Jasper Jolly and Dan Sabbagh 

UK carmakers allotted £150m in state aid in attempt to save jobs

Although Nissan accounted for lion’s share, other firms offered millions in support after Brexit vote
  
  

An employee works on the Nissan assembly line at Sunderland
The business secretary, Greg Clark, is facing mounting pressure after being forced to admit Nissan had been offered £84.2m since 2016. Photograph: Oli Scarff/AFP/Getty Images

Government pledges of £80m in support to Nissan were part of a package of almost £150m in state aid promised to leading carmakers since the EU referendum in 2016, as ministers tried to prevent an exodus of jobs from the UK.

Support offered since October that year has totalled at least £64.1m, according to Guardian analysis of EU data on state aid.

The business secretary, Greg Clark, was on Monday forced to admit that Nissan had been offered £84.2m since 2016 after he previously refused to disclose what support had been offered. Clark also wrote to the Japanese company saying it would not be “adversely affected” by the UK leaving the EU.

After lobbying from Theresa May and written promises of financial support, Nissan announced in October 2016 that it would build its new Qashqai and X-Trail models in Sunderland.

But at the weekend the company revealed that it would not build the new X-Trail in Sunderland, citing a decline in sales of diesel cars across Europe as well as Brexit uncertainty.

Nissan will have to reapply for at least some of the aid package, which was later reduced to £61m, after reneging on part of its original commitment.

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Toyota has been promised £21.1m by the government, while Ford has been offered £14.6m. BMW, which owns the Mini brand, has received pledges totalling of at least £6.3m, of which between £440,000 and £880,000) was tax relief offered to its UK manufacturing arm. Some of the support has not yet been paid to the companies.

Clark credited the state aid with keeping jobs in the UK which might otherwise have moved abroad.

Toyota said in March 2017 it would invest £240m in its plant in Burnaston, Derbyshire, after the government pledge. During the same month Vauxhall reiterated existing production commitments at its Luton and Ellesmere Port sites, after its owner, PSA Group, received promises of support. The company has not yet received any payments.

Jaguar Land Rover, the largest UK car manufacturer, received pledges of £6m. Aston Martin Lagonda received pledges of £7m, while McLaren received £9m.

The state aid will be paid via a variety of avenues, including through the £2.6bn Regional Growth Fund and Innovate UK, a non-departmental government body. Some of the aid was delivered via climate change agreements, in which companies receive tax breaks in exchange for lowering their emissions.

Labour said it was pressing Clark for answers to a string of questions relating to the Nissan deal, including whether the company would still receive the grants despite having to reapply and whether any conditions were attached.

Rebecca Long-Bailey, the shadow business secretary, has also asked whether UK car makers will retain tariff-free access to the EU after Brexit.

Clark will also face questions from the business select committee on Wednesday morning.

The minister is under pressure after keeping secret from MPs that he was in discussions with Nissan about a package of subsidies, even though he had insisted in an appearance on Question Time in October 2016 there was “no chequebook” on offer to the car maker.

Clark had refused to release a four-page letter that set out the government’s reassurances and financial offer, only relenting after Nissan revealed it had change its decision on the new X-Trail.

The UK car industry is often cited as one of the country’s manufacturing and exporting success stories, with £82bn in turnover in 2017, according the Society of Motor Manufacturers and Traders, an industry body. The sector supports the jobs of 856,000 people across the UK.

Carmakers across the world have been cutting back spending in recent months amid falling demand fin China, one of the largest markets, and increased regulatory scrutiny on diesel cars after Volkswagen’s emissions scandal.

Some of the same companies which have received British state aid pledges have since announced job cuts in the UK, citing falling demand.

 

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