The Labour leader has made some positive noises, but is he really prepared to stand up to private capital, asks John Haylett.
To be criticised by the Daily Mail and Peter Mandelson should be a feather in the cap of any politician trying to rescue the Labour Party from new Labour-induced despair.
That was Ed Miliband’s fortune this week when the Mail headlined its Wednesday edition Back to the Bad Old Days, citing: “Fixing energy prices. Grabbing land from property firms. Boosting minimum wage … Red Ed Revives ’70s Socialism.” For well-heeled Baron Mandelson, Miliband’s modest attempt to curb energy prices indicated that Labour had moved backwards from the days when he was business secretary.
“The industrial activism I developed showed that intervention in the economy — government doing some of the pump-priming of important markets, sectors and technologies — was a sensible approach,” he pontificated in typically self-effacing manner.
The response of the Mail, the Tory front bench and the energy privateers revealed commitment to the orthodoxy that corporate power should be untrammelled.
There was the usual prattle about the inadvisability of hampering wealth creators as though stacking up huge private profits amounts to altruism that benefits society as a whole.
That was precisely the siren song warbled by the banks, by “Labour means business” chancellor Gordon Brown and by the aforementioned Mandelson who was “intensely relaxed about people getting filthy rich.” Never mind the headline profit figures, the bonuses and shareholder dividend levels, they said. Profits provide income to the Exchequer and are essential to investment for the future.
Sounds good in theory but fatally holed below the waterline in reality.
The oligopoly of six energy companies that between them supply 99 per cent of household energy made annual profits of £3.7 billion in 2012, up from £2.1bn in 2009.
Electricity prices have leapt by over three times the general inflation rate since 2005 while gas has soared by more than five times inflation.
None of them pays the amount of tax that could be expected, relying on accountants’ ingenuity and the countless loopholes made available by obliging governments to contribute levels of taxation somewhere between nil and puny.
The Labour leader has chosen his target well. Everyone knows that privatised power companies are crucifying us and have superseded banks in the most-hated stakes.
By promising a brief price freeze, conducting a combative public dialogue with the companies and telling them what he’s not prepared to tolerate, Miliband projects himself as a strong leader and challenges Tories and Liberal Democrats to expose themselves as lackeys of corporate arrogance.
However welcome any trimming of the energy sector’s ability to milk consumers may be, the impact of this proposal should not be misunderstood as something it is not.
Tony Blair’s old spin doctor Alastair Campbell took issue with Mandelson in the tweetosphere, saying that he was wrong to see it as a shift to the left.
“It is putting consumer first v anti competitive force. More New Deal than old Labour.” Nor should it be forgotten that Blair himself imposed a windfall tax on privatised utilities in 1997, raking in £4.5bn, while even Margaret Thatcher’s government imposed a special levy on banks in 1981, raising £400m, and on oil and gas companies the following year, bringing in a further £2.4bn.
Such proposals are invariably greeted with dire predictions of economic disaster or, in the latest episode, energy companies’ inability to continue investing in green energy.
There is often too a wobble in the companies’ share price, but, despite everything, they survive and continue to enjoy huge profits, bonuses and dividends.
Many Tories have already demanded that David Cameron takes action to prevent Labour gaining an electoral advantage by developing his own proposals to hold down energy bills.
While Miliband would claim any such action as proof that he was right to take the energy bull by the horns, it would signal too the ephemeral nature of a short-term levy on energy companies, banks, major supermarkets, insurance companies or any other fully paid-up member of rip-off corporate Britain.
Labour’s obdurate refusal to even consider renationalisation of our railways, ostensibly on the spurious grounds of cost, reveals Miliband’s One Nation Labour as equally pro-business as its predecessor new Labour.
Putting forward the chimera of greater market efficiency by introducing new players or conjuring up the will o’ the wisp of tougher regulation is a fig leaf to cover deeprooted antagonism to public ownership.
The Communication Workers Union is about to ballot its members over the conservative coalition’s determination to press ahead with Royal Mail privatisation.
Unite assistant general secretary Tony Burke told the Labour conference that opposition to privatisation extended to managers, MPs, the Countryside Alliance and the general public.
He joined CWU deputy general secretary Dave Ward in urging Labour to commit itself to renationalise Royal Mail if the Tory plan goes through — which would probably scupper it — but shadow postal affairs minister Ian Murray would consider nothing more than trying to push another vote in Parliament.
Labour’s “fundamental” opposition to privatisation is called into question by such parliamentary cretinism.
Miliband’s price freeze challenge has enthused many working-class people, but the fear persists that there is less to his willingness to stand up to private capital than meets the eye..
John Haylett is political editor of the Morning Star where this article first appeared