A campaign by labour unions and other political activists at the Labour Party conference in Manchester has failed to instigate any change in Government tax policy towards energy companies.

Proposed changes, including nationalisation of and/or the levying of a windfall tax on large energy companies and punitive taxes for city speculators, were added to the discussion agenda by the Labour National Policy Forum.

Despite this, Alistair Darling made it clear that a windfall tax will not become government policy while he is chancellor.

Speaking to Radio 4’s Today programme, the Chancellor said: “You need to remain level headed. You need to do what is right and avoid knee-jerk reactions.

“I don’t want to destabilise the tax system.”

In response to Mr Darling’s comments, Dave Prentis, head of UNISON—the UK’s second largest union—told The Independent: “The Chancellor is making the right noises, but he has not gone far enough.

"The right thing to do is levy a windfall tax now, and he must curb boardroom pay."

Mr Darling did highlight the issue of executive bonuses and severance packages, promising increased regulation in an attempt to calm the current financial crisis and prevent a reoccurrence.

He said: “It's essential that bonuses don't result in people being encouraged to take on more and more risk without understanding the damage that might be done, not just to their bank, but to the rest of us in the wider economy."

Professor Jonathan Crook, Professor of Business Economics at the University of Edinburgh, explained how a windfall tax works: “It is a tax which is applied as a lump sum or proportionate amount of profits where a company’s profits exceed an ‘acceptable level,’ usually only applied in exceptional or unforeseen circumstances.

“There is no current regulator for oil prices and while oil companies will not intentionally delude regulators you have to prevent companies from passing on the costs of a windfall tax to the consumer.

"On one hand this could enable the Government to give a rebate to certain households but you have to weigh this against the potential for price increases.”