Skip to main content

Electric Vehicle Battery Production

Volume 726: debated on Wednesday 18 January 2023

12.39 pm

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy if he will make a statement on the UK’s gigafactory capacity given the announcement of Britishvolt entering into administration.

Britishvolt entering into administration is a regrettable situation, and our thoughts are with the company’s employees and their families at this time. The Government are entirely committed to the future of the automotive industry and promoting EV capability. As part of our efforts to see British companies succeed in the industry, we offered significant support to Britishvolt through the automotive transformation fund on the condition that key milestones, including private sector investment commitments, were met. Unfortunately, the company was unable to meet these conditions and as a result no ATF funds were paid out. Throughout the process, we have always remained hopeful that Britishvolt would find a suitable investor and we are disappointed that this has not been possible. We want to ensure the best outcome for the site, and we will work closely with the local authority and potential investors to achieve this.

The automotive industry is a vital part of the UK economy, and it is integral to delivering on levelling up, net zero and advancing global Britain. We will continue to take steps to champion the UK as the best location in the world for automotive manufacturing as we transition to electric and zero-emission vehicles.

Despite what the party opposite may claim, we are not giving up on the automotive industry: on the contrary, our ambition to scale up the electric vehicle industry on our shores is greater than ever. We are leveraging investment from industry by providing Government support for new plants and upgrades to ensure that the UK automotive industry thrives into the future. Companies continue to show confidence in the UK, announcing major investments across the country including: £1 billion from Nissan and Envision to create an EV manufacturing hub in Sunderland; £100 million from Stellantis for its site in Ellesmere Port; and £380 million from Ford to make Halewood its first EV components site in Europe. And we will continue to work through our automotive transformation fund to build a globally competitive electric vehicle supply chain in the UK, boosting home-grown EV battery production, levelling up and advancing towards a greener future.

When the Britishvolt site was first announced in 2019, with the promise to deliver the UK’s second ever gigafactory and create 8,000 jobs in Northumberland, it was lauded by the Government as their flagship example of levelling up: the right hon. Member for Spelthorne (Kwasi Kwarteng), then Business Secretary, said that Britishvolt is

“exactly what levelling up looks like”,

and Government Ministers fell all over themselves to take the credit, so now they must also accept accountability for its failure, because, much like their levelling up strategy, all we have been left with is an empty space instead of what was promised.

The collapse of Britishvolt into administration is in no uncertain terms a disaster for the UK car industry, but what is even more worrying is that this is a symptom of a much wider failure. The automotive manufacturing sector currently employs over 182,000 people, and if we are to continue to make cars in this country we must make electric batteries in the UK. The Faraday Institution says we need 10 factories by 2040 to sustain our automotive sector, so even if Britishvolt was going ahead we would still be nowhere near where we need to be. These factories are being built in competitor countries, and that is because they have Governments with the vision and commitment to be the partner that private firms need to turn these factories from plans on paper into a reality. Surely the Government must accept that we need an industrial strategy.

Will the Minister update the House on the Government’s plans to urgently increase UK battery-making capability? Can he tell us when the Government first had concerns about Britishvolt’s ability to deliver the factory, and why did these concerns not come to light when the Department conducted its extensive due diligence investigations into Britishvolt’s plans? What conversations has he had with other companies to secure the site and ensure the factory is built in Blyth? And will he now commit to Labour’s plans to build eight new gigafactories across the UK and expand the roll-out of charging points to support electric vehicle manufacturing?

Wherever we look the Conservatives are failing this country, whether in public services or our iconic industries. Unless this Government wake up to the scale of the transition required, we will not only risk many of the good jobs that so many of our communities rely upon, but we will miss out on one of the greatest economic opportunities this country has ever had.

The hon. Gentleman is right about one thing: there is a tremendous opportunity. That is why we have the automotive transformation fund. That is why we did thorough due diligence on Britishvolt. It is because we set conditions around milestones that it had to meet that not a penny of that fund was dispensed to Britishvolt. However, I make no apology for supporting companies that are going to be part of that opportunity. The idea from the Labour party is that, if it were in power, it would build these factories. That is not how the economy works. That is why, in 2010, after 13 years of Labour Government, we saw youth unemployment up by more than 40%. That is the truth. We saw communities such as Blyth left behind and ignored. We saw an economic strategy that did not work for our young people and did not contribute to net zero in the way that it should. On the underpinning energy system, a bit more than 7% of our electricity came from renewables when Labour left power. Now it is more than 40%.

The net zero strategy announced £350 million for the automotive transformation fund. That was in addition to the £500 million announced as part of the 10-point plan. That is why we are seeing investment. That is why we have nearly full employment. That is why we have factories and manufacturing going ahead in a way that would never happen under Labour.

As we are very short of commitments to assemble more EVs in the United Kingdom, which would be needed to create battery demand, will the Minister pause the ban on the sale of new petrol and diesel vehicles until our EV capacity has caught up? Otherwise, the industry will shrink too much.

I thank my right hon. Friend, whose economic insights I always value and appreciate. However, we are committed to electric and zero-emission vehicles and we will not stimulate investment in those sectors by removing the mandates that drive consumer choice and have led to such a significant change in our road transport emissions. We are going to have even more ambitious steps.

I express sympathy with all those affected by the job losses, but this is an abject failure of the mythical levelling-up agenda. Unfortunately, that should not come as a surprise. It has always irritated me that the Tories claim that they are the ones to level up communities—the very communities that they devastated in the first place.

Just over a year ago, the former, former Prime Minister was boasting about the construction of Britishvolt’s gigafactory. He said that it would create 3,000 direct jobs and 5,000 supply-chain jobs, and support the production of 300,000 batteries for car production. That meant putting our faith in a company with no pedigree, no assets except a field and no products to deliver a £4 billion factory—and that with one owner with a conviction for fraud. We know that the Government do not care about paying taxes, but that is akin to awarding a ferry contract to a company with no ferries. When did the Government do due diligence? When did they realise that there was a problem and what actions did they take? When will we see a coherent strategy for battery production, EV manufacturing, the roll-out of charging points across the UK and, importantly, hydrogen vehicle manufacturing and green hydrogen production?

I share the hon. Gentleman’s enthusiasm for the opportunities that come from net zero. That is why we are moving so hard on nuclear, which of course anybody who is not a prisoner of some ideological opposition and is genuinely committed to green energy would support. We are supporting that across the piece. I do not think that Conservative Members will take lessons on industrial intervention from Scottish nationalists after their shipbuilding enterprises in the north.

As my right hon. Friend pointed out, no cars with internal combustion engines can be sold after 2030, so, if we do not have battery manufacturing in this country, we risk not having car manufacturing in it. Do the Government have a strategy, as they did until 2019, to ensure that we manufacture batteries and cars? In the case of Britishvolt, will they work with the administrators, as they did when British Steel went into administration, to find a buyer who can take it out of administration and into production?

I thank my right hon. Friend, before whom I appeared this morning on the subject of delivering nuclear power, for which I noticed there were no Scottish nationalists present. He is absolutely right about the need to have those batteries in place and, as I have said, that is what the automotive transformation fund, among others, is designed to do. The automotive sector generated £58.7 billion in turnover and £14 billion in GVA in 2021 and we are committed to ensuring that it goes forward successfully. I look forward to working with the former Secretary of State to make sure that we do have those factories in this country, which is absolutely vital to make sure that, on British roads, there are zero-emission vehicles that are produced here and that jobs are created here as a result of that.

The Americans have announced significant subsidies for industry under the Inflation Reduction Act, and the European Union is responding by streamlining state aid rules and announcing its own subsidies for industry in the European Union. Surely the Minister must recognise that businesses are being attracted to the US and the EU, away from the UK. What is he going to do about it?

The hon. Gentleman, who is himself a distinguished Chair of a Select Committee, is right to highlight some of the pressures from IRA in the United States and the response from the EU. We have to ensure that we have policies in place and I look forward—[Interruption.] In the coming weeks, we will be coming forward with our green finance strategy and our response to the Climate Change Committee. In hydrogen, carbon capture and so many of these industries, the UK is world leading. We are determined to ensure through a raft of different policies—I know his Select Committee will be scrutinising them—that we retain that position, which has transformed the UK from where it was in 2010, when there was higher unemployment and so little progress on net zero.

To have secure battery production, we need a secure supply of lithium, so the Business, Energy and Industrial Strategy Committee was very concerned to hear last year that 95% of the world’s current supply of lithium is processed in China. Can the Minister tell the House what the Government will be doing to increase the resilience of the UK’s lithium supply chain both in boosting production at home and in creating partnerships with allies, because we cannot continue this over-reliance on China?

As ever in this area, I know my hon. Friend’s insights on security issues more broadly and specifically on critical minerals are well founded. The critical minerals strategy sets out our plans to improve the resilience of supply chains and increase the supply by accelerating the growth of the UK’s capabilities, as she suggested—there is a development and investment in my own constituency, at Saltend, in critical materials—as well as by collaborating with international partners and enhancing international markets to make them more responsive.

On the benefit of clarity and accuracy, the Britishvolt site is in Wansbeck—my constituency. Will the Minister give my constituency some guarantees that the jobs promised with Britishvolt—3,000 plus a further 5,000 in the supply chain—will not be forgotten, and can he say what support he will give to any potential investor to continue a gigafactory project on the site in Cambois in my constituency?

The hon. Gentleman is absolutely right that it is a fantastic site, and we will continue to work with investors and encourage them to go in that direction. As a champion of workers, he must be delighted that we have seen this transformation over the last 12 or 13 years, from the high unemployment left behind, sadly, by the Labour Government to the nearly full employment that Britain enjoys today.

The Minister has been clear today, and indeed the Prime Minister was clear at Prime Minister’s questions earlier, about the need for private sector investment in Britishvolt being supported by public sector and Government investment. From the Minister and his Department’s discussions with potential private sector investors, could he set out what appear to be the missing ingredients that stop them investing more in this company and in the broader supply chain, and what is being done by him and his Department to help fill in and provide those missing ingredients so that we can improve the resilience of the EV supply chain as a whole?

I thank my hon. Friend for his question. Britishvolt is in the best position to judge what happened with its investors. We set milestones, as I have said, for our funding, and we were prepared to put in significant British Government support, but it was dependent on Britishvolt fulfilling its business plan, with its offer to investors that it would bring forward, and then we were going to co-invest with them. That was the plan, and it is not for me as a Government Minister to second-guess the work of that company, or indeed others.

The collapse of Britishvolt is a huge blow by any measure. Owning and running an electric vehicle will continue to be financially out of reach for many or most UK households, and the lack of enough EV charging infrastructure compounds the problem. I welcome the Minister’s commitment to the mandatory phasing out of petrol and diesel cars, but how can that successfully happen without having a good charging infrastructure, which currently is woefully inadequate?

I thank the hon. Lady for her question. The Government have prioritised securing investment in battery cell gigafactories. As Members have been right to say, this is key in anchoring the mass manufacture of electric vehicles in the UK, safeguarding jobs and driving emissions to net zero by 2050. On 1 July 2021, Envision AESC announced investment in its gigafactory in Sunderland. On 18 July last year, Johnson Matthey confirmed investment in the construction of a factory for PEM—proton exchange membrane—fuel cell components for use in hydrogen vehicles to be located at its existing site in Royston, Hertfordshire. We have to keep on going with that and, as she says, build that investment and make sure we have the policies in place to bring that investment here.

My right hon. Friend is aware that, last month, electric vehicle sales overtook diesel and were one third of all new vehicle sales in the month. There is demand for electric vehicles, and we need to ensure that there is an automotive industry here making them. We have lithium in Cornwall, and members of my Environmental Audit Committee visited the constituency of my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) and saw the lithium mine there. We have natural assets. We have the site that the Minister is interested in and I encourage him to visit it. We visited Blyth and met the Britishvolt management there, who pointed out that the interconnector that serves the site provides electricity from Norway that is 100% fossil fuel-free. So there is a considerable asset in that site, and I urge him to do all he can to engage with the automotive industry to re-establish a credible proposition.

I entirely agree with my hon. Friend on the importance of the site, and we are absolutely committed to working with potential investors to ensure that it is developed.

The Minister will know that many in the industry have never actually taken Britishvolt as a serious proposition. The fact is that the Advanced Propulsion Centre has forecast that we need 90 GWh to 100 GWh production by 2030; we stand at 2% to 2.5% currently. Without UK battery manufacture, we do not have an automotive manufacturing industry supporting 180,000 employees. The UK is way behind France, Germany and other countries, and we are in danger of missing out. He will know that, under rules of origin changes, without those batteries, our products will not be competitive. What are the Government going to do?

The hon. Gentleman is right to highlight the importance of this and of ensuring that we get policies that put us on track for that kind of transformative change; we are not currently on that track. I look forward to myself and colleagues coming back to the House to talk about that because we have to get it right. He is right to highlight that it is an important strategic interest for the UK.

I congratulate my right hon. Friend on grasping this difficult nettle. I have the massive Toyota factory in South Derbyshire, and it is hugely important to us that we have these batteries built in the UK—and preferably near me. Would my right hon. Friend kindly agree to a meeting at which we can discuss future international inward investment in that sector?

I am grateful to my hon. Friend and I would be delighted to have that meeting. As I say, as part of the green finance strategy, about which I had a cross-Whitehall ministerial meeting just this morning, we are determined to make sure that this is the most investable place on earth for the net zero transition and the best place for companies to build businesses, including gigafactories.

