Will David Cameron really risk siding with rip off energy firms this winter?

Ed Miliband's announcement today on an energy freeze is not only a radical policy, but it also places David Cameron in a very awkward position.

Ed Miliband’s announcement today that he will freeze energy prices for 20 months should Labour win power in 2015 will, if the polls are anything to go by, be welcomed by a majority of voters.

According to polling data, more than eight out of 10 UK consumers feel energy suppliers maximise profits at the expense of customers, with utilities coming behind only banking, gambling, local councils and government departments in terms of their sheer unpopularity with the electorate.

If some polls are anything to go by, the public also appear to want even stronger action to bring down spiralling bills and curb the profits of the energy companies than that promised by Ed Miliband. In 2009, data showed that 31 per cent strongly supported the renationalisation of electricity, gas, water, railways and telecommunications, with 36 per cent slightly supporting renationalisation.

As with the Royal Mail and the railway network, while politicians still appear enthralled by privatisation, the public are more open minded about other models of ownership.

In terms of the policy of a price freeze announced by Miliband today, while the Tories and the big six energy companies will undoubtedly try to pour scorn on Labour’s plans, politically it will be difficult for David Cameron to position himself in opposition to the price freeze without being seen as in the pockets of the energy industry.

This will be made more difficult by the fact that, in a month or two, temperatures will start to fall and energy bills will begin to rise. According to recent reports, another round of energy price rises is said to be imminent, with the possibility of an extra five to 10 per cent going on the average annual bill.

It seems unthinkable that David Cameron would really be willing to position his party as on the side of the energy companies – and effectively in opposition not only to Miliband, but also to the millions of householders who will be hit with whopping bills in the months ahead.

And yet, the alternative is for Cameron to embrace a policy which goes against all his natural instincts as a conservative – unthinkable while his party battles to shore up the right-wing vote.

In this respect, today’s announcement on the energy price freeze ticked three important boxes: it was populist, progressive, and politically it puts David Cameron in a very difficult position.

9 Responses to “Will David Cameron really risk siding with rip off energy firms this winter?”

  1. B Profane

    Energy companies will just hike prices up in 2015. Price controls rarely result in a consumer win (see recent lowest tariff policy).

  2. TerryTurtle

    Has lowest prices tariff even amounted to anything other than more guff from Cameron – apologies if I’ve missed whatever he was supposed to have actually done, haven’t *noticed* any difference in prices we’re paying!

  3. TerryTurtle

    Has lowest prices tariff even amounted to anything other than more guff from Cameron – apologies if I’ve missed whatever he was supposed to have actually done, haven’t *noticed* any difference in prices we’re paying!

  4. TerryTurtle

    Has lowest prices tariff even amounted to anything other than more guff from Cameron – apologies if I’ve missed whatever he was supposed to have actually done, haven’t *noticed* any difference in prices we’re paying!

  5. franwhi

    Temperatures will start to fall in the next month or two ! No wonder Scotland needs a different energy policy – we’ve already got the heating on.

  6. John Jameson

    The response from nPower was brilliant:

    “If the Labour Party can commit to reducing policy costs on household energy bills, stopping the smart meter roll-out, preventing commodity cost increases and accept that there won’t be any investment in new power stations and infrastructure, then we could freeze our prices*. But will this make things better for Britain?”

    Ends

    * npower’s Price Protector 2017 already enables customers to freeze prices out to March 2017

    So, it’s just not possible. Well unless you sign up to a 3-year deal, then it’s just fine.

    And they don’t want smart meters, wonder why?

  7. John zims

    ‘it puts David Cameron in a very difficult position’

    The policy was already tried by the Polish government and ruled illegal by the EU,the Energy companies now have 20 months to prepare their legal position and if necessary have an injunction until an EU ruling.

    Meanwhile Cameron sits back with the popcorn.

  8. treborc1

    Gas prices are going up this year by about 8% and they will go up more I suspect in the twenty months after Miliband freeze. But as Miliband pointed out the wholesale price of gas went down, but the domestic price did not, well yes it did and it was labour that was in charge then.

    But what happens after the twenty months we would be back in the same place with the Gas companies adding 2% to the price hikes to recover the losses and labour would be saying well we won so that the task done.

    Time to take them back.

  9. blarg1987

    I think the idea of the policy is to move enery companies away from using the consumer and tax payer to pay for new infastructure but to look inwards. Just as many companies have years where they do not pay / pay very little in share dividens to reinvest that money into new equipment instead of passing the cost onto consumers in higher prices.

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