Contribution
My Lords, I feel that the onus is on me to concentrate on the Statement at hand. This is undeniably a sad announcement for a business that stretches back to the start of the previous century. It is a sad day for Luton, which has a proud tradition in vehicle manufacturing. Most of all, it is a sad day for the 1,000-plus men and women who are potentially losing their jobs.
There are people in your Lordships’ House who know Vauxhall better than I do, but although I no longer have a pecuniary interest in the automotive industry, my past work in that sector led me to value the skills and ingenuity of the people around whom I worked. My first question is this. Many businesses in other sectors are crying out for the skills possessed by the people being laid off, but in many cases those jobs are not in Luton. How do the Government plan to help retain those skills and channel those people, who are skilled workers, into well-remunerated, vital jobs? My second question concerns the town of Luton itself. What is being done to support the local community that is being denied an important driver of its local prosperity and economy? The Government need to work with Vauxhall and others to mitigate this, as it will be a major shock for the area.
This sad announcement is at the leading edge of a wider set of issues that face UK vehicle manufacturers and the Government’s plans to electrify personal transport in the UK, their so-called ZEV mandate. There are important questions regarding this ZEV mandate. As we know, 22% of cars sold this year have to be electric vehicles, EVs, rising to 28% next year. If a business fails to meet that target, either it pays a £15,000 fine on each internal combustion car it sells or it buys credits. This is handing cash to usually foreign competitors, such as Mr Musk’s Tesla. This system was put in place by the previous Government. Is it a sensible industrial strategy?
Successive Governments have taken a largely supply-side approach to this, and initially it had some success. Does the Minister agree that unless the Government address the demand side, UK manufacturers will not achieve their mandate targets? Added to that, the previous Government sent out mixed messages that caused many people who might have bought their first EV to opt for one more internal combustion engine. Demand needs to be stimulated. Infrastructure remains patchy, pavement charging is expensive for users—inhibiting the spread of EVs to people who do not have a drive on which to charge their vehicle—and sensible subsidies are being phased out. Can the Minister confirm that her department is now discussing incentives—for example, cutting VAT on EVs—with the Treasury?
Lib Dems have repeatedly called for it to be made easier and cheaper to charge vehicles by rolling out far more residential on-street chargers, ultra-fast chargers at service stations and the electricity grid infrastructure needed to support them. Additionally, VAT on public charging should be cut to 5% and all charging points should be accessible by a bank card, rather than the collection of different smart cards required.
Meanwhile, as demand stalls, the market for UK firms is getting harder. UK car makers are already competing with Chinese EVs that benefit from inbuilt domestic subsidies. In the EU and the US, these Chinese businesses are likely to face high tariffs in future. If both these huge potential markets erect such barriers, the likelihood is that Chinese EVs will flood into their remaining markets. Can the Minister set out the Government’s position on possible UK tariffs on Chinese EVs?
Yesterday the Secretary of State referred to the £2 billion for research and capital funding that was announced in the Budget. Can the Minister tell us the split between R&D and capital for that money? What is the phasing of that money—for example, how much will the industry see this financial year?
In summary, for the UK car industry basic costs have risen, energy costs have rocketed and labour costs will rise following the Budget. In the meantime, UK manufacturers are trying to sell more EVs than UK consumers want to buy, with a backdrop of cheap, subsidised imports. Does the Minister recognise that these are existential issues? When will the industry get to know what the Government’s response to these issues will be?