Liz Truss will ‘offer more help’ for people and businesses to see them through the energy crisis
Business Secretary Kwasi Kwarteng and Sir John Redwood are both expected to join the Treasury if the Conservative leadership frontrunner is successful.
Mr Kwarteng, likely to be Chancellor, said there would be fresh support this winter as energy bills soar.
“I understand the deep anxiety this is causing. As winter approaches, millions of families will be concerned about how they are going to make ends meet,” he said. “But I want to reassure the British people that help is coming.”
Sir John, a former Cabinet minister who is being touted as a Treasury minister, said: “Of course Liz will offer more help for people and businesses with the cost of energy. Universal hand outs are not the way.
“Tax cuts, help for people on low incomes and urgent measures to produce more domestic energy are needed.”
Latest forecasts suggest energy prices could spike at as much as £6,000 a year for the typical family next April.
Consultancy Auxilione predicted that the price cap on bills will gradually rise by more than £4,000 in the next eight months.
It said the cap is expected to reach £3,576 in October, rising to £4,799 in January, and finally hitting £6,089 in April.
The new forecast is an increase of £96 in January and £233 in April compared to the last one.
The cap is currently at £1,971 for the average household and the October figure will be announced on Friday.
Chancellor Nadhim Zahawi is said to be looking at options for bailing out businesses this winter as soaring bills face pushing smaller firms to collapse.
Mr Zahawi wants to find solutions that can be presented to the next prime minister so swift action can be taken.
He is understood to be interested in adapting Covid schemes to help businesses through the winter months.
Tory leadership contender Rishi Sunak claims Ms Truss will plunge the economy into an “inflation spiral” if she does not choose between tax cuts and providing cost-of-living support.
His campaign said: “The reality is that Truss cannot deliver a support package as well as come good on £50 billion worth of unfunded, permanent tax cuts in one go.
“To do so would mean increasing borrowing to historic and dangerous levels, putting the public finances in serious jeopardy and plunging the economy into an inflation spiral.”
Ms Truss insists there is “too much talk that there’s going to be a recession” and insists an economic slump is not inevitable.
The Foreign Secretary suggested a “level of ambition” was needed to “change the orthodoxy” and avoid the outcome forecast by the Bank of England.
She said immediate tax cuts will spur growth in the economy and promised a “small business and self-employed revolution” to help turn things around.
“It’s about that level of ambition,” she told a Sunday newspaper. “There is too much talk that there’s going to be a recession. I don’t believe that’s inevitable. We can unleash opportunity here in Britain.”
Labour is calling for a freeze in the energy price cap – a plan economists have warned could end up costing as much as the covid furlough bailout.
Tory former technology minister Chris Philp said “there’s nothing for free in life” and the plan would probably have to be paid for in the form of higher taxes.
He dismissed suggestions energy firms could cover the cost as there is not “efficient enough profit to do that”.
Mr Philp said the government must promote economic growth and develop domestic energy sources “so we’re not reliant on imported gas to the extent we are now”.
Highest energy bills in the UK
Boris Johnson has greenlit funding for a new multibillion-pound Sizewell C nuclear reactor in Suffolk to boost Britain’s energy supply.
Private investment will be sought for the project estimated to cost £20-30 billion.
The Government is then set to make a final decision on public investment early next year, with it expected to buy a 20 per cent stake in the plant, costing up to £6 billion.
A Government spokeswoman said: “Nuclear power has a key role to play as we work to reduce our reliance on fossil fuels and exposure to volatile global gas prices.”
Meanwhile, centre-right think tank Onward called for a 50 per cent stamp duty rebate for homebuyers if they install heat pumps and other energy efficiency measures to help the UK reach net zero.
It said the policy would take advantage of the “moment of change” when someone moves house and help overcome the barriers to insulating Britain’s leaky homes.
A similar scheme in Finland has helped that country reach one of the highest rates of heat pump sales in Europe.
Onward said people have been “reluctant to change the way they live their lives” despite a third of the carbon reductions needed to reach net zero by 2050 requiring individual action.
“Conventional policy has displayed limited effectiveness in driving these changes to date, and time is running out,” its report said.
“It is clear that the Government cannot simply ban, regulate or subsidise its way to net zero. Instead, the Government needs to learn from previous policy failures and think creatively about new forms of intervention which can encourage people to make the required changes.
“A new bold and practical policy package should revolve around incentives which encourage people to work together, and interventions which gently steer habits and behaviours.”
Tory former environment secretary Dame Caroline Spelman said: “As a former Environment Secretary, Liz Truss ought to know the devastating consequences of failing to reach net zero. Similarly, Rishi Sunak’s time as Chancellor will have warned him of an even bigger bill to the Treasury if we fail to act in a timely fashion.
“Whoever becomes Prime Minister should take note of the bold recommendations put forward by Onward to make it easier for the public to make the choices required for net zero.”
Ms Truss is expected to go ahead with an emergency budget without the traditional Office for Budget Responsibility forecasts in place as the organisation needs ten weeks notice to prepare.
A Campaign spokesperson said: “The cost of living crisis means immediate action is required. A Truss government would seek to act as soon as possible to help people across the UK, by cutting taxes and introducing a temporary moratorium on energy levies.”