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Car Manufacturing

This has been an excellent debate, and I, too, congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing it. He and all the other hon. Members who have taken part have shown that passionate support for UK car manufacturing continues in the House. I welcome that; such support is one of the industry's strengths. I assure hon. Members that the Government are determined to sustain success in UK car making. My hon. Friend was right to draw attention, as other hon. Members did, to successes, which include that of Vauxhall Ellesmere Port in beating off fierce competition from elsewhere in Europe for the new Astra. That example shows what can be achieved when management, Government, regional agencies and, crucially, the work force and the trade union, work together to win new investment. I thought that my hon. Friend was a little churlish in his comments about new plant, because that was an important win for the UK against fierce international competition. The Mini is a second example of success. I very much enjoyed attending, with my right hon.—and also tall—Friend the Member for Oxford, East (Mr. Smith) the launch of the Mini Clubman on 11 September. That is a fantastic success. We have raised with the Home Office my right hon. Friend's important point about language requirements on employees from elsewhere, and we shall continue to keep in touch with the Home Office about that. In addition to developments in relation to the Mini, there are record production levels at three other volume car makers: Honda—as my hon. Friend the Member for Birmingham, Northfield (Richard Burden) mentioned; Land Rover, to which the hon. Member for Solihull (Lorely Burt) drew attention; and Nissan, to which my hon. Friend the Member for Middlesbrough, South and East Cleveland (Dr. Kumar) effectively drew the House's attention. I thank my hon. Friend for his kind words; it is a remarkable and impressive story. All those car makers are producing excellent new products that are in high demand. All that I have described means that despite the terrible loss of Peugeot Ryton it looks likely that UK car output for this year will be higher than last year's. We exported more UK-made vehicles and engines last year than ever before. My hon. Friend the Member for Dagenham (Jon Cruddas) and the hon. Member for Wealden (Charles Hendry) were right to emphasise the importance, and success, of engine making in the UK. Of course there are big challenges. The global industry is intensely competitive and is undergoing enormous change. Jaguar Land Rover is very important to the UK economy, sustaining, as we have heard, more than 15,000 direct jobs, not to mention many more in the dealer network and the UK supply chain, with which Jaguar and Rover are particularly closely integrated. The business is also a significant research and development investor. It is not a business in crisis. The hon. Member for Solihull was right to talk about the record production levels at Land Rover. The combined business is profitable. I agree with the optimism of my hon. Friend the Member for Chorley about the prospects for the new Jaguar model, as well. We have therefore attached high priority to close engagement with Ford and with the sale process. There have been regular ministerial contacts with senior Ford management. Our objective is a long-term future for Jaguar Land Rover businesses in the UK. We shall do whatever we can to help to secure that, and will certainly work as closely with any new owner as we always have done with Ford, to that end. We shall also work more widely to ensure that the automotive sector in the UK can sustain its competitiveness in the face of the twin challenges of low-cost competition and the transition to low-carbon technologies, about which hon. Members have spoken. We shall continue to support investment, where we can, and to work on skills. The automotive sector in particular will benefit greatly from being an early focus of the National Skills Academy for Manufacturing, which was launched last year. We shall continue to focus on the challenges faced by the automotive supply chain, with our supply chain groups programme, which was launched in 2003. I particularly want to comment, in the few minutes I have left, on the issues raised in the debate about the environmental challenge that car making in the UK needs to address. Some important points were made. I agree with much of what my hon. Friends the Members for Birmingham, Northfield and for Dagenham said. Professor Julia King set out the scale of the challenge in her report for the pre-Budget report. Her assessment was that delivery of our overall carbon reduction target will require a 50 per cent. reduction in new car emissions by 2030 and complete decarbonisation by 2050. The final report, for the coming Budget, will make more specific recommendations to inform our development of policy on how to respond to that large challenge. I think that the challenge is one that the UK automotive sector can be confident about. As my hon. Friend the Member for Dagenham said, the UK is Ford's European centre for powertrain development. The company announced last year a £1 billion commitment to the development of lower-carbon vehicles in the UK. In addition to that, as the hon. Member for Wealden also mentioned, we have world-leading independent design engineering, including Mira, Prodrive and Ricardo. We have a range of strengths in emerging low-carbon vehicle technologies, including world-beating work in some of our universities on, for example, battery chemistry and hydrogen storage, and the progress made by such companies as Johnson Matthey and Intelligent Energy with proton exchange membrane fuel cells, and FiFe Batteries with lithium-ion battery development. That is technology at the world's leading edge, in areas that we know will be crucial. We are determined to provide support to help with the leverage of competitive advantage from those technology strengths. In September, the Technology Strategy Board announced the launch of its innovation platform for low-carbon vehicles, with an initial commitment of £30 million. I want to make a point to set against the concerns expressed by my hon. Friend the Member for Birmingham, Northfield about the short-term character of the platform. The board expects innovation platforms to last a minimum of five years—perhaps longer. The focus is on the business challenge in the area. We cannot guarantee future funding, but I hope that it will continue at similar levels. With support from Cenex, the centre of excellence for low carbon and fuel cells, Zytek is, as we have heard, converting up to 200 Smart cars for Daimler from conventional to electric power, to be trialled in the coming months. In the west midlands, the regional development agency has provided well over £30 million to enhance the manufacturing and design capabilities of automotive supplier companies under the premium automotive research and development programme. Regulation, too, can be a strong driver of innovation, and we shall support EU-wide mandatory targets for new car CO2 emissions. We await the European Commission's forthcoming proposal about that with interest. I agree with what my hon. Friend the Member for Birmingham, Northfield said about that issue, and we shall work to secure a mechanism that combines ambitious but realistic targets with enough flexibility to allow for the diversity of the European automotive sector—which is reflected in the diversity of production in the UK—from volume producers across Europe, such as Volkswagen and Toyota, to more niche businesses such as Aston Martin or a potentially independent Jaguar Land Rover. I listened with interest to the experiences that the hon. Member for Wealden had with Aston Martin yesterday. It is crucial to get the judgments right, and we shall work hard to do that. My speaking time is almost up, but I want to comment briefly on the important points about labour market regulation raised by my hon. Friend the Member for Chorley. Our flexible labour markets in the UK, including the availability of agency workers, have been a significant factor in the successes that we have celebrated in the debate and in attracting inward investment to the UK. My hon. Friend the Member for Chorley does not want to—