Labour’s energy bill freeze ‘will jeopardize investment’ says Energy Minister Michael Fallon

Energy Minister Michael Fallon believes Ed Miliband's price plan would put off potential UK energy investors (Susannah Ireland)

The Government is contemplating scaling back its environmental commitments to help stem rapid price rises in gas and electricity, the Energy Minister Michael Fallon disclosed on Monday night.

Speaking at the Independent fringe meeting, he delivered a withering assessment of Ed Miliband’s promise at last week’s Labour conference to impose a 20-month post-election freeze on the cost of energy.

Mr Fallon warned the move would deter major energy companies from crucial investment in Britain.

But he acknowledged work was underway in Whitehall to put a brake on the cost of gas and electricity and accepted there were questions over the dominance of the market by the “Big Six” energy firms.

He said ministers were examining whether to reduce some taxes faced by companies – for instance in commitments to renewable energy and energy efficiency – so that they could pass the savings to consumers.

“Energy prices are higher than I would like them to be. We need to have downward pressure by making the energy market more competitive,” Mr Fallon told the meeting, which was sponsored by RSA Insurance.

“We constantly keep an eye on the pressures on hard-working families. We are looking again at some of these energy taxes right now to see whether there’s a case for ensuring energy bills don’t increase out of line.”

Mr Fallon said the Government was already taking action to open up the market and to make it easier for customers to switch suppliers. He also pointed out that energy companies were simplifying their tariffs.

“We don’t have a fully competitive market in energy and we need to have one,” he said. “When Labour started in 1997 they were 14 energy retailers. We have ended up with six – they created the Big Six.”

He warned that Labour’s threat of price freezes was putting future investment in the UK in peril.

“[Energy companies] have global investment mandates –they can invest in Kazakhstan, Brazil, the United Kingdom. The great danger from what Miliband has done is [that Labour] has made the United Kingdom a riskier investment location for these companies.”

Mr Fallon told the meeting he had settled into an efficient working relationship with his boss, the Liberal Democrat Business Secretary Vince Cable.

But he made clear their political instincts were fundamentally at odds, accusing Mr Cable of wanting to “meddle and intervene”.

Citing the example of Mr Cable’s review of zero-hours contracts, Mr Fallon said: “It’s a key part of our automotive industry, it’s a key part of our retail sector – these are agreements that are freely entered into.”

Asked whether he could stomach another five years with Mr Cable and the Lib Dems, he replied: “I really hope not…too many of them are of the Left.”

Mr Fallon attacked the Liberal Democrats for “ratting on us” by dropping their support for a review of Westminster boundaries to reduce their inherent bias against the Tories.

The Energy minister dismissed the surge in electoral support for the UK Independence Party as a “protest vote” and emphatically ruled out a Tory pact with Nigel Farage’s troops.