Typhoon Aircraft (Exports)

Wednesday 7th March 2012 Westminster Hall

16:00

[Jim Dobbin (in the Chair)]

I give warning that I will call the Minister in this debate no later than 20 past 4. We have had a couple of problems in previous debates.

[Mark Menzies (Fylde) (Con)]

I am delighted to have secured this debate on support for export sales of Typhoon aircraft. It also gives me great pleasure to serve under your chairmanship, Mr Dobbin. I am pleased that the Under-Secretary of State for Defence, my hon. Friend the hon. Member for Aldershot (Mr Howarth), is responding. That is appropriate considering all that he has done on recent visits, on behalf of the Government, to India.

It is always a pleasure to speak on behalf of my hard-working constituents in Fylde, many of whom are employed in the aerospace industry. In my constituency, BAE Systems’ Warton site employs 6,272 people, with a further 4,000 employed in neighbouring Samlesbury. Indeed, BAE Systems provides one in four of all local manufacturing jobs in Fylde. Typhoon is the world-class platform on which the long-term success of UK military aerospace is predicated. That is why I called for today’s debate.

Those jobs are vital in our mission to rebalance the British economy, by returning manufacturing to its core. The military aerospace sector represents 70% of all UK defence exports, which are worth £4.5 billion a year to the British economy. Typhoon alone directly supports 10,000 jobs in the UK, and more than double that indirectly. At a time when all parties are rightly worried about youth unemployment, it is important to appreciate BAE Systems’ commitment to training and developing people, with 1,000 apprentices and 500 graduate trainees at any one time. It also sustains a supply chain made up of many small and medium-sized enterprises, including 1,200 suppliers in the north-west alone.

[Brandon Lewis (Great Yarmouth) (Con)]

I congratulate my hon. Friend on securing the debate. Companies such as C-MAC and Norfolk Capacitors in Great Yarmouth are also part of the supply chain to MOD projects and other organisations’ projects. Does he agree that the issue affects SMEs across the country, including in places such as Great Yarmouth?

[Mark Menzies]

Absolutely. BAE Systems is always the company one thinks about in relation to Typhoon, but my hon. Friend has rightly pointed out that component suppliers—large and small—are located in every corner of the country. I know he has spoken up on behalf of his constituents on the matter.

As well as benefiting the economy as a whole, supporting the Typhoon programme has direct advantages to taxpayers by reducing the Ministry of Defence’s unit costs. Savings are generated through increased production runs and a global network of operators, as well as through the pooling of spares and other support-related activities. Exports level out the peaks and troughs of domestic demand and give the MOD more programme flexibility. They also underpin some of our most important strategic relationships.

BAE Systems’ highly skilled work force have extensive expertise and experience over many decades of working in-country with global partners to deliver platforms that best fit their unique operational requirements, such as the Hawk trainer in India and the Tornado in Saudi Arabia. I have no doubt that the same work force are more than capable of continuing to deliver that level of service with Typhoon.

In all defence exports, the importing Government are the customer, and their relationship with the exporting Government is vital. That is why our support is so vital: customer Governments need to know that a Typhoon acquisition will enable interoperability, and facilitate a close and enduring relationship between the air forces of the two countries, with opportunities to train together, share assets and doctrine, and determine ways to enhance capability and reduce the cost of operation. Here the support of the MOD, in particular, is crucial. It is important that we continue to give our partners that confidence.

I believe the Government understand that. That is why, while respecting Germany’s role as consortium leader, the British Government have given such strong backing to the sale of Typhoons to India.

[Graham Jones (Hyndburn) (Lab)]

I congratulate the hon. Gentleman on securing the debate because the Eurofighter and BAE Systems are critical to his area. He talks about the Government’s relationship with BAE Systems. One anonymous industry source was reported in the newspaper as saying about the Typhoon Indian contract:

“Our defence industry is not working in tandem with the Government as much as the French worked with Dassault.”

What would the hon. Gentleman say in response to that?

[Mark Menzies]

The hon. Gentleman summed it up: it was an anonymous source. My experience is that the British Government and BAE Systems have no criticism of each other in the way they have been working to try to achieve the best for the work force in Warton. The Prime Minister himself took a leading role in the UK’s largest trade mission to India in living memory. I was encouraged.

[Andrew Percy (Brigg and Goole) (Con)]

I also congratulate my hon. Friend on securing the debate. As he knows, BAE Systems at Brough is just outside my constituency. We have a few choice things to say about BAE, but that is for another time. In relation to the Typhoon contract, which was another blow for the whole of BAE, including in Brough, does my hon. Friend agree that it is quite bizarre, given how much foreign aid we give to India—I think four times more than the French—that we are not in the running? There is still an opportunity for the Government to get their full weight behind the contract and to say to the Indians, “We expect something in return for what we give in aid.”

[Mark Menzies]

My hon. Friend has put that in words that I possibly could not. I will come later to some of the things that I think the British Government could do.

It is important to clarify the importance that the British Government place on this. I was encouraged, not just by the Prime Minister’s visit to India, leading the delegation, but by his proactive approach and extensive knowledge of the topic at a recent meeting that hon. Members held with him at No. 10 to discuss this important matter. I also thank the Minister for his two ministerial visits to India within the last year; he need take lessons from no one when it comes to upholding the interests of the UK defence sector abroad. None the less, I would encourage him, in his ongoing discussions with his Indian counterparts, to urge them genuinely to review, even at this late stage, the details of this contract, in particular, to note the advantages that working with BAE Systems on Hawk has brought the Indian air force. It should not be forgotten that both the Royal Air Force and the royal Saudi air force use the Hawk as the trainer aircraft for Typhoon. Together, those aircraft mark a perfect partnership in Anglo-Indian co-operation.

India has always been a proud nation; now it has truly come of age. India’s new role is not just regional but international. Britain has consistently supported United Nations Security Council reform to recognise that reality. However, if India is to play its full part on the world stage, it needs the very best military equipment. Typhoon, I believe, is the best fighter jet currently on the market. Diplomatically, India’s international position would also be enhanced by stronger relations with the UK and other partner nations—Germany, Italy and Spain.

It is important to remember that the consortium is made up of private sector companies that need to take primary responsibility for any commercial deal. They must continue to work together to provide a united front for potential customers. They must be proactive in seeking deals on behalf of their shareholders. Perhaps most importantly, they must be competitive on price. However, Government can play a supporting role, as the example of Nissan proved so successfully yesterday. To that end, I ask the Ministry of Defence to give a long-term commitment to enhance Typhoon with operational capabilities that are essential to both the RAF and export customers, such as e-scan radar, and the integration of new weapon systems.

[Graham Jones]

The hon. Gentleman is making a good point. He is passionate about BAE Systems. That passion is there for all to see and has been ever since he was elected. The Government’s White Paper, “National Security Through Technology”, suggests that British companies no longer have priority when it comes to MOD contracts. What does that say to foreign Governments, if the UK Government are unsure about whether they are going to buy their own products?

[Mark Menzies]

The hon. Gentleman raises an important point, which, were it to be taken literally, as he just said it, would be a cause of concern. However, the White Paper states the UK Government’s commitment to research and development very clearly, and that is an area on which we lead the world. The Government, through the White Paper, are determined to continue to lead the world in those strategic sectors.

Typhoon exports are not just a matter for the Ministry of Defence. I appreciate that the Under-Secretary of State for Defence is responding to the debate. However, Typhoon exports are inherently cross-departmental. It is vital for the Department for Business, Innovation and Skills, from the Secretary of State down, to engage fully with its German and Indian counterparts. I also urge all relevant Departments to ask their Indian counterparts whether they are looking at this contract beyond price, as this product offers world-leading capabilities.

The India deal is by no means done, but we would clearly not be here today if it had gone perfectly thus far. We must never allow ourselves to be in this situation of uncertainty. The good news is that the upcoming bids will be led by Britain. The British-led consortium is well placed to take advantage of our historical ties with Oman, the United Arab Emirates, Malaysia, Qatar and, crucially, the Kingdom of Saudi Arabia. The Foreign Secretary’s leadership in reinvigorating our vital Commonwealth bonds should also stand Typhoon in good stead. While the Minister can only respond on his Department’s behalf, in his response, will he please give an indication of the level of Government support for engagement with those countries? In particular, can he reassure me that the Ministry of Defence has played its full part in enhancing relations with Oman, the United Arab Emirates, Malaysia, Qatar and Saudi Arabia, and will continue to do so in the coming months? I also ask him to encourage other relevant Departments to be as proactive as he has been.

We should never be shy about supporting British defence exports—other countries are not. We must not allow ourselves to be caught queuing, while others are elbowing their way to the front. Let us never forget that the Typhoon is an exceptional aircraft, built by the finest work force in the world, and that it showcases the very best of British engineering on a global stage.

16:13

[The Parliamentary Under-Secretary of State for Defence (Mr Gerald Howarth)]

This is rather earlier than I had anticipated. It is an enormous pleasure to serve under your chairmanship, Mr Dobbin, as you and I share a number of matters in common.

I am delighted to respond to the debate. I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing it and on having brought with him reinforcements from both sides of the House in support of his case. It is good to see the hon. Member for Hyndburn (Graham Jones) and my hon. Friends the Members for Brigg and Goole (Andrew Percy), for Great Yarmouth (Brandon Lewis) and for Wyre and Preston North (Mr Wallace), who has just made an outstanding speech in the House in tribute to Her Majesty, as befits a former Army officer; he did so with great aplomb.

Since my hon. Friend the Member for Fylde first arrived in the House, he has been extraordinarily assiduous in making the case not only for his constituency, but for the wider aerospace industry. In that, he is following in the footsteps of his predecessor, Michael Jack, who was always a doughty champion, too. As my hon. Friend made clear in his speech, the aerospace industry is vital to the economic life of the north-west.

The Government attach great importance to the role of exports in restoring the country’s economic health, following the catastrophic destruction of the public finances by the previous Prime Minister. In line with the Government’s commitment to promote responsible exports, as set out in the coalition agreement, we have been especially active in supporting and promoting defence exports to overseas customers. We have intensified our support for bilateral engagement by directing that every Minister travelling overseas will promote the best that Britain has to offer, including its defence exports. I hope my hon. Friend will take reassurance from that.

Let me stress that such activism by the Government is founded on responsible exports, taking full account of UK legislation on licensing and our international treaty obligations. Our keenness to support UK industry does not translate into a cavalier policy to sell anything to anyone. As I shall say later, defence exports play a critical role in enhancing our international relationships, to which my hon. Friend referred.

Although this is an effort right across the Government and the lead for trade promotion rests with the Department for Business, Innovation and Skills, the Ministry of Defence has been doing much of the heavy lifting to bring practical effect to this Government policy. In that endeavour, we enjoy massive support from the Defence and Security Organisation element of UK Trade & Investment, led by Richard Paniguian, whose team do an outstanding job for us and for Britain’s defence industry.

With regard to Typhoon, the cross-Whitehall effort is brought together at the very top, as my hon. Friend acknowledged. Must of that is down to the personal leadership of my right hon. Friend the Prime Minister himself. Ministers and senior officials meet continually with a view to ensuring that industry has the appropriate Government support to help further its various campaigns across the globe. I pay a particular tribute to our ambassadors, high commissioners and defence attachés around the world for their contribution to that team effort. It is, astonishingly, quite a joined up exercise. It is more joined up, particularly between the Foreign and Commonwealth Office and the MOD, than I ever anticipated when I was in opposition.

In my role as Minister for International Security Strategy, I have already visited 15 countries so far, including Chile, Brazil, United Arab Emirates, the Kingdom of Saudi Arabia, Malaysia and Indonesia, pressing the case for Typhoon or promoting the Type 26 global combat ship, and, always, championing the depth and breadth of British industry’s capability in the defence and security sectors—businesses large and small.

[Graham Jones]

I have a concern about some of the export orders. Some of them involve new build at the factory sites of Samlesbury and Warton, but some involve displacements from the RAF. When the Minister is seeking new orders, is he seeking new build orders, or is he seeking to displace some of the Typhoons that were destined for the RAF?

[Mr Howarth]

As I think my hon. Friend the Member for Fylde made clear in his speech, the customers are overseas Governments. We do whatever we can, within reasonable limits and within the constraints that apply to us in providing the equipment that our own armed forces require, to provide what the customer is looking for. Clearly, new build is preferable because we understand that it generates jobs in the United Kingdom. However, other countries are increasingly looking for technology transfer and partnership. Trying to deal with that issue is challenging.

I recently returned from a successful trade mission to India, as my hon. Friend the Member for Fylde mentioned, where I led a delegation of 25 British defence companies, large and small, to promote the very best that Britain has to offer. That kind of initiative is designed to demonstrate to our friends in India our serious intent to build lasting partnerships with them. I am due to return to India for its defence exposition later this month, so I will see the Indian Minister again. I will mention India specifically in a moment.

Typhoon has already secured a number of export contracts beyond the four partner nations, including the Kingdom of Saudi Arabia, which has ordered 72 to date, and Austria, which has ordered 15. The MOD is actively supporting DSO and working with Eurofighter Typhoon’s three other partner nations on a number of other campaigns, which are at an advanced stage, including in Oman, Malaysia, the UAE and a further tranche for the Kingdom of Saudi Arabia. The UK is in the lead in responding to the requirements of Oman, Malaysia and the UAE, and Her Majesty’s Government and BAE Systems, as UK prime contractor, are also fully involved in those campaigns, led by our partners.

The MOD’s support activity has included deployments of aircraft to the Dubai and Malaysian air shows. The latter engagement also took in valuable participation in a multinational exercise within the five powers defensive arrangement. The RAF has also made platforms available to carry out impressive flight evaluation trials here in the UK, so that the overseas customer can witness Typhoon’s superb performance at close quarters. That is pretty impressive stuff by any measure, but all the more so when viewed against the backdrop of recent operations.

Earlier this month, a delegation from Malaysia visited the UK to undertake such a flight evaluation trial. RAF Coningsby hosted the Royal Malaysian air force, and a demanding schedule of sorties covering a wide range of mission scenarios was carried out, supported by maintenance demonstrations by teams on the ground.

We were very pleased to receive Oman’s request of 21 January for a proposal from BAE Systems for the supply and support of Typhoon aircraft. That represents an important step towards the contract and is a further sign of the strong and enduring relationship between our two countries. My noble Friend Lord Astor and my right hon. Friend the Member for Rutland and Melton (Mr Duncan) are well connected in the two countries I have just mentioned and have performed a huge service in adding to the strength of the British engagement.

As I mentioned, the Kingdom of Saudi Arabia signed an agreement to purchase 72 Typhoon aircraft, under the former Government. That is welcome, and together with initial logistics and training packages, it is worth several billion pounds to the UK and our European partners. We hope to provide a further tranche in future.

In the UAE, following representations from my right hon. Friend the Prime Minister, Eurofighter Typhoon was invited in November to submit a bid for 60 aircraft, when it had been thought a deal with another contractor was about to be signed. We are all working hard to prepare an attractive, competitive bid to one of Britain’s oldest allies. Indeed, my right hon. Friend the Secretary of State for Defence is due to visit the UAE shortly. This morning, I talked to Alan Garwood from BAE Systems, who returned this morning from the UAE. I assure all hon. Members in this Chamber that that is indicative of the effort that has been put into this campaign across the Government and industry.

