HC Deb 15 February 2001 vol 363 cc439-41
3. Mr. Tim Loughton (East Worthing and Shoreham)

What recent discussions he has held with the steel industry about the effects of the climate change levy. [149002]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

My ministerial colleagues and I have held regular discussions with the steel industry about the effects of the climate change levy.

Mr. Loughton

It sounds as though Ministers have not listened. How does the Secretary of State think that he is helping to combat global warming—let alone supporting British manufacturing industry—by his insistence on imposing an additional £10 million energy tax burden on the UK steel industry, which is already under great pressure, even though it is one of the most efficient in the world and has halved its carbon dioxide emissions since 1970? The loss of capacity in the UK will be taken up by our European competitors, many of which exempt their steel industries from energy tax altogether; or, worse still, will go to countries that now account for more than 40 per cent. of world production and are not covered by Kyoto emissions targets and where control of harmful emissions is a low priority?

Mr. Byers

The hon. Gentleman is right to point out that a balance needs to be struck between the desire for environmental protection and ensuring that, in achieving that objective, we do not affect the competitive position of British business. If the hon. Gentleman studies the evidence given by the chairman of Corns to the Select Committee on Trade and Industry yesterday, he will see that for Corns—the major steel producer in the United Kingdom—the climate change levy has had, or will have, very little impact.

Mr. Martin O'Neill (Ochil)

Is my right hon. Friend aware that about £8 million of the £10 million to which the hon. Member for East Worthing and Shoreham (Mr. Loughton) referred is accounted for by Corns? The rest of the British steel industry accounts for the remaining £2 million. When the CCL was first mooted, the figure was to have been more than £120 million. As a consequence of neliptiation with my right hon. Friend's officials, it was reduced to about £8 million. The last thing on which Corns can blame the redundancies is the impact of the CCL.

Mr. Byers

My hon. Friend makes an important point; £8 million of the amount relates to Corns. The company has pointed out that an issue of the greatest concern is that, if the exchange rate between the pound and the deutschmark changes by just one pfennig, it is the equivalent of an £8 million difference. That is why we need currency stability in the UK—one of the benefits that we would receive from joining a successful single European currency.

Mr. Patrick McLoughlin (West Derbyshire)

Does the Secretary of State believe that he is making a contribution to British industry by levying a charge on it? A company in my constituency will see the price of its gas rise next year from £300,000 to £600,000—its third largest cost after materials and salaries. Does the right hon. Gentleman think that the Government need to tell that company to try to reduce its energy costs?

Mr. Byers

Manufacturing industries, in particular, welcome the economic stability that the Government have created. Inflation is now 1.8 per cent. and interest rates were reduced last week. We now have the lowest long-term interest rate for some 35 years. That is the economic stability that manufacturing industry craves. If the hon. Gentleman looks at the gas and electricity figures, he will see that over the past few years the price of gas has gone up in real terms by 4 per cent. for industrial users, but that that has been more than compensated by reductions in electricity prices.

Mr. Eric Illsley (Barnsley, Central)

Will my right hon. Friend consider an aspect of the steel industry—the foundry industry? Although not on are same scale as the major steel producers, foundries suffer from the climate change levy, and throughout the country they are working to very tight margins. Has he had any discussions with representatives of that industry? W al he consider its predicament?

Mr. Byers

My hon. Friend makes an important point about specific issues affecting the foundry sector, and we have been carefully considering the support that we can give it. The exemption arrangements that we are putting in place give due regard to the position of the foundry sector of the steel industry.

Mr. David Heathcoat-Amory (Wells)

In the Secretary of State's statement on the 6,000 steel industry job losses at Corus earlier this month, he explicitly denied that the climate change levy was a factor. Is he aware that, on the very same day, the chairman of Corns said: Direct and indirect taxes on business such as … rising energy costs and the climate change levy have all eroded our competitiveness."? That is a direct quote from the management. Is the right hon. Gentleman so out of touch with manufacturing industry that he does not know that damage is already being caused by that £1 billion extra tax, or does he know that damage is being caused but is too weak to stand up to the Treasury and simply denies it? Which is it?

Mr. Byers

The right hon. Gentleman clearly did not follow the evidence that the chairman, Sir Brian Moffat, gave to the Select Committee yesterday, when he was quizzed very carefully on exactly those issues. I trust the evidence that the chairman of Corns gave to the Select Committee. He made it very clear that the climate change levy was not an issue for Corns. That is on the record; it is exactly what he said yesterday before the Select Committee. I much prefer to rely on evidence given to a Select Committee than on any quote in a national newspaper.