Industry leaders have reacted to the recent Liz Truss energy price cap announcement as the new prime minister unveils a two-year plan to cap typical energy bills at £2,500 a year
Prime Minister Liz Truss has made a new energy price cap announcement today (8 September) stating that a typical UK household will pay no more than £2,500 a year on their energy bills for the next two years from 1 October.
Suppliers will be limited by the price they can charge customers for units of gas under a new Energy Price Guarantee.
Businesses will see their energy costs capped at the same price per unit that households will pay, but only for six months.
The ban on fracking has also been lifted.
AEC welcomes Liz Truss energy price cap announcement
Stephen Marcos Jones, CEO of the Association for Consultancy and Engineering (ACE) welcomes plans by government to cap energy prices:
“Our members will be pleased with the short-term certainty provided by the six-month energy price cap announced by the prime minister today. For all businesses, it will provide some immediate relief during this difficult period. We await more details on how this will work in practice.
“However, energy costs are only one contributor to current inflation. In a soon-to-be-published survey of our members, results show increasing concerns about the broader economy. The pound falling to levels not seen since 1985 this week is just the latest example of the multi-faceted inflationary pressures facing our economy.
“To help our businesses navigate the choppy waters ahead of us, we need reassurance and clarity over the longer term outlook. For our sector, this means confirmation of a strong construction and infrastructure pipeline, a more holistic and sustained approach to regional and levelling up funding and a recommitment to Net Zero with the additional investment required to meet the 2050 target.
“Earlier in the week, I was pleased to see Liz Truss’ support for investment in connectivity and roads in her welcoming speech outside Number 10. We need to turn these positive words into tangible actions and projects and our members look forward to working with the government to do so.”
Support for consumers and businesses to deal with sky-high energy prices has come at an important time
Avinav Nigam, co-founder at IMMO, Europe’s leading technology-led residential investment platform, said:
“With a price tag of £130bn, today’s measures to help consumers and businesses deal with sky-high energy prices have come at an important time. They could have also helped pay for retrofitting close to half the UK’s housing stock.
“Clearly action is needed and with the government still counting the cost of Covid while staring down the barrel of recession, taxpayer money has to be targeted in its use.
“That’s why the government should look to tap into the growing weight of institutional capital that is keen to ‘do green and do good’, and increasingly sees residential for rent as an attractive alternative to fixed-income, to help fund the retrofitting of Britain’s housing stock.
“We’ve already committed £1bn to modernise over 3,000 homes across the UK and if given the right framework and incentives, we imagine others will follow.”
‘No sign of gas prices going down anytime soon’
Harriet Lamb, CEO at Ashden, climate solutions charity says: “The emergency intervention announced by prime minister Liz Truss is a much-needed immediate fix. But to address this once and for all we needed the announcement to include the two Rs – that is, a country-wide retrofit programme and rapid scale-up of cheap and quick renewable energy.
“Much of Liz Truss’s energy plan focused on securing new sources of high carbon energy, including a likely 100 new licenses for oil and gas.
“This is totally disingenuous. The crisis is caused by high oil and gas prices – drilling for more will not address that key problem. It will take years and will add to the climate crisis. Investing in renewables is quicker, cheaper and is the only solution to the climate emergency we are in.”
Cara Jenkinson, cities manager at Ashden said: “Emergency intervention to help struggling families on a grand scale is needed now, but it must go beyond a short-term short-sighted fix. We need to address the two Rs – that is, a country-wide retrofit programme and rapid scale-up of renewables.
“Without a major energy efficiency programme that stops heat, money and carbon leaking out of our homes, the government and us as taxpayers will face an open-ended commitment to support energy companies as there is no sign of gas prices going down anytime soon. If we don’t launch an insulation programme and ramp up renewables, we will be in the same sorry position again next year.”
