Ed Miliband, the Energy and Climate Change Secretary, appeared to be on a collision course with Britain's big power companies last night as he called for sweeping reforms to the industry, including greater state control and a retreat from the free market orthodoxy of the past two decades.

In one of his first big speeches since his appointment as head of a new Department of Energy and Climate Change, Mr Miliband signalled a departure in UK energy policy by suggesting that a more muscular approach would be needed from government to tackle the challenges of fighting climate change, curbing fuel poverty and securing long-term energy supplies.

“Sustainability, security and affordability are all challenges which the market alone cannot be guaranteed to solve,” he told an audience at Imperial College in London, before flying to Poland today to join negotiators from 190 countries at a UN Climate Change conference in Poznan.

He said that the Government needed to take a more interventionist approach in the setting of higher carbon prices to “overcome market failures” that were inhibiting the adoption of renewable energy technologies.

He also indicated that the Government was shifting away from the liberalised approach to the energy industry of the 1980s towards a hybrid model that would combine dynamic markets with strategic government.

“These markets will work to the best effect in the public interest if there is a strategic role for government alongside the market.” He added that he would unveil a road map next summer identifying how Britain can cut carbon emissions by 80 per cent by 2050.

His remarks reflect growing concerns within government that Britain's energy industry is failing to deliver, either for consumers or for the Government's increasingly ambitious environmental and fuel poverty agendas.

Accusations of profiteering by the Big Six power companies and of failing to pass on steep falls in wholesale prices have been accompanied by criticism that Ofgem, the regulator, has been too feeble in its policing of the industry.

The Government has also come under fire for making little headway either in cutting UK carbon emissions, boosting investment in the power sector or meeting its targets to abolish fuel poverty.

Nevertheless, the speech is unlikely to help to mend the fragile relationship between Mr Miliband, who was appointed to the post in October, and Britain's big power supply companies.

The Times revealed this week that some chief executives of the Big Six that dominate the industry: E.ON, EDF Energy, Centrica, NPower, Scottish Power and Scottish & Southern Energy (SSE) had felt snubbed by Mr Miliband's refusal to hold individual meetings with them.

They also criticised him for “shooting from the hip” on calls for them to cut prices, while at the same time expecting them to pour £100 billion into Britain's ageing power grid over the next 12 years.

Britain is committed to raising its share of renewable power generation from 4 per cent to 40 per cent by 2020, a target that many experts believe is unachievable.

“This looks like sabre-rattling,” said John Hall, an independent analyst, who added that Mr Miliband would find it difficult to create a new industry structure that met the Government's disparate objectives.

Another industry source said: “If they want lower emissions then they can't expect lower bills as well. Renewable energy projects are very expensive to build.

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