The announcement today is a tragedy for those who have jobs in this company and those who were looking forward to having jobs there in future. It is also a hammer blow to the Government’s levelling up policy. The support for this company seems to have been driven more by the desire, in the words of the former Prime Minister, to be

“at the helm of the global green industry”

than a robust economic case. Is the Minister concerned that the company mentioned ballooning energy costs? BMW is moving its production of the Mini to China because it can get cheap energy there. How many more jobs will be sacrificed on the altar of a high energy cost net zero policy?

I thank the right hon. Gentleman for his question and his consistency, but if he looks at energy costs at the moment he will find that it is the sky-high prices of fossil fuels that are causing the problems. There is consensus across the House, of which he is not quite a part, that renewables and the Government policy of building them at scale are bringing the lowest cost energy to the grid. The contract for difference companies are paying hundreds of millions of pounds into subsidised bills because under the CfD mechanism, while they were guaranteed a figure with high prices that are driven by gas prices, they are now contributing and lowering bills. It is precisely more renewables and more green energy that we need in order to have a more affordable grid for our industry and our residents.

About 40% of the components of an electric vehicle are contained within the battery. That matters because of the definition of “British made” when we export to the European Union and elsewhere. The Britishvolt site is a fantastic site with great renewable electricity and it is ready to go. Will my right hon. Friend confirm what the Government are doing to ensure that an alternative battery manufacturer takes advantage of that great site and creates employment locally?

My hon. Friend is absolutely right. I am working closely with the Department for International Trade, the Minister with responsibility for investment and others, and I am delighted to have the Minister for Trade Policy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), here beside me. We are absolutely determined to sell the opportunity of the site to contribute to the wider goals we have discussed, and to ensure local jobs and employment. The site offers a tremendous opportunity.

Luton has long been associated with the motor manufacturing industry at the Vauxhall plant in my constituency. Workers there will tell you that their futures are under threat without battery factories. Another major worry in the automotive sector is the semiconductor supply chain. We have waited two years for the Government’s review. Can the Minister tell us when we will finally get it?

The hon. Lady is right to highlight the importance of semiconductors to the automotive industry. I hope we will see that coming out as soon as possible.

As an unashamed enthusiast of UK electric vehicle production, there is understandable sadness on all sides of the House that Britishvolt is not proceeding. It was good to hear my right hon. Friend the Minister talk about four or five significant investments here in the UK, but I hope his Department will come back to the House shortly to further outline the UK strategy in this area, in particular on critical mineral supply chains—they have already been raised—which are so key to this part of the UK’s economic future.

My hon. Friend takes a close interest in these issues. He is right that we need to do more and critical minerals are a part of that. A whole series of elements need to come together, as another hon. Friend said, to form that battery and to be the vital component in a successful British automotive manufacturing industry for the future.

Is it not the case that, in this crucial industry, this is just yet another example of the lack of confidence in the UK economy? Part of the reason for that is because there is no strategy. When will the Government come forward with a strategy for industry, so that external partners can have trust and build business confidence in these sorts of proposals?

Opposition Members lose no opportunity to talk down the UK. It is quite extraordinary, especially in the week when we have just seen evidence come out that the UK is seen by—[Interruption.] If the hon. Lady, instead of chuntering from a sedentary position, were to stop her rant against the UK and its position in the world and hear the answer, she would hear that global CEOs have identified the UK as the third most attractive place in the world in which to invest. If she was as committed to helping workers as her party claims to be, then instead of talking this country down she would be highlighting those issues, celebrating the fact that we have nearly full employment and celebrating the fact that we are not in the position we were in, with so many young people on the dole, in 2010.

I declare an interest as chair of the all-party parliamentary group for critical minerals. As others have mentioned, it is vital that we step up not only the domestic supply chain but collaboration with friendly nations such as Australia, Japan, the US, Canada and so on, to ensure that we get all the minerals we need for our British-made battery production, starting with, but not limited to, Cornish lithium.

I thank my hon. Friend, who is always championing her constituency and its interests, and emphasising the fact that yes, quite rightly, critical minerals are important, and that working with partners and trusted allies is absolutely critical. Colleagues in the Department for International Trade and the Foreign, Commonwealth and Development Office are absolutely alive to that and we use our posts around the world to make sure we build a consensus and a common approach. We want security not just for ourselves, but for our democratic partners too.

Battery production and electric vehicle roll-out counts for nothing if the EV battery charging infrastructure is not adequate. England still lags well behind Scotland in its charging network. This Government have a target of 300,000 chargers by 2030. Last year, they installed just under 8,000 chargers and that was a ramp up in installation. The Government are not going to meet their target, are they?

