UK Automotive Industry

Gavin Newlands Excerpts

Monday 18th September 2023 Commons Chamber

[John Redwood]

I have said that the EU was keen to explore the synthetic fuel opportunity. In the meantime, it is not recommending the closure of traditional vehicle factories at pace. Indeed, the EU has recently required of its member states that they should not only speed up the roll-out of electrical charging points—which will clearly be needed if people are to buy more electric cars—but roll out the provision of hydrogen refuelling places, not synthetic fuels. It is probably easier to deal with synthetic fuels, because a good synthetic fuel that is liquid at normal temperatures can be used in the usual distribution system, using the sunk assets that already exist in the petrol and diesel system. Indeed, one of the ways to introduce synthetic fuels more easily would be to gradually increase the proportion of synthetic fuel mixed into traditional fuels, as we have with E10 petrol and as is being talked about for sustainable aviation fuels, where there are target percentages for the introduction of lower carbon ingredients in the fuels.

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

I am very much a supporter of synthetic fuels. I think they will have a role to play in the years moving forward. Can the right hon. Gentleman tell us what emissions synthetic fuels will emit from a combustion engine compared with the current fossil fuel equivalent?

[John Redwood]

That is to ask, “How long is a piece of string?” A variety of these fuels are being produced in trials in small quantities. They need to have all their characteristics explored, then people will decide which ones give the best green output for the lowest cost for scale-up.

The whole House needs to get better at carbon accounting. I hear from all sides that unless we go for battery cars, we will not meet our net zero targets. I am suggesting that there may be other ways of getting closer to net zero targets through other types of fuels. I also do not quite understand why so many people in the House think that getting people to buy electric battery cars today helps us with our net zero targets. Let us take the example of a well-off person who decides to replace their petrol or diesel car with an electric battery vehicle. They have enough money to be able to afford one—they are quite expensive—and they are also fortunate in that they have a driveway or personal garage and can pay to have a charger put in at home. They realise that they will always be able to get there and back for short and medium distances without having to rely on unpredictable and rather scarce public charging systems, so they are ready to go. When they get home and recharge their car on the first night, however, there is no extra renewable electricity to send to them. We use every bit of renewable electricity every day, whether or not the wind is blowing, because it is given priority so, when the car is plugged in overnight, a gas power station will probably have to up its output a little to supply the electricity. Far from helping us to meet our net zero target, that new electric car is probably increasing the amount of electricity that has to be generated from fossil fuels.

I have read a number of studies that attempt to get to the truth of how much of a contribution, or detriment, getting more people to switch to electric cars might make to reducing world CO₂, and there are rather different answers because the calculations are very complicated. I am more persuaded by the people who do total-life-of-vehicle calculations. We need to recognise that more CO₂ is generated in producing a typical electric car, including the battery, than in producing a petrol or diesel car. Mining all the metals and minerals needed for the battery and battery production is particularly intensive, and more CO₂ could be produced to deal with the waste when the battery reaches the end of its useful life and needs to be replaced, which is an expensive and complicated task.

To beat running a petrol or diesel car for a bit longer, a person running an electric car would need to do a very high mileage and would need to make sure that every unit of electricity used to charge the vehicle is generated from zero-carbon sources. At the moment, it is very clear that none of these requirements has been met. Although I can understand why we need to encourage people to go on this journey to build up the fleet of electric cars, against the day when we generate more zero-carbon electricity, we must accept that, in the short term, it is probably bad news for the world’s CO₂.

I am worried that we may be in danger of not achieving our main green objective, at the same time that we are spending a lot of money on a subsidy war with other countries that are similarly desperate to get battery production. I am also very worried that the UK, Europe and, to a lesser extent, the United States of America are so behind China in putting in battery manufacturing capability, and so behind China in doing deals with world suppliers of critical minerals and battery components, that it places us in a very vulnerable industrial position, which is why both the European Union and the United Kingdom are having difficulties ensuring enough value added in electric cars to meet our own criteria. That is a common and shared problem, and the solution is not easy because we need to leapfrog 10 years, or whatever, to get to the point at which we have control over the minerals, the raw materials and the production of batteries so we can meet those criteria.

I am also very worried about how customers are left out of most of these debates. They are taken for granted and, when they do not behave in quite the way that politicians would like, politicians invent taxes, subsidies and bans to say, “Well, we are going to make you choose a car you would not have chosen for yourself, because we do not think you are making the right choices.” I would rather live in a world in which the hugely talented motor industry, and all the skilled scientists and technologists who help it, work away at producing cars that are better, more affordable, safer, higher quality and meet our service requirements so that we willingly buy the electric or synthetic fuel alternative, rather than sticking to petrol or diesel vehicles. We are not there yet, as we can see. The proportion of people wanting to buy electric cars is still a minority, despite all the very aggressive advertising, promotion and political weight behind them. Part of that is affordability, part of it is range, part of it is the worry about refuelling and part of it is uncertainty about battery life and repair. There are many complicated decisions when trying to make such a big switch in product availability, and people have come to like their traditional petrol or diesel vehicle. They have the measure of those vehicles and think they provide a very good service. As a country, we should not get too far ahead of our electorates and consumers.

If we look at the fast growth of electric car sales, from a very low base, we will find that it is much more concentrated in the business fleet market than in the personal choice market, because companies feel under more of a moral imperative to buy into this idea, which I have just exposed as somewhat odd, that these are super-green vehicles, whereas individuals say, “But it is not affordable, it is not practical and it is not what I want.”

[Gavin Newlands]

Does the right hon. Gentleman accept that the reason why fleet purchases are now massively outstripping personal purchases is the tax incentives given to fleet purchases, whereas the incentives for private purchases have all but disappeared under this Government?

[John Redwood]

The hon. Gentleman makes a very good point, and it is an additional reinforcement, but I think fleet buyers are also very conscious of the environmental requirements.

I stress that, for this to work, it has to be a popular revolution. Millions of people have to decide for themselves, having listened to the arguments and seen the products, that green products are better than the old products, and in some cases they very clearly are and people will rush out to buy them. If we are still in a world in which people are not of that view, we can subsidise, tax and lecture all we like, but people will not change their mind.

One of the ways in which businesses and people could get around any attempt by this Government or a future Government to ban all sales of new petrol and diesel vehicles in 2030, when the rest of the world is not doing so, is that people will set up businesses to import nearly new petrol and diesel cars from places that still sell them and make them, to sell them as second-hand cars on the UK market. I do not believe anyone is suggesting that we ban the sale of second-hand diesel and petrol cars, as that would immediately remove all the value from our cars, meaning that we are prisoners—we either run the car until it falls to pieces or we lose its value and are unable to make the changes we would normally make.

There will have to be a definition of what is a new car, and it will presumably have something to do with how long ago it was made and/or how many miles it has on the clock. Whatever the definition, there will then be a good opportunity for people to sell cars that are four months old, rather than three months old, or that have 3,000 miles on the clock instead of 500 delivery miles. There would be a nearly new market, but the cars would all be imports, because people here would try to obey the law.

I urge all politicians to remember that they cannot just lecture, ban, tax or subsidise people into doing things unless the product has an underlying merit that people can see. Can we please work with the industry to prove that underlying merit? And do not ban things in the meantime, because Britain will lose jobs and factories. We cannot save the electric vehicle until the electric vehicle saves itself.

--- Later in debate ---

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

It is a pleasure to follow the right hon. Member for Wokingham (John Redwood), who made a very interesting speech. He asked many of the right questions, and he even came up with one or two right answers. I disagree with many of his conclusions, but it was interesting none the less.

The right hon. Gentleman talks about the electricity that will charge these batteries at home, in terms of renewables versus gas, etc. Obviously, in Scotland we will have a massive excess of renewable electricity in the coming years to power our electric vehicles, and we have a couple of large hydrogen schemes ready to go that will be powered by excess renewable electricity. This will add additional baseload to the grid in Scotland.

