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.

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).

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. 

John Major warned that many people would have to choose between "heating and eating". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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The government needs more on airports than just Chris Grayling's hunch

This disastrous plan to expand Heathrow will fail, vows Tom Brake. 

I ought to stop being surprised by Theresa May’s decision making. After all, in her short time as Prime Minister she has made a series of terrible decisions. First, we had Chief Buffoon, Boris Johnson appointed as Foreign Secretary to represent the United Kingdom around the world. Then May, announced full steam ahead with the most extreme version of Brexit, causing mass economic uncertainty before we’ve even begun negotiations with the EU. And now we have the announcement that expansion of Heathrow Airport, in the form of a third runway, will go ahead: a colossally expensive, environmentally disastrous, and ill-advised decision.

In the House of Commons on Tuesday, I asked Transport Secretary Chris Grayling why the government is “disregarding widespread hostility and bulldozing through a third runway, which will inflict crippling noise, significant climate change effects, health-damaging air pollution and catastrophic congestion on a million Londoners.” His response was nothing more than “because we don’t believe it’s going to do those things.”

I find this astonishing. It appears that the government is proceeding with a multi-billion pound project with Grayling’s beliefs as evidence. Why does the government believe that a country of our size should focus on one major airport in an already overcrowded South East? Germany has multiple major airports, Spain three, the French, Italians, and Japanese have at least two. And I find it astonishing that the government is paying such little heed to our legal and moral environmental obligations.

One of my first acts as an MP nineteen years ago was to set out the Liberal Democrat opposition to the expansion of Heathrow or any airport in southeast England. The United Kingdom has a huge imbalance between the London and the South East, and the rest of the country. This imbalance is a serious issue which our government must get to work remedying. Unfortunately, the expansion of Heathrow does just the opposite - it further concentrates government spending and private investment on this overcrowded corner of the country.

Transport for London estimates that to make the necessary upgrades to transport links around Heathrow will be £10-£20 billion pounds. Heathrow airport is reportedly willing to pay only £1billion of those costs. Without upgrades to the Tube and rail links, the impact on London’s already clogged roads will be substantial. Any diversion of investment from improving TfL’s wider network to lines serving Heathrow would be catastrophic for the capital. And it will not be welcomed by Londoners who already face a daily ordeal of crowded tubes and traffic-delayed buses. In the unlikely event that the government agrees to fund this shortfall, this would be salt in the wound for the South-West, the North, and other parts of the country already deprived of funding for improved rail and road links.

Increased congestion in the capital will not only raise the collective blood pressure of Londoners, but will have severe detrimental effects on our already dire levels of air pollution. During each of the last ten years, air pollution levels have been breached at multiple sites around Heathrow. While a large proportion of this air pollution is caused by surface transport serving Heathrow, a third more planes arriving and departing adds yet more particulates to the air. Even without expansion, it is imperative that we work out how to clean this toxic air. Barrelling ahead without doing so is irresponsible, doing nothing but harm our planet and shorten the lives of those living in west London.

We need an innovative, forward-looking strategy. We need to make transferring to a train to Cardiff after a flight from Dubai as straightforward and simple as transferring to another flight is now. We need to invest in better rail links so travelling by train to the centre of Glasgow or Edinburgh is quicker than flying. Expanding Heathrow means missing our climate change targets is a certainty; it makes life a misery for those who live around the airport and it diverts precious Government spending from other more worthy projects.

The Prime Minister would be wise to heed her own advice to the 2008 government and “recognise widespread hostility to Heathrow expansion.” The decision to build a third runway at Heathrow is the wrong one and if she refuses to U-turn she will soon discover the true extent of the opposition to these plans.

Tom Brake is the Liberal Democrat MP for Carshalton & Wallington.