Nissan: Sunderland

Baroness Neville-Rolfe Excerpts

Monday 31st October 2016 Lords Chamber

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

With your Lordships’ permission, I will now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy.

“Last Thursday, 27 October, the Nissan Motor Company Ltd announced that, following a meeting of its executive committee, both the next Qashqai and the next X-Trail models would be produced at its Sunderland plant. The plant will be expanded through new investment to be a super-plant manufacturing over 600,000 cars a year.

Eighty per cent of the plant’s output is exported to over 130 international markets. The decision is a massive win for the 7,000 direct employees and 35,000 total British employees in the plant and in the supply chain. It is a stunning tribute to the local workforce which has made the Sunderland plant, in the words of the chief executive of Nissan, ‘a globally competitive powerhouse’. We are immensely proud of it and proud of them.

Of course, the decision is great news for the people of the north-east more widely, our world-class automotive sector and the whole of the British economy. This is but the latest in a series of exciting investments in a United Kingdom that is proving to the world that it is open for business. Indeed, it is hard to think of more unambiguously good news.

I and my colleagues in government have been vigorous in ensuring that the Nissan board had no doubts about the importance of this plant and this industry to the British people. Through many conversations I and my colleagues had here and in Japan, it became clear that four reassurances were important to securing the investment for Britain. Three were about the automotive sector generally and one was about Brexit.

They were, first, that we would continue our successful and long-standing programme of support for the competitiveness of the automotive sector, including Nissan. This support is available for skills and training of the local workforce, research and development, and innovation in line with EU and UK government rules. Since 2010 the Government have invested £400 million into the UK automotive sector in this way, and we will continue to invest hundreds of millions more over the coming years. All proposals, from any company, must be underpinned by strong business cases and tested against published eligibility criteria. All proposals are subject to rigorous external scrutiny by the independent Industrial Development Advisory Board and are reported on to Parliament.

Secondly, we would continue our work with the automotive sector, including Nissan at Sunderland, to ensure that more of the supply chain can locate in the UK and in close proximity to the major manufacturing sites. Working with local enterprise partnerships, city and local growth deals have provided a way in which local councils, businesses and the Government can upgrade the sites and infrastructure for small and medium-sized suppliers. This programme will continue with vigour.

Thirdly, we would maintain a strong commitment to the research and development and take-up of ultra-low-emission vehicles. The opportunities presented by bringing the energy and climate change department together with the business department make us ideally placed to build on Britain’s strengths in low-carbon energy, the automotive sector and science and research.

Fourthly, in our negotiations to leave the EU we will emphasise the strong common ground that there is between ourselves and other EU member states in ensuring that trade between us can be free and unencumbered by impediments. A good deal for the UK can also be a good deal for other member states, and that will be how we approach the negotiations. Whatever the outcome, we are determined to ensure that the UK continues to be one of the most competitive locations in the world for automotive and other advanced manufacturing.

Last Thursday was a great day for Sunderland and for Britain, but the best is to come. Over 30 years Nissan has invested more than £3.7 billion in our country and created excellent jobs for a whole generation of world-beating British workers. Last week’s announcement means that a new generation of apprentices, technicians, engineers, managers and many other working men and women can look forward to a career filled with opportunity and success. This Government will always back them to the hilt, and I commend this Statement, and Nissan’s welcome decision, to the House”.

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[Lord Foster of Bath]

My Lords, I too thank the Minister for repeating the Statement. On these Benches, we are of course pleased that 35,000—some people argue 42,000—direct and indirect jobs have been saved because of the Nissan decision. We too join the tributes that have been made to the workforce and to Nissan for its commitment to the United Kingdom. But we remain unclear about cost, unclear about whether or not the deal extends beyond the Nissan Motor Company, unclear about the implications for sectors other than automotive and, frankly, completely in the dark about where the Government are seeking to take us. Like the noble Lord, Lord Mendelsohn, we wonder whether we have heard all there is to be told about the Nissan deal.

The Business Secretary says his negotiating demeanour—to use his word—will be to try to ensure continued access to the markets in Europe without tariffs and without bureaucratic impediments. What is the fallback position if he fails? WTO rules do not allow compensation to be paid to Nissan for imposed tariffs, so what will happen then? Alternatively, are the Government seeking partial membership—for some sectors and not others—of the single market and customs union? After all, the Prime Minister has said that membership of the customs union is not a binary affair. Does the Minister agree with the Prime Minister? Is she aware that experts simply cannot see a system where there is, for example, free movement for cars but not for bicycles? Does the Prime Minister know something that the rest of us do not?

If the Business Secretary succeeds in a tariff and bureaucracy-free solution for cars, who will then have responsibility for the manufacturing regulations? Will the UK have a say on them? That will be so important, not least for the specialist car sector and for our work, as the Minister said, on electric and driverless cars. What guarantee can the Government give Nissan in the long term if we do not have a voice in any regulatory framework? What of those other sectors, including aerospace, pharmaceuticals, the service sector and many others including the millions of small businesses? The Business Secretary has made clear that the Nissan deal is not a general deal. So is it the case simply that those who shout loudest get the best deal from the Government? If the Government cannot have a sector-specific customs union, will they stay in the customs union entirely? If so, why do we have a Secretary of State for International Trade trotting around the world proposing deals which would of course be illegal?

The Nissan saga shows all too clearly that the Government do not have a clear plan and that their idea of not having a running commentary on Brexit is, frankly, laughable. When Cabinet discussions are leaked, and when some companies and not others are given specific assurances, it causes confusion and rumour that impact on the economy and the confidence of millions of business owners, savers and investors across the country. Does the Minister agree that it would be better if the Government came to Parliament with a clear statement of their intentions for negotiations and then let Parliament have a vote on that negotiating strategy? We would like to hear the answer.

[Baroness Neville-Rolfe]

My Lords, I start by thanking the noble Lords, Lord Mendelsohn and Lord Foster of Bath, for their support for this important investment by Nissan. We are right to welcome it so widely. It seems to me a very long-term decision—a new plant and a new supply chain—and I congratulate everyone involved. It is in everyone’s interest and shows the strength of our economy. It builds on three decades of success, supported by all parties, in Sunderland and for Nissan.

What is the best way to start on the nature of the assurances? I emphasise that this is not a compensation package. That is important in relation to all the points that have been made. This was about convincing Nissan of the UK’s continuing competitiveness. Governments regularly invest in UK competitiveness by supporting businesses making major investment decisions. This investment has been secured thanks to the highly skilled workforce, the strong partnership between government and industry that we now have, and long-term investment in new technology and innovation. Those same strengths are what matters to the other sectors and other companies that noble Lords have touched on. There is real progress with the announcement that these two important, new, potentially world-leading models will be made in the UK.

I set out in my Statement the importance of electric cars. I do not apologise for the fact that putting the two departments together helps with the electrification of vehicles and encourages those sectors of industry in the UK to tool up to be world-competitive. That is also helped by the departments coming together in BEIS, the curiously pronounced new department.

On Brexit, as the Prime Minister has said, the Government want British companies to have maximum freedom to trade with and operate in the single market and to let European businesses do the same here. People do not emphasise often enough the huge mutuality of interest. That has to be taken into account in the Brexit negotiations that are being developed.

I do not want to stray into a running commentary, which would go beyond my brief, but we have been showing Nissan and others that we are committed to getting the best possible deal from the future relationship that we will be negotiating with the European Union. We wish to ensure and assure the competitiveness of the British economy, which is what they have been so pleased about. We understand the concerns of industry, and it will be a priority of our negotiation to support UK car manufacturers.

We are working across government in a joined-up way, coming to the correct, mature decisions, and we have an ambition to do the very best for our industries. That includes the other industries mentioned. We have been working across the divide as part of the Brexit process. We have 50 streams of work looking at the different sectors, including aerospace, pharma and steel, where there has been some good progress since we last debated it in the Chamber, with the reopening of the plate mills in Scotland and progress in Scunthorpe and, I would say, Port Talbot.

Finally, I should mention the industrial strategy. We are determined to ensure that the UK is a competitive place to manufacture and to have financial services and all the other things that have been mentioned. As we develop the industrial strategy, we want to work with companies such as Nissan across the economy to ensure that we get the very best results for Britain.

I shall close at that point. I have tried to answer the questions. I will need to come back to the noble Lord on the training numbers.

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[Baroness Neville-Rolfe]

In the discussions with Nissan, we emphasised the strong common ground that there is between us and EU member states, our intentions and ambition to get a really good deal and the mutuality of interest in the automotive industry. I am confident that the UK can get a good deal from other member states. That is the view that Nissan has come to, which is why it is making the investment it is.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, does the Minister acknowledge the centrality of manufacturing to the north-east of England? Nissan is very important. I am probably the only person in this House who was born and brought up in Sunderland, and I well remember the challenge when Nissan was eventually persuaded to invest. It is a loyal company. I have just seen the Japanese ambassador, and that is precisely what he emphasised: the loyalty inherent in Japanese companies.

However, the supply chain is critical. The north-east manufactures more per head than any other region. It is more dependent on manufacturing than any other region in the country. The supply chain is critical, as are other industries, as the noble Baroness says. What discussions is she or are the Government having with Hitachi, which is critical to train development in Newton Aycliffe? It has made new investment there and is very worried because it now does not think, because of EU rules, that it will be easily able to make trains in this country for other European countries.

[Baroness Neville-Rolfe]

The noble Baroness is completely right about the north-east: I always love the opportunity to visit, and have been to Newton Aycliffe in the not too distant past. We have a catapult not far away researching world-leading innovation. We are in constant discussion with Hitachi on its investment plans, which are indeed very important. This is the sort of foreign investment that we need to continue to welcome to the UK and the north-east.

[Baroness Ludford (LD)]

My Lords, I would not wish to look a gift horse in the mouth, and it looks as if the Government intend to seek membership of the single market and the customs union. My noble friend Lord Foster’s question on that was not answered. On behalf of the Government, will the noble Baroness come clean about that objective, instead of all this secrecy, confusion and incoherence, as a Member of the other place, Andrew Tyrie, the Conservative chairman of the Treasury Committee, is urging? He is also saying that the secrecy has nothing to do with the conduct of negotiations but everything to do with the confusion and incoherence in government. Please can we have a clear answer about the single market and the customs union?

[Baroness Neville-Rolfe]

We have already said that it is a priority for our negotiations to support UK manufacturing and ensure that the ability to export to and from the EU is not adversely affected. We need to remain competitive. Our ambition is high. In relation to the customs union, we made it clear that we are seeking the best possible deal with the widest possible access and that we do not expect exports to the EU to be adversely affected.

Clearly, work on this continues, but your Lordships can be clear that our ambition cannot be denied. We are not giving a running commentary because, as the noble Baroness will know, in negotiations, you cannot reveal every detail as you go along. Talking about confidentiality, we have not published the correspondence with Nissan, which she was perhaps hinting at, for the very good reason that investors in the UK—I used to be in business—must be able to have confidential discussions with the Government on their plans and be sure that those will not be revealed to their competitors. That is the way you have to work in the modern competitive world.

[Lord Liddle (Lab)]

My Lords, perhaps I may press the Minister on the deliverability of what she is saying. If she had said, “Yes, we recognise that we’ve got to be fully in the single market”, or, “We’ve got to be in the customs union”, perhaps she would be able to say to us that she could deliver. Her refusal to say that effectively means that the Government are trying to negotiate a series of sectoral agreements without the wider obligations of single market membership. Does not she agree that this is an extremely hazardous process for the United Kingdom and that there is very little prospect of it being completed within the two years of the Brexit timetable? What will be the position in 2019 in those sectors if negotiations have not been completed? I strongly support Nissan, but does she agree that it will be much easier to get a sectoral deal in goods—where, overall, Britain has a trade deficit—than in services, where we have a huge surplus? If we are looking at our interests overall, how does what the Government are saying add up to an adequate pursuit of the national interest?

[Baroness Neville-Rolfe]

The noble Lord is right to express his concerns with passion. You can see that we have already made some important totemic advances. The Nissan statement is one and the other is the Chancellor’s statement about financing the Horizon 2020 investments, which we will ensure are guaranteed. We are working hard in a complex negotiation, moving forward with ambition and a determination to ensure that exports continue both ways. I perhaps have a more optimistic view of matters than the noble Lord does.

[Lord Wrigglesworth (LD)]

My Lords, I have had a long association with Nissan. I was chairman of the Port of Tyne until fairly recently, from which virtually all Nissan’s cars were exported to Europe and the rest of the United Kingdom. I was also a director of the Northern Development Company, which did such sterling work in bringing it to the United Kingdom 30 years ago. I have followed its prospects and ups and downs over the years. This is not the end of the matter for Nissan. It is very good news in the short term, but we have had this before in the north-east: will the model come or not? The great advantage with the Qashqai is that it has been the most successful model that Nissan has ever made there. It has been made there for the last few years, so it was obvious to carry on making it there and a much easier decision for Nissan to take than if it were bringing a completely new model to the plant. Therefore, the Government have to face up to the fact that, unless this is a complete blank cheque, the future of the plant is still going to be in question when a new model has to be built there. Has a blank cheque been given to Nissan? Is it going to be compensated for any tariffs that are put on goods coming out of the factory in the future? As other Members have said, what about Komatsu and Hitachi and all the pharmaceutical industries in the north-east and other parts of the country that are also going to be affected if we are not in the single market?

[Baroness Neville-Rolfe]

I have already made it clear that there is no compensation package. Indeed, Nissan has itself said that there is no special deal and nothing for it that the rest of the industry would not be able to have access to. I commend the noble Lord for the work that he has done in the north-east. It is very important that we continue to invest in these areas with things like the Sunderland and South Tyneside City Deal for new advanced manufacturing. The noble Lord asked about other companies: it is important to bear in mind that the nature of the deal is available to other companies as well, because we are investing in competitiveness right across the board. I already said in my opening remarks that we have invested £400 million since 2010. Companies can apply for support but, rightly, those applications have to underpinned by strong business cases. They have to be approved by the independent industrial advisory body. While we are in the EU, they have to respect state aid rules and even if we ended up in a WTO situation—which I am not forecasting—they would have to respect the rules there. All that is very important.

[Lord Inglewood (Con)]

My Lords, I declare an interest as chairman of a training company elsewhere in the north of England. Can the Minister confirm that Nissan will be treated like all other businesses in respect of the proposed apprenticeship levy and is not going to have some sort of exceptional status?

[Baroness Neville-Rolfe]

I am certainly not aware of any special arrangements for the apprenticeship levy. As I made clear, the sort of arrangements which I outlined in relation to training, skills and innovation are an across-the-board approach which Nissan is obviously welcoming. I know my noble friend’s interest in the north-west and how important it is to him that we ensure investment in Cumbria, not only in nuclear but in manufacturing and other areas.

[Lord Lea of Crondall (Lab)]

My Lords, is it not abundantly clear that what was worrying Nissan was the repeated statement that “Brexit means Brexit”? Is it not equally clear, from today’s Statement, that Brexit does not mean Brexit and that the absence of access to the internal market and the customs union was starting to worry the management of Nissan? If these guarantees are now being given—and we hope that people on the continent will accept them, which is another question which I have not heard much about—can this be replicated in other sectors? At the end of all this, I hope the agreement with the European Union will include a lot of industrial policy and, as my noble friend Lord Liddle said, that things will be much nearer to acceptance of the internal market and customs union.

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[Baroness Neville-Rolfe]

I do not have a lot to add, except to repeat the point about the mutuality of interest between Britain and our European neighbours and our determination to approach the matter in a constructive fashion. The Secretary of State for Exiting the EU outlined to Parliament our ambition to get the best possible access to the European market that we can negotiate. I think he said that we want business to operate in the EU tariff-free area for the future. We must not forget that leaving the EU also offers us potential opportunities to forge some new relationships around the world and to stand up for free trade, which I believe strongly helps the world economy, the people of Britain and the people of Europe.

