UK Helicopter Industry

Tuesday 24th January 2017 Westminster Hall

11:00

[Marcus Fysh (Yeovil) (Con)]

I beg to move,

That this House has considered the UK helicopter industry.

It is a pleasure to serve under your chairmanship, Mr Howarth. The helicopter industry is a strong existing centre of research, innovation and excellence on which we must build, using the tools emerging in the Government’s industrial strategy to secure our strategic ability to produce helicopters and other defence aerospace products. My constituency is absolutely central to that industry in the UK.

Yeovil has a long history of involvement; we have been making helicopters for many decades. Many will have heard of the company Westland Helicopters, known as Leonardo now that it is owned by the Italian Government-controlled firm Leonardo. It was initially involved in making fixed-wing aircraft, and has latterly focused more on helicopters. Our area takes great pride in the firm; pretty much everybody in my constituency is connected in some way to someone who has flown a Westland product, had a hand in making one or worked for a Westland supplier at some point in their life. It touches everybody.

It is also worth pointing out that my constituency contains the royal naval air station at Yeovilton, which flies a lot of those machines and has done for many decades. Soldiers and sailors in our armed forces know very well how important helicopters are to their safety on and around the battlefield. I particularly do not want to see a repeat of what happened in the Iraq war when armed serving officers essentially said that they did not have the battlefield helicopter support that they needed, which exposed them to unnecessary casualties from improvised explosive devices.

About 3,000 jobs in Yeovil depend directly on Leonardo, and there are more in the supply chain. It is a multi-billion-pound firm in terms of revenue generated a year, and the biggest Italian inward investment into the UK. It has an iconic set of products, including, over the years, the Westland Wessex, the Sea King, the Lynx, the Merlin and now the Wildcat. In all my dealings with the Italian management, they have shown themselves to be willing to invest more in the industry to support it. I would like our Government to step up and think about how we can make more of that good relationship with Italy.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for securing this important debate. The fact that there are not enough Members here to back it is not an indication of the interest in the subject. Does he agree that it is essential that the skills of our workforce are not wasted? The Minister must fulfil the Government’s obligations to source locally rather than outsource, and a clear message must be sent about the possibilities of producing in Britain, the importance of a skilled and expert workforce and opportunities for apprentices in Great Britain, here at home.

[Marcus Fysh]

I absolutely agree with that sentiment. It is essential that we build on the highly skilled workforces in the UK. There is one in Yeovil, and I know that there are others within the industry in other parts of the UK. We have a great opportunity to construct a proper modern industrial strategy for turbo-charging skills development and apprenticeships.

[Greg Mulholland (Leeds North West) (LD)]

The hon. Gentleman mentions the industrial strategy, but it makes no direct mention of this hugely important industry and the need for a stand-alone industry that produces helicopters. Will he call for a commitment—it would be great to hear one from the Minister—to a direct reference to that in the refreshed defence industrial strategy when it is announced? Will he also commit to working with everyone in Yeovil and nationally—this is a national issue as well—including Lord Ashdown, who retains a big interest in it?

[Marcus Fysh]

Yes, absolutely. It is an important national industry, and I want to see it mentioned specifically within the industrial strategy. I have been working hard—I thank the Minister for her engagement with me over many months, since she was appointed, as well as the former Minister—on how we can make the industry a part of the industrial strategy. I welcome the support of everybody across the political spectrum to help the industry go from strength to strength.

The issue is about how we go forward. We have a strong local cluster in the Yeovil area, which at the moment can produce helicopters end to end, making all parts. I would like that to continue. There is a live issue involving the Wildcat airframe jigs, as anyone who has been following it will know. It is a relatively small issue within the overall scheme of the industry, but it is an important signal that we want to be able to manufacture helicopters end to end in the Yeovil area. It would give the community a lot of confidence that we mean business about ensuring that the industry is as strong as possible for the future. The question is how to preserve the industry and take it to the next level.

I believe that joined-up thinking and a clear plan for infrastructure and skills development is essential and should be promoted through the industrial strategy. It is about raising the competitiveness of the whole industry environment in the Yeovil area, and indeed in the south-west. The thing about competitiveness is that it is both an internal and an external matter. From an internal point of view, our local industries should focus, as they are doing, on continuously improving their competitiveness, but it also helps to have external players involved. Yeovil made a fundamental mistake some years ago by not inviting Ford to come and manufacture cars in the town. That would have been good to have as a discipline.

The issue is also about promoting innovation within the industrial strategy. I welcome the Government’s strategic partnering arrangement with Leonardo to consider developing its existing platforms as well as how we can make the products of the future, such as unmanned aerial vehicles, and all their potential technology spin-offs, including battery development and so on.

It is also very important to promote inward investment, and since I was elected I have tried to create a step change in the way the town thinks about such investment, and to get it to grab opportunities to diversify its industries. That is because Yeovil very much grew up as a company town. There was a time some years ago when out of 30,000 residents 10,000 were employed at the Westland site. That number has come down over the years to about 3,000 now, but Westland remains a very important player locally. Nevertheless, the more that we can try to diversify, the better health the industry will be in.

The UK helicopter industry has very serious competitive strengths, in design and engineering, and in specialties such as the manufacture of blades and gearboxes. In addition, Yeovil works closely with the Ministry of Defence client, and skills behind that work in areas such as certification, software design, materials and acoustic treatments, are available in the local supply chain and are second to none in the world.

There is a strategic imperative for an independent design and production capability to exist in the UK, and that inevitably entails some level of Government involvement as well as early, clear and efficient procurement that will take the whole business ecosystem into account. I welcome the focus on value for money within the MOD, but we also need to think quite holistically about the impact of different procurement decisions.

It is also very important within this context that we attempt to develop indigenous intellectual property. It is much better to develop our own products, because that is how the industry captures higher margins and secures higher living standards for the workforce and the population. Building to print, using other people’s designs and simply assembling products, is just not as good a business to be in. Indeed, it is almost a distraction from what the core endeavour of design and engineering should be, which is to create product opportunities and export opportunities. So, we must have early engagement with Her Majesty’s armed forces, to ensure that we are developing the capability that they want and need, while also making the platforms flexible for volume production at different levels of capability.

As I said before, there are opportunities to deepen relationships with Italy and the EU, and with US firms. There is a huge opportunity at the moment, for example, in service and support. There is the potential for Leonardo to work closely with Boeing, which I encourage and I would like the Government to try to encourage it too, because that could be a very good foundation for new product development to emerge from the excellent cash-flow opportunities.

There is a role for Government. We have seen some part of that in the strategic partnering arrangement and I would now like to see more joined-up thinking by the MOD, including in procurement, in addition to the support that can be given by both the Department for Business, Energy and Industrial Strategy, and the Department for International Trade. At times civil servants in different areas have not always known what other parts of the Government are doing.

[Jim Shannon]

I thank the hon. Gentleman for being so gracious in giving way again. Does he agree that there is also a need to have closer relationships between the helicopter manufacturers and those companies that provide the armaments for use on the helicopters, in other words companies such as Bombardier in Belfast? It is very important sometimes that we are in touch with the companies producing the technology as it is developed. Having heard her speeches in the past, I know that the Minister is well aware of that, but does he also feel that we need that closer co-operation between these armaments companies and the helicopter manufacturers?

[Marcus Fysh]

I thank the hon. Member for his intervention and, yes, I absolutely agree that the industry needs to take a holistic view, in order to work with the MOD and other clients in the rest of the world, to see how we can optimise these matters.

I call on the Government to support my infrastructure-led industrial strategy plans for the Yeovil area, with broader input from the national work on industrial strategy. I would also like the Government to support the iAero hub, which is a proposal that came out of the county council and the local enterprise partnership. The idea is to network up all the aerospace technology firms in the south-west around a hub in Yeovil, with a dedicated facility in the town for manufacturing innovation. Leonardo wants to acquire land. The county council has committed to putting in some money, but we need more money for the LEP to come up with its piece and, eventually, we will need more money from the EU funding— £10 million—or whatever the successor to that EU funding is.

I would also like the Government to encourage the clustering around the Yeovil area and inward investment, which I mentioned earlier, and to help the companies to focus on transforming themselves into firms that can sell products around the world in volume, to enable them to take advantage of the very high quality products that are being produced in and around Yeovil.

I would also like the Government to support the Yeovil area as a centre of excellence and technological skills development, with an institute of technology as a step change in the local tertiary education offer. There is widespread industry support among the local tech firms for that idea, and I would like to take it forward.

I would also like to make sure that the prosperity agenda is implemented in Yeovil, to ensure that Boeing and Leonardo work together in the town to seize opportunities in service and support, and in their manufacturing supply chain.

