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Defence Industry (North-West)

Volume 282: debated on Wednesday 24 July 1996

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1.30 pm

I am grateful for the opportunity to raise this vital issue concerning the importance of defence manufacturing in the north-west and I am delighted to have the support of so many of my colleagues from both within and outside the north-west. Those include, from outside the north-west, my right hon. Friend the Member for Northavon (Sir J. Cope) and my hon. Friend the Member for Salisbury (Mr. Key) and, from within the north-west, my right hon. Friend the Member for South Ribble (Mr. Atkins). My hon. Friend the Member for City of Chester (Mr. Brandreth) will be interested in some of what I shall say and would wish to participate if he could, but I am extremely grateful to see him in his place.

I am also pleased to see my hon. Friends the Members for Blackpool, South (Mr. Hawkins), for Southport (Mr. Banks), for Canterbury (Mr. Brazier) and for Wyre (Mr. Mans). Opposition Members from the north-west include the hon. Members for Pendle (Mr. Prentice), for Burnley (Mr. Pike) and for Rochdale (Ms Lynne). The hon. Member for Tooting (Mr. Cox) must also be interested in this debate.

Britain has a long and distinguished history in international affairs, which has bequeathed us a unique role on the world stage today, from the time when the sun never set on the British empire to present-day conflicts. We are the only country to be a member of NATO, the European Union, the Western European Union, the Commonwealth and the Group of Seven leading industrial countries, and a permanent member of the UN Security Council.

As President Chirac noted earlier this year, Britain has a long tradition of action abroad. That proud tradition has continued under this Government, with our troops, aircraft and Navy not only protecting our protectorates and assets abroad, such as the Falklands, but participating in grand coalitions of states enforcing the rule of law. That can be seen time and again—for example, in the Gulf, when our Tornado fighters, built in the north-west, were the first to brave enemy anti-aircraft fire and bomb Baghdad, and, more recently, in Bosnia, with UNPROFOR enforcing the peace process.

We are still a nation with a global reach. Even if it is not all that it once was, we can still hold up our heads with pride. For example, in one month in 1995, British forces were deployed or carrying out exercises in more than 30 different parts of the world. We are proud to continue that tradition, but we must ensure that our troops continue to be the best armed in the world.

Defence procurement now goes some way to achieving that goal. It accounts for 40 per cent. of our defence budget. It is important to maintain technical superiority, the like of which we have in the north-west. The importance of defence procurement to the economy as a whole and in the north-west in particular is beyond question. Some 38 per cent. of net manufacturing output in the north-west is directly related to aerospace products, which are affiliated to the Consortium for Lancashire Aerospace. Its 127 member companies range from British Aerospace, Rolls-Royce and GEC to smaller companies, some with only five or six employees.

The number of jobs involved is staggering. Up to 40,000 people are employed in the industry. At least two other jobs depend on every aerospace job. We can see the devastating effect that the cancellation or refusal of an order can have on the area from the loss of a 10-year lead in electronics and thousands of jobs when the TSR2 was cancelled by the then Labour Government in 1965 because it allegedly cost too much.

That was especially important to British Aerospace in Preston, where thousands of jobs were lost. The effect on the local economy was so severe that people still discuss the loss of that order today. We must not allow such catastrophes to happen again, as they would if Labour ever had a chance to put into operation its plan to slash defence by £4.5 billion. New Labour would certainly mean new danger to jobs in the north-west.

Today, the British armed forces are better armed and equipped than they have ever been, not only in high-tech weaponry but in boots and clothing, and I congratulate the Government on that considerable achievement. To continue it, we must guarantee the success of the British defence industry, especially the expertise and skills for which the north-west has become famous.

My right hon. Friend the Member for South Ribble and I have visited British Aerospace, Samlesbury, in my constituency several times and marvelled at the skills there. Many people from all our constituencies work in the factories there, and at Warton just outside my constituency. Their projects include the Eurofighter, which is set to be a major success, despite the fact that, only a few months ago, there was a major dispute between the four partner nations—Britain, Germany, Spain and Italy—over who should get how many finished aircraft, and over the flight control system.

The Eurofighter is a magnificent aircraft, which I saw in flight at Warton recently. It has advantages over all its competitors, particularly the American F22, which, although it allegedly has a better flight control system, could cost £20 million more per plane. The French Rafale, although roughly the same price, is easily out-performed by the Eurofighter, and the far cheaper Swedish Grippen is much inferior.

We must never forget the strategic importance of having a manufacturing base that is capable of producing aircraft such as the Eurofighter. It has an extremely good chance of being a commercial success, which can but benefit this country. An amazing number of jobs are tied into that project. Once British Aerospace has received the production investment go ahead, the number of people directly employed on the project will be 2,000. That does not include outside contractors or service industry providers, of which there are many.

According to an article in The Times earlier this week, if the aircraft is as big a success as early indications suggest, as it has advantages over all its main rivals, it will have a significant impact on dole queues in the Lancashire area. I urge the Government not to ignore that.

Defence is the life-blood of the north-west economy, and we have become world beaters in that area. It is essential, however, that the Government make the right choices in their procurement programme—unlike the Labour Government of the 1960s who, through their short-sighted penny pinching, consigned many skilled Lancashire workers to the scrap heap and lost us a massive lead in military technology, which filters through to civilian life and benefits us all.

Opposition Members call for diversification, but we must remember the importance of the defence manufacturing industry to the north-west, the fact that the skills base remains in the north-west, and that exports and research are important.

I was about to refer to the Nimrod upgrade.

As the prime contractor and design authority for Nimrod 2000, British Aerospace will take responsibility for many aspects of the plane, including the flight and test evaluation. All management and integration tasks will be carried out at Warton, thereby ensuring the retention and development of those key technologies for future airborne weapon system platforms.

But it is not only British Aerospace that will benefit directly from a contract of that size. Arrangements are in place for north-west industry to gain from contracts. Indeed, 68 companies already benefit from the £50 million-plus-worth of business that comes their way each year as subcontractors to British Aerospace Military Aircraft division alone. However, the Nimrod contract will be worth £212 million to the region as a whole.

Several hon. Members from the north-west contacted me earlier to ask whether I would give way to them during the debate. I said yes to all those hon. Members, none of whom included Opposition Members.

The Nimrod contract represents a total of 5,825 jobs in the north-west. Of those, 3,000 jobs will go, directly and indirectly, to British Aerospace, Warton. In addition, more than 1,500 jobs will go to subcontractors in the region, and a further 1,250 will go to other British Aerospace plants in the area.

As well as the immediate effects that a contract will bring, the export potential for the Nimrod 2000 has been examined by British Aerospace and the Department of Trade and Industry. They have estimated that the export market is worth more than £9 billion over the next 25 to 30 years, addressing both upgrades to existing fleets in the short term and the building of new aircraft after 2015 in the long term.

I thank my hon. Friend for giving way. I know that he would wish to associate his remarks with our hon. Friend the Member for Fylde (Mr. Jack), in whose constituency Warton is located and who cannot be present for the debate due to ministerial commitments. Will my hon. Friend, the Minister and his scribe accept that it is not acceptable to delay the procurement projects that affect the north-west and other areas beyond the next few days? The decisions have been taken, and the agreements have almost been made. The Treasury must now give the go-ahead, and we expect that to occur very soon.

I am extremely concerned about the delay in giving the order for the replacement maritime aircraft. I understand that the Ministry of Defence has already made a decision. Many workers in the north-west and elsewhere expect that order to be given, and the delay is extremely worrying for them.

I apologise for intervening in a debate about the north-west, but the issue is also important for my part of the country. I think that the Treasury must realise that, if it abuses the tender process by delaying beyond the arranged timetable, future orders will cost more.

My right hon. Friend is absolutely right. I have referred to the Nimrod's export potential when the contract is awarded. A union official from British Aerospace contacted me this morning. He said that, if the awarding of the contract is delayed further, firms may not be able to keep their technical work forces together. We risk losing that skills base if we delay much longer.

The Chamber must send a message today, on behalf of those hon. Members who are interested in the matter, that the Government must pull their finger out. Many people are waiting for the order to be given; they want to get on with it, as many jobs and export orders depend upon it.

Does my hon. Friend agree that those in the north-west, like the two of us, and others, would be wronged if the process were reopened after decisions had been taken at the instigation of an American aerospace company? That would go down badly in the United Kingdom, particularly in the north-west.

