I am amused by business reaction to Ed Miliband's proposals this week. Energy companies yell that his proposed price cap will lead to energy blackouts, when there is no reason to think that is or should be the case. On the 0ther hand, builders, to whom he tried to give the biggest boots possible are also yelling in protest. According to the FT:
Developers [have] warned that production could only be stepped up by between 5 and 10 per cent a year — far short of the 20 per cent annual increase needed to reach Mr Miliband's target.
“We are an inelastic industry. Where are we meant to find that sort of growth?” said the chief executive of one publicly quoted housebuilder.
Actually the tale is the same in both cases. These are monopolists trying to preserve their profits. The energy companies are the winners in the wholesale supply market that they say forces up domestic prices and supposedly keeps their profit margins in that market low (hence the bullying), whilst the big builders know they make most of their profits by under-supplying the market with housing so that house prices accelerate more than inflation.
Their protests hide their greed.
Miliband is right to challenge them.
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I notice that the “Dark Lord” Peter Mandelson is sticking his oar in as well. Cheerleaders for monopoly capitalism like him have no place in any progressive party.
I was amused by the declaration by John Cridland of the CBI that Ed Miliband’s energy policy was “dangerous”.
Personally I’m not convinced by Ed for all the “bound by austerity” reasons debated here and elsewhere.
BUT give me a politician that business thinks is dangerous anyday over those who respond “how high” when the City asks them to jump.
Agreed!
I saw Cridland at the conference – a man who has only ever worked for the CBI
What?! Good grief. That’s both the funniest and most ridiculous thing I’ve heard this week.
Interesting to see that the Mail’s headline is along the lines that Ed Milliband’s attack on the energy companies has “blowein up in his face”, because what he said wiped £2 billion of the shar price of those ocmpanies!
“Blown up in his face”! Hardly, a) because it implies the market thinks he’s serious and will win and b) because the market may also reckon the companies are over-valued because of their monopoly position.
Seems to me the Right Wing press might better keep quiet.
“because what he said wiped £2 billion of the shar price of those ocmpanies!”
That means of course the pension companies take a hit too. Makes running an occupational pension scheme even trickier…
Risk assessment is part of your job
Wasn’t an attack on monopoly abuse predictable?
“BUT give me a politician that business thinks is dangerous anyday….”
I’ve just got to ask……what’s your solution……..surely Red Ed doesn’t think every bit of business is dangerous does he? The same businesses that employ millions of people?
No of course not
But those on the left are capable of differentiating business
Private ownership is not good per se as the right think
We understand the theory of monopoly and oligopoly and the abuse they describe
There has also been a lot of talk about ‘California style’ black-outs if this policy is introduced (from Ed Davey for one).
As Greg Palast reported years ago (in the Guardian and ‘The Best Democracy Money can Buy’) those black-outs were almost entirely due to the US energy companies deliberately restricting oil supply (by blocking their own pipelines) to thwart plans to part nationoalise the state’s energy provision and to make speculative profits in the meantime.
http://www.theguardian.com/world/2001/may/22/usa
Don’t bet against the privatised utilities trying to do something similar to the markets here.
I think it entirely possible
An Emergency Powers Act may be needed
“will lead to energy blackouts, when there is no reason to think that is or should be the case.”
You are wrong there, Richard – Think Enron.
Perhaps I should have emphasised the “should be”
It may be
But it will be as a result of corporate choice
Quite – blackmail not blackout!
If the energy companies are really claiming they can’t provide an adequate supply, they aren’t fit to be in the game. Revoke their licences to trade and nationalise them. Simples.
Then they would be nationalised, and still be required to close their coal-fuelled generating plant anyway….
The EU large combusion plant directive means that some 8 GW of coal-fired generation will close by 2015, 2.5GW of oil-fired plant, and as well as that some 7GW of nuclear by 2020…because of age.
The industry reckons that 20GW of new plant will be required by 2020…
Instead of messing about with this proposal, Ed should propose nationalising the energy companies, anyway.
By the way, has there ever been any precendent for nationalising without compensation?
The likes of power, rail, road and water are far too important to be left to private profit!