© Christopher Furlong/Leon Neal/Getty ImagesLiz Truss • Kwasi Kwarteng
The paper, looking at the options for Liz Truss or Rishi Sunak in No 10, also warned the government should plan for prolonged rises in energy bills by going a lot further in making public appeals to use less gas - for example by informing consumers about the cost savings from turning down thermostats - and in committing to building more energy efficient homes to help protect consumers.
No 10 and Kwasi Kwarteng, the business secretary and close ally of Truss, have been resisting appeals to the public to use less energy. However, the next prime minister, likely to be Truss, faces some very difficult choices on entering office on how far to subsidise energy bills.
Boris Johnson's government has already spent £33bn on covering 90% of the then predicted increase in energy bills but soaring prices mean a further £23bn would be needed to cover average bills that are forecasted to be £900 more per household than was predicted just three months ago, according to the IfG.
It found that extending this kind of help in 2023/24 could cost the new government more than £90bn to be as generous to households again next year. Another option that could be considered for a new prime minister is insulating only the most vulnerable from higher bills.
The IfG found that offsetting energy bill increases for those on means-tested benefits would cost £800 to £900 per household, or about £6bn to £8bn in total, while extending more help to those on disability benefit and pensioners could take the total cost of support for the most vulnerable to £10bn to £12bn.
The IfG found Labour's proposed plan of keeping the cap at its current £1,971 a year would cost the government more than £40bn for six months and would also be difficult to reverse.
The total cost of the help would necessitate huge borrowing but still some degree less than the £300bn-plus spent during the Covid pandemic.
Olly Bartrum, a senior economist at the IfG and one of the authors of the report, said:
"Energy prices have risen sharply again in recent weeks and are now expected to stay higher for longer than previously expected. Deciding whether and how to help households and businesses with these costs will be one of the most urgent tasks facing the new government.Truss has softened her stance on what she called "handouts" to cover the cost of energy but has hinted the help could be targeted at the most vulnerable.
"This may require substantial extra spending this winter and even more again next year - even limiting help to the most vulnerable could cost several billion pounds. The government should also do more to encourage greater energy efficiency and reform energy markets to reduce vulnerability to high energy prices if it wants to avoid further expensive support packages in a future likely to be defined by highly volatile energy prices."
Reader Comments
Yet another mellamanic who's going to drive the UK into further recession whilst ensuring the RICH are least affected.
Megalomaniac was the word of my choice.
This is just as if Louis XVI (& Marie Antoinette) intrigued their way through the aristocracy to become French king in 1788 ...
OTOH, I saw a Telegram post today about some British politician, telling the commoners not to be picky about water quality. Sewer water is healthy too, he suggested.
Perhaps a Sweeney Todd - style pie ?
Like most of his European colleagues, he has never before seen a pitchfork.
Her husband, Louis XVI, thought he was the right hand of God, put in place by him, repleted by his thought and his will, untouchable and invincible.
Such is the hubris that preceedes the fall.
You can show them the pitchfork, and they think you are going off to work ...
Not sure in which country you live. But I think ethnic structure and coherence will play an important role. Because, when push comes to shove, the loyalty of enforcement agents (police, military) will be with their families and communities, not their masters. This is why ethnic uniform countries rarely experience civil wars. And which is the reason why the Davos crowd flooded countries like Germany, France, Austria, the UK and others with hostile muslim "refugees". I think we will soon find out what difference they make ...
It taught me one thing though, they are my fellow humans, regardless of their background. Right now I'm living on the island of Prince Edward (the smallest province), where the current indigenous descendants (white people from the time of Cabot settled) still show and exhibit old racial stereotypes. The province is currently being invaded by Indian, Chinese and some Japanese and Muslim folks. IT's completely different here now, from 10 or even 20 years ago. IT's an island and the province uses that as a crutch all the time. We still don't have natural gas here, only the large companies (Agri companies) truck it over for their plants. Residents here fought against the bridge (Confederation Bridge, it's free to visit, but you got to Pay at least $50CAD to leave) being built, because they thought that would bring the gangs to the island and home invasion's would go through the roof. There are more murders in the Yukon (who have less people) than here. We might hear of maybe 1 YEAR. It's an Agricultural island. I own 4 acres and a 100+ yr old barn and home, of an old 350 acre farm. My land abuts farmland. Besides potatoes (which the island is known for) they also grow carrots, soy, wheat, barley, blueberries, mustard and other such crops, plus beef, sheep, pigs, chickens and milk cows. I also noticed, this year, that a lot of farrow fields from last year, were not planted this year or added to the crop rotation. The Irvings, under one of their company structures Vanco, has been buying up farmland for the last 20 years and hiring people to farm it. My neighbour grew up in the house I live, his brother and sister and mother each live on different little parcels of land of the old farm, in fact he owns the last piece. They had to sell the farm in the 90's when the father died because, none of them wanted to farm, not just because they didn't want to farm, just lots of bad memories (dad wasn't the nicest person, he was harsh). The farm had been in the family since before the 1800's.
This is where I now live, while I deal with some family issues and my wife lives in Toronto at our home there.
I suppose the latter - large cities - are the worst place to be in a crisis. Except perhaps for cannibals with unlimited amounts of ammunition ...