Prax Lindsey Oil Refinery

12:49:00

(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the closure of the Prax Lindsey oil refinery.

In my oral statement on 30 June, I informed Parliament of the deeply disappointing news that the Prax Lindsey oil refinery had entered insolvency and that the court had appointed an official receiver to manage the situation on the site and determine the next steps. Since then, we have worked urgently to ensure the safety of the refinery site and the security of fuel supplies, and to protect workers. That also allowed time for bidders to express an interest in the site. Following a thorough process, the official receiver has rigorously assessed all the bids received and concluded that sale of the business as a whole is not a credible option. I visited workers at the site on 17 July, and I will be meeting them again shortly today. I know that this will be hugely disappointing news to them, their families and the wider community. They are all in my thoughts at this time. A package has been offered to all directly employed at the refinery which guarantees their jobs and pay over the coming months. Alongside the usual support that is offered to workforces in insolvency situations, the Government will also immediately fund a comprehensive training guarantee for those refinery workers to ensure that they have the skills needed and the support to find jobs in, for example, the growing clean energy workforce. Furthermore, we understand that the official receiver continues to explore various proposals for assets on the site. I therefore remain hopeful that a solution will be found that creates future employment opportunities at the Immingham site. The refinery will continue to process crude for the rest of the month, and the official receiver will continue selling refined products for a number of weeks, giving buyers time to adjust their supply chains. The former owners left the refinery in an untenable position and gave the Government little time to act. That is why the Energy Secretary immediately demanded an investigation into their conduct and the circumstances surrounding the insolvency, and why I have repeatedly called on the owners to do the right thing and provide financial support to the workforce at this difficult time.

I call the shadow Minister.

When the Prax Lindsey refinery closes its doors in October, there will be only four oil refineries remaining in the United Kingdom, following the news about Grangemouth a few months ago. This is the second oil refinery to close in the United Kingdom in only six months, prompting serious questions about our energy security and resilience. In Immingham, people are waking up today to the reality that redundancies are now inevitable. It is estimated that about 625 jobs will be lost. For the community in Lincolnshire, that is seismic. As the Minister said, we are aware of the long-standing financial issues with Prax Group, and I reiterate my support for the Government’s investigation into its directors. What progress has been made on that investigation? When does he expect the report to be made? We cannot escape the fundamental crisis facing our manufacturing sector. As Jim Ratcliffe has said, the sector is “facing extinction” because of “enormously high energy prices and crippling carbon tax bills.” The Minister’s Department knows that to be true and has exempted some industry from paying the net zero levies, recusing specific businesses from paying the extortionate green subsidy costs. That is a ridiculous situation that sees subsidies being paid by the Government to businesses to exempt them from the charges being imposed by that very same Government—we are truly through the looking glass. The Department is wilfully talking down the oil and gas industry with hostile language and an impossible fiscal regime while overseeing the deindustrialisation of the United Kingdom through the perpetuated high cost of industrial energy. This is not simply managed decline; it is accelerated decline driven by ideology and steered from Whitehall. Will the Minister tell us what work is being done to ensure the future of the four remaining oil refineries in the United Kingdom? What, if any, assessment has been made of the UK’s resilience, given the steep reduction in our refining capacity over the past six months? What, if any, assessment has been made of the increased reliance on imports that will be necessary as a result of the reduction in British refining capacity? Will he please change course and start speaking up for our oil industry—upstream and downstream—which sees from the current Government a disregard for it, its workers and the communities that rely most on it?

I agree with the shadow Minister, who was right to point out the impact that news like this will have on the workforce, who are hearing it this week, as well as the wider impact it has on their families and the community. That is why it is so important that we provide that support. On the investigation, there is not much that I can update the House on at the moment. The Insolvency Service is carrying out that investigation, and it would be wrong for Ministers to interfere in that, but we have obviously given the direction that we expect it to be completed as quickly as possible. Given the mess we found the company in, I would not be surprised if it takes a bit of time for the investigation to get to grips with what was going on there, but that is for the Insolvency Service to resolve. On resilience and fuel supplies, we have been really clear throughout that we have done everything we can to try to find a buyer to keep the site operating as a going concern, which is important for the workforce as well as for local resilience, but Prax Lindsey oil refinery comprises about 10% of our remaining refinery capacity; Phillips 66—a much larger refinery—is immediately next door. In the past few weeks, we have already seen fuel supplies adjusted and commercial contracts renegotiated. Although we clearly wanted the refinery to stay open, our assessment suggests that there is not an immediate risk to fuel supplies locally or in the wider area, but we will continue to monitor that. On the shadow Minister’s wider points, I will first repeat what I have said on a number of occasions: we do support the oil and gas industry. I have spent a lot of time with the industry understanding some of its challenges, which are long standing, particularly around jobs lost over the past decade, and we consulted widely on what the future of energy in the north-east should look like to give confidence to the industry. We inherited the fiscal regime from the previous Government. We have consulted quickly on what the future of the energy profits levy should look like to ensure certainty about the fiscal landscape. The Treasury will respond to that consultation in due course. We want to give certainty, but we also want to recognise that this is an industry in transition, and burying our heads in the sand and pretending that that is not the case does nothing to protect the workforce in the long term. We will therefore continue to invest in the new industries of the future and in that wider strategy. Refineries are important to our economy and will continue to be important. That is why I brought all of industry together in a roundtable to discuss the challenges facing the refinery sector. I was shocked to discover that that was the first time there had been such an invitation from the Government in 13 years. I ask the shadow Minister to reflect on who was in power for 14 years.

I call the Chair of the Energy Security and Net Zero Committee.

The Minister is absolutely right—so was the shadow Minister—to focus on the jobs and the communities affected by the worrying news coming from Lindsey. He was also right to say that the problems are the result of shockingly bad management. My Select Committee will look at the future of refining in this country in a one-off session in the autumn, and we will be able to take further evidence at that point. In response to what the shadow Minister said about energy prices, will the Minister confirm that the way to get industrial energy prices down—just as with domestic energy prices—is to reduce our reliance on the volatility, uncertainty and high prices that are determined by Vladimir Putin and the petrostates, and that we have to manage the transition, not shut our eyes to it or somehow play into culture wars as Reform wants us to do?

My hon. Friend is right. Separate from all the wider issues facing the refinery sector and the oil and gas sector generally, it is right we recognise that this week there are workers hearing some devastating news. Detailed work will be going on into how much of the site we can utilise in the future, and assessments are under way about how credible some of the bids are. We will do more work on that, and I am sure that his inquiry will be useful. On energy costs more generally, one of the conversations I had when I met the refinery sector was about how we could do more to bring down its costs. We are looking at how we could support refineries more through including them in the energy intensive industries compensation scheme, which would obviously cut costs and help UK refineries with their competitiveness. That is not straightforward, but we are determined to look at that. On my hon. Friend’s final point, he is right that the overall context of what we are doing as a Government is driving forward the transition to clean power, because it gives us back our energy security and takes away the volatility in prices that has been so devastating to households and businesses over the past few years. It is also the economic opportunity that helps drive forward refineries into what could be profitable businesses in that transition. They will continue to play a part in that, and we will support them to do so.

We have a lot of business today, so if we could help each other, that would be very useful. I call the Liberal Democrat spokesperson.

The closure of Prax Lindsey oil refinery is deeply troubling, with up to 1,000 jobs at risk across the supply chain. It is a devastating blow to workers, their families and the communities that rely on the refinery. We need a clear strategy to support those whose livelihood is in jeopardy. That means practical help with reskilling and retraining. This is also an opportunity for targeted green investment in industries that can offer decent, secure jobs for the future. This crisis speaks to a wider failure. The UK still lacks a proper plan for a just transition that gives oil and gas workers real confidence about what comes next. We need to wind down fossil fuels in a way that provides genuine opportunities—well-paid green jobs, clean energy infrastructure, and proper support for the communities that have long powered this country. As other parties embrace climate denialism and internet conspiracy theories, the Liberal Democrats call on the Government to ensure that we do not backtrack on our climate targets, undermine green investor confidence, and abandon our leadership on the world stage when it comes to climate change. First, what steps are the Government taking to ensure that contingency plans are in place, so that those whose jobs are at risk are guaranteed support and opportunities to redeploy their skills? Secondly, how are the Government ensuring that investment in skills and regeneration is targeted, so that it has the greatest impact where it is needed most? Finally, what steps are the Government taking to ensure that the transition to renewable energy makes the best use of the skills and experience of oil and gas workers in the places affected, such as the Humber estuary?

