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Theresa May must give Vauxhall assurances over Brexit, says Labour Theresa May must give Vauxhall assurances over Brexit, says Labour
(about 3 hours later)
Theresa May is facing calls to guarantee that Brexit will not harm the operations of Vauxhall after PSA, the French owner of Peugeot and Citroën, announced a deal to buy the British car manufacturer.Theresa May is facing calls to guarantee that Brexit will not harm the operations of Vauxhall after PSA, the French owner of Peugeot and Citroën, announced a deal to buy the British car manufacturer.
Labour said the company would need stronger assurances from the government about UK carmaking after Brexit, despite PSA’s claiming it wants to avoid factory closures and job cuts in the UK. Vauxhall employs 4,500 people in Britain at plants in Ellesmere Port, Merseyside, and Luton, Bedfordshire. Labour said the company would need stronger assurances from the government about UK carmaking after Brexit, despite PSA’s claim that it wants to avoid factory closures and job cuts in the UK. Vauxhall employs 4,500 people at plants in Ellesmere Port, Merseyside, and Luton, Bedfordshire.
Greg Clark, the business secretary, told the House of Commons on Monday that the government was “cautiously optimistic” about the deal. He said ministers would hold PSA to its intentions to “safeguard the plants, honour their commitments and look to increase the performance and the sales of cars” as well as a promise that “no pensioner, current or prospective, will be worse off in any way”.Greg Clark, the business secretary, told the House of Commons on Monday that the government was “cautiously optimistic” about the deal. He said ministers would hold PSA to its intentions to “safeguard the plants, honour their commitments and look to increase the performance and the sales of cars” as well as a promise that “no pensioner, current or prospective, will be worse off in any way”.
The cabinet minister also insisted that Brexit was not relevant to the deal. “This is a restructuring of the organisation. In my discussions with PSA, the chief executive said today that Brexit isn’t an essential driver of this,” he said. Clark insisted that Brexit was not relevant to the deal: “This is a restructuring of the organisation. In my discussions with PSA, the chief executive said today that Brexit isn’t an essential driver of this.”
Under existing agreements with Vauxhall’s current owner General Motors, which PSA has pledged to recognise, Vauxhall’s Ellesmere Port plant will produce the Astra car until 2021 and the Luton plant will make the Vivaro van until 2025.Under existing agreements with Vauxhall’s current owner General Motors, which PSA has pledged to recognise, Vauxhall’s Ellesmere Port plant will produce the Astra car until 2021 and the Luton plant will make the Vivaro van until 2025.
However, PSA will need to make decision on where the next Astra will be manufactured after 2021 as early as next year, meaning Ellesmere Port faces a battle rival plants in France and Germany during the middle of the UK’s negotiations to leave the EU. However, PSA will need to make a decision on where the next Astra will be manufactured after 2021 as early as next year, meaning Ellesmere Port faces a battle with rival plants in France and Germany during the middle of the UK’s negotiations to leave the EU.
The Labour frontbench and MPs whose constituents work for Vauxhall said they were worried about the impact of Brexit in the coming years as PSA makes decisions about whether to invest more money in UK operations. There are also potential concerns about the future of a UK-based partnership between Vauxhall and Renault, which is a major rival of PSA, to make vans in Luton. The Labour frontbench and MPs whose constituents work for Vauxhall said they were worried about the impact of Brexit in the coming years as PSA makes decisions about whether to invest more money in UK operations. There are potential concerns about the future of a UK-based partnership between Vauxhall and Renault, which is a major rival of PSA, to make vans in Luton.
Speaking in the House of Commons, Rebecca Long-Bailey, the shadow business secretary, called for PSA to be given the same assurances as Nissan – owner of Britain’s largest car plant in Sunderland - that Brexit would not be allowed to affect its carmaking operations.Speaking in the House of Commons, Rebecca Long-Bailey, the shadow business secretary, called for PSA to be given the same assurances as Nissan – owner of Britain’s largest car plant in Sunderland - that Brexit would not be allowed to affect its carmaking operations.
“Has PSA been offered the same deal?” she said. “If so, would it not make sense for the government to set out its strategy for this sector as a whole rather than enlightening businesses one crisis at a time?”“Has PSA been offered the same deal?” she said. “If so, would it not make sense for the government to set out its strategy for this sector as a whole rather than enlightening businesses one crisis at a time?”
Angela Eagle, the former shadow business secretary, whose Wallasey constituents include workers for Vauxhall and its supply chain, said she was concerned about the extra cost imposed on carmakers when the UK leaves the single market and customs union after 2019. Angela Eagle, the former shadow business secretary, whose Wallasey constituents include workers for Vauxhall and its supply chain, said she was concerned about the extra cost imposed on carmakers when the UK left the single market and customs union after 2019.
“Moving from an America-owned inward investor to a French and German-owned inward investor might not be brilliant because there is always a chance they might want to consolidate within the EU,” she told the Guardian. “We have a big domestic market which nobody ought to sneeze at but the government are going to have to work very hard to convince car manufacturers that the help they will get with producing compensates for some of the costs and uncertainties of losing membership of the single market.” “Moving from an America-owned inward investor to a French- and German-owned inward investor might not be brilliant because there is always a chance they might want to consolidate within the EU,” she said. “We have a big domestic market which nobody ought to sneeze at but the government are going to have to work very hard to convince car manufacturers that the help they will get with producing compensates for some of the costs and uncertainties of losing membership of the single market.”
Eagle said she was a “question of whether Greg Clark will get his chequebook out” when future decisions about investment in Vauxhall production lines come to be made. Eagle said it was a “question of whether Greg Clark will get his chequebook out” when future decisions about investment in Vauxhall production lines came to be made.
Gavin Shuker, Labour MP for Luton South, where a Vauxhall factory is based, said the major concerns around the deal were about the impact of Brexit. Gavin Shuker, the Labour MP for Luton South where a Vauxhall factory is based, said the major concerns around the deal were about the impact of Brexit.
“If you viewed it in purely rational terms, both plants in the UK have got a very secure future. They are both highly efficient and making money for a loss-making company. So the real questions is Brexit. We have a government pursuing a very hard-edged model of Brexit,” he said.“If you viewed it in purely rational terms, both plants in the UK have got a very secure future. They are both highly efficient and making money for a loss-making company. So the real questions is Brexit. We have a government pursuing a very hard-edged model of Brexit,” he said.
May’s official spokesman has insisted that no specific assurances were given to Peugeot to secure the future of the UK plants. May’s official spokesman insisted that no specific assurances were given to Peugeot to secure the future of the UK plants.
“In terms of specific assurances – none sought, none given,” he said. “We have a stated position that we will ensure the competitiveness of this country when it comes to the supply chain, research and development and trade.”“In terms of specific assurances – none sought, none given,” he said. “We have a stated position that we will ensure the competitiveness of this country when it comes to the supply chain, research and development and trade.”
There are also concerns about the pensions of Vauxhall workers, who could face a cut of between 10% and 15% to their pay and benefits. There are concerns about the pensions of Vauxhall workers, who could face a cut of between 10% and 15% to their pay and benefits.
The Vauxhall pension scheme is estimated to have a deficit of £1bn. Under the deal, GM will pay €3bn (£2.6bn) to PSA to settle the pension obligations of its European business and will keep most of the historic liabilities. Vauxhall workers are also likely to move from a final salary pension scheme they had with GM to a less lucrative defined contribution scheme with PSA. The Vauxhall pension scheme is estimated to have a deficit of £1bn. Under the deal, GM will pay €3bn (£2.6bn) to PSA to settle the pension obligations of its European business and will keep most of the historic liabilities. Vauxhall workers are likely to move from a final salary pension scheme they had with GM to a less lucrative defined contribution scheme with PSA.
John Ralfe, independent pension consultant, said: “At the moment the Vauxhall workers are in a generous defined benefit pension, based on their salary and years’ service. PSA has not said what sort of pension they will get under their ownership, but it is likely to be a defined contribution, with no guaranteed pension. This change will be a fall in overall pay and perks of 10% to 15%.” John Ralfe, an independent pension consultant, said: “At the moment, the Vauxhall workers are in a generous defined benefit pension, based on their salary and years’ service. PSA has not said what sort of pension they will get under their ownership, but it is likely to be a defined contribution, with no guaranteed pension. This change will be a fall in overall pay and perks of 10% to 15%.”
Earlier, Carlos Tavares, the chief executive of PSA vowed to turn Opel and Vauxhall around without factory closures or job cuts, after agreeing to buy the car brands from General Motors for €2.2bn (£1.9bn). Earlier, Carlos Tavares, the chief executive of PSA, vowed to turn Opel and Vauxhall around without factory closures or job cuts, after agreeing to buy the car brands from General Motors for €2.2bn (£1.9bn).
Nonetheless, PSA is looking to cut €1.7bn off annual costs in purchasing, manufacturing, and research and development by 2026 following the deal. Tavares said most savings likely to be achieved by 2020 from purchasing and the estimate did not include any job cuts. Nonetheless, PSA is looking to cut €1.7bn off annual costs in purchasing, manufacturing, and research and development by 2026 following the deal. Tavares told a press conference in Paris: “We do not need to shut down plants … Shutting down plants is rather simplistic.”
He told a press conference in Paris: “We do not need to shut down plants … Shutting down plants is rather simplistic.”Tavares stressed that he had not closed a single factory since he took over at PSA in 2014. The carmaker, which came close to bankruptcy and was bailed out by the French government and Chinese investors, shut a French factory just before the former Nissan executive took the helm. He stressed that he had not closed a single factory since he took over at PSA in 2014. The carmaker, which came close to bankruptcy and was bailed out by the French government and Chinese investors, shut a French factory just before the former Nissan executive took the helm.