I HAVE always liked Michael Heseltine's statement on industrial policy, insisting he would intervene "before breakfast, before lunch, before tea and before dinner".

There is the hint of a decadent way of life involving an extra meal from the standard three a day.

More importantly, the former Tory Cabinet minister's comments undermine the notion that government and business are mutually exclusive realms.

Hence the absurdity of claims in the more excitable parts of the British press that price controls on energy mooted by Labour leader Ed Miliband signal a return to "1970s socialism".

This characterisation of their regimes would be a surprise to the Tory Prime Ministers who bookended the decade, and possibly the Labour premiers in between.

The Government currently intervenes in many parts of the private sector: it regulates train fares, monitors the sale of financial products and insists on health and safety standards.

The market in energy was created by the government through privatisation. Mr Miliband's plans, which include breaking up the big energy companies, forcing them to buy and sell energy on an open market, and a tougher regulator, could help placate consumers who believe this system is rigged against them.

It has its flaws. Energy policy has to balance the competing demands of consumers, of the environment and the future needs of businesses and households. Something more will be needed to unlock the estimated £200 billion of investment required in the energy system by the end of this decade to prevent shortages.

The bigger picture is that an energy price freeze would be just the latest step in a recent increase in the role of the state in the economy.

Formal nationalisation of much of the banking system is being reversed but the Government and its regulators will continue to intervene to ensure it doesn't collapse again under its excesses. Not enough houses being built? Let taxpayers provide a mortgage subsidy scheme.

A functioning market has great merits. It balances supply and demand, leads to the effective deployment of capital, incentivises efficiency and rewards those behind products and ideas with the greatest appeal. But it requires transparency and limited barriers of entry. No wonder there is public cynicism when pay rates for a seemingly closed shop of top executives soar in line with the "market rate" despite little evidence showing how this improves the performance of a business.

In financial services, mis-selling problems, unfair charges and, most recently, over-priced pensions add to consumer scepticism. This is why a group like Which? can boast more than 600,000 members.

The proponents of laissez-faire will argue that a truly free market has never been properly tried, just as those on the far left claimed the failure of the regimes of eastern Europe was due to the wrong kind of communism.

The advocates of the free market will have to work harder to convince people of its merits if it is not going to be pushed further into retreat. But there will always be a role for the state in the private sector.