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

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BBC, blackout, British Gas, California, Centrica, company, cost of living, E.on, economy, Ed Miliband, EDF, energy, Energy UK, failing, firm, freeze, government, Guardian, Income Tax, invest, John Lewis, market, Mike Sivier, mikesivier, nationalise, npower, people, politics, power station, price, profit, ransom, reset, Scottish Power, SSE, tax, Treasury, Vox Political, workers co-operative

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.

Should movie stars keep their politics to themselves?

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"greenhorn", Barack Obama, California, Carmel, celeb, celebrity, Clint Eastwood, Coalition, Conservative, Democrat, endorsement, government, Kate Moss, Kenny Everett, Labour, Margaret Thatcher, Medicare, Michael Caine, Michael Foot, Mike Sivier, mikesivier, Mitt Romney, Parliament, people, politics, Republican, social security, sponsorship, Tiger Woods, Tories, Tory

Would it be better if celebrities like Clint Eastwood and Michael Caine kept quiet about their political views, leaving voters to make up their own minds about which political party to support?

Celebrity endorsement is always a bit “hit and miss”, isn’t it?

How many times have you seen a big name pimping themselves out in a sponsorship deal that has left you cringing with embarrassment for them? How many times have the deals gone sour because of events in the celeb’s personal life (think of Tiger Woods, or Kate Moss, for example).

The unpredictability of the endorsement effect is magnified in politics. Will you still respect a celeb if they are exhorting you to vote for a party you despise? What if it’s a person you don’t like, asking you to support your own choice? What if it’s someone you do actually rate, but they’re soliciting your vote in an unpalatable, tasteless way?

I remember my 13-year-old self turning his nose up at the late Kenny Everett when, supporting the Thatcher government in 1983, he said “We’re going to kick Michael Foot’s walking stick away!” (Mr Foot, also now deceased, was the leader of the Labour Party at the time).

On the other hand, when Sir Michael Caine supported the Conservatives in 2010, it didn’t bother me at all. I’m a fan of this prolific actor and will continue to enjoy his work, despite his unfortunate choice of allegiance. But then, I was never persuaded by Sir Michael to vote for the worst government in living memory. I wonder how many moviegoers were.

All of the above brings me to the announcement by Clint Eastwood that he is backing Mitt Romney’s US presidential election campaign.

Mr Romney’s plans involve tax cuts for the very rich, but he won’t offset their effect by closing other tax loopholes or creating other revenue streams. He’ll use the increased debt this creates as an excuse to strip social security and medicare down to nothing.

Put yourself in Mr Eastwood’s position. He’s a very rich man, and would probably benefit from Romney’s planned tax cuts. He has served as Republican mayor of the town of Carmel, in California. Also, he’s on record as saying that Barack Obama is a “greenhorn”, without the necessary experience to run the US government.

That’s fine for him. Now ask yourself: What effect will his endorsement of Romney have on an Eastwood fan of meagre means, whose life is enhanced by social security and medicare and who would suffer if these were dismantled?

They’d probably vote for Romney because their idol told them to do it – and then, if he gets in, repent at leisure.