British Steel

Nusrat Ghani Excerpts

Wednesday 8th November 2023 Commons Chamber

[Holly Mumby-Croft (Scunthorpe) (Con)]

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the announcement made by British Steel on 6 November, and provide an update on the negotiations between British Steel and the Government, and on the Government’s position on virgin steelmaking in the UK.

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

Steel is vital to the UK economy. I fully recognise the importance of British Steel to local communities, particularly in my hon. Friend’s Scunthorpe constituency, where the company is a major contributor to local economic growth, and where she campaigns incredibly hard for steelworkers.

Global conditions have been tough for steel companies around the world. That is why we have changed the competitive landscape for British Steel and other energy-intensive industries by announcing the British industry supercharger—a decisive package of measures to reduce the long-term electricity price gap that exists between UK energy-intensive industries and competitor countries. That support will mean that strategically significant UK industries, such as steel, are safeguarded against the high industrial electricity prices that they have faced in too many recent years. We have also provided over £730 million in energy costs relief to the steel sector since 2013, in addition to the energy bill relief scheme. Steel producers will continue to receive support until 31 March 2024 through the energy bills discount scheme.

As my hon. Friend is aware, the Government made an extremely generous offer of support to British Steel earlier this year to help it to invest in a decarbonised and sustainable future. We have continued to work intensively with British Steel since then and will continue to do so. However, she will also understand that the detail of those conversations remains highly commercially confidential and that any public discussion risks undermining talks.

I know that this must be a deeply concerning time for British Steel employees and others in Scunthorpe following the company’s announcement on Monday of its plans for future operations. I can very much assure my hon. Friend that we will help affected workers and their families, and that we are committed to finding solutions to enable the ongoing sustainable and decarbonised production of steel. Just last month, for example, we announced a £1.25 billion joint-investment package with Tata Steel to secure a decarbonised future for steelmaking in Wales. That has the potential to safeguard several thousand jobs across the UK. In 2020, the Government provided an emergency loan to Celsa Steel to help it continue trading during the covid pandemic, saving over 1,500 jobs, with a further 300 jobs created since the loan was made.

[Holly Mumby-Croft]

I stand absolutely unapologetically with steelmakers and my community today, and I do not support these moves. In this Chamber on 18 September, I asked the Minister for Industry whether she agreed that we need to retain a virgin steelmaking capability in the UK for strategic reasons alone. She said

“obviously, we need a place for virgin steel”—[Official Report, 18 September 2023; Vol. 737, c. 1125.]—

and that that place was Scunthorpe. That was reiterated the very same day by the Secretary of State, and so pleased was I with the comments that she made that I took contemporaneous notes of that conversation.

British Steel is a private company and can make business decisions as it sees fit, but I am clear that if it is seeking hundreds of millions of pounds of public money, the Government must leverage that money to protect steelworkers’ jobs and maintain our sovereign capability to make steel in the UK. Electric arc furnaces melt scrap; to make virgin steel from scratch, we need blast furnaces. Can the Minister tell the House how the UK will make virgin steel if all our blast furnaces are decommissioned? Can she tell us how many countries in the G20 are unable to make their own virgin steel? Would the Government be comfortable with us being entirely dependent on foreign imports for the virgin steel we will continue to need in this country?

Will any financial support offered to British Steel seek guarantees on steel jobs and lock in, as a minimum, an interim period of blast furnace production to allow us to explore green options to run them? Did the Government know that this announcement from British Steel was imminent? When will I get a response to my letter of 29 September to the Secretary of State? Why did the Department not contact me until 5 pm on Monday, when I was sent simply a short text message? What support is the Minister offering our excellent North Lincolnshire Council, which is proactively working with British Steel to bring additional green jobs on to the site? This Government have a good record on steel—they have paid workers’ wages. Can the Minister confirm that steel remains high on the Government’s agenda?

I have 3,500 of the world’s finest steelmakers in my constituency. It is my privilege to come out and bat for them today. Thank you, Mr Speaker, for allowing this urgent question.

[Ms Ghani]

My hon. Friend makes lots of very credible points—there is very little for me to disagree with. She does indeed make representations at the highest levels of Government, and her priority has always been steelworkers; she has never played politics with that role. I put on record my apologies if I have not done due diligence and provided the public service that she should have received by being contacted much sooner on that particular day. There is nothing she could say that I would not be telling myself off for even more, and I hope I will not fall short in communications going forward.

My hon. Friend is absolutely right: I did indeed say at the Dispatch Box that my personal opinion is that there is a strong place for virgin steel production in this country, and that, of course, is in her constituency. We are in the middle of live negotiations, and any decision taken by British Steel is a commercial decision. My hon. Friend is also right that we are able to carry out due diligence on any support we provide; it is taxpayers’ money, and our primary focus is to safeguard the sector and jobs, including in her constituency.

My hon. Friend is right to note that we have prioritised the UK steel sector, and we will continue to do so. We need to provide it with support as it transitions, because that is also a choice being made by manufacturers, customers and consumers who are looking for greener steel going forward. Any decision we take and any support we provide will be to ensure that the sector is sustainable and competitive. We want the sector not just to survive, but to thrive.

My hon. Friend spoke about the support we have provided to the sector to date. We have provided hundreds of millions of pounds of support to British Steel to deal with its emissions, and over £730 million in energy cost relief to the steel sector since 2013. We have put the supercharger in place, as well as the steel procurement policy note, which does its very best to ensure that we procure more steel here in the UK. We have provided support to Tata to ensure that that part of the country can continue to make steel and to protect those jobs, and we have provided support to Celsa. My hon. Friend talked about the support we are providing to North Lincolnshire generally—there is a huge amount of support there. Since 2018, the Government have committed over £200 million in investment in the north and north-east Lincolnshire area.

I cannot say much more at this time because we are in the middle of live negotiations that are commercially sensitive. When British Steel put out its press release, that was the first time I saw it, but we must recognise that it was a proposal; many things have to fall into place for such proposals to become accurate plans—not only will there be issues around planning, but our negotiations have to conclude as well. I do not doubt that I will continue to lean on my hon. Friend, and that she will continue to champion steelworkers in her constituency and across the country.

[Mr Speaker]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank the hon. Member for Scunthorpe (Holly Mumby-Croft) for securing this urgent question, at what will be a very difficult time for her constituents.

The Labour party supports the transition to green steel. We recognise, as the Government have now conceded, that a blend of public and private funding is necessary to do that. We believe electric arc furnaces are part of the solution, but we do not believe they can be the only solution. Specifically, we believe that the retention of primary or virgin steelmaking in the United Kingdom is a matter of economic necessity and of national security. While we all welcome the return of steelmaking to Redcar, which should never have been taken away to begin with, this will clearly mean very significant job losses at Scunthorpe. I therefore have major concerns about this announcement, coming, as it does, just after the Government have confirmed a deal to also close the blast furnaces at Port Talbot.

First, the Minister said in her answer to her hon. Friend that talks are ongoing. I have to say that that is not my understanding of the current status of this deal. Could she confirm that, please? Secondly, is it true that carbon capture technology could not be pursued at Scunthorpe because of delays from the Government to the necessary infrastructure over the last 13 years and uncertainty about a future business model? In addition, is it correct to say that a DRI—direct reduced iron—solution could not go forward because of uncertainty over the Government plans for green hydrogen, which would obviously be essential for a DRI business model? Thirdly, do the Government recognise the figure of 2,000 job losses, and will the Minister confirm that this is the net figure covering Scunthorpe and Redcar—in other words, that once recruitment at Redcar is taken into account, job losses in Scunthorpe will likely be in excess of 2,000? Finally, will she confirm how much public money this announcement involves?

Most of all, I reiterate to the Minister that decarbonisation cannot mean deindustrialisation; we cannot simply outsource our emissions to other countries, call that progress and expect public support for the transition. A real plan for green steel must be open to all technologies, it must be industry-wide, and it should be a story of new jobs, new opportunities and British economic strength. Sadly, this announcement seems very far from that.

[Ms Ghani]

Negotiations are indeed ongoing, which is why I am limited in what information I can put out in the public domain; information is of course incredibly sensitive. British Steel will make commercial decisions, but if it is hoping to secure Government support, we need to make sure that we are getting value for money for taxpayers.

The hon. Member asked why decisions have been taken on the electric arc furnace compared with other technologies. It is because the other technologies just cannot come up to speed fast enough. In particular, the hydrogen-based direct reduced iron equipment just cannot enable furnaces to transition at the speed at which they need to. He is very much aware of that, and this is also a challenge in Europe, not just in the UK.

Fundamentally, there are a number of challenges for the global steel sector. First, there are energy costs, which we have done everything we can to provide support for, with the hundreds of millions of pounds to cover energy costs and now the supercharger. Secondly, we have to ensure that we get more UK steel into the UK economy. That is why the public procurement note was incredibly important for us to do, and we will be able to secure millions of pounds for more UK steel projects. Thirdly, there is a major challenge in that advanced manufacturers, customers and consumers are looking for greener steel, and a lot of companies are trying to reflect on how they can provide a green steel option. Having said that, it is a particular kind of steel; as I said to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), for me that means a mix of virgin steel in the market as well. Of course, these are commercial decisions, but we need to make sure there is a mix to deliver for the UK market in particular.

The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) talked about the environmental issues and about hydrogen. We export a lot of scrap steel, and that also has a carbon footprint, so for us to have the capacity to turn that steel into products we can use will be incredibly useful. The positive news is that we are the eighth largest manufacturing country in the world. We are going to need more steel, not less, but there will also be demand for more green steel, not less, and we are trying to ensure that we provide support to the steel sector so that it can meet those market needs.

[Sir Edward Leigh (Gainsborough) (Con)]

Many of my constituents work at Scunthorpe, and we are all obviously deeply concerned about them, but the whole House must be concerned about the Minister’s statements in terms of our national security. There is no other major developed country in the world that is giving up its traditional blast furnaces—the only way we can make virgin steel. Frankly, the Minister did not bother to answer a single one of the brilliant questions from my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). Will she now make it clear to the House that this Government are committed, as a major economy, to go on making virgin steel? Do it now.

[Ms Ghani]

As I have said repeatedly at the Dispatch Box, I fundamentally believe we need to have virgin steel capacity in the UK, but these are commercial decisions, and negotiations are continuing. These are incredibly commercial decisions, and we are doing our very best to support electric and virgin steel capacity in the UK. We are very much aware of the challenges we have in importing steel and with the global markets when it comes to the price of steel, and that is why we need to make sure we have a mix. These are commercial decisions, which is why negotiations are ongoing. Fundamentally, the announcement by British Steel was a proposal—nothing is done yet. We are still in the middle of negotiations.

[Mr Speaker]

I call the Scottish National party spokesperson.

[Richard Thomson (Gordon) (SNP)]

May I begin by expressing my concerns on behalf of the 2,000 workers who are likely to be affected by this announcement? Also, I re-emphasise, as other contributors have, the importance of virgin steelmaking, not just in terms of security, but in meeting demand in the construction industry, where inflation is already racing ahead and our ability to build things will not be helped by being further away from the supply chain and reducing domestic capacity in steelmaking.

The Energy and Climate Intelligence Unit think-tank has said:

“Ageing blast furnaces need to be replaced and upgraded to produce greener steel…electric arc furnaces have a role in recycling steel”,

but

“failing to invest in modern hydrogen furnaces belies the government’s promises to invest for the longer term.”

Just as in the oil and gas sector, what plans do the UK Government have for a just transition for the steelmaking workforce? What support will the UK Government be giving to the development of hydrogen furnaces in the UK? What challenges will they put constructively to British Steel over these plans? Given the Government’s high-profile retreats on other climate measures, such as the date for banning the sale of internal combustion engine cars, how much faith can the industry have in any guarantees that the Government do make?

[Ms Ghani]

Negotiations are ongoing and nothing is concluded. The statement made by British Steel was a proposal, not a conclusion. The steel that comes out of electric arc furnaces can be used for a variety of things, including construction and military-grade steel—it is incredibly nimble—but I fully appreciate that different types of steel are produced out of different furnaces. The hon. Gentleman spoke about hydrogen, and the Government have a substantial hydrogen strategy that we launched in May 2022. The net zero hydrogen fund is worth up to £240 million of capital co-investment out to 2024-25. That will support upscaled hydrogen production projects, allowing companies, including steel producers, the potential to secure supplies of lower-cost hydrogen. Ultimately, decarbonisation pathways for specific sites are commercial decisions for individual companies based on their own operational circumstances. In the case of Port Talbot, it was about timing for using a technology that can be commercialised at scale. At the moment, for that part of the country, it is electric. Hydrogen may no doubt be the next stage of technology that is used.

[Greg Clark (Tunbridge Wells) (Con)]

May I pay tribute to my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for her passionate support for steelmaking in her constituency? Just yesterday at the Dispatch Box, the Prime Minister said that even when we get to net zero, we will still need to have oil and gas supplies. Does the same logic not apply to primary steel? We will still need that at net zero. Does that logic not extend to making sure we have the capability to make primary steel in this country to supply our needs in the future?

[Ms Ghani]

I agree on both points: first, on the incredible work that my hon. Friend the Member for Scunthorpe does for steelworkers in her constituency; and secondly, that we cannot achieve net zero without a mix of steel being manufactured in the UK. We have a booming renewables sector, whether that is solar panels, blades for offshore wind farms, or electric vehicles. Much of that steel can be produced by electric arc furnaces, but my right hon. Friend the Member for Tunbridge Wells (Greg Clark) is absolutely right that there is a space for virgin steel, too.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I am grateful to the hon. Member for Scunthorpe (Holly Mumby-Croft) for securing this urgent question. The Minister is in peril of presiding over the end of primary steelmaking in this country and the curtain falling on 300 years of Britain’s industrial history. The announcement comes at a time when an analysis shows that the Department’s budget is set for a 16% real-terms cut in the years ahead. Is it the policy of His Majesty’s Government that blast furnaces will stay in operation in our country and that we will not be dependent on imports of primary steel? When can we expect a conclusion to the negotiations and some safeguarding of the vital industry either at Tata or at British Steel?

[Ms Ghani]

I congratulate the new Chair of the Business and Trade Committee, of which I was previously a member. As I have made clear, these are commercial negotiations and they are ongoing. When the decision was taken on Port Talbot, discussions had taken place for several years—even decades. This will not take that long, but my point is that many Ministers have stood at the Dispatch Box talking about steel and doing what can be done to protect and promote the steel sector in the UK. The negotiations are ongoing.

British Steel’s statement on Monday contained proposals and a plan—nothing is concluded yet. My focus, as our focus has always been, is on protecting the steel sector in the UK, protecting steel jobs in the UK and doing everything we can to procure more British steel in UK manufacturing. Of course, that continues. These are commercial decisions about how companies wish to continue their business going forward. I have made it clear that fundamentally there needs to be a mix of steel produced in the UK in the steel market, but the reality is this. First, steel produced in electric arc furnaces is far more nimble because of the technology, and it can be used for many more materials in advanced manufacturing than previously—that is a fact. Secondly, manufacturers, customers and consumers fundamentally want a cleaner, greener steel package. It is not just me saying that at the Dispatch Box; it is also the UK steel industry representatives who have put together a net zero strategy and are talking about having cleaner, greener steel going forward. We have a lot of scrap steel in the UK that can be recycled, and we have far more capacity to recycle that than we have for that steel to be used in UK manufacturing, but, fundamentally, we need to have a mix. I believe that that mix will continue as long as it can and should, but these are commercial decisions. We continue to negotiate with British Steel.

[Mr David Davis (Haltemprice and Howden) (Con)]

I have a simple question to put to the Minister; I hope that I will get a yes or no answer. Much of the arc furnace capacity is being moved away from Scunthorpe or not put in Scunthorpe because of a lack of grid capacity. That electrical grid capacity is due to be increased. If she were to accelerate the increase to 2025, we may save many more jobs in Scunthorpe. Will she seek to do that?

[Ms Ghani]

Unfortunately, there is never a simple answer to these questions. Access to the grid is a challenge for many industries, let alone for the steel sector. We have been doing everything we can to increase access to the grid. British Steel’s proposal—negotiations will continue—says that it has chosen two sites over one, with its key site at Scunthorpe and a second site at Teesside to be closer to its manufacturing work. That decision has been made for many other commercial reasons beyond access to the grid.

[Jon Trickett (Hemsworth) (Lab)]

Yorkshire and the Humber is one of the great centres of steelmaking—in our area, there were more than 8,000 jobs in steelmaking, the last time that was counted—but how many jobs will be left when the Minister has finished with her cuts? Has she noticed that whenever the Conservative party is in government, it deindustrialises further? Unite the union—I declare an interest as a member—is saying that if the Government would commit to procurement of steel for all our relevant contracts, 8,000 further jobs could be created. What exactly does she make of that? Has she met representatives of the union to discuss that matter?

[Ms Ghani]

I meet representatives of the unions regularly, and I co-chair a steel council. The steel procurement policy note on increasing procurement in the UK was a personal ambition of mine. Previously, we did not calculate enough of the data on what was being procured and how we could continue to secure more contracts. Procurement has increased, with the value of contracts up by £97 million on the previous year. I want to go further; that is only the starting point. Earlier today, I was with the Minister for Defence Procurement, the hon. Member for South Suffolk (James Cartlidge), and I will continue to work to ensure that there is more UK steel in all our construction, whether rail, road, automotive, aviation or anything else. The reality is that last year it increased by £97 million-worth of work.

[Martin Vickers (Cleethorpes) (Con)]

I fully endorse all the comments of my neighbour, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). Many hundreds of my constituents work at British Steel, and I have a British Streel terminal on Immingham docks in my constituency. What assessment have the Department and the Treasury made of the impact on the local economy if the changes go ahead? The Minister talked about support for workers who may be made redundant. I have witnessed the decline of the fishing industry in the Grimsby-Cleethorpes area, which has ripped the core out of the community, who need generations of support. What plans will the Government put in place to ensure that that happens?

[Ms Ghani]

First of all, negotiations are ongoing, but I fully appreciate that the statements from British Steel will be incredibly unsettling for my hon. Friend’s constituents. Let me explain the way that we worked on Port Talbot. We were keen to ensure that any support we provided continued to guarantee jobs, in consultation with local stakeholders and the unions. We set aside a fund of around £100 million to ensure that people were reskilled and redeployed. That work will continue if circumstances require it. We are anxious about jobs. These are highly skilled workers, recognised internationally, and these are well-paid jobs. That is why negotiations are sensitive and continue at pace. If we provide support, we want to get the best deal for UK steelworkers.

[Mark Tami (Alyn and Deeside) (Lab)]

The Minister will know that Shotton steelworks rely on steel from Port Talbot. What assurances can she give on the supply of steel between the closure of the blast furnaces and the installation of new electric arc furnaces?

[Ms Ghani]

While negotiations were ongoing and support was being provided, we had a conversation to ensure that the supply chain continues to be resilient. A taskforce has been set up to ensure that supply chains continue to get support, working with the unions, Tata and the local community. We have been assured that supply chains will continue to secure the contracts that have been in place.

[Simon Fell (Barrow and Furness) (Con)]

Supporting British Steel need not be just about money; it can be about ensuring that the Government are joining the dots for industry and explaining the pipeline of work available to it. With the Dreadnought and SSN-AUKUS programmes, we have generations of need for virgin steel. The same goes for the new nuclear programme. Will my hon. Friend confirm that the Government are doing that work and signalling to British Steel that the demand is there? Also, where we have control over procurement, are we ensuring that we lean towards the British market?

[Ms Ghani]

Absolutely. That is why procurement went up by £97 million recently. I was looking at what the industry group UK Steel reflected on when it came to steel produced by electric arc furnaces—the reality is that a substantial amount of speciality military-grade steel can be manufactured using electric arc furnaces. We are working very closely with the steel sector to do everything we can to ensure that it secures UK contracts.

[Jessica Morden (Newport East) (Lab)]

The Minister seems to be ignoring events in south Wales last week. I met steelworkers from Llanwern last week, who understandably are deeply worried following speculation about the closure of the blast furnaces at Port Talbot. What conditions were attached to the £500 million grant agreed with Tata? Was this the agreed plan? What are the Government actually doing to safeguard jobs?

[Ms Ghani]

We put in place a programme of work and a substantial sum of money—around £100 million—to ensure that the transition took place in a just fashion. Decisions will be taken by the transition board—as has been mentioned—about providing upskilling and reskilling and ensuring that there are assurances in the supply chain. The board is made up of the Secretary of State for Wales, the Minister for the Economy of Wales, the Secretary of State for Levelling Up, Housing and Communities, and the hon. Member for Aberavon (Stephen Kinnock), who chairs the all-party parliamentary group for steel and metal related industries. Those decisions will be taken locally and in consultation.

[John Stevenson (Carlisle) (Con)]

The Government have supported a coalmine in west Cumbria that will produce coking coal, which is used in steel production. Does the Minister agree that it would be sensible for strategic reasons—which should override commercial reasons—to retain virgin steel production capacity in this country, and that from a practical perspective the coal mined in Cumbria could be used in the production of steel in Scunthorpe? Will she take into consideration the wider issues in the policy decisions that she may make?

[Ms Ghani]

Absolutely. I think all of this has made it clear to British Steel that there is a supply chain here in the UK, not only in the ability to make virgin steel but in the market afterwards, but even with electric arc furnaces we still need some ability to access coal. These are decisions taken across many Whitehall Departments. My job, fundamentally, is to ensure that steelmaking in the UK continues at the pace that it has done and grows even further, and that we support the manufacturing sector, which requires British steel.

[Richard Foord (Tiverton and Honiton) (LD)]

The official march of the Royal Navy includes the words,

“Heart of oak are our ships”.

In the 21st century, virgin steel is the critical industry for the Royal Navy, in the way that timber was in the 18th century. I am the first to want reduced carbon emissions, but this move sounds more like offshoring than about reducing carbon emissions. What consideration have the Government given to the supply of steel to the defence industry?

[Ms Ghani]

First of all, negotiations continue; no decision has been taken. Having said that, the UK steel industry group, which oversees the steel sector in the UK, has made it very clear that military-grade speciality steel can be made in electric arc furnaces. I have been working incredibly hard to make sure that more UK steel is procured in more UK contracts, including defence contracts.

[Peter Gibson (Darlington) (Con)]

I commend my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft) for her dogged campaign in respect of steel; she is a real champion for her constituents. This week’s news is bittersweet, as Teesside welcomes the return of steelmaking. Will the Minister outline what the whole Government are doing to support my hon. Friend’s constituents at this time, and what use of carbon capture and storage is being explored to ensure that we continue to produce our own virgin steel?

[Ms Ghani]

I of course agree with my hon. Friend’s first point: there is nobody more vocal about steel than my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft). We have had a number of programmes in place to support the steel sector, because it has a number of challenges, as it has in many continental European countries. Fundamentally, Putin’s invasion of Ukraine caused energy costs to skyrocket, and we had in place an energy costs relief scheme for the steel sector, which has been worth up to £730 million since 2013. We now have the supercharger in place; I have spoken about the steel procurement policy note to ensure that there is more UK steel procured in UK markets; and, obviously, we provided support for Tata recently and Celsa previously. We are doing everything that we can—with my hon. Friend the Member for Scunthorpe, of course—to get the best deal possible for Scunthorpe, but these are commercial decisions and they are ongoing.

[Alex Cunningham (Stockton North) (Lab)]

It is clear from today’s comments that the Government are set to abandon more than 2,000 steelworkers in Scunthorpe, just as they abandoned over 3,000 on Teesside eight years ago. That said, I too welcome the news of a new arc furnace for Redcar, but let me give the Minister yet another chance to answer the question from the hon. Member for Scunthorpe (Holly Mumby-Croft) and others: are the Government really going to settle for recycled steel and foreign imports, and consign virgin steelmaking in the UK to history?

[Ms Ghani]

Recycled steel can be recycled infinite times, so it does a huge amount for the circular economy. Because of the way technology has moved on, steel can now be used in many more sectors. We have a huge surplus of scrap steel, which we end up exporting to countries such as Turkey, Bangladesh and Pakistan. We could be reusing that in the UK economy. But as I said, these are commercial decisions and nothing has been concluded. The statement put out by British Steel was a plan or a proposal.

[Sir Chris Bryant (Rhondda) (Lab)]

Does the Minister not accept that it is a matter of national security that we should retain the ability to create primary steel in this country?

[Ms Ghani]

I have put it on record previously that we need to ensure that we have blast furnace capacity in the UK, and that, fundamentally, should be at the Scunthorpe site. There are matters involving national security—for instance, the anxieties about steel dumping from China and the issues emanating from Russia—and as we continue to manufacture at pace, we need to be able to ensure that we have access to steel manufactured here in the UK.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

Some of the mightiest structures made of steel were built in my constituency, in the Nigg yard—I worked there myself once upon a time. The hon. Member for Scunthorpe (Holly Mumby-Croft) talked about the strategic importance of the industry. May I point out to the Government that it is as important to my constituency in the far north of Scotland as it is to any other parts of our great United Kingdom?

[Ms Ghani]

I cannot disagree with that. I have been reading up on Scunthorpe steel: it has been used to create structures ranging from the Sydney Harbour Bridge to the London Eye, which demonstrates the breadth and the depth of its history.

[Dame Nia Griffith (Llanelli) (Lab)]

The feedstock for the Trostre tinplate works in Llanelli is steel of a quality that can currently only be produced in the blast furnace process. Following the devastating news that Port Talbot blast furnaces will be closed by the end of March, leaving Trostre dependent on imported steel—quite possibly produced to lower environmental standards abroad, and certainly not saving on emissions—may I ask the Minister to stop just quoting commercial decisions, and tell us what strategy the Government have to develop the green technologies of the future here in the UK and to keep virgin steel production here as well?

[Ms Ghani]

I had a feeling that I had mentioned that a few times. We have a fund of about £1.5 million, partly aimed to ensure that we are adopting, testing and commercialising new technologies to enable the steel sector to decarbonise. We have done a huge amount of work on electricity and we are also considering the possibilities of hydrogen, so we are looking into alternative sources of energy to help the sector in the UK. I know there are challenges for places such as the hon. Lady’s constituency because of the sort of steel that they need, but the fact remains that more and more different types of steel can be made to a high standard and a high grade in electric arc furnaces.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

The move to net zero should deliver tens of thousands of long-term, well-paid, green industrial jobs, but with her Government’s sticking-plaster policies the Minister is destroying both jobs and sovereign national capability. Is it really her intention to leave behind her a British steel sector that cannot make British virgin steel, and if not, what is her plan? Labour has an industrial strategy for green steel; why does she not have one as well?

[Ms Ghani]

I simply do not recognise the picture that the hon. Lady paints. Our recent decision on Tata Steel was welcomed by UK Steel, the organisation representing the UK sector, which said that it was the way forward. UK Steel itself has a net zero strategy, and wants to see the transition proceed apace.

Decisions have been just left to sit there, but now we are able to provide the support that is needed. What we did in Port Talbot has saved thousands of jobs and allowed the adoption of new technology which will, indeed, create thousands of jobs as well.

[Stephen Kinnock (Aberavon) (Lab)]

Last Wednesday morning, Tata Steel executives in Port Talbot summoned the workforce to tell them of the plan to shut down our entire virgin steel making capability by March 2024. This was utterly shocking, because the understanding had always been that some of the heavy end would continue to function while the electric arc furnace was being constructed, but it takes years to construct an electric arc furnace. The plan is utter madness: it involves importing millions of tonnes of steel from the other side of the world. Electric arc furnaces need the products of virgin steel making, such as iron and iron ore—that is why we need direct reduced iron capability—and the loss of 3,000 jobs over a period like that is completely unacceptable and unnecessary.

When the Government did the deal with Tata Steel about Port Talbot, did they know that Tata was actually proposing not a transition at all, but a potentially lethal cliff edge for our steel industry? Did they know that Tata would be doing that? Does the Minister not agree that the idea of this process is that it should be a transition? It needs to be a bridge, not a potentially lethal cliff edge.

[Ms Ghani]

Tata Steel employs more than 8,000 people and 12,500 further in the supply chain. All of that would have been at risk if we had not been able to provide the certainty it needed to increase its investment to over £1 billion to allow it to transition. These are commercial decisions relating to the pace of transition. The hon. Gentleman knows that there is a transition board in place because he is a member. If there has been a failure in consultation at the level and depth of time required, there is no doubt that he and I will take that up as we will both be at the next transition board meeting. The reality is that to ensure the long-term viability of steel in the UK, some tricky decisions have to be made, but the company was provided with support to make sure that it transitioned in a way that supported local jobs, knowing that it had to transition and support the supply chain.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for her responses. We have committed to a net zero target, but consideration must be given to the potential loss of 1,500 to 2,000 jobs, which could be gone from the industry. We have been told that the two furnace closures could put further employment at risk for many. What steps will be taken to ensure that the steel sector and industry jobs throughout the whole of the United Kingdom will be protected? I had a meeting this morning where it was confirmed to me that the United Kingdom of Great Britain and Northern Ireland is No. 7 in the world for manufacturing. If that is the case, steel is a key part of that. The hon. Member for Scunthorpe (Holly Mumby-Croft) is to be congratulated on bringing forward this urgent question. Really, Minister, we need to make sure that the industry can be retained and not reduced at all.

[Ms Ghani]

That is why the support was so substantial to Port Talbot, to ensure that the steel sector could continue to thrive here in the UK. Manufacturing in the UK is booming. We are the eighth largest manufacturer in the world and we need to get our goods fundamentally from the UK, including steel. The hon. Gentleman is right to say that we cannot achieve net zero without steel, but we can help steelmaking to become even more green and clean than it is at the moment.

[Nick Smith (Blaenau Gwent) (Lab)]

Does the Minister accept that this news gives up on the UK’s capability to produce primary steel?

[Ms Ghani]

I do not, because it was a plan or proposal put out by British Steel. We have not concluded negotiations.

[Mike Amesbury (Weaver Vale) (Lab)]

This is a question of national security. It is not just a commercial decision. A specific question was asked of the Minister by the shadow Secretary of State on job losses specifically in Scunthorpe. Is that figure of 2,000 correct?

[Ms Ghani]

Negotiations have not concluded. We are continuing to be in intensive talks with British Steel. We wish to provide the support that is needed to support the steel sector and steel jobs but negotiations will continue. We need to make sure that due diligence is done and that we get value for money for taxpayers, whose money we are going to put on the table. But look at what we achieved at Port Talbot—a sector that was unable to confirm its future until we provided it with the financial support that it needed.

Shipbuilding Credit Guarantee Scheme Update

Nusrat Ghani Excerpts

Tuesday 19th September 2023 Written Statements

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

I am making a statement to correct the record in relation to the supplementary estimate for UK Export Finance.

The final paragraph of the statement I made on 13 September 2023 should have read as follows:

“Parliamentary approval for additional resource of £51,000 for this new service will be sought in a supplementary estimate for UK Export Finance. Pending that approval, urgent expenditure estimated at £51,000 will be met by repayable cash advances from the contingencies fund.”

[HCWS1055]

Tata Steel: Port Talbot

Nusrat Ghani Excerpts

Monday 18th September 2023 Written Statements

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

The Government have agreed on a proposed joint investment package to provide £500 million to Tata Steel as part of their proposed £1.25 billion project to move to low carbon steel making in Port Talbot, subject to the necessary information and consultation processes that will be led by the company.

Through investment in a state-of-the-art Electric Arc Furnace at Port Talbot, this deal will support the UK’s efforts to meet increasing demand over the next decade and enable industry to take a significant step towards decarbonisation. It will strengthen our supply chain resilience, as well as protect thousands of skilled jobs across South Wales and the UK for the long term.

The Conservative Government have been supporting the UK steel industry for many years. The industry has been acutely impacted by recent wider geopolitical and macro-economic developments that have made traditional, blast-furnace steelmaking financially unviable. The global steel market has become saturated with heavily subsidised, carbon-intensive steel, while Putin’s invasion of Ukraine has dramatically increased energy costs. This Conservative Government will continue to stand by our steel industry, and this deal is part of our long-term plan for UK steel.

This ambitious transformation is the culmination of several years of negotiations between the Government and Tata Steel, and is one that has been backed by a majority investment by the company.

This transition will:

Secure continued production of steel at Port Talbot;

enable the industry to take a significant step towards decarbonising; and

provide a clear pathway towards a long-term financially and environmentally sustainable business model, removing the repeated need for Government intervention.

The Government are also enabling this major transformation and modernisation of the steel sector through key policy changes, including delivering the British Industry Supercharger to make electricity prices competitive for energy intensive industries.

Steel is a strategically significant industry which plays a vital role in the UK economy. The sector supports tens of thousands of UK jobs and remains a key driver for local economic growth in regions with proud steelmaking histories. It is also an industry in urgent need of modernisation. Decarbonising industry is a global challenge to meet the temperature goals of the 2015 Paris Agreement.

By replacing Port Talbot’s existing coal-powered blast furnaces, and assets nearing the end of their effective life, with an Electric Arc Furnace, this proposed project is expected to reduce the UK’s entire business and industry carbon emissions by 7%, Wales’s overall emissions by 22% and the Port Talbot site’s emissions by 85%.

This agreement with Tata represents the best offer and result for the UK and the people of South Wales. This package represents one of the largest support offers in recent history and will secure long term jobs, not just in Port Talbot, but across all of Tata Steel’s sites in England and Wales. It is a deal that not only safeguards jobs, but one that will help build greater resilience in the UK economy and will help create new opportunities in our construction, automotive and energy sectors.

During this transition, the UK Government will also ensure a broad range of support for staff who are affected by the transition, working with the Welsh Government and Tata Steel to provide up to £100 million of funding—in addition to the transformation investment —for a dedicated taskforce to support both employees and the local economy.

As part of the proposal Tata Steel will also release land in Port Talbot for redevelopment and use for new industrial businesses. Alongside the UK Government’s proposal for the Celtic Freeport and the land at Port Talbot which Tata expects to release for transfer or sale following the transition from blast furnaces, the investment could help unlock thousands of new jobs in both the South Wales and wider UK economy.

The funding proposal is subject to extensive scrutiny of detailed business plans, vigorous due diligence and subsidy control assessments. It will include strong conditions around financial probity, governance and delivery.

The landmark proposal builds on other major investments in UK green technology by Tata Group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK.

[HCWS1039]

UK Automotive Industry

Nusrat Ghani Excerpts

Monday 18th September 2023 Commons Chamber

5.35 pm

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

I beg to move,

That this House has considered the UK automotive industry.

It was only two months ago that I was standing in front of the House addressing a motion tabled by the Opposition on the UK risking losing the automotive industry. That is evidently not the case. With the Government’s lead, the UK continues to be one of the best locations globally for the sector. Votes of confidence in our economy have been showcased by three major automotive announcements in recent months.

The automotive industry is a vital part of the UK economy and is integral to supporting growth by creating high value added jobs across the country, enhancing export opportunities and helping to deliver the Government’s overarching goal of making the UK a global hub for innovation. In the span of just 10 weeks, the Government secured three major announcements on automotive, proving that the country is internationally competitive for vehicle manufacturing. These investments will secure green, high- quality jobs, strengthen our supply chains and boost economic growth. I am confident that more will follow.

The UK’s competitive business environment and regulatory system, combined with the Government’s targeted approach to support the enhancement of the innovation ecosystem, has attracted some of the most prestigious manufacturers to invest here. Last week, we celebrated BMW Group’s announcement that it is investing £600 million, which will bring production of two new all-electric Mini models to Oxford from 2026. It will enable the site to fully transition to electric vehicle production from 2030.

As my hon. Friend the Member for North Swindon (Justin Tomlinson) and the hon. Member for Oxford East (Anneliese Dodds) will be aware, with the support of the Government, this investment will secure the future of the 4,000 staff employed at the Oxford manufacturing plant and at the body pressing facility in Swindon. BMW has been part of the UK auto manufacturing family since 2000, and by 2030 it will have invested more than £3 billion in our country. Our joint success story continues throughout the transition to electrification.

BMW’s announcement builds on last week’s good news that, following a £100 million investment, Stellantis has started electric van production in its Vauxhall plant in Ellesmere Port. This transformation is also historic, as it makes the plant the first all-electric vehicle facility in the UK and one of the first in Europe.

[Rachel Hopkins (Luton South) (Lab)]

The Minister and I have had many conversations on electric vehicle production, as she knows, but in January 2024—just some three months away—UK car and van makers, such as Vauxhall in Luton South, are facing 10% tariffs on exports of electric vehicles if they cannot source enough home-made batteries. That is despite the Government having had more than two years to prepare for the introduction of these rules of origin, which they negotiated. The Minister is aware of this, as I have raised it many times. With just over three months to go, can she just admit that she is failing our motor manufacturers and is willing to chuck them under the bus?

--- Later in debate ---

[Ms Ghani]

The hon. Lady started off appropriately by talking about how we work collectively on this issue. The rules of origin and tariffs were not just negotiated by us—there was another party at the table. The tariffs, if they are implemented, will impact not only on the UK car manufacturing sector but on manufacturers in Europe. As there are more cars imported from Europe into the UK, the burden will be far greater on those countries. The negotiation took place pre-covid and before Russia’s invasion of Ukraine. Of course, there is now a tight deadline, but negotiations with Brussels always go to the wire.

The important thing is this: we are negotiating hard for the UK automotive sector. Those manufacturers in Europe were also desperately trying to negotiate hard, because this impacts them just as much. Just as we have the Society of Motor Manufacturers and Traders—the automotive sector’s umbrella group—campaigning, they have groups campaigning in Europe. Just last week, there was a huge amount of news coverage about how Europe is now incredibly concerned about the flood of cheaper electric vehicles into its market. The argument we are making should definitely be taken to the EU, because the tariffs would impact car manufacturing in mainland Europe, too.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

The truth is that while gigafactories are now being built right the way across Europe, we need at least eight gigafactories with about 15 GW of capacity in the UK—including, I might say, one in the heart of the west midlands, which is home to about a third of UK automotive production. In the last Metro Mayor election, both the Conservative Mayor, Andy Street, and I promised that we would get that gigafactory built; it is still a large open space. When does the Minister anticipate those eight gigafactories being built in the UK? When does she anticipate a gigafactory coming to the Coventry airport site? If we fail, our automotive industry will be hit with tariffs soon and we will put 114,000 jobs in jeopardy.

[Ms Ghani]

The Tata gigafactory announcement ensures that we are front-footed when it comes to gigafactories—it will be one of the largest factories in Europe. The right hon. Member and the Labour party are obsessed with us needing five or eight gigafactories, but it is about capacity. It has been noted that we need, I believe, 89 GW by 2030, and with both Tata and Envision we are two thirds of the way there. That is how we need to compare with the rest of Europe: it is not about the number of factories; it is about the level of capacity that they provide. Even though we have those two in place, we are not complacent and will continue to do everything we can to secure further investment.

The right hon. Member talked about a particular site. Obviously, that will have to go through two funds within my Department, but we will always look at solid investment for even more gigafactory capacity in the UK.

[Liam Byrne]

I am grateful for that reassurance, because this is one question on which both the Conservative Mayor and I would be happy to come and lobby on behalf of the west midlands. The point is that we are told that we need 130 GW of capacity in the UK by 2040. Now, that may be eight sites or it may be more or fewer, but the key thing is that we cannot see a plan for the UK getting that capacity in place, unless the Minister gets up and tell us that there is a plan that she is about to reveal.

[Ms Ghani]

The right hon. Member and, of course, the Mayor for the West Midlands lobby incredibly hard—as they should, because they have fantastic sites for potential gigafactories—and those negotiations will continue. I always used to say at the Dispatch Box that we needed 100 GW of capacity, but the figure is now 89 GW. Envision and Tata provide us with a solid footing to get up to the capacity that we need, but we will not be complacent; we will continue our work.

As hon. Members will hear throughout my speech, over the summer we put in place a consultation on a battery strategy. I believe that, outside Norway, no other European country has such a strategy. We are working to produce a strategy to ensure that we have substantial capacity in the UK. The Tata commitment is huge, and I will allude to that as well. I mentioned Stellantis, which has started electric van production in its Vauxhall plant in Ellesmere Port. That transformation is also historic, as it makes the plant the first all-EV facility in the UK and one of the first in Europe.

I turn to gigafactories, the favourite topic of the right hon. Member for Birmingham, Hodge Hill (Liam Byrne). In the summer, we also helped to secure more than £4 billion of investment from Tata for a new gigafactory. At 40 GW, it will be one of the largest battery plants in Europe, equivalent to the size of almost 65 football pitches. It will create up to 4,000 highly skilled jobs as well as thousands of further jobs in the wider supply chain for battery materials and critical raw minerals. Most importantly, the investment helps to turbocharge our switch to zero-emission vehicles by providing almost half the battery production needed by 2030. It is not that we need 12, 15 or five; it is about the capacity we need. Tata takes us two thirds of the way there and Envision is on top of that.

The announcements are the most recent in a line of investment decisions over the last couple of years. In 2021, Nissan and Envision announced a £1 billion investment to create an EV manufacturing hub in Sunderland. Ford joined the line-up in 2021 with a £227 million investment in Halewood to make the company’s first EV components site in Europe, and increased its investment in the plant to £380 million in 2022. Last year, we saw Bentley commit more than £2.5 billion to transition its Crewe plant to zero emission vehicles, with the first EV model to roll off the production lines around 2025.

Jaguar Land Rover has also announced that it will invest £15 billion over five years into its industrial footprint as part of its move towards electrification. That is great news for the west midlands and Halewood, where Jaguar Land Rover has production sites, research and development facilities and its headquarters. These investment decisions are votes of confidence from a highly productive and innovative sector, showcasing that the UK has the best to offer when it comes to green manufacturing and new and future technologies.

[Paul Howell (Sedgefield) (Con)]

The Minister is listing some fantastic organisations and great businesses around the country, but their size is such that the businesses that supply them are massive organisations in their own right. I have Gestamp in Newton Aycliffe, a supplier of subframes to all over the world, from Nissan in Sunderland to Volvo China. They are huge businesses. Does the Minister recognise the importance of the supply chain, not just the headline businesses?

[Ms Ghani]

My hon. Friend is right that the supply chain is critical to ensure that we continue to manufacture at pace. Just last week, we “leapfrogged”—I believe that is the quote—the French to become the eighth largest manufacturer globally, which shows how important our supply chain is. There are kinks in the supply chain and a lot of pressure—the Inflation Reduction Act on one side, covid on the other—while trying to get hold of critical minerals for the base products. I have been working with industry, and we will publish an import strategy-supply chain piece of work soon to make sure that we are shedding light and doing everything we can for our advanced manufacturing sector.

We have a strong and valued relationship with the sector, stemming from the UK’s rich history in auto manufacturing.

[Katherine Fletcher (South Ribble) (Con)]

I am grateful to the Minister for sharing the litany of successes in our proud automotive industry. I gently remind her that automotive includes trucks, not just cars. She mentioned the history of our production; Leyland has been making trucks since Victorian times and has a proud history—we still see the signs. It is now investing in making smaller electric trucks, reconfiguring its factory and taking on apprentices. It is a huge part of the Leyland industrial community. Can I make sure that my hon. Friend does not forget the Leyland DAF group’s wonderful truck heritage?

[Ms Ghani]

My hon. Friend is a passionate advocate for Leyland. Even if I wanted to, I would not be able to forget the importance of Leyland and its history, and the truck sector. I hope she will forgive me for my reference to automotive, as we tend to bag everything in.

[Katherine Fletcher]

The Minister is very welcome to come and visit.

[Ms Ghani]

I would love to. More importantly, I was recently at a site where we saw trucks that used hydrogen, ensuring that construction sites achieve their net zero ambitions. Leyland will not be forgotten, due to my hon. Friend’s hard work.

Although we are not reinventing the wheel, we are witnessing the biggest transformation this sector has gone through since the first Ford models came off the production line. New vehicle technologies are emerging and shaping our understanding of mobility daily.

In the transition, the UK’s aim is to lead the future by creating it. Our primary objective is to boost private sector investment across the whole of the UK and create the right conditions for all businesses to innovate, by giving them the confidence to do so. That is why Government have created a comprehensive and long-standing programme of support, which includes the Advanced Propulsion Centre, the automotive transformation fund and the Faraday battery challenge—all tangible interventions that industry can access. We believe that, through those programmes, we can de-risk private investment in R&D, fast-track the commercialisation of new technologies and unlock the industrialisation of our EV supply chains.

[John Redwood (Wokingham) (Con)]

Would the Minister like to give us a few thoughts on what she thinks the opportunities are for synthetic fuels, sustainable fuels and hydrogen? How will they fit in around her battery vision?

[Ms Ghani]

My right hon. Friend’s views on electric vehicles and zero emissions are well documented. As I mentioned, a hydrogen strategy is also in place. I have been to a number of projects where vehicles are using hydrogen to ensure that that technology is exploited and that there is supply and demand in the chain, too. We are looking at sustainable alternative fuels not only in the automotive sector but in the aviation sector, so it is not just in that space. All alternative fuels will be investigated.

The future of the auto sector is electric—although I know that my right hon. Friend would like it to be much wider—automated and connected. The UK is well placed to consolidate its position among global R&D leaders as these technologies begin to commercialise, creating jobs and valuable new services for our businesses and communities. Our flagship Commercialising Connected and Autonomous Mobility programme will bring benefits across the UK. The Centre for Connected and Autonomous Vehicle’s recent £66 million Commercialising CAM programme 2025 aims to create an early commercial market that could be worth £42 billion by 2035. This innovation will save lives, create jobs, enable more efficient movement of people and goods, address chronic driver shortages, and better link under-served communities to vital services. As part of the programme, on 5 September, I was pleased to announce £18.5 million of public grants to 13 projects and 43 organisations across the UK to strengthen our capabilities in the CAM supply chain. I then had first-hand experience of a self-driving vehicle with Wayve, near King’s Cross. These technologies are here. They are no longer something from science fiction. Today, we can take automated bus journeys in Didcot and Edinburgh, with more world-class automated passenger and freight services to follow in the coming months.

In addition, through Government policies, we are enabling future mobility in the UK. We launched the full local electric vehicle infrastructure fund in March 2023. Following a pilot, it provides a further £381 million over the next two financial years to deliver tens of thousands of local charge points across England. Furthermore, to enable long-distance journeys, the rapid charging fund will future-proof electrical capacity at strategic locations to prepare the network for a fully electric car and van fleet—not just cars.

[Katherine Fletcher]

Hear, hear.

[Ms Ghani]

I hear my hon. Friend. With up-to-date policymaking, we ensure that consumers and taxpayers get the best possible option of modern auto transportation.

As recent investment decisions suggest, our message—I keep reiterating it as co-chair of our industry-Government forum, the Automotive Council—that the Government have the automotive sector’s back, was heard loud and clear. In that regard, we do not shy away from the challenges the industry has been facing: rising costs because of Putin’s horrific war in Ukraine; supply chains disrupted by covid aftershocks; and a fierce international competition for green manufacturing investment, rooted in an economic security concern, leading to countries choosing protectionist tools and consequently threatening the hugely important global supply chains that rely on cross-border collaboration. Those are all serious challenges for the UK automotive sector.

Those issues, however, are not unique to us. Countries across the globe face similar challenges and provide different responses. Some feel that the best way to reach pole position in the race to secure green manufacturing is to spend incredible, eye-watering amounts of their taxpayers’ money. We have taken a different approach and concentrate on the best way to encourage investment with targeted support. We have more than a chequebook to attract companies to these shores. Our highly productive and skilled workforce, focus on innovation and ease of doing business are key factors in a company’s decision to base itself in the UK. We do not need more evidence of that than the three recent announcements I mentioned earlier.

As co-chair of the Automotive Council, I consult regularly with representatives of auto companies and listen to their views on how the UK can raise its international competitiveness. Our competitive business environment and regulatory system evidently continues to stimulate investment in the UK, but that can only come from a fruitful exchange with industry and by addressing concerns raised. For example, in February, we announced the British Industry Supercharger, a range of targeted measures to ensure electricity prices for key energy-intensive industries, including battery manufacturing, are in line with major economies around the world. An issue raised by many colleagues on both sides of the House is skills. We understand automotive companies need highly skilled individuals across the entirety of their business. One reason the UK is attractive is our world-leading universities, with four UK institutions in the global top 10, according to the QS world university rankings. But that is not all. We support the auto sector through the apprenticeships levy, with £2.7 billion in funding by the 2024-25 financial year. That will support apprenticeships in non-levy employers, often small and medium-sized enterprises, where the Government will continue to pay 95% of apprentice training costs.

We also recognise the importance of a level playing field. That is why, at spring Budget, the Chancellor launched a new capital allowances offer. Businesses will now benefit from full expensing, which offers 100% first-year relief to companies on qualifying new main rate plant and machinery investments from April 2023 until March 2026; the 50% first-year allowance for expenditure by companies on new special rate, including long life assets until 31 March 2026; and the annual investment allowance, providing 100% first-year relief for plant and machinery investments up to £1 million.

One issue that has already been touched on is our relationship and tariffs with Europe. To support our industry through the transition, we must also address any and all barriers to trade with partners and markets all over the world. Our closest trading partner is the EU, with whom we share not only climate goals and a trajectory towards electrification, but deeply integrated supply chains. Over 50% of cars manufactured in the UK and exported are destined for EU consumers.

For those reasons, we are working closely with industry to address its concerns about planned changes to the rules of origin for electric vehicles in the trade and co-operation agreement between the UK and the EU. Since signing a deal, unforeseen and shared supply chain shocks have hit the auto industry hard. That has driven up the cost of raw materials and battery components, making it harder to meet the changing rules. That risks industry in the UK and the EU facing tariffs on electric vehicles at a crucial time in the transition to electrification. I and the Government are determined to seek a solution to that shared problem and to work with the EU to fix it for 2024.

[Liam Byrne]

There are, of course, proposals by Chinese battery makers to consider investing in the UK. Can the Minister tell the House whether, if investments are made by those Chinese firms, the cars we make with those products will still be allowed to be exported tariff-free and will not get caught by new tariffs because of the amount of foreign content they might contain?

[Ms Ghani]

The right hon. Gentleman raises a valuable point. We need to ensure not only that we support UK manufacturers, but that new investors and entrants into the market are treated equitably. We know that, because of the negotiations taking place on rules of origin, there has been a consultation taking place in Europe on its anxiety about the market being flooded by cheaper EVs. Obviously, we need to allow customers to make a choice, but we have to ensure that UK manufacturers are not dealt a blow by any new Chinese entrants into the market. He knows my history when it comes to dealing with China and sanctioning. That is why I have been doing so much work not only to support our UK manufacturers, but to ensure our supply chain is resilient. I hope that will give him some confidence on this issue.

As I mentioned to the hon. Member for Luton South (Rachel Hopkins), this will impact EU manufacturers just as much as it impacts UK manufacturers; because they import more into our economy, it will be a heavier burden for them.

[Rachel Hopkins]

I thank the Minister for giving way again. On that point, given the impact on both the UK and EU automotive sectors, can she enlighten us any further on whether there would be any suspension of the ratcheting up of percentages in the rules of origin and a delay to implementation through those negotiations?

[Ms Ghani]

The hon. Member is asking me to comment on policy that is outside of my jurisdiction. It is led by the Foreign, Commonwealth and Development Office and the conversations will continue. The important thing to note is that we have to constantly and continually impress not on UK manufacturers, but on their sister representatives in Europe the impact it will have on European manufacturers as well. I think that, considering the issue will impact not only here but in mainland Europe, it will be resolved soon enough, while recognising that when dealing with the EU decisions tend to be taken very late in the day.

On supply chains and critical minerals, as I emphasised recently to the Business and Trade Committee, as part of our mission to secure a green and innovative future in UK automotive manufacturing, we need to ensure we develop key supply chains in Britain for battery manufacturing and electric vehicle production. I recognise that critical minerals are fundamental to producing batteries and anchoring the electric vehicle supply chain in the UK. We are accelerating our international collaboration, including recently signing partnerships with Canada, Australia, South Africa, Kazakhstan, Saudi Arabia, and Zambia, with more in the works, and engagement through the Minerals Security Partnership, the International Energy Agency and the G7.

We celebrated the announcement of the joint venture between British Lithium and Imerys—our UK-based lithium hub—on 29 June. By the end of the decade, it will supply enough lithium carbonate for 500,000 electric cars a year. We have also published “Critical Minerals Refresh: Delivering Resilience in a Changing Global Environment”, for which I was responsible. It highlights the progress to date and sets out our refreshed approach to delivering the strategy for UK businesses. As part of that approach, I have launched an independent task and finish group to investigate the critical mineral dependencies and vulnerabilities across UK industry sectors—including the automotive sector—and the opportunities for industry to promote resilience in its supply chains.

In plain numbers, the UK automotive industry employs 166,000 people, adds over £70 billion to the UK economy, and is our second largest exporter of goods. We are also home to more than 25 manufacturers—the role of the supply chains and small and medium-sized enterprises was mentioned earlier—which build more than 70 different vehicles in the UK, all of which are supported by 2,500 component providers and some of the world’s most skilled engineers. In 2022, we exported vehicles to more than 130 different countries and built more than three quarters of a million cars, with the onward trajectory rising year on year.

I am happy to add some more of those plain numbers: three, as in the three announcements I have made so far about recent investments in BMW, Stellantis and Tata; four, as in more than £4 billion of investment in a new gigafactory from the Tata Group; 40, as in 40 GWh, one of the largest gigafactories in Europe to be built in the UK—it is not about the number, but about the capacity; 4,000, as in up to 4,000 new jobs in addition to the existing 166,000; £600 million, as in the investment in its Oxford plant that BMW has just announced; and two, as in the two new fully electric Mini models being produced here in the UK. The Government are clearly not simply securing our world-class industry, but paving the way for the UK’s future in automotive manufacturing.

Royal Assent

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the shadow Minister, I have to notify the House, in accordance with the Royal Assent Act 1967, that His Majesty has signified his Royal Assent to the following Acts:

Lifelong Learning (Higher Education Fee Limits) Act 2023

Northern Ireland Troubles (Legacy and Reconciliation) Act 2023

Powers of Attorney Act 2023

Northern Ireland Budget (No. 2) Act 2023

Pensions (Extension of Automatic Enrolment) Act 2023

Animals (Low-Welfare Activities Abroad) Act 2023

Workers (Predictable Terms and Conditions) Act 2023

Protection from Sex-based Harassment in Public Act 2023

Veterans Advisory and Pensions Committees Act 2023

Firearms Act 2023.

Tata Steel: Port Talbot

Nusrat Ghani Excerpts

Monday 18th September 2023 Commons Chamber

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

With permission, Madam Deputy Speaker, I shall make a statement about Tata Steel’s proposal, which has been agreed with Government, to invest in greener steel making at its Port Talbot site in south Wales.

I can confirm that the Government have agreed on a proposed joint investment package to provide £500 million to Tata Steel as part of its proposed £1.25 billion project to move to low-carbon steelmaking in Port Talbot, subject to the necessary information and consultation processes that will be led by the company. For me it was always about certainty, continuity and security, and through investment in a state of the art electric arc furnace at Port Talbot the deal will support the UK’s efforts to meet increasing demand over the next decade and enable industry to take a significant step towards decarbonisation. It will strengthen our supply chain resilience as well as protect thousands of skilled jobs across south Wales and the UK for the long term.

The Conservative Government have been supporting the UK steel industry for many years. It will be no surprise that the industry has been acutely impacted by recent wider geopolitical and macroeconomic developments that have made traditional blast furnace steelmaking financially unviable. The global steel market has become saturated with heavily subsidised carbon-intensive steel, while Putin’s invasion of Ukraine has dramatically increased energy costs. This Conservative Government will continue to stand by our steel industry and this deal is part of our long-term plan for steel.

This ambitious transformation is the culmination of several years of negotiations between the Government and Tata Steel and it has been backed by a majority investment by the company. The transition will secure continued production of steel at Port Talbot, enable the industry to take a significant step towards decarbonisation and provide a clear pathway towards a long-term financially and environmentally sustainable business model, removing the repeated need for Government intervention.

As well as investment, the Government are enabling the major transformation and modernisation of the steel sector through key policy changes, including delivering the British industry supercharger to make electricity prices competitive for energy-intensive industries, including steel, so that they are line with those charged across the world’s major economies.

Steel is a strategically significant industry that plays a vital role in the UK economy. The sector supports tens of thousands of UK jobs and remains a key driver for local economic growth in regions with proud steelmaking histories, but it is also an industry in urgent need of modernisation. Decarbonising industry is a global challenge to meet the temperature goals of the 2015 Paris agreement. By replacing Port Talbot’s existing coal-powered blast furnaces and assets nearing the end of their effective life with an electric arc furnace, this proposed project is expected to reduce the UK’s entire business and industry carbon emissions by 7%, Wales’s overall emissions by 22% and the Port Talbot site’s emissions by 85%.

As such, decarbonising UK industry is central to the Government’s bold plans for tackling climate change and in doing so placing our country at the forefront of the growing global green economy. We are committed to seeing a low-emission production steel sector in the UK and are also working with global partners to support decarbonisation of steel production internationally.

This agreement with Tata represents the best offer and result for the UK and the people of south Wales. This package represents one of the largest support offers in recent history and will secure long-term jobs not just in Port Talbot but across all Tata Steel sites in England and Wales. It is a deal that not only safeguards jobs but will help to build better resilience in the UK economy and help to create new opportunities in our construction, automotive and energy sectors. We have been working closely with the Secretary of State for Wales and the Secretary of State for Levelling Up, Housing and Communities to establish a new transition board to help to capitalise on some of the opportunities that it will create. The UK Government will ensure a broad range of support for staff who are affected by the transition, working with the Welsh Government and Tata Steel to provide up to £100 million of funding for a dedicated workforce to support both affected employees and the local economy. We will continue to engage with local MPs and stakeholders in the area to ensure the project is a success.

Of course, any Government funding offered to a private company is subject to extensive scrutiny of detailed business plans, vigorous due diligence and subsidy control assessments. It will include strong conditions around financial probity, governance and delivery. With that in mind, we are delighted that we have reached this agreement on the Government’s role in the proposed project. As part of the proposal, Tata Steel will also release land in Port Talbot for redevelopment and use for new industrial businesses. Alongside the UK Government’s proposal for the Celtic freeport and the land at Port Talbot which Tata expects to release for transfer or sale following the transition from blast furnaces, this investment could help to unlock thousands of new jobs in both south Wales and the wider UK economy.

The landmark proposal builds on other major investments in UK green technology by Tata Group, including the July announcement of a £4 billion battery gigafactory creating 4,000 direct jobs, and represents a major vote of confidence in the UK. The Government are focused on working with business to get on with delivering key investments, creating opportunities across the UK. I commend this statement to the House.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

After 13 years of failure, expectations of this Government are not high, but even by their standards, spending half a billion pounds to make thousands of British steelworkers redundant is a truly remarkable feat. Last week, I went to Port Talbot to meet some of the workers affected by this announcement, and like us, they support green steel. They have actually been campaigning for green steel for many years, and those workers were promised repeatedly that they would be a part of the process. They rightly feel betrayed by this announcement and the fact it is being done to them, rather than with them.

I know the Minister will come back to say that more jobs were at risk. I have heard the Government’s line that all the jobs would have gone entirely, but she must be honest: it is absurd even to countenance the UK being the first major economy not to have a domestic steel industry. The UK steel sector is already much diminished compared with when the Conservatives came to power. The transition to green steel should be about more jobs, not less. It should be an optimistic, exciting moment for steel communities, but instead this has caused anxiety and anguish. I say genuinely to Government Ministers and to all on the Conservative Benches that if they allow decarbonisation to become associated with Thatcher-style job losses, it will risk the legitimacy and political support for net zero in a way that courts disaster. Is levelling up not a tacit admission by the Conservative party that the scars of the 1980s deindustrialisation cut so deep that we still feel them today?

Why were the workforce not involved in this process? Why has only one technology—the electric arc furnace—been chosen? What consideration was given to hydrogen and carbon capture possibilities? We already know that this deal was not the company’s opening proposal, so what other options have been considered? Crucially, what will happen to downstream facilities, such as Trostre and Llanwern, that provide packaging and automotive steels that cannot currently be served by an electric arc furnace? Will that steel be supplied from India, with a larger emissions profile than at present, which is what many of the workforce believe?

What is included in this package as regards ongoing industrial energy costs? Crucially, when will a grid connection for an arc furnace be provided? In addition, how will this £500 million of taxpayers’ money be protected? In the absence of any clear and identifiable criteria, how do we know that it represents good value for money? Finally, what does this announcement mean for the rest of the UK steel industry and, in particular, Scunthorpe?

The plan that Labour put forward for green steel was industry-wide, comprehensive and transformative, and it was designed to secure major economic dividends for the UK. We cannot secure the future of UK steelmaking with sticking plasters. We cannot do it on a plant-by-plant basis, and we cannot do it without the workforce behind us. This should have been such a positive announcement. It should have been about creating jobs, strengthening national capabilities and showing that we can do decarbonisation in a way that works for working people. I say to every single steelworker out there that it is clear that they will only get the bright future that they know is out there when they get a Labour Government.

[Ms Ghani]

It is unfortunate that the hon. Member decided to politicise such an important sector. It was not me but Gareth Stace for UK Steel, the trade association for the UK steel industry—the voice of the country’s steel manufacturers—who said:

“This is a really important day for our steel sector in the UK, with the Government showing a real commitment to the future of steel making here in the UK. We will get a true transformation of our sector to create steel for the net-zero economy, something which our customers are asking us for. We have the ability to completely transform our sector and boost the net-zero economy in the UK. We can really seize the opportunity to increase production in the UK and increase exports. We all know that a net-zero economy will need more steel, not less.”

The hon. Member is putting on a very poor display over a serious decision that has been in discussion, I am told, for more than a decade. I have spoken to Ministers who have held the portfolio over many years before me, and they tell me that these matters are nothing new.

More importantly, the hon. Member knows that the blast furnaces were at the end of their life. The right decision is to provide certainty, security and continuity, and that is exactly what we are doing. The UK is a world leader in producing steel, but we need to decarbonise, and this is the best way of ensuring and guaranteeing jobs, of which there are 8,000 on the site and 12,000 in the supply chain.

As well as the £500 million, £100 million has been put together for a group to consult and work with the unions, the staff, the Welsh Government and the Secretary of State for Wales to ensure that the transition is as appropriate as it can be and not so challenging for the people who are impacted. The proposal is to go for electric because other energy sources are underdeveloped. If the hon. Member will reflect on what is happening in Europe on hydrogen, for example, he will see that nothing else can work at this scale and within the tight timeframe that we want to work in to ensure that the site continues to be viable not only for manufacturing steel in the UK and supporting all the jobs in the supply chain but to support Wales, too.

The proposal will also transform the Welsh community and the Welsh area. A huge amount of work is taking place with the freeport, and a huge number of businesses and jobs will be coming out of the transformation to green steel. It is unfortunate that the hon. Member cannot recognise that, without this decision, there would have been continued uncertainty, no security for the staff and definitely no security for the UK steel sector.

[John Redwood (Wokingham) (Con)]

Have the Government ascertained that there is enough old steel and metal around for the recycling facility? Do their wider plans for steel in the United Kingdom include retaining capacity to produce new steel?

[Ms Ghani]

My right hon. Friend is always absolutely hot on these topics. There is enough steel, because we export so much of it and we can now use it on the site. Considering the age of the current furnaces, the reality is that electric arc furnaces are, within the timescale, the best way for us to transition. There is of course a supply chain in place that enabled Tata to put the business plan forward, for it to commit a substantial amount of money, and for us to support its plan.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the SNP spokesperson.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Madam Deputy Speaker,

“I’m not going to shy away from the fact that this is still terrible news.”

Those are not my words but those of the Wales Secretary, who is sat next to the Minister. How did we get to a stage where £0.5 billion of UK-wide taxpayers’ money is being used to prop up a deal that is classed as “terrible news” by a Government Minister?

We know that we need to decarbonise, but with this level of taxpayer investment we should be looking at proper, green, virgin steel manufacturing and job creation, not the loss of 3,000 jobs, and not settling for lower-grade steel production from recycling. What will the lower-grade steel production mean for Port Talbot’s ability to supply key UK infrastructure programmes? What UK-based supply chain guarantees are being sought for the £1.25 billion of investment that the Government say is coming forward into the plant? Why were the unions not involved in the discussions? Why were the Welsh Government not involved? Is it not hypocritical to propose to involve the Welsh Government in the taskforce for job losses but not to have included them in the initial discussions on options for the plant going forward?

Not that long ago, the Tata Group also received a reported £0.5 billion for a proposed electric battery factory—another deal lacking in transparency at this stage. How can the Tata Group secure £1 billion so easily from the Government? It is the same with EDF, with more than £1 billion allocated to the development of the Sizewell C nuclear power station. Too many deals are done behind closed doors, based on who has got the Government’s ear and where the Government think there is some political capital. Does it not prove yet again that there needs to be a structured, coherent, long-term strategy to address the competition from the Inflation Reduction Act in the United States and the EU’s green industrial plan? Does it not also prove that in the current constitutional framework and fiscal straitjackets imposed on the Welsh and Scottish Governments, our communities will always be at the mercy of decisions made at Westminster?

[Ms Ghani]

There were so many questions, but I will do my best to address the most important ones. Conversations at Port Talbot have been going on for years—one could argue more than a decade. It is not news that the site needed financial support to ensure that it continued to be viable. Steel companies lose more than £1 million a day producing steel, and it is no longer viable without Government support. That is a route that many countries have taken.

The blast furnaces in Port Talbot can be operated for 15 to 20 years only before a major investment decision is reached, either to be relined or to be rebuilt. There was a very tight timeframe; it was important to find alternative energy—electric—to make sure that it would work with the timeframe of the new furnaces coming on site. That is why it is electric, not hydrogen—there are no hydrogen alternatives that can give us the steel that we need on the scale that we need. This is not only a £500 million investment. There is also £100 million to deal with the transition. As I said, the transition board will comprise union members, staffers, the Welsh Government and the Welsh Secretary of State. The conversation will take place, and consultation will occur. Those conversations have been happening for quite some time.

It is important to note that the sector is now secure. In a part of the UK that is incredibly important to us, thousands of jobs will be created—up to 16,000 jobs in the Celtic freeport proposal, which is linked to the renewables at Port Talbot. That will create even more jobs. Any transition that requires a consultation on jobs is always sensitive, which it is why it is important that the transition board will be stood up to provide the support needed. The site needed to make a decision. The best decision was for it to continue to make steel. That is what we will support it to do.

[Holly Mumby-Croft (Scunthorpe) (Con)]

Tata in Port Talbot and British Steel in Scunthorpe are the last two steelworks in this country that have blast furnaces. There is a place for electric arc furnaces, but we need to remember that they melt scrap; they cannot make brand-new virgin steel from scratch; a blast furnace is needed to do that. My hon. Friend made the comment about steel being a strategic industry, and she is right. Does she agree that, for national security reasons alone, we must ensure that we retain the capability to make virgin steel in this country?

[Ms Ghani]

My hon. Friend is absolutely right on the importance of virgin steel production. She is the best champion for her constituency and her steel plant, which is now uniquely positioned as the blast furnace to make virgin steel. That will be important in line with our mantra of “continuity, certainty and security.” Conversations have been taking place with British Steel, the details of which are commercially confidential. My hon. Friend campaigns incredibly hard for the steel sector both in the constituency and across the UK. Those meetings will continue. She is right that, obviously, we need a place for virgin steel, and that is in her constituency.

[Stephen Kinnock (Aberavon) (Lab)]

When all is said and done, the purpose of the deal should have been to protect the current order book and to prepare us for the opportunities of the future. All investment is welcome— I do thank the Minister for her work in this area—but I am afraid that the deal will fail to keep us competitive and to deliver a just transition for the thousands of my constituents whose dedication to our proud steel industry is second to none.

Could the Minister kindly address the following questions? Why have the Government put all their eggs into the electric arc furnace basket? Where is the investment in hydrogen, direct reduced iron and carbon capture technology so that we can continue to produce virgin steel, as the hon. Member for Scunthorpe (Holly Mumby-Croft) pointed out? Why were the steel unions not consulted in advance of the announcement? There are literally dozens of hydrogen-based steel projects ongoing across Europe. They are not necessarily ready to make steel but at least they are out of the traps, whereas we are still in the changing room putting our trainers on. Why have the Government not actually entered the hydrogen race?

[Ms Ghani]

The hon. Gentleman, who worked with me incredibly well as chair of the all-party parliamentary group for steel and metal related industries, answers his own question when he speaks about hydrogen. He knows very well the age of the blast furnaces in his constituency and the fact that we needed a transition that enabled certainty to continue. There is no option other than electric to scale up within the time required. [Interruption.] My right hon. Friend the Member for Wokingham (John Redwood) knows that. We have spoken about this many times, so it is disappointing to see the hon. Member for Aberavon being so political about it now. The electric option was a commercial decision for Tata, but it was the only way to ensure certainty to continue. Another Member talked about supply chains and making sure that production continues, so that Tata can deliver the contracts it has in place. The only way to do that is with electric, and that is the way we are going forward.

Commercially sensitive conversations can take place in a much tighter circle, but the hon. Gentleman will know that discussions have been going on for years and years. There is now a transition board, and there will be a huge amount of consultation. The focus is on ensuring that the people impacted are provided with the support they need to transition into the jobs that they should. The fact is that we are securing the future of the steel sector in the hon. Gentleman’s constituency. Without this funding all 8,000 jobs would have been lost, along with 12,000 in the supply chain, and we are not seeing that. We are backing steel in his patch.

[Alun Cairns (Vale of Glamorgan) (Con)]

The Minister is absolutely right when she says that steel is of strategic importance to the UK’s security interests and to our manufacturing base. We need to recognise the scale of this investment, which strictly speaking is a devolved responsibility. This is the UK Government coming in to support a UK national interest. Tata has long held an ambition to turn this into an electric arc furnace. What assessment has my hon. Friend made of suggestions that electric arc steel is inferior to virgin steel, which is made in blast furnaces?

[Ms Ghani]

My right hon. Friend, who spent a considerable amount of time as Welsh Secretary, knows very well how these relationships work. He is absolutely right: the negotiations and securing the £500 million investment have taken place via the Government here. It was important for us to make sure that the Secretary of State for Wales and everyone else involved were across this, too. He is absolutely right that there is a difference in the steel produced—my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), the hon. Lady for steel, pointed out the importance of virgin steel—but there is a growing circular economy for steel produced in electric arc furnaces. It utilises scrap metal that is in abundance in the UK—we export tonnes of it—so there is a huge amount of work to be done in electric arc furnaces. That is why the business model is so substantial and why Tata put in so much money, with our £500 million going into the £1.25 billion commitment in total.

[Dame Nia Griffith (Llanelli) (Lab)]

The future viability of Tata’s tinplate works at Trostre in Llanelli depends both on the proximity of Port Talbot and on the production there of the grade of steel that can currently only be produced in the blast furnace process. While I welcome the recognition of the need for increased electric arc furnace capacity in the UK, what assurances can the Minister give me that the Port Talbot blast furnace will continue to supply steel to Trostre until such time as greener technologies are developed there? What will she do to support the development of those technologies in Port Talbot?

[Ms Ghani]

I am pleased that the hon. Lady recognises that whole new supply chains will be created and whole new businesses set up, with many more jobs in place too. There will now be a consultation in place. Tata has already put up its business plan for how it will continue to supply steel, but also for the work it will do with supply chains downstream. That work will continue to take place. As far as I am aware, there is no other change in any other sites. Now that the deal is out in public, work will continue at pace. I will continue to meet the chair of the steel APPG and the steel sector to ensure we are doing everything we can to back UK steel and UK manufacturing, and all the businesses in the supply chains too.

[Mark Pawsey (Rugby) (Con)]

The Minister was a distinguished member of the Business, Energy and Industrial Strategy Committee. I cannot remember whether she was with us when we visited Port Talbot, but we saw a plant that had given great service over many years but was badly in need of updating. At a time when we send almost all our previously used steel, otherwise known as scrap, abroad, is this not the best option to provide a less carbon-intensive method of production and to secure UK manufacturing?

[Ms Ghani]

My hon. Friend is correct: I was a member of the BEIS Committee when we produced the report on steel. I think I said earlier that we export just shy of 9 million tonnes; it is actually eight point something, so forgive me, Madam Deputy Speaker, if my earlier figure was inaccurate. All that scrap metal can now be used within this site, which is extremely important. We know that a huge challenge is posed to the steel sector, for instance by countries that tend to dump their steel elsewhere, and we will work both nationally and internationally to do what we can to protect UK steel.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Three thousand job losses at Tata Steel will be a huge blow to Wales. Just as happened under Thatcher, our industrial communities are being forced to pay the highest price, and it is being paid by those who can least afford it. This news comes just weeks after the Minister’s Government failed to attract funding for offshore wind in the Celtic sea. The Tories have had more than 13 years in which to put in place a proper industrial strategy maximising Wales’s green energy potential with a just transition from fossil fuel dependency, and with workers’ futures at its heart. Is the Minister proud that her party’s time in power will, once again, leave a toxic legacy in Wales?

[Ms Ghani]

It is unfortunate that the right hon. Member has taken such a narrow view. We are providing £500 million to ensure that the plant will continue to make steel, and to support the jobs in the industry. There are 8,000 direct jobs and 12,000 jobs in the supply chains which would disappear if there were no steel plant in Port Talbot. I should have thought that the right hon. Member, who has been so passionate about net zero, would appreciate the work that is being done in this regard. There is no alternative energy source that can deliver net zero, at scale or within the timetable that is required, given the infrastructure that is in place.

In case the right hon. Member thinks that it is just the Conservatives who are saying this, I invite her to read what UK Steel has said about this decision. It has said that this is a really important day for the steel sector in the UK, and that the Government are showing a real commitment to the future of steelmaking here. It is not just a question of our ambitions for net zero; the UK steel sector itself has put together a road map to net zero, which this investment will enable it to reach.

The right hon. Member alluded to the Celtic freeport. That will create 16,000 jobs, and will also ensure that a supply chain in renewables continues in that part of the country. It is unfortunate that the she cannot understand that the discussions that took place for so long could have continued the uncertainty, and, potentially, the age of the furnaces could have caused the site to close down. That would have been terrible, but we have ensured that we now have certainty, continuity and security.

[Jessica Morden (Newport East) (Lab)]

We have seen years of inaction on steel from this Government while watching other countries around the world invest proactively, but the investment announced on Friday will lead to potential job losses that will be deeply felt in Port Talbot and across south Wales. Why was there no consultation with the unions and the Welsh Government, who should surely have had a voice in ensuring that there is a fair transition to decarbonisation? What will the Minister do to provide clarity for workers about, for instance, the impact on downstream plants such as Llanwern, and to address the point about the grades of steel needed?

[Ms Ghani]

Any change will be challenged by those potentially affected, which is why the transition board is being set up with a budget of £100 million to ensure that people who are impacted are given the support that they need. It is hard not to go on repeating that this has not come out of the blue, and that discussions have been taking place forever. I speak to the hon. Member regularly about this matter. I know that it is difficult for her to reflect on it in the Chamber, but we finally have some certainty. She mentioned that no decision had been made for what seemed like forever, but this is a really good decision: it is protecting jobs, it is protecting the industry next to her constituency, and it is ensuring that there is a future for steel at Port Talbot. It is good news, although we know that there is some difficulty, which is why, as I have said, we are establishing a transition board.

The hon. Lady also mentioned the unions. They were in Westminster recently, attending a huge event co-hosted by our fantastic iron lady, or rather steel lady, my hon. Friend the Member for Scunthorpe (Holly Mumby-Croft), as well as UK Steel. There was a presentation of the procurement policy note, but also a discussion about the road map to net zero. This is a route that was identified, and it is one that we have now taken to ensure the longevity of steelmaking in Port Talbot.

[Helen Morgan (North Shropshire) (LD)]

The green transition should present exciting opportunities to build a fair, more prosperous economy for the benefit of communities across the UK, but the job losses involved here highlight that, for some workers, when the industrial landscape shifts around them there might not be an opportunity to benefit from those opportunities. They need to be supported to train and retrain throughout their adult lives, so will the Minister take this opportunity to commit to the development of a national skills strategy?

[Ms Ghani]

That is a sensible point. There are skills strategies in lots of different portfolios within industry, and in these particular circumstances, as I mentioned, a transition board will be stood up with £100 million to do exactly that—to ensure that people are redeployed and reskilled so that they can continue to work in the sector.

[Nick Smith (Blaenau Gwent) (Lab)]

The impact of the war in Ukraine has emphasised the importance of the UK’s sovereign steelmaking capacity, yet an electric-only arc model means that we will have to import supplementary virgin steel and be unable to produce high-end automotive steel. Does the Minister accept that, under this deal, the self-sufficiency of our steel industry has been dealt a real blow and that our defence capabilities are badly undermined?

[Ms Ghani]

The answer is no. Under this deal we have protected jobs and ensured that we will continue to have a steelmaking facility in Port Talbot that supports the diversity in the supply chain. We also realise how uniquely important the blast furnaces in Scunthorpe are. We have talked about looking at hydrogen, but as I mentioned, it is untested at this scale to work within the timeframe that is needed. This deal is really good news for the UK steel sector, enabling it and us to reach our decarbonisation targets and ensuring that we are dealing not with virgin steel but with scrap steel in a way that can be recycled within UK industry. It ensures the longevity of the steel sector in Port Talbot.

[Sammy Wilson (East Antrim) (DUP)]

No matter what gloss is put on this today, 3,000 jobs have been sacrificed on the Government’s altar of net zero and decarbonisation. There can be no hiding from the fact that there are huge costs associated with this policy, and that they are becoming apparent week after week. Despite what the Opposition spokesperson said, the fact is that job losses are associated with this policy. We have seen it with steel, aluminium, oil and gas—we could go on and on. Will the Minister not accept that, as a result of this policy, we now have strategic industries under threat, we are losing jobs, we are putting greater pressure on taxpayers, we are pushing production overseas and we are making ourselves dependent on foreign producers?

[Ms Ghani]

The reality is that one of the furnaces in particular was coming to its end of life and the other was mature, so a decision had to be taken on whether the company would want to continue, considering the loss it was making every day in producing steel, or to transition to making cleaner steel. That was a commercial decision. It was important for us to ensure that steelmaking in Port Talbot would not disappear but continue, and this is the option that the company went for. It is the option that it has a supply chain for, and it was best that we supported it through this process and ensured that there were fewer job losses.

The reality is that any transition is going to impact jobs, which is why it is so important to ensure that support is available to enable people to skill up and transition. That is why the transition board has been set up with £100 million to help people on that journey. It is not fundamentally about achieving net zero; it is fundamentally about the age of the furnaces on the site, about the loss-making in the steel sector in the UK, particularly at this site, and about what decisions the company would take next. It was important for us to support the UK steel sector and provide it with £500 million—it has an overall envelope of £1.25 billion—to ensure that steelmaking continues in Port Talbot.

[Kerry McCarthy (Bristol East) (Lab)]

I would have hoped to hear a rather more robust defence from the Minister of the need to reach net zero and of the massive job opportunities that will come from pursuing a green agenda, as we have seen from what is happening with the Inflation Reduction Act in the States.

I visited Port Talbot last month during the recess, and I echo what the constituency MP, my hon. Friend the Member for Aberavon (Stephen Kinnock), said about the importance of the site and of continuing to support jobs there. Concerns were raised with me about the availability of scrap and how difficult it is to recycle and retrieve scrap metal. There does not seem to be any strategy from the Government for dealing with that. Can the Minister tell us what she intends to do, working with her colleagues in other Departments, to achieve that?

[Ms Ghani]

As I mentioned, just shy of 9 million tonnes of scrap could potentially be used at the site. Tata has put together a substantial package, which shows that it has thought through its supply chains. A huge amount of work will continue to take place to ensure that more information is put in the public domain. No doubt there will be more public tenders, too. The scrap does exist and we recognise that electric arc furnaces produce a particular kind of steel, which is why it is important to have a virgin steel sector here in the UK as well.

I have spoken about the environmental impact and how it helps us to reduce our emissions, but it is not only about that. This site was reaching the end of its life, and these negotiations have been taking place forever. It is important that we made sure that we had the certainty and support to move on to the next conversation on how we best exploit the new site to produce cleaner, greener steel and how we make sure the contracts are in place.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Understandably, there has been much focus on the potential job losses at the Port Talbot plant, but the steelworks is an anchor operation supporting a vast supply chain across Wales and beyond. The Minister mentioned that Tata Steel is making an assessment, but what assessment have the UK Government made of the impact of the announcement on the wider supply chain?

[Ms Ghani]

The hon. Gentleman is right that the sector has a vast supply chain, and we know how important it is for UK manufacturing. Last week’s data show that we are the world’s eighth largest manufacturer, so supply chains are imperative.

I am also working on an import supply chain strategy to ensure that we are as resilient as possible when importing from countries that may not share our democratic values. Work has been done internally on the supply chain. To secure the money in this package, Tata had to ensure it had a business plan and sight of its supply chains. This work has been ongoing for quite some time, and a lot of it has been commercially sensitive. Now we are able to speak about it, I do not doubt that more will be made public. We will continue to work on the supply chains, and I hope to put forward the import supply chain strategy by the end of the year.

[Bill Esterson (Sefton Central) (Lab)]

The UK is the only country in the G7 in which steelmaking is in decline. We need to be honest with ourselves that the job losses announced at Tata are a further continuation of that decline.

The Minister said there have been ongoing negotiations for a very long time on the switch to electric arc production, and she has been asked a number of times about the supply of scrap. Why is she not able to tell us that she has a plan to end the export of scrap steel and to secure its use for electric arc production in the UK, now that this decision has been announced?

[Ms Ghani]

The hon. Gentleman’s opening comment is factually incorrect. He says we are the only country in decline, which is not true. French production has declined by 21%, German production has declined by 13% and Italian production has declined by 12%. It is appropriate to make sure we are accurate in setting the scene. His opening comment was wholly inaccurate.

These commercial decisions are based on business plans and Tata’s relationship with is supply chain. The hon. Gentleman was with me at the event in Parliament last week or the week before, and we have put together a procurement policy note to ensure that we have more UK steel in our supply chains, and definitely in Government contracts. I will continue to do my best to ensure that the number goes on the opposite trajectory to steel produced in the rest of Europe.

Shipbuilding Credit Guarantee Scheme Update

Nusrat Ghani Excerpts

Wednesday 13th September 2023 Written Statements

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

Further to the statement by my hon. Friend, the Minister for International Trade last week, I have today laid the accompanying departmental minute before Parliament describing a contingent liability arising from the launch of a shipbuilding credit guarantee scheme.



The SCGS is a finance instrument which will provide guarantees to banks in respect of loans made to vessel owners and operators seeking to place orders at UK shipyards. The scheme will guarantee a portion of the value of eligible loans, sharing the risk with lenders to encourage offers of finance to UK vessel owners and operators.



The SCGS is one of a number of targeted interventions being taken as part of over £4 billion of Government investment planned through the Government’s national shipbuilding strategy refresh, to encourage UK ship owners and operators to place new orders and upgrade their existing fleets with world-leading shipyards that are based up and down the UK. HM Treasury has approved the arrangements.



In addition, I hereby give notice of the Export Credits Guarantee Department’s—known as UK Export Finance, UKEF—intention to seek an advance from the contingencies fund. This was made over recess, and I am notifying Parliament at the earliest opportunity. I have previously notified the Chairs of the Public Accounts Committee and the Department for Business and Trade Select Committee. UKEF will act as service provider to DBT. It will manage inquiries and applications under the SCGS and DBT will cover resource and other costs. To have the necessary approvals to undertake this work on behalf of DBT, UKEF must apply for a contingencies fund advance.



Parliamentary approval for additional resources of £105,000 for this new expenditure will be sought in a supplementary estimate for UK Export Finance. Pending that approval, urgent expenditure estimated at £51,000 will be met by repayable cash advances from the contingencies fund.

[HCWS1016]

Retained EU Law Update

Nusrat Ghani Excerpts

Monday 4th September 2023 Written Statements

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

I am pleased to be able to update the House on progress regarding the usage of the Retained EU Law (Revocation and Reform) Act, with further revocations of Retained EU Law being tabled today in the Retained EU Law (Revocation and Reform) Act 2023 (Revocation and Sunset Disapplication) Regulations 2023.

These 93 revocations continue the work already undertaken in schedule 1 of the Retained EU Law (Revocation and Reform) Act in tidying and bringing further clarity to the statute book. This wave of revocations focuses on legislation that is redundant and therefore does not reflect policy change; however, it is a crucial exercise to tidy up the statute book and make sure that law is accurate and understandable.

Indeed, one of the key purposes of the Retained EU Law (Revocation and Reform) Act was to bring legislative clarity. Retained EU law is an aberration on the statute book which can cause unnecessary complication and confusion. It is the duty of all responsible Governments to make our law as clear and accessible as possible, and therefore we must continue to identify retained EU law that is redundant or inoperable and ensure its removal from the statute book. This SI is another step forward in this work.

However, let me be clear: simply tidying the statute book is not the limit of this Government’s ambition on retained EU law.

The steps the Government have already taken are a down payment on our plans to reform REUL and reduce the overall regulatory burden. Over the past few months we have already set out ambitious reform plans, such as reforms to reduce disproportionate EU-derived working time reporting requirements that could save businesses around £1 billion a year; and streamlining the 400-page EU-derived rulebook for wine, which is overly complex and bureaucratic, to name only two examples. Announcements to make clear the requirements on businesses and improve the lives of our citizens through improving consumer transparency, as well as on transport and travel, and on how the Government work with regulators to ensure they are playing their part in this effort, are all planned for the coming months.

We will continue to use the powers in the REUL Act between now and June 2026 to reform and replace unnecessary regulations, providing regular updates to Parliament on our progress as set out in the Act itself. This reform programme is a crucial part of the Government’s agenda and I can assure the House that this is only the beginning. I will of course provide further updates on reforms in due course.

The SI also contains a small number of preservations from the original schedule, as after further analysis of the legislation on the schedule, Departments have identified four pieces of retained EU law that it is necessary to preserve.

Furthermore, the Northern Ireland Civil Service has identified three pieces of legislation which must be preserved for Northern Ireland only. All three pieces relate to information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries. These must be preserved for Northern Ireland only because their revocation represents a policy change that would require agreement by Ministers in the Northern Ireland Executive which cannot be granted in the ongoing absence of that Executive.

A line-by-line explanation, providing further information on all pieces of REUL being revoked, has been deposited in the House Library and is available on gov.uk.

[HCWS996]

Tata Group Gigafactory Investment

Nusrat Ghani Excerpts

Thursday 20th July 2023 Commons Chamber

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

I am pleased to update the House about the significant investment announced by Tata Group just yesterday. The confirmation that Tata will be investing over £4 billion to build a new gigafactory—the largest in Europe, I believe—in the UK is a historic moment and a major vote of confidence in our automotive sector.

Across Government, we have worked closely with Tata for the past two years to help secure this crucial investment for the UK, and its decision to invest here is a testament to our strong partnership with Tata. Tata’s announcement represents one of the largest investments we have ever seen in the automotive sector, and is part of a new wave of investments—as significant as those made in the 1980s—that are helping to turbocharge our transition to zero-emission vehicles. It will also be the group’s first gigafactory outside India, directly creating up to 4,000 highly skilled new jobs, alongside thousands of further jobs in the wider supply chain for battery materials and critical raw materials.

Tata says that the battery gigafactory will produce high-quality, high-performance, sustainable battery cells and packs for a variety of applications within the mobility and energy sectors. As the anchor customer, the new gigafactory will supply Jaguar Land Rover’s future battery electric models, including in the Range Rover, Defender, Discovery and Jaguar brands. That means we will soon see cars from JLR’s iconic British brands manufactured in the UK, powered by batteries produced in the UK and developed using technology from research and development centres in the UK, before being exported to markets all over the world. Battery production at the new facility will commence in 2026, and we look forward to confirmation of the site’s location once due diligence has been finalised. When operational, Tata expects it to be one of the largest buildings in the UK and plans to maximise its renewable energy mix, with an ambition for 100% clean power.

The investment is also an important reflection of the UK’s position as a key location for European and global automotive manufacturing. With an initial output of 40 GW, the new factory confirmed yesterday will be one of the largest in Europe. As well as being a significant moment for the UK, this investment will play an important part in strengthening economic resilience across Europe in the highly integrated supply chain for the automotive sector and other key sectors. Using the Faraday Institution’s estimates, it will provide almost half of the UK’s required battery production by 2030, boosting the battery manufacturing capacity we need to support the electric vehicle industry in the long term.

The Government are committed to supporting the automotive sector and the electric vehicle supply chain to take full advantage of the move to zero-emission vehicles, and we are putting this commitment into action through the automotive transformation fund, the British industry supercharger and our strong programme of support for research and development. We are working alongside industry to unlock further private investment in our EV supply chain, and we have long-standing and comprehensive programmes of support for the automotive sector, including the ATF, the Advanced Propulsion Centre and, of course, the Faraday battery challenge.

This investment is an important milestone in enabling a UK-made transition to net zero. However, it does not stand in isolation. It builds on other announcements that have been secured with the support of Government, including Nissan and Envision plans to secure £1 billion to create an EV manufacturing hub in Sunderland, Ford committing a total of £380 million to make Halewood the first EV components site in Europe and Stellantis investing £100 million to transition Ellesmere Port to electric van manufacturing.

The transition to zero-emission vehicles gives us a once-in-a-generation opportunity to shape the future of manufacturing. Over 166,000 people are directly employed in the automotive sector, and I am delighted that yesterday’s announcement means that thousands of new highly-skilled jobs will be created in the next few years just for this project alone. This fantastic news from Tata shows that the Government are getting behind business to unlock the barriers to growth and secure further investment, and it will be a real boost to the entire sector. I look forward to building on the momentum and continuing our strong relationship with the sector, so that we can move the UK forward in the race to net zero and support the delivery of the Prime Minister’s priority to grow the economy. I commend this statement to the House.

--- Later in debate ---

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. I beg the right hon. Gentleman’s forgiveness. I was being distracted by another right hon. Gentleman, who ought to know better, and I therefore did not call the Minister to answer. I do apologise.

[Ms Ghani]

I think maybe we got a bit noisy as we were trying to fully digest the slightly delusional response of the Opposition Front Bencher, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), to this statement. Our job as representatives of the automotive sector is to praise, protect and promote, not to play politics, especially with investment this substantial.

Tata’s investment is so substantial. It is 40% of the gigawatts that we need, and fundamentally we need to have 100% by 2030. With Tata and Envision, we are two thirds of the way there. Obviously we want more, but we are not going to be complacent. We should not compare ourselves with the rest of Europe when their needs will be substantially different from ours, but let us take a moment to reflect on what is happening internationally. This is a global race to achieve net zero. Tata has decided to come here to the UK because it has faith in UK workers, UK technology and UK innovation. It has confidence in the UK supply chain, but fundamentally it has confidence in the UK Government’s policy when it comes to advanced manufacturing and the automotive sector.

The hon. Gentleman spoke about the automotive transformation fund, which is a £1 billion fund to support exactly this sort of initiative, but let us just reflect on the bonanza—I am not sure that is the right term—that the Opposition are offering. It is £28 billion in their plan, which is a lot of money for the taxpayer to front up for an un-costed plan that, as far as I am aware, is not endorsed by anyone in the advanced manufacturing sector and what they want to achieve. As we are getting close to our summer holiday, the £28 billion of un-costed promises that the Opposition are making are a bit like lines in the sand. We can look down at them, but the tide of reality will come in.

The Opposition’s proposals mean nothing to industry or to job creation. They are created within the Westminster bubble. [Interruption.] If the Opposition do not believe me, they should listen to the Society of Motor Manufacturers and Traders, the umbrella organisation for the automotive sector. It has talked about the substance in the UK supply chain, which will be a part of this initiative going forward. Unlike anywhere else in Europe, we have a fantastic supply chain with graphene, silicon carbide wafers—I am learning so much—power electronics, batteries and powertrains. It is a substantial boost to our supply chains in the UK. As the hon. Gentleman knows, I am working not only on our critical minerals strategy but on our supply strategy, to make sure we are using UK innovation and UK goods across all our supply chains, and in particular in the automotive sector. I urge him to have some humility and to reverse, and to praise, promote and protect the sector, and definitely not to play politics with it; that is a very weak thing to do.

There are challenges dealing with the rules of origin. As the hon. Gentleman knows, not only the Prime Minister but the Secretary of State are in intensive talks with the European Union. This is an issue not just for the UK; it is also about cars made in the EU being transported into the UK. It is a two-way system. I urge everybody in the House who has contacts with European counterparts to ensure that they make it very clear that this will be damaging for European car manufacturers as well.

Let me turn to the zero-emission vehicle mandate. I have taken many a delegation to the Department for Transport, which is responsible for this bit of policy, and I am keen to back business. The consultation has concluded and results will come through, and we will continue to work with the DFT. My position has always been to back the automotive sector. The hon. Member for Stalybridge and Hyde does not seem to appreciate how substantial the investment is. We should be focused on the £4 billion, the 4,000 jobs and the resilience in the supply chain—the 2,500 small firms across most of our constituencies that will be getting some support because of this fantastic confidence in the UK car and automotive sector, and fundamentally in UK policy when it comes to advanced manufacturing.

[Madam Deputy Speaker (Dame Eleanor Laing)]

And now I call Dominic Raab.

[Dominic Raab]

I warmly welcome the Government’s announcement and Tata’s decision, which highlights the tech potential of the UK. Does the Minister agree that our longer-term strategy, as I think she was setting out, is that we will not be able to engage in a bidding war on subsidies with the US, China and the EU, and that our comparative advantage will be shoring up the supply chain in the context of EV batteries, which means lithium deposits in the south-west and our emerging refinement capacity in Teesside?

[Ms Ghani]

I warmly welcome my right hon. Friend’s statement and agree with every single point he made. He mentioned the lithium mine in Cornwall, which will eventually produce enough lithium for 500,000 electric cars and vehicles. There is such success for our supply chain because this Government have a strategy that is embedded in the real-world politics of dealing with the automotive sector, and our critical minerals refresh was exactly the support required for the lithium mine in Cornwall.

It is not just about the financial support; it is also about the ecosystem. Fundamentally, the organisation had faith in initiatives such as the Faraday battery challenge, the Advanced Propulsion Centre and the tech in the UK. All the components that are required are here in the UK, and we have been able to link that ecosystem and supply chain together, which gave Tata the confidence to come and build the biggest gigafactory in Europe here in the UK.

[Stewart Hosie (Dundee East) (SNP)]

I thank the Minister for her statement and early sight of it. I agree that battery manufacturing capacity is important as part of our move towards EVs, away from petrol and diesel vehicles, and towards all our targets to achieve net zero. It would be remiss of me not to mention that a few years ago, as I am sure the Minister recalls, Dundee was given the “most EV visionary city in Europe” award by the World Electric Vehicle Association in Japan.

Let me turn to the statement itself. A £4 billion or so investment by Tata—that’s good. Substantial investment by Envision in battery production in Sunderland, plus the other investments the Minister mentioned, are of course all welcome. Yet that is broadly a comparable sum—around £6 billion—to the investment in the EV charging network we have been promised by 2030. Does the Minister think we are on track to have the right balance between investment in the supply chain and battery production capacity, and in the EV charging network. That network is where most drivers intersect with the system and it is the largest cause of frustration when it does not work or breaks down.

[Ms Ghani]

I do not think it gets any more positive from the SNP on this point. I am pleased that the right hon. Gentleman welcomed the £4 billion investment and the more than 4,000 jobs, and the confidence we have in the advanced manufacturing sector in the UK; that was such a positive response to what this Government have been able to achieve. I was not aware of the Dundee point, but I will go away and look it up. So many people have been responsible for getting this project over the line and so many have been campaigning for gigafactories. In particular, my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger) has been campaigning for gigafactories for longer than I have been in Parliament, so huge thanks go to him and to everyone else who helped to get this project over the line.

On charging points, as the Minister of State, Department for Transport, my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) said in last week’s debate on the automotive sector, ChargeUK has committed to investing more than £6 billion in the development and operation of charging infrastructure before 2030. We heard in that debate that some colleagues felt the investment in their constituencies was not substantial enough. We need to make sure that as demand for EV vehicles grows—there has been much more demand and many more sales recently—the charging infrastructure stands up to that. As the Minister responsible for the automotive sector, I know we are doing everything we can to fulfil our part of the bargain, as it were, but we need to make sure that charging infrastructure is rolled out as fast as it can be. Substantial targets are being met and the Transport Minister is keen to take up constituency cases to make sure that the roll-out is fast as it can be.

[Andrew Selous (South West Bedfordshire) (Con)]

I am absolutely delighted by this announcement. A number of my constituents work in the Vauxhall van factory in Luton, which makes a fantastic Vivaro van that we want to get electrified. Will the Minister say a little more about how we complete the final piece of the picture so that every car plant in the UK is reassured that there will be UK-made batteries? Yesterday’s announcement was fantastic, but one or two of us are concerned about that last piece.

[Ms Ghani]

I hope to get an invitation to visit that plant and my hon. Friend’s constituency, and I will of course do my best to promote Vauxhall vans. What is really exciting about this initiative is that it is about producing batteries not just for JLR but for the whole market, which is crucial. With the Tata and Envision gigafactories, we are two thirds of the way to getting to the 100 GW that the Faraday challenge believes we need. We are not complacent and are still going to do everything we can to secure further investment and seek further growth in this area, but for the moment we need to accept that this gigafactory could have gone anywhere in Europe, and there were huge talks about where it was going to be, but Tata had confidence in the UK and decided to come home to us.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

May I say, Madam Deputy Speaker, what a pleasure it is to see you back in the Chair on a regular basis? I wish you and everybody else who works in Parliament a very good recess when it comes.

This is a very welcome announcement. Tata is a good company and this is a big day and a big announcement. Of course, this investment should have been in Huddersfield —I would say that, wouldn’t I?—because we have a wonderful engineering skillset. I do not want to be a downer, but I warn the Minister of this: by the time building work on the canal system was finished, everybody had lost their shirt on their investment because the railways came unexpectedly and all the investment was wiped out. I have recently visited JCB, which has developed hydrogen-powered vehicles; will the Minister make sure that the Government focus equally on hydrogen? Many of us believe that, rather like the railways and the canals, hydrogen will come almost out of the blue and be the major, much more sustainable, future mode of transport.

[Ms Ghani]

The hon. Member is absolutely right that Huddersfield is a great place. We are not complacent: if the right opportunity, investment and partnership is put forward, we will of course consider that. We want to make sure that we continue to grow our gigafactory capacity. I knew that the hon. Member was going to touch on hydrogen, which he talks about often. The work we are doing with the ATF is not just about electric vehicles but about how we adopt all new functioning technologies to get to the first stage of zero emissions, and then to the next stage and so on. There are opportunities for hydrogen projects to come forward. Just a few weeks ago I visited a major construction project where not only the vehicles on site building and developing the port and the infrastructure were going to be hydrogen, but the vehicles moving on and off the site were to be well. Hydrogen is very much in our sights too.

[Fiona Bruce (Congleton) (Con)]

I warmly welcome this announcement. Does my hon. Friend agree that it shows this Government’s commitment to real and tangible green investment in the crucial automotive industry, in its supply chains and in many connected businesses throughout the UK, including the environmentally exemplary, forward-thinking transport logistics company in my constituency, Brit European?

[Ms Ghani]

Brit European sounds like one of the firms I need to meet. No doubt my hon. Friend will invite me to visit, and I look forward to meeting the firm with her. She is absolutely right: this is a huge vote of confidence in our ability to adopt new technologies to achieve net zero. It is not just about finding and securing new sources of critical minerals; we are at the leading edge of battery recycling too. The UK Battery Industrialisation Centre will help us to stay at the forefront of recycling.

[Daisy Cooper (St Albans) (LD)]

My constituents are desperate to embrace the transition to electric vehicles, whether cars, vans or buses, but electric cars remain far too expensive, and the charging infrastructure barely exists—and where it does exist, it is not reliable. Although investment is welcome, we need a consistent strategy. If the Government are serious about reaching net zero, I urge the Minister to look again at reintroducing incentives to take up electric vehicles. Will she consider giving local authorities a statutory responsibility to roll out, with pandemic-style urgency, the EV charging infra- structure that we so desperately need?

--- Later in debate ---

[Ms Ghani]

When the council in my constituency was Conservative-led, it had a substantial charging point infrastructure roll-out plan, which it had secured itself. When a council is ambitious, it is amazing how much work can be done. We know that sales of electric vehicles are up, as are EV exports and manufacturing, and prices will come down as more come on the market. I am slightly anxious about the sort of incentives the hon. Lady is asking for, if it means just another extra cost to the average taxpayer. We have really good charging infrastructure and fantastic supply chains. As this investment increases confidence in our supply chains, manufacturing will continue to increase and the cars will become even more attractive. My constituents, like hers, want to leave a leaner and greener footprint on the Earth.

[Mr Louie French (Old Bexley and Sidcup) (Con)]

This is fantastic news for the UK economy, with thousands of skilled jobs and investment in the transition to a lower carbon future. Does my hon. Friend agree that, while Labour continues its rather odd tribute act to new Labour and the likes of Lord Prescott, who famously had two Jags, it is the Conservatives who are delivering inward investment in our country and the UK car industry that will deliver much more?

[Ms Ghani]

I have learned that it is not a good use of one’s time to focus on what the Opposition are offering, because they U-turn so quickly; by the time one has closed the book they have just published, they have changed their mind. Let us not fret about that.

My hon. Friend is absolutely right. Investment in the automotive sector is on a fantastic trajectory, with not just this commitment but those from Stellantis, Ford, Envision and Nissan. That is because we have a really stellar agenda on how we create and adopt new technology to ensure that advanced manufacturing in the UK competes internationally, as we did with steel, including by helping with high energy costs, which are now coming down. We work hand in glove with the industry. We do not sit around in a Westminster bubble, creating new budgets that are completely uncosted and endorsed by no one in the sector. Yesterday’s and today’s news is fantastic for the automotive sector.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

I too welcome the announcement—I genuinely do—but we are miles behind European competitors. Some of that is Brexit-related, but mainly it is due to the lack of an industrial strategy, which is even more important in the net zero-related sectors. This Government are miles behind right across the EV sector; other countries are ramping up incentives, but this Government are slashing them. As a result, sales are plateauing. The charging network outside London is a postcode lottery, with some places a charging desert. Scotland had a strategy from day one. That is why we have twice as many rapid chargers per head than even London. When will the Government treat this issue with appropriate urgency?

[Ms Ghani]

I am afraid the hon. Gentleman is just wrong. First, car sales are up, car manufacturing is up, and car exports even into Europe are up. I am not sure what his view is. He welcomes the £4 billion investment to create the largest gigafactory in Europe, but just cannot bring himself to dwell on the good news it brings to so many of his businesses that will, no doubt, be involved in the supply chain helping us to deliver the cars that will now have UK-made batteries.

[Paul Howell (Sedgefield) (Con)]

Like so many, I welcome this statement. It provides an incredible, positive message for the UK and for the way we are attracting businesses of the right sort. However, we must remember that there is an existing motor supply chain and it will be taking on many challenges as the industry moves across from what we have now into the electric market. One of the suppliers in that market space is Gestamp in Newton Aycliffe. It supplies motor manufacturers all over the world and is a tremendous company. The Minister has been asking for invitations to visit other businesses, so I invite her to come and see Gestamp and to have a good conversation about the way the supply chain is being impacted by these tremendous investments.

[Ms Ghani]

My hon. Friend is such a champion of the businesses in his constituency. May I provide him with some confidence? Securing this investment is about providing assurances to everyone in the supply chain that there is now a bigger game for them to play—there will be far more production, sales and, obviously, work for them to do. My hon. Friend has invited me previously; it is an outstanding engagement and I look forward to visiting him shortly. I chair the Automotive Council so I meet a lot of small and medium-sized enterprises, but if I have not already met the firm he mentions, I suggest he gives my private office a little nudge and I will make sure I correspond with the firm shortly.

[Mr Tanmanjeet Singh Dhesi (Slough) (Lab)]

By 2025, Germany is set to have 10 times more battery capacity than the UK, while the US is set to have 30 times more capacity. I welcome yesterday’s announcement of Tata Group’s investment in a UK gigafactory, but will the Minister confirm exactly how the Government plan to ensure that this will be just the first, not the last, such announcement?

[Ms Ghani]

The hon. Gentleman has done his homework, but the most important point he needs to remember is that to meet our demand in the UK we need 100 GW. That is not a decision we have taken; it is a piece of work done by the Faraday Institution. Comparing us with the USA or Germany does not really work well, because we are trying to deal with the manufacturing that we have in the UK. So, we need 100 GW; this announcement provides 40 GW, and we have 12 GW with Envision and Nissan, which may go up to 38 GW if they wish to expand. Potentially we are two thirds of the way there, but we do not want to be complacent. When drawing international comparisons, we have to ask how many of the countries—whether the USA or Germany—are two thirds of the way to meeting their battery needs. This is of course not the first or the second step, because we have Nissan already with Envision, but yesterday’s announcement is substantial and we will of course continue to go forward. It shows huge confidence in the UK supply chain and will no doubt attract further investment.

[Sara Britcliffe (Hyndburn) (Con)]

This is absolutely fantastic news for the UK. Much of the supply chain in east Lancashire can grow further and faster with Government commercialisation and focused investment and support. Will my hon. Friend confirm that the Government are committed to making the UK a leading player in the whole of the EV battery space and that they will work with businesses such as Emerson and Renwick in Hyndburn and Haslingden to support growth in the supply chain?

[Ms Ghani]

My hon. Friend is a true champion of her constituency and all the firms within it. I am keen catch up with her now we know we have this fantastic deal and to see what more we can do for the many firms in her constituency. We want to make sure that everybody in the supply chain can be involved in this programme of work as it comes through. We have a number of initiatives, whether it is the automotive transformation fund or the Faraday challenge, to ensure that we are doing everything we can to adopt the new set of technology rules and de-risk any new technology that firms have in place. At the moment we think that that will boost 2,500 small firms, but of course if we can involve any more we will do that, and I look forward to sitting down with my hon. Friend and seeing what more we can do for her constituents.

[Anna McMorrin (Cardiff North) (Lab)]

Of course this new gigafactory announcement is very welcome, but it has taken time. How will it impact the industrial energy price? The Minister has not answered that question and we know that that price is a barrier to decarbonisation and that addressing it will ensure the transition to net zero and lower energy bills, which needs to be prioritised across all sectors and industries in our transition.

[Ms Ghani]

As a result of Putin’s invasion of Ukraine and high energy prices, we introduced substantial programmes to give energy-intensive firms the support that they needed. The next phase of that is the energy supercharger, which—as the hon. Lady will know—the Secretary of State for Energy Security and Net Zero has been talking about. We know that energy prices will fall in the near future, and that there will be a change in the mix of energy costs.

Tata came to the UK not only because it is, obviously, the best place in which to build a gigafactory and has a fantastic skillset, but because we could offer competitive energy prices. We have had conversations about that with a number of firms and investors. When energy prices were high and we were dealing with energy-intensive industries, we made sure that we provided the necessary support to protect those firms and their employees.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

I thank the Minister for her statement, and welcome Tata’s investment. The Adam Smith Institute has said that securing sustainable foreign direct investment is fantastic, but that the UK should also be introducing supply-side reforms so that we can continue to champion carbon reduction on a global scale. In the light of that, what steps are Ministers taking to introduce supply-side reforms?

[Ms Ghani]

I am working with most industry representatives to establish what we can do about the supply side, not just through reforms but by giving them the assurance, accessibility and resilience that they need to get their products into the country and continue manufacturing, whether in the chemical or the aviation sector. We are working closely with industry, and I hope to present a supply-side input strategy by the autumn.

[Rachel Hopkins (Luton South) (Lab)]

I have pressed the Minister many times for support to enable good, skilled jobs in the automotive sector and supply chains to be retained in the UK, including those at Vauxhall in my constituency, to which she is obviously welcome to pay a visit at any time. May I now press her to tell us how many public money or subsidy arrangements have been entered into by the Government to support Tata’s welcome choice of the UK for its gigafactory? If she is coy about answering that question, may I also ask how much of the £1 billion automotive transformation fund is left to support existing businesses such as Stellantis, also in Luton South?

[Ms Ghani]

I know that a visit to Luton South is outstanding, and I hope that we can secure a date soon. The hon. Lady has asked a very good and clever question. As she has said, the ATF amounts to £1 billion, and in due course, with due diligence, the commitments from Tata will be made public. However, the numbers on which we should focus are these. Tata is investing £4.5 billion to build Europe’s largest gigafactory, which is guaranteed to create more than 4,000 jobs and support, potentially, 2,500 firms in the supply chain. Those are the numbers that we should be proud of today, having secured such a stellar investment in a sector that all of us in the Chamber —because we are here on a Thursday afternoon—clearly wish to protect and promote. We won this investment, over any other European country. Tata could have gone anywhere, but it came here because it had confidence in our workers, our companies and our ecosystem.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for making such a positive statement. Everyone was enthralled by the announcement that Tata is to invest £4 billion in an electric car battery manufacturing site in Somerset, which is wonderful news for commerce and jobs in the UK, not to mention our contributions to the commitment made at COP26 and COP27, but can the Minister tell us whether sites outside England will be considered in the future? It is said that four battery factories are needed. Has the Minister considered, or is she considering, Northern Ireland as one of those locations, with the aim of boosting commerce in all regions of the United Kingdom of Great Britain and Northern Ireland? I am committed to that aim, and I know that the Minister is. It is good to know that we can all gain advantage from this.

[Ms Ghani]

It is great that we have a major commitment to one of the biggest gigafactories in Europe. That will generate even more investment and more interest in building gigafactories in the UK. We will, of course, consider all proposals for sites that are brought forward by commercial partners who see value in building gigafactories in the UK. This commitment shores up what we have, takes us towards where we need to be in 2030, and will help us meet our need for batteries, but it will also attract new investment. This is a massive vote of confidence in the UK economy and the UK’s policies on the automotive sector.

May I wish everyone a wonderful summer break, and thank all staff, especially the staff in the Tea Room, who enable us to get through our very long days?

[Madam Deputy Speaker (Dame Eleanor Laing)]

Indeed. I thank the Minister on behalf of everybody who works in this building. I thank her for taking questions.

Automotive Industry

Nusrat Ghani Excerpts

Wednesday 12th July 2023 Commons Chamber

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

What a disappointing opening speech. There was an opportunity to praise, promote and protect the automotive sector—and to talk about all the positive news stories—but all we have heard for the last 10 or 15 minutes was the automotive sector being talked down. I appreciate that the timing of this debate has not gone well for the Opposition: as my hon. Friend the Member for Bosworth (Dr Evans) mentioned, today we have heard about the Renault Group and Geely having chosen the UK as the headquarters of a new company developing ultra low emission engines and potentially investing billions of pounds in the UK—up to €7 billion. That shows not only the confidence of the automotive sector, but its commitment to the UK, and these are the opportunities or the stories we should be talking about.

The hon. Member for Stalybridge and Hyde (Jonathan Reynolds) constantly referenced the SMMT statistics, but he forgot to mention the ones he should have reported at the Dispatch Box so that we could once again promote how healthy and dynamic the automotive sector is. Car production in Britain rose for a fourth straight month in May. The SMMT has confirmed that a total of 79,046 cars rolled out of the factory gates a few months ago, which is an increase of more than 26%. Passenger car numbers are boosted by a greater appetite for hybrid electric motors built in Britain. The bosses at the SMMT have said that, while there have of course been challenges around the world, manufacturers have

“defied the challenging economic backdrop to fulfil customer demand for the latest British-built models, at home and overseas,”

so that manufacturing and production are indeed up.

This is a positive news story, and any opportunity we have to speak about the automotive sector should be positive, not negative or all about political point scoring. This is a serious topic and a serious industry. I know the hon. Gentleman is keen to be very ideological within the Westminster bubble, but I would suggest he steps a little outside it. I know my hon. Friend the Member for South Derbyshire (Mrs Wheeler), who is a champion for Toyota, which has the largest manufacturing plant in her constituency, would welcome a visit by Labour Members so they can see how the sector is booming just in her constituency. There are over 2,000 people working at the plant in South Derbyshire and involved in the supply chains, and 80% of the cars manufactured are exported to Europe. Exports are up, by the way, which I will get on to. Toyota continues to innovate and it is at the forefront of producing hybrid cars. It has been cutting emissions for over a decade and takes net zero seriously, having energy from solar panels all around the plant. The point she would want to make is, “Get out of the Westminster bubble, visit South Derbyshire, see what is happening at Toyota”—and at many other firms, as I will go on to say—“and you will see the work is going well.” Our job is to protect, promote and praise, not to talk the sector down.

[Sarah Owen (Luton North) (Lab)]

It is all very well and good talking about optimism, but does the Minister accept the reality facing the automotive industry in the UK today, and the stark warnings given by Stellantis about future job losses if the Government do not sort out the rules of origin problems?

[Ms Ghani]

I want to state for the record—and for the hon. Lady, who was obviously sitting there while I was speaking—that that was not optimism. Those were the facts and figures promoted not by Government, but by industry representatives. I had a meeting with Stellantis recently. We know that a number of challenges are reflected globally, not just in the UK, such as being able to recruit into the sector. The hon. Member for Stalybridge and Hyde missed another opportunity to talk about the fantastic jobs that are available. Of course, on rules of origin, that is an issue not just in the UK; it is an issue for lots of other countries that want to export and import, too.

[Mark Tami]

The Minister talked about the importance of the Toyota factory. In my constituency, I have the engine plant, which produces quality hybrid engines. Why are this Government opposed to hybrid engines?

--- Later in debate ---

[Ms Ghani]

This Government have a strong mandate to reach net zero and the consultation has just taken place on said mandate. The right hon. Member will know that I have been spending a lot time with the automotive sector, including taking delegations to meet the Minister of State, Department for Transport, my right hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman), who will be overseeing that. My job—I also chair the Automotive Council—is to champion business, and on occasion to try to remove all the barriers it needs removed for it to manufacture more and export more. I know that the Transport Minister will be speaking more about that later.

I will get on to all points the hon. Member for Stalybridge and Hyde raised, but he mentioned growing up in Sunderland. Just for the record—I can see there is a Birmingham MP here, the hon. Member for Birmingham, Perry Barr (Mr Mahmood)—I grew up in Birmingham very close to a car plant that employs many members of my family, including my brother Nasim, so this sector is very close to my heart. I have been told not to make any football jokes about Birmingham and Sunderland at this point; I will leave that for the final speech.

[Matt Western]

Will the Minister give way?

[Ms Ghani]

Is it on a football point, because I will not be able to handle that? If it is not on a football point, I will take the intervention.

[Matt Western]

This point is not about football; it is about the debate. To pick up on the Minister’s analysis, she is correct on the statistics she gave about the UK market. She will know that we started from a pretty poor base post the pandemic and that our production was particularly hit, but other countries recovered better. It is an international market that is fighting for investment—I am sure she will accept that—and that is why it is of concern.

[Ms Ghani]

It is an international market that is fighting for supply chains. The SMMT was clear that, when manufacturing production was low, that was down to access to products and critical minerals, which I will come on to. As well as taking care of the industry, I am responsible for critical minerals and for supply chains. We are working with the industry, which I met just this morning, to put together a supply chain import strategy, which will be out in the autumn. We need to get a number of things right to make it even easier for the sector to do even better than it already is, but it is in a really good place and I will go on to mention some of the facts and stories about that.

The sector is indeed a jewel in the crown of our economy. It is vital, because of where it is based across the country, to supporting the levelling-up agenda, net zero and advancing global Britain. Our automotive industry employs 166,000 people, adds over £70 billion to the UK economy and is our second largest exporter of goods. The UK is proud to be home to major global manufacturers such as JLR, Nissan, Stellantis, Toyota, BMW and Ford. But that is not the whole of the UK’s automotive eco-system: we have a lot more to be proud of, from our luxury and performance sector, including Rolls-Royce, Bentley, Aston Martin, McLaren and Lotus, to heavy goods vehicles and buses, such as Leyland Trucks, Wrightbus, Alexander Dennis and Switch, as well as the future of mobility, encompassing connected and autonomous vehicles. Those manufacturers are supported by a diverse, resilient and growing UK supply chain that spans a wide range of components and includes companies such as Bosch, NSK, Meritor and Swindon Pressings. These are valued partnerships, and the sector knows that my Department for Business and Trade is the Government’s first port of call to help businesses grow and flourish, and to create jobs, apprenticeships and opportunities around the country.

[Mike Amesbury]

I thank the Minister for being generous with her time. All the manufacturers that she mentioned face a cliff edge in January 2024, with the 10% tariff. What are the Government going to do about it? It is desperate in terms of those jobs in our communities.

[Ms Ghani]

I assume that the hon. Member is referring to the rules of origin tariff. That is why we are working hard and negotiating with the EU, and working with our partner representative groups within the EU, so that they can be lobby as well. This is not just an issue in the UK. This is a European issue too, and we are making sure that those voices are heard loud and clear with our partners across Europe.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I have a specific question for clarity: have the Government formally requested a reopening of the rules of origin for 2024?

[Ms Ghani]

The Government are working hard to share the challenges that will be faced by all manufacturers in Europe, not just the UK, when it comes to importing and exporting vehicles. This is not just a UK issue, and it is important that not just we but our counterparts in Europe make these arguments loud and clear to the EU. I recently met SMMT and asked that its sister bodies do the same where they reside in European countries, to ensure that those arguments are heard loud and clear.

As I said, there is huge diversity of companies within the supply chain and manufacturing of all automotive vehicles, and the UK has a full automotive eco-system across the UK. The sector is here because it recognises the UK’s unique strengths. Our engineers are world class—it is not for nothing that six out of a total of 10 Formula 1 teams are based in the UK. More broadly, the sector recognises that this Government have its back. We want to use innovation, skills and a competitive business environment to ensure that the UK automotive sector can thrive.

[Dr Luke Evans]

I am grateful to the Minister, because she alluded to the point that I was making about the automotive industry. We have talked a lot about manufacturing, but the UK is the world leader in things such as research and development, as well as in testing—autonomous testing, safety testing; we are literally the world leaders in this stuff. I mainly know that because a lot of it is based in my patch. Does the Minister agree?

[Ms Ghani]

I could not disagree with my hon. Friend, who is a champion for all things technology and transport, as well as for his constituency. The investment made in R&D has enabled large manufacturing firms to work closely with our academic institutions, and to de-risk some of the technologies that are now becoming mainstream, and we continue to support that area. That leads on to my next point about the Advanced Propulsion Centre and the automotive transformation fund, which are key in us trying to de-risk and adopt new technologies to drive the sector forward.

On the Automotive Council, the hon. Member for Stalybridge and Hyde said that he was engaging with the sector, but I am not quite sure where and when. A lot of the comments he made will not go down well with the sector because they were not very positive on all the work it has been doing. I engage directly with firms to see how hard they are committed to the sector, and what they expect from their politicians is support, not to be talked down.

I put on record my thanks to Graham Hoare, the current co-chair, Mike Hawes, Neville Jackson, Ian Constance, Markus Grüneisl, Paul Willcox, Murray Paul, Adrian Hallmark, Michael Leiters, Tim Slatter, Alan Johnson, Richard Kenworthy and many other indispensable members of the Automotive Council. I thank them for all the work they do, considering how challenging times have been not just for us but for our counterparts in Europe. I recently spoke at the Society of Motor Manufacturers and Trader’s parliamentary reception, and I welcome its “Manifesto 2030” with its five key priorities: green automotive transformation strategy, net zero mobility, green skills, made in Britain, and powering UK clean tech. There is a lot that we agree on, and I look forward to working with the sector to try to protect and strengthen the whole automotive industry. Car companies want to innovate, and we want to support them to do so. That is why the Government have an overarching goal of making the UK a global hub for innovation, as alluded to by the my hon. Friend the Member for Bosworth.

[Greg Smith]

In embracing that innovation—this is further to my intervention on the shadow Minister—the UK is a leader in the development of the synthetic fuel sector. By that, I do not mean fuels made from feedstocks; I mean green hydrogen merged with atmospheric carbon capture, whereby what comes out of the tailpipe is the same volume of carbon that is then recaptured to make the next load of fuel. With whole system analysis, that will be shown to be net zero, but the zero tailpipe mandate gets in the way of that. Does the Minister agree that, to embrace this innovation properly and to give an eclectic future to the automotive sector, we need to embrace those innovators as well?

[Ms Ghani]

We do need to embrace those innovators. One of the reasons we have so much investment in the UK in innovation and the automotive sector is that we are often first out of the door in helping to de-risk and test that technology. The Minister of State, Department for Transport, my right hon. Friend the Member for Hereford and South Herefordshire, will touch on tailings, but just last week I was at the Lower Thames Crossing, which is putting out a pitch to ensure that all vehicles on the construction site have green hydrogen. The several thousand vehicle movements on and off the site carrying freight will also have green hydrogen. The site is a port, and given the level of construction that is taking place, it may be one of the largest construction sites to get to green hydrogen first. I am not sure, but I think it is pretty well on track to being a world leader in that.

The UK-wide innovation strategy sets out our long-term plan for delivering innovation-led growth. Our primary objective is to boost private sector investment across the whole UK, creating the right conditions for all businesses to innovate, giving them confidence to do so and ensuring that we are leading the future by creating it.

[Barbara Keeley]

Will the Minister come on to the point that I raised with my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) about the roll-out of charging points? That is an important point. People are making decisions about electric vehicles, and we want them to make the right decisions. There is an absolute dearth of charging points in my constituency and many parts of Greater Manchester, and Westminster has installed more public electric charging points than the whole north of England. The Government are asleep at the wheel. When will they wake up and do something about that?

[Ms Ghani]

We are topping and tailing this debate with a Transport Minister and I know he is keen to touch on charging points, but the public charging network is growing quickly, and public charging devices have more than tripled in four years, from 10,300 devices in January 2019, to more than 43,000 in June 2023. The Government expect that around 300,000 charge points will be needed as a minimum by 2030. They are being rolled out at pace, but I do not doubt there will be constituency, case-by-case charge point concerns and the Minister will reflect on those.

One concern that the SMMT and all Members of Parliament who have manufacturing plants in their constituencies regularly raise with me is access to talent. Car companies need highly skilled individuals across the entirety of their business. One reason the UK is attractive is our world-leading universities, with four UK institutions in the global top 10, according to the QS world university rankings. But that is not all. We have supported the automotive sector through the apprenticeship levy, with £2.7 billion funding by the 2024-25 financial year. That will support apprenticeships in non-levy employers, often SMEs, where the Government will continue to pay 95% of apprentice training costs.

We recognise the importance of a level playing field. That is why, at the spring Budget, the Chancellor launched a new capital allowance offer. Businesses will now benefit from full expensing, which offers 100% first-year relief to companies on qualifying new main-rate plant and machinery investments from 1 April 2023 until 31 March 2026, the 50% first-year allowance for expenditure by companies on new special rate assets until 31 March 2026, and the annual investment allowance, which provides 100% first-year relief for plant and machinery investments up to £1 million.

Due to Putin’s invasion of Ukraine, energy costs have been an issue and a concern for the sector. That is why we have again intervened on behalf of the automotive sector, as well as many others, to ensure that the UK’s offer is competitive. It is why the Government have implemented a range of targeted measures to ensure that energy costs for high energy intensive industries, including battery manufacturing, are in line with other major economies around the world, levelling the playing field for British companies across Europe through the British industry supercharger scheme. In addition, to take just one example, the industrial energy transformation fund, now in its third phase, was designed to help businesses with high energy use to cut their energy bills and carbon emissions by investing in energy-efficient and low-carbon technologies. This Government announced £315 million of funding in the 2018 Budget available up to 2027.

The hon. Member for Stalybridge and Hyde talked about providing confidence and support for the sector, and I want to flesh out some of the announcements he was unable to bring himself to say at the Dispatch Box in case that was put into Hansard. Companies continue to show confidence in the UK, and we have announced major investments across the UK, including the £1 billion from Nissan and Envision to create an EV manufacturing hub in Sunderland. I was just on the phone to Envision this morning. It is an end-to-end supply chain. We have £100 million from Stellantis for its site in Ellesmere Port, and £380 million from Ford to make Halewood its first EV components site in Europe.

Jaguar Land Rover has also announced that it will be investing £15 billion over five years into its industrial footprint as part of its move towards electrification. That is great news for the west midlands, where JLR has three production sites, research and development facilities, and its headquarters. I am hugely confident that the UK will continue to attract investments large and small to enable the EV transition and deliver green jobs. Those are the stories we should be promoting at the Dispatch Box, not playing down.

The Government recognise the concerns of the sector, and we are dealing with serious global challenges, including rising costs because of Putin’s horrific war in Ukraine, supply chains disrupted by covid aftershocks and countries turning inward towards protectionism, by which, of course, I mean the Inflation Reduction Act. Acknowledging those issues, over the course of the summer I have been holding a series of business roundtables to understand exactly where the challenges in supply chains are most acute, and where the Government and businesses can work together more closely to ensure that the UK’s supply chains are resilient, now and in the future.

Those headwinds have been felt across the globe, and where the UK sector has been impacted, it has not been uniquely impacted. The entire automotive sector is midway through a once-in-a-lifetime shift away from the internal combustion engine towards zero-emission vehicles. That is good not just for our net zero ambitions; it also has the potential to provide wider economic and social benefits. Of course, our competitors know that too, and the race to secure zero-emission manufacturing capacity across the world is fierce. Some countries seem willing to spend eye-watering amounts. We will be offering targeted investment in the future of the auto manufacturing sector. That means focusing on exactly where we know we are ahead of the game internationally, offering targeted and measured support that reflects the size and scale of our outstanding automotive sector.

As I have said, we have more than a chequebook to attract companies to these shores; our highly productive and skilled workforce, focus on innovation and tech and the ease of doing business are key factors in a company’s decision to base itself in the UK. There is a backdrop of intensely challenging constraints on the sector globally, while the sector is undergoing a seismic technological transformation. It is clearly a difficult situation for manufacturers across the world, but there are positives to be considered, especially here in the UK. The SMMT reported that UK commercial vehicle production has just had its best May performance since 2008, growing by 36.9%—I thought the hon. Member for Stalybridge and Hyde might crack a smile for the sector—and year-to-date output is some 47.6% above the pre-pandemic levels of 2019. That is the message we want to send internationally. It clearly shows that the UK automotive sector is strong, dynamic and fundamentally capable. I want the UK to have a thriving automotive industry. As we take on these global challenges, we will take them on together with the sector.

Some mention was made of R&D support, and I will share all the work we have done. Our R&D and capital programmes delivered through the Advanced Propulsion Centre and the automotive transformation fund are positioning the UK as one of the best places in the world to design, develop and build zero-emission vehicles. They are working together to support the creation of an internationally competitive electric vehicle supply chain. In the coming months, after engagement with industry, the Government will build on those programmes to take decisive action and ensure future investment in the manufacture of zero-emission vehicles, as part of our commitment to building a cleaner, greener, more sustainable Britain fit for the world of the future, not the world of the past that the hon. Member for Stalybridge and Hyde is fixated on.

