Afternoon summary
Liz Truss will freeze energy bills at an average of £2,500 a year for two years from 1 October, and has pledged to tackle the root causes of the problems in the UK energy market through plans to increase supply, including the resumption of fracking. My colleagues Jessica Elgot and Peter Walker have the story here.
And Rupert Jones has a summary of what the plans involve.
The prayers of the nation are with the Queen, the archbishop of Canterbury has said, as Britain’s leaders sent messages of support to the monarch, who was put under medical supervision after doctors became worried about her health. There is ongoing coverage of this story on our separate live blog.
From ITV’s Robert Peston
.@trussliz and @KwasiKwarteng have cleared out two old-school Whitehall mandarins: Tom Scholar, long standing perm sec at HM Treasury, and Stephen Lovegrove, the national security adviser: assault on what they see as orthodoxy, probably as radical as that of Cummings and Johnson
— Robert Peston (@Peston) September 8, 2022
Truss's energy plan 'needlessly inefficient and expensive', says thinktank
The National Institute of Economic and Social Research, another thinktank, has published its assessment of the energy price plan. It is a bit more critical than the IFS (see 2.56pm) and the Resolution Foundation (see 3.59pm). NIESR argued for a sliding price cap, where the cost of energy per unit would go up the more energy a person uses, and it says the government’s plan is “needlessly inefficient and expensive”. Max Mosley, an NIESR economist, said:
The prime minister’s energy plan is appropriate in terms of scale and ambition, but is needlessly inefficient and expensive. Its untargeted nature makes the currently unfunded proposal wasteful, which will put pressure on public finances, and for an unknown amount of time. There are better options, including a variable price cap that would gone further in lowering the bills for the poorest and could have even paid for itself.
Updated
My colleague Peter Walker has written a good analysis of the energy bills announcement. Here’s an extract.
There are two main things to note about Liz Truss’s energy costs package. First, there is much detail to come. Also, it is an undeniable paradox that the first move of a prime minister surrounded by former Taxpayers’ Alliance staff is a £150bn state effort to fix commercial prices …
An early Truss campaign interview with the Financial Times even airily dismissed the idea of “handouts”. Future campaign messaging was less clear, but still resistant to what was disparagingly referred to as “Gordon Brown economics”.
As it has turned out, Truss has ended up doing more or less what Brown argued for in early August, a call for a freeze on prices that pre-empted not just the government but even Brown’s own Labour party.
What changed was the sheer weight of political and, what you might even term moral, pressure.
Truss was told by an array of experts that failure to take bold action would create a humanitarian disaster, with millions of households cold or hungry or both, businesses collapsing en masse, with the impact on the economy, and especially on public health inequalities, felt for a generation.
And here is the full article.
The Department for Businesss, Energy and Industrial Strategy has published a factsheet giving a tiny bit more detail of the energy plans announced by Liz Truss earlier. The section on support for business illustrates how vague the plans are at this stage. Full details of how the plan will work for households are not available, but the scheme for businesses is even more sketchy; it seems to be more of a wishlist than a plan, and, with a small typeface, you could literally print it on the back of the metaphorical fag packet.
But the factsheet does include this chart, showing the notional savings for households, by housing type.
Martin Lewis, the consumer champion, has a good video guide to the energy announcement that you can watch here. He thinks the chances are 50-50 that the government will also cut VAT on fuel bills in its emergency budget later this month.
NEW. Energy price guarantee at £2,500/yr on typical use just announced. My instant reaction and video briefing on what it means in practice.
— Martin Lewis (@MartinSLewis) September 8, 2022
Feel free to share
Subtitled version available via YouTube pic.twitter.com/zQtxEab3SZ
Updated
The Resolution Foundation thinktank has published its own assessment of the energy price guarantee. Like the Institute for Fiscal Studies (see 2.56pm), it welcomes this as a substantial intervention that will avert catastrophe for many people this winter, but one that will not stop them facing a very tough winter anyway. Both thinktanks stress that this does not offer a permanent solution.
Torsten Bell, the chief executive at the Resolution Foundation, said:
Households should be reassured that the winter ahead will not be as bad as feared, but policymakers need to recognise it will still be very tough indeed. The energy price guarantee does a good job of targeting those households facing the highest energy bills but, because it is not well targeted at those on low and middle incomes, comes with a large price tag.
Liz Truss is asking future taxpayers to pick up a large and very uncertain bill on behalf of today’s energy bill payers, but declined to set out the cost of this huge package. It could end up surpassing the bank bailouts at the height of the financial crisis, with new support for households alone on course to total around £120bn. It goes without saying this can’t be the permanent answer to higher energy bills.
The Resolution Foundation is also critical of the proposal to negotiate new, long-term contracts with low-carbon energy suppliers. Echoing the argument made by Ed Miliband (see 10.09am), it says this “risks delaying but locking in those windfalls, rather than removing them”.
Updated
Union leaders have criticised the energy announcement from Liz Truss, saying that it should have included a windfall tax and that ministers should have acted earlier. Here is a roundup of some of their reaction.
