Miliband promises crackdown on soaring utility bills

Energy Secretary backs our campaign to win fair deal for consumers.

The Energy Secretary, Ed Miliband, warns suppliers today to cut gas and electricity bills amid signs the Government is losing patience with the £27bn-a-year industry.

In an interview with The Independent, Mr Miliband called for prices to be lowered within months if wholesale energy prices continued their steep decline. He pointed out that the regulator Ofgem has forecast an 8 per cent fall in wholesale gas this winter, or £55 per customer.

Promising to usher in a new era of "tougher regulation", he disclosed that new legislation would hand Ofgem stronger powers to protect the country's 26 million electricity and 22 million gas customers. He also said poor families would be offered "energy mortgages" to fund insulation and renewable energy, a move which could create a market worth billions of pounds annually.

"I'm very clear that we need tougher regulation on behalf of the consumer," said Mr Miliband, who is drawing up Labour's general election manifesto. "We can't rely on a markets-only policy to protect the consumer any more."

As part of of its campaign against The Great Energy Rip-off, The Independent is calling for a 10 per cent cut in energy prices and powers to revoke the licences of suppliers that fail to pass on wholesale reductions. Prices for wholesale gas and electricity have halved during the past year but annual average bills, which spiked by 42 per cent last year, have fallen by just 4 per cent this year, to £1,140.

Although suppliers have bought more expensive long-term energy contracts, independent analysts estimate prices are between £100 and £120 too high.

Mr Miliband said: "I've talked in some detail to the regulator about this. Their view, in terms of looking in the round at all the costs the companies face, is that over the next six months they expect wholesale prices to fall, and I would expect that to be passed on to the consumer. So there should be price cuts for consumers, if wholesale prices fall as Ofgem expects them to."

The suppliers' representative, the Energy Retail Association (ERA) gave no indication of imminent reductions. Instead it re-iterated that present pricing was due to long-term contracts. "This means that there is always a time lag between when prices change on the wholesale market and when they change on domestic bills," the ERA said.

The watchdog, Consumer Focus, welcomed Mr Miliband's comments. "The Big Six energy companies have created a fog of confusion to justify high prices, but for consumers the story is quite simple," its energy expert, Robert Hammond, said. "The suppliers get away with making huge profits while their customers pay through the nose."

Mr Miliband, who took charge of the newly formed Department of Energy and Climate Change last year, indicated that Labour was now inclined to take a more "balanced" view of markets, rather than believing they always delivered for the public.

In particular, he referred to the Big Six energy firms' overcharging of pre-payment customers, who for years paid more than other customers, even taking account the extra expense of providing meters. Ofgem ended the rip-off last October, after finding £500m of overcharging of pre-payment and electricity-only rural consumers.

"We have the lowest median price for gas in Europe and we have below average prices for electricity," said Mr Miliband. "Now that doesn't make me complacent, but my view is that there's essentially two markets. There are the people who switch in a keen way and get better deals. And then there are the people who don't switch and my concern, to be totally honest, is that they have been left behind and that's why we're proposing these legislative changes."

In a new Energy Bill to be announced in the Queen's Speech next month, Ofgem will be given power to intervene more closely in the market, particularly in the way suppliers deal with generators amid signs of what Mr Miliband termed "market abuses".

But he rejected The Independent's idea of removing the licences of recalcitrant suppliers, saying Ofgem could refer anti-competitive firms to the Competition Commission. "The best way of getting a better deal for consumers is to have tough regulation and I say we need tougher regulation," he said.

The Government is trialling a new "Pay As You Save" scheme that provides the upfront costs of energy efficiency by spreading repayments over a period of time. The loans will be linked to the property rather than the occupier, to allay the concerns of those thinking of moving. Four hundred homes will be in a two-year trial, starting this month.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

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

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

iJobs Job Widget
iJobs General

Recruitment Genius: Bookkeeper / Office Co-ordinator

£9 per hour: Recruitment Genius: This role is based within a small family run ...

Recruitment Genius: Designer - Print & Digital

£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...

Recruitment Genius: Quantity Surveyor

£46000 per annum: Recruitment Genius: This property investment firm are lookin...

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor