Ed Miliband, leader of the UK’s opposition Labour Party, pledged this week to freeze British energy prices if elected in 2015. It’s one of the more obvious cases of a political party going for the grand pander rather than opting for a serious, well-thought out policy. The decision to intervene in the country’s energy markets—even on behalf of households struggling to pay heating bills—is a ham-fisted solution to the problem. The FT reports:
Michael Fallon, energy minister, said the “ill-thought out and irresponsible” measures would make it harder to raise the £110bn of capital required in the next 10 years to modernise energy infrastructure.Labour insisted energy companies could easily absorb the freeze while continuing to invest if they took lower profits or paid out smaller dividends.
Energy markets are already showing their disdain for the plan: shares in British energy companies dropped sharply on the news. Even the Ed Miliband from 2009 would find plenty to disparage in this plan, as he declared four years ago that “there is no low-cost energy future.”A better approach to bringing costs down might be moving ahead with exploratory shale gas well drilling. While that wouldn’t do the trick of differentiating Labour from the Tories (Cameron himself has made public pleas for fracking), it would give the UK a new supply of natural gas without distorting energy markets.[Ed Miliband image courtesy of The CBI]