New UK PM promises action on energy costs

·3-min read

New British Prime Minister Liz Truss will on Thursday set out a plan to save households and businesses from financial ruin as a result of soaring energy bills.

At her first Prime Minister's Questions on Wednesday, Truss confirmed her plan, expected to freeze household bills at around STG2500 ($A4265), will be set out in Parliament.

She rejected the idea of using a windfall tax on the bumper profits made by oil and gas giants to fund the package, reported to cost up to STG150 billion ($A255 billion).

Truss told the Commons: "I will make sure that in our energy plan we will help to support businesses and people with the immediate price crisis, as well as making sure there are long-term supplies available.

"I understand that people across our country are struggling with the cost of living and they are struggling with their energy bills.

"I will be making an announcement to this House on that tomorrow and giving people certainty to make sure that they are able to get through this winter and be able to have the energy supplies and be able to afford it."

In response to Labour leader Sir Keir Starmer, who has pushed for a levy on the STG170 billion of "excess profits" that oil and gas producers are expected to enjoy over the coming years, Truss rejected a windfall tax.

"I am against a windfall tax, I believe it is the wrong thing to be putting companies off investing in the United Kingdom just when we need to be growing the economy," she said.

Sir Keir said refusing to tax the profits made by oil and gas firms as a result of the high global prices would leave taxpayers footing the cost of the energy freeze for decades.

"The Prime Minister knows she has no choice but to back an energy price freeze, but it won't be cheap and the real choice, the political choice is who is going to pay," he said.

"Is she really telling us that she is going to leave this vast excess profits on the table and make working people foot the bill for decades to come?"

Truss' clash with Sir Keir showed clear dividing lines on fiscal policy, with the new Prime Minister determined to scrap planned increases in corporation tax for businesses.

Sir Keir said: "Not only is the Prime Minister refusing to extend the windfall tax, she's also choosing to hand the water companies polluting our beaches a tax cut. She's choosing to hand the banks a tax cut.

Corporation tax had been due to increase from 19 per cent to 25 per cent in 2023, but Truss said that would deter investors and the UK cannot "tax its way to growth".

In a sign of the political battles to come, Sir Keir said: "There's nothing new about the Tory fantasy of trickle-down economics, nothing new about this Tory Prime Minister who nodded through every decision that got us into this mess and now says how terrible it is, and can't she see there's nothing new about a Tory Prime Minister who when asked who pays says 'it's you, the working people of Britain'?"

Truss told him: "I will take immediate action to make sure we have lower taxes and we grow the economy, and that way I will ensure we have a positive future for our country and we get Britain moving."