Gordon Brown, the Shadow Chancellor, will tomorrow confirm his intention to go ahead with the one-off cash raid on the utilities in his first Budget if Labour is elected. Aides say the plan for the so-called "fatcat tax" is "legally fireproof".
Original estimates for a windfall tax on the water, gas, electricity and telecommunications companies indicated that an incoming Labour administration could raise between pounds 3bn and pounds 5bn. That has now been more than doubled following legal advice that the levy must apply to all privatised utilities.
The decision means that a much wider range of firms - including British Telecom and BAA, the former British Airports Authority - will now be caught in the net. That is bound to complicate Labour's new push to woo the business community.
Mr Brown's Shadow Treasury team has set up a top-level committee, bringing in investment bankers and City legal brains to advise on carrying out Labour's plan to milk the private monopolies. Legal opinion is that the new tax cannot fall to a court challenge if it is applied to all the privatised utilities - a strategy becoming known as "the doctrine of generality".
An adviser to Mr Brown said last night: "We are now 100 per cent confident there are no financial, technical or legal obstacles to the introduction of a windfall tax."
The money has already been earmarked to take a quarter of a million young people out of the dole queue and into training or work programmes.
The Opposition says its revised assessment is based on a working model of the share-price performance of the utilities and on their published accounts. "There is ample room in the balance sheets for a double-figure windfall tax," said the adviser.
Elsewhere in today's Independent on Sunday, Mr Blair defends the tax. "The fairest way to use the money from the excess profits of privatised utilities [is to] use it for a high-quality programme for young people."
This week, Labour will also set up a committee to consider far-reaching changes in takeover regulation that could spell an end to many hostile bids.
At present, if a merger proposal is referred to the Monopolies and Mergers Commission, it will go ahead unless it is shown to be against the national interest. A commission of business leaders and academics set up by the Institute of Public Policy Research, a centre-left think tank, will argue that the takeover should go ahead only if it can be specifically shown to be in the public interest. It also wants to redefine the public interest more broadly.
Labour backs the idea in principle and will set up a committee to examine whether such changes could go ahead without ruling out all takeovers. The party is also anxious to ensure any reforms do not run counter to Europe-wide developments on financial regulation.
Despite this, the Opposition will this week seek to cement its relationship with a growing section of industry. Mr Blair is being advised informally by a group of leading businessmen, including supermarket owner David Sainsbury; Robert Ayling, chief executive of British Airways; Dennis Stevenson, a board member of Pearson; and Niall Fitzgerald of Unilever.
They are helping to draw up a new strategy for industry under Labour, which will be launched as a "Business Plan for Britain" in March.Reuse content