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Grangemouth Refinery

Volume 748: debated on Wednesday 23 October 2013


My Lords, with the permission of the House, I should like to repeat in the form of a Statement the Answer to an Urgent Question asked in the other place.

“I wish to inform the House of the latest situation regarding the disruption at the Grangemouth refinery and petrochemicals complex in Scotland. I recognise the concern of many Members of the House, in particular the active involvement of the honourable Member for Linlithgow and East Falkirk. The Government have and continue to be in regular contact with both sides involved in the dispute. We are working closely with the Scottish Government and this morning I spoke to John Swinney, the Cabinet Secretary for Finance.

Earlier today, Ineos made a statement confirming the decision of its shareholders to place the Grangemouth petrochemicals plant into liquidation, which puts 800 jobs at risk. The Government are saddened by this move, particularly because of the uncertainty it will bring for the workforce and all those who indirectly owe their livelihood to the Grangemouth plant. The Government do not underestimate the plant’s importance to the local community. While respecting the right of Ineos to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant. Even at this late stage, the Government urge them to continue a dialogue, and we will offer all possible help and support on that. We want this petrochemicals plant to stay open if at all possible, but if redundancies are made, support will be available from the Partnership Action for Continuing Employment, which includes the Scottish Government, Skills Development Scotland, Business Gateway and Jobcentre Plus.

The owners of the refinery, who are Ineos and PetroChina, have announced their intention to keep their refinery open and their wish to restart full operations as soon as possible. Government stand ready to help with the discussions between the management and the union to ensure that this can happen. The Secretary of State is speaking to both parties today.

Throughout this disruption, fuel supplies are continuing to be delivered as usual. My department has been working closely with industry and the Scottish Government to put robust contingency plans in place to ensure that supplies of road fuels, aviation fuels and heating oils will continue to be available to Scottish consumers and continue to fuel the Scottish economy.

I will be giving a briefing at 4.15 pm today in Dover House for Members with Scottish constituencies and other interested honourable Members and noble Lords who wish to discuss the situation in more detail”.

My Lords, with permission I will repeat the response made by the Official Opposition’s spokesperson in the other place.

“The closure of the petrochemical plant at Grangemouth means that 800 people employed there and more employed as sub-contractors will lose their jobs. Ineos chairman, Jim Ratcliffe, had said at the weekend that if the petrochemical plant closed, it was likely that the refinery would go too.

There are reports this morning that Grangemouth might have fallen between the cracks, with neither the devolved Scottish Government nor UK Government Ministers getting to grips with the issue.

John Swinney, the Scottish Finance Minister, claimed yesterday that he was in discussion with potential buyers for Grangemouth. Can the Secretary of State tell the House whether he is aware of these discussions and what involvement he or his Ministers have had?

The Unite union had committed not to strike, with no preconditions, while negotiations over pay and conditions were undertaken. PetroChina, the 50% shareholder in Ineos’s refinery business, made a statement calling for all parties to get back round the table and reach a consensus. But today, rather than coming back to the negotiating table, Ineos has announced that it will close the profitable petrochemical plant. There were reports on the BBC this morning that management delivered the news with smiles on their faces.

Does the Secretary of State agree with me that Ineos should have got round the table to negotiate rather than delivering ultimatums? And can he tell the House what discussions he has had with Ineos management and the union in the past 24 hours and what support the Government are providing for those who have lost their jobs today?

In its report on UK oil refining in July 2013, the Energy and Climate Change Select Committee found a mismatch between refinery supply of petroleum products and demand, but the Government are still yet to respond. Can the Secretary of State be confident that the Grangemouth refinery will stay open? What contingency plans are in place to secure fuel supplies for Scotland, Northern Ireland and the north of England? And given the current shut down and uncertainty over the closure of Grangemouth, will the Secretary of State now commit to undertake the review of UK refining capacity which the right honourable Member for Wealden promised in June 2012 in response to the closure of Coryton refinery?”.

My Lords, the noble Lord raises a great number of questions. Of course we recognise that this is an incredibly unsettling time for workers at Grangemouth and for the wider community, but we need to try to work towards getting a resolution and therefore we stand ready to assist both sides to come to the table to discuss matters. We are also ready to engage with any potential purchaser that may make the case for the ongoing commitment to the UK if it were to take over Grangemouth petrochemicals. We are working very closely with the Scottish Government.

