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06th Sep 2022

Two-year energy bill freeze will cost £100,000,000,000

Jack Peat

energy bills price cap october ofgem

The tax-cutting PM is about to put a massive dint in the public finances 

Liz Truss is expected to freeze energy bills for homes and businesses for up to two years on Thursday at a cost of up to £100 billion.

The incoming Prime Minister, who secured a comfortable majority in the leadership election this week, has reportedly held talks with energy bosses last night to work out the terms of the freeze.

It would likely see the Government subsidise the cost of gas being bought by suppliers and electricity generators.

This would result in the price cap remaining at £1,971 for the average household – amid terrifying warnings it could surge as high as £6,000 next year.

Labour MP Bill Esterson has pointed out that the leaked energy crisis plan could put the public into debt for 20 years as the costs are paid back.

He suggested oil and gas companies should chip in, given that they are making “record profits scot-free”.

According to Treasury estimates, UK gas producers and electricity generators may make excess profits totaling as much as £170 billion over the next two years, which lay bare the revenue-raising potential of a windfall tax.

But fairness has yet to feature in Truss’s leadership bid.

Asked about her national insurance policies, which will benefit top earners by about £1,800 a year and the lowest earner by about £7, she argued it was wrong to view all economic policy through the “lens of redistribution”.

That is despite some Brits being forced to choose between heating or eating this winter, with terrifying warnings that some will die.

Speaking on BBC Breakfast this morning, Sir Ed Davey agreed that the burdon of energy costs shouldn’t be solely shouldered by tax payers.

“”Liz Truss isn’t proposing a windfall tax on energy companies to pay for an energy freeze, she’s proposing a loan, that families and pensioners will be paying for years to come… and that’s not right”, he said.

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