The Truss Plan Helps the Richest
In the United Kingdom, the government of L. Truss announces a support plan. However, it helps mostly the richest.
| Sectors | Gas, Natural Gas |
|---|---|
| Themes | Markets & Finance, Sector Analysis |
| Countries | United Kingdom |
The new British government’s plan to tackle soaring energy costs is expected to provide more financial support to wealthier households than to poorer ones, the Resolution Foundation think tank said in a study Tuesday.
Conservative Liz Truss’ first act as Prime Minister “was to put in place a huge support package to reduce the scale of the disaster” of the cost of living crisis, freezing the maximum rate per average household at £2,500 (€2,800) for two years, the anti-poverty think tank recalls.
Since the richest households consume the most energy, they will benefit the most from this cap, the Resolution Foundation believes, even though they suffer far less from soaring bills.
In addition to this, there are other “universal” aids such as the 400 pounds granted to each household, or the 150 pounds rebate on local taxes decided by the previous government, also conservative, and which are not primarily aimed at families in difficulty.
Liz Truss’s decision to remove a social security tax increase decided by the previous government will also favour the most privileged households, since the most modest do not pay this tax, the Resolution Foundation points out.
“Rising energy costs around the world are making the UK poorer as a country,” the study finds.
The United Kingdom is very dependent on gas prices, which have increased sevenfold over the past year, in particular because of tensions over supply since the start of the war in Ukraine.
The think tank is also concerned about the debt financing of the aid package announced by Liz Truss, as this means that it will ultimately be paid back by taxpayers, and therefore only postpones the economic impact of the energy crisis on the country.
The overall amount of these government interventions in response to the UK’s galloping inflation of more than 10% and the energy crisis has not yet been quantified, which the Resolution Foundation considers “disappointing”.
According to his calculations, the bill will be very heavy and could “dwarf the 137 billion pounds of the bank rescue plan during the financial crisis” of 2008-2009.
