Tag Archives: Energy companies

Privatisation of energy risks lights going out this winter

The effects of the UK privatised energy system are now becoming clear, not only in cartelised pricing and poor service , but also, critically, in loss of energy security.   As a result of the latter there are real risks of blackouts this winter.   Because of the Big Six privatised companies’ failure to invest on a scale that matched the performance of the industry when in public ownership, the UK’s spare electricity generating capacity has tumbled from 17% three years ago to just 4% now as winter approaches.   As a result the government has been forced to take emergency measures over the next 3 years to try to keep the lights on during the winter months.   They plan to keep three power stations on standby and are actually proposing to pay businesses to use less electricity.   In other words taxpayers not only have to put up with rocketing energy prices to fund unprecedented dividends to shareholders and bonuses for top executives, but now have to subsidise the companies’reluctance to invest in ordedr to keep the lights on.
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We need more public ownership, but it must be democratic & decentralised

Almost every day brings fresh demands for public ownership, whether over energy infrastructure or transport (rail and water systems), banking, housing, pensions, let alone reversal of privatisation and outsourcing in health and education.   That is certainly needed, but not a reversion to the Morrisonian brand of State corporatism.   Instead it needs to be democratic and decentralised, involving not only the workforce but the participation of the public and civil society.   At present, under the current market fundamentalist regime, real economic power is increasingly concentrated in  very few hands.   An elite of CEOs and top executives decide how companies operate, what strategies they choose, what markets they operate in or products they make, and how these are made and where.   A key nexus of financial and political elites in the Treasury and City of London determine the setting of interest rates, levels of government investment and debt, and decisions about gilt and bond markets, and so on.   the workers, the public and the wider society are simply shout out.   Yet democracy isn’t just about electoral politics, it is about the accountability of power wherever it is exercised, and above all that includes the economy.
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Time for Labour to set out how it will re-set energy markets in 2015-7: here’s how

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.
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A clear Labour narrative is emerging, but certain key gaps need to be filled

You could almost write the Labour manifesto now, except that there’s a great deal more to come later this month as well as in the run-up to the election.   It can be grouped under certain headings:

Protecting living standards

A Living Wage (£8.80 in London, £7.65 elsewhere), encouraged by incentives to business and enforced if necessary.   An immediate energy price freeze lasting  20 months till January 2017, by which time the energy market will be radically restructured.   A private rent cap as a check against rapacious landlords.   The hated and deeply unjust Bedroom Tax will be repealed.

Growth and jobs

A National Investment Bank will be created to fill the gap left by the investment strike in the private sector.   Labour standards will be protected particularly in the case of low wage and agency work., though another gap is the need for a strong endorsement of the positive role to be played by the trade unions in achieving a sustainable economic recovery.    A grant of £30bn to local authorities to devolve responsibility for house-building, transport infrastructure and skills training will kickstart growth and jobs in the regions in the face of the currently anaemic recovery there.   But this is also one area where a very different message needs to be got across.   At present the dominant economic theme has been continuing the Tory cuts till 2020, which is about as offputting for disaffected Labour voters as can be.   The message should focus relentlessly on growth, jobs and a return to full employment as a contrast to the Tories’ super-high unemployment policies (never fallen below 6.6% in 4 years).   And growth is the best way out of austerity.
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Tory backwoodsmen attack on renewables is potty

If one wanted a clear example (out of many) where ideology trumps common-sense in Cameron’s Tory party, you couldn’t do better than their latest knee-jerk reaction against onshore wind turbines.   They are a significant and fast-growing source of electricity in the UK and by far the cheapest source available to provide the low-carbon energy to meet Britain’s mandatory target of 15% of all energy consumption to come from renewables by 2015.   Cameron appears to be floating the idea of including in the 2015 Tory manifesto either a cap on onshore turbines’ output or lower subsidies to make it harder or even impossible to operate them or tighter planning restrictions to prevent them being built.   This crackers.   To meet the legally binding target it would then be necessary to build more offshore windfarms or more nuclear power stations, both of which are far more expensive.   Electricity from offshore turbines costs over 60% more than that produced by onshore turbines, whilst the new nuclear station at Hinckley Point C (if it is ever built at a cost of £14bn) is expected to produce electricity at twice the current price.   Is Cameron mad or simply the cat’s-paw of his more wacky backbenchers? 
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Winning over an insecure working class must be Labour’s strategy for the election

As Labour’s lead in the polls narrows to 1-2%, we need to keep our nerve and get our priorities right.   The previous Blairite electoral rule was to focus exclusively on middle class marginal seats with a narrow majority on the grounds that working class constituencies were bound to vote Labour if for no other reason than to keep the Tories out.   That attitude is exactly wrong.   Working class voters do have an option, in fact two of them: they can simply not vote, which is precisely what millions of them did in 2005 and 2010, but in addition this time they have another allurement – UKIP.   The real problem for Labour is that for too many working class voters the party doesn’t feel like the Labour party which once represented them and fought for them and with which therefore they strongly identified.   Ed Miliband has certainly come up with some resonant themes on energy, Living Wage, banks, etc., but there is a desperate need to join up the threads and pull them together within a strategic framework which makes it indelibly clear what a Labour Government will do – and above all why that will strongly benefit the working class, not just middle Britain which is often a misnomer for the upper middle class.

