“In response to this collapse, we see the government setting aside billions in public funds to prop up firms that are too big to fail. But with that public money comes no change in the broken energy market.”
During the Opposition Day Debate on VAT on household energy bills this week, Rebecca Long-Bailey delivered a powerful speech exposing the government’s continued failure to address the energy crisis and the monopolisation of the energy grid. You can watch her speech, or read the full planned contribution below:
We are in the midst of a cost of living catastrophe. Households will face higher taxes when National Insurance goes up, food bills are rising, council tax is expected to increase, life lines such as the £20 increase in Universal Credit have been cut and real wages are set to fall as inflation, taxes and interest rates rise.
On top of all of this, annual fuel bills are expected to rise by a whopping 50 per cent to £2,000 when the current energy price cap is raised in April.
So this motion is right – To provide some temporary relief the Government must cut the rate on VAT for household energy bills as soon as possible. They must expanding and increase the Warm Homes Discount, the costs of supplier failure must be prevented from going onto bills and a contingency fund to support businesses facing huge energy bills is necessary. But as we all know, they are just a short term fix to a long term problem.
The CEO of Ofgem argued that ‘no-one could have predicted the kind of gas price rises we have seen.’ But I disagree, we could see this coming for a long time. Closing the UK’s largest gas storage plant in 2017 without a plan to replace it was illogical. The Government was repeatedly warned at the time that the country faced more volatile winter gas prices and was becoming too dependent on energy imports.
But the bigger issue is the business model of the energy sector as a whole.
For years since privatisation the monopoly grid companies prioritised dividend extraction over upgrading the system for renewable energy. The generators didn’t really start investing in renewables until public money was put on the table and the supply market is in complete disarray. I say ‘market’ but that’s a real stretch because with so few switchers the supply companies didn’t really compete in a true sense, leaving many customers paying well over the odds. Even the Government admitted there was a problem and there had to be a price cap in the end.
And now smaller suppliers are folding creating even less competition leaving huge market shares for the bigger players.
In response to this collapse, we see the Government setting aside billions in public funds to prop up firms too big to fail but with that public money comes no change in the broken market, no reduction in household bills and none of the benefits of public ownership.
If our energy system was brought into public ownership however such public companies would not be duty bound to prioritise huge returns for shareholders. They could invest in the system, invest in renewables and use the financially buoyant times to build up reserves to protect against the types of price fluctuations we are seeing. These companies would be transparent and democratically accountable to the needs of consumers not driven by a director duty to prioritise shareholder return above all else.
And they get this is Germany, two-thirds of all electricity is bought from municipally owned energy companies. They get this is France, too, two-thirds buy their electricity from EdF, majority-owned by the French state, which also runs the grids and generates most of the electricity. And Further to that, the UK Government even thinks its ok for EDF to supply and generate energy for homes here in the Uk, thus generating profit for the French State, but they don’t think it’s appropriate to have our own public energy companies generating a return for the people of this Country. Even the most ardent fan of privatisation would think this was absurd.
The fact is, as David Hall, former director of the Public Services International Research Unit at the University of Greenwich says “the energy we need for our lives is not an ordinary consumer product; it’s a basic necessity.”
So until the Government recognises that public sector control is central to addressing the crisis we face in our energy system it’s our constituents who pay the highest price, victims of a chaotic market driven not by basic necessity but by profit.
Rebecca Long-Bailey MP