The expected increase in the energy price ceiling in October should be shelved by the next prime minister and the costs covered with an unexpected tax on oil and gas companies, the leader of the Liberal Democrats has said.
Sir Ed Davey said neither of the Tory leadership hopefuls – Liz Truss or Rishi Sunak – had understood the scale of the challenge facing people this autumn, as the cost of living crisis is set to worsen for millions of British households.
Experts have predicted that the energy price cap could rise to £3,358 annually from October, and could reach £3,615 from January. In October 2021, the average energy bill was £1,400 a year.
The Liberal Democrat leader said that instead of consumers being hit by the skyrocketing prices, the government should cover the deficit for energy suppliers.
The party estimated the cost of the policy would be £36 billion and proposed that the windfall tax on oil and gas company profits should be extended to help cover it.
Sir Ed said: “The competition to be leader of the Conservative Party might as well be happening in a parallel universe. Neither candidate has any idea how to help families and retirees through what could be the toughest winter in decades.
“We need bold and urgent action to help families pay their bills and heat their homes this winter. There is no other choice.”
Sir Ed added: “This is an emergency and the Government must step in now to save families and pensioners £1,400 by canceling the planned increase in their energy bill in October.”
It comes as Nicola Sturgeon has called for an urgent meeting of the heads of the devolved administrations to address the cost of living crisis.
In a letter sent on Monday, Sturgeon urged Boris Johnson to move a proposed meeting between the heads of UK governments from September to this week.
Many of the “hands of government” required to tackle the problem remain reserved for Westminster, the First Minister said in her letter, adding that action taken by devolved administrations “will not be enough”.
“I am therefore writing to request an urgent meeting of the heads of government and suggest that we, as heads of our respective governments, meet as soon as possible this week to discuss and agree urgent measures to help those who need it most now, and also draw up an action plan for the autumn and winter ahead.”
In his letter, the First Minister emphasized that “targeted” support was needed for the most vulnerable.
In response, a spokesperson for the Prime Minister said: “We recognize the pressures families across the UK are facing due to rising prices caused by global challenges.
“That’s why the UK Government is giving 689,000 households in Scotland the £650 cost of living payment, £300 for all Scottish pensioners and £400 to help people with their energy bills.
“We have also given an extra £82m to the Scottish Government to help vulnerable families at their discretion – on top of the substantial income tax and welfare authorities they already have.
“The UK Government’s spending review gave the Scottish Government a record settlement of £41 billion annually for the next three years and we will continue to work with them.”
Further reporting from PA