After the energy shambles, Cameron needs to restore certainty

The timing of this week’s confusion could not have been worse.

The last three days have seen government policy on energy tariffs and decarbonisation in flux. Conflicting statements from the Prime Minister, the Energy Secretary and the new energy minister have caused confusion. While an announcement from Ofgem today has helped provide clarity, confidence in the government has already been undermined. With a group of major energy companies already threatening to withdraw hundreds of millions of pounds of planned new investment in the UK due to policy uncertainty, this week's events will only make matters worse.

At Prime Minster’s Questions on Wednesday, Cameron said, “I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers”. The sector was shocked and confused. Not only would this be incredibly difficult to implement, it would also mark the single greatest act of intervention in the energy retail market since liberalisation – not the type of light touch regulation to be expected from a Conservative Prime Minister.

Today, thanks to the release of Ofgem’s Retail Market Review, it has become clear what the Prime Minister should have said. He should have announced that suppliers will be required to tell customers if there is a cheaper tariff, rather than automatically putting customers on the cheapest tariff.

One of Ofgem’s better proposals in the review is for suppliers to only be able to offer four tariffs for each fuel type. This policy was recommended by IPPR in our recent investigation of the retail energy market. This reform will simplify the market and encourage people to switch thereby improving competition, which will help keep bills low.

It should also help to ensure that tariffs are reflective of suppliers’ costs — a major problem since ‘loss leading’ tariffs act as a barrier for new suppliers to enter in to the market and vulnerable and low income people who don’t switch regularly can often be overcharged.

The timing of this week’s confusion could not have been worse. It is only three weeks since Ofgem announced that the spare electricity generation capacity in Britain will fall to a critically low level in 2015/16, raising the prospect of blackouts. With Twitter quick to dub this episode a "combishambles", the government needs to restore certainty and predictably before they publish their upcoming Energy Bill.

Reg Platt is Research Fellow at IPPR. He tweets as @regplatt.

David Cameron speaks with Maltese Prime Minister Lawrence Gonzi at the start of the second day of an EU summit in Brussels. Photograph: Getty Images.

Reg Platt is a Research Fellow at IPPR. He tweets as @regplatt.

Photo: Getty
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The Liberal Democrats are back - and the Tories should be worried

A Liberal revival could do Theresa May real damage in the south.

There's life in the Liberal Democrats yet. The Conservative majority in Witney has been slashed, with lawyer and nominative determinism case study Robert Courts elected, but with a much reduced majority.

It's down in both absolute terms, from 25,155 to 5,702, but it's never wise to worry too much about raw numbers in by-elections. The percentages tell us a lot more, and there's considerable cause for alarm in the Tory camp as far as they are concerned: the Conservative vote down from 60 per cent to 45 per cent.

(On a side note, I wouldn’t read much of anything into the fact that Labour slipped to third. It has never been a happy hunting ground for them and their vote was squeezed less by the Liberal Democrats than you’d perhaps expect.)

And what about those Liberal Democrats, eh? They've surged from fourth place to second, a 23.5 per cent increase in their vote, a 19.3 swing from Conservative to Liberal, the biggest towards that party in two decades.

One thing is clear: the "Liberal Democrat fightback" is not just a hashtag. The party has been doing particularly well in affluent Conservative areas that voted to stay in the European Union. (It's worth noting that one seat that very much fits that profile is Theresa May's own stomping ground of Maidenhead.)

It means that if, as looks likely, Zac Goldsmith triggers a by-election over Heathrow, the Liberal Democrats will consider themselves favourites if they can find a top-tier candidate with decent local connections. They also start with their by-election machine having done very well indeed out of what you might call its “open beta” in Witney. The county council elections next year, too, should be low hanging fruit for 

As Sam Coates reports in the Times this morning, there are growing calls from MPs and ministers that May should go to the country while the going's good, calls that will only be intensified by the going-over that the PM got in Brussels last night. And now, for marginal Conservatives in the south-west especially, it's just just the pressure points of the Brexit talks that should worry them - it's that with every day between now and the next election, the Liberal Democrats may have another day to get their feet back under the table.

This originally appeared in Morning Call, my daily guide to what's going on in politics and the papers. It's free, and you can subscribe here. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.