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Sir John Major calls for windfall tax on energy profits Sir John Major calls for windfall tax on energy profits
(35 minutes later)
Former prime minister Sir John Major has called for an emergency tax on the profits of the UK's top energy firms.Former prime minister Sir John Major has called for an emergency tax on the profits of the UK's top energy firms.
Speaking at a lunch in Westminster, the ex-Conservative leader said recent price rises of more than 10% were "unacceptable" and action was needed.Speaking at a lunch in Westminster, the ex-Conservative leader said recent price rises of more than 10% were "unacceptable" and action was needed.
The government could claw back the cost of extra winter fuel payments through a one-off tax, he suggested.The government could claw back the cost of extra winter fuel payments through a one-off tax, he suggested.
Downing Street said it was an "interesting contribution" but the government had no plans for such a tax.Downing Street said it was an "interesting contribution" but the government had no plans for such a tax.
Ministers have rejected calls by Labour leader Ed Miliband for a price freeze, describing it as a "con" and urging hard-pressed consumers to switch suppliers instead.Ministers have rejected calls by Labour leader Ed Miliband for a price freeze, describing it as a "con" and urging hard-pressed consumers to switch suppliers instead.
Three of the so-called "big six" energy firms - Npower, SSE, and British Gas - have announced plans to raise gas and electricity bills by between 8% and 10%.Three of the so-called "big six" energy firms - Npower, SSE, and British Gas - have announced plans to raise gas and electricity bills by between 8% and 10%.
Analysts expect the others - Scottish Power, E.On and EDF - to follow suit with similar price increases.Analysts expect the others - Scottish Power, E.On and EDF - to follow suit with similar price increases.
Sir John - prime minister between 1990 and 1997 - said price rises of this kind were not justified and it would be "acceptable" for the government to impose a one-off levy to recover the cost of cold weather payments this winter. Speaking to an audience of political journalists, Sir John - prime minister between 1990 and 1997 - said price rises of this kind were not justified and it would be "acceptable" for the government to impose a one-off levy to recover the cost of cold weather payments this winter.
Cold weather payments are triggered when the temperature falls below a certain level for a prolonged period.Cold weather payments are triggered when the temperature falls below a certain level for a prolonged period.
Those on income support and other work-related benefits are eligible for a £25 payment if temperatures drops to 0% celsius or below for seven consecutive days.
Fuel poverty campaigners have said the price rises will leave some people with the choice of having to "heat or eat" this winter but energy firms say they are needed to cover the cost of rising wholesale prices and environmental obligations.Fuel poverty campaigners have said the price rises will leave some people with the choice of having to "heat or eat" this winter but energy firms say they are needed to cover the cost of rising wholesale prices and environmental obligations.
'Behaving badly'
Asked about Labour's plan for price freeze if it is elected in 2015, Sir John said "Ed Miliband's heart was in the right place but his head has gone walkabout".Asked about Labour's plan for price freeze if it is elected in 2015, Sir John said "Ed Miliband's heart was in the right place but his head has gone walkabout".
The BBC's political correspondent Robin Brant said this was a serious intervention, representing the most senior Conservative to call for action to "punish" energy firms. "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."
"But at the moment 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."
He later told the BBC that the was a "crisis" in the energy market and there was a "very real chance" that the government would have to increase the amount of assistance it gave to people in the event of cold snap.
Should this happen, he said a "one-off retrospective" tax should be considered.
'Labour's argument'
The BBC's political correspondent Robin Brant said this was a major intervention on the most serious political issue of the day, representing the most senior Conservative to call for action to "punish" energy firms.
In response to the ex-PM's comments, Ed Miliband tweeted: "Sir John Major makes Labour's argument: David Cameron stands up for the energy companies not hard-pressed families."
And shadow Cabinet Office minister John Ashworth said it is "deeply embarrassing for David Cameron that a man famous for not wanting to criticise his successors would come out and say what everyone else is thinking".
The government has said the price rises are "disappointing" but has insisted a price freeze could actually lead to higher prices in the long-term and what is needed is more competition.
"There are a number of initiatives that the government has to support vulnerable people, such as the cold weather payments," a No 10 spokesman said. "We have a range of ways in which support is given and those are the right ones."
The bosses of the leading energy firms have been called to appear before MPs next week to explain the price rises.
Earlier on Tuesday, Scottish Power was told to pay £8.5m to many of its customers after being found to have misled them about the benefits of switching to alternative suppliers and other breaches of its licence obligations.
More than 140,000 customers on the warm homes discount schemes, designed to support those at risk of fuel poverty, will receive about £50 in compensation each.