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Automotive Industry

Volume 753: debated on Wednesday 19 March 2014


Asked by

To ask Her Majesty’s Government what assessment they have made of the effect on Midlands-based industrial component companies of the increase in automotive production in the United Kingdom.

The revival of the automotive sector has created component supply opportunities across the UK. Sertec, for example, a Midlands-based supplier to JLR, has seen its turnover quadruple and will create 400 new jobs over the next four years. The Automotive Council has identified a potential £3 billion in opportunities for UK-based manufacturers where components are currently sourced overseas. To help marry this opportunity with investor appetite, we have created the Automotive Investment Organisation.

My Lords, I thank the Minister for his Answer. There are many small companies that survived somehow through the recession and showed great courage to keep their teams together and to continue to invest, often while reducing their own pay as directors. Does the Minister agree that these companies should be praised for doing the right thing?

I acknowledge my noble friend’s comments and applaud those small companies that have maintained customer relations through often tough trading conditions, sometimes by ploughing back past profits into the business. They in turn rely on large manufacturers remaining here in the UK. For example, General Motors’ decision to retain its Ellesmere Port facility and grow its local supply chain while making cuts elsewhere is testament to our flexible, skilled workforce and collaborative working between government, industry and the unions.

My Lords, in 2008, soon after Tata took over Jaguar Land Rover, I visited its factory. At that time, it faced huge challenges. Today, Jaguar Land Rover is making more in profits than it paid for the company six years ago. I was with the chief executive, Dr Ralf Speth, last week, who said that the most important thing to them is innovation. What are the Government doing to promote, support and encourage innovation in the automotive industry and in manufacturing?

Much innovation is going on, across a range of issues. It is very good that we have announced today some help particularly for apprenticeships and a doubling of funding for our direct lending programme to £3 billion. Innovation is key to making sure that the products that we make are in demand abroad, not just in Europe but beyond.

Does the Minister, who is a generous man, agree that the scrap-and-buy-new cars scheme introduced by the previous Prime Minister in 2009 deserves grateful thanks for the revival of the automotive industry following a particularly difficult period?

Indeed. It is good to hear that. Last year, we produced more than 1.5 million cars in the UK, which was 3% up on 2012, so it is a real success story, with a car rolling off a British production line every 20 seconds. The UK has now overtaken France as the third largest European car producer, behind Germany and Spain.

My Lords, the transformation of the car industry is remarkable, but only one-third of car components are sourced in the UK. With the growing concern about shortages of technical skills, does the Minister agree that a similar transformation of our technical education is urgently required?

That is certainly true and I welcome the challenge. We established the Automotive Investment Organisation with up to £3 million-worth of funding over the next two years. It aims to double the number of jobs created or secured in the automotive supply chain through foreign direct investment over the next three years to 15,000. The Government certainly support investment, R&D and skills. For example, we fund an industry-led project with £13.4 million for training to help improve the competitiveness and capability of automotive supply chain companies.

Does the Minister agree that at the heart of the excellent news that he just gave about the automotive industry is the ongoing strategic collaboration between government and industry through the Automotive Council—a simple Labour innovation bringing together the modern face of engaged and flexible trade unionism with management and the Secretary of State? What plans has the Minister to introduce this to other sectors of our economy?

There is much going on across government in all sectors. I will write to the noble Lord with details of that particular issue. At the moment, we are focused on the automotive car sector and supply chains.

My Lords, the Minister recognised the need for innovation in maintaining a healthy industry. Innovation depends on R&D—research and development. The Government have a programme for grant-aiding research and development in industry. The important thing is that the money comes while the initiative and manpower are there to accept it. What is the average time taken by the Government to respond to applications for R&D grants? Is it faster than the snail-like progress of the European Union?

My Lords, do we get pull-through from our amazing British innovation and skill in the F1 arena, where we are world leaders, into our automotive industry?

Yes, indeed we do. That gives me a chance to applaud the Formula 1 and car industry in this country, where we are number one in the world.

Does the Minister recognise that the automotive industry now is classically an industry of the European Union? Does he celebrate with me the German investment through BMW and VW at Crewe with Bentley Motors and with Rolls-Royce Motor Cars, the enormous improvement of the product and the increase in the number of jobs?

I very much welcome the news that came through today that Bentley will consolidate its W12 engine production in Crewe. This will secure 100 new jobs, which will help families and give them greater security to look ahead to their future.

Is my noble friend aware that, as far as the high-powered Formula 1 area is concerned, within Northamptonshire there must be something like 25 or 30 high-tech companies contributing to the development of the automotive industry? I will make one comment on what is still missing. Is my noble friend aware that the Queen’s Award for Enterprise needs to be revitalised to recognise all the exciting work coming out of these creative industrial engineering companies?

Certainly that is something that we are looking at. As my noble friend Lord Borwick said, the Midlands is a centre of excellence for the automotive industry, focusing on companies such as JLR and Dunlop—the list is almost endless.