Labour doubts over pounds 3bn levy

Doubt was cast yesterday by a Labour frontbench spokesman on plans by Gordon Brown, the shadow Chancellor, to impose a pounds 3bn windfall levy on the profits of privatised utilities.

Kim Howells, the party's spokesman on competition policy, said the idea of the windfall tax was "a difficult one", and that the utilities "have got a good point" when they complain that it would put up their prices. But he told the BBC's Today programme: "I'm sure that Gordon Brown is going to work out a way of making that tax work."

A spokesman for Mr Brown dismissed claims that the policy was in question, and pointed out that he might increase the levy to penalise the utilities for their poor investment record. The windfall levy would be the most important source of funds available to an incoming Labour administration, paying for a pounds 1bn jobs programme.

Dr Howells was speaking after he sparked controversy with a call - approved in advance by Labour leader Tony Blair - for the Labour Party to "get real" and "embrace competition". Writing in today's New Statesman, Dr Howells said the way to get a "lost generation" of young people back to work was to "get serious about helping companies in Britain to become more competitive and innovative ... It is companies which succeed or fail in business, not countries".

Dr Howells, MP for Pontypridd, yesterday denied his ideas would bring him into conflict with Margaret Beckett, Labour's trade and industry spokeswoman. "I think she understands as well as anybody that if British industry cannot compete, we ain't going to have any jobs," he said.