Leaving the EU: North-East Exports

Julie Elliott Excerpts

Tuesday 25th October 2016 Westminster Hall

[Julie Elliott (Sunderland Central) (Lab)]

I thank my hon. Friend the Member for Sedgefield (Phil Wilson) for gaining this important, if not crucial, debate for the region of the country that I come from. I was a passionate supporter of the remain campaign—I thought it was in the best interests of my city, my region and my country to remain a member of the EU—but I absolutely respect the decision taken and totally accept that we are leaving the EU. It is important to put that on the record.

There has been much mention in the debate of the automotive sector and the fantastic Nissan plant—it is not in my constituency but in the city where I live. The issues surrounding that plant bring together all the problems faced by the wider manufacturing industry in the north-east in one place. I welcomed the Prime Minister’s statement after she met Mr Ghosn a week ago in which she said she was committed to

“supporting the right conditions for the automotive industry to go from strength to strength in the UK, now and into the future”.

That was important. However, the automotive industry is not the sum total of the problem we face in the north-east from Brexit. In fact, it is a very small part of it.

Even if some sort of agreement is made for the automotive industry, it would not necessarily include all the companies in Nissan’s supply chain. Those companies produce many parts for cars built in Sunderland and in other parts of the country but, because they also produce parts for other companies’ manufacturing, they may not be entirely protected by a special arrangement for the automotive industry. We have to bear that in mind when we look at the Prime Minister’s comments. I wrote to her a few weeks ago asking her to address the problems facing Nissan and the wider automotive industry and manufacturing quickly. I have not yet received a response, but I am sure I will in due course.

I want to talk about wider manufacturing not just because it does an amazing job in trade for our region—we have a positive balance of trade and there are fantastic examples of business doing well—but because of the impact down the line on our skills shortage. Those big manufacturing companies in the north-east train lots of high-skilled, high-end apprentices not on two-year courses but on four or five-year apprenticeships. The best go on to do degree-level qualifications. There would be a major impact on that if any of those companies started downscaling—goodness only knows what would happen if they disappeared.

We have to think about the long term, training and the future skills supply. We know that, in engineering, a bubble is coming when there will be a shortage of good, trained young people to replace the people heading towards retirement, but in the short time I have I want to talk about the tariffs problem. The investment uncertainty that the debacle since the referendum is causing is enormous. We know of examples of investment on hold for the north-east and of examples where investment has stopped. Those are the soft things. Let us think of the tariff situation not necessarily for the car industry but for wider manufacturing. Many of the companies involved in manufacturing in the north-east import parts and raw supplies for the things they make, so they will be hit by tariffs. They export right around the world, but in the main they export to the EU.

We also have major international companies in the north-east—names we all know—whose cost centres are in central Europe, which creates a knock-on effect. A rejigging of their business models is going on. I do not want to highlight any one in particular because they are general problems that all manufacturers say they are facing, with an impact across the piece. All the parent companies and boards and most of the manufacturing companies in the north-east are not British businesses dealing with British supply chains that provide all the supplies they need to produce products from the UK, and they are certainly not selling everything into the UK. For them, tariffs are crucial.

If we do not get the situation resolved—at this stage we are talking not about the detail but about the broad parameters of where the Government are going to stop the uncertainty and create certainty in the marketplace—the potential threat down the line is that British manufacturing will become more and more uncompetitive, which means we will lose jobs, the training I talked about, and revenues from taxes. There will be a massive impact on the economy of the north-east and the UK in general.

My preference would be to remain part of the single market. The Prime Minister needs to look at that as a matter of urgency and make a decision. If that is not what she and her Government are going to do, we need to know what is on the agenda. We need to be working on a cross-party basis to get the best deal for businesses in my constituency, the wider north-east and the country as a whole.