The biggest, most expensive policy Liz Truss will ever announce has landed.
Voters will probably like it, sensing the alternative would be ruin for millions. Her MPs will cheer it, knowing that a failure or delay to act would be electoral ruin.
The consequences of today’s announcement will be felt for decades because of the sums involved.
There was one surprise: the duration of the commitment – the freeze will last for two years. But two years of what exactly?
A huge number of questions arise from the sketchy details we have so far. The unknowns today are everywhere and could determine her political future. Here are five:
1. There is no costing
Ministers will today simultaneously argue that they can’t estimate the cost of this policy, while also saying that a costing will be available when Liz Truss’s government does its mini-budget later this month. Make of that what you will.
Sky News has been reporting that the cost could be in excess of £150bn.
Much of that assumed that the duration of the protection would be much shorter than the two years promised today, however.
So, could it end up being higher? That’s not a question that the government wants to help us – or the bond markets sizing up future sustainability of UK debt – with today.
They argue that while you could reasonably predict the course of gas prices over three months, it gets harder to do after that, so they can’t yet help. As it happens, the government will very shortly have to instruct the Debt Management Office how much extra to borrow to fund this, but unsurprisingly they can’t tell us what that will amount to either.
2. They’re not telling us what the actual policy is
This is, frankly, incredible. The promise to voters is that households won’t see a big increase in bills from their current highs.
There is a rough and ready estimate that this means a £1,000 a year benefit for households, but looking at such fine print as there is suggests this is very rough indeed.
This is delivered because the government will limit the price suppliers can charge customers for units of gas. But amazingly, ministers aren’t telling us this morning what the level of discount actually is.
This piece of information will be given to gas suppliers in days, we are told. Perhaps they can’t cost the policy because they don’t actually know what it is.
3. Two years won’t mean two years
The energy price guarantee begins on 1 October 2022 – the day the price cap had been due to rise. It is timetabled to end on 1 October 2024. Why two years, a longer than expected timeframe?
Is it because that is when the UK government estimates the conflict in Ukraine will be over?
Is that because that is how long is needed to strike revolutionary deals with energy generators for cheaper supply (although why they would make such agreements isn’t clear)?
Is that when new domestic energy sources will all but eradicate UK exposure to global gas prices (in which case that would be at a pace which would confound the view of experts everywhere)?
Challenge people in government, and they give you a vague jumble of all three answers – and no real one. That’s because the two-year timeframe smacks of a political timetable as it takes us up to the current likely landing zone for the next election.
But this brings its own challenge: would any government threaten a big rise in energy prices shortly before going to the country? Of course not – this scheme and variations of it will appear in party manifestos and will continue beyond two years.
4. What on earth happens in Northern Ireland?
The one part of the nation which, as it happens, cannot vote for the Conservatives in the next general election got no answers today about what happens to their bill.
Since they are part of the single market for energy, they are not subject to the price cap, and have different challenges and rules. The lack of Northern Ireland Assembly has been hampering the response there. Consequently, it’s not clear what happens in an entire nation of the United Kingdom.
5. Business doesn’t know what happens next
At the last moment, the government decided to fix only one part of the energy market – the price consumers pay for a unit of gas. They decided against fixing the wholesale cost of gas, which would have delivered equivalent benefits to business, but the price would have been eye-wateringly more than its already exorbitant levels.
But beyond that there were few details. There is a promise for “equivalent support” for businesses, charities and schools for six months based on a government guess of the excess they would have to pay because of the gas price increase, but it’s unclear how or when or the detail of this. Beyond six months, only vulnerable industries will be helped – with only the most in need getting support.
On the steps of Downing Street on Tuesday, Prime Minister Truss made sorting energy bills her second priority after securing growth. The headlines sound good, but the scarcity of details and the astronomical scale of the intervention make it appear rushed in order to match her promise of “action this day”.
She cannot afford to get things like this wrong.