Zero-emission Buses

Guy Opperman Excerpts

Tuesday 21st May 2024 Westminster Hall

[Simon Lightwood (Wakefield) (Lab/Co-op)]

I am pleased to serve under your chairmanship, Mr Rosindell, and to respond to this debate on behalf of the official Opposition. I extend my sincere thanks to the Backbench Business Committee for facilitating this debate, and to the hon. Member for North Antrim (Ian Paisley) for securing it. The hon. Member is a vociferous and passionate advocate for UK manufacturing—not just for Wrightbus in Ballymena, which is in his constituency, but for all bus manufacturers across the United Kingdom; for that I thank him.

This is a vital issue, and it is right that we have had the opportunity today for such robust discussion. I place on record my thanks to the excellent, insightful contributions that we have heard from colleagues throughout this debate, including the hon. Member for Milton Keynes South (Iain Stewart), Chair of the Transport Committee. I share his desire for a vibrant zero-emission bus fleet in the UK, with the majority manufactured on these islands, and I agree on the need for fair competition and that the true cost must be highlighted. I also thank him for his mention of the end-of-life processes for those buses and how those should also be taken into consideration.

I am afraid the hon. Member for Strangford (Jim Shannon) had me at lemon drizzle cake—I would love to sample that—but he also made the important point about the significant capacity for UK manufacturers to expand their capabilities, given the right conditions and the certainty that they need. The hon. Member for Paisley and Renfrewshire North (Gavin Newlands) raised the real importance of recognising social and environmental benefits when awarding those grants. I thank all hon. Members for their contributions.

Labour knows that decarbonising the transport sector is essential to achieving net zero. Decarbonising what is now the single largest source of the UK’s carbon emissions will be no easy feat, but Labour is crystal clear that with those challenges come enormous social and economic opportunities. Across road, rail and bus there are immense opportunities for secure, high-skilled green jobs to power our next industrial revolution. With bus being by far the most utilised mode of public transport, zero-emission buses are central to that.

Across the UK, operators and local transport authorities are already taking great strides to decarbonise their fleets, meaning that demand for zero-emission buses will only continue to rise. However, it is clear that the flagship decarbonisation scheme known as ZEBRA, which was announced with much fanfare two Transport Secretaries ago as part of bus back better, continues to be woefully off-target.

Bus back better promised 4,000 new zero-emission buses on the road, but it also promised to set a date for ending the sale of new diesel buses in the UK. Neither of those promises have been met. The Government continue to dither on the phasing-out date, leaving both manufacturers and operators in the dark. In July 2023, the previous Transport Minister—the right hon. Member for North West Durham (Mr Holden)—promised that a response to the DFT’s consultation would be forthcoming “within months”. Well, almost 12 months later, it is still the case that no Transport Minister is able to tell us on what date they will mandate the end of new diesel bus sales. The current Minister with responsibility for roads and local transport, who is here today, told the House in response to a written parliamentary question in January this year that more information would be provided “in due course”. Almost five months on, we are none the wiser.

In the absence of leadership on this issue from the Government, large operators have resorted to setting their own targets. National Express has committed to operating only zero-emission buses by 2030, and Go-Ahead, First Bus and Stagecoach aim to have fully decarbonised fleets by 2035. Although that is commendable, the continued silence from the Government on the end date for diesel bus sales will doubtless have the biggest impact on smaller and more rural bus operators.

The parameters of the Government’s consultation, which was launched back in 2022, could see a date for phase-out set “between 2025 and 2032”. Operators and manufacturers alike need certainty from this Government. It feels like a profoundly short-sighted, anti-business stance for the Government to refuse to grant that certainty, leaving it up to the sector to guess whether the phase-out could be as soon as next year or in eight years’ time.

