Energy-intensive Industries

Debate between William Cash and Jonathan Gullis

Wednesday 24th November 2021 Westminster Hall

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

It is a pleasure to serve under your chairmanship for the first time, Ms Nokes. I congratulate my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton), who is a doughty champion of Stoke. He is Stokie born and bred and boasts regularly that nearly half of Stoke-on-Trent North was built with his family line, so I look forward to seeing Brereton Place soon when I am out campaigning on the trial.

[Clive Efford in the Chair]

I also want to give a shout-out to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) who gave an absolutely outstanding speech; one of the best I have heard since I became a Member of this place. I hope that a lot of those asks are taken up by the Government and acted on.

The city of Stoke-on-Trent is absolutely steeped in its ceramics, not just in its history but in its future. My hon. Friend the Member for Stoke-on-Trent South talked about Lucideon, one of the leading UK advanced ceramic manufacturers which was recently awarded £18 million with the Ceramics Manufacturing Group, which is looking at how we can have new and exciting ways for this technology to work, alongside the traditional industries. I have companies such as Steelite, Churchill China and Burleigh, which are still making their world-leading products, which we can enjoy in this place if we go into Portcullis House or the Members’ Dining Room. It is a shame that when I go into Government Departments when I am turning or when I visit a Minister, I do not see a Stoke-on-Trent mug. I am absolutely dumbfounded when I visit a Minister and see that they do not have Stoke-on-Trent ceramics in their office.

One of the things the Minister should take away from this is to ensure that we properly procure Stoke-on-Trent’s world-leading ceramics in every single Government Department, because it sends a message that a UK Government are backing UK production.

[Sir William Cash]

I commend my hon. Friend on making an excellent speech, as they all have been today. With sovereignty we can stand on our own feet and insist on a level playing field in energy, which never existed in the EU, and promote our own manufacturing on a proper basis.

[Jonathan Gullis]

I am grateful to my hon. Friend for his intervention. As a co-Staffordshire MP, he has absolutely championed our world-leading ceramics manufacturing in Stoke-on-Trent and Staffordshire, as well as being a doughty champion for the coal industry. A lot of ex-miners in my community always wish to pay their respects to him for all the work he did for them.

Turning to covid-19 and the energy price rise, if we take Steelite International as an example, 99% of its turnover comes from the hospitality industry. In April 2020, as covid-19 forced us into our homes and away from pubs, restaurants and cafes, Steelite lost 95% of its turnover overnight. Despite that being hugely damaging to Steelite as a hospitality operator, it failed to qualify for the rates relief offered to hospitality businesses as part of the emergency package announced in 2020, and it was classed as a manufacturer.

The ceramics industry is crucial to the hospitality sector and should also benefit from the 50% one-year business rates discount announced recently by the Chancellor. As a company that depends on hospitality, Steelite was one of the businesses hit hardest by the pandemic, and now by gas prices. Gas prices have risen rapidly across Europe in 2021, but the UK has been exposed to considerably higher prices than elsewhere, with prices rising to five times what they were this time last year.

Many ceramic companies forward purchase their gas and electricity. However, during lockdown when demand for the hospitality sector drastically decreased, gas that had been forward purchased was not used. That meant companies had to sell it back at a loss, making many reluctant to forward purchase again due to uncertainty over future lockdowns and levels of demand. As a result, the ceramics industry has been left particularly exposed to the current exceptional gas prices. On average, gas is roughly 10% of the cost of manufacturing a plate. However, companies have been exposed to gas costs five times of what they were last year. Companies should, of course, aim to build in some resilience in their processes, but this kind of market fluctuation is beyond anything they could have reasonably planned for. For large manufacturers, it could add as much as £500,000 to £1 million per month to production costs. It is simply impossible for ceramics companies to continue to swallow these increased costs, especially at a time when orders from the hospitality sector are still not up to the previous levels in 2019.

Costs will need to be passed on to customers. However, while we are still recovering from the hangover effects of the pandemic, customers are looking to cut costs, not increase them. Passing on extra costs to customers risks encouraging them to turn to cheap imports from abroad, where Governments have taken decisive action to support intensive industries. Spain has introduced tax cuts, including extending an existing suspension of a 7% power generation tax until the end of the year and cutting the special electricity tax from 5.1% to 0.5%. At the end of the day, we must take action and protect these industries. I hope the Minister will take away everything that has been said, and I congratulate my hon. Friend the Member for Stoke-on-Trent South for securing the debate.