Theresa May’s government is preparing to intervene in Britain’s energy market to weaken the influence of the big six providers and stop the poorest families being forced on to the most expensive tariffs.
In a speech that had echoes of the previous Labour leader, Ed Miliband, who promised to introduce an energy price freeze, the prime minister argued that the market was “manifestly not working for all consumers”.
Addressing the Conservative party spring conference in Cardiff, she said she supported competition but was prepared to step in on behalf of consumers.
“Energy is not a luxury,” she said. “It is a necessity of life. But it is clear to me – and to anyone who looks at it – that the market is not working as it should.”
The Conservative prime minister said prices had risen by 158% in 15 years, hitting ordinary working families with soaring heating and lighting bills.
“The vast majority of consumers, especially those with the lowest incomes, are on the most expensive tariffs,” she added. “Relying on switching alone to keep prices down is clearly not working.”
“So we are looking very closely at how we can address this problem, and ensure a fairer deal for everyone,” the prime minister said. “We will set out our plans very soon.”
May has been warning she would intervene in broken markets since the Conservative party conference last year. But the government has faced increasing pressure to introduce a price cap after five of the big six energy suppliers hiked prices for millions of people in recent months, some by as much as £109 a year for dual fuel customers.
Energy minister Jesse Norman, added: “It must be noted that wholesale prices, which account for about half of an average bill, are still lower than in 2014. This is a moment not for crisis, but for sober reflection.”
Comparison sites and British Gas, the UK’s biggest energy supplier, argued that any price cap would ultimately hurt competition and consumers.
The chief executive of Citizens Advice, Gillian Guy, said: “The prime minister is right that the energy market is not working for everyone. Over 2 million low-income families and pensioners in Britain are paying £141 more each year because they remain on their supplier’s standard variable tariffs.”