Darling considering energy company windfall

Darling considering energy company windfall

Friday, 01, Aug 2008 11:19

A windfall tax on the billion of pounds profit made by energy companies is being seriously considered by chancellor Alistair Darling.

Support has been growing steadily among Labour MPs for the move, and ministers have now confirmed Mr Darling is weighing up the idea.

On the one hand, a windfall could help the elderly and those on low incomes – both groups suffering disproportionately from high energy prices - through the winter without costing the Treasury anything.

On the other, business leaders are warning such a move could make Britain a less attractive investment climate. Alternately, the companies may just pass on the costs to their customers.

But there are various motivating factors from the government's perspective. A windfall would be popular with the country, shield Labour from Lib Dem attack on the issue and be a solid left wing move to galvanise the party's core vote.

Liberal Democrat leader Nick Clegg said: "Ministers should be clawing back the money from the energy companies' £9 billion European windfall to help protect struggling households from the effects of fuel poverty.

"Energy companies have a responsibility to protect their most vulnerable customers, and ministers must ensure that they deliver on this."

Last week a cross-party group of MPs said there was a "compelling rationale" to the idea.

The pressure on the Treasury to act increased this week when British Gas announced a 35 per cent increase in bills, despite executives at its parent company, Centrica, sharing a £250,000 dividend.