BUSINESS leaders’ group the CBI has called for a change in Government policy over the impending introduction of the carbon floor price tax, which is threatening the future of major North East employers such as Alcan in Northumberland.
The CBI says Government needs to ensure the competitiveness of the most energy-intensive manufacturers is not undermined by rising costs and climate change and energy policies.
In a new report Protecting the UK’s essentials: a blueprint for energy-intensive industries, the group argues that these companies form a crucial part of the manufacturing and supply chain and will play a key role in tackling climate change.
Energy-intensive companies also employ 225,000 people in the UK and account for £15bn or 1% gross domestic product.
But the carbon floor price is making it increasingly uncompetitive for the most energy-intensive users to remain in the UK, and the CBI is calling on the Government to consider exempting these firms from the tax.
At Alcan in Northumberland, which employs 650 people, the introduction of the carbon floor price is slated to add £40m to its annual costs.
As a result of this and other carbon emissions’ legislation Northumberland’s largest private employer fears its annual profits will be wiped out and a review is currently under way by parent company Rio Tinto into the future viability of the plant.
Katja Hall, CBI chief policy director, said: “The Government is in serious danger of throwing out the baby with the bath water if it continues to pile new costs onto industries that are responsible for hundreds of thousands of jobs and bring in £15bn to the UK economy every year.
“The Government must ensure it looks at ways of exempting companies most at risk from the carbon floor price, while encouraging them to be as energy efficient as possible.” She added that unless the Government acts swiftly, there was a risk these companies would leave the UK.
The CBI welcomed the Government’s recent impact assessment on its energy and climate change policies but argued it should go further.
The CBI’s proposals to ensure that energy-intensive industries can compete globally include an exemption for those energy intensive industries most at risk from the carbon floor price and using EU state aid to create a level playing field so all member states are able to protect the competitiveness of their energy intensive industries equally.