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Westminster Hall

Tuesday 6 November 2012

[Sir Roger Gale in the Chair]

Ford Motor Manufacturing

Motion made, and Question proposed, That the sitting be now adjourned.—(Dr Thérèse Coffey.)

9.30 am

Caroline Nokes (Romsey and Southampton North) (Con): It is, as ever, a pleasure to serve under your chairmanship, Sir Roger. I thank Mr Speaker for his assistance in securing this important and timely debate, as well as the many right hon. and hon. Members present today from the immediate Southampton area and further afield. I am conscious that several other colleagues would also have been present if not for ill health and delegations to other parts of the world.

Two weeks ago, Ford announced a major restructuring of its operations in Europe and confirmed that it would be closing its assembly plant at Swaythling, the factory where the iconic Transit, the world’s most famous van, is assembled. I am sure that the Transit needs no introduction; the name is now synonymous with light industrial vehicles in the same way that the name Hoover is synonymous with vacuum cleaners.

The first Transit, sold in 1965, was manufactured at Langley in Berkshire, before the plant moved to Southampton 40 years ago. The Southampton plant, much bigger than Langley, was able to handle the considerable growth in demand that the Transit enjoyed among tradesmen—and, if Jeremy Clarkson is to be believed, armed robbers. Over the years, the Transit has been made at plants in Belgium and the Netherlands, which, along with the Swaythling plant, have either closed or will now close. The Transit continues to be manufactured in Turkey and China.

I am tempted to focus on the bigger macro-economic issues that have brought about this situation, including globalisation and large corporations’ ability to shift production to countries where the cost base is lower. I could also concentrate on the granting of a European Investment Bank loan in June to the Ford factory at Kocaeli, Turkey, which will now benefit directly from the closure of Swaythling. That £80 million loan, which EIB documents state was for the modernisation of the factory, is guaranteed by the British taxpayer.

I remind hon. Members that the decision does not merely have political implications; nor does it solely impact on the profit and loss forecast. It is not just an accounting decision or an issue simply of where a vehicle is assembled. As community leaders have emphasised, it is a human issue, especially for the approximately 2,000 people in the Southampton area who depend on Ford in one way or another for their livelihoods.

Mark Field (Cities of London and Westminster) (Con): Does my hon. Friend recognise that it also affects the London economy? The hon. Member for Dagenham and Rainham (Jon Cruddas) will undoubtedly want to speak later. The stamping and tooling operations plant at Dagenham, where Ford began its UK operations in the 1920s, will close next July. Does my hon. Friend

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agree that we need to work across parties, support the Mayor of London in his plans and, in particular, consolidate all the Ford activities at Dagenham south of the London-Southend railway line to ensure proper regeneration north of that area? I hope that Ford will play an active role in fulfilling its community obligations in the months and years ahead.

Caroline Nokes: My hon. Friend makes an excellent point. I have consistently called for a cross-party, as well as a cross-country, effort. I am conscious of the efforts that the Mayor of London is already making.

The news is devastating to those employed by Ford, especially contractors and those active in the supply chain, who cannot benefit from the redundancy payments available to direct employees. I am thinking particularly of the residents of Mansbridge, in the shadow of the Ford plant. As well as losing a significant economic driver and employer, they now face uncertainty about what will happen to the plant when Ford ceases production. Wherever this debate leads, we must bring ourselves back to the heart of the matter: how can we in the House give practical support to those who have just lost their jobs?

We must be forward-looking and find solutions to the immediate problems faced by the community. Although the decision has been made and will not be reversed, Ford none the less has questions to answer. I am sure that Opposition Members will also pick up on that theme. The fact that Ford is developing a plant in Turkey that will benefit from UK redundancies with a loan guaranteed by the UK taxpayer has caused concern and anger.

It is imperative that Ministers seek to establish from Ford when the decision was made to close Swaythling. Was it before the loan was signed off on 27 June this year? If so, did anyone in Government know of the decision to move production to Turkey before the announcement the week before last? If it is shown that Ford decided to close Swaythling before accepting the loan, serious questions must be asked about the company’s conduct. Indeed, if Ford accepted the loan knowing that it would be used to consign Swaythling to history, then I, like many in my local community, expect Ford either to repay the loan or, better still, make a corresponding payment to the Solent local enterprise partnership that could be used to regenerate Southampton’s economy. Ford had a moral duty to declare its hand before asking UK taxpayers to fund their own redundancies. I seek the Minister’s assistance in helping Ford to understand that and account for its actions.

As I argued last week, the issue is of national significance. Although the net impact of the closure is the loss of 500 direct jobs at the factory and further jobs in the supply chain, Southampton is a key economic driver in the south and south-east and has an important part to play in the national economy. What hits Mansbridge and Swaythling, like a stone thrown into a pond, will send waves across Southampton, the region and the whole country.

This debate should therefore touch on three key issues. First, why and when was Ford’s decision reached? Secondly, what impact will it have? Thirdly and most importantly, what can be done to minimise negative effects on the city and the wider region?

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On the first question, the people of Southampton have a right to know whether there was anything the Government could have done to prevent the decision. I look to the Minister for assistance, particularly on the question of the EIB loan, which needs explanation and justification. However, I suspect that the answers can only come from Detroit, not from Ministers.

To some extent, however, it is a moot point. Whether the money signed off in June was granted before or after Ford decided to close Swaythling, the money loaned to assist the Turkish plant could only have disadvantaged Southampton and would never have benefited it. By guaranteeing the loan, the UK taxpayer has helped Turkey to import British jobs at the undoubted expense of the UK taxpayer. It is therefore up to Ford to show some moral responsibility toward those who have just subsidised their own redundancy. The UK taxpayer should not be supporting the dividends of Ford’s shareholders. I could not help but notice that in the hours following Ford’s announcement, its share price jumped from £10.36, itself a considerable improvement on the immediate past, to £11.16. The markets may have reacted well to job losses in Hampshire, but Ford now has a duty to those on whose P45s its future profitability has been built.

We must be assured that another loan granted to Ford—from the regional growth fund, and intended for research and development of low-carbon technologies—did not prejudice the operation in Swaythling or represent Ford’s reneging on any previous commitments to Southampton. It is in Ford’s best interests to demonstrate good faith in both those matters.

Of course Ford’s financial performance must be considered. It is in no one’s interest for a company to risk insolvency that, even after the redundancies in Southampton and Dagenham, employs nearly 14,000 people in the UK. Undoubtedly, there has been a huge fall in demand for the Transit. Sales are down 20% since 2007, and so far this year, Ford Europe has lost $468 million on the back of a 26% decline in revenue. Sales are down 17% from last year.

Ford also states that the Turkish factory offers labour costs that are one third of those in Southampton, and the excess capacity there means that Southampton’s production can easily be absorbed in Turkey. On the face of it, even taking into account the costs of redundancies and site amelioration and disposal, the closure of the Southampton factory may seem a rational, commercially sound decision; but if adopted, that position must be balanced against the fact that Ford globally made an enormous $2.2 billion profit last year, $200 million more than the previous year. Although Ford wishes to act to preserve its commercial viability and profitability, and some of that profit will undoubtedly have been reinvested in plant, research and development and product development, I struggle to see why a subsidiary of a company making $2.2 billion needs cheap loans from UK taxpayers to export UK jobs to a country that is still outside the EU.

Ford has a moral and social responsibility to both the city it is leaving behind, which it once called the home of the Transit, and the supply chain, which will now be broken, to ensure that the economic hole it is creating is filled with sustainable employment and economic activity.

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Ford should not look to the Government or the taxpayer to subsidise its moral and social responsibilities. It should step up to the plate and work with Government, local business and other agencies to ensure that its exit does not harm the local and regional economy, but benefits it by fuelling economic growth and sustainable, high-skilled, quality jobs, thereby ensuring that Turkey’s gain in the long term might also be Southampton’s gain.

Secondly, on the impact of the decision, Southampton has some of the south-east’s most deprived areas in terms of employment, health, housing and education. It is ranked 81st out of 326 local authorities for deprivation. It has some of the region’s highest levels of young people not in education, employment or training, levels that are comparable to parts of the north-east—a problem that this decision will make worse, given that Ford is my constituency’s single biggest employer. That is why community groups are so concerned and why I am so keen that Ford face up to its responsibilities to the community in which it has co-existed for so long. Rather as Ghandi wished the British to retreat from India as friends, the legacy of Ford’s time in Southampton could be both ongoing and positive for the city and Ford’s reputation.

Thirdly, and for me, most importantly, we must look ahead. This debate must highlight the need for the business community to expand and create new jobs. I have emphasised the need for the Solent region to be successful in its bid for city deal funding, but there are other ways in which the Government can provide support. Hampshire already has a local enterprise zone at HMS Daedalus, but I cannot think of a better location for a second one than at Swaythling, adjacent to the M27 motorway, where significant junction improvements are scheduled to make access to the major road network easier. Additionally, the Government’s Growing Places fund has already provided money to the LEP, but in this situation further specifically targeted support is needed.

I seek Government help in encouraging Ford to augment existing help, particularly for those in the supply chain who will not benefit from generous redundancy payments. Ford must not merely aim to meet its legal minimum requirements; it has a wider responsibility. I was heartened to learn that Ford has a trust fund which, with some modification of its limits, could be used for this purpose. Although the fund makes relatively small grants aimed at education, the trust also aims to

“develop a skilled workforce committed to improving the business whilst maintaining employment opportunities now and for the future “.

Therefore, in line with its own stated social responsibility aims, I call upon Ford to outline how it will fund and work with the local business community, the city and county councils, neighbouring local authorities, and national Government to ensure that the legacy of Ford’s time in Southampton is a highly skilled work force filling high-skilled jobs. The Ford trust states:

“Being a good corporate citizen is an essential part of how we do business. Both globally and locally, we have an ongoing commitment to helping and supporting the communities we operate in “.

I hope that this commitment to communities in which Ford operates is also extended to the communities in which it used to operate.

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Ford can do a number of things immediately. It can create a rescue fund to which suppliers can apply for funding to help them develop new markets, and announce how it intends to dispose of a critical 52-acre employment site on the edge of the city. Perhaps Ford will even consider donating an ameliorated site to the city council for the establishment of a business park and local enterprise zone. Much of this could be funded by the reallocation of money received from the European Investment Bank to modernise the factory that will be building the Transit vans once built in Southampton.

This House is where the country looks to in times of trouble. It is where, in times past, some of the greatest words of encouragement have been uttered and where worried people have historically looked for answers. At this sad and worrying time for the people of Southampton, the country will once again be looking to this House to debate their concerns and fears, and for new optimism. I hope that Ford will join with other agencies and heed the calls in this debate for it to leave a legacy that will endure and be a testament to excellent corporate and social responsibility, not one that reflects the unacceptable face of global capitalism.

It is important—I look forward to the Minister’s response on this point particularly—that the local enterprise partnership, BIS Local and other local agencies work together to ensure that retraining opportunities are maximised. I know the Minister is currently looking at that with the local growth White Paper, which sets out the Government’s aspiration for growth to be driven by local communities and businesses. This will, I hope, focus on retraining, which Ford should be a partner in and providing funds for.

Finally, I ask the Minister urgently to consider creating a Southampton local enterprise zone, which would be an engine of growth, job creation and retraining in Southampton. As Ford’s decision to close its factory illustrates, that is now more urgently needed than ever.

Several hon. Members rose

Sir Roger Gale (in the Chair): Order. This is a matter of importance to Members of Parliament in the Southampton area and nationally. It is therefore important that the Opposition and Government Front-Bench spokesmen have a significant amount of time to respond, where ordinarily we might curtail those responses in the interests of Back Benchers. For that reason, I shall exercise my powers to impose a six-minute time limit on speeches, which I hope will allow hon. Members to contribute while at the same time giving the Front-Bench spokesmen an equally adequate time to respond. We have a piece of high technology that will give hon. Members one minute’s warning.

9.46 am

Mr John Denham (Southampton, Itchen) (Lab): I will work within the time you have allocated, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing the debate.

The Ford Motor Company has behaved shabbily. I have worked with the company over many years, sometimes with good news and sometimes, more recently, with bad

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news, but the relationship has always been one of openness, transparency and willingness to engage. None of those characteristics have been present in this decision.

