Energy Intensive Industries

Debate between David Simpson and Paul Farrelly

Wednesday 4th December 2013 Westminster Hall

[David Simpson (Upper Bann) (DUP)]

I thank the hon. Gentleman for giving way—he is a very popular individual this morning. One of the issues I have received the most lobbying on in my constituency is green taxes. We have the second-largest manufacturing base outside Belfast. The Government have promised to make business easier and more competitive and to remove bureaucracy, but we need to do something about this issue, because our manufacturing industry is not competitive out there, and we need to keep our jobs in the UK.

[Paul Farrelly]

I am grateful to be so popular for the first time in many a month. I do not want to make this party political, but one of the lessons the Government seem to have learned from the Labour party’s initiative on energy prices is that we need to have simplicity and to reduce prices for domestic customers. However, the same message needs to be learned in respect of industry across these islands.

As I was saying, the ceramics industry, along with other industries represented here by Members, uses some of the most electro-intensive processes in the UK and Europe. The advanced refractory and technical ceramics manufacturers, which make products that must withstand high temperatures, operate electric arc and indication furnaces at well over 2,000° C, which is getting on for half the surface temperature of the sun.

That brings me to one of the key points I want to make. Several of our major manufacturers in these highly competitive industries have already moved overseas, relocating inside and outside Europe, including in Germany and France—our major European competitors—and they have cited electricity costs as a key reason for doing so. That is happening in not just the ceramics, but other sectors, such as chemicals and steel. We have heard about INEOS, and Members will no doubt want to refer to the steel industry and the experience of Tata.

To take one further example, the German multinational chemical company BASF, which is a major employer near Manchester, just north of my constituency, wrote to me to underline that electricity and other energy costs have been responsible for rendering uncompetitive its 60-year-old Scottish pigments plant at Paisley—the group’s second most energy intensive plant. As a result, that plant will close in 2015, with the loss of another 150 jobs. That is the stark message from the industry about UK competitiveness. Manufacturers now typically pay between £80 and £100 per megawatt-hour in the UK. Some of their German competitors pay nearer to €40—not even £40—per megawatt-hour, which is less than half that price. In France, they pay €50. If nothing is done, and if UK electricity costs rise further, more businesses, investment and jobs here will be put at risk.