Miliband promises two-year energy bill freeze
Gas and electricity prices will be frozen for homes and businesses for 20 months after the 2015 general election if Labour wins power, Ed Miliband announced today.
The Labour leader said the move would save the typical household £120 and an average business £1,800 between May 2015 and January 2017.
But the dramatic policy put him on collision course with the “Big Six” energy companies, which stand to lose an estimated £4.5 billion and have not been consulted on the scheme.
Mr Miliband also promised to help businesses and families cope with the rising cost of living, as he declared: “Britain can do better.”
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The Labour leader pledged an £800 million tax break for small businesses, and revealed he is planning a new generation of new towns and garden cities in England to ease the housing shortage.
But the freeze on energy prices was the major talking point. Speaking to Labour’s annual conference in Brighton, Mr Miliband said: “The companies won’t like it because it will cost them money. But they have been overcharging people for too long because the market doesn’t work. It’s time to reset the market.”
Mr Miliband accused the coalition Government of allowing energy prices to get out of control because David Cameron did not have “the strength to stand up to the strong”.
Families’ energy bills have risen by almost £300 since the coalition took office in 2010, and companies now say that energy is the second biggest cost they face, after wages.
A report by consumer group Which? last weekend estimated that flaws in the market had left consumers paying £3.9 billion a year over the odds.
Mr Miliband told the Labour conference that soaring energy prices were part of a “cost-of-living crisis” which had left ordinary people struggling to pay their bills, while the proceeds of the UK’s economic recovery were siphoned off by a “privileged few”.
In a keynote speech delivered without notes, he repeatedly declared “Britain can do better”.
“In the 1990s, Labour committed to a dynamic market economy,” said Mr Miliband. “We were right to do so.
“But what happens when competition fails, what happens when it just fails again and again?
“Government has to act – with the train companies that put the price of the daily commute further and further out of reach, with the payday lenders who force people into unpayable debt, and with the big gas and electricity companies, that put prices up and up and up.
“It’s not good for the economy – it’s not a dynamic market economy when one section of society does so well at the expense of others. It’s bad for families, it’s bad for business and it’s bad for Britain too.
“Some people will just blame the companies, but I don’t think that’s where the blame lies. Ultimately it lies with the Government for not having the strength to take this on, not having stood up to the powerful interests, for not having had the strength to stand up to the strong.”
Labour has already announced it will legislate to force energy companies to separate into energy generation and retail arms, to create more competition, and will abolish regulator Ofgem and replace it with a new watchdog with sharper teeth. But Mr Miliband said that these reforms will not kick in until the start of 2017.
But he said he was not willing to stand by in the meantime, telling delegates: “If we win the next election in 2015, the next Labour government will freeze gas and electricity prices until the start of 2017. Your bills will be frozen, benefiting millions of families and millions of businesses.
“That’s what I mean by a government that fights for you, that’s what I mean when I say: Britain can do better than this.”
Aides said that Labour believes energy companies will be able to absorb the cost of the price freeze, because of the large profits they have made in recent years.
They said that if the companies sought to dodge the freeze by hiking prices before the election, Mr Cameron should be ready to act to hold bills down.
Ofgem already has the powers to enforce a freeze but Labour will legislate to reinforce this, said a party source.
Ben Bradshaw, Labour MP for Exeter, said: "Good rousing speech, more confident and relaxed even than last year. I really welcome the freeze on energy bills, rates cut for small businesses, house building programme and integrating health and social care. All really important for the Westcountry.
"I also welcomed him tackling the leadership question head on and comparing his willingness to take tough decisions and stand up to the powerful and vested interests with Cameron's bowing before them."
Alison Seabeck, Labour MP for Plymouth Moor View, said: "Ed Miliband, in evoking the spirit of 1945, is speaking the language that many people in Plymouth who lived through that period will understand.
"In talking about the link between hard work and economic benefits he is speaking the language that people in Plymouth will understand.
"And in talking about the need to stand up to the strong rather than simply to bully the weak he is speaking the language people in Plymouth can understand.
"This really was a speech about the importance of us being One Nation. And it was the speech of the potential Prime Minister.
"The announcement on a stronger energy regulator will be welcomed by my constituents who have seen prices rise faster than wages in 38 out of 39 months since coalition took control and small business will welcome this as well as the measure on business rates."
But Energy and Climate Change Secretary Ed Davey warned Labour risks letting the lights go out.
He said: “Everyone wants to help with the cost of rising bills, which is why Liberal Democrats have cut income tax by £700 for working people. But Labour’s plan is a promise that won’t work.
“When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts. We can’t risk the lights going out here too.
“Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt.”