UK Automotive Industry: Job Losses — [Mr Peter Bone in the Chair]

– in Westminster Hall at 9:30 am on 22nd May 2018.

Alert me about debates like this

Photo of Peter Bone Peter Bone Conservative, Wellingborough 9:30 am, 22nd May 2018

Before I call Matt Western to move the motion, it might help Members to know that, at 11.30 today, the Division bells will ring and there will be a minute’s silence.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

I beg to move,

That this House
has considered job losses in the UK automotive industry.

I thank the Speaker for granting this debate. I also thank you in advance for your chairmanship, Mr Bone.

“Precipitous” is not a word used very often; when it is said by the chief executive of a major global automotive manufacturer, it is time to listen. Why? Because such utterances from major industrialists are rare; such people prefer to keep out of the headlines and to get on with the day-to-day of running multibillion-pound organisations that employ hundreds of thousands of people.

In the UK, the automotive industry has been one of the great success stories since the financial crash of 2007-08. In the two decades before that crisis, the industry’s economic output was broadly flat, before it dropped sharply in 2009. Since then, we have been fortunate to witness a renaissance in this major industry, which was seriously damaged by the crash, but which managed to sustain itself, with some Government intervention, through that difficult period. In 2017, in real terms, the motor manufacturing industry was worth 25% more than in 2007, although growth appears to have levelled off in the last year. In 2007 motor vehicle manufacturing accounted for 5.4% of total UK manufacturing, but in 2017 it accounted for 8.1%—a 50% increase in its overall importance. That was the result of significant inward investment from all resident vehicle manufacturers and component suppliers. The industry has contributed to almost 10 consecutive years of steady growth. Just as importantly, that has translated into a 29% increase in direct manufacturing employment in the sector.

The headwinds are strong and many. As the industry meets the challenges of transitioning to cleaner fuels and to a super-low-carbon future, it has been disrupted by the uncertainty of Brexit and a Government policy that penalises the cleaner diesel-powered vehicles. It is one of the great paradoxes in business that, in seeking to improve air quality, the Government have managed the reverse the progress achieved over many years to reduce carbon dioxide emissions.

In my maiden speech last year, I stated that there were rising pressures on the industry and that action was needed to maintain its recent success. I warned of the slowdown, with falling sales, and that the industry represented an economic bellwether. It has become increasingly clear that, from trucks to cars, sales are falling as people decide not to replace their vehicles.

I have repeated those calls in many subsequent debates, and there have been many in recent months, including those held by my hon. Friends the Members for Dagenham and Rainham (Jon Cruddas) and for Ellesmere Port and Neston (Justin Madders). Both of their debates reflected the rising concern about the real, clear and present danger to the sector, and sought the attention of the Government so that they would act.

That danger has become very real since the autumn, with the announcement of job losses all over the UK. To date, 2,000 jobs have been lost among car manufacturers, and planned increases in staff recruitment have been put on hold. More widely, when the component suppliers and related sectors are taken into account, it is estimated that between 8,000 and 12,000 jobs at least have been lost in just eight months.

Photo of Alison McGovern Alison McGovern Chair, Speaker's Advisory Committee on Works of Art, Chair, Speaker's Advisory Committee on Works of Art

I congratulate my hon. Friend on getting this crucial debate. Given the numbers that he mentions, does he think we ought to return to the subject of the last debate we had here—business rates? The car industry needs a shot in the arm; is it not time that the Government gave it one?

Photo of Matt Western Matt Western Labour, Warwick and Leamington

I totally agree with my hon. Friend. The business rates situation handicaps the industry in this country and puts it at a significant disadvantage to competitors on the continent. Added to that are the energy costs that it faces: on average, there is a 74% premium on the energy costs on the continent.

Major manufacturers have told me that their greatest concern is that there seems to be little concern from the Government. It is disheartening that this apparent lack of interest flies in the face of the industry’s importance to our overall economy. The financial services sector is held up as the great driver of UK national wealth, but it is worth remembering the increasingly important contribution of the UK motor vehicle manufacturing industry. According to the Library, it generated £15.2 billion of value to the economy in 2017, which is 0.8% of total output. More relevantly, it represents 8% of manufacturing output. Likewise, it employed 162,000 people across the UK in 2016, equating to 1% of all UK employees.

In UK manufacturing, the automotive industry is the second most investment-intensive sector for total investment as a proportion of gross value added, although it is top in value terms, investing £3.6 billion in 2015. The west midlands has the largest number of people employed in the manufacture of vehicles in any UK region or country—perhaps that is why this subject is so close to my heart. The 54,000 employees in our region represent around a third of all motor industry employees in the UK.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

I thank my hon. Friend for bringing this timely debate. Not only are there direct employees, but for every direct employee there are probably two or three indirect employees—we are talking about the supply chain. There could be a massive effect if the problem is not handled properly. We need a transitional period, with electrification on the one hand and diesel on the other hand.

My hon. Friend Jack Dromey and I met the trade unions about this issue some months ago, and there is a lot of concern that it could affect jobs. With business rates, the Government are shifting expenditure away from proper funding through the taxpayer to local government. That creates a major problem for local government and for the efficiency of these industries.

Photo of Matt Western Matt Western Labour, Warwick and Leamington

My hon. Friend makes an important contribution. He is quite right about the multiplier effect on supplier industries—component manufacturers and so on. I totally agree with him about the importance of establishing a very clear pathway for the transition between where we are and where we have set ourselves to be in future. I will speak about that at some length.

The employment statistics are significant by anyone’s measure. The concern voiced by the industry is that direction is needed from policymakers, in particular with regard to Brexit and the UK’s future trading relationships, as well as to support for the transition to clean fuels. Without that clarity, it is inevitable that investment decisions will be placed on hold.

People will cite recent announcements at Luton and elsewhere as great news about the future of the industry, but many of us will understand that those sorts of decisions are taken many years in advance—those were taken way before the EU referendum. Without clarity, there will be a recruitment freeze or job losses, as we have seen. One example of the recruitment freeze is in the constituency of my hon. Friend the Member for Dagenham and Rainham, where Dagenham has recently announced that it will have to put on hold 150 planned jobs.

Just over a year ago, in March 2017, Lloyds bank conducted a survey of the UK automotive manufacturing sector. It summarised that the vast majority—some 87%—of automotive manufacturers planned to create new jobs in the next two years. It estimated that, if those plans were replicated across all the UK’s automotive firms, a further 85,000 new jobs would be created. What a difference a year makes.

In the context of Brexit, there are concerns that there may be job losses in the industry in the long term. The Business, Energy and Industrial Strategy Committee conducted an inquiry into the impact of Brexit on the industry and stated that, should the UK leave the customs union and single market, hundreds of thousands of jobs could be lost. It reported that

“it is difficult to see how it would make economic sense for multinational volume manufacturers—the bulk of the UK automotive sector—to base production in the UK in a no deal or WTO tariff scenario. The shift of manufacturing to countries within the customs union and single market would be inevitable;
the cost in UK jobs could be in the hundreds of thousands, and inward investment in the hundreds of millions. For the automotive sector, no deal would undoubtedly be hugely damaging. The Government should not seriously contemplate this outcome.”

Carlos Tavares, the chief executive of the PSA Group, which manufacturers Peugeot and Citroën vehicles, said:

“We cannot invest in a world of uncertainty. No one is going to make huge investments without knowing what will be the final competitiveness of the Brexit outcome.”

That sentiment was echoed by others, including the chief executive of Jaguar Land Rover, Dr Ralf Speth, who said:

“Uncertainty is really challenging us very much and not only us, it’s for the complete industry. You hardly see inward investment any more.”

Perhaps that should come as no surprise. Some have explained that job losses in manufacturing are an inevitability, and that we should embrace the loss of manufacturing in the post-Brexit era. One such voice is that of Professor Minford of Cardiff Business School, who has advocated “running down” the UK auto industry. In evidence to the Foreign Affairs Committee in 2012, he said:

“It is perfectly true that if you remove protection of the sort that has been given particularly to the car industry and other manufacturing industries inside the protective wall, you will have a change in the situation facing that industry, and you are going to have to run it down. It will be in your interests to do it, just as in the same way we ran down the coal and steel industries. These things happen as evolution takes place in your economy.”

He echoed that statement in The Sun ahead of the EU referendum, writing:

“Over time, if we left the EU, it seems likely that we would mostly eliminate manufacturing, leaving mainly industries such as design, marketing and hi-tech. But this shouldn’t scare us.”

Well, I am afraid it scares me, and I think it scares many of us—for good reason.

A while back, the BEIS Committee stated that

“it is difficult to see how it would make economic sense for multinational volume manufacturers—the bulk of the UK automotive sector—to base production in the UK…The shift of manufacturing to countries within the customs union and single market would be inevitable”, and it would cost hundreds of thousands of jobs, as I said. The Committee concluded:

“Overall, no-one has argued there are advantages to be gained from Brexit for the automotive industry for the foreseeable future. We urge the Government to acknowledge this and to pursue an exercise in damage limitation in the negotiations. This involves retaining as close as possible a relationship with the existing EU regulatory and trading framework in order to give volume car manufacturing a realistic chance of surviving in this country.”

The Committee is not alone in voicing its fears. The automotive industry’s trade body, the Society of Motor Manufacturers and Traders, stated:

“There is no escaping the fact that being out of the customs union and single market will inevitably add barriers to trade, increase red tape and cost. Settling for ‘good’ access to each other’s markets is not enough as it will only damage the UK’s competitiveness and reduce our ability to attract investment and the high quality jobs that go with it.”

It is worth noting that in 2017, 86% of the UK’s imports came from the EU, while only 41% of the UK’s exports went to the EU.

Many say that the UK runs a widening trade surplus in motor vehicles with non-EU countries and a widening trade deficit with EU countries, and that leaving the EU and the customs union is therefore a positive thing. That is true, but the industry has responded by using its strength through the renaissance that I mentioned to reduce that deficit considerably. Importantly, the industry shows a determination to grow in other markets—it seeks to retain its strong position in Europe, but want to build elsewhere too. Other countries’ domestic manufacturers are doing that, and we can do so too. It is not a choice between one and the other—they are complementary.

Our remaining in a customs union is critical to the sector’s future. We must avoid at all costs losing tariff-free access to the EU. In the worst-case scenario, under World Trade Organisation rules, a 10% tariff on finished vehicles and a 2.5% to 4.5% tariff on components would be introduced. Those tariff rates would cost the automotive sector at least £2.7 billion on imports and £1.8 billion on exports. Just imagine what would happen to the sticker price of vehicles in this country.

Ford has stated that rules of origin would “add a significant cost” to its business if UK-manufactured products were no longer considered to have originated in the EU. Similarly, Vauxhall has stated that any rules of origin changes

“will have a drastic impact on UK trade with any countries outside the EU”.

It is critical that a future UK-EU trade deal includes provision for full bilateral cumulation, which would ensure that components produced in the EU were considered local UK content for the purpose of rules of origin, and that the automotive sector was able to benefit from preferential trading relationships established with not only the EU but third countries.

It is worth noting that the majority of Ford’s Bridgend output goes to the EU. Without a comprehensive UK-EU free trade agreement, engines sent to European assembly plants would attract a 4.5% tariff, increasing the cost to the consumer. In an industry where margins are wafer-thin, that sort of tariff may cause significant damage to the sector. The SMMT’s position is clear. It has stated:

“Should the UK and the EU no longer have a customs union arrangement, UK businesses exporting to EU27 countries would need to submit information about the origin of the product, the destination country, relevant commodity codes, Customs Procedure Codes, product value, a unique consignment number, as well as relevant safety and security information. This would represent a significant increase in bureaucracy, and undermine the competitiveness of British business. Compliance with these new requirements would be particularly challenging for SMEs that make over 90% of the automotive supply chain.”

The components industry and the highly integrated supply chain are crucial to this debate. Currently, an estimated 1,100 trucks from the European Union deliver components worth £35 million to UK car engine plants every day. The movement of those vehicles and the timeliness of their departure and arrival is crucial—every minute counts. However, about 78,000 people are employed in the supply chain here in the UK, supplying not just the UK but Europe. The sector is highly integrated with the rest of Europe in the case of both finished cars and component parts. For instance, the UK imported just under £14 billion of vehicle engines and other components in 2017, 79% of which came from the EU. Some may ask, “Why can’t we transfer more of that back to the UK?” The complication is in scale, the strength of businesses and where they need to be located, and the geography of supply.

The manufacturers’ trade body, and the automotive trade body, the SMMT, have both called on the Government to protect that close integration. The financial reality of the chain’s fragility is underlined by the fact that some manufacturers face costs of up to £1 million an hour if production is stopped due to a delay in the supply of components to the assembly line. The SMMT estimates that a 15-minute delay to parts delivered just in time can cost manufacturers just under £1 million a year.

Let me give two examples. The manufacture of a single Delphi fuel injector takes more than 35 components, requiring 100 processes, and the elements for that come from 15 countries. The injector goes through 39 UK-EU border crossings and five UK-customs union border crossings. Another example is the Mini crankshaft, which crosses the channel three times in a 2,000 mile journey before a finished car rolls off the production line. The casting is made in France before being transferred to Hams Hall back in the midlands, where it is crafted into shape. Those pieces are then sent to Munich and inserted into an engine, which is then sent to Mini’s plant in Oxford, where it is installed in a car.

Related to all of that is the importance of type approvals, a much overlooked area that can add significant cost. One engine supplier—I will not mention its name—has estimated that, if we do not have harmonisation with Europe, it will cost between £300,000 and £500,000 per vehicle certification. In fact, the CBI noted that the two areas where convergence with the EU is of the greatest importance are the rules that determine how and by whom vehicles can be approved as safe for the road, and the Vehicle Certification Agency maintaining its ability to approve vehicles for the European market. It also mentioned maintaining pan-European rules on carbon dioxide and other air pollutants to ensure that international targets on clean air and climate change are met.

That brings me to diesel. In the early 2000s, the drive to achieve climate change goals led to the rapid uptake of diesel: from 17% of the total car market, it grew to 50% in just eight years. The manufacturers responded. Ford set up its Dagenham diesel centre, which I think employs 3,000 staff and provides for 50% of all of its global diesel production. Then came the Volkswagen dieselgate scandal and subsequently the demonisation of diesel, which has led to a 33% drop in diesel sales so far this year. Once more, manufacturers have sought to respond where they have seen a lack of leadership, in this case perhaps from policy makers. Ford introduced a diesel scrappage scheme, as certain other manufacturers have done, and since September it has taken 21,000 vehicles off the road. The programme has been so successful that it was extended beyond December, when it was due to close, and is still running.

A tax on diesel was announced in the November 2017 Budget, with an increase in vehicle excise duty by one band and on benefit in kind by an additional 1% for all diesel vehicles. Some would say that that is kicking an industry when it is already struggling. The taxing of vehicles based on such a legislative standard has yet to be finalised or introduced by the EU; it is unprecedented and unrealistic. I suggest that the measure is counter- productive and merely makes worse the problem it seeks to solve. People are holding off buying new diesel vehicles and keeping on using older, polluting vehicles. Of course, the reduction in—or lack of—support for the diesel industry does not take into account the many hundreds of millions of pounds that it has already invested in manufacture, responding to the Government’s policy direction of five to 10 years ago.

