Greens push for billions to be spent on energy support if bills rise

The government should set aside billions of pounds to support households if energy bills rise in the wake of the Iran war, the Green Party leader has said.

In a speech, Zack Polanski said ministers should plan to cover a potential rise of £300 per household this year to end "uncertainty" over future prices.

The party argues the estimated £8.4bn costs could be covered by hiking taxes on capital gains, and tightening an existing tax on energy firms' profits.

Polanski's call comes as political parties vie to convince voters they should be trusted on the cost of living ahead of a series of elections across Britain in May.

The issue of energy bills has emerged as a key electoral battleground in recent weeks, as fears grow that the continuing conflict in the Middle East could cause lengthy disruptions to energy supplies and a prolonged spike in prices.

In his speech, the Green leader said Labour ministers should guarantee now to support billpayers if energy costs rise after June, when the price cap on household energy set by regulator Ofgem is next scheduled to be recalculated.

He argued that families felt "helpless" in the face of the situation globally, and it was right that the government takes steps to "insulate us from some of the worst economic effects of Trump's war".

He conceded that the plan was "not cheap" - but argued it was required to avoid a "doom loop" of higher government borrowing and mortgage costs if the energy price shock causes a prolonged hike in interest rates.

The Greens have not specified how they would like the energy bill support to be delivered, but says its estimated £8.4bn price tag for the intervention is based on prices rising by up to £300 per household after the cap is repriced.

It says the cost could be paid for through its policy of equalising capital gains tax, paid on profits from asset sales, with income tax, which it believes could raise an additional £12bn a year for the Treasury.

The party also wants to hike the windfall tax on the profits of energy companies, and end investment allowances for companies it considers a "loophole" in the tax.

Elsewhere in his speech, Polanksi sought to highlight his party's existing cost of living policies, including rent controls and nationalising water companies, which he said would help "end Rip Off Britain".

He also called for a changes to the UK's "failing fiscal rules", with strict rules on borrowing and spending replaced by a "panel of experts" tasked with judging the sustainability of the UK's debt.

In an escalating arms race of political pledges in recent days, Reform UK said it would scrap VAT on energy bills if it wins power. Like the Conservatives, Nigel Farage's party is also planning to ditch a number of green energy taxes.

Opposition parties have also called on ministers to abandon its plans to phase out a 5p cut made after Russia's full-scale invasion of Ukraine from September.

For its part, the government has announced £53m to help "vulnerable" households hit by sharp increases in the price of heating oil since the Iran war began, with local leaders deciding who qualifies.

So far, Labour has not announced universal support for household energy costs similar to the multibillion pound scheme put in place by former Conservative prime minister Liz Truss in autumn 2022.

Chancellor Rachel Reeves has hinted that any support is likely to be directed at the poorest households, previously saying the Treasury is looking at "targeted options" to support households with costs.