Steel Industry: Contribution to the UK Economy

Jack Brereton Excerpts

Wednesday 25th January 2023 Westminster Hall

[Holly Mumby-Croft (Scunthorpe) (Con)]

It is a pleasure to serve under your chairmanship, Mr Pritchard. I thank the hon. Member for Newport East (Jessica Morden) for securing the debate. I know from our work together on the APPG for steel and metal related industries that we agree on many things and have the interests of the steel industry jointly at heart. I also thank my hon. Friend the Minister for the level of focus that the steel industry is receiving at the moment. I am heartened by that and want to put my thanks on the record.

Steel is something that I never tire of mentioning in Parliament. My home town of Scunthorpe has one of the biggest steelworks in the country. I care about the local jobs because I understand the impact that it would have on our local community and on individuals and families were those jobs to be lost, but we can never say enough times the impact that it would also have on us as a nation and our position in the world were we ever to lose our ability to make our own steel.

Not only does the steelworks provide thousands of jobs that pay roughly 45% more than the average job in Yorkshire and Humberside, but its impact ripples throughout our entire local economy, supporting an ecosystem of businesses that sustain countless livelihoods. I have been told that it supports 20,000 jobs in our area, and I believe that to be the case. People who work in the steelworks in Scunthorpe are people I went to school with. They are people whose children went to school with my daughter. They are my neighbours. They are members of my family—my granddad made his living and raised his family through his work at the steelworks. It is a source of great pride to him and to many people in Scunthorpe and the surrounding area that the work our town has put in has helped to build this country.

We heard figures from the hon. Member for Newport East on the value of the output of steelmakers here in Britain, but it is almost impossible to truly quantify the impact that steel has throughout the wider economy and every sector and, just as importantly, the loss we would face were we not able to produce our own steel.

[Jack Brereton (Stoke-on-Trent South) (Con)]

I congratulate the hon. Member for Newport East (Jessica Morden) on securing this debate, which is very important for not just steel but ceramics. Refractory ceramics are vital for the steelmaking industry, and particularly energy-intensive industries such as steel and ceramics need additional support to transition and invest in energy efficiency measures. Does my hon. Friend agree that we need additional support from the Government that is easier to access so that these industries can invest in energy efficiency measures?

[Holly Mumby-Croft]

My hon. Friend is absolutely right. He and I have worked together on many of the issues that affect energy-intensive industries. Ceramics play a crucial role in the steel industry, lining the blast furnaces that we use to make steel and, of course, we like to have a cup of tea in a ceramic mug as well.

I cannot say enough times how important it is that we never, ever become the only country in the G20 that is not able to make its own steel. That would leave us at the mercy of steel producers around the world, who would be in full knowledge that we were not able to make our own steel, with the prices and challenges that would come with that. I hope the Minister agrees that steel truly is a vital strategic industry. Nobody can go a single day in their lives, from the moment they get up to the moment they go to bed, without needing to use steel.

A dependable supply of high-quality steel—that is a crucial point: in this country we make some of the finest steel money can buy anywhere in the world—will underpin our every endeavour as we tackle the problems of the 21st century and the issues that we grapple with in this place. It is vital for everything from growth to defence, and Russia’s invasion of Ukraine has served only to highlight the challenges and the importance of that. I truly believe that the public have a fantastic understanding of how important this is and instinctively know it is crucial that we are always able to make our own steel.

I have seen the support in recent years, including the £800 million of energy support and the two occasions when the Government took the brave step of extending the steel safeguards. That was a challenging time for us, so I congratulate the Government on doing that, because it was really important. Had we not done that, I am not sure we would be here now having this conversation—it was absolutely right. In Scunthorpe, we remember how the Government paid workers’ wages in 2019 and into early 2020 when the buy-out happened.

We have all seen the press reports about British Steel and Tata negotiating with the Government. I know that is a live negotiation and we cannot talk about it, but I will do everything I can, as I know other Members will, to help and assist all parties involved to reach a good outcome and secure the future of steelmaking in Scunthorpe. My own view is that, should a deal be reached, we must look at this as a pivotal moment. We must get a deal done and then the next day wake up and start straight away with the steps we need to take to allow steel to thrive into the future. We must immediately start discussions at pace about carbon border adjustments, so that we do not find ourselves falling behind the EU. We must look at the emissions trading scheme and the perverse incentive that it is possible to create whereby we can see loss-making production—carbon-producing production—incentivised by a scheme initially designed to prevent excess carbon production. We must also address all the issues relating to energy costs.

I urge the Government to go as far and as fast as they can on those issues, and to do everything they can to give the industry confidence that ours really is the Government that will put in place the measures that will secure the future of the steel industry. I believe they are, and I urge the Government to give the steel industry that confidence.

Cost of Energy: Ceramics Sector

Jack Brereton Excerpts

Tuesday 17th January 2023 Commons Chamber

[Jonathan Gullis]

I am grateful to the hon. Member, who is a really good friend. It is incredible that Strangford finds a way of linking itself to every single one of our constituencies across the House, and it could not be better served than by him; he is a doughty champion. I look forward to exchanging some pottery with him in the near future so that we can share in our fine ceramics. He is indeed correct to make the point about the cost implications of rising gas prices and the danger to small, medium and large firms, which could see lots of jobs lost if support goes earlier than it should do.

[Jack Brereton (Stoke-on-Trent South) (Con)]

I congratulate my hon. Friend on securing this important debate. The ceramics sector has not received the level of support that many other energy-intensive sectors have to help with the transition and decarbonisation. Does he agree that, given that 97% of businesses in the ceramics industry are SMEs, the ceramics sector really needs a dedicated pot of funding from the Government to invest in the transition and in improving energy efficiency measures?

[Jonathan Gullis]

I am extremely grateful to my hon. Friend for his fantastic words. He is indeed correct to say that the ceramics industry has already put about half a billion pounds of its own money into decarbonisation and energy efficiency. I totally agree and understand that steel is important to this nation’s history as well as its future, but ceramics are just as important. Ceramics are in our mobile phones, and our kneecaps in some cases, as well as in the aerospace adventures we want to see—aeroplane engines literally would not fly without the ceramic film that goes around them. Ceramics are so important, with about 20,000 jobs across our United Kingdom dependent on them, so I hope we will see some support for them. The chase to net zero is fine, but we cannot do it by damaging the ceramics sector. We want to remain competitive with the world while China continues to dump its cheap, unruly products on our country unfairly. Thankfully, we are protected by tariffs for now—we need a longer-term commitment to them—but we also need the carbon border scheme and adjustments to ensure that we are competitive with mainland Europe. I totally concur with my hon. Friend.

On average, gas is roughly 10% of the cost of manufacturing a plate. However, companies are currently exposed to gas costs five times what they were for many years and have seen gas prices hit 20 times the previous normal cost. Companies should, of course, aim to build some resilience into their processes, but that kind of market fluctuation is beyond anything they could reasonably have planned for. Regrettably, businesses will certainly be put at a disadvantage because of the rapid and staggering rise in energy prices. Increased energy costs could have a significant impact on local businesses that do so much for the community. I want to ensure that the UK Government are acutely aware of the impact the cost of energy is having on UK ceramics and get a commitment from them that they will do all they can to protect it.

First, it is vital to point out the significance of the ceramics industry. As a proud Member of Parliament for Stoke-on-Trent North, Kidsgrove and Talke, an area that is hugely proud of the ceramics industry, I want to point out the ceramics industry’s centrality to both the national and local economies. The UK ceramics industry employs around 20,000 people. It is a crucial part of Stoke-on-Trent. Johnson Tiles, established in 1901, made over half of the 888,246 ceramic poppies for the Tower of London, commemorating all British and colonial servicemen who died in the first world war, and employs over 200 people in Stoke-on-Trent.

The UK ceramics industry contributes around £2 billion to the UK economy, which really does mean that ceramics are one of our country’s last great exports. The British Ceramic Confederation, which represents over 90% of UK ceramic manufacturers and whose chief executive is Rob Flello, estimates that the ceramic industry exports around £600 million a year. We use the world-leading products designed by companies such as Steelite, Churchill China and Burleigh in this place, in the Members’ Dining Room and Portcullis House, to name just a few. The very tiles on the floor just down the corridor in Central Lobby, at the very centre of our great democracy, are from Stoke-on-Trent. Sadly, it is a constant source of irritation and frustration to me that there are not anywhere near enough Stoke-on-Trent-made ceramics in Government Departments. Therefore, one of my first initiatives in my brief stint at the Department for Education was to ensure all tableware in my ministerial office was made in Stoke-on-Trent. I am very proud that my former private office in the Department for Education now proudly boasts its cups and saucers.

Not only does the UK ceramics industry clearly play a crucial role in both the national and local economies, but it is impossible to understand enough the emotional significance of this historic industry. For the people of Stoke-on-Trent and wider north Staffordshire, the ceramics industry is a source of immense pride. Local manufacturers are being priced out of the market by companies overseas in places such as China. This is, of course, at huge expense of the end product’s quality, as we all know that “Made in Stoke-on-Trent” is a sign of excellence.

The ceramics industry is an immensely energy-intensive industry. As such, Putin’s abhorrent, illegal and immoral invasion of Ukraine in February of last year has had a demonstrable impact on the industry. Gas prices have caused considerable instability in the ceramics industry, which is traditionally used to very reasonable energy prices. The base rate for wholesale gas prices is now £1.62, which is four times its stable average before February 2022.

Research by UK ceramics manufacturers suggests that productivity costs are exponentially higher—the average is 47% higher—in addition to an enormous increase in the price of energy. Again, research points to a staggering increase in costs, this time of around 400%. The UK has been hit especially hard by the global energy crisis, and our ceramics manufacturers have significantly higher overheads. By contrast with the UK, average price increases for overseas factories are only 29%. All this means that the sales volumes of ceramics manufacturers in Stoke-on-Trent are impacted and they struggle to compete against imported competition from cheap-labour countries such as China and European countries with far more generous support packages.

The shocking increases in prices meant that the Government’s previous energy relief scheme was so important for the ceramic industry and Stoke-on-Trent’s leading ceramics businesses. One manufacturer told me that over the winter months the scheme saved them an estimated £4 million, giving them a huge boost in these turbulent times. In times of global instability, the scheme has allowed our first-class manufactures to remain competitive, keeping their high-quality products on the market and on our shelves.

I welcome that the new scheme from April seems to include UK ceramics manufacturing, but overall it is still going to have a significant impact on manufactures’ overheads and thus competitiveness. In places such as Spain and Italy, which is a major competitor country on ceramics, their major ceramics businesses are being underwritten and helped to cope with energy costs. UK ceramics also struggle to compete with German competitors, which have electricity rates that are 38% lower.

For UK ceramics manufacturers to be most competitive, we need a level of support similar to that for, or at parity with, European businesses. This will ensure that the ceramics industry, the jewel in the crown of our great country’s manufacturing, is able to prosper well into the future. One way we could do this is to consider getting rid of regulations in order to make it easier for UK ceramics manufacturing sites to be regenerated. We could thereby drastically improve the short and long-term prospects of UK ceramics. Furthermore, we can point to other manufacturing industries such as textiles and plastics that are also struggling. If we cannot and do not support these industries, the UK will be far less competitive and, crucially, it will deter foreign investment. This puts skilled jobs at risk, not just in Stoke-on-Trent but throughout the country.

I must put on the record the devious behaviour of some energy suppliers that have sought to use never-before-used small-print clauses to levy additional charges and fees as a way around the price cap. I am aware of a business that was hit out of the blue with a £3 million bill for gas that the supplier bought from the wholesale market but that was seemingly lost in transit to its customers. It is important to note that the gas was never used by the manufacturer but was nevertheless charged to that customer. There are other examples of poor business practice used to extract money from hard-pressed UK ceramics manufacturers.

The UK ceramics industry is working tirelessly to become carbon neutral, as my hon. Friend the Member for Stoke-on-Trent South pointed out. In an energy-intensive industry, in the current energy crisis, this is all the more commendable. With the publication of the Skidmore review on net zero, the House should note that China still builds most of the world’s coal-fired power stations. UK ceramics manufacturers have to compete against a country that is not tied down by net zero targets. Many UK ceramics businesses are working with the British Ceramic Confederation to research the production of various ceramic products using hydrogen-fired kilns, and many UK ceramics manufacturers have signed up to the confederation’s net zero commitment by 2050.

As I outlined earlier, Stoke-on-Trent was at the beating heart of Britain’s first industrial revolution, and I am adamant that it can also be the centre of the green revolution, too. The British Ceramic Confederation is looking into the development of hydrogen technology to power factories. This is an exciting opportunity for the Government to support a crucial industry while also making this country more self-sufficient. As we all know, the war in Ukraine has vividly illustrated the importance of not relying on other countries for our energy.

In May, the British Ceramic Confederation was delighted to announce that £300,000 of Government funding had been awarded for a project to study the feasibility of using hydrogen as a fuel for the UK ceramics sector as the industry pushes towards net zero targets. This was a fantastic and highly welcome first step in supporting the ceramic industry to achieve net zero. Today, I ask the Minister to clarify what next steps the Government will take to further advance our goal of achieving net zero by 2050 by providing direct support on innovation to the UK ceramics industry? Will the Minister meet me and colleagues from the ceramics sector to explore direct research funding?

The purpose of this debate was to highlight, on the Floor of the House, the impact of the cost of energy on our great ceramics sector. It is impossible to overstate its centrality, at both local and national level, to communities such as Stoke-on-Trent North, Kidsgrove and Talke. I therefore implore the Minister to demonstrate that the Government remain steadfast in their support for the sector and those who work in it. As I have said, they are a fundamental element of Stoke-on-Trent’s economy, its jobs and its heritage.

This is one of our great country’s last great assets, and it is of paramount importance that we support it.

[The Minister for Industry and Investment Security (Ms Nusrat Ghani)]

I congratulate my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis) on securing the debate. As usual, he made a sensible and well-rounded speech. He is always lobbying the Department very hard, and he continues to be a champion for UK ceramics manufacturers. I am grateful to him for describing the impacts on the sector so clearly, and I can confirm that we in the Government are indeed steadfast in our support for it. Following Putin’s barbaric invasion of Ukraine, we committed billions of pounds to help households and businesses keep the lights on this winter, and I can reassure Members that we want to keep the kilns firing as well.

The Government recognise the significant contribution that energy-intensive industries make to this country. We know how valuable they are to local economies and communities, providing about 375,000 jobs directly, and millions more in the industries that they support through supply chains. That is particularly true of Stoke-on-Trent North, the birthplace of Wedgwood, some of whose china now sits proudly in my hon. Friend’s former Department, and whose strong connection with the ceramics sector continues to this day.

My right hon. Friend the Prime Minister has set out our objective, which is to grow the economy with better-paid jobs and improved opportunities throughout the country. If we are to meet that objective, energy-intensive industries such as ceramics, glass and steel will be crucial. As we continue our transition to net zero, about which my hon. Friend spoke so passionately, they will also be crucial to the manufacture of everything from electric cars to wind turbines, and we will do all we can to support them. In my role as Minister for Industry, I have engaged with business and trade associations, and have witnessed at first hand their drive and passion to work with the Government to find a sustainable solution to those challenges that works for us all.

We can all agree that the last few years have been exceptionally difficult for everyone, and energy-intensive industries were no exception. Looking forward, however, I am confident that we can deliver a better future, unlocking the opportunities that net zero offers to build resilient industries bringing growth and jobs to communities across the country and providing security, opportunity and prosperity in the years to come. We have already made enormous progress: between 1990 and 2019 we grew our economy by 76% and cut our emissions by 44%, decarbonising faster than any other G7 country.

However, there is a long way still to go, and given our present economic conditions it is more important than ever to accelerate the move away from fossil fuels and towards clean, affordable energy. We are clear about the fact that we must do all we can to ensure that we drive the green transition in a way that is resolutely pro-business and pro-growth, ensuring that no one is left behind on our journey to a low-carbon future, and as we do so we will consider carefully the recommendations of the Skidmore review, published last week.

My hon. Friend talked about low-carbon hydrogen and carbon capture. We know that there is a huge amount of potential in those transformative forms of energy, which will support the UK on its journey to energy independence and offer vital British industries such as the ceramics sector an opportunity to make the transition away from expensive oil and gas. These are technologies in which we are at the cutting edge globally, and we have set our ambitions high. We are aiming for up to 10 GW of low-carbon hydrogen production capacity by 2030, including four carbon capture, utilisation and storage clusters, and we are delighted that industry is doing the same. We support the British Ceramic Confederation’s ambition to use hydrogen technology, and we would be happy to discuss its plans further.

In recognition of the increased pressure facing all businesses, the Government took bold action. In October 2022 we announced the introduction of the energy bills relief scheme for Great Britain and Northern Ireland, which provides a price reduction to ensure that all eligible businesses and other non-domestic customers are protected from excessively high energy bills over the winter. The relevant price reduction for each business is being automatically applied to its bills by its supplier on the basis of eligibility, but I will come to the case that my hon. Friend mentioned.

As soon as that scheme was under way, we started a review of it to help to inform our next steps when it comes to an end on 31 March 2023. Last week we announced the successor to the energy bill relief scheme, which will be called—they love their titles—the energy bills discount scheme. As with the current scheme, the new one will be aimed at everyone on a non-domestic contract, including businesses, voluntary sector organisations and public sector organisations such as schools, hospitals and care homes. This will provide a discount on gas and electricity unit prices for energy bills during the 12-month period from April 2023 to March 2024, subject to a maximum discount. The relative discount will be applied if wholesale prices are above a certain price threshold.

Also as with the current scheme, suppliers will automatically apply reductions to the bills of all eligible non-domestic customers. Recognising that some non-domestic energy users in Great Britain and Northern Ireland are particularly vulnerable to high energy prices due to their energy intensive and trade exposure, these sectors will receive a higher level of support, subject to a maximum discount. The ceramics sector forms part of this group. These businesses, which we refer to as energy and trade-intensive industries, will however need to apply for the higher level of support, and we will work with the sectors, including ceramics, over the coming weeks and months as we finalise the details of this part of the scheme. I spoke to my hon. Friend the Member for Stoke-on-Trent North earlier today to confirm that he will be invited to those meetings.

