Labour has accused the Government of not being serious about the UK automotive sector after failing to deliver promised funding for battery firm Britishvolt.
Shadow Business Secretary Jonathan Reynolds was invited to the battery start-up's Northumberland site where it hopes to build a 3,000-job factory producing hundreds of thousands of British-designed lithium-ion batteries a year from 2024. But the firm has been hampered by a lack of investment it needs to get the £3.8bn facility operational, the latest blow being a Government refusal to allow £30m of a £100m grant promised to the firm first announced in January.
Mr Reynolds told Business Live: "The reason we've had the stories this week is because, quite frankly, after the mini-Budget, there's been substantial damage done to household finances, to interest rates but also to business investment and also to the investability of the UK. The political instability has a real world effect in terms of people's view of the country and the economic stability that they need to invest.
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"Now, this has to be recognised by the Government and it doesn't require any additional resources, because this company has already been through a six-month due diligence process and has been awarded £100m from the Automotive Transformation Fund. They need to have the humility to recognise that it's the Conservative Party's actions that have caused this problem.
"I understand that they're asking for £30m of the £100m they've already been allocated and they have private investors who will match that, they will underwrite that £30m from the taxpayer so there's no risk here. To me, this is such a compelling position it comes back to the fact that I don't think the Government is serious about the automotive sector and battery capacity and this country stands to lose out unless they get on the pitch."
Mr Reynolds said that no gigafactories had been built anywhere in the world without state support, and added: "There's huge interest. I've spoken to existing investors in Britishvolt and the prospects they see.
"Anything about the fact this is a start-up should have been addressed in the six months of due diligence the Government has already done and the fact they have then awarded money. This cannot be separated from the fact it is the Government themselves who've made life harder for all businesses in this country. And if we're serious about not falling further behind our competitors - and let's be frank 2024 is not that far off in business cycles - this has real national importance."
His comments were echoed by Wansbeck MP Ian Lavery, whose constituency covers the Britishvolt site. Mr Lavery said it looked as though the Government had abandoned any support for the firm. He added the project was a "golden opportunity" for levelling up and would pay huge dividends, not only locally but in the UK's pursuit of green industry.
Reported to have been on the verge of administration, Britishvolt this week secured a short-term investment from an undisclosed backer - indicated to be an existing investor - that it said would see it through the "coming weeks" while negotiations with other potential investors were ongoing. In the meantime, some of Britishvolt's 300 staff have agreed to a voluntary pay cut and its executive team has agreed a total pay cut for November.
The firm's chairman Peter Rolton said he hoped some of those conversations would result in positive news within three weeks. He said: "We had conversations very well progressed with a number of funds. What we found was post-Christmas there has been a huge worsening in the economic market. The amount of available capital coming to the UK for equity investments has literally tailed off to less than 10% of what was available last year."
He added: "You've had a semi-global crash and then of course huge disruption in the UK, politically and financially, with the fiscal event or whatever they want to call it. It's certainly made international funds very, very nervous about the UK as an investible proposition. Not Britishvolt - we've numerously and continuously passed due diligence as an organisation around our product, our people and our business plan.
"But the big challenge has been getting people to go: 'We want to invest in a company that is in the UK' - it's the UK platform that's the challenge for us. That said, we are starting to see that turn around now in the last few weeks. We've had a lot of discussions started that were previously, frankly, stalled - where they said 'we're out, we love you dearly but not at the moment' - they're now coming back to the table. I'm confident we'll get somewhere with it now."
Despite the funding rebuff from the Department for Business, Energy and Industrial Strategy, Mr Rolton said there had been no "falling out" and that Britishvolt "may yet persaude them". Having met previous Business Secretary Jacob Rees-Mogg for a matter of minutes, Mr Rolton said he was yet to speak to new Business Secretary Grant Shapps but wanted the opportunity to convince him of Britishvolt's potential.
A spokesman for the Department for Business, Energy and Industrial Strategy (BEIS) said: “We are determined to ensure the UK remains one of the best locations in the world for automotive manufacturing as we transition to electric vehicles, while ensuring taxpayer money is used responsibly and provides best-value. We do not comment on speculation or the commercial affairs of private companies.”
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