Conservative MP Brandon Lewis, speaking to Julia Hartley-Brewer on TalkTV, dismissed the Labour Party’s £29 billion plan to address the “national emergency” by freezing the energy price cap as ignorant to the “medium and long term”. He cited the Institute for Fiscal Studies, who today described Labour’s plans as an “illusion” given the offsetting nature rising inflation would have on savings through tax. Mr Lewis later highlighted the plan of Ms Truss, who he is backing to become the next Prime Minister, saying her notion of a “lower tax economy” would help people pay for rising costs while addressing inflationary pressures.
Ms Hartley-Brewer said: “[Sir Keir] seems to be calling for action now saying that if he was prime minister he would be freezing that energy price cap as it is right now, £1971, and he has called on Tories to do the same for the next six months. Is that what Liz Truss would be planning to do?”
Mr Lewis said: “I think it is part of the benefit of being in opposition rather than government, you can pull ideas out there without necessarily having to worry about the medium and long term.
“This is a six month solution that is going to cost roughly what furlough cost, the IFS have already outlined this morning where there could be an easy £7billion gap in the figures. It is effectively recycling taxpayers money.
“What Liz has outlined, and she has led the way on this, is wanting to have a lower tax economy so people have more money in their pockets to deal with these challenges and to have an emergency budget that could look specifically at what we would do early in the autumn once she becomes Prime Minister if she is able to win that position in the first week of September.”
Sir Keir Starmer announced his party’s proposals this morning, describing them as “very strong, robust, costed”.
He said: “We have a choice and this is really the political choice of the day. We either allow oil and gas companies to go on making huge profits which is what’s happening at the moment or we do something about it.
“We, the Labour Party, have said we’ll do something about it. We will stop those price rises and we will extend the windfall tax on the profits that the oil and gas companies didn’t expect to make. So we’ve got a very strong, robust, costed plan here which will stop those rises this autumn.”
But Director of the IFS Paul Johnson was quick to call into question the logicality of the policy, as well as the soundness of its budgeting.
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He described Sir Keir’s policy plan as an “illusion”, highlighting that the £7.2 billion purportedly saved on interest payments on national debt would be absorbed by rising inflation.
He said of the policy: “It is an illusion in the sense that it will reduce interest debt payments in the short term. But unless you maintain these kinds of subsidies permanently, it won’t reduce them in the long run. Inflation will be higher later on.”
Asked about the IFS’s comments on Labour’s plan, Sir Keir said: “What Paul Johnson (IFS director) isn’t disputing is that our plan will reduce inflation, so he’s absolutely clear that that is the case.
“Of course what he’s rightly saying is what happens after April matters because you have to maintain measures to reduce inflation. Of course we have to do that in April when we see the circumstances, but what he’s not suggesting is that we’re wrong when we say that our plan will reduce inflation.”
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