Reeves: Bills will not rise by “a single penny” under Labour’s energy plans

Rachel Reeves has said that people in the UK will not see their costs increase by “a single penny” under Labour’s plan to tackle rapidly rising gas and electricity bills.

In a Sky News interview this afternoon, the Shadow Chancellor defended Labour’s plan to freeze the energy price cap at the current level so that the expected rises in October and January– which would see household’s average annual energy bill spend increase to £3,600 and £4,200 respectively – will not take place.

Reeves told viewers that the proposed package from Labour would “get us to next April” and that the opposition party will then “look at the forecasts” closer to next year and “if necessary put forward another package of measures”.

“The package that we are putting forward will take people through those very worrying winter months when the cost of gas and electricity for ordinary families and pensioners does tend to be higher because we’re spending more money heating our homes during those cold months,” she said.

Labour has said its plan, which would cost £29bn, can be funded by backdating the windfall tax to include excess profits made since January, closing the loophole in the levy allowing tax relief on fossil fuel investment, halting the planned £400 payments for all households and lowering government interest payments on debt.

Reeves also argued that the package of interventions would lower projections of inflation over the next year. The Bank of England has projected that the UK will enter recession from the fourth quarter of the year and that inflation will rise to around 13%, largely as a result of increases in the price of gas.

“For the next six months, until April next years, this is a fully-funded and fully-costed package of measures and the reduction in inflation that this package would bring about – because energy prices wouldn’t go up by the astronomical amounts that Ofgem and others are expecting it to – that would directly reduce the level of inflation and so reduce the amount that government would spend on servicing national debt,” she said.

She told viewers that, if implemented, the proposals would mean that inflation would peak at 9% rather than 13%, lowering the cost of servicing government debt and giving ministers “more money to pump back into keeping people’s energy bills, which is our number-one priority now during this national emergency”.

Keir Starmer said earlier today that his party is “not going to stand by” while millions of households struggle to pay for energy this autumn as he unveiled the plan to freeze energy bills by introducing an expanded windfall tax.

“We’ve got to make a choice. We can either let oil and gas companies continue to make huge profits that they didn’t expect to make whilst families and millions of people struggle to pay their bills or we do something about it,” he said.

“The Labour Party is not going to stand by. We have made the choice that those oil and gas companies should pay a windfall tax on the excess profits that they didn’t expect to make so that we can freeze the cost for families.”