Financial Assistance to Industry

Anne-Marie Trevelyan Excerpts

Monday 5th July 2021 General Committees

[The Chair]

Before we begin, I remind Members to observe social distancing and to sit only in places that are clearly marked. I also remind them that Mr Speaker has stated that masks should be worn in Committee. Hansard would be most grateful if Members sent their speaking notes by email to [e-mail].

We are debating for up to 90 minutes the content of the resolution that the House of Commons itself will be asked to pass without debate once the text of the resolution has been reported from this Committee.

[The Minister for Business, Energy and Clean Growth (Anne-Marie Trevelyan)]

I beg to move,

That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, grants to businesses to support the development of an electric vehicle supply chain in the UK, up to a limit of £388 million over four years.

The Prime Minister’s 10-point plan sets out our ambition to accelerate the shift to zero-emission vehicles. That will play an important role in driving down carbon dioxide emissions for net zero and improving the air quality in our cities and towns.

The UK is home to a successful automotive sector, which has one of the highest productivity levels of the major European automotive-producing nations. Currently, 149,000 people are employed in automotive manufacturing, with an estimated 278,000 jobs supported by the sector in the wider economy. Those jobs are spread across the UK, mostly outside London and the south-east, with significant clusters of activity in the west midlands, the north-east and Wales.

Globally, the automotive sector is going through a once-in-a-lifetime transformation and significant investment will be required to support the shift to electric vehicles. The UK needs to establish supply chains to source critical components and to continue to develop the new technology to deliver the transition. Investing in such areas offers a huge opportunity for the creation of new highly skilled jobs as we build back better following the significant challenges that the pandemic has posed for the automotive industry. There is significant opportunity for the UK to capture a share of the investment needed to make that happen, building on existing strengths in automotive research, development and manufacturing, and on wider capabilities such as chemicals, materials processing and refining, and electronics.

Without the new investment, there is a real risk that the sector will fall into decline, causing irreversible loss of jobs and activity in our industrial heartland. To maintain and grow our automotive sector, our aim is to create an internationally competitive electric-vehicle supply chain right here in the UK. Government have developed the automotive transformation fund, which supports both R&D and capital investment to focus on the commercialisation of strategically important technologies to enable production at scale. Securing investment in battery manufacturing and gigafactories is a priority, but the fund also targets investment in the upstream battery supply chain, motors, drives, power electronics and fuel cells.

The specific technologies and processes being targeted are based on extensive research into the vehicle value change, coupled with an analysis of UK strengths, capabilities and market trends. Demand for those key components is increasing rapidly as the transition to electric vehicles accelerates. Increasing production capacity will therefore help UK-based vehicle manufacturers to secure the supplies that they need. The ability to source from suppliers in the UK is also central to enabling UK businesses to meet the rules-of-origin requirements and to continue to benefit from tariff-free exports under the UK’s free trade agreements with important export markets. That will safeguard existing jobs in the automotive supply chain and create new ones, helping our established incumbent businesses to transform and attracting new investors.

Securing such investment will take concerted effort in the face of global competition. That is why the Government and their delivery partner, the Advanced Propulsion Centre, engage proactively with potential investors through the automotive transformation fund. Engagement is backed by extensive research into the UK’s competitive strengths and an understanding of key considerations for investors. The team also provides support and information on, for example, site availability, planning and energy supply; facilitates contact with other relevant stakeholders; and makes introductions to other businesses. We speak to vehicle manufacturers to better understand their requirements and which aspects of their supply chain they would most like to onshore. We use that information to inform our targeting and discussions with investors.

The automotive transformation fund is critical to our efforts to support the transformation of the automotive sector to a zero-emissions future. We are determined to ensure that the UK continues to be one of the most competitive locations in the world for automotive manufacturing. I commend the motion to the Committee.

--- Later in debate ---

[Anne-Marie Trevelyan]

May I thank the hon. Lady for her valuable contribution to the debate? On her last point, I completely agree on women-led businesses and how we make sure that we maximise all that latent potential. The green jobs taskforce, which has been running over the last few months, is about to publish its recommendations, and an area that I have discussed with its members at some length is the fact that they are not maximising the use of all the human capital available to them in terms of women. I hope very much that they will be able to put forward suggestions on how they will look to expand their staffing groups to make sure that they do, because I think there is room for much improvement in many sectors. I look forward to reading the report shortly.

To answer the point the hon. Lady made, the Prime Minister set out his 10-point plan last year with the £1 billion investment for the automotive transformation fund, of which £500 million is so far in the system—if that is the right way to describe it—and will set out in due course how the second half of that committed fund will roll out. We are committed to the continued success of the UK automotive sector. We are the fifth largest European car producer and we have one of the highest productivity levels among major European automotive-producing nations.

Investment in the automotive sector was £7.2 billion in 2019, which is nearly 22% of UK manufacturing investment, and I was thrilled to see Nissan’s commitment just last week to its move to electric vehicles and the work it is doing. It wants to stay because it knows—I speak as a north-east MP who is entirely biased—that its north-east workforce is fantastic, and the company would not in any way want to move away from that. On a personal level—I apologise—I was thrilled by that announcement, because many of my constituents work at Nissan, and this will expand not only that workforce and the vehicles they produce but the wider supply chain through the battery factory. It is very exciting news.

The automotive transformation fund will continue to be a really important programme to help us with the steadfast commitment that we have made to support the sector through its transition to electrification, and the intervention that we are discussing today will help to lay the foundations for that competitive and sustainable industry. We will continue to show our support as a Government to the automotive sector as it builds back better following the disruption caused by the covid pandemic last year, giving businesses the confidence to invest and innovate, creating skilled, well-paid gender-balanced—I hope—jobs across the country, and enabling our green industrial revolution to make progress at pace.

Question put and agreed to.