My hon. Friend is absolutely right. We understand that the decision has been taken, and the Government must now act to secure those jobs in this country.

The people in the south of England care about the matter very much. Has my hon. Friend had an opportunity to read today's Defence Select Committee report on the defence estimates, which says that it will not be able to recommend the defence estimates to the House when they are debated in October unless the Government fulfil the contract and the rest of the defence estimates as promised?

I have not yet had the happy opportunity of reading that report. However, I know that it is important to hon. Members that the contract be awarded as soon as possible. Many people expected that to occur before the House rose today, but I understand that the contract will be given during the recess.

Our message is loud and clear: the order contract must be awarded as soon as possible. I am delighted that my hon. Friend the Member for City of Chester, who cannot speak in the debate, has heard that message. I am sure that he will pass it on to those who need to hear it, so that action can be taken.

Other aircraft and missile orders besides Nimrod are important. My hon. Friend the Member for Chorley (Mr. Dover) is interested in the matter as well. For instance, there is the Hawk trainer aircraft. I am delighted to see several Labour Members in the Chamber, some of whom signed the early-day motion in an attempt to prevent the export orders of Hawks to Indonesia using bogus information supplied by people who have no interest in defence manufacturing in this country. They would happily see those jobs exported to France, Germany and Sweden. I am delighted that the Government are turning a blind eye to them, and will support those exports. It is important for defence manufacturing skills in the north-west that we support the Hawk trainer aircraft.

As well as jobs in the defence manufacturing industry, many other jobs in related industries will be affected. Local hotels, shops and other businesses provide services to defence manufacturing. We saw the damage that was done during the 1960s when the TSR2 order was cancelled. British Aerospace in Preston lost many jobs, and there was an enormous knock-on effect throughout the economy. People talk about those job losses even today.

I turn now to Royal Ordnance, as I have concentrated mainly on British Aerospace aircraft. It is a major employer in my area. Other companies involved in the defence industry provide many jobs in my constituency.

Including Leyland Trucks, as my right hon. Friend has mentioned.

Royal Ordnance has three offices in the north-west, at Chorley, Blackburn and Radway Green, which between them employ 1,500 highly qualified technical and managerial staff. They also use several dozen subcontractors, and that accounts for a further 5,000 jobs. The peace dividend has meant falling orders for the north-west. The company is finding it difficult to compete against overseas competitors, which are often state-sponsored.

On a point of order, Mr. Deputy Speaker. According to the Register of Members' Interests, the hon. Member for Ribble Valley (Mr. Evans) has taken several trips at the behest of British Aerospace. Should he not declare an interest in the debate?

That is not a point of order for the Chair. The Chamber is not the place to make such complaints. All hon. Members are familiar with the procedures of the House. They know that they can declare an interest in the House if they so desire, or through the Register of Members' Interests.

I have no problems with that; the information is there for all to see. British Aerospace, Samlesbury, is in my constituency, and, unlike the hon. Member for Burnley (Mr. Pike), I stand up and speak in support of my constituents' jobs. I am not trying to destroy their jobs; I am backing them.

I call upon the Ministry of Defence to look seriously at the imminent contract for the SRA 1236 competition for a stand-off bunker-busting weapon, and to consider the implications for the north-west, without compromising the quality of weaponry in the infantry, should the contract go abroad. I am sure that some of the old doubts remain: such as, should we spend vast sums of money developing our own aircraft and munitions when we could buy cheaper abroad? That is an extremely dangerous path to tread.

No one could call me a friend of subsidies—I deplore the propping up of ailing state industries, many of which would be recreated under a Labour Government. However, our lean armaments industry is neither subsidised nor ailing. I am afraid that, if we ignore the strategic importance of the defence industry in the north-west and destroy it, we will never get it back. We will lose those skilled workers to France, Germany, the United States and elsewhere. We cannot afford to lose the technological and the strategic edge.

For example, if we were to import cheap Russian planes because the market is good at present and there is easy access to spares and munitions, what would happen if a hardline nationalist or communist took over in the Kremlin and denied us access to those parts? We would have squandered our technological lead, and we would be at the mercy of an unfriendly power. I urge the Government to take that factor into consideration.

