Prax Lindsey Oil Refinery
(1 day, 19 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
With permission, Madam Deputy Speaker, I will make a statement about the Prax Lindsey oil refinery. Today its owners have declared insolvency at the refinery, and the Government are urgently acting in response to that deeply concerning news. I know that will be extremely worrying news for workers at the refinery, as well as for the wider community in Lincolnshire. Let me say very clearly that the Government stand with the workers, their families and the wider community at this difficult time. They have been let down by the company, but we will ensure that they are supported.
Let me take the House through the chain of events leading up to today, and the actions that we will take in response. There have been long-standing issues at the refinery since it was acquired in 2021. At the end of April, the Government were informed of ongoing commercial difficulties, and the Energy Secretary met the chief executive on 13 May to see how the Government could provide support. The Secretary of State was reassured by the company that there was no immediate closure risk at the refinery.
A week ago, the business changed its position, and said that it feared that it could no longer be a going concern. We repeatedly asked it, at an official and ministerial level, what the financial gap was, to work out whether the Government could help to bridge that gap, but the company was unable to share that basic information. As a result of today’s decision by the company, an official receiver and administrators have been appointed to take over different parts of the business. The Government will ensure that supplies are maintained, protect our energy security, and do everything we can to support the workers, including engaging with trade unions and industry bodies.
Let me update the House on the Government’s response. First, we will work with the official receiver over the coming days and weeks to manage the situation at the Lindsey oil refinery site, and to determine the next steps. The official receiver will take immediate steps to ensure safe operations at the site, ensure continued fuel supply and explore all credible options for a sale. Unfortunately, the refinery has consistently failed to make a profit since it was bought by the current owners from Total in 2021; it has recorded a total of around £75 million of losses between its acquisition in 2021 and the financial year ending February 2024. That has left the refinery in very bad shape, and the company has left the Government with very little time to act.
We are supporting the official receiver in carrying out its statutory duties, including managing the situation on the site to determine next steps. That will include urgently reporting back on the steps, including all potential uses of the site, prior to the wind-down of the refinery. As to the wider business, extensive operational and financing interdependencies in the Prax Group mean that the refinery’s parent company, State Oil Ltd, has also been placed into administration today, along with a small number of other group entities. However, other parts of the group, including its UK retail business, have not gone into administration. The retail business will trade as normal, while the administrators look to secure a sale in due course.
Secondly, there are questions that must be answered about how the owners allowed this situation to happen. That is why my right hon. Friend the Energy Secretary has today written to the Insolvency Service to demand an immediate investigation of the conduct of the directors and the circumstances surrounding that insolvency.
Thirdly, as we engage in this work, our immediate priority is to ensure that affected workers at the Prax Lindsey refinery are supported through this difficult time. The Government believe that the business’s leadership has a responsibility to the workers and the local community. We call on it to do the right thing and provide support to the workers through this difficult period. The wealthy owner cannot wash his hands of his obligations to the workers and their families. That is why we call on him to put his hands in his pockets and deliver proper compensation for the workers. The Government will now urgently work with the company and trade unions to explore what further support can be offered to the workforce, including the maximum possible help to ensure that workers can pursue new job opportunities if the refinery cannot be sold.
Fourthly, we are committed more widely to securing the long-term future of the UK’s refinery sector. It is important to say that the UK has a refining sector with a number of well-run operators. I met the refining sector earlier this month for a ministerial roundtable, and it told me that it had not had such a meeting with Government for 13 years. The reality is that the previous Government left the UK’s refining sector facing significant long-term challenges. We know that there are global challenges too, including competition from larger refining operations in the middle east, India and Africa. We have already seen the effects of years of negligence from previous Governments, and this Government have been left to pick up the pieces.
