Hutton pours cold water over windfall plan

Hutton pours cold water over windfall plan

Thursday, 28, Aug 2008 06:30

The gathering momentum for a tax windfall on energy companies has met with resistance in the form of business secretary John Hutton.

In a clear indication the government is unlikely to back down in the face of calls from about 80 Labour MPs for the windfall, Mr Hutton said such a move would make the UK a less attractive investment climate.

"What we shouldn't do is create a climate that makes it harder to attract new investment," Mr Hutton told the Daily Telegraph.

"We need £100bn plus in the next 10 years, so we've got to create the right framework that encourages investment. We must not lose sight of that."

The comments echo the words of chancellor Alistair Darling, who all-but-killed off speculation about a future windfall when he warned such a move would make the UK less attractive to investors.

But Mr Brown is expected to launch his political fight back on the basis of helping poor families despite rising food and energy prices, and polls show a windfall on the profits of energy companies has widespread public support.

Earlier this week the prime minister's spokesman said: "The position on tax is a matter for the chancellor and the Treasury.

"The Treasury receives a whole range of representations and of course will consider such representations in the normal way."

Mr Hutton, known for being on the right-wing of the Labour party, said minister were aware low income families needed help.

"The era of cheap energy is over," he said.

"The question is how we are going to adjust to that and what sort of help can we provide to those who are going to struggle the most.

"There is genuine concern about the difficulties people will face paying heating bills over the coming winter and we are looking at extra support."

There are strong reports Mr Brown favours negotiations with energy companies to ensure they provide support – in the form of insulation or other practical measures – to poorer families.

Labour has previously imposed a windfall tax on energy companies, in an effort to fund its New Deal, but it was pre-announced in the party's manifesto.