Tribune – news, features and comment from Britain's left-wing magazine

EVEN before the ink was dry on the reports disclosing massive profits, and before the eye-watering record hikes in domestic fuel prices were announced, the energy companies were inside the door of Number 10. Their mission: to head off any chance that the Government might entertain a windfall tax to alleviate the plight of the increasing thousands of people being added to the millions already suffering fuel poverty, an inability to meet the bills without going short elsewhere in the family budget. The pre-emptive effort to create a bulwark against a windfall tax has already shown signs of success. Gordon Brown is reported to have taken “personal charge” of a package of measures to protect poorer families which, no surprise, stops short of a windfall tax. Mr Brown is convinced that, while it may seem a neat solution to a grave problem and one which would send the right signal, let alone help, to a large section of the electorate, it would send the wrong signal to the energy industry and the wider market. And, if experience is anything to go by, it is the latter which wins the day.

Too much ground has already been lost. A half-baked compromise which suits the energy companies’ agenda will be a half-baked solution to the immediate plight of those whose suffering will get worse this winter. It would be a lost opportunity in political boldness amounting to political weakness and the absence of courage.

That’s why Tribune has joined voices from the unions, MPs, peers, campaigning groups on welfare and the environment and other “progressives” in journalism and the arts in backing the call, organised by the Compass group, for a windfall tax. No time can be lost in pressing MPs to add their backing to the call in order to create a critical mass behind it.

Critics of a windfall tax argue that it serves to increase fuel consumption when conservation is the long-term answer and that it would deter longer-term investment in energy, not least renewables. They miss the point. The crisis for those in fuel poverty is now and they do not have recourse to an overnight make-over of their energy regime. But while helping those in fuel poverty, the tax could also be used to kick-start a national programme of home energy efficiency, starting with the homes of the fuel poor. Used in the right way this could benefit the  economy as a whole in terms of new jobs in insulation, renewables, building renovation and other sectors.

It is spurious to argue that it would be counter-productive to the long-term national interest because the energy firms would draw back from risking future investment. The banks and the utilities survived and thrived after respective Tory and Labour governments slapped a one-off windfall tax on unearned profits. Energy companies cannot complain that future investment is jeopardised by unpredictable taxes if it is made clear this is a one-off. They could make up some of the shortfall by paying a few million pounds less to those tax experts who are so adept at moving profits from one place to another to avoid tax liabilities in the first place, a practice which the Treasury, for one, believes was executed with excessive zeal in relation to the recent profit announcements.

Nor is windfall tax the only way to get the energy companies to behave better to customers. Much more needs to be done on the regulatory front. They should raise more than the paltry £50 million a year, rising to

£150 million in 2010, combating fuel poverty.

The scandal of pre-payment meters, which end up charging the poorest customers a higher tariff, must end.

The energy companies were suspiciously slow to cut customer prices when the global price of energy was low a few years ago, but have been very quick to pass on the costs now that the market in electricity and gas is rising. So much for competition in the post-privatisation industry. It was with taxpayers’ money that governments responded to the oil shocks of the 1970s with investment in North Sea oil.

It is now absolutely right that the corporations which are benefiting from that original benefit and the later privatisation pay their fair share to society. They owe us.