The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, with the leave of the House, I will repeat a Statement made in the other place by my right honourable friend the Secretary of State for Wales. The Statement is as follows:
“With your permission, Mr Speaker, I would like to make a Statement about the future of Ford’s engine plant in Bridgend, south Wales. On Thursday, Ford announced the start of a consultation with its unions concerning the potential closure of the Ford Bridgend engine plant in south Wales. I am not going to understate what a bitter blow this is to the 1,700 skilled and dedicated workers at Ford in Bridgend and their families, to the many more people and businesses who supply the plant and to the town of Bridgend and the wider community.
Our focus will be on working with Ford and the unions to understand the challenges and opportunities and gain the best outcomes. I have spoken to the company, unions and colleagues across the House. Colleagues at Jobcentre Plus are standing by to provide advice and support to those who require it in the local area, if required.
I live close by and absolutely understand the importance of this plant to the local community. The site has been worth over £3 billion to the local economy over the last 10 years. The town of Bridgend has proudly been home for 40 years to a world-class engine manufacturing facility. Ford has relied on Bridgend and Dagenham to supply fully one-third of its total engines worldwide, a fact of great pride.
We have known for some time that the production of the Sigma engine was coming to its natural end and that the Jaguar Land Rover contract would not be renewed, but the news that the Dragon engine may no longer be produced in the UK is disappointing. It is very disappointing that it could be taken out of UK—in fact, out of Europe—to be manufactured in Mexico. That underlines that this is not a decision about Brexit. This decision was about the challenging conditions faced right across the global automotive sector.
Bridgend has been particularly impacted by the downturn in Ford’s share of the passenger vehicle market in Europe, with volumes for the new Dragon engine falling significantly below installed capacity. Ford is restructuring its business across Europe significantly to decrease structural costs and allow for investment in future electrification. To that end, it is optimising its European manufacturing footprint and reducing operations in France, Germany and Spain.
Bridgend is significantly underutilised, with projections for the number of engines that it will produce falling far below what would be commercially viable in a single plant. Bridgend also faces a significant cost disadvantage compared with other Ford facilities around the world building the same engine. I have spoken to my right honourable friend the Business Secretary, colleagues in the Welsh Government, the trade unions and representatives since Ford’s announcement, and my honourable friend the Minister for Business and Industry and I have spoken to local Members of Parliament. Together, we will continue to engage with all stakeholders and elected representatives. While I know that the honourable Member for Bridgend cannot be in the Chamber today, I spoke with her on Friday.
We in the UK Government are committed to working with the Welsh Government and the local community to ensure that south Wales’s justified reputation as a place of industrial excellence in manufacturing and technology is maintained and expanded. On Thursday the Welsh Government’s Minister for Economy and Infrastructure announced the establishment of a task force to work with partners over the difficult weeks and months ahead to help find a sustainable long-term solution for the plant and its workforce. UK government departments and I will play a full and active part in that. This builds on an existing group that has been working jointly since it was confirmed that production of the Jaguar Land Rover engine would end in 2020, and it will be important that that also builds on the Honda task force, working together to support the automotive industry.
We are already looking at opportunities to attract new investment to the area. I remain optimistic that south Wales is an attractive proposition and place for industry to operate from. In fact, over the last two years I have been to Japan, China and the USA to promote the opportunities that Wales presents for the advanced manufacturing sector and our modern industrial strategy. Later this year Aston Martin will begin production of the DBX engine, which has created 750 jobs, and last September it announced a further £50 million that will make south Wales the home of its electric vehicle range.
I and many other colleagues across this House have worked hard over the last three years to make the case for investment in Britain to investors in this country and around the world. Despite the devastating news for south Wales operations, Ford’s commitment to the UK will remain, as a major employer of some 10,000 people, with other significant operations in the country, including Ford’s technical centre in Dunton, Essex, which is home to Ford’s European market-leading commercial vehicle business; Ford’s engine facility in Dagenham, east London, where it will continue to produce diesel engines; Ford’s mobility innovation office in London, where it will develop future mobility solutions for Europe; and the Halewood transmission plant, a joint venture between Ford and Getrag producing transmissions for cars such as the Ford Fiesta.
