Friday 25 July 2014

Blog: Are Brits unsuited to having a Big 1,000?

“We need a Big 60,000 of suppliers” is a phrase which often tripped off the tongue of Greg Barker, the former Energy and Climate Change Minister who left his post in last week’s reshuffle.

But is it possible that Great Britain is simply unsuited to having more than a handful of suppliers?

Unsuited that is, by nature. We chucked the monarchy out, once - but quickly let them back in. (Now we fawn on the royal progeny in magazines, news reports, ludicrous memorabilia. I don’t mind the odd Jubilee tea towel – but gazing at snaps of a stranger’s baby? It’s a bit weird.)

A report this week by think-tank ResPublica says we should look to Germany and their 1,000+ suppliers from community groups to local authorities.

The Germans’ biggest energy firms have just 44% of the market share while in the UK, the Big Six have more than 90%.

It’s dropped a few percent, sure, after a few years of roasting in the press for the Big Six.

And half of Germany lived with strong Communist values for decades. Is it any surprise there are hundreds more smaller suppliers set up to serve consumers?

How small businesses – and their owners – work is also a factor in this. If you build up a successful business, do you keep running at its current size? Or is capitalism so ingrained in the system, the only obvious option is to sell it off to a bigger rival?

The risk of energy newbies being hoovered up, threatening the small saplings of competition currently growing, was on the brain for Baroness Verma yesterday (24 July 2014).

In a House of Lords committee session on new laws for the electricity market, she said: “We’ve got to make the market more certain for those smaller players so we don’t have the sort of, disappearance, that we saw very rapidly happening when we had the Big Six take over.”

The way independent suppliers market themselves these days – “we’re not the Big Six, we’re different! We love you!” they cry - may mean this business model of grow it and flog it to the highest bidder is not possible in future. (Hat tip here to Tony Ward of EY who made this excellent point after I interviewed him a few months back.)

I’m no psychologist – so treat this as a conversation-starter, an appetiser rather than a three-course meal. But I’d be intrigued to know if there’s ever been a study into the psychology of buying energy.

And if the British bulldog is by nature called to heel by the Big Six - or an independent breed.