Brian Monteith: Nicola Surgeon's state energy company will never fly

A not-for-profit company is more about chasing a cheap headline than reducing bills, writes Brian Monteith
First Minister Nicola Sturgeon has announced that she will establish a state-owned not-for-profit energy company to cut the bills of Scottish consumers. Picture: John DevlinFirst Minister Nicola Sturgeon has announced that she will establish a state-owned not-for-profit energy company to cut the bills of Scottish consumers. Picture: John Devlin
First Minister Nicola Sturgeon has announced that she will establish a state-owned not-for-profit energy company to cut the bills of Scottish consumers. Picture: John Devlin

The chasm between nationalism and unionism is now deeper and more bitter than anything achieved by Margaret Thatcher in the eighties.

The reasons are twofold; short of anything positive and credible to say, the SNP’s continuing independence campaign is based wholly upon grievance – while the unionist defence is too often based upon the inconvenient facts that the Scottish economy could not possibly survive the break with the UK. Be under no illusion: we would endure an austerity so severe it would strip the paint from Nicola Sturgeon’s ministerial limousine. The most astonishing thing about this is that some people actually think such an experience would be worth it.

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This bi-polar political division gets in the way of good government for there is growing evidence that it clouds our collective judgment about what is good and bad public policy. The well-intentioned but over-the-top criminalisation of singing hateful songs at football matches is but one example. The ludicrous state guardian policy that loads responsibility on an already overburdened social work system is another. Both have been repudiated by votes at Holyrood but still the Scottish Government refuses to repeal them to avoid losing face.

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A more shaming example is the Scottish Government’s decision not to allow the process of fracking that could establish if cheap gas can be produced domestically – at a time when we have some 940,000 souls enduring fuel poverty, of which for a quarter of a million it is extreme fuel poverty.

Now our the SNP leader has compounded these errors by announcing to whoops of delight at her party conference that she will establish a state-owned not-for-profit energy company to cut the bills of Scottish consumers. If ever there was a competition for a policy that best demonstrates how jingoism can subvert the normal process of evaluating what works and what doesn’t, this would be a strong contender.

Call something Scottish and it wins three, or maybe four out of five stars for PR value; call something Scottish that is state-owned and by implication belongs to all of us, and it wins five out of five stars. Unfortunately, as bitter experience has shown, state businesses end up being owned by none of us but are instead captured by those that work for them and the vested interests that manage them. We have been here before when everything in the Seventies that did not work tended to have the prefix “British” and was “owned” by the state but very much managed by the employees’ unions and the corporate bosses for their own benefit. Thankfully Britain has managed to leave behind that sorry period of never-ending strikes, rationing of supply (party telephone lines, anyone?) and build quality worse than a three-year-old’s Stickle Brick car – but the SNP wishes to revive it and paint it tartan.

Those watching Nicola Sturgeon’s speech via social media were quick to ask what the new energy company might be called. Alba Energy was suggested, but I suggest Albatross Energy would be more appropriate. It will have considerable difficulty taking off and it is a harbinger of doom we do not wish to contemplate – our very own Scottish national socialism where an institution is placed beyond criticism because it is state-owned (ours!) and Scottish (ours cubed!).

The quickest way to reduce energy bills is for consumers to check their tariffs and switch to a lower cost supplier – of which there are now many. As the Scientific Alliance has pointed out, two-thirds of household energy bills are gas and there is a very small profit margin on electricity generation. They argue the regulator’s figures show there is only a profit margin of 5 per cent on dual bills of electricity and gas, therefore we cannot expect Albatross Energy to make a huge difference if it cannot cut gas bills – which is governed by the wholesale market.

A switch to fracked gas will come – but we will now have to rely on imported gas rather than our own – which would have created over 3,000 Scottish jobs and been cheaper and less polluting as it would not have been transported from the US. Crazy does not begin to describe it.

Now let us go beyond theory and look at practice. I have great faith in co-operatives – one of a number of competing capitalist business models – although they usually have to be local in scale to be optimal in maintaining their employee and customer relationships. A state-owned not-for-profit concern is an entirely different animal, rather like a sloth and a dolphin are both mammals but cannot live in each other’s environment.

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It so happens there is already a not-for-profit co-operative companies supplying energy – so why replicate what exists? Political grandstanding is the reason – Ms Sturgeon needed a sympathetic headline to distract from her failures elsewhere and intervening in the energy market (just like Theresa May did the week before with her similarly absurd energy cap) provided the ready-made answer.

But surely the state can supply energy better? There will be no need for profit, after all. This ignores the state has to use its own funds to establish and run the organisation, meaning fewer funds for the NHS and schooling – at a time when we have a teacher and GP recruitment crisis, eye-watering waiting lists and primary school classes of thirty-plus have doubled.

If the SNP Government cared genuinely about tackling fuel poverty it would attempt two things; firstly doing all in its power to encourage and help with consumers switching to cheaper deals so this practice is at least at the same level as in the rest of the UK. Secondly, its ministers would campaign for the Chancellor to remove VAT from energy bills the morning after we leave the EU – saving about £70 on an annual bill of £1,344. Unfortunately the SNP want us to rejoin the EU.

As an idea Albatross Energy is already dead in the water.

l Brian Monteith is editor of