I should read into the record a letter I received from John Fleming, then European head of Ford, in February 2009:

“Dear John,

Thank you for making the time for our discussion earlier this week”.

Having set out some of the economic challenges, he continued:

“In November last year I offered my assurances to yourself, Lord Mandelson and to your constituency colleagues in Southampton would receive the necessary investment to manufacture the Chassis Cab version of the next generation Transit. After extensive studies, which were shared with our union colleagues, this was the only investment option that met both the cost and profitability requirements demanded of the business.

I remain committed to the future of Southampton and, as I have stated in my recent letter to all Ford of Britain employees, I can re-confirm that it is our plan to build the next generation Transit Chassis Cab there. The sourcing and Chassis Cabs to Southampton gives the plant a meaningful and profitable manufacturing future and I trust you will continue to share my view that this is a positive development for the plant.”

That is the last official communication that I ever had from Ford about the future of Southampton; at no stage since has there been any indication of doubts about that strategy. It is true that its implementation was delayed because of the investment required to move to the chassis cabs, but the latest that that was to happen was next summer—indeed, the unions at Ford had been discussing with the management how the summer closedown would be handled to enable that shift to take place—but then the decision was announced.

Last spring, with my hon. Friends the Members for Wrexham (Ian Lucas) and for Dagenham and Rainham (Jon Cruddas), I was at a dinner of what could be called Ford’s Labour MPs, where the discussion was not about closure, but about the possibility of winning extra orders. The irony of ironies is that, at that dinner, Ford asked us to lobby the European Union about a trade deal with other countries that was going to be harmful to manufacturing in Europe. Given the outcome of Ford’s decision, that seems extraordinary.

Reputations are hard won and easily lost. I believe that it will be a long time before any Government of any colour in this country will sit down with Ford without wondering whether the people on the other side of the table are telling the truth. It saddens me to say that, but that is where we are today. A parliamentary reply I received on Friday revealed 12 meetings since the last election between Ford and Ministers in the current Government. We cannot fault Ministers for their willingness to meet with the Ford Motor Company over that time. I believe Ministers when they tell us that Ford did not let them in on the plans or share them, which is bad conduct by the company.

I have two or three things to say quickly, because I do not have much time. It is extraordinary that a regional growth fund grant was made to Ford without the Government being aware of the wider Ford strategy. I simply say that that is a weakness of the regional growth fund compared with the old regional development agency structures, which were much more likely to ensure that the bits of government dealing with major

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companies were aware of the whole of the company strategy. By dividing the regional growth fund into separate grants, there is no sense of engagement with the company.

Similar issues apply to the European Investment Bank. I am grateful to the office of Peter Skinner, MEP, for this information. Yesterday the EIB was claiming that the loan was fine because Turkey is “upstream” of the UK and is an assembly site, not a component manufacturer. Well, Southampton is an assembly site and not a component manufacturer. Those involved in the EIB decision have questions to answer. The Chancellor is a governor of the EIB; Britain was represented by an official, Peter Curwen; and there would also have been an opinion from the European Commission about the loan. We need to know whether the Commission, the EIB and the UK representatives were aware of the situation in Southampton and the likely implication of the loan for the future of that site.

The truth is that it is impossible for Governments to dictate to transnational companies what they do. They can influence to some extent what such companies do, but only if every sinew is strained to ensure that they have the maximum influence on the company.

I had hoped to speak for longer, but let me now turn to the existing work force. As the hon. Member for Romsey and Southampton North said, Ford’s commitment must go way beyond those directly employed by the company. There are more than 200 non-Ford employees on the site; they are not working in logistics or making the seats for the Transits, and they are not covered by the redundancy terms now on offer. Ford must extend its support to far more people.

Finally, I emphasise to the Minister that the taskforce established under the leadership of the city council and the local enterprise partnership will need serious resources. The last time we had such a taskforce, we had RDAs, colleges had money to spend and local government had money to invest, but none of those resources exists now and significant additional funding will be necessary to make any taskforce viable. That will be needed to support not only the individuals affected, but the supply chain companies—81 supply the factory in Southampton—which need help to reorient their businesses to win orders from elsewhere in British manufacturing, other parts of the motor industry, or overseas. We must have resources from the Government, Ford and whoever to make the taskforce viable. Simply recycling some money that might have been coming in Hampshire’s direction anyway as a result of the LEP or other growth strategies will not be good enough.

9.52 am

Chris Huhne (Eastleigh) (LD): It is a pleasure to serve under your chairmanship, Sir Roger. I thank my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) for securing the debate, with the strong support of the other local MPs.

The most crucial point to make about the closure of the plant at Southampton is that the work force have done absolutely everything in their power to make a success of the plant, with substantial increases in productivity and substantial savings in costs. No fault

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can conceivably attach to any of the employees. The plant is a key part of our local economy. It is on the southern edge of my Eastleigh constituency and many of the employees come from the town, in particular, Boyatt Wood. As my hon. Friend said, the plant has been manufacturing Transits since 1972; that is an iconic vehicle and the plant is its home.

I have two fundamental concerns about Ford’s decision. The first, which is similar to that expressed by the right hon. Member for Southampton, Itchen (Mr Denham), is that the Ford Motor Company made commitments which it has broken. On 28 November 2008, three local MPs—myself, the then Member for Romsey, Sandra Gidley, and the hon. Member for Southampton, Test (Dr Whitehead)—went to see the head of Ford’s European operations, John Fleming, at the company offices in London. The right hon. Gentleman was a Minister at the time, but was clearly there in spirit. We had all campaigned hard to save the plant and we all came out of that meeting without any doubt about its significance. We all told the local media the same thing—I have a cutting with me. The plant was safe, despite the downturn in the market and despite what might turn out to be the loss of a considerable number of jobs.

Appropriately, the right hon. Gentleman quoted the letter he received from John Fleming in which Ford’s head of European operations made a clear commitment to investment in chassis cab production and to a future for the plant. Those commitments are what make the closure different. Ford is a major multinational and, as my hon. Friend the Member for Romsey and Southampton North has shown, is profitable globally, yet it is flying in the face of its past promises. It has done so in a way that may be difficult to challenge in court, but there was clearly a moral commitment on the part of the company.

Unlike bond holders, employees cannot take the company to court for breach of its promises, but customers will no doubt draw their own conclusions about a company that is prepared to walk away from firm commitments when they consider the value of Ford warranties, for example. In addition, as the right hon. Member for Southampton, Itchen, said, Ministers will, before signing any further cheques for the company, rightly ask for clear understandings, including of why the company considers it appropriate to go back on its commitments. There has been no change in management; John Fleming, the head of European operations at the time, is now the head of global operations, based in Detroit, so it is not a question of the Ford Motor Company changing management and therefore forgetting its commitments.

Furthermore, in 2008 and 2009 two big pieces of material help were available to Ford: a £450 million EIB loan, of which more than £380 million had to be guaranteed by the UK taxpayer as a condition of its extension; and the scrappage scheme introduced by the previous Government, which was designed to boost demand in the car and van market. Indeed, we pressed for the scheme to include the commercial van market, and it was of material help. It beggars belief that such help could have been agreed without commitments being made to Ministers, so we have to ask: what commitments were made to Ministers? That is not advice to Ministers in a previous Government so it is not covered by privilege; any meeting between a Minister and an executive of the Ford Motor Company would have had present a member of the Minister’s private

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office taking an extensive note of exactly what the Ford executive said, and that will be a matter of record within the Department for Business, Innovation and Skills. I ask the Minister to find out exactly what the record was and what the undertakings were, and to draw the necessary conclusions.

That is crucial to the second big issue about the closure, which is the position of the rest of the work force. As my hon. Friend the Member for Romsey and Southampton North said, it is not only a question of those directly employed by Ford, who have had a commitment that there will be no compulsory redundancies. Although that is a limited commitment, given the absence of alternative Ford workplaces in the area, I have no doubt that the company will do the right thing by its own employees, but what about the subcontractors on site, such as the Penske employees? What about the supply chain? What about the commitment to the whole local economy and to making sure that we survive this hammer blow, as we have survived many other blows in the past? I want the Minister’s assurance that he will make absolutely certain that Ford respects its previous commitments and, if it does not, that he uses that to come away with clear commitments not only to the direct Ford employees, but to the wider work force dependent on the plant.

9.59 am

Dr Alan Whitehead (Southampton, Test) (Lab): I want immediately to take up where my colleagues who represent south Hampshire left off this morning. An important aspect of this debate is the extent to which, at all stages, hon. Members for the area affected by Ford in Southampton have, in good times and bad, rallied to ensure that Ford was supported as far as it could be. They have ensured jointly that as much information as possible about Ford’s plans was obtained and disseminated, and as the right hon. Member for Eastleigh (Chris Huhne) said, they have taken part in meetings at which Ford gave assurances about how the Southampton plant would operate and its prospects.

As the right hon. Gentleman emphasised, at the meeting with John Fleming in November 2008, the three hon. Members from the area around Ford’s operation who attended obtained cast-iron assurances about the plant’s future, what it would be doing and its development of a chassis cab. The hon. Members present understood that those assurances extended not just to Ford’s central operation, but to its whole operation, including all the ancillary supply chains and the associated arrangements. I recall that that was part of the discussion at that time.

Everything seemed fine with those assurances, as Ford sought to suggest in briefings, until three or four days before it set out its decision. The suggestion that suddenly, on a Thursday afternoon, its international management decided to pull stumps on its plants in Genk and particularly in Swaythling is incredible. That underlines the urgency of obtaining answers to questions about the money that Ford obtained from the regional growth fund and, as importantly, the £80 million loan from the European Investment Bank.

It is difficult to believe that those loans were obtained when the original 2008 assurances stood at the time that the discussions were entered into. Either Ford did not give the information that should have been before both bodies before the loans were agreed, or the people who

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were responsible for discussing them had information that could and should have caused them to take a more careful view of how those loans should have been set out. That underlines what my right hon. Friend the Member for Southampton, Itchen (Mr Denham) emphasised: the extreme sadness with which some Members of Parliament in the Southampton area feel about the break between past working arrangements with Ford locally and the clear issues that now arise. I like to think that, even at this stage, Ford might consider what that means for its national and international reputation, its responsibilities to Southampton, its past investment in Southampton and, more importantly, Southampton’s investment in Ford’s operation for many years.

I join my colleagues in making three suggestions. First, the work force who are involved not centrally in production but in the supply chain that has supported Ford’s success in Swaythling should be considered on an equal basis with those in the Ford plant as far as future support is concerned. Secondly, any decisions by Ford about the plant’s future should take account of whether it can continue with a presence in the area, in any shape or form. That might provide the opportunity for Ford employees to relocate, as the right hon. Member for Eastleigh said, in not very favourable circumstances, as there are no Ford plants anywhere near Southampton. If there is a continuing presence in Southampton, perhaps some of the work force currently employed at Swaythling could be relocated more locally. Thirdly, Southampton has invested in Ford’s Transit operation for more than 40 years, and the vehicle and the site are iconic. The workers have probably paid for it many times over in the work that has gone into it and the profit that has come out.

If Ford attempts to raise funds by selling that site, in addition to the funds that it obtains by exporting its benefits to Turkey, that will be an additional slap in the face for the local area, which has put so much into Ford in the past. The minimum that I expect Ford to say is that the site will not be sold for development or other purposes, but will be donated to the community and the city that have put so much into Ford and have been such a pivotal part of its success in making that site work for so many years. If that happens, we might at least have the opportunity in Southampton and the surrounding area to bring to that site some of the industry, jobs and prosperity that have been part of it in the past. If Ford would leave that small legacy to the city of Southampton, it would be at least some reparation for what seems to me is a grubby episode.

10.7 am

Jon Cruddas (Dagenham and Rainham) (Lab): As is the custom, I, too, congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this debate and those who have made contributions. We share the deep concern for our constituents and their material well-being following the announcement.

The workers who are employed at the Ford Dagenham stamping plant and tool room operations were shocked and bewildered by the hundreds of Ford job losses announced a couple of weeks ago. I have spoken to many of the workers who have been affected by the announcement, and the consistent response was almost disbelief. We were blind-sided on Thursday 25 October, which was a bad day for manufacturing in the UK, in Southampton and in my part of east London.

