Honda in Swindon

With permission, Mr Speaker, I would like to make a statement on Honda. This morning, Honda announced that future models of its Civic car, which are currently made in Swindon, will after 2021 be made in Japan. The Civic is the only vehicle made by Honda in Swindon, so the result of the decision is that the company’s manufacturing plant will close in 2021.

I am not going to understate what a bitter blow this is to the 3,500 skilled and dedicated workers at Honda in Swindon and their families, to the many more people and businesses who supply the plant, and to the town of Swindon, which has been proud to be home for 34 years to one of the best car factories in the world. It is a blow to the whole British economy.

The reason that Honda has given is its decision to accelerate the move to electric propulsion and to consolidate investment in its facilities in Japan. Following the entry into force of the EU-Japan free trade agreement earlier this month, tariffs for cars exported from Japan to the EU will drop from the current 10% to zero by 1 January 2026. Honda will then export from Japan, rather than from Britain, to Europe and the rest of the world. The company has stated that Bracknell will be retained as its European headquarters, that it will continue to base its Formula 1 operation from Britain, and that its research and development centre for electrification and connected and autonomous technologies will continue at Swindon.

Honda has announced an immediate consultation on the plan with the trade unions and suppliers. I have spoken with the trade unions, the local Members of Parliament, the leader of Swindon Borough Council and the chair of the local enterprise partnership. I will shortly chair, in Swindon, the first meeting of a taskforce, comprising those people and others, to do everything we can to ensure that the much valued Honda workforce in Swindon find new opportunities that make use of their skills and experience. We will work with the local community to ensure that Swindon’s justified reputation as a place of industrial excellence in manufacturing, technology and services is maintained and expanded.

In our automotive sector, we will work in close partnership with an industry that is going through a period of technological change and adjustment across the world that is greater than at any time in its history—a period of change that is disruptive and even painful for many, but in which Britain’s industry can emerge as a global leader if we back innovation in new sources of power and navigation. That is one of the four grand challenges of our industrial strategy, and the focus of our automotive sector deal.

I and many other colleagues in the House, of all parties, have worked hard over the past three years to make the case for investing in Britain, to investors in this country and around the world, despite the uncertainty that Brexit has put into the assessments of investors in Japan and around the world. We have secured investments during this time, from Nissan, Toyota, Geely, BMW, PSA, Aston Martin, Williams and many smaller firms. We have an international reputation for being a place to do business, with skilled, motivated staff, with access to innovation, especially in automotive, which is the best on the planet, and with a determination to make those strengths even greater in the years ahead.

This is a devastating decision that has been made today, and one that requires us to do whatever it takes to ensure that in the years to come Honda will once again, building on its continued presence here, recognise Britain as the best place in the world to build some of the best vehicles in the world.

I thank the Minister for advance sight of his statement. This morning’s news is absolutely devastating for the 3,500 workers in Swindon, their families and the wider community. It is absolutely devastating for the businesses in Honda’s supply chain and the tens of thousands of workers employed in them. It is a devastating blow to the automotive sector, to UK manufacturing in general and, indeed, to our entire economy.

A worker employed at Honda in Swindon for 24 years summarised the situation last night when he said that the Government are “completely incompetent”. I could not agree more. Honda’s decision is a damning indictment of the Government’s failure to support car manufacturing and ensure business confidence, with regard both to Brexit and to their so-called industrial strategy. Before Members on the Government Benches become too agitated, let me say that I understand that Honda’s CEO said this morning that the decision was unrelated to Brexit. However, the company’s statement specifically says that it wants to

“focus activity in regions where it expects to have high production volumes”,

especially of electric vehicles. The logical question is this: why does Honda no longer believe that the UK will have high production volumes, and why does it no longer have the confidence to invest here to make it so? As the Secretary of State has said, it will in future be exporting to the EU from Japan rather than from Britain.

