Freeze energy bills NOW: Government urged to back £100bn plan to save families this winter

Millions of households are on a countdown to catastrophe unless urgent action is taken on soaring energy bills, experts warn.

Pressure is piling on the Government to back a £100billion plan to freeze household energy bills for up to two years.

Half of all households face being plunged into fuel poverty if nothing is done, industry chiefs claim.

The Treasury is believed to be considering a taxpayer-backed energy fund as part of an unprecedented package of measures as Ofgem gets set to announce its latest energy price cap rise on Friday.

The increase is expected to hike standard tariffs by around 80% to £3,554 from October 1 to allow suppliers to claw back a surge in wholesale energy costs.

With costs still sky-high because of Russia ’s war in Ukraine, there are warnings the cap could jump to nearly £4,700 a year in January – and even £6,500 in April.

Yet as the clock ticks, big decisions are being delayed as Liz Truss and Rishi Sunak continue their contest to replace Boris Johnson at No10 – with the new Prime Minister not announced until September 5.

Keith Anderson, boss of energy giant Scottish Power, told the Mirror the expected price cap rise will be “absolutely catastrophic, truly horrific”.

He added: “We can’t allow that to go through to people’s bills. We need to cap the price, freeze the price at about the current level.”

Freezing energy bills could also limit a surge in inflation, predicted to hit 18% in January, as it is the biggest single driver.

But Tory leadership frontrunner Liz Truss tonight rebuffed desperate calls to “fully protect” households from rising bills.

While not ruling out extra help, she said her first priority is cutting taxes and her second is boosting energy supply.

However, the idea of giving handouts to energy firms is likely to prove controversial given the fat profits suppliers made in the past.

Bosses insist most are making a loss on their supply arms now because of high wholesale prices.

But companies such as British Gas owner Centrica are still raking in bumper profits from their energy production arms.

And energy giants such as BP and Shell are making record amounts – prompting calls for them to be slapped with a fresh round of windfall taxes.

Adam Scorer, of National Energy Action, backed anything that prevented price hikes but warned of consequences from a loan scheme.

He said: “Repaying the loans mean you have higher energy costs for longer. And it risks ignoring the pain already baked in from the price rises which have already hit.”

A senior executive at the UK arm of energy giant EDF today warned half of the nation’s households face fuel poverty this winter unless the government does more to help with bills.

Philippe Commaret, a senior executive at EDF Energy UK, said without further support, people face a “catastrophic winter”.

Households are considered in fuel poverty if they have to spend 10% or more of their income on energy.

If average bills top £4,700 in the new year, even those households with incomes of £47,000 a year will fall into the bracket.

Consultancy Auxilione forecast the energy price cap will be set at £6,552 in April.

Wholesale prices soared on Monday after Russia said it would run maintenance on a key gas pipeline that connects the country with Germany.

Rocio Concha, director of policy and advocacy at consumer group Which?, said: “The government must take urgent action to support individuals and families.

“Failure to act could mean countless more people are pushed into the impossible choice between heating or eating this winter.”

Taxpayer-backed loans could allow suppliers to freeze energy prices at their current level – already nearly £2,000 a year on average.

Details are still up for discussion but would likely involve suppliers or network operators being able to get commercial loans to offset the spike in wholesale costs.

Funding the scheme directly from the government is seen as unlikely given Tory PM frontrunner Liz Truss’s pledge to lower taxes.

One suggestion is loans would be repaid through customer bills, potentially over 10 to 15 years.

Industry figures argue the scheme needs to remain in place for at least two years as there is no end in sight to the war in Ukraine.

Sources say the Treasury is also weighing up scrapping VAT on energy bills and moving green levies to general taxation.

Rishi Sunak told the Birmingham hustings Liz Truss had “ruled out providing direct support and thinks tax cuts are the answer”.

Under her plans he added: “Millions of people are going to face the risk of destitution this winter, literally millions. And if we don’t do anything to avert that I think it would be a moral failure of the Conservative government.”

Ms Truss twice referred to her emergency budget as a “fiscal event” after ditching Office for Budget Responsibility forecasts.

Ms Truss also raised more questions about how she would fund her pledges – after saying she would still spend the £12bn a year raised by a tax rise she is axing.

She said: “I still would spend the money, I would just take it out of general taxation rather than raising National Insurance.”

The former Treasury minister complained “this whole language of unfunded tax cuts” is “Treasury orthodoxy”, claiming her tax cuts might pay for themselves, but not explaining how.

Read More

Read More