Liz Truss is expected to lift the ban on fracking as she puts in place measures to protect homes and businesses from rising energy bills.
In her first major policy speech as prime minister, she is expected to tell MPs on Thursday that household energy bills will be frozen at around £2,500 as part of a package to ease the cost of living crisis which will cost around £150. billion
The Energy Costs Guarantee, which aims to save families and businesses from financial ruin if bills continue to rise as predicted, will be funded by increased borrowing after Mrs Truss rejected requests from ‘an extraordinary tax on oil and gas producers.
Downing Street has indicated that Ms Truss will end the moratorium on fracking – the process of extracting shale gas by fracturing rocks with high-pressure water.
Any move to lift the ban would be heavily criticized by opponents who have long warned that fracking can cause earthquakes, water pollution, noise and traffic pollution, while supporting the extraction of a fossil fuel is not ‘fits the Government’s net zero objectives.
The Prime Minister is also expected to confirm promises made during her Conservative leadership campaign to scrap green taxes on energy bills and support the exploitation of North Sea gas resources.
On Wednesday, the pound fell to its lowest level against the dollar since 1985 amid concerns about the scale of borrowing needed.
But Leveling Up Secretary Simon Clarke told Sky News: “If we don’t act, if we don’t protect the economy against a shock of the size and scale we’re talking about, there will be enormous damage.
“In these circumstances I think the country will say and I think the markets will respect that this is the most sensible thing to do.
“The Government is clear that a fiscally responsible approach is at the heart of our plans, but we cannot fail to respond to the magnitude of the moment.”
The precise mechanism of the price controls and the duration of the regime are yet to be confirmed.
Sources said the estimated £150bn cost of the proposals was a gross figure, not a net figure, while The Times suggested the plan would be reviewed early next year but could take until next elections, scheduled for 2024.
For household users in England, Scotland and Wales, the current price cap for each unit of energy means average household bills should average no more than £1,971, rising to £3,549 in October and is expected to continue to rise when the next level is established. January
Lifting the moratorium on fracking is unlikely to help lower bills, given the time it will take to start production and the amount of gas it could produce relative to the scale of global supply problems linked to invasion of Ukraine by Vladimir Putin and the restriction of deliveries to Europe.
In March, Kwasi Kwarteng, now the chancellor, wrote in The Mail on Sunday: “Even if we lifted the moratorium on fracking tomorrow, it would take up to a decade to extract sufficient volumes, and it would come at a high cost to communities and .our precious landscape”.
But Clarke said: “If we want energy sufficiency, we need to look at all sources, including clearly new nuclear, more renewables, but we also want to look at technologies like fracking.”
He insisted that the Government remains committed to the “critical” goal of achieving net zero emissions by 2050 “but in the short term we need all kinds of gas as a transition fuel and that is something the prime minister”.
The decision to fund the package by increasing borrowing – at a time when interest payments on public debt are rising – opened a clear dividing line with Labour, which wants a freeze on levy-funded energy bills to producers who have enjoyed optimal profits. consequence of high prices on the world market.
The refusal to levy an extraordinary tax on the surplus profits of energy companies has been made “solely on the basis of dogma”, shadow climate change secretary Ed Miliband said.
He told BBC Radio 4’s Today program that it was wrong for Ms Truss to suggest a windfall tax would hurt investment in the energy industry.
“This investment argument is completely false; which would have a detrimental effect on the business,” he said.
Ahead of Thursday’s announcement, Ms Truss acknowledged that families and businesses across the country are worried about how they will “make ends meet” in the coming months.
He blamed rising global prices on Russian President Putin’s “weaponization” of gas supplies to Europe.
“This has only made it clearer that we need to boost our long-term energy security and supply,” Ms Truss said.
“We will act immediately to help people and businesses with their bills, but we will also take decisive action to tackle the root of these problems so we are not in this position again.”
However, he faced accusations that he was dodging scrutiny over how his plans would be presented to Parliament.
Ms Truss will open a debate on energy costs but, unlike a formal ministerial statement, this will not lead to sustained questioning of MPs on the measure.