It remains the case that Ford, as an American company with a century-long history of operating successfully in the United Kingdom, undoubtedly recognises our international reputation for being a place to do business, with skilled and motivated staff, with access to innovation and strong determination to make those strengths even greater during the years ahead. That is the Government’s ambition, as is well-evidenced by the steps that we have most recently taken to build on the successes of our automotive sector deal. Our Advanced Propulsion Centre has awarded grants worth £800 million to more than 150 organisations across the United Kingdom. Just last month my honourable friend the Minister for Business and Industry announced a further £28 million of support to further enhance our UK Battery Industrialisation Centre in order to give an investment of over £100 million in a world-leading facility, enabling industry and academia to put the United Kingdom at the forefront of bringing battery technologies from the lab into the next generation of vehicles to drive our streets. Working with industry, £80 million of investment through our Driving the Electric Revolution programme will see support for innovation in electric motor technologies. We are determined to ensure that the United Kingdom continues to be one of the most competitive locations in the world for automotive and other advanced manufacturing.
While the announcement of this consultation by Ford is a disappointing blow, the Government’s bold mission to put the United Kingdom at the forefront of the design and manufacturing of zero-emission vehicles presents significant new opportunities for the United Kingdom. This includes new industries and ventures that will be well suited to the skills and expertise of those dedicated workers at Ford and its suppliers. I remain committed to ensuring that Bridgend and other parts of Wales benefit from this work. In this way, we will continue to work with the Welsh Government and our very many partners across the industry as we seize the opportunities for Britain to provide great jobs and careers for hundreds of thousands of people across our country during the years ahead. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Fox (LD)
My Lords, I draw attention to the interests in my name in the register and thank the Minister for repeating the Statement. I commend the noble Lord, Lord Griffiths, notwithstanding his optical challenges, for his very eloquent statement. I associate myself with almost everything he said; I will not attempt to repeat it, but the loss of the Ford Bridgend plant is huge. It is not just the 1,700 workers; it is the whole community—the subcontractors and the infrastructure that supports that factory. I agree with the GMB’s assessment that this is a disaster, not just for that area but for the UK car industry.
Following on from the final point of the noble Lord, Lord Griffiths, could the Minister tell us what talks Her Majesty’s Government had with Ford in the lead-up to this announcement? What help were they able to offer Ford, which in the end proved not to be enough? How far did the Government go to prevent this happening? They had fair warning. In April, Ford warned that it would reconsider its UK investments if MPs could not agree a Brexit deal that offers a smooth departure from the EU. This really points up that Brexit is absolutely a factor in this Statement, notwithstanding the point that the Secretary of State has made. It is also another dagger in the side of the industrial strategy.
For the avoidance of doubt, can the Minister update your Lordships’ House on how the Government are getting on with negotiating the smooth exit strategy that Ford and the rest of the car industry need? How many meetings have been had in Brussels since the extension of the exit date? How many times has the Prime Minister met with anybody in Brussels to bring forward a new proposal to Parliament? Indeed, when might Parliament expect a new proposal to deliver the smooth exit that business says it needs as a minimum level? The Minister may plead that this is above his pay grade—modestly, I would suggest—but this, above all issues, is front and centre in all the decisions that his department, BEIS and all the other departments in this country and Wales are dominated by. It must be dominating his waking hours. I hope he has an answer to the question: how are you getting on with the negotiations?
I thought that the situation was bad last term, but that stasis is nothing compared to what we are seeing now. The PM, as we know, has stepped down and the Government have gone into a sabbatical of self-immolation—if you want to see what setting fire to yourself looks like, just look at what Michael Gove managed over the weekend—while Britain’s advanced manufacturing is crying out for stability and direction. In the words of the SMMT’s chief executive:
“This ongoing uncertainty is corrosive, both on the operations … and on their reputation”.
That is another reason why Brexit is causing this to happen. The reason Ford pulled out is that it is losing confidence in the UK trading environment.
Of course, it is not just automotive. A recent paper from the Royal Economic Society finds that the confusion following Brexit has caused an output loss—a cut in GDP—of 1.7% to 2.5% up to the end of 2018. Today’s announcement of a drop in GDP of 0.4% in one month is a shocking reminder, but we should not be surprised. We were warned. In fact, the ERG’s favourite economist, Patrick Minford, explained some time ago that a no-deal Brexit would see manufacturers go the same way as the coal industry. That prediction is now being priced into every industrial and commercial decision made today, and it is the workers of Bridgend who are falling foul of that today.
In the FT, the Business Secretary is quoted as saying in this context that there are “grounds for optimism”. I am sure the Minister will agree with his colleague, because Ministers have to agree with Secretaries of State, so could he please answer just this one question, if none of the others. On this rainy day, what are the grounds for optimism for the workers of Ford Bridgend?
Lord Bourne of Aberystwyth
My Lords, first, I wish the noble Lord, Lord Griffiths, a speedy recovery from his cataract operation. It is very good to see him here at all, and he did an excellent job putting his case.
I shall try to answer the points made by the noble Lords, Lord Griffiths and Lord Fox, in the order in which they were made, if I may. First, there is a consultation here. I agree that this is serious—it is a devastating body blow, and there is no doubt of that—but we must appreciate that a consultation will be going on. Secondly, we know that the manufacture of the Dragon engine will continue until at least February next year, and the Jaguar Land Rover production still at the plant will continue until September next year. I am not making light of the issues, but it is important to get them in the proper context.
Both noble Lords touched on the task force. I think it is fair to say that the task force system was a creation of the Welsh Government. I was privileged to act as chairman of one in relation to a previous job problem—the closure of the Murco oil refinery in west Wales—and I can say with confidence that such task forces are very effective at bringing agencies together to talk about ways to mitigate problems. The first meeting of this task force will be within a week, and both Ken Skates from the Welsh Government and the Secretary of State, Alun Cairns, will be at that meeting, as will representatives of the unions. I understand that the consultation and discussions going on so far between the Secretary of State, the unions and Ken Skates have been very constructive.
It is very important that situations such as this do not become a political football. That is not to say that political points will not be made, but what is important for the people in Bridgend is that we act responsibly to seek new jobs, to find out what we can do to ensure that the highly skilled workforce there—including some excellently paid jobs in that town and the surrounding area of Ogmore and the south-west Wales valleys—is properly served by the work we do. I think that is the intention of all those involved.
On the point about Brexit, it is very important that we do not misrepresent what this is. I am not saying that there is not a discussion to be had on Brexit, and I will come to that, but it is very clear from what was said by Ford and from the context of the Statement, with significant job losses in Germany—5,000 being talked about—Spain and France, that this is not simply about Brexit, or it would just have been about jobs being lost in Britain.
That said, I accept—and noble Lords would do well to reflect on this—that Ford, Honda, Nissan and the Society of Motor Manufacturers and Traders have all called for support for a deal. Indeed, they have all called for support for the deal that has been voted down: the Prime Minister’s deal. I say to noble Lords that, yes, it is important that we get a deal, but there is a deal that these manufacturers have been urging support for which does not attract support from most Members of parties opposite. I make that point advisedly.
I accept that this is also an issue about the supply chain. That will be discussed in the context of the task force. The supply chain is also a factor with Honda. What has been offered in support for Honda’s supply chain will also be offered here. It is worth noting that the automotive sector deal, which is a significant part of the business strategy, has expended £16 million on supply chain assistance.
Noble Lords also need to see that the context of this is the move from diesel and petrol to electrification. The support we are giving to electrification—low-emission vehicles and infrastructure—is significant here. Thoughts about how we can develop that would really help the Welsh workforce, and indeed the British workforce, going forward.
Lord Morris of Aberavon (Lab)
My Lords, 40 years ago, as the Welsh Secretary, encouraged by Jim Callaghan, I provided the incentives for Ford to come to Bridgend, including, unconventionally, selling it the freehold in order to clinch the deal. The balance sheet over the years has been good jobs and good, planned industrial relations. Very little notice to Governments has been given of this calamitous decision. Will the Minister confirm that the usual yardstick of a total 4:1 loss in jobs can be expected, as happens in other industries? Secondly, can he assure me that stricter labour regulation and redundancy legislation in other countries, such as applies in Valencia, if the plant is still flourishing—I visited it as a Back-Bench MP—and Mexico have not affected this decision? Despite current denials, Brexit has loomed large over recent decisions in the whole of the automotive industry.
Lord Bourne of Aberystwyth
My Lords, first, I acknowledge the massive role that the noble and learned Lord, Lord Morris, had in the establishment of the Bridgend plant, very close to his former constituency of Aberavon. I agree with him that the supply chain is important. I have no specific figures on that, but it is not just the supply chain; the broader economy suffers in a situation such as this. The unemployment rate in Bridgend is very close to the national average—I think it is marginally above—but this is clearly an important situation.
I have no specific knowledge of redundancy legislation in Spain and Mexico, but I will write to the noble and learned Lord, if I may. As for trade union relations with Ford, Ford’s treatment of workers in previous job situations has been fair. I do not want to talk it up too much, but it has been fair. I know that that will be very much on the mind of the task force. I am also confident that the Secretary of State will want to talk to the noble and learned Lord about his experience of Ford, and I hope that he is available, as I am sure that that would be helpful going forward.
Lord Howell of Guildford (Con)
My Lords, this is obviously a miserable affair. The Statement mentioned China. Is it not a fact that the entire worldwide motor industry is now in a state of turmoil with the rise of Asia? China has not yet even begun its impact on world car markets, but it will be massive when it comes. On top of that, there are the changes in technology, with the move to electric vehicles. The war on diesel clearly has not helped and nor, frankly, has Brexit. Otherwise, why would the motor industry have cut its output in the past month by 24%? That is a devastating impact.
One understands all that, but is not the time coming when we should have a strategic overview on all those problems? We have had Honda, JLR, the Nissan problem with Renault and the question of their future production here. Now, we have Ford. We are not just talking about motor manufacture but every conceivable component of a vast industry employing 822,000 people in all. Surely the time has come for a really strategic insight into how this kind of transport will develop here and how we fit into the world of rising China, America and Latin America, all of which will be in the motor manufacturing business and the transport business on a colossal scale. We have not seen anything yet.
Lord Bourne of Aberystwyth
My Lords, I am grateful to my noble friend for the benefit of his experience on this issue. I very much agree that we are dealing with a global situation; this is not simply about Europe or Brexit. I accept that there are Brexit issues relating to the economy, but the far more important issue here is the move away from diesel and petrol towards low-emission vehicles and the growth of markets in China and India in particular.
On strategic responses to this issue, we have the automotive sector deal and we committed £250,000 to the Faraday challenge on battery storage, which is important. A couple of weeks ago, I had the great privilege of going round Northern Industrial Battery Services Ltd in Welshpool, which is significantly attached to what BEIS is doing and provides a useful glimpse into the future. We need to move towards battery storage and low-emission vehicles, which is a large part of why the automotive sector has seen this period of turbulence. That turbulence has not been limited to this country, of course: as I indicated, this is going on pan-Europe. I take seriously what the noble Lord, Lord Howell, says, but I assure him that we are very much there.
I should add that we are investing in infrastructure in the low-emission and electric sectors. I am sure that, like me, noble Lords have noticed a greater prevalence of battery-charging in our cities now.
Lord Wigley (PC)
My Lords, I really must challenge the Minister on the total non sequitur in the Statement that this decision is not about Brexit, as engines will come from Mexico. Is he not aware that, in January, a Ford executive—Bob Shanks—said that a no-deal Brexit would be,
“catastrophic for the UK auto industry and Ford’s manufacturing operations in the country. We will take whatever action is necessary to preserve the competitiveness of our European business”?
Is the Minister not aware that Ford executives made it clear to Welsh Government Ministers that the danger of a no-deal Brexit was a contributory factor in their decision to close the Bridgend engine plant? What discussions have the Government had, or will they have, with the Welsh Government to create an aid package that will persuade Ford to suspend its decision until it is known whether we are to suffer a disastrous no-deal Brexit outcome?
Lord Bourne of Aberystwyth
My Lords, the noble Lord knows that I have immense respect for him but, on the move to Mexico, I rely not on the Statement but on what Ford has said. It made it quite clear that this decision would have been taken independently of Brexit. That is not to say that Brexit is not an important issue for the economy, but that debate is different from the one on this particular decision. We would do well to listen to Ford.
The noble Lord makes a significant and fair point about aid packages and assistance, which I am sure the task force will begin to look at next week in its first meeting. In the meantime, consultation is ongoing so there is time to look at this issue, although I accept that there is a degree of urgency. That will be one of the early things that Ken Skates, as the Welsh Government Minister, and the Secretary of State will want to look at with the unions and others when the task force meets.
Lord Steel of Aikwood (LD)
My Lords, I draw attention to my interests in the register as the president of the Jaguar Drivers’ Club in Britain. Ford is simply joining the queue after Jaguar Land Rover and Honda in closing plants. Although the Minister is absolutely right to emphasise that the transfer to electric technology is causing this issue—we do not deny that—the number of motor vehicles produced in this country has fallen by 45% in one year. That is horrific. Uncertainty over our future trading relationship with the rest of our big market in Europe is causing this issue. These companies are all internationally owned but no international investor will consider the major investment in new technologies that we need as long as this uncertainty exists. The Minister needs to take that message back to his colleagues.
Lord Bourne of Aberystwyth
My Lords, I can be led only by what the companies concerned are saying in relation to potential job losses, which is that this decision would have been taken regardless of Brexit. The noble Lord says that the economy in general is not benefiting from the Brexit uncertainty—indeed, that it is being harmed. He is absolutely right. I do not think that there is any doubt of that. As I said in answer to an earlier question, Ford, Nissan and Honda have all said that we need a deal; they have also said that people should support the deal that was put forward—a point I have already made. We must be realistic about this particular decision. The appropriate response to secure jobs should include investment, pushing the low-emissions sector in the automotive sector deal—as we are doing—and ensuring that we support battery storage and so on.
