UK opposition pledges to abolish energy tax

Conservative party ups the pressure, calls for more gas power production, emissions permit trading

The UK's principal opposition party today pledged to abolish a major planned industrial energy tax if it wins the next election. The "climate change levy" would harm British firms without efficiently limiting carbon dioxide emissions, said "shadow" finance minister Michael Portillo.

Mr Portillo said that the tax could cost up to 156,000 jobs in manufacturing over ten years and claimed that any loss of business to countries with lower environmental standards would lead to increased overall environmental damage. It would be better to end restrictions on building new gas-fired power stations and to introduce "US-style" emissions permit trading, he maintained.

The centrepiece of a "pro-industry" policy statement alleging massive increases in business costs under the current government, the promise in fact failed to win support from the Confederation of British Industry, today, which said it was not calling for the levy's abolition. Pressure group Friends of the Earth described Mr Portillo's statement as a "dangerous and ill-informed U-turn on the environment" that would "blow a huge hole" in UK efforts to reduce greenhouse gas emissions.

First announced in March 1999 and due to take effect from next April, the climate change levy has been heavily criticised by industry and amended several times to reduce costs and increase flexibility. Last November, the government cut proposed tax rates on coal, gas and electricity and said energy-intensive industries could benefit from large discounts if they signed voluntary emissions reductions targets (ENDS Daily 9 November 1999). Talks are now underway to finalise details of voluntary agreements with up to 30 business sectors. These are due to be completed by 1 November.

Follow Up:
UK Conservative party, tel: +44 20 72 22 90 00; Confederation of British Industry, tel: +44 20 73 95 82 47; Friends of the Earth England Wales & {Northern Ireland}, tel: +44 20 74 90 15 55.

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