Cost-of-living crisis: Energy furlough scheme urged by Liberal Democrats amid ‘wartime mentality’ claim

The UK Government should treat the cost-of-living crisis with a “wartime mentality” and issue an energy bill “furlough”, according to the Liberal Democrats.

The party’s Scottish leader, Alex Cole-Hamilton, made the call on the BBC’s Good Morning Scotland programme on Tuesday.

“Families right across Scotland, and indeed the UK, will be looking towards the coming October with trepidation and fear, because they’re going to see their bills go up again by as much as 70 per cent,” he said.

The Liberal Democrats want an energy furlough system to be introduced

Mr Cole-Hamilton suggested the Government could assist households with managing costs by cancelling the planned price cap increase.

In doing so, it would “absorb” the cost and “take the hit” by paying the estimated £36 billion cost itself, he said.

Such funding would become available via a “meaningful” windfall tax, additional VAT generated through current inflation levels, and making use of headroom resulting from less borrowing than was previously anticipated, the Edinburgh Western MSP said.

He said this policy would “offset the need” for other measures being offered by the Government, such as the winter fuel allowance and the £400 energy bill discount, but reiterated his party’s calls for the £20 Universal Credit uplift to be reinstated.

The Liberal Democrats would also look for the Warm Home Discount and winter fuel allowance to be doubled, he confirmed.

“This is a multi-faceted approach, but right now we recognise the biggest sort of thing coming over the horizon, causing fear to Scottish families, UK families, is that lift to the price cap,” he said.

“We can do something. We can pay for it immediately.”

Mr Cole-Hamilton added: “Extraordinary times call for extraordinary measures.

“These things are linked. We know that energy suppliers have said that one of the reasons that the price cap is going to go up is that, after the economy restarted after the pandemic, massive demands were put on supply of gas and oil and electricity.

“We also know that the war – Russia’s illegal invasion of Ukraine – has seen a massive hike in the global commodity of gas prices.

“All of these things are grouped together, so we should look at this almost like a wartime mentality and say ‘this is an exceptional set of circumstances’.

“If it requires a bit more borrowing, that’s fine, but we actually know we can pay for this with the headroom we’ve got, if we create a meaningful windfall tax on the super-profits, and if we use VAT.”

A UK Government spokesperson said: “We know the pressures people are facing with rising costs, which is why we are providing £37 billion of help for households including the £400 discount on energy bills this winter, and £1,200 of direct support for the most vulnerable households to help with the cost of living.

“While no Government can control global gas prices, over 22 million households are currently protected by the price cap.

“If the cap was not in place, energy companies could charge consumers even higher prices, over and above the costs of purchasing wholesale gas and electricity.”