New Labour has climbed down before big business again, on the issue of a windfall tax on the energy companies.
Brown’s pathetic advice, that the elderly should wrap up warm and switch off lights when prices go up, makes you wonder whether we voted for Labour or the Big Six gas and electricity companies to run the country in the last election. Brown says he has a cunning plan to lag people’s cavity walls and lofts and save fuel bills in the long term, rather than a windfall tax now. The trouble is, there is no doubt that more people will die in the short term – this winter – as a direct result of the hike in heating bills.
“Money for us”
They will also die as a direct result of the cowardice of Brown and this government. Let’s hope for all concerned that it’s a mild winter. E.ON senior executive Mark Owen-Lloyd remarked that spiralling fuel bills "will make money for us." E.ON ‘only’ made £877m profit last year. The Big Six are looking at £4.5bn profits this year. Owen-Lloyd’s little joke shows the contempt that the fuel barons correctly feel for this gutless government. Does he sound as if he could care less that millions more will end up in fuel poverty or that thousands of elderly people could die of hypothermia this winter, faced with the choice of heating or eating?
The facts are not in dispute. The Big Six energy companies are responsible for distributing 98% of gas. E.ON also owns Powergen, which supplies electricity to millions of households. They are members of a sinister body, the Energy Retail Association. It costs £100,000 to become a member. Meetings are ‘private and confidential.’ These people have the power to drive millions into fuel poverty and to cause thousands of deaths with excessive heating bills. They stick up two fingers to us, the British people and the elected government, and declare, ‘Mind your own business.’ What they’re plotting is our business – it’s our standard of living they’re attacking.
Adam Smith
We may well be inclined to draw the same conclusion as that champion of free markets, Adam Smith, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
We see them now in the process of edging up prices, colluding in fleecing the consumers – ‘After you, Claude’. EDF have put prices up by 22% so far this year, and there’s more to come. Household fuel bills are soaring as we write. Average household energy bills are likely to be over £1,000 – some say £1,200 – by the end of the year. 4.5 million people are in fuel poverty, defined as spending more than 10% of disposable income on heating bills. More families are being tipped over the edge by ever-rising prices. There could be 6 million fuel poor by the end of the year.
Windfall tax?
Socialist Appeal believes the only solution to these desperate problems for working people is the renationalisation of the gas and electricity companies, as we shall explain later. The demand for a windfall tax on windfall profits among trade unions Party members and rank and file Labour MPs is understandably popular. We believe a windfall tax is better than no windfall tax, though it’s not a permanent solution to the problem of rising heating costs.
After all the energy companies have shown no entrepreneurial skills to ‘deserve’ this money. They have just marked up their prices with the price of oil, and their profit margins increase automatically. How hard is that? Oil prices are important for electricity generation and because the price of natural gas is closely linked with the price of oil. But hang on, oil prices were $150 a barrel a couple of months ago and now they have slipped below $100. Aren’t we all due a rebate? Don’t be silly! It is a characteristic of oligopoly industries that they put prices up when costs go up and don’t put them down when costs go down. It’s evidence that they are ‘a conspiracy against the public.’
Dividends
Brown and New Labour hope the energy giants will invest. Fat chance! Last year they declared £1.64bn in dividends, up from £1.38bn the previous years. Shareholders must be licking their lips at the bonanza they’ll get as a result of the increases this year. In the end it’s our money, of course. Dividends just fly out of the industry without even touching the sides.
The plunderers oppose a windfall tax. David Porter, spokesperson for the Association of Electricity Producers, warns, "Whenever people impose costs on an industry like ours, inevitably the bill to some extent always ends up with the customer." He might as well have said, ‘To hell with you. Either way, we’ll shaft you.’
So we’ll pay either way. This is more proof that the Big Six are abusing monopoly power. That is the case for renationalisation in a nutshell. These greedy parasites are holding us all to ransom. It is high time we took them over.
