PKF Urges Chancellor To Use Tax Breaks For Energy Investment

by Robin Pilgrim, LawAndTax-News.com, London

10 September 2008

Lisa Macpherson, National Director of Tax at PKF accountants and business advisers, has this week urged the UK's Chancellor, Alistair Darling to use real tax incentives to harness the "financial muscle" of private investors, in order to boost green energy production.

Ms Macpherson pointed out that during his time as Chancellor, Gordon Brown introduced tax reliefs that helped the UK film industry raise "huge amounts of investment capital" and revitalised film-making in the UK, observing that:

“Widespread use of the film tax reliefs has proved that the tax system can change investors’ behaviour.”

Earlier this week, in a speech at the TUC conference, the Chancellor announced that he thinks the UK could create one million new “green-collar jobs” in the next twenty years. However, PKF argues that the scale of the Government’s investment in this area is very modest compared to spending on health or education.

The firm went on to explain that currently, the UK lags behind its European neighbours in green energy production capacity and some technologies: coal fired carbon capture and storage power stations – like the one that recently came on stream in Germany – are still on the drawing board in the UK.

Ms Macpherson continued:

“If Chancellor Alistair Darling is serious about his three energy goals, security, clean green generation and low prices, he has to use the limited investment funding currently at his disposal very wisely. Carefully constructed tax breaks for investors will gear up the investment capital that can be pumped into the UK’s green energy sector at a time when all businesses are finding it harder to find funding."

She went on to add that: "Simple relief structures, similar to the ones used for Enterprise Investment Schemes or Venture Capital Trusts, but without their restrictive limits on total funds, would capture investors’ attention and ensure vital long term funding for this key industry."

Concluding, Macpherson suggested that:

“This would help towards each of the Chancellor’s three objectives and be good for investors. For once, the Chancellor has a chance to create a good news story on energy – I hope he takes the opportunity in his Pre-Budget Report."

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