Queen’s Speech: government will consult on price cap

Consumer green paper will examine the need for regulatory action versus legislation

The government has will not rush into implementing its threat to cap energy bills, according to the Queen’s Speech.

The background briefing notes to the speech, which outlined the government’s programme for the next two years, showed government intends to consult on how to deliver its manifesto commitment in a consumer green paper.

The notes also show that ministers have yet to make up their mind on whether legislation is required in order to implement the price curbs.

They say the government is “considering” whether regulatory action or fresh legislation is the “best way” to fulfil the government’s manifesto pledge to extend the protection against price hikes currently enjoyed by customers on pre-payment meters.

The consumer green paper, which was in the pipeline before Theresa May’s decision to call a snap general election, will “closely examine markets which are not working fairly for consumers”.

The speech notes claim that “more needs to be done” to improve competition in the energy retail market despite progress in recent years.

It says that the government is acting to boost competition through its measures to push back the smart meter roll out and through its support for initiatives to improve switching and transparency in the market.

Citizens Advice chief executive Gillian Guy pressed ministers to implement its pledge by adopting her organisation’s proposal to extend the prepayment cap to all those eligible for the warm home discount.

“This would still allow for healthy competition between suppliers on prices. We will be keeping an eye on the progress of the government’s proposals for intervening in the energy market to make sure they deliver lower bills for consumers.”

Brendan Flattery, chief executive at energy consultancy Utilitywise expressed disappointment with the government’s move to prioritise smart meters over market intervention.

He said: “Moving from plans to implement an energy price cap to investing in smart meters is like a football club trying to buy Lionel Messi but ending up with Joey Barton. Smart meters are the technology of yesterday, and by the time the roll-out is complete they will be obsolete. It’s like the last government investing heavily in Blockbuster as Netflix was on the rise.”

Richard Neudegg, head of regulation at price comparison site uSwitch.com, said: “We will continue to work with the Government, regulators, and other organisations to ensure more energy customers access better deals.”