Following the price of Brent crude oil dropping below US$50 a barrel there have been calls for companies to pass on the savings to consumers. The lead of the Labour party, Ed Miliband, suggested that energy regulator Ofgem ought to possess powers to make firms reduce their energy prices in response to a drop in wholesale energy prices. While the UK trade body Energy UK stated this week that suppliers are already passing on these reduced costs in energy prices.
Miliband also said he might demand fast-track legislation in a House of Commons debate this week. The Labour party wants “to see those wholesale costs passed on to consumers” and that wholesale energy prices falling up to 20% ought to be reflected in household energy prices. Chancellor George Osborne has launched a Treasury investigation into whether energy companies are passing on the reduced price of oil onto consumers in the form of household bill savings. A Labour-called vote is to be held Wednesday and may give Ofgem powers to make energy companies reduce prices therefore passing on their savings to the consumer.
Mr Miliband’s latest calls build on his declaration in September 2013 that a Labour government may pass legislation that would legally prevent energy companies raising prices for two years on top of reforms that might make the energy market more competitive. In the 2013 announcement the suggested cap would last from May 2015 through to January 2017. Aides believed this may save average households up to £120 during that period. Understandably, with the General Election scheduled on May 7th these proposals appear to poll well with an electorate that has seen a drop in global oil price without a drop of household energy prices.
These proposals come at an eventful time in British politics – during an election year that is unique with the emergence of smaller political parties. The Labour party’s General Election campaign appears to be geared towards increasing living standards, with the National Health Service (NHS) being a flagship issue. Proposing the cap on energy prices may be an attempt to try to appeal to voters whom are yet to feel the benefits of the recovering economy that has been the focus of the Conservative party since the last General Election.
This recent energy announcement comes after Prime Minister David Cameron’s statement that he may refuse to take part in any of the UK television debates unless the Green Party is included as he feels the parties represented in the House of Commons ought to be considered equal. His stated point of view being that if Nigel Farage and the United Kingdom Independence Party (UKIP) are to be considered a major party and be involved in the debates then so should the Green Party. This has led to Ed Miliband accepting that he may be willing to be involved in an ‘empty chair’ debate in absence of the Prime Minister. It may be possible that the Conservative party are attempting limit any boost in support that the debates might hand to Nigel Farage and UKIP. When asked about the debates Mr Miliband stated “These debates need to happen. They are owned by the British people”.
The result of the Treasury’s investigation into whether savings are being passed to consumers may effect on both the upcoming General Election and energy market. Across this topic the backdrop of the General Election is clearly visible with both of the major parties using their traditional positions of Labour campaigning to improve public services and improve costs of living and the Conservatives promising to continue economic growth.
How might the Labour proposals productively change energy policy within the United Kingdom?