Saturday, February 23, 2008

Profiteering? Isn't it what free market is about?

Each year the same grumble. But the reason behind the rise in your utility bill is plain and simple. Just do the maths.

Today's UK newspapers are united in their outrage at the profits recorded by British Gas. In the period 2006-2007 BG's takings quintuplicated as the company made £571m compared to £95m the previous year. Welcome to Britain, the country where electricity and gas bills go up 15% a year, council tax eats into a third of your wage and rents simply take the piss. British Gas keep wailing that, poor little things, they have to struggle within this "higly competitive market". Wouldn’t we all like a struggle like that, where you end up pocketing an extra 476 million pounds in a year?

The most useless, almost disarming, contribution comes from the stoical watchdog groups who keep urging the customer to "shop around" and "switch suppliers". In other words, if your bills are rising like a hot-air balloon, then you just take your customs elsewhere and switch to another power supplier. Except that, in the real world, competition doesn’t work like it would in theory. And picking Npower over British Gas isn’t quite as simple as giving Tesco the nod over Sainsbury's because of their enticing three-for-two wine promotion. The price difference amongst gas and power suppliers is negligible and they all have put up their rates along very similar patterns.

That's the nature of the market and dividends have to pour in from somewhere. Is there a single politician or paper ready to go on record as saying that it's time we stop fooling ourselves and accept that those companies are physiologically bent on making a profit? People were warned when Thatcher & Lawson privatised them. Now, just do the maths and spread £476 million amongst all British Gas bills dished out in 2007. Then ask yourself if private ownership of public utilities is worth your pocket's while.


Anonymous said...

so basically you advocate a return to soviet style colletivisation???

Anonymous said...

anonymous - take your straw man arguments somewhere else