Truss energy bills freeze could last another two years

LIZ Truss will move to freeze energy bills within days to head off a winter crisis.

In a speech to mark her election as Tory leader yesterday, she put the cost of living crisis at the top of her agenda, saying she would ‘deal’ with household bills.

Campaign sources insisted she would set out the details in her first week, possibly on Thursday. One said: ‘We either sort out bills or we don’t have a government by Christmas. Everyone understands that.’

Truss allies, including incoming Business Secretary Jacob ReesMogg, were last night locked in talks with energy industry bosses about exactly how the scheme would work.

Sources said the cap could last for as long as two years.

The options, which may cost up to £100billion, include an industry proposal in which the Government would underwrite huge loans to sup

‘End the ban on fracking’

pliers to allow them to cap bills.

The cost could be piled on to the national debt or repaid by customers through a levy on future bills over a decade or two.

Ministers are also looking at the possibility of capping wholesale energy prices, effectively forcing suppliers to sell at below market rates.

But it is feared this could lead to shortages and blackouts.

Incoming Chancellor Kwasi Kwarteng is also examining options to bail out firms struggling with rocketing costs. Sources said the situation was ‘ complex’ with the options including cuts to business rates and VAT and a price freeze.

In her acceptance speech in central London, Miss Truss said: ‘I will deliver a bold plan to cut taxes and grow our economy. I will deliver on the energy crisis dealing with people’s energy bills, but also dealing with the long-term issues we have on energy supply.’

Energy industry executives have warned Mr Kwarteng that any scheme might have to last for at least two years –

far longer than the six-month plan put forward by Labour.

Writing in the Financial Times, he said the new Government had an ‘ urgent responsibility’ to ‘help people with the severe price shocks that the twin issues of the pandemic and Putin’s war have brought about’.

He added: ‘We know households are worried, and decisive action is needed to get families and businesses through this winter and next.’

Gas prices surged again yesterday as markets took fright at Vladimir Putin’s decision to

cut off a key pipeline supplying Western Europe.

Miss Truss’s energy plan will also aim to boost the UK’s long-term supplies.

Sources said this would include ending the ban on fracking, issuing new licences for drilling in the North Sea, and continuing Boris Johnson’s push for more nuclear power stations.

Later this month, Miss Truss will hold a mini-budget where she will press ahead with pledges to reverse the rise in national insurance and scrap plans to raise corporation tax.

Andrew Goodwin of Oxford Economics said: ‘Liz Truss’s term as Prime Minister will be defined by her response to the cost of living crisis.’ He said he expected her to ‘quickly pivot towards making large direct payments to households’.

A source close to Miss Truss said: ‘Her view is that a sticking plaster now is fine because people need help.

‘But we have to also fix the long-term problem.’

Tony Danker of the Confederation of British Industry said he was ‘ hopeful’ businesses would receive help.