Miliband issues energy prices warning

Consumers could soon see energy firms as 'part of the problem' rather than the solution if they refuse to work with Labour on plans to freeze gas and electricity prices, party leader Ed Miliband has warned.

Mr Miliband announced the plans at his party's annual conference in Brighton, saying that if Labour wins a General Election in May 2015, energy prices will be frozen for 20 months to early 2017.

£120 savings for average household

Labour say that would save the average household £120 and the typical business £1,800, with suppliers able to absorb the estimated £4.5 billion cost through the profits they've amassed from 'overcharging' consumers. 

The announcement has been met with scepticism from the industry, including claims that the policy could be counterproductive and result in power blackouts and falling investment.

Angela Knight, chief executive of trade body Energy Watch, said although the idea of a price freeze was 'superficially attractive', it would also result in a freezing of the amount of money available to build and renew power stations.

That, she added, would 'freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone'.

Meanwhile, the chairman of Centrica - British Gas's holding company - Sir Roger Carr said firms would potentially be in danger of 'economic ruin' if they couldn't control their costs or prices.

'Crisis of confidence'

But Mr Miliband has written to the UK's 'Big Six' energy firms, saying they risk being seen as 'part of the problem, not part of the solution' if they don't work with Labour to keep prices down. He wrote it was time to 'rebuild public trust in the energy market'.

He said: 'You and I know that the public have lost faith in this market. There is a crisis of confidence. We face a stark choice. We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution.'

An incoming Labour government would freeze energy prices before making changes to the market in 2017 to increase competition, reduce bills for households and businesses and make regulation tougher.

Copyright Press Association 2013