Stellantis Luton

Baroness Jones of Whitchurch Excerpts

Thursday 28th November 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, I feel that the onus is on me to concentrate on the Statement at hand. This is undeniably a sad announcement for a business that stretches back to the start of the previous century. It is a sad day for Luton, which has a proud tradition in vehicle manufacturing. Most of all, it is a sad day for the 1,000-plus men and women who are potentially losing their jobs.

There are people in your Lordships’ House who know Vauxhall better than I do, but although I no longer have a pecuniary interest in the automotive industry, my past work in that sector led me to value the skills and ingenuity of the people around whom I worked. My first question is this. Many businesses in other sectors are crying out for the skills possessed by the people being laid off, but in many cases those jobs are not in Luton. How do the Government plan to help retain those skills and channel those people, who are skilled workers, into well-remunerated, vital jobs? My second question concerns the town of Luton itself. What is being done to support the local community that is being denied an important driver of its local prosperity and economy? The Government need to work with Vauxhall and others to mitigate this, as it will be a major shock for the area.

This sad announcement is at the leading edge of a wider set of issues that face UK vehicle manufacturers and the Government’s plans to electrify personal transport in the UK, their so-called ZEV mandate. There are important questions regarding this ZEV mandate. As we know, 22% of cars sold this year have to be electric vehicles, EVs, rising to 28% next year. If a business fails to meet that target, either it pays a £15,000 fine on each internal combustion car it sells or it buys credits. This is handing cash to usually foreign competitors, such as Mr Musk’s Tesla. This system was put in place by the previous Government. Is it a sensible industrial strategy?

Successive Governments have taken a largely supply-side approach to this, and initially it had some success. Does the Minister agree that unless the Government address the demand side, UK manufacturers will not achieve their mandate targets? Added to that, the previous Government sent out mixed messages that caused many people who might have bought their first EV to opt for one more internal combustion engine. Demand needs to be stimulated. Infrastructure remains patchy, pavement charging is expensive for users—inhibiting the spread of EVs to people who do not have a drive on which to charge their vehicle—and sensible subsidies are being phased out. Can the Minister confirm that her department is now discussing incentives—for example, cutting VAT on EVs—with the Treasury?

Lib Dems have repeatedly called for it to be made easier and cheaper to charge vehicles by rolling out far more residential on-street chargers, ultra-fast chargers at service stations and the electricity grid infrastructure needed to support them. Additionally, VAT on public charging should be cut to 5% and all charging points should be accessible by a bank card, rather than the collection of different smart cards required.

Meanwhile, as demand stalls, the market for UK firms is getting harder. UK car makers are already competing with Chinese EVs that benefit from inbuilt domestic subsidies. In the EU and the US, these Chinese businesses are likely to face high tariffs in future. If both these huge potential markets erect such barriers, the likelihood is that Chinese EVs will flood into their remaining markets. Can the Minister set out the Government’s position on possible UK tariffs on Chinese EVs?

Yesterday the Secretary of State referred to the £2 billion for research and capital funding that was announced in the Budget. Can the Minister tell us the split between R&D and capital for that money? What is the phasing of that money—for example, how much will the industry see this financial year?

In summary, for the UK car industry basic costs have risen, energy costs have rocketed and labour costs will rise following the Budget. In the meantime, UK manufacturers are trying to sell more EVs than UK consumers want to buy, with a backdrop of cheap, subsidised imports. Does the Minister recognise that these are existential issues? When will the industry get to know what the Government’s response to these issues will be?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I thank noble Lords for their responses to the Secretary of State’s Statement in the other place. The news on Tuesday that Stellantis was commencing a consultation with staff on the future of the plant at Luton will have been very difficult to hear for the hard-working staff, their families and the wider Luton community. We have asked the company to share the details of its plans with us so that we can put in place the right support across government to help them through this process. Luton has a proud history. While this is disappointing news, we are confident that the town has a bright future ahead. We will work closely with Stellantis, trade unions, Luton Borough Council and other partners to look at the impact of this decision.

I heard the points made by the noble Lord, Lord Fox, about the zero-emission vehicle mandate and how it links to this decision. Ministers met Stellantis within days of coming into office to discuss the pressures it was facing in its business, including concerns on the zero EV mandate, but that was not the only concern it raised. Noble Lords will know that this is a complicated area. The automotive industry is operating under a lot of different pressures, and this is just one of them that we are seeking to address.

The noble Earl, Lord Effingham, asked about consultation. The Statement made clear that the Secretary of State has been in constant discussion with Stellantis and others in the automotive industry to address their concerns. The Secretary of State for Business and Trade and the Secretary of State for Transport are listening closely to the concerns of the industry and the wider sector about the transition to electric vehicles. This included the round table earlier this month to hear directly from major automotive companies, the Society of Motor Manufacturers and Traders and the charging sector. In response, we will shortly be fast-tracking a consultation on our manifesto commitment to end the sale of new pure petrol and diesel cars by 2030, but the question here is the transition rather than the endpoint. I think we are clear about what we want to achieve by 2030. We will use this consultation to engage with industry on the previous Government’s zero EV transition mandate and the flexibilities within it, and we will welcome the industry’s feedback as we move forward.

We want to do everything we can, together with industry, to secure further investment in the British automotive sector now and over the longer term. That is why in the Budget the Chancellor committed £2 billion to research and development and capital funding to support the zero-emission vehicle manufacturing sector and the supply chain. The noble Lord, Lord Fox, asked about this support. The Government are already backing the wider industry with more than £300 million to drive uptake of zero-emission vehicles, and we have also committed long-term funding of more than £2 billion of capital and R&D funding to 2030 for zero-emission vehicle manufacturing and its supply chain as part of a comprehensive offer to attract strategic investment and deliver real growth. There is a real opportunity for the UK from the transition to zero-emission vehicles, and we welcome the commitment Stellantis made to expand its production of electric vehicles at its other plant in Ellesmere Port by adding a second van model.

This is a complicated issue. An expansion of electric vehicle production is going ahead. I make clear that, at Luton, only diesel vans are being produced, so, if anything, production is switching to electric vehicles and not the other way around. Our automotive sector is at the heart of UK manufacturing and the global and British brands that make vehicles here are central to unlocking further growth and investment. Our industrial strategy will address these issues and ensure that further growth and investment is absolutely at the heart of what we intend to do. As the Secretary of State said yesterday, the Government are clear that decarbonisation must not mean deindustrialisation, and that winning the race to net zero and having a world-leading automotive sector must go hand in hand.

The noble Earl, Lord Effingham, asked about the Budget. I do not need to take any lessons from the previous Government, since they left a £22 billion black hole that we inherited. I am sorry to remind them—I know they would rather we forgot that—but let us be honest: that is what we have inherited and have been struggling with ever since. The Budget dealt with that black hole in the Government’s finances, and—as the noble Earl mentioned—over this Parliament the Government will transform business rates into a fairer system that protects the high street, supports investment and is fit for the 21st century. The Government are permanently lowering business rates for retail, hospitality and leisure properties from 2026-27—so we are addressing business rates.

The noble Earl mentioned the employment Bill. I am proud that we are bringing modern employment practices to this country—the previous Government promised this, but it was never delivered. The noble Lord, Lord Fox, asked about imports, and several noble Lords mentioned Chinese EVs. Again, this is a complicated area, but we are closely analysing how imports of Chinese EVs will impact the UK’s economy and industry. It is worth stressing that the UK’s economy and industry differ from other countries in both ownership and markets. We export 80% of what we make, compared to, for example, the US and EU, where a greater proportion of production is sold domestically. So we need to adapt our approach to what is appropriate for our situation here in the UK. When we need to act, we will do so, but any action taken on Chinese EVs has to be the right one for the UK industry.

We are also looking at unfair trading practices on an international basis by supporting global initiatives at the WTO and G7, and domestically through our industry-led trade remedy systems. Here, we already apply 44 trade remedy measures, 28% of which are on China. I hope I have addressed the main points that noble Lords have raised today, and I look forward to further questions.

[Lord Woodley (Lab)]

My Lords, I declare an interest: three generations of my family have worked at Vauxhall. My sympathies go out to the Luton plant. I thank the Minister for meeting me and the former chief executive of Vauxhall last week to discuss the difficulties surrounding Stellantis.

The noble Lord, Lord Fox, covered most of my points admirably, and I thank him for that. There is no doubt that the ZEV mandate has been and still is a problem, and it needs changing now or this will not be the last problem we have. The plant at Luton is profitable, and it is not 1,100 workers losing their jobs but 4,000-plus when we add the component supporters.

Maybe there are cynics among us who would say that the Government have not tried and that this situation does not have a great deal to do with the ZEV mandate but rather relates to the value of the land that sits alongside the airport at Luton. I would not like to be a cynic, but I sincerely hope—in line with the demands of my union, Unite, for this company to be pushed to rethink its closure strategy—that it is made sure that, if the land is sold, it is sold for industrial purposes and not for housing. I would like to hear the Minister’s comments about that. However, this is not over; we have a lot of work to do and my people at Luton are determined to fight this. I wish them the very best of good fortune.

[Baroness Jones of Whitchurch (Lab)]

I thank my noble friend for those points. As I said at the outset, we very much feel for the people of Luton—this is a terrible time for them. My noble friend is quite right that this is not just about the people who are directly employed in the sector; it has much wider ramifications. At the end of the day, these are commercial decisions, but we are working very closely with Stellantis on how the consultation is dealt with and what support can be given to those affected. There will be the opportunity for some people to transfer to Ellesmere Port, but we understand the impact that this closure will have on the remaining population.

The Government recognise that Luton is a vibrant and very diverse community that has ambitions for the future. We are already investing £20 million in the Stage mixed-use development to help unlock Luton’s town centre regeneration plans, so we are looking at what wider support we can give. In the meantime, it is absolutely right that we focus on those who are affected now, and that we give them support through both the Department for Work and Pensions and further negotiations that we will have with Stellantis, to make sure that we provide the maximum protection for those affected by this decision. However, I will not underestimate the challenge of this, and my noble friend is quite right to raise it. I am sure there will be further discussions about what else we can do.

[Baroness Foster of Oxton (Con)]

My Lords, this is the tip of the iceberg of the obsession this Government have with their punitive net-zero targets. I agree with the noble Lord opposite. I visited Vauxhall Ellesmere Port as a former Member of the European Parliament. I was closely involved with the car industry. As the noble Lord rightly said, this is not just about the 1,100 workers at the Luton plant. They will all have families and people to support, so there will be at least 4,000 people affected just from that plant alone, and that is without the thousands of others who work at the small and medium-sized manufacturers that supply that plant—and that is aside from the vast local economy. That figure of 1,100 at Vauxhall that the Government, and even the newscasts, keep emphasising is very much understated.

Therefore, I ask the Minister: what exactly have the Government put in place to deal with this? Clearly, the trade unions are vehemently opposed and the TUC is opposed—I had a look at the Morning Star, by the way—and I think we would all be extremely interested to know. I ask the Government to start to rethink clearly the consequences of this obsession with these targets that, in my view, are totally unrealistic and will damage the future of this country.

[Baroness Jones of Whitchurch (Lab)]

As I said, we will provide whatever support we can to the people affected. We are talking to Stellantis about how we can identify these individuals and what support they need, and we stand ready with the Department for Work and Pensions to provide accelerated support and help to them. I challenge the noble Baroness’s concern that we should step back from our progress on rolling out electric vehicles, which is part of our net-zero ambitions. I think everybody understands the need for us to meet our net-zero ambitions, which are very important for this country and our climate but also for delivering green jobs for the future.

As we set out in the manifesto, we will support the transition to electric vehicles by accelerating the rollout of, for example, charge points. That ambition was supported in the Budget and was confirmed with £200 million for an accelerated charge point rollout next year. We are working closely with industry stakeholders to promote positive messages around electric vehicles and improve consumer confidence in the public charging network, so there is a lot that we can do to carry on promoting the use of electric vehicles.

Those who have electric vehicles respond with a very positive view of their ownership, so they are popular when people purchase them; we just have to persuade people to make that transition when they purchase new vehicles. As I say, that is important for our climate change ambitions and for jobs in the future. We believe there will be more jobs in future based on the rollout of electric vehicles.

[Baroness Donaghy (Lab)]

I thank my noble friend the Minister for the Statement. This must go down as one of the more difficult jobs that any Minister has to do in any circumstances, so I thank her for the clarity of her replies so far.

My sympathies go to the families of the direct and indirect workers, the shopkeepers and all those members of the community who are always affected by these closures or proposed closures. As I come from a family where most of them worked in manufacturing, we have had that experience. That was in the Midlands, not Luton.

This all brought to mind my noble friend the late Lord McKenzie of Luton, the amount of work that he did to improve the prosperity of Luton and how he would be feeling today and fighting for that community. Can my noble friend the Minister say a little more about the efforts to find jobs and improve the prospects of transfer for those workers who are directly affected?

