Angela Knight represents Britain’s 80-plus much-criticised energy companies and has some clear advice for her members: ‘Be upfront, be open with customers, explain what you’ve done, admit if you have made a mistake and put it right as soon as you can.’
In the eyes of the public and politicians this advice could keep Knight’s members in Energy UK very busy indeed, because most of them think the energy giants have done plenty wrong and have a lot to put right.
Recent price hikes have seen energy bills soaring, but on top of this the suppliers are among the companies accused of avoiding tax in this country despite making massive profits.
It is the bills, of course, that most affect the public’s perception of the energy industry and in particular the Big Six that dominate the retail supply market – Centrica-owned British Gas, RWE npower, Eon, ScottishPower, SSE, and EDF.
The average household energy bill is now a staggering £1,352 a year, up more than 50 per cent from just two years ago. But Knight reckons energy companies’ profits are not excessive when you take out the cost of distributing energy to homes as well as VAT. ‘Your bill is composed of a lot of things all of which have been rising,’ she says.
‘Of course, the main energy firms are big and it is not the greatest time to be a large company, but large companies are necessary for investment and we have to get that message across.’
Also definitely rising are profit margins for the Big Six, which have more than doubled to seven per cent compared with 3.3 per cent in 2011.
But critics say they do not pay any significant amount of corporation tax, as was revealed before incredulous MPs a fortnight ago.
Knight points to a report from accountant Ernst & Young that showed the energy sector paid £1.2billion in corporation tax in 2011. This was 2.9 per cent of the Revenue’s total corporation tax receipts, considerably more than energy’s 1.6 per cent contribution to the total UK economy.
The 62-year-old Knight was herself once on the tax-collecting side of the fence having been a Tory MP in the Nineties and Economic Secretary to then Chancellor Kenneth Clarke. She lost her seat in 1997.
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She also has some experience of the industry’s ways as a business customer since setting up Cook & Knight, a metallurgical processor, in Sheffield with her husband David. They subsequently divorced and she brought up her two sons.
Today, the former entrepreneur and politician accepts that energy companies risk being perceived by the public and politicians in the same light as Starbucks, Google and Amazon as not paying their fair share.
‘There is a real trust issue here and the energy companies themselves will tell you the same thing,’ Knight says.
‘We need to do as much as we can to try to build that trust especially as energy policy moves more and more to the centre of the economic stage.’ SSE’s recent £10.5million fine for mis-selling hardly helps, especially since regulator Ofgem’s verdicts on RWE npower, Eon and Scottish Power over the same accusations are all to come.
Neither is Knight’s task helped by the bumper pay packets of some of the energy company bosses, though she is too diplomatic to say so. This is also an issue she is familiar with having previously represented the banking industry as chief executive of the British Bankers Association.
Centrica directors shared £16.4million between them last year with chief executive Sam Laidlaw taking almost £5million, even while bills went up for customers.
Knight tactfully chooses to focus on broader economic issues. ‘We have to say that profit is a good thing because that provides the jobs and the investment which creates more jobs,’ she says.
‘The energy sector has created a lot of jobs in recent years and there will be more to come with the growth of windpower etc.
‘Ideally, by the time of the next General Election, I would like the public to have a proper understanding of what makes up their energy bill.
‘Above all I would like the silent majority to agree with the approach that is being taken by the Government and industry over energy.’
A new poll shows that a striking 61 per cent of people reckon utilities including energy and water are best run by the public sector.
No one could accuse Knight of opting for the easy path.