Theresa May has been urged to hold her nerve and stick with her campaign pledge to cap energy prices for millions of households, after it emerged cabinet ministers have told her to scrap the flagship policy.
A leading Conservative MP said that the cap was one of the few genuinely popular policies with voters in the election, and called on the prime minister to ignore attempts to scrap the measure.
John Penrose, one of the staunchest and most outspoken advocates of a price cap in the last few months, said: “Whatever the problems and criticisms levelled at the Conservative party’s election campaign, we got one thing absolutely right: the energy price cap.”
Campaigners also urged the government to stick to its guns and extend protections beyond the 4m households who already have a ceiling on their energy bills. Labour said it would be a “stunning U-turn” if the Tories dropped the cap.
May promised during the election to end the “injustice” of millions of people paying over the odds on energy, saying she would put “a cap on unfair energy price rises” if re-elected.
However, the chancellor, Philip Hammond, and the communities secretary, Sajid Javid, have reportedly told the prime minister to use the election result as a chance to drop the plan. “We have to get back to our free market roots,” a source told the Sun.
But a Tory source told the Guardian that some form of control on prices had “widespread support in the party”.
Energy companies have lobbied fiercely against an absolute cap on bills, saying it would kill competition.
The industry suggested ministers settle on a compromise deal that sees 6m households have their bills capped, rather than the 17m families the Tories promised to protect during the election campaign.
Penrose wrote in the Guardian: “A month ago the argument was won, but over the last couple of days the big six have been stirring things up and are still trying to stitch up a deal to get the whole thing dropped. The very fact that they don’t like it, while their best challengers and competitors do, should tell us we’re on the right track.”
The former minister favours a relative price cap, whereby an energy supplier’s most expensive tariff is pegged at a certain percentage above the cheapest one.
“Energy firms could still have as many tariffs as they wanted, so there’d be plenty of customer choice and competition would be red hot,” he said.
If the government did opt for a relative cap it would mark a distinct change of direction – the Conservative party said during the election campaign that the cap would be an absolute one.
Greg Clark, who has retained his position as business secretary, also said on the day of the general election: “We will get Ofgem to set an absolute cap.”
A Conservative source told the Guardian that sticking with an absolute cap, rather than looking at other options such as a relative one, would “present problems for a few colleagues”.
The Democratic Unionist party, from whom the Tories are seeking support for their minority government, has not called for such a stark intervention as a price cap but there is no huge clash with the Conservatives’ policy. The party said in its manifesto that it would support “efforts to better control energy bills” for people in Northern Ireland.
May has warned of some form of intervention in the energy market since last October, but the issue came to a head in the past few months after five of the big six suppliers hiked their prices, some by nearly 10%.
Consumer charities said the government should extend the price cap for the 4m households on prepayment meters to a further 2.6m who are eligible for the warm home discount, which is mostly poorer families and pensioners.
Gillian Guy, the chief executive of Citizens Advice, said: “It is important to recognise that it isn’t just a case of cap or no cap. There is scope to introduce a targeted cap to protect the most vulnerable households, building on the existing cap for prepayment meter customers.”
Industry sources have told the Guardian that such a measure could be imposed by the regulator Ofgem next April.
But capping prices for around 6m households would amount to a huge watering-down of ambition from the 17m households the Conservatives repeatedly pledged to protect during the campaign.
Rebecca Long-Bailey, shadow business secretary, said: “Theresa May unequivocally guaranteed a price cap before the general election but now it appears she is preparing to row back on that promise.
“It now looks like this price cap was simply an election gimmick and that the Conservatives were never serious about taking action to keep energy bills down.”