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
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Cabinet Maker / Joiner

£22000 - £24000 per annum: Recruitment Genius: This bespoke furniture and inte...

Recruitment Genius: Graphic and Motion Designer

Negotiable: Recruitment Genius: Do you get a buzz from thinking up new ideas a...

Recruitment Genius: Media Telesales Executive - OTE £25,000

£14500 - £16000 per annum: Recruitment Genius: This is an opportunity to join ...

Recruitment Genius: Female Care Worker

£7 - £8 per hour: Recruitment Genius: This expanding, vibrant charity which su...

Day In a Page

Read Next
 

Think I'm living the high life on benefits? Here's what being disabled costs me every day

Hannah Buchanan
 

Like many other black men, I grew up with only women around. Now I'm worried the experience has ‘feminised’ me

Tyrell Williams
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones