Grangemouth Refinery

Caroline Flint Excerpts

Wednesday 23rd October 2013 Commons Chamber

[Caroline Flint (Don Valley) (Lab)]

(Urgent Question): To ask the Secretary of State for Energy and Climate Change if he will make a statement on the Government’s contingency planning in the light of the closure of the Grangemouth refinery.

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I thank the right hon. Lady for her question. Let me inform the House of the latest situation in respect of the disruption at the Grangemouth refinery and petrochemicals complex in Scotland.

I recognise the concern of many Members, and, in particular, the active involvement of the hon. Member for Linlithgow and East Falkirk (Michael Connarty). The Government have been in regular contact with both sides throughout the dispute, and we continue to talk to both sides. We are working very closely with the Scottish Government, and I spoke to John Swinney, the Cabinet Secretary for Finance, Employment and Sustainable Growth, again this morning.

This morning INEOS made a statement confirming the decision of its shareholders to place the Grangemouth petrochemicals plant in liquidation, which puts 800 jobs at risk. The Government are saddened by the move, particularly because of the uncertainty that it will bring for the work force and all those who indirectly owe their livelihoods to the Grangemouth plant. The Government do not underestimate the plant’s importance to both the local community and the Scottish economy.

While respecting INEOS’s right to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant. Even at this late stage, the Government urge them to continue dialogue, and we will offer all possible help and support with that. We want the petrochemicals plant to stay open if at all possible but, should redundancies be made, support will be available from Partnership Action for Continuing Employment, which includes the Scottish Government, Skills Development Scotland, Business Gateway and Jobcentre Plus.

INEOS’s statement this morning made it clear that the situation regarding the refinery is different from that of the petrochemicals plant. The owners of the refinery, INEOS and PetroChina, have announced their intention to keep their refinery open and their wish to restart full operations as soon as possible. The Government stand ready to help with discussions between the management and the union to ensure that that can happen, and I am speaking to both parties again today.

Throughout the disruption, fuel supplies continue to be delivered as usual. Moreover, my Department has been working closely with industry and the Scottish Government to put robust contingency plans in place to ensure that supplies of road fuels, aviation fuels and heating oils will continue to be available to Scottish consumers and to fuel the Scottish economy.

The Secretary of State for Scotland and I will be giving a briefing at 4.15 pm today in Dover house for MPs with Scottish constituencies and any other interested hon. and right hon. Members who wish to discuss the situation in more detail after these exchanges.

--- Later in debate ---

[Caroline Flint]

I appreciate the right hon. Gentleman’s remarks and the support, through Jobcentre Plus or anyone else, for those who have lost their jobs so that we do whatever we can to help the workers and their families at this difficult time.

The closure of the petrochemical plant at Grangemouth means that the 800 people employed there, and more who are employed as subcontractors, will lose their jobs. The INEOS chairman, Jim Ratcliffe, said at the weekend that if the petrochemical plant closed, it was likely that the refinery would go too. John Swinney, the Scottish Finance Minister, claimed yesterday that he was in discussions with potential buyers for Grangemouth. Is the Secretary of State aware of those discussions and what involvement have he or his Ministers had?

The Unite union committed not to strike, with no preconditions, while negotiations over pay and conditions were undertaken. PetroChina, the 50% shareholder in INEOS’s refinery business, made a statement calling for all parties to get back around the table and reach a consensus but today, sadly, rather than coming back to the negotiating table, INEOS has announced that it will close the—profitable—petrochemical plant. Sadly, there were reports on the BBC this morning that management delivered the news with smiles on their faces. Does the Secretary of State agree that INEOS should have got around the table to negotiate, rather than delivering ultimatums?

In its July report “UK oil refining”, the Energy and Climate Change Committee found a mismatch between refinery supply of petroleum and demand, but we are still waiting for the Government to respond. Can the Secretary of State be confident that the Grangemouth refinery will stay open? Will he tell us more about the contingency plans that are in place to secure fuel supplies for Scotland, Northern Ireland and the north of England? Given the current shutdown and uncertainty over the closure of Grangemouth, will he reassure us that he will commit to undertake the review of UK refining capacity that the hon. Member for Wealden (Charles Hendry) promised in June 2012 in response to the closure of the Coryton refinery?

[Mr Davey]

I thank the right hon. Lady for her questions. Her first was about the recent statement by the Finance Secretary in the Scottish Government that they were looking for potential buyers. I have spoken to Mr Swinney about that, and we in the Westminster Government certainly stand ready to assist. It is a devolved responsibility, but my right hon. Friends the Secretary of State for Scotland and the Secretary of State for Business, Innovation and Skills will be making all efforts, through Departments and UK Trade & Investment, to assist should we need a buyer for the petrochemicals plant.

The right hon. Lady asked whether INEOS should have got around the table. Throughout the dispute, I have personally been asking both sides to get around the table. At one stage, INEOS was not prepared to go to ACAS. I personally spoke to INEOS and persuaded it to go to ACAS, which it then did, and I regret that those ACAS talks were not successful at avoiding the situation that we have arrived at today.

The right hon. Lady asked about the contingency plans that we put in place. We have been working for a significant time to ensure that there were contingency plans, should the disruption become any worse. As she knows, the refinery is currently closed down, but fuel is coming through the refinery—refined fuel is being loaded from ships into the plant and then on to racks to go into tankers. That is a part of our contingency plans, but they are much more detailed and granular than that. They go into minute detail about how we would ensure that fuel—heating oil, road fuel and aviation fuel—is supplied throughout Scotland, which is why I can say confidently that the people of Scotland may be reassured that we will keep fuel going through that economy.

Finally, the right hon. Lady asked about the review of refineries, and we expect to have that—probably—by the end of the year. It is very detailed and has been under way for some time. She will understand that there has been a big switch in the way in which motorists use fuel—away from petrol to diesel—but most refineries in the UK produce petrol rather than diesel. We import a huge amount of diesel, and that is one of a number of issues being considered in that review.