Under the new prime minister’s plan to freeze rates, taxpayers would assume the risk of soaring wholesale gas prices and subsidize the cost of energy for homes and enterprises that are already facing insolvency.
Liz Truss is rushing 1,000 miles to see the Queen before commencing her premiership with a £100 billion energy price freeze that might endure until the next election.
She will fly 500 miles each way to Balmoral, where the monarch will hand her the keys to No. 10, before addressing the nation from Downing Street and promising to reduce household bills.
Her emergency plan to combat the rising cost of living is anticipated to involve freezing residential and commercial energy prices until at least January of next year, and maybe until 2024.
It would result in an average household’s energy bills being locked at just under £2,000 per year. The initial cost to taxpayers would be £40 billion, which would be covered by increased government borrowing.
In the past twenty-four hours, Truss allies have been negotiating with energy executives over the details of a price freeze that, if it lasts for two years, could cost £100 billion.
Government ministers are anticipated to assert that the next prime minister’s plan is more generous than Labour’s proposed price freeze, but she is anticipated to reject their demand for a windfall tax.
Who will be the cabinet members?
The major cabinet positions have been held by Ms. Truss’s closest allies for quite some time, notably Kwasi Kwarteng as chancellor, James Cleverly as foreign secretary, and Therese Coffey as health secretary.
Suella Braverman is poised to succeed Priti Patel as home secretary after her resignation. Nadine Dorries, culture secretary, and Boris Johnson supporter is poised to join Ms. Patel in departing.
In contrast, addressing the cost of living crisis is the new prime minister’s top policy goal. In her speech following her election as Tory leader, she vowed to address energy costs.
Currently, family energy expenditures are capped at £1,971; this cap will increase to £3,549 in October. In January, when it is anticipated that bills would exceed £5,000, the ceiling will be raised once again.
The government would immediately engage in the wholesale energy market and subsidize the cost of gas purchased by electricity generators and suppliers under the incoming prime minister’s plan to freeze prices.
This would entail taxpayers assuming the risk of escalating wholesale gas prices and subsidizing the cost of energy for homes and enterprises now facing insolvency.
The plan will be announced as soon as Thursday.
As promised by the new prime minister on the steps of No. 10, Ms. Truss or her new chancellor, Mr. Kwarteng, are likely to provide complete details as early as this Thursday.
Her Downing Street address upon her return from Balmoral will also contain commitments to cut taxes and handle the NHS crisis. Allies characterize her strategy as one of “shock and awe.”
In addition to her policy ideas, the new prime minister must unite her deeply divided party. After her victory over Rishi Sunak by a margin of 57% to 43%, many Conservative MPs are pushing her to mend the scars of the leadership contest.
Theresa Villiers, a former cabinet minister, and Sunak supporter said that she would now back Ms. Truss’s policies, including the cut to National Insurance that the former chancellor vehemently opposed.
Ms. Villiers said, “It will be crucial to ensure that whatever tax measures are made do not increase inflation or add significantly to debt.”
Regarding energy expenses, she stated, “There is a basis for a broader, low-income-targeted support program as well.”
John Penrose, who resigned from his government position because of Mr. Johnson’s partygate behavior, stated that Ms. Truss had a “clear victory,” adding, “We’ll have to see if she can deliver, but she said the right things.”
Regarding energy prices, 1922 Committee treasurer Sir Geoffrey Clifton-Brown told, “I wouldn’t offer a very large package to everyone, because that would only add to our already enormous debt, which will eventually have to be repaid.”
