Business, Energy and Industrial Strategy

Debate between Baroness Beckett and Greg Clark

Monday 25th June 2018 Ministerial Corrections

[Margaret Beckett (Derby South) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the announcement by Rolls-Royce of 4,600 redundancies over the next two years.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

Rolls-Royce is one of our most important companies. It is a world leader in new technology, and plays a vital role in our industrial strategy. I spoke to Warren East, the chief executive, yesterday evening. Mr East explained that the company’s view is that the job losses are a necessary part of a drive to make the business more efficient and therefore more competitive. The jobs are principally in management and corporate support facilities rather than engineering and operational roles. Rolls-Royce has informed me that the announcement does not reflect a reduction in growth by the company; indeed, it reflects the reverse. It has a growing order book amounting to more than £170 billion, and Mr East told me that it would need more staff directly employed in both the manufacture of components and assembly to meet that demand.

[Official Report, 14 June 2018, Vol. 642, c. 1088.]

Letter of correction from Greg Clark.

An error has been identified in my answer to the urgent question on Rolls-Royce Redundancies.

The correct response should have been:

Rolls-Royce Redundancies

Debate between Baroness Beckett and Greg Clark

Thursday 14th June 2018 Commons Chamber

[Margaret Beckett (Derby South) (Lab)(Urgent Question)]

To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the announcement by Rolls-Royce of 4,600 redundancies over the next two years.

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

As the right hon. Lady has said, Rolls-Royce announced this morning that as part of an ongoing restructuring of its business, it intends to reduce the size of its worldwide management and support workforce by up to 4,600. As the company’s main management base is in Derby, it has said that that is where the biggest reduction will be felt. Although the company will embark on a statutory consultation with staff and unions, it is obvious that the news will come as a blow to the workforce, and that this is a very worrying time for the dedicated and talented employees who did nothing to bring it on themselves, but who will be affected.

Rolls-Royce is one of our most important companies. It is a world leader in new technology, and plays a vital role in our industrial strategy. I spoke to Warren East, the chief executive, yesterday evening. Mr East explained that the company’s view is that the job losses are a necessary part of a drive to make the business more efficient and therefore more competitive. The jobs are principally in management and corporate support facilities rather than engineering and operational roles. Rolls-Royce has informed me that the announcement does not reflect a reduction in growth by the company; indeed, it reflects the reverse. It has a growing order book amounting to more than £170 billion,[Official Report, 25 June 2018, Vol. 643, c. 3MC.] and Mr East told me that it would need more staff directly employed in both the manufacture of components and assembly to meet that demand. The company has told me that it will continue to recruit engineers, technicians and apprentices. It is continuing to invest in research and development. It invested £1.4 billion last year, and about two thirds of that investment was in the United Kingdom. Last year it filed 704 patents, more than any other single UK company.

When I visited Rolls-Royce at Derby just a few weeks ago, it was to break ground on the new test bed, part of an £150 million investment to ensure that the next generation of aero-engines will be built in Derby for many years to come. We will work closely with the company, the unions, the local enterprise partnership, councils and, of course, the right hon. Member for Derby South (Margaret Beckett) and other colleagues to ensure that each and every worker is supported in finding new work. We will continue to support a company, and an industry, of which we can be proud, and our biggest contribution will be to ensure that everyone in Derby, and in Britain as a whole, is able to benefit from a growing, modern economy that creates good jobs now and will do so long into the future, so that when jobs are lost, people can find new ones to support themselves and their families.

[Margaret Beckett]

I thank the Secretary of State for his statement. I hope that he understands clearly the enormous economic and social impact that this announcement will have—particularly, as he said, on the city of Derby, but throughout the east midlands and anywhere else in the country where manufacturing is considered important, and particularly where manufacturing excellence is highly regarded.

I was pleased to hear the Secretary of State say that he recognised the huge importance of a world-class company such as Rolls-Royce, especially as we approach our departure from the European Union. These are the kind of jobs, and this is the kind of industry, that we want for the future, because of its export potential and because of its potential throughout the world. However, will the right hon. Gentleman say a little more about what the Government can do to address some of the problems that will be caused as an inevitable consequence of the announcement? I heard the company’s chairman say this morning that he hoped that most of the redundancies would be voluntary, and that the company would abide by agreements made with the trade unions, but that there might be some compulsory redundancies. What can the Government do to ease the situation?

I was pleased to hear the Secretary of State note the company’s emphasis on the need for continued investment. I know that, as he said, it is continuing to hire engineering expertise and to maintain its apprenticeship programmes, and to do the things that we hope it will do for the future of the company and of our country, but I want to press him a little more on just how close a relationship the Government have with Rolls-Royce. I know that he visited the company recently, but I think that that was his first ever visit.

I am mindful of the fact that we have corresponded with the Department about the issue of investment in small modular reactors. The company invested substantial resources of its own money in that technology, without any corresponding commitment, even in decision making frankly, by the Government, which I know has been a great disappointment to the company, especially as this technology is thought to have great export potential.

The Secretary of State referred to the need for continued investment, and I note that the title of his Department includes the words “industrial strategy”, which I welcome, but if there is an industrial strategy, what is it if it does not include a strong partnership with companies such as Rolls-Royce that might, one would hope, avert announcements like today’s?

[Greg Clark]

I am grateful to the right hon. Lady for bringing this matter to the House in such a timely way. She has a long record of engagement with what is not only a very important employer but a very important national force. It is important to stress the point I made in my statement, and which Mr East has emphasised: the company is expanding its production. It expects to employ more apprentices, technicians and engineers, and has a growing order book; it has a waiting list for orders to be placed. As the right hon. Lady knows, that is in the context of growth in manufacturing in Derbyshire and across the east midlands, and it is very important that that is supported.

The skills among the employees whose jobs are under threat are valuable. The fact that they may be in management does not mean that they are not highly valued, in an economy nationally and in the east midlands that has a great demand for those skills. We will work very closely through the rapid response service that the Department for Work and Pensions provides to make sure that opportunities are offered, whether they are new jobs for existing employees or new opportunities to train in an expanding manufacturing sector in the east midlands. As the right hon. Lady knows, Infinity Park, for example, is continuing to attract new investment; just in recent days Airbus has announced an intention to establish an important facility there.

Our relationship with Rolls-Royce is very close, and it is at the heart of the industrial strategy; it is one of our most important aerospace partners. I have met numerous times with the management of the company all around the country. Since 2015 some £150 million of Government investment has been deployed in partnership with Rolls-Royce. It has been a major force in shaping our industrial strategy. Precisely for the reasons the right hon. Lady mentions, the industries in which it is engaged—aerospace, defence and the power sector—are some of the industries in which Britain leads the world, and we will do everything we can to drive that expansion forward.