Miliband is right to stand up to the energy companies' blackmail

Were trade unions threatening to plunge the country into darkness, Cameron would be calling in the troops.

Ed Miliband's promise to fix energy bills for 20 months if Labour win the 2015 election will remove some of the pressure that ordinary people across the country feel every day. Households are already paying £2bn more for their gas and electricity after the last hikes in November 2012. Now the energy companies are looking to add another £1.4bn onto bills this coming winter. This has added £300 to the average bill in this parliament. This cannot go on.

Immediately after Ed’s announcement, the usual shouts came that this was "meddling in the free market". "Back to the seventies" and "you can't beat supply and demand" echoed on. Let us put aside the fact that the average yearly growth in the 1970s, 2.88%, is more than the economy has grown in total since Quarter 3 2010. The energy market in this country is not a free market, it is a racket. Six multinational companies dominate, and in much of the country choice is reduced still further. These companies are now threatening blackouts if their profits are in any way challenged by an elected government. Were this a trade union threatening to plunge the country into darkness, Mr Cameron would be calling in the troops. Yet when it is time to challenge a private cartel about that classic seventies question, “who runs Britain?” this government is silent. 

Npower were first out of the traps on Tuesday, with their spokesman decrying these "easy answers", and that the "global market" would drive costs regardless of what they did. The biggest shareholders in Npower, or to give it its proper name Rheinisch-Westfälisches Elektrizitätswerk Npower plc, are a group of German towns and cities. In other words, the profits Npower extracts from the British people allow German municipalities to keep the rates down. The people of Middlesbrough are effectively paying rent to the people of Münster. It seems state intervention is acceptable when investing in your corporation, but bad when it seeks to limit your profits.

This confused attitude to the "free market" runs through all the "Big Six". Iberdrola, owners of Scottish Power, are kept liquid by €27bn in state backed loans and massive subsidies from the struggling Spanish government.  Both Centrica and Scottish and Southern Electric are receiving over £50m each in subsidies just for wind power. E.On’s decision whether or not to build a new biomass generator in Bristol was not dependent upon ‘market forces’, but how much tax-payer money the Department for Energy and Climate Change would promise it.

Perhaps the greatest example of state interference however is Électricité de France, EdF, controlled by the French state. They are the company that we are turning to to build a new generation of nuclear power stations. Britain, which built the first commercial nuclear generator in the world at Calder Hall, must now wait on the whim of the French President.

Has it really come to this? That a country once the workshop of the world relies on the French to build its power stations? On the Danes to forge its turbines? On Norwegian gas to keep our lights on? Is Britain a ‘third world’ country that it has to beg for foreign investment to upgrade its infrastructure?

I welcome companies from all around the world who want to set up shop in Britain. This nation gains greatly from international firms bringing their skills and expertise here, and we are richer for it. Our membership of the European Union and good working relationship with our European neighbours is a key part of this attraction. But those meetings must always be as equals, not as supplicants.

The repeated refusal of the British state to back its own people has led to the basics of life; from water, to energy, to transport being sold off not to thousands of plucky entrepreneurs, but to American corporate titans, Chinese and Arab sovereign wealth funds, or the state-backed enterprises of our savvier European cousins. Rather than invest in our own youngsters, our own infrastructure, our own future, a small elite have skewed our economy not by accident, but by design. As Ed said on Tuesday, Britain can do better than this.

Andy McDonald is the Labour MP for Middlesbrough

The logo of the French electricity company EDF is pictured on a building of the Fessenheim nuclear power plant reactor in eastern France. Photograph: Getty Images.
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Brexit has opened up big rifts among the remaining EU countries

Other non-Euro countries will miss Britain's lobbying - and Germany and France won't be too keen to make up for our lost budget contributions.

Untangling 40 years of Britain at the core of the EU has been compared to putting scrambled eggs back into their shells. On the UK side, political, legal, economic, and, not least, administrative difficulties are piling up, ranging from the Great Repeal Bill to how to process lorries at customs. But what is less appreciated is that Brexit has opened some big rifts in the EU.

This is most visible in relations between euro and non-euro countries. The UK is the EU’s second biggest economy, and after its exit the combined GDP of the non-euro member states falls from 38% of the eurozone GDP to barely 16%, or 11% of EU’s total. Unsurprisingly then, non-euro countries in Eastern Europe are worried that future integration might focus exclusively on the "euro core", leaving others in a loose periphery. This is at the core of recent discussions about a multi-speed Europe.

Previously, Britain has been central to the balance between ‘ins’ and ‘outs’, often leading opposition to centralising eurozone impulses. Most recently, this was demonstrated by David Cameron’s renegotiation, in which he secured provisional guarantees for non-euro countries. British concerns were also among the reasons why the design of the European Banking Union was calibrated with the interests of the ‘outs’ in mind. Finally, the UK insisted that the euro crisis must not detract from the development of the Single Market through initiatives such as the capital markets union. With Britain gone, this relationship becomes increasingly lop-sided.

Another context in which Brexit opens a can of worms is discussions over the EU budget. For 2015, the UK’s net contribution to the EU budget, after its rebate and EU investments, accounted for about 10% of the total. Filling in this gap will require either higher contributions by other major states or cutting the benefits of recipient states. In the former scenario, this means increasing German and French contributions by roughly 2.8 and 2 billion euros respectively. In the latter, it means lower payments to net beneficiaries of EU cohesion funds - a country like Bulgaria, for example, might take a hit of up to 0.8% of GDP.

Beyond the financial impact, Brexit poses awkward questions about the strategy for EU spending in the future. The Union’s budgets are planned over seven-year timeframes, with the next cycle due to begin in 2020. This means discussions about how to compensate for the hole left by Britain will coincide with the initial discussions on the future budget framework that will start in 2018. Once again, this is particularly worrying for those receiving EU funds, which are now likely to either be cut or made conditional on what are likely to be more political requirements.

Brexit also upends the delicate institutional balance within EU structures. A lot of the most important EU decisions are taken by qualified majority voting, even if in practice unanimity is sought most of the time. Since November 2014, this has meant the support of 55% of member states representing at least 65% of the population is required to pass decisions in the Council of the EU. Britain’s exit will destroy the blocking minority of a northern liberal German-led coalition of states, and increase the potential for blocking minorities of southern Mediterranean countries. There is also the question of what to do with the 73 British MEP mandates, which currently form almost 10% of all European Parliament seats.

Finally, there is the ‘small’ matter of foreign and defence policy. Perhaps here there are more grounds for continuity given the history of ‘outsourcing’ key decisions to NATO, whose membership remains unchanged. Furthermore, Theresa May appears to have realised that turning defence cooperation into a bargaining chip to attract Eastern European countries would backfire. Yet, with Britain gone, the EU is currently abuzz with discussions about greater military cooperation, particularly in procurement and research, suggesting that Brexit can also offer opportunities for the EU.

So, whether it is the balance between euro ‘ins’ and ‘outs’, multi-speed Europe, the EU budget, voting blocs or foreign policy, Brexit is forcing EU leaders into a load of discussions that many of them would rather avoid. This helps explain why there is clear regret among countries, particularly in Eastern Europe, at seeing such a key partner leave. It also explains why the EU has turned inwards to deal with the consequences of Brexit and why, although they need to be managed, the actual negotiations with London rank fairly low on the list of priorities in Brussels. British politicians, negotiators, and the general public would do well to take note of this.

Ivaylo Iaydjiev is a former adviser to the Bulgarian government. He is currently a DPhil student at the Blavatnik School of Government at the University of Oxford

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