Hundreds of jobs are axed by Ford, and we're letting them get away with it

Our current industrial strategy is allowing the company to undermine public trust.

Over 1,400 families are still in shock. Ford’s decision to close plants in Southampton and Dagenham left workers blindsided after almost a century of UK production. At a time of recession, there is a deep concern for the economic wellbeing and material welfare of these workers, as well as many more subcontractors and suppliers. These quality jobs will no longer be available for young Brits. Another nail in the coffin for British manufacturing. The makers are marching straight out of the country.

We are told that it’s inevitable. Of course Ford is now focusing its operations in Turkey. In a brave new world of global competition, this is how we operate. Automobile companies are as cold and sharp as the steel they manufacture; ready to cut and shift production at a moment’s notice. Sympathy is unaffordable. Responsibility and relationship to people and place is naïve. If we want to win the economic war, workers may be collateral damage. The bottom line dictates the show.

But this narrative has masked the deeper failings of Ford and of government. In a meeting earlier this week in Westminster, a little-attended parliamentary debate revealed what is really happening. MPs of all sides dismissed Ford’s behaviour as “shoddy” and “grubby”. The failings of the government’s industrial strategy began to be exposed, and the consequences for the British taxpayer revealed. Three key questions strike to the heart of the problem.

First, why were ministers kept in the dark about Ford’s decision? The business secretary Vince Cable is on record saying he knew nothing about the company's decision to close the plant until just a few days before it was announced. Despite the fact that ministers had 12 meetings with Ford since taking office, Michael Fallon MP said there was “no opportunity to discuss (closures) as we would have liked.”

MPs at a local level went further, claiming they were actively misled by Ford. Alan Whitehead, MP for Southampton Test, said he had received “cast iron” guarantees that local production would continue. Jon Cruddas, MP for Dagenham, said workers were “blindsided” by the decision. Chris Huhne, MP for Eastleigh, called for the minutes of all meetings with Ford to be published from 2008, questioning whether the company gave false impressions of growth to benefit from cheap government loans. John Denham, MP for Southampton Itchen, said that the last communication he had with John Fleming - now head of global manufacturing at Ford - was an email saying that they were planning to increase operations in Southampton.

“Reputations are hard won and easily lost,” says Denham, “I’m sorry to say it will be a long time before MPs will be able to sit down with Ford representatives at the other side of the table and believe they will keep their word.”

Ford insisted they didn’t make their final decision until 19 October – less than a week before ministers were informed - but that doesn’t explain previous assurances.

Second question. Why are British taxpayers supporting Ford’s new line of vehicles outside of the UK? This summer, the European Investment Bank (EIB) gave Ford a cheap £80m loan to develop a new line of transit vans, previously assembled in the UK, in Kocaeli. We part fund the EIB, and our chancellor George Osborne sits on its board. Conservatives themselves were raising concerns about this, including the MP for Romsey and Southampton North, Caroline Nokes:

“Ford globally made $2.2bn profit last year. Why does it need cheap loans to subsidise it to export jobs from the UK to outside the EU?”

Of course Turkey has lower production costs, and its labour costs are one third of those here. But it’s one thing to say it’s cheaper to do business abroad, and quite another to expect British taxpayers to pay for it.

The problems don’t end there. Just a few days before Ford’s announcement, the British people gave some £10m to the company to help it develop a new series of diesel engines here in the UK. This money was awarded by the Regional Growth Fund (RGF), which is chaired by none other than Michael Heseltine – the man recently charged for producing a report for the government on growth. So why didn’t we make this grant contingent on Ford maintaining the rest of its operations here in the UK?

“There is no sense of engagement across the board” says Denham, who called on both the EIB and the RGF to be subject to review. Another MP added, “Ministers have shown themselves to be incapable… you can’t rebalance growth by tossing a few grants here and there.”

And a final bonus question. Given the pain, why aren’t workers going out on strike? Employees are desperately unhappy, but union members say many don’t speak out because they have been given generous pay offs, which include an extra £20,000 “bonus” for not going on strike. When it comes to a definite chance of a pay off verses a small chance of saving your job, most workers are understandably putting their families first. This is obviously less helpful for all those subcontractors on site, who aren’t receiving any redundancy package from Ford.

Ford are keen to emphasise that they are pursuing voluntary redundancies and relocating workers wherever possible. Workers in Dangenham can take some comfort that a new diesel engine is being developed there, but in general Ford say that they are suffering from over capacity.

Nobody disputes that Britain has to adapt to a changing world. But the way Ford is operating now is not good for business. The company has undermined public trust, and our current industrial strategy has let them get away with it. Ford could improve its brand by celebrating production here in Britain. European consumers would be more likely to buy from a company known for providing good jobs, worker representation and apprenticeships here in Europe. Initiatives like this wouldn’t just be good for business, it might also give those struggling workers and their families another chance.

Ford will be closing plants in Southampton and Dagenham next year. Photograph: Getty Images

Rowenna Davis is Labour PPC for Southampton Itchen and a councillor for Peckham

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Debunking Boris Johnson's claim that energy bills will be lower if we leave the EU

Why the Brexiteers' energy policy is less power to the people and more electric shock.

Boris Johnson and Michael Gove have promised that they will end VAT on domestic energy bills if the country votes to leave in the EU referendum. This would save Britain £2bn, or "over £60" per household, they claimed in The Sun this morning.

They are right that this is not something that could be done without leaving the Union. But is such a promise responsible? Might Brexit in fact cost us much more in increased energy bills than an end to VAT could ever hope to save? Quite probably.

Let’s do the maths...

In 2014, the latest year for which figures are available, the UK imported 46 per cent of our total energy supply. Over 20 other countries helped us keep our lights on, from Russian coal to Norwegian gas. And according to Energy Secretary Amber Rudd, this trend is only set to continue (regardless of the potential for domestic fracking), thanks to our declining reserves of North Sea gas and oil.


Click to enlarge.

The reliance on imports makes the UK highly vulnerable to fluctuations in the value of the pound: the lower its value, the more we have to pay for anything we import. This is a situation that could spell disaster in the case of a Brexit, with the Treasury estimating that a vote to leave could cause the pound to fall by 12 per cent.

So what does this mean for our energy bills? According to December’s figures from the Office of National Statistics, the average UK household spends £25.80 a week on gas, electricity and other fuels, which adds up to £35.7bn a year across the UK. And if roughly 45 per cent (£16.4bn) of that amount is based on imports, then a devaluation of the pound could cause their cost to rise 12 per cent – to £18.4bn.

This would represent a 5.6 per cent increase in our total spending on domestic energy, bringing the annual cost up to £37.7bn, and resulting in a £75 a year rise per average household. That’s £11 more than the Brexiteers have promised removing VAT would reduce bills by. 

This is a rough estimate – and adjustments would have to be made to account for the varying exchange rates of the countries we trade with, as well as the proportion of the energy imports that are allocated to domestic use – but it makes a start at holding Johnson and Gove’s latest figures to account.

Here are five other ways in which leaving the EU could risk soaring energy prices:

We would have less control over EU energy policy

A new report from Chatham House argues that the deeply integrated nature of the UK’s energy system means that we couldn’t simply switch-off the  relationship with the EU. “It would be neither possible nor desirable to ‘unplug’ the UK from Europe’s energy networks,” they argue. “A degree of continued adherence to EU market, environmental and governance rules would be inevitable.”

Exclusion from Europe’s Internal Energy Market could have a long-term negative impact

Secretary of State for Energy and Climate Change Amber Rudd said that a Brexit was likely to produce an “electric shock” for UK energy customers – with costs spiralling upwards “by at least half a billion pounds a year”. This claim was based on Vivid Economic’s report for the National Grid, which warned that if Britain was excluded from the IEM, the potential impact “could be up to £500m per year by the early 2020s”.

Brexit could make our energy supply less secure

Rudd has also stressed  the risks to energy security that a vote to Leave could entail. In a speech made last Thursday, she pointed her finger particularly in the direction of Vladamir Putin and his ability to bloc gas supplies to the UK: “As a bloc of 500 million people we have the power to force Putin’s hand. We can coordinate our response to a crisis.”

It could also choke investment into British energy infrastructure

£45bn was invested in Britain’s energy system from elsewhere in the EU in 2014. But the German industrial conglomerate Siemens, who makes hundreds of the turbines used the UK’s offshore windfarms, has warned that Brexit “could make the UK a less attractive place to do business”.

Petrol costs would also rise

The AA has warned that leaving the EU could cause petrol prices to rise by as much 19p a litre. That’s an extra £10 every time you fill up the family car. More cautious estimates, such as that from the RAC, still see pump prices rising by £2 per tank.

The EU is an invaluable ally in the fight against Climate Change

At a speech at a solar farm in Lincolnshire last Friday, Jeremy Corbyn argued that the need for co-orinated energy policy is now greater than ever “Climate change is one of the greatest fights of our generation and, at a time when the Government has scrapped funding for green projects, it is vital that we remain in the EU so we can keep accessing valuable funding streams to protect our environment.”

Corbyn’s statement builds upon those made by Green Party MEP, Keith Taylor, whose consultations with research groups have stressed the importance of maintaining the EU’s energy efficiency directive: “Outside the EU, the government’s zeal for deregulation will put a kibosh on the progress made on energy efficiency in Britain.”

India Bourke is the New Statesman's editorial assistant.