Frances O’Grady, the outgoing TUC general secretary, said:
The prime minister is making the wrong people pay. She should have imposed a much larger windfall tax on profiteering oil and gas giants, and she should have required all firms getting help with energy bills to commit to no lay-offs for the lifetime of the help, to protect livelihoods.
Sharon Graham, the Unite general secretary, said:
It is quite frankly remarkable that the prime minister is asking workers to pay for massive energy company profits. The economy is broken and workers will see through this plan to boost profiteering yet again.
I don’t think the irony escapes many. The reason we are held to ransom now by an over-reliance on non-domestic energy is that a Conservative government privatised our energy.
Andy Prendergast, national officer at the GMB, said:
The Tories have been in office for 12 years. Their failures to build new nuclear power stations, to protect and utilise our gas storage capacity and willingness to engage in political groupthink on domestic on and offshore resources, means we are playing catch-up in the race to defend ourselves against the global energy crisis.
And Christina McAnea, the Unison general secretary, said:
At long last, the government has acted. A bill freeze should have happened months ago. Instead, millions have endured sleepless nights terrified of the winter ahead.
The companies raking in billions from soaring energy costs should pay their share. Another windfall tax would be fairer than handing huge debts to future generations.
Updated
Updated
The Institute of Directors, which represents business leaders, has welcomed the government’s energy plan. But Jonathan Geldart, the IoD’s director general, said it was important to get an assurance that the plan would not weaken the public finances. He said:
What we need now is an external reassurance that the scale of the intervention does not jeopardise the public finances. That’s why it’s crucially important that the Office for Budget Responsibility can swiftly produce its independent assessment of the impact on government debt and the wider macroeconomy.
Updated
During first minister’s questions in the Scottish parliament Nicola Sturgeon welcomed the UK government’s “very belated action on energy bills” but said people would still have to pay more. She said:
It does not represent a halt to the rise in energy bills.
Average energy bills right now are just under £2,000, a cap of £2,500 will still see people pay more for their energy.
People are still seeing soaring energy costs because of a broken energy market and the utter incompetence of this UK government.
Conor Murphy, the Sinn Féin finance minister in Northern Ireland, said the UK government needed to provide “urgent clarity” as to how it will meet its promise to ensure that households in Northern Ireland get the same help as households in Britain. In a statement on the energy package he said:
While the British government has said the energy policy changes will apply here, they have failed to outline what exactly that means.
This will bring little comfort to individuals who are having to decide between heating and eating. Likewise, businesses trying to plan ahead for the winter months have no certainty as to when support will be forthcoming.
The absence of a functioning executive will require a workaround. At a time of crisis for citizens, businesses and public services, this is completely unacceptable. I am calling for urgent clarity on how energy support will be delivered locally.
The power-sharing executive in Northern Ireland is not functioning because the DUP says it will not participate until the government abandons the Northern Ireland protocol in its current form.
Poorest homes will gain slightly less in cash terms, but most as proportion of income, from energy plan, says IFS
The Institute for Fiscal Studies has published its assessment of the energy plan announced by Liz Truss today. It says that capping the average household energy bill at £2,500 a year would cost £60bn over the next year and that just over half of that would go to households in the top half for income distribution.
But while poorer households will gain less in cash terms, they will gain significant more as a proportion of what they spend, the IFS says. “The energy price guarantee will save a household with typical energy use in the lowest-income tenth an amount equivalent to 14% of their household spending, compared to 5% for the highest income tenth,” it says.
Poorer households will gain slightly less than richer ones in cash terms.
— Institute for Fiscal Studies (@TheIFS) September 8, 2022
But energy spending accounts for a much larger share of poorer households' budgets. The poorest tenth will save on average 14% of their household spending, compared to 5% for the richest tenth. pic.twitter.com/0Q6Ncei9Uf
The IFS also says that, if other European countries subsidise bills in the same way, this could increase the risks of a bidding war. It explains.
Prices are high because Europe faces severe gas shortages in the coming months. To correct the (large) mismatch between supply and demand, some users of energy – whether households, businesses or governments – will have to reduce their energy use. The less UK households reduce their energy demand, the greater demands placed on others. If other European countries also attempt to subsidise household or business use of energy, the result could be a bidding war that raises the cost of providing support in all countries. It also risks a situation where there is simply not enough energy to go round, which would require rationing or increase the risk of blackouts.
Updated
Truss's energy plan does not do enough to protect the poor, say charities
Charities say Liz Truss’s energy support package will not do enough to protect the poorest families. Here is a roundup of reaction from some of the leading voices in the sector.
Imran Hussain, the director of policy and campaigns at Action for Children, said this was a “big intervention with a big hole in it”. He explained:
We desperately need more targeted help through benefits for the low-paid and those who have lost their jobs or cannot work because of disability, illness or caring responsibilities.
