Tuesday, 8 April 2014

An "energy price freeze" does not control prices and what happens to workers wages?

Ed Miliband’s energy policy needs  to be understood – he proposes to govern by issuing edicts to companies, telling energy firms what they should charge their customers and threatening similar orders to those he regards as ‘predators’. He has a very advanced and detailed business strategy — but seems to lack the support of a single prominent business leader. More importantly his strategy would raise prices not lower them. And who will do the investing in new energy infrastructure?  

I asked this question of the shadow Energy secretary Caroline Flint, in the House of Commons, last week:
Guy Opperman (Hexham, Conservative)

"Does the right hon. Lady accept that an externally imposed price freeze does not control overseas supply or energy prices?"
Answer came there none.

Later another colleague asked her:

"What discussions has she had with trade unions and the energy industry about the possibility, should there be a price freeze, of a demand for a wages and salary freeze in the energy industry?"

I cannot overstate the problems that would occur if government fixes prices - investment will be stymied, wages will reduce and all of us, the customer, will suffer in the long term.