The UK Government are determined to work with industry, workers and trade unions to ensure that we safeguard our refineries for the future. That is why we are reviewing the methodology for the energy-intensive industries compensation scheme that we inherited from the last Government. The refineries sector is not covered by that scheme, and the review will help assess whether sectors such as this should be covered in the future, and whether more can be done to help their competitiveness. That is not all: in less than 12 months in office, we have invested in carbon capture, usage and storage, which can help key refineries, such as Phillips 66 and Stanlow, through Viking and HyNet. We have funded Project Willow at Grangemouth—a project that can help all refineries meet future challenges—and we are driving forward with the sustainable aviation fuel mandate, to help the refining sector maximise the opportunities created by the clean energy revolution.
From the moment we were informed of these issues, the Government have been focused on securing the future of the Prax Lindsey oil refinery site and supporting its workers. Today, those workers have been badly let down by the company, but we are committed to supporting them and the wider community during this difficult time. The Government are absolutely committed to a long-term future for the UK’s refinery sector, and over the weeks and months ahead, we will provide further updates on the steps I have set out in this statement. I commend this statement to the House.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
I thank the Minister for advance sight of his statement, and for taking the time to speak with me on this issue earlier today.
Today, hundreds of jobs are at risk, and a strategically significant asset is in jeopardy. The Lindsey oil refinery has a capacity roughly equivalent to 35% of British petrol consumption and 10% of British diesel, and it supplies aviation fuel to Heathrow airport via a pipeline. Refineries represent a core strategic interest for the United Kingdom. We are reassured that the oil and gas fields to the west of Shetland are not at risk, nor is the network of petrol stations affected by today’s announcement —I would like to reiterate that that side of the operation is not at risk. The refinery has been loss-making since it was acquired from TotalEnergies in 2021, and we are aware of long-standing financial issues with the Prax group, including its being unable to provide accounts to the Government. As such, we support the Government in ordering an investigation into the conduct of the directors and the circumstances surrounding this insolvency.
However, despite the management issues facing the company, which, as the Minister has said, are multiple, it is clear that the refining industry as a whole is being driven into the ground by the high cost of energy in this country. In the late 1970s, Great Britain had 17 oil refineries; if the Lindsey refinery in the Humber closes its doors, only four will remain. Energy is the single largest cost of operating a refinery, so the sky-high cost of energy to industry in the UK is pushing manufacturers in energy-intensive industries such as refining out of business. As Sir Jim Ratcliffe at INEOS has said, the chemicals sector is “facing extinction” because of
“enormously high energy prices and crippling carbon tax bills.”
Industry in the United Kingdom is uncompetitive, with two oil refineries closing within six months. It is quite clear that we need a rethink. If our route to lowering emissions in the UK comes at the price of deindustrialisation, and costs jobs, livelihoods and economic growth—if it means impoverishing the UK and increasing dependence on imports, and a fragile supply chain for fuel and essential oil products—then we must rethink. If the Secretary of State brings refineries within the scope of the energy-intensive industries compensation scheme, he will be providing only a sticking-plaster response. Exempting specific industries from policy costs such as the renewables obligation, the feed-in tariffs, the contracts for difference subsidies, and capacity market payments does not fix the foundations. This piecemeal approach simultaneously accepts the devastating consequences of green levies for the industry and abdicates responsibility for fixing the root problem.
We are already seeing the real impact on working people’s livelihoods and communities of not taking action. Some 400 jobs have been lost at Grangemouth; 60 have been lost at Moorcroft pottery in Stoke; over 1,000 have been lost at Vauxhall in Luton; and 250 have been lost at Nippon Electric Glass Fibre Works in Wigan. Now we see the same at the Prax Lindsey oil refinery, where 440 people are employed. Unite the union has warned the Government that their policies
“have placed the oil and gas industry on a cliff edge”.
This Government are driving up the cost of energy, increasing our reliance on imports, and offshoring our carbon emissions. That is not good for the climate, and it is very bad for Britain.
