Can someone explain again - how are energy companies make so much profit?

BUFF

because not all energy suppliers (retail) have energy production parents:
this would disadvantage those companies, which might go out of business & reduce competition even more. With less competition left the remaining energy retailers could put their prices up ...

Or they may decide not to pass on the lower cost to consumers - after all, why should they if they are not constrained by regulations?

Government does need tax revenue.

matt_drummer

ariarnia said:

IanIanIanIanIan said:

So, The Government can change the regulations so the producers may sell to their subsidiary suppliers at a lower price at the front end, which filters down to the public consumer's pocket, instead taxing the windfall profits upstream and then distributing a little of their own money back to the consumer with the Government appearing to be the consumer's angel.  The producers and the suppliers make the same amount of money overall as it will not be taxed off of them.

Of course the money would stay in the consumer's pocket instead of vanishing into the Governments coffers.  Makes you wonder why they won't do that?

they could. but those rules are in place for a good reason. 

https://blog.ipleaders.in/the-competition-act-2002/

this explains it better than i could but basically if we let a global company set up a uk supplier and cross subsidise that supplier using global profits then in not to long we might end up with only one supermarket/energy supplier/electronics retailer etc. then they can hike there prices to whatever they want and you are forced to pay it because theres no one else to buy from. 

and you can say the government would step in but its like bulb costing the government 6 billon pound because it was 'to big to fail' but even worse as there are no alternatives. it sounds nice and simple on paper but in reality it would cause a lot more pain than the current system. 

the only realistic alternative is nationalisation but that has its own problems (including what i said before about us all being quite happy with the arrangements when it meant we could get cheap electric to waste as we wanted). 

and of course your point about tax. remembering that if the goverment get less tax then they also have less money to spend on things like the nhs and schools and nuclear reactors. so probably if were not happy with those things then we should all pay a bit more tax whatever the arrangement is not a bit less?

Before paying more tax I would prefer to see the taxes we already pay spent more wisely.

Instead of building what I consider to be a pointless railway that saves a few minutes on a journey, that is vastly over budget and doesn't even go where they promised it would go, they could have installed solar panels and batteries on 15 million UK homes and mitigated many peoples concern's over energy costs, cut emissions and freed up grid capacity for charging electric vehicles and running air source heat pumps.

But no, they decided to spend it on getting from somewhere on the edge of London to Manchester 15 minutes quicker, and I expect it won't be quicker in the end as there will be the wrong type of leaves, or rain, or snow that will mean the train can't go as quickly as expected!

Anybody remember the tilting APT?!!!

We already pay more tax in percentage terms than we have done for seventy years!

The conservatives criticised labour in 2010 for borrowing £800 billion, that's what we had borrowed since the dawn of time.

The conservatives have now increased our borrowing to £2.5 trillion in 13 years. They have borrowed twice what all of the governments before them combined had borrowed!

This wouldn't be so bad if we were getting great services, you can't see a doctor, a dentist, the roads are a disgrace, schools are suffering, councils say they have no money, police and other essential services have been cut.

Am I the only person that sits here wondering,

What have they and what are they doing with all of our money?!

[Deleted User]

Spoonie_Turtle said:

Dolor said:

People will argue that they are working hard but the statistics indicate that we are 20% less productive than our US cousins. We are short of key workers but the thought of increased immigration remains an anathema to many. My daughter took her skills to Canada where she is now a senior vice-president of an international insurance company. I can see many others following in her steps with Western Australia making no secret of the fact that it wants our skilled workers.

By what metric are they more productive?  (Genuine question.  Edit: not implying I don't believe you, just wanting to know the context.)

In the US most ordinary people are having to work two or three jobs just to keep a roof over their heads, they have very little holiday and although perhaps productive, they are all burning out.  Not that the system cares, plenty more drone workers to exploit and expend because they all have to work so much just to afford the basics - and there are virtually no protections for employees, no statutory holiday, the sickness policy is basically 'you must never be off ill', and access to healthcare is contingent on their employer not firing them (most states are 'at-will' states so firing is an ever-present danger) yet somehow still horrifically expensive even after insurance. 

Many acquaintances from the US describe it as a "dystopian hellscape", we absolutely should not be looking at the US for ideas no matter how much the people in charge already want to.

[They also don't fund their schools properly, and are losing so many teachers that many schools are having to go to a 4-day week even with unqualified substitute teachers.  Before this crisis most of their teachers had to work a second job to make ends meet - let's maybe not do that to our teachers please?]

I don't know what the answer is, but it is categorically NOT to emulate the USA.

House of Commons Research Paper - published 30 January 2023

https://commonslibrary.parliament.uk/research-briefings/sn02791/

GDP matters because it is what pays for the NHS; Defence; teachers etc. 

TheGardener

sevenhills said:

TheGardener said:

 I'm no socialist, I believe in reward for hard work but let's face it  - we're all getting pretty shafted at the moment - well, that's what it feels like to me. 

Anyone that was really poor, would have opted for the free solar panels funded by the government...
The retired and those on benefits got an inflation increase on their income, on top of that they got over £1,000 in government help with energy bills.
I work and got some government help, but very few got inflation pay increases. When I visit my 70 year old sister, the heating of often off. Because she prefers to spend her money on other things. She has more money than me, still working at 70.
She goes to Barbados next month.

Are you for real...supposing the 'really poor' don't own their own homes and the decision wasn't theirs to make...or better still, their social housing provider got them into this mess... Solar panel firm 'mis-sold 25-year contracts in Stoke' - BBC News

EssexHebridean

sevenhills said:

TheGardener said:

 I'm no socialist, I believe in reward for hard work but let's face it  - we're all getting pretty shafted at the moment - well, that's what it feels like to me. 

Anyone that was really poor, would have opted for the free solar panels funded by the government.
The retired and those on benefits got an inflation increase on their income, on top of that they got over £1,000 in government help with energy bills.
I work and got some government help, but very few got inflation pay increases. When I visit my 70 year old sister, the heating of often off. Because she prefers to spend her money on other things. She has more money than me, still working at 70.
She goes to Barbados next month.

Well, there seems to be a nice combination of privilege and resentment there then! 

I know for a fact there are some folk who are probably struggling to a quite significant level in my building. My ground floor flat probably isn’t particularly ideal for solar to be honest. I mean there is the balcony, but it’s not very big… our worse off neighbours would be in the same position. Chances of the council giving ANY of us permission to fit solar panels would be precisely zero. So no - even under the heading of “really poor” there are still different level’s of privilege - I’m afraid poverty doesn’t fit into some sort of neat mould where everyone has the same options! 

“The retired” as you put it have NOT yet had the increase to their state pension - that kicks in in April I believe. My Mum is glad of it too - as otherwise by the time the increased council tax, phone and internet cost, and a further rise in energy bills takes effect she would be significantly struggling - as it is the increase will mean she still has at least a little bit of spare cash. 

Your sister sounds fab - and if she wants to make you sit in the cold when you visit so that she can go to Barbados, more power to her! 

And for transparency, as for pay rises, I’ve not had one for a good while - the industry I work in was badly effected by Covid, and has now been even more badly effected as a result of the wretched mini budget and increasing interest rates. Do I feel some sort of brooding sense of resentment against pensioners and disabled folk for having been “given” more than I have? Absolutely not - I have a job, and one that I enjoy at that, and can cope with what I earn - as much as a bit more would be nice, I’m still more fortunate than many. 

ariarnia

that's something that came up on here recently. people in rented/low income accomodation and there landlords (housing association i think) installed fancy modern systems with heat pumps and solar but they werent set up right or the insulation in the houses wasnt great (i can't really remember) and it was actually costing them a fortune so they had to be cold most of the time. 

sometimes these things sound good but really need a bit of thought and not blanket rollouts

sevenhills

TheGardener said:

Are you for real...supposing the 'really poor' don't own their own homes and the decision wasn't theirs to make...or better still, their social housing provider got them into this mess... Solar panel firm 'mis-sold 25-year contracts in Stoke' - BBC News

That sounds similar to my situation. I had free solar panels fitted to my council house and I get a small amount of free electricity for 25 years 

MattMattMattUK

matt_drummer said:

ariarnia said:

IanIanIanIanIan said:

So, The Government can change the regulations so the producers may sell to their subsidiary suppliers at a lower price at the front end, which filters down to the public consumer's pocket, instead taxing the windfall profits upstream and then distributing a little of their own money back to the consumer with the Government appearing to be the consumer's angel.  The producers and the suppliers make the same amount of money overall as it will not be taxed off of them.

Of course the money would stay in the consumer's pocket instead of vanishing into the Governments coffers.  Makes you wonder why they won't do that?

they could. but those rules are in place for a good reason. 

https://blog.ipleaders.in/the-competition-act-2002/

this explains it better than i could but basically if we let a global company set up a uk supplier and cross subsidise that supplier using global profits then in not to long we might end up with only one supermarket/energy supplier/electronics retailer etc. then they can hike there prices to whatever they want and you are forced to pay it because theres no one else to buy from. 

and you can say the government would step in but its like bulb costing the government 6 billon pound because it was 'to big to fail' but even worse as there are no alternatives. it sounds nice and simple on paper but in reality it would cause a lot more pain than the current system. 

the only realistic alternative is nationalisation but that has its own problems (including what i said before about us all being quite happy with the arrangements when it meant we could get cheap electric to waste as we wanted). 

and of course your point about tax. remembering that if the goverment get less tax then they also have less money to spend on things like the nhs and schools and nuclear reactors. so probably if were not happy with those things then we should all pay a bit more tax whatever the arrangement is not a bit less?

Before paying more tax I would prefer to see the taxes we already pay spent more wisely.

So would I, but I also know that governments will never invest all revenue wisely, even if the majority of it likely is.

matt_drummer said:

Instead of building what I consider to be a pointless railway that saves a few minutes on a journey, that is vastly over budget and doesn't even go where they promised it would go, they could have installed solar panels and batteries on 15 million UK homes and mitigated many peoples concern's over energy costs, cut emissions and freed up grid capacity for charging electric vehicles and running air source heat pumps.

But no, they decided to spend it on getting from somewhere on the edge of London to Manchester 15 minutes quicker, and I expect it won't be quicker in the end as there will be the wrong type of leaves, or rain, or snow that will mean the train can't go as quickly as expected!

HS2 is a waste of money, the economic case was never there from the early days Labour proposed it, to the multiple times the Coalition and the Conservatives have green light it and signed it off to carry on, but it is a political football. Equally installing solar panels and batteries on fifteen million homes would have also been a waste of money, domestic solar is the least efficient kind of solar, domestic battery storage is the least efficient battery storage. If they were going to spend the £100 billion building 15 nuclear reactors providing 24,000 MWe of generation capacity 24 hours a day, 365 days a year come rain or shine.

matt_drummer said:
We already pay more tax in percentage terms than we have done for seventy years!

We do, we already pay less than any other major European economy, we pay less than any major economy other than the USA and they do not have a socialised health care system. The UK electorate seems to think that we can have European style social contract on US levels of taxation, that is not possible, we either accept far worse public services or higher taxes, we cannot have both. More than half of all households receive more in benefits than they pay in tax, less than a third make a net contribution in any one year, less than 5% make a net contribution over their lifetime. In the UK the top third of earners pay the fifth highest rate of income taxation in the EU, however the bottom two thirds pay the lowest rate of income taxation in the EU, that is unsustainable. Taxes need to rise for everyone, or we need to accept that public services will only get worse.

matt_drummer said:

The conservatives criticised labour in 2010 for borrowing £800 billion, that's what we had borrowed since the dawn of time.

The conservatives have now increased our borrowing to £2.5 trillion in 13 years. They have borrowed twice what all of the governments before them combined had borrowed!

