May vows to cap energy bill increases if Tories win election

Theresa May says she is "fed up with rip-off energy prices" and will cap bill increases if the Conservatives win the next election.

The Prime Minister has confirmed plans unveiled last month to protect gas and electricity customers on standard variable tariffs from "sudden and unjustified" increases.

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.

Mrs May says the proposed measures could save 17m families as much as £100 on their household energy bills.

:: Analysis - Are we being ripped off by energy companies?

However, she insists her plan is different from the energy freeze proposed by former Labour leader Ed Miliband in 2015, which led David Cameron to accuse him of wanting to live in a "Marxist universe".

Unveiling the manifesto pledge at an event in Yorkshire, and asked if she was living in a "Marxist universe", Mrs May said: "Ed Miliband didn't suggest a cap on energy prices. Ed Miliband suggested a freeze on energy prices which would have frozen them so that people paying above the odds would have continued paying above the odds, and crucially the prices would not have gone down.

"Under our cap, prices will be able to come down."

She (Munich: SOQ.MU - news) also refused to rule out future tax hikes, saying it was not her intention to increase the level of tax but she was "not going to make any tax commitments that we are not absolutely sure we can keep".

According to Claire Osborne, an energy expert from uSwitch, there are bigger savings to be made.

She told Sky News: "With (Other OTC: WWTH - news) about two-thirds of consumers sitting on the expensive standard variable tariffs the Tories are talking about, there are big savings to be made by making a whole of market comparison.

"Within 10 minutes you can do a comparison and instead of saving the £100 that the Tories are pledging, you can be saving an average of £350 - but in many cases it's much higher."

:: British Gas owner in election plea on bills

Business Secretary Greg Clark told Sky News: "The independent competition authority made an investigation into the energy markets and they found consumers were overpaying by £1.4bn a year - that's ranged in the past from £70 to £200 a year on people's bills.

"It seems to me that if you are presented with that evidence, you need to act to stop people paying through the nose.

"So what we're going to introduce is a cap so people who are not on the best deals and are on standard variable tariffs don't overpay in the way they are at the moment."

Mr Clark added that the policy is geared towards vulnerable people who may not have access to the internet or the confidence to haggle with their providers.

Reaction to the policy has been mixed - with the trade association for the industry, Energy UK, warning such intervention could affect competition in the marketplace and undermine "positive changes" being made to improve choice and customer service.

:: Analysis - Tories playing with fire on energy bills

Keith Anderson, chief corporate officer at ScottishPower, said: "Though the Conservatives have asked the right question, they have found the wrong answer.

"ScottishPower has been campaigning to abolish unfair standard variable tariffs (SVTs) altogether. Getting rid of SVTs would end the status quo in the market, increase competition and save much more than just £100 for hard-working families."

Meanwhile, E.ON warned: "Intervention by Government will harm investor confidence at a time when the country requires significant investment to deliver energy security and the low carbon agenda."

Ed Davey, the former Lib Dem energy secretary, told Sky News the Conservatives' policy could actually make costs rise for some Britons.

He said: "They can get the future prices wrong and the cap wrong - prices can fall and people can be left stranded on higher energy bills and pay a lot more. This is the experience of other countries.

"This policy from the Conservatives, just as the policy from Ed Miliband, will not work."

But Stephen Fitzpatrick, the chief executive of OVO Energy, described the policy as a "bold and ambitious move" - and argued that a cap on standard variable tariffs would not harm consumers or competition.

"It will be painful for some companies, especially those currently taking advantage of customer disengagement, but it will offer consumers a safety net, protecting them from some of the worst practices of the industry whilst still allowing innovative suppliers to compete," he said.