Day one of Project Truss and there’s actually some… good news. Or at least, superficially. Something to celebrate? Sort of. Not quite. There are strings, and debts, attached.
By all accounts, and against expectations, Liz Truss is going to freeze gas and electricity bills until at least next year and, possibly, until the next general election. Without ever mentioning her secret plan during the leadership hustings, she and Kwasi Kwarteng are apparently going to match the Liberal Democrats and Labour and keep bills where they stand. Relax. Households, at least, will have significant protection.
But not so fast. It’s short term, and it’ll have to be paid back before long. The bad news is that the way Truss and Kwarteng are structuring the scheme means higher bills, possibly quite markedly higher, for everyone for decades to come.
Under the mooted plan, when the gas and electricity retail supply companies make a loss on supplying homes with energy, they can pile up the debts and borrow to cover them – with the loans guaranteed by the Treasury. That means that, as long as investors are prepared to trust the UK to pay back what it owes, the energy supply firms can build up huge debts – which will eventually be paid back by you and me via a compulsory levy on energy bills. For years and years to come.
So the government is really organising a sort of mortgage scheme for unpaid and unpayable gas and electricity bills. The extra costs will still have to be paid, but…
