UK Automotive Industry: Job Losses

Alison McGovern Excerpts

Tuesday 22nd May 2018 Westminster Hall

[Matt Western (Warwick and Leamington) (Lab)]

I beg to move,

That this House has considered job losses in the UK automotive industry.

I thank Mr Speaker for granting this debate. I also thank you in advance for your chairmanship, Mr Bone.

“Precipitous” is not a word used very often; when it is said by the chief executive of a major global automotive manufacturer, it is time to listen. Why? Because such utterances from major industrialists are rare; such people prefer to keep out of the headlines and to get on with the day-to-day of running multibillion-pound organisations that employ hundreds of thousands of people.

In the UK, the automotive industry has been one of the great success stories since the financial crash of 2007-08. In the two decades before that crisis, the industry’s economic output was broadly flat, before it dropped sharply in 2009. Since then, we have been fortunate to witness a renaissance in this major industry, which was seriously damaged by the crash, but which managed to sustain itself, with some Government intervention, through that difficult period. In 2017, in real terms, the motor manufacturing industry was worth 25% more than in 2007, although growth appears to have levelled off in the last year. In 2007 motor vehicle manufacturing accounted for 5.4% of total UK manufacturing, but in 2017 it accounted for 8.1%—a 50% increase in its overall importance. That was the result of significant inward investment from all resident vehicle manufacturers and component suppliers. The industry has contributed to almost 10 consecutive years of steady growth. Just as importantly, that has translated into a 29% increase in direct manufacturing employment in the sector.

The headwinds are strong and many. As the industry meets the challenges of transitioning to cleaner fuels and to a super-low-carbon future, it has been disrupted by the uncertainty of Brexit and a Government policy that penalises the cleaner diesel-powered vehicles. It is one of the great paradoxes in business that, in seeking to improve air quality, the Government have managed the reverse the progress achieved over many years to reduce carbon dioxide emissions.

In my maiden speech last year, I stated that there were rising pressures on the industry and that action was needed to maintain its recent success. I warned of the slowdown, with falling sales, and that the industry represented an economic bellwether. It has become increasingly clear that, from trucks to cars, sales are falling as people decide not to replace their vehicles.

I have repeated those calls in many subsequent debates, and there have been many in recent months, including those held by my hon. Friends the Members for Dagenham and Rainham (Jon Cruddas) and for Ellesmere Port and Neston (Justin Madders). Both of their debates reflected the rising concern about the real, clear and present danger to the sector, and sought the attention of the Government so that they would act.

That danger has become very real since the autumn, with the announcement of job losses all over the UK. To date, 2,000 jobs have been lost among car manufacturers, and planned increases in staff recruitment have been put on hold. More widely, when the component suppliers and related sectors are taken into account, it is estimated that between 8,000 and 12,000 jobs at least have been lost in just eight months.

[Alison McGovern (Wirral South) (Lab)]

I congratulate my hon. Friend on getting this crucial debate. Given the numbers that he mentions, does he think we ought to return to the subject of the last debate we had here—business rates? The car industry needs a shot in the arm; is it not time that the Government gave it one?

[Matt Western]

I totally agree with my hon. Friend. The business rates situation handicaps the industry in this country and puts it at a significant disadvantage to competitors on the continent. Added to that are the energy costs that it faces: on average, there is a 74% premium on the energy costs on the continent.

Major manufacturers have told me that their greatest concern is that there seems to be little concern from the Government. It is disheartening that this apparent lack of interest flies in the face of the industry’s importance to our overall economy. The financial services sector is held up as the great driver of UK national wealth, but it is worth remembering the increasingly important contribution of the UK motor vehicle manufacturing industry. According to the Library, it generated £15.2 billion of value to the economy in 2017, which is 0.8% of total output. More relevantly, it represents 8% of manufacturing output. Likewise, it employed 162,000 people across the UK in 2016, equating to 1% of all UK employees.

In UK manufacturing, the automotive industry is the second most investment-intensive sector for total investment as a proportion of gross value added, although it is top in value terms, investing £3.6 billion in 2015. The west midlands has the largest number of people employed in the manufacture of vehicles in any UK region or country—perhaps that is why this subject is so close to my heart. The 54,000 employees in our region represent around a third of all motor industry employees in the UK.