Britishvolt

Sharon Hodgson Excerpts

Wednesday 25th January 2023 Commons Chamber

[Ian Lavery]

The reality is that the development of this Britishvolt plant would have transformed lives and communities not just in the south-east of Northumberland, in places such as Blyth, Wansbeck and Bedlington, but—my hon. Friend is right—in the likes of Jarrow and farther afield in Sunderland, North Tyneside and the entire region. It was to be the biggest investment in our region since Nissan in the ’70s.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend is being very generous with his time. Does he agree that despite the clear failure of the Government’s UK industrial strategy, they should continue to try to attract investors to support a battery gigafactory in his constituency by establishing a localised supply chain across the north-east? That would in turn support automotive giants, such as Nissan, which he mentioned, that are already investing in electric vehicles. We know that that is vital for EU trade and the drive toward zero-emissions vehicles by 2030.

[Ian Lavery]

Thanks for that intervention. The supply chain is so, so important. Britishvolt suggested at the time that there would be 3,000 jobs created at the site and 5,000 jobs created in the supply chain. That would have been felt throughout the whole of our region in the north-east and probably further afield.

Links with Nissan would be brilliant. We need to take a leaf out of Nissan’s book in the way it has operated in the north-east for so many years. We were hoping to see some sort of link. Nissan is looking towards an on-site gigafactory with Envision AESC, which is in progress as we speak.

--- Later in debate ---

[Ian Lavery]

Yes, of course. I will come on to the nub of the questions the hon. Gentleman raises during my speech—I have only got through two paragraphs up till now.

The Britishvolt site has been kept alive for years. It is not just something somebody has come up with; it is to the credit of the former Labour-run council, which had the foresight to recognise the site’s advantages. It insisted on maintaining the site for industrial use to create thousands of potential jobs in the future, a prophecy that Britishvolt promised to make a reality. We should remember that projects on the scale Britishvolt was proposing do not just appear from thin air. They go through decades of decision making and planning. That was largely done by the Labour group on Wansbeck Council, which made the site so attractive to potential builders over decades.

Britishvolt arrived on the scene in late 2020 and was full of promise and potential. While many of the industry professionals I spoke to, along with others, expressed scepticism about its lack of experience and long-term plans, it continued to exceed expectations and gather support. I recall the chief executive ringing me up before Christmas that year, just out of the blue. He said, “I’m the chief executive of Britishvolt”—I had not heard of it—“and we are bringing 8,000 jobs to your constituency.” They were going to be well-paid, secure jobs—green industrial jobs. I promise you, Mr Deputy Speaker, I could not believe it. It was like all my Christmases had come at once. Since then, I have been heavily involved, only to be devastated by the current position.

As I say, Britishvolt arrived on the scene in late 2020. It impressed people so much that it managed to secure a £100 million grant from the Government’s automotive transformation fund. To many, that seemed to legitimise the company. There were still many people—many, many people, in fact—who doubted it, but they were confounded by glowing reports from the then Business Secretary, the then Chancellor and the then Prime Minister.

At the time, the then Business Secretary, the right hon. Member for Spelthorne (Kwasi Kwarteng), announced:

“I’m delighted to confirm we have now provided Britishvolt with a final grant offer through the Automotive Transformation Fund. The Blyth gigafactory will turbocharge our plans to embed a globally competitive electric vehicle supply chain in the UK and it is fantastic to see how the project is progressing.

The vast site will ensure Britain can fully capture the benefits of the booming global electric vehicle market. The well-paid jobs and growth it will generate for the North East of England will be transformational and are exactly the reason we are investing to make the UK the best place in the world for automotive manufacturing.”

In an interview with national media when the grant had been confirmed, he also claimed:

“It is absolutely what levelling up is all about. In fact, I can’t think of a project that demonstrates levelling up better than this one.”

The then Prime Minister, the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), claimed:

“Britishvolt’s plan to build a new gigafactory in Northumberland is a strong testament to the skilled workers of the North East and the UK’s place at the helm of the global green industrial revolution.

Backed by government and private sector investment, this new battery factory will boost the production of electric vehicles in the UK, whilst levelling up opportunity and bringing thousands of new highly-skilled jobs to communities in our industrial heartlands.”

Last summer, before his departure from office, he gave me further guarantees in this House that support for Britishvolt was in the post and that the Government remained 100% behind the project.

The then Chancellor, who is now the Prime Minister, also took the opportunity to jump on the bandwagon, boasting:

“Once complete, this factory will produce enough batteries for over 300,000 electric vehicles each year…Our #PlanForJobs is working.”

So he claimed. At the time, everybody wanted a piece of Britishvolt, which was hailed as the poster boy of levelling up and as a tribute to the vision of life post Brexit held by this new-look Conservative party.

So where did it all go wrong? What actually happened? Why are we in this situation now? At what point did the Government go cold on Britishvolt, which was hailed only a year ago as the jewel in the crown of their levelling-up plans and vision for Britain? As ever, the Government will be keen to blame the cost of soaring energy bills and the knock-on effects of the illegal invasion of Ukraine, but that does not add up with the story across Europe. The website Sifted is tracking the development of 33 gigafactories across Europe, many of which are due to be up and running imminently. Germany has plans for 12 gigafactories, while the UK has plans for only three, one being the Cambois gigafactory we are discussing, which is now in great peril at best.

