Biting the hand that feeds you

Posted on 17 Dec 2009 by The Manufacturer

Julian Hunt of the FDF on the desicion to cut manufacturers' discount from the Climate Change Levy

Baffling – there is simply no other word to describe how we currently feel about the Chancellor’s decision to cut the discount available to manufacturers from the Climate Change Levy (CCL).

The decision – which was tucked away on page 125 of the recent Pre-Budget Report – represents a £50m green tax on UK industry. And the food sector will be the hardest hit.

Like many sector bodies, the Food and Drink Federation is has established a Climate Change Agreement with Government that has provided an 80% discount from the CCL for participating manufacturers.

And the food industry’s CCA has been hugely successful – providing an incentive for manufacturers to invest in energy efficiency in their factories and thus reduce our sector’s carbon emissions.

In fact, we recently announced that members of the Food and Drink Federation have reduced their carbon emissions by 19% since 1990 – the equivalent to almost one million tonnes – and our sector’s CCA has helped to underpin that success.

The carbon reductions form part of our Five-fold Environmental Ambition – a bold plan under which food and drink manufacturers are reducing their impacts in areas where they can make the biggest difference to the environment. Click here for more information on that.

Back though to the thorny issue of the CCAs, which even the Chancellor accepts have been an effective way of reducing emissions in energy-intensive sectors.

So why on earth did he decide that he would cut the discount available from 80% to 65% from 2011? He claims it is to “ensure that the schemes can continue to operate within the EU framework for energy taxation”.

We are aware of issues with respect to gas, but there is absolutely no need to cut the discount for other fuels to create a single rate of rebate.

We believe this decision will weaken considerably the incentive for manufacturers to make new investments in energy-efficient plan – and is completely at odds with the Government’s supposed policy of encouraging low-carbon growth.

The Food and Drink Federation has already started the process of lobbying Government about this issue – supporting the efforts of other bodies such as the CBI and EEF. We hope to encourage the Treasury to reflect on its decision and work with us to find a better approach – one that will have the least impact on manufacturers and our efforts to green our businesses.

Julian Hunt, Food and Drink Federation