Brown to introduce energy tax on business

THE CHANCELLOR will announce plans today to tax the business use of gas, electricity and oil to raise an estimated pounds 7bn and help Britain to meet its targets for reducing greenhouse gases.

Tony Blair met Gordon Brown twice yesterday to finalise the Budget package, adding to speculation that the Prime Minister intervened at an early stage to reduce the impact of tax changes on middle-class families.

But with most of the Budget papers already being printed, it is believed they were working on the final tone of the speech to be delivered to Parliament.

In one key development, Mr Brown will end the prevarication over an energy tax by acting on the conclusions of the report by Lord Marshall of Knightsbridge, the chairman of British Airways, in favour of taxing big users of energy to help Britain meet multilateral emissions agreements. Labour's election manifesto pledged to cut harmful carbon dioxide emissions, which produce global warming, by 2010.

Business leaders are worried that the tax will create an advantage for foreign competitors, but they are braced for the announcement and have privately indicated that their criticism will be muted.

But the measure will be welcomed by environmentalists. It forms part of the Chancellor's "green" strategy agreed with John Prescott, the Deputy Prime Minister.

Mr Brown will also announce a 6 per cent increase in fuel duties, underpinning Mr Prescott's efforts to persuade more commuters to abandon their cars and use public transport.

US share-owning,

Business, page 16

Hamish McRae,

Review, page 3