Could the climate change from anger to acceptance?
11 Apr 2001
It's been a long time coming, but most companies affected will by now know that the Climate Change Levy has arrived.
From 1 April many of those companies' electricity and gas bills will be showing an increase of between 10 and 15 per cent, as the government's initiative to encourage energy efficiency in industry comes into play.
Despite the government's assertion that the CCL will be 'fiscally neutral', with reductions in National Insurance contributions offsetting the £1billion a year the levy will raise, the thumping of bigger bills on corporate doormats at the end of the month will no doubt lead to an outpouring of anger from those who, perhaps, should really have known what was in store for them.
After all, it's not as though the CCL has been slipped in through the backdoor. A quick search just on this website flags up nearly 80 references since the initiative was announced in last year's Budget, and we reported on this page only two months ago the views of the Combined Heat & Power Association on the subject of exemptions from the levy.
Apart from those companies to whom the very mention of CCL on their forthcoming bills might be the first they have heard of the tax - and apocryphal evidence suggests that there are a surprising number in that category - the main bone of contention remains this vexed area of exemptions and discounts.
Energy-intensive industries have lobbied long and hard for relief from the levy, but only installations covered by the Integrated Pollution Prevention and Control regulations are eligible for the up to 80 per cent discounts granted in return for industry commitments to reduce significantly CO2 emissions.
But even many companies eligible for these discounts could find themselves losing out. This is simply because many energy-intensive industries tend not to be particularly labour-intensive - thereby negating the beneficial effects of the National Insurance rebates at a stroke.
However, the government had another ace up its sleeve to counter the complaints about the fairness of the CCL. Unveiled in detail last month, this is the Enhanced Capital Allowance scheme, operated by the Treasury and the Department of the Environment, Transport and Regions.
Basically, this grants 100 per cent corporation tax relief against the capital cost of installing approved energy-efficient technologies. The fact that this approved list appeared only three days before the starting date of the CCL has, of course, not done anything to appease opponents of the levy. But it's available now (on www.eca.gov.uk) and, if nothing else, should give a sizeable boost to at least part of the manufacturing sector.
Manufacturers of equipment as varied as pipe insulation materials, CHP systems, and variable speed motor drives now find themselves on effectively a buyers' guide to money-saving equipment. And who knows, once the initial - and, in some cases, righteous - anger dissipates, many companies might be pleasantly surprised to discover that environmental measures need not be a burden on the economy.
