Nissan: Sunderland

Lord Mendelsohn Excerpts

Monday 31st October 2016 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I thank the Minister for repeating the Statement made in the Commons.

The announcement on 27 October by Nissan Motor Company that it will produce the next Qashqai and will add production of the next X-Trail model at its Sunderland UK plant is to be welcomed. This increase in its investment in Sunderland will not just secure and sustain the jobs of more than 7,000 workers at the plant but be welcome news to workers holding the 28,000 British automotive supply chain jobs and the tens of thousands of jobs in the local economy that are dependent on the thriving plant there. It is, of course, a great tribute to the extraordinary workforce there, and we are very pleased to associate ourselves with the comments about their great achievements.

It is also entirely appropriate to pay tribute to Nissan’s commitment to the UK and its fantastic record since the plant opened in 1986. It is, I believe, not just the UK’s largest car plant but the largest plant ever in the UK. To date, Nissan has invested more than £3.7 billion in Sunderland. It stands as a globally competitive powerhouse of manufacturing and is proof that the UK can and should excel in manufacturing.

In his statement, the Nissan chairman and CEO made two important points, which are the reason for the Minister’s Statement and the Secretary of State’s foray into the media and on to the news programmes over the weekend. He said that:

“The support and assurances of the UK Government enabled us to decide”;

and, secondly, that he welcomed the Prime Minister’s,

“commitment to the automotive industry in Britain and to the development of an overall industrial strategy”.

I ask the Minister to provide the House with more detail around a few important issues, such as the nature of the assurances, the Government’s openness with dealing with underpinning the economy in dealing with the consequences of Brexit and their approach to assurances for other areas of the economy.

We heard over the weekend—there were perhaps more details in the interview with Marr than in the Statement—a number of announcements in relation to the commitments given to Nissan. The first is that this deal is on offer to the whole car industry. Will the Minister confirm that all aspects of the support package will be available to the companies operating assembly plants in the UK? Does it also apply to the more than 650 automotive companies and even the 2,000-plus automotive suppliers in the UK? Have the UK Government made an estimate of the range of potential financial implications if this offer is accepted by Nissan and all the assembly plants and automotive companies?

On “The Andrew Marr Show”, the Secretary of State said that there were four things in the letter, and those were repeated in the Statement. One was that the Government will provide funding for training. The Statement suggests that this will be around £66 million a year. It would be very useful if the Minister could tell us how much Nissan currently receives from the money that has been apportioned over the past six years and whether there were any indications that more was requested or that more would be supplied.

Secondly, the Government have said that they will bring the supply chain back to the UK . The Society of Motor Manufacturers and Traders estimates that 80% of components in a car can be made in the UK. Currently, the average UK content in British-built cars is 41%. The government commitment is therefore to make up this 39%—effectively doubling it—by a new, energetic campaign. This could be one of the most significant industrial undertakings of current times. However, it concerns me that the Statement indicates that this is no more than is done currently in a programme which has made a very small shift but which is running out of steam and where the year-on-year changes are reducing. I would be grateful if the Minister will provide us with any details on anything that would indicate whether this is a new, sustained effort or more of the same programme that is running out of steam.

Thirdly, the Government have given an undertaking to be at the leading edge of research and development for electric cars. Can the Minister confirm the Government’s full commitment in relation to that? Did it relate to grants, tax incentives, employment assistance or R&D spend? Was anything mentioned? The principal argument seems to be that the merging of the departments was enough. Did that really satisfy the Nissan executive or were more details provided? Were any of the details that were provided, whether by letter or verbally, the basis for any conclusions to be drawn by Nissan?

Fourthly, the Government say they will try to achieve tariff-free trade in the Brexit negotiations. Did the Minister—verbally, in a letter or in any other way, such as through officials or in any other form of communication—explain or give any steer on what would happen if the Government failed to achieve an agreement for tariff-free trade? Were any details provided? It is hard to believe that a company such as Nissan was convinced by good intentions alone or that what the Secretary of State has already said meets the test of “support and assurances” that the Nissan chairman and CEO could report to the Nissan executive. There is nothing wrong, and everything good, with providing reassurances and support, but in current circumstances, the Government need to be more open. Ensuring the UK’s economic well-being after Article 50 is lodged may well be the responsibility of the Government, but it will not be achieved only by the Government. There are many others ready and willing to help.

