Politics drove the energy price cap initiative which came into force yesterday. The Tories simply stole a key plank of Labour policy and made it th
Politics drove the energy price cap initiative which came into force yesterday. The Tories simply stole a key plank of Labour policy and made it their own.
Nothing has agitated consumers more in recent times than the way in which power prices rise inexorably, irrespective of events on wholesale markets.
The big six energy groups plainly are the main culprits being targeted by the Government, because default tariffs hit the poorest consumers hardest – along with those who pay the loyalty penalty by not shopping around. But government itself is not innocent in any of this.
Nothing has agitated consumers more in recent times than the way in which power prices rise inexorably, irrespective of events on wholesale markets
Much of what we pay in our fuel bills, both at the petrol pumps and for domestic heating, comes in the shape of taxation.
In the case of domestic bills we are all paying for green taxes, for transmission investment and nuclear decommissioning.
On the surface, it must be a good thing that 11m people (according to official data) could save an average of £76 per year on fuel bills.
However, interfering with the operation of free markets is never a sensible approach. It spells trouble for future investment by disincentivising the energy industry, and creates distortions.
Britain’s energy market already is the most competitive in Europe, with a choice of dozens of new suppliers, easy transfer mechanisms and comparison websites.
Indeed, one of the ironies is that at a time when switching is taking off – British Gas owner Centrica lost 340,000 customers in the first half of 2018 – the cap is weakening the economics of the challengers.
It is no accident that Spark Energy, with 290,000 customers, went bust in November, the seventh challenger supplier to call it a day. The price cap means consumers will be more reluctant to switch, making it harder for independents to win customers.
The cap was also among the factors which led UK energy giant SSE to call off its proposed retail merger with German rival Innogy because of the altered economics.
The proper answer for a market not changing fast enough was for the regulator Ofgem to have come down hard on companies sticking with default tariffs by punishing them with heavy fines on their turnover.
But that would have been a slow burn and created space for Labour Party mischief.
How encouraging to see Senator Elizabeth Warren, 69, an indefatigable campaigner for cleaning up Wall Street, throw her hat into the ring for the Democratic presidential nomination in 2020.
In spite of a foolish claim about a Native American background, Warren has sound credentials, including a combative spell overseeing the Troubled Asset Relief Program, which bailed out the US banks in 2008.
Anyone who saw Warren’s forensic and tough-minded questioning of tarnished Wells Fargo executives over the creation of unauthorised bank accounts to burnish bonuses and dividends could not fail to be impressed. Bankers and corporate fat cats be warned!
The veteran, Harvard-educated, Greek-born banker Minos Zombanakis, 92, who died shortly before Christmas in his native Crete, was an innovative financier who helped revive the City of London and turn it into an economic powerhouse.
Tall and imposing, Zombanakis was a key player in the development of London as the home of the syndicated loan market, where bankers came together to finance big corporations and nations with borrowing costs based on the London Interbank Offered Rate (Libor).
As a commercial banker at Manufacturers Hanover, he worked on the first such euro-loans for US companies in the early 1970s, creating a City-based market which grew from $10bn in 1972 to $180billion a decade later.
He was author in 1983 of what The Economist dubbed the ‘Zombanakis Plan’, which proposed extending the role of the International Monetary Fund in bail-outs of indebted countries.
In his later years he was largely responsible for bringing Saudi Arabia, through his role as a senior executive at Chase Manhattan, into the mainstream of global finance.
No one was more exasperated and disgusted at the greed which disgraced banking in the run-up to the great financial crisis of 2008-09 than Zombanakis – and in particular, at the distortion of the ethics he valued strongly.
A great, serious financial thinker, he will be much missed by his family and those of us privileged to call him a friend.