Profiteering energy firms would be stupid to believe they can hold Labour to ransom

Miliband's cost-of-living crusade starts here. [Picture: Metro - from an article in August headlined 'Energy company profits rise 74 per cent in 48 months']

Miliband’s cost-of-living crusade starts here. [Picture: Metro – from an article in August headlined ‘Energy company profits rise 74 per cent in 48 months’]

The UK’s private energy companies will be playing a very dangerous game if they think they can call Ed Miliband’s bluff on price-freezing.

According to The Guardian, Mr Miliband’s announcement that energy prices will be frozen for 20 months under a Labour government has sparked a chorus of protest from the affected firms.

In the first skirmish in the new political battle over the cost of living in the UK, Mr Miliband wants to “reset” what he sees as a “failing” energy market in which customers had paid £3.9 billion more than necessary since 2010. The measure would save families an average of £120 and businesses £1,800.

Energy firms say it would lead to blackouts similar to those seen in California. They say it will stall investment in new power stations.

Energy UK, which represents the largely foreign-owned energy firms, said: “It will… freeze the money to build new power stations, freeze the jobs of 600,000 people dependent on energy industry and [make] the prospect of energy shortages a reality.”

Here’s Centrica: “If prices were to be controlled against a backdrop of rising costs, it would simply not be economically viable for Centrica or indeed any other energy supplier to continue to operate and far less to meet their sizeable investment challenges the industry is facing.”

And Ian Peters, head of residential energy at British Gas, said: “If we have no ability to control what what we do in retail prices and wholesale prices suddenly go up within a single year that will threaten energy security.”

Labour has said the claims were “patently absurd” and “nonsense” put about by the large energy companies.

Mr Miliband said: “There’s a crisis of confidence in the system. It’s time we fixed it and they can either choose to be part of the problem or part of the solution. I hope they choose to be part of the solution.”

Suppliers say prices have gone up to cover their rising environmental and social obligations and in response to commodity price rises – sums paid on wholesale markets. So let’s examine the profits made by the “big six” – British Gas, EDF, E.On, npower, Scottish Power and SSE – over the last few years (figures courtesy of the BBC): In 2009, £2.15 billion. In 2010, £2.22 billion. 2011 – £3.87 billion (a massive hike of £1,870,000,000 in a single year). And in 2012 – £3.74 billion. That’s £11.98 billion in profits over four years – a huge and unwarranted amount in these times of supposed austerity.

And let’s not forget – this is pure profit. None of that money will have been reinvested into the companies. It goes to the shareholders.

It is while sitting on such huge amounts that these companies are trying to tell us they won’t be able to afford theinvestments to which they have signed up; that they won’t be able to increase employee pay. And it is while sitting on this massive pile of cash that they are threatening us with blackouts if they aren’t allowed to continue demanding huge price rises.

Well, it won’t wash.

Doesn’t it seem more likely that, faced with threatened blackouts, Mr Miliband will choose to re-nationalise the energy firms, rather than back down?

After all, they would be reneging on their contract to provide energy to the United Kingdom. This could be just what Mr Miliband needs to bring them back under State control, where energy generation and distribution belongs. And it would show he is serious about having the strength to “stand up to powerful vested interests”.

Naysayers may point out that this would only put him back in a position of being at the unions’ mercy, instead of under the thumb of big business, but this isn’t true either – the Tories restricted the unions’ power massively back in the 1980s.

Besides, new structures have come into being since then. What if the energy companies were re-constituted as Nationalised Workers’ Co-operatives? This would entail every employee receiving a percentage of any profits – possibly along the lines of the successful John Lewis model – with the remainder ploughed back into the Treasury to reduce income tax bills.

Such an arrangement should silence any dissent among workers as they would receive two slices of the pie – a profit-driven bonus and a tax cut – while everyone else has lower energy bills, together with the tax cut.

If it were proven to be successful, then employees of the other privatised utilities could soon be queueing up to have their companies re-nationalised as well.

17 thoughts on “Profiteering energy firms would be stupid to believe they can hold Labour to ransom

  1. Gavin MacMillan

    Sounds good to me. Fact is, they should be renationalised anyway. The concept that businesses providing absolutely essential services should be left in the hands of profiteering, private hands is fundamentally wrong. It is like giving these people a licence to print money – which is essentially what they do in their price fixing. And if they are run along the lines of the John Lewis co-operative model, even better.

  2. garyxxx

    These companies should be glad they have our custom its if there doing us the favour – The Gov can always implement its own public run companies and do away with the multi-nationals that seem to be getting too big for their boots – they have got to used to having the Conservatives bow to there every whim, Time for a change a Government doing what the people want and that’s Labour so far.

  3. aussieeh

    Eon took thousands off me over a 9 year period and I have the paperwork to prove it. I went to the ombudsman with this and was told ” sorry there is nothing we can do about it “. The flat had a prepayment meter fitted when I moved in, I kept it for convenience. One quarter I was almost £200.00 in credit and I made £160.00 in payments, they took the lot. They are nothing more than a bunch of thieving bastards.

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  5. gavinpollock

    Spot on. Miliband must also manoeuvre Cameron into supporting the bleating energy companies. See how well that plays with the electorate just before the traditional Winter price hike.

    1. garyxxx

      I don’t think Cameron or any of the Coalition will back Labour on their energy freeze bill because that would be money out their pockets there not a people party- Simple

      1. Mike Sivier

        Labour is not trying to freeze energy prices now – this is a policy for when (if) a Labour government is formed after the 2015 election. If that happens, they will instantly freeze energy prices. Tory/Liberal Democrat votes would not be needed as Labour would have the majority.

  6. bookmanwales

    Basic requirements should not be left in the hands of profiteers. Energy, water and housing are now all controlled by private companies. These companies provide their services at whatever price they want irrespective of income or ability to pay
    Energy, housing and water prices have risen far in excess of wages over the last few years causing untold hardship for many families.

    Let’s also not forget the majority of these companies are foreign owned, enjoy massive tax breaks and pay little or no corporation tax and therefore, apart from the employment they provide (massively reduced of course), they contribute nothing to this country.

    Other countries put the welfare of their country first and foremost, have efficient state run industries and provide generous benefits.

    It’s about time this country’s government grew some balls and did the same for the people of this country and kicked out their sleazy business associates who are slowly but surely bleeding this country dry.

      1. Mike Sivier

        I’m not so sure about public transport but am willing to be persuaded. It seems to me that allowing coach companies to run bus services, and subsidising those that might not easily make a profit, is a reasonable system.

  7. kamsandhu

    Reblogged this on and commented:
    Here are some thoughts from the brilliant ‘Vox Political’ on the energy prices debate, which the energy companies (making billions) are threatening blackouts over if we don’t pay whatever they say. Ed Miliband’s 20 month price freeze promise has ruffled some feathers, and brought the subject into the centre of debate. About time.

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