The Uncomfortable Truth About Britain’s Energy System

As the UK struggles with soaring energy bills and a cost-of-living crisis, its energy system is in dire need of an overhaul. But the solution may not lie in trendy concepts like decarbonization or sustainability, but rather in embracing public ownership – a model once considered radical. Historian and energy expert Arthur Downing argues that this thinking has led to the current crisis.

Downing’s book, Power and the People, critiques Britain’s energy system for being “fragmented, comically complicated, and hopelessly dependent on imported fossil fuels.” He contends that ownership matters not only in terms of profits but also in shaping the very fabric of our energy infrastructure. By examining four distinct phases in British history, Downing reveals a pattern of decline from public and municipal ownership in the late 19th century to the privatized mess today.

The state-owned enterprises of the mid-20th century constructed massive projects – such as hydroelectric plants and mountainous power stations – faster and cheaper than their private sector counterparts. Yet, despite this track record, the orthodoxy remains that public ownership is inherently inefficient and unproductive. As Downing notes, “this view is based on a profound misunderstanding of what institutions do.”

The current focus on producers and investors must shift to consumers and citizens. This would involve removing levies that add to energy bills and reevaluating questions of ownership. Public ownership was an extraordinary tool for building infrastructure, but it was also incredibly efficient. In contrast, the hybrid model where private companies feed off state subsidies while maintaining control over production is a dysfunctional system.

The recent acquisition by Engie of UK Power Networks has been hailed as a step towards greater efficiency. However, Downing points out that this only underscores the entanglement of public and private interests in the current system. The bond markets didn’t blink when Engie took over UK Power Networks, but what about British citizens who are left to foot the bill?

Downing’s prescription for change is clear: a renewed focus on public ownership as a means of building a more equitable and sustainable energy system. This isn’t a radical idea – it was tried and tested with remarkable success in the past. As we hurtle towards a future where climate crisis and cost-of-living crisis are increasingly intertwined, it’s time to reexamine our assumptions about what drives efficiency and innovation in the energy sector.

Britain is comfortable with public ownership, but only by foreign powers. This paradox raises questions about why domestic public ownership is viewed as inefficient while foreign investment is seen as a means of achieving greater efficiency. The answer may lie in the way we perceive institutions and their roles in shaping our energy infrastructure. By reevaluating our assumptions and embracing a more nuanced understanding of public ownership, we may be able to build a more sustainable and equitable energy system for all Britons.