Let’s call Liz Truss’s plan to help with energy bills what it is – a scam

Day one of Project Truss and there’s actually some… good news. Or at least, superficially. Something to celebrate? Sort of. Not quite. There are strings, and debts, attached.

By all accounts, and against expectations, Liz Truss is going to freeze gas and electricity bills until at least next year and, possibly, until the next general election. Without ever mentioning her secret plan during the leadership hustings, she and Kwasi Kwarteng are apparently going to match the Liberal Democrats and Labour and keep bills where they stand. Relax. Households, at least, will have significant protection.

But not so fast. It’s short term, and it’ll have to be paid back before long. The bad news is that the way Truss and Kwarteng are structuring the scheme means higher bills, possibly quite markedly higher, for everyone for decades to come.

Under the mooted plan, when the gas and electricity retail supply companies make a loss on supplying homes with energy, they can pile up the debts and borrow to cover them – with the loans guaranteed by the Treasury. That means that, as long as investors are prepared to trust the UK to pay back what it owes, the energy supply firms can build up huge debts – which will eventually be paid back by you and me via a compulsory levy on energy bills. For years and years to come.

So the government is really organising a sort of mortgage scheme for unpaid and unpayable gas and electricity bills. The extra costs will still have to be paid, but they’ll be spread over years, if not decades. You’re being forced to take on a massive loan to heat and light your home. There may be a similar scheme for businesses, and equally flawed.

As I say, it’s like a mortgage or a student loan – except this huge debt, effectively running into many thousands of pounds will be compulsory. The extra £3,000 or £5,000 you were due to pay this year (if you could) will be "put on the tab", a kind of credit card for your arrears. After two or three years there could be £10,000 or £20,000 to pay back! You’ll still owe the gas and electric companies, and you’ll still be worse off; the pain will be postponed and spread out. Yet the reality is that even a modest increase in average bills over an indefinite time period will impose great hardship on the poor.

So that’s the catch. Welcome as the move is, for immediate relief, the flaw in the Truss plan is the way it is being funded – by hard-pressed families. There is an alternative, and this is the new dividing line in British politics. The Liberal Democrats and Labour want to fund the price freeze with a windfall tax on energy producers.

This works well because they are making vast profits from the high prices, and will therefore only pay the special tax for as long as prices are high. When prices go back to normal, they will no longer need to pay the windfall tax. It is a perfectly balanced measure, and leaves families free of unwanted debt. But Truss and Kwarteng are implacably, dogmatically  opposed to it.

A windfall tax on the energy producers – the firms that get the suddenly incredibly valuable stuff out of the ground – is in fact already in place, after Rishi Sunak and Boris Johnson caved in to public and party opinion. Previous Tory chancellors – Geoffrey Howe and George Osborne – had also imposed similar levies. Johnson was obviously reluctant to do it, but agreed on pragmatic grounds.

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It is immensely popular with the public, but Truss went around the country ruling it out, just as Kwarteng tried, and failed, to do when he was business secretary in Johnson’s government. He poured scorn on it in public, even as the Treasury was preparing to launch it. Truss has pledged no new taxes. How can Truss and Kwarteng now avoid either the humiliation of an early U-turn, or the public revolt when they realise that the Truss price freeze is in fact a compulsory loan scheme for your energy bill arrears?

We don’t know that much detail about the new government’s price freeze plan – but we do know who is going to pay for it. Consumers will be loaded with debt for years, while Big Energy and shareholders enjoy a bonanza. It’s obscene and indefensible but, worse for Truss, the public will hate their new energy poll tax.

Liz Truss says we’re too bothered about the distribution of income and wealth and stuff such as fairness. We’ll see about that. Ed Davey, Keir Starmer should hammer home the truth about the Truss plan – enough to get her to the next election, but after that the bills will climb again. The likes of Sunak and Michael Gove should also expose this scam for what it is, and what it means for Tory prospects at the next election. Sorry, Liz, the honeymoon is already over.