February 28, 2013 by Nash Riggins
British Gas has come under heavy fire once more following the announcement that profits from its domestic energy sales are up 11% – and the uproar is hypocritical at best.
Centrica and British Gas execs were left defending their reported rise in profits on several news programmes this morning, explaining that the £606m jump in profits came after last year’s especially cold weather saw gas use increase 12%. Subsequently, customers are now left fuming that, after increasing energy bills by 6% in 2012, British Gas has hauled in a profit increase of almost double that.
On the one hand, it’s completely understandable that in a time of economic uncertainty, customers want to be able to point a finger at someone – especially following an industry-wide price hike. That being said, it’s rather odd that other industries don’t get the same sort of flack.
In fact, according to a report released last year by the UK’s Department for Environmental Food and Rural Affairs, British food prices have increased by 32% in the past five years alone. Even staples such as milk and bread have sky-rocketed, leaving consumers to make some difficult decisions concerning how to feed their families.
For example, at Morrisons supermarket, the average loaf of bread cost just 79p in 2010 – while the following year, that figure increased by 22%, to £1.01. In fact, the overall cost of the average trolley in Morrisons increased a whopping 53% from 2010-2011. Based upon the reaction homeowners have had with regards to the profits of British Gas, one can only assume that said consumers would have been equally perturbed to discover that Morrisons reported a profit of £947m in 2011 – which was up 8.4% on the previous year. Yet for whatever reason, the revelation that supermarkets raised food prices whilst simultaneously reporting an increase in profit failed to grip angry consumers.
Funnily enough, guess who food retailers have blamed on the relatively unnoticed hikes in food prices? Wholesale prices and increased costs in production – exactly who the UK’s Big Six energy suppliers credited with last year’s industry-wide price hike.
Both bread and energy are still substantially cheaper in the UK than they are elsewhere in the world – in fact, it’s worth noting that UK customers already pay up to 53% less for their energy than some of their European neighbours. That’s a particularly impressive feat, given that the UK’s domestic energy consumption ranks 12th in the world. Subsequently, it should be duly noted that the problem surrounding fuel prices in Britain is not an issue of price, but rather one of affordability – no doubt the same can be said for Britain’s supermarket bills, too.
Meanwhile, angry citizens must put down the pitchforks for two seconds and realise that it’s impossible to keep prices of a non-renewable commodity from increasing – especially in the UK, who imports around 60% of its energy from the likes of Norway and Qatar. Consequently, if we aren’t going to demand that Tesco and Morrisons stop making a profit whilst raising our food bills, then it’s hardly fair to demand that British Gas lower its rates. After all, if energy companies stop turning a profit, the average household energy bill will only get higher – or worse yet, the lights could get shut off entirely. Accordingly, moaning consumer rights groups would be better suited lobbying against the government’s inability to establish a national wage appropriate to these unavoidable increases in the UK’s cost of living, rather than complaining about the fundamentals of capitalism and free enterprise.