Energy prices in the United Kingdom should be frozen for nearly two years after the next general election and then subject to tougher regulation, Labour leader Ed Miliband has promised.
The declaration – one that will be popular with homeowners who have seen gas and electricity prices rise far above inflation – formed the centrepiece of Miliband’s Brighton conference speech. However, the promised intervention on energy would be but one of several by a Labour government – with developers facing warnings to “build on land or lose it”.
The Brighton speech is targeted at the majority of voters who have seen living standards fall significantly since the financial crisis five years ago.
Last night Labour figures emphasised that pay has stagnated since 2008, while prices have risen by 13 per cent since 2009, while energy is up by 29 per cent.
“The companies won’t like it because it will cost them money. But they have been overcharging people for so long because the market does not work,” said Mr Miliband. “For generations in Britain when the economy grew the majority got better off . . . that vital link between the growing wealth of the country and your family finances was broken.”
Party in power
"This goes beyond one party or one government. It is more important to you than which party is in power . . . they used to say a rising tide lifts all boats, now the rising tide just seems to lift the yachts," he told delegates.
Labour’s intentions were, unsurprisingly, condemned by the energy companies who warned that curbs could threaten billions in necessary investment over the coming years.
Speaking to a fringe meeting Ian Peters of British Gas said wholesale price rises cannot be controlled by companies. “Energy prices reflect the cost of energy,” he said, an argument supported by the General, Municipal, and Boilermakers’ Union (GMB) which represents many workers in energy firms.
However, Gary Smith of the GMB warned that some of today’s difficulties are caused by too much of the UK’s energy market being controlled by foreign investors.
Mr Miliband’s plans are far more complex than a simple price freeze.Energy firms would be forced to split generation from supply while all companies would then be required to sell into a pool, thus clearing the way for new competitors.
Energy firms unenthusiastic However, the UK faces a difficulty: supply is already tight and will become even tighter in two years' time, with just a 2 per cent margin remaining in the system.
Energy UK, which represents the industry, was predictably negative last night.
“Freezing the bill may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone,” said chief executive Angela Knight.
The Labour leader is gambling that the proposal will cut through to voters, often impervious to gambits by politicians to grab their attention.
Under the UK’s electoral rules, which offers Labour a four percentage-point bias because it controls so many poorly-populated north of England constituencies, Mr Miliband has a better chance than the Tories of taking power, since he could form a majority with 35 per cent of the popular vote. But he suffers handicaps, principally a belief exhibited by a succession of opinion polls that voters do not consider him prime ministerial material, unlike David Cameron.
