Ceramic and Brick Industries

– in Westminster Hall at 4:29 pm on 15th June 2016.

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Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills 4:29 pm, 15th June 2016

I beg to move,

That this House
has considered the ceramic and brick industries.

It is a great pleasure to serve under your chairmanship today, Mr Chope, and to see Members from both sides of the Chamber here in Westminster Hall. As vice-chairman of the all-party group on ceramics, and because the brick industry is in my constituency, I felt that it was important to raise this issue with the Minister.

The ceramics industry employs around 20,000 people in the UK, generating £2 billion in sales and exporting products all over the world. It is undoubtedly an industry of huge importance to our country.

In my constituency of Aldridge-Brownhills, there has been a large ceramics presence in the area since the early 19th century, when clay and coal mining boomed in the district. The availability of jobs in mining resulted in a population surge in Aldridge, to 2,478 by 1901, and by 1906 two of the mines—known locally as Drybread, which is near Coppice Road, and Bare Bones, at Leighswood—employed nearly 1,500 people between them. There is also the Brownhills Miner. If anyone is travelling through Brownhills or is on the A5, please make a detour to see Jigger, a 40-foot statue standing at the end of Brownhills High Street. It is a wonderful reflection of a proud industrial heritage.

Aldridge-Brownhills is now home to four companies working in the ceramics industry, which directly employ around 300 people across five sites. Some of the most famous clay products in the world originate in Aldridge, from the beautifully hand-crafted Imperial Bathrooms products, which are exported all over the world, to the bricks made at the Ibstock and Wienerberger sites, which are used to build new housing stock in the UK. Recently, some of the clay for the stunning art installation by Paul Cummins called “Blood Swept Lands and Seas of Red”—the poppies, as many will know, that were installed at the Tower of London—came from the Potclays quarry in Brownhills.

Photo of Rob Flello Rob Flello Labour, Stoke-on-Trent South

I congratulate the hon. Lady on securing this debate. May I ask her to say a word not only for the fantastic ceramics industry itself—I am truly blessed in Stoke-on-Trent South with some wonderful businesses that are directly involved in ceramics—but all the ancillary businesses, which do related work such as designing or maintaining kilns?

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

Absolutely. The hon. Gentleman makes a very valuable point. In any discussion about business, it is always worth reminding ourselves that it is not only the one business that matters but all the other businesses that feed into it, be it businesses that work with kilns, businesses that provide paint brushes or businesses that do a whole host of other things. Also, there are all the other businesses, which are often family businesses, around the area, which perhaps provide sandwiches or other things for the people working in all these companies.

However, the ceramics industry is approaching a worrying period of uncertainty. The European Commission published its legislative proposals for the emissions trading system phase 4 in July 2015. These proposals cover the period from 2021 to 2030 and propose a target of achieving at least a 40% reduction in EU greenhouse gas emissions by 2030. The key issue for ceramics within the EU ETS proposals is carbon leakage, notably the evaluation of industries so that they are deemed either at risk or not at risk of it. Some sectors are likely to meet the proposed carbon leakage quantitative threshold, but the situation for other sectors, mainly the heavy clay industries and particularly those that produce bricks, clay roof tiles and clay pipes, is less clearcut, which is why I felt there was a need for this debate.

The UK Government recently announced their position on the EU ETS phase 4 and suggested that free allowances should be focused on only a handful of sectors, with other sectors receiving a lower-tiered proportion. The ceramics industry is extremely concerned by this tiering proposal, as ceramic manufacturing sites would need to purchase significantly more allowances. Indeed, it is predicted that heavy clay producers such as those in my constituency would have to buy all their carbon allowance after 2027. A number of ceramic manufacturers have said that that charge alone is likely to exceed their profits.

As part of its Ceramic EARTH campaign, the British Ceramic Confederation has used figures from the Department of Energy and Climate Change to estimate that UK heavy clay construction product manufacturers will pay more than £40 million by 2030 under this proposal, which equates to almost £1 million per year per factory on average.

Clearly this situation concerns me and many other people, because businesses, jobs and investment are at stake. Therefore, I ask the Minister to continue to look at this proposal, which is for a system that supports only a few energy-intensive industries at the expense of many others. I genuinely fear that the UK proposal will burden businesses with very high extra costs. In fact, energy costs and climate-related taxes already make up around 30% of a brick maker’s production costs, and I fear that this proposal will only add to the issues that they face.

I am sure that others in Westminster Hall today are aware that there is a growing demand for housing in this country—we often discuss and debate it in the Chamber. Construction of houses is at an eight-year high and therefore the demand for materials is growing too. Brick is the most popular cladding material for building walls, with over 80% of new homes using bricks. Brick is unmatched for its durability, low maintenance costs, aesthetics and lifetime sustainability.

I recently had the pleasure of visiting one of the brick factories in my constituency and it was an inspiration to follow the production of bricks, from the clay pit behind the factory all the way through to the finished product at the end. It was only when I stood on top of the huge kiln that I really appreciated just how much energy goes into such large kilns to produce bricks for us.

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge

The point that the hon. Lady made about the sustainability of the industry is a good one, and she made it well. Clay pipe making is very prominent in my constituency—90% of the UK’s production of clay pipes takes place in my constituency. Of course, clay pipes are very sustainable and very long-lasting, with a life of well over a hundred years. Does she agree that, although other forms of production are of course valid and important, we ought not to forget the importance of such manufacturing capacity?

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

The hon. Lady makes a very valuable point. I will focus more on bricks, because they are produced in my constituency, but I appreciate and understand that this issue is not only about bricks but about clay pipes. When we look around the country, we often hear stories about, for example, the sewers under London. They have been in place probably for centuries, using British-manufactured clay products, pipes, bricks and lots of other things as well. I thank her for making that point.

To meet the UK demand for new housing, we will need a 60% uplift in clay products for over a decade. Unfortunately, rising demand for bricks and clay roof tiles has been met by unprecedented levels of imports. We need to encourage and focus on investment here in the UK, and consider future innovation. In 2014, brick imports accounted for 25% of sales in this country, representing a direct loss of around £80 million per year for the UK economy. The rising rate of imports of heavy clay from outside Europe shows how the EU ETS phase 4 will not really work if the industry loses its full carbon leakage status.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Equality)

The hon. Lady is setting a very important scene. I do not have any clay making or ceramics works in my constituency, but I see the issue that she is raising. Surely there is a very simple solution. On 23 June, vote no and get out, and we will not have to be under the regulations that she has referred to.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

I am grateful to the hon. Gentleman for his intervention. I happen to disagree with him in terms of this debate. In fact, I have yet to declare my position on Europe, but it will become clearer later today.

The UK has some of the most energy-efficient manufacturing plants in the world. Specific energy consumption—in other words, energy efficiency—in the entire ceramics sector has improved by around 30% in just over a decade. To do this, hundreds of millions of pounds have been invested to make many UK plants as energy-efficient as is currently possible, and yet they could all be forced to buy all of their carbon allowance if the tiering proposal is accepted. I ask the Minister this simple question: is that fair?

The uncertainty in the industry caused by the proposals and the rise of imports means that future investment is becoming difficult and unsteady. It will make the UK even more vulnerable to higher carbon non-EU imports. We need stability and continuity. As someone who comes from a business background, I know how important that is for businesses from all sectors. It is only through stability and continuity that they feel safe and secure in investing in the future.

Photo of Caroline Nokes Caroline Nokes Conservative, Romsey and Southampton North

I also congratulate my hon. Friend Wendy Morton on securing this important debate. Michelmersh in my constituency is a fantastic local brick maker. It would always make the point that it wants continuity and certainty so that it can make investment decisions that ultimately mean that jobs stay in the UK and do not disappear to China.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

My hon. Friend makes an important point. The subject of the debate is important, because behind it are jobs and our local economy. I do not wish to see de-industrialisation. The UK has a proud industrial history. We should also recognise that importing products from outside the EU would defeat the point of the emissions trading system. Overall, manufacturers outside the EU are not as well regulated. The electricity generation and the fuels used are more carbon-intensive, and the transportation of goods to market emits additional carbon.

As I said, the matter of housing is frequently raised in the House. The British Ceramic Confederation estimates that the Government’s programme of house building has the potential to create more than 3,000 direct ceramic manufacturing jobs in the UK and give a big boost to the sector and GDP. However, that is not being realised because of the threat of carbon leakage loss and the uncertainty that brings.

Turning to energy costs, brick makers in the UK pay about 80% more for their electricity than the EU average price, according to Eurostat. Despite much mention of the renewables compensation scheme for energy intensive industries, brick makers are not compensated at all in the UK for renewables costs. I am sure my right hon. Friend the Minister will know that seven ceramic manufacturers in the UK are likely to receive renewables compensation, in contrast to more than 100 German ceramic and clay sites. Clearly we do not have a level playing field, and we need one.

Photo of Rob Flello Rob Flello Labour, Stoke-on-Trent South

Given that a lot of the players in this market that have factories in the UK also have factories in such places as Germany, surely one pressure comes from saying to those companies, “You can get compensated in Germany. Put your production in Germany, not the UK.”

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

The hon. Gentleman is absolutely right. At the end of the day, I want a level playing field for our industries in the UK so that we can compete. We need to extend the number of companies that the compensation covers. I am pleased to note that Ruth Smeeth is here today. She is chair of the all-party group for ceramics. I am sure she will make reference to and, I hope, welcome the Chancellor’s announcement of the ceramic valley enterprise zone status in her constituency. That is welcome news, and I am sure she will have more to say on that, but we need the right energy and carbon policies to unlock investment at this critical time where we continue to secure the country’s economic recovery.

The Government have set a key target in their construction strategy of a 50% reduction by 2025 in the trade gap between total exports and total imports for construction products and materials. Ceramics and bricks can make a real contribution to that target, but that will happen only if we have a level playing field that enables us to compete.

The ceramics industry does not just face issues within Europe. As a result of dumped imports, between 2006 and 2011 a huge number of direct jobs were lost in the ceramic tableware and kitchenware industry within the EU as Chinese exports tripled. Since the EU anti-dumping measures were introduced in 2011 for tiles and in 2013 for tableware, the industry has stabilised its production, brought manufacturing processes back to the EU and created jobs and investment opportunities, including with clay and other materials suppliers.

