Business minister boasted Britishvolt was Brexit success story months before collapse

Ministers were using the electric car battery maker Britishvolt as a prime example of the government’s record for “securing business investment in the UK” just months before the scheme collapsed without any public investment.

The company, once heralded as Britain’s potential champion for battery making, fell into administration last week after the failure of last-ditch talks to find emergency funding to keep it afloat. Its demise has been criticised as showing the government’s lack of industrial strategy, the shortcomings of “levelling up” and Britain’s failure to grasp new manufacturing opportunities in the wake of Brexit.

However, it has emerged that just last summer, ministers were still using Britishvolt as an example of the government’s ability to attract investment to the UK. In response to a request from a Tory MP for details of the government’s progress in securing investment, the then-business minister, Jane Hunt, claimed the government “has provided further support to attract significant investment in manufacturing, including delivering Britishvolt’s £1.7bn gigafactory in Blyth Valley, which will support 3,000 direct jobs and a further 5,000 across the supply chain.”

Senior Britishvolt executives are now to be quizzed as part of a parliamentary inquiry into the electric car battery industry. It had been trying to build a large facility near Blyth in Northumberland and had been promised government funds worth £100m, but the grant was dependent on finding private investors for the project.

Government officials met with the company on several occasions, but both the business department and the Treasury concluded its financial and managerial performance meant providing emergency support would not be a good use of public money. There have since been claims of mismanagement and profligate spending by the company, which senior figures have denied.

It is an embarrassment for the government, in a week in which it was attempting to show its commitment to supporting neglected areas with its levelling up funding. The Britishvolt collapse means there is now only one large-scale gigafactory planned in the UK, which will be Chinese-owned.

Some Tories are hoping that a new buyer can still be found for the company, but the majority of its 300 staff were immediately made redundant after it collapsed into administration last Tuesday. It follows BMW’s decision in October to stop building the electric version of the Mini in the UK. Its Oxford plant will then only be making petrol models for the foreseeable future.

Jonathan Reynolds, the shadow business secretary, said Britishvolt had once been the government’s “answer to levelling up” poorer communities outside London, but had now become a symptom of a wider problem. “This government doesn’t have an industrial strategy, a plan to boost jobs in the industries of the future, or secure the investment Britain needs to grow.

“Britain has to have battery factories if we are to continue making cars in this country. Labour has an industrial strategy, including a commitment to part-invest in eight gigafactories alongside industry. If we want to see investment in Britain we need a government willing to be the partner business needs.”

A Department for Business, Energy & Industrial Strategy spokesperson said the department had offered “significant support to Britishvolt through the Automotive Transformation Fund (ATF) on the condition that key milestones – including private-sector investment commitments – were met”.

“We remained hopeful that Britishvolt would find a suitable investor and are disappointed to hear that this has not been possible, and therefore no ATF grant has been paid out. Our thoughts are with the company’s employees and their families at this time, and we stand ready to support those affected.

“The UK is one of the best locations in the world for automotive manufacturing, and we want to ensure the best outcome for the site. We will work closely with the local authority and potential investors to achieve this, as part of our commitment to boost homegrown electric car battery production, level up and advance towards a greener future.”