In the March 2013 budget statement the Chancellor announced that he “will exempt from next year the industrial processes for that industry [ceramics] and some others from the Climate Change Levy. And in the Spending Round we will provide support for energy intensive industries beyond 2015.”
More exactly we read in the HMRC “Overview of Tax Legislation and Rates”, item 2.34 “Climate change levy (CCL): exemptions for energy used in metallurgical and mineralogical processes – [that] The Government will introduce exemptions from the CCL for energy used in metallurgical and mineralogical processes from 1 April 2014. It will seek views from industry after the Budget, with the intention of introducing legislation in Finance Bill 2014.”
This means that the Chancellor proposes to exempt the glass industry which of course transforms raw mineral materials (e.g. sand and limestone) into glass from part or all of the residual Climate Change Levy as is permitted under the rules laid down in the EU Energy Taxation Directive. This exemption is something that British Glass, which has drawn on the skills of several staff including John Stockdale and Jenni Staves, has been at pains to achieve for many years. The levy is a costly burden and furthermore the fact that some other EU Member States already use this exemption raises cross border competition issues for UK manufacturers. Members of the BG team have worked hard with other similarly affected sectors such as ceramics, cement and lime and metals and no doubt the sheer weight of British Industry affected and the potential for better UK economic growth has much is due to do with the Government’s decision.
British Glass greatly welcomes this approach to glass manufacturers who despite continuing to make good reductions in energy and CO2, including during the life of their Climate Change agreements, have suffered from energy and carbon costs and their taxation, especially in a recession period where the efficiency of processes is challenged due to throughput fluctuation. Indeed the budget also confirms that CCL rates will be increased by RPI this and next year!
What now needs to be done? The Government’s tax policy making process requires the publication of draft legislation three months before the Finance Bill is introduced to Parliament so work needs to be commenced as early as possible. The BG team will build upon work it has already undertaken with HMRC, BIS and other mineralogical transformation sectors to make this welcome commitment work. The team is ready to work with government who no doubt will need to know which processes could come under the scope of the exemption, how such an exemption should be tied in with energy efficiency schemes such as the climate change agreements and, given the exemption, what benefit to growth can occur.
