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Labour to over-rule CMA on Big 6

general election energyWith general election fever getting into its stride, the landscape upon which the political battlefield will be based is being drawn up. Unsurprisingly energy features highly on the key strategic attacks on the Labour party agenda.

Back in 2013 Ed Miliband promised a price freeze (subsequently modified to a cap when prices fell), more recently he’s committed to the abolishment of Ofgem and promised to act tough on delivering on the outcomes of the Competition and Markets Authority investigation into the energy market.

Now though, Miliband and Shadow Secretary of State for Energy and Climate Change Caroline Flint have change tack, dramatically.

Rather than following the CMA’s findings and recommendations for the energy market, indeed rather than even waiting for them, Labour have committed themselves to over-ruling the CMA and acting regardless on their long held goal of “breaking up the Big 6 energy suppliers”.

The naked exposure of their policy intent follows the CMA’s reporting of their initial findings into the energy market which gave an unexpected clean bill of health to the vertically integrated business models of the Big 6 energy suppliers. Despite many suspicions to the contrary the CMA found no evidence of the Big 6’s very existence impacting competition, and although the investigation continues, the most marked criticism for the problems in the market were laid at the regulator, Ofgem’s door, not the energy suppliers.

Miliband had that one right, the industry does need a better regulator, but such a policy doesn’t win votes, and so a further attack on the Big 6 was called for.

Their sledgehammer policy was previewed by erstwhile energy supplier bashing lieutenant Flint in an interview with Utility Week. Apparently unaware of the irony Flint said:

“There are certain areas of policy we are absolutely committed to [breaking up the Big 6]”

When pressed as to whether this meant over-ruling the CMA:

“I’m still committed to doing something in this area.”

And rather dismayingly she added, without having knowledge of the final report, and despite her parties policies being in total contradiction to the initial findings, the CMA report would be “complementary” to Labour’s energy policy (despite it not being) and that even though this wasn’t looking likely to be the case that she was “sure there is a way we can dovetail these ideas together.”

In short, forget the investigation. We’re doing it anyway.

Secretary of State for Energy & Climate Change Ed Davey recognised the danger saying:

“Labour, if they get into power, may try to ignore the CMA but they won’t be able to.

“Having strongly supported an independent CMA which has got real teeth, I think it’s going to be a very significant moment when they report on the energy market. I’ve made it absolutely clear that there should be no holds barred to their investigation and I have faith in them being able to do the job that they are empowered to do.

“I’m not going to second guess their recommendations; but whatever they turn out to be they will be based on evidence and analysis”

Davey however admitted the potential outcomes were still varied despite the CMA’s initial findings:

“We should support their proposals and it’s going to be a very significant moment. It will be a solution that promotes competition. The solution maybe even be to break up some of the incumbent companies who’ve held on to their customer base from when they were previously monopolies.”

“[Or] the CMA may decide the best remedy could be banning variable tariffs, or breaking up the big energy companies, or it could be something else. I don’t know but I know we must be supportive.”

Who said politicians and parties were all the same?