ALEX Salmond has backed calls for a windfall tax on energy companies and said Gordon Brown should go further into the red in order to help ease the pain for taxpayers.
In a warning to the Prime Minister, Salmond will say today that cuts in fuel duty and reductions in heating costs are necessary to restore consumer confidence.
The Exchequer should pay for it by a one-off raid on energy firms and by breaking its
rules on borrowing to take more out of the bank.
Salmond says that in the last downturn in the early 90s the UK Government borrowed far more as it sought to pump up the ailing economy. He says Brown and Chancellor Alistair Darling should now do the same.
"In moral terms, Government cannot stand aside and watch families being driven into fuel poverty," he said.
He added: "I urge the Prime Minister to come out of his bunker and tackle the deflationary forces in the economy. Action must be taken to resurrect consumer confidence."
The call comes amid growing speculation that Brown will back a windfall tax on energy firms next month. Downing Street sources say the idea is being "discussed" as the Prime Minister seeks to seize the agenda with an economic recovery plan.
The focus on energy firms came after BP revealed it had made £4.3bn – almost £2m an hour – between April and June, and £6.75bn since the start of the year. Shell posted six-monthly profits of nearly £8bn.
There is also speculation that Brown will tear up his Golden Rule on borrowing by funding further tax cuts this autumn. The Government had committed itself to keeping borrowing below 40% of GDP but that may now be scrapped in a bid to find extra funds. A 1% rise would give Brown and Darling a further £ 14 billion to push into tax cuts.
Salmond drew a parallel between the borrowing in 1992 when the UK economy was last in trouble.
"There is room for manoeuvre in fiscal policy and a substantial economic boost is necessary. For example, the net borrowing forecast for this year was £43bn. The equivalent figure in the last downturn in 1992/93 was £68.2bn," he said.
Salmond is also calling for specific measures in Scotland, including a demand for the UK Treasury to allocate a share of its North Sea oil revenues.
The First Minister said: "The biggest windfall gainer offshore is the Chancellor himself whose oil revenues are heading for £15bn in the current financial year."
But one of the contenders for the vacant Holyrood Labour leader post, Cathy Jamieson, hit out at Salmond last night over what she described as his "megaphone diplomacy".
She, too, is calling for a windfall tax on energy firms. "It's time that the SNP played their part in supporting under-pressure Scots. Co-operation is the way forward for Scotland, not conflict for conflict's sake.
"Salmond's megaphone diplomacy will not make any Scottish home warmer or greener," she said.
Jamieson said the SNP Government should end means testing of elderly people who are applying for central heating systems.
Salmond is preparing a major speech for later this month on the challenges facing the Scottish economy.
However, the First Minister insists that the economy in Scotland is better placed than the rest of the UK to withstand the tough times.
He points to the fact that growth in Scotland has matched or surpassed that of the UK in each of the last three quarters. Employment rates are also higher and while house prices in England and Wales are tumbling, recent figures suggest that they are continuing to rise slowly in Scotland.
Salmond added: "Scotland has proved more resistant to financial pressures than other parts of the UK. However, with deflationary forces becoming stronger by the day, Scotland is not immune to the economic downturn."
The full article contains 656 words and appears in Scotland On Sunday newspaper.
