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Car Manufacturing

Volume 469: debated on Wednesday 12 December 2007

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Roy.]

I am pleased that this important debate is taking place today. It is about the manufacture of cars, vans, trucks and components in the United Kingdom. There is great interest in the number of jobs in that sector. I am glad to see the Minister in his place. I hope that he will give detailed responses to some of the questions posed this morning, and if he cannot answer today I hope that he will write. It is important to record how important that sector is.

Britain is the sixth-largest manufacturing economy in the world. We now make almost twice as many cars in Britain as we did 25 years ago. Seven of the top vehicle makers are based in the UK, and 19 of the top 20 auto-part makers have a manufacturing presence in the UK. In my constituency of Chorley, we have a huge parts centre and the Leyland Trucks factory. In the north-west—just down the road from your constituency, Mr. Benton—we have Jaguar and Vauxhall. The motor industry has a major presence in the north-west, as it has in my colleagues’ constituencies in the east and west midlands.

Many people are bothered about the car industry and the components sector. Many companies have a presence in the area, and they are taking a lot of interest in it, and it is from that angle that we have to consider the matter. More than 75 per cent. of cars made in the UK are exported. Independent surveys show that UK car plants are among the most productive in Europe. I stress that they are the most productive.

Having painted such a picture—a good picture and a good story to be told, at least to begin with—why is there so much uncertainty and concern within our car manufacturing sector? What can we do about it? There is no doubt that globalisation presents massive challenges for the manufacturing industry. India and China have wages at about 15 per cent. of European levels, and they are expected to account for nearly half of global growth over the next 15 years, so it is a serious problem.

In a speech on 23 October, the Minister stated:

“We cannot hold back global development, and protectionism certainly is not the answer.”

I accept that that is what the Minister said. He continued:

“The companies best placed to prosper in the knowledge economy are those that invest the most in R and D, that are most alive to the commercial opportunities of the ideas they generate; that most successfully bring their ideas to market.”

Absolutely. Great R and D is fantastic, but we should not forget that we need a manufacturing base to go with it. It is no use having the best ideas if we export the jobs. Yes, we must invest heavily in R and D. I fully agree with that statement, but the question has to be asked: what is being done to promote R and D and support, through financial incentives? I understand that R and D in the UK car manufacturing sector is so important. The Minister also said that

“protectionism is not the answer.”

I do not believe that old-fashioned protectionism is the answer, but greater protection for UK employees is. We still lag behind our European counterparts in employment rights. That is the problem.

Although protectionism may not be the answer, is it not extraordinary that the Government, unlike those of the other major car-producing countries, seem to prefer foreign vehicles to British vehicles? Would it not be a good start if Ministers were to be driven in British cars?

I cannot disagree with my right hon. Friend. He is spot on. In fact, I shall come to that very point later in a little more detail.

The UK has some of the most profitable car plants in Europe, none more so than Vauxhall. However, when costs had to be cut, the company turned to UK plants and UK workers, because it was the easiest and cheapest place to sack people. That is always a problem. There are many more examples of shifts in production, such as at Ford and Peugeot. People are talking about new cars with great British brand names, such as the small Rolls-Royce and the SUV Mini, being built abroad. Aston Martin’s new four-seater saloon car is to be built abroad.

Ford made many promises when it closed its last own-badge car plant at Dagenham. I was a member of the Trade and Industry Committee that took evidence from Ford. It said that we should not worry and that although they might not have Ford badges, the company still owned Jaguar, Land Rover and Aston Martin. Those are great brand names and Ford said that it would continue to manufacture them in the UK. Aston Martin is already under foreign ownership and Jaguar and Land Rover are up for sale. That is the difference; they are in foreign hands. Ford will not have a car assembly plant in the UK if it sells to Tata, yet Ford sells more cars in the UK than anywhere else in Europe. The company does very well out of the UK.

I am sure that my hon. Friend will agree that there is a certain amount of uncertainty about Ford, because no one knows exactly who is going to buy it. That has created much uncertainty in Coventry.

Absolutely. Uncertainty is what it is all about and especially for the workers, whether in Coventry or Liverpool. It is a big question. Those promises made by Ford, saying that it would continue to build cars in the UK have not been kept. The question must be, where does it leave us with the Ford Transit?

The hon. Gentleman paints a slightly depressing picture. If I were an employee of Ford, Land Rover or Jaguar, I would rather be owned by a company with money to invest in new models than a company that was losing billions of pounds that could not make such an investment.

I have great respect for the Chairman of the Trade and Industry Committee, but we can agree on one thing: we have new models. We should remember that Ford has taken a tough decision. It invested in Aston Martin, made it profitable with new models and then sold it. There has been investment in the Land Rover Discovery and Freelander models, and they are making a profit. It is important to be profitable. Jaguar is losing money, but Ford has invested heavily in the launch of the new mid-range car that will come on the market in March next year, and that should be a huge success. When there is a success story, why sell? Why not show commitment? That is the difference.

I understand that Ford is selling the classic marques of Land Rover and Jaguar because elsewhere in the world it is not necessarily so successful. The company is £6 billion in debt. The company does not want those marques to be lost, it wants them to continue—but, as the hon. Gentleman said, with the greater investment needed to meet the challenges of the global market.

I recognise that, but after the investment, the profitable side is here. Why not close plants in other parts of Europe? We know that Ford have made a lot of closures in America, but once it has turned the corner it is surely better to keep silverware that is well polished rather than silverware that is losing money. It is sad that Ford, which has one of the biggest markets, is now leaving us. I understand that Ford has to make tough decisions, but I am worried for those who work there and their long-term future.

I agree with the hon. Member for Mid-Worcestershire (Peter Luff) that my hon. Friend is painting a depressing picture. In the north-east, Nissan has been a great success, having produced the Micra, Almera and Primera, and is making about a third of a million cars a year. It has been a success, despite the supposed climate that he describes. There have been success stories, so I do not think that the situation is as depressing as he has articulated so far.

I have tried to show the balance and the strength of the car manufacturing industry in the UK. However, we must look to the long-term future. We all know that, when the French became involved, the decision on where the next line for the Nissan Micra went was very close. Let us not think that life is so great. That was a tough decision and, thankfully, the Government put in a lot of support for the continuation of that new model. A car plant is only one model away from closure.

While we dwell briefly on successes, Toyota’s car assembly plant is based in Burnaston, in my constituency, and is a flagship of a group that is dominating the world in car manufacturing. One thing that would keep it there is investment in proper infrastructure in order to allow the plant effective access to the rail network, which would reduce its logistics costs. That is the kind of investment that we seek from the Government.

Absolutely right. That is the point that I am making. We must put in the investment to ensure that our car industry has a long-term future. That is what I am concerned about and what I am trying to get across. At the moment, the market is very successful, but we must look to the long-term future.

Does my hon. Friend agree that part of the difficulty for the industry’s long-term future in the UK is that, owing to foreign ownership, we have been chasing markets that are, by and large, declining? As far as I am aware, only two superminis are built in the UK—the Mini and Nissan Micra, the latter of which is about six years old. We have been receiving foreign investment in models and market segments that are declining owing to concerns about climate change. We need the Government to pressure foreign car manufacturers to build more superminis and smaller, less environmentally-damaging models, in the UK, because that is where the market is going and where the future is for the car industry.

I cannot disagree. Some good points are being made. This is about the future and ensuring that the models relate to future demand.

This is not a question of painting a depressing picture. However, over the last few years, Rover, one of the Jaguar plants at Browns Lane and Marconi have all left Coventry. We must face reality. Those working in plants want to know what their future is. For example, they are the ones who had to pick up the pieces following the Peugeot closure, which was a brutal and callous act by that company.

I agree absolutely with my hon. Friend. There have been some savage cuts and some incorrect decisions taken. None has been more wrong than the one taken on Peugeot. It was not the fact that it was not profitable; its work force did everything to ensure that production continued, but the money was stripped out and when the decision was made, the Coventry plant was closed. Peugeot still wants the market share. It would not get that in France if it closed all its plants there.

We cannot pretend that everything is rosy. We must face up to that fact. I am sorry to say that there will be further casualties, which is why this debate is so important. I am very worried about certain plants. I want Ford to commit itself to Transit and Land Rover to commit itself to Solihull, but we are not hearing those noises loud and clear. There will be more bad news to come, so we must ensure that there will be good news as well. We can do that and build on what we have with a Government concerned about manufacturing. We do not want protectionism; we are simply asking for fairness and a level playing field. That is the most important thing. At the moment, we are suffering at both ends of the scale. We are all aware that no country in Europe can compete on wage levels with China and India, but we can secure higher skills, high-tech industries and good-quality investment in order to compete on quality with modern production lines. That is how to compete in the global market.

Thanks to UK workers, we achieve this objective, only to have the rug pulled from under our feet because our employment laws are insufficient and make British workers the easiest to get rid of in Europe. We need to adopt the working time directive to improve employment, and to couple that with better rights for temporary and agency workers. Casual and insecure work is now common with more than 2 million workers employed on a temporary basis. Agency staff perform a wide range of tasks. They carry out technical, administrative and production work; they work in finance departments, and are IT and computer specialists.

In a complex survey carried out in the motor industry, 80 per cent. of the companies represented used agency workers. A further 72 per cent. reported that the use of agency work had increased over recent years. What was more surprising and worrying was that 81 per cent. of trade unions representing those firms had no say in the decision to introduce agency work. Agency workers are common in the motor industry and they should have equal rights in pay, hours, holidays, training and terms and conditions. That has got to be our objective and where we must start to push forward.

If UK car manufacturing is to have a future, it has to be in the high-skill, high-tech sector, where considerable time and energy is spent on R and D, and on bringing production to fruition in the UK. That will be transferred into UK manufacturing jobs, if employees are not undermined by weak employment law. In addition to strengthening employment law the Government have a part to play in encouraging companies to invest in skills, innovation, R and D and capital equipment expenditure in order to ensure competitiveness. Vehicle and component manufacturers need both basic and specialist engineering skills to compete.

A recent report by the Confederation of British Industry showed that since the mid 1990s the number of students obtaining a first degree in engineering and technology has fallen by 11 per cent. Greater emphasis has to be placed on engineering and manufacturing as a long-term solution to ensuring that we maintain the skills required to compete in the future. The provision of skills and training should be a shared responsibility between employers, individuals and the Government, and employers should be offering or assisting individuals to access training that will help their long-term employability. The Government should set an example.

The Government have an opportunity to promote engineering in schools. The Government should take the initiative. A recent report by the Royal Academy of Engineering made the point that youngsters are not interested in engineering. Perhaps the Government could make a positive effort. Will the Minister take that up with the Department for Innovation, Universities and Skills?

My hon. Friend is absolutely right. We must make engineering trendy and look at it in the same way as the Germans, who put engineering first. That is important. The classics might be good for some, but they do not constitute the backbone of the country.

Does the hon. Gentleman share my concern that the precursor to engineering—physics funding—has been cut recently by the Government? Does he accept that exchange rate stability is important to the global market?

We know that there is a global market out there. However, as the hon. Gentleman knows, most people still deliver in dollars. No one can get away from that fact, no matter how pro-European they might be.

I have continued to press Departments to procure more cars built in the UK. The Ministry of Defence must procure more trucks and vans built here. I have looked into the spread in procurement by the police, ambulance and fire services and by other Government agencies, and I see no recognition of the need to buy British. I am deeply concerned at the apparent hurdle that needs to be overcome. What is wrong with buying British-built products? It is so important that we do so. It is something that the Government and their agencies have to do. Local authorities, the police, fire and ambulance services and primary care trusts have a big spend, but only 26 per cent. of the cars they use are built in the UK. That is ridiculous; it is absolutely absurd. Do we really believe that Italy, Germany and France would do that? We are meant to play on the same playing field, but if they tilt the situation their way, let us tilt it our way.

The hon. Gentleman plays a valuable role on the Business, Enterprise and Regulatory Reform Committee, which I chair, and it is a privilege to hear him talking that way. However, does he agree that although the symbolism of buying British matters, the symbolism of buying the right environmental technology matters, too? In that context, is it not doubly strange that the Government drive so extensively Toyota Priuses, whose environmental credentials are dubious when compared with British-made, high-technology diesels, for example?

I am coming on to that very point. My right hon. Friend the Member for Warley (Mr. Spellar) has already made it, and I am building up to it. The hon. Member for Mid-Worcestershire (Peter Luff) is absolutely right, and we must mention it.

When Lord Jones of Birmingham Minister for Trade Promotion and Investment took office, he appeared before our Select Committee, which in those days dealt with a Department that was called quite rightly, the Department for Trade and Industry, rather than the nonsensical name that it now has. I asked him why his Government car was not built in the UK, because he was meant to represent British business. He waffled, gulped and tried to believe that it was built in the UK, but he had to admit that it was not. Well, I am pleased to inform Members that Lord Jones now has a Jaguar and leads by example. [Hon. Members: “Hear, hear!”] The Toyota Prius has been dumped and he is now in a diesel Jaguar, which is flying the flag for UK car production. There is nothing wrong in that, and he has set the example. It is so important that we persuade other Ministers to back British industry. Lord Jones did not take the Labour party card, but at least we have the Jaguar, so I suppose we have made some progress. We will work on the other aspect later.

Why cannot all Government cars be built in the UK? The Government are the standard bearer for UK industry—the standard bearer for our car manufacturing sector. If UK car manufacturing cannot rely on its Government, who can it rely on for support? That is the key question. On the Prius, what is so special about a car that is built in Japan and transported all the way around the world on a cargo ship—the most pollutive vehicle in the world—to deliver it to this country? It does not have any British car components, and at the end of its life, it costs more to scrap the Prius than it does to scrap a car built in the UK. Why are the Government playing at gestures? It is purely a gesture to say, “I am going round in a hybrid car.” It is not good enough, because if the Government had something about themselves and they really wanted to ride around in hybrid cars, they would ask, “Why are they not built in Derby? Why are they not built in the midlands?”

