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UK Manufacturers Want £470M Subsidies To Survive Green Energy Taxes

Manufacturers are lobbying for more than £470m in compensation from the taxpayer for having to swallow four green levies by the end of the decade.

They argue that the taxes will make them uncompetitive compared with foreign companies, as electricity prices rise by anywhere between 7pc and 58pc.

Ministers have already agreed to provide some relief for industries that use a large amount of electricity and they are currently in negotiations with the companies affected.

If the Government were to give in to the manufacturers’ demands, a greater burden of paying for new nuclear and wind farms would fall on the taxpayer.

The EEF, a manufacturing group, wants “direct compensation” for the £1.2bn per year by 2020 that its members will be paying under the “carbon floor price”. This levy will artificially raise the amount of tax paid on each tonne of carbon dioxide emitted above the market price.

The group is asking for compensation to prop up the iron, aluminium and steel industries to the tune of £27m per year from 2013 onwards – equating to £189m by the end of the decade .

The EEF also wants £40m per year for compensation for Climate Change Levy from 2013 – equating to £280m by the end of the decade.

In addition, it is asking for sectors that use a large amount of electricity to be exempted from paying “feed-in tariffs”, which are subsidies for low-carbon producers of power fixing the price at a level higher than the market price. There is no estimation of how much this would cost.

Steve Radley, EEF director of policy, said: “UK industry was already facing energy bills which made them uncompetitive before the substantial additional burden of the unilateral carbon price floor.

“We have now reached a tipping point where the cumulative burden of UK climate change policy will make it uncompetitive for some sectors to invest and create jobs in the UK.”

The Daily Telegraph, 3 August 2011