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Construction products sector warns on energy taxes

8 Nov 13 Carbon taxes are threatening the competitiveness of UK manufacturing, the Construction Products Association (CPA) has warned.

CPA chairman Geoff Cooper
CPA chairman Geoff Cooper

The CPA has joined calls for the chancellor of the exchequer to abolish the carbon price floor in his upcoming autumn statement.

Speaking to an audience of nearly 600 senior industry leaders and government officials at the Construction Products Association’s autumn lunch, the organisation’s chairman Geoff Cooper said: “The construction products sector in the UK is supportive of the government’s intent to deliver a low carbon, low cost built environment whilst securing the future of a vibrant, modern and innovative manufacturing sector.  However, like the ordinary householder, business is being considerably impacted by the rise in energy prices and the increasing insecurity of energy supply.

“According to a study conducted for the Department of Business, Innovation and Skills, by 2020 the UK’s electricity price is expected to have risen by more than three times that of Germany’s.  A primary reason for this is the additional taxes on energy.

“Much of our manufacturing is energy-intensive: energy bills and taxes can be up to 30-35% of total production costs.  The need to maintain diversity and security of energy supply, and to meet emissions reductions targets must be balanced against the ability of the industry to pay.  Many firms have already invested in the latest technology to improve energy efficiency to the maximum level possible so further savings here are unlikely.”

Mr Cooper, who is also chief executive of Travis Perkins, continued: “The chancellor has said, ‘We are not going to save the planet by putting our country’s manufacturing sector out of business’, and so end up importing these same products.  His actions, however, speak louder than words as the minimal extra climate change agreement rebate on electricity from April 2013 has been more than eclipsed by the increases in renewable obligation costs and feed in tariffs this year, neither of which is compensated for energy intensive users.

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“In this year’s autumn statement, therefore, we are joining the ranks of many senior industrialists by calling on the Chancellor to abolish the carbon price floor, or at the very least to a freeze to the rates of the tax.

“It is essential that the UK has a secure, low carbon energy supply at a price that does not jeopardise investment in UK manufacturing and sustained economic recovery.  We need a level playing field to ensure we can compete against international competitors to keep manufacturing in the UK.  This needs a concise and coherent regulatory environment and policy framework to allow confidence to invest.”

Mr Cooper said that the CPA was also calling on the government to link the energy performance of the property to the stamp duty which the buyer pays, and offer a stamp duty refund where the new home owner improves the performance within the first 18 months of ownership. 

“We believe this will be highly effective in driving change right at the time homeowners are most likely to make such improvements,” he said. “Also, crucially, our model shows that such an incentive would not leave the Treasury out of pocket.”

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