In theory, a regulated free market in energy supply should have ensured healthy competition and lower prices. For a few years following the sell-off, both shareholders and consumers shared the benefit: shareholders gained a healthy dividend and rising share values and consumers saw prices fall. Not any more, though.

As natural gas supplied from the North Sea became depleted, we found ourselves having to import increasing amounts of gas from other countries and therefore over the last few years the UK has become increasingly dependent upon those imports and the inexplicable European relationship between the wholesale prices of gas and crude oil.

All businesses must make profits, otherwise those enterprises will very quickly fail. However, in this country we cannot do without some sort of method of heating our homes in the winter and in the modern world it is hard to live without an electricity supply. Domestic energy has become an essential part of daily life and we all know that as we become older – and thankfully we are on average living far longer – we feel the cold more and therefore need more warmth in our homes.

When British Gas announced that their gas prices would rise by a further 35 per cent, the shock and anger among consumers soon became clear. While better-off users may be able to absorb these extraordinary increases, the majority of the population simply cannot and will have to make savings elsewhere in the family budget, or even worse, switch off the heating at the coldest time of the year.

Last week, I spoke at a leisure club for older people where about 100 people aged from 60 to 90 were present and we had a lively debate about a huge range of subjects.

After the meeting, a lady in her 80s came up to me and told me that while she was very grateful for the £300 a year winter fuel allowance paid to her by the Government, that sum only amounted to about £6 a week. Her heating bills, however, came to about £24 a week and on a basic pension, where was she going to find the extra £18?

Earlier this year, in response to the then price increases in gas and electricity, I tabled a Commons Early Day Motion (EDM) calling on our Government to bring in a windfall tax on the excessive profits of the energy companies.

Last week, the parent company of British Gas, Centrica, announced that it had made a profit of £992m in the first six months of the year – a decrease over last year's profits – but nonetheless earnings of more than £5m a day. So, when does a profit become excessive and unacceptable to us as consumers?

My view, shared by almost everyone I have spoken to in the past few days, is that we cannot allow the most vulnerable in our society to suffer as a result of circumstances beyond their control. There are now just six energy supply companies in the UK, some of which are foreign owned. Clearly, it would be impractical as well as very expensive to renationalise them. But the Government can regulate them more strongly and ensure that either they compensate the most vulnerable or, as I have advocated, the Government takes a one-off windfall tax on a section of their profits in order to directly help not only older people but also the "fuel poor" – those families and individuals who spend more than 10 per cent of their disposable income on energy.

There is another issue related to fuel poverty. Why do those consumers whom the energy companies insist should have pre-payment meters pay on average 70 per cent more for their gas or electricity? That, surely, is a further tax on the poorest and least able to pay.

In addition, the oil companies – whom I acknowledge spend a considerable proportion of their profits investing in the search for new supplies – are making massive amounts of money from the huge increases in petrol following the rise in the price of crude oil, reaching up to $130 a barrel.

The news that BP made more in profits in six months than the average small African country spends in an entire year should make us realise the power that some of these companies now wield. While they are enjoying the mega-dollar earnings, the rest of us are paying through the nose for our fuel. In order to reduce the cost of petrol and diesel at the pumps, and the consequent effect upon almost every aspect of daily life, the Government should reduce fuel duty (a suggestion I made in Parliament long before the Conservatives). But as a contribution towards the cost of this, the oil companies should also be forced to pay back some of their huge profits to the hard-pressed motorist. That would at least show people that we cared and were trying to help.

The Labour Party was founded to protect and help the poorest in our society as well as to ensure fairness, equality and justice. It's about time we showed the public that we are still in that business.


Fabian Hamilton is the Labour MP for Leeds North East.