Aerospace Industry

Iain Wright Excerpts

Wednesday 12th September 2012 Westminster Hall

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner.

I congratulate my hon. Friend the Member for Wrexham (Ian Lucas), who is a very good friend, on securing this important debate. He is to be commended for bringing this vital topic before the Chamber in such a thoughtful, knowledgeable and measured manner. He was an excellent Minister in the Department for Business, Innovation and Skills and acted as a champion for important future sectors such as the aerospace and automotive industries. He has demonstrated that same commitment to British industry today.

Speaking of congratulations, I welcome the right hon. Member for Sevenoaks (Michael Fallon) to his appointment as minder of state at the Department. This is his first Adjournment debate in that role. I also welcome his elevation to the Privy Council. He has an important role in championing British industry in a long-term, modern and constructive way, relevant to the needs and ambitions of business in the 21st century, and I wish him well in that task.

On a slight tangent, this is my first opportunity in a debate on aerospace to pay tribute to Neil Armstrong, the first man on the moon, who died last month. That extraordinary man was brave, modest and inspirational, and it should be remembered that his first love was flying.

--- Later in debate ---

On resuming—

[Mr Wright]

Before we were rudely interrupted by the Division, I was about to take off in tribute to Neil Armstrong, whose first love was flying and aviation. After he came back from the moon, he became a professor of aeronautical engineering at Cincinnati university for the best part of a decade.

Coincidentally, today marks the 50th anniversary of President Kennedy’s moving and powerful speech about the moon project, probably the best example in history of Government and industry working in harmony. This is what he said:

“We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard”.

I genuinely hope that the Secretary of State’s speech yesterday, on an industrial strategy for the UK, will have the same sort of wide-ranging and dramatic impact as Kennedy’s speech had in September 1962. Having said that, given that the Secretary of State has made 15 speeches on this topic since he came to office—an average of one every eight weeks—without any real, discernible impact, I shall not hold my breath on behalf of industry.

In today’s excellent debate, we have heard that the UK aerospace industry is a national success story that should be promoted and celebrated, arguably more than it currently is. My hon. Friend the Member for Wrexham and others have pointed out that this country has 17% of the global market, making the UK the largest aerospace industry in Europe, and second only to the United States in the world. Some 2,600 companies in the UK directly employ more than 100,000 workers, and last year generated a turnover of close to £25 billion, with three quarters from exports.

As we have heard this afternoon, there are huge opportunities and potential for the industry. Airbus, in its global market forecast published last week, estimated that there will be a need for 28,200 passenger and freight aircraft to be delivered between now and 2031, a potential market worth $4 trillion. Passenger traffic will more than double in the next 20 years, with those passengers flying on larger, more efficient aircraft like the A380, that will be made of material that is substantially lighter but more endurable, and which will consume less fuel and make less noise.

Although the growth of civil aerospace will be large and potentially lucrative, there are also targeted opportunities that our defence aerospace industry, because of our global reputation, should be able to, indeed must, take advantage of. In the face of that huge potential, there is also enormous competition, as my hon. Friend the Member for Wolverhampton North East (Emma Reynolds) mentioned. We cannot afford to be complacent in such an important sector. On the back of that, much of today’s debate has rightly focused on the role of Government in relation to business and aerospace in the context of planning an industrial strategy.

Opposition Members believe strongly that the Government should set out a compelling vision for what this country’s economy will look like in the next 30 or 40 years. They should be determined—not necessarily to pick winners at a company level, as my hon. Friend the Member for Alyn and Deeside (Mark Tami) mentioned—to identify those sectors in which we as a nation have a current competitive strength and a comparative advantage that will allow Britain to play a leading role in global markets in the decades to come. Co-ordination of policy right across Whitehall, not just confined to the Minister’s Department, should then be pursued relentlessly and without dither for the single-minded purpose of allowing those sectors to thrive.

With that in mind, Labour Members fully support the championing of the aerospace sector as a vital and much-needed part of the UK economy. As I have explained, UK aerospace has a leading role in the global market, not just now but in the growth of the sector in the next 20 or 30 years. All Opposition and Government Members should therefore be determined to maintain that market edge, and to enhance it for the good of the national economy.

The aerospace sector has capital expenditure programmes and lead times for research and development, design and manufacture measured in billions of pounds and in decades. The industry and its supply chain need to have confidence and certainty to allow them to plan for the long term. Policy uncertainty is bad for business and for the interests of the UK aerospace industry, as my hon. Friend the Member for Wolverhampton North East eloquently said.

We therefore applaud the creation of the aerospace growth partnership, which is somewhat similar, as my hon. Friend the Member for Wrexham said, in its ambition and scope to the work done with the Automotive Council for another vital sector for the UK economy, the automotive sector. The aerospace growth partnership builds on the progress made by the advanced manufacturing strategy introduced by the previous Labour Government as part of the “New Industry, New Jobs” initiative. The aerospace growth partnership’s strategic vision for UK aerospace, “Reach for the skies”, is ambitious and clear, focusing on what we believe to be the right areas of strategy, technology, manufacturing capability, supply chain competitiveness and engagement and communications, as well as the vital work undertaken on skills for the sector by the aerospace and defence sector strategy group.

