North East Labour MPs: Nissan shows that leaving single market will put North East jobs at risk

24 Labour MPs from the North East of England have written to Theresa May asking specific questions about the impact of the Government’s plan on auto manufacturing in the North East, saying that her decision to pull the UK out of the European Union’s single market and customs union will have a “damaging” impact on investment and manufacturing across the region.

The letter, organised by the Open Britain campaign, expresses concern about the comments of Nissan’s chief executive, Carlos Ghosn, last week, who said that when his company sees the final Brexit deal negotiated by the Prime Minister they will “have to re-evaluate the situation” regarding the “competitiveness” of Nissan’s Sunderland plant. He said the company would have to “make decisions on investment within the next two to three years.” This was despite the fact that, in October, Nissan committed to continue investing in Sunderland thanks to a private guarantee from the Government.

Nissan is one of the North East’s most important companies, employing 6,700 workers at its plant in Sunderland and many thousands more in the supply chain. 58 per cent of all British car exports are sold to the European Union.

In their letter, the MPs say that while they do not oppose British exit from the EU, the Prime Minister has “no mandate” for a hard Brexit that damages manufacturers by pulling the UK out of the single market and customs union. They say that no free trade agreement can replicate the benefits of our current trading relationship with the EU, and that the Prime Minister’s threat to leave the EU without any trade deal being agreed at all will lead to manufacturers feeling “shivers down their spine”, as every British car exported to the EU will face a 10 per cent tariff.

And they challenge the Prime Minister to: guarantee that no jobs will be lost as a result of hard Brexit; make public the guarantees given to Nissan by the Government; admit that no free trade agreement with the EU can match the benefits of being in the single market and customs union; reveal the Government’s rationale for ignoring business advice; reveal if there is any cost, in jobs and growth, that would lead the Government to reconsider its plan; accept that leaving the customs union will lead to businesses facing costly rules of origin checks; reveal which sectors of British industry will be prioritised in specific customs deals with the EU; rule out a Brexit with no deal at all, which would slap 10 per cent tariffs on UK car exports; and explain which future trade deals will boost which UK manufacturing sectors.

Commenting, Julie Elliott MP, leading supporter of Open Britain, said:

“Theresa May has decided to follow a hard Brexit and as a result long-term investment in the North East is at risk.

 “The Government’s greatest priority in the Brexit negotiations should be protecting jobs, like the many thousands employed by Nissan and its supply chain in the North East. Outside the single market and customs union, jobs will be insecure as there will be new trade barriers between us and our largest trading partner – the EU. There is no mandate for this from voters. It is the Prime Minister’s choice and working people will pay the price.

“If a hard Brexit does lead to people being laid off in Sunderland and elsewhere, the Prime Minister must swallow her pride, change course, and keep Britain in the single market and customs union.”

/ends

Notes to editors:

Speaking at the World Economic Forum in Davos on Friday, Nissan CEO Carlos Ghosn said: “Obviously when the package comes, you are going to have to re-evaluate the situation, and say, okay, is the competitiveness of your plant preserved or not… We're going to have to make decisions on investment within the next two to three years. So obviously the faster the Brexit results come, the better.” His comments are reported here: http://www.independent.co.uk/news/business/news/nissan-boss-carlos-ghosn-admits-uk-investment-will-be-reviewed-a7537586.html.

The Government had previously offered a private guarantee to Nissan that Brexit would not damage the competitiveness of its UK operation. They denied that this involved any offer of financial subsidy or compensation. However, despite being pressed by Chuka Umunna MP and Nick Clegg MP, they have refused to give a precise explanation of the guarantee given to Nissan. And the Treasury refused to tell the Office for Budget Responsibility whether or not the guarantee given to Nissan would have any impact on the public finances. 

The full letter and list of signatories is below:

Dear Prime Minister,

Following your decision to withdraw the United Kingdom from the EU single market and customs union, the Chief Executive of Nissan has said that this huge UK employer will now have to “re-evaluate” their UK investments when your new trade deal with the EU is agreed.

