Liz Truss, who won the Tory leadership race yesterday, is currently developing a “bold” loan scheme that would reportedly keep bills kept at current levels. This would be a major lifeline for millions of Britons, as Ofgem recently announced the price cap on energy bills will reach £3,549 in October. This 80 percent spike would be unaffordable for many, forcing them into fuel poverty.
To combat this energy crisis brought about by the soaring costs of gas, Ms Truss’s team is reportedly working up a support package to freeze bills at the existing level of £1,971.
This plan is expected to be announced as soon as Thursday and could cost the Treasury up to £90billion.
Under this scheme, the Government would subsidise the extra cost of wholesale gas that’s being purchased by energy companies.
Sir Iain Duncan Smith, a senior Truss ally, told the Times that up to £90 billion was “the sort of money that they may well be looking at”, adding: “There’s no time now to be small or narrowly targeted.”
Energy industry chiefs have also suggested that, once the worst of the crisis is over, a levy could be imposed on household bills to repay the huge loan.
Lib Dem leader Sir Ed Davey called for a “genuine freeze” of energy bills that would be paid for through a windfall tax on oil and gas.
Speaking to BBC Breakfast, he expressed his concern that Ms Truss appears to want to utilise a “loan system”.
He said: “What we’re hearing from Downing Street, what you were referring to, isn’t a freeze. It’s a loan.
“What they’re saying is that families and pensioners should be paying this back for years to come. That’s just not right.”
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It is unclear how long this scheme would be in place for, with some reports suggesting that the bills would be subsidised for two years.
However, The Sun claimed that the freeze would be for “at least four months”.
Such a short duration may not be enough as energy industry analysts predict that the bills could rise to £5,000 next year.
Aside from this scheme to instantly freeze bills, Ms Truss is also looking to boost the UK’s energy security by ending the ban on fracking “within days”.
Ms Truss has repeatedly advocated for a return to the controversial gas extraction process, as a way to boost the UK’s energy security in the face of Vladimir Putin’s invasion of Ukraine.
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