The Labor leader confirmed that under his plan the energy price cap would be frozen at the current level, meaning an expected 80% rise in October – taking the average household bill to around £3,600 – would not go ahead. Starmer said the country was facing a “national emergency” and that Labor “wouldn’t let people pay a penny more” on their energy bills as a result of his “fully funded plan”. A typical family would save £1,000, he claimed. He said: “Britain’s cost of living crisis is worsening, leaving people fearing how they will get through the winter. Labour’s plan to save households £1,000 this winter and invest in sustainable British energy to reduce bills in the long term is a direct response to the national financial emergency which is leaving families fearing for the future.’ Starmer said the scheme would cost £29bn over the winter and could be funded by extending the scope of the windfall tax on energy companies (raising £8bn), suspending the proposed £400 payments to all households it offers the government to offset the rise in the price cap planned for October (saving £14bn) and cut government interest payments on the debt (saving £7bn), which Labor said would be possible because its plan would reduce inflation. Last week Sir Ed Davey, the Lib Dem leader, and Gordon Brown, the former Labor prime minister, called for the energy price cap to be frozen at its current level and published plans explaining how it could be funded . This led to criticism that Starmer, who was on holiday at the time, was letting them and not the Labor leadership set the agenda. Starmer’s plan was released as Boris Johnson was reported to be on his second overseas holiday of the summer. He was photographed with his wife, Kari, in a town near Athens. Earlier this month the couple had a break at an eco-friendly hotel in Slovenia. The energy price cap is now set at £1,971 and is expected to almost double in October, with a further increase expected in January. Economists and charities have said millions of households will be plunged into poverty as a result or unable to pay. The government has not proposed suspending energy price rises but has announced a series of measures aimed at helping people pay their bills, and Johnson said he was confident his successor would deliver more help in the autumn. But neither Liz Truss, the foreign secretary and front-runner in the bid to replace him, nor Rishi Sunak, her rival and former chancellor, are calling for the energy price cap to be frozen. And while both have signaled they will offer additional cash support to households, neither has proposed a full funding plan beyond additional borrowing. Truss argues that its real priority is to reduce the tax burden. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. Starmer stressed that his winter proposal was part of a wider plan that also included insulating 19 million homes over the next decade. If the Government had started when Labor proposed it a year ago, 2 million homes could have been insulated by now, saving the typical tenant £1,000 a year, he claimed. Under the energy price cap, Labor would need £29 billion to pay energy companies to cover the gap between what they would receive from customers and what they would have to pay for energy on the wholesale market. As well as freezing the energy price cap, Labour’s plan would include support for people not protected by the price cap and a plan to ensure people using pre-paid meters don’t have to pay more for energy them from people who pay monthly. Brown, as part of his plan, suggested the government consider taking energy companies into temporary public ownership. Starmer rejected that proposal on the grounds that money from the package should be used to help clients and not to compensate shareholders, a party source said. To raise an extra £8 billion from the windfall tax, Labor will close a loophole that would allow tax relief on fossil fuel investment and delay the tax until January. Labour’s announcement was welcomed by Davey. “Now that the progressive parties and charities are speaking with one voice to cancel the energy price rise using a windfall tax, the pathetic response from Liz Truss and Rishi Sunak is even more outrageous,” the Lib leader said Dem. “The turmoil and delay of government by this prime minister and any future prime minister is deeply damaging to pensioners and families across the country.” Labor says that as a result of its plan, energy bills will add just two percentage points to inflation over the winter, instead of the six percentage points currently forecast. This figure was confirmed by analysis by the Institute for Public Policy Research (IPPR) thinktank. Luke Murphy, deputy director for climate and energy at the IPPR, said Labour’s plans would “prevent rising energy bills from pushing millions into debt and poverty and contain rising inflation which is a risk to economic stability of the United Kingdom’. However, many international and domestic economic considerations have urged the government to strengthen means-tested benefits to target households most at risk of rising energy bills. The International Monetary Fund (IMF) has reprimanded European countries, including the UK, for offering blanket subsidies that also benefit better-off households in addition to higher benefits. Adrian Pabst, deputy director of public policy at the National Institute for Economic and Social Research, said: “I find it surprising that political parties want to subsidize the companies that provide energy and the households that are best able to cope with the energy shock. It is fairer to tackle the problem by increasing universal credit.’ Pabst was skeptical that a cap freeze would reduce inflation by a significant margin and that the Bank of England would respond by holding back expected rate rises.