[Lord Ashdown of Norton-sub-Hamdon (LD)]

My Lords, the Government’s welcome clarity, albeit given in secret to Nissan, has assured the continuation of car jobs in Sunderland and the north. Does the Minister realise that their lack of commitment and uncertainty has contributed to costing some 290 high-tech aircraft engineering jobs in Yeovil? I will see if I can explain. The Government put an order for Apache to Boeing without any kind of competitive tender whatever. In consequence, the confidence has been eroded in the Government’s wish to see a continuation of the helicopter design and manufacturing industry in Yeovil—the only one in Britain. That has contributed to the loss of 290 jobs just recently, with Leonardo probably going to Italy. Does the Minister agree that any attempt to produce any kind of industrial policy that did not say clearly that it wished to see Britain’s aerospace industry maintained, and our standalone capacity to make helicopters sustained, would not be worth the paper it was written on?

[Baroness Neville-Rolfe]

I certainly agree with the noble Lord that the aerospace and aviation industries are incredibly important to Britain. I have already asked on a previous occasion to have a conversation with him about Yeovil in particular, so that I can report to my noble friend and other Ministers who deal with these issues. Especially at this time of uncertainty with Brexit, we need to engage more with business across the UK and discuss difficult issues that arise.

[Viscount Ridley (Con)]

My Lords, will the Minister confirm that Nissan’s practice, when choosing at which plant to build a new model, is to organise competitive tendering among its plants all around the world, that the best one wins and that that is why this decision has come? As recently as August, the BBC was reporting that Nissan in Sunderland would not even be able to bid for these new models, let alone win those competitions—a speculation in the long tradition of pessimism about the Nissan plant, going back to how it would be lost if we did not join the Euro et cetera. This is a tribute to the fact that, whatever the conditions, this plant is highly competitive thanks to the brilliant work done in the north-east of England.

[Baroness Neville-Rolfe]

My noble friend is entirely right. It is great news and a tribute to Sunderland and the people of Sunderland. I am delighted to know that Nissan in the UK scores so very well in the international league tables.

[Lord Hain (Lab)]

My Lords, since the great bulk of Nissan Sunderland’s production is exported to the European market and the typical life cycle of a new model is five to 10 years, can we assume that Nissan has been promised either tariff-free access to the single market or a transitional access of that kind over a 10-year period?

[Baroness Neville-Rolfe]

I have made it quite clear that there is no special sweetheart deal. I outlined in the Statement the broad ingredients of what we have agreed with Nissan, and it has endorsed this with a clear statement to that effect. Of course, we need to look ahead over 10 years. We need to tool our industry and ensure that it is skilled and that we have the right sort of investment and innovation. That can include things Nissan is expert in such as electric cars and, no doubt in due course, the move to autonomous vehicles. We can do all that together. Nissan is a very competitive company that likes Britain. There is plenty of opportunity. We do not need to be so pessimistic about the future.

[Lord Campbell of Pittenweem (LD)]

My Lords, are we to accept that Nissan was persuaded by the answers to the first three proposals, which are about continuing and maintaining, and the fourth, which is about doing the best deal we can for the United Kingdom? If I was making an objective judgment of Nissan’s capacity for negotiation, I do not think I would give it many marks out of 10 if this is all it amounts to. Why cannot we have sight of the correspondence exchanged between the Secretary of State with the relevant responsibility and Nissan? Surely this is not the normal run-of-the mill argument about confidentiality; this issue goes right to the very heart of the Government’s case and their chances of success in negotiation. Is not that exactly the kind of accountability which this House and, indeed, the other place are more than entitled to ask for?

[Baroness Neville-Rolfe]

I feel sorry for Nissan. Over 30 years, it has invested more than £3.7 billion here. We have had important exchanges and correspondence with it of a confidential nature. We have summarised the key ingredients of that in good faith. I do not think there is anything I need to add to give a truer picture. I look forward to Nissan continuing to invest in the UK over many years.

[Lord Trefgarne (Con)]

My Lords, I warmly commend what the Statement said about support for training. I speak as the former chairman of the Engineering Training Authority. I have visited Nissan on many occasions. Its training facilities are outstanding.

[Baroness Neville-Rolfe]

I very much agree with my noble friend. Part of our industrial strategy—to give a preview—will be that skills and training will be vital. As the world is changing, especially as it becomes more digital, they are becoming even more important, and we have to invest in skills and training to a much greater degree, as we have heard from the Prime Minister and the Secretary of State. I look forward to seeing a changing Britain with our new approaches and investments. We should learn from Nissan because it has obviously been so successful.