Train-building Industry

Chris Williamson Excerpts

Tuesday 12th July 2011 Westminster Hall

[Chris Williamson (Derby North) (Lab)]

I will try to be brief, Mr Gale, and it is a great pleasure to serve under your chairmanship.

I congratulate the hon. Member for Amber Valley (Nigel Mills) on an excellent speech. I agreed with almost everything that he said, although I shall come on to a point with which I took slight issue. I agreed with what the Prime Minister and the Chancellor of the Exchequer said when they came to Derby just three months ago. The Prime Minister said:

“The point of the Cabinet today is to ask one fundamental question: what is it that we can do in government to help the economy to rebalance, to grow and for businesses to start up, to invest and employ people?”

The Chancellor said:

“Derby’s a great example of what Britain’s economy should be in the future. And a strong endorsement of the importance of manufacturing industry.”

I could not agree more.

The train-building and railway industry has been a cornerstone of British manufacturing since the 19th century. It is a vital industry in the Derby area, and it would be a sad irony, would it not, if 2011 turned out to be the last year when a British train rolled off a British production line? However, that is where we might be if the Government are unwilling to reverse their decision. Derby gave the world the railways, and I want Derby to continue to have a future in the railway industry long into the 21st century.

The hon. Member for Mid Derbyshire (Pauline Latham) referred to the Rolls-Royce crash of 1971. Derby has not faced a crisis of such proportions since then. Not for 40 years have we faced the possibility of losing so many jobs in one go. I remember that, at the time, the then Government were initially unwilling to intervene, but ultimately they did the right thing by Rolls-Royce, the workers, and the families who relied on Rolls-Royce for their livelihood. Since then, Rolls-Royce has gone from strength to strength, and it is now the largest employer in Derby. It is a world-leading company and a top aerospace company in the world.

I come to the matter raised by the hon. Member for Amber Valley with which I slightly took issue. He referred to a future for the train-building industry if the Government are unable to change their decision on the Thameslink rolling stock programme. My fear is that if that decision is not changed, the train-building industry in our country might not have a future. Let us be clear. From the autumn, Bombardier will have work for barely 300 workers to finish off a contract for sub-surface trains for the London underground, which means that 3,000 people who are employed directly by Bombardier, and at least a further 12,000 in the supply chain, could lose their jobs within the next 12 months. That would have huge knock-on implications for the city, and not just for the individuals who lose their jobs, devastating as that would be, but because the wider implications for Derby’s economy would be massive.

I agreed with what the hon. Member for Mid Derbyshire said when she made that point and also referred to the apprenticeships that will be lost at Bombardier. I know that that is an area of priority for the Government—I share that view—so I implore the Minister to consider the training and employment opportunities for countless young people and future generations in the city of Derby. They will be denied such opportunities if the decision is not reversed.

As I said, the train-building industry is a cornerstone of British manufacturing. Surely we cannot allow such a situation to develop on the spurious grounds that awarding a contract to Siemens represents value for money for taxpayers. How can that possibly be true when 15,000 workers might lose their jobs? That would lead to a huge loss of tax revenue to the Exchequer, a loss of VAT because of reduced spending power, and the payment of increased unemployment benefit.

I shall present a petition to the House next week. It already has 27,000 signatures and the number is growing by the day. It demonstrates the strength of feeling not just in Derby, but further afield, as my right hon. Friend the Member for Derby South (Margaret Beckett) pointed out. The issue is national, not just local.

I shall conclude with three specific questions to the Minister. What legal advice did the Department take on changing the terms of the original invitation to tender? What assessment has been made of how Germany and France have managed to stay within EU procurement rules when, in the past 10 years, 98% of train contracts in Germany have gone to German companies, and 100% of such contracts in France have gone to French companies? Finally, will the Minister publish the results of the value-for-money assessment applied to Siemens?

I will conclude with a quotation from the Chancellor’s Budget statement:

“Manufacturing is crucial to the rebalancing of our economy.”

He continued:

“We want the words…“Made in Britain”, “Created in Britain”, “Designed in Britain” and “Invented in Britain” to drive our nation forward—a Britain carried aloft by the march of the makers. That is how we will create jobs and support families.”—[Official Report, 23 March 2011; Vol. 525, c. 958-966.]

I could not have put it better myself, so I urge the Minister and the Department to look carefully at the decision and to change it to ensure that British train building has a future.

--- Later in debate ---

[Mrs Villiers]

As I have said, whatever the reason for the job losses, it is important that we should work together to help Derby in this difficult time.

[Chris Williamson]

Will the Minister give way?

[Mrs Villiers]

No. I am afraid I have only a few more minutes, and a long list of points to get through. I want to try to respond to my hon. Friend the Member for Amber Valley.

My hon. Friend was concerned that in some way the Department for Transport discriminated against Bombardier. Absolutely not. We fully respect the excellence of the engineering facilities at Bombardier. We are determined that it should be judged on an impartial basis, so there is no question of any predisposition against Bombardier, or any discrimination.

Several hon. Members have expressed concern about the combination of long-term funding and maintenance and whether we should take the approach to procurement in the future of judging each procurement on its merits. It was not possible to sever those elements of the bid process from the criteria we inherited from the previous Government. They combined long-term maintenance and funding, and it would not have been possible for us to sever those criteria and start again, for the reasons I have given.

My hon. Friend the Member for Amber Valley thought that there was a case for leaving more procurement decisions to the train operators and the rail industry. I agree on that. He also asked about the margin between Siemens and Bombardier. I am afraid that that is commercially confidential at the moment and I cannot share it with the House. It would not be in the interest of Bombardier, Siemens or the taxpayer for me to do that. Several hon. Members, including my hon. Friend and the shadow Secretary of State, have expressed concern about the Siemens bogie. That has been evaluated. The bogie is based on proven technology used elsewhere. Its development began in 2007 and it is expected to have undergone about 1 million miles of testing before it goes into passenger service. As to concerns about peaks and troughs in rolling stock orders, yes, we need to consider that in future, and we shall do so as part of our consideration of the McNulty review.

My hon. Friend the Member for Mid Derbyshire (Pauline Latham) spoke passionately and movingly about the impact of job losses. She asked about a meeting with the Prime Minister, and he has asked the Business Secretary to meet Councillor Philip Hickson of Derby city council. In answer to the question of the hon. Member for Derby North (Chris Williamson) about assessment of the position in Germany and France, we looked carefully at their approaches, and will also do so as part of our growth review. As to whether we will publish the results of the value for money assessment of the Siemens bid, it is not possible at this point, as I have said, to publish such commercial details, because they are commercially sensitive. The hon. Gentleman asked what legal advice the Department obtained on changing the invitation to tender. As I have made clear, we are legally bound by the criteria we inherited from the previous Government, and those were thoroughly assessed by our legal advisers.

[Chris Williamson]

Will the Minister give way?

[Mrs Villiers]

No, I am sorry. I have a lot of points to make, and I propose to make them.

My hon. Friend the Member for Solihull (Lorely Burt) rightly emphasised the benefits of open markets and highlighted the dangers that going down a protectionist route might have. The hon. Member for Birmingham, Erdington (Jack Dromey) talked about how the Government could use their £100 billion public procurement programme to underpin economic recovery. Of course we will consider that as part of our growth review. My hon. Friend the Member for Crewe and Nantwich (Mr Timpson) was concerned about the amount spent on consultancy. The bulk of that happened under the previous Government, but I agree that we need a more efficient approach to spending on consultancy in relation to procurement in the future. Since the general election the consultancy spend has been considerably reduced.

It is important to recognise that Bombardier, alongside other train manufacturers and train and component supply chain businesses in the UK, will have the opportunity to bid for a range of contracts in the future. We are reforming the franchise system to incentivise train operators to invest in new rolling stock. We have given the go-ahead for the tube upgrades. We have secured funding for Crossrail. We are going ahead with a consultation on high-speed rail. Bombardier is a highly successful global company, with a proven record of winning big contracts for its Derby works and elsewhere. It has done so in the past; we see no reason why it should not be well placed to do so again in the future. In recent years it secured orders for nearly 1,400 carriages for London Underground’s sub-surface line, 376 for the Victoria line and 232 for London Overground. It has been shortlisted for the Crossrail order. Its striking success rate on tube-related contracts must put it in a strong position for when London Underground next needs to procure new carriages, which, thanks to the securing of funding for the tube upgrade, will happen in due course. Only a few weeks ago, Bombardier won a £354 million signalling contract for London Underground.

For all those contracts we are determined to ensure that domestic suppliers are treated entirely impartially and given a fair chance of getting them. The fact that the coalition Government have secured funding for such a major programme of capacity enhancement will result in major opportunities, not just for Bombardier but for other train component and supply chain manufacturing businesses in this country. Following its nomination, for example, as the preferred bidder for the intercity express programme contract, Hitachi has announced that it is locating its train manufacturing services for Europe at Newton Aycliffe in County Durham. That will provide significant opportunities for UK component manufacturing. As has been said, if the Siemens Thameslink bid proceeds to conclusion, it will involve the creation of 2,000 jobs in the UK. It has indicated that it intends to use elements of the UK supply chain to supply its bid.

This has been a difficult debate, and it is a difficult time for Derby. We are determined to help.

[Chris Williamson]

Will the Minister at least give an undertaking to take legal advice on the possibility of calling in the decision and reviewing it, with the possibility of reversing it, as has happened with previous contracts?

[Mrs Villiers]

We have looked extensively at the contract and have done the numbers very carefully. As I have said, it is not legally possible for us to rip it up. We need to ensure that in future, Bombardier and all our domestic suppliers will be well placed to compete effectively for bids and competitions that will be made possible by the coalition’s commitment to investing in our railways.