Toyota: UK Plant (Hansard, 18 April 1989)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
My Lords, with the leave of the House, I should like to make a Statement on investment by the Toyota Motor Corporation.
I told the House on 26th January that Toyota was considering setting up a car plant in Europe and that the United Kingdom was the lead candidate as a location for the project. I am pleased to be able to return to the House today to report that the company has now made a final decision to proceed with the project in the United Kingdom. The president of the company, Dr. Toyoda, and I are today signing a document setting out the heads of agreement reached between us, copies of which I am placing in the Library of the House.
Toyota has chosen a 280-acre site at Burnaston near Derby. The project will be in two phases. In phase one, after a short period of pilot production starting in December 1992, commercial production will begin in August 1993 and will rise gradually thereafter to the maximum capacity of 100,000 cars per year. When economic and commercial circumstances allow, the project will move into phase two, in which capacity will be expanded to 200,000 cars per year. The plant will then employ some 3,000 people, and will involve a total investment of about £700 million.
692 The company has decided to proceed with the project without government financial assistance. And it is its firm intention to achieve a local content level of 60 per cent. from the start of commercial production in August 1993 and an 80 per cent. level within a further two years.
Toyota's decision was probably the largest mobile industrial investment still to be won and it represents a major vote of confidence in the United Kingdom. I have no doubt that it will make a significant contribution to the local economy in the area around Derby, to the United Kingdom economy and indeed to the European economy as a whole. I wish the company every success here.

§ Lord Williams of Elvel
My Lords, the House will be grateful to the Secretary of State for making the Statement, which we welcome. We welcome the presence of Toyota as an investment. With the noble Lord, we wish the company well provided that it meets its targets of local sourcing, which the noble Lord spelt out in his Statement as 60 per cent. after a certain period and 80 per cent. in the next period.
The fact that the Secretary of State has made his announcement and that he has signed heads of agreement between Toyota and the British Government indicates that the Government are prepared to intervene to secure beneficial inward investment. We welcome that. In our view it is the proper function of government to do so. We are glad to see that the doctrines propounded by the Secretary of State for Wales have been adopted by the Secretary of State opposite.
I wonder whether the noble Lord can comment on a statement on the one o'clock news, which I should like to quote in a genuine spirit of inquiry. It said: A Japanese news agency has quoted company sources as saying that a formal announcement will be made simultaneously in the two countries at two o'clock this afternoon". I am sure that that was not an official statement. However, in the light of the words of the noble Lord the Leader of the House about statements, I should be grateful if the noble Lord would make some inquiries to see whether in fact a statement was made in Japan at two o'clock our time rather than at the time of the noble Lord's Statement.
Is it true that there will be no government help towards infrastructure investment? I understand from Derbyshire County Council that £8 million will have to be invested in infrastructure investment around the new plant. I understand from the council that this will have to be found by Derbyshire ratepayers, or Derbyshire poll tax payers, as the case may be. Is that the case? Is it not a little penny-pinching on the part of the Government to put the whole onus for investment on Derbyshire County Council? Are there no kind words from the Secretary of State for the Derbyshire workforce? After all, Toyota has placed an enormous vote of confidence in the Derbyshire workforce; otherwise, it would not be investing there.
Furthermore, are there no kind words for Derbyshire County Council, which entered the race 693 for this investment rather late, had no government financial help to make its pitch and succeeded in carrying off the prize? Is it pure coincidence that Derbyshire County Council is Labour controlled? Is this not a good example of a county council, regardless of party, doing what it is meant to do and getting good investment for its own area? In other words, are the efforts of Derbyshire County Council, which is Labour controlled, those which we would all wish to encourage? If that is so, will the Secretary of State now be good enough to congratulate the county council on its efforts?

§ Lord Ezra
My Lords, I welcome the Statement and congratulate the Secretary of State for the part he undoubtedly played in bringing this about. It will mean 3,000 jobs in an area which badly needs them and an investment of £700 million. The noble Lord referred to local sourcing. How many additional jobs will be created as a result of the 60 per cent. and 80 per cent. local content level? It is an important point.
I should also like to refer to the longer term. We in this country have welcomed—and I hope that we shall continue to do so—enterprising concerns from abroad which want to set up here, to employ British labour and join their skills with ours. However, does the Toyota Motor Corporation intend to link us with its research and development for the future? I ask that question because what I believe is important is that we should not only look for short-term benefits from inward investment, but that we should also look for a long-term partnership, so that we can combine our skills and our innovative possibilities with those of the corporation. I should not like to feel that firms like Toyota are here just for the time being, which might be five to 10 years, and that they will then look elsewhere. Could this perhaps be a lasting relationship in which we can combine our research and development, so that we not only have the benefit of employing more people as a result of the arrangement of having an inward investment, but that we also have the opportunity of joining together with the corporation in those skills and research when we look to the long term?

§ Lord Young of Graffham
My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, for what he said. I am sure the noble Lord will understand me fully when I say that I cannot claim responsibility for anything which is broadcast on the radio news at one o'clock, neither can I do so in respect of a report from an agency in Tokyo. I said on 26th January in your Lordships' House that I would come back to the House when I had a statement to make on the matter. This is the first statement I have made on the position and I am sure that your Lordships will not expect me to do otherwise.
Of course I congratulate the Derby City authority, which happens to be Conservative, as indeed I congratulate Derby County, which happens to be Labour-controlled. However, the important point in the matter is that the Toyota Motor Corporation told us that it had chosen the United Kingdom because it was this country which actually provided the best industrial climate in Europe. Further, the corporation knew that there was no financial help 694 which the Government could give. That is not because the Government are unwilling to do so, but because very sensibly, and very properly, the European Community has entered into new guidelines (as from 1st January of this year) which impose rigorous tests to prevent unnecessary subsidies being given to car manufacturers elsewhere.
I would join, as I am sure would all Members of your Lordships' House, in congratulating the people in Derby on having the plant situated in their county. I also congratulate them on the creation of 3,000 jobs. Those jobs will be enjoyed by the people of Derby. Derby County and others would have welcomed them. It was a contest in which 40 local authorities entered. I congratulate the people of Derby on winning their "Derby".
I must say to the noble Lord, Lord Ezra, that in addition to the 3,000 jobs I am told that component suppliers will see a further 3,000 jobs being created as a result of the arrangement. In my view this is a significant landmark for our country. Not only is this the largest internationally mobile car plant—indeed, the third largest car company in the world after Ford and General Motors—but it happens, by coincidence, to be the 100th Japanese company to settle within our shores.
I should like here to stress a point which I made to Dr.Toyoda of the Toyota Motor Corporation. So far as we are concerned, Toyota is a British company. It happens to be a Japanese-owned British company, just as Ford happens to be an American-owned British company and, indeed, just as General Motors is an American-owned British company. However, it is British workmen, and it will be British wealth creation, that will actually benefit from this arrangement.
Dr. Toyoda also told us that the corporation has not, in its entire history, ever closed a plant. By coming into the Single European market, and into the industrial climate of this country, I hardly think that it will find any cause to change its policy in the future.
So far as concerns research and development, let us proceed step by step. Perhaps we can take a parallel from another Japanese car company which came to this country a few years back. That company has already opened its own research and development plant.

§ Lord Taylor of Gryfe
My Lords, from these Benches we should like to congratulate the Minister unreservedly on the Statement which he has just given to the House. There is occasion today for a double celebration, because as a result of the activities of his department I note that the French have conceded that the Nissan imports will now be permitted duty free into the EC. That is a considerable achievement by the Minister and all those concerned in that matter.
Of course we associate ourselves with the congratulations which have already been expressed by the Labour Party Front Bench. We particularly welcome the statement that there will be no govern- 695 ment financial assistance involved in this investment. Bearing in mind the fact that during the period between 1985 and 1988 30 per cent. of inward investment attracted 59 per cent. of all the regional selective assistance, I think that we have a breakthrough in this case. A company is coming to this country without the inducement and incentive of regional assistance. That should leave a good deal more of the regional selective assistance budget for indigenous companies. As I said, on behalf of Members on these Benches, this is an occasion for celebration and congratulations.

§ Lord Young of Graffham
My Lords, I am most grateful to the noble Lord, Lord Taylor of Gryfe, for what he said. I am sure that his congratulations to the people of Derby are shared by Members from all sides of your Lordships' House. Further, I am glad to be able to confirm that Commissioner Bangemann of the European Community has now formally confirmed to me that the French Government will now count the Sunderland-built Nissan cars as being cars of European and British origin, and that they will be allowed to circulate freely. I regard that matter as no more than one of the growing pains of the European Community. It is a matter which is now behind us. I look forward to the future. I also look forward to welcoming all those companies which may come to settle within our shores and which undertake to obey the rules which we have set, so that their products may be circulated throughout Europe as British products.

§ Lord Boyd-Carpenter
My Lords, is it not immensely encouraging to all those of us who are interested in the British economy that this great company, with the whole of Europe to choose from, decided to set up its major plant in this country? Further, is my noble friend aware of the fact that many of us who have been informed as to what has been happening know that he himself played a major part in bringing about this particular investment? This country should therefore feel great gratitude towards him for that fact.

§ Lord Young of Graffham
My Lords, I am most grateful to my noble friend for what he said. I do not think that I should add anything to his last remark.

§ Lord Taylor of Blackburn
My Lords, I congratulate all the people involved in the matter. Let us not nitpick on who has done what, and who has got what; I think that it has been a team effort on behalf of many people. Indeed, anyone who has had anything to do with the matter ought to be congratulated on having succeeded. Many local authorities are doing everything that they can to try to encourage industry, whether it is in this country or from abroad, to come into their areas. We are only too delighted when they achieve what they set out to achieve.
However, in this particular case, perhaps I may ask the Secretary of State whether he will co-operate and work with his colleague, the Secretary of State for 696 the Department of Education and Science, because additional money needs to be spent in the technical colleges and in the schools in that particular area. Much additional training and retraining must be carried out. Perhaps the noble Lord would be kind enough to have a word with his colleague and point out to him that fact, so that additional moneys, which are so badly needed, will be made available in those particular institutions.

§ Lord Young of Graffham
My Lords, I fully understand what the noble Lord has said. The car plant will be coming into gradual production over the early years of the next decade. Further, it is a matter at which my right honourable friend the Secretary of State for Education and Science will no doubt be looking. It is also a matter at which I very much hope the local education authority will be looking, because that is where the primary responsibility lies. It is a matter which a combination of effort from the private and public sector will undoubtedly solve.
We have had a stream of overseas investors coming to the United Kingdom. Indeed, over the past few days we have seen Fujitsu coming to this country, we have seen Bosch coming to this country and, now, we have the Toyota Motor Corporation. Why do they come here? They come here because this country provides the best industrial climate in Europe. That is the most powerful argument; it is not regional aid nor subsidies which create the right environment.

§ Viscount Caldecote
My Lords, it is very good news indeed that such a big investment will be made by Toyota. We all congratulate my noble friend on the matter, especially in regard to the large effect it will have on job creation. However, perhaps I may ask my noble friend the Secretary of State two questions. First, is he confident that such jobs will not in time lead to a reduction in employment in other parts of the British motor car industry?
Secondly, will my noble friend agree that Toyota has been able to make this vast, very good investment in this country only because of its huge investment elsewhere in new product development? Further, will he, to the best of his ability, encourage British industry to follow that good example?

§ Lord Young of Graffham
My Lords, there are many reasons, but one of the additional reasons we welcome Toyota is that at a time when the demand for cars in this country far outstrips our capacity to produce them—last year 57 per cent. were imported—it is safe to say that we can see a substantial increase in the car industry in this country without affecting any jobs here. Although last year we sold about 85 per cent. of the total theoretical car capacity of Europe, there is room for further expansion. Secondly, I am sure that industry has learnt its lesson. It took some decades to learn that without investment there can be no future.

