Party leaders trade populist blows over energy costs
Energy & Climate Change Secretary Ed Davey’s annual departmental statement – which he delivered to the House of Commons on Thursday – isn’t usually the most hotly anticipated event of the parliamentary calendar. Fortunately/unfortunately however, this year is different; Labour leader Ed Miliband’s political-spanner-in-the-works price freeze pledge at his party’s recent conference has bounced energy to the top of the policy agenda and pushed Mr Davey firmly under the public spotlight. Whether or not it’s good economics, most commentators recognise that Mr Miliband’s new populist stance on rocketing energy bills carries plenty of political currency and – perhaps crucially – has forced Prime Minister David Cameron onto the back foot.
The Labour leader knows this, and as such has now used four consecutive instalments of Prime Minister’s Question Time to trumpet his flagship price freeze and beat Mr Cameron with a large, “I’m more on the side of ordinary working people than you are” stick. Clearly backed into a corner, the Prime Minister surprised many – and not least Mr Davey himself – on 23 October when he hit back with an equally populist pledge to “roll back” green levies on consumers’ energy bills: worth about £112 annually to the average consumer, although the cost does seem to vary depending on which newspaper you read.
The green-leaning Liberal Democrats quickly cried “panicky U-turn”, and there was a considerable amount of confusion over what exactly the Prime Minster had in mind. The energy investment world in particular was immediately concerned that vital subsidies such as Contracts for Difference – which ensure that sufficient money is pumped long-term into building new energy infrastructure – would be culled; it took almost a week before the Department of Energy & Climate Change published a categorical statement reassuring that this isn’t the case. Instead, it seems that Mr Cameron has set his sights on consumer tariffs such as the Warm Homes Discount and the Carbon Price Floor; a full announcement detailing the review – and how any cuts are to be paid for – will be made in the Chancellor’s Autumn Statement next month. Having pledged to fight any rollback, Ed Davey might find himself in the spotlight for a while longer yet.