Sir Keir Starmer is to join the political manoeuvring over what to do about soaring energy prices by proposing that bills should be frozen this Autumn. The Labour leader will give details today, with another windfall tax on oil and gas company profits likely to feature.
His plan may follow an idea put to the Government by the heads of Scottish Power and E.ON to fix bills for two years. Suppliers would cover the gap between this and the wholesale price by borrowing from a "deficit fund" underwritten by the government but backed by commercial banks, allowing the industry to cap default-tariff bills at their current level of £1,971.
The cost would be passed on to consumers over a 10 to 15-year period and in theory could be done without spending taxpayers' money, though the Government would assume an ongoing liability.
With average bills set to rise to £3,500 in October and possibly to more than £4,000 in the New Year, the scramble for a workable and affordable solution is intensifying.
Last week, industry heads met Boris Johnson and other ministers, though without reaching any conclusions. The Prime Minister said later that help would be forthcoming after he leaves Downing Street early next month.
But the issue is what form it will take. No political leader is arguing against additional measures to mitigate the impact but they are at odds over how to go about it. Liz Truss has suggested that reversing tax increases would let people keep more of their own money, but the saving will be nowhere near enough to cover the gap. Some people on fixed incomes who pay no taxes will find energy costs impossible to absorb.
Rishi Sunak had previously turned down the Scottish Power plan when he was Chancellor and is wedded to more piecemeal help to pay for rising bills. Help at the moment includes £400 off household bills this Autumn, with the poorest eight million receiving an additional £650 to help with the cost of living. A separate £300 payment will be paid to about eight million pensioner households.
Arguably this is already generous but is being outpaced by events. A freeze will be a politically popular move and the Tories need to be prepared either to counter it or match Sir Keir's scheme when it emerges. The obvious question to be answered is how much will it cost – one estimate says £40bn – and who will pay?
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