Thamesteel

It is a pleasure to serve under your chairmanship, Mr Davies, and I congratulate the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop) on his remarks. I associate myself with his comment on blast furnaces. The first time I saw a blast furnace in Port Talbot was a formative experience for me. Every hon. Member would benefit from spending some time in front of a blast furnace. I want to talk about one aspect of the issues facing energy-intensive industries such as steel, aluminium, ceramics and cement—that of energy prices. I shall focus on one of the drivers that we can do something about while still meeting our carbon reduction commitments. Today, business in the UK is paying around €10 a unit for electricity. If a business were located in France, that figure would be €7 a unit, which is the business rate. That is a difference of about 40%, and a very significant margin. That factor is important in the decisions being made. It is not true that our energy prices are more than those across Europe generally—our gas prices are cheaper than nearly everywhere in Europe—but electricity is expensive and continuing to get more expensive. It is hard for a Government to drive an industrial strategy that involves rebalancing the economy when energy prices are on an upward track relative to our major competitors. That is the issue. About 18 months ago, I received a written answer from the Department of Energy and Climate Change stating that 18% of business energy costs were caused by our green—or our renewables—policies, which is a large chunk. That figure is set to rise to 30% by 2020. What matters is what that means relative to our competitors. It is not possible for gross domestic product to grow if energy is expensive. As we move from a service-based GDP to what I hope is a more manufacturing-based GDP, costs will be more in terms of energy per unit of GDP developed. This is not about climate change. There are two aspects to what we are trying to do with our energy commitments: reduce carbon and go for renewables. The Climate Change Act 2008, which was rightly passed by the previous Government, committed us to an 80% carbon reduction by 2050. That is about the hardest thing I can imagine doing while we continue to grow the economy. A year later, the same Government signed up to an EU directive that said that, as well as an 80% reduction, we would produce 30% of our electricity from renewables by 2020. That is a contradictory objective. There is nothing in the first objective that says we have to go for renewables at the pace and scale we did. We could have gone much more quickly for nuclear power, or for carbon capture and storage—even more quickly than we are doing now, and I concede that the Government are moving in that direction. There is a serious consequence here. We have two deltas in energy costs for companies such as Tata, Alcan and others: the delta of increased energy costs due to the need to meet our carbon commitments, which I accept as we have to do our bit, and the additional delta, over and above that, to meet a large component of that carbon commitment through renewables—a larger component than if we had just tried to minimise carbon at the lowest cost possible, which would have created the most jobs. I have sat through many debates, hearing about job losses related to the solar tariff. I remind hon. Members that the tariff was 43p a unit of electricity—the feed-in tariff that the Government belatedly cut. In France, electricity is being generated at 6p a unit. That is not sustainable: it has to be paid for by somebody and the buck is stopping at companies such as Tata. The Government are continuing to do a lot in their industrial policy, and with the growth fund, which is far more focused towards the north of the country than the regional development agencies were—apprenticeships and all that goes with them. Energy prices are critical, and unless we get them right that will all be for nothing. The £250 million is welcome and is directed at the energy-intensive industries, but that is an error in focus, too, because all manufacturing requires energy. It is a continuum. There are not just a few companies at the top using a lot of energy; all manufacturing companies use energy. If they are paying 18% or 20% more than their competitors as a result of the Government pursuing policies that we do not need so as to meet our carbon commitments, the penalty will be job losses. Unfortunately, the jobs that have been lost are marginal jobs. They tend not to be seen in the same way, perhaps, as jobs in a solar company or a wind farm company, which are very high profile and all that goes with that. The Government need to focus on that and get it right.