To ask the Chancellor of the Exchequer what assessment he has made of the effect of the Carbon Price Floor on the competitiveness of UK business.
The carbon price floor establishes a minimum carbon price, which sends an early and credible signal to drive investment in low-carbon electricity generation and support the UK's long-term energy security.
For most businesses, direct energy costs are a relatively small proportion of total costs. In 2011, purchases of energy and water accounted for less than 3% of total costs for UK manufacturing. In 2013 the carbon price floor will add around 2% to the average business electricity bill. However over the longer term, consumers stand to benefit from cleaner, cheaper and more reliable sources of low-carbon energy as a result of the Government's policies.
The Government recognise the cumulative impact of energy and climate change polices on the most energy intensive industries. Autumn statement 2011 announced a package of measures, worth £250 million over the spending review, to help these businesses adjust to the low-carbon transformation while remaining competitive. The Budget announced that energy-intensive industries will continue to receive support in 2015-16.
Energy-intensives will also benefit from relief from the costs of electricity market reform, subject to state aid; an exemption from the climate change levy (CCL) for metallurgical and mineralogical processes; and an increase in CCL relief to 90% on electricity for most energy-intensive businesses who are part of Climate Change Agreements UK businesses will also benefit from a further reduction in corporation tax to 20% by 2015 and the introduction of a £2,000 per year employment allowance for businesses and charities from April 2014 to reduce their employment and NICs bill.