Price cap will be temporary, pledges minister

Greg Clark tells MPs intervention will be time limited

Greg Clark has assured MPs that there are no plans for the government’s mooted energy price cap to be a permanent measure.

Under cross examination by MPs on the BEIS (business, energy and industrial strategy) select committee, which began a pre-legislative inquiry into the recently published draft price cap bill today, the business and energy secretary said that he did not expect the cap to be a ‘permanent feature of the landscape’

“Our experience is that this should be a time limited cap,” he said, adding that the roll out of smart meters should redress the £1.4bn consumer detriment identified by the CMA in its energy market report last year. “I hope and expect that the level of detriment will be eradicated and you will have increasing levels of competition as smart meters are upgraded to the next level.”

Clark also told the committee that he wanted the final legislation introduced to the House of Commons ‘as soon as possible’.

“I hope bill will progress quickly,” the business secretary said, adding that he hoped to identify an ‘early opportunity’ to introduce the bill into Parliament once it has undergone the pre-legislative scrutiny process.

“To have a bill that has undergone pre-legislative scrutiny puts it in good shape to enjoy early passage through the House.”

But he said that he could not guarantee that the price cap would be in force by next year because the bill did not yet have a slot in the legislative timetable.

Clark added that there was a ‘growing recognition’ by energy companies that a price cap would be beneficial.

“This old model in which we can rely on taking advantage of a group of people is not consistent with good business practice. A majority of consumers don’t go through the process of looking for different deals and it’s perfectly reasonable not to require customers to do that simply to avoid overcharging.”

Jeremey Pocklington, director general for energy and security at BEIS, told the committee that the department was ‘very actively working’ with the Department of Work and Pensions and Ofgem on better data matching to enable the government to identify households which would benefit from an extension of the regulator’s proposed cap for vulnerable customers.

He said: “For that further extension we need to have improved data matching.”

Under Ofgem’s current proposals the safeguarding cap is limited to households who are eligible for the warm homes discount.