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World

Truss and Sunak reach crunch week on the energy crisis

22 August 2022

6:14 PM

22 August 2022

6:14 PM

There’s still two weeks of the Tory leadership contest to go but by Friday the scale of the energy crisis that awaits the next prime minister will be clear for all to see. This is when Ofgem is due to announce the new level at which energy bills will be capped. After the price cap hit £1,971 in April, the forecasts point to trouble ahead. Cornwall Insight predicts the October rise could see bills go up to £3,582 a year. This could go up to £4,266 by January with suggestions it could even reach £6,000 by April next year.

It means the terms of the debate are once again on the economy. In advance of the announcement, the Sunak camp is out on the attack – with a campaign spokesman saying Truss must choose between tax cuts or cost of living support. His supporter Lord Griffiths – who served as Margaret Thatcher’s Head of Policy – has jumped on a report in the Sunday Times suggesting that prime minister Truss would proceed with an emergency Budget without receiving an official OBR forecast. He’s claimed this suggests a ‘complete loss of confidence in the policy she is advocating’. However, it’s worth pointing out that during his time as chancellor, Sunak offered support without an OBR forecast and Truss would – by law – have to have one this autumn.


Both candidates will come under greater pressure to spell out what relief they would offer struggling households. Figures in the Leader’s Office feel that Labour is on the front foot in the conversation after Keir Starmer last week set out his policy of freezing the energy price cap and funding it in large through an extended windfall tax. This has since been criticised by both for its feasibility and the fact it would apply to the most wealthy.

So how are the Tory leadership candidates likely to respond? Both Sunak and Truss have been tight-lipped on the issue – pointing to the fact there are no definite figures yet. An ally of Sunak suggests he would be minded to look at something similar to the targeted help he offered previously, so trying to match the price cap as much as possible to the most vulnerable. As for Truss, the frontrunner in the race is now spending half her time planning for government, including ministerial appointments (see my column in this week’s magazine for the current direction of travel). Both Truss and her likely pick for chancellor, Kwasi Kwarteng, have dropped hints over the weekend that help is coming.

Despite saying in a Financial Times interview a few weeks ago that she was not averse to handouts, there is an expectation that there will be targeted help. Truss’s method for dealing with the energy crisis is to cut taxes, reform the supply side so as to make the UK more self sufficient and then look at what extra help can be given. When the cost of energy this autumn becomes clear on Friday, it will be harder for the candidates to refuse to get into the detail of what response it calls for.

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