As I mentioned, bus back better also pledged 4,000 zero-emission buses. I regularly quiz the DFT on the latest statistics about the roll-out of zero-emission buses funded by ZEBRA. The most recent statistics, which I was able to obtain last month, show that just 313 are on the road and 1,053 have been ordered using ZEBRA 1. That means that to date the Government have achieved barely a quarter of ZEBRA’s potential. The successful bidders in the next phase of ZEBRA—ZEBRA 2—were announced back in March, funding a further 955 zero-emission buses. But even if every single one of those buses is somehow on the road by the end of this Parliament, the Government will still fall considerably short of their target. Even the Chair of the Transport Committee said last year that “it seems increasingly unlikely” that the Government will meet their target.

Despite bold steps by operators, local transport authorities and manufacturers, it is clear that we have a long way to go before we decarbonise our bus sector. I would be grateful if the Minister could tell me exactly how many zero-emission buses he thinks he will be able to deliver on the road by the end of this Parliament. For the UK’s leading bus manufacturers—Alexander Dennis, Wrightbus and Optare, or Switch—the ambition and appetite for zero-emission buses is an enormous opportunity. Our bus manufacturing sector directly employs 3,500 staff across the UK and supports a further 10,000 across the supply chain.

Those companies are world-class, trailblazing manufacturers producing some of the most advanced zero-emission and ultra low emission buses anywhere on the globe. Not only are their products world-class, but they are vital employers, contributing millions to the UK economy. I regularly meet them and they frequently tell me about their fantastic apprenticeship schemes and training and upskilling programmes. But under the Government’s approach to decarbonising the bus sector, those companies are at risk.

Research undertaken by Labour and—commendably—by the office of the hon. Member for North Antrim shows that 46% of the money spent by the Government on funding ZEBRA 1 has been used to purchase buses built outside the UK. The Minister will be aware that in addition to recent reports of more Chinese buses being procured, funding from ZEBRA has already been used to procure hundreds of Chinese Yutong buses. In last week’s Transport questions, I told the Secretary of State that it had emerged that a major UK operator was preparing to procure tens of millions of pounds-worth of buses, not from Wrightbus, ADL or Optare, but from China.

Labour is realistic about the fact that, as demand for zero-emission buses increases globally, competitive manufacturers will be involved in the supply chain. However, we are at a crossroads. Britain under the Tories risks losing the global race for the clean industries of the future, losing jobs overseas and betraying communities across the country. The hon. Member for North Antrim is right to question whether taxpayer-funded schemes to support the introduction of zero-emission buses should be delivered in a manner that helps UK bus manufacturing industries more. We must remember that the Government have refused to adopt a full-scale industrial strategy since 2017. We should make no mistake: the lack of a strategy from the Government is putting home-grown bus manufacturers at risk. Alexander Dennis tells me that, with enough joined-up thinking from the Government, the company could spool up production to meet demand, but, in the absence of certainty, it may have to reconsider its future in the UK.

[The Parliamentary Under-Secretary of State for Transport (Guy Opperman)]

I am listening to the hon. Member’s speech with interest. I want to clarify one point before I address the Chamber. Is the Labour party’s approach to continue to be part of the World Trade Organisation agreement on Government procurement rules made in 2012? Surely that goes to the heart of the debate.

[Simon Lightwood]

I do not agree with the Minister’s assertion. As others have said, the debate is about highlighting and acknowledging the important social and environmental benefits that UK manufacturing brings to these shores.

UK bus manufacturers are in a profoundly frustrating position when they should be leading our green transition. Support for them has not been sufficiently integrated into the national bus strategy from the start. It is a damning metaphor for the Government’s attitude that the front cover of the “Bus Back Better” document shows an image of a bus manufactured by BYD, a Chinese company.

Labour will always back British industry. A Labour Government will act as a strategic industrial partner, setting out clear priorities to provide the certainty that businesses and investors need to solidify the UK’s position as a leader in clean industry. That extends across the EV supply chain. Labour will accelerate domestic battery-making capacity with a national wealth fund to part-finance the new gigafactory capacity that we will need to support the green transition. Not only will that create thousands of good, green jobs in the supply chain and add billions to the UK economy, but it will provide the certainty that UK bus manufacturers desperately need to continue to play a leading role in the UK’s decarbonisation.

I will finish with a few questions for the Minister. On the battery supply chain, what is he doing to ensure that, as demand for electric bus batteries rises, so too does our battery manufacturing capacity? There are billions of pounds-worth of growth to be unlocked if Ministers get this right. The Government’s battery strategy is a welcome first step, but we are already behind the curve, and the scale of ambition in the strategy does not currently match the scale of the challenge we face to reach 100 GWh of capacity by 2030.

What steps will the Minister take to support UK bus manufacturers, in respect of everything that has been discussed today? In a similar Westminster Hall debate in 2022, the then Transport Minister, the hon. Member for Copeland (Trudy Harrison), was asked the same question. She said that she would look into going

“further to understand how we can support British-built buses.”

She went on to say she would explore the factors

“that may help to encourage competitive bids from UK firms”.—[Official Report, 5 July 2022; Vol. 717, c. 290WH.]

I would be grateful if the Minister updated us on whether that work has progressed, and whether he considers the current procurement regime sufficient to back British industry when it comes to bus manufacturing.

Labour stands ready to embrace the green transport revolution and knows that zero-emission buses are essential to that. The UK has a world-class bus manufacturing sector that can, with the right policies from the Government, deliver millions of pounds-worth of economic growth by leading the transition. We need more action from the Government to ensure that our home-grown bus manufacturers can continue to thrive.

[The Parliamentary Under-Secretary of State for Transport (Guy Opperman)]

It is a pleasure to serve under your chairmanship, Mr Rosindell. I think it is the first time I have had the opportunity to do so since you returned to the House, and you are most welcome.

I congratulate the hon. Member for North Antrim (Ian Paisley) on securing the debate and I thank the Backbench Business Committee for recommending that it take place. I welcome it because it is an opportunity for us to discuss the successes and for me to set out the ways in which the Government are supporting the transition to zero-emission buses.

With respect, I welcome the nuanced way in which this debate has to be considered. Quite clearly, buses are at the centre of the public transport network; we are aware, are we not, that there are 4 billion bus journeys a year? It is utterly to the credit of this country that we have created and support a variety of providers.

The hon. Member for North Antrim is right that I am keen to visit Wrightbus, having sought to do so on several occasions in the past. I should, at the very outset, put to rest the cake rumours. Our former Prime Minister was famously ambushed by a cake in an incident that is well known to this nation. When I visited the constituency of the hon. Member for Strangford (Jim Shannon) in a former role at the Department for Work and Pensions, I walked into the office and his assistant— I think her name is Claire—ambushed me with a lemon drizzle cake. I will not try the strong Strangford accent, but she said, “You’ll be needing a lemon drizzle straight away after the journey you’ve had, sir.” Sure enough, I was sat down with a large slice of cake before we had our meeting, in circumstances that I am quite sure will be matched, if not surpassed, when I visit Ballymena.

The UK has a proud history and particular expertise in bus manufacturing and it is right that we celebrate our successes. We acknowledge and accept that our bus manufacturers play a vital part in the UK automotive ecosystem, employing well over 3,000 people across England, Scotland and Northern Ireland. I suggest, with respect, that our bus manufacturers are very competitive. As has been outlined, Wrightbus has the first hydrogen-powered double-decker bus and Alexander Dennis continues to innovate with a new in-house series of electric buses developed with the knowledge and experience gained from working hand in hand with international partners. That has resulted in 2,300 zero-emission buses hitting the UK roads to date. The vast majority of the buses operating in urban areas are produced here in the UK and we are committed to continuing to make the UK one of the best places in the world for automotive investment as we transition to zero- emission vehicles.

There are certain frameworks that I want to try to address as a starting point.

[Paul Girvan (South Antrim) (DUP)]

Will the Minister give way?

[Guy Opperman]

Not yet. Let me try to set out the position and then I will happily give way to the hon. Gentleman.

The starting position is that the UK is part of the 2012 World Trade Organisation agreement on Government procurement and the related WTO texts. As the Chair of the Select Committee, my hon. Friend the Member for Milton Keynes South (Iain Stewart), set out, that is a basis upon which all such organisations have to work. Were there to be any breach leading to unfair competition —the technical term is “dumping”—then, as the Secretary of State set out last Thursday, it would be the responsibility of the Trade Remedies Authority, the independent statutory body, to look at the circumstances.

