Once again, labour party MP’s are looking to raid the coffers of big business. This time, it is to counteract the economic and social impact of the increase in fuel prices, through the imposition of a so-called “windfall tax”. This is so typical of new labour, if they can’t employ a stealth tax or borrow it, they simply steal it. Yes, how else can you describe a direct raid on the profits of the energy companies?

Now don’t get me wrong, I am not advocating that we take no action, but simply applying a one-off windfall tax is not the answer. This would act as a massive dis-incentive for other international companies considering a move to the UK, assuming there are any left. That notwithstanding, this country faces another potential energy crisis in the next 10 years, or more accurately, an energy shortage and that is because many of our existing power stations are due to be replaced. With a build process of 10 years or so and the delay in the decision to utilise nuclear stations, if the existing companies refuse to invest, we could be in a lot of trouble.

It is possible to make the energy companies pay their fair share, by reducing the substantial windfall they received, as a consequence of the free carbon credits. Energy companies would find it more difficult to argue against this particular aspect of their business that a blatant raid on their profits. It may amount to the same thing, but arguably it is all in the presentation.

Using any money gained simply to reduce people’s bills is also not the answer; it is a short-term fix and would have to be repeated year on year, most likely rising year on year to take account of further rises. This is a massive burden on the taxpayer that would have to fund future shortfalls; after all, the government couldn’t simply turn to the energy company’s year on year.

What is needed is a joined up approach to the problem. Existing government and energy company initiatives need to be extended to put in place a programme designed to reduce the energy usage of those in fuel poverty, rather than simply subsidising energy costs. The introduction of low energy bulbs would make a significant difference to energy costs and if purchased in bulk, would cost the government pennies. This could be completed as a project, much the same as smoke alarms were some years ago. Similarly, looking at more efficient energy use, for example, a modern boiler will often use 35% or more, less fuel than an old one. I know the government already has a programme in place, but why not expand it, put more money into this initiative, rather than subsidise bills every year.

We all know of the various, well publicised methods of reducing home energy usage, most experts have suggested that there could be a saving of as much as 35% on annual bills, with a the adoption of commonsense approach to usage and a relatively small, targeted investment. Given the exponential savings in so called greenhouse gases, perhaps the government could consider transferring some of the revenues’ gained from ‘green taxes’ directly into this project.

I don’t have all the answers and I am neither an expert on energy nor the carbon trading scheme, but I know this, we cannot afford to introduce an ongoing form of fuel subsidy for those in fuel poverty and not expect it to hurt the majority. Surely it is better to invest a larger amount of money now, in fuel saving measures, rather than fuel subsidies? The government does not need to employ expensive consultants to come up with a commonsense approach to this problem. I don’t have all the answers and my suggestions may be over simplistic, but then I won’t cost the government hundreds of millions of pounds of taxpayer’s money in consulting fees either.

So, the politicians say that they cannot be held responsible for the rising gas and oil prices, because they are beyond their control. This true, but only up to a point, lets consider the facts.

The hike in fuel prices is, for the most part, a consequence of rising demand (global demand went up 3.4% last year), production capacity,  the fact that some of the largest oil reserves are within unstable countries and, of course, speculators. However, there is another factor that makes us very susceptible to the vagaries of the market and that is, we now a net importer of oil and gas.

In spite of the fact that we had excellent oil and gas reserves in the north sea, successive governments have placed no caps on the exploitation of these essential assets. Because the current labour government have presided over this country for the past 11 years, they must take the lion share of the blame.

The government has known for years that there would come a time when we would need to import gas and oil, yet they appear to have placed no restrictions on the oil companies. Restrictions could have ensured that the situation we now find ourselves in would have been delayed for decades. Instead, short-termism was the order of the day, so that the government could maximise tax revenues and squander this country’s precious assets.

In fact, this government has not even bothered to build in any gas storage capacity, if the gas supplies were stopped, we would quite simply run out of gas in just 3 to 4 days! This would also lead to electricity shortages, given some of our power stations are gas fired and any shortage of gas, will inevitably see an increase in demand for electricity.

Not only do we have problems with a lack of gas reserves, this government has taken so long to get its act together in respect of nuclear power stations, that there is every likelihood that we will have electricity shortages in the future, given it takes some 10 years to build and commission a power station. Whatever your views on coal fired or nuclear electricity stations, the bottom line is this country needs electricity to survive…socially and economically. We will all pay the price for this governments’ abject failure to consider the medium to long term needs of this country in respect of oil, gas and electricity. Some of the pain is being felt now, but there is much more to come.

Whilst our government is washing its hands of any responsibility, it is worthwhile looking at who is profiting out of our pain. Something like 63% of the cost of fuel goes to the Exchequer in respect of duty and VAT. So, for every 10p per litre your fuel rises, the government is directly responsible for 6.3p of that rise. Crocodile tears come to mind! When the government tells us that it is going to suspend the fuel escalator, they make out they are doing us some sort of favour, that it is going to cost the government etc., but the reality is, they are the biggest pimps of fuel price increases. Most of the political commentator’s seem slow to grasp this particular nettle, but when they have, the minister’s claim that reduced demand means that the tax revenues from fuel are neutral. Just who are they trying to kid?

The conservative party have proposed a ‘fair fuel stabiliser’, whilst this idea is not original, the government would do well to consider its introduction. However, this is unlikely, because whatever they tell us publicly, if truth be told, the government need this additional revenue because they will almost certainly have some black holes in their revenue forecasts.

Next time you hear a government minister feigning concern about how higher fuel prices are impacting the “people” (that condescending terminology they use to describe you and me), consider the fact that they have presided over the exploitation of our precious fuel assets denying us the opportunity to be, at least in part, self-sufficient. By their actions, they have placed us at the mercy of both market forces and political shenanigans. They have not built any additional storage facilities that could have enabled us to stabilise prices, or ride out a political storm. Their legacy will be one that we shall all pay for in the coming years, you mark my words.

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