Climate Change Levy (Hansard, 16 May 2000)

§ Mr. Nicholas Winterton
To ask the Chancellor of the Exchequer how he intends to ensure that the climate change levy is revenue neutral in the long term for those industries and individual companies to which it is to be applied; and if he will make a statement. [122126]

§ Mr. Timms
As the Chancellor stated when the climate change levy was first proposed, the levy package is designed to be revenue neutral for the private sector. Moreover, the levy package is expected to be broadly neutral between services and manufacturing, in that the Government expect manufacturing and services each to pay broadly as much in the levy as they get back via the 0.3 per cent. NICs reduction and the additional support for energy efficiency measures. The Government do not intend to make the levy revenue neutral for each firm or sector, however. As Lord Marshall stated in his report "Economic Instruments and the Business Use of Energy", the design of the levy should ensuresome incentive for all users to save energy at the margin.
As with excise duties, the Government expect that the rates of the levy will keep pace with inflation over time. The value of the NIC reductions to business is also expected to increase over time.

§ Mr. Nicholas Winterton
To ask the Chancellor of the Exchequer what plans he has to make an early announcement of financial incentives for the emissions trading scheme for firms taking on binding emissions targets as part of the climate change levy; and if he will make a statement. [122125]

§ Mr. Timms
Emissions trading will provide a flexible way in which sectors involved in negotiated agreements as part of the climate change levy can meet their individual energy efficiency targets.
In addition, the Government are working closely with the business-led UK Emissions Trading Group (ETG) on the development of a wider emissions trading scheme, and have said that they see merit in the case put forward by the ETG that some form of financial incentive will be required for companies to take on binding emission targets that generate additional emission reductions. Issues being addressed include the links between the wider trading scheme and the negotiated agreements; and the form a financial incentive might take. Further announcements will depend on the progress the ETG and the Government can make in dealing with these outstanding issues.