The Conservative leadership candidates came under increasing pressure on Sunday to detail plans to tackle skyrocketing energy bills, with growing calls to find a way to freeze the amount households pay.
Sir Keir Starmer, leader of the opposition Labor Party, and some of Britain’s biggest energy suppliers have put forward separate plans to cap the typical household bill below £2,000, as concerns grow that gas and electricity prices could push millions of families into poverty. and trigger a deep recession.
The energy crisis was now a “national emergency”, the Labor leader said, adding that the Conservative leadership had “failed to prepare and refused to invest” in the sector. Starmer said the party’s plan would save the typical family £1,000, bring energy costs under control and help tackle inflation. It will be financed through initiatives including increased taxes on oil and gas company revenues.
Ofgem, the energy regulator, has set the current annual rate, which caps the prices energy suppliers can charge customers on their standard tariffs, at £1,971 for the typical home. But it is due to announce a new cap for the autumn later this month, with the price expected to rise to more than £4,400 by April next year and some consultancies predicting it could rise to around £5,000 as wholesale gas prices continue rise.
Starmer’s intervention echoed calls from the opposition Liberal Democrats to scrap the incoming energy price increase in October.
Over the weekend, 70 charities across the UK, including the Joseph Rowntree Foundation, described rising energy prices as a “national emergency” and called on Tory leadership candidates Liz Truss and Rishi Sunak to “demonstrate the compassion and leadership needed” to tackle the cost of living crisis.
Truss has ruled out imposing another windfall tax, arguing that tax cuts and other measures, such as a temporary moratorium on taxes on green energy, will ease the cost of fuel bills for families.
Meanwhile, Sunak has promised that if elected, he would “lead a national effort” to increase domestic energy supply and cut energy waste, and establish a new energy security task force.
Some of the UK’s biggest gas and electricity suppliers have also hinted that more government help will be needed for households.
Last week, Prime Minister Boris Johnson admitted the government’s existing £37 billion cost-of-living package may not be enough to support struggling households this autumn, but Downing Street said the government had no plans to make any significant fiscal interventions until a successor to Johnson is announced it. September 5.
Scottish Power has revived a proposal to cap typical household bills at less than £2,000, with the rest paid for through a combination of lending and government backstopping. It will eventually be repaid over the next decade, either by being added to customer bills or absorbed into general taxation.
The Financial Times reported on Saturday that energy suppliers including Centrica – owner of the UK’s biggest household supplier, British Gas – Octopus Energy and Eon have proposed moving a number of charges on bills to general taxation.
These include taxes linked to support for poorer households, VAT and environmental charges, which could reduce bills by at least £420 from October, according to calculations by Eon.
Electricity generators – which include some of the biggest household suppliers that own various stakes in renewable projects, nuclear power plants or gas fields – are worried they could also be targeted for a windfall tax beyond oil and gas. Some renewable and nuclear projects have reaped much higher revenues without seeing costs rise significantly.
“We know that rising prices caused by global challenges are affecting how far people’s incomes go, which is why we have continuously taken action to help households by phasing in £37 billion worth of support throughout the year,” the Treasury said .