Liz Truss plans to axe green levies for high-use industries

2022-08-31

Liz Truss plans to axe green levies to ease financial burden of soaring energy bills for high-use industries

Allies of Foreign Secretary call for cost of living plans to also address companies
Energy-intensive firms already exempt from 85 per cent but set to rise to 100
Heads of six of UK’s biggest pub and brewing firms yesterday signed open letter
They demanded Government acts to avoid ‘irreversible’ damage to the industry

Liz Truss is to exempt power-hungry industries such as steel from all green levies as part of a package to help businesses cope with soaring energy bills.

Allies of the Foreign Secretary, who is the frontrunner to become prime minister next week, said plans to ease the country’s cost of living crunch must address the impact it is also having on companies.

The heads of six of the UK’s biggest pub and brewing firms yesterday signed an open letter to the Government demanding it acts to avoid ‘real and serious irreversible’ damage to an industry facing rises in energy bills of up to 400 per cent.

Allies of the Foreign Secretary (pictured), who is the frontrunner to become prime minister next week, said plans to ease the country’s cost of living crunch must address the impact it is also having on companies

In a separate letter to ministers last night, the trade body UKHospitality warned the sector faced ‘widespread business failure’ unless it received support. Chief executive Kate Nicholls said: ‘Hospitality businesses are facing a crisis this winter, with soaring costs combined with a sharp drop in disposable incomes for our customers.’ She warned of tens of thousands of job losses as a result.

The CBI and other organisations have also said that, because the energy price cap does not apply to business, many firms face bill increases they will find impossible to pay this winter. Miss Truss and her supporter Business Secretary Kwasi Kwarteng have been discussing possible help as part of discussions on a planned emergency Budget.

A source said the package was likely to include immediate aid for energy-intensive sectors such as steel, paper, chemicals and cement, which are highly exposed to rising prices. This is expected to involve excluding the sector from all green levies.

Energy-intensive firms are already exempt from 85 per cent of costs associated with measures such as the climate change levy. But this is set to be increased to 100 per cent, saving them tens of millions of pounds and helping them continue to compete in global markets.

The incoming administration is also looking at a range of other options, including Covid-style loans and grants as well as giving firms more time to pay their tax bill. Sources declined to say which other measures would be adopted.

But a senior ally of Miss Truss said: ‘Understandably, the focus has mainly been on the need to help households, but we are also going to have to help ensure that we do not lose viable businesses because of the spike in energy costs.

Boris Johnson yesterday said several elements of a £37billion support package were still coming into force, including a £400 discount on bills

‘Businesses like pubs, restaurants and care homes all have significant energy costs and are going to be unable to cope with the sort of rises we are seeing.’

Treasury figures last night predicted that UK energy producers could make excess profits totalling £170billion on the back of record global prices. It suggests that the energy profits levy of 25 per cent could raise tens of billions of pounds to help fund a bailout package.

But Miss Truss, who has argued against windfall taxes, has yet to say whether she would retain the new levy.

Boris Johnson yesterday said several elements of a £37billion support package were still coming into force, including a £400 discount on bills.

‘There’s a huge amount coming. A lot more to come,’ the Prime Minister said.

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