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"So with the first test of this so-called transitional plan, which only ended in December, it has failed and I think this is a breach of faith."
There are certainly those in the Brough work force who would share the sentiment that despite the assurances BAE Systems gave some years ago, the continued reliance on Hawk has led us to the position we are now in. I urge
the Minister to give us assurances this evening in whatever way he can that the Government will put as much pressure as possible on BAE Systems to ensure that the work undertaken at Brough is broadened in furtherance of the agreement of some two years ago.
It is also important to pay tribute to the unions at the Brough site. Every time there have been threats to jobs at Brough, they have engaged in a positive way with management, local elected representatives and the local councils, who are also incredibly supportive of the site. As we move forward in addressing difficult decisions more generally, the nature of their engagement might serve as a lesson to others about what can be achieved when we have a proper positive partnership between unions, staff and management. I hope others will take a lead from the engagement at Brough as they face their own issues in coming months and years.
I also seek some assurances from the Minister this evening on the future of the Hawk contracts. We have not been able to get to the bottom of that. We are told that there are three countries, two of which have been named-one as country X, for whatever reason-where there are potential Hawk contracts ready to be signed. What is different about the current position at Brough, where about 210 jobs are under threat, is that this seems to have come as a bolt out of the blue. When there has been a threat to jobs in the past, the management at BAE Systems have engaged positively with local Members of Parliament, the local councils and the work force to see what pressure can be applied, wherever, to try to alleviate the problems. This time, the threat seems to have come out of the blue, so we are unclear as to what exactly the contracts are, at what point the Hawk contracts are at and whether indeed there are any contracts. The securing of one of these contracts would put the site on a secure footing for a couple of years. If the Minister is unable to respond this evening to those points, I urge him to take them up with BAE Systems and respond to the work force and MPs as soon as possible.
It is also important to welcome the new Government's movement on the so-called "commercial foreign policy", because this is something we need. I heard with interest the comments about the success of the UK's aerospace industry over the past few years. It did not happen overnight or in the past 13 years; it happened because of decisions taken decades ago, many of them in the 1980s and often in the teeth of opposition, because of the nature of the work involved, from the Labour party-depending on who gets its leadership, we might see that again in the future. Those tough and important decisions taken in the national interest decades ago have led to the successful industry we have in this country today.
John Woodcock: The hon. Gentleman makes persuasive points, but does he not think that they underline the importance of the decisions that we are going to take next month in ensuring that the next two decades can continue to provide export growth?
Andrew Percy:
I do think that, but Labour Members have absolutely no credibility on this issue. They could and should have undertaken the strategic defence review a number of years ago, and they have left us in the current financial position. They must
accept that the decisions being taken today are not down to this Government, but down to our inheritance from the previous one.
Mark Hendrick: Will the hon. Gentleman give way?
Andrew Percy: No, I am not going to give way to the hon. Gentleman, because I fear that we will end up getting into too much of a political debate. Perhaps I have contributed to that, and I apologise, so I shall now focus much more on the positives of how we can make progress.
There is the potential for us to work on a cross-party basis and for MPs representing different parts of the country to work together to protect their local work forces. The Government have got the right idea about going out there and selling for Britain. I take the point that the hon. Member for Barrow and Furness made about the fact that we must prove our commitment to our products, and I am sure that the Minister will have heard what he said. Tough decisions lie ahead, but as long as this dialogue takes place early, the announcements do not come out of the blue and we are given the full information about where we are at, particularly on the Hawk contracts and the Brough site, we can perhaps alleviate many of the current threats to jobs.
I conclude by, again, emphasising that the Brough site has a highly skilled and dedicated work force, who are an important part of not only the local economy, but the national economy. We have to get real about this commitment to improving manufacturing in this country, and there we have an excellent example that can be drawn upon for use in other areas of Government policy. I urge the Government to do all that they can to work with BAE Systems, to protect jobs not only in Brough and my patch, but across the whole industry. It is a huge success story for our country, and I look forward to the Minister's response.
6.33 pm
Gordon Birtwistle (Burnley) (LD): I congratulate the hon. Member for Fylde (Mark Menzies) on managing to get this important issue on the agenda this evening. I have worked in the aerospace industry for more than 40 years, and I can remember working on the old Phantom engine at Lucas Aerospace many, many years ago. Amazingly, some of those engines are still being used in jet fighters in underdeveloped countries.
It is important to remember that this country can no longer afford to develop new military aerospace equipment, because it is far too expensive for a single country to do that. The European countries of Germany and Spain-the ones involved in the Eurofighter contracts-have appreciated that. One thing that concerns me a little is that although the Eurofighter is being built at the moment, we should be developing the next stage of military aircraft now. A new aircraft does not just happen tomorrow-it takes years and years to develop. I hope that the European Union, in collaboration with all the aerospace companies, is starting to consider the next combat plane that will have to be developed after Eurofighter finishes.
