Three reasons Labour must not be bullied by fat cat energy bosses

The most important thing now is that Ed Miliband and the Labour Party stand firm against the inevitable cascade of sour grapes that are about to come their way. Here are three reasons why that is so important.

Conference is barely over and the hysterical reaction to yesterday’s speech by Ed Miliband is already filling the airwaves and the print media. The ‘Red Ed’ moniker is back, and judging by certain Tory op-eds you could be forgiven for thinking the Red Army has been given permission to water its horses in the Thames.

The source of most resentment was the announcement by Miliband that a future Labour government will freeze energy bills for 20 months should Labour win the 2015 election.

Unfortunately, many appear to still be stuck like glue to the dogma that one can never interfere in markets without fatally distorting them – quite forgetting that the country was only saved from utter catastrophe five years ago by…yep, the state intervening in the feted market so as to rescue our cavalier banks.

No matter. The most important thing now is that Miliband and the Labour Party stand firm against the inevitable cascade of sour grapes that are, like higher energy bills this winter, going to come their way.

Here, then, are three reasons why it’s so important to stand firm against the fat cats.

1. We’re getting ripped off

The cost of energy is increasingly unrelated to the cost of energy. In other words, the price consumers are paying for the power to heat their homes is increasingly unrelated to the cost of that energy on the wholesale markets. In 2009 wholesale energy prices fell by 46 per cent; yet during the same period energy bills dropped by just five per cent. Profits of the Big 6 energy companies have risen by 74 per cent since 2009, while prices have risen by 13 per cent. Centrica, the company that owns British Gas, saw adjusted operating profit rise by 9 per cent to £1.58bn for the six months of 2013 to 30 June.

The energy companies say they need to charge such high prices because they need to invest; however that’s not the only reason bills are rising…

2. Struggling pensioners are paying for fat cats to live the high life

It’s only 24 since Ed Miliband’s speech, and the threats have already started, with energy bosses warning of blackouts and saying that price controls may “threaten energy security in the UK”.

If energy security means anything, however, it means every family in Britain being able to afford to heat their home. It doesn’t mean is five bosses pocketing £16.4 million as us regular folk struggle with whopping bills, which is what happened at Centrica, the company that owns British Gas, in March this year. This is not investment – unless by investment we mean investment in mock Tudor mansions, Porsches, or whatever it is these fat cats spend their – correction, our – money on.

3. Ed has latched on to a genuinely popular policy at last

Popularity isn’t everything, and there are many policies we at Left Foot Forward would strongly caution against even though they are relatively popular with the electorate. That said, the energy price freeze announced yesterday strikes the right balance: it is both populist and progressive.

More than eight out of 10 UK consumers feel energy suppliers maximise profits at the expense of customers, with utilities coming behind only banking, gambling, local councils and government departments in terms of their sheer unpopularity with the electorate.

The utilities firms should also be wary of holding the country to ransom with threats of pulling the roof in should they fail to get their way, as there is evidence to suggest the public are significantly more Red than Ed Miliband on this issue. In 2009 for example, data showed that 31 per cent strongly supported the renationalisation of electricity, gas, water, railways and telecommunications, with 36 per cent slightly supporting renationalisation. More recently, according to a ComRes poll earlier this month, 69 per cent want energy renationalised.

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