The ceramics industry is, I fear, one of the most vulnerable to overcapacity from the Chinese economy. If market economy status is conferred on China by the EU, despite it only meeting one of the five necessary criteria, it will make the maintenance of adequate and meaningful anti-dumping measures, which currently protect tiles and tableware, impossible, the progress the industry has made since 2011 will be lost, and the industry will once again be put at risk. It would also further add to the uncertainty the sector is facing. What assessments have the Government and the Minister made of the impact of market economy status for China on the ceramics industry? Will they continue to listen to the views of the industry? Colleagues in the European Parliament recently rejected MES for China in a plenary vote.

I come from a business background. I believe in manufacturing. Businesses need continuity and stability to invest, innovate and thrive. As a country, we cannot decarbonise by de-industrialising and shifting our carbon emissions to another part of the world. Will the Minister look seriously at this issue? I want our industries to prosper and thrive. The ceramics industry needs competitive energy prices and the rejection of market economy status for China, but above all it needs a level playing field. That is why I am asking the Government to recognise the strategic importance of the ceramics industry and, in particular, bricks, pipes and roof tiles. I am sure that other Members will mention other products, too, and I leave that to them. We need the Government to look at today’s industries to see how they can be best be supported to thrive in tomorrow’s markets.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North 4:46 pm, 15th June 2016

It is a pleasure to serve under your chairmanship, Mr Chope. I thank Wendy Morton for securing such an important debate. I agree wholeheartedly with all her comments, with the exception that I think the priority should always be tableware.

I am the chair of the new all-party group on ceramics, and am proud to represent the Potteries—the historic centre of our country’s ceramics industry—so it will come as no surprise that I consider the sector to be of great importance. Across Stoke-on-Trent, more than 7,000 people are still directly employed in ceramics—more than in any other industry. With the ceramic valley enterprise zone, the future of the industry is clear; there is huge opportunity for development and huge potential. We need to ensure the level playing field that the hon. Lady spoke about so articulately.

I was saddened in our last debate to hear that the Minister so rarely finds the time to eat a proper meal from our excellent Stoke-on-Trent tableware, or even from the less-than-excellent Chinese tableware utilised by her Department, but that lack of familiarity with the craftsmanship of Dudson, Churchill or Steelite need not concern her in today’s debate. There is so much more to the ceramics industry than just tableware, important though that is. It is those other applications that I wish to focus on today.

In my constituency, we are proud to be home to Johnson Tiles, the UK’s leading tile manufacturer and pioneers in the field of ceramic design. Like the brick factories in the constituency of the hon. Member for Aldridge-Brownhills, it is a major employer and a big contributor to our national economy. Bricks and tiles are not just important to the livelihoods of our constituents, however; they are key strategic industries in their own right, providing the raw materials that our country needs to build and to grow. The Government have repeatedly stated their commitment to a major programme of house building, which I very much support. We cannot build new homes without the raw materials for construction, and the Government’s ambitions, if fulfilled, could be an incredible opportunity for our brick and tile industries.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North

Indeed. My hon. Friend will undoubtedly highlight that later. I am concerned that under the Government’s policies on these sectors, the benefits will not be felt as keenly as they should or could be. Indeed, if we do not support the industries appropriately, the benefits of any construction boom will be reaped not by our businesses, but by brick factories in north Africa, Turkey and elsewhere, where costs of production are lower and future risks less pronounced.

Despite their importance in the supply chain for house building and construction, and despite the wide range of high-tech applications, I fear that the brick and ceramic industries are being treated as poor relations by the Government. I can only hope that this debate will help to persuade the Government that more can and must be done to support the industry, which sets the benchmark for innovation and for commitment to sustainable manufacturing.

The British Ceramic Confederation’s EARTH campaign is doing valuable work in highlighting some of the major issues affecting the brick and ceramic industries. One such issue concerns China’s ongoing bid for market economy status. I have spoken before in this hall about the threat that MES for China would pose to British industry, and I have also raised the Government’s apparent acquiescence to China’s demands. Nevertheless, the ceramics industry’s concerns on this matter are significant and bear repeating. Granting market economy status to China would leave us with no defence against unfair Chinese dumping practices, and would allow our domestic market to be flooded with inferior goods at prices that are simply not achievable without the state intervention and rock-bottom labour costs that Chinese industries take advantage of—or exploit.

It is well established that China has, to date, met only one of the five criteria required for market economy status. It is also recognised that the impact on the British economy of granting China such a status would be severe, with a potential cost of 3.5 million jobs across the UK—jobs we can ill afford to lose.

Photo of Rob Flello Rob Flello Labour, Stoke-on-Trent South

I would, of course, mention wonderful firms such as Mantec, Wedgwood and Cromartie, but I do not want to go through the list because Mr Chope will not allow me. In addition to the “legitimate” importation, or dumping, of Chinese goods in the UK, there is still a massive problem with counterfeiting—including with dangerous chemicals and materials—and intellectual property theft by companies in China. That is being dumped on our market as well.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North

I totally agree with my hon. Friend and neighbour in Stoke-on-Trent South. I am dealing with one such case in my constituency, in which a company has, unfortunately, been a target of infringement. We have to look seriously at what we can do to provide support. There is no easy answer, but we have to deal with these problems at every level.