Refineries have consistently raised the issue of the existential issues that the sector faces, including the cost of the emissions trading scheme and eye-wateringly high energy bills. Since the closure of Grangemouth, this Government have taken no action to tackle the fundamental problem: the need to reduce the burden on businesses, make UK manufacturing more competitive, and back British industry. I have some questions for the Minister. What are the Government’s plans for the Lindsey refinery? Does he expect to find an operator? How long will the Government support the refinery, and what plans do they have for the refinery if no buyer is forthcoming? What action will the Minister and his Government take to ensure that the situation is not replicated at Britain’s four remaining refineries? How many petroleum refineries does he expect to be left by the time the Labour Government leave office in 2029, and what will the Government do to bring bills down for all industrial energy consumers, not just those covered by the energy-intensive industries compensation scheme?
Michael Shanks
I thank the shadow Minister for rightly reiterating the fact that it is not the whole of the business we are discussing that has gone into administration today. It is really important to say that there is certainty in other parts of the business—we will be able to outline more of that in the days and weeks ahead. I also thank him for his and his party’s support for the investigation into the conduct of the directors that the Secretary of State has launched. Clearly, something has gone badly wrong here, and it is important that we get to the bottom of it.
The shadow Minister asked three specific questions. First, the Government have backed the official receiver, who is now running the refinery in the short term. We will use that time to see whether there is a possibility of finding a buyer—clearly, our very first option is to see whether someone wants to take on the refinery as a going concern, and we will put every effort into trying to find one. If that is not possible, we will look at what the wider future of the site might be and what possibilities exist for other industries on that site.
Turning to the shadow Minister’s wider questions, he spoke about fixing the root of the problem. I have to gently say to him, though, that he and his party oppose the action that will fix the root of the problem, which is our continued exposure to volatile fossil fuel prices that have driven up the cost of electricity. As he rightly said, households and businesses right across the country are paying the price for that. We have an answer to that, which is to move much faster towards a clean power system including renewables and nuclear that brings down costs and delivers that power here in the UK, rather than relying on the casino for volatile fossil fuels. However, the shadow Minister opposes that plan. He cannot call for us to fix the root of the problem—as he puts it—while opposing the very action that will do so. We have outlined a credible plan for how we will deliver cheaper electricity for all consumers across the country, including businesses, and we are getting on with delivering it. The Conservatives oppose all those initiatives.
Madam Deputy Speaker (Caroline Nokes)
I call the Chair of the Select Committee.
Bill Esterson (Sefton Central) (Lab)
My hon. Friend the Minister recognises the importance to our energy security of securing the fuel supply at Lindsey. He also recognises the importance of engaging with the trade unions to attempt, at least, to reassure the workforce. I thank him for those actions and congratulate him on them, and indeed on the engagement that the Government have had with the sector since the election.
Refinery operations are increasingly challenging, not least because of the volatility and uncertainty in international fossil fuel markets that the Minister just mentioned, but also because of the competition across the world. Phillips 66 and Stanlow, which he mentioned in his statement, are adapting to the changes in our energy system, taking advantage of carbon capture and the production of sustainable aviation fuel and biofuels. Will the Minister ensure that the UK refinery sector is part of the energy transition and a key part of our energy and industrial strategies, so that refineries play a key part in the future for the communities and workers that depend on those jobs at the moment, and so that we do not see a cliff edge?
Michael Shanks
I thank my hon. Friend for his question. First, he is right to restate what I said in the statement—when I brought in the refinery industry for a roundtable, it was frankly extraordinary to be told that it was the first time in 13 years that that had happened. That is an extraordinary state of affairs. I am glad that we have now held that roundtable, but what it has highlighted is just how much engagement with the sector is now necessary. I am determined to drive that engagement forward.
My hon. Friend is also right about the nature of the transition. Refineries will be important at all stages of the transition. Clearly, they are critical to delivering our fuel security today, and they will play a really important role in that area in the future—in sustainable aviation fuel, biofuels, and the wider work we need that sector to do. We will support refineries to transition into some of those future technologies.
The bottom line in this case is that we seem to have had a business that was far from doing that—it was not driving forward the investment that was necessary. We will now, at pace, try to get to the bottom of what the directors were doing with this company. It is a shocking state of affairs and a sad day for the workers, but I genuinely believe that there will be a strong refining sector in the future.