I wrote down the hon. Gentleman’s points, and then he came on to specific questions, but I will respond to the points. He rightly says that this has been devastating news for the workers. He also said something that I want to echo, and which I said to the workers when I met them last week: this decision, and what has happened to the company, is no reflection at all on the incredible, very skilled work that they are doing. I want to reiterate that. So often in these cases, the workers bear the brunt of decisions taken by the company, and that is a great shame. He is right, and we will support the workers. My Department is funding the training guarantee to make sure that all those workers are given an assessment of their training needs and future employment desires, so they can be given tailored support. We will make sure that is rolled out in the coming months. On the hon. Gentleman’s wider point about the transition, he is right to say that we need a proper plan. That is why we consulted on the future of energy in the North sea, both through a series of questions, and through a much broader question about what the future of our energy sector looks like. It will have oil and gas for many decades to come, but already thousands of jobs are being created in other offshore industries, and we want to support that. The hon. Gentleman is right to highlight that investor confidence is critical. It is shameful that people would seek to damage investor confidence in this country in the name of net zero rhetoric. The truth is that there has been more than £40 billion of investment in clean energies in this country. That means jobs and opportunities in all our communities across the country, and those who would talk that down should be ashamed.

I draw the House’s attention to my entry in the Register of Members’ Financial Interests in respect of the GMB trade union. The Minister said that he was engaging with workers. Will he set out in more detail what engagement he is undertaking with the trade unions that are those workers’ representatives? Will he give the House an assurance that the detailed modelling work undertaken by the Department includes the impact on the wider supply chain?

I also declare that I am a member of the GMB trade union; that is recorded in my entry in the Register of Members’ Financial Interests. I have engaged with both the Unite trade union reps who are on the site, and with day shift workers who are not represented by a trade union, to make sure that I hear from them. I met them earlier this month and last week at the refinery, and I will meet them in about an hour’s time to talk through this more. We want to continue that engagement with them.

I call the Father of the House.

Obviously, my first concern is my constituents who work in the refinery in the neighbouring constituency, that of my hon. Friend the Member for Brigg and Immingham (Martin Vickers). I am sure that the Minister will give them reassurance about enhanced redundancy. Also, may I ask a question on behalf of my rural constituents in North Lincolnshire—and I declare an interest, as I live there? This is a deeply rural area, where we rely on heating oil because we are not on mains gas. What impact will closure of the refinery have on the price of heating oil?

On redundancy, because of how the company went into insolvency, the workers will be entitled to statutory redundancy. That is not acceptable, given the role that they played in delivering for the company for many years. That is why I have publicly asked the owners of the company to put their hands in their pocket and improve the redundancy package. It is not possible for the Government to improve the package directly, but I am still hopeful that the company owners will do the right thing. We are providing a training guarantee to the workers, from Government funds, to make sure that they have that enhanced support. I am happy to take away the point about heating oil. We have been assessing the situation over the past few weeks, including a number of weeks during which fuel has not left the refinery at its normal pace, to see what the impact is on supplies across the region. That impact has been minimal. That is partly because a significant amount of fuel and products come from the refinery next door. However, we will continue to monitor that, and if there is an impact on prices, I am happy to look into that.

Much like the ceramics sector, the refinery sector is an energy-intensive industry that is at the mercy of industrial energy prices, which are beyond its control but have a huge impact on its viability. It is welcome that the Minister thinks that the energy-intensive certification programme could expand to include the refinery sector, but he will know that the business level test is a huge barrier that needs to be overcome; it means that many companies will not be eligible for the programme. He will also know that the British industry competitiveness scheme is not due to come online for another two years; indeed, consultation on that scheme has yet to be opened. Refineries and ceramics companies are looking down the barrel of ever-increasing industrial energy bills. Will he give them some indication of what help and support is available now, before the new schemes come online, so that we do not have more statements about closed factories in the next few months?