The reason why the likes of Honda and Nissan began producing in the UK in the first place was that it was a good place to locate their manufacturing, so something must have changed. Could it be the Government’s botched Brexit causing chaos and uncertainty and undermining business confidence? The Secretary of State also alluded to the EU-Japan trade deal, which imposes zero tariffs at a time when we do not know what our tariffs will be. The likes of Airbus, Nissan, Ford and Jaguar Land Rover have all halted investment or slashed jobs as a direct result of that uncertainty. Nissan reversed its decision to build the X-Trail here only two weeks ago, JLR has slashed 4,500 jobs, and Ford has cut 1,000 jobs. Over the weekend, the senior vice president of Airbus said that a no-deal Brexit would be “catastrophic”, adding:

For over 30 years, Japanese companies investing in our automotive sector have been able to count on a bipartisan commitment to talking about the advantages of investing in Britain: our skills, our commitment to innovation and the efficiency of our operations. Members on both sides of the House know that I and my colleagues have worked intensively, including with trade unions, to ensure that we get investments that recognise those advantages. I hope that we can send to companies considering investment a clear determination, across both sides of the House, that we will continue to keep faith with that tradition of stability.

I think it was evident in my remarks that I share the dismay of the hon. Member for Salford and Eccles (Rebecca Long Bailey) at the decision and the consequences for the excellent workforce in Swindon and their suppliers. We will do everything we can to ensure that they have good opportunities in future.

The hon. Lady asked about Brexit. The company said that the decision was not about Brexit and clearly we must accept that. She asked about its market share. In truth, it has a small market share in Europe compared with the markets in which it said it was expanding. Those are the reasons that it has given. However, I have always been clear with the House that the motor industry, Japanese investors and particularly Honda have made it clear for many months that Brexit is an additional worry at a difficult time. They have been instrumental in shaping the deal that has been negotiated. If there is one message all of us in the House can give that they want to hear it is that the deal should be ratified.

Ford Motor Company said:

“A no-deal Brexit would be a catastrophe…It’s important that we get the agreement ratified that’s on the table at the moment.”

Aston Martin said of the deal,

“it’s obvious that… it meets the needs of all the requests we put forward as an industry and as Aston Martin”.

I accept, as the Secretary of State does, Honda’s statement that Brexit played no significant role in the decision. We must avoid a childish debate every time there is an industrial announcement, whereby one side or the other leaps on how far Brexit has been involved in complex decisions. However, the fact remains that when I served at the Department of Trade and Industry under Margaret Thatcher, and at the Treasury under John Major, I was involved in pursuing the policy of those Governments to draw foreign investment to this country to revive our manufacturing base by presenting Britain as the most attractive and business-friendly country in the European Union, through which companies could gain access to the single market. The Blair Government pursued that policy with equal vigour. As my right hon. Friend has just said, it is no good people ignoring the warnings of every leader of the car industry, most of our foreign investors and all our business leaders that we must seek to retain that reputation. Will he therefore confirm that, in line with the withdrawal agreement, we are pursuing a customs arrangement and a regulatory alignment that will not put new barriers in the way of trade with our biggest, most important market? If we fail to do that, there will be a succession of announcements of this kind, and Britain will cease to be of any particular attraction to international investors seeking a European market.

I acknowledge my right hon. and learned Friend’s contribution as part of a succession of Ministers on both sides of the House who have given confidence to investors from Japan and around the world. A particular admiration has been accorded to Britain for the stability and predictability of our arrangements. In a turbulent world, the sense of continuity that we have been able to offer, especially to investors who invest for the long term—and any automotive investment is for the long term—is important. It is essential that we recover that.

It is also important that we listen to and respect the evidence of people who employ hundreds of thousands of our constituents. We have consistently done that. In my response to the hon. Member for Salford and Eccles, I set out the almost unanimous view of investors that the deal that has been negotiated meets their needs. That is not a surprise because they have been consulted during the negotiations. However, this is a moment when the House needs to reach a resolution. The Japanese ambassador is very active on these matters. He summarised his views in a letter to the UK and the EU:

“What Japanese businesses in Europe most wish to avoid is the situation in which they are unable to discern clearly the way the Brexit negotiations are going, only grasping the whole picture at the last minute.”

