SMMT calls for more Government support - Just Auto
Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

SMMT calls for more Government support

29 Jun 2021

The UK’s auto industry trade association wants public fund to support competitiveness as the industry faces major energy transition ahead.

SMMT calls for more Government support

The Society of Motor Manufacturers and Traders (SMMT) has called for more support from the British Government as the UK auto industry faces major challenges ahead. It also warned of the danger of ‘precipitous decline’ if the UK’s automotive sector is left stranded.

A report commissioned by the SMMT, ‘Full Throttle: Driving UK Automotive Competitiveness’,  explains how government can deliver manufacturing competitiveness in the transition to net-zero and help ‘level-up’.

The SMMT is calling for a ‘Build Back Better Fund’, 60 GWh of gigafactory capacity and 2.3 million charge points by 2030.

It argues that the UK’s auto industry has the potential to gain 40,000 jobs this decade but, if left stranded, risks precipitous decline.

Commissioned by SMMT and written by Public First, the report strategy sets out a series of policy proposals for this coming year and remainder of the decade, covering all aspects essential to automotive industry competitiveness.

The strategy calls for a new ‘Build Back Better Fund’ to support industry transformation, not just in automotive but across other manufacturing sectors, to ‘revolutionise production lines and overcome some of the areas where the UK lags in cost competitiveness or strategic support – from skills to energy costs’. Most importantly, the SMMT says the fund will help the sector transition to Net Zero and transform our existing manufacturing and supply-chain.

The shift to electrified vehicles is the biggest challenge facing the sector, SMMT says. Government is already working with industry to attract additional battery manufacturing to the UK but the report calls for a binding target of 60 GWh of battery capacity be built by 2030. These ‘gigafactories’ would give British manufacturers the capability to produce up to one million electric vehicles a year and ensure tariff free access to critical markets in the EU.

Finally, to support market transition, the report calls for the installation of at least 2.3 million charging points nationwide before the end of the decade. This would ensure all drivers – especially those without driveways – have the confidence to invest in the latest zero emission technologies, investment that will not just support a healthy domestic vehicle market, but which will underpin mass market automotive manufacturing in the UK and help deliver the country’s climate change and air quality goals.

The stakes are high. In a best-case scenario with the sector transitioning successfully to a zero emissions future, with ambitious global trading terms, there is the potential to gain 40,000 new, well paid and highly skilled sector jobs by 2030. This would provide a significant impact in auto heartlands such as the North-East and West Midlands, directly helping ‘level up’ the UK – the report maintains.

Without the competitive conditions, however, the UK’s automotive industry risks decline, according to SMMT. In a worst-case situation, with the sector left stranded, analysis shows that around 90,000 jobs could be lost compared with the central scenario, with most of these outside London and the South-East, increasing UK regional inequality, the report suggests.

Speaking today at the automotive industry’s annual Summit, Mike Hawes, SMMT Chief Executive, said, “The next few years represent a critical period for the sector. The pace of technological change is accelerating and the competition more ferocious. If we are to secure vehicle manufacturing in this country, with all the benefits to society that it brings, decisions need to be made today. The automotive sector is uniquely placed to help this government deliver on its agenda; to level up, deliver net zero and trade globally. The Government has made clear its support for the sector in its negotiations with Europe, so now is the time to go full throttle and take bold action to support one of Britain’s most important industries.”

Hawes also told a press conference that high energy costs are a major challenge in UK manufacturing and action from government was needed to address that competitive constraint for automotive and other industries in Britain. He stressed the need for the right infrastructure and conditions required for a thriving automotive manufacturing industry able to successfuly meet the major challenges ahead.

‘Full Throttle: Driving UK Automotive Competitiveness’ outlines 12 policy proposals.

The 12 Policy Proposals:

Technology & Innovation

  • Commit to creating 60 GWh of battery production within the UK via gigafactories by 2030.
  • Support development of a fuel cell gigafactory with 2GWh capacity to support cars, heavier vehicles and rail units by 2030.
  • Roll out a comprehensive and long-term skills strategy that supports auto needs combined with piloting greater flexibility in the Apprenticeship Levy to support retraining.
  • Commit to the UK becoming a global leader in developing, testing, trialling and deploying Connected and Automated Vehicle (CAV) technology.

Manufacturing Competitiveness

  • Introduce a new ‘Build Back Better Fund’ to support good manufacturing jobs for the future and help lower manufacturing costs such as energy.
  • Allow net zero critical industries, such as manufacturers of low carbon, hydrogen and battery vehicles, to access the same benefits and compensation schemes as energy intensive industries and get more support within the UK Emission Trading Scheme (ETS).
  • Fund trial and demonstration projects to explore the use of hydrogen during manufacturing.
  • Ensure the UK tax system helps position Britain as an attractive destination for global investment.

Consumer, Market & Trade

  • Develop a holistic infrastructure strategy to ensure that at least 2.3 million public charging points are in place by 2030.
  • Commission an independent review to holistically consider the long-term future of fuel duty and CO2 based taxes like vehicle excise duty in a decarbonised sector.
  • Continue Plug-in Vehicle Incentives beyond their current term and exempt Ultra Low Emission Vehicles from taxation for the next five years
  • Work with the industry to develop an ambitious, forward looking trade strategy, which targets the sector’s most important markets.