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Brown frustrates windfall tax supporters

05/09/2008

Campaigners for a windfall tax on energy companies have criticised the prime minister after he appeared to rule out such a move yesterday.

Gordon Brown told Scotland's Confederation of British Industry (CBI) he does not intend to introduce "short-term gimmicks or giveaways" to address the problems faced by Britain's "hard-pressed, hard-working families".

He rejected a "fuel stabiliser" as an inadequate solution to the supply and demand of oil, apparently dismissing calls for a windfall tax on energy firms to pay for energy efficiency schemes.

Neil Lawson, chair of left-wing pressure group compass, said the government's stance would be viewed with "outrage".

"The real disappointment will be felt by the fuel poor who will go cold this winter. It's not a short-term gimmick to heat the homes of the poor and vulnerable. What people want is the warm glow of knowing the government is on their side, they're not getting it."

Union Unite's joint general secretary Tony Woodley also reacted angrily to Mr Brown's speech, saying it was unfair that "needy people" be forced to pay for improvements in fuel efficiency.

"There must be a rethink and cash assistance for every needy household in the land. It cannot be right that big business is allowed to bank their obscene profits while ordinary people will shiver this winter," he said.

"If greedy fuel companies have won out over struggling consumers then this is not just a disappointing move by the government but a downright disgrace."

Yesterday the prime minister's official spokesperson told reporters next week's energy package is expected to address both short- and long-term aspects of the problem.

And, responding to today's criticism for the government, Hilary Benn said it was appropriate for energy firms to make "a further contribution".

He told BBC Radio 4's The World At One programme: "We're discussing with them what form that might take. But we really must not dismiss insulation measures because once you get those things done then it reduces your bills compared to what they would otherwise be."

Research published today by the Local Government Association (LGA) shows that dividends among the six major energy suppliers rose by 19 per cent between 2006 and 2007.

It wants the energy firms to contribute £500 million a year towards a national home insulation programme, less than a third of the total dividend payment in 2007.

LGA director Sir Jeremy Beecham said: "The government and Ofgem should seize the opportunity to take a long-term solution to encourage the energy companies to use their disproportionate dividend payments for a massive drive to insulate people's homes."