Energy giants must act to avoid windfall tax, Brown warns

Energy giants must act to avoid windfall tax, Brown warns

Gordon Brown warned yesterday that energy companies could still face a windfall tax unless they offered a much bigger rebate for the poor and pensioners facing big rises in fuel bills.

The prime minister was being questioned in the Commons by David Marshall, Labour MP for Glasgow East, a week before the budget as pressure grows from MPs for action against energy firms. The companies have hit back by warning that a windfall tax could affect their commitment to investment in renewable energy.

Marshall asked Brown to give "serious consideration to a windfall levy" on "soaring profits" for energy companies with a view to increasing the winter fuel allowance for pensioners by £200.

Brown said that it was right for Alistair Buchanan, chief executive of the power regulator, Ofgem, to investigate the market in electricity and energy. He added: "The energy companies have made additional money available this year to help people on low incomes pay their fuel bills, but that is a small amount in relation to what the government are doing. Our winter allowance is £200 for the over-60s and £300 for the over-80s. This winter ... the allowance we are giving is crucial."

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Power bills have risen by as much as 15% in recent weeks but the Treasury remains to be convinced that all the increases are justified and Alistair Darling, the chancellor, has called in the bosses of British Gas, E.ON and others to discuss fuel poverty.

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