In the east, west and the north-east.

If we are serious, and the Government really want hybrid cars, they should put pressure on car manufacturers to build in the UK. They will not build in the UK when they are happy to pollute, ship a car around the world, deliver it to this country and give it to a Minister. We need fewer gestures and more positive action for British manufacturing. That is what we want, and that is how we will see the strength of UK manufacturing.

The hon. Gentleman mentions one of my hobby horses: one can take a car from Solihull, adapt it with a dual-fuel tank and run it primarily on pure vegetable oil. Does he not agree that the Government should examine why we have to buy the adaptations from Germany and why we do not create them in the UK? They should recognise that it is possible to run a diesel Land Rover Discovery on about 85 per cent. vegetable oil.

There are many options, including the old chip-shop fat, too. What I would say to the hon. Gentleman, however, is that the smell of fish and chips might be a bit much through the windows or in the air conditioning. Mr. Benton might think he was in Blackpool if it was like that. We must recognise that there are other options, including compressed natural gas, which can be used in vehicles.

Yes, it may be, but there are other options.

The issue is about investment, as we have been trying to say all along. The answer is not to buy from Japan cars that are shipped around the world. Let us make that point clear. I hope that next time we have a debate, the Minister will hold up the keys and say, “I now use a British-made car.” The issue is about setting examples, and I know that the Minister listens, and that he will take that on board.

Other countries, such as France and Germany, have a policy of ensuring that their Ministers travel in domestically built cars. We need a clear procurement policy that places the emphasis on best value for the service involved and for the whole UK car manufacturing sector, as opposed to a procurement policy that is based on taking what is cheapest. We are told that we buy many of the vehicles because they are the cheapest, but that does not mean that they are the best.

As I stated at the beginning, the UK car manufacturing sector has an important role to play in our economy. With the necessary support and help from the Government with procurement, stronger employment laws, efforts to improve research and development, and investment in our car manufacturing and component sector, heavy vehicles and light commercial vehicles, we can ensure that we have a viable future based on a highly skilled, high-tech industry.

There is a good picture to be painted, but it can soon be distorted and we can lose what we have. We need a Government who will champion our vehicle industry and ensure that we have a strong component sector to feed into vehicle manufacturing. To the Minister, I say please, whenever we procure, let us use the same rules that the French, Germans and Italians use. What good is a police car built in Japan or Germany? What example does that set? What good is a Highways Agency vehicle from Mitsubishi, riding around Solihull, the home of Land Rover? It is absolutely absurd. We cannot say that the decision is based on price, because part of the fleet is from Land Rover and the other part is from Mitsubishi and Nissan. It makes no sense. We need more common sense from the Government.

The issue is about joined-up government fighting for our future and recognising our car industry, so I ask the Minister to take it on board and give us the good news that he is buying and driving British.

Order. Before I call the next speaker, may I make it known to the Chamber that I propose to start the winding-up speeches at 10.30 am? Quite a number of people have indicated that they wish to speak, and I want to try to get everybody in, so may I ask that everyone be as brief as they possibly can?

Thank you for calling me, Mr. Benton. I shall try to be as brief as I can.

I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on a typically spirited defence of the motor industry and exposition of the key issues. He is right to draw attention to the major challenges that face the industry in the UK, and his point was well made about the importance of getting our employment laws in line so that workers in the motor industry can be effectively protected. He is right also to point out the key issue of procurement not only by the Government directly, but by all sorts of agencies.

Coming from the midlands, I am, like my hon. Friends the Members for Coventry, South (Mr. Cunningham) and for Birmingham, Erdington (Mr. Simon), very concerned about the future of Jaguar and Land Rover, as no doubt the hon. Member for Solihull (Lorely Burt) is too. None of us pretends that there are no hard decisions to make—of course there are. We all want to ensure that the company is successful. So far, Ford has stressed that it envisages its roles including not only ensuring a good and profitable presence in the UK, but accepting its responsibilities as a corporate citizen in the midlands and in the north-west. I hope that that is true. We certainly wish to hold the Company to it.

I thank the hon. Gentleman for giving way so early in his speech. Would an illustration of Ford’s intention be the Aston Martin range? It has retained a share in the company and continues as supplier to it for engine and other parts.

That is certainly one option, that is true. If the hon. Lady will forgive me, I do not want to go into the specifics of that. The important thing is to establish the principle that Jaguar and Land Rover are strategically vital to large parts of our economy and manufacturing industry. If Ford accepts that it has responsibility as a good corporate citizen, the precise form of what happens in the future can be discussed. That principle needs to be established, and I hope that it will be.

No doubt other hon. Members, as they did in interventions on my hon. Friend the Member for Chorley, will talk about many successes as well as the challenges that we face, whether in the north-east with Nissan or General Motors up in Ellesmere Port. I know that my right hon. Friend the Member for Oxford, East (Mr. Smith) will rightly say something about Mini and the success of the Oxford plant, and, coming from the west midlands, it pleases me to know that engines for the Mini are built there, not in Brazil. It is important to recognise that some 25 per cent. of Ford’s global engine requirements are still sourced from the UK.

I wish to say a couple of things about the challenge of climate change and how the Government and the industry can respond to it. The Prime Minister is absolutely right that the UK must be at the forefront of driving that agenda forward. It is also right to acknowledge that the industry has achieved rapid progress in the carbon dioxide performance of new cars for some time. That is not an excuse to let up; we need to go further on that and the industry must be pushed to go further, but we need to acknowledge the progress that has been made.

When regulations are brought in and we consider standards, targets and so on, we must recognise that the impact of that will not be even across the sector. They will have different impacts on different parts of the UK car industry. If the environmental performance of a company is considered across a range of models, as appears to be the intention under European regulations, a company with a balanced model range from the supermini to the performance or luxury end of the market will be able to meet its CO2 targets while still producing, to put it bluntly, quite polluting cars. However, a company producing a specialist model range might produce fewer polluting cars but not hit its targets, purely because it does not have a balanced model range. There is no easy solution to that, but I ask the Minister to bear it in mind. Yes, it will be a problem for Porsche in Germany, but in the UK it will be a problem for Jaguar, Land Rover and Aston Martin—the range of companies that specialise in high-performance cars. If the European regulations go through, we must ensure that their needs are addressed.

On the same issue, we need to consider the industry’s overall performance as well as that of individual models when we consider how to improve environmental performance. The Society of Motor Manufacturers and Traders’ recent sustainability report carried a sobering message: that progress has been substantial in the performance of individual models, but that in the vehicle industry as a whole aggregate CO2 emissions have not changed much, because there are a lot more cars on the road, often being driven in inappropriate circumstances. We need to examine the performance of individual vehicles, but we also need to examine the impact on the industry and performance across the sector.

Despite all the challenges, we excel in this country in niche vehicles, performance engineering and motor sport. Those industries employ a substantial number of people, but the real contribution that they can make is to securing and locking in motor manufacturing and the motor industry in a way that meets the needs of the 21st century, not those of the previous century. There is a huge potential crossover between our skills in motor sport technology and performance engineering and the environmental technologies that we need to develop. I welcome the investment that the Government have made so far; such things as the low-carbon vehicles innovation platform are welcome, but they provide fairly short-term funding. It is important that the industry is encouraged to go further and invest long-term, and Government programmes must do that.

In looking to develop and promote those technologies, I ask the Government to please examine the future of Longbridge. This is the one time that I shall mention Longbridge in the debate. There we have a Chinese firm, which will possibly be a partnership of Chinese firms in future, producing cars. However, the production of cars there will not ultimately be the most important thing. What is important is whether they bring R and D there. China has a huge environmental challenge in its motor industry, and we could use our technologies in partnership with it here, not only to build up our industry but to promote sustainability in the automotive sector over in China. Where better to do that than the place that has been synonymous with the car industry in the 20th century and can, if we do it right, be synonymous with automotive environmental technologies in the 21st?

I, too, congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. He is making a debate here in Westminster Hall on the motor industry a regular feature, and quite right too, given the industry’s enormous importance to jobs, innovation, skills, GDP and exports.

Some colleagues may have seen a huge and excellent poster as they drive past Cowley, which has a picture of the Mini, saying “Made in Oxford”, and then the words “Sold in” with the flags of more than 80 countries. That is a real tribute to the skill and commitment of all the work force at Cowley and at the Swindon and Hams Hall plants, which make up the Mini production triangle, and to all the suppliers and those who are out there selling the cars. Let us remember the big contribution made to the UK car industry by the dealership network, which is another important part of the industry and has certainly raised its game in recent years.

I am pleased that my good and right hon. Friend the Minister will respond to the debate. We were pleased that he was able to join us for the formal launch of production of the Mini Clubman in Oxford in September. We were particularly glad that the Government sent a tall Minister, because it provided a practical demonstration of the excellent legroom in the new Mini Clubman. Since we last debated the automotive industry here, the Mini has continued to go from strength to strength, with not only the successful launch of the Clubman but the millionth Mini coming off the production line in April and, this year alone, 202,000 Minis sold worldwide—an increase of more than 16 per cent. on the same period last year.

I wish to make a few points about the environmental challenges and opportunities facing the industry, to which my hon. Friend the Member for Birmingham, Northfield (Richard Burden) referred. What the public interest in the industry needs, and what we must work with the EU to ensure, is a stable and transparent framework of expectations and requirements on fuel consumption, emissions and recyclable materials, which is demanding of the industry and incentivises the right performance but also allows for the lead times and investment needed for new technologies and processes. It is important that the Government work with the industry and the trade unions so that there is a joint approach on those crucial issues. I look to the Minister to assure us that they are doing that.

In the industry, there is both recognition of the need to improve environmental performance and cut its carbon footprint and the will to do so, building on the considerable progress on emissions and fuel efficiency that has already been achieved.

Certainly at Cowley, there have been significant advances. The plant has cut the energy consumption for each Mini made by 20 per cent. in the past five years. Water consumption is down by more than 30 per cent. per unit, and waste recycling is up by 134 per cent. The company is committed to further reducing carbon dioxide emissions, energy and water consumption by 5 per cent. per vehicle per year.

The Mini Cooper D has one of the lowest carbon emission levels of any car worldwide at 104 g of CO2 per km, thus matching the latest hybrid vehicles. I have no doubt that with a well-thought-out regulatory framework and continuing investment in research and development, technology and skills, further progress is not only possible but will be achieved right across the industry, so that environmental delivery comes together with the continual increases in productivity for which the industry is already renowned.

I want to flag up with the Minister a separate matter that will have a bearing on other car plants, given the global nature of the industry and its ownership. It is important that current proposals about linking work permits to English language ability do not override other considerations, and particularly that they do not result in other countries feeling encouraged to put language barriers in the way of British workers being employed abroad. Within BMW—and, I am sure, other companies—there are regular transfers of personnel between not only the UK and Germany, but operations in other countries. We all know that public policy is full of the unintended consequences of well-intended initiatives, and I am sure that we do not want restrictions on movement within transnational companies to be one of them. I ask my right hon. Friend the Minister to keep an eye on that.

This debate is an opportunity for us to talk up British manufacturing and the enormous amount being achieved both by workers and companies in the car industry here. My hon. Friend the Member for Birmingham, Northfield talked about the repatriation of engine production from Brazil to Hams Hall. That is clear evidence that there is nothing inexorable about automotive production and sourcing shifting to low wage economies. On the contrary, the more sophisticated the product, the more advanced our innovation and design, and the better the skills of our work force and supply industries, the more chance we have of retaining relative competitive strategic advantage in this country. I believe that with the right commitment to investment, R and D and skills, and with the right partnership between Government and trade unions, rising environmental expectations are not just a challenge but an opportunity that we can and must make the most of.

I do not want to prevent my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) from getting in before the 10.30 shutdown, so I shall simply make a few comments echoing points that have already been made. I agree with every word of the previous speech, but I find it quite strange to follow my hon. Friend the Member for Birmingham, Northfield (Richard Burden), because many years ago, before I was an MP, I was involved with him in the fight to protect Longbridge and subsequently in the battle over the Dagenham plant. It brings back to me some of the tiring discussions and fights that we had to maintain car assembly in both those plants. [Interruption.]

I also appreciated the speech of my hon. Friend the Member for Chorley (Mr. Hoyle), who is chuntering away at the moment. He is a good friend of mine, and over the years he has consistently been at the forefront of maintaining the case for British manufacturing and the car industry. At times, the climate has been quite cold. A few years ago, before the collapse of WorldCom and Enron, our Government tended to be preoccupied with what we thought of as the new economy, at the expense of the manufacturing industry, which tended to fall off the edge in terms of debates, but the then Department of Trade and Industry later changed its thinking on that dramatically. Throughout all that, my hon. Friend has been at the forefront in maintaining the case for British manufacturing, and I applaud his work.

I also applaud my hon. Friend’s speech, especially some of his comments about agency workers and factors such as the downward pressures in the labour market. We in Dagenham have been at the hard end of that, because despite the protestations that people made throughout the protracted struggle to maintain car assembly in the Ford plant, which we lost, the outstanding factor was the ease with which jobs could be cut in this country because of labour market conditions. I still abide by that view, because I saw it happen at close hand.

One thing that my hon. Friend missed out of his tour de force, which focused on manufacturing and the car industry across the whole country, was the role of manufacturing in London. It also seems to be omitted from debates about the capital, in which we become preoccupied with financial services, arguably at the expense of the role of manufacturing. I know that the Minister, as the MP for East Ham, has a working knowledge of the Ford Dagenham plant—indeed, some of his constituents work there—so he will not be one of those who overlook the role of manufacturing in the London economy, or the east London economy, but there is a tendency to do so in debates on future economic strategy. Today’s debate gives us an opportunity to overcome that.

As I have said, before I was elected I was involved in attempts to save car assembly at the Ford Dagenham plant. Unfortunately, we did not manage to do that, but, contrary to the belief that the car plant at Dagenham has closed, we did manage to diversify into engine production. Compared with the somewhat darker days between 1997 and 2000, the plant is now thriving as a result of that diversification into diesel engine manufacturing and technology. Since 2003, Ford has invested £800 million in the Ford Dagenham plant, thus confirming its strategic importance as Ford’s European diesel engine manufacturing centre. Today, it manufactures engines for Ford, Jaguar, Land Rover and Volvo, and the latest investment will mean that output increases to more than 1 million units by 2009, and that the plant will supply more than 50 per cent. of Ford’s global diesel demand. Between them, the Dagenham plant and the Ford Bridgend plant, which manufactures petrol engines for Ford, Jaguar, Land Rover and Volvo, supply about 25 per cent. of Ford’s global engine requirement. In any debate on the car industry in this country, we should acknowledge that role in relation to diesel and engine technology and production.

Since 1999 and 2000, when the plant ended car assembly, there has been a massive economic transformation. It has been very bumpy and difficult at times and it has taken a lot of hard work by all parties, but we now sit in a very different place from where we sat then. I should put on record the tireless work of the Mayor of London, his advisers, successive DTI Ministers and advisers, and, indeed, a couple of Prime Ministers in maintaining that investment and working strategically with the Ford Motor Company. At times, the whole plant was threatened, but there has been a major transformation in recent years that will, I hope, provide a platform for further investment and production.

In total, the Ford Motor Company employs about 30,000 people in this country—approximately one third of its employees in Europe—of whom 15,500 are employees of Jaguar and Land Rover. I have a few points to make against that general backdrop about the sale of Jaguar and Land Rover and about R and D, which my hon. Friends have already discussed. There is also a question about the future of the supply chain, which has direct relevance to the Ford Dagenham plant and the future production of diesel engines. The debate about the future of Jaguar and Land Rover is not an isolated debate: the consequences will be felt throughout the British economy.

Research and development is an important part of Ford’s UK work, and accounts for up to 80 per cent. of automotive industry R and D in Britain. About 9,500 people are employed at its three main technical centres at Dunton, Gaydon and Whitley, responsible for Jaguar and Land Rover engineering development. Spending in the UK on R and D for Ford brands is around £800 million annually. We need to maintain those investments. It is clear from discussions with Ford that it believes that environmental technology development provides an economic opportunity for the UK. However, the UK cost equation presents a significant challenge to investment, given the growth in technical capability in India and China. Funds are available for R and D activity and investment, but they need to be maintained and, arguably, increased to maintain our current competitive position, especially within the context of the global market, and to maintain and boost employment for UK workers.

Secondly, I want to touch on a couple of points that my hon. Friend the Member for Birmingham, Northfield made about CO2 emissions legislation. Any new EU legislation on CO2 emissions needs to ensure that premium manufacturers such as Jaguar and Land Rover are protected. That point was made earlier. The legislation will impose challenging targets for the entire industry, but it is likely that vehicle manufacturer groups will be able to offset their smaller, higher volume vehicles against the lower volume, higher CO2-emitting vehicles. But if and when Jaguar Land Rover becomes a separate company, it will not be possible to offset emissions in that way, despite the fact that Jaguar Land Rover plans to reduce CO2 emissions by more than the industry’s expected average reduction of 18 per cent. I would appreciate the Minister’s comments on that. Do we need provision in the legislation for niche producers? It would mean that companies such as Jaguar and Land Rover, which do not produce a full range of vehicles and whose sales volumes in Europe are relatively low, would have a separate target still expected to be in excess of the average overall reduction for the industry.

I have had a number of discussions in Brussels about the targets. My understanding is that the problem is appreciated, and that there is willingness to be flexible in the application. Everyone wants CO2 levels to decrease—indeed, Land Rover and Jaguar are committed to making huge strides in decreasing emissions to below the industry average. That seems to resonate well with the people who will eventually make the decisions on targets.

I appreciate that intervention, because that is my understanding as well. I made the point to give the Minister an opportunity to comment on it. That is why this debate, initiated by my hon. Friend the Member for Chorley, is timely.

The objective of any sale should be to provide Jaguar Land Rover with the ownership, technology and investment structure that it needs to allow it to reach its full potential, while enabling Ford Motor Company to concentrate on its core business strategy.

We must guarantee that any takeover or buy-out keeps not only the same powertrain going, but the rest of the component sector that feeds into Land Rover and Jaguar, because, unfortunately, people have to take the cost out to pay the bill for buying them. Let us hope that there will be guarantees for everybody.

Funnily enough, that is exactly the point that I was about to make, as there is a direct interest for my east London constituency. The changes would ricochet throughout other parts of the British economy as well, which is the primary reason for having this debate today.

As the largest employer in the UK auto industry, Ford has responsibilities not only to its employees but to its local communities. There would be significant connections between Ford Motor Company and Jaguar Land Rover in terms of component supply, engineering and manufacturing, and any potential sale would need to take full account of that, not least in terms of the consequences for diesel engine production in my Dagenham constituency. The company has selected several bidders to proceed to more detailed discussions. The successful bidder must be a strong owner for the business going forward.

Overall, I very much welcome this debate. It has allowed us to put several points on the agenda in a short time. I look forward to the Minister’s response and commend my hon. Friend the Member for Chorley for initiating it.

It is a great pleasure to follow the hon. Member for Dagenham (Jon Cruddas). I strongly agree that our Labour Government neglected manufacturing during their first term. We did not do enough—we were relying too much on dotcom culture. I remember telling Peter Mandelson that that would blow up, and that is exactly what happened. I agree with my hon. Friend’s sentiments that we should have done more in the first term.

However, much more has been done for manufacturing in the second term and this one. I am happy that the Minister is here, because he takes manufacturing seriously. In all the discussions that I have had with him on different occasions and in different Departments, he has been a great champion of manufacturing. He is honest and realistic about globalisation, and I have agreed with nearly everything that he has said at different times about manufacturing and the direction that the Government are taking. I am happy that he is on stream for this debate.

I congratulate my very dear hon. Friend the Member for Chorley (Mr. Hoyle) on initiating this debate. As other Members said, it has become an annual event, and long may it continue. It is vital that we discuss manufacturing and car production, which is an important sector. May my hon. Friend carry on applying for these debates, and may Mr. Speaker always grant them in the years to come.

I want to tell the House a success story. My hon. Friend focused on the depressing end, but I want to talk about the north-east and the great success of Nissan. The car production sector is important to us in the north-east. It makes up 10 per cent. of the UK’s gross value added in this area of the engineering sector. I ask nothing from the Minister, but just want to put on the record a success story in the north-east.

The car production sector employs 15,000 people in the north-east. The region is home to Nissan’s manufacturing base, and the plant and its supply chain lie at the heart of the region’s activity. There are, of course, companies other than Nissan, and in the original equipment manufacturers I would include Caterpillar, which runs a thriving plant in my constituency and enjoys a mutually productive partnership with Corus Special Sections. They share a common site at Carlin How at Skinningrove in east Cleveland. I also want to mention ElringKlinger Gaskets, a major employer in the Teesside area that employs a large number of my constituents.

The efforts of the car production sector are recognised by development interest in the region. Support from the regional development agency One NorthEast, the Government office and the region’s local councils has helped the sector to generate profitable growth, to provide focused business support, to promote the regional car manufacturing capability and to provide a management service that reflects the strategic importance of the sector in the north-east.

A key challenge has been to encourage good practice in training for an industry that is still relatively new to the region and to encourage similar good practice in production techniques. The key driver in the sector is, of course, Nissan Motors, which has had its UK manufacturing base in Sunderland since 1986. It has been identified as the most productive car plant in Europe for the past seven years running, and here I want to thank the Government for their financial support. Millions of pounds have been allocated to Nissan, and it was appreciated. I appreciate the Government’s support.

With nearly one third of a million Micra, Almera and Primera models produced each year, Nissan now accounts for one in five of all cars produced in the UK. Sunderland was selected for the production of a new sports utility vehicle range, with £500 million of investment creating a further 400 jobs.

Nissan’s 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 to markets in 45 countries, including the Nissan home nation of Japan. Nissan contributes some £500 million to the local economy each year and has 240 suppliers in the region. Its total investment exceeds £2 billion, and some 5,000 people are employed at the plant.

Nissan has also been the agency for creating a large supply base in the region. Significant suppliers include Hashimoto, Magna Kansei, Calsonic Kansei, TRW Automotive and Johnson Controls. Much of the work is concentrated around Sunderland, and the city continues to build on its worldwide reputation as a centre of car manufacturing. The sector employs 12,000 people in the city alone. There is potential for further growth of the sector throughout the region through the development of local supply chains and the adoption of advanced manufacturing practices. That will help to maintain global competitiveness.

Hon. Members have mentioned training, support, and research and development. In commenting on one aspect of training, I commend an institution: the Institute for Automotive and Manufacturing Advanced Practice, which is based at the university of Sunderland and which provides consultancy, training and industry-led research, including design and process solutions delivered through the computer-aided engineering centre. Its expertise covers a broad range of industrial applications with particular strengths in the car manufacturing sector. It can provide a range of valuable services to manufacturers with the added weight of its existing expertise as a leading group in niche international research. Its services can be applied equally to smaller companies of 100 or fewer employees through to major corporations. They can also be applied to individuals who are looking to upskill their engineering expertise through education and professional development.

My time has run out, but I again congratulate my hon. Friend the Member for Chorley on securing this debate. I wanted to put on record the great success story in my constituency because it is important. I hope that the Minister will take that success forward, and I thank the Government for their support in my constituency.

I add my congratulations to the hon. Member for Chorley (Mr. Hoyle). I requested this debate on 28 June following the announcement of the proposed sell-off of Jaguar and Land Rover. To misquote Mark Twain, the report of the car industry’s death in Britain is somewhat premature, and I am fed up with the nay-sayers who say that the industry is on its knees. However, there is a bad side with 6,000 jobs lost at Land Rover at Longbridge, and 2,300 lost at Peugeot Citroen just round the corner from Solihull at Ryton. Vauxhall has had job losses at Ellesmere Port; Ford has had £6 billion of losses worldwide, and is selling the classic marques of Jaguar and Land Rover to try to balance its books.

The hon. Members for Chorley and for Dagenham (Jon Cruddas) bemoan the fact that it is cheaper to close a factory in the United Kingdom than in other parts of Europe, but the UK is also a more attractive place in which to set up a car factory, because of our flexible working practices.

Although I agree with the hon. Lady, the last plant to be set up here was Toyota, and we have not had that success. In fact, during 10 years of this Government, no major car plant has been established in the UK, but there have been closures, and the hon. Lady should think carefully about that.

I am grateful for that intervention, because the hon. Gentleman makes a good point, but our flexibility is a huge selling point for retaining our existing manufacturing industry, as is the attractiveness of the UK as a destination for manufacturers. I shall talk about that later.

Let us look at the success side. During the past decade, Japanese car giants have invested £5 billion in the UK, and created 10,000 jobs. The hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) gave a delightful description of the stunning success of Nissan’s car plant. BMW now employs 55,000 people in the UK, following the Mini’s tremendous success, with 200,000 cars built at Cowley last year, as the right hon. Member for Oxford, East (Mr. Smith) said. The United Kingdom builds more cars today than ever before—1.8 million last year, 74 per cent. of which were exported.

We have paid credit to a number of companies, and it would be remiss if the debate concluded without a mention of Honda and its expansion at Swindon. Indeed, it has added a third shift, and we must publicly acknowledge that.

I am grateful to the hon. Gentleman for mentioning Honda. I totally concur with his point.

Jaguar and Land Rover are being sold not because they are so-called basket cases, but because they will fetch a good price. The hon. Member for Chorley said that Ford is selling off the family silver, and that is regrettable, but I recall the earlier point that that will involve large investment in the company. That investment is necessary, although Ford has invested £1 billion in new technology and fighting carbon emissions to make their vehicles more environmentally friendly and competitive.

Land Rover is a success story, and well known to me as it is in my constituency. It is a unique, iconic brand, and is revered around the world for its ability to keep going on any terrain. When I was in Dallas in the autumn I visited a Land Rover dealer. In America, the Land Rover is dwarfed by some 4x4 vehicles, but there is great love and respect for the brand, which is borne out of a history that the Americans have grown up with. Global sales rose by 27 per cent. last year up to November. Land Rover, which is coming up to its 60th birthday, is enjoying its third record sales year, and 70 per cent. of those sales contribute to our export balance of payments.

I mentioned Ford’s investment in low-carbon technology, which includes the e-terrain technology concept vehicle that will have CO2 emissions of 150 g/per km. Ford is making great strides in reducing carbon emissions and developing new technology.

Interest in buying the Land Rover and Jaguar marques has been very keen. The announcement of the preferred bidder is expected soon. I acknowledge the points made by the hon. Member for Chorley about the uncertainty and worry for families, particularly in the west midlands. We can only accept the assurances that Ford has given that it is a good, corporately responsible employer and that it is looking for long-term continuity for both marques. That has been a major consideration in its evaluation of the bids. We do not know who the preferred bidder will be, but we hope that it will give similar commitments.

The elephant in the room, which I have not mentioned, is ownership. Apart from classic, niche marques, such as Morgan and Bristol, the UK car manufacturing industry has no ownership worth speaking of, but that is a fact of life. We have had to come to terms with the death by a 1,000 cuts of an industry’s ownership, but we are where we are, and there is more to be hopeful about in the industry’s future.

Another cause for optimism in car manufacturing is global warming, which seems to be posing a great threat. Foreign manufacturers flock to the UK because of our skills base and expertise, as the hon. Member for Birmingham, Northfield (Richard Burden) said. Our innovative design and technology is cutting edge. Why else would all the formula one teams have engineering resources here? We are simply the best at automotive engineering and we are putting our energies into meeting the climate change challenge. As the hon. Gentleman said, we can export that technology, as well as the vehicles that we manufacture.

I want to leave hon. Members with just a couple of examples. The British-owned electric Smart car is produced by Zytek in Lichfield, and hon. Members will see the G-Wiz on the streets of London any day. For those who want the ultimate sports car, there is the Tesla Roadster. The company is American-owned, but has a British subsidiary. The car does 0 to 60mph in under four seconds. It also does 135 mpg and 245 miles per charge—yes, it is electric. It costs less than 1p per mile to run and it is beautiful—it is a car to drool over.

So the future is bright—the future is electric. We have the ability to meet market and global warming challenges. Not all change is welcome, but change does give British engineers and workers the opportunity to take full advantage of their skills and to lead the world.

It is a pleasure to follow the upbeat speech by the hon. Member for Solihull (Lorely Burt). I join other colleagues in congratulating the hon. Member for Chorley (Mr. Hoyle) on once again securing a debate on this issue and on introducing it in the passionate and sincere way that we have come to expect—indeed, there were a few challenges in there for the Government as well.

I am glad that the debate has focused on the positive side of the car industry and on what is going on. As the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) emphasised, however, the debate is being held against the background of a decline in manufacturing generally. One million manufacturing jobs have been lost over the past 10 years and manufacturing’s share of our GDP has fallen from about 18 to 13 per cent. over the same period.

We should be in no doubt, however, that the car industry has been fighting back with great vigour and we should rightly be proud of it. It still accounts for 10 per cent. of manufacturing turnover and it also accounts for £20 billion of exports, or 10 per cent. of the total. As others have said, the industry’s output of 1.8 million vehicles is historically good, with the overwhelming majority being exported.

The sector is investing heavily in research and development, with £1 billion going into R and D this year. The Society of Motor Manufacturers and Traders estimates that 2,000 businesses around the country are completely dependent on the automotive sector for their business. That has resulted in an extra 140,000 jobs and a turnover of £12 billion, with a further £3 billion in turnover and 50,000 jobs being created among more general suppliers to the industry. We are therefore talking about not only the major names, with which we are all familiar, but a vast range of other companies, which are completely dependent on the success of the British motor industry for their survival.

We are seeing much greater specialisation than we have in the past. As others have said, the United Kingdom has become a global centre for excellence in the production of engines, and we will produce 3 million engines this year, compared with 2.4 million in 1999. Ford is creating 250 new jobs at Bridgend, and 25 per cent. of global demand for the company’s engines will be sourced from the United Kingdom.

I listened with interest to the hon. Member for Dagenham (Jon Cruddas). It is perhaps ironic that it will not be possible for people in London to drive vehicles containing many of the engines made at Dagenham once the Mayor’s new super-congestion charge comes in, because those engines will be too large, but we should nevertheless celebrate the success that Ford has brought to the factory.

This country has the largest collection of specialist car manufacturers of any country in the world. We have seen an increased commitment from Bentley and a brand-new Rolls-Royce factory. In this day and age, it is remarkable to have a completely new concept for a motor car and a new facility such as that being set up in Chichester. In addition, Ford has invested £800 million in Land Rover, Range Rover and the Jaguar XJ and XK.

The hon. Member for Chorley was churlish—or perhaps the hon. Member for Churley was chorlish—in the way he spoke about Ford. We should recognise that some great brands, such as Jaguar and Aston Martin, would have disappeared had it not been for Ford’s ownership and investment in R and D and design facilities. The fact that they are now being sold on says more about the global state of Ford than about its affection and love for them.

Those are great brands, and there has been great investment by Ford. The company has driven things so well and put all these new measures in place, but it is now selling, and that is my regret—not what the company has done otherwise.

If there is a silver lining in this story, it is that these brands will now be central to the goals of the companies that own them, rather than being a niche element in a major company. I happened to go to Aston Martin yesterday for the unveiling of its new concept car, the V12 Vantage RS, and the opening of its design studio—obviously, someone has to go. Some might think that the company has lost its way, but it has a greater sense of direction and greater passion than it has ever had before. Indeed, we have spoken about environmental issues, and the company’s new design studio uses 80 per cent. less energy than a typical building and it was built more cheaply. These companies are leading the world not only in the design of their motor cars, but in the way in which they develop them.

We should not be shy about celebrating success. One challenge is that we should be able say, “You can be green and have fun.” We should not say that we all have to move away from specialist cars simply because of environmental issues—we must keep the issue in proportion. We should celebrate the fact that Aston Martin is apparently this country’s coolest brand. Most of us do not know a huge amount about being cool, but I think that we would agree that Aston Martin is our coolest brand—indeed, it was this year’s luxury car of the year globally. The company has created 1,800 jobs since 2000, with another 2,000 to 3,000 jobs being created among its suppliers. As the company’s chairman, Dr. Ulrich Bez, said last night, the company has been given a future, based on its core values of engineering and design.

There are other areas of specialist engineering in which this country is leading the world. Ricardo, an engineering company that started in Shoreham, but which now works globally, has a fantastic record, with 70 per cent. of its work taking place outside the UK. As has been mentioned, we are also global leaders in motor sport development, but perhaps that should be the subject of a further debate, given the lack of Government support that the sector receives.

The contribution made by the mass-production car companies has rightly been recognised in the debate. Tributes have been paid to Nissan, Honda and Toyota, and mention has been made of the massive success of the Mini, which has brought so much joy to people across the country. That success has been possible because of the commitment that such companies and their parents have shown to investing in research and development. Ford has put £800 million into R and D in the UK and employs 9,500 people in its three technical centres. As has been mentioned, it has invested £1 billion in green technologies, most of which will be delivered through companies and centres in the UK.

As has been rightly said, however, there are concerns, including about skills. We are not producing enough graduates with the skills that the automotive business requires to prosper in this country. Ricardo has had to open a technical base in the Czech Republic to identify graduates with the skills base that it needs. We should tie into that a general concern about the status of engineering. Too many people who study engineering end up being thought of as technicians—people who will come and mend the boiler when it goes wrong—rather than as people with an extremely important degree.

I hope that the hon. Gentleman will forgive me, but I will not give way, because time is short.

Engineering should be given much higher status in this country. We should also be concerned about the loss of specialist departments. We have lost 31 physics departments and five maths departments. If we want to attract high-technology investors to this country, we will have to do more to encourage young people to study science and engineering so that companies know that they can come here and find people with the skills that they need.

We clearly face global competition, and global companies must take difficult decisions, but I say to the hon. Member for Chorley that employment protection is not the way forward. It might force some people to stay who might have chosen to do other things, but it will also drive away the new investment that we need.

