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Rebecca Paul (Reigate) (Con)
I beg to move,
That this House has considered Government support for employment in the automotive manufacturing sector.
It is a pleasure to serve under your chairmanship, Sir John. The automotive industry is an important part of the UK economy, contributing £93 billion in turnover and £22 billion in value added. It invests around £4 billion each year in research and development and employs around 0.8 million people across the wider industry. Many of these are high-skilled, high-paid jobs, of which a considerable proportion are outside London and the south-east, but I am pleased to say that some of these high-value jobs are in the south-east, in places like my constituency of Reigate.
In Burgh Heath, just down the road from Epsom, we find the UK headquarters of Toyota. It is not only one of the biggest employers in the local area; it is also an eco-HQ. In a project that started in 2014, Toyota partnered with Kew royal botanic gardens and the Surrey Wildlife Trust to create a landscaped oasis full of native species from the surrounding countryside, complete with an orchard and meadow. It is wonderful to see a business taking the time and energy to ensure its HQ fits into our special corner of Surrey.
And it does not stop there. Outside the site, Toyota has supported many local initiatives, from providing rooms for community meetings to providing buses for local groups and charities. In 2024, more than £40,000 in grants were given to support the work of local groups, including, to name just a few: the Brigitte Trust; Home-Start Epsom, Ewell and Banstead; St Catherine’s hospice; and Warren Mead school parents and friends association. Before I talk more broadly about the automotive industry, I want to take the opportunity to thank Toyota GB for its significant contribution to the Banstead, Burgh Heath and Epsom area.
The automotive industry is important to this country and our economy, and it is vital that it is not smothered by over-regulation, over-taxation and green initiatives. Only by creating an environment that is conducive to growth will we see the creation of more high-quality jobs. UK car and commercial vehicle production saw a significant decline of 11.6% in February 2025. Worryingly, that marks the 12th consecutive month of declining car production. This must be an important wake-up call. More must be done to protect the automotive industry we already have, to help it grow and to encourage inward investment in new plants and new technologies. It can only continue to create new jobs and innovative technologies with growth-supporting policies.
The automotive industry accounts for over 12% of total UK goods exports, generating £115 billion of trade in total automotive imports and exports. Eight out of 10 cars produced in the UK are exported overseas to 140 different countries, but automotive manufacturers now face additional US tariff costs of around £1.9 billion, which will have a significant and detrimental impact on the industry. The USA is the UK’s second largest car export market after the EU, with exports of over 101,000 units in 2024. These tariffs have material implications for competitiveness, investment and export potential, and it is vital that the Government’s policymaking reflects this new protectionist and uncertain environment. With this massive setback to the industry, it is now even more important that we get things right domestically, to create an environment that stimulates growth for this important industry. I want to raise some of the biggest challenges here in the UK, and I ask the Minister to confirm her plans to address them.
In simple terms, for an industry to thrive, it needs to be able to manufacture products at competitive cost, employ people with the skills it needs, have free access to a market for its products without barriers or restrictions, and not be taxed to high heaven, so that it can reinvest in innovation and growth. A good product will always do well. If it is something someone needs, if it provides value for money and if it makes their life easier, they will buy it—it really is that straightforward—so let us talk about the zero emission vehicle mandate challenge first.
The ZEV mandate sets out the proportion of new zero emission cars and vans that manufacturers are required to produce each year up to 2030: 80% of new cars and 70% of new vans sold in Great Britain must be electric vehicles by 2030, increasing to 100% by 2035. Part of the reason for introducing this policy was to provide investment certainty for the charging sector to expand the network, given that lack of charging points is one of the things that puts consumers off buying an electric car. There can be no doubt that it is a well-intentioned policy, but as the old saying goes, the road to hell is paved with good intentions.
Notably, the moving of goalposts by Governments of various colours in recent years has been deeply unhelpful. The previous Government made the decision to delay the ban on new diesel and petrol cars by five years, from 2030 to 2035, whereas the new Government have reversed that. Putting aside the question of which position is the correct one, such chopping and changing is not fair on the automotive industry, which needs certainty and consistency so that it can deliver what is expected of it while still growing its businesses.
I do, however, recognise the Government’s recent announcement about increasing the flexibility of the ZEV mandate, which is welcomed by the industry and shows that the Government are listening. In particular, I welcome the reduction in fines for missing targets and the allowance for all forms of hybrid cars until 2035. However, I would suggest that the whole approach in this area needs to be reconsidered as a priority. Tinkering is not enough.
The ZEV mandate targets are incredibly challenging for businesses to meet. It makes no sense to expect businesses to dictate what products their customers should buy, when we all know that consumer preference and need should drive the products that a business sells, and rightly so. In 2025, ZEV sales will need to increase by 43% for cars and 171% for vans for automotive businesses to achieve the mandate targets. That is not achievable, and a fine of £12,000 per vehicle is levied on those businesses for every missed EV sale.
