I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate, in line with current Government guidance and that of the House of Commons Commission. I also remind hon. Members that they are asked by the House to have a covid lateral flow test twice a week if coming on to the estate, which can be done either at the testing centre in the House or at home. Please give each other and members of staff space when seated and when entering and leaving the Chamber.
That this House has considered energy intensive industries.
It is a pleasure to serve with you in the Chair, Ms Nokes. I am grateful to have secured this timely debate. As we continue to emerge from the economic hit of the covid crisis and as financial activity builds and grows, energy prices are noticeably higher and our constituents are feeling the pinch. We have seen domestic suppliers go bust, and jobs and product affordability have been threatened by the cost of energy to businesses. The short-term issue of price volatility is exacerbated by longer-term issues of energy production and energy efficiency.
Today, I will set out the issues facing industries that rely on the intensive use of energy, not least the ceramics industry, for which the Potteries are internationally famous. It is worth remembering that to be the world capital of ceramics, Stoke-on-Trent needed to be not just a city of pots and clay, but a city of pits. The energy requirements to fire ceramics at extreme temperatures are intense, and it was local coal—as well as clay—that fired kilns historically.
Times change and coal firing is now, thankfully, a thing of the past. The last such firing was literally a museum piece, organised by the fantastic Gladstone Pottery Museum in my constituency at the Sutherland works of Hudson & Middleton in 1978. It is a good thing that coal firing is a long-lost practice. We should not over-romanticise the scenes of smoke billowing from hundreds of bottle kilns, which came at the human cost of debilitating industrial illnesses such as miner’s lung and potter’s rot, but neither should we look to close the industry down or leave it to wither on the vine, as the last Labour Government did, when massive household names, including Spode, Tams and Royal Doulton, were lost during their time in office.
The ceramics industry was born out of the innovation of Josiah Wedgwood and, while some processes from that time survive, the industry has continuously been one of innovation, with producers often competing to deliver even greater efficiencies. Just as the ceramics industry has had to adapt and adjust from the use of coal to the use of gas and electricity, it is currently adapting and innovating to the ongoing shift from gas. We should support it and other energy-intensive industries in doing so.
The hon. Member is making a good speech. Does he agree that it is high time the Government changed the regulations on hydrogen blending to allow that to happen in the gas network? At the moment, the gas management safety regulations do not allow any blending above 2%, which is contrary to the Government’s own hydrogen strategy.
I thank the hon. Gentleman for that point. I know that the Government are looking at that. Further trials at scale are being looked at—in Newcastle, I believe—to be undertaken by Cadent. I am sure that that will lead to further changes and to developments of hydrogen mix within the industry.
As I was saying, it is important to do that testing for energy-intensive industries, not least because glazes can respond sensitively to firing conditions, such as temperature and humidity. For that reason, I am glad to say that certain offshore production lines have looked to return to Stoke-on-Trent from locations with different climatic conditions that simply do not create the pristine quality of ceramic goods one gets from Stoke-on-Trent. I have been pleased to discuss with Cadent the importance of fully scientifically trialling and testing the impact of hydrogen mix, and I know that Cadent has been looking into this further with Lucideon, which leads the industry in ceramics research and material science.
I have argued for several years that we need an international research institute—a ceramic park—based in Stoke-on-Trent to institutionalise the myriad projects and advances, not least the work of Lucideon, to develop hydrogen kilns, which I am pleased to say recently secured UK Research and Innovation funding. What we need now is a dedicated research facility as a base for those projects for the industry, with Lucideon as the anchor. Glass Futures in St Helens is one example of what might be achievable by learning from another energy-intensive industry.
I am sure that the British Ceramic Confederation will have engaged with the Minister about its ambition for a similar world-leading centre of excellence for the world capital of ceramics. Indeed, as the BCC will point out, the sector has been working on recycling waste heat for decades, such as by pre-heating spray dryers with exhaust gases or heating spaces via heat exchangers on tunnel kilns. This is not a sector that wants to waste anything, and where it is economically viable, energy and carbon efficiency has been invested in for decades.
It looks like we have in the region of seven Back Benchers wanting to contribute, so if Members could do the maths and work out how many minutes they have, that would be much appreciated.
I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on securing this debate and on a very good opening speech, in which he has talked about the ceramics industry. I hope that his speech demonstrates the call for greater Government support for energy-intensive industries, including steel, which I will be talking about today, representing Llanwern steelworks and Liberty Steel in Newport East. I hope that shows that this is a truly non-partisan, cross-party campaign that we can all agree with.
I declare an interest today as a proud member of the Community and GMB trade unions, which—along with Unite—so ably represent steelworkers in my constituency and across the UK. Those campaigning unions, along with the industry trade body UK Steel and hon. Members of different parties, have long banged the drum about the need to reduce eye-watering energy prices, which hold back our steel sector. I make no apologies for doing so again today, as this is an issue that has not gone away; in fact, it has got much worse over the last year.
Even before the pandemic hit, industrial energy prices were hitting our steel producers to the tune of £50 million a year. In the five years that UK Steel has been monitoring the costs, they have cost the UK sector £0.25 billion more than what is paid by French and German producers. UK steel producers—we always quote this fact, but it is worth doing so again—still pay 86% more than German competitors and 62% more than those in France. As the hon. Member for Stoke-on-Trent South said earlier, wholesale prices are now at record highs, with electricity costs peaking in October. To put that into context on the ground, energy costs for medium-sized steel rolling mills in south Wales and across the UK have almost quadrupled over the past year. One manufacturer said to me that it was paying £130,000 a week, which has now gone up to over £500,000 a week in some cases.
There is nothing inevitable about this, as my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) said in Wales questions last week. Other countries have acted swiftly to ensure that energy costs are less of a burden on steel producers. The hon. Member for Stoke-on-Trent South mentioned the Portuguese Government. The Spanish and Portuguese Governments have taken decisive steps, including reducing the extraordinary profits made by energy companies, cutting special electricity tax rates for steel, and introducing a minimum 30% reduction in network charges for industrial users. Although every economy and every country is different, such steps represent Governments making a tangible show of support for their steel sectors—an example that the UK Government should follow.
My hon. Friend is giving an excellent speech. It appears that some Members on the Government Benches seem to see steel as a sunset industry. In fact, nothing could be further from the truth. It is at the cutting edge of innovation. New alloys are being developed all the time. We need to emphasise the fact that this is a future-facing industry.
I thank my hon. Friend. It is absolutely true to say that steel is a future-facing industry, which will help us build back the economy after the pandemic and help us power a green industrial revolution. That is as true now as ever.
9:55 am
Dr Jamie Wallis (Bridgend) (Con)
It is a pleasure to serve under your chairmanship for the first time, Ms Nokes. I pay tribute to my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) for opening this very important debate.
On top of fierce international competition, the recent volatility of energy prices means that energy-intensive industries are facing significant challenges to remain competitive in the global market. That is putting thousands of jobs and livelihoods at risk. That is why we need to take action now.
UK electricity prices for extra large industrial consumers in the second half of 2020 were higher than for any European Union member state. My hon. Friend will be aware that the steel industry, much like ceramics, is heavily reliant on vast amounts of heat to produce high-quality consumer goods and materials. With China now dominating the market, accounting for 53% of production, more needs to be done to protect the quality British steel we make here from crippling high costs, which will potentially exclude us from the very industry that we created.
The British steel market needs the Government to remain committed to it. The hon. Member for Aberavon (Stephen Kinnock) is absolutely correct to say it is a future-facing industry. We need the Government to remain committed to this future industry to protect the generations of families who have worked in and around it. Sadly, the number of people working in steel has already declined by half since 1990. We need to buck that trend if we are to deliver on our 2020 mandate. Sectors such as steel are vital to the Government’s levelling-up agenda, with modern technology and infrastructure increasingly dependent on steel for components for everything from wind turbines to electric cars. Consequently, it is essential that we support these industries as they struggle to respond to higher energy prices.
The Port Talbot steelworks is located in the constituency of the hon. Member for Aberavon, just on the doorstep of Bridgend and Porthcawl, and hundreds of my constituents are employed there, much like their families before them. The jobs, and the people, need to be safeguarded.
The Government currently provide compensation to energy-intensive industries for higher electricity costs associated with low-carbon energy emission reduction policies. Between 2013 and September 2020, that provided the steel sector with £480 million. Nevertheless, the steel sector is calling loudly for further support from the Government. The hon. Member for Newport East (Jessica Morden) highlighted the UK Steel electricity price report of February 2021, which estimated that electricity prices would cost UK steelmakers an additional £54 million, compared with production costs in Germany. For the past five years, the cost is £254 million. These are clear danger signals. We are teetering on the edge and we need urgent action.
It is a pleasure to serve under your chairship, Ms Nokes. I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on securing this very important debate.
Manufacturing is the backbone of the British economy, but it is a backbone that has been dangerously damaged in recent decades. By failing to back our manufacturing sector, successive Conservative Governments since 2010 have only succeeded in offshoring jobs. As a result, they are ripping the heart out of our local communities, while also offshoring our carbon emissions. The Government’s No.1 priority should be to do whatever it takes to support and regenerate our manufacturing sector.
Steel is the cornerstone of that manufacturing sector, and it will continue to be so for decades into the future. Steel is the homes that we live in, the vehicles that we drive and the offices that we work in. Steel will build the smart cars and the wind turbines that power our economy forward. The Government appear to believe that steel is a sunset industry, but nothing could be further from the truth. The steel industry is a hotbed of innovation and pioneering technology.
Tata Steel is the largest private sector employer in my constituency, and the company is absolutely determined that there should be a future for UK steelmaking, while also recognising the importance of decarbonisation. It recognises that for UK steelmaking to enjoy a prosperous future, the industry needs support and partnership from the UK Government, first by working with the industry to manage a pathway to net zero on both public and private investment, but also by the Government levelling the playing field in order to ensure that the industry is competitive against its European counterparts.
Let us be clear—the current energy spike has played havoc with energy-intensive industries.
The hon. Gentleman is making a first-class speech. I was brought up in Sheffield and lived there for 20-odd years. I know what he is talking about and he is completely right. I am not going to make a speech, but I want to congratulate him.
Let us be clear—the energy spike has played havoc. November 2021 prices peaked at 50 times the 2020 average, at £2,000 per megawatt hour. The monthly average wholesale costs are 50% higher than in Germany. These extraordinary electricity prices are leading to smaller or completely eliminated profits, and thus to less reinvestment and even pauses in production for some companies. Higher electricity prices also act as a disincentive for investment from international steel companies, with the UK being seen as a less favourable investment environment than other places.
The potential for a widening price gap between the UK and our European competitors means a loss of market share, both in the UK and in key export markets. That is why it is utterly self-defeating for Ofgem to recommend that network energy prices rise even higher. The Business, Energy and Industrial Strategy Committee has rightly called for the steel industry to be exempt from this price hike; let us hope that Ofgem, the Secretary of State for Business, Energy and Industrial Strategy and the Minister, who is in his place today, will take heed of the Committee’s recommendations.
Other European countries have taken quicker and more expansive action than the British Government by offering support to energy-intensive industries. As has already been mentioned, the Portuguese Government have announced a minimum 30% reduction in network charges for industrial users. The Italian Government have pledged over £4 billion to eliminate renewable levies on gas for industry and electricity for small and medium-sized enterprises. In Spain, we have seen tax cuts and the temporary reduction in extraordinary profits made by energy companies, including extending the existing suspension of a 7% power generation tax through year end. They will also cut their special electricity tax from the current 5.1% to 0.5%.
What we need to see in this country now is the provision of 100% compensation for costs of carbon in electricity bills, through a carbon price floor and a UK emissions trading scheme, up from the current 75% allowed for under EU state aid rules. We need to provide 85% compensation for the capacity market fee and an 85% reduction in network costs, in line with France and Germany, as well as full exemptions for the renewable levies or the introduction of additional compensation.
10:05 am
Holly Mumby-Croft (Scunthorpe) (Con)
It is a pleasure to serve under your chairmanship on this debate, Ms Nokes. I also thank my hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) for securing the debate. I know he is as passionate about the ceramics industry as I am about the steel industry.
I want to lay my cards on the table and make three clear points. First, steel uses a lot of energy; we understand that. That means we are on the frontline of the energy price rises. Secondly, we will never not need steel. I am sorry to anyone who has heard me say this a hundred times already, but no one in this country can go a single day without steel. We need it for everything we do, from infrastructure to defence and from healthcare to the wire in the tyres of my trusty old Škoda parked underneath Parliament. Thirdly, of course we must find ways to make steel that consider the environment, but we must never completely rely on other countries to make steel for us. We will have no control over the quality or the environmental issues that come with that, and it would be foolish and immoral to ship steel from other countries.
