Martin Hickman: Unbridled greed of Big Six cannot be tolerated in hard times

Click to follow

The Big Six exert a far tighter stranglehold on energy than their counterparts in other industries with large calls on household budgets. The results of this oligopoly are over-the-top prices, confusing bills and poor customer service.

That they have become so dismal is probably not their fault: any industry dominated by so few players would be inclined towards mediocrity. The blame lies with Labour politicians and the regulator Ofgem, which was asleep on the job until 2010. For more than a decade, Tony Blair's Energy ministers shirked the hard decisions required to create a sustainable and competitive energy sector. They were content to see bills fall as finite cheap North Sea oil was sucked up and pumped into poorly insulated homes, and takeovers shrank the 20 energy firms at privatisation to six.

They failed to recommission nuclear plants or launch a vigorous campaign to insulate thermally wasteful homes leaking heat through roofs and walls.

The resulting energy crisis will be felt in homes across the UK. With the hasty running down of North Sea gas and global decline of easy-to-extract oil, bills have rocketed. Where once energy was so cheap that many people saw no need to insulate, the opposite is now true: hundreds of thousands more people are having to choose between heating and eating.

And the squeeze is likely to continue. Britain requires up to £200bn of new infrastructure this decade to keep the lights on, with Ofgem estimating bills will have to rise by up to 60 per cent by 2020 to fund it.

Since 2009, Ofgem has become tougher and there has been renewed political pressure. Even more starkly, hard times have changed the context for the companies. With rising unemployment and budgets squeezed by higher fuel prices and benefit cuts, people have become less willing to tolerate greedy businesses, and there is a growing desire to check the activities of irresponsible capitalism. The solutions – a crackdown on prices and more competition – are more likely now.