Aviation Industry

Gavin Newlands Excerpts

Wednesday 18th November 2020 Westminster Hall

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

It is a pleasure to see you in the Chair, Sir Edward, and I congratulate the right hon. Member for Epsom and Ewell (Chris Grayling) on securing what has been an interesting and very welcome debate. I agree with a huge amount of what was has been said by Members from all parties.

The stark truth is straightforward and simple: the UK Government have essentially abandoned the aviation sector to its fate. To be clear, when I refer to the aviation sector, I include its large and varied supply chain, including the strategically important aerospace sector. I say “abandoned” because the Government appeared at the start of the pandemic to be in lockstep with the industry. The Secretary of State for Transport came to the Dispatch Box and said that he had saved Flybe; the Chancellor promised back in March that there would be sector-specific support for the aviation industry; and the Secretary of State stood in the same hotel ballroom as myself and the Minister’s predecessor, looked industry representatives in the eye, and said:

“I understand the enormity of what you are facing, and this Government will stand by your side.”

The new Minister—he is still relatively new, but he has an extremely difficult job to repair broken relationships and a near-broken industry—is not responsible for making any of those promises, but he is now responsible for trying to deliver on them. I know what he will say in his closing remarks about the aviation sector having had access to x millions, loan-funding from the Treasury and, of course, access to the furlough scheme, but that is not enough and it is not what was promised. How many jobs in the sector might have been saved if the Chancellor had been clear from the start that furlough would continue throughout the winter period, as many of us had called for? We will never know.

Going into this crisis, the UK had the third biggest aviation sector in the world. I would be very surprised if we come out of it in the same lofty position, such has been the difference in the levels of support given to the sector by other Governments across the world. Plenty of other countries recognise the massive and strategic importance of the sector, including the Scottish Government, which rolled out support including full business rates relief for a full year. I know that many in this Chamber have called for that to be replicated in England. The Scottish Government have also worked with Highlands and Islands Airports to invest in infra- structure and economic stimulus as we come out of the pandemic, and they have worked with the aerospace response group, industry and trade unions to preserve aerospace, manufacturing and related sectors—protecting jobs in the short term, while expanding in the long term.

However, the blunt fact is that the Scottish Government have gone just about as far as they can with the limited powers they have. I know that the Prime Minister thinks devolution is “a disaster”, but it is a fact, and the fact is that the UK Government hold the bulk of the powers—legal and financial—that can make a difference in the aviation industry.

Instead, we have seen the Government watch as the aviation industry teeters on the edge of a cliff, and then give it a shove, with their baffling decision—I accept that it is not a Department for Transport decision—to propose scrapping the VAT retail export scheme and the airside extra-statutory concession scheme. In combination, those schemes created thousands of jobs, not only at the airports themselves but in retailers across the country.

For Glasgow, the airside concession is worth £8.6 million in revenue, which will now be lost, and 170 retail jobs will be put at risk, at a time when between 1,500 and 2,000 of the 5,000 jobs based at Glasgow airport have either gone or are under threat. Across the UK, the scrapping of both schemes is estimated to cause £1.5 billion of losses at a time when the industry is on its knees. It is beyond irresponsible to slash one of the few remaining income streams that offers a glimmer of hope for many airports. I hope the Treasury sees sense and reverses course in the coming weeks, and I hope that the Minister will confirm that he is lobbying the Treasury to do just that.

That is not to say that I think all parts of the aviation industry have been behaving entirely reasonably. It would not be a speech of mine if it did not mention fire and rehire; I agree wholeheartedly with every single word that the hon. Member for Easington (Grahame Morris), my colleague on the Transport Committee, said on the issue, and for that reason I will curtail my remarks—not least because I spoke for 15 minutes on the issue yesterday in a debate that I secured.

When I come out in public to support the industry, it makes my life and the lives of everybody else who advocates for it much more difficult when companies such as Menzies Aviation and, of course, British Airways engage in such disreputable behaviour against their own staff. I would have little objection to making Government support conditional on those companies’ complying with the idea that they must treat their staff with dignity and respect, instead of working out the cheapest way to shove them out the door. I again ask another Government Minister, in his closing remarks, to confirm whether he thinks the practice of firing and rehiring should be legal and whether he thinks action should be taken.

While passenger numbers have recovered slightly over recent months, even the latest statistics from August show the scale of the challenges now and for the immediate future: Exeter, Cardiff, Norwich and Southampton are all down more than 90%, Glasgow is down 82% and Edinburgh is down 79%. The best-performing airports are those that provide a lifeline service such as the Isles of Scilly or Tiree, but even their passenger numbers are down significantly. If action is not taken soon, we face a crisis of connectivity, threatening not just regional airports, but rural communities for whom air service is essential. That would be an economic disaster not only for the communities served by those airports, but nationally: regional aviation is worth £4 billion to the Scottish economy, which is the same as its value in London.

In September, the First Ministers of the devolved Administrations—before the Prime Minister decided devolution was a disaster—jointly wrote to him asking for urgent intervention to support the aviation and aerospace sector. I am interested to know whether the Minister can confirm that they have even received a response. Certainly we have heard nothing publicly from the Prime Minister or his colleagues on what he and the Government intend to do to preserve a sector that is fundamental to what is left of our manufacturing base.

My constituency has already seen that base butchered, with 700 jobs axed at Rolls-Royce in Inchinnan and the remaining 600 or so of the workforce deeply anxious about the plant’s very future. The Government’s response in my Rolls-Royce debate was to commend the company for carrying out redundancies voluntarily rather than by compulsion. Our workers and our industry deserve a lot better than that. The Scottish Government continue to try their level best to support the sector, which also includes companies such as Spirit AeroSystems and GE, among many others. I mentioned earlier that there is an aerospace response group that meets fortnightly, but there is also a separate specific Rolls-Royce working group, which includes the company itself, trade unions, a Government Minister and officials.

Over the past 20 years, the UK proportion of the Rolls-Royce global workforce has been slashed. In the year 2000, 43,700 out of 53,000, or 82%, were based in the UK; with the latest job cuts in the system, that figure is now down to 17,000 out of 46,500, or 36%. Over the past decade and more, the UK Government have funded Rolls to the tune of well over £3 billion, and around 12% of Rolls-Royce profits have been generated as a result of UK Government grants and tax breaks. I do not mind the Government’s supporting companies such as Rolls-Royce—in fact, I welcome it—but the Government must exert a bit more influence on this offshoring issue if they are to continue to support the business so well.

It would be remiss of me not to mention climate change and its impact on the sector before I conclude. There is some great work being done by many in this area, including by the FlyZero project and the Aerospace Technology Institute. Given the perilous financial state of the aviation and aerospace sectors, I have some concerns that, without more Government support, the UK will struggle to maintain its position as a global leader in this field. I echo calls for increased funding for the institute itself and towards developing and manufacturing sustainable fuels. Much as I have urged the Government to increase incentives for motorists to switch to ultra-low emission vehicles, I also ask them to consider a scrappage scheme for older aircraft, which would have the double benefit of decreasing carbon emissions and providing a needed boost to our aerospace sector.

In previous debates on aviation during the pandemic, I have asked the Government to act and said that it was not too late to intervene; I fear that we are rapidly approaching the point when it will be too late. It is time for the Government to act, and to act now.