Urgent question (Commons) on Vauxhall/Opel: Proposed Takeover - Feb 20

Justin Madders (Ellesmere Port and Neston) (Lab) 

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the proposed takeover of Vauxhall and Opel by PSA.

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

Vauxhall is one of our oldest and most valued motor manufacturers. It has been making cars in Britain for 113 years and has been owned for the last 92 years by an overseas investor, General Motors. There are over 40,000 people employed directly by GM or in Vauxhall’s retail or supply chain in this country. Last Tuesday, news emerged that GM was in discussions with French company PSA about the future of GM’s European operations.

I spoke to the president of GM by telephone that afternoon and communicated the importance we attach to Vauxhall’s presence in the UK and to its workforce. I am grateful to Mr Ammann for travelling to meet me in my office last Thursday morning. In our meeting, he told me that no agreement with PSA had been reached and discussions were ongoing, that he shared my assessment of the success of the Vauxhall plants in Britain and the Vauxhall brand, and that GM’s intention was that any deal should be about building on the success of these operations, rather than seeking to rationalise them.

Following my meeting with GM, I travelled to Paris to meet my counterpart in the French Government, the Industry Minister, and following those discussions I met with PSA board members for two hours later on Thursday night. I emphasised once again the importance I attach to the continuing success of Vauxhall in Britain and the recognition of its workforce. The PSA executives said that they, too, greatly valued the Vauxhall brand and the commitment of its workforce, and that any deal would build on these strengths. They also emphasised that their operational approach in recent years has been not to engage in plant closures, but to focus on continuous improvements in plant performance. On behalf of the UK Government, I emphasised our commitment to securing continued mutually beneficial access to European markets, and our intention, as part of an ambitious industrial strategy, to enhance the competitiveness of the UK economy generally—including, of course, the automotive sector. Earlier today, my Minister of State spoke to his German counterpart.

We remain in close contact with GM, PSA and the French and German Governments, and I look forward to meeting Carlos Tavares, PSA chief executive, later this week. Of course, I have also met, and will continue to meet, with the trade unions and Members of this House with constituency interests. I will do everything I can at all times to secure the best possible future for Vauxhall and its workforce. Our unity of purpose in seeking this good future should be a source of strength in the House, and I will keep the House informed at every opportunity.

Justin Madders 

I thank the Secretary of State for his response and for the helpful way in which he has kept me and other interested parties informed as matters have unfolded. As he said, not only are thousands employed directly at the plants in Ellesmere Port and Luton, but there are tens of thousands of other people working in the associated supply chain and sales network.

I want to make it clear that Vauxhall is a British success story. The plants in Ellesmere Port and Luton benefit from dedicated and highly skilled staff, who are among the most efficient anywhere in Europe. If this takeover does go ahead, we need to get the message out that risking the closure of either facility would be a retrograde step not just for the UK economy, but also for the new owners. Will the Secretary of State confirm that the Government stand ready to use all the tools at their disposal to safeguard British jobs at Vauxhall?

Of course, this is a worrying time for everyone affected, but it is not a new experience. There have been threats to the plants in the past, but they have been seen off by industry-leading collaborations between unions, workforce, management and Government. I want that to carry on, so can the Secretary of State confirm that he will continue to work closely with everybody at every stage?

Although it would be an over-simplification to characterise the proposed deal as being entirely down to Brexit, there are understandable concerns about Brexit’s potential impact, particularly if tariffs were imposed. Will the Secretary of State ensure that the future of the automotive sector is put front and centre of our negotiations and that a redline will be that there will be no deal that imposes tariffs—not just on the finished product, but on components in the supply chain?

We are very proud of our automotive sector in Ellesmere Port and Neston, but we know we cannot take it for granted. I will do everything I possibly can to fight for the future of Vauxhall, and I expect nothing less from the Government.

Greg Clark 

I commend the hon. Gentleman, and I am grateful to him for giving us the opportunity to update the House on these matters. I completely agree with him about the importance and the success of the workforce at both Ellesmere Port, his constituency plant, and Luton, and of course the supply chain, the retail network across the country and the call centre and customer service sector.

