Each day appears to bring a government U-turn at the moment, but none appears greater than the confusion surrounding David Cameron’s approach to energy policy. Rising energy prices have dominated the political agenda this autumn with the government forced onto the defensive as it struggles to understand how to respond to public concerns about the cost of living.
So, do we have U-turn on energy prices from David Cameron or is it all just a misunderstanding with the big six? Early press reports that the prime minister asked the energy companies politely to hold their prices steady until 2015 sound slightly wide of the mark. No 10 is backtracking quickly to dampen press coverage. That just leaves the government with its attack on ‘green crap’ and suggestions that they will halve environmental support on energy bills.
Whatever is happening in No 10 on energy policy it is not pretty. Despite DECC spinning like a top about the government’s commitment to climate change and long-term reform, Ed Davey remains isolated from the main action over in the Treasury and Downing Street. Initial attacks on Labour’s price freeze have melted into a soft recognition that with prices rising faster than wages, the government is exposed on charges that the energy companies are misusing their market position.
Labour’s launch of its energy green paper takes the party’s thinking to the next stage. Despite its resonance with the public, the price freeze has only ever been a small part of Labour’s approach to energy. The 20 month price freeze provides short-term relief whilst a Labour government would pilot a wider energy market reform bill through parliament to enact the long-term changes needed to secure our energy supply. That means a new regulator to replace Ofgem with the teeth to stand up for consumers and safeguard the energy market. It will make transparency and efficiency central to Britain’s energy market ensuring that it works for both consumers – the public and business – and new entrants to the sector. By breaking the link between the wholesale and retail markets energy companies will find it harder to pass on hidden charges to customers. Let the sun shine in, as some say. New research from Labour shows that the big energy companies add an average of £85 onto bills through selling energy between the wholesale and retail wings.
The driving force behind these reforms has been Caroline Flint – and the shadow team around her – who have been toiling away for two years on a comprehensive package. These themes have been given greater amplification by Ed Miliband and the price freeze campaign.
The energy green paper also makes clear that Labour’s policy is about encouraging investment and security of supply, as well as helping relieve the burden on households. The UK used to be a world leader in green energy. Our competitive advantage has collapsed under this government due to uncertainty on policy and an increasingly angry rhetoric against climate change and environment policy. The green paper will outline greater powers for the Green Investment Bank and commitment to a clear 2030 decarbonisation target. The government’s reliance on gas as its main policy approach leaves the UK at risk of price hikes and destabilisation on the international markets. Amongst the ministerial mixed messages, the government has lost sight of the end goals: to ensure a sustainable energy supply and to prepare the UK for a non-fossil fuel future. Government’s job is to set the rules of the game to ensure consumers get a fair deal and the sector gets the certainty it needs to invest. Labour gets this; it is up to ministers to decide whether they do as well.
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Andrew Pakes is a former environment advisor to the shadow cabinet and the Labour parliamentary candidate for Milton Keynes South. He tweets @andrew4mk