When a ‘Market’ is not a ‘Market’

Freezing Energy Prices

There has been much furore this week from certain sections of industry and the press following Ed Miliband’s announcement that a future Labour government would freeze energy prices for eighteen months.

Opponents have suggested that this move is ‘Red’ Ed’s attempt to interfere in the market and with market forces. But that’s a load of codswallop.

Instinctively, as a business owner and the chief executive of a private sector lobbying organisation, I am against the notion of imposed price caps, or of politicians attempting to skewer the market place with unnecessary interventions.

I would not be best pleased if Mr Miliband was proposing that business organisations had to set the same level of subscription, and that this price would be frozen, for example.

However, the difference between the products I sell, and that of the owners of utility companies, is that if you choose not to buy from me, then you don’t have to.

In the arena of utilities we have allowed a cartel of sorts to be established. They have different brands, different management structures, different bank accounts, and on occasion price differential too. But they are nowhere near as diverse or competitive enough, because they don’t have to be.

I don’t have a choice as to whether I heat my home, cook my food, use my laptop to write my always ‘on the deadline’ blog from my armchair.

We were promised by a Tory government in the eighties that the sale of our nationalised assets to ‘Sid’ would lead to more robust competition – not only on energy prices, but in the water industry and telecoms as well. That may have been the intention, but it has never materialised, and we have been royally ripped off by the big energy companies ever since.

Miliband’s proposal isn’t anti competitive; it won’t lead to a blackout; it’s certainly not Socialist. But it is long overdue.