Despite yesterday’s mini-budget, nearly every family will face the winter with much higher bills than last year. The current government support to keep bills down is just a short-term sticking plaster. Liz Truss and her ministers have no long-term solution.
Clues to the answer we need lie in Munich, Germany, where a dad takes his daughter swimming in an Olympic-sized pool. And in Bergen, Norway, where a student receives her engineering degree without paying a penny in tuition fees. And on the windswept coast of Brittany, France, where a grandmother gets her energy bill, delighted to find it barely changed from last year – despite French companies facing surging wholesale prices for gas.
What do they have in common? And how does that relate to your rising energy bills? All of the above have been funded with the proceeds of energy companies – including profits made from offshore windfarms in Britain. While the UK sold off its energy industry to private companies, the governments of France, Denmark, Norway, and several German provinces and cities chose a different path. They developed publicly owned energy companies, alongside private sector competition.
Without shareholders extracting value, these companies generated billions to reinvest in services, infrastructure and lowering bills. The Norwegian people now own one of the world’s largest investment funds – so big that it provides a fifth of the nation’s budget year on year. This is in large part because it directed profits from its North Sea oil and gas fields into a sovereign wealth fund. The UK could have done the same. But we allowed private companies to take all the profit.
Oil and gas are not the only riches off our shores. Powerful winds course across the North Sea like rich seams of gold. But unlike gold – or fossil fuels – no matter how much you take, it never runs out. Over the past two decades, Britain has had the second largest expansion of offshore wind power in the world. This time, much of the profit flowed into the public purses of other countries: to Sweden, via the company Vattenfall; to the United Arab Emirates, via Masdar; to Canada, via a Quebec public pensions investment fund.
Meanwhile, fabrication yards and ports stood empty in Scotland and north-east England as wind turbine contracts went elsewhere in the world. And crews servicing turbine construction sites were found to be working for less than the national minimum wage.
Research published today in a TUC report shows that if the UK had a publicly owned energy champion like other countries, the Treasury could receive between £63bn and £122bn over the next two years due to the escalation of wholesale energy prices. That’s at least £2,250 for every UK household – enough to cover the bulk of the government’s energy price guarantee.
This should not just be a moment for looking back in regret. It’s not too late to change our approach. In fact, we are still in the early stages of a major energy transition.
In the years ahead, the UK will need to build a tremendous amount of new clean energy infrastructure, to reduce our reliance on volatile fossil fuels and to keep the climate safe for future generations. The British public should get the full benefit of this UK-generated energy. Our report sets out proposals for the creation of a public energy champion to give the British people a major stake in our new energy infrastructure. And to make sure that the profits come back to the public purse – the UK’s public purse.
The national wealth that will be generated is not the only benefit. Energy companies are tools for long-term transformation too. When their only aim is public benefit, they can help change the nation in positive ways for us all.
Public energy champions can think ahead to the energy mix needed for the future. They can pioneer technologies, as Orsted did with offshore wind and EDF with nuclear. On the scale of German or French companies, a new UK public energy champion could build 27-77 gigawatts of new, clean-electricity-generating infrastructure. This is at least a tenth, and up to a third, of the power needed for UK homes and industries by 2050.
They can set the gold standards on being a good employer, with best practice in workplace safety, pay, benefits and workforce relations. EDF, for example, practises this across many of its operations, from working to make construction a welcoming industry for female workers, to taking care of workers’ re-employment when coal power plants are wound down.
For customers, public energy champions provide price stability even when global markets are volatile. And they enable support to households who need it, whether in an energy crisis or not.
If we get on the right track now – if we invest in a public energy champion – it will help ensure that our children and grandchildren live in warm homes, breathe clean air and work in good jobs.
Frances O’Grady is general secretary of the TUC
