Energy Price Cap: Labour calls for three month extension

Labor has urged the government to freeze energy bills until July.

The government’s energy price guarantee, which caps average household bills for electricity and gas at £2,500 a year, will be increased by £500 in April.

“Most people just don’t have the money to pay for that,” Labour’s shadow chancellor Rachel Reeves told the BBC.

A three-month extension of the price freeze could be funded by an increased windfall tax, Labor said.

Raising the country’s existing windfall tax from 35% on oil and gas company profits to 78% – the same tax rate as Norway – would raise £4.7 billion, according to Labor research.

The party said backdating the tax to early 2022 and ending the practice of allowing energy companies to circumvent the scheme by investing profits would raise a further £8.7 billion.

The extra money should also be used to freeze fuel taxes at their current rate, Labor said.

Labor has urged the Government to ensure customers with prepayment meters pay no more than those paying by direct debit.

There should also be a moratorium on “energy companies moving people from regular payments to prepaid meters,” Ms Reeves said.

“This effectively cuts some people off from heating when temperatures drop below zero,” she said with Laura Kuenssberg on Sunday.

Pressed about what would happen after the three months, she said: “We always said we would look at it depending on what happens with oil, gas and electricity prices.

“If those prices go down, that should be reflected in people’s bills.”

All households will automatically receive a one-off rebate of £400 on their fuel bill, spread over six months between October 2022 and March 2023.

Households in Northern Ireland – which has a separate energy market – will receive a one-off payment of £600 in January, more than the rest of the UK as heating oil is widely available.

Eight million low-income households who receive certain benefits or tax credits have received £650 in two payments.

The reversal of these payments means lower-income households face a 40% increase in energy bills if the price cap is raised, according to the Resolution Foundation think tank.

The Department for Enterprise, Energy and Industrial Strategy has been asked for comment.