The energy price freeze is a means - market reform is the end

Long after the price freeze has been lifted, Labour's market reforms will go on delivering a more transparent and more competitive deal for consumers and businesses.

In Parliament today, every MP will have the opportunity to back their constituents and local businesses in voting for Labour’s 20 month energy price freeze. For every hyperbolic statement from those lined up by the Tories to stand in the corner of the large energy companies, and the Edinburgh SNP’s energy spokesman Fergus Ewing ridiculously repeating the comparison to the Enron manipulated experience in California in Holyrood, thousands of individuals in every part of the country want to see their bills frozen and real reform of the broken energy market.

While the price freeze has attracted – and sustained – headlines for several weeks, it is far from being the only element of Labour’s agenda for the retail energy market. The price freeze enables us to take volatility out of bills while we get on with the vital task of reforming the retail energy market.

They may not draw as much attention, but these measures to overhaul the market are needed. They are the Xabi Alonso to the price freeze’s Cristiano Ronaldo. Long after the price freeze has lifted, these will go on delivering a more transparent and more competitive deal for consumers and businesses alike.

Sift through the responses to Labour’s energy policy with a little more care and you’ll find that behind some of the (obvious, predictable, wrong-headed) opposition, there is a recognition that these policies are desperately needed. From arch-Tories, such as John Major or Peter Lilly, through the Telegraph, the FT and the Guardian, to organisations such as Which? and the Committee on Energy and Climate Change, there is a growing chorus that calls for widespread reform of a market that is broken. 

Labour have been quietly setting out such policies for the past two years. We’ll begin by scrapping Ofgem. This is a regulator that has proved time and again that it is simply not up to the job of protecting consumers. Its replacement will be established with a clear commitment to to make sure that wholesale price decreases are registered on the bills of our households and businesses, not just in the profit margins of the Big Six.

We will end the practice of shady over-the-counter deals by requiring that all energy is traded through an open exchange. At present, some estimates suggest that the equivalent of just 6% of electricity consumption volume is traded this way, damaging transparency and liquidity. By ring-fencing generation businesses from supply operations, we will end the practice of vertical integration that can allow big utility companies to sell energy to themselves at an inflated price, passing profit back along their supply chain.

The reason that these proposals have drawn support from right across the political spectrum is because what drives them is fairness and transparency to provide competition and liquidity in the market. These are practical, common sense proposals. But the Conservatives have nothing comparable to offer. They defend the Big Six to the hilt, making the classic mistake of assuming that the less-regulated market is always the more effective market. In truth, the large companies have the energy sector stitched up. It is only by pushing the reset button that that we can repair the failing market.

Increasingly, the public debate is beginning to reflect these deeper concerns. This is a real problem for the Tories. They’ve taken more than a month to start putting together a response to Labour’s price freeze. Even those of us who hold the competence of the Conservatives in fairly low regard have been surprised by their sluggishness.

But just as they're beginning to formulate a policy on retail prices – shifting some costs from consumers’ bills onto their taxes and pretending that those costs have vanished – the public debate is moving ahead. Newspapers and commentators have begun to ask more fundamental questions about the adequacy of the energy market that sets such prices.

Throughout the progress of the Energy Bill through Parliament, Labour warned that it was a serious mistake not to include any measures to reform the clearly defunct retail market. By failing to head those warnings and signalling that they were content with the status quo, the coalition made a grave oversight. What the Tories are discovering is just how cavernous this hole in their policy is, and the lack of public and business support for a broken market which works against the consumer.

The longer this debate goes on, the starker the contrast will become between a Labour Party that will freeze prices, get tough with the Big Six and bring much-needed reform to the market and a Tory Party that is content to defend the status quo. 

Tom Greatex is shadow energy minister and Labour MP for Rutherglen and Hamilton West

British Gas branding adorns the entrance to Leicester's Aylestone Road British Gas Centre. Photograph: Getty Images.

Tom Greatrex is shadow energy minister and Labour MP for Rutherglen and Hamilton West

Photo: Getty
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Why Labour's rise could threaten Nicola Sturgeon's independence dream

As the First Minister shelves plans for a second vote, does she join the list of politicians who bet on an anti-Brexit dividend that failed to materialise?

The nights are getting longer, and so are generations. The independence referendum sequel will happen after, not before the Brexit process is complete, Nicola Sturgeon announced yesterday.

It means that Scottish Remainers will not have the opportunity to seamlessly move from being part of a United Kingdom in the European Union to an independent Scotland in the European Union. Because of the ongoing drama surrounding Theresa May, we've lost sight of what a bad night the SNP had on 8 June. Not just because they lost 21 of the 56 seats they were defending, including that of their leader in Westminster, Angus Robertson, and their former leader, Alex Salmond. They also have no truly safe seats left – having gone from the average SNP MP sitting on a majority of more than 10,000 to an average of just 2,521.

As Sturgeon conceded in her statement, there is an element of referendum fatigue in Scotland, which contributed to the loss. Does she now join the list of politicians – Tim Farron being one, and Owen Smith the other – who bet on an anti-Brexit dividend that failed to materialise?

I'm not so sure. Of all the shocks on election night, what happened to the SNP was in many ways the least surprising and most long-advertised. We knew from the 2016 Holyrood elections – before the SNP had committed to a referendum by March 2019 – that No voters were getting better at voting tactically to defeat the SNP, which was helping all the Unionist parties outperform their vote share. We saw that in the local elections earlier this year, too. We knew, too, that the biggest beneficiaries of that shift were the Scottish Conservatives.

So in many ways, what happened at the election was part of a bigger trend that Sturgeon was betting on a wave of anger at the Brexit vote. If we get a bad Brexit deal, or worse, no deal at all, then it may turn out that Sturgeon's problem was simply that this election came a little too early.

The bigger problem for the Yes side isn't what happened to the SNP's MPs – they can undo that with a strong showing at the Holyrood elections in 2021 or at Westminster in 2022. The big problem is what happened to the Labour Party across the United Kingdom.

One of Better Together's big advantages in 2014 is that, regardless of whether you voted for the Conservatives, the Liberal Democrats or the Labour Party, if you believed the polls, you had a pretty reasonable expectation that your type of politics would be represented in the government of Britain sometime soon.

For the last two years, the polls, local elections and by-elections have all suggested that the only people in Scotland who could have that expectation were Conservatives. Bluntly: the day after the local elections, Labour and the Liberal Democrats looked to be decades from power, and the best way to get a centre-left government looked to be a Yes vote. The day after the general election, both parties could hope to be in government within six months.

As Tommy Sheppard, the SNP MP for Edinburgh East, observed in a smart column for the Herald after the election, one of the reasons why the SNP lost votes was that Corbyn's manifesto took some of the optimistic vote that they gobbled up in 2014 and 2015.

And while Brexit may yet sour enough to make Nicola Sturgeon's second referendum more appealing on that ground, the transformation in Labour's position over the course of the election campaign is a much bigger problem for the SNP.

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

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