IT'S WHAT the late Tory Prime Minister Edward Heath used to call "the unacceptable face of capitalism". The Centrica/British Gas announcement of £1bn in half yearly profits, only hours after increasing gas prices by 35%, has ignited a public conflagration about the morality of business in modern Britain. Even the right wing Daily Mail was moved to call for a windfall profits tax.

The price hike followed a 15% increase earlier this year, and Centrica/British Gas is warning of another rise early in the new year. The company blamed falling profits, but rather undermined its own case by increasing dividends to its shareholders by 16%. This isn't just a financial storm. The recent price increases will condemn six million to fuel poverty and threaten the lives of Scottish pensioners who face a cold, cold winter. The cost of home energy has doubled in four years as the six main gas and electricity suppliers - British GAS, EDF, Npower, Eon, Scottish and Southern and Scottish Power - have been leapfrogging each other to deliver the biggest increases. The government's advice to consumers to "shop around" for the best deal is pretty useless when faced with suppliers who move their prices up in unison.

This is not supply and demand. These are vertically integrated' utilities, to use the current euphemism, which use their monopoly privileges, derived from the days when they were public companies, to maximise profits through internal pricing mechanisms. British Gas says it had to increase prices because of record rises in wholesale prices. But since its parent company, Centrica, is one of those wholesale suppliers, and owns extensive gas fields in the North Sea, Centrica is effectively increasing the charges on itself. It makes a killing at both ends of the supply chain.

The energy companies sell North Sea gas at low summer prices to themselves for storage in Europe and then sell it back to Britain in winter at high prices. Brilliant business model that! They also link the price of wholesale gas to the price of oil, for no sound economic reason, and therefore increase their profits in the wholesale market in line with colossal oil price movements. The consumer price has lost any rational connection to the cost of production.

It's the same with the oil companies, which make a fortune from the petrol they sell to themselves at the filling stations. Last week Shell announced profits of £4bn for April to June; BP made £3.4bn. Shell's profits are running at £1000 a second. There have been no apologies for these windfalls, still less any suggestion that they might pass any of it back to the public by reduced in petrol prices. The international energy companies have decided that they are laws unto themselves, beyond political influence and have no need to placate or even recognise public opinion when they decide their pricing policies. It is time that our politicians told them otherwise. Ministers are forever lecturing public sector workers about the need for pay restraint; well, how about a little price restraint also? We are continually told that pay increases which keep pace with inflation cannot be sustained without the risk of an "inflationary spiral". But the exorbitant pricing of essential commodities is also creating an inflationary spiral. It is expected that, as a result of Centrica's price hikes, inflation in the UK will rise to 5% later this year, two and a half times the Bank of England's inflation target of 2%. This means that interest rates will not be falling in the near future and may have to rise, with profound implications for the British economy.

Families across Britain are outraged at these pricing practices, but the UK government seems to have lost its voice. Ministers seems incapable of mobilising or reflecting public opinion. What censure have you heard from the Chancellor, Prime Minister or the business minister, John Hutton? - the very politicians who have been attacking the trades unions for seeking to defend the living standards of their members. The government is supposed to be "considering" a windfall tax, similar to that introduced by Gordon Brown in 1997, but I wouldn't hold your breath. Anyway, a more sensible approach would be to introduce price guidelines so that savings are handed on direct to the consumer. Labour ministers seem to think that calling for price restraint would in some way commit them to a policy of renationalisation. Actually, that might not be such a bad idea, since the privatisation of the former public utilities has been a disaster from the public's point of view. Public monopolies were turned into private monopolies, many now foreign-owned, with no protection whatever for the consumers. EDF, which just increased prices by 22% and which the government wants to take over British Energy and build the next generation of nuclear power stations, is 70% owned by the French government. Its head of media relations is the Prime Minister's brother, Andrew Brown.

We have squandered one of our greatest assets: the energy in the North Sea. The "dash for gas" through the 1990s depleted gas resources at knockdown prices, leaving Britain vulnerable to foreign energy suppliers. Nor has the oil wealth been properly conserved. Most of it was sold off when oil was $10 or $20 dollars a barrel, frittered away, instead of being invested in an energy fund for the future. We are paying the price for the inaction of short sighted and pusillanimous ministers in successive governments who have failed to defend the public interest, and who seem more interested in securing lucrative posts in the private sector than in challenging these unacceptable concentrations of economic power. Bring back Ted Heath.