Freezing energy bills one option for new PMon September 5, 2022 at 8:45 am

A freeze on energy bills is one of a series of options for tackling the soaring cost of gas and electricity due to be presented to the new prime minister this week.

BBC News has been told a menu of options has been worked up in Whitehall to help struggling households.

Energy industry sources are optimistic the government will back a plan to freeze the energy cap.

Either Rishi Sunak or Liz Truss will be announced as the new PM later today.

A freeze of the energy price cap – the limit on how much gas and electricity can cost in England, Scotland and Wales – would not necessarily require upfront government funding at the beginning.

There have been multiple meetings between the energy industry and government, including ministers close to Liz Truss, who is seen as the front runner to replace Boris Johnson.

In an article for the Financial Times, Ms Truss’ close ally, Business Secretary Kwasi Kwarteng, said a government led by her will borrow more to help people this winter through “exceptionally difficult times” during the energy price shock.

He sought to reassure markets that the UK had space to borrow more and that it would be done in a “fiscally responsible way”.

Ms Truss did not rule out a freeze, during an interview with the BBC’s Sunday with Laura Kuenssberg,

But there is still some lack of clarity about how it would be funded.

A published version of the industry plan, suggested that to hold down this year’s energy payments at £2,000 for a typical household, future bills would have to repay the money.

That would leave payments not far off that level into the next decade, and require a fund of around £90 billion.

The government may need to offer some guarantees and alter existing energy industry mechanisms.