PM considering bank loan scheme with price cap set at £2,400
The government is said to have considered proposals for bank loans to smooth out a rise in the cost of energy bills expected this year.
The latest projections suggest households could face crushing bills, with the energy price cap set to nearly double to £2,400 a year from October, according to EnAppSys analysis for the FT.
A cost deferral mechanism is being considered by ministers under which banks would lend billions of pounds to energy companies to allow them to spread rising gas bills over five or 10 years, the BBC first reported. .
The price cap protects millions of households in the UK who do not opt for fixed price offers and is on track to increase by more than 50% in April to reach £2,000 a year. Analysis from the FT and EnAppSys predicts that bills will rise further later in the year unless the government and energy regulator Ofgem step in to cut costs.
The government is also reportedly considering using the Bank of England to provide seed funding to businesses to smooth price rises. Another option for the government to reduce the impact of rising tariffs is to extend a discount scheme for low-income households or reduce energy taxes.
Boris Johnson is under pressure to act quickly before a rise in the fuel price cap, expected in April, takes Britain’s inflation rate to 6% or more. Britons will also be hit by a controversial National Insurance tax hike later this year, which will put further pressure on households.
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