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Tory Urges Liz Truss And Rishi Sunak To Listen To Labour's "Direct" Energy Bill Proposals

Rishi Sunak and Liz Truss have been urged to take heed of Labour's plan to stop the energy price cap rising this winter (Alamy)

5 min read

A former Tory minister has urged the government to pay attention to Labour's proposed plan to freeze the energy price cap for six months instead of “doling out money to help people with higher bills”.

Baroness Altmann, a Conservative former work and pensions minister, said the two candidates for the Conservative leadership, Liz Truss and Rishi Sunak, should take heed of Labour leader Keir Starmer’s proposals to stop anticipated rises to energy bills "at source”, rather than following the government's plan to offer individual rebates.

Current forecasts predict the energy price cap, currently at just below £2,000, will go up to £3,500 in October, and as much as £4,200 in January. 

Starmer said his six-month plan would mean people would not pay a "penny more" than they currently are, and will finance it through a £29bn package including an increased windfall tax on energy companies, saving on debt interest payments from lower inflation, and diverting the costs of the government's planned £400 rebate. Downing Street has said there will be no revisions to the current policy before the new prime minister is in place on 5 September. 

Altmann said she favoured Starmer's direct approach via energy to the government's more granular consumer-based proposal. 

“I think direct action to stop the rises is much preferable to indirect action to subsidise higher energy price rises, because the extent of the increases is so extraordinary and in my view ridiculous,” she told PoliticsHome

She said Labour's was an attractive proposal, as the measures already announced by outgoing Prime Minister Boris Johnson to help with the cost of living are a “significant amount of money”, but isn't generating much response from the people it is intended to help.

“It seems to me that continuing on the same path, doling out money to help people with higher bills, rather than reducing the bills themselves is just carrying on a policy that is clearly not getting through to the public,” Altmann continued.

“It is not alleviating a panic and fear that has grown in the population, on top of which by continuing a price increase you are directly boosting inflation as well, which sets up a vicious circle where workers see prices rising so they demand higher wages and then it becomes endemic.”

She said whoever takes over from Johnson next month needs to look at ways of stopping the energy price cap from rising, a policy proposed earlier this year by Tory MP Stephen McPartland, who called on regulator Ofgem, which sets the cap, to keep it at its previous level by offering a credit facility to utilities firms.

PoliticsHome understands McPartland, now a minister, is still keen on such a plan to prevent bills going up further – but Sunak has previously rejected it when he was still Chancellor.

Campaign teams for neither Truss or Sunak have responded directly to Starmer’s suggestions today.

Tory former Cabinet minister Esther McVey backed Labour's principle of keeping the energy cap where it currently is.

“With energy bills set to soar to circa £4k in January, radical solutions are required, like freezing bills at the rates they are now with the government picking up the rest until the market steadies," she tweeted.

“Tinkering is not enough and I’m not sure many politicians appreciate how serious this is.”

Former work and pensions secretary Stephan Crabb told PoliticsHome it is “crystal clear that the energy industry will need to do more of the heavy lifting” alongside the taxpayer to deliver the support required to help people pay their bills in the months ahead.

“Support for the most vulnerable households will need to at least double by this winter. Targeted help is of course the best way forward but some element of universality, perhaps through cutting VAT for everyone, may need to be part of the package too,” he said. 

But several Tories were dismissive of Labour’s plans. George Holt, a Conservative councillor in Dartford accused Labour of  "kicking the can down the road," with the proposed price cap freeze due to expire in April. 

"It's reactionary and ill-thought out,” he told PoliticsHome

“What we actually need is to continue focusing on producing more energy domestically, more targeted relief for households who need it and meaningful tax cuts on our costs."

Tory peer and president of the National Energy Action charity Baroness Anne McIntosh said she is confident that the next PM will implement policies that will help solve the issues, but worried that the delay in new announcements was having a negative impact on the party. 

“We’re thrashing around a bit in the dark a bit at the moment as nobody knows what October price will be,” she said.   

She suggested Starmer's ideas were “interesting” but supported the idea of an emergency Budget once the next Prime Minister is in office. 

“We’ll be in a better position in September to know what the cap is going to be in October,” she told PoliticsHome. “And we will then have to forecast what the cap will be in January.”

McIntosh said she had “reservations” about the idea of nationalising any firms. “As long as we’ve got the Ukrainian war we do need to look at new ways to make new energy in this country,” she added. 

Downing Street has said Johnson – who is currently on holiday in Greece – does not plan on making significant interventions before he leaves office. Today a spokesperson for the PM confirmed he will not hold discussions with Truss and Sunak to agree any further measures to help with rising energy bills.

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