Between 5 o’clock and 6 o’clock last Monday, steelmakers in Scunthorpe paid an eye-watering £2,080 for a megawatt-hour of electricity. The average cost of electricity prices in 2020 was £35 per megawatt-hour. That volatility is crippling our daily operations. Site managers have to shut down or delay key processes to cope with the spikes in energy prices. It is unfortunate and I know this is a collective challenge for energy-intensive industries, but the cost of energy is now higher than the cost of labour and this is not merely a market blip that will come and go.
I recognise that this is in great part caused by global circumstances beyond our direct control. I believe in a free market, but when it comes to steel a free market does not really exist. Steel is made in every G7 country and, quite bluntly, one way or another those countries have consistently found creative measures to support their steelworks because they want to maintain a steel-making capacity. We were already at a disadvantage when the energy price spikes hit us and that has highlighted the extent of other nations’ support for their energy- intensive industries.
I also want to directly challenge anyone who has the incorrect view that steelworks constantly need bailing out. They do not; they need a level playing field, but it could not be any more firmly the other way round. Steelmakers in Scunthorpe are survivors and thanks to our local talent, we have kept our heads above water for decades. We need to be on a fair footing with our European competitors and we will thrive. The Treasury has said it wants
10:11 am
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As a whole, the energy-intensive industries of steel, chemicals, paper, glass, cement and lime, industrial gases and ceramics contribute £38 billion annually to UK GDP, according to figures from the Energy Intensive Users Group. The group notes that the industries provide 200,000 jobs directly and support 800,000 indirectly. Those are not jobs that we should lose to international competitors with lower environmental standards than our own, lower ambitions for carbon reduction or higher interventionism.
There is an urgency to ensuring that energy-intensive industries survive in the UK, due to the real and present danger of the volatility in world energy markets. It would be a tragedy if short-term price pressures were allowed to undermine British industry just at a time when order books are recovering strongly from covid and firms are looking to take on more skilled staff. Just as there is a need to keep industrial jobs in Britain, we need to make sure that the existing orders for goods stay on the books of British firms.
Competitor countries are providing support and are ready to seize the market share. Worryingly, that includes competitors with less exposure to world energy markets and scant regard for enforcing environmental protections. In ceramics, it is worth being clear what that risk is.
The renaissance of the ceramics industry since 2010 is a great British success story, with the sector’s gross value added doubling in real terms from 2009 to 2019, according to the House of Commons Library. Ceramics is particularly important in the midlands economy. Some 60% of direct employment in the sector is within the midlands engine, and most is concentrated in the Staffordshire Potteries, focused on Stoke-on-Trent. The sector’s products encompass everything from crockery to electrical components, bricks to agricultural filters, sanitaryware to armoured plating, tiles to prosthetic joints, and pipes to works of fine art.
I have previously visited Ross Ceramics in Newstead in my constituency, which has expertise in the manufacture of complex geometry ceramic cores, which are used in the casting process of jet engine components for aerospace and other industrial uses. It is world-leading engineering. Far from being an industry of the past, modern manufacturing in advanced ceramic technologies is securing the future of skilled employment on good wages in and around north Staffordshire, but firms that usually face one third of their total production costs from energy are suddenly finding that two thirds of costs are from energy.
The industry has long militated against price shocks by buying energy in advance, but many were stung by the pandemic, finding that they had excess energy at a time of restricted demand for ceramic production, and taking a loss on selling back that energy. Things have now boomeranged completely. Firms that had held off from buying energy early for this winter—for fear of further lockdowns hitting demand—now face severe financial difficulties. Firms with full order books operating at 100% capacity have none the less had to contemplate shutting down early in December, out of fear that it will be cheaper to pay employees not to work than to incur the costs of the necessary amount of gas and electricity to fire products at 1,000°C or more.
I note that Portugal, a direct competitor for tile manufacturers, has recently introduced a 30% reduction in the network access tariff for the ceramics sector. That is just one example. Many countries around the world have taken such steps to support energy-intensive industries that have high costs. The industry’s electricity prices in the UK are some of the highest in Europe and are becoming uncompetitive. Additionally, although many of our manufacturers use electricity to generate heat, others who could switch to decarbonise are deterred from doing so by the high cost of commercial electricity on top of the capital investment that would be needed.