Additionally, the Government are determined to secure a competitive future for our energy-intensive industries for the long term. In recent years, we have provided extensive support, including more than £2 billion to help with the cost of electricity and to protect jobs. This support includes electricity price relief schemes for eligible energy-intensive industries such as chemicals, cement, ceramics, paper, glass and steel. One of the specific EII schemes is the exemption scheme, which provides relief for a share of the indirect costs arising from the renewable levies. Eligible businesses receive a discount on their electricity bills and the UK ceramics sector received around £17 million from this scheme between 2016 and 2021. I know that my hon. Friend will want more, and we will obviously keep an eye on this.

In addition, there are several other funds in place to support businesses with high energy use to increase efficiencies and reduce emissions, including the £315 million industrial energy transformation fund, which will help to enable the sector to go green. As my hon. Friend will be aware, the ceramics sector recently secured £18.3 million for the Midlands Industrial Ceramics Group from the Government’s Strength in Places fund to help establish a global centre for advanced technical ceramics. This will ultimately lead to the creation of 4,200 jobs by 2030.

[Jack Brereton]

The Minister mentioned the fund that is available for energy-intensive sectors. Given that 97% of the sector is small and medium-sized enterprises, they are often excluded from the funds while the larger energy-intensive industries get them. Can we not have some dedicated funding for the ceramics sector, given that it is mainly made up of SMEs and has previously been excluded from bidding for a lot of this funding?

Energy Security

Jack Brereton Excerpts

Tuesday 29th November 2022 Commons Chamber

[Grant Shapps]

My hon. Friend is right about the role of hydrogen. I know from my time as Secretary of State for Transport how important that will be, particularly for transport in the much larger category of goods vehicles, buses, coaches, marine vessels and aviation. This is not just about the jobs in nuclear, which the Sizewell decision and Great British Nuclear will help, but about the development in hydrogen power. In particular, those hubs with great expertise will be tremendously important, and this Government fully back them.

[Jack Brereton (Stoke-on-Trent South) (Con)]

Investment in energy-intensive industries such as ceramics must also be a key part in reducing our overall energy consumption. Will my right hon. Friend look at what more can be done to invest in those key manufacturing sectors not only to reduce that energy dependence, but to reduce costs and support jobs in places such as Stoke-on-Trent?

[Grant Shapps]

The brilliant industries—particularly ceramics—in my hon. Friend’s constituency have been badly impacted by Putin’s war. The energy bill relief scheme has helped, and such things as the scheme for energy-intensive industries will assist, too. Ultimately, this comes to the point of today’s statement: energy independence, with low-cost and affordable energy, is the way forward not just for domestic users, but businesses such as those in my hon. Friend’s constituency.

Bill Presented

Elections (Proportional Representation) Bill

Presentation and First Reading (Standing Order No. 57)

Cat Smith presented a Bill to introduce a system of proportional representation for Parliamentary elections, for elections for directly-elected mayors in England, for local authority elections in England and for police and crime commissioner elections in England and Wales.

Bill read the First time; to be read a Second time on Friday 20 January 2023, and to be printed (Bill 201).

Energy Prices: Support for Business

Jack Brereton Excerpts

Thursday 22nd September 2022 Commons Chamber

[Mr Rees-Mogg]

Heating oil is an important issue, for the hon. Lady’s constituents, for businesses and, as I mentioned earlier, for Northern Ireland. It is therefore important that we ensure there is a proper equivalent scheme, and that is what we are doing.

[Jack Brereton (Stoke-on-Trent South) (Con)]

Many businesses in my constituency very much welcome these measures. As a number of Members have said, energy-intensive industries, in particular, have borne the brunt of many of the issues we have faced with energy cost rises. So will my right hon. Friend look in particular at industries such as ceramics, at longer-term support and at how we can support them to invest in more efficient and energy-saving technologies?

[Mr Rees-Mogg]

This is a very important point for ceramics, steel and other energy-intensive industries: they want to move to more efficient means of production, and that may require some investment. It is important that the Government help to work on the schemes to ensure that we have vibrant, efficient, profitable and, most importantly of all, globally competitive industries.

Energy-intensive Industries

Jack Brereton Excerpts

Wednesday 6th July 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to the hon. Member for Bradford South (Judith Cummins) for calling this debate today. It is an important issue and it is right that we debate it in the detail and depth it deserves. I recognise how important this issue is in many parts of the country, both from the perspective of my constituency and from being a Minister for the past 10 months. I know that there are hon. Members, both present and not in attendance, who have a very extensive interest in this and are very concerned about the challenges— which we hope are temporary—that the industry faces. We recognise those challenges.

First, lest it be suggested otherwise—I am sure that is not the intention of the hon. Lady—I want to say that energy-intensive industries are important to the United Kingdom and important to the UK Government. They are important because they provide resilience within our supply chains over the long term; are representative of British manufacturing and the fantastic things it does; and provide a historic link to our past and our proud energy and manufacturing background.

That importance is why I have spent much of my time as a Minister over the past 10 months talking to our energy-intensive industries. I speak almost weekly with at least one representative—sometimes more—from the energy-intensive industries. I have been on regular visits, including to glass factories in the north-west, paper mills in the east midlands, steel factories in Wales—the UK Steel representatives in the Public Gallery are very welcome—and chemical factories in Teesside. Over the past 10 months, I hope that I, as Minister, have demonstrated to the industries that I am interested in hearing their views—views that the hon. Member for Bradford South has articulated—and in engaging in open dialogue.

We want to understand the industries’ concerns and issues and to work through them in a careful, calmed and reasonable process—in the way that public policy should be created—to work out what is reasonable and proportionate. We discussed the issues on Monday in one of our regular UK steel discussions with unions and companies representing the industry. At those meetings, we come together and have exactly the kind of strategic dialogue that the hon. Member for Bradford South was talking about. The Government will continue to do that in the coming months. I want to make very clear that energy-intensive industries are important in terms of what has been done, and we need to ensure that they are listened to and heard on an ongoing basis.

