From 1 April, your company electricity bill will be upped by a tax of 0.43p/kW and your gas and coal by 0.15p/kW. The levy is intended to collect a tidy £1.7bn a year and will be administered by Her Majesty's Customs and Excise. The visiting VAT inspector will now want to rummage through your electricity bills to make sure you don't fiddle your chimney tax. And, if you do duck and dive with your kilowatt hours, the act of parliament says you will go to prison for up to seven years.
The whole idea of the tax is not to put up your running costs, but to persuade you to use less energy. The rumour is that part of the £1.7bn tax is to employ 5000 uniformed electricity wardens to roam the streets in tin hats shouting "put that light out". It is all about those confounded greenhouse gases and CO2 emissions. That man of energy, John Prescott, has promised the world that by 2010, the UK will have reduced these emissions by 20% from 1990 levels.
He knows that if we don't cut the carbon, the Amazon rainforest will be devastated; come to think of it, I am not impressed with how well my wallflowers are doing this year. Anyway, the minister for energy and industry said the levy was "to jump-start companies into taking efficiency seriously". More likely, however, is that these politicians want to look big on the world stage and use the chimney tax as an exercise to bring in one hell of an extra lump of revenue to the Treasury.
But the Treasury protests at this. It says this £1.7bn chimney tax is to be recycled in full back into your business. Your employer National Insurance contribution is eventually going down by 0.5%. It reduces from 12.2% to 11.9% in April, then to 11.7% in the following year. The government crows about this saving. But I say trick! trick! It was only the previous year that it massively increased employer contributions from 10% to 12.2%. Oh, come on, you naughty politicians, you are giving nothing back at all. This isn't a sale price because you put the price up before the sale.
Since time immemorial, robber barons have plundered the people they pretend to protect. In 1662 there was the despised hearth tax at two shillings for every fire hearth. Then came the reviled window tax; the stupid politicians took one shilling for every window in every building. That tax lasted 150 years and was replaced by the house duty in 1851. Eventually the poll tax saw riots in Trafalgar Square. And now we are to have this new chimney tax under the fancy name of the climate change levy.
We are overtaxed by half-baked politicians with half-baked ideas. A dramatic rise in electricity and gas bills will not drive industry to reduce its use of energy. Instead it will do two things; first it will put up prices, and second it will breed resentment between industry and politicians. The Cement Association has told parliament that the levy amounts to a £40m tax on cement. The Aluminium Federation says four smelters will have to close and that the levy will cause 4000 job losses. The Food and Drink Federation explains that there is no room for absorbing the £150m costs and they will therefore go on the weekly shopping bill. But the government has ignored all this. It wants the £1.7bn.
If the government was serious about lowering energy use it would come up with incentives, not penalties. It wouldn't use sticks; it would use carrots and carrots alone. If savings on kilowatt hours can be achieved at all, share the savings with the saving party. If no savings can be achieved, it is because the company is already energy efficient, so give him a prize … an extra discount off his bill. But don't hit him with a 20% chimney tax when he can do damn all about his energy use.
The truth is that this is a method of raising revenue. It is dressed up as something serious but we are on to you, dear government. This is a tax, which goes up the chimney just the same.
Tony Bingham is a barrister and arbitrator specialising in construction. You can write to him at 3 Paper Buildings, Temple, London EC4 7EY, or e-mail him on email@example.com.