Saturday 12 January 2013

'Rip off' Britain?

The Labour leader has a new favourite term: 'rip-off'. Over the last months he has railed against energy and train companies 'ripping-off' ordinary customers. Now he also talks about 'rip-off' landlords. The overall narrative is clear: the common man on the street is at the mercy of vicious companies which are led by greedy CEOs pocketing multi-million salaries. All potential rofits are being passed on to evil shareholders whilst customers are squeezed with ever higher prices.

There shouldn't be much surprise about why the Labour leader chose to attack train and utility companies. They fit into his picture of capitalism as the evil mechanism that exploits ordinary people up and down the country. Yet, his worldview seems a simplistic one, and one that he didn't seem to espouse when he was the transport secretary himself. So why now?

Steering Britain towards a more energy efficient future and one with effective public transport takes a lot of investment. To be precise: £18 billion over the next 6 years to upgrade the transport network alone. This money cant just come from the tax payer. It will mainly be sourced from investment companies which expect a healthy return. That much was clear to Miliband when he was still in government.

Now, sitting on the opposition benches in the House of Commons, the world looks rather different. The main task of Miliband as the leader of the Labour Party is to take it back to power. Which boils down to attracting new voters. Opposition parties hence often have the unappealing tendency to cast their net into fishponds they wouldn't have considered when still in power. That's where Miliband's rhetoric about 'rip-off' Britain comes from.

Miliband is smart enough to know that utility companies operate within a regulatory framework that is set by the very government in which he served. The terms of reference are defined in such a way as to attract sufficient investment for future infrastructure development. There is nothing 'rip-off' about making billions of pounds from selling gas, power or train tickets to customers when at the same time these companies are requested to spend billions on upgrading their infrastructure to make it fit for the 21 st century.

In other words, accusing companies of 'ripping-off' customers is opportunism pure and simple on the side of Miliband. He will come to regret this language if he ever makes it back on to the government benches and will have to conjure up the billions of pounds of infrastructure investment that keep the water flowing, and the lights on in Britain.

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