Examination of Witnesses (Questions 140-159)
RT HON
LORD MANDELSON
14 JANUARY 2009
Q140 Miss Kirkbride: We are interested
in your ideas, Secretary of State, as to whether or not you think
there is a need to do so and, if so, what that might be?
Lord Mandelson: What are the subsidies
you think I should consider which you would like a response on?
Q141 Miss Kirkbride: We were led
to believe by the press that you are considering it, so we are
interested in what your ideas are.
Lord Mandelson: I am glad to have
had that encouragement from you for more and extensive intervention
in industry and subsidies for important sectors in the economy.
As it happens, I happen to share your concern about this sector.
I think it is a really important employer, a really important
researcher and developer of new technologies, a really important
practitioner of advanced manufacturing technique and skills and
I want to see the automotive sector remain an essential part of
Britain's manufacturing base. I acknowledge, of course, that this
sector is experiencing real difficulties. They are facing a serious
loss of demand which, in the opinion of some in the industry,
will never fully be restored because of changes which are taking
place in the levels and pattern of demand for these products.
Be that as it may, and I cannot speculate on that, we need to
do what we can appropriately take on to enable this sector to
get through the economic downtown. I am currently holding discussions
with the industry representatives. I saw them before Christmas
and I am going to see them again at the end of this month to see
whether there is appropriate help or interventions that we can
make. Of course, their main issue is the credit crunch, the shortage
in the availability and reasonable pricing of credit. The schemes
and initiatives which the Government has gone live with today
will help companies in this sector, in the very important supply
chain for this sector as for others and I hope they will take
advantage of it. As I say, if there are other things we can do,
then we will consider those in discussions. Before Christmas I
asked the European Commission to take a Europe-wide view of what
is going on in this sector. They are holding an important meeting
this Friday, for which I am travelling to Brussels to represent
our country and our sector. In the light of what I hear at that
summit from ministerial colleagues amongst other Member States
as well as from the industry, I will continue my discussions with
my colleagues.
Q142 Miss Kirkbride: Do you think
it is a problem that France and Germany have already gone ahead
to help their car sector because obviously that creates an unlevel
playing field in terms of if our Government was to choose to do
nothing?
Lord Mandelson: I understand why
they have gone ahead. They are both trying to give some help to
the finance arms of car companies as well as underwrite the investment
in their R&D and new green technologies. I know why this is
attractive, why these approaches are attractive to many in Britain
and that is why we are keeping them under review.
Q143 Miss Kirkbride: The fact that
others are doing it, therefore, it becomes a problem if we do
not, does it or does it not?
Lord Mandelson: Given Europe's
single market, I think it would be better if the same rules, standards,
benefits and advantages were applying across the EU.
Q144 Chairman: This does look to
be strangely like state aid issues are being raised here by some
of these steps that are being taken in individual markets. Julie
is right to highlight France and Germany, but also Italy, Spain,
Sweden, Portugal and Romania are all doing or thinking about doing
things which look very much like state aids to me.
Lord Mandelson: Of course, as
you know, the state aid rules in the EU have been somewhat relaxed.
They have been made more flexible and more rapid in decisions
that are taken. I think this is inevitable in the economic circumstances,
although I hope it will not remain permanent. One European-wide
initiative, of course, which has been taken is in relation to
the European Investment Bank.
Q145 Chairman: Clean transport facility.
Lord Mandelson: Yes. A major sum
of money has been set aside by the bank for investment. It is
not acceptable, in my view, either that the EIB discriminates
in its investments and its favours between the sizes of company
or between EU Member States. I will be looking very carefully
at the practices of the EIB to make sure there are fair shares
operating across Europe where there is need.
Q146 Miss Kirkbride: If you were
to create some form of scheme in the way you have done schemes
to date, would it be important that all car companies in the UK
could apply to it or are you really just thinking about Jaguar
Land Rover, which is the one that has been mentioned in the press?
Lord Mandelson: Which one of the
schemes today that we have announced, do you mean the loan or
the working capital or what?
Q147 Miss Kirkbride: What I am asking
is, for the car manufacturers not the supply people who you have
mentioned that you have dealt with today, if you were to come
up with some financial support, that kind of scheme, would it
apply to all car manufacturers in the UK or are you really looking
at Jaguar Land Rover and specific car manufacturers?
Lord Mandelson: It depends on
their need.
Q148 Chairman: Can I put to you what
their need might be, for help in research and development. Jaguar
Land Rover account for something like half of all automotive R&D
investment in the UK. Making sure the Technology Strategy Board
focuses its funds properly on its green automotive projects, for
example, would be a way of giving help to the UK industry which
would not fall foul of state aid rules and might help JLR very
considerably.