Eurofighter is being built at Samlesbury, near Preston, but the biggest contract for Preston would be one that has already been mentioned: the F-35. Our requirements
for the F-35 are negligible compared with what the USA wants. I understand that it is considering somewhere in the region of 3,000 of these aeroplanes. Quite a large number of them will be built in Lancashire at Samlesbury and Warton. I hope that the Minister can press the USA to take final decisions on engine design and engine contracts, because I know that Rolls-Royce at Barnoldswick is urgently awaiting the contract.
Graham Jones: The hon. Gentleman makes some excellent points and I agree with him. I am concerned about our capacity at Warton if we are solely reliant on the F-35 and the Eurofighter is cancelled or reduced. The F-35 is assembled not in the UK but in the USA, so we will not need the runway at Warton and we will lose our capacity. There are ongoing issues when we rely totally on the F-35. We should not be doing that; we should be trying to keep our European bases, which is the point that he is making.
Gordon Birtwistle: All military aircraft go out of fashion. By the time the Eurofighter was developed, the countries that would potentially be our enemies were already developing systems to combat it. We have to accept that, as it has gone on for ever. I remember the TSR2-not many people in this Chamber will remember that-which got almost to the point of taking off when the then Labour Government cancelled it. This has nothing to do with politics, really-it has to do with collaboration between countries across the world in developing the fighters.
One thing that I want quickly to mention is the link between military aircraft and commercial aircraft. Modern aeroplanes, such as the Airbus, are built around the technology that has been developed over many years in military aircraft. The fly-by-wire in the Airbus was initially developed in the early stages of the English Electric Lightning aircraft and was developed further for commercial aircraft. Military aircraft sales in this country are very high-I accept that-but they pale into insignificance when they are linked to the sales of commercial airliners.
Rolls-Royce is one of the manufacturers, and much is built in Burnley-the thrust reversers are built at Aircelle. The contracts for the Trent engine and the Airbus wings all involve products that have been developed from old military technology.
Mark Hendrick: I totally agree with the hon. Gentleman. As a young engineer, I trained at the Royal Signals and Radar Establishment. Liquid crystal was one of the products that was developed there for military use. As we know, that has formed the basis of television sets sold in millions around the world. That is a technology that we developed and that we are not exploiting as a nation because the sets are made in other countries in the far east. The loss of any industry in the north-west would mean that we would lose the spin-off industry, as well as the direct industries that he talks about.
Gordon Birtwistle:
Yes, that is another industry that developed from military aircraft. My link is from military to commercial and concerns the potential for sales of commercial equipment-that is, the new Trent XWB Rolls-Royce engine that we hope will power the new family of single-aisle aircraft after the Boeing 737s and A320s have finished their lives. All that technology starts in the military field because commercial companies
cannot afford to develop the technology. They live off what they get from the Government to develop technologies to power military aircraft, and that spins off into commercial aircraft. When the Government order military aircraft, they might-indeed, I am sure they do-contribute to the development of commercial airliners and engines in this country. Thousands of people work in that industry and we are world leaders in it. We probably produce the best aircraft wings ever built and Boeing is certainly a big customer of many manufacturers in this country, particularly Rolls-Royce, whose Trent engine powers the new Dreamliner, the 777, most of the Boeing 737s and the majority of the Airbus aeroplanes. Hon. Members will know that the new A380 is powered by the new Trent 900 engine.
It is important to keep military aircraft going, but it is also important to keep a focus on the cost of doing so and the cost of developing those aircraft. I understand that Eurofighters cost about £20 million apiece. It is important to link all that together and consider the development of commercial equipment that spins off from military equipment. As I have said, military equipment comes and goes-in my life, I have seen some aircraft cancelled and some that are developed go on to be very successful-but it is important to focus on what we can get from the development of military equipment into commercial equipment, as that is where all the money is made by companies that work in that industry.
6.41 pm
Graham Jones (Hyndburn) (Lab): The hon. Member for Burnley (Gordon Birtwistle) made a good point about cross-subsidy. We can look at BAE Systems and start from there. It spends £101,000 for every £1 million-10% of its revenue-on research and development, and it is the third-highest of 850 UK firms when it comes to R and D. He made the tremendous point that any reduction in our military or industrial base will affect commercial opportunities and other businesses in the north-west and the UK.
This is not a two-sided argument, as some Government Members have characterised it. It is not about deficit reduction or increased national debt, and I am very concerned that the Treasury is leading on this issue rather than the Ministry of Defence. The arguments between the Chancellor and the MOD do not serve the country or the aviation industry well, and statements such as that by the Secretary of State for Defence that we will buy "off the shelf" are very unhelpful.
The hon. Member for Blackpool North and Cleveleys (Paul Maynard) talked about scaremongering. When workers hear those kinds of comments and see job losses, they are naturally concerned. As my hon. Friend the Member for Barrow and Furness (John Woodcock) said, they have every right to approach their Member of Parliament and expect them to stand up on their behalf and for their jobs and families. They also have sense in that they understand that the sector is part of the UK's industrial base, especially in Lancashire and the north-west.
