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Mr. Phil Gallie (Ayr) : I congratulate the Select Committee on Trade and Industry on a wide-ranging and deep analysis of the aerospace industry and welcome many of the Government's responses. I will pick up in particular three of the recommendations and responses which affect Jetstream aircraft. The company operates from my constituency in Prestwick and was referred to earlier by my hon. Friend the Member for Ruislip- Northwood (Mr. Wilkinson).
Jetstream employs 2,600 people at Prestwick. Redundancy notices have been issued to some 460, and a further 130 site contractors are also to go. The situation perhaps reflects the realities of the marketplace and Jetstream, which designs and builds turboprop regional jet aircraft, does not try to hide behind the difficulties of the marketplace. Its preference, without a doubt, is for free markets. However, even with the GATT talks coming to what we all hope will be a successful conclusion, it is unlikely that freedom of the marketplace will be a consequence of that conclusion.
Three major projects are produced by Jetstream, to which I will initially relate my comments on recommendation 8 of the report. One of the projects is the Jetstream 31, which is a real trailblazer : it is a 19-seater aircraft, is the
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market leader worldwide and has taken up 36 per cent. of the 12 to 19-seat aircraft market. That has led Jetstream to develop Jetstream 41. It is a 29-seater and it was certificated in record time from the date of its announcement. Jetstream 41 has left the company's rival Dornier, which proposed a similar aircraft at the same time as British Aersospace, standing at the blocks.Jetstream 41 offers a plane which can meet all the performance criteria of its competitors in speed, range and payload and, above all, meet them at what is recognised to be the lowest cost on the market--the lowest cost without a substantial subsidy. It has real potential. The Jetstream 41 and 31 programmes have received some Government support. Some £11 million has been given through regional selective assistance, regional development and training grants. However, there have been almost 400 sales, which has provided earnings of about $2 billion.
That means that Jetstream has paid to the Exchequer in taxes some £64 million, which, when the £11 million grant is taken into account, leaves it as a net contributor to the British economy accounting for some £53 million. That does not take account of the wealth that has been generated in Ayrshire, in Scotland generally and throughout the United Kingdom. Many companies throughout the United Kingdom assist and supply the Jetstream projects.
Recently, Jetstream failed to win an order from Sky West, an American company, for some 20 aircraft. That was despite the fact that it was recognised that the Jetstream product was liable to have the lowest cost. The competitor, Embraer of Brazil, used the Proex system of subsidy and was able to discount its aircraft by between 12 and 15 per cent. Its aircraft were thus $1 million cheaper than anything Jetstream could possibly compete with.
That brings me to recommendation 8 of the report. There is a suggestion that the United Kingdom Government should make comparisons between the levels of subsidies offered here and those offered overseas. In the example to which I referred, that would be very helpful.
Mr. Foulkes : Is the hon. Gentleman aware that, for once, I agree with everything that he has said? I hope that that does not upset him too much and does not do him too much harm back home. Does he agree that he and all Ayrshire Members made those points when they met the Minister for Industry? Does he also accept that we were all a little disappointed by the lack of urgency that the Minister brought to the point? Will the hon. Gentleman join me in hoping that the Minister for Industry has now appreciated the seriousness of the situation in Prestwick and that he will deal with these matters rather more vigorously in his reply tonight than he dealt with them at our meeting last month?
Mr. Gallie : The hon. Gentleman may agree with all that I have said today, but I will hold back a little my total agreement with him on the issue. I was slightly disappointed by some of the things that my right hon. Friend the Minister for Industry said to me on that occasion. However, when I spoke to him later, he gave me assurances and said that he would meet the managing director of Jetstream. He assured me that if he received additional information, the issues would be addressed positively. I have every confidence that my right hon. Friend will do that in due course. I accept that it was necessary to provide additional information.
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Let us consider the facts behind the Brazilian offer in respect of Embraer. The salt is rubbed in when I discover that we have been providing technical aid to Brazil through our overseas aid programmes and through international debt write-off. Ministers must consider that aspect. I am in favour of overseas aid, but it must be provided reasonably. I do not expect it to bounce back and kick us in the teeth, as it has on this occasion. I am concerned about the fact that a further order of 20 aircraft is probably coming up. I hope that my right hon. Friend the Minster will address that issue and ensure that the same conditions do not prevail the next time round.Prestwick has recently taken on the advanced turbo-prop programme. It picked up a considerable number of problems, but the designers are coming to grips with them. Indeed, British Airways has commended those designers on the way in which they have tackled some of the long-standing problems of the ATP. The intention is to turn the ATP into the new Jetstream 61 which will compete--and I am confident will beat--the ATR 72, which has the majority market share in the 60-seater market.
The Government have provided assistance through regional aid through the Scottish Office. To date, no payments have been made, but with the successful transfer of the ATP to Prestwick, I believe that that payment is now due. When we consider the range of aircraft that Jetstream needs to build if it is to stay in that sector of the market, it is clear that there are gaps in the 50-seater and 70-seater ranges. In those respects, Jetstream needs, and is looking for, partners. At the same time, it will need assistance with launch aid, about which we have heard much tonight.
I now refer to recome third of the costs associated with the development of aircraft above the 100-seater range. One can compare the development costs and profitability of smaller aircraft. Larger aircraft are restricted to one third support payments. I query whether it would be possible, under existing arrangements, to go above one third launch aid support for aircraft beneath the 100-seater range. That would be a great benefit to Jetstream. When we consider the potential market for aircraft in that range, we must acknowledge that any money brought forward initially by Government support for projects such as the Jetstream 61 and 51 and, some day, the 71 will be well spent if the returns are as good as they have been in respect of the Jetstream 31 and 41. I am confident that, with the knowledge, capability and design expertise in Jetstream at Prestwick, such good returns can certainly be achieved. Recommendation 13 of the Trade and Industry Select Committee report refers to the Ministry of Defence procurement programme. I was particularly pleased to see my hon. Friend the Minister of State for Defence Procurement here. Not long ago, he met me and the managing director of Jetstream to consider the Department's trainer provision, currently T30s and T31s.
Mr. Brian Donohoe (Cunninghame, South) : Has anything come of that meeting with the Minister of State for Defence Procurement, given that it is the wish of the Jetstream management and the work force that an order be placed by the Ministry of Defence to replace old aircraft?
Mr. Gallie : I thank the hon. Gentleman for that intervention. Ministry of Defence officials have met people
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from Jetstream at Prestwick to discuss those issues. A paper was tabled which laid down what Jetstream considered to be some long-term financial advantages. I am not aware of the final conclusions, but I should like at least to think that the Ministry of Defence and Jetstream can find a solution that will benefit them both. On free trade, Britain cannot be unilateralist. Therefore, I again refer to my first point and ask my right hon. Friend the Minister for Industry to analyse every aspect of the subsidies which operate in the international aviation market and ensure that Jetstream can compete on a level playing field.My right hon. and learned Friend the Chancellor mentioned a 20-seater aircraft tax exemption to be applied to travellers within the United Kingdom. Given the current situation, and given the sort of aircraft that service the highlands and islands, it would be reasonable to extend that tax relief to 70-seater aircraft. That, above all, would help Jetstream with its excellent project. My final point relates to the export credit guarantees on Jetstream 31 and 41 aircraft. If the time elements of seven and 10 years were extended to 12 years, it would be a great boost to the excellent products manufactured by Jetstream at Prestwick.
9.20 pm
Mr. Adam Ingram (East Kilbride) : I am only the second member of the Select Committee to participate in this debate. I echo the sentiments of my hon. Friend the Member for Sheffield, Central (Mr. Caborn) and pay tribute to the clerks and staff of the Committee, and to the specialist advisers. Undoubtedly, they assisted us in producing a report that has been warmly welcomed by everyone connected with the aerospace industry, other than the Department of Trade and Industry.
Given the time scale I now face, I hope to comment on the Government's response to the report. It is interesting to note that not one Tory member of the Select Committee is present in the House tonight. It is also interesting to note that Scottish National party Members are not present either, although more than 8,000 manufacturing jobs in Scotland are tied up in the aerospace industry.
The British aerospace industry is vital to UK plc. It is one of the high- value industries and is a major contributor to employment in a high-skill, high-wage sector, exports and technology. More important, the industry is vital to the regions of the United Kingdom. Until last year, Rolls-Royce was the largest manufacturing employer in my constituency of East Kilbride. It has now gone down the pecking list to become the second largest manufacturing employer. It has dropped thousands of jobs over the years.
I do not have time to go into the background of Rolls-Royce, but it is no exaggeration to say that there is extreme nervousness among the work force at East Kilbride and the sister plant at Hillingdon in Glasgow. Certainly, the work force are critical of the company but they have a certain understanding of the dilemma and difficulties that it faces. However, the workers do not have confidence in the Government and the way in which they approach such a crucial industry.
If my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) had spoken in the debate,
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he would have referred to the situation at British Aerospace at Prestwick. I am sure that he would have made a similar comment about the Rolls-Royce workers in Glasgow and East Kilbride. Those workers have no confidence whatever in the Government. They know that the industry is doing its best and the company is fighting hard in a competitive market without the Government's support.We have a lot to be proud of in Britain's aerospace industry, but we have more to be concerned about for the future. Engineers do not live on history alone. One message game across loud and clear in all the evidence given by aerospace manufacturers in the United Kingdom and the main suppliers--there is a need for a coherent Government strategy for the aerospace industry if the country's relative international strength in aerospace technology is to survive beyond the end of this decade and into the next century.
Every company that gave evidence to the Committee--Rolls-Royce, British Aerospace, Short Brothers, GEC, Dowty, Westland, the major trade associations, the Electronic Engineering Association and the Society of British Aerospace Companies--highlighted the growing concern about the near crisis in the industry.
There is no doubt that the industry is suffering, and will continue to suffer, because of the Government-created UK recession, the international recession and the effects of the massive and largely unpredictable downturn in defence expenditure world-wide. Uniquely among our competitors, that suffering is compounded in the United Kingdom industry by an indifferent and unsupportive Government. The Americans, French, Germans, Japanese and the emerging aerospace economies in Taiwan, Indonesia and Brazil all have the active support of their Governments. Those Governments recognise the long-term planning and investment horizons, which are an integral feature of aerospace technology, and assist their home-based companies accordingly. It is only in the United Kingdom that the view remains within Government that they should have a hands-off approach and that the market should dictate the future developments of this most strategic of industries.
The difference in strategy between, say, the United Kingdom and the United States could not be more stark. The DTI and the Government dither about what to do with the Select Committee report and the fears and worries of the British aerospace industry, while at the same time cutting the support that they give the industry. Compare that with the United States aerospace industry. One of the first steps of the incoming Clinton Government was to lay down a revised technology and investment plan, committing more than $17 billion for the period 1994 to 1997. The bulk of that will be of direct benefit to the United States aerospace industry. By comparison, our Government are cutting support to one of our crucial industries. In its evidence to the Committee, Shorts, which I mentioned earlier, highlighted the difference in approach between this country and competitor countries. It told the Committee that it knows, from particular collaborative projects in which it has been involved, that significantly higher levels of financial assistance are available in the Netherlands, France, Germany, Spain, Canada and Japan than are available to it.
Mr. Gallie : Will the hon. Gentleman give way?
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Mr. Ingram : No. The hon. Gentleman took enough time, and I am not going to give him more time.
I am sure that the chief executive of Dowty spoke for the whole United Kingdom aerospace industry when he told the Committee that the company was up against not just competitors but other Governments. The tragedy is that the United Kingdom Government are rapidly becoming one of those Governments that the United Kingdom industry is up against. It is for that reason that the Committee laid down its 19 recommendations. The report was unanimous. There was a Conservative majority on the Committee and 19 recommendations set out what the Committee thought was necessary for the future of the United Kingdom aerospace industry.
The recommendations fell into two main categories. The first concerned the need for public money to be allocated to the industry. That public investment should be targeted in two key
areas--implementation of the national strategic technology acquisition plan, which my hon. Friend the Member for Sheffield, Central spoke of in detail, and an improved allocation of launch aid for specific projects.
The other key area dealt with the need for a coherent strategy. I shall make two brief points about NSTAP and launch aid. NSTAP is not an over- ambitious concept, nor is it greedy in its demand for public funds. It is calling for £1 billion to be invested in this strategic industry over 10 years. I see the grocer on the Government Front Bench smiling. The Minister does not understand how important investment in those industries is. That request for investment would be matched by the industry itself. It must be set against the $17 billion which was mentioned earlier, and which has been laid down for a four-year period in the United States.
Given the time constraints on me, I shall conclude by saying that I wanted to mention in detail the letters that Rolls-Royce sent to members of the Committee and to hon. Members who are interested in the industry. However, I draw the Minister's attention to a letter that refers to the importance of the recommendations in relation to the NSTAP report and to launch aid. Rolls-Royce is not a company with its hands out, greedily dipping into the taxpayer's pocket. It contributed greatly to the well-being of the country. If the Minister has not already read that letter, it would be well worth him taking the time to do so.
Another comment was made about the Select Committee's report. Recommendation 19 set out a request, which was not over-radical, for a coherent strategy for the industry. The response from the Minister and the DTI was nothing short of scandalous. It is worth repeating a quote about that response. It is little wonder that Sir Barry Duxbury of the Society of British Aerospace Companies retorted :
"Yet the response implied an absence of strategic thinking." That absence has major implications for tens of thousands of manufacturing jobs. If the Government do not decide soon what they will do, we shall not have an industry left that is able to compete with the best in the rest of the world. We have only a short time scale in which to do that. I shall listen carefully to the Minister's reply to the Select Committee report.
9.30 pm
Mr. Roy Beggs (Antrim, East) : I congratulate the Chairman and members of the Committee on their excellent report. The maintenance of a successful United
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Kingdom aerospace industry is of even greater importance to Northern Ireland than it is to Great Britain, although that importance has been outlined by hon. Members with constituency interests on the mainland.Short's of Belfast is the oldest aircraft manufacturing company in the world. It was founded by the three Short brothers at the beginning of the century. It was in Government ownership from 1943 until it was privatised in 1989 and then acquired by Bombardier. Since privatisation, almost £200 million has been invested in a programme of re-equipping and modernisation. That programme is nearing completion. Annual sales have doubled. The company has returned to profitability and, as Northern Ireland's largest employer, with more than 7,000 employees and approximately 3,000 jobs among local suppliers, its growth reflects Short's success.
The company manufactures the Short's Tucano military trainer under licence and designs and manufactures aircraft components and structures for Boeing, Rolls-Royce, British Aerospace, Fokker, Lear Jet, Canadair and others. Most of Short's business is based on international collaboration with other Bombardier aerospace companies, including a partnership with Fokker and Deutsche Aerospace on the Fokker 100 aircrft, joint ventures with Hurel- Dubois for engine nacelles and with Thompson in missiles. The design and manufacture of guided weapons systems for very short-range air defence remains a profitable aspect of Short's business.
Since privatisation, the company has made rapid progress as a result of focused investment and radically improved manufacturing processes. Its competitiveness and capability within the aerospace industry has never been better. The company is in a sound position to cope with the recession in the commercial aircraft industry and the decline in military orders, but today's strength could be threatened in the long term unless there is closer co-operation between the Government and the British aerospace industry as a whole in the immediate future.
The United Kingdom industry is crying out for a national plan to maintain the United Kingdom's technological advantage. Adequate levels of Government support for research and development, launch aid and other investments is essential to safeguard the industry in the future. The investment programme at Short's, the process improvements, freedom to harness the skills, effort and enthusiasm of the work force and competitiveness in a commercial environment have made Short's the best cost producer in the Bombardier aerospace empire. Since privatisation, the company is putting more and more business into Northern Ireland through its local support development progamme.
I have some questions for the Minister. Have the Department of Trade and Industry and the Ministry of Defence got the same level of commitment as the United Kingdom aerospace industry to maintaining that industry at the leading edge and in a position of strength in world markets? Have the DTI, the MOD and the Treasury reached an agreement yet with the United Kingdom aerospace industry on the long-term future plans for that industry? Do the Government accept that there should be a national technology acquisition plan? What proposals does the DTI have to support and encourage the United Kingdom aerospace industry to continue to invest, even through recession, in new project development and new
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technology acquisition to prevent our international competitors from achieving advantage through their on-going investment programmes?9.35 pm
Mr. Derek Fatchett (Leeds, Central) : I also congratulate my hon. Friend the Member for Sheffield, Central (Mr. Caborn) and his Committee on producing the unanimous report. Those of us who have sat through the whole debate have seen that unanimity reflected in every comment. It will not be unique that the only discordant voices will be from the Government Benches, when all the arguments made by the Minister's hon. Friends and my hon. Friends will be ignored and the Government's line that it should all be left to market forces will be repeated.
My hon. Friend the Member for Manchester, Blackley (Mr. Eastham) made two important points, about the GATT negotations and about the aerospace industry. I am sure that all hon. Members feel that we need transparency in the aerospace industry--particularly in view of the American subsidies--or the European industry will be placed at a considerable disadvantage. I hope that the Government, through the European Union, will take a strong line on that.
My hon. Friend the Member for Blackley also mentioned the skills needed in the aerospace industry and those that have already been developed. A key aspect of this important industry is not just its contribution to the balance of payments or that it is a high-tech industry, but that it is one of the most highly skilled industries in the country, if not the highest. Some 40 per cent. of the country's skilled and technical personnel are employed in the aerospace or aerospace-related industry. We cannot afford to lose that skilled manpower and investment, and my hon. Friend was right to draw that to our attention.
The hon. Member for Ayre (Mr. Gallie) made a cogent case for public intervetion and mentioned the spin-off that it has for the public and private sectors. It is a rare occasion, but his contribution is worth another look. I suggest that he reads it again, because he will find that, instead of somebody who strongly believes in the market, he is sombody who believes strongly in public intervention.
The hon. Member for Ayr made a very strong case for Jetstream showed his concern for it. His concern is shared by my hon. Friends the Members for Carrick, Cumnock and Doon Valley (Mr. Foulkes) and for Cunninghame, South (Mr. Donohoe). They also support the Committee's recommendation in relation to launch aid and the need for public expenditure in that respect.
Two key issues came out of the debate. The first was defence procurement and the extent to which the aerospace industry relies on it. In paragraph 108 of the Select Committee's report, an unnamed witness from GEC made comments which strongly sum up the arguments in favour of some system of defence diversification :
"if we are not careful, almost a classic recipe for eventual run-down and decline of the aerospace industry, because the Ministry of Defence is, in aerospace terms, the main procurer/buyer without having the responsibility for the health of the industry. The DTI, of course, has responsibility for the health but has not got the clout to actually do anything about it."
That summarises the problem between our commitment to defence and the rundown in defence expenditure. The hon.
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Member for Ruislip-Northwood (Mr. Wilkinson) made an interesting contribution about defence procurement and the role for the Government, but, along with every other speaker, he recognised the important point that defence expenditure will decline in the future. When one compares the comments made to the Select Committee by a representative of GEC with the response from the Minister, it is clear that there is a great gulf between the attitude expressed by one of our leading companies and that of the Government. The Minister said that matters should simply be left to the market. He said it was up to individual companies to sort out their own futures. No one would accuse GEC of being a socialist organisation or of being anti-market. It is clear, however, that that company has recognised something that the Government are either too blind or too stupid to see, because it appreciates that the Government have a role to play if we are to keep the skills and technology that are tied up in the aerospace industry. President Clinton and other Heads of Government have recognised that, but our Government believe that matters should simply be left to the market.I hope that, even at this late hour, the Minister for Industry will recognise that the Government should make a different response to the calls from industry and that they should recognise the importance of skills and technology. At the end of the debate, perhaps the right hon. Gentleman will say to my hon. Friend the Member for Sheffield, Central and all those who supported him in the Select Committee and in the House tonight, that the Government accept their responsibility to help those companies that rely on defence orders to diversify their skills and technologies into new civilian -based activities. The first issue to consider is defence procurement and its future. The second issue is the role of the Government and their responsibilities. My hon. Friend the Member for East Kilbride (Mr. Ingram) was right to say that our defence industry competes not only against other foreign industries, but against their Governments. The key issue that we must recognise is that, as my hon. Friend said, this is a global industry in which the players are not simply companies, because in every other country the players are companies and Governments working together.
The key passage in the Select Committee report is contained in four paragraphs on pages 38 and 39 that discuss the role of Government support. It is worth reminding ourselves that that report is an all-party document and that its recommendations are unanimous. Each of them suggests to the Government that there must be greater public support for various activities relating to the aerospace industry. The reasons set out in those four paragraphs are understood by everyone except the Minister. Everyone else is aware that the British aerospace industry, in common with every other aerospace industry, needs long-term investment in research and development. The financial market cannot satisfy those needs, so the answer must be for the Government to adopt a more proactive role. Labour and Conservative members of the Select Committee recognised the need for additional expenditure.
Apart from funding, hon. Members have also identified another problem that confronts British industry and British aerospace industries in particular. Those industries suffer from one other crucial weakness : they simply do not know
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where the Government are going strategically. There is no clear definition of the relationship between Government and industry. I know that that may come as a surprise to you, Madam Speaker. I also know that you read widely, and I am sure that you read the publication of the President of the Board of Trade on politics and industry, which appeared when he was going around the rubber chicken circuit, running his campaign against the then Prime Minister. The right hon. Gentleman said in that work that the aerospace industry was the key industry that Government had to support and with which they should define a proper role.That is the view of the President of the Board of Trade. Unfortunately, he did not seem to have gone from one office to another in the Department of Trade and Industry to explain that role to the Minister of State who is now responsible. It is so clear and frustrating and comes out in the evidence and conclusions of the Select Committee report, that British industrialists do not know what the Government expect or what they can expect of the Government. We often hear the phrase that we need a level playing field. The Government cannot define the playing field because they feel that they have no responsibility in that direction. We and the Select Committee want the Government to play a clear role in defining their purpose and function in relation to the aerospace industry. Many questions have been raised, which the Minister would like to answer. What I should like to hear from the Minister--crucial and sadly lacking in any contribution that he makes to this or any other debate--is agreement that we need a strategic view and a vision of partnership between Government and industry and a recognition that that would help and assist an important industry such as British Aerospace. The Committee report has set that out and it is now up to Ministers to live up to that challenge. I fear that they will fail yet again.
9.45 pm
The Minister for Industry (Mr. Tim Sainsbury) : I shall begin with three lots of congratulations. First, I congratulate and thank the Select Committee on Trade and Industry on the painstaking and thorough work in its report on the aerospace industry. In the comments that the Committee made on the Government's response, I was pleased to see that we have made "a useful beginning" in translating its recommendations into action. I know that Select Committees are not always so generous to the Government, and for a moment in tonight's debate I thought that that generosity was slipping away. I also congratulate all hon. Members on both sides of the House who have spoken. I hope that what they said has reaffirmed the importance that the House attaches to the industry.
Thirdly, I congratulate the industry itself. In 1992, in the midst of one of the worst downturns in the civil and military aerospace industry since the war, United Kingdom companies continued to perform well with sales of over £10 billion, exports worth £7 billion and a positive balance of trade of well over £2 billion, and was one of the major sources of employment with more than 137,000 employees. As the hon. Member for Manchester, Blackley (Mr. Eastham) said, it is something that we are really good at. Plenty of companies in the sector are good examples of world leaders--British Aerospace in military technology and the design of large and advanced wings, Rolls-Royce
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plc across a whole range of civil and military engines, GEC, Westland and, as the hon. Member for Antrim, East (Mr. Beggs) mentioned, Short's, a company that I have visited on more than one occasion and one that has transformed to become among the world leaders in its field.However, as hon. Members have said, there are problems. There have been job losses and the industry has recently suffered. I share the concern that has been stressed about those who have lost their jobs. Nevertheless, those losses must be placed in context. No person or business is entirely immune to market conditions. That even includes the mighty Boeing company, which recently announced production cuts that will lead to job losses of 3,000 now and of 27,000 by the middle of next year.
Mr. Barry Jones (Alyn and Deeside) : Will the Minister say whether the airbus issue has been withdrawn from the GATT talks tonight? Will he tell the House what the latest situation is, as I have a big constituency say in that decision?
Mr. Sainsbury : I know of the hon. Gentleman's constituency interest. I shall come to the GATT situation later. I have been in the House for three years and I do not know how up to date I will be-- [Interruption.] I am sorry, I meant three hours : the situation is changing hourly, not just yearly.
Hon. Members will know of many other job losses throughout the world in the industry--times are hard. However, I do not believe that they will remain so for ever or even for long. In those circumstances, obviously the industry must ensure that it emerges from the recession lean, fit and ready to take on the challenges and opportunities of the longer-term growth in the market.
The primary responsibility lies with the industry to restructure, forge international alliances, plan for the future, benchmark itself against its leading competitors and ensure that it operates at peak efficiency. Governments can help by getting the economic climate right, emphasising the need for competitiveness and establishing sensible rules governing world trade such as GATT. Ultimately it is for the industry to ensure its own future by effective management. There has been a lot of talk today about the overall policy framework. Indeed, much of the Select Committee's work has been to look at what the Government's role is or should be. In its recommendation 19, the Committee asked the Government to set out our overall policy framework in more detail. If the Government are to have a sensible understanding with the aerospace industry of where our and their priorities lies there must be adequate communication between us. Helping United Kingdom business to compete in world markets is our shared objective. Therefore, we shall continue our close dialogue with companies, trade associations and the people of the industry. Within that framework, industry can make clear to us its priorities.
However, we do not believe that it would be sensible for the Government to make a once and for all strategic statement. After all, the Government are not the key player.
Mr. Caborn : Will the Minister give way?
Mr. Sainsbury : No. I must press on. Time is limited.
The Government have a responsibility to set a climate in which industry can prosper by their economic and fiscal policies, by establishing a free and open trade regime and,
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in industries such as aerospace where the market finds it difficult to respond to all the industry's needs, by taking specific measures such as launch aid and the civil aircraft research and demonstration programme. It is for industry to take the lead in ensuring that it can win in world markets.The hon. Member for Sheffield, Central (Mr. Caborn) and several other hon. Members referred to the national strategic technology acquisition plan. The Committee's report placed a great deal of weight on it. The plan was produced by the aviation committee--a useful committee set up to advise the Government. The document is extremely useful and to some extent groundbreaking, as I hope that I made clear last July when I adopted the technological priorities which it contains on behalf of my Department.
By producing the NSTAP when it did, the aeronautics industry has led the way in carrying through the approach to technology foresight and the prioritisation of research and technology which was set out in the Government's science and engineering technology White Paper "Realising our Potential". That is not to say that NSTAP is a simple and self-sufficient list of instructions which one needs only to follow closely to guarantee immediate techn in practice. First, the generic categories that it represents are to be broken down into more specific areas of direct application. Secondly, those categories need to be mapped on to the research effort that is already going on, especially in industry, my Department, the Ministry of Defence, the Civil Aviation Authority, the Science and Engineering Research Council, academia and Europe.
Until we are clear about the range of current activity, we cannot identify the gaps and overlaps that may be limiting the effectiveness of our efforts in research and technology acquisition. Such painstaking work is an essential prerequisite in assessing whether extra effort is needed.
In order to achieve this, a working group involving industry, the Department of Trade and Industry, the Ministry of Defence, SERC and the Office of Science and Technology is carrying out pilot studies which are intended to refine the analysis in the NSTAP. That involves taking three category 1 technologies, assessing industry's needs in the light of commercial opportunities, relative priorities and benefits to the United Kingdom, and matching the results against existing industry and public sector programmes. Those studies will take some months, after which we can judge the best way to proceed. Mr. Foulkes rose --
Mr. Sainsbury : I cannot give way, as time is limited, if the hon. Gentleman will excuse me.
That is not to say that NSTAP has only had an influence in the world of theory and not in the real world. The priorities set out in the plan have served as a guide in the selection of the project to be supported under the second CARAD programme. Those priorities are also helping to define the areas that should be emphasised under the European Community framework 4 programme.
By its very nature, research and technology acquisition does not normally allow for a precise identification of the
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appropriate level of resource for any given project. If I may explain by example ; we might be seeking to identify an alloy with certain properties. We could have one team in one lab working on the research part time, or several teams in several laboratories working full time. One cannot know in advance whether the first or the second team will arrive at the right answer. The pharmaceutical industry is a good example of that.However, in CARAD we are not dealing with just one project but a range. My Department's second and third year CARAD programme was rigorously assessed to ensure a clear focus on the priorities that have been identified by the industry. It must be for Government to determine the priorities between the various demands of industry and the economy as a whole and, therefore, the resources to be allocated to CARAD.
We take fully into account the importance of the industry, the range of priorities that have been identified, the importance of maintaining our technological competitiveness and the very substantial resources being devoted to research and development for the aerospace industry by that industry, the Ministry of Defence and other publicly funded science and technology programmes in Whitehall, the science base and Europe.
It is against that background that I have to tell the House that I do not believe that any reliable or precise estimate can be made of the right level of public support for research and technology acquisition. It is a matter of judgment in the light of all the circumstances and subject to regular review as those circumstances change. Indeed, the very process of review, involving close liaison between my Department, the industry and other organisations, is building the partnership that we need to bring the NSTAP priorities to fruition and hence to influence the research priorities in industry, Whitehall, defence, the science base and Europe. In the limited time available I do not intend to comment directly on the Government's role as a customer. That is a matter for my right hon. Friend the Secretary of State for Defence. However, as hon. Members will have seen, my hon. Friend the Minister of State for Defence Procurement has been present and has noted what has been said.
Some hon. Members have spoken--notably the hon. Member for Leeds, Central (Mr. Fatchett)--as if the Government did nothing for the industry. So I make no apology for running once again through the support that the industry already enjoys, since it is the envy of many other equally significant sectors.
Since 1979, we have made available more than £1.5 billion in launch aid, regional development grants and support for research and development programmes. The Export Credits Guarantee Department has provided £735 million in export credit guarantees during the past three years. Launch aid is unique to the aerospace industry, which is the only sector with its own dedicated DTI research budget. The House should recognise the considerable scale of support that the industry has had and continues to enjoy.
The GATT Uruguay round has been mentioned and it is reaching what seems to be a nail-biting conclusion. We have been actively working, through the EC and directly, to press for more equitable and comprehensive disciplines on the trade in civil aircraft, their engines and equipment.
My hon. Friend the Member for Ayr (Mr. Gallie) mentioned Jetstream. I know that he takes a great interest in that company and I look forward to meeting him and the
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managing director later this week. Jetstream has made it clear that job losses were necessary to improve productivity, reduce costs and reflect present demand. Prestwick has benefited from previous Government assistance and substantial regional selective assistance is on offer from the Scottish Office for future development. Jetstream's current problems arise from the weakness in the market and the world-wide overcapacity and not from the lack of Government support. They are seeking a more international, collaborative partner to put their business on a sounder footing, and we are supporting the company when asked to do so.My hon. Friend the Member for Ayr mentioned the subsidies received by others. We must act, within international rules, to challenge subsidies offered to overseas competitors. That does not always bring quick results. Jetstream met my Department last week to discuss its evidence and we are continuing to discuss how best to pursue the matter.
At the start of my speech I paid tribute to the industry. It has received considerable support from the Government and we shall continue to support it. It is one of our leading exports ; it provides employment throughout the country ; and it stands at the leading edge of technology. We should celebrate its success, and I am pleased to do so tonight.
I apologise to those hon. Members who have made points to which I have not responded. I shall read the debate and I hope to respond to them in writing. I apologise for the shortness of time and I am grateful to those hon. Members who contributed to the debate. It being Ten o'clock, Madam Speaker-- interrupted the proceedings, and the Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of estimates).
Madam Speaker,-- pursuant to paragraph (5) of Standing Order No. 52 (Consideration of estimates), put the deferred Questions on Supplementary Estimates, 1993-94 (Class II, Vote 2 and Class IV, Vote 2).
Class II, Vote 2
Question put,
That a supplementary sum not exceeding £98,121,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31 March 1994 for expenditure by the Foreign and Commonwealth Office on grants and subscriptions etc. to certain international organisations, special payments and assistance, scholarships, military aid and sundry other grants and services :
The House divided : Ayes 309, Noes 54.
Division No. 26] [10.00 pm
AYES
Ainsworth, Peter (East Surrey)
Aitken, Jonathan
Alexander, Richard
Alison, Rt Hon Michael (Selby)
Allason, Rupert (Torbay)
Amess, David
Arbuthnot, James
Arnold, Jacques (Gravesham)
Arnold, Sir Thomas (Hazel Grv)
Ashby, David
Aspinwall, Jack
Atkins, Robert
Atkinson, Peter (Hexham)
Baker, Nicholas (Dorset North)
Baldry, Tony
Banks, Matthew (Southport)
Banks, Robert (Harrogate)
Bates, Michael
Batiste, Spencer
Beggs, Roy
Beith, Rt Hon A. J.
Bellingham, Henry
Bendall, Vivian
Beresford, Sir Paul
Biffen, Rt Hon John
Bonsor, Sir Nicholas
Booth, Hartley
Boswell, Tim
Bottomley, Peter (Eltham)
Bottomley, Rt Hon Virginia
Bowden, Andrew
Bowis, John
Boyson, Rt Hon Sir Rhodes
Brandreth, Gyles
Brazier, Julian
Bright, Graham
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