Even with a freeze, energy bills will still be double what they were a year ago, the price of other essentials continues to soar and the true value of benefits has been cut.
Becca Lyon, the head of child poverty at Save the Children, said the plan would not stop many families reaching crisis point this winter. She said:
How can it be right that multimillionaires will get the same support as the most vulnerable families?
If there is enough money to pay the energy bills of the rich and not ask energy giants to pay a penny more, surely there should be enough money to make sure no family has to choose between heating and eating this winter.
James Taylor, the director of strategy for the disability charity Scope, said the plan was just a “sticking plaster” for disabled people. He explained:
Life costs more if you are disabled. This universal approach brings some relief, but disabled people often rely on higher energy use.
It’s important to remember that this cap does not limit what you pay. For many disabled households their bills are still skyrocketing.
The End Fuel Poverty Coalition also said the plan would be an “expensive sticking plaster” without further investment in improving energy efficiency of homes worst affected by fuel poverty. The coalition coordinator, Simon Francis, said:
While many households will breathe a sigh of relief, the prime minister offered no detail of additional support for the millions of households who will be left behind in fuel poverty this winter.
Updated
Carl Emmerson, deputy director of the Institute for Fiscal Studies, told Radio 4’s World at One that he expected the government’s “energy price guarantee” to cost at least £100bn. He said:
The cost will be very, very uncertain. It will depend on what happens to gas prices over the next two years, it will depend on whether this scheme is extended.
I would be surprised if over the next 12 months it didn’t cost more than £100bn.
The uncertainty gets much greater the further out you go. This expires in two years’ time. On current expectations, that will make it a very painful winter in 2024-25.
I think that does open the question about whether this scheme will get extended or not, just as the [Covid] furlough scheme got extended and extended again and again.
Bloomberg’s Alex Wickham said this morning that, on the basis of a government document he had seen, he expected the figure to be much higher than £100bn.
The £130bn figure for households we reported the other day came from a govt doc that forecast a £2,500 cap lasting 18 months
— Alex Wickham (@alexwickham) September 8, 2022
Truss says it will last for 2 years
So by their own numbers it's well north of £130bn for households
Then it's £40bn for biz
Then more for tax cuts
Miatta Fahnbulleh, chief executive of the New Economics Foundation thinktank, says that, by not imposing a new windfall tax, the government has ensured that “our public services and communities to pay for this through lower investment”. She explains why in a Twitter thread starting here.
Liz Truss’ intervention to freeze the #energypricecap for 2 years is a big one that shows the government has finally grasped the scale of the challenge.
— Miatta Fahnbulleh (@Miatsf) September 8, 2022
But there is a sting in the tail.
1/5 https://t.co/k1wNgW8iyN
SNP claims people will pay 'Truss tax' under PM's energy bills plan
In his speech in the energy debate Ian Blackford, the SNP leader at Westminster, said Liz Truss was in effect imposing a “Truss tax” on people who would have to pay more for energy. He explained:
Freezing prices wasn’t really a choice. It’s the only political option. And when the current price cap stands at 2,000 with a 54% increase since spring, and many people are already unable to pay, setting the cap at 2,500 isn’t an actual freeze.
After all the waiting, it couldn’t be any clearer, [the prime minister] set it out very brazenly. The prime Mminister’s plan means that the public pays. She has made the political choice to tax families instead of companies, to put profit over people.
Instead of a windfall tax, she has chosen a new Tory tax, the Truss tax. The Truss tax that means that in the months and years ahead households and businesses will be punished with higher bills, higher interest rates and higher mortgage costs.
A Truss tax means that cuts to the vital public services rely on and which are used to support the most vulnerable.
A Truss tax means a threat to the Scottish budget, which the Scottish government is using to protect our population and shield workers and public services as best they can.
Sam Coates from Sky News has a good analysis of the “energy price guarantee”. He says there are five big unknowns: 1) no costings; 2) no detail about how average bills will be capped; 3) no clarity about what might happen after the two-year guantee expires; 4) no clarity about how people will get help in Northern Ireland, where the energy regime is different; and 5) uncertainty about what support business will actually get.
And Torsten Bell, chief executive of the Resolution Foundation thinktank, is also surprised by the decision not to give any costings for the policy.
I’ve seen a lot of big fiscal announcements over the years. I’ve never seen one with NO details of paying for it
— Torsten Bell (@TorstenBell) September 8, 2022
Paul Johnson, director of the Institute for Fiscal Studies thinktank, says he is staggered that Liz Truss announced her “energy price guarantee” without saying how much it would cost. (See 11.47am.)
Just listened to the PM's statement. Can't quite believe nothing there about the cost. This is one of the biggest announcements in peacetime history, and apparently we'll be told how much in a few weeks.
— Paul Johnson (@PJTheEconomist) September 8, 2022
Not a complaint about the policy. But some transparency would be welcome
Politicians have been issuing statements expressing their concerns about the Queen’s health, and their best wishes for her recovery. My colleague Miranda Bryant is covering all the developments on that story on a separate live blog. It’s here.
