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 50.

    How can anyone believe a word this government says? Time and time again Cameron says one thing and does completely the opposite.

    There shouldn’t be different tariffs; there should be one price for domestic electricity

    Time to Re nationalise

  • rate this

    Comment number 47.

    The energy firms are a cartel that rip us off and have been doing so unchecked for years. A million tariffs that no-one understands, not even them probably. The government will do nothing about it apart from a set of regulations that will be so watered down they will be worthless.

  • rate this

    Comment number 545.

    The problem with private companies is that they end up acting like monopolies. If one raises prices so does the other so you might as well nationalist the lot and let the dividends go to investment.
    We all are fed up as well with this constant search for good deals, good deals that end up being bad deals. So again Nationalize.

  • rate this

    Comment number 43.

    Wasn't the idea behind privatisation that we would all end up paying less through competition?

    Looks like the Tories weren't telling the full story when they stripped the nation's assets and flogged everything off to their mates (the only ones who actually did benefit from low prices)!

  • rate this

    Comment number 54.

    Look, energy is an essential item. All the suppliers use the same supply lines. The only difference between them is how good they are at negotiating with the people selling the energy in the first place. This is not what competition is about. I am not generally in favour of nationalisation but in this case, as an essential item, then energy MUST be nationalised to control prices.


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