UK Automotive Industry

Mark Pawsey Excerpts

Monday 18th September 2023 Commons Chamber

[Mark Pawsey (Rugby) (Con)]

It is a great pleasure to take part in this debate on the UK automotive industry because I grew up in a village just outside the traditional heart of UK car manufacturing. One of my earliest memories, as I walked to primary school in the mornings, is workers returning home from the night shift at one of the many car factories that existed in Coventry at that time.

I am very much aware of the heritage of the automobile industry in my local area. In fact, we have two excellent local museums that display historic British cars: Coventry Transport Museum, in Coventry city centre, which includes Queen Mary’s 1935 Daimler and the iconic Coventry-built 1975 Jaguar E-Type, and the British Motor Museum, in Gaydon, where there are over 400 classic British cars from major manufacturers such as Austin, Morris, Hillman and Triumph.

Over my lifetime, I have seen huge change in the origin of the cars on our roads. In my early years, they were mostly domestically manufactured. In the 1960s, I looked out for European cars, such as the Volkswagen Beetle, and then in the 1970s we saw the introduction of Japanese cars, such as the reliable, small Datsuns. In recent years, the majority of cars on our roads have been manufactured outside the UK.

However, it is two-way traffic. While the proportion of imports has risen, so has the proportion of our exports, as the automotive market has become international rather than national or even continental. Now some 80% of our production is exported, generating £77 billion in trade, as buyers across the world recognise the kudos of UK brands such as Land Rover, Range Rover, Jaguar and Mini. At the same time, overseas-based manufacturers, seeing the opportunities provided by the UK’s membership of the European single market, chose to manufacture their vehicles in Sunderland, Derbyshire and Swindon and, more recently, there has been investment in Ellesmere Port, Oxford and south Wales.

I have raised the issue of heritage and the impact of personal ownership of automotives, as cars are not just another manufactured product. For most people, a car is the second most expensive item they will ever acquire and there are few other items where there is such an emotive personal connection. I do not know many people who could tell me what brand of fridge or washing machine they or their parents owned, but almost all will know what brand of car they drive and how they identify with it. We need to generate the maximum impact from our iconic brands.

There are not just emotional reasons for supporting UK manufacture; there are hard-nosed commercial ones as well, because automotive manufacture provides highly-paid skilled jobs. There are 160,000 jobs in the manufacture of automobiles, which is 0.6% of the UK total. That is even more significant in the west midlands, where 2.2% of all employees work in automotives, including many in my constituency of Rugby. A large number of employees work at the London Electric Vehicle Company at Ansty Park, in my constituency, and at Jaguar Land Rover at Gaydon, and many more work in the supply chain, such as at Automotive Insulations on Central Park industrial estate in Rugby and Lenoch Engineering on Somers Road.

In 2022, the manufacturing of vehicles and parts contributed £13.3 billion to the UK economy—it was 0.6% of UK total output.

[Jim Shannon]

When it comes to telling good news stories—it is always good to tell them in this Chamber—Wrightbus in Ballymena would be one, encouraged by this Government and this Minister. One thousand jobs were created in Ballymena, with those buses being sold all over the United Kingdom but also across the world. Therefore, when there are good news stories to tell, let us tell them.

[Mark Pawsey]

I agree wholeheartedly. It is great to see Wrightbus’s product on the streets in London.

Although important and significant, the sector has seen decline, particularly in the number of vehicles produced. We peaked at 1.5 million units in 2015; that dropped to 775,000. The Society of Motor Manufacturers and Traders is projecting 860,000 units this year and 1 million by 2028—still lower than the peak years, but we generally produce higher-value cars, which is a key point to remember. The challenge for us is to maintain our volumes as the sector undergoes massive change. That arises from the worldwide move to electrically powered vehicles as a consequence of the imperative to reduce CO₂ emissions.

I still sit on the Business and Trade Committee. In October 2018, we produced a report on the sector, decarbonisation and the introduction of electric vehicles. I had to reread that report to remind myself that it was almost five years ago. We looked at the opportunities that would present themselves as we effected the transition from internal combustion engine-powered cars. Many of the issues that we considered five years ago are still relevant, but in other areas we have made progress. In August, almost four in 10 new cars that were sold in the UK had some form of electric power, with 20% being purely battery electric, 7.7% plug-in hybrids and 6.8% hybrid, in a market that grew by 24.4% over the previous years.

My right hon. Friend the Member for Wokingham (John Redwood) spoke about the role of the consumer. Most car drivers know that electric vehicles are coming. Most people will know someone who drives one, or who speaks enthusiastically about it and is preparing for that change. Most people by now have already been driven in an electric vehicle and, often, that will be an electric London taxi, manufactured in my constituency. On that pathway, the London Electric Vehicle Company has a pioneering role in the sector. In many cases, the move to electric will be championed by the cabbie, because every cabbie who drives an electric vehicle will speak very highly of it, compared with the diesel alternative. However, there remain those who are not convinced by the need to decarbonise or to move to electric vehicles as the solution, and there will also be people who do not support the ambition to get to net zero by 2050.

[Gavin Newlands]

Does the hon. Member accept that there is another cohort of people, who are in fact the majority of our constituents, who may like to move to an electric vehicle, but simply cannot afford to do so?

[Mark Pawsey]

The hon. Gentleman makes a good point and I will make some remarks on that issue in just a second.

The view about the need to support our move to net zero, and the steps that we need to take, are very much mainstream. The environment is still a top issue, and a rising issue among people in the country more generally. It is in the top five when people are asked about issues facing the world. Climate change is consistently there above poverty, war and migration. Therefore, there is an increasing acceptance of the need for change, but the question is over the pace of change. Back in 2017, our date for ending the sale of conventional petrol and diesel-powered vehicles was 2040. In the BEIS Committee report, we called for all new cars and vans to be truly zero emission by 2032, bringing the target forward eight years. As a Member of Parliament with an interest in UK auto-manufacturing and close to businesses that were involved in it, at the time we prepared the report five years ago, I was concerned that bringing the target forward was too ambitious. I was really bothered that it would put our UK-based manufacturers at a disadvantage because I believed they would struggle to electrify the UK-manufactured heavier and larger cars. However, it soon became clear that manufacturers such as Jaguar Land Rover were willing to move faster, with Jaguar very soon to become an all-electric brand. We now have the date set at 2030.

Having set that date, and with the good news that we have had recently of BMW’s investment in the Mini plant at Oxford, and the manufacture of all electric products at Ellesmere Port, it is vital that the Government stick to the 2030 date. There are voices making the case for relaxation, but Ministers and the Government should stand firm because what industry needs is some certainty.

To take up the point of the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), I accept that there is a case about the high cost of electric vehicles, compared with those powered by an internal combustion engine. In many cases, the new vehicle is something in the order of £10,000 more expensive on a like-for-like basis. Interestingly, many manufacturers— I have in mind Volkswagen—are bringing out new models, rather than electrifying the existing model range, to avoid a direct comparison. Of course, the higher purchase price can be offset by lower running costs. The electricity costs less than petrol or diesel where the price is inflated by the addition of fuel duty. There will be lower servicing costs on the electric vehicle as a consequence of their having fewer moving parts. However, I accept that, for some people, the higher cost is an obstacle.

As we have heard, some countries are further down the road in the manufacturing of EVs, with a range of new models ready to come into the UK. I have in mind China, which, according to many industry watchers, has up to 10 new brands to launch in the UK by the end of the decade. Although they will be less expensive than UK or European-produced products, they will not be as attractive to the consumer because they will not possess the brand and heritage, which is a big part of the value. UK manufacturers will have to take on this competition and, in many cases, that will mean, as they already are, focusing on higher-quality, more upmarket models. That means that, when we look at the performance in the UK, it will be as important to focus on revenue derived from sales as on units sold.

[John Redwood]

The danger is that China will try to acquire some of those brand attributes. After all, China owns MG, does it not?

[Mark Pawsey]

I accept that point, but Chinese manufacturers are intending to bring to the UK a load of brands that are anonymous and bland and they will not have the same attractiveness to the consumer.

On the incentives to acquire an electric vehicle, in recent years, there has been a cash grant to offset the extra cost of an EV. That now stands, I think, at £1,500 towards a vehicle costing less than £32,000. One way the Government could make a change and provide a reason for many private buyers to buy EVs is to level the playing field between private buyers and company car users. We have already heard that company drivers benefit from favourable benefit-in-kind rates, which means that they can save hundreds of pounds each month if they choose an EV over an internal combustion engine. One reason that employers are keen to encourage that is that they make savings on employers’ national insurance contributions. That is why many of the EVs on our roads are company cars. An increasing number of companies are also offering salary sacrifice schemes as a method of getting staff to switch to an EV. It would be beneficial if the parliamentary authorities were to launch such a programme in Parliament as a way of getting MPs and staff here to consider making the change.

On electrical vehicle charging, in our Select Committee report, we spent a lot of time considering charging infrastructure. We know that, in addition to the higher capital cost, range anxiety is a key reason drivers will not switch. Frankly, I hope the Minister will accept that the picture here is less rosy, with public charging in particular failing to keep pace with increasing numbers of electric vehicles.

I got a sense of the challenges when the most recent motorway services opened at junction 1 of the M6 at Rugby in 2021. At one point, because of the lack of power infrastructure, it looked as though the site would open with only two charge points. It was a real challenge to get enough power but, fortunately, good work by the site operator and the power network enabled 24 charge points to be available at the opening. Thanks to additional provision since 2021, there are now 40 charge points at junction 1 of the M6 at Rugby. It is a great place for people to stop in the middle of a long journey across England.

Too often, chargers are busy or are not working. I happened to notice a letter in The Times today from a driver of an electric vehicle, who recounts that he restricts his round trips to his battery’s limit of 240 miles and takes public transport for longer journeys. In fact, he questions—perhaps with tongue in cheek—whether that is the Government’s intentional strategy. Clearly we will not achieve the transition we need if every electric vehicle has that issue.

I appeal to the Minister to intervene with my local authority. Warwickshire County Council is providing public charge points but is allowing anybody to park in front of them for as long as they like, so someone who has identified a vacant charger via the app may get to a site and find a diesel internal combustion engine-powered vehicle occupying it. That seems absolutely crazy. I ask the Minister to put pressure on local authorities to ensure that parking in front of public EV chargers is available only to electric vehicles, and that they move off once they have finished charging.

A further issue for many EV drivers is that charging at a public site has a higher cost than charging at home. I suspect most EV drivers expect to pay more for using the facility and for charging faster, but I do not know how many realise that they are paying 20% VAT, compared with just 5% at home. That is why I supported the campaign by the motoring journalist Quentin Willson to reform VAT and equalise the charge.

We spend a lot of time talking about battery manufacture; in fact, the Business and Trade Committee is conducting an inquiry into it. The conventional thinking is that because a battery represents 40% of the value and weight of an electric vehicle, assembly will migrate close to where the batteries are manufactured. West midlands MPs, including me, have been calling for the development of a gigafactory at the Coventry airport site, adjacent to the traditional heart of UK automotive manufacture. I very much welcome the investment coming to Somerset from Tata Sons, with 40 GW of capability, but it is well accepted that we need 100 GW to keep business operating at the same level. To achieve that, we will need one more gigafactory, or maybe two. I very much hope that that will happen in the midlands, at the Coventry airport site.

Five years on from our Select Committee report, automotive remains an important sector and a major contributor to the UK economy. The transition to EVs presents real opportunities for manufacturers, the supply chain and the associated sectors. The one thing I know from my business career is that businesses need certainty. Having embarked on change for all the right reasons, the Government must maintain their course and create the climate for further growth in future years.