Penistone MP speaks out about energy costs for Intensive Energy manufactures

Resize text

Angela Smith worries that high energy manufactures are being squeezed by high energy costs and she has today challenged the government to support the sector

It is not only households that are feeling the pinch when it comes to high energy costs, so say’s Angela Smith MP.

In a speech in the House of Commons today Angela Smith told fellow Members of Parliament that many manufactures in her constituency are now facing a myriad of green and other taxes as well as increasing prices of energy that are squeezing margins and allowing international competitors not facing the same costs to undercut them.

While she pointed out that she has not met many industrialists who don’t understand the need for green taxes and the need to decrease emissions many are now concerned British industry is becoming seriously un-competitive with European competitors and those further afield. For instance Angela points out in her speech that policy driven taxes and levies for the most intensive users were 2.5 and 6.5 times higher than in Germany and France respectively in 2011, something many manufactures are concerned is unsustainable in the long term.

Worse still, it may even lead to increased emissions through carbon leakage as high energy users are forced elsewhere where environmental standards are lower with the associated cost of jobs and investment in the UK. And Angela points out that manufacturing is still important to the UK still being 12% of the UK economy.

In the speech she called for government to seriously look at the issues facing this important sector of the UK economy that in many cases is actively supporting the green economy with for instance 1000 ton of steel needed for each off shore wind turbine.

In the speech she says “maybe it’s time to look at consolidating all the green taxes and levies, increasing the capital allowances for a wider range of energy efficient technologies, by way of a return of a much higher proportion of the environmental taxes into such investments, or by completing scrapping the carbon floor price altogether, a unilateral tax which is projected to pull in over £2bn to the Treasury by 2020 but which threatens to undermine the competitive of our key industries.”

Commenting  further Angela says;

“Manufacturing is still important, it still provides many people with jobs and it contributes massively to the British Economy.

However, for many high energy users the increased energy costs, some will see real rises in excess of 70% by 2030 it is making them uncompetitive with foreign competitive in a global market place.

The government needs to look again at how it supports this important sector, if not we could see jobs move overseas, and worse still global emissions rise as manufactures move to countries with lower environment standards than ours.”

 

Notes :

Full speech is below, check against delivery

Westminster Hall debate 4th December 2013

I represent a constituency which is host to Tata Speciality Steels, Naylor Industries, a ceramics manufacturer which specializes in clay pipes, as indeed does Wavin, a bit further to the west of the constituency. We are also home to a paper mill at Oughtibridge, but unfortunately this is due to close in 2015 after a long, 140 year history of paper making on that site.

My constituency is also home to the British Glass Federation, something of which I am very proud, as this reflects a tradition of glass making in the area.

Now, nationally, manufacturing represented 12% of national output in 2011 and 8% of employment; at the same time, 14% of output in my constituency was generated by manufacturing and it accounted for 11.8% of employment.

So, manufacturing really matters to my area. I’m very proud of that and the area is very proud of this heritage; a belief in manufacturing runs deep and there is a tangible, emotional connection between industry and the people of South Yorkshire. And I want to see us build on that legacy - it’s an ambition in an area which hasn’t forgotten its industrial roots and doesn’t want to let go of them.

But the big manufacturing employers in my constituency, in steel, paper and ceramics, are also high energy users; it is estimated, in fact, that about a third of the costs of their production is related to energy use. So, my work as an MP is not just about talking up manufacturing, its need for long-term investment, for skilled workers, for robust supply chains and growth of the small to medium sized sector;

It’s also about making the case to government about how it can help secure cost-competitiveness in a global context and for many of my industries, energy costs are a key factor in all of this

What, then, are the facts on energy costs for these high-end users?

