§ Mr. MacShane
To ask the Chancellor of the Exchequer (1) what advice he has received on the likely impact on the United Kingdom steel industry's international competitiveness of the climate change levy at the indicative levels currently proposed; 
(2) how he plans to ensure, in introducing the proposed energy levy, that United Kingdom manufacturing exports are not unfairly disadvantaged in world markets. 
§ Ms Hewitt
In line with the Statement of Intent on Environmental Taxation, the Government considered carefully the potential impact of the climate change levy on the international competitiveness of United Kingdom industry. The design of the levy closely follows Lord Marshall's recommendations. Its introduction will666W involve no increase in the overall burden of taxation on business. The Government intend to recycle the revenues to business through a cut of 0.5 percentage points in the main rate of employer National Insurance Contributions. Businesses will also benefit from an additional £50 million for schemes aimed at providing energy efficiency directly and stimulating the take-up of renewable sources of energy.
The Government also recognise the need for special consideration to be given to the position of energy intensive industries given their energy usage, the separate Integrated Pollution Prevention and Control regulation and their exposure to international competition. In line with the recommendations made by the CBI, the Government will not be taking a blanket "across the board" approach to setting the appropriate level of the new levy. Subject to any legal and practical constraints, the Government intend to set significantly lower rates for those energy intensive sectors that agree targets for improving energy efficiency which meet the Government's criteria.
§ Ms Hewitt
[holding answer 29 March 1999]: The Chancellor announced in the recent Budget that, subject to any legal and practical constraints, the Government intend to set significantly lower rates for energy intensive sectors that agree targets for improving energy efficiency. Sites in sectors covered by the EU Integrated Pollution Prevention and Control Directive will be eligible. The Deputy Prime Minister, along with Ministers from the DTI and HM Treasury, met with the energy intensive sectors on 29 March to begin these negotiations.
Lord Marshall's report, "Economic Instruments and the Business Use of Energy", which was published on 3 November 1998, contains an analysis of energy intensity by business sector.
§ Ms Hewitt
The EU rules governing the harmonisation of taxes within the Single Market permit member states to introduce national taxes provided they do not give rise to border-crossing formalities in trade between member states, nor infringe State Aid rules. Customs and Excise's consultation paper on the design and administration of the levy, published on 9 March, proposes a treatment of the imports and exports of energy products which meets our obligations concerning trade between member states. And following the announcement of the climate change levy in the Budget, I informed the European Commission of the Government's announcement. The Government are working closely with the European Commission to help ensure that the proposed scheme to set significantly lower rates for energy intensive sectors that agree targets for improving energy efficiency is compatible with State Aid rules. In doing so, we shall also take into account our obligations under the World Trade Organisation.