During Labour's long economic boom, few in government gave much thought to energy policy. So long as the bills came down – which for years they did because of North Sea gas and the privatised suppliers trimming workforces – politicians were content to allow greater consolidation of the industry. They gave little thought to the future. That complacency must end now.
More than 5.5 million households are now in fuel poverty – spending 10 per cent or more of their income on heating. With bills set to rise for the rest of this decade, as suppliers replace worn-out plants and invest in renewable energy, action is needed to ensure that households escape the desperation of choosing whether to eat or stay warm. Excess profit must be squeezed out of the system.
Figures from Ofgem show that the margins of the biggest six energy firms have risen sharply since 2006 – though the regulator expects them to fall in coming months after January's modest price cuts. In a market characterised by scant competition, the Big Six have failed time and again to perform or reform; refusing to make bills more easily understood; failing to cut prices quickly when wholesale costs have fallen; failing to instal smart meters which reduce billing queries and increase energy efficiency.
The campaign – End the Big Six Energy Fix – calling for a windfall levy on energy profits, with the proceeds going to help alleviate the plight of the fuel poor, has the dual merit of being achievable and just.
Windfall taxes on businesses must be the exception rather than the rule; companies must be able to plan for their tax liabilities and not be penalised for success. But energy companies are currently being rewarded for failure. Tony Blair imposed a windfall tax on privatised public utilities, and Gordon Brown levied one on bankers' bonuses. The Coalition should back the campaign and act against these slothful, failing monoliths of a market economy which otherwise serves us well.
In this hard winter, with the chill of an economic downturn still biting, these firms will receive little sympathy from voters.
- More about:
- Alternative Energy (renewable)
- Gordon Brown
- Labour Party
- Tony Blair