  • Tata Steel stated 2nd December 2013, wholesale electricity year ahead prices are 70% and 45% higher than in Germany and France respectively
  • policy driven taxes and levies for the most intensive users were 2.5 and 6.5 times higher than in Germany and France respectively in 2011
  • Scale of difference is large enough to turn profit to loss and to send out negative signals to potential investors
  • On the taxes and levies, the British Ceramics confederation has pointed out that DECC’s analysis shows climate related charges are already 19% of the baseload price
  • This will rise to 47% in 2020
  • EEF states that the government’s own estimates indicate that industrial electricity prices will have increased by 50% by 2020 and 70% by 2030.
  • Official estimates, acc to the Financial Times on Monday, are consistent with this picture
  • Moreover, Tata Steel is clear that the green levy which has the greatest impact today is the Renewable Obligation; this levy, along with small scale FITs – will cost £10.50 per MWh in the coming year, from April 2014 – an increase of more than 100% in three years. Tata points out too that many steel makers in Europe will either be completely exempt or have their charge capped at half a euro per MWh

Clearly, then, there is a serious problem here for energy intensive industries in the UK, with spiralling energy costs compounded by a myriad of taxes and levies which combined is threatening our ability to compete, even within the EU.

The Ceramics Confederation points out, for instance, points out that some of its manufacturers operate some of the most energy intensive processes in the UK and that several ceramic manufacturers have already relocated to Germany and France, with electricity costs cited as a key reason, so the impact on cost competitiveness is already being felt

And even more worrying, there is a real risk that the tax regime we have at the moment will do nothing to lower emissions globally, if, as the Ceramics Confederation points out, the manufacturing focus emerges in less regulated or less energy efficient factories abroad

Carbon leakage is therefore a real threat. But the irony is even greater than that, because energy intensive industries are making huge efforts to cut their costs by improving energy efficiency.

  • Tata uses 40% less energy to produce the same amount of steel today as compared with 1975
  • Ceramics industries have already invested in the latest technology to improve energy efficiency to the maximum level possible – Naylors in my constituency
  • Why wouldn’t they, in an increasingly competitive global trading environment?
  • Another example shows Tata generating power at some of its sites by recycling waste products, with a programme in place for capturing and reusing heat generated by relevant processes

So, in summary of where we are, it’s clear that we need to see reform of the system of green taxes and levies currently in place, because of the risk of losing manufacturing capacity, either within the EU or elsewhere, with the linked risk of carbon leakage.  

But let me be absolutely clear; I have not, as yet, come across one industrialist who disagrees with the principle of green taxation; everyone understands that a well-designed system of taxation has a role to play in stimulating the growth of the low carbon economy.

But this process has to be very carefully balanced with the critical need to avoid damaging the cost effectiveness of our manufacturing base. Our energy intensive manufacturers are important in their own right. I know that; I come from a family which has been involved in steelmaking for at least five generations, if not more.

But they are even more important when you realize that these very same industries have a key role to play in providing components for the low carbon economy:

  • Ceramics – durable, resource-efficient construction materials and technical ceramics used in nuclear, wind and solar generation
  • Clay pipes – 100% recyclable and durable, with long life
  • 1,000 tonnes of steel in each offshore wind turbine and a requirement for 6 different grades of steel
  • Steel exterior for the Nissan leaf electric vehicle was developed and produced in the UK by Tata Steel
  • And last but not least the polyurethane foam insulation developed by BASF saves 233 tonnes of carbon in its lifetime for every ton used in its generation.

So what is to be done?

Well, it’s worth summarizing at this point the array of schemes in play, or due to come into play soon:

  • Climate change levy
  • Small scale FIT
  • EU ETS scheme
  • Renewables Obligation
  • Carbon Floor Price
  • Energy Company Obligation
  • Carbon Reduction Commitment
  • Landfill tax
  • Aggregates levy
  • Contracts for Difference

And maybe I haven’t got all of them on this list!. But the point is made.

For industry, the green tax landscape is burdensome in two key ways; in terms of cost, and in terms of the bureaucratic tangle involved in ensuring compliance. For example, one of the businesses in my constituency employs a full time, highly skilled individual just to ensure that its obligations are met and that it is compliant with the green tax regime.   That’s both a cost and a bureaucratic nightmare

So, I repeat, what is to be done?

Well, industry itself has a few ideas, a few key demands:

First of all, the energy intensive industries want to see a level playing field with European and non-European competitors on climate-related taxes and levies, to ensure that world-class companies in the UK can remain internationally competitive ; the EEF in particular wants this fresh assessment of the issue to take place within the context of the fourth carbon budget review

Secondly, industries need to see detail of the promised exemption of ceramics and other industries from the full costs of the Climate Change Levy from next year. The Autumn statement tomorrow would be a good opportunity to provide that detail and details too of how the government is going to negotiate a way through this without having to make reference to state aid rules.

In addition, the expected change in revised guidelines means the government has an opportunity to exempt energy intensive industries from both the Renewables Obligation and small scale FITs and the EEF and the Ceramics Confederation in particular make reference to the impact of these two taxes on their member businesses

Industry also wants to see the £250m package, moulded around the ETS scheme and the CFP, in place for the duration of the latter policy through to 2030, and for the value of the compensation to reflect the floor’s upwards trajectory

And the Contract for Difference is worrying energy intensive industries too, so they are looking for proposals which are sufficiently comprehensive to exempt a wider group of the companies badly affected by cumulative and rising environmental taxes.

Indeed, the ceramics industry in particular would argue that its members, together with glass and cement manufacturers, have been excluded from current EU proposals for revised state aid guidelines. Steel, paper and chemicals are included, but not the other three; the latter are looking to the UK government to make the appropriate representations on this matter at EU level.

Finally, both the steel and ceramics sector point out that the UK government could do a great deal for their members if the capital allowances were to be increased for a wider range of energy efficient technologies, by way of a return of a much higher proportion of the environmental taxes into such investments.

The Government clearly faces a bewildering range of choices. Perhaps, therefore, it also needs to consider two more radical proposals before making up its mind. Perhaps we need to see a consolidation of all these taxes and levies. Perhaps we just need to simplify the system, both to reduce the bureaucratic burden on our manufacturing companies and to make it easier to work out what the cost burden should be and how best to compensate those industries at risk of losing that competitive edge. Transparency and good design of environmental taxes could be achieved by simply revising and reforming the complexity of the current regime, making it more workable, easier to understand and fairer.

Or perhaps we could just scrap the carbon floor price altogether. It’s a unilateral tax which is projected to pull in over £2bn to the Treasury by 2020 but which threatens to undermine the competitive of our key industries.

The Minister needs to be clear about the choices the government are prepared to make, in response to the demands I’ve just outlined from the energy intensive industries themselves. Indeed, the Chancellor needs to be clear in his Autumn statement tomorrow that the political will is there to protect energy intensive industries from the potentially disastrous impact of this wide array of green taxes and levies on their cost-competitiveness, and that he is prepared to set in train a robust response to the pressures they are experiencing.

Our manufacturing base demands it; our industries deserve it, not least because of the contribution they are already making to energy efficiency and the building of the low carbon economy. But most important of all, our country, the UK, desperately needs it. Our future has to see an expansion of the manufacturing base, not a further contraction, and the government has to act.

I await the Minister’s comments with interest.

Your neighbourhood

Penistone & Stocksbridge Wards Dodworth West Ecclesfield East Ecclesfield Penistone East Penistone West Stocksbridge dodworth ward penistone east pen west stocks east eccles west eccles

Latest from Angela

IMAGE Angela joins World Animal Protection to save the National Wildlife Cri...
Thursday, 07 January 2016
Angela Smith this week offered her support World Animal... Read More...
IMAGE Angela helps raise the awareness of Puppy smuggling
Tuesday, 15 December 2015
Last week the Dogs Trust, the UK’s largest dog welfare... Read More...
IMAGE Angela's Christmas card winners 2015
Saturday, 05 December 2015
For a selection of photos of the prize giving... Read More...
IMAGE Angela supports launch of leading hearing loss report
Monday, 30 November 2015
Angela recently attended the Westminster launch of Hearing... Read More...
Angela marks World Toilet Day
Monday, 30 November 2015
Angela Smith, has joined calls on the UK Government to... Read More...
IMAGE Angela backs call for 50 year forward view for NHS
Wednesday, 25 November 2015
Angela has backed a call for the NHS to put in place... Read More...
IMAGE Ofcom launch online Mobile Coverage Checker
Tuesday, 24 November 2015
In August Ofcom launched an online Mobile Coverage Checker... Read More...
IMAGE Action is needed to regulate online sales of exotic pets
Tuesday, 24 November 2015
Angela Smith, MP for Penistone & Stocksbridge today... Read More...
IMAGE New Constituency Oiffce
Tuesday, 24 November 2015
Angela recently re-located her constituency to new premises... Read More...
IMAGE Angela lends her support to Pancreatic Cancer UK
Tuesday, 24 November 2015
Angela recently attended a cross-party event at the House... Read More...
IMAGE Angela Smith MP Hooks-a-Truck to clean up problem pavement parking
Tuesday, 27 October 2015
Angela Smith MP recently took on the challenge of cleaning... Read More...
IMAGE Politics goes pink for breast cancer awareness
Wednesday, 16 September 2015
Angela, has shown her support for women with breast cancer... Read More...
IMAGE Angela gives her support to calls for an end to Japan’s Antarctic wh...
Friday, 19 June 2015
 As Shadow Animal Welfare Minister, Angela has shown... Read More...
IMAGE Xmas Card winners
Tuesday, 09 December 2014
 On Saturday Angela presented awards to the winners of... Read More...
IMAGE Angela adds her support to to protect shopworkers from threats and abu...
Wednesday, 19 November 2014
Angela Smith MP has joined with members of the retail... Read More...
IMAGE Angela shows support for secondary breast cancer
Friday, 17 October 2014
Recently Breast Cancer Care met with Angela at Parliament,... Read More...
IMAGE End to “game of chance”
Thursday, 09 October 2014
Angela calls for an end to “game of chance” bus service... Read More...
Concerns raised over the viability of the site of the proposed Chapelt...
Thursday, 24 July 2014
Serious concerns have been brought to the attention... Read More...
IMAGE Angela highlights link between obesity and arthritis but offers optimi...
Monday, 14 July 2014
Angela has called for a greater focus on the links between... Read More...
IMAGE Angela congratulates local winner at BTEC awards
Monday, 14 July 2014
Penistone & Stocksbridge MP, Angela Smith recently had... Read More...
IMAGE Defra Shadow Minister Visits Dogs Trust Leeds
Monday, 14 July 2014
Angela recently visited the Leeds Dogs Trust rehoming... Read More...
IMAGE Angela visits Fox Valley in Stocksbridge
Wednesday, 18 June 2014
Angela visits Fox Valley site in Stocksbridge to see how... Read More...
IMAGE ANGELA OFFERS HER SUPPORT TO THE KENNEL CLUB’S MICROCHIPPING CAMPAIG...
Wednesday, 11 June 2014
With the launch of the Campaign to raise awareness of... Read More...
IMAGE Angela objects to the proposals to build motorway Services at Smithy W...
Wednesday, 14 May 2014
Angela has today (14th May 2104) objected to the proposed... Read More...
IMAGE surgery on a bus
Thursday, 01 May 2014
This Friday May 2nd Angela will be hosting her constituency... Read More...
Angela calls for a re-think on Chapeltown Academy
Thursday, 01 May 2014
In an Adjournment debate in the House of Commons (Wednesday... Read More...
New Job for Angela
Tuesday, 22 April 2014
After a mini reshuffle in the Shadow Ministerial teams... Read More...
IMAGE Angela lends her support to the International Diabetes Federation
Tuesday, 15 April 2014
Angela recently joined volunteers from the International... Read More...
Angela calls for more help for Energy Intensive Industries
Tuesday, 25 March 2014
Angela Smith MP well known supporter and campaigner for... Read More...
Barnsley MPs urge Government to put fairness at the heart of local gov...
Friday, 14 March 2014
Angela, along with the three other Barnsley MPs, Michael... Read More...
IMAGE Angela raises concerns over the transfer of trains from Trans Pennine ...
