The privatisation of Britain’s energy industry by the Conservative governments of Margaret Thatcher and John Major has come back to haunt the Tories as hard-pressed consumers turn against the companies they accuse of “extortion” in their pursuit of profit.
The Prime Minister, David Cameron, and the Secretary of State for Energy, Chris Huhne, met representatives of the Big Six energy companies after Ofgem, the industry watchdog, and consumer groups complained about profiteering.
The firms, in a bid to head off criticism, have promised to write to customers telling them how to find lower tariffs, change payment methods and insulate their homes in a bid to cut
their bills.
Mr Cameron said the companies will be “permanently watched” and urged them to “put their shoulders to the wheel” in what he described as a “call to action” this winter.
A Downing Street spokesman even described the meeting as “a milestone in delivering the coalition programme pledge to increase households’ control over their energy costs.”
But Caroline Flint, the Shadow Energy Secretary, said: “For the Big Six to agree with David Cameron to hold their price increases over the winter, when wholesale energy prices have been falling in recent weeks, is a complete betrayal of the public.”
And Labour leader Ed Miliband called on the firms to “give up their profits” after the regulator revealed the details of just how much extra profit they are squeezing out of households in Britain.
Ofgem revealed that recent price hikes have expanded the profit margins of the Big Six energy companies by an extra £125 per costumer per year.
Mr Miliband said: “All the Big Six energy firms have seen their profits rise sharply this year. There is nothing to stop those power companies giving up those profits. Instead of an improved bottom line, they could use this extra money to stop crippling price rises.”
The firms have defended their prices – and profits – by arguing that they need some of the money for research and development; that they are, to some extent, dependent on wholesale prices; and that they are, anyway, in business to make money.
But those arguments hold little sway with consumer groups and hard-pressed families in the new Conservative Age of Austerity.
Rob Tolan of the Elizabeth Finn Care charity branded the extra customer costs of £125 as “a slap in the face for households who are struggling to make ends meet”.
The Tories thought that the privatisation of Britain’s energy firms – of British Gas in 1986 and of the regional electricity boards in 1990 – would prove popular with customers, some of whom became, for a time, small shareholders in the companies. But soaring prices – and profits – have put an end to all that.