Photo of Ruth Smeeth Ruth Smeeth Labour, Stoke-on-Trent North

And not give China MES to make the situation even worse. Let us be clear: these fears are not baseless. They have been raised time and again by all the major employers in the sector, including those in my constituency, and by GMB, the trade union that represents the sector, and which has done an incredible job in both the UK and Europe to highlight the challenges that MES would pose.

In the European Parliament, these concerns have been widely recognised. A recent vote against granting market economy status to China was overwhelming: 546 votes in favour of not granting MES, and just 77 against not doing so. Furthermore, the motion received support from British MEPs from across the whole political spectrum—Labour and Conservative—who were united, as I hope we are today. Does the Minister agree that that demonstrates just how valuable our EU membership is to the protection of British industry? Will she confirm whether the Government will listen to their European representatives and work with our EU partners to help block China’s bid?

It is heartening to see so many Members from both sides of the House here today; it is a sign, I hope, of the depth of feeling on the issue. We all want our excellent brick and ceramic industries to continue to grow, thrive and prosper; all we are asking for is a level playing field, so that those ambitions can be fulfilled.

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire 4:53 pm, 15th June 2016

It is a pleasure to serve under your chairmanship, Mr Chope. I congratulate my hon. Friend Wendy Morton on securing this debate.

I shall focus on the EU emissions trading system policy, which has already been highlighted but is of particular concern to Wienerberger, a brick manufacturer based in Kingsbury in my constituency. Like my hon. Friend the Member for Aldridge-Brownhills, I had the chance to stand on top of the kiln when I visited the company recently, which was quite exciting. Wienerberger has 13 factories throughout the country that produce bricks and roof tiles. It is employs 1,165 people in the UK. Its Kingsbury factory alone produces 40 million bricks per annum, which is enough to build 5,000 new homes.

Wienerberger’s specific problem is the proposal concerning the future carbon leakage policy. As has already been pointed out, and as I know the Minister is aware, carbon leakage in this sense refers to the relocation of UK production to locations where it is cheaper to manufacture because of environmental policies and/or lower energy costs. The direct result is a loss of investment and jobs from the UK economy. In EU ETS phase 3, ceramic sector installations, which include brick and clay roof tile factories, are deemed to be at risk of carbon leakage. As a result, factories receive a proportion of allowances based on the average of the top 10 performers across the EU in that sector, free of charge. If, as has been proposed by the UK and France, a tiered approach to carbon leakage risk is adopted in phase 4, it is likely that the ceramic sector will be reclassified as no or low risk and will thus receive significantly less free allocation.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

Does my hon. Friend agree that with the increased demand for housing, we should be looking at ways to support the brick manufacturing industry?

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire

My hon. Friend pre-empted part of my speech. She is absolutely right that we need more houses, and that it makes absolute sense for the bricks for those houses to come from local businesses in the UK.

The loss of the free allocation I have described will, when combined with an escalating market price for carbon allowances, significantly increase the cost of production. Meanwhile, competing construction materials, such as cement, will retain free allocation, creating market distortion. The situation is particularly acute in the UK as the carbon price floor, a UK-only policy instrument, adds further costs to the EU ETS carbon price for power producers. That additional cost is being passed on to businesses via electricity prices, with manufacturers being unable to pass them on to customers. Countries such as Germany and Italy are compensating for renewable electricity charges, but the UK is not. That further reduces the competitiveness of the UK brick and clay roof tile industry.

Wienerberger has factories across Europe, including in countries with significantly lower electricity costs than the UK. Any increase in UK production costs makes future investment in its UK factories far less attractive than investment in other European countries.

Photo of Mike Wood Mike Wood Conservative, Dudley South

On that very point, the family-owned Hinton Perry & Davenhill brickworks in my constituency has recently invested £5 million in new energy and production efficiency measures. Does my hon. Friend agree that undermining the business model on which such brickworks operate reduces investment in energy efficiency, thereby worsening the situation, rather than helping?

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire

I cannot say much more than that my hon. Friend is absolutely right. That is the nub of the problem. It is about investment as much as anything else.

Given the Government’s commitment to delivering 400,000 affordable housing starts by 2021, and the Construction 2025 strategy, which seeks to achieve a 50% reduction in the trade gap between total exports and imports of construction products and materials, it is essential that we maintain a UK manufacturing base of bricks and clay roof tiles. In order to achieve that, we must support local manufacturers in the UK, which will ultimately reduce the need for imported materials.

Competing construction materials such as cement and steel are set to retain carbon leakage status, creating distortions in the UK market. Importing construction products will have a negative effect on the UK trade balance and increase the UK’s consumption-based emissions. I should add that it is not only the brick and ceramics industries that raise these concerns; there is also support from other energy-intensive sectors, such as paper and glass industries.

In summary, my asks of the Minister are that the Government support these very important industries by ensuring that no tiered approach is applied, and that ceramic installations retain full carbon leakage mitigation; by maximising the provision of free allowances to preserve the UK’s competitiveness; and, finally, by allowing the current qualitative assessment process to continue. I look forward to hearing my right hon. Friend the Minister’s response.

Photo of Mary Robinson Mary Robinson Conservative, Cheadle 4:59 pm, 15th June 2016

It is a pleasure to serve under your chairmanship, Mr Chope. I am pleased to have the opportunity to speak in this debate, and I congratulate my hon. Friend Wendy Morton on securing it.

