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Freezing energy bills would help richer people the most, Paul Johnson, director of the Institute for Fiscal Studies, told the Today programme this morning.
Liz Truss is expected to announce a price freeze when she publishes her energy bills plan, probably tomorrow. It will reportedly cost in the region of £100bn.
If this is a straightforward bill freeze then the majority of the money will go to better-off people who use more energy.
So this is very poorly targeted. Not only is it poorly targeted, but it also means that we don’t see the full price signal, that across the world people need to see.
We can afford to borrow that amount. We’re still managing to borrow relatively straightforward on the international markets.
The big question here is: ‘Is it going to be 100bn? What is the exit strategy from supporting bills?’
My guess is it might end up being an awful lot more than that unless we react quite quickly to make it a better system.
It is good to see that Liz Truss is taking this seriously and looking at energy price freezes. This will shield nearly a million and a half from poverty this winter. But if Liz Truss wants to stabilise poverty at pre-pandemic levels, she will need to go further and introduce a 10% uprating of universal credit as existing inflation will still hit the poorest hardest.
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