I would like us to work more closely and creatively with Italy on mutual defence programmes, and I would love it if the Minister would find time in her busy schedule to visit Italy and meet the management of Leonardo and, potentially, some Italian politicians, to talk about the ways in which we can build on our relationship with Italy after Brexit and do even more to co-operate with Italy than we are doing now.

I would also like us to consider spending substantially more than 2% of our GDP on defence, to increase our defence capabilities with more personnel and more equipment, which will be needed given the enlarged role in global affairs that I see us having in the future. Clearly, in Europe there is a loss of confidence in America’s commitment to the NATO alliance. We should lead on that issue, and on ensuring that our friends and allies in Europe are confident that the NATO alliance will continue to matter in the future.

Last but not least, I would also like the Government to help to promote civil use of Yeovil-made Leonardo helicopters, which have an exemplary safety record. That is especially important given the low morale that currently exists among offshore platform workers, due to safety concerns about other fleets of helicopters.

To give the Minister ample time to reply to the debate, I will just summarise by saying that the Yeovil area presents huge opportunities to raise growth and export potential, and to help to drive up local and UK living standards. Its helicopter industry is the core of the UK’s strategic ability for the flexible production of crucial battlefield lift capability, and its companies are focused on delivering continuous improvement, innovation and value for money to military and civil clients, and they also make some of the safest and most capable aircraft available. So let us build on this existing centre of excellence and rotor speciality, using all the elements of the Government’s industrial strategy to drive growth, skills and innovation throughout the south-west.

11:19

[The Parliamentary Under-Secretary of State for Defence (Harriett Baldwin)]

It is a pleasure to serve under your chairmanship, Mr Howarth, this morning. I congratulate my hon. Friend the Member for Yeovil (Marcus Fysh) on securing this timely debate on the UK’s helicopter industry. He is absolutely right to raise this issue, which is important for his constituents, particularly given Yeovil’s long history of supporting our helicopter industry, which he highlighted. I welcome the opportunity to highlight to the House the work we are doing.

This is an ideal moment both to take stock and affirm that our armed forces are indeed the biggest customer of the UK helicopter industry, and to summarise some of the investment that the Government have made and continue to make in the industry. We have spent considerable sums over recent years investing in our helicopter capabilities for our armed forces, and much of that investment has been focused on Leonardo, with more than £1 billion spent on the development and manufacture of 62 Wildcat helicopters; some £800 million spent on delivering 30 Merlin mark 2 into service; and about £330 million being spent on developing the Merlin mark 4 upgrades across a 25-aircraft fleet. That investment is vital in ensuring that we have the helicopter capability we need for decades to come. The helicopters also need to be kept in tip-top condition and filled with the latest equipment.

On 9 January I was delighted to go to my hon. Friend’s constituency of Yeovil to announce a £271 million deal with Leonardo’s helicopter division to provide through-life support and training for Wildcat, which is one of the most advanced helicopters in the world. That will not only deliver a key capability for the Royal Navy and Army but will sustain 500 vital skilled jobs in the UK, most of which, as my hon. Friend has pointed out, are in the Yeovil area.

In addition, just last week I announced a £269 million contract with Lockheed Martin for the Crowsnest helicopter-based surveillance system. It will act as the eyes and ears of the Royal Navy’s ships, helping to keep our armed forces safe as they deploy around the world. The contract will also secure more than 200 highly skilled UK jobs, about 60 of which, I understand, are in the south-west—no doubt very close to, if not in, the Yeovil constituency. I reassure my hon. Friend that that and other commitments underpin our spending of more than 2% of our GDP on defence and security, which will be maintained for every year of this decade. The commitments are all part of the Government’s 10-year £178 billion plan to provide our armed forces with the battle-winning equipment they need.

Given that Leonardo’s helicopter division is based in Yeovil, my hon. Friend is especially interested in the helicopter element of that. Last year, we put in place a 10-year strategic partnering arrangement with Leonardo, building on the many decades of work we have done with the company. That arrangement is key to maintaining and improving cost-effective support for our helicopter fleets.

