Ceramics and Chemicals Industries

This statement provides an update on the Government’s support to ceramics and critical chemical producers, two of the foundational sectors underpinning our industrial strategy.

The Government are today announcing the launch of the ceramics industry support scheme of £120 million to support the transition of the ceramics sector to a more cost effective and less carbon intensive means of production. Supporting this transition continues to deliver on our mission to decarbonise the economy, helping businesses to invest and grow across the country.

The ceramics industry has a rich cultural heritage, notably in the Potteries in the Stoke-on-Trent area, and it remains a large source of employment in Staffordshire and neighbouring Derbyshire, as well as in areas across the UK from Devon to Dumfries.

However, in recent years the sector has faced a number of difficulties, including a challenging global trading environment, and the cost of reliance on volatile fossil fuels, which have seen costs increase significantly since the Russian invasion of Ukraine. These challenges have led to a pattern of decline and resulted in the closure of historic sites such as Johnson Tiles, Moorcroft Pottery, the liquidation of Royal Stafford, loss of jobs at Armitage Shanks, and the recent administration at Denby pottery.

This Government are clear that industrial decarbonisation must not be achieved by deindustrialisation, and reducing operating costs for businesses will support a successful transition to more efficient and cost-effective forms of production. However, we recognise the challenges faced by ceramics producers, and that Government support will be necessary to help the sector.

That is why the ceramics industry support scheme is being introduced: £60 million of this funding will support capital investment from ceramics firms into more efficient and decarbonised means of production, including electrification of relevant processes. This will both attract business investment in efficient new technologies, and enhance our energy security by reducing our reliance on volatile fossil fuels. This fund will be delivered on a competitive basis, with successful companies demonstrating corresponding co-investment of their own. The expectation is that the package will support a small number of high capital projects, likely from larger companies, as well as smaller projects from established trading SMEs.

To ensure that all eligible companies are able to effectively take advantage of this support in practice and invest in the future of this industry, the ceramics industry support scheme will include an additional £60 million to support operational costs for firms that make successful capital bids but demonstrably need additional support to manage the transition.

We will continue to engage with the sector and explore both fiscal and non-fiscal policy options that can continue to support and sustain a modern, thriving ceramics sector. This includes ensuring that our trade remedies regime works appropriately to protect the sector from injury as a result of unfair foreign trading practices. I strongly encourage industry to engage the Trade Remedies Authority and share new evidence to make sure we have the right trade protections in place.

Secondly, the Government are also announcing today the development of a £350 million critical chemical resilience fund to support our chemicals industry. This fund will be available to the UK’s most strategically important chemical producers who underpin our most critical sectors and essential services.

The UK chemicals sector is crucial for UK manufacturing, with chemicals products embedded in the vast majority of manufactured goods. However, like the ceramics sector, the chemicals sector has also faced significant headwinds in recent years with reduced output and recent plant closures raising concerns about its long-term resilience. This Government recognise the scale and depth of those challenges, and we are standing firm, alongside industry, to provide robust support to ensure the sector has a prosperous future in this country.

We have already acted urgently to support and safeguard vital chemical production and jobs at INEOS in Grangemouth, and are restarting production at Ensus in order to protect supply of CO₂.

Today we are taking further action. The fund will seek to address the most acute pressures by offering support to critical chemical companies in key clusters that need help to put themselves on a sustainable footing. This will ensure these companies can continue to supply our essential services, boost the resilience of our supply chains, and protect critical UK sectors like food production, water and healthcare.

This is just a first step, and we will work together with industry to ensure we continue to make the critical inputs our economy requires in the UK. The fund will be developed in collaboration with independent experts and industry representatives, and further details will be communicated in due course.

The Government will continue to work hand-in- hand with industry to ensure broader policy delivers decarbonisation and not deindustrialisation. We are committed to tackling unfair foreign trade practices, and Ministers will urgently convene the chemicals industry to explore potential trade defence action.

The Government are also committed to driving down regulatory costs faced by the industry. We have already cut back the need for UK businesses to buy expensive and unnecessary data, cutting transition costs while maintaining health and environmental protections. We will work with the industry to identify where the UK can go further to reduce regulatory costs and remove duplicative procedures for businesses.

This Government recognise the importance of the chemicals sector, its contribution to society and our economy, and the jobs and communities it supports. The fund supports the delivery of our industrial strategy, which identifies chemicals as a vital foundational sector that underpins the UK’s high-growth industries like defence and advanced manufacturing by producing the materials they all depend on and are essential to many supply chains. Chemicals are also essential to delivering our ambitions in our clean energy mission. Action today will ensure the sector can play its part in strengthening our industrial capability and boosting resilience for the UK’s future.

The Government will continue to work with the sector and experts as the ceramics industry support scheme and critical chemicals resilience fund are being developed, including on eligibility criteria and delivery mechanisms as they are progressed. Further detail will be published in due course, and we are aiming to open both funds to applications later this summer.

The support being announced today is in addition to our support for the chemicals sector through the industrial strategy. In particular, the targeted support to bring down energy costs, through the British industrial competitiveness scheme, will benefit over 10,000 businesses, including many chemical companies, reducing electricity costs by up to £40 per megawatt hour.

This is a long-term industrial intervention designed to address persistent competitiveness challenges facing the chemicals sector. This will help chemical companies remain competitive and resilient through periods of volatility, supporting supply chain security through global supply shocks.

Time and again we have stepped in to support our resilience: from keeping the blast furnaces running at Scunthorpe and restarting production at Ensus to safeguard the UK’s supply of CO₂, to this intervention today. This is the difference an active and strategic state makes.

Together, these measures demonstrate our continued commitment to heavy industry, which underpins our economy, industrial strategy growth sectors, and our national resilience.

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