Energy Intensive Industries

Sarah Champion Excerpts

Monday 25th March 2013 Commons Chamber

[Andy Sawford (Corby) (Lab/Co-op)]

I had not anticipated this number of Members attending the debate at this late hour. I am delighted to see them, as it shows the level of interest in this subject. Many other Members have raised the same issues, and there were some welcome announcements in the Budget last week, but I hope to press for more detail and more information on how this issue will impact on my particular constituency. If I am not able to take all the interventions that Members wish to make, I am sure they will understand.

Corby is a town built on steel: the steelworks and the tubeworks. In 1980 thousands of men were put on the dole, including my own dad, when Corby stopped making steel, but the tubeworks continued, and my granddad worked in the stores there. Today it is still incredibly important to our local economy. Six hundred and fifty people work there. These are good jobs that pay well, and in which people learn great skills. This year, Tata took on 13 apprentices at Corby. It dispatched 250 kilotons of tubes, and exported 40% of the product around the world. It contributes more widely to our local economy. I am told that there is a multiplier effect.

[Sarah Champion (Rotherham) (Lab)]

As my hon. Friend knows, Tata Steel in Rotherham employs more than 2,000 people, and the effect that they have on the economy is considerable. That is why I think that the Government should introduce practical measures to support the industry.

[Andy Sawford]

My hon. Friend is right, and I know that she will continue to champion the steel industry in Rotherham. Steel is, of course, incredibly important to many communities around the country. I am particularly proud of Corby’s steel tubes, which can be found in Wembley stadium, in the Olympic park and in the millennium wheel. The red tubes can be found in buildings across the country.

I am pleased that, since becoming a Member of Parliament, I have been able to be active in the all-party parliamentary group for the steel and metal-related industry, which is chaired by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) and supported by many other Members. I have also been involved with the trade unions, particularly Community but also Unite. Together, we are concerned about the impact of rising energy prices, both because of rising wholesale prices generally and because of European Union and United Kingdom Government policies, especially those that rightly seek to reduce carbon output but, in my view, have wrongly had an impact on a set of vital industries which we need as a nation, and which are part of our sustainable future.

I am not talking just about steel. We have world-class energy-intensive companies that make a huge contribution to our employment, tax revenues and exports. The Environmental Audit Committee estimates that energy-intensive industries account for 4% of gross value added, and employ 125,000 people in the United Kingdom. Concern is shared by a number of industries. The hon. Member for Rugby (Mark Pawsey) has expressed concern to me about the cement industry, and companies such as INEOS Chlor which are part of the Energy Intensive Users Group have given me helpful briefings.

Last week the ceramics industry was very much in the public eye when the Chancellor made announcements about it in his Budget statement. In my constituency, Morgan Technical Ceramics employs 200 people. It makes an incredible variety of products which are exported to more than 100 countries, but in the process it uses large amounts of gas, as do all ceramics manufacturers.

Three areas of climate policy are having a particular impact on industrial energy prices: tax, carbon prices and renewable subsidies. Of course, those apply in other European countries, but the United Kingdom Government have not listened to the calls from energy-intensive industries in the UK for help of the kind that the German and French Governments give their industries. That has two effects. First, it makes it very difficult for our companies to compete now, and secondly, when it comes to investment decisions and securing the long-term future of these industries, the global companies of which they are part are increasingly opting to move elsewhere. Morgan Ceramics, for example, tells me that it recently moved 300 jobs from the UK to France.

We have an urgent problem. Climate policies have added about 21% to current electricity prices, and the Energy Intensive Users Group estimates that the figure will rise to 58% by 2020. New extra climate-related taxes are likely to exceed current profits for many of our energy-intensive companies within the next few years, which means that their viability is in question in the medium term. Let me give two figures that illustrate the problem. The wholesale price of electricity in Germany in 2014 is forecast to be €40 per MWh, while the price in the UK is forecast to be €60 per MWh—and that is before taxes have been taken into account. That should be contrasted with the help that is being offered by Governments. The UK Government have provided a £250 million mitigation package to protect industry from the cost of the carbon prices floor and the EU emissions trading scheme. Of course, that mitigation is welcome, but the German Government are offering €5 billion in energy tax rebates to their energy-intensive industries, so we can immediately see that the concerns about a level playing field are very real.