Today’s diesels are the cleanest yet, having the same nitrous oxide and particulate emissions as petrol and 20% lower CO2 emissions. To put it into context, it would take at least six of today’s new diesel cars to emit the same nitrous oxides as one vehicle put on the road just two years ago. The focus should therefore be on getting older vehicles off the road, not on penalising customers who wish to buy newer, cleaner diesels. Of course, the swing to petrol means a collective failure to meet our carbon dioxide targets. Hon. Members will know that we are now seeing an uptick in carbon dioxide emissions for the first time in 15 years.

We see challenging issues in our deliberations over Brexit and the trading arrangements we face. That is best exemplified by the profound challenges faced by the automotive industry, one of our most successful industries. The industry has seen a renaissance, which was seriously damaged by the global financial crash, but it managed to sustain itself, and since then we have seen huge inward investment by various manufacturers, which has contributed to a 50% increase in manufacturing share, almost 10 years of steady growth and a consequent almost 30% increase in direct manufacturing employment in the sector, notwithstanding the growth in component suppliers.

The industry also faces the challenge of transitioning to cleaner fuels and a super-low-carbon future, and that is being disrupted by the uncertainty of Brexit and Government policy that seeks to penalise cleaner diesel-powered vehicles. It is currently one of the great paradoxes that, in seeking to improve air quality, the Government have managed to reverse the progress achieved over many years in reducing carbon dioxide emissions. As Mike Hawes, the chief executive of the SMMT, put it:

“The industry shares Government’s vision of a low-carbon future and is investing to get us there, but we can’t do it overnight;
nor can we do it alone. The anti-diesel agenda has set back progress on climate change, while electric vehicle demand remains disappointingly low amid consumer concerns around charging infrastructure availability and affordability.

To accelerate fleet renewal, motorists must have the confidence to invest in the cleanest cars for their needs, however they are powered. A consistent approach to incentives and tax and greater investment in charging infrastructure will be critical. Now more than ever, we need a strategy that allows manufacturers time to invest, innovate and sell competitively, and which gives consumers every incentive to adapt.”

That is all the industry seeks: a controlled, orderly, managed transition from one system to the other. Regarding Brexit, it simply wants both clarity and certainty urgently.

Many are calling on the Government to act now to reduce the effects of diesel taxation on the newest, cleanest diesel vehicles and amend the carbon dioxide bands to reduce the impact of new emissions standards on consumer vehicle excise duty. Failure to do so will threaten the future success and sustainability of businesses and the significant contribution that the sector makes to jobs and the UK economy. The orderly, managed transition I described is essential to enable the manufacturers to use their revenues today to invest in our tomorrow. Without that support, the sector could be seriously damaged in its need to compete with the likes of China who have the scale and state backing to invest in newer technologies.

We have grown used to having a successful industry that contributes greatly not just to our international trade but to our global manufacturing prestige. We would be fools not to support it.

Several hon. Members:


Photo of Peter Bone Peter Bone Conservative, Wellingborough

Order. The winding-up speeches must start at 10.30 am, and 10 Back Benchers are trying to catch my eye. It is easy to work out: roughly three minutes each, please.

Photo of Gillian Keegan Gillian Keegan Conservative, Chichester 10:00 am, 22nd May 2018

It is a pleasure to serve under your chairmanship, Mr Bone, and I thank Matt Western for securing this important debate.

Job losses in the automotive industry are of great concern to everybody, particularly to those of us with car manufacturers in our constituencies. My constituency, Chichester, is home to Rolls-Royce, which is the single largest employer and employs more than 1,700 people in highly skilled, well-paid jobs. Nationally, the automotive industry provides 814,000 jobs, with an annual turnover of £77.5 billion—more than 8% of the UK’s manufacturing output. The car manufacturing industry is of great importance not just to Chichester, but to the whole country.

I began my working life in a car factory in Liverpool where I worked for seven years. When I first started work, the industry was introducing a supply chain mechanism called just-in-time. First developed in Japan, just-in-time manufacturing would revolutionise the industry and make UK car manufacturing competitive and able to compete effectively with the rest of the world. However, just-in-time manufacturing is logistically complex: components arrive from suppliers based all over the world on the same day that they are to be assembled into a car or a sub-assembly, thereby avoiding the need to store large quantities of inventory that add to overhead costs.

Over decades the automotive industry has created a highly integrated and fast-paced supply chain, and that has been facilitated in Europe through the free movement of goods within the customs union. A car comprised of parts from throughout Europe will be assembled in around 20 days from start to finish, but not a screw will have been made before those 20 days. A network of suppliers based all over the world will be involved, and parts will sometimes cross borders several times before becoming a sub-assembly that is ready for final production. To put that in context, a crankshaft in a car manufactured in the UK will cross the English channel four times before being assembled into the final car.

The success of the supply chain network depends on many parts moving in a frictionless fashion. Imagine the effect that even a small delay at customs will have. I am probably one of the few Members of Parliament who have spent days sitting in customs, desperately waiting for parts to be released, to dash them back to a car factory where a line of workers are sitting eagerly waiting for work. Stopping a line in the manufacturing business is a disaster—it means all the cost, none of the production, and a knock-on delay for other plant production in future. To say it is a costly experience is an understatement.

Such delays make car manufacturing uncompetitive and would certainly lead to job losses. Car manufacturers will not risk that happening, and instead they will have to build warehouses to house stock. That will effectively set the industry back years, sending it back to the 1980s. What effect will that have on our roads? Lorries currently pass through customs in under two minutes, but if that time is doubled, it will have a huge impact on our ports and the surrounding roads. We must be innovative when we implement new customs arrangements and utilise technology to ensure there are no hold-ups at crossing points. I am pleased that the Government are aiming to ensure that crossing points are as frictionless as possible, but we must ensure we get it right.

The size of the UK’s car manufacturing industry is impressive, but we cannot take it for granted. Every new model is highly competitive, because a number of car plants located around the world will have similar capabilities but different labour rates and market conditions. As we leave the EU, the UK must remain competitive because increasing pull factors to other locations will seek to draw investment away from our shores. Thus far the industry has shown its support by investing further in the UK, and since 2010, jobs in car companies have increased by nearly 30%. If we continue to prioritise friction-free customs arrangements and continued close co-operation with the EU on rules of origin, harmonised standards and type approvals, I am optimistic that the automotive industry will continue to thrive and grow.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 10:04 am, 22nd May 2018

I congratulate Matt Western on securing this debate. I fully support his goal of highlighting the need to support the car manufacturing industry, since it props up so many local economies in many ways.

The manufacturing base across the entire United Kingdom is important, but it is particularly important in Northern Ireland because of Bombardier, which employs some 4,000 people in the manufacture of aeroplanes. Bombardier is an essential primary and secondary employer in my constituency, as well as in neighbouring constituencies. It represents about 10% of our total exports and 40% of direct manufacturing jobs in Belfast, and its impact on wider manufacturing and the supply chain is felt across Northern Ireland. Investment in Bombardier is an investment not simply in job security but in local spending power. The hon. Gentleman made that point in his speech, and we understand it only too well.

