Automotive Industry — Statement

Part of the debate – in the House of Lords at 3:19 pm on 27th January 2009.

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Photo of Lord Razzall Lord Razzall Spokesperson for Business, Enterprise and Regulatory Reform 3:19 pm, 27th January 2009

My Lords, I join the noble Lord, Lord Hunt of Wirral, in welcoming the Statement and the fact that the Minister has made it to this House. Perhaps I may do what I normally leave to the Tories by commenting that my noble friend Lord Tyler suggested on 14 January that the Secretary of State should make Statements to this House first and his junior Minister should follow in the House of Commons. The Secretary of State did not seem to be immediately enthusiastic about that suggestion, but that is what is happening today. Can he confirm that that will be the precedent he will follow?

The noble Lord, Lord Hunt of Wirral, demonstrated accurately the serious state in which the car industry finds itself. I do not think that anyone who passes through Southampton will fail to recognise the problem that the automotive industry faces there. Southampton City Council is making far more money on parking charges for unsold vehicles than the motor car manufacturers are making through selling those vehicles. The automotive industry is clearly in crisis, which is, of course, why the Minister had to come to the House to bring forward proposals to help it.

We on these Benches will support many of the proposals. As the noble Lord, Lord Hunt, said, the training of employees through the Train to Gain programme is highly desirable and we welcome it. The Minister indicated that the Transport Secretary has announced the provision of £250 million to support consumers who switch to ultra-low carbon cars, and we welcome that. We obviously welcome the initiative that he has given the new Trade and Investment Minister to look at access to finance. It makes no sense that someone wanting to borrow money to buy a car can go to Barclays Bank, or perhaps I should say RBS, which has government support and pressure, but if they go to Volkswagen's leasing or financing company, it is difficult to raise finance. That initiative makes sense in the context of what the banks are doing.

However, whenever the noble Lord, Lord Hunt, and I stand up to respond to Statements, I am always left with the underlying question: is this enough? The real financial issue in this Statement is the £1 billion of lending to cover worthwhile investments that are not eligible for EIB support. What will that lending be for? The Statement seems rather opaque in detail. Is it to support jobs? Is it to pay salaries for people who probably, without that money, would be made redundant? Is it to keep people in part-time work who otherwise would be made redundant? Or is it for investment in new products and new technology? The Statement is extremely opaque on that.

Will similar proposals come forward for the steel industry or other industries that soon come up with the begging bowl? You have only to turn on the radio or television to know the industries with a problem. Is this a disguised form of job preservation or genuine investment in the future of the British economy? The Statement indicates that we have moved to the next stage of the economic crisis. We have had two, three or four proposals by the Government to deal with the banking crisis and to endeavour to improve the provision of credit in the UK economy. The heat has gone from the Treasury to the Minister and, given the effects of the economic crisis, we are turning to British industry right across the board, in services and manufacturing.

I do not blame the Minister at all. I suspect that he has been extremely innovative. Although he will not admit it to your Lordships' House, he has the brace of the Treasury behind him, pulling him back as he produces his innovative solutions. That is what I observe to be happening. Rather than this ad hoc approach as industry after industry has a problem—I touched on the steel industry and there will be others—does he not feel that over the next week or two the Government could take a more strategic approach so that the public, your Lordships' House and the other place could have a view of the strategic imperatives that will save us from the frightful horrors that otherwise lie ahead? What are the strategic industries which need efficient support to ensure survival?

As the Government have no clear strategy but are going ahead on an ad hoc basis, dare I suggest that, if there is a strategic approach, there should be one or two key principles? First, any money spent by the Government in industry must deliver real value; secondly, it should be spending that can be undertaken quickly; and, thirdly, the work should be as labour-intensive as possible with other costs kept as low as possible. If those principles were applied in the proposals that I am sure the Minister will bring to this House in the next month or two, such a strategic approach would find merit with your Lordships' House.

I welcome the concentration in these proposals on the greening of the car industry. That greening principle could apply to a number of other industries. We could invest in greening public buildings by investment in technologies such as ground-source heat pumps, better energy conservation and modern energy-efficient data centres. I am sure the Minister, with his strategic approach, could lead us to the forefront of the greening of British industry. I fear that without a strategic approach, this economy is heading for the edge of the cliff and we will fall off it.