Miliband calls for ‘root-and-branch reform’ of energy regulation

Energy regulation requires a “root-and-branch reform” following a crisis to which the UK has been more exposed than other European countries, Ed Miliband has said.

Rounding off a House of Commons debate on Tuesday (11 January) on Labour’s motion to cut VAT on household energy bills, which was subsequently defeated by a margin of 319 to 229, the shadow climate change and net zero secretary called for an inquiry into energy regulation.

He said: “There needs to be a proper inquiry into how we ended up with the disastrous regulation system under this government and a root-and-branch reform of that system so that we never again have a situation where so many companies go bust and it is the British people who are left to pay the price, with such a dramatic impact on their bills.”

Miliband accused the government of being “paralysed” in the face of the cost-of-living crisis, which has been sparked by April’s looming hike in the level of the energy price cap.

“The culpability lies directly at the government’s door: they were warned and they did not act.”

There is “no question” that there is a global dimension to the current crisis with “many countries” facing strains due to spiralling wholesale energy prices, but the UK had been hit particularly hard due to regulatory failures, the ex-Labour leader said: “No other country has seen 28 energy companies go under. They are failures that we already know will cost consumers £100 on bills. No other major European country has gas storage equivalent to just 2% of its energy demand.

“No other country in western Europe performs as badly on fuel poverty and insulation as the UK. These undeniable facts are symptoms of government failure over the past decade. There were failures of regulation. They were warned repeatedly about the regulation of the sector and did not act – in fact they loosened regulations.”

He also accused the government of going “too slowly” on the transition to a decarbonised energy system, resulting in “continued dependence on fossil fuels that makes us more vulnerable and less resilient.”

Opening the debate, shadow chancellor of the exchequer Rachel Reeves had responded to the prime minister’s recent comments that cutting VAT on energy bills is a “blunt instrument” because savings are not targeted on households most in need.

Poorer households would feel a bigger benefit of a VAT cut on their bills because they spend a bigger share of their household budget on energy, she said: “If someone is a pensioner, they spend twice as much on energy and will be hit even harder by the rising energy price cap.”

Simon Clarke, chief secretary to the Treasury defended the measures that the government had taken to relieve pressure on household finances, saying business and energy secretary Kwasi Kwarteng is continuing to have meetings with suppliers to develop solutions to the crisis.