Sir Keir Starmer pledges to freeze fuel bills by extending windfall tax
The Labour leader claims this will raise £29 billion to combat the cost-of-living crisis
Last updated 15th Aug 2022
Sir Keir Starmer has pledged to freeze fuel bills if Labour were elected, by extending the windfall tax on energy companies. The Labour leader claims this plan will raise £29 billion to combat the cost-of-living crisis.
The Labour leader said the £29 billion plan to address the "national emergency" would freeze the energy price cap at its current level of £1,971 for six months from October, saving the average household £1,000.
He contrasted Labour's proposal with the inaction of "lame duck" Prime Minister Boris Johnson and the "internal battle" of the Tory leadership contest, increasing the pressure on contenders Liz Truss and Rishi Sunak to spell out how they would help families struggling with soaring bills.
Sir Keir added that scrapping the planned increases in the price cap would keep inflation down, seeing it peak at about 9% rather than the 13% the Bank of England is forecasting, making future interest rate rises less likely.
He criticised the Government and the Conservative leadership hopefuls, who both oppose extending the windfall tax.
Sir Keir said: "We've got to grip it because at the moment what we've got is two Tory leadership candidates who are fighting each other in a sort of internal battle, where their main argument seem to be about how awful their record in Government has been and a Prime Minister who's a lame duck because he's acknowledged there's a problem with energy bills, but says 'I'm not going to do anything about it"
No nationalisation plan
The Labour leader has been under pressure to set out how his party would address the worsening cost-of-living crisis, with former prime minister Gordon Brown last week calling for an emergency budget, a price cap freeze and the temporary nationalisation of energy firms if they reject reducing bills.
Asked if he and his party should have acted sooner, Sir Keir said he had wanted a "fully costed, comprehensive plan".
Sir Keir rejected calls to nationalise energy firms, saying: "If you go down the nationalisation route, then money has to be spent on compensating shareholders and I think in an emergency like this, a national emergency where people are struggling to pay their bills, I think that the right choice is for every single penny to go to reducing those bills."
Conservative former Northern Ireland secretary Brandon Lewis called Labour's energy proposal a "poor policy" that did not deal with the "underlying issues" as he touted Ms Truss's tax-cutting plans.
Cost of living crisis
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.