£100 OFF YOUR ENERGY BILL

Theresa pledges cap on tariff paid by 70% of families

THERESA May last night pledged to cap rip-off energy prices in a move expected to cut £100 from a typical bill.

In the first major policy announcement of the Tory campaign, the Prime Minister said her manifesto would include a pledge to limit the standard tariffs paid by seven in ten families.

The regulator Ofgem would be given powers to set maximum prices, making it harder for energy firms to punish loyal customers.

Ofgem would review the market twice a year, keeping the cap in line with wholesale energy prices and stopping firms making excess profits. Around 17million families on standard variable tariffs could benefit by up to £100 a year, according to Tory sources.

However some Conservatives question whether a government should fix energy prices. Tory MPs savaged Ed Miliband’s plan for a cap in the 2015 election campaign.

Power firms have warned that competition could be stifled, raising prices in the long run. The manifesto move came as:

Mrs May brushed aside Cabinet doubts to say her party will retain a key pledge to slash net migration to the tens of thousands;

Jeremy Corbyn prepared to launch the most Left-wing campaign in modern Labour history, promising a ‘reckoning’ with the rich;

Vince Cable encouraged fellow Lib Dems to back Labour in some seats to beat the Tories;

Mrs May urged voters to give her a strong mandate to take on France’s new president

emmanuel Macron, a europhile who has described Brexit as a crime;

An opinion poll gave the tories a 22point lead over Labour – the largest recorded by pollsters ICM.

Mrs May hinted at the move on energy bills yesterday, telling activists she would pursue ‘deliverable’ policies.

She said these would include protecting workers’ pensions against irresponsible bosses and capping energy prices.

Greg Clark, whose brief as Business Secretary covers the energy market, confirmed the price cap proposal last night.

‘We will act on our commitment to intervene when the energy market fails to treat people in a fair and reasonable manner,’ he said. ‘A recent investigation found that families are paying £1.4billion more than they should in energy bills.

‘And in the past few months, five of the largest energy suppliers have announced increases to their already poor value standard tariffs. this clearly isn’t fair and rea- sonable and we are going to put it right.’ Ofgem moved last month to cap prices for four million mainly poorer customers who use pre-payment meters.

energy giants have been accused of ripping off their most loyal customers by leaving them on expensive tariffs that are far costlier than their best deals.

A review by Ofgem last year found the difference between some suppliers’ best and worst deals was worth £300 a year to the average family. An investigation by the Competition and Markets Authority said firms were able to exploit customers who did not regularly switch.

the watchdog accused firms of fixing standard tariffs ‘materially above a level that can be justified by cost differences’.

Will Hodson of the Big Deal, which encourages consumers to switch to smaller providers, welcomed the proposal for a cap. ‘the Big Six make hundreds of millions in profit by overcharging families,’ he said. ‘they’ve had years to put their house in order but always refuse. A price cap will finally force them to do the right thing.’

Suppliers say a cap will reduce competition and encourage firms to ‘cluster’ around the level set by Ofgem. they also claim they will be less able to offer cheap deals to those who switch.

Since October – when Mrs May first floated the idea of a cap – several firms have withdrawn their cheapest deals and pushed up prices. energy companies have been accused of trying to cash in by raising bills dramatically since theresa May first threatened to take action against the industry in October. SSe’s cheapest gas and electric deal has gone up 37 per cent to £1,072 a year, according to the comparison site Uswitch.

British Gas owner Centrica said: ‘Centrica does not believe in any form of price regulation. evidence from other countries would suggest this will lead to reduced competition and choice, and potentially higher average prices.’

Former tory minister John Penrose has urged ministers to limit the gap between best and worst deals rather than setting an absolute cap.

In the 2015 election, then tory minister eric Pickles warned that a price ceiling would lead to energy shortages and power blackouts.

‘Force them to do the right thing’

ThE Mail passionately believes that the free market is the engine of enterprise and prosperity. But sometimes, areas of the market fail so badly and become so dysfunctional that the Government feels it must intervene to protect the consumer.

Let’s be clear. The energy industry in Britain is failing. Giant firms, largely foreignowned, have fleeced customers for years and because there is so little choice, they have been getting away with it.

when wholesale oil and gas prices rise, their charges go up like a rocket. when they fall, they come down like a feather and it’s ordinary families who pay the price.

So we fully understand why Mrs May has pledged to cap these rip-off energy prices, a move the Tories believe will save the average customer around £100 a year.

Mandatory regulation is fraught with difficulties and the cap will doubtless be subject to legal challenge. But it’s being done for the best of reasons – to rein in a bunch of contemptible profiteers.

And perhaps most importantly with the election imminent – it will be extremely popular with the voters.