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The Dagenham estate was built in 1929 and has been Ford Motor Company’s centre of production ever since. A couple of weeks before the announcement, I visited the stamping plant, the tool room and the two parts of the engine facility to meet management and workers to discuss bringing more workers to the plant. No one mentioned possible closure; it was not an issue. We knew that announcements were coming, but our concern was to secure more investment in the engine plant by getting the new Panther engine into Dagenham.

The background is that the Dagenham diesel engine plant and diesel centre covers some 2.5 million square feet, and employs approximately 2,000 employees. In 2011, nearly 1 million engine units were shipped from the estate. At present, the Lynx engine operation in Dagenham has an annual capacity of some 320,000 engines. That is scheduled to finish in the second quarter of 2013. The Puma engine capacity is another 400,000 a year. Our emphasis in the discussions was on securing the Panther engine at the Dagenham estate, because there is a natural fit in both the time line and capacity at the estate.

We have been lobbying people at the highest level of the Ford Motor Company internationally and the Government regarding the new engine, to ensure that the investment comes to Dagenham, so guaranteeing future jobs. An application for round 3 of the regional growth fund, covering questions of plant readiness and training requirements, was included in that process.

News of the job losses will worry many local families who are either employed directly by Ford or have a business that relies on trade created by the plant. At a time when the economy is suffering so much and when families are struggling to pay their monthly bills, the announcement is not good. I am sure that there will be generous voluntary redundancy offers from the company, and it has assured us all—I assume—that those who want a job will be redeployed at least across the Dagenham estate. In reality, however, the jobs will be gone for good. Those quality manufacturing jobs will not be available to young people in the borough in future, and the closure will shake down in terms of the supply chain, affecting local families and people’s future job prospects.

However, in the bipartisan spirit of our debate, I add that I am pleased that the Mayor of London has convened an emergency taskforce to deal with the effects of Ford’s announcement in east London. That will include representatives from the London enterprise panel, the London borough of Barking and Dagenham, the Department for Business, Innovation and Skills, the Skills Funding Agency, the Department for Work and Pensions and Jobcentre Plus. It has already met, and some of us will meet Ford’s chairman, Joe Greenwell, over the next couple of days to alert him to the establishment of the taskforce and to ask him for help. The Mayor of London is important for the future of parts of the estate, and the Greater London authority is a significant landowner in the area. The Dagenham stamping and tool room operations site is immediately adjacent to the GLA’s Beam Park and Chequers Corner sites, as well as being within close proximity to the Sanofi site due to close next year.

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I urge Ford to investigate how Sanofi has dealt with its exit from my constituency over the last couple of years. Sanofi has worked brilliantly with the local community to redevelop its site and build more jobs and community facilities in the area. I request that Ford enters into similar discussions to ensure that the stamping and tooling operations site is decommissioned with limited detrimental impact to the local area and with an eye on future regenerative potential. The majority of redundancies will not come into effect until mid-2013. The expectation is that the stamping plant building will be decommissioned and shuttered, with all parts stripped and sold, and that that will take nine to 12 months after the closure next July.

As with Sanofi, I would like to think that Ford will release land for regeneration north of the railway line, following both demolition and clearance of the stamping plant and all related buildings, including remediation, decontamination and cleansing of the released land. That should be done with a view to future economic regeneration, perhaps as part of the Ford exit costs, given the benefits that the company has extracted for nearly 100 years from our part of east London.

I must put on record, however, that Ford’s announcement had some positive elements that should not be ignored; by that, I mean the decision to invest in the new two litre, four cylinder, low carbon dioxide Panther diesel engine at the Dagenham engine plant. The combined engine output will remain at approximately 1 million engines a year, and the new engine will support some 3,500 engineering, design, admin and support jobs in nearby Dunton.

Overall, although I welcome the news about the investment in the new Panther engine in my constituency —we have been fighting for that for months—I cannot hide my disappointment about the latest decision. We must do everything that we can to support local residents affected by the closures and those in the broader community. We will raise those points with Mr Greenwell here in Parliament this week.

10.13 am

Ian Lucas (Wrexham) (Lab): I had not intended to speak, Sir Roger, as I am conscious of the local interest in Dagenham and Southampton in this matter, but I would like to make one point relating to the UK Automotive Council. Will the Minister ask that organisation whether any aspect of Ford’s actions was raised with any officer or individual from the council? The organisation is, of course, jointly chaired by the Secretary of State. Has the issue as a whole been contemplated in discussions of automotive strategy that take place at that organisation? It is an important body, which has been a key part of the renaissance of British manufacturing and the automotive sector in the UK economy.

Much depends on frankness between the parties involved. It means that the Government come to the aid of the industry when it is in trouble. The right hon. Member for Eastleigh (Chris Huhne) mentioned the car scrappage scheme. Ford was extremely vocal to me at that time of great crisis in the UK automotive industry, calling for the introduction of the scrappage scheme. At that difficult time, all political parties supported the scheme’s introduction. If there is no frank relationship between the industry and the Government, it means that should

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there be a difficult time in future and should a similar call be made, the Government and those who have taken part in this debate will think twice before assisting businesses such as Ford.

Ford must realise the ill will among good people caused by its decision, and in particular by the fact that individuals who had worked hard with the business over the years to improve its prospects and help it in times of need were given no opportunity to try to safeguard the future of the jobs at Southampton and Dagenham. That has a cost. It is unfortunate that we are in this position, but I hope that that message is carried back to Ford at the highest level, because there will be a major impact on the relationship between the automotive sector and the Government, and particularly, between Ford, Members of the House, and the Government.

Mr Denham: While my hon. Friend is on that theme, does he agree that there is a sharp contrast between the way in which companies such as Nissan, Toyota, Honda and BMW responded to the assistance that they were given after the global banking crisis? They worked together through the Automotive Council to build up vehicle assembly in this country, so that it is now one of the success stories of the British economy that we can celebrate. The Ford Motor Company has pursued a very different strategy: although there has been investment in engines, it has run down its vehicle assembly in this country.

Ian Lucas: There is a marked contrast. One of the most disappointing aspects of the announcement was that it followed positive announcements on the automotive industry over the past four years. Britain has become an investment destination of choice as far as the international automotive industry is concerned, so it is very difficult to understand why Ford was not even prepared to engage with the UK Government and MPs to try to address the difficulties that the company had in continuing the manufacturing in Southampton and in those parts of the Dagenham operation that are to cease.

I hope that Ford will listen carefully to the debate, and that it will consider closely its relationship with both the Automotive Council and the Government. I hope, too that it will engage and be open in discussions and ensure that this type of decision—without notice, without partnership—does not happen again.

10.18 am

Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship again, Sir Roger. I congratulate the hon. Member for Romsey and Southampton North (Caroline Nokes) on securing this important and timely debate, and I pay tribute to the Members who have supported her.

My immediate concern, as it has been throughout the course of today’s debate, is about the 1,100 Ford workers who will lose their jobs with the closure of both the Transit factory in Swaythling and the stamping operation in Dagenham, as well as the wider impact that will have on subcontractors, the supply chain, and workers in those areas. The workers at those plants, many of whom have worked either directly or indirectly at Ford for many years, have important skills for our manufacturing base, and naturally they will be anxious about their future and that of their families.

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The message from today’s debate is obvious, and the Minister must clearly set out what reassurances he can provide. What precisely will his Government, working with the company, local council leaders, the Mayor’s office and others, do to secure to alternative employment? How will the workers at Southampton and Dagenham be helped? What specific initiatives, whether the formation of an enterprise zone or of a focused taskforce such as the one already set up in east London, are being put in place to help? What is the Minister doing to co-ordinate action across central and local government for the benefit of the workers employed both directly and indirectly and in the wider supply chain who are at risk of redundancy?

As you quite astutely said, Sir Roger, there is a wider and more fundamental issue. The repercussions extend beyond Southampton and Dagenham. Let us be in no doubt: this is a devastating blow to this country’s manufacturing base. Ford is an important global company and we want the company to stay and to prosper in the UK. In that regard, as my hon. Friend the Member for Dagenham and Rainham (Jon Cruddas) said, its £1.5 billion programme of investment in advanced manufacturing and the production of the new low-carbon Panther diesel engine, designed and engineered at Dunton and made in Dagenham, is very welcome. It reinforces the UK’s competitive advantage in Europe’s engine design and manufacturing market, and we need to continue that.

However, the point and the blow remain: this announcement is the end of an era. It brings to an end a century of Ford vehicle manufacturing in Britain. Ford started in Dagenham some 90 years ago—when we think of Ford, we often think of Dagenham, and vice versa. The iconic Ford Transit van, which for 40 years has been the symbol of Britain’s white van man and is the automotive industry’s modern-day equivalent of the workhorse, will no longer be made in this country, but will instead be produced in Turkey, as the hon. Member for Romsey and Southampton North said. At a time when Ministers from the Prime Minister down speak of the need to rebalance the economy towards manufacturing and of the march of the makers, this decision in a sector that is often lauded as a productive and efficient part of the economy shows the need for business and Government to work ever closer together to implement an active industrial strategy.

I have a number of questions to put to the Minister, supplementing much of what has already been discussed in today’s excellent debate. I will speak in very broad terms. I would like to hear the Minister’s assessment of what the volume car market in Europe will look like in the future, and how that assessment affects Government’s approach to the sector. As the hon. Lady pointed out, car and van sales have fallen dramatically on the continent in the past couple of years—by some 20%. There is, let us be honest, overcapacity in car and van production capabilities in Europe. Ford’s decision in the UK a couple of weeks ago must be seen in the wider context of what the company has done with the closure of an assembly plant in Belgium, as well as the closure of a factory near Paris for Peugeot Citroën and the shutting of facilities for Opel.

Mr Denham: My hon. Friend talks of overcapacity in Europe. Does he acknowledge the point made by a number of the Southampton Members present that

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what Southampton has been up against is not overcapacity in Europe, but overcapacity in Turkey? Ford has pursued a strategy of developing a 300,000-plus vehicle plant in Turkey, with the assistance from the European Investment Bank, and that is what many of us question. That is at the root of Southampton’s problems, so the question is really about the company’s strategy in seeking to locate such a massive proportion of its production for the European market outside the European Union.

Mr Wright: I shall respond to my right hon. Friend in two ways. First, he is absolutely right about overcapacity in Turkey and the extent to which British taxpayers helped to push production away from the UK to Turkey. That will be one of my themes.

Secondly, my right hon. Friend makes an important strategic point about Ford’s direction of travel. Other car makers—Nissan, Honda, Toyota and others—have worked very successfully with the current Government and the previous Government in setting out a clear, long-term strategy to have assembly, design and manufacture here in the UK, but also to expand the markets further afield. Jaguar Land Rover is a very important case in point. As my hon. Friend the Member for Wrexham (Ian Lucas), who was an excellent Minister for the automotive sector, said, that close co-operation between business and Government when it comes to setting out a long-term strategy and expanding export markets has been for the benefit of the car industry. I would like something similar to what we have seen with Nissan, Honda, Toyota, Jaguar Land Rover and others to have been implemented with Ford. Sadly, that has not been the case.

I would like to hear what the Minister thinks the car industry, and particularly volume car makers with European manufacturing capability, will look like in the next few decades. Is the decline and overcapacity cyclical or structural? If it is structural—if the Minister thinks that we are seeing a general movement away from Europe towards new markets in the east and in south America—what impact will that have on other volume car and van manufacturers in the UK? We have talked about the UK automotive industry being a success story—something that, on a cross-party basis, we all want to see continue—so what does the Minister expect other manufacturers to do, given Ford’s decision? What are Government doing, in working closely with business, the Automotive Council and others, to ensure that we can mitigate the risks in this country? What co-ordination is taking place across Europe to ensure that general economic conditions on the continent, and specifically lack of demand, are being addressed? What discussions is the Minister having with his counterparts across Europe to ensure that the European car industry is not lost altogether?

My reference to discussions between Government and business brings me to my next question. Where does Ford’s decision leave the Government’s industrial strategy? The Secretary of State can talk a good game—he has had plenty of practice, having made 16 speeches on the matter since coming to office. In his speech of 11 September at Imperial college, he mentioned how Government

“must plan for the long term. Government must work with business.”

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He went on to say:

“The second strand of our industrial strategy is to build a collaborative strategic partnership with key sectors. The examples I often give are aerospace, automotives, and life sciences... What is the starting point for this? We are dealing on a global scale with fierce competition—between companies and countries... Different industrial sectors require varying degrees of government support... At the other end are sectors that require a long-term, strategic partnership with government. We have the institutions to deal with them; the Automotive Council and Aerospace Leaders Group are models of what I have in mind.”

Indeed, the BIS paper entitled “Industrial Strategy: UK Sector Analysis”, which was published at the same time as the Secretary of State’s speech, stated:

“The UK has a strong comparative advantage in the aerospace and automotive industries which, because of their highly innovative nature, are a major source of knowledge and innovation spillovers... Both industries also have very important local economy and rebalancing effects.”

Certainly rebalancing is very important: we need a rebalancing towards manufacturing. On the other point, about local economies, the hon. Member for Romsey and Southampton North and other hon. Members have made very important and pertinent points about the impact that this decision will have on the Southampton economy. My hon. Friend the Member for Dagenham and Rainham mentioned the importance of the Ford plant to the east London economy.

We agree with much of the analysis by BIS. Much of current policy in terms of the setting up of the Automotive Council and the ensuing benefits in terms of increased investment in the likes of Jaguar Land Rover and Nissan began under the previous Labour Government. Continuity of policy, to allow global firms to plan investment in the UK for the long term, is something on which Opposition Members will support the Government. However, in relation to Ford’s announcement, the Secretary of State’s words about an active industrial strategy ring hollow. As I said, he often talks a mean game about assisting and working with productive sectors of the economy to allow them to improve and thrive, and we all want to support the UK automotive industry, but Ford’s decision showed him to be out of the loop, floundering and too weak within Whitehall to be able to offer a constructive solution.

There was no dialogue between Government and the company—indeed, following the announcement, the Secretary of State told The Southern Daily Echo that Ministers had felt “let down” and would have asked Ford

“what on earth was going on”.

So much for open, constructive and honest dialogue between Government and business. Answers to parliamentary questions from my hon. Friend the Member for Streatham (Mr Umunna) further revealed Ministers’ ignorance of the facts and failure to ask the right questions. As my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said, since the coalition came to office in May 2010, Ministers have met Ford executives on—well, I make it 13 separate occasions, but I might not be able to count; my right hon. Friend said 12.

Mr Denham: I was not including the meeting the Minister had after the announcement.

Mr Wright: I welcome my right hon. Friend’s clarification.

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Since coming to office, the new Minister has met Ford on two occasions. We welcome such early engagement; that is exactly how it should be for an iconic global manufacturing company in a key industrial sector for the country. In his response today, will he outline what was discussed when he met Ford? Were the company’s future strategic direction and capacity issues within Europe not discussed? Did he not inquire what the company’s response might be to overcapacity on the continent and how that might affect Ford’s manufacturing in the UK relative to the company’s operations in Belgium, Valencia or even Turkey? Has Ford, as has been suggested today, reneged on previously agreed commitments?

Does the Minister agree that joined up, co-ordinated government is part of an effective active industrial strategy? Did he make Ford executives an offer to discuss matters relating to Ford and future investment with other Ministers? Did he speak to Ministers in the Department for Transport about how the competitiveness of Swaythling and Dagenham could be enhanced through infrastructure improvements in logistics or connectivity, improvements to the road network and the M27, or improvements to rail networks in the east end of London? That is what the Secretary of State should have been thinking about when he referred in his speech to the fact that:

“We are dealing on a global scale with fierce competition—between companies and countries.”

Instead, I have to say, with some degree of sadness, Government Ministers have been asleep at the wheel.

Assistance from Government inevitably comes down to finance. I have two questions, both of which were raised in the debate. The European Investment Bank approved the £80 million loan to Ford Otosan, which runs the Turkish plant, as part of a £452 million structuring deal for the production facility to

“support the future manufacturing of the new Ford Transit”.

The 27 EU countries own the EIB, and its board of governors includes the Chancellor of the Exchequer. The role of the governors, as it says on its website, includes deciding

“on the Bank’s participation in financing operations outside the European Union as well as on capital increases”.

Given that, what role did the Chancellor have in fulfilling his duties as a governor of the EIB in signing off the investment? What role did he and officials play in ensuring that the investment went to Turkey? It simply defies belief that British taxpayers, as well as other European taxpayers, have provided funds to a facility in a country outside the EU that undermines the competitiveness of manufacturing in the UK. Will the Minister specifically address that point?

The second aspect of Government funding concerns the award of regional growth fund money to Ford a matter of days before the closure announcements. In answer to a written parliamentary question from my right hon. Friend the Member for Southampton, Itchen, the Minister stated:

“As part of its relationship with Ford UK, the Department’s Automotive Unit has regular and ongoing discussions with the company. Those discussions included understanding the context to Ford’s bid for…(RGF) support… The RGF Secretariat did not have any other discussions with Ford UK about their strategic plans.”—[Official Report, 2 November 2012; Vol. 552, c. 430W.]

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As my right hon. Friend said, is that not a huge failing in the RGF process? What did Ministers and their officials know about the wider context of Ford’s strategy in the UK? Did they not inquire about the longer-term view of the company in this country? If not, why not? Does not that show that Ministers are incapable of producing a proper co-ordinated and long-term active industrial strategy?

As my hon. Friend the Member for Wrexham said, we cannot have a productive and honest relationship between business and Government, or rebalance the economy towards manufacturing, by tossing a few grants here and there. As Lord Heseltine said in his growth review published last week, we need a strategic approach to each sector and to ensure that each pound of taxpayers’ money offered to companies gives the best possible long-term, sustainable, competitive deal. Is the Minister suggesting that no such strategic discussion or consideration took place as part of the RGF bid?

Mr Denham: First, does my hon. Friend agree that it would be good to hear the Minister accede to the request from the right hon. Member for Eastleigh (Chris Huhne) to make available any notes on discussions with the company in 2008 and 2009? I believe that they would show that Ministers discussed topics such as the future of Swaythling in discussions about EIB loans and so on. Secondly, it would be helpful, and I mean this in a non-partisan way, if the Minister undertook to review his Department’s and the Treasury’s engagement in the RGF and the EIB to see what lessons can be learned from these two extraordinary events.

Mr Wright: My right hon. Friend makes two important points that I hope the Minister will address. I will sit down now, because right hon. and hon. Members have raised many significant concerns during this important debate. There are huge implications not only for Southampton and Dagenham—I say that with the greatest respect—but for the wider manufacturing base in a key sector that should be productive for the UK economy. Manufacturing must be at the heart of what we do and the automotive industry must be at the heart of manufacturing. Ford’s announcement is a blow. I hope the Minister will address the concerns raised today.

10.36 am

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon): I congratulate my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) on securing this important debate. I thank all of those who have contributed for doing so in a relatively non-partisan way. Hon. Members have spoken frankly and asked some tough questions, but, until the previous contribution, we have approached the issue in a non-party political way.

I will focus on some of the broad areas that I have been asked about, but I am happy to address specific questions, be interrupted or to reply by letter if I have missed anything out. I shall address: what we were told in the Department; the circumstances surrounding the European Investment Bank loan; the support that we are able to offer Southampton and Dagenham now; and Ford’s future in the UK. I hope to wrap up in that most of the points made in the debate.

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First, what were we told when? As recently as 7 September, when my officials specifically asked Ford about Southampton, Ford assured us that it would continue to produce the new chassis cab variant in 2013. Ford has invested regularly in Southampton, including significant sums this year. We therefore had no reason to question what we were told. Amid a sharp deterioration in the mainland European vehicle market, Ford’s board decided on Friday 19 October to close the site. Ford contacted my Department the next working day, Monday 22 October, to arrange a discussion between the Secretary of State and the Chairman/CEO of Ford Europe. That phone call took place on the evening of Wednesday 24 October. We did not know of Ford’s plans in advance of that conversation.

We are obviously disappointed that, on this occasion, Ford chose not to engage with us until the day before the announcement. It gave us no opportunity to discuss the decision, which we would have expected and preferred. It made the decision based on a thorough analysis of its commercial operations in Europe.

Last Tuesday, 30 October, Ford published its latest financial results, which revealed a $1.02 billion pre-tax loss for the first nine months of 2012 for its operations in Europe, reinforcing why it has had to take difficult commercial decisions to restructure its European business and place it on a more sustainable footing.

Demand for light commercial vehicles has fallen dramatically in Europe over recent years, with the Transit seeing a sharp fall in sales. The company is clear that it can no longer support two van production facilities in Europe and must seek to consolidate production at one. Unfortunately, the Southampton plant is unable to compete with Ford’s newer factory in Turkey where labour and production costs are significantly cheaper than those in the United Kingdom. The Secretary of State and our officials probed that differential with the company, but we are clear that those differences are too high to bridge.

Let me turn now to the circumstances surrounding the European Investment Bank loan. The loan to Ford for its Turkish Transit van operation was approved as part of the EIB’s support for Turkey’s integration into the European Union economy. The Turkish operation has been in existence since 2001, and since 2009, it has made all versions of the Transit apart from the chassis cab variant, which is made at Southampton. The EIB loan for the Turkish operation was for retooling the Turkish plant for the production of the next model in 2013 and was not based on the cessation of production at Southampton. It is therefore incorrect to imply that the EIB loan is itself responsible for exporting jobs from the UK. Indeed, Ford tells us that it will not be increasing capacity at the Turkish site.

The EIB makes investments in key markets outside and inside the European Union. For instance, Ford UK benefited from up to £400 million of EIB funding back in 2010.

Mr Denham: For the record, I do not think that any Member has suggested that the loan to Turkey was responsible for the closure of the Southampton plant, but rather that it undoubtedly helped Ford to develop Turkey, which therefore helped it to close the plant.

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The key question is, would British officials involved in that decision have given the go-ahead to that loan—it was a loan rather than a grant—had they been aware of Ford’s plans for Southampton and Dagenham?

Michael Fallon: I do not wholly accept that. Ford was already planning to develop the new model at its Turkish plant. That plant has the capacity to produce more than 100,000 units per year of all types of van. Southampton, as we know, only made 28,000 units of one van variant each year. Even if the Turkish factory had not got the loan from the EIB, it is unrealistic to suggest that the entire new model production would have moved to the smaller Southampton factory, and that is the issue.

On the assistance that we need to make available to those affected by the move, I fully appreciate the concerns that have been expressed for the workers at Southampton and those at the associated stamping plant at Dagenham, along with their families and the wider communities in each area. I accept that it should be the Government’s priority and responsibility to do their very best to help those affected.

In Southampton, both the Secretary of State for Business and I have been in discussion with the chairman of the Solent local enterprise partnership, Doug Morrison, to ask directly what we can do to help. As Members here will know, the local enterprise partnership held an emergency board meeting on Thursday. I discussed the matter with the chairman on Friday, and he told me that a multi-agency taskforce is now being established, including representatives from the local enterprise partnership, Southampton city council, Eastleigh borough council as well as officials from my Department and other agencies, including Jobcentre Plus and the Skills Funding Agency. The taskforce will work in partnership with Ford until the plant closes next summer to ensure support is in place for affected employees and small and medium-sized enterprises in the supply chain.

Caroline Nokes: On that point, the Minister will no doubt be aware that between 2003 and 2008 there was, within the automotive and aerospace sectors, the supply chain group programme, which was funded by the regional development agencies. Has the Minister given any thought to the introduction of a similar scheme, which might be of specific assistance to those companies in the supply chain?

Michael Fallon: I will certainly look at that point. The local enterprise partnership has said that it will try to identify the specific impact on the supply chain. If it has requests to make as a result of that work, we certainly stand ready to assist it. It also asked us for specific assistance in two other respects. First, it asked whether it was possible to accelerate the roll-out of phase 2 of the Bridging the Gap project, which, rather confusingly, was announced under round 3 of the regional growth fund in the middle of October. The project will provide grant support to individuals and small businesses in the Southampton and Isle of Wight area. Secondly, the LEP asked whether it was possible to broaden the remit of the scheme so that Ford employees living outside the specific boundaries of the local enterprise partnership could also benefit from the proposal.