Every part of Britain has a stake in Vauxhall, so I completely agree with the hon. Gentleman: we will do everything we can. My personal commitment, and the commitment of this Government, will be unbounded to make sure that the future, building on the success of the plant in the hon. Gentleman’s constituency and the workforce, will be maintained. That is my purpose, and I am grateful for the hon. Gentleman’s support for that. I will of course work with all the groups, including the trade unions and the workforce, to make that case to the new owners, if new owners there are to be.

Andrew Selous (South West Bedfordshire) (Con) 

Vauxhall has been a huge name in Bedfordshire for over a century, and that tradition continues with the building of the excellent Vivaro van at the IBC plant in Luton. I want to see the Secretary of State doing everything he can to secure those jobs, but will he also say something about the pensioners in this country, many of whom are in my constituency and across Bedfordshire? They will be worried about the future of their pensions, so will he say a little bit about that issue as well as about the jobs?

Greg Clark 

Of course, the continued welfare of the pensioners is of great importance in any prospective takeover, and I have mentioned in my discussions with GM and with PSA how important it will be. No deal has been concluded yet, but both those organisations are well aware of the importance that I, and my hon. Friend the Member for South West Bedfordshire (Andrew Selous), attach to that matter.

Rebecca Long Bailey (Salford and Eccles) (Lab) 

I thank the Secretary of State for his response and my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) for his question. Vauxhall employs over 40,000 people in the UK, as the Secretary of State said, including 4,500 at its manufacturing plants in Ellesmere Port and Luton and tens of thousands in its retail and support arms and in the supply chain. It is, as we have heard, a great British success story.

I would like to raise a number of questions. First, the French Government own a 14% share in Peugeot, which has prompted many to suggest that any job cuts are likely to fall on Opel’s six plants in Germany, the UK and Spain. The German Government have already demanded that there must be no job or plant losses as a result of any deal, and German papers reported yesterday that PSA had pledged to continue operating all four of Opel’s German production sites. Will the Secretary of State tell us what action the Government are taking to obtain the same assurances for the UK? Will the Prime Minster demand that no jobs or plants will be lost when she meets the PSA chief executive?

Secondly, at the 2016 Conservative party conference, the Prime Minister stated:

“We are the party of workers”.

To make good that promise, will the Secretary of State confirm that he will demand equal treatment for UK workers, compared with workers in France and Germany, in any final deal package?

Thirdly, the UK’s automotive industry is dependent on the EU for sales and components. Nissan’s special deal provided assurances of unencumbered EU market access, more UK-based suppliers, and support for green vehicle research and development and for jobs and training. Can the Secretary of State confirm reports that PSA has been offered the same deal, and whether, in return, it has given an assurance that no UK jobs or plants will be lost? Is it not the case that all UK industries require certainty and stability? Would he agree that a haphazard and crisis-led approach is quite simply the very antithesis of an industrial strategy?

Greg Clark 

First, I welcome the hon. Lady to the Dispatch Box and congratulate her on her appointment. She will find that there is no one more prepared than I am to be active in supporting employment prospects in every constituency in the country, wherever they might be. In our discussions with industry, including the automotive industry, about overseas investment, there has been tremendous enthusiasm and warm encouragement for our industrial strategy. This is something that has been pursued in other countries for some time. I think the hon. Lady described our approach as haphazard and random—

Rebecca Long Bailey 

Haphazard and crisis-led.

Greg Clark 

Indeed. I am not sure that the hon. Lady, in speaking from her Front Bench, is in the best position to talk about that. She made some important points, however. She mentioned the fact that the French Government own a significant stake in PSA. That is why I felt it was important immediately to have a meeting with my French counterpart. That meeting was very constructive, and he recognised the importance of ensuring that the whole of Europe should be treated fairly in these discussions. We agreed to stay in close touch on that, and I was grateful to him for seeing me.

On the treatment of plants across Europe, one of the points that the PSA executives made to me is that, since the new management of PSA has been in place, they have taken pride that part of their strategy is not to close plants. The discussions are clearly continuing and no deal has been done, but I share the view of the hon. Lady, the hon. Member for Ellesmere Port and Neston (Justin Madders) and Members on both sides of the House: it is very important that our successful enterprises with successful workforces should be able to continue that success in the future.

