Ed Milliband’s big gamble with energy prices and populism

At the Labour Party conference in Brighton this week leader Ed Milliband had to come up with something that would generate a big headline and silence the persistent questions about his leadership abilities. He managed the former, but seems to have pushed the latter under the rug; for now.

In his set piece speech on Tuesday Ed Milliand announced that a Labour government would freeze gas and electric prices for domestic and industrial users for twenty months, he also pledged to split up the big energy companies and subject them to tougher regulation.

This was the big headline in a speech he used to set out how ‘Britain can do better’ under a Labour government. He promised action on what he called the ‘cost of living crisis’. In an attack on the government’s handling of the economy he said, ‘David Cameron talks about a global race. But what he thinks is the only way Britain can win is for you to lose.’

This, he said, had translated into ‘the lowest wages, the worst terms and conditions and the fewest rights at work; a race to the bottom,’ adding that ‘the only way we can win is in a race to the top.’

This was an upbeat and, considering the torrid time not so red Ed has had over the summer, surprisingly confident speech. He looked relaxed and peppered his text with promises to defend the NHS and scrap the ‘bedroom tax’, there were also a number of pointed references to the coalition’s approach to basic economic fairness, the most quoted of which was ‘they used to say a rising tide lifts all boats. Now the rising tide just lifts the yachts.’

All good knock about stuff; but once it had passed his lips the only thing anyone wanted to talk about was that plan to freeze energy prices.

The press, well the right wing press which is pretty much all of it these days, wasn’t madly keen on the idea. To the Daily Mail it was an exercise in ‘schoolboy Marxism’, the Sun howled ‘Red Ed knocks £2billion off shares’; the prospect of our boy Ed being invited round to have a ride on Rupert Murdoch’s horse any time soon seems fairly remote.

Perhaps more worryingly for him Lord Mandelson, the chief architect of the New Labour project decided to throw a few stones at his party leader. He said the plan risked creating a situation where ‘perceptions of the Labour Party are in danger of being dragged backwards’. Yikes if Labour’s own Lord Voldemort thinks it’s a bad idea the little man who is, nominally, running the party ought to be shivering in his shoes and thinking about changing his mind pronto.

To his credit Ed Milliband was unrepentant saying it was his job to ‘stand up for the public interest’ and comparing the opposition from the energy companies to the behaviour of the banks who ‘used to threaten and conjure up scare stories’ whenever they couldn’t get their own way.

The public certainly seem to have responded positively to the policy, a YouGov poll gives Labour a nine point lead over the Tories and Ed Milliband’s personal approval rating has risen from 21% to 26%. It’s all good then, the energy companies aren’t well loved and bashing them is a sure fire way to make friends; what could possibly go wrong?

Quite a lot unfortunately, for a start by announcing such a radical policy so far in advance of the next election there is a risk he has robbed it of much of its potency. However popular freezing energy prices and breaking up the big energy companies may be now there is no guarantee the public will still be talking about it in 2015.

There is also the small matter of governments seldom making a good job of trying to control prices. In fact the mere suggestion that a prospective Labour one would give it a go might be all the prompting the energy companies need to hike prices as much as they can and cut investment to the bone all in the name of protecting the interests of their shareholders.

As for breaking up the big energy companies that will make little difference if they continue to operate in the same rapacious way. A more radical, perhaps too radical for Labour, plan would be to force them to become co-operatives owned by their customers rather than city shareholders and obliged to operate to high ethical standards including making a genuine commitment to moving towards renewable energy.

The populism of which this policy reeks may well prove to be illusory, Red Ed is riding high now but consider the case of Nick Clegg, for a short while back in 2010 he was the most popular politician ever, based solely on the fact that he could stand upright and speak at the same time. Fast forward a few months and a mixture of the compromises that are an inevitable part of being in government and his own poor judgement had made him less popular than typhoid, the same thing could happen to Ed Milliband.

Once the glow of public popularity has faded the old questions about Ed Milliband’s leadership abilities and his party’s lack of policies will still be there. As will the feeling that nothing he has said this week has provided an answer.