Quick fixes won’t stop rip-off Britain

Profiteering by the Big Six isn't to blame for the huge rise in energy prices.

It is cheap to reform, could help bring down inflation, increase household income and it's a vote winner. So reforming the energy market should be a no-brainer for the government, right? Wrong.

Energy bills are the number one financial concern for the public, ahead of the cost of food and housing. The average dual fuel energy bill has increased by 75 per cent since 2004, energy companies received four million complaints last year and overcharging of loyal (often poor and old) customers is still widespread. But as with that other current target of public anger, corporate excess, the political debate is failing to make much headway with public opinion.

David Cameron's attempt to make the running on this was an energy summit held back in October last year. The only tangible outcome from the summit was action to make it easier for people to switch suppliers to get cheaper bills. Yet despite the hard times, even less people are switching now than five years ago. Over 60 per cent of people have never switched, many have no intention of doing so and those who most need to - the elderly and those on low incomes - are least able to. The coalition and now new Energy Secretary Ed Davey need to have an answer beyond simply trying and failing to increase consumer engagement in the market.

Right-wing think tanks continue to lay the blame for price rises on policies to develop renewable energy, while failing to compare this with the cost of replacing our ageing high carbon power stations, as well as the high costs of doing nothing at all. But there are blind spots on the left too.

A campaign to end energy profiteering was launched yesterday by Compass in the Independent backed by a host of leading political figures. It rightly calls for action but puts forward quick fix solutions rather than a basis for lasting reform. A windfall tax is called for by the campaign as the way to claw back excessive profits from the Big Six and price caps to prevent the costs of this being passed onto customers. But it is not clear what, if anything, a one-off regulatory intervention like a windfall tax will do to prevent underlying problems in the market.

The blame for the huge rise in prices is pinned solely on the Big Six's profits, when we know that wholesale and distribution costs have driven over 80 per cent of the price increase since 2004 and social and environmental obligations seven per cent of this. The real issue is where the profits are being made. Regulator Ofgem's own research shows that between 2005 and 2008 the Big Six's total net profits came from just 48 per cent of their customer base - largely those still with the same supplier since before market liberalisation. These customers are being overcharged to subsidise cheap offers for customers who switch suppliers in the more competitive end of the market. Though some suppliers have stopped this, others continue.

IPPR analysis to be published this spring will show how removing some of the more inequitable and anti-competitive practices in the energy market could remove barriers to new entrants, extend competition and improve market efficiency to help exert downward pressure on prices. If after this the market is still failing to deliver the benefits of competition to the vast majority of the public, there would be a strong case for more fundamental review of the market.

The London mayoral elections show how quickly the electorate can respond on cost of living issues. Ed Miliband's Rip-Off Britain campaign may not be original but it could be effective if it can set out a clear route to reform that cuts through to the public. Above all the opposition should establish a strong pro-competition stance that it would be hard for the government not to follow. The 1 in 4 households who can't pay their energy bills need action soon. Until then, they'll believe it when they see it.

Clare McNeil is a senior research fellow at IPPR.

Clare McNeil is a senior research fellow at IPPR.

Twitter: @claremcneil1

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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.