Liz Truss could freeze bills to avoid energy ‘Armageddon’

Liz Truss set to beat Rishi Sunak to be announced as new Conservative leader – Shutterstock

Liz Truss is considering freezing energy bills for millions of households this winter if she wins the Tory leadership race, the Telegraph understands.

Campaign sources familiar with the discussions and energy company insiders consulted said some form of freeze is now expected.

Shortly after midday on Monday, the contest to succeed Boris Johnson will officially end, with Ms Truss or Rishi Sunak, the former chancellor, announced as the next Tory leader.

The winner, as chosen by members of the Conservative Party, will become prime minister on Tuesday.

Ms Truss is the clear favourite, having steadily led in Tory member polls throughout the summer – although both sides insisted on Sunday night that the result was not yet certain.

Whoever wins, one of their first priorities will be tackling the cost of living crisis.

In an interview on BBC One on Sunday, Ms Truss moved to reassure the public that help would be coming if she becomes prime minister, pledging to unveil a support package within a week.

The Foreign Secretary said rising energy bills should not mean “Armageddon” this winter and refused to rule out freezing bills for some households.

Annual energy bills for the average household are set to jump from £1,971 to £3,549 from this October, when the change to the price cap begins.

It comes as Olaf Scholz, the German chancellor, announced on Sunday a plan to ease energy bills of around 65 billion euros, mirroring major interventions elsewhere in Europe.

In an interview on BBC One Sunday with Laura Kuenssberg, Mrs Truss said: “I will act if I am elected Prime Minister. I will act immediately on the bills and on the energy supply because I think these two things go hand in hand.”

Pressed on whether she would rule out a blanket freeze on energy bills – a policy proposed by Labor and the energy companies – Ms Truss declined to do so.

“I’m not going to go into detail about what a supposed announcement would be before because I think it would be wrong to do so,” he said.

He added: “I don’t think we should be predicting a kind of Armageddon scenario. I think we are in a good position to face the very difficult challenges.”

Scottish Power has proposed a £100bn plan for a two-year freeze on energy bills, funded by loans underwritten by the Treasury. The proposal is supported by other energy companies.

An energy company source said the idea had been “extremely actively looked at” by Truss’s campaign figures and that Kwasi Kwarteng, the Business Minister tipped to become chancellor if Mrs Truss wins, seemed “very open” to options for freeze.

A second industry source confirmed the proposal was being scrutinized by the Truss campaign.

Members of the Truss team told The Telegraph as much. Someone said “I’m sure a mechanism will be introduced to freeze accounts.” Another said the idea had been discussed “quite a bit in the last fortnight”.

The specifics of such a freeze on energy bills – exactly who would benefit, for how long, at what price level and the extent to which the taxpayer would cover the cost – remains a point of debate, according to sources.

A spokesman for the Truss campaign declined to comment.

During the leadership contest, Ms Truss faced criticism from the Sunak campaign for saying in a newspaper interview that she would prefer not to hand out “handouts” as a solution to the cost of living crisis.

She has rejected calls for details of the financial help she would give people, pointing instead to her promises of wider tax cuts.

But there is speculation that her yet-to-be-finalised energy support package, combined with her promised tax cuts, could end up costing as much as furloughs, the £70bn government plan that paid the wages of millions in the private sector. workers during the pandemic.

Some criticism of the idea of ​​a freeze on energy bills came from Truss supporters on Sunday night.

Professor Patrick Minford, who teaches applied economics at Cardiff University and was named by Ms Truss as a supporter of her economic approach earlier in the campaign, raised concerns.

He said that while the move could be politically popular, it would not be as effective in tackling the energy price crisis as other measures such as cutting VAT.

“A freeze seems tempting quite often. The problem is from an economic point of view it’s not the most desirable way to do it,” Professor Minford told the Telegraph.

A poll published this weekend found that 82 percent of respondents favored freezing the energy price cap at its current level, while just 11 percent disapproved.

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