Anthony Hughes, managing director of RVA Surveyors, said: “What we need to see from the government are clear paths forwards to helping businesses, to helping keep people in jobs, but with overheads increasing across the board, the government appears to have been sitting idle – or worse, are completely asleep at the wheel altogether while the British public and businesses continue to struggle.”
Liz Truss energy price cap announcement is a “sticking plaster”
Simon Tucker, global head of energy, utilities & resources at Infosys Consulting: “The energy bill freeze will provide relative stability for working families and will help to curb inflation. But it’s a sticking plaster, especially for those who are on the lowest incomes. Households will still be paying around £2,100 in energy bills, and there will need to be targeted support, particularly for those on pre-payment meters.
“The biggest beneficiaries will be small to medium-sized businesses, like pubs, restaurants, and dry cleaners, whose operating costs will be shielded against the excesses of energy price rises.
“We’ll see pandemic levels of spending to ease the energy crisis, but rationing remains a very real threat for at least another two years. The UK government’s energy strategy must focus on doing everything possible to secure new, reliable and low-carbon energy sources, and to reduce consumption. Big investment in clean energy supplies like wind, solar, hydro and nuclear is an absolute imperative, but there also needs to be a greater drive to encourage consumers and businesses to use less. Reducing energy demand by 10-15% nationwide would make a huge difference when it comes to shoring up supply.”
Upgrading all households to EPC Grade C would help households reduce their energy bills permanently
Anika Scott, MD and head of capital formation at A/O PropTech, Europe’s largest proptech VC fund, said:
“The Government will need to retrofit at least 28m homes per year to be within striking distance of net zero in 2050, given that 23% of UK emissions come from households.
“No-one would disagree that households will struggle this winter. We support the spirit of what the Government is trying to do, but rolling packages of support year on year is unsustainable, amounting to around £170bn in spending commitments to-date relating to rising energy costs.
“According to the Government’s own figures, upgrading all households to EPC Grade C would cost £400bn, help households reduce their energy bills permanently, cut energy emissions, and increase energy security. The Government has an opportunity to deploy capital to fund retrofit both to help address rising energy poverty and deliver on climate targets.
“Doing so would have other benefits: the Green Finance Institute estimates that retrofitting 29m homes would grow the UK retrofit industry by a factor of ten, promoting green growth and contributing to the Government’s aim to make the UK a centre for green finance by using public monies to crowd in private sector finance.”
Government must freeze business rates for the next financial year
The British Property Federation reacts to Liz Truss’ energy plan:
“The Prime Minister has delivered on her commitment to provide immediate support on soaring energy costs for individuals and businesses. Today’s announcement also recognises that vulnerable sectors will need further targeted support and the Business Secretary’s review must look at all options including the crippling burden of business rates – the Government must freeze the business rates multiplier for the next financial year to avoid significant inflationary uplifts and make sure that businesses whose rates are being reduced because of the last revaluation get the benefit of this reduction straight away.”
The new energy price cap is moving us away from changing consumer behaviours to reduce consumption
Peter Hogg UK cities director at Arcadis said: “Millions of households will, understandably, breathe a sigh of relief at the plan announced today. The Government should be commended for leap-frogging from energy cost support also-ran to support package front-runner.
“Whilst householders will be feeling better however, today’s announcement leaves the business sector on tenterhooks. Up and down the country, businesses – especially SMEs that employ so much of our workforce – are left with a double whammy of continuing uncertainty, no price cap and, as yet, no details on an assistance package. The Government needs to make clear its plans for ‘equivalent support’ to business and do so soon.
“It was right that Government turned first to spiralling energy costs, but we would urge a continued focus on changing consumer behaviours to reduce consumption and avoid both the risk of energy shortages and a reduction in focus on moves away from hydrocarbon fuel sources. On its own the new cap risks moving us in the wrong direction in these areas as the fear of rising prices is allayed.
“In short, the Government has addressed the crocodile closest to the canoe, but it has not yet navigated safely out of the energy cost & resilience swamp.”