We should heed that advice. We have the opportunity to bring negotiations to an orderly conclusion. I hope that, for the sake of jobs in constituencies throughout the country, we will do that.

Our thoughts on these Benches are with the people of Swindon, those whose jobs are at risk and those in the supply chain who face further uncertainty. Unite the union made the point:

“The usual formula is one job in the plant equates to four in the supply chain and the local economy. If closure is confirmed, it will rip the heart out of this area.”

I welcome the taskforce that the Secretary of State has set up. Will he assure the House that he will regularly communicate its outcomes to hon. Members?

We have known for some time that the EU was making tariff-free trade for Japanese car makers possible and shipping from Japan viable. Does the Secretary of State therefore agree that it is important that the Government now communicate a similar zero-tariff ambition for UK-EU car exports?

Some of us are very concerned that no deal will do irreparable damage to the manufacturing sector throughout the UK. What is the Department doing to protect the UK’s manufacturing sector?

I am grateful to the hon. Gentleman for his remarks and the tone in which he expressed them. I will certainly keep the House informed about the taskforce’s progress. We should bear in mind that there are two years in which the workforce will continue to be employed. It is important that the sales in Swindon should continue so that their jobs can be secure. During that time, I want to find out whether in the first instance Honda, recognising its continued commitment to research and development, will see that it has an ideal facility in Swindon in which to build the next generation of vehicles,

The fact that there is a modern plant and a workforce in Swindon who have an international reputation for being excellent and innovative is a message that we should send out loudly and clearly. At a time when there are skill shortages across manufacturing industry, there is absolutely no reason why the opportunities made available to the workforce should not give them equally promising and rewarding careers in advanced manufacturing, such as they have enjoyed in Swindon. I will certainly update the House on the progress on that.

The hon. Gentleman asked about the trade agreement with Japan. My view is that the best outcome—indeed, the essential outcome—is that we should roll over, and continue to be able to benefit from, the trade arrangement that has been negotiated between the EU and Japan, unless and until we negotiate an alternative that is at least as good.

Is not one of the lessons from this about the power and scope of the EU-Japan trade agreement, in contrast to the continuing uncertainty for our businesses here and for overseas investors —two and a half years after the referendum—about what the future terms of our trading relationship with Europe are actually going to be? Will the Secretary of State tell us why it is taking so long to put in place our trade agreements with countries such as Japan, Canada and Australia?

I agree with my right hon. Friend. Although Brexit uncertainty was not cited as one of the factors in the decision, it is evident in investment decisions in the whole industry. I know from regular conversations with investors that it does bear on their minds. Last time I was in the House, I mentioned that Nissan has said that the political uncertainty over a no-deal Brexit, or what kind of Brexit there will be, is “casting a shadow” over its future. When investors that have no political motivation to make such statements issue that advice and warning, we should attend to it. It seems to me that we have the information necessary to conclude these negotiations, and in my view we should do it during the days ahead.

This is the latest and the most serious in a series of announcements and warnings from the UK car industry about its future operations in this country. I know and the House knows that the Secretary of State fully understands what a dangerous moment this is for the future of that industry. May I therefore simply wish him, and some of his colleagues whom I can see on the Government Benches today, well in persuading the Government to abandon the idea of a no-deal Brexit? He knows probably better than anyone else in this House what a disaster that would be for the future of British car manufacturing.

As I said in my statement, this is a time of change and challenge, but also of opportunity for the automotive sector. I have been proud that in the two or two and a half years since the referendum, notwithstanding the concerns that have always been expressed to me—it is the first thing people have said when I have met boards—we have won every single competitive automotive decision that has taken place in Europe. It is frustrating that this and the X-Trail have gone to Japan, but I think all of us take pride in the fact that the efficiency and the potential of the British manufacturing sector have been recognised in that way. However, it is apparent, as my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) has said, that although a degree of uncertainty was expected after the referendum decision, this has now got to the point—as I am told time and again in boardrooms in this country and around the world—where the time taken is unconscionable and if we do not act, we will see decisions not simply deferred but moved elsewhere.

