I thank you for facilitating this debate, Mrs. Dean, and I thank the Minister for attending to respond to it. The subject is important. Manufacturing is still one of the mainstays of the UK economy, and we ought not to lose sight of that. No matter how many people want to talk manufacturing down, we are in the Chamber to talk it up. I am sure that we will have a good response from my right hon. Friend.
UK manufacturing has faced turbulent periods, which is why the debate is extremely timely. We have had bad news, we have had good news and we have had indifferent news. It is the good, the bad and the ugly of the UK car and component manufacturing industry that we want to discuss. We need to ensure that the debate is a serious one. It is about the future of car component manufacturing in this country. It is not a forum for scoring political points, but a means of raising the genuine concerns of Members of Parliament. Amicus, the Transport and General Workers Union and other unions have been involved and they have the same worries about the future of manufacturing in the UK. We need to get the message across, and that is what we will try to do.
There is no doubt that the UK manufacturing sector is changing fast, with many worrying signals as well as reasons to be optimistic, which I shall come to. If we look back to 1996, the Ford Motor Company was producing cars in the UK, as were Rover Group and General Motors. The Vauxhall brand was dominant. Those were the major players. Rover Group, which was once the fourth largest car manufacturer, is now gone. Ford no longer builds a Ford-badged car here. Of course, GM also lost one of its assembly plants. We have seen a real difference since 1996.
Is my hon. Friend aware that when tourists, particularly from France and Germany, visit this country they are amazed that fire, police and ambulance vehicles are not manufactured in the UK but in their countries? Is not that an absolute disgrace?
It is a total disgrace. It is unacceptable. In Italy, France or Germany, such vehicles would be produced only in that country. We need a bit of that spirit in this country. People will say to me, “It’s European law. It’s this, that and the other,” but we all know that companies will alter the design features to fit the spec of the vehicle that is built there. We want to copy a little of that, and procurement ought to be a major part of that. I totally agree with my hon. Friend.
On the matter of Ford-badged cars not being built here any more, I am sure that my hon. Friend will want to take the opportunity to recognise that Ford is building great British-badged cars in this country, such as Jaguar, which employs 3,000 people in my constituency. Ford is the leading investor in research and development in the motor industry in the country, and probably accounts for some 70 or 80 per cent. of motor industry research and development. We should encourage the company—especially as the leaked review into the future of Jaguar and the rest of Ford Europe is under way, and as Ford management will meet the Chancellor tomorrow—to redouble its commitment to and investment in the British car industry and Jaguar in Erdington in particular.
Of course we should. I cannot disagree, and one ought not to shy away from doing that. I certainly would not have liked to have opened Ford’s bank statement this week. It has struggled, and the debate is about the premier brands of the automotive industry. We hope that Ford will stick with Jaguar and we can see signs of it coming good. It is a tragedy that Aston Martin was put up for sale, because the research and development and shared knowledge should have continued within those premier brands. I hope that Ford will reconsider because Jaguar has a future. As my hon. Friend the Member for Bolton, North-East (Mr. Crausby) said, it is a shame that the police are not using Jaguars. Why do they have to use other vehicles? The police in Stafford were the last force to use Jaguars, and surely the time has come for the police to invest in the Estate, the S-type, the XJ—
Ministers can set the best example. All ministerial cars should be British built, and that is part of what we will say today.
The recent news has not been good—far from it—with 900 job losses at Ellesmere Port and the decision to close Peugeot at Ryton, with the loss of 2,300 jobs. It is not just about the jobs that have been lost—far from it—but about the back-up effect on the component sector and the loss of hidden jobs. We can see the direct impact of a car plant closing, but we cannot see the impact on the supply chain, which could be as much as four or five times worse. We cannot really measure it.
Every time there is bad news we have to look not only to the headline figure but to the hidden figure and the component sector, because it is just as important as car production. We must remember that the likes of Rover and Jaguar get a lot of their components from the UK. We know that other manufacturers are basically an assembly plant, and we need to persuade them to invest more in components from the UK. That is part of the problem that we must address.
It is not good news for the people of Coventry. The first bad news came from Jaguar, although I know that it only moved up the road. Then they found out that Peugeot had misled everyone. It had been offered a Government loan in the form of a £15 million grant, but it turned its back on Coventry at the last minute. That is the kind of tragedy that I despise the most. I admire the French for putting France and French industry first, and we are seeing a shake out, but I hope that we will do the same.
Let us not buy Peugeot and Citroen products. Maybe they will then consider how important the UK market is. They have a large share of the UK market—we are third and fourth for Citroen and Peugeot respectively. Why are they not producing vehicles here? Why do they sneak off to the former eastern bloc? It is absolutely appalling. Peugeot should stand by the loyal workers that made Ryton one of its profitable sites. It was not losing money, but just needed more investment and a new model to come down the line. Peugeot has misled the people of Coventry, the regional development agency and the Government. Such car producers are the unacceptable face of manufacturing.
I hope that we will start to learn a little more from the French and start to back the British car industry. As has been pointed out, the Government must set the example. We must ensure that we do not lose any more car plants and we must see continuing growth. Unfortunately, this week we heard similar news about TVR in the north-west, not far from my constituency. TVR produces its famous cars in Blackpool, but a Russian entrepreneur came over and demonstrated the danger of foreign investors buying out British companies. They do not have the same affinity. He might say that he was slightly misled when he bought the company, but TVR has always produced in Blackpool. Now it seems easier to move production to Europe. It is a worry.
The 260 jobs that Blackpool could lose are quality skilled jobs in the north-west and that is a tragedy. It is also a tragedy for the components sector, because it has a knock-on effect. It is a great worry. As Kevin Morley, the BBC automotive industry analyst, stated:
“If you cannot make cars, then you do not do manufacturing, and yet we have the finest automotive engineers in the world here in Britain.”
We build some of the best racing cars, the best technology comes out of the UK and we have the best research and development. We must see that transferred into production. Production must be the backbone of the industry, and we must get manufacturing back and up to where it ought to be—leading the rest of Europe. We want to see the investment of the 1980s and 1990s continue in this new millennium. We must look at that and ensure that we are the best place to do business.
I know that global forces can dictate the actions of multinational companies, but the Government can still take action to support and promote UK manufacturing. As I said, they should lead by example, show their patriotism to the country’s hard-working people by backing British manufacturing and ensure that all Government cars are built in the UK.
That principle should be extended to chief constables. We should remind them where the money that pays for our police force comes from. Do they think it comes from Japan, or even Germany or Korea? No, they get it from the British public. The least that chief constables could do is to start buying British. They buy Astras, but not the bigger cars. When did we last see them use a Jaguar, to name just one model? When did we last see a Transit? Most of the larger vehicles are Mercedes. Much more can be done, not only with cars but with the light commercial vehicle sector as well. It is time for chief constables to start leading by example. It is not good to see so many BMWs and Mercedes.
