Protection for 17m families paying most expensive tariff, which Tories promised in election campaign, has been dropped

This article is more than 3 years old

This article is more than 3 years old

Millions of people are unlikely to see their energy bills capped after Theresa May appeared to make a U-turn on one of her flagship election promises – to the delight of big energy companies.

The prime minister had pledged to cap bills for 17 million families on the worst-value energy tariffs, but the plan was missing from the Queen’s speech and No 10 would not confirm a cap would go ahead.

Instead, the government looks likely to extend an existing ceiling on bills for 4m households on prepayment meters to a further 2.6 million vulnerable customers.

That compromise would be exactly what the industry has been lobbying for, and a huge rowing back by the Conservatives after months of escalating rhetoric from May and ministers.

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An extension of the prepayment meter cap, which started on 1 April after a recommendation by the competition watchdog, is far from the “muscular and strong” action that Greg Clark, the business secretary, had threatened.

No 10 would only say that May was committed to extending price protection for vulnerable customers, and was considering how best to do that.

The share price of Centrica, which owns British Gas and is the UK’s biggest energy company, climbed more than 2% after the Queen’s speech.

Iain Conn, the chief executive, who has argued that price caps could stifle competition, said he believed a wide-ranging cap was off the table.

“I’m hopeful that this approach in the Queen’s speech could actually go further and more progressively towards the right type of market than if we had gone for an explicit price cap,” he said. “I’m encouraged by what’s been said so far, but it’s early days.”

However, the government does appear to be entertaining the idea of setting targets for shifting customers off standard variable tariffs, the default energy deals that two-thirds of households are on.

In a letter to the energy regulator sent on Wednesday, Clark asked Ofgem to consider “the future of standard variable tariffs”, and to safeguard “customers on the poorest value tariffs”.

The business secretary said he hoped energy companies would not attempt to delay new measures during any consultations.

“I would be surprised and disappointed if the major energy companies did not acknowledge the need for such changes and be supportive of them, and for them to be made quickly, so there is common treatment across the industry.”

However, one industry expert was sceptical. Nick Mabey, chief executive of the energy thinktank E3G, said: “The prime minister claimed she would do what it takes to reduce energy bills. That will take a lot more than the business secretary, Greg Clark, issuing tinkering instructions to Ofgem.”

ScottishPower, which has called for a car-insurance-style model instead of standard variable tariffs, urged Ofgem to abolish the tariffs “as a matter of urgency”.

John Penrose, a Tory MP who has led calls for a relative price cap, asked May if the promised “price protections” would be a cap that saved 17m households up to £100 each, as she had said during the campaign.

“I can confirm we do indeed intend to take action on this issue. We recognise the problem that there is in relation to energy bills,” said May in parliament, though she did not refer to any cap.

Rebecca Long-Bailey, the shadow business secretary, said: “This is another stunning U-turn from a demonstrably weak and wobbly government. Only last month Theresa May was explicitly promising a price cap for 17 million families and has now seemingly collapsed under lobbying from the big six energy companies.”

The Liberal Democrats, who did not back a cap in their manifesto, said the Conservative policy had been “pure economic illiteracy”.



“The best way to bring down bills is to break up the monopoly of the ‘big six’ and encourage new entrants to the energy market,” said Lynne Featherstone, the party’s energy spokesperson.

