I beg to move,
That this House
has considered defence aerospace industrial strategy.
Madam Deputy Speaker, I am sure you would agree that the calibre of Members here on a Thursday afternoon is testimony to the importance that the House places on both our military and the need for them to have the right kit, at the right price, at the right time. Our debate on this matter is timely. This month we mark the 100th anniversary of the creation of our Royal Air Force. It therefore seems fitting that we should also recognise the fundamental role that our domestic defence aerospace sector has played in maintaining our country’s aerial supremacy for generations.
Last weekend all of us here today, along with millions of British citizens, gathered across the country to commemorate the courage and the sacrifice of those men and women who have served in our armed forces, to protect our country. But while we remember those who have fallen defending our country, we must also honour those currently in uniform. Their dedication, skill and bravery is demonstrated every day, in every corner of the world.
These efforts are exemplified by those 1,350 service personnel who are currently supporting Operation Shader. In the last week alone, RAF Tornados and Typhoons undertook further operations in support of the battle against Daesh, eliminating hidden improvised explosive devices, destroying Daesh stockpiles and, vitally, disposing of Daesh armoured truck bombs. Over the course of this conflict against the most barbaric and ideological of opponents, British air support has played a vital role, striking Daesh 1,384 times in Iraq and 262 times in Syria.
The men and women of our RAF, and indeed of our entire armed forces, serve with courage and distinction, but they do not operate in isolation. They require the platforms and the weapons to do their job effectively and with as little collateral damage as possible. Their military success depends on the technology and the weaponry that we can bring to bear and—crucially for this debate—on the wider defence family that develops, designs, manufactures and maintains it. I am delighted that members of the defence aerospace industry from the GMB at Brough are in the Gallery today.
The men and women who develop these products do so in the knowledge that it may well be the sons and daughters of their friends and neighbours who are called upon to use them. They understand the stakes and they do everything they can to ensure that when our armed forces are deployed, our brave service personnel have what they need to keep them safe and to get the job done, in order to keep us safe. They recognise their role in defending our country; the question today is, do we, and importantly, do the Government?
I maintain that it is the defence family—the inventors and engineers, tradesmen and technicians, fitters and fabricators—who have built Britain’s defence industry into a world leader and sustained our sovereign capability in a world where such strength has never been more vital. It is that very defence family which I fear is currently being sold short by the Government, especially in the aerospace sector. Unless we address that now, the situation will become even more challenging in a post-Brexit world. Simply put, to ensure our sovereign capabilities post-Brexit, we need to develop a defence aerospace industrial strategy now to protect our domestic skill mix.
The Government have recognised that need in our maritime defence sector with the development of the national shipbuilding strategy. All we are asking today is that the same generosity be applied to the defence aerospace sector to give it and the workforce some stability for the next generation.
That is not beyond us. British industry has developed such iconic aircraft as the Hawk, the Harrier, the Tornado and the Typhoon, and that is before we even touch on the A400M or any of our helicopters. We have earned our place as a global leader in the manufacture and support of combat aircraft. It is, however, my contention that the development of a long-term industrial strategy for our defence aerospace industry would do far more than reassure an individual sector. It would provide lasting benefits to our economy, retain a valuable skills base, guarantee our sovereign military capability and secure our position on the global stage.
The hon. Lady has mentioned Tornado twice, including the valuable role it has played in Op Shader. It remains a potent combat aircraft, even today. Does she agree that when the Tornado retires from service in 2019 we should keep some as a war reserve, and that British industry has the skills and capability to support that?
I agree with the right hon. Gentleman, who has raised that point repeatedly in recent months. We have to decide what reserves we need, but that is no replacement for the development of our future capabilities.
First, on our economy, our defence aerospace sector makes an enormous contribution. It is the core of our wider defence industry, which directly employs more than 142,000 people, with a further 116,000 indirectly employed in the supply chain. In 2016, BAE Systems alone contributed £11.1 billion of gross value added to the UK—equivalent to 0.6% of our entire economic output—but there is further additional value to ensuring that those defence jobs stay in the UK. The Royal United Services Institute has calculated that for every pound the Government spend on a defence contract when the good or service is generated in the UK, the Treasury receives 37p back in revenue, as well as the new platform or system we have procured.
It is self-evident that a strong defence industry is a major contributor to a strong national economy, and our defence aerospace industry supports thousands of well-paid and highly skilled jobs, the majority of which are outside the south-east, as well as boosting our economy through exports of world-class products. Our defence aerospace sector accounts for 88% of all defence exports —an incredibly important aspect of our economy, especially as we look to leave the EU, not least for the impact on our future balance of payments.
But there are challenges in the sector that fundamentally relate to two factors. One is that export sales typically depend on the use of future platforms by our own RAF—the British brand and RAF stamp of approval mean a huge amount for other state actors. When buying British is key for the global success of the sector, we need to pay attention.
The second significant challenge is the extended lead-in times and development processes that characterise the defence aerospace industry. That requires a long-term strategy, not a short-term fix, to ensure a steady drumbeat of orders and constant research and development to maintain confidence within the industry and to protect jobs and our domestic skills base.
We have seen recently what happens when that certainty is missing from the market, with BAE announcing up to 2,000 redundancies owing to a gap in its order book. Those job losses are not just a blow for those workers and their families, but could result in a loss of skill and expertise that could set us back a generation. I believe that those jobs could be protected in the short term if the Government committed to bringing forward the order for the new Hawk aircraft for the Red Arrows and to securing the next wave of export contracts for that aircraft.
The Hawk aircraft is incredibly important to my constituents, many of whom work at BAE Systems in Brough. As well the work the Government are rightly doing to support the Hawk overseas, bringing forward the Red Arrows replacement aircraft would fill part of the gap in the order book, as the hon. Lady has outlined. Could that not also be done in such a way as to support the development of new orders so that what is built now does not necessarily have to be part of the replacement fleet, but can be used as a stopgap?
At the moment, this clearly hinges on the Qatari order, but does my hon. Friend agree that if that does not come forward and the Government do not bring forward the Red Arrows replacements, we may not have any sovereign capability for building fast jet trainers in this country?
I completely agree. The reality is that this is about our sovereign skills mix, and about whether we can develop future training aircraft or fast jet aircraft. This is also about people’s lives: for the people in the Gallery, this is about the jobs they will move on to in the future. This is therefore a key moment at which the Government should act.
Perish the thought that the Red Arrows should fly anything other than British-built planes. Let us be clear: 2030 was not a date anyone recognised until recent weeks for the renewal of the Hawks. I say this as a young Member of this House, obviously—[Hon. Members: “Hear, hear.”]—but the newest Hawk aircraft used by the Red Arrows is six months older than me, so this is not showing off the best and brightest of our potential capability.
We are both very young Members. [Interruption.] Well, it appears there is not so much agreement about that in my case.
On the age of the aircraft, have there not been some really troubling reports about just how few of our current Red Arrows aircraft are actually able to fly at any one time? That is why the 2030 date seems somewhat strange to many of the people who are intimately involved in the group.
I had the privilege of sitting in Red 1 last year, so I absolutely agree. The Red Arrows are our showcase for the RAF, and for us not to be investing at the time of the 100th anniversary of the RAF seems to me somewhat short-sighted.
I am not in favour of having a new aircraft just for the sake of it, but this is our most impressive and important defence engagement tool, and one of the priorities of the RAF. The Red Arrows can show off the best of our new technologies on a global stage, and we should encourage them to do so. However, I acknowledge that this would be a sticking plaster, and the long-term security of these and other sites can be guaranteed only by the development of a clear, genuine industrial strategy for the future of UK defence aerospace.
I recall that when I was a young major—I am still young, as I am sure the hon. Lady would agree—we were talking in 1984 about the requirement for a defence aerospace industrial strategy. We sometimes change the name, but we keep talking about the same thing. The truth of the matter, however, is that every time there is a defence review, the defence aerospace industrial strategy goes into the bin. I am afraid that that is the reality of the situation. We all want such a strategy, but it keeps getting scrapped, like so many of our aircraft.
This is the perfect chance for the Government to ensure that there is a real opportunity to have an industrial strategy. They must put their money where their mouth is and move forward with such a strategy.
My second point relates to the retention and development of our domestic skills base. Our defence aerospace industry operates at the absolute cutting edge of modern technology. This is a highly skilled, highly qualified workforce, and their talents are a national resource that need to be nurtured as well as retained. Such expertise enabled us to play a major role in developing the F-35 alongside our US partners—a project that was secured by our unique knowledge through the design of the Harrier jump jet.
When deals stall and future projects are uncertain, those jobs are put at risk, and if they go, those skills go with them. Once the capability to develop and produce complex systems in any field has been lost, it can be incredibly difficult and time-consuming to rebuild. One has only to look at the experience of the Astute programme to see the danger. Delays in our procurement of a new submarine programme led to significant redundancies of very specific skills which meant that, embarrassingly, when we eventually decided to upgrade our submarine capability, we had to go cap in hand to an American firm to help us rediscover and upskill the skills that we had lost after the completion of the Trident programme in Barrow.
My hon. Friend is right to mention the problem in Barrow, and I am sure she will agree that not only was reskilling a problem, but there was a massive extra cost to the taxpayer in a programme that had only one supplier. In aerospace we could lose out to competitors. Other people make aeroplanes, but we are the only ones who make submarines for ourselves.
My hon. Friend speaks with authority about his constituents and their work in Barrow.
As I was saying, that loss of skills was not just a national embarrassment. The erosion of capability can have serious and long-lasting consequences for our sovereign military capability. Let us not repeat previous mistakes. Let us develop a comprehensive industrial strategy for our defence aerospace sector, and ensure a steady drumbeat of orders to maximise the benefits of an already highly successful exports market.
Central to that strategy must be a forward-thinking plan that starts to consider what a post F-35 future may look like. We need commitment to the development of a sixth-generation combat fighter, to ensure that we have a British option for our next multi-role air defence asset. It will not surprise Members to know that the development of both the Typhoon and the F-35 projects took two decades from concept stage to mass production. We need to commit now to developing that new platform with a view to the finished product entering service in the 2030s—I will still be a young Member.
We should also use that project as an opportunity for a realignment away from a US-led development process, and turn towards our partners in Europe. The F-35 is an exemplary piece of kit, and we should be proud of our involvement in its development. If we are to maximise the benefits for our domestic defence aerospace industry, we must play a lead role in the development and construction of the sixth-generation fighter, and not operate in the long shadow of the US military industrial complex.
Finally, a defence aerospace industrial strategy sends a message to the world that we are serious about our future defence commitments, as well as our long-term security and that of our allies, and it provides us with opportunities to build lasting relationships with international partners. It would also demonstrate that the UK may be leaving the European Union, but we are not leaving the world and we are open for business.
When a nation develops an over-reliance on foreign imports for its defence capabilities, that does not just impact on jobs and industries; it also sends a signal to the world about that nation’s lack of confidence in its own industry and society. Put simply, great nations become great by acting as though they are. If we put our faith, and our active, long-term support, into our domestic defence aerospace industry, it will show the world that we are leaders in the field and intend to keep it that way. The time is right for the development of this strategy. Industry is willing; the military are wanting. What we need now is Government action.
In the run-up to this debate, which was so ably introduced by Ruth Smeeth—a star of the Defence Committee—I and no doubt other members of the Committee were almost inundated with communications from defence companies that wanted to showcase how much they do for industry in this country. For example, Boeing UK wanted to draw attention to its 18,700 workers in the UK. MBDA, the missile specialists, wanted to draw attention to the £1 billion of annual sales that it generates. BAE Systems, however, is in a rather special position. It has over 83,000 employees in 40 countries. It describes itself as a global leader in making and supporting combat aircraft and states:
“If we are to sustain this leading position, a government commitment to the development of a next generation of combat aircraft”— precisely as the hon. Lady just said—
“would be of immense value to the industry.”
The Government are committed to an industrial strategy process, with a defence sector deal as a component of that. The question is whether that is sufficient or if we need a separate strategy. It seems rather strange that when we have a separate national shipbuilding strategy—shipbuilding, for all its valuable potential for export, does not even begin to approach the potential and actual magnitude of aerospace industry exports—we should want to subsume a strategy for the aerospace industry under a general industrial strategy.
In the case of the joint strike fighter—the Lightning II, which has been referred to—we provide parts for all the aircraft that are built, but only sections of the aircraft. As valuable as that may be, it is not enough to sustain our importance as a prime integrator with all the supplying companies that depend on that process.
The industry is asking the Government to think ahead and to make advance investment so that we will be able to be in the van of future development in aircraft, but I believe that requests for investment have to be a two-way process. For example, it is not just BAE Systems asking for this; Rolls-Royce itself says that the current research and development investment in future combat engine capability ceases at the end of 2017. I would therefore just say this: if these companies want the Government and the country to invest in the future of the industry, we are entitled to say to them, “You need to invest in the future of the workforce.” As I pointed out in proceedings on the urgent question about the BAE Systems redundancies on
“near monopoly position in many parts of the British defence procurement structure.”—[Official Report,
Vol. 629, c. 169.]
It should therefore be working, in the closest possible co-operation, with the Government to see whether job losses can be mitigated. It is a two-way process; we need the companies to invest in the workforce.
The right hon. Gentleman is right about the need for collaboration. However, the uncertainty, which I hope the Minister will be able to clear up, is about the extent of the Government’s commitment to the future of aerospace. As a country, we are in a parlous position. A slowdown is affecting many of Barrow’s neighbouring constituencies in the north-west, with the prospect of job losses. There is uncertainty over future orders for which, as my hon. Friend said, the export market remains absolutely key. There is also a big question mark over the determination and even the capacity of the Ministry of Defence to look forwards and do the necessary planning.
If this were about aerospace alone, it would be concerning enough, for all the reasons set out so adeptly by my hon. Friend: the massive contribution aerospace makes to our overall industrial base; the advanced manufacturing jobs it brings; the contribution of its capability to our country; and its defence engagement role in being able to underpin our strategic defence relationships with key partner nations. However, it is in not only aerospace where this vital forward look that the Government need to be doing could be stalling. I was alarmed to hear recently that the key spending on the Government’s future submarine programme, the unfortunately titled MUFC—maritime underwater future capability—had been cut without explanation. That creates the impression that the Government think they are about to hit a wall due to the comparative spending restrictions imposed and the build-up of capabilities. When Conservative Members were in opposition, they criticised —understandably at times—the last Labour Government for shifting projects to the right, yet it appears that an alarming number of projects might be going the same way.
We have the sense that the Government, having lauded the aim of balancing the books, as they spuriously put it, and of looking to the future, are now going back into crisis mode—just getting from one Budget to another. When future planning suffers, it is not only an problem for our future capability, because we end up with inferior capability now, potentially buying off the shelves, meaning that we spend much more and lose jobs. The Government have a window in which they can acknowledge the problems and concerns that are building up before putting them right, and I hope that the Minister will do that today.
The whole defence procurement sector, and especially the defence aerospace industry, has a huge role to play in supporting employment, exports and growth, but our sovereign defence capability, in the national interest, must lie at the heart of the decisions we make and at the centre of the Government’s defence policy. We therefore need a defence aerospace industrial strategy that takes into account the practical needs of our armed forces. Recent and ongoing operations to counter Daesh, as well as humanitarian efforts in the wake of Hurricane Irma, have shown how our modern, powerful and flexible armed forces are vital to our national strategic interest and our place in the world.
It is not sufficient, however, just to ensure we have capability today and in the short term to enable the RAF to defend our skies, fight our enemies, and aid our friends and allies. We must also have the sovereign skills capacity to continue to manufacture platforms and to innovate in Britain far into future. The skills that are needed to continue to develop high-tech, world-leading aerospace platforms are already present across this country, particularly in my constituency, which has Airbus, Boeing, Rolls-Royce and BAE, among many others. We must, however, work hard to maintain and, crucially, to enhance and develop these skills. There is a serious shortage of skilled engineers and scientists, and we must avoid ever being forced to rely entirely on expertise from abroad.
Does my hon. Friend welcome this week’s announcement at the Dubai airshow that Airbus has struck its single biggest aircraft order ever—for 430 A320neo jets? That is great news for the workforce.
I am obviously delighted and thrilled. That excellent news will help to secure jobs in my constituency and elsewhere in the country.
As I have said in previous debates, the defence and aerospace companies I have met and engaged with over many years are clear that without long-term procurement commitments, Britain will start to lose the skills that we have worked so hard to nurture and develop. To illustrate the long-term nature of this issue, it is worth remembering that equipment used in the 2011 Libyan intervention derived from research and development that started in the 1970s. We cannot fall prey to short-term decision making on the basis of the current defence and budgetary landscape yet still expect to find a skilled defence and aerospace workforce in the future when we need it most.
I thank the Under-Secretary of State for Defence, my right hon. Friend Mr Ellwood, for writing to update me on the progress that his Department is making on a replacement for the Typhoon. I am sure that that will be welcomed by companies in the defence and aerospace industries such as Rolls-Royce and BAE Systems throughout the country, but particularly in my constituency. The Minister informed me that the preparatory work for the procurement process had begun. The future combat air system—FCAS—will be vital to support our defence and aerospace skills base. Most importantly of all, it will be vital to the maintaining of our sovereign defence capability, our export opportunities and our place in the world.
Alongside such procurement commitments, it is important that we support and maintain the excellent work of a number of defence aerospace companies to encourage apprenticeships and graduate programmes. Those will help to secure our skills base, as well as providing excellent opportunities for young talent and, of course, enhancing our country’s social mobility. The 5% club, in which companies undertake to ensure that 5% of their UK workforce will be either apprentices or students in structured programmes, is a very welcome scheme. I commend it to all the other manufacturers in my constituency, and indeed to manufacturers throughout the country. I also welcome the efforts of Airbus in particular, as well as others in the sector, to engage directly with universities and university technical colleges, and to invest heavily in highly skilled research and development across the country.
However, our sovereign defence requirements, and the requirements of our skilled industries, extend beyond the FCAS. I urge the Government to consider a wide range of equipment and research opportunities for inclusion in any future defence aerospace industrial strategy. A comprehensive approach is required to ensure that our armed forces remain equipped with the best possible technology, and that our country has the skills base to design, build and continue to develop that technology.
Every Member has the best interests of our country’s defence at heart. The challenge to the Minister is not being made in a partisan way, but it is necessary because we want to hold the Government to account in this regard.
Let me say—in the presence of the Chair of the Defence Committee, Dr Lewis, and some of the other Committee members, including my hon. Friend Ruth Smeeth, who initiated the debate—that I think some of the evidence that has been given to the Committee over the past few weeks about defence procurement and equipment should be essential reading for all Members. I commend the Committee and its Chair for that.
I agree with my hon. Friend John Woodcock that the debate is taking place in the context of a great deal of uncertainty about the entire equipment budget. That uncertainty leaves the Government unsure about how they will fill a gap which requires—depending on whom we believe—considerable sums of money. If we are not careful, we will end up with short-term fixes in relation to medium and longer-term strategic objectives. The aerospace industry is particularly vulnerable in that respect.
Let me quote from the Select Committee’s report, which was published this morning. The evidence of General Barrons and Admiral Zambellas was particularly challenging for the Government, but in the context of the debate, I want to quote what was said by Air Marshal Sir Baz North:
“as a juxtaposition, look at our defence exports—80% is in the air sector, yet we do not have an air sector industrial policy to support the very industries that we need to support the platforms at home to sustain those. It’s not just about foreign exchange, but about where we find ourselves. People wish to buy our kit, yet we are not joined up and together in terms of supporting that initiative”.
I think that that sums up where we are. Let us take BAE Systems, although of course there are many other defence companies. We have the Typhoon—or the Eurofighter, or whatever we call it—which has been rolled out until 2040. What will happen after that? We are not sure. We have the Hawk jets, which have been given a 2030 deadline that many of us had never heard about until a week or so ago.
My hon. Friends, and others, have asked why we do not use this as an opportunity to sustain the skills and expertise of our workers. Why do we not take this as an opportunity to look at how we might use the newer Hawk T2s, to showcase everything that is best about our industry and our workforce and to retain that sovereign capability? We cannot just see this industry as a tap that is turned on and off; we have to maintain capability and sustain that capability.
Much of that is about exports, but we do not know where this sixth generation combat fighter is coming from. We are uncertain about that, but we all know that certainty is the key to investment and to maintaining skills—through the training and through apprenticeships of future workers. So I say again to the Committee Chair, the right hon. Member for New Forest East, that the evidence to the Committee should be essential reading for everybody. It challenges the Government to get a grip on equipment procurement, of which aerospace is a crucial and dynamic part.
It is a pleasure to follow so many Members who have spoken with such passion and knowledge on this topic, about which all of us on both sides of the House are dedicated. I thank the Backbench Business Committee for granting the debate, and Ruth Smeeth for having co-sponsored it with me. I refer the House, too, to my declaration in the Register of Members’ Financial Interests.
In 1940, the RAF realised that it was going to need new aircraft and asked North American to look at designing one, and it became the legendary P-51 Mustang. That went from request to first flight in 148 days, and it is fairly trite to say that we cannot do that any longer. That is why I would like this topic to be considered seriously by the Government.
We must think about the kind of capability we will need in the future: what it is going to be, where it is going to come from, what the Air Force needs, and how we are going to get it. The story since 1940—through the period of decline, in many ways, of the individuality of the British aircraft industry—is quite a sad one, and I shall give two examples of what we should try to avoid.
In the ’60s, there were three V bombers: there were three different aircraft industries competing, with three excellent designs. Why did we have three excellent designs competing for the same space, with the result that we now have none of those aircraft industries existing on their own?
The Harrier was probably the last great all-British aircraft that we designed, which we sold to the Americans —the AV-8A. We then looked at having an advanced Harrier but ended up pulling out of our own programme. There were a number of reasons for that. Cost was one; the RAF only wanted 60, which was not enough for the amount of input required. Therefore, we ended up, albeit a joint programme, essentially buying back from the Americans an anglicised Harrier. The AV-8B—the GR5, GR7 and GR9 we have seen throughout the ’80s and ’90s—was really an anglicised American aircraft. That is what I want to avoid—seeing brilliant British industry, brilliant British skills and brilliant British technology not having the input it needs through a lack of looking strategically at where we are going to go.
The hon. Gentleman is making a powerful speech. Will he add that the Typhoon began on the drawing-board in 1984 and came into service in 2003? Does that not highlight precisely the problem?
The hon. Gentleman is right. Typhoon, the F-35 and, in my constituency, the A400M have all had a gestation period of between 20 and 30 years, depending on how we cut the initial date. In that case, we need to be looking at what will replace the Typhoon when it is out of service in 2040. It is counterintuitive when we have not got joint strike fighter F-35 in service yet, but we need to consider what will replace it as we are looking now.
Although that is what we must start doing, I do not want us all to become, as we tend to become, fixated on fast jets and on the strike aircraft, because we also have to look at trainers and transport aircraft. We have already referred to the Hawk and we will have to consider that in this mix. I want us to have ambition for aviation, as we all do; I want to see where the fast jet capability will come from in the future, and what will be the transport aircraft in the future, so we know what will be replacing in due course the A400M and the C-17—the Hercules will probably be long gone by then.
We must also think about what we are likely to need. As we all know, it is very inefficient to send a Type 45 destroyer to carry out light patrol activities in the Caribbean when we could be sending a patrol boat. Likewise, if we want a show of force, do we really want to send an F-35 to support troops when there is little or no air threat coming back from the other side? Could we perhaps look at what the Americans are doing? They are considering a light attack aircraft competition at the moment. Could we be doing that? I do not know the answer to that—it is something that the Royal Air Force and the Ministry of Defence will have to consider—but my point is that we have to look at what we are going to need, how we will go about getting it and what the capability is, and then to go forward and look at it from there. We cannot do that unless we have an ambition for aviation.
I have concentrated on other matters, but that is not to take away from the points that others have made about jobs in the industry. There are lots and lots in my constituency who depend on such jobs—at Thales, Boeing, Airbus, RAF Brize Norton and AirTanker, and also at Airbus helicopters near my constituency. I could go on and on. This is all terribly important as well. I am grateful to have had this short time in which to speak, and I hope that I have made my point with force. I should like us to have an aerospace strategy, so that we know where we are going and the ambition for aviation that we all want to see.
I congratulate my hon. Friend Ruth Smeeth on securing this debate. She has outlined the importance of this industry to the UK economy. The crisis that we face is of the Government’s making. In 2010, they came into office and took great capability out, scrapping elements such as Nimrod. Then, in the strategic defence and security review two years ago, the then Prime Minister, David Cameron, tried to put in place a more ambitious programme of development, including the P8 purchase, more unmanned aerial vehicles and the attack helicopter.
The interesting point is that there was no extra money for that programme. It was going to be paid for by efficiencies and property sales. According to the National Audit Office report, the shopping list came to £24.4 billion, and the only extra money was £6.4 billion, which was earmarked to accelerate the in-service date of the F-35. That left the need for £7.3 billion from efficiencies and £10.7 billion from land sales, neither of which have been met. By 2020, £310 million will be met through staff efficiencies, but the drawdown from Germany—which many of us said would cost us—is going to cost £1 billion. This black hole in the equipment programme is of the Government’s own making.
Added to that are some ridiculously stupid procurement decisions that have been made in the past couple of years. In the light of Brexit and the plummeting pound, the procurement of the P8 and the Apache will add to the costs. The Minister intervened earlier to announce the importance of orders that had been placed with Airbus. Why did she not give that contract for the P8 to a British company? Boeing has made lots of promises about investing in this country, but I can tell her now that if that had been the other way round, with the US buying a British product, it would not have been done without a clear commitment to a workshare taking place in the USA. We have only to look at the AirTanker contract to see the muscle involved and the way in which it protects jobs in America first, rather than those overseas. The Government are actually adding to the problem.
The simple question is: do the Government want strategic capability for fast jets and certain other sectors? If they do, they are going to have to pay for that. In regard to the Hawk, there is a clear danger that we will be unable to provide fast jet trainers in this country. It used to be an annual thing when I was a Defence Minister for tabloids and Tory MPs to say that the Labour Government were going to scrap the Red Arrows. We never were, but under this Government, there is a danger that that is exactly what will happen if those orders do not come forward. This short-sighted Government are making lots of promises about equipment, but in practice, those promises are not being funded. The problem facing our industry is that, once we get rid of those skills, we cannot turn them back on again like a tap when we require them. We will be out of this industry for good. If we then wanted a Red Arrows display team in the future, it would have to have aircraft from Korea, France or Italy. That would be a damning indictment of this Government.
It is a huge privilege to follow my hon. Friend Mr Jones, and I mean to call him my hon. Friend because we work closely on such matters for North Durham. I also thank Ruth Smeeth for securing today’s debate. Defence aerospace really matters to my constituency, which is the home of Typhoon final assembly and Hawk final assembly. Some 6,000 men and women work at BAE Systems in Warton, with many thousands more working in the supply chain, so I know how important the defence aerospace industrial strategy is.
With just over two and half minutes available to me, I want to focus on several key points. It is a huge privilege to represent a constituency where aircraft are not only designed, developed and built, but exported around the world. I thank the Minister for her support and for the Government’s support of work in the incredibly competitive defence export markets, such as the Kingdom of Saudi Arabia, Qatar, Oman and other countries around the world. Please can we maintain that support? I want to ensure that we continue the development work that we have secured through the memorandum of understanding with France on unmanned aerial combat vehicles and that the technology that arises can be maintained, secured and then put into what will be the sixth generation of aircraft.
The former Prime Minister David Cameron visited my constituency on three occasions, all of them to BAE Systems in Warton. That was how highly he regarded it. On his final visit, he outlined the Government’s commitment to a sixth-generation fighter aircraft. I urge the Minister to ensure that we continue to work to make good on that commitment to deliver it, and I say that not just to keep the United Kingdom secure, but as someone who has had the privilege of visiting RAF Akrotiri and has seen Typhoons and Tornadoes keeping safe the people who are at risk of harm from ISIS.
The defence industrial strategy will also ensure that we have jobs in the UK for the future. The solution is not buying off the shelf, because if we do not have our own strong industrial base, when it comes to working on collaborative programmes such as the F-35, we will not have the technology or the ability to chip in and get an enhanced workshare in the way that we did on the F-35. Having our own ability is absolutely critical. Some of the best people anywhere in the world work in our aviation defence industry, and I am incredibly proud of them. Will the Minister ensure that we do everything we can to support them during an incredibly tough time, with some of them potentially facing redundancies? We are good at this, and Government Members are dedicated to ensuring that our defence industry has a bright future.
Perhaps it is right and proper if I inform the Chamber at this point that my daughter is a serving officer in the Royal Air Force.
I am new to this brief, but I read the proceedings of the Defence Committee on
Secondly, to pick up on the point of Robert Courts, let us remember why we won the second world war. In the 1920s, the 1930s and the 1940s, our air defence industry was broadly based, had expertise and was innovative. If one studies one’s history, one finds that we actually out-designed and out-built our foes. In that conflict, our aircraft were without question the best in the world. That is what is at stake for the defence of this country. This is extremely important and history speaks to that.
My time is almost finished, Madam Deputy Speaker. I apologise that you were not told that I was the Liberal Democrat defence spokesman, so I shall conclude with this: I represent the Tain weapons range and Cape Wrath, where NATO and our forces practise and drop their weapons. I hope very much to see a sixth-generation fighter aircraft flying over my constituency before they put me in a wooden box and carry me away.
