Media Release

Theresa May’s energy price cap could have “unfair consequences”

Responding to the Prime Minister’s comments about an energy price cap, the director of the Social Market Foundation James Kirkup said:

“Theresa May is absolutely right to want to make markets fair, but there are risks that capping prices this way could have unfair consequences.

“Energy companies will inevitably recoup the costs of this cap elsewhere, which may mean higher prices for people who have shopped around and switched tariff to get themselves a better deal.

“That sort of engagement with the market should be rewarded to encourage others, not penalised.

“SMF research suggests that promising loyal customers bonuses or other financial protection actually makes them less likely to shop around and use their consumer power to put pressure on suppliers to cut prices. Part of the reason for unfairly high prices is a lack of customer engagement in the market, and a price cap could actually lead to less engagement.

“We think there could be more effective ways to intervene in the market, for instance by automatically putting the business of long-term SVT customers up for grabs in a reverse auction where companies compete to offer the lowest price.”


Notes to editors

SMF director James Kirkup is available for comment and interviews. Please contact David Mills, SMF communications director on / 020 7222 7060

The SMF report, Bargaining on a low income, which examines how low income customers can get a better deal in consumer market such as energy, can be found here and the press release for the report can be read here.

The SMF is currently working on a research project examining the concept of loyalty across a range of consumer markets, sponsored by Scottish Power. This will be published in the summer.


About the SMF

The Social Market Foundation (SMF) is a non-partisan think tank. We believe that fair markets, complemented by open public services, increase prosperity and help people to live well. We conduct research and run events looking at a wide range of economic and social policy areas, focusing on economic prosperity, public services and consumer markets. The SMF is resolutely independent, and the range of backgrounds and opinions among our staff, trustees and advisory board reflects this.



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