Oral Answers to Questions

Lord Wharton of Yarm Excerpts

Monday 11th June 2012 Commons Chamber

[Nick Harvey]

The review is making good progress and is on target to report to the Prime Minister and the Deputy Prime Minister at the end of the year, as was announced by the previous Defence Secretary.

[James Wharton (Stockton South) (Con)]

The cadet forces provide great opportunities for young people to train in teamwork, leadership and discipline. I very much enjoyed being a cadet when I was at school. What is the Department doing to ensure that more young people avail themselves of those wonderful opportunities?

[Mr Robathan]

We are very keen to encourage more cadet forces. Indeed, I had a joint conference with the schools commissioner at the end of April on this matter. We are pushing it forward and will find the resources. I am delighted that my hon. Friend gained from the cadet experience and learned about things such as integrity, teamwork and leadership. I, too, was a cadet, but I will leave it to the House to determine whether my character improved.

BAE Systems

Lord Wharton of Yarm Excerpts

Thursday 24th November 2011 Commons Chamber

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

It is a pleasure to follow the right hon. Member for Haltemprice and Howden (Mr Davis). As he said, for the past 14 years we have worked together to try to protect the interests of BAE workers at Brough. We have been joined in that by other Members who represent constituencies in Hull and the east riding, many of whom are here today, but he and I have been working together on it the longest.

Three consistent themes have run through all our discussions with BAE and its work force. First, there is a superb work force at Brough, as BAE has stated over and over again. Indeed, Allan Cook, who heads the Government’s talent retention unit and has a long history in the aerospace industry, having worked for Marconi, Cobham, BAE and Marshalls, told us a few days ago that he had never encountered such a talented group of workers in his entire engineering career. Secondly, there is the success of the Hawk. Since its first flight in 1976, 900 Hawk aircraft have been sold around the world. It is an iconic British product that is still in great demand, as I will show later. Thirdly, the work force have shown remarkable loyalty to, and respect for, the company. On the several occasions when the plant has been downsized, I have found the work force’s enormous respect for the company incredible.

Since the announcement on 27 September, only one of those three consistent themes has changed; I am afraid that the company has lost the respect of its work force. One long-serving employee who wrote to me—I am sure that colleagues have received similar letters—said, “Until this week I was proud to wear BAE Systems’ name but now find myself appalled by the actions of the senior management.” That kind of sentiment has been repeated by people who feel utterly betrayed by the announcement and by the way it was made.

BAE is seeking to end 100 years of aerospace manufacturing on the Humber not because of any problems with the staff or the product they produce, but because in difficult times it would rather impress shareholders with how tough it can be than impress the work force with how honourable it can be. The decision of the four Typhoon countries to slow deliveries of the aircraft was of course a blow, but the European Aeronautic Defence and Space Company and Finmeccanica are slowing production of the Typhoon in Germany, Spain and Italy without losing any highly skilled manufacturing jobs.

[James Wharton (Stockton South) (Con)]

The right hon. Gentleman makes the important point that this might appear to be a short-term decision that benefits shareholders in the immediate future, but does he agree that in the long term shareholders would probably rather see the retention of an important skills base that will allow BAE to compete effectively in future and secure contracts?

[Alan Johnson]

That is absolutely right. That is why we wanted a debate in the House with a motion setting that out, because that is precisely the message we need to put out. As I will say later, that is precisely what other serious manufacturing companies are doing.

Four countries are affected by the decision to slow delivery of the Typhoon, but only BAE in the UK has reacted by throwing highly skilled engineers out of work and abolishing a manufacturing plant. Although the company says that its announcement was forced by the slow-down in orders for the Typhoon, almost a third of the job losses are for the Hawk, an aircraft that remains popular around the world. Orders are imminent from Saudi Arabia, Oman, Iraq and the United States, and potential orders are imminent from Poland, Kuwait and the RAF in a few years’ time. When we and others, including the unions, have asked the company what will happen if they get an order for 10, 50,100 or 150 Hawks next week—this relates closely to the point that the right hon. Member for Haltemprice and Howden made about the 90-day process—its reaction has been that nothing would change. Our suspicion is that is because there is a view that it will not be the other side of the Pennines that benefits from extra Hawk orders, but Texas, India and manufacturing plants abroad.

