Batteries for Electric Vehicle Manufacturing

Debate between Liam Byrne and Jim Shannon

Thursday 23rd November 2023 Westminster Hall

[Liam Byrne]

I am grateful to my hon. Friend. As ever, he is on the money. The rules of origin framework was put in place with the best intentions, to try to incentivise people in Europe and the United Kingdom to get gigafactory investments in place, but that has not yet happened. We have a looming gigafactory gap in this country, and if we do not negotiate an extension to the rules of origin, we will have tariffs of up to 10% on some of our exports, which will have a really serious impact on hundreds of thousands of jobs. Given how much is at stake and how many jobs are in peril, we were surprised to see almost no news about where the renegotiation of the rules of origin had got to. That was one reason why we stated it so clearly as a requirement in our conclusions—so that the Government now have to go on the record to explain to the House, and indeed the country, precisely what they are doing.

[Jim Shannon (Strangford) (DUP)]

I thank the Chair of the Select Committee for his statement. I have a specific question, which I spoke to him about beforehand. As I understand it, EV batteries used in the UK are likely to be sourced from Europe and elsewhere, so we very much welcome talk about British production of batteries. In my constituency of Strangford—the Chair of the Committee has referred to regionalisation, to which my question relates—there is much interest in electric and hybrid vehicles, and many engineering companies there are willing to get involved in the production of batteries. I have asked about this in oral questions in the main Chamber, but today I ask the Chair of the Committee the same question: does he agree that there is an opportunity for Northern Ireland and my constituency of Strangford to get involved in the production of EV batteries, and that any legislation that comes forward in this place must take on board, and extend to, the devolved institutions as well?

[Liam Byrne]

I am grateful for that question. Although I do not have the specific details of the opportunities in the constituency of the hon. Member for Strangford (Jim Shannon), the spirit of the Committee’s report is that we need to be using industrial policy to do three things: to de-risk supply chains, to decarbonise, and to decentralise the sources of economic growth. That is why we are so clear about the need for the Government to designate strategically critical sites for gigafactories in the future. As to quite how many we need, the Minister and I may have different views, but we know how much capacity we need, and that can perhaps be delivered by between five and eight gigafactories, depending on how much each factory can produce. But the broad point is that we cannot be producing batteries simply for the automotive industry; we need a wide range of applications for them in the future.

Once we have designated the sites, we need to think about how industrial policy helps to unlock the wide range of policy levers that any place will need. That includes access to low-cost electricity, skills, and incentives and subsidies to get factories built in the first place. Of course, we then need the trading arrangements, so that people can export and we can ensure that the export of EV batteries is a real growth sector for our economy. The point the hon. Member for Strangford made is therefore absolutely the right one, and we have sought to provide the checklist of things he needs to be asking of Ministers.