Time for Labour to set out how it will re-set energy markets in 2015-7: here’s how

August 20th, 2014

Current UK energy policy is a colossal failure.   It is supposed to (1) deliver cheap and affordable energy to consumers, (2) provide security of supply, and (3) shift from carbon fuels to renewable energy as a key part of tackling climate change.   But under the current privatised regime the UK is monumentally failing on all 3 counts.   On affordability, the most recent figures for domestic electricity prices show that despite its wealth of natural energy resources, the UK has the fourth highest prices in the EU (excluding the new East and Central European accession states).    Other studies over a number of years have consistently concluded that UK electricity prices are consistently higher than they would have been without privatisation.   At the same time the UK has some of the worst statistics in Europe for fuel poverty.   What is most shocking of all is the number of UK pensioners who die from extreme cold every winter at a rate double that of Finland  despite the latter’s much colder winter climate.   Indeed the UK rates are also far higher than for countries with similarly severe winter weather like Sweden and Germany.

On the energy security issue, the UK’s current carbon-based and nuclear power energy stations are being phased out, with about one-quarter of the existing power station capacity due to be closed by 2025.   It has been estimated by DECC that at least £110bn infrastructure investment is required to achieve both security of supply and the UK’s environmental objectives of meeting 30% of its electricity generation from renewables by 2020.   There is no sign whatever that the privatised companies are preparing to deliver this unless the government provides enormous financial incentives for them to invest, i.e. the companies privatise the profits but socialise the cost of investment.   On tackling global warming, the UK has one of the worst records in Europe in shifting its energy production towards renewables, still with only 4% of its energy consumption coming from renewables, just one-third of the EU average.   The Commons Environmental Audit Committee has estimated that no less than £200-£1,000bn will be required over the next 10-20 years to achieve the commitment to 80% reduction in greenhouse gas emissions by 2050.   Perversely the Danish state energy company DONG and the Swedish government-owned Vattenhall have now become the largest beneficiaries of UK government subsidies earning £156m and £128m respectively in wind farm subsidies. UK energy privatisation has not brought the promised investment or efficiency gains, but instead led to private value extraction at the expense of the public purse while leaving a legacy of decaying infrastructure.   Faced with these massive contradictions the only sensible way now to re-set energy markets is through taking the energy companies back into public ownership to secure the investment now desperately needed (‘to keep the lights on’) and to regain strategic direction in the public interest in a key sector of the economy.

3 Responses to “Time for Labour to set out how it will re-set energy markets in 2015-7: here’s how”

  1. jeffrey davies Says:

    it seems thatchers britain is rotten to the core selling everything off wasnt the way was it we now have vast unemployed has these big companies only want the proffit yet politicians talk about it but do nowt isnt it strange when those in power pay nowt owt but the peasants pay all yes being lied to hurt our younsters who go about without jobs when apprenticeships real ones 4yrs long learning a trade has gone yet you talk talk talk isnt it time you all looked out yes the the peasants dont want that roburst filling out of reports but most want that job that pays a living wage yet yoiu all denied that by selling off our assests jeff3

  2. Paul Billanie Says:

    This is an excellent piece. I have to say this is a rotten sector which needs a top down shake up in the regulations. It needs a watchdog with teeth unlike Ofgem and who in fact have made the situation worse to some degree. I will say more on this later.

    The problem is these services were put out there for companies to make a profit. I am personally of the belief that essential for life services, electricity, gas and the waters should never have been made available to make a profit on. These should all have been kept as not for profit, simply because they are essential to maintain life.

    The other point you touch upon is completely valid as well and I have said this elsewhere before as well. This is the government spending on the infrastructure which by rights, as these are now private companies should be coming from themselves. The same can be said of the railways too. These are private companies and they should be reinvesting themselves and not expecting the government which is in the long run the taxpayers paying.

    This amounts to in my view a form of corporate ‘welfare’. It must stop as we need to make further cuts to the expenditure but this should in no way shape or form be aimed at anyone on benefits and low incomes anymore and neither should it be restricted pay increases any longer for public sector workers. They should not have to endure more attacks on them while there are other cuts that can be made!

    On renewable energy we should be looking at a wide range of measures. Tidal, we are surrounded by the sea with plenty of tides after all, solar and wind. A combination of all 3 could even be implemented. Masts for the wind turbines could have solar panels down them collecting solar energy and for those at sea a mechanism for harnessing tidal energy as well could be added.

    Back to Ofgem. They as I said in some ways made the situation worse for some last year, including myself. This was the scrapping of the tariff with no standing charge. I am an extremely low user when it comes to gas. Which estimates low usage as 11,000 KWH as low usage. I use around a tenth of that. I was on a tariff that had no standing charge which means my gas expenditure per year was around the £95 mark. Then they introduced the policy to scrap the no standing charge tariff, by saying that all tariffs had to have a standing charge. They did say that the standing charge rate could be set at zero, but when given a virtual licence to print money, what company will do that? This meant I would in future be paying out about £95 just for the standing charge. This would have resulted in doubling of my bill. This may not sound a lot but when on a low income every penny counts. I thankfully eventually found a company that does have a zero charge tariff but this took a lot of searching to find.

  3. J.P. Craig-Weston Says:

    An interesting if largely self evident piece, (even for those of wholly unconvinced by the alleged reality of climate change/global warming/ atypical climatic variation; or whatever they’re calling, “it,” this week?)

    Thatcher’s demented, “vision,” (demented, gullible and wholly naive,) of an entirely middle class, “property owning democracy,” and of all it’s ramifications stands as pretty much completely discredited at this point and has unarguably been a complete, utter and unmitigated failure for the overwhelming majority of British voters.

    But Paul Billanie, (above,) covers these issue so thoroughly and sensibly that additional comment from me would be largely redundant.

    However since Milliband, (who favours the disintegrating and increasingly dysfunctional American commercial model,) has already announced that he has no interest whatsoever in taking any of our national infrastructure back into public ownership, neither the NHS nor the railways, (which we still actually own,) ably assisted by Ed, “sticky fingers”, Balls who is well to right of Thatcher, (even at her most completely barking,) and Any Burnham who was up to neck in the privatization by stealth program for the NHS and the PFI initiatives, even before the Health and Social Care Bill, (and also the Mid Staff cover up,) so once again our admirable MP speaks only for himself and not in any sense for the political party of which he is a member.

    Not a pretty sight.

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