The underlying issue with Britishvolt is that as a start-up it had no capital to work with, and a range of issues meant it was not able to attract sufficient investment and meet the milestones that would have unlocked the Government funding that was promised—not a penny was ever received by the company, despite the benefits explained by the Prime Minister, the former Prime Minister and the former Business Secretary.

[Mrs Hodgson]

I do not want to interrupt my hon. Friend’s flow too much, as he is making some excellent points. On the number of gigafactories we need, he mentioned plans for three. I hope the one in his constituency will be saved, but it looks as though we may lose it. We actually need eight gigafactories if we are to meet the 2030 target for zero-emission vehicles. The last thing in the world we should be doing is not saving the plant in his constituency. The Minister shakes her head, but I do not know how we will ever reach that target if we do not save such plants.

[Ian Lavery]

I will come on to that point later in my speech, but my hon. Friend makes a very valid and strong point.

On the issue of competitive energy sources, the UK’s industrial energy pricing is far from competitive and drives investment away, while our green energy infrastructure is nowhere near able to guarantee a supply of energy via the national grid. In December 2022, the UK cost per megawatt-hour was £580, while in Germany it was £225, in Italy £259, in France £238, and in Sweden £206. If we are ever going to reach our targets and support the automotive industry, that disparity must be addressed without any further delay.

That is just a drop in the ocean of the wider strategic issues that have been allowed to develop in the industry. We have hundreds of thousands of workers producing parts for vehicles that will not be required, with no clear plan on how those workers will transition and be reskilled in a rapidly changing industry. That is part of the wider issue of a chronic skills shortage that needs to be addressed by having the proper training available for our young people leaving schools and paying them a proper living wage to do well-paid skilled jobs. We are being rapidly overtaken by European competitors who have support from the European Commission and the member states themselves, and we are also being stymied by the strength of the US and, in particular, China, which has a near dominance in the supply of cells, cathodes and anodes, as well as the base materials for their manufacture.

CATL in Germany has received grant and loans from the state of €750 million, or 22.8% of the total build costs; Northvolt in Sweden has had €505 million, or 17.1%; and in North America General Motors has had $2.5 billion, or 36.2%, Stellantis has had $l billion, or 35.7%, Tesla has had $1.3 billion and Ford has had $884 million—the list is nearly endless. Compare that with Britishvolt, which was promised just £100 million by the Government, and guess what percentage that was of build costs—only 2.3%. That is absolutely disgraceful. Moreover, the £100 million was heavily caveated, to the point where the company never had a penny of Government support. How can this country—how can we, as a manufacturing nation—expect to be competitive while Governments across Europe and beyond are offering real incentives for the manufacture of batteries, far greater than those offered by our Government? We have to pull our socks up. We have to get on to the pitch. We have to start playing the game, for the sake of this nation.

In the autumn, when Britishvolt was facing financial difficulties, it asked for £30 million of the £100 million grant that had been agreed by the Government. The company asked for this to be released early because it had cashflow problems, arguing that the money would help keep it afloat and attract the private investment that it needed to reach the other milestones set by the Government. The Government have repeatedly made the point that they need to act responsibly with taxpayers’ money. I agree with that, and I am sure no one disagrees with it, but it seems to me that £30 million for a company that says the money will allow it to stay in business and create 8,000 jobs in a region that has been held back for so long, keeping it afloat, is a worthwhile investment. That £30 million is a mere drop in the ocean of the money lost so carelessly during the pandemic, which went into the coffers of those with close ties to senior members of the Government, but when it might be spent on benefiting held-back towns in the north-east, it is held under very tight wraps.

By this point, the Government’s attitude towards the company seems to have cooled considerably since the previous January, when they were singing its praises from every rooftop they could find. The pandemic and the Russian invasion of Ukraine have been harsh reminders of the need for national self-reliance, particularly in key strategic industries. Simply assembling the batteries in the UK is not enough; as we enter a new phase of globalisation, we must take control of our own destiny—and of battery manufacturing—if we want our car industry to survive. We still do not have a single fully functioning gigafactory, although, as was mentioned earlier, predictions suggest that we will need anywhere between eight and 10 by 2040.

All this has real consequences at an individual human level. Towns and villages across south-east Northumberland and in the north-east as a whole, including my constituency, have been held back for decades. Once thriving industrial communities, they have had their economic and social fabric swept from under them with nothing to replace it. More than a decade of brutal austerity has hollowed out our public services and civic spaces and left us battling high levels of unemployment, low pay, poverty, crime, and addiction problems. The jobs that were promised to come with the gigafactory had the potential to be the first step in changing the fortunes of our region. The income from the new well-paid local jobs would have supported thousands of families across our communities, and might well have helped to kick-start a new era of manufacturing in industrial work that could have reignited the economy in the towns and villages close by.

