Honda in Swindon

– in the House of Commons at 1:19 pm on 19th February 2019.

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Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy 1:19 pm, 19th February 2019

With permission, Mr Speaker, I would like to make a statement on Honda. This morning, Honda announced that future models of its Civic car, which are currently made in Swindon, will after 2021 be made in Japan. The Civic is the only vehicle made by Honda in Swindon, so the result of the decision is that the company’s manufacturing plant will close in 2021.

I am not going to understate what a bitter blow this is to the 3,500 skilled and dedicated workers at Honda in Swindon and their families, to the many more people and businesses who supply the plant, and to the town of Swindon, which has been proud to be home for 34 years to one of the best car factories in the world. It is a blow to the whole British economy.

The reason that Honda has given is its decision to accelerate the move to electric propulsion and to consolidate investment in its facilities in Japan. Following the entry into force of the EU-Japan free trade agreement earlier this month, tariffs for cars exported from Japan to the EU will drop from the current 10% to zero by 1 January 2026. Honda will then export from Japan, rather than from Britain, to Europe and the rest of the world. The company has stated that Bracknell will be retained as its European headquarters, that it will continue to base its Formula 1 operation from Britain, and that its research and development centre for electrification and connected and autonomous technologies will continue at Swindon.

Honda has announced an immediate consultation on the plan with the trade unions and suppliers. I have spoken with the trade unions, the local Members of Parliament, the leader of Swindon Borough Council and the chair of the local enterprise partnership. I will shortly chair, in Swindon, the first meeting of a taskforce, comprising those people and others, to do everything we can to ensure that the much valued Honda workforce in Swindon find new opportunities that make use of their skills and experience. We will work with the local community to ensure that Swindon’s justified reputation as a place of industrial excellence in manufacturing, technology and services is maintained and expanded.

In our automotive sector, we will work in close partnership with an industry that is going through a period of technological change and adjustment across the world that is greater than at any time in its history—a period of change that is disruptive and even painful for many, but in which Britain’s industry can emerge as a global leader if we back innovation in new sources of power and navigation. That is one of the four grand challenges of our industrial strategy, and the focus of our automotive sector deal.

I and many other colleagues in the House, of all parties, have worked hard over the past three years to make the case for investing in Britain, to investors in this country and around the world, despite the uncertainty that Brexit has put into the assessments of investors in Japan and around the world. We have secured investments during this time, from Nissan, Toyota, Geely, BMW, PSA, Aston Martin, Williams and many smaller firms. We have an international reputation for being a place to do business, with skilled, motivated staff, with access to innovation, especially in automotive, which is the best on the planet, and with a determination to make those strengths even greater in the years ahead.

This is a devastating decision that has been made today, and one that requires us to do whatever it takes to ensure that in the years to come Honda will once again, building on its continued presence here, recognise Britain as the best place in the world to build some of the best vehicles in the world.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Secretary of State for Business, Energy and Industrial Strategy, Member, Labour Party National Executive Committee 1:23 pm, 19th February 2019

I thank the Minister for advance sight of his statement. This morning’s news is absolutely devastating for the 3,500 workers in Swindon, their families and the wider community. It is absolutely devastating for the businesses in Honda’s supply chain and the tens of thousands of workers employed in them. It is a devastating blow to the automotive sector, to UK manufacturing in general and, indeed, to our entire economy.

A worker employed at Honda in Swindon for 24 years summarised the situation last night when he said that the Government are “completely incompetent”. I could not agree more. Honda’s decision is a damning indictment of the Government’s failure to support car manufacturing and ensure business confidence, with regard both to Brexit and to their so-called industrial strategy. Before Members on the Government Benches become too agitated, let me say that I understand that Honda’s CEO said this morning that the decision was unrelated to Brexit. However, the company’s statement specifically says that it wants to

“focus activity in regions where it expects to have high production volumes”,

especially of electric vehicles. The logical question is this: why does Honda no longer believe that the UK will have high production volumes, and why does it no longer have the confidence to invest here to make it so? As the Secretary of State has said, it will in future be exporting to the EU from Japan rather than from Britain.

The reason why the likes of Honda and Nissan began producing in the UK in the first place was that it was a good place to locate their manufacturing, so something must have changed. Could it be the Government’s botched Brexit causing chaos and uncertainty and undermining business confidence? The Secretary of State also alluded to the EU-Japan trade deal, which imposes zero tariffs at a time when we do not know what our tariffs will be. The likes of Airbus, Nissan, Ford and Jaguar Land Rover have all halted investment or slashed jobs as a direct result of that uncertainty. Nissan reversed its decision to build the X-Trail here only two weeks ago, JLR has slashed 4,500 jobs, and Ford has cut 1,000 jobs. Over the weekend, the senior vice president of Airbus said that a no-deal Brexit would be “catastrophic”, adding:

“We will have to look at future investments... There’re many other countries that dearly love aerospace.”

In fact, Honda itself warned last year that leaving the EU without a deal would cost the company tens of millions, so there can be no doubt that the Government’s reckless threats of no deal and prolonged uncertainty are having an impact on business decisions in the here and now, even if that is not in the top line of a press release. No deal must therefore be taken off the table and a firm commitment to a customs union and single market deal agreed.

Honda has also said that global trends and the move to electric vehicles were a factor in its decision. Could it be that the Government’s failure to support the transition to electric vehicles through their industrial strategy has augmented Honda’s decision? It wants to expand its electric vehicle production, which is something we all want, but we need that production to be here in the UK now, not used as a reason to close down plants in the wake of Brexit.

The UK has a world-class automotive sector and could be a world leader in electric vehicles, at the cutting edge of electric vehicle technology and research, but the Government have failed to invest to support the transition. I will give just one example. The Treasury pledged last year to support the switch to zero-emission vehicles with a £400 million fund for charging infrastructure, giving manufacturers the certainty to invest in production. Half of the money was to come from the taxpayer, with the rest matched by the private sector. However, one year on, the money that it was promised would be raised from the private sector has not been secured and no money from the fund has been invested.

The automotive sector is the jewel in our manufacturing crown. It supports highly paid, highly skilled jobs, it contributes enormously to our economy, and it has been an exemplar of the kind of industry that we need in the UK. But its future is in jeopardy, as has been shown so clearly in the decisions of recent weeks. Can the Secretary of State commit now to taking a no-deal Brexit off the table, agreeing a customs union deal and working with manufacturers and unions to support the transition in the market before it is too late? Can he offer Honda any incentives or reassurances that its investment here would be secure? After all, he did offer Nissan a sweetheart deal. Or is he happy to let yet another industry, and the communities who rely upon it, fall by the wayside on the Conservatives’ watch?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

For over 30 years, Japanese companies investing in our automotive sector have been able to count on a bipartisan commitment to talking about the advantages of investing in Britain: our skills, our commitment to innovation and the efficiency of our operations. Members on both sides of the House know that I and my colleagues have worked intensively, including with trade unions, to ensure that we get investments that recognise those advantages. I hope that we can send to companies considering investment a clear determination, across both sides of the House, that we will continue to keep faith with that tradition of stability.

I think it was evident in my remarks that I share the dismay of Rebecca Long Bailey at the decision and the consequences for the excellent workforce in Swindon and their suppliers. We will do everything we can to ensure that they have good opportunities in future.

The hon. Lady asked about Brexit. The company said that the decision was not about Brexit and clearly we must accept that. She asked about its market share. In truth, it has a small market share in Europe compared with the markets in which it said it was expanding. Those are the reasons that it has given. However, I have always been clear with the House that the motor industry, Japanese investors and particularly Honda have made it clear for many months that Brexit is an additional worry at a difficult time. They have been instrumental in shaping the deal that has been negotiated. If there is one message all of us in the House can give that they want to hear it is that the deal should be ratified.

Ford Motor Company said:

“A no-deal Brexit would be a catastrophe…It’s important that we get the agreement ratified that’s on the table at the moment.”

Aston Martin said of the deal,

“it’s obvious that…
it meets the needs of all the requests we put forward as an industry and as Aston Martin”.

McLaren said that the withdrawal agreement would

“provide urgently-needed certainty and an implementation period that allows us to plan for the future”.

Toyota said:

“We welcome the announcement of a deal. It would provide business with the certainty” that it needs. I could go on. The clear message from the automotive companies is that we should get on and ratify the deal.

The hon. Lady asked about the industrial strategy. She will know that our commitment to it, and through it to the future of mobility, has been at the heart of our policy and has been widely recognised. The £250 million investment in the Faraday challenge to make Britain the best place in the world for new battery technology has resulted in the national battery manufacturing centre being established in the west midlands. We already have the biggest-selling electric vehicle in Europe—indeed, one in five electric vehicles in Europe is made in Britain. The fact that Honda’s R&D facility will continue to be in the UK and that companies such as Ford are moving their R&D to the UK underlines the strategy. The London Electric Vehicle Company is making taxis powered by electricity, not just for London but for export around the world. Aston Martin has invested £50 million in its new electric engine facility in Wales. Cummings is investing £210 million in its R&D in the automotive sector.

The hon. Lady asked about the charging network: £200 million is being invested in new, fast-charging networks for electric vehicles. Our reputation for automotive innovation and exports is strong and growing. That is one of the reasons why it is particularly frustrating that Honda has made this decision, when other companies are recognising the fruits of those investments and investing in Britain.

The announcement comes at a time of disruption and change in the industry. Veterans of the industry say that this is the biggest period of change in most of their careers. That reinforces how right we are to invest in the future and in promoting Britain as a place to develop the next generation of vehicles. I hope that in the weeks, months and years ahead, the whole House will support us in promoting those advantages, not just for Honda, but for other companies that can invest in this country.

Photo of Kenneth Clarke Kenneth Clarke Father of the House of Commons

I accept, as the Secretary of State does, Honda’s statement that Brexit played no significant role in the decision. We must avoid a childish debate every time there is an industrial announcement, whereby one side or the other leaps on how far Brexit has been involved in complex decisions. However, the fact remains that when I served at the Department of Trade and Industry under Margaret Thatcher, and at the Treasury under John Major, I was involved in pursuing the policy of those Governments to draw foreign investment to this country to revive our manufacturing base by presenting Britain as the most attractive and business-friendly country in the European Union, through which companies could gain access to the single market. The Blair Government pursued that policy with equal vigour. As my right hon. Friend has just said, it is no good people ignoring the warnings of every leader of the car industry, most of our foreign investors and all our business leaders that we must seek to retain that reputation. Will he therefore confirm that, in line with the withdrawal agreement, we are pursuing a customs arrangement and a regulatory alignment that will not put new barriers in the way of trade with our biggest, most important market? If we fail to do that, there will be a succession of announcements of this kind, and Britain will cease to be of any particular attraction to international investors seeking a European market.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I acknowledge my right hon. and learned Friend’s contribution as part of a succession of Ministers on both sides of the House who have given confidence to investors from Japan and around the world. A particular admiration has been accorded to Britain for the stability and predictability of our arrangements. In a turbulent world, the sense of continuity that we have been able to offer, especially to investors who invest for the long term—and any automotive investment is for the long term—is important. It is essential that we recover that.

It is also important that we listen to and respect the evidence of people who employ hundreds of thousands of our constituents. We have consistently done that. In my response to the hon. Member for Salford and Eccles, I set out the almost unanimous view of investors that the deal that has been negotiated meets their needs. That is not a surprise because they have been consulted during the negotiations. However, this is a moment when the House needs to reach a resolution. The Japanese ambassador is very active on these matters. He summarised his views in a letter to the UK and the EU:

“What Japanese businesses in Europe most wish to avoid is the situation in which they are unable to discern clearly the way the Brexit negotiations are going, only grasping the whole picture at the last minute.”

We should heed that advice. We have the opportunity to bring negotiations to an orderly conclusion. I hope that, for the sake of jobs in constituencies throughout the country, we will do that.

Photo of Chris Stephens Chris Stephens Shadow SNP Spokesperson (Fair Work and Employment)

Our thoughts on these Benches are with the people of Swindon, those whose jobs are at risk and those in the supply chain who face further uncertainty. Unite the union made the point:

“The usual formula is one job in the plant equates to four in the supply chain and the local economy. If closure is confirmed, it will rip the heart out of this area.”

I welcome the taskforce that the Secretary of State has set up. Will he assure the House that he will regularly communicate its outcomes to hon. Members?

We have known for some time that the EU was making tariff-free trade for Japanese car makers possible and shipping from Japan viable. Does the Secretary of State therefore agree that it is important that the Government now communicate a similar zero-tariff ambition for UK-EU car exports?

Some of us are very concerned that no deal will do irreparable damage to the manufacturing sector throughout the UK. What is the Department doing to protect the UK’s manufacturing sector?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am grateful to the hon. Gentleman for his remarks and the tone in which he expressed them. I will certainly keep the House informed about the taskforce’s progress. We should bear in mind that there are two years in which the workforce will continue to be employed. It is important that the sales in Swindon should continue so that their jobs can be secure. During that time, I want to find out whether in the first instance Honda, recognising its continued commitment to research and development, will see that it has an ideal facility in Swindon in which to build the next generation of vehicles,

The fact that there is a modern plant and a workforce in Swindon who have an international reputation for being excellent and innovative is a message that we should send out loudly and clearly. At a time when there are skill shortages across manufacturing industry, there is absolutely no reason why the opportunities made available to the workforce should not give them equally promising and rewarding careers in advanced manufacturing, such as they have enjoyed in Swindon. I will certainly update the House on the progress on that.

The hon. Gentleman asked about the trade agreement with Japan. My view is that the best outcome—indeed, the essential outcome—is that we should roll over, and continue to be able to benefit from, the trade arrangement that has been negotiated between the EU and Japan, unless and until we negotiate an alternative that is at least as good.

Photo of Michael Fallon Michael Fallon Conservative, Sevenoaks

Is not one of the lessons from this about the power and scope of the EU-Japan trade agreement, in contrast to the continuing uncertainty for our businesses here and for overseas investors —two and a half years after the referendum—about what the future terms of our trading relationship with Europe are actually going to be? Will the Secretary of State tell us why it is taking so long to put in place our trade agreements with countries such as Japan, Canada and Australia?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree with my right hon. Friend. Although Brexit uncertainty was not cited as one of the factors in the decision, it is evident in investment decisions in the whole industry. I know from regular conversations with investors that it does bear on their minds. Last time I was in the House, I mentioned that Nissan has said that the political uncertainty over a no-deal Brexit, or what kind of Brexit there will be, is “casting a shadow” over its future. When investors that have no political motivation to make such statements issue that advice and warning, we should attend to it. It seems to me that we have the information necessary to conclude these negotiations, and in my view we should do it during the days ahead.

Photo of Hilary Benn Hilary Benn Chair, Committee on Exiting the European Union

This is the latest and the most serious in a series of announcements and warnings from the UK car industry about its future operations in this country. I know and the House knows that the Secretary of State fully understands what a dangerous moment this is for the future of that industry. May I therefore simply wish him, and some of his colleagues whom I can see on the Government Benches today, well in persuading the Government to abandon the idea of a no-deal Brexit? He knows probably better than anyone else in this House what a disaster that would be for the future of British car manufacturing.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

As I said in my statement, this is a time of change and challenge, but also of opportunity for the automotive sector. I have been proud that in the two or two and a half years since the referendum, notwithstanding the concerns that have always been expressed to me—it is the first thing people have said when I have met boards—we have won every single competitive automotive decision that has taken place in Europe. It is frustrating that this and the X-Trail have gone to Japan, but I think all of us take pride in the fact that the efficiency and the potential of the British manufacturing sector have been recognised in that way. However, it is apparent, as my right hon. Friend Sir Michael Fallon has said, that although a degree of uncertainty was expected after the referendum decision, this has now got to the point—as I am told time and again in boardrooms in this country and around the world—where the time taken is unconscionable and if we do not act, we will see decisions not simply deferred but moved elsewhere.

