The market is “not working for customers on default tariffs” says business secretary

Business secretary Greg Clark has told MPs the government is putting the finishing touches to its crackdown on what he has branded “very damaging” energy price rises.

Giving evidence to the House of Commons BEIS (business, energy and industrial strategy) select committee, the secretary of state said that the government would take “very decisive action” to curb above inflation power bill hikes, when it publishes its long-awaited consumer green paper.

He told the committee the government would be publishing the green paper, along with the government’s response to the CMA (Competition and Markets Authority) energy market report, “very shortly”.

But Clark admitted that the timing of the green paper’s publication, which had been expected as soon as next week, had been hit by prime minister Theresa May’s announcement of a snap general election on 8 June.

“When you have an election, you need to reflect on whether a number of things that are in the final stages of preparation can be finalised in time. This is what we are doing.”

During the so called “purdah” period, in the run up to elections, the government is prevented from making announcements which may sway the outcome of the poll.

Accusing energy companies of “milking” the large numbers of customers who have not switched from default tariffs, Clark said: “It is disappointing that energy companies have not exercised the responsibility that they bear to customers who are on very high default tariffs. If companies don’t see that this behaviour is very damaging to consumers’ interests, I do.”

“It is clear that the market is not working for customers on default tariffs. Our response will be muscular and strong and apply to all companies that are disadvantaging consumers.”

He also highlighted to the committee that the CMA had been split over the action that should be taken to crack down on energy prices with the publication of a harder line, minority report

Clark said that as part of its response, the government would address what the existing regulatory framework of the retail energy market, which he said was “not adequate”. And he said that the consumer green paper would address smart meters.

Responding to Clark’s comments, Greg Jackson, CEO of Octopus Energy, said: “The energy secretary is right. The big energy companies are milking their customers. Our research shows that they can charge loyal customers £286 per year more than the artificial prices they dangle in front of new customers.

“We support John Penrose MP’s proposal for a relative price cap. If that was implemented, these companies could never win another customer without giving all their customers a good price.”