Nissan Brexit deal puts Clark under fire
Leaked letter contradicts Business Secretary’s assertions over financial help for car manufacturer
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