UK Labour Party Vows to Freeze Household Energy Bills as Part of ‘Emergency' Cost of Living Plan

UK Labour party leader Sir Keir Starmer had earlier pilloried “lame duck” Prime Minister Boris Johnson as he called for a “strategic, credible plan” in the face of the worsening cost of living crisis.

Labour leader Sir Keir Starmer has unveiled the key points of his party’s “emergency” plan, to be released in full later, designed to tackle the UK's cost of living crisis.

“Britain’s cost of living crisis is getting worse, leaving people scared about how they’ll get through the winter. This is a national emergency. It needs strong leadership and urgent action,” he said.

In the face of rampant inflation and the jump in prices, Starmer vowed that his party’s “fully funded” £29Bln energy plan would allow families to save £1,000 on their gas and electricity bills this winter.

Price Cap ‘Freeze’

The Labour party’s plan relies on freezing the energy cap - the maximum suppliers can charge customers in England, Scotland and Wales for each unit of energy - in both October and January.

Currently, the cap is £1,971 per year on typical use. However, energy regulator Ofgem adjusts the level every three months based on what energy suppliers are paying producers for electricity and gas, and it has predicted the cap will rise to £3,359 per year in October and £3,616 in January.

Globally soaring energy costs have accelerated since sweeping anti-Russia sanctions were put in place by western countries over the crisis in Ukraine. The self-inflicted economic fall-out from the measures aimed at reducing Russia’s energy exports have driven gas and electricity costs to hit record highs.

UK energy industry analysts Cornwall Insight predict an average annual bill may reach £4,266 in January 2023.

Furthermore, inflation hit 9.4 percent in June - the highest level in more than 40 years – with the Bank of England warning it could reach 13 percent next year. Freezing the price cap, stated Starmer, will bring inflation down by 4 percent.

‘Fully-Funded Plan

Starmer clarified how the Labour party’s plan would fund the energy cap freeze. First, this could be achieved by increased tax revenues from oil and gas producers.

“Labour would close the Government’s absurd loophole in their Energy profits levy, backdate the start date to when Labour first called for a windfall tax to January, and accounting for higher gas and oil prices, would raise £8Bln,” Starmer stated.

More money would come from the £14Bln of non-targeted extra support to cover energy bill rises which has already been earmarked by the government. And, finally, by keeping energy bills down, Labour proposed reducing the rate of inflation, resulting in £7Bln saved in government debt interest payments.

Labour's "emergency package" also includes insulating 19 million homes across the country over the next decade to reduce energy demand.

Starmer underscored that “12 years of Tory government … failed to prepare and refused to invest, leaving bills higher and our country less secure," adding:

“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.”

Labour and other opposition parties in the UK have been urging the government to take immediate action on rising living costs.

Outgoing Prime Minister Boris Johnson admitted on 12 August that the financial support the government has allocated to vulnerable households amid the rising cost of living was insufficient and needed be increased regardless of who will become the next PM. Johnson's successor will be announced on 5 September as former Chancellor of the Exchequer Rishi Sunak and Foreign Secretary Liz Truss battle it out to take the top job.