§ 4. Mr. David Amess (Southend, West)
What representations she has received from business about the impact of the climate change levy on UK competitiveness. 
§ The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander)
The Department has received a number of representations from business about the climate change levy, including its impact on UK competitiveness. The levy has been introduced to help the UK deliver its commitments to reduce emissions of greenhouse gases, while safeguarding UK business competitiveness.
§ Mr. Amess
I welcome the Minister to the Dispatch Box—and I now realise how old I must be getting—but can he justify placing that extra tax on manufacturing companies throughout the UK, especially when small businesses involved in manufacturing have been brought to their knees as a result of the policies of this rotten Government? Finally, will the Minister justify how those poor hard-working companies will be able to pay the extra £30 million in VAT on top of their existing liabilities?
§ Mr. Alexander
I thank the hon. Gentleman for the characteristic grace and generosity of his introductory remarks.
The competitiveness of UK business extends beyond the climate change levy. We have established a platform of stability in this country, with low inflation and interest rates, and we have offered incentives to the manufacturing community. On the specific issue of the climate change levy, I merely make the following points: all the revenues are recycled via reduced national insurance contributions and energy support for business; there is an 80 per cent. discount for energy-intensive sectors that deliver energy savings in negotiated agreements with the Government and modern manufacturing competitiveness requires not only labour productivity, but resource productivity.
§ Mrs. Jackie Lawrence (Preseli Pembrokeshire)
The Minister will be aware that the report of the United Nations Intergovernmental Panel on Climate Change, which has been published today, shows that global warming is increasing at double the rate that the panel predicted five years ago, with the result of failing crops throughout the world and possibly a loss of a quarter of food supplies in the poorest countries. Does he agree that the issue is not the climate change levy and its impact, but the impact of inaction on humanity in the future?
§ Mr. Alexander
I thank my hon. Friend for that very timely question. The latest work of the Intergovernmental Panel on Climate Change confirms the very worrying trend, and the consequences for the world if we do not tackle the problem of climate change. That reinforces the Government's determination to take action on climate change. It is noteworthy that although the Conservative party was willing to countenance international agreements when it was in government, it seems to have lost that resolve in opposition.
§ Mr. Michael Jack (Fylde)
is the Minister aware of the impact of the climate change levy on investment in 915 fuel-efficient combined he at and power systems? This week I received a representation from British Sugar, advising me that its investment in combined heat and power was under threat not just from the application of the levy, but from the operation of the new electricity trading arrangements—as the Minister will learn if he can find the appropriate spot in his briefing notes. Will he give me an undertaking for British Sugar that he will carefully consider that matter and review whether, if he wants energy efficiency, turning off investment in combined heat and power is the best way to achieve it?
§ Mr. Alexander
The position of individual businesses, including the one that the right hon. Gentleman mentions, will depend on the extent to which they take advantage of the various levy exemptions, the new capital allowances for energy efficiency investments, the energy support and the advice on the new carbon tax. If he wishes to write directly to me about the company that he mentioned, I shall, of course, ensure that the matter is dealt with.
§ Paddy Tipping (Sherwood)
Will the Minister consider British Sugar's representations? He will know that bringing new environmentally friendly combined heat and power systems on stream is a Government policy objective, and the present arrangements for the climate change levy on energy exports to the local network are causing very real problems.
§ Mr. Alan Duncan (Rutland and Melton)
I, too, welcome the hon. Gentleman to his position as Minister. It gives me especial pleasure, as I think that I top him by about a quarter of an inch—[Laughter]—at most.
The climate change levy was introduced in April. As the Minister well knows, manufacturing costs rose sharply in May and output fell more sharply than at any time for a decade. Does he accept that, as a matter principle, a tax should not be levied just when the sector that it hits hardest is having the hardest time? What possible justification can he give for adding to the hardship of manufacturers? How can he say today that the tax will improve the sector's competitiveness?
§ Mr. Alexander
I thank the hon. Gentleman for his characteristic generosity concerning my arrival at the Dispatch Box—matched only by his initial comments on my appointment to the Department of Trade and Industry.
On the hon. Gentleman's substantive point, the Government have indeed worked in partnership with business to consider a range of measures, and significant changes have been made to the climate change levy since it was first introduced. That reflects the DTI's sponsorship work. We need to ensure that British businesses get ahead of the curve by improving the productivity not only of the labour in those companies, but of the resources that they use. Countries and companies throughout the Organisation for Economic Co-operation and Development are introducing similar measures and our challenge is to ensure that we lead on an agenda of manufacturing productivity. The climate change levy makes an important contribution to that as well as to our environmental objectives.