The Big Switch will be a big help

These schemes will intensify pressure on the energy firms to keep prices low

Share
Related Topics

For such a modest proposal, Ed Miliband's plan to freeze gas and electricity prices for 20 months if Labour wins an election that is still 19 months away has had a remarkable effect. The Labour leader has managed the first stage of successful politics: of, as Bill Clinton put it, feeling voters' pain. A distant price freeze may not offer much relief to people feeling the pinch now, but it shows that Mr Miliband knows what matters to many voters.

The response of Ed Davey, the Liberal Democrat Energy and Climate Change Secretary, as we report today, is to encourage consumers to band together to demand a better deal from their suppliers. Tomorrow sees the start of the Big Community Switch and the Big London Energy Switch, schemes supported by local councils in which people can sign up to see if they can get cheaper bills. The switch is open to anyone living in Great Britain through the two websites. The energy companies will then bid for these thousands of customers, who will then be able to switch to the cheapest offer.

This is a good idea. As our exclusive ComRes poll finds, 70 per cent of people think that it is "quite easy" to change gas or electricity provider, and 13 per cent say that they have switched in the past month. If that rate is maintained, the entire population will have switched by next June. But, naturally, the rate of switching will decline, and there are still the 30 per cent who do not think it is easy, or who say they do not know, which may come to the same thing.

The advantage of collective switching is that it makes it easier to involve people who find the idea of even looking at a gas bill intimidating, or who do not have ready access to the internet. The schemes encourage social tenants to organise themselves, and they can be linked with local energy generation, such as the solar panels on the roofs of members of the Wedmore Community Power Co-operative in Somerset.

Next month, we expect George Osborne, the Chancellor, to make his response to Mr Miliband in the Autumn Statement. If, as has been suggested, this consists of taking some of the green or social levies off gas and electricity bills and paying for them out of general taxation, that will simply be the traditional Treasury trick not of robbing Peter to pay Paul but of paying Peter by robbing Peter.

Mr Davey's plan is more important, because even if the immediate gains from switching start to diminish, greater competition will feed pressure for lower prices through the system. Mr Miliband's price freeze, it should be noted, would be a temporary measure while an incoming Labour government tries to introduce more competition in the electricity generation market – a market Mr Miliband describes as "broken" and which needs to be "reset". There are reasons to be sceptical about this, not least that Mr Miliband was the minister responsible for creating the present market, but also because the money for new and low-carbon generating capacity has to come from somewhere.

That is the strength of Mr Davey's policy of encouraging collective switching. It will intensify pressure on the energy companies to keep prices low. If, as the companies claim, the market in electricity generation is working, then more competition at the retail end will make little difference. If, however, the companies are making excess profits in the areas where margins are less transparent, competition will help to squeeze them out of the system.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

Read Next
 

Errors & Omissions: A widow’s tale with an unexpected twist

John Rentoul
 

For all his faults, Russell Brand is utterly sincere, something politicians should emulate

Janet Street-Porter
The Last Word: Justin Gatlin knows the price of everything, the value of nothing

Michael Calvin's Last Word

Justin Gatlin knows the price of everything, the value of nothing
The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower