Energy Intensive Industries

Nia Griffith Excerpts

Monday 25th March 2013 Commons Chamber

[Andy Sawford]

I was conflicted in preparing for this debate because, as so often with these things, the Ministers who are called to respond to the pressure we put on the Government are the very people who are listening and seeking to help. The Business Secretary has indeed acknowledged that progress has been slow. I was told in a ministerial reply on 25 February that the Government are analysing the responses to their consultation on the mitigation package, and are exploring the issue further. I hope the Minister will understand when I say that, given the vital importance of these industries, which employ 125,000 people, this uncertainty is not good enough and we need to hear the detail soon. I hope he can say when the Government will tell us how the mitigation package will work and explain the details.

The overall level of compensation is not adequate—neither the scale of financial compensation nor the duration of the scheme, which covers only the current spending review period. The Chancellor announced in last week’s Budget that there will be further support in the next spending round, which is welcome. However, on the long-term investment decisions, the scale and duration of support during the next spending round has not been made clear. Can the Minister give us further details today?

The Budget proposes a one-year extension to the current mitigation package, taking us through to 2015-16. Does that mean stretching the existing £250 million further, involving a thinner spread of money across the period, or will there be additional money? That was not made clear in the Red Book.

The announcement in the Budget of a 100% exemption from the climate change levy is good, and I am sure the Minister will remind us of that, but we must remember that it was already at 90%. The Chancellor made much of the specific exemption for the ceramics industry, which did not previously qualify for mitigation. That has been hugely welcomed and we should welcome it tonight. I pay particular tribute to my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) for his campaign, in which I know other Members are involved. I hope the Minister will not mind me describing the situation in these terms, but all those measures put together look like a sticking plaster. He must acknowledge that our energy-intensive industries have a long-term problem, certainly a long-term challenge.

To secure the future of France’s energy-intensive industries, the French Government brokered the Exeltium deal, through which energy-intensives have signed long-term power supply deals for low-carbon energy. That is the kind of measure we need in the UK.

Ofgem has already raised concerns about a 2015 electricity supply crunch. We know there is a lack of gas reserves stored in this country, and gas prices are highly volatile. Last Friday, the Bacton interconnector failed for several hours. Prices opened at £1.25 per therm and rose to £1.50 during the day, which shows the huge volatility within the industry. The ceramics industry is concerned that it could be the first in line if there are gas shortages. If production has to be turned off with two hours’ notice, which is a risk, given the uncertainty of supply, that could seriously damage the kilns. In the long-term we need more storage and the requirement to use it through a public service obligation, as is common in other European countries, to ensure energy security and reduce price volatility.

I have spoken about the importance of our energy-intensive industries, and how vital they are to my constituency and many others around the country, so I urge the Minister to maintain an ongoing dialogue between the Government, industry and the trade unions, which have played a helpful role. Will he commit to visit my constituency to meet Tata, with me and work force representatives, and to visit Morgan Technical Ceramics so that we can discuss the issues for that industry in more detail?

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend recognise that many energy-intensive industries are keen to make significant investment, which will result in energy efficiency, but are hampered because the enhanced capital allowance system is not broad enough to encompass much of that investment and a lot of it is not eligible? Will he therefore join me in calling on the Government to re-examine this area to see whether they could expand the scope of enhanced capital allowances?

[Andy Sawford]

My hon. Friend makes an incredibly important point. I have received a great deal of helpful briefing from industries on how they hope to secure their industry for the long term, and I hope we will hear from the Minister about the enhanced capital allowances. If he would commit to visit my constituency, that would be incredibly welcome. I ask him to provide much more detail on the various measures that have been announced and how we might go further, so that when companies look at their operations in this country, as Tata regularly does, they can be confident that they will be able to operate in a viable way in the future because of the policies that we have advocated and that the Minister has acknowledged.