Labour pledges energy price cap

Labour has promised to place a cap on the prices charged by energy companies if it wins power.

Shadow chancellor John McDonnell made his comments to the BBC this weekend.

Asked what he would do to respond to actions by suppliers to significantly raise prices – as Npower has announced it will do this March – McDonnell said he would introduce legislation to limit such increases.

“We can’t allow this to keep going on,” he said.

Npower has come under wide ranging criticism for its decision to increase prices. The hike is made up of an average bill rise of 4.8 per cent for gas and 15 per cent for electricity. It includes a £55 increase to the standing charge for electricity, which Npower said would bring it “in-line with the rest of the market”.

Npower blamed the increase on rising wholesale energy prices and the growing cost of government policies such as the smart meter rollout and the Capacity Market – though the Energy and Climate Intelligence Unit told Utility Week that it was “bizarre” to say the Capacity Market is putting upwards pressure on bills.

Labour’s pledge to take an interventionist approach to the energy market should it gain power harks back to similar promises made by former party leader Ed Miliband who said in 2013 that he would impose a price freeze for energy if Labour won the 2015 general election.