Industry demands energy tax let-out

BRITAIN'S BIGGEST energy users are seeking an exemption from the new climate change levy proposed in this month's Budget in return for signing binding agreements to improve their energy efficiency.

Industry representatives rejected the offer of a 50 per cent reduction in the energy tax proposed by the Deputy Prime Minister John Prescott at a meeting yesterday.

"We are disappointed the Government has linked energy efficiency agreements to the tax, and we are looking for a zero rate of tax," said Graham Funnell, head of environmental policy at the UK Steel Association, one of nine sectors represented at the meeting.

But Mr Prescott said industry had already benefited from substantial reductions in energy prices. "Companies will be able to exchange part of their liability for the climate change levy in return for commitments to environmental gain," he said.

The objections to the environmental tax, which comes into force in April 2001, follow the row between the Government and road hauliers over vehicle excise duty for heavy lorries announced in the Budget.

Lisa Waters, economic adviser to the Energy Intensive Users Group (EIUG), said: "It is important people understand it was not a win, win Budget. It was lose, lose if you work in manufacturing. The Government has failed to grasp the effects of this tax on the competitiveness of UK manufacturers."

The Department of Environment, Transport and the Regions and Treasury are to hold further meetings after Easter with industry representatives, including steel, chemicals, paper, glass and food manufacturing.

One of the objections is that the climate change levy is not fiscally neutral. Although the revenues raised will be returned to industry through a reduction in employers' national insurance contributions, most energy- intensive businesses employ relatively few people.

British Steel estimated that in the worst case the levy would cost the company pounds 200-300m, compared with a pounds 5m saving on its national insurance bill.

The industries are also alarmed that the Government plans to impose the tax on companies that meet their energy use targets. This would raise costs at a time when many manufacturers are struggling with the effects of the strong pound and recession in important markets overseas.

Some of their biggest foreign competitors are also unburdened by efforts to meet the international climate change targets. These include China, Brazil, Korea and India.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Adviser - OTE £24,500

£22500 - £24500 per annum: Recruitment Genius: Inbound and outbound calls with...

Recruitment Genius: Business Development Executive / Sales - OTE £40,000

£18000 - £40000 per annum: Recruitment Genius: This fast growing Insurance Bro...

Guru Careers: Research Associate / Asset Management Research Analyst

£40 - 45k (DOE) + Benefits: Guru Careers: A Research Associate / Research Anal...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Day In a Page

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkey's conflict with Kurdish guerrillas in Iraq can benefit Isis in Syria

Turkish President Erdogan could benefit politically from the targeting of the PKK, says Patrick Cockburn
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn or a return to a Labour government

Our choice is years of Tory rule under Corbyn or a return to a Labour government

Yvette Cooper urged Labour members to 'get serious' about the next general election rather than become 'a protest movement'
Singapore's domestic workers routinely exploited and often abused in the service of rich nationals

Singapore's hidden secret of domestic worker abuse

David Cameron was shown the country's shiniest veneer on his tour. What he didn't see was the army of foreign women who are routinely exploited and often abused in the service of rich nationals
Showdown by Shirley Jackson: A previously unpublished short story from the queen of American Gothic

Showdown, by Shirley Jackson

A previously unpublished short story from the queen of American Gothic
10 best DSLRs

Be sharp! 10 best DSLRs

Up your photography game with a versatile, powerful machine
Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash