Page last updated at 12:20 GMT, Friday, 1 August 2008 13:20 UK

Ministers 'consider' windfall tax

Petrol pumps
The UK's largest energy firms have reported large profits

The government is considering imposing a windfall tax on energy companies amid public anger at record increases in fuel costs.

The cash generated would be used to help poorer families who will struggle to pay their bills this winter.

Business Secretary John Hutton told the BBC that ministers were "looking at" all options.

The "big three" energy firms, Shell, BP and British Gas, have all recently announced multi-million-pound profits.

'Highly taxed'

But CBI director Richard Lambert said windfall taxes were "almost always the wrong thing to do".

He added: "These companies are already highly taxed and they have to make enormous investments if we are going to have a secure supply of energy over the next 10 years.

"The one thing not to do would be to make these companies think the UK is not a stable, predictable and fair investment climate."

BBC political correspondent Iain Watson said a windfall tax was not expected "imminently" but it was "something being actively considered".


Mr Hutton told BBC Radio 4's Today programme that tax policy was the domain of Chancellor Alistair Darling, who would have to "weigh up some very important considerations".

He said: "We've got to encourage very significant investment into our power generation system over the next 10 to 15 years.

"We've got to have a fiscal and a regulatory climate that encourages all of that investment because, quite simply, it will go elsewhere if there's not confidence in the UK market.

"But the chancellor has to make these calls - very difficult calls - and he has my full support in looking at all of these issues."

Liberal Democrat leader Nick Clegg said: "When the winter comes, price rises will hit the elderly and the vulnerable hardest. The government cannot sit idly by and allow them to suffer."

These companies are not charities and have never claimed to be
Monique, Cardiff

Shell has announced a 4bn profit for April to June - up 4.6% on the same period last year.

Centrica, which owns British Gas, said it had made 992m in the first half of the year.

This represented a fall of 20%, but came a day after it had announced a 35% price increase for British Gas customers.

Earlier in the week, BP said it had made 3.4bn in April to June - a rise of 6%.

In May, Treasury Minister Lord Davies said: "There are no current plans to introduce a windfall tax on oil companies."

The government imposed a windfall tax on the profits of recently privatised utility companies in 1997, as this had been one of Labour's general election commitments.

There was no such pledge in the party's 2005 manifesto.

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31 Jul 08 |  Business
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