Business secretary Vince Cable has warned that the carbon price floor, a green levy that hits energy-intensive businesses hardest, is holding back UK exports.
Speaking at a fringe meeting at the Liberal Democrat annual conference in Glasgow yesterday, Cable said the tax is hampering businesses who can’t compete with their counterparts abroad.
“Many of our manufacturing companies and exporters – particularly in areas like steel and cement and others which consume lots of electricity – are struggling against international competition because of the cost of energy.
“They will argue that because we are trying to be green we are imposing costs on them which their competitors don’t have,” Cable said.
He added that while a compensation system existed, hard won by the Liberal Democrats, it was “expensive and it’s a constant battle with the Treasury to make sure it’s topped up”.
City A.M. understands the business secretary wants to see the compensation scheme, which currently only covers the period to 2016/17, extended, to give businesses more security and the ability to plan for the longer-term.
The criticism will come as no surprise to chancellor George Osborne, who backed the introduction of the carbon price floor, as Cable has been critical of its effect on business.
The Lib Dem business minister also hinted that a business rate cut for small firms was likely to be revealed by Osborne in the Autumn Statement in December, in a bid to incentivise growth.
Today, Cable will announce a new quango for workers’ rights while his leader Nick Clegg will unveil the party’s plan for a garden city railway to connect Cambridge and Oxford. Between three and five settlements will be built along the route, adding up to around 50,000 new homes and each new town will get a railway station.