View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. Politics
22 October 2013

Major’s call for an energy windfall tax offers the Tories an escape route

By rejecting Miliband's proposed price freeze and calling for an "emergency excess profits tax" on the energy companies, the former PM has pointed the way forward for the Tories.

By George Eaton

As a former prime minister, John Major always speaks with care, which makes his intervention in the energy debate all the more striking. At a press gallery lunch this afternoon, he attacked the energy companies for price rises that were “not acceptable” and called for the government to impose an “emergency excess profits tax” on them (citing the cost of increased Winter Fuel Payments). He said:

“Sod’s Law is that we will probably have a very cold winter and it is not acceptable to me, and it ought not be acceptable to anyone, that many people are going to have choose between keeping warm and eating. That is not acceptable.

“And so if we get this cold spell, the government will have to intervene and if they do intervene and it is costly, I for one would regard it as perfectly acceptable for them subsequently to levy an excess profits tax on the energy companies and claw that money back to the Exchequer where their primary job is to get the economy working and back to work.”

While he dismissed Ed Miliband’s proposed energy price freeze (“a good heart but his head has gone walkabout”), his words help legitimate the Labour leader’s crusade against the “big six” and encourage the impression that the government is standing idly by. In an echo of Miliband’s recent rhetoric, Major warned that many people would have to choose between “keeping warm and eating” this winter. 

The question now is how the Tories will respond. Ahead of the Autumn Statement on 4 December, George Osborne was surely already considering a windfall tax as a riposte to Labour’s price freeze (several Tories have mentioned the idea to me), but Major’s intervention removes the element of surprise that the Chancellor craves (although it’s worth asking whether this is a calculated act of kite-flying).

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Despite this, Osborne could still do far worse than simply embrace the former PM’s proposal. A windfall tax would be viewed as less interventionist than a price freeze (helpfully rejected by Major) and could be justified pragmatically on fiscal grounds. Labour, which imposed its own windfall tax in 1997 (ironically attacked by Major at the time), would argue that a price freeze is superior, but would struggle to oppose an emergency levy. On this occasion, Osborne should follow Oscar Wilde’s advice and remember that “talent borrows, genius steals”.

Update: No. 10 has issued the following statement on Major’s comments: “This is a very interesting contribution to the debate. But we have no plans for a windfall tax.” 

In response, it’s worth noting that the Tories similarly claimed that they had “no plans” to raise VAT before the last general election (before doing just that). Downing Street could have rejected the idea of a windfall tax entirely. Instead, it has kept it in play. 

Content from our partners
Development finance reform: the key to climate action
Individually rare, collectively common – how do we transform the lives of people with rare diseases?
Future proofing the NHS

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU