Gaining Currency
I see that the former Conservative Prime Minister - now Sir John Major - has come out in favour of a 'windfall tax' on the excess profits of the big six energy companies and that even the Labour leader, Ed Miliband, who has been making most of the running on this issue - has been singing his praises, as a result.
How nice it is to hear that people in such high places are agreeing with what I had to say back on 12 October 2013 - and what would make my day now is an announcement that my views on independent regulation of the trade unions are gaining currency - amongst the great and the good - as well.
Sir John Major calls for windfall tax on energy profits
Sir John Major: "People will have to choose between keeping warm and eating"
Former prime minister Sir John Major has called for an emergency tax on the profits of the UK's top energy firms.
Speaking at a lunch in Westminster, the ex-Conservative leader said recent price rises of more than 10% were "unacceptable" and action was needed.
The government could claw back the cost of extra winter fuel payments through a one-off tax, he suggested.
Downing Street said it was an "interesting contribution" but the government had no plans for such a tax.
Ministers have rejected calls by Labour leader Ed Miliband for a price freeze, describing it as a "con" and urging hard-pressed consumers to switch suppliers instead.
Three of the so-called "big six" energy firms - Npower, SSE, and British Gas - have announced plans to raise gas and electricity bills by between 8% and 10%.
“I do not see how it can be in any way acceptable that with energy prices rising broadly 4% in terms of costs that the price to the consumer should rise by the 9-10% that we are hearing”Sir John Major
Analysts expect the others - Scottish Power, E.On and EDF - to follow suit with similar price increases.
Speaking to an audience of political journalists, Sir John - prime minister between 1990 and 1997 - said price rises of this kind were not justified and it would be "acceptable" for the government to impose a one-off levy to recover the cost of cold weather payments this winter.
Cold weather payments are triggered when the temperature falls below a certain level for a prolonged period.
Those on income support and other work-related benefits are eligible for a £25 payment if temperatures drops to 0% celsius or below for seven consecutive days.
Fuel poverty campaigners have said the price rises will leave some people with the choice of having to "heat or eat" this winter but energy firms say they are needed to cover the cost of rising wholesale prices and environmental obligations.'Behaving badly'
Asked about Labour's plan for price freeze if it is elected in 2015, Sir John said "Ed Miliband's heart was in the right place but his head has gone walkabout".
PAST WINDFALL TAXES
- 2009: Labour tax on bankers' bonuses
- 1997: Labour levy on the profits of energy giants and other formerly state-owned firms privatised since the 1980s
- 1981: Conservative tax on oil and bank profits
"But at the moment I do not see how it can be in any way acceptable that with energy prices rising broadly 4% in terms of costs that the price to the consumer should rise by the 9-10% that we are hearing."
He later told the BBC that the was a "crisis" in the energy market and there was a "very real chance" that the government would have to increase the amount of assistance it gave to people in the event of cold snap.
Should this happen, he said a "one-off retrospective" tax should be considered.
Failing Markets (12 October 2013)
A backbench Labour MP - Graham Jones - won plaudits from his colleagues the other day for asking David Cameron at Prime Minister's Question Time (PMQs) why the government is prepared to intervene in the mortgage market but not in the energy market.
The implication being that the Coalition Government is soft on energy companies who keep raising their prices - unlike the Labour Party which, if returned to power, would be on the side of the consumer and would give these big monopolies a much harder time - for example by freezing prices.
But this is nonsense of course - because government (including the last Labour one) has been intervening in the energy market for many years with the deliberate aim of driving energy prices up - and not down.
The reason being that energy has been regarded by all governments as generally too cheap and as a 'great polluter' into the bargain - so in the move to cleaner, greener forms of energy which is supported by all parties, of course, prices have to rise as a way of securing reliable energy sources for the future.
Which explains the big increase in wind energy, for example, which doesn't come cheap but is capable of helping the UK government to meet its international commitments on reducing global warming and preventing further climate change.
A specific area where this policy was pursued under the last Labour Government was in relation to the so-called 'fuel price escalator' (a different form of energy of course) which was due to keep raising the price of petrol year on year - as part of a cleaner, greener UK energy policy.
Now the Coalition Government has stopped those planned price increases from going ahead - which is good news if you are a motorist, but bad news if you believe that global warming and climate change represent a real threat to world's future - witness the freak weather events that the UK and other countries have experienced in recent years.
All of this comes at the worst possible time, as it often does, when the economy is struggling to pull itself out of recession and people are struggling with household bills - but the choice, as ever, is the same between the competing demands of a viable, long-term and responsible energy policy - and the shorter-term interests of consumers who face a big hike in their household bills.
At this rate I can see nuclear energy making a comeback and/or the dumping of green energy targets - as politicians get into a 'bidding war' about which party, if any, is on the side of the consumer.
Whatever happens, I'm not convinced that a 'price freeze' is a sensible solution - because energy companies can just side-step any planned freeze by raising prices before and/or after any Government legislation is due to come into place - which will clearly take some time.
What would make more sense to me is a 'Windfall Tax' on energy companies that are deemed to be making excess profits and ripping off the consumers - although what I can't understand is why the industry regulator (Ofgem) appears to have been so ineffectual in championing consumer interests up until now.
In which case why not sack the regulator and appoint a new one?
A final point to make is about Labour's claim to be the consumer champion where markets are failing - which rings more than a bit hollow when you consider the behaviour of the trade unions, particularly those operating in the public sector - where GMB, Unison and Unite completely dominate the 'market'.
In the much maligned energy market there are six big players - yet in the case of public sector trade unions only three - all of whom charge very similar fees and all of whom support the Labour Party - and all of this happens without the benefit of an independent regulator who can adjudicate in disputes between the consumer (ordinary union members) and the service provider which keep merging into ever larger organisations.
