Covid-19: Support for UK Industries

Baroness Winterton of Doncaster Excerpts

Thursday 25th June 2020 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

This is a very, very well-subscribed debate and I also want to accommodate a maiden speech. Until the maiden speech is finished there will be a time limit of six minutes, including for the maiden speech. However, I must warn colleagues that if everybody who is down to speak actually turns up—I suspect they will—it is likely that we will have to put another three-minute time limit on in order to accommodate as many people as possible. I strongly discourage interventions, because they will prevent others from speaking. That is how I intend to conduct the debate.

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[Mark Tami (Alyn and Deeside) (Lab)]

I will follow your guidance, Madam Deputy Speaker, and I will not take interventions.

Coronavirus has hit all sectors of the UK economy, some harder than others, and aerospace and air travel will be one of the hardest hit. I have been here long enough to remember the effects on the industry of 9/11 and the banking crisis. These were severe, but nothing compared with the challenge that we face today. For Airbus in Broughton in my seat, this has meant a reduction in production rates of about a third. Some 40% of the UK workforce in the commercial aircraft division is currently on furlough. About 500 employees at Broughton have been working on the ventilator programme. I am sure everyone here and everyone in the country will be extremely grateful and proud that that has happened. It demonstrates what a dedicated workforce we have, but their reward for this work, as the programme comes to an end, is that many of them will not qualify for furlough. I think that that is an absolute disgrace. I would ask the Minister to really look at this situation. It cannot be right that the people who have done this work do not qualify. They are a special case and they should be treated as such. Airbus has stepped in and will cover the furlough, but that is hardly the point. I ask the Minister to press his Treasury colleagues on this matter urgently.

Industry experts do not expect passenger demand to return to pre-crisis levels before 2023. That will in turn mean that actual production rates will not catch up until 2025. With 70% of the value of an aircraft in the supplier chain, the effects there could be devastating, leading to a near total collapse of the sector if intervention does not occur. If we are serious about maintaining a viable aerospace sector in the UK, we need to be serious and have a strategic plan that embraces not only companies such as Airbus and the airlines, but the supplier chain. All parts need to work together to that end. I am concerned that some airlines—well, one in particular—see this crisis as an opportunity to remove rivals and ride roughshod over the terms and conditions of their workforce. That type of attitude and approach needs to change. We need a united front to face this crisis.

In the US, Germany and France, we have had announcements of targeted programmes of support. The latest announcement from the French Government included a raft of measures. Its aim is to protect some 100,000 jobs. It includes a reduced working week or working hours, with the difference picked up by the state. That will last up to two years. There will be a one-year moratorium on aircraft loans under the export credit agencies, amounting to around €1.5 billion. In addition, Airbus will have 18 months to pay loans, rather than the six months currently. That is worth around €2 billion. Defence procurement projects are also to be brought forward with new investment to help the sector, and the defence sector SME fund will be increased by 50% to €100 million a year. Air France-KLM has already been given a €7 billion loan guarantee to secure its future.

In addition, the French Government have promised more investment, with €1.5 billion to decarbonise and produce carbon neutral aircraft by 2035, rather than the current target of 2050. Those are bold plans that look at the medium and long terms. They recognise that there will be no quick fix, and we in the UK need to rise to that challenge, otherwise we will be left behind and could lose one of our greatest and most important industries.

What can we do to help to secure the future? We clearly need a job retention support scheme, not just for now and a few more months, but for the long term. We need to retain skills and we need the flexibility that reduced working hours can offer. We need to build support for Airbus by speaking to the airlines and retiring older, less efficient aircraft from their fleets. Around 70 aircraft flown by UK-registered airlines are more than 15 years old.

We need to address the complete mess, as has been mentioned, of quarantine, which has already added to the crisis. We need to invest in research and development, make advances in R&D tax credits and confirm that funding of the Aerospace Technology Institute will be doubled to £300 million a year. We need something for the supply chain, because that is in many ways the most vulnerable part of the sector. We need a long-term policy to ensure that there is an investment fund to keep suppliers alive during this crisis. We need to bring forward defence projects, but they need to be in this country, not just bought off the shelf from America.

If we do not step up to the plate, the future will not be good. For Broughton, it is always about securing the next wing. If we do not secure the next wing and Germany, France or Spain get it, the future will be bleak. I ask the Government to act and act now before it is too late.

[Madam Deputy Speaker (Dame Rosie Winterton)]

It is a pleasure to call Darren Henry to make his maiden speech.

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[Several hon. Members rose—]

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I am afraid that we will have to move to a three- minute limit if we are to have any chance of getting as many people in as possible.