Labour's Energy & Climate Change Team 

Thank you for visiting the website of Labour’s Energy and Climate Change team. You can find out about our policies, our speeches and our day-to-day work in Parliament and beyond.  

Please note: This website was established while members of the Shadow Energy and Climate Change team were Members of Parliament. As Parliament has been dissolved, there are currently no MPs until after the Election on 7th May 2015.

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Ed Miliband today announces that Labour will give the energy regulator the legal duty to ensure prices are fair and the power to cut bills this winter.

The new legislation is being drafted to put an immediate end to the overcharging by the Big Six energy firms which consumer groups estimate is costing families and businesses £2.5 billion a year. 

The Government has admitted there is a problem with consumers being ripped off, but it has refused to act against the big energy firms. 

Over the last year wholesale energy prices have fallen by an average of 20 per cent but the Big Six energy firms have reduced gas bills by a meagre one per cent to five per cent - while electricity bills have not been cut at all.

Labour has already declared that it would freeze prices – so they can only fall and not rise - for 20 months while the energy market is reset. 

But the new legislative plans being announced today goes further by setting a clear timetable for changes so that consumers pay fair prices this coming winter.

In one of the first Bills of the new Parliament, Labour will give Ofgem a legal duty to review prices by the autumn – and the power to order price reductions in time for the winter. 

The consumer group Which? says that further cuts of up to 10 per cent in gas and electricity bills should be made this year.    

Such a reduction would save the typical family at least £100 this winter, on top of the savings they will get from Labour’s plan to freeze gas and electricity bills until 2017. 

Mr Miliband’s announcement comes as he prepares to unveil the fifth pledge on Labour’s five-pledge card at its pre-election Spring Event in Birmingham on Saturday. 

Ed Miliband is expected to say: 

“Britain can only succeed when working families succeed.

“Our economy is at last growing again. But the vital link between the wealth of our nation and working families has been broken. 

“We live in a country where you can’t fulfil one of the foundations of family life - keeping your home warm – without being overcharged by one of the big energy firms. 

“It’s been 18 months since I announced the next Labour government would freeze energy bills – so they can only go down and not up – until 2017 while we reset this broken market.

“In those months we first heard loud protests from the Big Six energy firms and their PR men in the Government. 

“Then we saw prices continue to rocket upwards, unchecked by the Government. 

“Now something else is happening. The costs of energy are tumbling down, not because of anything the Government or the Big Six energy firms have done, but because of global changes in oil and gas supply. 

“The cost of energy to the Big Six firms fell by 20 per cent. But the sky-high prices that families pay have only fallen by a fraction of that. Gas bills have declined by between one per cent and five per cent. Electricity bills haven’t fallen at all. 

“What better evidence do we need of the chronic over-charging, the broken market and the rip-offs being faced by millions of families and businesses across Britain? 

“Even David Cameron and George Osborne admit this is a problem. But they have not acted and the whole country knows why. It’s because they will never stand up to powerful interests and they never stand up for you. 

“My government will be different. We will stand up to the big energy companies. We will go ahead with our price freeze. We will reset this broken energy market for the long term so that proper competition and regulation can ensure fair prices are charged in the future 

“And we will go still further. We will pass a law to ensure falling costs are passed on to the consumer this winter; a law giving the regulator a legal duty to ensure fair prices this winter; a law giving the regulator the power to cut prices and keep homes warmer this winter.”

Policy Detail:

The energy market isn’t working for working people 

The typical household energy bill has increased by over £300 since the last election, the number of families with children who can’t afford to heat their homes is at an all-time high, while three out of four families are being overcharged. 

Energy companies hike prices when the cost of energy rises but don’t cut them properly when it falls. 

The energy market is dominated by six companies that supply to over 90 per cent of homes and generate 70 per cent of the power we use. Limited competition and weak regulation has weakened the incentives to keep prices low. When the wholesale price of energy rises, energy companies have passed this on to consumers but when it drops consumers don’t see the benefit of this through reductions in bills. 