I did agree, however, with what the right hon. Gentleman said about a stick approach to consumers, as I do not want to see the Government produce a large stick. I made the point in an intervention that they have withdrawn many of the incentives to switch to electric vehicles. I prefer a much more balanced approach, where there is a carrot and a stick, particularly given that the price of EVs is still higher relatively than internal combustion engine cars. We want the switchover to electric cars and to our decarbonised future to be open to everyone, not just to people such as us in this Chamber, who can potentially afford it—I speak as an EV owner.

The Minister, like the Secretary of State today at the Society of Motor Manufacturers and Traders electrified event, which has been mentioned, was extremely bullish about the UK automotive industry, and recent announcements on the investments highlighted by the Minister and the Secretary of State earlier today are warmly welcomed. But right now they are a fig leaf to cover deeper issues—ones largely not caused by the sector itself. The UK automotive sector has a great many strings to its bow, but the challenges it faces are real and immediate. They include: the spectre of Brexit; slow and unresponsive UK Government policy, including the complete lack of an overall industry strategy, let alone a strategy for the sector; and an ongoing culture war within the Conservative party about the net zero agenda.

Of course, there is also the concerning pace of the Department for Transport’s EV charging infrastructure roll-out to consider, which highlights the contrast between Scotland’s rapid EV charging network and the shortcomings in England, particularly outside London. The disastrous decision to leave the European Union—one that was made for Scotland—has had profound consequences for many sectors, and the automotive industry is no exception. The intricate supply chains, just-in-time manufacturing processes and integrated regulatory frameworks that once underpinned our automotive sector have been disrupted, causing uncertainty and economic turbulence. Brexit has led to increased costs for manufacturers, who now face customs checks, tariffs, and regulatory divergence when exporting to our European neighbours. That has forced many manufacturers to reconsider their operations in the UK, leading to job losses and a loss of investment.

[Dr Luke Evans (Bosworth) (Con)]

It is dangerous to have this doom-mongering. Triumph Motorcycles in my constituency, for example, has seen its exports across the world, in emerging markets such as Asia and America, go from 40,000 to 70,000 in the past three years. Is that not exactly what we want to see from a bold UK, one that is looking outwards and expanding across the world? Triumph, right in my constituency, is a prime example of it.

[Gavin Newlands]

I am grateful for the intervention and, obviously, that is a triumph for Triumph, but it is very much the exception that proves the rule, as I am about to go on to state. I congratulate Triumph on its export success, but Brexit has caused immense damage to our automotive sector, with real-world consequences for workers and communities. Since Brexit, car production in the UK has plummeted from about 1.7 million in 2017 to just 840,000 in the 12 months leading up to July this year. Factories produced just 775,014 cars during 2022, the lowest figure since 1956.

Despite the much more positive recent news on investment, which has been mentioned, the new post-Brexit rules of origin that come into effect in January, which place tariffs of 10% 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 EU, will be deeply damaging. The Minister mentioned Stellantis, the world’s fourth largest car manufacturer, which has recently warned that a commitment to make EVs in Britain is in jeopardy unless the Government renegotiate their Brexit deal with the EU to maintain existing trade rules until 2027. Mike Hawes, the chief executive of SMMT, speaking at the very same conference as the Secretary of State, echoed similar sentiments. Of course, the dogs on the street know that Brexit has been a disaster and they also now know that Labour owns this Brexit every bit as much as the Tory party. There is no mitigating, fixing or polishing Brexit, and the sad thing is that the Leader of the Opposition and the vast majority of those behind him also know that to be true.

To compound that issue, the UK Government’s approach to supporting both the industry and consumers during this period of upheaval has been less than ideal. We have witnessed unresponsive Government policy that lacks a comprehensive strategy for the sector’s future. The industry, a cornerstone of our economy, deserves a clear vision and targeted support to ensure its competitiveness and sustainability in a rapidly evolving global landscape. The ZEV—zero emission vehicle—mandate is a case in point, because on paper it is a good thing and it has cross-party support, save from some Conservative Members, but it has been bungled from start to finish. I say “finish”, but we still do not know the final details of the policy, and how it will be enacted or enforced, even though it is scheduled to kick in next year. Mike Hawes said this morning that

“until we see the regulations, we can’t plan, and if we cannot plan, we cannot deliver.”

