Ceramics Industry

Paul Farrelly Excerpts

Tuesday 8th March 2016 Westminster Hall

[Tristram Hunt]

The hon. Gentleman is exactly right: it is a great export industry. It is interesting that the companies that stayed in the UK, did not offshore all their production, invested in research and development and design, and supported innovation, are growing. As I am sure my hon. Friend the Member for Stoke-on-Trent North will explain, her constituency is pretty much dominated by Steelite, which grows every week. That is only to be admired.

A new culture is emerging among trade unions such as GMB, the British Ceramic Confederation and local businesses, and a new culture of research and innovation is coming out of facilities such as Lucideon in Stoke-on-Trent—our ceramics research hub. Today, as the hon. Member for Stafford (Jeremy Lefroy) suggested, the ceramics sector exports £500 million a year, employs about 20,000 people directly and enjoys annual sales of about £2 billion.

To sustain that success, I have some requests for the Minister. The ceramics industry is an energy-intensive sector. Energy comprises up to 30% to 35% of production costs. We are severely disadvantaged by the current plethora of UK and EU policies. For example, only seven ceramics manufacturers in the UK are likely to receive renewables compensation, in contrast to more than 100 German and 140 Italian companies. Policies relating to the EU emissions trading scheme are very important for competitiveness. The question for the sector is: which processes will be awarded carbon leakage status for phase 4, which will begin in 2021?

There are particular worries about the tiering on just a handful of sectors, and concerns, which my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) might pursue, about the roof tile and brick businesses. The Government’s much-vaunted house building programme should not be carried out on the back of Polish, Belgian or Dutch bricks. We should produce them in the UK.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

Does my hon. Friend agree that, although of course we are all concerned about the future of the steel industry, it is very important in our discussions with Brussels that the ceramics industry is not disregarded or harmed as a by-product of our attempts to help the steel industry?

[Tristram Hunt]

My hon. Friend, who has been a brilliant campaigner for the brick business over many years in our part of the world, is exactly right: we would be shooting ourselves in the foot, in terms of industrial policy, if the advances that we want to make in the steel industry undermine the ceramics industry. They are both energy-intensive sectors, so they share similar challenges relating to energy costs.

We would like to hear that the Minister is fighting to ensure that heavy clay producers are also awarded carbon leakage status. We welcome the ceramic valley enterprise zone, but without support on the EU emissions trading scheme, even state-of-the-art facilities will be punished for their carbon costs. We serve neither British industry nor the global environment if we rack up industrial energy prices, export jobs from Britain and import carbon emissions.

It is very important that consumers know where products are made. The outsourcing of production is nothing new in the ceramics business—indeed, during busy periods, Josiah Wedgwood himself sometimes asked other manufacturers to make up blanks for him—but in an age of brand value, the back stamp remains all-important. In Stoke-on-Trent, we are proud to house the turnover club, whose members flip the crockery in restaurants and even dinner parties to find out where it was made.

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[Ruth Smeeth]

I wholeheartedly agree that investment in ceramics is as much in our national interest as it is part of our wider economic interests. Like our city, the industry has a proud past, but it could have an even brighter future if the Government are prepared to support it. My local businesses are keen to invest in research and development, to expand production and to create jobs, but a toxic cocktail of policies is creating great uncertainty. If future profits are seen to be at risk, investment will stall and our economy will suffer.

I am proud to support the British Ceramic Confederation’s EARTH campaign, which is doing vital work to bring policies to light. One such policy is the decision to confer market economy status on China, which would prevent meaningful anti-dumping measures against unfair Chinese export practices. The Government have tried to claim that granting China market economy status would not affect the ability to protect British industry and that anti-dumping measures could still be put in place, but that fails to take into account the fact that anti-dumping measures are calculated at a far lower rate for free market economies.

If China were to be granted market economy status, any anti-dumping measures placed on it would be calculated on the basis of the domestic cost of production in China, which is greatly subsidised by state support and kept lower by the cheap cost of labour employed in appalling conditions. The result would be so-called protections that in practice would be virtually worthless and nothing to stop European markets from being saturated with Chinese productions at extremely cheap prices.

[Paul Farrelly]

Does my hon. Friend agree that the industry’s concern for many years has been not just dumping from China, but counterfeiting? Many companies such as Doulton and Wedgwood have found themselves in a position where, weeks after producing new designs, professional salesmen from Chinese industrial complexes are going around Europe with portfolios of copies of their designs marketed at a third or a quarter of the price. That remains a concern.

[Ruth Smeeth]

I very much agree with my hon. Friend and would suggest that one reason we need to protect our industry is the quality of what comes out of our factories as well as the design and investment.

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[Anna Soubry]

Right, so I am basically running out of time. That is very sweet of you, Mr Hollobone; I am very grateful.

[Paul Farrelly]

Will the Minister give way?

[Anna Soubry]

The hon. Gentleman will have to be quick, or I will be in trouble. Go on.

[Paul Farrelly]

May I briefly suggest—and thank you, Mr Hollobone—one more subject for the Minister’s road map? For many years, we have pursued the issue of mandatory origin marking, in part to combat counterfeiting from China, as well as on product safety grounds, but the Department has always resisted it, because it feels that it is protectionist. Will the Minister look afresh at that and tell us, perhaps in writing, where this issue stands in the Department and, at the moment, in discussions in Brussels?

[Anna Soubry]

I was about to come on to that issue, so that is good timing. We did a study on mandatory country-of-origin marking, which was published on 2 March 2015. I have to tell the hon. Gentleman that the majority of companies that took part did not believe that compulsory origin marking would enhance product safety or tackle counterfeiting. However, I do not doubt that more work can be done, because there is marking that is misleading. There are all sorts of things that I will not go into now, Mr Hollobone, because that really would have me here all night, but I am not happy about the markings on lots of products that make out that they are British when actually they are largely made somewhere else. More work can be done on that, and I am very happy to do it.

We are looking at catapult status for the Materials Processing Institute. I am in all sorts of discussions with other hon. Members, notably from Redcar and the north-east, and that will continue. It is something that we are revisiting and looking at, and we will judge it on its merits.

Hon. Members asked about the European Union. It is undoubtedly the case that we are stronger, safer and considerably better off by remaining within the EU. We are making huge strides by ensuring that on dumping, for example, the EU is acting much more quickly and also reducing regulation, and ensuring that it, too, is getting the message on energy. I will finish on this very strong line, if I may. When I went over specifically for the energy intensive industries competitiveness meeting two or three weeks ago, the various sectors did not hold back in making it absolutely clear that we have to have sensible energy prices. We must not overly burden people with taxes. We must create a level—