§ Lord Northfield
My Lords, is the Minister aware that there are other issues about which he might say a word? As he will be aware, the recruitment of 697 industry from Japan has played a large part in my life over the past 10 years. I may be slightly jealous that this plant has not gone to Telford. As we now have 13 Japanese companies in Telford, including some as big as Toyota, I may be able to temper my jealousy in the friendliest way.
Does not the Minister need to add two further assurances? First, it is important to assure the British people that these Japanese companies are not just proud of being British when they set up here. They want to be good citizens of Britain. They make generous contributions to charity. They take part in local life, and they do everything they can to show that they want to be part of Britain and not just a foreign import. Secondly. does not the Minister need to reassure people, as I have to do all the time when recruiting in Japan, that when such companies come they do not bring large numbers of Japanese people who put British people at disadvantage in their factories? When a Japanese company comes here, employing, say, 100 or 200 people, the total number of Japanese employees at the beginning is usually six or a dozen. That number is phased out as fast as the company can train British managers to take over the running of the factory.
Is it not important to reassure British people on those two points as well as on the point that the Minister mentioned—that such companies are British companies?

§ Lord Young of Graffham
My Lords, I am the first to pay tribute to the sterling work that the noble Lord, Lord Northfield, has done in Telford in securing the settlement of a large number of Japanese companies there. I believe that the British people do not need such reassurance. Many Japanese companies, and other companies from overseas which have settled within these shores, have given positive proof of their desire to be good citizens. We have seen that time and time again. I hardly think that Toyota will be an exception. I look forward to a time when we shall wonder whether a Toyota is a Japanese company or whether it has always been a good British company.

§ Lord Harmar-Nicholls
My Lords, my noble friend has said that Mr. Bangemann has said he is prepared to give this new firm access to the European Community. Is that agreed by the French Government? Has he removed completely the risk that while they may not have tariff barriers they may resort to non-tariff barriers because of their past prejudices, which may interfere with the smooth development of that company?

§ Lord Young of Graffham
My Lords, I am happy to confirm that Commissioner Bangemann told me he has been informed by the French Government that there were no further impediments. He of course had always held that view. I do not believe that we shall see any further difficulties in that regard. I regard the matter as now closed. It has been firmly established that those cars, and other cars established here within the criteria, will have access throughout Europe.

§ Lord John-Mackie
My Lords, on a slightly different point, if the 280-acre site is coming out of agriculture will the owner be allowed to claim the set-aside grant, which will come to something like £17,000 a year?

§ Lord Young of Graffham
My Lords. I had always understood that industrial land was used for industry. If there is a change of use, other considerations will apply; but I believe that it is industrial land.

§ Lord Williams of Elvel
My Lords, before we finish with the matter, will the Minister answer my questions about the infrastructure investment? I understand from Derbyshire County Council that infrastructure investment of the order of £8 million is to be made. I understand that the Government are not giving any help. Is that the case?

§ Lord Young of Graffham
My Lords, what is the function of Derbyshire County Council but to put in a certain amount of infrastructure to welcome 3,000 jobs and all the wealth-creation processes in its area? There were 40 other authorities which were happy to do so. It seems to me to be a proper function for Derbyshire. I am sure it is something that the people of Derbyshire will welcome. I see no case for doing anything other than what we are doing at present.

The Earl of Selkirk
My Lords, is there any simple way of saying whether a car, either in part or in whole, is manufactured in this country?

§ Lord Young of Graffham
My Lords, we are reaching a stage where a car is no longer made solely in one country, with the exception of some minor speciality cars. One can look at the cars produced by the Ford Motor Company. It has an engine plant in Bridgend which produces cars for a large part of Europe; and the bodies of some cars that it sells in this country are made in Germany. We are rapidly reaching the stage where we are internationalising the car manufacturing industry. It is extraordinarily difficult to say who does what.