NISSAN has given a double boost to workers at its Sunderland factory, opting to build its next-generation Qashqai and add production of the new X-Trail model at the site.
There had been concerns about the future of the car giant’s plant in the North East after the UK leaves the European Union.
The news, which will secure thousands of jobs, is the first major UK automotive decision since the Brexit vote in June.
Building the X-Trail in Sunderland is an unexpected boost to the factory.
Nissan boss Carlos Ghosn went to Downing Street earlier this month for crunch talks with Prime Minister Theresa May.
He said on Thursday that the manufacturer could make the production decision due to “support and assurances” from the Government.
Mr Ghosn welcomed Mrs May’s “commitment to the automotive industry” and to the “development of an overall industrial strategy”.
Liberal Democrat leader Tim Farron welcomed the news but said it was “utterly ridiculous” that Mrs May was having to give “special assurances” to key manufacturers to deal with the “Brexit fallout her Government is creating”.
He added: “If the Government was serious about protecting jobs in the UK, it would be fighting to remain part of the single market.”
Business Secretary Greg Clark refused to be drawn on whether the Government had promised to compensate Nissan if it faced additional tariffs as a result of the decision to leave the EU.
He said conversations with the company had centred on reassuring it of the Government’s determination to get “the best possible deal” with the EU.
“The automotive sector is a good example where there are strong common interests between our continental partners and friends and the UK. There is a lot of cross-border trade,” he told BBC News.
“The conversations we have had with Nissan and other companies in other sectors have all been about reinforcing the determination of this Government to make sure that Britain not only stays competitive but is even more attractive for investment.”
Keeping Nissan in the UK was regarded as vital to Mrs May’s hopes for a successful Brexit.
She described the announcement as “fantastic news for the UK” and said “families across the North East will be delighted”.
She added: “It is a recognition that the Government is committed to creating and supporting the right conditions for the automotive industry so it continues to grow - now and in the future.
“This vote of confidence shows Britain is open for business and that we remain an outward-looking, world-leading nation.”
The Sunderland plant, which has been active since 1986, employs almost 7,000 people, producing around 2,000 cars a day.
Nissan is part-owned by French manufacturer Renault, which had raised concerns that production could be moved to France to avoid any tariffs which might be introduced on exports to the EU if the UK leaves the single market in a so-called “hard Brexit”.
New figures show that car exports have passed the one million mark this year, offsetting a decline in production for the UK market.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “The vast majority of cars manufactured here in the UK are destined for abroad and future growth will depend on securing our international competitiveness and the barrier-free access to major global markets that has enabled the UK automotive industry to thrive.”
Shadow chancellor John McDonnell said the lack of clarity about what level of support the Government had offered Nissan was a concern, and highlighted the”chaotic” nature of ministers’ approach to industry.
“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?”
Mr McDonnell warned that “secret deals behind closed doors” would divide industry and the country.
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 form 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 BBC Radio Four’s World At One.
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.
“Clearly, the question of Brexit put a large headwind in our way and it raised a basket of uncertainties. And we had to work very closely with the Government to understand the Government’s position.”
Labour leader Jeremy Corbyn, on a visit to meet motor mechanic apprentices at the Regional Automotive Technology Hub at Blackburn College, said any deal between the Government and Nissan should be out in the open.
He said: “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 Corbyn added: “We are only a few months into Brexit and we don’t know what the terms of the agreement are between Nissan and the Government.
“I’m pleased there’s going to be continued investment in Sunderland that protects those jobs and obviously helps to develop manufacturing industry, but the concerns are still there. We have to have market access in Europe in order to keep British engineering industries going.
“Our bottom lines are market access in Europe and protection of environmental and working conditions that we have gained through membership of the European Union.
“We’re leaving the European Union, the referendum is done, that’s the decision, we respect that decision, we have got to work with it.”
Business Secretary Greg Clark insisted financial compensation over tariffs did not come into it.
He told BBC Radio Four’s World at One: “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.”
Pressed on whether written assurances on tariffs had been given, Mr Clark said: “We have had, obviously, as you might imagine, lots of communication between us, but actually, what it rests on is very a strong mutual confidence.”