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The country's leading electrical goods makers have warned they could cease production in the UK if the Government refuses to impose an eco-tax on consumers to cover the cost of meeting new recycling laws.

The companies include Electrolux, the largest private sector employer in the Prime Minister's constituency of Sedgefield, where it employs 1,200 people. Manufacturers from Philips, Whirlpool and Smeg to Aga, Dyson and Kenwood have written to Alistair Darling, the trade and industry secretary.

Uwe Hanneck, chief executive of Bosch and Siemens' UK arm and chairman of the Association of Manufacturers of Domestic Appliances, said if left to the free market, large retailers would refuse to pass on the cost to consumers, leaving producers to pick up the entire bill, which could cripple his members.

The threat comes as the Department of Trade and Industry prepares to launch the final public consultation on its implementation of the Waste Electrical and Electronic Equipment directive, which forces producers to pay for the cost of recycling their goods rather than letting them be dumped in landfill sites.

The Government has proposed that the market should be left to decide how best to absorb the cost of disposing of the hundreds of thousands of existing electrical toothbrushes, mobile phone chargers, computers, washing machines and the like. But most producers, supported by smaller retailers, local authorities and environmentalists, prefer a fixed charge, which consumers pay when they buy new goods for the next five to seven years.

Mr Hanneck writes in the letter: "We are increasingly concerned that, if incorrectly transposed [into British law], the directive has the real potential to make it impossible for many companies to continue to operate profitably in the UK." The Government estimates the cost of recycling all qualifying electrical goods will be up to £500m.

"It is unfair current UK producers should bear this burden, especially when many were not producing in the UK until recently," Mr Hanneck said.

The Government has spent four years consulting on the directive and should have introduced the law last August. The European Commission is taking the Government to court over its failure to implement the directive, which is expected to become law next year.

The Local Government Association, whose members will be involved with the collection and disposal of the waste, supports the idea of a visible fee. Friends of the Earth has also backed the proposal. Michael Warhurst, a senior waste campaigner, said: "I have some sympathy with their point of view. In order to deal with the historic waste they need to make sure they have some financing."

The DTI said producers were in fact split on the need for an eco-tax. "The number of respondents who strongly support the application of a visible fee did not outweigh those who are against a mandatory visible fee," it said.

Hewlett-Packard is one that has broken ranks with other producers. It said: "We have said from the beginning a visible fee is a bad idea. It's a disincentive for consumers. They will see the price of the product and an extra charge and that will create a negative association between recycling and electrical products."

The DTI said its proposals would give producers and retailers the flexibility to agree the appropriate method to display the cost to the producer if they so wished.

From The Telegraph

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