The government's 'flawed' climate change levy is materially damaging industry, according to a report sponsored by the country's two biggest employers' organisations. It has caused job losses among over half of the UK's manufacturers and forced some companies to consider moving production abroad.
The study, published by the Confederation of British Industry and the Engineering Employers' Federation, calculates that manufacturing costs rose by £143 million in the 12 months following introduction of the tax in April 2001. According to the survey, 18 of the 532 companies taking part have moved some production abroad or are planning to do so.
The levy was designed to improve industry's energy efficiency, with revenues mainly returned to business through cuts in national insurance contributions. The report says that the tax has penalised high energy using manufacturers with small workforces, while service sector companies with larger workforces and typically lower energy use are the main beneficiaries.
Utilities had also seen a net increase in their costs. British Energy was quoted as saying that exclusion from the climate charge levy would save it about £80 million a year.
John Healey, economic secretary to the Treasury, commented: "The CBI has missed the point. The climate change levy ... is shifting the tax burden from businesses which use clean forms of energy and are energy efficient, to companies which use more, and less clean, energy."
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