Govt blocks energy windfall tax plan

The government has dismissed the gathering momentum for a windfall tax on energy companies.

In a clear indication that the government is unlikely to back down in the face of calls from about 80 Labour MPs for the windfall, business secretary John Hutton said such a move would make the UK a less attractive investment climate.

"What we shouldn't do is create a climate that makes it harder to attract new investment," Mr Hutton told the Daily Telegraph.

"We need £100 billion plus in the next ten years, so we've got to create the right framework that encourages investment. We must not lose sight of that."

The comments echo the words of chancellor Alistair Darling, who all but killed off speculation about a future windfall when he warned such a move would make the UK less attractive to investors.

But Gordon Brown is expected to launch his political fight back on the basis of helping poor families despite rising food and energy prices, and polls show a windfall on the profits of energy companies has widespread public support.