Stellantis Luton
Debate between Lindsay Hoyle and Jonathan Reynolds(1 day, 16 hours ago)
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The Secretary of State for Business and Trade (Jonathan Reynolds)
With permission, Mr Speaker, I wish to make a statement on the announcement by Stellantis yesterday on the future of its manufacturing sites in the United Kingdom.
I know that yesterday was a dark day for Luton. This is an iconic plant powered by a talented workforce. There are very few people in the town who do not know someone who works at the site. I wish to outline the steps that the Government have taken to try to prevent this outcome, and how we are going to support the industry and the area going forward.
The Transport Secretary and I found out about the challenges of this site just 10 days after the election. The global chief executive officer told us that he felt extremely frustrated by the lack of action from the previous Government, which meant that his desire was to close the Luton plant. Since then, we have been involved in intense negotiations with the company to try to find a way to keep the site open. Following these initial meetings, in July of this year the company announced its intention to conduct a review of its operations in response to the significant pressures that it was facing in key markets. Following the review, the company set out plans on Tuesday, which will see manufacturing at the two current Stellantis plants consolidated into a single location.
We were, and are, aware that Stellantis has significant excess capacity across Europe. The company’s talk of efficiency and investment elsewhere will of course be positive for its bottom line, but that will come as no comfort to the workers affected.
For more than a century, Vauxhall as a brand has been synonymous with Luton, and we are bitterly disappointed to hear that this relationship looks likely to end. Our No. 1 priority is the people of Luton, who will of course be devastated by this decision. News such as this rips through the heart of communities, sending shock waves beyond those immediately impacted—through their families, their communities and the businesses that they support. I grew up in a car community and know what it is like when half the street work at the same site.
We have asked the company to urgently share its full plans with us and to work with the Government, so that every single worker who is impacted receives the support they deserve. The Department for Work and Pensions stands ready to help anyone affected with a rapid response service designed exactly for these kinds of scenarios. It provides vital support and advice to both employers and their employees facing redundancy.
I want the House to be aware that we have done everything we possibly can to prevent this closure. My right hon. Friend the Secretary of State for Transport and I met Stellantis many times over the summer and again on Tuesday morning to discuss the situation and the acute pressures that the company is facing. We have worked hard to find a solution that would support the business and ensure that people kept their jobs, and we confirmed in writing that we were willing to consider any solution put forward.
However, despite our best efforts, we have been forced to accept that this is ultimately a commercial decision by Stellantis as it responds to wider challenges within the sector. And I will be frank with hon. Members: these challenges are not confined to any one company. Car manufacturers around the world are battling with increased costs, supply chain issues and changing consumer demand in a highly competitive, fast-evolving market. Hon. Members will know that last week Ford also announced 800 job losses in the UK over the next three years as part of a major restructuring programme across the whole of Europe. Many of the challenges faced by our car manufacturers are global in nature and they cannot be resolved by UK Government intervention alone.
Although this announcement is not what we wanted or what we worked towards, we must not mischaracterise this. It categorically does not signal a retreat by Stellantis from the UK. The plans announced by the company will also see it investing £50 million as it consolidates manufacturing at its Ellesmere Port plant in Cheshire. Hon. Members will know that Ellesmere Port is the UK’s first all-battery electric vehicle plant, and Stellantis’s decision to bring production of the Vivaro electric van to there is welcome. We will of course continue to work closely with the company on next steps of the consolidation process, including the proposal to offer affected workers a relocation package to take up roles at Ellesmere Port. The investments being made at Ellesmere Port and elsewhere demonstrate that there are real opportunities for UK manufacturing as part of the move to zero emission vehicles, but the transition has to be properly managed. That requires a Government who are on the pitch—something that the car industry finally has in this Government.
The Government are determined to support automotive companies as they revamp their production lines, adjust their business plans, and develop the technology needed for the next generation of zero emission vehicles. These cars and vans are greener, cleaner and essential to our net zero ambitions. Roughly 30% of the UK’s greenhouse gas emissions come from cars, vans and lorries. To tackle that, and wean our country off imported fossil fuels, we need zero emission vehicles, but the Government are resolute that the transition must be done in partnership between Government, industry and of course consumers. That is why the Secretary of State for Transport and I are listening closely to the concerns of the automotive industry and the wider sector about the transition to electric vehicles, and about the Conservative party’s zero emission vehicle mandate.
We held a roundtable earlier this month to hear directly from major automotive companies, the Society of Motor Manufacturers and Traders and the charging sector, and in response we will shortly fast-track a consultation on our manifesto commitment to ending the sales of new pure petrol and diesel cars by 2030. We will use that consultation to engage with industry on the previous Government’s ZEV transition mandate, and the flexibilities in it, and we will welcome the industry’s feedback as we move forwards. We want to do everything that we can, together with industry, to secure further investment in the British automotive sector, now and over the long term. That is why in the Budget the Chancellor committed £2 billion to research and development and capital funding to support the zero emission vehicle manufacturing sector and supply chain.
Also, our industrial strategy will give the automotive sector the certainty that it deserves, and will send a clear signal to global boardrooms that the Government are in this for the long term. We want to invest alongside them, create a policy environment that allows them to prosper, and help them to do what they do best: bringing good jobs to every part of this country. Through the national wealth fund, we are unlocking billions in private investment in new green infrastructure, including gigafactories, and supporting growth and job creation—not just in the automotive sector, but in the wider economy. We are working with investors to build a globally competitive electric vehicle supply chain in the UK, and so are laying the foundations for growth over the long term.
The closure of the Luton plant by Stellantis is a bitter blow to our car industry, to Luton, and to the workers who made Vauxhall a world-class brand, producing world-class cars and vans, but we must not lose sight of the fact that those vehicles will continue to be designed and built here in the UK, at Ellesmere Port. That matters to me, and it matters to the Government. When I say that decarbonisation must not mean deindustrialisation, I mean it. Winning the race to net zero and having a world-leading automotive sector must go hand in hand. We must never undermine the transition, as the previous Government did, but we will be pragmatic in ensuring that regulation and incentives are working as they should. Contrived cultures wars are not what the industry needs; instead, it needs a partner in Government ready to look at the practical solutions that are necessary. We stand ready to do that, and I commend this statement to the House.
Jonathan Reynolds
That is the single most dishonest statement I have ever heard in my time in this House.
Jonathan Reynolds
Mr Speaker, I would like to clarify some of the points that the hon. Gentleman raised. The ZEV mandate policy is—[Interruption.]
Jonathan Reynolds
The ZEV mandate policy that the shadow Minister mentioned is a policy of the previous Government, as he is aware. The changes that the previous Government made were not to the ZEV mandate. They were not pragmatic about it. They changed the destination and kept the fines, the ramp-up and the threshold exactly the same. They allowed no flexibility or pragmatism in how the policy operated, but still undermined the transition, leading to a massive reduction in consumer confidence. He asks whether I have talked to industry. I was the guest speaker at the SMMT dinner last night; 1,000 people were there, from every bit of the automotive sector. They are absolutely clear: they support the destination; it is how the previous Conservative Government’s policy operates that is causing them the problems. As I said in the statement, as he would know if he was listening, or had read it in advance, 10 days into this Government, we were told that the plant was likely to close.
Labour has acted with pragmatism; we have been willing to look at any part of the policy to prevent this outcome. The simple truth was that it was too late, after 14 years of failure, to put this right. I say to the hon. Gentleman with all politeness that he is out of touch with industry, with workers, and even with what the previous Conservative Government did, and that speaks for itself.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
This is indeed a hard day for Luton. I welcome what the Secretary of State shared with the House, and the review of the zero emission mandate that he announced. In that review, I hope that he looks again at the perversities of the regime that he inherited, which could involve petrol engine makers in this country transferring credits to companies like Elon Musk’s Tesla, and to Chinese EV makers. If we really want to ensure a level playing field, why do we not reverse the decision of the last Secretary of State, follow the EU Commission and launch anti-subsidy investigations into Chinese EV makers? The Trade Remedies Authority is ready to go—it just needs the Secretary of State to give the green light.
Jonathan Reynolds
I am grateful to the Chair of the Select Committee, including for the exchanges that we had in the Committee evidence session yesterday. He is right that because of the position we inherited—the issues with the flexibilities in the policy and the fact that no domestic producer is on track—the transfer he described is effectively the problem. That is why I say that decarbonisation cannot mean deindustrialisation. It is precisely what we inherited that we are critiquing. We do not want to undermine the transition in the way the previous Prime Minister did—anyone in industry in the sector could tell Conservative Members how disastrous that was—but we need to give a breathing space, and ensure that the policy has none of the perverse incentives that he described.
On subsidies, the Trade Remedies Authority and the potential response from the UK, we have to bear in mind two things. First, under the system that we inherited, industry makes the application. I have powers to do that, as Secretary of State, but they have never been used, to my knowledge. Secondly, we must remember that the UK automotive sector is a world-class, export-led sector. If we were to go down any kind of protectionist route on principle, we would have to bear in mind what it would mean for the markets we sell vehicles into. If we sell 80% of our product abroad, we have to consider the international export position, alongside the domestic market position. If industry makes that request, of course that request will be followed up, in accordance with the way the system operates.
Clive Jones (Wokingham) (LD)
I thank the Secretary of State for advance copy of his statement. Yesterday, like the Secretary of State, I attended the Society of Motor Manufacturers and Traders annual dinner, and I greatly appreciated the opportunity to hear directly from such an important sector for the British economy. UK car manufacturing brings billions of pounds into our economy. It employs hundreds of thousands of people directly, and many more thousands across its supply chain. It is at the forefront of the green transition, and of making transport sustainable for the future via electric vehicles. Most importantly, the industry is always willing to be frank with me and with other politicians; it reaffirmed to me that it sees major hurdles on the horizon, and the closure of Vauxhall’s 100-year-old factory in Luton is a sign of great troubles ahead.
Inevitably, the Conservatives will play politics with the announcement, but there is still no apology from them for trashing the economy. There is not one moment of reflection that the previous Government’s policy on electric vehicles was a disaster. The policy simply did not do enough on infrastructure and incentives. The Government therefore need to fix the Tories’ mess. As a starting point, the Government urgently need to work with Vauxhall to mitigate this major shock for the area. The Government have said that they will fast-track a consultation, but it needs to be fast-tracked today. Urgency is the key, so when will that consultation start, and when does the Secretary of State expect it to report? The previous Government did not do enough to incentivise people to buy electric vehicles, nor did they provide the right infrastructure. What are the Government doing to increase sales of electric vehicles and increase the number of charging points in places such as my constituency?
Jonathan Reynolds
I am grateful to the hon. Gentleman for his questions and observations, and apologise that he has had to hear me speak twice on this topic in the short period of time between last night and today. He has asked the Conservative party to apologise for its economic record. That case stands for itself, but I would also like to know, given how urgently this issue was presented to us as a new Government, what the last Government were doing at the end of their time in office. What did they know? What conversations were they aware of? Certainly, we inherited a position of extreme frustration from the company, and I cannot imagine that that frustration had not been conveyed in some way to our predecessors.
Turning to the hon. Gentleman’s specific questions, there were policies in the Budget relating to charging infrastructure—which I recognise is a key part of this issue—as well as £2 billion for research and development through the automotive transformation fund and the partnership with business that we use that fund for. Obviously, the consultation he asked about will come from the Department for Transport. The shadow Secretary of State, the hon. Member for Arundel and South Downs (Andrew Griffith), asked why that consultation is happening, but the previous Government set these policies out in primary legislation, so he knows that there are processes to follow. Any conversation about the thresholds in the existing policy would be for my right hon. Friend the Secretary of State for Transport to have, but I refer back to my points about how the system works and the flexibilities and allowances in, and how we can make sure that we are giving automotive manufacturers in the UK a system that lets them get to the transition they and the consumer want, but in a way that works with industry to enable that transition to happen for the benefit of the United Kingdom.
Port Talbot Transition Project
Debate between Lindsay Hoyle and Jonathan Reynolds(2 months, 2 weeks ago)
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The Secretary of State for Business and Trade (Jonathan Reynolds)
With your permission, Mr Speaker, I would like to update the House on the improved deal that this Labour Government have secured for the workers of Tata Steel, specifically as it relates to its plant in Port Talbot. As well as setting out the details of this improved deal, I am also announcing today our ambition for a new UK-wide steel strategy—one that equips our steelmaking industry with the right support not just to adapt but to thrive in the new green economy. But before I do so, I want to address the situation we have inherited.
Since becoming Secretary of State two months ago, I have had to respond to a series of challenges, not just with the steel industry but in shipping—such as at Harland & Wolff—and in other areas where the previous Government had simply ceased to make decisions and decided to leave them for us to deal with. That was a dereliction of duty and it has left the steel industry in particular in an extremely perilous position. The previous Government had been promising a plan for the steel industry for years. With what I am able to announce today—with the signing of a legally binding deal that enables Tata to order its electric arc furnace as part of a significantly improved package—this Government have made more progress in two months than they made over the previous Parliament. But if we had started these negotiations even a year ago—never mind years ago as they had the opportunity to do—I have no doubt that we would have secured an even better deal for the community.
So I start with an apology to the people of Port Talbot, because they were let down by the previous Government. While this deal is much improved, I acknowledge that it falls short of what would be my ideal. I have, however, been to Port Talbot several times and met the workforce there, along with the reps and the generations of families who have literally forged Port Talbot as we know it. That is why, when Tata first announced that it would be closing the blast furnaces, resulting in some 2,800 job losses, I knew that the workforce deserved so much better. I warned my predecessor not to proceed with what they had negotiated. Why? Because I was confident that the Government could secure a better deal: a better deal for Tata’s workers and a better deal for the people of Port Talbot. And I am able to announce today that this Government have secured that better deal, but I reiterate that if we had had the opportunity that the previous Government had over so many years we could have done more.
The key features are as follows. First, we have agreed a process with Tata to assess investment opportunities for new, additional capabilities that will deliver more secure, long-term jobs than the deal we inherited. This is on top of the plans for the instalment of the electric arc furnace. We have agreed a process with Tata to take this forward, and I will report back to the House on that progress. But this is the most important element, so I am announcing the deal now, rather than after the process is complete, because for Tata to secure the build slot for the electric arc furnace, that element needs to be sorted now. Further delays would put the whole project at risk and could lead to a much worse outcome.
Secondly, in every conversation I have had with Tata’s directors, I have stressed the need to avoid compulsory redundancies wherever possible. I have asked them to channel their efforts instead into job matching and retraining so that the steelworkers of Port Talbot, who have dedicated so much to the industry in the past, can now help shape its future as they will be able to transition and move within the business. As well as that, Tata is agreeing to offer a comprehensive training programme for any employee as an alternative for those at risk of compulsory redundancy. This would be on full pay for one month, then £27,000 a year per employee for 11 months. Tata will fund all those costs. Employees will be able to choose from recognised qualifications to develop sought-after skills that will be in high demand in the local economy now and long into the future. We know, too, that Tata expects that during the construction of the electric arc furnace at least 500 new jobs could be created, which will tap into the local labour market wherever possible.
Thirdly, where we cannot secure new jobs or training, working closely with the unions we have helped to secure improved terms on redundancies. Tata’s employees are now able to express an interest in the most generous voluntary redundancy package the company has ever offered for a restructuring of this size. Employees will now be paid 2.8 weeks of earnings for each year of service up to a maximum of 25 years. At the same time, we are ensuring that there is a minimum redundancy payment—£15,000 pro rata—and a retention payment of £5,000 for employees leaving the business because of these closures. Over 2,000 members of staff have expressed an interest in voluntary redundancy who will be eligible on these terms.
Fourthly, as part of the deal the company will also be releasing 385 acres of its site for sale or transfer. This is valuable real estate which will help bring in more companies and more employers not just from the steel sector but from a whole host of other industries too, helping to diversify the workforce at Port Talbot.
While Conservative Members told us that there was no alternative to the original proposal, we knew that there was, and we have bargained hard for it. And we are putting in watertight conditions within our grant funding agreement for job guarantees to claw back investment if these jobs do not materialise. For example, there is now an improved grant repayment of £40,000 for every job that is not retained post transformation. This money will be repaid directly to the Government and is a powerful incentive for Tata to deliver the 5,000 UK jobs target.
