Truss and Sunak urged to end silence on ‘emergency’ of rocketing energy bills

Tories accused of ‘appalling vacuum of leadership’ as new price cap rise looms

Rob Merrick
Deputy Political Editor
Monday 15 August 2022 22:35 BST
Keir Starmer describes his proposals to freeze energy price cap

Liz Truss and Rishi Sunak are being urged to end their silence on the “national emergency” of energy costs hitting £3,600 in just two months, after Labour vowed to freeze bills.

Independent experts and a former top government scientist joined Sir Keir Starmer’s party in arguing the gathering crisis could not wait for the end of the summer-long Tory leadership contest.

As a holidaying Boris Johnson again declined to intervene, the two candidates came under fire for failing to set out how they would ease the pain for households if they reach No 10.

The Institute for Fiscal Studies (IFS) warned the next government would need to spend another £12bn just to provide the help already promised, because of rocketing prices.

“The government is still playing catch up as inflation and the cost of energy continue to spiral upwards,” its director Paul Johnson said, warning that would “still leave many households much worse off”.

David King, a former chief scientific adviser, warned of “extreme suffering” to come, saying: “This could be the worst possible time for the leadership of this country to be simply sitting back. We’re waiting until what?”

And Ed Miliband, Labour’s shadow climate change secretary, said direct debits will rise as soon as the new price cap is confirmed on 26 August, “plunging millions into misery and anxiety”.

“If this was a banking crisis, the government would act. If this was a war, the government would act. This is national emergency facing families and it cannot wait,” he said.

“The Conservative candidates and the zombie government must end the appalling vacuum of leadership and act.”

But neither of the candidates – preparing for more leadership hustings in Scotland on Tuesday – responded to Labour’s plan to freeze bills for six months over the winter, at a cost of £29.3bn.

Sir Keir promised families would not “pay a penny more” if the proposal to freeze the price cap at £1,971 was adopted, instead of allowing it to soar to an expected £3,600 in October – and a possible £4,200 in January.

It would be funded by a beefed-up windfall tax on energy companies (£8.1bn), scrapping £400 rebates for all households (£14.1bn), and lower interest payments on debt from reduced inflation (£7.2bn).

But the IFS cast doubt on the claim of lower inflation, which would be only a “temporary” benefit if the energy crisis persisted deep into next year and beyond.

The IFS’ Mr Johnson said the cost would reach £60bn if, as he expected, Labour was forced to retain the policy for a year, pointing out: “You are looking at the cost of furlough.”

But he said Labour had, at least, costed its plans adding: “That is frankly more than we have had from the government or the candidates for the premiership.”

Momentum, the grassroots left-wing Labour pressure group, criticised Sir Keir’s refusal to nationalise energy companies at this moment of crisis, an idea backed by 60 per cent of voters it argued.

Hilary Schan, Momentum’s co-chair, said: “Instead of proposing to shell out tens of billions of pounds subsidising energy companies, Labour should be arguing for public ownership, at a fraction of the price.”

The leadership candidates have been widely criticised for putting forward vague and inadequate proposals to curb energy bills, in a contest dominated by “fantasy” tax cuts and hardline policies towards asylum seekers.

Ms Truss, the overwhelming favourite, was forced to row back from her opposition to “handouts”, but has failed to address criticism that her tax cuts would overwhelmingly help higher earners.

The foreign secretary has proposed suspending the green levies on bills, but that would only save the average household about £150 a year.

Mr Sunak performed a U-turn when he promised to remove VAT on energy bills, but that would also only cut bills by about £150.

The former chancellor originally said there would be no time to pull any other “levers” before October, but has since hinted at further help along the lines of that unveiled in the spring.

Philip Hammond, the former Conservative chancellor, attacked Labour’s energy plan as “a populist response that is untargeted”, when a “longer term response” might be needed.

“It’s fine for the government to intervene to support people through a short-term pressure, but the government can’t protect us indefinitely if this is a long-term shift in relative prices,” he told the BBC.

“I’m sure everybody would like to have their energy bills frozen this winter, but not everybody needs that support from the taxpayer in the same way.”

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