Financial Assistance to Industry

Sarah Jones Excerpts

Monday 18th March 2024 General Committees

[Sarah Jones (Croydon Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Pritchard.

The Minister has laid out the case for this legislation clearly, for which I thank her. As she says, Britain boasts a world-leading automotive sector, which supports hundreds of thousands of jobs across the country and contributes billions to the economy. We are proud to host a whole ecosystem of major international players: JLR, Nissan, Toyota and of course BMW, whose manufacture of BMW Minis in Oxford has become an iconic institution, supporting thousands of highly skilled, highly paid jobs, with more than 100 years of history in the area.

It is vital to communities, to our economy and to our global leadership position in the green transition that the UK retains and develops our automotive manufacturing capabilities. For those reasons, while Labour has major concerns about the Government’s overall approach to this issue, we will not reject the measure under consideration today.

The motion would, as the Minister has mentioned, authorise the Secretary of State to pay a grant of up to £75 million to BMW to support the transition of its Oxford plant to the manufacture of electric Minis. The grant would be paid under section 8 of the Industrial Development Act 1982, which provides for financial assistance to be given to businesses outside the assisted areas, of which Oxford is not one.

We accept that significant changes are needed to adapt the plant to EV production, such as capital investment, as the Minister says, in new tooling, new machinery and new skills for workers at the plant. The case has been reviewed by the Industrial Development Advisory Board, which has supported the proposal, and the report by the Competition and Markets Authority’s subsidy advice unit accepts that the Government have made an adequate case that the project would not have been undertaken in a similar form, manner and timeframe without the subsidy.

As such, and given the strategic importance of supporting electric vehicle manufacturing in the UK, Labour is not opposing the motion. We do have some concerns that it would be helpful for the Minister to address, not least because this is a substantial amount of money that we are handing over. First, while we are pleased that the Industrial Development Advisory Board has reviewed and supported the proposal, it is slightly unclear what that body’s role and function is. If we look on the Government website, the only documentation this body has published in the last three years has been a statement on its membership, as far as we can see.

Can the Government explain what the IDAB is doing, and will they republish its report on this grant or the minutes of the decision it came to? There is advice on the website that people can make a freedom of information request to get information, but perhaps the Minister can save us having to do that and see whether we can get the information from that body.

Secondly, the report by the Competition and Markets Authority’s subsidy advice unit concluded that, while it is absolutely right that overall the positives outweigh the negatives,

“in our view the Assessment would be strengthened if it followed the Statutory Guidance more closely in explaining the relevant market failures and providing supporting evidence. The Assessment has not clearly demonstrated the existence of positive and negative externalities constituting market failures that require government intervention.”

The unit does accept that the subsidy will not be used to finance something that would have been financed anyway if the subsidy had not been there, but it asks some questions and it would be helpful if the Minister could perhaps answer them.

Thirdly, the Government have said that the grant will be subject to performance on employment key performance indicators. Will the Government make public the details of those KPIs, or at least explain a bit more about what they are and against what timeframe BMW’s success or failure will be judged? More specifics on those three areas would be very helpful.

It is important to note briefly the wider context of this discussion. The reality is that this deal was a near miss. The money from Government came after BMW had publicly announced its plans to relocate production to China, bringing us to the brink of what would have been an historic loss for British manufacturing capacity. We on the Opposition side think that getting ahead of those kinds of crisis situation, by having a strategic industrial strategy to help businesses to invest in this county and deliver the economic growth we all want to see, would be a more stable and longer-lasting approach and, in the end, would help the automotive industry much more.