Nis­san Brexit deal puts Clark un­der fire

Leaked let­ter con­tra­dicts Busi­ness Sec­re­tary’s as­ser­tions over fi­nan­cial help for car man­u­fac­turer

The Daily Telegraph - - Front Page - By Steven Swin­ford, Christo­pher Hope and Camilla Tominey

GREG CLARK, the Busi­ness Sec­re­tary, was last night fac­ing crit­i­cism af­ter it emerged that he of­fered Nis­san an £80 mil­lion Brexit sweet­ener de­spite pre­vi­ously in­sist­ing there had been “no cheque­book” in­volved in the deal.

De­tails of the of­fer emerged in a pre­vi­ously un­seen let­ter from Oc­to­ber 2016 in which Mr Clark said Nis­san would re­ceive money as long as it built two new mod­els at its Sun­der­land plant.

How­ever, the let­ter was leaked yes­ter­day af­ter Nis­san re­vealed that it was break­ing its pledge to build the X-trail SUV in the UK and switching pro­duc­tion to Ja­pan.

Mr Clark in­sisted the an­nounce­ment was a “warn­ing sign” from in­dus­try about the risk of a no-deal Brexit, ad­ding in the Com­mons that leav­ing without an agree­ment would be “ru­inous”.

Nicky Mor­gan, the chair­man of the Trea­sury se­lect com­mit­tee, said de­tails of the fund­ing for Nis­san should have been in the pub­lic do­main “im­me­di­ately”. Mr Clark’s com­ments prompted a Cab­i­net back­lash, with one min­is­ter ac­cus­ing him of “try­ing to use this as a po­lit­i­cal foot­ball in the Brexit de­bate”.

He was also con­tra­dicted by Chris Grayling, the Trans­port Sec­re­tary, who said the de­ci­sion was “much more to do with the diesel car mar­ket than Brexit”.

The of­fer of £80mil­lion was sub­se­quently re­duced to £61mil­lion af­ter a re­view by an in­de­pen­dent ad­vi­sory com­mit­tee. Min­is­ters are now re­view­ing the of­fer of sup­port. A source sug­gested Nis­san was still likely to re­ceive the bulk of the fi­nan­cial sup­port be- cause it was build­ing a new ver­sion of its Qashqai car in Sun­der­land. Mr Clark’s depart­ment de­clined to say why it had been cut, but of­fers of sup­port can be re­duced if not con­sid­ered good value or breach state aid rules.

Nis­san’s an­nounce­ment trig­gered a chaotic day at the depart­ment.

Richard Har­ring­ton, a busi­ness min­is­ter, ini­tially claimed that Nis­san would still get the £61mil­lion of sup­port be­cause it was “noth­ing to do with the X-trail”. How­ever, the Gov­ern­ment sub­se­quently clar­i­fied that fund­ing was un­der re­view af­ter Mr Clark’s let­ter was leaked to the Fi­nan­cial Times.

In the let­ter to Car­los Ghosn, then head of Nis­san, Mr Clark said the of­fer of £80mil­lion was “con­tin­gent” on the pro­duc­tion of both the Qashqai and Xtrail in Sun­der­land. He said it was “crit­i­cal” to en­sure UK man­u­fac­tur­ers were not “ad­versely af­fected” by the UK’S fu­ture re­la­tion­ship with the EU.

Sir Bill Cash, a Euroscep­tic Tory MP and chair­man of the Euro­pean scru­tiny com­mit­tee, in­sisted EU laws to pro­tect the en­vi­ron­ment were to blame.

He said: “Rather than Brexit, a fun­da­men­tal rea­son for the de­cline in de­mand for diesel cars … is the im­po­si­tion of EU reg­u­la­tions, which will con­tinue in UK law un­der the With­drawal Act 2018, to re­duce emis­sions and diesel par­tic­u­lates which are harm­ful to health, so what on earth are the an­tibrex­i­teers com­plain­ing about?”

Steve Bush, a Unite of­fi­cial, said a “great deal of anx­i­ety” had been caused to the Nis­san work­force. “What this whole sorry saga shows is the sec­tor­wide un­cer­tainty caused by Brexit ur­gently needs to be ad­dressed.”

Mr Clark’s depart­ment said that the fund­ing of­fered to Nis­san had been made avail­able to other car firms. At the time of the an­nounce­ment Mr Clark said since 2010 the Gov­ern­ment had in­vested £400mil­lion “in this way”.

JUST months af­ter Bri­tain voted to leave the Euro­pean Union in 2016, Greg Clark was fac­ing one of his big­gest chal­lenges as Busi­ness Sec­re­tary.

Ja­panese car maker Nis­san’s com­mit­ment to the UK had been in doubt fol­low­ing the ref­er­en­dum. But on Oct 26, 2016, there was a break­through. Nis­san con­firmed it would build both the new Qashqai and X-trail SUV in Sun­der­land af­ter all.

He hailed the an­nounce­ment as fan­tas­tic news for its 7,000 work­ers and nearly 30,000 oth­ers who sup­ply the fac­tory. And pub­lic money had not been used to swing the deal.

The pos­si­bil­ity of Nis­san halt­ing its in­vest­ment had been enough to give min­is­ters sleep­less nights. One lo­cal fig­ure said the prospect “had the po­ten­tial to put the city back in the stone age”, ad­ding that “you would be count­ing more tum­ble­weed than jobs”.

