'Huge relief to millions' Firms welcome bill freeze announced by Liz Truss

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Liz Truss introduces ‘energy price guarantee’ to tackle cost crisis

Many firms, already pushed to the brink by Covid, feared the energy crisis would be the last nail in the coffin as gas and electricity bills soared. But Liz Truss’s announcement of help was widely welcomed.

Rocio Concha, director at consumer group Which?, said: “This is a bold intervention that will provide huge relief for many and prevent millions of households being left in the cold.”

West Midlands mayor Andy Street said: “It’ll be hugely welcomed. The Prime Minister has used the words, ‘This is a crisis.’ I think that is a very, very good sign.

“It looks as though there’s going to be really important support for small businesses. This hasn’t been talked about as much…but it looks as though there’s going to be decisive action.

“If you’re a pub, a restaurant or cafe facing the winter, this could be the difference between staying in business and going out of business.”

Britain’s new Prime Minister announced a £2,500 price cap freeze for households for the next two years – and a similar proposal for business relief will be published in the few days.

For firms and other non-domestic users, such as schools and hospitals which are not covered by the existing price cap, a six-month scheme will offer equivalent support.

Liz Truss’s announcement of help was widely welcomed

Liz Truss’s announcement of help was widely welcomed (Image: GETTY)

After that there will be ongoing help with a review in three months’ time to decide where it should be targeted.

Sara Hall, founder of online gift shop The Silk Purse Guild, said the help “could not come soon enough”.

She added: “The energy bill crisis is piercing the very heart of small businesses. I work with creatives and artists who tell me daily they are struggling to survive.

“There is a tangible, underlying fear running through the UK’s small business community. The crisis is having an impact on mental health as well as financial security.”

Graham Cox, founder of website SelfEmployedMortageHub.com, said: the PM’s plan was “long overdue but welcome nevertheless”.

He added: “Capping energy to £2,500 is double what people were paying in January, so it will still leave millions of households struggling to keep their homes warm this winter. But at least it provides certainty.”

The move was welcomed by the care sector. Adrian Forth, director at Peace Hospice Care in Watford, said: “We’re pleased the Government has finally acted on energy prices for businesses and charities.

“This has been a really worrying time. If we had been left to deal with the situation with no intervention, it may well have been unsustainable as we were seeing potentially enormous price increases on our bills.

“We hope this price cap will allow us a small amount of breathing space so we can continue to provide the high standard of care we offer.”

Finance experts also welcomed the energy price guarantee.

Steven Cameron, pensions director at Aegon, said it will help the Treasury measure the UK’s future finances.

He said: “The two-year cap not only provides much needed support for households, but it will also help to dampen the headline inflation rate. Many state-related benefits are uprated by inflation, so this support should help to manage the affordability of Government funding.”

Scott Gallacher, of independent financial advisers Rowley Turton, said: “Millions of hardworking families will be relieved that their bills will be capped this Christmas.”

And Imran Hussain, of Harmony Financial Services, labelled Liz Truss’s announcement: “A fairly impressive start from the new PM.”

However, some critics said her energy price guarantee had not been set at a low enough level.

Samuel Mather-Holgate, of advisory firm Mather & Murray Financial, said: “What a disappointment! We were all hoping that, at worst, prices would be kept as they are.

“But households are expected to find another £600 per year from October. This will put some families out on the street.

“With mortgage interest rates on the rise, too, the cost of living is too high for many low and middle income families. Liz Truss needs to look again at this with serious urgency.”

Ed Rimmer, chief executive of lender Time Finance, last night called for more detail on help for businesses.

He said: “The fact exact details about company energy bills are yet to be outlined leaves many businesses in the lurch. Ultimately, this makes forecasting business plans impossible.

“The damage caused by this ongoing economic stretch is already in effect, with many firms’ financial challenges now rising to unmanageable levels.

“Businesses now need a clear and direct approach to the energy crisis so they can plan their finances for the challenging winter ahead.”

COMMENT BY DALE VINCE

Liz Truss has promised to fix average annual energy bills at £2,500. This is great news for millions of people who did not know how they were going to get through this winter.

The plan is not perfect. Support should have been targeted to those that really need it – and it should have been paid for from the rampant (£170billion) profits of the oil and gas sector. There’s risk too: £130billion is the estimated cost today, however that could easily double or triple.

We’re entering unchartered waters as Russia turns off the gas to Europe this winter.

That makes it even more essential for the Prime Minister to now take step two of our plan: price cap North Sea gas.

Half of Britain’s gas supply comes from there and we don’t have to pay unhinged global prices for it. This would take away half the price problem.

Further, reforming the market, so that the price of gas did not set the price of all electricity, would deal with the other half. Doing both could take energy bills back to last October’s £1,200 a year, making this entire Government pledge cost nothing.

