Manchester Airport and the Local Economy

Debate between Rachel Hopkins and Navendu Mishra

Thursday 2nd July 2020 Commons Chamber

[Navendu Mishra (Stockport) (Lab)]

I refer hon. Members to my entry in the Register of Members’ Financial Interests in relation to Unite the union, of which I am a member. Unite represents thousands of workers in the aviation industry and has been campaigning for Government support for the sector throughout the covid-19 pandemic. I also pay tribute to my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane), who has been a tireless campaigner for workers at Manchester airport.

Manchester airport is a core part of Greater Manchester’s economy. It employs 25,000 people directly on site and 76,000 indirectly, generating £4.5 billion for the local economy. It has links to 210 destinations—more than any other UK airport—and is an international gateway for trade and travel, acting as a major draw for investment and development in Greater Manchester, giving our region a huge competitive advantage. For example, in the past two years its direct route to China has helped to grow export values in the north by 41%, bringing with it £250 million to the visitor economy.

The whole supply chain relies on a successful Manchester airport. Catering companies such as Newrest and hotel chains such as Hilton have been affected by the lack of footfall during lockdown and have been forced to make cuts. Furthermore, an Independent Transport Commission report revealed that 55% of the workforce in the area surrounding Manchester airport are employed by aviation businesses. As a result, Manchester airport is central to everything we do in the north-west and will be a major catalyst for kick-starting the regional economy as we emerge from the first phase of the coronavirus crisis.

The fallout from covid-19 has been catastrophic, with passenger levels and revenue dropping to historic lows of between 1% and 4% of those seen in the same period last year. Thousands of workers face redundancy if the Government do not intervene to save the airport, its airlines and the businesses that rely on it as a key hub. More than 1,500 redundancies have been proposed to date, with well over half of them at Swissport. Widespread losses have already been reported for airlines including Virgin, Ryanair, Jet2, TUI and—just this week—easyJet, with more to follow in the coming weeks.

Manchester Airports group, which also operates London Stansted and East Midlands airports, faces a difficult restructuring programme with 25% of its leadership and management positions being cut and the remaining 75% subject to restructuring. All of that will take place before the end of the furlough scheme, when further redundancies are almost certain to follow. While the furlough scheme has been of some help, the money is little more than a drop in the ocean, accounting for just 5% of the airport’s fixed costs.

The situation will not simply end with a resumption in air travel. Even with an increased number of air bridges and an end to quarantine, the aviation industry has warned that it may not return to anything like normality until the second half of 2021, and even then the numbers are expected to be at only about 90% of pre-crisis levels. The Government must therefore consider a sectoral support package that ensures the industry has the backing and confidence it needs to recover as quickly as possible, mitigate job losses and protect skilled jobs.

[Rachel Hopkins (Luton South) (Lab)]

Thank you for giving way in this important debate. Would you agree that while airports in our regions provide many direct jobs, as you outlined, they also have an important role—

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[Rachel Hopkins]

Thank you, Madam Deputy Speaker. I appreciate that as a newer Member I am practising the ways, and I will get it right. Does my hon. Friend agree that regional airports have an important role to play, not only for all the direct jobs they provide in our areas, but for the wider jobs and services they can support, such as at Luton airport? It is in my constituency and it is the fifth largest airport in the UK. It provides £20 million a year in direct dividend to Luton Borough Council, which provides jobs and services, and £10 million a year direct to the voluntary and community charitable organisations. Does he agree on the importance of that role, too?

[Navendu Mishra]

Absolutely, I agree. In the past few years, especially in the past decade, councils have faced a lot of cuts as a result of the austerity regime, including my local Stockport Metropolitan Borough Council and the Greater Manchester Combined Authority. They depend on income generated by the airport, and I thank my hon. Friend for raising that issue.

If the Government do not step in, businesses will continue to collapse and tens of thousands of workers will lose their jobs. In the north-west, it is crucial that we do not see a repeat of what happened to Thomas Cook last year, which had a huge impact on the 3,000 employees who lived and worked across Greater Manchester, including those who worked at five branches across the borough of Stockport, including the one at Merseyway, in my constituency, as well as the 900 cabin crew who operated out of the airport.

In his Budget on 17 March, the Chancellor promised a financial support package for the aviation sector. That is almost four months ago, but we are still waiting. It is completely unacceptable, given how precarious the current situation is for the industry, that we are still waiting. The Government urgently need to consider sector-specific furlough support, such as an extension to the coronavirus job retention scheme, which is scheduled to end on 31 October. Such an extension should also come with a warning that no company is allowed to accept public funds from the scheme and use them to cover the cost of making staff redundant. The Government must also consider prioritising loans or taking a stake in companies, and ensure that when that happens businesses that agree to such support should be prohibited from paying dividends, from undertaking share buy-back or from capital contributions, with a cap on executive pay until 12 months after the loan is fully repaid.

Business rates make up a significant proportion of our airport’s fixed costs, at a time when the revenue is close to zero. In recognition of that, business rates relief has already been provided to airports in Scotland and Northern Ireland, and the UK Government should correct that anomaly for airports in England, too. They should also support local authorities so that they do not face further financial strain. Temporary measures should also be considered, such as a reduction in air passenger duty, which makes up a significant proportion of the cost of tickets and limits the profits that airlines can make. In addition, support is needed for the temporary funding of the Civil Aviation Authority.

Many businesses have rightly been praised for the efforts they have made during the crisis to support and retain their workers, utilising Government loans, where needed, to retain staff on full pay or opting to furlough staff rather than lay them off. Those that have gone down the route of Government support have done so in good faith, in the hope that this will be no more than a short-term measure. The flip side is companies that take advantage of the system, using taxpayers’ money to prioritise the protection of shareholder dividends ahead of the protection of their own workers.

One such company is British Airways, whose chief executive, Willie Walsh, was hauled before the Select Committee on Transport in May. It branded Mr Walsh’s company a “national disgrace”. Despite having a parent company, International Airlines Group, with total assets of £10.7 billion and profits last year alone of £2.6 billion, at the very first opportunity Mr Walsh furloughed 22,626 of his employees. In doing so, it was claimed that the measures were

“to protect jobs and ensure that BA comes out the other side of this crisis in the best possible shape”.

What is clear now, just weeks later, is that the protection of jobs was never his priority, beyond those of BA’s top executives.

Despite the fact that IAG was in a position to retain its entire workforce on full pay for more than a year, even without Government support, Mr Walsh announced that all 42,000 of British Airways’ workforce would be made redundant, with 30,000 fired and rehired on inferior contracts, with worse pay, terms and conditions. That means that 12,000 people were made redundant. Furthermore, failure by employees to sign the paperwork that contains a clause allowing the company to temporarily lay off workers will result in instant dismissal.

As part of its plans, British Airways’ contact centre in Didsbury, Manchester, is set to be affected, with 350 workers being faced with redundancies. That is completely unacceptable, and I urge the Minister to look at measures for holding British Airways to account, including reviewing the lucrative slot allocations that it is given as a legacy carrier, which, in the case of London Heathrow, in the constituency of my right hon. Friend the Member for Hayes and Harlington (John McDonnell), amounts to more than 50% of all spaces at the airport. The question must be, if BA is targeting the legacy staff, many of whom have spent decades of loyal service building BA’s brand, why should it be rewarded with legacy slots? It cannot pick and choose which legacies it keeps.

It is also incredibly important that our efforts to tackle climate change are not lost as we revive and rebuild our aviation sector. Indeed, this can and should be an opportunity to explore new technologies further and green the economy with well-paid, unionised jobs. That means inserting clauses into the financial support that the Government provide for businesses to set out a clear programme of transitioning to more efficient and environmentally friendly operations, including cleaner fuel options. There should also be consideration of publicly financing smaller airports and air traffic control as well as specific routes within the UK aviation network to retain much-needed connectivity.

There are many examples around the world of Governments backing the aviation sector. The US, for example, has injected $45 billion into the sector. Another good example, closer to home, is France, where Emmanuel Macron’s Government have unveiled a series of historic rescue packages, including one of almost £7 billion for Air France, which included £4 billion in bank loans guaranteed by the state and £3 billion in loans direct from the Government, all of which has helped to safeguard Air France’s 84,000 employees. As part of the rescue package, France’s Finance Minister was clear that airline bosses needed to bring forward a plan for reducing carbon dioxide emissions and transforming their fleet to be less polluting. Similar steps would be very welcome in Britain.

Ultimately, as lockdown measures are eased, people’s health must remain a priority ahead of profits. That means that companies must be compelled to take all possible steps to ensure that appropriate action is taken, such as providing proper PPE for all staff and enforcing the Government’s social distancing guidelines. That is why, last month, the Mayor of Greater Manchester, Andy Burnham, launched a “Safely Reopening Greater Manchester” campaign, which is an initiative to ensure that the region’s economy can reopen safely from the covid-19 lockdown.

The Greater Manchester Combined Authority, led by Mayor Burnham, is also looking at initiatives such as the regional brokering scheme, to match people at risk of being made redundant when the furlough scheme ends with parts of the economy where there are opportunities, as well as exploring initiatives such as the future jobs fund.

In conclusion, it is time for the Government to act. All 10 local authorities in Greater Manchester have already intervened to support Manchester Airport Group, providing a combined package of more than £250 million to protect long-term investments and safeguard tens of thousands of jobs that rely on the airport as a major engine of the local economy. I urge the Minister to consider all the measures that I have set out in this speech and ensure that our aviation sector can build back better and be the economic catalyst that our country desperately needs if it is to emerge stronger from this crisis.