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Editorial: We should nationalise, not bail out, the energy privateers

THERE is a grim familiarity to the government’s crisis talks with rapacious energy monopolies on bailing them out with public money.

A failing privatised model is on the rocks and needs our help to keep afloat — a favour that will be repaid with higher energy bills and continued foot-dragging when it comes to addressing climate change.

For years energy regulator Ofgem and ministers responsible have pushed the myth that consumer choice is the route out of fuel poverty.

Shopping around and switching suppliers were presented as a panacea that would see the magic of market competition drive down prices.

It hasn’t worked. As a Sunday Times study found last year, average gas bills rose by 18 per cent in the decade from 2010 and electricity bills by a whopping 44 per cent — while wages lagged way behind such inflationary figures at a measly 4 per cent over 10 years.

And Ofgem this year announced it would allow increases of up to £153 in annual bills, the biggest hike since the energy cap was introduced. 

As these rises combine this autumn with the end of the furlough scheme and the withdrawal of the £20 uplift in universal credit, millions across Britain are left facing a cold, hard winter, especially since the government’s decision to scrap its green homes grant withdraws funding for better insulated homes.

Now Business Secretary Kwasi Kwarteng is mulling subsidies to allow the bigger energy firms to cover the cost of taking on customers from smaller companies expected to bite the dust amid rising global energy prices. 

“Uneconomic” tariffs offered by newer, smaller companies can be unaffordable for established firms because of their longstanding pension obligations, a further example of the cost of a strategically incoherent energy policy in which short-term profit trumps long-term planning and in which natural monopolies are parcelled out among privateers.

If the small players go to the wall and the big firms are bribed to swallow up their customers — whose existing contracts may be honoured, but who like the whole country are staring bigger bills down the line — the whole crazy merry-go-round becomes still more surreal.

The GMB union, which has been warning the government of a looming energy crisis for years, draws a useful analogy with the wasted opportunity of the bankers’ crash of 2008.

Then, billions were found to bail out the banks — yet the then Labour government declined to take operational control of financial institutions which could have been used to break the parasitical bonus culture, reverse the damage done by Margaret Thatcher’s “big bang” deregulation of financial markets and direct lending to socially useful ends.

Its Tory-Lib Dem successor proceeded to sell the rescued banks back to the private sector at a heavy loss to the public purse. Britain’s broken banking system, in which billions are sunk in property speculation to fuel the housing bubble and the productive economy suffers from chronic underinvestment, was left unreformed.

As GMB leader Gary Smith points out, we cannot afford a repeat of the “get-out-of-jail-free card” given to the banks when it comes to an energy sector crucial to keep us fed and warm — and the reform of which is essential to reducing greenhouse gas emissions and slowing climate change.

Yet “lining the pockets of bandit capitalism,” to use his phrase, is precisely what this government has done since the start of the Covid crisis and precisely what it will do again unless it is stopped.

Labour stood at its last election on a promise to nationalise rail, mail, energy and water. The case for doing so is stronger than ever. Our movement must press for that commitment to be made loud and clear at next week’s party conference — and take the demand for public ownership to drive down bills to the streets. 

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