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  1. ITV Report

Nissan received £2.6 million of taxpayers' money before pulling out of government deal

  • Video report by ITV News Business and Economics Editor Joel Hills

Nissan received £2.6m of taxpayers' money before pulling out of a deal with the UK's government, MPs have been told.

The deal, which would have created 741 jobs in Sunderland, fell through as the Japanese car-giant blamed both lack of demand for diesel cars and Brexit.

The admission was made in the House of Commons by Business Secretary Greg Clark in response to Nissan's decision to move planned production of the new X-Trail SUVs to Japan rather than the Sunderland plant as had been promised, which he described as "deeply disappointing".

The car giant said the decision was taken for business reasons, but made clear that continued uncertainty around the UK’s future relationship with the EU was not helping it plan for the future.

In 2016, the Japanese car-maker said it would build the models at the UK-based plant after receiving "assurances" from the Government over Brexit.

Some £61 million was due to be handed to Nissan as part of a nine-year programme, seeing it receive around £7 million per year.

The company is still free to take up the offer of help from the Government, but will need to reapply for the cash.

The Business Secretary said: "Because the terms of the application which is independently assessed and reviewed has now varied, then of course the company will need to re-submit on the grounds of the new information that it has."

Pulling out of the deal has been called a "bitter blow," to the north-east and car manufacturing by Shadow business secretary Rebecca Long-Bailey.

During his urgent question, Mr Clark also told the Commons that a no deal Brexit would be "ruinous" for the UK and called on all MPs to "come to an agreement" over a deal.

Also speaking in the Commons, Tory Remainer Anna Soubry said Nissan's decision came as "no surprise" since the Japanese firm had been clear about the threat of Brexit shortly after the EU referendum result, and the Government had only "exacerbated" these fears because it "refuses to take no deal off the table".

Nissan's Sunderland plant employs 7,000 people. Credit: PA

In 2016, Mr Clark wrote a letter to Nissan promising to pull out all the stops to keep the company's manufacturing plant based in Sunderland.

The Government pledged £80 million in a bid to persuade the Japanese manufacturing giant to build models of its cars in the UK after Brexit.

Mr Clark made the offer in the note to the then-head of Nissan, Carlos Ghosn in October 2016, a few months after the EU referendum.

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In the letter, released by officials on Monday afternoon, the details of the proposal from Westminster were laid out.

It said that funding was dependent on the manufacturer producing two models of cars in the UK - an agreement it shunned last week, saying it would move production of the X-Trail to Japan.

Earlier this week, the company said a decline in the sales of diesel cars and the UK's vote to leave the EU were both factors that played a part in the decision.

The government has reportedly said that Nissan did not receive any money from taxpayers, despite the government's offer, and that it will have to reapply to receive support from the public purse.

Workers at Nissan’s plant in Sunderland. Credit: PA