Electric Vehicle Battery Production

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?

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 call the SNP spokesperson.

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.

I call the Chair of the Business, Energy and Industrial Strategy Committee.

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.