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12 Dec 2007 : Column 89WH—continued

10.41 am

Charles Hendry (Wealden) (Con): It is a pleasure to follow the upbeat speech by the hon. Member for Solihull (Lorely Burt). I join other colleagues in congratulating the hon. Member for Chorley (Mr. Hoyle) on once again securing a debate on this issue and on introducing it in the passionate and sincere way that we have come to expect—indeed, there were a few challenges in there for the Government as well.

I am glad that the debate has focused on the positive side of the car industry and on what is going on. As the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) emphasised, however, the debate is being held against the background of a decline in manufacturing generally. One million manufacturing jobs have been lost over the past 10 years and manufacturing’s share of our GDP has fallen from about 18 to 13 per cent. over the same period.

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We should be in no doubt, however, that the car industry has been fighting back with great vigour and we should rightly be proud of it. It still accounts for 10 per cent. of manufacturing turnover and it also accounts for £20 billion of exports, or 10 per cent. of the total. As others have said, the industry’s output of 1.8 million vehicles is historically good, with the overwhelming majority being exported.

The sector is investing heavily in research and development, with £1 billion going into R and D this year. The Society of Motor Manufacturers and Traders estimates that 2,000 businesses around the country are completely dependent on the automotive sector for their business. That has resulted in an extra 140,000 jobs and a turnover of £12 billion, with a further £3 billion in turnover and 50,000 jobs being created among more general suppliers to the industry. We are therefore talking about not only the major names, with which we are all familiar, but a vast range of other companies, which are completely dependent on the success of the British motor industry for their survival.

We are seeing much greater specialisation than we have in the past. As others have said, the United Kingdom has become a global centre for excellence in the production of engines, and we will produce 3 million engines this year, compared with 2.4 million in 1999. Ford is creating 250 new jobs at Bridgend, and 25 per cent. of global demand for the company’s engines will be sourced from the United Kingdom.

I listened with interest to the hon. Member for Dagenham (Jon Cruddas). It is perhaps ironic that it will not be possible for people in London to drive vehicles containing many of the engines made at Dagenham once the Mayor’s new super-congestion charge comes in, because those engines will be too large, but we should nevertheless celebrate the success that Ford has brought to the factory.

This country has the largest collection of specialist car manufacturers of any country in the world. We have seen an increased commitment from Bentley and a brand-new Rolls-Royce factory. In this day and age, it is remarkable to have a completely new concept for a motor car and a new facility such as that being set up in Chichester. In addition, Ford has invested £800 million in Land Rover, Range Rover and the Jaguar XJ and XK.

The hon. Member for Chorley was churlish—or perhaps the hon. Member for Churley was chorlish—in the way he spoke about Ford. We should recognise that some great brands, such as Jaguar and Aston Martin, would have disappeared had it not been for Ford’s ownership and investment in R and D and design facilities. The fact that they are now being sold on says more about the global state of Ford than about its affection and love for them.

Mr. Hoyle: Those are great brands, and there has been great investment by Ford. The company has driven things so well and put all these new measures in place, but it is now selling, and that is my regret—not what the company has done otherwise.

Charles Hendry: If there is a silver lining in this story, it is that these brands will now be central to the goals of the companies that own them, rather than being a niche element in a major company. I happened
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to go to Aston Martin yesterday for the unveiling of its new concept car, the V12 Vantage RS, and the opening of its design studio—obviously, someone has to go. Some might think that the company has lost its way, but it has a greater sense of direction and greater passion than it has ever had before. Indeed, we have spoken about environmental issues, and the company’s new design studio uses 80 per cent. less energy than a typical building and it was built more cheaply. These companies are leading the world not only in the design of their motor cars, but in the way in which they develop them.

We should not be shy about celebrating success. One challenge is that we should be able say, “You can be green and have fun.” We should not say that we all have to move away from specialist cars simply because of environmental issues—we must keep the issue in proportion. We should celebrate the fact that Aston Martin is apparently this country’s coolest brand. Most of us do not know a huge amount about being cool, but I think that we would agree that Aston Martin is our coolest brand—indeed, it was this year’s luxury car of the year globally. The company has created 1,800 jobs since 2000, with another 2,000 to 3,000 jobs being created among its suppliers. As the company’s chairman, Dr. Ulrich Bez, said last night, the company has been given a future, based on its core values of engineering and design.

There are other areas of specialist engineering in which this country is leading the world. Ricardo, an engineering company that started in Shoreham, but which now works globally, has a fantastic record, with 70 per cent. of its work taking place outside the UK. As has been mentioned, we are also global leaders in motor sport development, but perhaps that should be the subject of a further debate, given the lack of Government support that the sector receives.

The contribution made by the mass-production car companies has rightly been recognised in the debate. Tributes have been paid to Nissan, Honda and Toyota, and mention has been made of the massive success of the Mini, which has brought so much joy to people across the country. That success has been possible because of the commitment that such companies and their parents have shown to investing in research and development. Ford has put £800 million into R and D in the UK and employs 9,500 people in its three technical centres. As has been mentioned, it has invested £1 billion in green technologies, most of which will be delivered through companies and centres in the UK.

As has been rightly said, however, there are concerns, including about skills. We are not producing enough graduates with the skills that the automotive business requires to prosper in this country. Ricardo has had to open a technical base in the Czech Republic to identify graduates with the skills base that it needs. We should tie into that a general concern about the status of engineering. Too many people who study engineering end up being thought of as technicians—people who will come and mend the boiler when it goes wrong—rather than as people with an extremely important degree.

Dr. Kumar: Will the hon. Gentleman give way?

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Charles Hendry: I hope that the hon. Gentleman will forgive me, but I will not give way, because time is short.

Engineering should be given much higher status in this country. We should also be concerned about the loss of specialist departments. We have lost 31 physics departments and five maths departments. If we want to attract high-technology investors to this country, we will have to do more to encourage young people to study science and engineering so that companies know that they can come here and find people with the skills that they need.

We clearly face global competition, and global companies must take difficult decisions, but I say to the hon. Member for Chorley that employment protection is not the way forward. It might force some people to stay who might have chosen to do other things, but it will also drive away the new investment that we need.

Finally, as to green issues, the motor industry is leading change. It is not the laggard that it is often portrayed as. New materials are being used, such as carbon to reduce vehicle weight; brilliant design improves motor cars’ aerodynamics and fuel efficiency; and we have some of the world’s best engineering minds examining how to develop clean diesel, biofuels and hydrogen-powered cars. The industry sees the environmental challenges clearly, and comes up with unbelievably brilliant and sophisticated solutions. The hon. Members for Birmingham, Northfield (Richard Burden) and for Dagenham rightly referred to the issue that faces some of our niche manufacturers in relation to carbon targets. I hope that the Minister will reassure us that he is fighting Britain’s corner on that.

This debate was well worth having, because it has given us all the opportunity to pay tribute to a great British success story.

10.50 am

The Minister for Competitiveness (Mr. Stephen Timms): This has been an excellent debate, and I, too, congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing it. He and all the other hon. Members who have taken part have shown that passionate support for UK car manufacturing continues in the House. I welcome that; such support is one of the industry’s strengths. I assure hon. Members that the Government are determined to sustain success in UK car making.

My hon. Friend was right to draw attention, as other hon. Members did, to successes, which include that of Vauxhall Ellesmere Port in beating off fierce competition from elsewhere in Europe for the new Astra. That example shows what can be achieved when management, Government, regional agencies and, crucially, the work force and the trade union, work together to win new investment. I thought that my hon. Friend was a little churlish in his comments about new plant, because that was an important win for the UK against fierce international competition.