I think we are all aware of the UK's industrial base. I want to read out three points from the plethora that have been raised with me. First, the UK is the world leader in the manufacture of aircraft wings and engines, as the hon. Member for Burnley pointed out, and has a 35% market share in the sale of engines, which is worth
more than £5.1 billion a year. Secondly, defence exports are generally worth £5 billion a year to the UK economy and support 65,000 jobs. Thirdly, according to the Government's 2009 value added scoreboard, the aerospace and defence sector added £12 billion in value to the economy. The average value added per employee in the industry was very high, as the hon. Member for Pendle (Andrew Stephenson) pointed out, at £116,000, whereas for general manufacturing the figure is £15,500 per employee in Lancashire. The £116,000 figure also compares well with those for other industries. The sector is one of Britain's success stories, as has been pointed out.
This is not about scaremongering. The hon. Gentleman is right that it is important that these issues are raised in this place and discussed thoroughly. The citizens who elect us are the important people, not us. We are simply advocates on their behalf. They are the ones who will face redundancy and repossession when they are unable to pay the mortgage. Britain will suffer from the economic impact-and there will be an economic impact. This is not a case of pushing one domino over and perhaps two or three others falling. In the case of the defence industry, if one domino is pushed over, it is likely that the whole lot will go down, and Britain's industrial capacity in one of our best exporting sectors will then be torn away.
The north-west has a great export and manufacturing story. However, as the hon. Member for Burnley said, that has come on the back of military spending and Government contracts. The old private sector and state industries are long gone, and the heartbeat of the north-west economy is kept ticking by, if not the public service, defence and nuclear.
The Chancellor's priorities for the coalition Government are a return to manufacturing, and a focus on the private sector and on manufacturing companies that are able to export to get Britain out of the so-called deficit. The north-west's defence industry ticks all those boxes. We should look at the domino principle of how everything collapses if the industrial and skills bases are taken away. If things are turned off today, they will not come back on in five years' time. Given that the industry ticks all the boxes that the coalition has put forward, I do not understand why it would cancel any of the defence contracts.
Gordon Birtwistle: Does the hon. Gentleman agree that the age profile of a lot of the work force in the British aerospace industry, particularly in Lancashire, and the engineering industry is getting very high and that when those members of staff move, the companies should seriously consider replacing them with a major influx of new apprentices? We heard earlier that BAE Systems takes on a derisory number of apprentices compared with the number of people whom it employs.
Graham Jones:
The hon. Gentleman makes the good point that a lot of skilled people in the sector developed their skills in the 1960s and 1970s. We paid the price for the great manufacturing recession of the 1980s with the loss of capacity and skills. Those in my generation are missing from the skilled group, and such unskilled people should have become skilled so that they could work in places such as Warton and Samlesbury. The history lesson from the 1980s shows that when
manufacturing is hit, it does not come back, and we should take that lesson on board when we consider defence spending.
The hon. Gentleman is right to talk about apprenticeships. BAE Systems has some 200 apprentices. It spends £1 million at the university of Central Lancashire and is heavily involved in trying to bring young people through so that they get skills. On job prospects, I have heard someone-it might have been my right hon. Friend the Member for Doncaster North (Edward Miliband)-talking about Govan shipyard or Asda, and one could almost say for us that it is a supermarket or BAE. That is not quite true, but it is a lot of people's perception of job prospects. A job at British Aerospace, as it was formerly known, was something to behold because someone employed there was working for a first-class company that was one of the best in the region.
The Minister has heard a lot of evidence during the debate-all of it true-to show that we cannot afford to cancel defence contracts now.
Ben Gummer (Ipswich) (Con): The hon. Gentleman is addressing the House in a positive manner and we are with him on maintaining jobs, skills and our excellent defence export industry. However, is he edging towards suggesting what his party would be able to cut to maintain the defence expenditure that he is proposing? Government Members would be fascinated to hear what might be sacrificed so that his skills base and industry may be supported.
Graham Jones: Thank you very much for raising that. You make a very good point that there has been no dialogue-
Mr Speaker: Order. May I gently say to the hon. Gentleman that I have not made any point at all? It is important that the second person is not used. We must get into the habit of holding debates through the Chair. I know that the hon. Gentleman will wish to continue that now-we look forward to it.
Graham Jones: I apologise, Mr. Speaker. It is a result of being a new MP.
There has been little dialogue between the Government and unions. We need more discussion of the future prospects. I appeal to the coalition to engage in more dialogue and to think about the decision that it will make.
6.50 pm
David Rutley (Macclesfield) (Con): Thank you, Mr Speaker, for giving me the chance to say a few words. I had not intended to speak, but this is a stimulating and important debate. I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing the time for a debate on such an important subject. We have heard some great remarks.
Although I had not planned to speak, the subject is important to me as the Member of Parliament for Macclesfield because in the neighbouring constituency, Cheadle, there is a big BAE site, BAE Woodford, which is a former aerodrome, as my hon. Friend the Member for Pendle (Andrew Stephenson) no doubt knows, having been raised in Poynton. Many of the work force live in
Macclesfield. Woodford is famous for the Lancaster bomber, the Vulcan, and now Nimrod. It is also famous for many well known air shows, where Concorde turned up.
BAE Woodford is symbolic of the importance of the industry to the UK. In recent decades it has seen a huge amount of investment in the new Nimrod MRA4, which is a magnificent aircraft. I have had the chance to tour the aircraft on site and it is an amazing structure. Sadly, the long-term survival of that aircraft is not guaranteed, despite the best efforts of my predecessor, Sir Nicholas Winterton, of the hon. Member for Cheadle (Mark Hunter), and of the work force and management of BAE. It is well known that the site will close in 2012.
Today we have been meeting the Minister and are extremely grateful to him for the time that he has given. We made representations about the importance of securing the remaining nine Nimrod MRA4s that we are keen to see produced, which will be vital to protect this country's Trident capability. We will see how that emerges from the strategic defence review. We are very hopeful.
It is important not just for BAE Woodford and the people who work there, but in the context of the debate, that we have a strong and vibrant aviation industry and military capability. We need that not only to find jobs for people when the 600 jobs at Woodford go in 2012-of course I am concerned about that-but in order to maintain our sovereign capability, which has been well described in the debate. We must have that at the forefront of our minds.
The other point that has been made on both sides of the House is that we need to maintain the skills and the experience that underpin this vital industry. Those are important to the economy not just of the north-west or the other side of the Pennines, but to the whole country. The industry is strategically important. I hope that on the strength of the debate, the strength of feeling and the judgments that have been made by the Minister and his colleagues, we will see the industry thrive and succeed. It will be vital in future. I hope the Minister will take note of these points, and I look forward to hearing his response later.
6.53 pm
Mr David Hanson (Delyn) (Lab): Thank you, Mr Speaker, for calling me to speak in the debate. It is always a pleasure to be able to contribute to a debate when I had not expected to do so, and today is one of those rare opportunities. I am grateful to the hon. Member for Fylde (Mark Menzies) for initiating the debate and I apologise to him for missing the commencement of it. The previous business finished earlier than we expected.
I shall use the opportunity to make a case that I have made before to the House with regard to the A400M future large aircraft, with which the Minister will be familiar. It is a major development project for future military aircraft that involves manufacturing capability in my constituency in north Wales, with the Broughton Airbus site, and also creates employment in Bristol and the Avon area.
The Minister will know that some 6,500 people are employed at the Broughton site. Many-to continue the tenor of the debate-live and work in the north-west, and many live and work in my constituency in north Wales. Indeed, some 2,000 of the people who work at
that plant are based in my constituency, and they are very concerned to ensure that the A400M aircraft is developed, purchased and built, and that the relevant skills are grown, to ensure that we meet the needs not only of the military, but of the skills base in the private sector.
The Minister will know that my right hon. Friend the Member for Coventry North East (Mr Ainsworth), when Defence Secretary, signed a contract for the purchase of 22 A400M aircraft-before the general election but in the window between January and the general election date. The current Government have now deemed that period to be one for the review of contracts. The Minister is currently reviewing the contracts for the purchases that my right hon. Friend intended to make at that time, and I wish to see the Minister do so positively, for the reason that the hon. Member for Burnley (Gordon Birtwistle) gave.
The use and development of military technology is strongly linked to the development of civil aircraft. Members will know that the Airbus factory at Broughton produces world-class wings for civil aircraft, but it does so based on the technology, skills and investment in people that its military capacity is developing and, with the A400M, I hope will continue to develop. There is a great synergy between the two, and, when I recently met the trade unions, which work very positively with the management at that factory, to look at the work on civil and military projects, they recognised that although the Airbus factory in north Wales, servicing north Wales and the north-west, does not make a major contribution to the A400M, the skills, expertise and wings that are developed for civil aircraft very much depend on its successful construction.
The A400M is a flexible aircraft, providing the opportunity for the strong development of the required technologies in modern aircraft. It offers the requirements that the military need for civil, military and humanitarian usage, and it is an excellent technology that has long been in development. I was very pleased when that contract was signed, so I am disappointed that it is under review, but I hope that the Minister will review it positively. Given what I have heard from Members today, this debate is not just about our military capability, but about maintaining a world-class manufacturing base with skills development and long-term jobs in the British aerospace industry, both in the military sector and, as with my constituency, in the civil sector.
Those skills are interchangeable, but if we duck that challenge, purchase products off the shelf from foreign countries and do not develop our skill base, we will be exporting those jobs to competitors-to foreign countries-who will ultimately cost us more in the long term, not just in terms of our technology and our ability to export products and skills to other countries, but in relation to our future defence capacity.
