Ed Miliband hits back at energy firms over prices plan

 

Ed Miliband: ''We've got to tackle the cost-of-living crisis''

Ed Miliband would "take action" against energy companies if they defied a Labour government by raising prices ahead of his promised freeze.

The Labour leader has pledged gas and electricity bills would not go up for 20 months if he wins the 2015 election.

It has been welcomed by consumer groups angry at price hikes over recent years, but the "big six" suppliers warned it could have serious consequences.

Energy Secretary Ed Davey, a Lib Dem, said it risked "the lights going out".

Mr Miliband told the BBC the UK had "a market that isn't working" and, as the row between Labour and the energy firms escalated, he dismissed them as "unreliable witnesses" after they claimed possible blackouts.

He has written to the big six suppliers warning that without changes, taxpayer-funded guarantees to energy firms might not be sustainable.

The plan for a freeze on household and business energy bills between June 2015 and the start of 2017 was the stand-out announcement of Mr Miliband's party conference speech on Tuesday.

'Overcharging'

The Labour leader argued firms had been "overcharging" customers for many years and millions of households would benefit from the temporary cap on prices at a time when finances were under acute pressure and many were struggling to heat their homes.

Labour says the move will save average households £120 a year and businesses £1,800.

When the lights went out - the BBC reports on California's energy blackouts in 2001

Mr Miliband insisted he wanted energy suppliers to be successful and to continue to invest in new capacity to supply the UK's long-term energy needs.

But he said "public consent" for these arrangements depended on consumers getting a fair deal and that could happen only if the energy market was totally restructured to separate firms' generating and retail operations.

'Patently absurd'

Speaking to BBC News he said: "I've written a letter to [the energy companies] this morning saying there's a crisis of confidence in the system.

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"It's time we fixed it and they can either choose to be part of the problem or part of the solution. I hope they choose to be part of the solution."

Rebutting claims that to protect their profits, suppliers would merely put their prices up ahead of Labour's freeze, Mr Miliband said he would "make sure this is a genuine freeze that works for consumers".

"If we have to take action to make sure that happens, we absolutely will."

The party has rejected suggestions the cap, which could cost energy firms £4.5bn, will endanger much-needed investment in new plants, saying suppliers should be able to absorb the cost of the freeze out of recent profits.

Responding to suggestions the policy could lead to energy blackouts, Mr Miliband accused the industry of spreading "scare stories".

Shadow business secretary Chuka Umunna added the claims were "patently absurd" and "nonsense" put about by the large energy companies.

Since 2007, gas bills have risen by an average of 41% in real terms, while electricity has gone up by 20%, according to the Office for National Statistics.

Energy profits

The "big six" - British Gas, EDF, E.On, npower, Scottish Power, SSE - made total net profits of:

2009: £2.15bn

2010: £2.22bn

2011: £3.87bn

2012: £3.74bn

This has contributed to overall industry profits of £2.15bn in 2009, £2.22bn in 2010, £3.87bn in 2011 and £3.74bn in 2012.

But suppliers say prices have gone up to cover their rising environmental and social obligations and in response to commodity price rises - sums paid on wholesale markets.

Speaking at a fringe meeting on Tuesday evening, a senior British Gas executive suggested such a direct price intervention could "threaten energy security in the UK".

"If we have no ability to control what we did with the retail prices, and that (wholesale price volatility) was to happen again, it would mean we are selling products at significant amounts of a loss and that would threaten energy security in the UK," said Ian Peters.

Asked whether it could mean "the lights could go off" he replied: "I think that is a risk."

'Economic ruin'

Energy UK, the trade body representing the six largest energy firms, has described the price freeze as "superficially attractive" but suggested it could bring a halt to future infrastructure projects.

Chief executive Angela Knight said: "It will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone."

Centrica's boss warns that the plan could lead to firms' "economic ruin"

And the chairman of Centrica - British Gas's holding company - said a firm unable to control either its costs or its prices was potentially in danger of "economic ruin".

"We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on," Sir Roger Carr said.

Energy Secretary Ed Davey said: "Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt.

"Ed Miliband made a significant contribution to tackling climate change with the 2008 Climate Change Act. But he is putting this all at risk with his ill thought through plan which will put off investors in low carbon power generation."

Asked on BBC Radio 4's Today programme whether a Labour government would step in if a firm went bust, Mr Miliband said: "That's not going to happen."

But he added: "Of course if there was a major shock, companies could make their case."

Energy regulator Ofgem, which Labour plans to replace after 2015, has suggested legislation would need to be passed to change pricing arrangements.

In his speech, Mr Miliband also promised Labour would build 200,000 new homes a year by 2020 and enfranchise 16 and 17 year olds.

 

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  • rate this
    +2

    Comment number 66.

