Brown Signals He May Refrain From Energy Windfall Tax in U.K

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http://www.bloomberg.com/apps/news?pid= ... 8&refer=uk

By Gonzalo Vina

Sept. 4 (Bloomberg) -- Prime Minister Gordon Brown signaled the U.K. government may avoid imposing a one-off tax on utilities, tapping the industry instead for voluntary contributions to help people cope with higher energy costs.

Brown told business leaders in Glasgow that he's working on ``not short-term gimmicks or giveaways, but firm steps towards making every home in Britain more energy efficient, reducing bills not just temporarily, but permanently.''

At least 91 lawmakers within the ruling Labour Party have signed a petition calling for a windfall tax on companies that have benefited from soaring oil and natural gas prices. Brown aims to announce a package of measures to help people trapped in ``fuel poverty,'' where a household pays 10 percent or more of its annual earnings for home heating.

A text of Brown's speech, released by his office in London today, made no mention of the attack former Home Secretary Charles Clarke made on the prime minister, calling on him to consider stepping aside. Brown also said he is ``cautiously optimistic'' that the U.K. will pull through economic turmoil that brought growth to a halt in the second quarter.

That comment appeared to contradict Chancellor of the Exchequer Alistair Darling's remark on Aug. 30 that the slump may be the worst in 60 years and may last longer than most people expect.

`Civil War'

``The prime minister is in denial about both the crisis of confidence in his leadership and the economic crisis facing the country,'' said George Osborne, a Conservative member of Parliament who speaks on finance. ``At a time when Britain needs strong and united leadership with a clear sense of direction, we have a Labour government descending into civil war.''

Business Secretary John Hutton last week sided with industry and analysts, who say such a charge would deter investment in a new generation of electric power plants that Britain needs in the next decade.

Instead of a tax, Brown wants companies to fund a program to help poor households improve energy efficiency so that bills can be lowered permanently.

``You cannot address a long-term problem, the supply and demand for oil, with a short-term gimmick like a fuel stabilizer,'' Brown said.

Tom Hoskin, a spokesman for the prime minister, told reporters in London today that the government is engaged in ``cooperative and constructive'' talks with the energy companies.

Details of the measures may be announced on Sept. 8, when Cabinet has its first meeting since its summer recess. Brown has been putting together plans to help the hardest-hit families cope with a surge in borrowing costs and higher fuel bills.

Pressure Group

Compass, a research institute and pressure group, said its campaign for a windfall tax has the support of at least 91 Labour members of the House of Commons and several peers from the House of Lords. It also said it has the support of some government ministers in the Commons whom it cannot name.

BP Plc and Royal Dutch Shell Plc have reported a surge in profits after oil prices jumped to a record near $150 a barrel earlier in July. Utilities including Electricite de France SA and Centrica Plc raised gas and electricity bills.

The Trades Union Congress, which begins its annual conference this weekend, wants a 9 billion-pound windfall tax to offset extra earnings of at least 800 million pounds a year that energy companies will accrue through 2012 from trading European Union emissions permits issued free by the government.

Union leaders including Communications and General Workers Union head Billy Hayes, Dave Prentis of Unison and Tony Woodley of Unite have also called for the tax.