Group Lotus
Debate between Richard Bacon and Mark Prisk
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing this debate and on his energetic advocacy on behalf of his constituents, not just today, but previously. He is right to say, as other Members have pointed out, that Group Lotus is one of largest private sector employers in the area, so I understand the importance that he and––as is plain from the attendance this evening––the vast majority of Norfolk representatives attach to the issue. They want to ensure that we as a Chamber understand how importantly their constituents view this matter.
Today’s debate follows on from parliamentary questions from my hon. Friend, from correspondence and, indeed, from considerable speculation in the media. I know that he will appreciate that I cannot comment on media speculation, but as I made clear to him last night, when we had an opportunity to discuss the issue—with him having raised it and me wanting to ensure that I understood the detail of his concerns—he should understand that the whole of the Government take this matter extremely seriously, and we are already actively engaged in it.
Let me respond to the sensible points, if I may say so, about the calibre of the company that we are dealing with. Lotus is a world-class design engineering company, and, as we have heard, a manufacturer of highly desirable sports cars, supported of course by a dedicated and experienced work force. The group, which has more than 60 years of history behind it, comprises Lotus Cars, Lotus Engineering and Lotus Racing. As my hon. Friend observed, its journey was from humble beginnings. I think it was in the late 1940s that Colin Chapman was first in a lock-up garage developing a trial racing car, but that has led all the way to a globally renowned company manufacturing high-performance products.
This is a business that has always been at the cutting edge. It makes an important contribution to the UK automotive sector, not just through the exports of its iconic cars but through the world-class design engineering to which my hon. Friend referred, which, although particularly relevant to the automotive sector, is—as he said—also relevant throughout the engineering field. Lotus is a globally respected business which works with many of the world’s most prestigious car manufacturers and tier 1 suppliers. Lotus engineers spearhead research in crucial areas such as hybrids, electric vehicles and renewable fuels, which is one of the reasons why many people understand that the business has a very strong future.
The Government believe that the company’s work must continue and that it should continue in Norfolk, but, as a number of Members have pointed out, it is important to view Lotus in its wider context. This country has one of the most diverse and competitive automotive sectors in the world. When considering the prospects of both individual businesses and the sector as a whole, we should take account of the key investments that have been made. Some £4 billion has been invested in the last 18 months. That sends the important signal that international investors recognise the calibre of the work force, and also the opportunities that they can gain by basing their firms here.
The sector is strong and growing. Vehicle production has risen by 5% in the last year, and more than 1.4 million vehicles have been produced. Engine production has also increased. I am thinking particularly of the strength of powertrain in the UK automotive sector: some 2.5 million units have been produced in the last year. One of the encouraging features of the whole sector is that not only is its productivity strong and its work force capable, but it exports a significant proportion—some 80%-—of what it produces. Last year exports were up by 15%, and they are now at an all-time cash high of just short of £30 billion. Lotus is part of that: last year it recorded production of 1,458 cars of which 1,189 were for export, so it clearly has a strong export programme.
Despite a difficult international economic environment and a contracting European market, global demand for UK-made vehicles has risen, which shows that UK producers are generating what customers throughout the world are looking for. That is why our car trade deficit is at its lowest for more than 36 years. There are a number of good examples. Nissan has invested £250 million, creating the possibility of some 3,000 new jobs in both its own business and its supply chain. Jaguar Land Rover has announced that it will take on a further 1,000 people and increase shifts at its Halewood plant. Honda is to double production at its main European plant in Swindon. Those are all important investments in the sector. It is important for everyone—both the existing sector and potential investors—to understand that the UK automotive sector has real strength and depth, and is backed by a Government who are actively supporting those who seek to invest here in the United Kingdom.
My hon. Friend briefly mentioned ultra-low-carbon vehicles. As he said, Lotus is a key participant in that regard, as it is clear from its world-class range-extended electric vehicle technology and its role in the development of the important emerging technology of hydrogen fuel cells. The Government are pursuing a programme which seeks to ensure that we have a marketplace in which those technologies can develop, because we cannot assume that past technologies will be revived. As the new generations of ultra-low-carbon vehicles develop, it is important for those who wish to invest to recognise that the expertise and know-how are resident here.
Let me turn to the details of the current situation, which my hon. Friend mentioned. The takeover by the Malaysian company DRB-HICOM of Lotus’s parent, Proton, was begun in January, as we heard, and completed around the middle of March. DRB-HICOM is one of Malaysia’s leading companies; indeed, it is the country’s leading automotive manufacturer. Its values, stated clearly and openly, include excellence, innovation, quality and teamwork. Since then, DRB-HICOM has been carrying out what we understand to be standard due diligence checks on Lotus and other assets related to its takeover of Proton. As my hon. Friend mentioned, the Prime Minister raised the issue of Group Lotus with the Malaysian Prime Minister and Proton while he was in Malaysia recently. He stressed, as I do today, that the Government continue to wish to work with the company.
In response to media speculation, DRB-HICOM issued a press statement last Saturday stating that no decision had been taken on whether to sell Lotus. In the meantime, DRB-HICOM has also stated that it continues to support the company, including through management help. I understand that additional funds have been made available by DRB-HICOM to enable Lotus to resume production while the due diligence continues. That would follow on from the £100 million invested in Lotus at Hethel in recent years.
Mr Bacon
May I ask my hon. Friend to interrogate closely the question of how much support is being provided so that manufacturing can “resume”, as he puts it? My understanding is that DRB-HICOM is drip-feeding small amounts of cash to the business, that there is little manufacturing going on and that there might not be too much manufacturing going on in future unless we are careful. If he could press the Malaysians—indeed, the Government of Malaysia—on that point, so that they put pressure on DRB-HICOM to reach a resolution in the interests of workers in Norfolk, I would be very grateful.