Murnaghan 23.03.14 Interview with Henry de Zoete

ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

COLIN BRAZIER: Well all parties seem to agree that energy bills are a key battleground in the run up to the next election.  Ed Miliband says he will freeze prices whilst the Prime Minister has pledged to bring them down but neither can deliver on their promises, so says a former government advisor, Henry de Zoete.  He worked for Michael Gove for four years before leaving to set up The Big Deal, it’s a consumer group that aims to get down energy prices by bargaining en masse and he joins me now.  En masse, we’ve seen this come through as a tactic in dealing with what people are is monopolistic power for some time, how might it work as you see things here? 

HENRY DE ZOETE:  It’s exactly as you describe, we bring hundreds maybe even thousands of people together so that we can massively increase the consumer power of individuals who at the moment with huge monopolies, the individual consumer has very little power if anything at all and what we’ve seen over the last five or six years is prices doubling, profits massively increasing and people thinking what can I do about it?  Now The Big Deal is an opportunity for people to come together and actually take action now to decrease their energy bills.

CB: Presumably part of the problem with this debate is that people are being urged to move their energy supplier and what we know is people are more likely to get divorced than move, all those dreadful statistics remind us of the inertia that people are in the grip of.  How easy is it to get involved in what you’re doing?

HENRY DE ZOETE: Well you highlight a very key point because a lot of people talk about switching, they go on price comparison websites, you have to get out all your information, you have to find out your old bills, know exactly how many kilowatts or whatever and other stuff.  We take the total hassle out of that, it’s very easy to sign up at thisisthebigdeal.com and you just put a very small bit of information in, it takes less than 45 seconds then you’re signed up.  Then we go away and do all the hard work for you, bargain en masse so we can get a better deal than even what’s on the price comparison sites. 

CB: If we can unpack that a little bit, how do you go about striking that deal?  Do you go to British Gas and say what, we represent 50,000 customers, give us a good deal, we’re buying in bulk?  What do they then turn round and say?  It’s not in their interests to afford you special privileges is it?

HENRY DE ZOETE:   Well we will see how they react.   We did a bit of polling when we launched that showed that 80% of the country think that energy, the Big Six, act like a cartel so if we go to them with 50,000 people and we hope to get even more than that, and say this is a huge amount of business for you, please will you do a deal and talk to us, I think if they don’t want to even talk to us or even negotiate that would be quite an extraordinary mood that would play into the public’s perception and politicians view that these guys aren’t really being fair on consumers but I would also say that now there are smaller energy companies, the independent ones who are big enough so potentially they could be involved in what we’re doing and we could see a deal being done with those guys which would be fantastic. 

CB: There is a perception, as you say, that the Big Six energy companies are acting as a cartel, there is no shortage of complaints against them, whether it’s misspelling, whether it’s … I think Which the consumer organisation last year recorded 5.5 million complaints against them.  However, whenever any set of institutions or individuals become panto villains and arguably the Big Six energy companies have become exactly that now, you run the risk don’t you of overdoing it, overegging the criticism with unforeseen consequences and we had Tony Cocker, didn’t we, the CEO of Eon, one of the Big Six companies, who said recently, look, if you keep putting the boot in to the energy companies you are going to scare off exactly the kind of big multinational international investors that this industry needs to deliver ultimately price reductions because they are going to see this as a market they can’t invest in, in full knowledge that things will be the same today as they are two years hence.

HENRY DE ZOETE:  We always hear this argument that they have to make big profits so that they can invest but …

CB: But they have got to invest haven’t they, you have only got to look at what’s happening in Germany how they cravenly fawn before the Russians because they are so dependent on Russian gas.  Energy really matters, it’s not just about heating your home anymore, it’s geopolitical.  

HENRY DE ZOETE:  That’s absolutely right, of course, but the truth is when you look at what’s happened over the last years with energy prices doubling and profits quadrupling, I mean SSE just two weeks ago said that they were going to make £1.5 billion in 2013 and that’s despite losing 250,000 customers, they lost a quarter of a million customers and they are going to go and make massive profits of £1.5 billion and the complaint about disinvestment, questions have to be raised.  

CB: Henry, we have covered a lot of ground there and I’m glad we did because it was always likely we were going to have to go to Perth to see the latest mission returning from that sweep across the ocean in search of the Malaysian flight or debris from it.