But our ambition for steel is so much bigger and broader than one single company: it is about the whole sector. The UK has always been a proud steelmaking nation, with a rich heritage stretching back to the industrial revolution. From cars to cranes to ships and scaffolding, British steel has been, and is still, used the world over, embodying our industrial might and innovation. Yet for years steel has been a neglected industry in this country. Crude steel production has declined by more than 50% in the last 10 years. Indeed, some proclaimed the industry’s decline would be inevitable in the 21st century—that it was somehow a sunset industry—but those people are wrong: we on this side of the House have never believed that decline is inevitable and while the industry faces challenges today we want to do everything we can to ensure that it can adapt and grow tomorrow.
That is why I am pleased to announce that we will introduce our new steel strategy. As hon. Members know, our manifesto included plans to make available £2.5 billion for steel, on top of the £500 million transformation of Port Talbot. Our intention is to increase our UK capabilities, something the previous Government never attempted, so that we can create a more vibrant and competitive steel sector in the UK.
As part of our steel strategy, this Government will look seriously at options to improve steel capabilities across the supply chain, including in primary steelmaking. We are clear that we cannot prioritise short-term subsidies over long-term jobs, which is why, with the help of independent experts, we will review the viability of technologies for production of primary steel, possibly including direct reduced iron.
Steel is essential to delivering on our net zero goals and building the next generation of green infrastructure, and I know that Labour Members are passionate about that. That is why, under our steel strategy, we intend to use the Procurement Act 2023 to drive economic growth and account for social value in the things that the Government buy and the projects we commission. Work is already under way to increase the role of steel as we build our manufacturing base.
We recognise that, for far too long, Britain’s energy-intensive industries, including the steel sector, have been held back by high electricity costs. More often than not, this has made the UK less attractive to international investors, but we will take action on that. Our clean energy mission will ensure that we are no longer exposed to the kinds of gas price shocks that we have seen in recent years, and that will help British businesses to compete and win in the global market. In support of that ambition, we are working with like-minded nations to tackle global trade distortions, including through our chairing of the global forum on steel excess capacity this year.
Our steel strategy will be developed and delivered in partnership with the steel sector and trade unions, and it will work in lockstep with the Government’s industrial strategy, which will set out our ambition to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places where they are needed most. In order to drive forward our partnership on the steel strategy, I will shortly meet industry experts and interested parties for discussion on the industry’s future. We intend to publish the steel strategy in the spring of next year.
The Government care about steel and the communities it supports, and recognise steel’s fundamental importance to the economy. Supporting steel in this country is about being involved in the detail and shepherding individual plants into the future while protecting the people in them, but it is also about providing a direction of travel, an inspiration for investment and a cause for confidence, so that the sector can play its part in the next 10 years and beyond.
We are not naive about the scale of the challenge before us. Although the situation is still challenging, this is a better deal for Port Talbot than was on the table, and it is the maximum improvement we could make in two months. It represents a better destination and a better transition to the bright future that steel will have under this Government. I commend the statement to the House.
Jonathan Reynolds
I have been a Member of Parliament for 14 years, in which I have seen some interesting political events, but I do not think I have ever heard a contribution with such brass neck. That is quite something, because there is quite a menu to choose from.
Let me explain what I was doing during polling week, in the lead up to 4 July. Parliament was not sitting, and I was shadow Secretary of State. I was going between key seats, as would be expected, negotiating with unions, Tata, my colleagues in the Welsh Government and every relevant body to prevent action that would have resulted in the entire closure of the Port Talbot works on polling day. It was as though the Government had already gone; they were not on the pitch. The first thing I had to do, before I even became Secretary of State, was ensure that there was something there to save, because it would have gone under the Conservative party. [Interruption.] Conservative Members really need to listen, because my contributions are factually accurate, and I will help them to understand the real situation.
The point of the new investment is to save jobs. There will be better terms for the people who are unable to get the new jobs, including better cushioning during their retraining for entry into the rest of the economy. I have explained why it is a better deal, as I hope the shadow Minister has seen. He mentioned media reports; they have not come from my Department, but I appreciate that there were lots of interested parties. The unions and the Welsh Labour Government recognise that this is a better deal. I hope that the Conservative party recognises, on taking a step back from the statement, why the deal will make such a difference.
