In the words of Deputy Prime Minister John Prescott, the 1999 Budget sent “exactly the right signals: emissions of greenhouse gases are discouraged, while job creation is encouraged; waste is penalised and efficiency promoted; incentives to drive extra miles in company cars give way to incentives to more fuel efficient vehicles”.

The Budget received something of a mixed reception from industry, with the introduction of a levy on the business use of energy from April 2001 prompting, in the case of a response from the Utility Buyers’ Forum, “real concern in light of the need for UK business and commerce to increase international competitiveness at a time of fragility in the UK business cycle”.
The Electricity Association, whilst welcoming the assurance made by the Chancellor that the energy tax will be revenue neutral by means of a cut in the main rate of employers’ national insurance contributions from 12.2% to 11.7%, expressed disappointment “that the Chancellor is looking to use the tax as a blunt instrument and has not more fully embraced Lord Marshall’s recommendations that ‘some of the revenues be channelled into schemes aimed directly at promoting energy efficiency and reducing greenhouse gas emissions'”.

The challenge now, according to Combined Heat & Power Association (CHPA) director David Green, is “to ensure that revenue can be recycled to boost industrial investment in energy efficiency, and that any negotiated agreements are effective”.

The Chancellor did, however, announce his intention to set “significantly lower” rates of tax for energy intensive sectors that improve their energy efficiency, as well as allocating £50m to support environmental and renewable energy technologies that offer reductions in CO2 emissions.

A £3 rise in the standard rate of landfill tax, to £10 per tonne from 1 April 1999, followed by an escalator of an additional £1 per tonne each year, has been welcomed as a necessary clarification of proposed increases, providing much needed certainty to waste producers and managers as, according to Environmental Services Association (ESA) chairman Edouard Dupont-Madinier: “Investors need long lead times to develop alternative waste management facilities.”

The landfill tax increase means that over £20m additional funding is available, through the Environmental Bodies Tax Credit Scheme, to support the development of more sustainable management practices.

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