Friday, February 22, 2008

'Victory for the Treasury' I think you will find

Take a look at the image to the right, and read the front page story that goes with it in the Independent. If you can't be bothered to click the link the story goes like this. Yesterday, the Indy ran a story about how energy giants like British Gas, EDF and others were ripping off consumers amid allegations of price fixing.

Quite right too of course to expose the way they've asked us all to bend over and pay more whilst their own profits seem to have gone through the roof, and we, the poor consumers have to choose between expensive or expensive in what does indeed appear to be a slightly skewed energy market.

Today the Indy is thus crowing that it ran a story yesterday, then British Gas announced its profits, and now the energy regulator OFGEM is going to investigate possible price fixing and the companies face the potential of a fine worth up to 10% of their profit. How is this billed in the paper? A "victory for consumers" and "power to the people" apparently, that's how.

Now here's a quick reality check moment. How exactly is the possibility of paying a huge fine into the Treasury by the companies that might have ripped you, me and others off, a victory for the consumer? How is that power to the people? I am a British Gas customer. If they have been price fixing then I, as a consumer, should be reaping the rewards of any possible sanction against them surely? That would be a real victory for me as the consumer.

What is not a "victory for the consumer" is making the company pay huge sums of money (some of it ripped off from me) to the Treasury. That is a victory for the Treasury, and they're essentially turning my ripped off cash into a quasi-tax. When the Independent claims it is "power to the people" its talking absolute balls.

Instead of fining companies and taking consumers money into the Treasury here's a novel idea. How about having a regulator than says "you have to give all your customers X% rebate for being dodgy". Now that would be a victory for the consumer.


Chris Paul said...
22 Feb 2008 08:54:00  

Fair-ish point. Though if this windfall staves off a 1p in the pound tax rise and/or doubles the winter fuel allowance for the neediest and saves 5,000 deaths next cold break then we'll be laughing. The Treasury/Government could presumably force a real cut for the next 24 months as well.

Mostly Ordinary said...
22 Feb 2008 09:08:00  

Not sure I believe OFGEM are doing anything anyway, they only appeared to talk about acting after the profits were announced, aren't they supposed to be regulating all the time not just to week after results are announced?

Travis Bickle said...
22 Feb 2008 09:19:00  


What's the weather like in la la land?

lettersfromatory said...
22 Feb 2008 09:32:00  

A very valid argument. Evidence of price-fixing is surely grounds for giving refunds to customers rather than plugging the massive holes in government accounts. As I was saying on my blog this morning, price-fixing is a serious offence but finding evidence for it is extremely difficult.

Pogo said...
22 Feb 2008 09:48:00  

Thing is though... British Gas have about 17million accounts, so the "massive profit" appears to average out to less than 30 quid a year per account, so what, 60p a week? Your local newsagent probably makes more profit from you than that.

dougal said...
22 Feb 2008 12:22:00  

Except, Mr Paul, that the winter fuel allowance does not only go to the needy, does it?

Newmania said...
22 Feb 2008 12:27:00  

Yes I am not all that impressed with this profit and the flack which seems to me to be an attempt to blame 'greedy board rooms' for rising energy prices and slow-down.

I expect to see a lot more of this sort of thing .

JuliaM said...
22 Feb 2008 17:35:00  

"How about having a regulator than says "you have to give all your customers X% rebate for being dodgy". Now that would be a victory for the consumer."

But....but....then you'll just spend it on inappropriate things like alcohol, fatty food or carbon-hungry gadgets! The Government knows how to spend that money far better than you, so it's only right they have it.

So they can piss it down the PFI hole like all the rest...

Anoneumouse said...
22 Feb 2008 17:40:00  

The so-called Renewable Obligation will cost energy customers £32bn over the next 20 years.

Eat your greens

Trumpeter Lanfried said...
22 Feb 2008 21:11:00  

Don't read the Indie, Dizzy. It's a silly newspaper. Sillier even than the Guardian and with less intellectual rigour than Readers' Wives or Big Jugs.

Anonymous said...
23 Feb 2008 18:14:00  

While we're all focussing on the top-line gross profit figure has anyone actually asked how much capital British Gas employs to run its business?

Surely the profit figure is completely meaningless without that?

Oh sorry, of course, thinking about it that deeply would require an attention span of more than five seconds, I do apologise.

Brian said...
23 Feb 2008 22:33:00  

So let me get this right...

Gas companies connive to rip off the consumer.

The Treasury finds out about it, and demands a slice of the action.

This is a 'Victory For Consumers'?

What it is, is a conspiracy to defraud.

Woffle said...
24 Feb 2008 09:26:00  

Er... presumably the idea is that they are fined so that they don't do it again? Which is how fines work, generally.

Culpability Brown said...
24 Feb 2008 12:29:00  

You're absolutely right Dizzy. A measure like this just turns the energy companies into tax collectors.
Also, it won't be a means-tested tax.

Hurrah! Another Labour triumph for low income people. :-P

Long live the bollocksy badly thought out pseudo-revolution! is a participant in the Amazon Europe S.à.r.l. Associates Programme, an affiliate advertising programme designed to provide a means for sites to earn advertising fees by advertising and linking to