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Hypocritical Tories caught out on energy

Hypocritical Tories caught out on energy

"So I am making this promise: if I am re-elected on June 8, I will take action to end this injustice by introducing a cap on unfair energy price rises".

The Confederation of British Industry said Theresa May's plans for an energy price cap would lead to "unintended consequences".

The energy industry was sent reeling after the Tories first confirmed the price cap plans last month and shares in energy groups fell again on Tuesday, with Centrica and SSE in the red.

Under the plans, there will be a cap on the cost of a standard variable tariffs, the default deals that are used by two-thirds of households in Britain.

The policy is remarkably similar to the bill cap offered by the Labour party back in 2013, which David Cameron dismissed at the time as "Marxist".

Elderly people, poor and disabled people are among those less likely to switch providers and therefore find themselves on overpriced rates as a result, which in turns boosts the providers' coffers.

Jonathan Stevenson said: "This recognition that the government has a role in the broken energy market is welcome, but a tiny cap won't fit the scale of the problem".

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"Instead of bringing in a price cap, the Government should spend some money raising awareness of switching and leave the mechanics of an increasingly vibrant and competitive market well alone".

But an investigation by the competition watchdog in 2016 said households had overpaid 1.4 billion pounds a year in the previous three years due to uncompetitive standard tariffs. These more passive consumers remain on standard tariffs with one of the "Big Six" energy suppliers, including 80 per cent of Britain's elderly, disabled and low income households. They raise the prospect of prices across the board tending to be closer to the Ofgem-set cap, thereby reducing the incentive for consumers to switch.

Justin Bowden, National Secretary of GMB, the union for energy and gas workers, added: "Should this policy come into effect, and the regulator be given the job of capping energy prices, then Ofgem must distinguish between profiteering and the resources needed to generate jobs and to pay for the vital infrastructure needed to maintain our power networks".

The firm, the only one of the "Big Six" that did not hike prices, lost 261,000 customers to competitors in the first quarter of 2017, on top of the 400,000 customers British Gas lost previous year. "Unlike the Tories' half-baked cap which only deals with some people, Labour policies will help people on every tariff", a spokesman said.

However, she said she could not promise that her planned cap would guarantee prices do not go up "year on year" but said it would prevent "sudden and unexpected and significant" jumps in the price of gas and electricity.

Shares in Centrica have fallen 15% since the start of this year and some are speculating that it may cut its dividend to shareholders to cope with an estimated £200 million hit to profits from the cap.

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