My hon. Friend is right, and it is deeply frustrating that we inherited many of these issues, which were unresolved for such a long time. These are not problems that arrived in the past 12 months. Bringing in the refinery sector for talks with Government about the challenges would have been a fairly obvious thing to do at least once in the past 13 years. Clearly, that did not occur to the previous Government, and we have inherited challenges. My hon. Friend is right to say that consultations will take time, unfortunately. It is right that we conduct a proper consultation to make sure that there are not any unintended consequences. The Minister for Industry, who is a Minister in both the Department for Energy Security and Net Zero and the Department for Business and Trade, is looking at how we can do that as quickly as possible. I am happy to follow that up with her. My hon. Friend is also right that nobody wants to be talking about redundancies in any part of our economy, and we are doing everything we can to bring down prices to prevent redundancies.

This is a massive blow to my Brigg and Immingham constituency—most particularly to those directly employed by the refinery, but also to the wider economy of the sub-region. Will the Minister reconsider what he just said about statutory redundancy? I want the maximum support given to those workers. I will raise two other points. First, North Lincolnshire council published a green growth zone document last year about the future of the regional economy. As we discussed yesterday, I urge the Minister to consider an urgent meeting, at which all involved are brought in for a roundtable discussion. Secondly, if he is not doing so already, may I urge him to speak to his colleagues who are local government Ministers? North Lincolnshire council will lose £2.6 million in business rates. Needless to say, that is a massive blow that would affect the delivery of services.

I thank the hon. Gentleman for his questions, and for meeting me to discuss the matter yesterday. I appreciate the impact that the closure will have, not just on those refinery workers who are directly impacted, but on the wider economy. We absolutely appreciate that there are ripple effects from a closure like this. On the statutory redundancy point, we have looked at this, and have pushed to see if there is more action that the Government can take to change or give additional payments. It is not possible for Government to do that, not least because the Insolvency Service has to follow specific rules on creditors and how they operate in the event of an insolvency. However, the owners of the company have profited from this business, and they should do the right thing by the workforce that delivered that for them. I have agreed to hold a roundtable discussion, and I previously met the two council leaders to talk about this. I am happy to arrange that discussion, and to have it with whoever is useful and wants to participate, because the hon. Gentleman is right about the opportunities. I am happy to engage on the point about North Lincolnshire and business rates. Although the refinery will not continue to be a going concern, we are assessing bids from those who are interested in the site; we hope those bids will deliver jobs and economic benefit, and that business rates income will come from new industries on the site. That is not as good as retaining the refinery in its current form, but we hope we can make some progress.

I thank the Minister for his statement, and particularly for the news that there will be a thorough investigation. I have two quick questions. First, are the reports correct that the previous Government did not meet representatives of the sector for 13 years? I know the Minister said that he had met them recently. Secondly, families will be in crisis when they hear this news, and they will struggle to deal with it. Does he agree that the owner, who I understand is not short of money, has an absolute moral obligation to ensure that those families are supported? Statutory payments are welcome, but the moral obligation has to be made clear.

I thank my hon. Friend for both those points. My understanding from the sector and from the Department is that a meeting has not happened in the past 13 years. [Interruption.] If the right hon. Member for Louth and Horncastle (Victoria Atkins), on the Opposition Front Bench, wants to find me dates when her Government met the sector, I would be really happy to look at them, and at any minutes from those meetings. That would be helpful. There are particular issues for the sector, but also for individual refineries; some are more profitable than others, and some have transitioned to doing other pieces of work. It is important that they learn from one other, and that the Government do what they can. On my hon. Friend’s final point, I agree that there is a moral obligation here. Having met the workers on the site, I know that they have done nothing wrong. They have worked hard over many years to keep the refinery going, and to deliver a profit. Those who have taken money out of that business should now do the right thing and fund those workers, and I hope that they will respond to my letter in due course.

