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
    +5

    Comment number 1220.

    Energy supply in the UK is a cartel. Simple as that. And there's nothing government can do about it.

    If, say, EDF, EON and others had a series of their own power stations and could supply power from them directly to the customer, we would have a proper free market and bills would start tumbling. As it is, it's just a sham with middle-men creaming off commissions.

  • rate this
    +1

    Comment number 1219.

    The problem is that an oligopolistic market will be marked by suppliers charging the same price and using other methods to 'compete'. Need to allow other entrants into the existing market or bring it back in state ownership as a natural monoploy. I am suprised that David doesn't understand this. The basic struction of the energy provision market works against the consumer.

  • rate this
    +1

    Comment number 1218.

    1167 - Robert the Bruce
    "...It would be virtually impossible to re-nationalise...WHY DOESN'T THE GOVERNMENT BECOME A "COMPETITOR"...create a new energy company that doesn't pay fat cat[s]...shareholder dividends..."

    OR...why don't they do the above and smash unemployment across the UK. Answers - it would be (1) admitting they were wrong (2) like socialism, (3) the wrong kind of Dunkirk spirit

  • rate this
    0

    Comment number 1217.

    1208 Mark_from_Manchester

    'we really need more private sector workers on big salaries and low productivity'

    Whereas at the moment we have private sector workers on big salaries and low productivity...oh wait!

  • rate this
    0

    Comment number 1216.

    1188
    Fair enough, but the Tories arn't going to re nationalise, Lib Dems are toast, UKIP are a joke, so who else is gonna get the Murdoch backing other than Labour?

  • rate this
    +1

    Comment number 1215.

    Cameron is covering his tracks. The Government have introduced all kinds of stealthy measures to force every consumer to pay more in taxes and subsidies for the green agenda. The government energy policy is to use the price mechanism (charge more in taxes) to reduce demand for energy. In the end it's the final retail customer - YOU - who pays for the wind farms, solar energy subsidies, carbon tax

  • 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
    +4

    Comment number 1213.

    Yet another lie from a desperate Government.Would anyone out there like to admit that they voted for this Condem rabble? I've yet to meet anyone has!

  • rate this
    +4

    Comment number 1212.

    I quote:

    Energy Minister John Hayes: "We will be bringing forward legislation to make sure customers get the best deal"

    Listen up John - why would a customer want anything other than the best deal? Are you saying the energy companies have contrived to give customers something other than the best deal? Surely that is illegal? Is it John?

  • rate this
    -1

    Comment number 1211.

    Anyone who thinks power would be any cheaper if we re-nationalized these companies is living in cloud cuckoo land.

    The ONLY way to bring down bills is (a) leave the EU. (b) Stop building and mandating more stupid expensive non productive non green windmills. (Yes Windmills are not green. have you greens considered the carbon footprint of making the things? and they make virtually no electricity)

  • rate this
    -3

    Comment number 1210.

    Why are the audience of the BBC socialists? Is it because they comment on these news stories whilst the rest of use are working to pay for their lot. Can someone direct me to a less socialist news station?

  • rate this
    +4

    Comment number 1209.

    @ 1182 - Yeah if I'd had inhertited a debt the size of what they've taken over .. my legs would be wobbly & weak as well

    lol this again - they knew full well what they were inheriting it wasn't exactly a secret.

    Turns out they just had no meaningful plan to fix it, despite their assertions...

  • rate this
    0

    Comment number 1208.

    Nationalize the energy companies?

    Yeah, like we really need more private sector workers on big salaries and low productivity. Can't wait for Bob Crow to take over our energy supplies.

    Oh and where is the £100's of billions needed to buy them back coming from?

    Yes more borrowing, more interest payments, so more in taxes to pay the interest to subsidize the "cheaper" fuel.

    Pure muppetry.

  • rate this
    +2

    Comment number 1207.

    Does any Tory want to take money off their mates. No. Nuff said.

  • rate this
    +1

    Comment number 1206.

    Re: #1086, Your reasoning is the wrong way round, IF a nationalist company has to compete against private ones, they will only just undercut the private ones, to make a profit or the private boss's may call "foul", unless that is unless the Nationalised company was Non-profit making, BUT it may also have to produce the product. Utilities companies MUST be non-profit making, Utilities ARE SERVICEs

  • rate this
    +2

    Comment number 1205.

    1194.who2believe

    ...just make sure that ALL the energy companies display their prices as pence per unit. ..... Or is that too simple and will not allow companies to hide their true prices?
    ---
    It's meaningless to quote pence per unit if prices change when you've used a certain number of units. If you want a single price, you'll just make some people's bills go up, and others down.

  • rate this
    0

    Comment number 1204.

    Nationalise in the following order:-

    NHS
    Water
    Electric
    Gas
    Banks
    Rail
    Air
    Telephony

    These things are too important to be left on the hands of capitalists. Who your buy your cheese, shampoo and floor cleaner from doesn't matter a hoot. Whether workers can afford to eat, to heat and to light their homes does.

    It won't cost a great deal as no compensation is required.

  • rate this
    +2

    Comment number 1203.

    Another side to this debate is the amount of tax revenue that was increased last year by this goverment resulting in Oil & Gas operators in the UK paying combined tax bills of up to 82%! These increases were done without warning.

    I'm not defending any of the Oil majors but all they do is add the added tax burden onto the consumer.

  • rate this
    +1

    Comment number 1202.

    The government energy policy - Asking foreign owned companies to please invest in UK infrastructure, but we're not going to make it easy for you. These are companies, not charities. The industry is highly regulated and they take less in profit than the government takes in VAT!

  • rate this
    +2

    Comment number 1201.

    we need to secure our energy and not be held ransom by the arabs and the so called free market its not working for the UK
    1.build coal power stations
    2.shale gas must be utilized
    3 green energy must be utilized
    4.nuclear power.
    unless we act we will be held hostage by foreign govts and unscrupulous cartels of so called free market providers

 

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