The Blog

Cut the Crap and Freeze Energy Bills, Mr Cameron

On Saturday nearly eight million households will start paying the price for David Cameron's failure to stand up to the energy companies...

On Saturday nearly eight million households will start paying the price for David Cameron's failure to stand up to the energy companies. British Gas's decision to increase their gas prices by 8.4% and electricity prices by 10.4%, which comes into force on Saturday, will add about £100 to the average family's bill this winter - on top of the £300 increase people have already seen since the election.

People in Britain do not believe the Tories when they tell them they've never had it so good. They know rising energy bills are one of the main reasons they are finding it harder and harder to make ends meet. David Cameron can't solve the crisis because he puts a privileged few before working people. Just look at how he's responded to the price rises.

First he told people to shop around. But by the time the fifth of the Big Six energy companies had announced their price rises, most people seemed to conclude that, no matter who your supplier was, bills would be rising this winter. Then he said he wanted to roll-back green levies, or, more bluntly, to cut the 'green crap'. Let's leave aside for a moment the fact that 60% of the levies he now blames were introduced by his government, and that most of the levies are actually about helping pensioners and low-income households pay their bills and insulate their homes. What David Cameron doesn't seem to grasp is that social and environmental levies, which amount to about £112 on the average bill, simply cannot explain bill rises of £300-£400. Indeed, as EDF has made clear, even if the government does make changes to green levies the energy companies are still planning to put up people's bills anyway.

Instead of asking taxpayers to bail out the energy companies, David Cameron should stop these companies from overcharging people in the first place. That's what One Nation Labour would do. Our market reforms will reintroduce proper competition, improve transparency and create a system with fairness to consumer at its heart. To do this we'll make three big changes to the way this market works.

First, we'll stop energy companies setting their prices and trading behind closed doors. One of the reasons energy companies can get away with confusing us about their prices and profits is because very little trading actually happens on an open market. That will stop. We'll make energy companies buy and sell their power through an open pool.

Second, we'll force the energy companies to separate out their power stations from the companies that supply our homes and businesses. At the moment, if wholesale prices are high, their power stations make big profits. If wholesale prices are low, their supply companies make big profits. Either way, there's no incentive to get prices down, and consumers are left out of pocket.

And third, to make sure our reforms last, we will create a tough new energy watchdog with new powers to police the market, including the power to force energy companies to cut their prices when wholesale costs fall.

But these measures will take time to create a market people can trust. So we will take immediate action upon entering office to put a stop to this unfairness and help people facing the cost-of-living crisis by freezing prices until January 2017 when our reforms will start kicking in. This will save money for 27million households and 2.4million businesses.

Popular in the Community