Opponent accuses Cameron of panic response to rising energy prices

By Thomas Penny and Kitty Donaldson
Bloomberg News

Ed Miliband, the leader of the U.K.’s opposition Labour Party, accused Prime Minister David Cameron of making up energy policy in a panicked response to public anger at soaring electricity and gas bills.

Tory leader Cameron announced a probe into U.K. energy suppliers’ profits and competition between them yesterday and pledged to cut green levies as both his government and Labour bid to show they have plans to deal with inflation-busting price increases. Deputy Prime Minister Nick Clegg, who heads Cameron’s Liberal Democrat coalition partners, was told about the policy only a half-hour before it was announced.

“In weakness and panic he made up a policy on energy, which means business as usual for the energy companies, and which is already falling apart,” Miliband will say in a speech in London today, according to extracts released by his office. “There is no solution to the cost-of-living crisis which tiptoes around taking on the energy companies and reforming a broken market.”

Three of the “Big Six” companies that dominate Britain’s energy market have announced gas and electricity price increases of about 10 percent over the past two weeks, almost four times the rate of inflation. One of Cameron’s Conservative predecessors as prime minister, John Major, called on the government this week to impose a windfall tax on their profits if it needs to spend more money this winter helping the elderly and needy with higher fuel costs.

Labour Plans

Miliband said last month Labour would freeze energy prices if it wins the next general election in 2015. The party also announced plans to break up the Big Six — Centrica Plc (CNA), SSE Plc (SSE), EDF Energy Plc, EON SE, Iberdrola SA’s Scottish Power Ltd. and RWE AG (RWE)’s Npower unit — and force them to trade all their electricity on the open market.

In clashes in the House of Commons yesterday, Cameron accused Miliband of being a “con man” over the proposals. Speaker John Bercow rebuked the premier for his use of the words.

“We will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be made more competitive,” Cameron said. “I want more companies, I want better regulation, I want better deals for consumers.” He said there’s also a “need to roll back” green levies that suppliers have said contribute to higher costs.

Cameron’s Conservatives argue that if there is no policy change by 2020, green levies may rise to 194 pounds ($313) a year from the current 112 pounds — or 14 percent of the typical household bill. Labour said that of the 112 pounds, 67 pounds of levies had been introduced under the current government.

Coalition Battle

Cameron’s remarks on reducing green levies opened up a new battle with his coalition partners, the Liberal Democrats, who oppose eliminating such taxes.

Clegg said today that it would not be right to cut all the green levies, which provide investment in renewable energy and help to insulate the homes of people on low incomes. He said he will discuss the proposals with Cameron and confirmed he was only told about the policy through his office “shortly” before Cameron appeared before lawmakers.

“The prime minister and I will resolve our differences in the national interest, keeping bills as low as we can and keeping the lights on,” Clegg told BBC television. “I’m not going to accept simply scrapping a whole system of levies that help 2 million of the poorest households in this country and supports the green economy.”

Clegg said his party hasn’t yet seen any concrete proposals on green levies.

Free Schools

Clegg also played down a rift with Cameron over free schools, which are independent of local-government control and are a flagship Tory policy. He has called for all teachers in them to be qualified and for the schools to meet national standards. He said today those proposals are aimed at improving the schools, not reversing the policy.

Cameron’s spokesman, Jean-Christophe Gray, told reporters yesterday that the examination of green levies is being undertaken in the runup to Chancellor of the Exchequer George Osborne’s end-of-year statement to Parliament on Dec. 4.

“This prime minister is too weak to stand up for the consumer and he always takes the side of the Big Six companies,” Miliband will say today. “Sir John Major recognizes that the job of government is to reform markets when they are failing and to protect people. This prime minister does not.”