UNITED KINGDOM: Former Foreign Secretary Liz Truss, who won the Conservative leadership over the weekend and became the new British Prime minister, has now actively involved herself in delivering on her campaign promise to resolve the UK’s energy crisis.
Truss will cap soaring consumer bills on Thursday and promote new sources of energy in an expected 100 billion pound ($115 billion)-plus package designed to limit the economic burden caused by the Ukraine conflict.
With Britain caught in the clutches of a prolonged recession fuelled by a near quadrupling of household energy bills, Truss- appointed prime minister on Tuesday, vowed to take urgent action to protect consumers and ease the economic burden.
Typical British household energy bills can be capped at around £2,500 a year, with firms also likely to get some relief. It is unclear how long the government support would last, but it is expected to borrow at least £100bn to pay for it.
Experts and charity organizations have sounded warning alarms for the British population- if soaring energy prices are not curbed immediately, it could put millions of lives at risk, as people struggle to keep up with the piling bills ahead of a harsh winter.
The increase in consumers’ bills follows sharp spikes in wholesale gas largely due to the conflict in Ukraine, which has reduced supplies of Russian gas.
Russia has also launched its counterattack and denied the supply of gas and oil to the Western allies over harsh sanctions on Moscow over Russia’s “special military operation” in Ukraine.
Ahead of the announcement, Truss addressed the concerns of families and firms who were worried about “how they are going to make ends meet this autumn and winter.”
“Putin’s war in Ukraine and weaponization of gas supply in Europe is causing global prices to rise – and this has only made clearer that we must boost our long-term energy security and supply.”
Meanwhile, a jump in government borrowing to fund the support package plus a pledge by Truss to cut taxes has rattled financial markets. On Wednesday the pound fell against the dollar to levels last hit in 1985.
Truss is expected to set out her plan to lawmakers at around 1000 GMT.
Deutsche Bank reported that the energy price offset will distress Britain’s financial state. The promised tax cuts could cost 179 billion pounds or about half the amount Britain spent on the COVID-19 pandemic.
The government is also predicted to establish new sources of energy supply including the issuance of up to 130 oil and gas exploration licences in the North Sea and scrap a ban on fracking if local communities agree.
Fracking, which involves extracting shale gas from rocks by breaking them up with water and chemicals at high pressure, was banned in 2019 after oil and gas authorities predicted the possibility of high-magnitude earthquakes it might trigger.
“If we want energy sufficiency, we have to look at every source including clearly new nuclear or more renewables,” the minister for levelling up, Simon Clarke, told Sky News. “We also ought to look at technologies like fracking… There is a balanced approach to this question.”
The new Prime Minister is faced with one of the most daunting challenges in Britain’s post-war history. Her plan is expected to cool inflation- which currently stands at 10.1%, already the highest of any leading economy.
However, reducing inflation comes at a cost- It will add more than 100 billion pounds to Britain’s borrowing, putting more strain on public finances with the energy crisis possibly lasting into next winter.
“We will take action immediately to help people and businesses with bills but also …to tackle the root cause of these problems so that we are not in this position again,” Truss said in a statement.
“We will set out our plans to deliver on that promise and build a prosperous Britain for everyone.”
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