Malcolm recalls a commonplace of the 1960s: only Labour could “deal with” the Unions, and only the Tories could discipline Big Business (he believes the original context for this was when Ted Heath was trying to abolish retail price maintenance). Well, phooey to that.
There is, though, one area of Big Business that urgently needs Gordon’s big stick: the energy companies. Malcolm found himself filling up his daughter’s car yesterday, at 83.9p a gallon. How long ago was the unleaded pushing through the pound-a-litre level?
So that’s good news for inflation, money in the pockets of Chelsea-tractor drivers, more congestion, more pollution, more kids with asthma, lower income for the Treasury. Time to use the price regulator?
Meanwhile, the price of domestic gas and electricity shows little sign of reducing. We are now paying 90% more for gas, and 60% more for electricity than 2003. There are further price increases due in the near future. Scottish and Southern is upping tariffs next January by 12.1% for gas and 9.4% for electricity. In the name of all decency, why?
Last January, the wholesale price of gas was 71.25p per therm: this year it is being offered at 61.7p (a fall of nearly 15%). The “spot” price is just over 40p per therm (half the peak price reached last Spring), though this is not significant because most suppliers are locked into long-term contracts. However, suppliers, to justify price increases, repeatedly quoted the “spot” price. (Addicts of graphs can check ‘em out here).
To their credit, the broadsheets are beginning to bite on the issue. The Sunday Times found space among its usual sarky trivia, though influenced (i.e. partly plagiarised) from other sources (for instance, thisismoney.com). Yesterday, in the Guardian, Julia Finch’s Viewpoint asked:
is it time for Ofgem to look at imposing some sort of price cap to protect consumers?
This followed Mark Milner, the previous day, commenting on Scottish Power’s defence of
surging profits in the face of soaring domestic gas and electricity prices.
Meanwhile, working on the coarse-rugby principle that “thrice armed is he who gets his retaliation in first”, the National Grid is pressing for Ofgem to make “a significant move” to raise tariffs in its forthcoming price review, as the company reported a 12.4 per cent rise in first-half profits. Furthermore,
The company announced a £1 billion share buyback, helping to lift its shares 6.8 per cent to 7461⁄2p. They have already risen 30 per cent this year.
So, says Malcolm, time to draw the line. Let’s see and hear that the Treasury
- is leaning on Ofgem to toughen up the proposals for gas and electricity prices for the next five years (that statement is due on 4th December);
- knows how to get the energy “market” working for the consumer and not just for the overseas investor; and
- is, in the last resort, willing and able to go for an excess profits tax on those corporations bilking and milking the consumer.