The shadow Minister mentioned virgin steel. Let me talk about my frustration about that. He will understand that the two blast furnace sites, Scunthorpe and Port Talbot, lose a great deal of money every day. The managers are so fed up with the lack of action under the last Government that they have put timescales on their closure. The simple truth is that I do not have the timeframe that was available to the Conservative party. Moreover, when it comes to Scunthorpe, I do not yet have the carbon capture infrastructure in place that will be necessary for the ideal solution. I would love to be a position to look at the hybrid solution that the shadow Minister put forward—keeping the blast furnaces open while we bring the electric arc furnaces online—but all the time that could have been used to work on that was during the Conservative Government, and they did not do that work. There are therefore far fewer options available to us, and the situation is far more challenging.
Since I became Secretary of State, I have had many meetings with the UK management about Scunthorpe, and have had three meetings, I believe, with Mr Li, the principal shareholder. I also met him when I was shadow Secretary of State. We have been clear that we want a transition in Scunthorpe, and want to put up Government money alongside what the company may offer, but that has to be part of a transition to the future. The workforce and the route that is offered to them has to be part of that.
Even if we are successful in doing that, my frustration is that the options available are very difficult for the area. The solution I would ideally deliver, which could have been delivered by the Conservatives in those 14 long years, is not available. When Conservative Members leave the Chamber today, I hope they reflect on the mistakes they made, their lack of action, the legacy they bequeathed us and, fundamentally, the improvements we have been able to make in such a short time.
Mr Speaker
Order. May I say to Members, especially senior Members, that when they speak facing the opposite direction from where I am sitting, I cannot hear what they say? Please, speak towards the Chair. That is how we keep neutrality working as well.
Jonathan Reynolds
My right hon. Friend is absolutely right. We are not just seeking to deliver new, improved transition deals for the key sites, but want to improve the overall business and investor environment for steel in the UK. I believe that can be done. The kind of investments in core capacities that we are thinking about could be very successful in the United Kingdom. Obviously, two months is insufficient for the due diligence that is required on some of the elaborate and considered business cases necessary, but the process is about delivering that. We can turn this into an extremely positive story for UK steel.
Sarah Olney (Richmond Park) (LD)
Steelmaking is of vital strategic importance to the UK. We need it to build the crucial infrastructure necessary to generate sustainable growth and safeguard our national security. The neglect of the steel industry in recent years is just another part of the previous Government’s disastrous legacy.
Today’s announcement is a welcome sign of change. The steps the Government have outlined to help protect jobs and, crucially, to develop a steel strategy are long overdue. We need to finally move on from a patchwork of last-minute rescues to a long-term plan that will set the industry on a sustainable footing. This is true of the steel industry and across our economy. We desperately need a real industrial strategy that works in tandem with this plan for steel.
Will the Secretary of State assure us that his steel strategy will be fully aligned with a wider industrial strategy, and will take a view on steel’s importance to our economy and society as a whole? Will it aim to balance the need for infrastructure, national security and net zero commitments? Will he assure us that he will bring the strategy to this House by spring next year for scrutiny and debate, so that the industry can finally move on with certainty?
Jonathan Reynolds
I very much welcome the hon. Member’s words and her recognition of the improvements that we have made with this deal. Fundamentally, we have recognised the need for a better business environment, moving away from relatively short-term responses to that much better, more secure long-term framework. She will understand that the significant increase in investment that this new Government are willing to make can make a substantial difference. However, the emphasis must be on long-term investments for the future, so that we can secure those long-term secure jobs. There are several different ways that we can do that. I absolutely agree that our method should be aligned with the industrial strategy, and we will be able to make some announcements on that in the near future, leading up to the launch of the steel strategy next year.
Oral Answers to Questions
Debate between Lindsay Hoyle and Jonathan Reynolds(2 months, 3 weeks ago)
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Jonathan Reynolds
I thank the hon. Member for that question. That is a key issue. There have been positive developments in recent years, particularly through the work of the British Business Bank. The Government feel that the landscape for public finance institutions is now quite busy. The key policy is to ensure that the national wealth fund aligns with priorities in this area, expands the work that has been done, and ensures consistency, so there is a ready way for businesses to understand what can sometimes be a confusing landscape. Also, policies such as that on growth hubs will continue, so the interface for businesses is straightforward and simple, and, fundamentally, the product to access finance will be there when they need it.