Energy price freeze: A political winner?
- 25 September 2013
- From the section UK Politics
Throughout the economic crisis Labour has struggled to find an answer to a difficult question: how do they do socialism when there is no money left? In the past, there was always enough economic growth to fund the tax revenues that Labour governments could spend on their social democratic priorities. But with no growth, there is no cash.
Ed Miliband has now come up with an answer. If the taxpayer cannot fund his priorities, then business should do so instead. Where once Labour might have looked to tax credits or welfare to help people struggling with their gas or electricity bills, the party now taps up the energy firms themselves.
It is a pitch that revives the idea of active government. Are your prices too high? Don't worry, the government will pass a law to bring them down. Are property firms not building enough homes? Don't worry, the government will force them to sell their land.
Mr Miliband's calculation is that voters will welcome a party that is prepared to back them against what this morning he called "predatory businesses", businesses that are ripping off consumers for big profits. It is populist, bold and game changing. It defines Mr Miliband's leadership as never before, an attempt to put Labour on the side of the people against the profiteers. No longer need anyone ask what he stands for.
The risk is that voters might gratefully pocket a cut in their energy bills but then worry about a party that seems so willing to take on business when the economic recovery is so fragile. They might say, yes, the energy market does not appear to be working, but why not fix it by opening up the oligopoly to more competition, to drive down prices, rather than getting the men in Whitehall to intervene? Surely now is not the moment to create instability in the business world, potentially putting investment and jobs in doubt?
For on the Today programme on BBC Radio 4, the Labour leader made clear that he is ready to fix prices in other markets: "If competition fails, and if there is evidence it has failed in particular markets, should the regulator act? And if the regulator fails, as has happened in this market, should government act? Absolutely."
His opponents will say - and are saying already - that this is a shift to the left, an old fashioned Labour reliance on the state to solve all ills. The energy companies and business groups will protest furiously and warn of legal challenges and the lights going off. Others warn that Labour's proposals might even lead to a rise in energy prices in the short term. Labour do not mind this; they appear to relish a battle that can help reinforce their position in the eyes of voters.
Perhaps the biggest question remains what those voters' priorities will be at the next election. Ed Miliband is gambling that the battle in 2015 will be over which party has the best answer to what he calls the cost of living crisis. If he is right, his energy price cut might prove highly effective.
But if voters think the more important question is which party will best secure the economic recovery, then a battle with business might not be what all voters are looking for.
The challenge now is for the Conservatives to respond to this. What can they do to match Mr Miliband's support for the struggling classes while also staying on the side of business? We will find out at their conference in Manchester next week...