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thomas davison

Britain for sale: How long before a foreign power turns out Britain's lights?
By Alex Brummer
PUBLISHED: 23:10, 15 April 2012 | UPDATED: 09:16, 16 April 2012

On Saturday in the Mail, our City Editor Alex Brummer revealed the price we�re all paying in higher bills for having sold off half our companies to foreign owners. Here, in the second extract from his devastating new book, he warns that with so much of our vital utility companies in foreign hands, we are now at the mercy of conglomerates that could bring Britain Plc to a shuddering halt .
Everyone feels it�s their right to have water when they turn on a tap � just as we all assume a flick of a switch will produce light.

These are public services we take for granted. We also expect our airports to function properly and care homes to treat the elderly with respect.

True, most are now owned by private companies, but we tend to assume the public interest always comes first � such as plugging leaks and renewing water pipes, rather than providing fat profits for shareholders.

But what happens when most of Britain�s essential public services are no longer run by the British? It�s a crucial question that politicians dodge, as one company after another is sold off to foreign masters.

Roughly half of all our essential services � from water to bridges and ports � now have overseas owners. And in many cases, there�s disturbing evidence to suggest the public is losing out � and will continue to do so.
Scandal: The day may well come when we no longer own any of our vital public services at all
Why? Because not only are foreign companies out to make fat profits as speedily as possible, but they�re not as concerned as a British company would be about public opinion. They owe no particular allegiance to this country, and their foreign fortresses shield them from our bitter complaints.

Take Scottish Power, now owned by Spanish firm Iberdrola. Last year, after a series of price increases, it announced its customers would have to pay yet more for their gas. Scottish consumers were furious: in five years, their energy bills had risen by an average of 40 per cent.

So you can imagine the reaction when, just weeks after the latest hike, it emerged that Scottish Power had piled up vast profits. So much so, that it had made an �800 million loan to a sister company in the U.S.

This was not illegal. A utility company with an international reach can transfer profits from one part of the world to another rather than reinvest them in infrastructure, service and lower prices in the host country.

Among the critics of Iberdrola was Glasgow MP John Robertson, who said: �It seems beyond the pale to be hiking prices in the UK when the company has lent �800 million. It�s in no one�s interest to have energy companies milking the British consumer at a time when households are struggling to make ends meet.�

Struggling British consumers had to swallow the increase. Not so in America, where Iberdrola also supplies gas and electricity. Its consumers there had gas and electricity bills frozen since the mid-Nineties, until relatively modest rises last year of between four and eight per cent.
Milking the British consumer: Jose Luis Del Valle (right) chief executive of Scottish Power and Ignacio Galan chief executive and Chairman of Iberdrola
So how come Iberdrola � through Scottish Power � hikes up bills in Britain while keeping them at a reasonable level in the U.S.? It�s because different states and cities in America retain strict controls not only over gas and electricity prices, but how much the companies should reinvest into their business.

When UK firm National Grid bought several energy companies on the East coast of America, it discovered that any proposed price increase was subject to public hearings in which all interested groups have their say.

And each state demanded full financial disclosure � such as details of the salaries, perks and lifestyles of company executives. Investigations by the New York Public Service Commission of National Grid�s operations in the state found it had potentially over-charged expenses of $26 million.

The result is that in New York and other states, National Grid has been knocked back in its efforts to force through price increases. No wonder foreign companies flock to Britain and generally give the U.S. a wide berth.

Ironically, the first wave of new owners after British power companies were privatised were chiefly Americans. Attracted by the lack of regulations, they saw an opportunity to make easy profits and ship them home. They brought with them U.S.-style remuneration packages for directors which turned many into �fat cats� overnight. The pay of the highest-paid water company executives soared by between 50 per cent and 200 per cent.

And we paid, through rising prices.

In the UK, we�ve ended up with the worst of all worlds: overseas ownership and no real accountability or constraint on price rises. Increases are frequent and apparently arbitrary �and push up overall levels of inflation.
The worse of both worlds: Rising cost and foreign ownership means we have little control over the problem of ever rising utility bills
Unlike its U.S. counterparts, our energy regulator, Ofgem, has only limited powers in its battle against absentee landlords.

The head of Ofgem, Alistair Buchanan, a former City analyst, says one of his principal concerns is that foreign-owned utilities have a record of instantly passing on price increases to UK consumers when oil and gas prices are rising, but failing to adjust them downwards fast enough � if at all � when wholesale prices are falling.

Another concern is that our power bills are likely to soar even higher when old plant and equipment come to the end of their effective life. Foreign owners tend to have more compelling uses for their cash than building up investments for our future.

Yet, ironically, it was the urgent need for investment that helped make such a good case for privatising Britain�s water companies in 1995. Far better, thought the Government then, to get our Victorian pipes and sewage systems replaced by private companies.

One of the jewels in the crown was Thames Water, with 8.5 million water customers, 100 water treatment plants, 290 pumping stations and 235 reservoirs. In 2001, it was snapped up by Germany�s RWE, one of Europe�s largest power utilities.

More from Alex Brummer... Consequences of selling off Britain's public service companies could be calamitous 16/04/12 ALEX BRUMMER: How Britain has sold more than half its companies to foreigners 13/04/12 UK for sale: Uniquely in the world, Britain has sold more than half its companies to foreigners. And we are all paying the price 13/04/12 ALEX BRUMMER: The dangers of a fortress pound 12/04/12 Meltdown: The idea of entrusting our nuclear future to the firm that built Chernobyl is part and parcel of Britain's bankrupt energy policy- which is now in very real danger of imploding 11/04/12 ALEX BRUMMER: Spanish meltdown would be a tragedy for our recovering banking system 11/04/12 ALEX BRUMMER: Facebook lavishing $1bn on picture-sharing application Instagram is astonishing deal 10/04/12 ALEX BRUMMER: JP Morgan Cazenove banker Ian Hannam mines his friends 05/04/12 VIEW FULL ARCHIVE By 2005, Thames profits had soared by 30 per cent to �346 million � helped by a 21 per cent price rise for customers approved by the notoriously useless regulator, Ofwat. Yet that same year, the company�s pipes were in such a bad state of repair they were leaking 196 million gallons a day.

The German owners did little to address the problem. This became a scandal in the serious drought of 2006, when customers were banned from watering lawns and washing cars.

The Daily Mail revealed that the five men controlling Britain�s most wasteful water company were paid �20 million a year. And while the average Thames customer�s bill was �265 a year, residents of the chief executive�s hometown � Laren in Germany � paid well under half that amount for a first-class modern network.

The ghastly publicity forced Philip Fletcher, director-general of Ofwat � until then ineffectual � to confront the issue. Describing the situation as �totally unacceptable� and pointing out that the water leaked from Thames Water�s pipes could supply 2.8 million homes each day, he accused the company of profiteering.

The failure of Thames to curb leakages had contributed to water shortages in the South, he added, and could increase the need for hosepipe bans and other restrictions in future years.

Taken aback, the German owners bailed out and sold the company. They did not leave empty-handed: over their five years of ownership, the company paid �1 billion in dividends to its mainly German shareholders, including a final payment of �216 million.

The new, foreign, owner, was Kemble Water, controlled by Australian infrastructure fund Macquarie. Immediately, it started selling off some of Thames�s assets � including South East Water.

Today, as Thames imposes yet another hosepipe ban, it claims to be improving pipes, sewers and other facilities. But it�s still making a handsome profit for its overseas owners: as the Mail revealed, its directors were paid �179.5 million in bonuses in the last financial year � including �3 million for three of its executives. That money came from British pockets.

But the Thames Water experience shows that even foreign owners are not totally impervious to consumer power and negative media coverage. Overall, however, the foreign-owned water companies have shown far more interest in profits than improving the reliability and quality of our water supplies and sewerage disposal.

This method of doing business is not exclusive to them, either.

Remember December 2010, when Britain shivered for days under inches of snow? Unlike other big European airports, Heathrow turned into something akin to a Third World refugee camp as it closed for 48 hours.
French state energy giant EDF is in control of Britain's nuclear power generators
The British Airports Authority � owned by the Spanish company Ferrovial � had under-invested in snow-clearing equipment. In buying BAA, Ferrovial had lamentably over-extended itself with debt. Despite some improvements since, our leading airport remains a poor cousin to many of its European counterparts.

And there are other grounds for alarm. By a strange quirk, several of the latest foreign owners of British utilities are state-controlled. So nationalised companies privatised only a few years ago are effectively in state hands again � though the state is no longer Britain.

London Electricity, bought by U.S. firm Entergy in 1996 for �1.3 billion, was sold two years later to French state-owned EDF for �1.9 billion. EDF later snapped up two small nearby power distributors and merged them into a new company, EDF Energy. In 2009, it won control of Britain�s nuclear power generators, which means that they�re effectively owned by the state of France.

Three years before � as other nations started to invest heavily in nuclear energy � we�d sold another prime nuclear company, Westinghouse, to the Japanese.

More...Hosed down with millions! How water bosses have pocketed huge bonuses and handed shareholders massive payouts
Water companies splashed out �4million in bonuses to bosses despite failure to repair leaks
Fears of even higher fuel prices due to fuel tanker drivers dispute allayed by peace proposals

They got a real bargain, as Westinghouse was one of a handful of designers, manufacturers and builders of new nuclear plants around the world. Had we retained it, Britain could have become a leader in a booming sector. But there was little public opposition, and the $5.4 billion received was seen as a welcome bonus for the Exchequer.

Now, as old plants are mothballed and oil grows more expensive, we�re faced with having to build new nuclear power plants to avoid major power crises. But the only company we have with the expertise to construct them is French � and likely to give other French companies the lion�s share of the work.

Meanwhile, EDF is involved in detailed discussions with the UK authorities over setting a future guaranteed price for power generated by the new plants. In effect, it�s asking for a nuclear subsidy.
The EDF Energy London Eye: British consumers are making foreign bosses millionaires
And who�ll be paying? We will, through a charge on energy bills.