When the unions have berated BAE on the effects on British manufacturing and pointed out that it is an important British manufacturing company, it has replied that it is not a manufacturing company, but an engineering company that chooses to manufacture, the implication being that that is the choice it has made at the moment but might not make in future. In no other major industrialised country in Europe would a company that has spent much of the past decade moaning about skills shortages be getting rid of some of the most highly skilled people in the country. In no other major industrialised country would a company whose biggest customer is the Government and whose biggest investor historically has been the taxpayer be causing such damage to a precious sector of the economy.

There is an alternative approach. Andrew Witty, the chief executive of GlaxoSmithKline, another British manufacturer that sells its products abroad, lambasts British businesses that turn themselves into “mid-Atlantic floating entities” with no connection to society. He says that his company has given a lot to Britain, but that Britain has given a lot to his company and that it would not exist without the work of British people and the support of the British Government. He is busy returning manufacturing jobs from abroad to this country. He says that his objective is to give more jobs, provide more skills and pay more taxes in Britain. It is a shame that other iconic international British companies do not follow the same philosophy.

--- Later in debate ---

[James Wharton (Stockton South) (Con)]

I congratulate hon. Members of all parties on what has been a passionate and heartfelt debate on behalf of constituents right across the country. It is always reassuring when there is a consensus across the political divide on an issue of such importance.

I shall speak primarily about one facet of this decision—the policy that successive Governments of whatever colour have taken towards defence procurement and how it should be considered by BAE as it moves forward. In broad terms, there are two camps on defence procurement. There are those who believe—we have heard some of their arguments put forward eloquently today—in the strategic imperative of retaining our defence industrial production base: our capability, as a nation, of building our own defence and aerospace systems. At one extreme, that could mean everything from building the wings and canopy on a fighter jet to supplying the bullets that go in SA80 A2. That is a valid argument that retains an integrity and strategic independence for the UK, which has been valued highly by Governments for many years.

At the other end of the spectrum—the other argument put forward by the likes of Lewis Page in his book, “Lions, Donkeys and Dinosaurs”—is the suggestion and proposal that we should buy off the shelf and look to find the most effective but also cheapest option that meets our defence requirements and needs. We should not falsely subsidise an industry, as some argue, for strategic reasons when so many other countries across the world supply their defence needs by off-the-shelf methods because they do not have that home-grown capability.

The reality for BAE is that it is a company that is a product of political decisions taken over many years. It is a product of decisions taken by the British Government to retain the defence infrastructure and capability for a variety of strategic and economic reasons, including the benefits that flow from that in jobs, development, R and D, new technologies and exports. In 2009, BAE exported about £4.9 billion-worth of equipment, expertise and knowledge from the UK. That is very valuable for our economy and helpful to the Exchequer.

BAE is a product of a series of policies. This debate sends an important message to the company. If by the decisions it takes it loses the skills base that allows it to be competitive, and if it stops delivering, or reduces, the jobs benefits and economic advantages to this country, there is a danger that those who propose a more purist free-market approach to defence procurement will feel that their argument is strengthened. BAE’s great strength is that it has provided British jobs, growth, investment, technology and research. If it loses skilled workers and finds itself having to re-recruit when future contracts are secured, thereby driving up its costs and driving down its competitiveness as well as damaging our skills base nationally, it will weaken its future prospects and strengthen the argument of those who believe that we should be looking to buy more off the shelf and to rely on others to do the heavy lifting of developing defence technologies, all of which are expensive. Although at heart I am a free marketeer, I am extremely concerned that BAE might take a decision that benefits its short-term profit margin but in the long term could damage its capabilities, strategic position and ability to compete successfully for British contracts.

I am concerned that the arguments of those who do not believe in, or support, our home-grown defence production infrastructure will be made stronger by what appears to be a short-term decision that will benefit neither the company nor this country. I therefore urge BAE to listen to what Members have said today, and to look at the options available to it. I ask it to reconsider its decision at this time of great economic need for the United Kingdom, and to come to a different decision that would be better for its long-term future and that of its work force.

