The idea of freezing the price cap and funding the difference with a deficit fund is being “seriously considered” by the government, Scottish Power boss Keith Anderson has said.
Anderson was speaking on BBC’s Good Morning Scotland earlier today (23 August) ahead of a summit of energy retailers and other industry bodies, convened by Scottish first minister Nicola Sturgeon, on improving advice and support for people struggling with bills.
Ofgem will announce the level of October’s price cap on Friday (26 August) and the latest forecasts indicate it will exceed £3,550 equivalent per year, a figure that is expected to increase to more than £5,300 in April 2023.
Previously Anderson has suggested that the government could freeze the current cap level of £1,971 for consumers, while underwriting the difference with loans. Freezing the cap at this level for two years, Anderson said, would cost around £100 billion and would be repaid over a 15-20 year period.
Earlier this month ministers held urgent talks with industry leaders, including the largest retailers, about how best to alleviate the crisis.
Asked about the political will for the idea of freezing the cap at its current level, Anderson said he believed the government was now coalescing around ideas that they implement in time for October.
“Obviously time is getting critical now because October is not very far away, so my push and my request of the UK government is to move as fast as you can to let people understand what you are going to do to help them. I think that’s a strong, strong message for them, to give that information and get that decision made as quickly as possible.”
Additionally, with Kwasi Kwarteng widely tipped to become chancellor of the exchequer if Liz Truss succeeds Boris Johnson as prime minister, Anderson was asked whether the current business secretary was supportive of his suggestion.
He responded: “Yes, we have been through all of the details of this fund with him, we have been through all of the details with the current chancellor and other members of the cabinet as well.
“I think this is being seriously considered, I think it’s being looked at as probably one of the best ways of dealing with the issue in the short-to-medium-term.
“But the government will also look at other options. They have options around VAT, options around green levies, options around other support funds, so the government will end up making its choice,” he said.
“My message to the government is: it has to be big, it has to be bold and it has to be done right across the whole of the country very, very quickly.”
Responding to the comments, a UK government spokesperson said: “We know the pressures people are facing with rising costs, which is why we have continually taken action to help households by phasing in £37 billion worth of support.
“In the immediate term, we are giving a £400 discount on energy bills over winter and eight million of the most vulnerable households will see £1,200 extra support, provided in instalments across the year.
“We have provided an extra £82 million for the Scottish Government to help vulnerable families at their discretion. This is in addition to the significant income tax and welfare powers they already have.”