There are several strong reasons for pursuing this strategy.   One is that working class influence in deciding elections is hugely under-estimated.   They are the largest class in the country, representing nearly half the electorate, and the most cohesive since the middle class under market pressures has become more fragmented.   Second, they have been under continuous attack and feel deeply let down by the Labour party in failing to defend them as they would have expected against Osborne’s austerity, soaring rents, the suppression of trade unions and workplace rights, job-cutting privatisations and outsourcings, and the squeezing of the wage share by out-of-control inequality and rampaging capital.   Third, the depredations of this government, arguably even harsher than Thatcher, have produced an enormous groundswell of anger seething just below the surface, but what it lacks is the lead from Labour to transform it into a decisive political force.

Five strategic themes could turn around the slide in the polls.   Labour will reverse austerity by public investment to kickstart the economy and reduce the dole queues by a million or more within 2 years.   Labour will bring in rent controls to stop rapidly rising, unaffordable rents and by the end of a 5-year term will be building 250,000 houses a year, a third of them social housing.   Labour will re-nationalise rail and at least some of the energy companies because of their crucial importance to national security.   Labour will ensure workers get a proper say in the company for which they work through enterprise councils and through encouraging the spread of collective bargaining.    And Labour will reverse privatisations in the central areas of human welfare, in particular in health, education, housing and pensions.

Redistributing property empires of Britain’s ultra-rich families would be as popular as energy price freeze

Oxfam has just reported that Britain’s richest 5 families are wealthier than 12.6 Britons who make up a fifth of the entire UK population.   The latest survey from Forbes magazine shows that these 5 fortunes are heavily based on property rather than entrepreneurial innovation.   The families listed are those of the Duke of Westminster (who owns 190 acres of prime real estate in Belgravia, London), the property magnates David and Simon Reuben, the Hinduja brothers, the Cadogan family whose wealth has always traditionally come from property, and (the one exception) the Sports Direct investor Mike Ashley.   Their combined wealth works out at £28.2bn, an average per family of £5.6bn each.   The collective wealth of the poorest 12 million Britons however comes to only £2,230 each.   Thus the wealth of the richest 5 families is 2.5 million times greater than that of the bottom fifth.    This is grotesque: so what should be done about it?
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Labour should set out its key goals clearly, not just play safe in run-up to election

The issue as to whether Labour should aim to slide past the electoral winning post with (as one senior civil servant once said to me) ‘minimum exposure of flank’ or make clear what Labour today really stands for and what its central objectives for government really are, is an extremely important one.   The argument for the former is obviously that it entails fewer risks in counter-blasts from the Tories and their right-wing media friends – and clearly a campaign to project the party with a more confident and inspirational presence does have to be worked on very carefully if it is not to be misrepresented and exploited by malevolent enemies.   But the argument against, which in my view tips the balance, is that there is very sizeable segment of the electorate, to a large degree potential Labour voters, who feel unmotivated and disinclined to vote at all.   The classes with the lowest turnouts at the 2010 election were the young and those who were semi-skilled or unskilled workers.   The potential gains of winning them over to vote, even perhaps inspiring them, could well in terms of the millions they represent turn out to be the decisive factor at the next election.

Of course it will raise the political heat in this coming year before the election.   But – and again planned very carefully beforehand – picking a fight on a few central issues could likely be essential in stamping Labour’s identity on the minds of the voters.   It is often only when a political party sets its standard on some big, often contentious, issue and fights its corner robustly and confidently against the inevitable attacks that the voters conclude that the party really means it and, if the issue has been chosen well, begins to swing behind it.

Renationalising rail and at least some energy companies would be one such issue which shows Labour will re-draw the lines between State and markets not only to protect long-suffering customers, but to stop exploitation in failed private markets.   Another such issue would be to establish Enterprise Councils in all large companies which would give worker representatives drawn from across the firm a say both in its operations and in allocation of pay from boardroom to shopfloor, as one way to tackle inequality at source.   A third, and perhaps most important of all, would be to give a clear commitment to repudiate Osborne-style austerity and through a major programme of public investment kickstart the economy and generate a million jobs within 2 years in house-building, infrastructure improvement in energy, transport and IT, and laying the foundations for a low-carbon economy.

Miliband’s ‘use it or lose it’ to Big 4 house-builders extends his theme of taking on corporate power

Ed Miliband’s speech today targeting the Big 4 developers – Barratt, Berkley, Persimmon and Taylor Wimpey – for hoarding land and not building the houses that Britain desperately needs is a textbook for political strategy as the election fast approaches.   The shortage of housing, particularly affordable housing, has been a public scandal for years.   Up till 1970 more than half the houses constructed in Britain were built by local authorities.    During the mid-1950s to the mid-1970s between 300,000 to 400,000 houses were built in the UK every year, including over 400,000 in one year at the end of the 1960s.    Last year it was 98,000, the lowest figure since 1923.   Yet the need for new housing has been intense.   There are 1.8m households currently on local authority waiting lists, and the number of houses required to be built to keep up with annual demand and to begin to clear the enormous backlog is at least 240,000 a year.   As with the energy price freeze, Miliband identified a raw spot of acute social need and again pointed the finger at its cause – corporate power more interested in profiteering from land speculation than building homes.
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