Commons statement on Nissan in Sunderland - Feb 4

With permission, Mr Speaker, I would like to make a statement about Nissan. The House should know the background to the decision that the company announced yesterday. In July 2016, the allocation decision for the next model of the Nissan Qashqai was about to be made, and it was set to be awarded to a European plant other than Sunderland.

 

Nissan had located in Sunderland in 1986, having been persuaded by Mrs Thatcher that the combination of British engineering excellence and tariff-free access to the European Union made Britain an ideal location. So it proved, and the Sunderland plant grew to be the largest car plant in the history of Britain. The firm invested nearly £3.7 billion in it, and it currently employs about 7,000 people, with approximately another 35,000 in the supply chain.

 

The prospect of losing easy access to the EU market was the principal concern of the company at the time. It was clear that if Sunderland lost the Qashqai, which accounted for over half its production, mostly for export, the medium and long-term prospects for a plant losing scale would be bleak. Determined not to see the 30-year success of the plant come to an end, we set out over the coming months a strong case for backing Sunderland that centred on four areas, all of which were about highlighting the success of, and our strategy for, the British motor industry.

 

First, we would continue our successful and long-standing support for the competitiveness of the automotive sector, which has been available to all firms for skills and training the local workforce and for innovation. The regional growth fund has supported over 30,000 companies—large, medium and small—since 2010, with £2.6 billion of public support. Some £335 million of that has been invested in the automotive sector via the regional growth fund since 2010. All proposals are assessed independently by the Industrial Development Advisory Board and are subject to UK and EU rules. In 2016, Nissan initially considered applying for a total of up to £80 million in support over nine years for skills training, research and development, and environmental improvements, and it was eventually awarded £61 million—around £7 million a year over nine years.

 

The second commitment was that we would work with the automotive sector to ensure that more of the supply chain could locate in the UK, in close proximity to manufacturing sites. Since 2016, as many hon. Members know, our automotive sector deal has established with the industry an ambitious programme to do just that.

 

The third was that we would make a strong commitment to research and development, particularly to the development of new battery technology and its deployment in connected and autonomous vehicles. Our joint industry-Government £1 billion advanced propulsion centre R&D programme, along with our £250 million Faraday challenge, is putting Britain at the leading edge of battery technology and manufacturing. We have introduced testbeds for autonomous vehicles across the country. Indeed, the longest autonomous car journey in the UK will take place in November this year from the Nissan site at Cranfield to its site in Sunderland, covering more than 200 miles on public roads.

 

Our fourth commitment was that, in our negotiations to leave the EU, we would always emphasise the strong common ground that exists between the UK and other EU member states and pursue a deal that could ensure free trade unencumbered by tariffs or other impediments.

 

These commitments proved persuasive, as they have subsequently for investments by Toyota at Burnaston, BMW Mini at Oxford and PSA at Luton. Indeed, every competitive allocation decision taken since 2016 in this industry has gone to Britain. Although the discussions had been around the Qashqai, Nissan proposed towards the end of the discussions to add a further model, currently produced only in Japan—the X-Trail—to Sunderland. On 27 October 2016, Nissan announced that both the Qashqai and the X-Trail would be built in Sunderland, securing the plant’s future and adding 741 new jobs.

 

Last Friday, I was informed by Nissan that following a global review of its capital investment, future capital was needed to accelerate the shift in Europe from conventional to lower-emission vehicles. The Qashqai and the Juke will in future have petrol and plug-in hybrid variants made in Sunderland, and as a result, more capital will be invested in Sunderland than was originally planned in 2016. However, this was accompanied by a decision to maintain Japan as the sole production location for the X-Trail model, rather than to establish a new production line in Europe. The consequence of this is that the existing jobs in Sunderland will be maintained by the increased investment, but that the 741 additional jobs that would have been created in Sunderland will not now be available. Nissan confirmed that production of the new Qashqai, Juke and Leaf will continue at Sunderland, and that the decision has no implications for the existing jobs at the plant.

 

Nissan also pointed out, as it is done consistently since 2016, that the risk of a no-deal Brexit was a source of damaging uncertainty. While I am pleased that the decision taken in 2016 to build the Qashqai and secure the Sunderland plant is unchanged, it is deeply disappointing to me and to the workforce that the extra jobs that would have come from the X-Trail will no longer be created. I told the House that I would publish the correspondence with Nissan at the time of its original decision, as soon as the company advised that it was no longer commercially sensitive. I have previously shared it with the then Chair of the Business, Energy and Industrial Strategy Committee, but I have now agreed with Nissan that it is reasonable to publish it in full today. Colleagues will see that it sets out exactly what I told the House in October 2016.

 

Grant support for training and development and for environmental improvements were applied for and approved by the Industrial Development Advisory Board on the basis that both the Qashqai and the X-Trail models would be built in Sunderland. Given yesterday’s announcement, if the company seeks to participate in those industry funding schemes—as I hope and expect it will—it will submit new applications in the standard way and undergo a process of independent assessment.

 

I am disappointed that the new jobs associated with the X-Trail will not now come to Sunderland, but I am pleased that the plant will benefit from substantial new investment in the existing models and that the decision to continue with the vital investment in the Qashqai, Leaf and Juke, and the jobs associated with them, is unaffected. These decisions were made on broader business grounds, but Nissan has commented on the need for us to come together to resolve the question of our future trading relationship with the EU. I believe that its advice should be listened to and acted upon, so that our automotive industry—which will undergo more change through innovation in the decade ahead than it has for most of the past century, in areas such as battery technology and artificial intelligence—can seize the opportunities for Britain to be a world leader in state-of-the-art car making, providing great jobs and careers for hundreds of thousands of people across our country during the years ahead. I commend this statement to the House.

Yesterday’s announcement by Nissan that it has reversed its decision to build the X-Trail at its Sunderland plant and move it to Japan instead is a bitter blow to the north-east, the automotive sector and Britain’s industrial strategy. Of course, Brexit was not the only reason for that, but it was pretty prominent in Nissan’s decision. To quote its initial statement,

 

“the continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future.”

