Automotive Industry

Gavin Newlands Excerpts

Wednesday 12th July 2023 Commons Chamber

[Richard Thomson (Gordon) (SNP)]

I had ample cause to reflect as I listened to the Minister’s speech, replete with positivity as it was, that there are probably not all that many electric vehicles on the market that could not have been charged up to about 80% in the time the Minister was on her feet. I wondered whether she was looking to give her name to a standard unit of measurement that we might adopt for such an infusion of charge into a vehicle.

The debate is of course about an industrial strategy, or the lack thereof. While I was preparing for the debate, I had the opportunity to stumble over a few of the various iterations of industrial strategy we have had under Conservative Governments past and present. We had one called “Industrial Strategy: building a Britain fit for the future” dating from 2017, which in most respects seemed to be a pretty conventional industrial strategy in what it set out to achieve and the sectors it sought to develop to do that. That was of course replaced by something called “Build Back Better” under the unlamented premiership of the former Member for Uxbridge and South Ruislip, which notably promised an “open and dynamic economy” and “World-class knowledge and research”, all the while the Government seemed determined to cut us off from our largest competitors and closest market. It promised

“A stable framework for growth and strong institutions”

and boasted of “low, stable inflation”, which sounds somewhat risible after the experience of the past few months. It also promised levelling-up in terms of people and places, despite the fact that we have seen a significant lack of transparency in the allocations made through that funding stream. I suggest that those allocations will do nothing to recalibrate the grossly disproportionate imbalances of wealth and life opportunities across the nations and regions of these islands.

That takes us to the automotive industry. In many ways, it is something of a surprise that there still is one. Part of the deeply held mythology of the Conservatives in terms of the shape of the post-1979 UK is a tale they like to tell of industrial dysfunction and poor industrial relations. While that certainly took its toll on the automotive industry, I think it is the general lack of care that we have shown for manufacturing and the economic vandalism inflicted over that period as services were esteemed over manufacturing that makes the continued existence of our mass automotive sector in the UK a near miracle. That is not just as a result of the general lack of respect for manufacturing; there was also the general economic policy.

Since being elected to this place, I have always tried to talk more about the future of the North sea oil and gas fields than about their past mismanagement. Successive Governments, Conservative and Labour, were desperate to get the oil and gas pumping as quickly as they could, to reduce the crippling balance of payments deficit. The result was to push up the value of sterling beyond anything sustainable, which made manufacturing exports uncompetitive. Together with what we might call the policy of sado-monetarism that was imposed with high interest rates, manufacturing was driven down even further and unemployment was allowed to spiral later in the decade to above 3 million, leaving scars in the form of decades of lost opportunities and diminished life chances.

Although automotive production rallied later in the decade thanks to significant overseas investment, in recent years those concerns have re-emerged. The Society of Motor Manufacturers and Traders has reported that manufacturing decreased every year from 2016 to 2022. I hear what the Minister says about the positive trend of the past four months, but there is a longer-term trend over the past six years that cannot simply be wished away because of the past few weeks. In that time, a number of UK-based manufacturers have announced UK plant closures or reductions in capacity.

Greening the automotive industry will be a key element in the green transition. Personal transportation will be here for good, so it is imperative that we seize fully the industrialising of our green opportunities. We have touched on the importance of gigafactories. Batteries are heavy things by their nature, because of the materials that go into their production. There are lots of regulations on their transport, particularly cross-border. They are hazardous to transport over long distances due to their flammability. That means that there will be a strong incentive to ensure that EV manufacturing is located relatively close to where batteries are manufactured—probably in the same country and region.

For all the promises of factories, Britishvolt and the potential of gigafactories here, the UK is at risk of falling even further behind Europe in battery manufacturing. Capacity in continental Europe is expected to reach nearly 450 GWh by 2030. That is simply dwarfing the scale of the ambition, never mind the scale of delivery, that we are likely to see over the next few years. If those batteries are made in Europe or Asia, there is a simple decision that vehicle manufacturers can take about where to build the electric vehicles of the future.

All that is compounded by rules of origin. The new post-Brexit rules that come into effect in January 2024 will place 10% tariffs on exports of electric cars between the UK and the EU, if at least 45% of their value does not originate in the UK or the EU. We have heard about Stellantis, the world’s fourth largest car manufacturer, which has warned that the commitment to make electric vehicles in the UK is in serious jeopardy unless the Government can negotiate a deal to maintain existing trade rules until at least 2027, to give them a chance to adapt.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

I looked at Labour’s Opposition day motion; is my hon. Friend as surprised as me that it does not mention Brexit anywhere?

[Richard Thomson]

I was very surprised about that. It seems to be the elephant in the room, and of this discussion. If my hon. Friend is patient, I will come to that towards the end of my speech.

Not just Stellantis makes such warnings; they have been echoed by Jaguar Land Rover and Ford, which have said that if the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close. Mike Hawes, the chief executive of the SMMT, warned at a summit recently:

“We can’t afford to have a last minute, 31 December agreement, because business needs to plan its volumes.”

Andrew Graves, a car expert at the University of Bath has warned of dire consequences of the industry, noting:

“you will start to lose the whole of the UK industry, not just Vauxhall and a couple of other manufacturers…it really makes no industrial sense to locate in the United Kingdom.”

The UK Government’s lack of action to ensure that the UK has the capacity to build batteries necessary for EU production—coupled with Brexit, as my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) rightly raised—has made it virtually impossible for domestic UK production to help us meet our targets on CO₂ emissions. As Mike Hawes said:

“We urgently need an industrial strategy that creates attractive investment conditions and positions the UK as one of the best places in the world for advanced automotive manufacturing.”

That must be a priority for the UK Government, but I do not see any indication beyond warm words that it is. To quote someone else who might know what they are talking about, Andy Palmer, former chief operating officer at Nissan and chairman of battery start-ups InoBat and Ionetic, has warned that

“we are running out of time”

to get battery manufacturing up and running in the UK, and that the failure to address the issues also caused by Brexit could lead to 800,000 jobs lost in the UK—basically those associated with the car industry.

[Gavin Newlands]

On job losses, Madam Deputy Speaker you will remember as well as I do the impact of the closure of Linwood car plant on the town. Many would say that Linwood has still not fully recovered from that closure, when thousands of workers were put on the scrapheap. Is my hon. Friend worried about what will happen to places such as Sunderland and Ellesmere Port if the Government do not get a grip?

[Richard Thomson]

I share my hon. Friend’s concern. [Interruption.] There is some sedentary chuntering—if the hon. Member for Bosworth (Dr Evans) gives me a chance to respond to the intervention, I will gladly give way to him if he has a substantive point to make. We can still see the industrial scars of the devastation reaped by the sudden closure of the Linwood factory in 1981. What we do not see quite so readily but is still every bit as debilitating is the impact on families who lose opportunities to participate fully in the economy. There is a very high price associated with getting this wrong, which goes far beyond simply not seeing factories on greenfield sites.

The motion speaks about a lack of a meaningful UK industrial strategy, which is a fair accusation. It calls for the need to

“urgently resolve the rules of origin changes”

that are looming in 2024. At this point, I am bound to observe that both Labour and the Conservatives make grandiloquent promises about how each would seek to harness the power of the British state to transform the economy and, with it, the lives and opportunities that follow. For the two years in every three over the last century that the Conservatives have had power, or the one year in every three that Labour has had power, neither has done that.

I mentioned the various iterations of Conservative industrial strategy; I have read Labour’s industrial strategy, which carries the signature and many photographs of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). In many ways it is a very fine document, but when it comes to the impact of rules of origin, as with much else, a position promising to make Brexit work means absolutely nothing. I say this as gently as possible: Brexit can never be made to work, either in its current form or in any conceivable variant. As long as making Brexit work is part of the strategy, no matter which party it belongs to—Labour or the Conservatives—it will be left with a slow puncture.

--- Later in debate ---

[Dr Evans]

That will lead me on to what I want to talk about, which is the positive side of this. Britishvolt wanted to have its headquarters in my constituency, and I met it to see what would happen. The Government protected £100 million of British taxpayers’ money. If that had gone to the wrong place, the shadow Secretary of State would have been at the Dispatch Box lambasting the Government for frittering away taxpayers’ money, so I will take no lectures on that point.

I am here to talk about the positive side of the automotive industry. In the east midlands, we are very proud of what we have to offer in the manufacturing industry. It has been through a tough time for the past 50 or 60 years, but we are making real progress. Only recently, Bosworth was noted as a net zero hotspot and described as

“connected areas with concentrated net zero activity, where businesses create jobs and add to the local hotspot’s economy”.

That means better paid jobs, better opportunities locally, better local businesses and, nationally, 840,000 jobs. Within that context, the average wage for someone in the industry is £42,600, compared with the national average of £33,000.

What does that look like in reality on the ground? That is what I want to spend a few minutes talking about. On Monday, I was at a place called Horiba MIRA. For those who do not know it, imagine the silicon valley of the automotive industry. Imagine the Google complex of anything to do with the car industry. From designing to manufacturing to testing, it all happens in this one space. It is unique in the world in what it can do. It was supported by Government from 2010 all the way through, with investment to grow as an enterprise zone, and was then allowed to flourish and attract international investment from the likes of REE, an Israeli company, bringing hundreds of millions of pounds in and bringing 300 jobs with it.

