Friday, 8 November 2013

Unacceptable Corporate Blackmail

Imagine the following scenario:  The British government and other political leaders receive threats from a small group of wealthy men that unless they keep allowing them to squeeze money from the general population for the foreseeable future, these men will cut off the power supply to the UK.  It sounds like a plot from a spy novel of the 1970s, but is in fact the situation that the UK is in today.  It is not SPECTRE but the six main power companies who are making such threats.  Back in September leader of the Labour Party said at the party conference that if Labour won the next general election, which will not be held until 7th May 2015, they would impose a 20-month price freeze on the charges for gas and electricity supply to consumers.  Now, at the time it was still 19 months until the election and there is no guarantee that Labour will win.  However, just making this policy statement was sufficient for the leaders of the the 'Big Six' : British Gas, EDF, E.ON, npower, Scottish Power and SSE to say such a policy would lead to blackouts. 

Given that four of these companies are foreign owned; they said that they would withdraw from the UK market place. EDF belongs to the French government; Scottish Power is owned by Spanish company, Iberdrola; E.ON is German and npower is owned by RWE of Germany.  They blame the wholesale prices, even when these are falling; they blame the taxation raised to try to promote sustainable energy initiatives, they blame everything except their own greed.  These six companies have made made more than £2 billion (€2.4 billion; US$3.22 billion) every year for the past four years, rising to £3.74 billion in 2012.  This year prices to consumers on both gas and electricity are rising by an average of 9% whereas wholesale prices have risen between 1-2%, so it is likely that they will exceed last year's profits this year.  They claim they only make 5% profit on what they sell.  When this is generating billions of pounds of profit, year after year, you could fall to 1% profit and still be incredibly wealthy.

The complaint from the power companies, is that they lack capital for investment.  However, it is clear that if rather than paying their chief executives and their shareholders big sums they actually invested in the business this would be not an issue.  Phil Bentley, CEO of British Gas, led got a salary of £1.3 illionm in 2010, plus share options worth £2.7 million at the time.  Ian Marchant  of SSE got £1.2 million, plus £126,000 bonus in shares and 330,000 shares worth £4 million at the moment; his pension in 2011 was worth £6.1 million.  Johannes Teyssen, CEO of E.ON, has salary of £860,000 in 2010 but including bonuses and share options raised this to £3.6 million.  These are just the men at the very top, not the numerous executives and managers beneath them who all receive generous payments which could pay for all the power going into a small town for a year.

Once again, today, as reported on BBC Radio 2, npower has spoken out saying blackouts are inevitable unless Britain has a 'more stable' political context.  Now, this to me, sounds very like a company trying to dictate Britain's government, it can be taken as suggestion that democracy is too troublesome for the power companies and something like a dictatorship which panders to their greed and lets them keep ramping up prices for consumers, year after year, unchallenged would be better.  If a foreign politician said something similar you can imagine the outrage.  A few weeks ago the wife of an executive from an energy company said that there needed to be a 'serious conversation' about investment and more money coming to companies for it.  I said that her husband should simply be arrested for threatening the British state.  Why can someone tweet a joke about terrorism and be arrested and yet, these company executives can come on the television and radio week-after-week and continue to threaten damage to the UK economy without even being challenged let alone arrested?  It is clear that there is one rule for the hyper-rich and one for the rest of us.  The cockiness after the first assault following Miliband's speech in September is apparent that now the power companies feel they can begin to try to shape the political context too.

Yes, there are major problems with generating electricity in the UK.  There are two key sources of this.  Both the Labour governments 1997-2010 and the current coalition have failed to drive ahead with developing new power stations of any kind.  They vacilated because they are torn between making sure enough electricity is generated and their obligations to sustainable energy.  Surprisingly, unlike our European neighbours, especially in Germany and Denmark, Britons are largely hostile to sustainable energy approaches.  The campaigns against wind farms are far more extensive and successful than any campaigns against nuclear, gas or coal power stations being built.  Greed does have an impact as EDF held out for its set price for the electricity it will generate from the nuclear power station it is building.  The price will be £89.50 per megawatt hour once the station is complete, twice the current level.  Of course, this is blackmail.  The cost to the consumer can do nothing but rise, but there is nothing that government let alone the consumer can do to resist this.  We can switch suppliers, but it is a cartel.  Some smaller companies are appearing but as yet they cannot challenge the marketplace the way was possibly fantasised about when private companies were allowed this oligopoly. 

We have to commend Miliband for his bravery in standing up to the companies.  It is certainly a vote winner.  However, with the corporations now making political points and in fact trying to threaten any future government both in terms of what policies they will permit it to adopt and indeed the entire 'political scene', we can argue that democracy is being eroded before our eyes.  I was concerned during the Blair regime especially with the attacks on human rights in the UK, that this process was happening or that it would be driven by the Murdoch empire.  However, I had overlooked that other big corporate players were happy to follow in the footsteps of News International and try to shift the political patterns more to their liking, and, indeed being pretty successful about it.


Jonathan said...

The Big-Six threaten to depart from the UK market. Yes, so? Bugger off, go on. They can't hoik Drax onto the back of a low-loader and take it with them. The power stations and infrastructure will still be here.

Jonathan said...

Slightly tangential to the article, but noticing your banner: "Given how I have already encountered difficulties for expressing my views on political issues I think it is better that I remain to some degree anonymous." prompted this:

Back in January I was attempted to be fired simply because four years ago I used to be an elected city councillor!

After 1200 applications and almost three years of unemployment, days away from bankruptcy, I had managed to get a bearly minimum wage job working as a contractor to an outsourced IT firm doing upgrades for the city council's outsourced IT contractors. "Somebody" instructed my employment agency to terminate my contract "because he used to be a city councillor". I had to explain the law to them and insisted I would not leave until given the specific name of the specific person giving this instruction ... which never happened.

There you are, kids. NEVER EVER even consider going into elected public office unless you are obscenely filthy rich; it will comprehensively, completely and utterly destroy your future employability