UK’s Liz Truss unveils plan to freeze annual energy bills at £2,500 until 2024

LONDON — The typical household energy bill in Great Britain will be frozen at £2,500 for the next two years in an unprecedented government intervention in the U.K. energy market, Prime Minister Liz Truss has announced.

Amid soaring costs for consumers and businesses in the wake of the Ukraine war, the new British prime minister’s administration will limit what energy firms can charge per unit in order to keep prices close to the current cap set by Ofgem, the energy regulator.

The plan is projected to save the average household at least £1,000 a year, Truss said.

But she refused to specify the total cost of the program, thought to be in the region of £150 billion, which will be set out by her chancellor, Kwasi Kwarteng, in a fiscal statement in the coming weeks. An intervention on that scale would cost more than double the £70 billion cost of the coronavirus furlough scheme, which saw the U.K. guarantee wages during the pandemic.

“This is the moment to be bold,” Truss told MPs, stressing that there are “no cost free options” to lessening the impact of the energy crisis.

But the opposition Labour Party attacked the government for opting not to fund the intervention through a one-off tax on energy producer profits, with energy spokesperson Ed Miliband accusing Truss’ administration of “setting its face against it purely on the basis of dogma.”

The Treasury has instead signalled it will ramp up public borrowing, although Truss argued measures to boost supply could help “defray” the scheme’s cost.

House of Commons Speaker Lindsay Hoyle admonished the government for a delay in publishing details of the scheme, with a written ministerial statement offering limited further information landing after Truss had gotten to her feet in the Commons chamber.

The government estimates the scheme, which starts in October, will curb inflation by up to five percentage points compared to current projections.

Businesses will be offered the same guarantee for the next six months, while public services such as schools and hospitals will also benefit. The scheme comes on top of measures announced by the previous chancellor, Rishi Sunak, back in March, but goes significantly further in its scale.

Officials are working on an equivalent scheme for Northern Ireland, which is not subject to the same pricing system, and a fund to support households not on standard gas or electricity contracts.

Truss also announced a number of measures intended to boost domestic energy production, including an end to the moratorium on fracking and a new oil and gas licensing round to be launched next week.

Madelaine McTernan, a civil servant in charge of the vaccine taskforce, will lead a new unit focused on securing the U.K.’s energy supply.

Chris Skidmore, a Conservative MP who leads the net zero support group in parliament, will carry out a review of energy regulation which will report by the end of the year.