The Government should publish not just the letter between the Secretary of State and Nissan but also any supporting information and data they collect that are relevant to the development of the assurances and their delivery. Can the Minister undertake to do that? Can the Minister also confirm that the Government are united on their approach to negotiations with Europe? Has the Secretary of State cleared his commitment to tariff-free single market access with the Secretary of State for Exiting the European Union and with the Secretary of State for International Trade?

The chairman and CEO of Nissan was explicit that the commitment to an industrial strategy was an important consideration. Could the Minister provide the details of what was provided, if anything, in addition to the statements that the Government have already made public? Does this mean that the Government are willing to provide such assurances to other parts of the economy? Car manufacturers make a valuable contribution to our economy in terms of jobs, productivity and exports, but so do many other sectors, including strategically important ones such as steel, aerospace and pharmaceuticals. Then of course there is the service sector, which accounts for most of our economy. What are the Government going to do support the rest of our economy through Brexit? Could the Minister outline any elements of the strategic architecture or even some of the measurements which will be used to devise a proper plan rather than a factory-by-factory approach?

The UK is currently a beneficiary of EU R&D funding. Will the Government guarantee to match this funding after Britain leaves the EU—including the funding that UK institutions get to lead and manage programmes across the EU, which act to cover the core costs of important UK research institutions? Will the Minister please confirm the current Government’s thinking on what and how affordable it would be to provide some sort of “support and assurances” to the banking sector if it is unable to secure passporting? The Government continue to block action against steel dumping at the EU level. Will the Secretary of State commit to giving equal treatment to other vital sectors by taking action to support our steel industry? Can the Minister give any idea whether the Government will take a different view after Brexit?

We are where we are, and we have to act to ensure the UK thrives. The Government need to provide more detail, and not less, if we are looking to launch Article 50 in five months. Surely the Minister needs to understand the reasonable expectations of having a better timetable and explanation of the government plan. Being more open about the terms agreed with Nissan would be a useful start.

[Lord Foster of Bath]

My Lords, I too thank the Minister for repeating the Statement. On these Benches, we are of course pleased that 35,000—some people argue 42,000—direct and indirect jobs have been saved because of the Nissan decision. We too join the tributes that have been made to the workforce and to Nissan for its commitment to the United Kingdom. But we remain unclear about cost, unclear about whether or not the deal extends beyond the Nissan Motor Company, unclear about the implications for sectors other than automotive and, frankly, completely in the dark about where the Government are seeking to take us. Like the noble Lord, Lord Mendelsohn, we wonder whether we have heard all there is to be told about the Nissan deal.

The Business Secretary says his negotiating demeanour—to use his word—will be to try to ensure continued access to the markets in Europe without tariffs and without bureaucratic impediments. What is the fallback position if he fails? WTO rules do not allow compensation to be paid to Nissan for imposed tariffs, so what will happen then? Alternatively, are the Government seeking partial membership—for some sectors and not others—of the single market and customs union? After all, the Prime Minister has said that membership of the customs union is not a binary affair. Does the Minister agree with the Prime Minister? Is she aware that experts simply cannot see a system where there is, for example, free movement for cars but not for bicycles? Does the Prime Minister know something that the rest of us do not?

If the Business Secretary succeeds in a tariff and bureaucracy-free solution for cars, who will then have responsibility for the manufacturing regulations? Will the UK have a say on them? That will be so important, not least for the specialist car sector and for our work, as the Minister said, on electric and driverless cars. What guarantee can the Government give Nissan in the long term if we do not have a voice in any regulatory framework? What of those other sectors, including aerospace, pharmaceuticals, the service sector and many others including the millions of small businesses? The Business Secretary has made clear that the Nissan deal is not a general deal. So is it the case simply that those who shout loudest get the best deal from the Government? If the Government cannot have a sector-specific customs union, will they stay in the customs union entirely? If so, why do we have a Secretary of State for International Trade trotting around the world proposing deals which would of course be illegal?

The Nissan saga shows all too clearly that the Government do not have a clear plan and that their idea of not having a running commentary on Brexit is, frankly, laughable. When Cabinet discussions are leaked, and when some companies and not others are given specific assurances, it causes confusion and rumour that impact on the economy and the confidence of millions of business owners, savers and investors across the country. Does the Minister agree that it would be better if the Government came to Parliament with a clear statement of their intentions for negotiations and then let Parliament have a vote on that negotiating strategy? We would like to hear the answer.