SSE price-freeze: Politicians rush to claim credit

SSE's price freeze is good news for consumers, says Energy Secretary Ed Davey

The government and the Labour party have both claimed credit for a price freeze announced by UK energy supplier SSE.

Prime Minister David Cameron and Labour leader Ed Miliband said the freeze was a result of their policies.

SSE domestic gas and electricity prices will be frozen at their current levels until 2016, it said on Wednesday.

The move comes after many of the "big six" UK energy firms raised their tariffs at the end of last year.

Mr Cameron said a cut in green taxes on energy companies had been passed on to consumers.

"What we have done is reduce the costs of energy charges so companies are able to cut their bills," the prime minister told Parliament. "This part of our long-term economic plan is as successful as all the other parts."

Last year, the government cut the green "Eco scheme" levy which was used to pay to insulate low income households.

Mr Miliband said Labour calls for a price freeze on energy bills had previously been rebuffed by the government.

"Week after week, he [Mr Cameron] denounced Labour's call for an energy price freeze to help families and businesses, said Mr Miliband. "What is clear is that his argument against a freeze has been totally demolished today."

Start Quote

The sacrifice for owners in this apparent price war seems to be zilch: an initiative billed as being great for consumers turns out - in the round - to be benign (or better) for shareholders.”

End Quote

The BBC's industry correspondent, John Moylan, said the freeze had echoes of Labour's flagship energy policy, which promises to keep prices at the same level for 20 months after the next election if Labour are elected.

The proposal has been heavily criticised by many in the industry.

Job losses

SSE, which has 9.5 million customer accounts, said the freeze would lower profits, but it would "streamline" its business to cover the shortfall.

The company, whose companies include Swalec, announced it would cut 500 jobs and shelve four planned offshore wind farm developments.

As a result, SSE hopes to make annual operational cost savings of £100m.

Start Quote

Clearly, it [SSE] is responding to public, regulatory and political pressure to bear down on prices”

End Quote

SSE chief executive Alistair Phillips-Davies said "delivering the lowest possible energy prices" to customers was "central to everything we do".

"One of biggest concerns they [customers] have is that energy prices may well be going up again," Mr Phillips-Davies told the BBC. "The most important thing for our customers over the next couple of years is freezing prices."

Green taxes

The boss of the UK's second biggest supplier also called on the government to take energy taxes out of bills and retrieve them through general taxation instead.

The move would make sure tax "is paid for fairly in a way that is proportionate to people's income and protects the vulnerable", he added.

The company has written to the leaders of UK political parties on the subject of green levies, he said.

"We're looking to do whatever we can to bring down prices for consumers," Mr Phillips-Davies said.

SSE, based in Perth, said it would legally separate its retail and wholesale businesses by March 2015, in order to "improve transparency".

"I hope that people will start to recognise SSE is not part of the problem but part of the solution," Mr Phillips-Davies said.

Energy Secretary Ed Davey said: "This shows that the big six are starting to realise they need to take big action if they want to keep their customers, who have been switching suppliers in record numbers.

"SSE have shown today that the big energy firms are able to cut their costs and profits, and be confident about their ability to weather potential uncertainty in the wholesale markets, to give bill payers long-term price security.

"Customers of the others will be asking whether their suppliers will do the same."

Regulators are this week expected to give their verdict on whether there should be a full investigation into the competitive practices of energy companies.

Mr Phillips-Davies said that SSE had been working on the price freeze for some time, and that changes to its business were not linked to the upcoming verdict.

Clare Francis, editor-in-chief at Moneysupermarket, said that other energy suppliers have price-freeze tariffs that could help consumers save money.

"The political spotlight is on the energy industry at the moment and it would not surprise me if we see other firms act to try and quash feelings that this is a market that is broken and not working in the customers' interests," she said.

How much have energy bills ended up rising?

Supplier 2013 average bill cost 2014 average bill cost Average price increase

Source: Uswitch based on 3,200kwh of electricity consumption, and 13,500 kwh of gas. Dual fuel standard tariffs. Payment by cash or cheque on quarterly basis.

E.On

£1,226

£1,240

1.1%

EDF

£1,190

£1,237

3.9%

SSE

£1,211

£1,259

4.0%

Scottish Power

£1,230

£1,284

4.4%

British Gas

£1,191

£1,265

6.2%

Npower

£1,220

£1,299

6.5%

Average

£1,212

£1,264

4.3%

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    BANK POWERS 11:27:

    The Bank of England's Financial Policy Committee says it has deliberated over the Treasury's offer of more powers to manage risks from the housing market. It says it should receive the ability to cap how big a mortgage Britons can receive relative to their income and the value of their home.

     
  2.  
    OIL SLIDES 11:13:
    North Sea Brent Crude

    As the chart above shows, oil prices have made a sharp move lower today. The benchmark contract for North Sea Brent crude is down 2.3% so far this morning. On Wednesday Saudi Arabia recently cut its official selling price to Asian customers, which has rattled traders. From a high in mid-June of $115 a barrel Brent crude has fallen 20% to under $92 per barrel. Let's hope lower petrol prices are on the way.

