Liz Truss's Energy Plan Will Disproportionately Benefit The Wealthiest Households

18th September 2022

By 2024, support for the wealthiest tenth of households will far exceed the level of support for those living in poverty.

Britain's looming living standards catastrophe was the big question hanging - unanswered - over the Conservative Party leadership race this summer, with both candidates refusing to be drawn on how exactly they'd tackle soaring energy bills.

But Liz Truss provided an emphatic answer on just her second full day in office by announcing a new Energy Price Guarantee that effectively caps typical households' energy bills at £2,500 for the next two years.

This is a simply huge policy - and one that is essentially a blank cheque given high levels of uncertainty about future gas prices. The Government provided no costings of its own. But our analysis suggests that it could cost around £60 billion over the next six months, rising to around £120 billion over the next two years. Add in support for business, and this could easily surpass the £137 billion spent bailing out the banks at the heights of the financial crisis – although it will be a couple of years until we know the actual final price tag.

Once you factor in the £30 billion of support announced by the last Chancellor Rishi Sunak, the Government is providing, on average, £2,200 worth of cost of living support to every household this year. That’s enough to prevent a broad living standards catastrophe, but it won’t stop this winter from feeling very tough for households. After all, energy bills will still be twice as high as they were last winter, and pay packets are still shrinking at an alarming pace amid double-digit inflation. The UK’s four million families on pre-payment meters, who tend to have lower incomes, will still need to find £250 up front to keep the heating on in January alone due to the higher cost of gas, and the fact that households use more gas during this month.

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Read the full article at the Resolution Foundation