Of course, we are disappointed about the decisions made in Japan and India, but of course we fully respect their decisions. The Indian Government have chosen not to take Typhoon into the detailed negotiations phase of their medium multi-role combat aircraft competition, but the Eurofighter Typhoon consortium and the partner nations stand ready to enter into further discussions with the Indian Government, should that be their wish.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I congratulate the hon. Member for Fylde on securing the debate, which is important for his constituency. I have a genuine question for the Minister, relating to how optimistic we should be about the prospect of the Indians changing their minds. Will he tell hon. Members how many contracts the British Government have got to that stage that have then been subject to such a change of mind, because that is not common, is it?

[Mr Howarth]

I am grateful to the hon. Lady for raising an important point. India had to select from two bids on the basis of price, price, price—nothing else. We understand that that is the procedure in India and that, unless and until negotiations with L1—the lowest bidder—have been exhausted and do not lead to a contract, at that point and only that point the Indian Government will be able to enter into negotiations with the other bidder. I assure the hon. Lady that we are maintaining a close interest, but we have to respect the Indian Government’s decision. Beating them about the head and saying, “You made the wrong choice,” is not the best way to win friends and influence people, least of all to encourage a customer to turn to a company.

We stand ready. I have to say that, in this case, the UK is not and never has been in the lead. The campaign in India has been led from the outset by Germany and EADS Cassidian, not by the UK and BAE Systems.

A great strength of Typhoon is that it is proven on combat operations, as we found out in Libya. I thought that it might help if I put on the record some of those achievements. Typhoon’s performance stood out from its coalition contemporaries. Fully loaded with up to six air-to-air missiles, four 1,000 lb bombs, a targeting pod and two under-wing fuel tanks, it was able to cruise at more than 500 knots and at heights in excess of 40,000 feet, taking it well clear of rough weather.

The combination of Typhoon’s long-range radar and data-link integration gave its pilots exceptional situational awareness, which enabled them to control and co-ordinate less well-equipped coalition assets. In six months of deployed operations, the Typhoon force flew more than 600 sorties for a total of just over 3,000 flying hours, without any requirement for an engine change, and delivered more than 200 precision weapons. The aircraft’s excellent reliability resulted in no sorties lost owing to serviceability issues. That is a pretty outstanding record.

Defence exports generally make an important contribution to sustaining our defence industry, as my hon. Friend mentioned. Some 300,000 people are employed in the defence and aerospace industries, which provide tens of thousands of highly skilled jobs. In 2010, defence exports amounted to approximately £6 billion and made a significant contribution to the balance of payments. Figures from UK Trade & Investment show that in the first decade of this century the UK was, on average, the second most successful exporter of legitimate defence equipment in the world, not least in my hon. Friend’s and my constituencies.

It is not simply about money and getting cash in. As my hon. Friend implied, helping our friends to build up their own defence and security capabilities contributes to regional security and helps tackle threats to UK national security closer to their source. No other industry in this country can leverage influence so much as defence, which is why we are giving it such a high priority.

I pay tribute to the UK companies, large and small, throughout the supply chain that are participating in this export drive, including Rolls Royce, SELEX, Martin-Baker, MBDA and Ultra. That reminds us that the Typhoon is not just a BAE product, but encapsulates a range of outstanding British and European technologies. Having paid such a tribute, I extend it to my hon. Friend and highlight the contribution of companies in Lancashire, because in calling this debate he pays tribute to the company and its employees for bringing so much back into the constituency of Fylde and the north-west more generally. I shall, of course, forbear from saying too much about the north-west, as I represent the Farnborough Aerospace Consortium in my neck of the woods, but we are complementary.

I reassure my hon. Friend that Her Majesty’s Government, led by my right hon. Friend the Prime Minister, are working to support Typhoon exports and British industry more widely, but in these straitened times others are doing much the same and we should not expect an easy ride. The UK enjoys historic ties with a wide range of countries, often dating back centuries, greater than any other nation can claim. Our strategy is to revitalise those ties, both in the interests of our mutual defence and regional stability and to the benefit of our outstanding aerospace industry, of which this country can be truly proud.