Ed Davey, a former energy secretary, has called for the huge energy price cap rise in October to be cancelled with an ‘energy furlough’ scheme in its place.

The energy price cap – set by regulator Ofgem – is a maximum suppliers can charge per unit of energy, but it isn’t a limit on bills as it’s based on usage. In April, it rose just shy of £2,000 a year.

But given the ongoing wholesale price volatility, the energy price cap is expected to rise 70% to £3,400 from October, impacting the 24 million people who are on their provider’s default standard variable tariffs.

The Lib Dem leader said the two Conservative leadership hopefuls – Rishi Sunak and Liz Truss – haven’t a plan to help those “who will go hungry and cold this winter” and as such, the Lib Dems have a “bold plan” to tackle the issue.

The party believes it would cost £36bn for the government to absorb but this would “more than be covered” by a windfall tax on oil and gas companies’ profits, together with increased receipts from VAT.

‘Facing a social crisis’

Speaking on Sky News this morning, Davey, said: “We’re worried about what millions of families and pensioners are going to face this winter and I’ve been listening to the Conservative candidates for the next Prime Minister for a plan to tackle this, to help people, but they’ve got no plan whatsoever. It’s almost like they’re living in a parallel universe.

“So, the Liberal Democrats today are putting forward our plan and what we’re saying is, the expected rise of £1,400 in the energy price cap on top of the £700 rise last April, we’re saying that new rise should not happen. It should be cancelled and it should be the government that pays the suppliers to make sure that people get the electricity and gas that they need.

“If we don’t do this, we’re facing a social crisis, a catastrophe. I think from the evidence we’ve seen, we could be seeing people go hungry, not eating as much, turning off their heating and not heating their homes. So, if we’re going to avoid a cold, hungry winter for millions of people, we have to have the bold plan the Liberal Democrats are asking for.”

On Good Morning Britain, Davey added: “Oil and gas companies are making tens of billions of pounds of profit. BP and Shell just in the first six months of this year made £29bn alone. So, we’ve called for a one-off tax – a  windfall tax – on those super profits.

“We’ve also pointed out that with higher inflation, the government is having a bonanza in its VAT receipts so over the next three years it will get more than £30bn more than expected in VAT.

“So, if you couple a bold windfall tax on the oil and gas companies and by recycling VAT receipts, you can more than cover the cost of this measure which will help millions of pensioners and families across our country.”

The call comes as leading energy consultancy Cornwall Insight revised its forecast for the January 2023 energy price cap to £4,266 a year, a £650 increase from its previous estimate.