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

    Comment number 1100.

    Also why do the government insist on charging V.A.T @5% on domestic gas and electricity .whilst it may not be a lot, it does not help those who need help to pay their bills, and i personally don't agree that being able to see inside my home during the hours of darkness or keeping warm or being able to wash in hot water and cook &clean, are luxuries they should be a basic human right

  • rate this

    Comment number 1099.

    Someone explain to me why there has to be different tariffs.
    You use a unit of gas, it costs X.
    Or do words like, "money" and, "old rope", have anything to do with it?

  • rate this

    Comment number 1098.

    The current situation where companies have lots of tariffs to loads of T&Cs is not competitive. Companies need to compete against each other for competition to exist.

    Companies are just fleecing part their customer base to strip customers off each other.

    Some customers win, some customers lose whilst the companies play the game and make their profits.

    The whole system is pretty rotten.

  • rate this

    Comment number 1097.

    There was no overall increase in wholesale prices of electricity or gas between 2006 and 2012. Typical customers gas bills increased from £500/yr to £730 and electricity from £440/yr to £580, i.e. £1310 for dual fuels, an increase of 40% over six years. Page up and look at OFGENs charts. The increases are all down to government policy and the energy companies greed.

  • rate this

    Comment number 1096.

    Why exactly does Cameron have to meddle in this?

    12 years of Labour’s rule drove down energy prices for the working man to pre-privatisation levels, when energy was free.

    Ohh – must go now as I have to get back to planet Earth.

  • rate this

    Comment number 1095.

    Smart meters are great technology and have the advantage that it makes the energy companies believe they are at the forefront. My dad used to clip my ear if I left a light on after leaving the room - not technologically sound but it worked

  • rate this

    Comment number 1094.

    Some facts:
    Taxes cause inflation. Taxes on companies and rich people are passed down to consumers.
    Governments' duties should be to uphold the laws, not interfere with business and with people's freedom to choose.
    Capitalism and free enterprise is the only system that ensures people are lifted out of poverty. History has proven this.
    Socialism requires taxes that ensures price hikes.
    No brainer

  • rate this

    Comment number 1093.

    Will the wind once again blow for England, just like the one that scattered the Spanish Armada?
    Utilities blamed for water shortages due to excessive leakage. Result: The wettest summer in recent history.
    Power companies raise their prices: What odds can you get for the mildest winter on record?

  • rate this

    Comment number 1092.

    "Private companies who provide utilities only act in the best interest of the company and shareholders..When Cameron decides to sell off the roads too we will all be screwed!"

    If you dont remember, it was the last Labour government were going to about charge per mile, but the Tory "toff" eton chums rejected it,
    Who put in the London congestion charge?

  • rate this

    Comment number 1091.

    How does it add to efficiency to have thousands of people in call centres competing for our business? (MANWEB once had a Customer Capture Unit!). How can it be efficient to buy energy, pay other companies for the use of pipes and cables to distribute the energy, hire meters and meter-reading services? What is the cost of accounting for all this? How can this Byzantine complexity be efficient?

  • rate this

    Comment number 1090.


    So what you're saying is that it's OK to avoid paying a tax if you're reacting to the 'concept' of it?

    Fine by me. I'm reacting to the 'concept' of paying too much tax.

  • rate this

    Comment number 1089.

    @517. I couldn't agree more.

    The whole country has gone tarriff mad, from energy costs to mobile phone deals to train tickets.

    Next thing we know they will introduce a new GCSE called "Tarriff Deciphering in Modern Britain".

    Could be the most sought after qualification yet....

  • rate this

    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

    Comment number 1087.

    I think the best way of promoting competition is to force vertically integrated companies to sell 80% (say) of the power/gas they produce and not hide it in the transfer price between the production and retail divisions. That way, there will be more sellers and buyers in the market, which will eventually be driven by supply and demand.

  • rate this

    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!)

  • rate this

    Comment number 1085.

    David Cameron has sought to clear up a row over the government's plans on energy by promising legislation to "ensure customers get the lowest tariff" on gas and electricity.


    What row?

    If you mean the media and Labour whinging and moaning at everything then that isn't a row, that is just par for the course these days.

    It's no wonder people can't be bothered with politics in the UK.

  • rate this

    Comment number 1084.

    Surely all this will mean is that the energy suppliers will raise the cost of their lowest tariffs, so we will end up paying more anyway. Surely the govt should be saying that they can't charge X% more than the published cost of wholesale gas. This cost should be provided by the watchdog. If they can't make a profit from this then move over because some one will.

  • rate this

    Comment number 1083.

    1075.Tuesday11Oct - "....Please talk me through the steps as to how we renationalise an industry such as energy?........."

    Step 1 - regulate against price fixing in the industry
    Step 2 - if they behave no need to nationalise
    Step 3 - if Step 2 fails you fine the companies for price fixing until their pips squeak and buy the dirt cheap rotting remains of said companies....

  • rate this

    Comment number 1082.

    Discussions between the government, British Gas and the other suppliers will have been very short.

    Dave "Will you lower prices?"
    BG rep "No"
    Dave "oh erm right"
    BG rep "Bye then Dave"
    Dave "anybody got a copy of plan B?"

  • rate this

    Comment number 1081.

    Please don't talk about privatising. I was around when we had the CEGB, and dealt with the huge Bureaucracy, inefficiency, and cost involved in designing and building power plants. Yes it has some advantages from an engineering point of view but we really need to make privatisation work. It was a wonder we ever got anything built with industrial relations as they were.


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