Reeves unveils plan to save households £3,000 a year

Rachel Reeves will tomorrow [19 November] unveil Labour’s Better Off Plan to cut household bills by up to £3,000 a year over the next decade. 

Speaking ahead of the Autumn Statement, Reeves will accuse the Conservatives of having presided over “thirteen years of economic failure that has left working people worse off, with higher taxes, higher mortgage payments and prices still rising in the shops.”

The Shadow Chancellor will pledge that a future Labour government would help families with the cost of living by cutting energy, petrol and mortgage bills. 

Over the next decade, Labour’s Better Off Plan would save families:

• £500 a year by insulating homes to make them more energy efficient.

• £900 a year by building cheaper, cleaner power across the country through the creation of Great British Energy, a new, publicly-owned clean generation company.

• £400 a year by cracking down on unfair car insurance practices like subscription traps and unfair postcode pricing.

• £1,200 a year on mortgage bills by building 1.5 million homes over a Parliament to keep housing affordable.

The Plan would sit alongside Reeves’ pledge to bring economic stability back to the UK, including a new set of fiscal rules that would apply to every decision taken by a future Labour government.

The unveiling of the plan comes as new figures from the Labour Party reveals the scale of the cost-of-living crisis hitting families. Analysis of data from the Office for National Statistics and the Office of Budget Responsibility reveals that disposable income is forecast to rise by just £42 between 2010 and 2025. Under the Labour Government it rose by more than 40%, or £11,000 per person. 

Keir Starmer and Rachel Reeves have pledged to make growing the economy a priority for a future Labour Government. Earlier this year, the leadership unveiled Labour’s mission to secure the highest sustained growth in the G7 – with good jobs and productivity growth in every part of the country making everyone, not just a few, better off.

Rachel Reeves MP, Labour’s Shadow Chancellor, said:

“The economy is not working for working people. After thirteen years of economic failure, families are worse off, with higher taxes, higher mortgage payments and prices still rising in the shops.

“The 25 Tory tax rises since 2019 are the clearest sign of the Conservatives' economic failure, with households paying £4,000 more in tax each year. The Conservatives have become the party of high tax because they are party of low growth.

“Under Keir Starmer’s leadership, the Labour Party has changed and is now the party of economic responsibility. A Labour Government’s priority would be growing our economy so we can boost wages, bring down bills and make working people in all parts of the country better off.”

Ends

Notes

Clean Power:

• Clean power is already cheaper than gas generation. The wholesale cost of electricity from last year’s renewable auctions was less than one sixth the wholesale cost of electricity (which is set by the price of gas) over last Winter, at less than £50/MWh8 compared to over £300/MWh. Evidence from Ember: https://ember-climate.org/app/uploads/2022/09/Analysis_A-path-out-of-the-gas-crisis_Ember.pdf and from Ofgem: https://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators

• That difference would be worth £900 per year to a household with average electricity consumption for EPC C in a future crisis.

Home upgrades:

• E.ON estimate that upgrading a home from EPC D to EPC C could save households up to £500 a year. Written evidence submitted by E.ON: https://committees.parliament.uk/writtenevidence/108318/html/

• Estimates from IPPR find the same figure: https://www.ippr.org/news-and-media/press-releases/uk-is-falling-billions-short-of-investment-needed-in-current-parliament-for-energy efficiency-and-clean-heat

Motorists:

• Which? estimates that letting car insurance policies auto-renew without confirmation or opportunity to compare policies with other providers could be costing drivers up to £388 a year.

• Labour will crack down on unfair costs by consulting with industry on ways to crack down on unfair practices from insurers, such as a lack of transparency over autorenewals, the rise of hidden fees, and poor value of insurance products, and by ordering the Competition and Markets Authority and Financial Conduct Authority to launch urgent investigations into the rising cost of car insurance.

• Unfair postcode pricing is also potentially leading to higher costs. Consumer rights organisations have repeatedly warned are imposing “poverty premium”^[21]or an “ethnicity penalty” of up to £280^[22] where differences in pricing go beyond typical risk factors of crime rate, deprivation, road traffic accidents and population density^[23].

• This would happen alongside other action by Labour to help motorists, including reducing traffic by providing better public transport options, removing planning barriers to ensure upgrades to our transport networks are actually delivered, and accelerating the charge-point rollout to give drivers confidence no matter what type of vehicle they drive

Housing:

• Lichfields analysis shows that Labour’s housing policy, reversing disastrous planning changes announced by the government, would lead to 77,000 more homes being delivered by 2030.

• For renters Lichfield estimate this will result in £200 in extra rent per month.

• For homeowners this will mean mortgage payments higher by around £100 a month, or £1,200 per year. This is based on the difference in average  purchasing prices of £18,400 and typical interest rates of 5% as they are currently on new mortgages: https://www.bankofengland.co.uk/statistics/visual-summaries/effective-interest-rates

  Worse off under the Conservatives:

• Disposable income rose by more than 40%, or more than £11,000 per person during the Labour years. 

• They are forecast to grow by just £42 between 2010 and 2025.

• Uses data from figure 2 of ONS data on real individuals mean household disposable income up to financial year ending 2022 https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyearending2022

• This is then converted to 2024/25 values using the real household disposable income forecast in table 1.5 of the OBR March 2023 forecast economic supplementary tables https://obr.uk/efo/economic-and-fiscal-outlook-march-2023/