Full details of government's 'energy price guarantee'
The government has now sent out a press release about the “energy price guarantee” announced by Liz Truss earlier. It does not seem to be available online yet, and so here are some excerpts.
Help for households
Under new plans, a typical UK household will pay no more than £2,500 a year on their energy bill for the next two years from 1st October, through a new ‘energy price guarantee’ which limits the price suppliers can charge customers for units of gas. This takes account of temporarily removing green levies, worth around £150, from household bills. The guarantee will supersede the existing energy price cap.
This will save the average household £1,000 a year based on current energy prices from October. It comes in addition to the announced £400 energy bills discount for all households and together they will bring costs close to where the energy price cap stands today.
The new guarantee will apply to households in Great Britain, with the same level of support made available to households in Northern Ireland.
Those households who do not pay direct for mains gas and electricity – such as those living in park homes or on heat networks – will be no worse off and receive support through a new fund.
Today’s action will deliver substantial benefits to the economy - boosting growth and curbing inflation by 4-5 points, reducing the cost of servicing the national debt.
Help for business
As businesses have not benefited from an energy price cap and are not always able to fix their energy price through fixed deals, many are reporting projected increases in energy costs of more than 500%.
A new six-month scheme for businesses and other non-domestic energy users (including charities and public sector organisations like schools) will offer equivalent support as is being provided for consumers. This will protect them from soaring energy costs and provide them with the certainty they need to plan their business.
After this initial six-month scheme, the Government will provide ongoing, focused support for vulnerable industries. There will be a review in 3 months’ time to consider where this should be targeted to make sure those most in need get support.
Reforms to energy market
The government will provide energy suppliers with the difference between this new lower price, and what energy retailers would charge their customers were this not in place. Schemes previously funded by green levies will also continue to be funded by the government during this two year period to ensure the UK’s investment in home-grown, secure renewable technologies continues.
Whilst the intervention will be funded by the government, action is being taken to significantly reduce the cost over time, including:
A new energy supply taskforce – led by Madelaine McTernan who headed up the UK’s successful vaccine taskforce – has begun negotiations with domestic and international suppliers to agree long-term contracts that reduce the price they charge for energy and increase the security of its supply. The taskforce and Department for Business, Energy and Industrial Strategy will negotiate with renewable producers to reduce the prices they charge as well.
HM Treasury are announcing a joint scheme, working with the Bank of England, to address the extraordinary liquidity requirements faced by energy firms operating in UK wholesale gas and electricity markets. [The Treasury has published details of that here.]
Measures to increase energy supply
Learning from the mistakes of the past, the government is taking action to accelerate domestic energy supply, increase our energy resilience and achieve our ambition to make the UK an energy exporter by 2040:
Launch a new oil and gas licensing round as early as next week, expected to lead to over 100 new licences.
Lift the moratorium on UK shale gas production. This will enable developers to seek planning permission where there is local support, which could get gas flowing in as soon as six months.
Drive forward the acceleration of new sources of energy supply from North Sea oil and gas to clean energy like nuclear, wind and solar.
Continue progressing up to 24GW of nuclear by 2050, with Great British Nuclear helping to set direction of getting new nuclear projects online in the UK.
Speaker interrupts energy debate to say Queen is in 'thoughts and prayers' of MPs after announcement about her health
In the Commons Sir Lindsay Hoyle, the Speaker, has just interrupted Ian Blackford, the SNP leader at Westminster, who is delivering a speech in the debate, to comment on an announcement from Buckingham Palace.
Hoyle is referring to this.
NEW UPDATE ON QUEEN:
— Chris Ship (@chrisshipitv) September 8, 2022
“Following further evaluation this morning, The Queen’s doctors are concerned for Her Majesty’s health and have recommended she remain under medical supervision. The Queen remains comfortable and at Balmoral.”
Buckingham Palace say family members have been informed about the Queen’s medical situation.
— Chris Ship (@chrisshipitv) September 8, 2022
She remains at Balmoral.
Hoyle says:
I know I speak on behalf of the entire house when I say that we send our best wishes to Her Majesty the Queen, and that she and her family are in our thoughts and prayers at this moment.
He says he is not going to say any more at this point.
My colleague Caroline Davies’s story about the Queen is here.
Updated
Starmer says fracking and a dash for gas in the North Sea will not cut bills or strengthen energy security.
And he says Truss should remember what Kwasi Kwarteng said about fracking in an article for the Mail on Sunday earlier this year. Kwarteng wrote:
Even if we lifted the fracking moratorium tomorrow, it would take up to a decade to extract sufficient volumes – and it would come at a high cost for communities and our precious countryside.
Second, no amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon.
And with the best will in the world, private companies are not going to sell the shale gas they produce to UK consumers below the market price.
They are not charities, after all.
He also says Kwarteng’s own department produced a Q&A saying future extraction from the North Sea would not “materially impact on the global price of gas”.
He ends by saying the UK needs a fresh start, not the fourth Tory leader in six years.
