UK Opposition to Pressure Government to Retain Energy Price Cap

The Labour Party will demand the UK government drops plans to remove a cap on energy prices, putting pressure on Liz Truss and Rishi Sunak — both vying to take over as prime minister — to come up with concrete proposals to mitigate what threatens to be the nation’s biggest cost-of-living crisis in decades.

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(Bloomberg) — The Labour Party will demand the UK government drops plans to remove a cap on energy prices, putting pressure on Liz Truss and Rishi Sunak — both vying to take over as prime minister — to come up with concrete proposals to mitigate what threatens to be the nation’s biggest cost-of-living crisis in decades.

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According to the Guardian newspaper, party leader Keir Starmer will ask on Monday that the government tell regulator Ofgem to freeze the current £1,971 ($2,390) limit on household bills. Cornwall Insight has predicted that the typical annual bill will jump in October to more than £3,500, and to beyond £4,200 in the first quarter.

Warnings that millions of low-income households face misery as power prices spike are dominating the national conversation. And with inflation running rampant, interest rates rising and strikes bringing trains to a halt, Britain is already beset by what’s been dubbed a summer of discontent.

The weeks-long leadership battle between Truss and Sunak to replace Boris Johnson has also exposed a vacuum in the heart of government as the economy sputters toward recession. Johnson is staying on until his successor is named in early September, but his administration won’t make any major fiscal decisions in the mean time.

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The Telegraph reported that Truss, whose campaigning has focused largely on her desire to cut taxes to revive the economy, might limit access to the discount currently available to all Britons facing steeper energy bills. 

Simon Clarke, one of her backers and the chief secretary to the Treasury, mused to the paper it was “odd” that wealthy people are set to benefit from a £400 handout in October — part of a package unveiled by Sunak when he was Chancellor of the Exchequer.

The Times reported late Saturday that the Treasury is planning a lending program for suppliers that would reduce household bills by another £400 this winter.

In an interview with the Sun published on Sunday, Sunak set out a plan that included giving unspecified support to pensioners and the poorest families for their energy bills.

For the longer term, he wants to encourage more production from the North Sea and fracking, and to reform regulations governing wind, solar and nuclear power.

“We’ll get through this winter with my plan but it’s also the longer-term things we need to get right,” he told the newspaper.