Lord Mandelson joins Miliband energy plan critics‏

Former business secretary Lord Mandelson has criticised Ed Miliband’s energy price freeze plan, announced at the Labour conference on Tuesday.

Mandelson claimed that the Labour leader’s demand for a resetting of the energy market could create the impression that the party’s industrial policy was going backwards.

Mandelson said: “At the business department I tried to move on from the conventional choice in industrial policy between state control and laissez-faire. The industrial activism I developed showed that intervention in the economy – government doing some of the pump priming of important markets, sectors and technologies – was a sensible approach.“

An incoming Labour government in 2015 would impose a price freeze on energy suppliers for at least 20 months. Miliband also promised to “break-up” the big six energy companies, separating their wholesale power producing arms from their retail supply businesses.

More than 99% of British households’ energy is supplied by six companies: Centrica (which owns British Gas), SSE (which used to be called Scottish and Southern Energy), Scottish Power, EDF Energy (which is owned by the French government), RWE npower (German), and E.ON (German).

The move could prove popular with the public as the Organisation for Economic Co-operation and Development (OCDE) reported that UK energy prices were 2.2% higher than last year and polls show that the majority of voters feel “energy companies treat them with contempt”.

However, Ed Miliband’s surprise announcement has been heavily criticised by the opposition and energy companies.

Centrica, one of the largest UK suppliers, immediately threatened to leave the UK market if the reforms are implemented. The company argued that it just makes £49 profit on an average £1,188 gas electricity bill – a 4% profit margin. The owner of British Gas increased its operating profits by 14% in 2012 to £2.74bn.

Shares in UK utilities dropped yesterday following the announcement, implying that Centrica and SSE’s share prices could move in line with Labour’s poll lead ahead of the 2015 election.

Caroline Flint, the shadow energy secretary, said Mandelson was wrong to criticise the plans and hinted at the peer’s financial interests in the energy market: “I know Lord Mandelson has financial interests in energy companies. I don’t know if he’s just speaking to them, but I’m speaking up for consumers and businesses who are going to be helped by Labour’s policies. Lord Mandelson may not have to worry about his energy bills, but a lot of consumers and businesses do.”

Ludovic Caritey