The key strategic findings of “Reach for the skies” state quite explicitly:

“The UK can retain its position as the largest aerospace manufacturer in Europe (and number two globally) if industry and Government work together to address barriers to growth”.

It goes on:

“Companies are more likely to invest in creating jobs and capabilities in the UK if they believe the Government is committed to maintaining the UK as an attractive environment for aerospace.”

Opposition Members certainly support such a commitment.

In that context, and given the debate that we have had, will the Minister take this opportunity to appreciate that in the modern economy, in important industrial sectors such as aerospace, close co-operation, partnership and activism is absolutely necessary between the Government and business? Indeed, it is the only way the UK will maintain and enhance its competitive edge. Will he also take the opportunity to support, in full, the industrial strategy approach set out by the Secretary of State this week; in particular, what he told the House on Monday? The Secretary of State said:

“The other theme is the need for partnership between business and industry. Very few countries have a purely laissez-faire approach, and we should learn from their experience. We also should draw on our experience; I have learned much from some of my predecessors, particularly Lord Heseltine, who has an office in my Department and is contributing valuably to thinking on this subject.”—[Official Report, 10 September 2012; Vol. 550, c. 25.]

Will the Minister fully endorse his Secretary of State’s approach? Will he also take the opportunity to reject his own comments in The Sunday Telegraph, particularly—I think my hon. Friend the Member for Wrexham mentioned this—when he said:

“Deregulation and privatisation worked before”?

Is that not a somewhat dated and discredited approach that will do nothing to address business needs in a fiercely competitive and interconnected global economy of the 21st century? It is like trying to solve the problems of 2012 by harking back to 1982, or like listening to a Sony Walkman when the world is excited about iPhone 5s.

“Reach for the skies” states that business and the Government are working to identify the product and manufacturing process technologies that will position the country for growth, and that a business case will be set out by the end of this month. Is that still on track? Will the Minister update the Chamber on that important matter? Similarly, the document states that business and the Government will develop a strategic plan for the UK aerospace industry’s underpinning and enabling capabilities within academia, the supply chain and the relevant Catapult, as well as creating a strategic road map—or should that be runway—to exploit future technologies. Again, will the Minister give an update on progress on that?

I am concerned that business policy should not merely reside in the Department for Business, Innovation and Skills, but that the reach of an industrial strategy should stretch right across Whitehall. In that vein, the Minister will want to address one of the findings in “Reach for the skies”. A big factor in whether we can maintain and enhance our competitiveness in aerospace—mentioned by my hon. Friends the Members for Wolverhampton North East and for Alyn and Deeside, and my right hon. Friend the Member for Coventry North East (Mr Ainsworth) —is the shortage of skilled engineers, particularly at senior technician, graduate and postgraduate level. What work is the Minister doing to address that, and how is he engaging with the Secretary of State for Education on this vital issue, particularly as the Education Secretary has downgraded the engineering diploma? Does the Minister share my concern that studying engineering at school, college, as an apprentice and at university does not seem to be a top priority in Sanctuary Buildings, and that for the sake of our competitiveness in the next 20, 30 and 40 years it should be a priority, especially when it comes to important sectors such as aerospace? Will the skills strategy for aerospace be delivered as planned by autumn 2012?

One of the risks to the industry identified by the aerospace growth partnership is access to finance, especially in the supply chain, and we need to ensure that the gap between banks and aerospace businesses are closed. Yesterday’s speech by the Secretary of State for Business, Innovation and Skills mentioned setting up a British business bank. That is a welcome step, as we are the only country in the G8 that does not have such an institution for small and medium-sized enterprises’ financing requirements. Will the Minister say a little more about that? Will he expand on the points made by my hon. Friend the Member for Wrexham? Will the British business bank have new money and new borrowing powers, or is it a case of existing arrangements being consolidated into something new? How will SMEs in the aerospace supply chain derive benefit from such a bank?

Concerns about the EU emissions trading scheme have been raised in the debate. There is no point in undermining our competitiveness and losing trade to the likes of China and Russia, and order books being lost. I hope the Minister will spend some time addressing that, too.

Opposition Members are passionate supporters of the UK aerospace industry. We need to give the major players certainty and stability, allowing them to invest for the long term. We want UK aerospace to maintain its global pre-eminence as the market grows sharply, but in the face of fierce competition, this is possible only with an active partnership between Government and industry. We will support the Minister and the Government wholeheartedly if they adopt that model. I hope that the Minister will take this opportunity—his first in an Adjournment debate—to pursue such an approach for the sake of the advancement and prosperity of the UK aerospace industry, long into the future.