Conservative leadership candidates faced mounting pressure on Sunday to detail their plans to tackle soaring energy bills, with calls for a way to find a way to freeze what households pay.
Opposition Labour leader Sir Keir Starmer and some of Britain’s biggest energy suppliers have proposed separate plans to limit typical household bills to under £2,000 amid growing fears of runaway gas and electricity prices could push millions of households into poverty and trigger a deep recession.
The Labour leader said the energy crisis was now a “national emergency”, adding that the Conservative leadership had “failed to prepare and refused to invest” in the industry. Starmer said his party’s plan would save the average household £1,000, rein in energy costs and help fight inflation. It will be funded through initiatives such as increasing taxes on oil and gas company revenues.
The energy regulator Ofgem has set the current annual cap, which caps the default tariff rate energy providers charge customers, which is £1,971 for a typical household. But it will announce a new cap for the autumn later this month, with prices expected to rise above £4,400 by April next year, with some consultancies predicting prices could climb to around £5,000 as wholesale gas prices continue to rise.
Starmer’s intervention echoes opposition calls Liberal Democrats Cancel the upcoming energy price hike in October.
all weekend, 70 charities Across the UK, including the Joseph Rowtree Foundation, has described rising energy prices as a ‘national emergency’ and urged Tory leadership candidates Liz Truss and Rishi Sunak to ‘show a response to life’ The Compassion and Leadership Needed for the Cost Crisis”.
Truss rejected another windfall tax, arguing that the tax cuts and other measures, such as a temporary moratorium on green energy taxes, would ease households’ fuel bills.
Meanwhile, Sunak has pledged 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 largest gas and electricity suppliers have also said households need more government help.
Last week, the Prime Minister Boris Johnson Acknowledging the government’s existing £37bn cost of living may not be enough to support struggling families this autumn, Downing Street said the government had no major fiscal intervention planned until Johnson’s successor was announced on September 5.
Scottish Power has reintroduced a proposal to cap a typical household bill below £2,000, with the rest covered by government-backed loans. It will eventually be repaid over the next decade, either by being added to customer bills or absorbed into general taxes.
The Financial Times reported on Saturday that energy supplier Centrica, owner of British Gas, the UK’s largest household supplier, Octopus Energy and Eon, have proposed to include substantial billing charges into general taxation.
These include costs related to supporting poorer households, VAT and environmental taxes, which could reduce the bill by at least £420 from October, according to Eon’s calculations.
Power generators — which include some of the largest household suppliers with various stakes in renewable energy projects, nuclear power plants or gas fields — fear they could also be targeted by windfall taxes other than oil and gas. Some renewable and nuclear projects have generated higher revenues without a significant rise in costs.
“We know that rising prices due to global challenges are affecting people’s incomes, which is why we are continually taking action to help households by progressively providing support worth £37 billion throughout the year,” the Treasury said.