Liz Truss will finally present her long-awaited plans to tackle soaring energy bills on Thursday, with some Tory MPs conceding this is already a make-or-break moment for her entire premiership.
The new prime minister is expected to announce to MPs that bills will be frozen at about £2,500 a year until 2024 as part of a package of support costing up to £130bn, funded by the taxpayer, as she tries to address the most significant economic crisis in a generation.
Senior Tories predicted the bailout would generate enough goodwill to guarantee her survival in No 10 until at least Christmas, but warned she had a big challenge keeping her deeply divided party in line beyond the new year.
In one move that will cheer some Tory backbenchers, it is understood that Truss will announce an immediate end to the pause on fracking for shale gas, with new drilling potentially beginning within weeks as part of her hydrocarbon-based push for greater energy security.
The practice is hugely controversial – the moratorium was imposed in 2019 because of earthquakes the practice can trigger – and Truss has previously said fracking would only happen in areas where there was local support. It is not known if this would be changed.
With the pound falling to its lowest level against the dollar since 1985 and the country set to plunge into recession, charities and thinktanks warned that government plans to cap energy bills are “poorly targeted” and will fail to protect low-income families without a package of additional support.
The Institute for Fiscal Studies was among those saying ministers should adopt a scheme that did not benefit wealthier households.
Ahead of her Commons statement, Truss said: “I know families and businesses across the country are worried about how they are going to make ends meet this autumn and winter.
“Putin’s war in Ukraine and weaponisation of gas supply in Europe is causing global prices to rise – and this has only made clearer that we must boost our long-term energy security and supply.
“We will take action immediately to help people and businesses with bills but also take decisive action to tackle the root cause of these problems, so that we are not in this position again.”
Earlier, at her first prime minister’s questions against Keir Starmer, she ruled out extending the windfall tax on oil and gas producers to fund her support package, adding: “I believe it is the wrong thing to be putting companies off investing in the United Kingdom, just when we need to be growing the economy.”
But, with Treasury forecasts estimating higher prices could result in energy firms making £170bn in profits beyond previous forecasts in the next two years, Starmer repeatedly pushed Truss on how a price freeze would be financed – seen by Labour as a vulnerability for the government given worries about public debt.
He told her: “It won’t be cheap, and the real choice, the political choice, is who is going to pay? Is she really telling us that she’s going to leave these vast excess profits on the table and make working people foot the bill for decades to come? More borrowing than is needed – that’s the true cost of her choice to protect oil and gas profits, isn’t it?”
New polling by campaign group 38 Degrees showed three-quarters of Conservative voters would prefer a windfall tax over further public borrowing in order to fund the new package.
It found that just 13% of people backed funding the measures through new borrowing. Asked separately to rate the prospect of a windfall tax, 74% of Conservative voters supported it, rising to 84% among 2019 voters.
Despite only being in office a matter of days, Truss has a huge task bringing back together her party after a bruising leadership contest, a brutal cabinet cull of all senior ministers who had backed her rival, Rishi Sunak, and the Conservatives lagging in the polls.
One former cabinet minister said the package would be big enough to generate enough goodwill from the party for the rest of the year, but they warned Truss would need to show enough grip and flexibility to get through an even tougher period in a likely recession next year.
Truss’s approach has seen a number of big Conservative names – including former health secretary Sajid Javid and levelling up and housing secretary Michael Gove – consigned to the back benches. The ex-minister said they would be likely to start making critical interventions from that point. “Sajid, or Rishi, or Michael – they won’t go quietly,” they predicted.
The new prime minister was met with muted cheers as she arrived in the chamber for PMQs on Wednesday, and Tory backbenchers appeared underwhelmed by her speech to the 1922 Committee, with several describing it as “fine”.
While others were more effusive with praise about her directness in answering questions from colleagues, one noted: “No one’s going to take a shot at her yet. It’s not the PLP [Parliamentary Labour party].”
According to those in the room, Truss promised her MPs she had learned one of the big mistakes of Boris Johnson’s administration and would listen more to concerns from backbenchers. “Expectations were relatively low but she managed to get the party behind her,” said one, of her performance hours before at PMQs. A cabinet minister also reflected: “That went as well as it could have done.”
Though Sunak’s supporters bit their tongue until the cabinet reshuffle was complete, a few started to express concerns when it was over. “She said this would be a cabinet of all the talents – and it’s clearly not,” said one. One sacked cabinet minister said they were shocked and disappointed at the “tribalistic” nature of their dismissal.
Yet Truss completed her reshuffle last night by holding out an olive branch to supporters of Sunak in the junior ministerial ranks. Robert Jenrick, a high-profile backer of the former chancellor for the Tory leadership, becomes a health minister, while Mark Spencer joins the department for the environment.
Hardline Brexiter Steve Baker has been made a minister in the Northern Ireland Office, where he will be responsible for reaching agreement with the European Union on the thorny issue of post-Brexit trade.
Meanwhile, Thérèse Coffey, Truss’s new health secretary, is weighing up a package worth hundreds of millions to help ease pressures on the NHS by freeing up bed space in hospitals.
She is examining proposals to pay care homes in England to look after medically fit patients who cannot be discharged because of a lack of social care. About 13,000 hospital beds are taken up by “delayed discharge” patients.
Additional reporting by Denis Campbell