Photo of James Gray James Gray Conservative, North Wiltshire

I am confident that I speak on behalf of my hon. Friend Justin Tomlinson, my hon. and learned Friend Robert Buckland, my right hon. Friend Claire Perry and my hon. Friends the Members for Chippenham (Michelle Donelan) and for Salisbury (John Glen). The constituents of all of them may be affected by this matter, but they are all unable to take part in this statement because of their roles as Ministers.

Across Wiltshire, we are deeply concerned about the 3,500 job losses and potentially more in the supply chain. May I therefore volunteer to take part in the excellent taskforce that my right hon. Friend the Secretary of State has announced? I think that is a very useful step forward. Will he join me in rejoicing at the fact that the economy of Wiltshire is actually extremely strong at the moment? The unemployment figures announced this morning are the lowest there have ever been, and we have had huge growth particularly in electric car manufacturing and our high-tech industries across the M4 corridor. I hope he will join me in thinking that we will therefore be able to find useful employment for all these people in good time before the plant closes.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

Like my hon. Friend, I pay tribute to our colleagues, my hon. Friend the Member for North Swindon, my hon. and learned Friend the Member for South Swindon and my right hon. Friend the Member for Devizes, whose commitment to the success of the economy in Wiltshire is unflagging.

My hon. Friend James Gray is absolutely right to refer to the fact that the success of Swindon and the whole of Wiltshire has been notable. In fact, one of the problems that Honda has occasionally discussed with me in the past is its struggle to recruit the volume of labour that has been required. It is a matter of sadness that that will not be a problem for the future, given this decision. He is right to emphasise that the demand for the kind of skilled labour that exists in that county is very strong. Through the taskforce, we will do everything we can to make sure that employers are matched with people with skills.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

Brexit may not have been the direct cause of Honda’s announcement, but, to echo the wise words of Mr Clarke, does the Business Secretary agree with me that it is an absolutely key part of the context in which Honda and other major car manufacturers are making decisions on where to invest in the generations of vehicles that will transform this industry? The harsh reality is that Britain’s reputation as a stable place to do business and as the gateway to Europe is being undermined before our eyes.

The Business Secretary mentioned the EU-Japan trade agreement. Will it not be a ludicrous situation if we end up leaving the EU without a deal at the end of March, or if we end up on World Trade Organisation terms after a transition in 2020, and tariffs are put on cars exported from Honda in Swindon to the EU that do not apply to cars exported from Japan to the EU? Does that not indicate that, whatever else happens in the coming weeks, the option of a no-deal Brexit has to be ruled out once and for all?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree with the hon. Gentleman when he describes the reality of how the automotive industry successfully trades in this country. It is based on a just-in-time system of production, which has been very well calibrated over the years to make us very efficient. That has been communicated not just to me but to Select Committees of this House. It is clear, and it has been much debated, as the hon. Gentleman will know from his constituency experience. That is what we must agree, and it is what has been agreed—the ability to continue to trade without tariffs, without rules of origin checks, without quotas and with a minimum of frictions—which is why the companies have endorsed the deal. I agree with him that to leave on WTO terms would be a hammer blow to a foundational industry in this country. However, he has it in his gift, as do all Members, to avoid that by coming together in the days ahead to agree a deal.

Photo of Suella Braverman Suella Braverman Conservative, Fareham

While this is awful news for the employees at Honda and for the communities affected—I have no doubt that the Secretary of State and his team will be doing all they can to support Honda and those affected during this time—does my right hon. Friend agree or disagree, for the sake of those who are failing to understand, with the senior vice-president of Honda, Ian Howells, who has confirmed that this decision has nothing to do with Brexit, is not driven by Brexit and is not because of Brexit?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

Of course I completely respect—everyone has to respect—the reasons that have been given for the decision, but I am pretty familiar with this industry and others, and there are a number of factors. I report to my hon. Friend truthfully that on the minds of many investors around the world is an anxiety caused by a lack of knowledge as to what our trading relationships will be with our most important neighbours in just over a month’s time. That is something that we should resolve; if we do, I think we can look forward to a resumption of significant investment and to statements that are happier than the ones I am able to give today.

Photo of Alistair Carmichael Alistair Carmichael Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Northern Ireland), Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

I thank the Secretary of State for advance sight of his statement. I wish him, and all those with whom he will be working, well as they try to turn this unhappy set of circumstances around. Let us not forget that 3,500 house- holds are facing a pretty bleak future at the moment.

The point the House needs to address today is that this is not a one-off incident—it comes on the back of similar announcements from Nissan and Jaguar Land Rover. It raises serious questions about the future viability of our automotive sector as a whole. This is precisely the sort of thing the Secretary of State’s industrial strategy was designed to address. Why is it that, at the moment, it does not seem to be working?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The decision we took to position this country at the leading edge of the new automotive technologies—battery technology and connected and autonomous vehicles—is evidently the right one, because the pace of change, as has been made clear by Honda today, is faster than even it expected just two or three years ago. If we sustain our commitment through the industrial strategy to make sure that we are the place in the world associated with the leading edge of battery technology and its manufacture—the Faraday challenge and the Faraday Institute are prime examples of that—there is a very prosperous future for that industry. However, it also occurs to me that, in a world in which there is such turbulence and so many changes, we should do everything we can to neutralise other sources of uncertainty. So we need to do both.

