ENERGY bills will be frozen by Labour for 20 months if the party wins power at the 2015 general election, Ed Miliband announced on Tuesday in his boldest policy move since becoming leader three years ago.
Speaking to delegates at his party’s conference in Brighton, Mr Miliband revealed plans to transform the energy market and break up the power of the “big six” companies.
The emergency price freeze, the party claims, will save the average household £120 and businesses £1,800, and cost the big six energy companies £4.5 billion over the duration of the measure.
Energy companies said the freeze was “unaffordable” and will halt investment in the industry.
The energy policy was the main announcement in a speech in which Mr Miliband laid out his agenda for the UK, claiming repeatedly that “Britain can do better”. Speaking without notes for 63 minutes, he said a Labour government would also strengthen the minimum wage and give 16-year-olds the vote.
He addressed head-on doubts about his personality reflected in poor poll ratings, insisting that he had shown “leadership” in taking on media mogul Rupert Murdoch and stopping British military action in Syria. He challenged David Cameron and the Conservatives by saying: “If they want to have a test about leadership and character, be my guest.”
Mr Miliband made no direct reference to accusations of New Labour in-fighting and smears contained in former spin doctor Damian McBride’s memoirs, launched at the Brighton conference. But he told delegates: “Some people say you have got to leave decency behind when you go into politics. I say they are wrong.”
Pitching the 2015 election as a battle with Conservatives who had allowed the proceeds of recovery to go to the “privileged few” while ordinary families and small businesses struggle with a soaring cost of living, he said: “Britain’s best days lie ahead. Britain can do better than this. We’re Britain, we’re better than this. I will lead a government that fights for you.”
The Labour leader, who had already vowed to squeeze big business with a reversal in the cut in corporation tax, said Labour in government would impose a cap on energy prices until January 2017.
Over a 20-month period, the energy market would be reformed, with the companies which provide energy and those which sell it broken up. That would allow energy sellers to buy from a single pool in the hope of bringing prices down.
Ofgem would be abolished and replaced with a new watchdog “with real teeth” and the government’s £1.3 billion “ECO” scheme, for energy efficiency, would be replaced with a “more cost-effective alternative”.
Mr Miliband insisted Labour had to act because the soaring cost of energy was strangling the economic recovery. It is also the second highest cost for businesses after salaries, he said.
The Labour leader pointed to a survey by Which? that suggested consumers have paid £3.9bn a year over the odds since 2010.
He also promised that investment in clean energy would be restored after seeing a reduction from £7.2bn to £3bn between 2009 and 2012. Mr Miliband said: “We want a race to the top to make our economy work for working people once again. That’s how you make Britain better than this. And we don’t win a race to the top if our economy is held back by vested interests.”
He went on: “In the 1990s, Labour committed to a dynamic energy market economy. We were right. But when competition fails, government must be prepared to take action with the big gas and electricity companies whose bills just go up and up and up.”
His freeze pledge brought fierce criticism from the energy sector’s umbrella group.
Angela Knight, chief executive of Energy UK, said: “Freezing the bill may be superficially attractive, but it will also freeze the money to build power stations, freeze the jobs and livelihoods of the 600,000-plus people and make the prospect of energy shortages a reality, pushing up the prices for everyone.”
Energy giant SSE said bills were rising because of government initiatives, not fuel costs.
Chief executive Alistair Phillips-Davies said: “Instead of price freezes which will lead to unsustainable loss-making retail businesses, Labour should put policy costs into general taxation, taking them off energy bills.”
There was a warning too that the threat of a freeze would see energy companies inflate prices ahead of the 2015 election.
Price comparison website UKPower.co.uk said: “This puts pressure on suppliers to inflate prices between now and the election as they won’t be taking any chances on the voting outcome.”
Professor Philip Booth, editorial director at the Institute of Economic Affairs, said: “Ed Miliband has failed to get to grips with why the costs of energy are so high in the first place. It is only because of repeated government interventions and regulations that household bills have reached such an unaffordable level.”
Conservative Party chairman Grant Shapps said: “Rather than saying how Labour would cut the deficit or fix the welfare system, Ed Miliband called for a damaging tax rise on business that would cost jobs and confirmed that Labour would spend more and borrow more.”