Politicians are the undisputed masters of double standards. They are all too happy to give with one hand and take with the other; to smile to our faces while plunging the dagger into our sides. They over-promise and under-deliver. Worst of all, they all too often sacrifice the policies that are necessary to safeguard our future, knowing all too well that tomorrow’s voters will not reward them for prudent measures taken today.
Sadly, Labour is not immune to this behaviour. Nor is Ed Miliband. His conference pledge to freeze energy prices for 20 months was an act of naked political opportunism and exposes the party to accusations of shrill hypocrisy.
This may be tough for the committed Labour supporter to understand- but it’s true, and I’ll explain why.
First of all, Freezing energy prices will undoubtedly play well on the doorstep today, but may have serious costs for the party tomorrow. It is true that Britain’s energy market is dominated by a dysfunctional oligopoly, and that price have risen by over £200 on average since the election. But it is not true that a temporary cap on prices is the solution. This is a sticking plaster policy. After the 20 months are up, what will happen to prices? In the worst case scenario, if firms need to make up losses following price spikes in the wholesale market during the freeze, customers will see a large jump in their monthly bills. Perhaps this won’t happen overnight, but over time the energy companies will seek to claw back what was lost.
A temporary freeze also has the potential to kill off new entrants into the market. Already Ed’s announcement might have signed the death sentence for smaller energy players, such as First Utility and Ovo Energy. Say what you like about market capitalism, but a competitive energy sector made up of dozens of diminutive Davids rather than six giant Goliaths would lead to lower prices and better customer service. Ofgem, the energy regulator, has itself argued the case for making the sector more competitive by increasing pressures on suppliers. Why has Ed ignored this call for action?
Worst of all, Ed’s policy may take us a step back in the fight against climate change. Labour should be proud of the fact it legislated to make energy companies bear the costs of transitioning to a low carbon future, as it is unlikely they would have ploughed money into renewables and energy efficiency on their own initiative- after all, the more energy we use, the more profits they make. Ofgem reported in 2009 that 3% of the average gas bill and 8% of the average electricity bill was attributable to these environmental levies. In 2013, these figures had increased to 6% and 11% respectively.
Building a green future will incur costs for all of us. I dislike paying expensive energy bills as much as the next person, but I take solace in the fact that by doing so I am helping to fund the next generation of low carbon technologies. Is Ed, a former Energy Secretary, really willing to sacrifice millions of pounds of investment in renewables and energy efficiency for the sake of a brief boost to his polling?
Finally, there is a political cost to be borne. Labour has rightly slammed the Conservatives’ ludicrous Help to Buy scheme as cheap populism, as a policy that patronises the intelligence of the electorate. We have just emerged from the worst financial crisis for a generation, a crisis caused by an unsustainable debt boom based on a rising housing market. With recovery in sight, the first thing the Conservatives do- the very first thing- is promise to stoke another housing bubble. People can see through this nonsense, and they will see through Labour’s energy freeze too. Ed’s message is ‘profit today, pay later’. Save some pennies in the short term so your children have to pay pounds in the long term.
This is not a left wing policy, it is not fair to future generations, and it is not a sustainable solution to the problem of high prices. If we want to help families struggling with expensive bills Labour should introduce new subsidies- like an extension of the winter fuel allowance to those earning below a set income threshold- and make it easier for people to switch to cheaper suppliers.
As it stands, this is the sort of populism Labour supporters rightly deplore in their Tory and Lib Dem rivals. It has no place in our manifesto.
Louie Woodall is Editor of Anticipations