Manchester Airport and the Local Economy

– in the House of Commons at 4:11 pm on 2nd July 2020.

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Motion made, and Question proposed, That this House do now adjourn.—(James Morris.)

Photo of Navendu Mishra Navendu Mishra Labour, Stockport 4:20 pm, 2nd July 2020

I refer hon. Members to my entry in the Register of Members’ Financial Interests in relation to Unite the union, of which I am a member. Unite represents thousands of workers in the aviation industry and has been campaigning for Government support for the sector throughout the covid-19 pandemic. I also pay tribute to my hon. Friend Mike Kane, who has been a tireless campaigner for workers at Manchester airport.

Manchester airport is a core part of Greater Manchester’s economy. It employs 25,000 people directly on site and 76,000 indirectly, generating £4.5 billion for the local economy. It has links to 210 destinations—more than any other UK airport—and is an international gateway for trade and travel, acting as a major draw for investment and development in Greater Manchester, giving our region a huge competitive advantage. For example, in the past two years its direct route to China has helped to grow export values in the north by 41%, bringing with it £250 million to the visitor economy.

The whole supply chain relies on a successful Manchester airport. Catering companies such as Newrest and hotel chains such as Hilton have been affected by the lack of footfall during lockdown and have been forced to make cuts. Furthermore, an Independent Transport Commission report revealed that 55% of the workforce in the area surrounding Manchester airport are employed by aviation businesses. As a result, Manchester airport is central to everything we do in the north-west and will be a major catalyst for kick-starting the regional economy as we emerge from the first phase of the coronavirus crisis.

The fallout from covid-19 has been catastrophic, with passenger levels and revenue dropping to historic lows of between 1% and 4% of those seen in the same period last year. Thousands of workers face redundancy if the Government do not intervene to save the airport, its airlines and the businesses that rely on it as a key hub. More than 1,500 redundancies have been proposed to date, with well over half of them at Swissport. Widespread losses have already been reported for airlines including Virgin, Ryanair, Jet2, TUI and—just this week—easyJet, with more to follow in the coming weeks.

Manchester Airports group, which also operates London Stansted and East Midlands airports, faces a difficult restructuring programme with 25% of its leadership and management positions being cut and the remaining 75% subject to restructuring. All of that will take place before the end of the furlough scheme, when further redundancies are almost certain to follow. While the furlough scheme has been of some help, the money is little more than a drop in the ocean, accounting for just 5% of the airport’s fixed costs.

The situation will not simply end with a resumption in air travel. Even with an increased number of air bridges and an end to quarantine, the aviation industry has warned that it may not return to anything like normality until the second half of 2021, and even then the numbers are expected to be at only about 90% of pre-crisis levels. The Government must therefore consider a sectoral support package that ensures the industry has the backing and confidence it needs to recover as quickly as possible, mitigate job losses and protect skilled jobs.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South

Thank you for giving way in this important debate. Would you agree that while airports in our regions provide many direct jobs, as you outlined, they also have an important role—

Photo of Eleanor Laing Eleanor Laing Deputy Speaker and Chairman of Ways and Means

Order. Would the hon. Lady mind saying that again, but, instead of saying “would you agree,” please say “would he agree”?

Photo of Eleanor Laing Eleanor Laing Deputy Speaker and Chairman of Ways and Means

No, no. Everyone makes a mistake now and then. It is not terrible, but it is time that we managed to grasp this and get it right. I would be grateful if the hon. Lady would set an example, please.

Photo of Rachel Hopkins Rachel Hopkins Labour, Luton South

Thank you, Madam Deputy Speaker. I appreciate that as a newer Member I am practising the ways, and I will get it right. Does my hon. Friend agree that regional airports have an important role to play, not only for all the direct jobs they provide in our areas, but for the wider jobs and services they can support, such as at Luton airport? It is in my constituency and it is the fifth largest airport in the UK. It provides £20 million a year in direct dividend to Luton Borough Council, which provides jobs and services, and £10 million a year direct to the voluntary and community charitable organisations. Does he agree on the importance of that role, too?

Photo of Navendu Mishra Navendu Mishra Labour, Stockport

Absolutely, I agree. In the past few years, especially in the past decade, councils have faced a lot of cuts as a result of the austerity regime, including my local Stockport Metropolitan Borough Council and the Greater Manchester Combined Authority. They depend on income generated by the airport, and I thank my hon. Friend for raising that issue.

If the Government do not step in, businesses will continue to collapse and tens of thousands of workers will lose their jobs. In the north-west, it is crucial that we do not see a repeat of what happened to Thomas Cook last year, which had a huge impact on the 3,000 employees who lived and worked across Greater Manchester, including those who worked at five branches across the borough of Stockport, including the one at Merseyway, in my constituency, as well as the 900 cabin crew who operated out of the airport.

In his Budget on 17 March, the Chancellor promised a financial support package for the aviation sector. That is almost four months ago, but we are still waiting. It is completely unacceptable, given how precarious the current situation is for the industry, that we are still waiting. The Government urgently need to consider sector-specific furlough support, such as an extension to the coronavirus job retention scheme, which is scheduled to end on 31 October. Such an extension should also come with a warning that no company is allowed to accept public funds from the scheme and use them to cover the cost of making staff redundant. The Government must also consider prioritising loans or taking a stake in companies, and ensure that when that happens businesses that agree to such support should be prohibited from paying dividends, from undertaking share buy-back or from capital contributions, with a cap on executive pay until 12 months after the loan is fully repaid.

Business rates make up a significant proportion of our airport’s fixed costs, at a time when the revenue is close to zero. In recognition of that, business rates relief has already been provided to airports in Scotland and Northern Ireland, and the UK Government should correct that anomaly for airports in England, too. They should also support local authorities so that they do not face further financial strain. Temporary measures should also be considered, such as a reduction in air passenger duty, which makes up a significant proportion of the cost of tickets and limits the profits that airlines can make. In addition, support is needed for the temporary funding of the Civil Aviation Authority.

Many businesses have rightly been praised for the efforts they have made during the crisis to support and retain their workers, utilising Government loans, where needed, to retain staff on full pay or opting to furlough staff rather than lay them off. Those that have gone down the route of Government support have done so in good faith, in the hope that this will be no more than a short-term measure. The flip side is companies that take advantage of the system, using taxpayers’ money to prioritise the protection of shareholder dividends ahead of the protection of their own workers.

One such company is British Airways, whose chief executive, Willie Walsh, was hauled before the Select Committee on Transport in May. It branded Mr Walsh’s company a “national disgrace”. Despite having a parent company, International Airlines Group, with total assets of £10.7 billion and profits last year alone of £2.6 billion, at the very first opportunity Mr Walsh furloughed 22,626 of his employees. In doing so, it was claimed that the measures were

“to protect jobs and ensure that BA comes out the other side of this crisis in the best possible shape”.

What is clear now, just weeks later, is that the protection of jobs was never his priority, beyond those of BA’s top executives.

Despite the fact that IAG was in a position to retain its entire workforce on full pay for more than a year, even without Government support, Mr Walsh announced that all 42,000 of British Airways’ workforce would be made redundant, with 30,000 fired and rehired on inferior contracts, with worse pay, terms and conditions. That means that 12,000 people were made redundant. Furthermore, failure by employees to sign the paperwork that contains a clause allowing the company to temporarily lay off workers will result in instant dismissal.

As part of its plans, British Airways’ contact centre in Didsbury, Manchester, is set to be affected, with 350 workers being faced with redundancies. That is completely unacceptable, and I urge the Minister to look at measures for holding British Airways to account, including reviewing the lucrative slot allocations that it is given as a legacy carrier, which, in the case of London Heathrow, in the constituency of my right hon. Friend John McDonnell, amounts to more than 50% of all spaces at the airport. The question must be, if BA is targeting the legacy staff, many of whom have spent decades of loyal service building BA’s brand, why should it be rewarded with legacy slots? It cannot pick and choose which legacies it keeps.

It is also incredibly important that our efforts to tackle climate change are not lost as we revive and rebuild our aviation sector. Indeed, this can and should be an opportunity to explore new technologies further and green the economy with well-paid, unionised jobs. That means inserting clauses into the financial support that the Government provide for businesses to set out a clear programme of transitioning to more efficient and environmentally friendly operations, including cleaner fuel options. There should also be consideration of publicly financing smaller airports and air traffic control as well as specific routes within the UK aviation network to retain much-needed connectivity.

There are many examples around the world of Governments backing the aviation sector. The US, for example, has injected $45 billion into the sector. Another good example, closer to home, is France, where Emmanuel Macron’s Government have unveiled a series of historic rescue packages, including one of almost £7 billion for Air France, which included £4 billion in bank loans guaranteed by the state and £3 billion in loans direct from the Government, all of which has helped to safeguard Air France’s 84,000 employees. As part of the rescue package, France’s Finance Minister was clear that airline bosses needed to bring forward a plan for reducing carbon dioxide emissions and transforming their fleet to be less polluting. Similar steps would be very welcome in Britain.

Ultimately, as lockdown measures are eased, people’s health must remain a priority ahead of profits. That means that companies must be compelled to take all possible steps to ensure that appropriate action is taken, such as providing proper PPE for all staff and enforcing the Government’s social distancing guidelines. That is why, last month, the Mayor of Greater Manchester, Andy Burnham, launched a “Safely Reopening Greater Manchester” campaign, which is an initiative to ensure that the region’s economy can reopen safely from the covid-19 lockdown.

The Greater Manchester Combined Authority, led by Mayor Burnham, is also looking at initiatives such as the regional brokering scheme, to match people at risk of being made redundant when the furlough scheme ends with parts of the economy where there are opportunities, as well as exploring initiatives such as the future jobs fund.

In conclusion, it is time for the Government to act. All 10 local authorities in Greater Manchester have already intervened to support Manchester Airport Group, providing a combined package of more than £250 million to protect long-term investments and safeguard tens of thousands of jobs that rely on the airport as a major engine of the local economy. I urge the Minister to consider all the measures that I have set out in this speech and ensure that our aviation sector can build back better and be the economic catalyst that our country desperately needs if it is to emerge stronger from this crisis.

Photo of Andy Carter Andy Carter Conservative, Warrington South 4:33 pm, 2nd July 2020

Thank you, Madam Deputy Speaker, for calling me to speak in this important debate, and I thank Navendu Mishra for securing it.

Although I do not live in the constituency in which Manchester Airport is based, I, like many other Cheshire residents, live on the flight path. During normal times, I can sit at my kitchen table and count the planes out in the morning and then count them back in in the afternoon. In fact, I have developed a bit of an unhealthy obsession. I open the app just to find out where those planes are going and, on many occasions, wish that I was going with them.

One thing that has really struck me over the past few weeks of the crisis is just how passionate people are about having a flagship northern airport on their doorstep. I do not just mean the plane spotters who we see queuing to get into the runway aviation park. People really do care about having on their doorstep somewhere from where they can reach out to the world. Manchester’s role as a northern hub airport, its position as the most used airport in the north, and the fact that it is the only airport outside London that has two full-length runways mean that it really does have a critical role for our northern economy, and we take real pride in that facility. It links us to 210 different destinations, more than any other UK gateway, and has direct links to 35 of our top 50 export markets. It really is fundamental to the northern powerhouse economy. No longer do we have to rely on the south to export and trade, and as somebody who worked with businesses across Europe and in Asia before coming to this place, I can say that there is nothing more frustrating than living next to Manchester airport and knowing that I have to drive to Stansted or Heathrow to get a flight just to jump across the channel.

Today, flights passing over my house have gone from hundreds to four or five a day, and most of those are domestic. That is at the heart of the issue for Manchester airport and the wider economy. Warrington’s close proximity means that families have moved there and have chosen to live there. The risk to our local economy and its recovery is significant because of that massive drop in passenger levels. The risk is to staff who work airside, crews, pilots, air traffic controllers, engineers and Border Force guards. All of them live in Warrington South, as well as other constituencies in the north-west of England. The supply chains, which feed and fuel the sector, are part of our local economy.

While this debate is not about British Airways, I share the hon. Gentleman’s views about the way that British Airways has handled many of the negotiations with its staff at an incredibly difficult time.

Restarting the aviation sector is a vital part of the UK’s economic recovery, for Warrington, for the northern powerhouse and for the UK, and I very much look forward to hearing from the Secretary of State for Transport when he announces plans to allow flights to resume shortly. Indeed, I was really pleased to hear him confirm this morning that he is looking at common health protocols to keep passengers safe. The Department for Transport, and in particular the Minister, deserves credit for the incredible efforts that they have taken to ensure that we can see a recovery in this sector. At the same time, during this health crisis it really is important that we ensure that countries where infection rates are high are regarded as high risk, and that people coming into this country from those locations self-isolate to make sure that we do not spread the disease further.

This is an industry that contributes billions of pounds to our local economy and supports thousands of jobs, and it is growing. The centrepiece of the £1 billion Manchester airport transformation programme, the extension of terminal 2, has been delayed—put on hold—because of what has happened over the past three months. It is an oven-ready project that has been privately funded, for world-class infrastructure that relies on a rapid and strong economy to enable it to deliver the economic benefits to the north and to level up. I am sure none of us in this House doubts that the economic situation facing the industry is anything less than critical, with passenger levels dropping to historic lows.

Restarting the aviation sector is a vital part of the UK’s economic recovery. Aviation, the facilities that it supports and the travel industry are crucial to the economic growth of the region, to the north, to the northern powerhouse and to Warrington, and I urge the Government to take full steps to ensure that we can grow our sector as much as possible.