This subject matters fundamentally to me. The Puma squadron is based in my constituency at RAF Benson, and I was concerned by questions over the Puma’s future and how that fits into any strategy that we may be thinking of developing. We need to take account of a proper strategy assessment that covers many of the points raised by Ruth Smeeth in her initial contribution.
The Puma is not an old aircraft, as is occasionally stated. All the Pumas were found to be in excellent condition, and, in terms of airframe life, there is no impediment to their making the current out-of-service date of 2025, or indeed considerably later. In addition, we only have to look at the contribution that these aircraft have made to operations around the world: whether deploying in Afghanistan in support of Operation Toral or supporting vital aid in the Caribbean following the recent hurricane disasters, the Pumas have shown their enormous ability to be ready for operations within a few hours of arrival, and they make an ideal platform to support special forces. Moreover, Puma 2 has a relatively low operating cost, delivering excellent value for money.
The £260 million contract to upgrade 24 helicopters was noted by the National Audit Office as a programme delivered on time and to cost. I finish with a quotation from Major General Richard Felton:
“Out of all the aircraft I’ve flown, Puma 2 probably made my jaw drop most.”
I normally talk up the Royal Navy, but Plymouth is also a proud home to the makers of the gizmos and gyros that support our aerospace and space industries. The clear ask from Members on both sides of the House is for a clear, long-term strategy in which the private sector and the supply chain can invest in the jobs, R and D and skills required to supply our RAF and our fighting forces with the best and most capable equipment to secure our long-term position.
It is important to note that we do not live in benign times. The context of the military world needs to be taken into account in this debate. We are facing a resurgent Russia that is investing in its aerospace and naval power, and we need to keep pace. The aircraft coming on line shortly are formidable, but we need a long-term commitment to ensure that we have a generation to come next. I worry about this country’s sovereign defence capabilities being eroded not by long-term thoughtful strategy but by the short-termism that is currently afflicting the Government.
We need to look carefully at this. Just as the Minister told me that the apprentice who builds the last of the Type 26 frigates has not yet been born, I fear there is no such parallel in the aerospace sector. We need to make sure there is one. Having a new Defence Secretary offers the chance of a fresh start not only in the aerospace sector but in reconsidering the cuts to the Royal Navy I have spoken about elsewhere. The opportunity for a fresh start and new thinking could provide certainty for our sector to invest in the jobs and skills we need at the moment.
I fear that at times, despite the aerospace sector’s importance to our economy, we have had a victory of tactics over strategy, and I implore the Minister to consider a long-term aerospace strategy that secures the jobs we need.
My constituency has a historical link to the British defence, aviation and aerospace industry, because in 1908 the first British flight was made by Samuel Cody from Farnborough Heath. He was piloting British Army Aeroplane No. 1, which he had built himself. That was the start of a remarkable industry in and around Farnborough and it leaves a tremendous legacy, including the headquarters of BAE Systems just a few metres from the runway from which Samuel Cody took off.
That sort of courageous innovation needs to be at the heart of our defence, aviation and aerospace strategy, and I fully endorse the calls for such a strategy. Three things are important for a future strategy. First, an element of competition is important so that different providers can bid for work, driving standards up and costs down. Secondly, innovation is crucial, especially in terms of unmanned aerial vehicles and unmanned combat aerial vehicles—they are now battle-winning, critical capabilities that we need to advance on our own terms. Thirdly, exportability is fundamental. I am very encouraged by the exportability component of the excellent national shipbuilding strategy. I would like to see that sort of ethos in a future defence aviation and aerospace strategy, because being able to export our world-leading defence exports is not just a matter of good commerce and domestic jobs; it is also a matter of our global standing, global reach and global power.
May I, too, congratulate my hon. Friend Ruth Smeeth and Robert Courts on securing this debate? On
There are two big issues facing the likes of BAE Systems at the moment. One is keeping the current Typhoon work going. It is ticking away slowly; the production lines have been slowed down. That is mainly to do with this not being as saleable as we thought it might be or it not being sold hard enough. The second big issue is one that colleagues have touched on, which is the question relating to a sixth-generation fighter. That has to come, and the elephant in the room seems to be who we collaborate on that with. The Chair of the Defence Committee mentioned that we need to see integrational capability, which we are not getting a great deal of with the F-35. We are not going to get all of this if we do it in partnership with our European neighbours, and the French and the Germans must be prime candidates here. We have to develop that sixth-generation fighter and sell it far better than we have sold the Typhoon to date.
Let me start by congratulating Ruth Smeeth on making a powerful case for the need a defence aerospace industrial strategy and on getting us all here on a Thursday afternoon. Remarkably, in less than an hour we have heard from Dr Lewis, and the hon. Members for Barrow and Furness (John Woodcock), for Filton and Bradley Stoke (Jack Lopresti), for Gedling (Vernon Coaker), for Witney (Robert Courts), for North Durham (Mr Jones), for Fylde (Mark Menzies), for Caithness, Sutherland and Easter Ross (Jamie Stone), for Henley (John Howell), for Plymouth, Sutton and Devonport (Luke Pollard), for Aldershot (Leo Docherty) and for Preston (Mr Hendrick). There has been consensus across the House on the need for such a strategy.
The BAE Systems announcement in October that it was planning to slow the production on the Typhoon and Hawk jets, resulting in a huge number of job losses, shocked many of us in this place, but with hindsight perhaps we should not have been surprised. Without a defence aerospace industrial strategy there can be no certainty within industry. Of course it is not just the 2,000 BAE Systems workers who will be affected; small and medium-sized enterprises, supply chains and local communities will all feel the impact of this announcement. Importantly, we face losing key skills from this industry, at a time when we should be protecting and developing them. This strategy must look not just at procurement and plans for equipment, but at how we are going to ensure we have the skilled workforce for the future.
Reckless decisions on defence are already affecting the security of the UK. Russian submarine incursions into the waters off Scotland’s west coast are reaching levels not seen since the cold war. The former Defence Secretary admitted that himself, warning of an “extraordinary increase” in Russian submarine activity in the north Atlantic when he gave evidence to MPs last month. Despite those warnings, the UK’s ability to find the submarines has been drastically hampered since the Nimrod was scrapped seven years ago. In the past few years, we have seen American, Canadian, French and Norwegian aircraft in UK airspace, helping to pick up the slack.
