The following Statement was made in the House of Commons on Tuesday 18 November.
“With your permission, Madam Deputy Speaker, I wish to make a Statement on the closure of the ExxonMobil Fife ethylene plant at Mossmorran in Scotland. I thank Mr Speaker for accommodating this Statement today.
Like many Members of this House, I am saddened to learn of Exxon’s plans to close its Fife ethylene plant. This decision is, of course, extremely worrying news for those employed by Exxon, as well as for contractors who work at the plant, those employed by the companies which supply the site with gas, and those at the adjacent natural gas liquids plant operated by Shell. While this is no solace to those impacted at Exxon, Shell has confirmed that it does not see its workforce or operations being affected by this closure.
The Government and ExxonMobil have been discussing the operating environment of the plant since April, and my officials have endeavoured to meet Exxon every week since August. Ministers also met Exxon regularly this year, underlining our commitment to exploring every possible opportunity to retain the site’s operations. This afternoon, I spoke to Paul Greenwood, the chair of ExxonMobil. He assured me that Exxon is not suggesting that this closure was due to a lack of action or will on the Government’s part. It was a commercial decision made when the numbers simply did not add up. He reiterated to me that the site is 40 years old, inefficient and in dire need of modernisation to be commercially viable for the future.
The company estimates that it would have cost close to $1 billion in capital investment to bring the site to a point where it would be profitable. That fact, combined with a challenging petrochemicals market, including a sharp decline in ethane supply in the North Sea, meant that the investment was likely to outweigh the return. ExxonMobil has already closed similar assets in Europe, and is divesting from activities where there is no short-term path to profitability. It explored alternative use cases for the site, but none offered a viable route to sustainable operations. As the site has been significantly loss-making for the last five years, and as it would take a further five years for the investment to reach its potential, Exxon decided against continuing operations.
In those circumstances, the support from the Government that Exxon would need to change those calculations was beyond acceptable levels. Exxon was aware of this, and it has acknowledged that, even with support, the commercial circumstances were simply too stark, and the costs would have been too great. So, despite tireless, inventive and determined work from both government officials and Exxon, the challenges facing the site were ultimately insurmountable.
The decision that the Government would not provide financial or bespoke policy support was communicated to Exxon by my right honourable friend the Business and Trade Secretary, but we have of course retained an open dialogue with the company throughout. This is not a decision that either the company or the Government have taken lightly. As honourable Members know, this Government have shown that we are prepared to step in and support industry when it is feasible to do so. We have stepped in to support businesses in the steel, shipbuilding and chemicals industries, protecting jobs and vital capability across the UK, including Scotland, but in all cases there was a fundamentally sound business proposition underpinning our investment. Sadly, here that was not the case.
I want to stress that, as disappointing and concerning as the closure of the Mossmorran site is, it is not symptomatic of UK industry as a whole. Our commitment to supporting UK industry is clear in the many steps that we have taken since coming into government last year. Our modern industrial strategy lays out a raft of policy interventions to ensure that British industry remains a world leader that is hugely innovative and investable. It is a strategy to cut red tape, lower energy bills and get spades in the ground. The fact that we have seen £250 billion of investment committed and over 45,000 jobs supported since July is testament to the strategy’s success so far.
The closure of the Fife plant is a commercial decision made by ExxonMobil, but of course it has a very human cost. There are 179 direct employees and 250 contractors employed, and there are more people in the supply chain. I know Members from across the House will be worried primarily about these individuals and the communities impacted. Let me assure the House that the Government stand ready to provide support through the Department for Work and Pensions rapid response service and its involvement in PACE—partnership action for continuing employment. The Secretary of State is meeting Unite tomorrow as part of a wider visit, during which he will discuss options for more support for the affected employees. I also met Unite earlier today, and I will meet GMB colleagues tomorrow.
I have been assured by the company directly that Exxon, as a responsible employer, will ensure that it properly supports its staff in finding alternative work, including at its Fawley site at Southampton, and will support those employees in their relocation. Our focus now is on helping the workforce through this troubling period, and ensuring that responsible next steps are taken for the decommissioning and remediation of the site. Long term, we are ensuring that UK manufacturing at large benefits from this Government’s growth mission. We want to create the right conditions for British manufacturers to compete properly in the global economy—and win. Over the coming days, my department will update the House on the progress that we are making, not least on energy costs.
Before I conclude, Exxon chair Paul Greenwood asked me to reiterate a message that he has given to all the employees at Mossmorran. It is a message that I am sure all Members of the House will agree with: the closure of this site is no reflection on them, their efforts, or their work. They should be proud of what they have accomplished in the last 40 years. As Industry Minister, I personally thank the employees at Mossmorran and the Fife community for their contribution to the UK industrial economy and, through decades of ethylene exports, to our balance of trade for over 40 years.
This is not the end of Fife’s industrial story. As Exxon gradually decommissions and remediates the site, the Government are committed to working with the local authority and the Scottish Government to promote the benefits of this location for future industrial investment. This Government are committed to supporting the workforce and the community over the coming weeks and months, during what I know will be a difficult and painful transition. I commend this Statement to the House”.
My Lords, His Majesty’s Official Opposition’s thoughts are with the 450 workers at Exxon Mobil’s Fife plant, who now face losing their livelihoods. That plant had been a cornerstone of chemical production in the United Kingdom for 40 years. These are skilled people—proud people—and whole communities are now wondering what comes next. They deserve our sympathy, of course, but sympathy will not keep an industry alive. This closure was not unavoidable; it is happening because of this Government’s policies.
The chief executive of the Society of Chemical Industry, Sharon Todd, put it starkly:
“Without further government action to address high energy costs for industry, and a greater consideration of the importance of fossil carbon for material feedstocks, industrial resilience in the UK is undermined and further closures are increasingly likely”.
What a verdict—and it is one that the Government cannot pretend they have not heard. We on these Benches have warned Ministers repeatedly. Industry has warned them repeatedly. Everyone who actually makes things in this country has warned them repeatedly.
But the Government simply will not listen, and the price of this stubbornness is being paid by workers, manufacturers and communities up and down the country. ExxonMobil is not alone; we are seeing exactly the same story in steel. Everywhere you look, energy-intensive industries are struggling with the same crushing energy costs, and the pattern is not subtle. The Government’s energy policy is pulling in the opposite direction to its supposed number one priority of growth. You cannot claim to have a plan for growth while presiding over some of the highest electricity prices in Europe. It just does not add up.
Only a few weeks ago, the US ambassador to the UK, Warren Stephens, warned Ministers that high electricity prices are deterring investment from the world’s strongest economy and our closest ally historically. Then we have ExxonMobil’s UK chairman, Paul Greenwood, who said that the company had spent months warning the Government about the risks to the plant, only to be ignored. He said that
My Lords, this is quite clearly a blow for the area of Fife, and especially for the direct and indirect workers of the plant. Just as the noble Lord, Lord Sharpe, said, our thoughts go to them and their families as they seek to find ways of coming to terms with the blow.
The closure will see many highly qualified and specialised workers laid off at a time of severe cost of living pressures. The company has talked about supporting its employers and possible relocation available for some, but what about contractors and the wider supply chain? As far as I am aware, no task force has yet been set up to manage this, so can the Minister please update your Lordships’ House on how the wider workforce will be helped as this crisis bites? It is reported that only around 50 staff are being offered jobs, and nearly 500 miles away in Hampshire. Can the Minister confirm how many have actually agreed to relocate? What are the Government doing to protect and create highly skilled, high-quality jobs located for those who cannot move far from their homes, their communities and their wider family? More generally, much is made of the transition to net zero, which we wholeheartedly support, but there is a danger of the old jobs disappearing more quickly than the new ones are being created, and this mismatch will make growth very difficult, if not impossible.
There has, not unexpectedly, been some finger-pointing—indeed, we just saw some—trying to work out who is to blame for this. But we should understand that this plant has been in trouble and making a loss for five years. If economic and trading environments are causing the closure, both this Government and the last Government are culpable. But I also point to Brexit. All the products made at Mossmorran are exported to the EU. Can the Minister outline how much Brexit contributed to the plant’s demise? Given that there will no longer be these exports from the plant, what is the effect on our balance of trade?
I thank the noble Lords for their statements today, and I entirely agree that our thoughts are with the workers and the families of those affected by the closure.
While this Government inherited a precarious economic position from the previous Administration, it is imperative that we continue to move forward and pursue the right pro-innovation, pro-business policies which generate growth. We were disappointed to learn of Exxon’s announcement of the closure of its Fife ethylene plant. This follows months of engagement with the company and a commitment to explore all the opportunities to retain the site’s operations. However, it is my understanding that there was no credible buyer for the plant. Of course, if there are potential purchasers who wish to explore what is possible, the Government would be happy to work with them. We would be happy to find a solution, whether that is the ongoing operation of the plant or repurposing the site for new uses.
As noble Lords will know, the Government and ExxonMobil have been discussing the operating environment around the plant since April, and officials endeavoured to meet Exxon every week since August. Last weekend, Ministers from across government were in contact with the company to discuss this decision, and I expect there will be further conversations over the coming months. The Minister for Industry was clear that the Government are prepared to step in and support industry where it is feasible to do so, as we did with Harland & Wolff, Tata Steel and most recently British Steel. Sadly, in this instance, the Government are not able to provide support without a fundamentally sound business proposition. No intervention would represent value for money without one.
We know that it is a concerning time for those affected, which is why our focus is now on supporting the workforce. The Minister for Industry met Unite to explore options for supporting the affected employees, and Exxon is taking steps to mitigate the impact of its closure decision, as any responsible company would, with some employees being retained to support the decommissioning of the site and others being offered relocation and training packages to Exxon’s other assets at Fawley and Southampton. Discussions about the precise allocation of those roles are ongoing and I cannot confirm at this time exactly how many people have decided to make the transition to other sites. Regrettably, this falls short of supporting the entire workforce in finding new employment, which is why the Department for Work and Pensions is engaged in supporting those impacted. Officials in the department are also in contact with representatives from Fife Council and the Scottish Government and are working together on a task force to provide further support. Today, my right honourable friend the Secretary of State for Scotland met the Scottish Government and the Fife local authority to convene the first of those discussions and will continue with that task force over the coming months.
My Lords, last week was another sad one for the UK oil and petrochemicals industry, as well as for the company employees, contractors and those in the general supply chain who rely on it. The imminent closure of Mossmorran comes in addition to the Grangemouth and Lindsey refineries. What comes next? There is not much left.
Mr Greenwood, the chairman of ExxonMobil UK, mentioned four reasons why the plant at Mossmorran is being closed. Due to time, I will concentrate on just one: the decline in a cheap and abundant source of ethane from the North Sea. We know that there is a large untapped supply of ethane in the North Sea, but this Government have increased taxation on the producers in various ways to prohibit them making any money—making them less competitive—and have prevented any more licences being issued in this basin. This has a snowball effect of closing the North Sea down, reducing a revenue stream to the Exchequer and seeing the workforce continue to fall, as well as, by inference, increasing hydrocarbon imports from overseas where job numbers go from strength to strength.
Equally important are the significantly increasing carbon emissions on a global scale. Just because the imports arrive in the UK emissions-free does not mean that we are not responsible for the increase in emissions from our own production, which are significantly less. Production continues elsewhere in the world and its subsequent transport for our use is more emissions-intensive.
Does the Minister agree with me that this country must, therefore, ensure the continued and increased flow of North Sea hydrocarbon production, rather than having to increasingly purchase product from overseas? This would keep the significant but rapidly reducing onshore and offshore oil and gas industry alive for the foreseeable future; more importantly, it would keep the remaining jobs secure. Electricity generation, green or otherwise, will not satisfy our complete energy needs for many decades to come—if ever—so why do this Government continue to penalise this nation?
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“these are deliberate Government policies that are undermining us”.
When global companies start talking like that, something is seriously wrong.
This closure lands at the same moment that Make UK published a report warning that surging energy costs and cumulative taxes are threatening the future of Britain’s industrial base. Ministers have no excuses left. These are the results of decisions made in Whitehall: a slow-motion sustained act of industrial self-harm. Even Unite and GMB—hardly allies of these Benches—warned Ministers that their ban on new oil and gas development would devastate supply chains and destroy skilled jobs. When both employers and unions are saying the same thing, it seems that only this Government could fail to hear it.
And what exactly has this achieved for the environment? Nothing, because now we simply import more oil and gas instead of producing it ourselves. Meanwhile, the Minister in the other place, the Secretary of State for Net Zero, posts on X claiming that bills remain high due to fossil fuel dependence, yet Ofgem has confirmed that policy costs are the major driver.
Minister can no longer hide from the consequences of their own decisions. We have major international investors describing the UK as “mismanaged” and “uninvestable”. South Africa’s richest woman called Britain a “scary country”, saying that she
“wouldn’t touch it with a barge pole”.
When global investors are talking about the UK in those terms, something has gone profoundly wrong.
As we said during the steel debate a few weeks ago, high energy costs and new unemployment burdens looming from the Employment Rights Bill, plus scatter-brained and ideological policies coming out of DESNZ, are all squeezing the life out of British industry. Will the Government reverse their ban on North Sea oil and gas? Will they stop pouring unaffordable subsidies into wind and solar while heavy industry collapses under the weight of energy costs, or are they determined to preside over a full-scale de-industrialisation? British workers, British industries and British communities deserve a lot better than this; they deserve a Government who listen, support industry and understand growth, and the Government are failing on all three counts.
This is, of course, a further blow for the Scottish economy and UK-wide manufacturing, and it comes fast on the heels of other company closures. The common denominator seems to be a combination of long-standing depressed demand alongside the policy environment—and the overwhelming issue, as noted by the noble Lord, Lord Sharpe, is the cost of energy. Energy was a problem when the noble Lord was in government and it remains a problem now. This is not to downplay today’s news confirming the £420 million a year committed to reduce electricity costs for the UK’s most energy-intensive industries—but that is jam tomorrow; it does not start until 2027.
There is a desperate need for further and more rapid intervention, as many UK chemicals operations face risk of closure before the British industrial competitiveness scheme, as it is called, comes into effect the year after next. There also remains considerable uncertainty about which businesses will benefit from this new support. Can the Minister fill us in on what the process will be for deciding which businesses and sectors qualify for this subsidy? What specific steps are the Government taking for the here and now? We understand what is happening in 2027, and we have seen the long look into the future that is called the industrial strategy, but what is happening now? We need to find a way of making sure that there is long-term investment in our manufacturing and chemicals industry.
The Scottish Government have a responsibility for the economy and jobs in Scotland, so why is there no meaningful mention of them in the Statement? Will the Minister outline what conversations were being had with the Scottish Government and when, and how the Minister sees the role of the Scottish Government going forward?
To conclude, energy-intensive industries are in decline across the UK. Every chemical business across the UK is paying more for its energy than competitors elsewhere, as was the case under the noble Lord, Lord Sharpe, as much as 400% higher than in America. Closures at Grangemouth, Prax Lindsey and now Mossmorran risk forcing downstream operators to import resources at higher cost. Britain’s once dominant chemical industry is continuing to suffer. The UK’s chemical output has reached its lowest level for a decade. The latest business survey of members of the Chemical Industries Association shows that 60% of chemical businesses report falling sales with a further 20% seeing no growth. More worryingly, many report strategic reviews.
Closures reduce our already dwindling industrial capacity and reduce our ability to deliver essential materials for our country’s critical national infrastructure, be it health, energy, food or defence. If the Government want to continue to have a chemical industry, then we need much more action to address these unsustainable costs.
I stress that this closure is not representative of UK industry as a whole. Through our modern industrial strategy, we are channelling support to the eight growth sectors of the economy, including clean energy, defence and advanced manufacturing—all areas in which Scotland is incredibly strong. Far from being uninvestable, since July, we have seen more than £250 billion of investment committed into the UK, alongside 450,000 jobs. Only recently, we have seen further investment into AI growth zones and small modular reactors.
Both noble Lords talked about energy costs. Your Lordships know that bringing down energy costs for British businesses is a key part of our industrial strategy. Although it is important to note that electricity costs were not a major factor behind this site’s closure, we are pressing ahead with unprecedented support for our energy-intensive industries so that they can properly compete and win in the global economy. Last month, we pledged to increase the discount on electricity network charges from 60% to 90% for businesses in sectors such as steel, cement, glass and chemicals; this discount will slash costs for a whole host of businesses not just in England but across the UK. We know that around 550 of our most energy-intensive businesses will save up to £420 million a year on their electricity bills from next April thanks to this one change.
To that end, our new British industrial competitiveness scheme, announced for consultation today, will reduce electricity costs for more than 7,000 eligible manufacturing businesses. We want to save them up to £40 per megawatt hour, or up to 25%, from April 2027; that will cover the foundational and frontier areas, as defined in the industrial strategy. This will be subject to further consultation, as set out in the papers today.
On the point about engaging and working with the devolved Governments, the Scottish Government have been heavily involved in the ExxonMobil discussions, with meetings at the highest level. I thank my colleagues, both there and in the UK Government, who have been engaging on this issue for such a long time and trying to find a way forward. We will continue to work constructively together both to support the hard-working employees of the Fife plant and to ensure that they are fully supported over the coming weeks and months.