Automotive Industry

Louise Haigh Excerpts

Wednesday 12th July 2023 Commons Chamber

[Ms Ghani]

We are topping and tailing this debate with a Transport Minister and I know he is keen to touch on charging points, but the public charging network is growing quickly, and public charging devices have more than tripled in four years, from 10,300 devices in January 2019, to more than 43,000 in June 2023. The Government expect that around 300,000 charge points will be needed as a minimum by 2030. They are being rolled out at pace, but I do not doubt there will be constituency, case-by-case charge point concerns and the Minister will reflect on those.

One concern that the SMMT and all Members of Parliament who have manufacturing plants in their constituencies regularly raise with me is access to talent. Car companies need highly skilled individuals across the entirety of their business. One reason the UK is attractive is our world-leading universities, with four UK institutions in the global top 10, according to the QS world university rankings. But that is not all. We have supported the automotive sector through the apprenticeship levy, with £2.7 billion funding by the 2024-25 financial year. That will support apprenticeships in non-levy employers, often SMEs, where the Government will continue to pay 95% of apprentice training costs.

We recognise the importance of a level playing field. That is why, at the spring Budget, the Chancellor launched a new capital allowance offer. Businesses will now benefit from full expensing, which offers 100% first-year relief to companies on qualifying new main-rate plant and machinery investments from 1 April 2023 until 31 March 2026, the 50% first-year allowance for expenditure by companies on new special rate assets until 31 March 2026, and the annual investment allowance, which provides 100% first-year relief for plant and machinery investments up to £1 million.

Due to Putin’s invasion of Ukraine, energy costs have been an issue and a concern for the sector. That is why we have again intervened on behalf of the automotive sector, as well as many others, to ensure that the UK’s offer is competitive. It is why the Government have implemented a range of targeted measures to ensure that energy costs for high energy intensive industries, including battery manufacturing, are in line with other major economies around the world, levelling the playing field for British companies across Europe through the British industry supercharger scheme. In addition, to take just one example, the industrial energy transformation fund, now in its third phase, was designed to help businesses with high energy use to cut their energy bills and carbon emissions by investing in energy-efficient and low-carbon technologies. This Government announced £315 million of funding in the 2018 Budget available up to 2027.

The hon. Member for Stalybridge and Hyde talked about providing confidence and support for the sector, and I want to flesh out some of the announcements he was unable to bring himself to say at the Dispatch Box in case that was put into Hansard. Companies continue to show confidence in the UK, and we have announced major investments across the UK, including the £1 billion from Nissan and Envision to create an EV manufacturing hub in Sunderland. I was just on the phone to Envision this morning. It is an end-to-end supply chain. We have £100 million from Stellantis for its site in Ellesmere Port, and £380 million from Ford to make Halewood its first EV components site in Europe.

Jaguar Land Rover has also announced that it will be investing £15 billion over five years into its industrial footprint as part of its move towards electrification. That is great news for the west midlands, where JLR has three production sites, research and development facilities, and its headquarters. I am hugely confident that the UK will continue to attract investments large and small to enable the EV transition and deliver green jobs. Those are the stories we should be promoting at the Dispatch Box, not playing down.

The Government recognise the concerns of the sector, and we are dealing with serious global challenges, including rising costs because of Putin’s horrific war in Ukraine, supply chains disrupted by covid aftershocks and countries turning inward towards protectionism, by which, of course, I mean the Inflation Reduction Act. Acknowledging those issues, over the course of the summer I have been holding a series of business roundtables to understand exactly where the challenges in supply chains are most acute, and where the Government and businesses can work together more closely to ensure that the UK’s supply chains are resilient, now and in the future.

Those headwinds have been felt across the globe, and where the UK sector has been impacted, it has not been uniquely impacted. The entire automotive sector is midway through a once-in-a-lifetime shift away from the internal combustion engine towards zero-emission vehicles. That is good not just for our net zero ambitions; it also has the potential to provide wider economic and social benefits. Of course, our competitors know that too, and the race to secure zero-emission manufacturing capacity across the world is fierce. Some countries seem willing to spend eye-watering amounts. We will be offering targeted investment in the future of the auto manufacturing sector. That means focusing on exactly where we know we are ahead of the game internationally, offering targeted and measured support that reflects the size and scale of our outstanding automotive sector.

