The Leader of the Opposition unveiled a new plan to freeze the energy price cap in a bid to protect penny-pinching British households from soaring bills. However, the Institute for Fiscal Studies (IFS) think tank has since claimed the proposal could cost as much as the Treasury’s furlough scheme at £60billion.
Sir Keir Starmer revealed his proposals to suspend October’s rise in electricity and gas prices.
He instead claimed they would be fixed at a maximum of £1,971 for the following six-month period.
Such a move would help shield British households from an increase to around £3,600 in the autumn, with the Government picking up the tab on behalf of energy companies.
Southside said the scheme would cost £29billion and suggested the money would be raised through windfall taxes on oil and gas giants.
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IFS director Paul Johnson warned a freeze would likely need to stay in place for at least a year.
He told BBC Radio 4: “You are looking at the cost of furlough if you remember that from Covid a couple of years ago, so that is a very expensive scheme.”
The furlough scheme, which helped support the wages of almost 12million employees for 18 months, was estimated to have cost approximately £70billion.
Other experts have also suggested the scheme could prove costly.
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Andy Mayer, energy analyst at the free-market Institute of Economic Affairs think tank, said: “Labour repeats errors made during the last energy crisis in the 1970s, economic mismanagement through ‘make believe’ price controls, that left the UK seeking a bailout from the IMF.”
Ex-Chancellor Philip Hammond described Labour’s plan as “a populist response that is untargeted”.
Mr Hammond added: “I’m sure everybody would like to have their energy bills frozen this winter, but not everybody needs that support from the taxpayer in the same way.”
However, the Labour leader claimed his “very strong, robust, costed plan” would help the “millions of people already struggling with their bills” before the price cap rises further.
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Sir Keir also took aim at Boris Johnson, who he described as a “lame duck” Prime Minister, before accusing both Rishi Sunak and Liz Truss of “fighting each other”.
The Leader of the Opposition also claimed his proposal would see inflation peak at nine percent this year, as opposed to the 13 percent forecast by the Bank of England.
The UK’s current inflation rate stands at 9.4 percent, according to Threadneedle Street.