Banking News

Windfall tax on energy `may not be the answer`

4 August 2008

Rapping energy companies with a windfall tax could have a further negative impact on customers, a financial expert claims.

Steve Wagner, energy spokesperson at Fairinvestment.co.uk, noted that the last time a windfall tax was used on energy company profits - in 1997 - it was used to help people most in need.

However, he suggested that this time around there are fears from financial experts that the energy companies could retaliate and it would make matters worse.

Mr Wagner noted that EDF has raised its gas prices by 22 per cent and electricity by 17 per cent, while British Gas raised its tariffs for the second time in six months, putting gas prices up by 35 per cent and electricity by nine per cent.

"The recent increases are going to start hitting households just in time for the winter months and with millions of people already in fuel poverty this is only set to get worse," he added.

A household is considered to be in fuel poverty if it spends more than ten per cent of its income on heating their house adequately.