Financial Assistance to Industry

Nusrat Ghani Excerpts

Monday 18th March 2024 General Committees

[The Chair]

It may help if I clarify from the Chair that what we are debating in this Committee—for up to 90 minutes, as Members will be aware—is the content of the motion in the name of Ms Ghani, which is listed on the Future Business section of the Order Paper. The House itself will be asked to pass the motion without debate after the text has been reported from this Committee later today.

[The Minister for Industry and Economic Security (Ms Nusrat Ghani)]

I beg to move,

That the Committee has considered the motion, That this House authorises the Secretary of State to undertake to pay, and to pay by way of financial assistance under section 8 of the Industrial Development Act 1982, a grant or grants exceeding £30 million and up to a total of £75 million to BMW to support the production of electric Minis at Plant Oxford.

It is an honour and a privilege to do this under your chairmanship, Mr Pritchard.

The UK’s automotive sector is a global success story, contributing £14 billion to the UK economy annually, with some of the highest productivity levels among the major European automotive-producing nations. The sector currently employs 182,000 people in manufacturing, with an estimated 780,000 jobs supported by the sector in the wider economy. Major global companies such as Jaguar Land Rover, Nissan, Toyota and BMW have a significant manufacturing presence in the UK.

On 11 September 2023, BMW announced a £600 million investment in its Oxford plant for the production of two new electric Mini models, to start in 2026. BMW requested £75 million of funding from His Majesty’s Government via the exceptional regional growth fund to support that £600 million investment. It is that Government funding that we are debating now.

The exciting decision by BMW to invest in the future of the UK’s automotive sector is a prime example of how industry and Government are working together to meet new challenges. BMW’s investment in new tooling and machinery, and in re-training and upskilling of employees, will create and safeguard jobs in its Oxford and Swindon facilities and in the wider supply chain.

This support to BMW builds on our existing winning formula, which has delivered significant investment success. I am confident that BMW’s decision is among the first of many such investments that will drive the future of the sector in the UK. This Government will continue to work towards maintaining the competitive environment necessary to stimulate growth and productivity in the sector and ensure that the UK continues to be one of the most competitive locations in the world for automotive manufacturing. I commend the motion to the Committee.

--- Later in debate ---

[Ms Ghani]

I thank the hon. Lady for her contribution to this debate. As she says, we are discussing a large sum of money—although of course the larger sum is the £600 million overall investment, which is key to ensuring those supply chains continue and that we remain the most stellar place to come in and invest in the auto sector.

Beyond that £600 million, the largest sum is the settlement we received from the Treasury in the last Budget but one for the advanced manufacturing plan, under which £2 billion will be allocated to the automotive sector. We have a fantastic automotive sector here in the UK, and the commitment made by this particular company, like so many others, speaks of their huge confidence not only in their workers, but in the supply chain.

This investment comes on the back of some fantastic successes to date, including the Tata Group’s £4 billion investment in a new gigafactory, which will be one of the largest in Europe, Nissan and Envision delivering up to £2 billion of new investment in Sunderland, with two new electric models, and Ford’s £380 million investment to manufacture electric drive units. I am pleased that the hon. Lady has made clear that the Opposition are not objecting to, but welcoming, the support being provided.

I turn now to a couple of points the hon. Lady raised, starting with the Competition and Markets Authority’s report. Those reports are published and we respond to them. We submitted our assessment to the CMA, as is our legal obligation, and the CMA did not recommend any adjustment to the grant award. We have reviewed its recommendations thoroughly and updated our internal documentation accordingly. We are satisfied that the award meets the subsidy control principles, and that is supported by the evidence.

On the issue of support for the company, the grant was assessed and tested in accordance with the Government’s Green Book appraisal guidance, which provides a framework for ensuring that due diligence is done. That included a rigorous assessment of the minimum Government intervention needed to swing the investment decision in favour of the UK and scrutiny by the Industrial Development Advisory Board. Those initiatives and frameworks are independent, to ensure that decisions receive due diligence. On top of that, there was third party due diligence by KPMG.

This Committee is meeting today because we are providing substantial support of up to £75 million, but we must not forget that the overall package is £600 million. I confirm that the Government will continue to support the automotive sector by giving businesses the confidence to invest and innovate in the UK. This grant is just another example of that.

Question put and agreed to.