Photo of David Jones David Jones Conservative, Clwyd West

My right hon. Friend will know that, sadly, Honda today also announced the closure of its plant in Turkey. Given that Turkey is, and will remain, part of the customs union, does he not agree that we should be careful about accepting the advice of those such as Rebecca Long Bailey that we, too, should join the customs union, as that would clearly have made no difference to Honda’s decision?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My right hon. Friend is correct in pointing that out. As I said in my statement, the company has decided to consolidate its production, in this instance, in Japan, and the consequences for Turkey and the Swindon plant are the same. That also draws attention to the fact that free trade agreements, important though they are, do bring about changes themselves and are associated with decisions that sometimes can be difficult.

Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

This is a devastating blow for the south-west, Swindon and the wider UK manufacturing base. Does the Secretary of State not accept that it is a fact that our not being in the new Japan-EU free trade agreement, and therefore not being able to guarantee future tariff-free trade between our country and Japan, puts us at a disadvantage when people are making these sorts of decisions? I was encouraged by the replies he gave to my right hon. Friend Hilary Benn, who chairs the Brexit Committee, but when will he and other of the more sensible Ministers in the Government, many of whom are flanking him today, act to stop the Prime Minister pursuing this reckless, crash-out no-deal Brexit strategy?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

It is evidently the case that we should be part of a free trade agreement with Japan, and we should avail ourselves of the one that has been negotiated with the EU, unless and until it is replaced by a better one. Notwithstanding the disruption that free trade can sometimes cause, I am strongly of the view that, as a nation, we prosper from being a nation of free trade, and I think the right hon. Gentleman agrees. I think it has been evident in my replies to hon. Members on both sides of the House that I regard it as an urgent requirement to conclude our discussions. That will require compromise on both sides of the House, but that is something that this House has achieved over the years; indeed, the rest of the world has admired this House of Commons for coming to pragmatic decisions that are in the interests of the long-term reputation of this country.

Photo of Patrick McLoughlin Patrick McLoughlin Chair, European Statutory Instruments Committee

The Society of Motor Manufacturers and Traders has said that the industry is on red alert. Will the Secretary of State ensure that his Department is in full dialogue with the SMMT on the issues that it needs to address to reassure the rest of the automotive industry? Although these 3,500 jobs are incredibly important and skilled, there is also a very big supply chain, which involves many other companies, other than just directly Honda. Will my right hon. Friend, in making up his taskforce, ensure that my right hon. Friend Claire Perry, my hon. Friend Justin Tomlinson, my hon. and learned Friend Robert Buckland and my hon. Friend Michelle Donelan are very much involved?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I will indeed, and I am grateful to my right hon. Friend. I and my colleagues are in frequent dialogue with the SMMT and all the companies that are part of the industry. It seems to me—he knows this from his time in the Department—that having a close understanding of the requirements of job creators is an essential feature of a successful industrial strategy. We know from them what is required: a commitment both to invest in the next generation of vehicles to make sure that the skills of the workforce continue to be invested in and to work with businesses to ensure that their environmental performance meets increasing international requirements.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Treasury), Shadow SNP Spokesperson (Housing, Communities and Local Government)

What assessment has the Secretary of State made of the extent of the supply chain? Is he aware of all the companies that supply Honda? What specific support will he put into each of those companies to make sure that people in those industries do not also lose their jobs as a result of this decision? What further support can be put into the local economy, which may also suffer, although that may not necessarily involve supply chain companies?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Lady makes an important point. It is, of course, the direct employees of the company who are affected, but also the employees of companies that supply it. I have that very much in mind. In the work of the taskforce, I will strongly recommend that they are—there is no doubt they will be—prominent in its concerns. Through the Automotive Council, which I chair, we work with the supply chain right across the automotive sector, and that will be a prominent part of our discussions, plans and decisions over the weeks ahead.

Photo of Andrew Murrison Andrew Murrison Chair, Northern Ireland Affairs Committee

May I say that the loss of Honda in Swindon will be keenly felt throughout the whole of Wiltshire? May I also urge the Secretary of State to be very careful about imputing motives to companies that might be relocating from the UK or to the UK? Honda is entitled to be taken at its word, and it has said unequivocally that this decision has nothing to do with Brexit.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I do take it at its word; it is only fair to do so. However, as it departs, I reflect on the words it has given to me and to Committees of this House based on its experience of the requirement to avoid changes in our trading relationship with Europe that would introduce frictions. It has said those words on the record, and they are as valid today as at the time when it said them during the weeks and months past.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Public Health)

The news confirmed today from Honda will be hugely concerning for the thousands of employees in the automotive industry, as well as its supply chain, across the UK, including those at Nissan in my constituency. The Business Secretary is well aware that the UK automotive industry is facing a number of urgent challenges, including ongoing uncertainty around Brexit and the threat of no deal. There are just 38 days until we leave the EU. When will we have clarity on what the deal will be the day after?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree with the hon. Lady that the environment in which investment decisions take place affect all businesses, not just those in the automotive sector. That is why I have taken pains to remind the House of what the leaders of the industry say, which is that we should conclude these matters on the lines of the deal that has been negotiated. It is in her hands to contribute to that resolution.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

It is worth noting that the largest European market for electric vehicles is the Norwegian market, which is outside the customs union but has specific relationships for no rules of origin, tariffs or quotas. The second largest market is of course our own. Will my right hon. Friend confirm that the withdrawal agreement and future partnership would allow British manufacturers to have that same specific relationship with no rules of origin, quotas or tariffs?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

It will. This is one of the big advantages of the agreement. The industry and individual firms have been very clear that this is one of the reasons why they have endorsed it.

