Aerospace Industry

Lord De Mauley Excerpts

Monday 5th December 2011 Lords Chamber

[Lord Soley]

To ask Her Majesty’s Government what discussions they have had with the aerospace industry regarding problems facing that industry.

[Lord De Mauley]

My Lords, the Government have continuous and wide-ranging dialogue with the aerospace industry. The Secretary of State for BIS chairs the aerospace business leaders group—involving some of the sector’s leading businessmen as well as the national trade association ADS—which is tasked with identifying strategic issues that affect the sector. These issues are then addressed by Government and industry jointly, through the aerospace growth partnership. The Ministry of Defence similarly has wide-ranging discussions with defence aerospace businesses.

[Lord Soley]

I am grateful for that Answer. Does the Minister accept that this is a crucially important part of our manufacturing base, as well as our science and technology base, which is under threat at the moment both from some of the defence cuts and from the lack of a coherent civil aviation policy? Will he undertake to make sure that the Government stay in very close contact with the industry lest we lose our leading position in this premier international industry?

[Lord De Mauley]

My Lords, yes, I share the noble Lord’s concern. Focusing specifically on defence, I think that it is true that defence spending is declining worldwide, so we have developed the talent retention system to retain skills that may be released as some companies in the sector lay people off. There is, after all, a shortage of skilled engineers nationally. Some defence suppliers have diversified and the growth in other areas will offset the downturn in this sector. It is also worth saying that aerospace companies have been successful in both rounds of the regional growth fund.

[Baroness Kramer]

My Lords, as my noble friend the Minister will know, this is an industry that operates almost exclusively in dollars. Can he give us an assurance that last week’s arrangements between key central banks will ensure access to a steady supply of dollars for British aerospace industry and its global partners? As he knows, this has been a question mark hanging over the industry in the last few weeks.

[Lord De Mauley]

My Lords, my noble friend is absolutely right. The Government are certainly focused on that issue.

[Lord Craig of Radley]

Can the Minister confirm that the purchase of the F35 Joint Strike Fighter for the Royal Navy and the Royal Air Force is essential for the future viability of British and other aerospace systems, essential to the security of the skilled workforce and essential to the Treasury for the tax take that will come from worldwide sale of this aircraft?

[Lord De Mauley]

My Lords, I cannot give the noble and gallant Lord the assurance he is seeking, but I can say that we are absolutely aware that the first responsibility when procuring equipment is to provide our Armed Forces with the capabilities they require at a cost that is affordable and represents best value for money for the taxpayer.

[Lord West of Spithead]

My Lords, would the Minister agree that defence spending is perhaps going down around the world in countries that might see the world and the future world order rather in the way we do, but in the countries that do not see it in that way defence spending is actually going up—in some of them quite alarmingly? Would the Minister also agree that the best way for us to build up a very strong defence industry, which, as has been said, is so important in this country, is for us to buy from it and not to buy off the shelf from abroad?

[Lord De Mauley]

The noble Lord makes a fair point, and the Government have their eye very firmly on other regions of the world. It is also worth saying that defence exports are a key issue for this country, so long as they are legitimate.

[Lord Teverson]

My Lords, I am sure that the Minister welcomed the UK-France defence treaty as much as I did. As part of that, there are a number of weapons programmes. Will the Government make sure that they defend the interests of the British defence industry as strongly as, I am sure, the French Government will ensure the strength of the defence industry of France within the context of that treaty?

[Lord De Mauley]

Yes, my Lords.

[Baroness Royall of Blaisdon]

My Lords, when we talk about the aerospace industry, we tend to think of large companies such as BAE Systems, but the supply chain and SMEs are extremely important. Can the Minister give me an assurance that, when the Government are looking at things like defence cuts and cuts in the aviation industry, they will also consider what jobs may be lost in the supply chain?

[Lord De Mauley]

My Lords, that is a very important point and is a key focus of the aerospace growth partnership which I referred to in my initial Answer. The work that it is undertaking is addressing how we can make the UK aerospace supply chain more competitive, for example through improving our manufacturing processes and capabilities, ensuring that companies can access finance, increasing their ability to share risk with higher-tier suppliers and improving supply chain relationship management.

[Lord Avebury]

My Lords, can the Minister say what are the consequences of the sale of the Harriers to the United States? Will we have any work remaining in the maintenance and upkeep of the Harriers now that they have all gone to the US?

[Lord De Mauley]

My Lords, I cannot answer that question, but I very much hope so. I will write to my noble friend.

[Lord Haskel]

Thinking about the supply chain, the Minister said nothing about skills. Is he aware that many component suppliers are not able to supply parts because of the shortage of skills? Aerospace manufacturers are having to buy their components abroad. The logical conclusion of that is that they will put the manufacture of the planes themselves overseas.

[Lord De Mauley]

That is also an extremely important point. We have invested £1.3 billion in apprenticeships this year and another £180 million in funding adult apprenticeships to deliver 250,000 more apprenticeships over the spending review period than was previously planned, and £250 million has been allocated to develop the vocational training that businesses need. We are making it easier for small employers to take on young apprentices, and we are working with the lead trade association ADS and the sector skills group SEMTA to secure the skills and competencies and make aerospace the industry of choice for the workforce of tomorrow.

[Baroness Symons of Vernham Dean]

My Lords, the Minister was somewhat ambivalent earlier on in answering the question about whether the Government would take on the Joint Strike Fighter. Will he assure the House that in making any decision on this point, the Government will fully take into account the enormous amount of money that has already been spent by the Government, and indeed the previous Government, in investing in the future of the Joint Strike Fighter?

[Lord De Mauley]

My Lords, I am sorry if I appeared ambivalent. The noble Baroness is quite right and, yes, I will.

[Lord Berkeley]

My Lords, given the Statement last week by the Chancellor committing not to build any more runways at Heathrow, Stansted or Gatwick and expressing interest in building a fourth airport for London in the Thames estuary as a way of increasing the capacity of London airports as a whole, will the Minister explain to the House how the Government are going to take forward studying this new project?

[Lord De Mauley]

Yes, my Lords. The coalition Government have made clear that they do not support the construction of a third runway at Heathrow because of the unacceptable impacts on local communities and on climate change. In advance of the Developing a Sustainable Framework for UK Aviation consultation next spring, the Government are therefore considering a number of alternative measures, including taking on board the recommendations of the South East Airports Task Force.

[Lord Hamilton of Epsom]

When my noble friend hears the appeal of the noble Baroness, Lady Symons, that he should not be ambivalent over the Joint Strike Fighter, should he not be quite clear in his own mind, and should the Government not be quite clear, how much it is going to cost before we commit ourselves to buying it?

[Lord De Mauley]

My Lords, that thought is never far from the Government’s mind.

[Baroness McIntosh of Hudnall]

Since the question of runway building has been raised—I was not sure that it would be under the heading of this Question—can the noble Lord assure us that, when the taskforce comes to deliver its conclusions, built into those there will be a proper assessment of the kind of long-term impact on communities, which have been waiting years to know whether a runway would or would not be built in their area?

[Lord De Mauley]

My Lords, that is one of many considerations that absolutely must be taken into account.