NUS CALLING FOR A WINDFALL TAX

Dear Rt Hon Ed Miliband MP

We are writing to express our grave concern regarding the behaviour of energy companies who are refusing to pass price cuts on to consumers, particularly students, in spite of the sharp falls in the world price of crude oil.

Average annual spending on energy per household has breached £1,200 (since 2000 gas prices have risen 100% and electricity 61%, with further increases – on 30/07/08 British Gas announced record 35% gas price rises), correspondingly energy providers' profits have risen from £557 million in 2003 to over £5 billion today (similarly oil companies have announced huge windfall profits).

These companies are continuing to receive unearned profits at the expense of everyone. Furthermore the record price rises coupled with the refusal of companies to pass on cost cuts could increase those in fuel poverty beyond six million. This is unacceptable.

We would point out that while the government’s energy package of long-term measures worth £900 million over three years is welcome, given the ongoing high cost of energy this won’t go far enough to end fuel poverty. The government is legally bound to do all that is reasonably possible to eradicate fuel poverty for vulnerable households by 2010.

In 1997 the government rightly levied a windfall tax on the unearned profits of the privatised utilities. In 2008 the inflated price of energy continues to make massive unearned profits for energy providers, therefore in response to the failure of these companies to pass on savings from the falling cost of oil, I therefore urge government to introduce a new windfall tax if these companies continue to refuse to pass their cost cuts onto students.

Revenues from any windfall tax should be ring-fenced and targeted at those people in wider society likely to suffer from fuel poverty to give them immediate help and should also be used to start an adequately funded program of home insulation to protect people, particularly students and those on lower incomes, from future price rises.

The government can move quickly to ensure the energy companies are held to account and we hope you agree with NUS that enough is enough.

We would therefore urge you as Secretary of State for Energy and Climate Change to lobby both the Prime Minister and the Chancellor of the Exchequer in support of a windfall tax.

Yours sincerely,

Wes Streeting Susan Nash

National President National Executive

Photo from NUS