Can Labor solve the cost of living crisis?

Electricity bills are to be frozen for six months to ensure people across the UK don’t “pay a penny more” for gas and electricity this winter, Keir Starmer has claimed.

Unveiling a £29bn proposal to help tackle the cost of living crisis, the Labor leader said averting expected price rises in October and January would save families an average of £1,000 each.

In accordance with The Timesthe poll shows a majority of the public support Labour’s plan, including three-quarters of Tory voters, “as ministers come under pressure to do more to tackle the cost of living ‘national emergency'”.

What does Labor propose?

At the heart of Labor’s plans is a freeze on the cap on energy prices, which is financed by the expansion of the so-called windfall tax on oil and gas companies, dated from the beginning of this year.

This would see the price cap that is forecast to reach £4,266 in Januarywill remain at the current level of £1,971 a year for households until April 2023.

Starmer said it would save families hundreds of pounds and help reduce inflation by four percentage points. The latest forecasts from the Bank of England show inflationwhich reached 9.4% in June, could peak at more than 13% later this year.

Cap freeze to be paid for by raising £8bn from windfall tax hike sharp increase in profits of oil and gas companies and the scrapping of the £400 energy rebate announced by the government for the autumn. A further £7bn could be saved by reducing interest payments on the national debt through lower inflation. The work plan also includes support for people not protected by price caps and a scheme to ensure that people who use pre-paid meters do not have to pay more for energy than people who pay monthly.

Starmer also promised to reduce energy demand and lower bills in the long term by insulating 19 million homes over the next decade.

What was the reaction?

Tory leader Liz Truss cuts taxes the center of her cost of living response, but a YouGov survey of nearly 1,800 adults, conducted for The Times, “suggests a public desire for more radical measures,” the newspaper said. Only one in eight respondents said they “could afford a rise in electricity bills without a reduction in their standard of living”.

Charities including the Salvation Army have warned that children will starve unless ministers increase the existing support package to cover rising electricity bills.

Labour’s plans received positive front-page coverage in the Daily Mirror, the i newspaper and the widely read suburban newspaper Metro, Politics said: “This is a rare breakthrough moment for Starmer.”

Guardian reported that his statement was “welcomed” by the Liberal Democrats. And the left-leaning think tank Institute for Public Policy Research (IPPR) backed the twin arguments that a price freeze, funded by a windfall tax, “would prevent rising electricity bills from driving millions into debt and poverty and curb ever-rising inflation, a risk to the economy stability of Great Britain”.

What do the critics say?

With widespread support for a cap freeze, critics of Labour’s plans have instead focused on how the plan will be paid for and what will happen when the six-month freeze ends next April.

This was reported by the director of the Institute of Fiscal Studies, Paul Johnson Telegraph that the £7.2 billion saving in interest payments on the national debt was an “illusion” as inflation would increase if the huge subsidies did not remain constant for more than six months.

Allies of Tory leadership contender Truss have reportedly issued a similar warning that “any freeze must end”. Dismissing Starmer’s plans as a “Band-Aid” solution that is “no substitute for more coherent policy”, an unnamed ally of the minister cited how the freezes of the 1970s had ultimately failed to contain prices or inflation.

Other critics of Labour’s proposals say it will mean big handouts to wealthy voters, with Professor Richard Murphy of Tax Research UK warning they include £10 billion in subsidies to Britain’s richest 20% of households.

However, Labor sources say bills are rising so much that there are now relatively few families who will not need help.

Those “concerned about huge government costs will argue that the plan opens the door to continued subsidization of profitable energy companies, with no end in sight,” he said. A mirrorand “the left meanwhile will ask why [Starmer] did not go all out and nationalize the industry” as Proposed by former Prime Minister Gordon Brown last week.