At the same time as the unions are calling for a windfall tax on energy companies, the civil service unions are apparently seeking higher pay rises to compensate for rising inflation.

It is arguable that the unions are seeking to flex their mussels after decades of first Conservative and then New Labour governments eroding their power. And with a terminally weakened administration, this is, perhaps hardly surprising.

But they really do need to consider what grounds they fight on, because both these strategies are deeply flawed – for different reasons.

Windfall tax
Most of us facing higher fuel bills at home, work and on the roads are likely to be sympathetic to the notion of punishing the multi-national businesses that are apparently ripping us off under the excuse of high oil prices.

Unfortunately, the cure could be worse than the malaise; if businesses are taxed too heavily on prices, they frequently have the option of moving off shore, thus denying the government much of its revenue and damaging the economy.

This is not to say that the government is impotent against big business. It cannot be beyond the wit of civil servants to devise a form of control over prices that affects all energy suppliers irrespective of where they operate. One idea could be to limit the amount of profit margin that is permitted between the cost it pays for energy and the price it charges consumers and businesses. The operation could be averaged over three to six months, in order to smooth out fluctuations, but would affect all suppliers; those based in France just as much as domestic companies.

More importantly, it would not encourage businesses to move to overseas domiciles, as there would be no benefit. We all seek to minimise the tax we pay, after all that is what inheritance tax planning is all about. So governments need to exercise caution over what they do.

Civil service pay demands
Unions have a perfect right to seek the best possible benefits for their members; and nobody would wish to deny those who serve the state a fair income.

However, as long as civil servants enjoy retirement benefits that most of us can only dream about – and which we have to pay for – it is unreasonable for then to expect pay rises at our expense, while we cannot expect the private sector to match them.

Give them their pay award, if you wish, Mr Darling, but they must give up their gold plated pension schemes in return. Will they? You must be joking.

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