130 billion debt - Truss

[Stephthegreat]

Truss, misguided as she is, has announced a 130 billion bailout for the energy companies. Why saddle our dcs with this enormous debt because, let’s face it, it will be paid back down the line.

Truss completely ruled out a windfall tax.

What next? I fear for our country, we have just had one clown and now we have this no hoper.

1. The price of gas is likely to go up over winter when there is higher demand (and yes, weakness of sterling against the dollar makes imports more expensive)

2. We have a complex/weird way of setting wholesale prices in this country. Effectively all electricity (whether produced by gas, solar, wind or something else) is priced at the cost of the most expensive. It was designed to encourage investment in renewables that were probably going to be more expensive in the early years when they were getting set up. But it's adding enormously to pressures now; and it's part of the reason why the costs of renewable energy has increased (along with more demand from power from these sources as we try to move away from gas)

3. I hear what you are saying- putting big costs on a credit card for our children to pay feels very bad. But; we need affordable energy for people, homes and business. The best outcome would be short term support to ensure that bills stay affordable while bigger issues on energy generation get sorted out. If the UK could produce all the energy it needs from nuclear/ renewables (and maybe fracking?? definitely north sea gas in the medium term while nuclear facilities are built) then we won't face problems like this again- at the moment we are trying to buy resources in international markets that everyone else is wanting to buy

I understand the need to help those who cannot afford these rising heating costs. However, what I don't understand is why she also wants to cut taxes which she knows mainly benefits the richest in the UK. She justifies it by claiming that helping the wealthy is fair but the country cannot live on borrowing alone!

And one other point, if she is insisting on spending, I hope they will at least spend something on facilities to store gas and electricity or even kit out public buildings with solar panels and batteries to help with future problems.

Fracking, hated by tory voters even more than labour voters, is now also being put back on the table.

@lookthisway I think she thinks that lower taxes will encourage more people to invest in setting up more business; and over time; this will create more jobs and other good things in the economy. I disagree; and think tax cuts right now are a bad idea- increases division in society and will just add to inflation

Absolutely agree on more storage and solar on public buildings

I think she thinks that lower taxes will encourage more people to invest in setting up more business; and over time; this will create more jobs and other good things in the economy. All the data we have shows this does not happen. Businesses create additional profits and pay to shareholders, or off-shore it.

It is another scam along the same lines as '£350m/week for the NHS'. The worry is people will fall for these lies again.

On this it's worth noting that in February Kwarteng said fracking was a terrible idea, too long to instigate and not worth the trade-offs you'd get with renewables. So for him to u-turn on this to that degree shows how little he believes in anything.

The cap will apply to unit prices so the “average usage household” will pay £2500. It’s not limitless energy for £2500. Higher usage households will pay more etc.

They're not capping anyone's total fuel bill.

They're proposing capping the unit cost so that the average household would pay about £2,500. Someone households will end up paying less than this, and some will end up paying a lot more.

I don't think you understand the cap. It's not stupid of you. Lots of people don't understand it properly. Google MoneySavingExpect for a clear explanation but basically the cap is a cap on the price of each unit of fuel. The more units you use the more you will pay. They use the bigger figure as it represents a 'typical' household but you might you more or less energy.

I think theres been a discussion with renewable and nuclear companies to change contracts and fix prices for 15 years. It’s on the bbc website.

I assume this plan is to signal to people they won’t be financially devastated by extremely expensive bills over the next two winters while working on other ways to increase supply and hold prices. I don’t think just borrowing x billion pounds is the whole of the plan.

Reality is whatever they do they need to do it quickly so yeah its a sledgehammer. Hopefully this will be more refined as time goes on. It will at the very least provide some certainty for people about what to expect.

130 billion makes me feel like throwing up though.

It is mental to borrow so much more money rather than implementing a windfall tax....things will be okayish for a year or so, it will let the Tories get re-elected and then the shit really hits the fan... public services will be decimated. I'm scared for the future of this country

@Stephthegreat the energy companies do already pay tax on their profits. The reason a windfall tax isn't being imposed is because the excess profits are needed to invest in reforms our energy supply chain, to increase the proportion of renewables and reduce the reliance on foreign gas, i.e. to build wind farms, nuclear power stations etc. Those things don't come cheap and if the government took a windfall tax from the energy companies they'd end up handing the same money back to them in subsidies.