As I have said, we have more than a chequebook to attract companies to these shores; our highly productive and skilled workforce, focus on innovation and tech and the ease of doing business are key factors in a company’s decision to base itself in the UK. There is a backdrop of intensely challenging constraints on the sector globally, while the sector is undergoing a seismic technological transformation. It is clearly a difficult situation for manufacturers across the world, but there are positives to be considered, especially here in the UK. The SMMT reported that UK commercial vehicle production has just had its best May performance since 2008, growing by 36.9%—I thought the hon. Member for Stalybridge and Hyde might crack a smile for the sector—and year-to-date output is some 47.6% above the pre-pandemic levels of 2019. That is the message we want to send internationally. It clearly shows that the UK automotive sector is strong, dynamic and fundamentally capable. I want the UK to have a thriving automotive industry. As we take on these global challenges, we will take them on together with the sector.

Some mention was made of R&D support, and I will share all the work we have done. Our R&D and capital programmes delivered through the Advanced Propulsion Centre and the automotive transformation fund are positioning the UK as one of the best places in the world to design, develop and build zero-emission vehicles. They are working together to support the creation of an internationally competitive electric vehicle supply chain. In the coming months, after engagement with industry, the Government will build on those programmes to take decisive action and ensure future investment in the manufacture of zero-emission vehicles, as part of our commitment to building a cleaner, greener, more sustainable Britain fit for the world of the future, not the world of the past that the hon. Member for Stalybridge and Hyde is fixated on.

The automotive transformation fund supports the creation of an internationally competitive electric vehicle supply chain in the UK. It provides support to late-stage R&D and capital investments in strategically important technologies. That includes unlocking strategic investments in gigafactories, which I will come to, motors and drives, power electronics and fuel cell systems. Our automotive industry has a long and proud history. We are determined to build on our heritage as we invest in the technologies of the future, positioning the UK as one of the best locations in the world to manufacture electric vehicles.

I have spoken previously about the Advanced Propulsion Centre, because it does fantastic work in driving technology forward. It was founded in 2013 as a £1 billion joint venture between the automotive industry and the Government to help the industry meet the challenges of innovation and decarbonisation. It facilitates funding to UK-based research and development projects developing zero-emission technologies. The programme helps accelerate the development, commercialising and manufacture of advanced propulsion technologies in the UK. So far, it has supported 199 projects involving 450 partners. It is estimated to have supported more than 55,000 highly skilled jobs and is projected to save more than 350 million tonnes of CO₂—the equivalent of removing the lifetime emissions of 14.1 million cars.

Those projects include the setting up of a joint venture between Unipart and Williams Advanced Engineering to manufacture batteries in Coventry, Danfoss setting up a centre of excellence for hydraulic R&D at its plant in Scotland, and Equipmake increasing the size of its manufacturing plant in Norfolk to meet demand for its electric drive unit. That shows how much work can be delivered and how many jobs created if we work with industry and help it de-risk in adopting new technologies.

I recently visited the Warwick Manufacturing Group, which the hon. Member for Stalybridge and Hyde alluded to. I am surprised he did not applaud the work further.

[Louise Haigh (Sheffield, Heeley) (Lab)]

He did.

[Ms Ghani]

He could have gone further.

I saw at first hand the cutting-edge future mobility research being done in Coventry, the birthplace of British motor manufacturing. While in Coventry, I also had the opportunity to attend the Advanced Propulsion Centre to discuss how we can build on the success of our existing R&D and capital investment programmes. During the visit I met year 6 pupils from Templars Primary School in Coventry who attended the Advanced Propulsion Centre’s STEM day. That is a prime example of outreach activity to inspire the next generation of automotive engineers.

We cannot talk about the automotive sector without thinking about the broader supply chain and one of my particular passions, critical minerals, which I am surprised the hon. Member for Stalybridge and Hyde did not spend more time discussing. He missed out the key point of what is needed to produce electric vehicles. We know that China dominates the EV market, partly due to its grip on the supply chain. It controls much of the mining of crucial raw materials, and 80% of battery making for EVs is controlled by Chinese firms. It is also the world’s top car exporter.

