At the end of this cacaphony of wailing on the BBC website, the small voice of reason:
Sam Laidlaw, Centrica's chief executive, justified the price rise, saying: "This is a business that has got a million shareholders - a lot of pension funds and people have got their savings invested in British Gas shares and we have to look after them".
I am, of course, assuming that he's telling the truth about those 'million shareholders'. I can't find anything in their 2007 accounts to prove or disprove it.
Centrica's detailed first-half results are interesting. They did indeed book the bulk of their profits, i.e. £504 million, in Centrica Energy (gas extraction and electricity generation). Also worth noting is that Centrica only extract one-third as much gas (1,413 mmth) as they sell (4,399 mmth), so the business (i.e. the mark-up on gas) is not absurdly profitable (4.3% operating profit margin - as against 5% VAT that the government skims off the top).
Final thoughts; with ten million gas customers and six million electricity customers, Centrica's £1 billion profit is £62.50 profit per customer (or £131 if you are on dual fuel), which doesn't seem wildly excessive to me. Their tax note suggest that the group's tax bill is about 40% - 45% of profits (corporation tax, petroleum revenue tax and VAT), which I think is quite enough.
Import the Third World
1 hour ago
6 comments:
Off topic Mark, but you may be interested in one of the fringe events at the UKIP conference with Dr Richard Lamerton talking about the way we tax land and how it could be changed for the better:
http://www.conference.westbournemouthukip.com/event/programme.htm
Very interested indeed. Can you email me his contact details? Or indeed forward my email address to him (which you can glean from my 'email me' button).
But whose "reason" was Laidlaw addressing? The party of government looks for its financial support to the unions, the majority of whose members are in the public sector. The government looks for its electoral support to its client base (the public sector and the benefiterati). In all cases the private sector's only perceived function is to be mulcted and penalised: there is no perceived nexus between between post-tax business profits and public sector pensions. Accordingly, as far as Labour is concerned - we're only talking a further 2 years after all - Centrica, BP, Shell and other golden geese can be killed (or go offshore) to please Labour's financial and electoral supporters.
There is one way for SOME discount from the energy companies.
Forget about switching as they really don't care about it as they end up with the same numbers of different customers.
The answer is a little more affirmative.
If the entire country picks ONE supplier, say Centrica for ease, and every single Centrica account switches to another supplier.
Their competitors gain while they flounder.
Then we would really see how much competition there is in the market.
They must be eeeevil because they're making money whilst many struggle to pay their bills. There is no acceptable level of profitability in such circumstances. The solution is to brutally tax them, thus starving them of profits and encouraging them to...errrrr...lower fuel costs? increase productivity? become charities? Ummmm, I'm losing my lefty train of logic here.
I suppose, a windfall tax might lead them to ... er ... Cut costs by sacking a few workers?
Hike their prices even more?
Relocate offshore and pay even less tax?
Cut their dividends so that all pension funds fall in value (those pension funds are having a rough enough time with their shares in banks and housebuilders)?
Get into such financial difficulties once gas prices fall again that they become a take-over target for wicked foreigners?
(Continued page 94)
Post a Comment