     
  3.  
    Via Twitter Brian Milligan Personal Finance Reporter, BBC News

    tweets: "Bank of England's new powers will hit speculative landlords"

     
  4.  
    ROLLS-ROYCE 10:45:
    Rolls Royce chief executive Torsten Muller-Otvos

    So how much for an entry level Rolls-Royce? Well, that would be the Ghost model, says the chief executive of Rolls-Royce, Torsten Muller-Otvos on News Channel. It will set you back around £200,000, he says. And remember that's just your basic model, pretty soon you'll be wanting to upgrade...

     
  5.  
    WONGA 10:35: Via Email Pat McFadden MP, member of the House of Commons Treasury Committee.

    emails: "We cannot have the usual routine response to these findings, which is that the company involved claims it is all in the past, that everything has changed and urges everyone to move on... I believe Wonga should be called back before the House of Commons Treasury Committee to be questioned."

     
  6.  
    Via Twitter Rory Cellan-Jones Technology correspondent

    tweets: "Unusual alliance - Nat Rothschild & Ken Livingstone unite against Uber, backing community ride-sharing app Maaxi"

     
  7.  
    ROCKET CRASHES 10:07:
    Rocket internet

    Oh dear. Shares in Rocket Internet have fallen up to 14% on their debut on the Frankfurt Stock Exchange. The Berlin-based internet firm owns a host of online businesses, including food delivery, taxi hailing and a fashion retailer. The share sale raised €1.4bn.

     
  8.  
    OFCOM BOSS LEAVES 09:56:
    Ed Richards, Ofcom chief executive

    Ed Richards is standing down as chief executive of Ofcom, the regulator of television, radio and internet services. Patricia Hodgson, Ofcom chairman, said: "Under his leadership, Ofcom has helped to deliver superfast broadband, 4G, lower prices, innovation, competition, and sustainable public service broadcasting in the UK."

     
  9.  
    WONGA 09:52:

    The Financial Conduct Authority is sending a message to the payday loan industry. Clive Adamson, director of supervision, said: "We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice - they need to lend affordably and responsibly."

     
  10.  
    Via Twitter Adam Parsons Business Correspondent

    tweets: "FCA says did deal with Wonga requiring company "to make significant changes to its business immediately....should put industry on notice""

     
  11.  
    Via Twitter Neil Hume, Financial Times Commodities Editor

    tweets: "It's turning into a rout. Brent down 1.4% to $92.86 this morning in the wake of the latest Saudi OSPs [oil sales price] "

     
  12.  
    WONGA 09:21:

    Payday lenders like Wonga were criticised last year by the Office of Fair Trading for the number of times debt was rolled over, extending the amount of time a borrower has to repay, but also increasing the overall cost of the loan. Earlier this week, Wonga said 2013 profits fell by 53% to £39.7m due to "remediation costs" - money it had to pay back to customers as a result of its own mistakes.

     
  13.  
    WONGA 09:09: Breaking News
    Wonga logo

    Wonga will write off the debts of 330,000 customers who are in arrears of more than a month. Another group of 45,000 customers who have been in the red for less time can pay their debt without interest and charges. Wonga is doing this following "discussions" with City watchdog the FCA.

     
  14.  
    DOMINO'S PIZZA 08:58:
    pizza

    Shares in Domino's Pizza are up 2.2% after the fast food firm said third-quarter sales were up 12.9%. The company says it has been helped by a shift to online sales.

     
  15.  
    CONSERVATIVE CONFERENCE 08:37:
    Prime Minister David Cameron

    The Daily Telegraph is swooning over Prime Minister Cameron's conference speech. "Electrifying," is how it describes the PM's pledge to raise the 40p tax threshold. The Telegraph doesn't quite claim credit for the move, but does remind us that it has been campaigning for such a reduction.

     
  16.  
    MARKET UPDATE 08:27:

    The FTSE 100 is down 0.24% in early trading following a 1.4% loss for the Dow Jones in on Wednesday.

     
  17.  
    PARIS MOTOR SHOW 08:11: BBC Radio 4
    Discovery Sport

    Jaguar Land Rover has plenty to boast about at the Paris Motor Show. It has doubled sales volume and employment in five years. On Today Andy Goss, global sales director says that 80% of its output is exported. But to compete it has to build plants abroad, he says. A new plant opens in China at the end of this year and one in Brazil around a year later.

     
  18.  
    VIRGIN MONEY FLOAT 08:03: Via Email Kamal Ahmed BBC Business editor

    emails: "Virgin Money's announcement of its intention to sell a stake on the London stock exchange brings to an end another chapter in the sorry story of Northern Rock. The functioning bits of the bank, which spectacularly collapsed in 2007 and was bailed out in February 2008 with £1.4bn of tax payers' money, were bought by Sir Richard Branson and US investor WL Ross for £747m in 2011."

     
  19.  
    MARKET REPORT 07:50:
    Share price board, Tokyo

    It has been a shaky session for shares in Tokyo, the Nikkei 225 index closed 2.6% lower at 15,661. The Hang Seng in Hong Kong, which has fallen more than 9% since hitting a six-month peak in September amid pro-democracy protests, is closed for a public holiday.