I am not sure whether the hon. Member has had time to read Ed Conway’s recent book, “Material World”, which makes some key points on lithium. We know that reserves of the metal are concentrated in a handful of nations. In his book, he said that lithium reserves are concentrated in “a handful of nations”, so that “while the rest of the world panics about China’s dominance of the battery supply chain, many in Beijing are simultaneously panicking about China’s reliance on the rest of the world’s raw materials.”

We know that an EV car battery contains 40 kg of lithium, 10 kg of cobalt, 10 kg of manganese and 40 kg of nickel, and that is before we consider the graphite that goes into the anode. Those materials have to come from somewhere, which is why we updated our critical minerals strategy in the “Critical Minerals Refresh”—[Interruption.] That was a positive noise from the hon. Member—to ensure we were supporting the sector through the whole supply chain. I encourage colleagues to read Ed Conway’s book. I am not on commission, by the way; it is just a good read.

The hon. Member for Stalybridge and Hyde talked about not having a strategy, but we are working with industry to make sure it can plan for the future. To do that, we had the “Critical Minerals Refresh”, which came from the integrated review. We are making sure that we are focused on batteries and the EV supply chain here in the UK. Recent good news that the hon. Member also forgot to mention is the joint venture between British Lithium and Imerys, announced on 29 June. That is a massive boost to the critical minerals supply chain in the UK.

By the end of the decade, the development of Cornwall as the UK’s leading lithium hub will supply enough lithium carbonate for 500,000 electric cars a year. To help secure the supply of critical minerals, the Government have not only refreshed our critical minerals strategy, but put in place a task and finish group to work with industry so that it can highlight its particular vulnerabilities and we can provide it with the confidence and resilience it needs in its supply chains.

Most recently, I visited Indonesia, where I met Indonesian Ministers to emphasise that the UK has a lot to offer on critical minerals, particularly in relation to private finance, environmental, social and governance capabilities, and mining services. I also visited key mine sites and met companies that are critical in the battery supply chain and in critical mineral production, including some innovative UK companies showcasing the best of British—I know that sentence would be hard for the hon. Member for Stalybridge and Hyde ever to put on the record.

This year, I have also visited South Africa, where I represented the UK at the Minerals Security Partnership ministerial meeting and confirmed the UK’s intention to host the next such meeting during London Metal Exchange Week in October. I also visited Canada, where I signed the UK-Canada critical minerals statement of intent and launched our critical minerals dialogue with Canada, forging a key partnership with one of the most important global players in the critical minerals ecosystem. The hon. Member will want to have a moment to reflect on and applaud our work internationally and domestically on critical minerals.

--- Later in debate ---

[Louise Haigh (Sheffield, Heeley) (Lab)]

This has been an excellent debate, informed by real experts from across the House who are clear champions of their constituencies and of the automotive industry. I think the House can agree, following today’s debate, that our automotive industry is truly the crown of British industry.

However, I would say very gently to the Minister that her speech really did sound out of touch with the reality that the industry and the workforce across our country are currently facing. We were treated to 35 minutes, but there was absolutely no plan, no explanation as to why we still do not have in place the strategy to ramp up our battery production, and no plan for how we are going to deal with the looming rules of origin deadline or the ZEV mandate.

As we have heard powerfully today, the industry is struggling under a Government who have no plan or strategy, and are constantly risking more jobs being shipped overseas. My hon. Friends the Members for Luton North (Sarah Owen), for Luton South (Rachel Hopkins), for Ellesmere Port and Neston (Justin Madders), for Llanelli (Dame Nia Griffith), for Wansbeck and for Warwick and Leamington (Matt Western) all spelled out clearly the impact of this on their communities. This debate has been enormously enhanced by their contributions, and they are huge champions of the automotive industry in this place.

In the face of the new geopolitical reality and the approach our global allies are taking, the Government’s current approach is little short of reckless. The Biden Administration are at the forefront of this new economic approach, taking an active role in rebuilding America’s manufacturing base through their groundbreaking Inflation Reduction Act and the CHIPS Act. The European Union, with its Net Zero Industry Act, aims for 40% of its green industry to be based at home, and the Powering Australia plan is set to create 600,000 jobs and spur 76 billion Australian dollars of investment. Yet here in the UK, this Government seem content to settle for less and are resigned to good jobs and green growth continuing to head overseas.

