Ceramics Industry

David Mowat Excerpts

Tuesday 8th March 2016 Westminster Hall

[Dr Paul Monaghan (Caithness, Sutherland and Easter Ross) (SNP)]

I congratulate the hon. Member for Stoke-on-Trent Central (Tristram Hunt) on winning the debate and his entertaining account of the industry. As my hon. Friend the Member for Rutherglen and Hamilton West (Margaret Ferrier) noted, ceramics are enormously important to Scotland’s economy and to my constituency. Anta pottery in Fearn, Highland Stoneware in Lochinver and Northshore Pottery in Caithness are examples of companies that produce ceramic products in Scotland.

Anta is one of the largest employers in Easter Ross outside of the manufacturing and oil industries. Highland Stoneware is based in Sutherland and has a smaller factory in Ullapool in Ross-shire. It is a major employer in the local economy, with a reputation for producing some of the finest hand-crafted ceramics in the world, completing more than 700,000 orders each year—a remarkable achievement. Northshore Pottery operates in a far north-western corner of Scotland, close to Wick. The company is owned by a lady called Jenny Mackenzie Ross, who reflects Norse culture in her work and specialises in architectural ceramics. These are very different companies. Each operates in remote and rural areas, supports a range of local tradesmen in completing their work and, of course, returns approximately 65% of turnover to staff wages.

As the hon. Member for Stoke-on-Trent Central noted, the ceramics industry is very energy-intensive. In 2014, some ceramics manufacturers reported that their energy bills made up 35% of their total overhead costs. In addition, its energy demands are inflexible and cannot be easily tapered depending on the time of day. Energy costs appear critical to the success of the industry. Ceramics producers, including brick makers, have been critical of the fact that the steel industry has received exemptions from UK renewables taxes, while ceramic producers have not, rendering the industry unviable. Closing down energy-intensive industries will not make a difference to global carbon output, but will export jobs from an industry that makes a net contribution to the economy, as the hon. Members for Stafford (Jeremy Lefroy) and for St Austell and Newquay (Steve Double) noted.

The British Ceramic Confederation criticised the UK Government’s autumn statement for failing to provide certainty on, among things, energy costs for this industry. The hon. Member for Penistone and Stocksbridge (Angela Smith) mentioned the confederation’s submission made in January in respect of the Budget. As part of its EARTH campaign, the confederation listed five actions that the UK Government should take in order to create a level playing field internationally. It called for an EU emissions trading scheme to ensure that all ceramic subsectors receive full mitigation measures to guard against leakage of carbon, investment and jobs to competitors outside the EU, as well as action to reduce the cumulative costs of energy, climate and environmental policies that are harming the sector’s ability to remain internationally competitive.

[David Mowat (Warrington South) (Con)]

I am glad to hear the hon. Gentleman talking about energy in that way, because it seems fundamental. It is important we understand that, in Germany today, ceramics manufacturers are paying approximately half what manufacturers are paying in the UK. All of us have a role to play in getting the balance right between green taxes and lower energy costs, because it is vital for these industries.

[Dr Monaghan]

I absolutely agree; it is vital. These industries are struggling in the UK and need support from the Government to create the level playing field that the hon. Gentleman speaks of.

The confederation calls for long-term partnership working with the UK Government and funded assistance for the sector to accelerate investment in existing technologies and the development of breakthrough decarbonisation technologies. The confederation has also called for the rejection of unilateral recognition of China as a market economy, which would leave manufacturers inadequately defended against a rising tide of cheap imports, about which we have heard today. Finally, it called for the UK Government to achieve higher levels of economic growth through a revised housing policy, to enable investment in the supply chain in the UK rather than overseas.

The Scottish Government recognise the importance of Scotland’s manufacturing sector and are committed, through their new manufacturing strategy, to continue doing whatever is necessary to support the sector. Through their enterprise agencies, that demonstrable commitment is focused on strengthening and supporting Scotland’s economic links with overseas markets. The Scottish Government will continue to invest in and promote exports to help to build sustainable economic growth for Scotland. Similar affirmative action by the UK Government would be of enormous benefit.

--- Later in debate ---

[David Mowat]

Will the Minister give way?

[Anna Soubry]

I will in a moment—sorry, I am just on a bit of a roll and I want to make this point, because it is really important. What we do—certainly what I do—is look at each case on a case-by-case basis. For example, a particular type of steel was used by a particular part of our economy. The buyers—the users—of it said, “Please do not vote in favour of tariffs, because it will have a direct impact on British jobs”, so in that instance, we abstained. However, on two other issues of tariffs on steel, I did not hesitate to give the direction—telling the officials—to vote in favour of tariffs, but we look at it on an individual basis. I will quickly give way to my hon. Friend.

[David Mowat]

I am interested in the point about MES, because industry—whether it is aluminium, steel or ceramics—is telling us quite the opposite. I am interested to understand which of our sectors, in the Government’s view, benefit from giving China MES, because it is not these ones. Is industry really so wrong in what it is telling us, and BIS is right?

[Anna Soubry]

Let us get this point about market economy status absolutely clear. First, that will be decided by the European Union, and that will be with all the benefit of everybody being involved. When I went over to Brussels about two or three weeks ago, I was told that this is absolutely the hot topic for the EU. It looks as though—as we might imagine with the EU—there will be some sort of fudge or middle way, but it will be for the EU to decide and it will be the hot topic. My point, however, is that if China were to get market economy status, that does not preclude it from being subject to tariffs, because Russia has market economy status and it can have tariffs put on it. There is no debate about that: Russia can have tariffs put on it. I have had this argument with the steel industry, but that is a fact. Tariffs can be put on a country even if it has market economy status. Whether China should have market economy status and the arguments for and against whether it should are a different matter, but do not conflate tariffs and MES.

What time do I have to finish, Mr Hollobone?