The Labour party has called for the government to invest billions of pounds in the UK car industry to help it recover from the coronavirus pandemic and to push forward the transition towards electric cars.
The stimulus for motor manufacturers envisaged by Labour would be on a similar scale to the support given by Germany and France, which last year earmarked €5bn (£4.4bn) and €8bn, respectively, for their carmakers.
The car industry has suffered a torrid year, with the pandemic lockdowns causing the biggest annual drop in car sales since the second world war. At the same time carmakers must still spend heavily on switching production to electric vehicles, ahead of a ban on UK sales of new fossil fuel cars in 2030.
Labour’s plan would include bringing forward investment in electric car chargers, and investing in facilities for battery production – known as gigafactories – and recycling. It would also bring forward procurement of zero-emission buses, a policy strongly backed by UK busmakers who are struggling to make sales.
Lucy Powell, Labour’s shadow minister for business and consumers, told the Guardian that the UK had an “opportunity for growth” beyond the European Union if investments in electric vehicle technology were made now.
“Sectors like automotive, aerospace too, are competing in that global economy; that pan-European economy,” said Powell. “If we don’t keep up with the level of support and particularly the level of stimulus that’s going into these sectors, in Germany and France, we’re going to see the demise of these sectors a lot faster.”
The government was not doing enough to help the UK car industry transition, preferring to leave it to market forces, she said. Estimates from the government-backed Faraday Institution suggest 105,000 UK workers’ jobs are at risk in the next two decades without new gigafactories being built.
Powell said the automotive stimulus would be a “significant chunk” of the £30bn green recovery plan proposed by Labour in November, although she declined to detail the exact cost of the policies.
Germany and France funnelled money to their car industries partly via subsidies for new cars, although they faced criticism both for helping companies whose finances remained relatively intact, as well as for helping sales of hybrid cars with polluting internal combustion engines.
Labour’s plan would not include policies such as a scrappage scheme to lower the cost of electric vehicles for buyers directly. Powell also said an increase in fuel duty, a policy that would disincentivise petrol or diesel car ownership as well as raising revenues, was not part of the plan.