As for questions about the European Union, many of GM’s operations in Europe are in Germany, which is not about to leave the European Union so this is not a Brexit-related transaction. I have said very clearly that our commitment, evidenced in black and white in our industrial strategy, is to build on our strengths in advanced manufacturing, including in the automotive sector. That is available to all players in the sector through the Automotive Council, and in our industrial strategy we mention electric vehicles, battery storage and training, which are important to all members of the sector and, as I began by saying, have attracted enthusiastic support from firms all over the world.

David Rutley (Macclesfield) (Con) 

I welcome my right hon. Friend’s characteristically speedy response to this new situation. Can he confirm that the UK automotive sector is not only integral and important to our industrial strategy but will play a vital role in shaping our future trade relationship with EU member states post-Brexit?

Greg Clark 

I agree with my hon. Friend. One of the strengths of our automotive sector is that it is particularly international. It benefits from and is strengthened by trade to and from not only the rest of Europe but the whole world. Vauxhall’s being owned by GM for such a long time is a reflection of the fact that the motor industry has long been international beyond Europe. The industry will be very prominent in our discussions.

Callum McCaig (Aberdeen South) (SNP) 

I congratulate the hon. Member for Ellesmere Port and Neston (Justin Madders) on securing this urgent question. I welcome the hon. Member for Salford and Eccles (Rebecca Long Bailey) to her Front-Bench position, and I look forward to working with her in that role.

Like every Member of this House, my party’s thoughts are with those affected at the plants in Ellesmere Port and Luton and with all those who work in the supply chain or for the company in other ways. I welcome that the Secretary of State has led from the front in his interactions with the French and others.

What assurances has the Secretary of State sought and/or received from the French Government or from PSA about the plants, employment and, in particular, the terms and conditions of employees and pensions? We cannot ignore the impact that Brexit might have on this issue. If there is direct competition between a German plant and a UK plant—regardless of the undoubted strength of UK plants—given that 75% of a UK plant’s components come from, and 80% of its exports go to, the single market, it will be at a comparative disadvantage with European counterparts.

Given that the Secretary of State has said that he will do everything he can at all times to rule out the hard Brexit that has been proposed, will he reassess single market membership? We can leave the EU, but we do not have to leave the single market, and staying in the single market would protect employees at Vauxhall and right across the economy.

Greg Clark 

I am grateful to the hon. Gentleman for his kind words. I thought it was important to have discussions immediately with both parties to the negotiations. It is fair to say that, as a deal has not been concluded and discussions are continuing, the prospective purchaser is clearly not in a position to give contractual guarantees. One of the important reasons for meeting was to have a clear understanding of the prospective purchaser’s purpose and to commit to having further meetings as the discussions continue—I will be having a further meeting later in the week. Of course, the conditions for workers and pensioners are uppermost in the discussions.

In the context of Brexit, I made it clear, as the Prime Minister did in her speech at Lancaster House, that we want to negotiate the best possible access to the single market, free of tariffs and bureaucratic impediments. It is also important to reflect on the fact that we have a very strong and successful domestic market, with Vauxhall having a particularly strong share of it. That was mentioned to me by both parties, GM and PSA; they are very aware of that, and we will emphasise it in the days and weeks ahead.

John Redwood (Wokingham) (Con) 

Are the Government considering their policy on when, why and how to intervene in mergers that could be damaging to British jobs and the public interest?

Greg Clark 

In the context of the Hinkley Point C decision, we said that we would come forward with measures to govern the critical national infrastructure regime. In addition, we have proposed some changes to our corporate governance regime, and we will be making suggestions as to how we can keep our merger regime up to date.

Mr Iain Wright (Hartlepool) (Lab) 

In an earlier answer, the Secretary of State said that this will not become entangled in Brexit, but the concern will be that the issue of this important company’s future in Britain will become collateral damage in wider negotiations and deals on Brexit. In the face of elections in France and Germany this year, does he think that nations will have to engage in an ever-rising bidding game in order to maintain production facilities in their countries? If so, what will he do for British manufacturing?