The automotive industry cannot win on this one. Consumers are not ready to buy EVs yet, because of the lack of charging infrastructure, the battery range issues and the cost, but the automotive businesses will be held responsible and expected to pay the price. If we continue in that way, we will see contraction of the industry, plant closures and job losses, all in the name of net zero. That has already started, with Vauxhall owner Stellantis announcing plans to close a van factory in Luton that employs around 1,100 people.
The industry has already invested billions in bringing more than 130 ZEV models to market. Despite spending some £4.5 billion in market support for EVs in 2024, it still missed last year’s target by some way. Such a level of support from industry is unsustainable and is diverting resources away from investment in new technology, models, plants, and research and development. I urge the Government to take responsibility for their role in delivering charging infrastructure and lowering energy costs, rather than beating businesses over the head for their own failings.
I also urge the Minister to review the mandate targets as soon as possible and to consider other, more effective ways of driving growth in EV take-up. It would make much more sense to incentivise consumers, rather than penalising businesses. The ZEV mandate targets cannot magically drive demand out of thin air. What we need is more carrot and less stick.
Has the Minister considered such alternative options as reducing the VAT on EV sales and public charging, or offering plug-in grants for cars? Those could be straightforward and effective ways of boosting consumer demand. If the Government are wedded to the current draconian ZEV mandate approach, the fair thing would be for them to commit to delivering public charging infrastructure on equivalent targets.
For example, in 2025 the target is for 28% of new car sales to be electric, so the Government must ensure there are sufficient public charging points across the UK to serve those new EVs by the end of 2025. If the Government fail to do that, the shortfall should be offset against the fines levied on the automotive industry, reducing what it has to pay. Surely that is fairer. The Government need to play their role and must also be held to account when they do not deliver.
Before moving on, I want to touch on domestic energy prices, which apply to all manufacturing industries, not just automotive.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady for securing the debate. I did some research on the industry back home in Northern Ireland, and I am sorry that I cannot make a speech because I have sponsored an event at 10 am, and it cannot happen if I am not there.
We have a vibrant automotive sector in Northern Ireland that provides some 11% of employment and 13% of gross value added. That is down not just to Wrightbus, which has great sales across the United Kingdom and further afield, but to the rest of the automotive industry in Northern Ireland. Does the hon. Lady agree that the Government need to step up in supporting businesses and helping research and development? We have the skills, but we need the support, and today’s debate is a significant step forward for the industry across this great United Kingdom. Research and development is on the mainland, yes, but it is also in Northern Ireland. The Minister knows that already and, I suspect, is already on it.
Rebecca Paul
I agree with the hon. Member on the importance of supporting businesses. We must make sure that we remove obstacles and barriers that hinder growth. I hope that conversation starts today and that we can get to a better place where we support our amazing automotive industry, which delivers so much for this country, including Northern Ireland.
Energy costs must come down. The industry cannot manufacture at a competitive cost with energy costs being so high compared with what other countries pay. We must not shoot ourselves in the foot with a net zero obsession. We must make sensible decisions on the energy mix to ensure energy security and value for money so that our manufacturing industry can compete on the global stage. That means investing in nuclear and not making the mistake of thinking that solar and wind are a silver bullet.
I urge the Minister to share her views on how she intends to reduce energy costs for manufacturing industries in the short to long term so that they are better able to compete. I recognise that some of this goes across many briefs, so I appreciate that this is not something over which she has full control.
Another important challenge is ensuring that we have a skilled workforce. Research by the Institute of the Motor Industry suggests that around 107,000 additional technicians will be needed by 2030. That is an amazing opportunity for this country. The more the industry grows, the more jobs and opportunity there will be, but we must ensure that we have people here with the skills to take up the jobs to ensure the industry’s success.
That is why it is so important to support apprenticeships, which are a great way for young people to gain the skills they need while working. A survey from the Society of Motor Manufacturers and Traders in February 2025 found that the UK automotive sector will increase apprenticeship numbers by 16% in 2025, with opportunities spanning manufacturing, supply chain logistics and vehicle maintenance. The most in-demand roles are design and development engineers, EV technicians and specialists in batteries and power electronics. That equates to over 700 new apprenticeships available among UK automakers.
I want to take this opportunity to mention East Surrey college in my constituency, which offers full-time and part-time qualifications in vehicle technology, maintenance and electric/hybrid vehicles. I recently visited and was impressed by the expert teachers, the well-equipped workshops with industry standard equipment, and the very talented and engaged students. We must ensure that we provide the right courses so that people with the right skills will be available to fill job opportunities in the industry. East Surrey college is certainly playing its part.