The Highways Agency buys a few Discoverys—we see them travelling up and down the motorways—but what other vehicles does it use? Mitsubishi has no plant here, and Nissan four-wheel drive vehicles are not built here. Why is the Highways Agency not buying the best four-wheel drive vehicles that are built in the midlands? It is absurd that it runs four different types of vehicle. It makes no sense. Bearing in mind the scale on which it buys vehicles, it would be better to buy from one supplier, and it should be British. We need to take that message back to organisations such as the Highways Agency and the police.
What about the ambulance service, which my hon. Friend the Member for Bolton, North-East (Mr. Crausby) mentioned? Why are ambulances made by Renault or Mercedes? The home of the Transit is at Southampton. We should be using Transits or LDV vans from Birmingham. It is the same with the fire brigade. Why should brigades buy Scania and Volvo? What is wrong with them buying DAF trucks built at Leyland?
A lot of good vehicles are made in Britain, but we have to persuade Departments and agencies to start backing British manufacturing. Let us show our mettle. Let us copy the French, the Italians and the Germans. Let us use the same playing field instead of the unfair playing field that causes such unfair competition. People wonder why it is not happening and why Ministers do not use British-built cars. It is a shame, and I am sure that it is something that the Minister will put right. As I say, we must reverse that trend.
It is an easy option for multinational companies, including car producers, to turn their backs on the UK when the economy is not running well. Whenever General Motors or Peugeot want a better financial result, what do they do? They turn their backs on the UK and close their plants here. Why? Because it is easier to do that. It is so much cheaper to make someone redundant in the UK than it is in France, Italy or Germany. We should not have to pay that price.
We need an equal playing field, so that British workers have the same rights as those in other EU countries. It is appalling that it is cheaper, easier and quicker to sack someone here. People say, “Is the plant profitable? Yes, but it’s cheaper to get rid of the workers. We don’t have to wait 12 months”— or however long it takes in Germany. People can be made redundant virtually overnight in this country, and that is unacceptable. It needs to be changed. We must ensure that people are not made redundant simply because it is easier. Companies must be made to realise that our workers have the same rights. I hope that the Minister will do something about that. It is important that we take up the challenge.
Ensuring that we have a safer manufacturing industry and component sector and strengthening employment rights is the first challenge. The second is dealing with what happens when car companies begin to look at the books. The Select Committee on Trade and Industry found that people in the UK feel disadvantaged when it comes to energy costs. The problem is that our energy companies are failing us because energy is more expensive here than it is for our competitors abroad.
That disadvantage is the result of the failure of energy companies to invest in storage facilities. If only we had had the storage facilities the other week, when it was not possible to give gas away, we could have back-filled them with gas, which would have guaranteed cheaper energy. We could have energy at a set price all year round instead of the price spikes. That is becoming a difficulty for car companies, which recognise that energy is a problem.
We need the Government to play a part. If companies fail to invest, I hope that the Government will either force them to invest or invest for them and then charge them. That is how we can get a better and more stable economy for our manufacturing industry. It is about a level playing field. However we might look at it, we have to prevent people from taking the easy option. Those are the key factors. The cost difference in heavy energy use of between 20 and 30 per cent. is another key factor. I hope the Minister takes that on board. Addressing that problem would help to reduce prices and ensure that we are more competitive. The Government need to take the lead on those challenges. We have to support UK industry and ensure that all workers have the same rights.
The Warwick agreement is a lot of fine words, with which we all agree, but we know that it has failed. Although it has been successful in some areas, in others it has let us down. The fact is that Government procurement was meant to support UK industry. We have seen examples of when that procurement should have happened but did not, as with textiles, which moved to China. We would not have broken any laws had we done that—far from it. Those goods should have been manufactured here. Instead, the Government contracts ended up in Chinese factories. It is not acceptable.
Procurement can make a real difference. We must ensure that the Warwick agreement is held up as a good example of best practice in supporting UK industry and manufacturing. We have to get behind it, because it could make a difference, especially to the midlands and the north, which have been struggling. The agreement can help, because Government procurement leads by example, and there is a lot of money to be spent. We need to ensure that it is spent here, in support of UK jobs. I hope that we start to get that right.
As I said, there are many troubles in UK manufacturing, but there are also many positives. It is interesting to note that Honda is adding another shift, with further expansion—that is good news—as are Toyota and Nissan, and the Mini is bringing engine production back to the UK. There are many success stories, and we have to build on that success, but it does not always support the UK component industry. We have to persuade companies not only that the UK is good for manufacturing but that it is good for supplying components. That is what needs to be pushed. We have to make the car industry realise how important the component industry is to the UK and that it is a quality product that can be delivered on time.
We have some of the most skilled, able and dedicated workers in the world. We should not lose sight of that. It is said that people can retrain, but why should they? Why should we lose a shift at Ellesmere Port? They are skilled people. We should ensure that GM understands that future Government procurement will be based on who builds here. That is what we have to get across.
Our facilities are the among the best in the world. We have the best technology, some of the best research and development, and some of the best plant and machinery. We must build on that. Last year, we made 1.6 million cars. That was not far short of the record. Only the 1970s were better, so it is a good story. We have had the good, and we have the bad. It must be recognised that the UK is good for car companies and can help them to be profitable.
The Government have initiated changes to create a more favourable framework for car companies. People realise that working with the trade unions has done much to improve the industry. It is not the old days of strikes; the unions are now working with management. It is about them working together to ensure that there is a future. That was noted by the chief executive of Rolls-Royce, Ian Robertson, who recently said:
“There is now common purpose; to secure the future of the British motor industry.”
However, we must recognise the role that the trade unions have played. It is not about us and them. Both sides, management and trade unions alike, must work together.
My hon. Friend talks about good practice and working together. In the north-east, Nissan is a classic example of that and a testimony to how workers and managers can make a success of working together. It has invested £2 billion and employs 5,000 people on the plant. I have seen how people work together and it is a great success story in the north-east. That is in the spirit to which my hon. Friend referred and it should be highlighted.
I recognise that and had the privilege of going to the Nissan plant soon after it opened. I saw how it had changed and how many more thousands of people are now employed there. Nissan recognises the importance of the component sector as well and we rightly should salute it and other good companies that recognise trade unions and work with them. I congratulate my hon. Friend on raising that point.
I talked about the downside of the situation with TVR, but perhaps we should talk about the upside, which is Land Rover Freelander 2, produced in my region of the north-west. It is an important model for Halewood and it is unique that a Land Rover and a Jaguar are produced on the same line. As we speak, the first vehicles should be rolling off the assembly line. We should highlight that good news. I am very pleased that it will help to secure the future of Halewood. Those are two great vehicles and we need to ensure that Government agencies start using them. I hope that that will be taken on board.
In my constituency, Lex Multipart deal with a lot of parts for cars in the commercial sector. It has just spent £20 million on a 268,000 sq ft site in Chorley to ensure that it has a state-of-the-art back-up spares facility. That is good news as it shows that investment is going in. I am pleased with Lex Multipart, and it is good news for customers, the business and the employers who work in Chorley. That is why we will see parts from there going across the UK and to Europe as well.
Now is an ideal time for the Government to come out with a new vision for our future in the car manufacturing industry and component sector: a vision that puts the UK and component manufacturing at the forefront of Government policies and that can influence and shape employment rights. That is what we must do. We know how important it is to ensure that, by working together, the future of manufacturing continues and does not dip any further. We must have growth as it is important to this country, to the future and to the skills of the work force—and apprenticeships must not be forgotten.
I ask the Minister to take my comments on board so we can look to the future with a new vision and not forget how important manufacturing is to the UK.
I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. He was right to stress the enormous importance of automotive and component production to Britain’s manufacturing industry and to the economy as a whole. He also referred to the industry having had bad, indifferent and good news.
I want to concentrate on a bit of good news and congratulate the whole Cowley work force on the outstanding achievements of the BMW Group in producing the Mini. Like other long-standing centres of vehicle production, Cowley has had its ups and downs. Some of the downs were nearly fatal. The plant teetered on the brink of closure in the 1980s and had a succession of different owners—not an unfamiliar story in the car industry—from the British Motor Corporation to British Leyland, and from Austin Rover to British Aerospace, Rover and the BMW Group. While there were some real achievements during that time, there were also a lot of false dawns and a lot of managerial industrial relations failures. It was not a particularly happy or secure period for the work force or the local community.
Today, six years after the BMW Group took full control of the plant in its own right, it is a very different story—indeed, it is a success story. The key ingredients of that are long-term investment; partnership with the trade unions and the work force; a brilliant product that is very carefully researched, designed and marketed; and production to the highest quality standards, which can be achieved only with investment in plant and equipment, and in the skills and commitment of the work force.
The key statistics include more than £380 million invested in upgrading and expanding the Cowley production facilities. The work force, down to 1,500 in 2000, stand at 4,500, with another 200 recently taken on for the new generation of the Mini—launched by my right hon. Friend the Chancellor. The work force skills mix has been enriched as part of BMW’s commitment to long-term skills planning and the Cowley plant has an apprenticeship scheme with more than 115 apprentices between the ages of 16 and 21. They are undertaking a three to four-year apprenticeship with the opportunity to gain a degree while working.
The plant is completing more than 200,000 models a year, which is up from 48,000 in its first year of production, and production is scheduled to rise further to 240,000 units in the medium term. Every model has a customer’s name on it and the plant can sell all the cars it can produce. There is a wonderful advertising hoarding that anyone who drives down the eastern bypass in Oxford will see. It says,
“Mini—built in Oxford, sold in”
and then it shows the flags of more than 70 countries.
The plant’s productivity has been rising year on year since production began in 2001. There are no subsidies or regional support from the Government and basic wages, not including bonuses, for grade 2 workers are £20,516—many earn significantly more.
All that has resulted from the BMW Group’s skill in bringing to fruition what would be a tough challenge in any industry: the reinvention and complete reconstruction of an iconic brand, through the commitment of the Cowley work force to making a success of it. Going back to the roots of that, there were some far-sighted and brave decisions by shop stewards to make a success of partnership. They fought for their members’ interests while recognising that there had to be a successful plant for their members to have an interest in.
There are other important lessons and hopeful signs for other areas of the automotive industry. Indeed, certain developments confound some of the conventional wisdom on global manufacturing. My hon. Friend the Member for Chorley mentioned the importance of components, and rightly so. When Mini production started at Cowley, the proportion of components that were UK produced was 40 per cent. It is now up to 60 per cent.
BMW Group has established a manufacturing triangle with Cowley as the production centre, body pressings in Swindon and engine manufacture at Hams Hall. Those engines were previously manufactured at Curitiba in Brazil. It is interesting to note that the BMW Group explained that it repatriated engine manufacture for the flexibility of just-in-time production, and because it is more efficient and cost-effective to have the engines made 70 miles up the road in a state-of-the-art engine plant than for them to be made several thousand miles away.
That is a positive story, and I am confident there are a lot more chapters to go. It is an example of how Britain can compete successfully with the best in global manufacturing. The key is to have a business committed in the long-term to working in a framework of economic stability and that designs its models carefully for what customers want and are prepared to pay. It should invest in the long-term and have a skilled and flexible work force equally committed to quality. BMW Group in the UK is an outstanding example of British-German partnership, but most importantly everyone at Cowley is proud to be part of a British manufacturing success story. That should be celebrated.
The last time my right hon. Friend the Minister visited my constituency, she went to a disabled workshop and bought a very good garden bench. The next time she visits, she must come to the Cowley car plant and buy a Mini.
I congratulate the hon. Member for Chorley (Mr. Hoyle) on securing this important debate and on the manner in which he introduced it. As the Chairman of the Select Committee on Trade and Industry, I am privileged to have him as a member of my Committee—[Interruption.] I will not say that it is a dubious privilege.
The Select Committee is coming to the end of an inquiry on the reasons for success and failure in the automotive sector, although we had hoped to have produced the report by now. In that respect, I am grateful to the hon. Member for Birmingham, Northfield (Richard Burden) for the excellent evidence that he gave us, which came out of concern about the Rover group. However, the inquiry is being held up because we are waiting for further evidence from Advantage West Midlands, although I hope that we will finalise the report when it arrives.
We are also considering the broader issues facing manufacturing industry, and we have touched on many of those outlined by the hon. Member for Chorley. In particular, we are looking at public procurement, which has big ramifications not only for the car industry, but for many other parts of British manufacturing.
I want to echo the hon. Gentleman’s comment that energy costs have recently emerged as a major issue for UK manufacturers. The Committee has received evidence on that issue, and he is right to highlight it. We cannot afford to be complacent. However, I also want to challenge him a little on his definition of Britishness. I had the privilege of being a special adviser in the Department in the mid-1980s.
The hon. Gentleman says that it is my fault, but he should wait to hear what I am going to say. The Secretary of State at the time—now Lord Young of Graffham—had a clear industrial strategy and sought to attract to the UK all the internationally mobile major car investment going. He played a big part in getting Toyota, Nissan and Honda here, and they have had precisely the effect that we hoped for.
In that respect, I was powerfully struck by something that I was told anecdotally by a constituent who made car components before the Japanese companies arrived. He said that the big motor manufacturers procured their components from companies on the basis of who bought them the best lunch. It was not the quality of the component, but what was on their plate that dictated who got the contract. The Japanese had no truck with that, and I am sure that they have played a major part in driving up standards in the UK component industry, much of which, I am glad to say, is located in my constituency.
I am afraid that I also disagree with the hon. Gentleman—I suspect that we will have a debate on this in the Select Committee—about his point that people in this country are easy to sack. People here might be easy to sack, but it is also easy to establish a business here, which is one reason for Nissan, Toyota and Honda coming here in the first place. There are two sides to the equation, and both need to be considered.
In conclusion, what does it mean to buy British? I suspect that the hon. Gentleman—perhaps I should call him my hon. Friend, for these purposes—and I will disagree slightly about this, but I would say that buying British means buying from any company that is committed to the UK. For someone who does not want a Mini, buying a BMW 1, 2 or 3 series might be a good way of, in effect, buying British. The Minister can carry on driving her Toyota Prius for exactly the same reason.
I echo other hon. Members in congratulating my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. Much of what he said struck a chord with me, and that was particularly true of his comments on the responsibility of public authorities to have some regard to the effect of their decisions on British manufacturing.
As my hon. Friend said—the hon. Member for Mid-Worcestershire (Peter Luff) also referred to this, and I thank him for his comments—I had the privilege of representing Longbridge when MG Rover was in operation there. The causes of MG Rover’s ultimate demise are complex, and today is not the time to go into them, but I say to my right hon. Friend the Minister that we hope it will not be too much longer before the official investigation into MG Rover reports, because people in the area want to see the results. I know that the matter is not entirely in her control, but I hope that she will pass the message on.
There was constant concern among workers and members of the community about the fact that vehicles manufactured at Longbridge, such as the MG ZT and the Rover 75, were not being used by police forces, although I do not say that that was the cause of the company’s demise. My hon. Friend the Member for Chorley is right, however, that the same point can also be made about Jaguars and some other vehicles.
Given the situation facing Peugeot, memories of the 6,000 people who lost their jobs at MG Rover last year have come back to all of us in the west midlands. Again, it would be wrong to go into the issue in detail, and there is not enough time to do so today, but I urge all hon. Members and the Minister, who was present for some of our earlier debates, to look again at the important words of my hon. Friend the Member for Coventry, South (Mr. Cunningham) and other Coventry Members, who have spoken in recent Adjournment debates about the disgraceful way that Peugeot has behaved over the Ryton plant.
I am pleased to say that the vast majority of former Longbridge employees have now got other jobs. That is good news, but it is important that we set it in perspective: a substantial minority still do not have jobs, and those who do are often on much lower pay rates. It is therefore important that we do not abandon those people.
The taskforce that the Government set up has achieved a great deal, and I pay credit to it and its successor body. However, it is important that that work goes on. Not all the money that the Government allocated to the issue has been spent. If the needs are still there, it is important that the money is still there. Indeed, I shall be speaking to my right hon. Friend the Minister in just a couple of hours about some of the issues involved. However, I make this appeal to her: we should not be over-concerned about whether money is allocated in one financial year rather than another. The really important thing is what the money is needed for and what use it should be put to.
As regards the future for Longbridge, the Chinese firm Nanjing Automobile Corporation has guaranteed that it will be producing MG sports cars at the plant from next year. That is good news, and I wish the company the best of luck. However, although the announcement that Nanjing will locate its European headquarters at Longbridge is welcome, we need to think about what else needs to happen, because the future of Longbridge and, in many ways, the British car industry can be about much more. Part of that future should involve looking at where our strengths have been, still are and will be in future.
My hon. Friend the Member for Chorley referred to performance engineering, and motor sports technology is also relevant in many ways. Just two weeks ago, the final round of the British touring car championship took place at Silverstone. The car that won was a Honda, and the firm running it was a performance wheel manufacturer called Rimstock, which is based in West Bromwich. Interestingly, two teams in that performance series were running on bioethanol and one was running MGs. There is huge potential for synergies in the performance engineering and environmental technology fields. I hope that Longbridge can be part of that and that the Government can take an active role in promoting such ventures.
Such things can also happen in other parts of the motor industry. Just down the road in the west midlands, at Fen End in Warwickshire, the performance engineering firm Prodrive has just secured final confirmation that it has received planning permission, so a Formula 1 car produced in Warwickshire will be on the grid from 2008.
Tata and Shanghai Automotive Industry Corporation—erstwhile partners of MG Rover—also have committed to new design centres. Nanjing’s supplier Stadco is moving to the Longbridge plant to build bodies. JCB in Staffordshire is collaborating with Ricardo Consulting Engineers to produce state-of-the-art diesel engines. My right hon. Friend the Member for Oxford, East (Mr. Smith) rightly paid tribute to the work of BMW at Cowley and, significantly, to the production of the new generation of engines at Hams Hall.
There are therefore several different examples of where we are succeeding in new areas and with traditional, iconic brands. My hon. Friend the Member for Birmingham, Erdington (Mr. Simon) referred to Ford, Land Rover and Jaguar. Equally, London Taxi International has just teamed up with a Chinese partner, which will, I hope, see their production increase tenfold in the midlands.
We might have fewer and smaller manufacturing plants, and we cannot duck the challenges of globalisation, but if we stay ahead of the game and play to our strengths, there can be a bright future not only for manufacturing, but, as my right hon. Friend the Member for Oxford, East rightly said, for the components industry. I pay tribute to programmes such as Accelerate, which celebrates its 10th anniversary this year. It has been encouraging components suppliers to improve processes and to get ahead of the game, and they have been very successful in so doing. Such programmes were important in ensuring that the loss of MG Rover last year was not half as serious as it would have been had it happened in 2000.
There are one or two things that the Government need to think about, and I want to describe a couple for the Minister. First, if I am right about the kind of future that I am sketching out for the motor industry, we need to think about the supportive mechanisms and attitudes that are needed to back that up. The planning system has a role. It is right that we involve local people in planning decisions and that we look to protect the environment, but there should be a framework of trying to make things happen, rather than always getting in the way of things happening. That is very much the view of people living in and around Longbridge.
These days, we all celebrate motor sport and performance engineering, which I have mentioned today. However, we need to think about whether all Departments of State, parts of local government and different agencies are working together to make those as effective as possible, and whether we are using the expertise of our performance engineers as effectively as we can to meet the environmental challenge. As I say, the synergies are there. The Low Carbon Vehicle Partnership, for example, has done some great work, but are we really doing all we can to be world beaters in the business of alternative fuels? Could we do more on biofuels or, for the long-term future, on hydrogen power?
We need to consider those issues, as well as planning policies. We need to examine whether our industrial policies link with our environmental policies. Equally, we should consider whether they both link with our transport policies and whether we are using the transport innovation fund, for example, as creatively as we can to obtain the spin-off industrial and technological benefits, as well as the transport benefits.
We have a proud manufacturing history. In Longbridge, we know that the tenacity and skills of the work force and the vision of people such as Herbert Austin built the 20th century for Austin in Longbridge. The tenacity and skills of the work force there, and those of the motor industry, can now also build a future. It will be a different future, but I think it can be a bright one.
South Derbyshire is arguably the heart of UK manufacturing. Nearly a third of the work force there are employed in manufacturing, which is more than double the average for a UK constituency, and it is home to a wide variety of companies. I shall concentrate on one of those. However, we make engines for JCB—the main plant is of course in your constituency, Mrs. Dean, but the engines are now made in South Derbyshire—and many Rolls-Royce employees live in my constituency.
We also have Futaba, which makes car parts for Toyota and other car manufacturers. We make steel frames and aircraft parts, and innovative electric power systems for high-performance vehicles. The area is a centre of expertise, hard work and innovation, with committed workers who know what they are doing and owners who are committed to the future of their businesses.
I want to focus on Toyota, which is also based in my constituency. It is, I think, the most successful car company in the world, and 4,200 people are employed at Burnaston, out of the 4,800 in the UK. That is based on an investment over the past 14 years of nearly £2 billion. The plant makes two lines: the Avensis, which I drive—I do not suppose that I could get away with driving much else, as I live a mile and a half from the plant that makes them—and the Corolla. They are vehicles that I commend in public purchasing terms, and certainly commend to other Members of Parliament. Sometimes when one wanders into the Members’ car park, the number of British-made cars sitting down there is noticeable.
Annual production of vehicles at the plant is coming up for 285,000, because a major investment has facilitated further expansion of annual production for this year, and it is used as a source of advice on manufacturing and process quality. The Toyota production system is taught to many people, including those from the public sector who come to learn about how processes can be organised and how teams can work together to produce high-quality output.
Eighty-five per cent. of the Burnaston production is exported, including a proportion that goes to Japan. In 2005, Burnaston produced its 2 millionth vehicle, and it makes a net contribution of £400 million a year to our balance of payments—which is not to be sneezed at. A point that has not yet been picked up in the debate is the fact that such major manufacturing investments make an important contribution to UK plc’s trading status as a nation.
Burnaston is now also a training facility for Toyota employees across Europe. I am pleased that my constituency has been chosen as the base for people learning how to produce in the Toyota way. It also has an enviable reputation as a general car manufacturer: we have already heard about the Toyota Prius, which is a vehicle with a dual power system that is often used in the ministerial fleet. My right hon. Friend the Minister may go around in one—I do not know.
The plant, which I commend as a place to visit, if the Minister has the pleasure of visiting South Derbyshire—I am sure that Toyota would welcome that too—also has a strong focus on the reuse of materials. Anything that can be reused is put aside for recycling or repurposing. It is a model employer and manufacturer, and, when we consider the global statistics, a manufacturer that is winning the race worldwide, not just in Britain.
All that is very positive, and it is my core message: we can succeed in making cars in the UK. Toyota proves that. However, what do such companies need? My right hon. Friend the Member for Oxford, East (Mr. Smith) rightly mentioned the importance of a stable economy. Toyota always makes that point: it wants a clear environment in which it can invest in the future, knowing that something desperate will not happen in six months that dramatically changes the mechanism of its business. That includes relative stability of exchange rates. It is a major trading force, as I have emphasised, and it is important that the Government have made admirable progress there. While we have not joined the euro, in the past two years we have, nevertheless, had relative stability in exchange rates with the euro, which has helped companies such as Toyota to predict costs in the relevant area.
Energy costs have been touched on and I shall not discuss them again, but a critical area is logistics. South Derbyshire is right in the middle of the UK. Toyota would love to be able to use our railway system, as that would allow it to ship its high-quality product to UK ports for export. I know that discussions on some relevant issues have been going on with my right hon. Friend’s Department for some time. I would welcome her comments on what progress might be made, because Toyota is an enthusiastic supporter of the opportunity.
My last point is that we need a regulatory framework that is sympathetic to manufacturing activity and takes account of the competitive environment in which it operates. It is no use applying regulatory burdens in the UK that are not applied to major manufacturers in mainland Europe—particularly some of the new-entrant countries. That is hard for a major company such as Toyota to bear.
I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. He has talked passionately about manufacturing and said that he wanted to talk manufacturing up. I agree wholeheartedly that that is what we should do, because we both, like other right hon. and hon. Members who are present, care passionately about manufacturing.
I agree with what my hon. Friend said about the Government leading by example and considering their purchasing policy. That is something that the Government could do to set an example, and I urge the Minister to take the idea seriously; it has my support.
I want to focus on the positive aspect of manufacturing and particularly motor manufacturing in the north-east and on a great success story, Nissan, which was mentioned by the hon. Member for Mid-Worcestershire (Peter Luff), the Chairman of the Select Committee on Trade and Industry. The Nissan plant in the north-east was set up in 1986 and has been one of the most productive car plants in Europe. I put it on the record for my right hon. Friend the Minister that it has enjoyed tremendous support from the Government office for the north-east and from the regional development agency—One NorthEast. The local council has also given tremendous support over the years to help to make the plant work. Everyone has worked together to recognise the sector and played their part.
The Nissan plant produces nearly a third of a million Micra, Almera and Primera models each year. It now accounts for one in five of all cars produced in the UK. Nissan works closely with the university of Sunderland and with local colleges. A two-year foundation degree—the first—in lean manufacturing has just been launched in the north-east, with more than 40 students enrolling. Sunderland has also been selected to take forward production of a new sport utility vehicle range, with £500 million of investment and the creation of a further 400 jobs.
The plant is highly technically advanced. A total of 435 functioning robots provide for nearly 80 per cent. automation of the assembly process at the plant. About 75 per cent. of production is exported, with markets in 45 countries, including Nissan’s home nation of Japan. Nissan contributes about £500 million to the local economy each year, with 240 suppliers in the region. Nissan’s total investment exceeds £2 billion, with about 5,000 people employed at the plant.
Nissan has also been the agency for creating a large supply base in the region with significant suppliers, including Hashimoto, Magna Kansei, Calsonic Kansei, TRW Automotive and Johnson Controls. Much of that work is concentrated around Sunderland, and the city continues to build on its worldwide reputation as a centre for car manufacturing. The sector employs about 12,000 people in that city alone.
As I said, the Nissan plant is a great success story and has enjoyed tremendous support, certainly from the Government. I ask the Government to continue to provide support in future so that the plant can continue to flourish and we will have a great success story to tell for years to come.
My experience of the motor manufacturing industry goes back more than 30 years. In those days, I regularly used to visit the Standard Triumph factory in Speke, which has long since closed for what are now obvious reasons. It was a depressing, noisy place, with bad human resources practices, and the products were not of the highest quality. There was no vision for the future and no ambition at the time. Sadly, that reflected the period in which we were living.
The Government have changed the emphasis quite considerably, but we need more vision now. I echo the words of my hon. Friend the Member for Birmingham, Northfield (Richard Burden) on that. We need a vision that encompasses a strategic future that engages the hydrogen fuel cell industry. Otherwise, it will end up in Germany. We need a vision that engages bioethanol products. I saw the same race on television. Knowing my hon. Friend’s love of the sport, I am sure that he was there. We need to engage the performance industry as well.
I agree with the comments about public procurement. The strategy on public procurement is important because it sends a powerful message. The fact that many police forces drive Vauxhall Astras is a huge plus in the bid that we have just made for the new vehicle for Ellesmere Port. If none of our police forces drove the vehicle and there was not significant public procurement of the vehicle, the company would perhaps focus elsewhere. I shall return to that issue.
We have to recognise that we are now dealing with global vehicles, which are designed by giant corporations seeking to meet market needs across the world. My right hon. Friend the Member for Oxford, East (Mr. Smith) is fantastically lucky that his area is hitting the world market from the very good factory there. We need to recognise, though, that many vehicles are manufactured in a large number of countries and we have to ensure that, if we are in this for the long term, the strategic changes that we engage in make sense in relation to the needs of those big corporations.
My hon. Friend the Member for Chorley (Mr. Hoyle) mentioned energy, which is a huge issue. In relation to the Vauxhall bid, we are working closely with the company not only on engaging with our friends in the Treasury about energy prices in this country, but on finding innovative solutions, working with energy suppliers in the area that might be able to make provision directly into the grid. Such innovation is highly desirable.
We have also been working on estate management and ensuring that the estate is fit for purpose, because it was designed in a different era of vehicle manufacturing, when it was quite common to have long rambling production lines that did not make a great deal of sense in terms of integration, because that was not the way in which production worked. A huge amount of work is taking place on that. My right hon. Friend the Minister may have seen, in a paper that I sent to my right hon. Friend the Chancellor of the Exchequer last week, that we have achieved a deal on the rates for the building, putting them in line with the rates that apply to Gliwice in Poland and thus removing one of the obstacles that would mean that we lost out on the bid.
A huge amount of work is taking place on training with the Northwest Development Agency. This is enormously important. If we are going to take the Astra platform forward for the next model and over the projected 15 years, we must have the most highly trained work force to be able to compete with sister plants elsewhere in Europe.
My hon. Friend the Member for South Derbyshire (Mr. Todd) touched on the transport infrastructure. It is utterly absurd that a railway siding goes through the Vauxhall factory, yet not one single component travels on railways. I shall not make a party political point, but the reason for that goes back to the failure of Railtrack, which simply was not interested in the business. Therefore, Vauxhall has invested in fleets of lorries, and its actions, together with those of all the other manufacturers in my area, cause the clogging of the M6. If anyone wants to find a quick solution to traffic-flow problems on the M6, they should invest in rail freight, which would help Vauxhall, Shell and all the other big players in my area.
That type of cross-cutting Government thinking is needed and we need to send out a powerful message. I hope that the Minister, in her reply, will do just that. We need to send to potential investors and, in my case, particularly to General Motors a powerful message that says that we are serious about ensuring that we continue to be a great place to do business and that part of that will involve working with them to try to address some of the energy and transport infrastructure issues, to ensure that we invest in training and to address the issues of estate management and so on.
If we get those things right, we can continue to produce the Vauxhall Astra in my constituency. Those messages reflect across the broader industry. I hope that the Minister will speak with enthusiasm about the industry, which is hugely important to the country and needs to be so in the future.
I, too, congratulate the hon. Member for Chorley (Mr. Hoyle) on securing today’s important debate. I come from Solihull, the home of Ford and Land Rover. Obviously, the hon. Gentleman is delighted that the Freelander rolled off the production line at Halewood today, but that has been to the cost of Solihull and 1,200 jobs there. Having said that, because its hugely successful products contribute enormously to British exports, I think that Land Rover should be congratulated, as should the other excellent car production companies that have been mentioned today, such as Honda, Toyota, Nissan and BMW Mini.
The west midlands has more jobs in car manufacturing than any other region in Britain: 78,000 jobs. Unfortunately, when Labour came to power it had 95,000. The figure for the drop in car manufacturing from last year to this, which was released yesterday, is 15 per cent., but I am sure that the sad tales of Rover and Peugeot have contributed to that. I am hopeful that there might be something of an upturn next year. If there is not, it will not be for want of effort on behalf of the excellent companies that I have mentioned.
I want to discuss car component manufacturers, on whom there are enormous pressures. It is important that they are located close to car manufacturers wherever possible because of the pressures of just-in-time technology, which is hugely valuable, but there are problems with the transport infrastructure, and it becomes increasingly problematic when components do not get to their destination within the required time.
We are moving away, particularly in the west midlands, from low added-value components and the metal-bashing era to using much more technically challenging, high-spec systems that involve computer-aided design and electronics. That is a good move because it brings a great deal more added value in the cars that we manage to export, which is good for our balance of payments. However, we are a net importer of vehicles to the tune of 1 million vehicles a year at a cost of almost £6 billion to the UK economy. Clearly, the more vehicles we manufacture here for export, the better it will be for prosperity in the country generally.
As we are being technically challenged all the time, particularly with car components, it is important to keep research and development ahead of that in China, India and the rest of Europe. We therefore need skills and investment to create an environment that overseas car manufacturers will welcome.
There seems to be a global problem in car manufacturing with surplus capacity. Strong unions that are, obviously, against cuts in the volume of manufacturing cause profit pressures, and the tight margins to which manufacturers have to work will filter down the supply chain through price-downs, where suppliers on each tier demand price cuts from the suppliers below. That phenomenon, and the investment that is required in research and development and new technology, mean that many car component companies are highly geared. There is a constant need to upgrade manufacturing plant and tooling, and they are less able to withstand the shocks of lack of demand or changes to do with economic pressures and interest rates, so Government help to a create stable environment is important.
However, it is not all gloom and doom. The British success stories that we have discussed are hugely welcome. Foreign manufacturers come to this country because of flexible jobs. While jobs are very important, the route to more success is more partnership working between unions and manufacturers rather than there being a protectionist approach to British jobs.
The hon. Member for Chorley talked about buying British, which is hugely important. I wish that the British public would buy British as well—
Indeed. Renault does not make a single vehicle in this country, yet there are many Renault vehicles on the road. I totally agree with the hon. Gentleman that we should encourage a better awareness of where vehicles are made and the link between buying vehicles that have been made in Britain and the prosperity of Britain. We do not laud that enough. The game is definitely worth the candle, but we need skilled people and R and D support. The transport infrastructure is also important.
I echo the comments of the hon. Member for South Derbyshire (Mr. Todd) about regulation, particularly with regard to car components, and the need for sensitivity to the enormously changing environment. I encourage the Minister to consider regulation in relation to component manufacturers, and I am sure that she and her Department would be pleased to hear from those manufacturers how regulation is hampering them.
