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Liz Truss allots $150 billion to keep energy bills below $2,300

Truss is also finalising plans for a £40 billion ($46 billion) support package to lower energy bills for businesses.

Topics
UK | electricity bill | Queen Elizabeth II

Agencies 



Queen Elizabeth welcomes Liz Truss during an audience where she invited the newly elected leader of the Conservative party to become Prime Minister and form a new government, at Balmoral Castle, Scotland
Queen Elizabeth welcomes Liz Truss during an audience where she invited the newly elected leader of the Conservative party to become Prime Minister and form a new government, at Balmoral Castle, Scotland (Photo via Reuters)

Incoming Prime Minister Liz Truss has drafted plans to fix annual electricity and gas bills for a typical household at or below the current level of £1,971 ($2,300).

Truss is also finalising plans for a £40 billion ($46 billion) support package to lower energy bills for businesses.

In discussions with her team and government officials in recent days, Truss has settled on a mechanism that will avert the massive increase in energy bills that is due to kick in at the start of next month under the existing pricing system, according to officials and advisers to Truss who were briefed on the plan.

The policy could cost as much as £130 billion ($150 billion) over the next 18 months, according to policy documents seen by Bloomberg.

Energy bills in the were due to jump 80 per cent from October to £3,548 a year for the average household, forcing many poorer families to choose between heating their homes and other basics. Under the plans drawn up by Truss’s team, that pricing regime will effectively be abolished and the energy regulator Ofgem will be sidelined. Instead, ministers will set a new unit price that households will pay for electricity and gas, the people said.

The pound rose relative to most major currencies following the report and was 0.4 per cent higher against the dollar in Asian trading, marking a second straight day of gains for the first time since July.

Liz Truss took over as British prime minister on Tuesday, facing one of the most daunting set of challenges for an incoming leader in post-War history led by soaring energy bills, a looming recession and industrial strife.

Truss, the fourth Conservative prime minister in six years, flew to the royal family's Scottish home to be asked by Queen Elizabeth to form a government. She replaces Boris Johnson who was forced out after three tumultuous years in power.

“Ms Truss accepted Her Majesty's offer and kissed hands upon her appointment as Prime Minister and First Lord of the Treasury,” Buckingham Palace said.

Until now, the constitutional process of the monarch inviting the leader of the majority party to form a government in her name has taken place at Buckingham Palace in London. But with the Queen cutting back on her travels, it had been decided that she would receive Johnson and Truss at her summer residence of Balmoral Castle in Aberdeenshire, Scotland, marking a historic first.

Truss inherits an economy in crisis, with inflation at double digits, the cost of energy soaring and the Bank of England warning of a lengthy recession by the end of this year.

Already, workers across the economy have gone on strike.

She also enters the latest crisis to buffet Britain with a weaker political hand than many of her predecessors.

Having held a place in the cabinet of senior ministers for eight years, she defeated rival Rishi Sunak in a vote of members by a tighter margin than expected, and more of the party’s lawmakers initially backed her rival.


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First Published: Tue, September 06 2022. 23:45 IST

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