     
  20.  
    Via Twitter BBC Radio 4

    tweets: "'Downgrade could follow Brexit' says Standard and Poor's Mortiz Kraemer @EthicalMan"

     
  21.  
    HEADLINES
     
  22.  
    LORD HILL 07:33: BBC Radio 4
    Lord Hill

    "He showed no grasp of the issues," is the verdict of Phillippe Lamberts, co-chair of the Greens in the EU parliament, on Lord Hill's appearance before European members of parliament on Wednesday. "Behind his charm there was apparently little knowledge of the subject matter at hand," Mr Lamberts said on Today.

     
  23.  
    VIRGIN MONEY FLOAT 07:26:

    So, will ordinary folk be able to buy shares in the Virgin Money offering? Not until they start trading. The offer is open to "certain institutional investors". Although they are giving staff £1,000 of shares apiece.

     
  24.  
    VIRGIN MONEY FLOAT 07:11:

    Virgin Money has announced details of its share sale. The firm hopes to raise £150m from the sale of about 25% of the bank, it said. If the sale is successful the Treasury will receive £50m, which was part of the deal when Virgin Money took over assets from Northern Rock.

     
  25.  
    ECB MEETING 06:57: BBC Radio 4
    Eurozone sign

    The European Central Bank (ECB) hosts its monthly meeting in Naples today, amid worries that the eurozone economy is deteriorating. "The ECB can buy time for governments to act... but it cannot generate lasting growth," says Moritz Kraemer from Standard & Poor's on Today. He says Europe needs to reduce the debt load of households, firms and governments.

     
  26.  
    PIMCO EXODUS 06:48: BBC Radio 4

    Investors have taken £14.5bn out of the investment firm Pimco since its founder Bill Gross resigned last week. Andrew Balls, chief global investment office at Pimco, says "it's calmed down very quickly though". The departure was not a huge surprise, he reckons. Mr Balls reminds listeners to Today that Mr Gross was 70 "and wouldn't be there [Pimco] for ever". Ouch.

     
  27.  
    PARIS MOTOR SHOW 06:40: BBC World News
    Rolls Royce chief executive, Torsten Muller-Otvos

    "We are on the roll ja," says the German chief executive of Rolls Royce Motor Cars, Torsten Muller-Otvos on World Business Report. He expects the company to have another record year. He is standing in front of a limited edition Rolls-Royce Phantom, only 20 were made and, sorry readers, they are all sold out.

     
  28.  
    SHARING ECONOMY 06:31: Radio 5 live

    What is the sharing economy? "The sharing economy defines the assets you own and skills you have" says Debbie Wosskow, chief executive of Love Home Swap on 5 live. (Are we clear now?) Customers need protection, but regulation needs to keep up with this emerging market, she says. She's writing a review into the sharing economy.

     
  29.  
    CONSERVATIVE CONFERENCE 06:17: Radio 5 live

    Lord Digby Jones, the crossbench peer and businessman is on 5 live after his appearance at the Conservative Party conference. He is worried people think money grows on trees, rather than coming from business, but also says business should mend its image: "I don't want chief executives paying themselves big bonuses [right now]. They may deserve it, but it sets a lousy example."

     
  30.  
    ARGENTINA 06:13: Radio 5 live
    President Cristina Fernandez

    The boss of Argentina's central bank has resigned. Juan Carlos Fabrega had been calling the government to tackle inflation and rein in spending. That created conflict with the nation's economy minister. The BBC's South American Business Reporter Katy Watson says the resignation doesn't make President Cristina Fernandez de Kirchner look good either.

     
  31.  
    PARIS MOTOR SHOW 06:07: Radio 5 live

    Jurgen Stackman, chairman of carmaker Seat is on Radio 5 live. Ten years ago electric vehicles were seen as the future, so what went wrong? Industry watchers were very optimistic about the speed of people picking them up, he says. Electric cars still have mileage and range limitations and families with one car don't want to rely on an electric car, he adds.

     
  32.  
    US SHARES SLIDE 06:00: BBC World News
    New York Stock Exchange

    There were sharp losses for US shares overnight. On World Business Report, Michael Hewson, chief analyst at CMC Markets reminds us that the US market has had a good run recently. But there is not much to be positive about at the moment, he says. The recent economic data from China and Japan has not been great. Traders are also preparing for higher interest rates in the US, Mr Hewson says.

     
  33.  
    06:00: Howard Mustoe Business reporter

    Good morning. You can get in touch via email bizlivepage@bbc.co.uk and on twitter @BBCBusiness

     
  34.  
    06:00: Ben Morris Business Reporter

    There were sharp losses for US shares overnight, so it will be interesting to see how Europe responds to that later. Plus we'll have reports from the Paris Motor Show. It should be a fun morning, so stay with us.

     

Features

From BBC Capital

Programmes

  • European Union's anti-terrorism chief Gilles de KerchoveHARDtalk Watch

    Anti-terrorism chief Gilles de Kerchove on the threat from returning Islamic State fighters

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.