I am very grateful to the hon. Member for Fylde for initiating this debate and to you, Mr Speaker, for allowing me to contribute, however briefly, given the time that we have had. This has been a very valuable debate, and there are real issues at stake, so I hope that the Minister, in his difficult deliberations, will take on board my constructive comments about the A400M and, ultimately, confirm the contracts that my right hon. Friend the
Member for Coventry North East signed in good faith in order to keep that skills base in north Wales and in the United Kingdom.
6.58 pm
The Parliamentary Under-Secretary of State for Defence (Peter Luff): It is customary to congratulate the hon. Gentleman or hon. Lady who has secured such a debate at the end of the day, and I congratulate my hon. Friend the Member for Fylde (Mark Menzies) with particular pleasure today. It is his first Adjournment debate, mine too as a Minister, but it has been of the most exceptional value and great quality, so his congratulations are all the more deserved. There has been a phenomenal level of participation in what is normally a half-hour debate. My brief is littered with handwritten comments, which I hope I can decipher as I go through my remarks. If for any inadvertent reason I unintentionally overlook any hon. Gentleman in my response, I shall of course write to them subsequently. I also congratulate my hon. Friend on what was a very informative and entertaining maiden speech in the House during the debate on the strategic defence and security review on 21 June. He is clearly carrying on with exceptional skill the excellent work of his predecessor, Michael Jack, who also spoke very strongly for the aerospace industry in the north-west.
7 pm
Motion lapsed (Standing Order No. 9( 3 )),
Motion made, and Question proposed, That this House do now adjourn.- (Miss Chloe Smith . )
Peter Luff: This debate is timely, as my hon. Friend said, not only for the reasons he gave us-the very sad redundancies, which I want to discuss later-but because of its significance to the strategic defence and security review process. That process seriously constrains how far I can go in replying to many of the points made by hon. Members, and I apologise for that, but the debate is an important contribution to the process, and I welcome it for that reason.
The debate is also timely for a second reason, as we heard. Today is battle of Britain day: 15 September 1940, 70 years ago, was a critical turning point in the war, when RAF fighter command claimed a decisive victory over the Luftwaffe. It is fitting, when debating the aviation industry today, to pause and pay tribute to the bravery of our RAF service personnel, past and present, and to all those who work so hard to design and build the aircraft in which they fly. From the battle of Britain to Afghanistan, the skills of all those who work in the industry and their commitment to supporting our servicemen and women has proved to be second to none.
The contribution made by the UK's military aviation industry in supporting our armed forces cannot be underestimated, and it certainly has not been in the Chamber this evening. All three of your Deputy Speaker colleagues, Mr Speaker, have interests in the aerospace and military aviation sector. I know that the hon. Member for Chorley (Mr Hoyle) and my hon. Friend the Member for Ribble Valley (Mr Evans) are particularly sad not to be able to contribute to this debate-they, too, have
been outspoken advocates for their constituencies in the past-and the right hon. Member for Bristol South (Dawn Primarolo) has a strong local aviation industry and a vital interest in the A400M project.
I am relieved that Members from areas other than the north-west turned up. This is not just a north-west issue, although it is very important to that region, and the right hon. Member for Delyn (Mr Hanson) demonstrated that fact. We also have interests in Yorkshire and around the country, including the south-east, the south-west, the west midlands, and the east midlands. Wherever one goes there are aviation and military aviation interests, so I am glad that the debate has been so broadly drawn.
Our servicemen and women who are currently deployed on operations, particularly in Afghanistan, deserve the best equipment that we can provide, and there is no doubt that the UK military aviation industry has risen to that challenge in the past and, as hon. Gentlemen have said, continues to do so. I listened carefully to my hon. Friend's excellent speech and I share his heartfelt and sincere view that it is crucial for the security of the UK and our allies that we have a strong and dynamic military aviation industry both now and in the future.
BAE Systems' Warton facility, which lies within my hon. Friend's constituency, demonstrates this ethos, supporting as it does the important multinational Typhoon and joint strike fighter programmes. I will be concentrating on fast jets and unmanned aerial vehicles-UAVs-but military aviation of course encompasses much more, including helicopters, tankers, strategic lift and, as the right hon. Member for Delyn reminded us in his fine speech on the A400M, intelligence, surveillance, target acquisition and reconnaissance, or ISTAR.
Turning briefly to ISTAR, my hon. Friend the Member for Macclesfield (David Rutley) told the House that he had met me, together with my hon. Friend the Member for Cheadle (Mark Hunter) and the right hon. Member for Oldham West and Royton (Mr Meacher), to discuss the Nimrod MRA4. I pay tribute to my hon. Friends and to the right hon. Gentleman for the way in which they put their case and, in particular, to the trade union representatives from Woodford who came with them and made such a powerful case. I apologise publicly for the fact that the meeting was so disrupted by Divisions in the House, but I think they successfully conveyed their key messages, and I congratulate them on that. I promise that I will take careful account of what was said.