Madam Deputy Speaker (Caroline Nokes)
I call the Liberal Democrat spokesperson.
Pippa Heylings (South Cambridgeshire) (LD)
I, too, thank the Minister for advance notice of the statement today. Our thoughts are with the workers at the Prax Lindsey refinery who have heard this last-minute, shocking news today, which has put their futures and jobs on hold.
We understand that this is just one refinery within the Prax Group, but the threatened closure will send shockwaves across its wider operations, with its newly acquired oilfields to the west of Shetland and roughly 200 petrol stations in the UK under the Breeze and Harvest Energy brands. While those facilities are outside the insolvency process as things stand, workers in those upstream businesses and the wider community will understandably be worried about the impact of the insolvency on their jobs.
There are questions to be asked of the company bosses in both State Oil and the Prax Group, and it is good to hear the Secretary of State’s announcement of an investigation into how the company bosses have let workers down. We welcome the Minister’s words that the company should bear some responsibility and accountability for jobs and skills for those workers, if it turns out that the company closes.
We welcome the Government’s proposals to consider adding refineries to the network charging compensation scheme for energy-intensive industries. Once again, as we have heard, we see UK industry buckling under soaring energy costs—some of the highest in Europe—with workers left to pay the price. Many in this House will feel a troubling sense of déjà vu following the Grangemouth job losses. We have heard from the Minister about the state of the refining industry and how the industry had not met the Government for 13 years. Such situations make it yet clearer that the Government must set out a comprehensive and strategic plan for workers in the oil and gas industry to support the redeployment of skills and training as part of a just transition.
A recent report by Robert Gordon University warned that the UK risks losing tens of thousands of offshore energy jobs by 2030 unless urgent and co-ordinated action is taken immediately. Rather than the irresponsible and reckless race backwards to volatile fossil fuel dependency that the Conservatives have put forward today, the report calls for honest dialogue to settle on a common UK policy framework—
Madam Deputy Speaker (Caroline Nokes)
Order. The hon. Lady will know that the time limit for responses to statements is two minutes for the Liberal Democrats. I am sure she has finished her comments.
Michael Shanks
I think I got all the hon. Lady’s key points down. Importantly, I agree with many of them. First, I echo the point that she makes about this being shocking news for the workers, as it always is. Given how quickly it has happened, it has been as much a surprise to us, but for the workers it will be particularly shocking news.
I will reiterate two things that the hon. Lady said, just to be clear. She mentioned the upstream business west of Shetland. That is not filing for insolvency. The petrol forecourts will continue to operate as normal, and the administrators are exploring the prospect of a sale of those retail operations. There is no need for anyone to be concerned about any of that.
There is an argument that it is critical, whatever the outcome, that the company takes some responsibility for the actions it has taken up to this point and for the workers who were employed in its business and kept it running for a long time. I have been clear in my statement today, and we will continue to reiterate it, that we expect the owners to put their hands in their pockets and provide the support that those workers deserve.
Finally, I was in Aberdeen last week talking to people about a comprehensive plan, and I will continue to do that, because it is right that we put in place a comprehensive plan for the future of those working in oil and gas. There is a bright future for that workforce in oil and gas for many decades to come, but increasingly they will transition into new industries. We are determined that we will deliver those jobs. A plan is crucial, and I am working on it at pace.
Melanie Onn (Great Grimsby and Cleethorpes) (Lab)
I thank the Minister for his statement, and he is right that this news has sent a shock reverberating around our local area. Back in April, I visited the Prax site, which sits in the constituency of my neighbour, the hon. Member for Brigg and Immingham (Martin Vickers). I spoke with the staff and trade union reps about the importance of their work, and I was impressed by their commitment to the company. There was absolutely no hint of the scale of difficulties—beyond how challenging it is in the refining sector anyway—or how deep and uncomfortable the company’s financial situation was. It is astonishing that the company could not answer basic questions about its finances when the Government asked for those details.
