Ofgem's move on the "big six" is very welcome

Finally breaking the stranglehold.

Energy regulator Ofgem has today announced plans designed to shake-up the market for British consumers by forcing the "big six" utility companies to publish the prices at which they buy and sell electricity up to two years in advance.

Together, British Gas, E.ON, SSE, Npower, EDF and ScottishPower account for 80 per cent of the electricity generated in the UK, giving them an extremely dominant position in the market.

"Ofgem's proposals will break the stranglehold of the big six in the retail market and create a more level playing field for independent suppliers," said Andrew Wright, senior partner for markets at Ofgem, “…who will get a fair deal when they want to buy and sell power up to two years ahead."

The proposals are the regulator’s attempts to provide more price transparency in the long term futures market, which has traditionally limited sales to smaller energy suppliers, only allowing them to purchase energy in the near-term spot market.

By requiring the "big six" to publish their long term prices and not allowing them to refuse reasonable requests by smaller suppliers to buy energy, it is hoped that the proposals will make it easier for new entrants to take on the established players and ultimately improve price transparency for customers.

“An increased role ...for independent suppliers and generators is precisely what will help drive the competition that delivers better value for consumers and businesses," said energy secretary Ed Davey.

This latest move follows other recent measures by Ofgem to improve the energy market, such as its efforts to reduce the number of complex offers advertised by utility companies and forcing them to offer consumers the best available tariff.

Often accused by the British public of charging inflated prices and being responsible for appalling customer service, the "big six" have long been a source of much rancor for consumers, when in fact a recent study has found that British households pay below-average prices for their electricity compared with other consumers elsewhere in the EU.

Despite this, once a reputation has taken hold among the population, it is very hard to shake, so these reforms will undoubtedly be welcomed by householders up and down the country.

Photograph: Getty Images

Mark Brierley is a group editor at Global Trade Media

Photo: Getty Images
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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.