David Cameron stands by 'lowest' energy tariff vow

 

David Cameron: ''I want to be on the side of hard pressed, hard working families who often struggle to pay energy bills''

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David Cameron has insisted energy firms will be compelled to give customers "the lowest tariff" as he sought to clear up confusion over energy policy.

The exact details of how this will be achieved, in next month's Energy Bill, have yet to be decided.

But Downing Street claims consumer groups and energy firms SSE and Ovo support the policy.

Some business groups warn it could damage competition and even lead to higher prices.

It comes after 24 hours of apparent confusion over where the government stands, with Labour accusing ministers of throwing energy policy into "chaos".

During Prime Minister's Questions on Wednesday, Mr Cameron made a surprise announcement promising to legislate "so that energy companies have to give the lowest tariff to their customers".

The main energy firms said they knew nothing of the plan - or of the government's intention to put it into legislation.

There has been a lot of uncertainty after the prime minister's statement in the Commons yesterday.

Officials in Whitehall were saying this policy is very much in development, and the prime minister had spoken a little bit early on this.

What we've seen today is a government that is so desperate to try and say that it is on the side of people who are feeling the pinch in a time of austerity, particularly when energy prices are rising, that they announced a policy before all their ducks were in a row.

Energy Secretary Ed Davey appeared to distance himself from the proposal and Downing Street said energy firms would be obliged only to "offer" the cheapest tariffs.

Energy minister John Hayes, summoned to the Commons to clear up the confusion, said a number of options were being considered.

These included an evaluation of whether voluntary agreements made by the energy companies in April should be "made binding" through legislation.

"This is a complicated area and we will discuss with the industry, consumer groups and the regulator in order to work through the detail," Mr Hayes said.

But arriving for an EU summit in Brussels, Mr Cameron stood by his remarks, telling reporters: "I want to be on the side of hard-pressed hard-working families who often struggle to pay energy bills.

"That's why I said in the House of Commons yesterday we're going to use the forthcoming legislation - the Energy Bill coming up this year - so that we ensure that customers get the lowest tariffs."

In his statement to MPs, Mr Hayes said the government needed a "robust" relationship with the six big energy firms and would take the "necessary steps to ensure people get the best possible deal".

Shadow energy secretary Caroline Flint said Mr Cameron had thrown energy policy into "confusion", causing "chaos" in the energy industry.

Graph showing the typical electricity bill over time

Angela Knight, chief executive of the Energy UK - the trade association for the energy sector - told BBC News the industry had been taken by surprise by the PM's announcement and more clarity was needed on the government's position.

She said the industry had already made progress by introducing "easily understandable tariffs, much fewer tariffs and assisting people as to how they can find out exactly which one is suitable for them".

Start Quote

I asked the boss of one of the UK's biggest gas companies what would happen if they were forced by the government to offer all their customers the lowest tariff they offer”

End Quote

Business groups warned forcing companies to give customers the cheapest tariffs could damage competition in the market.

Deputy director general of the CBI Neil Bentley said "scare stories" about the government's commitment to the energy market could "create a lot more uncertainty for companies looking to invest in the UK".

But consumer group Which? urged Mr Cameron to "stick to the promise" he made in Parliament.

"Just giving people information on the lowest tariff is not enough when trust is at an all-time low in the industry and switching levels are falling," Which? said.

Greenpeace said the government's energy policy was now "as confusing as British Gas tariffs" and the UK needed to do more to reduce its reliance on gas.

Under this voluntary arrangement the six main energy providers agreed to contact customers once a year to tell them what the best tariff is for them, and how to get it and to contact customers coming to the end of a fixed-term contract with the same advice.

Graph showing typical gas bill over time
 

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  • rate this
    -1

    Comment number 1214.

    Is it just me or is the amount of money saved per person relatively small? Even if gas companies were to half their profits so it'd be 1/16 of what we pay? If people really want to save money on the leccy, there's a very easy way to do that; don't use so much. The price of gas and electricity are only going one way in the long term, so we need to get used to using less.

  • rate this
    +43

    Comment number 1156.

    The PM has accidentally highlighted why the "private" energy sector is a joke anyway. If all energy companies had one cheapest price, we would all switch to.. er... the cheapest one.

    It is only a market that allows them all to coexist *because* they can confuse and rip us off.

  • rate this
    +31

    Comment number 1151.

    Fact is I can't afford to heat my home I sit with jumpers on and blankets over me its going to be another long winter for me and a lot of others why should these energy companies make a profit from our misery.The people at the top of these companies and politicians know that people are suffering and even elderly dying because of this greed and do nothing, makes you wonder how they sleep at night.

  • rate this
    +15

    Comment number 1088.

    If the government legislate to compel energy companies to put all customers on lower tariffs, then theses lower tariff will disappear - everyone will pay the same tariff. Energy companies can currently offer lower tariffs to some customers because others (knowingly or unknowingly) pay a higher tariff.

  • rate this
    +35

    Comment number 1086.

    Why is the nationalisation/privatisation issue always seen as being one or the other? Why can't we have a nationalised energy supplier which has to compete with the privatised suppliers, which can keep them honest by preventing them forming a cartel and pushing prices up, and doesn;t end up a complacent monopoly? (We could do the same with RBS if there was a will!)

 

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