Monday, 7 May 2007

UK Utility Companies - cash vampires of Britain

This post in some ways picks up from my earlier one 'This is the Age of the Train' which looked at the major problems anyone trying to use trains in the UK faces. I read an article yesterday about screw-ups on the computer system which mean if you have bought a card to give you discounts, say for travel in a region, you actually end up paying more!

Well, leaving trains aside for the moment, I am going to turn to utility companies. By this I mean electricity, gas, water, sewerage, telephone, broadband, cable and satellite television providers. Throughout the 1980s in line with the policy of privatisation all of these services which had been state or local monopolies were either privatised in themselves, e.g. British Telecom the state telephone provider became BT, the private company or their services were taken over by a combination of such companies and others that had been set up as private companies, for example, where I live with have Southern Electric (who also now supply gas) which was once a state-run regional electricity provider and Utility Warehouse which was established as a private company. The idea was that moving away from state monopolies would introduce competition into the system and this would reduce prices to consumers and mean that those providing the best service would win out. How wrong the theorists proved to be. Rather than any decent company taking over services we seem to have gathered together the most arrogant and avaricious people on the planet to provide us with our essentials.

If I had been writing this post 1-2 years ago I would have been even more indignant as in those years gas and electricity prices were rising two or three times per year, often at above 10%, so triple the level of inflation, and actually pushing that inflation higher because utility bills form such a part of people's monthly expenditure. All the companies, good and bad, have been making profits of millions of pounds and finally are bowing to pressure and lowering the prices, but as yet they still have a long way to go to their previous levels. In 2002 23,000 UK households had their utilities cut off. It was estimated that 1.4 million could not afford to put money in prepayment meters for their electricity and gas; 1 million homes had had their telephones disconnected and 4.7 million households were in debt to water companies (these are households not individual, so, say a family of 4 is affected in each case we could be looking at almost 20 million individuals affected because they or their parents cannot pary). Obviously a lot people appearing in these figures are the same people, but these are old figures and with prices rising since then, I imagine close to 1 in 10 of the households (many of these will be single elderly people, but many others will be families). These items are not luxury items, they are essentials for health and wellbeing. You can argue that telephone is not essential, but what happens if you are an elderly person who slips up, how do you get help? How do apply for a job when you have no number for employers to call you back on?

I am comfortably off, I have a job that pays £8000 more per year than the national average, and yet I find it tough to pay my utility bills. There are issues that are not simply about the cost, but about the whole behaviour of utility companies. The first is paying in advance. Now on my gas, electricity, water and sewerage (and for some reason in my town we have separate water and sewerage companies and whilst elsewhere my sewage removal charges have been 10% of my water bill, in this town, for some reason they are 108%) I am assessed for my likely usage and have to pay in advance. For gas I am now paying for the next three months gas that I have not even used yet and in fact given that summer is coming and we run to very ecological/economical rules in my house I doubt we will use that much. So 3 months' worth of money for supplies I am unlikely to use until the Winter, is now sitting in the gas company's bank account gathering interest. The same happens with the telephone company for 1 month in advance (I am not going to name the names of the companies as the principle applies to all of them, if someone can tell me a UK company that does not behave like this, I am happy to name them. Bascially if you live in the UK you will find your utility providers all do this, the details may vary, it might be 1 month or 3 months in advance, but the behaviour is the same).

The additional problem with all this, is that not only do they hold your money for things they have not provided you yet, they always over-assess how much you are going to use. When I lived alone I was always assessed as if I was a family. In one month the water company in Milton Keynes sent me three different paying in books with different amounts as they could not make up their mind about me. This means when I leave a town I each company has to pay me back a lot of money, e.g. £100 (€145; US$ 200) from the phone company, £134 from the gas company, when I left Milton Keynes and of course they are in no hurry to do this. What do the companies do with the money? Invest in other ventures, hotels are apparently popular investments for water companies at a time when leakages in the UK are at 25% on average compared to 14% in France and 10% in the Netherlands. You cannot stop leakages but the UK water companies are lax in tackling them and would prefer to put bans on water usage. We should be economical in our usage of water for the sake of the planet, but how can I be economical if a quarter of the water I am paying for in advance has gone before it reaches my house?

The final element which makes the utility companies such a burden on British people is their lack of customer service. Again, there have been some changes. The big uproar has been about moving telephone call centres to places like India. Much of the charges set against these have simply been on racist grounds, but that misses the entire point. It does not matter where a call centre is located if the person on the other end of the telephone cannot help you; it could be in a building in the same street as your house and still not do the job. I will just outline some of the problems. First you have contracts which tie you in for months or years. You have no choice over these, you have to take what is offered. I move house on average every 16 months, and typically I am still paying for utilities at the old house for 1-3 months after I have left it (and by then there are other occupants also paying for the services); for this cable television (compulsory in Milton Keynes, where, as a new town television aerials were banned) is the worst. Telephone companies especially ones providing mobile (a.k.a cell phones in the USA, handies in Germany) 'phones are also bad.

The next thing is if you have something wrong with your service. The new companies just supply the commodity and are not responsible for how it gets to your house; e.g. BT actually oversees all telephone cables in the UK; Transco oversees all gas pipes no matter what company actually provides your telephone or gas. So often if the fault is technical the provider cannot help. The company who provides the link, the pipe or whatever will often charge to check if it is something they are responsible for or not; BT charge £160 (€233; US$320) to do this.

Aside from all that, whenever you call a utility company as with all interaction on the telephone these days you have to wait and wait (if your employer lets you call during the day) and press a combination of buttons and then keep repeating your story to different people. Do not believe what you are told. The people in call centres do their best but are poorly trained and have to navigate a maze of rules that are often confusing to everyone. Moving to a new house, we booked two weeks in advance to have our telephone connected, but arriving there it had not been and it was not for a further six weeks, so eight weeks in total. The previous occupants had left without telling any utility company; their telephone had been paid for by their employers and in the end we had to contact those employers and tell them to stop paying for it (the occupants had gone to the USA) before we could have our phone connected. Now, this problem had been apparent to the phone company immediately and on all of the times we had phoned, we had been given conflicting advice each time ranging from 'you have no phone line running to the house', 'the phone line does not belong to us', 'you can be connected in 28 days' to 'you can be connected this afternoon'. The work to be done was lodged each time and encountered an error but no-one contacted us to tell us what was happening. Of course in all this time we were paying for a service we did not have. This is one small example, do not get me started on the gas and electricity for which two separate companies tried to bill us for our usage.

The household I live in is robust and patient and has jobs that allow you to take time out to sit on the phone for a couple of hours; many people in the UK are not so lucky as us. We are all faced by very slow service, an arrogance that we should know precisely what to do (do not ask me to explain any of the bills, they are bewildering and I spent 9 years at university), and if we do what they ask they are not obliged to provide us with a service; even one we are paying for in advance.

The UK government wanted Britain to be the leading country for broadband coverage and in the early 2000s it seemed that that was possible. Now, however, it is clear that the UK is lagging behind countries such as South Korea, not only in the percentage of the country covered but in the speed of the service provided. Why is this? It is not that there is no demand for broadband, it grows daily, it is because the companies are more concerned every last pound out of consumers and tying them into such difficult contracts that they cannot upgrade or transfer. Privatisation was supposed to promote competition and thus efficiency, instead the UK has large cartels working to the lowest common denominator. Not only is their utter greed and absolute arrogance holding Britain back from developing to meet competition, it is also haunting the lives of the bulk of the UK population and in millions of homes denying them basic supplies.

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