Ministers are under renewed pressure to scrap their controversial green “carbon tax” after delays in European Union state aid left British heavy industry without promised protection from the costs of the levy.
The Government promised that energy-intensive industries would be offered a £100m compensation package to protect them from the unilateral tax, which was introduced last April.
But the compensation has been held up for several months awaiting EU state aid approval, with businesses already facing millions of pounds in costs. Ministers said last October that they expected EU approval “by the summer of 2013”, but last night disclosed the earliest a resolution would come would be the end of this year.
If approval were rejected, it could call the whole tax into question. Industry hopes that the Government may be prompted to review the tax, especially after the Conservatives indicated that they were looking to mitigate rising energy costs in the wake of Ed Miliband’s price freeze pledge.
“We shouldn’t put British industry at a disadvantage against Europe and the US: for our manufacturers this would be assisted suicide,” Michael Fallon, the energy minister, said last week.