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Westminster Hall

Wednesday 12 December 2007

[Mr. Joe Benton in the Chair]

Car Manufacturing

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Roy.]

9.30 am

Mr. Lindsay Hoyle (Chorley) (Lab): I am pleased that this important debate is taking place today. It is about the manufacture of cars, vans, trucks and components in the United Kingdom. There is great interest in the number of jobs in that sector. I am glad to see the Minister in his place. I hope that he will give detailed responses to some of the questions posed this morning, and if he cannot answer today I hope that he will write. It is important to record how important that sector is.

Britain is the sixth-largest manufacturing economy in the world. We now make almost twice as many cars in Britain as we did 25 years ago. Seven of the top vehicle makers are based in the UK, and 19 of the top 20 auto-part makers have a manufacturing presence in the UK. In my constituency of Chorley, we have a huge parts centre and the Leyland Trucks factory. In the north-west—just down the road from your constituency, Mr. Benton—we have Jaguar and Vauxhall. The motor industry has a major presence in the north-west, as it has in my colleagues’ constituencies in the east and west midlands.

Many people are bothered about the car industry and the components sector. Many companies have a presence in the area, and they are taking a lot of interest in it, and it is from that angle that we have to consider the matter. More than 75 per cent. of cars made in the UK are exported. Independent surveys show that UK car plants are among the most productive in Europe. I stress that they are the most productive.

Having painted such a picture—a good picture and a good story to be told, at least to begin with—why is there so much uncertainty and concern within our car manufacturing sector? What can we do about it? There is no doubt that globalisation presents massive challenges for the manufacturing industry. India and China have wages at about 15 per cent. of European levels, and they are expected to account for nearly half of global growth over the next 15 years, so it is a serious problem.

In a speech on 23 October, the Minister stated:

I accept that that is what the Minister said. He continued:

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Absolutely. Great R and D is fantastic, but we should not forget that we need a manufacturing base to go with it. It is no use having the best ideas if we export the jobs. Yes, we must invest heavily in R and D. I fully agree with that statement, but the question has to be asked: what is being done to promote R and D and support, through financial incentives? I understand that R and D in the UK car manufacturing sector is so important. The Minister also said that

I do not believe that old-fashioned protectionism is the answer, but greater protection for UK employees is. We still lag behind our European counterparts in employment rights. That is the problem.

Mr. John Spellar (Warley) (Lab): Although protectionism may not be the answer, is it not extraordinary that the Government, unlike those of the other major car-producing countries, seem to prefer foreign vehicles to British vehicles? Would it not be a good start if Ministers were to be driven in British cars?

Mr. Hoyle: I cannot disagree with my right hon. Friend. He is spot on. In fact, I shall come to that very point later in a little more detail.

The UK has some of the most profitable car plants in Europe, none more so than Vauxhall. However, when costs had to be cut, the company turned to UK plants and UK workers, because it was the easiest and cheapest place to sack people. That is always a problem. There are many more examples of shifts in production, such as at Ford and Peugeot. People are talking about new cars with great British brand names, such as the small Rolls-Royce and the SUV Mini, being built abroad. Aston Martin’s new four-seater saloon car is to be built abroad.

Ford made many promises when it closed its last own-badge car plant at Dagenham. I was a member of the Trade and Industry Committee that took evidence from Ford. It said that we should not worry and that although they might not have Ford badges, the company still owned Jaguar, Land Rover and Aston Martin. Those are great brand names and Ford said that it would continue to manufacture them in the UK. Aston Martin is already under foreign ownership and Jaguar and Land Rover are up for sale. That is the difference; they are in foreign hands. Ford will not have a car assembly plant in the UK if it sells to Tata, yet Ford sells more cars in the UK than anywhere else in Europe. The company does very well out of the UK.

Mr. Jim Cunningham (Coventry, South) (Lab): I am sure that my hon. Friend will agree that there is a certain amount of uncertainty about Ford, because no one knows exactly who is going to buy it. That has created much uncertainty in Coventry.

Mr. Hoyle: Absolutely. Uncertainty is what it is all about and especially for the workers, whether in Coventry or Liverpool. It is a big question. Those promises made by Ford, saying that it would continue to build cars in the UK have not been kept. The question must be, where does it leave us with the Ford Transit?

Peter Luff (Mid-Worcestershire) (Con): The hon. Gentleman paints a slightly depressing picture. If I were an employee of Ford, Land Rover or Jaguar, I would rather be owned by a company with money to
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invest in new models than a company that was losing billions of pounds that could not make such an investment.

Mr. Hoyle: I have great respect for the Chairman of the Trade and Industry Committee, but we can agree on one thing: we have new models. We should remember that Ford has taken a tough decision. It invested in Aston Martin, made it profitable with new models and then sold it. There has been investment in the Land Rover Discovery and Freelander models, and they are making a profit. It is important to be profitable. Jaguar is losing money, but Ford has invested heavily in the launch of the new mid-range car that will come on the market in March next year, and that should be a huge success. When there is a success story, why sell? Why not show commitment? That is the difference.

Lorely Burt (Solihull) (LD): I understand that Ford is selling the classic marques of Land Rover and Jaguar because elsewhere in the world it is not necessarily so successful. The company is £6 billion in debt. The company does not want those marques to be lost, it wants them to continue—but, as the hon. Gentleman said, with the greater investment needed to meet the challenges of the global market.

Mr. Hoyle: I recognise that, but after the investment, the profitable side is here. Why not close plants in other parts of Europe? We know that Ford have made a lot of closures in America, but once it has turned the corner it is surely better to keep silverware that is well polished rather than silverware that is losing money. It is sad that Ford, which has one of the biggest markets, is now leaving us. I understand that Ford has to make tough decisions, but I am worried for those who work there and their long-term future.

Dr. Ashok Kumar (Middlesbrough, South and East Cleveland) (Lab): I agree with the hon. Member for Mid-Worcestershire (Peter Luff) that my hon. Friend is painting a depressing picture. In the north-east, Nissan has been a great success, having produced the Micra, Almera and Primera, and is making about a third of a million cars a year. It has been a success, despite the supposed climate that he describes. There have been success stories, so I do not think that the situation is as depressing as he has articulated so far.

Mr. Hoyle: I have tried to show the balance and the strength of the car manufacturing industry in the UK. However, we must look to the long-term future. We all know that, when the French became involved, the decision on where the next line for the Nissan Micra went was very close. Let us not think that life is so great. That was a tough decision and, thankfully, the Government put in a lot of support for the continuation of that new model. A car plant is only one model away from closure.

Mr. Mark Todd (South Derbyshire) (Lab): While we dwell briefly on successes, Toyota’s car assembly plant is based in Burnaston, in my constituency, and is a flagship of a group that is dominating the world in car
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manufacturing. One thing that would keep it there is investment in proper infrastructure in order to allow the plant effective access to the rail network, which would reduce its logistics costs. That is the kind of investment that we seek from the Government.

Mr. Hoyle: Absolutely right. That is the point that I am making. We must put in the investment to ensure that our car industry has a long-term future. That is what I am concerned about and what I am trying to get across. At the moment, the market is very successful, but we must look to the long-term future.

Rob Marris (Wolverhampton, South-West) (Lab): Does my hon. Friend agree that part of the difficulty for the industry’s long-term future in the UK is that, owing to foreign ownership, we have been chasing markets that are, by and large, declining? As far as I am aware, only two superminis are built in the UK—the Mini and Nissan Micra, the latter of which is about six years old. We have been receiving foreign investment in models and market segments that are declining owing to concerns about climate change. We need the Government to pressure foreign car manufacturers to build more superminis and smaller, less environmentally-damaging models, in the UK, because that is where the market is going and where the future is for the car industry.

Mr. Hoyle: I cannot disagree. Some good points are being made. This is about the future and ensuring that the models relate to future demand.

Mr. Cunningham: This is not a question of painting a depressing picture. However, over the last few years, Rover, one of the Jaguar plants at Browns Lane and Marconi have all left Coventry. We must face reality. Those working in plants want to know what their future is. For example, they are the ones who had to pick up the pieces following the Peugeot closure, which was a brutal and callous act by that company.

Mr. Hoyle: I agree absolutely with my hon. Friend. There have been some savage cuts and some incorrect decisions taken. None has been more wrong than the one taken on Peugeot. It was not the fact that it was not profitable; its work force did everything to ensure that production continued, but the money was stripped out and when the decision was made, the Coventry plant was closed. Peugeot still wants the market share. It would not get that in France if it closed all its plants there.

