LABOUR will extend the windfall tax on oil and gas companies to pay for a £29bn emergency cost of living package, Sir Keir Starmer has announced.

The leader of the opposition said the money raised through the levy could be used to cancel the rise in the energy price cap, keeping it at £1,971 for the average household. 

Sir Keir said scrapping the increases could also help cut inflation by 4 per cent, meaning it would peak at about 9% rather than the 13% predicted by the Bank of England,

This, Labour said, would make future interest rate rises less likely.

He also said that if the cap was to be frozen, then it could also be party funded by doing away with Rishi Sunak's £400 rebate on energy bills for all households. 

Last Friday, energy consultant Auxilione’s predicted the price cap on energy bills could reach £3,628 in October, up from £1,971 today. They said it could then rise again to £4,538 in January and peak at £5,277 in April.

The Labour leader - who has been criticised over a lack of response to the cost of living crisis - said the plan was a direct response to a “national economic emergency” which had left millions of families across the country fearful as to how they would cope.

As well as freezing the energy price he said a Labour government would insulate 19 million of the coldest homes over the next decade, further reducing bills.

He also announced a number of measures to increase the UK’s energy security, doubling onshore and offshore wind capacity, investing in solar, tidal and hydrogen, and bringing forward new nuclear capacity.

Sir Keir said: “Britain’s cost-of-living crisis is getting worse, leaving people scared about how they’ll get through the winter.

“We’ve had 12 years of Tory government that has failed to prepare and refused to invest, leaving bills higher and our country less secure.

“This is a national emergency. It needs strong leadership and urgent action.

“Labour’s fully-funded plan would fix the problems immediately and for the future – helping people get through the winter while providing the foundations for a stronger, more secure economy.”

The plan will likely be opposed by the oil and gas sector. In order to pay for the measures, Labour said it would close a “loophole” in the levy on the profits of the energy companies announced by Mr Sunak in May when he was chancellor.

They also said the changes would be backdated to the start of January.

This, Labour claimed, would bring in £8bn.

Last week, former Prime Minister Gordon Brown put forward a number of suggestions for tackling the cost of living crisis.

In a column for the Guardian, he was seen as taking a subtle swipe at his holidaying successor. 

“Time and tide wait for no one. Neither do crises," he wrote.

“They don’t take holidays, and don’t politely hang fire – certainly not to suit the convenience of a departing PM and the whims of two potential successors and the Conservative party membership.” 

Sir Keir later said that it was “nonsense” to claim his party has not been leading on the cost-of-living crisis.