It is a busy day on the economic front, with new inflation figures (which are expected to show an increase) to be released at 9.30am and Ed Davey, the energy secretary, to address the House about further allegations (published in the Guardian this time) that the wholesale price of gas has been fixed by traders. The claims were made by a whistleblower, Seth Freedman, who used to work at ICIS Heren, an agency that reports on gas prices. The Financial Services Authority and the energy regulator, Ofgem, have both swung into action to investigate Freedman’s allegations.
It is only natural that the government would state its response to the House and outline the regulatory authorities’ plans. Yet it is also a sign of how seriously the government takes energy prices as a political issue. This morning’s newspapers have not covered this story in any great depth, partly because there is not much left to say after the Guardian broke the scoop; but the broadcasters, especially the TV broadcasters, have driven the point home in numerous bulletins and special reports this morning. Energy prices are the closest thing the early 21st century has to a ‘mob issue’. The allegations come on the back of a month of stories about huge gas and electricity price rises. These will drive up the cost of living, which will, in turn, make it harder for the government to convince voters that the very worst of the economic pain is over; and it must begin to frame such an argument as the electoral cycle turns towards 2015. The Treasury is understood to be worried by the prospect of dismal growth figures in Q4 of this year; stories such as these are likely only to darken its mood because they make the politics of the economics tricky.
The government has done well this morning; for once its communications operation has been wholly successful. Preliminary statements from Ed Davey appeared prominently on BBC Breakfast, suggesting that he is in control, that complete answers will be forthcoming and that order will be restored. Indeed, the government’s decisive response to this story shows that it recognises the essential sense of Ed Miliband’s much-mocked ‘predator capitalism’ speech at the 2011 Labour Conference. The fallout from the 2008 crash has changed the rules of the game entirely. It must be stressed that the allegations against the traders are as yet unproven; but, in popular terms, throw enough mud at something and some of it will stick. The government seems well positioned to dodge the incoming mud on this occasion.