Energy-intensive Industries

Mike Amesbury Excerpts

Wednesday 6th July 2022 Westminster Hall

[Judith Cummins]

I absolutely agree; these industries are fundamental to the future of our economy. The Minister can imagine my dismay when I raised one of the cases from my constituency with the Minister for Energy, Clean Growth and Climate Change, the right hon. Member for Chelsea and Fulham (Greg Hands), at Business, Energy and Industrial Strategy questions on 7 June, and I was told that my example was just an “extreme” case. Therefore, presumably, it was not worth his time addressing. The case in question is an energy-intensive business in my constituency, whose energy bills have risen from £7 million to £35 million. However, that is not an extreme case. In fact, industry after industry have been warning for months about the impending problems, and raising the alarm on the dire situation they now find themselves in.

[Mike Amesbury (Weaver Vale) (Lab)]

One such industry is in my constituency, Tata Chemicals Europe. The managing director has fed back to me exactly your concerns; it is a real live issue across the country.

[Judith Cummins]

My hon. Friend is absolutely right that it is a national problem and needs a response from the UK Government. Almost all industries are feeling the effects of soaring energy prices. However, for some industries, such as chemicals, steel, ceramics, cement and shipping, it is their extreme energy intensity and the singularity of their outputs that make it nearly impossible for them to react to energy price fluctuations. Those energy-intensive industries face a unique set of challenges that need to be addressed directly by the Government or they will face significant job cuts, lost investment and, ultimately, factories closing. There are good jobs at risk here.

If that seems too extreme for the Minister, he should know that Make UK, which represents Britain’s manufacturing industry, has made it clear that more than two thirds of companies claim that rising energy costs are causing “catastrophic” or “major” disruption to their businesses. Make UK has said that eyewatering energy costs have become “a matter of survival” and has called on Ministers to do “whatever it takes” to support businesses and protect jobs. Without that, they face pushing these essential industries closer to breaking point.

The UK’s glass industry also faces an increasingly challenging position. With energy prices tripling and gas bills quadrupling, the glass industry has repeatedly asked the Government to recognise the unbearable pressure these prices have placed on an industry that is so vital to the UK. It needs support—any support—because price hikes are putting UK glass manufacturers at a competitive disadvantage, risking undoing the hard work on decarbonisation, quashing inward investment and, ultimately, passing on a rise in prices to consumers at a time when we all know that inflation is already ballooning out of control.

While the Government continue to bury their head in the sand, it is working people who will pay the price and suffer. British Glass states that

“without firm action to address the industrial energy crisis, we risk…loss of employment across the north of England.”

I say to the Minister, this is not levelling up; this is the Government playing fast and loose with other people’s jobs.

The Government’s own figures, laid out in the latest energy price comparisons, reveal that industrial electricity prices in the UK are significantly higher compared with the rest of Europe, and indeed the world, with extra-large consumers facing prices 40% above the median of the EU14. It is worth noting that under the coalition Government, BEIS used to publish annual energy prices and bill impact reports, but that has been stopped. Minister, will you outline when those reports will be reinstated?

The energy White Paper in 2020 called for

“a strategic dialogue between government, consumers and industry on affordability and fairness”,

but that has not happened yet. Will the Minister update me on any progress in those conversations?

The petrochemical group INEOS has also warned that British manufacturing is now under serious threat from competing regions, such as the US, because of high energy costs. It cites our producers facing gas prices seven times higher than the levels paid by US competitors. To put the size of the problem into perspective, INOVYN, a chlorine manufacturer operating in Runcorn, on the banks of the Mersey, uses as much electricity as the nearby city of Liverpool.

However, the problem is not new. Last year, UK Steel published its report into the huge structural barriers it faces because of out-of-control energy prices.

--- Later in debate ---

[Lee Rowley]

My apologies for not using the correct nomenclature, Mr Stringer.

The point I am making is that there is a variety of nuances underlying this discussion. We have energy-intensive industries that are heavily dependent on one source of fuel, and energy-intensive industries that are heavily dependent on another. We have some industries that are very heavily hedged and some that are not. We have some differences when it comes to the significance of the change in energy costs. We have some industries that are within the compensation scheme, and some that are without it. Some are in other schemes, and some have already applied for schemes that are already open, including the industrial energy transformation fund, which is another £300 million of Government funding—of taxpayer subsidy—to help the sector.

The point I am making to the hon. Member for Bradford South is not that there is not a challenge—I have repeatedly indicated that there is. It is not that we do not value energy-intensive industries, nor that I do not want to listen, and I accept that she is acting completely in good faith in trying to record and highlight the challenges that energy-intensive industries in her constituency face. However, the question is exactly what we do about it, and that strategic dialogue is under way at the moment.

[Mike Amesbury]

CF Fertilisers, which employs many people from my constituency of Weaver Vale, is located in the constituency of my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) and also has many employees there. Over 300 of those people now face losing their jobs. I know there have been discussions with a consortium that has come forward and some reference to a bridging loan, but that would require some intervention, hopefully from the Government, with a potential purchase. It may be beyond the scope of today’s discussion, but I would be interested to know how that is progressing.

[Lee Rowley]

I thank the hon. Gentleman for his intervention. I know that this matter is important to employees at the Ince factory, just as it is important to those at the Billingham factory. I have 50 seconds left of my speech, so I am afraid I cannot address that issue directly, but the hon. Gentleman has absolutely made his point and has been clear about the implications for that locality.

In the few moments I have to sum up, the key point I want to make is not that the Government do not agree there is a challenge, or that we do not think energy-intensive industries are valuable to the United Kingdom—they absolutely are. The point I am trying to highlight is that we are talking to those industries in a careful, calm and methodical manner, working out all the nuances and differences that underlie this issue, and seeking to determine how, over time, we can bring forward solutions that work for the long term. However, we must also recognise that £2 billion in support has been provided since 2013, and that we have done much in recent weeks, too.

Motion lapsed (Standing Order No. 10(6)).