Climate Change, the Environment and Global Development

Debate between Jim Cunningham and Andrew Stephenson

Wednesday 10th July 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Stephenson)]

I beg to move,

That this House has considered tackling climate change, protecting the environment and securing global development.

I welcome this timely debate and the work of the Select Committee on International Development, and of many hon. and right hon. Members on both sides of the House, to highlight the urgency of addressing the interlinked challenges of tackling climate change, protecting the environment and ensuring sustainable development.

The challenge has never been clearer and our will to act has never been stronger, as demonstrated by the resounding support from both sides of the House for committing the UK to a target of net zero emissions by 2050. The world faces the challenges of doubling global infrastructure to meet development and of feeding 1 billion more people, while simultaneously halving global greenhouse gas emissions by 2030 to keep pace with the Paris climate change targets.

Globally, we are not yet on track to meet the aspirations of the Paris climate agreement. On our current trajectory, we may hit 1.5° C above pre-industrial temperatures as early as 2030, and 3.5° C above by 2050. This risks 100 million people being pushed into poverty by climate change by 2030, making the sustainable development goals much harder to achieve.

[Mr Jim Cunningham (Coventry South) (Lab)]

What has been the impact of the Americans withdrawing from the Paris agreement? Has there been any dialogue, for want of a better term, with the Americans to get them back into the agreement?

[Andrew Stephenson]

We have regular discussions with the American Government. Obviously we think the Paris climate change agreement is important, but we are seeing reductions in America’s emissions because many states and many bodies across the country have decided to up their ambitions despite the actions of the federal Government. We are seeing some encouraging signs, even if we hope the US Administration would go further and faster.

Bombardier

Debate between Jim Cunningham and Andrew Stephenson

Tuesday 7th May 2019 Commons Chamber

[Andrew Stephenson]

My hon. Friend is correct to point out that Bombardier is a growing company that is investing in different sectors; it is just strategically realigning itself. I look forward to visiting a different Bombardier site on Thursday—not the one my hon. Friend mentioned—to talk about other investments within the UK. The decision to sell its operations in Northern Ireland is regrettable, but we will work with the company to ensure that the right buyer is found.

[Mr Jim Cunningham (Coventry South) (Lab)]

Members will recall that the American Government took legal action against Bombardier about 18 months ago, so how big a part did the United States play in this decision? The hon. Member for Glasgow North West (Carol Monaghan) said that this affects 4.5% of the workforce in Northern Ireland, but we can multiply that figure by two or three if we include the supply chain as well, so the problem is much bigger than people realise. We had a similar statement on GKN a couple of weeks ago; is the Minister being conned on this?

[Andrew Stephenson]

Bombardier has told us that this is a strategic decision so that the company can focus on its transportation division, which includes trains and business jets. We have been told that it has not been influenced by any other factors. This is a strategic decision by the company so that it can focus on certain key parts of its core operation.

GKN Aerospace, Kings Norton

Debate between Jim Cunningham and Andrew Stephenson

Wednesday 24th April 2019 Commons Chamber

[Andrew Stephenson]

No, I think foreign direct investment is a power for good in our economy, and we should work to attract more investment into the economy. Some of our best firms have grown through mergers and acquisitions, and we have seen huge investments in different sectors with the help of foreign direct investment. It is worth saying at this point that GKN has grown through mergers and takeovers, both here and abroad. I think the firm actually bought the site from Pilkington in 2003.

The UK’s merger regime is highly regarded around the world because of how it is designed. It is based on transparent rules that are administered consistently by expert bodies. It recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence. An example of that is the independent Takeover Panel, which governs the takeover code. The code provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner, with fair treatment of all shareholders.

On 12 January 2018, GKN announced that Melrose had made a takeover approach and the Secretary of State spoke to both parties to understand their intentions. The Government’s priority was to ensure that the national security concerns raised by the transaction were addressed. The Government completed a thorough and detailed assessment and concluded that they should not intervene under the Enterprise Act 2002.

