UK Automotive Industry

Andrew Smith Excerpts

Tuesday 1st April 2014 Westminster Hall

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing this debate, and I join him in his paean of praise for all sectors of the UK automotive industry and his ambition for its future. He referred to Jaguar Land Rover; its success is great news. I am pleased about the part that Unipart, which is based in my constituency, has played in that success. On the important point he made about the supply chain, he might be aware that Unipart’s after-market logistics were, with Jaguar Land Rover, the overall winner at the independently assessed European supply chain excellence awards last year, reflecting innovation, delivery and collaborative commercial success over many years. We have examples of excellence in this country that can be built on and emulated.

I take this opportunity to praise the achievement of the 4,000-strong work force at Cowley and BMW’s investment of £1.75 billion in the UK, which has made possible the continuing stunning success of the Mini. It is a very good example of what can be achieved by British manufacturing in the most competitive markets, so long as there is the right investment, the best design and engineering, a skilled and committed work force and a management adept at securing continuous improvement in product quality and responsiveness to customers. Whenever I visit the plant, I am struck by just what a staggering logistical accomplishment it is to manufacture a car these days. The Mini has 3,600 parts, arriving from several suppliers in different parts of the UK and abroad, with countless variations per model, five different models going down the line at the same time and the right parts arriving in the right place in the right order at the right time. I cannot help thinking that if Government policy, and IT projects in particular, were delivered as well as car production, we would all be a lot better off.

Partnership with trade unions is important. Industrial relations at Cowley have been transformed since BMW took over. That is not because the union is weak or has caved in—it has not—nor just because BMW’s ownership and management are so much better than what went before, although they certainly are. That transformation has happened because there is a constructive partnership, with real commitment to and a mutual interest in success. Negotiations are sometimes hard, but the outcomes are good. A recent example was Unite’s success in securing agreement that 1,000 agency workers on temporary contracts would become eligible for permanent contracts, giving a massive boost to security and well-being for the workers concerned and their families. The Mini plant is not only a premium employer locally, but is leading the way in training, with £1 million invested in its Oxford training school and 95 apprentices. It is important for the future of the plant that we nurture the skills and application needed to sustain advanced manufacturing success.

Across the industry, the quality of apprenticeship training remains too variable. The Minister should look, through the Automotive Council, at how we can achieve a standard automotive framework with high levels of quality assurance. We also need to sustain a competitive business environment, simplify energy efficiency regimes and keep business rates down. Through that, we can build on the Mini’s fantastic success, with 2.4 million models produced and 80% of production exported to 108 different markets. That represents a massive contribution to the UK balance of payments, exemplifying UK manufactured export achievement at its best, and is a performance the country needs to emulate more generally.

The new model of the new Mini went on sale last month and is showing every sign of carrying that success forwards, with more than 4,000 UK orders taken even before it was in showrooms. Obviously, as with every other car Britain is looking to export, what we most want is sustained world economic growth in demand, but through this recent difficult period, the Mini has shown what is possible. I thank the work force for all that the success of the Mini means to Oxford, and our partners in both the Mini production triangle at Swindon, where the body panels are made, and the engine plant at Hams Hall, which enabled Mini engine production to be repatriated from Brazil. I also thank BMW for the sustained investment and its commitment to the future, which can keep Plant Oxford and all its workers in my constituency at the forefront of automotive success for years to come.

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[Michael Fallon]

Yes. That is a very important approach, and I hope that it will be copied more widely.

The Trailblazer group is chaired by Ian Eva, the apprenticeship manager from Jaguar Land Rover, with the involvement of a number of other companies, including Toyota and BMW. Traineeships are another key strand of our strategy to help unlock the potential of young people who are motivated to work but lack the skills and experience needed to compete for apprenticeships and other jobs. Hundreds of employers are already on board, including household names in the automotive sector, such as Jaguar Land Rover and Nissan.

[Mr Andrew Smith]

On apprenticeships, although progress is of course welcome, will the Minister respond to my point about the need for a standard automotive framework for apprenticeships with a high level of quality assurance?

[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.