Labor leader Keir Starmer is due to call for a ban on crippling energy price hikes this autumn, which would save the average household more than £2,000 a year on gas and electricity bills , can reveal the Observer.
The demand to freeze the energy price cap at the current level of £1,971 – preventing regulator Ofgem from authorizing a huge planned increase to around £3,600 in October – will put intense pressure on candidates for the leadership of the Conservatives Liz Truss and Rishi Sunak to follow suit when you become prime minister.
Starmer’s plan, to be announced on Monday, comes as 70 of the nation’s largest charities and organizations in health, mental health, education, care and other sectors warn today Truss and Sunak in a joint letter of dire consequences across British society unless they take more drastic action to tackle the energy and wider cost of living crisis.
Paul Kissack, chief executive of the Joseph Rowntree Foundation (JRF), which coordinated the letter, said the UK was facing a “national emergency” as the government was “asleep at the wheel”.
Demanding urgent support for the most vulnerable, in the form of a doubling of the £1,200 that was committed earlier this year for households on means-tested benefits, Kissack said: “Without this, the vulnerable will face full-scale disaster when winter sets in. The consequences of standing idly by are unthinkable.
Starmer, who returned from vacation late last week, came under pressure to say more about energy prices after former Labor leader Gordon Brown raced with a series of major interventions .
In the Observer last weekend, Brown called for an emergency budget. He also demanded the freezing of price caps, as well as the temporary nationalization of energy companies that refuse to offer lower bills.
In a pointed remark that some saw as a direct reference to Starmer, Brown wrote in the Guardian last week: “Time and tide wait for no one. Neither do crises. They don’t take vacations and politely hang the fire.
It is understood that Starmer will ask the government to order Ofgem to freeze the cap on bills, saying it is within his power to do so.
High-level sources said Labour’s choice had been between supporting huge amounts of extra financial aid for the most vulnerable or preventing a massive rise in energy prices in the fall at the source. “It seemed best to stop the upside first,” said a senior insider.
In response to rapidly rising wholesale prices, Ofgem warned in May that the cap was set to rise by around 40% to around £2,800 in October. Since then, forecasts have soared, with analysts at Cornwall Insight last week predicting a rise of £3,582, more than 80% above the current limit. They are also planning further increases to £4,266 in Q1 2023.
New analysis for the Institute for Public Policy Research think tank, commissioned by the Economic Change Unit, finds that freezing the price cap would not only save families more than £2,000, but would also help to curb inflation, preventing it from being “integrated” into the economy.
The research indicates that if the cap were to be raised to £3,600, as expected, inflation would jump to around 13%, but if it were frozen at £1,917 inflation would remain at 9.2%.
Sarah-Jayne Clifton, executive director of the Economic Change Unit, said it was time for the government to act and make energy companies pay: “Other countries have kept prices low to protect the financial security of citizens. There is absolutely no reason why our government cannot do the same and shift the burden onto those profiting from this crisis.
The energy price cap, introduced in 2019, limits the maximum amount that energy suppliers can charge for each unit of gas and electricity used.
In their letter to Sunak and Truss, the 70 charities and other organisations, including JRF, AgeUK, Trussell Trust, Children’s Society, the TUC, Shelter, MacMillan Cancer Support, Mind, Oxfam GB and Action for Children, tell candidates for the direction of the Conservatives that “the crisis in the cost of living for low-income households is the most serious problem facing our country”.
They add: “So far this year, almost three-quarters of low-income households receiving Universal Credit or other means-tested benefits, many of them working families, have been forced to go without. at least one essential element. This means people have to skip meals or not be able to heat their homes properly.
“Many of our organizations work directly with these families and are overwhelmed, too often unable to provide the support so desperately needed.
“This situation cannot continue. As potential leaders of this country, we urge you to act now to show the compassion and leadership necessary to tackle this problem head-on.
Isabel Hughes, head of policy engagement at the Food Foundation, who also signed the letter, said: “Continued rising prices and the approach of winter will continue to make life more difficult for low-income families. income and those who have received proportionally less support so far. are particularly at risk. The government must urgently protect families from the worst impacts to protect the health and future of children.
A new poll for the Liberal Democrats, who also support a cap freeze, found on Sunday that seven in 10 Conservative voters support plans to cancel the October hike. Party leader Ed Davey said the move should be funded by “a tougher windfall tax on energy giants making record profits”.
Labor said last night its plan to insulate more homes would save millions of families more than £1,000. Ed Miliband, the shadow climate change and net zero secretary, said: ‘Twelve years of Conservative failure to insulate our homes is one of the reasons the bills are so high. Too many workers and retirees live in cold, drafty homes with high heating costs. If they were serious about cutting bills, they could start now, delivering the warm homes plan demanded by Labour. A proper national mission would save 19million families over £1000 on bills and boost our energy security.