Updated
Theresa May, the former Conservative PM, intervenes, and asks Starmer why no new nuclear power stations were build under Labour.
Starmer says he remembers Tony Blair declaring his support for nuclear, and mocking David Cameron for being able to say what his policy was.
Doubtless Starmer “remembers” this because the clip has been widely circulated on social media recently.
🥊 Blair v Cameron on Nuclear Power 🥊pic.twitter.com/MUpbOm9BTq
— Tides of History (@labour_history) September 1, 2022
Starmer says Labour did approve new nuclear power stations in 2009. But they were never build after the Tories too power, he says.
Starmer says government's ban on new onshore wind was 'policy disaster'
Starmer says the government banned onshore wind in 2015. That cost the UK the equivalent of the energy it imported from Russia. That was a “policy disaster”, he says.
And he says Truss has consistently opposed solar energy. When she was environment secretary she cut subsidies for solar, and the market crashed, he says.
Starmer says borrowing will go up because Truss has ruled out windfall tax
Keir Starmer is speaking now.
He says Labour called for a price freeze earlier in the summer, and was criticised for doing so. He says he is pleased there is action being taken today.
But the key question is will pay for this. The energy companies are making £170bn in windfall profits over the next two years, he says. He says Labour wants to tax this, but Li Truss is opposed. He goes on:
Every pound the government refuses to raise in windfall taxes … is a pound of extra borrowing. It’s that simple.
Key points from Truss's 'energy price guarantee' announcement
This is what Liz Truss has announced.
A typical household will save on average £1,000 a year from her two-year energy price guarantee, she claims.
An average energy bill for a typical household will be no more than £2,500 a year for the next two years from 1 October under the plan. This figure takes account of the removal of green levies (worth around £150 per household) and it will supersede the existing energy price cap.
The policy applies to households in Britain, but in Northern Ireland (where the energy regime is different) households will get the same amount of support.
Households who do not pay direct for gas or electricity from the mains will receive support from a fund, and will be no worse off, Truss says.
Businesses will get equivalent support, under a scheme lasting six months. After this there will be ongoing support, particularly for vulnerable industries.
The package is expected to reduce inflation by up to 5 percentage points from where it otherwise would have been.
Updated
Truss says she wants to make UK net energy exporter by 2040
Truss says that for too long the government has ignored the need for energy security.
She says she will address this. She wants to make the UK a net energy exporter by 2040, she says.
That’s it. She has finished.
Truss announces review of how government can achieve net zero in 'pro-business and pro-growth' way
Truss says that, to improve long-term energy security, she is announcing two reviews.
First, there will be a review of energy regulation.
And, second, there will be a review of how the government can reach net zero “in a way that is pro-business and pro-growth”.
She says this will be led by Chris Skidmore.
Skidmore, a former energy minister, is one of the Tory MPs most committed to net zero.
In response to a question from Sammy Wilson (DUP), Truss says she can assure him that this policy will benefit people in Northern Ireland.
Energy firms to get access to liquidity support worth up to £40bn, Truss says
Truss announces another plan that she says will curb prices.
I’m announcing today that, with the Bank of England, we will set up a new scheme worth up to £40bn to ensure that firms operating in the wholesale energy market have the liquidity they need to manage price volatility.
This will stabilise the market and decrease the likelihood that energy retailers need our support like they did last winter.
By increasing supply, boosting the economy and increasing liquidity in the market, we will significantly reduce the cost to government of this intervention.
Energy bills package will lower inflation by 5 percentage points from what it otherwise would have been, says Truss
In the Commons Truss says today’s intervention will curb inflation by up to five percentage points. This will cut the cost of servicing government debt, she says.
The written ministerial statement is now available online. It is from Jacob Rees-Mogg, the business secretary, and it is here.
This is what it says:
HM Government is acting to protect British households from the spiralling costs of energy. The Energy Price Guarantee (EPG) which will give people certainty with their bills. The EPG will apply from 1 October and will discount the unit cost for gas and electricity use.
This guarantee, which includes the temporary suspension of green levies, means that from the 1st October a typical household will pay no more than £2500 per year for each of the next two years. This will save the typical household £1000 a year. It comes in addition to the £400 Energy Bill Support Scheme.
The scheme will start on the 1st October 2022, when Ofgem’s new price cap is due to come into effect. Cost projections for the delivery of the EPG are uncertain as they depend upon usage levels (which are highly dependent on weather patterns) and, for future three-month periods, the wholesale price of energy.
The new guarantee will apply to households in Great Britain, with the same level of support made available to households in Northern Ireland.
HM Government will also support all business, charities and public sector organisations with their energy costs this winter, offering an equivalent guarantee for six months.
The Chancellor of the Exchequer will set out the expected costs as part of the fiscal statement later this month.
Truss is now talking about how they might “defray” the costs of this.
First of all, the government will do this by ramping up supply.
A new energy supply taskforce has been set up. They are negotiating new contracts with electricity and gas suppliers.
