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Prime Minister pressured over windfall tax on energy suppliers
Tuesday 26 August, 2008
By becca.talbot@consumerchoices.co.uk
Gordon Brown is under heavy pressure from MPs to impose a one-off levy tax on gas and electricity suppliers, to help Britons meet the cost of soaring home energy bills.
Dozens of Labour MPs are backing a big windfall tax, and a poll shows that two-thirds of voters support the levy, meaning the Prime Minister may face a vote on the scheme at next month’s Labour Party conference.
The MPs feel a one-off tax could ease the pain for homeowners, and save the party’s falling popularity, by either offsetting fuel bills or by putting the money towards long-term energy-efficiency measures. They want ways to tackle energy prices to be the focus of Brown’s Labour relaunch, with 70 signing a petition backing the plan.
The YouGov poll, commissioned by the left-wing pressure group Compass, showed that 67% of voters support a major one-off tax on energy firms’ profits.
The poll found a slight preference for the money to be spent on offsetting fuel bills this winter, however over 50% of voters also backed proceeds from the tax going into long-term projects to reduce energy consumption and keep bills permanently lower.
Ministers have said they will look at the windfall plan, and Compass has launched a petition gathering support for the measure, claiming 70 Labour MPs have already signed and 30 more are predicted to follow suit.
| “We get record price rises and they get record profits - this has got to stop.” |
So far, among the public signatories are at least three parliamentary private secretaries, unpaid junior members of the Government.
It is understood however, that Brown is backing a much more modest scheme, to charge the industry around another £100 million a year.
Jon Cruddas, a former Labour deputy leadership candidate and Compass member said the proposed windfall tax would allow Labour to differentiate itself from the Conservatives.
Speaking in the Guardian, he said: “We need to take a bolder policy agenda to meet people’s material concerns and that’s why this policy resonates across the social spectrum. There are millions of people suffering from fuel poverty and it’s the job of a Labour government to tackle that.”
After a month of price rises, families now face the prospect of paying £100 a month to heat and light their homes this winter.
Gavin Hayes, of Compass, said: “As millions of Britons struggle to make ends meet, the energy and oil companies struggle with a different challenge - what to do with all their windfall profits. We get record price rises and they get record profits - this has got to stop.”
However, the Prime Minister is believed to have concluded that a multi-billion pound tax on energy suppliers would be politically and economically risky, at a time when the UK economy stands on the brink of recession. John Hutton, the Business Secretary, has also privately opposed the tax.
Instead of a direct tax, Brown is said to be considering options for charging the energy suppliers for the pollution they cause, through the European Union Emissions Trading Scheme.
Last week, Scottish and Southern put gas prices up by 29.2% and electricity bills up by 19.2%, on the same day that E.ON (www.eonenergy.com) raised prices by 26% and 16%. British Gas (www.britishgas.co.uk) and EDF ( www.edfenergy.com) imposed similar rises last month.
Gas prices have doubled since 2000, with electricity prices up by nearly two-thirds. Energy suppliers’ profits have risen nearly sixfold in the last three years.
Chris Eagle, Financial Director of EnergyChoices.co.uk said of the proposed windfall tax: “Many households face a difficult winter; with freezing temperatures and soaring fuel bills. The Government needs to review its approach to fuel poverty, as soon as possible. A windfall tax would have a huge impact on suppliers’ profits however the government needs to ensure that the benefits are passed onto the customer.”
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