As Members know, in the autumn statement the Government committed to building 400,000 new homes in this Parliament. I am pleased that brick manufacturers want to play their part in achieving the Government’s ambitious goal. Yet with that ambition comes a need for the steady production and supply of building materials for Britain’s new homes. When Britain last built 200,000 new houses a year, it required stocks of more than 1 billion bricks and the production of almost twice that number to fulfil orders and keep the prices of basic construction materials stable. Although I am pleased that figures from the Department for Business, Innovation and Skills show an increase in brick production, and that the Office for National Statistics and the chair of the Brick Development Association agree with those figures, we need to ensure that the brick manufacturing industry and the other elements that go into building our homes are recognised. They must be appreciated as an important staple for house building and increasing market values.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

Does my hon. Friend agree that, as we seek to build more houses, the construction industry needs a continuity of construction materials? That includes bricks, roof tiles, pipes and everything else that is required for constructing a home.

Photo of Mary Robinson Mary Robinson Conservative, Cheadle

I totally agree. We need exactly that package if we are to achieve this ambitious target.

I welcome the British Ceramic Confederation’s ceramic EARTH campaign, which aims to raise the profile of the industry’s important contribution to the UK economy. To be able to compete internationally and secure jobs, we must ensure that all sub-sectors receive mitigation measures to fully guard against the leakage of carbon investment and jobs outside the EU, and there must be action to lighten the cost of UK/EU energy, climate and environmental policies, which harm the sector’s ability to remain competitive on the international stage.

I share an interest with my hon. Friends the Members for Aldridge-Brownhills and for North Warwickshire (Craig Tracey): my constituency is home to the national headquarters of Wienerberger, the UK’s third largest brick manufacturer. Wienerberger is responsible for producing all the elements of construction. It is the only multinational producer of clay block for walls, clay roof tiles, ceramic pipe systems, and concrete and clay pavers. It provides what the firm calls a “whole building envelope”.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

My hon. Friend is talking about one of her local companies that produces bricks. Does she accept that the many companies across the country that manufacture such products, from small family-run companies to the much bigger national and international companies, are all affected by the EU ETS and the market economy status?

Photo of Mary Robinson Mary Robinson Conservative, Cheadle

That is exactly right. They have an all-pervasive influence.

Innovation and speed are important in meeting the Government’s targets. Innovation can drive down construction time. For instance, Porotherm—Wienerberger’s clay block walling system—has been used to build an apartment block complex in South Harrow, which is currently being finished. It has reduced the construction time by 20% from 15 to 12 months. One floor is rising every eight days, readying the roof for installation within 10 weeks. That new method of brick production has reduced overall construction time and speeded up access to home ownership. Therefore, where there is demand for good-quality housing, and where there are brownfield sites with appropriate planning permission for construction, we should recognise that developments in the brick industry enable quicker construction and allow properties to be released much sooner than the market is currently used to.

It is clear from Members’ contributions that investment in new capacity is needed to help the industry with the production of bricks. That should be at the forefront of our concerns. As Members have mentioned, in the EU ETS phase 3, all ceramic sectors and subsectors are deemed at risk of carbon leakage for direct carbon costs, but they will not be compensated for indirect carbon costs. The key issue for phase 4 legislation is to guard against the leakage associated with indirect and direct costs. However, there are shortcomings to those proposals—most notably, an insufficient number of free allowances for the industry. Thus there would be a uniform percentage reduction, known as the cross-sectoral correction factor, to keep within the minimum. To avoid the CSCF, the introduction of a tiered approach, although helping a limited number of sectors, could be damaging to other sectors. Under this tiering, ceramic installations would see a significant reduction in the level of free allocation received. That is worrying for the firms that are involved in the production of bricks, roof tiles and drainage pipes, which may cease to receive free allowances. That will make investment in UK operations challenging and undermine much needed investment in capacity.

The UK ceramic industry is steeped in heritage. Now more than ever it is vital to Britain’s growth. As we seek to build more homes, we should remember that good homes are built on strong foundations, and we should do all we can to ensure that those foundations are built on a strong brick and ceramic manufacturing industry.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office) 5:05 pm, 15th June 2016

It is an honour to serve under your chairmanship, Mr Chope. I congratulate Wendy Morton on bringing forward this very important debate. She spoke of the 20,000 people employed in these heavy industries, which generate £2 billion-worth of sales and exports worldwide. Interestingly, she said that ceramics, clay and coal mining have been in her constituency since the 19th century.

I, too, have a ceramics business based in my constituency. Having visited to Raeburn Brick and listened to its concerns, I feel obliged to speak up for it in this place. It is Scotland’s only remaining clay brick company, and makes 15% of the bricks used in Scotland. When I was doing some research earlier, I noted some of the names of the bricks, including Jacobite, Livingstone, MacKintosh Smooth, Holyrood Buff and Orkney Buff—very interesting. It uses clays won locally in west central Scotland.

I am familiar with many of the issues that the industry faces. As a member of the Scottish steel taskforce, I have listened to a wealth of evidence from many different sources about the problems that our energy-intensive industries face. We all recognise that the road ahead is not easy, and the industries acknowledge that there are serious and significant challenges. The ceramics and brickmaking industry is an important part of Scotland’s manufacturing heritage.

