UK Automotive Industry: Job Losses

(Limited Text - Ministerial Extracts only)

Tuesday 22nd May 2018 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)]

Thank you, Mr Bone, for the iron discipline that you have exerted on the Members of Parliament here today. It has worked, because I have the time that you originally said I would.

I commend the hon. Member for Warwick and Leamington (Matt Western) not just for bringing about the debate—he has always very eloquently represented his constituents who work in the automotive industry—but for his speech. I think that it was described by the shadow Minister, the hon. Member for North West Durham (Laura Pidcock), as a tour de force, and it was. I agreed with a lot of the things that he said; I agreed with contributions from hon. Members on both sides of the Chamber. A lot of the views expressed are based on severe concern about the automotive industry. We all know how critical it is to our economy—specifically to the constituencies of hon. Members who have spoken today, but also to the economy generally.

I would like to put it on the record that the only comment that I could really object to—I do not take offence, because it is part of the political system to say these things—is that the Government do not really care about the industry or are not involved with it. I can say from personal experience that that is not true. The automotive industry is at the top of our list. As was well published in most of the press, my right hon. Friend the Secretary of State uses the automotive industry in the Cabinet as an example of the complexity of business within the European Union. There are well known examples of what happens to different parts. I saw one part in a car factory that had been in and out of the country seven times. Hon. Members, in their contributions today, gave similar examples.

In relation to communication with and listening to the industry, hon. Members should know that I meet, as does the Secretary of State, every Wednesday morning with the business representative organisations. The particularly relevant one here is the Engineering Employers Federation, which represents thousands of businesses up and down the country; many of them are involved with the automotive industry. Stephen Phipson, the director of EEF, may be known to hon. Members. He had worked in industry for most of his life and more recently had worked for the civil service in relation to trade. He has written a letter to one of the newspapers, explaining his recent visit to the Canadian-American border. He saw how complex, after many years, billions of dollars of expenditure and good will on both sides, movements across borders are even with electronic trading. A very important part of what we do in government is listening to people about that kind of thing.

I have made visits since I took on this portfolio, and I should say that I asked for the automotive industry to be part of my portfolio. I have not had constituency experience of it, but in terms of manufacturing and this kind of manufacturing investment, I realise, as does the Secretary of State, how important it is to the economy. I think that it is fair to say that I have met executives from nearly all the major manufacturers in this country. I have met senior Japanese executives from Toyota, for example. That was with the Secretary of State, who made very clear the critical importance of frictionless trade between this country and the countries in the European Union. I agree with the comment made today that this country is not a big enough market on its own to sustain a healthy automotive industry.

The population is 60 million. The demand for new cars in a good year could be between 1 million and 2 million, along with all the components. This is big business. These are very complex parts. It is not as it was when the car industry started. We have to be part of a larger market. In whatever way it is worked out, it has to enable companies to do business as they are now. That includes regulatory matters, the frictionless—or near frictionless—movement of goods and the ability to recruit necessary labour. On a recent visit to BMW’s Mini plant in Oxford, I saw—I may be wrong by 1% or 2%—that 21% or 22% of labour there was from the European Union. Fortunately for our economy, there is not a large number of unemployed people in the Oxford area and it is clear that that labour will have to come in, to work in a good career, in a fantastic company and in a fantastic factory.

I mention all that because the engagement aspect has not been communicated enough to hon. Members, but is a very important part of what we do. I believe that the interests of the automotive industry have been reflected in the negotiations. The shadow Minister made an eloquent speech, but she said that one of the delays has been a disagreement among the Cabinet on how this should be approached. That, however, is part of democracy. There are different views within the two major political parties. That is a legitimate part of democracy. I wish everyone agreed with me. They do not always, but I believe we will prevail. I had better make some progress. I spoke a lot on engagement with other companies and I have completely ignored the notes I made earlier, but I did feel that I should react to that.

There has been speculation today in the press that the decline in the diesel market has been caused by uncertain messaging. I think that it was the hon. Member for Birmingham, Northfield (Richard Burden) who suggested that comments made by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs had been prejudicial to the diesel industry. It is important to note, however, what my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy said about this last week:

“Diesel cars have played an important part in reducing CO2 emissions from UK road transport. They can still play a valuable role in further reducing CO2 emissions during the transition to zero emission vehicles.”