The hon. Gentleman is right to highlight the importance of charging infrastructure. We need to do more and we need to do it faster. We are absolutely focused on delivering that.

My right hon. Friend rightly protected taxpayers’ money as milestones were not met, but will he confirm to potential investors that the £100 million is still on the table for firms that can get the private sector investment and the orders that Britishvolt was sadly unable to?

In the net zero strategy it was announced that there would be £350 million of funding for the automotive transformation fund, in addition to the £500 million announced as part of the 10-point plan.

This is clearly deeply disappointing news, both for the workforce and the wider UK economy. As we heard earlier, the electrification of vehicles is slipping backwards under this Government’s watch. Will the Minister update the House on what action he will now take to try to improve this very worrying situation?

In terms of vehicles on the road, as one of my hon. Friends mentioned, we are actually seeing record sales. We are seeing that transformation going ahead. [Interruption.] As the shadow Secretary of State rightly says from a sedentary position, we want to make them here—that is a shared aspiration. Today is not good news, but I make no apology for, with conditions, making that offer to Britishvolt because we wanted to help it. We did thorough due diligence and we wanted it to succeed, but it was unable to do so. If we want an enterprise economy, we will have failures as well as successes. We cannot have some kind of monolithic approach. We must keep going to deliver the industry we want, so that we can have the outcomes the hon. Gentleman and I desire.

Clearly, this is unwelcome and sad news. Does my right hon. Friend agree that the Government must keep a constant eye on ensuring that the UK remains an attractive place for new investors and, alongside that, ensure that we retain the ability to make other materials that are essential for net zero, such as steel?

My hon. Friend would never miss an opportunity to promote Scunthorpe steel, and I applaud that. That is why she is rightly seen as a champion for her constituents, protecting their interests. Steel, like energy, is at the heart of almost every product and needs to be a fundamental part of our system if we are to have a successful economy.

I agree with the Minister that this is a most regrettable situation. It is a blow to the automotive sector in the United Kingdom. Battery integrity for the UK is essential if we are to save the industry, but if we are in a race to beat China, it is a race that we cannot win. To follow on from the question that the hon. Member for Wansbeck (Ian Lavery) asked, is the Minister engaging in roundtable talks with other suitors who could step into the shoes of the failed directors and try to reinvest in and reinvigorate opportunities in the sector? Is this also an opportunity for the Minister to look afresh at the opportunities for hydrogen, in which we are ahead of China?

We are engaging with the Department for International Trade—as I hope the presence in the Chamber of my right hon. Friend the Minister for Trade Policy indicates—to make that case to investors. We have the green finance strategy, as I say, and our response to the Climate Change Committee and to the judicial review are coming up in the coming weeks, sending a real signal of the investability of the UK in the green sectors. I know that the hon. Gentleman, perhaps unlike the right hon. Member for East Antrim (Sammy Wilson), is an enthusiast because he can see the economic opportunity; if the hon. Gentleman can use the few feet between the two of them to educate his right hon. Friend, he will be an even greater politician than I thought he was already.

Last month, I spoke at the launch in London of the Indo-Pacific Net-zero Battery-materials Consortium, which brings together British and far eastern businesses, working with the support of the British and Indonesian Governments, to secure materials essential for battery production, such as nickel. Some politicians here today have talked about sprouting battery factories in the UK as if they were mushrooms, but the reality is that they depend on sources of materials. That is precisely what our Government are helping to facilitate.

My hon. Friend is a shining example of how the trade envoy programme can allow Members of this House to gain a deep understanding of other countries, engage with their Governments, and see in context how engagement with another country and its industries can contribute to the success of our own, to the mutual benefit of both countries concerned.

I thank the Minister very much for his answers to all those questions and for the industrious method that he is using to try to find a way forward. Will he outline how he intends to secure production of batteries for the industry and secure access for the future, as we are paying an excess because of our reliance on foreign entities? British battery production must be supported at all times. In my constituency of Strangford there is much interest in battery storage, and indeed in production, if possible. Northern Ireland wants to be a part of that. Will the Minister outline how all regions of the United Kingdom of Great Britain and Northern Ireland can play their part in electric battery production?

I thank the hon. Gentleman for his—as ever—courteous question. He is right about the importance of Northern Ireland playing its part in the automotive industry as we move to zero-emissions vehicles. I look forward to having the opportunity to discuss this issue and others later this week when I visit Strangford lough with him to hear about that particularly successful technology.