Ruth Smeeth raised the issue of EU support and funding during Prime Minister’s questions, and it is important that we recognise the vital role that the European Union plays.

Throughout the steel crisis, the Scottish National party consistently called on the UK business sector to bring forward a comprehensive and revised industrial strategy for heavy industry in the UK. That is more crucial than ever if we are to guarantee the long-term sustainability of the ceramics industry and other heavy industries in the UK.

Although the SNP Government in Scotland support energy-intensive industries, they recognise that energy efficiency and clean energy are the key to meeting our ambitious climate change targets and contributing to long-term and sustainable economic growth. We are well on our way. In fact, this week it was announced that Scotland has exceeded our 2020 target to reduce greenhouse gas emissions by 42% six years early. The transition to a lower-carbon economy is not easy. The challenge is that the payback on such investments is often achieved in the long term, so we need strong leadership, technical expertise and access to appropriate finance. We also need to support manufacturers that are taking a lead by adopting and investing in energy-saving measures, as Raeburn Brick is doing. We need a proactive response that engages constructively with the industry. Ceramics cannot be allowed to slump into crisis before the Government are willing to respond.

Many Members made very interesting points. The hon. Member for Aldridge-Brownhills said that we have to achieve a 40% reduction in greenhouse gases by 2030. That means companies in her constituency will have to purchase more allowances, at a cost of £40 million between now and 2027, which equates to £1 million per year per factory, she said.

It is important to support all heavy industry. The hon. Member for Sheffield, Hillsborough spoke up for clay pipe making in her constituency—

Penistone and Stocksbridge.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office)

Sorry about that—I mean Angela Smith. I should have known that, because we have met many times to talk about heavy industry—my apologies.

Robert Flello spoke about ancillary firms also being important, and kiln production. He spoke kindly about Wedgwood, to mention it again, and that we have to be careful about market economy status for China, which has counterfeiting and dangerous chemicals in some products.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills

The hon. Lady always speaks with such passion about the industries in her constituency. Does she agree that we need to look not only at the EU emissions trading scheme, but at market economy status for China? Only by having a level playing field can we encourage businesses to do their bit, which is to invest and innovate for the future.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office)

The hon. Lady makes a good point. We will hear from the Minister in her response to all our points. We have heard many times that market economy status will not mean that we cannot bring anti-dumping cases, so I am interested to hear how she will respond to everyone’s concerns.

We heard from Ruth Smeeth that there is more to ceramics than brick alone; it includes tableware. A tile manufacturer is a big employer in her constituency, and it has major concerns. The brick and tile industry has bases in north Africa and Turkey, where production costs are much lower, so we have to support our ceramics in the UK. She also made mention of labour costs, which are lower in those countries, although employees there can be exploited.

Craig Tracey, which includes Bedworth, spoke about his brick and tile manufacturer in Kingsbury, which employs 1,100—

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Order. I am sorry to interrupt the hon. Lady, but by convention the time available is split between the Opposition spokesmen. I have to call the Minister at 20 past, so if the time is to be split equally, the hon. Lady’s time is up.

Photo of Margaret Ferrier Margaret Ferrier Shadow SNP Spokesperson (Scotland Office)

I apologise, Mr Chope, and will conclude by saying that we have heard many concerns from Members in all parts of the House. We look forward to hearing the Minister’s response.

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Business, Innovation and Skills) 5:13 pm, 15th June 2016

I congratulate everyone on their contributions to the debate, in particular Wendy Morton—I was going to call her the hon. Member for brick, because she was such an advocate for her brick makers, but I realised others might claim the title. However, she rightly celebrated the industry in her constituency, and pointed out her concerns about the uncertainties caused by some of the issues mentioned, which I will return to in my remarks.

I congratulate my hon. Friend Ruth Smeeth, or the hon. Member for ceramic tableware, as we might call her. She said that the industry is treated as a poor relation, and referred to the industry’s EARTH campaign, as well as market economy status, which is a thread running through the debate.

I congratulate Craig Tracey, and for Bedworth, on his contribution—the hon. Member for tile and brick perhaps. He spoke about the potential negative interest of the Government proposal on the emissions trading scheme. I also congratulate Mary Robinson, who spoke about bricks, pipes and pavers—so she, too, introduced a new product into our debate.

The debate was very informative, as they always are in Westminster Hall. We all learn a lot from hon. Members and their experiences in their own constituencies. Some of the debates are among the best seminars that we can get anywhere.

As hon. Members have said, the industry is important, and I want to praise it for taking the initiative with its EARTH campaign, which has been mentioned. The campaign raises the key issues that the Government need to address in order to secure the future of the industry. The industry employs many thousands of people, and there are 480 ceramic and brick manufacturing businesses in Great Britain, although that number has fallen from 640 in 2009. They are a key part of a modern UK economy.

The highly regarded new extension of Tate Modern is an example of a resurgence in the use of brick in construction and British architecture. The high-profile use of brick in an iconic building, combined with the strong growth figures forecast for the housing industry, which we have heard about, mean that there is a glowing future for the brick industry in the UK, which is renowned globally for its excellent design and architecture expertise and the innovative materials that make that possible.