I am encouraged that the Government’s industrial decarbonisation strategy of April this year recognises the dangers and undesirability of simply offshoring production, or ceding it to competitors, as a route to getting the UK’s overall emissions down. Of course, the Government have devised the energy-intensive industries exemption scheme, which is great for businesses that qualify for it. Unfortunately, many of the industries in Staffordshire are excluded at the first hurdle from what the Department for Business, Energy and Industrial Strategy has dubbed the “sector-level test”. Specifically, that means businesses within NACE codes 23.41, 23.42 and 23.43, which cover household ceramics and ornaments, sanitaryware and insulators. Those codes need to join other NACE codes in the ceramics sector that, thankfully, are within the eligibility criteria—namely 23.20, which covers refractory products; 23.31, which is ceramic tiles and flags; 23.32, which is bricks and so on in baked clay; 23.44, which is other technical ceramic products; and 23.49, which is other ceramic products.
If we see the industrial decarbonisation strategy as a herald of the Government’s intention for a serious investigation of the longer-term measures needed to support industry as it transitions to lower-carbon energy, we need to look at how the parallel doubling of public research and development investment can benefit energy intensive industries. That will be necessary to improve efficiency, to encourage a move towards more electric firing and to develop hydrogen as the solution for the larger high-powered kilns where electricity is not an option.
There is a pressing need for an investment strategy for R&D in the energy transition for the midlands engine ceramics cluster, which is just as important as those in London and the Oxford-Cambridge arc who have for far too long received disproportionately high public R&D funding. Public R&D funding is particularly needed in a sector such as ceramics, given the high number of small and medium-sized enterprises—as much as 97% of the sector, according to the British Ceramic Confederation. Even firms that do pass the sector-level test for the energy-intensive industry scheme have difficulty passing the business-level test, due to the smaller-sized enterprises typical of the sector—even firms with worldwide brand recognition.
When certain qualification thresholds for energy-related assistance are set at tens of millions of pounds per work site, the ceramics industry loses out. A sum of £1 million per site would be more realistic. The use of NACE codes could, as has already been demonstrated, target lower thresholds at the ceramics industry for its particular characteristics and configuration.
I know that the Government recognise their responsibility to step up to the plate. Only this Monday, the Government announced £9.4 million to back a trailblazing hydrogen-storage project near Glasgow, helping to create high-skilled jobs. Last week, the Royal Navy issued a market exploration notice to seek hybridisation of the fleet, seeking private sector expertise for a public sector commission to reduce emissions by 20% to 40% by 2030.
The week before that, the RAF announced that it had secured a Guinness world record, no less, for the world’s first successful flight using only synthetic fuel, in partnership with Zero Petroleum Ltd. There was also confirmation this month of the highly significant £200 million Government investment in the Rolls-Royce small modular reactor—an exciting development that could create 40,000 jobs and secure many more in the supply chain, including at Goodwin International in Stoke-on-Trent, which leads the way in British precision engineering.
Sources of intense energy with low to zero carbon emissions are one clear way forward for heavy industries. Another is carbon capture and heat capture. The Minister will know that Stoke-on-Trent leads the way with a district heat network to use deep geothermal energy to heat our city and save thousands of tonnes of carbon dioxide annually, benefiting residents, education providers and businesses alike.
We can go further; I know that our local industries want to go further, but they need support to do so. Keele University, in our neighbouring borough of Newcastle-under-Lyme, has not only worked with EQUANS, part of the ENGIE Group, to generate and store energy from wind and solar on campus; it has also worked with Cadent Gas to demonstrate that hydrogen can be blended at up to 20% into the natural gas network, with no adverse effects for users. The consequent reduction in carbon emissions is obvious, but with hydrogen being six times as combustible as natural gas, public reassurance on safety will be paramount.
Fortunately, Keele and Cadent found in their year-long trial that it is safe to use a 20% hydrogen mix, saving 27 tonnes of CO2emissions in the process. Rolling that out to the domestic market nationally could remove from the atmosphere the equivalent emissions of taking 2.5 million cars off the road, all without changes to current gas heating and cooking appliances. For any new fuel source tested in private homes and campus buildings, as happened with the Keele-Cadent trial, there is a need to research the effects on ceramic and other industrial production, not least because glazes can respond very sensitively.
I should note that one such improvement comes from switching from intermittent to continuous kilns. One of the dangers of today’s very high energy prices is that kilns may need to be shut down completely and then restarted, which is far more complicated and dangerous than it sounds, with wide-ranging consequences. However, innovation must continue. That means supporting the development of new technologies, providing incentives for large-scale investment in proven technologies, and creating a regulatory framework that supports decarbonisation alongside the international competitiveness of UK industry. Some of the new technologies are almost there, but there are issues to overcome. For example, we have to overcome tar build-up or moisture content, depending on the fuel innovation; resist corrosion for acidic kiln exhaust gases; and avoid emissions of nitrogen oxides.
The need to produce and distribute hydrogen on a large scale must be fully researched, not least because hydrogen is also being touted as a fuel of the future for everything from JCBs to trains, including the freight trains that will bring the fine white china clay into the Potteries and will hopefully take more products out in the future. The Government want demand for hydrogen to be high, so they must ensure that the market conditions are right for a ready fuel supply. Interestingly, I note that as part of the Government’s industrial fuel-switching competition, BEIS funded a £3.2-million project led by the Mineral Products Association and Hanson UK to trial a mix of 100% net zero fuels, including hydrogen, meat and bone meal and glycerine, for commercial-scale cement in Lancashire for the very first time this September. Let us see more of those sorts of trials covering more of our energy-intensive industries.
In conclusion, I am happy that we have a Government who have enabled manufacturing to resurge in the UK, particularly the British ceramics sector. Modern and advanced manufacturing is a key provider of high-skilled, well-paid employment across Stoke-on-Trent—not just in ceramics, but emblematically so, as it is the world capital of that industry. We are on the cusp of very big advances in low-emission energy, and we need to seize the opportunities without taking our eye off the ball of the short-term dangers of price volatility in traditional fuel markets. Energy-intensive industries are spread right across the country, and are crucial to realising the higher-skill, higher-wage economy that will level up opportunities. I look forward to the Minister’s response detailing how the Government will meet the challenges ahead.
The reasons why we support our steel sector fall into even sharper focus following COP26. Indeed, there was welcome acknowledgement at the summit that the world cannot decarbonise without steel—whether it is for use in wind turbines, electric cars, energy-efficient buildings, infrastructure and much more. That is why it was all the more disappointing that nothing of note for steel was in the Budget, which UK Steel rightly called a “missed opportunity” and a “triumph of complacency”, particularly on support to help the industry to decarbonise. For example, there was nothing on industrial energy costs, even though we know that the move towards decarbonisation will require even more energy-intensive methods of steel production.
I asked the Prime Minister about this last week but did not get much of an answer, so I will put the question to the Minister: what is happening with the clean steel fund that the industry was promised? It was absent from recent announcements and last month’s net zero strategy paper, and when my hon. Friend the Member for Blaenau Gwent (Nick Smith) raised the issue in the main Chamber recently, he was referred to the industrial energy transformation fund, which is two years older than the proposed clean steel fund. It really feels like the Government do not know what is happening to it, and its absence risks adding to the growing gap between what is needed to decarbonise the sector and what is available in support.
We have also heard little from the Government on improving the procurement of UK steel—a move that would support jobs and livelihoods, benefit our economy, provide value to the taxpayer, and lower our carbon footprint. The latest Government data on how much steel is sourced for the UK includes only 160 tonnes of British steel, which is somewhat lower than the estimated 800,000 to 900,000 tonnes that the forward-looking pipeline indicated. It is not good enough, and it is about time the Government took steps to ensure the maximum economic value of public money to be spent on steel in the coming years.
It is worth saying again that the Government talk the talk on net zero and industrial strategy, but it is really not worth anything if steel is not at its core, as my hon. Friend the Member for Aberavon (Stephen Kinnock) will agree. When the Community union launched the “We Need Our Steel” campaign, the “We” it referred to was not just our world-class, highly skilled steelworkers, or communities such as mine, with industry at their heart, and all those in the supply chain. It also referred to government at all levels harnessing the potential of steel and using it to build back the economy after the pandemic, and to power a green industrial revolution.
