SIR KEIR Starmer has defended Labour’s £29bn plan to keep bills low over the winter, insisting it is “robust and costed”.

The leader of the opposition also rejected calls to nationalise energy companies and denied he had been slow to respond to the cost of living crisis. 

The plan, announced this morning, would see the energy price cap frozen at £1,971 for the next six months, meaning households would not “pay a penny more” on energy.

It would be paid by extending the windfall tax on oil and gas giants and scrapping the £400 energy rebate. 

READ MORE: Labour unveils £29bn cost of living package

The plan, Sir Keir added, would also see inflation reduced, which would ultimately save £7.2bn on debt interest payments.

However, the Institute for Fiscal Studies has warned that any reduction in inflation would only last as long as there was government intervention.

The thinktank said any saving on interest payments would be an "illusion" as inflation would just increase again when the six months were up. 

Director Paul Johnson told The Daily Telegraph: “It’s an illusion in the sense that it will reduce interest debt payments in the short term but unless you maintain these kinds of subsidies permanently, it won’t reduce them in the long run. Inflation will be higher later on."

He said the cost of cancelling the energy price cap rise would be roughly the same as the cost of furlough.

Asked about the IFS criticism, Sir Keir told BBC Breakfast that the economists were not disputing that his plan will reduce inflation.

“So he’s absolutely clear that that is the case. Of course, what he’s rightly saying is what happens after April matters because you have to maintain measures to reduce inflation. 

“Of course, we have to do that in April when we see the circumstances, but what he’s not suggesting is that we’re wrong when we say that our plan will reduce inflation”.

Sir Keir defended the raid on north sea gas profits. He told BBC Radio 5 Live: “Millions of people are already struggling with their bills, we all know that across the country and the hikes that are expected for this October....from a price cap of just under about 2,000 to 3,500 and then 4,200 and millions of people, millions of families are saying ‘I just can’t afford that’.

“We have a choice and this is really the political choice of the day. We either allow oil and gas companies to go on making huge profits which is what’s happening at the moment or we do something about it.

“We the Labour Party have said, we’ll do something about it. We will stop those price rises and we will extend the windfall tax on the profits that the oil and gas companies didn’t expect to make.

"So we’ve got a very strong, robust, costed plan here which will stop those rises this autumn.”

Sir Keir also rejected criticism that Labour had been slow to act.

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 both Boris Johnson - who at that point was on his first holiday of the summer - and Sir Keir who was in Mallorca with his family. 

“Time and tide wait for no one. Neither do crises," Mr Brown 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 told the BBC: “I think it was the beginning of July I said to my team, right I want a fully costed, comprehensive plan and I want to see whether it’s possible for us to freeze energy prices but I need a fully costed plan.

“We’ve been working on that for six or seven weeks...I’ve got a very important job as leader of the Labour party, leader of the opposition, but I’ve also got another job that’s really important and that is I’m a dad and I’m not going to apologise for going on holiday with my wife and kids, it’s the first time we’ve had a real holiday for about three years.

One of Mr Brown’s suggestions was the temporary nationalisation of energy firms if they fail to reduce bills.

Sir Keir ruled that out. He said: “If you go down the nationalisation route, then money has to be spent on compensating shareholders and I think in an emergency like this, a national emergency where people are struggling to pay their bills, I think that the right choice is for every single penny to go to reducing those bills.”

Philip Hammond, the former Tory Chancellor, described Labour plans as "populist".

He told BBC Radio 4’s World At One programme: "I think we’ve got to be very careful how we respond to what undoubtedly is a crisis that people are facing through this winter.

"We don’t know yet whether this is a short-term spike and we will get relief from this as we go into 2023 or whether something more fundamental is happening, which is likely to shift the terms of trade against us and require a much longer-term response.

"It’s fine for the government to intervene to support people through a short-term pressure, but the government can’t protect us indefinitely if this is a long-term shift in relative prices, so I don’t support Labour’s proposal because it is a populist response that is untargeted.

"I’m sure everybody would like to have their energy bills frozen this winter, but not everybody needs that support from the taxpayer in the same way."