The effects of the British privatised energy system are now becoming clear, not only in cartelised pricing and poor service but also, critically, in loss of energy security.

As a result of the latter there are real risks of blackouts this winter.

Because of the “big six” privatised companies’ failure to invest on a scale that matched the performance of the industry when in public ownership, Britain’s spare electricity generating capacity has tumbled from 17 per cent three years ago to just 4 per cent now as winter approaches.

As a result the government has been forced to take emergency measures over the next three years to try to keep the lights on during the winter months.

It plans to keep three power stations on standby and is actually proposing to pay businesses to use less electricity.

In other words, taxpayers not only have to put up with rocketing energy prices to fund unprecedented dividends to shareholders

and bonuses for top executives but now have to subsidise the companies’ reluctance to invest in order to keep the lights on.

The risks arising from the shrinkage of reserve generating capacity have been highlighted by four nuclear reactors at Hartlepool and Heysham being shut down three months ago after a defect was found.

In addition there have been fires at Ironbridge and Ferrybridge power stations, but most seriously a very big fire last month at the Didcot B gas-fired plant in Oxfordshire, one of Britain’s biggest power stations, which led to a loss of 600 megawatts of generating capacity.

The government’s answer to these setbacks is to launch a new system of what it calls “capacity payment auctions,” which are

effectively bribes to get the energy companies to invest.

It exposes how helpless the government is in a privatised system where the companies hold back, knowing they’re in the driving seat, till the government makes an offer they can’t refuse.

There’s also the problem that most of the generating system isn’t now even owned by British companies at all.

Four companies — Eon, EDF, Npower and SSE — now control 96 per cent of the residential electricity market and 71 per cent of total generating capacity. Foreign state-owned corporations control 25 per cent of the sector.

This has led to some bizarre outcomes. The Chinese, French, Norwegian and Russian governments, through their state-owned corporations, now have collectively far more control over British strategic energy interests than any British political actor.

I hope the government believes it can trust Vladimir Putin and Xi Jinping if the going gets tough this winter.

An obvious game-changer

Labour needs a game-changer to settle the result of the next election once and for all.

As it happens it has the perfect opportunity ready to hand.

George Osborne was foolhardy enough to announce six months before the election that he intends to impose further cuts of £25 billion to get on track to eliminate the structural deficit by 2019, which an FT analysis suggests may have to be nearly double that — or around £48bn.

This is an utterly reckless pledge which Labour should be exploiting for all its worth — as opposed to the actual silence with which it greeted this faux pas.

The mathematics show that there’s not a snowball’s hope in hell that Osborne’s latest demarche can wipe out the deficit by 2019.

Alistair Darling’s expansionary budgets in 2009-10 reduced the deficit — ie public-sector net borrowing — from 10.2 per cent of GDP to 6.9 per cent within two years.

Under Osborne’s public spending cuts the deficit increased to 7.2 per cent in 2012-13, and only reduced last year to 5.7 per cent because of the unexpected economic growth that only began in early 2013.

However, that growth which has been so extravagantly talked up by Osborne and the Tory press is now rapidly deflating.

In the second quarter of this year growth was reported of 0.9 per cent

and in the third quarter 0.7 per cent. The signs are clear that in the fourth quarter it will be just 0.5 per cent. The deficit is set to rise again.

Financially, we were told that austerity was necessary to cut the deficit.

Since it is not now actually reducing the deficit — it’s likely to rise this year to just over £100bn — there’s no rationale for continuing with prolonged austerity.

The only reason that Osborne is persisting with austerity is not to cut the deficit but to carry through the real Tory objective of shrinking the state and withering the public sector, to get back to the Tory dominance of the 1930s.

If Labour now repudiated austerity in favour of the far more effective way of cutting the deficit through public investment to expand the economy out of stagnation, generate real jobs, increase household incomes after a decade of steep decline, it would be a game-changer at the election.

Politically there couldn’t be a better moment to strike. For all the manic talking up the recovery by the Tories, only one in seven adults, according to a recent Populus poll, say they feel the benefit of a recovery where they live.

If 86 per cent of the population have not felt any recovery in their own circumstances despite a 9 per cent real-terms fall in average wages, then Labour’s message that it will abandon austerity in favour of genuine and sustainable growth would be music to their ears.

There’s one further benefit for Labour here. Cameron and co continually lambast Labour for leaving behind an economic mess.

Time to poke them in the eye with the facts — the Labour government in its 11 years before the crash (1997-2008) never ran a budget deficit bigger than 3.4 per cent of GDP, yet the Tory government, because it disastrously mismanaged the ERM from which it was unceremoniously pitched in 1992, ran budget deficits more than double that size in 1992-4.

So who was the economic incompetent and who was was the prudent manager of the nation’s finances?

Michael Meacher is Labour MP for Oldham West and Royton. Visit his blog for more of his writing.