Asked by
To ask His Majesty’s Government what assessment they have made of
car production in the United Kingdom since 2016.
A noble Lord
No Minister.
A noble Lord
Oh dear.
A noble Baroness
What time do you call this?
The Minister of State, Department for Business and Trade ( of Lainston) (Con)
My apologies; I was waiting outside.
The Government are focused on transitioning our car industry from
internal combustion engines to electric and other sustainably
powered vehicles. Shortages of semiconductors and supply chain
disruption have been key factors affecting recent UK and global
car production numbers. However, the Government are accelerating
and positioning ourselves for growth in electrification and
unlocking industry investment.
(Lab)
I give a warm welcome to the Minister.
A noble Lord
Belated.
(Lab)
I also appeal to Ministers to be more open. My question asked
about car production. Car production in the UK has collapsed by
over half since 2016—the worst performance of any car producer in
Europe. Even the soaring demand for electrical vehicles is likely
to be affected when, under the trade and co-operation agreement
with the EU, car industry rules of origin exemptions for EVs come
to an end this coming December. Brexit has created nothing but
uncertainty, extra costs and supply chain problems for business.
What incentives have the Government provided for international
investors in the car industry to come to this country at a time
when the major trading blocs, from which we are now excluded, are
becoming more protectionist?
of Lainston (Con)
I sincerely thank the noble Lord for raising this point. It is
important that we have a strong car industry in this country, and
there are some legitimate reasons why the industry is
transitioning. As many noble Lords who have been involved in this
industry will know, we are moving from internal combustion
engines to electric vehicles, which means some lines end and it
takes time to start new lines. I am also very aware of the rules
of origin issue, and I sincerely hope that our new relationship
with Europe will allow us to have a more constructive
conversation around that. It is in no one’s interest to have a
trade war on cars.
I will finish by saying that there have been some great
announcements over the last few years, and the Government have
been extremely influential and relevant in supporting companies
such as Nissan and Envision, with investment in the Vauxhall
plant at Ellesmere Port and support for Pensana’s factory near
Hull. Ford has committed just under £0.25 billion of investment
in Halewood, and in 2022, Bentley announced a £2.5 billion
investment to produce its first battery electrical vehicles by
2026, which will secure 4,000 jobs at its Crewe plant. There is
certainly more that we can do, but we are acting, and we are
trying to transition our car industry into one that is
sustainable for the future.
(Con)
My Lords, with growing Chinese competition in car
manufacturing—in fact, China is dominating the EV market
altogether—there are obviously even worse challenges to come. But
would my noble friend like to say what he thinks about the EU
proposal, announced yesterday, to go for what it calls a Net-Zero
Industry Act to compete with the Inflation Reduction Act in the
United States, because it is very nervous that Volkswagen and
other European manufacturers are all about to move from France
and Germany to the United States? How are we going to work it out
in this situation? It seems rather dangerous.
of Lainston (Con)
I thank my noble friend for his comments. There has been a large
amount of debate around the value of the Inflation Reduction Act,
which I believe is the greatest oxymoronic legislative title in
history, frankly, as I cannot believe that it will reduce
inflation. Some of its measures are also relatively
protectionist. The Government are investing heavily, not just in
car manufacturing but in the research and development around it.
For example, the Faraday Challenge amounts to £500 million, the
Automotive Transformation Fund is hundreds of millions of pounds
and the Advanced Propulsion Centre is providing huge amounts of
much-needed money for new car production facilities and the
inventiveness around that. It is not good enough just to try to
find a bigger bazooka; we must ensure we focus on regulation and
proper support for R&D, because our brains are our best
defence.
(LD)
My Lords, the Minister may call it “transitioning” but most
people will call it “declining”. But let us take his word:
transitioning. In order to create the industry for electric
vehicles, Britain needs a gigafactory. The Government pinned
their hopes on the Britishvolt factory. That failed, the company
is being taken over and it will now be used for a different
purpose. Last week I asked how the Government’s ambitions for a
gigafactory would be fulfilled in the very near future. I did not
get a detailed answer and I would be very grateful if the
Minister could give me a proper answer now that explains how the
industry is going to be able to rely on a gigafactory at the
centre of government strategic thinking.
of Lainston (Con)
I greatly appreciate the pressing on this point. It is essential
that we have strong battery manufacture capability in this
country if we are to have an automotive industry. Do not be under
any illusion: the Government are concentrating on this night and
day. I draw the noble Baroness’s attention to the fact that I
think the Britishvolt transition —if I can use that word
again—was quite successfully handled. The Government pledged
money, which should have worked in the financing. Unfortunately,
it had to evolve to a new owner, but that transition has been
successfully managed and it will still be making battery
materials and technology.
