Would price cap pledged by Tories result in lower energy bills?

Would price cap pledged by Tories result in lower energy bills?

Would price cap pledged by Tories result in lower energy bills?

Theresa May insisted it was right to intervene to tackle "rip-off" standard variable tariffs but confirmed that the cap set by the regulator Ofgem would rise if suppliers' costs increased.

She has promised a cap on standard variable tariffs in the Tory election manifesto.

Speaking earlier to Conservative General Election candidates in York, Mrs May said that last year's investigation by the Competition and Markets Authority had shown consumers were spending £1.4 billion a year more than they would in a truly competitive market. "We will legislate and this will be part of our manifesto".

But when Labour pledged a freeze in 2013, under then leader Ed Miliband, it was dismissed as a "petty socialist campaign" by then prime minister David Cameron.

In response to the pledge, Rebecca Long-Bailey, Labour's shadow secretary for Business, Energy and Industrial Strategy, says: "This is desperate stuff from the Tories, re-announcing something they tried to get a headline for just a fortnight ago".

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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.

The move would save 17 million customers £100 each year, according to the Tories.

"With a cap it would be very hard for the "Big Six" to generate the kind of profits they have been able to".

The Confederation of British Industry (CBI) also cautioned against introducing a price cap, suggesting it could leave customers worse off than they are now.

Stephen Murray, energy expert at price comparison website MoneySuperMarket, says: "For customers who have the ability to switch - the majority outside the most vulnerable - an energy price cap would be a disaster... it will lead to numerous best deals disappearing, prices finding a higher level and a growing market of disengaged customers".

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So what is the problem with capping expensive tariffs?

There has also been a fair amount of goading from Labour overnight, given the amount of flak the Tories gave Ed Miliband when he proposed an energy price freeze ahead of the 2015 general election. That would imply that if wholesale prices continue creeping up, as they have in Ofgem's cost supplier index, bills will go up despite the cap.

Mr Clark said that the Competition and Markets Authority had found that the market was not sufficient competitive.

"It is important that these measures bed in before looking to further interventions".

British Gas owner Centrica has warned that price regulation would lead to higher bills for consumers and reduce competition in the sector, claiming evidence from other countries suggests it would lead to potentially higher average prices.

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Even consumer groups are anxious that consumers will become less bothered trying to find a good deal if they think the government is doing it for them.

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