The shamelessness of the energy companies shows why we need a price freeze

British Gas's suggestion that households should simply use less energy is blackly humorous. But customers won't see the funny side.

Following last week’s announcement that SSE, the biggest supplier of energy to Welsh households, is to increase prices by 8.2%, yesterday came the announcement that Britain’s second biggest supplier, Centrica (AKA British Gas) is to follow suit with a 9.2% hike. Though customers will not see the funny side, the press release from British Gas, defending its decision, is a blackly humorous read. It begins with an acknowledgement that Ed Miliband is right: "the cost of living is rising faster than incomes". Then there’s a passage of hand-wringing regret that despite these tough times for customers, our bills have to go up by almost 10% to maintain their profitability. Before, finally, in a statement almost beyond parody, the company’s managing director, Ian Peters, reassures us: "A price rise doesn’t necessarily mean energy bills have to go up too. The amount you pay depends not just on the price, but on how much gas and electricity you use."
 
And he’s right, of course. You could just not turn on the boiler or the cooker and save a fortune. Why didn’t we think of that earlier? It would certainly make life easier for David Cameron, who, having so spectacularly failed to stand up to the energy companies in the interests of ordinary families, looks like a man who would give anything to make the problem go away.
 
Since I was having such fun reading the press release, I thought I’d take a look the Annual Accounts and Report for British Gas’s parent company, Centrica, to see if they were as much of a laugh. I was not disappointed.
 
Sam Laidlaw, the group’s chief executive, concludes his introductory remarks with the cool observation that "Centrica has a robust balance sheet and generates strong cashflows". He’s not kidding. British Gas – the bit putting up their prices today – made a post-tax profit of £1.09bn last year, up from the £1.01bn it made in 2011, though not as much as the £1.22bn it made in 2010. Within that consistent £1bn-plus profit, the sales to residential customers have been looking good too: up to £606m from the £544m posted in 2011.
 
The bit of the company generating the energy to sell to British Gas (i.e. itself) is called Centrica Energy, and its numbers are even better. In 2012, the energy generation arm made a post-tax profit of £1.2bn, £200m better than the year before and £500m better than 2009, the last year a Labour government was in charge. Little wonder the smiles are so broad on the faces of the board members’ pen-pictures, when share prices have risen by a third since May 2010 and top managers’ salaries with them: Mr Laidlaw’s total remuneration was almost £5m in 2012, his understrapper at British Gas making do with £3m.
 
What the accounts don’t tell us, of course, is the real amount it costs Centrica to generate the energy which it then sells on to British Gas at the going market rate – a market rate that itself reflects the wholesale prices set by the big six companies. It’s a circular process - in which the only real loser appears to be the paying customer at the end of the pipeline or the power cable, watching nervously as the wheel spins ever faster in the black-box under the stairs. Labour can’t stop the wheel turning, but we can freeze the price of each revolution and therefore your overall bill. And we will.
The entrance to Leicester's British Gas Centre. Photograph: Getty Images.

Owen Smith is a Labour leadership candidate and MP for Pontypridd. 

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Ed Miliband on Brexit: Labour should never be the party of the 48 per cent

The former Labour leader has not ruled out a return to the shadow cabinet. 

What do George Osborne, Jeremy Corbyn and Ed Miliband have in common? A liking for a soft Brexit, it turns out. 

But while Osborne is responding to the border lockdown instinct of some Tory Brexiteers, the former Labour leader, along with Chuka Umunna, Lisa Nandy and Rachel Reeves, has to start by making the case to fight for Brexit at all.

And that’s before you get to the thorny and emotional question of freedom of movement. 

Speaking at a Resolution Foundation fringe event, Miliband ridiculed calls to be the “party of the 48 per cent”, in reference to the proportion who voted to stay in the EU referendum.

Remain voters should stop thinking Brexit was a “nasty accident” and start fighting for a good deal, he urged.

Miliband said: “I see talk saying we should become the party of the 48 per cent. That is nonsense.

"I don’t just think it is nonsense electorally, but it is nonsense in policy because it buys into the same problem people were objecting to in their vote which is the old ‘I’m right, you’re wrong’”. 

Remain voters shared many of the same concerns as Leave voters, including on immigration, he said. 

Miliband praised the re-elected Labour leader Jeremy Corbyn’s comments that a hard Brexit would be a disaster. He said: “We have to engage in these negotiations.”

Although he said he “anticipated” staying on the back benches, he did not rule out a return to the shadow cabinet, and urged the party to use its newly recruited member, many of whom joined under Corbyn.

Miliband was backed up by Nandy, seen as a rising star of the party, who said there was longterm dissatisfaction with jobs and wages: “You throw freedom of movement into the mix and you create dynamite.”

She also called for Labour to throw itself into Brexit negotiations: “We have been stuck between two impossible choices, between pulling up the drawbridge or some version of free market hell.

“But the truth is we are a progressive, internationalist, socialist party and we can’t afford to make that false choice.”

Reeves, who wrote in The Staggers that freedom of movement should be a “red line” in Brexit negotiations, said: “I don’t buy this idea that people who voted Leave have changed their minds.”

And she dismissed the idea of a second referendum on the eventual deal: “If people voted against the deal, then what?”

But while the speakers received warm applause from the party member audience, they were also heckled by an EU national who felt utterly betrayed. Her interruption received applause too.

Umunna acknowledged the tensions in the room, opening and ending his speech with a plea for members not to leave the party. 

Having called identity politics "the elephant in the room", he declared: “We have got to stay in this party and not go anywhere. It is not just because you don’t win an argument by leaving the room, it is because we are the only nationwide party with representatives in every region and nation of this country. We are the only party representing every age and ethnic community. 

“Stay in this party and let us build a more integrated Britain.”