Liberal Democrats call for scrapping of energy price cap rise

The Lib Dems have called for October's expected energy price cap rise to be scrapped - with the cost covered by a windfall tax on energy company profits.

Experts expect the energy price cap - the maximum amount suppliers can charge their customers in England, Scotland and Wales - to hit £3,615. In October last year the average bill was £1,400.

The energy price cap is designed to protect consumers from short-term price changes. It is adjusted every three months and is based on the price energy suppliers pay producers for electricity and gas.

The cap is expected to go up again to £3,615 a year from January next year.

The Liberal Democrats estimate keeping the price cap at its current level of £1,971 will save the average household £1,400 a year.

Without raising the price cap, suppliers will have an estimated shortfall of £36 billion.

This Lib Dems said this should be met by expanding the windfall tax on oil and gas company profits, and using the higher-than-expected VAT revenues as a result of soaring inflation.

Lib Dem leader Sir Ed Davey said: "The contest 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 pensioners 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.

"Energy bills have already gone up by £700 this year, and Conservative ministers have barely lifted a finger to help. We simply cannot afford more inaction in the face of another even bigger rise in October.

"This is an emergency, and the Government must step in now to save families and pensioners £1,400 by cancelling the planned rise in energy bills this October."

The Liberal Democrats have also proposed:

Doubling the Warm Homes Discount to take £300 a year off the heating bills for pensioners and those on a low income, and extending it to all those on universal credit and pension credit

Doubling the Winter Fuel Allowance, giving up to £600 a year to 11.3 million pensioners to help with their heating bills.

The party estimates that an extended Windfall Tax could raise around £20 billion.

And the Government raised £11 billion more in VAT in the last fiscal year than it was expecting in March 2021 due to rising inflation.

It is now expected to take in an extra £9 billion this year and £10 billion next year compared to last year's forecasts.

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