Ed Miliband outlines plan to break up Big Six gas and electricity companies and abolish energy regulator

Labour Government to impose biggest shake-up of the energy industry since it was privatised in the 1980s

Political Editor

The stranglehold enjoyed by the “Big Six” gas and electricity companies on the energy market would be broken under Labour, with the regulator Ofgem also abolished, Ed Miliband will pledge today.

He will spell out how an incoming Labour Government would impose the biggest shake-up of the energy industry since it was privatised in the 1980s. An Energy Bill would be pushed through Parliament during the 20-month period while energy prices were frozen, as Mr Miliband announced in September.

In a Green Paper published today, Labour will promise to replace Ofgem, which has been attacked as a “toothless tiger”, with a new body with “real teeth to prevent overcharging”. A new Energy Security Board would be set up to keep the lights on and deliver the capacity Britain needs.

A Labour government would improve competition and transparency to ensure “downward pressure” on bills. Power generation companies would be banned from exclusive deals with their retail arms, which critics claim they use to boost charges and disguise profits. New entrants would be allowed into the market to bid openly for “pooled supplies” and tariffs would be simplified so consumers could compare prices.

Labour launched its policy ahead of next week’s Autumn Statement, in which George Osborne will announce plans to cut at least £50 a year from domestic energy bills. Ministers will insist that will deliver real benefits, and claim that Mr Miliband’s price freeze would not work because firms could raise charges before and after the 20-month period.

The Chancellor is expected to implement the Energy Companies Obligation scheme, which provides free insulation to low income households, over four years rather than two as originally planned. The warm homes discount, which cuts annual energy bills by £135 for pensioners and vulnerable groups, is likely to be funded from general taxation. Mr Osborne may also reduce the cost of transmitting energy, which is responsible for 20 per cent of the average £1,340-a-year annual fuel bill.

Speaking in Manchester today, Mr Miliband will say: “In the past three years it has become clear to everyone but this Government that the energy market is broken. Prices are rising year on year without justification. And Britain is not getting the investment in energy we need. Labour is setting out our plan to make sure gas and electricity is affordable and available for this generation and generations to come.”

The Labour leader will promise: “We will reset the market with real competition and proper regulation so that prices are affordable. We will stop you being ripped off and, together, we will power Britain into the next century.”

According to Labour, consumers have paid £3.6bn more than they should have and greater competition would have kept costs down for a typical household by more than £100 a year. It claimed the “Big Six” pay over the odds – by up to 40 per cent – for the energy they sell on, often through back-door deals between different arms of the same company. Labour’s “tough new regulator” would have powers to order firms to pass on wholesale savings to the consumer in lower bills; protect the interest of existing and future consumers and ensure they secured fair value from the market.

Labour’s Energy Security Board would be modelled on the Office for Budget Responsibility, the independent tax and spending watchdog. It would work with the Government, the National Grid and regulator to set out and implement a timetable for building the capacity Britain needs.

Ofgem insists it is working to “achieve a culture where businesses put energy consumers first and act in line with their obligations”. In the past three years, it has completed 14 full-scale investigations, collected more than £35m in penalties and obtained about £6m in redress for customers.

* Chris Huhne, the former Liberal Democrat Cabinet minister, has said his party and Labour could form a “historic radical coalition” after the 2015 general election. He dismissed speculation that Nick Clegg would not be able to forge a partnership with Labour in a hung parliament.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before