I want to be clear that there is a challenge. When I speak to colleagues, including my hon. Friends the Members for Scunthorpe (Holly Mumby-Croft) and for Stoke-on-Trent South (Jack Brereton), and Opposition Members who feel just as strongly, I know how important it is that we acknowledge that there are difficulties. There are global difficulties because of unprecedented circumstances—we all accept that—which we did not anticipate. It is very difficult to anticipate the first invasion of a sovereign country on European soil for 70 years, which is what Putin did. It is difficult to anticipate the price spikes and the volatility in the market that comes from that. That is not something that can be easily managed away, but none the less it has caused issues for a number of energy-intensive industries as well as the wider sector. The Government are working through how they can support that.

We recognise that this follows a number of years where energy-intensive industries have been clear that while the Government have brought forward support, undertaken dialogue and are doing what they can, there is a price differential compared with Europe, and we understand that. That is one reason why we brought forward the British energy security strategy in April. It includes many elements, addresses the long-term approach to energy and indicates our continuing support for industry.

[Jack Brereton (Stoke-on-Trent South) (Con)]

The ceramics industry in Stoke-on-Trent has been incredibly successful since the Conservatives came to power. We have virtually doubled gross value added. However, we now face serious challenges, particularly because of energy costs. Most or all of the ceramics industry has not been eligible for Government support because most of the industry is too small and many of the NACE codes do not qualify. Does my hon. Friend agree that there must be a level playing field and we must address this issue to ensure that support in place for the ceramics industry?

[Lee Rowley]

My hon. Friend is an absolute champion of the ceramics industry, and I know how important it is for his constituency. As he indicates, it has been a real success story for our country, and we want to ensure that it continues to be a success story. His advocacy in this place is absolutely the way to ensure that that happens. We accept that there is a challenge—there is no question of that. Over recent months, the Government have acknowledged that challenge in papers such as the British energy security strategy, which is important and has been welcomed by a number of industries as part of our ongoing dialogue, and have started doing things to address it.

I am glad the hon. Member for Bradford South has acknowledged and welcomed the compensation scheme. It is not something to quickly pass over; it is a substantial increase in money—if that is the yardstick we are using. It is substantial confirmation that we are serious about supporting our energy-intensive industries. From the extensive conversations I have had with colleagues in this place and with the industries themselves, the changes coming from that have been welcomed. When people say, “The Government need to do something”, the Government have done something.

The energy security strategy is clear that there will be a further consultation on a further element of what we are seeking to do, and I expect that to begin shortly. We are considering using that strategic dialogue, which the hon. Lady indicated is important, about what else is reasonable and proportionate to do over a longer period of time. None of these issues is straightforward or has a simple solution; otherwise, this Government or previous ones, including the Labour Government pre-2010, would have done it. It is a difficult and challenging problem and we need to do something about it, as the Government have done, and look at what can be done in the future.

I will address a few of the hon. Lady’s points. Unless we contextualise this conversation and conduct it in a reasonable manner, it will go off in all sorts of directions that are ultimately unhelpful. I understand that ultimately it is for other people to choose their words, focuses and emphases, but there has been progress on this agenda in recent months and that should be acknowledged. It is recognised that the Government are absolutely serious about supporting these industries.

Energy Security Strategy

Jack Brereton Excerpts

Tuesday 19th April 2022 Commons Chamber

[Kwasi Kwarteng]

My right hon. Friend knows very well that the chemical industry is central not only to people in his constituency, but to those throughout the north-east. We engage with energy-intensive sectors such as the glass, steel and chemical sectors, and others.

[Jack Brereton (Stoke-on-Trent South) (Con)]

Ceramics?

[Kwasi Kwarteng]

Ceramics, yes. All those industries are covered by the energy-intensive scheme that we want to promote.

--- Later in debate ---

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am afraid that this will have to be the last question. I call Jack Brereton.

[Jack Brereton]

Energy price fluctuations are a particular issue for the ceramics sector. Over Easter, I was delighted to visit 1882 Ltd, a ceramics producer in my constituency that has raised these concerns with me. What is my right hon. Friend doing to support the ceramics sector, and all energy-intensive sectors, to reduce the cost of energy and help to increase energy sustainability?

[Kwasi Kwarteng]

My hon. Friend will have noticed that there is a commitment in the strategy to energy-intensive users. From his first day here, he has been a tireless champion of the ceramics industry. I was pleased to see him in his constituency when I went there, and to the other Stoke constituencies. I look forward to working with him to ensure that we protect our precious ceramics industry in the UK.

Oral Answers to Questions

Jack Brereton Excerpts

Tuesday 29th March 2022 Commons Chamber

[Paul Scully]

As a condition of receiving payment under the contracts for difference scheme, generators must demonstrate that they meet our biomass sustainability criteria, irrespective of where that biomass is sourced. There is no evidence that deforestation has occurred in the areas from where UK electricity generators source their biomass, but we must make sure biomass is sourced from areas that are managed consistently with sustainable forest management practices.

[Jack Brereton (Stoke-on-Trent South) (Con)]

8. What steps he is taking to support investment in UK manufacturing.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)]

The UK remains one of the world’s largest manufacturing nations, and the Government agree that manufacturing plays a vital role in the health of the UK economy. It is ultimately for British manufacturers to make decisions on their own strategies, but the Government continue to support them through a range of initiatives on productivity, costs, innovation and investment, ranging from Made Smarter to the catapults and the global Britain investment fund.

[Jack Brereton]

I very much welcome the Prime Minister’s response last week to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) that energy-intensive manufacturers such as ceramics will be covered by the upcoming British energy security strategy. These sectors are more important than ever, particularly for future technology, and they need support to address high energy costs now. Will my hon. Friend the Minister do more to support ceramic manufacturers to invest in new technologies and increased energy efficiency?

[Lee Rowley]

There is no bigger champion of the ceramics industry than my hon. Friend and his colleagues from Stoke, who work as an excellent team in supporting the industry as a whole. The Government have worked with industry for many years to mitigate the costs of energy, including an aggregate of £2 billion-worth of subsidy since 2013. From our multitude of conversations on the ceramics industry with him and his colleagues, I know he will encourage manufacturers in his constituency to consider other opportunities such as the industrial energy transformation fund.

--- Later in debate ---

[Kwasi Kwarteng]

I will reassure businesses that I engage with that we are constantly engaging in conversations with our Treasury colleagues and across Government to see how best we can use the existing schemes to support industries—the steel industry, ceramics industry and chemicals industry—in this difficult time.