County Antrim, which borders my constituency, is home to Wrightbus, which is a world-class bus manufacturer. It is increasingly recognised as one of Europe’s leading providers of passenger transport solutions, having established a reputation built on a foundation of high-quality design and world-class engineering. Many of the buses in London today come from Wrightbus in North Antrim, and people can enjoy their very good finish. The company offers the largest portfolio of vehicles in the UK, covering midi, maxi, full-size, double-deck, articulated and hybrid-electric categories—no one would have thought there were so many kinds of buses, but there are. The widest range of chassis has elevated Wrightbus to being the largest independent manufacturer in the United Kingdom. I have done my duty to my hon. Friend and colleague Ian Paisley by highlighting that tremendous manufacturer in his constituency and the jobs that it creates, not only in North Antrim but across Northern Ireland because people travel to take advantage of those jobs.

The importance of such industries to the Northern Ireland economy cannot be overstated. Indeed, the manufacturing industry—with special reference to the motor manufacturing industry—was worth 25% more in 2017 than it was in 2007, although growth appears to have levelled off in the past year. According to Library papers, the UK motor vehicle manufacturing industry contributed £15.2 billion to the economy in 2017. That was 0.8% of total output, and 8.1% of manufacturing output—those are very important figures—and it employed 162,000 people across the United Kingdom of Great Britain and Northern Ireland.

I am conscious of the time, Mr Bone, and I want to ensure that other Members get to speak. In conclusion, therefore, there is capacity for more growth, but we have to speculate to accumulate. The industry needs support to thrive and—much like our industry at home—the dividend to the local economy is incredibly valuable. It is not enough to wait until the industry is on its knees; we must invest and support, and ensure that skills are taught for long-term survival. Most importantly, we must ensure in the post-Brexit era that we facilitate the industry to thrive globally. That can be done only by working in partnership and by doing all we can to help the industry foresee and meet the needs of a growing global market.

Photo of Kirstene Hair Kirstene Hair Conservative, Angus 10:07 am, 22nd May 2018

It is a pleasure to serve under your chairmanship, Mr Bone, and I thank Matt Western for securing this worthy debate on an issue that I know is important to his constituents. I declare an interest as chair of the all-party group for fair fuel for UK motorists and UK hauliers.

The British automotive industry has been the cornerstone of our economy and engineering sector for decades, yet it has known hardship in previous years. In 2000, the amount added to the economy by the motoring industry stood at £9.2 billion, but following the global economic recession, production slowed to £5.9 billion. Despite that, I am delighted to note that last year £15.2 billion was added to the economy by car manufacturing, and the number of those employed in that sector has also seen sustained growth.

Since 2010, employment has risen by nearly 30%, from 126,000 to 162,000 jobs. To put that in perspective, those involved in automotive construction account for approximately 8.1% of all manufacturing jobs in the UK, and according to recent research by Lloyds bank, there is potential for that figure to rise even further. The UK Government are keen to see similar progress on the environment and engagement with alternative fuels, which is one of the most pressing topics facing car manufacturers. As set out in our manifesto, we want a ban on the sale of new petrol and diesel cars by 2040, with the majority of cars and vans on the road in 2050 producing zero emissions. Although that is a considerable step, that commitment does not mean that we are turning our back on existing firms or on what has been achieved in the past. Instead, we wish to work with those organisations and guide them towards new and emerging technological avenues. I am sure all Members will agree on the vital need for such a change for the sake of the environment, but it would be wrong to present it as instantaneous.

My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy made the point recently:

“There’s a place for diesel vehicles and will be for some time to come.”

I hope the Minister will clarify that that means we can do more to improve environmental standards with respect to diesel and electric cars and that we will produce new systems that will have a starkly different impact on the environment but will still be familiar and accommodate the specific wishes of the user. The need for clarity on the issue is paramount. We have already seen the detrimental impact of the demonisation of certain sectors in favour of others. What follows is a loss of confidence, a decline in production and the loss of jobs. As we move forward, it must be clear that different fuels are supported equally in the UK. Only by promoting a nuanced manufacturing industry that prioritises development over exclusion will it be possible to encourage further foreign investment and allow the industry to thrive.

Photo of Colleen Fletcher Colleen Fletcher Opposition Whip (Commons) 10:11 am, 22nd May 2018

I congratulate my hon. Friend Matt Western on securing this debate on a sector that is so important to the city that I represent and the wider region. The automotive industry is at the heart of my home town of Coventry. The British motor industry was born there—the names originating there include Jaguar, Rover, Triumph and Armstrong Siddeley. The first ever British car was built in Coventry more than 120 years ago. The industry gave Coventry people much needed prosperity, and my city thrived because of that.

Coventry now boasts two world-class universities specialising in automation: Coventry University and the University of Warwick, with its Warwick Manufacturing Group. Coventry University is home to the National Transport Design Centre. The National Automotive Innovation Centre, a partnership between Jaguar Land Rover, Tata Motors European Technical Centre, WMG and the University of Warwick, is set to open this summer. It will be the largest automotive R&D facility in Europe and shows a commitment by the university and industry giants to continue Coventry’s history as the UK’s motor city. Jaguar Land Rover is now firmly entrenched in the makeup of the city, with the firm’s headquarters at Whitley. Recently JLR even declared its intention to make Coventry the heart of its large-scale battery and electric vehicle production plans. JLR brings jobs and security to my city, as it does for the wider west midlands. Its success and Coventry’s fortunes are inextricably tied.

With those things in mind, I share my hon. Friend’s desire to protect the UK automotive industry at all costs. The UK’s departure from the EU presents new challenges to the sector, which Jaguar Land Rover has openly stated may be detrimental to business. Uncertainty is bad for business. It is vital to offer safeguards to companies such as JLR and universities such as Coventry and Warwick to maintain the UK’s place in the industry. Yet protecting Coventry’s automotive status is vital not just for companies and universities but for employees. There have already been job losses in the west midlands, and people need guarantees, too.

I am thrilled to represent a city with a record as impressive as the one I have set out. I cannot wait to see the future developments in which Coventry will lead. I hope that the Minister will tell us the Government’s plans to help to protect the automotive industry and the jobs that it supports and to ensure that the sector thrives, in Coventry and more widely in the UK.

Photo of Justin Madders Justin Madders Shadow Minister (Health and Social Care) 10:13 am, 22nd May 2018

It is a pleasure to serve under your chairmanship, Mr Bone. I congratulate my hon. Friend Matt Western on securing the debate. As we have heard from him and other hon. Members the car industry is of strategic national importance. I am sure the Minister has heard that message loud and clear, so I will take the opportunity to focus on the issues facing the Vauxhall car plant in my constituency, which has lost nearly half its workforce in the past 12 months.

There is virtually no one in Ellesmere Port who does not have some connection with the plant. At its height, it employed about 12,000 people, but sadly, with recent job losses it employs only around a tenth of that number now. It is still a substantial number, however, and it does not take account of the many people employed in the supply chain and associated industries—or of the potential for much greater numbers if we were to increase from single-shift production again. The plant remains a big part of the local economy. Recent job losses there have meant our going against the national trend, with unemployment in the constituency shooting up in the past few months. Every job lost is of course an individual tragedy, but my job now, and the Government’s job, is to make sure that those jobs that remain are protected and built upon, because they are exactly the sort of jobs I want to see as a central component of our future: highly skilled permanent jobs in the manufacture of something that is a source of national and local pride.

Whatever our feelings about history and the pride that the plant generates, we cannot expect sentimentality from the new owner, the PSA Group, which has consistently said that each plant will be judged on its efficiency. If there is truly a level playing field I welcome that. As we have heard, there are many things that we can do with respect to business rates and energy costs, for example, that can help. I know that the Minister has had a quite long list of the things that we would like to happen. However, one factor may make the competition unfair altogether and render all the other good work that is done academic—and that is Brexit. We have a clear message that the current uncertainty is delaying investment decisions by the parent company. Some might say that that is a ready-made excuse not to invest; but I do not want us to be in the business of providing people with excuses. I want us to be in the business of providing people with jobs. It is important to recognise that the automotive sector is one of our most vulnerable sectors, and we need to do everything possible now, as a priority, to safeguard jobs and investment. A bespoke trade deal for the automotive sector should be considered. After all, if it has been looked at for other areas, why not this one?

Vauxhall Motors has enjoyed half a century of production in Ellesmere Port. If that is taken away, a huge chunk of our identity will go with it, but it does not have to be that way. As hon. Members have said, the Government have a big challenge ahead, but I believe there are solutions, and we have heard some of them. On behalf of everyone in the constituency, I express a sincere wish that between us we can all rise to that challenge.

Photo of Sharon Hodgson Sharon Hodgson Shadow Minister (Public Health) 10:16 am, 22nd May 2018

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend Matt Western for securing this important debate.

As many of my colleagues will know, Nissan has a large plant in my constituency, which employs about 7,000 people directly and 28,000 in the UK supply chain. It contributes significantly to the local and national economy. Nissan recently announced job losses at the plant, which was of course hugely disappointing news. Many people will have been concerned about the announcement, but I understand from speaking to Nissan at the time that, although it was unfortunate, the decision was due to anticipated drops in demand for vehicles currently under production. Based on business projections, it is expected that making the changes will allow for increased production of newer models in the future that will therefore provide more jobs in the long term.

With the uncertainty around the diesel industry because of Brexit, the move towards electric vehicles and drops in consumer confidence after the emissions scandal, it is easy to see how any loss of jobs can be seen as part of a wider concern. The motor vehicle manufacturing industry provided 7% of all UK manufacturing jobs in 2016, and it is only right to follow any changes closely and act to prevent further losses. With those points in mind, I want to talk about the Government’s target to ban all sales of new petrol and diesel cars by 2040.

The UK is in the grip of an air pollution crisis—the Environment Secretary was talking about it this morning—with pollutants responsible for 40,000 premature deaths a year in the UK. I see two problems with the target however. First, it is not ambitious enough to deal with the environmental issue with sufficient urgency or to ensure that the UK maintains its leadership on electric vehicles. Research shows that bringing the target forward by 10 years could nearly halve UK oil imports, support a larger number of jobs overall in the automotive sector and reduce total cumulative carbon dioxide emissions in a shorter period. Is the Minister’s Department currently considering bringing the target forward?

Secondly, I do not see how consumers are being assisted in the industry-wide move away from more polluting cars and, ultimately, towards electric vehicles. Reaching any target will require a seismic change in consumer behaviour. In 2009, the Labour Government introduced a vehicle scrappage scheme designed to help the motor industry through the recession following the global financial crisis. It was co-funded by the Government and the car industry, and 400,000 claims were submitted. If we are now to expect consumers to move away from older and more polluting diesel and petrol vehicles, often at some expense, is it not right that the Government should assist them to do so, particularly when we consider that, historically, many consumers were encouraged to purchase diesel vehicles?

I had a lot more to say, but I shall leave my remarks there, to give other Members their moment in the sun.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield 10:19 am, 22nd May 2018

I start by declaring an interest; I chair the all-party parliamentary motor group, which receives support from the Society of Motor Manufacturers and Traders, the Motorsport Industry Association and the RAC Foundation. I congratulate my hon. Friend Matt Western on his comprehensive tour of the challenges facing the UK’s automotive industry and his explanation of how this industry literally drives economic growth in this country.

In the short time I have available, I will focus on two areas, both of which my hon. Friend covered: first, the challenges of Brexit, and secondly the transition away from petrol and diesel production. As he said, when we have over 1,000 trucks coming in across the channel every day, delivering £35 million worth of parts to build 6,600 cars and 9,800 engines every single day, most of which then go back to the European Union by similar means, achieving frictionless trade post Brexit is vital to this industry. I simply do not see a way of doing that except by continued membership of a customs union.

My hon. Friend also mentioned regulatory alignment. Keeping the Vehicle Certification Agency’s ability to certify cars as safe for sale throughout the EU is key to the industry in this country. I ask the Minister what negotiations are going on to ensure that that is the case, and how he feels that could be achieved except through as close as possible a relationship with the single market.

On skills, a key part of the integration of the industry internationally, particularly across Europe, is the ability to transfer skills from one country to another. Frankly, the UK’s visa requirements all too often get in the way of that, but the integration is at its closest with our European partners. I ask the Minister what negotiations are going on to ensure that, post Brexit, it will still be possible to transfer those skills between the UK automotive industry and partners on the other side of the channel.

Very briefly, in relation to the transition away from petrol and diesel, there are three challenges: anxiety over the range of electric vehicles, price and infrastructure. I hope that the Automated and Electric Vehicles Bill will help to improve infrastructure, but I must say to the Minister that more needs to be done to ensure and to mandate interoperability of charge points. It makes no more sense to have differences on that than to have different domestic plugs depending on whether someone has a Dyson or a Hoover vacuum cleaner. What is being done to ensure that we can achieve on-street charging? In particular, what negotiations and what work are being undertaken to try to enable wireless charging? What are the Government doing to ensure that there is infrastructure in place not just for conventional electric vehicles, but for hydrogen-powered vehicles in the future?

My last point is on the transition. As my hon. Friend said, there is something wrong when the cleanest diesels are being hit the hardest. Of course, the UK’s air quality crisis means there must be a trend away from petrol and diesel in the future, but the real challenge is to get the oldest and most polluting diesels off our roads, and we will not do that by hitting the cleanest ones. What are the Government’s ideas for getting those older, more polluting diesels off the road? At the moment, the signals being sent out by Government are confused.

Photo of Madeleine Moon Madeleine Moon Chair, Defence Sub-Committee, Chair, Defence Sub-Committee 10:24 am, 22nd May 2018

This is a very personal debate for me, because my Ford engine plant employs over 1,760 people and has 12,000 jobs associated with it. The plant covers the equivalent of 17 rugby pitches—we view size in that way in Wales. It produces one of five different engines every 30 seconds, and those go into seven different Ford models. Leaving the customs union means that the engines sent to European assembly plants will attract a 4.5% tariff, and it will inevitably lead to increased cost to consumers and loss of sales, leading to further loss of jobs.

Those of us who watch the automotive industry are concerned about the impact of Brexit and the confusion of Government policy on clean diesel. Changing diesel sales have not translated into petrol sales, and consumers are holding on to older products—cars and vans—for longer, slowing down air improvements. The Bridgend engine plant is a great example of the complex and integrated automotive supply chain across the EU.

There are a number of things we must be absolutely clear about. The Bridgend engine plant can be counted under originated content under the EU’s rules of origin. Components flow from the EU into Bridgend, and engines flow back. That must continue unimpeded. A frictionless customs regime is essential for us. Mass producers such as the car industry, as we have already heard, need the just-in-time delivery principle. A 15-minute delay to parts delivered just in time can cost over £850,000 a year. Storage of stock just increases customer costs, as the cost knock-on to the car manufacturer is passed on to the consumer. We need zero-tariff trade; that is a minimum requirement and should form the basis of any trade deal for the future.

We have already heard reference to minimum customs costs and delay in moving goods. Regulatory alignment—a prerequisite for minimising customs delays—is crucial in preventing cumulative cost and restricted customer choice as a result of trying to meet different standards. Ford would be especially impacted by a change of type approval if the VCA certification was no longer approved in the EU, and by CO2 targets if the UK was not included post 2020 in EU-wide calculations. Preferential trade with third countries, including Ford’s trade flow with Turkey, facilitated by the EU-Turkey customs union, and with South Africa through the EU-South Africa free trade agreement, is important to the European business.