I, too, congratulate the hon. Member for Chorley (Mr. Hoyle), who has long had an interest in this matter. He spoke with real passion on the subject, and I suspect that not only we in the Chamber but many of his constituents will have heard what he has to say.
The debate has been useful and is timely. I was particularly struck by two contributions—I hope that other right hon. and hon. Members will not be disheartened. The remarks of my hon. Friend the Member for Mid-Worcestershire (Peter Luff) showed his wisdom, not least as the Chairman of the Trade and Industry Committee, and were particularly helpful, so I am grateful for those. I commend also the remarks of the hon. Member for Birmingham, Northfield (Richard Burden). Like him, I hope that the Minister will be able to tell us when the MG report will be published.
The manufacture of cars and their components in this country is an industry of long significance, and will continue to be of great economic and technological importance. As we have heard, the industry accounts for 10 per cent. of manufacturing in the UK— £45 billion if we put that into real money—and supports roughly 800,000 jobs. I understand that our exports are worth about £20 billion.
Despite some well-reported problems, car production has remained remarkably steadfast in recent years, and is, roughly speaking, about 1.6 million vehicles. Several hon. Members alluded to the fact that those figures do not show the change in the industry’s structure over that decade. During the period, there has, on the one hand, been the demise of familiar British names, such as TVR, and, on the other hand, their replacement by leading overseas players in the industry. It has gone from being a British car-making industry to being a car-making business in Britain.
On the debit side, MG Rover recently went into administration and Peugeot made the announcement about its facilities at Ryton, and Vauxhall has sought to cut production of its Astra model with the loss of 900 jobs. No one in the Chamber, or among our constituents, welcomes the demise of those enterprises, nor does anyone underestimate the distress that it causes to hundreds, if not thousands, of workers. The hon. Member for Birmingham, Northfield highlighted that extremely well. We should also not forget the many small and medium-sized enterprises in the supply chain, the component chain, who often do not hit the headlines. They are often ignored by the national media when this kind of event takes place.
On the credit side, we should not ignore the good news, which the hon. Member for Chorley mentioned. In Sunderland, Nissan has invested another £125 million to enable it to build its fifth model in the UK. In Swindon, Honda has invested up to £1.3 billion so far and is just about to open the new logistics operation. I am sure that the hon. Gentleman knows, and is pleased about, the fact that Leyland Trucks has turned its plant in Lancashire into the most productive commercial vehicle plant in Europe. I believe that it turns out about 15,000 units a year. All of those stories are to be welcomed. They show that the UK is still able to attract international investment, but it can do so only if we are able to offer the right combination of skills and markets.
The Select Committee is considering the fact the UK still faces considerable competitive challenges. In the short time available, I want to focus on three areas: skills, investment, and—several hon. Members have mentioned this—regulation. Car and component manufacture needs both basic and specialist engineering skills to compete. Sadly, this country is not keeping up with our competitors on both counts. A recent survey by the Society of Motor Manufacturers and Traders Ltd highlighted that 83 per cent. of its members found that low employee skills are holding their businesses back.
The independent Leitch review of skills confirms the problem. It was commissioned by the Treasury, and its interim report found that one third of working adults do not have a basic school-leaving qualification. Worse still, it shows that the result of the Government’s current plans for skills would leave 4 million adults without the basic literary skills expected of 11-year-olds and 12 million adults without their numeric skills. Why are the Government planning for such low attainment? How does the Minister expect the industry to cope with staff who have such inadequate skills?
On graduate engineering skills, a CBI report has shown that since the mid-1990s the number of students obtaining a first degree in engineering and technology has fallen by 11 per cent. That has serious implications for motor engineering and car making. Given that, why does the Minister believe there has been such sharp decline? As a former Minister with responsibility for higher education, which of the Government’s policies in particular does she think are failing?
On business investment, the Government have set themselves a target to increase the UK investment in research and development to 2.5 per cent. It is a laudable ambition, given that it is fair to say that we have had a historic habit of lagging behind France, Germany and America. Therefore, it is disappointing to report that the most recent figures show that research and development investment has remained static as a proportion of gross domestic product; it has gone nowhere in nine years. The Chancellor is proud of his research and development tax credits, yet the Government’s own evidence shows that they have failed to help the Government to reach that target. We are exactly where we were nine years ago. Why do they think that the investment has not increased? What does the Minister think is wrong with the research and development tax credits? Can she say today that she is still absolutely confident that the Government will meet their target?
Several hon. Members have alluded to the fact that the burden of regulations is one thing that has increased. A recent survey by the Engineering Employers Federation showed that 62 per cent. of its members cite regulation as having a negative effect on the ability of this country to be a place to which people want to come to invest and do business. They are right. The annual level of regulations has risen since 1997 by more than 50 per cent. It is now the equivalent of having 15 new regulations every working day. Does the Minister recognise how the burden impacts on car manufacturers? Does she accept the figure from the Federation of Small Businesses that the average small business spends 28 hours a month simply complying with Government paperwork? If she does accept that those figures are correct, what steps does she intend to take, as the Minister with responsibility for small businesses?
Equally, conflicting regulatory objectives can create serious confusion. Let us consider recent EU initiatives about health and safety, and environmental protection. On the one hand, the EU has initiated regulations to reduce tailpipe fumes, which affect our health. However, these Euro V regulations involve installing particulate filters, which increase the weight of the car. The result is an increase in carbon emissions, which directly contradicts another EU policy that seeks to tackle climate change. For car makers, that conflict between policies is immensely frustrating and confusing. Which policy comes first for them? As the Minister responsible for industry, is she aware of the regulatory confusion? If she is, what does she propose to do about it?
The car and component-manufacturing industry remains vital, not just to today’s economy, but to our future prospects. Improving skills, increasing investment and reducing regulations will all require an energetic and positive approach from the Government. Given that, I hope that the Minister will explain her plans for supporting the industry. In particular, I hope that she will respond not just to my questions, but to those raised throughout the debate.
In 13 minutes I shall try to do justice to this well informed and high-powered debate. I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing it. I also congratulate Amicus, the union with which he is so closely associated, on the work that it has done to raise the profile of British manufacturing, and the car industry on its day-to-day work and in the important partnerships that it creates.
I should be up front in admitting that I have a Vauxhall Vectra; it is my Government car. Those cars used to be produced in Ellesmere Port, but I am unsure whether they still are. Perhaps my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) could help me on that.
I was going to ask my permanent secretary whether he could get me an upgrade to one of the Deputy Prime Minister’s Jaguars.
I will try to do justice to what everybody has said. The hon. Member for Mid-Worcestershire (Peter Luff) talked about the Select Committee report. I look forward to the outcome of that. I want to deal with one or two of the issues raised by my hon. Friend the Member for Birmingham, Northfield (Richard Burden). As he knows, it is the inspectors who are reporting and not the Government, so we must wait for that to happen. He is going to talk to me later about the particular issues in relation to the taskforce, and I hope that I will have good news for him. I should say some general things about the planning system, but I know that the planning application on his particular site has not been called in. That should not hold up that particular development, although I accept that planning is an issue of concern in Ellesmere Port and elsewhere.