On the first point, I have asked officials to see what can be done to accelerate the due diligence required of the bid. I am confident that we can shorten that process

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and ensure that money is made available more quickly. Bidding under round 3—the arrangements for the finalisation of the selected bids—is already subject to faster time limits, which were put in place after the experience of rounds 1 and 2. As for the boundaries, I think—I hope that hon. Members will agree—that it would be wrong to discriminate against someone who has worked at the plant simply because they live outside the geographical boundary of the local enterprise partnership area. I have asked officials to look specifically at what we can do to ensure that there is no such discrimination.

The future of the site itself has also been raised today. I can understand that the community and the local enterprise partnership are keen to retain such a prominent and iconic site for manufacturing use, but that will depend on the site’s ownership and planning status, which is, in the first instance, a matter for the planning authority. Let me say though that we, too, are keen to see it remain in industrial use. We have already notified its availability to UK Trade and Investment to ensure that inward investors are aware of the opportunity there, and we are happy to work with the local planning authority to do everything that we can to ensure that the site remains in manufacturing or industrial use.

My hon. Friend the Member for Romsey and Southampton North suggested extending the enterprise zone. There is already an enterprise zone in the area on the Daedalus site, some 15 miles away. I understand her request that we should create another one. Of course we will await advice on that from the Solent local enterprise partnership. The LEP covers Southampton and Portsmouth, and it really is for it to advise us on whether it sees the need to create a specific zone around the site, or whether it wants to enlarge the other zone and so on. We await advice from the local enterprise partnership.

It would be wrong not to touch on the Dagenham area. The hon. Member for Dagenham and Rainham (Jon Cruddas) has spoken eloquently for his constituents, and I know that he is in regular touch with the plant there. Following the Mayor of London’s standing commitment to lead a response to any large-scale redundancies in London, he hosted a constructive meeting of partners, including Jobcentre Plus, the Skills Funding Agency, the London borough of Barking and Dagenham and my officials, last Friday. The Mayor will work with all those partners and with Ford to develop support arrangements for the affected Ford workers and their families.

In partnership with the London enterprise panel, the Greater London assembly and the borough are already considering the long-term impact on the Dagenham area, including how new opportunities to retain a high value-added and high-skills local economy can be realised on the back of the continuing and substantial commitment of Ford to Dagenham, about which the hon. Member for Dagenham and Rainham has spoken and which we should not forget in the circumstances surrounding the regrettable decision to close the Southampton plant.

Ford has indicated that it hopes that the inevitable redundancies will be voluntary. It expects that around 300 people may want to relocate within Ford’s remaining UK operations, rather than take the voluntary redundancy package, and it has hired Lee Hecht Harrison, a global outplacement provider, to work with it at both the

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affected sites to help individuals. Whatever criticisms we may have about the circumstances in which the decision to close the Southampton plant was made, we should welcome Ford’s commitment to do everything that it can to help its employees after that decision was made.

Chris Huhne: Has the Minister had any contact with Ford executives about extending that package to the subcontractors on site and, indeed, to people in the supply chain, particularly given the availability of an outplacement agency, which can have an important effect on job opportunities in the future?

Michael Fallon: I am very happy to undertake to look at that point. The right hon. Gentleman raised the supply chain in his meeting with the Secretary of State. As I say, we will certainly look at that point. We are waiting for more evidence from the local enterprise partnership about the scale and degree of the supply chain, and exactly where the jobs affected might lie, but I am happy to consider that point and I will get back to him.

As I was saying, we have ensured that the local Jobcentre Plus teams and the Skills Funding Agency are involved in both Southampton and Dagenham. The SFA will work with colleges and training providers in the local areas to ensure that support is available to any employees who are at risk of redundancy, and the national careers service can offer free careers advice on upskilling or retraining for alternative employment.

I will turn shortly to the future of Ford in the UK, but before I do so I will attempt to answer some of the questions that the hon. Member for Hartlepool (Mr Wright) put to me. He asked me to assess the European market. I am not sure whether it is for me to do that, but the manufacturers certainly tell us that there remains significant and structural overcapacity throughout the European marketplace. We have seen that in the closures proposed at Peugeot and in the recent profit warning from Renault. I do not think that there can be any doubt that some quite significant restructuring lies ahead for the European market. Of course, that is a market that the Turkish Ford plant supplies.

The hon. Gentleman asked me more specifically if I had discussed these matters in my discussions with Ford. I met Ford on 5 September—my second day in office—and again on 25 and 26 September, in the meetings that I had with most of the major automotive companies in the margins of the Paris motor show. Yes, we certainly discussed overcapacity, but we were given absolutely no hint that that overcapacity had any implications for Ford’s operations in the UK.

The hon. Gentleman also asked whether we talk to other Departments. Yes, we talk to other Departments, and issues are raised with us by the major investors, not least about the taxation of low-carbon vehicles, and so on. So, as I say, we do talk to other Departments.

The hon. Gentleman finally asked about the strategic approach, and discussing that approach is the point at which I should turn to the future of Ford’s long-term commitment to the UK and to the efforts that we and previous Governments have made to secure that

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commitment to research and development and, in particular, to engine design and manufacturing operations in the UK.

It is important to remind ourselves that Ford is a very important part of the UK automotive sector and has been for more than a century. Ford employs more than 12,000 people in the UK and invests more than £400 million each year here on high-quality R and D—about a quarter of the total UK automotive R and D spend.

Even more significantly, the UK supplies more than a third of Ford’s total global demand for petrol and diesel engines. As part of that, the UK supplies more than half Ford’s total global diesel engine requirement. These are astonishing statistics, all the more so because the engines are not only built here but designed here. That is why, despite the circumstances that have brought us together this morning, I am delighted that Ford has subsequently confirmed that it will design, engineer and build its brand new low-carbon diesel engine in the UK.

Of course, Ford applied for help from round 3 of the regional growth fund to enable that project to go ahead. On 19 October, we announced our conditional offer of £9.3 million to support Ford’s investment of £156 million into Dagenham to build an all-new engine series at the plant. It may be of no comfort to those in the Southampton area, but that investment will safeguard some 450 jobs and create 50 new jobs, while supporting many more in the supply chain and wider economy. Ford expects to follow that project with a new petrol engine at Bridgend, and together these projects will ensure that the UK retains its crown as Ford’s global centre of powertrain excellence.

I was specifically asked about the circumstances of the regional growth fund bid. Of course, the bid is appraised by an independent panel, chaired by Lord Heseltine, and it is separately appraised by our secretariat, assessing it on its own merits against the fund’s objectives, which include the employment that the bid would create or safeguard, as well as the investment and the benefits to the wider community that it would bring to the UK.

I need to be absolutely straight with colleagues here and say that we look at such bids independently; we do not have discussions with the company about the rest of its strategic plans right across the UK; and we look at each bid on its merits and measure its compliance with our criteria. Of course, all the allocations are then subject to due diligence—an important process that is built in to protect the public purse.

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Mr Denham: I am grateful to the Minister for giving way, but perhaps I can just put it on the record that this is where we disagree and that, in the view of many of us, the regional growth fund should engage with a company’s wider strategy and not simply assess the merits of an individual decision.

Michael Fallon: I note that point and I heard the right hon. Gentleman make it in his earlier contribution. I am not sure whether, under the old system, the four regional development agencies that would have been involved—I think that is the number—would have been part of that process, but I will certainly reflect on what he has said.

What is important is that we are capturing this new work in the UK and we are playing to our world-class strengths of design, engineering and advanced manufacturing. That is the direction that we should be moving in, as we seek to rebalance our economy, drive forward growth and secure greater export revenues. That is the front and centre of our industrial strategy. Without our support, the Ford projects that I have mentioned would have gone elsewhere, which would have undermined the UK’s position as the centre of choice for Ford’s engine programme and our ability to bid for and win new work.

In conclusion, a number of points have been made today. Let me re-emphasise that I share the disappointment of every Member who has spoken in the debate at Ford’s decision to close the Swaythling plant. I regret the circumstances in which that decision was made and communicated to the Department and, indeed, to colleagues here in Parliament. Nevertheless, we will commit to work with local partners; we will do all that we can to help those affected by the closures; and we will continue to work with Ford to build on its major and ongoing commitment to the automotive sector in the UK.

Sir Roger Gale (in the Chair): May I take this opportunity to thank all right hon. and hon. Members who are in Westminster Hall, both for the largely non-partisan manner in which the debate has been conducted and for seeking to accommodate both Front Benchers in the manner that they have been accommodated? As I said earlier, this is an important subject, and I hope and believe that those watching in a wider audience may just have seen a little of the House of Commons at its very best this morning. Thank you all very much indeed.

If the right hon. and hon. Members who are leaving Westminster Hall could do so quietly, in a moment we will proceed to the next debate.

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Unmanned Aerial Vehicles

11 am

Rehman Chishti (Gillingham and Rainham) (Con): It is a pleasure to serve under your chairmanship, Sir Roger. May I welcome the Minister to his post? I have great admiration and respect for him in his current role, and the same was true when he was in his previous role. I hope that he has had a chance to read my speech, which I sent over yesterday, and particularly the 10 specific questions I will be asking him to address.

In recent years, we have witnessed the proliferation of the use of unmanned aerial vehicles, better known as drones. These remotely piloted aircraft are predominately used by states to conduct intelligence and surveillance, and, increasingly, to carry out armed strikes. This debate looks at the military use of armed drones by the United Kingdom and the United States.

It appears that the Government see drones as having an ever greater role in our armed forces. According to the vice-chief of the defence staff, General Nicholas Houghton, we may see a tipping point by the mid-2020s, when the UK will

“move away from manned fast jets to Unmanned Combat Aerial Vehicles and missiles”.

The Government recently announced that the number of Reaper drones the UK operates in Afghanistan was to double to 10 and that operations were, for the first time, to be conducted from RAF Waddington, in Lincolnshire. Currently, the UK’s five Reaper drones are operated by British personnel from Creech air base in Nevada, and the latest figures show that those drones have flown 40,000 hours and fired 345 missiles in Afghanistan.

Although drones offer the potential to target insurgents without having to put our armed forces in harm’s way, we need to ensure that all steps are taken to prevent civilian casualties. Despite the growing significance of drones, there has been little debate about this issue, and the time is right for a review into how they are used and how they may be developed and deployed in future.

The first question I would like the Minister to address is, what is the Government’s policy on the use of drones, particularly in Afghanistan and Pakistan? My second question is, how many civilians have been killed by UK drone strikes in Afghanistan? My third question, which is linked to that, is, does he agree that the death of civilians in Afghanistan undermines the aim of winning hearts and minds, and feeds anti-west feeling? If civilians cannot be protected, does he agree that we should consider suspending the use of drones?

Earlier this year, I visited Pakistan, having been a former adviser to Benazir Bhutto, and I met President Zardari, senior Ministers and many local people. Everywhere I went, concerns were raised about the use of drone strikes in Pakistan by foreign countries. There were real concerns that such strikes would feed into the anti-west attitude played on by radical elements.

Although the UK has operated drones only in Afghanistan, the United States has used them as part of its counter-terrorism strategy in Pakistan, Somalia and Yemen. According to reports, that has resulted in hundreds of civilian causalities. The Bureau of Investigative Journalism believes that more than 350 strikes have

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taken place in Pakistan since 2004, and 3,378 people may have been killed, including 885 civilians. That has fed into anti-west feeling, with 74% of Pakistanis now seeing the US as an enemy, and only 17% supporting its use of unmanned strikes.

One victim was Daud Khan, a local tribal elder from Datta Khel, who was killed in March 2011, along with 40 other people, while attending a jirga, which is a peaceful council of elders. His son, Noor Khan, has launched legal proceedings in the United Kingdom, alleging that the British Government provided locational intelligence to the CIA about individuals of interest to the United States and that this intelligence is then used to direct drone attacks in Pakistan. The legal statement for the case asserts that if Government officials assisted the CIA to direct armed attacks in Pakistan, they are, in principle, liable under domestic criminal law. Such allegations damage our relationship with Pakistan, which will draw its own inferences from the Government’s refusal to confirm or deny whether intelligence has been shared with the United States.

