Chancellor Nadhim Zahawi has reportedly asked Treasury officials to work on a multibillion-pound aid package that could see the energy price cap fall from January. 2 The Treasury is said to be working on a multi-billion pound aid package for hard-hit householdsCredit: Alamy 2 Chancellor Nadhim Zahawi reportedly called on Finance Ministry officials to draw up measures to curb inflationCredit: PA The inflation-busting measure will give Ofgem a better say in what the price cap should be, while scrapping an allowance charged by energy suppliers to customers, according to The Sunday Times. The publication said the cost would be met by the Treasury and the Bank of England. According to Treasury estimates given to Zahawi and other ministers this week, the new proposals could lead to a reduction in the price cap and much-needed relief for stretched British households struggling with a cost-of-living crisis. The plan will not be implemented before the next price cap increase in October, but could be implemented by early 2023. Senior government sources told The Sunday Times that proposals were being worked out for both Liz Truss and Rishi Sunak to possibly announce when one of them becomes the new prime minister on September 5. Meanwhile, Keith Anderson, chief executive of ScottishPower, has proposed freezing bills at the current level of £1,971 for two years. This could lead to suppliers covering the gap between this and the wholesale price by borrowing from a “deficit fund” backed by commercial banks and repaying the debt over 15 years. The cost of the payments will then be passed on to customers over the same period or transferred to taxation. Mr Anderson’s idea was mooted in April but was reportedly rejected by then chancellor Rishi Sunak in favor of a £15bn payment to households. It comes as recent estimates published last week predicted the cap would rise to an impressive £3,500 in October, before rising to more than £4,200 in January. This could leave households paying more than £500 in the first month of the new year. The cost of an average family’s annual energy bill could rise to almost £5,300 from April if wholesale gas and electricity prices do not fall soon. This is the worst forecast yet for the millions of households set to face devastating bills this winter. The energy price cap works by setting a limit on the maximum amount suppliers can charge for each unit of gas and electricity. There’s no limit to how much you can be charged for the energy you use – so if you use more, expect to pay more. While the forecasts make for grim reading, it’s important to recognize that figures can change. The new forecast follows news that some energy customers have already seen increases in their direct charges now, to account for future price rises. Chancellor Zahawi and Business Minister Kwarteng met yesterday with the heads of energy companies. A government source said “no option was off the table” as to how the companies’ colossal profits could be targeted to make the accounts fairer.
