Energy-Intensive Industries

Margaret Ferrier Excerpts

Thursday 10th March 2016 Westminster Hall

[Margaret Ferrier (Rutherglen and Hamilton West) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Chope. I congratulate the hon. Member for Weaver Vale (Graham Evans) on securing this important debate.

Support for energy-intensive industries is a matter that I care a great deal about. My hon. Friend the Member for Motherwell and Wishaw (Marion Fellows) and I represent the two constituencies with Scotland’s remaining steel mills, and those are sadly at risk. I have worked hard since my election to fight to save our steel industry. Although the Clydebridge steel treatment mill employs far fewer people than mills in other constituencies, it is no less devastating when jobs are at risk and when such an iconic industry stands to be lost from the constituency.

As the steel industry transitions to lower-carbon forms of production, it deserves our support. When crisis hit in my constituency, First Minister Nicola Sturgeon moved swiftly to establish the Scottish steel taskforce. That has resulted in positive action to retain jobs and hopefully to save and protect this established industry. If an alternative operator takes over, production will be able to resume swiftly due to the Scottish Government’s steelworkers retention plan. Action has been taken on business rates, and in addition to new public procurement guidance on steel, the Scottish Government have released an ambitious and visionary new action plan entitled “A Manufacturing Future for Scotland.”

The Scottish Government’s decarbonisation of industry steering group promotes and co-ordinates action to support energy-intensive industries, such as the steel industry, in making the transition to lower-carbon forms of production.

[Wendy Morton (Aldridge-Brownhills) (Con)]

The hon. Lady and I both sit on a newly formed all-party parliamentary group on ceramics. Does she agree that not only the steel industry but industries such as the ceramics industry face huge challenges? There are a number of firms in those industries in my constituency.

[Margaret Ferrier]

I thank the hon. Lady for that intervention, and I will come to ceramics later, if she will bear with me.

The Scottish Government’s steering group specifically helps them to deliver their emissions reductions under the EU emissions trading system and to meet legal obligations such as the UK climate change levy and the energy savings opportunity scheme.

It is clear that the Scottish Government are committed to protecting the steel industry as a key strategic asset in the Scottish economy, and on behalf of my constituents, I would like to put on record my sincere appreciation of that. The UK Government have gone some way, but there is still more to be done.

On the issue of ceramics, in addition to a very long-established steel mill, there is a brickworks in my constituency—Scotland’s only remaining clay brick company, in fact. Raeburn Brick is an established family- run business in Blantyre. Somewhere in the region of 15% of the bricks used in Scotland are produced by Raeburn, which means that about 85% are imported from outside Scotland. Those figures might not mean much to others, but to me they show that there is a real opportunity for more domestic business.

[Graham Evans]

I was interested to hear the hon. Lady mention the figure of 15% being made by that family business. Does she have the figure for how much is imported from outside the United Kingdom?

[Margaret Ferrier]

The figure I have is that 85% of bricks are imported from outside Scotland, but I am not sure how many are within the UK or the EU. I can certainly get back to the hon. Gentleman about that.

If we are serious about long-term and sustainable economic growth, companies such as Raeburn need support. There is clearly room for the Scottish market to expand and reasons why it is being held back. The manufacturing sector is highly important, and I certainly do not wish to see Raeburn at risk, as the Tata steelworks at Clydebridge is. The ceramics industry is looking for a level playing field, just like the steel industry, and is calling for assistance and action on carbon emissions, energy costs and trade, as well as on the housing supply chain.

How do we support energy-intensive industries? I acknowledge and welcome the action that has been taken already. State aid clearance for the UK Government’s energy-intensive industries support package will go some way towards easing costs for those industries.