The automotive transformation fund supports the creation of an internationally competitive electric vehicle supply chain in the UK. It provides support to late-stage R&D and capital investments in strategically important technologies. That includes unlocking strategic investments in gigafactories, which I will come to, motors and drives, power electronics and fuel cell systems. Our automotive industry has a long and proud history. We are determined to build on our heritage as we invest in the technologies of the future, positioning the UK as one of the best locations in the world to manufacture electric vehicles.

I have spoken previously about the Advanced Propulsion Centre, because it does fantastic work in driving technology forward. It was founded in 2013 as a £1 billion joint venture between the automotive industry and the Government to help the industry meet the challenges of innovation and decarbonisation. It facilitates funding to UK-based research and development projects developing zero-emission technologies. The programme helps accelerate the development, commercialising and manufacture of advanced propulsion technologies in the UK. So far, it has supported 199 projects involving 450 partners. It is estimated to have supported more than 55,000 highly skilled jobs and is projected to save more than 350 million tonnes of CO₂—the equivalent of removing the lifetime emissions of 14.1 million cars.

Those projects include the setting up of a joint venture between Unipart and Williams Advanced Engineering to manufacture batteries in Coventry, Danfoss setting up a centre of excellence for hydraulic R&D at its plant in Scotland, and Equipmake increasing the size of its manufacturing plant in Norfolk to meet demand for its electric drive unit. That shows how much work can be delivered and how many jobs created if we work with industry and help it de-risk in adopting new technologies.

I recently visited the Warwick Manufacturing Group, which the hon. Member for Stalybridge and Hyde alluded to. I am surprised he did not applaud the work further.

[Louise Haigh (Sheffield, Heeley) (Lab)]

He did.

[Ms Ghani]

He could have gone further.

I saw at first hand the cutting-edge future mobility research being done in Coventry, the birthplace of British motor manufacturing. While in Coventry, I also had the opportunity to attend the Advanced Propulsion Centre to discuss how we can build on the success of our existing R&D and capital investment programmes. During the visit I met year 6 pupils from Templars Primary School in Coventry who attended the Advanced Propulsion Centre’s STEM day. That is a prime example of outreach activity to inspire the next generation of automotive engineers.

We cannot talk about the automotive sector without thinking about the broader supply chain and one of my particular passions, critical minerals, which I am surprised the hon. Member for Stalybridge and Hyde did not spend more time discussing. He missed out the key point of what is needed to produce electric vehicles. We know that China dominates the EV market, partly due to its grip on the supply chain. It controls much of the mining of crucial raw materials, and 80% of battery making for EVs is controlled by Chinese firms. It is also the world’s top car exporter.

I am not sure whether the hon. Member has had time to read Ed Conway’s recent book, “Material World”, which makes some key points on lithium. We know that reserves of the metal are concentrated in a handful of nations. In his book, he said that lithium reserves are concentrated in “a handful of nations”, so that “while the rest of the world panics about China’s dominance of the battery supply chain, many in Beijing are simultaneously panicking about China’s reliance on the rest of the world’s raw materials.”

We know that an EV car battery contains 40 kg of lithium, 10 kg of cobalt, 10 kg of manganese and 40 kg of nickel, and that is before we consider the graphite that goes into the anode. Those materials have to come from somewhere, which is why we updated our critical minerals strategy in the “Critical Minerals Refresh”—[Interruption.] That was a positive noise from the hon. Member—to ensure we were supporting the sector through the whole supply chain. I encourage colleagues to read Ed Conway’s book. I am not on commission, by the way; it is just a good read.

The hon. Member for Stalybridge and Hyde talked about not having a strategy, but we are working with industry to make sure it can plan for the future. To do that, we had the “Critical Minerals Refresh”, which came from the integrated review. We are making sure that we are focused on batteries and the EV supply chain here in the UK. Recent good news that the hon. Member also forgot to mention is the joint venture between British Lithium and Imerys, announced on 29 June. That is a massive boost to the critical minerals supply chain in the UK.

By the end of the decade, the development of Cornwall as the UK’s leading lithium hub will supply enough lithium carbonate for 500,000 electric cars a year. To help secure the supply of critical minerals, the Government have not only refreshed our critical minerals strategy, but put in place a task and finish group to work with industry so that it can highlight its particular vulnerabilities and we can provide it with the confidence and resilience it needs in its supply chains.

Most recently, I visited Indonesia, where I met Indonesian Ministers to emphasise that the UK has a lot to offer on critical minerals, particularly in relation to private finance, environmental, social and governance capabilities, and mining services. I also visited key mine sites and met companies that are critical in the battery supply chain and in critical mineral production, including some innovative UK companies showcasing the best of British—I know that sentence would be hard for the hon. Member for Stalybridge and Hyde ever to put on the record.

This year, I have also visited South Africa, where I represented the UK at the Minerals Security Partnership ministerial meeting and confirmed the UK’s intention to host the next such meeting during London Metal Exchange Week in October. I also visited Canada, where I signed the UK-Canada critical minerals statement of intent and launched our critical minerals dialogue with Canada, forging a key partnership with one of the most important global players in the critical minerals ecosystem. The hon. Member will want to have a moment to reflect on and applaud our work internationally and domestically on critical minerals.

[Jonathan Reynolds]

Any other countries?

[Ms Ghani]

So many—too many to list right now.

We also need to look at battery recycling. We want to create a regulatory space that supports the appropriate treatment of EV batteries. The Department for Environment, Food and Rural Affairs is currently reviewing existing UK batteries legislation and working at pace to publish a consultation in the second half of 2023. We have also funded the Faraday battery challenge, which has enabled research into the safe and efficient segregation and repurposing of EV battery cell components. Altilium is exploring how to recover the critical metals from old EV batteries and process them effectively so that they can be reused in new batteries. Reblend aims to develop the core processes and capabilities for a UK-based automotive battery recycling industry that can recover cathode materials from production scrap and end-of-life automotive and consumer batteries for reuse in automotive batteries going forward. We are not only trying to get close to host countries and make sure that we are mining ethically, but seeing how we can ensure that we are recycling batteries.

The Minister of State at the Department for Transport, my right hon. Friend the Member for Hereford and South Herefordshire, will touch on a few issues about the zero-emission vehicle mandate, so I will quickly touch on rules of origin. To support the transition, we must not only champion innovation but address all barriers to trade with partners and markets all over the world. Our closest trading partner is of course the EU, with whom we share not only climate goals and a trajectory towards electrification, but deeply integrated supply chains. More than 50% of cars manufactured in the UK and exported are destined for EU consumers. For those reasons, I am working closely with the industry to address its concerns about planned changes to the rules of origin for electric vehicles in the trade and co-operation agreement between the UK and EU.

Since signing the deal, unforeseen and shared supply chain shocks have hit the auto industry hard. That has driven up the cost of raw materials and battery components, making it harder to meet the changing rules. That risks industry on both sides facing tariffs on electric vehicles at a crucial time in the transition to electrification. I am determined to seek a solution to this shared problem and will work with the EU to fix it for 2024. The Prime Minister has raised the issue directly with European Commission President Ursula von der Leyen, and I and other Ministers are engaging with our EU counterparts. We will continue to work closely with industry to address any and all blockers to the electric transition so that our great UK auto industry continues to benefit from access to global markets and UK consumers have the best possible options as we make the switch to electric vehicles.

I wanted to touch on hydrogen, but I believe I am running out of time. I was also going to reflect on success in the aerospace sector, which is very much linked to the automotive sector, but I will not because I can see that you would like me to conclude, Madam Deputy Speaker.

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. For the sake of clarity, there is plenty of time for the debate and the hon. Lady can take as long as she wants. She has so far held the floor for 32 minutes. It is not for me to judge how long she ought to speak for; it is for her to judge the mood of the House.

[Ms Ghani]

Well, I think the mood of the House is to be more positive about the automotive sector. I could list even more stories, but I will conclude because I believe that Opposition Members would despair about all the positivity about the automotive sector that we could talk about and reflect on.

We are home to more than 25 manufacturers that build more than 70 different vehicles in the UK, all of which are supported by 2,500 component providers and some of the world’s most skilled engineers. It is incredibly important to reflect how difficult it has been for the automotive sector globally, but of course we have huge success stories here in the UK. In 2022 we exported vehicles to more than 130 different countries and built more than three quarters of a million cars, with the onwards trajectory rising year on year. This is a healthy sector going above and beyond not only to reskill and upskill, but to meet net zero targets.

The Government are supporting the UK automotive industry, and the sector is a stalwart example of innovation and dynamism to the rest of the world. It is a great sector to get into, whether someone joins it as an apprentice or even by taking on a regular job. Of course, there is more to do. There are more opportunities to secure as we transition to zero-emission vehicles and we realise the potential of connected and autonomous mobility. We have already achieved a great deal in partnership with this fantastic sector, but we are determined to do more. We work with the sector—we do not sit in Westminster coming up with plans that we then U-turn on—and that has given the sector the confidence it needs to continue to invest in the UK. The job of those representing the sector is to praise, promote and protect, not to talk the sector down.

[Jonathan Reynolds]

And to deliver.

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[Ms Ghani]

Delivery is based on the investment I have reflected on throughout my speech. I look forward to hearing lots of sensible speeches throughout the debate.

[Several hon. Members rose—]

--- Later in debate ---

[Sarah Owen (Luton North) (Lab)]

It is a privilege to follow my hon. Friend the Member for Llanelli (Dame Nia Griffith), who is right to talk about the importance of innovation and enterprise in this sector.

This is an important debate, which is why it is disappointing that there are now more Government Parliamentary Private Secretaries in the Chamber than there have been Conservative speakers in this debate. The public and workers will question why the Tories think so little of the automotive sector and will draw their own conclusions.

I am pleased that parliamentary time has been given today to focus on the automotive industry, which has a long and proud history in the UK. As we have already heard, from Sunderland to Coventry, Ellesmere Port and Luton, industrial cities and towns across the country have been hallmarks of manufacturing and quality production in our automotive sector for decades.

My constituents in Luton North have a particular interest in this debate. In a moment I will address the recent events at the SKF plant at Sundon Park in my constituency, but first I would like to discuss another automotive crisis facing the Luton community. Luton’s Vauxhall plant is based in the constituency of my hon. Friend the Member for Luton South (Rachel Hopkins). She is a champion for the automotive sector, and I wish the hon. Member for Bosworth (Dr Evans) had looked up how many times she has mentioned the automotive sector and industry, as he would have reached double digits for sure.

Vauxhall has been a proud industrial landmark of our town since 1905. The plant played a major part in the war effort during the 1940s, producing the Churchill tank and becoming a centre for repairing battle-damaged tanks. Thousands of Bedford lorries were turned out at Kimpton Road, including the QL, which was the company’s first four-wheel drive vehicle and a key feature of our country’s military fleet.

If we fast forward to the present day, we see that the Luton Vauxhall plant employs around 1,500 people from across our town and has been essential to creating skilled, unionised local jobs, running apprenticeship schemes for young people and fostering local talent, including across supply chains and other local businesses. The plant now specialises in producing vans, around 70% of which are exported to mainland Europe. I am so pleased to have had the pleasure of visiting the plant with my hon. Friend the Member for Luton South to meet the workers, and we saw how proud they are of what they turn out. Long may it continue, in the face of the challenge from this Tory Government.

Businesses such as Vauxhall not only provide jobs to people in Luton North, they are also intrinsic to our identity as a town. Generations have worked there, known each other and grown together. Automation changed the face and size of Britain’s automotive sector but, as quickly as we saw it rise, we are now sadly seeing it decline.

Thirteen years of Tory chaos have turbo-charged the closure of factories and the destruction of workers’ livelihoods. The Conservatives’ disastrous handling of Brexit negotiations, the explosion of the economy by the previous Conservative Prime Minister and the long abandonment of any semblance of an industrial strategy are just a few of many contributing factors.

Locally, even in the face of the Government’s evolving mess, we have seen a committed, quality automotive sector and supply chain in Luton, but it is now hanging by a thread. The Minister talked about optimism, but this is the reality facing thousands of workers across the country. Other jobs linked to manufacturing, the automotive industry and the supply chain are similarly under threat.

SKF is a major employer in my constituency. SKF is a ball bearing manufacturing plant, formerly closely tied to Volvo. SKF, like Vauxhall, has been a proud feature of Luton for more than 100 years, and it is another prime example of how this Government are sitting on their hands while they oversee the slow, managed decline of manufacturing in this country.

Last month, SKF announced its plan to close the Luton plant and move production to Poznan in Poland by the end of 2024. This is a devastating blow to our town and our local economy, and it could see the loss of up to 300 jobs. I went to meet workers and Unite union reps at SKF, and they are all deeply concerned about the sudden closure. They told me that, throughout covid, they were considered key workers. They operated and worked throughout, putting their safety behind production, for the good of the company and for the good of the economy.

Generations have worked at SKF in Sundon Park, and thousands have given their best working days to that business, only for SKF’s board members to turn their back on them and for this Government to turn their back on manufacturing workers again. Seriously, what do the Government want? A land of Amazons? A blanket of windowless storage warehouses, where people compete and break themselves to meet unrealistic and ever-increasing pick rates? That is what they are turning our country into.

I am pleased the Minister was keen to take up invites to visit Members’ constituencies, so will she please commit to meeting me and workers at SKF who face losing their jobs to see how we can save SKF’s future in Luton?

[Ms Ghani]

I recently had a meeting with the hon. Member for Luton South (Rachel Hopkins) and Stellantis, and I am always open to meeting colleagues on both sides of the Chamber. Of course I will meet the hon. Member for Luton North (Sarah Owen), those employees and Unite the union.

UK Car Industry

Nusrat Ghani Excerpts

Wednesday 17th May 2023 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

(Urgent Question): To ask the Secretary of State for Business and Trade if she will make a statement on the future of the UK car industry.

[The Minister of State, Department for Business and Trade (Ms Nusrat Ghani)]

The automotive industry is vital. It is a vital part of the UK economy and it is integral to delivering on levelling up, net zero and advancing global Britain. After a challenging period where covid and global supply chain shortages have impacted the international automotive industry, the UK sector is bouncing back. Production is increasing, and in 2022 the UK’s best-selling car was the Nissan Qashqai, built in Sunderland.

The automotive industry has a long and proud history in the UK. We are determined to build on our heritage and secure international investment in the technologies of the future, to position the UK as one of the best locations in the world in which to manufacture electric vehicles. We are leveraging investment from industry by providing Government support for new plants and upgrades to ensure that the automotive industry thrives into the future. Companies continue to show confidence in the UK, announcing major investments across the country, including £1 billion from Nissan and Envision to create an electric vehicle manufacturing hub in Sunderland; £100 million from Stellantis for the site in Ellesmere Port; and £380 million from Ford to make Halewood its first EV components site in Europe.

We will continue to work through our automotive transformation fund to build a global, competitive EV supply chain in the UK, boosting home-grown EV battery production, levelling up and advancing towards a greener future.

[Justin Madders]

Thank you for granting this urgent question, Mr Speaker, and I thank the Minister for her response.

The warnings from Stellantis overnight are deeply concerning, not just for my constituents who work at Vauxhall Motors in Ellesmere Port, but for the automotive sector more widely. She will know of the huge efforts put in over recent years to secure the future of the plant and to move to electric vehicle production; significant contributions have been made from the management, the workforce, the local authority and the Government themselves. So it is beyond frustrating that just a couple of years later we find ourselves once again in a position where there is a threat to my constituents’ livelihoods.

We know what needs to be done to secure jobs in Ellesmere Port and in the wider automotive sector, because the sector has been telling the Government, as have we, that there needs to be a proper industrial strategy. So where is that strategy? Indeed, where is the Secretary of State? The EU is pumping billions into manufacturing as part of its green industrial plan, the US is investing trillions with the Inflation Reduction Act and we are being left behind. Every day this Government sit on their hands, that mountain to climb gets a little higher.

So we need urgent action, but I am afraid that all I have heard this morning is complacency. We need those gigafactories with spades in the ground this year, because we know the timescales that the industry invests across are long and it needs to see progress now. So will the Minister tell us what steps the Government are actively taking to increase the proportion of vehicle parts manufactured in the UK? We need to make sure our trading relationship with the EU is updated to reflect the global supply chain difficulties that all manufacturing industry is facing. So does she plan to make a formal request to reopen negotiations with the EU on the trade and co-operation agreement? It has been made repeatedly clear that without changes to the future trading arrangements, and without a proper industrial strategy, the UK car industry is at risk. What assurances can she give to my constituents that their futures matter to this Government? The UK car sector is the jewel in the crown of our manufacturing industry. If we lose it, it will not be coming back. So please, Minister, take action now.

[Ms Ghani]

The hon. Gentleman will know, when I respond to this question, just how seriously I take the sector, as he does—he and I have worked on this previously. I agree that the automotive industry is a vital part of the UK economy and I will go on to explain all the work we are doing there; if we add it all up, it is more or less a very strategic strategy. We know that it is integral to delivering on our levelling-up agenda, which is why it matters to so many constituents and why there are so many MPs in the Chamber today. We know that it matters to net zero and to advancing Global Britain. We also know how important this is to Members of Parliament because of the number of people who work in the sector.

The automotive industry employs around 166,000 people and includes major manufacturers, such as Jaguar Land Rover, Nissan, Toyota and BMW. We are leveraging investment from industry by providing support for new plants and upgrades to ensure that the UK automotive industry continues to thrive into the future. This includes Nissan’s £1 billion north-east electric vehicle hub, Ford’s £380 million investment in Halewood to make electric drive units, and Stellantis’s £100 million investment in Ellesmere Port for EV van production.

We work closely with the sector through the joint Government and industry-led Automotive Council, of which I am the co-chair, which discusses opportunities for growth, competitiveness and future opportunities. We also meet regularly with individual long-standing and new automotive companies to discuss a range of issues, including future investments.

On Government support, the Government and industry have jointly committed approximately £1.4 billion in innovative projects through the Advanced Propulsion Centre to accelerate the development and commercialisation of strategically important vehicle technologies, strengthening our competitive edge internationally. We also work on the automotive transformation fund, which puts the UK at the forefront of transition to zero-emission vehicles.

Of course, I must not forget the Faraday battery challenge, which, with an overall budget of £541 million since 2017, worked to establish the UK as a battery science superpower. This is what keeps us at the forefront as we try to adapt and use a new technology.

I wish to put it on the record that there are regular reviews of the EU-UK trade and co-operation agreement, but, as the hon. Gentleman will know, that responsibility sits with the Foreign, Commonwealth and Development Office and is not something that I can respond to on its behalf. However, I can provide assurances—[Interruption.] I am just about to do so, if Members will allow me to continue. I can provide assurances that I and the Secretary of State for Business, Energy and Industrial Secretary have raised these issues with our colleagues across Government and have had productive conversations with our counterparts in the European Union. We are aware of the concerns of UK and EU car makers about the challenges and, of course, we continue to make strong representations.

[Mark Pawsey (Rugby) (Con)]

The automotive industry has been a huge success story for the west midlands and can be so in the future as we transition to electric vehicles. However, with 40% of the weight and cost of an electric vehicle being made up in the battery, it is vital that we get a battery manufacturing site in the west midlands. A site has been allocated at Coventry airport, immediately adjacent to the Battery Innovation Centre, where some innovative and brilliant work is taking place. Will the Minister provide Government support for the proposed gigafactory at Coventry Airport?

[Ms Ghani]

I am grateful to my hon. Friend for raising this issue. He and I worked together on the Business, Energy and Industrial Strategy Committee. He has always been a passionate advocate for his constituency. It is indeed a fantastic proposal and we are keen to make sure that we can support as much investment as possible and that sites are set up for gigafactories. We know how important it is to ensure that the supply chain is as reliable as possible. If my hon. Friend would like to meet me, we can go through the proposals in further detail.

[Mr Speaker]

I call the shadow Secretary of State.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I thank my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) for securing this urgent question on an area of fundamental importance not just to his constituency, but to the prosperity of the whole country.

For months now, Labour and industry have been warning the Government that this cliff edge was coming. It is a statement of the blindingly obvious that the lack of battery-making capacity in the UK, combined with changes to the rules of origin, was a car crash waiting to happen. It is a fact that, without domestic batteries, there will be no domestic automotive industry in the UK, yet the Government have no strategy to bring in the investment and infrastructure needed, and the rules of origin just make that even more compelling. This deadline to conform with the rules of origin has not been a secret, but where is the urgency, the ambition and the determination to keep our world-class automotive industry in the UK?

Once again, industry has been treated to a Government who are fond of big-state, top-down targets, but completely missing in action when it comes to how to deliver on those targets. Dare I say it that, despite warning after warning, it is clear that this Government are asleep at the wheel. Labour has a plan, through our industrial strategy—which Members can read as it is published—not just to protect the industry and the jobs that we have, but to deliver even more. We will part-finance those eight gigafactories, create 80,000 jobs and power 2 million electric vehicles, matching the incentives on offer from our rivals.