There are other projects in the pipeline, such as the future large aircraft and the future offensive aircraft. We must ensure that we award the orders and contracts and look to the long-term future of the British defence manufacturing industry—of which hon. Members should be proud, rather than sitting back and carping at every opportunity. We must get behind that industry and support those men and women who are producing the aircraft, and who are taking a lead in exporting to the world and providing a great service to this country.

On a point of order, Mr. Deputy Speaker. I mean no disrespect to the Minister for Competition and Consumer Affairs, but several hon. Members were expecting the Minister of State for Defence Procurement to come to the Dispatch Box and make an announcement about the replacement maritime patrol aircraft, which affects hundreds of my constituents who work for British Aerospace in Prestwick. I ask you to demand that the Minister of State for Defence Procurement comes to the Dispatch Box today to answer the call by the hon. Member for Ribble Valley (Mr. Evans), and to make that statement.

The hon. Gentleman knows full well that it is for the Government to decide who appears at the Dispatch Box.

1.48 pm

I congratulate my hon. Friend the Member for Ribble Valley (Mr. Evans) on his success in securing this Adjournment debate, and on using the opportunity to raise the defence industry's interests in the north-west. I know that he and other hon. Members representing constituencies in the region—not least my hon. Friend the Member for City of Chester (Mr. Brandreth), who is in his place sharing the ministerial Bench with me—work hard to impress on the Government the importance of the industry.

I also mention my right hon. Friends the Members for South Ribble (Mr. Atkins) and for Northavon (Sir J. Cope), and my hon. Friends the Members for Wyre (Mr. Mans), for Southport (Mr. Banks), for Chorley (Mr. Dover), for Blackpool, South (Mr. Hawkins), for Salisbury (Mr. Key) and for Canterbury (Mr. Brazier). If I have missed out any others, I apologise. I shall be even-handed in this matter, because I recognise the interest of the constituency of Bury—

Burnley—I beg the hon. Gentleman's pardon. I know Burnley, at the top end of the Rossendale valley, because my father came from Whitworth, so the hon. Gentleman will have to accept that it was a mere slip of the tongue.

I recognise the interest of the hon. Members for Burnley (Mr. Pike), for Pendle (Mr. Prentice), for Hyndburn (Mr. Pope) and for Rochdale (Ms Lynne), where my mother was born, and the interest of even the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).

That was an unworthy intervention. I recognise the interest of my hon. Friend the Member for Ayr.

On a point of order, Mr. Deputy Speaker. Now that the Leader of the House is in his place and as he is responsible for business, would it not be appropriate for him to bring the Minister of State for Defence Procurement to the Chamber so that he could be told—

Order. I have already ruled on that. It is a matter for the Government to decide who is at the Dispatch Box.

It is important for me to place it on the record, for the benefit of Members on both sides of the Chamber, that the questions under consideration are for decision by the Government. They are under the closest consideration, and there is not much more to it than that—except that, in our different roles, I share with my hon. Friend the Member for City of Chester the responsibility for letting other Ministers know just how forceful have been the opinions expressed, and their importance in relation to the north-west in particular, and to other regions as well. I assure my right hon. and hon. Friends that I will not short-change them in getting across the strength of their message.

At least I am here, unlike the Minister of State for Defence Procurement, who has not had the guts to come in and explain to the House why important defence contracts, which have been delayed for a year, have been further delayed. Why is he not here to respond to the defence procurement issues that have been raised?

I defer to you, Mr. Deputy Speaker, in all matters of order. I thought that the hon. Gentleman was rising on a point of order, so I resumed my place. As it is, he has merely taken up valuable time that I should like to have spent addressing my right hon. and hon. Friends.

The contribution of the north-west to this industry is a major one. It is estimated that, in 1993–94, 12,000 people were employed directly by the defence industry in the north-west. The full employment impact is, of course, much greater, given the multiplier effects on indirect employment.

There are well-known centres of excellence in the north-west. British Aerospace Military Aircraft, based at Warton and Samlesbury, is world famous for producing a succession of splendid aircraft. The Hawk, Harrier, Tornado and now Eurofighter are all world-competitive products, of which the region can be justly proud. British Aerospace is the United Kingdom's leading exporter of manufactured goods. GEC Marine's VSEL shipyard at Barrow-in-Furness is another such centre. As Minister with special responsibility for the north-west, I visit the region regularly, and I hope to visit the Barrow region in the near future.