So much for levelling up: it is exactly the communities that have already suffered from deindustrialisation that will be hit all over again. We know the story, and we have heard it again today, of how good, high-skilled, well-paid jobs disappear and their alternatives are low-paid and insecure, and of how poverty rises, inequality increases and the social fabric of communities is permanently torn. We simply cannot allow it to happen again, because the warning signs are already flashing.

Just two weeks ago, the Business and Trade Secretary and I both spoke at the British car manufacturers conference. The industry was clear that it urgently needs a strategy—or anything—from this Government. Mike Hawes, who has been quoted many times today, warned:

“We just need a plan, and one more cunning than Baldrick’s. I don’t care whether it’s called industrial competitiveness, activism, or dare we say it, an industrial strategy. We just know we need it, and we need it urgently.”

What did the Secretary of State have to say in response? I quote directly:

“We will come out with plans soon, please stick with us”.

Is that really the best the Government can offer—begging industry to wait a little longer and to hold its nerve, as they admit that they have no plan after 13 years in government?

The reality is that we cannot afford to wait any longer. For decades, our car industry has been at the forefront of innovation and expertise. We have heard fantastic examples of that from my hon. Friends the Members for Warwick and Leamington, for Ellesmere Port and Neston, for Birmingham, Perry Barr (Mr Mahmood), for Llanelli, and for Luton North, as well as from my hon. Friend the Member for Luton South, who is a fantastic champion of motorsports. Under the Conservatives, however, we are losing the race for the jobs of the future. Car production has already slumped by one-third since 2010. By 2025, Germany will manufacture 10 times more batteries than we do, and the US 30 times.

We heard the whole sorry tale of the history of Britishvolt from my hon. Friend the Member for Wansbeck. He is right—it is an ideal site for a gigafactory, because it has the grid connections and supply chain in the north-east, but it has been failed, repeatedly, by this Government. Manufacturers are already leaving the UK or shutting up shop: Arrival has left Bicester for the US; Honda has closed its Swindon plant after 35 years of production; Ford has cut thousands of jobs at its Halewood plant; and manufacturers in the supply chain such as SKF in Luton are at risk of being offshored to Poland. Yet more problems are looming, self-inflicted by this reckless Government.

We have heard many times today of the impending cliff edge through the trade and co-operation agreement, with new rules of origin requirements that will apply huge tariffs to UK exports if we cannot produce enough batteries at home. The Government have had two and a half years since the agreement was signed, but they have failed to use that time to ramp up our battery capacity. That is coupled with their own looming ZEV mandate that industry has no detail about. Our industry will be slapped with tariffs, and demand will move to countries with the battery capacity such as China.

Communities such as Llanelli, Luton, Birmingham, Elsmere Port and Wansbeck will suffer, as will those such as Blyth, West Brom, South Derbyshire, Durham, and Crewe. That is why many constituents across the country will wonder why this debate has been so one-sided and from one side of the House, and why Labour will create the conditions for our car industry not just to survive, but to thrive. Our vision is one where good jobs in the industries of the future—jobs that people can be proud of and raise a family on—are brought back to our industrial heartlands. That is why, alongside my hon. Friend the Member for Stalybridge and Hyde, we have developed a plan to turbocharge electric vehicle manufacturing.

First, we will address the consequence of the Conservatives’ Brexit deal, acting to avoid the cliff edge in the TCA that will slap tariff on our electric vehicles. We will rapidly scale up our domestic battery industry by part-financing eight additional gigafactories through our green prosperity plan. We will accelerate the EV charge point roll-out by setting new, binding targets on Governments, and we will make the UK a clean energy superpower by 2030, lowering the sky-high electricity costs for UK industries and cutting £93 billion in energy bills for the British people, by investing in cleaner, cheaper, homegrown power for our country.

With Labour’s plan to turbocharge our EV transition the opportunities are clear for all to see, and we have heard them expressed loud and clear today: resilience to withstand geopolitical shocks; 80,000 good, green jobs right here, not in China; £30 billion of investment across the country, forging resilience at home while creating new partnerships abroad; an active state working in concert with innovative, world-leading manufacturers, pursuing a modern industrial strategy; and new life breathed into our hollowed out industrial base. Mr Deputy Speaker, Labour will not shy away from the challenges facing our car industry. We will back it every step of the way, and we have the plan to prove it. I urge colleagues to support our motion today.