Morning:
8°c
Energy firms may have to pay windfall taxes
Nicholas Cecil1 Aug 2008
Energy giants may be hit with a windfall tax under proposals being considered by Alistair Darling, a Cabinet minister confirmed today.
Business Secretary John Hutton said the Chancellor was "looking at" options including stinging energy firms with a one-off levy.
The move would be hugely popular with Labour MPs, millions of families struggling to pay their gas and electricity bills and motorists facing spiralling petrol and diesel prices.
Business chiefs have warned that a windfall tax could scare off investment in Britain's programme to build new nuclear, gas and coal power stations.
But gas and electricity "fat cats" have sparked outrage by announcing huge profits for their companies while raising prices. British Gas, Shell and BP have all recently announced large profits as the cost of petrol, diesel and household energy has soared.
Mr Hutton, who has voiced the business concerns, said: "It's a complicated set of issues. The Chancellor is looking at all of these options sensibly and fairly as he always does and he will come forward in due course with his proposals."
He stressed there were important considerations to "weigh up".
"We have got to encourage very significant investment into our power generation system over the next 10 to 15 years," he told BBC radio.
"We have got to have a fiscal and regulatory climate that encourages all of that investment because quite simply it will go elsewhere if there is not confidence in the UK market.
"The Chancellor has to make these calls. They are very difficult calls and he has my full support."
The Treasury, though, sought to downplay the likelihood of a windfall tax but did not rule it out.
A spokesman said: "Tax is a matter for the Chancellor and it's considered on a Budget by Budget basis."
However, Gordon Brown is being urged by despairing Labour backbenchers and ministers to gamble with "bold" policies to rescue his stricken premiership. The Government could justify the levy to help hundreds of thousands of households, including many pensioners, who could be forced to turn down the heating this winter.
Even senior Tories said there would be widespread support for a £300 million raid on the coffers of the energy giants to channel funds towards the fuel poor.
Peter Luff MP, who chairs the influential Commons business and enterprise committee, said: "The politics of that are really very attractive. It could be done."
But CBI chief Richard Lambert warned the UK will have to rebuild around a third of its power generating capacity. "Windfall taxes are almost always the wrong thing," he said.
British Gas bosses sparked fury yesterday when it emerged they are to share £250,000 after its parent company Centrica unveiled half-year profits of nearly £1 billion. Just 24 hours earlier, British Gas announced recordbreaking price rises of 35 per cent.
Reader views (5)
Well said Mikko Takala from Scotland Re:NATIONALISE the essential things the public need etc Water/sewage Gas Electricity Transport. How come in France their Diesel fuel and petrol is much lower than ours,and their Railways are better nationalised?
- Laurence, Havering. Essex., 02/08/2008 22:52
Report abuse
What's the point of a windfall tax. These greedy corporations made their billions from the public , I think the money should go back to the public. Not to the government where it will disappear into a black hole.
A credit to the consumer is what we want not a freebee to the treasury.
- Mr S.Port, London, 02/08/2008 21:31
Report abuse
This pure moronic Socialist madness. The oil and gas industry will de-list from the UK, move their headquarters, costing thousands of British jobs and all their foreign profits will no longer be reported to the UK. Sheer bloody genius, trust Nu Labor to screw things up completely!
- James, New Malden, Surrey, 01/08/2008 16:27
Report abuse
I am in favour of a windfall tax just so long as it goes to the people, pensioners in particular on low fixed incomes not to stay in government coffers, where it can be wasted.
- Jean, London England, 01/08/2008 16:16
Report abuse
Re-nationalisation without compensation for the shareholders is the way forward. They have bled enough out of the rest of us already so can hardly complain.
Future profits will then benefit all of us.
- Mikko Takala, Drumnadrochit, Scotland, 01/08/2008 14:43
Report abuse
