Climate-change levy 'bad for business'

Some manufacturers could be hit by energy taxes of at least £1m a year despite the Government's softening of its proposals to introduce a climate-change levy, British business claimed yesterday.

The Tories seized on a warning by the Confederation of British Industry that individual vehicle manufacturers will suffer although they have already reduced CO2 emissionsby 25 per cent in the past year.

Gordon Brown, the Chancellor, altered plans to introduce the levy in his last Budget after widespread concern by industry that they could not afford the levy. But the CBI said that present proposals still excluded 40 per cent of the energy used by manufacturing. It would hit companies involved in areas such as motor manufacturing, farming, microelectronics and construction products.

David Heathcoat-Amory, shadow Treasury Chief Secretary, renewed his attacks ondetails of the proposed climate-change levy during the Finance Bill's committee stage, saying it would damage key British businesses competing in tough global markets.

Earlier, Labour backbenchers called for legislation to encourage greater use of renewable sources of energy.

Joan Walley, the MP for Stoke-on-Trent North, introduced her Renewable Energy Bill under which the Government would be required to draw up a strategy for promoting non-convergent renewable energy technologies. Ms Walley, a member of the Commons Environmental Audit Select Committee, said a body - perhaps a Cabinet Office liaison group - was needed to create deadlines and costcutting measures to encourage their development.

Britain had the biggest resource of offshore wind in Europe - technically sufficient for three times the UK's total electricity needs - but was not meeting its potential, she said.