The Mini is a second example of success. I very much enjoyed attending, with my right hon.—and also tall—Friend the Member for Oxford, East (Mr. Smith) the launch of the Mini Clubman on 11 September. That is a fantastic success. We have raised with the Home Office my right hon. Friend’s important point about language
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requirements on employees from elsewhere, and we shall continue to keep in touch with the Home Office about that. In addition to developments in relation to the Mini, there are record production levels at three other volume car makers: Honda—as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) mentioned; Land Rover, to which the hon. Member for Solihull (Lorely Burt) drew attention; and Nissan, to which my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) effectively drew the House’s attention. I thank my hon. Friend for his kind words; it is a remarkable and impressive story. All those car makers are producing excellent new products that are in high demand.

All that I have described means that despite the terrible loss of Peugeot Ryton it looks likely that UK car output for this year will be higher than last year’s. We exported more UK-made vehicles and engines last year than ever before. My hon. Friend the Member for Dagenham (Jon Cruddas) and the hon. Member for Wealden (Charles Hendry) were right to emphasise the importance, and success, of engine making in the UK.

Of course there are big challenges. The global industry is intensely competitive and is undergoing enormous change. Jaguar Land Rover is very important to the UK economy, sustaining, as we have heard, more than 15,000 direct jobs, not to mention many more in the dealer network and the UK supply chain, with which Jaguar and Rover are particularly closely integrated. The business is also a significant research and development investor. It is not a business in crisis.

The hon. Member for Solihull was right to talk about the record production levels at Land Rover. The combined business is profitable. I agree with the optimism of my hon. Friend the Member for Chorley about the prospects for the new Jaguar model, as well. We have therefore attached high priority to close engagement with Ford and with the sale process. There have been regular ministerial contacts with senior Ford management. Our objective is a long-term future for Jaguar Land Rover businesses in the UK. We shall do whatever we can to help to secure that, and will certainly work as closely with any new owner as we always have done with Ford, to that end.

We shall also work more widely to ensure that the automotive sector in the UK can sustain its competitiveness in the face of the twin challenges of low-cost competition and the transition to low-carbon technologies, about which hon. Members have spoken. We shall continue to support investment, where we can, and to work on skills. The automotive sector in particular will benefit greatly from being an early focus of the National Skills Academy for Manufacturing, which was launched last year. We shall continue to focus on the challenges faced by the automotive supply chain, with our supply chain groups programme, which was launched in 2003.

I particularly want to comment, in the few minutes I have left, on the issues raised in the debate about the environmental challenge that car making in the UK needs to address. Some important points were made. I agree with much of what my hon. Friends the Members for Birmingham, Northfield and for Dagenham said. Professor Julia King set out the scale of the challenge
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in her report for the pre-Budget report. Her assessment was that delivery of our overall carbon reduction target will require a 50 per cent. reduction in new car emissions by 2030 and complete decarbonisation by 2050. The final report, for the coming Budget, will make more specific recommendations to inform our development of policy on how to respond to that large challenge.

I think that the challenge is one that the UK automotive sector can be confident about. As my hon. Friend the Member for Dagenham said, the UK is Ford’s European centre for powertrain development. The company announced last year a £1 billion commitment to the development of lower-carbon vehicles in the UK. In addition to that, as the hon. Member for Wealden also mentioned, we have world-leading independent design engineering, including MIRA, Prodrive and Ricardo. We have a range of strengths in emerging low-carbon vehicle technologies, including world-beating work in some of our universities on, for example, battery chemistry and hydrogen storage, and the progress made by such companies as Johnson Matthey and Intelligent Energy with proton exchange membrane fuel cells, and FIFE Batteries with lithium-ion battery development. That is technology at the world’s leading edge, in areas that we know will be crucial.

We are determined to provide support to help with the leverage of competitive advantage from those technology strengths. In September, the Technology Strategy Board announced the launch of its innovation platform for low-carbon vehicles, with an initial commitment of £30 million. I want to make a point to set against the concerns expressed by my hon. Friend the Member for Birmingham, Northfield about the short-term character of the platform. The board expects innovation platforms to last a minimum of five years—perhaps longer. The focus is on the business challenge in the area. We cannot guarantee future funding, but I hope that it will continue at similar levels.

