Monday 5 July 2021 6:30 am

Nissan's £1bn gambit in Sunderland is worth every penny of subsidies for Boris Johnson

Eliot Wilson is co-founder of Pivot Point and a former House of Commons official.

The campaign for the Brexit referendum seems a long time ago. By the calendar, it was only five years ago, and yet we remember it like another world: David Cameron was prime minister, Barack Obama was in the White House, François Hollande was sneaking out of the Elysée palace on the pillion of a scooter and the blowhard property magnate-cum-reality TV star Donald Trump was gathering worrying momentum in the presidential stakes.

Like any fight, much was said in the heat of the moment which combatants on both sides would now prefer we did not remember. Anyone looking at the Covid-battered NHS could think up some useful ways to spend that £350 million a week we were promised. Equally, the electorate took the dreaded “leap in the dark” that could herald in doom and gloom prophesied by Project Fear and we still stand here mostly unscathed. 

The central claim was that inward investment in the UK would dry up. On car manufacturing in the North East, the Remain aristocracy was clear: “Nissan will leave”. Now, the Japanese giant has announced plans for a £1bn electric vehicle hub at the Sunderland plant. It will create 6,000 jobs and cement Nissan’s position in the manufacturing landscape. Boris Johnson, inevitably, is parading this as a vote of confidence in Global Britain.

It does seem to be very good news. With the internal combustion engine very much on the wane, and the government committed to ending the sale of new petrol- and diesel-powered cars by 2030, electric power is the future, and the development will include a 9GWh-capacity electric battery “gigafactory” built by Envision, a battery recycling facility, and production of a new all-electric car model for Nissan. All in all, it is a major step into the automotive future.

Of course the deal is not without its critics. The government is alleged to be contributing £100 million to the mix, with £423 million from Nissan and £450 million from Envision. Remainers, keen to prove they were never wrong, have seized on this to rubbish the announcement; “bribe” was a word thrown around a lot over the weekend. 

Nissan’s messaging was clear, however, with Ashwani Gupta, the company’s COO declaring it was “thanks to Brexit” that Nissan is “moving forward” to use Britain’s newfound freedom as an opportunity. That quote may well be worth £100 million alone to Boris Johnson. 

The continuation of the Japanese car-maker’s presence in the UK should not be viewed in isolation: a similar gigafactory is planned in Coventry which would generate 4,500 jobs and £2 billion of inward investment, while Britishvolt intends to build a facility in Blyth to create 3,000 jobs. It is easy, then, to see the Nissan announcement as a piece in an overall jigsaw of the UK getting a head-start in battery manufacture.

It is surely no coincidence that last week the Government published the Subsidy Control Bill, which provides for state support to business in a post-EU regulatory landscape. But let’s be clear on one thing: the European Union is hardly a subsidy-free zone or a bastion of the free market at work. In many ways it is an edifice built on state support to industry. 

The Common Agricultural Policy subsidises agriculture to the tune of €60 billion a year, arguably distorting the industry and development of the farming sector outside the EU. It represents more than a third of the EU’s budget. So criticism of the government’s support for Nissan cannot be based on the purity of competition within the European Union.

Free-marketeers (among whom I generally count myself) may find it uncomfortable, but the government is engaged in shaping the future of the UK economy. It has identified electric batteries as a growth area, and that competitiveness will be enhanced by sustainability in this field more than almost any other. There is a strategy, of a kind, to create a network of gigafactories to allow the UK to succeed in this field, and Nissan’s new investment in Sunderland is part of that strategy.

In the scheme of the enormous sums of money doled out my treasury, £100 million in support of a key industry is not a sizeable sum. It will be quickly and massively outweighed by the economic benefits of Nissan’s investment. In a complex and fragile global economy, still reeling from the pandemic, we’ve paid a modest premium, but the reward will be significant. Doomsters and gloomsters may have to hold their tongues for the moment, because the public, rightly, will see this as good news.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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