[Jack Brereton (Stoke-on-Trent South) (Con)]

T4. I thank the small business Minister for speaking to our Staffordshire chamber of commerce event in Parliament recently. Recruitment continues to be a challenge for many businesses across Stoke-on-Trent, so will my hon. Friend outline what more we can do to support small businesses, particularly to upskill and recruit more workers?

[Paul Scully]

It was a pleasure to speak to the Staffordshire chamber of commerce. The Department for Work and Pensions’ “Way to Work” campaign is a drive to help employers to fill vacancies faster by streamlining recruitment processes and offering employers a named adviser. The Department is also supporting people to upskill through skills boot camps and sector-based work academies.

Reducing Costs for Businesses

Jack Brereton Excerpts

Tuesday 11th January 2022 Commons Chamber

[Jack Brereton (Stoke-on-Trent South) (Con)]

The support for businesses in the last two years to help them cope with the pandemic has been unprecedented. Stoke-on-Trent alone has had about £1 million in grants for businesses to cope with the challenges, not to mention all the support received through the furlough scheme, CBILS and self-employment income support scheme. Given that we now have record numbers of people in work—far more than before the pandemic—those measures have clearly worked to preserve jobs and livelihoods.

Many of the challenges are not new, however, and we must continue to support businesses to overcome the challenges they face. A part of the economy that has been particularly affected by the heightened energy costs is energy intensive industries such as ceramics and steel, which were the subject of my recent Westminster Hall debate. Hundreds of thousands of important skilled jobs are dependent on those sectors.

Unlike the significant decline in manufacturing jobs that we saw under the last Labour Government, in the last decade an increasing number of people have been employed in manufacturing roles. It is vital to further support those sectors to reduce energy costs; become more efficient; and develop new, more reliable forms of power to continue the successes that we have seen in recent years.

In the ceramics sector alone, there has been a doubling of GVA in real terms since 2010. I was particularly pleased that the Midlands Industrial Ceramics Group recently secured £18.27 million in Government funding through the UK Research and Innovation’s strength in places fund. The Government are doubling UK research and development investment and it is vital that more of that goes to industries such as ceramics and to energy intensive industries to support the transition and the levelling-up of our economy across the country.

Energy-intensive Industries

Jack Brereton Excerpts

Wednesday 24th November 2021 Westminster Hall

[Caroline Nokes (in the Chair)]

I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate, in line with current Government guidance and that of the House of Commons Commission. I also remind hon. Members that they are asked by the House to have a covid lateral flow test twice a week if coming on to the estate, which can be done either at the testing centre in the House or at home. Please give each other and members of staff space when seated and when entering and leaving the Chamber.

[Jack Brereton (Stoke-on-Trent South) (Con)]

I beg to move,

That this House has considered energy intensive industries.

It is a pleasure to serve with you in the Chair, Ms Nokes. I am grateful to have secured this timely debate. As we continue to emerge from the economic hit of the covid crisis and as financial activity builds and grows, energy prices are noticeably higher and our constituents are feeling the pinch. We have seen domestic suppliers go bust, and jobs and product affordability have been threatened by the cost of energy to businesses. The short-term issue of price volatility is exacerbated by longer-term issues of energy production and energy efficiency.

Today, I will set out the issues facing industries that rely on the intensive use of energy, not least the ceramics industry, for which the Potteries are internationally famous. It is worth remembering that to be the world capital of ceramics, Stoke-on-Trent needed to be not just a city of pots and clay, but a city of pits. The energy requirements to fire ceramics at extreme temperatures are intense, and it was local coal—as well as clay—that fired kilns historically.

Times change and coal firing is now, thankfully, a thing of the past. The last such firing was literally a museum piece, organised by the fantastic Gladstone Pottery Museum in my constituency at the Sutherland works of Hudson & Middleton in 1978. It is a good thing that coal firing is a long-lost practice. We should not over-romanticise the scenes of smoke billowing from hundreds of bottle kilns, which came at the human cost of debilitating industrial illnesses such as miner’s lung and potter’s rot, but neither should we look to close the industry down or leave it to wither on the vine, as the last Labour Government did, when massive household names, including Spode, Tams and Royal Doulton, were lost during their time in office.

The ceramics industry was born out of the innovation of Josiah Wedgwood and, while some processes from that time survive, the industry has continuously been one of innovation, with producers often competing to deliver even greater efficiencies. Just as the ceramics industry has had to adapt and adjust from the use of coal to the use of gas and electricity, it is currently adapting and innovating to the ongoing shift from gas. We should support it and other energy-intensive industries in doing so.

As a whole, the energy-intensive industries of steel, chemicals, paper, glass, cement and lime, industrial gases and ceramics contribute £38 billion annually to UK GDP, according to figures from the Energy Intensive Users Group. The group notes that the industries provide 200,000 jobs directly and support 800,000 indirectly. Those are not jobs that we should lose to international competitors with lower environmental standards than our own, lower ambitions for carbon reduction or higher interventionism.

There is an urgency to ensuring that energy-intensive industries survive in the UK, due to the real and present danger of the volatility in world energy markets. It would be a tragedy if short-term price pressures were allowed to undermine British industry just at a time when order books are recovering strongly from covid and firms are looking to take on more skilled staff. Just as there is a need to keep industrial jobs in Britain, we need to make sure that the existing orders for goods stay on the books of British firms.

Competitor countries are providing support and are ready to seize the market share. Worryingly, that includes competitors with less exposure to world energy markets and scant regard for enforcing environmental protections. In ceramics, it is worth being clear what that risk is.

The renaissance of the ceramics industry since 2010 is a great British success story, with the sector’s gross value added doubling in real terms from 2009 to 2019, according to the House of Commons Library. Ceramics is particularly important in the midlands economy. Some 60% of direct employment in the sector is within the midlands engine, and most is concentrated in the Staffordshire Potteries, focused on Stoke-on-Trent. The sector’s products encompass everything from crockery to electrical components, bricks to agricultural filters, sanitaryware to armoured plating, tiles to prosthetic joints, and pipes to works of fine art.

