Truss and Sunak retreating into “fantasy world” over cost of living, Labour says

Labour’s Alan Whitehead has accused Tory leadership candidates Liz Truss and Rishi Sunak of retreating into a “fantasy world” rather than responding to the cost-of-living crisis after Ofgem warned of a “very challenging winter ahead”.

The energy regulator announced today that it will begin updating the energy price cap quarterly rather than once every six months. Ofgem said the change would allow the cap to “adjust much more quickly” to volatility in the energy market.

Commenting on the announcement, the shadow energy minister stressed that “millions of families” are facing a “cost-of-living catastrophe” over the winter months.

Whitehead declared: “The government should be preparing now for what’s coming, but instead the Tory leadership candidates are retreating ever further into their fantasy world, ignorant or uninterested in the struggles that families across the country are facing.

“Meanwhile, they are blocking new onshore wind and solar, the cheapest, cleanest, quickest forms of energy we have, whilst refusing to insulate homes to cut bills for good.

“While the Tories are asleep at the wheel, Labour has a plan to insulate millions of draughty homes and kickstart a green energy sprint to cut bills and ensure our energy security.”

Consultancy BFY estimated that the energy price cap could rise to £3,420 a year in October for the average dual-fuel tariff. The cap is expected to be increased again in January, with BFY forecasting that it could hit £3,850. Analysts at Cornwall Insight have predicted a smaller but still significant rise to £3,615.

Reacting to today’s announcement, End Fuel Poverty Coalition co-ordinator Simon Francis said: “Households will face a two-stage cost-of-living crisis this winter, thanks to Ofgem’s confirmation that energy bills will go up in October and again in January.

“From October, millions of families across the country will face the real prospect of skipping meals to pay for energy, older people will shut themselves into one room to save on heating and disabled people will be unable to afford to charge vital equipment, such as electric wheelchairs.

“Then in January, they will be asked to pay even more for their energy. Ultimately, this decision will force more people into fuel poverty in the middle of winter, causing additional stress on the NHS, and it may ultimately lead to increased levels of excess winter deaths this year. It is simply inhumane.

“It’s clear that the government and the Conservative Party leadership hopefuls just don’t get the scale of the problem facing the country, nor the public anger at rising bills. They are running out of time to act.

“Only a full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future.”

GMB national secretary Andy Prendergast said: “This change will create unnecessary uncertainty for households. Although in theory this allows for bills to fall more quickly as a result of changes in the energy market, it also allows bills to be raised at a faster rate.

“Prices are forecast to go up in the medium term, meaning that struggling households are likely to see bills rise even faster. As prices rise, the government must shoulder responsibility for its failure to tackle the difficult questions over gas storage and investment in new nuclear.

“Ministers and Ofgem should be providing customers with support and certainty – instead, this announcement will lead to real worry that those just about managing will be tipped over the edge.”

UNISON head of energy Matt Lay said: “The government must stop pretending it’s done enough. Support for consumers has so far been pitiful. Other European governments have been both swifter and bolder to lessen the blows from big bills.

“All but the richest consumers face a terrifying prospect this winter. Many simply don’t have the means to pay. Swift and radical government action is needed to cap the horrific price hikes predicted. Otherwise, there will be a crisis of unimaginable proportions.”

Ed Miliband declared last week that the country is facing a “serious and worsening energy bills crisis, far worse even than a couple of months ago,” noting that, at the same time, oil and gas producers’ profits are soaring to “record levels”.

The Shadow Climate Change and Net Zero Secretary said: “Both candidates for the Tory leadership have shown themselves living on another planet when it comes to the cost-of-living emergency.

“Rishi Sunak opposed the windfall tax tooth and nail and has introduced a multi-billion tax break for the oil and gas sector, while Liz Truss appears to believe that the cost-of-living crisis can be solved by abandoning renewable energy – the cheapest form of power we have.

“The government is asleep at the wheel. They should start by getting rid of the plan to hand £4bn of public money back to the oil and gas giants making record profits in this crisis and using this money to help families.”

The government announced in May that it would be introducing an energy profits levy on the “extraordinary profits” of the oil and gas sector – a policy Labour had been calling for since January.

The government’s levy includes a new investment allowance, a ‘super-deduction’ style relief intended to “encourage firms to invest in oil and gas extraction in the UK”. The investment allowance will mean businesses receive 91p in tax savings for every £1 invested in the North Sea.

BP reported on Monday that its profits had tripled to nearly £7bn in the second quarter of the year. British Gas owner Centrica revealed last week that its operating profits for the six months to the end of June were £1.34bn – up from £262m for the same period last year.

Shell announced that it had made record profits of £9.5bn between April and June – an increase of 26% on the first quarter of this year, which was a previous high. The company plans to give shareholders payouts worth £6.5bn.