Tax gas producers to heat poor homes

A WINDFALL tax should be slapped on leading oil and gas producers' profits to help poor households meet their energy bills, a senior Government adviser has said.

In the first hearing of the inquiry into energy prices today, chairman of the Fuel Poverty Advisory Group (FPAG) Peter Lehmann said producers earned an extra £2bn in 2004 through higher oil and gas prices.

He claimed half of that would be enough to enable the Government to meet its targets of halving poverty within six years.

Lehmann said: 'Given the price rises, we think more is needed to try and make sure we meet the fuel poverty targets.'

The FPAG was set up in 2002 to advise the Government on the progress of efforts to combat fuel poverty amid concern that growing numbers of pensioners could not pay their bills and were dying from the effects of cold.

The House of Commons Trade and Industry Committee quizzed oil and gas bosses on why prices were rising at such a quick rate.

MPs heard household gas prices have shot up 20% and electricity 14% over the past year. London power supplier EDF Energy has raised prices three times in 10 months. That is thought to have added £100 to residential bills. consumers are expected to pay £5.2bn to heat their homes this winter.

Fuel watchdog Energywatch claims an extra 800,000 consumers face financial hardship as a result of the increases.

Gas and oil producers rejected the Lehmann's call. Chief executive of the UK Offshore Operators Association Malcolm Webb told the committee: 'This is a very volatile commodity. I think it would be a huge mistake to make policy decisions on a relatively short-term view of oil prices.'

The parliamentary committee is expected to prescribe policy recommendations this spring after assessing the impact of a sharp rise in household gas and electricity bills.