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HM Treasury News Release
183/99
3 November 1999
CLIMATE CHANGE LEVY
STEPHEN TIMMS TALKS TO UNIONS
Financial Secretary Stephen Timms met union representatives today
to discuss the introduction of the climate change levy.
Attending a meeting hosted by the Trade and Industry Secretary,
Stephen Byers, the Financial Secretary welcomed the opportunity to
hear at first hand the views of the union representatives, and added:
"The development of the climate change levy has been characterized
by extensive consultation between the Government and all interested
parties.
"Today's meeting offered me a valuable opportunity to discuss the
levy in person with union representatives and I am heartened by the
commitment shown by the whole of the business community in responding
positively to the issue of climate change. All the views expressed
both today and through previous representations will feed into our
decisions on the design of the levy."
Representatives from the following union organizations were present:
the GMB; the Amalgamated Engineering and Electrical Union; the Iron
and Steel Trades Confederation; the Graphical, Paper and Media Union;
the Transport and General Workers Union; and the TUC.
NOTES FOR EDITORS
- The climate change levy on the business use of energy was first
announced by the Chancellor in the March 1999 Budget and its design
follows closely the recommendations made by Lord Marshall in his
report, "Economic instruments and the business use of taxation".
In line with Lord Marshall's recommendations, the levy will be revenue
neutral for business as a whole, with the proceeds raised being
recycled to business principally via a cut in employers' National
Insurance Contributions.
- The climate change levy will form a significant part of the Government's
draft UK climate change strategy to reduce greenhouse gas emissions
by creating a step change in the approach to energy management across
business as a whole. Under the Kyoto Protocol the UK is legally
bound to reduce emissions of six greenhouse gases by 12.5% from
1990 levels in the period 2008-2012. The Government also has a domestic
goal of reducing carbon dioxide emissions by 20% from 1990 levels
by 2010.
- The Government's Statement of Intent on environmental taxation
committed the Government to explore the use of the tax system to
meet environmental objectives. The Government's believes that there
is a role for a tax, alongside other economic instruments, in combatting
the problem of climate change and in reducing greenhouse gas emissions.
- The illustrative rates published at the time of the 1999 Budget
indicated that the levy would raise around £1.75 billion per
year, with around £1.7 billion being recycled through a 0.5
per cent cut in employers' NICs and £50 million set aside to
promote energy efficiency measures and the development of renewals.
- The Government recognises the case for special treatment of energy
intensive sectors, such as the steel and chemical industries, in
view of their energy usage, the requirements of the separate Integrated
Pollution Prevention and Control regulation and their exposure to
international competition. The Government therefore intends to set
significantly lower rates of the levy for those energy intensive
sectors which are prepared to sign agreements to improve their energy
efficiency or carbon emissions. The Department of the Environment
Transport and the Regions is conducting discussions on sectoral
agreements with a number of trade associations.
- Further announcements on the design of the levy are expected in
the Chancellor's Pre Budget Report on 9 November, and legislation
for the levy will be included in the Finance Bill 2000. The levy
itself will be introduced in April 2001.
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