It is the case that the UK Government support various manufacturers in a variety of ways. I will try to set that out in detail, but before I do so, I will give way to the hon. Member for South Antrim (Paul Girvan).

[Paul Girvan]

I want to make a point about other countries that are major manufacturers. We will not speak about the elephant in the room—although we probably will; it is China—but some of our neighbours sometimes play fast and loose with what is termed state aid. Unfortunately, companies in those places get the benefit of the opportunity to export at a reduced rate because of help and assistance given to them either directly or indirectly. Unfortunately, the UK tends to be too good at abiding by the rules and does not see that many companies are sliding under the radar and getting our markets because of the shortcuts that they are taking.

[Guy Opperman]

I am told that the companies Yutong and BYD are not state-owned. That is the first key point. The second is that there is a degree to which we debate in this House the extent to which the state supports individual companies in their individual country. I take the hon. Gentleman’s point. Clearly, on one simple basis, a worker in China is not paid the rate or salary that a worker in this country is paid, with automatic-enrolment pensions and all the welfare support and other bits that come on top of that. That is clearly a difference in scale. But I want to try to address a couple of the key points.

[Gavin Newlands]

Will the Minister give way on the WTO?

[Guy Opperman]

No. I will try to address the point made by the hon. Member for South Antrim. As a Minister in a different Department, I brought forward ESG: environmental, social and governance regulations. Those apply across the City of London, all pension funds and, by and large, to how local authorities conduct their business. Those bodies must give due consideration to ESG in their purchasing. More particularly, under the Cabinet Office public procurement notice 02/23 they have to be mindful and cognisant of modern day slavery in the supply chain. Public sector suppliers must comply with all the applicable human rights and employment laws, as set out in the Modern Slavery Act 2015.

As was rightly set out, social value for the tender can be considered—and already is—by local authorities. There is a degree to which organisations seek for Government to say the local authority cannot do this, but it is for the individual local authority to look at the way it is commissioning. Matters of social value, ESG and the interpretation of modern day slavery and its impact are highly relevant when doing that. The fair point has been made by various Members that commissioning an environmentally friendly bus from somewhere 10,000 miles away seems an interesting call, given the consequences.

We must be aware that a lot of companies in this country also receive aid from the Government. I want to try to set that out. Members will be aware, I am sure, of the funding, research and development through the Advanced Propulsion Centre, which allows UK bus manufacturers to be supported by Government to seize opportunities for the future. Through the APC research and development competitions, the UK Government have awarded grants totalling £24.2 million for bus-related projects, with total costs of £52 million.

Those late-stage collaborative R&D competitions are an important part of the Government’s support for the UK automotive sector’s transition to zero-emission vehicles and provide backing for new market-leading technology to underpin battery and fuel cell electric buses. There is also £460 million in dedicated funding provided for the zero-emission buses this Parliament. The innovative technology is to be deployed, we suggest, at scale. More than 5,200 zero-emission buses have been funded across the UK since the Government committed to funding at least 4,000 this Parliament, and UK manufacturers are leading the way.

In March this year, we announced a further £142 million to support almost 1,000 more zero-emission buses. I look forward to UK manufacturers winning more orders. For example, I think Wrightbus has been named the fastest-growing and most successful business in Northern Ireland, having been struggling a few years ago, however one interprets the business as it was. On the back of Government funding for zero-emission buses, the company’s numbers have massively increased, from more than 1,000 to almost double that. Bus funding in this country has pretty much doubled in terms of Government subsidy and support over the past 14 years.

With respect, I suggest that the Government are fully supporting the bus sector, providing financial support, whether through Innovate UK or individual support in relation to hydrogen.

[Gavin Newlands]

The Minister talked about Government support. In fairness, it was before he was Minister, but he may remember a Transport Committee report that said that Scotland had ordered just over 10 zero-emission buses per 100,000 people, compared with 0.94 zero-emission buses outside of London. Does that highlight the success that the DFT has made of the roll-out?

