Brown Set To Introduce Energy Efficiency Measures, Ignore Windfall Tax Calls

by Robert Lee, Tax-News.com, London

11 September 2008

UK Prime Minister Gordon Brown has announced this week that despite widespread calls for such a levy, the profits of the UK's six key energy suppliers will escape a windfall tax.

Centrica PLC, EDF Energy, E.ON UK, Npower, Scottish Power, and Scottish & Southern Energy, have negotiated a deal whereby instead of paying tax on windfall profits, they will each contribute to a GBP1bn, three-year energy-saving initiative, increasing their contributions to the carbon emissions reduction target programme, which pays for energy saving initiatives.

Under the auspices of the new package, Brown announced that four million of Britain's low income households and pensioners over 70 will receive free loft and cavity insulation.

For those in better-off households, discounts will be made on any household improvements which make cuts to the amount of energy used.

Speaking out about his decision this week, Mr Brown explained:

"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."

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

Brown recently came under intense pressure to impose a windfall tax, when 70 Labour Party MPs signed a petition supporting the introduction of such a levy on the profits of energy firms, and just two days prior to the Prime Minister's announcement, the Trades Union Congress (TUC) urged him to do likewise, arguing that the government could raise an additional GBP8bn per year in revenues by imposing a windfall tax on energy companies.

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