With support from Cenex, the centre of excellence for low carbon and fuel cells, Zytek is, as we have heard, converting up to 200 Smart cars for Daimler from conventional to electric power, to be trialled in the coming months. In the west midlands, the regional development agency has provided well over £30 million to enhance the manufacturing and design capabilities of automotive supplier companies under the premium automotive research and development programme.

Regulation, too, can be a strong driver of innovation, and we shall support EU-wide mandatory targets for new car CO2 emissions. We await the European Commission’s forthcoming proposal about that with interest. I agree with what my hon. Friend the Member for Birmingham, Northfield said about that issue, and we shall work to secure a mechanism that combines ambitious but realistic targets with enough flexibility to allow for the diversity of the European automotive sector—which is reflected in the diversity of production in the UK—from volume producers across Europe, such as Volkswagen and Toyota, to more niche businesses such as Aston Martin or a potentially independent Jaguar Land Rover. I listened with interest to the experiences that the hon. Member for Wealden had with Aston Martin yesterday. It is crucial to get the judgments right, and we shall work hard to do that.

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My speaking time is almost up, but I want to comment briefly on the important points about labour market regulation raised by my hon. Friend the Member for Chorley. Our flexible labour markets in the UK, including the availability of agency workers, have been a significant factor in the successes that we have celebrated in the debate and in attracting inward investment to the UK. My hon. Friend the Member for Chorley does not want to—

Mr. Joe Benton (in the Chair): Order. It is time for the next debate.

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Train Services (Nuneaton)

11 am

Mr. Bill Olner (Nuneaton) (Lab): I am delighted to have secured this debate on rail services at Nuneaton or, as I should perhaps say, on the proposed lack of such services. That is why I have asked for the debate, and why I am delighted to have secured it.

The Minister will know of my anger and that of the wider community at the proposals. He will recall that I have met him twice, and his predecessor once, to protest against the plans. Following that first meeting, there was some movement: instead of nothing stopping at Nuneaton, peak services to London in the morning, and return services in the evening, would at least be planned. However, that is not good enough because there are no services in the morning peak to connect London to Nuneaton, and it denies the people of Nuneaton the ability to travel quickly to the north and back again. By “the north”, I mean Manchester and a place close to your heart, Mr. Benton, Liverpool. Under the plans, the good people of Nuneaton will not be able to travel to your great city on a fast inter-city train.

The Minister should reflect on what Nuneaton is. It is in the centre of the country and a huge operations and logistics hub. In modern times, following the electrification of the railways, we saw the demise of the loco sheds in the town, but it remained a central railway hub between north and south, and east and west, on the west coast main line. That was recognised by the Minister for the West Midlands, my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Byrne), in a speech to the Advantage West Midlands annual conference. He said that transport is a key—perhaps the key—enabler when it comes to sustainable growth and that it is important that the west midlands give close consideration to what investments would make the biggest impact on the community.

Nuneaton is very much part of the west midlands. The previous debate in this Chamber was on the auto industry, which still plays a big part in the area. The Minister for the West Midlands recognised that in his speech to the Advantage West Midlands conference when he said that Government announcement of the enhancement of the freight lines that link Nuneaton to Peterborough and Southampton shows the importance of the link. However, if the link is good enough for freight travel, it is good enough for the people of Nuneaton who demand a good rail service.

The Minister and the operator, Virgin Trains, have received representations from many individuals and organisations on retaining the current fast, hourly services in Nuneaton, including from the Labour-controlled Nuneaton and Bedworth council, Conservative-controlled Warwickshire county council and organisations such as the Guide Dogs for the Blind Association, which submitted a document to the Minister. I should like to express gratitude to a local member of the association, Diana Gidlow, who was active in raising a petition against the proposed reduction of services.

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