They did and that was political, the slight difference is the Conservatives borrowed during an economic downturn, where as Labour under Blair/ Brown were borrowing during an economic boom which is when national debt is supposed to be repaid. The reality is though that the Coalition and the Conservatives never implemented austerity, the nation carried on spending more than it earned because the public did not have the appetite for further cuts to spending and they were unwilling to pay more in taxes.

matt_drummer said:

This wouldn't be so bad if we were getting great services, you can't see a doctor, a dentist, the roads are a disgrace, schools are suffering, councils say they have no money, police and other essential services have been cut.

We do not pay enough taxes for those services to be great, our tax levels are far too low for high quality European style services. In Scandanavian countries, Germany, Holland etc. those services are far better than ours, but everyone also pays a lot more tax than we do. 

matt_drummer said:

Am I the only person that sits here wondering,

What have they and what are they doing with all of our money?!

Spending it on services, debt interest etc. Yes there as been contracts for "friends" but in terms of the national budget these are rounding errors. The UK spends just over £3,000 per head on healthcare spending for example, the EU average is £3,700, in Germany it is £4,300, in Norway it is nearly £5,000 per head. Most counties also have social components which further top up healthcare spending.

The UK collects the equivalent of 34.5% of GDP as tax, Norway collects 40%, Germany 42%, Sweden 45%, France is top at 48%, that gives them the revenue to properly fund their services. They are collecting 20% more tax revenue than us, they also have lower debts which means lower debt repayments, interest repayments and bond yield payments. In the UK the problem is not that we do not spend the money we have wisely, all governments have a wastage (although ours is higher than most advanced economies) but that we collect considerably less, whilst expecting it do do considerably more.

matt_drummer

MattMattMattUK.

You are correct on all of that, far more detailed than my brief whinge at the end of a long day last night.

My wife is from Latvia and I have spent a lot of time there and in Sweden. 

It's pretty difficult to compare these countries to ours in terms of taxation.

In Latvia, until fairly recently, many people received a big proportion of their wages in cash (off the record), they paid no tax, their headline tax rate may be higher on lower paid workers (which is most of them!) but their real tax rate was tiny.

Property in Latvia is really cheap, not like here.

Wages in Sweden are much higher than they are here, they may pay more tax but they have more money to take it from in the first place.

Latvia has barely any social care, if you don't go to work you don't have any money. No judgement here at all, but we pay a lot of people to stay at home. It's remarkable when I travel to other countries that there are one or two disabled parking bays at a supermarket, here there are loads, why do we have so many more (as a proportion) disabled people than say Latvia?

Our housing is expensive, our wages at the bottom end are low, and our benefits system is generous and easy to play.

I strongly believe in supporting the less well off in society, it's one of the great things about our country, but I am sure many of us know of people who are taking advantage of the system.

I don't know that many people but even I know of at least six couples who are not telling the truth  about their living arrangements in order to claim benefits that they would not be entitled to if they told the truth.It's really easy to claim benefits that you are not entitled to if you are prepared to bend the truth. The worst thing is that they are taking money from people who really need and deserve it.

I'm rambling a bit (as I'm at work) but comparing tax takes in other countries is not the whole story for me, it's part of a package of wages, living costs and looking after those who need help, I think our balance is wrong and just taxing people more is a lazy way of fixing the problems.

ariarnia

matt_drummer said:

 It's remarkable when I travel to other countries that there are one or two disabled parking bays at a supermarket, here there are loads, why do we have so many more (as a proportion) disabled people than say Latvia?

why do you think we have more disabled people than latvia and not that we have more VISABLE disabled people because the people in latvia are stuck at home dependent on family because they can't do things like go to the supermarket or work?

tho it could also be that i remember when we went to finland and they didn't have disabled bays. because all of the bays were bigger than ours and there always seemed to  be spaces near the front empty (maybe the non disabled people didn't mind walking so didn't feel the need to park right outside the doors?)