I will end by saying that Bridgend has seen the loss of jobs in steel manufacturing. Bridgend has seen the loss of jobs in coal. We do not wish to see further devastation to the constituency from the loss of jobs in the automotive trade.

Photo of Jon Cruddas Jon Cruddas Labour, Dagenham and Rainham 10:27 am, 22nd May 2018

As has been mentioned, this sector has been one of Britain’s greatest manufacturing success stories, providing thousands of jobs and a major contribution to our country’s economic growth. The story of my own constituency’s past cannot be told without an understanding of the sector, dominated by Ford’s Dagenham plant, which at its height employed some 40,000 workers. Today, Dagenham’s two engine plants produce 1 million diesel engines annually—50% of Ford’s global diesel requirement —and provide over 3,000 jobs. Some 89% of those engines are exported. The total turnover stands at £1.75 billion.

However, investment in Britain’s car industry has halved during the past two years. Brexit concerns and the demonization of diesel appear to be the two biggest challenges. The crisis of confidence in diesel vehicles and diesel technology was triggered by Volkswagen’s emissions scandal, but the upshot has been damage to not just VW but the whole sector. I am not seeking to defend older diesel engines, which, in truth, are more polluting than their petrol counterparts. However, we must bring some nuance back into the debate. All diesel technology is being tarred with the same brush, despite the fact that state-of-the-art diesel technology is a vast improvement over its predecessors.

As has been mentioned, those dirtier engines will, ironically, be kept on the road longer if consumers are misinformed about the difference between diesel technologies. It is clean-diesel technology that is being invested in in Dagenham. Ford invested £490 million in developing clean, cutting-edge diesel technology in Dagenham in 2014. This new generation of clean engines meets the Euro 6 emissions standards and satisfies Transport for London’s ultra-low emission zone. Modern Euro 6 diesel cars are the cleanest in history; they capture 99% of particulates and emit 84% fewer oxides of nitrogen than in 2000—a point worth making on the day the Government publish their new clean air strategy.

To help the Dagenham plant to transition to future technologies, we need to provide stability today and in the near future. That can be done only by supporting modern diesel technology and production, yet diesel sales have fallen 37% since last year. Unfair criticism and a misunderstanding of the technology are threatening thousands of high-quality jobs in my constituency; plans in Dagenham for 150 new jobs in 2017-18 were shelved due to falling demand. The overall lack of clarity around modern diesel compared with older diesel is also hurting the environment. In 2017, carbon tailpipe emissions rose for the first time in two decades.

My overall point is simple: the Government have a role in restoring consumer confidence in new diesel technology. They have to begin to make the case for modern diesel and for British jobs. That can and needs to be done, regardless of the outcome of the Brexit negotiations.

Photo of Jack Dromey Jack Dromey Shadow Minister (Work and Pensions) (Pensions) 10:30 am, 22nd May 2018

I first pay tribute to the excellent presentation made by my hon. Friend Matt Western. I will speak about the human consequences of what will happen if the Government get this wrong.

Erdington is rich in talent, but is one of the poorest constituencies in the country. However, we are blessed with having the Jaguar plant in our midst. The industry has now become the jewel in the crown of British manufacturing. It has been transformed, but it is characterised by its troubled history and by tragedies. I remember working night and day back in 2005 with Tony Woodley to try to prevent the collapse of Rover, and I remember that awful Friday when the factory finally collapsed and 5,000 workers were made redundant. However, in 2009 we saw the establishment of the Automotive Council—the first great industrial strategy—and the scrappage scheme to save the industry from collapse. The basis was laid for a future to be built on.

In 2010, Tata Motors took over Jaguar Land Rover from Ford. It brought in two gifted German industrial managers, one of whom—chief executive Dr Ralf Speth—is still there to this day. We worked night and day with them to turn around a factory that was doomed to close and where there was a funereal atmosphere on the part of the workers. I will never forget that wonderful day in October 2010 when we stood outside the main gate and said that the factory that had built the Spitfire during the war and two generations of Jaguars after the war was safe for the next generation.

That transformed the lives of thousands of local workers. I will never forget Warren, who is a big bear of a man. I first met him at a jobs fair that we organised. Four years later, he was moving into a house in Edwards Road, just down from my constituency office. He called me over and told me about how he was buying this little Edwardian terraced house. He said how he had been in and out of work for 10 years before getting that apprenticeship, and was now in a job that he described as secure, well-paid work that he loved. He then turned to his partner and said, “I’m moving into the house of my dreams with the woman of my dreams.” He said that could never have happened had it not been for the success of Jaguar Land Rover.

Lives were transformed and progress was built on. I actually pay tribute to some of the things that the Government did by way of continuity of policy, such as with the Automotive Council; the focus on the industrial sector and the engine plant; the skills initiative; and investment in research and development. All of that was welcome. As a consequence, we saw the number of staff at the factory double from 1,400 when it faced closure in 2010 to 3,000, while GKN—the parts plant just up the road—increased its staff from 500 to 800. Thousands of local people were given the opportunities that Warren had.

However, we now face deep and growing difficulties. Some 1,000 workers are being laid off at the Solihull plant, while 240 workers have been transferred from the Jaguar plant to Solihull. Why? Because of the combination of utter confusion over diesel on the one hand—forgive me if I say this, but the Secretary of State for Environment, Food and Rural Affairs has grossly mishandled this situation and has sent the wrong message, having a serious impact on consumer confidence—and Brexit on the other.

I have only a short time remaining, so I will conclude. I wholeheartedly agree with the points made earlier. Hope emerges from despair. I once again see workers on production lines despairing and fearing for the future. Our fortunes are inextricably linked with those of the European Union—crucially, through the single market and the customs union. If we get it wrong over Brexit, this country will pay a very heavy price, and the people who will pay that price above all will be the workers in the automotive industry.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Before I call the spokesman for the Scottish National party, I am advised that the minute’s silence has been moved from 11.30 am to 2.30 pm.

Photo of Martin Docherty Martin Docherty Shadow SNP Spokesperson (Industries for the future) 10:34 am, 22nd May 2018

It is good, as always, to see you in the Chair, Mr Bone. I congratulate Matt Western on securing the debate. Critically, he highlighted the supply chain, which goes beyond the idea of the automotive industry and reaches every part of the industrial complex across the UK.

Jim Shannon, who is no longer in their place, mentioned the issues for Northern Ireland. In Scotland in 2016, there were 4,000 employees in the industry, representing 2% of manufacturing employees in Scotland and 2.5% of all motor vehicle manufacturing employees across the UK. It continues to be an important industry, for not only employment but the economy. The industry has seen a steady increase in output since 2010. In real terms, the motor manufacturing industry was worth 25% more in 2017 than in 2007, although growth appears to have levelled off in the last year.

However, as other Members have highlighted, we need to recognise that the sector is highly integrated with the rest of Europe, in both finished cars and component parts. For instance, the UK imported £13.95 billion-worth of vehicle engines and parts in 2017, 79% of which came from the European Union. From my perspective, if the UK Government continue with their desire to leave the customs union and single market, it will have a detrimental impact on the industry and will cost jobs.

That is why the industry has called for the UK Government to change their approach to Brexit and opt to remain in the single market and customs union, to facilitate trade and investment. I hope that the UK Government listen to those calls and take action to protect the sector’s close integration with the rest of Europe as they negotiate our leaving the European Union.

