The policies of Liz Truss
In the UK energy bills have SKYROCKETED. In July electricity prices were 54% higher than the year before. Gas prices were 96% higher.
What can the government do to reduce prices?
On her 2nd day as Prime Minister, Liz Truss announced her plan to deal with the issue.
The typical household will pay no more than £2500 a year for the next 2 years. The government has promised to pay the excess.
Businesses (restaurants, bars, schools) will also have a fixed amount they’ll pay this winter.
What do you think of this plan?
Should everyone receive this benefit? Or should some factors be taken into account?
members in the household
number of rooms
income
size of your house
Now you can leave on your heater ALL DAY in ALL your rooms during the winter and you won’t pay more than £2500.
She hasn’t encouraged anyone to try to reduce their energy use. For example: “Set the temperature slightly lower this winter.” “Wear a jumper in your house”
Now there is a risk of gas and electricity shortages this winter.
Another (major) problem is Truss never announced how she would pay for this. The 3 main options are:
increase taxes
the government will borrow money (increase debt)
windfall taxes (tax the large profits energy companies are making)
Which would you recommend?
Labour, the opposition party, wants to tax energy companies who are making huge profits.
What does this graph show?
Why do you think this is happening?
The UK imports less gas from Russia than other European countries but it imports a lot from European countries.
Compared to most EU countries, the UK makes less energy from nuclear and renewable energy.
31 small energy companies that offered low prices to customers have gone bankrupt so customers needed to change energy companies and were offered a high price from the start.
What should the UK do to create more energy?
Lis Truss said she would remove the ban on FRACKING to get shale gas.
Fracking has helped the US become more energy independent.
Do you think this is a good plan? Should Japan allow fracking?
Fracking causes earthquakes, releases lots of hydrocarbons into the air and can often destroy or pollute underground rivers or water sources.
Also, the amount of energy is limited so companies always need to move on to the next area.
Truss also said they would build more solar and wind power plants and more nuclear power plants.
In the past she said she said it was “depressing” to see the countryside covered with solar panels “instead of crops or livestock.”
The problem is her plans will all take years to complete. They won’t help people in the next 5 months … or even 5 years.
Many experts recommend subsidies to help improve houses to become more energy efficient.
How can houses be improved?
Subsidies for:
Better insulation
solar panels
replacing old appliances
After Truss’s speech the value of the pound fell dramatically. Why?
Liz Truss made her policy speech on September 8th
Truss’ economic plan to grow Britain’s economy
Truss, like Margaret Thatcher, believes in “Trickle Down Economics” (トリクルダウン理論)
What do you think this means?
Trickle Down Economics = when rich people get more money they will invest or spend that money and it trickles down the economy
Fashion example:
A rich person buys Louis Vuitton bag.
The Louis Vuitton employee buys a Burberry bag.
The Burberry employee buys Uniqlo… etc.
Do you think “Trickle Down Economics” works?
In the US in 2021 the richest 1% of people owned:
14% of all real estate in the country
53.9% of all shares held by individuals
57% of privately owned businesses
The majority of economists believe that rich people mainly invest their money to make themselves richer.
Liz Truss decided to cut the highest income tax rate. What is the highest income tax rate in Japan?
Which country, the US, Japan or UK, has the highest tax rate?
Japan:
US:
40 million yen = 240,000 pounds = 270,000 dollars
How do you feel about Japan’s tax rates? Should anything be changed?
Liz Truss fired her Chancellor, Kwasi Kwarteng, on October 14th. He was chancellor for less than 6 weeks. She also removed the tax cut for the highest earners and decided not to cut corporation taxes.
Why do you think she fired him?
How did her supporters react?
How did the public feel about her U-turn?
She fired him to try to protect her job and place the blame on him.
Her strongest supporters are unhappy she broke her promise to them. Many openly tried to remove her as Prime Minister.
The public feel she’s weak and doesn’t know how to fix the economy so she resigned on October 20th.