I ask the Minister to clarify what the impact of abolishing level 7 apprenticeships will be on the automotive industry and how she plans to mitigate any detriment. Additionally, I urge her to consider how the new Government’s Employment Rights Bill will impact on the automotive industry. In February 2025, a Motor Ombudsman survey found that 58% of businesses reported difficulty in recruiting qualified technicians to meet growing workload, and that those difficulties would be made worse by the Employment Rights Bill, which is causing businesses to re-evaluate their hiring strategies.
It is vital that the UK remains competitive and that the industry is not further burdened when it already faces so many challenges. It is clear that the rise in employer national insurance contributions is putting additional pressure on the automotive industry, with a cost of £200 million. The increased cost of doing business in the UK will reduce inward investment, economic growth and ultimately jobs. The Institute of the Motor Industry stated:
“These changes are likely to have a significant impact on costs for small businesses that operate in the automotive sector, which is already facing a skills gap of 20,000+ vacancies.”
It went on to say that the additional costs will
“dampen investment in training and continuous professional development”.
If the Government are really committed to boosting job opportunities and growth in the automotive sector, they need to reflect on some of their recent policies. Just saying that growth is a priority does not make it so. They need policies that do not put obstacles in the way.
Lastly, I want to raise the challenge of taxation. In the interests of time I will not speak in detail, but the automotive industry has raised concerns about recent announcements on proposals to ban employee car ownership schemes and changes to capital allowances and benefit-in-kind treatment for double-cab pick-up vehicles. The SMMT is concerned that those changes will
“undermine the market, hit profitability and viability and have serious consequences for UK tax returns, automotive OEMs and their employees, and sole trader/small business operations.”
Will the Minister confirm whether there are any plans to remove or adjust the vehicle excise duty expensive car supplement?
That is enough from me for now. I will bring my comments to a close so that anyone else who wishes to contribute has the time to do so. I thank all hon. Members for attending the debate and showing their support for the automotive industry.
Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)
It is a pleasure to serve under your chairship, Sir John. I thank the hon. Member for Reigate (Rebecca Paul) for introducing this timely debate, particularly in the light of the turmoil and uncertainty caused by US tariffs.
As on many occasions, I rise to champion a flagship site of the UK automotive sector: Jaguar Land Rover’s engine manufacturing centre at the i54, which is just outside my constituency. That world-class facility employs 1,700 people, with many of them living in my constituency. I welcome the 100 more roles recently announced as part of JLR’s drive towards electrification, which is part of an additional £18 billion investment over the next five years.
The UK automotive sector is a cornerstone of our manufacturing economy, generating £93 billion in turnover last year and supporting hundreds of thousands of skilled jobs. Yet, today, the sector faces serious uncertainty following the announcement of a 25% US tariff on automotive imports. I am therefore here to seek urgent clarifications. First, what progress has been made in negotiations with the US to remove or reduce those damaging tariffs? Secondly, in the worst-case scenario—the absence of a deal—how will the Government act to support the industry through the immediate and longer-term challenges?
The US is a crucial market for JLR, accounting for around a quarter of its global sales. A prolonged 25% tariff would hit the business and the UK auto sector disproportionately. We need a deal that prioritises reducing those barriers. I support the calm, clear and statesmanlike leadership of our Prime Minister amidst the turbulence and erratic policy shifts from across the Atlantic. However, if a deal cannot be secured, the Government must act swiftly to protect jobs, sustain investment and safeguard our industrial base.
In the west midlands, we are talking about a potential £6.2 billion hit—the biggest regional impact in the UK. The support announced at JLR’s Solihull site in April is welcome. To support the transition to net zero and the automotive sector, the Prime Minister has introduced pragmatic changes: easing EV targets, allowing cleaner petrol cars to count towards quotas and extending hybrid sales to 2035. Those realistic steps back innovation, while keeping our ambitions intact.
We must now fully deliver on our promise to protect British industry from global shocks. That includes supporting time to pay arrangements, to help manage cash flow; cutting energy costs; and creating a new advanced manufacturing partnership with the west midlands to bolster supply chains and drive growth.
Finally, I want to highlight another reason why JLR is such a vital employer in my constituency: its outstanding commitment to skills and apprenticeships. With 350 new places across BTEC and T-level routes, from engineering to electrification, it is building the workforce for the future that we so badly need. It is a powerful example of how business and education work in partnership, hand in hand, to secure long-term prosperity.
I again ask the Minister, what progress has been made in securing a deal with the US? If one cannot be reached, what specific support will the Government provide to protect this vital sector and ensure that world-class facilities such as JLR’s i54 site can continue to thrive?
Antonia Bance (Tipton and Wednesbury) (Lab)
Thank you for indulging me, Sir John, and for letting me speak after I walked in so late. I also thank the hon. Member for Reigate (Rebecca Paul) and congratulate her on securing this important debate.
We have heard today how strategically important the automotive industry is for our country and about the £93 billion turnover across the industry and its supply chain. I would also like to flag how important the industry is to many of our regional economies. In my constituency, which covers Tipton, Wednesbury and Coseley—the home of the industrial revolution—we have 21,000 manufacturing jobs across 1,000 firms, many of them in the supply chain for the automotive industry.
I recently visited J.H. Lavender & Co., which makes cast aluminium casings for JLR’s new electric Land Rover. It was incredible to see the process go from the silver liquid all the way through to the finished casing. Those world-class products are made in a family firm in the heart of my constituency. Truflo makes industrial air-cooling fans that go in industrial vehicles—the construction and heavy goods vehicles we are all so familiar with—and exports across the world, including to China and the US. As my hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge) so eloquently outlined, the west midlands is also the home of Jaguar Land Rover, with its 34,000 jobs—many of those people live in my constituency—and 200,000 jobs in the supply chain.
The automotive industry faces two key challenges: transition and tariffs. On the transition piece, automotive is critical if we are to reach net zero. I do not believe that this country will give up its cars—I certainly do not want to give up mine—so it matters that we move towards net zero in a way that is sustainable and that supports the freedom that owning a car brings. We can see that the investment towards that net zero future has already begun, whether it be JLR’s investment of £18 billion over the coming five years or the investment elsewhere in the industry. I was so glad the Prime Minister went to JLR in April to announce the flexibilities that have been needed for so long in the ZEV mandate to smooth the requirements, cut the fines and ensure that there is a continued role for hybrids.
We know there is more to do to increase the uptake of electric vehicles, whether that be on consumer demand or the charging infrastructure we need. More broadly, I hope that the industrial strategy, when we see it, takes action on the issues that have held back advanced manufacturing: skills, access to finance—particularly in the supply chain and for smaller manufacturers—and energy costs. I was absolutely appalled to hear Nissan tell the Business and Trade Committee two weeks ago that its plant in Sunderland is its most expensive in the world, because of the energy costs. It will be great to hear the Industry Minister’s thoughts ahead of the industrial strategy, although I know she will have more to say in the coming months.
Let me turn now to tariffs. This morning, I talked to Richard Parker, our Mayor of the West Midlands, and his team. They have produced research by Steve Rigby, which my hon. Friend the Member for Wolverhampton North East touched on, showing a £6.2 billion hit to the west midlands economy from the US automotive tariffs if nothing changes—the biggest regional hit in the country. Some 52% of firms in our local manufacturing base are warning about profits because of the tariffs.
JLR alone accounts for 4% of UK goods exports. We need a deal, and soon. I thank the Prime Minister, the Chancellor, the Business Secretary and the Industry Minister for their calm approach to the negotiations. That is right, but we must get a deal; otherwise, that impact will be coming down the road in my constituency and in all our constituencies in terms of jobs and the critical research and development that will help us navigate the transition that we need to electric cars and net zero. When it comes to a deal, fast is better than perfect: that is the message from the west midlands automotive industry to my colleagues in the Government.
I would like to hear from Ministers what options they intend to explore to help the industry, and especially the employment base in the automotive industry supply chain in my constituency, if—God forbid—we get no deal. The Chair of the Business and Trade Committee set out a number of options in a letter to Ministers earlier this week. It would be good to hear what consideration is being given to things such as a reduction in employer costs, help with energy costs, domestic sales subsidies for EVs, an increase in research and development tax credits, and help with cash flow, particularly for the smaller companies in the supply chain, which tell me time and again that they need that.
Then, of course, there is the £2 billion that was allocated in the Budget to the automotive industry’s transition, which we will hear more about in the industrial strategy. It would be good to know whether that can be used to help in the event that there is no deal and there is a prolonged period of tariffs. But that money is necessary for the transition—for research and development, and for moving our workforces to the new industry’s new production techniques and requirements—so it will have to be replaced in time.
My colleagues in Government know how urgent this issue is and have been working at pace to get the deal that our automotive sector needs. They have the support of all of us in this House, and I urge them to continue that work for this vital sector of the UK economy, of which we are so proud.
Sir John Hayes (in the Chair)
We will move to the winding-up speeches now but, given how much time we have left, I emphasise that Front Benchers should not fall into the Gladstone trap of becoming intoxicated by the exuberance of their own verbosity.
Clive Jones (Wokingham) (LD)
It is a pleasure to serve under your chairship, Sir John. I thank the hon. Member for Reigate (Rebecca Paul) for securing this important debate.
The UK’s automotive industry is a cornerstone of our economy, contributing £93 billion and providing many high-skilled, high-wage jobs across the country, which pay 13% above the national average. Crucially, many are located outside London and the south-east. However, the industry faces intense global competition, supply chain pressures and the ongoing demands of the transition to net zero, as well as Trump’s disastrous tariffs, which are deliberately targeted at the automotive sector. The UK Government, under the Conservatives and now Labour, have struggled and failed to grow the economy. The automotive sector will need to be at the forefront of any plan to get on to the right path again.
When I visited BMW’s Mini plant in Cowley earlier this year—
Freddie van Mierlo (Henley and Thame) (LD)
I am grateful to my hon. Friend, as the Liberal Democrat spokesperson for trade, for visiting the Cowley Mini plant in Oxfordshire. All Liberal Democrat Oxfordshire MPs attended; it was a pleasurable visit and we saw the amazing work being done there. I am worried that the Government are asleep at the wheel on this issue and that we will see job cuts at Cowley as a result of the very high energy costs in the United Kingdom. I would like the Government to do more to tackle that and, potentially, to support the industry. Does my hon. Friend agree that the Government should announce greater flexibility, benefiting not just luxury manufacturers such as JLR—that is very welcome—but those that make cars intended for the mass market?
Clive Jones
I certainly agree with what my hon. Friend says about energy prices, and I will talk about that a bit later.
When I visited BMW’s plant, I met hard-working staff, who are the most at risk if the Government continue to get this wrong. Whether plants are being closed or investment scaled down, people lose their livelihoods and a rich history of manufacturing at the heart of Britain is lost, possibly forever.
This sector is at a crossroads: with the right support, it can lead the way in innovation, climate action and economic resilience, but without swift and strategic action, we risk losing a competitive advantage built up over generations. That is why more must be done to end the uncertainties that the car industry faces, and that starts by building consumer confidence in electric vehicles. The previous Conservative Government failed to support a thriving electric vehicle market in the UK, implementing chaotic U-turns that badly hurt the industry, and they continually failed to deliver the charging infrastructure needed to boost demand, create jobs and cut emissions. The Government must right that wrong by cutting VAT on public charging by 5%, by investing urgently in schemes to speed up the installation of rapid charging points throughout the country and by making it as affordable as possible to own an EV by reducing electricity prices that are passed on to the consumer.
One of the clearest calls from the sector is on energy costs. UK automotive businesses face electricity prices that are, on average, twice as high as those in the EU; gas costs are nearly 60% higher. That is an unsustainable burden. If we are serious about reshoring manufacturing and making the UK a global hub for ZEVs, we must address that urgently.
Ensuring that we have a strong trading relationship with our economic allies is vital for supporting UK automotive employment. The EU remains our largest trading partner for vehicles, and electric vehicles are now the biggest share of UK automotive exports by value. With the next EU-UK summit on the horizon, the time to act is now. We must give investors and manufacturers certainty and protect the employment and regional growth that depend on it.
What contingency planning is in place to protect UK manufacturers and exporters if President Trump’s damaging tariffs remain in place? What action is being taken to reduce the UK’s industrial energy costs to ensure a level playing field with our global competitors? What is the status of the £200 million that was announced in the autumn Budget for charging infrastructure but is in limbo? What is the status of the rapid charging fund, which has delivered ultra-rapid en-route hubs across the country? Will the UK formally seek to accede to the Pan-Euro-Mediterranean convention to provide manufacturers with a more flexible and reliable origin framework?
Sir John Hayes (in the Chair)
I remind the remaining Back Benchers that interventions should be pertinent and pithy.
Greg Smith (Mid Buckinghamshire) (Con)
It is always a pleasure to serve under your chairmanship, Sir John. I begin by drawing the House’s attention to my entries in the Register of Members’ Financial Interests. I congratulate my hon. Friend the Member for Reigate (Rebecca Paul) on not only securing this debate but delivering a superb opening speech. She spoke with passion for the automotive sector, particularly Toyota in her constituency, and she spoke with realism about the challenges that we face, and the other way that is possible to ensure that consumers get to choose vehicles of the future that are greener and cleaner and do not rely on fossil fuels, but do not necessarily fit in with the Government’s chosen winner, despite the fact that they claim to be technology neutral. That is battery electric, whose sales figures, once we remove fleet sales, are utterly appalling because people simply do not want to buy one of those vehicles.
Employment in the automotive manufacturing sector— a sector that has long been the backbone of British industry, supporting hundreds of thousands of jobs and driving innovation—is the foundation of regional economies across our great United Kingdom. My constituency does not have any major vehicle manufacturers, but it sits in the absolute heart of motorsport valley. The motorsport sector and its supply chains do so much to create the next big thing and innovate. They find solutions, yes, for speed and the racetrack, but there is often a direct translation from the race car to the road car. So much British innovation in motorsport has found itself in the cars that I am sure all of us in this Chamber and people across the country drive today.
It is therefore with great concern that I speak about the marked lack of support for the vital automotive sector under this Labour Government. Let us be clear that this is not a new challenge: automotive manufacturing has been under pressure for many years from the combined forces of global competition, supply chain shocks and the urgent transition to cleaner technologies—note the plural, cleaner technologies; there is not just one. We now see a deeper, more systemic failure, which is rooted in the inability of this Government to deliver on their own promises and provide the strategic direction that the industry so desperately needs.
