Friday 2 July 2021

Batley, Batteries and British Sugar

Thankfully, Labour held on to Batley & Spen yesterday, which must be regarded as an excellent result given, among other things, it means we won't have to put up with listening to George Galloway in parliament. Has there ever been a more egregious political carpet-bagger in our history?  What a disgrace he is. Who knows what the outcome would have been had he not stood. Perhaps he took more Tory votes than Labour ones among the 8,000 he won, we will never know.

Battery plant 

Good news about the battery plant at Nissan in Sunderland but it comes at a significant cost to the UK taxpayer - around £100 million according to the FT but the truth is we have no idea, it could be more. It is also providing a small fraction of the battery capacity needed. The UK market needs about 50-60GWh of battery production, but the Sunderland plant to be built by Nissan’s Chinese supplier Envision, is only 9GWh, in other words less than one sixth of what’s required.

In The New Statesman, David Bailey, professor of business economics at Birmingham Business School, says European factories will also have incentives “at the national level – there’s a lot more support from the likes of the German government and the Hungarian government. Hungary has a special economic zone where battery makers and car makers can invest in battery production and get lots of tax breaks. There’s a race on.”

Bailey adds that 20 battery plants are already being built or planned across the EU. Some are massive – the planned Tesla factory near Berlin is expected to produce around 50GWh alone per year, while Volkswagen is planning six so-called gigafactories with a total capacity of target of 240GWh.

As Bailey points out, car plants are all about volume and economies of scale.

It seems the government is also looking at more plants, with one in Coventry to serve Jaguar Land Rover and another in Blyth, Northumberland.  So, we will have a sprinkling of small plants while Europe has much bigger, lower cost sites and ready sooner.

To counter the government hype, Honda’s Swindon plant closed this month and the Nissan plant will create jobs but others are bound to be lost in the internal combustion engine assembly plant and its supply chains. However, without the investment in battery production the UK car business wouldn’t survive at all, so it was a no brainer anyway.

If you're interested here's a nice balanced explainer:


Rishi Sunak

The Chancellor has confirmed that talks with the EU about establishing equivalence for financial regulation between London and Brussels have stalled, and he seems to have given up on ever getting it.

Mairead McGuinesss, the European Commissioner for Financial Services, in response to Sunak's Mansion House speech, says the EU will not grant equivalence to the UK based on the regulatory situation governing the City of London today, but on what occurs in the future.

Ms McGuinness said: “I took note of the Chancellor’s statement.   I think in the long run we are expecting the UK to diverge [from EU financial services regulation] adding, "That’s been their mantra because of Brexit."

But Sunak left the door open for a possible deal in the future and said the UK did not plan to undercut the EU’s rules, but was pushing ahead “as a sovereign jurisdiction with our own priorities”.

The EU are waiting to hear how far we plan to diverge and we say not very far but can't or won't specify by precisely how much, if at all.

This captures the insanity of Brexit. We are keeping EU regulations or at least not planning to sweep them all away, and we'll be very close to equivalence but not quite enough to get a deal. In other words to get a tiny 'advantage' in being able to say we're 'sovereign' and not following EU rules, we lose easy access to the lucrative EU market and see thousands of jobs moving into the bloc - far more than are being created at Nissan.

France are expecting to have 3,000 more jobs in financial service by the end of the year and they are nor even the biggest beneficiaries. And French Finance Minister Bruno Le Maire said, "These 3000 jobs are only a starting point."

British Sugar

Finally, the FT are reporting that British Sugar have won the right to have the government's trade policy judicially reviewed.

The legal challenge is in response to a decision by Liz Truss last December to unilaterally allow 260,000 tonnes of “raw cane sugar” to be imported tariff-free for 12 months as part of the UK’s post-Brexit global tariff schedule.

BS refines sugar from sugar beet, and have argued that the decision amounts to a state subsidy for its main competitor, Tate & Lyle, because it is the only main refiner of cane sugar in the UK.

This is, I think, the downside to (a) having your own trade policy and (b) conducting negotiations without consulting stakeholders. 

British Sugar's main factories are in Cantley and Wissington in East Anglia where the Brexit vote was very high. If the judicial review fails, jobs in both plants will probably be lost in the long term.  Mad, eh?


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