 

The Secretary of State’s opposition to a no-deal Brexit is, of course, well known, but still the Government juggernaut chaos hurtles on. Even he must be suitably frightened today by the uncertainty being created by his Government’s negotiating strategy.

 

This week, Nissan has reversed commitments to invest in the UK. Last week, we saw that car production is down 9% to its lowest level in five years, and fresh investment in the sector halved in 2018, according to the Society of Motor Manufacturers and Traders.

 

When Nissan made the commitment to produce the X-Trail and Qashqai models in Sunderland, the Government provided certain assurances, as the Secretary of State has outlined. After the Government’s refusals to publish the letter, even in response to freedom of information requests, today we have finally seen a copy. The letter acknowledged the

 

“uncertainties as the UK prepares to leave the EU”,

 

and in particular the

 

“fear that potential future trade arrangements could affect the business case for…investments”,

 

and it promised that Nissan would not be “adversely affected”.

 

Although the letter made no firm commitment to a customs union or single market deal, there was a pretty strong assurance that manufacturers would still be able to trade without barriers. However, Nissan clearly does not have any confidence in those assurances today. Can the Secretary of State confirm why those assurances no longer stand and what has changed in the Government’s approach since those commitments were made? Is it now Government policy to accept that there will be significant trade barriers as we leave the EU and potentially a no-deal situation? If not, can the Secretary of State rule out the possibility of no deal?

 

The letter went on to offer support of about £80 million towards Nissan’s investments at its Sunderland site, in return for the expansion of SUV production. The Secretary of State noted that £61 million was eventually applied for. Can he confirm whether any of the conditions surrounding that £61 million were written into any formal agreement? Can he also confirm whether Nissan will still receive the £61 million, despite the move? He intimated that it may have to reapply for certain forms of grant funding. What assessment has he made of the impact of yesterday’s decision on the wider supply chain, particularly those companies that might already have decided to start investment?

 

The Government’s letter to Nissan also said:

 

“It will be a critical priority of our negotiations to support UK car manufacturers, and ensure their ability to export to and from the EU is not adversely affected by the UK’s future relationship with the EU.”

 

Yet it is important to note that Nissan’s announcement came days after a free trade agreement was signed between the EU and Japan whereby tariffs on Japanese car exports to the EU will begin to taper towards zero over the next 10 years. What assurances can the Secretary of State give today to British automotive sector companies that there will be no tariffs on British-made vehicles entering the EU?

 

Similarly, in relation to cars exported to non-EU countries where the EU currently enjoys preferential trading terms, the International Trade Secretary has suggested that we can simply replicate those terms and Tipp-Ex out “EU” and replace it with “UK” on the front page of nearly 40 free trade agreements. How is he getting on with that? What assurances can the Business Secretary provide that Britain will continue to enjoy those trading terms?

 

Furthermore, what assessment has the Secretary of State made of the real risks of a temporary, Brexit-induced slowdown in British manufacturing? Has he examined any temporary support measures he could offer, such as examples in the German industrial sectors following the financial crash?

 

Finally, it is clear that we have reached a tipping point. I know that the Secretary of State agrees with me that a real industrial strategy is designed to give businesses the confidence to invest for the long term, but his Government’s handling of Brexit is undermining our industrial strategy. Businesses are no longer speaking out simply to highlight the future dangers of a badly handled Brexit; they are now losing confidence in the Government and taking real action to protect their businesses. Without real assurances from the Secretary of State and a firm commitment to take no deal off the table, it is hard not to think that managed decline is indeed the Government’s plan.

If the hon. Lady had spent time talking to employers in the automotive sector, she would have come to a different set of conclusions. First, she should welcome the fact that Nissan has committed to Sunderland. After the referendum, before any negotiations had taken place and even before article 50 was triggered, the plant was in jeopardy, and the workforce, the unions and the Government worked closely and hard together to secure its future. At the time, her former colleague, the then hon. Member for Hartlepool and Chair of the Business, Energy and Industrial Strategy Committee, hailed it as

 

“a welcome example of targeted Government commitment to a successful company in a strategically vital sector”.—[Official Report, 31 October 2016; Vol. 616, c. 684.]

 

That commitment continues.

 

The hon. Lady asks whether the financial support that Nissan applied for continues, and I hope that I was clear in my statement that the support is available to the sector and has been for many years. Nissan will be invited to resubmit an application in the light of its changed investment.

 

The hon. Lady’s second point is that we need to conclude our Brexit negotiations, but what she spectacularly ignores is that Nissan and the UK automotive industry back the deal that the Prime Minister has negotiated. The deal achieves what they need: no disorderly Brexit on 29 March, a transition period and a commitment to no tariffs, no quotas and no rules of origin checks at the border.

 

The Japan Automobile Manufacturers Association has welcomed both the withdrawal agreement and the political declaration, and it has called for this House and the European Parliament to ratify the agreement swiftly. If the hon. Lady wants to rule out no deal—if that is her concern and her motivation—she should back the calls from the industry to ratify the agreement.

 

The continued uncertainty I referred to in my statement, as the hon. Lady will acknowledge, is a reflection, in part at least, on the Opposition’s failure to come to a decision and back the deal. During all Nissan’s 30 years in the UK, it has been able to count on constructive support from all parties, yet Labour Front Benchers have evaded having a policy on this vital issue for our country, hiding behind six tests that are a fake and a sham designed expressly to avoid a deal, and they know it. They claim to represent the workers of this country, but the livelihoods of millions of workers are being jeopardised by the machinations of the people occupying the Labour Front Bench.

 

In a call from Japan yesterday, a senior Nissan executive told me, “Please pass on the view to your Opposition that they need to meet in a way that forms a deal.” I think all of us in this House should act on that.

