Labour has pledged to back efforts to fast-track the government’s energy price cap legislation, which cleared its first parliamentary hurdle yesterday (6 March).
The Domestic Gas and Electricity (Tariff Cap) Bill, which was tabled last week in the House of Commons, passed its second reading.
Shadow secretary of state for business and energy Rebecca Long-Bailey called for the inclusion in the legislation of a “hard deadline” by when the cap should be in place.
She expressed her “exasperation” that the government had not acted more swiftly to implement its election manifesto commitment to cap standard variable and other default tariffs.
“As a result of this government’s dithering and delay, the four million households currently living in fuel poverty, one million of which include a disabled person, will be receiving whopping bills at the end of the month.
“The bill is frankly too little, too late, for millions of people who will not feel the benefit this winter and nor, it would seem, for half of next winter.”
Long-Bailey also called for a “fundamental root-and-branch look” at the functioning of the energy market, singling out the network operators for what she described as the “exploitation of a natural monopoly”.
Her colleague Alan Whitehead, shadow minister for energy, said Labour would not oppose the bill to ensure the price cap is in place next winter.
“That is quite a daunting timetable, but it is one for which we can have only limited sympathy, bearing in mind the time that the government has wasted by opposition, then vacillation, then confusion and finally some degree of determination to introduce a price cap.
“We want to see that cap in place well before the winter, if possible, and are minded to seek to place an absolute start date on the face of the bill.”
Opening the debate, business secretary of state Greg Clark had criticised Ofgem for not being more “agile” in the way it exercised its price capping powers due to fears the regulator would lay itself open to a legal challenge by suppliers.
He said: “It seems to me that its powers would have allowed these actions to be taken under its existing remit, and it is a matter of regret that we have to introduce a bill to compel it to act in this way.
Mark Menzies MP criticised the government’s decision not to allow energy suppliers recourse to appeal to the Competition and Markets Authority (CMA) against the level of the cap set by Ofgem.
“To impose a price cap in a long-standing liberalised energy market—has never been done before. We are sailing into completely unchartered waters.
“The bill provides no check nor expert oversight of Ofgem’s decisions,” he said.
“Appeals on price controls are always to the Competition and Markets Authority (CMA). This is consistent with every other comparable sector, including telecoms, water, and aviation, and there are very good reasons why.”
“The CMA is designed precisely to consider such appeals. As an expert appeals body, it has specialist panels with experience of deciding whether price controls have been set properly through consideration of the economic merits of each case.
“In contrast, a judicial review would consider only whether Ofgem reached its decision reasonably and in accordance with the relevant procedure. A judge with legal—not economic—training and with no specialist expertise would be asked to assess whether these deeply technical price control issues were fair and accurate.”
Claire Perry, minister of state for energy and climate change, defended the government’s decision to allow companies the opportunity to challenge Ofgem’s cap level via a judicial review.
She said: “Courts can consider these issues more quickly than the CMA, and a whole range of evidence can be taken in such a case, whereas with CMA decisions, the range of those who can comment is very restricted. I do not want anything that slows the introduction of the cap.”
Former Labour energy and climate change spokeswoman Caroline Flint slammed energy company Centrica as “outrageous” for linking the price cap to job cuts.
“Trade unions representing Centrica employees—Unite the union, GMB and Unison—are rightly sceptical about why UK employees might bear the brunt of the effect of corporate failures internationally under the leadership of Iain Conn.”