Labour pledges to scrap 'outrageous' prepayment energy meter costs

Labour has vowed to stop “outrageous” premiums that energy prepayment meter customers face.

The pledge is part of a package of measures to tackle the cost of living crisis which Sir Keir Starmer’s party is set to unveil.

It comes as Boris Johnson doubled down on his insistence that it is for his successor to “make significant fiscal decisions” after talks with energy bosses ended with no new measures to ease the cost of living crisis.

Mr Johnson said he would continue to urge the energy sector to ease the financial pressures facing struggling families, but he repeated his stance that it is for his successor in Number 10, either Liz Truss or Rishi Sunak, to “make significant fiscal decisions”, a Treasury spokesperson said.

Energy analysts have predicted that typical energy bills could rise to approximately £3,500 in October and more than £4,200 in January.

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Mr Johnson’s successor will not be announced until 5 September.

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Liberal Democrat leader Sir Ed Davey called the lack of extra support being offered to families and pensioners following the meeting with industry bosses “appalling”.

And Labour accused the government of being “missing in action”.

“Families are worried about how they will pay their bills. But instead of showing leadership, the Conservatives are missing in action,” said Ed Miliband, shadow secretary of state for climate change and net zero.

“The prime minister and chancellor have gone AWOL, whilst the candidates for the leadership have no substantive ideas about how to help working people meet the challenges they face.”

Shadow chancellor Rachel Reeves has now confirmed that part of this action would be to end the “unjustifiable” cost of prepayment energy meters.

Specifically, the use of premiums which can result in people with energy prepayment meters being charged more than those who pay by direct debit.

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The party says the measure is part of a wider cost of living package being developed by Labour leader Sir Keir Starmer, who, along with Mr Johnson, has been criticised in the last week for taking a holiday at a time of crisis, and Mr Miliband ahead of the August price cap announcement from Ofgem.

Earlier on Sky News, shadow justice secretary Steve Reed denied that Gordon Brown was leading the party’s policy in Sir Keir’s absence after the ex-PM called for energy firms to be temporarily nationalised, in his third major intervention this week.

Sir Keir will be visiting Edinburgh on Friday, where he is expected to speak about some of the elements of the party’s proposals to help people with rising energy bills, before a full announcement next week.

Labour says the prepayment meter policy would help to bring prepayment energy prices into line with those for direct debit customers and estimates that it would provide relief to four million households.

“It’s outrageous that people on prepayment meters have to pay more for their energy. Why should those with the least have to pay more to heat their homes and put the lights on? This is unjustifiable and morally wrong,” Ms Reeves said.

“As energy prices spiral, this unfair prepayment premium must end. Labour would make sure that no-one pays over the odds for the same gas and electricity that everyone else gets, as well as taking broader action to help people manage their bills over the winter.”

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It is thought that Labour would remove the gap between the two price caps and reimburse energy companies for the difference between October and March – at an estimated cost of £113m.

Labour says this would be paid for by a strengthened windfall tax on oil and gas companies.

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “Pre-payments meters remain an effective way for people to pay for their energy use whilst managing costs and debt, while the energy price cap protects four million pre-payment meter customers from overcharging by energy suppliers.

“We understand that global inflationary pressures are squeezing household finances. This is why we are providing a £37bn package of support to help households in these challenging times, including a £400 discount on energy bills which can be accessed by those on prepayment meters and £1,200 to around eight million low-income households.”

Following the meeting with energy firm bosses earlier on Thursday, the Treasury said that Chancellor Nadhim Zahawi and the energy firms agreed to “work closely” over the coming weeks to ensure that the public, including vulnerable customers, are supported in the face of rising costs.

In a tweet, Mr Johnson said he knows people are worried about the “difficult winter ahead” but added that there is already a package of support in place, including a £400 energy bill discount for all households.

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Meanwhile, former leader of the Labour Party Jeremy Corbyn is among a group of MPs who have said Parliament should be recalled to discuss how to tackle the cost of living crisis.

Writing a letter to Mr Johnson, Sir Keir and both the speakers of the House of Commons and House of Lords, the MPs says recent assessments of the rising cost of energy are “naturally causing fear and consternation for many people” and that Parliament should be recalled “in the public interest”.

Other signatories include former shadow home secretary Diane Abbott, former shadow chancellor John McDonnell and former shadow business secretary Rebecca Long-Bailey.

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