Whatever the complex rationale behind this decision and, despite my right hon. Friend’s considerable efforts to work on it, is it not a stark reminder that our exporters still have no idea whether, at the end of the implementation period, they will require new certification, whether they will carry tariffs or whether, indeed, they will be able to trade frictionlessly? Given the fall off in business investment in each of the last three quarters, is it not now time for us all to come together to end the uncertainty and agree on the terms of our future trading relationship with the European continent?

My right hon. Friend makes an excellent point. He has experience of dealing with businesses that are making investments in this country. It is the view of investors in this country and around the world that they want to see us live up to the traditions of this House in providing a stable environment for investment to take place. That includes having certainty on our future trading relationship. It is incumbent on us all in this House to deliver that for the investors who are placing faith in our economy.

I thank the Secretary of State for advance sight of his statement. I echo the sentiment that our thoughts should be with the workers at Nissan and elsewhere who are unsettled by this news.

 

The Secretary of State has put a brave face on this bad news. We all know that the issue of diesel and the change to petrol is part of it, as is the global review, but the cancellation of X-Trail has his Government’s handling of Brexit at its heart. Brexit, in itself, is bad enough, but it is being bungled beyond belief by a Government who have failed to listen to business. He talks about business wanting to back a deal, but he omits to say that they all say that any deal is worse than what we already have with the EU. Professor David Bailey, from Aston University, is an expert in the car industry, and he has pointed out:

 

“The Japanese carmakers came to the UK to access the single market”.

 

He went on to say that Brexit is

 

“a big shock for the Japanese producers.”

 

Nissan’s European chairman has been clear:

 

“The continued uncertainty around the UK’s future relationship with the EU is not helping companies like ours to plan for the future”.

 

Nissan’s decision shows that international investors have no faith in this Government’s assurances about the economic impact of the Prime Minister’s rotten Brexit deal. If Brexit uncertainty is too great for one of the world’s best resourced manufacturers, what hope is there for small and medium-sized businesses, which are the backbone of the economy? This Government’s continued failure can be demonstrated by the failure to top up the Tay Cities deal to support Michelin workers, so will the Secretary of State urge the Chancellor to make the spring statement a fiscal event that increases funds to support businesses impacted by Brexit? Will the Secretary of State, once and for all, rule out participation in the foolish game of failing to rule out no deal?

First, let me remind the hon. Gentleman that a greater amount of financial investment is going into Sunderland than was anticipated in 2016; this is a long-term commitment that has been made by the firm. He should welcome that and reflect that the future jobs of those employed in Sunderland have been secured by that investment in the Qashqai. That is a welcome factor.

 

The hon. Gentleman is right to point out that the company has expressed an urgent concern that we should resolve the question of Brexit, but he is wrong to say that the deal the Prime Minister has negotiated does not command the positive confidence of the industry. I have talked about Nissan, but let me mention the head of Ford in Europe, who said:

 

“It’s important that we get the agreement ratified that’s on the table at the moment”.

 

The chief executive of Aston Martin has said that it is “obvious” that the deal that we see

 

“meets the needs of all the requests we put forward as an industry and as Aston Martin.”

 

Toyota has said that it welcomes the announced deal, which

 

“would provide business with the certainty of a transition period and help avoid the significant production disruption a ‘No Deal’ outcome would have for ‘Just in Time’ supply chains in the automotive industry.”

 

I share the hon. Gentleman’s view that we should bring the uncertainty to an end, but the only way to do that is by backing a deal, and I commend to him the deal that has the support of every one of the employers in the automotive sector that I have quoted to him today.

The big increase in vehicle excise duties, the squeeze on new car loans, and the general tax and regulatory attack on new low-emission diesels has had a predictable effect, in greatly reducing the demand for and sales of new diesel cars in the UK. Will the Government reconsider these damaging policies, given the strong bias in our industry to produce those Euro 6 diesels?

I say to my right hon. Friend that, in fact, the extra investment is going into new Powertrains—cleaner Powertrains. Far from being critics of this, Nissan, as people who know the industry well know, is among the principal advocates for more ambitious environmental standards and has been a pioneer in establishing electric vehicles in this country. It is recognising that that is the way consumer demand is going, but it recognises that this is a positive step.

Nissan in my constituency, together with the supply chain, employs almost 40,000 people, many of whom will be extremely concerned at this decision. This Government’s chaotic approach to the Brexit negotiations, concerns about diesel and a new free trade agreement between Japan and the EU have created a perfect storm. With just 53 days until we are due to leave the EU, no Brexit parliamentary business scheduled for two weeks, the Prime Minister currently engaged in fantasy politics over the backstop and the sweetheart deal on the rocks, what immediate steps is the Secretary of State taking to reassure the whole UK automotive industry?

One of the pleasures of dealing with the automotive industry in the UK is that it is one of the most advanced and most capable in the world in innovation. We are working with the sector, through our industry strategy, to be the leading place in the world, and our work not just for the discovery of new battery technologies, but for manufacturing, and the testbeds that we have put in place for connected and autonomous vehicles make Britain the place in the world that people come to for innovation. This Government back that, and I know it enjoys support across the House; it is a source of confidence around the world. However, it is true that an international business such an automotive one wants to know, perfectly reasonably, what its trading relationships will be with the rest of the European Union in the years ahead. That is why these companies have been so clear that this House should come together and back the deal. I hope that the hon. Lady, with the care for her constituents that I know she always has in mind, will see fit to do so too in the days and weeks ahead.

In 2016, my predecessor as Chair of the Treasury Committee, who now sits in the other place, wrote to the Chancellor asking what money had been promised to Nissan in order for it to make its commitments. Today we find out that a letter was sent to the former Chair of the Select Committee on Business, Energy and Industrial Strategy, but it has only been released today, after the press had got hold of it. First, does the Secretary of State think it right that the company should decide that something is still commercially sensitive two years after the event? Secondly, how much of the £61 million is not going to be paid over?