The Chancellor set up the Barker review to try to tackle some of the conflicts that exist, so that we can ensure that our desire to achieve growth in the economy, particularly in the manufacturing sector, is not impeded by slowness in the planning system. We all look forward to the outcome of the Barker review, which should be around the time of the pre-Budget report.
I shall respond to the other contributions more generally. Manufacturing always provokes bad news in the press and its image is an issue that I must tackle. Manufacturing is vital and a key part of our infrastructure. It provides 14 per cent. of our gross domestic product, one seventh of our national wealth and 50 per cent. of our exports. It is interesting that many of the contributions about the car industry this afternoon were positive. British car manufacturing has a good story to tell and, without being too party political and partisan, it was a Labour Government who brought British car manufacturing back from its all-time low in the 1980s of about 900,000 cars a year to 1.6 million a year now—[Interruption.] I will take a sedentary frown from the hon. Member for Mid-Worcestershire.
My right hon. Friend the Member for Oxford, East (Mr. Smith) told a warm story about what is happening at the Cowley plant where there has been not only a massive increase in the work force from 1,500 to 4,500, but a welcome increase in apprenticeships—many hon. Members talked about training. It is interesting that cars are built in Oxford, but sold with a flag. Car manufacturing is an important export industry and whether that is in south Derbyshire, where Toyota’s vehicle manufacturing is based, or Oxford, East, we should not lose sight of the fact that we export cars. That is hugely important.
My hon. Friend the Member for South Derbyshire talked about Toyota, which I recently had the pleasure of visiting in Japan. I am incredibly impressed by it and particularly by its investment in new fuels and its consideration of safety. It is much more grounded in what I think will be the future that customers want from their cars than are some other car manufacturers with an American base who are in trouble.
There was a positive story to tell about all car manufacturers in this country, including Nissan and Toyota. My hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) talked about Nissan, which is a fantastically good-news story. Nissan has the wonderful feature of being Europe’s most productive car plant today and we are proud of that, although Toyota at Burnaston and Honda at Swindon are also in Europe’s top 10.
I cannot let time pass without mentioning Ford. Jaguar’s Halewood plant has become Ford’s most productive plant and I am proud that in Dagenham, the constituency next to mine, we are producing so many engines, many of which are also exported.
The supply chain is strong with 2,600 companies employing 130,000 people. The just-in-time location for supply chain products to feed into the manufacturing process is extremely important and one of the messages that I received from Toyota when I was in Japan was that we need to work together to improve the performance of supply-chain companies so that they can produce within cost, to quality and on time to meet demand. It is important to put some effort into that as we move forward. The supply chain is crucial and it is good to see that BMW is increasing—
Sitting suspended for a Division in the House.
I hope that I can do my hon. Friends justice.
I shall say one more thing about United Kingdom car manufacturing: its productivity went up by 44 per cent. between 2000 and 2004, the years for which I have figures. That is why in Oxford, East, South Derbyshire, and Middlesbrough, South and East Cleveland there is such successful manufacturing capacity.
I want to deal quickly with the issues that have been raised, and then with the vision that my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) described. Procurement is a difficult issue, as he knows, but a lot of purchasing takes place: the Post Office purchases Transits and Vivaros, Royal Mail purchases from LDV, and Toyota provides a lot of cars for the Post Office. The Government car fleet could do better—I accept that—but we must ensure value for money. Britain does well because we have an open market, and we are producing so many cars because we are competitive. That is good for the British car industry in the long term because it makes it sustainable and helps us to export.
The importance of a stable economic environment was mentioned by my right hon. Friend the Member for Oxford, East, my hon. Friend the Member for Middlesbrough, South and East Cleveland and the hon. Member for Solihull (Lorely Burt). The matter is key, and I say to my hon. Friend the Member for Chorley that there are many myths about employment rights in the UK. A Department of Trade and Industry survey found that five of 15 EU countries have collective redundancies that are implemented more quickly than those in the UK. In Denmark and Greece there are shorter periods of notice and lower severance payments for blue-collar than for white-collar workers, and in France, with which we are often compared, there is an insider-outsider problem. Those who are in work have their jobs protected, but it is much more difficult to take people on. That has led to a 25 per cent. unemployment rate.
Hon. Members mentioned the shrinking number of jobs in the car industry, but that is not peculiar to the UK. Volkswagen, for example, is to cut 20,000 jobs at six West German plants. Energy costs are a consideration, and until 2005 ours were comparable with those in continental Europe or, in many cases, slightly lower. Things went wrong in the winter of 2005, when there was an increase in demand and in energy prices internationally because of the decline of North sea gas production. By about mid-2006 we were competitive again, and new infrastructure, such as the new gas pipeline from Norway that the Prime Minister recently opened, will help us to equalise the situation.
We must do what we can in the energy sector. Hence the Carbon Trust, which we set up to provide direct advice to industrial companies; hence the enhanced capital allowances scheme, which means that companies can claim 100 per cent. first-year allowances; and hence the climate change programme, which a number of hon. Members mentioned.
Transport infrastructure and logistics are key. We are discussing them with Toyota and a feasibility study is being undertaken with the regional development agencies. We are conscious of the issues affecting Vauxhall, and I congratulate my hon. Friend the Member for Ellesmere Port and Neston on having done an enormous amount of work on them. We must try to unlock the problems faced. It is crazy that we cannot use the railway lines to support our car industry and that we have to rely on road transport. I think we would all accept that.
I end by mentioning what we are doing for the car industry, a subject that the hon. Member for Hertford and Stortford (Mr. Prisk) raised. I shall not reply to him in detail, but he said that there are 4 million adults with no skills. When we came into government there were 7 million. We have nearly halved the figure. There was no research and development tax credits system, and R and D investment was on the down. I shall talk to him in another arena about small businesses, but some regulation is good. For example, we all support opening up the right of older workers to have a place in work.
The car industry is central to the manufacturing base of the UK, and we are strong in it. We all need to talk it up, not down, and ensure that we put the right investment in the right places. The automotive innovation and growth team report was published under my predecessors, and we are going ahead with that work. A huge amount of work is going into building skills. We have the automotive academy, which I visited on a recent visit to the west midlands and which is doing good work, and we are building centres of excellence and investing in the examination of new fuel technologies. We have a technology programme of almost £400 million, and one of the innovations coming from it is the low-carbon vehicle partnership. There is InnovITS, which brings people together on telematics. We must focus on the supply chain, and we have put money into that. Companies must work with their peers to improve productivity and their management of the supply chain. All those elements make for a good, healthy car industry. That is what we want—an industry that produces for UK residents but also for export. That is how to build a prosperous UK with a growth in jobs.