Since David Cameron entered Downing Street energy companies hiked up bills by an average of 10.4 per cent a year between 2011 and 2013, blaming rising energy costs. In the last year, wholesale gas prices have fallen by an estimated 22 per cent whilst electricity prices have fallen by 17 per cent. But the Big Six have only passed on a fraction of this to consumers who have seen reductions of just between 1 per cent and 5 per cent for gas and nothing for electricity. 

The Government knows there is a problem but has failed to act:

In Opposition, David Cameron said: “You have to give the regulator the teeth to order that those reductions are made and that is what we will do.” As recently as January this year, George Osborne admitted: “We need to ensure falls in wholesale prices are properly passed on to all consumers and we will continue to monitor this very closely.” 

But the Government has voted against Labour’s plans for a regulator with the power to order energy companies to cut bills when wholesale prices fall and they opposed Labour’s price freeze.

Consumer groups say more can be done:

Which? estimates that a further eight to 10 per cent cut in gas bills and 10 per cent cut in electricity bills are possible this year. This would save families a total of almost £2.5 billion a year – at least £100 off their annual fuel bill.

Labour’s legislation:

We will introduce legislation in the first months after taking office to freeze prices, so they can fall and not rise, and give the regulator the power to cut prices and a duty to review prices and act in time for winter.   

We will then reset the market so that it delivers a better deal for working families by forcing energy companies to separate out the parts of the business that generate energy from the parts that sell to homes and businesses; requiring them to trade their energy on a pool; introducing a simple new tariff structure; and creating a tough new energy watchdog with new powers to police the market.

 

Also available from http://press.labour.org.uk 

MILIBAND: Labour will bring in new powers to cut your energy bills – and freeze prices until 2017

Ed Miliband today announces that Labour will give the energy regulator the legal duty to ensure prices are fair and the power to cut bills this winter. The new legislation...

Caroline Flint was featured on the BBC's Andrew Marr Show, to discuss energy prices, green bonds and Labour in Scotland. Broadcast on 8 March 2015. You can also read a transcript of the interview below. 

AM: Given that you want to really heavily re-regulate the energy industry and break up some of the companies and bring in freezes and so forth, will the big six still exist in their current form after five years of a Labour government?

CF: There is an opportunity for the big six to continue, but I want to have it bigger than the big six, but you know it’s not a numbers game about how many companies, it’s about making sure that bill payers get a good deal. That’s why we will freeze energy prices for 20 months but we’ll also give the regulator the power that when wholesale costs fall, if they don’t pass it onto their customers first, the regulator will have the power to do so.

AM: And would force companies to cut prices –

CF: Absolutely.

AM: Because you could end up freezing current energy prices at a higher level than subsequently they come in the market?

CF: Look, we’ve said we will freeze prices for 20 months but we’ve said from day one, from the day of Ed Miliband’s speech in 2013, that does not stop bills being cut. And the truth is, is what we’ve had over a number of years –

AM: It’s not really a freeze is it in that case?

CF: It is a freeze against rising prices. But the truth is in 2011 and 2014, Ofgen produced two reports in which they identified that when wholesale costs fell there was evidence to show that these companies were not passing that on to their customers. And in fact in their 2014 report they said it was getting worse. So we need to reform this market to make sure people feel confident they’re paying a fair bill, and the truth is over the last five years we’ve seen bills go up by over £300 and we’ve seen people, working people and families still suffering from this cost of living crisis.

AM: And you would what, fine the companies if they didn’t pass on the full cost of the fall in the price to the consumer, or just some of it?

CF: We wouldn’t have to fine because we’d give the regulator the power to force them to pass it on, and that is an important part of what we need in the future. That people feel they’re paying a fair price for their bills. So a freeze for 20 months while we reform the energy market and give the regulator the power that if they don’t do it first they will force them to pass on wholesale cost falls.

AM: I just come back, it might seem fiddly, to this word ‘freeze’ cos freeze suggests that it won’t move, but you’re saying that’s no longer the case.

CF: Andrew, we were clear from day one and you can look at the Green paper we’ve produced on energy reform in which I clearly said it’s a freeze against rising bills but that does not stop them falling, and we need to make sure we get to a better place where people have confidence in this energy market. The other part of helping people with their bills is to make sure we insulate our homes. In Sweden their prices are higher, their winters are colder but their bills are smaller and that’s because they have more energy efficiency and that’s why I’ve also announced that over ten years we’ll make five million homes warmer. But can I just go back to this cost of living? The truth is bills have gone up £300 over the last few years, that at the end of this parliament for the first time since the 1920s families are going to be worse off and that is not a cause for celebration.

