Truss team holds talks on freezing energy bills

If appointed to become Britain’s next prime minister as expected, Liz Truss has vowed to present a plan to tackle soaring energy bills within her first week in power.

Liz Truss, left, speaking with BBC journalist Laura Kuenssberg, is expected to be announced as the UK’s next prime minister. Picture: AFP

Liz Truss is to announce a vast support package to deal with surging energy costs as her allies and officials discuss plans for a gas and electricity price freeze with industry leaders.

The British foreign secretary is expected to be confirmed as Britain’s next prime minister on Monday and will move rapidly to set out a new economic policy. The package to deal with growing energy bills this winter is understood to be on the scale of the Covid furlough scheme.

Senior Tories lined up for appointments in Ms Truss’s cabinet have been told “in no uncertain terms” not to scorn the idea that energy bills could be frozen.

Industry sources said that a price freeze for consumers was “the only conversation that anyone was having with the government”, including discussions involving Kwasi Kwarteng, who is expected to be Ms Truss’s chancellor.

“The plan is to introduce some kind of artificial price cap for consumers combined with a mechanism for reimbursing suppliers,” one source said. “Plans are reasonably well advanced and involve not just civil servants but also ministers lined up for jobs by Truss.”

The level of the price cap has not been set and businesses, particularly hospitality and retail, would need separate support, the source added.

Conservative leadership hopeful Liz Truss. Picture: Getty Images

One senior government figure said the scale of the package being looked at would “at least” be in the region of the pounds £69bn ($116.7bn) cost of furlough scheme and “could be more”. “No one has come up with any option to do it for less,” the source said.

Ms Truss herself did not deny on Sunday that the total cost of the package could reach $169.1bn. She refused to detail her plans but carefully declined to rule out freezing bills.

“I’m not going to go into details of what a putative announcement would be before [it is made] because I think it would be the wrong thing to do now,” she said.

But she added: “I understand that this is a huge problem. And I understand people are worried and I want to reassure people that I am absolutely determined to sort out this issue.”

Ms Truss said on Sunday she would set up a “council of economic advisers” to help to tackle the crisis. Gerard Lyons, an economist who advised Boris Johnson as mayor of London and who is close to the Truss campaign, is said to be in line for a place on the panel and on Sunday he backed the idea of capping the price of wholesale gas.

Ms Truss is expected to be declared Britain’s third female prime minister on Monday, when the result of the Conservative leadership race is announced.

She will not become prime minister until Tuesday, when she flies to Balmoral to be formally appointed by the Queen. She will then fly back to London on Tuesday afternoon to address the country from Downing St and begin appointing her cabinet, which is expected to be the first in history without a white man in any of the four great offices of state. Alongside Mr Kwarteng, Ms Truss is likely to appoint James Cleverly, 52, as foreign secretary and Suella Braverman, 42, the attorney-general and former leadership contender, as home secretary.

She has pledged to announce her energy support package within a week of taking office and will disclose plans for tax cuts in a financial statement to parliament within the month.

Under the proposals being discussed, the government would either give refunds to energy companies directly for the cost of buying wholesale energy above the price cap charged to consumers or underwrite commercial loans to cover the shortfall. The money could then be recouped over many years as and when energy prices eventually fall.

One source said the exact mechanism for the price cap had yet to be agreed but said it had become increasingly clear that only a “bold” move would be sufficient.

“This is not a new idea but it is one that has become increasingly inevitable as the crisis goes on and gets worse,” the source said. “This is not something that we can any longer deal with by one-off handouts to help people get through winter.”

Labour and the Liberal Democrats have proposed a freeze on bills. A Labour source said: “It is clear Labour is winning the battle of ideas.”

The Tory MP David Davis said that tackling the cost of living crisis could require the same scale of funding as the furlough scheme. “That is what should happen. It has to happen,” he said.

The Times