The coalition Government recognise, of course, that the UK military aviation industry is a vital strategic asset. The challenge is to maintain a vibrant and innovative industry capable of meeting the needs of the MOD at a time of financial challenge, and to be competitive in the world marketplace while at the same time minimising any MOD investment in artificial sustainment activities-we want this activity to be real. We simply cannot do this without listening to what industry has to say; and industry has had some very powerful advocates in the Chamber this evening.
That is why, in addition to the engagement with industry that has occurred during the SDSR-despite, Mr Speaker, reports to the contrary-I recently announced the publication of a Green Paper at the end of this year to explain the MOD's defence industry and technology policy, to follow the conclusions of the SDSR in the
autumn. It will include a full discussion of many issues, including sovereign capabilities and skills-I hope that will please my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard)-and, I hope, the role of apprentices, which was mentioned by my hon. Friends the Members for Pendle (Andrew Stephenson) and for Brigg and Goole (Andrew Percy). On a recent visit to Rolls-Royce I was struck by the number of senior managers who had started their working life with the company as apprentices, which shows how important that route of entry into the industry is.
As a result of that Green Paper process, we will publish a White Paper in the spring, which will formally set out our approach to industry and technology through to the next SDSR, which I hope will come after a much shorter gap than this one. That will provide the clarity that the industry needs to understand what our priorities are and how we plan to engage with it to bring those priorities to fruition.
Two of the highest priorities in the Green Paper and White Paper will be reinvigorated Government support for exports and helping small and medium-sized enterprises to expand and prosper. Many of them serve and supply the military aviation industry, as hon. Members have said. We will support the drive for exports with an active and innovative programme of defence diplomacy, and Ministers will play an important and personal role in that.
My hon. Friends the Members for Fylde and for Blackpool North and Cleveleys mentioned the role of my right hon. Friend the Prime Minister in securing a recent Hawk contract in India, which shows how important high-level ministerial engagement is. When I wore a previous hat, as Chairman of what was once called the Select Committee on Trade and Industry, we repeatedly made the call for such engagement, and I am delighted to see it bearing fruit so quickly under the coalition Government. The entire ministerial team was at the Farnborough air show this year to demonstrate our support for military exports in general and the military aviation sector in particular. I undertake that that level of support from Ministers will continue.
I turn to the BAE Systems site in Samlesbury. The MOD continues to recognise BAE's integral role in the UK aerospace industry, and it is essential that we continue to work together for our mutual benefit as we establish and confirm the UK's strategic objectives in the wake of the SDSR. In that respect, I very much welcome the company's own review that is currently under way to ensure that its Military Air Solutions business has the right balance of skills, capabilities and resources to meet the new challenges that lie ahead. That cannot be achieved without some effect on the structure of the company, and I note with sadness the company's announcement on 9 September that it sees a need for more than 700 job losses at a number of its aviation business sites following decisions by the last Government in 2009. Those losses come on top of earlier such announcements.
My hon. Friend the Member for Fylde will be aware, however, that BAE Systems is making a multi-million-pound investment in the north-west at its Samlesbury facility, which will be state-of-the-art. The company aims to develop the site into a major centre for unmanned air system development. Samlesbury has a strong tradition of design, engineering and manufacturing excellence in
the aerospace industry, for which I pay tribute to it. It is home to some of the most advanced aerospace manufacturing and assembly technologies in the world.
On the subject of advanced technologies, unmanned air systems, which my hon. Friend mentioned, are already making a critical contribution to our operations in Afghanistan. Hermes 450, Desert Hawk and Reaper are saving the lives of our forces, our allies and the Afghan people themselves. I look forward to the introduction of Thales's Watchkeeper system, which is currently the MOD's largest unmanned air vehicle procurement programme. It will provide operational commanders with a day and night, all-weather capability to detect and track targets without the need to deploy troops into potentially sensitive and dangerous areas. My hon. Friend mentioned HERTI, which, if I remember correctly, is a privately funded capability at BAE Systems.
Looking further forward, we are investing in programmes to help us better understand possible future roles for unmanned air systems. Mantis, for example, is a programme funded jointly by the MOD and BAE Systems, which is leading an industrial consortium. The programme is a concept demonstrator with state-of-the-art sensors that will demonstrate a UK-developed deep and persistent intelligence, surveillance, target acquisition and reconnaissance capability of the type currently provided by Reaper.
Mark Hendrick: The Minister is speaking very strongly about the importance of the UAV programme, which is taking place principally at Warton, and I totally agree with him. He mentioned the restructuring at Samlesbury, which we all know has amounted to hundreds of jobs being lost last year and hundreds more this year. What does he have to say to people there who are going to lose their jobs, some of whom have given a lifetime of commitment to Samlesbury? That is likely happen to even more of them as a result of the defence review, in addition to the losses announced recently.
