Contribution
I thank the Minister for advance sight of his statement, and for taking the time to speak with me on this issue earlier today.
Today, hundreds of jobs are at risk, and a strategically significant asset is in jeopardy. The Lindsey oil refinery has a capacity roughly equivalent to 35% of British petrol consumption and 10% of British diesel, and it supplies aviation fuel to Heathrow airport via a pipeline. Refineries represent a core strategic interest for the United Kingdom. We are reassured that the oil and gas fields to the west of Shetland are not at risk, nor is the network of petrol stations affected by today’s announcement —I would like to reiterate that that side of the operation is not at risk. The refinery has been loss-making since it was acquired from TotalEnergies in 2021, and we are aware of long-standing financial issues with the Prax group, including its being unable to provide accounts to the Government. As such, we support the Government in ordering an investigation into the conduct of the directors and the circumstances surrounding this insolvency.
However, despite the management issues facing the company, which, as the Minister has said, are multiple, it is clear that the refining industry as a whole is being driven into the ground by the high cost of energy in this country. In the late 1970s, Great Britain had 17 oil refineries; if the Lindsey refinery in the Humber closes its doors, only four will remain. Energy is the single largest cost of operating a refinery, so the sky-high cost of energy to industry in the UK is pushing manufacturers in energy-intensive industries such as refining out of business. As Sir Jim Ratcliffe at INEOS has said, the chemicals sector is “facing extinction” because of
“enormously high energy prices and crippling carbon tax bills.”
Industry in the United Kingdom is uncompetitive, with two oil refineries closing within six months. It is quite clear that we need a rethink. If our route to lowering emissions in the UK comes at the price of deindustrialisation, and costs jobs, livelihoods and economic growth—if it means impoverishing the UK and increasing dependence on imports, and a fragile supply chain for fuel and essential oil products—then we must rethink. If the Secretary of State brings refineries within the scope of the energy-intensive industries compensation scheme, he will be providing only a sticking-plaster response. Exempting specific industries from policy costs such as the renewables obligation, the feed-in tariffs, the contracts for difference subsidies, and capacity market payments does not fix the foundations. This piecemeal approach simultaneously accepts the devastating consequences of green levies for the industry and abdicates responsibility for fixing the root problem.
We are already seeing the real impact on working people’s livelihoods and communities of not taking action. Some 400 jobs have been lost at Grangemouth; 60 have been lost at Moorcroft pottery in Stoke; over 1,000 have been lost at Vauxhall in Luton; and 250 have been lost at Nippon Electric Glass Fibre Works in Wigan. Now we see the same at the Prax Lindsey oil refinery, where 440 people are employed. Unite the union has warned the Government that their policies
“have placed the oil and gas industry on a cliff edge”.
This Government are driving up the cost of energy, increasing our reliance on imports, and offshoring our carbon emissions. That is not good for the climate, and it is very bad for Britain.
Refineries have consistently raised the issue of the existential issues that the sector faces, including the cost of the emissions trading scheme and eye-wateringly high energy bills. Since the closure of Grangemouth, this Government have taken no action to tackle the fundamental problem: the need to reduce the burden on businesses, make UK manufacturing more competitive, and back British industry. I have some questions for the Minister. What are the Government’s plans for the Lindsey refinery? Does he expect to find an operator? How long will the Government support the refinery, and what plans do they have for the refinery if no buyer is forthcoming? What action will the Minister and his Government take to ensure that the situation is not replicated at Britain’s four remaining refineries? How many petroleum refineries does he expect to be left by the time the Labour Government leave office in 2029, and what will the Government do to bring bills down for all industrial energy consumers, not just those covered by the energy-intensive industries compensation scheme?