Brown ignores calls for energy windfall tax

LONDON Thu Sep 11, 2008 6:37pm BST

1 of 5. Britain's Prime Minister Gordon Brown speaks during his monthly news conference in Downing Street, central London on September 11, 2008.

Credit: Reuters/Suzanne Plunkett

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LONDON (Reuters) - Prime Minister Gordon Brown has ignored calls to impose a tax on energy firms' windfall profits, but looks set to face renewed demands for a levy at Labour's annual conference at the end of the month.

Choosing instead to make energy companies to pay for most of a 1 billion pound energy saving plan, Brown is hoping this latest initiative will bolster his flagging opinion poll ratings and combat calls from within Labour to step down.

Brown's woes were compounded on Thursday as a "poll of polls" in the Independent newspaper showed that his attempted fightback was having no effect, despite a move last week to boost the housing market with help on stamp duty and a package to help first-time buyers.

Brown defended his decision not to tax energy suppliers.

"We looked at all possible options of both raising money and the action that we could take and that has been an inquiry that we had over the summer months," he said at his monthly press conference.

"Instead of a windfall tax, this is the better way of moving forward."

But the package to provide free home insulation to the poorest received a cold shoulder from lobby groups and unions.

Derek Simpson, joint leader of the Unite union, warned Brown that the issue would be raised again at Labour's conference.

"I think it must be. I think it (a windfall tax) is a very sensible way to do it," he told BBC television.

"There's no way that they (companies) are being restricted. They're not going to be hit by a windfall tax, there's no regulation on them, there's no price capping on them to stop future price rises."

"It is, quite frankly, ridiculous to believe that this measure is a complete or even partial solution."

Simpson's view of the industry appeared to vindicated when it emerged that a senior executive at German energy firm E.ON said rising fuel prices with winter approaching would mean more money for the company.

E.ON immediately apologised and the remark was roundly condemned.

The government's proposal was also attacked by lobby group Help The Aged.

"This is a flimsy and failing package which does little to help older people struggling to cope with soaring fuel bills," it said in a statement.

"Today's announcement devalues the word 'strategy'. Half-baked measures such as these are not going to address the social emergency of fuel poverty."

Help the Aged and environmental campaigners Friends of the Earth are taking the government to court for failing to keep its pledge to eradicate fuel poverty.

It promised in 2000 to eradicate all fuel poverty in England by 2016 and for vulnerable groups by 2010. Despite this, fuel poverty is still increasing, the two groups said.