Miliband: Don't oppose bills freeze

Updated: 
Ed MilibandEd Miliband warned energy companies today not to set their faces against his plans for a gas and electricity price freeze amid claims that the policy could lead to blackouts.

In a letter to the "Big Six" power firms, Mr Miliband warned that if suppliers refused to work with an incoming Labour government to keep prices down, they risked being seen by consumers as "part of the problem, not part of the solution".

The Labour leader underlined his determination to impose a 20-month price freeze if he wins the general election in May 2015, ahead of radical changes to the energy market in 2017 designed to increase competition, introduce tougher regulation and bring down the size of bills for households and businesses.

And he warned the companies: "You and I know that the public have lost faith in this market. There is a crisis of confidence. We face a stark choice. We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution."

Labour said yesterday that Mr Miliband's plans, announced at the party's annual conference in Brighton, would save the typical household £120 and an average business £1,800 between May 2015 and January 2017. And the party said that the energy giants will be able to absorb the estimated £4.5 billion cost of the move because of the profits they have amassed in years of "overcharging" customers.

But the announcement prompted a backlash from business, with warnings that a ban on price rises could lead to the lights going out.

Sir Roger Carr, the chairman of Centrica - British Gas's holding company - said a firm unable to control either its costs or its prices was potentially in danger of "economic ruin".

"We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on," he told the BBC.

And Angela Knight, chief executive of trade body Energy Watch, said that while the price freeze was "superficially attractive", it would "also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone".

In today's letter, Mr Miliband told the Big Six firms that it was time to "rebuild public trust in the energy market".

"Our intention is to now reset the market that has consistently failed to secure the confidence of the public or the investment Britain needs," he wrote.

"Doing that requires two steps. First, it means legislating to build competition and transparency into the market, with a trusted regulator standing behind the system. Second, it means ensuring that in the time it takes to put a new system in place, up to the start of 2017, we ensure the prices paid by consumers do not rise."

A Labour government would ensure that a fairer market for customers is matched by a better deal for investors, with a decarbonisation target for 2030 to create certainty in the years ahead, a commitment to the system of "contract for difference" in the Energy Bill, the creation of an Energy Security Board to provide a clear framework for supplying the country's power needs and borrowing powers for the Green Investment Bank to support investment.

"We believe that this framework will create certainty and attract the range of domestic and international investors we need in the years ahead," wrote the Labour leader.

"I appreciate that you will not welcome all aspects of this package. But it is my firm view that without resetting the market we are not going to see the public consent that is required to underpin the scale of taxpayer-backed guarantees for which you have argued.

"I am prepared to make the case for sharing the risks of such investment, but that must be against the backdrop of a market that customers believe works for them."

He assured the companies: "This is a genuine opportunity to reset the energy market in the interest of consumers and investors. (Shadow energy secretary) Caroline Flint and I stand ready to work with you on these proposals in the months ahead. I look forward to continuing to discuss them with you.

Mr Miliband accused the energy companies of peddling "scare stories" about the potential impact of the price freeze.

Asked about the companies' concerns, the Labour leader told ITV1's Daybreak: "I would say that they are pretty unreliable witnesses, because these are people who are overcharging people, so of course they are going to say when someone calls time on it that they are not very happy.

"Then we have got the Government taking their side and saying the same thing, supporting the energy companies.

"That's fine, they can do that, but I am determined to make this change.

"I have written to them to say, 'Make yourselves part of the solution not part of the problem. There
is a crisis of confidence in this market, there is a crisis of confidence in you. You can take the old attitude, or you can work with us'.

"But let me be absolutely clear about this - I am determined to stand up to the energy companies to get a fair deal for consumers and also get the investment this country needs."

Mr Miliband dismissed suggestions that his plans were similar to the attempted restructuring of the energy industry in California in 2000, which had to be scrapped amid widespread price rises, power shortages and company insolvencies.

"There are bound to be people coming up with scare stories, the energy companies doing that, including about California," said the Labour leader.

"California was a totally different approach. It was a deregulated approach, not the kind of approach we are talking about."

Mr Miliband said: "For years and years in this country, people have just stood aside and not dealt with this issue. I am determined we do. I am determined we bring relief to hard-pressed families up and down the country.

"That is why we will freeze energy bills until the start of 2017 and then we will sort out the way the energy market works to stop people being overcharged. That's what my focus is.
"This system can work, it will work, it must work and we are going to make sure it works."

Pressed on whether he believed the "red Ed" tag he was often given in the press was an accurate one, Mr Miliband told BBC Breakfast: "No, it's not accurate.

"Let me give you an example - we are cutting taxes for small businesses. Now that is actually recognising the problems small businesses have in this country and somebody standing up for them.

"I don't think there's very much that's red about that. It's about one nation, it's about everybody playing their part, including giving the opportunity for the great small businesses of our country to get some help from government and be able to do that."