It will not escape the country’s notice that Nissan’s investment in Sunderland was secured last year on a promise to maintain the status quo and is now jeopardised by your embrace of a hard Brexit.

Your decision, for which there is no mandate, has therefore cast doubt over thousands of jobs across the North East; over the future of the UK as an attractive destination for global investors; and over our position as a global leader in advanced manufacturing. 

In deciding to remove the UK from the single market and customs union you have decided to erect trade barriers – whether in the form of tariffs or new regulatory hurdles – between the UK and the half-billion-strong EU marketplace, our largest trading partner. 

Every UK manufacturer knows that there is no Free Trade Agreement that can deliver the same degree of trade openness with the EU as we enjoy today. They will also have felt shivers down their spine after your statement that you would be prepared to leave the EU with ‘no deal’, since moving on to the WTO without a preferential trade arrangement would mean UK manufacturing facing eye-watering tariffs. 

You will have had submissions from industry making these points, of course, but you have chosen to ignore them, siding instead with the political fantasies of a section of your party. 

It is vital you now answer these questions:

• Can you guarantee that no job will be lost in UK manufacturing as a result of your decision to leave the customs union and single market?

• Will you publicly repeat the assurances that were given to Nissan in private to all manufacturers and UK exporters to the EU, namely that UK-EU trade will continue without tariffs or bureaucratic impediments, or will you concede that these are incompatible with your ‘plan’?  

• Will you admit that there is no EU Free Trade Agreement that gives the same degree of access to the EU marketplace as being a member of both the single market and customs union?

• Will you reveal which businesses have advocated maintaining our position within the customs union or in the single market to you or your Ministers, and outline your economic rationale for ignoring their arguments? 

• Is there any amount of cost, for example in lost trade and investment, that would lead you to consider another trading relationship with the EU than the one set out in your ‘plan’?

• Do you accept that outside the customs union, components exported to the EU will have to adhere to ‘rules of origin’ checks, or can you definitively rule this out? 

• If you are to seek specific agreements on customs co-operation for different sectors, which sectors will be prioritised? 

• Do you accept that if the UK leaves the EU with ‘no deal’ we will face tariffs of 10% on cars, and will you rule this out? 

• To give our constituents confidence can you outline which new trade deals will boost which UK manufacturing sectors? 

In deciding to leave the customs union and single market you have chosen to deepen not ease the economic circumstances that led many to vote to leave the European Union last June. Your policy risks further damaging the North East of England, which benefits so much from overseas investment.

We of course accept the result of the referendum, we just reject your interpretation of what it means and want to protect jobs and industry.

We look forward to your response.

Dave Anderson, MP for Blaydon

Roberta Blackman-Woods, MP for City of Durham

Tom Blenkinsop, MP for Middlesbrough South & East Cleveland

Alan Campbell, MP for Tynemouth

Ronnie Campbell, MP for Blyth Valley

Jenny Chapman, MP for Darlington

Alex Cunningham, MP for Stockton North

Julie Elliott, MP for Sunderland Central

Pat Glass, MP for North West Durham

Mary Glindon, MP for North Tyneside

Helen Goodman, MP for Bishop Auckland

Stephen Hepburn, MP for Jarrow

Sharon Hodgson, MP for Washington & Sunderland West

Kevan Jones, MP for North Durham

Ian Lavery, MP for Wansbeck

Emma Lewell-Buck, MP for South Shields

Catherine McKinnell, MP for Newcastle upon Tyne North

Ian Mearns, MP for Gateshead

Grahame Morris, MP for Easington

Chi Onwurah, MP for Newcastle upon Tyne Central

Bridget Phillipson, MP for Houghton & Sunderland South

Anna Turley, MP for Redcar

Phil Wilson, MP for Sedgefield

Iain Wright, MP for Hartlepool