Posts Tagged ‘windfall tax’

The realpolitik behind Labour’s energy price freeze

29/10/2013, 03:04:11 PM

by Atul Hatwal

In the run up to Labour conference, a new policy to tackle rising energy costs was widely anticipated. After a summer of atrocious headlines, and with an Autumn of fuel price hikes in prospect, Ed Miliband needed a rabbit to pull out of his policy hat at conference.

For many within Labour, the natural solution seemed to be a new windfall tax on the utilities. It had worked well in the 1990s, when Labour was last in opposition, forcing the Tories to defend the largesse of the fat cats while generating funds to help tackle youth unemployment.

So when Ed Miliband announced the energy price freeze it was a genuinely striking political moment. There had been no pre-briefing or preparation and media and party alike were stunned.

While the media have subsequently focused on the mechanics and implications of a price freeze, from an internal Labour party perspective, politically the more interesting question is: why was a windfall tax rejected?

After all, it draws the same dividing line as the price freeze without any connotations of a 1970s style price control policy and given the windfall tax’s previous successful implementation, the public would be more likely to believe it would be enforced (the ComRes poll today found that 52% of the public do not think Labour will enact the price freeze, with 41% believing it will).

Even centrist Tories like John Major and Rob Halfon think a windfall tax would be justified.

The answer is to be found in the deteriorating relationship between Labour’s leader and his shadow chancellor, a dysfunction which is increasingly defining policy-making within the party.


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