Into the long grass? PM backs energy prices inquiry

David Cameron has given the green light to an inquiry into the energy market, prompting Ed Miliband to accuse him of "kicking the issue into the long grass".

The Competition Commission is expected to start its probe into the dominance of the 'Big Six' energy providers "immediately," the prime minister's spokesperson said following PMQs. Further details are expected tomorrow.

It comes after E.ON's chief executive Tony Cocker called for such an investigation during his appearance before the Commons' energy and climate change committee yesterday.

Public anger about increasing energy bills, which companies have raised by an average of nine per cent despite only modest rises in wholesale energy prices, prompted Miliband to once again raise energy in prime minister's questions this lunchtime.

Miliband said: "Here's the problem – he wants a review on energy policy. But that's exactly what the energy companies want – a long inquiry kicking the problem into the long grass. How will a report due next summer help people to pay their bills this winter?"

The prime minister replied: "We want a competition inquiry that starts straight away, that is our policy."

The announcement will be viewed as a victory for the energy companies, who will now also be hoping to persuade ministers to cut the 'energy companies obligation' which they claim adds £60 a year to each household's bill.

It prompted Miliband to accuse Cameron of being "the unofficial spokesman for the energy companies".

But Cameron said he wanted to see more competition in the market and mocked Miliband for having following his advice in switching suppliers.

He blamed New Labour for having presided over a system in which only six companies were able to dominate the energy market.

The PM also repeated his call for "lower levies", referring to the green subsidies for renewable energy Conservatives in government are now hoping to slash.

Miliband responded: "Why has he, when it comes to energy companies, gone from Rambo to Bambi?"

The Competition Commission has previously been used to investigate airports, supermarkets and payment protection insurance. It conducts its work behind closed doors but its reports have real weight – and could provide the government with the political capital to take decisive action to change the energy market.

John Fingleton, a former head of the Office of Fair Trading, wrote in the Financial Times newspaper: "The Competition Commission has extraordinary powers enabling it to get to the root of the problem, rather than tinker with the symptoms.

"It could, should the evidence support doing so, break up the energy companies, as it did with airports. It could order different trading arrangements, and it could dictate different pricing approaches."