UK Automotive Industry

Debate between Michael Fallon and Alan Meale

Tuesday 1st April 2014 Westminster Hall

[Michael Fallon]

Yes, I will. We need to drive up the quality of apprenticeships, and that is part of what is called the Trailblazer exercise. Those involved will help to draw up the standards, and ensure that there is a rigorous test at the end of the apprenticeship and that we improve the quality of what is on offer.

I turn to what we are doing to support innovation and technology. Our aspiration is for almost every car and van in the UK fleet to be an ultra-low emission vehicle by 2050, with our industry at the forefront of the design, development, manufacture and use of those vehicles, delivering opportunities and contributing to the decarbonisation of road transport. We have made a commitment of £400 million over this Parliament to making the UK a leading market for ultra-low carbon vehicles, and we announced an additional £500 million of capital funding for the period between 2015 and 2020.

To ensure that we maintain our position at the forefront of that technology, as I have said, we have already agreed the investment in the Advanced Propulsion Centre, and we are supporting further innovation, research and development through an £82 million investment up to 2015 from the Office for Low Emission Vehicles through the Technology Strategy Board.

As my hon. Friend the Member for South Staffordshire said, we have great automotive design capacity in this country. Nissan has a cutting-edge European design centre based in Paddington—London, of course, is one of the creative hubs of the world—but with its sister Nissan technology centre at Cranfield and the largest single production plant at Sunderland, we can be proud to say that the latest version of the best-selling Qashqai has been designed and developed, and is being successfully manufactured, here in the UK.

Nissan is not alone in that. Ford invests some £450 million each year in designing, developing and researching advanced gasoline and petrol engines for its global product range at Dunton. Volkswagen spends £200 million each year at its engineering centre at Crewe, which, of course, designs the interior and exterior of Bentley cars. The scale of JLR’s research and development investment places it in the top 10 of all R and D investment in the UK. Some £2.75 billion was invested in 2013-14.

Let me turn to points that have been raised. The hon. Member for Birmingham, Northfield (Richard Burden), asked me about Dunlop. We have been working closely with Dunlop to see what we can do in Government to secure a better outcome for all parties concerned, particularly the Dunlop workers, given the expiry of the lease next year. The company met the Secretary of State for Business, Innovation and Skills recently. There have also been key meetings at official level. We continue to offer our full support to Dunlop. The company has acknowledged that offer of support and will contact officials once the consultation has concluded.

The hon. Gentleman also asked me about the regional growth fund, which I have referred to. It is true that in the first couple of rounds of the regional growth fund, a proper time scale was not in place. I put that in place for round 3. It is in place for round 4, and it will shortly be put in place when we announce the award winners for round 5, so I think we have a more systematic process for looking at the allocations.

The hon. Member for Inverclyde asked me specifically what we were doing to make sure that all this growth was more evenly spread throughout the United Kingdom. It is fairly spread, certainly across England. I recognise the decline of some elements of the Scottish car industry. Industrial policy, of course, is a devolved matter, so the instruments at our command here—the regional growth fund and AMSCI—are not available in Scotland. It has its own separate instruments, but companies from all over the United Kingdom are represented on the Automotive Council, and we work closely through UK Trade & Investment with counterparts in Scotland.

The hon. Member for Hartlepool (Mr Wright) asked me about a number of points. He referred to the partnership with the unions. I, too, would like to place on record the important part that unions have played in the revival of our automotive industry. We saw that in emphatic fashion in the negotiations over Ellesmere Port; it was the constructive partnership—the agreement on more flexible working practices—that made it able to win investment in the face of a competing bid for Germany. I remind hon. Members that Unite is represented on the Automotive Council. It is right that it has its place there, and I, too, pay tribute to the constructive way in which it has worked on a number of the changes that have taken place in the industry.

The hon. Gentleman asked me about the supply chain, but I think I have answered questions about the efforts that we are making to improve supply chain capabilities right across the world.

Finally, let me say that the United Kingdom is now a competitive place to do business. When we came to office back in 2010, the rate of corporation tax was 28%. Yesterday it was 23%, today it is 21%, and next April it will be 20%. Our labour costs are already among the lowest in western Europe. We have an attractive research and development tax credit regime and the patent box. All those combine to make this country an attractive location for innovative industries such as the automotive sector. With the automotive sector investing over £2.5 billion in our country last year, it is very clear that vehicle makers value the UK as one of the best places in the world to do business. Through the Automotive Council, the Government are working in close partnership with automotive companies to continue to improve the overall competitiveness of the business environment, both domestically and internationally.

[Sir Alan Meale (in the Chair)]

Mr Williamson, we have about one minute left. That gives you the opportunity to thank Members on both sides of the Chamber and the Minister for their participation, but there is no time for questions.

British Retail

Debate between Michael Fallon and Alan Meale

Wednesday 6th March 2013 Westminster Hall

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Thank you, Sir Alan, for enabling at least nine other Members to contribute to this important debate. All the points made today will be digested, and I will ensure that I reply to particular points later if I cannot do so directly in the remaining minutes of the debate.

I congratulate my hon. Friend the Member for Watford (Richard Harrington) on securing the debate. He almost apologised for being parochial, but there is nothing parochial about the retail sector. It is our largest private sector employer, employing one in nine of the workforce. It is a £300 billion industry and the end point of many supply chains. As we have heard, retail plays a vital role in the national economy, local economies and communities, and the Government fully recognise that.

