TaxPayers' Alliance attacks carbon floor price as industrial masochism

November 18, 2011 9:03 AM

Click here to read the full report


Click here for the complete press release


TaxPayers' Alliance says carbon floor price will:

  • Increase total global greenhouse gas emissions

  • Threaten tens of thousands of jobs as activity contracts in the UK

  • Raise significantly less tax revenue than expected as major firms move energy intensive industry abroad


New research by the TaxPayers' Alliance (TPA) finds that, as well as increasing domestic energy prices, the carbon floor price threatens energy intensive industries whose costs will rise in Britain while their competitors' costs in the rest of Europe fall, and tens of thousands of jobs are at stake. Some companies have made it clear that the rise in costs threatens billions in new investment, or even the ability to keep major plants open.

Click here to read the full report


Click here for the complete press release


The policy could devastate British industry by undermining competitiveness:

  • For some major industries – such as steel or chlor-alkali – energy represents between a quarter and well over half of total costs. Any substantial increase in those costs, particularly compared to our key industrial competitors, will make it impossible for them to compete in the UK.

  • The largest energy consumers already pay up to 10 to 25 per cent more than in Germany, and 60 to 75 per cent more than in France. The carbon floor price alone will add another 10 per cent to their energy costs by 2020, while reducing costs for their competitors. The burden is exacerbated as the carbon price floor has not been accompanied by a ceiling, which means industry still faces the possibility of damaging price spikes.


That will have a number of consequences:

  • The carbon floor price will increase total global emissions as emissions are exported to other countries where production is less efficient, and it does not cut the overall cap on European emissions.

  • Jobs will be threatened. For example, Tata Steel employs around 20,000 people. Three to four times as many jobs may be at stake with suppliers and contractors. And should that activity contract there would undoubtedly also be job losses in the wider economy. Overall employment in energy intensive industries has been estimated at 225,000.

  • Revenue from the new tax could be offset by reductions in revenue if major firms in energy intensive industries contract their activities in the UK. For example, INEOS report that they pay £600 million a year in VAT and £70 million a year in PAYE and NICs. Tata Steel report they pay £280 million a year in PAYE and NICs.


Matthew Sinclair, Director of the TaxPayers' Alliance, said:

"Putting in place a carbon floor price that threatens major, successful British industries with huge rises in their costs is absolute madness at a time when we need the economy growing, and business bringing investment and jobs here.  Particularly when it will mean workers in Britain bear more of the burden, but overall global emissions are higher than they would have been without our politicians making such an expensive mistake.  The Government should scrap the new tax, or at least ensure that energy intensive industries aren't disadvantaged competing with rivals around the world.  George Osborne needs to abandon this industrial masochism."

Click here to read the full report


Click here for the complete press release


TaxPayers' Alliance says carbon floor price will:

  • Increase total global greenhouse gas emissions

  • Threaten tens of thousands of jobs as activity contracts in the UK

  • Raise significantly less tax revenue than expected as major firms move energy intensive industry abroad


New research by the TaxPayers' Alliance (TPA) finds that, as well as increasing domestic energy prices, the carbon floor price threatens energy intensive industries whose costs will rise in Britain while their competitors' costs in the rest of Europe fall, and tens of thousands of jobs are at stake. Some companies have made it clear that the rise in costs threatens billions in new investment, or even the ability to keep major plants open.

Click here to read the full report


Click here for the complete press release


The policy could devastate British industry by undermining competitiveness:

  • For some major industries – such as steel or chlor-alkali – energy represents between a quarter and well over half of total costs. Any substantial increase in those costs, particularly compared to our key industrial competitors, will make it impossible for them to compete in the UK.

  • The largest energy consumers already pay up to 10 to 25 per cent more than in Germany, and 60 to 75 per cent more than in France. The carbon floor price alone will add another 10 per cent to their energy costs by 2020, while reducing costs for their competitors. The burden is exacerbated as the carbon price floor has not been accompanied by a ceiling, which means industry still faces the possibility of damaging price spikes.


That will have a number of consequences:

  • The carbon floor price will increase total global emissions as emissions are exported to other countries where production is less efficient, and it does not cut the overall cap on European emissions.

  • Jobs will be threatened. For example, Tata Steel employs around 20,000 people. Three to four times as many jobs may be at stake with suppliers and contractors. And should that activity contract there would undoubtedly also be job losses in the wider economy. Overall employment in energy intensive industries has been estimated at 225,000.

  • Revenue from the new tax could be offset by reductions in revenue if major firms in energy intensive industries contract their activities in the UK. For example, INEOS report that they pay £600 million a year in VAT and £70 million a year in PAYE and NICs. Tata Steel report they pay £280 million a year in PAYE and NICs.


Matthew Sinclair, Director of the TaxPayers' Alliance, said:

"Putting in place a carbon floor price that threatens major, successful British industries with huge rises in their costs is absolute madness at a time when we need the economy growing, and business bringing investment and jobs here.  Particularly when it will mean workers in Britain bear more of the burden, but overall global emissions are higher than they would have been without our politicians making such an expensive mistake.  The Government should scrap the new tax, or at least ensure that energy intensive industries aren't disadvantaged competing with rivals around the world.  George Osborne needs to abandon this industrial masochism."

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