According to Shadow minister Ed Miliband, Labour will be calling for a vote tomorrow to introduce a windfall tax on energy companies, saying how shameful it is not to introduce the measure to help the government tackle the rising cost of living for ordinary people.
He told BBC it was “obscene” that the government had refused to punish these companies for making so much money. There are few who have not noticed the surging profits of the likes of Shell, but how, exactly, does government interference help the man/woman on the street? Kwasi Kwarteng says it will discourage investment, which it will, but after government has had its share, will any be left to do what Ed Miliband wants?
Had government not interfered with the price cap in the first place, all the smaller power companies might still be in existence, providing competition to the huge corporations in the way that an open market always does. For it was the government that waited until even Bulb – with four million customers – succumbed to the impossible situation of paying more for gas and electricity than they were charging.
Opposition parties have repeatedly banged on about the idea that a windfall tax on these record profits, saying the money raised could be used to help those struggling the most with rising living costs. But does that sort of money ever reach its intended beneficiaries? For first there is the cost of government “processing” the windfall – and we all know that the government machine is currently the most inefficient it has been in history - try getting a passport at the moment!
The money, or at least a huge chunk of it, would get swallowed up in costs, adding to the amount of “dead” money in this most unproductive sector of the economy. “Ordinary Joe” won’t see a benefit.
Even now, with the new price cap set where it is, there is no chance of competition re-entering the market with the volatility of world markets, so the huge corporations can maintain their grip on a virtual monopoly.
If the government wants to help, it should leave well alone, stop meddling and not do any more damage to the energy sector.
Martin Day – Party Secretary