Having condemned a windfall tax earlier in the week, I am delighted that Gordon Brown has seen fit to agree with me. Indeed, he has persuaded the energy companies to come up with £910 million to pay for free loft and cavity insulation for all low-income and pensioner families, with half-price deals for six million others. So, why aren't I impressed?
Firstly, it's a question of naivety. Gordon insists that he doesn't expect the cost to be passed on to the consumer. The chief executive of the Association of Electricity Producers says, "Whenever people impose costs on an industry, the bill to some extent always ends up with the customer.". One of these gentlemen is likely to be right, and sadly, I have a nasty feeling which one of them it's going to be. What were the negotiations like, I wonder...
Gordon Brown. "I would really like you to meet me part way here."
Energy Companies "Why should we, what are you going to do if we don't?"
Gordon Brown "I'll be very unhappy and the Conservatives will win the next election."
Energy Companies "And?"
Gordon had his trump card, the threat of a windfall tax. The chances are that it would have been popular (forget the economics for a moment) and he would have been looking for a lot more than £910 million. So the energy companies will take most of the credit at relatively little cost.
Meanwhile, the Conservatives have responded through Alan Duncan. "(it is) not clear how this announcement will help the millions of people who will struggle to heat their homes this winter". Genius. But what about a solution? Oh no, that would risk having a policy, and we can't have that, can we?
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