Consumers told: Club together to buy energy in bulk

A major drive to encourage energy users to cut their bills by clubbing together to buy gas and electricity is to be launched this month by the Government.

Residents of villages or local neighbourhoods – or people with similar interests in different parts of the country – would make joint bids to negotiate mass contracts for heat and light.

Ed Davey, the Energy Secretary, is to hold a meeting of consumer groups, including the consumer organisation Which? and Money Supermarket, to discuss ways of making it easier to bring people together to place orders for energy

He also wants to extend the idea wider by encouraging the involvement of such organisations as the Church of England, trade unions, social landlords, the National Trust, the Friends of the Earth and the Women's Institute.

Similar schemes have been successfully launched in Holland, Belgium and Denmark.

Ministers have been dismayed by a recent drop in the number of households switching suppliers in an attempt to get a cheaper tariff – despite sharp rises in energy prices.

They attribute the fall to increasing public mistrust of the hard-sell methods of energy companies trying to win new customers.

They believe trusted third-party organisations shopping around for new deals for thousands of members could give a boost to the concept of "collective purchasing".

Harnessing what Mr Davey has described as the "power of the crowd", the initiative is designed will help to drive down prices for consumers and boost competition in a market dominated by the "Big Six" suppliers.

Mr Davey told the Independent: "Energy is the perfect market for this kind of approach – it could be a very good way of helping consumers.

"People can be put off from switching because of the hassle involved – the number of switchers is going down, not up.

"But a third-party could tackle the practical problems for them, and thus help increase rates of switching.

"The idea of collective switching is very, very exciting. The government's role would be to give it momentum and visibility and to remove any barriers that prevent it from happening."

He praised the Big Switch scheme being run by Which? and the campaign group 38 Degrees. It is aiming to attract as many interested consumers as possible to sing up by March 31. After then energy companies will be invited to bid against each other for their business.

Thousands have also signed up to the "End the Big Six Energy Fix" campaign launched in The Independent last month. Its aim is force companies to share their profits with the needy, lifting more than five million households out of fuel poverty.

Mr Davey also said that moves, in partnership with the regulator Ofgem, to simplify energy tariffs and make bills easier to understand would encourage more consumers to shop around for the best deal.