I am grateful to my right hon. Friend for her question. What I said in my statement and what I said at the time was that the programme of support for the automotive sector is very long standing and has been very successful. As it happens, the application that Nissan made was concluded relatively recently; it was putting forward a case, through the independent scrutiny processes, for funding. I shared the letter with the previous Chair of the BEIS Committee, and the Comptroller and Auditor General had also seen it at that time. I said in my statement that because the terms of the application, which is independently assessed and reviewed, have now varied, the company will of course need to resubmit on the grounds of the new information that it has. However, this remains a programme that has been very effective in supporting the skills in the wider workforce, environmental improvements and the research and development for which our automotive industry is now so renowned.

After the announcement at the weekend by Nissan—for the first time publicly saying that the insecurity around Brexit was impacting business decisions, which in real terms means jobs—what assurances can the Secretary of State give the workers not only at Nissan, but in the supply chain and wider manufacturing, that the Government will come up with an agreement that will secure jobs as we leave the EU? As he knows, the Prime Minister’s deal is not going through this House, and we need real decisions and real movement on the customs union and the things that will protect jobs.

I say to the hon. Lady, whose constituents depend on successful future investments, as well as the ones that have been secured, which she rightly welcomed when they were first made, that this whole House has a responsibility to come together, put its differences aside and find a deal that can be agreed and ratified, and can be ratified by the European Parliament, so that we can have precisely that certainty that Nissan and other investors have called for.

Will my right hon. Friend accept that, rather than being about Brexit, a fundamental reason for the decline in demand for diesel cars—not only in Sunderland, but elsewhere in the UK and throughout the whole of Europe—is the imposition of EU regulations, which will continue in UK law under the European Union (Withdrawal) Act 2018, to reduce emissions and diesel particulates, which are harmful to health? So what on earth are the anti-Brexiteers complaining about?

First, the company sells most of its output into the rest of the European Union so will need to maintain its ability to meet the requirements to which my hon. Friend refers. Secondly, as I said to my right hon. Friend the Member for Wokingham (John Redwood), Nissan in particular has been among the prime advocates of the drive towards cleaner vehicles. That has often been to this country’s benefit, because the Leaf, which is made in Sunderland, is the best-selling electric vehicle in Europe.

I thank the Secretary of State for his comprehensive statement. May I follow up on the question from the Chair of the Treasury Committee, the right hon. Member for Loughborough (Nicky Morgan), about the £61 million? In view of the statement apparently made by the Department an hour ago, which contradicts what the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington), said this morning, apparently in good faith, will the Secretary of State clarify how much of the £61 million was actually paid to the company and how much is now due to be repaid?

I made it clear that the £61 million was approved by the independent process, with which the right hon. Gentleman is very familiar. To date, there has been a payment of £2.6 million, about half of which was for training of the workforce and the community, and half of which was for environmental improvements to the plant. So £2.6 million has been paid to date.

A matter of minutes before I came to hear this statement, I had the wife of a car worker on the telephone and she was very distressed by the threat to her husband’s job. Does the Secretary of State agree that, for the long-term security of the car industry, the political declaration needs to secure a stable customs arrangement with the EU and the House needs to get behind the deal?

I do agree with my right hon. Friend that the House needs to come together and enter into a deal that can provide that confidence. When it comes to the customs arrangements, as she well knows, the motor industry has been absolutely clear, as I set out in my statement, that it wants to make sure that the agreement involves no tariffs, no rules-of-origin checks and no frictions added to what has been a spectacularly successful trading relationship.

Nissan has been clear that uncertainty around our future trading relationship with the European Union has been a factor in this decision. Is it not the case that even if the Government’s deal is passed, we will still face years of uncertainty and negotiation, which will put jobs and investment at risk at Nissan and throughout the country?

No. The industry has been clear that the deal that has been negotiated meets its requirements to continue what has been a very successful investment programme. One of the opportunities that we have and one reason I really do think it is in the country’s interest to come together on a deal is that I am familiar with investment plans into what is a very successful environment of innovation and excellence on the part of the workforce, and people are poised to make investments if we can settle the question of the terms of our exit and our future relationship. That is why I hope that in the weeks ahead the House will come together to provide that certainty.

I agree completely with what the Secretary of State has said about the need to provide certainty as soon as possible, but I take issue with those who want to turn this all into an issue of Brexit. The House should be clear that there has been a 14% reduction in the sale of Nissan products into Europe over the past year, which explains a lot of the context of this decision. Will my right hon. Friend clarify that no jobs are being lost as a result of this decision and, crucially, that production of the Juke, the Leaf and the Qashqai is entirely unaffected?

My hon. Friend is absolutely right, but it is also right to reflect that for more than two and a half years now the industry, and Nissan in particular, has been worried about the consequences of Brexit. That is why many Members, both Government and Opposition, as well as the trade unions, made such a determined effort to ensure that we got the investment that was so vital. That investment is there, it continues, it has been made, and it has saved the plant in Sunderland and ensured that the more than 40,000 jobs—people’s livelihoods—that depend on it are there and secure. I want to see more investment in future, which is why I want the House to agree a way forward with the rest of the European Union.

The Nissan Washington plant is less than 5 miles from the edge of my Gateshead constituency, where we have 3,325 people unemployed—1,000 more than at the same time last year. Nissan has laid off many hundreds of agency workers in the past 12 months, so will the Secretary of State commit to do something tangible for the north-east of England? The north-east of England is in danger of being left behind, but parts of it, like my constituency, are being left behind already. In the light of this very harmful decision, will he do something tangible and work with Members from the region to establish a taskforce to rescue the north-east economy?

I am a north-easterner myself by birth and upbringing. We should celebrate the resurgence of industry across the north-east in recent years, including the expansion of Nissan. The hon. Gentleman should know—Members from all parties certainly know—that I worked closely with Members on both sides of the House to pursue investment opportunities. Had we not done so, we would not have had the investment that Nissan made two and a half years ago that secured those jobs for the future. I will continue to do that, all the time.

