UK Automotive Industry

Alan Meale Excerpts

Tuesday 1st April 2014 Westminster Hall

[Gavin Williamson]

My hon. Friend makes a valid point. At the weekend, I took my two daughters to the Enginuity museum at Ironbridge near Telford. We saw a cross-section of a Mini. Although the design is amazing and out of this world, it is all pulleys and levers. Now, much of a Mini’s design is down to electronics. We must not forget how high tech or capital-intensive the automotive industry is, but it is about getting the skills and technology in line, and the Government have an important role in ensuring that that happens. Let us not forget that if youngsters and people of all ages do not have the skills, and if we do not support companies constantly to skill up and improve their work force so that they can move forward, we will lag behind.

I am conscious that other people want to take part in this debate. In summary, I seek assurance from the Minister that the Government are committed to ensuring that the regional growth fund continues to deliver jobs and investment not just for the west midlands but for the whole country. The fund has already achieved a great deal, but it can do more. Let us not kid ourselves, because the automotive sector is one of the most international industries in the world. The sector can move to virtually any country. We would be very naive to think that countries such as Germany, Italy, France, Spain, Portugal, India, China, Russia, Brazil and the United States are sitting back and not being proactive in attracting investment, because those Governments are going out to seek and deliver investment. I want to see the Government continuing to do that, ensuring that it is clear to everyone not only that we have the most skilled work force and the best designers in the world and produce the best cars, but that we are the best place to produce them.

[Sir Alan Meale (in the Chair)]

Order. Before we continue, I have permission from the Speaker to impose time limits on speeches if necessary. Seven Members have indicated that they want to speak, and we need to give a proper opportunity for the Minister and the shadow Minister to respond. I will impose a five-minute limit on speeches, which includes any interventions. It is up to individual Members to decide if they want to give way.

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[Richard Burden (Birmingham, Northfield) (Lab)]

It is a pleasure to follow my fellow Birmingham Member of Parliament and hon. Friend the Member for Birmingham, Erdington (Jack Dromey) and the hon. Member for Warwick and Leamington (Chris White), whom I have known for many years—I remember well that first debate. I also congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate. He started off his remarks by talking about “Top Gear”, and I think I may be the only Member in this debate who has actually been on the programme. I appeared on a feature looking for the fastest political party, and the good news, at least for the Opposition, is that I soundly beat the Conservative candidate, but the rather bad news is that I was beaten by the Legalise Cannabis Alliance, so I do not necessarily talk about that too much.

[Sir Alan Meale (in the Chair)]

Order. As a result of Members kindly keeping their contributions short, we have the opportunity to allow a little more time to subsequent speakers. The hon. Gentleman can now speak for reasonably longer than he was planning.

[Richard Burden]

Thank you, Sir Alan; it is much appreciated.

As my hon. Friend the Member for Birmingham, Erdington said, ask anyone in the automotive industry what they want from Government and two words will come up time and time again: continuity and predictability. It is not always exciting for politicians, because we all love to blame everything that goes wrong on the other side and to corner the market in everything that goes right for our side, but the automotive sector does not work that way. The reality is that all major political parties underestimated the importance of manufacturing for too long, but that has now turned around.

The automotive industry has been a trailblazer, with great partnerships within the industry, which my hon. Friend the Member for Birmingham, Erdington and my right hon. Friend the Member for Oxford East (Mr Smith) discussed, but also with the Government and with Parliament. The industry forum that thrived under the previous Government was a building block of that success, as was the creation of the Automotive Council, which creates road maps for future issues facing the industry, such as skills and the low-carbon agenda. Other hon. Members have referred to the figures that highlight the automotive industry’s success story. Despite your offer that I can speak for longer, Sir Alan, I will not repeat them, but suffice it to say that some of the figures are startling.

I want to discuss something that the hon. Member for South Staffordshire mentioned, namely the role of the motorsport and performance engineering industries in the automotive sector. Eight of the 11 Formula 1 teams are based in the UK. Lewis Hamilton won the Malaysian grand prix on Sunday, which was very good, and the results state that he was driving a Mercedes, which he was, but that Mercedes was built in Brackley. The factory in Brackley has been Honda, Brawn and Mercedes, but it has always been British. Motorsport companies are involved in so much more than what many people usually think of as motorsport, such as the fantastic work being done in a range of areas at the McLaren Technology Centre by McLaren Applied Technologies. How many people know that the skeleton sled on which Lizzy Yarnold did so well at the winter Olympics was designed by McLaren here in the UK? Williams Advanced Engineering’s centre is also doing much great work, and companies such as Prodrive and Cosworth are also involved in state-of-the-art work.

The UK, however, is the home of motorsport not only in Formula 1, but in so many other ways. The national and grassroots series are among the building blocks that make our motorsport and performance engineering industries as world-class as they are. The premier national racing series is the British Touring Car championship, the opening round of which was on Sunday. The main sponsor of the series is Dunlop Motorsport. Why therefore is Dunlop Motorsport, as part of that cluster, turning its back on the home of motorsport? When the Minister responds, will he update the House? I know that approaches have been made on the matter from both sides of the House. My hon. Friend the Member for Birmingham, Erdington and I have worked hard on the issue, and it needs to be said to Dunlop that it has still not answered satisfactorily the questions that have been put to it, and that the reasons it has given for doing what it seems intent on doing have not been convincing. It will be bad for motorsport, for the cluster and for Dunlop if it goes ahead with what it is doing.

I mentioned the British Touring Car championship. Two of the races on Sunday were won by Hondas built in the UK. The road car, the Civic, is also built in the UK. Despite the success of the automotive industry, we sometimes find things that are not great, and it is worth pausing for a moment to reflect on the fact that just in the past week Honda has had to cut back on some shift working at Swindon, which is something to be mourned by all of us. If we ask the people at Honda why that is, they say that it is about the market for their cars, and crucially the European market. Europe is still the largest export market for UK vehicles.

In my constituency, Shanghai Automotive still produces MGs and has its European technical centre there as a base, a foothold and a bridge into Europe. The hon. Member for South Staffordshire was right that the automotive industry needs reassurance, but it needs reassurance that we will not play fast and loose with our membership of the European Union. That is important not only to the motor companies exporting into Europe. Jaguar Land Rover, for example, has fantastic export achievements in other parts of the world, but ask it and those who want to export to the United States about the European Union and they will also say that continued membership is vital to them, apart from anything else because of the free trade agreements and other ongoing negotiations. I accept that the Conservative party might have one or two problems, looking at its flank with the UK Independence party, but frankly the interests of Britain are more important. Continued membership of the EU and reducing the uncertainty about our membership are very important.

On the supply chain, the hon. Member for South Staffordshire was right that one way in which we can and should do more is by ensuring that its component sections—the original equipment manufacturers—in the UK are firmed up and developed. About two years ago, KPMG produced an important report for the Society of Motor Manufacturers and Traders which showed that about £3 billion-worth of opportunities are being missed in the supply chain. That is why it is important for us to do more.

Some good things are going on: the Automotive Investment Organisation, headed by Joe Greenwell, formerly of Ford of Britain, has been set up to attract vital foreign investment, which is good news; the advanced manufacturing supply chain initiative has been established, which is good news; and the advanced propulsion centre is being established, which is important to ensure that there are opportunities for small and medium—and not so small and not so medium—companies in the development of ultra-low-emission vehicles and so on.

We need a sustainable framework, however, which is why the hon. Member for South Staffordshire was right to stress the importance of predictability and speed of action by things such as the regional growth fund. I believe that it was a mistake to get rid of the regional development agencies. We may disagree about that, but they at least provided a framework for making decisions and ensuring that those decisions were carried through. All too often, things are too hand-to-mouth at the moment. I hope that the Minister will address that issue, because the automotive industry is very much the jewel in our industrial crown.

Many other sectors in the UK and beyond are asking, “How did you do it in automotive?” They want to copy things such as the Automotive Council or the partnership. That is good news, but we must not rest on our laurels. There is a huge skills agenda to be developed and so much more yet to be done with the supply chain to ensure that we achieve our potential.

In conclusion, I hope that the Minister will say a few words about Dunlop, because that is still not a done deal and we still need to apply pressure. I hope that he will join me in applauding the work of the Automotive Council. I also hope that he will say a little more about the advanced propulsion centre; about how the UK will accelerate on the ultra-low-emission vehicle agenda, because we are lagging behind other countries in the take-up of such vehicles; and about what we can do to better address the concerns expressed by the industry about skills and the supply chain.

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[Michael Fallon]

Yes, I will. We need to drive up the quality of apprenticeships, and that is part of what is called the Trailblazer exercise. Those involved will help to draw up the standards, and ensure that there is a rigorous test at the end of the apprenticeship and that we improve the quality of what is on offer.

I turn to what we are doing to support innovation and technology. Our aspiration is for almost every car and van in the UK fleet to be an ultra-low emission vehicle by 2050, with our industry at the forefront of the design, development, manufacture and use of those vehicles, delivering opportunities and contributing to the decarbonisation of road transport. We have made a commitment of £400 million over this Parliament to making the UK a leading market for ultra-low carbon vehicles, and we announced an additional £500 million of capital funding for the period between 2015 and 2020.

To ensure that we maintain our position at the forefront of that technology, as I have said, we have already agreed the investment in the Advanced Propulsion Centre, and we are supporting further innovation, research and development through an £82 million investment up to 2015 from the Office for Low Emission Vehicles through the Technology Strategy Board.

As my hon. Friend the Member for South Staffordshire said, we have great automotive design capacity in this country. Nissan has a cutting-edge European design centre based in Paddington—London, of course, is one of the creative hubs of the world—but with its sister Nissan technology centre at Cranfield and the largest single production plant at Sunderland, we can be proud to say that the latest version of the best-selling Qashqai has been designed and developed, and is being successfully manufactured, here in the UK.

Nissan is not alone in that. Ford invests some £450 million each year in designing, developing and researching advanced gasoline and petrol engines for its global product range at Dunton. Volkswagen spends £200 million each year at its engineering centre at Crewe, which, of course, designs the interior and exterior of Bentley cars. The scale of JLR’s research and development investment places it in the top 10 of all R and D investment in the UK. Some £2.75 billion was invested in 2013-14.

Let me turn to points that have been raised. The hon. Member for Birmingham, Northfield (Richard Burden), asked me about Dunlop. We have been working closely with Dunlop to see what we can do in Government to secure a better outcome for all parties concerned, particularly the Dunlop workers, given the expiry of the lease next year. The company met the Secretary of State for Business, Innovation and Skills recently. There have also been key meetings at official level. We continue to offer our full support to Dunlop. The company has acknowledged that offer of support and will contact officials once the consultation has concluded.

The hon. Gentleman also asked me about the regional growth fund, which I have referred to. It is true that in the first couple of rounds of the regional growth fund, a proper time scale was not in place. I put that in place for round 3. It is in place for round 4, and it will shortly be put in place when we announce the award winners for round 5, so I think we have a more systematic process for looking at the allocations.

The hon. Member for Inverclyde asked me specifically what we were doing to make sure that all this growth was more evenly spread throughout the United Kingdom. It is fairly spread, certainly across England. I recognise the decline of some elements of the Scottish car industry. Industrial policy, of course, is a devolved matter, so the instruments at our command here—the regional growth fund and AMSCI—are not available in Scotland. It has its own separate instruments, but companies from all over the United Kingdom are represented on the Automotive Council, and we work closely through UK Trade & Investment with counterparts in Scotland.

The hon. Member for Hartlepool (Mr Wright) asked me about a number of points. He referred to the partnership with the unions. I, too, would like to place on record the important part that unions have played in the revival of our automotive industry. We saw that in emphatic fashion in the negotiations over Ellesmere Port; it was the constructive partnership—the agreement on more flexible working practices—that made it able to win investment in the face of a competing bid for Germany. I remind hon. Members that Unite is represented on the Automotive Council. It is right that it has its place there, and I, too, pay tribute to the constructive way in which it has worked on a number of the changes that have taken place in the industry.

The hon. Gentleman asked me about the supply chain, but I think I have answered questions about the efforts that we are making to improve supply chain capabilities right across the world.

Finally, let me say that the United Kingdom is now a competitive place to do business. When we came to office back in 2010, the rate of corporation tax was 28%. Yesterday it was 23%, today it is 21%, and next April it will be 20%. Our labour costs are already among the lowest in western Europe. We have an attractive research and development tax credit regime and the patent box. All those combine to make this country an attractive location for innovative industries such as the automotive sector. With the automotive sector investing over £2.5 billion in our country last year, it is very clear that vehicle makers value the UK as one of the best places in the world to do business. Through the Automotive Council, the Government are working in close partnership with automotive companies to continue to improve the overall competitiveness of the business environment, both domestically and internationally.

[Sir Alan Meale (in the Chair)]

Mr Williamson, we have about one minute left. That gives you the opportunity to thank Members on both sides of the Chamber and the Minister for their participation, but there is no time for questions.

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[Sir Alan Meale (in the Chair)]

It does not seem as if the Member has arrived for the next debate, so I shall adjourn the sitting.

Question put and agreed to.