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  1. ITV Report

May denies reheating Labour policy as she explains Tory bid for cap to stop 'rip off' energy prices

  • Video report by ITV News Political Correspondent Emily Morgan

Theresa May has said her proposed cap to tackle "rip off" gas and electricity prices is needed because competition is not working - as she denied borrowing the Conservative election pledge from Ed Miliband.

The prime minister said the action could save families up to £100 a year as she condemned a market that sees customers of the Big Six suppliers paying £1.4 billion more than they would in a "truly competitive market".

Mrs May sought to distance her proposed cap from the ex-Labour leader Miliband's 2013 pledge for an energy price freeze, which saw him rebuked by the Tories, despite both bringing about a clear government intervention in the market place.

"Ed Miliband didn't suggest a cap on energy prices," she said in response to a question from ITV News Political Correspondent Emily Morgan.

  • Video: How Tories lampooned Ed Miliband's 2013 energy cap pledge

"Ed Miliband suggested a freeze on energy prices that would have frozen them so that people paying above the odds would have continued to pay above the odds and crucially the prices couldn't have gone down. Under our cap the prices will be able to go down."

Mrs May's predecessor David Cameron had denounced Mr Miliband's flagship plan to intervene back in 2013, accusing him of wanting to live in a "Marxist universe" as a host of senior Tories lined up to lampoon the then Labour leader.

Michael Fallon said Labour's plan was "unworkable" and "a gimmick", while Boris Johnson condemned the "crazed attempt at governmental price fixing".

In another 2013 Tory conference speech, then chancellor George Osborne told the audience the "phoney freeze" was a "policy drawn up on the back of a fag packet", and said: "Britain can do better than that".

Almost four years on, Mrs May denied she has broken away from the party's core pro-business principles by calling for the Government to intervene with a price cap.

Theresa May said the energy market is not working and the Government needs to intervene. Credit: PA

"We're Conservatives, we believe in free markets and competition. But we want to see competition working," she said at the campaign appearance in York.

"The competition authority has shown that customers of the six largest energy suppliers in a year after paying £1.4 billion more than they would do if there was a truly competitive market."

Under the Tory plan, the cap would be set by the independent regulator for the energy market, Ofgem.

The cost to consumers of 'excessive prices' charged by the Big Six is estimated to be about £1.4 billion a year. Credit: PA

The cap will apply to poor value standard variable tariffs (SVTs), which would affect around 17 million households in Britain.

The 2016 report by the Competition and Markets Authority (CMA) found 70% of domestic customers of the "Big Six" energy companies were on SVTs.

70%
of domestic customers of the "Big Six" energy companies were on SVTs

The Conservative proposal was condemned as "crazy" by Liberal Democrat leader Tim Farron, who said it was the "last thing" needed in the bid to get more affordable energy prices.

"What we need is an energy policy that makes sure there is more competition," he said.

"The last thing you do is give notice to the Big Six that you're going to freeze their prices so they can then put them up hugely and then you squeeze out all the little providers. It just shows the Conservatives have lost any understanding of market economics."

Labour's shadow business secretary Rebecca Long-Bailey said the Conservatives had still not provided any proper detail as to how the cap would work.

"When the Tories say they'll 'cap' bills, the question they need to answer is whether they can guarantee bills won't go up for people next year - that's the real test," she said.

"A cap suggests a maximum amount that can be charged, not a promise that bills won't go up year on year."

British Gas owner Centrica said the proposed cap could lead to higher bills for customers.

British Gas owner Centrica has hit out at the proposed cap, warning it could lead to higher bills for consumers and reduce competition in the sector.

In a trading update, the group said it had put forward "alternative ways" to improve the market and address concerns as part of its regular dialogue with ministers.

The group said trading in the first quarter of 2017 had been hit by warmer than usual weather, leading to lower than expected energy consumption.

Meanwhile price comparison site uSwitch.com called the plan a "red herring" which would "kill competition, push up energy prices and leave consumers worse off".

Mrs May had announced the Conservative proposal in an article in The Sun, writing: "Like millions of working families, I am fed up with rip off energy prices.

"Too many people simply aren't getting a fair deal. And it is the vulnerable, and those on low incomes, who are being hit hardest.

"So I am making this promise: if I am re-elected on June 8, I will take action to end this injustice by introducing a cap on unfair energy price rises."