UK Politics

The story of Ed Miliband's energy price freeze plan

Ed Miliband at the Labour conference

This week Labour completed a two-year political journey - from predatory capitalism to price controls.

At his conference speech in Liverpool in 2011, Ed Miliband set out his approach to the economy - distinguishing between productive businesses and asset-stripping "predators".

There was just one small snag.

At the time, it was about as widely understood as the Schleswig-Holstein question*.

In short, very few people knew what he was on about.

And he had trouble explaining it himself in a series of broadcast interviews the next day - especially the tricky task of which companies would fall into which categories.

Popular appeal

So his policy team realised that, at the very least, a solid example of predatory capitalism was required.

They themselves decided to prey on a victim, or victims - the six big energy companies, controlling 98% of the market.

The utilities, perhaps, walked into the trap by being slow to pass on decreases in the wholesale price of energy to consumers.

Though some had a better record than others, Ed Miliband has long grouped them together as "the big six" and called for market reforms. But simply promising to "reset the market" isn't exactly the way to grab the attention of swing voters.

For 18 months, those in Ed Miliband's back office have been mulling over how to give this policy a rather more popular appeal.

Every time Damian McBride, the disgraced former spin doctor, popped up at - or rather, near - the Labour conference this week, party officials were quick to stress how the old Brownite regime had been consigned to the dustbin of history. Ed had moved on.

'Echoes of 1997'

But in one respect, Ed Miliband's strategists did admire the former prime minister.

They were looking for something that had "echoes of 1997" to make an impact.

They were taken by Gordon Brown's one-off windfall tax on privatised utilities in order to fund a programme to help the unemployed.

The unions were largely in favour and the idea was discussed as part of Labour's policy review.

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Media captionLabour leader Ed Miliband: "I'm not going to tolerate the energy companies using the fact there's going to be a price freeze to collude in raising prices"

Back in 2008, the left-wing group Compass - close to the current policy chief Jon Cruddas - had argued for such a tax, so it was seen as a very serious option.

But it had disadvantages, namely the "t-word".

If opponents successfully concentrated on Labour's desire to tax business - rather than to help the consumer - it could be in trouble.

And it would not directly benefit bill payers. So a more direct approach was devised and tested in focus groups with floating voters worried about the cost of living.

Instead of taxing the companies, the energy suppliers would have their prices frozen.

The benefits would be there for all to see in their household - and small businesses' - bills.

Ed Miliband would also stick to his long-standing commitment to shake up the energy sector by saying the price freeze would end once the market was reformed and properly regulated.

Some backbench MPs were briefed by a shadow minister ahead of this year's conference to expect a big energy announcement, but weren't given the details.

They were assured that their long and restless wait for something to sell on the doorstep would soon be over.

The announcement, they were told, would be "divisive" and "not liked by those it affected". It would be shocking, not just surprising.

Challenge to coalition

The other key - and obvious - attraction was that it would issue a far stronger challenge to the coalition than a windfall tax.

Would the government freeze prices too? If not, why not? To mix canine and feline metaphors - are they on the side of the underdog or the fat cat?

And, as one shadow minister confided, a price freeze would be an attractive offer to make to the electorate in what might become a "pocketbook" election in tough times.

Image caption The policy has been portrayed in some quarters as a return to the state controls of the 1970s

But there were other potential benefits too.

Last year, Ed Miliband impressed commentators with his "look at me, no notes" speech in Manchester.

But many Labour MPs felt it didn't signal the start of a process. Once the speech had been delivered and the "one nation" slogan unveiled, those around him seemed to feel their job was done. There was a determination that this year's speech would be different.

As well as the policy commitment for 2015, Labour activists would be "fired up" to campaign for a price freeze now - petitions, leaflets, online campaigns, the lot.

And of course if it did happen. Labour would take the credit, not the coalition.

To help keep up the feeling that this is a new phase in the push towards the election, Ed Miliband will be reshuffling his top team towards the end of next week as the conference season draws to a close.

But there are dangers in Labour's approach too - risks which Ed Miliband's team say they have anticipated. But that does not mean they can necessarily be avoided.

If energy companies push prices up ahead of a freeze, will the so-called "predatory capitalists" get the blame - or Labour?

Lights out?

Do price controls bring back memories of the "old" Labour government of the 1970s which was turfed out of office having lost a vote of confidence?

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Media captionLabour's energy plan could potentially cause 'economic ruin' said Centrica's chairman

Suppose - as we have already seen - share prices in the energy companies take a tumble, and they say they can no longer make necessary investments?

In short, suppose the lights do go out?

But for Ed Miliband, he has taken the view that it's better to be denounced than ignored.

He says he has the energy for this political fight. But he is not yet guaranteed to win power.

(*Lord Palmerston is reputed to have said only three people had understood this diplomatic question - one was dead, another was mad, and the other had forgotten).