…Rules out windfall tax on energy giants
Britain’s newly elected Prime Minister, Liz Truss, who appears before parliament today, is expected to unveil a new bailout package to the energy crises hitting households in the country.
She will unveil a blueprint for mitigating the rapidly escalating energy crisis as well as bolster Britain’s long-term energy security.
She used the opportunity of her first ministerial appearance in parliament yesterday to commit to a £100 billion plus plan to support households and businesses hit by rising energy costs. But she ruled out imposing a windfall tax on energy giants to offset soaring bills.
Meanwhile the Pound responded the developments yesterday as investors took onboard the prospect of mammoth borrowing to fund a package to deal with soaring energy bills,
The pound moved lower on the foreign exchanges to a new 37-year-low against the dollar. Sterling dipped as low at $1.1403, slipping below the trough of 1.1412 seen at the outset of the Covid-19 pandemic in March 2020.
It has been widely predicted that she will announce a freeze on UK energy bills for up to two years. The National reported yesterday that Scottish Power has already put forward a plan costing £100bn for a two-year energy bill freeze that will be financed by loans underwritten by the Treasury.
Eager to prove her tax-cutting credentials, Ms Truss is scrapping a previously announced increase in corporation tax from 19% to 25%. She has also pledged to reverse April’s rise in national insurance.
The new prime minister would not cancel a windfall tax imposed in May by former treasury chief Rishi Sunak, her defeated leadership rival, but would not bring in a new one.
“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,” Ms Truss told a packed House of Commons. “This country will not be able to tax its way to growth.”
Reports say the new government’s energy proposal is backed by energy companies and new Chancellor Kwasi Kwarteng has overseen the preparations.
The current UK price cap stands at £1,971 but, if a freeze to bills is not applied, then this would rise to £3,549 in October.