Greg Clark 

The hon. Gentleman should reflect a bit more positively on the success of Vauxhall in this country. The two plants we have been talking about are among the most efficient in Europe and, therefore, the world. So this is not about altruism; these are successful plants, which is a tribute to their workforce, and they are competitive. As I said a few moments ago, the other side of the equation is that the Vauxhall brand is a very successful one in this country. So we start from a position of strength and, as he would want, I will be vigorous in promoting those strengths and influencing the negotiations so that this excellent workforce can continue and go from strength to strength in the future.

Graham Evans (Weaver Vale) (Con) 

My right hon. Friend will be well aware of the importance of this plant to the Cheshire and greater Cheshire economy. Will he assure the House that he will ensure that PSA understands the skill and efficiency of the plant and its workforce?

Greg Clark 

I will indeed, and from my initial conversations I can say that I think that is well understood. It is matter of pride that our automotive industry in general and those two plants in particular are such high performers, and nobody will be more vigorous than me in reminding all parties to the transaction of that.

Tom Brake (Carshalton and Wallington) (LD) 

Does the Secretary of State believe that it will be much harder for companies that are looking at their integrated European operations to want to base themselves in the UK, because of the uncertainty surrounding our leaving the single market and the customs union? Does he agree that in those circumstances they are going to need some very attractive sweeteners? What sweeteners has he offered? Are those sweeteners also going to be available to the medium-priority and low-priority areas that the Government have identified, such as fisheries and chemicals, and steel and telecoms?

Greg Clark 

I would say to the right hon. Gentleman what I said to the Chair of the Select Committee: he should reflect on the competitiveness of our automotive industry. Companies choose to invest in Britain because we are a competitive place from which to do business, we have a skilled and flexible workforce, and we have fantastic research and development facilities. We have been absolutely clear in the industrial strategy consultation that these strengths will be extended so that we continue to be a beacon of success in this and other industries.

Mr Andrew Tyrie (Chichester) (Con) 

The Secretary of State has clearly made some reassuring noises to the firm. We need transparency on those, so will he now respond to the Treasury Committee request to publish the letter he sent to Nissan on 21 October giving reassurances to that company?

Greg Clark 

My right hon. Friend may not have noticed that, some time ago, I said that of course we would release the letter sent to Nissan at the time when it is no longer commercially confidential.

Ms Angela Eagle (Wallasey) (Lab) 

I commend the Secretary of State for his fast action in meeting all the parties. I represent people who work in the Ellesmere Port factory. We local MPs are all justifiably proud of the work that has been done there to keep the production process as one of the most efficient in the world. We bow to no one in the world when it comes to efficiency and productivity at the Ellesmere Port plant. Nevertheless, given that it is effectively much cheaper to get rid of British workers, because of the nature of employment rights in this country compared with those in France and Germany, what can the Secretary of State do to ensure that, when it comes to possible cost cutting, the equation is evened up so that we can support British production and British jobs?

Greg Clark 

Like the hon. Lady, I am proud of the performance of the two plants, as well as that of the other plants in our automotive sector. The PSA executives communicated to me that performance is their guide to strategy. The two plants have very effective performance, so I want and expect them to be major parts of the future of an expanded group, if the transaction proceeds.

Jeremy Lefroy (Stafford) (Con) 

I welcome my right hon. Friend’s action on this incredibly important issue of retaining the plants at Ellesmere Port and Luton. Most investment in motor manufacturing in this country comes from overseas, with the exception of Aston Martin and Triumph. What is my right hon. Friend doing to encourage British-based investment in motor manufacturing so that we do not always rely on overseas investment?

Greg Clark 

I am very proud that we attract the world’s best automotive companies and that they see Britain as a place to prosper and succeed, so I am always encouraging that level of investment. Of course, it is not only about the major manufacturers; the supply chain is increasingly important in all advanced manufacturing, including the automotive industry. We have an increasingly good record of attracting small and medium-sized businesses either to locate here from overseas, or to grow from the bottom up. My hon. Friend will know that our industrial strategy makes a great focal point of the opportunity to grow our supply chains.

