Energy Prices: Energy-intensive Industries

10:30:00

To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the Government’s approach to reducing energy prices for energy-intensive industries.

I relay my thoughts to the workers in my hon. Friend’s constituency, for whom I know this is a worrying time. I thank my hon. Friend for raising the issue. He is a tireless champion for workers and businesses in his constituency. We have spoken and will continue to speak regularly about these issues and the importance of the ceramics industry in his area in particular. This Government recognise the challenges high energy prices pose to UK businesses. We know that the ceramics sector is particularly affected; my hon. Friend has raised the issue in Parliament on other occasions. The Government are working closely with Ceramics UK and local Stoke MPs to work out how we can support the sector. For energy-intensive industries overall, our clean power 2030 target is the key to long-term sustainable price reductions. Clean home-grown energy is the best way to protect bill payers and boost Britain’s energy independence. We are already bringing energy costs for UK industries closer into line with other major economies through the British industry supercharger. That will fully exempt eligible firms, including some but by no means all of those in the ceramics sector, from certain costs linked to renewable energy policies, particularly those exposed to the high cost of electricity. Using more electricity and less fossil fuel is the future for UK businesses. The latest advice from the Climate Change Committee expects electricity to meet 61% of industrial energy demand by 2040, so we are developing options to enable businesses to do that. We are already taking action. When my hon. Friend raised this important issue in a Westminster Hall debate in March, I noted: “We are working on how to remove undeveloped, speculative programmes from the grid connection queue and prioritise others.”—[Official Report, 4 March 2025; Vol. 763, c. 109WH.] Just last month, we announced pro-growth reforms to help unlock £40 million of mainly private investment a year in clean energy and infrastructure, so that so-called “zombie projects” will no longer hold up the queue for connection to the electricity grid. We recognise that we need to support a range of energy-intensive industries, including industries such as ceramics, that are essential to our UK economy and our missions, for example to build the 1.5 million homes and the clean energy infrastructure products in which this Government are already investing. Following years of economic chaos and instability under the previous Administration, this Government are implementing a modern industrial strategy that will drive growth and the creation of good high-quality jobs in communities across the UK. I look forward to continuing to work with my hon. Friend and other hon. Members from across the House. We are meeting next Wednesday and I hope to be able to progress things further at that stage.

I thank the Minister for her engagement on this issue, because she has genuinely and authentically tried to look for a way forward. When my hon. Friends the Members for Stoke-on-Trent North (David Williams) and for Stoke-on-Trent South (Dr Gardner) and I had a meeting with the Minister six weeks ago, we warned her that other factories were going to fail, and we stand here following the closure of Moorcroft yesterday. She will be aware that other factories in Stoke-on-Trent are working on short time as a way of reducing costs so that they can put more money into meeting their ever-increasing energy bills. I thank the Minister for the outline she has given, but she will know that we have previously talked about most of the things she has raised today, and they do not apply to the ceramics sector or to great swathes of the energy-industrial sector as a whole. The supercharger scheme does not work for the ceramics sector; indeed, ceramics companies end up having to subsidise other energy-intensive industries, because they are not part of the supercharger scheme. We have been told that we cannot see an exception to that. We have asked about the emissions trading scheme and free trade allowances and have been told that some are available for ceramics, but that does not go far enough to meet the demands we have today. We have been constantly promised jam tomorrow, by the last Government as well as this one—well, jam is no good if you are dead, and the ceramics sector in Stoke-on-Trent is on life support. We are at a point where good manufacturing jobs done by proud people are falling away every month. This is not new: it started in 2019, with the closure of Dudson, and continued with the closure of Wade in 2022, Johnson Tiles in 2023 and Royal Stafford and now Moorcroft in 2025. The energy-intensive industries in this country are pivotal to manufacturing. If we see them fall away, manufacturing in this country will fall away. I ask the Minister three very simple questions. Will she look at a wholesale change to the way in which we do subsidies and energy prices for energy-intensive industry in the short term, before GB Energy comes online? As well meaning as GB Energy is, it is too far away to help. Will she rule out specifically moving any policy costs on to gas costs? Gas is the big cost for the ceramics sector; electricity is a small proportion of what we do. Will she take the opportunity to make a clear commitment at the Dispatch Box, as the Secretary of State for Business and Trade just did when he talked about a sector falling on its knees? Ceramics is there. We do not need the same level of investment that steel does; we need a tiny fraction of it. Can we have it, and can we have it soon? If we have to come back here in six weeks, there will be no sector left to defend.

I agree with my hon. Friend and recognise the challenge. We lost 1,250 jobs in the ceramics sector between 2015 and 2023. It has been a very sad decline, and we want to turn that around. The whole point of an industrial strategy is to have a Government who are proactive in supporting our industries. We will not put extra cost on the ceramics industry; we are looking to see how we can help and support. My hon. Friend has my word on that. We are working on every single one of the suggested policy reforms in the package that Ceramics UK has put forward, and we will meet him next week to talk about these things. I cannot make promises at the Dispatch Box on areas that are not my responsibility and rule out whole swathes of policy, but I assure my hon. Friend that we will not put extra costs on the ceramics industry. We are looking to do more and to support, and we will come back. I completely understand his point about the timing and the need to act quickly.

I call the shadow Secretary of State.

Grangemouth, the Luton Vauxhall plant and now the Moorcroft pottery in Stoke-on-Trent—every single week, we hear of more job losses in energy-intensive industries and more British companies shutting up shop and laying off workers because of the toxic combination of high energy costs and this Chancellor’s devastating jobs tax. We have the highest industrial electricity prices in the developed world. Just this week, INEOS told us in no uncertain terms that carbon taxes and high energy costs are killing off manufacturing in the UK. This Government have been warned by Opposition Members, by the GMB this week and by Unite. This week, they were warned by none other than Tony Blair. What was their response? Advisers in No. 10 Downing Street picked up the phone and begged him to row back on what he said. They asked him to row back on what we all know to be true—what the Minister, Morgan McSweeney, apparently, and an increasing number of the Government’s own Back Benchers know to be true: the current approach to energy and net zero is doomed to fail, and voters are being asked to make financial sacrifices when they know that the impact on global emissions is minimal. That is at the heart of this madness. This Government are wilfully destroying British industry in oil and gas, ceramics, chemicals and metals when they know that it will not make a difference to global emissions. We will not use any less oil and gas; neither will we use any less steel, cement, bricks or chemicals. We will just import those things from abroad, at greater cost to our economy and the climate and with British job losses added to the bargain. As the Government are led by an ideological zealot, the Secretary of State for Energy Security and Net Zero, and by a Prime Minister too weak to rein him in, we will continue down this path, and British workers will pay the price—in Aberdeen, in Grangemouth, in Luton, and today in Stoke. Energy is not a silo; energy costs underpin growth, prosperity, competitiveness and living standards. Without cheap energy, our industries will not survive—British manufacturers cannot remain competitive—so what will the Minister do to prevent more British jobs being lost in energy-intensive industries in this country? Will she listen to the head of Unite, who says that working-class people are losing their jobs and that this Government have no plan to replace them? Will the Government end their mad ideological plan to shut down North sea operations? What will it take for Labour Back Benchers to wake up and realise that this ideological approach is crippling this country?

The Conservative party is hiding behind this new-found scepticism of net zero to conceal its complete failure to support and grow our foundational and manufacturing industries on its watch. On its watch, we lost 70,000 jobs in the North sea and 1,250 jobs in the ceramics sector, chemicals manufacturing fell by 30%, and we produced only 30% of the steel that we use in this country. The Conservative party’s record on this issue is shameful. This Government have a completely different approach. We are developing the industrial strategy, which will support those foundational industries. We are looking to make sure we can reach net zero by 2030, in order to provide the economic and energy security we need. The last cost of living crisis was caused by our reliance on global gas prices, as the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) knows, and as he occasionally says in some meetings when he flips and flops on his position on net zero. We will support manufacturing; we are developing our industrial strategy, which will be published in a few weeks’ time, and we are already providing more support to the energy-intensive industries through the energy supercharger than the previous Government did. We will act where the previous Government failed to act.

I call the Chair of the Business and Trade Committee.

My hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) is an enormous champion of the ceramics industry, and he is right to bring this question to the House today, but this issue is wider than simply the ceramics sector. Tata Steel has told our Committee that energy prices are the single biggest factor in its lack of competitiveness, and Nissan has told us that electricity prices at its plant in Sunderland are the highest of any Nissan plant in the world. We have recommended that the Government bring energy prices in line with our European competitors; can the Minister tell us today that she shares that ambition?

I thank my right hon. Friend the Committee Chair for his question. Of course this is a huge issue. Under the previous Government, industrial energy prices doubled, and as my right hon. Friend says, we have higher prices than many other countries. The 3,000 people who responded to our consultation on the industrial strategy said that energy, skills and access to finance were their top three issues, so we are absolutely aware of the issue. We are looking at what support we can provide and how we can make our country more competitive, both for the people who are looking to invest in the UK and for our existing manufacturing base.

I call the Liberal Democrat spokesperson.