Take, for instance, Labour’s 2024 manifesto commitment to “supercharge the electric vehicle revolution” and make the UK “the best place in the world to manufacture electric cars”. Those are bold words yet one year into their term, we see precious little action, only rhetoric that seems to accept an electric future rather than a technology-neutral approach.
Freddie van Mierlo
Does the hon. Member regret the lack of action to bring forward battery manufacturing in the UK under the Conservative Government?
Greg Smith
What I regret is the ZEV mandate, which is why I voted against it at the time. It puts shackles around our automotive industry, and it needs to be revisited so that our automotive sector has the freedom to get on, innovate and provide future solutions that consumers might actually want to buy.
Even with the electric obsession, the promised gigafactory developments remain stalled or mired in uncertainty, commercial investment incentives have been vague at best and crucial supply chain support has failed to materialise in any meaningful way. Labour also pledged to spend on a national training programme to reskill workers for the green transition, yet we still await details of how, when and, crucially, where that will be delivered.
The skills gap in the automotive industry is widening by the day. Thousands of jobs are at risk, not because there is no demand for people to work in that sector, but because we do not have a pipeline of trained, job-ready individuals. The industry has been crying out for a co-ordinated national effort to address this, and what it has received instead is a patchwork of pilot schemes and a lot of ministerial hot air.
Contrast that with the pragmatic and targeted steps taken by the last Government, which launched the Advanced Propulsion Centre and the Faraday battery challenge—programmes that secured investment in cutting-edge technologies and laid the groundwork for the electric vehicle sector in particular. To attract global investment, we need to back British innovation and give investors confidence in our long-term industrial strategy. In government, the Conservatives also took real action to support jobs: the automotive transformation fund, which was backed by Conservative Ministers, delivered vital support to manufacturers, and let us not forget the commitment made to freeports, which are already starting to attract inward investment and create highly skilled jobs, including in areas directly linked to automotive logistics and component manufacture.
Now, under Labour, we see dithering where there should be decision making. The industry does not need more consultations; it needs action. Businesses are ready to invest—yes, in electric, but also in synthetics and hydrogen. However, they need the certainty that they can get on and do that. They need clarity on planning reform, energy prices, trade policy and the Government’s commitment to industrial growth.
The Government must address the ever-growing training deficit. They must launch a comprehensive industry-led training strategy that spans apprenticeships, technical colleges and adult reskilling programmes. It must be tailored to the needs of automotive employers, not devised in isolation by Whitehall, where the Government pick the winners and losers at odds with what consumers want to buy. The Government must do more to attract foreign direct investment into the automotive sector. That means tax incentives that are actually internationally competitive, a planning system that works at pace and a stable regulatory environment. Labour’s flirtation with regulatory overreach is already spooking the investors.
The Government must ensure that the UK’s de-fossilisation transition is an opportunity for jobs and growth, not a burden on industry. I repeat: that means genuine technologically-neutral support, embracing other technologies beyond battery electric, such as synthetic fuels and hydrogen, as well as putting realistic deadlines around any transition.
The automotive manufacturing sector is not asking for handouts; it is asking for clarity and leadership. The last Conservative Government took steps in that direction. Labour, in contrast, have offered slogans over substance, and pledges over performance. We cannot allow this Government’s inaction to cost Britain its place at the forefront of the global automotive industry. The time to act is now.
The Minister for Industry (Sarah Jones)
It is a pleasure to serve under your chairmanship, Sir John, and to have this important debate. I congratulate the hon. Member for Reigate (Rebecca Paul) on securing the debate and on her words; she gave a very helpful summary of the importance of the automotive sector to the UK. She is absolutely right about the number of jobs it creates and the amount that it brings into the economy, as well as the importance of Toyota in her area, which is not far from mine—I know how important Toyota is. Other Members have talked about the importance of the factories in their constituencies, stabilising whole economies through their supply chains. I thank the hon. Member for Reigate for her valid points.
I start by saying that we need to deal with the world as we find it, and the world we find today is a difficult one in terms of tariffs. I will talk about those in more detail. There are many challenges facing the automotive sector. However, as nobody has mentioned it, I will champion the trade deal with India that we secured yesterday. This is good for the automotive industry in the UK, in particular JLR and our high-end manufacturing —they are going to win from this deal.
Automotive tariffs into India are historically incredibly high at 100%, and we have negotiated bringing them down to 10% under a new quota system. Yesterday, the Secretary of State for Business and Trade said that we could see 22,000 high-end cars from the UK being sold into the Indian market. That is very substantial for those high-end vehicle manufacturers, and hopefully it is something that everyone will welcome. We worked with the automotive industry as we developed our relationship with India and came to this deal, so we are confident that it is a good deal for the industry.