This is the proper way to get to the root of the problem, not the hopeless aim of making the UK a net exporter of energy by 2040. We simply don’t have the fossil reserves to achieve this.

And even if we did, Kwasi Kwarteng had it right when he said it doesn’t matter how much fossil fuel we produce here, it won’t affect the global price or the price we pay.

This is a fossil fuel crisis. We can’t solve it with more fossil fuels.

Energy independence can only come from using sustainable sources.

These will always be available at low prices and we have them in abundance. Liz Truss should face down her vocal minority of MPs and unleash our onshore wind and solar power.

With them we could dash to 100 per cent green electricity on the grid in just five years. And sustain that forever with no pollution. Stable energy bills. And no cost to the public.

  • Dale Vince is the founder of Ecotricity.

FRACKING: WHAT IS IT, WHY IS IT CONTROVERSIAL AND WILL IT LOWER BILLS?

The Government has lifted the moratorium on fracking in a controversial move to stimulate more domestic gas supplies.
– What is fracking?
More properly known as hydraulic fracturing, fracking is a process by which liquid is pumped deep underground at high pressure to fracture shale rock and release gas or oil trapped within it.
– How much potential is there for developing shale gas and oil in the UK?
Assessment by the British Geological Survey (BGS) suggested there are an estimated 1,300 trillion cubic feet of shale gas resources in the Bowland Shale across northern England.
Estimates from 2013 for the size of the Bowland Shale reserve found it could potentially provide up to 50 years of current gas demand.
But a study published in August 2019 by the University of Nottingham and BGS suggested there may be less than 10 years’ gas at current levels of demand.
There are “modest” shale gas and oil resources in Scotland, with an estimated 80 trillion cubic feet of gas and six billion barrels of shale oil in the Midland Valley stretching across Scotland and including Glasgow and Edinburgh.
There is an estimated 4.4 billion barrels of shale oil in the Weald Basin in southern England.
But it is not known how much of the resources can be extracted, with exploitable reserves thought to be much lower than the total estimated oil and gas.
– Why is fracking controversial?
The process has been mired in controversy since it hit the headlines in 2011 for causing two minor earthquakes in Lancashire, prompting a temporary ban on fracking in the UK.
The ban was later lifted, with controls put in place to prevent tremors, but fracking continued to attract opponents who feared it could also cause water contamination, as well as generate noise and traffic pollution at the drill sites.
Environmentalists warned that pursuing new sources of gas – a fossil fuel – is not compatible with efforts to tackle climate change, and the focus should be on developing cleaner sources of energy such as renewables.
A new moratorium was imposed on fracking after a series of earthquakes at the UK’s only shale wells at Preston New Road, Lancashire, in 2019.
How has the Conservative Government’s position changed?
It had once hoped that a shale gas industry in the UK could boost tax revenues, create jobs, reduce reliance on energy imports and bring down household fuel bills.
The Government took steps to get the industry going, such as introducing tax breaks and community payments, and proposed changes to planning rules to get schemes off the ground more easily.
But after bringing in the moratorium in November 2019, the Tory manifesto for the general election in December abandoned plans to change planning rules, saying: “We will not support fracking unless the science shows categorically that it can be done safely.”
It seemed that the decade-long controversy over fracking was drawing to an end when at the beginning of 2022, Cuadrilla announced it had been told by officials to permanently cap its two shale wells at Preston New Road.
But Russia’s invasion of Ukraine sent gas prices soaring, and prompted calls for a rethink on fracking.
The Government withdrew the demand to cap the wells and commissioned a review from the BGS on shale gas and seismic impacts. Now the moratorium has been lifted.
– So will fracking make a difference to bills?
No. UK energy prices are driven by international gas prices and even if fracking was pursued at scale – which even with the lifting of the ban remains an uncertain prospect – UK reserves of shale gas are too small to bring down those global prices.
Chancellor Kwasi Kwarteng spelled this out as Business Secretary in March when he wrote in the Mail on Sunday that: “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.”
He also warned that it would take a decade to get sufficient volumes of gas from fracking, harming communities and the countryside along the way.
The heads of the Climate Change Committee and the National Infrastructure Commission agree, warning that UK gas reserves – from fracking or North Sea drilling – are “too small to impact meaningfully the prices faced by UK consumers”.
– Where has fracking been pursued and opposed in the UK?
Cuadrilla has long focused on fracking in Lancashire, where it also applied for planning permission at a second site, Roseacre Wood, which was refused by the Government in 2019.
In December 2018, the National Trust withdrew its legal opposition to seismic surveying by energy company Ineos at Clumber Park, in Nottinghamshire, but vowed to fight to protect the site from fracking.
Parts of Yorkshire have also been targeted for fracking, including areas around the North York Moors National Park, though the regional minerals plan has been introduced to conserve the protected area from harm.
The Scottish and Welsh governments do not support fracking in their countries, and there is a planning presumption against it in Northern Ireland.



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