[Guy Opperman]

There was pretty much nothing in the hon. Member’s speech with which I agreed, aside from his comments in relation to the hon. Member for Strangford. I, too, believe we are better together, in so many different ways. The long and the short of it is that I am proud to stand up and defend the UK bus industry. I am also proud to defend and support the degree to which this Government have supported the bus industry, and we have seen companies such as Wrightbus and others grow on the back of that.

Is everything perfect? No, of course not. Is there still work to be done? Yes, of course. Is there still work to be done to ensure that local authorities and commissioners fully understand their obligations under the Modern Slavery Act, the impact of social value and all the consequences of any commissioning purchase? Can the Government work harder with, for example, the Department for Business and Trade and the Cabinet Office to ensure those rules are then disseminated to the commissioners? I do accept that more can be done in that space.

However, as an example, £76 million in UK export finance loans and guarantees have been provided to UK bus manufacturers in the past few years, which is turbocharging exports. Wrightbus, as I understand it, is exporting to Hong Kong, right on the doorstep of China, and UK manufacturers are continuing to win orders around the world. Although we clearly want UK manufacturers to be commissioned in this country, it is most important, surely, that they can also take orders from around the world; my hon. Friend the Member for Milton Keynes South made that fair point. The argument is nuanced. We want our manufacturers to be able to compete worldwide, and I believe they can.

We are also providing certainty for manufacturers on the pathway to a fully zero-emission fleet. The final decision on diesel buses will be made shortly; part of the process is understanding exactly the capacity and capability of our UK bus manufacturing sector—if one sets a date that is too soon, clearly there are consequences, but if one sets a later date, there are also consequences. We are very much engaged with finding the sweet spot for a date, and we will be making a decision without a shadow of a doubt in the very near future. We believe that will provide a greater degree of certainty, allowing further focus on research and development lines, and also shifting production to producing more zero-emission buses at scale.

It is also clear that as a result of the Government’s action, air pollution has reduced significantly, both since 2010 and, more recently, since the introduction of zero-emission buses: since approximately 2016 or 2017, there has been a true ramping up—a massive reduction in CO₂.

I want to finish on a couple of the key points that have been made. My hon. Friend the Member for Mansfield (Ben Bradley) rightly made a variety of points. We clearly are working with local authorities, like his good self’s. The £8.3 billion for road resurfacing, redirected because of the HS2 second-leg decision taken by the Prime Minister in October, has benefited all local authorities, not least Nottinghamshire. I saw that when I visited there about three weeks ago and met my hon. Friend the Member for Rushcliffe (Ruth Edwards). I actually visited the site and met some of the councillors and other individuals.

My hon. Friend the Member for Mansfield is clearly badgering me about a variety of roads and infrastructure projects. He is passionate about the A614, which, I assure him, is engraved at the very top of my to-do list. I will make sure that we get that project over the line, to the benefit of both his constituents and my right hon. Friend the Member for Sherwood (Sir Mark Spencer), who has been robust in his recommendations.

I have dealt clearly with the point about competition on labour costs, which is a fact that we cannot disagree with or ignore.

It is hard to disagree with anything that my hon. Friend the Member for Milton Keynes South said. I do want to restate the point, though, that this is a nuanced argument. We want our manufacturers to be able to export, as well as to supply in the local environment. That has consequences when it comes to being part of WTO agreements. But we also want to make sure that we, as Government, are supporting manufacturers as much as we possibly can. I have addressed the issues of modern-day slavery and will not necessarily take that any further.

I want to finish, to allow the hon. Member for North Antrim to wrap up the debate with sufficient time. I genuinely welcome this debate. It has been an opportunity for us to cite, laud and praise a growing business in the UK. In these tricky times, there is no doubt that bus manufacturing in the UK is growing substantially. The best evidence is Wrightbus, with its massive increase in numbers. I look forward to visiting and being ambushed by a lemon drizzle cake in the appropriate way, and I greatly welcome the opportunity to set out the degree of support that the Government have given it.