Members rightly pointed to the challenging issues of the day in their contributions. My hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge) and I spoke yesterday about those issues. We will continue to do so, just as she will continue to champion JLR, the number of people it employs and the importance of that site. I will come on to our approach to the US and what we are doing, but I hope that we will continue to have those conversations about JLR. My hon. Friend the Member for Tipton and Wednesbury (Antonia Bance) also talked about the importance of her area in the supply chain, quoting companies such as Lavender’s, which is so important in JLR’s production. I will say more about our approach to the US in a minute.
Of course, it is about not just the US but the rapid growth of China as a major car manufacturer, high energy costs—as Members have rightly said—and the transition to electric vehicles. That has led to lower sales and volumes of production, which in turn has put pressure on the supply chain, increasing the risk of job losses across the sector. This Government are not prepared to sit back and leave industry to face those challenges alone. I would say that I speak to the automotive industry every week, but often more regularly, and since the introduction of tariffs I have been having regular roundtables with the whole affected sector and talking in detail about what needs to be done. We are determined to do what is necessary to help our car industry to weather the storm and achieve the long-term growth that we all want to see.
Where manufacturers are telling us that there are policy hurdles, we are listening, responding and helping industry to overcome them. That is why we launched the zero emission vehicle mandate consultation back in December, and in April we announced significant changes to the mandate, which I think everyone in this place welcomes, to ease the path for the automotive sector’s transition to electric vehicles. We have increased the flexibilities within the mandate for manufacturers up to 2030, smoothing the transition towards zero emission vehicles. We are allowing hybrid cars, such as the Toyota Corolla and the Nissan e-POWER, to be sold until 2035 to ease the transition and give industry more time to prepare. British supercar brands, such as McLaren and Aston Martin, have been exempted altogether from the 2030 phase-out date.
Crucially, we are also boosting demand for electric vehicles by improving charging infrastructure—an issue that several Members mentioned. The current statistic on charging infrastructure is that there are now 76,500 public charging points, and the National Audit Office recently found that we were on track to deliver 300,000 charging points. However, I hear what Members are saying, and I heard what the hon. Member for Reigate said about the need to go further. Of course, we are working with our colleagues in the Department for Transport to do just that.
Moving on to the US trade deal, Members will have seen speculation in the Financial Times this morning that we are very close to a deal. Of course, we cannot comment on that, but we know that we are in a good starting position. We have good relationships with our colleagues in the US, and the Business Secretary has been having regular conversations with them; the Prime Minister has also been talking to the President.
We know that tariffs are a real concern for the sector, and we saw JLR temporarily having to pause shipments to the US last month. From the outset, we have been talking to the industry and playing back our approach to them all the way along. They very much support our calm and cool-headed response, as well as the discussions that we are having with the US. That is what industry wants us to do, and that is exactly what we are doing.
At the beginning of April, we launched a request for input to hear from business about their concerns and assessments of what the next steps need to be. We are working through all those responses now. Following that request for input—it was not a consultation; for some reason we have to call it a “request for input”, but I do not know why—we are looking at the feedback and my colleagues are continuing to talk to the industry every day.
We will always act in the best interests of UK consumers and businesses, and throughout the last few weeks we have rightly focused on negotiating a deal. My hon. Friend the Member for Tipton and Wednesbury mentioned the letter from the Chair of the Business and Trade Committee, my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), and other Members mentioned preparations in the event that there is not a deal. Obviously, our focus is on getting that deal, but we would not be doing what we should if we did not also look at the available options in the event that there was not a deal. Of course the Chair of the Business and Trade Committee has suggested some options and, as I say, we are considering all options in the event that there is not a deal. However, we firmly believe that we are in a good position. We have a good relationship with the United States and we want to secure a deal as quickly as we can.
In addition to trying to achieve a reduction of tariffs, we are really investing in the automotive industry. In the Budget last year, we committed over £2 billion of capital in research and development funding until 2030, as has been mentioned, for zero emission vehicle manufacturing and the supply chains, and a further £300 million to drive the uptake of electric vehicles.
This new funding will support cutting-edge research and the scale-up of innovative zero emission vehicle technologies. It will also unlock capital investment in ZEVs, batteries and the wider supply chain. And that comes on top of the great work being supported by our Automotive Transformation Fund, which enables British brands and car manufacturers to benefit from a globally competitive supply chain for electric vehicles and their batteries. That has given much confidence to the sector and helped to secure major investment in the UK —including, of course, the £4 billion investment by Tata in its new gigafactory in Somerset. We also want future initiatives to work alongside the National Wealth Fund as part of a comprehensive offer to other big-hitting international investors.
Several Members raised the issue of skills, and they were absolutely right to do so. We recognise that we have a skills gap, and we need to ensure that we can fill it through the development of the industrial strategy, which will come out in a few weeks’ time. We are working with the Department for Education and with Skills England to look at the skills gaps across a whole range of industries in the UK, including advanced manufacturing and automotive, to see what the gaps are and to see how we can tilt funding to help to fill them. That is exactly the work that we are doing. Apprenticeships are also incredibly important in this space. There are some brilliant apprenticeship models out there in our car manufacturers. Of course we will continue to support those models. We are also making the apprenticeship levy more flexible, so that a wider range of people can use such models.