Furthermore, the culture war within the Conservative party about the net zero agenda is sowing seeds of confusion and inaction. This morning, Mike Hawes had a message for the Conservatives, dressed up in a rhetorical reference they might understand:

“With respect, and I choose my words carefully—very carefully—where there is uncertainty may the Government bring certainty because on decarbonisation this industry is not for turning.”

We should all be united, not so much in quoting Margaret Thatcher—many in this Chamber might like me to do so, but it will not win me any votes—but in our efforts to combat climate change and achieve net zero emissions. We are instead witnessing political infighting that threatens to derail our progress. It is time for the Conservative party to put aside its internal divisions and focus on the pressing issue of climate change. One crucial aspect of that transition is the promotion of EVs.

The Scottish Government have taken decisive steps to support green transport, and we will continue to support the automotive industry to phase out the need for petrol and diesel cars by 2030. The most obvious example of this is on the charging infrastructure, particularly the rapid charging infrastructure, which I will come back to, but Scotland has also shone on incentives to drive switching from combustion engines to EVs. Over the past 10 years, Scottish Government grant funding has provided more than £165 million of interest-free loans to support the purchase of more than 6,100 vehicles, including my own—I have already declared that. If we look at that from a UK Government spending perspective, we see that that is the equivalent of £1.6 billion for 61,000 vehicles. The Scottish Government have provided nearly £5 million to support the installation of more than 16,000 home charge points across Scotland, which is the equivalent of nearly £50 million for 160,000 home chargers—that is over and above the Office for Zero Emission Vehicles grant funding from the UK Government. The Scottish Government have also provided the equivalent of more than £100 million to deliver 15,000 charge points to businesses.

[Jim Shannon (Strangford) (DUP)]

rose—

[Gavin Newlands]

I suspect I know what the hon. Gentleman is going to say about Northern Ireland, but I will give way to him.

[Jim Shannon]

The hon. Gentleman is setting out a good case for what the Scottish National party has done in Scotland, and it is much welcomed. In Northern Ireland, we have a real shortfall, because electric cars are being encouraged but there are not enough charging points. Has he taken into consideration the rural community, who depend upon their diesel cars in my area? It is not possible to have EV charging points in the rural community, where it is needed, just as it is in the urban areas.

[Gavin Newlands]

Praise for the SNP from the Democratic Unionist party might also not feature on my leaflets in the west of Scotland, as that might cause more problems than help. However, the hon. Gentleman makes a good point about rural chargers, as they are certainly part of the solution. Internal combustion engines and so on will clearly have to be part of the mix for some time to come for those in rural communities. That is where Scotland has taken a different approach over the past decade and more. Scotland has a comprehensive charging network, but the parts of it that are the most comprehensive are in the highlands, the Western Isles and Orkney—they are in the rural and island locations, where the private sector would not invest and so the Scottish Government invested to make sure that there was a charging infrastructure for the highlands and islands. However, I fully accept the general point he is making.

To come back to a point made in the speech by the right hon. Member for Wokingham, Orkney has the second highest rate of EV ownership in the UK, but that is hardly a surprise, as Orkney has the highest number of public EV chargers per capita in the UK outside London—this is four times the English rate outside of London. The lesson is clear: give drivers confidence in the charging network, combined with incentives, and people will switch to EVs. We still have a long way to go. In Norway, 20% of all cars on the road and 80% of all new cars are EVs. That is where we could be; in fact, that is where we should be.

Alexander Dennis Limited is a world leader in bus manufacturing and one of Scotland’s key manufacturers and exporters of high-quality products around the world. Just this year, its Enviro200AV electric fleet was used as the vehicle of choice for the autonomous bus service across the iconic Forth Road bridge. As diesel and petrol buses are phased out and replaced with zero emission vehicles—at least, that should be the plan—ADL is innovating with new electric battery technology that will ultimately benefit the environment and transport networks. However, that requires UK Government support and, so far, their record on buses leaves much to be desired.

