The Money Shot – 27 July, 2012

Gerald was aghast at Centrica's profits
“The best way to stick it to your energy company is by taking your business elsewhere." Jeremy Cryer, Gocompare.com
  • | by Kristian Dando

LIFE’S A GAS

“Recession? What recession?” Those must have been the thoughts running through the minds of shareholders of Centrica, the parent company of British Gas, as they guffawed, spluttered and hooted all the way to the bank this week.

The company announced £1.45bn of operating profits in the first half of the year – that’s equivalent to £2m a day. The operating profits of British Gas’s consumer division alone rose a staggering 23% to £345m. The choice to reveal these eye-popping numbers in a week when the world and its dog are chattering about a large, London-based sporting event - whilst also collectively reaching for the factor 30 - must surely be a coincidence…

Since cancelling our student subscription to the Morning Star  and reconciling our revolutionary ideals with the necessity to make a crust and buy eye-bleedingly gaudy trainers, the Money Shot isn’t necessarily averse to a bit of profit and free-market capitalism. But it nonetheless grinds our gears that in May British Gas was warning of price hikes to come in the winter. What’s more, despite those loudly trumpeted price cuts in January the cost of energy to the consumer is still more expensive than in 2011, thanks to whopping 16-18% rises last August.

Centrica chief Sam Laidlaw said the group had performed well despite "challenging market conditions”, and that the increase in profits "must be placed in the context of unusually low levels of consumption and profits in the UK in the first half of 2011," possibly whilst pulling on a pair of figure-hugging Speedos and diving Scrooge McDuck-style head first into a large pool of money.

Mike O'Connor, chief executive of Consumer Focus, was just one of the voices calling out Centrica. "You're making £2m every day of the week; I think it's about time you gave consumers a break," he thundered, to no avail.

Of course, when it comes to energy there’s always the option of voting with your feet. Or, in this case, your direct debit. Not by ‘going hermit’ and living in a cave with no power - unless of course that sort of thing floats your boat - but by switching energy suppliers.

“The best way to stick it to your energy company is by taking your business elsewhere,” says Jeremy Cryer, energy expert at Goompare.com. “If you’ve had it up to here with high prices, shoddy customer service and gratuitous profits when your bills are going up, then switching suppliers might just be the ticket.”

QUOTE OF THE WEEK

"We are sorry... and recognise that we have disappointed our customers and shareholders.”

A fairly unreserved apology from Barclays about that unpleasant Libor-rigging business. Speaking of ‘Barclay’s apology,’ the theology buffs among you should know that was also the name of the vindication of the Quaker faith written by Robert Barclay in 1678. It’s not just cheap zings and tired re-hashed news here, readers.

DOUBLE TROUBLE

“Business, Numbers, Money, People… Computer world!” sang German popsters Kraftwerk in their 1981 hit Computer World.

It conjured a vision of banking and commerce that was cold, clinical and robotically infallible. If only. Over 30 years on, and a couple of bank-related computer clangers later, it would seem Britain’s financial IT structures are being held together with the coding equivalent of string and gaffa tape, with customers of Nationwide being charged twice on transactions this week thanks to a ‘technical error’. Allegedly, one customer was charged £9,000 for a car twice over, while tales of missed mortgage payments and direct debits abound. About 704,426 customers were said to be affected.

It comes just weeks after the RBS meltdown which led to its customers – plus those of Nat West and Ulster Bank- being unable to access their accounts for a week or more.

Thankfully, Nationwide says that the problem has been fixed, and customers are in the process of being reimbursed. But how long will it be before another problem like this causes all sorts of annoyance, panic and worry for consumers?

BOLT FROM THE BLUE

When the Money Shot read the headline that Virgin Media’s ad campaign featuring fast-running Usain Bolt was pulled, our immediate thoughts were that it was the dastardly work of the Olympic sponsorship Stasi, who’ve joylessly been smacking down any opportunistic trader looking to capitalise on ‘the Games’ coming to town in their locale.

However, it turns out that the ads – which feature Bolt doing a passable impression of Virgin boss Richard Branson – have been pulled because they’ve been found to be ‘misleading’ by the Advertising Standards Authority (ASA).

In the advert, Bolt urges consumers to “say bye-bye to buffering and hello to a superfast broadband." This irked rivals BT to the extent that they dobbed Virgin up to the ASA. They said that Virgin’s 4.1 million broadband customers would still experience frustrating buffering (that’s where video and music freezes while the data catches up) and their claims were, to put it lightly, piffle.

A Virgin spokesman tried the old ‘only joking’ defence. "When one of the world's leading athletes dresses up as a world-famous entrepreneur, complete with stuck-on blond beard and space helmet, and says he wants everyone to 'wave bye-bye' to buffering – this should not be taken as an absolute claim that no Virgin Media customer will ever experience buffering ever again," she said.

IN THE NEWS THIS WEEK

One in five households have had their gardens burgled, according to a survey from LV, whose career has a taken a surprising trajectory since topping the charts with Coolio on ‘Gangsta’s Paradise’ in 1995. What? Oh…

Vince Cable slammed bankers’ bonuses – a move in no way connected to his recent angling for George Osborne’s chancellorship...

Ofcom will auction off next-generation 4G licences next year, which apparently has something to do with mobile phones. As the Money Shot has barely progressed from the days of polyphonic ringtones and playing snake, we don’t feel that this will affect us much.
Land Rovers are the most unreliable cars in the country, according to the What Car? annual reliability survey.

ON GOCOMPARE.COM NEWS THIS WEEK

Rachel England donned her pinstripe and barked this beginners’ guide to stocks and shares down a comically- large mobile phone.

Seasoned car buyer Daniel Bevis has bought and sold more motors than Arthur Daley. Well, probably. Here, he shares his top tips on bagging a bargain on eBay motors.

If that student overdraft is feeling like a weight around your recently graduated neck, then take heed of these tips on ridding yourself of the financial hangover that is post-university life.

There’s a full-scale mortgage war on the horizon, and the British consumer looks like they may be the real winner, says Kristian Dando.

A picture of Morrissey with a cat on his head. If this sort of thing floats your boat, then step this way.

Comparison sites save people money on their car insurance – not our words, those of the quarterly AA Insurance Premium Index.

AND FINALLY…

Scottish beer scamps BrewDog aren’t shy of a publicity stunt. But even seasoned followers of the Fraserburgh-based company were forced to make a 1960s-style double take when Never Mind The Anabolics was unveiled. It’s a tipple containing 50 substances banned by the International Olympic Committee including creatine, guarana, ginseng, maca powder, kola nut and, er, steroids.

James Watt, cofounder of BrewDog, bellowed: “It seems a beer laced with performance-enhancing ingredients isn’t actually illegal, but it is definitely frowned upon. However, we don’t think Never Mind the Anabolics is as absurd and obnoxious as the tenuous sponsorship deals from fast-food chains and global mega breweries that seem to define the people’s Games.

He continued: “A burger, can of fizzy pop and an industrial lager are not the most ideal preparation for the steeplechase or the dressage (for human or horse).So we decided to give the athletes something that was going to make them happier and better - a way to relax before a big event and, at the same time, increase your chances of winning.”

At a head-banging 7.5%, it’s probably not best to attempt too many athletic feats after sinking one of these.

Join us for another thrilling installment of THE MONEY SHOT. In the meantime, why not email the editor with your letters. If we print them, you could receive a prized Gocompare.com stationery set and an autographed picture of Gio Compario, star of our ad campaign. Three are up for grabs every week. (Promoter: Gocompare.com Ltd)
*Marketing magazine’s ‘Most Irritating Advert’ 2009/2010