@allatwonce And you really think they'll be so willing to invest their profits into the UK rather than hoard them..

I agree in general re detail. Out of interest did the pandemic debt make you feel the same? I think it was x3

Truss, misguided as she is, has announced a 130 billion bailout for the energy companies.

This is false. The energy companies are not the beneficiaries of the bail-out, energy consumers are.

Truss completely ruled out a windfall tax.

On BBC news last night, someone was saying the windfall tax would raise 5 billion pounds, which works out at less than 4p for each pound you saying is going to be spent. So it's really not a solution.

Oh, and there already is a windfall tax. (I was checking details of what that expert said, and my search brought up the fact that Rish Sunak had created a tax in May this year.)

The boss of BP does not agree! They said a windfall tax would not affect investment.

The windfall tax is only on the EXCESS profits caused by the war.

@SallyLockheart @DogInATent @LollingAround

Thanks for the replies, I get it now. They should have worded it better on the radio rather than just "energy bills will be capped at £2500" - didn't think that made much sense!

" Out of interest did the pandemic debt make you feel the same? I think it was x3". Some of it did yes, mainly the business loans given with zero checks, that have been now spaffed up the wall in home extension, fraudulent claims and people fleeing back to their home countries, quids in at our expense. 😡

www.newstatesman.com/business/2022/02/it-was-as-easy-as-clicking-a-button-how-the-government-handed-billions-to-fraudsters

A lot of people misunderstand. The messaging needs to be much clearer or people will be happily running their heating 24/7 and lolling in their sex ponds!

People who do understand will use less energy this winter as prices will still be double of what they were last winter.

I agree targeted help would have been better, but we had Lazy Johnson doiing feck all during the leadership race, so no time to introduce something more nuanced. This is last minute back-of-a-fag-packet policy making.

Sebastian Payne, FT writer:

The view inside government on their stance against a windfall tax:

“All people care about is getting their energy bill sorted. How it’s paid for doesn’t matter.”

Yup LOL I don’t like big numbers. BUT I do understand the need. It just makes me feel a bit queasy.

COVID was an uncertain situation, governments were trying to make decisions cautiously, with what information they had experts often couldn’t agree on what the right thing to do was. Our government did some things well and some things not so well.

We are again in an uncertain situation, there have been people on mumsnet terrified, literally terrified of the consequences of energy prices increases.

If for example the government can re-negotiate contracts to push down energy prices without windfall taxes I am happy for them to do so. I sincerely hope they are looking at other options too to expand supply.

I think a windfall tax sends a very clear message to any business thinking of investing in the uk, and am not disappointed that it's been ruled out. I think it would have had very negative, long-term consequences

Why would, say Siemens not build a wind turbine factory in Yorkshire because Shell have to pay a one off tax which still leaves them 'billions in profit? billions they had no idea they'd every make 2 years ago.

Siemens et al wont invest in the UK not because of a tax on energy producers but because there isn't a decent available workforce and that their workers will be off sick for months because they can't get treated in a timely manner.

You 'd also have to explain why other countries have a WF tax on gas production yet still attract inward investment?

Thatcher and Osbourne both had WF taxes too.

Yeah this. I’m a now a bit worried that what the price cap actually is hasn’t been communicated properly to people and they really really need to understand that. And I’m also a little worried that people won’t be as fastidious about monitoring usage as they would have been with a higher cap (but I’d also rather not see people freeze).

I was nervous about some of the COVID debt, the government chucked a lot away. Some was clearly needed or the economy would have imploded. They have s magic money forest!

But Covid spending was a one off, supported people and business, so they can survive long term.

This 130 billion of borrowing is just for 18 months, after than, baring a pro west Russian leader taking over, we'll be back to square one, what then? another 130 billion of borrowing?

This approach is total madness.