There have been 558 zero emission buses ordered in Scotland through the Scottish Government’s ScotZEB and SULEBS—the Scottish zero emission bus challenge fund and Scottish ultra-low emission bus scheme—which is the equivalent of around 5,600 buses in England. Let us bear in mind that the previous Prime Minister’s target was 4,000 in England and that the vast majority of the zero emission buses ordered in Scotland are actually on the road. The figures equate to 10.1 buses per 100,000 people, compared with just 0.94 per 100,000 delivered through equivalent schemes in England, outside London. That is an extraordinary gulf in both ambition and delivery.

[John Redwood]

Does the hon. Gentleman have any thoughts on how the Government should go about replacing all the lost petrol and diesel taxes if electric vehicles take off?

[Gavin Newlands]

I am not sure I heard the right hon. Gentleman’s question correctly. Would he mind repeating it?

[John Redwood]

My point is that if we achieve a big switch to electric cars, the United Kingdom will lose a huge amount of petrol and diesel tax. How should we replace that lost tax revenue?

[Gavin Newlands]

That is a very astute intervention. I did not pick up that he said the word “tax”, so apologies for asking him to repeat the question. It is a fair point. I am a member of the Transport Committee and we worked on a report about that a while back. The elephant in the room is that we will have to look at something to replace the current form of taxation. The SNP does not have a policy on whether that is road pricing or whatever, but we have to have that conversation and we have to have it now. We all know that revenue at the Treasury is already an issue, and will become an ever-increasing issue every year, so we have to have that debate sooner rather than later. I rather suspect we will not hear much about it before the election, but after the election that debate will have to begin in earnest.

Of course, in an independent Scotland we would have control of the same fiscal and tax incentives that have encouraged those huge levels of electric vehicle uptake in countries such as Norway. The Department for Transport’s poor record on EV charging is a glaring obstacle on our path to decarbonisation. When compared to some of our European counterparts, the deficiencies in our charging network are stark. We must acknowledge that reliable and widespread EV charging infrastructure is essential to encourage the adoption of electric vehicles and reduce carbon emissions from the transport sector.

Scotland’s approach to rapid EV charging infrastructure is an example of what can be achieved. The SNP Scottish Government have made huge strides in expanding the EV charging infrastructure, with one hand tied behind their back. The network has grown from 55 charge points in 2013 to over 2,500 charge points in 2023. In fact, the latest figures, published in July by the DFT, show Scotland has 72.7 chargers per 100,000 people, which is around 40% more per head than English regions outside London, and 19.2 rapid chargers per head, which is nearly double London’s figure of 10.7.

The lack of rapid charging infrastructure in many English regions, and much of Northern Ireland, makes charging a postcode lottery and hampers the transition to EVs, leaving residents without reliable options for charging their cars That imbalance is not only detrimental to our environmental goals, but exacerbates regional disparities. One would think addressing those imbalances would be a priority for a Government who have been talking about levelling up for quite some time.

The challenges facing the industry are multifaceted and require immediate attention and action. Brexit’s disruptive influence, unresponsive Government policy and the internal strife within the Tory party are hindering our efforts to tackle climate change and transition to a sustainable future.

The Scottish Government have led the way on transport decarbonisation, from the EV incentives and charging infrastructure I have talked about and decarbonising our railways at twice the pace of the UK Government, to many times more electric buses per head, funded, bought and actually on the road, those 21 and under travelling free on those same buses, and the gulf—the chasm—in investment in active travel. We have shown what we can do despite the dead hand of Westminster, so just imagine what we can do when that hand is removed by independence.

--- Later in debate ---

[Mark Pawsey]

I agree wholeheartedly. It is great to see Wrightbus’s product on the streets in London.

Although important and significant, the sector has seen decline, particularly in the number of vehicles produced. We peaked at 1.5 million units in 2015; that dropped to 775,000. The Society of Motor Manufacturers and Traders is projecting 860,000 units this year and 1 million by 2028—still lower than the peak years, but we generally produce higher-value cars, which is a key point to remember. The challenge for us is to maintain our volumes as the sector undergoes massive change. That arises from the worldwide move to electrically powered vehicles as a consequence of the imperative to reduce CO₂ emissions.