Wednesday, 12 March 2014
Angela recently held Ministers to account for their... Read More...
IMAGE Celebrating 9 years of the hunt ban Charities and MPs mark success of ...
Thursday, 13 February 2014
It is 20 years since the RSPCA, the League Against Cruel... Read More...
IMAGE Fox Valley gets the go ahead
Friday, 07 February 2014
Angela recently attended the signing of contracts... Read More...
Angela and David Blunket write to Gove over concerns about Chapeltown ...
Friday, 31 January 2014
Local MPs Angela Smith and David Blunkett have written to... Read More...
IMAGE Angela calls for the protection of Ancient Woodland from HS2 planned r...
Friday, 31 January 2014
Local MP, Angela Smith has today responded to the HS2 phase... Read More...
IMAGE MP Gets the chair treatment at new dentist’s surgery
Tuesday, 14 January 2014
Recently HDS Dental Care an NHS Dental Practice in... Read More...
Penistone MP calls for improvements to cross Pennine transport links
Monday, 06 January 2014
Figures show Woodhead Pass frequently closed due to bad... Read More...
IMAGE Angela sees hospital’s work to manage winter pressures
Tuesday, 17 December 2013
Angela recently visited Barnsley Hospital’s A&E... Read More...
IMAGE Paws for Thought
Thursday, 12 December 2013
Christmas to mark 35th anniversary of iconic dogs trust... Read More...
Penistone MP speaks out about energy costs for Intensive Energy manufa...
Wednesday, 04 December 2013
Angela Smith worries that high energy manufactures are... Read More...
Barnsley MPs call for reconsideration of new CCG funding formula
Wednesday, 04 December 2013
Three local MPs, Michael Dugher MP, Dan Jarvis MP and... Read More...
IMAGE Ozzie Owl gives a helping wing!
Sunday, 01 December 2013
Saturday 30th November saw Angela Smith MP and Sheffield... Read More...
IMAGE Angela offers her supports campaign to stamp out wildlife crime
Thursday, 28 November 2013
Angela has shown her commitment to protecting animals by... Read More...
Angela backs campaign to get local school children talking and learnin...
Thursday, 28 November 2013
Penistone and Stocksbridge schools urged to take part in... Read More...
Victory for Common Sense!!
Thursday, 28 November 2013
Angela was delighted to hear that an application to build... Read More...
IMAGE Angela joins Paralympians to show support for social care for disabled...
Tuesday, 29 October 2013
Local MP Angela Smith joined double Gold medallist... Read More...
Angela offers support to local residents against inappropriate develop...
Tuesday, 29 October 2013
After carefully considering an application to build more... Read More...
IMAGE Angela pushes giant button for autism
Friday, 18 October 2013
Angela has pushed a giant button as he pledged her support... Read More...
IMAGE Angela objects to the Siting of two wind turbines
Tuesday, 15 October 2013
Click here for full details of the letter After carefully... Read More...
IMAGE No meat for me, says Angela
Thursday, 03 October 2013
Angela is marking Mahatma Gandhi’s birthday by turning... Read More...
Angela welcomes improvements to Penistone Post Office
Friday, 27 September 2013
Angela has today welcomed plans by the Post Office to... Read More...
IMAGE Angela takes part in the big coffee morning
Friday, 27 September 2013
Local MP for Penistone and Stocksbridge, Angela Smith... Read More...
IMAGE Hero MP from Penistone joins the fight against breast cancer
Monday, 16 September 2013
Angela Smith MP for Penistone & Stocksbridge has joined... Read More...
Angela defends Charitable sector
Thursday, 12 September 2013
In a speach during the report stage of the lobbying and... Read More...
Angela backs fight on access to rare disease drugs
Friday, 06 September 2013
Angela has this week backed a major inquiry that warns... Read More...
The Government’s Lobbying Bill will hit local charity claims Angela
Tuesday, 03 September 2013
Angela Smith, MP for Penistone and Stocksbridge has... Read More...
Angela congratulates Wentworth Castle’s Victorian Conservatory
Tuesday, 30 July 2013
Angela has congratulated Wentworth Castle’s Victorian... Read More...
IMAGE Angela is named Parliamentarian of the Year 2013
Friday, 19 July 2013
Honorary Vice President of the League Against Cruel Sports,... Read More...
Angela Calls for better Broadband in Dodworth
Friday, 12 July 2013
Angela has today called for improvements to broadband... Read More...
Changes to the Probation Service
Monday, 01 July 2013
Government’s proposals will see up to 70% of probation... Read More...
No School Left Behind - speech by Stephen Twigg
Monday, 01 July 2013