I also congratulate my hon. Friend on what he has done to ensure a healthy future for the heart of Watford. I hope the senior management at John Lewis fully appreciate that their loss is Watford’s, and indeed Westminster’s, gain. I know how important retail is to his constituency. Watford was one of 100 towns sharing the £10 million high street innovation fund, which is contributing to the widespread regeneration and revitalisation projects that are under way.

As we have heard, retail is a diverse sector in the size and structure of businesses, what retailers sell and to whom, and where and how retailers operate. From micro-businesses to international players and from high-end luxury to providing for our daily needs, it is a lively, competitive and innovative industry. There are some outstanding success stories of competitive retailers operating here and in international markets. Conversely, many smaller retailers are battling to survive—we have all seen the reports.

A high street or town centre needs a thriving and diverse retail sector, and retail needs thriving town centres, but as we have heard today, the town centre is no longer just about shopping—it is about eating and drinking, entertainment, services and culture. Successful towns know that and nurture it. Because retail is so important, it was chosen as one of the first sectors to be the subject of a growth review and was the first theme chosen for the red tape challenge. The initiatives identified several barriers to retail performance and growth, which we are addressing. We are delivering measures to support retail, including doubling small business rate relief for three and a half years to help small shops and making it easier for small firms to claim. More than 500,000 businesses in England are expected to benefit, with about 300,000 paying no rates at all.

We are focusing retail development in town centres through the “town centre first” planning policy; changing planning rules to allow councils to provide more parking spaces in town centres; and issuing guidance encouraging councils to set competitive parking charges. We are also working with the retail sector to develop the retail strategy, published last September, which focuses on what we can do at national, local and European level while avoiding market distortions. That includes reducing the burdens of regulatory compliance through better inspection and performance and helping to understand and analyse town centre performance.

As we have heard today, we cannot discuss retail without talking about help for high streets and town centres, especially where there are empty shops. Many hon. Members have spoken about empty shops in their high streets and town centres and will know the impact that closures have had on retail employees and their families. To alleviate some of the problems that causes, new planning measures introduced in January will ensure that empty shops and offices can be swiftly converted into much-needed housing. That will help town centres by increasing footfall and providing badly needed homes for local people.

The Government have always recognised that high streets are important for communities and growth, which is why we commissioned Mary Portas to carry out her review of the high street. We published our response to the review last year, accepting nearly all the recommendations, and we are going further with the Portas-plus package, designed to revive ailing high streets. We have doubled the number of Portas pilots—there are now 27—and announced a £10 million high street innovation fund, which is benefiting Watford. We received 55 nominations for the £1 million future high street X-fund, which will make awards to locations delivering the most creative and effective schemes for revitalising their high streets. Winners will be announced in March.

In October, we announced support for over 300 towns that had come forward to be town team partners. They are receiving funding, plus a package of support through the Association of Town and City Management. We will publish a further response to the Portas review later this year, building on what has been learned across the country and the progress we have made on the other recommendations.

The debate is not about high street versus out of town or the internet. A feature of today’s debate has been that every speaker has accepted that high streets must change and evolve to compete, and in some cases to survive. The Government are committed to supporting high streets, but we cannot dictate what should and should not be done; the vision and innovation has to come from places and communities, with the public and private sectors playing their part.

I turn briefly to two particular questions that my hon. Friend asked about business rates. The estimate from the valuation office was that the revaluation would have increased bills for about 800,000 properties and decreased them for only about 300,000. We would have seen significant tax increases for food, retail and convenience stores. We think it better to give businesses more certainty, which is why we postponed the revaluation. He also asked why we could not index the annual rise to the consumer prices index rather than the retail prices index. He will know that RPI is much lower for the year beginning in April than it was for the year beginning the previous April, but we are continuing to review the situation.

I turn to the main feature of the debate: the future of retail. Analysts at Verdict research have predicted that UK retail will grow by about £4.9 billion in 2013—the highest increase since 2008. Online sales are increasingly important. They accounted for 5% of all retail sales back in 2008 and more than 9% in 2012. Verdict predicts that they will account for 12% of all retail spending this year and 17% of all non-food spending.

Those numbers do not really tell us what is happening and why. What are the drivers of change? UK retail faces challenging trading conditions, but it is simultaneously having to adapt to massive structural challenges driven by changes in consumer lifestyles and preferences, the impact of new and emerging technologies and the constant evolution of how technology is used. Technology is driving change. Tablets and smartphones are making it easier for consumers to buy online in any location, and new delivery options such as click and collect are reducing the problems customers face with home deliveries.

I shall conclude, because I want to allow my hon. Friend a few minutes to sum up at the end. Retail is an important barometer of our economic and cultural well-being. It is going through a period of rapid change, but Britain has the companies, the brands and the entrepreneurial spirit to ensure that we will always have successful retailers. It is part of the Government’s job to ensure that we have the right environment for them to thrive, prosper locally and compete globally. There are no easy answers or quick fixes for either the retail sector or the high street. We all have to play our part—central and local government, businesses, communities and local partnerships—in helping the adaptation of the future of retail and helping to shape that future.

[Sir Alan Meale (in the Chair)]

Mr Harrington, would you like a few seconds?