About that windfall tax…

In France, caps on energy price rises for private users and promises of extending social tariffs to another million people.

But here?

Though ministers briefed the media that they were considering it, such consideration hasn’t taken long and the answer is: no chance.

Brown is more neoliberal than Sarko!

But it’s worth campaigning for:

A windfall for social & environmental justice
Wednesday, August 06, 2008

Rising energy and fuel prices are affecting everyone but it’s the poorest and those on fixed incomes who are paying the heaviest price. The warm summer weather will not mask the anxiety and anger at dramatically rising bills for the essentials of life – light and heat. We believe that the moment is right for the government to levy a sensible one off windfall tax to guarantee social and environmental justice both now and in the future. This is why.

The average annual spend on domestic energy per household has now breached £1200. Since 2000 we have faced gas price rises of 100% and electricity price rises of 61% – with further increases including British Gas raising its gas bills by a record 35%. Simultaneously the main energy providers have seen their profits rise from £557 million in 2003 to now over £3 billion. This alongside the recent news of profits made by oil companies – BP is now making £37 million a day with a 23% increase in profits to £6.7 billion for the first 6 months of 2008.

The current spike in the price of oil means these companies are receiving unearned and undeserved windfall profits that are damaging to the rest of society, not least because the unprecedented price rises are fuelling inflation and therefore the cost of borrowing and repaying mortgages.

The government estimates that 2.5 million families are living in fuel poverty, whilst Energywatch puts the figure at over 4 million. Yet despite the billions made in profits, the energy industry spends just £50 million a year combating fuel poverty and has only agreed to raise this to £150 million a year by 2010. But every 10% increase in energy prices mean an extra 400,000 people go into fuel poverty.

At the same time there is a lack of investment in securing renewable energy to help Britain become energy independent and more carbon neutral. By 2020 the UK wants 15% of all energy to be from renewable sources, this is currently only 2%. Increased investment is urgently needed if the government is to meet its target.

Just as government responded to the oil shocks of the 1970s and invested in North Sea oil – to the ongoing benefit of the now privatised energy and oil companies – so government must intervene again to secure sustainable energy supplies for the 21st century and reduce the fear of fuel poverty. It’s absolutely right that the corporations who are benefiting from that original investment and the later privatisation pay their fair share to society.

As precedent a similar windfall tax was levied when Labour came to power in 1997 on the unearned profits of the newly privatised utilities and raised £4.5 billion. Similarly in 1981 the Conservative government levied a windfall tax on the main clearing banks – justified on the grounds that increased interest rates led to substantial unearned profits. In 2008 the spike in the price of oil has today lead to substantial unearned profits for the main oil and energy companies – we therefore call on the government to levy a windfall tax.

Revenues from the tax should be ring-fenced to deliver social and environmental justice for all. Part of the money raised should be used to immediately help those struggling with rising fuel bills and should be particularly targeted at families in or facing fuel poverty. However the best strategy to eliminate fuel poverty forever is to ensure every home is insulated and energy efficient to the highest standards. Therefore much of the money raised should be used to kick-start a national programme of home energy efficiency and installing renewable energy, starting with the homes of the fuel poor.

Used in the right way this could benefit the UK economy as a whole – just as the New Deal in 1997 created new jobs for the long term unemployed, such an investment could see the creation of hundreds of thousands of new jobs in renewable energy production, insulation, building renovation and other sectors.

The 1997 measure took just three months to enact. The government can move quickly and decisively now – but it needs to know that this is what the people want:

To ensure social and environmental justice please:

1. Add your signature to the petition below!
2. Lobby your MP via the ‘theyworkforyou‘ website
3. You can also support this campaign by making a donation today

Signed by

Neal Lawson, Chair, Compass
Gavin Hayes, General Secretary, Compass
Friends of the Earth
Tony Juniper, Environmental Campaigner
Kate Green, Chief Executive, CPAG
Stephen Hale, Green Alliance
Lord Roy Hattersley
Michael Meacher MP
Chuka Umunna, Labour PPC, Streatham
Nicky Gavron AM
Cllr Jon Collins, Leader of Nottingham City Council
Richard Burden MP
Karen Buck MP
John Battle MP
Derek Wyatt MP
Diane Abbott MP
Frank Cook MP
David Crausby MP
Martin Caton MP
Ann Cryer MP
Chris McLaughlin, Tribune
Howard Reed, Economist
Heather Wakefield (in a personal capacity)
Mark Donne, Fair Pay Network
Nancy Platts, Labour PPC, Brighton Pavilion
Roger Berry MP
Ruth Lister CBE, Professor of Social Policy, Loughborough University
Doug Naysmith MP
Billy Hayes, General Secretary, CWU
Tony Robinson, Actor and Broadcaster
Dave Prentis, General Secretary, UNISON
Colin Crouch, Professor of Governance and Public Management at the University of Warwick Business School
Keith Norman, General Secretary, ASLEF
John Harris, Journalist
Guy Palmer, Director New Policy Institute
Baroness Helena Kennedy QC
Tony Woodley, General Secretary, T&G Unite
Andrew Simms, Policy Director and head of the climate change programme, nef
Melissa Benn, Author and Journalist
Sunny Hundal, Editor, Liberal Conspiracy
Tony Benn
Wes Streeting, NUS President
Mark Serwotka, General Secretary, PCS

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