Liberal Conspiracy is helping Compass to spearhead a call for a windfall tax on energy companies. Apparently they are making far too much money and we want a piece of that pie. The article itself says...

Yet despite the billions made in profits, the energy industry spends just £50 million a year combating fuel poverty and has only agreed to raise this to £150 million a year by 2010. But every 10% increase in energy prices mean an extra 400,000 people go into fuel poverty.

I'm afraid that "we" don't all agree with this kind of thinking and feel very cautious about a windfall tax, especially given this government having made moves to disproportionately charge poorer people more for simple living through the abolition of the 10p tax rate and now the VED tax changes, changes that could do as much as to put around 400,000 people in to relative fuel poverty by the article's figures. On top of this Brown and his chancellor are considering axing some levels of stamp duty which could lose the government billions of pounds it could better put on alleviating fuel poverty.

Windfall taxes are essentially a quick political fix for a government that is desperately scrambling to re-engage with it's core voters. What it fails to realise is that rising fuel costs are only a small part of the issue, especially when a windfall tax offers no future security of situation. Since 1997 council tax costs have risen by almost the same amount as fuel. OK, but then councils don't make any profit do they?

Oh wait, only £200m a year on social housing. Now ideally this would go in to social housing but...

Under the system, rent income totalling around £800m will go to the Treasury from English councils this year, while only £600m will be returned or "redistributed". Unbelievably, for many in the social housing sector there is no guarantee that the surplus will be spent on housing rather than being channelled to, say, health, education or transport.

Now I know it's not that simple, and that not using that money on other services means other people could suffer in other ways...but people in this sort of housing are the more needy of our society, they are the ones that want to get out of poverty. How about we just stop charging council house tenants so much more every year to live there and give them some more money to actually pay for their fuel bills at a start? Or how about not letting your MPs talk a bill out of the house that would save energy costs and, more beneficially, reduce domestic demand?

I've said it before, we don't need quick fixes we need absolute change in the strategy for trading energy. In fact Tim Worstall does a better job than I could ever do of explaining why windfall taxes on energy are inherently a bad thing for energy pricing. And look, I didn't even talk about the waste of money that is ID cards...

Increasing supply would require more money to be spent on the problems of discovering and extracting more of those energy sources: reducing demand could be done by reducing the amount that people either do or have available to spend on purchasing such. Perhaps not the way we'd like to do that latter, but it would work.