Britain's Business secretary says energy market is inefficient

Theresa May Campaigns In Yorkshire

The major intervention has been trailed for six months since Theresa May spoke out against the Big Six energy companies during her first speech to the Conservative conference as prime minister.

Mrs May denied she was resurrecting an Labour policy derided as "Marxist" by David Cameron when it was put forward by Ed Miliband in 2015.

She says in The Sun the measure could "save families on poor value tariffs as much as £100".

Haven't I heard something similar about this before?

But it is nearly identical to a Labour policy from 2015 which was - at the time - slammed by the Tories as a quasi-Marxist state intervention.

If standard variable tariffs milk customers, the picture for consumers on pre-paid energy meters is not much rosier.

Similarly, figures released by comparison site energyhelpline in August last year, showed a third of United Kingdom households, which have not switched their energy suppliers over the past five years, have spent £18.7bn ($24bn) more than they should have had. They raise the prospect of prices across the board tending to be closer to the Ofgem-set cap, thereby reducing the incentive for consumers to switch.

Bosses at British Gas owner Centrica and ScottishPower have also recently spoken out against the proposal, warning that it could lead to higher bills for consumers and reduce competition.




Others say a cap will damage investment in energy when it is required more than ever.

Meanwhile Alex Neill, managing director of home products and services at consumer group Which?, says: "Measures that significantly reduce the cost of your bills overnight will be welcomed, but this can not result in an increase in bills overall, undermine improvements in service or bring much needed innovation to a halt".

"It is clear to me that the energy market is not working for ordinary working families".

However, she said she could not promise that her planned cap would guarantee prices do not go up "year on year" but said it would prevent "sudden and unexpected and significant" jumps in the price of gas and electricity.

Theresa May has announced plans to cap standard variable tariffs in the new Tory manifesto after acknowledging that vulnerable people can be affected by the "rip-off bills". Switching rates are certainly increasing but, as we already know, around two thirds of households are still paying much more than they need to because they have not moved to a cheaper supplier or even a less expensive deal.

Speaking this morning to the BBC, Business Secretary Greg Clark said the companies should look at ways to become more efficient. Unlike Mr Miliband's freeze, which would stop prices falling, her plan would see an independent regulator set maximum prices, reflecting market conditions.

Keith Anderson, chief corporate officer at ScottishPower, said: "Though the Conservatives have asked the right question, they have found the wrong answer".

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