Editorial: Not the way to tackle rising energy prices

With the Government in confusion, where are consumers? No better off than before

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So much for drawing a line under the Government's shambolic recent performance. In an apparently unscripted addition to Prime Minister's Questions on Wednesday, David Cameron told MPs that the Government is to use the law to force energy companies to give their customers the best possible tariff.

The proposal would be startling enough by itself, signalling a sudden, radical intervention in of one of Britain's more complex industries. But it was also news to both the energy companies and, it appeared, to the Department for Energy and Climate Change. Was the Prime Minister boldly seizing the initiative on an issue close to voters' hearts, or did he stumble – detail-lite – into a grave policy blunder? Disquietingly, it would seem to be the latter.

In the immediate aftermath of Mr Cameron's bombshell, DECC officials made general noises about the Government helping customers find the best deal, but stopped conspicuously short of confirming that companies would be forced to transfer them automatically. The Tory energy minister summoned to answer questions in the Commons did little better. For all his flamboyant style, John Hayes could only bluster about "a number of options" being considered. Hardly a clarification. Meanwhile, the Liberal Democrat Secretary of State dodged the issue altogether. And even the Prime Minister's own attempt at clarification – on the way into a European summit – only reaffirmed a general commitment to ensure consumers access to the lowest tariffs.

A sorry state of affairs, indeed. It is easy enough to understand how the situation came about. Squeezed between public outrage at last week's sharp rise in energy bills, and the expectation of more tough talk on the subject from the Opposition, Mr Cameron grabbed the opportunity to appear both caring and decisive. Except that his impromptu announcement has confused consumers, caused havoc in the industry, and added to the worrying impression that his grip on policy is not all it might be.

Where does all this leave consumers? In all likelihood, no better off than before. The most probable explanation for the debacle is that Mr Cameron was over-egging an existing plan – in place since April – to force companies to give customers details of the best tariffs available to them (a proposal which is, indeed, to be included in the Energy Bill due next month).

Nor is the Prime Minister's more far-reaching proposal either as simple or as attractive as it sounds. First, it would damage competition. With such a chunk of bills at the mercy of global commodity prices, the creation of multiple tariffs – which vary according to payment methods, usage patterns, and the like – is central to rivalry between suppliers. Heavy-handed Government intervention would simply tilt the market towards a single price band, leaving customers even less choice.

Second, even if it were desirable, such a plan would be nigh-impossible to put into practice, given that it would require suppliers to have far more information about each customer than is currently available to them. Again, the result would be fewer tariffs. Third, even if it were possible, such a plan would have the opposite result to Mr Cameron's stated aim of cutting consumers' costs. In fact, by putting an end to the pricier packages, it might be expected to raise the average bill.

Britain's energy market most certainly needs attention. Pricing is too complex and too opaque, adding to consumers' considerable mistrust; switching between suppliers is too difficult and unrewarding. But simplistic broadsides solve nothing. By adding to the confusion, the Prime Minister has made matters worse.

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