There was a good deal of reluctant optimism about announcements of new developments in transport and infrastructure, alongside the announcements about the factory and the possibility of money from the Government’s new towns fund and levelling-up fund, but bit by bit, drip by drip, that has ebbed away. Only last week a bid from Ashington, in my constituency, for levelling-up money to transform the crumbling town centre was rejected, while Richmond, in the Prime Minister’s Yorkshire constituency, received a cosy £19 million. That is pretty offensive to people in held-back communities.

Bedlington in my constituency got about £8 million to build new cycling lanes, although the bid was somewhat ironically designed with getting workers to the new Britishvolt factory in mind. Although every penny given to Bedlington is welcome, many are already questioning whether new cycle lanes are all that levelling up will amount to, given how starved the town has been, like many in my constituency, of crucial infrastructure funding for so long. The levelling-up fund has proved itself to be time-consuming, expensive, divisive and unable to meet the needs of held-back towns in the north-east. The south-east has received nearly twice as much as the north-east from the fund, and none of this touches the sides of the cuts to local councils since 2010 and the introduction of austerity.

The best use of levelling-up money for south-east Northumberland would have been getting behind the Britishvolt gigafactory. The people of Northumberland and the north-east have, sadly, once again been let down by those working far away in the halls of Whitehall and Downing Street. Three Prime Ministers in a matter of weeks and a merry-go-round of Ministers in different positions, based on nothing but blind loyalty, rather than competence and know-how, has been a disaster for any plans the Government may have had to level up my constituency and the region. As usual, we are the ones dealing with the consequences of the internal political drama unfolding in the ranks of the Conservative party.

We need long-term thinking and a proper plan for our broader industrial sector, and we need to overcome the major obstacles our automotive industry is up against, if we are to truly level up, or gauge up, our communities in the north-east, not just a few packets of money—not just the crumbs off the table. It cannot just be that who is best at submitting a bid will get the money and other areas that are sadly lacking will again get left further and further behind—my hon. Friend the Member for Hemsworth (Jon Trickett) talked about that.

This morning, the news broke in the press that Recharge Industries, an Australian-based company, had put in an offer to buy Britishvolt, which is very encouraging, as were other reports in the press this morning that 12 other companies have shown an interest. Let us hope that something can happen, because we cannot have another false dawn. We cannot have another Britishvolt, where we have a project of this magnitude, with the land, the planning and everything else in place, only for the Government to go cold and step back from assisting our regions.

A couple of issues are really interesting. The administrator, Ernst & Young, has a legal obligation to accept the highest offer. It has no legal obligation to accept what might be the best offer for the people in our communities or to say, “I will take that offer because it is going to create tens of thousands or hundreds of jobs.” It has an obligation to seek what is best for the current shareholders. We have to look at that and hope that the administrators bear in mind when making this ultimate decision that this is not only about the shareholders, many of whom will probably not live in our region, or even in this country, and are looking for as much money as possible—the people in our region count and they should not be forgotten. We have to put as much pressure as we can on the administrators.

I am going to ask the Minister a number of quick questions. We have to make sure that the Government step up to the plate on this. I have explained this and I will not repeat myself, but the Government were shouting about Britishvolt from the rooftops one minute and then they were refusing any finances to it the next moment—that is well documented. They said that one of the milestones was private investment, but the company thought that was wrong way around. Those private companies were willing to invest on the basis that the Government would support it morally and financially. If the company had UK Government support, that would hold sway. The British Government basically abdicated responsibility, and jumped off the ship like a rat. That caused investors to be extremely unhappy, and probably put them off in the short and the medium term.

We are where we are with Britishvolt at Cambois. Will the Minister commit to do whatever it takes to get behind whoever acquires the site to build a gigafactory, including offering a proper package of financial support, in line with what other states across Europe offer? I have explained the massive difference in support that European countries get from their Governments. Can the Minister outline the Government’s plans to ensure that the site in Cambois is developed as quickly as possible? There cannot be any more delays. We hope that the Government will get in intense discussions to support any successful bidder for the plant.

Would the Minister tell us why money was not forthcoming to Britishvolt when it requested the £30 million early, which it argues would have gone a long way to reach its milestones and to get the gigafactory developed? Can the Minister clarify what due diligence was done on the company when it decided to offer it a £100-million grant in the first place? Why did the Government eventually go cold on their support? Can the Minister clarify what the Government are doing to reach the target of building eight to 10 gigafactories by 2040? How do they plan to stay competitive with other companies across Europe and globally, given the strategic barriers that I have outlined?

I have spoken for quite some time, but the issue is critical for Members, individuals and families in south-east Northumberland and the wider afield constituencies of my hon. Friends the Members for North Tyneside (Mary Glindon), for Hemsworth and for Washington and Sunderland West (Mrs Hodgson). We feel left behind. We feel that the Government have not supported us, despite the initial euphoria that this was to be the best possible opportunity to transform our area. I say to the Minister that, seriously, we need to get on to that playing field. We need to support the automotive industry. That includes electrical vehicle battery plants. We are way behind if we are to have 80 by 2040. Let’s get cracking. Let’s get the site developed in Cambois. Let’s get the Government support to the preferred bidder and make sure that the bidder wants a gigafactory, not something much less, so we can transform the economy of our great region.