As the Scottish National party spokesperson for industries of the future, I welcome the Government’s announcement of the automotive sector deal as part of the industrial strategy, as that should boost investment in emerging technology and establish leadership in meeting future mobility and clean growth challenges. However, with countries such as Estonia and Singapore at an advanced stage of preparation, and with investment in infrastructure that will allow them to take advantage of industries of the future, there is a danger that the automotive industry, and many other industries across the UK, are unprepared for the inevitable advancement that will be made.

As the Member for West Dunbartonshire, I know only too well the impact of industrial policy that fails to meet the challenges of the modern age—the complete and utter collapse of the industrial complex. I would not wish that on any other Member. From my perspective, the UK Government must therefore step up and lead on the issues that put thousands of jobs at risk, which would have an immediate impact on local economies and feed into the larger economy.

Photo of Laura Pidcock Laura Pidcock Shadow Minister (Business, Energy and Industrial Strategy) (Labour) 10:37 am, 22nd May 2018

I congratulate my hon. Friend Matt Western on securing this important debate. He said that “the headwinds are strong and many” for the automotive sector. He went on to point out 16 issues, including business rates; energy costs; the move from older energies to renewables; the UK’s future trading relationship following our withdrawal from the EU; a freeze on recruitment in the industry; our leaving the customs union; huge uncertainty for businesses owing to a lack of certainty on the Government’s position on a future customs union; the potential shift of manufacturing to EU countries; the kind of regulatory framework that will exist following our withdrawal from the EU; added barriers to trade; the potential loss of tariff-free access; what will happen if we return to World Trade Organisation tariffs; and changes to rules of origin rules.

Other hon. Members then set out many more concerns, including about the impact on SMEs, which makes up 90% of the supply chain, and the complex EU-wide production web and the multiple border crossings needed for the production of a single car. They also spoke of dieselgate and the punitive measures currently levied on some of the cleanest diesel cars, and—crucially—of the lack of confidence for the car industry and its uncertainty over the Government’s position.

My hon. Friend the Member for Warwick and Leamington also talked of how the automotive industry represents an economic bellwether and how crucial it is for the west midlands and his constituency. My hon. Friend Colleen Fletcher talked about the automotive industry’s transformative effect on Coventry, including her constituency. My hon. Friend Justin Madders talked about the loss of almost half the jobs at the Vauxhall plant at Ellesmere Port. He repeatedly speaks up for his constituency. It was poignant to hear my hon. Friend Jack Dromey explain so eloquently how a job for Warren was about so much more than work. We know that, in every industry, it is about so much more; it is the lifeblood of a community.

It has been said many times that the automotive industry is one of the UK’s most successful sectors. It provides employment to more than 150,000 people across the UK and last year contributed £15.2 billion to the economy. There is no doubt that the continued success of the automotive sector is vital for workers and families across the UK and for the success of our economy as a whole, but worryingly it has been going through a challenging time.

Although there was an uplift in April, car sales plummeted in March by 15.7% compared with last year, and almost 2,000 job losses have been announced during the past six months. In January, despite all the assurances from the Government when PSA Group took over, Vauxhall announced 250 job losses, on top of the 400 lost last year, at its plant in Ellesmere Port, as my hon. Friend the Member for Ellesmere Port and Neston described. I pay tribute to him and to Unite the union for all the work that they did with PSA Group to protect as many jobs as possible for the future. In April, it was announced that Nissan would be cutting jobs in Sunderland, and last month Jaguar, the UK’s biggest car manufacturer—it employs 40,000 people—announced that it would be shedding 1,000 temporary contract workers in the west midlands.

Three reasons were listed for those cuts: low demand, with sales at Jaguar down by 26%; changes to tax on diesel cars; and the uncertainty caused by Brexit. Those three factors are all either wholly or partly within the Government’s control. They have complete control over the uncertainty on Brexit, or at least they would if they could sort out the Cabinet and it was not in so much chaos. They also have control over the confusion about taxation policy on diesel, but in recent months they have actually exacerbated it. Weak demand in the economy could be mitigated by Government policy through, for example, encouraging wage growth and Government spending to increase national income.

As has been said, the Society of Motor Manufacturers and Traders has highlighted just how important trade with the EU is to the automotive sector. It says that 1,100 trucks from the EU deliver components worth £35 million to UK car and engine plants every single day. The complex cross-border supply chains depend, crucially, on the free and frictionless movement of goods. Manufacturers are very concerned about that freedom and those frictionless borders being disrupted.

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

It has been one year, 10 months and 30 days since the UK voted to leave the European Union. Does my hon. Friend agree that the Government have therefore had more than enough time to sort out their negotiating position on the customs union, considering how important it is?

Photo of Laura Pidcock Laura Pidcock Shadow Minister (Business, Energy and Industrial Strategy) (Labour)

That is right. I have outlined previously that perhaps some of the confusion and slowness in the process is due to the fact that an initial set of negotiations has to be carried out with two or three Cabinet members before negotiations with the EU can take place.

The SMMT says that

“neither option currently being considered by government...would provide the frictionless movement of goods that UK automotive needs to maintain its competitiveness and productivity.”

It is right that the Labour party has called for the Government to negotiate a new comprehensive EU-UK customs union covering all goods. That is the best way to ensure that there are no tariffs or customs checks within Europe, to support jobs, particularly the 2.1 million UK manufacturing jobs, and to help to avoid, crucially, the need for a hard border in Northern Ireland. It would be very helpful if the Minister could use his closing remarks to set out how the Government will ensure the future security of the automotive industry and those employed in it, going beyond the bespoke assurances to the likes of Nissan and Peugeot. Those were important, but we need more than that.

The automotive industry in the UK is a great success story. We have heard a tour de force in defence of the industry from all hon. Members in the Chamber, but it is currently under huge pressure, and sadly that shows through in the increasingly frequent announcements about job losses and in sales figures. It is incumbent on the Government to work with businesses, industry bodies and trade unions and listen to them when they express very clearly that the Government should prioritise a customs arrangement that removes the risk of tariffs being imposed. We must, as an imperative, seek to protect workers’ jobs and secure the future success of the industry as a whole, and I would be grateful if the Minister could now set out how he intends to do that.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I am very grateful to the 10 Back-Bench Members who have spoken and the Opposition Front-Bench spokesmen for keeping their comments short—I know how difficult that is—to give the Minister the chance to reply fully to this excellent debate. I would just like to remind the Minister to leave a little time for the proposer of the debate to wind up.

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 10:45 am, 22nd May 2018

Thank you, Mr Bone, for the iron discipline that you have exerted on the Members of Parliament here today. It has worked, because I have the time that you originally said I would.

I commend Matt Western not just for bringing about the debate—he has always very eloquently represented his constituents who work in the automotive industry—but for his speech. I think that it was described by the shadow Minister, Laura Pidcock, as a tour de force, and it was. I agreed with a lot of the things that he said; I agreed with contributions from hon. Members on both sides of the Chamber. A lot of the views expressed are based on severe concern about the automotive industry. We all know how critical it is to our economy—specifically to the constituencies of hon. Members who have spoken today, but also to the economy generally.

I would like to put it on the record that the only comment that I could really object to—I do not take offence, because it is part of the political system to say these things—is that the Government do not really care about the industry or are not involved with it. I can say from personal experience that that is not true. The automotive industry is at the top of our list. As was well published in most of the press, my right hon. Friend the Secretary of State uses the automotive industry in the Cabinet as an example of the complexity of business within the European Union. There are well known examples of what happens to different parts. I saw one part in a car factory that had been in and out of the country seven times. Hon. Members, in their contributions today, gave similar examples.