But isn�t the constant buying and selling of utility companies to foreign owners simply part of the natural capitalist order of things? Certainly � and there�s nothing wrong with firms making money.

It should, however, be clear by now that selling off our vital services to overseas interests is a risky strategy that takes no account of what might happen in the future. It�s classic short-termism. And it�s not a strategy that�s been adopted by other countries.

In Germany, the massive power generators E.ON and RWE � which also own energy companies in Britain � are regarded as national champions. With the backing of their government, they�ve expanded all over the continent.

Moreover, they�re protected by elaborate and complicated laws that have made it all but impossible for UK firms to compete with them in Europe.
RWE and E.ON have established a special relationship with the Russian gas supplier Gazprom.
They have joint supply and pipeline ventures which help ensure they get preferential treatment whenever supplies are short.

Good for us? Sadly, not. The German companies are so intensely focused on continental markets that � like EDF and Iberdrola � they tend to give the UK short shrift.

So when oil or gas supplies are short, British consumers are likely to be low on their list of priorities. If an energy crisis occurred like that of the Seventies, Britain would be in real trouble. Firms such as RWE and E.ON would doubtless feel more of an obligation to keep the Ruhr supplied rather than, say, Tyneside.

If that seems like scaremongering, bear in mind that during the Arctic winter of 2010�2011, gas supplies through the Langeled UK�Norway pipeline were substantially reduced because the Norwegians prioritised themselves and their closest trading partners.

Britain�s energy supplies are also vulnerable to global political rows, particularly since Russia started piping oil and gas across the Ukraine and Europe to UK consumers.

Six years ago, it even looked for a while as if the state-owned Russian gas conglomerate Gazprom might be taking over British Gas�s parent company Centrica, gaining access to its 15.7 million UK customers.

At the time, the Kremlin was using its huge energy resources as a political weapon by turning off gas taps supplying the Ukraine. If they could do it to the Ukraine, some feared, there was nothing to prevent them doing it to us one day.

Tony Blair, who presided over the sale of so much of Britain�s energy industry to overseas owners, was typically unfazed by the Russian approach, and saw no reason to block it. But many breathed a sigh of relief when Gazprom dropped the idea of making an official bid. As former Chancellor Alastair Darling remarked: �There�s a huge issue and it�s security. Frankly, as we know, if you lose power it is catastrophic. Remember the blackout in London a few years ago? It was an accident but it paralysed half the City and it was terrifying.�

The ease with which a foreign power could disrupt the nation�s energy supplies, bringing the economy to a shuddering halt, is frightening. To date, however, there�s no restriction in place to stop Gazprom buying British Gas � or any other public service company.

Without a thought to the future, we�ve sold four of our big six energy firms to foreigners who view us as little more than a useful profit centre.

In fact, the day may well come when we no longer own any of our vital public services at all.

Started with Thatcher continued by Blair, Brown and now Cameron. The utilities and national assets they have sold off did not belong to them in the first place, they belong to the Nation. Our politicians over the last three decades have cared nothing about the people they claim to represent just their own careers and returning favours to their paymasters. NHS next; why did the media cover so little of the short and long term consequences of allowing private profiteers, many of whom have off shore accounts, takeing over the most lucrative parts at our expense.

I really cant understand HOW a great Country like Britain USE TO BE, can sell off strategic asset's such as Gas,Power, Clean Coal (200 years supply) Water,Steel ,Shipbuilding,British Rail,Nuclear Power,Hospitals ? and still maintain itself as a 'Sovereign Nation'. This wouldn't happen in Japan,Germany,China and other Sovereign Nations. British Historians really have to examine the EU 'Stauffenberg Plan' to understand exactly who are seizing control of these Industries?,to whose benefit, and to whose interests ?.

With a proper government in place, one who takes care of Britain, all the above can be turned round in a year as long as we get out of the EU and the Human rights laws, we can do it, we can really.

thomas davison · Posted: Mon Apr 16, 2012 6:52 pm Post subject:

Sunday, August 09, 2009
Von Stauffenberg To Prevent EU Totalitarianism

The German Parliament is being manoevred sweetly to sidestep the CSU's position on the decision of the German Constitutional court and the proposed veto over Government negotiations with the EU by the German Parliament is to be avoided.

Stepping into the debate is a man whose name is already strongly asssociated with fighting for freedom from totalitarian power in Germany. Open Europe reports as follows -

Die Welt reports that the former MEP Franz Ludwig Schenk Graf von Stauffenberg (CSU) has said that he may launch a new complaint against the Lisbon Treaty, "We see each other in Karlsruhe again" if the parliament and Bundesrat (upper chamber) do not sufficiently transpose the requirements of the Court's Lisbon judgment."

Is this history repeating itself? The attempt to overwhelm the populations of Europe with totalitarian power is the same as it was in 1944, except this time the fight is being waged without bombs and bullets. At least it is so far.

Read his words -

I see the way to [the Constitutional Court] as a last resort,� the Count said, �and had hoped that we could compel a re-think through an ordinary democratic manner, through argument, debate, and public pressure. This has totally failed..... This Europe is no longer compatible with the basic structures of a democratic legal state.