We cannot pretend that everything is rosy. We must face up to that fact. I am sorry to say that there will be further casualties, which is why this debate is so important. I am very worried about certain plants. I want Ford to commit itself to Transit and Land Rover to commit itself to Solihull, but we are not hearing those noises loud and clear. There will be more bad news to come, so we must ensure that there will be good news as well. We can do that and build on what we have with a Government concerned about manufacturing. We do not want protectionism; we are simply asking for fairness and a level playing field. That is the most important thing. At the moment, we are suffering at both ends of the scale. We are all aware that no country in Europe can compete on wage levels with China and India, but we can secure higher skills,
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high-tech industries and good-quality investment in order to compete on quality with modern production lines. That is how to compete in the global market.

Thanks to UK workers, we achieve this objective, only to have the rug pulled from under our feet because our employment laws are insufficient and make British workers the easiest to get rid of in Europe. We need to adopt the working time directive to improve employment, and to couple that with better rights for temporary and agency workers. Casual and insecure work is now common with more than 2 million workers employed on a temporary basis. Agency staff perform a wide range of tasks. They carry out technical, administrative and production work; they work in finance departments, and are IT and computer specialists.

In a complex survey carried out in the motor industry, 80 per cent. of the companies represented used agency workers. A further 72 per cent. reported that the use of agency work had increased over recent years. What was more surprising and worrying was that 81 per cent. of trade unions representing those firms had no say in the decision to introduce agency work. Agency workers are common in the motor industry and they should have equal rights in pay, hours, holidays, training and terms and conditions. That has got to be our objective and where we must start to push forward.

If UK car manufacturing is to have a future, it has to be in the high-skill, high-tech sector, where considerable time and energy is spent on R and D, and on bringing production to fruition in the UK. That will be transferred into UK manufacturing jobs, if employees are not undermined by weak employment law. In addition to strengthening employment law the Government have a part to play in encouraging companies to invest in skills, innovation, R and D and capital equipment expenditure in order to ensure competitiveness. Vehicle and component manufacturers need both basic and specialist engineering skills to compete.

A recent report by the Confederation of British Industry showed that since the mid 1990s the number of students obtaining a first degree in engineering and technology has fallen by 11 per cent. Greater emphasis has to be placed on engineering and manufacturing as a long-term solution to ensuring that we maintain the skills required to compete in the future. The provision of skills and training should be a shared responsibility between employers, individuals and the Government, and employers should be offering or assisting individuals to access training that will help their long-term employability. The Government should set an example.

Dr. Kumar: The Government have an opportunity to promote engineering in schools. The Government should take the initiative. A recent report by the Royal Academy of Engineering made the point that youngsters are not interested in engineering. Perhaps the Government could make a positive effort. Will the Minister take that up with the Department for Innovation, Universities and Skills?

Mr. Hoyle: My hon. Friend is absolutely right. We must make engineering trendy and look at it in the same way as the Germans, who put engineering first. That is important. The classics might be good for some, but they do not constitute the backbone of the country.

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John Hemming (Birmingham, Yardley) (LD): Does the hon. Gentleman share my concern that the precursor to engineering—physics funding—has been cut recently by the Government? Does he accept that exchange rate stability is important to the global market?

Mr. Hoyle: We know that there is a global market out there. However, as the hon. Gentleman knows, most people still deliver in dollars. No one can get away from that fact, no matter how pro-European they might be.

I have continued to press Departments to procure more cars built in the UK. The Ministry of Defence must procure more trucks and vans built here. I have looked into the spread in procurement by the police, ambulance and fire services and by other Government agencies, and I see no recognition of the need to buy British. I am deeply concerned at the apparent hurdle that needs to be overcome. What is wrong with buying British-built products? It is so important that we do so. It is something that the Government and their agencies have to do. Local authorities, the police, fire and ambulance services and primary care trusts have a big spend, but only 26 per cent. of the cars they use are built in the UK. That is ridiculous; it is absolutely absurd. Do we really believe that Italy, Germany and France would do that? We are meant to play on the same playing field, but if they tilt the situation their way, let us tilt it our way.

Peter Luff: The hon. Gentleman plays a valuable role on the Business, Enterprise and Regulatory Reform Committee, which I chair, and it is a privilege to hear him talking that way. However, does he agree that although the symbolism of buying British matters, the symbolism of buying the right environmental technology matters, too? In that context, is it not doubly strange that the Government drive so extensively Toyota Priuses, whose environmental credentials are dubious when compared with British-made, high-technology diesels, for example?

Mr. Hoyle: I am coming on to that very point. My right hon. Friend the Member for Warley (Mr. Spellar) has already made it, and I am building up to it. The hon. Member for Mid-Worcestershire (Peter Luff) is absolutely right, and we must mention it.

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