Energy tax comes under more pressure from business

60,000 jobs will be lost across the service industry if the government continues its plans for a tax on energy, according to a new report.

UK economic output and productivity will also suffer as a result of the planned climate change levy - which is designed to help reduce emissions of greenhouse gasses - says the report by economic consultancy Business Strategies.

A further 95,000 jobs will be lost in manufacturing, leading Martin Temple, Director General of the Engineering Employers' Federation, which co-commissioned the report, to say: "No other piece of proposed government legislation in recent times has appeared to discriminate so heavily against manufacturing industry.

"The levy will severely damage our competitiveness, drive production to less environmentally friendly economies and discourage the high value added investment the government is so keen to encourage."

The Treasury plans to use the tax income to lower national insurance contributions, but this is not enough compensation, according to many businesses.

Gary Cutlack