Photo of Jack Dromey Jack Dromey Shadow Minister (Work and Pensions) (Pensions)

Today is a human tragedy for 3,500 workers in that great Swindon factory, yet there are those, such as Patrick Minford, who would say that the car industry should follow the coal mines down the path to industrial oblivion; and there are those in this House, such as Mr Rees-Mogg, who when confronted by the automotive industry’s concerns about, for example, frictionless trade and the impact of Brexit, say, “Fake news.” Does the Secretary of State agree with me that our 850,000-strong automotive industry is a world-class success story, and that nothing should be done that puts it at risk by those who would be oblivious to the consequences of their actions and take this country crashing out of the European Union on 29 March without a deal?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am very proud of our automotive industry. It has all the attributes the hon. Gentleman ascribes to it. I am proud of the workforce. I am proud of the workforce in Swindon in particular. This is no reflection on their calibre, their commitment and their ingenuity. Far from the automotive industry being an industry that we can or should do without, it is one of the prime opportunities we have. If we have some of the best brains on the planet looking at connected and autonomous vehicles, and inventing the next generation of batteries, why on earth should we not make the products of that ingenuity in this country? I am determined that we should do so.

Photo of David Davies David Davies Chair, Welsh Affairs Committee

Given that we have decided to ban all their vehicles from our roads by 2040 and that many Members on both sides of the House have called for that ban to be brought forward, what does my right hon. Friend think is more surprising: that some of these companies are thinking of relocating elsewhere or that so many MPs in this House seem to want to put the blame on Brexit?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

What I would say to my hon. Friend is that we are talking about Honda’s plant in Swindon and that most of its output is not diesel but petrol vehicles, which go all around the world. Automotive companies are increasingly reflecting the much more rapid global shift to new powertrains than was expected a while ago. I think advantage comes from being in the vanguard of that change, rather than being a laggard. That is why we, in the industrial strategy, are determined to make sure that we are at that leading edge and can be an example to the rest of the world.

Photo of Helen Goodman Helen Goodman Shadow Minister (Foreign and Commonwealth Affairs)

This morning a person who owns a firm in the supply chain wrote to me. He expressed his extreme dismay about the lack of a UK-Japan trade deal and he suggested that Business, Energy and Industrial Strategy Ministers talk to the 56 Japan-based firms in the north-east. He also sought a more active industrial strategy. I know about the Secretary of State’s Faraday initiative, but were we to have some really big infrastructure investment for electric vehicles, we might grow the domestic market, which would enable us to sell more here and leverage more exports on that basis.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

As my hon. Friend Vicky Ford said earlier, we are the second country in the EU in terms of take-up of electric vehicles. I do not think the hon. Lady will find anyone in the industry who doubts the commitment my colleagues and I make to our industrial strategy and advancing that leadership. That is noted not just in this country, but around the world. As I said earlier, it is frustrating that the timing of this decision by Honda does not allow it to avail itself of some of the fruits of that strategy.

Photo of John Stevenson John Stevenson Conservative, Carlisle

Manufacturing represents about 20% of the Carlisle economy, which is twice the national figure, and many of those businesses export to Europe and to the rest of the world. Probably most important of all, they provide jobs, security and livelihoods for thousands of people who live in my constituency. Does the Secretary of State agree that we must do nothing that endangers that success? Does he further agree that he must ensure we continue to have access to our biggest export market, as well as a domestic environment that is stable and certain?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I agree with every part of what my hon. Friend says. At a time of change and challenge for the industry, this is just the time to provide the certainty, commitment and enthusiasm about the future that will retain and attract investment from this country and around the world.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention), Shadow PC Spokesperson (Business, Energy and Industrial Strategy)

Those arguing that this announcement is in no way Brexit-related are insulting the intelligence of the workers in Swindon and those in the manufacturing companies along the supply chain. Two of those companies are based in my constituency and they employ hundreds of workers. What discussions will the British Government be having with the Welsh Government to co-ordinate a response to today’s announcement?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am grateful to the hon. Gentleman for his question. It is important to point to and acknowledge the reasons for the decision that have been given by the company. I have been clear that publicly the automotive sector has strongly advocated the need for supply chains to continue to be effective and uninterrupted. I work very closely with Ken Skates, my counterpart in the Welsh Government. We will make sure that we work together to ensure that the supply chain in Wales is part of initiatives we take.

