Leaders: Energy firms shouldn’t be complacent

The sharp drop in profits announced by British Gas is due to warmer weather in the first half of the year. Picture: PA
The sharp drop in profits announced by British Gas is due to warmer weather in the first half of the year. Picture: PA
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British Gas owner Centrica may be hoping a fall in profits at British Gas and talk of a £90 “average” reduction in customer bills this year will work to cool public anger over relentless above-inflation rises in energy charges. But the news is unlikely to turn down the political heat under the Big Six suppliers.

Indeed, the latest figures are more likely to intensify the public row over pricing policy, margins and the effectiveness of energy market competition in holding down prices for millions of households.

The sharp drop in profits announced by British Gas is due to warmer weather in the first half of the year and a consequent fall in customer demand. Residential supply operating profit is down by a quarter at £265 million while parent company Centrica’s operating profit tumbled 35 per cent to £1.03 billion.

A key issue that has heightened customer anger is the difficulty in working out the underlying trend in profits setting aside weather-related fluctuations. Also in dispute is whether the mooted 7 per cent or £90 reduction in average bills is a “one-off” or the result of an ongoing reduction in profit margins.

These questions have been heightened by a statement from industry regulator Ofgem earlier this week that the Big Six energy firms were set to double profit margins over the next year to 8 per cent. Whatever the accuracy of these calculations, they do little to bolster customer confidence that they are getting a fair deal from their energy supplier or give assurance that their energy bills will not “revert to type” when colder weather returns.

As it is, Ofgem has already referred the industry to the Competition and Markets Authority to examine rising bills, service quality and profitability, focusing in particular on whether they can be both energy generators and retailers at the same time.

Heating is a necessity for all households and energy bills account for a large proportion of basic household outgoings, squeezing the amount of income available to support other areas of family spending.

It is this continuing squeeze that Labour leader Ed Miliband has identified as the Achilles’ heel of the coalition government. It may be able to cite impressive ­figures on an improving economy, but little of this has so far translated into an improvement in living standards.

Mr Miliband’s plan to fight the general election next year with a proposal to cut household energy bills may have its detractors, arguing that it is opportunist and will bring only temporary relief. But it has the power of a real and tangible benefit which may hold more sway with voters than vague promises of operational improvements. That Prime Minister David Cameron has sought to counter this with his own proposals is testimony to the potency of the Labour leader’s attack. Either way, the energy companies should brace themselves for stormy political weather ahead.

No mean cuisine, whatever they say

Meticulous the planning for the Glasgow Games may have been. But has the cuisine in the athletes’ village been up to scratch?

As if the dancing Tunnock’s teacakes at the opening ceremony did not convince the world of our commitment to the highest standards of cuisine, some athletes have complained about the standard of food.

Raj Singh, chef de mission for the 215-member Team India, claims the contingent, many of whom are vegetarians, were “coping” with a Glaswegian diet of pizza and McDonald’s. And Jamaican 100-metre gold medal winner Kemar Bailey-Cole says the food at the 2012 London Olympics was “way better”. The food on offer here, he added, “could do with some more seasoning”.

It could hardly be a lack of the bucketfuls of salt and vinegar dousing everything for which Glaswegians are famed. Rather, we may have been a tad light on the jerk seasoning – a Jamaican cooking style in which meat is dry-rubbed or wet marinated with a very hot spice mixture.

It wouldn’t do to make a meal of this. The vast majority of customers have been more than satisfied. And outside the village, Glasgow is a wonderfully cosmopolitan city, where it’s possible to sample cuisines from all around the world. When the favourite food of most Scots is, after all, chicken tikka masala, what exactly is “Scottish food” anyway?

Arguably where the organisers really slipped up was over the dancing Tunnock’s teacakes which omitted any display of the blue-wrapped dark chocolate ones. What a slight on those of more sophisticated and discriminating palate. In Scotland’s leafier neighbourhoods the shockwaves are still reverberating.