Peter Luff: I hope the hon. Gentleman heard me express deep regret for those redundancies, which result from decisions taken in the past. Exactly how BAES chooses to distribute its skills and work force in future is a matter for BAES, and it is not for me to comment. However, I express deep regret to those individuals, many of whom are outstanding engineers and technicians who started as apprentices and who have given a lifetime of work to some excellent products. I shall turn to the importance of maintaining a skills-base in the north-west, in particular for unmanned aerial systems, in a moment.
Another unmanned aerial system, Taranis, is the MOD's prototype unmanned combat aircraft of the future. Built by BAES, Taranis reflects the best of our nation's advanced design and technology skills. It will allow the MOD to gain a better understanding of the most cost-effective and capable future combat air capability force mix between manned and unmanned platforms. A pinnacle of UK engineering and aeronautical design, Taranis is a leading programme on the global stage and a significant step forward in this country's fast jet capability. It is truly a trailblazing project.
To return to a point I made earlier, projects such as Mantis and Taranis will enable the UK to retain vital aeronautical engineering and design skills, not least in the north-west at Warton and Samlesbury. However, we
acknowledge the risk to sustainment of critical engineering skills and, in particular, a critical mass of design skills within the UK aerospace sector. We are currently funding some work with BAES and key UK suppliers to sustain capabilities pending SDSR outcomes, which I am afraid I cannot prejudge.
My hon. Friend the Member for Fylde of course has a specific in interest in Warton, and its work is vital to the Department. The Typhoon programme contracts are worth approximately £20 billon for, from memory, about 160 aircraft, up to and including tranche 3A. I was asked to say that I would not cancel tranche 3B, but I cannot cancel it, because no order has been placed. However, all future Typhoon contracts are SDSR dependent. Of course, a significant proportion of the Typhoon work goes to BAES.
The MOD has also awarded a contract worth approximately £145 million for unmanned air systems air projects based at Warton. As a number of hon. Members pointed out, the site makes a critical contribution to the multi-billion dollar JSF F-35 programme, about which many hon. Members spoke enthusiastically. I agree with my hon. Friends the Members for Burnley (Gordon Birtwistle) and for Pendle that a two-engine option is vastly preferable in terms of security, design and driving down cost. I hope our American friends will be persuaded to pursue the two-engine option, which offers great strategic and financial advantages to countries participating in the programme.
The UK's military aerospace industry is well placed to continue performing significant work in maintaining Typhoon's capability edge and to address the considerable export interest that is being shown. Indeed, with two existing export customers-Austria and Saudi Arabia-official campaigns being pursued in India, Japan, Turkey and other countries, and with further opportunities in the middle east, including in Oman and Qatar, Typhoon promises to provide excellent employment prospects. That underlines that healthy defence exports are the best way in which to sustain a viable defence and aerospace sector in the UK.
The hon. Member for Hyndburn (Graham Jones) suggested that we were in some sense withdrawing from a commitment to Typhoon, but nothing could be further from the truth. Such suggestions are very damaging to our defence exports. This country has a fine aircraft in Typhoon, which is already in active service and serving the country very well indeed. However, the Typhoon situation will require the industry to continue modernising its approach to address the capability and through-life support requirements of those customers, as it does in the UK, rather than simply focusing on aircraft production and supply. Through-life support costs are hugely important, and we look forward to showing the way ahead through the Green Paper that I mentioned. Certainly, we will work with industry to ensure that, in future, our requirements for new equipment are designed from their inception with exportability in mind. That is very important in, for example, the unmanned air systems environment.
My hon. Friend the Member for Fylde asked for reassurances on the JSF. Again, it must be SDSR dependent, as in everything else, but the UK's contribution to the JSF development will not change-it is fixed by the memorandum of understanding that we signed
jointly with the US in 2001. There are significant work share benefits for the UK aerospace sector and it is important to recognise that those benefits come because of the excellence of that sector, which has won those contracts in competition in world markets. That is a great tribute to British engineering and the sector itself.
The UK's plans to purchase further joint strike fighters are incremental-we already have some bought for test purposes-and they have always been based on the programme reaching technical maturity levels and being affordable within the overall resources for defence. We will regard future purchasing plans accordingly, as part of the normal planning process and the outcome of the SDSR. The UK continues to play an important role in the JSF programme through the provision of expertise and resources, including RAF pilots who are now flying the short take-off and vertical landing-or STOVL-flight test aircraft.
The SDSR underpins all this work and, together with the new national security strategy, will provide a coherent and consultative approach to security and defence across government. Our National Security Council has agreed that the overarching strategic posture should be to address the most immediate threats to our national security while maintaining the ability to identify and deal with emerging ones before they become bigger threats to Britain. This flexible, adaptable posture will maintain the ability to safeguard international peace and security, to deter and contain those who threaten Britain and her interests and, where necessary, to intervene on multiple fronts. It will also, crucially, keep our options open for a future in which we can expect our highest priorities to change over time.
