Truss’s £100bn bills freeze comes late as Tories ‘asleep on the job’

Liz Truss: Beth Rigby analyses comments on energy supply

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The Prime Minister is reportedly planning to freeze all household energy bills at around £2,500 a year as one of the first acts in her new role. The package, which according to some estimates costs around £100billion, could come into effect as soon as Thursday as part of a “major intervention” amid skyrocketing gas and electricity bills.

Exact details of the policy are yet to be announced, but according to estimates the plan could go up to as much as £130billion (in accordance with gas price rises) over the next 18 months.

The October price cap was set to hit £3,549 for a typical household, industry regulator Ofgem announced last month, an 80 percent rise which threatened to push millions of vulnerable households into fuel poverty.

But Ms Truss will reportedly sideline the regulator and impose the bills freeze for the next 18 months.

While this may bring relief to millions of Britons around the country, the Lib Dems exclusively told the Conservatives could have done this much sooner.

It comes after the party had earlier called for the cap to be frozen at current levels, as had Labour Leader Sir Keir Stammer as part of a £29billion plan.

Lib Dem MP Christine Jardine told last week: “The Liberal Democrats have been absolutely clear that what we need is to freeze bills and cancel the October rises.

“The Government should then absorb the additional cost that consumers would have faced.

“This could already have been in place if the Government had taken up our offer to recall parliament and have the legislation in place before the raised price cap was announced.

“As usual they were asleep on the job and have dithered and delayed while people’s anxiety about how they will pay their bills increased.

“People will be facing two price rises this winter, each one significantly higher than the last and it just can’t continue.”

While the plan to cap bills at £2,500 can avoid households forking out the extra £1,000 earmarked by Ofgem, it does mean that bills will still go up from £1,971 in a rise of more than £500.

It was first thought the Government may offer loans to energy suppliers to fund the price freeze.

The loan would then be repaid by consumers with an extra levy on household bills once Britain escapes the energy crisis.

But now, there are reports that Government officials are looking at extra public borrowing to fund the scheme.

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According to BBC’s Business Editor Simon Jack, this could cost over £100billion as the UK remains exposed to volatile gas markets.

Economists have warned that public borrowing could add to the gap between Government spending and revenue (deficit).

Rishi Sunak, Ms Truss’ main contender in the leadership race, also warned in his campaign that extra borrowing would worsen inflation, which is already at 10 percent.

But economists also say that freezing energy prices could help to stop the consumer price inflation rate from peaking at a higher level.

Mr Truss may also fund the scheme by absorbing the costs into general taxation.

Kwasi Kwarteng, who is expected to be made Chancellor in Truss’s cabinet, is reportedly hoping to swerve fears of an energy tax which could spark a backlash and be scrapped further down the line.

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