The Government has failed to offer big industrial users a reduced rate of energy tax – which could cost UK heavy industry more than £500m a year.
The Department of Environment, Transport and the Regions is leading negotiations with the large users on a reduced rate, but senior officials told industry representatives recently that it was up to the Treasury to offer a reduced figure.
Don McGarrigle, chairman of the electricity group on the Major Energy Users’ Council, said this had lead to confusion throughout the industry.
By contrast, German heavy industrial users have been told they will pay just 20% of the standard rate.
The CBI warned last week that the measure as it stood would damage the UK’s struggling manufacturing sector.
CBI director-general Adair Turner said the tax `must be designed to ensure that manufacturing competitiveness is not harmed’.
A recent study of heavy industry by private-sector environmental consultancy Etsu was supposed to identify realistic energy savings and provide a basis for a reduced tax rate. However, the big users have little confidence in Etsu’s findings.
`Some of the points it has made are really yards away from reality,’ McGarrigle said.
He cited an example from the cement industry, where Etsu had suggested big energy savings could be made from switching from wet to dry production processes. McGarrigle said this proposal ignored the fact that all the big manufacturers had made this change years ago.
* Environment minister Michael Meacher has announced that the Government is working with business and other interested parties to develop a domestic system in the UK of tradeable permits for emissions of greenhouse gases, such as carbon dioxide.
While international trading of emissions between countries – as a supplementary move to domestic action – is a key element of the 1997 Kyoto accord on climate change, Meacher said domestic trading would also make a valuable contribution.