It is very clear that the current defence programme is unaffordable and tough choices will need to be made. It cannot be said too often that the programme for the next 10 years is £38 billion over-committed, a sum that we simply cannot fund. That is additional to any requirement to cut budgets beyond that. That over-commitment of the existing budget is the legacy of the last Government.
Graham Jones: Will the Minister accept that the reason for the £38 billion overspend is the Government's choice to cut the deficit further and faster? Otherwise the money would be there.
Peter Luff: Labour Members just do not get it. It is not a matter of choice. The last Government made a choice to be-I shall choose my words with great care-a little disingenuous with the figures and to make commitments that they knew they could not meet. We have to deal with the £38 billion over-commitment before we address any budget deficit reductions, and that is the problem we face in the Ministry of Defence.
Mark Hendrick rose- [ Interruption. ]
Mr Speaker: Order. May I just say to the hon. Member for Bournemouth East (Mr Ellwood) that as he has only just toddled into the Chamber he should not be chuntering from a sedentary position in evident disapproval of the views of others?
Mark Hendrick:
The Minister ignores the fact that we had a major global economic crisis and the Government had to bail out the banks after the irresponsible behaviour of generations of financiers. The reason we are in the
terrible state we are in now, which the coalition Government seem to forget, is the behaviour of the bankers, not of the previous Government.
Peter Luff: It is the nature of Adjournment debates not to be too partisan, so I shall just spell it out in very simple language. The problem facing the MOD-the £38 billion-is nothing to do with international crises or bankers. It is because the last Government made commitments that they had no money to pay for. It is nothing to do with deficit reduction or the crisis. I could not be clearer about that. The £38 billion is a problem that we have inherited that we would have had to deal with irrespective of any need to address the extraordinarily large structural deficit that we also have in the UK. The £38 billion is a starting point before we address the consequences of the crisis.
John Woodcock: I hope that the Minister will accept my apologies for coming in slightly late for his speech. Members on both sides of the House accept that there is an over-commitment in the budget. Will he accept the findings of the Defence Committee's report today that there is a grave danger that if the correction is done in the wrong manner-and it is being done very quickly-we will lose the capacity to maintain or restore capability in vital areas in future years?
Peter Luff: The Select Committee's statement was constructive and thoughtful. I have not read every word of it yet, but it is a very helpful document. In some areas, it has not quite understood the process, but never mind-it is a good response, and today's debate shows that Members on both sides of the House, including me, understand how important it is to maintain these capabilities and to ensure that we can take part in the next generation, particularly of unmanned aerial systems, which are the future of fast jet production. I will not labour the £38 billion point any more, but it does set the framework of what the Government have to contend with.
For Britain's defence, and despite all the financial constraints we linger under-both inherited ones and the structural problems caused by irresponsibility in fiscal policy generally-that means taking strategic decisions for the long term. These are the realities we face as we approach the critical decision-making phase of the SDSR. I reiterate that no decisions have been taken on any of the issues debated in the House this evening. The right hon. Member for Delyn (Mr Hanson) referred to
the A400M. Everything is in the pot, including the Nimrod MRA4. Everything is there together, and nothing has been singled out or decided. We have to do that to ensure we address both the fiscal challenges and the defence issues facing our country.
Mr Hanson: The contracts for the A400M were signed by my right hon. Friend the Member for Coventry North East (Mr Ainsworth) before the election, but that has been put in abeyance by the coalition Government. So a decision has been made on something that would, it had been decided, go ahead.
Peter Luff: I would like to be more explicit, but I cannot be. We are, and I quote:
"Pleased that agreement in principle on the future of the A400M programme has been reached between Partner Nations and Airbus Military (AMSL); this is an important stage in agreeing an amended contract."-
the contract now needs to be amended-
"Work on the amended contract continues, and we expect it to be concluded later this year. However, as these discussions are ongoing and at a critical state, it would be inappropriate to provide any further details at this stage."
I hope that the right hon. Gentleman will accept, therefore, that the issue is not just about the SDSR; negotiations are also going on at present.
I said that no decisions had been taken. However, my right hon. Friend the Defence Secretary made one such commitment at Defence questions earlier this week: he is keeping the RAF. I hope that provides some reassurance to hon. Members.
The potential prize is great: modernised, well-supported armed forces ready to defend and promote British national interests and successful manufacturing industry to support that. The UK military aviation industry is a strategic asset, and this Government will ensure that it remains so. We are committed to increasing the exportability of our equipment and delivering the industrial and technology support our armed forces need. The MOD's defence industry and technology policy Green Paper will be a significant step towards achieving those aims. I welcome the opportunity to engage with our industrial partners in the coming months to ensure that, despite the serious financial challenge we face, these aims will become a reality.
7.22 pm
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