Lord Berkeley (Lab)
My Lords, the noble Lord, Lord Wigley, quoted a senior Ford executive saying that Brexit was entirely to blame, but the Minister seemed to contradict that completely. Either one of two different Ford executives is lying or somebody has misunderstood something, because those statements are complete opposites. On closing Bridgend, which is a terribly sad occasion, has Ford indicated whether it will move electric car production there instead, or will that go to the rest of Europe, which Brexit is not affecting?
Lord Bourne of Aberystwyth
My Lords, I am not sure that the noble Lord was here to hear the Statement.
Lord Shipley (LD)
My Lords, the Minister has made a number of comments about a no-deal Brexit. Is he aware of an Oxford University study published in April predicting that the UK car industry could shrink by almost half by the mid-2020s in a no-deal Brexit? If so, does he agree that the election of a Conservative leader and Prime Minister who promotes no deal is not in the interests of the British car industry?
Lord Bourne of Aberystwyth
My Lords, fascinated as I am by the ongoing leadership election, I do not have any role in it—not until it comes to the membership, at least—so I will not give any commentary on it. However, I agree with the noble Lord about the need for certainty in the economy; he is absolutely right about that. I also agree that a no-deal Brexit is not in the interests of the British economy. The vast majority of candidates accept that and are working towards a deal, which is desirable. If we are talking about the wider economy, however, we come back to the fundamental point on the delivery of Brexit: that there was a vote and that the vote cannot be ignored. To come back to the point about helping the highly qualified, highly skilled, well-paid workforce at Bridgend, we will do the best we can for them by seeking fresh investment and ensuring that the possibilities touched on by the noble Lord are there to service not just Europe but the rest of the world with electric vehicles.
Lord Roberts of Llandudno (LD)
My Lords, the Minister will be aware of the anxiety over the future of Airbus. Of course, Airbus is based in north, not south, Wales but it could lose 7,000 employees and 400 apprentices could lose the opportunity of an occupation. The supply chain could also suffer. This is because the Government insist on going ahead with Brexit without a fair deal or any deal at all. Why on earth do the Government not realise that their actions could decimate the workforce in Wales again, not only in Airbus but in the agricultural industry? I hope that the Government will look at Bridgend and at least say, “Yes, Brexit is partly responsible. Let us now halt this insanity of withdrawing from Europe”.
Lord Bourne of Aberystwyth
My Lords, I understand some Members’ desire to make this about Brexit but it is important that we focus on the job in hand, as I said. The noble Lord knows that I have immense respect for him, but we do not want to be in the position of talking down the excellent production of and workforce at Airbus. There really is no call for that. We should focus on helping the workforce at Bridgend.
Lord Stoneham of Droxford (LD)
My Lords, as someone who worked in the motor industry early in his career, I know that although the executives in the industry are cautious about what they say, they need Brexit like a hole in the head, whether it is with a deal or no deal. That is because there is a seven-year investment cycle in the industry. It is not about what is happening in the short term but about what is going to happen as each production line comes up for investment, as is now the case in Bridgend. The whole industry risks being destroyed by the uncertainty—not just on whether there is a deal in the next few months but over the next five years while we try to negotiate a deal going forward. That is the problem for the motor industry and surely that is why it is at risk.
Lord Bourne of Aberystwyth
My Lords, again it is important that we as politicians do not seek to interpret what executives in the car industry say. They are sufficiently strong to know their own minds and they are not backward about coming forward and telling Governments what they feel. If they say that this decision would have been made anyway and that it is not related to Brexit, we must take them at their word. It does not do any good at all to claim that this is about something that it is not. That is not to say, as I have now repeated many times, that uncertainty in the economy is a good thing; it is not and we all know that. That is why we need a Brexit deal and I hope that noble Lords will take that message back to their leaders so that we can come together and get a deal before the end of October.
Lord Wigley
My Lords, I hope that I can raise one more point. The Minister said that Brexit had played no part in this and that this position had been accepted by Welsh Government Ministers. Did he not hear Ken Skates AM yesterday morning on the radio making it perfectly clear that Ford had told him that a no-deal Brexit was a contributory factor in this decision?
Lord Bourne of Aberystwyth
My Lords, I have worked a great deal on the Welsh economy with Ken Skates. I did not have the privilege of hearing that interview but I did have the privilege of seeing what Ford had said in relation to the job losses. That is the point I was making.