Gordon Brown: ‘Set emergency budget or risk a winter of dire poverty’

Boris Johnson and the Tory leadership candidates should agree an immediate emergency budget tackling the spiralling cost of living, Gordon Brown has said, or risk “condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty”.

The intervention by the former prime minister comes as new figures seen by the Observer show that more than 4 million households are on course to spend a quarter of their net income on energy.

“The reality is grim and undeniable: a financial timebomb will explode for families in October as a second round of fuel price rises in six months sends shock waves through every household and pushes millions over the edge,” Brown writes in Sunday’s Observer.

“The more the Conservative leadership election heats up, the more the remaining candidates have resorted to claiming the moral high ground. Raising debt is ‘immoral’, Rishi Sunak is saying. ‘High taxes are immoral,’ retorts Liz Truss. But there is nothing moral about indifferent leaders condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty.”

He adds: “Boris Johnson, Sunak and Truss must this week agree an emergency budget. If they do not, parliament should be recalled to force them to do so.”

It follows the Bank of England’s grim forecast last week that inflation will soar to 13% in October. There have also been predictions that UK energy bills could reach more than £3,600 a year this winter.

With pressure growing for action, senior Labour sources have confirmed to the Observer that the party is preparing to back a key intervention designed to curb the winter crisis, in addition to the removal of VAT on energy bills that it has already supported.

Labour leader Keir Starmer and Rachel Reeves, the shadow chancellor, have not yet finalised the package, but have concluded that big measures are needed. “We recognise that this is an emergency situation and that requires a response that matches the moment,” said a senior Labour source.

Brown’s call for immediate action was backed by the shadow climate change secretary, Ed Miliband. “Families across the country face a catastrophic rise in energy bills,” he said. “Meanwhile, the Tories are missing in action and the two leadership candidates have nothing to say on the cost of living.

“The government urgently needs to provide more support to help people cope this winter, including by scrapping the Tories’ tax break for oil and gas producers, who are making record profits at bill-payers’ expense.”

The energy profits levy also offers 91p of tax savings for every £1 of investment made by companies. Photograph: Bluegreen Pictures/Alamy

It comes as the Observer has been handed new research that lays bare the scale of the looming crisis. By January, there will be 4.2 million households – or about 11.6 million people – spending more than a quarter of their net income on fuel, according to a study by York University’s social policy research unit.

It also found that more than 3 million households will be spending at least 30% of their net income on fuel by January.

A separate report carried out by Prof Donald Hirsch at Loughborough University found that existing government support for low-income households fails to cover the shortfalls they now face. Some families will be up to £1,600 worse off a year, the study found.

Matt Copeland, head of policy at the National Energy Action group, said the poorest could be protected with the right action. “With energy bills so high, this winter is going to be a nightmare for millions in the UK,” he said. “However, we want to make it clear that this is avoidable. The UK government has the power to save millions from the hardship of cold homes, crushing debt and unsafe coping tactics.”

Rishi Sunak has backed scrapping VAT on energy bills. Photograph: Jacob King/PA

Brown said that local charities he knew were now stocking up on blankets, duvets, sleeping bags and hot water bottles as they prepare for “the worst winter in living memory”. He said it would have a devastating impact on child poverty. “Britain is creating a left-out generation of young boys and girls, without the cash to participate in what their friends are doing and whose childhoods are starting to resemble shameful scenes from a Dickens novel,” he writes.

He has now joined with dozens of faith groups, charities and local politicians to call on the government to take urgent action.

There are no plans for the leadership candidates to agree to any joint programme before the appointment of a new prime minister next month. Asked how she would help those hit by high energy costs, Truss said last week that she would help by cutting taxes rather than through “handouts”. She has backed cuts to national insurance and a suspension of green levies on bills.

Sunak has backed scrapping VAT on energy bills, but wants to prioritise tackling inflation. “The high rate of inflation is a concern for everyone right now,” said a campaign spokesperson. “We must do everything we can to grip inflation and fast. There is no doubt that the country faces a tough winter – we need to be honest with people about that. As prime minister, Rishi will look at every possible lever available to help those struggling with higher prices and their bills.”

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A Downing Street source said Johnson believed that big fiscal decisions should be left solely for the next prime minister.

A government spokesperson said: “We know that rising prices caused by global challenges are affecting how far people’s incomes go and many will be concerned by the latest economic forecasts. We have continually taken action to help households by phasing in £37bn worth of support throughout the year, which includes specific support to help people through the difficult winter ahead.

“Eight million of the most vulnerable households will see £1,200 extra support, provided in instalments across the year, and everyone will receive £400 over the winter to help with energy bills. That’s on top of action earlier this year, including a record fuel-duty cut and a national insurance cut worth up to £330 a year for the typical employee.”