Downing Street denies offering Nissan 'sweetheart deal' to overcome Brexit fears and expand Sunderland production

Ministers under pressure to reveal 'support and assurances' Government offered car manfacturer

Nissan's manufacturing plant in Sunderland (Getty)

Downing Street has denied offering Nissan a “sweetheart deal” to boost production at its Sunderland car plant, despite its concerns over the effect of Brexit.

The Japanese giant's decision to build its next-generation Qashqai and add production of the new X-Trail model at the site has eased concerns about the future of the factory after the UK quits the EU.

It followed a meeting between Nissan's chairman, Carlos Ghosn, and Theresa May earlier this month.

Announcing the company's decision to expand production in the North East on Thursday, sustaining 7,000 jobs, he said the move was enabled by “support and assurances” from the Government.

"I welcome British Prime Minister’s commitment to the automotive industry in Britain and to the development of an overall industrial strategy," he added.

It is the first major UK automotive decision since the Brexit vote in June, prompting warnings from Labour over the possibly consequences of any "secret deals" done with individual companies.

Pressed on whether written assurances on compensation for any future EU tariffs had been given, Business Secretary Greg Clark told BBC Radio Four's World At One: “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.

“There is no question of financial compensation over tariffs because we have said that they, what is necessary, is that we are going to maintain the competitiveness of the sector, and we are going to get the best deal possible. We think that the mutual interest between our European neighbours and ourselves is very strong in this way.”

Colin Lawther, Nissan's senior vice president for manufacturing in Europe, denied there was a special deal for the company.

“No, there is no offer of exchange. It's just the commitment from the Government to work with the whole of the automotive industry to make sure that the whole automotive industry in the UK remains competitive,” he told the programme.

Asked if Nissan had received written assurances from the Government on what would happen if tariffs were imposed in the future, he said: “There's nothing, there's no special deal for Nissan. We are working within the whole of the automotive industry. We would expect nothing for us that the rest of the industry wouldn't be able to have access to.”

Mr Lawther said Brexit had created a host of uncertainties for the firm.

“Now, clearly there is this massive basket of unknowns from triggering Article 50 to the end of the process, and it is a massive amount of potential outcomes, so it is not really productive for us to speculate on what could happen. We just trust that the Government will work through diligently to make sure, that as a whole industry, we end up competitive.”

As Labour's shadow Chancellor, John McDonnell, warned about the damage that could be done by “secret deals behind closed doors”, party leader Jeremy Corbyn insisted the Government must make any arrangements with Nissan known.

“It must be made public, because it is public money that will be used if there are any inducements that have been offered and quite obviously, if you are offering big inducements to one industry or one manufacturer, then all the others will quite reasonably say, 'Well, what about us?”'

Mr McDonnell said the lack of clarity about what level of support the Government had offered Nissan was a concern, and attacked ministers' approach to industry.

The Nissan Leaf is also manufactured in Sunderland (Nissan)

“It's utterly chaotic at the moment. We have got a situation where we get leaks and rumours. Are they now going to decide, literally, factory by factory the support they are going to give?”

Building the X-Trail in Sunderland is an unexpected boost to the factory, while the Juke, Leaf and Infiniti models will continue to be made by Nissan in Sunderland.

It emerged earlier this year that the car-maker was ending production of its Note hatchback in the North East. Officials said the move would have no impact on jobs.

Chi Onwurah, shadow minister for industrial strategy, said: “We welcome the 7,000 jobs secured by this deal through the hard work and campaigning of many unions, businesses and organisations. But the fact it reached this point shows the chaos the Government is in, waiting for individual businesses across the country to hit crisis point before stepping in to help, rather than supporting business as a whole. The whole country is harmed by this incoherent approach.

"The Government has no strategy for Brexit or for industry and we are all suffering as a result."

Downing Street insisted there was no "special deal" either for Nissan or the wider automotive industry in the UK.

"There is no compensation package,” a No 10 spokesman said. “What was made clear to Nissan and to others in the automotive industry is that what we want is a competitive environment for the whole of the industry.”

Press Association