Maria Eagle (Garston and Halewood) (Lab) 

The Secretary of State understands the importance of the plant at Ellesmere Port, and its suppliers and retailers, to the wider north-west’s automotive sector, which includes Jaguar Land Rover at Halewood. What will he do to ensure that we do not lose some of the essential skills, jobs and firms, and that the sector in the north-west does not shrink as a consequence of factors that are completely out of the control of the Government and the people who work at the Ellesmere Port plant?

Greg Clark 

The hon. Lady knows from the work that we have done together that it is possible to make a case for attracting investment and commitment. She is absolutely right that the plant is important, and not only to the north-west but to the whole country, if the dealership network is taken into account. My ambition, as is the case for the rest of advanced manufacturing, is for our automotive sector to be more successful and to employ more people in the future. That does not happen by accident; it will involve our being engaged with the sector and making sure that facilities for research and development and training establish our reputation as the go-to place in the world for motor manufacturing, as we are for other sectors. I will work with the hon. Lady and others, and I will be vigorous in making sure that that message is very loudly understood.

Seema Kennedy (South Ribble) (Con) 

Leyland in my constituency has a long and proud history as a part of the automotive sector. Will my right hon. Friend the Secretary of State tell the House what specific support for the automotive sector will be included in the industrial strategy?

Greg Clark 

The automotive sector has been one of our most successful sectors in recent years. That is partly due to the effective arrangements that have been put in place through the Automotive Council, whereby firms, including small and medium-sized suppliers, can work together to support each other. An example of that is the National Automotive Innovation Centre, which I visited recently, where new facilities are being made available not only for the majors, but for people with new ideas who are setting up new businesses. That can reinforce and continue the success of one of our most effective industrial sectors.

Alison McGovern (Wirral South) (Lab) 

A number of my constituents work for Vauxhall at Ellesmere Port and Unilever in Port Sunlight. If there are Members who think that everything in our economy is rosy, I invite them to come to Wirral South this weekend and say that. When it comes to the high-value manufacturing that the Secretary of State has talked about, does he realise the importance of the customs union, and has he made a great and important contribution to the Prime Minister’s strategy on Brexit with regard to keeping us inside the customs union?

Greg Clark 

The automotive sector, like others, trades across borders. That is one reason why the Prime Minister and I have been very clear that we need to be able to negotiate trading arrangements that maintain our access across those borders without tariffs and without bureaucratic impediments—that is clearly understood. Those negotiations have some way to go, but it is important to emphasise, as I and the Prime Minister have done, what our intention is.

Sir Desmond Swayne (New Forest West) (Con) 

What guarantees might General Motors USA be required to make to General Motors GB with respect to the pension deficit before any disposal can take place?

Greg Clark 

As my right hon. Friend knows, the independent Pensions Regulator is the arbiter of any changes to pension arrangements. It is absolutely right that such robust independence is in place. I emphasise that discussions are still continuing. No agreement has yet been reached but, as I have said to a number of colleagues across the House, the future of pensioners is very important to me, as it is to all Members.

Mr Pat McFadden (Wolverhampton South East) (Lab) 

I was involved in the discussions that took place the last time that GM considered selling its European brands in the wake of the financial crisis. At that time, we had a successful resolution, in that the company decided to retain the brands. The Secretary of State is right that Vauxhall is tremendously successful. The Astra and Corsa are among the top 10 best-selling cars in the UK, but those cars are made by a Europe-wide company that has a Europe-wide supply chain. In any of the discussions that he has had in the past week, have exchange rate movements over the past year been raised?

Greg Clark 

We have of course discussed all aspects of Brexit. One feature of the decisions that are being made about investment is the opportunity to locate more of the supply chain firms nearer to the production facilities. Across the board, it is important to emphasise our commitment to negotiating the best possible access to the single market, and also that the intrinsic competitiveness of the UK makes it attractive to overseas investors.

Mr Peter Bone (Wellingborough) (Con) 

If I were on a board of directors of a very successful vehicle manufacturing outlet in the fifth biggest economy in the world and that economy was about to leave the EU, I think that I would want to invest more in that facility and make sure that I did not put all my eggs in one basket. Does not the future for Vauxhall look rather good and not the reverse?