The noble Lord asked about contingency plans. We are working very closely with suppliers and retailers to ensure that Scottish forecourts increase their stock levels well above normal levels as a precaution. We have been working with airports to ensure that they have contingency plans in place to ensure the supply of jet fuel, and with heating oil distributors to encourage them to stock up early. A number of plans are already in place and we are working on them. Ultimately, the best solution would be to get both parties back talking to each other.

My Lords, first, I thank my noble friend for organising the meeting this afternoon. This is a vital national resource of great strategic importance in an area where jobs are in short supply. Will my noble friend encourage my right honourable friend the Prime Minister to knock some heads together and get agreement on the way forward? Quite frankly, the idea of finding a purchaser is a complete red herring. This plant is losing money on a substantial scale and it will be necessary for both sides to give way. It really is important to the United Kingdom as a whole, and to Scotland in particular, that the Government use their highest authority to get a resolution as speedily as possible and that these redundancy notices are withdrawn.

My noble friend is absolutely right that it is an incredibly important issue. That is why my starting point is that we need to get both parties back around the table. We in the Government here are doing our level best to ensure that happens and are working very closely with the Scottish Government.

My Lords, is the Minister aware that a further 141 jobs have been lost today at the BASF plant at Hawkhead Road in Paisley? It is hard to overestimate just how critical the situation now is in Scotland. I echo the request of the noble Lord, Lord Forsyth, for the engagement of the Prime Minister. We need a little more detail about the nature of the assistance that can be given to try to get these redundancy notices withdrawn with a view to saving these jobs, which are critical to the infrastructure of Scotland and to Scotland’s economic future.

The noble Baroness raises a very important point. This is not just about one area but affects the whole country. This debate will be watched very closely and I will of course take back the requests of my noble friend and the noble Baroness that this is taken to the highest levels to ensure that we get proper engagement. What we want to see of course, at the end of it all, is the two parties around the table to resolve their differences.

The plant is on the east coast of Scotland. I live on the west coast and some of my neighbours and some of my former constituents travel on a daily basis to the plant. The impact therefore goes across the central belt of Scotland. For many reasons, I echo the case that has been put by noble Lords on both sides of the House. It is important to deal with this at prime ministerial level and that is where the negotiation should come from.

My Lords, I can only reassure noble Lords that we take this issue incredibly seriously. We are doing our utmost to ensure that there is engagement from both parties and are working very closely with the Scottish Government on this as well. As I have already said, this debate will be watched very closely and I am sure that everyone will take this debate seriously and encourage discussion.

My Lords, does the Minister share my concern that this Government, the Scottish Government and the workforce have been blackmailed by a billionaire sitting on a £130 million yacht in the Mediterranean? Is that not awful? Will the Minister confirm that the UK Government will consider, along with the Scottish Government, all options for keeping this plant open, including bringing it into public ownership?

My Lords, we need to be very careful about the language we use and how we progress this debate. It would be wiser for all of us to try to work very carefully and closely with the parties and get them to come together around the table for discussions.

My Lords, is it not the case that this dispute has been going on for some weeks? Those of us who have been watching it from a distance have been concerned at the lack of high-level intervention to try to get it resolved. There appears to be an intransigent union on one side and a rather distant operator on the other. I simply want to add my voice to those who are saying that we really must try at the highest level to get this sorted out.

My Lords, I have noted my noble friend’s comments, as I have noted those of all noble Lords around the Chamber. So that noble Lords are reassured, I will again repeat that we take this matter seriously and we want to get the parties around the table. That means that we all have to work together very closely at every level.

My Lords, as the noble Baroness will be aware, I raised the issue of refinery capacity in the UK previously, when the highly efficient refinery at Coryton in Essex had to close down. The Government refused even short-term financial support to keep it open, unlike the French and German Governments with their refineries. We must not make the same mistake again. How sure and confident is the Minister that the UK has adequate refinery capacity?

My Lords, we feel confident that we do have adequate capacity. On the broader point about support for the Grangemouth complex, we are happy to work to support it as long as there is a good business case there. Before we go to that stage, let us do the most important thing and get both parties to start talking to each other.