Brown puts British Gas and BT firmly in his sights

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The Independent Online
Labour yesterday gave the clearest indication yet that British Telecom would be caught in its planned windfall tax on the privatised utilities.

Facing repeated questioning about which companies would be hit by the tax, Gordon Brown, the shadow Chancellor, said it would affect "privatised companies that are licensed and regulated by statute." Experts said the definition was wider than any used so far by Labour, and would include BT, British Gas, the airports operator BAA, Railtrack and British Energy - in addition to the electricity supply and water companies which have always expected to be included.

Mr Brown also categorically denied that the tax would be repeated in subsequent years. He told BBC radio: "This is a one-off. I have made that absolutely clear." Several utility companies have claimed the tax could be resurrected to raise funds for other Labour programmes.

Though he again declined to reveal how much money the tax would raise, Mr Brown reaffirmed that the levy would fund Labour's pounds 3bn programme to create jobs for the long-term unemployed. Mr Brown insisted the tax would work, adding: "we're utterly satisfied the three billion pound employment programme that we are proposing will be comfortably financed within the windfall levy." The party also announced it would appoint a minister for jobs working under the Secretary of State for Education.

Last night, one leading utility expert, Simon Flowers from the NatWest Bank's stockbroking arm, estimated that BT could have to pay at least pounds 1bn to Treasury coffers after a post-election Labour budget, based on a pounds 5bn windfall tax. Mr Flowers said: "Increasingly since the turn of the year, the Labour Party has been suggesting the net would be spread fairly widely. That's why we've included British Gas and British Telecom in our calculations."

A BT spokesman yesterday brushed off the comments. "We have not been told that we have been included in this tax and we would be surprised if were were, given that our profits are not excessive and the regulation of BT is anything but lax," he said.

BAA, the group which runs Heathrow Airport, said it "welcomed" the comments. "Gordon Brown stressed that the tax would only apply to the privatised utilities and BAA is not a utility. It simply wouldn't make any sense to include BAA," said a spokesman.

Some companies, including British Gas, BAA and BT, will argue their share prices have not substantially outperformed the general trend in the stockmarket in recent years. A wider tax might be privately supported by the electricity and water companies, which could see their share of the levy halved from pounds 300m to pounds 150m, based on a pounds 5bn total.

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