Mr Portillo argues that the tax will threaten up to 150,000 manufacturing jobs and could cost business 1bn a year. But the government says the tax, which has been criticised by business leaders for being over complicated and unfair, will reduce carbon emissions by five million tonnes a year by 2010. Labour is bringing in the climate change levy next April to help meet its commitments set out in the 1997 Kyoto summit on the environment. The Conservative announcement comes a day after environmentalists warned that a third of the world' s habitats were under threat due to effects of climate change and global warming.
Business can no longer be the fall guy.
But speaking to the BBC earlier, Mr Portillo confirmed that he would not go through with the cut in employers' National Insurance contributions that the government plans to introduce to compensate industry for the new energy tax. Responding to the announcement, financial secretary to the Treasury Stephen Timms said all the expert advice was that the tax represented the most effective way of tackling the problem. He also said the levy would raise around 1bn a year which would go back to business in the form of reduced National Insurance contributions. And the Liberal Democrat environment spokesman, Don Foster, said the Tory proposal would mean the loss of the opportunity to tackle the problems of climate change, to reduce pollution and to improve energy efficiency. The decision to scrap the energy tax was just one of a raft of initiatives unveiled by Mr Portillo, who also announced a series of new policies designed to appeal to the business community.