The government will also launch a new licensing round for North Sea extraction, which could lead to more than 100 new licences being awarded.
She says providers will move to contracts for difference, so that they price they get is not pegged to gas. This will further bring down costs, she says. (See 10.09am.)
Updated
Richard Burgon (Lab) says the government can do better than this. Why is Truss putting profits ahead of people?
Truss says she is doing the important work to help people get through this winter and the next winter, while fixing the energy supply problems.
She goes on:
This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options.
Updated
John Redwood (Con) says we are too short of energy, but have too many taxes. If we have too many taxes, we will have less supply of the things we are taxing, he says.
Truss says Redwood has made a good point. She goes on:
The reality is that we can’t tax our way to growth.
Updated
Truss tells MPs they will not learn cost of her energy plan until Treasury statement later this month
Truss says she recognises that people are worried. That is why she has brought forward this debate.
Emergency legislation will be brought forward to deliver the policy.
Kwasi Kwarteng, the chancellor, will give details of the costs when he makes a fiscal statement later this month.
But Truss says she will not accept Labour’s call for a windfall tax.
The written ministerial statement setting out this plan should be available here, but it isn’t.
Some MPs are angry about not being able to read the details. Sir Lindsay Hoyle, the Speaker, says copies are being printed out by the vote office now. He seems furious.
Truss claims typical household will pay no more than £2,500 a year for energy for next two years under her plan
Truss says her plan means a typical household will pay no more than £2,500 a year for energy for the next two years from October.
A typical household will save on average £1,000 a year from her two-year energy price guarantee, she claims.
An average energy bill for a typical household will be no more than £2,500 a year for the next two years from 1 October under the plan. This figure takes account of the removal of green levies (worth around £150 per household) and it will supersede the existing energy price cap.
Updated
Liz Truss unveils to MPs her plan to keep down energy bills
Liz Truss is about to open the debate.
But Sir Lindsay Hoyle, the Speaker, starts by complaining that the written ministerial statement setting out the plan was not published earlier. It is only just available, he says.
This is discourteous to the house, he says.
Updated
Johnson declares donation of almost £24,000 from JCB chair Anthony Bamford to fund his wedding party
The new version of the register of members’ interests also clarifies who paid for Boris Johnson’s recent party to celebrate his wedding last year. It was held at the mansion owned by the JCB chair and Tory donor Anthony Bamford, and Bamford donated the equivalent of almost £24,000, it says. The declaration reads:
Name of donor: Lord Anthony and Lady Carole Bamford
For my wedding celebration, hire of Marquee; portaloos; catering; waiting staff; flowers; ice cream van; smoke and braai; total value £23,853.
Updated
According to George Grylls from the Times, the biggest single donation to Liz Truss’s leadership campaign came from the wife of a BP executive.
NEW Liz Truss raised almost £420,000 from donors to fund her Tory leadership campaign.
— George Grylls (@georgegrylls) September 8, 2022
Biggest single donation of £100k came from Fitriani Hay, wife of James Hay, a former BP executive with a luxury goods empire.
Updated
In the Commons Penny Mordaunt, the new leader of the Commons is still taking business questions. But she is expected to wrap up soon, within the next few minutes. When she finishes, Liz Truss will deliver her statement on her energy bills package, which will take the form of a speech opening a general debate on energy costs.
Swing voters have reacted warmly to Liz Truss, according to the results of a focus group conducted by James Johnson, a pollster who used to work in Downing Street for Theresa May.
New: @JLPartnersPolls @TimesRadio swing voter focus group in @thetimes
— James Johnson (@jamesjohnson252) September 8, 2022
- Voters thought Liz Truss’ Downing St speech was ‘strong’, ‘confident’
- Shown PMQs clip, one said she ‘blew Starmer away’
- Voters giving her ‘benefit of the doubt’ for now
(1/2)https://t.co/dongkxYtzS
- Starmer a ‘follower’, no unprompted recall of his energy freeze announcement
— James Johnson (@jamesjohnson252) September 8, 2022
- 6 of 7 chose Liz over Keir as best PM
- BUT all thought freeze should be paid for with windfall tax over ‘more borrowing’
Listen with me and @MattChorley at 11am on https://t.co/ge9VGQwupj (2/2)
Big early question now is whether warmth about the PM’s approach (strength, consistency) wins out over uncertainty and concern on some of her positions (no windfall tax, borrowing, fracking).
— James Johnson (@jamesjohnson252) September 8, 2022
My hunch in my @politico piece is that former will matter more https://t.co/K6ceSqO2BF
The House of Commons has published its latest updated version of the register of members’ interests, and it includes details of who donated to Liz Truss’s campaign for the Tory leadership. Until now she had not released those names. The full details are here. I’ll post more on it soon.
This is from the Labour MP Chris Bryant, replying to what Simon Clarke said on the Today programme this morning.
