Labour plans would lead to “yo-yo” pricing – Davey

Ed Davey slammed the Opposition’s plans for energy yesterday, claiming they would create higher, “yo-yo” prices for consumers. The Energy Secretary was speaking in the Commons ahead of a vote […]

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By Vicky Ellis

Ed Davey slammed the Opposition’s plans for energy yesterday, claiming they would create higher, “yo-yo” prices for consumers.

The Energy Secretary was speaking in the Commons ahead of a vote on new powers for Ofgem, which Labour lost.

The vote prompted a verbal brawl on whether controlling retail energy prices was possible or desirable, with Coalition ministers, backbenchers and Opposition MPs weighing in.

The Lib Dem politician said: “The Opposition’s proposed new regulations would be bad regulations, resulting in higher prices for consumers, not lower. I am not against regulations where they work better than competition but Labour’s proposed regulations, involving wholesale-retail price links, would produce yo-yo pricing and higher pricing and consumers do not want either.”

Davey quoted E.ON UK boss Tony Cocker’s comments that Labour’s threat to freeze energy tariffs made suppliers reluctant to pass on drops in wholesale costs.

Wholesale lunacy – or just what David Cameron wants?

Former oil industry man and Tory MP Sir Alan Duncan waded into the debate, branding Labour’s ideas “populist posturing” and “total lunacy and ignorance”.

He said: “Their ignorance of markets and their Canute-like pretence that they can control prices in the way they propose is pitiful in its fantasy and it is irresponsible.”

Labour MP Albert Owen retorted: “My first job was as a galley boy on an oil tanker in the Middle East, so I know a little bit about oil from a different perspective from that of the right hon. Gentleman. He says people are ignorant of the facts. Does he agree with the Prime Minister, who said that the best way to deal with the issue is to ‘give the regulator the teeth to order that those reductions are made’?”

Owen, who sits on parliament’s Energy Select Committee, added: “Those were the words of the Prime Minister. Is he criticising us for repeating what the Prime Minister said? Does he agree with the leader of his party?”

Sir Duncan said he “totally” agreed with the Prime Minister that “competitive market” not the control of prices by a regulator is needed.

Coming to his Labour colleague’s aid, MP Ian Lavery said the party’s idea was far from a “gimmick”.

The MP for Wansbeck said: “[The motion] is about making sure that instead of standing back and hiding around the corner from the big energy companies—the big six and others—Ofgem does what it is supposed to be doing in protecting people who are suffering greatly in this country.”