UK Automotive Industry: Job Losses

Laura Pidcock Excerpts

Tuesday 22nd May 2018 Westminster Hall

[Laura Pidcock (North West Durham) (Lab)]

I congratulate my hon. Friend the Member for Warwick and Leamington (Matt Western) on securing this important debate. He said that “the headwinds are strong and many” for the automotive sector. He went on to point out 16 issues, including business rates; energy costs; the move from older energies to renewables; the UK’s future trading relationship following our withdrawal from the EU; a freeze on recruitment in the industry; our leaving the customs union; huge uncertainty for businesses owing to a lack of certainty on the Government’s position on a future customs union; the potential shift of manufacturing to EU countries; the kind of regulatory framework that will exist following our withdrawal from the EU; added barriers to trade; the potential loss of tariff-free access; what will happen if we return to World Trade Organisation tariffs; and changes to rules of origin rules.

Other hon. Members then set out many more concerns, including about the impact on SMEs, which makes up 90% of the supply chain, and the complex EU-wide production web and the multiple border crossings needed for the production of a single car. They also spoke of dieselgate and the punitive measures currently levied on some of the cleanest diesel cars, and—crucially—of the lack of confidence for the car industry and its uncertainty over the Government’s position.

My hon. Friend the Member for Warwick and Leamington also talked of how the automotive industry represents an economic bellwether and how crucial it is for the west midlands and his constituency. My hon. Friend the Member for Coventry North East (Colleen Fletcher) talked about the automotive industry’s transformative effect on Coventry, including her constituency. My hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) talked about the loss of almost half the jobs at the Vauxhall plant at Ellesmere Port. He repeatedly speaks up for his constituency. It was poignant to hear my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) explain so eloquently how a job for Warren was about so much more than work. We know that, in every industry, it is about so much more; it is the lifeblood of a community.

It has been said many times that the automotive industry is one of the UK’s most successful sectors. It provides employment to more than 150,000 people across the UK and last year contributed £15.2 billion to the economy. There is no doubt that the continued success of the automotive sector is vital for workers and families across the UK and for the success of our economy as a whole, but worryingly it has been going through a challenging time.

Although there was an uplift in April, car sales plummeted in March by 15.7% compared with last year, and almost 2,000 job losses have been announced during the past six months. In January, despite all the assurances from the Government when PSA Group took over, Vauxhall announced 250 job losses, on top of the 400 lost last year, at its plant in Ellesmere Port, as my hon. Friend the Member for Ellesmere Port and Neston described. I pay tribute to him and to Unite the union for all the work that they did with PSA Group to protect as many jobs as possible for the future. In April, it was announced that Nissan would be cutting jobs in Sunderland, and last month Jaguar, the UK’s biggest car manufacturer—it employs 40,000 people—announced that it would be shedding 1,000 temporary contract workers in the west midlands.

Three reasons were listed for those cuts: low demand, with sales at Jaguar down by 26%; changes to tax on diesel cars; and the uncertainty caused by Brexit. Those three factors are all either wholly or partly within the Government’s control. They have complete control over the uncertainty on Brexit, or at least they would if they could sort out the Cabinet and it was not in so much chaos. They also have control over the confusion about taxation policy on diesel, but in recent months they have actually exacerbated it. Weak demand in the economy could be mitigated by Government policy through, for example, encouraging wage growth and Government spending to increase national income.

As has been said, the Society of Motor Manufacturers and Traders has highlighted just how important trade with the EU is to the automotive sector. It says that 1,100 trucks from the EU deliver components worth £35 million to UK car and engine plants every single day. The complex cross-border supply chains depend, crucially, on the free and frictionless movement of goods. Manufacturers are very concerned about that freedom and those frictionless borders being disrupted.

[Mrs Hodgson]

It has been one year, 10 months and 30 days since the UK voted to leave the European Union. Does my hon. Friend agree that the Government have therefore had more than enough time to sort out their negotiating position on the customs union, considering how important it is?

[Laura Pidcock]

That is right. I have outlined previously that perhaps some of the confusion and slowness in the process is due to the fact that an initial set of negotiations has to be carried out with two or three Cabinet members before negotiations with the EU can take place.

The SMMT says that

“neither option currently being considered by government...would provide the frictionless movement of goods that UK automotive needs to maintain its competitiveness and productivity.”

It is right that the Labour party has called for the Government to negotiate a new comprehensive EU-UK customs union covering all goods. That is the best way to ensure that there are no tariffs or customs checks within Europe, to support jobs, particularly the 2.1 million UK manufacturing jobs, and to help to avoid, crucially, the need for a hard border in Northern Ireland. It would be very helpful if the Minister could use his closing remarks to set out how the Government will ensure the future security of the automotive industry and those employed in it, going beyond the bespoke assurances to the likes of Nissan and Peugeot. Those were important, but we need more than that.

The automotive industry in the UK is a great success story. We have heard a tour de force in defence of the industry from all hon. Members in the Chamber, but it is currently under huge pressure, and sadly that shows through in the increasingly frequent announcements about job losses and in sales figures. It is incumbent on the Government to work with businesses, industry bodies and trade unions and listen to them when they express very clearly that the Government should prioritise a customs arrangement that removes the risk of tariffs being imposed. We must, as an imperative, seek to protect workers’ jobs and secure the future success of the industry as a whole, and I would be grateful if the Minister could now set out how he intends to do that.