Simon Clarke making preposterous arguments today. He complains @UKLabour is arguing for a windfall tax. He forgets his spell at Treasury saw highest tax take for decades, and he introduced a (poorly drafted) windfall tax this year. We are the party of sound money.
— Chris Bryant (@RhonddaBryant) September 8, 2022
Rightwing thinktank IEA criticises Truss's energy plan, saying 'price controls won't work'
Although Liz Truss is sticking to her opposition to a further windfall tax on energy companies, in most respects her announcement today marks a huge shift from the ideological stance she was taking on energy bills earlier this summer. A small state libertarian, she insisted that the best way to help people with rising prices was through tax cuts, rather than Rishi Sunak-style government intervention. “The way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts,” she told the Financial Times in early August.
From what we know of the announcement coming later, she will not be offering cash handouts to households. But she will be putting a limit on the amount bills can rise through handouts to energy companies, which will have a similar effect.
This has alarmed some of her libertarian allies. On Sunday Mark Littlewood, who runs the Institute of Economic Affairs (IEA) thinktank and who has been a friend of Truss’s since they were fellow Liberal Democrats at Oxford, wrote an article for the Sunday Telegraph saying she was the last person who would want to fix a price for energy. He said:
As a convinced market liberal, [Truss] will recoil at the idea that more state involvement is the best strategy to deal with any given problem.
Her approach to date on the energy crisis is a classic example of this. Whilst politicians of all stripes seem to want the government to take even more action to fix the price of energy, Truss’s starting position would be to allow the price mechanism to operate freely and then consider how one might mitigate the effects. She would rather offset the soaring price of utility bills through meaningful tax cuts, than appoint a central committee to pronounce on the exact price we should all be paying per kilowatt hour.
That didn’t age well, and last night the IEA issued a press release criticsing the plan being announced today. Andy Mayer, energy analyst at the thinktank, said:
Targeted welfare and tax cuts are better than price freezes.
The expected energy price freeze, which will limit typical bills to between £2-2,500, is estimated to cost between £90-£170bn. It would be better and cheaper to focus on targeted welfare and tax cuts.
Price controls don’t work. By suppressing the price signal and subsidising energy use, more energy will be used, inefficiently, prolonging the crisis, and limiting investment in energy saving.
Updated
According to the BBC, the government is considering a plan to change the way energy companies are paid for electricity generated from sources other than gas. At the moment prices are pegged to the price of gas, which has led to producers generating energy from nuclear, or renewables, making soaring profits on the back of rising international gas prices.
The idea is backed by the industry body Energy UK, which explains it in a briefing here. My colleague Alex Lawson explains what is proposed in a story here.
In his interview on the Today programme, Ed Miliband, the shadow secretary for climate change and net zero, claimed this would be “terrible” for consumers. He explained:
This is a proposal from Energy UK, and let’s be clear about this proposal: This would lock in massive windfall profits for these electricity generators.
Let me explain why: what Energy UK have said is we’ll accept slightly lower prices now, so we can have much higher prices over the following 15 years.
This would be a terrible deal for the British people, a terrible deal for billpayers.
It is much better - if there are these unexpected windfalls, and there are - the right thing to do, the fair thing to do, is not to do some dodgy deal with these companies, but to do a windfall tax.
In an interview with Times Radio Ed Miliband, the shadow secretary for climate change and net zero, also criticised the appointment of Jacob Rees-Mogg as business secretary because of his approach to the climate crisis and net zero. He said:
Jacob Rees-Mogg has a record, which deeply disturbs me … He has questioned the science of climate change. Now, that’s not just bad in relation to climate change or the climate emergency; it is but if we’re going to lower energy bills, there is one overriding thing we’ve got to do - which is get off fossil fuels.
All this nonsense about lifting the ban on fracking. That’s not a solution to this problem. Because fracking, the fracked gas, even if it isn’t dangerous, will cost exactly the same as the gas we’re currently importing.
There’s only one way out of this, which is renewables, nuclear, offshore wind, onshore wind, solar, which Jacob Rees Mogg, I fear has set his face against.
Energy bills package will provide certainty 'in medium term', says Clarke
And here are some more lines from what Simon Clarke, the new levelling up secretary, said on his morning broadcast round.
Clarke defended the government’s decision to act on the grounds that the economy would suffer “enormous damage” if it did nothing. Liz Truss is instinctively a small state Tory, and during the Tory leadership campaign she criticised what she described as Gordon Brown-style government interventions. But Clarke, one of her closest allies, said on this occasion a big intervention was essential. He said:
If we fail to act, if we don’t protect the economy against the shock of the size and scale we are talking about, then there is going to be enormous damage.
In these circumstances I think the country will say and I think markets will respect that this is the most sensible thing to do.
The government is clear that a fiscally responsible approach sits at the heart of our plans but we cannot fail to respond to the magnitude of the moment.
He said the plan announced today would provide certainty “in the medium term”, and would not just be a “sticking plaster” solution. He said:
We are not looking here at sticking plaster solutions. We want a lasting settlement that provides both comfort and clarity for both households and businesses.
