The Labour MSP Jenny Marra has urged Dundee City Council to trial a form of collective bargaining, originally featured in Holyrood magazine in December, that has secured significant reductions in fuel bills for thousands of participants.

The idea, pioneered in the Netherlands, allows consumers to register as part of a voluntary collaboration in order to secure their energy supply through collective bargaining. The initiative is optional and participants are under no legal obligation to agree to the negotiated price.

The idea has been taken up in a number of areas in England, with a group of local authorities in the North West pioneering the first publicly administered scheme in the UK.

“This is a simple but exciting idea,” Marra said. “Councils or housing associations seek the permission of their residents to negotiate a bulk-buy price with the energy companies. The more tenants involved, the greater the buying power. If Dundee City Council were to negotiate with the energy companies on behalf of all its council tenancies, tenants could save up to 20 per cent on their annual fuel bills.” Both the UK and Scottish governments have urged consumers to shop around for the best available tariffs, while the “big six” energy suppliers have come under pressure to make their pricing systems more transparent.

All six companies have pledged greater openness, but Marra said that when she raised the idea of community bulk buying on a visit to the Dallfield multis in Dundee, she had been told such a scheme would be illegal.

“British Gas was quick to tell me that European Competition Law prevented this as every consumer has the right to choose their supplier. But lawyers at Ofgem, the energy regulator, have confirmed that as long as each individual opts in to the collective bargaining scheme, then there is no contractual obligation and they can be part of a collective bargaining unit for energy prices.”