Britain's manufacturers are urging government to abandon plans to double the UK's unlilateral carbon tax in the forthcoming Budget amidst fears that it will widen the competitiveness gap between UK and European industrial electricity prices.
According to EEF, the manufacturers’ organisation, if the government continues with its current price trajectory this will double the rate of the 'Carbon Price Support' levied on fossil fuels used for power generation from £4.94 per tonne of CO2 in 2013/14 to around £10 per tonne in 2014/15. Instead, EEF is calling on government to stick to the original estimated price for 2014 of £7.28 per tonne.
A tax on this scale would push industrial electricity prices up a further 6-7% on top of the host of existing policy measures already adding to energy costs. EEF has calculated this could cost the UK economy approximately an extra £300m.
“Currently, the UK is walking into a system whereby higher energy taxes than our competitors are locked in, regardless of the market price of carbon,” said EEF Director of Policy, Steve Radley. “Yet another unilateral increase on this scale, coming at a time when the economy is still in recovery, would only serve to widen further the gap between electricity prices in the UK and those in our competitors in Europe.
“It would also contradict the government’s stance that the UK will go no faster than our partners in Europe and hamper its plans to rebalance the economy. The more government policies push up the cost of operating in the UK, the harder it will be for manufacturers to invest, create jobs and compete in global markets. The Government has the choice and must think again about imposing this unilateral increase.”
EEF is also urging the government to use the Budget to undertake a strategic review of energy and climate change policy reform in the run up to the next Comprehensive Spending Review.
Steve Radley added:
“The current policy landscape remains costly, confusing and complex. Government must grasp the opportunity to undertake unique change which will ensure we meet our environmental challenges at the same time as boosting our manufacturing sector.”
