With car companies weakened, the everlasting consequences of Brexit just add insult to injury
If you are a regular reader of this column, then you would be aware that I have a very low opinion of Boris Johnson. If I’m being totally honest, I hold him in complete contempt. I don’t respect him, and I don’t like him. And it’s really not hard to understand why when you realise just how despicable a person he is. The list of misdemeanours in his professional and personal life reveal his true colours.
It’s clear that Johnson lacks a moral compass. He is a serial liar. He is an adulterer. He has written racist remarks. He has written homophobic comments. And I can provide evidence incriminating Johnson to every single one of those claims. These disturbing truths make me wonder what on earth people see in Johnson. Decent people wouldn’t trust or want to associate with someone like that. Just what is it that makes people think he can be prime minister?
There are seven principles of public life. They are ethical standards that holders of public office are expected to abide by. These are selflessness, integrity, objectivity, accountability, openness, honesty and leadership. But Johnson fails on every single one of them. His track record belies someone so inadequate that it genuinely astonishes me just how on earth he is prime minister in the first place.
Now I accept that at the last election, the choice of prime minister was very much between a rock and a hard place. However, the Covid crises has exposed just how clueless, useless and hopeless Johnson is. The management of the pandemic has been disastrous. Johnson’s incompetence has killed tens of thousands of people, that surely amounts to a credible case of corporate manslaughter. The NHS was fatally undermined by eleven years of ideologically imposed Tory austerity cuts, hindering the capacity to cope simultaneously with Covid and routine care.
"Everything Johnson touches turns to sugar-honey-ice-tea"
Even the fast-starting vaccination rollout has slowed right down, with uptake a fraction of what it was at the outset. It’s resulted in six European Union member countries overtaking Brexit Britain in fully inoculating a higher percentage of people, despite the bloc initially struggling at the start with limited supply. Malta, Belgium, Spain, Portugal, Denmark and Ireland are all now ahead. And several other EU member countries are catching Brexit Britain up as well. Everything Johnson touches turns to sugar-honey-ice-tea.
And that’s before we get to Johnson’s biggest deception of all, Brexit. Writing for the Torygraph, Johnson fabricated numerous falsehoods about the EU, all of them lies. The manifestation of Brexit came about through the mainstreaming of populism. The bloodstream of the country was indoctrinated with poisonous propaganda over decades. Now under the cover of Covid that acts conveniently as a scapegoat, Brexit is laying waste to the country. Sector by sector destroyed, job by job lost. The damage possibly irreversible.
It torpedoes the myth that the Conservative party are the party of business or fiscally responsible, there is no foundation to either claim. There never was. That Trade and Cooperation Agreement (TCA) hailed when it was signed with EU in December 2020, now disowned altogether. Yet it did preserve most of one sector, the car industry. As a car fanatic, I am relived that my worst fears did not come to pass with the destruction of carmakers in Britain. But even here, all is not what it seems.
Leaving the EU single market and customs union is causing considerable inconvenience for car manufactures that they could well do without. For production plants to be efficient, they need frictionless just-in-time supply chains. Now with the imposition of non-tariff barriers such as red tape and extra costs, that seamless flow of components has stopped. Commitments have been made to simplify procedures, but with no concrete timetable, productivity is being undermined and operating costs are set to increase.
But this is just the tip of the iceberg. The government has also failed to implement a safety standards system to replace the one used by EU member countries. It means that parts for use in the UK won’t have a recognised “Kitemark” for safety standards approval, meaning products can’t be sold in the UK market. It poses further risk of disruption to manufacturing from January 1 2022, when the compliance deadline runs out. This is all because the UK failed to get an agreement with the EU recognising each other’s safety standards, known as conformity assessments.
And for the record, this isn’t the EU acting vindictively towards the UK. This is Brexit. If you voted for it, you have to own it. These problems perhaps proved to be the straw that broke the camels back for one carmaker in particular, Honda. The plant in Swindon had its last day of car production on Friday 30th July 2021, and with it the loss of 3,000 skilled workers. And the closure has also impacted local suppliers, with 1,800 jobs ending at two firms.
It’s a sad and sorry story. The Japanese carmaker has been in the Wiltshire town since 1985 and has shifted 3.7 million units in that time, with 680 cars coming off the production line every day at its peak. Now after 35 years of history, Honda is pulling the plug. Multiple reasons are cited for the withdrawal, but Brexit perhaps proved to be a step to far. When Britain was a member country of the EU, the single market was the biggest incentive for Honda to base a factory in the UK. But now the UK is a third country, non-tariffs could have prompted the company to cut its losses.
Thankfully though, this outcome hasn’t transpired for Nissan in Sunderland. After the worst-case scenario of a no-deal Brexit was avoided at the last minute, the second worst-case scenario of a hard Brexit was adequate enough for the Japanese company to announce the expansion of electric vehicle production at the site, which will create 1,650 new jobs. Nissan plan to spend up to £423m on a new electric model establishing 909 jobs and 4,500 in the supply chain. More details of that model are set to be revealed nearer the launch date.