With the Grangemouth refinery in Scotland having closed, and Prax Lindsey facing the same fate, there is clearly a missing element in the UK Government’s just transition policy. There can be no just transition if skilled jobs are lost when that transition is made. What assurance can the Minister give that the Government have taken a wider view, in order to stem these closures and address what is clearly a deeper issue with policy?

I take the hon. Gentleman’s point about the importance of recognising that the most important thing to get right is the transition of workers. I have said that in other answers. That requires us to recognise that a transition is under way, and to put in place a plan, which has not happened in the past decade, during which we lost more than 70,000 workers in this industry. It is really important that we grapple with those issues, and it will not be easy. The starting point is to bring together everyone with an interest in this, as I have done—everyone from the trade unions and industry to those making the green investment that is driving this forward—to make sure that we deliver on jobs, and to make sure that training and support are in place, so that workers can transition. He raises an important point. On the hon. Gentleman’s point about Grangemouth, it was not breaking news that Grangemouth was in a precarious position, and the previous Government could have done more to ensure a just transition there. I met the investment taskforce yesterday, along with my colleague Gillian Martin, the Energy Minister in the Scottish Government, to look at the prospects for the sites. There are some interesting propositions coming forward; there are 84 bids in total for £200 million from the National Wealth Fund, and I hope that we will have good news on jobs and investment in Grangemouth soon.

I thank the Minister for his briefing yesterday, but there is a pattern developing, is there not? Some 800 jobs were created every single day in the 14 years of the Conservative Government, but unemployment has gone up every single day under this Labour Government. Some 400-plus jobs have been lost at Vivergo, on the north side of the Humber, and perhaps 600 jobs will be lost directly, and others lost indirectly, on the south side of the Humber. Can the Minister reassure those affected that this Government will not destroy our industrial base, and that there is a future for us, because it looks like we are heading in the wrong direction?

I will avoid the wider political points in a week when workers are finding out about job losses, because that is obviously devastating for them. I will just say that the Government have published their industrial strategy, and this is the first time the country has had an industrial strategy in a very long time. [Interruption.] Well, let us say a credible industrial strategy, if the right hon. Member for Beverley and Holderness (Graham Stuart) thinks he had one before. Again, I ask him to present it to me. We are investing in the industries of the future, and delivering thousands of jobs on the Humber and right across the country. We are making sure that investment comes forward in jobs for the future. [Interruption.] The problem with the right hon. Gentleman’s point is that his party opposes that investment. It opposes the very thing that will deliver the jobs of the future, and I am afraid that is simply an untenable position. Either he is for or against investment in jobs; he has to say which it is. The industrial strategy is the way to deliver that.

The last time we discussed Prax Lindsey, I asked the Minister to support my energy jobs Bill—a plan for the redeployment and retraining of oil and gas workers that is proactive and industry-wide rather than reactive and crisis by crisis, and that would be paid for by the companies. That is what the workers and the unions want, but the Minister said he did not agree with it. He has now said that the Government will fund a training guarantee for these refinery workers and is asking this company’s owners to make voluntary contributions to support workers. That is progress, but will he now turn this into a proactive and industry-wide plan, and please go beyond asking the company nicely to do the right thing and require it?

I think the hon. Lady slightly misses the point. The company went into insolvency. The workers are therefore entitled only to statutory redundancy. I do not think that that is acceptable, so I have called—not nicely, but directly—for the owners of that company to do the right thing, put their hands in their pockets and fund proper redundancy for those workers. That is separate from a wider piece of work we are doing around the transition. I think she also misses the point about the importance of delivering investment in oil and gas that is also investment in renewables and in carbon capture, utilisation and storage to deliver the jobs that come next, so that there is a transition for those workers. I have said that I do not support her proposal, and I am happy to say that again because it would do neither of those things. It is essential that we support the oil and gas industry in its current form, but recognise that it is in transition. We still have decades of oil and gas to come in this country, but we are already building up the industry that comes next. That needs investment, and it also needs us to build infrastructure, which many people in her party seem to oppose.

While the Minister is right to point out that this refinery produces a small amount of the UK’s refined fuel overall, the site does provide around 50% of the fuel into Warwickshire Oil Storage, a key site at Kingsbury in the west midlands that supplies fuel into the west midlands, which is obviously a very large demand centre. What is the Minister’s assessment of the impact on the supply and demand balance of road fuels in the west midlands as a result of this closure?

