Use power windfall to help poorer families, firms urged

CHARITIES including Help the Aged and the Royal National Institute for the Blind are demanding that gas and electricity companies use windfall profits from advance VAT payments on energy efficiency projects for the less well off, writes Mary Fagan.

A group of more than 30 consumer organisations and charities says the companies will make a profit of about pounds 40m after tax as a result of advance payments of more than pounds 1bn by customers aiming to beat the introduction of VAT.

They say the money should be used to help low-income families that spend more than 10 per cent of their income on fuel bills.

VAT on domestic fuel was imposed at 8 per cent from April and goes up to 17.5 per cent next year.

Some regional electricity companies and British Gas said the cost of coping with thousands of customers paying bills in advance - some for several years ahead - largely offset any advantage to them.

One company, Midlands Electricity, has already contributed pounds 500,000 to Neighbourhood Energy Action, and Scottish Power will use a similar amount to help the less well off.