Greg Clark 

I agree with my hon. Friend that we have in Vauxhall a very successful firm that is well regarded in the domestic market and across the continent. It is building on the success that is in prospect, but it is important that, through the discussions, that is secured in the future arrangements of the firm.

Margaret Greenwood (Wirral West) (Lab) 

Many of the thousands of people employed at Vauxhall Ellesmere Port live in Wirral and they are understandably concerned about the future of their jobs following the announcement of PSA Group’s acquisition of Opel. Some 80% of the cars made at Vauxhall Ellesmere Port are exported directly to EU states, and 75% of the value of each car is imported. The Prime Minister is reported to have received a meeting request from the chief executive of the PSA Group, which Downing Street has said will take place

“in principle, subject to diary availability”.

Will the Secretary of State suggest that the Prime Minister makes a space in her diary as a matter of urgency?

Greg Clark 

I think that the hon. Lady started by saying that the deal has been agreed, so let me first say that the deal has not been done. Secondly, no one could be under any illusions as to the vigour of our response. Of course, the Prime Minister will need to find the time in her diary for a meeting, but we are keen to continue the close contact we have had.

Nigel Mills (Amber Valley) (Con) 

The various takeovers that were talked about over the weekend show the importance of having robust and enforceable rules on takeovers and mergers. When will the Government come forward with new policy so that we will know not only how we will handle takeovers when we leave the European Union, but how we can intervene in deals that we do not want to take place?

Greg Clark 

It is important to reflect on the context: our reputation as an open economy that attracts overseas investment is one of the foundations of our success. We need to maintain that success and reputation. We have said that we will bring forward proposals, as we will regarding corporate governance. We will do that in due course and I will update the House at that time.

Christian Matheson (City of Chester) (Lab) 

As a trade union official, I supported the management and workers at Ellesmere Port through new model bidding processes three times. Each time, they demonstrated themselves to be productive, efficient and flexible, and their plant to be profitable. Unfortunately, those attributes cut no ice with Peugeot, which has form in this area, as any Coventry Member will attest. May I suggest that the Secretary of State uses this opportunity to beef up his industrial strategy? I also suggest that any public procurement of motor vehicles, for example by police forces, local authorities and Government Departments, should involve only the purchase of cars from companies that build in the UK, and that those that choose not to build in the UK should not be considered?

Greg Clark 

Of course, I discussed with PSA the context of its closure of the Coventry plant. It was pointed out to me that the company has new management and a different approach was described. These are early stages, but that was a better message to receive than the alternative. However, like the hon. Gentleman, I want to ensure that it is reflected in practice. On procurement, it is obviously important that we get good value for money, and we have changed the procurement rules to take into account some of these wider impacts.

Craig Whittaker (Calder Valley) (Con) 

Opel has not made a profit in the EU since 1999, and Carlos Tavares, the chief executive of PSA, has a record of drastically reducing costs. What further tools does my right hon. Friend have in his armament to ensure that PSA does not move vehicle producing factories and the supply chain out of the UK?

Greg Clark 

The discussions are at an early stage. The leak of the discussions came out only in the middle of last week and I have had a number of meetings since then. I have been clear to the House that the successful operations in this country need to be maintained. The PSA side of the discussions has pointed out quite recently that Vauxhall is not yet its company to make contractual statements about, but the direction in which the discussions are going is clear. I will continue to be vigorous in extracting the best possible agreements about the future of Vauxhall here.

Jim Shannon (Strangford) (DUP) 

I welcome the Secretary of State’s statement and what he has said so far. It is clear that Vauxhall’s UK plants are run to a high standard, with above-normal efficiency ratings, so will the Secretary of State outline what support he will offer to ensure that the plants are retained—and, indeed, enhanced—and that jobs are secured during any takeover? What influence, including financial assistance, can the Government exert to help?

Greg Clark 

I am grateful to the hon. Gentleman for what he says. Again, I come back to the fact that Vauxhall’s UK operation is successful. It is efficient and effective, which is the reason, as with other car companies, why investments come to this country. We have had a successful programme of joint working with the automotive sector in areas such as research and development, and in training and upskilling the workforce. That programme continues and is available to any manufacturer that participates in the sector.