My hon. Friend Martin Docherty-Hughes submitted a written question after a flight-tracking website at the end of last month tracked a friendly aircraft thought to be looking for a vessel. He asked
“which NATO countries provided Maritime Patrol Aircraft for use in UK airspace”.
This is a fundamental problem, and we will have to wait many years for the replacements. In fact, the we believe the P-8s are not going to be available until 2024, meaning that we have another seven years until they will be operational. We can only assume that Russian incursions will continue.
The Government must admit that their actions have an impact. The fall in the value of the pound has exposed the taxpayer to increased spending, and the former National Security Adviser Mark Lyall Grant stated that MOD officials were having to address a funding shortfall well before a final Brexit deal. He said that
“national security cannot be divorced from economic security…Put at its most basic, if the British economy suffers as a result of the prospect or reality of Brexit, then our ability to fund the ambitious 2015 strategic defence and security review will be put at risk, whether we continue to spend 2% of GDP on defence or not.”
These matters really must be considered as part of the industrial strategy. We also have to consider the impact of Brexit. The EU provides important opportunities for defence research and innovation, not only through the single market but through bodies such as the European Defence Agency. The Government must actively explore means to ensure that UK industry can maintain its existing relationship with European counterparts and benefit from collective innovation and joint projects.
The challenge for many companies is to be able to remain globally competitive. This is how an industrial strategy can help, regardless of whether we are talking about defence, aerospace or security. The Government must support investment in future skills and education, promote apprenticeships and technical courses, and build future capability. We need to recognise and support the regional clusters of universities, colleges and companies where collaboration is pushing the boundaries of innovation. Solutions for the defence sector have been applied to the civil aerospace sector, creating the potential for significant new business and economic expansion over the next decade.
We need to focus on collaborative programmes in Europe, the United States, South Americas and Asia if the UK is to continue in its position as a globally competitive player. Any strategy for defence aerospace should ensure that access to the best possible equipment and capabilities for the UK armed forces is safe- guarded.
I congratulate my hon. Friend Ruth Smeeth on her opening speech. The debate has been important because of the significance of the defence aerospace industry to this country and to our nation’s defence. I wish to make two points. The second is about the need for a well-thought-out industrial strategy for the sector. First, though, I wish to address the particular problem that is being experienced with BAE Systems.
As my hon. Friend Mr Hendrick said, in October, BAE Systems announced that up to 1,400 jobs were to be lost in its military aerospace business over the next three years. It has said that the cuts will be implemented by
Those job losses will have a devastating impact on the individuals affected and their families. It will also hit those communities that have a long tradition of providing workers for the aerospace industry. Moreover, many of these jobs are highly specialised and extremely skilled. Once those skills have been lost to the industry, it will be enormously difficult to replace them, as my hon. Friend Mr Jones quite accurately said.
A few days ago, my hon. Friend the shadow Defence Secretary and other Opposition Members wrote to the new Secretary of State for Defence. The letter made several important points and called on the Government to take action in a number of areas. It refers to the fact that the Hawk advanced jet trainer is currently in use by 18 countries across the world. It is therefore vital that the UK does its utmost to promote the Hawk aircraft as a good option for other nations as well. Can the Minister tell me what steps the Government are taking to promote the Hawk advanced jet trainer abroad?
As we all know, the Hawk is the aircraft of the iconic Red Arrows. In a few years’ time, the Red Arrows will need to renew their Hawks. It makes good sense for the Government to bring forward orders for the new Hawk T2s, so that there can be continuity of manufacture. The Minister for defence procurement will know that there is a precedent for that. The Government have brought forward orders for offshore patrol vessels to fill gaps and to support shipyards and workers. If the Government can do it once, they can do it twice.
There is also the statement of intent with Qatar for the purchase of 24 Typhoons and six Hawk aircraft, which was signed earlier in the year. We want to see that statement of intent firmed up as quickly as is humanly possible. The contract is tremendously important and I would appreciate it if the Minister could update us on any progress that has been made.
The problems that BAE Systems faces at the moment serve to highlight the more general problem of a lack of a defence aerospace industrial strategy. We welcome the fact that—even though rather belatedly—the Government have produced a national shipbuilding strategy, as my hon. Friend the Member for Stoke-on-Trent North mentioned. We argue that a strategy should also be produced for the defence aerospace industry. I pay tribute to my hon. Friend Vernon Coaker for the way in which he put his case.
Such a strategy should contain a number of elements. For example, there should be: full engagement with industry so that it can develop a more strategic approach to technological development and address the present and future needs of the armed forces; a long-term commitment by the Government to development by the aerospace sector with an emphasis on exports; a long-term perspective to give confidence and certainty, which in turn will encourage business investment, and a perpetual encouragement for industry to develop new, innovative approaches and technologies. That would require Government to allow industry the necessary “room” to develop more blue-sky thinking.
If we look at Britain’s national interest, we can see that it cannot be right for us to be buying so many of our capabilities off the shelf from our American allies, as my hon. Friend John Woodcock so correctly argued. In place of short-termism and going for a quick fix, the Government should see things in the long term and value the economic contribution that the defence industry makes to the British economy and to the nation’s balance of payments.
Let us not forget that defence manufacturers in general, and the aerospace sector in particular, pay corporation tax and employee national insurance, and they have subcontractors and suppliers. In this context, it has been suggested—as the Chair of the Defence Committee mentioned—that there ought to be a Government commitment to at least an examination of the development of a next generation of combat aircraft. It has been suggested that such an aircraft will enter service in the 2030s and replace the Typhoon class aircraft. What is the Government’s position on that?
We have had a good debate on an important subject. There can be no doubt that it is vital that Britain has a vibrant defence aerospace sector. We have a workforce of which we can be proud and an industry that is full of enthusiasm and commitment. We now need a Government policy that is up to the challenges we face.
It gives me great pleasure to respond to this debate. I congratulate Ruth Smeeth and my hon. Friend Robert Courts on securing it. We have heard 14 interesting and compelling Back-Bench contributions, and I will start by picking up on some of the general themes that came from them.
