Keir Starmer calls for extra windfall tax to freeze energy bills

Sir Keir Starmer has said families would “not pay a penny more” on their energy bills this winter under Labour’s plans to tackle rising living costs.

The Labour leader claimed his proposals would save the average household £1,000 a year.

The package would be paid for, in part, by a big increase in tax on oil and gas company profits.

But critics said the plan would cost as much as the Covid furlough scheme and was not a long-term solution.

The government has already announced £37bn of support for hard-pressed families, but it is under pressure to do more, with bills set to rocket over the winter.

Rishi Sunak and Liz Truss – who are battling it out to be the next prime minister – have both set out what they would do, but have ruled out extending the current windfall tax on energy company profits.

Labour said its plan to stop energy bills from rising was “fully costed” and would be paid for in three ways:

The Labour leader said freezing the energy price cap at the current level of £1,971 a year for the typical household would bring inflation down by four percentage points.

Inflation – the rate at which prices rise – hit 9.4% in June, the highest level for more than 40 years. The Bank of England has warned it could peak at more than 13% later this year.

The main reason for high inflation is soaring energy bills, driven by Russia’s invasion of Ukraine, although households have also been hit by higher petrol, diesel and food costs.

Sir Keir said he would have to “assess” the situation in April, but Labour’s plans were about helping people through the winter.

He added further measures to reduce inflation may be needed next year, and argued in the medium to long term Labour was calling for further measures to bring costs down such as insulating millions of homes.