This is not just about public investment; it is about planning reform, changes to business rates, domestic energy security and supply, and more. That is the action that is needed. With respect, the Minister has not really answered any of the questions from my hon. Friend the Member for Ellesmere Port and Neston yet, so will the Government outline how they will secure the battery-making capacity that we desperately need in the UK? What is the Government’s view on the suitability and application of the rules of origin as they currently stand? Finally, will the Government wake up, grab the steering wheel and get control of the situation before it is far too late?

[Ms Ghani]

It is a good to hear that the Opposition are expecting businesses to make decisions on promises that may or may not come down the line, and on promises of sums of money that have been allocated and reallocated a number of times by the Labour party. This is not just my view: look at the figures from the Society of Motor Manufacturers and Traders, showing that British commercial vehicle production grew by 39% in 2022, the best since 2012, with exports surging by 63%. We are determined to make the UK the best location for export-led automotive manufacturing.

I am going to talk not about a promise, but about the programmes that are in place to ensure that supply chains and gigafactories are here to support the whole automotive sector. I have spoken about the Advanced Propulsion Centre—perhaps the Opposition do not understand how important that is—the Faraday battery challenge and “Driving the electric revolution”. We must not forget the Envision AESC announcement of its investment in a gigafactory in Sunderland or Johnson Matthey confirming its investment in the construction of a factory in Hertfordshire for proton exchange membrane fuel cell components for use in hydrogen vehicles.

Discussions are constantly ongoing with other potential investors into gigafactories in the UK. We are not doing this by ourselves in Government, making decisions that seem good on paper; as I said, I co-host the Automotive Council and just this week—possibly on Monday or Tuesday, I cannot remember—I caught up with Aston Martin, Bentley Motors, BMW, Ford, Jaguar Land Rover, McLaren Automotive, Nissan, Stellantis, Tesla, Toyota and the Volkswagen group. They are keen to continue working with us to ensure that we have supply chains here in the UK.

[Greg Clark (Tunbridge Wells) (Con)]

To secure the future of our vital automotive sector, we need to manufacture batteries in the UK. The industrial strategy in 2017, which my hon. Friend the Minister referred to, established the Faraday challenge to build on our cutting-edge research capability. The battery innovation centre was set up to develop manufacturing capacity. While the strategy is vital, and must be refreshed and continued, it is necessary but not sufficient; we need activism. When Mrs Thatcher lured Nissan and Toyota to this country, she travelled to Japan to make the case for locating here. Does that level of activism exist in the Government, and will the Minister commit to ensuring that we have those investments from companies around the world in the UK?

[Ms Ghani]

I believe that my right hon. Friend was the Secretary of State for Business, Energy and Industrial Strategy when the decision on the Faraday battery challenge was taken. He made sure that £211 million of funding was in place, so that technology could be developed to make batteries as efficient as they can be. That is just one part of our trying to secure investment into the UK. I can confirm that meetings are constantly taking place, including at Secretary of State level, with companies based in the UK and overseas, meeting with chief executive officers and chief financial officers to ensure that the UK is seen as an attractive place to manufacture cars. There is a global challenge around supply chains—it is not just a domestic issue—and we are keen to ensure that the UK continues to be seen as the best place to manufacture cars.

[Mr Speaker]

I call the SNP spokesperson.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

The Minister is sticking her fingers in her ears and burying her head in the sand on this question. The Government were told time and time again about the rules of origin issues, and the car industry seems to be another casualty of the Government’s damaging Brexit. Increasing the uptake of low-emission vehicles is vital to meeting our net zero goals, but the UK’s disastrous trade deals are making the domestic manufacture of those vehicles impossible.

Stellantis has warned:

“If the cost of EV Manufacturing in the UK becomes uncompetitive and unsustainable operations will close.”

Has the Minister made an estimate of how many job losses it would lead to if the world’s fourth-largest carmaker closed its UK factories as a result of Brexit? Andy Palmer, a former chief operating officer, said that we are “running out of time” to get battery manufacturing in the UK, and that a failure to address the issues caused by Brexit will lead to the loss of 800,000 jobs in the UK. Car manufacturing has fallen sharply since the UK chose to leave the EU, from more than 1.5 million in 2016 to just 775,000. Does the Minister accept that the only way for Scotland to stop the decline of our industries is to gain independence and rejoin the world’s largest single market?

[Ms Ghani]

I would not expect anything less than a rerun of the conversation on Brexit. Fundamentally, the hon. Member does not like Brexit, does not like any trade deal, and does not even like the most integrated single market between England and Scotland, so I know that he has nothing appropriate to say.

Let us talk about the situation as it is: confidence in the UK automotive sector, and in the whole supply chain, has meant that Stellantis has invested more than £100 million in the Vauxhall plant in Ellesmere Port. That will see the plant transition to become the first mass-market all-electric plant in the UK, producing electric vans from 2023. That shows the confidence that that particular firm has in the UK.

We know that the production of electric units will go up, whether for private or commercial use, and we are doing everything we can to provide support on some of the more challenging issues in car manufacturing, such as access to energy and the cost of energy, which we have been working on as well. It is internationally challenging—I accept that—but the UK continues to be incredibly attractive for car manufacturing.

[Andrew Selous (South West Bedfordshire) (Con)]

Many of my constituents work at the Vauxhall Luton van factory, which makes the incredibly successful Vivaro, so this issue really matters to them and to me, and it matters for our industrial future. Will the Minister flesh out in a little more detail the plan to get more battery manufacturing capacity here in the United Kingdom? When will there be announcements? What number of battery plants does she believe the United Kingdom needs to have a successful car manufacturing industry?

[Ms Ghani]

I thank my hon. Friend for that incredibly sensible question. I have talked about all the programmes of work we have in place to attract gigafactories to the UK and to ensure that we are using the best technology that we can. We have the automotive transformation fund, which is building globally competitive electric vehicle supply chains, and I have spoken about the Faraday project, which will unlock a huge amount of research and development. We have Envision, too. We are working with and we constantly talk to other investors to help them come and establish gigafactories in the UK. We know how important it is to have supply chains to deal with the remarkable amount of cars being manufactured here.

My hon. Friend will be pleased to know that we also published in the integrated review an updated report on critical minerals to ensure that we are able to access to those minerals and are not relying on a particular nation, but can diversify. As I have said, I co-chair the Automotive Council, and that will provide a huge amount of assurance to his constituents that we are working hand in hand with the sector.

[Mr Speaker]

I call the Chair of the Business and Trade Committee.

[Darren Jones (Bristol North West) (Lab)]

The story overnight came from written submissions to my Committee’s inquiry on the future of battery manufacturing in the UK. Stellantis will be here in Parliament next Tuesday to give further evidence. The Minister will know two things: that she and her departmental officials are in ongoing negotiations with other car manufacturers in the UK beyond Stellantis, and that all the car companies are raising exactly the same issues and are asking for a step up in activity from the Government and an end-to-end industrial strategy to show that the UK is serious about the future of UK production of electric vehicles. Will the Minister confirm for the record that those assertions—that the Department is in negotiations right now with other car manufacturing companies and that they are raising exactly the same issues as Stellantis—are indeed correct?

[Ms Ghani]

I am grateful to the Chair of the Select Committee for being here. I was once on his Committee. Overnight, I went through the transcript and some of the submissions to that inquiry, and I noticed the submission from Nissan. I know that nobody wants to pick out all the positive things that were said, but there was a great point on page 4:

“The UK has strong promise as an EV battery production location due to strong demand, a skilled workforce, and attractive manufacturing sites.”

We somehow seem to be forgetting all the positive things that are said in submissions by the automotive sector.

We are working with those in the sector, as I have said. I meet them regularly and was with them just this week to deal with a number of challenges, whether to do with the Inflation Reduction Act or gigafactories. I can, of course, confirm that we are working with industry to do everything we can to ensure that there is greater commitment to gigafactories here in the UK.

[Holly Mumby-Croft (Scunthorpe) (Con)]

Manufacturing and industry in this country are definitely an ecosystem, and when we start to lose chunks of it, that not only devastates communities but affects wider supply-chain businesses. The Minister will know that steel is crucial to car manufacturing. Can she reassure me and my constituents that she is considering those supply-chain businesses and doing everything she can to ensure that we have a level playing field in this country, not just for the steel industry but for manufacturing more widely?

[Ms Ghani]

My hon. Friend is once again the lady of steel, raising the topic on behalf of the whole industry across the UK. She will know about our recent work to look at procurement and the whole lifecycle of supply chains, and to ensure that we are doing everything we can in the UK. She knows about our commitment to the steel sector—we have provided billions of pounds-worth of support for energy costs, and now there is a huge amount of support for decarbonisation—and because of her work, steel will not be left out of any conversation when it comes to advanced manufacturing.

[Ian Lavery (Wansbeck) (Lab)]

Recharge Industries, the organisation that bought out Britishvolt, is committed to building a gigafactory on the Britishvolt site in Cambois in my constituency. However, there is a huge issue with Northumberland County Council relating to a buyback proposal on the land of the proposed gigafactory. Will the Minister please intervene to facilitate discussions between all parties to ensure that we are not let down again at the site in Cambois, and that Recharge Industries gets every support it needs from the Government to build that gigafactory and bring 9,000 jobs to the north-east?

[Ms Ghani]

We are pleased that Britishvolt has been successfully acquired. We know that investment supports high-quality jobs in industries of the future, and we are determined to ensure that the UK remains one of the best locations. We look forward to learning more about the Recharge Industries plans, and we continue to work closely with the local authority—it is not a Government decision—to ensure the best outcome for the site. Because I am so keen to ensure that we continue to have good news in this sector, I will commit to meeting the hon. Member this week so that he can ensure that the information I am getting from my officials is absolutely correct. If there is anything more I can do in relation to the local authority, I will do my best.

[Rachel Hopkins (Luton South) (Lab)]

I am very proud to have the Vauxhall van plant in my constituency. I was going to ask the Minister whether the Government accepted that setting ambitious targets, such as the zero emission vehicle mandate, without a plan, alongside the issues with the rules of origin, was simply reckless, but I want to impress upon her that what we are debating impacts on people’s lives and livelihoods. Will she accept an invitation to Luton South to visit the Vauxhall van plant and speak with workers there, and their representatives, to see how Government decisions impact on people’s lives?

[Ms Ghani]

We are very much aware of how this impacts on people’s lives. I can tell by the number of Members in the Chamber. I co-chair the Automotive Council, so I know how incredibly important it is that we are sensitive to the needs of the industry while delivering on our other ambitious targets, including net zero. For the meeting this week with the sector, I took a delegation over to the Department for Transport to explain a little further the challenges of the ZEV mandate. There is a huge commitment to delivering electric vehicles, but there are also challenges if we want to ensure that the UK automotive sector continues to be as competitive while delivering on our net zero ambitions. Of course, if the opportunity arises, I would be more than happy to visit the hon. Member’s manufacturing site when she is available. I will do my very best to try to make that happen.

[Sarah Olney (Richmond Park) (LD)]

In a written answer to me in November last year, the Minister said:

“The Government is committed to securing investment into the automotive sector, which will play an important role in levelling up across the UK and driving down emissions to net zero by 2050.”

In the light of that, today’s intervention by Stellantis is extremely worrying. If the Government cannot get an agreement to keep the current rules until 2027, what assessment have they made of the effect that the 10% tariff will have on the UK car manufacturing industry?

[Ms Ghani]

The hon. Member’s premise is wrong. I can list all the investments that have taken place in the sector, including £100 million from Stellantis in Ellesmere Port. That is taking place because there is confidence in the UK and in the supply chains. There has been a £380 million investment in Halewood. We have £1 billion of investment in the north-east hub between Nissan and Envision. That is all investment in the UK. Bentley announced £2.5 billion of investment in 2022 to produce its first battery-electric vehicles by 2026, securing 4,000 jobs at its Crewe plant. None of that was in the hon. Member’s script as she stood up.

We are aware of the rules of origin issue and it is raised with the Automotive Council, of which I am a co-chair. As I said earlier, the FCDO leads on this issue, but my Secretary of State is in constant contact to ensure that we get the best deal we can.

[Mick Whitley (Birkenhead) (Lab)]

Stellantis’ warning that it might be forced to close its UK factories will be greeted with dread by the large number of my constituents who work in the Vauxhall car plant in Ellesmere Port, where I myself was employed for many decades. The automotive sector now faces an existential threat as a result of the Government’s recklessness in setting such ambitious rules of origin targets, with no clear plan on how they would be delivered. With 800,000 jobs hanging in the balance, can the Minister confirm that the Government are prepared to sober up, get real, and work with the EU to revisit the rules of origin requirements in the trade and co-operation agreement?

[Ms Ghani]

Stellantis gave evidence to the Select Committee on a number of issues, and it seems peculiar that just one particular point has been raised, which has been in process for quite some time. The confidence that the hon. Member can give his constituents is that Stellantis has invested over £100 million in the UK—that is the confidence that employees have as well. A series of submissions were made to the Select Committee, and I am sure that the Chair, the hon. Member for Bristol North West (Darren Jones), will see a lot of activity on the website going forward. I read out the submission from Nissan expressing the confidence it has in the UK, as well as in us being able to deliver a huge amount of technological advancement in providing net zero vehicles. I ask the hon. Member for Birkenhead (Mick Whitley) to read the submission in full, not just the snapshot that was in the news.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

As the Minister will be aware, Sunderland is home to Nissan—it is in my constituency—and there are thankfully already shovels in the ground for the Envision AESC’s battery gigafactory, but we need more than one gigafactory. The sustainability of other UK manufacturing operations is at massive risk, as we have heard today, because the Government are incapable of seeing through any strategy. They knew this day was coming. When will the Government renegotiate the trade and co-operation agreement?

[Ms Ghani]

The hon. Member is absolutely right: there is a fantastic project with Nissan and Envision that will support 6,200 jobs in that supply chain, with more than 900 new Nissan jobs and 750 new jobs at the Envision gigafactory. By 2025, that site will see a projected 100,000 battery electric vehicles produced each year by Nissan; it is the first in the UK at that scale. All the other programmes of investment that I explained, whether that is the automotive transformation fund or the Faraday battery challenge, are what we are using to attract further investment in the UK, especially in gigafactories. That is exactly what we are working on—it is what I am working on as the co-chair of the Automotive Council.

[Dame Nia Griffith (Llanelli) (Lab)]

The transition to electric vehicles means not only new battery and engine factories, but significant investment in car component factories such as Gestamp in my constituency, which has developed lighter, tougher car body parts. Multinational companies such as Gestamp are currently making crucial decisions about where to site the production lines of the future, so with the US Inflation Reduction Act and the EU refining its response, what are the Government going to do to reduce energy costs both now and in the long term, to provide a coherent industrial vision and strategy, and real incentives for companies such as Gestamp to invest their new lines here in the UK?

--- Later in debate ---

[Ms Ghani]

Those are the exact conversations that we have been having for quite some time with manufacturers in the UK. Of course, IRA is not just a challenge for us, but a challenge internationally—the hon. Member has no doubt seen the response from Europe. We are also putting together a response collectively for all the manufacturers within the UK. It is important to note all the support we have given to energy-intensive industries, including the energy bill relief scheme, and now we have the supercharger coming down the line as well. Fundamentally, we also have the critical mineral refresh that is in the integrated review, which will provide further assurance that we can get hold of the basic goods—the critical minerals—that are needed to ensure that supply chains are reliable for manufacturers in the UK.

[Matt Western (Warwick and Leamington) (Lab)]

Never has an industrial strategy been more needed, and never have a Government been found more wanting. We have just 2.5 GW in production currently with Envision, and as the right hon. Member for Tunbridge Wells (Greg Clark) said, it needs activism, but I am afraid the signals just are not there. As Chancellor, the Prime Minister gave a keynote speech to the automotive industry last May. He spoke for just one minute and 46 seconds, and the delegates were left feeling disrespected by his lack of commitment. Unfortunately, this does affect international corporates that are looking to invest, and between the US with its IRA and the investments in Europe—in Germany, France and Spain—we are in serious danger of losing out. As such, will the Minister please convene a cross-party meeting with the Automotive Council to discuss what the plan is to address this real crisis?

[Ms Ghani]

If Madam Deputy Speaker allows, I will be more than happy to go over the allowed one minute in my response, but I do not want to lose favour with her. The constant requests for the strategy are peculiar because I can tell Members exactly what we are doing. The Chancellor identified five key growth sectors for the UK, which of course include advanced manufacturing, and the Government have announced £500 million per year for a package of support for 20,000 research and development-intensive businesses. We have 12 new investment zones and we are saving £1 billion yearly by cutting red tape that is burdensome for big employers.

But the point is this: there are a number of challenges around supply chains. We are looking at that issue with the Automotive Council, and also through the integrated review and the critical minerals refresh. There was a challenge internationally when it came to energy costs; we had the EBRS and now we have the supercharger. I am the co-chair of the Automotive Council. I am sure that, if the hon. Member for Warwick and Leamington (Matt Western) wanted to attend, he could write to the co-chair and ensure there could be time for him to be there as well. That work is done collaboratively with all the automotive CEOs, CFOs and leading managers across the UK. I do not determine who comes to that meeting and represents the automotive sector; that is for them to decide.

[Kerry McCarthy (Bristol East) (Lab)]

In the UK, we have the largest queue to connect to the grid of any country in Europe, which is affecting the car manufacturing industry, including when it sets up new plants. One manufacturer that wanted to put solar arrays on its plant was quoted 2031 for grid connection and a £9 million cost; another one was quoted 2037. That is clearly hindering our chances of securing a prosperous car industry in this country and attracting more investment. What conversations is the Minister having with her colleagues to ensure that grid connectivity is resolved?

[Ms Ghani]

I thank the hon. Member for that question, because it shows that we have to work across Whitehall. Access to the national grid is a major issue for any of the large manufacturers and of course, as their plans grow, they need to have greater access over a faster timetable than one would have previously thought National Grid would make available. Conversations are taking place, in particular with colleagues who were previously in the Department for Business, Energy and Industrial Strategy, who are now in the Department for Energy Security and Net Zero and are leading that relationship with National Grid. The issue comes up regularly in the meetings that we have with the manufacturing sector, and my priority is to support the advanced manufacturing sector, so the hon. Member can be assured that I am campaigning incredibly hard to make sure that all our advanced manufacturing sites—present or planned—get access to energy at a timetable that suits the business, not just National Grid.

[Dave Doogan (Angus) (SNP)]

It is deeply unimpressive for the Minister to come along today and talk about jam tomorrow—investments in future exotic technology and the investments that industry is making in that scenario—when what we actually need is conventional traction battery manufacturing capacity in the UK now. I am invested in this because of the supply chain in Scotland and because the United Kingdom has done everything it can to avoid any of the automotive foreign direct investment coming to Scotland. What will the Minister do to address the emergency of a lack of manufacturing capacity in traction batteries now, not different types of batteries in the future?

[Ms Ghani]

It is not about jam tomorrow: it is about money committed previously and money committed today. The transition to zero-emission vehicles is being supported by up to £1 billion for R&D and capital investments in strategically important parts of the electric vehicle supply chain, building on the £1.9 billion in spending review 2020. The Government have committed £620 million to support the transition to electric vehicles—that is committed today; it is not jam tomorrow. I ask the hon. Member to read all the submissions to the Select Committee, and to respond to the positive comments that have been made about why businesses continue to see the UK as a great place to manufacture cars.

[Andrew Gwynne (Denton and Reddish) (Lab)]

If levelling up is to be more than just a slogan, we desperately need an industrial strategy that matches historical skills to new job opportunities. I want to impress on the Minister that, in 2002, Oldham Batteries in Denton closed for the last time. It made car batteries for a long time. It had been a company since 1894, but those skills are still there in Tameside. How do we match up future job opportunities that the green transport revolution brings to those skills that still exist in areas such as Denton and Tameside?

[Ms Ghani]

I am grateful for the hon. Member’s point. There is no doubt a huge amount of skills in his constituency and it is absolutely right that he is coming here to represent them today. I have spoken about the Faraday battery challenge, which is about using new technology to ensure that we are producing the best batteries with the longest lifecycle. Forgive me; he is absolutely right: I should have mentioned the national electrification skills framework. That project is being continued by the Faraday battery challenge. It looks at the skills needed today, tomorrow and even further going down the line to ensure that these jobs and opportunities are spread across the UK. If he would allow, I am more than happy to write to him and to make sure, if it does not already, that that part of the Faraday challenge covers his region, too.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

As well as a viable automotive industry, the UK badly needs adequate road infrastructure to drive electric vehicles on. Do the Government recognise that demand for private and commercial electric vehicles is stalling in the UK because there is insufficient charging infrastructure, which makes buyers reluctant to make the move? Will the Minister raise that with Transport colleagues and commit to Labour’s policy of implementing mandated regional targets to ensure that all parts of the country get the charging infrastructure they so badly need?

[Ms Ghani]

As I mentioned earlier, I went with a delegation of car firms over to the Department for Transport, and I can see a Minister from that Department, my hon. Friend the Member for North West Durham (Mr Holden) on the Front Bench. As I mentioned, it included Bentley, BMW, Ford, Jaguar Land Rover—I have to read them all out; they will complain if I miss them off—McLaren, Nissan, Stellantis, Tesla, Toyota, Volkswagen and Aston Martin. I think that is everybody. Infrastructure is absolutely key, and we are doing everything we can to put pressure on the Department for Transport as it works with its stakeholders to make sure that the roll-out of charging points, including fast charging points, is kept up to speed to make sure that buying an electric vehicle is as attractive as it can be.