Behind those companies, however, lies a long supply chain of smaller companies whose interests must not be ignored. They are the backbone of the competitiveness of our major defence equipment suppliers.

I accept that the hon. Member for Ribble Valley (Mr. Evans) has rightly made the case for British Aerospace, but many small companies are also involved in the Orion project. Will the Minister recognise that those companies and their jobs are just as important to the north-west and to Lancashire as British Aerospace is?

The north-west and small companies in the north-west have been handsomely represented by my right hon. and hon. Friends. They have no equivocation in their responsibility for supporting—

Order. I should be grateful if the hon. Gentleman would address the occupant of the Chair.

I fell to the temptation of wanting to be direct in engaging with my right hon. and hon. Friends, but I should like say to you, Mr. Deputy Speaker, that my right hon. and hon. Friends have no difficulty or equivocation in standing up for small business, for large defence contractors and for the defence of their country generally. They have no difficulty reconciling those duties, and they discharge them admirably.

I cannot say the same for Labour Members, who have a long history of not wanting to be associated in any way with the export of arms that are intended for destruction. Those who can come to terms with this country's fighting requirements can look that straight in the eye and have no problem with it, but Labour Members are humbugs on this subject.

On a point of order, Mr. Deputy Speaker. The Minister is making statements that are not correct, and he should be careful that he does not mislead the House.

The Minister is responsible for his own speech. I hope that I shall not get any further points of order that are not genuine points of order. I have waited in vain for many years to get one of those in this place, and I have not succeeded yet.

Having been rebuked, but kindly, by you, Mr. Deputy Speaker, once already today, I shall endeavour to discharge the rest of the debate in a manner that is as helpful as possible to my hon. Friend the Member for Ribble Valley.

I want my hon. Friend to know that my Department has been active in seeking to ensure that smaller suppliers' interests are not ignored. This activity has included working with the Consortium for Lancashire Aerospace in developing their role in providing support to companies in the north-west. The Department of Trade and Industry has also funded the Society of British Aerospace Companies' competitiveness challenge programme. The British Aerospace Military Aircraft division at Warton played a significant part in the programme by leading the work on supply chains.

If I may, I should like to focus on the aerospace industry for a moment, as it accounts for the largest element of Government expenditure, in terms of both defence programmes and important civil programmes, the latter of which are supported by Government through launch aid and the DTI's research and demonstration scheme, CARAD—the civil aviation research and demonstration scheme.

My Department has an especially strong relationship with the industry, which was reflected in the joint statement issued by the DTI and the Society of British Aerospace Companies towards the end of 1995. Our developing relationship was fully recognised by the society through the launch of its national aerospace framework earlier this year.

This is an impressive document, and I pay tribute to the society and to its leading company members for producing one of the most systematic documents produced by an industrial sector that I have seen. The framework provides an excellent basis for the trade association, member companies and the Government to work together in partnership to benefit industry and the economy as a whole. I hope that the society will continue to work with the DTI on updating the document.

Government are, of course, close to the defence industry.

No. I have little time to try to conclude the debate.

The Ministry of Defence is British industry's largest customer, and all its decisions on major procurements impact greatly on industry, including companies in the north-west. My Department is the sponsor of the industry, and we have recognised the importance of the sector by setting up the aerospace and defence industries directorate earlier this year. The directorate provides the focus for the DTI's relations with the industry, and works with the MOD on defence procurement policy and projects.

The Government have made it clear in their statements on defence procurement policy—for example, in the "Statement on the Defence Estimates" presented to Parliament by my right hon. Friend the Secretary of State for Defence in May—that industrial implications will be thoroughly examined in all procurement decisions. That is certainly true of the current procurements that my hon. Friend has mentioned.

Earlier this year, the Defence and the Trade and Industry Select Committees made recommendations regarding my Department's role in assessing the bids for Ministry of Defence procurement competitions. Indeed, the Committees expressed some satisfaction with the DTI's role in major procurement cases. The Committees urged the Government to extend that role to include smaller procurements.

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.