Automotive Manufacturing Sector: Support

Lord Johnson of Lainston Excerpts

Monday 15th May 2023 Lords Chamber

[Lord Woodley]

To ask His Majesty’s Government what is their investment strategy to support the automotive manufacturing sector in the United Kingdom.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Our automotive industry has a long and proud history. We are determined to build on our heritage, and to secure international investment in the technologies of the future to position the UK as one of the best locations in the world to manufacture electric vehicles. That will include aspects such as the automotive transformation fund, our Advanced Propulsion Centre, UKRI, our critical minerals strategy, our overall global trade strategy, UKEF and, on top of that, the specific investment opportunities that I, my team and colleagues from the Department for Business and Trade are working on assiduously.

[Lord Woodley (Lab)]

My Lords, in my opinion, what appears to be missing here is a proper government strategy for the automotive sector as part of a much wider industrial strategy. The House will be well aware that the EU’s Green Deal industrial plan is in place, with tens of billions of euros in manufacturing grants topped up by literally hundreds of billions in loans to companies, while the US is investing over $2 trillion in its advanced manufacturing, energy and clean technology efforts. We have already fallen behind our competitors, according to my contacts at the Society of Motor Manufacturers and Traders, who tell me that we are at a tipping point. Does the Minister therefore agree that what we need now is a truly tripartite industrial strategy council, with the Government, companies and trade unions working together, and that it should be placed on a statutory footing—as called for only this weekend, ironically, by Labour?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his continued engagement on this important matter, which I know he holds dear to his heart, as do I. My department will work continually with all parties to ensure that we have the right amount of investment in our future industries. Please make no mistake about it: the creation of an EV industry in this country and the importance of the automotive sector is paramount to our long-term strategy, and to the success and prosperity of this great nation.

[Lord McLoughlin (Con)]

My Lords, in looking at what the Government are doing to support the manufacturing industry, I ask: are they satisfied with the way in which industrialists and entrepreneurs see it at the moment? There was a call by James Dyson at the weekend, saying that there is not sufficient liaison. If he does not feel that the Government are on the side of industry in this country, that is very disturbing. What are the Government doing to put this right?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that comment but I do not necessarily see those figures in the facts that I look at. Look at the investments into life sciences, into fintech, into start-ups and venture: we lead the world, second only to the United States. On unicorns, which are an important measure of the sort of R&D that Sir James Dyson is talking about, if your Lordships took a hot-air balloon up over this great nation and looked down, you would see herds of unicorns thundering across our green and pleasant land, the sunlight glinting off their horns. But if your balloon drifted over the channel to the continent, you would see single unicorns, their ribs showing, tethered to a stake and munching dry grass. Our brains are our best defence, and the facts speak for themselves.

[Lord Fox (LD)]

My Lords, I remind your Lordships’ House that unicorns are mythical beings. I will return to the point of discussion: there is a lack of urgency and of scale. We are at a watershed; if the investments are not made very soon, they will never be made because they will have been made somewhere else. France is investing about €10 billion in automotive electrification and Germany about €7 billion. When will the Government understand the nature of the international competition that we face and put in place the scale and urgency that we need to get this done?

[Lord Johnson of Lainston (Con)]

As I have expressed, the importance of investing in this area remains paramount. We have the automotive transformation fund, which is over £850 million, and the Faraday challenge. I have listed some other important aspects that the Government are focusing on. This has led to important investment, including into Pensana, Jaguar Land Rover, Mahindra & Mahindra, Motherson Group, TVS and the Hinduja Group, and a whole new range of investments into hydrogen-powered buses, which is a great success flag for Northern Ireland.

[Lord Leong (Lab)]

My Lords, my first car, which I loved, was a British-made MG Midget in racing green. It is very sad that we are now at a point where unless the UK Government develop a credible automotive industrial strategy, Britain will soon have no automotive industry and the memory-making cars that come with it. We have world-class British automotive designers, internationally renowned British engineers and a skilled and hard-working British workforce. What plans do the Government have to utilise these assets to improve productivity, invest in research and innovation and ultimately transform the sector as it moves away from petrol and diesel?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord, Lord Leong, for telling us about his car history. My first car was a Fiat Regata; I doubt that anyone in this House has ever driven one of those, and I would not necessarily advise it. It is important to look at some of the other aspects of where we are investing and have been successful in this country, and to trumpet the successes and triumphant elements of our car industry. Formula 1 is a very good example of that: two-thirds of the Formula 1 teams are effectively located here and the technology is developed here. There is our luxury car industry, where Bentley has recently announced £2.5 billion for further investment. We lead the world in luxury cars including, I am pleased to say, the rebirth and renewal of the important brand of Lotus. I met those in its owning company a few days ago and heard of their commitment to investing in this country, because we have the expertise to do the design, development and, ultimately, manufacture.

[Lord Patel (CB)]

My Lords, the Science and Technology Committee’s report published in November 2022 was concerned about the UK’s capacity for electric vehicle battery production. It now comes to pass that Britishvolt, one of our biggest possible producers of electric vehicle batteries, has failed. What effect will this have on our automotive industry, as we have no other UK production of batteries?

[Lord Johnson of Lainston (Con)]

I believe that the outcome has been relatively satisfactory, with the purchase of Britishvolt by Recharge Industries, which I have met on several occasions to ensure that it is committed to investing in this country. It will make non-vehicular batteries to begin with but has reassured me that it will ultimately make batteries that can be used in EVs. It is not true that we do not have prospects. As we know in this House, there has been £1 billion of investment in the Sunderland plant for Envision to allow us to make electric vehicles made by Nissan.

[Viscount Stansgate (Lab)]

My Lords, further to the answer the Minister gave a moment ago, when he gazes down on the country from his hot-air balloon, can he tell us where the gigafactory for the manufacture of electric batteries, on which the future automotive industry of this country is going to depend, will be?

[Lord Johnson of Lainston (Con)]

I have tried to cover the key areas where we are investing significantly alongside industry to build our EV industry. We have several important pools of capital. I have not mentioned UKEF, which has through various loan schemes also supported our existing and future manufacturers. On top of that, through the Faraday challenge we are investing very heavily in R&D, because innovation will drive the technological change that will give us these opportunities in the future.

[Lord Howell of Guildford (Con)]

Has my noble friend noticed that Honda, which has given up manufacturing in this country, now proposes to import a low-cost EV made in China? Many are forecasting a tidal wave of lower-cost EVs from China as its industry expands at an amazing rate. Is our strategy robust enough to take account of that and of the devastating effect of the Inflation Reduction Act in America, which is sucking a lot of investment in automotive components and manufacture away from this country? Are we ready for these two blows?

[Lord Johnson of Lainston (Con)]

We clearly import cars and run a global economy. I would like to raise to the House the importance of our trade deals. They will allow us, through the new rules of origin opportunities under CPTPP and so on, to make more cars with mixed-use components. I congratulate our Secretary of State, who is in Switzerland today to further this post-Brexit vision of Britain.

[Lord Wigley (PC)]

My Lords, given that the future of the motor sector will be related to electric cars, can the Minister address the inconsistency in the rates of VAT exercised with regard to the electricity in private households and that available at public charging points? For those who do not have the benefit of a private drive and the ability to charge cars by their own homes, can the Government move towards an equalisation of these charges?

[Lord Johnson of Lainston (Con)]

My Lords, as always, I am grateful to the noble Lord for raising important points, and this debate continues. However, we are investing £381 million to ensure that we have the right number of points around the country so that people can have the infrastructure they need to run their electric vehicles and make this vital transition to a zero-carbon future.