Oil Refining Sector

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Morgan.)

It is a pleasure to take part in this Adjournment debate, and I thank Mr Speaker for granting it. As I advised the Speaker’s Office and with the Minister’s agreement, the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn) will take a few minutes of my time. To some extent, the points I will be making are similar to those in my Westminster Hall debate, which took place on 11 December.

Before I turn to the specific issue of the closure of the Prax Lindsey oil refinery in my constituency, I want to question the Government’s position regarding energy security. The loss of Lindsey oil refinery will reduce the UK to just four refineries. All of that makes us even more reliant on imports in a turbulent global situation. As we know, world markets can result in supplies being disrupted. At a time when we have an unpredictable American Administration, we are becoming more and more reliant on American-owned businesses, and I question whether that is wise.

I am grateful to my hon. Friend and neighbour for introducing the debate. Of course, as local Members of Parliament, we must be primarily concerned with our constituents who have worked at the refinery. Is it not the point, which he powerfully makes—we have just had a debate on Ukraine—that in an increasingly dangerous world, the Government must look into their own hearts about whether their policies on energy security are meeting national security?

I thank my right hon. Friend the Father of the House, who makes an important point and strengthens the argument I was trying to make. We are exporting skilled jobs, and the Government seem to find that acceptable. The Minister has previously stated that the market would adjust as, indeed, it has, but it raises the question of whether, if another refinery were to close, at what point we will recognise that we must retain some refining capacity in the UK—surely for strategic reasons, if no other.

I thank the hon. Member for securing this debate and for his Westminster Hall debate. We sit on opposite sides of the Chamber, but I thoroughly respect how much he has stood up for his constituents and the wider oil refining industry in the United Kingdom, and I thank him for that.

I will speak about Grangemouth and specifically the jobs that have been lost there—

Order. The hon. Gentleman will not speak about Grangemouth. The debate is about the Lindsey oil refinery, and interventions must be brief.

Thank you, Madam Deputy Speaker. I was under the impression that the debate was on the wider UK refining sector. On that note, we talk about just transition—it is often mentioned in this Chamber—but job losses and no future jobs are the definition of a very unjust transition.

I thank the hon. Gentleman for his kind words. Equally, I recognise how he has stood up for his constituents over the Grangemouth issue, and I compliment him on that.

I also thank the hon. Member for bringing forward the debate. He is right to refer to the Lindsey oil refinery, but all of the United Kingdom of Great Britain and Northern Ireland is affected by the sector if we become vulnerable and reliant on foreign entities. Does he agree that for the nation’s energy security and future energy provision, we need to right this wrong and invest in British-based refineries and energy provision, because otherwise everybody in this great United Kingdom of Great Britain and Northern Ireland will suffer as a result?

I thank the hon. Member for his intervention. No debate would be complete without such an intervention. He is absolutely right that it is the United Kingdom’s energy security that we are referring to.

To turn to the future of the Lindsey refinery, which has been part of the local economy in my constituency for over 50 years, the closure is a tragedy not just for the immediate workforce, 124 of whom have already been made redundant, but for the area as a whole: the bars, restaurants, hotels, haulage firms, Humberside airport, catering suppliers—the list goes on. North Lincolnshire council receives around £2 million a year in business rates, which could steadily reduce over coming years. Needless to say, that would leave an enormous hole in its budget, which would have a consequent impact on the local community.

At last week’s question time, the Secretary of State said in reply to me that fault lay with the owner, Prax. I agree that the directors bear responsibility, but it is my constituents who are feeling the consequences. A Minister has previously stated that the Government are not in the business of saving failed businesses—even, it seems, when they are a vital national resource.

The hon. Member is right that the UK Government said that they are not in the business of saving failing businesses, but they have washed their hands of some of the key factors that contribute to those businesses failing. For example, they are signalling about new licences in the North sea, but these refineries use vast amounts of energy. In the UK, we enjoy the highest industrial energy prices in the developed world. That is the Government’s responsibility.

The hon. Gentleman is absolutely right that energy costs have played a major part not only in the struggles of Lindsey oil refinery, but in those of other businesses, particularly manufacturing businesses. The Government’s comment that they are not in the business of saving businesses seems rather strange coming from Labour.

Ministers have repeatedly said that there is a legal process that the insolvency practitioners must follow. Of course, I accept that. I have previously said that I feel that the Government are hiding behind the administrators, because they have refused to consider the wider implications of the refinery closure, for example on the local economy, the workforce and national energy security.

I have asked on more than one occasion if the Government would prefer a sale of the whole business that would allow it to resume production. Alarm bells rang for me when I received a letter from the Under-Secretary of State for Energy Security and Net Zero, the hon. Member for Leeds North West (Katie White), following my Westminster Hall debate. It said:

“The sales process remains ongoing, with the Official Receiver and Special Managers continuing to engage with all interested parties. However, they have confirmed that none of the credible”—

that is the important word—

“offers received would enable a return to refining operations within the next few years or allow all employees to be retained.”

I note that she refers to “credible” bids—so we have an acknowledgment that there were indeed credible bids—and to a timeframe. That contradicts the Government’s repeated statements that there were no credible bids. Either there were credible bids or there were not. Which is it, Minister?

In fairness to the Minister, when the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn) and I met him last week, he did at least acknowledge that the Government would have preferred a sale of the business in its entirety.

Picking up that point, if there was a serious bid to buy the whole site—to invest in it, keep it going, maintain the jobs and grow the number of jobs—surely that should have been taken into account, not only in the interests of the local area, but in the strategic interests of Lincolnshire and the country. Will the hon. Gentleman therefore ask the Minister to ensure full transparency in this whole process so that we can establish whether or not there were credible alternative bids to keep Lindsey oil refinery going?

The hon. Gentleman supports the point that I was making. I got it in writing from the Under-Secretary that there were credible bids. The issue of credible bids is one of the most important unanswered questions following last week’s announcement about the sale of the assets to Phillips 66, which I should say is an excellent local employer and provides hundreds of well-paid jobs. I have corresponded or met with four consortia that wanted to buy the business in its entirety. When I spoke to the union representative yesterday, he said that there were seven such expressions of interest. The four consortia I have been in contact with referred to FTI Consulting—the agents—and have reached the same conclusion: they have been ignored and not allowed to put forward their case in sufficient detail for any informed judgment to be arrived at.

The Minister will no doubt be aware of an email to the Prime Minister from James Ascott, who is acting on behalf of Axiom. In the email, Mr Ascott said that Ministers

“have publicly stated that no bids were received for the full Lindsey Oil Refinery site that would safeguard the future of refining operations and protect jobs. This statement is factually false. Our company did submit a fully funded, credible bid for the entire site on behalf of our client, expressly structured to preserve and continue operations, safeguard jobs and provide a full credit and liability solution, and a separate cash acquisition value of £400 million… This bid existed.”

The hon. Gentleman is being very generous in giving way again. He is setting out a seriously curious sequence of events for a well-intentioned Government relative to a vital industry. Is he concerned, as I am, that this is more about the beliefs of the Secretary of State than the industrial imperatives of these islands? The Government are failing in their pursuit of decarbonisation, but they are succeeding in deindustrialisation.

The hon. Gentleman makes an important point about the Government’s overall policies in relation to net zero.

Adam Wilson of Falcon Petroleum wrote to me describing

“the unsatisfactory experience we have had with the bidding process with FTI… We own and operate 4 refineries in Europe and the middle east. With advancement of technology we have been able to go carbon neutral at all our refineries. We had pledged to turn LOR carbon neutral within 2 years if we had successfully purchased it.”

I could give other examples, but what I have said so far makes it clear that the approaches to FTI from consortia that wish to purchase the whole business and continue production have been rebuffed. Potential investors, employees and all those affected have a right to know why. The Government have chosen not to get involved. Yes, they have offered a training guarantee, which is helpful, but much more is required. At a meeting with me and the hon. Member for Great Grimsby and Cleethorpes last week, the Minister suggested that the Minister for Investment, Lord Stockwood of Great Grimsby and Cleethorpes, and local authorities and all agencies could help to provide investment in the area. We must sit around the table with them at an early opportunity. We need better transport connections, and early decisions from the Government on the many proposals in their in-tray that could boost the Humber region economy.

To sum up, why did the Government not act to ensure that production continued, and engage more fully in the process to achieve that? When will the Minister and Lord Stockwood visit the area and put in place a structure that helps us to recover the local economy? How many jobs will be saved by the P66 deal? The receiver’s job is to ensure the best deal for creditors, so will the Minister explain why a sale of the assets rather than the business better achieves that? The Government are one of the creditors, so how much are they owed and how much of it will the P66 deal return to the Treasury? I look forward to his response.