As energy company buckles, Miliband needs to pick more battles

Ed Miliband’s success on reforming the energy sector shows a new high-risk, high-reward strategy for him: fighting the entrenched interests others won’t touch.

In Prime Minister’s Questions today, Ed Miliband claimed credit for the decision (£) of Scottish and Southern Energy to divorce its wholesale and retail arms – for which he was shouted down, en cue from Flashman, by the boorish government benches.

Watch it:

To jeers from David Cameron’s Conservatives, Miliband said:

“And yes, and yes, and yes, I will take on, I will take on those companies in this country who aren’t doing the right thing, like the energy companies, and we’re seeing change today in the energy sector, because of what I’ve said.”

Perhaps Cameron’s Tories would believe Miliband had something to do with the decision if they heard it from a different source – like the Financial Times (£):

Ed Miliband’s speech to the Labour party conference last month cast more than the familiar array of thunderbolts at the “big six” utilities. Instead of sticking to routine condemnation of bill increases, he pledged to abolish a “rigged market” that had allowed them to achieve “dominance”.
Afterwards, Ian Marchant, chief executive of Scottish and Southern Energy, asked his colleagues to come up with a response.

Two weeks later, SSE’s answer is to do voluntarily what a government led by Mr Miliband would force upon them.

This move should hopefully serve to bring down energy bills far more than abdicating the UK’s responsibility to cut emissions ever would.

There has long been a suspicion that the energy companies’ profits are unjustifiably high; no one is entirely sure, because the internal price the companies pay themselves for the energy they generate might be much lower than the external price offered to new competitors.

If this anti-competitive pricing is locking out new competition, then the energy oligarchies have free reign to charge the consumer whatever they can get away with. SSE’s decision – and that of the others which may follow course – looks set to put an end to that problem; and for all of the right’s “red Ed” abuse, it is a solution which results in a freer market, rather than a more regulated one.

This success for Miliband suggests a new course he could take to win favour with the public.

As it is, he comes under criticism, but his two biggest wins since his election as leader have come from ballsy attacks on seemingly unassailable entrenched interests – first came his leadership on phone hacking, when he took on the Murdoch empire against conventional wisdom:

“The rule book said you didn’t take on News International, you didn’t take on vested interests, because, as with the ‘too-big-to-fail’ banks, they were ‘too big to be challenged’.”

Now his victory on energy proves the validity of this strategy. Miliband should devote his time to identifying further battles which no-one else has been brave enough to pick, fight them, and win.

There’s no shortage of possible targets:

• The welfare-to-work companies, who profit from quick and sloppy welfare assessments with record appeal rates;

• The lobbying industry, the rot that lies at the heart of the Liam Fox scandal and the appalling quality-to-profit ratio of companies like Serco and G4S;

• Public services outsourcing to companies who underpay their staff, collect massive profits, and let the taxpayer pick up the bill through the social safety net;

Banks, banks, banks, banks

If Miliband scored a hit on just one of these, he’d have a victory he could dine on for a year; if he brought justice to all four, he could go to the country in four years and claim he has improved the country more in opposition than Cameron and co have done in government.

See also:

Huhne’s tough talk on energy companies exactly what we needNatan Doron, September 20th 2011

Government needs to take on the energy companies to bring down pricesBarry Gardiner MP, August 17th 2011

Government and Labour should demand more innovation in energy sectorCharles Samuda, July 27th 2011

Misselling is only the beginning of the energy companies’ sinsHuw Irranca-Davies MP, July 25th 2011

Warnings over Scottish fuel poverty target as energy chief enjoys £2m bonusEd Jacobs, July 25th 2011

16 Responses to “As energy company buckles, Miliband needs to pick more battles”

  1. Alex Braithwaite

    RT @leftfootfwd: As energy company buckles, Miliband needs to pick more battles

  2. sunny hundal

    @johnrentoul @ConHome except even the FT admitted this happened how about giving credit where its due?

  3. Adam Richards

    RT @leftfootfwd: As energy company buckles, Miliband needs to pick more battles

  4. Outrage at 733 per cent rise in energy companies’ profits | Left Foot Forward

    […] also: • As energy company buckles, Miliband needs to pick more battles – Alex Hern, October 12th […]

  5. Shooter

    I don’t understand where you dig up these people commenting on business and economics. Almost every single piece I read is badly flawed. If the author was actually familiar with electricity trading or indeed, business he would know two things. 1. the deal SSE has done is in the day ahead market…no one trades in this and suppliers get their supply from two year forwards. SSE has gambled on the fact that most leftys don’t know their arse from their elbow…clearly, they have won. 2. these companies just don’t make that much money. every single appraisal of their profit is in absolute figures which just isn’t relevant. try looking at a figure that people who actually do business look at like return on equity. again, these businesses just aren’t that profitable…and people wonder why Labour is toxic to people who run businesses?

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