Archived press release

Chancellor urged not to cave in on climate levy

24 September 2001

Friends of the Earth today urged Chancellor Gordon Brown to resist calls by industry for the Climate Change Levy to be watered down. The call follows the latest attack on the levy by the Enginering Employers' Federation (EEF) today. The EEF says that the levy “is imposing an ever greater burden on manufacturing at a time when it is already in recession”.

The Climate Change Levy is an integral part of the UK's strategy to meet both its Kyoto climate treaty obligations, and its domestic target of cutting carbon dioxide emissions by 20% by 2010. The levy alone is expected to cut emissions by 2.5 million tonnes of carbon a year. The overall UK emission savings target is 32 million tonnes per annum.

The levy is already a business-friendly package. There are 100% exemptions for electricity from renewables and money-saving combined heat and power plants and further tax breaks for investments in energy efficiency technologies. All the money raised goes back to industry through reductions in employers' national insurance or grants from the Carbon Trust. Industry associations like the EEF should focus on helping their members exploit these opportunities to cut CO2 emissions and prepare for the low-carbon economy the Government aims to develop.

The Chancellor should not cut the Climate Change Levy because:

• It would undermine the UK's contribution to tackling climate change. Climate change is one of the biggest threats to the planet. Scientists predict rising sea levels, disastorous floods and severe and unpredictable weather conditions. Earlier today Deputy Prime Minister John Prescott warned that the situation was “getting considerably worse, and the consequences of that is the cost of billions [of pounds] round the world and a considerable cost to Britain also.''

• It would be damaging to the long-term health of British industry. Companies would inevitably lose money in the medium term as they scale back investments in energy efficiency.Investments in the clean renewable technologies that Britain needs to be competitive in the 21st century would also be cut.

• It would set an appalling precedent: whenever times look tough, we compromise on environmental principles, making it even more costly for businesses to change at a later date.

Roger Higman, senior climate campaigner at Friends of the Earth said:
“Energy-intensive industry has made it perfectly clear from the very start that they don't like the climate change levy. This is because they don't want to pay for polluting the planet. Now they are using the recession to call for the levy to be neutered. The Chancellor must resist these calls, and show that the Government will not allow our environmental goals to be undermined. The best way for companies to pay less under the climate change levy is to produce less pollution.”

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Published by Friends of the Earth Trust