Melrose voluntarily agreed post-offer undertakings with the Takeover Panel. As a result, for a period of five years, Melrose committed to sustain GKN’s current level of expensed research and development at 2.2% of sales; maintain a UK stock exchange listing; remain headquartered in the UK and ensure that the majority of directors are UK resident; and guarantee that both the aerospace and Driveline divisions retain the rights to the GKN name. In addition, Melrose agreed to sign a deed in favour of the Department for Business, Energy and Industrial Strategy that commits the company not to sell the core aerospace business before 1 April 2023 without the Secretary of State’s consent.

[Mr Jim Cunningham]

I welcome the Minister to the Front Bench—I should have said that earlier. In response to my hon. Friend the Member for Birmingham, Northfield (Richard Burden), he indicated that he has had discussions with the Ministry of Defence about the current situation. What was the MOD’s view?

[Andrew Stephenson]

The MOD shares my Department’s view that these job losses and this closure are highly regrettable but do not contravene the terms of the deed and the undertakings made during the takeover. Melrose agreed a deed with the MOD that includes clear obligations and commitments to maintain capacity and to support certain military goods, and requires that the Secretary of State for Defence be notified if Melrose plans to transfer production outside the UK. Melrose also made commitments to invest in skills and innovation, support sector deals, and support the supply chain during its ownership of the business.

Since the transaction completed, the Government have been monitoring Melrose’s compliance with the terms of the deal. My officials had a meeting with the company in October 2018 and will meet it again next month. Furthermore, on 1 April Melrose publicly reported that it is in compliance with the post-offer undertakings as required by the Takeover Panel. We are currently content that Melrose is compliant with the commitments that it made to the Government. Although GKN Aerospace’s decision is a huge disappointment for both the Government and the 172 staff members who will be affected, it does not contravene the commitments that were made at the time of the takeover.

The hon. Member for Birmingham, Northfield asked whether I had spoken to my colleagues in the Ministry of Defence; I have spoken to the Defence Procurement Minister, and he confirmed that they are content that Melrose has complied with its requirement under the deed with the MOD.

Prior to the Melrose bid, GKN had itself planned to restructure the business, which could have resulted in job losses, and intended to sell the entire automotive division to the US company Dana, which likewise might have decided to close UK manufacturing sites. The Secretary of State spoke to GKN Aerospace’s chief executive officer, Hans Büthker, and he informed us that the announcement does not in any way reflect a reduction in growth by the company. In fact, he said it is quite the opposite: the decision is the result of an internal strategic review by GKN to invest in high-value technology- driven production. That same review proposes to invest more in other UK sites.

I understand that a meeting has now been arranged between the hon. Member for Birmingham, Northfield, the Secretary of State and the CEO of GKN Aerospace for further discussions on the matter, including on how we can best support his constituents who work at the site. I hope that will be an opportunity to discuss and explore alternatives to the site, and that that is something the hon. Gentleman can take forward from this debate.

As I mentioned earlier, GKN has confirmed that it will be doing all that it can to support the affected employees. We will continue to work closely with the company, the unions, the local enterprise partnership, the Mayor of the West Midlands Combined Authority, Andy Street, and councils to help with this effort and ensure that each and every worker is fully supported in finding new work.

Aerospace is one of our most rapidly expanding sectors and skilled and experienced employees are in strong demand. The UK aerospace sector is a great success story, and we punch well above our weight on the world stage. We are a world leader in the design, manufacture and maintenance of some of the most complex and high-value components of an aircraft, including the wings, engines, aerostructures and advanced systems. Our industry turns over £39 billion a year and the vast majority of what we make in the UK is exported globally.

