BAE Systems

Ben Wallace Excerpts

Thursday 24th November 2011 Commons Chamber

[Mr Ben Wallace (Wyre and Preston North) (Con)]

I have been following the thread of my right hon. Friend’s argument, but I point out that the issue is not entirely one-sided for BAE Systems. The previous Government signed a number of contracts based on the work throughput in a location. No matter what Her Majesty’s Government ordered, BAE Systems was guaranteed to deliver work, through the Clyde, Woodford and other sites around the United Kingdom. If the Government cancelled orders, BAE Systems had to pick up the bill, because it was a sort of Stalinist tractor factory contract that the previous Government put in place.

[Mr Davis]

Frankly, I will resist making this a Labour versus Tory argument, for a simple reason. For the past 10 years, when it comes to BAE Systems and employment in our constituencies, the right hon. Member for Kingston upon Hull West and Hessle and I have studiously aimed solely at protecting jobs, sometimes demurring from scoring political points. My hon. Friend the Member for Wyre and Preston North (Mr Wallace) makes a good general point, that there is a central planning approach—a bad one—but the raw truth is that it was designed to ensure that our defence capability and defence employment were stable, and would be there in time of war. That has been turned, and it has effectively been used to destroy those jobs and that defence capability.

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[Mr Ben Wallace (Wyre and Preston North) (Con)]

May I congratulate my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) and the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) on securing this debate? I put on record my sympathy for the members of the BAE work force who have lost their jobs or have had their jobs put under threat—by the recent announcement or, indeed, over the past few years as the aerospace industry has contracted. I also wish to place on the record my thanks to BAE as a business. Both its work force and its management invest in my constituency, not just in plant, but in the schools and the community. They do an excellent job, certainly in Lancashire, in ensuring that they support the community from which they draw their employees.

In my constituency, I have nearly 3,000 BAE workers at both Samlesbury and Warton, as well as nearly 3,000 BAE pensioners. We should remember that when we bash the BAE brand as opposed to the work force, we may damage the share price, which is as important to the pensioners of BAE, many of whom live in the UK, as it is to job opportunities.

Before coming into the House in 2005, I was the overseas director for QinetiQ, a large UK aerospace company employing 10,000 people. I worked in consortiums, because most modern aerospace is now done by consortiums and subcontractors. I have worked with BAE, Finmeccanica, EADS, General Dynamics, Lockheed Martin, and with many overseas customers, in selling Britain abroad and, supported by the last Government and this Government, in our embassies, through the Defence Export Services Organisation and Ministers, in trying to win contracts. So I come with an awareness of what the real world is like in manufacturing industries. Eurozone manufacturing, for example—not ours, I emphasise —has shrunk faster in the last quarter than it ever has since the war. We have a £34 billion black hole in our MOD procurement budget, and defence spending cuts around the world are in progress; if the US Congress cannot reach resolution, they will certainly be made in the United States. These all have a large impact on us and we have to remain competitive, as well as deliver winning contracts, here and abroad.

As for the background to the decision, we have heard before about the slow-down in Typhoon, and we do not have to repeat the economic problems of Spain and Italy, which are two of the partner nations in that project, which inevitably mean fewer shifts on fewer production lines. The joint strike fighter development delays involve both technical delays and Congress budget hold-ups. We are not in control of that process, but we are ready to do our best with the JSF. BAE and the Government have invested nearly £100 million in the Samlesbury site to manufacture parts for every single JSF—not just the British JSF, but the US JSF and everyone else’s. A joint strike fighter bought by anyone in the world will have part of its rear fuselage and some of its titanium manufacturing parts made in this country by my constituents and those of my colleagues in neighbouring constituencies.

We should not forget that we need to ensure that we secure the JSF programme in the US. The US has a $600 billion defence budget, and we must not forget that not many countries spend that much. As part of that figure, the US buys many components, not just from BAE but from many British manufacturers. The C-130 Hercules has 29% of its components from British manufacturers. It is made in America, but subcontracted in the UK. It is as important to subcontract and make parts as it is to perform final assembly and check-out.

