Gordon Brown says energy firms unable to offer lower bills should be temporarily re-nationalised

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Energy companies that cannot offer lower bills should be temporarily brought into public ownership, Gordon Brown has said, in a stark challenge to political leaders on the day Liz Truss signalled a climbdown on help for households.

Writing for the Guardian, Brown called for the energy price cap to be cancelled and for the government to negotiate new lower prices with the companies, comparing the situation to the 2009 banking crisis where some banks were temporarily nationalised to protect consumers.

He warned the time for action was slipping away and major decisions had to be made within days. “Time and tide wait for no one. Neither do crises. 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.”

The intervention of the former prime minister and chancellor came as Truss said she had never ruled out giving direct help with energy bills. She would not make further commitments until her proposed September budget, though hinted she would be prepared to look at cutting VAT on bills.

Her leadership rival Rishi Sunak said the change showed Truss had made “a serious moral and political misjudgment on a policy affecting millions of people”.

Writing on the day after annual bills were forecast to top ?4,200 by January, Brown said the government should “pause any further increase in the cap” and then negotiate separate company agreements to keep prices down after examining profit margins and available social tariffs.

He said that the government should consider bringing into public ownership companies who could not meet that requirement, comparing it to what his government did “as a last resort” in 2009 with banks.

He said before taking that step, the government should offer guaranteed loans and equity financing but “if this fails, then, as a last resort, operate their essential services from the public sector until the crisis is over”.

Brown wrote: “Families of 2022 are about to suffer more than in 2008 – 9 and only bold and decisive action starting this week will rescue people from hardship and reunite our fractured country.”

The fleshed-out plan goes far further than Labour has gone on how to tackle the autumn crisis – though the party is said to be working on a new policy offer.

Brown said there were urgent decisions that could not wait until the end of the Tory leadership race. Those include:

Cancelling the energy cap before the official announcement on 26 August

Agreeing October payments for vulnerable households

Finding urgent new supplies of gas and storage

Voluntary energy cuts like Germany’s to prevent blackouts

He said spending should be paid in new “watertight windfall tax” on oil and gas and a new tax on the high levels of city bonuses which he said were pushing up wage inflation. Those measures could raise ?15bn, he said, enough to give nearly 8 million low income families just under ?2000 each.

The business secretary, Kwasi Kwarteng, will meet energy providers on Wednesday, amid divisions over the future of a windfall tax which Sunak has hinted could be extended.

Brown’s intervention came as the war of words escalated between Truss and Sunak over the energy crisis. In a softening of her stance, Truss said she would do “all that I can to help struggling households” – a move which Rishi Sunak’s campaign claimed was a U-turn from her previous comments about preferring tax cuts to handouts.

Truss has taken a firm stance against further windfall taxes but gave the first hint of a U-turn on direct grants early on Wednesday, insisting “that’s not what I said” when asked if she was ruling out any form of grant. “I’m not going to announce the contents of a budget in the future at this stage,” she said.

Later, her campaign released details of how plans already announced by Truss would help families – including cancelling the national insurance rise and a one-year moratorium on the green energy levy. A campaign source stressed Truss had “been consistently clear” she would look at what more she could do.

But the figures in Truss’ release highlight how her offer is likely to be dwarfed by the scale of the rises. The suspended levy would save families ?153 a year on average on their energy bills and the NI cut would save someone on the typical median full-time pay ?240 a year. Households will also get ?400 under existing schemes.

On GB News, Truss was confronted by a social housing manager who said he was looking for a second job in order to pay his own family’s bills. Challenged to get rid of VAT on gas and electricity, she said that all issues should be under consideration in an emergency budget.

The chief secretary to the Treasury Simon Clarke, a vocal backer of Truss, confirmed that work was already under way on cost of living support. He tweeted: ‘Of course, the government is working up a package of cost of living support that the next prime minister can consider when they take office.”

The new language from Truss brought a scathing response from Sunak’s campaign who compared it to a previous U-turn.

“It’s all very well offering empty words about ‘doing all you can’. But there aren’t lots of different ways to act on this,” Sunak’s spokesperson said. “Taking action means providing direct support, which Truss had previously dismissed as ‘handouts’.

“Twice now, Truss has made a serious moral and political misjudgment on a policy affecting millions of people, after last week reversing plans to cut the pay of teachers and the armed forces outside London. Mistakes like this in government would cost the Conservative party the next general election.”

Sunak has committed to increasing a ?15bn support package he drew up earlier this year, though has said further help should be targeted at the most vulnerable.

A Truss campaign spokesperson highlighted Sunak’s record of raising taxes. “Rishi Sunak wouldn’t know how people benefit from a tax cut because he has never cut a tax in his life. People didn’t vote for the Conservative party to be subjected to old fashioned Gordon Brown style politics of envy.”

In an interview broadcast on BBC One on Wednesday evening, Sunak again hit out at Truss, criticising what he called policy based on “starry-eyed boosterism”. He said: “I’m prepared to lose this contest if it means that I’ve been true to my values and I’m fighting for the things that I think are right for this country. I’d rather lose on those terms, than win by promising false things that I can’t deliver.”

The host, Nick Robinson, said Truss had also been invited to appear for a similar interview but had thus far declined.