Recently, the energy-intensive industries have made common requests to the Government, many of which have been mentioned. I will reiterate briefly that the cost of compliance under the renewables obligation compensation package must be looked at, and a level playing field is needed across Europe. We welcome the consultation that the Department for Business, Innovation and Skills is conducting, but action is required.

Carbon emissions can be massively reduced by undertaking research and development into energy saving and efficiencies, new innovations in fuel and energy efficiency, heat recovery, and furnace design. As hon. Members have said, we also need to be protected from cheaper Chinese products, otherwise we have the dumping of goods being produced for less than the cost of production, as we have seen in the steel industry. That is one of the key demands of the EARTH campaign.

The housing industry needs to be primed to create homes for millions of UK citizens awaiting decent housing, which will help to create demand in many UK materials products, including ceramics, bricks, steel and glass. The UK is pioneering new approaches in the brick and ceramics industry, with research in areas such as kiln firing and energy efficiency. I pay tribute to the work of the industry and to ceramics research centred in Stoke-on-Trent. Research and development in the brick and ceramics industry needs to be systematically spread across the whole of the materials industry.

We have not heard mention of this so far today, but a proposal is with the Government for the creation of a materials catapult, which could bring about the upscaling and commercialisation of relentless, continuous innovation in the materials sector, taking new science from the discovery stage to the practical stage, ready to be picked up by business. However, the brick and ceramic industries, in common with the rest of the UK materials sector, do not benefit from the support of an innovation catapult.

In developing the UK catapults, Professor Hermann Hauser outlined the foreign criteria for a new catapult to flourish: a large global market to exploit; a UK global lead in research capability; and the necessary absorptive capacity to exploit commercially in the UK. The UK materials sector clearly meets those guidelines, so I am interested to hear from the Minister what the latest thinking is on the establishment of a catapult in this field, and whether that could bring the UK into line with other advanced nations, including our competitors in the European Union, which I know the Minister is a strong supporter of, as I am.

Photo of Rob Flello Rob Flello Labour, Stoke-on-Trent South

The advanced materials catapult is exactly the right thing to do, for the reasons given by my hon. Friend, but would it not be tragic if, at the same time as developing it, we lost the production to other countries?

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Business, Innovation and Skills)

My hon. Friend is absolutely right, which is why the issues that have been identified in the debate are so important and why it is very important that the Minister responds to each of the asks in the EARTH campaign, with particular reference to the Government’s slight obsession with pushing through market economy status for China. It is clear from the recent vote in the European Parliament—it was cross-party, cross-sector and an overwhelming result—that there are strong feelings about that matter, yet the Government seem intent on pushing ahead, despite such a strong expression of opinion. I would be grateful if the Minister could update us on whether that is having any influence on the thinking and whether the Government are listening seriously to the voice of industry with regard to that.

I do not want to take up any more time because we want to hear from the Minister, but I urge her to listen to the requests from hon. Members and the demands from the industry, and tell us what she is doing about the proposal to create a materials catapult for the UK sector, with bricks and ceramics at the heart of that research and development, together with steel, aluminium, glass and those sorts of materials. That could give the sort of assurance to those great British industries that secures their continuity well into the 21st century.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills 5:20 pm, 15th June 2016

It is an absolute pleasure to serve under your chairmanship, Mr Chope. May I begin by congratulating my hon. Friend Wendy Morton on securing this excellent debate and everybody who has contributed to it? It is indeed a fascinating subject. Such is my interest in all the sectors in my brief—especially ceramics, because of the breadth and depth of the sector—I am getting to the stage now where I could bore for Britain on the different technologies and techniques and how exciting it is. Yes, it relies on many traditional methods. I am helpfully reminded that brick making is some 5,000 years old, but it pretty much has not changed over those years.

I always have to pay tribute to my excellent Parliamentary Private Secretary, my hon. Friend Mark Pawsey, who, within his constituency has Morgan Advanced Ceramics—actually, this is a serious point. I quickly looked at its website, and when we see the astonishing high value products it makes, it is almost difficult to believe that they all fall within the wonderful broad category of ceramics, which, of course, includes clay pipes.

As I said, brick has been used by people for building for at least 5,000 years for good reason: it is a durable and it is energy efficient. It is to be commended and, if I may say, it should be used at every opportunity. The sector is very diverse, including electronics, aerospace, automotive and healthcare.

After a prolonged and painful restructuring in recent decades, some parts of the brick and ceramic sector have seen a revival in past years. Strong demand from house builders has meant that previously mothballed brick factories have reopened and substantial investment has been made in others, such as the Ibstock Brick Ltd facilities at Chesterton and Ibstock in Leicestershire. Unfortunately there is nobody here from Leicestershire, but that is an outstanding company. In ceramics there has been new investment in both technology and factories, with distinguished names such as Waterford, Wedgwood, Royal Doulton, Wade and Steelite leading the way.

