Politics of the jerking knee

I agree with Gordon Brown, if his distaste for a windfall tax on energy companies is genuine. There seems to be some momentum building up behind this proposal. But poor old Gordon has fallen into such a weakened state and is so not in control of his Government that he might have to back down. At present, he's just bobbing around aimlessly like a storm petrel relaxing on the open seas.

This windfall tax does not look like a very sensible idea to me. In fact, it looks like a thoroughly stupid idea, conceived during an orgasm of spite and a belief that its consequences will not be understood by the voters - or more precisely has the capacity to be presented by Labour in a way which will be misunderstood by voters, to the electoral benefit of the Labour Party. Kneejerk politics at its worst.

What's wrong with a windfall tax on energy companies - to punish them for putting up prices by so much you might ask, or more accurately, those who read leftie blogs might ask. Well firstly, its destructive of private sector investment whenever Government introduces retrospective taxes. How on earth will Gordon Brown convince energy companies to take on the risk involved in building nuclear power stations after he's just pulled such a stunt and a substantial rug from under their feet. Putin's behaviour over the last few weeks has made the nuclear route inevitable, and urgent.

And secondly, its naive in the extreme to believe that any windfall tax is not eventually going to find its way back into even higher energy bills. And thirdly it will hit share prices, and associated investments and pensions by delivering a huge knock to confidence. Now this might not seem to matter to some people, but its what the British economy is built on - and the walls are shaking already.

Now none of this is to suggest that there is not a big responsibility on energy companies to help their less well off customers and invest more in energy saving. I have no objection to use of the tax system to 'persuade' private companies to change behavior, but it doesn't work if its perceived as just an excuse for another tax hike.