Automotive Manufacturing: Employment

Rebecca Paul Excerpts

Wednesday 7th May 2025 Westminster Hall

[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.

--- Later in debate ---

[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.