Harry Cockburn: Why is the government letting heavy industry escape green levies?

Manufacturing is recovering in Britain, but our energy problems are mounting

Harry Cockburn is business reporter at LondonlovesBusiness.com. Follow him @LondonlovesBiz and @Harry_Cockburn

The UK government has announced that it will cut the amount of tax which heavy industries contribute in green levies as part of their energy bills. Why? Because these powerful firms are putting pressure on the government to do something to help them survive a squeeze on their finances due to spiralling energy costs.

Michael Fallon, the energy and business minister behind the energy relief package says that the current energy bills paid by heavy industries including steel and chemical production are “undermining our competitiveness” and threatening jobs. This is undoubtedly true.  

Increasing the level of manufacturing in the UK is a vital element in building a balanced economy away from consumption and services. It is something that we have been making convincing progress with in recent months; the Markit PMI recorded its 11th month of growth in the sector in February and we have seen more firms moving back to the UK from China.

High energy costs threaten the sustainability of this headway.

But instead of concerted action on lowering energy costs and creating alternatives to our dependency on foreign energy, the government is planning to cut out the taxes that aim to solve those issues.

This approach will have the immediate (desired) effect of lowering overall energy costs for businesses, but does not address where or indeed if funding shortfalls for renewable energy projects will be made up.

Neither does it address the problems that will occur when the energy firms decide to ramp up their prices again.

Unless comprehensive plans for replacing and increasing funding for new domestic energy sources are introduced, energy prices will continue to rise.

Companies with sufficient wealth have already had enough of fluctuating energy markets to shell-out on the equipment to create their own – Apple now generates 75% of its energy through green sources – with solar and wind making up the majority. It is aiming at eventually achieving 100%. Google has also invested huge amounts of money in renewable energy sources.

At the moment the UK government has taken the easy option of lowering energy bills through the path of least resistance. Unfortunately this will not benefit the economy further down the line.

Harry Cockburn is business reporter at LondonlovesBusiness.com. Follow him @LondonlovesBiz and @Harry_Cockburn

Want more? Follow us on LinkedIn

Now read:

Harry Cockburn: Electioneering over immigration will only damage the recovery

Cool Runnings Jamaica

Readers' comments (1)

  • Sure it's not Dave Spart speaking? Misconceptions about climate change are crippling our industry and increasing our manufacturing and domestic energy costs. there is no proven link between carbon output and climate change. which has always happened; nothing to do with our puny efforts one way or the other. Climate change, formerly global warming, is believed by credulous and well-meaning people, but mostly strongly propagated by those who make a living out of it.

    Unsuitable or offensive? Report this comment

Social Bookmarks