I have many constituents who work at Nissan in Sunderland. They are highly trained and committed workers who do a long commute every day to work in such an extraordinary and fabulous place. As my hon. Friend the Member for Stone (Sir William Cash) said, the changes to the EU rules—and therefore the UK rules, too—on diesel emissions have put real pressure on Nissan to move away from diesel engines in the longer term. Will the Secretary of State set out clearly what the Government will do to support not only Nissan but the car manufacturing industry as a whole to move fully to electric vehicles over the next 20 years?

In my statement I mentioned the Faraday challenge, which we established as part of the industrial strategy. Not only is there a quarter of a billion pounds to fund the latest research on the future of batteries, but we have established in the west midlands the national battery manufacturing centre to make sure that we not only invent the technology but deploy it. We have a reputation as one of the places in the world with the greatest prospects for the new types of propulsion that the industry is moving to rapidly. Nissan is of course one of the prime exponents of that and one of the prime beneficiaries.

Many of my North Durham constituents work at Nissan or in the supply chain and were very disappointed by the announcement at the weekend. Will the Secretary of State refute the allegation in yesterday’s Sunday papers that because of this decision the Government will somehow penalise Nissan in respect of future Government grants? Also, will he be an advocate for the clean diesel engine? That would help not only Nissan, but the entire UK motor industry.

I am grateful to the right hon. Gentleman for what he said, and I can certainly refute that. He knows that I have given particular attention to the expansion of prospects for the automotive industry, including by establishing the programme for battery technology and connected and autonomous vehicles. I travel the world to make the case for Britain as the home of the vehicles of the future. Of course, Nissan is a hugely valued investor, employer and innovator in this country, and we will work closely with it in future.

 

On clean diesel, I have said to Members from all parties that the country will undergo a transition to fully electric and zero-emission vehicles, and a new-generation clean diesel is a perfectly reasonable choice for people to make, especially those who, for example, use it regularly for long journeys. People should be clear about that.

My right hon. Friend has very clearly shown his enthusiasm for the future with the Advanced Propulsion Centre and the Faraday challenge. On the issue of diesel, however, changes in diesel legislation have resulted in a significant slowdown in the second-hand car market for diesels. That market is incredibly important to the financial sector that finances the car market in the whole of the UK. Has he done an analysis of what is going on in the second-hand diesel car market and its implications for the whole of the financial market in the UK?

My hon. Friend is absolutely right, as the House knows, there has been a slowdown in the market for new diesels. People are hanging on to their existing ones and values have fallen in the second-hand market. It is something that is reflected across the whole of Europe, and indeed in many other parts of the world. We need to make sure that we are clear that the next generation of diesel is a perfectly reasonable choice for people, and that we accelerate the deployment and the uptake of electric and zero-emission vehicles. That has been our determination in the past two and a half years, and that is recognised by the industry right across the world.

I was at Nissan just recently meeting the fantastic workforce, some of whom are my constituents who had lost their jobs in the steelworks and subsequently been recruited by Nissan. It was made very clear to me when I was there just how important the EU market and the integrated cross-border just-in-time supply chains were. In their letter to Nissan, the Government say that they fully recognise

 

“the significance of the EU market to your presence in Sunderland.”

 

Why then are the Government keeping no deal on the table and playing fast and loose with my constituents’ jobs again?

Everyone in this House has a responsibility: we need to protect the jobs of our constituents and to give them opportunities for the future. One way or another that involves this House agreeing on a plan for our relationship with the rest of the European Union. It might involve Members from all parts of the House leaving their comfort zone and being willing to compromise. Internationally, we have had a reputation for being willing and able to do that—to be a pragmatic and dependable place in which to do business. Now is the time to demonstrate that to the rest of the world.

I say to the Secretary of State that many people would compromise. If a customs union were put to the vote, some of us would vote for it, but the Prime Minister has made it very clear that that is not available. I suggest to the Government that they might start the compromising in Cabinet and with the Prime Minister. I had the great honour—and it was an honour—to go to Sunderland and visit the Nissan plant shortly after the EU referendum result. Having spoken to the management and workforce, this decision comes as no surprise, as there were very serious concerns then about Brexit. I gently say to him that, in my opinion, this Government, far from allaying those fears, have exacerbated them, because they refuse to take no deal off the table. Given the catastrophe of a no-deal Brexit, I would have expected the Cabinet to have discussed it, based on a careful assessment of the risks of a no-deal Brexit by officials. If it has not, why not? If those discussions have taken place, when will this House see the documents that have been made available to the Cabinet so that we can all understand the dangers of a no-deal Brexit, and so that the next time it comes to a vote, Conservative Members, who are supposed to represent the party of business, will vote overwhelmingly against no deal instead of, like last time, voting overwhelmingly in favour of a no-deal Brexit.

I say to my right hon. Friend that no deal is fully acknowledged—certainly by me and the industry—as being ruinous for our prospects, but in order to avoid no deal, we need to come to an agreement in this House in the weeks ahead. She is right that this is something that affects all parts of the House. To put off the decision, or not to come to a conclusion, would be to continue the uncertainty. We need to bring it to an end, because that is what the investors are looking for.

Does the Secretary of State agree that big multinational companies want to enter the transitional period detailed in the withdrawal agreement to work out whether they are going to stay or leave. They can make that choice—the transitional period is their breathing space—but the small and medium-sized companies and our constituents do not have that choice. They have to stay and suffer the consequences of whatever Brexit brings. Is it not about time that the issue was put back to the people so that they can decide whether what is on offer today measures up to the promises that were made back in 2016?

The views of businesses up and down the country—not of all of them, but of the majority of them—are clear that having a transitional period is something that they regard as important. The small businesses as well as the large businesses have called for that. It is one of the features of the withdrawal agreement that has been negotiated and it is why businesses specifically and through their representative organisations have called on this House to back it.

My first experience of Westminster politics was as the parliamentary candidate for Birmingham Northfield when Rover closed the Longbridge works and 6,000 people lost their jobs. It takes years to build a car factory, and one phone call to close it. Our car manufacturers benefit from frictionless trade with Europe and being part of the cumulative rules of origin regime. The withdrawal agreement keeps those. Does the Secretary of State agree with me that those who seek to vote against the withdrawal agreement or to try to rewrite large swathes of it are playing a deeply dangerous game?