The Liberal Democrats believe that the future of British industry and our national security depend on a serious and sustained commitment to renewable energy. We want to see far greater emphasis on clean energy sources, particularly solar, in order to reduce our dangerous reliance on fossil fuels, strengthen our energy security, and tackle fuel poverty by bringing down energy bills for households and businesses alike. In the face of Putin’s barbaric war in Europe and with Donald Trump’s reckless tariffs threatening fresh economic turmoil, we cannot afford to be complacent. The future of energy-intensive industries, not least our steel industry, hangs in the balance. Steelmaking is not just an economic asset; it is of vital strategic importance to the UK. We need steel in order to build the infrastructure required for a sustainable, secure future, from wind turbines and railways to hospitals and homes. Without it, our ambitions for net zero and national resilience will collapse. As such, will the Government give a clear, unequivocal commitment to their net zero plans, and will they ensure that no option is off the table when it comes to safeguarding our steel industry and the future of British manufacturing?

I can give the hon. Gentleman reassurance that we are looking at all options to support the steel industry, which is foundational to our country. He makes the correct points about how important steel is to building our future, whether it be runways, homes or other infra- structure. We are looking at all options, and we have the steel plan, which will be coming out soon, and the £2.5 billion earmarked to support the steel industry.

My constituency has many brilliant metal manufacturing companies that supply critical UK industries in defence, automotive and construction. However, many of them are struggling because the last Government left us with sky-high electricity prices and a dependence on foreign gas imports. Last month, I launched Make UK’s new “Electrify Industry” initiative in Parliament, which seeks to address this broad challenge. Can the Minister set out how the clean power 2030 action plan will make industrial energy costs cheaper and help us drive growth in the west midlands manufacturing industry?

I thank my hon. Friend for her championing of her constituency. I am still to visit, and I must do that, because I know she has many exciting places for me to see. Electrifying industry is crucial. The Climate Change Committee has said that that is the route and that 61% of industry will need to be electrified. We need to make sure we do that. We are looking through the spending review process, as I am sure she would expect, at how we can support industries to make that change to electric and how we can help with some of the capital costs, which will lead to lower costs in the longer term. Making that leap can be difficult, and that is what we are looking at through the spending review.

Why is it better, according to the Government, to import gas from Norway instead of developing our own North sea gas fields?

The North sea fields are a declining basin. We lost 70,000 jobs under the previous Government. Something like only one in 10 of the licences that have been approved over recent years have actually amounted to anything, because of the difficulties of a declining basin. The impact on prices of a very small amount of the global mix coming from the North sea would be zero. It would not change a penny in the costs we would pay.

When the previous Government looked at supporting energy-intensive industries, they included within the definition brewers, cider makers and wine makers, but not distillers, despite the fact that distillers use 17 kW per hour to make a litre of alcohol, compared with brewers which use just 0.5 kW per hour. As the Government consider what they will have to do to support energy-intensive industries such as distilling, will the Minister consider that the Scotch whisky industry in particular is critical to the maintenance of economic activity and good- quality jobs in some of the most remote and economically fragile communities in this country?

We are obviously keen to do what we can to support the Scottish whisky industry. I have been to see it and understand how important it is. The definitions of energy-intensive industries were developed under the previous Government, and we have no immediate plans to change those, but I will take away the right hon. Gentleman’s point and look into it.

On net zero, I think there is a national consensus on making the environment better, creating green jobs and improving energy security, but will the Minister recognise that for many people, consumers and companies out there—particularly small businesses, by the way; it is not all about large ones—there is too much happening, too soon and too fast? Rather than having regressive and punitive taxes on industry and small businesses, there should be more education and more incentives to change consumer and company behaviour.

The right hon. Gentleman makes a perfectly reasonable point. We have a national consensus that we need to act, and I think the population are with us on that. They understand that we need to make sure we have a planet for our children and our grandchildren and that we need to do everything we can. As was said this week, we want to tread lightly on people’s lives, and of course we do not want to inflict regressive and punitive taxation. We want to make sure we are supporting industry and business, and we are looking at how we can help to incentivise the changes that we need to see.

Despite Scotland’s growing abundance of potentially cheap renewable energy, businesses in Scotland’s energy sector are dealt a double blow, whereby energy-intensive businesses in the renewables supply chain are hammered by high energy costs in production and extortionate transmission charges. When the Minister looks at this problem, as her colleague told me he would the other day, will she bear in mind that this is entirely linked to the high cost of producing energy and all the other ways in which the current energy market model serves Scotland poorly?

I think it was probably the Minister for Energy, my hon. Friend the Member for Rutherglen (Michael Shanks), who gave that assurance to the hon. Gentleman, and he is looking at all these issues. We have a very complex energy system. We are trying to make it as cost-effective as we can, and sustainable in the long term, to give us the energy security that we all need. I am sure my hon. Friend will continue to look at these issues.

A vital ingredient of any net zero policy is an understanding of the word “net”. Ultimately, we are going to have to grapple with technology that we have had for over a century to remove carbon directly from the air, aren’t we?

