PM faces windfall tax defeat

GORDON Brown is facing a damaging defeat at the Labour Party conference later this month over his refusal to support moves for a windfall tax on energy firms.

Left-wingers and unions are to force the campaign for a windfall tax onto the conference agenda, with delegates expected to back calls for it to become party policy.

Brown last week insisted that he would not support "short-term gimmicks or giveaways" to meet widespread concern over escalating energy bills.

This week he will aim to head off attacks with a new scheme aimed at boosting the energy efficiency of homes.

However, his decision to reject a windfall tax has enraged union leaders, who meet this week in Brighton for the annual Trades Union Congress. After that, in a fortnight, Labour will gather for its annual conference, where the party's powerful Compass group is to haul the windfall tax debate back onto the floor.

A spokesman for Compass said: "Insulation measures are not going to help people this winter. There are six million people facing fuel poverty. What the Government is proposing is not a coherent policy. Labour constituency parties across Britain are all voting for a windfall tax. We aim to make sure that it is backed at the conference as well."

The pressure for a windfall tax is also coming from Scotland, where all three candidates for the post of leader at Holyrood are sticking with the campaign.

However, Brown is expected to hit back at his critics this week with a "long-term" series of measures. Grants to homeowners to encourage them to insulate their homes properly are expected to be rolled out beyond those on benefits, so that most homes can receive Government support.

The package may run into trouble, however, over the shortfall of insulation installers. The Government grant scheme is already warning that installers are "struggling to keep up with demand".

Last night, one of Brown's closest allies admitted Labour is "two-nil down" to the Conservatives in the race for the next General Election.

But Schools Secretary Ed Balls insisted there was "still a lot to play for" and – in a message directed squarely at former Cabinet minister Charles Clarke who criticised the party's performance last week – urged fellow Labour MPs to stick together and "stop jeering at the manager".

Meanwhile, Conservative Party leader David Cameron hinted at the possibility of tax cuts under a Conservative government, saying that it is right for those who "put their backs into the British economy" to be rewarded.

Cameron's comments come amid continuing pressure from within his party for more specific promises on tax than his oft-repeated mantra that he will "share the proceeds of growth" between public services and tax cuts.

Talks between the Government and the energy firms are continuing this weekend, with negotiations centring on the scale of the contribution the energy companies will make to the boost to energy efficiency.

Dr Garry Felgate, chief executive of the Energy Retail Association, said: "Energy companies understand that many people in the country are feeling the pain of the credit crunch, and this is why discussions between the Government and the companies are ongoing."

There is also growing support on Labour benches for the Government to take back control from the regulator Ofgem, so that it can once again set prices.

Campaigning in Glenrothes yesterday, First Minister Alex Salmond said: "In dismissing using the windfall gains of the energy supply companies to help people struggling with fuel bills, he has shown that he is out of touch with the needs of ordinary people in Fife.

"An SNP win in Glenrothes will send a message to Westminster that fuel poverty amid energy plenty in 21st-century Fife and Scotland is utterly unacceptable".