I have previously visited Ross Ceramics in Newstead in my constituency, which has expertise in the manufacture of complex geometry ceramic cores, which are used in the casting process of jet engine components for aerospace and other industrial uses. It is world-leading engineering. Far from being an industry of the past, modern manufacturing in advanced ceramic technologies is securing the future of skilled employment on good wages in and around north Staffordshire, but firms that usually face one third of their total production costs from energy are suddenly finding that two thirds of costs are from energy.

The industry has long militated against price shocks by buying energy in advance, but many were stung by the pandemic, finding that they had excess energy at a time of restricted demand for ceramic production, and taking a loss on selling back that energy. Things have now boomeranged completely. Firms that had held off from buying energy early for this winter—for fear of further lockdowns hitting demand—now face severe financial difficulties. Firms with full order books operating at 100% capacity have none the less had to contemplate shutting down early in December, out of fear that it will be cheaper to pay employees not to work than to incur the costs of the necessary amount of gas and electricity to fire products at 1,000°C or more.

I note that Portugal, a direct competitor for tile manufacturers, has recently introduced a 30% reduction in the network access tariff for the ceramics sector. That is just one example. Many countries around the world have taken such steps to support energy-intensive industries that have high costs. The industry’s electricity prices in the UK are some of the highest in Europe and are becoming uncompetitive. Additionally, although many of our manufacturers use electricity to generate heat, others who could switch to decarbonise are deterred from doing so by the high cost of commercial electricity on top of the capital investment that would be needed.

I am encouraged that the Government’s industrial decarbonisation strategy of April this year recognises the dangers and undesirability of simply offshoring production, or ceding it to competitors, as a route to getting the UK’s overall emissions down. Of course, the Government have devised the energy-intensive industries exemption scheme, which is great for businesses that qualify for it. Unfortunately, many of the industries in Staffordshire are excluded at the first hurdle from what the Department for Business, Energy and Industrial Strategy has dubbed the “sector-level test”. Specifically, that means businesses within NACE codes 23.41, 23.42 and 23.43, which cover household ceramics and ornaments, sanitaryware and insulators. Those codes need to join other NACE codes in the ceramics sector that, thankfully, are within the eligibility criteria—namely 23.20, which covers refractory products; 23.31, which is ceramic tiles and flags; 23.32, which is bricks and so on in baked clay; 23.44, which is other technical ceramic products; and 23.49, which is other ceramic products.

If we see the industrial decarbonisation strategy as a herald of the Government’s intention for a serious investigation of the longer-term measures needed to support industry as it transitions to lower-carbon energy, we need to look at how the parallel doubling of public research and development investment can benefit energy intensive industries. That will be necessary to improve efficiency, to encourage a move towards more electric firing and to develop hydrogen as the solution for the larger high-powered kilns where electricity is not an option.

There is a pressing need for an investment strategy for R&D in the energy transition for the midlands engine ceramics cluster, which is just as important as those in London and the Oxford-Cambridge arc who have for far too long received disproportionately high public R&D funding. Public R&D funding is particularly needed in a sector such as ceramics, given the high number of small and medium-sized enterprises—as much as 97% of the sector, according to the British Ceramic Confederation. Even firms that do pass the sector-level test for the energy-intensive industry scheme have difficulty passing the business-level test, due to the smaller-sized enterprises typical of the sector—even firms with worldwide brand recognition.

When certain qualification thresholds for energy-related assistance are set at tens of millions of pounds per work site, the ceramics industry loses out. A sum of £1 million per site would be more realistic. The use of NACE codes could, as has already been demonstrated, target lower thresholds at the ceramics industry for its particular characteristics and configuration.

I know that the Government recognise their responsibility to step up to the plate. Only this Monday, the Government announced £9.4 million to back a trailblazing hydrogen-storage project near Glasgow, helping to create high-skilled jobs. Last week, the Royal Navy issued a market exploration notice to seek hybridisation of the fleet, seeking private sector expertise for a public sector commission to reduce emissions by 20% to 40% by 2030.

The week before that, the RAF announced that it had secured a Guinness world record, no less, for the world’s first successful flight using only synthetic fuel, in partnership with Zero Petroleum Ltd. There was also confirmation this month of the highly significant £200 million Government investment in the Rolls-Royce small modular reactor—an exciting development that could create 40,000 jobs and secure many more in the supply chain, including at Goodwin International in Stoke-on-Trent, which leads the way in British precision engineering.

Sources of intense energy with low to zero carbon emissions are one clear way forward for heavy industries. Another is carbon capture and heat capture. The Minister will know that Stoke-on-Trent leads the way with a district heat network to use deep geothermal energy to heat our city and save thousands of tonnes of carbon dioxide annually, benefiting residents, education providers and businesses alike.

We can go further; I know that our local industries want to go further, but they need support to do so. Keele University, in our neighbouring borough of Newcastle-under-Lyme, has not only worked with EQUANS, part of the ENGIE Group, to generate and store energy from wind and solar on campus; it has also worked with Cadent Gas to demonstrate that hydrogen can be blended at up to 20% into the natural gas network, with no adverse effects for users. The consequent reduction in carbon emissions is obvious, but with hydrogen being six times as combustible as natural gas, public reassurance on safety will be paramount.

Fortunately, Keele and Cadent found in their year-long trial that it is safe to use a 20% hydrogen mix, saving 27 tonnes of CO₂ emissions in the process. Rolling that out to the domestic market nationally could remove from the atmosphere the equivalent emissions of taking 2.5 million cars off the road, all without changes to current gas heating and cooking appliances. For any new fuel source tested in private homes and campus buildings, as happened with the Keele-Cadent trial, there is a need to research the effects on ceramic and other industrial production, not least because glazes can respond very sensitively.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The hon. Member is making a good speech. Does he agree that it is high time the Government changed the regulations on hydrogen blending to allow that to happen in the gas network? At the moment, the gas management safety regulations do not allow any blending above 2%, which is contrary to the Government’s own hydrogen strategy.

[Jack Brereton]

I thank the hon. Gentleman for that point. I know that the Government are looking at that. Further trials at scale are being looked at—in Newcastle, I believe—to be undertaken by Cadent. I am sure that that will lead to further changes and to developments of hydrogen mix within the industry.

