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The Independent’s Investigation into Foreign Ownership

big 6 energyIn a new investigation, the Independent newspaper has revealed the extent of the displacement of dividends to other European governments as a result of the increasing level of foreign ownership amongst UK utilities.

The Independent revealed that:

“In the past two years alone, overseas taxpayers have taken dividends totalling nearly £1bn from companies which make their profits from UK”

To add further grist to the mill the Independent highlighted the dichotomy of dominant foreign ownership in the UK against the almost “zero presence” of the UK in overseas utilities markets.

The extent of the profits and dividends extracted by foreign exchequers from UK utilities, and therefore UK tax payers, has been laid bare by the Independent investigation who said:

“Privatisation was meant to bring the business acumen of the corporate sector into public utilities, increasingly it has allowed foreign governments and their state-owned operators to make vast profits out of the UK”.

The ‘hardest hit’ area according to the Independent is the energy sector with an estimate, based on the dividends taken out of the UK by EDF Energy and GDF Suez, of £900m alone. Given their status of partial state ownership, the French exchequer is directly benefitting from the pricing travails of the UK customer.

The Independent also revealed the “huge dividends” that private investors are garnering from foreign investment in UK energy infrastructure such as through Iberdrola’s ownership of Scottish Power

According to the newspaper:

“The Independent’s findings shine new light on the motivations of foreign energy suppliers”

Whilst the anti-privatisation group We Own It claimed:

“If energy was run publicly, we could use these profits to reduce the bills we all pay and boost green investment.”

Whilst that is a questionable view given the largesse and inefficiency associated with nationalised industry over many years of malaise, the desire for private and state owned enterprise to make a profit for shareholders is undoubtedly valid.

Addressing the report, a Department of Energy and Climate Change spokesperson simply underlined that whatever the source or ownership of the energy companies, a working market was key, saying:

“We want an energy market that works for consumers.”

Meanwhile EDF Energy defended their position saying:

“Dividends paid by EDF Energy to our parent company should be set against the £17.5bn that has been invested in the UK, and the £1.2bn it invested last year alone in its existing nuclear and coal stations, new generation capacity, gas storage and in its customer supply business.”

Whilst the Independent’s investigation presents eye-watering numbers it is this context of investment (and naturally the expectation of return) that resonates loudest. After all without foreign ownership the UK energy market would be in an even worse state than it currently is.