Unions to join ranks of private utilities

Union leaders are today expected to make a historic break with their socialist past and endorse the creation of a TUC-backed business to supply union members with cut-price gas and electricity.

According to confidential documents, the company - provisionally called TUCPower - would be 75 per cent owned by unions and 25 per cent by financial investors and would seek to take advantage of the deregulation of the energy supply market next year.

The idea would be to supply energy providers with the names and addresses of any of the seven million union members who declared an interest in joining the scheme. Under the plan, householders would get cheap power and unions would be paid half the profits made through fees charged by TUCPower.

A venture of this kind represents a sea-change in the attitude of unions, which have traditionally steered clear of engaging in capitalist enterprises, but it will receive a warm welcome from Labour leaders.

Left-wingers on the TUC's ruling general council, which is due to back the plan in principle today, will argue that the venture sits uneasily with the movement's opposition to privatisation and deregulation.

But the officer corps at the left-led unions Unison and the T&G general union, together with the GMB general union and the engineering union, have identified no serious practical difficulties. Criticism may yet emerge from lay activists.

Tony Cooper, general secretary of the Engineers' and Managers' Association, who first floated the idea, says that if the company could capture just 1 per cent of the market, turnover would amount to pounds 147m.

In a letter to John Monks, TUC leader, Mr Cooper says that the seven million trade unionists together with their families represent between a third and a half of the country's 21 million households.

An internal TUC memorandum argues that potentially unions have considerable bargaining power to negotiate discounts with power providers.

Mr Cooper says union members are "low risk, valuable customers" because by definition they are in employment. If a substantial return was made cash could be used to help unemployed members buy energy.

"We have here potentially a way to give all members a good deal on energy purchase; ensure that the unionised companies in generation and the coal industry have access to the key market so preserving members' jobs; make a substantial amount of cash for the movement and at least get something out of yet another difficult change rather than getting stuffed by it as business passes to assorted foreigners, non-unionised generators and the likes of Group 4. It will cost us nothing."

TUC officials propose that some of the surplus could be used to provide some hardship payments to trade unionists who ran into temporary difficulties in meeting energy bills. Initial start-up funding is intended to come from private financiers, who would be required to provide between pounds 500,000 and pounds 1m.