These days there is a lot of talk about a “cost of living crisis”, but as Unite’s most recent research confirms, we should actually be talking about a cost of profiteering crisis. From rising supermarket prices, to energy bills, to transport costs, we are all paying the price.
Take UK Power Networks, the National Grid power distributor. Last financial year, according to Companies House, it made a staggering £1.3bn pre-tax profit. Billions in profit, bonanzas for the executives and shareholders, while there are only real pay cuts on offer for workers.
One worker told my union: “The shareholders are obviously more important than the workers that have secured the company’s reputation and extreme profits. They wouldn’t even notice the difference if they paid us in line with inflation, it’s just outright obstinance that they choose not to.”
The profiteering crisis isn’t just a few “bad apples” like UK Power Networks: it’s systemic. In the first half of 2022, FTSE 350 companies saw their margins up by an average of 89% on the same period in 2019. That is astonishing corporate greed on a historic level. In the US, economists call it “price gouging”. Their economists have identified a “second round” of inflation as many companies raised their prices well above their costs in a conscious attempt to boost profits.
In 2021, Tesco, Sainsbury’s and Asda doubled their combined profits compared with 2019 to £3.2bn. Likewise, big brand food manufacturers such as Nestlé and Unilever have seen their corporate profits soar. From energy to food, hikes in our bills are seen in these soaring profits.
George, a tunneller on the HS2 project, hasn’t had a pay increase “for ages”. “The money is coming in but it’s not staying in the account. Food, energy and fuel prices are rocketing and it’s all coming out of our pocket.” There is little or no money left at the end of every week and his savings are long gone.
Less immediately obvious are the massive profit jumps at the very start of supply chains. For example, 2021 saw the four giant agribusiness corporations, ADM, Bunge, Cargill and Louis Dreyfus, reaping profits of $10.4bn(£8.6bn) – up on pre-pandemic levels by an astonishing 255%. In petrol pump supply chains, refineries and oil companies are smashing corporate profit records. Last year, BP recorded the biggest profits in the company’s history – £23bn.
Probably the most blatant examples of all this planned, untouchable corporate profiteering are the container shipping giants like Maersk, Cosco and Hapag-Lloyd. Between 2019 and 2022, the container industry boosted its profits from $7bn to $210bn (£5.8bn to £174bn). It may seem improbable, but in 2022 reporting, they are set for an even bigger bonanza. Port owners, such as DP World and CK Hutchison, have also seen huge profiteering gains, and the biggest road freight operators were on the same page as their profits zoomed by 149%.
How has a broken economy created so many opportunities for corporate profiteering at our expense? Failed market pricing systems have allowed some companies, such as energy firms, to reap massive windfalls while their real production costs haven’t changed. State-licensed monopolies have handed historic profits to North Sea oil extractors, electricity grids, privatised water operators and transport companies.
In other cases, big retailers or suppliers have exploited their “market power” to push up prices in circumstances of high demand and a limited supply of products. But we have also seen “price gouging” when crises create opportunities for what amounts to price fixing across sectors.
We are confronted by this cost of profiteering because of the stark inequalities in wealth and power that govern Britain. Capital, boosted by favourable governments, has managed to win enormous power that in turn allows it to set the rules of the economy and reap the rewards accordingly. The system isn’t only broken, it is rigged.
That must be challenged if workers are actually to get a better deal and not be forced to pay the price for a crisis they did not create. Britain is a rich country. The money is there to fund the pay rises we need and deserve. It’s only by taking on the profiteers that we can end the cost of living crisis.
Sharon Graham is the general secretary of Unite
