View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Politics
28 October 2013updated 04 Oct 2023 10:35am

New questions for the big six mean Miliband’s price freeze will continue to dominate

A new study by Ofgem shows that while consumers are paying up to 11.1% more, wholesale prices have risen by just 1.7% in the last year.

By George Eaton

As even Conservatives now privately concede, Ed Miliband’s pledge to freeze energy prices has had more political impact than any announcement since George Osborne’s 2007 promise to cut inheritance tax. In the five weeks since the Labour conference, rarely a day has passed without it leading the debate. 

If the Tories are hoping to change the subject this week, they’re likely to prove disappointed. On Tuesday, representatives of the big six will appear before the energy select committee to be questioned on price rises, and the day hasn’t begun well for them. New data from the energy regulator Ofgem shows that while consumers have been hit by price increases of up to 11.1%, wholesale prices have risen by just 1.7% over the last year. It’s a finding that will make it even harder for the firms to justify their inflation-busting price hikes. While the wholesale element of the average bill has risen from £600 to £610, Ofgem estimates that companies’ average net profit margin has more than doubled from £45 a household to £95.

The big six have responded this morning by disputing Ofgem’s figures. A spokesman for British Gas said: “The prices that individual suppliers pay depend on their own hedging strategies, and the Ofgem methodology is, at best, an approximation of what those hedging profiles are. We buy a certain amount of gas more than two years in advance, and if you look at the 24 month figure to October 2013, there has been an 18 per cent increase in the wholesale cost.” A spokesman for SSE said: “This is very much a global market and we are seeing increased international competition for supplies, which is putting up prices”. But given the consistent lack of transparency shown by firms over how their profits are made, few will be willing to accept their excuses. 

For the coalition, the energy companies’ kamikaze media strategy is a political headache. While it’s likely that George Osborne will announce plans to reduce the green charges paid by consumers when he delivers his Autumn Statement on 4 December, the government still lacks a policy able to convince the public that it is on their side against the big six. A recent poll by Survation for the Mail on Sunday found that 75% do not believe that green measures are to blame for higher bills. Unless ministers are prepared to demonstrate how they will force companies to return some of their ill-gotten gains, it is alternative proposals, whether Miliband’s price freeze or Major’s windfall tax, that will continue to dominate. 

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
The promise of prevention
How Labour hopes to make the UK a leader in green energy
Is now the time to rethink health and care for older people? With Age UK

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU