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‘Absurd’ Green Targets Threaten To Drive Business Abroad

George Osborne is preparing to offer tax breaks to firms hit by Britain’s ‘absurd’ climate change policies after being warned they threaten to drive business abroad. In a major U-turn, the Chancellor will try to help companies that use large amounts of energy.

His move comes amid growing concern that companies and households are being hit heavily by Britain’s commitment to cut carbon emissions faster than other countries.

Yesterday one of the world’s leading industrialists said manufacturing was being ‘ruinously penalised’ by green taxes and said the levies could put his firm’s £1.2billion investment programme in this country at risk.

Karl-Ulrich Kohler, head of Tata Steel Europe – which employs 20,000 staff in Britain – told the Daily Mail: ‘Why the UK government wants to go further and be the leader in Europe in this field is difficult for me to understand.

It’s a race for the leadership that is simply over the top.

‘The UK is one of the weaker industrial players in Europe. Why are we trying to be a leader on the green front when the economy is in such a hard place?’

He added: ‘If the UK becomes less attractive due to regulation and tax, then there are other places in the world to invest. The Government must see that.’

Mr Osborne’s plans are sure to set him on collision course with his Liberal Democrat coalition colleagues.

Last night Whitehall sources told the Mail the Chancellor is working on radical proposals to mitigate the effects on companies that use large amounts of energy, such as cement, aluminium and steel makers.

Tax breaks and exemptions from new carbon levies are expected to be included in a mini-Budget due next month.

A source close to Mr Osborne said: ‘We recognise that a decade of environmental laws and regulations have piled costs on the energy bills of energy intensive business.

‘As well as increasing the climate change levy discount on electricity and reducing corporation tax, he will be announcing a package of measures to help energy intensive industries remain competitive in due course.

‘There’s no point forcing energy intensive industries to relocate to other countries – that would only harm our economy without reducing global carbon emissions.’

Last year David Cameron said he wanted the Coalition to be known as the ‘greenest government ever’. And Mr Osborne alarmed industry when he announced a ‘carbon floor price’ in his Budget last March – essentially a tax on emissions that will raise £3.2billion by 2016.

Former Conservative Chancellor Lord Lawson, a leading climate change sceptic, said tax breaks for the hardest-hit industries were a good ‘first step’.

‘There’s no point forcing energy intensive industries to relocate to other countries – that would only harm our economy without reducing global carbon emissions.’

The current policies are endangering the economy at a particularly difficult time,’ he said. ‘I hope the Chancellor will as soon as possible spell out exactly what he proposes to do to prevent this.

‘The real need is not to have these absurd commitments and then have to run around bribing vulnerable businesses at taxpayers’ expense so as to prevent them from closing down or leaving the country – it is to amend the [emissions] targets.

‘We must make it quite clear that we are not going there if the rest of the world isn’t.’ Under Labour’s Climate Change Act, the Government is legally bound to cut emissions 35 per cent by 2022 and 50 per cent by 2025.

But the EU is committed only to cutting emissions 20 per cent by 2020.

Several countries are rejecting calls for them to increase the target to 30 per cent.

Tory MP David Davis, a former leadership contender, said: ‘George Osborne must stand his ground against the Lib Dems on this issue.

‘There is absolutely no point in having such draconian environmental policies that heavy energy-using industries like steel and chemicals up sticks and go and create just as much pollution in India and China, but to our economic disadvantage. It is simply not a rational policy.’

Energy Secretary Chris Huhne said it was vital for Britain to reduce its dependence on oil and gas imports from ‘volatile’ parts of the world.

He said volatility in fossil fuel prices was primarily responsible for pushing up household bills.

…and how the climate change ‘obsession’ drives up your bills

Ministers’ obsession with green taxes is driving up energy bills, bringing financial pain to millions of families, it was claimed last night.

Business groups demanded cuts in fuel prices be given a higher priority than meeting EU targets to reduce carbon emissions.

But the Government energy summit yesterday offered no hope that struggling families and businesses will be offered lower energy bills this winter.

Both Energy Secretary Chris Huhne and British Gas managing director Phil Bentley admitted that price rises were here to stay.

The ‘big six’ energy giants have increased tariffs by 15 per cent-plus in recent weeks, raising the average annual dual fuel bill by around £175 to £1,345.

This figure is inflated by around £100 to cover a raft of green taxes and associated charges, which are set to soar in the next decade. Mr Huhne is the chief cheerleader for the charges, which are being used to fund a £200billion shift to wind, wave, solar and nuclear power.

Yesterday he insisted that prices in Britain were ‘relatively good’ compared with elsewhere in the world but admitted: ‘If you are asking me to predict what is going to happen to world fossil fuel prices then the Government’s prediction… is that in the medium-run those prices are going to go up. The companies are not the Salvation Army. We expect them to earn respectable returns for their shareholders.’

Mr Bentley added: ‘In the last two and a half years, gas prices on the international market are up by 70 per cent. I’m afraid it is an inconvenient truth that those costs have to be passed on to customers.’

‘Undermining the UK’s competitiveness through high energy costs would do no favours to either economic recovery or the environment.’

Mr Huhne said customers should shop around as up to 85 per cent ‘don’t bother’ to look for a better deal. He said: ‘This is not small beer. If you look at the figures on an average dual fuel bill of about £1,300, by switching you can get £200 off.’

But yesterday Simon Walker, the new director general of the Institute of Directors, said it was ‘simply not credible’ for the Government politely to ask energy firms to curb bills.

He warned that the current push for green energy is driving up bills, saying: ‘Current policies risk locking us into cleaner and more expensive energy, when the goal should be cleaner and cheaper energy.

‘What may have been tolerable in an age of affluence is far less realistic today. Undermining the UK’s competitiveness through high energy costs would do no favours to either economic recovery or the environment.’

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