I do agree with my hon. Friend. She knows the industry well and she knows that, time and again, the leaders—the chief executives—of the players, big and small, in the industry have called on us to back the deal for precisely the reasons that she gives.

Many of my constituents work at Nissan, and many more at the Port of Tyne in my constituency, which is a large part of Nissan’s supply chain. The Secretary of State has failed to answer what assessment he has made of the impact of this decision on the wider supply chain, but he keeps saying to us, “Back the deal”. He and the Government are offering zero clarity on the true impact of that very deal, so will he share that with us now?

I think that I have been clear that the investment that is being made into the Qashqai is an expanded investment, which will have opportunities for the supply chain, but that the supply chain will lose the prospects of supplying the new model that we had hoped would be there—that is clearly understood. Again, I say to the hon. Lady that I want, as much as she does, to resolve the question of our future relationship. The leaders of the automotive sector have said that the deal that has been negotiated would do that and they have urged us in this House to get on and approve it.

Nissan itself has noted a significant decline in demand for diesel-powered vehicles due in no small part to changing EU regulations over emissions in the wake of the VW scandal. Is it not the case that it is that decline in demand that was the primary reason why Nissan decided that it was simply uneconomical to expand the production of the X-Trail outside Japan?

The company gave its reason, and it said that it was owing to business conditions. One was the accelerating take-up of low-emission vehicles for which it has been one of the strongest proponents, and indeed it has an advanced position in that. It has been clear about that, but it did comment, as my right hon. Friend knows, that the context of uncertainty around Brexit was a negative factor. When an employer communicates that information as clearly as it has done, I think that we should act on it.

The jobs of many of my constituents will be affected by this decision. We all know that the Secretary of State is a man who does not want to see a no-deal Brexit, so can he explain to the House and the country why it is that in this morning’s Financial Times he said that the crunch point was the end of February when the big votes will be on 14 February?

I do not quite understand the hon. Lady’s point, but I think that she might be referring to the fact that we should not regard the period until 28 March as the time available to us to negotiate. Manufacturers place orders for components with suppliers and they are doing so now. They have to buy components now and these decisions are being taken at the moment. Manufacturers that are exporting to the far east, for example, have to make decisions about what they are going to ship during the weeks ahead. We therefore do not have the luxury of waiting until 28 March; we need to conclude this matter very quickly.

The Secretary of State has some historical connections with my region, so he will be aware that we have lost the coalmining industry, the steelworks and the shipyards. I hope that he is also acutely aware of how vital the car industry and the supply chain are not just to Sunderland, but to the whole region. Given that many thousands of my constituents work in the supply chain and directly at Easington, has the Minister considered introducing some incentives to drive the take-up of all-electric vehicles also manufactured by Nissan on Wearside, such as a car scrappage scheme? That would help to reduce emissions and promote employment in my constituency and in the region.

The hon. Gentleman will know that there is no one in this House more familiar with the importance of the car industry across the country and in the north-east. Within 10 days of having been appointed Business Secretary, I flew to Japan to meet the chief executives not just of Nissan, but of the other investors. I have always had a clear understanding of their requirements regarding future prosperity, and I have always applied that. If he looks at the automotive sector deal that I negotiated with the whole industry and at the investment that we have made in the Faraday challenge, he will see that we are working well and closely with the industry to do what it says is necessary to drive the take-up and innovation in the sector that will secure the future of the motor industry in the north-east and right across the country.

North East England chamber of commerce tells me that, as the Prime Minister’s deal does not nail down our future trading relationship, Brexit uncertainty could continue for years. What certainty can the Secretary of State give now to the 600 workers in the Nissan supply chain at Nifco in my constituency, for whom this decision is a massive missed opportunity to improve their job security?

The hon. Gentleman should, in fairness, reflect—as I have done—on the renewed commitment that Nissan has made to Sunderland by putting more cash into the plant than was originally intended in 2016. It has made a decision not to expand out of Japan the production of a model that does not have any other production lines around the world, and I regret that, but it has made a big commitment to Sunderland. That is something that we should respect and recognise the importance of.

I thank the Secretary of State for referencing my predecessor, the former Member for Hartlepool, who was quite right in his observations at the time. Specialist companies in Hartlepool, such as Helios Precision Engineering, have invested heavily in new technologies as part of the supply chain. What will the Secretary of State do to protect local manufacturing suppliers to Nissan and the wider automotive industry post Brexit?

The hon. Gentleman will know that the automotive sector deal, in which Nissan was an important partner, has a significant programme of investment in the skills and capabilities of the supply chain. In fact, the increase in opportunities for the supply chain domestically is one of the principal components of the sector deal that was so widely welcomed by the automotive industry.

Unemployment in my constituency is double the national average, and there are hundreds of people in the constituency who are employed at Nissan and at supply chain companies. These supply chain companies also provide goods to other car makers and across the EU. What is the Minister going to do about a customs union that will protect those jobs in the longer term?

To protect those jobs in the longer term, we need to secure our ability to trade without tariffs and without impediment across the whole of the rest of Europe. As I have stated very clearly to the House, it is my view that the House needs to come to a decision within the next few weeks. We need to make compromises with each other to be able to provide that certainty and security to important employers.

When it could soon cost less, in terms of tariffs, to import a car to the EU from Japan than it will to export a new car from the UK to the EU in the event of a hard Brexit, is it not easy to see just what impact Brexit uncertainties have on decisions like this? Could not the Government minimise those uncertainties—first, by jettisoning the customs union as a red line for the Government and, secondly, by ruling out no deal?

 

On diesel, is it not the case that the problem is not with the latest emissions standards, but that Government vehicle excise duty rates hit the newest, cleanest diesels hard and leave the oldest, dirtiest diesels untouched? Will the Secretary of State have a word with the Treasury to do something about that in the spring statement?