The decision taken by State Oil puts more than 400 local jobs at risk, with around 65% of those workers living in north-east Lincolnshire. I appreciate the efforts that the Government are making to support our workers, and I hope to work closely with the Government to help find a new buyer to preserve the jobs and support domestic fuel production as a strategically important asset. However, as things stand, I understand that State Oil is required only to make statutory redundancy payments to those workers. Does the Minister think that the billionaire owner of the refinery could do more to better support those workers in the event that they lose their jobs? Surely that is the least they could do, after what appears to be gross mismanagement.
Michael Shanks
I thank my hon. Friend for her questions. By talking of her recent visit to the refinery, she underlines the issues that have come to light in such an incredibly short space of time, although the truth is that in uncovering some of this, we have discovered that it goes back some time. That is why my right hon. Friend the Secretary of State has announced that he has asked for an inquiry into the decisions that have been made. We need to get to the bottom of this and learn any lessons that we can.
My hon. Friend is right that we have to do everything we can to support the workers. We will continue to do that, and we will look at what support we can provide for them. At the moment, these are jobs at risk rather than redundancies that have been announced. We are doing everything we can to see whether someone is interested in buying the refinery as a going concern, in which case the workers would be retained. We will do everything we can to support those workers should that not come to fruition.
My hon. Friend is right to point out that under the current process, those workers will be entitled to statutory redundancy only. It is clear that the business’s leadership have a responsibility to those workers, not only because it is right and prudent for all owners of businesses like this to take responsibility for the workforce, but because, particularly given how this business has ended, they should take responsibility for the workers and the local community. We call on them to do the right thing and support the workers through this incredibly difficult period.
Martin Vickers (Brigg and Immingham) (Con)
I thank the Minister for his statement and for the briefing he gave me earlier today. It is disturbing that when the Government reached out to the company for additional information, it was not forthcoming. The shadow Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) asked some pertinent questions, one of which was how long the Government are prepared to support the workers and the refinery. It would be reassuring for many of my constituents who work there if the Minister could give some indication that there will be support at least in the medium term.
Michael Shanks
I am grateful to the hon. Gentleman for his time earlier today. This will be a distressing issue in his constituency, so it was good to have the chance to speak to him about it. He is right. With this decision having been made last night in the courts and made public this morning, we have not had much time to fully work through the timeline of what will happen in the coming weeks. The Government are funding the official receiver to continue the safe operations of the refinery. The first priority will be to make sure that safe operations proceed, but then we will see whether a buyer is interested in the site. We will then move as quickly as possible, if that is not possible, to see what alternatives there are for the site.
I cannot give the hon. Gentleman assurances on exact timescales at this point, but he can be assured that the Government are determined to do the right thing, and we will do whatever we can to get either a buyer or a sustainable future for the site. I reiterate to the House that this is a difficult set of circumstances with little time to prepare, and the refinery has been loss-making since it was taken over from Total some years ago. It is a difficult position, but we will do everything we can.
Brian Leishman (Alloa and Grangemouth) (Lab)
I am glad that the root cause of the problems that we face has been identified. We have touched on it, but this is what happens when private capital is in charge of such a key piece of infrastructure. We saw that play out at the Grangemouth refinery in my constituency, and it is good to hear my hon. Friend the Minister in agreement with me in condemnation of the owners of the Prax Lindsey refinery. It gives me hope that the Government will learn important lessons and assume at least some form of ownership in the future industries that will be come at Grangemouth and potentially at other sites. Can we get an update on that, please?
