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No more blackmail from Greedyguts, Inc

WHEN British Gas announced last October that its dual fuel charges were to increase by 9.2%, the excuses were ready.

There were "green levies" to contend with. There was the cost of delivering power - imagine that - to customers. Finally, there was the burden of buying energy "on the global markets".

Like the rest of the Big Six utilities, British Gas presented that one as the wild card. The world being a wicked, dangerous place, what's a poor energy giant to do? If you fancy a 41% share of the domestic market, like British Gas, you do the sensible thing and purchase much of your supply from Centrica, which just happens to be your parent company.

The upshot last year was that British Gas did indeed find its profits being squeezed by rising prices. Simultaneously, however, Centrica enjoyed a 64% increase in profits from "international gas supply" to the likes of, well, British Gas. It was, as it remains, a wonderful arrangement. Unless you happen to be a customer.

Centrica would maintain, no doubt, that this is a grossly simplified description of a complicated market. Profits dictate investment decisions; investment decisions are the key to whether the lights stay on. Do you mothball plants or build new ones? Do you put money into new resources or walk away? Do you bow before a regulator or risk leaving shareholders in a state of alarm?

Centrica seems to cope. In the five years from 2009 to 2013 its margin on domestic gas supply was, successively, 7.4%, 10.6%, 8.1%, 11.2% and 9%. For the purposes of comparison, Tesco's profit margin for the six months to August 2013 was 4.9%. Yet last week, Sam Laidlaw, chief executive of the energy company, was warning that even an investigation of his industry by the Competition and Markets Authority would delay investment and lead to "an increasing risk" of blackouts.

It was a simple message: leave us alone or it will be too late to build new power stations (despite having mothballed several of those). Leave us alone or you will see more job losses and more renewables schemes abandoned to follow the announcements made by SSE. Above all, don't tinker with a market in which Ofgem detects "possible tacit co-ordination" over price rises or the lights will indeed go out.

The last threat carries weight. Thanks to the Big Six, the flawed energy policies of successive governments and a regulator that fails to regulate, a distribution system that ought to operate with 25% spare capacity to deal with emergencies or unexpected demands copes with 4% (some say less). The supply companies are failing to supply.

Meanwhile, they push up prices far beyond inflation, offer a lesser cut when the public rebels, and threaten blackouts at the hint of interference from Ofgem, Ed Miliband, or any Government department. And how have they suffered from the vagaries of those fiendish global markets? In 2009, collective retail profits for the Big Six amounted to £233 million. By 2012, the figure was £1.1 billion.

Arguments over energy needs and energy markets will go on. Laidlaw's claim that a simple competition inquiry could bring his industry - not to mention the country - to its knees is less interesting for its own sake than for what it signifies. First, it sounds very like what it is: a threat. Second, it counts as an another example of where power (no pun) these days lies.

In essence, the Big Six are no different from those too-big-to-fail banks. They are no different from the rail companies demanding public subsidies they can pass on as shareholder profit in return for "investment" to keep trains running. They are not much different, indeed, from the corporate suits who threaten to abandon electorates liable to think independently in referendums.

The power companies have pulled this kind of stunt before. After British Gas announced its 9.2% increase last year, others followed with increases of up to 10.4%. The firms claimed that iniquitous green levies were one reason for increased bills. The Government dutifully obliged with a cut in environmental taxes supposedly worth £50 to the average consumer.

Corporate Britain is in the habit, to coin a phrase, of holding the country to ransom. Fuel prices are one example, rail fares another. The near-comical threats of bankers to decamp to warmer climes if their taxes go up, their bonuses come down, or their persistent wrongdoing attracts legal sanctions while the taxpayer supports their industry is a third. Corporate interventions in Scotland's referendum argument have, meanwhile, reminded us that politics is a stock in trade for these barons.

If your memory allows, cast your mind back to the days when only trade unions could be accused of blackmail. When they threatened to put the lights out there was hell to pay. Over time the corporate world and its political backers demanded, and got, a raft of legislation designed to circumscribe the right to strike. So who now tells the Big Six, or the rail companies, the banks or the English water companies that their exploitation of public need is contrary to the common good?

The worst excesses, by no coincidence, are in those industries on which we depend. In many cases they involve utilities and services we used to own. Yet when Royal Mail is flogged off for less than half of what it is worth, or when the Coalition insists on a third attempt at privatising the East Coast Rail Line after two spectacular private-sector failures, few at Westminster rush to advocate sensible - not to mention honest - alternatives. This is less odd than perverse.

Last November, a YouGov opinion poll gave a clear idea of what the public wants. The politicians and the minions who obey such things slavishly when it suits - over immigration, say, or nuclear disarmament - seemed not to be listening. But the poll found that 84% of voters want the NHS in public hands, and that 68%, 67% and 66% want the same for, respectively, energy firms, the Royal Mail and the rail companies.

Alex Salmond says he will renationalise Royal Mail if the SNP is elected to govern an independent Scotland. That won't be easy, institutionally or financially. Labour made noises about returning railways to public ownership. That would be easy enough as franchises lapse, but the party seems in no hurry to make a commitment. Beyond that, the political world has hesitated to accept the public has an interest in services on which it depends.

In a rational society the conflict between the public good and private interests would be resolved easily enough. Britain no longer offers that kind of society. Corporate power has been elevated absurdly while corporate irresponsibility and greed have been excused. An independent Scotland, its services better protected to begin with than those in the south, could start with a clean slate.

The YouGov poll responses would be a place to start. A proper examination of what we mean by the common good and why it matters would be better still. It's a simple question: why be hostages to those who are supposed to serve us?

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