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Government letter to Nissan reveals Brexit promise to carmarkers Government letter to Nissan reveals Brexit promise to carmarkers
(35 minutes later)
The business secretary promised Nissan in 2016 that it would not be “adversely affected” by Brexit, in a confidential letter released after the carmaker abandoned plans to produce a new model in Sunderland. The business secretary promised Nissan in 2016 that it would not be “adversely affected” by Brexit in a confidential letter released after the carmaker abandoned plans to produce a new model in Sunderland.
Greg Clark told Nissan’s then chief executive, Carlos Ghosn, that the UK government would do “everything we can” to help, and promised a previously undisclosed package of financial support worth £61m contingent on manufacturing the X-Trail in the UK. Greg Clark told Nissan’s then chief executive, Carlos Ghosn, that the UK government would do “everything we can” to help and promised a previously undisclosed package of financial support worth £61m contingent on manufacturing the X-Trail in the UK.
“The government fully recognises the significance of the EU market to your presence in Sunderland,” Clark wrote in the four-page letter dated October 2016. “The government fully recognises the significance of the EU market to your presence in Sunderland,” Clark wrote in the four-page letter dated October 2016. “It will be a critical priority of our negotiation to support UK car manufacturers and ensure that their ability to export to and from the EU is not adversely affected by the UK’s future relationship with the EU.”
“It will be a critical priority of our negotiation to support UK car manufacturers and ensure that their ability to export to and from the EU is not adversely affected by the UK’s future relationship with the EU.”
Clark’s promise cannot be met because no Brexit deal has been struck with the European Union, and the government has not ruled out leaving without a deal on 29 March.Clark’s promise cannot be met because no Brexit deal has been struck with the European Union, and the government has not ruled out leaving without a deal on 29 March.
The letter, which the government had repeatedly refused to release, promised financial support for Nissan’s investments at the site. “I understand this could amount to additional support of up to £80m,” Clark wrote at the time.The letter, which the government had repeatedly refused to release, promised financial support for Nissan’s investments at the site. “I understand this could amount to additional support of up to £80m,” Clark wrote at the time.
In fact, the state aid package was ultimately worth £61m, Clark disclosed in a second letter sent on Monday to Rachel Reeves, the chair of the business select committee, setting out the position. In fact, the state aid package was ultimately worth £61m, Clark disclosed in a second letter sent on Monday to Rachel Reeves, who chairs the business select committee, setting out the position.
Nicky Morgan, the chair of the Treasury select committee, complained that MPs had not be told that Nissan had been offered financial support at the time. She asked why her predecessor, Andrew Tyrie, had not been told about the package when he had asked what assurances had been provided to Nissan in 2016. Nissan will have to reapply to the government for the financial support, which was offered on the basis that the carmaker would produce both its Qashqai and X-Trail models at its north-east England plant.
Morgan said: “If the government provided financial assistance to Nissan to persuade it to stay in Sunderland, it should set out what this support was, and why it did not disclose it to my predecessor.” Nicky Morgan, who chairs the Treasury select committee, complained that MPs had not be informed that Nissan had been offered financial support at the time. She asked why her predecessor, Andrew Tyrie, had not been told about the package when he had asked what assurances had been provided to Nissan in 2016.
At the time Clark declined to say what support had been offered to the company, refusing to answer a question about what was on offer six times when interviewed on the BBC. Morgan said: “If the government provided financial assistance to Nissan to persuade it to stay in Sunderland, it should set out what this support was and why it did not disclose it to my predecessor.”
“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,” he said at the time. At the time, Clark declined to say what support had been offered, refusing to answer a question about what was on offer six times when interviewed on the BBC. “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,” he said at the time.
Clark is understood to be unhappy with reports on Monday morning that the package could be scrapped, as he does not want to further antagonise Nissan, according to sources at the Department for Business.Clark is understood to be unhappy with reports on Monday morning that the package could be scrapped, as he does not want to further antagonise Nissan, according to sources at the Department for Business.
The letter did not make any specific assurances about the UK’s future Brexit policy, although it did seek to provide general comfort to Ghosn. It acknowledges his concern about the impact of changes in the terms of trade.The letter did not make any specific assurances about the UK’s future Brexit policy, although it did seek to provide general comfort to Ghosn. It acknowledges his concern about the impact of changes in the terms of trade.
“We will continue to do everything we can to make it as easy and rewarding as possible for Nissan to invest,” Clark wrote at the time. “We will continue to do everything we can to make it as easy and rewarding as possible for Nissan to invest,” Clark wrote at the time. “I understand, of course, your worries now about uncertainties as the UK prepares to leave the EU. In particular, your fear that potential future trade arrangements could affect the business case for your investments.”
“I understand, of course, your worries now about uncertainties as the UK prepares to leave the EU. In particular, your fear that potential future trade arrangements could affect the business case for your investments.”
Over the weekend, Nissan said it would no longer manufacture the new model X-Trail SUV in Sunderland, stopping a planned expansion. The company said “the continued uncertainty” over Brexit was one of the factors behind its decision.Over the weekend, Nissan said it would no longer manufacture the new model X-Trail SUV in Sunderland, stopping a planned expansion. The company said “the continued uncertainty” over Brexit was one of the factors behind its decision.
‘It isn't just Nissan, it’s all the jobs’: how the carmaker's U-turn hit Sunderland‘It isn't just Nissan, it’s all the jobs’: how the carmaker's U-turn hit Sunderland
The minister has repeatedly warned of the dangers of a no-deal Brexit, and wants the government to rule it out soon if parliament cannot agree on a deal with the European Union. Clark has repeatedly warned of the dangers of a no-deal Brexit and wants the government to rule it out soon if parliament cannot agree on a deal with the EU.
Nissan said it plans to consolidate all production of the X-Trail in its plant in Kyushu, Japan. Cars manufactured in that plant will benefit from the recently completed free trade agreement between the EU and Japan, which will mean all tariffs on cars are reduced to zero within seven years. Nissan said it planned to consolidate all production of the X-Trail in its plant in Kyushu, Japan. Cars manufactured there will benefit from the recently completed free trade agreement between the EU and Japan, which will mean all tariffs on cars are reduced to zero within seven years.
Nissan has also come under new leadership since Clark’s letter, after Ghosn was ousted following allegations brought by the company that he under-reported income worth billions of yen. Japanese businessman Hiroto Saikawa has taken over. Nissan has come under new leadership since Clark’s letter, after Ghosn was ousted following allegations brought by the company that he under-reported income worth billions of yen. Japanese businessman Hiroto Saikawa has taken over.
The decision comes amid turmoil in the broader European car industry caused by a slump in demand for diesel vehicles. The fuel is facing tighter regulations across the EU after an emissions-cheating scandal at Volkswagen prompted intense scrutiny on its environmental impact. The blow to Sunderland comesas turmoil grows in the broader European car industry caused by a slump in demand for diesel vehicles. The fuel is facing tighter regulations across the EU after an emissions-cheating scandal at Volkswagen prompted intense scrutiny on its environmental impact.
The share of diesel sales across Europe fell from as high as 55.7% in 2011 to only 44.4% in 2017, the lowest since 2003, according to the European Automobile Manufacturers Association.The share of diesel sales across Europe fell from as high as 55.7% in 2011 to only 44.4% in 2017, the lowest since 2003, according to the European Automobile Manufacturers Association.
Nissan said in a statement that the letter showed both the company’s and the government’s “continued desire to support investment in the UK and maintain Sunderland as one of Nissan’s manufacturing hubs in Europe. The letter is no longer commercially sensitive as it contains nothing that hasn’t been disclosed publicly before, and the projects referenced in the letter have now changed.” Nissan said in a statement that the letter showed the company’s and the government’s “continued desire to support investment in the UK and maintain Sunderland as one of Nissan’s manufacturing hubs in Europe. The letter is no longer commercially sensitive as it contains nothing that hasn’t been disclosed publicly before, and the projects referenced in the letter have now changed.”
Brexit
NissanNissan
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Automotive industryAutomotive industry
Greg ClarkGreg Clark
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European UnionEuropean Union
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