Michael Shanks
My hon. Friend is right to highlight the work that the Government are doing following our £200 million commitment to support the future of Grangemouth through the national wealth fund. There have been 84 serious and credible inquiries about projects there, and I have been meeting those involved in some of those projects to discuss what more the Government can do to ensure that they are delivered. We will say more about that in due course, but we are working collaboratively with the Scottish Government and Scottish Enterprise to bring the projects forward. As we have said since day one, we are determined to deliver a sustainable, viable industrial future for Grangemouth. The difference between Grangemouth and the Prax Lindsey refinery—I want to separate the two slightly—is that while we may have issues with the owners of various sites across the country, an 18-month redundancy package was put in place at Grangemouth and that is not the case in this instance, which is why the Government are particularly calling on the owners of this refinery to do the right thing for the workers there.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
Westminster’s mismanagement of the energy sector is clearly being felt across these islands, and the Government were right to arrange a statement today to address the possible closure of the Prax Lindsey oil refinery. However, that is not a courtesy that the Labour Government have ever extended to Grangemouth in Scotland: they have not once come to the Chamber to make a statement about it. We have seen Labour pull out all the stops for Scunthorpe and now begin that process for Lindsey. Will they think again and do the same for Grangemouth?
The Shetland gas plant is also owned by Prax, and is also a significant employer. What steps are the Government taking to secure the future of this site, and why did the plant not feature in the statement, if only for the purpose of an assurance?
Michael Shanks
Let me deal with that on two fronts. First, we have come to the House repeatedly to talk about Grangemouth. I have had meetings with a number of Members over the past year to discuss Grangemouth, probably more than I have had to discuss any other issue, and I have weekly meetings with Scottish Government Ministers, businesses or others to discuss Grangemouth’s future. No one wanted the outcome that we got from Grangemouth, but we have done everything in our power to turn that around and deliver a viable economic future for the site, so I do not entirely accept the hon. Gentleman’s criticism, which I think is misplaced.
Secondly, I apologise to the House for being unable to give explicit details about every part of the business, but one of the problems is that we have not been able to obtain clarity from the company about all the interdependencies within its own business group. We will discuss more of this in the coming days as we engage with the official receiver. It is important to separate the issue of insolvency for the refinery—the specific issue that we are discussing today—from the wider group issues, but I have no doubt that we will return to some of those in due course.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The shadow Secretary of State mentioned Moorcroft in Stoke. A small glimmer of light in what is otherwise a rather gloomy story is the rescue of that company by Will Moorcroft, the grandson of its founder, and the jobs that are potentially coming back. However, those jobs were put at risk, much like the jobs at this refinery, because of the eye-watering industrial energy costs that we face in this country. The Government have announced the British industrial competitive scheme, but it will not come alive for industrial energy prices until 2027, which is two years away.
I thought I heard the Minister say that the Government would consider the potential for changing the criteria for the energy intensive industry compensation scheme to bring in new sectors that could be offered some immediate help and some respite between now and the introduction of that scheme. If that is the case, will the Minister be clear about it at the Dispatch Box, and if he is able to look at the EIIC criteria, can he also look at the existing energy supercharger scheme, which would give ceramics companies in my constituency access to the support that they need in order to continue to thrive?
Michael Shanks
My hon. Friend is right to mention the impact of high electricity costs across industry. Since we came to office we have been doing everything possible—through the industrial strategy, and through other work that my colleagues in the Department for Business and Trade have been doing—to try to drive down energy costs, and we are doing wider work across the energy system to deliver clean power by 2030, and to bring down bills and reduce the volatility in bills that affects too many households and businesses throughout the country. We are looking at all the possible options, and I have said to the refinery sector that we are willing to look at all the schemes on a case-by-case basis. There is no easy answer to many of these questions, but we will, for example, consider eligibility for the industrial competitiveness scheme following the consultation that will open shortly, and it will be reviewed in due course.
I understand that the question relates to how fast we can move on some of these matters, but we need to ensure that we get this right, and we are doing everything we can, where we can, to move faster with some of the decisions.
Harriet Cross (Gordon and Buchan) (Con)
The Government stood in to secure British Steel, citing national security and protecting jobs; now they are standing in to support Prax Lindsey, citing the need to protect energy security and workers. As the Minister knows, tens of thousands of jobs and many, many companies in north-east Scotland are nearing a cliff edge because of the Government’s policies. To prevent the need for another eleventh-hour standing in by the Government, will he now support the North sea by ending the energy profits levy and allowing new licences there?
