No policy announced by an opposition party in recent years has had more political impact than Labour’s proposed energy price freeze. It succeeded in shifting the economic debate from the deficit towards living standards (where it has largely remained since) and left the Tories in a strategic tailspin. The eventual reduction in green levies announced in last year’s Autumn Statement would have been unthinkable without Ed Miliband’s pledge.
Given the political and economic significance of the policy, I recently submitted a Freedom of Information request to the Department of Energy and Climate Change (DECC) requesting a copy of their private assessment of the price freeze. After months of waiting, with DECC securing several time extensions, I have now received the 32-page report, which you can read in full below. (It is notably replete with spelling and grammatical errors, for instance, “Chuka Uma” and “Peter Mandelson came out criticising the move ass counterproductive”.)
The document has been redacted to exclude an assessment of the legal position and comparisons with similar policies, but offers a useful insight into how the department and others view the measure. Here are some of the most notable extracts.
European reactions and policy (p.9): “The issue has been raised with UK officials”
The department notes that “the issue of energy prices is coming up the agenda in Europe” and that “the issue has been raised with UK officials by both the EIB [European Investment Bank] and the CION [European Commission]”. It adds: “As a general position, the Commission doesn’t favour regulated prices (albeit that there is express provision for them in the Electricity and Gas Directives) and it’s contrary to the direction of travel on the internal energy market (which is focused on market-based pricing).”
“The Commission has made it clear that it will continue to take cases against Member States where price regulations don’t meet EU law conditions. The most recent action of this type is against Poland’s gas price regulation (on the basis that there is no time limit and prices apply to to all non-household users regardless of size.) Other actions have included investigations into France and Spain’s price regulation on similar grounds.”
Ministerial response (p. 30): “Ministers acknowledged that cost of living was an issue”
In its round-up of ministerial reaction to the policy, DECC writes that “Comment from Government Ministers initially focussed on the prospect of blackouts and the lack of investment (particularly from abroad). As the debate progressed, Ministers acknowledged that cost of living was an issue, and that the best way to address that was right investment now (for example nuclear and fracking). Michael Gove sad [sic] he took the predictions of blackouts with a “pinch of salt”. However, he acknowledging [sic] that energy prices were a big issue in the cost of living debate, but argued the Conservatives were addressing these.”
Polling on the price freeze (p.31): “Some polls are predicting Labour could tip the balance…enough to win the 2015 election”
In its summary of polling on the issue, the department notes that “The polls point to the announcement being generally popular among voters. The YouGov poll reported in the sun [sic] shows over half (58%) of voters do not believe the government’s ‘scaremongering’ predictions of power cuts. Polls show Miliband’s popularity has increased and that he (and labour) ‘stand up for’ ordinary consumers.”
In what appears to be a reference to Lord Ashcroft’s recent marginals polling, it also notes that “Some polls are predicting labour [sic] could tip the balance enough in marginal [sic] to win the 2015 election.”
Labour response (p.31): “Ed Balls and Chuka Uma [sic] noted the risk to Labour’s relationship with business”
The department summarises the response from Miliband’s own party, noting that “Interestingly…an unnamed senior shadow minister conceded the policy risked being subject to judicial review”. It also writes that “Ed Balls and Chuka Uma [sic] noted the risk to Labour’s relationship with business, but that energy was a big part of business’ costs. He also reiterated that fairer market [sic] would be a better environment for long-term investment”
Referring to Peter Mandelson’s public criticism of the policy, DECC notes “Peter Mandelson came out criticising the move ass [sic] counterproductive and poor for investment. Lord Myners took a similar critical stance. Much Labour comment in the first few days, however, was critical of Mandelson, in particular pointing out his connections to the energy industry, and his part in the windfall tax in the ’90s.”
It adds: “Other comment was around the ‘entrenched Big Six’, and Caroline flint [sic] noted the Big Six may be opverplaying [sic] their hand as they were already offering fixed deals to 2017.”
SNP reaction (p.31): “A potential split in the party”
DECC highlights “A potential split” in the SNP with “Fergus Ewing ruling-out a freeze in the event of independence, but the left-wing of the party remaining open minded, awaiting the analysis.”
Trade unions (p.30): “Little comment”
“Little comment from unions other than GMB: ‘Labour are stepping in where Ofgem has failed.'”
Other reaction (p.31): “We may wish to renationalise essential elements of our infrastructure”
“Although other comments have praise for Labour’s proposal many, again, focus on the detriment to investment and energy security. An interesting point made by Kevin McCullough [chief executive of UK Coal] is that although energy companies may not up sticks, they will focus efforts in other more profitable countries. He suggests that we may wish to renationalise essential elements of our infrastructure. Some used the announcement to call for investment in nuclear; and other comment focusses on going back to the old days of more socialist policies.”
Government assessment of Labour’s energy price freeze
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