Brian Monteith: Sturgeon Power recalls bad old days of British Rail

If there was one thing that came out of the Eighties (other than fashion icons such as big hair, power shoulders and mullets) it was the realisation that governments are rubbish at running businesses.

Nicola Sturgeon wants to create a power company owned by the Scottish Government

Time after time we found out the the Post Office should not be running the phones and the Department of Transport should not be running British Airways or British Rail (unless you are a sentimental masochist).

Investment was rationed because it came from taxes or taxes deferred (also known as borrowing). Prices were fixed, so the managers could not detect where the demands from customers were.

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Innovation was stifled because there were fewer incentives to find savings or grow profits. Marketing was centralised so everything became British with little local variation. The workers (the producers) told the customers what they could have, instead of the customer being ‘king’. Customer relations did not matter or were a joke (usually featured every Sunday on the TV show ‘That’s Life’).

I could go on. But anyone who lived through the 60s, 70s and 80s would find it difficult to argue that for all their faults most modern-day private companies are worse than what we had back then.

Indeed many of the problems we face now are problems of success (from greater demand). We have much, much more investment, customer relations are taken seriously, customers matter and prices (while in most cases regulated) are held down by competition.

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Nicola Sturgeon announces publicly owned energy company

So when a politician no less than our First Minister, Nicola Sturgeon, tells first her SNP conference (note, not as should have been the case, the Scottish Parliament) that she will consider forming a taxpayer-funded, Scottish Government energy company to supply gas and electricity you have to ask: “Why?”

The answer is easy, she thinks there’s votes in it. Votes from those not remembering the past, votes from those who know all about today’s problems of costs but have forgotten about the difficulties and failures we endured before – and votes from those who will receive “free stuff” or at least cheaper stuff.

In most circles it is called deception, chicanery and bribery but in politics it passes for wearing your compassion on your sleeve. Modern-day parlance is “virtue signalling”, only it is the poorest that will end up paying the most (it was ever thus).

Now as a welcome antidote, a warning and a singular chance for the First Minister to quickly backtrack, a £315,000 report by consultants has revealed the options available to Ms Sturgeon – and their costs.

The reality is that a new Scottish Government energy company would be in a tough market with 42 other competitors. Yes, 42. Who knew? And there lies the problem – for the evidence shows the reason people often pay too much for energy is because they stay loyal to their current provider and don’t switch to get a lower price. Why then would they switch to Scot Gov energy, let’s call it “Sturgeon Power”?

The costs of start-up are put at £3.5 million before a kilowatt hour has reached you. It will cost £9 million a year just to run – whether or not you are a customer you will still be paying for it (because we shall all “own” it). Of the 42 competitors already half are making a loss, including two of the so-called “big six” – it’s clearly not an easy business to be in.

Time after time, the inquiries into energy supply show the companies are not rapaciously greedy, or even just mildly greedy, the problem is we are stubbornly against choosing to switch suppliers. So why would Sturgeon Power be any better, any more successful than the 21 companies that can’t hack it already?

Sturgeon has never run a jumble sale, never mind an energy company. Farmers can’t get their support payments more than a year later, schools are failing their pupils, NHS targets are being missed – but let’s have Sturgeon Power?

What next, run Prestwick Airport at an annual profit? Sort that out first!