Starmer would seek 'improved' Brexit deal as car-making giant warns on UK future

May 17, 2023

Sir Keir Starmer has told Sky News the UK needs an "improved" Brexit deal with the EU after Vauxhall's parent company warned the future of UK car plants were at risk.

The Labour leader used an interview with Ian King Live to say that his party would seek "a better deal than the one that we've got' to bolster the country's trading relationship with the bloc.

He was speaking after it emerged that Stellantis, which also has Citroen, Fiat and Peugeot among its stable of brands, used a submission to a parliamentary committee's inquiry on electric vehicle (EV) production to warn it was no longer able to meet Brexit trade rules on where parts are sourced.

The company said its commitment, two years ago, to the Luton and Ellesmere Port factories was based on meeting the strict terms of the deal that 45% of the value of EVs should originate in the EU or UK from 2024 to qualify for trade without tariffs.

Stellantis called for that date to be extended to 2027 or "trade between the UK and EU would be subject to 10% tariffs", it said.

Its submission to the BEIS committee continued: "If we source batteries from mainland Europe and China, as currently planned, our UK Stellantis plants will also be at a competitive disadvantage due to the higher logistics costs that we will face to transport the batteries from mainland Europe to the UK.

"This is a threat to our export business and the sustainability of our UK manufacturing operations.

"To reinforce the sustainability of our manufacturing plants in the UK, the UK must consider its trading arrangements with Europe."

Mike Hawes, the chief executive of the industry body SMMT, explained: "The rules of origin for batteries pose a significant challenge to manufacturers on both sides of the Channel, with the prospect of tariffs and price increases which discourage consumers from buying the very vehicles needed to achieve climate change goals.

"At a time when every country is accelerating their transition to zero emission transport, and global competitors are offering billions to attract investment in their industries, a pragmatic solution must be found quickly."

Sir Keir said Labour would seek to renegotiate several elements of the trade deal but reiterated that his government, if elected, would not rejoin the EU or the Single Market.

He said of the trade arrangements: "I don't think many people look at that deal and think it's working very well.

"We were promised an oven-ready deal and we got something that was, frankly, half-baked."

He said it was a crucial element of Labour's plans to grow the economy.

Stellantis spoke up as the industry eyes a 2030 UK climate-led ban on the sale of new cars and vans powered by diesel and petrol.

Efforts to bolster domestic battery production were badly damaged early this year when the start-up Britishvolt collapsed but was subsequently rescued.

The Reuters news agency subsequently reported remarks by Stellantis chief executive Carlos Tavares that the UK car industry would be "in trouble" without UK-made batteries.

"If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable operations will close," the submission continued, "manufacturers will not continue to invest and relocate manufacturing operations outside of UK, as seen with previously established UK manufacturers such as Ford and Mini".

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A major obstacle to UK investment is a massive sweetener being offered to manufacturers by the US government.

Stellantis has no plans to make its own batteries in this country, unlike Nissan. However, the Japanese-based firm has also voiced concerns about the viability of the UK due to competitive factors including high energy costs.

Stellantis halted, this week, a joint battery plant venture in Canada, accusing the Canadian government of reneging on a funding pledge.

Jaguar Land Rover has reportedly asked for a UK government subsidy to build a battery plant.

Chancellor Jeremy Hunt gave a hint on Wednesday that a related announcement was imminent.

He said: "Watch this space because we are very focussed on making sure that the UK gets that EV and manufacturing capacity."

The government has reported "productive" talks with the EU on the tariffs issue while the PM's official spokesman has spoken of high government hopes that a resolution on the rules of origin issue will be found.

A government spokesperson said: "Shocks to global supply chains have had significant impacts on both UK and EU manufacturers.

"The Business and Trade Secretary has raised this with the EU and is determined to find a joint UK-EU solution, which ensures the UK remains one of the best locations in the world for automotive manufacturing.

"We are supporting the industry through the Automotive Transformation Fund and Advanced Propulsion Centre to develop a high-value end-to-end electrified automotive supply chain in the UK and support cutting-edge automotive technologies.

"In the coming months, the government will build on these interventions with decisive action to ensure future investment in zero emission vehicle manufacturing."

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