Nissan in Sunderland

Our fourth commitment was that in our negotiations to leave the EU we would always emphasise the strong common ground that exists between the UK and other EU member states and pursue a deal that could ensure free trade unencumbered by tariffs or other impediments.

These commitments proved persuasive, as they have subsequently for investments by Toyota at Burnaston, BMW Mini at Oxford and PSA at Luton. Indeed, every competitive allocation decision since 2016 in this industry has gone to Britain. Although discussions had been around the Qashqai, Nissan proposed towards the end of the discussions to add a further model, currently produced only in Japan—the X-Trail—to Sunderland. On 27 October 2016, Nissan announced that both the Qashqai and the X-Trail would be built in Sunderland, securing the plant’s future and adding 741 new jobs.

Last Friday I was informed by Nissan that following a global review of its capital investment, future capital was needed to accelerate the shift in Europe from conventional to lower-emission vehicles. The Qashqai and the Juke will in future have petrol and plug-in hybrid variants made in Sunderland, and as a result, more capital will be invested in Sunderland than was originally planned in 2016. However, this was accompanied by a decision to maintain Japan as the sole production location for the X-Trail model, rather than to establish a new production line in Europe. The consequence of this is that the existing jobs in Sunderland will be maintained by the increased investment, but the 741 additional jobs that would have been created in Sunderland will not now be available. Nissan confirmed that production of the new Qashqai, Juke and Leaf will continue at Sunderland, and that the decision has no implications for the existing jobs at the plant.

Nissan also pointed out, as it has done consistently since 2016, that the risk of a no-deal Brexit was a source of damaging uncertainty. While I am pleased that the decision taken in 2016 to build the Qashqai and secure the Sunderland plant is unchanged, it is deeply disappointing to me and to the workforce to find that the extra jobs that would have come from the X-Trail will no longer be created. I told the House that I would publish the correspondence with Nissan at the time of its original decision, as soon as the company advised that it was no longer commercially sensitive. I have previously shared it with the then chair of the Business, Energy and Industrial Strategy Committee, but I have now agreed with Nissan that it is reasonable to publish it in full today. Colleagues will see that it sets out exactly what I told the House in October 2016.

Grant support for training and development and for environmental improvements were applied for and approved by the Industrial Development Advisory Board on the basis that both the Qashqai and the X-Trail models would be built in Sunderland. Given yesterday’s announcement, if the company seeks to participate in those industry funding schemes—as I hope and expect it will—it will submit new applications in the standard way and undergo a process of independent assessment.

I am disappointed that the new jobs associated with the X-Trail will not now come to Sunderland, but I am pleased that the plant will benefit from substantial new investment in the existing models and that the decision to continue with the vital investment in the Qashqai, Leaf and Juke, and the jobs associated with them, is unaffected. These decisions were made on broader business grounds, but Nissan has commented on the need for us to come together to resolve the question about our future trading relationship with the EU. I believe that its advice should be listened to and acted on so that our automotive industry, which will undergo more change through innovation in the decade ahead than it has for most of the past century in areas such as battery technology and artificial intelligence, can seize the opportunities for Britain to be a world leader in state-of-the-art car making, providing great jobs and careers for hundreds of thousands of people during the years ahead. I commend the Statement to the House”.

My Lords, that concludes the Statement.

Can the noble Lord confirm that the Government will actively engage with the trade unions and automotive manufacturers to protect what is now left? The truth is that the news of Nissan’s departure is not isolated and, in the coming months, more jobs and investment could well be lost in industries elsewhere across the UK. Only last week the Society of Motor Manufacturers and Traders announced that car production is down to its lowest level in five years: in total it has now slumped by 9%; and in the past year alone new investment has halved. What considerations are being given through the industrial strategy to ensure that other parts of the industry, such as Bridgend or Ellesmere Port, do not suffer in the same way?

Our automobile industry and wider manufacturing sector is in desperate need of assurances from the Government. They must finally rule out a no-deal Brexit, which in itself is the single most important decision they could take to remove that uncertainty.

Finally, why has no discernible progress been made on trade agreement negotiations, despite pledges otherwise? Where are we with the commitment that there will be no tariffs on British-made vehicles entering the EU?

So, when the chill winds blew in the year before last, the Minister acted fast and secretly to seek to insulate Nissan. In 2016, in order to reassure the company, the Government made a deal, which included public investment of around £60 million, as we heard, and was sealed in a letter that the Government moved heaven and earth not to publish. They cited commercial sensitivity as the reason—until this week, when publishing suddenly suited the Government. I have a number of questions about that letter.

First, what was commercially sensitive before that is not so now, particularly when the Secretary of State goes out of his way to explain that the funding surrounds the Juke and Qashqai ranges but not the X-Trail? That range will continue, so any commercial sensitivity should surely continue, too. Secondly, and perhaps more importantly, did the Government notify the EU competition authorities about their deal with Nissan? If not, why not? I note that in 2001 some £40 million of support for the production of the Nissan Micra was cleared through the EU. What was different about this support?

The Minister stated that the Government’s fourth commitment is to the,

“strong common ground that exists between the UK and other EU member states”.

I suspect that we would question that. He also said that Her Majesty’s Government would,

“pursue a deal that could ensure free trade unencumbered by tariffs or other impediments”.

There is no sign that the Prime Minister’s red lines will allow this to happen—and clearly Nissan no longer believes the Government either. The reduced sector investment tells the same story.

The prime phrase in all this is “damaging uncertainty”. Faith is falling, even in the Minister’s own department. His colleagues in the other place sound increasingly worried about what is going on and whether the right of his party will drive the country over a cliff. Mr Harrington has called no deal a “complete disaster”, while Mr Clark warned that a no-deal Brexit would be “ruinous” to the economy. Can the Minister tell us the adjective he would use to describe it?

The noble Lord, Lord Fox, also asked about the commercially sensitive nature of that letter, which he rather cynically suggested my right honourable friend the Secretary of State had released only now because it suited him. My right honourable friend said at the time, back in 2016, that it was commercially sensitive as a result of discussions with Nissan. Nissan made it clear that supplier negotiations were under way. Those negotiations have now completed and it is therefore a matter that can be released. As my right honourable friend made clear, we are more than happy to do so.

Finally, I was asked whether the United Kingdom Government notified the EU of the £61 million support. I can give that assurance. It has been given on many occasions. The grant award was fully compliant with EU state aid rules. Details of the award were shared with the EU and published on its transparency website.