That is just a start in describing what is going in the automotive industry. I agree with those on both sides of the House who have said that this really is a revolutionary opportunity. Everyone in the world is trying to work out the best way to take it, and the best way is to support our research going on right here, including in happening in my constituency. MIRA Technology Park has over 600 high-value jobs, with specialisms in anything from autonomous car driving to battery technology, road safety and defence. Those technologies are all being tested right here in the UK. In November 2022, Horiba MIRA’s assured connected autonomous vehicle testing won the test facility of the year prize at the Vehicle Dynamics International awards, based on innovation in products, teams and technology. In June 2023, MIRA won an award from Jaguar Land Rover at its seventh annual global supplier excellence awards, demonstrating outstanding achievements in JLR’s global supply based on

“customer love unity, integrity, growth, impact.”

That all sounds very good, but when I ask my constituents whether they are aware of what is going on in our constituency, they do not really know what MIRA is. That is part of why I am so pleased to speak in this debate, because actually the UK is fantastically good in this space. It is not just about creating jobs—at MIRA, someone can go from being an apprentice all the way through to a PhD level qualification on cyber-security in cars. It is also innovating for the future to get to net zero and create energy security. It has been partnered by local enterprise partnerships, investment zones and the Midlands Engine to help drive investment, change policy and bring inward investment from the international community.

On Monday, I was very proud to welcome the president of Horiba, Mr Horiba. We saw two things: the research it is doing with Ceres on hydrogen battery technology to allow us to have battery technology in houses and vehicles; and driving simulators. If someone wants to break into the industry and is designing a car, they can now use a simulator to test how it will handle, what it will look like, and how it will feel in terms of comfort and safety. All that can be done simply in a computer-generated room, which takes out the need to make 50 to 100 prototypes and collapses it down to about one or two. But Horiba does not just have dark rooms with TV screens—there is an entire race track to test every single condition one can think of that a car might need to go through. That is right here in our country, leading the world on the international stage on how to bring in investment. I am really pleased that we can talk about that.

There is more in my constituency. We have Triumph Motorcycles. For those who do not know, Steve McQueen leapt away on a Triumph motorcycle. James Bond was seen going over the rooftops on a Triumph motorcycle. I am very proud to have Triumph Motorcycles’ headquarters in my patch, creating over 1,000 jobs. In the last three years, it has broken records for the number of bikes it has sold, which has gone up by 30% across the world. All across America and into Latin America, it is breaking into the industry and the market. That means high-end innovative jobs designed and manufactured right here in my constituency. This is the kind of thing that Members on both sides of the House are not good enough at talking up and talking about. That level of innovation and finishing makes a huge difference to my local community.

I want to mention two other businesses. Flying Spares, based in Market Bosworth, is a second-hand remodelling firm for cars such as Rolls-Royces. If someone need a part, it will ship it anywhere across the world. That is an innovative way of creating longevity and helping achieve net zero by recycling our high-end products. JJ Churchills is a fantastic advanced manufacturing aeronautical and defence agency, which employs 110 people, with high-end apprenticeships, in the middle of the countryside. This is happening right in my constituency—it is 85% rural, yet I have businesses like that.

The final jewel in the crown is Caterpillar, which last year made £59 billion worth of sales worldwide. The company, which has 1,000 people working in Desford in my constituency, is looking at making green hydrogen-fuelled electric tractors, forklift trucks, dumper trucks—you name it. I have had the pleasure of sitting there and driving Caterpillar vehicles in Arizona remotely. That is the sort of innovation that we can do. Caterpillar is sourcing its manufacturing right here in Desford, and has been for 70 years.

I mention all this to highlight some of what is going on in my small area of Leicestershire. People choose the UK because of the skillsets we have, the tech environment we create, the regulation we have in place and our stability in the global market. That is why they come here. Does that mean we should shut up shop, because we have done enough? No, of course not. It is important to make sure that there are signposts and avenues so that people know where to invest. When I speak to the likes of the Midlands Engine, which is looking for ways to drive investment in the 11 million people in its area, among the questions that come up are: where should businesses go, and how do they connect with Government?

[Gavin Newlands]

The hon. Member is trying manfully to paint an extraordinarily positive picture of the industry, but does he not think that the rules of origin and Brexit will have a negative impact on the automotive sector? Yes or no?

[Dr Evans]

If that was the case, Triumph would have struggled, but it has not.

A fundamental point has not been concentrated on enough. I am danger of straying into the territory of my Department, the Department for Energy Security and Net Zero, but the hon. Member for Worsley and Eccles South (Barbara Keeley), who is no longer in her place, raised the subject of infrastructure. It does not matter what we are discussing, be it wind, EVs, power generation or gigafactories; unless we sort the grid out there will be a fundamental difficulty. I believe that, broadly speaking, the UK is five years ahead in delivering on net zero. The problem is that so many companies are coming forward that they simply cannot be connected. I ask the Minister to speak to his colleagues in the Government to make sure that we deal with infrastructure. I know a report is coming out this month on the grid and how we can take it forward.

My final plea goes to Members in all parts of the House of Commons. Please come to my constituency of Bosworth and see just how marvellous our automotive industry is. From design to manufacturing to testing at the highest world standards, we have it all right here in Bosworth. You are more than welcome to join me.