UK Price Freeze Pledge Sparks Strong Reaction

One of the first acts of a future UK Labour Government would be to implement a freeze of gas and electricity prices for a period of two years.

The pledge made by Labour leader Ed Miliband in a speech at the party’s annual conference in Brighton re-inforced his positioning as looking out for the interest of working families and small entrepreneurs.

 Miliband’s salvo, directed at voters who have seen living standards eroded by rising prices outpacing incomes, was met with outrage from energy companies, who warned of blackouts, job losses and reduced investment, which would ultimately lead to consumers facing even higher energy prices in future. 

'Energy poverty' becoming an increasing reality for many in the UK.  Labour estimates that the proposal would save average households £120 and businesses £1,800.

Leading energy player Centrica plc, which owns British Gas, said that the policy which Labour estimates will cost energy firms £4.5 billion in lost revenues, threatened economic ruin.

Centrica Chair Sir Roger Carr, said "it would simply not be economically viable for Centrica, or indeed any other energy supplier, to continue to operate" in an environment where prices were fixed while operating costs continued to rise on the backdrop of rising costs.

Ed Davey, Lib Dem energy secretary in the governing coalition responded that previous experiment with price controls has not worked commenting:

“When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts.”

The industry trade group UK Energy said that the proposed policy could impact the estimated 600,000-plus individuals dependent on the power sector for employment.