Government closes in on energy rescue plan

Help for consumers' energy costs is to be provided by allowing energy suppliers to take out government-backed loans to allow them to subsidise bills.

The plan, which had been suggested by the energy industry, is set to be announced on Thursday.

The "deficit reduction scheme" is expected to form the centre piece of the government's attempt to tackle the high cost of energy for consumers.

Small business are also expected to be offered some relief.

New Prime Minister Liz Truss used her victory speech on Monday to pledge to "deliver on the energy crisis" - with a price freeze widely expected.

Energy bills are rocketing and the cap on prices will go up on 1 October, meaning a typical British household is set to pay £3,549 a year on gas and electricity.

Energy bosses have insisted for some time that a government-backed superfund from which they could borrow to lower or freeze bills "is the only game in town".

Under such a plan, the government would guarantee loans to energy companies that would be used to freeze or at least lower bills this winter and beyond. These loans would be repaid from bills over the next 10-20 years.

Scottish Power said freezing all bills at the current price cap of £1,971 for two years would cost nearly £100bn.

However, unlike households, businesses are not protected by an energy price cap. Many business fixed-rate deals expire this October, exposing thousands of firms to the full horror of bills that could rise by four or five times or more. Thousands would go bust or cut their wage bills by firing staff.

Smaller firms are expected to be offered similar help to that of households, although the BBC understands the details of how businesses will be helped may not be ironed out in time to be included in Thursday's energy announcement.

However, the leader of one business group said "it's clear they have crossed a mental Rubicon - they know that businesses need help to avoid lasting damage to the economy".

Including businesses would mean the bill for the government's energy plan could easily exceed £100bn.

It is understood that bigger companies may be offered bespoke tax breaks to help them through the period of high prices.

Energy bosses have been meeting government officials in the Cabinet Office this evening.