The dismantling of Trussonomics: PM’s last redoubt bites the dust
The junking of Trussonomics was almost absolute. Even the energy price guarantee, the one policy the sinking prime minister had tried to trumpet in her short and painful press conference at the end of last week, is being canned. The guarantee for households will now expire next April, to be replaced by, well, new chancellor Jeremy Hunt didn’t say. There will be a Treasury-led review to design a cheaper scheme that ensures “enough support for those in need”.
The broad thinking behind Hunt’s new approach should not be contentious. The principle is correct. It never made economic sense to freeze energy prices for everyone, higher-earners and millionaires included – or, at least not for two years. Labour, remember, only backed a universal freeze for six months, probably sensing the danger in a “blank cheque” approach when nobody can be confident of where gas prices will stand in the winter of 2023-24.
The catch-all nature of Liz Truss’s guarantee is why projections of the cost went as high as £140bn under consultancy Cornwall Insight’s “extreme scenario” for gas prices. And the untargeted design rightly received a rebuke from the International Monetary Fund, even if its criticisms of theunfunded tax cuts generated 10 times as much attention.
The Treasury’s definition of “those in need” is, obviously, now the critical issue. Existing support schemes don’t get remotely close to capturing those in fuel poverty if, come next April, average annual household bills could be £4,500-plus on an uncapped basis. The warm home discount, for instance, is received by only 2.26 million out of 29m households. The same applies to using universal credit: it doesn’t cover enough of the population.
There are many suggestions around. A sliding-scale
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