In relation to communication with and listening to the industry, hon. Members should know that I meet, as does the Secretary of State, every Wednesday morning with the business representative organisations. The particularly relevant one here is the Engineering Employers Federation, which represents thousands of businesses up and down the country; many of them are involved with the automotive industry. Stephen Phipson, the director of EEF, may be known to hon. Members. He had worked in industry for most of his life and more recently had worked for the civil service in relation to trade. He has written a letter to one of the newspapers, explaining his recent visit to the Canadian-American border. He saw how complex, after many years, billions of dollars of expenditure and good will on both sides, movements across borders are even with electronic trading. A very important part of what we do in government is listening to people about that kind of thing.

I have made visits since I took on this portfolio, and I should say that I asked for the automotive industry to be part of my portfolio. I have not had constituency experience of it, but in terms of manufacturing and this kind of manufacturing investment, I realise, as does the Secretary of State, how important it is to the economy. I think that it is fair to say that I have met executives from nearly all the major manufacturers in this country. I have met senior Japanese executives from Toyota, for example. That was with the Secretary of State, who made very clear the critical importance of frictionless trade between this country and the countries in the European Union. I agree with the comment made today that this country is not a big enough market on its own to sustain a healthy automotive industry.

The population is 60 million. The demand for new cars in a good year could be between 1 million and 2 million, along with all the components. This is big business. These are very complex parts. It is not as it was when the car industry started. We have to be part of a larger market. In whatever way it is worked out, it has to enable companies to do business as they are now. That includes regulatory matters, the frictionless—or near frictionless—movement of goods and the ability to recruit necessary labour. On a recent visit to BMW’s Mini plant in Oxford, I saw—I may be wrong by 1% or 2%—that 21% or 22% of labour there was from the European Union. Fortunately for our economy, there is not a large number of unemployed people in the Oxford area and it is clear that that labour will have to come in, to work in a good career, in a fantastic company and in a fantastic factory.

I mention all that because the engagement aspect has not been communicated enough to hon. Members, but is a very important part of what we do. I believe that the interests of the automotive industry have been reflected in the negotiations. The shadow Minister made an eloquent speech, but she said that one of the delays has been a disagreement among the Cabinet on how this should be approached. That, however, is part of democracy. There are different views within the two major political parties. That is a legitimate part of democracy. I wish everyone agreed with me. They do not always, but I believe we will prevail. I had better make some progress. I spoke a lot on engagement with other companies and I have completely ignored the notes I made earlier, but I did feel that I should react to that.

There has been speculation today in the press that the decline in the diesel market has been caused by uncertain messaging. I think that it was Richard Burden who suggested that comments made by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs had been prejudicial to the diesel industry. It is important to note, however, what my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy said about this last week:

“Diesel cars have played an important part in reducing CO2 emissions from UK road transport. They can still play a valuable role in further reducing CO2 emissions during the transition to zero emission vehicles.”

We have stated that we will end the sale of new conventional petrol and diesel cars and vans by 2040. That is a general European-wide policy. But we will shortly publish the Government’s “Road to Zero” strategy, which will set out the gradual steps that we will take over the coming years to deliver our mission. The mission is for every car and van in the UK to be effectively zero emission by 2040. I think that will prove to be significantly beneficial to the UK car manufacturing industry.

Photo of Richard Burden Richard Burden Labour, Birmingham, Northfield

Consumer incentives will have to be part of the package that we hope will incentivise the shift towards zero emissions. The Government have scaled back both the plug-in car grant and the grant available for the home charging of electric vehicles. Does that not send out a confused signal, if we are trying to encourage people to make that shift?

Photo of Richard Harrington Richard Harrington Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

One of the issues is not reducing the amount of grants, but where the grants should go, which I am happy to discuss separately with the hon. Gentleman, as I need to make progress due to lack of time. There are questions: for example, should hybrid cars receive the same grant as all electric cars? I would be delighted to meet him to talk this through, formally or informally.

I want to stress the importance that the automotive industry has to us with regard to the future. My hon. Friend Gillian Keegan, while stressing frictionless trade, mentioned Rolls-Royce in her constituency and how it might appear as a small blob on a map compared to vast production, but it is critically important to the country and the local economy. I would be happy to accept her kind invitation to visit with her.

Investment generally in the UK auto industry is important to us. The industrial strategy and landmark automotive sector deal show how the Government can work with industry at the forefront of new technologies, to ensure that we remain the destination of choice for future investment decisions. There was good news, which hon. Members have mentioned, about the Luton plant with the Vivaro vans. Toyota announced that it will build the next generation Auris in Derbyshire. Those decisions are not to be sneered at, but are important. While I accept that decisions are made over a long period, I think that 10-year decisions for any significant investments are also important, but they can be pulled. Like any decisions, a company can decide to do that at the last minute for whatever reason it wants—for example, if it is short of money or if there is uncertainty in the market or points are raised about Brexit. Although they are long-term decisions, they are not decisions until they are finally made. BMW’s investment in the electric Mini and Nissan’s investment in Sunderland mean that since 2016, this country has won every single competitive model allocation decision by major car manufacturers. That does not mean we can take it for granted.

I would like to speak for an hour on the EU exit issue. I cannot, however, due to your quite rightly ruthless chairing, Mr Bone. The Government have reached an agreement on the terms of the implementation period, but we have to plan for all scenarios. I have a lot of confidence that we will leave with a deal and that a no-deal scenario in March 2019, which I think would be disastrous for the automotive industry—I am happy for that to be on record and will defend it to anybody—is significantly less likely. I hope that it is totally unlikely. I hope that it does not happen and I believe that it will not happen. There needs to be a competitive market as part of a European-wide industry. It has been a huge success. It was Mrs Thatcher who persuaded many of the Japanese firms to invest here, because of the market that they would be involved in. Whatever hon. Members’ different views about Mrs Thatcher are, I think that they will all agree that that has been a good thing for the country.

Our vision for the UK is clear. We are seeking a comprehensive solution, which includes most of the things that the industry wants, such as vehicle standards, one series of approvals and simple, frictionless movement for parts and labour, where it is required in the industry. We are pleased that the Government are producing a White Paper, which will set out in detail the UK’s position on a future relationship. I think that it will be significant and show the exact terms of the relationship we are seeking with the EU and our preferred option for the future customs relationship, providing detail on precisely these issues, such as tariffs, rules of origin and mutual recognition, which are important to the industry.

I am happy to take up this discussion afterwards. I am meeting Justin Madders and others later today, and I am happy to meet any hon. Member to talk in more detail about this complex issue. In conclusion, hon. Members should know how strong the automotive sector is for us. We are a strong manufacturing nation. I believe that we will be a lot stronger. I thank everyone for their attention today.

Photo of Matt Western Matt Western Labour, Warwick and Leamington 10:58 am, 22nd May 2018

I thank all hon. Members who have contributed to this wide, but clear and focused debate on such an important industry. This industry has been a phenomenal success for the UK and we should all be proud of it, but it is being handicapped. We have heard from around the Chamber how the industry faces great challenges, such as clarity and direction over Brexit and the transformation to cleaner energy. On both challenges, it is within the Government’s gift to set a policy to assist the industry—not necessarily to advantage the industry, but certainly not to disadvantage it as at present.

The industry has been extremely competitive, but it is being made uncompetitive as a result of contradictory policies from the Government, particularly the decisions of the Chancellor to further penalise a product that is critical to an orderly transition to a zero-carbon future, while achieving the international climate change obligations and reducing CO2. I simply urge the Minister to revisit both those areas urgently. Whether it is diesel or the transition, we are hampering and damaging the most crucial manufacturing industry in this country.

Motion lapsed (Standing Order No. 10(6)).