It is set to be the first major policy initiative of Liz Truss’s prime ministership as she takes over from Boris Johnson. After months of criticism over the lack of additional help to manage the impact of energy-driven inflation, which is at a 40-year high, details of the plan to tackle the cost of living are expected to be revealed on Thursday. But early signs suggest a price freeze is on the way – and the Treasury may shield families entirely from covering the scheme’s costs, meaning the costs won’t be passed on through future bills. Johnson offers hints about his future – Politics Hub A government source told Sky News that the Treasury will effectively provide funding, directly through government borrowing instead of state-backed loans, to cover rising wholesale gas costs for both households and businesses. Use Chrome browser for more accessible video player 1:47 What companies want from the new PM as energy costs bite This will allow domestic gas and electricity suppliers to sell energy at around their current average annual rate of just under £2,000 for the foreseeable future – possibly until the next election in 2024 – as wholesale prices continue to soar ahead of Russia’s war in Ukraine. The plan would amount to a government-imposed price guarantee. It could, the source said, be set at £2,500 but would revert to the current level once the £400 per household grant and other bill adjustments are made. The Bloomberg news service, citing sources, put the cost of the wholesale cap on businesses at around 40 billion pounds for just six months. The overall scheme could put the taxpayer on the hook for well over £100bn next year, depending on wholesale price levels, it is understood. The promise of additional aid follows an unprecedented rise in the price of crude energy, exacerbated by Russia’s invasion in February. Although the energy price cap protected households from the worst of the first increases, leaving suppliers to bear the brunt, price cap reviews and forecasts of cap levels to come have become a nightmare scenario. It was announced last week that the cap, which covers the vast majority of households, will rise by 80% to an average annual total of £3,549 from October. There is speculation that the figure could top £5,000 next year. Businesses, not covered by the price cap, have been forced to swallow rising gas and electricity costs much sooner, exposing them to unsustainable bills, risking jobs and further inflation as they pass the cost on to customers. It is understood that companies, although not necessarily large businesses, will receive additional help to mitigate the energy increases already seen.
