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

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Where Labour has no chance, hold your nose and vote Lib Dem

May's gamble, MacKenzie's obsession and Wisden obituaries - Peter Wilby's First Thoughts.

In 2007 Gordon Brown allowed rumours to circulate that he would call an early general election for the spring of 2008. When he failed to do so, he was considered a coward and a ditherer and never recovered. Theresa May has tried a different strategy. After firmly denying that she would call an early election and killing off speculation about one, she suddenly announced an election after all. Will this work better for her than the opposite worked for Brown?

The Prime Minister risks being seen as a liar and an opportunist. Her demand for “unity” at Westminster is alarming, because it suggests that there is no role for opposition parties on the most important issue of the day. If Labour and the Lib Dems are smart enough to co-operate sufficiently to rally the country against what looks like an attempt to instal an authoritarian, right-wing Tory regime, May, even if she wins the election, could find herself weakened, not strengthened. I never thought I would write this but, in constituencies where Labour has no chance, its supporters should hold their noses and vote Lib Dem.

Taken for granted

I wonder if May, before she took her decision, looked at the precedents of prime ministers who called unnecessary elections when they already had comfortable parliamentary majorities. In 1974, after three and a half years in office, Edward Heath, with a Tory majority of 30, called a “Who runs Britain?” election during a prolonged dispute with the miners. He lost. In 1923, Stanley Baldwin, a new Tory leader sitting on a majority of 75 obtained by his predecessor just a year earlier, called an election because he wished to introduce tariffs, an issue strikingly similar to the one raised by Brexit. He also lost. The lesson, I think (and hope), is that prime ministers take the electorate for granted at their peril.

China’s long game

Commentators compare the crisis ­involving North Korea and the US with the Cuban missile crisis of 1962. It doesn’t feel that way to me. For several days that year, nuclear war seemed, to my 17-year-old mind, all but inevitable. I went to the cinema one afternoon and felt surprise when I emerged three hours later to find the world – or, at least, the city of Leicester – going about its business as normal. Two nuclear powers were in direct confrontation. The US threatened to invade communist Cuba to remove Soviet missiles and blockaded the island to prevent deliveries of more weapons. Soviet ships sailed towards the US navy. It wasn’t easy to imagine a compromise, or who would broker one. Nobody doubted that the two sides’ weapons would work. The Soviet Union had carried out nearly 200 nuclear tests. North Korea has claimed just five.

For all the talk of intercontinental missiles, North Korea at present isn’t a credible threat to anybody except possibly its neighbours, and certainly not to the US or Britain. It is in no sense a geopolitical or economic rival to the US. Donald Trump, who, like everybody else, finds the Middle East infernally complicated, is looking for an easy, short-term victory. The Chinese will probably arrange one for him. With 3,500 years of civilisation behind them, they are accustomed to playing the long game.

Mussel pains

Whenever I read Kelvin MacKenzie’s columns in the Sun, I find him complaining about the size of mussels served by the Loch Fyne chain, a subject on which he happens to be right, though one wonders why he doesn’t just order something else. Otherwise, he writes badly and unfunnily, often aiming abuse at vulnerable people such as benefit claimants. It’s a new departure, however, to insult someone because they were on the receiving end of what MacKenzie calls “a nasty right-hander”, apparently unprovoked, in a Liverpool nightclub. He called the victim, the Everton and England footballer Ross Barkley, who has a Nigerian grandfather, “one of our dimmest footballers” and likened him to “a gorilla at the zoo”.
The paper has suspended MacKenzie, a former Sun editor, and Merseyside Police is investigating him for racism, though he claims he didn’t know of Barkley’s ancestry.

Several commentators express amazement that Sun editors allowed such tripe to be published. It was not, I think, a mistake. Britain has no equivalent of America’s successful alt-right Breitbart website, disruptively flinging insults at all and sundry and testing the boundaries of what it calls “political correctness”, because our alt right is already established in the Sun, Express and Mail. To defend their position, those papers will continue to be as nasty as it takes.

Over and out

Easter is the time to read the cricket annual Wisden and, as usual, I turn first to the obituaries. Unlike newspaper obituaries, they record failures as well as successes – those who managed just a few undistinguished performances in first-class cricket and, most poignantly, some who promised much but died early. We learn of a 22-year-old Indian who, during demonstrations against the alleged molestation of a schoolgirl, was shot dead by police and whose grieving mother (invoking the name of one of India’s greatest batsmen) cried, “Bring my Gavaskar back!” In England, two young men drowned, having played one first-class match each, and a 22-year-old Sussex fast bowler, described as “roguish” and “enormously popular”, fell off a roof while celebrating New Year with friends in Scotland. In South Africa, a young batsman was among five municipal employees killed when their truck crashed; the local mayor fled the funeral as his workmates “chanted menacingly” about unpaid wages.

Among the better-known deaths is that of Martin Crowe, probably New Zealand’s best batsman. In a Test match, he once got out on 299 and reckoned the near-miss contributed to the cancer that killed him at 53. “It tore at me like a vulture pecking dead flesh,” he said. Cricket can do that kind of thing to you. 

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 20 April 2017 issue of the New Statesman, May's gamble

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