The hon. Gentleman makes an important point about the importance of tariff-free trade. The European Union has agreed, and put into operation last week, a free trade agreement with Japan that provides advantages for Japanese companies in being able to import and export directly with Japan. In my view, it also increases the urgency that we face to conclude our agreement with the European Union that should allow us to continue to trade with it and with other countries, without interruption.

 

We have had many conversations about diesel. It is the case that companies, including Nissan, are accelerating their investment; they are investing more than they previously intended to in ultra-low emission vehicles. This is giving the supply chain opportunity. I agree with the hon. Gentleman that we should not send a message that the current generation of diesel engines is a choice that needs to be avoided by consumers thinking about their next car.

While the Conservative party tears itself apart over the Irish backstop and border, the fundamental problem that we face is that we still have absolutely no clarity about our long-term relationship with the EU. Is it not the truth that it is this uncertainty that is causing huge problems for companies such as Nissan, that the Prime Minister’s withdrawal agreement does not solve that uncertainty—it just prevents us from immediately falling off a cliff—and that, if we go ahead with the Government’s blindfold Brexit, we will back here with more damaging statements and announcements that hurt people’s jobs and livelihoods for years and years to come?

The policy that the Prime Minister has proposed has commanded the support and endorsement of the employers that the hon. Lady is concerned about. I am not aware of any policy proposal from the Labour party that commands any degree of consensus across the Opposition Benches. I have said very clearly today and previously that all Members of this House who were elected in 2017 following the referendum the previous year always knew that this was going to be the most important decision that we would take. It is time to find common ground and to settle on an agreement that commands a majority of support in this House that will provide the confidence and stability that the rest of the world looks to.

The Nissan decision is sadly following a developing trend of disinvestment by foreign companies not just in the north-east of England, but north Wales. I appreciate the Secretary of State meeting me later to discuss that. I am a proud member of the all-party parliamentary group on Japan, of which the Minister for Asia and the Pacific, the right hon. Member for Cities of London and Westminster (Mark Field), is also a regular member, and Japanese representatives say clearly to me that there are two strengths to investing in the United Kingdom: the loyal and unionised workforce, and a strong single European market. I ask the Secretary of State to urge his Cabinet colleagues, for a start, to ensure that we have that strong unionised workforce and a strong European single market?

I gently correct the hon. Gentleman when he talks about disinvestment in Sunderland. It is very important that the House understands that far from being a disinvestment, the commitment that has been given actually involves an increase in the capital investment into the plant. Given that that comes from a company that has other uses for its capital, we should recognise that it is putting more money into Sunderland and into securing its future. With regard to the future, he is right to draw attention to the fact that the reason companies have located very successfully here in this country is partly because of the excellent workforce that we have, partly because of our track record of innovation, and partly because they have had access to a large market that has come from the European Union. It seems to me that we need to continue with all of those.

Have any of the other large car manufacturers in this country sought and gained similar-sized packages of support—I am thinking about Vauxhall—and if they have been refused, why?

As I said in my statement, there has been a regular and long-standing programme of support for companies right across the automotive sector. It is conducted independently. Companies make applications either through the Advanced Propulsion Centre or through the scrutiny of the Industrial Development Advisory Board. This has been a success. Nissan has applied for it, and many other companies have done so as well. For example, I commend the investment that Toyota made in its Burnaston facility. I had the pleasure of opening the production line for the new Corolla there a few weeks ago.

I thank the Secretary of State and his like-minded colleagues for what we read they are trying to do to avert a ruinous no-deal Brexit, as he just described it, but I gently suggest to him that when the moment of truth arrives again in 10 days’ time when the votes come back, they will be judged on their deeds and not just their words. I say to my own Front Benchers that if we have a Whip that ignores the unanimously agreed policy of our own party in opposing a no-deal Brexit, they will be judged just as harshly.

I cannot speak for the right hon. Gentleman’s Front Benchers, but he has heard me say that it is incumbent on the whole House to keep the national interest in mind and to reflect our traditions of doing that. I recently looked at the speech that Margaret Thatcher gave when she opened the Nissan plant in Sunderland. She commented that Nissan had chosen the UK because

 

“within the whole of Europe, the United Kingdom was the most attractive country—politically and economically—for large scale investment and offered the greatest potential.”

 

That political stability, confidence and pragmatism, which was so important then, is important now, and we should return to it.

In his speech in the European Union (Withdrawal) Bill debate, the right hon. Member for Sevenoaks (Sir Michael Fallon), who has just left his place, said that the political declaration was “vacuous”, so I gently point out to the Secretary of State that opposition to his Government’s withdrawal arrangements is not confined to the Opposition Benches. When a country like Japan is looking to invest, and when companies such as Nissan export up to 80% of their products into the single market, will he just acknowledge that being within the single market provides an advantage over the countries that are outside it?

Of course, it depends on the terms of trade that are negotiated. Clearly, being a member of the European Union unquestionably allowed Nissan and others to trade without thinking about tariffs or impediments. We need to secure a deal that allows us to continue to offer Britain as a place of innovation and skills, and a place that can be confident in exporting to the rest of Europe.

This weekend’s news clearly demonstrates the damage of continued uncertainty about our future relationship with the EU. The Society of Motor Manufacturers and Traders has been warning for many months about the very grave dangers of a no-deal Brexit, but in recent weeks numerous Nottingham employers, including Paul Smith, East Midlands airport and Siemens, have all contacted me to raise exactly the same concerns. The Secretary of State has just admitted that a no-deal Brexit would be ruinous, so when does he think the Prime Minister is going to recognise the damage that she has done by insisting that no deal remains a real option, and instead act to protect jobs and investment by ruling it out?

I hope that when the hon. Lady has been having her discussions with those employers, she has listened to what they have said. The SMMT, for example, has been very clear that in order to avoid the consequences that she talks about, it is necessary to accept the deal that has been agreed. The SMMT said that it is “a positive step” that should be backed. The chief executive of Siemens in the UK has also commended the deal. So if she wants to avoid the disruption that I agree would be caused, she needs to listen to the other part of what people say to her and follow their advice in that respect too.

