BAE Systems

Part of Backbench Business — [Un-allotted Day] – in the House of Commons at 1:37 pm on 24th November 2011.

Alert me about debates like this

Photo of Mark Hendrick Mark Hendrick Opposition Assistant Whip (Commons) 1:37 pm, 24th November 2011

BAE Systems is a world-leading manufacturer of defence and security products. It has bases scattered across the globe in places as distant as the United States, Australia and India. However, it is important that the UK remains at the core of its business and its base.

Before the recent announcements, BAE Systems employed 40,000 people directly. When the indirect employment throughout the company’s supply chain is factored in, about 120,000 British jobs are dependent on BAE Systems. To further demonstrate the company’s standing, it generated £9.2 billion in revenues in 2009. It made a direct value-added contribution to UK GDP of £3.3 billion and contributed more than £650 million to the Treasury’s coffers. The Prime Minister has spoken at length about wanting to support British manufacturers. No company has done more than BAE Systems.

BAE has a centre of excellence in the north-west. In 2009, a comprehensive report into the company by Oxford Economics stated:

“The North West is by far the most important region within BAE Systems UK, accounting for about half of all its UK employment.”

That is about 20,000 jobs. The report went on to make a point that has just been made by Lorraine Fullbrook:

“BAE Systems now accounts for exactly one in eight jobs in knowledge-intensive production within the North West.”

BAE’s concentration in the north-west means that the recent announcement that the company will axe 3,000 highly skilled workers, half of them in Lancashire, is a body blow to the region, as I am sure it is in Yorkshire as well.

The Warton site, which employs more than 8,000 people and contributes more than £300 million to the local economy, will see 822 redundancies. A further 565 jobs will go in Samlesbury, and more than 100 elsewhere in the region. Many of them are in my constituency and the surrounding constituencies in central Lancashire. That is a tragedy for those employees, their families and the region. We have heard a great deal about Brough today, but to put the matter in context, more jobs are being lost in Lancashire than exist at Brough as a whole.

Contrary to some fairly derogatory remarks about the standard of the work force in Lancashire, Warton and Samlesbury are highly confident that they are capable of doing whatever work is required on any aircraft if the company asks them to undertake it. The north-west is where BAE Systems has placed the bulk of its operations, and it is where the company’s future lies. The north-west centre of excellence exists at Warton and Samlesbury, and it will be a major contributor to this country’s gross domestic product. Coming when they do, however, the changes are a particular problem for families on either side of the Pennines.

The Typhoon jet is a huge success story, which we want to be continued. As the hon. Member for South Ribble mentioned, the jet undertook its first major combat missions earlier this year, providing an invaluable service in the skies of Libya. Production of the Typhoon has taken place in three tranches, and although the previous Government signed up to tranche 3A, it has sadly been subjected to the coalition’s ill thought-through and rushed strategic defence and security review. Rather than producing a carefully constructed industrial strategy, the Ministry of Defence is now planning to halve the UK’s tranche 3 order, and BAE will cut its annual production from 61 to 36 jets.

Last week, the Minister made the point that much of what was happening was due to the slowness of ramping up work on the F-35. Nigel Whitehead, the group managing director, has made it plain in a letter to me and other hon. Members that the main reasons for the decision were the cut in the Typhoon, not the F-35, along with the withdrawal from service of the Harrier and the decision to scrap the Nimrod. That is what the company is saying about the facts.