Jim Shannon (Strangford) (DUP): I thank the hon. Gentleman for bringing this matter to the House. Does he agree that, while we regret the loss of civilian lives, the drones’ military objective of taking on terrorism is vastly important? Is it not better to use them to save British Army lives?

Rehman Chishti: I thank the hon. Gentleman. That is an important point. I am not against the use of drones, but it has been asserted that the United States operates drone strikes not simply against known targets, but against suspects, and that is completely unacceptable when somebody may or may not be an insurgent. Drones have their place; if they can be deployed, and the intelligence is good, of course we have to look at using them. However, in Pakistan, there have been 885 fatalities in 3,330 strikes, which is completely unacceptable. I am therefore asking the Minister for assurances that we will ensure that drones are linked to proper intelligence. If steps can be taken to avoid civilian casualties, drones can, of course, be used to target known militants, as they have been.

Jason McCartney (Colne Valley) (Con): As a former RAF officer, may I say that a poorly targeted air strike is a poorly targeted air strike, whether it is carried out by a Tornado, a Mirage, an F-15 or a remotely piloted vehicle? I praise my hon. Friend for bringing in the phrase “remotely piloted vehicles”, because drones are not unmanned—they have a pilot, and they are remotely piloted. We must get away from the idea that this technology is flying around, as in “The Terminator”, just destroying targets. Last week, I saw the Reaper squadron combating Somali piracy, and they are really helping to reduce attacks. Does my hon. Friend agree that drones have good uses when used well by allied forces?

Rehman Chishti: I am grateful to my hon. Friend for making that key point about drones being used well. I have seen drone strikes in Pakistan, where Baitullah Mehsud, a known terrorist, was taken out, and drones of course have their uses. The other key element, however, is the huge number of civilians who are losing their lives. That undermines the work being done in Afghanistan,

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because the hearts and minds that we want to win are lost when we lose so many civilians. Of course drones should be used—absolutely—but there is also the issue of proportionality and of ensuring that drones are used with proper intelligence. I thank my hon. Friend for his expertise. The point I was making—I have touched on it previously—is that the use of drones fosters anti-west sentiments, which could be a danger to our security in this country.

My fourth question is, can the Government make clear whether the UK has shared locational intelligence with the United States, leading to drone strikes in Pakistan? Question No. 5 is, what is the Government’s policy on the circumstances in which intelligence may be lawfully transferred? Question No. 6 is, do the Government believe that there is an armed conflict in Pakistan? If not—this is question No. 7—do they accept that a UK national who carried out a targeted killing in Pakistan could, in principle, be liable under domestic criminal law? My question No. 8 is whether, in that case, the Government accept that if UK officials were to share intelligence with the CIA that they knew or believed would be used to assist in drone strikes they could, in principle, be liable under UK law.

I recently asked the Secretary of State in the House a question about locational intelligence and his reply raised more questions than it answered. He said:

“The United States operates in Afghanistan under a different basis of law from the one under which we operate.”—[Official Report, 22 October 2012; Vol. 551, c. 696.]

As I understand matters, there is only one basis for international law, so my next and ninth question to the Minister is, under what legal basis do the Government believe the United States to operate, and why is that so different from international law?

Drone use by the United States raises several legal questions. It has been argued that drone strikes in Pakistan have been carried out in violation of international humanitarian law. The high number of civilians killed in such attacks who were not participants in armed conflict raises questions about whether their use is proportionate. Christof Heyns, the UN special rapporteur on extra-judicial killings, has even suggested that some of the drone attacks may constitute war crimes. A recent report by Stanford university and New York university called “Living Under Drones” describes the strikes’ effect on cultural, religious and community life in Pakistan, where some families even refuse to send their children to school, in case they are attacked. The authors also detail the use of double tap strikes where the same area is attacked multiple times, deterring humanitarian assistance.

At a time when Pakistan faces severe poverty and one in four live on £1 a day or less, drone strikes threaten to undermine the work achieved through international aid. By 2015, Pakistan will become the UK’s largest recipient of aid. Yet that good will is threatened by such military activity. We need to ensure that Afghanistan and Pakistan are safe, secure countries but drone strikes can undermine the important battle to win hearts and minds. My tenth question to the Minister is whether drones are being used proportionately and whether enough is being done to protect civilians.

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The issues that I have raised deserve serious consideration. If drones are to be more widely used, we must ensure that they are deployed so as not to create a risk of civilian deaths and collateral damage, or pose a risk to international relations or a danger to our national security. I urge the Minister to ensure that the United Kingdom’s policy on drones and sharing intelligence that may be used in drone strikes is fully compliant with the relevant national and international law. In answer to the interventions of the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Colne Valley (Jason McCartney), I would say that if drones are used in accordance with our national law, and international law, I do not have a problem with that. However, there are concerns at the moment, linked to the issue of sharing intelligence with the United States, which may lead to attacks in Pakistan, about whether they are being used properly under national and international law.

Those are serious questions that need to be answered, and they damage the excellent work that this country does around the world, in rightly giving international aid and winning hearts and minds. The tragic London bombings of 2005 were linked to the border region of Afghanistan and Pakistan. We need a secure and prosperous Afghanistan and Pakistan, which may be linked to international security.

Sir Roger Gale (in the Chair): Order. In half-hour Adjournment debates only the sponsoring Member may speak, unless others have the consent of that Member and the Minister. My understanding is that both Yasmin Qureshi and Nick Harvey have sought consent to do that, but the Chair deprecates the fact that a Minister is sometimes left without sufficient time to respond; so I should be grateful if hon. Members kept their contributions very brief.

11.14 am

Yasmin Qureshi (Bolton South East) (Lab): I congratulate the hon. Member for Gillingham and Rainham (Rehman Chishti) on securing the debate. This issue is incredibly important, especially in Afghanistan and Pakistan. I have constituents of Pakistani Kashmiri and Afghan heritage, and they have several times come to see me, and written many e-mails and letters to me, about drone attacks, especially as some of them have family members living in the relevant parts of Pakistan—Waziristan and other areas. They have told me in person about the effects of drone attacks. They ask, “How would you feel if you were asleep at night and suddenly you heard drone attacks—buildings being destroyed and people being killed: you would not know from day to day what would happen. One minute you are peacefully asleep in bed, and the next an attack is happening.” How would we like that—if people were asleep in Bolton, for example, and that were to happen, with the deaths of young children as well as adults, including old people. Much has been made of the shooting of young Malala, but there are many other young Malalas in that part of the world—and young boys, too, and families being destroyed.

Our argument for using drone attacks in the countries in question has always been that we are trying to get rid of the Taliban or al-Qaeda. According to some statistics—and these were in a recent American study—only 2% of people killed in all drone strikes could possibly have

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been called al-Qaeda or Taliban; 98% of the people were civilians and not involved in armed conflict. It is fine to protect our country. I live here, and I want to be protected as well; but is it really fair that we should engage in actions that lead to that proportion of deaths of ordinary innocent civilians? I am sorry to say that is not right, and the reason is the way the drones are used. I entirely accept the fact that if they are used properly and targeted at people who are known to be involved in illegal or criminal activities, there could be a justification. Under article 2.4 of the United Nations charter, force can be used if the host nation agrees, and the action is in self-defence. From everything that we have heard from the Pakistan Government, they do not agree to the use of drones in their country. Recently at the UN Human Rights Council in Geneva, the Pakistan Foreign Minister Hina Rabbani Khar said that they object. There is therefore a question of the legality of the weapons.

That issue is coupled with the fact that drones are not targeted properly. It is not the case that there are particular houses or positions, with people known to have committed criminal or terrorist offences. It might just be right to target such positions if it accorded with international law; but the evidence increasingly shows that drones are being targeted not at specific people but randomly, that they are being controlled, in America, not by the army but the CIA, and that there are successive strikes with more than one hit in the same place. That cannot be right. I am sorry if I sound very passionate about this, but thousands of innocent lives have been taken in Pakistan and Afghanistan—and in Yemen and elsewhere, although I do not have many constituents from there. I can talk more about Pakistan and Afghanistan, where the most intensive drone use has been.

There are ways to fight a battle, but we must abide by international law. I am grateful that an investigation is being carried out by the UN rapporteur on counter-terrorism, the British lawyer Ben Emmerson QC, on whether the use of drones is legal, and I wonder whether the Minister will also welcome that. If it is found that they are illegal, will we desist from using them in our campaign?

My final question for the Minister is: if drones are being used legally, are they being used strategically? At this moment in time, the evidence tells us that they are not being used properly, and that they are wrecking the lives of thousands and thousands of innocent people. We would not like it if, when going to a wedding, funeral or procession, we did know whether we might suddenly be attacked. We should put ourselves in the position of the people living in that country.

11.19 am

Sir Nick Harvey (North Devon) (LD): There is nothing inherently wicked or virtuous about a remotely piloted aircraft. The moral questions that have been raised hinge entirely on what is done with them. In that sense, there is little, if any, valid comparison to make between what the United States does with remotely piloted aircraft in Pakistan, and what we do with them in Afghanistan. It is up to the United States, not to a British Minister, to justify what the US does with them in Pakistan, and we will all have our own view on that.

On our use of remotely piloted aircraft in Afghanistan, we should be very proud of and pleased with the part they are playing in our campaign. I have visited Creech

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in Nevada, and I have also watched the RAF pilots who remotely pilot aircraft in Afghanistan. They do tours of duty of about a couple of years, so they very often have a more intimate knowledge of the situation on the ground than those sent to patrol on foot, who do a six-month tour of duty.

From what I have seen, I believe that in many instances remotely piloted aircraft have a restraining impact on what actually takes place on the ground. Their ability to hover, loiter and build up an intelligence picture over as much as 24 hours—to use that information and share it with those on the ground—has a civilising effect on the nature of the combat that takes place. To suggest that remotely piloted aircraft are inherently evil and should be discarded from our inventory would be to make a bad mistake. I hope that the vice-chief’s prophecy that they will become increasingly common in years to come will prove true.

11.21 am

The Parliamentary Under-Secretary of State for Defence (Mr Philip Dunne): It is a pleasure to serve under your chairmanship today, Sir Roger.

I congratulate my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) on securing this important debate on the Floor of the House. This subject clearly arouses considerable passions, some of which are better informed than others, but all of which are important. This is a good opportunity to place the Ministry of Defence’s use of unmanned aerial vehicles—UAVs—on the record, so I am grateful to my hon. Friend. I shall endeavour to answer as many of his detailed questions as I can in the time available.

I will take a few minutes to explain the context in which UK armed forces operate our fleet of unmanned aerial vehicles. They are often referred to as drones, but that term is misleading, as it implies that there is no human input into the operation of UAVs. As was said by my hon. Friend the Member for Colne Valley (Jason McCartney), who has direct experience, military personnel are intimately involved in the operation of UAVs flown by UK forces, with professional pilots being in control and military and civilian personnel analysing the collected intelligence.

I know that the Chief of the Air Staff, Air Chief Marshal Sir Stephen Dalton, prefers “remotely piloted aircraft”, a term which was mentioned by my hon. Friend. That better reflects the fact that trained personnel are always engaged in the decision-making process. For the sake of clarity, I will use the more widely recognised UAV terminology, although I entirely agree with the Air Chief Marshal’s sentiment.

The UK has a number of UAV systems currently deployed in support of operations in Afghanistan, and they are vital to the success of the mission. I recognise that their use is often emotive, but we can use this debate to dispel some of the misapprehensions that surround their deployment. UAVs are saving the lives of both British and coalition service personnel and Afghan civilians on a daily basis. Their use is predominantly as intelligence, surveillance and reconnaissance—ISR—assets and, when weapons are deployed, the decision-making process leading to the identification and engagement of a target is identical to that for manned aircraft.

