Labour price freeze threat has stifled £3bn in energy investment, says Rudd

The Labour party's pledge to freeze retail energy prices if the party comes to power after next year's general election has already cost the UK £3 billion in energy investment over the past year, said energy minister Amber Rudd.

The Conservative MP told delegates of the Energy UK annual conference that the opposition should reconsider its promise to freeze energy prices for 20 months “in the wake of the evidence of the damage it’s doing to the market”.

“The price freeze proposal put forward by Labour is already having a detrimental impact on investment – with some reports suggesting a £3 billion shortfall in investment in the energy sector over the past year. And a price freeze would ultimately drive up costs for the very consumers Labour say they are trying to help,” Rudd said.

Energy companies are understood to be wary of committing to investment if earnings could take a hit due to the planned freeze, and may also be delaying retail price cuts after a year of low wholesale prices as a result of the pledge.

Earlier this year the chief executive of RWE-owned npower said the company would not reduce retail prices as a result of the risk the price freeze poses.

Earlier in the day energy secretary, and Liberal Democrat, Ed Davey challenged the opposition party to make the responses to its consultation on the freeze public. The consultation was launched after the pledge was made last year and concluded in March this year although the responses of industry, consumer groups and other stakeholders have not been made publicly available.

Rudd said the collation government’s strategy to manage affordability will be through energy efficiency and greater market competition.

“We know that the best way to keep bills as low as possible for the long term is to reduce energy waste and drive competition and choice,” Rudd said.