§ 4. Mr. Nicholas Winterton (Macclesfield)What assessment he has made of the impact of the climate change levy on UK manufacturing industry's competitiveness. [153632]
§ The Minister for Trade (Mr. Richard Caborn)The climate change levy is an environmental protection measure designed to avoid damaging the competitiveness of UK manufacturing. The levy's impact on individual businesses will depend on the extent to which they take advantage of the various levy exemptions, the new scheme of enhanced capital allowances for energy efficiency, the energy efficiency advice and support from the new carbon trust, and whether their sites qualify for a discount from the levy. The hon. Gentleman knows that we are offering an 80 per cent. discount to energy-intensive industries exposed to international competition in return for their commitment to challenging energy- saving targets.
§ Mr. WintertonHas the Minister seen the report published last week by Ernst and Young, which was commissioned by the Engineering Employers Federation? Will he comment on the remarks of Nick Turner of Ernst and Young, who said:
There is no doubt that the climate change levy will penalise a number of manufacturing enterprises in the UK, particularly those that have made considerable improvements to their energy efficiency prior to the introduction of the levy."?Is it not important that we do not have policies that damage the capacity, effectiveness and efficiency of manufacturing?469 Will the Minister comment also on the remarks of Martin Temple, the director-general of the EEF, who said that he believes that the levy is
one of the most badly designed economic instruments in recent times."?Will the Minister reconsider the effect of the climate levy on manufacturing industry?
§ Mr. CabornI think that the hon. Gentleman will agree that the levy is one element of a national climate change programme, which was published in November. Our answers to earlier questions make it clear that we want to approach energy in the most effective way and to stop damage to the environment. The levy is one of the instruments that is being used to address the Kyoto targets, with which I think the entire House agreed. We have made major concessions in discussions with organisations such as the Engineering Employers Federation—I listed some of them in my main answer—and dialogue continues with them. The tax will take effect in April. It must be seen as part of the Government's attack on damage to the environment.
§ Mr. Barry Jones (Alyn and Deeside)Is it not the case that the Government have given many millions of pounds of relief to the British steel industry on the levy? Corus repaid the Government's generosity by giving £700 million back to its shareholders and promulgating 4,000 job losses in Wales, including 400 in Shotton steelworks in my constituency. Bearing in mind the fact that the Shotton steelworkers went, with Corus, to see the Government to ask for the levy on steel to be lessened, my steelworkers think that that is a disgrace.
§ Mr. CabornSome of my right hon. Friend's questions about Corus should be directed at the company itself. However, the climate change levy was not a major factor in the decisions that were made, rightly or wrongly, on the present restructuring. That was clear from the evidence given to the Select Committee on Trade and Industry by the chairman and chief executive of Corus.
§ Mr. David Heathcoat-Amory (Wells)How is it that the Department of Trade and Industry has the professed aim of helping manufacturing industry and improving competitiveness—that appears in its so-called mission statement—but in reality is so weak and ineffective that it allows the Treasury to impose a new energy tax, which will come into effect in less than two weeks, at a time when energy prices for industry are already rising fast? Will the Minister confirm that the new tax will be particularly damaging for manufacturing industry, which has already lost more than 350,000 jobs since the general election, and that it is an unwelcome additional burden on the steel industry, which is already suffering severe job losses? The damage caused by the new energy tax has been confirmed by the chairman of Corus.
Will the Minister also confirm that the tax is an extremely clumsy and inefficient way of tackling climate change, which could be dealt with much better by other means, such as emissions permit trading, and that the tax has been condemned by business groups, all of which have declared that it is ridiculously complicated and an additional stealth tax? Above all, will the DTI start to 470 stand up for the interests of British business instead of constantly being ignored and overridden by the tax-raising ambitions of the Treasury and the Chancellor of the Exchequer?
§ Mr. CabornI repeat what the chairman and chief executive of Corus said: the climate change levy was not a major consideration in the company's decision to restructure, as has been said at the Dispatch Box before.
The levy is part of the Government's attack on the question of damage to the environment, and of our responsibilities as a Government. The DTI has been extremely active on behalf of British industry, including manufacturing, in our discussions and dialogue with the Treasury. Because representations were made, and strongly supported by the DTI, we have a package of measures to address the concerns raised by manufacturers when we first started discussions on the climate change programme last November. We are now coming to a consensus, and when the levy starts to operate on 1 April, we shall be able to reflect and see that it is a sensible move for all the population.