Around half of the world’s modern passenger aircraft have wings designed and built here in the UK, and GKN Aerospace-manufactured products are on more than 100,000 flights a day. The hon. Gentleman asked what impact the closing of the Kings Norton site will have on the industrial strategy in Birmingham. Yesterday, I attended a meeting alongside five of my ministerial colleagues to discuss the midlands engine and the progress of our west midlands local industrial strategy. This will set out an ambitious long-term vision for the west midlands economy to increase productivity, drive economic growth, and support manufacturing and technology in both Birmingham and the wider region.

The midlands has long been renowned as a hub for manufacturing, and it is not short of opportunities for advanced engineering jobs. More than a third of the UK’s automotive sector employment is in the midlands, and the region boasts many globally recognised companies, including Jaguar Land Rover, JCB and Rolls-Royce. More widely, the midlands is also home to the Manufacturing Technology Centre in Coventry, which operates some of the most advanced manufacturing equipment in the world.

The past year has seen the largest GKN Aerospace UK technology investment since 2012. This includes the announcement of a £32 million UK Global Technology Centre in Bristol and the large investments made to support its additive manufacturing capabilities in the UK—both have been supported by the Government through co-funded research and development grants. This co-funded investment will support GKN’s growth in the UK and will help safeguard and create high-value jobs in the company and its supply chain.

Hon. Members will be pleased to hear that GKN has also confirmed to us that there will be further investment at some of its other UK sites, including those in Luton and Portsmouth, which will soon become technology centres of excellence. This comes on top of GKN’s recent announcement of £300 million in new investment to ramp up its activities in the fast-growing market for electric vehicles, something that I am sure the hon. Gentleman, as chairman of the all-party motor group, will welcome.

I can assure hon. Members that the Government will continue to support those affected by this site closure in the years ahead. Finally, I thank the hon. Gentleman again for giving the House the opportunity to debate this important issue.

Question put and agreed to.

Aerospace Industry

Debate between Jim Cunningham and Andrew Stephenson

Wednesday 12th September 2012 Westminster Hall

[Andrew Stephenson (Pendle) (Con)]

I congratulate the hon. Member for Wrexham (Ian Lucas) on securing this important debate and welcome the new Minister to his role. His predecessor, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), was a strong and vocal advocate of the aerospace industry, and I hope that the Minister will become one, too. I apologise to him and other Members that I have to leave straight after my contribution, but I look forward to reading the debate and the Minister’s response at a later date.

The aerospace industry is vital to Pendle’s manufacturing base. I raised the subject during Business, Innovation and Skills questions last Thursday. In reply, the Secretary of State said:

“Aerospace is an excellent example of how Government and industry can work together to create growth and world-leading industries.”—[Official Report, 6 September 2012; Vol. 549, c. 382.]

The UK aerospace industry is the second largest in the world. It is worth more than £24 billion and employs a huge number of people in Pendle in highly skilled jobs in firms such as Euravia, Graham Engineering, the Merc Engineering Group, PDS (CNC) Engineering, Regal Precision Engineers, Rolls-Royce, T and R Precision Engineering, Weston EU and Whitwam Precision Components.

Last November, the hon. Member for Wolverhampton North East (Emma Reynolds) re-established the all-party parliamentary group on aerospace, and I was delighted to take on the minor role of treasurer. In June, we held a meeting with the Secretary of State for Business, Innovation and Skills, and I was encouraged by what he said about Government support for the industry.

The broad picture both locally in Pendle and nationally is encouraging. I have visited most of the companies that I just mentioned, and on the whole, they are doing well and are positive about the future. Aerospace industry exports rose by 15.6% in 2011 and the civil aerospace market is booming worldwide.

Pendle’s largest aerospace employer, Rolls-Royce, which employs more than 1,000 staff at its sites in Pendle, recently reported record profits and an order book of nearly £52 billion in its civil aerospace division. I took my right hon. Friend the Chancellor of the Exchequer to the Barnoldswick site before the last general election and look forward to my next visit there on 19 October.

I echo what the hon. Member for Wrexham said about the positive role of the trade unions. One concern that was raised by Rolls-Royce trade union officials at their last meeting with MPs here in Parliament—it was also raised with me by my local trade union representatives—is the unforeseen consequences that the EU’s reform of financial regulation could have on companies such as Rolls-Royce, and I could not agree more with them.

The Minister might be aware that, after the financial crisis, the G20 agreed that over-the-counter derivatives contracts should, if sufficiently standardised, be moved to clearing houses and be reported to trade repositories. That poses real challenges for large non-financially based companies that utilise OTC derivatives for risk management purposes. That is particularly important to the UK aerospace sector, because virtually all deals are done in US dollars.

[Mr Jim Cunningham]

Does the hon. Gentleman agree that the issue affects not only aerospace but UK manufacturing, which is something that we are all trying to build up at the moment? He has touched on an important issue.

[Andrew Stephenson]

This is a huge matter that will affect all non-financially dominated companies and all large-scale manufacturing companies. Using OTC derivatives allows companies to focus on development and growth of the business and is a simple way of managing risks; it is simply good housekeeping. If the move goes ahead, it will not be long before companies such as Rolls-Royce will be looking to move their headquarters overseas. It is a crucial point, and I applaud the trade unions for spending so much time trying to raise it.

Turning back to my local area, the regional growth fund has had a positive effect. The Government have agreed to fund the Regenerate Pennine Lancashire bid for an additional £7.5 million in business support and its accelerating business growth in Lancashire scheme is designed to meet the needs of local manufacturing small and medium-sized enterprises.

There was also a successful bid from the North West Aerospace Alliance, which I met last December to discuss the challenges that face the industry. It is currently putting together a bid for a national aerospace supply chain centre that would be based in the enterprise zone at Samlesbury in Lancashire. Needless to say, I strongly support the creation of such a centre in the north-west, even though it would not actually be in my constituency.

The regional growth fund announcements came just two weeks after the Government said that they would back the bid from the Visions Learning Trust to create a new £18 million university technical college in east Lancashire. The sponsors of the new UTC are Pendle companies with large aerospace contracts, such as Graham Engineering and Weston EU, so the college will play a key role in addressing the skills shortages faced by many local aerospace companies.

All such developments come on top of issues that the Minister has previously talked about, such as cutting corporation tax, promoting exports and getting the banks lending again. However, there are some areas where the Government could go further. In advance of this debate, I spoke to Dennis Mendoros, the founder and managing director of Euravia—an aerospace company based in Kelbrook. It is a medium-sized business with a global reach, and it won the Queen’s award for export in 2010. Mr Mendoros believes that the main issue that has not been extensively discussed is the support that should be provided to aerospace companies with a strong export record.

As many hon. Members will know, exports account for nearly 75% of the UK aerospace turnover. None the less, Mr Mendoros feels that UK export companies do not receive any real structured support from the Government, whereas other countries, such as France, Singapore, and the USA have a structured national strategy for aerospace development. He believes that much more could be done to ensure that UK Trade and Industry and the Ministry of Defence are focused and committed to supporting UK export companies, especially small and medium-sized businesses such as his own. In addition, he believes that it would be helpful to receive tax incentives to help procure new technologies, skills and expertise, which are essential for continuous growth.

I am aware that industry and the Government have formed the aerospace growth partnership to look at those issues and at what more can be done to support the industry. Will the Minister explain how that partnership and other structured support can help SMEs such as the one run by Mr Mendoros?

In conclusion, the aerospace industry, which is vital to Pendle, is doing incredibly well, with a growing number of orders and jobs. However, more could be done to help SMEs with exports. As I have said in previous debates on manufacturing, the long-term future of the aerospace industry in the UK cannot be secured without a long-term commitment to research and development and support for the supply chain. The Government have done a lot for the aerospace industry so far, but many of our international competitors are taking similar steps, so we need to be constantly striving to stay ahead of the game.