Windfall tax is political gimmickry which can only harm Labour

You can almost hear the cogs turning in Southwold.

The Prime Minister is on his summer break in the Suffolk resort, his ratings are desperately low, there is revolt in the air, the economy is sliding downwards, hastened on its trajectory by soaring energy prices - and meanwhile BP, Shell and Centrica are raking in mega-profits.

Why not impose a windfall tax on their earnings? It shows you're in charge, that you care and it will go down a storm with your traditional Labour supporters.

It's been done before, by Geoffrey Howe on the major banks in 1981, when interest rates were high, and again by Labour on the privatised utilities in 1997.

Even so, there's no disguising the suggested measure for what it is - a piece of political gimmickry. Markets go down as well as up. Right now, they're up so HMG decides to clobber the beneficiaries. The fact that these companies are also ones in which most British pensions are held is, of course, forgotten.

So too is the reality that a massive gainer from higher energy bills is already the Treasury. Its take from production profits in the North Sea should double this year to £16 billion and VAT on fuel bills will rise by £500 million to £1.5 billion.

To make the move more acceptable to the companies, the Government could ring-fence the cash raised - ensuring it is used to alleviate fuel poverty by reducing consumption through a programme of home insulation.

But however it is dressed up and however loudly Labour, the unions and consumer groups cheer, the charge could do the party immense harm. It will be another nail in the coffin that says Labour is a friend of business.

The rest of the world will watch and question whether they want to invest in a country where, at the drop of a hat, the Government wades into the private sector.