Guest 667- Registered: 6 Apr 2008
- Posts: 919
#1
I see from tonight's news that the big boys of the gas and electric companies are talking about further increases while they fill their pockets with wages around £900.000 per year.
Who is to blame for these fat cats getting fatter, outside factions, this Government for not putting pressure on them or the last Conservative Government for the sell offs and creating the fat cats in the first place. My opinion for what its worth is all three.
From Nationalised Companies to Who Dares Wins.
I am not suggesting for one minute we ever go back to Nationalisation, but have we not gone too far the other way with no control what so ever on the Power Companies and what profits they are making out of the average person on the street?
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#2
then bills are frightening, it is probably a mixture of things that have caused this dilemna.
the only western leader that has actually gone out to chat with the boss man in saudi arabia is our gordon.
the big oil producers are suffering the same as us by the high prices, all their investments are here in the west.
from reading various reports our jock on the spot and the rag head reached broad agreement on the way ahead.
let us hope that the 40% rises being threatened do not transpire.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#3
Harry this fat cat thing is a fallacy. Today at a meeting we had an economic briefing and one factor mentioned was that our gas companies are buying gas 'futures' at price that is 66% higher than consumers are currently paying. That indicates that the price we pay will go up next winter and this is nothing to do with how our gas companies are owned, its the world market. You cannot buck the market.
The bare fact is that the old nationalised monopoly would have resulted in us paying even higher power bills than we are. The old nationalised companies were inefficient monopolies and expensive on top of which they also would be hostages of world prices.
Guest 667- Registered: 6 Apr 2008
- Posts: 919
#4
While I can see most of what you say Barry and would not want to go back to nationalised companies.
How can you justify the big profits these Companies are making and the large payments of £800.000 to 1 million a year wages for the Directors. That is not world market, it is greed when people on low income are finding it hard to pay their bills.
No the Nationalised Companies were wrong but there is also some thing wrong with todays system as well.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#5
Harry. The salaries of the Executives are a matter for the boards and the shareholders. They reflect the market rate for the job and it is dangerous to interfere with that.
Are the profits really high relative to the capital deployed? I dont think so. You have to consider the high levels of capital investment they need as well.
Incidentally, most of the dividends that are paid out are ultimately to the benefit of the man in the street who has a pension fund or equity ISA.
Investments such as utilities (as opposed to riskier 'growth' stocks such as tech companies) are a good port in an uncertain economic world. They attract new investment through issuing highish dividends rather than offering great growth prospects. Many pensioners are generating income from funds (income or 'value' funds) that have a high holding of these stocks because of the dividends.
They are a bedrock providing income for many people with relatively modest means.
Please, no-one take any of what I say as advice or a hint to invest in these companies (or funds) - get advice as you need to know the associated risks.
Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
#6
Unfortunately fat cat salaries and disproportionate profits are not a fallacy, they are all too real. I myself would have preferred these gas and electricity companies to have remained nationalised as I cannot see for the life of me what the ordinary man in the street has gained by their privatisation.A few make money, a few, but at the expense of the previous owners..you and me.
A nationalised company would not have required profits on such a scale and any profits that are made could have been adjusted to absorb pain in a downturn.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#7
PaulB - We have a Government that is overborrowed, its fiscal policy is in a mess, do you really think that they would be in a position to subsidise power? Utility companies would be a cash cow to them, they would blame (correctly) world prices for any increases. £25bn has gone into Northern Rock and that would be peanuts compared to what you are suggesting. Subsidy is the narrow end of the wedge and very dangerous, would you suggest that food production too should be in the hands of the Government for the same reasons? Given food price increases you could make the same argument.
Doing what you sugest would be unsustainable, expensive, a commercial disaster and would require huge tax rises. If taxes did not go up to pay for it the money would have to be borrowed or printed and that would further push up domestic inflation. It would be an economic timebomb exacerbating the current problem.
The truth is that the competition in the system has kept prices lower than they might have been and even today you can reduce the price of your power by moving supplier. Consumers do win out with the privatised system.
#8
PaulB - you talk sense. Nationalised enterprises are efficient and productive IF MANAGED APPROPRIATELY!!! The same as any other company......but with a different focus.
Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
#9
Yes its a question of philosophy here Bern. BarryW you talk there about current times. Its true it would be very difficult to re-nationalise now, but the original concept of power for all was a good one. These companies generate huge profits, so had they still been under the nationalised umbrella, would not be a drain on anyones tax return...quite the contrary I would suggest. I dont accept that consumers are winning under the present system.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#10
PaulB, Bern - you cannot get away from the economic facts. Nationalisation was a disaster for this country and even this Government have done some privatisation. The nationalisation of Northern Rock is regarded by them as an embarrassment and was brought about by the failures of the regatory system that was instituted by Gordon Brown.
Its very good claiming how wonderful it could be, in theory, but we have to live in the real world. Face the facts, even Communist China has had to allow free enterprise to bossom in order to make its economy work. Russia and all other former Communist countries have had to introduce free market reforms. Nationalised businesses do not work and its cloud cuckoo land to think you can somehow buck hard experience.
The profits are not huge relative to capital. Utility companies are not 'sexy' in the investment world and provide equity investments that carry relatively low long term capital risk (they do fall as well as rise, however). They offer a long term hedge against inflation but not much of an extra 'premium'. They need to make high levels of investment and need investors. To attract them they pay a relatively high level of dividends, in other words those 'high profits' go out to investors who are mainly institutional. These institutional funds include pension funds and everyone with a pension plan benefits. There are man, many elderly people who derive a large part of their income from invested 'Distribution Bonds', Equity Income Funds, with profit bonds, and pension drawdown arrangements. These are not rich people but are those who benefit most from the profits made by utilities, not those who you like to classify as 'fat cats'.
