Terina Hine argues that the Labour leader’s proposals don’t come close to matching up to the crisis

At last Keir Starmer speaks. The Labour leader has announced a policy on how it would deal with the looming cost of living crisis with a proposal to freeze the energy price cap. A move in the right direction, but a long way from the radical change so desperately required.

There is no question that government intervention is urgently needed, and the outcry from workers, unions, activists and media savvy campaigners like Martin Lewis was becoming increasingly difficult to ignore. Perhaps the former Labour leader Gordon Brown stepping in where Sir Keir wasn’t provided the final push for the opposition party to act. 

Although the plan, to be funded by a windfall tax on the fossil fuel industry’s “eye-watering profits” is welcome, the response does not go nearly far enough. The energy price cap has risen by 54% since April and it is this increased price that would be frozen. The freeze is only for six months, and there is no help on offer for business, schools or hospitals. Nationalisation, a key policy in the Labour manifesto, has been dismissed altogether as being “too expensive”.

In the UK the burden of soaring global prices has been passed directly to the consumer, as if there was no alternative, while at the same time several of the large energy suppliers have made increasing levels of profit. But there is an alternative, and we only need to look across the channel to see it.

Earlier this year the French government took the energy firm EDF into public ownership and capped energy price rises to 4%. The right-wing Prime Minister Elisabeth Borne informed French voters that pubic ownership was the only way to combat the instability of the global energy markets.

Other European countries have stepped in to help households deal with this crisis. According to TUC research they have been able to do so because of who owns and controls their energy systems.

Across Europe investment has been made in renewable energy and home insulation – something that successive governments in the UK have failed to consider with much more than vacuous soundbites. Here diversification away from fossil fuel is left in the hands of private companies that value shareholder dividends over longterm investment or the environment.

The TUC calculate that the cost of taking the Big 5 energy retailers into public ownership would be £2.85bn, and to nationalise all energy suppliers would cost about £4bn. The right-wing think tank the Centre for Policy Studies has argued that this falls far short, claiming the true cost to be closer to £55bn. What is undisputed is that Starmer’s current proposal relies on an industry bailout amounting to £29bn. A bailout which will likely need repeating in 6 months time.

Starmer’s plan is no more than a temporary and expensive sticking plaster that offers no longterm stability, and fails to deal with the issues of underinvestment, environmental damage or gross profiteering.

The nationalisation of utilities is massively popular among voters – it may cost in the short term, but it provides a solution which would clearly bring huge benefits, now and in the future. The market led dogma that dictates the policy of both Labour and the Conservatives must be challenged.

Since April wages have plunged at a record pace. Inflation is now at 9.4 per cent as the cost of energy and food has gone through the roof. The heroes of the pandemic – nurses, teachers and doctors – are among those who have seen the value of their income fall dramatically.

Household energy bills will reach an average of £3,600 in October, a 180 per cent increase from the same time last year, at which point inflation is expected to hit an incredible 13.3 per cent. Double digit inflation is already a reality for the lowest income households.

None of this has prevented the missing in action PM from insisting that no policy be decided before his successor is announced in September. Ofgem, the industry regulator, is clearly failing, and no-one in power is asking why.

Without financial resilience price shocks of the kind we are witnessing will be disastrous for millions. Those on low pay with less disposable income and living in poorly insulated homes will be the coldest: 35 million plunged in fuel poverty by October, 1.3 million pushed into absolute poverty by the spring. Structural change is urgently needed.

Labour’s plan may lead to a Tory copy once their leadership election is over and the new PM begins bidding for votes from a wider constituency. Good. But it is not good enough. Labour’s policy is one the Tories will happily replicate because it is far from radical.

Neither party will address the fundamental structural issues that have led to and exacerbate the current emergency. The dysfunctional market system needs to be challenged. It is up to us to do so.