Military Aviation Industry

Lord Walney Excerpts

Wednesday 15th September 2010 Commons Chamber

[Mark Hendrick]

I accept that there has been a loss of jobs in manufacturing, but that trend has continued since the 1960s under Governments of both persuasions. I say that as an engineer rather than as a politician. As technology advances, computers can do many jobs that humans used to do, and a section of an aircraft that used to be made of 100 parts can now be made of two or three. I would not try to be party political on manufacturing. Nobody did more to defend jobs than the previous Labour Government. Every contract that could be given to British Aerospace, which is now called BAE Systems, was given to it, and order books were full. We were looking forward to decades of further production at the company, so we will not take any lessons from the Conservatives.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

My hon. Friend’s point about general manufacturing is important, but does he agree that defence industry manufacturing has been completely different from much of the rest of the picture? Defence manufacturing has been a strength in the past 10 years, especially given the number of jobs that have been created. The danger is that we could lose capacity over the next decade and the capability to lead the world in a range of areas, including, of course, shipbuilding.

[Mark Hendrick]

My hon. Friend makes a very important point. We are not here to talk about aircraft carriers, but they are important to the future of both Warton and Samlesbury. Manufacturing the two aircraft carriers in places such as Barrow would support many industries in the north and north-west, but they are under consideration in the strategic defence review. Bluntly, if the carriers do not go ahead, the need for the aircraft to go on them will be called into question, as will our share of the F-35 joint strike fighter programme. We are currently guaranteed 12 to 15% of those contracts with Lockheed Martin. The Government are sailing close to the wind when it comes to maintaining our share of that work unless a commitment is made to the aircraft carriers.

We are playing for high stakes, because at threat is the future of Britain as a defence manufacturing nation. We have lost a lot of consumer manufacturing to the likes of Germany, Japan and China, and it is essential that we maintain our expertise and technological base in defence manufacturing. Otherwise, not only will the jobs and livelihoods of people in the north-west economy suffer, but the nation will suffer, because we will not punch the same weight or have the same GDP. We will be a much poorer nation as a result. Aerospace is the jewel in the north-west’s economic crown.

On the strategic defence review, the Typhoon programme is extremely important. Exports are important, as is take-up by the four partner nations in that programme. Before the general election, I was disappointed to see the Liberal Democrats make it plain that they would not continue tranche 3B of the Eurofighter Typhoon, against the wishes of many in the north-west. It is a disgrace that so many Liberal Democrats can take a view that threatens so many jobs in the north-west, especially when so many were silent on the issue during the election, especially my opponent in Preston. The Labour Government signed up to tranche 3A, so we showed our commitment, and I call on the Government to show their commitment not only to Typhoon, but to the aircraft carriers, the design and preparation for which are well under way.

The skills of a generation of the work force at Warton and Samlesbury will be put at risk. Last year, 200 jobs went at Samlesbury, leaving only 4,200 jobs. The hon. Member for Fylde mentioned the figure of 5,000, but 4,200 is the actual figure—a loss of more than 25%. The situation is similar at Warton. I do not want to see anyone lose their job, but it is surprising that executive jobs have not been greatly affected. Only one executive job will be lost over both sites, which seems unbalanced.

The announcement that 1,000 jobs will be lost across the country in BAE Systems is a tragedy, but I shudder to think what the strategic defence review will reveal after November when it is completed. That announcement may be just the tip of the iceberg of job losses, and the Government will rue the day if they make significant cuts and these major programmes disappear, as those decisions will be reflected at the ballot box at the next general election.

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[Paul Maynard]

I thank the hon. Gentleman for that intervention, but people’s jobs depend on decisions being made now, and I do not intend to engage in self-indulgent scaremongering. He may wish to do so on behalf of his constituents, to whom he is responsible, but I do not intend to adopt a similar position.

[John Woodcock]

Will the hon. Gentleman give way?

[Paul Maynard]

No, because I have a number of things I want to say.

We are here to discuss the UK military aviation industry, not the outcomes of the strategic defence review. There are two important aspects to consider. First, there are the potential changes to UK Government orders that we do not know about, and which we will not find out about tonight, however much Opposition Members may wish otherwise. I do not expect that, and I am sure that many other Conservative Members do not expect it either. However, we can discuss the important steps taken by the Government to promote exports. I was interested to hear the hon. Member for Preston (Mark Hendrick) discuss the need to improve exports. The hon. Member for Hyndburn (Graham Jones) said it was no substitute for investment by the UK Government. We had 13 years of a Labour Government who failed to take seriously the promotion of UK exports. I heard it time and time again, even from active trade unionists, that BAE Systems—

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[Paul Maynard]

Export industry is crucial, and improved Government support for it—

[John Woodcock]

Will the hon. Gentleman give way?

[Paul Maynard]

No, I am not prepared to give way.

[John Woodcock]

The hon. Gentleman gave way to his hon. Friend just now.

[Paul Maynard]

No, I am sorry. I am not prepared to give way.

As my hon. Friend the Member for Fylde said, a recent trip to India resulted in a much improved Hawk order. However, I would like to make one observation to the Minister that I hope he will bear in mind. There is no finer advertisement for the British military aviation industry than the Red Arrows. I hope that he will bear that in mind when he is considering the wider issues of the strategic defence review.

Tonight’s debate should not be about BAE Systems only. I realise it is a major player in the UK military aviation industry, but it is not the sole player. In the north-west, we have the North West Aerospace Alliance, which has made an enormous effort to develop a world-class supply chain that includes not just BAE Systems—

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[John Woodcock (Barrow and Furness) (Lab/Co-op)]

I had not originally intended to speak in this debate. I will try to make my contribution brief, but it is important to make a contribution, in part to correct some of the misconceptions spread by the previous speech and, to an extent, by previous interventions.

First, I agree with the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on sovereign capability. It is important that we maintain that in the years ahead. The aviation industry in the north-west offers prime examples of the ways in which we have been able to lead the world, and it is vital that we continue to do so. I hope that the Minister will bear this in mind as we approach at breakneck speed the conclusions of the strategic defence and security review.

Hon. Members on both sides of the House should support the Government’s drive to improve the standing of our exports. We can sustain many jobs by increasing our exports, not only in the aviation industry in the north-west but right across the defence industry. We can also improve the UK’s standing in the world, and our military and diplomatic influences, by doing so. Let us not pretend, however, that the situation is dire at the moment, or that the previous Labour Government ran us into the ground. I am sure that the Minister is aware—although I am not sure whether the hon. Member for Blackpool North and Cleveleys is—that this country punches roughly three times above its natural weight in its exports industry. We should be proud of that, and the kind of partisan remarks that the hon. Member for Blackpool North and Cleveleys has just made do the defence industry and those who work in it a disservice.

I want the Typhoon to play an important part in the areas that I have just mentioned, and in sustaining the economy. It will do so, however, only if we take a mature attitude to exports and, as my hon. Friend the Member for Preston (Mark Hendrick) said, if we buy this kit ourselves. The first question that any foreign Government will ask when we rock up at their door and try to sell them this kit or anything else is, “Are you using it yourself?” If we are not, why on earth should they buy it? I very much hope that the laudable rhetoric that is coming from the Government at the moment will be sustained by a proper strategy that will enable us to acquire this kit and help us to export it overseas.

I want to mention scaremongering in regard to jobs. There is an important role for Members of Parliament in standing up for employment in their constituencies and their regions, and I think that many hon. Members on the other side of the House get that. I hope that the hon. Member for Blackpool North and Cleveleys understands it as well. It is not dishonourable to speak up for the potential industrial consequences of the decisions that are about to be made. I am a member of the cross-party Defence Committee, which has just concluded that some of those decisions could put at risk our long-term security, as well as our defence industry and the industrial base that it sustains.

[Graham Jones]

I note that, yesterday, the Minister said that the UK was the second most successful exporter of defence products in 2009, with orders worth more than £7 billion. Would my hon. Friend like to comment on that?

[John Woodcock]

My hon. Friend provides evidence for what I was saying earlier. We are a successful country, but we want to become even more successful. We shall need to do that in an environment that is going to be very tough in the years ahead. Other counties are retrenching their budgets just as we are, but it is important that we take a mature attitude to this.

Returning to my point about jobs and about the industrial base that the defence industry sustains, I wonder whether the Minister and the hon. Member for Blackpool North and Cleveleys are aware of the evidence that the chief executive of BAE Systems and other senior members of the defence industry gave to the Defence Committee last week. They pointed out that we are on the verge of decisions that we risk getting wrong. Alarm was expressed within the industry among the speakers who gave evidence to the Defence Committee last week. If we get this wrong, they said, we could lose our capability in the north-west—in aviation, shipbuilding and right across the piece—in a way that will have devastating consequences for employment. If in five or 10 years’ time, we decide that we need this capability, we will find that the employment base needed to sustain it has gone—never to return. If the hon. Member for Blackpool North and Cleveleys believes that those people were scaremongering when they said that, I hope he will stand up and make his view clear. I certainly do not think that they were, as this is a serious issue that will have to be dealt with.

In conclusion, it is so important to sustain capacity at Samlesbury and Warton—for the reasons I have just set out, but additionally because if the north-west takes the right decisions and the Government support it, and developing a defence and industrial policy following the strategic defence review will be critical—that could strengthen and augment its position as playing a leading part in the country and the world in producing world-class industrial products to serve our armed forces here and to export across the globe. The decisions made now and in the coming weeks and months will be critical.

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[Andrew Percy (Brigg and Goole) (Con)]

I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing what has turned out to be a longer debate than we might have expected. It has given many more Members a chance to make speeches, some more political than others.

I want to break the Lancashire stranglehold on the debate—or rather the north-western stranglehold. I used to teach geography too, so I apologise to the hon. Member for Barrow and Furness (John Woodcock). My constituency has been very much affected by the proposal for job losses at the BAE Systems site at Brough. My right hon. Friend the Member for Haltemprice and Howden (Mr Davis) and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) have been engaged in cross-party work in relation to that proposal, and over the past few years they have also worked closely together to help to secure contracts for the continuation of the site.

The BAE Systems site at Brough has a huge impact on our area. In recent years we have struggled in respect of manufacturing jobs, as has the rest of the country, and the continuation of the Brough site is greatly valued by local people. It gives young people in the area some aspiration that they might have a future job in manufacturing. I know all about that. I grew up in the area, attending a comprehensive school in Hull, and one of the most secure prospects we had was the possibility of going into apprenticeships at either BAE Systems at Brough or BP at Saltend.

I cannot over-emphasise the value of BAE Systems and the Brough site to our local economy and education facilities. It is heavily involved in local schools in my constituency and across the East Riding, and probably beyond that. Its educational roadshow is run from Brough and it has thus far received about 5,000 young people from the ages of nine to 13, bringing them on to the site to see what the possibilities for them there might be, and perhaps sparking an interest in manufacturing and in pursuing that interest in their own educational futures. BAE Systems is also heavily involved with the local secondary schools and every year provides a number of apprenticeships to local schools. All that is a success story for our region, so I do not want anybody to leave this debate with any impression other than that the existence of the Brough site in our local area is entirely positive.

The links go far and wide. The current mayor of Goole is an employee at Brough BAE Systems, as is the husband of my secretary in the constituency. Perhaps I should therefore declare an interest, although many more people than just those two are employed there—and, in fact, the mayor of Goole is a Labour party member so I am working cross-party in that respect.

There have been a number of challenges to the Brough factory in recent years. It is heavily reliant on Hawk contracts, for instance, and a couple of years ago there were a number of job losses. My right hon. Friend the Member for Haltemprice and Howden and the right hon. Member for Kingston upon Hull West and Hessle worked incredibly closely to try to alleviate the pain of that. Following the problems back in 2008 and earlier we got an assurance from BAE Systems that the over-reliance on the Hawk contracts at Brough would cease and that it would seek to broaden the work undertaken there. However, I can only repeat what the right hon. Member for Kingston upon Hull West and Hessle has said in response to the latest threats to Brough:

“So with the first test of this so-called transitional plan, which only ended in December, it has failed and I think this is a breach of faith.”

There are certainly those in the Brough work force who would share the sentiment that despite the assurances BAE Systems gave some years ago, the continued reliance on Hawk has led us to the position we are now in. I urge the Minister to give us assurances this evening in whatever way he can that the Government will put as much pressure as possible on BAE Systems to ensure that the work undertaken at Brough is broadened in furtherance of the agreement of some two years ago.

