Energy-intensive Industries

Debate between Mike Amesbury and Judith Cummins

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.