    About time someone stood up against big business ripping us all off. It's a shame that so many other sectors are doing exactly the same and getting away with it. Standing up to the energy companies is a good start.

  • rate this
    -1

    Comment number 65.

    Energy prices are now higher than historically, for a reason. Global demand has greatly risen over the last fifteen years. You cannot control the world Ed. Labour have nothing to offer so they invent a 'Crisis' to fire up their activsists and proclaim Ed to be the Saviour of the Universe. Show us the precise sums as to how this will work in practice! Otherwise speech was just wasted Energy !

  • rate this
    +9

    Comment number 64.

    So much of our energy bills are made up of stupid green levies so beloved by the Labour party, now Ed says he's on the side of keeping energy bills low.

    Yeah, right.

    Anyone seen how much tax is charged on fuel? Labour hoiked that up for 13 years and Ed's very quiet about that!

  • rate this
    +9

    Comment number 63.

    Spending other people's money always was a sure way of Labour buying votes. Besides, it's the vast expense of building all these green-energy windmills - a policy that Labour introduced - that is causing energy prices to rocket.

  • rate this
    +2

    Comment number 62.

    Ed Miliband is not a good man to be Prime Minister. In fact, no one on the Labour benches is...

  • rate this
    +2

    Comment number 61.

    When the big energy companies get taxpayer subsidy (winter fuel allowance) to allow them to make record profits year on year there was always going to be a breaking point. I'm no Labour voter but this is to be applauded, someone needed to do something & I'm just glad it's been proposed sooner rather than later.

  • rate this
    0

    Comment number 60.

    So by freezing prices does that mean there could be no price cuts?

  • rate this
    0

    Comment number 59.

    I'm sure privatised or public, energy costs would be increasing.... our infrastructure needs significant investment. This pushes up prices. If public, you could argue this investment would come from government. But at what cost? Many more Billions in debt! and tax payers taking the brunt!.....

  • rate this
    +9

    Comment number 58.

    Someone has to stand up to the energy companies, because for years they have been quick to raise prices and slow to lower them, claiming that its the 'energy market'. At the same time posting greater and greater profit. I for one would like to see our energy services back in public hands, but this is a small step.

  • rate this
    +1

    Comment number 57.

    Milliband's policies have some superficial attraction but the more they are examined the less attractive they are. Nothing to stop energy providers bumping up prices both before and after the freeze negating any benefit to consumers. Real reform is required but is this the way?

  • rate this
    -3

    Comment number 56.

    This is certainly clever politics so you have to give Ed credit for that. Energy prices have risen fast and are hurting so this has voter appeal. The freeze is for a limited time so with luck nothing bad will happen. In the unlikely event that an energy company goes bust it will be renationalized for free and to much cheering.
    The fact that we actually have cheap energy compared to Europe

  • rate this
    +12

    Comment number 55.

    I always thought that part of any energy bill was for future development, where has this money gone, its time someone took these companies by the neck and give a good shake

  • rate this
    +1

    Comment number 54.

    Remember folks this is the same man who imposed these massive increases in fuel bills, shocking, its like the bully at school making you say thank you for them taking your lunch money. Labour are now fully signed up to far left wing policies, so be prepared for huge tax rises, increased public sector, increased unions result = bankrupt country begging the IMF to bail us out again

  • rate this
    +8

    Comment number 53.

    The energy companies predict the sky will fall in.

    Well they would say that wouldn't they?

  • rate this
    +3

    Comment number 52.

    Feels good to know that with their VAST profits threatened they feel it acceptable to threaten their customers with blackouts! just who do they think they are creaming that much money for what is almost a basic human right? If Miliband says he would have the power to do that if he gets in then why have "the big 6" been allowed to get away with charging us so much for so long?

  • rate this
    +81

    Comment number 51.

    Everyone wants to see energy price freezes. And of course energy firms r going to be against it. Its a bold move from ed but is it a politically disastrous one. Im not too sure about his socialist plans. Welfare is way out of control, many foreigners and fraudsters target the system and exploit it as much as possible. Under ed this can only get worse and real honest hardworking people will suffer.

  • rate this
    +3

    Comment number 50.

    I just don't belieeeeve it.

  • rate this
    +3

    Comment number 49.

    So what MilliBean is saying is "Vote for me and then in January 2017, your energy bills will probably go up 25-30%" I hope Justine doesn't trust him to run the house.

  • rate this
    +35

    Comment number 48.

    Not surprised by the threats from energy companies to turn off the power when their cosy empires are threatened. Time to take some control back from these greedy parasites

  • rate this
    +53

    Comment number 47.

    About time too. Margaret Thatcher took on the unions who were holding us all to ransom and it is about time we had a Prime Minister prepared to do the same with the big businesses which are now doing more damage than the unions ever did. I only hope he's got the guts to fight as dirty as he will have to against these corrupt, morally bankrupt sharks in suits.

 

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