Thank you to Matthew and the team at the RSA for hosting us... Read More...
MPs condemn scaremongering by UKIP representatives
Wednesday, 26 June 2013
Local MPs Angela Smith and David Blunkett, a former Home... Read More...
Angela re-acts to Oughtibridge factory closure
Friday, 24 May 2013
‘I am saddened by the news that the manufacturing... Read More...
Angela asks for Sheffield’s name to be protected
Friday, 24 May 2013
Government Red Tape Challenge to un-protect the... Read More...
IMAGE Stop Puppy farming
Thursday, 16 May 2013
Stop the Badger Cull sign the petition NOW!!... Read More...
IMAGE Analysis on the recent local elections
Thursday, 16 May 2013
It’s the economy, stupid ..... What Labour needs to learn... Read More...
IMAGE Bus services for young people
Friday, 19 April 2013
Westminster Hall Debate, Bus Services for the... Read More...
IMAGE Angela speaks out on the latest dog attack
Wednesday, 27 March 2013
The dog attack on Jade Anderson is shocking and my... Read More...
IMAGE Angela speaks out on cuts to leisure services
Thursday, 14 March 2013
Westminster Hall Debate, Olympics Legacy and local sports... Read More...
IMAGE Angela Smith calls on Japan to end its cruel commercial whaling
Wednesday, 20 February 2013
Penistone & Stocksbridge MP, Angela Smith has called on... Read More...
IMAGE Angela creates buzz about bee decline
Thursday, 31 January 2013
Angela recently joined a giant bumble bee and campaigners... Read More...
IMAGE Angela welcomes HS2 announcement
Tuesday, 29 January 2013
Angela Smith MP (Pensitone & Stocksbridge) welcomed... Read More...
IMAGE Angela Smith stands up to prejudice
Thursday, 24 January 2013
Angela stands up to prejudice by signing Holocaust Memorial... Read More...
Movement but Not Enough
Thursday, 24 January 2013
Responding to the news that the Sheffield Council has... Read More...
Angela calls for joint meeting with the council
Friday, 18 January 2013
Angela has responded to a request from Stocksbridge Town... Read More...
IMAGE Angela calls for Stocksbridge Leisure Centre to remain Open
Monday, 14 January 2013
Angela Smith has today called for the pool at Stocksbridge... Read More...
IMAGE Stocksbridge Leisure Centre
Monday, 14 January 2013
Many of my constituents, and especially those living in the... Read More...
IMAGE Christmas Comes Early!
Monday, 10 December 2012
Local school children collect prizes in Angela’s... Read More...
IMAGE Angela pledges to end the institutionalisation of children
Tuesday, 04 December 2012
Angela Smith pledged to support efforts to end the... Read More...
IMAGE Angela calls for improvements in services for ovarian cancer patients
Friday, 30 November 2012
Angela, joined women affected by ovarian cancer from across... Read More...
Angela Smith MP delivers Christmas encouragement to posties
Friday, 30 November 2012
Angela Smith MP has visited Royal Mail’s Stocksbridge... Read More...
IMAGE Planting the future
Monday, 19 November 2012
Angela along with Stocksbridge Mayor Susie Abrahams reently... Read More...
Angela attempts to Save Compensation for 90% of Victims
Wednesday, 14 November 2012
Angela recently voted to stop the Coalition Government’s... Read More...
IMAGE Well badger Me
Monday, 12 November 2012
Mr Brock receives a stay of execution. At the last minute... Read More...
IMAGE Angela helps children celebrate
Saturday, 10 November 2012
Angela Smith, helped children at Silkstone Pre-school... Read More...
IMAGE Angela meets Scouts at party conference
Tuesday, 02 October 2012
At the Labour party conference this weekend, Angela Smith... Read More...
IMAGE Books for Stocksbridge Library
Friday, 21 September 2012
As part of the summer reading challenge campaign local MP,... Read More...
Angela backs the fight against breast cancer
Friday, 21 September 2012
Angela Smith, MP is backing the fight against breast cancer... Read More...
IMAGE Angela supports campaign to save elephants
Sunday, 08 July 2012
Angela Smith has shown her commitment to protecting... Read More...
IMAGE Angela adds her support to new employment campaign
Sunday, 24 June 2012
Angela is supporting The National Autistic Society’s... Read More...
Deputy Prime Minister Challanged
Sunday, 24 June 2012
Angela has challenges the Deputy Prime Minister to come... Read More...
Youth unemployment up by 130%
Sunday, 24 June 2012
Angela Smith today recorded her deep concern and worry at... Read More...
IMAGE Protecting Hares with Bill Oddie
Sunday, 24 June 2012
In Scotland, the Wildlife and Natural Environment Act of... Read More...
IMAGE Angela meets the Owls
Friday, 22 June 2012
As a massive Wednesday fan Angela was recently delighted to... Read More...