To ask His Majesty’s Government what plans they have to implement the recommendations in the UK Gigafactory Commission report Britain’s Battery Future, published on 21 January.
I thank the noble Baroness for her contribution to the commission and its report. A resilient domestic battery sector is essential to the future of our automotive industry, our energy security and our transition to net zero. The Government have demonstrated our commitment to support the UK’s battery and electric vehicle sectors in the modern industrial strategy, including the UK’s record commitment to battery research and development through the battery innovation programme.
Our major market is the EU, where shortly we must show that significant value in manufactured goods must originate here or in the EU. In the case of EVs, as the Minister will know, that is the battery. Does she agree, even having said what she has said, that we do not yet have the EV battery gigafactories on the scale we need? The commission on which I served made 10 recommendations. What is the Government’s response, in particular, to the urgent need to attract a major manufacturer to drive the economic incentives to put battery gigafactories in place before we are too late?
As the noble Baroness highlights, the UK understands the need for gigafactories. We have two gigafactories committed to delivering a combined 55 gigawatts of capacity by 2030. We largely agree with the thrust of the recommendations in the report. On the specific question of attracting another major OEM, led by my noble friend Lord Stockwood, the Minister for Investment, the Office for Investment and the department are engaging global EV manufacturers to invest further in the UK, and we are utilising our comprehensive support offer, including DRIVE35 and the battery innovation programme grants, as well as potential national wealth fund support, to proactively engage potential OEM investors.
My Lords, the Minister mentioned gigafactories, and we need to speed up the process of getting more gigafactories operational in the UK if we are not to miss out on investment and jobs. She also mentioned electric vehicles. The Labour Party manifesto did not include any road pricing measures, yet from 2028 we will have road pricing for electric vehicles and hybrids. Can the Minister tell the House whether she and her department are involved in any discussions across government on a further expansion of road pricing, perhaps to cover all vehicles on our roads?
We are supporting the performance and efficacy of the ZEV mandate in the transition to additional electric vehicles on the roads and in line with our net-zero commitments. We are supporting that through a range of measures to support people to transition to zero-emission vehicles and to support the expansion of charging infrastructure. On the question of road pricing, let me follow up with the noble Lord and write to him on that question.
My Lords, I declare my interest as a chief engineer working for AtkinsRéalis. High electricity prices feature strongly in the report as a barrier to investment. There is no easy fix here, but does the Minister agree that the Government need to take a more fundamental look at the electricity market, whether that involves market reform or system design, because prioritising cheap as well as clean electricity is fundamental to the future of industry and growth in the UK?
We have set out in our Clean Power 2030 Action Plan a road to energy security, and to the clean power the country needs, to provide clean energy for the future as well as securing our energy independence. We have seen the importance of that in recent months. We have also taken steps to cut energy costs for industry, particularly in areas of the industrial strategy that are especially energy-intensive.
My Lords, further to the Question of the noble Baroness, Lady Northover, what steps are the Government taking to secure a domestic supply chain for battery materials, to reduce our dependency on China?
The new critical minerals strategy sets out the ambition to meet 10% of the UK’s demand from domestic production and 20% from recycling, and no more than 60% of any critical mineral from a single country. For battery supply specifically, the ambition is to produce at least 50,000 tonnes of lithium in the UK in the next decade. The most recent round of battery innovation programme collective R&D grants have refunded recycling projects to fulfil these goals.
My Lords, I thank the Minister for the work she is doing on this subject. I want to draw attention, in my role as chancellor of Exeter University, to three things in the south-west that she might not be aware of. Agratas, in Somerset, is building the biggest EV battery plant; Altilium in Devon is recycling lithium in a dramatic way; and in Cornwall, lithium is being mined. Putting the whole cycle together, would the Minister like to visit the south-west—or send one of her officials to visit these plants—to see what it is doing on this important theme?
My noble friend is absolutely right to highlight the role of the south-west. Last week, the Secretary of State announced during a visit to Agratas in Somerset a £380 million government grant, which will support the construction of one of Europe’s largest gigafactories, notably built using 100% British steel. But if I get the chance, I would very much like to take up his suggestion.
My Lords, notwithstanding the developments that the Minister just spoke of and her Answer to my noble friend’s Question, it is clear that significant elements of battery vehicles will not be made in this country in time for the 2027 review of the rules of origin requirements, nor will they be there to meet the “Made in Europe” requirements which are likely to come in. Can the Minister tell your Lordships’ House what the Government are doing in advance of those negotiations to make sure that British electric cars will be able to be sold in the European Union?
The noble Lord is right to highlight the importance of the EU as the largest market for UK-manufactured cars. The EU remains the UK automotive sector’s largest trading partner. We are talking closely with the EU on all aspects of regulatory developments in respect of EU battery rules, the EU digital battery passport and the “Made in Europe” content rules, because we want to continue to press the EU to avoid any detrimental impact on the UK and EU’s automotive sectors, given the integrated UK-EU supply chains.
My Lords, according to the Society of Motor Manufacturers and Traders, the Government’s EV mandates imposed an industry-crushing £6 billion-worth of costs on manufacturers in 2024 alone. This is putting the 183,000 jobs which this sector supports at considerable risk. If the Government want the EV transition to endure, surely, they must proceed at a pace that industry can bear. Is it not now time to reverse these mandates, as the Official Opposition, I am happy to confirm, are committed to doing? Can we not now bring industrial policy back in line with economic reality?
We are monitoring the performance and efficacy of the ZEV mandate and last year we introduced additional flexibilities, providing manufacturers with more tools to decarbonise in a way that protects jobs and boosts investment. We have a large range of measures to support people to transition to zero-emission vehicles, including salary sacrifice schemes, generous company car tax rates for electric vehicles and the new electric car grant, as well as support for local EV infrastructure to support the transition.