It is time to break up the energy companies and separate production from sale.

24 Oct 2013 at 11:48

For the very first time in my life I felt sorry for both Norman Tebbit and Simon Heffer. No doubt I will need deep therapy over the months.

What a terrible dilemma these two old Tory dinosaurs face. They despise both John Major and David Cameron and everything they stand for. Both took an almost perverted pleasure in putting the boot into Major when he was Prime Minister, with Tebbit openly campaigning for John Redwood when, in breach of his promise, he left cabinet and stood for the leadership. And they regard monstering Cameron as a scared duty. I always find the Tory loony tunes’s version of party loyalty rather confusing. It has always been a conditional loyalty, “we will support you provided that you do it our way”. In other words, leave Europe, cut taxes and bash the unions and ban the Burka. These fellows support a cult rather than a party with everything viewed through the prism of Thatcher worship. It’s a bit like those who believe in the sanctity of life opposing abortion but gagging for a return of the death penalty.

So the dilemma facing the gruesome twosome after John Major’s energy intervention is whom should the boot kick hardest?

At first I was utterly confused at Major’s press gallery speech. I have known him as a friend for nearly forty years. Although I don’t see a lot of him nowadays I have heard him offer nothing but praise for Cameron, who is doing everything that he would have wanted to do. And I have never ever heard Major be snide about class.

So when I heard his comments about a windfall tax on the energy companies I assumed that this was merely a kite flown at the behest of Number 10. It was even spun (“friends” of John Major which is often the code for what he has been briefing) that he was helping out Osborne. But the Number 10 spokesman was quick to trot out the, “we have no plans” line, which is not a slamming of the door nor leaving it slightly ajar. If you wanted to play political Kremlinology it could be argued that this was a clever Major quote when he said that there were no plans to raise VAT, which he eventually did. Too clever by half I’m afraid.

To be honest, I don’t think a windfall tax is a runner. The view from seasoned hacks at Westminster is that Major was not attacking Cameron at all, rather pointing out two areas where the Conservatives could face serious electoral trouble.

The first is reform of benefits. Have the implications been carefully thought through? The bedroom tax (or bedroom subsidy) is a disaster and apart from the obvious injustices that are bound to result, it may well drive people into the private sector with serious public expenditure hikes when housing benefit clicks in.
And as for changing the criteria for free school meals, has anyone given a thought of the reaction of those families who will lose out? And has anyone considered the cost implications of what other benefits click in with being eligible for free school meals, like free uniforms and subsidised trips? I hope someone has their eye on the ball. The subtext of what Major said is that IDS had better be a genius or very lucky. And I haven’t even mentioned the IT which is a disaster waiting to happen.

But Cameron is going to have to make some swift policy decisions over energy. The reason the public is held to ransom by the big six is that they both produce and sell. It’s an unfair cartel that cannot be effectively regulated. And it squeezes out competition. Smaller companies can’t get a look in.

The answer is to separate generation from sale. And there are two ways of doing it, nationalisation which is unthinkable for Cameron, yet something being considered by Miliband. Politically, I am not entirely sure that this would be particularly unpopular with voters, sick to death of paying enormous energy bills. But it would be a step too far for fractious backbenchers.

The only sensible option is breaking up the companies. Free marketers will go berserk. But a rigged market is hardly a free market. It would also let in smaller companies with the competition reducing prices. But they will have to be heavily regulated to stop the cowboys putting out the lights.

David Cameron is going to have to be quick about this as Miliband wanted to do it when he was energy secretary. The big six will of course howl in indignation. But there is an election riding on this. It is time for action. Now.