Where are all those Brexit benefits?

Project Fear has become Project Reality—just look at Britain’s car industry

May 20, 2023
Image: Sergio Azenha / Alamy Stock Photo
Car manufacturers are concerned about the future of their industry in Britain. Image: Sergio Azenha / Alamy Stock Photo

In the wake of the EU referendum, when the Vote Leave brigade was still trying to work out what Brexit actually meant, I visited the warehouse complex of Unipart, once one of the country’s biggest car part suppliers and now a leading logistics partner to automotive companies such as Jaguar Land Rover and Volkswagen. The firm employed more than 6,000 people in the UK and had a turnover of £900m, selling components to companies such as Volkswagen. Its warehouse site covered an area totalling a million square feet. 

The site in Cowley, just outside Oxford, had previously housed the factory for British Leyland, the firm that came to symbolise the failure of British manufacturing in the 1970s and from which Unipart emerged. John Neill, the Unipart executive chairman, said that he feared that Britain was risking economic catastrophe . “It’s desperate,” he warned. “The Brexiteers are playing roulette with my customers and my suppliers and my employees and our communities.”   

The car industry—which is highly international and more dependent than most sectors on so-called “just in time” supply chains—was always worried about the implications of leaving the EU. Now three of the big global motor manufacturers are insisting that the government must renegotiate the Brexit deal, which they say threatens the future of the British automotive industry. 

To make matters worse, it is the fate of the most important part of the future market—electric vehicles—that is at stake. Car companies are facing potential tariffs of 10 per cent on exports to the EU as a result of new rules on the sourcing of parts. Under current rules, 40 per cent of the value of an electric vehicle should originate in the UK or EU to qualify for tariff-free trade, but this is rising to 45 per cent from the beginning of next year. 

Stellantis, which owns Vauxhall, Peugeot, Citroën and Fiat, has warned that unless something changes it may be unable to keep its commitment to make electric vehicles in Britain. Ford has called the tariffs on exports to the EU a “pointless cost”. Jaguar Land Rover, the biggest UK automotive employer, also said the timing of new rules was unrealistic”. 

There is a very real chance that factories will close. Stellantis employs more than 5,000 people in this country, including 1,000 in Cheshire at its electric van factory, and 1,200 at its plant in Luton. Just two years ago, the firm said the future of these factories was secure. Now it describes the current trade rules as a “threat to our export business and sustainability of our UK manufacturing operations”. It says if the cost of making electric vehicles in the UK becomes “uncompetitive and unsustainable” then “operations will close".  

 It turns out that Project Fear is Project Reality. I can’t help thinking of Sarah Vine’s remark to her then husband Michael Gove on the morning after the Brexit referendum: “you were only supposed to blow the bloody doors off”. This reference to the The Italian Job now seems ironic given that the film’s Mini car chase is a reminder of the British motor industry.

The Brexit result was a vote for change. But nothing has changed for the better

The government is clearly worried. The car industry is totemic, a symbol of economic success as well as the creator of real employment and wealth. The growth of electric vehicles (as well as the associated battery technology) is a core component of any eco-friendly economic recovery that will create green jobs. 

Jeremy Hunt, the chancellor, has offered Jaguar Land Rover half a billion pounds in subsidies not to build a new electric battery “gigafactory” abroad. The package includes a cash grant, reduced energy costs and paying to upgrade the power network around the potential site in Somerset.  

But the prime minister’s response to the motor manufacturers’ concerns was staggeringly tin-eared: “I voted for Brexit, I believe in Brexit,” he told journalists while travelling to the G7 summit in Japan. He cited the supposed “Brexit benefits” of policies that he had introduced as chancellor.    

There aren’t many of those in evidence for the motor manufacturers or those working in car factories. In fact, the phrase “Brexit benefits” has become the punchline of a bad joke rather than the start of a glorious new dawn. At the same time, the Vote Leave promise to “take back control” rings ever hollower as the country is gripped by a cost-of-living crisis that leaves households feeling increasingly powerless. 

Brexit was never a rational economic decision; it was an emotional vote against the status quo. But now the financial consequences are ricocheting around the country.   

The anti-establishment outsiders are in power, and they have not delivered. The Brexiteers blame “the Blob” in the civil service, leftie lawyers, or a “woke” elite because they cannot accept responsibility for their own failures. It’s always someone else’s fault. The Eurosceptics accuse yet another Conservative leader of betrayal, but the truth is that their ideological certainties have simply run up against economic reality.

Public opinion has been shifting slowly but surely against the Leave vote for some time. If the referendum were held again tomorrow it would almost certainly deliver a Remain result. Regret is growing even if there is little appetite for another referendum. 

There are wider political consequences of the shifting mood. The recent local elections showed that the realignment brought about by Brexit is going into reverse. Labour’s vote was up the most in areas with the fewest graduates, while the Conservatives continue to do worst in the areas with most. 

The Brexit result was a vote for change. But nothing has changed for the better—particularly in the disadvantaged areas and “red wall” constituencies that switched from Labour to the Conservatives at the last election. In fact, life has got tougher for most voters, who see their bills rising, NHS waiting lists soaring, rivers overflowing with sewage and trains at a standstill. The warnings from the car industry will only reinforce the sense that the country is going in the wrong direction—and that it may be time for a change.