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The UAV systems being operated in Afghanistan form part of a mix of airborne ISR capabilities. They are but one, albeit an increasingly important, component of those systems. They complement the more traditional manned surveillance capabilities provided by aircraft such as Sentinel or the Sea King helicopter. Uniquely, UAVs provide an unblinking and persistent ISR presence that can be exploited with crews being relieved while the aircraft remain airborne, as was made clear by the hon. Member for North Devon (Sir Nick Harvey). That would be too resource-intensive to provide from manned aircraft alone. Persistent surveillance provides a significantly more complete intelligence picture, which decreases the risk of misidentifying targets of interest. The ability of UAVs to loiter over areas to survey for enemy activity, feeding video and imagery intelligence to commanders in real time, makes them an invaluable asset on the ground in Afghanistan and allows coalition forces to stay one step ahead of the enemy.

As with all our deployed capabilities, UAV capability in Afghanistan is constantly under review. Reaper is the UK’s only medium-altitude, long-endurance ISR platform currently in service, and it has provided ISR capabilities to coalition forces in Afghanistan since October 2007.

Rehman Chishti: On Afghanistan, will the Minister clarify whether he has the facts and figures about how many civilian casualties have occurred as a result of those drones?

Mr Dunne: I will come on to address my hon. Friend’s specific question.

Reaper has provided more than 40,000 hours of persistent intelligence in support of our front-line troops, giving vital situational awareness and helping to save military and civilian lives in Afghanistan. Its success has been such that, in December 2010, the Prime Minister announced an increase in the number that the Royal Air Force operates. The Army also operates unarmed tactical UAVs for ISR purposes, and it has introduced a range of the latest nano-UAV technology to service operations this year. Together, the UK’s fleet of UAVs have carried out well over 100,000 hours of flying in Afghanistan.

Its primary role is ISR, but Reaper is also the UK’s only armed UAV. In its armed configuration, Reaper has been certified for use only in support of ground forces in Afghanistan. For example, it was not used during Operation Ellamy over Libya. In answer to their questions, I assure my hon. Friend the Member for Gillingham and Rainham and the hon. Member for Bolton South East (Yasmin Qureshi) that it has not been operated in Pakistan. Reaper is not used in Somalia either; my hon. Friend the Member for Colne Valley was perhaps thinking of Predator UAVs operated there by the US.

Rehman Chishti: Will the Minister give way?

Mr Dunne: I have only a short amount of time, and I must still deal with many of my hon. Friend’s questions.

It is important to note that Reaper does not have the capability to deploy its weapon systems unless commanded to do so by the flight crew. They are trained to operate

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under the Geneva conventions on the law of armed conflict, which is otherwise known as international humanitarian law. On the rare occasions that weapons are used—349 precision-guided weapons have been employed since Reaper went to Afghanistan—the strict rules of engagement for the use of weapons are the same as those that apply to manned combat aircraft, which have been designed to minimise the risk to civilians. The selection and prosecution of all targets is based on a rigorous scrutiny process that is compliant with international law. Reaper is launched and recovered by crews deployed in Afghanistan, but its missions are exclusively controlled by RAF personnel based outside Afghanistan. That means that, rather than being rotated through a six-month deployment to theatre, operators build up an unsurpassed degree of knowledge and experience.

The weapons carried by Reaper are all precision-guided, and the type is carefully selected in every engagement to ensure the most appropriate munition is used to deliver the required effect, so minimising the risk to civilians and their property. I am aware of only one incident of civilians having been killed by weapons deployed from a UK Reaper. As my hon. Friend the Member for Gillingham and Rainham may know, on 25 March 2011 a strike on two pick-up trucks carrying a significant quantity of explosives resulted in the death of four Afghan civilians, as well as of two insurgents. That incident was highly regrettable, but the subsequent report concluded that the actions of the Reaper crew had been in accordance with extant procedures and UK rules of engagement.

The moral, ethical and legal issues associated with the operation and use of weapons from UAVs are the same as those for manned aircraft. As I said at the beginning, there is always a human in the loop. Although technological advances are likely to increase the level of automation in some systems, just as in other non-military equipment, the Government have no intention of developing systems that operate without human intervention in the weapon command and control chain.

My hon. Friend raised some questions regarding the use of armed UAVs by the United States. I am not going to comment on the operations of our allies and—this is long-standing Government policy—for reasons of operational security, the Ministry of Defence does not comment on its intelligence-sharing arrangements with coalition partners. Countries can, of course, make their own interpretation of what they are permitted to do under international law, and it is a matter for the US Administration, whoever they are after today’s election, to assure themselves that the actions they undertake are lawful.

In Afghanistan, our UAVs are an increasingly important means of providing vital information to our ground forces. They have been proven to provide great military benefit. I can reassure my hon. Friend and the House that I am satisfied that the UK’s policy on UAVs is fully compliant with national and international law.

11.30 am

Sitting suspended.

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High Speed Rail (Scotland)

[Mr Christopher Chope in the Chair]

4 pm

Sheila Gilmore (Edinburgh East) (Lab): It is a pleasure to speak under your chairmanship, Mr Chope. I sought the debate because of the huge importance that high-speed rail has for us in Scotland—for our economy and for Scotland’s development over a long period into the future. Obviously, like many other Scottish MPs, I have a personal interest: when Parliament is sitting, I spend nearly 10 hours a week sitting in trains. I quite enjoy it and I can get a lot done, but I think we are on the cusp of being able to achieve a modal shift in the way that people travel between Scotland and London. That is important, including for environmental reasons, because at the moment the journey time is such that on some occasions or in some circumstances, flying seems preferable. That adds to the pressure on London airports. If we could make progress on rail, it would help us to meet our environmental targets.

This debate follows a debate earlier this year led by my hon. Friend the Member for Glenrothes (Lindsay Roy). Since then, two things have happened. First, we have a new Secretary of State and a new Minister of State. Secondly, and perhaps even more important, the new Secretary of State made a very important commitment in his speech at the Conservative party conference last month. This is what he said:

“At the start of this year, the government committed to build a new line not just to Birmingham but on to Manchester and Leeds. Soon, I’ll publish detailed plans for the route north of Birmingham, but I want even more parts of our country to benefit. So we’re launching a study on the way to get fast journeys further north still, with the aim of getting the journey from Scotland to London to under three hours and making sure the north-east benefits too, because this will be a scheme for every person in Britain.”

Jim Shannon (Strangford) (DUP): To follow on from what the hon. Lady is saying, this scheme will benefit everyone in the United Kingdom of Great Britain and Northern Ireland. Does she envisage this high-speed rail having contact with Larne, Cairnryan and Stranraer, thereby ensuring that the people of Northern Ireland can also benefit from the high-speed rail link, which ultimately will take them to London? Based on a very significant business plan—

Mr Christopher Chope (in the Chair): Order. We must keep interventions short.

Sheila Gilmore: I thank the hon. Member for Strangford (Jim Shannon) for his intervention. I am sorry, but I was reading out a quote; it was the speaker of those words who stopped at Britain and did not talk about the United Kingdom. I think that any options that can be built in for some of these things would be very useful. Anyone who has ever travelled to Stranraer using the current arrangements will know just how difficult that is. It is a big disadvantage for both Northern Ireland and Scotland that we do not have a particularly good rail link down to the ferry ports.

In the debate in April, we talked about getting the journey time down to three and a half hours—that is what the previous Minister said—but a commitment to

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bring it down to three hours is a welcome further step in the right direction. That would hugely enhance connectivity. It would improve links, not just the Scotland-London link, but links to other parts of England and the major conurbations, which would make Scotland a much more attractive place to do business. It would boost jobs and growth throughout the country.

Lindsay Roy (Glenrothes) (Lab): In the event of separation, what incentive would there be for the rest-of-the-UK Government to extend high-speed rail beyond Manchester to Carlisle and further north?

Sheila Gilmore: I thank my hon. Friend for his intervention. I shall go into that in a little more depth later. It does reveal the issue that we might be faced with. The importance of the scheme, particularly the northern part, to Scotland is probably greater, at this stage at least, than it might seem to be to what we are tending to refer to as the rest of the UK at that point. I certainly hope that the situation alluded to is not one in which we find ourselves.

Mrs Cheryl Gillan (Chesham and Amersham) (Con): I congratulate the hon. Lady on obtaining the debate. Does she agree that it is very important to connect Scotland and England and that it would perhaps be advisable for the Government to consider starting with high-speed rail from Scotland to the north of England, and then finally down to London when the airport policy is decided, not least because that would send a signal to people in Scotland, who will be facing the referendum, that we want them in the United Kingdom?

Sheila Gilmore: I thank the right hon. Lady for her intervention. It would certainly be an interesting prospect if we were to be placed at the forefront of this. I agree that the connection with the debate about air travel and airports is also important. We should have a very clear, unified transport policy, not only for transport reasons but for environmental reasons, yet at times it feels as though there is a disconnect there. When it comes to people’s travel from Scotland, I am sure that if we did achieve high-speed rail in the near, not the very distant, future, we would see a huge transfer of both business and leisure travel to rail. That would be highly beneficial.

If there is to be a study, I have some questions for the Minister. Who is carrying out the study that we were told is to take place? Is it HS2 Ltd, the Department, or another external organisation? When are we likely to get a report with the information? That is important, especially in terms of timing, because it will determine whether the additional sections of line to Edinburgh and Glasgow could be incorporated in phase 2 of the project. Phase 2 is the part that involves the building of the Y network from Birmingham to Leeds and to Manchester. Broadening the scope of phase 2 would be critical in ensuring that the benefits of High Speed 2 are realised sooner rather than later. The alternative is that what I have described becomes phase 3, which would be very disappointing.

The estimated completion date of phase 1 is 2026. For the existing phase 2, it is 2033-34. If building to Scotland were to be a completely separate phase, on that sort of time scale we would not see the network reach Scotland until well into the 2040s. From our perspective, and in terms of growing the Scottish economy, that would be extremely disappointing.

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We know that the Secretary of State intends to publish plans for the route between Birmingham and Manchester and Leeds by the end of this year. A recent written answer revealed that the Minister wants to bring forward consultation on phase 2 from 2014 to 2013. I warmly welcome all that, but I argue that the plans to build to Scotland should be published and consulted on, so that, at the very least, that section of the route can be included in the hybrid Bill for phase 2. I acknowledge that planning is likely to be at a fairly early stage, but there some key issues about the route to Scotland on which I hope that the Minister will be able to give us some reply, or at least an undertaking that he and his Department will examine that.

One issue is whether building to Scotland would involve two separate lines—one from Manchester to Glasgow on the west coast and one from Leeds to Edinburgh—or one line, probably from Manchester, that would split into a further Y in southern Scotland and link to both Edinburgh and Glasgow. That is already in place for certain rail journeys, and has been for a long time, as anyone who travels north or south on the sleeper will know. That mechanism enables Edinburgh and Glasgow to link to not only London on conventional-speed rail, but many other parts of the country, and it is a big boon for many people who travel that way.

Will the stations in the existing phase 2 be through-stations or terminuses, as planned for Birmingham? I would argue that through-stations are vastly preferable, because each service to and from Scotland could call at stations on the line, which increases connectivity and reduces the need for additional point-to-point services or people having to change to complete their journey.

At this stage, it is important to acknowledge that regardless of when the high-speed network is extended to Edinburgh and Glasgow, passengers in Scotland will benefit as soon as the first phase of the project is complete. Sometimes, the impression is given that high-speed rail is irrelevant to us at that stage, but if the line from London to Birmingham is connected to existing lines, it will allow trains to continue beyond Birmingham at conventional speeds, which could cut journey times from Scotland to London by half an hour. I hope that Scotland will be part of phase 2, but even without that or a phase 3, journey times could be down to three and half hours. Such reductions in journey times are critical when we are looking at the best methods of travel. To return to the environmental issue, it is the kind of difference that will make people realise that rail is by far the better way to travel. It will also fit in with our business needs, because travel will still be from city centre to city centre.

Will the Minister confirm that, from the completion of phase 1, through-running trains will go to both Glasgow and Edinburgh? HS2 will be linked to the west coast main line at Lichfield, and traditionally trains on that line serve only Glasgow, not Edinburgh. We are aware that there are capacity constraints on the west coast main line, but it would be frustrating if Edinburgh had to wait for the completion of phase 2 to benefit from through-running trains. We are not only talking about Edinburgh, but the entire east coast; people coming from further north would also be able to make use of such a connection.

