View from City Road: Utilities in search of sympathy

As always, the politicians want it both ways. On the one hand they want the privatised utilities to deliver lower prices - witness the howl of outrage that greeted Ian Byatt's new price limits for water companies last week. On the other, they want the utilities to do their bit for the cause of full employment - witness the howl of outrage that went up yesterday when it emerged that another 50,000 are to be lopped from BT's workforce.

There is of course a connection. BT is cutting the workforce not just in the cause of making monstrous profits, though there is an element of that, but because the regulator has required real price reductions of 7.5 per cent a year. To meet that target and remain competitive BT must take a hatchet to costs. Dramatic job losses will be required among water and electricity companies too, even though their price controls are comparatively lax.

Arguably, dividends are too high in these industries. Certainly executive salaries are, and possibly more might be made out of forcing utilities to take on debt to finance investment. But none of these things make a great deal of difference to the bottom line relationship between jobs and prices. Not that the utilities have had much joy getting the message across. If executives were not so liberal with their own salaries and perks, they might receive a more sympathetic hearing.