Goldilocks and the Three Bears

Goldilocks and the Three Bears works as a story. Goldilocks and the Thousand Bears wouldn’t work and neither would Goldilocks and the Bear. This is why, counter-intuitively, the proposed legislation for each energy supplier to have a single domestic tariff might be a good thing by making it easier to choose which supplier is just right.

With winter approaching, October seems to be the time when politicians’ thoughts turn to the price of energy. The Prime Minister, to some surprise (not least from ministers in the relevant department), announced in Parliament that:

We have encouraged people to switch, which is one of the best ways to get energy bills down. I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers – something that Labour did not do in 13 years, even though the leader of the Labour party could have done it because he had the job.

This looks like a strange policy from a Party and government which notionally is or ought to be in favour of competition. A sign of how strange can be seen in the unlikely support it has received from the influential and controversial “tax expert” Richard Murphy, here. However, it actually is somewhat less surprising than it sounds because it is implicit in Ofgem’s proposal last year for a budget tariff with a low fixed charge and single usage tariff for each supplier.

What the proposal isn’t, contrary to the Murphys of this world, is a retreat from the idea of choice and competition as a good thing.

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