“Privatisation has ushered in intense profiteering by big energy corporations, as shown by their historic profits in the last year. Global corporations are pushing price rises onto customers in order to line the pockets of their already super-rich shareholders.”
By Jon Trickett MP
Energy is a basic necessity. We need it to turn on our lights, charge our phones, cook meals and heat our homes. Whether it is gas or electricity, our society could not function without it.
But our global energy system is driving our planet to destruction whilst increasing economic inequality. Climate scientists warn that man-made climate change has put the survival of human life on our planet in jeopardy. If we do not decarbonise our economy and radically overhaul our economic model which prioritises protecting capital rather than protecting people and planet, we risk extinction.
COP26 agreed to keep alive the commitment to stop temperatures rising more than 1.5C. However, no country or corporation has actually taken action to make this a reality.
Why are politicians failing to take the action required when the cost of inaction is so disastrous? To answer this question we need to look at creeping state capture by corporations and the political mechanisms the fossil fuel industry exploits, such as lobbying.
In the House of Commons today I raised the issue with the COP26 president, asking whether the fact that government ministers meeting the fossil fuel industry nine times more than renewable energy organisations has had an impact on the government’s decision to develop new fossil fuel projects. Several such projects are already in motion and nearly 50 others are in the pipeline in the next three years.
The UN Secretary General called any new spending on fossil fuels “delusional” but it is clear that the way British capitalism and our political system is structured actually enables the fossil fuel industry to wield power within our democracy.
Some argue that it is necessary to invest in new fossil fuel options because of the current energy price crisis. The government blames the war in Ukraine as the reason for this, but the reality is much more complex. The truth is that energy prices have been rising and rising since privatisation. We Own It have argued that electricity prices are 10-20% higher than they would have been without privatisation.
Let’s remember that the supply of energy through a limited set of power lines and gas pipes, laid down over decades, makes energy a natural monopoly. This is why before the neoliberal turn under Thatcher the UK energy supply was publicly owned.
In the late 1980s, our public energy suppliers were broken up into multiple private transmission, distribution, generation and supply companies as part of Thatcher’s privatisation crusade. It was argued that competition would lower bills.
Fast forward to 2021, and we have the Big Six energy companies (Centrica, e-on energy, EDF, npower, SSE, Scottish Power) competing to sell us electricity and gas that travels down the same power lines and through the same pipes.
Privatisation has ushered in intense profiteering by big energy corporations, as shown by their historic profits in the last year. Global corporations are pushing price rises onto customers in order to line the pockets of their already super-rich shareholders.
Indeed, this week, Eurogas – a big lobby group of 65 fossil fuel companies – meets for its annual conference where there are set to be “celebrations” over the historic profits made by their most prominent members in 2021. Last year, for example, BP made £9.45bn in profits as it cashed in on oil and gas price hikes.
Research by CommonWealth shows that oil and gas companies have handed out almost £200 billion to shareholders since 2010. If the energy market was in public hands, this money could have been used to cut bills and invest in a cheaper, renewable energy supply.
Of course, the Tories will never reverse this privatisation; they are ideologically wedded to it. The public may also draw a connection with the fact that the Tories have received £1.5 million in donations from the energy industry under Boris Johnson’s premiership alone.
That is why we need a Labour government which will radically break with the political and economic status quo. Because there is an alternative: the restoration of public ownership of our energy system that would remove the profit motive and restore public accountability. A Green New Deal programme of large-scale investment in renewable industries, Green jobs and home insulation could facilitate the transition away from a carbon economy.
This alternative is not only pragmatic, it’s also popular. Polling finds that 59% of adults support bringing energy companies back into public ownership compared to 13% who are opposed.
The Labour Party should pay special attention to the fact that 60% of adults who voted Conservative in 2019 support bringing energy companies back into public ownership compared to just 18% who are opposed and 70% of adults aged over 65 support bringing energy companies back into public ownership, compared to just 13% who are opposed.
A Survation poll this month found that 68% of voters in the ‘red wall’ constituencies of the North and Midlands support public ownership of energy, compared to 20% who are opposed.
The way the energy market operates is a microcosm of how our wider economy fails people everyday, supported by a rigged political system. In order to tackle climate change and inequality we not only need to change how the energy market operates, but also change our whole economy.