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A tax on their profits
If the utility providers were still public companies – like British Gas, the London Electricity Board and the Water Board were – then central government could control price rises with a stroke of a pen.
As they are privatised companies they are free to push the concept of market forces to the furthest degree and we are seeing proof of this in the current round of price increases that are causing immense distress in Ealing North and beyond.
I accept that Mrs Thatcher won the battle to promote the private company over public interest and I doubt that we'll ever be able to undertake a wholesale re-nationalisation but there is something profoundly wrong about a monopoly supplier – often foreign owned – cranking up charges as is happening at the moment. With British Gas customers expected to pay an extra 35 per cent for their energy supplies, it is profoundly offensive to learn that executives of Centrica, its parent company, can look forward to sharing a dividend of £250,000 as its profits top £992 million.
If taking back the utilities into public ownership isn’t a realistic option at the moment, then it seems right that the Government should ameliorate the impact of the profit gouging by imposing a windfall tax and using the receipts to protect those hardest hit by the price rises.
This was done before in 1997 when the money raised was used to bring people out of long-term unemployment and into work, helping achieve unprecedented levels of employment – something that we now take for granted.
Some people say that the Government could at least act in their area of fuel costs by reducing the cost of duty for general use – in the same way as it currently subsidises fuel for agriculture, fishing and many essential services – but that misses the point that the duty on fuel doesn’t change despite the cost of a litre at the pump and there are no “extra” receipts to the Government, even when forecourt prices rocket.
VAT receipts would increase but high fuel costs equal reduced consumption and lower VAT receipts, so any cut in duty would have to be offset by cuts in other services. A windfall tax seems sane and sensible to me and the money received should be directly targeted at those who suffer most from the impact of the costs.