Ceramic and Brick Industries

Angela Smith Excerpts

Wednesday 15th June 2016 Westminster Hall

[Wendy Morton]

Absolutely. The hon. Gentleman makes a very valuable point. In any discussion about business, it is always worth reminding ourselves that it is not only the one business that matters but all the other businesses that feed into it, be it businesses that work with kilns, businesses that provide paint brushes or businesses that do a whole host of other things. Also, there are all the other businesses, which are often family businesses, around the area, which perhaps provide sandwiches or other things for the people working in all these companies.

However, the ceramics industry is approaching a worrying period of uncertainty. The European Commission published its legislative proposals for the emissions trading system phase 4 in July 2015. These proposals cover the period from 2021 to 2030 and propose a target of achieving at least a 40% reduction in EU greenhouse gas emissions by 2030. The key issue for ceramics within the EU ETS proposals is carbon leakage, notably the evaluation of industries so that they are deemed either at risk or not at risk of it. Some sectors are likely to meet the proposed carbon leakage quantitative threshold, but the situation for other sectors, mainly the heavy clay industries and particularly those that produce bricks, clay roof tiles and clay pipes, is less clearcut, which is why I felt there was a need for this debate.

The UK Government recently announced their position on the EU ETS phase 4 and suggested that free allowances should be focused on only a handful of sectors, with other sectors receiving a lower-tiered proportion. The ceramics industry is extremely concerned by this tiering proposal, as ceramic manufacturing sites would need to purchase significantly more allowances. Indeed, it is predicted that heavy clay producers such as those in my constituency would have to buy all their carbon allowance after 2027. A number of ceramic manufacturers have said that that charge alone is likely to exceed their profits.

As part of its Ceramic EARTH campaign, the British Ceramic Confederation has used figures from the Department of Energy and Climate Change to estimate that UK heavy clay construction product manufacturers will pay more than £40 million by 2030 under this proposal, which equates to almost £1 million per year per factory on average.

Clearly this situation concerns me and many other people, because businesses, jobs and investment are at stake. Therefore, I ask the Minister to continue to look at this proposal, which is for a system that supports only a few energy-intensive industries at the expense of many others. I genuinely fear that the UK proposal will burden businesses with very high extra costs. In fact, energy costs and climate-related taxes already make up around 30% of a brick maker’s production costs, and I fear that this proposal will only add to the issues that they face.

I am sure that others in Westminster Hall today are aware that there is a growing demand for housing in this country—we often discuss and debate it in the Chamber. Construction of houses is at an eight-year high and therefore the demand for materials is growing too. Brick is the most popular cladding material for building walls, with over 80% of new homes using bricks. Brick is unmatched for its durability, low maintenance costs, aesthetics and lifetime sustainability.

I recently had the pleasure of visiting one of the brick factories in my constituency and it was an inspiration to follow the production of bricks, from the clay pit behind the factory all the way through to the finished product at the end. It was only when I stood on top of the huge kiln that I really appreciated just how much energy goes into such large kilns to produce bricks for us.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

The point that the hon. Lady made about the sustainability of the industry is a good one, and she made it well. Clay pipe making is very prominent in my constituency—90% of the UK’s production of clay pipes takes place in my constituency. Of course, clay pipes are very sustainable and very long-lasting, with a life of well over a hundred years. Does she agree that, although other forms of production are of course valid and important, we ought not to forget the importance of such manufacturing capacity?

[Wendy Morton]

The hon. Lady makes a very valuable point. I will focus more on bricks, because they are produced in my constituency, but I appreciate and understand that this issue is not only about bricks but about clay pipes. When we look around the country, we often hear stories about, for example, the sewers under London. They have been in place probably for centuries, using British-manufactured clay products, pipes, bricks and lots of other things as well. I thank her for making that point.

To meet the UK demand for new housing, we will need a 60% uplift in clay products for over a decade. Unfortunately, rising demand for bricks and clay roof tiles has been met by unprecedented levels of imports. We need to encourage and focus on investment here in the UK, and consider future innovation. In 2014, brick imports accounted for 25% of sales in this country, representing a direct loss of around £80 million per year for the UK economy. The rising rate of imports of heavy clay from outside Europe shows how the EU ETS phase 4 will not really work if the industry loses its full carbon leakage status.

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[Ruth Smeeth (Stoke-on-Trent North) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Chope. I thank the hon. Member for Aldridge-Brownhills (Wendy Morton) for securing such an important debate. I agree wholeheartedly with all her comments, with the exception that I think the priority should always be tableware.

I am the chair of the new all-party group on ceramics, and am proud to represent the Potteries—the historic centre of our country’s ceramics industry—so it will come as no surprise that I consider the sector to be of great importance. Across Stoke-on-Trent, more than 7,000 people are still directly employed in ceramics—more than in any other industry. With the ceramic valley enterprise zone, the future of the industry is clear; there is huge opportunity for development and huge potential. We need to ensure the level playing field that the hon. Lady spoke about so articulately.

I was saddened in our last debate to hear that the Minister so rarely finds the time to eat a proper meal from our excellent Stoke-on-Trent tableware, or even from the less-than-excellent Chinese tableware utilised by her Department, but that lack of familiarity with the craftsmanship of Dudson, Churchill or Steelite need not concern her in today’s debate. There is so much more to the ceramics industry than just tableware, important though that is. It is those other applications that I wish to focus on today.

In my constituency, we are proud to be home to Johnson Tiles, the UK’s leading tile manufacturer and pioneers in the field of ceramic design. Like the brick factories in the constituency of the hon. Member for Aldridge-Brownhills, it is a major employer and a big contributor to our national economy. Bricks and tiles are not just important to the livelihoods of our constituents, however; they are key strategic industries in their own right, providing the raw materials that our country needs to build and to grow. The Government have repeatedly stated their commitment to a major programme of house building, which I very much support. We cannot build new homes without the raw materials for construction, and the Government’s ambitions, if fulfilled, could be an incredible opportunity for our brick and tile industries.

[Angela Smith]

And pipe industry.

[Ruth Smeeth]

Indeed. My hon. Friend will undoubtedly highlight that later. I am concerned that under the Government’s policies on these sectors, the benefits will not be felt as keenly as they should or could be. Indeed, if we do not support the industries appropriately, the benefits of any construction boom will be reaped not by our businesses, but by brick factories in north Africa, Turkey and elsewhere, where costs of production are lower and future risks less pronounced.

Despite their importance in the supply chain for house building and construction, and despite the wide range of high-tech applications, I fear that the brick and ceramic industries are being treated as poor relations by the Government. I can only hope that this debate will help to persuade the Government that more can and must be done to support the industry, which sets the benchmark for innovation and for commitment to sustainable manufacturing.

The British Ceramic Confederation’s EARTH campaign is doing valuable work in highlighting some of the major issues affecting the brick and ceramic industries. One such issue concerns China’s ongoing bid for market economy status. I have spoken before in this hall about the threat that MES for China would pose to British industry, and I have also raised the Government’s apparent acquiescence to China’s demands. Nevertheless, the ceramics industry’s concerns on this matter are significant and bear repeating. Granting market economy status to China would leave us with no defence against unfair Chinese dumping practices, and would allow our domestic market to be flooded with inferior goods at prices that are simply not achievable without the state intervention and rock-bottom labour costs that Chinese industries take advantage of—or exploit.

It is well established that China has, to date, met only one of the five criteria required for market economy status. It is also recognised that the impact on the British economy of granting China such a status would be severe, with a potential cost of 3.5 million jobs across the UK—jobs we can ill afford to lose.