The Prime Minister and the Energy Minister, Ed Davey, were unanimous in their response to the British Gas price hike this week by 10 per cent, about four times the rate of inflation – described judiciously by the PM as ‘disappointing’. Shop around! they said. ‘We need more competition!’ cried Mr Davey. They haven’t yet recorded their opinion of today’s price increase from little Co-op, another energy provider, at about twice the rate of inflation, but I expect it will be much the same.
Funnily enough, even before the decision by another of the utilities companies, SSE, to increase their duel fuel bills by just under the British gas rate a few days ago, I turned to one of the price comparison companies with a wad of my bills to hand to find out whether I should be shifting my patronage from my existing provider to someone else. But of course, was the answer. The man, from Northern Ireland, at the other end of the phone (‘Do you mind if I call you Melanie?’) took half a minute to determine that I should be going for a fixed price deal. He could do me a nice one that would save me about eighty pounds a year. ‘Would there be any chance of paper bills?’ I asked. ‘For some reason, I find it handy to have it on paper.’ ‘Tsk,’ he responded. But if I must, he could still get me a better deal with paper bills, which would save me £45 a year. ‘OK,’ I said. And gave him all my bank and debit card details, plus age and address – ‘it’s perfectly safe, Melanie’ – to make it all possible.
Just before we parted cordially – though not without an obscure feeling on my part that I was somehow being fleeced, though I wasn’t sure by whom, I said: ‘This is a really stupid question, but is there any actual difference in the product I’m getting? I mean, is there any difference in the electricity and gas that comes out?’ Well, that made him laugh. ‘It’s not gold-plated, if that’s what you mean. It all comes out of the National Grid. I suppose that makes it all a bit meaningless.’ ‘Yes,’ I said. ‘It does.’ And we parted with expressions of the utmost goodwill on his part.
The whole exercise – and it’s much, much worse when you try and swap a phone/internet provider – left me with a sense of resentment at the waste of an hour, at the end of which, as my new friend pointed out, I would be getting gas and electricity as before, just the same, only with a different name on the bill. My sense of bewilderment was increased once the SSE increase was announced and I learned on the invaluable Radio4 MoneyBox programme that my old provider was in fact offering one of the best fixed rate deals. In which case, why wasn’t I offered it?
The whole exercise, as the PM and Mr Davey assure me, is in the name of competition. Now I do understand the benefits of a competitive marketplace, I truly do. But it only makes sense if there is indeed some difference in the nature of the products on offer. I can see that my irrational preference for paper bills would add a few quid, that my willingness to pay by direct debit might subtract a few, but beyond that my sole desire from a company is that it should provide me with gas and electricity as cheaply as possible.
Competition, in this context of identical product, makes no sense at all. Yesterday, I bought some flour, for bread and cakes – as I observed in a previous column, it is possible to make really good bread with just flour, yeast, salt and water for just a bit more than a value loaf – in one of the bigger supermarkets and I effortlessly selected what I wanted from about twenty varieties – strong, value, organic, self-raising, ‘00’, plain, wholemeal, you name it. I could decide in a matter of seconds what would work; the tradeoff between price and product; the value attaching to a brand. In that context, competition makes sense; it gives you a choice between varieties of a product, and it’s up to you to strike your own balance between price and quality.
In the context of gas and electricity it makes no sense. None at all. Competition is a chimera and choosing a provider a matter of jumping through hoops once a year. It’s engaging in an academic exercise which takes time to no purpose. I can just about do it; my uncle, a pensioner without access to the internet and who doesn’t really understand about switching companies, can not. When the PM invokes the virtues of competition, it feels like an Orwellian shift between opposing sides which is, in the end, meaningless. It may be the foundation of the energy market but from the consumer end it feels like a cod, a con, a waste of time.
PS: In Ireland, my mother was notified the other day by eircom, the telecom company she uses, that her broadband (installed for my benefit) could be much quicker and would be automatically upgraded. You reckon BT does that here, even in a highly competitive marketplace? Nope. You have to jump through the hoops first.Tags: Competition, Cost of living, David Cameron, Ed Davey, Energy