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Labour Is Finally Preparing To Unveil Cost-Of-Living Policy Proposals As Energy Crisis Escalates

Labour Is Finally Preparing To Unveil Cost-Of-Living Policy Proposals As Energy Crisis Escalates

Keir Starmer is expected to make the first of these announcements shortly (Alamy)

4 min read

Exclusive: Labour is preparing to make several policy announcements on the worsening cost-of-living crisis, with the first set to be detailed in a speech by Keir Starmer as soon as early next week.

With inflation running at a 40-year high, continuing low growth and the Bank of England warning that the United Kingdom faces a 15-month recession, the opposition party has been under growing pressure to set out its policies for addressing the myriad challenges facing the country.

PoliticsHome has learned that Labour is poised to make several significant interventions on the economy between now and the next general election, with the party preparing to escalate its policy to crisis mode.

The first intervention, which party insiders say will reflect "the scale" of the crisis facing households and industry, is expected to be a speech by Starmer, which could take place as soon as Monday.

Shadow chancellor Rachel Reeves, meanwhile, is bullish about facing Liz Truss and Kwasi Kwarteng – the pair Labour sources believe is most likely to enter Downing Street as prime minister and chancellor in early September.

“The Tory leadership campaigns are playing to a gallery of Tory members – none of whom want ‘handouts’. But they also want to win the next election, and they’re not speaking to the country,” a senior Labour source said.

“Far and away the biggest issue is the cost of living. I’m astounded they haven’t done more to show they recognise that. We’re going to get on that.”

The source said Truss should not be underestimated by Labour, but added: “In terms of the political centre ground, she’s moving away from it and we’re moving much closer to it.”

Starmer's office has been working closely with Reeves and shadow climate change secretary Ed Miliband’s team on the new policy – which has been tested with external experts – for several months, PoliticsHome understands.

A Labour source said the party had always been planning to wait for yesterday's forecasts before announcing its plans, so that its proposals were up-to-date. The pressure on Labour to challenge the Tory's deadlock on cost-of-living increased earlier this week when the Liberal Democrats announced a radical proposal that the government should absorb the cost of the upcoming hike in energy bills, in what leader Ed Davey described as "energy furlough scheme", partly paid for by an expanded windfall tax on major energy companies.

The plan, which Davey told The Guardian would cost £36bn, received praise for grasping the magnitude of the energy crisis.

A Labour adviser dismissed the Lib Dem idea, however, telling PoliticsHome it showed that Davey's party's "reputation for creative accounting" is "alive and kicking".

They said: “They've used forecasts that were out of date before the ink on their press release was dry. They want to break numerous taxation treaties with their plan to unilaterally tax the profits of companies twice.

“And their constant references to a VAT windfall are wishful thinking – we’re heading into a recession, which is hitting spending and VAT receipts.”

Truss has been consistently in the lead to succeed Johnson as the next prime minister since making it onto the final ballot, with latest polling of Conservative members by YouGov and ConservativeHome showing a 38 point lead on rival Sunak. 

She has committed to holding an emergency Budget if she wins, which the opposition predict will be held on 14 or 21 September. 

“But that will be too late," a senior Labour source said. 

“People will have solidified their views and thought ‘she doesn’t give a shit’. So, that’ll be too late on public perception. And where’s the fiscal headroom? It’s always under doubt anyway because of changes to forecasts, and she’s used it all up.”

They continued: “How is she going to get into the Treasury and think of something that matches the scale of the problem? I’m sure she’ll do something, but I don’t know what they’ll come up with. All indications are neither she nor her team understand the crisis.”

The new Prime Minister will deliver their first Tory Conference speech as leader just days after the new energy price cap comes into effect on 1 October.

The latest forecast released by consultancy Cornwall Insight predicts that the cap will reach £3,582 in October this year, up from £1,277 in October last year. It is currently at £1,971 per year.

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