This is a major attempt to draw a line and provide energy certainty for everybody in this country about energy usage in the medium term.
He rejected suggestions that the increase in borrowing being announced today would be excessive, or that it would alarm the financial markets. He said:
If you look at the UK’s most recent round of debt issuance, that was well-covered. There was much more demand for our debt than was needed to cover the latest auction.
We are paying around three per cent for our debt. That is a perfectly sustainable level. The UK is obviously a very stable, very strong economy, subject to a very clear regulatory system and the rule of law. We are a safe bet and a safe haven as we always are, frankly, in these kind of situations.
Levelling up secretary Simon Clarke argues windfall tax would discourage investment by energy firms
Simon Clarke, the new levelling up secretary, was on the morning interview round on behalf of the government this morning. Echoing what his boss said at PMQs yesterday, he said imposing a new windfall tax on energy companies would be a mistake. He told LBC:
These firms are the people we are going to be absolutely relying on to deliver that next generation of oil and gas extraction on the route to energy self-sufficiency.
We need to go much, much further in getting new fields on line.
That is why we need these companies to be ploughing that investment into the North Sea.
We cannot do what Labour would do, which is just tax, tax, tax.
Labour says Truss's opposition to windfall tax based on 'dogma' and shows Tories shifting to right
Ed Miliband, the shadow secretary for climate change and net zero, was also on the Today programme this morning where he restated Labour’s call for a windfall tax to be used to part fund a rescue pacakge for energy bills. He said the government’s argument that this would deter investment was “bogus”. And he said Truss’s decision to rule out the idea showed the government had shifted to the right. He said:
This investment argument is completely bogus; that it would have a damaging effect on business.
Bernard Looney, the chief executive of BP, says it wouldn’t have a damaging effect.
This is a dogma, and I’m afraid we see a pattern here. This is a shift to the right by the Conservative party under Liz Truss. Boris Johnson and Rishi Sunak actually eventually ended up agreeing with our idea of a windfall tax.
Now we have a government that is setting its face against it purely on the basis of dogma.
Consumer champion Martin Lewis says energy bills plan will provide relief to millions of people
Good morning. Liz Truss has been prime minister for less than 48 hours, but she is about to make an announcement that could define her premiership. If her plan to prevent energy bills soaring backfires or crashes, then it is hard to see how she recovers. But if it gets a positive reception, then Truss, whose ratings with the public at large are very poor, and her party, which is trailing badly behind Labour in the polls, could be on a path to recovery.
Here is our overnight splash setting out what we are expecting.
And here is an analysis from my colleague Archie Bland, who has examined the plan in his First Edition briefing.
This morning Labour has renewed its attack on Truss for failing to considing using a windfall tax to part fund the energy rescue package. Ed Miliband, the shadow secretary for climate change and net zero, told the BBC:
We know from the Treasury that there are £170bn of excess profits being made by the energy companies. We believe a windfall tax must be part of the solution to that, that is the fair thing to do, that is the right thing to do.
I am afraid that Liz Truss is making a terrible mistake by setting her face against that, because in the end, higher borrowing will have to be paid for somehow and it will end up falling back on the British people, and she’s leaving money on the table that these companies are making.
But there was a much more encouraging response for Truss from Martin Lewis, the consumer champion and founder of the MoneySavingExpert website. Lewis is the go-to expert on consumer issues – the equivalent of John Curtice on elections, or Paul Johnson on the IFS on budgets – and he has been described as one of the most trusted men in Britain. An endorsement from him really counts, and on the Today programme this morning he gave a qualified welcome to what Truss is doing. He said:
I have said we have a catastophe coming in winter. By January we expect to see the [energy] price cap to be 120% higher than it is right now, more than double. And my great call has always been that we need to have political will to do something.
Well, I think we do now have the political will. And I very much welcome the plans that are being rumoured to come out today. They are not perfect. Then again, I’ve not seen any solution that’s perfect. They are not the panacea. But they will meet millions, if not tens of millions of people, will breathe a sigh of relief that will be they will be able to afford their energy bills this winter.
But clearly there will need to be some further work done looking at the very poorest in society to make sure that they can get through this. We need clarification on whether the remaining payments on benefits, the payments for those disabilities that were planned and announced in May, are still going to come through.
But I think we have to be fair here. And as someone who has has been begging and pleading that more help comes out, well, this is more help.
The great benefits of this policy is that it helps everyone. The great problem with this policy is that it helps everyone. It means wealthy people like me also get our bills cut. But, absolutely big picture, I think we need to welcome that something is being done, and that the political will has changed.
I will be focusing almost exclusively on the Truss announcement today. It will come after 11.15am, when Truss will unveil the plan in a speeech in the Commons opening a general debate on energy costs. Unusually, she has chosen to make the announcement in this format rather than through a normal ministerial statement – which would have required her to answer questions about her plans for more than an hour.
I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.
If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.
Alternatively, you can email me at andrew.sparrow@theguardian.com
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