Role of Government
119. The Government gives in its memorandum to us
some idea of what it is doing to assist the UK vehicle manufacturing
- It has given Regional Selective Asistance
(RSA) on a very substantial scale: £282 million over the
past five years, for 222 projects, providing an estimated 14,700
new jobs and safeguarding a further 21,000 jobs.
These funds have gone to the major manufacturers and to SMEs in
the automotive component chain. The figures do not include the
£129 million offered to BMW for the new Rover to be built
at Longbridge, a sum now committed to assistance in the wake of
BMW's disposal of Rover, nor the £40 million offered to Toyota
to assemble the new Micra at Washington rather than at Flins in
- It provides funding for Research and Development
(see paras above ).
- It helps fund improvements to the component supplier
base through the SMMT-Industry Forum, as one means of improving
productivity so that the UK component industry can thrive
in a globally competitive market.
- As demonstrated by the objectives of the DTI's
the department seeks by close liaison to ensure that the
industry's concerns for example, on currency or on skills
training are recognised in Whitehall and Brussels, and
where possible addressed.
120. The evidence we received from representative
organisations, and the impression received from our informal discussions,
suggest that many sections of the automotive industry feel neglected
and even persecuted by Government. Among issues of concern were
- the impact of the climate change levy
on the hundreds of smaller companies whose sites are not covered
by the Integrated Pollution Prevention and Control (IPPC) Directive:
- aspects of the vehicle taxation system,
to the degree that vehicle excise duty and company car tax rates
have a potentially damaging effect on UK vehicle manufacture.
For example the SMMT state that the penalty on diesel in vehicle
taxation "impede(s) the development of cleanest diesel technology
in the UK":
- the end of life vehicle (ELV) Directive
as applied in the UK and so the proposal for workplace parking
levies are both seen as bearing down unduly heavily on manufacturers:
- the recent orders made by the Secretary of State
on arrangements for retail car pricing, following the Competition
Commission inquiry and our own Report, were cited by some as indicating
the Government's hostility towards the industry, although none
have claimed that it affects decisions on where to assemble vehicles.
121. It is not our view that the UK vehicle industry
has any complaint of much substance against the Government's policies.
Indeed, it has enjoyed a level of publicly funded support which
some other industries might justly envy. The environmental policies
pursued, while on occasions perhaps producing perverse or unintended
effects, bear equally on vehicles assembled here or abroad. The
Government's policies create opportunities, particularly in the
field of public transport. The industry may have been short of
positive expressions of political support: as the Motorsport Industry
Association put it, the Government needs to be seen to recognise
the success of the industry.
On 28 November 2000 the Minister of Trade told the SMMT annual
dinner that "This government is not an anti-car administration".
More such expressions of Ministerial interest and support, divorced
from management of individual crises, would help. We recommend
that DTI Ministers discuss with the Society of Motor Manufacturers
and Traders and other trade bodies means of demonstrating the
reality of Ministerial support for the UK vehicle industry, going
beyond reactive commitment at moments of crisis.
122. There are limits under international and
European laws and conventions to what even the most interventionist
Government can do to assist a national vehicle industry. We
set out above some of the actions the UK Government has taken
or is taking which have an impact on the industry. It can respond
to requests for assistance. It can use its good offices to seek
alternatives to those presented. But it cannot throw money at
a problem even if it wishes to. For example, Regional Selective
Assistance funding for projects in the vehicle industry are now
rigorously scrutinised by the European Commission, and have to
be minutely justified. Nissan noted that the £40 million
RSA had "swayed the balance" in the short term in its
decision on the new Micra. Central Government is not a major purchaser
of vehicles, and is bound by European and international rules
on public procurement. These rules may indeed help the UK; we
heard at Southampton, for example, of Ford Transit sales to several
mainland European public authorities.
123. Consumers are not similarly constrained.
There is no reason why individual consumers, including businesses,
should not exercise their freedom to choose which vehicles to
buy in such a way as to assist the UK car industry. One reason
they do not do so at present is that advertising does not at present
give any weight to UK assembly or UK content as a selling point.
There would be advantage in consumers being aware that there
is a UK-assembled car in almost every segment of the market, and
that buying such a car is one way of supporting the national industry
and of conveying to the companies concerned that the British public
does wish to maintain an vehicle industry in the UK.