Liz Truss is set to announce her enormous energy price freeze later today, and with most of the details already briefed out – including the £100+ billion price tag – the wonks at the Institute of Economic Affairs are already pouring cold water on the plans. In a release last night, IEA Chief Operating Officer and Energy Analyst Andy Mayer called on the government to scrap their price controls plan and instead focus on targeted welfare and tax cuts:
“Targeted welfare and tax cuts are better than price freezes. The expected energy price freeze, which will limit typical bills to between £2-2,500, is estimated to cost between £90-£170 billion. It would be better and cheaper to focus on targeted welfare and tax cuts.
Price controls don’t work. By suppressing the price signal and subsidising energy use, more energy will be used, inefficiently, prolonging the crisis, and limiting investment in energy saving.
Support will be untargeted, encouraging executives to heat their swimming pools, as much as helping those facing a choice between heating and eating.”
Given Truss is reportedly the darling of Tufton Street, it’s significant to see the IEA already coming out against her policies two days into the job…