Liz Truss, the Conservative Party’s new leader and incoming prime minister, drafted plans for a massive £130 billion support package over the next 18 months to help struggling households and businesses lower energy bills, according to policy documents seen by Bloomberg.
Truss faces massive economic challenges as energy hyperinflation, and a cost-of-living crisis darkens the outlook, with a recession becoming more likely. She has to act swiftly to avert social unrest.
Liz Truss energy plan:
– freeze will be at around £2,500
– but £400 universal handout remains so that’s why there are suggestions it’s at roughly maintained at the £1,971 current rate
– paid by borrowing. No plan to claw back thru energy bills
1st reported @Steven_Swinford
— Sam Coates Sky (@SamCoatesSky) September 6, 2022
According to documents, energy suppliers would charge households at a lower rate for power, and the government would cover the difference with the utility.
On Monday, Jacob Rees-Mogg, who is set to become Business Secretary, met with top executives of energy companies to discuss Truss’ new plan. A person at the meeting said the execs were more open-minded about this plan than being hit with a windfall tax.
The new protections for households and businesses will be announced as early as the second half of this month and implemented in October. As for businesses, officials are in the process of drafting emergency legislation.
“Limiting households’ bills could cost as much as £130 billion over the next 18 months … cost of the plan to protect businesses will range from £21 billion to £42 billion over six months, depending on how low the cap is set. Over a year, the estimated costs to the government range from £28 billion to £67 billion,” Bloomberg said.