I am afraid that I have to disagree with the analysis of my right hon. Friend the Member for Haltemprice and Howden about buying only what is made in Britain. The French have gone down that route, and their Rafale aircraft has sold precisely no planes abroad. Their aerospace industry is on its knees and they are desperate to try to privatise some of it or win orders abroad. We go head to head with them in India, and we can try to say to the Indians or the US, “No, you can’t have anything made there, you can’t final-assembly and check-out your aeroplanes there,” but we are not the only people in the ring. The French are desperate to save their aerospace industry, and there are two US contractors with dollar funds that make us look like midgets. We must do what we can, where we can: if it benefits the shareholder and the work force, that should be our priority.

What can be done? The Government can be tougher in committing to our UAV programme and ensuring that it has a long-term future, and I ask BAE to be much more transparent about increases in orders.

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[John Woodcock (Barrow and Furness) (Lab/Co-op)]

It is good to follow the hon. Member for Brigg and Goole (Andrew Percy). I shall take up some of the points about which he spoke so well. We have also listened to powerful speeches from the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson). I hope that the company will listen to them, make this consultation genuine and rethink its approach to the jobs currently set to go.

It is hard to underestimate the appalling hardship that looms for these communities. While the Astute programme in Barrow shipyard is maintaining the order book there, we remember and still feel the scar of the 10,000 jobs lost there in the early ’90s and the tale of long-term benefit dependency, which still remains with us to an extent to this day. It is not only those communities that feel the blow, as this is a hit on the defence industry across the north where synergies between the aerospace and shipbuilding industry jointly support supply chain jobs, which many people will be worried about if these job cuts go ahead.

Most of all, of course, this affects individuals. When I attended BAE’s apprenticeships awards earlier this month, I saw brilliant talent there—people who had been employed in engineering manufacturing kit to help injured troops returning from the front line who were based at the Queen Elizabeth military hospital in Birmingham. The teams from the affected sites were not clear about what their future would be or whether they would be able to remain.

Previous speakers have highlighted the company’s responsibility to rethink. I want to stress the importance of the questions facing this and future Governments about their approach to the defence industry and to maintaining our defence industrial base. In an earlier intervention, the hon. Member for Wyre and Preston North (Mr Wallace) criticised aspects of the previous Government’s defence industrial strategy as Stalinist. The right hon. Member for Haltemprice and Howden pointed to ways in which companies are still able to offshore, despite agreements put in place in certain areas. It is a great worry that current Ministers seem reluctant to take responsibility for helping to shape an overall strategy for industrial capacity.

[Mr Wallace]

If my memory serves me correctly, the hon. Gentleman was a special adviser in the Ministry of Defence—if not, I apologise, as I would not want to tarnish him with that accusation. Does he not think it wrong that under the last Government—it is not about party—the decision was made to underpin industrial strategy by guaranteeing work for a period, such as for 15 years on the Clyde, even if contracts were not going to be placed? That would restrict future Governments in deciding the shape of the armed forces’ and taxpayers’ money would be used to compensate for work that did not actually exist. The Government were the contractor.

[John Woodcock]

Agreements that secured work in the UK were really important. Where there are lessons to be learned from how those agreements were put in place, we should learn them, but the current Government have turned their back on this whole approach and that is a cause for considerable alarm. At a time when the Prime Minister and the Business Secretary are talking about reforming the Government’s overall procurement process to try to encourage more jobs here in the UK and to protect supply chains, I hope that such an approach will be meaningfully reflected in a rethink by the Ministry of Defence and in its forthcoming White Paper.

Whatever the balance of responsibility between Government and suppliers for ensuring that the current crisis is addressed and the future set more securely, we need to remember that it is not just the economic implications for areas that are important—as, indeed, they are—because what happens affects our ability to protect our country and support the front line. I have gone around and talked to companies and small businesses that are part of the supply chain about how they have been able to speed up getting vital equipment to troops on the front line for urgent operational requirements in Afghanistan. If our industrial base shrinks and we end up knocking on the door of foreign companies when we know we need new kit to ensure that we can have an edge on the battlefield, we will not have anything like the same level of guarantee that we will be able to accomplish that.

Finally, in an uncertain world, we simply cannot know what our defence requirements are going to be in decades ahead. It could significantly increase the nation’s vulnerability if we allow our prized industrial base to shrink from here.