As I highlighted earlier, through government support through the
Automotive Transformation Fund, Nissan and Envision have signed a
deal to produce batteries. Importantly, this is linked to a
critical mineral supply deal we did with Indonesia that I
personally helped steer through after the excellent work of my
noble friend Lord Grimstone. This does not just give us battery
manufacturing capability. As importantly, the focus of this
Government is to make sure that we have the materials to supply
these batteries, so that we can be ahead of our competitors.
(CB)
My Lords, the Minister referred to our brains as being our
competitive advantage. The Government reiterated in the
integrated review refresh their ambition for the UK to be
investing 2.4% of GDP in R&D. The OECD average is 2.7%. Does
the Minister think that the Government’s ambition is likely to
turn us into a so-called superpower in terms of science, and will
that be sufficient to support the kinds of ambitions we ought to
have in our car industry?
of Lainston (Con)
I thank the noble and gallant Lord for his point. I am glad he
agrees with us that our brains are our best defence. I see around
this House many good examples of that. I would stress that the
Government are investing not simply in R&D in science and
technology to become a science and technology superpower, but
heavily in education, which is not necessarily classified under
those figures. I saw recently an extra £2.8 billion being
announced for education and training. We have further projects to
ensure that our tertiary education remains the strongest in the
world with, I might point out, three of the top 10 greatest
universities in the world coming from this nation, which is
something we should celebrate.
(Lab)
My Lords, why are the Government investing for their own fleet of
cars in South Korea? My friends in Sunderland are bewildered as
to why investment is going to South Korea and not to the Nissan
Leaf in Sunderland.
of Lainston (Con)
I greatly appreciate the noble Baroness for drawing this to my
attention; I am afraid that I was unaware of government
investment in Korean car production, so maybe we can follow that
up at a later date. As I said, the Government have provided a
huge amount of support for the motor industry, not just financial
support but real support. I can assure her that the Office for
Investment, which is under me at the Department for Business and
Trade, works continually to ensure that all the opportunities
around the world are brought to this country so that we can have
a strong car manufacture and research and development industry in
this nation.
(GP)
My Lords—
(Con)
My Lords—
(Con)
My Lords, it is the turn of the noble Baroness from the Green
Party, followed by my noble friend Lord Lamont.
(GP)
It is good that the Minister emphasises R&D, but, truly,
electric cars are not really sustainable, so the Government will
actually have to think about the next generation of much more
sustainable vehicles. Will any of that research and development
go into improving our public transport networks—not HS2?
of Lainston (Con)
I am grateful, as always, for the prompting on the importance of
achieving net zero and sustainability over the next so many
years. I draw this House’s attention to the broadness of our
attempts to build a sustainable automotive sector in this
country, with Johnson Matthey announcing in July an £80 million
hydrogen gigafactory at its existing site in Royston. So this is
not simply about EVs; it is important that we want to have a
diversified strategy to ensure that we are sustainable for the
future. That requires effort, finance and the businesses
themselves to be successful, and we are supporting all those
three.
(Con)
My Lords, is the European-wide nature of the problems facing the
car industry not illustrated by the fact that Germany in 2021
produced fewer car passenger vehicles than it did 30 years ago?
The German Ministry for Economic Affairs has prophesised that
there will be loss of 100,000 jobs in the car industry because of
the transition. Has my noble friend the Minister noted the
intention announced by both the German and Italian industry
Ministers that they may veto the previous decision of the EU to
phase out CO2-emitting cars by 2035? If that were to happen, what
would the impact be on Britain, with its different target?
of Lainston (Con)
I appreciate my noble friend’s point on this subject. We are
committed to our targets, and it is absolutely right to achieve
net zero by the date we have set. I am glad that he mentioned the
other European car manufacturers, because this past week alone
the Prime Minister travelled to Paris for a summit with President
Macron to work on the very important task of rebuilding our links
with Europe, to ensure we can have sensible conversations with
our European partners. I call that Project Grand Amour, and it
has been enormously successful. If we look ahead at some of the
problems facing us, particularly in our automotive industry—and
at the importance of ensuring we have strong trading
relationships with our European neighbours, which is the essence
of this point—we should be extremely grateful for, and indeed
celebrate, the Prime Minister’s wonderful and marvellous actions
last week in the new Belle Alliance.