Many hon. Members spoke out on behalf of the incredible work of the BAE workforce in their constituencies. There has been an urgent question on this subject in recent days. The decision was made by the company, and it is currently consulting the workforce. As the Department is its largest customer, I have been in discussions with the company, asking that it looks to avoid any compulsory redundancies. As an employer ourselves, we are also in ongoing discussions regarding staff with the right skills who could fit into our organisation.
On the subject of the unfortunately named MUFC—the maritime underwater future capability—there is no hon. Gentleman who speaks up more for his constituents than John Woodcock. However, I am sure that he would acknowledge that there is a very solid pipeline of work in his constituency for decades to come. That shows the amazing work of those who live and work in his constituency. The maritime underwater future capability project is still ongoing work, and he will have seen some of the wonderfully imaginative recent ideas.
Regarding the Hawk pipeline, I can reassure the House that we continue to work on export opportunities to Kuwait and India. The RAF has 28 of the T2 aircraft, and there is no risk to the Red Arrows. A number of colleagues mentioned the P-8 aircraft. The first of that capability will come into service in 2019, and will be based at RAF Lossiemouth in the north of Scotland, which will be good for the local economy. Some excellent UK companies are in the P-8 supply chain, including Marshall with the fuel tanks, Martin-Baker with the crew seats and General Electric with the weapons pylons.
I will not take any interventions because there is so little time.
My hon. Friend John Howell spoke eloquently about the excellent Puma squadrons in his constituency. A number of colleagues asked about Typhoons. So far, just over 500 Typhoons have been built, and they are in service and have been ordered by nine countries around the world. There is still a significant pipeline of Typhoons to be built, and the statement of intent was signed with Qatar. Of course, the Government are working as hard as possible to ensure that those and the 12 Hawk aircraft are on contract by the end of the year.
Contributions from across the House have shown that not a corner of our great country is untouched by the nationwide enterprise that is defence aerospace. Indeed, we have a rising defence budget overall, and the strategic defence and security review in 2015 set out a £178 billion equipment plan for the next decade. In the last year for which we have the recorded numbers, 2015-16, the MOD had a spend of over £2 billion with UK aerospace, and that directly sustained over 7,000 jobs. In fact, I am delighted to be able to announce today that we have awarded Babcock three new contracts, worth £160 million, to provide RAF bases across the country with expert support.
As we heard in today’s debate, aerospace strikes a real chord with the British public, and we have heard some key reasons for that. There is obviously the historical connection and the fact that we have 100 years of the RAF coming up in the next year. We also know that our country would be a very different place were it not for the immense intervention of air power in world war one and particularly during the battle of Britain in world war two.
The current crop of aerospace experts in the UK has a worldwide leadership reputation. We have some of the most technically advanced and capable aerospace companies in the world. Aerospace is an engine of local and national prosperity. Up to 2,500 UK companies are involved in it, and it generates more than £33 billion of turnover, employing more than 120,000 people, including 26,000 just in research, design and engineering. Interestingly, more than 80% of the sector’s production is exported. Of the £64 billion brought into this country through defence-related exports in the last decade, 85% was generated by aerospace, and much of that was from the combat air sector.
Crucially, as the hon. Member for Stoke-on-Trent North mentioned, we are using our kit in places such as Iraq today. A combination of our Tornados and Typhoons has helped to bring Daesh to its knees and liberated millions of people from an evil death cult. I am sure hon. Members will want to join me in paying tribute to all the brave men and women who are currently serving in our aircrews on deployment.
We are absolutely right to celebrate the aerospace sector, but we also need to talk about the future. The Typhoon has been selected by nine national air forces, and we are currently pursuing exports to Bahrain, Belgium, Finland, the Kingdom of Saudi Arabia, Malaysia and Qatar. Other Typhoon nations are also pursuing export opportunities to other countries.
On the export pipeline, we are looking ahead not just one or two years. We need to look decades ahead, because we know our Typhoon aircraft will go out of service in 2040. The 2015 SDSR allocated a substantial budget over 10 years to the future combat air system technology initiative, precisely to protect and develop key design and engineering skills in our industrial base. The money includes funding for a national technology programme to maintain the UK’s position as a global leader in this area. Some of the work to mature other high-end technologies is with France, and some is with the US.
The decision on the future of combat air will require us to decide at some stage to replace the capabilities currently delivered by the Eurofighter Typhoon. It will be a complex decision, involving a clear military requirement and requiring detailed consideration of the industrial and financial implications. In terms of the timing, the decision will be made in the very early 2020s or sooner to enable a maingate decision on the procurement in or around 2025.
In conclusion, this is a key sector, and we have had a good debate highlighting a number of the issues in it. Our approach to the defence aerospace industry should be about an overall industry strategy, taking into account the business leaders, the educators, the representatives, the unions and the local economy. We must ensure that, whatever the dangers to come, the great industry we have been discussing today flies even higher, faster and further in the future.
Before I start, may I first apologise to the House? I should have directed everyone to my entry in the Register of Members’ Financial Interests.
I thank all hon. Members for participating today, and the Minister for her contribution. I am a little concerned I did not hear the words, “We will have a defence aerospace industrial strategy,” and I hope she will return to the House at some point in the next few weeks, after she has consulted colleagues, to inform us of when we will have a defence aerospace industrial strategy.
I thank everyone for the debate. I hope everyone recognises that this is an opportunity to cast renewed light on the need for an industrial strategy, supporting both industry and our colleagues moving forward.
Question put and agreed to.
That this House
has considered defence aerospace industrial strategy.
On a point of order, Madam Deputy Speaker. I wish to place on record my unreserved apology to the House for my conduct earlier. I was irritated by something that was said, and I allowed my irritation to get the better of me and I approached the Opposition Front Bench. I apologise unreservedly to the Opposition and to the House, and I have apologised to the Member in question. I believe he has accepted my apology.
I thank the hon. Gentleman for his point of order and for his courteous and unreserved apology, which is noted by the whole House.