The hon. Member for Reigate mentioned East Surrey college, which I know; it is very good, and I am very pleased to see that it is helping in this space. She also raised the level 7 apprenticeships issue, which I recognise. We are working on all these issues in the run-up to the industrial strategy and the publications that will go alongside it.
Skills have to be at the heart of this agenda. We do not just want to grow the automotive industry. It is an industry in transition, so we must ensure that we are transitioning skills and creating the workforce of the future that we want to see. So, Members are right to raise these issues. Of course we are working very hard on them, and I hope that we will have much more to say about them shortly.
The hon. Member for Reigate also mentioned a couple of tax issues—the employee share ownership scheme and the double-cab pick-up vehicles. We have no plans to change those things at the moment, but I hear what she says about the pressures that exist. What we are doing through the run-up to the spending review is looking at how we can support the industry more widely. How do we increase demand, how do we provide support, how do we help to fund, and how do we break down further barriers? So, she is right to raise those issues and of course we continue to look at them. There will also be technical consultation later this year on the employee car ownership scheme, which she might want to look out for. However, I have heard the points she makes. We are currently in a period when we are developing plans but are unable to speak about them, because we cannot yet confirm what the spending review will tell us. However, I hope that the industrial strategy and the spending review will give her reassurance that we are very serious about the automotive sector and will support it in the future.
In the run-up to the publication of the industrial strategy, we are engaging with the sector on very complex issues such as access to finance or the planning system when it comes to electric vehicle charging infrastructure. We are looking at everything.
Of course, all Members rightly mentioned energy prices. I am acutely aware of how high our energy costs are in this sector compared with other sectors. Our industrial energy costs doubled under the last Government, and we want to take action to tackle that. Of course, we are pushing for clean energy by 2030 to ensure that energy bills come down in the long term and that we have the stability to ensure that we never again suffer a massive shock, as we did when the war in Ukraine began. However, we know that we need to do more. I am working at pace to do that. I hope that, through the processes that we have coming up in the next few weeks, we will see movement; but I completely understand the situation. I am working with lots of sectors, including ceramics, chemicals and automotive. Everybody has the same challenge, and we are looking to see what we can do about that.
To conclude, the automotive sector is incredibly important to our country. I appreciate Members’ caring so much about those high-quality jobs and supply chains. We know we need to upskill and reskill the workforce, provide the industry with support for the transition, and build our strengths in new technology, artificial intelligence software, connected and autonomous vehicles—which comes under this remit—and of course, our off-road vehicles as well, which we are supporting. The automotive sector will be at the heart of our industrial strategy, and we will create the right climate for the industry to thrive.
Rebecca Paul
Thanks to everyone who has attended this important debate today, particularly the hon. Members for Wolverhampton North East (Mrs Brackenridge) and for Tipton and Wednesbury (Antonia Bance), who I thank for their powerful speeches. It is so clear how much they care about JLR and what it brings to their constituencies. I am grateful to them for coming along and providing more on the manufacturing piece, which is not in my constituency. It was really good to hear that from them.
What came through is that tariffs are the big and urgent issue right now. Clearly, getting that deal must be the No. 1 priority. Obviously, energy costs are also an issue, and all of us here today have spoken about them. I was struck by the fact, which the hon. Member for Tipton and Wednesbury mentioned, that Nissan’s plant is the most expensive to run in the world due to energy costs. That in itself should be a massive wake-up call. For the medium to long-term success of the automotive industry—and all manufacturing throughout the country —we clearly need to address that. I also thank the Lib Dem spokesperson, the hon. Member for Wokingham (Clive Jones), for the excellent questions raised. A lot of us are asking the same questions, which is really helpful.
I was not sure whether there would be anyone else in the room with the same view on the ZEV mandate as me. I was heartened to hear—funnily enough, from the same side of the room—that my hon. Friend the Member for Mid Buckinghamshire (Greg Smith) is also sceptical about whether that is the right approach. I appreciate that the Government are trying to make that work as best as they can, and to make the adjustments.
Lastly, I thank the Minister for a clear, constructive and logical response. I am grateful that they have gone through and addressed all the concerns raised. I am reassured that they are looking into those. I acknowledge that the India deal may well be beneficial for the automotive industry, because the cost of employing those people will be lower, but we also need to think more broadly about that, because we could disincentivise the recruitment of local residents. The deal needs to be viewed through a wider-angle lens, and those concerns need to be considered too. I thank everyone for attending this important debate.
Question put and agreed to.
Resolved,
That this House has considered Government support for employment in the automotive manufacturing sector.