Photo of James Cartlidge James Cartlidge Conservative, South Suffolk

I have a sense of déjà vu, because few days after the meaningful vote was lost, Philips announced the closure of the Philips Avant plant—the largest plant in my constituency. It said explicitly that it was not due to Brexit that production was being moved to the Netherlands. The key point is surely this: we know it is bad news, whatever the cause; we now have to get new inward investment and make ourselves competitive and attractive. Will we do that better if we trade on WTO terms, or if we have a deal with the EU, with tariff-free access to our largest market?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend puts it extremely well. In a world of competitive investment, we need to deploy all the assets and strengths at our disposal. Internationally mobile investments are competed for by many other countries, so we have to get everything right. It seems to me that to have trading relationships that are the bare minimum of international arrangements is a handicap rather than an advantage.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Selly Oak

An analysis of the last Labour Government’s car scrappage scheme revealed that it generated almost 400,000 new sales over a 12-month period at a relatively modest cost. Given the twin challenges of poor air quality and a downturn in the automotive sector, why do the Government not consider a repeat of that strategy?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman is very familiar with and experienced in this area, and I understand his point. I would say that the reasons behind this decision and some others have been not so much about demand—in this case—but about an acceleration of a change in technology and how investment can be consolidated, so I am not sure that his proposal is the answer to the reasons that Honda cited, but I take into account the representation he makes.

Photo of James Heappey James Heappey Conservative, Wells

The car industry is having to reset quickly as consumers turn their back on diesel and, increasingly, internal combustion engine cars more generally. Does the Secretary of State share my view that as we compete for new electric vehicle production lines, one way of making the UK more attractive is to show strong domestic demand by accelerating our planned transition from ICE to electric vehicles?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

If a country wants want to be renowned as a source of innovation and manufacturing, there is an expectation that people can look to the domestic market to see that the products are consumed there. That is important, but I am always careful to respect the fact that for some years to come conventional vehicles will be manufactured here and will be a perfectly reasonable choice for people to make. An orderly transition rather than an abrupt shift would be best for investment and confidence.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

Honda’s employment base and supply chain go well beyond Swindon into the Stroud valleys, which remain a major manufacturing area. We have had a double blow with SKF’s announcement that it intends to shut its factory in Stonehouse, and the loss of our last aerospace ball-bearing manufacturer will have a major impact on Rolls-Royce. Is it not about time that the Government looked at which bits of our manufacturing base we must retain in this country and talked to Members about how the Government can do that?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman ought to come to talk to me about the automotive sector deal, which has brought investment into research and development from across the industry. He talks about aerospace; there is a sector deal with the aerospace sector that, again, is about positioning Britain at the leading edge of new aerospace technology. These commitments are being made by industry as well as by Government, and I would be very happy to see him to talk him through what we are doing with the industry.

Photo of Richard Drax Richard Drax Conservative, South Dorset

My sympathy extends to all those who are going to lose their jobs. I remind the Secretary of State that we are leaving the EU and that we must be able to strike our own trade deals around the world if we are to flourish as a country, as I believe we would, so any deal that we sign with the EU that prevents us from doing that is not acceptable.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend makes an important point. It has been a clear part of our mandate to negotiate in a way that allows us to strike free trade agreements. That is provided for in the agreement that is on the table, but I think the wrong thing to do in furtherance of that would be to lose our ability to trade without tariffs and frictions with, as we might say, our existing customers.

Photo of Chris Elmore Chris Elmore Opposition Whip (Commons)

The announcement from Honda today is devastating for the community of Swindon. Just up the road in Bridgend, which neighbours my constituency, Ford has announced voluntary redundancies. The Jaguar Land Rover contract is ending three months early and there is only one Dragon engine left, which will mean the employment of only 500 people beyond 2021. Going from 1,700 people down to 500 means far more redundancies in the long term. Ford has also supposedly warned the Prime Minister that a no-deal Brexit would be a catastrophe and that it would look to pull all its production out of the UK. First, what more can the Minister to do to support the Bridgend workers, particularly at Bridgend Ford? Secondly, I wish him luck in trying to convince the Prime Minister to take no deal off the table, because that would be catastrophic for the car manufacturing industry in this country, including Bridgend Ford.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

The hon. Gentleman mentions Bridgend; I speak to Ford and its VP for Europe, Steve Armstrong, very regularly, and the hon. Gentleman is absolutely right that it is looking to us to resolve this matter. Steve Armstrong says that if we leave without a deal, it would be “pretty disastrous” and that it would

“force us to think about what our future investment strategy for the UK would be”.

However, he also says that the deal that has been negotiated would address these concerns, and I hope that given the hon. Gentleman’s interest in the workers in Bridgend, he will come to resolve this matter by voting for the deal.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

This announcement is very sad news for the workers at Swindon and for the jobs and businesses in the supply chain, but does my right hon. Friend agree that this is much more to do with the EU-Japan trade deal than it is about Brexit? The reality is that free trade deals create winners and losers in the short term, but in the longer term, there are benefits for all from free trade.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

Again, I think it is for the company to account for the reasons for the decision, but my hon. Friend is absolutely right to point to the fact that any new free trade agreement adjusts the pattern of trade; that is evident. To me, this seems to underline the case for us to have a free trade agreement with Japan, and unless and until we do so, not to lose the ability to be part of the EU deal.

