Reports of record-breaking profit for energy giants amid surging energy prices for households and a cost-of-living crisis, has sparked criticism and calls for energy to be brought into public ownership.
As households are warned energy bills are to hit more than £3,500 a year, Centrica, the owner of British Gas, has seen operating profits increase five-fold to £1.34bn.
Reports show that the energy giant’s profits for the six months to the end of June were substantially more than the earnings recorded in the same period in 2021 – which stood at £262m.
The same week has seen Shell report record-breaking profit. The company recorded a second quarter profit of $11.5bn, exceeding its previous record recorded just three months earlier and doubling its earnings in a single year.
Earlier this year, Shell recorded a fourteen-fold increase in quarterly profits, reigniting calls for a windfall tax to lessen the burden placed on struggling families.
According to a Reuters’ report, a rapid recovery in demand following the end of the pandemic lockdowns, and a surge in energy process, driven by the war in Ukraine, have boosted profit for energy companies after a two-year slump.
Chris O’Shea, Centrica group chief executive, has reportedly claimed the company’s profits were not due to customers’ rising energy bills.
“We are very aware of the difficult environment many customers are facing and we will continue supporting them,” said O’Shea.
However, news of record-breaking profit for energy giants amid surging energy prices for households and a cost-of-living crisis, has ignited criticism and calls for energy to be brought back into public ownership.
Gas and electricity in the UK were privatised over three decades ago, starting with British Gas in 1986 under Margaret Thatcher’s government. Households have subsequently been forced to endure a fragmented system that combines privatised transmission and distribution.
In 2016, a cross-party group of MPs called for drastic action to be taken to protect consumers after a series of price increases by gas and electricity companies and to stop the big six energy companies “ripping off” consumers.
Six years later, and households are being forced to pay excessive price rises for gas and electricity, as energy bill spending heads towards highest level since at least the 1950s.
‘It doesn’t have to be this way’
Angela Knight, former Energy UK chief, told TalkTV that there was a “big question mark over those who are making extraordinary profits from an extraordinary world situation.”
The Trades Union Congress (TUC) has called for the public ownership of energy companies and is proposing a reshaping of the UK’s energy system, to be more in line with Europe.
“Publicly-owned energy retail companies can deliver fairer bills for households, accelerate the rollout of household retrofits and reduce energy use,” said the TUC.
Many appealing the nationalisation of the energy system took to Twitter to share their views.
Miatta Fahnbulleh, chief executive of the New Economics Foundation, a think-tank that promotes social, economic and environmental justice, wrote: “Energy company #Centrica made an additional £1bn profit in the last 6 months, whilst millions of people can’t afford to heat their homes.
“Our economic system is currently enabling this, but it doesn’t have to be this way.”
Richard Burgon, Labour MP for Leeds East, has made repeated calls to bring energy back into public ownership. In September 2021 when news that millions of households could face a second record jump in energy bills in the spring surfaced, Burgon tweeted: “Our privatised energy system has left people with rip off bills.
“And it’s undermined the transition we need to renewable energy.
“We need to bring our energy system back into public ownership so that it works for people and planet.”
Following this week’s reports of energy companies making record-breaking profit, the MP said:
“Key services like energy, water, mail and rail should be run in the interest of the public good not private profit. We can’t go on with privatised firms ripping people off while millions face a cost-of-living emergency. They should be brought into public ownership as people want.”
Reacting to the news that British Gas owner Centrica says adjusted operating profits increased five-fold to £1.34bn in the first half, driven by high energy prices benefiting its oil and gas and nuclear business, Ralph Palmer, who works on zero-emission transport policy, said: “We’re being robbed. Millions can’t make ends meet and we’re due another price hike in coming months. Bring the energy industry into public ownership, use profits to provide effective subsidies to reduce bills and meaningful investment in renewables and energy efficiency.”
We Own It, anti-privatisation campaigners, have called on the government to bring energy into public ownership.
In a letter to chancellor Nadhim Zahawi and business secretary Kwasi Kwarteng, the campaigners state how the government is allowing energy bills to rise by nearly £3,000 a year, leaving 8.5 million households unable to heat their homes. We Own It are calling for the government to make a public commitment to bring privatised monopolies of the National Grid and regional distribution into public ownership, and to set up a publicly owned energy supplier.
We Own It’s petition to bring energy into public ownership now has already gained almost 23,000 signatures.
Limitations of markets
Carwyn Jones, former first minister of Wales, speaks of how the latest cost-of-living crisis has laid bare the limitations of markets at the time of crisis.
Writing for The National, Jones notes how in the 1980s people were promised that when it came to gas, electricity and water, putting those utilities in the private sector would lead to more competition and lower prices. “Yet here we are in a situation where that model has collapsed,” he writes.
“Not long ago it was possible to go to two comparison websites and see what deal was best one for you.
“Now that world has disappeared. People are slaves to their energy contracts, and it is pretty much impossible to move to another company because there are no better deals available.
“Despite the existence of a number of energy companies, most of them are simply charging up to the cap imposed by the UK government. That cap is far too high and has led to people seeing increases of 50 per cent or more on their energy bills.
“Other countries have not taken the same route. We have now a clear case of market failure that the current government is doing nothing to address,” Jones continued.
In France, the state already owns 84% of Électricité de France (EDF), one of Europe’s biggest utilities. In February, the French government announced it was to provide €2.1 billion to state-controlled energy incumbent (EDF) to help the company tackle financial difficulties and bear the cost of the construction of new nuclear reactors.
This month, France announced it will fully nationalise EDF, in a move to give the government more control over a restructuring of the group, whilst contending with the European energy crisis.
France has also said that is has extended its energy price cap of no more than 4% to the end of 2022.
Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward
As you’re here, we have something to ask you. What we do here to deliver real news is more important than ever. But there’s a problem: we need readers like you to chip in to help us survive. We deliver progressive, independent media, that challenges the right’s hateful rhetoric. Together we can find the stories that get lost.
We’re not bankrolled by billionaire donors, but rely on readers chipping in whatever they can afford to protect our independence. What we do isn’t free, and we run on a shoestring. Can you help by chipping in as little as £1 a week to help us survive? Whatever you can donate, we’re so grateful – and we will ensure your money goes as far as possible to deliver hard-hitting news.