We know this is a global issue; there is no point in pretending otherwise. When some of us who were members of the EU Internal Market Sub-Committee and then the EU Services Sub-Committee visited various research plants, they showed us the exciting developments that were taking place in car manufacturing. If only we were a bit quicker at developing research into practical production. That is a failure that this country has experienced for a long time. The work and the knowledge are there, and the Minister has indicated that we are further supporting that research. Will she confirm that? There was an implication by the Opposition Front Bench spokesperson that Stellantis was abandoning production. Can she confirm that Stellantis is developing production at Ellesmere Port and that it has not abandoned manufacturing in this country?

One issue where politics and government come in is in the provision of consistency. One of the difficulties that manufacturing has had over the years is that Governments do not provide consistency and long-term objectives. Can my noble friend the Minister assure the House that there will be consistent government policies rather than chopping and changing, so that industry and manufacturers know where they stand for years to come?

[Baroness Jones of Whitchurch (Lab)]

My noble friend rightly reminds us of the fantastic contribution that Lord McKenzie made to this House. I am sorry that he might be looking down and hearing these messages from us, because I know how passionate he was about his town.

My noble friend makes a point about consistent policies. We have learned over many years that industry responds to consistent policies and consistent targets, and it is important that we maintain that. That is why I made it clear that we are still pursuing, and are determined to deliver, our targets for net zero and the contribution that the rollout of electric vehicles will ultimately make to that. That is an important message. We are hearing from the automotive industry, among others, that it wants those consistent policies; as my noble friend says, it does not want us to chop and change, which is not helpful to anyone. The industry makes long-term investment decisions, and we have to support it in that.

On the jobs, the announcement from Stellantis has been relatively recent and we had hoped we would not have to hear that message from it, so we are still in active talks with it and are continuing to talk about the full implications of who will be affected. We will continue to work closely with it and the trade unions and the council on the next steps of its proposals. It is early days, but we are actively pursuing this issue and we take to heart the fact that we need to protect those workers and their future in whatever way we can.

My noble friend mentioned funding. I think I mentioned that we already committed in the Budget to a multiyear funding commitment to the automotive sector, with long-term funding of over £2 billion of capital and R&D funding to 2030 for zero-emission vehicle manufacturers and their supply chains, so we are putting in the money to support that investment. We have a proud history in all this of being at the forefront of R&D, and it is important that we capitalise on that R&D investment.

In the intermediate term, the Department for Work and Pensions is ready to support anyone affected by the decision. It has a rapid response service that is designed to support and advise both employers and their employees when faced with redundancies. Affected employees will be able to access our broad range of support, including universal credit and the new-style jobseekers’ allowance, as well as, perhaps more importantly, access to tools and support to find new jobs in the area. Our priority is to find those people new jobs in the sector.

[Baroness Randerson (LD)]

My Lords, the SMMT says that EV sales overall fell by 30% last month compared with October 2023. This is clearly a critical time in the industry. My noble friend has explained many of the problems facing the UK auto industry, most of them a direct result of the previous Government’s dysfunctional policies, but the Statement emphasises the amount of work that has been going on, which makes the point that the Government were fully aware of the critical condition of the automotive industry. I am therefore concerned that the Government are announcing yet another consultation. They have emphasised how closely they are working with the industry, so they know the problems. They have identified the problems with current policy, and it is essential that action takes place now. Why are we having another time-wasting consultation when the Government tell us they know all the problems?

[Baroness Jones of Whitchurch (Lab)]

As the noble Baroness has said, the problems at Stellantis are due to a variety of factors that have impacted its business across the whole of Europe, not just to do with electric vehicles.

On consultation, the Government’s intention is not to have what we would see as a normal, traditional consultation; this is going to be a quickfire consultation to get everyone around the table quickly to understand what needs to be done. I reassure the noble Baroness that we are not pushing this into a long-term period of time. I anticipate that it will be in the form of round tables and quickly getting all the issues on to the table so that we can begin to address them.

We will look at some of the wider problems that are affecting the industry but also at the impact that the zero-emission vehicle mandate is having. If there are adjustments that we need to make, we can look at them in the rollout of that mandate, but we need to be clear, as I said earlier, that the endpoint is that we need to have clean transport in the future.