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The good news is that our new prime minister Liz Truss has recognised that the coming increases in utility bills will cripple the economy and plunge millions of people into poverty. The bad news is that her so called plan to freeze energy bills will not be cost free to your average punter, far from it. Where Keir Starmer’s plan is to use a windfall tax from the big energy companies to freeze bills, Truss’s policy is, in effect, a compulsory tax, like a mortgage or a student loan, whereby we will have to pay back to the government whatever it is it uses to subsidise our bills for the time being. This could be over 20 years and the sums to be repaid will be huge, running into many thousands of pounds. Do you hate running up debts and taking out loans? Unless she performs a screeching u-turn, that’s what you’ve got coming.
The people who are really going to be laughing will be the banks and utility companies, whose vast unearned profits will not be touched by Truss’s government. That’s the whole point of what she’s doing. And we will pick up the costs of the loans to keep energy prices high.
As the plan supports high energy prices, the Bank of England will say it fuels inflation and they will increase interest rates as a result. Some experts suggest interest rates alone could see the average household forking out an additional £600 a month in mortgage costs. With inflation predicted to roar into high double figures in the coming weeks and months, and the economy going into recession, the effect on living standards will be catastrophic.
As things stand, the cap on energy prices will last just four months after which we will pick up the tab for the higher energy cap for years, maybe decades, to come. Put simply, we won’t feel the cost of the increased energy cap, forecast to be around £6000 or even more by next summer until we have to start paying it back from future bills. Once again, it must be pointed out that neither the utility companies nor the banks will have to pay a penny in extra tax.
The devil is usually in the detail but it appears that, like Boris Johnson before her, Truss doesn’t do detail and the full horror of what will be heading towards us will be staring us in the face.
There is another way and that’s fully costed Labour’s way, by tapping into the vast unearned profits of the energy companies to help see us through. The Truss idea is a scam in plain sight. Freeze energy bills up to the next general election and shaft us with massive repayments to pay off a debt we were forced into having. She must assume we are all stupid in not being able to see what she is up to. I’m hoping we’re not.
