Martin Lewis explains problem and benefit of Liz Truss’s energy bills plan

·3-min read
Martin Lewis has given his verdict on Liz Truss’s rumoured plan to tackle the energy bill crisis. (Getty)
Martin Lewis has given his verdict on Liz Truss’s rumoured plan to tackle the energy bill crisis. (Getty)

Martin Lewis has given his verdict on Liz Truss’s rumoured plan to tackle the energy bill crisis.

The new prime minister wants to protect households from the full impact of soaring energy prices with a £90 billion intervention, according to reports.

Truss, who took office after meeting the Queen in Balmoral, is thought to be planning to freeze bills at around £2,500 – some £500 higher than current levels but more than £1,000 below next month’s cap.

Consumer champion Lewis has said the potential plan presents a problem and benefit as “almost everyone gets it”.

Watch: What support is expected on energy bills?

Lewis explained on his Money Savings Expert website that the plan would be good as it would help more middle earners but it would also mean wealthy people who didn’t need help would benefit.

He wrote: “In past conversations with Rishi Sunak when he was chancellor, he recognised both practically and politically that while you had to focus help to the poorest and most vulnerable, in doing so, some on low to middle incomes would feel they had unfairly missed out.

“That is even more so now, with cost rises so large, many middle earners will find it hard to manage.

“By (near) freezing the cap, you spread the help net very wide.

“However that means the benefit goes to every bill payer, including wealthy people (yes, like me).

“And those who gain the most from it in cash terms will be those with the highest bills (many, though not all, will be at higher income levels), so clearly it isn't targeted at helping those who need it most.”

Read more: Liz Truss's energy bills freeze: What does it mean for me?

Electric bill charges paper form on the table
Liz Truss is planning to freeze bill. (Getty)

Details have not yet been finalised, but Truss’s plan is expected to be funded through general taxation or increased borrowing rather than paid for in future energy bills.

A government source confirmed a Times report that the energy freeze will be at around £2,500, although an insider in the Truss camp said “nothing is finalised yet”.

The plan is based on the current £1,971 energy price cap plus the £400 universal handout announced under Johnson’s government.

Help is also expected for business customers struggling with soaring bills which are not covered by the existing energy price cap in England, Scotland and Wales.

Read more: Voices: Let’s call Liz Truss’s plan to help with energy bills what it is – a scam

Truss became the UK’s third female prime minister after meeting the Queen at her Scottish estate on Tuesday.

The handover of power from Boris Johnson took place at Balmoral rather than Buckingham Palace because of the 96-year-old monarch’s mobility problems.

Truss, who won the Tory leadership on Monday, addressed the nation from Downing Street on Tuesday afternoon.

She is also putting together her Cabinet with Business Secretary Kwasi Kwarteng expected to take the key post of chancellor.