I am happy to follow up on anything specific with the hon. Gentleman, but I can tell him that I get daily updates on assessments on exactly that point. Clearly, the first week of the insolvency saw some disruption to supplies leaving, but our evidence pointed to the fact that those commercial contracts were able to be renegotiated and to adjust to that. We are continuing to monitor to ensure there is no disruption, and there is no assessment at the moment that would suggest any impact at all on fuel security. Clearly, we will continue to do that, and if I can follow up on specifics, I will do so.

What a pathetic turnout today from the party of the workers: just four Labour MPs have turned up to speak out on behalf of the Prax Lindsey workers. What I want to know from the Minister is if it is true that a foreign company has already been lined up to asset-strip and decommission this site—yes or no?

First, I think the hon. Gentleman is misjudging the mood of this question, which is about workers affected by redundancy. I hear nothing from him on those workers who are hearing the news this week. On his point, we assessed a number of bids for the business as a going concern. None of those bids were credible, which is why the official receivers made the decision to cease refining. Some bids are interested in parts of the site for a range of different things, but I am not party to those bids. They are commercially sensitive bids that will be assessed on the basis of how many jobs can be retained and the industrial opportunities on that site, which is what we are driving forward. I would just say to him that spreading nonsense and rumours, either in this House or on social media, does absolutely nothing to support the workers on that site.

I have listened closely to the Minister’s answers, and he is rightly highlighting the importance of the jobs and the redundancies, but I think we need to be a bit clearer and more open with people about what the new jobs in the renewables sector that the Minister refers to are about. These jobs are not comparable to a lot of the ones that will be lost in the oil and gas sector. A lot of them are not full-time jobs; a lot of them are part time or temporary jobs during construction phases. We are losing a huge number of workers across the country, and we will continue to do so because of the Government’s policies on oil and gas and the speed at which the sector is being demolished. Can the Minister please outline directly to these workers across the country, whether at Prax or in the north-east, how their jobs will be supported into the future? I am talking about comparable full-time jobs, not just the temporary ones.

A key objective of this Government is to deliver good, well-paid trade-unionised jobs, and we have been driving that forward. My right hon. Friend the Secretary of State has been pushing on trade union recognition, partly to ensure that terms and conditions in the clean energy industry are as good as those in, for example, the oil and gas industry. We will continue to push on that, and we have already had some successes. I gently say that the investment going into clean energy that is delivering thousands of jobs and will deliver tens of thousands of new jobs across the country comes against a backdrop of opposition from the Conservatives on Great British Energy in the north-east of Scotland delivering those jobs. We are also announcing today the final investment decision on Sizewell C—10,000 jobs are being created in nuclear after years of dither and delay by the hon. Member’s party. We are getting on with doing this, and we will do everything we can to ensure those jobs are comparable on terms and conditions and pay. I say to her that if she wants these jobs to be created, she should support some of the policies that will deliver them in the first place.

I thank the Minister for his answers. Bearing in mind that the refinery was responsible for supplying some 10% of British fuel—fuel for the United Kingdom of Great Britain and Northern Ireland—it is absolutely essential that a way forward is found, and found quickly. Part of that solution must be a common-sense approach to using fossil fuels. What discussions has the Minister had with his Cabinet colleagues to provide a long-term assurance that there is a future for this refinery, even at this eleventh hour, so it can be sold as a going concern, as it should?

The Government have pushed, over the past four weeks we have been aware of this issue, to try to find a route whereby the refinery can continue as a going concern. That was obviously our No. 1 objective. The official receiver assessed the bids that were made and found that none were viable to deliver that. The Government are not going to nationalise this refinery—we are not in the business of nationalising loss-making businesses—so, unfortunately, that is not a route we will take. But we have done everything we can, and what we now want to do is assess the bids for the future of the site to see what the maximalist approach is that, crucially, will keep as many jobs on the site as possible, but also will deliver on the industrial opportunities of that site for the wider community. We will continue to have those conversations.