It’s really rich that Osborne has tweeted: “Vital this (drop in the oil price) is passed on to families at petrol pumps, through utility bills and air fares”. He’s spent the last 5 years lambasting Labour in support of the Tory free market mantra that the State should get out of the way and leave it all to the markets. Now rather pathetically he’s pleading with market operators to show a dose of fair play rather than exploit a windfall for their own interests which is the natural instinct of capitalism. It takes some gall for Osborne to try to jump on the bandwagon at the last minute, four months before the election, when he’s been aggressively promoting ruthless self-interest throughout his chancellorship. But it certainly shows how desperate the government have become over the cost of living issue and how readily their poll lead on economic matters may slip away from them especially given the increasing signs that Osborne’s ‘recovery’ is fading (with a likely growth of only 0.5% in the 4th quarter of last year).
Much good however will Osborne’s appeal for fair shares do him. Petrol prices at the pumps have been cut by less than a quarter of the 60% fall in oil prices. Utility prices have come down even less. Those who operate in the market do so to maximize their own gains, and expecting them now to pull in their horns to appease Tory electoral prospects is not in their nature. Osborne is hoist on his own petard.
Ironically he has also been beset within the Coalition itself for his neglect of pure market principles. Ed Davey, the LibDem energy secretary, keen to burnish his reputation as a right-wing leadership candidate, ticked him off for criticism of energy companies by politicians which would “damage markets, investment and the economy”. The rather lightweight Davey opined that competition was the key to driving down energy prices and that the Competition and Markets Authority regulator was already holding an inquiry to tackle any remaining problems in the energy market. What he neglected to say was that there have already been 18 investigations into the UK energy market, none of which have had any noticeable impact.
Clearly the government is still in disarray about how to respond to Labour’s demand in the Commons debate today demanding fast-track legislation to give the energy regulator Ofgem powers to cut energy bills when wholesale costs fall. Whether that is sufficient to achieve proper regulation of a private energy market without taking one of more of the Big Six into public ownership is another question. But it does show the government is on the run over energy costs, and appeals to decency and fair play will only get Osborne blown a raspberry.