Photo of Ian Lucas Ian Lucas Labour, Wrexham

The Secretary of State makes his case very well in response to this devastating news. My real condolences go to Swindon, which I visited as the automotive Minister. However, has not the central problem been displayed in the Secretary of State’s exchanges with some Government Members—namely, that the deal that the Prime Minister is putting forward is an interim deal that defers the big question of whether we have frictionless access or whether there is the freedom to make trade agreements? It is getting towards high noon. I have a lot of respect for the Secretary of State. The position is that there is a natural majority in this House to do the sensible thing. We need to have people like him being statesmanlike and taking the right decision on behalf of the country—that is, to reach a permanent deal on our arrangements with the EU are concerned and to sort this situation out. As a former Minister for the sector, for which I have a great deal of affection, I plead with him to do that.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am grateful to the hon. Gentleman for his kind words. He embodies the spirit of continuity in understanding and support for the sector, which I said at the beginning of my statement is very important for investors. On the future partnership agreement, in fairness, it was the EU that maintained that those discussions could take place only after we have left the EU. That is part of its negotiating mandate. That is why it has not been possible to agree the final state, but it is the case—I have worked hard to convey the requirements of manufacturing industry—that within those negotiations, the opportunity to have frictionless trading arrangements should be there and be noted, and it is one of the reasons why firms and sectors support the deal.

Photo of Marcus Jones Marcus Jones Vice-Chair, Conservative Party

This is a very sad day for the people whose livelihoods depend on the Swindon plant. This is a global industry undergoing massive change, with the challenge of car sales volumes falling significantly in many markets. I heard what my right hon. Friend said about Brexit and moving forward. Will he say what more can be done to help British manufacturing companies and manufacturing companies from other countries that are based here to get through this transitional period and the current turbulence, so that these companies can emerge stronger and be world-leading in many of the new technologies?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

Companies’ prime requirement is that the uncertainty be brought to an end. It is in the gift of the House to meet that requirement, and we cannot and should not leave it a moment longer. We will have the opportunity in the days ahead to conclude this matter. That is the best thing the House can do for manufacturing and other sectors of the economy.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

May I applaud the response of the two hon. Members for Swindon, my hon. and learned Friend Robert Buckland and my hon. Friend Justin Tomlinson, and the Business Secretary for his swift plans to go to Swindon and establish the taskforce, but may I criticise him for not being clear enough that this is not a Brexit-related issue? Had we voted to stay in the EU in June 2016, chances are he would be here today at that Dispatch Box making a statement about the closure of the Honda plant. We know this because Honda is closing its car factory in Turkey, which is a member of the customs union, and because Honda’s chief European officer said on the radio today:

“This is not a Brexit-related issue for us”.

Will the Business Secretary make it absolutely clear that we will offer every support to the Honda workers but that this closure announcement has nothing to do with Brexit?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

I am grateful to my hon. Friend for giving me the chance to say on the record that we totally respect the reasons Honda has given. In fairness, he will agree that I have made it clear that the sector is undergoing a big change, not least in technology, but I have to report to him and the House the countless conversations I have with virtually every firm in the automotive sector, large and small, all saying that the uncertainty is a negative factor in their investment decision making and that they want our future relationship to be without frictions, tariffs and rules of origin checks. That is sufficiently consistent that it is fair that I bring it to the attention of the House in a statement about the automotive sector.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

A year ago, the Business, Energy and Industrial Strategy Select Committee visited the Honda plant at Swindon. We saw Civics coming off the line, many of them destined for the European market, and the benefits of the substantial overseas investment in our automotive industry, some of which has benefited my constituency through the London Electric Vehicle Company. In its peak year of 2013, investment reached £588 million. Are there any decisions the Secretary of State would suggest the House take in the next few days to encourage future investment to get back to that kind of level?

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

There are indeed. The context of technological change is common to the motor industry around the world, but as I hope I have made clear, we have the opportunity to be a beneficiary of that change. We cannot be complacent about how competitive the sector is around the world, which means we must do everything we can to give confidence to investors, and that certainly involves agreeing a deal over the next few days that can unleash the optimism that comes from investment up and down the country—investment that I know in many instances is not taking place while people contemplate what our future trading relationship will be.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

My thoughts are with the workers whose excellent work I saw for myself on a visit to the Swindon plant with the Industry and Parliament Trust last year, and with those at Bridgend and elsewhere—my first job after graduation was as a foreman at Ford in Bridgend. We must not have no deal. Honda’s relationship with the UK car industry goes back much further than the car plant at Swindon to the tie-up with British Leyland and the Rover Group when it was still nationalised. I urge my right hon. Friend to remember that history and to engage with Honda to see in what other innovative ways we can engage with it to the benefit of workers at Swindon and elsewhere, just as the then Government did with Michael Edwardes and British Leyland in the days of the new Rover models.

Photo of Greg Clark Greg Clark The Secretary of State for Business, Energy and Industrial Strategy

My hon. Friend makes an excellent point, drawing on experience that I was not aware of but which is clearly important to him. He is right that this country’s relationship with Honda has been a mutually successful one lasting many years and that we should respect its contribution to the British economy over that time. As I said in my statement, I hope that the fact that its European headquarters will remain here, that its Formula 1 team will still be based just outside Milton Keynes and that it will continue to do research and development there will mean that in the months ahead, when it contemplates new investments, it will think first of a place that has served it and its workforce well for a very long time.