UK Politics

Ed Miliband: Labour would freeze energy prices

  • 24 September 2013
  • From the section UK Politics
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Labour would freeze gas and electricity bills for every home and business in the UK for 20 months if it wins the 2015 election, Ed Miliband has said.

The big energy firms would be split up and governed by a new tougher regulator to give people "a fairer deal".

Labour says the move will save average households £120 and businesses £1,800 - but cost the energy giants £4.5bn.

But energy companies said the policy could lead to power shortages, and jeopardise investment and jobs.

The Labour leader said firms had been overcharging "for too long" and it was time to "reset" the energy market.

The Tories accused him of a "sleight of hand", saying people would have to "pay more for their electricity" under the plans.

Speaking for more than hour without notes at his party's annual conference in Brighton, Mr Miliband set out his vision of how "Britain can do better" under Labour, with an economy that works for "ordinary people once again".

In other developments at Labour's conference:

Mr Miliband used his speech to pledge action on what he has called Britain's "cost of living crisis", setting out an alternative vision of Britain's economy to that pursued by the Conservatives, with higher skills and wages.

"David Cameron talks about Britain being in a global race. But what he doesn't tell you is that he thinks the only way Britain can win is for you to lose."

Mr Miliband said that means "the lowest wages, the worst terms and conditions, and the fewest rights at work - a race to the bottom", adding: "The only way we can win is in a race to the top."

In an upbeat speech peppered with swipes at David Cameron and George Osborne for being out touch and lacking aspiration for the country, Mr Miliband repeatedly used the phrase "We're Britain, we're better than this" to cheers and applause from Labour activists.

He received standing ovations for defending the NHS and promising to axe "the bedroom tax" - and tackled Tory criticism that he lacks leadership skills head-on, saying: "If they want to have a debate about leadership and character - be my guest."

Unlike David Cameron, he told the party faithful, he had stood up to vested interests on media regulation and the tobacco lobby and made the right call on Syria. There was no mention in the speech of Mr Cameron's coalition partners, the Liberal Democrats.

Explaining what he believes has gone wrong with the economy under the coalition, he said: "Too many of the jobs we're creating in this country are just too low paid, too many of the gains in our economy are just scooped up by the privileged few, including those big bonuses, and too often you are left being charged over the odds.

"They used to say 'a rising tide lifts all boats'. Now the rising tide just seems to lift yachts."

The Labour leader has used his week in Brighton to set out some of the policies on which he will fight the next election but saved what is likely to be one of the centrepieces of the manifesto for his big speech.

He vowed to abolish energy watchdog Ofgem and replace it with a new regulatory regime that ensures customers get a "fair deal".

"We will legislate for this in our first Queen's Speech and it will come into effect in 2017," the Labour leader told activists.

"But in the meantime I am not willing to just stand by. So the next Labour government will freeze gas and electricity prices until the start of 2017.

"Your bills will be frozen, benefitting millions of families and millions of businesses. That's what I mean by a government that fights for you, that's what I mean when I say: Britain can do better than this.

"The companies won't like it because it will cost them money. But they have been overcharging people for too long because of a market that doesn't work. It is time to reset the market."

'Easy solutions'

Labour says the energy giants have been overcharging customers to the tune of £3.9bn since 2010 by not passing on reductions in wholesale prices to consumers.

The party denies that the policy is a return to discredited "price controls" of the 1970s, arguing it is a temporary measure aimed at helping consumers while the party sets up a new regulator, which would force firms to openly sell their wholesale energy in a pooled market.

But RWE npower, one of the big six energy firms targeted by Labour, criticised what it said were "easy", "simple solutions".

"In reality, there are three main factors that influence prices - fixing inefficient housing stock, the investment required to replace the UK's energy infrastructure, and the cost of the buying energy on the global market," said chief executive Paul Massara.

Another firm, SSE, said bills were rising because of "well-intentioned" government initiatives, not fuel costs.

Chief executive Alistair Phillips-Davies said: "Instead of price freezes which will lead to unsustainable loss-making retail businesses, the Labour Party should put policy costs into general taxation, taking them off energy bills."

Angela Knight, of industry body Energy UK, said freezing prices could hit the sector, making "energy shortages a reality, pushing up the prices for everyone".

One Nation book

In his speech Mr Miliband also pledged to help small firms by freezing business rates in England, paid for by halting a planned increase in UK-wide corporation tax for large companies.

And he said that by 2020 under Labour 200,000 houses would be built a year, with a fresh generation of new towns and "garden cities".

An incoming Labour government would also scrap the £1,3bn Energy Companies Obligation, launched earlier this year to make the energy giants improve efficiency, and replace it with a more "cost-effective" regime.

Unite union general secretary Len McCluskey said he was "pleased" with some of the issues raised by Mr Miliband.

"The most important thing was he highlighted the problems with the minimum wage and low pay and that fact that wage depression is something that needs to be tackled," he added.

But John Longworth, from the British Chambers of Commerce, said talking about "controlling prices and wages sends a very bad signal" to businesses.

John Cridland, from the CBI, said the plan "will deter much-needed investment" and would be viewed by business as "a setback for Labour's pro-enterprise credentials".

Every Labour activist in the hall was given a copy of a book called One Nation Economy after the leader's speech.