It is also important to pay tribute to the unions at the Brough site. Every time there have been threats to jobs at Brough, they have engaged in a positive way with management, local elected representatives and the local councils, who are also incredibly supportive of the site. As we move forward in addressing difficult decisions more generally, the nature of their engagement might serve as a lesson to others about what can be achieved when we have a proper positive partnership between unions, staff and management. I hope others will take a lead from the engagement at Brough as they face their own issues in coming months and years.

I also seek some assurances from the Minister this evening on the future of the Hawk contracts. We have not been able to get to the bottom of that. We are told that there are three countries, two of which have been named—one as country X, for whatever reason—where there are potential Hawk contracts ready to be signed. What is different about the current position at Brough, where about 210 jobs are under threat, is that this seems to have come as a bolt out of the blue. When there has been a threat to jobs in the past, the management at BAE Systems have engaged positively with local Members of Parliament, the local councils and the work force to see what pressure can be applied, wherever, to try to alleviate the problems. This time, the threat seems to have come out of the blue, so we are unclear as to what exactly the contracts are, at what point the Hawk contracts are at and whether indeed there are any contracts. The securing of one of these contracts would put the site on a secure footing for a couple of years. If the Minister is unable to respond this evening to those points, I urge him to take them up with BAE Systems and respond to the work force and MPs as soon as possible.

It is also important to welcome the new Government’s movement on the so-called “commercial foreign policy”, because this is something we need. I heard with interest the comments about the success of the UK’s aerospace industry over the past few years. It did not happen overnight or in the past 13 years; it happened because of decisions taken decades ago, many of them in the 1980s and often in the teeth of opposition, because of the nature of the work involved, from the Labour party—depending on who gets its leadership, we might see that again in the future. Those tough and important decisions taken in the national interest decades ago have led to the successful industry we have in this country today.

[John Woodcock]

The hon. Gentleman makes persuasive points, but does he not think that they underline the importance of the decisions that we are going to take next month in ensuring that the next two decades can continue to provide export growth?

[Andrew Percy]

I do think that, but Labour Members have absolutely no credibility on this issue. They could and should have undertaken the strategic defence review a number of years ago, and they have left us in the current financial position. They must accept that the decisions being taken today are not down to this Government, but down to our inheritance from the previous one.

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[Peter Luff]

It is the nature of Adjournment debates not to be too partisan, so I shall just spell it out in very simple language. The problem facing the MOD—the £38 billion—is nothing to do with international crises or bankers. It is because the last Government made commitments that they had no money to pay for. It is nothing to do with deficit reduction or the crisis. I could not be clearer about that. The £38 billion is a problem that we have inherited that we would have had to deal with irrespective of any need to address the extraordinarily large structural deficit that we also have in the UK. The £38 billion is a starting point before we address the consequences of the crisis.

[John Woodcock]

I hope that the Minister will accept my apologies for coming in slightly late for his speech. Members on both sides of the House accept that there is an over-commitment in the budget. Will he accept the findings of the Defence Committee’s report today that there is a grave danger that if the correction is done in the wrong manner—and it is being done very quickly—we will lose the capacity to maintain or restore capability in vital areas in future years?

[Peter Luff]

The Select Committee’s statement was constructive and thoughtful. I have not read every word of it yet, but it is a very helpful document. In some areas, it has not quite understood the process, but never mind—it is a good response, and today’s debate shows that Members on both sides of the House, including me, understand how important it is to maintain these capabilities and to ensure that we can take part in the next generation, particularly of unmanned aerial systems, which are the future of fast jet production. I will not labour the £38 billion point any more, but it does set the framework of what the Government have to contend with.

For Britain’s defence, and despite all the financial constraints we linger under—both inherited ones and the structural problems caused by irresponsibility in fiscal policy generally—that means taking strategic decisions for the long term. These are the realities we face as we approach the critical decision-making phase of the SDSR. I reiterate that no decisions have been taken on any of the issues debated in the House this evening. The right hon. Member for Delyn (Mr Hanson) referred to the A400M. Everything is in the pot, including the Nimrod MRA4. Everything is there together, and nothing has been singled out or decided. We have to do that to ensure we address both the fiscal challenges and the defence issues facing our country.