These profits are made from efficiency and scale. A nationalised company would not have the commercial freedom and expertise to exploit the world markets in the way a private company can. Indeed a Government could not possibly allow a nationalised operation the risk of having these freedoms. Shareholders, particularly the majority institutional shareholders, understand the commercial risks and imperitives better than any politician or member of the public.
Make no mistake PaulB - consumers may be feeling the pinch of rising energy prices but it would be far worse under a nationalised system.
DT1- Location: Dover
- Registered: 15 Apr 2008
- Posts: 1,116
#11
All of what you say is true Barry but this really is, as Paul says, a question of philosophy. Nobody could deny the fact that these nationalised utilities were managed so poorly by previous governments that privatisation has brought consumer prices down. Privatisation has improved the efficiency in order to provide stable returns for shareholders. The fact that this can happen is proof that these utility companies are commercially viable but were being run into the ground and not serving their shareholders...the British public (Society) much of the infrastructure created by these public services was created through public money and we pay in to receive a service for all (incidentally my Dad is still a bit annoyed that he didn't get any money when Mrs T. sold his share)
This is the same for our forces, the police, schools, hospitals, playgrounds etc. We are taxed (and I don't mind being taxed more if the services are provided) The core infrastructure of our society should remain public, if you start exploring the philosophy of privatisation, the absurdity becomes apparent.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#12
You are correct that this is a matter of philosophy, from the left.....
I do indeed have an inbuilt distrust of nationalised industry because of practical, not philisophical, factors and you indeed have highlighted the practical side of the argument.
I accept that the State does have a role in the provision of core public services, military, police, health, education being the major examples. That is not to say that the private sector dont have a role in the delivery of these services. Many of our better schools and hospitals for instance are privately run and I would like to see access to this private provision opened up to more people and not restricted to the rich. Doing so can also help generate improved services and greater private provision.
I would opnly draw the line over the military and police though in each case there is a fringe role for free enterprise, private security guards for instance.
So you see I do accept the philosophical need for state involvement in core services, so mine is not a philisophical issue.
DT1- Location: Dover
- Registered: 15 Apr 2008
- Posts: 1,116
#13
You are absolutely right Barry; looking at private Hospitals they provide faster and in some cases a better service than the NHS. But this already exposes the awful 2 tiered system we have. If you have money you can get treated faster, and potentially have a better chance of survival. So in theory, if you take this model to it's conclusion, the poorer people, once referred to as the working class, are less purposeful or valuable than those with more money or power. This isn't progress; this is a feudal class system, exploiting many for the benefit of a few. It's also unsustainable, the army amusingly shows us exactly the sort of model that is efficient, the infantry at the bottom of the hierarchy, when injured are taken in and cared, it is in the interest of the people at the top of the hierarchy, there through their merits. (This 'Confucianism' does not fully apply within the army of course because it is possible to hold rank through birth right!) Without everyone being supported everything, even the people at the top will suffer, it is in our interests to look after everyone, regardless of wealth or class.
Schools again by becoming led by finance (and I'm not talking about PFI schools and academies but Public School Oh the irony)) If the best education is that which is paid for, then this whole jobs for the boy, and perpetuation of a class system carries on. It's just so old fashioned and meaningless. Just because someone is richer than someone else this should not give them more of a right to health or education.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#14
Good post DT1.
I should point out that there will be proposals forthcoming from the Conservatives for wider access and provision of publically funded private services to the general public. I look forward to your support on this.....
DT1- Location: Dover
- Registered: 15 Apr 2008
- Posts: 1,116
#15
Provision of publicly funded public services is what I would 'really want'
#16
Left....right.....whatever - if we see Government as a means of safeguarding the people who elect it rather than safeguarding the people who offer it backhanders we emerge with a democratic and nurturing environment........
Guest 667- Registered: 6 Apr 2008
- Posts: 919
#17
Is not part of the problem where these Companies want large profits and their shareholders want large returns part of why the prices are spiralling?
Now we have the lower paid workers who are being told to accept two and two and half percent pay rises, are turning back to the only tool they have left and that is to strike. I do not like strikes but what other tool do they have.
Government needs to come down on these Companies and say enough is enough and cap the prices of Gas and electric for at least two years. Sadly I doubt this will happen and it certainly will not happen under the Conservatives, they believe in the system where the rich can get richer while the poor well they can just pay up or go cold.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#18
some of the better posts i have read on here for a while.
i will reread them to make sure i have not missed a good point.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#19
Harry - we know all about the disaster of price and pay policies, they did not work in the 70's and can't work now. It was like shaking a bottle champagne until it is ready to burst!!
To do what you suggest would be economically damaging and many of those who suffer most would be the elderly and vulnerable.
We have moved away from that kind of thing and the fact that Labour seems to be trying to resurect this is a sign of desperation, they simply have no idea how to deal with this problem. Their fiscal policies are a disaster that has left them without room to manouvre. The energy prices are part of a greater problem affecting our economy (and indeed the world economy), sadly we are among the countries least able to soften the blow to the public.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#20
Howard - I agree, a particularly satisfying and intelligent discussion from all sides.
