Horticulture joins queue of industries pleading for exemption from Climate Change Levy

National Farmers’ Union (NFU) President Ben Gill has told the Government that horticulture needs discount on the Levy if the industry is to avoid business closures or relocation abroad (see related story).

The Climate Change Levy is a tax on the business use of energy, with offsetting cuts in employers’ National Insurance contributions (NICs) and additional support for energy efficiency schemes and renewable sources of energy from April 2001 (see related story). Last year, pressure from industry forced the UK Chancellor, Gordon Brown, to reduce the levy rate and increase the discount for energy-intensive sectors of industry. Brown also exempted renewable power and combined heat and power generation from the Levy.

Gill says the Levy will cost farmers and horticulturalists around £26 million, even though growers claim to have achieved significant improvements in energy efficiency . A NFU survey of its members found that horticulture could lose £12,500 per hectare per year for every grower, that the increase in energy costs of growing produce would be between 25 – 54% for gas-fired glasshouses and 13 – 20% for those powered by electricity, and that the Levy would cost between £1,000 and £1 million per business, depending on individual circumstances.

NFU also claims that British horticultural businesses are already extremely energy efficient because they have to compete with growers in both northern and southern Europe. Using heat insulation, thermal screening and computerised climate control systems, British growers have improved energy efficiency by 25% in the last 10 years, the NFU claims. For this reason the NFU believes the necessary reduction in emissions can be achieved through current and planned measures across the whole economy rather than through the Levy.

Mark Johnston, Energy Campaigner at Friends of the Earth (FoE) told edie that businesses should be given the 80% discount if they can demonstrate an ongoing ability to reduce energy use. “If a sector can show that it can make savings in the future then they deserve to get a discount from the DETR,” Johnston says. “Under the Utilities Bill the price of electricity will come down anyway because of the new, more competitive trading arrangements for gas and electricity. So, after companies have paid the Levy, they may find themselves back to square one as far as power bills go.”

At a meeting with Stephen Timms, the Financial Secretary to the Treasury, Gill said that Spain and Portugal currently have no plans for an energy tax, while Holland and Germany have adopted a cost-neutral scheme for horticulture. “Sectors such as horticulture which are exposed to the full realities of an unsupported marketplace should not be penalised by this tax. Many of our competitors are exempting horticulture or at least lowering the tax rate.

“It is no wonder then that faced with the prospect of huge extra costs, many UK growers are now questioning the viability of remaining in this country.

“Surely the Government does not want to see much of British horticulture being taxed out of existence and driven abroad especially when estimates show that this could lead to at least 10,000 job losses?”