AM: Though, according to the IFS, independent body and all the rest of it, wages are back to their 2008 level. You don’t contest that?

CF: But they also that working people are worse off. In fact they’re not better off than before the financial crisis and the truth is we’ve seen families be given opportunities on one hand but tax is imposed on them in another way, and in terms of bills they’ve gone up 4 times as fast as wages, twice the rate of inflation and as I’ve said at the end of this parliament families are going to be over one thousand pounds worse off.

AM; And yet things are going in the right direction, are they not? According to Lord Ashcroft’s poll 60% of people either feel better off or think they’re about to feel better off.

CF: Look, I think the public recognise that there is a recovery but I do believe Andrew, that actually most people don’t feel that they are benefitting from it, and the reason they don’t feel that –

AM: That’s not what the polls say.

CF: Well, actually you know, if I look at polls around household incomes and household bills, energy bills is the top of people’s concerns and in Doncaster and when I campaign around the country ordinary working people do not feel that they are benefitting from this recovery, and the truth is a strong economy doesn’t work unless working people are being successful as well and what they have seen is actually this government give with one hand and take with another, but also prioritise tax cuts for millionaires over ordinary people.

AM: Would Labour maintain the freeze on petrol duty?

CF: We will look at making sure we keep costs down as much as possible, what we’ve said we would do is freeze energy prices and clearly petrol prices are part of that – it’s separate to my brief but we are committed to freezing energy prices for 20 months.

AM: I mean the reason that I’m asking is of course climate change is also part of your brief. We’ve had warnings in the papers today about us not hitting our targets and so forth and there is a case to say well if prices are going down anyway actually you could keep that, keep the fuel duty as a kind of green measure.

CF: Look, part what we have to do in terms of meeting our climate change targets is get more investment in cleaner energy and I’m afraid to say we have to find something like a hundred billion
pounds of investment in just electricity alone by 2020, and the rate of investment is half what it actually should be. That’s why we’ve said to get investment in, in this important area, to meet our climate change targets we need to make sure we have a de-carb target to take carbon out of our electricity supply, give the green investment (bonds) foreign powers and I’ve said today we want green bonds so British people can invest in their sector as well. That’s the way we can get the investment but also meet our climate change targets.

AM: Because if you were running a big energy company you’re looking at all these new regulations and the freeze and so forth, this is not the mood that you’d be in for new investment, would you? You can understand their case. You want us to invest us in new energies, clean energies, green energies, all sorts of different and big projects, why would we when we’re about to be regulated out of existence?

CF: I don’t think that there is any contradiction between wanting to have policies that protect consumers from bad behaviour from these companies – and let’s be honest about it. You know three quarters of bill payers are paying over the odds. And we have heard over the last few years time and time again of practices, customer practices that puts loyal customers at a disadvantage to new customers. So there is no contradiction between wanting to establish an energy market in which bill payers feel that they’re being treated fairly and in doing so actually we get some confidence back into this market, but also what investors say to me, Andrew, is they want certainty. That’s why the certainty that we’re providing by having a de-carbonisation target by 2030 which says, yes, Britain is open for business when it comes to clean energy, you can count on that, is one of the best ways we get the money in.

AM: If the Chancellor is indeed about to give a big tax give away in the budget that is going to be a game changer for the election isn’t it?

CF: Well, you know, we heard David Cameron at the Tory Party Conference promise £7 billion worth of tax cuts but we know from his record over the last five years, is often what they give with one hand they take with another. That’s why working people are worse off at the end of this parliament.

AM: But there’ll be a vote.

CF: These are unfunded, these are you know, being put out there with 60 odd days to go to the General Election and I think what the choice will be on May 7th is going to be between a failing plan that hasn’t helped working people and a plan in which an economy can only be strong if working people are succeeding as well. 4

AM: You keep talking about working people. If George Osborne puts down a vote on whether to raise the minimum level of National Insurance and thresholds, in effect giving a very, very large tax cut to a large number of working class voters, will Labour support that or not?