Strategic Defence and Security Review

Lord Wharton of Yarm Excerpts

Thursday 16th September 2010 Commons Chamber

[James Wharton (Stockton South) (Con)]

Thank you, Mr Deputy Speaker, for the opportunity to speak this afternoon. Like so many Members before me, I would like to extend my thanks to the Backbench Business Committee for its excellent foresight in calling a debate on a topic of such great interest to so many on both sides of the House.

The hon. Member for Midlothian (Mr Hamilton) said earlier that he wanted to encourage new Members to join the armed forces parliamentary scheme. The hon. Gentleman is no longer in his place, but I would like to echo his comments and say how pleased I am to have signed up and how pleased I am that so many of my new colleagues of all parties have also signed up to this excellent scheme.

Of course, the strategic defence and security review has to be seen in the appropriate context, both financial and strategic. We have to be careful to ensure that it is not driven solely by financial considerations. In this House, we have a duty to ensure that it pays proper heed and attention to the strategic considerations. I would be the first to accept that the strategic situation in which we now find ourselves was not particularly in the control of the previous Government, just as it is not directly in the control of any Government—nobody could have foreseen or predicted the international and global situation that has arisen.

I would argue that the financial circumstances in which the SDSR is being carried out were perhaps more in the control of the previous Government and that the challenges we now face in addressing some of those problems can more accurately be laid at their feet. However, we are where we are. In proceeding to debate and carry out the SDSR, I hope that the Government will never forget, as many colleagues have reminded them, that the primary duty of any Government is to ensure the defence and security of the realm.

In order to get this right, we have to deal with a great many difficult questions. Some are headline grabbers: the aircraft carriers, strategic nuclear defence, the joint strike fighter—the big issues that all the newspapers want to talk about. There are also many other issues, often equally important, that do not always grab the front pages: the quality of service personnel accommodation, how we are to deal with our reserve and cadet forces, the work we need to do to encourage the cadet forces and how best to look after those injured in conflict when fighting overseas for the nation. All these questions must be taken into consideration in the context of the world in which we live today and of the financial constraints that exist so that we can ensure that the SDSR comes up with the result that is in the best interests of this country.

Throughout the decision-making process, the Government have, of course, another obligation—always to try to strive to deliver value for money for the taxpayer in everything they do. We have heard from a number of Members today comments about, and discussion of, various defence procurement programmes that have not run according to plan. I am thinking particularly of the contribution of my hon. Friend the Member for North Wiltshire (Mr Gray), who referred to a number of aircraft schemes, notably the new scheme for the new strategic tanker aircraft.

The tanker aircraft is very much in the news today. The latest report from the Public Accounts Committee is scathingly critical of the programme, pointing out that it will eventually deliver 14 aircraft at a cost of £10.5 billion, that it is currently nearly six years overdue, and that the signing-up process took nine years to complete. Although, as a member of the Committee, I have a slight vested interest, I think that the report was quite right in its criticism. In the context of defence spending assessment and the approval of projects, it is important to stress the need for the Government to drive for value for money in procurement, and to ensure that it is flexible so that our armed forces can adapt to and meet the needs of the changing strategic environment in the future.

With that important issue in mind—along with the importance of managing, in whatever way we can, to secure an effective strategic defence capability within the financial constraints that we all know exist today—I was delighted to hear so many of my hon. Friends fighting for the things which, to me, seem particularly important. I would single out the aircraft carrier proposals and the strategic nuclear deterrent and its replacement. Of course those projects must deliver value for money, costs must be controlled, and they must be delivered on time and fit for purpose; but we must bear in mind that they are vital to giving our military forces the strategic ability to continue to engage in a dynamic way throughout the globe, as they can today.

I am conscious of the time. Let me end by asking the Government to take careful account of the comments that so many Members have made, and to note the priorities of Members in all parts of the House as we have heard them expressed today. We ask the Government to ensure that whatever decisions they make are in the best interests of the military as a whole, and to consider the possible future needs as well as the known unknowns, the unknown unknowns, and the things that we are really just not sure about at all.