In the months preceding the General Election the issue of spiraling energy prices ranked high on Labour’s agenda, drawing the Prime Minister’s ire repeatedly. In January David Cameron referred to Labour’s plans to cap and cut consumer prices as “a joke” and questioned both its feasibility and desirability.
It was therefore surprising that Energy Secretary Amber Rudd announced that she had written to the heads of the ‘big six’ energy companies calling on them to lower their prices, now that Labour’s pledge to institute price caps through legislation was off the table. While Rudd’s chosen instrument may be quite different to Ed Miliband’s the principle is much the same.
Speaking to the Daily Mail she suggested that “Labour’s price freeze was a theme for why they were unable to reduce prices before the election. Now that threat is no longer there, I intend to keep up the pressure on them to act. My focus is to get the best deal for consumers and the department is working hard to keep energy bills as low as possible.”
Analysis by regulator Ofgem has found that energy firms are now making an average profit of £118 per dual fuel deal this year, an increase of roughly a third on last year, despite an £80 fall in the wholesale gas and electricity costs in the same period.
Amber Rudd is something of a rarity in the Conservative Party: an avowed believer in the existence of manmade climate change. She not only believes that climate science is “compelling”, but has called for the need for a deal to be made at the forthcoming United Nations Climate Change Conference in Paris. She is, according to The Guardian, certainly not an unbiased critic of the Tories, “really green and no-nonsense”. There is a sense that she understands the energy market and will seek to regulate it, while also pushing the government towards a more progressive policy on climate change.
In a sense Rudd represents a clear continuum with the Conservatives circa 2006. That being the year Cameron famously posed with huskies on his way to visiting a melting glacier. The trip was, according to Davis Nussbaum, the chief executive of World Wildlife Fund UK, “part of Cameron’s detoxification of the Conservative brand. This was a symbolic indication that the Conservative party had changed… [that it] wasn’t any longer the ‘nasty party.’”
However, a number of Tories, including prominent backbenchers like Graham Brady, chair of the 1922 Commission, remain skeptical: a. that climate change is happening at all and b. that the government should intervene in an area that could be “destroyed” by legislative changes. For others, like David Davis, intervention in the energy market will only lead to the “blight” of wind farms and mixed signals on economic liberalism. Even George Osborne has suggested that he would never “save the planet by putting Britain out of business.”
Though the Tories are on a high having gained majority these ideological schisms could prove decisive in the future, and raise questions as to the kind of energy policy that they will choose to implement. There are long-standing promises to end subsidies for onshore wind power and an openness to fracking, previously suppressed in coalition by the Liberal Democrats. However, they have committed themselves to a “strong global climate deal” and boosting those area that offer “good value for money.” These goals are arguably not at odds with one another, but nor are they entirely complementary and they certainly don’t look like a cogent portfolio for office.
Matters have been complicated further by the threat of legal action from the renewables industry should any existing subsidies be cut. Maf Smith, deputy chief executive of Renewables UK, has called the uncertainty “extremely concerning” and promised that “the industry will fight against any attempts to bring in drastic and unfair changes utilizing the full range of options open, including legal means, if appropriate.” Such strident language should not be taken for granted in Whitehall, with a majority of just twelve the government is vulnerable to rebellion and cautious, informed approach is required.
Supply chain constraints are too a major issue for the energy sector as a whole. Staffing, accommodation for staff, say for staff working on the MayGen project in the Pentland Firth or on the large offshore wind farms in the North Sea, and technical expertise are limiting the sector’s growth as much as the regulatory politics. However, the two are interdependent. Investment in the supply chain, raw materials and expertise is difficult in the current climate. The opportunity now is to engage with government across the UK (especially in the devolved administrations) and the EU and to develop a policy that works beyond the five years of a Parliamentary term.
As David Cameron’s performance at last week’s Prime Minister’s Questions demonstrated, the Tories are on a high. The excitement and unity fostered by an electoral victory will not last forever and management is required to shape and define the Conservatives’ energy program. In Amber Rudd they possess an energetic and diligent campaigner, but whether she has what it takes to win over or reign in the perennial awkward squad remains to be seen.
Latest posts by Jack Taylor (see all)
- Conservatives face welfare challenge - July 1, 2015
- Retreating from the middle: what can we learn from the Select Committee elections? - June 22, 2015
- Understanding the Tories’ approach to energy - June 9, 2015