THE MILITARY AVIATION INDUSTRY
Speech

END OF DAY ADJOURNMENT DEBATE, HOUSE OF COMMONS

The Parliamentary Under-Secretary of State for Defence (Peter Luff)

It is customary to congratulate the hon. Gentleman or hon. Lady who has secured such a debate at the end of the day, and I congratulate my hon. Friend the Member for Fylde (Mark Menzies) with particular pleasure today. It is his first Adjournment debate, mine too as a Minister, but it has been of the most exceptional value and great quality, so his congratulations are all the more deserved. There has been a phenomenal level of participation in what is normally a half-hour debate. My brief is littered with handwritten comments, which I hope I can decipher as I go through my remarks. If for any inadvertent reason I unintentionally overlook any hon. Gentleman in my response, I shall of course write to them subsequently. I also congratulate my hon. Friend on what was a very informative and entertaining maiden speech in the House during the debate on the strategic defence and security review on 21 June. He is clearly carrying on with exceptional skill the excellent work of his predecessor, Michael Jack, who also spoke very strongly for the aerospace industry in the north-west.

This debate is timely, as my hon. Friend said, not only for the reasons he gave us-the very sad redundancies, which I want to discuss later-but because of its significance to the strategic defence and security review process. That process seriously constrains how far I can go in replying to many of the points made by hon. Members, and I apologise for that, but the debate is an important contribution to the process, and I welcome it for that reason.

The debate is also timely for a second reason, as we heard. Today is battle of Britain day: 15 September 1940, 70 years ago, was a critical turning point in the war, when RAF fighter command claimed a decisive victory over the Luftwaffe. It is fitting, when debating the aviation industry today, to pause and pay tribute to the bravery of our RAF service personnel, past and present, and to all those who work so hard to design and build the aircraft in which they fly. From the battle of Britain to Afghanistan, the skills of all those who work in the industry and their commitment to supporting our servicemen and women has proved to be second to none.

The contribution made by the UK's military aviation industry in supporting our armed forces cannot be underestimated, and it certainly has not been in the Chamber this evening. All three of your Deputy Speaker colleagues, Mr Speaker, have interests in the aerospace and military aviation sector. I know that the hon. Member for Chorley (Mr Hoyle) and my hon. Friend the Member for Ribble Valley (Mr Evans) are particularly sad not to be able to contribute to this debate-they, too, have been outspoken advocates for their constituencies in the past-and the right hon. Member for Bristol South (Dawn Primarolo) has a strong local aviation industry and a vital interest in the A400M project.

I am relieved that Members from areas other than the north-west turned up. This is not just a north-west issue, although it is very important to that region, and the right hon. Member for Delyn (Mr Hanson) demonstrated that fact. We also have interests in Yorkshire and around the country, including the south-east, the south-west, the west midlands, and the east midlands. Wherever one goes there are aviation and military aviation interests, so I am glad that the debate has been so broadly drawn.

Our servicemen and women who are currently deployed on operations, particularly in Afghanistan, deserve the best equipment that we can provide, and there is no doubt that the UK military aviation industry has risen to that challenge in the past and, as hon. Gentlemen have said, continues to do so. I listened carefully to my hon. Friend's excellent speech and I share his heartfelt and sincere view that it is crucial for the security of the UK and our allies that we have a strong and dynamic military aviation industry both now and in the future.

BAE Systems' Warton facility, which lies within my hon. Friend's constituency, demonstrates this ethos, supporting as it does the important multinational Typhoon and joint strike fighter programmes. I will be concentrating on fast jets and unmanned aerial vehicles-UAVs-but military aviation of course encompasses much more, including helicopters, tankers, strategic lift and, as the right hon. Member for Delyn reminded us in his fine speech on the A400M, intelligence, surveillance, target acquisition and reconnaissance, or ISTAR.

Turning briefly to ISTAR, my hon. Friend the Member for Macclesfield (David Rutley) told the House that he had met me, together with my hon. Friend the Member for Cheadle (Mark Hunter) and the right hon. Member for Oldham West and Royton (Mr Meacher), to discuss the Nimrod MRA4. I pay tribute to my hon. Friends and to the right hon. Gentleman for the way in which they put their case and, in particular, to the trade union representatives from Woodford who came with them and made such a powerful case. I apologise publicly for the fact that the meeting was so disrupted by Divisions in the House, but I think they successfully conveyed their key messages, and I congratulate them on that. I promise that I will take careful account of what was said.

The coalition Government recognise, of course, that the UK military aviation industry is a vital strategic asset. The challenge is to maintain a vibrant and innovative industry capable of meeting the needs of the MOD at a time of financial challenge, and to be competitive in the world marketplace while at the same time minimising any MOD investment in artificial sustainment activities-we want this activity to be real. We simply cannot do this without listening to what industry has to say; and industry has had some very powerful advocates in the Chamber this evening.

That is why, in addition to the engagement with industry that has occurred during the SDSR-despite, Mr Speaker, reports to the contrary-I recently announced the publication of a Green Paper at the end of this year to explain the MOD's defence industry and technology policy, to follow the conclusions of the SDSR in the autumn. It will include a full discussion of many issues, including sovereign capabilities and skills-I hope that will please my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard)-and, I hope, the role of apprentices, which was mentioned by my hon. Friends the Members for Pendle (Andrew Stephenson) and for Brigg and Goole (Andrew Percy). On a recent visit to Rolls-Royce I was struck by the number of senior managers who had started their working life with the company as apprentices, which shows how important that route of entry into the industry is.

As a result of that Green Paper process, we will publish a White Paper in the spring, which will formally set out our approach to industry and technology through to the next SDSR, which I hope will come after a much shorter gap than this one. That will provide the clarity that the industry needs to understand what our priorities are and how we plan to engage with it to bring those priorities to fruition.

Two of the highest priorities in the Green Paper and White Paper will be reinvigorated Government support for exports and helping small and medium-sized enterprises to expand and prosper. Many of them serve and supply the military aviation industry, as hon. Members have said. We will support the drive for exports with an active and innovative programme of defence diplomacy, and Ministers will play an important and personal role in that.

My hon. Friends the Members for Fylde and for Blackpool North and Cleveleys mentioned the role of my right hon. Friend the Prime Minister in securing a recent Hawk contract in India, which shows how important high-level ministerial engagement is. When I wore a previous hat, as Chairman of what was once called the Select Committee on Trade and Industry, we repeatedly made the call for such engagement, and I am delighted to see it bearing fruit so quickly under the coalition Government. The entire ministerial team was at the Farnborough air show this year to demonstrate our support for military exports in general and the military aviation sector in particular. I undertake that that level of support from Ministers will continue.

I turn to the BAE Systems site in Samlesbury. The MOD continues to recognise BAE's integral role in the UK aerospace industry, and it is essential that we continue to work together for our mutual benefit as we establish and confirm the UK's strategic objectives in the wake of the SDSR. In that respect, I very much welcome the company's own review that is currently under way to ensure that its Military Air Solutions business has the right balance of skills, capabilities and resources to meet the new challenges that lie ahead. That cannot be achieved without some effect on the structure of the company, and I note with sadness the company's announcement on 9 September that it sees a need for more than 700 job losses at a number of its aviation business sites following decisions by the last Government in 2009. Those losses come on top of earlier such announcements.

My hon. Friend the Member for Fylde will be aware, however, that BAE Systems is making a multi-million-pound investment in the north-west at its Samlesbury facility, which will be state-of-the-art. The company aims to develop the site into a major centre for unmanned air system development. Samlesbury has a strong tradition of design, engineering and manufacturing excellence in the aerospace industry, for which I pay tribute to it. It is home to some of the most advanced aerospace manufacturing and assembly technologies in the world.

On the subject of advanced technologies, unmanned air systems, which my hon. Friend mentioned, are already making a critical contribution to our operations in Afghanistan. Hermes 450, Desert Hawk and Reaper are saving the lives of our forces, our allies and the Afghan people themselves. I look forward to the introduction of Thales's Watchkeeper system, which is currently the MOD's largest unmanned air vehicle procurement programme. It will provide operational commanders with a day and night, all-weather capability to detect and track targets without the need to deploy troops into potentially sensitive and dangerous areas. My hon. Friend mentioned HERTI, which, if I remember correctly, is a privately funded capability at BAE Systems.

Looking further forward, we are investing in programmes to help us better understand possible future roles for unmanned air systems. Mantis, for example, is a programme funded jointly by the MOD and BAE Systems, which is leading an industrial consortium. The programme is a concept demonstrator with state-of-the-art sensors that will demonstrate a UK-developed deep and persistent intelligence, surveillance, target acquisition and reconnaissance capability of the type currently provided by Reaper.

Mark Hendrick: The Minister is speaking very strongly about the importance of the UAV programme, which is taking place principally at Warton, and I totally agree with him. He mentioned the restructuring at Samlesbury, which we all know has amounted to hundreds of jobs being lost last year and hundreds more this year. What does he have to say to people there who are going to lose their jobs, some of whom have given a lifetime of commitment to Samlesbury? That is likely happen to even more of them as a result of the defence review, in addition to the losses announced recently.

Peter Luff: I hope the hon. Gentleman heard me express deep regret for those redundancies, which result from decisions taken in the past. Exactly how BAES chooses to distribute its skills and work force in future is a matter for BAES, and it is not for me to comment. However, I express deep regret to those individuals, many of whom are outstanding engineers and technicians who started as apprentices and who have given a lifetime of work to some excellent products. I shall turn to the importance of maintaining a skills-base in the north-west, in particular for unmanned aerial systems, in a moment.

Another unmanned aerial system, Taranis, is the MOD's prototype unmanned combat aircraft of the future. Built by BAES, Taranis reflects the best of our nation's advanced design and technology skills. It will allow the MOD to gain a better understanding of the most cost-effective and capable future combat air capability force mix between manned and unmanned platforms. A pinnacle of UK engineering and aeronautical design, Taranis is a leading programme on the global stage and a significant step forward in this country's fast jet capability. It is truly a trailblazing project.

To return to a point I made earlier, projects such as Mantis and Taranis will enable the UK to retain vital aeronautical engineering and design skills, not least in the north-west at Warton and Samlesbury. However, we acknowledge the risk to sustainment of critical engineering skills and, in particular, a critical mass of design skills within the UK aerospace sector. We are currently funding some work with BAES and key UK suppliers to sustain capabilities pending SDSR outcomes, which I am afraid I cannot prejudge.

My hon. Friend the Member for Fylde of course has a specific in interest in Warton, and its work is vital to the Department. The Typhoon programme contracts are worth approximately 20 billon for, from memory, about 160 aircraft, up to and including tranche 3A. I was asked to say that I would not cancel tranche 3B, but I cannot cancel it, because no order has been placed. However, all future Typhoon contracts are SDSR dependent. Of course, a significant proportion of the Typhoon work goes to BAES.

The MOD has also awarded a contract worth approximately 145 million for unmanned air systems air projects based at Warton. As a number of hon. Members pointed out, the site makes a critical contribution to the multi-billion dollar JSF F-35 programme, about which many hon. Members spoke enthusiastically. I agree with my hon. Friends the Members for Burnley (Gordon Birtwistle) and for Pendle that a two-engine option is vastly preferable in terms of security, design and driving down cost. I hope our American friends will be persuaded to pursue the two-engine option, which offers great strategic and financial advantages to countries participating in the programme.

The UK's military aerospace industry is well placed to continue performing significant work in maintaining Typhoon's capability edge and to address the considerable export interest that is being shown. Indeed, with two existing export customers-Austria and Saudi Arabia-official campaigns being pursued in India, Japan, Turkey and other countries, and with further opportunities in the middle east, including in Oman and Qatar, Typhoon promises to provide excellent employment prospects. That underlines that healthy defence exports are the best way in which to sustain a viable defence and aerospace sector in the UK.

The hon. Member for Hyndburn (Graham Jones) suggested that we were in some sense withdrawing from a commitment to Typhoon, but nothing could be further from the truth. Such suggestions are very damaging to our defence exports. This country has a fine aircraft in Typhoon, which is already in active service and serving the country very well indeed. However, the Typhoon situation will require the industry to continue modernising its approach to address the capability and through-life support requirements of those customers, as it does in the UK, rather than simply focusing on aircraft production and supply. Through-life support costs are hugely important, and we look forward to showing the way ahead through the Green Paper that I mentioned. Certainly, we will work with industry to ensure that, in future, our requirements for new equipment are designed from their inception with exportability in mind. That is very important in, for example, the unmanned air systems environment.

My hon. Friend the Member for Fylde asked for reassurances on the JSF. Again, it must be SDSR dependent, as in everything else, but the UK's contribution to the JSF development will not change-it is fixed by the memorandum of understanding that we signed jointly with the US in 2001. There are significant work share benefits for the UK aerospace sector and it is important to recognise that those benefits come because of the excellence of that sector, which has won those contracts in competition in world markets. That is a great tribute to British engineering and the sector itself.

The UK's plans to purchase further joint strike fighters are incremental-we already have some bought for test purposes-and they have always been based on the programme reaching technical maturity levels and being affordable within the overall resources for defence. We will regard future purchasing plans accordingly, as part of the normal planning process and the outcome of the SDSR. The UK continues to play an important role in the JSF programme through the provision of expertise and resources, including RAF pilots who are now flying the short take-off and vertical landing-or STOVL-flight test aircraft.

The SDSR underpins all this work and, together with the new national security strategy, will provide a coherent and consultative approach to security and defence across government. Our National Security Council has agreed that the overarching strategic posture should be to address the most immediate threats to our national security while maintaining the ability to identify and deal with emerging ones before they become bigger threats to Britain. This flexible, adaptable posture will maintain the ability to safeguard international peace and security, to deter and contain those who threaten Britain and her interests and, where necessary, to intervene on multiple fronts. It will also, crucially, keep our options open for a future in which we can expect our highest priorities to change over time.

It is very clear that the current defence programme is unaffordable and tough choices will need to be made. It cannot be said too often that the programme for the next 10 years is 38 billion over-committed, a sum that we simply cannot fund. That is additional to any requirement to cut budgets beyond that. That over-commitment of the existing budget is the legacy of the last Government.

Graham Jones: Will the Minister accept that the reason for the 38 billion overspend is the Government's choice to cut the deficit further and faster? Otherwise the money would be there.

Peter Luff: Labour Members just do not get it. It is not a matter of choice. The last Government made a choice to be-I shall choose my words with great care-a little disingenuous with the figures and to make commitments that they knew they could not meet. We have to deal with the 38 billion over-commitment before we address any budget deficit reductions, and that is the problem we face in the Ministry of Defence.

Mark Hendrick rose- [ Interruption. ]

Mr Speaker: Order. May I just say to the hon. Member for Bournemouth East (Mr Ellwood) that as he has only just toddled into the Chamber he should not be chuntering from a sedentary position in evident disapproval of the views of others?

Mark Hendrick: The Minister ignores the fact that we had a major global economic crisis and the Government had to bail out the banks after the irresponsible behaviour of generations of financiers. The reason we are in the terrible state we are in now, which the coalition Government seem to forget, is the behaviour of the bankers, not of the previous Government.

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.

Mr Hanson: The contracts for the A400M were signed by my right hon. Friend the Member for Coventry North East (Mr Ainsworth) before the election, but that has been put in abeyance by the coalition Government. So a decision has been made on something that would, it had been decided, go ahead.

Peter Luff: I would like to be more explicit, but I cannot be. We are, and I quote:

"Pleased that agreement in principle on the future of the A400M programme has been reached between Partner Nations and Airbus Military (AMSL); this is an important stage in agreeing an amended contract."-

the contract now needs to be amended-

"Work on the amended contract continues, and we expect it to be concluded later this year. However, as these discussions are ongoing and at a critical state, it would be inappropriate to provide any further details at this stage."

I hope that the right hon. Gentleman will accept, therefore, that the issue is not just about the SDSR; negotiations are also going on at present.

I said that no decisions had been taken. However, my right hon. Friend the Defence Secretary made one such commitment at Defence questions earlier this week: he is keeping the RAF. I hope that provides some reassurance to hon. Members.

The potential prize is great: modernised, well-supported armed forces ready to defend and promote British national interests and successful manufacturing industry to support that. The UK military aviation industry is a strategic asset, and this Government will ensure that it remains so. We are committed to increasing the exportability of our equipment and delivering the industrial and technology support our armed forces need. The MOD's defence industry and technology policy Green Paper will be a significant step towards achieving those aims. I welcome the opportunity to engage with our industrial partners in the coming months to ensure that, despite the serious financial challenge we face, these aims will become a reality.

Question put and agreed to

7.22 pm
House adjourned.


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