We hear that The Competition and Markets Authority (CMA) has announced that energy suppliers will soon be forced to open up their consumer databases to allow competitor firms to offer those on standard variable rate tariffs better deals.
The CMA reckons that some 70% of the great British household ‘consumer collective’ could have been overpaying by around £1.7 billion a year or in CAM speak, consumers ‘could save up to £300 per year’.
That is assuming those consumers really do care, something that may not actually be the case despite the good work of the CMA.
There are many reading this who will have recalled the days when electricity and gas was provided by their supplier, then referred to as a ‘board’. Yes a board, not a company.
Power by way of gas and electricity was ‘homemade’ and the supplier was in fact the government by way of a nationlised utility. The same supply rational applied to water, telecoms, the rail network, health service, airports, air traffic control, the post office, coal, steel…..I could go on.
Without getting too political, nationalised management of utilities, key industries and services was not without its problems and it may be worthwhile to ponder the pros and cons.
And that ponder may induce more than a wry smile
Benefits from economies of scale on the assumption that bigger is definitely better. That should see prices to consumers being relatively lower than if we had a number of smaller privately run for profit firms.
As they are owned, run and controlled by the government, this will stop consumers being exploited. The government can manage the economy better by ‘controlling’ the important utility and key industries. The government can invest money and make those services more efficient. Utilities and key industries owned and run by the people for the people take social costs (pollution, staff welfare, retirement benefits etc.) into account and the profits made go back to the ‘people’/ state.
Low performance when ownership is in the public sector. Managers and employees do not work for profit and so their performance and efficiency has a perceived tendency to remain poor.
Lack of competition that is necessary for development and increasing innovation and production. Nationalisation historically has decreased the spirit of competition.
Favoritism.The management of nationalised industries will provide jobs to their politically favoured few because of government influence upon those state utilities and key industries.
Smiling wryly yet?
I am reminded of a now infamous George Best story about a waiter delivering an iced bucket of champagne to the late, great George Best’s hotel room.
On seeing thousands of pounds of casino winnings along with the then current Miss World both arranged very tastefully on the bed, the scene prompted the waiter to ask, “Mr., Best, where did it all go wrong?”
Some years later Best observed: “Perhaps he saw something in me that I didn’t.”
And that is the analogous point of this whole mess.
De-nationalisation needs regulation, nationalisation does not.
In light of the now completed FAMR exercise and last years FCA suggestion that consumers should be able to view all their lifetime pension savings in one place, would the creation of a ‘Pension Dashboard’ look like the first step toward a nationalisation of the financial services industry in the UK?
Just a thought that may have been missed in the deliberations?