I am confident that I speak on behalf of my hon. Friend the Member for North Swindon (Justin Tomlinson), my hon. and learned Friend the Member for South Swindon (Robert Buckland), my right hon. Friend the Member for Devizes (Claire Perry) and my hon. Friends the Members for Chippenham (Michelle Donelan) and for Salisbury (John Glen). The constituents of all of them may be affected by this matter, but they are all unable to take part in this statement because of their roles as Ministers.

Across Wiltshire, we are deeply concerned about the 3,500 job losses and potentially more in the supply chain. May I therefore volunteer to take part in the excellent taskforce that my right hon. Friend the Secretary of State has announced? I think that is a very useful step forward. Will he join me in rejoicing at the fact that the economy of Wiltshire is actually extremely strong at the moment? The unemployment figures announced this morning are the lowest there have ever been, and we have had huge growth particularly in electric car manufacturing and our high-tech industries across the M4 corridor. I hope he will join me in thinking that we will therefore be able to find useful employment for all these people in good time before the plant closes.

Like my hon. Friend, I pay tribute to our colleagues, my hon. Friend the Member for North Swindon, my hon. and learned Friend the Member for South Swindon and my right hon. Friend the Member for Devizes, whose commitment to the success of the economy in Wiltshire is unflagging.

My hon. Friend the Member for North Wiltshire (James Gray) is absolutely right to refer to the fact that the success of Swindon and the whole of Wiltshire has been notable. In fact, one of the problems that Honda has occasionally discussed with me in the past is its struggle to recruit the volume of labour that has been required. It is a matter of sadness that that will not be a problem for the future, given this decision. He is right to emphasise that the demand for the kind of skilled labour that exists in that county is very strong. Through the taskforce, we will do everything we can to make sure that employers are matched with people with skills.

Brexit may not have been the direct cause of Honda’s announcement, but, to echo the wise words of the right hon. and learned Member for Rushcliffe (Mr Clarke), does the Business Secretary agree with me that it is an absolutely key part of the context in which Honda and other major car manufacturers are making decisions on where to invest in the generations of vehicles that will transform this industry? The harsh reality is that Britain’s reputation as a stable place to do business and as the gateway to Europe is being undermined before our eyes.

The Business Secretary mentioned the EU-Japan trade agreement. Will it not be a ludicrous situation if we end up leaving the EU without a deal at the end of March, or if we end up on World Trade Organisation terms after a transition in 2020, and tariffs are put on cars exported from Honda in Swindon to the EU that do not apply to cars exported from Japan to the EU? Does that not indicate that, whatever else happens in the coming weeks, the option of a no-deal Brexit has to be ruled out once and for all?

I agree with the hon. Gentleman when he describes the reality of how the automotive industry successfully trades in this country. It is based on a just-in-time system of production, which has been very well calibrated over the years to make us very efficient. That has been communicated not just to me but to Select Committees of this House. It is clear, and it has been much debated, as the hon. Gentleman will know from his constituency experience. That is what we must agree, and it is what has been agreed—the ability to continue to trade without tariffs, without rules of origin checks, without quotas and with a minimum of frictions—which is why the companies have endorsed the deal. I agree with him that to leave on WTO terms would be a hammer blow to a foundational industry in this country. However, he has it in his gift, as do all Members, to avoid that by coming together in the days ahead to agree a deal.

While this is awful news for the employees at Honda and for the communities affected—I have no doubt that the Secretary of State and his team will be doing all they can to support Honda and those affected during this time—does my right hon. Friend agree or disagree, for the sake of those who are failing to understand, with the senior vice-president of Honda, Ian Howells, who has confirmed that this decision has nothing to do with Brexit, is not driven by Brexit and is not because of Brexit?

Of course I completely respect—everyone has to respect—the reasons that have been given for the decision, but I am pretty familiar with this industry and others, and there are a number of factors. I report to my hon. Friend truthfully that on the minds of many investors around the world is an anxiety caused by a lack of knowledge as to what our trading relationships will be with our most important neighbours in just over a month’s time. That is something that we should resolve; if we do, I think we can look forward to a resumption of significant investment and to statements that are happier than the ones I am able to give today.