In response to Ruth Smeeth, I want to put the record straight. I do eat when I can—I enjoy eating, in fact. However, I think her point was in relation to the fact that in BIS, apparently, we do not use crockery that has been made in this country.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

It is absolutely shameful—I could not agree more. When we last debated this issue, I have to confess that I did not know Steelite, which is a disgraceful admission from the Minister responsible for ceramics. By a happy chance, that very weekend I happened to be staying somewhere in Scotland—I will not name it—where they used Steelite. It is an outstanding ceramic because it is incredibly durable. It has many other qualities, too—it can be very fashionable and traditional—and I could go on. It has outstanding British quality and it has stamped on its back proudly that it is all made in Britain. I know that the industry has been keen to overcome some of the difficulties it has had. Frankly, we know that some companies have imported products and then, because they will slip them and perhaps finish them off, they then put “made in England” on them. Anyway, Steelite is made here in Britain and it is brilliant.

The business environment has been tough, and it still is tough for many parts of the sector, especially those businesses that are caught up in the supply chains for sectors such as steel. We all know the difficulties they have been suffering. However, we are getting the fundamentals of the economy right. By way of example, we are cutting corporation tax to 18% by 2020, which is important to support the sector and indeed all manufacturing. We are cutting red tape and investing £6.9 billion. Again, all of that is important, as is our work creating apprenticeships so that we keep our skills base up.

In relation to Stoke-on-Trent in particular, the Stoke-on-Trent and Staffordshire local enterprise partnership has achieved many things. For example, there was £159,000 for Keeling and Walker, Fairey Technical got £159,000, Hygan Products got £30,000 and Siak Transfers got another £10,000 to help them with new jobs and new investment, looking to the future. The Ceramic Valley enterprise zone along the A500 corridor was announced in the autumn statement to help the United Kingdom to compete with the growing technical ceramics sectors in the United States, Germany and Italy. The Government’s city deal with the LEP includes a flagship proposal for the UK’s first at-scale, low-carbon heat network system, which will support the region’s world famous advanced manufacturing and applied materials sectors, including ceramics.

I turn to the sometimes controversial—understandably so—EU emissions trading scheme and reform. We are a strong supporter of the EU ETS as a cornerstone of EU climate and energy policy. It can help industry decarbonise in a cost-effective way in the transition to the low-carbon economy we all want, but the United Kingdom Government believe that improvements to the EU ETS in phase 4 can help it function more effectively and target carbon leakage support at those sectors at greatest risk. What we do not want is for us to be exporting jobs and importing carbon, so we have to get that absolutely right.

We favour a tiered approach that would focus a limited supply of free allocation on those sectors that need it most. Our recent joint non-paper with France sets out a number of potential approaches to tiering. It is important to note that, at this stage, we do not favour any one particular approach. We acknowledge that parts of the ceramics industry are at risk of carbon leakage and we are engaging proactively with the ceramics industry to discuss its concerns. It is always a pleasure for me to meet with it.

We are keen to see more simplified procedures and a potential increase in scope for the small emitter opt-out and to ensure that innovation funding is available for industry. All of those measures can help installations in the ceramics sector. The really important point, which was made by my hon. Friend the Member for Aldridge-Brownhills, who so ably represents her constituency, is that, like all sectors, this sector asks for nothing more than that level playing field. She is right that, as other hon. Members mentioned, it is only right and fair that, as a Government, we do or do not do stuff to ensure a level playing field. That is a proper and right ask to make.

Turning quickly to EII compensation and what we call the 2050 road maps, the industrial energy costs in this country are higher than in other European countries. We know that we face a genuine and serious challenge in our country, but in answer to my hon. Friend Craig Tracey, who made a very good contribution, eligible ceramics companies can apply for compensation for the indirect costs of the renewables obligation and the small-scale feed-in tariffs scheme. We have been working closely with the British Ceramic Confederation and ceramics companies to help them to apply for that. We have worked closely with the sector to develop a 2050 road map to help it to reduce greenhouse gas emissions and increase its energy efficiency while remaining competitive. We all agree that we now need to see some real action to ensure that our energy costs are cheaper, in particular for the benefit of our manufacturing sector.

I know that MES for China is controversial and I am aware of the vote. The Government of course continue to listen, but we should not get overly hung up on market economy status. Russia has it and the Commission is still able to act to put on tariffs, for example, and so on. Of course, the Government continue to listen.

There were some excellent contributions from all hon. Members. My hon. Friends the Members for Cheadle (Mary Robinson) and for North Warwickshire mentioned Wienerberger, an excellent brick company. It does not just make traditional bricks, as the hon. Member for Motherwell—I have the wrong constituency again. I apologise.

Photo of Anna Soubry Anna Soubry The Minister of State, Department for Business, Innovation and Skills

I thank my PPS for that help. Margaret Ferrier also made the point that it is not just traditional bricks that are proving so popular. A modern approach to bricks, based on traditional methods, means that bricks are now being seen as a beautiful design and feature in themselves in any work that is undertaken.

Because I am going to run out of time, let me say that I am happy to look at procurement. Perhaps we could do some work in persuading local authorities to do more in the procurement of British bricks.

Photo of Wendy Morton Wendy Morton Conservative, Aldridge-Brownhills 5:29 pm, 15th June 2016

In the short time that I have, I thank you, Mr Chope, for keeping us in good order this afternoon, and I thank the Minister for coming along and listening to us. I was pleased to hear that she is engaging proactively on some of the issues, and I urge her to continue to listen to the sector. I thank all the Members from across the country who have participated in the debate.

Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).