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Open letter to Tory leader hopefuls: Retailers are ready to act – when will you?

This is a copy of the letter sent by Utility Week editor James Wallin to the two prospective candidates to be leader of the Conservative party, Rishi Sunak and Liz Truss.

Over the past few weeks you have both pledged action on the cost of living crisis if you are chosen to occupy 10 Downing Street.

I write to you today on the back of a series of conversations with energy retailers to share their concerns that time is running out to achieve anything meaningful for struggling billpayers this winter. In just 10 days’ time Ofgem will announce a painful increase in the price cap from October. Everyone seems to have an opinion on the level it will reach but there is consensus that the figure will start with a 3 and end in misery for millions.

Once the cap is announced, retailers will begin the process of communicating the rise to their customers and preparing to adjust bills. The countdown towards the harshest of winters will be over.

However, there is still time to change course and to start your premiership with a bold gesture that could provide genuine relief to millions of people across the country.

Throughout 2022 retailers have been pitching solutions to government that would mitigate the worst impacts of bill rises this winter. As prominent members of Boris Johnson’s administration you know this, of course, but I would urge you to re-engage with these debates. While conversations between the Chancellor, energy secretary and retailers seem to have been constructive, there is frustration that government is in limbo at the worst possible time.

However, the talks have helped to coalesce the retail sector and focus what was at a times a disparate range of opinions.

There are still many in the sector who would like to see a targeted approach to helping the most vulnerable in society, through the introduction of a social tariff. This is a proven model within energy retail and if aligned to Universal Credit or the Warm Home Discount should be relatively straightforward to implement. This could be achieved by October, although is probably more feasible by January. To ease the pressure in the meantime, the £400 energy bill support scheme could be delivered over three instalments instead of six.

There is of course the very large question of how such a social tariff would be funded and here the views of the sector do diverge – much like your respective positions.

However, there are options that take the financial risk away from the taxpayer to be shouldered by the commercial sector instead. The idea of freezing the cap at its current level and setting up a deficit fund – guaranteed by government but borrowed from banks – to bridge the gap with the wholesale price, seems to have broad support across the sector.

Sector leaders have told Utility Week they stand ready to implement this strategy and ensure billpayers across the country are spared an unprecedented shock to their personal finances. But they need the reassurance that an incoming government will back their stance.

One said: “The clock is ticking for October. Ofgem will come out with their figure next week and then we have to start the process of contacting customers. But it’s not too late. If both prospective prime ministers pledged to do something to freeze the price cap when they came into office then we could hold fire. Maybe they can’t do anything about Ofgem standing up next week but they can say, don’t worry, we’ve got this. That could be all it takes.”

I am under no illusion as to the weight of responsibility inherent in these decisions but surely the mark of a leader is the ability to make bold decisions and take others with you. Here is an opportunity that no TV debate, three-word slogan or photo opportunity can bring you.

I understand that your focus at the moment is on a select audience and that your message must be tailored to them but as prime minister you will serve the entire country. One of you will be punished by your party members in a few weeks and that will no doubt be painful. But to be the leader that stood idle in the face of a truly bleak winter seems a far worse fate.

For all these reasons I ask you to make clear that under your premiership energy bills will be frozen and the public protected this winter. The energy retail sector can complete the journey if you can give them the green light.