Energy price debate: Peter Lilley joins John Major in urging Cameron to get tough

Another Tory grandee is urging David Cameron to get tough with the big energy companies if it is shown they are using their monopoly powers to make excess profits.

After former prime minister Sir John Major called yesterday for a windfall tax on the companies' profits, Peter Lilley said the Government should be prepared to hand greater powers to the industry regulator, Ofgem.

While the former social security secretary rejected the idea of a tax - warning it would simply add to the cost of energy - he said both Sir John and Labour leader Ed Miliband, who is proposing a temporary price freeze, were right to try to address the issue.

“They are both sensibly trying to propose something that will help people with their energy bills, because that's what matters most to people the lower down the income tree you go and the further north in the country you go,” he told the BBC Radio 4 Today programme.

Mr Lilley said that if an inquiry by the Commons Energy and Climate Change Committee - of which he is a member - finds prices are going up because of the monopoly power of the companies, the Government should step in to strengthen the regulatory system.

“If profits are made through greater efficiency and greater investment, fair enough. Conservatives are in favour of them,” he said.

“If they are made through monopoly power and they are putting up prices more than is justified by increased investment and increased costs, then we want more competition and tougher regulation to get those prices down, not to load them with additional taxes.

“We have got to have a proper system that makes sure that the energy companies do not raise prices more than is justified by investment and rising costs.”

Mr Lilley also suggested that Sir John should be grateful to him and other Cabinet Eurosceptics who he once famously denounced as “bastards”.

Speaking at an event at Westminster yesterday, the former premier said his comment - made when he thought the TV microphones were off - was unforgivable and his only excuse was that it was true.

Mr Lilley admitted that he may have been “irritating”, but added: “We - I and my allies - were the cause of his greatest triumph. It was because of our obstinate refusal to let Britain go into the euro that he negotiated Britain's opt-out from the euro.

“That, frankly, is one of his greatest achievements which the nation should hold him in great regard and with considerable gratitude - he and his bastards, we worked together.”