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I promised my hon. Friend the Member for Glenrothes that I would say a little about the circumstances that would arise should the referendum result in independence. The HS2 project, probably more than any other, encapsulates why we are better together. The Union means that Ministers in Westminster have a responsibility to look out for the interests of people in Scotland alongside those of people in England, Wales and Northern Ireland. That is demonstrated by the decision to facilitate through-running to Scotland from the completion of phase 1 and by the Secretary of State’s stated ambition to drive down journey times further in future. Should Scotland separate from the rest of the UK, it is possible that a benevolent Government in Westminster might retain those commitments, but that is not guaranteed. If Ministers decided that they would not fulfil those commitments, there would be no formal means of redress though, for example, voting against governing parties at the next general election. There would not even be forums such as Westminster Hall where Members representing Scotland could directly raise and debate the issues.

On a purely practical level, I cannot envision the Government of a separate Scotland persuading Ministers in the UK to pay for the hundreds of miles of expensive, high-speed track necessary to link Leeds and Manchester to the Scottish border. I believe that that is the point my hon. Friend wanted to make. UK Ministers would probably expect a Scottish Government to pay for that in addition to what would be required in Scotland—a huge additional expense.

Graeme Morrice (Livingston) (Lab): I congratulate my hon. Friend on securing this important debate. She makes a powerful argument for the completion of the line to Edinburgh and Glasgow. On the latter point, does she take the view that an independent Scottish Government would not have the financial resources to ensure that the high-speed rail link continued to Edinburgh and Glasgow?

Sheila Gilmore: I think that is an extremely likely scenario. We are often faced with proponents of separation suggesting that nothing will change—we can keep the Queen, the pound and all sorts of things—so they will no doubt tell people that they can keep high-speed rail, but that is most unlikely to happen.

Even if the UK Government decided to build the sections between Manchester and the border, or the Scottish Government decided to pay for them, what would happen if there was a concerted campaign against the route and local people decided that they did not want the line to cross their communities? In such circumstances, why should a UK Government expend the political capital necessary to overcome the objections? We could again find ourselves unable to influence the debate.

I do not expect the Minister to say too much about independence, but I would like answers to the questions on the study, the possible route and through-running to Edinburgh. When will the study report? Will any proposed route be incorporated into the hybrid Bill for phase 2? What is the likely route to Scotland? Will the stations in the current phase 2 be through-stations or not? Will there be through-running trains to both Glasgow and Edinburgh when services start after the completion of phase 1 in 2026?

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4.14 pm

The Parliamentary Under-Secretary of State for Transport (Norman Baker): I congratulate the hon. Member for Edinburgh East (Sheila Gilmore) on securing the debate and on her sensible approach to it. To pick up on her last point, we have always believed that the aspiration that we should pursue is for a truly national rail network. Our policy is to maintain the United Kingdom as it is. We are confident of winning the referendum, and we are not planning for independence. I personally think that the Scottish people will conclude, for the reasons that the hon. Lady set out, that independence will be yet another gamble as far as high-speed rail is concerned.

Behind all the headline statistics, HS2 is about believing in something better than we have. The coalition Government passionately believes that the public deserve more than just making do with what they have. In the same way that we are not prepared to put up with a fiscal deficit, neither should we put up with an infrastructure deficit. For too long, successive Governments have failed to grasp the nettle on the decisions necessary to achieve our long-term aspirations.

Growing demand for inter-city rail travel is putting increasing pressure on existing infrastructure. Without planning for additional capacity, passengers face the prospect of more crowded and more unreliable services. To be clear, the primary, though not the only, justification for HS2 is a clear need for extra capacity north to south.

Our plans for a high-speed rail network from London to the west midlands and on to Leeds and Manchester will be the backbone of a new transport system for the 21st century. A new national high-speed rail network will deliver massive benefits in terms of rail capacity, connectivity and reliability that will help to underpin prosperity across the UK and leave a lasting legacy for generations to come. HS2 will benefit every type of traveller on not only the new network, but existing lines. It will free up more space and capacity, which will drive competition on the railway, so changing how rail travel can be marketed and sold.

The Government is serious about making the long-term decisions that the country needs to connect our communities better, support the economy and make Britain the best place in the world to do business.

Mrs Gillan: My hon. Friend is reading out the public relations blurb on HS2 very expertly. Does he agree that, given that the north of England and parts of Scotland are far poorer than the rich and often overheated south-east, if one of the Government’s aims is to increase the country’s prosperity, it would have been common sense to have started the project in the north or even in Scotland, as I suggested to the hon. Member for Edinburgh East (Sheila Gilmore)? What consideration did the Department give that idea before embarking on phase 1?

Norman Baker: I personally believe that we are starting at the sensible place, not least because it enables the connection with HS1 to be facilitated, which would not otherwise be the case. Of course if the Scottish Government wants to start building southwards from Edinburgh and Glasgow, there is nothing to stop it from so doing. On the question about what consideration the Department gave, I will have to ask the Minister of State for Transport, my right hon. Friend the Member for Chelmsford (Mr Burns), to write to my right hon. Friend with an answer.

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The Department for Transport ministerial team is very much engaged in the question of HS2 as it affects and, indeed, benefits Scotland. I visited Glasgow to discuss the matter in March 2011. The former Secretary of State for Transport, my right hon. Friend the Member for Putney (Justine Greening), went there in March this year, and the current Secretary of State intends to visit later this month. There is no question but that Scotland will benefit from the Y network and even from the existing plans that have been announced.

The hon. Member for Edinburgh East referred to the reduction in journey times from Birmingham in phase 1 and the subsequent journey time reductions when the Y network to Leeds and Manchester is completed. We have already begun work with partners north of the border to ensure that Scotland gets the most from High Speed 2, and we should not underestimate—I know that the hon. Lady does not do that—the extent of the benefits from the Y network when it is completed.

The network is expected to deliver up to £50 billion of business benefits alone, and that will be felt very much in Scotland and the north of England as well as the south. Completion of the Y network to Leeds and Manchester will spread the benefits of high-speed rail across the country, so increasing capacity and enhancing connectivity all the way to Scotland by relieving pressure on the most congested southern end of the line. Seamless transition of trains on to the east coast and west coast main lines will deliver faster journeys to destinations the length of Britain, including to Edinburgh and Glasgow, without the need to change trains.

Cutting journey times is important for the competitiveness of not just Scotland but the whole UK. We want to see the benefits delivered as soon as possible, which is why we are exploring options for bringing forward formal public consultation on phase 2 of the Y network to 2013.

The claim by some opponents of HS2 that better and faster transport links between north and south will pull economic activity into London and away from the UK’s other great cities is defeatist and misguided. Isolation is not the way to ensure that Scotland thrives. Indeed, the campaign for HS2, which has been particularly strong in Scotland and the north, suggests that people in those areas share that view. I have every confidence that bringing Edinburgh and Glasgow closer to London and the cities of the midlands and the north of England will boost growth across our major conurbations. That confidence is based on the evidence from our European neighbours, which began their high-speed rail journey a generation before we had even started arguing about our first 67 mile stretch of high-speed track from the channel tunnel.

Faster journeys will produce more extensive modal shift between rail and air, as the train becomes the mode of choice for more travellers. High-speed rail is already greener than flying, and the gap between the two modes will widen as we make progress in decarbonising the sources of our electricity.

A crucial point to underline is that we are pursuing HS2 not just because of the positive benefits that it will generate but because of the pressing need to head off big problems that are heading down the track towards us, which will affect Scotland as well as the rest of Britain. We welcome the enthusiasm and support for high-speed rail north of the border.

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Graeme Morrice: I welcome many of the Minister’s comments. Forgive me for raising independence again—obviously it is something that those north of the border will be focused on for the next two years in the run-up to the referendum—but does he share our view that, in the event of Scotland becoming independent, HS2 would be in serious jeopardy in relation to the rail links continuing to Edinburgh and Glasgow?

Norman Baker: I do not think that the population north of the border will vote for independence, so I hope that that is a hypothetical question. I would say not that HS2 is in serious danger, but that it unnecessarily raises a question mark over something that is not there. That in turn brings an air of uncertainty over HS2, which is also not presently there.

We are working closely with the Scottish Government throughout this year to understand how HS2 might be extended further north. The coalition agreement makes it clear that we want a genuinely national network. We see phases 1 and 2 of the High Speed 2 project as the best way to make progress towards that goal. None the less, there is a real case for examining whether we should go beyond the Y network, as the Secretary of State said at the Conservative party conference last month. The Department is launching a study on ways to get fast journeys further north and to Scotland and to ensure that the north-east benefits, too.

The hon. Member for Edinburgh East asked me a couple of questions about the study and when it would report. The study will involve departmental HS2 officials, who will start a process of work with the Scottish Government and northern English regions better to understand and articulate transport needs north of the Y network. The study will set out a remit for any future work, using as a starting point completion of the Y network. There is likely to be a focus on improvements in capacity and journey time. Once the study is complete early in the new year, we will take stock of the results to ensure that we have a full understanding of the transport needs north of the Y network. We will then have the right base from which we can consider scoping out broad options for bringing high-speed rail further north and to Scotland.

The study will not start with any preconceptions but will be open to all options that offer good value for money to the taxpayer. That may include a full high-speed solution, upgrades to existing infrastructure, or a combination of the two.

The hon. Lady also asked about journeys to Edinburgh, which she of course is interested in given where her constituency is sited. Let me make it clear that as soon as phase 1 is complete, there will be a link on to the west coast main line from the new high-speed line, which will enable services to be run from Glasgow and Edinburgh on the high-speed network using a bifurcation at Carstairs. That is perfectly possible in operational terms as soon as the link to Birmingham is completed in phase 1.

Our plans for HS2 do not mean that we will stop investing in and improving our current transport network. Generally, our investment programme is the biggest since the 19th century. We fully appreciate the need to

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enhance our network and improve links between England and Scotland. The inter-city express programme will deliver a brand-new fleet of trains for the east coast main line that will start operating in 2018 and offer faster, greener, higher capacity and better quality services well ahead of the Y network being completed. The trains will boost fast-line capacity from Scotland into King’s Cross during peak hours and cut journey times between London and Edinburgh by 12 minutes, with even larger gains for journeys to Dundee, Aberdeen, Perth and Inverness.

A major factor in our decision to press ahead with the IEP was its capacity to enable the continuation of through journeys to and from northerly destinations. On top of that, we have announced a £240 million upgrade of the east coast main line, which will greatly improve journeys between Scotland and England.

On the west coast route, the long-awaited new Pendolino carriages have started serving the Birmingham to Scotland corridor. The route will also benefit from an upgrade to its power systems that will enable more passenger and freight electric trains to operate.

The Manchester to Scotland route is also due to get new trains, with delivery starting in December 2013 and completion by May 2014. On the east coast, a new timetable introduced last May increased the number of through services between Scotland and London—it includes the Flying Scotsman—linking Edinburgh and King’s Cross with a fast service that can bring Scotland’s key business leaders into the heart of London in four hours, arriving before 10 o’clock each day.

We are also investing in stations north of the border. As part of the Department’s sponsored access for all programme, which falls within my portfolio, £41 million has been allocated to making at least 17 stations across the Scottish network accessible to disabled passengers. We are also investing more than £6 million up to 2014 across a wide range of Scottish stations to make smaller access improvements.

In conclusion, fast, reliable connectivity between Scotland, London and the cities of the midlands and the north is a crucial component of a successful economy, and we are investing to bring that about. High-speed rail not only supports thousands of jobs in Scotland and throughout the UK but gives us a once-in-a-generation opportunity to reshape the economic geography of the whole country, by bringing our key cities closer together and helping to bridge an economic divide that has defied solution for decades. This is a national scheme in the national interest being delivered by a national Government.

I warmly welcome the political consensus on HS2 across the three main parties on the basis that it will help to ensure that the planning and construction of this transformational scheme is carried through to completion. Realising the full benefits of high-speed rail for Scotland is crucial to the economic well-being of the whole country, and we will work with our partners in Scotland to achieve that. If there are any outstanding matters that I have not been able to address, I will ensure that my colleague, the Minister of State for Transport, will write to the hon. Lady with the answers.