We are happy to look at a range of options. The whole point of the clean energy plan is that we are using a very diverse range of interventions, some of which are more high-tech and for the future, and some of which are well established. We need that mix.

Given the huge economic and environmental effects of burning fossil fuels, it is clear that the future of energy has to be clean, green, cheap renewables, plus energy efficiency. All of us who care about fact-based, truth-based politics should call out the outrageous misinformation from those who suggest that net zero is the reason for high energy prices, when it clearly is not. Gas prices have gone through the roof in recent years, and we all know why: because of Putin’s outrageous invasion of Ukraine. That is why companies and businesses are struggling. There are two specific things that the Government can and should do to help precisely those businesses: first, decouple the price of electricity from gas so that the true costs of generating electricity are reflected in the price that consumers pay; and secondly, implement a carbon tax in order to be able to use those revenues to assist industries to make the just transition from fossil fuels to the clean, green, cheap energies of the future.

The hon. Lady is right to point out that there is a lot of misinformation in this space, and it is often used by the Conservatives to hide their own failings in government. Of course, the energy price hike that we had was partly because the previous Government had not delivered the security that we needed in our home-grown energy supply and storage. We are looking at all options to make sure that we have the right systems in place going forward. We already have the emissions trading scheme, and we are looking at where that goes in future years. She is right to point out that we need to look at all these things.

The pretence is that Britain is somehow caught in a storm- tossed sea of international gas prices, which drives up energy costs, but when INEOS reports that it is paying £127 million a year in carbon taxes, rising to £2 billion by 2030, is it not the case that we are seeing the cascade of jobs losses because Labour has made decarbonisation deindustrialisation?

I think the hon. Gentleman knows that his own party are the experts on deindustrialisation, which we saw significantly across all parts of our manufacturing sector, including at INEOS. I regularly meet INEOS, as do the Secretary of State and other colleagues, and we are looking at what we can do to support the sector. It faces a lot of challenges, and we are looking to try to resolve them.

My constituents in Edinburgh West, like many others across Scotland and the UK, depend on energy-intensive industries for their livelihoods: defence, whisky and Grangemouth. How can the Minister reassure people who are already suffering because of high domestic energy prices that the situation will not be made worse by losing jobs in those industries?

The hon. Lady is right to raise these challenges, which we are trying to grapple with. We are looking at how we can provide support on energy prices and other aspects for energy-intensive industries. Of course, the energy-intensive industries that qualify for the supercharger are getting significantly increased support from April, which will be helpful, but we recognise that that does not go far enough, and we need to do more.

Talking of experts in deindustrialisation, over 1,000 jobs at Luton’s Stellantis plant have been lost, impacting my constituents, because this Government did not respond to concerns about energy policy. If the Minister does not agree with us on net zero, does she agree with the general secretary of the GMB, who says that the Government’s energy policies amount to “exporting jobs and importing virtue”?

I have met and talked with those from Stellantis many times, and while the closure of the site at Luton was of course very difficult, I know that the reasons were global and complex; it is simply not the case that it was because of energy policy. Stellantis faced a whole range of issues globally, and it had to respond in the way it did. We regret that, and we offered support, but we could not get to a point where we could persuade it to stay. We are working with the MPs and the local council to ensure that what comes afterwards provides good, decent jobs, but the hon. Member is just wrong to say that that was the only reason.

The Minister has told the House that the Government would not impose any new costs on the ceramics industry, but we know that they are going to increase carbon taxes, which will kill off energy-intensive industries. Does she not see that this is a totally incoherent policy position?

There was no coherence under the previous Government, and there will be coherence under this Government. We are developing our plan of support for our foundational industries in the industrial strategy. I know that the Opposition are very keen to see what the industrial strategy will contain. They will have to wait a few weeks for its publication, but all will be revealed in due course.

I thank the Minister very much for her answers. Manufacturing currently represents less than 10% of the UK economy, but in Northern Ireland it represents 16% of the economy and about one in four families in Northern Ireland are dependent on manufacturing. It is clear that, as energy prices rise, so do the concerns for such industries. How can the Government and the Minister offer support to those industries to retain their viability while the Government are finding an energy solution?

The hon. Member is right to raise this issue, and the figure for manufacturing in Northern Ireland of 15% or 16% is high. Yesterday, I was with trade unionists from Shorts Brothers—Spirit AeroSystems —to talk about the importance of manufacturing there and the importance of retaining those jobs. They made the point that these good jobs have helped not just with people’s lives, but with the sectarian divides. Bringing people out of poverty and giving them good, well-paid jobs is an incredibly important part of the history of Northern Ireland and of what we need to preserve there. I will continue to work with him to make sure we protect that manufacturing base. We of course had huge support in the Budget, with the £2 billion for the automotive sector and the £1 billion for the aerospace sector to support exactly that manufacturing industry.