Labour's plan to reform our broken energy market deserves cross-party support

Lack of competition and transparency has created an unfair market that consumers don’t trust, says former Conservative special adviser Tom Burke.

Ed Miliband’s energy price freeze met with a predictable, if not always credible, response from the energy industries. Led by Angela Knight, who was last heard from a few years ago asking us to stop being nasty to bankers, we were warned that this would halt investment and turn out the lights.

The current energy market doesn’t work either for consumers or for all the non-energy businesses in Britain. Lack of competition and transparency has created an unfair market that consumers don’t trust. The only lights going out now belong to households that can’t afford the electricity.

But what about investors? Will they really go on strike? Is it true that only ever larger profits must be made in order to to deliver investment , even if it is at the cost of consumers?

Keep two key points in mind as you listen to this argument. First, when you drill down into company accounts you see that some of the companies with the highest profits are investing the least in new plants. Rather than plough returns into a broken energy market they have opted to pay out dividends. Centrica has made the highest profits but 74% of this has gone back to shareholders.

Across the "Big Six", an average of 56% of their profits are going into dividend payments. This is a perfectly legitimate business strategy if there is no urgent need for investment. But it certainly questions the link between higher profits and investment. If there are no value-creating projects to invest in, you cannot argue that the lights will go out if you don’t invest.

Second, profits have grown over the last three years but investment has slumped. Large scale clean energy investment went from £7.2bn in 2009 to £3bn in 2012. And this takes us to the fundamental point. The market isn’t working any better for investors than for consumers.

The reality is that what investors need is long-term certainty. And the complex and incoherent measures in the Energy Bill are simply adding to the uncertainty. And this is why it was so encouraging to hear what Labour had to say on reforming the market. Commitment to the 2030 power sector decarbonisation target will help convince investors that there will be long-term demand for clean energy.

Combined with the proposals to revitalise the investment in energy efficiency, the contracts for difference for new generation and an Energy Security Board that will mean one body charged with doing everything necessary to meet the country’s energy needs, this will create a market that will offer investors much more stability than they have at present.

Tom Burke CBE was formerly a special adviser to three Conservative secretaries of state for the environment, and director of Friends of the Earth and the Green Alliance. He is currently a Founding Director of E3G

Ed Miliband gives an early morning radio interview next to a giant ice cube representing Labour's energy price freeze at the Labour Party conference in Brighton. Photograph: Getty Images.
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Why is Labour surging in Wales?

A new poll suggests Labour will not be going gently into that good night. 

Well where did that come from? The first two Welsh opinion polls of the general election campaign had given the Conservatives all-time high levels of support, and suggested that they were on course for an historic breakthrough in Wales. For Labour, in its strongest of all heartlands where it has won every general election from 1922 onwards, this year had looked like a desperate rear-guard action to defend as much of what they held as possible.

But today’s new Welsh Political Barometer poll has shaken things up a bit. It shows Labour support up nine percentage points in a fortnight, to 44 percent. The Conservatives are down seven points, to 34 per cent. Having been apparently on course for major losses, the new poll suggests that Labour may even be able to make ground in Wales: on a uniform swing these figures would project Labour to regain the Gower seat they narrowly lost two years ago.

There has been a clear trend towards Labour in the Britain-wide polls in recent days, while the upwards spike in Conservative support at the start of the campaign has also eroded. Nonetheless, the turnaround in fortunes in Wales appears particularly dramatic. After we had begun to consider the prospect of a genuinely historic election, this latest reading of the public mood suggests something much more in line with the last century of Welsh electoral politics.

What has happened to change things so dramatically? One possibility is always that this is simply an outlier – the "rogue poll" that basic sampling theory suggests will happen every now and then. As us psephologists are often required to say, "it’s just one poll". It may also be, as has been suggested by former party pollster James Morris, that Labour gains across Britain are more apparent than real: a function of a rise in the propensity of Labour supporters to respond to polls.

But if we assume that the direction of change shown by this poll is correct, even if the exact magnitude may not be, what might lie behind this resurgence in Labour’s fortunes in Wales?

One factor may simply be Rhodri Morgan. Sampling for the poll started on Thursday last week – less than a day after the announcement of the death of the much-loved former First Minister. Much of Welsh media coverage of politics in the days since has, understandably, focused on sympathetic accounts of Mr Morgan’s record and legacy. It would hardly be surprising if that had had some positive impact on the poll ratings of Rhodri Morgan’s party – which, we should note, are up significantly in this new poll not only for the general election but also in voting intentions for the Welsh Assembly. If this has played a role, such a sympathy factor is likely to be short-lived: by polling day, people’s minds will probably have refocussed on the electoral choice ahead of them.

But it could also be that Labour’s campaign in Wales is working. While Labour have been making modest ground across Britain, in Wales there has been a determined effort by the party to run a separate campaign from that of the UK-wide party, under the "Welsh Labour" brand that carried them to victory in last year’s devolved election and this year’s local council contests. Today saw the launch of the Welsh Labour manifesto. Unlike two years ago, when the party’s Welsh manifesto was only a modestly Welshed-up version of the UK-wide document, the 2017 Welsh Labour manifesto is a completely separate document. At the launch, First Minister Carwyn Jones – who, despite not being a candidate in this election is fronting the Welsh Labour campaign – did not even mention Jeremy Corbyn.

Carwyn Jones also represented Labour at last week’s ITV-Wales debate – in contrast to 2015, when Labour’s spokesperson was then Shadow Welsh Secretary Owen Smith. Jones gave an effective performance, being probably the best performer alongside Plaid Cymru’s Leanne Wood. In fact, Wood was also a participant in the peculiar, May-less and Corbyn-less, ITV debate in Manchester last Thursday, where she again performed capably. But her party have as yet been wholly unable to turn this public platform into support. The new Welsh poll shows Plaid Cymru down to merely nine percent. Nor are there any signs yet that the election campaign is helping the Liberal Democrats - their six percent support in the new Welsh poll puts them, almost unbelievably, at an even lower level than they secured in the disastrous election of two year ago.

This is only one poll. And the more general narrowing of the polls across Britain will likely lead to further intensification, by the Conservatives and their supporters in the press, of the idea of the election as a choice between Theresa May and Jeremy Corbyn as potential Prime Ministers. Even in Wales, this contrast does not play well for Labour. But parties do not dominate the politics of a nation for nearly a century, as Labour has done in Wales, just by accident. Under a strong Conservative challenge they certainly are, but Welsh Labour is not about to go gently into that good night.

Roger Scully is Professor of Political Science in the Wales Governance Centre at Cardiff University.

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