Tories finally return to an Energy Price Cap with measure that is tentative first step on road to easing cost of living burden for many

Photograph: Twilight power lines from Pixabay (License) (Cropped)

Finally, a piece of domestic legislation from the government emerges. After a year of prevaricating, the government's promised energy price cap seems to have at last begun it's journey through Parliament.

The energy price cap had been a feature of the Conservative manifesto at the last election, but was jettisoned along with most of their agenda in the aftermath - sacrificed on the Brexit altar.

The opposition has been pressing the government of late to return to the measure. There are many households burdened by the high cost of living and any help extended to them is to be welcomed - and hopefully that is what the Domestic Gas and Electricity Bill will do.

The government had chosen to pursue a less interventionist, less confrontational, approach in the form of promoting how customers could switch tariffs and companies to get a better deal. But customers just weren't playing the markets.

So, with prices continuing to rise more than wages, squeezing households month on month, the government has been forced to take action to tackle the cost of living. But it won't be an easy sell to either the energy industry or to all Conservatives.

When the Tories first announced their interest in a energy price cap, the government's approach was to follow the system for capping pre-payment - with a maximum figure, an absolute cap, based on the lowest regional price that is reviewed biannually.

Energy firms have already expressed discontent. When the layoff of two thousand workers in Britain was announced, Centrica blamed them on the impending prospect of a price cap. Others have been calling for any cap to have 'headroom' to allow competition.

Such arguments are accompanied by the opinion of right-wing think tanks like the IEA, who argue a price cap will give minimal help to those who don't switch, end the benefit that switchers get, and entrench the Big Six - who benefit from the support of government subsidies - at the expense of their smaller competitors.

The progressive view on energy costs anchors on the essential nature of energy - along with other utilities like water. People simply cannot live without their utility supply. That creates an easily exploitable monopoly that must be closely monitored - at the least.

However, there isn't always agreement on how to actually run these services among progressives. But there are plenty who are unconvinced by either extreme - nationalised or privatised. Making switching suppliers easier and capping prices is a sort of middle ground.

So too is the Corbyn-era Labour proposal, to reconstitute municipal and regional public run - whether by cooperatives, non-profits or local authorities - utility companies to establish a basic, baseline affordable supply for everyone to compete with the corporate Big Six.

With Theresa May's admiration for Joseph Chamberlain, she should have little consternation at the prospect of municipal services. As the mayor of Birmingham, he was among the pioneers of local government as an active participant in improving the services for local people.

And for all the arguing back and forth, there is a lot of common ground between Labour and the Conservatives here. In fact, the Tories have pretty much adopted the policy wholesale from Ed Miliband, who had campaigned hard for an energy price freeze.

For this reason, when it comes down to it, the Domestic Gas and Electricity Bill may have a quick passage through Parliament - with the govt able to rely on opposition support to fend off any backbench concerns about interfering with markets.

What is clear is that households are under a lot of pressure - not least those forced to pay upfront for utilities because of poor credit scores. This situation just reinforces the absurd debt-traps that surround those with insecure work and low pay.

Drastic reductions in the price of a basic supply of energy is one move. Making that permanently available through a municipal energy supplier would be a complimentary second. A third would be removing the credit score entry qualifications, to help people get away from expensive, exploitative, pay upfront deals.

Pay caps may very well not be a long term solution. But the more pressing concern is to, on every front possible, unpick the nets cast into the churning water surrounding the poorest and most vulnerable.

References

'Move to cap 'rip-off' energy bills'; on the BBC; 26 February 2018.

Harriet Agerholm's 'Energy price cap: Government to introduce legislation to limit how much power firms can charge - Bill will 'force energy companies to change their ways', says Theresa May'; in The Independent; 26 February 2018.

'Queen's Speech summary: Bill-by-bill at a glance'; on the BBC; 26 July 2017.

Brian Milligan's 'How would the Tory energy price cap work'; on the BBC; 9 May 2017.

'Energy price cap on pre-payment meters tightened by Ofgem'; on the BBC; 7 August 2017.

Bruno Prior's 'The government’s ‘temporary’ energy price cap is bad economics'; from the Institute of Economic Affairs; 19 October 2017.

'Ed Miliband insists energy firms can 'stomach' price freeze'; on the BBC; 4 October 2013.