Britain’s Labour Party called for the energy price cap to be frozen on Monday to help people deal with another expected increase in fuel bills, putting pressure on the Conservative government as Britons grapple with the worst cost-of-living crisis in decades.

Liz Truss and Rishi Sunak, the two Conservative Party politicians competing to replace Boris Johnson as Prime Minister, have so far promised more limited assistance than major opposition leader Keir Starmer’s 29-billion-pound plan.

If elected, Starmer’s Labour Party would cap energy costs at the current level of 1,971 pounds ($2,386) per year for six months beginning in October, raising 8.1 billion pounds by extending a windfall tax on oil and gas companies in the North Sea.

Charities in the United Kingdom have warned that if the government does not provide a fresh support package, millions of people will be forced into poverty.

“We would make sure these energy price increases do not go ahead in the autumn and so instead of allowing the prices to go up and then trying to rebate people, we’re going to cut the problem at source and stop those price increases,” Starmer told the BBC.

“We’re going to pay for it by extending the windfall tax on oil and gas companies in the North Sea who’ve made much bigger profits than they expected.”

Labour also stated that it would retroactively apply the windfall tax to January and eliminate the government’s investment allowances for energy companies, allowing firms to receive tax breaks in exchange for increased investment in oil and gas production.

Starmer stated that the emergency package would lower bills in the long run by insulating 19 million homes in the UK over the next decade, as well as reduce inflation, which the Bank of England predicts will exceed 13% in October.

However, he ruled out temporarily nationalizing energy companies that refuse to lower bills, a suggestion made by Gordon Brown, Labour’s former prime minister, who appeared to criticize Starmer for going on vacation last week during a crisis.

According to Paul Johnson, director of the Institute for Fiscal Studies, the plan would most likely need to run for a year at a cost of around 60 billion pounds.

“If that’s what you want to achieve, that’s what you need to do but you do need to recognise that is a very expensive thing to do,” he told BBC radio.

The government has announced a 37-billion-pound aid package, with 8 million of the most vulnerable households receiving 1,200 pounds in direct assistance.

The finance ministry and other departments, according to a spokesman for Prime Minister Johnson, are making “necessary preparations to ensure a new government will have options to deliver support as quickly as possible, but clearly those decisions will rest with the new prime minister”

Russia’s decision to reduce gas exports to the West in the aftermath of its invasion of Ukraine has raised prices across Europe, forcing governments in Italy, France, and elsewhere to intervene. France has set a 4% cap on electricity tariff increases.

Cornwall Insight predicts that average British annual gas and electricity bills will rise to 3,582 pounds in October and 4,266 pounds in January. The price cap was 1,277 pounds earlier this year.

Foreign Minister Truss, the favorite to be Britain’s next prime minister, has faced criticism from political opponents and charities for appearing to rule out further “handouts” and for failing to commit to increasing direct consumer support in order to appeal to fiscally conservative Conservative Party members.

Sunak, the former finance minister, has stated that lowering VAT may save homeowners roughly £200 on their energy expenditures.

Source: Reuters


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