Comment: Miliband is frightening energy companies into raising prices
By David Morris MP
Yesterday I spoke in a debate about the new Labour policy of freezing energy prices in the unlikely event they win the next election. Whilst this policy has generated headlines, I believe it is also deeply irresponsible and puts at risk so many recent achievements in this important sector.
Since Milibands announcement at the Labour conference, most providers have hiked their prices by around ten per cent. Many have launched products like the EDF 'Blue Price Freeze' which offers customers a guaranteed price until Match 2017. This clearly supersedes any Labour policy on freezing prices.
The big six energy firms will obviously deny that any of this is linked to Labours actions, but I'm not a big believer in this sort of coincidence. Not least because the last time energy companies offered this sort of deal Miliband was the energy secretary. On that occasion the energy prices from the east were volatile and Miliband was powerless to intervene. So what makes him think he can do it now?
Let's start with the basics: under Labour green taxes, combined with a historic reliance on gas imports and a lack of choice in the market, led to price rises. Any price freeze now has been superseded by the market because it is only a sticking plaster on the real problems we face.
In reaction to this announcement by the big six, Miliband has achieved another big price hike, followed by a meaningless price freeze that does nothing for hard pressed consumers. Also what's the point in Labour's policy if energy companies can do it anyway? He's just frightened them into raising prices.
Meanwhile, the coalition is delivering some real improvements that will cut energy production costs and add plurality into the market, which will ensure these cuts in costs will translate to lower bills. And make switching deals the norm. Miliband himself has taken advantage of this legislation but did nothing to implement anything similar when he was energy secretary.
Remember that fracking has led to reductions in gas prices in America of 80% and obviously that has a knock on to domestic electricity prices. We have also learned lessons from the Americans in ensuring that teething problems with the technology have been ironed out before we commit to it.
Similarly we have pushed ahead with nuclear new build at Hinkley Point, which will give us much more home-grown electricity. Nuclear must be part of the mix as it delivers low carbon electricity for less than wind farms, wave power and solar could ever achieve.
Nuclear will enable us to hit the low carbon targets we have set without ruining our countryside with wind turbines and pushing up bills because of their cost.
Also under the last Labour government green taxes were heaped on to domestic consumers. The average household pays £112 a year in environmental levies and David Cameron is quite right to want to see these reduced. There is no point in taxing people to death and claiming that represents a genuine viable energy policy when it does not.
We all know that the Liberal Democrats were pushed into supporting many of the good ideas that have come out of the Department for Energy and Climate Change. I have always sang the praises of Charles Hendry MP, who I think has done more to push nuclear than any other minister in decades. The claim that Chris Huhne was ever a supporter of nuclear energy is hard to swallow for those of us who observed him closely.
Since 2010 we have worked hard to freeze council tax by demanding changing in what local government does. A similar result for the energy sector was never going to be as quick to deliver but we are moving in the right direction.
The announcement of Labour's policy on energy has wiped billions off the value of energy firms over night, that in turn has put investment at risk and puts prices up for consumers by ten per cent. Trust me when I tell you – if Labour win the next election they will want to freeze energy prices. But when they thaw, expect massive price hikes.
David Morris is Conservative MP for Morecambe and Lunesdale.
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