"The Conservative government has bribed Nissan by giving money to the French government (an EU member country) to stop the Japanese carmaker from leaving Sunderland"
And there’s more. As part of the £1bn investment, Nissan partner Envision AESC will build a battery gigafactory to supply up to 100,000 electric Nissan cars a year, creating 750 new jobs in the process, as well as securing 300 current ones. It does strike a sharp contrast with the warnings that Nissan had been voicing if there was a no-deal Brexit. And on the face of it, these announcements are all very good news. But taking into account the Brexit backdrop, it does somewhat feel too good to be true. That’s because in a way, it is.
As the Renault-Nissan-Mitsubishi Alliance illustrates, an inconspicuous shareholder owns 15% of Renault, with Renault owning 43% of Nissan. The Conservative government has given Nissan an undisclosed amount of public money (thought to be in the region of £100m) towards the expansion in order to persuade the Japanese company to keep the factory in Sunderland. The identity of that inconspicuous shareholder is – short pause for effect – the French government.
So, just to be completely candid, the Conservative government has bribed Nissan by giving money to the French government (an EU member country) to stop the Japanese carmaker from leaving Sunderland. This is so they can continue pretending that Brexit was a good idea for the country, when in fact there is objective evidence to the contrary. And in the process, they can continue to gaslit the country with this false/fake narrative to stop them admitting the truth.
It is genuinely staggering, but not really surprising if you realise the extent to which the Conservative government is prepared to go in order to cover up the Brexit con they imposed on the country. It also shows that a Brexit "win" is now celebrating commerce not closing. Because the other option is to admit that Brexit is built on lies and is a massive intergenerational mistake that is inflicting huge damage on the country, and destroying livelihoods.
It is a similar story with the Stellantis Group, owner of Vauxhall. The factory at Ellesmere Port in Cheshire was at risk from closure if the Conservative government failed to incentivise the plant to produce further models. Without it, the site would have been commercially unviable. And so, taxpayer funding was put forward. Although the figure was never disclosed, it was thought to be in the region of £30m, with Stellantis pumping in £100m. The total amount secures the 1000 jobs that remain, as well as those in the local supply chain.
It is, of course, good that Vauxhall at Ellesmere Port will remain. During its 59 years of history, the factory has produced more than five million cars. Yet this approach taken by the Conservative government in subsidising struggling car companies for unsustainable reasons of commerce is at direct odds with Conservative laissez-faire economic doctrine. It would suggest that the political fallout was too higher price to pay in not intervening, thus tacitly admitting the devastating commercial consequences of Brexit for Britain.
Nevertheless, despite the survival of most carmakers, the terms of the TCA are very much worse than they were before Britain left the EU single market and customs union. With non-tariff Brexit bureaucracy and red tape costs, the British car industry is not as dynamic or competitive as it once was. But that’s the least of the problems. The regulatory divergence that now exists between the UK and the EU is the catalyst for looming legislative pressures on the British car industry.
As Brexit Britain is now a third country, the nation is subject to the same rules as any other third country not a member of the EU. And no amount of British exceptionalism or entitlement can change that reality. While the TCA enables tariff-free trade in principle, the exported goods need to originate from the UK or an EU member state to qualify for tariff-free treatment. However, the TCA includes an annex for the car industry that temporarily waters down rules of origin (ROO) requirements for electric cars, batteries and other components.
"As Brexit throws a spanner in the works of the British car industry, the current lack of gigafactories as a result of Brexit is storing up even more problems down the line"
It highlights the incompatibility of Brexit for the British car industry. A six-year phase-in period for car companies is in place to convert their complex supply chains which are deeply embedded in EU member countries. Electric and hybrid cars must meet a 40% UK/EU content requirement for preferential treatment, which increases over time to 55% in 2027. As for batteries and components, they need to meet a 30% UK/EU threshold, which rises over time to 65% in 2027.
This puts a time pressure on carmakers in the UK of less than six years to establish supply chains that are commercially sustainable. And this means an emphasis on creating a gigafactory network to provide for the British car industry. Without gigafactories, the future of the car industry is shrouded in uncertainty. But right now, Nissan in Sunderland is one of only two planned sites, the other is Britishvolt’s project. To compare and contrast, EU member countries have 38 planned sites.
While there have been discussions between the Conservative government and companies interested in making batteries in order to secure investments, nothing else is currently confirmed. As Brexit throws a spanner in the works of the British car industry, the current lack of gigafactories as a result of Brexit is storing up even more problems down the line. It amounts to another existential risk if they aren’t addressed. It’s a slow puncture of avoidable and unnecessary decline. It’s a potential disaster waiting to happen, which really does sum up Johnson and Brexit in a nutshell.
Photos: PA
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