Published on October 9th, 2013 |
by Oliver Campbell
Prime Minister’s Questions: The Price of Energy Problem
A wide range of points were brought up at today’s Prime Minister’s Questions with Syria, nursery prices and the post office card account all briefly covered. However it came as no surprise that the session was dominated by the debate surrounding energy prices.
In the wake of the party conference season it has been Ed Miliband’s pledge to freeze energy bills for 20 months if he wins the next election that has arguably stood out. The reaction to Ed’s promise by David Cameron is a clear indicator of this. Despite exclaiming that the policy was ‘nuts’, Cameron went on to say how the policy would strike a chord with many households around the country.
This isn’t surprising. Energy prices have been rising at an incredible rate over the past few years, the price of energy almost doubling over the past decade. This is therefore a problem for poor households all across the country, a point that the Labour MP for the city of Durham, Roberta Blackman-Woods, pointed to in her question to the Prime Minister. She asked Cameron how he could side with energy bosses when one family in her constituency earning £18000 per year had to pay £3276 of this on energy bills.
However despite the policy of freezing energy bills striking a chord is it a realistic one? David Cameron and his Conservative party clearly do not think so. The Prime Minister continually referred to any Labour MP wanting to freeze energy prices as needing a ‘lesson in basic economics’. This is due to the government’s inability to control the international wholesale price of gas. So is this promise from the Labour Party really ‘a gimmick that collapsed after 12 hours’? The answer is of course impossible to deduce, it will be something that will become clear if Labour win the next election, however it does seem to be a step in the right direction. As Miliband made clear in his debate with Cameron, energy prices often rise sharply before taking much longer to reduce, something that isn’t in line with the wholesale international price.
David Cameron reacted by stating how his party were looking to tackle this energy problem, but in a realistic way. The way in which the Tories are looking to do this is by restricting the number of tariffs energy companies can offer. In doing so they hope that it will make it easier for households to find the cheapest deal, helping to solve the problem while maintaining their philosophy that a competitive market is crucial. However this isn’t actually forcing the energy companies into physically cutting their profits. The problem of energy prices is consequently still a worrying one for many families with Scottish and Southern Energy handing its 8.4 million customers an increase in their bills of around 9% from the 15th October.
Ed Miliband’s claim of a ‘cost of living crisis’ might seem like an exaggeration, however it cannot be denied that energy prices are a major problem. However simply voting for the Labour Party at the next election is not necessarily a solution. Not only is the problem of not being able to control international wholesale prices present in their freeze pledge, but there is the issue that it might also stop companies investing in Britain. One new supplier, Open4Energy, has already stated that it would pull out of the UK if a price freeze looked likely.
The energy price problem is therefore not simply solved by freezing prices, however it does need tackling. Labour’s approach may seem clumsy but at least they are committing to action. The Tories on the other hand are looking to implement a new tariff system that doesn’t actively tackle the issue: The power wielded by large energy companies over prices. If one thing can be learned from today’s Prime Minister’s Question it is that Cameron was indeed right in seeing Labour’s energy policy as striking a chord with people. However Ed Miliband’s approach has also struck a big chord with his party and David Cameron needs to act fast in order to counter this sign of unity and strength.