Michael Shanks
I should avoid straying into taxation policy, which is not in my brief. However, I will say that we are doing everything we can to issue a speedy response to the consultation on the future of energy in the North sea, which is all about how we strategically plan the future of oil and gas in this country to ensure that we are building up the future industries at the same time as supporting existing oil and gas supply chains and jobs, and we are moving that work forward.
Let me be clear about what the official receiver does. The official receiver is in post with statutory duties, but that is not in the same bucket as nationalising an industry. It would not be right for the Government to underwrite failing businesses, but we have a responsibility to ensure that an active refinery is wound down in a way that is safe, or that we can find a buyer to continue it.
Carla Denyer (Bristol Central) (Green)
I stand in solidarity with the workers in the oil industry who are facing such uncertainty and fear. This incident illustrates perfectly why a carefully managed worker-led transition away from oil and gas is so desperately needed to avoid a chaotic collapse in which workers pay the price. Will the Minister agree to implement my Energy and Employment Rights Bill, whose proposals include the publication of a plan for the redeployment and retraining of oil and gas workers, paid for by oil and gas companies across the industry rather than piece by piece and crisis by crisis?
Michael Shanks
I do not agree with the hon. Lady’s proposed piece of legislation, so I will not be supporting it. I think that that is the wrong approach, although she has highlighted the right problem. We are moving as quickly as possible to plan the transition properly, although we should have been doing that many years ago when it started, and as a result we have lost a third of the workforce in the past 10 years. More than 70,000 people have lost their jobs because we failed to plan for this.
I recognise the problem that the hon. Lady has described, but I think that the answer is for us to do two things: to manage the existing fields and support the industry for the lifetime of those fields, and to build up, at speed, investment in the industries that come next. In the spending review the Government supported industries in respect of carbon capture and storage and hydrogen, and, of course, significant investments in the supply chain through Great British Energy to ensure that we are building infrastructure in this country again and securing the jobs that come with it. The transition is important, and we are doing all that we can to ensure that workers are at the heart of it.
Charlie Maynard (Witney) (LD)
I appreciate the Minister’s words of support for the workers who are facing such horror and shock, and the Liberal Democrats will work hard to hold him to those words. I have two questions for him. The carbon border adjustment mechanism leaves UK refineries at a disadvantage when it comes to the trade in international fuel. Will the Government now consider including that trade in CBAM so that our UK refineries can be level pegging with the rest of the world? Secondly, the UK now has only one refinery left facing the North sea. How many refineries is it okay for us to have when it comes to maintaining fuel security? Can the Minister be precise in telling me how many more can fall after Grangemouth and the one that we are discussing?
Michael Shanks
I thank the hon. Gentleman for his questions and his promise to hold us to account; I look forward to that. He was right to reiterate the point that I made at the beginning about the importance of support for the workers, and we are calling for the company’s owners to do the right thing. As for the carbon border adjustment, we have looked at three factors: the UK emissions trading scheme, the carbon leakage risk, and the feasibility and effectiveness of inclusion. The refining sector does not currently meet all those criteria and is therefore not included in scope at present. We are looking beyond 2027 and also considering whether there is more we can do in the short term, but clearly there are questions about carbon leakage and other matters that we need to work through. That is partly why I got those in the sector together—the first time that had happened for 13 years, as it turns out—to talk about some of those issues, and about their own views.
I am not going to answer the hon. Gentleman’s second question with a specific number, because I do not think that is the right way to look at anything around business planning. What I can say is that refineries are incredibly important to this country. They are crucial parts of our energy infrastructure, and they are important businesses, but businesses have to operate as successful businesses. While some refineries are absolutely doing that, this one is clearly an example of where that has not happened. We will do everything we can to support the sector, but I am not going to put a specific number on how many refineries we should have in the future.