On my recent visit, I was briefed not only about the thousands of people employed directly by Leonardo’s helicopter division in Yeovil, but about the supply chain of companies, which my hon. Friend mentioned. I pay tribute to the 4,300 people who work at the royal naval air station—RNAS—Yeovilton, one of the Navy’s two principal airfields. More than one third of the UK’s military helicopter fleet is based in, and maintained from, Yeovil. The people working there will continue to support our Merlin and Wildcat helicopters for at least the next two decades. Indeed, the company will also support our current Apache fleet until they are retired. Put simply, it is clear that none of that world-leading capability would be possible without the expert work undertaken every day by the British helicopter industry, particularly by those working in my hon. Friend’s constituency.

The industrial strategy Green Paper, which was launched yesterday, has been mentioned. It signals the start of an extensive period of engagement with businesses, local leaders, local enterprise partnerships and other stakeholders right across the country, and offers an “open door” challenge to industry to come up with proposals that will transform and upgrade the sector. The consultation will provide a firm basis on which the Government can deliver a strategy that will drive growth and productivity for decades to come across all parts of the UK and all industries. The Ministry of Defence is fully engaged with the work, recognising as it does that the defence industry provides significant opportunities in many sectors and in all parts of the UK.

For defence in particular, as we outlined in the 2015 strategic defence and security review, we have a national security objective to promote UK prosperity, part of which includes a refresh of our defence industrial policy, which was mentioned by the hon. Member for Leeds North West (Greg Mulholland). That work is well under way, and an industry consultation has just been completed. I will take on board the representations I have received today regarding the opportunities that UK defence and security companies have to compete, grow and develop successfully in a global market. We want to use our defence spending to help the industry sustain vital skills, and to promote prosperity through developing the export potential of new equipment, including helicopters.

The industrial backdrop and each of the themes that have come up in this debate—skills, exports and new technologies—is as applicable to the helicopter industry as it is to any other. Those themes are already enshrined in our strategic partnering arrangement with Leonardo’s helicopter division, which was signed in July 2016. I take on board my hon. Friend’s invitation to go and mark the anniversary of that signing with our Italian colleagues and friends. We are already very engaged in working with Italy on the Typhoon aircraft as well.

[Jim Shannon]

In my earlier intervention I mentioned apprenticeships but the Minister has not mentioned them. In the strategy, could we have a confirmation of a commitment to apprenticeships?

[Harriett Baldwin]

The hon. Gentleman is right to re-emphasise that point. It was a pleasure to meet the apprentices employed in Yeovil by Leonardo’s helicopter division when I visited. I think I am right in saying that the armed forces are the biggest provider of apprenticeships. The defence industry partners we work with are also enormous providers, so we have a key role in that regard.

I want, briefly, to touch on exports and on how important they are to our work on helicopters at Leonardo in Yeovil. Leonardo has sold the Wildcat aircraft to South Korea and the Philippines, and continues to sell the Merlin to customers with demanding operational requirements. The contract I saw last week, for example, was for the search and rescue variant currently being manufactured for Norway. Those sales bring valued jobs and prosperity to the local region, and have contributed an average of more than £700 million a year to UK defence exports for the past five years—a truly remarkable sum. We are doing everything we can, building on the specialist skills of Government, our network of defence attachés in embassies around the world and our newly created Department for International Trade, where the Defence and Security Organisation resides. The latter provides specific export support to Leonardo, meeting regularly with the company and doing whatever it can to use Government resources to create a strategic export plan for the firm, with the aim of maximising civil and defence exports and producing an ongoing impact on UK prosperity.

My hon. Friend mentioned important initiatives such as iAero, which is being driven by leading south-west aerospace partners. Through the aerospace growth partnership, industry and Government have committed £3.9 billion to aerospace research to 2026, including on rotary wing, from which the UK helicopter industry will benefit. We are also co-funding a project with Leonardo to understand the potential of a rotary wing unmanned air system capability, which I had the privilege of witnessing at first hand in Benbecula last October.

My hon. Friend raised the matter of jigs and tooling for Wildcat held at the GKN premises in Yeovil. I can confirm that that is Ministry of Defence equipment but also that we have not yet been given a proposal by the industry about the next steps. We would expect to be able to make a decision by July, however, and I look forward to working with my hon. Friend closely during this time. That decision will take into account not only the specific proposal but the UK’s wider interests.

In conclusion, I emphasise how grateful I am that the outstanding skills and expertise of those employed on helicopter-related work in the UK, particularly in the south-west, are helping us to meet our ambitions and our commitment, ensuring that we continue to deliver cutting-edge, battle-winning capability for our armed forces in the UK for years to come.

Question put and agreed to.

11:29

Sitting suspended.