"Promoting choice and value for all gas and electricity customers" is allegedly the raison d'être of Ofgem - one of the British government's utilities watchdogs. This bold claim is hardly supported by recent events. Such occurrences provide a fine example of the skewing of incentives in order to render the regulatory bodies toothless.
The government, via Ofgem, are seeking a levy of £9 billion ($18 billion) on the recent profits of the electricity companies. This windfall tax will be collected, on your behalf, by the government and, no doubt, used for important causes like paying for the London Olympics or bailing out Northern Rock to the tune of another few billion. What is certain is that not one penny will find its way back in the pockets of the customers who have been repeatedly robbed by the emerging British energy cartel. As an excellent example of industrial coercion tactics, the cartel claims that this windfall tax, if implemented, will push up the prices charged to customers, setting the whole cycle of corruption off once again. This is evidently merely a form of indirect taxation - the money finds its way into Treasury coffers via the intruding hand of the middleman, Ofgem. A carve up, in other words... Ignoring the blindingly obvious reasoning that surely the money should be returned to those who were scalped in the first place, perhaps by a six month zero payment window, lets examine Ofgem's role in this scam.
The only democratic validity for a government watchdog is on the very rare occasion where the government watchdog serves the bottom of the pyramid rather than the more privileged levels. It is an entirely Orwellian construct for a government watchdog to have the reverse of this function and, yet, in shareholder capitalism, that is exactly the case virtually all of the time. For Ofgem to live up to its motto, its incentives need to be reordered. The government watchdog should be paid on performance and, if it repeatedly fails to reach reasonable goals at the expense of the energy cartel, it should be dismantled and reconstituted in a more valid form.
Allan Asher of the consumer watchdog, Energywatch, is correct in asserting that the free market in energy in Britain is malfunctioning. There are only six firms supplying the market and cartels and fragmented cartel structures abound in all such marketplaces. The markets are opaque and a whole range of devices are utilised to prevent any new competition. This very same tactic is leading to the joyful demise of the majors in the music sector - too much market power, too little strategy and an inability to adapt to the management of change. Even spooky Alastair Darling poked his head above his pool of incompetence long enough to question whether there was any relation between the cost of production of energy and the inflated prices charged to customers. When even The Economist recognises that a liberalised market isn't working surely it is time for some proper infrastructural alterations. Otherwise, you remain in the territory of indirect taxation and all must understand that there should be no taxation without representation. Ofgem must represent the customer.
On the subject of tax, Brian Barwick must have been born under a particularly unfortunate astrological sign. Not only has the man got absolutely nothing going for him but his trump suit is incompetence. How much checking of Fabio Capello's tax issues were undertaken prior to him being offered the job of England manager? Were the FA given assurances by the authorities in Italy that the purge against rich people would not lead to prosecutions for Capello and others? Would it not have been a good idea for the FA to publicise the reality rather than being reactive to a news story which originally broke in Italy?
And taxes and Capello finish today's rant! Capello should take our advice and ditch the old school when he names his first England squad for the match against The Land Of The Private Banks. Goldchip Ltd, the private bookmaker for the England squad, has just announced first year profits, as a legal bookmaker, of £600,000 for the year ending January 2007. Goldchip, as we have shown before, is an interesting little operation. Owned by Steve Smith, a business partner of Michael Owen, Goldchip operated unofficially until February 2006 when a decision was made to exit the black market. Outrageously, this practice was not illegal as Smith claims that the unofficial version of Goldchip was taking bets on behalf of an unnamed third-party bookmaker. As Matt Scott pointed out in The Guardian: "As a declared "small" company Goldchip's turnover cannot be higher than £5.6m, indicating a profitable return of more than 10%". Such a Return On Turnover is higher than the published figures of the mainstream bookmakers but has parity with the "real" accounts of the these layers - the ones that are prepared strictly not for taxing eyes. Now, Goldchip first reached infamy when the story broke about Wayne Rooney owing Smith £700,000 - that's 16% higher than the declared annual profit on just one account in an earlier year where, one might surmise, declared profits (if any had been declared) might have been rather less than £600K. Now, following publicity, Smith did the first decent thing in his life to date and reached an arrangement with Rooney's agent over the "debt". If an individual manager is clearing over £12 million a year's worth of betting then one might also surmise that people on half a million quid per month (prior to supplementary income) might produce turnover greater than just 50% of the activity of just one manager. It would be our guesstimation that the declared turnover is orders of magnitudes too small and that Goldchip Ltd still operate a very tight interaction with one of the major bookmaking organisations. In this manner, much of the turnover may be squirrelled to private markets that exist entirely outside the regulatory system, in that any such regulatory system actually exists anyway.
Capello needs to learn fast. Otherwise, England's future will be decided on the private betting markets as was always the case... Just kick Owen out and be done with it...
© Football Is Fixed/Dietrological
