Energy Bills: Major Calls For 'Windfall Tax'

By Jon Craig, Chief Political Correspondent

Former Prime Minister Sir John Major has dropped an energy price hike bombshell on David Cameron by calling for a windfall tax on power companies this winter.

In a move that stunned the Tory high command, he said the recent price rises were unacceptable and many people would have to choose between heating and eating.

And he said that if there was severe cold weather this winter and the Government had to help vulnerable people it should impose an "excess profits tax" on the energy companies.

But within an hour the former Prime Minister was slapped down by Downing Street, with the Prime Minister's spokesman declaring: "We have no plans for this."

Labour seized on the apparent disarray.

Ed Miliband, whose price freeze pledge has put the Government on the defensive for weeks, tweeted: "Sir John Major makes Labour's argument: David Cameron stands up for the energy companies not hard-pressed families."

Ed Miliband said Sir John was making "Labour's argument"

Sir John's shock intervention in the energy price row came in a comeback speech to political journalists at Westminster in which he made a passionate plea to the Tories to win back the support of blue collar voters.

Asked about energy price hikes of up to 10%, Sir John said: "I do not see how it can be in any way acceptable that with energy prices rising broadly 4% in terms of costs that the price to the consumer should rise by the 9-10% that we are hearing.

"I do not regard that as acceptable at all by the energy companies.

"And it is not acceptable to me, it ought not to be acceptable to anyone, that many people are going to have to choose between keeping warm and eating. That is not acceptable.

"So if we get this cold spell the government, I think, will have to intervene and if they do intervene, and it is costly, I for one would regard it as perfectly acceptable for them then, subsequently, to levy and 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 people back to work."

Asked if he was backing the Labour leader, the former Prime Minister said: "When Ed Miliband made his suggestions just a few weeks ago I think his heart was in the right place but his head had gone walkabout.

"But he did touch on an issue that's very important. The private sector is something the Conservative party support but when the private sector goes wrong or behaves badly I think it is entirely right to make changes and put it right."

David Cameron's spokesman said it was an "interesting contribution"

Sir John told reporters that with interest rates at a record low, energy companies should be looking to borrow money to pay for investment rather than funding it "out of the revenue of families whose wages have not been going up at a time when other costs have been rising".

"I believe there will be difficulties this winter without action and, if there are those difficulties, the Chancellor will have my total support if he acted in the way I suggest and imposed an emergency impost upon the energy companies to claw back the money that we will have to give to people to help them see the winter in any form of warmth," he said.

Shortly after Sir John's speech, Mr Cameron's spokesman told reporters: "The Prime Minister's view on this is that this is an interesting contribution. We have no plans for this.

"What the Government is doing is legislating around forcing energy companies to put customers on their lowest tariffs and more competition in energy markets."

Asked about Sir John's concerns about people having to choose between eating and heating this winter, the spokesman said: "There are a number of initiatives that the Government has to support vulnerable people, such as the cold weather payments.

"We have a range of ways in which support is given and those are the right ones."

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