Grangemouth Oil Refinery Closure: Job Losses

Question

11:06:00

Asked by

To ask His Majesty’s Government what steps they are taking to mitigate job losses following the Grangemouth oil refinery closure.

My Lords, the decision by Petroineos to cease refining at Grangemouth was deeply disappointing. Before July 2024, there was no plan for Grangemouth. Within weeks, we worked with the Scottish Government to deliver a £100 million package to support the local community. This includes a training guarantee for all Grangemouth refinery staff affected to help them into new, good jobs with local employers. Project Willow identifies nine low-carbon business models that could create 800 jobs by 2040, backed by £200 million from the National Wealth Fund.

I thank the Minister for his Answer. I speak as the former leader of Unite the Union. My union, and indeed the people at the sharp end in Grangemouth, believe that converting the existing refinery to produce sustainable aviation fuel, which is much needed by the industry now and in the future, is by far the best option for creating jobs on that site. That is what Keir Starmer promised—green jobs, new jobs. Does the Minister agree that the plan should therefore be fast-tracked and implemented now? We could be producing aviation fuel, as opposed to importing it and storing it as in the Chinese/Ineos joint venture proposals. It would be best for jobs, best for Scotland and best for Britain.

I thank the noble Lord for his question. We welcome Unite’s continued engagement in the long-term clean energy future of the site, and long may that involvement continue. The Prime Minister is committed to creating many more green jobs. The Government share Unite’s ambition to secure a viable, long-term future for the site, which is why the National Wealth Fund stands ready to invest £200 million once an investable proposition has been identified, which could include sustainable aviation fuel.

My Lords, on these Benches, we believe in a just transition, and I know that the Government do too, but, more broadly, what action are this Government taking to be proactive and not reactive in this space? The truth is that a blizzard of ideas, policies and proposals, just coming too late, do not work to save the jobs. It is important that we help those people to make sure that they have a living and that we do not sacrifice workers. Can I ask the Government to do more in assessing risk?

I welcome that question and agree with the noble Earl. If we look at the oil refinery industry, we see that refineries that are doing well are investing in the future; for example, looking at sustainable fuels. The Prax refinery unfortunately went into insolvency at the beginning of the week, but the refinery across the road, Phillips 66, is doing really well, because it is doing exactly what we want to see, which is investment in sustainable fuels for the future.

My Lords, when will we see the end of this hand-wringing about loss of jobs in Scotland? It can be summed up for two reasons. One is net zero and the other is Ed Miliband.

I think the noble Lord will understand that I do not agree with that assessment of the situation. Our objective is net zero and what the Secretary of State is doing is thinking about the future. The jobs being lost in Scotland at Grangemouth are because the company has lost over £700 million since it took over the refinery. It invested £1.2 billion and still made a loss. It has got to do with the future, and it is about oil refineries which have international competitors. They need to change and secure long-term investment in sustainable fuels. There is a future for them, and it is one that we are going to back.

My Lords, the sad reality is that the Grangemouth oil refinery has come to its end of life after 100 years of service. That is due to the transition from oil and gas to renewables. Of course, the loss of 450 jobs is deeply regrettable, and Ineos should get some credit for working with authorities to try to mitigate that with Project Willow, but I am even more concerned about the 1,000 jobs on the site next to the oil refinery in the Ineos petrochemical plant. It is one of two of its kind in the UK; it is best in class of 40 in Europe, but its profitability is deeply compromised by exorbitant energy prices and carbon taxes which are not imposed on its competitors in the US, China and India. When will the Government realise that their current energy policies are driving the UK industry on the rocky road to ruin?

I thank the noble Lord for that question, but I think that the Opposition want to airbrush out of the equation the last 14 years, from 2010 to 2024. As far as the petrochemical industry and oil refineries are concerned, under the last Government’s watch two oil refineries closed and a third, Grangemouth, announced its closure. Last month saw the first meeting of the industry with a Minister in 13 years. The trade body for the oil refineries in that sector has welcomed this Government’s approach, especially the energy-intensive industries compensation scheme and a review into the industry’s eligibility for it. We are working with the industry and doing our best to think about what is best for the industry into the future. It is time that the Opposition reflect on what they achieved in the last 14 years.

My Lords, the Interministerial Group for Net Zero, Energy and Climate Change met on 6 May 2025. Clearly, quite a lot of things were discussed there, but a communique published later that month makes no mention of Grangemouth. Can the Minister tell us when the interministerial group will meet again, and whether this will be on the agenda?

I thank the noble Earl for the question. I do not know when the next date is, but I can write to him and let him know. The oil refinery sector is something that we are keen to see as a success. We need to make sure that the fuel that we create is as homegrown as it possibly can be, and we want to see a future on this. We know that we have competitors around the world, such as in India and Africa, and that the margins in the fuel refinery industry are very small, so this is something we would like to take up internationally. I will write to the noble Earl on what we are going to do in the future.

My Lords, another oil refinery is going bust, this time in Lincolnshire. It is run by an individual who has managed to turn a going concern into a so-called “loss-making” business. It is closing down with the loss of 400 jobs and more than 1,000 in the supply chain. The similarities to Grangemouth are obvious. Does the Minister accept that this is no way to run our energy policy? Does he agree that the only way to ensure energy security is to take Grangemouth and Prax Lindsey into public ownership—

Oh!

Yes, public ownership; it does work—while sustainable, green jobs are developed?

I thank the noble Baroness for that question. First, the problem with Prax was that it was a badly run company. If I have one message for it, it is to put its hands deep into its pockets and think about the 400-odd workers who have lost their jobs there. Secondly, we are investigating how that company was run. As far as the industry is concerned, as I said earlier, if we look just across the road, at Phillips 66, we see that that is a well-run oil refinery that is thinking about the future and looking at sustainable fuels. That is the future of the industry. We are looking at Project Willow, which is active in Grangemouth, to see whether we can utilise that in Lincolnshire as well, and at what kind of training package we can get together for the workers there. We are looking at this, and it is very important that we do, but the reason why Prax is in the position that it is in is that it was badly run.

My Lords, there is a certain irony in all this and in discussing net zero, because next door to the Grangemouth oil refinery is the Alexander Dennis bus company, which produces some of the finest electric buses in this country. The danger there is that a great number of jobs are apparently going to be lost at that facility. Has the Minister anything to say regarding those jobs?

All jobs are important, and I will write to the noble Lord on exactly what we are doing about that. Our vision for the future is that it is sustainable and that we utilise EVs more than we are currently. There is a future in all this, and I am sure that we will do everything we can to ensure that those jobs are sustainable.

My Lords, I think the Minister said that there had not been a ministerial visit to Grangemouth in the last 13 years; I certainly went to Grangemouth as Secretary of State for Scotland. Let me give him an easy question: to add to the factors creating uncertainty for the Scottish jobs market cited by the noble Lord, Lord Forsyth of Drumlean, does the Minister agree that another is the Scottish Government’s obsession with independence?

I thank the noble Lord for that. As far as Scottish independence is concerned, it is not the position of this Government, and it is something that I actively campaigned against 10 or so years ago. I do not deny that the noble Lord went up to Grangemouth, but the point I made in my answer was that there was no ministerial meeting with the industry in 13 years.