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Labour vows to match Tories' two-year energy bill freeze - but struggles to explain funding

The Telegraph logo The Telegraph 02/10/2022 Camilla Turner
Rachel Reeves - Pixel8000 © Pixel8000 Rachel Reeves - Pixel8000

Labour would match the Tories’ two-year energy bill freeze, the shadow chancellor has said, but struggled to explain how they would pay for it.

In August, the Labour leader unveiled proposals to suspend October’s rise in electricity and gas prices, fixing them at a maximum of £1,971 for the following six months.

But on Sunday, Rachel Reeves said her party now agrees with the Government’s two-year energy support package.

"We welcome the fact that the Government has come forward with their own package and we support that support for the two-year period," she told the BBC’s Sunday with Laura Kuenssberg.

"The difference between us and the Conservatives is that we would fund part of that package by an extension of the windfall tax on North Sea oil and gas companies."

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But Ms Reeves was then quizzed about how Labour would cover the cost of a two-year energy bill freeze through a windfall tax alone.

"The two year cost of supporting people’s energy bills might come out at around £100-£120 billion. The windfall tax I think is projected only to raise £8 billion. £8 billion versus £120 billion - how are you going to come up with the rest of it?" Ms Kuenssberg said.

Ms Reeves said Labour would extend the windfall tax by backdating it to January, claiming that this would raise "tens of billions of pounds" for the Exchequer.

She was challenged again by Ms Kuenssberg, who interjected: "An extension of £8 billion, double it, that’s £16 billion - you’ve still got £120 billion…"

Ms Reeves added that it would be extended to "all energy generators beyond just oil and gas", and would last over a "longer period of time".

She also accused Liz Truss and Kwasi Kwarteng, the Chancellor, of embarking on a "mad experiment" with trickle down economics, adding that the "sheer scale" of Government borrowing in the mini-Budget was to blame for spooking the market.

A poll from earlier this week revealed that Labour now enjoys a 33-point lead over the Conservatives, after days of market turmoil sparked by the mini-Budget.

'Truss doesn't seem to understand the anxiety and fear'

According to the poll on Friday, support for the Conservatives fell by seven points in the previous four days, handing Labour a mammoth lead against the party.

Ms Reeves said Ms Truss had failed to understand the "anxiety and fear" felt by people facing huge increases in their mortgage repayments as a result of the Government's mini-Budget.

She dismissed claims that the growth plan would deliver the annual 2.5 per cent trend rate of growth that Mr Kwarteng is aiming for.

"The Prime Minister just doesn't seem to understand the anxiety and fear. This is a crisis made in Downing Street but it is ordinary working people who are paying the price," she said.

"The idea that trickle-down economics is somehow going to deliver the 2.5 per cent growth we all want to see is for the birds.

"The Prime Minister and the Chancellor are doing some sort of mad experiment with the UK economy and trickle down economics. It has failed before and it will fail again."

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