Given the uncertainty that the announcement by Nissan has caused, the job losses announced at Jaguar Land Rover, the worries expressed by Honda, and the Hitachi decision when the Prime Minister of Japan had barely taken off following his visit to our Prime Minister, what worries does the Secretary of State think have arisen in his Department? Does he agree with his junior Minister, the hon. Member for Watford (Richard Harrington), that we are going from

 

“a crisis into a catastrophe”?

I visit Japan a lot and speak both to the leaders in the Government and the leaders of important investors there. They regard Britain as a place with which they have enjoyed good relationships and in which they have invested with prosperity. They admire the ingenuity of our scientists and our engineers. They are keen to work even more closely together in future. But is true to say that they look at the uncertainty around Brexit and think that after two and a half years it is time that it is resolved and comes to a conclusion. When they say that, we should listen to them and act on their advice.

The Secretary of State is a nice man, but I honestly feel as if we are going to hell in a handcart. The only people who can genuinely stop this conveyor belt towards a no-deal Brexit in a few weeks’ time are people like him sitting in the Cabinet. They have got to go back to the Cabinet and say to the Prime Minister, “We will not put up with this. This will do lasting damage to our country, to our people, to our jobs and to our standing around the world, and we must put a stop to it; otherwise we will resign.” I suggest that he does that before next week’s votes.

I am grateful for the hon. Gentleman’s advice. I think it is matter of public record that I have constantly and consistently advocated the need for us to be able to secure the trading relationship that we need to make sure that the jobs in his constituency and all around the country continue. It is important that I should do that.

The automotive industry, employing 850,000 workers, is the jewel in the crown of manufacturing excellence. We have had 4,500 jobs going at Jaguar Land Rover and we now have the news about Nissan. The Society of Motor Manufacturers and Traders is warning that the industry is now “on red alert” as a consequence of Brexit uncertainty. Does the Secretary of State agree, on the one hand, that we should rule out any question of a no-deal Brexit, and crucially, on the other hand, that this House needs to come together at the next stages to negotiate a deal that will provide much greater and longer-term security, at the heart of which must be the customs union?

The success last week of the amendment that the hon. Gentleman tabled with my right hon. Friend the Member for Meriden (Dame Caroline Spelman) demonstrated that the majority of Members of this House are determined not to see a no-deal Brexit. Indeed, to avoid that, we need to come together in just the way that he says to reach a deal, making compromises with each other that can provide the certainty that investors need to continue the period of great success that we have enjoyed in this magnificent industry.

In response to the 2008 world economic crisis, the Labour Government tasked the Automotive Council, which they had established, with putting together emergency measures to sustain our important automotive sector. We are in a similar situation, and we need action. The Labour Government introduced the scrappage scheme, which led to me, as the last Labour automotive Minister in 2010, announcing the Nissan Leaf going to Sunderland—that is the type of action we need. Will the Minister task the Automotive Council with putting together emergency measures that it will support to sustain not only Sunderland but all the other plants, including at Bridgend, Dagenham and Ellesmere Port, to ensure that the strong automotive sector we have all built—Labour, Liberal Democrat and Conservative—over the past 15 years is maintained at this dangerous time?

It is important for the hon. Gentleman to recognise that the investment being made in Sunderland is greater than was planned two and a half years ago. The company is investing more of its capital in Sunderland than it originally intended. That is significant because the pace of change in the sector means that there are great opportunities for investment right across it. We have a reputation because of a long-term commitment to the sector that started before this Government for being at the leading edge of innovation. If we can resolve the question of our future relationship with the European Union, I believe that substantial investments will be made very quickly, to the great benefit of this country and the people who work across it.

When I started my career in manufacturing, I had the great benefit of being taught by experts in lean manufacturing from Nissan, Toyota Burnaston and Airbus. One thing that was drilled into me from a young age was the concept of the seven wastes: transportation, inventory, motion, waiting, over-production, over-processing and defects. The worst of those wastes was inventory. As a result of the uncertainty facing British industry, inventory levels are increasing, putting British industry at a permanent competitive disadvantage. Does the Minister recognise that the absence of a customs union will put British industry at a permanent strategic competitive disadvantage?

I am impressed at the hon. Gentleman’s recall of the principles that he was taught. He is right that one of the benefits and sources of efficiency in our production system is that companies do not need warehouses or inventory. It is clearly a matter of huge regret that companies are having to invest in inventory and warehouses and divert capital from more productive uses. I agree that we need a deal and an agreement that allows just-in-time production to continue. I strongly share his analysis of that.

This is clearly a terrible decision for not only Nissan Sunderland and the whole north-east but the entire automotive industry, given how much of it depends on scale and component suppliers working to scale. The Secretary of State understands this sector particularly well. Does he accept that the industry wants a customs union and a single market? Does he accept that the Government have a responsibility to remove the diesel levy that they introduced two years ago?

Obviously the hon. Gentleman has great familiarity with the industry, from his constituency perspective. The industry has consistently expressed itself satisfied with the deal that has been proposed. It has said so in terms at the overall level, through the Society of Motor Manufacturers and Traders, and individual companies have said so. The industry is concerned that this House has not come to a resolution to turn that agreement into something that it can depend on. I hope he will join colleagues from across the House in advocating the kind of compromise that will enable the whole House, not just by a slim majority but wholeheartedly, to agree a deal that can send confidence to investors in this industry and others around the world.

There is no doubt that this is bad news. At Vauxhall in Ellesmere Port, we have had more than our share of bad news in recent times—we have lost over half the workforce in the last year. Now that we know what the Government are prepared to offer to encourage investment in car manufacturing, can the Secretary of State confirm that the same or very similar terms will be available to any other applicants?

When I first made the statement to the House on 31 October 2016, I described the programme of support that has been operated for many years, in which investment in training the workforce, environmental improvements and R&D can be applied for, and those applications are subject to independent scrutiny. We have a good record of providing that. It is available to large, medium and small firms and is well known in the sector.