The X-trail would have led to hun­dreds of new jobs and would have been the first time the model had been made out­side Ja­pan. The terms of agree­ment be­tween Mr Clark and the car com­pany re­mained se­cret – prompt­ing sus­pi­cion that the Gov­ern­ment had of­fered cash to Nis­san to se­cure the com­mit­ment.

When pressed on this Mr Clark was clear. No Gov­ern­ment cash had been of­fered up front. Six times he de­clined to say on BBC Ra­dio 4’s World At One what sup­port had been of­fered to Nis­san, say­ing “there is no ques­tion of fi­nan­cial com­pen­sa­tion”. The fol­low­ing evening, on Oct 27, he told mil­lions of peo­ple watch­ing Ques­tion Time that there had been no of­fer of fi­nan­cial com­pen­sa­tion or state aid.

He said: “There’s no cheque­book. I don’t have a cheque­book. The im­por­tant thing is they know this is a coun­try in which they can have con­fi­dence they can in­vest. That was the as­sur­ance and the un­der­stand­ing they had and they have in­vested their money.”

Colin Lawther, a se­nior Nis­san Europe ex­ec­u­tive, said the com­pany re­ceived “no spe­cial deal” but specif­i­cally did not rule out any fi­nan­cial pack­age.

He said: “It’s just a com­mit­ment from the Gov­ern­ment to work with the whole of the au­to­mo­tive in­dus­try… We see this as a whole in­dus­try thing, not a Nis­san thing.”

Jeremy Cor­byn, the Labour leader, started to smell a rat, urg­ing the Gov­ern­ment to dis­close any deals struck with the firm. “We can’t have se­cret deals on Brexit, com­pany by com­pany,” he told a con­fer­ence on Nov 5.

“All our busi­nesses need the kind of as­sur­ances Nis­san has had about the Gov­ern­ment’s Brexit plans, to make the right in­vest­ment de­ci­sions.”

Over the fol­low­ing months car unions started to ag­i­tate about cash sup­port for other plants. In Fe­bru­ary 2017, Unite leader Len Mc­cluskey met Mr Clark to talk about Vaux­hall’s plant at Ellesmere Port and emerged to say it must get the same sup­port as Nis­san.

It was not un­til late last week that Mr Clark first got wind that Nis­san was con­sid­er­ing drop­ping its com­mit­ment to build the X-trail in Sun­der­land. He spent much of Satur­day urg­ing the car com­pany’s ex­ec­u­tives to re­think.

Events soon spi­ralled out of con­trol. Sky News broke the story that Nis­san was about to drop its plans to make the X-trail in Sun­der­land. Nis­san for­mally con­firmed this on Sun­day, blam­ing a com­bi­na­tion of a clam­p­down on diesel ve­hi­cles, fall­ing sales and un­cer­tainty caused by the Brexit talks.

It was not long be­fore de­tails started to leak. Yes­ter­day’s pa­pers claimed Nis­san se­cured £61mil­lion as part of the agree­ment with Mr Clark in 2016. Mr Clark told the Fi­nan­cial Times Nis­san’s de­ci­sion was a “warn­ing sign” of the dam­age on the car in­dus­try from a nodeal Brexit. There was fur­ther con­fu­sion when Richard Har­ring­ton, a ju­nior min­is­ter in Mr Clark’s depart­ment, said Nis­san would get the money af­ter all: “The £60mil­lion still stands. It’s to do with re­search and de­vel­op­ment and de­vel­op­ing al­ter­na­tive tech­nolo­gies and mak­ing sure Nis­san is at the fore­front of that. This was noth­ing to do with the X-trail.”

But it cer­tainly was linked to the new model – as be­came abun­dantly clear yes­ter­day lunchtime when the Fi­nan­cial Times pub­lished ex­cerpts un­der the head­line “UK let­ter vowed to pro­tect Nis­san from Brexit fall­out”.

With the com­mer­cial con­fi­den­tial­ity of the deal no longer ap­ply­ing, Mr Clark had no choice but to au­tho­rise the pub­li­ca­tion of a let­ter dated Oct 21, 2016, to Car­los Ghosn, Nis­san’s then chief ex­ec­u­tive, re­veal­ing that the £60 mil­lion could have in­creased – to £80mil­lion.

In the let­ter Mr Clark had told Mr Ghosn: “As a demon­stra­tion of the UK Gov­ern­ment’s com­mit­ment, we are al­ready work­ing with your UK team on a pack­age of sup­port. Work con­tin­ues but I un­der­stand this could amount to ad­di­tional sup­port of up to £80 mil­lion.

He added: “It is con­tin­gent on a pos­i­tive de­ci­sion by the Nis­san board to al­lo­cate pro­duc­tion of the Qashqai and X-trail mod­els to the Sun­der­land plant. We recog­nise that the UK has a stake, and we are back­ing your con­tin­ued suc­cess in Sun­der­land to the hilt.”

In the Com­mons, Mr Clark ad­mit­ted Nis­san would have to reap­ply for fund­ing fol­low­ing “the new in­for­ma­tion”.

The blow to Mr Clark’s cred­i­bil­ity might take longer to sal­vage.

‘I out am the writ­ing ways in to which you to the set UK Gov­ern­ment would like to work with you to con­tinue this part­ner­ship long into the fu­ture’ Greg Clark, Oct 21 2016

“The sup­port and as­sur­ances of the UK gov­ern­ment en­abled us to de­cide that the next gen­er­a­tion Qashqai and X-trail will be pro­duced at Sun­der­land” Car­los Ghosn, 27 Oct 2016

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