The Labor leader, Keir Stormer, is calling for a moratorium on energy price gouging this autumn, which the Observer can reveal could save the average household more than £2,000 a year in gas and electricity bills.
Demands to freeze the energy price cap at the current £1,971 level – barring regulator Ofgem from allowing a massive expected rise to around £3,600 in October – will put intense pressure on Tory leadership candidates Liz Truss and Rishi Sunak to become prime minister.
Stormer’s plan, to be announced on Monday, warned 70 of the country’s biggest charities and organizations across health, mental health, education, care and other sectors, the Truss and Sunac today, in a joint letter of dire consequences across British society. More austerity measures to address energy and widespread cost-of-living crises.
Paul Kissock, chief executive of the Joseph Rowntree Foundation (JRF), which organized the letter, said the UK was facing a “national emergency” while the government was “asleep at the wheel”.
Calling for urgent help for the most vulnerable, in the form of a doubling of the £1,200 earlier this year committed to means-tested benefits for households, Kissock said: “Otherwise, vulnerable people will face a large-scale disaster when winter sets in. The consequences of sitting idly by are unthinkable.
Stormer, who returned from leave late last week, is under pressure to say more about energy prices after former Labor leader Gordon Brown ran ahead with a series of major interventions.
In the Observer last weekend, Brown called for an emergency budget. He has also called for a freeze on price cap and temporary nationalization of energy companies that refuse to pay lower bills.
In a pointed statement that some saw as a glassing reference to Stormer, Brown wrote Guardian Last week: “Time and tide wait for no one. There are no crises. They don’t take holidays and politely hang fire.
Stormer calls on the government to instruct Ofgem to freeze the cap on bills, saying it is within its power to do so.
Senior sources said Labour’s choice was to back large amounts of extra cash help for the most vulnerable or prevent a huge autumn rise in energy prices from occurring at the source. “It seems better to stop the escalation in the first place,” said a senior insider.
Ofgem warned in May that the cap would have to rise by around 40% to around £2,800 in October, in response to rapidly rising wholesale prices. Since then, forecasts have risen, with analysts at Cornwall Insight predicting a rise of £3,582 last week, more than 80% above the current limit. They forecast a further increase to £4,266 in the first quarter of 2023.
New analysis from the Institute for Public Policy Research thinktank, commissioned by the Economic Change Unit, found that freezing the price cap would not only save households more than £2,000, but also help reverse inflation, preventing it from becoming “embedded” in the economy. .
If the cap is raised to £3,600 as forecast, inflation will rise to around 13%, but if frozen at £1,917, inflation will run at 9.2%, the research says.
Sarah-Jane 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 held prices down to protect citizens’ financial security. There is no reason for our government to do the same and shift the burden to those who profit from this crisis.
The energy price cap, introduced in 2019, limits the maximum amount energy suppliers can charge for each unit of gas and electricity used.
70 charities and other organizations including JRF, AgeUK, Trussell Trust, Child’s Society, TUC, Shelter, MacMillan Cancer Support, Mind, Oxfam GB and Action for Children told the Tory leadership candidates in their letter to Sunak and Truss. The cost of living crisis for low-income families is a serious issue facing our country.
He adds: “So far this year, nearly three-quarters of low-income families receiving Universal Credit or other means-tested benefits, many of them working families, have been forced to go without at least one requirement. This means people have to skip meals or be unable to heat their homes properly.
“Many of our organizations work directly with these families and are too often unable to provide the support they need.
“This situation cannot be allowed to continue. As the prospective leaders of this country, we urge you to act now to demonstrate the compassion and leadership needed to confront this problem.
Isabel Hughes, policy engagement manager at the Food Foundation, who signed the letter, said: “Continued price rises and a winter approach will make life harder for low-income families and those who have received disproportionately less support. is at particular risk. The government needs to protect families from the worst consequences to protect children’s health and future.
A new poll of Liberal Democrats backs the cap freeze, revealing on Sunday that seven in 10 Tory voters back plans to scrap the October rise. Party leader Ed Davey said the move should be funded by a “tougher windfall tax on energy giants making record profits”.
Labor last night said its plans to insulate more homes would save millions of families more than £1,000. Ed Miliband, shadow climate change and net zero secretary, said: “Twelve years of failure by the Conservatives to insulate our homes is one reason why bills are so high. Too many working people and pensioners live in drafty, cold homes with high heating costs. If they are serious about cutting bills, they can start now by delivering on the warm homes plan that Labor has called for. The right national mission will save 19 million households more than £1,000 in bills and increase our energy security.