CF: Look, we’re going to have to wait and see what he says, but what is clear is it has to add up and what we don’t want –

AM: It’s a heck of a trap for you, isn’t it?

CF: Well, look, we are supporting a 10 pence starting rate, we’re supporting strengthening the minimum wage, banding exploitive zero hour contracts. These are things that help working people.

AM: (But you’ll have to vote with him or not.) He’s got to I think has he not on this?

CF: Look, let’s see the detail of what he’s going to say. We are not against anything that is going to help working people. What we are against though is when you have politics, as we’ve seen over the last five years, where you give with one hand and take with another and the end result of it is, is ordinary working families are worst off. That is not good enough. We had the 7 billion promise at Tory Party Conference from David Cameron and he couldn’t stack up how he was going to pay for it. And what we do know is over the course of this parliament ordinary working people have paid for the choices, the failed choices that this government has made.

AM: Are there any circumstances in which you would sit in cabinet with the SNP?

CF: Look, we are focused on winning a Labour majority government.

AM; That’s not an answer.

CF: And let me say this. We do not want, we do not need and we do not plan to have any coalition with the SNP.

AM: Can you rule it out?

CF: We plan to make sure that we will focus on the issues and win a Labour majority government. And I’ll say two things on this and Scots know this, that there is going to be a choice at this election between who will sit in Number 10 and it’s a choice between either Labour or the Conservatives forming a majority government. The second point I would make is this. Is every vote that is cast for the SNP makes it more likely that David Cameron will retain the keys to Number 10. AM: Nonetheless, the SNP is a party which loathes your austerity economics as they see it, it’s completely against all of that, they want Ed Balls to change policy dramatically and is against Trident. Wants Trident abolished. Could you do a deal with them, that is the question? CF: Andrew, the SNP is not the social conscience of the Labour Party. We are a party –

AM: That’s how they see themselves.

CF: Well they might like to see themselves like that Andrew, but they are not the social conscience of the Labour Party. We are the party that will repeal the bedroom tax, we will raise the minimum wage. We will freeze energy prices, a policy that the SNP do not support, and we’re a party based on our record over a hundred years of supporting social justice and success for working people. We are the party of the NHS, the national minimum wage and we are the party of equality and we’re not going to take any lectures from the SNP about how they can somehow be more progressive than Labour. That is just not the case.

AM: So why not rule out a deal with them and be done with it? Forget all the arguments and the driving from David Cameron and all the rest and say we won’t do it?

CF: Look, people want to know what are the issues at stake at this election. What is the choice at this election? And that is why we need to have the debates, we need to be talking our policies and what our offer is for the country and the offer is clear to me. It’s a choice between a failing plan that has failed working people and a plan that meets working people’s concerns for the future and puts them at the heart of a successful British economy.

AM: Caroline Flint, thank you very much for joining us today.

ENDS

Caroline Flint on the BBC's Andrew Marr Show

Caroline Flint was featured on the BBC's Andrew Marr Show, to discuss energy prices, green bonds and Labour in Scotland. Broadcast on 8 March 2015. You can also read a...

From today's Observer:

The public will be invited to invest in new interest-bearing premium bonds which will specifically fund billions of pounds of investment in solar, wind and other forms of clean energy, if Labour forms the next government.

Shadow energy secretary Caroline Flint said the time had come to involve the public and local communities in financing and backing new green energy projects – as happens in Germany – in a way that would benefit the environment and give people an attractive financial return.

If Labour wins power, Flint says she will ask the Green Investment Bank – set up by the coalition to fund green investment – to oversee the management of new “green bonds”, which experts believes would yield far higher rates of return than many traditional methods of saving.

“We need to invest around £100bn in the electricity system alone by 2020 as we replace ageing and polluting sources of power with new, cleaner alternatives. But investment is running at half that level,” Flint told the Observer.

You can read the rest of the article here.

Guardian: Chance to benefit the environment and provide an attractive financial return offered by shadow energy secretary

From today's Observer: The public will be invited to invest in new interest-bearing premium bonds which will specifically fund billions of pounds of investment in solar, wind and other forms...

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