PM's fuel bill plans in disarray

David Cameron's plans to reduce soaring fuel bills are in disarray amid accusations of backtracking on his commitment to require energy firms to give households the cheapest deals available.

The Prime Minister plunged energy policy into confusion with his surprise announcement on Wednesday that the Government would legislate so that gas and electricity companies "have to give the lowest tariff to their customers".

Energy Secretary Ed Davey distanced himself from the proposal and No 10 said energy firms would be obliged only to "offer" the cheapest tariffs.

Mr Cameron, attempting on Thursday evening to clarify his statement, stopped short of repeating his previous suggestion that companies would be compelled in any way to put customers on the cheapest tariffs. Arriving in Brussels for an EU summit, he said he wanted to be on the side of hard-pressed people "who struggle to pay energy bills".

Neither energy firms nor the Department for Energy and Climate Change (DECC) are thought to have had any forewarning of Mr Cameron's announcement during Prime Minister's Questions on Wednesday.

Mr Davey delivered a speech on energy market reform to the CBI on Thursday morning which contained no reference to the Prime Minister's announcement. Asked about it afterwards, he referred instead to moves previously announced by Deputy Prime Minister Nick Clegg to require energy companies to inform customers of the lowest tariffs available to them.

"I've been working with the Deputy Prime Minister and others, working with the energy companies, to try to drive more competition, to get them to agree that they will tell their customers what are the best available tariffs, so customers can save money," he said. "These high energy prices are causing lots of problems and they are at the top of my list of priorities."

Shadow energy secretary Caroline Flint said the Prime Minister's statement had thrown energy policy into confusion, adding: "It caused chaos in the energy industry and I have to say it left his own ministers at a loss as to what energy policy actually is."

Neil Bentley, deputy director general of the business organisation the CBI, said Mr Cameron's statement had been "a bit of a surprise" to industry and was at odds with the idea of competition in the marketplace. But consumer group Which? urged Mr Cameron to "stick to his promise".

Downing Street insisted the Government would legislate to ensure consumers get the lowest tariffs but would preserve customer choice. One option being considered would mean customers on a variable tariff paying by direct debit were automatically switched to the lowest rate by their provider. Under the proposal customers would be able to opt-out of automatic switching if they wanted to.