We have stated that we will end the sale of new conventional petrol and diesel cars and vans by 2040. That is a general European-wide policy. But we will shortly publish the Government’s “Road to Zero” strategy, which will set out the gradual steps that we will take over the coming years to deliver our mission. The mission is for every car and van in the UK to be effectively zero emission by 2040. I think that will prove to be significantly beneficial to the UK car manufacturing industry.

[Richard Burden]

Consumer incentives will have to be part of the package that we hope will incentivise the shift towards zero emissions. The Government have scaled back both the plug-in car grant and the grant available for the home charging of electric vehicles. Does that not send out a confused signal, if we are trying to encourage people to make that shift?

[Richard Harrington]

One of the issues is not reducing the amount of grants, but where the grants should go, which I am happy to discuss separately with the hon. Gentleman, as I need to make progress due to lack of time. There are questions: for example, should hybrid cars receive the same grant as all electric cars? I would be delighted to meet him to talk this through, formally or informally.

I want to stress the importance that the automotive industry has to us with regard to the future. My hon. Friend the Member for Chichester (Gillian Keegan), while stressing frictionless trade, mentioned Rolls-Royce in her constituency and how it might appear as a small blob on a map compared to vast production, but it is critically important to the country and the local economy. I would be happy to accept her kind invitation to visit with her.

Investment generally in the UK auto industry is important to us. The industrial strategy and landmark automotive sector deal show how the Government can work with industry at the forefront of new technologies, to ensure that we remain the destination of choice for future investment decisions. There was good news, which hon. Members have mentioned, about the Luton plant with the Vivaro vans. Toyota announced that it will build the next generation Auris in Derbyshire. Those decisions are not to be sneered at, but are important. While I accept that decisions are made over a long period, I think that 10-year decisions for any significant investments are also important, but they can be pulled. Like any decisions, a company can decide to do that at the last minute for whatever reason it wants—for example, if it is short of money or if there is uncertainty in the market or points are raised about Brexit. Although they are long-term decisions, they are not decisions until they are finally made. BMW’s investment in the electric Mini and Nissan’s investment in Sunderland mean that since 2016, this country has won every single competitive model allocation decision by major car manufacturers. That does not mean we can take it for granted.

I would like to speak for an hour on the EU exit issue. I cannot, however, due to your quite rightly ruthless chairing, Mr Bone. The Government have reached an agreement on the terms of the implementation period, but we have to plan for all scenarios. I have a lot of confidence that we will leave with a deal and that a no-deal scenario in March 2019, which I think would be disastrous for the automotive industry—I am happy for that to be on record and will defend it to anybody—is significantly less likely. I hope that it is totally unlikely. I hope that it does not happen and I believe that it will not happen. There needs to be a competitive market as part of a European-wide industry. It has been a huge success. It was Mrs Thatcher who persuaded many of the Japanese firms to invest here, because of the market that they would be involved in. Whatever hon. Members’ different views about Mrs Thatcher are, I think that they will all agree that that has been a good thing for the country.

Our vision for the UK is clear. We are seeking a comprehensive solution, which includes most of the things that the industry wants, such as vehicle standards, one series of approvals and simple, frictionless movement for parts and labour, where it is required in the industry. We are pleased that the Government are producing a White Paper, which will set out in detail the UK’s position on a future relationship. I think that it will be significant and show the exact terms of the relationship we are seeking with the EU and our preferred option for the future customs relationship, providing detail on precisely these issues, such as tariffs, rules of origin and mutual recognition, which are important to the industry.

I am happy to take up this discussion afterwards. I am meeting the hon. Member for Ellesmere Port and Neston (Justin Madders) and others later today, and I am happy to meet any hon. Member to talk in more detail about this complex issue. In conclusion, hon. Members should know how strong the automotive sector is for us. We are a strong manufacturing nation. I believe that we will be a lot stronger. I thank everyone for their attention today.