Finally, as to green issues, the motor industry is leading change. It is not the laggard that it is often portrayed as. New materials are being used, such as carbon to reduce vehicle weight; brilliant design improves motor cars’ aerodynamics and fuel efficiency; and we have some of the world’s best engineering minds examining how to develop clean diesel, biofuels and hydrogen-powered cars. The industry sees the environmental challenges clearly, and comes up with unbelievably brilliant and sophisticated solutions. The hon. Members for Birmingham, Northfield (Richard Burden) and for Dagenham rightly referred to the issue that faces some of our niche manufacturers in relation to carbon targets. I hope that the Minister will reassure us that he is fighting Britain’s corner on that.

This debate was well worth having, because it has given us all the opportunity to pay tribute to a great British success story.

10.50 am

This has been an excellent debate, and I, too, congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing it. He and all the other hon. Members who have taken part have shown that passionate support for UK car manufacturing continues in the House. I welcome that; such support is one of the industry’s strengths. I assure hon. Members that the Government are determined to sustain success in UK car making.

My hon. Friend was right to draw attention, as other hon. Members did, to successes, which include that of Vauxhall Ellesmere Port in beating off fierce competition from elsewhere in Europe for the new Astra. That example shows what can be achieved when management, Government, regional agencies and, crucially, the work force and the trade union, work together to win new investment. I thought that my hon. Friend was a little churlish in his comments about new plant, because that was an important win for the UK against fierce international competition.

The Mini is a second example of success. I very much enjoyed attending, with my right hon.—and also tall—Friend the Member for Oxford, East (Mr. Smith) the launch of the Mini Clubman on 11 September. That is a fantastic success. We have raised with the Home Office my right hon. Friend’s important point about language requirements on employees from elsewhere, and we shall continue to keep in touch with the Home Office about that. In addition to developments in relation to the Mini, there are record production levels at three other volume car makers: Honda—as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) mentioned; Land Rover, to which the hon. Member for Solihull (Lorely Burt) drew attention; and Nissan, to which my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) effectively drew the House’s attention. I thank my hon. Friend for his kind words; it is a remarkable and impressive story. All those car makers are producing excellent new products that are in high demand.

All that I have described means that despite the terrible loss of Peugeot Ryton it looks likely that UK car output for this year will be higher than last year’s. We exported more UK-made vehicles and engines last year than ever before. My hon. Friend the Member for Dagenham (Jon Cruddas) and the hon. Member for Wealden (Charles Hendry) were right to emphasise the importance, and success, of engine making in the UK.

Of course there are big challenges. The global industry is intensely competitive and is undergoing enormous change. Jaguar Land Rover is very important to the UK economy, sustaining, as we have heard, more than 15,000 direct jobs, not to mention many more in the dealer network and the UK supply chain, with which Jaguar and Rover are particularly closely integrated. The business is also a significant research and development investor. It is not a business in crisis.

The hon. Member for Solihull was right to talk about the record production levels at Land Rover. The combined business is profitable. I agree with the optimism of my hon. Friend the Member for Chorley about the prospects for the new Jaguar model, as well. We have therefore attached high priority to close engagement with Ford and with the sale process. There have been regular ministerial contacts with senior Ford management. Our objective is a long-term future for Jaguar Land Rover businesses in the UK. We shall do whatever we can to help to secure that, and will certainly work as closely with any new owner as we always have done with Ford, to that end.

We shall also work more widely to ensure that the automotive sector in the UK can sustain its competitiveness in the face of the twin challenges of low-cost competition and the transition to low-carbon technologies, about which hon. Members have spoken. We shall continue to support investment, where we can, and to work on skills. The automotive sector in particular will benefit greatly from being an early focus of the National Skills Academy for Manufacturing, which was launched last year. We shall continue to focus on the challenges faced by the automotive supply chain, with our supply chain groups programme, which was launched in 2003.

I particularly want to comment, in the few minutes I have left, on the issues raised in the debate about the environmental challenge that car making in the UK needs to address. Some important points were made. I agree with much of what my hon. Friends the Members for Birmingham, Northfield and for Dagenham said. Professor Julia King set out the scale of the challenge in her report for the pre-Budget report. Her assessment was that delivery of our overall carbon reduction target will require a 50 per cent. reduction in new car emissions by 2030 and complete decarbonisation by 2050. The final report, for the coming Budget, will make more specific recommendations to inform our development of policy on how to respond to that large challenge.

I think that the challenge is one that the UK automotive sector can be confident about. As my hon. Friend the Member for Dagenham said, the UK is Ford’s European centre for powertrain development. The company announced last year a £1 billion commitment to the development of lower-carbon vehicles in the UK. In addition to that, as the hon. Member for Wealden also mentioned, we have world-leading independent design engineering, including MIRA, Prodrive and Ricardo. We have a range of strengths in emerging low-carbon vehicle technologies, including world-beating work in some of our universities on, for example, battery chemistry and hydrogen storage, and the progress made by such companies as Johnson Matthey and Intelligent Energy with proton exchange membrane fuel cells, and FIFE Batteries with lithium-ion battery development. That is technology at the world’s leading edge, in areas that we know will be crucial.

We are determined to provide support to help with the leverage of competitive advantage from those technology strengths. In September, the Technology Strategy Board announced the launch of its innovation platform for low-carbon vehicles, with an initial commitment of £30 million. I want to make a point to set against the concerns expressed by my hon. Friend the Member for Birmingham, Northfield about the short-term character of the platform. The board expects innovation platforms to last a minimum of five years—perhaps longer. The focus is on the business challenge in the area. We cannot guarantee future funding, but I hope that it will continue at similar levels.

With support from Cenex, the centre of excellence for low carbon and fuel cells, Zytek is, as we have heard, converting up to 200 Smart cars for Daimler from conventional to electric power, to be trialled in the coming months. In the west midlands, the regional development agency has provided well over £30 million to enhance the manufacturing and design capabilities of automotive supplier companies under the premium automotive research and development programme.

Regulation, too, can be a strong driver of innovation, and we shall support EU-wide mandatory targets for new car CO2 emissions. We await the European Commission’s forthcoming proposal about that with interest. I agree with what my hon. Friend the Member for Birmingham, Northfield said about that issue, and we shall work to secure a mechanism that combines ambitious but realistic targets with enough flexibility to allow for the diversity of the European automotive sector—which is reflected in the diversity of production in the UK—from volume producers across Europe, such as Volkswagen and Toyota, to more niche businesses such as Aston Martin or a potentially independent Jaguar Land Rover. I listened with interest to the experiences that the hon. Member for Wealden had with Aston Martin yesterday. It is crucial to get the judgments right, and we shall work hard to do that.

My speaking time is almost up, but I want to comment briefly on the important points about labour market regulation raised by my hon. Friend the Member for Chorley. Our flexible labour markets in the UK, including the availability of agency workers, have been a significant factor in the successes that we have celebrated in the debate and in attracting inward investment to the UK. My hon. Friend the Member for Chorley does not want to—