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.

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Theresa May's cabinet regroups: 11 things we know about Brexit negotiations so far

The new PM wants a debate on social mobility and Brexit. 

This was the summer of the Phony Brexit. But on Wednesday, the new Tory cabinet emerged from their holiday hideaways to discuss how Britain will negotiate its exit from the EU. 

The new prime minister Theresa May is hosting a meeting that includes Brexiteers like David Davis, now minister for Brexit, Boris Johnson, the new Foreign secretary, and Liam Fox.

For now, their views on negotiations are taking place behind closed doors at the PM’s country retreat, Chequers. But here is what we know so far:

1. Talks won’t begin this year

May said in July that official negotiations would not start in 2016. Instead, she pledged to take the time to secure “a sensible and orderly departure”. 

2. But forget a second referendum

In her opening speech to cabinet, May said: “We must continue to be very clear that ‘Brexit means Brexit’, that we’re going to make a success of it. That means there’s no second referendum; no attempts to sort of stay in the EU by the back door; that we’re actually going to deliver on this.”

3. And Article 50 remains mysterious

A No.10 spokesman has confirmed that Parliament will “have its say” but did not clarify whether this would be before or after Article 50 is triggered. According to The Telegraph, May has been told she has the authority to invoke it without a vote in Parliament, although she has confirmed she will not do so this eyar.

4. The cabinet need to speak up

May’s “you break it, you fix it” approach to cabinet appointments means that key Brexiteers are now in charge of overseeing affected areas, such as farming and international relations. According to the BBC, the PM is asking each minister to report back on opportunities for their departments. 

5. Brexit comes with social mobility

As well as Brexit, May is discussing social reform with her cabinet. She told them: “We want to be a government and a country that works for everyone.” The PM already performed some social mobility of her own, when she ditched public school boy Chancellor George Osborne in favour of state school Philip Hammond. 

6. All eyes will be on DExEU

Davis, aka Brexit minister, heads up the Department for Exiting the EU, a new ministerial department. According to Oliver Ilott, from the Institute for Government, this department will be responsible for setting the ground rules across Whitehall. He  said: “DExEu needs to make sure that there is a shared understanding of the parameters of future negotiations before Whitehall departments go too far down their own rabbit holes.”

7. May wants to keep it friendly

The PM talked to Prime Minister Sipilä of Finland and Prime Minister Solberg of Norway on the morning of the cabinet meeting. She pledged Britain would "live up to our obligations" in the EU while it remained a member and "maintain a good relationship with the EU as well as individual European countries".

8. But everything's on the table

May also told the Finnish and Norwegian prime ministers that negotiators should consider what is going to work best for the UK and what is going to work for the European Union, rather than necessarily pursuing an existing model. This suggests she may not be aiming to join Norway in the European Economic Area. 

9. She gets on with Angela Merkel

While all 27 remaining EU countries will have a say in Brexit negotiations, Germany is Europe’s economic powerhouse. May’s first meeting appeared amiable, with the PM telling reporters: “We have two women here who have got on and had a very constructive discussion, two women who, I may say, get on with the job.” The German Chancellor responded: “Exactly. I completely agree with that.”

10. But less so with Francoise Hollande

The French president said Brexit negotiations should start “the sooner the better” and argued that freedom of labour could not be separated from other aspects of the single market. 

11. Britain wants to hold onto its EU banking passports

The “passporting system” which makes it easier for banks based in London to operate on the Continent, is now in jeopardy. We know the UK Government will be fighting to keep passports, because a paper on that very issue was accidentally shown to camera.