We need only look at Sweden, for example, to see that electricity prices in the UK are needlessly high. According to Eurostat, the statistical office of the European Union, Swedish industry pays only €0.067 per kilowatt-hour for electricity. In the UK, the figure is exactly double that. Sweden has decided that fracking is not economically viable and is also phasing out nuclear. Renewable energy in the form of hydropower is now the single large source of electricity in the country, and wind power production is growing at a phenomenal pace—it has more than quadrupled over the past six years. We must aspire to cleaner, lower-carbon, sustainable forms of energy if we want to support industry in the long term.

The Scottish renewables sector has massive potential. The waters surrounding Scotland have the potential to provide it with a sustainable, renewable energy source—they are estimated to account for up to 25% of Europe’s tidal power and 10% of its wave power, as well as about 25% of European offshore wind resource potential. That renewable potential is being impaired, however, by the regressive energy policies of the UK Government, who are cutting support for onshore wind and vital support for solar energy projects, and slashing hydro tariffs.

We have an opportunity to develop new, low-carbon products and services, both to accelerate economic recovery in the short term and to drive long-term, sustainable economic growth. In short, low carbon is an environmental and economic imperative.

[David Mowat]

It is interesting that the hon. Lady has chosen the example of Sweden, because along with France it has, as she says, the lowest electricity prices in Europe, but both are characterised by a very high proportion of nuclear power. That is the reason.

--- Later in debate ---

[Margaret Ferrier]

I thank the hon. Gentleman for his intervention.

The hon. Member for Weaver Vale stated that energy-intensive industries are foundation industries. In the UK they account for 4% of gross value added and employ 200,000 people, who are highly skilled, high-wage and very important to the UK economy and especially to regional economies. He mentioned his concern about the 20% criterion, which leads to some companies being put at a disadvantage in direct competition.

The hon. Gentleman then spoke about chemicals. Tata and INEOS are significant employers with a strong manufacturing record. The industry is worth £9 billion to the UK economy and brings 5.1 million jobs—I hope I have got that right. Energy security is very important. The hon. Gentleman then mentioned bricks and the need for a commitment to house building in the UK. We need 2.2 billion bricks a year. Germany does better than the UK, so we need to look at that as the demand for bricks grows. I hope that the Minister will consider those points.

The hon. Member for Warrington South (David Mowat) mentioned that we do not want to lose jobs and spoke fondly of his time at Port Talbot. The hon. Member for Cardiff West (Kevin Brennan) also has fond memories of working in the industry.

Energy-intensive industries include not just steel and bricks but ceramics, chemicals and aluminium. As the hon. Member for Warrington South said, aluminium is a growth industry and a green material, but we are down to just one smelting capability, which apparently happens to be in Scotland. There is also a risk in the steel industry, and we must look at energy prices. He said that the gas industry in America is not new and has been going for more than a decade, but we must reflect on its environmental aspect. He said that China and India still have to catch up in their carbon policy.

The hon. Gentleman mentioned the difference between emissions in the UK and the EU—the EU seems to have signed up to a 50% to 60% lower emissions reduction than the UK. He then spoke about the emissions trading system and the failure to make progress on climate change. He mentioned Austria—it is interesting that its carbon emissions have increased. He asked the Minister who is right—are we going down the right road, or are other countries?

One comment that the hon. Gentleman made, if I picked it up correctly, was that Labour MPs in the north are less concerned about the issue. I am not sure whether I agree—perhaps I picked up on his comment incorrectly. I know that there are not many Labour Members in the Chamber today, but perhaps the Opposition spokesperson will be able to take that argument forward. Labour Members have certainly been strong advocates for the steel communities in the north.

[David Mowat]

I completely accept that. The point I was trying to make was that whenever we discuss climate policy, those MPs press for us to go further unilaterally, which is a little odd in the context of the industries and communities they represent. I completely accept that they care passionately about those industries.

[Margaret Ferrier]

I thank the hon. Gentleman for his intervention.

Finally, the hon. Gentleman wanted to know which industries will benefit from China gaining market economy status. We have heard many times from the Minister why she feels it would be okay to give China market economy status, and I am sure she us will give that answer again at the end.