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'Sweetheart deal' between Nissan and ministers denied

Published 27/10/2016

Nissan staff in 2014 with the two millionth Qashqai car produced at the Sunderland plant
Nissan staff in 2014 with the two millionth Qashqai car produced at the Sunderland plant

Nissan and the Government have denied that a "sweetheart deal" protecting the manufacturer from any post-Brexit EU tariff wall was behind the company's move to boost production at its Sunderland car plant.

The Japanese giant's decision to build its next-generation Qashqai, and add production of the new X-Trail model, at the site has eased concerns about the future of the North East factory after the UK quits the EU.

The news, which will secure thousands of jobs, is the first major UK automotive decision since the Brexit vote in June.

Pressed on whether written assurances on compensation for any future EU tariffs had been given, Business Secretary Greg Clark told BBC Radio Four's World At One: "We have had, obviously, as you might imagine, lots of communication between us, but actually, what it rests on is a very strong mutual confidence.

"There is no question of financial compensation over tariffs because we have said that they, what is necessary, is that we are going to maintain the competitiveness of the sector, and we are going to get the best deal possible. We think that the mutual interest between our European neighbours and ourselves is very strong in this way."

Colin Lawther, Nissan's senior vice president for manufacturing in Europe, denied there was a special deal for the company.

"No, there is no offer of exchange. It's just the commitment from the Government to work with the whole of the automotive industry to make sure that the whole automotive industry in the UK remains competitive," he told the programme.

Asked if Nissan had received written assurances from the Government on what would happen if tariffs were imposed in the future, he said: "There's nothing, there's no special deal for Nissan. We are working within the whole of the automotive industry. We would expect nothing for us that the rest of the industry wouldn't be able to have access to."

Mr Lawther said Brexit had created a host of uncertainties for the firm.

"Now, clearly there is this massive basket of unknowns from triggering Article 50 to the end of the process, and it is a massive amount of potential outcomes, so it is not really productive for us to speculate on what could happen. We just trust that the Government will work through diligently to make sure, that as a whole industry, we end up competitive."

As Labour shadow chancellor John McDonnell warned about the damage that could be done by "secret deals behind closed doors", party leader Jeremy Corbyn insisted the Government must make any arrangements with Nissan known.

"It must be made public, because it is public money that will be used if there are any inducements that have been offered and quite obviously, if you are offering big inducements to one industry or one manufacturer, then all the others will quite reasonably say, 'Well, what about us?'"

Mr McDonnell said the lack of clarity about what level of support the Government had offered Nissan was a concern, and attacked ministers' approach to industry.

"It's utterly chaotic at the moment. We have got a situation where we get leaks and rumours. Are they now going to decide, literally, factory by factory the support they are going to give?"

Building the X-Trail in Sunderland is an unexpected boost to the factory.

Nissan boss Carlos Ghosn went to Downing Street earlier this month for crunch talks with Prime Minister Theresa May.

He said on Thursday that the manufacturer could make the production decision due to "support and assurances" from the Government.

Mr Ghosn welcomed Mrs May's "commitment to the automotive industry" and to the "development of an overall industrial strategy".

Liberal Democrat leader Tim Farron welcomed the news but said it was "utterly ridiculous" that Mrs May was having to give "special assurances" to key manufacturers to deal with the "Brexit fallout her Government is creating".

Keeping Nissan in the UK was regarded as vital to Mrs May's hopes for a successful Brexit.

She described the announcement as "fantastic news for the UK" and said "families across the North East will be delighted".

The Sunderland plant, which has been active since 1986, employs almost 7,000 people, producing around 2,000 cars a day.

Nissan is part-owned by French manufacturer Renault, which had led to concerns that production could be moved to France to avoid any tariffs which might be introduced on exports to the EU if the UK leaves the single market in a so-called "hard Brexit".

The Juke, Leaf and Infiniti models will continue to be made by Nissan in Sunderland.

It emerged earlier this year that the car-maker was ending production of its Note hatchback in the North East.

Officials said the move would have no impact on jobs.

Chi Onwurah, shadow minister for industrial strategy, said: "We welcome the 7,000 jobs secured by this deal through the hard work and campaigning of many unions, businesses and organisations. But the fact it reached this point shows the chaos the Government is in, waiting for individual businesses across the country to hit crisis point before stepping in to help, rather than supporting business as a whole. The whole country is harmed by this incoherent approach.

"The Government has no strategy for Brexit or for industry and we are all suffering as a result."

Downing Street insisted there was no "special deal" either for Nissan or the wider automotive industry in the UK.

There is no compensation package," a No 10 spokesman said. "What was made clear to Nissan and to others in the automotive industry is that what we want is a competitive environment for the whole of the industry."

SNP international trade spokeswoman Tasmina Ahmed-Sheikh MP said: "The UK Government have promised post-Brexit deals for Northern Ireland, the City of London and now exports from the North East of England.

"If it's right that special treatment is merited in their respect, why can Theresa May not keep her promises and even consider a bespoke deal that keeps Scotland in the single market when this is supported by voters in Scotland, the Scottish Government and the Scottish Parliament?"

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