House of Commons Hansard Debates for 13 Dec 1993

Mr. Wilkinson : I take to heart what the hon. Gentleman has said and I share the concerns of the workers at Prestwick, and those who come from his constituency. Like the hon. Gentleman, I want to see what was Scottish Aviation prosper under its new guise and have an assured future. It will be very difficult to ensure genuinely fair competition, however, because nations that are embarking on creating indigenous aircraft industries are bound to give generous support to the easiest part of the industry to develop--the construction of relatively unsophisticated twin-turbo prop aircraft.

I want negotiations through GATT on this matter, as on all others, to prove in the future to have been a success. I cannot say that this area of BAe's business is absolutely secure yet. The company is, however, determined to make

Column 752

it competitive, and I am sure that the workers at Prestwick are working as hard as they ever did to make a success of it. It has good a good product range.

The larger end of the product range is represented by the airbus series of aircraft. Here again, launch aid has proved itself. When I was chairman of my party's aviation committee in the mid-1980s I remember going along to see my right hon. Friend, Mrs. Thatcher, with the past committee chairmen to argue for launch aid for the A320. She replied, "Oh John, it will never work. Boeing will dominate the market. Why should we waste our time on things like that?"--or words to that effect.

We managed, however, with the support and encouragement of the Labour party and that of Lord Varley, then an Opposition Front-Bench spokesman, to table an early-day motion which commanded the support of nearly half the membership of the House. As a result, we persuaded Her Majesty's Treasury to invest £220 million in launch aid. The A320 sold more aircraft off the drawing board than any airliner in west European history.

The purpose behind this anecdotal account is to show that there genuinely is a worthwhile role for launch aid. When those responsible for the airbus come to build a really big aircraft to compete with or to succeed the jumbo, the new aircraft could be a worthwhile candidate for launch aid.

What worries me about the military side of business is the way in which the European fighter aircraft programme has absorbed such a large proportion of the Government's defence budget for development. For understandable reasons, the first flight will probably be two years late and the entry into service will be some four years late. I compare that with the achievements of Avions Marcel Dassault which is building its Rafale aircraft on its own and has already got several prototypes in the air for the French air force and for the French fleet air arm.

I am also interested in the progress of the Swedish Saab JAS39 programme. I know that BAe has a marketing agreement with Saab for the aircraft and that it is lending its expertise, especially in the development of the flight control system. However, for the next generation of combat aircraft, I wonder whether we should have four-nation programmes again. They are complicated to manage and extremely political in nature.

Also, if a programme such as the EFA consumes such a

disproportionate part of what used to be known as the Air Force's budget and is now the MOD's budget for air systems, it has a negative impact on important equipments which are at least as important as the platforms. For example, a stand-off weapon for Tornado has been in mind for many years and still has not come to fruition. The RAF needs an intelligent anti-armour weapon, especially as the MLRS 3 has been cancelled.

Britain's defence has been degraded by the fact that we cannot afford, at least in the immediate future, to deploy a medium surface-to-air missile to replace the Bloodhound. I also gather that the mid-life update of the Tornado to the GR4 standard will not be as comprehensive as would otherwise have been the case. In future, I hope that we shall not invest such a vast amount in mega-projects but will consider them more carefully.

Mr. Keith Mans (Wyre) : Does my hon. Friend agree that, although the first flight of the Eurofighter 2000 has been somewhat delayed, first flights of previous aircraft have also been delayed and it is therefore not outside the

Column 753

band that one would expect? Despite the fact that the Eurofighter has not yet flown, the in-service date from the French air force for Rafale is after that of Eurofighter, in 2001, and the Rafale aircraft will be more expensive and inferior to the EFA.

Mr. Wilkinson : All those things may or may not be true. I hope they are, because I like to see projects in which the British have a leading role proving to be the best. The projects must be the best because, if we are deploying a front-line fighter/attack aircraft, it must do its job against a potentially well-equipped adversary. For good military and industrial reasons, I hope that what my hon. Friend--who has considerable experience and professional wisdom in those matters--said is true. Nevertheless, I feel bound to inject a note of caution.

In a relatively short time, we shall also need an enhancement of our air transport force. We have all recognised the importance to our aid efforts and to our military deployments of the Herculese C130 aircraft which are in service with the RAF. They are wonderful work horses, but they cannot go on for ever. There must be a limit to the process of refurbishment. There is an improved version of the C130--the J version--available to the RAF. Were it selected, it would benefit British industry because the RAF would be the launch customer and a number of British suppliers such as Dowty Rotol for the propellers, Westland Aerospace for the nacelles, Smiths, Lucas and Marshalls of Cambridge would benefit. More than that, we would get a transport into service which was much more cost effective than the existing version of the Hercules.

I hope that the Government will recognise these facts and will not let themselves be diverted into thinking about what may or may not come into service in the next century--future large aircraft, or whatever. I doubt whether the Ministry of Defence has the money to invest development funding in a strategic turbo fan transport of the FLA category.

One has only to consider the problems McDonnell Douglas has had with the C17, which is badly over budget, late and performing below specification. Since we took the Belfast out of service many years ago, we have not invested in a strategic long-range transport aircraft. We have not bought C5s or C141s. Instead, when needed, we have chartered civil Belfasts and used them for military purposes. Can the decision on the Hercules C130 be postponed any longer? I do not think that it should be.

Nor should we postpone for too long important decisions which affect the future of our rotary wing aircraft constructor Westland. There are two major programmes vital to the future of the company--first, the selection of an attack helicopter for the Army and I hope for the Royal Marines too, and I say that advisedly ; and a new support helicopter for the Royal Air Force. The Secretary of State for Defence has announced that he intends, as I understand it, to buy a mix of EH101 support helicopters and additional Chinook helicopters. We shall certainly need them and the attack helicopters soon because wherever our troops are deployed--whether in peacekeeping operations as we debated earlier or otherwise--we always need more helicopters.

The aero engine business is important to our future as an industrial and engineering nation. It is remarkable how we have stayed in the big league for so many years and how competitive Rolls-Royce plc has remained, even after the trauma of the failure of the company in 1971. Rolls-Royce

Column 754

plc now has a range of products which have important niches in their respective markets--for example, the Trent for big long-range twin jets, the Tay for the medium-range civil transports and long-range business aircraft, the EJ200 for the European fighter aircraft and other military programmes, the RTM 322 for helicopters or for potential business aircraft use, and the BMW-Rolls-Royce 700 series of collaborative engines for medium-range transports. Rolls-Royce plc needs to be sustained because it is of strategic importance to Britain. I do not know whether it will come to an arrangement with Pratt and Whitney or how it sees its commercial future. However, it is crucial for our national defence and our engineering capacity that we stay in the aero engine business. If Rolls- Royce plc asks the Government for launch aid for programmes which it believes to be commercially viable, I hope that its request will be sympathetically received.

One also ought to bear in mind that the market for spares continues for 25 to 30 years after an engine has gone out of production. For example, spares for the Dart, the Spey, the Avon and the Tyne are still being manufactured. Engines such as the Adour, the RB199 and the Pegasus will serve the spares businesses for many years to come. Looking back at the development of our aircraft industry over the past generation, the decision which I believe to be most fatal for the welfare of the space business in Britain was the one to opt out of the launcher business. You will remember, Madam Deputy Speaker, that in the mid-1960s we had in Blue Streak a launcher which could have provided the main launch facility for Europe for decades to come. Instead we unilaterally decided to get out of the business. Aerospatiale, CNES--the French national space agency--and the French Government decided to support the Ariane series of launchers, and very good business they have proved. In space, we have concentrated more on telecommunications, remote sensing and so on. This is an appropriate field. It is good business and it is worth while. But as other nations such as Japan, China and India all recognise the importance of space, we shall need to invest more.

I congratulate the Select Committee on its timely report. I am pleased that the Government have given a thoughtful reply to its recommendations. I am delighted that my hon. Friend the Minister of State for Defence Procurement should have taken time to share the debate with us. It is in the interests of our country that the Ministry of Defence and the Department of Trade and Industry work together to support an industry of such crucial commercial and strategic significance.

Several hon. Members rose --

Madam Deputy Speaker (Dame Janet Fookes) : Order. It is self-evident that many hon. Members want to speak in the debate tonight. We do not have a great deal of time. I ask hon. Members who catch my eye early to exercise considerable restraint. Otherwise, there will be many disappointed Members.

8.21 pm

Mr. Ken Eastham (Manchester, Blackley) : I find this a rather refreshing debate. It is unusual because, for a change, we are speaking about industry. So often, we find

Column 755

ourselves discussing insurance, finance and housing, but on this rare occasion we are talking about making things-- things that we can make well and sell abroad.

Tonight, we are talking about something we are really good at. One thing that we are good at is the aerospace industry. As far as it goes, our industry is the best in Europe. The only major competitor is America, so we can sell our goods abroad. This debate is not about begging or about pleading for something to which we are not entitled. Many of us feel that the aerospace industry is entitled to more consideration from the Government. Unfortunately, it does not have it.

I remember reading a newspaper headline after a report of the Select Committee on Trade and Industry was published. It said, "DTI snubs Select Committee on the conclusions of its report." The Trade and Industry Select Committee has achieved a unanimous report. It is to be congratulated on the way in which it has gone about it. The industry is also to be congratulated because it had co-operated in a non-political way with a sincere desire to improve British capability and profitability.

It is a great pity that we have received little encouragement so far. I plead with Ministers urgently to review their thinking. The aerospace industry is one of the few success industries. If the United Kingdom aerospace industry failed, some of our competitors, such as Germany, France and others, would be delighted. It would mean less competition for them. They would become more and more prosperous and we would gradually wither away.

Even the Government have talked recently about the need to improve our industrial base. The Prime Minister and other Ministers have said that. That is somewhat belated, but we who come from industry are delighted that, at last, industry is being recognised. Even the Engineering Employers Federation raised its hands in despair 12 months ago and said that not enough was being done for the engineering industry.

I am sad to have to tell the House tonight that only last week in my area, Ferranti--a well-known company--was on the point of closure. Several hundred highly skilled jobs could be lost, mainly in the north-west. The nation can ill afford to lose those highly skilled people. They would lose their job through no fault of their own. It is not a case of their incompetence, lack of skill or lack of competitiveness. On this occasion, it was just a case of bad management. That is a fact. Those hundreds of jobs are now to be smashed.

It is also a fact that the aerospace industry has been contracting at a tidy old pace. About 27,000 jobs have gone. I should like to impress on the Government that unless they do something radical, that contraction will accelerate. We shall lose one of the finest industrial winners that we have.

I should like to underline a few special issues. The first is GATT. I sincerely believe that we must not give the United States aerospace industry more favourable terms than other countries. We already know that the United States heavily subsidises its aricraft industry. It has a massive defence industry which is far bigger than any aircraft defence industry in any other country in the world. It has the largest space industry and a massive satellite empire. That is all high-tech industry which we know is

Column 756

being spilled into the American aircraft industry. For those reasons, we must be extremely careful when we negotiate with the Americans in the GATT round.

Another issue is national strategic technology acquisition. I understand that the Treasury is receiving £30 million net cash in launch aid for the A320. Yet it is deplorable to report that the civil aviation fund is being cut. That is not a sign of progress. Those are some of the damning facts that have to be faced up to. The hon. Member for Ruislip-Northwood (Mr. Wilkinson) referred to the need to develop the European future large aircraft. There may be a debate about whether we should enter that industry. I believe that we cannot afford not to. At present, America has a monopoly in very large aircraft. We must attempt to stop world monopoly of, say, the American Hercules. The only way in which we can do that is to apply ourselves, along with other European countries, to producing the goods.

It is no good saying that we cannot, or should not do it. The same was said about the airbus. People said that it would not work. I am not a little Englander, but I believe that our engineering is as good as any in the world. Therefore, I do not believe that we cannot develop a large aircraft. We can do it if our engineering skills are given the chance. If we embarked on such a project, we would also avoid heavy import costs. It affects the balance of payments when one makes massive purchases of such aircraft. There is no doubt that such purchases will continue.

My next subject is export credits. We have not supported industry very well and for proof of the pudding one has only to make comparisons with the favourable terms that Germany and France have been able to offer, which mean that we are not playing on a level playing field. We have been greatly disadvantaged and there is no doubt that, owing to certain changes, such as the end of the cold war, the market is declining and will become far more aggressive. We can, therefore, justify additional help from the Government.

If the Department of Trade and Industry had offered more support we would have gained a larger market share. For example, we could have built a larger proportion of the airbus if the DTI had given more assistance ; we got the wings. We are grateful for that, as it has been a money spinner. However, some people have no doubt that it we had been more determined and had had the courage to invest more, we could have had a bigger share of the cake and made more of a very successful aircraft than just the wings.

One final plea is that we must remember that the aerospace industry is highly technical and that the staff in it need quality training. If we are to be world leaders we must place more emphasis on high-tech skills and spend some money on them.

I do not think that any hon. Member has mentioned that we must also remember the industry's hundreds of equipment suppliers and their sub- contractors. Thousands of supply jobs will be at stake outside the aerospace companies if there is any further contraction in the industry. Time is not on our side. We must make some decisions now. We cannot put it off, or say that we will think about it at the turn of the century. By that time, it will be too late and other countries will have wiped our industry out. We must decide whether we are to have a British

Column 757

aerospace industry. I predict that if we do not take that decision, our aerospace industry will become just another British engineering graveyard.

8.32 pm

Mr. Keith Mans (Wyre) : I am pleased that we have had the opportunity to discuss the aerospace industry and I associate myself with the remarks of the hon. Member for Sheffield, Central (Mr. Caborn), who opened the debate. I agree with him that the industry has been a world beater. It contributes 9 per cent. of out total manufacturing exports, valued at £7.7 billion last year. In addition, our industry is 30 per cent. more efficient than the German industry at manufacturing aircraft. It operates at the frontiers of science in a number of different areas of technology and that is well established by three articles in the most recent edition of the journal of the Royal Aeronautical Society.

The first article deals with the YF22--the latest American fighter--and reflects the advances in two areas in which aviation has led other industries--the lightness and strength of materials. Those advances will be taken a stage further by Eurofighter 2000--an aircraft which will be 85 per cent. non-metal. While it is the same size as Tornado--an aircraft which illustrates the previous generation of technology--it is none the less 30 per cent. lighter and considerably stronger. For good measure, its radar signature is 50 per cent. less than that of the Tornado. Despite all those advances, in real terms, the aircraft is cheaper than the Tornado. Those new materials and the techniques used to produce them economically will have an ever-widening use in commercial aircraft--as has happened with the previous advances in military technology that have transferred directly to commercial aircraft--and in many other industries. The second article described fly-by-wire systems, which are designed to make aircraft lighter, but also to improve their reliability and to reduce pilot error. In aircraft today, the controls are operated by touch, but in future they might even be operated by sight. Those advances are at the forefront of technology. Britain is again ahead, or at least abreast, of the world. The new systems require highly complicated software, which is constantly testing the frontiers of artificial intelligence. The systems that are being tested for aircraft today will have applications in a wide range of industrial processes tomorrow, as the interface between man and machine becomes even more sophisticated.

The ng of aviation's constant need for lightness and strength--are driving engine designers to look for even more esoteric material and production techniques, to allow higher temperatures at the back end of the engines, while increasing mass flow at the front. As hon. Members have said, Rolls- Royce has been at the forefront of those developments, especially in the development of the wide-core fan, which has revolution-ised compressor development. The company has also developed turbine blades that allow even higher inlet temperatures. The developments are vital to Rolls-Royce if it is to continue to sell engines in the same numbers.

Another illustration of the advanced nature of the aircraft industry is to be found in management techniques. Here I must differ with my hon. Friend the Member for

Column 758

Ruislip-Northwood (Mr. Wilkinson). Any development is highly expensive and, therefore, partnerships are the order of the day. That means that design teams in different countries, speaking different languages, have to communicate effectively with each other. That is taken to the ultimate in the production of the Eurofighter 2000, where one wing is produced by the Italians and the other is a combination of British and Spanish manufacture. I hope that we shall see it fly successfully within the first quarter of next year. The techniques used to allow such management practices to be successful have a direct bearing on some other industries, as they, too, find that the only way to fund the development of new products is through partnerships with companies in other countries. Because it is operating at the frontiers of science, the development of new aircraft and air systems is highly expensive. In the past, Governments have been intimately involved in such developments--not always successfully--but it is worth pointing out that, during the 1950s, 1960s, 1970s and early 1980s, the British Government's involvement in many developments had a direct bearing on the size and strength of the aircraft and component industry today.

The aerospace industry is a long-term industry. Investments 20, 15 or 10 years ago have a direct bearing on the number of people employed and the wealth created today and on revenues to the Exchequer. Even Concorde, which in pure cash terms was not a commercial success, has allowed our component and avionics industries to remain at the forefront of today's techonology. That has meant considerable export success during the past decade for many companies, contributing much more back to the Treasury in tax revenues than was expended on the development of Concorde.

Many other countries recognise the need to foster and develop their aircraft industries. I noticed in The Times on Saturday that the French balance of payments surplus last month almost accurately reflected our deficit. That is in no small way due to the whole-hearted commitment to aviation of the French. They have built up an industry that was almost non- existent after the second world war into one that is slightly larger than ours today, a fact made clear by the hon. Member for Sheffield, Central.

The Americans, too, have recognised the importance of the aircraft industry and have funded virtually all their civilian programmes through research and development contracts for similar military projets. Other countries, particularly in the developing world and around the Pacific rim, also want to create and develop their aerospace industries. It might seem strange that so many countries wish to do that, bearing in mind the high cost and poor returns in the short term. The reasons are twofold : first, they recognise the long-term nature of the industry--aircraft produced today are likely to be in service in 20 or 30 years' time ; and, secondly, the cost of maintaining and supplying them with spares many times exceeds their original price.

Nothing illustrates the long-term nature of the industry better than the British Government's decision in 1971 to pull out of the Airbus consortium. As a result, now that we are back in we have only 20 per cent. rather than 33 per cent. of the content of any of the aircraft produced by that consortium. That means a smaller British contribution than would otherwise have been the case. When we consider the number of aircraft that the Airbus consortium has sold,

Column 759

which runs into thousands, that fact alone partly explains the balance of payments difference between France and Britain. The need to support the aviation industry is recognised even by the general agreement on tariffs and trade, which allows Governments to contribute up to 33 per cent. of the launch aid for new aerospace projects. The point is simple : even if we sign the GATT, no one should be under the misapprehension that it will allow us to trade on a level playing field with others that want us to become involved in aerospace activities if we do not continue to be involved in launch aid and support our industry.

We must recognise the strategic importance of the aerospace industry to this country. That means not that we should initiate state-run projects but that the DTI should get behind developments that help aerospace companies in this country to maintain their position in the world. That will mean supporting new development and research in all sorts of areas, particularly those that I mentioned earlier. It means encouraging partnerships between different companies to produce specific aircraft or series of aircraft, as well as the provision of launch aid.

As the hon. Member for Sheffield, Central said, there is much evidence of the support that the Americans are giving their jet engine industry, amounting to some $760 million a year. What is even more significant about that amount is that some of the money being provided to launch the G-90 engine produced by General Electric--the direct rival of the Rolls-Royce Trent--is being provided by the European Community through the link between General Electric and the French engine company, SNECMA.

It is therefore no surprise that the decision taken by British Airways a year or two ago to buy that engine was based on the better price that GE could offer compared with Rolls-Royce, largely because of the subsidy that it received not only from the American Government but from the European Community. That example shows clearly the importance of the British Government getting right behind Rolls-Royce in this highly competitive jet engine industry, which will mean wealth creation, tax revenues and jobs running well into the next century.

That is true also for commercial aircraft. Because the Americans can no longer cross-subsidise, to the extent that they have in the past, civilian projects from military technology, they will directly subsidise commercial aircraft. Indeed, President Clinton has said as much in a number of speeches.

Mr. Stephen Day (Cheadle) : My hon. Friend will be aware that the Woodford plant of British Aerospace, where it builds the 146, is in my constituency. The company is looking to the future, with a deal with Taiwan and further development on the 146. Does he agree that it is essential, should the Taiwan deal not go through--we all hope and are fairly confident that it will, but have our doubts because we cannot be certain--that the company should have a chance to look for other partners because of the expertise and efficiency at the plant and the sacrifices made to produce an efficient manufacturing base at Woodford? Does he agree that, in those circumstances, it is essential that the Government ensure that such plants survive to be competitive in the future?

Column 760

Mr. Mans : I agree with my hon. Friend to the extent that, if the regional jet series of aircraft produced by British Aerospace are to be successful in the future, they will need to look for partners outside this country. In that context, the British Government should get behind industries that are looking for partners to ensure that projects like the regional jet series continue, and continue to sell well abroad.

Another point that must be recognised relates to the reduced contribution that defence budgets, particularly ours, will make to research and development. In the past, we have partly gone down the American road of funding development through the defence vote. That is bound to be reduced in the future and it is, therefore, important that the DTI takes a more active role in that area, in partnership with the Ministry of Defence. Military and civilian development of aircraft have always run together, but now the burden of developing new products will fall increasingly on the commercial side. One way forward has already been pioneered in America, where partnership deals between companies and Government push along together developments that benefit both and have military and civilian objectives.

That can be taken a stage further. In the early 1980s, we produced an aircraft called the European aircraft prototype as a technology demonstrator for Eurofighter. We now have an opportunity in relation to the future large aircraft project. Here, I differ somewhat with the view expressed by my hon. Friend the Member for Ruislip-Northwood and believe that we must at least get the RAF to put a spec forward to that consortium to say what they want, so that the consortium can at least see whether its proposals meet the RAF's needs.

In that area, there is a possibility of providing a similar technology demonstrator to get industry and Governments together to see whether an aircraft to meet the needs of the different air forces in Europe for tactical and medium-range transport can be produced on this side of the Atlantic.

The DTI has a reasonable record of supporting the aerospace industry, at least until the mid-1980s. Its support in the future will become even more vital, as the industry becomes even more competitive. Without it, one of our few remaining world-class industries is likely to go slowly into decline. That has ramifications well beyond aerospace.

As the Select Committee report says, we need an overall policy framework for the industry. The DTI needs to spell out clearly its strategic thinking towards the industry. If it does that and supports the industry in the future, as it did before 1986, there is a fair chance that the aerospace industry will remain at the forefront of technology and continue to contribute handsomely both to our exports and to Exchequer revenues.

8.48 pm

Mr. Nigel Jones (Cheltenham) : I welcome this opportunity to debate the crucial aerospace industry. I pay tribute to the Chairman and members of the Select Committee for producing such a readable and worthwhile report.

A few weeks ago, during the conference season, the Prime Minister made some encouraging comments about manufacturing industry. He said :

"We want British industry to be the best Manufacturing industry is one of our greatest national assets Compete on a level basis with the rest of the world Make pounds for the UK ; don't make dollars for other people Sell abroad and buy at home."

Column 761

We should all have been encouraged by those statements. I certainly was. At last, I thought, the Government have realised the importance of manufacturing industry, and aerospace in particular, to the future of Britain.

I was encouraged by the report produced by the Select Committee into the British aerospace industry. It hit several nails on their respective heads. The industry is vital to Britain as an exporter and an employer. Aerospace is a net contributor to the balance of trade of some £2.5 billion a year. It is one of those high-value-added industries where Britain has enjoyed--and still enjoys in certain areas--the world lead.

As we have heard, Britain's aerospace industry is the third largest in the world behind the dominant United States and just behind France. However, competition is tough and becoming tougher. To survive in world markets the industry must stay ahead of the competition--and to do that requires huge amounts of investment in research and in technology acquisition.

The Convention of Scottish Local Authorities, which lobbied Parliament today, points out that British manufacturers are competing to sell our aircraft in an overcrowded market. They are competing against manufacturers from Brazil, France, Italy, the United States, Canada, Korea, Spain, Germany, Holland and Sweden, all of which are in direct receipt of Government support.

Our competitors understand that competition is fierce. In October, Germany announced an eight-point strategic programme for the improvement of basic conditions for aerospace in Germany. The United States Federal Government are investing billions of dollars in aerospace and they are increasing their support. NASA's 1994 aeronautical research and development programme is up by 18 per cent. to more than $1 billion. The United States Defence Department spends $37 billion, of which more than 50 per cent. is applicable to aerospace technologies. The dual-use technology budget in 1994 is $964 million, linking the best of America's defence and commercial sectors. As we have already heard, President Clinton has announced an additional $17 billion of support for technology between 1994 and 1997.

The most worrying feature of the aerospace industry is that it is widely believed that Japan has taken the strategic decision to produce an entire aircraft by 2015. Only a fool would bet against it achieving that aim, bearing in mind its success in world markets with cars, televisions, videos, hi-fi and computers. Other competitors are also building up their aerospace industries--for example, Taiwan and Indonesia.

With the background of the Select Committee report and after hearing the Prime Minister's encouraging words, I awaited the Budget with great interest. I hoped that, at last, the Government would take responsibility for mapping out a strategy for the future support of the aerospace industry. That is important because exactly the opposite has happened during recent years. Since 1974, Government support under the civil aircraft research and demonstration programme for the aerospace industry has fallen in real terms, on 1993 figures, from £87 million per year to £20 million per year.

Yet what happened in the Budget? Nothing. There was no vision for the future, no statement of direction, no tangible support for the industry--it was as though those who spoke at the conference were different people from those who speak in this House. Frankly, that is of great

Column 762

concern to those who work in the industry and to those of us who represent constituencies with a long tradition of involvement in aerospace.

There was a time when Government felt and demonstrated responsibility for the future of industries in Britain. By any standard, aerospace is one of our key industries. As I have already said, it is one of the few that has a positive effect on the balance of payments--more than £2.5 billion. It also employs large numbers of skilled people in well-paid, high-value-added jobs. Sadly, during recent years the number of people employed has fallen and is continuing to fall--35,000 jobs have been lost since 1985. Part of that reduction is due to improvements in productivity and the use of technology in the design and manufacturing process. However, part is also due to the lack of direction and Government support for an industry that is becoming increasingly competitive worldwide. The Government are not supporting our aerospace industry in the same way as the Governments of our major competitors are supporting their industries in the USA, France, Germany, Canada and, increasingly, the far east.

The Select Committee's report supported the view of the Department of Trade and Industry's aviation committee on what needs to be done to maintain the industry's technological competitiveness. That was set out by the aviation committee in the form of a national strategic technology acquisition plan-- NSTAP--which the Minister accepted on 20 July. The key recommendation of the Select Committee's report was recommendation 19

Mr. Adam Ingram (East Kilbride) : The hon. Gentleman said that the Minister accepted the NSTAP report on 20 July. It might be better if he corrected that statement and said that the principle was accepted--the Government have still not said how the recommendations in the report are to be funded.

Mr. Jones : I accept what the hon. Gentleman says. In fact, the former president of the Bristol chamber of commerce, Alex Ewens, wrote in the Western Daily Press on 19 November :

"The DTI has decided to adopt the principles of NSTAP, but has said nothing about how it is to be funded."

Recommendation 19 of the Select Committee report states : "The Government should set out in much greater detail than hitherto the overall policy framework and view of the industry's future which it intends to guide individual decisions affecting the UK aerospace industry."

That recommendation and, indeed, the whole report was welcomed by the industry.

Sir Barry Duxbury, director of the Society of British Aerospace Companies-- the SBAC--the trade association for the aerospace industry, said in a news release dated 21 July 1993 :

"This report proves that parliamentarians across the political spectrum are keen to take a long-term view of manufacturing industry. It also proves that the House of Commons does want to address the important issues that will determine our country's ability to pay for its social aspirations."

Sadly, following the Government's response to the Committee's report, Sir Barry issued another SBAC release on 10 November stating :

"I must say that the Government's response to recommendation 19 was particularly disappointing. This recommendation urged the Government to set out in much greater detail than hitherto, its overall policy framework and view of the industry's

Column 763

future--in other words, to spell out clearly the strategic thinking, analysis and prioritisation which should guide its policies. Yet the response implied an absence of strategic thinking."

Those were Sir Barry's words, not mine--but I agree.

Britain has some excellent aerospace companies. British Aerospace is by far the largest, Rolls-Royce make the best engines in the world, and there are leading equipment suppliers such as Smiths Industries and Dowty--which have operations in and near my constituency. Dowty supplies the landing gear for the European airbus and won the contract for the A320 in 1983. Supply began three years later in 1986, and repair and overhaul is expected to start in 1994. It is likely that that aircraft will still be flying in 2025 or even 2030. The Dowty A320 landing gear contract demonstrates the long life of aerospace projects--in that case, 40 years. I am making the point that investment this year will not bring a payback for many years. The Government have a role to play in helping projects through launch aid at the front end of a project, in the research and development years.

The Government should put into action the report's recommendations in full, increase the limited amount of support given to British aerospace companies so that they enjoy a level playing field in competition against countries in which Government support is more extensive, and extend launch aid to the equipment sector. That last point is important because equipment suppliers have been discouraged from applying for launch aid in the past. On page 69 of volume 2 of the report, Dowty states in evidence :

"Dowty did not apply for launch aid for its landing gear on the A330-340 in a formal way because we were consistently informed by the DTI that it would not be forthcoming."

Why not?

Aerospace is a global industry. British companies, to succeed in world markets, must innovate and stay ahead of the competition. Although we need to join with our European partners to tackle ambitious projects such as the BFLA so that British companies retain a slice of world business now and in future, and while I welcome the recent link between Dowty and Messier Bugatti, British companies can--with the right support--create wealth and jobs for Britain into the next century.

My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) introduced the Liberal Democrat alternative to the Budget one week before the Chancellor introduced his Budget. That of my friend mapped out hope for the future and included £400 million in support for scientific research. Part of that was earmarked for aerospace support.

Last Friday, I met Graham Lockyer, managing director of Dowty Aerospace Landing Gear. He estimates that the aerospace industry needs £100 million of support annually, which is rather more than the Government are providing this year. The industry is not asking for cash handouts or to be featherbedded, but wants a flow of orders so that it can produce a flow of supply.

I agree with the hon. Member for Ruislip-Northwood (Mr. Wilkinson) that the Government should make up their mind on the replacement for the Hercules transport fleet. British companies such as Westland of Yeovil and Dowty Propellers in Cheltenham have already won contracts to supply key equipment to Lockheed for the C130J, one of

Column 764

the options. Many British Hercules aircraft are aging after decades in service and it is not fair that our service men should be expected to make do with aircraft of old design that have done sterling service for as long as 30 years.

The aerospace industry is not just about jobs today but about job and wealth creation well into the next century. The Government are placing that future in jeopardy. All the warning lights are red, with the fierce and increasing competition from abroad, the high and increasing cost of new products, and a slowdown in orders. This year, for the first time, design engineers have been made redundant. Once design teams are lost, it is virtually impossible to put them back together--and highly expensive if one can.

Aerospace is a global business and the people who work in it are extremely mobile. If there are no jobs for them in Britain, they will go abroad. If they see no long-term future for the industry in Britain, they will go abroad for good. There are competitors who would love to recruit designers from Britain because they are the best in the world. They would be recruiting not just the skills of our people but the world-leading knowledge that they gained in our companies. That would make it even more difficult for British firms to compete.

I urge the Government to act on all 19 of the Committee's recommendations. If they fail to do so, there is a danger that our aerospace industry will contract, jobs will continue to be lost, and we shall suffer a deteriorating balance of payments. I am critical of the Chancellor's Budget. Where were the measures to create wealth for five, 10 or 15 years down the track? We must encourage those companies which are at the leading edge of technology. We must train people to become the designers and the engineers of the future, and they must know that there is a secure, well- paid career ahead of them.

We must face up to the future and invest now ; otherwise the future will be bleak. If we fail to act now, I fear that the historians of the next century will write of the British Government of the 1990s : "Where was the strategy? Where was the vision?"

9.5 pm

Next Section

Home Page