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Aerospace Industry

3. Mr. Peter Pike (Burnley): What recent discussions she has had with the United Kingdom aerospace industry on the changes predicted as a result of the events of 11 September. [9549]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): My colleagues and I are in very close contact both with individual companies and with the trade associations in order to understand and evaluate the effect of the appalling events of 11 September on the aerospace sector. We are already of course putting in place measures to help the workers affected by the redundancies that have been announced, but it is too early to predict the full impact on the sector.

Mr. Pike: My right hon. Friend will know that in Burnley, as in many places, we have lost jobs in the aerospace industry since 11 September. Will she confirm that the Government believe that it is a high-skill, high-value industry crucial to the future of our economy, and that they will do everything possible to secure its future? Will they also do everything possible to ensure that those people who lose their jobs can retain their skills for the advantage of the industry and the country in years ahead?

Ms Hewitt: I entirely agree with my hon. Friend about the importance of the aerospace sector: it is a world-class high-tech manufacturing sector. During the past three years, we have invested £1 billion in support, through Airbus UK and Rolls-Royce, to ensure that we maintain that world-leading position. I also draw his attention to the very welcome announcement a few days ago that Lockheed and its British partners have won the new contract for the joint strike fighter. That will be worth more than £22 billion in investment and orders over the

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next 10 years and will help, with further Government backing, to ensure that workers and businesses in the aerospace sector have a strong future.

Mr. John Wilkinson (Ruislip-Northwood): Traditionally, at difficult times for the civil aerospace industry, capacity is utilised by appropriate increases in orders for the military manufacturing sector of the industry. The Secretary of State's announcement of the Lockheed Martin order for the JSF—in which we are participating—is especially welcome news. Can she make it clear that the Ministry of Defence will now sign a contract for the A400M aircraft that will ensure the continuance of many British jobs? That contract is especially important in view of the Italian Government's decision not to sign.

Ms Hewitt: We will continue to work closely with colleagues in the Ministry of Defence to ensure that the British aerospace industry continues to flourish and to meet the needs of the defence as well as the civilian sector. I shall certainly raise the hon. Gentleman's point with my right hon. Friend the Secretary of State for Defence.

Mr. Mark Todd (South Derbyshire): The announcement of 1,900 job losses at Rolls-Royce in the Derby area shocked many local people. Steps are being taken to deal with the short-term implications of what we all consider a temporary setback for a great company. However, what steps are being taken to ensure that when the upturn comes, the investment that Rolls-Royce and other aerospace businesses want to make is located in the UK? Furthermore, what steps have been taken to ensure that the supply chains of that company are shortened and brought as far as possible within a UK compass?

Ms Hewitt: The announcement of the Rolls-Royce redundancies was an appalling shock, especially for workers in my hon. Friend's constituency and other parts of Derby. We are working closely with the company and with colleagues in the Employment Service to ensure that every support is given to the workers who face losing their jobs. The Minister for Industry and Energy will shortly meet the Rolls-Royce taskforce to ensure that my hon. Friend's points are taken on board as we develop an effective strategy so that the aerospace sector remains competitive and employs large numbers of British workers in very good jobs.

Dr. Vincent Cable (Twickenham): Is the Secretary of State aware of the possibility of serious misuse of the public funding of £530 million for the Airbus project? Has she realised that, whereas in the rest of Europe industrial assistance is being spread throughout the supply chain, in the UK, all the DTI funding is going to the prime contractor, which in turn is demanding that all the British suppliers provide the full up-front development costs, putting them at an enormous competitive disadvantage? Will she investigate that matter and intervene if necessary, because there is a real possibility that large amounts of taxpayers' money will end up providing employment for Italian subcontractors?

Ms Hewitt: The hon. Gentleman makes an important point. We are of course in touch both with prime contractors and the first-tier suppliers as we look at the

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impact—in particular of 11 September—on the aerospace sector. I shall certainly look further at the point that he raised.

Mr. Lindsay Hoyle (Chorley): The announcement about the joint strike fighter and the benefits that will come to the north-west from the creation of many thousands of jobs is wonderful. However, the supply chain is the worry. When we follow the supply chain back through BAE Systems, we find that some of the work is going to the former Russian bloc. I fear that that is uncompetitive and will disadvantage local skills and companies. Can my right hon. Friend help?

Ms Hewitt: We are working with the aerospace sector, as we are with other sectors, to ensure that throughout the supply chain our companies and workers are competitive, wherever the competition comes from. Having considered the implications of the award of that contract to Lockheed, I understand that we are looking not only at £22 billion of orders during the next 10 years, but at some 7,000 jobs throughout the British supply chain as a direct result. I am sure that my hon. Friend will join me in welcoming that news for the British aerospace sector.

Wave and Tidal Power

4. Mr. Alistair Carmichael (Orkney and Shetland): What steps her Department is taking to develop electricity generation using wave and tidal power. [9550]

The Minister for Industry and Energy (Mr. Brian Wilson): The Department is taking a number of important steps to develop electricity generation from wave and tidal power. We have supported the development of the world's first commercial wave power station on Islay, and we recently announced that we will provide further support to Wavegen—the company involved—for its most recent project. Earlier this year, the wave programme was extended to cover tidal-stream technology.

Mr. Carmichael: The Minister is no doubt aware that the Select Committee on Science and Technology concluded last year that the United Kingdom should establish a marine energy test centre. He is no doubt also aware that since then, research commissioned by the Scottish Executive and Highlands and Islands Enterprise has concluded that the best site for that centre would be in Stromness, Orkney. What discussions has he had with the Scottish Executive and Highlands and Islands Enterprise to move that project forward to the next stage? Is he prepared to commit any funding from his Department towards establishing the centre?

Mr. Wilson: The announcement to which I referred about further support for Wavegen is relevant to the testing station on Orkney, because I understand that Wavegen will develop the technology for an offshore wave-power machine, which will be tested there. There is close liaison between those responsible for our UK-wide policy and those responsible for what is happening in Scotland. We work very closely with the Scottish Executive on all energy issues, especially renewables, and

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the funding will come from the DTI where appropriate, and from the Scottish Executive or Highlands and Islands Enterprise where that is appropriate.

Dr. Nick Palmer (Broxtowe): The Minister will share the concern of Members who read the report in the recent Parliamentary Office of Science and Technology bulletin that changes to reduce the price of electricity have resulted in a decline in the amount of energy produced from renewable sources in recent months. Will he be particularly vigilant to ensure that in attempting to reduce energy costs, we do not score an own goal?

Mr. Wilson: My hon. Friend's point is extremely well taken and succinctly expressed. There is a problem, but the new electricity trading arrangements are working well in their own terms. NETA has led to a significant 20 per cent. reduction in the wholesale price of electricity, but there is no doubt that NETA, among other factors, has had an impact on renewables, especially wave power and combined heat and power. That is why I have announced a consultation exercise on NETA's implications for renewables and CHP in its first few months of operation, but the rhetoric must match the reality, and I will be very interested to know about NETA's effect. NETA has many benefits, but we must also pursue and give substance to our targets on renewables and CHP.

Mr. John Whittingdale (Maldon and East Chelmsford): May I make it clear to the Minister that the Opposition strongly support efforts to encourage the development of renewable energy sources, such as wave and tidal power? We welcome the measures that he mentioned, and those to which the Secretary of State referred earlier, but may I press the Minister on the issue that has just been raised? The support that he described is almost worthless when set against NETA's effect on the industry. As he said, NETA has been very successful in driving down electricity prices, but it is also driving renewable energy producers out of business. Does he accept that if the Government are to meet their renewable energy targets—rather than waiting for the outcome of a review or the consultation exercise to which he referred—action is needed straight away?

Mr. Wilson: I am delighted to hear that the Tories now support our policies on renewable energy, because the reality is that they never did anything about it. If they had done so, Britain might have kept its lead in wind power in particular and we, instead of Denmark, might have a £4 billion manufacturing industry today. I am determined that we will not lose our technological lead in wave and tidal power, CHP and other industries that can contribute enormously not only to our energy policies but to our manufacturing policies. That is our objective, and it is why I am so determined that we shall not be diverted from those targets. We will study NETA's effect. Ofgem is an independent regulator. Its priority is to reduce the price of electricity, which is also a popular and successful policy, but we have our targets for renewables and CHP, and we must consider the reality of what is happening in the first few months of NETA's working.

Mr. David Chaytor (Bury, North): Is it not the case that the European Union has now set a target of 20 per cent. for renewables, by contrast with the 10 per cent. by

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2010 that we have set? Is it not now time for us to look beyond 2010, and to set higher targets for renewables in the years ahead? In the current context of international terrorist threat, will my hon. Friend tell the House whether he personally would feel safer living next to a wind farm or a nuclear power station?

Mr. Wilson: I would feel extremely safe living beside either, and no one should suggest otherwise at this or any other time. On the wider point, I should like even more ambitious targets for renewables to be set, and those involved in the energy review are studying that issue among others, but I am not interested in setting targets that cannot be achieved, so if we set a higher target for renewables, which I would strongly welcome and support, we must do so on the basis of hard evidence showing that we can deliver. That is precisely what the energy review will set out.

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