Energy price cap could have saved households over £1,000 since 2010, say Labour

Labour has claimed an energy price cap could have saved the average consumer over £1,000 over the past seven years on rip-off energy bills.

The new analysis comes amid mounting pressure on Theresa May from her own backbenchers, including 20 former minister, to honour the Conservatives’ pre-election pledge to cap bills after the Prime Minister ditched the proposal at the Queen’s Speech.

According to analysis by Labour, if their proposed cap - ensuring that household energy bills remained below £1,000 a year - had been introduced in 2010, the average person could have already saved £1,149 and a further £149 in the years going forward.

Rebecca Long-Bailey, the Shadow Business Secretary, said: “Working people are suffering rip-off price hikes by the big six energy companies whilst at the same time many bosses continue to carry on paying themselves obscene amounts. That’s the Tories’ rigged economy in action and they will do nothing about it.”

She added that Labour, if elected, would take “tough action” on the energy companies, adding: “We’ll impose a hard price cap on energy bills that will immediately end rip-off price increases, and we’re prepared to take on the big six to do it.”

The analysis is significant as it follows a rebellion facing the Prime Minister from her own backbenchers over a decision to ditch the party’s pre-election pledge to introduce a cap that aimed to save families up to £100 a year on their bills.

According to reports, 53 Conservative MPs have signed a letter, addressed to Ms May, demanding she now fulfil the promise and introduce a cap for all families on a standard variable tariff.

The protest – organised by the former minister John Penrose – also has the backing of 38 Labour and SNP MPs, and includes prominent Conservative figures such as the former Work and Pensions Secretary Iain Duncan Smith.

In a letter to the PM, they said: “We are writing to urge you to extend Ofgem's proposals of 3 July 2017 by introducing an energy price cap that protects all of the 17 million families currently on expensive standard variable tariff deals, not just the two million vulnerable ones.

”While these proposals are a step in the right direction, it is clear we must do more to protect the further 15 million households who continue to be preyed on by the big six energy firms.

“As you can see from our signatures below, the idea has substantial cross-party support.

“It was promised in the three leading party manifestos and a temporary, relative price cap has support from most of the ‘challenger’ energy firms – the insurgents who are challenging the dominance of the big six incumbents, and providing choice and stronger competition, which benefits consumers.

Just weeks ago British Gas – one of the energy companies – hiked its prices by 12.5 per cent for 3.1 million customers, which led to the Department for Business, Energy and Industrial Strategy expressing concern the price rise would hit many people already on poor-value tariffs.

On Monday Ofgem, Britain’s energy watchdog, also said it has warned electricity distribution network operators (DNOs) they could have their revenue slashed if their customer service does not improve.

Ofgem said: “Failure to meet minimum expectations can lead to a financial penalty. Following feedback from customers to our consultation in July, our view is that all DNOs may have fallen short of these expectations.

“In general DNOs seem to be improving their engagement and services but some specific issues raised by stakeholders remain unaddressed. As a result, each of the DNOs faces a reduction in its revenue.”