Sir Michael Fallon had to perform somersaults yesterday when he was invited to defend a proposed cap on energy prices which the Tories intend to include in their election manifesto. When he was energy minister in the Coalition, Sir Michael called the idea daft and it still is. He maintained that Labour’s plan before the last general election was for a price freeze rather than a cap and invited us to appreciate the distinction. Whereas a freeze would fix prices, a cap would allow them to go down when wholesale energy prices fell.
But it is interfering in the market in a way the Conservatives thought was unwarranted when Labour suggested doing so. The consequences were immediately apparent when shares in energy companies fell: this can impact pension funds, offsetting any gains from lower gas and electricity prices.
There are undoubtedly problems in the energy market with six companies tending to dominate the supply and distribution. The answer is to encourage competition; yet we know from experience that price controls stifle it. Also, the fact that people do not switch to lower tariffs is not an argument for what Mr Fallon previously described as a return to the Labour policies of the 1970s.
It is not as though there is a dearth of comparison sites to help the consumer; it is not the Government’s function to do it for them. Perhaps the Conservatives want to soften the blow of a possible move to end the triple lock on pensions. But they should find innovative ways of making the energy market work better and resist the temptation to reach for discredited Labour policies in order to attract the Left’s voters.