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UK Chemical Industries Association says budget positive, but more is required

22 March 2012

Responding to the Government’s March 21 Budget Statement, Chemical Industries Association (CIA) Chief Executive Steve Elliott said his organisation welcomed the Chancellor’s measures to encourage investment in the energy sector, alongside protecting the science budget to support UK innovation and exports, where the chemicals sector features strongly.

“We are pleased at the announcement of exemptions from Carbon Price Floor (CPF) on inputs to heat from our on-site Combined Heat and Power (CHP) generation and good news that competitiveness impacts from CPF on both our electricity and heat users are being recognised,” said Elliott

But, he added, government must make further progress towards a comprehensive strategy for energy intensive industries (EIIs) such as chemicals to ensure it can continue to green the economy as it decarbonises.  

“I urge Government to start by re-incentivising CHP, which is key to carbon reduction in industry, and confirm strategies for reducing Electricity Market Reform impacts on EII’s power prices when these reforms are announced.

“We welcome further moves to simplify the Carbon Reduction Commitment, however it will be important to ensure that any replacement environmental tax in the future does not increase costs for energy intensive industries that already face increased energy costs,” he said. 

“It is great to see an above-the-line R&D tax credit will be introduced, providing critical development support when businesses are in a loss making phase.  Linked to this point it was also good to see greater encouragement for university spin-outs – start ups – through an enhanced Enterprise Management Incentive Scheme grant.”

Elliot said the CIA was gravely disappointed that no support is being given to encourage capital investment. “Manufacturing must renew its plant and machinery to remain competitive and profitable - only then will any lower corporation tax rate be relevant”

As regards regulation, he was pleased to hear the chancellor will launch sector-based reviews of regulation from April 2012 to ensure enforcement is at the lowest possible cost to business, starting with chemicals.

He concluded: “Today’s budget a positive step forward but more ambition required if we are to compete in the long run on the international stage”

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