Liz Truss ‘to freeze energy bills for homes and businesses within days’

Watch: Liz Truss promises a "bold plan" to cut taxes as she becomes next prime minister

Tory leadership winner Liz Truss is understood to be considering a lengthy freeze on energy bills for homes and businesses in one of her first acts as prime minister.

The support package to freeze bills is expected to be announced as soon as Thursday and could cost the Treasury up to £90bn, according to reports.

The plan under consideration could see the government subsidising the extra cost of wholesale gas being bought by energy companies, according to The Times.

Sir Iain Duncan Smith, a senior Truss ally, told the newspaper 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.”

However, energy industry chiefs have suggested that the huge loans are repaid through levy on household bills once the worst of the crisis is over, according to The Telegraph.

Lib Dem leader Sir Ed Davey called for a “genuine freeze” of energy bills paid for through a windfall tax on oil and gas – expressing his concern that Ms Truss appears to want to utilise a “loan system”.

“What we’re hearing from Downing Street, what you were referring to, isn’t a freeze. It’s a loan,” he told BBC Breakfast. “What they’re saying is that families and pensioners should be paying this back for years to come. That’s just not right.”

Labour’s deputy leader Rayner also said it would be “unfair” for working-class people to bear the brunt of any energy bill freeze that is brought in by Truss’s government.

She told Good Morning Britain it appeared Ms Truss would “will bring in the energy freeze, which is what Labour has called for and that’s a good thing”, adding: “But to make working people pay for it when the gas and oil companies have made bumper profits would be completely unfair.”

The loan scheme could see energy bills frozen at the existing level of £1,971. energy bills rising to £3,549 as of October 1. The cap will be reviewed in January with experts warning it could top £5,000 without further intervention.

Treasury minister Simon Clarke said Ms Truss’s plan to tackle energy bills will be a “major intervention” to help businesses as well as households – telling BBC Radio 4’s Today programme it would addresses the current crisis and the “long-term interest to bill-payers”.

Some reports suggest that the measure under consideration is a scheme to freeze bills for two years until the next general election in 2024. However, The Sun instead claims the freeze would be for “at least four months”.

Business secretary Kwasi Kwarteng – set to be named chancellor – has suggested a support package could last for two years, saying support would help businesses and families “through this winter and the next”.

Liz Truss will enter Downing Street after her triumph in the Tory leadership (PA Wire)
Liz Truss will enter Downing Street after her triumph in the Tory leadership (PA Wire)

Following her victory over Rishi Sunak, the new party leader will fly to Balmoral on Tuesday where she will be formally invited by the Queen to form a government.

She will then return to Westminster where she is expected to address the nation for the first time as prime minister before getting down to the business of appointing her ministerial team.

A number of key allies and supporters have already been pencilled in for some of the most senior roles, including Mr Kwarteng, who is widely expected to be given the crucial role of chancellor.

If confirmed he will have the task of delivering on her promised “bold” plan to deal with surging energy bills which have plunged households and businesses into crisis.

Kwasi Kwarteng is expected to be appointed chancellor (PA Wire)
Kwasi Kwarteng is expected to be appointed chancellor (PA Wire)

Other key appointments are expected to include attorney general Suella Braverman, who is tipped for promotion to home secretary, and education secretary James Cleverly, who is expected to be the new foreign secretary.

Therese Coffey, the work and pensions secretary described as Ms Truss’s closest friend, is thought to be in line to become health secretary while Ben Wallace is expected to remain as defence secretary.

Other appointments will be closely scrutinised by Tory MPs for signs that she is prepared to bring in ministers who did not necessarily support her in the leadership race.

The day began with a final valedictory speech from Downing Street by Mr Johnson before he heads to Balmoral to formally tender his resignation to the Queen ahead of Ms Truss’s arrival.

Mr Johnson said Ms Truss would have his “fervent support” and used his address to urge Tories to rally round his successor.