I would strongly welcome more targeted Government support for hydrogen technology within the steel sector, to help our green transition to cleaner and more affordable energy. I was delighted to see the Chancellor’s announcement in the autumn Budget of £140 million to establish the industrial decarbonisation and hydrogen revenue support scheme, and the £240 million in the net zero hydrogen fund—but more needs to be done, working in conjunction with the steel industry.
I would welcome a commitment to work with international partners that are world leaders in exploring hydrogen technology, such as Sweden and the United States, to explore potential areas of co-operation. Investment in the green hydrogen-based steel demonstrator project via the clean steel fund requires more clarity, which I hope can be provided today. We ought to prioritise green hydrogen in the net zero hydrogen fund, with the goal of commercialisation.
Looking ahead, I firmly believe hydrogen is key to achieving the Government’s ambitious net zero strategy and to building a green economy, and that such technologies will be crucial for the future development and protection of our steel sector. Now that we have taken back control of our own laws, including those on state aid, we can and we should go further. Finally, more support for transition to a hydrogen-steel economy should be considered as vital in how we respond to the current major challenges to the steel sector.
The Minister will point, of course, to the energy-intensive industries compensation fund, but that was half a decade ago, and the gap I have just described exists after that fund is taken into account. We have had enough of warm words; we must now commit to levelling the playing field for our steel companies. It is the least British workers in industrial communities deserve. What a contrast between the Government’s dithering and Labour’s bold and ambitious £3 billion steel renewal fund. In that fund, we pledge serious investment while the Chancellor had absolutely nothing to say about steel in the Budget. It is a dereliction of duty and makes a mockery of the Government’s so-called levelling-up policies. Tragically, successive Conservative Governments have failed to support our steelworkers and their families and communities. What a contrast with our party and our steel unions, which truly grasp the central importance of the steel industry to the past, present and future of our country. Let us hope that the Government will at some point recognise the need to unleash a modern manufacturing renaissance, with steel at its heart.
“an attractive and internationally recognised ecosystem across both regulation and tax”
for financial services. I want the same for steel. That is why I was delighted to hear the Prime Minister in his speech on Monday acknowledging that we must end the unfairness that UK energy-intensive manufacturing pays so much more than our competitors overseas. The Prime Minister has historically been supportive of steel. I know for a fact that he has a keen understanding of the industry and clearly understands the threat of high industrial energy costs and the burden of the incredibly high policy costs that UK energy-intensive industries continue to face. So I ask the Government and my hon. Friend the Minister to continue the conversations they are having with the steel industry in these really tricky times, to help it to step forward into a greener and more sustainable future.
I know that since taking over his brief my hon. Friend the Minister has engaged regularly with our steelworks, which I thank him for, and I also know that he has been assiduous in understanding this issue. So I hope that he will agree with me that as a sovereign nation we have the ability to legislate and support our steel industry in a number of ways. Our neighbours and competitors in Europe have started taking action. As the hon. Member for Aberavon (Stephen Kinnock) outlined, in Italy the Government are temporarily removing renewable levies; in Spain, the Government have suspended power generation and consumption-related taxes; and in Portugal, the Government have put forward a minimum reduction in energy charges.
Meanwhile, our policy and network charges still continue to be much higher than those of our main competitors, so I urge the Minister to look urgently into abolishing the carbon price support mechanism, which is a tax that is not faced by our competitors; cutting down the network costs and capacity market fees; providing support for emissions trading scheme costs; and reassessing existing renewable levies applicable to steel. I understand that the renewable levies are there to encourage businesses to move towards environmentally friendly practices, and to some extent they have succeeded, but the cure should not be worse than the disease. Of course, we also need a green steel deal, as businesses transition to better, greener technologies, and British Steel has laid its cards on the table with its low-carbon road map announcement. I remain hopeful that my hon. Friend the Minister and the Business Secretary will be the ones to seal that historic deal.
There are few industries in this country that are more closely associated with an area than ceramics is with Stoke and steel with Scunthorpe. As fellow MPs in manufacturing constituencies, I am sure that many of my regional colleagues share the sense of duty to protect those industries and the communities built around them. I genuinely hope that my hon. Friend the Minister will be able to make some progress on this issue.