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The Labour Party has unveiled plans to keep the energy price cap at current levels by increasing taxes on oil and gas firms that have made sizable profits in recent months.
Party leader Keir Starmer said that Labour “wouldn’t let people pay a penny more” on their winter fuel bills, which would save a typical family around £1,000.
The plan would cost £29bn but would be paid for through an extension of the windfall tax on oil and gas firms that was announced in May after months of mounting pressure from MPs and public bodies on then-Chancellor Rishi Sunak.
Currently, the tax will pay for a £400 discount on household energy bills over the winter, although with the price cap estimated to rise to over £5,000 by January, the money will offer little respite from the soaring bills.
Labour estimates that its plan would bring inflation down by 4 per cent – which would lower the likelihood of future interest rate rises.
“Britain’s cost of living crisis is getting worse, leaving people scared about how they’ll get through the winter,” Starmer said.
“Labour’s plan to save households £1,000 this winter and invest in sustainable British energy to bring bills down in the long term is a direct response to the national economic emergency that is leaving families fearing for the future.
“We’ve had 12 years of Tory government that has failed to prepare and refused to invest, leaving bills higher and our country less secure. This is a national emergency. It needs strong leadership and urgent action.
“Labour’s fully funded plan would fix the problems immediately and for the future – helping people get through the winter while providing the foundations for a stronger, more secure economy. Only Labour can give Britain the fresh start it needs.”
The right-leaning Institute for Fiscal Studies (IFS) questioned Labour’s explanation as to how it would fund the support package.
The think tank’s director Paul Johnson said the party’s plan to cancel the energy price cap rise, if extended from the proposed six months to a year, would cost as much as the Covid furlough scheme.
“Of course, what it does achieve is to protect everyone entirely from the increases in energy prices, so if that is what you want to achieve that is what you need to do, but you do need to realise that is a very expensive thing to do,” he told BBC Radio 4’s Today programme.
He added that while it would help to tackle inflation in the short term, the average rate of inflation would not change over time assuming it was only a temporary subsidy.
Campaign group We Own It, which advocates nationalising many of the UK’s essential infrastructure, said there was overwhelming backing for public ownership of energy and water firms following a survey of 4,300 adults.
More than three out of five members of the public, and a similar number of Conservatives, wanted to see the utilities in public ownership, a report from the body said.
Cat Hobbs, director of We Own It, said “Privatisation has failed for nearly 40 years. Politicians can’t ignore the truth any longer – these monopolies are a cash cow for shareholders around the world and we need to take them back.
“We need energy companies that don’t rip us off, public transport that works for passengers, water companies that don’t pour sewage into our rivers.
“We call on the Government to bring energy, water, public transport and the Royal Mail into public ownership, and to reinstate our NHS as a fully public service.
“Labour and all opposition parties must commit to public ownership. The clue’s in the name – public services are supposed to work for us, the public.”
The survey, by Survation, also showed overwhelming support for public ownership of buses, the railways, the NHS and Royal Mail.
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