Liz Truss to announce energy bill freeze amid warnings tens of thousands of businesses are facing insolvency

Liz Truss is preparing to unveil her plans to save households from ruin over the cost-of-living amid new warnings tens of thousands of businesses are facing insolvency.

Her announcement will come through a debate on energy costs rather than formal ministerial statement, leaving opposition MPs unable to extensively question Ms Truss over the plan.

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It is believed the plan that could cost towards £100 billion, surpassing the Covid-19 furlough scheme. The pound yesterday slipped to a new 37-year-low against the dollar as UK investors swallowed the prospect of mammoth borrowing to fund the package.

Prime Minister Liz Truss will announce her energy plan on Thursday.
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This will also see the bills for businesses frozen, with a special unit price reduction that suppliers must offer them.

It comes as insolvency experts warned the UK could witness the collapse of an “unprecedented number of otherwise healthy businesses” over the coming months due to rocketing energy bills

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Rejecting a windfall tax on energy firms at PMQs, Ms Truss told the Commons: “I will make sure that in our energy plan we will help to support businesses and people with the immediate price crisis, as well as making sure there are long-term supplies available.

“I understand that people across our country are struggling with the cost of living and they are struggling with their energy bills.

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“That is why I, as Prime Minister, will take immediate action to help people with the cost of their energy bills and I will be making an announcement to this House on that tomorrow and giving people certainty to make sure that they are able to get through this winter and be able to have the energy supplies and be able to afford it.”

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Sir Keir Starmer has pushed for a further levy on the £170 billion of “excess profits” that oil and gas producers are expected to enjoy over the coming years.

The Labour leader said refusing to tax the profits made by oil and gas firms as a result of the high global prices would leave taxpayers footing the cost of the energy freeze for decades.

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He added: “The Prime Minister knows she has now choice but to back an energy price freeze, but it won’t be cheap and the real choice, the political choice is who is going to pay.

“Is she really telling us that she is going to leave this vast excess profits on the table and make working people foot the bill for decades to come?”

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The Prime Minister’s official spokesman said the existing windfall tax imposed under Boris Johnson still stands, despite Ms Truss’s opposition to such levies.

Downing Street also suggested the moratorium on fracking in England could be lifted in Ms Truss’s energy package despite the 2019 Conservative manifesto opposing an end to the ban without science showing it can be done safely.

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On Wednesday, the Prime Minister’s press secretary said: “She made clear her position during the campaign but I’m not going to get into what’s in this energy package.”

Ms Truss began Prime Minister’s Questions by striking a conciliatory tone, promising to work with MPs across the House to tackle “the challenges we face”, at a “vital time for our country”.

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But her clash with Sir Keir showed clear dividing lines on fiscal policy, with the new Prime Minister determined to scrap planned increases in corporation tax for businesses.

Sir Keir said: “Not only is the Prime Minister refusing to extend the windfall tax, she’s also choosing to hand the water companies polluting our beaches a tax cut. She’s choosing to hand the banks a tax cut.

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“Add it all together and companies that are already doing well are getting a £17 billion tax cut while working people pay for the cost-of-living crisis, stroke victims wait an hour for an ambulance and criminals walk the streets with impunity.”

Corporation tax had been due to increase from 19 per cent to 25 per cent in 2023, but Ms Truss said that would deter investors and the UK cannot “tax its way to growth”.

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It came as Red Flag Alert, which monitors the financial health of larger firms, warned more than 75,000 companies are at risk of insolvency due to energy price hikes.

It added that 26,720 are at risk of failing completely as they struggle to swallow higher costs, together costing around £100 billion a year in business support to mitigate the impact of this cost inflation.

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The report said: “Government support for households is important. However, supporting businesses in dealing with uncapped energy costs should also be a priority.

“If the Government doesn’t provide financial support to businesses, many could be forced to lay off staff.

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“A rise in unemployment would put untold pressure on households and would be catastrophic for the economy.”

Yesterday, sterling dipped as low as 1.1403 dollars on Wednesday afternoon, surpassing the trough of 1.1412 seen at the outset of the Covid-19 pandemic in March 2020.

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Earlier the Chancellor Kwasi Kwarteng met market leaders to discuss the Government's approach to the issues facing Britain.

He said: “We face extraordinary economic challenges in the coming weeks and months and I know that families and businesses across the UK are worried.

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“We need to be decisive and do things differently. That means relentlessly focusing on how we unlock business investment and grow the size of the British economy, rather than how we redistribute what’s left."

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