Sammy Wilson (East Antrim) (DUP)
Whatever the specific reasons for the company’s failure, the fact of the matter is that the refining industry has been squeezed for decades as a result of Government policy. When the Secretary of State for Energy Security and Net Zero stands up and demonises fossil fuels, it is hardly surprising that there is not investment in the refining sector. If we add the energy costs, the carbon taxes and all the other impediments, of course we will see businesses disappear. Given the fact that we have seen aluminium, steel, oil and now oil refinery disappear from the scene in the UK, does the Minister not understand that as long as we pursue this demented net zero policy, we will have regular announcements of job losses, greater insecurity in our fuel supplies, and the loss of heavy industry?
Michael Shanks
I do not agree with the right hon. Gentleman on any of his assessment—it will not come as a huge shock to him or the House for me to say that. Aluminium and steel have not disappeared from our industrial landscape in this country, but he is right to read out a number of things that this Government inherited and have had to fix. We had 14 years of failure in industrial policy, and that is why we recently announced an industrial policy, which I am sure the right hon. Gentleman has read and supports.
We are not agnostic about our industrial future. It matters that we build things in this country again, and we need a credible plan to do that. That is what we have outlined in the industrial strategy, but I will make a wider point: the right hon. Gentleman is against all the investment in the clean power that will give us the energy security that he talks about, which will take us away from the volatility of fossil fuels. I repeat this point to him, as I have done before: that investment will deliver the re-industrialisation of our communities, and will give certainty to the industries he talks about that bills will be under control and falling, rather than subject to the ups and downs of an international fossil fuel marketplace. That will drive forward economic growth and investment, and he opposes all of that.
Richard Tice (Boston and Skegness) (Reform)
I understand that Lindsey oil refinery has gone bust because it was uncompetitive because of high energy prices, just months after Grangemouth closed. We are witnessing the disappearance of the oil refining sector in this country because of high energy costs. We are witnessing the deindustrialisation of Britain because of high energy costs because of this Government’s obsession with net stupid zero—that is the harsh reality. That is the simple fact, and thousands of jobs are disappearing in front of our eyes. The Minister accepts that our energy costs are too high, and the Government promise that energy bills will come down, so could he tell the British people when?
Michael Shanks
I am always delighted to give the hon. Gentleman an opportunity for his soundbite. Of course, the problem with soundbites is that one needs some detailed, credible proposals underneath them, and they are in short order from the Reform party at the moment—it has no credibility whatsoever. He seems to have concluded a whole series of things about why this refinery closed. If he is party to information that the Government do not have, I would be grateful if he shared it with us, because we have not concluded the investigation that the Secretary of State only launched today.
The refinery has not made a profit since 2021, so for the hon. Gentleman to say that the situation is the responsibility of this Government’s energy policy is quite misguided. The truth is that while the Reform party chooses to oppose the investment that will drive forward jobs and opportunities across the country, including in his own constituency, we are determined to deliver that, because it is the right plan for re-industrialisation, for economic growth, for bringing down bills, for energy security and for tackling the climate crisis, which he might not care about, but children across this country, who will have to face this planet in the future, do care about it.
Sorcha Eastwood (Lagan Valley) (Alliance)
I thank the Minister for his responses so far. I, too, stand in solidarity with workers at the Prax Lindsey site. Whenever big companies are responsible for the stewardship of our energy, and sometimes for its generation, I worry that the cost will be passed on to consumers. I am also worried that workers at the Tata Steel site in my constituency of Lagan Valley, who are currently engaged in industrial action, have had their meeting cancelled by management. Does the Minister agree that these jobs are important and key to our transition for the future, and that those workers should not be left behind?
Michael Shanks
That is a very powerful and well-put point that I am very happy to agree with. Workers are right at the heart of our entire economy and will be at the heart of the transition in the future, and we need these skills to power the future industries that we are driving forward at the moment. We cannot afford to lose them, and the hon. Lady is right to make that point. I did not quite pick up on the cancelled meeting, but if she wants to write to me, I will happily look into it.