Lord Mandelson: This is one such
idea that is under consideration by the Government. Here JLR's
performance is very strong. We are talking about something in
the region of £480 million spend on R&D by the company
investing heavily in low carbon technologies, in hybridisation
and light-weighting. This is very important, not just for the
company but for the sector as a whole, but also for our manufacturing
future in this country. I do not believe it would be right for
anyone to stand by and see this sort of investment going to the
wind just because of the current economic pressures we are experiencing.
Q149 Miss Kirkbride: You are more
attracted to areas of supporting R&D and perhaps green industries
than you are to supporting more directly the manufacturing jobs
base?
Lord Mandelson: I need to look
at the impact of any large-scale redundancy or potential business
failure on a region's economy, employment base and skill base.
I also have to look very carefully at what sort of contribution
we think a company which is under threat in that way will make
to Britain's future manufacturing strength and economic success.
We have a major challenge in this country, a very beneficial challenge,
in converting our economy to low carbon production, low carbon
technologies, low carbon goods and services. This is going to
be a major generator of business growth and job creation for the
British economy. We are talking potentially of millions of jobs.
In my view, we should not be prepared to see the downturn that
we are currently experiencing setting back or even jeopardising
our ability to convert to a low carbon economy in the ways that
I have described. If it means taking action now, both through
a low carbon industrial strategy, which I am working on closely
with my colleague, the Energy and Climate Change Secretary, Ed
Miliband on which—
Miss Kirkbride: With whom you are getting
on very well, we hear!
Q150 Chairman: From the Guardian
this morning.
Lord Mandelson: --- plans and
measures will be laid before you or in respect of particular areas
of research and development which we need to support, you will
find the Government paying very close attention, within the financial
means and limits we have, to doing what we can to take forward
this goal.
Q151 Chairman: Just to intervene
for a second, as you raised this.
Lord Mandelson: I have not read
the Guardian this morning.
Q152 Chairman: The headline here
says, "Miliband and Mandelson battle for top staff to back
rival green agendas. `Clash of generations over pro-industry policy
bias; credit crunch pits jobs against climate change".
Lord Mandelson: I do not think
I am that much older than Ed Miliband, what do they mean by that!
Q153 Chairman: I am afraid you are!
Lord Mandelson: These young Turks!
Q154 Chairman: You can assure us
there is no truth in the Guardian's suggestion that you
are at war with the Department of Climate Change, you are working
co-operatively with them in every way possible?
Lord Mandelson: I do not understand
what the story is about, we are competing for top jobs?
Q155 Chairman: You are fighting over
the whole agenda and the people who will implement it. Hundreds
of civil servants are swishing around between your two Departments
as you argue over the turf wars as to who does what in Government.
Lord Mandelson: Absolute and complete
stuff and nonsense. Who wrote the story?
Q156 Chairman: David Hencke.
Lord Mandelson: No further comment!
Q157 Miss Kirkbride: Secretary of
State, I was wondering whether TATA'S sponsoring of Formula 1
has helped their case?
Lord Mandelson: I do not think
it is the biggest factor.
Q158 Mr Hoyle: Obviously you have
touched on what part of the West Midlands will benefit Liverpool,
Jaguar Land Rover, but we have got more vehicle production than
that. I understand you have met with Leyland Trucks, which is
very important to the North West, the last major truck builder
in the country. Also, we have got van production with Transit
and LVA. What can we do to ensure they have got a future? What
support we will give to the car industry presumably can be replicated
across the van and truck industry as well. Have we thought about
the biggest problem we that are facing within the truck industry
is people are frightened about replacing their vehicle fleets
and I wonder if we can do something with tax breaks to encourage
people to replace their fleet or even spending some of that £600
million within Royal Mail because they do buy Leyland Trucks and
they buy British built vans and I wonder if we can do something
there. The other key is, of course, you talk about playing fields,
but when I look at Europe: Italy, Germany, France always manage
to buy their own built vehicles. What can we do through procurement
to ensure that we buy British built vehicles and that your ministers—I
know your claim to fame the last time you were here was you quite
rightly ride around in a Jaguar—your great team also rides
around in British built vehicles because I think if we are going
to flag wave, let us do it with our ministers as well.
Lord Mandelson: I am still driving
the Jaguar.
Q159 Mr Hoyle: I know, I watch your
car go out with great interest!
Lord Mandelson: And support?
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