Batteries for Electric Vehicle Manufacturing

Debate between Matt Western and Liam Byrne

Thursday 23rd November 2023 Westminster Hall

[Liam Byrne]

I am grateful for that question. Although I do not have the specific details of the opportunities in the constituency of the hon. Member for Strangford (Jim Shannon), the spirit of the Committee’s report is that we need to be using industrial policy to do three things: to de-risk supply chains, to decarbonise, and to decentralise the sources of economic growth. That is why we are so clear about the need for the Government to designate strategically critical sites for gigafactories in the future. As to quite how many we need, the Minister and I may have different views, but we know how much capacity we need, and that can perhaps be delivered by between five and eight gigafactories, depending on how much each factory can produce. But the broad point is that we cannot be producing batteries simply for the automotive industry; we need a wide range of applications for them in the future.

Once we have designated the sites, we need to think about how industrial policy helps to unlock the wide range of policy levers that any place will need. That includes access to low-cost electricity, skills, and incentives and subsidies to get factories built in the first place. Of course, we then need the trading arrangements, so that people can export and we can ensure that the export of EV batteries is a real growth sector for our economy. The point the hon. Member for Strangford made is therefore absolutely the right one, and we have sought to provide the checklist of things he needs to be asking of Ministers.

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

I thank the Chair and the Select Committee for putting together such a comprehensive and valuable report. As the chair of the all-party parliamentary group on electric vehicles and the all-party parliamentary motor group, I agree with him: my frustration is that we find ourselves behind our major competitors—China, the US, Japan, Germany, France and many others—in our capacity to manufacture battery units for electric vehicles and other uses.

That is frustrating because, from what I sense from the report and more widely, we have an energy advantage in the UK—indeed, we should have a huge energy advantage over other nations. In my constituency, National Grid reminds me of what we can do by bringing green energy to this country through the interconnectors. We also have organisations such as Warwick Manufacturing Group, which is at the forefront of the development of new battery units. We have two great advantages, but because of what the Chair of the Select Committee describes as a lack of industrial strategy, we are way off the pace.

I have a couple of points on skills—not just on the manufacturing side, but in terms of what we will need up and down the country in our franchise dealer network and other vehicle marketing sites. In terms of what we need to do on infrastructure for the consumer—

[Matt Western]

I apologise, Mr Hollobone. My question is about infrastructure for consumers. Also, I hear that Europe will perhaps grant us a three-year extension on the issue of rules of origin, which would be advantageous. Does my right hon. Friend know any more about that? And what is his estimation of how long it will take the UK to catch up with our major competitors, such as Germany and France?

[Liam Byrne]

I commend my hon. Friend’s work; his leadership of the all-party parliamentary group on electric vehicles and the all-party parliamentary motor group has been so important in ensuring that we in Parliament can benefit from informed debate.

We are two to three years behind our European competition, and we therefore have to move quickly to catch up. The lack of certainty has damaged confidence—moving the goalposts on phasing out petrol engines, for example, has hurt confidence. Ultimately, despite the public investment that needs to go into building things such as gigafactories, the investment overwhelmingly comes from the private sector, and when we damage confidence, we damage the speed of that private investment. I am afraid that the Committee came to the conclusion that the lack of an industrial policy has hampered our ability to secure the needed investment.

It is not too late to catch up. There is a real risk that we cannot win a subsidy race with the United States, or indeed Europe, so we will need a smart policy framework—the seven things I set out. They include devolved funding on skills and guarantees around infrastructure and low-cost energy access. My hon. Friend is absolutely right that there is a niche—in the global market, it is a huge niche—for the UK to provide, build and sell batteries built with low-carbon energy and with the highest levels of integrity right through the supply chain. That is a big opportunity for the UK, which we should be seizing with both hands.