Ed Davey calls for next PM to scrap October’s energy bill price cap increase

The expected energy price cap increase in October should be scrapped by the next prime minister and the cost covered with a windfall tax on oil and gas companies, the Liberal Democrat leader has said.

Sir Ed Davey said neither of the Tory leadership hopefuls - Liz Truss or Rishi Sunak - had grasped the enormity of the challenge that people are facing this autumn, as the cost of living crisis is set to get worse for millions of UK households.

Experts have predicted that the energy price cap could rise to £3,358 annually from October, and could hit £3,615 from January. In October 2021 the average energy bill was £1,400 a year.

The Liberal Democrat leader said that instead of consumers being hit in the pocket by the soaring prices, the government should cover the shortfall to energy suppliers.

The party estimated the cost of the policy would be £36bn and suggested the windfall tax on oil and gas company profits should be expanded to help cover it.

Sir Ed 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.”

Sir Ed added: “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.”

It comes as Nicola Sturgeon has called for an urgent meeting between the heads of the devolved administrations to address the cost-of-living crisis.

In a letter sent on Monday, Ms Sturgeon urged Boris Johnson to move a proposed meeting between the heads of the UK’s governments from September to this week.

Many of the “levers of government” required to tackle the issue remain reserved to Westminster, the first minister said in her letter, adding that actions taken by devolved administrations “will not be enough”.

“I am therefore writing to seek an emergency meeting of the Heads of Government Council and propose that we, as leaders of our respective governments, meet as soon as possible this week to discuss and agree urgent steps to help those in most need now, and also formulate a plan of action for the autumn and winter ahead.”

In her letter, the first minister stressed that “targeted“ support was necessary for the most vulnerable.

In response, a spokesperson for the prime minister said: “We recognise the pressures families across the United Kingdom are facing due to rising prices caused by global challenges.

“That’s why the UK government is providing 689,000 households in Scotland with the £650 cost-of-living payment, £300 for all Scottish pensioners and £400 to help people with their energy bills.

“We have also provided an extra £82m for the Scottish government to help vulnerable families at their discretion - in addition to the significant income tax and welfare powers they already have.

“The UK government’s spending review provided the Scottish government with a record £41bn annual settlement for the next three years and we will continue to work collaboratively with them.”

Additional reporting by PA