As I was saying, it is important to do that testing for energy-intensive industries, not least because glazes can respond sensitively to firing conditions, such as temperature and humidity. For that reason, I am glad to say that certain offshore production lines have looked to return to Stoke-on-Trent from locations with different climatic conditions that simply do not create the pristine quality of ceramic goods one gets from Stoke-on-Trent. I have been pleased to discuss with Cadent the importance of fully scientifically trialling and testing the impact of hydrogen mix, and I know that Cadent has been looking into this further with Lucideon, which leads the industry in ceramics research and material science.

I have argued for several years that we need an international research institute—a ceramic park—based in Stoke-on-Trent to institutionalise the myriad projects and advances, not least the work of Lucideon, to develop hydrogen kilns, which I am pleased to say recently secured UK Research and Innovation funding. What we need now is a dedicated research facility as a base for those projects for the industry, with Lucideon as the anchor. Glass Futures in St Helens is one example of what might be achievable by learning from another energy-intensive industry.

I am sure that the British Ceramic Confederation will have engaged with the Minister about its ambition for a similar world-leading centre of excellence for the world capital of ceramics. Indeed, as the BCC will point out, the sector has been working on recycling waste heat for decades, such as by pre-heating spray dryers with exhaust gases or heating spaces via heat exchangers on tunnel kilns. This is not a sector that wants to waste anything, and where it is economically viable, energy and carbon efficiency has been invested in for decades.

I should note that one such improvement comes from switching from intermittent to continuous kilns. One of the dangers of today’s very high energy prices is that kilns may need to be shut down completely and then restarted, which is far more complicated and dangerous than it sounds, with wide-ranging consequences. However, innovation must continue. That means supporting the development of new technologies, providing incentives for large-scale investment in proven technologies, and creating a regulatory framework that supports decarbonisation alongside the international competitiveness of UK industry. Some of the new technologies are almost there, but there are issues to overcome. For example, we have to overcome tar build-up or moisture content, depending on the fuel innovation; resist corrosion for acidic kiln exhaust gases; and avoid emissions of nitrogen oxides.

The need to produce and distribute hydrogen on a large scale must be fully researched, not least because hydrogen is also being touted as a fuel of the future for everything from JCBs to trains, including the freight trains that will bring the fine white china clay into the Potteries and will hopefully take more products out in the future. The Government want demand for hydrogen to be high, so they must ensure that the market conditions are right for a ready fuel supply. Interestingly, I note that as part of the Government’s industrial fuel-switching competition, BEIS funded a £3.2-million project led by the Mineral Products Association and Hanson UK to trial a mix of 100% net zero fuels, including hydrogen, meat and bone meal and glycerine, for commercial-scale cement in Lancashire for the very first time this September. Let us see more of those sorts of trials covering more of our energy-intensive industries.

In conclusion, I am happy that we have a Government who have enabled manufacturing to resurge in the UK, particularly the British ceramics sector. Modern and advanced manufacturing is a key provider of high-skilled, well-paid employment across Stoke-on-Trent—not just in ceramics, but emblematically so, as it is the world capital of that industry. We are on the cusp of very big advances in low-emission energy, and we need to seize the opportunities without taking our eye off the ball of the short-term dangers of price volatility in traditional fuel markets. Energy-intensive industries are spread right across the country, and are crucial to realising the higher-skill, higher-wage economy that will level up opportunities. I look forward to the Minister’s response detailing how the Government will meet the challenges ahead.

[Caroline Nokes (in the Chair)]

It looks like we have in the region of seven Back Benchers wanting to contribute, so if Members could do the maths and work out how many minutes they have, that would be much appreciated.

--- Later in debate ---

[Jack Brereton]

I thank the Minister for the great interest he is taking in these sectors. I hope to welcome him very soon to Stoke-on-Trent.

These jobs are so important for levelling up across the country. They are skilled, well-paid employment opportunities. As a number of Members have said, it is vital that we see a level playing field on energy. We have seen huge competition from Europe, which subsidises a number of markets, and from China, which puts huge subsidies into many of these sectors. We need support to make sure we have a level playing field. As my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) noted, there is no level playing field at the moment—there is not a free market in these sectors—and we need to address that.

As my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis) said, the costs are beyond what many of these industries can reasonably plan for. We need action and support to make sure that we have a level playing field, so that these sectors continue to build on their strengths and that we continue to see these important jobs and industries in the UK. I particularly thank the hon. Member for Strangford (Jim Shannon) for his kind words about Stoke-on-Trent, which is ably represented here.

I also want to touch on the importance of levelling up in R&D investment. There is increased investment in R&D now, with a doubling of R&D spending in the UK. We need to see more of that being spent in the midlands, in the north and in Wales. A huge proportion of R&D spending has been in the south and other parts of the UK. We need to spread it out across the country, particularly for the energy-intensive sectors such as ceramics, which need that support to transition and to decarbonise, to secure those jobs for the future.

Question put and agreed to.

Resolved,

That this House has considered energy intensive industries.

Net Zero Strategy and Heat and Buildings Strategy

Jack Brereton Excerpts

Tuesday 19th October 2021 Commons Chamber

[Greg Hands]

A very substantial amount of Government money is going into the heat and building strategy—I think it is in the region of £4 billion. I will correct the right hon. Lady. On this heat pump scheme that we have introduced, the idea is that it kickstarts the market and gets the private sector providing solutions. We have already seen a really good response to our signals from the private sector. That is exactly right, because the solutions to issues such as home heating will lie principally with the private sector.

[Jack Brereton (Stoke-on-Trent South) (Con)]

Further to the points made by my hon. Friend the Member for Stoke-on-Trent Central (Jo Gideon) earlier, the ceramics sector in Stoke-on-Trent has faced significant energy price volatility recently. It does want to transition, but it cannot do so on its own while continuing to be competitive internationally. Will my right hon. Friend ensure that we have our fair share of the additional R&D money that this Government are committed to investing in the UK?

[Greg Hands]

I am absolutely committed to that. My BEIS colleagues who look after research and development are absolutely committed to making sure that British ceramics are not sold short when it comes to R&D. We have a huge commitment to the sector overall, which my hon. Friend will know from the many years that we have worked together, particularly on trade issues as they affect the ceramics sector, including trying to break down trade barriers to make sure not only that our industry flourishes here in the UK, but that our exports do as well. I commend the work that he and all of the Stoke Conservative MPs have been doing for the sector for some years now.