I still sit on the Business and Trade Committee. In October 2018, we produced a report on the sector, decarbonisation and the introduction of electric vehicles. I had to reread that report to remind myself that it was almost five years ago. We looked at the opportunities that would present themselves as we effected the transition from internal combustion engine-powered cars. Many of the issues that we considered five years ago are still relevant, but in other areas we have made progress. In August, almost four in 10 new cars that were sold in the UK had some form of electric power, with 20% being purely battery electric, 7.7% plug-in hybrids and 6.8% hybrid, in a market that grew by 24.4% over the previous years.

My right hon. Friend the Member for Wokingham (John Redwood) spoke about the role of the consumer. Most car drivers know that electric vehicles are coming. Most people will know someone who drives one, or who speaks enthusiastically about it and is preparing for that change. Most people by now have already been driven in an electric vehicle and, often, that will be an electric London taxi, manufactured in my constituency. On that pathway, the London Electric Vehicle Company has a pioneering role in the sector. In many cases, the move to electric will be championed by the cabbie, because every cabbie who drives an electric vehicle will speak very highly of it, compared with the diesel alternative. However, there remain those who are not convinced by the need to decarbonise or to move to electric vehicles as the solution, and there will also be people who do not support the ambition to get to net zero by 2050.

[Gavin Newlands]

Does the hon. Member accept that there is another cohort of people, who are in fact the majority of our constituents, who may like to move to an electric vehicle, but simply cannot afford to do so?

[Mark Pawsey]

The hon. Gentleman makes a good point and I will make some remarks on that issue in just a second.

The view about the need to support our move to net zero, and the steps that we need to take, are very much mainstream. The environment is still a top issue, and a rising issue among people in the country more generally. It is in the top five when people are asked about issues facing the world. Climate change is consistently there above poverty, war and migration. Therefore, there is an increasing acceptance of the need for change, but the question is over the pace of change. Back in 2017, our date for ending the sale of conventional petrol and diesel-powered vehicles was 2040. In the BEIS Committee report, we called for all new cars and vans to be truly zero emission by 2032, bringing the target forward eight years. As a Member of Parliament with an interest in UK auto-manufacturing and close to businesses that were involved in it, at the time we prepared the report five years ago, I was concerned that bringing the target forward was too ambitious. I was really bothered that it would put our UK-based manufacturers at a disadvantage because I believed they would struggle to electrify the UK-manufactured heavier and larger cars. However, it soon became clear that manufacturers such as Jaguar Land Rover were willing to move faster, with Jaguar very soon to become an all-electric brand. We now have the date set at 2030.

Having set that date, and with the good news that we have had recently of BMW’s investment in the Mini plant at Oxford, and the manufacture of all electric products at Ellesmere Port, it is vital that the Government stick to the 2030 date. There are voices making the case for relaxation, but Ministers and the Government should stand firm because what industry needs is some certainty.

To take up the point of the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), I accept that there is a case about the high cost of electric vehicles, compared with those powered by an internal combustion engine. In many cases, the new vehicle is something in the order of £10,000 more expensive on a like-for-like basis. Interestingly, many manufacturers— I have in mind Volkswagen—are bringing out new models, rather than electrifying the existing model range, to avoid a direct comparison. Of course, the higher purchase price can be offset by lower running costs. The electricity costs less than petrol or diesel where the price is inflated by the addition of fuel duty. There will be lower servicing costs on the electric vehicle as a consequence of their having fewer moving parts. However, I accept that, for some people, the higher cost is an obstacle.

As we have heard, some countries are further down the road in the manufacturing of EVs, with a range of new models ready to come into the UK. I have in mind China, which, according to many industry watchers, has up to 10 new brands to launch in the UK by the end of the decade. Although they will be less expensive than UK or European-produced products, they will not be as attractive to the consumer because they will not possess the brand and heritage, which is a big part of the value. UK manufacturers will have to take on this competition and, in many cases, that will mean, as they already are, focusing on higher-quality, more upmarket models. That means that, when we look at the performance in the UK, it will be as important to focus on revenue derived from sales as on units sold.