Truss expected to unveil energy price cap freeze as bills soar for millions

ITV News Political Editor Robert Peston gives his assessment on what Liz Truss's expected energy announcement could mean for families

A plan to freeze the energy price cap is expected to be the first major policy announcement from new Prime Minister Liz Truss's administration.

It comes as the current price cap is set to rise in October to £3,549. It could rise again in 2023, with some predictions forecasting a rise of £5,386 in January and £6,616 in April.

The regulator has accepted that such increases will be 'devastating' to UK families.

Meanwhile businesses have no protection from rising energy prices and are warning of closures and redundancies unless a solution is found.

It's the biggest problem facing Liz Truss, who will be under pressure to find a solution to rising prices if she wants her premiership to be a long one.

Reports suggest she is set to announce a freeze to the price cap, as early as Thursday.

Under the proposals, it's thought that the government could essentially abolish the Ofgem sanctioned pricing system and replace it with its own version.

This would see government ministers establishing the price people pay for energy.

The government would then subsidise the cost of gas being brought by energy suppliers, so consumers don't have to pay more than the cap this winter.

However that could cost at least £60 billion, economists have forecast - with the government borrowing the money to pay for it.

The Labour Party and others have been urging a tax to be placed on the profits of energy companies, which greatly exceed what the companies had projected for themselves at the beginning of the year.

But it's been reported that Jacob Rees-Mogg - touted as a possible next Business Secretary - has been meeting with energy executives and assured them that the money will not come from a windfall tax.

Whilst the money could be borrowed, it would therefore have to be paid back, possibly from general taxation at some point in the future - although Mrs Truss's flagship policy during her leadership campaign was tax cuts.

She "talked an enormous amount about cutting taxes," commented ITV News Political Editor Robert Peston.

"She was going to reverse that rise in national insurance on both businesses and individuals and she was not going to impose a substantial increase in corporation tax."

"The paradox here is...she is kicking off her time as Prime Minister with a massive ninety billion pound spend on trying to keep out energy prices lower and targeting help for those who are most vulnerable."

"There is this tension between on the one hand her saying she's going to govern like a traditional Tory, and on the other hand having to cope with all of these pressures."

Speaking to ITVs Good Morning Britain this morning, the Chief Secretary to the Treasury under Boris Johnson Simon Clarke wasn't able to say what form paying back that borrowed money would take.

"We will set out full details on how it's going to be paid for in due course," he said.

"There will be no half measures," he said. "This will be a bold, decisive intervention, designed to reset things so people can look forward with certainty to the Autumn and Winter ahead."