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Transport) 4:38 pm, 2nd July 2020

I congratulate Navendu Mishra on securing this debate about Manchester airport and the local economy, and I thank my hon. Friend Andy Carter for his contribution. I know that Mike Kane has a keen interest in Manchester airport but is unable to speak in the debate. I have listened carefully to the points that the hon. Member for Stockport has made and will endeavour to address as many of them as I am able to.

As Members across the House will be well aware, these are incredibly challenging times for the aviation sector. Covid-19 has presented unprecedented difficulties for the industry, but we must not forget that the aviation and aerospace industry is a British success story. Before the impact of covid-19, the UK aviation sector contributed at least £22 billion to the UK economy each year and directly supported around 230,000 jobs spread across the UK. Around 12% of those jobs are in the north-west, so I am mindful of the impact that covid-19 is having on communities across the region.

Aviation is one of the sectors worst affected by covid-19, and areas such as Manchester, with its large airport and supply chain, are particularly affected. Having held regular discussions with the whole sector since the pandemic began, I met again with senior management from Manchester airport earlier this week. I want to thank them for their constructive engagement throughout this period, as we continue to work collaboratively with the sector to ensure its recovery. I was very encouraged, as I am sure the hon. Member for Stockport was, to hear this week that Manchester airport plans to reopen terminal 2 from 15 July, following the opening of terminal 3 this week. I know that we still have a long way to go, but this shows the beginning of the sector’s recovery, as flights once again take to the skies.

The restart comes on the back of the unprecedented package of measures that the Chancellor put in place to protect the economy and jobs. The hon. Member spoke about support for this particular sector, and I am afraid that this is where we disagree. The support provided was unprecedented and has enabled airlines, airports and ground handlers to benefit from a significant amount of taxpayer support during the most critical time. It did not end there. The Chancellor and the Secretary of State for Transport were incredibly clear that any business needing further support, having exhausted all the economic measures that were put in place, will have the ability to talk to us about further support. We stand ready to speak to any business that is in that situation and has used all that support.

Photo of William Wragg William Wragg Chair, Public Administration and Constitutional Affairs Committee, Chair, Public Administration and Constitutional Affairs Committee

I apologise to you, Madam Deputy Speaker, for arriving late, and I congratulate Navendu Mishra on securing the debate. Have there been any approaches from the likes of Manchester airport to take the Minister up on the offer that she appears to be making?

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Transport)

Obviously, commercial discussions are not for discussion in the Chamber, but I reassure my hon. Friend that I am in regular communication with all the airports in the United Kingdom, and officials in the Department are in weekly contact with them.

The measures put in place include the Bank of England’s covid corporate financing facility, which provides funding to businesses to pay wages and suppliers; the coronavirus job retention scheme, which helps firms to keep people in employment by allowing businesses to put workers on temporary leave; and the business interruption loan scheme. All those measures have been designed to ensure that companies of any size receive the help they need to get through this difficult time, including airports, airlines and the wider supply chain.

Beyond that package, many firms are getting support from established market mechanisms such as existing shareholders—the hon. Member for Stockport mentioned the support that has been provided by local authorities—and bank lending and commercial finance. We have been looking at other flexibilities to give the sector. The Civil Aviation Authority is working with airlines, airports and ground handlers to provide flexibility within the regulatory framework to help them manage the impacts of covid. We also welcome the response by the European Commission, which relaxed the 80:20 rule on slots, and we continue to engage with organisations across the sector on that issue. Nevertheless, I would not want to underestimate the challenges to the sector and to airports such as Manchester, because despite the measures that we have put in place to protect the economy, there remain serious challenges for the aviation sector.

I want to turn to the announcements of redundancies by a number of companies, which the hon. Gentleman has mentioned. As he said, these are distressing announcements for employees and their families. While they are commercial decisions, they are decisions that I profoundly regret as Aviation Minister. Redundancies are not something that should be considered lightly, and if organisations find themselves having to consider these measures, I hope that they will do so sensitively. I hope that they will take into account the dedication and professionalism that their employees have shown, and that they will act within and, where possible, beyond the requirements and the spirit of all relevant legislation.

The hon. Member for Stockport and my hon. Friend the Member for Warrington South mentioned British Airways in particular. I have spoken directly to BA and to the IAG chief executive, Willie Walsh, to discuss the organisation’s plans and its engagement with staff and union representations. I have offered to support these engagement efforts where possible, and where it is appropriate to do so. I am also in regular communication with the unions that are particularly affected by those redundancies. I encourage BA and the unions to engage constructively with each other, and to strive to provide employees with as much certainty as possible during this challenging time.

I would now like to turn to the sector’s restart and the next stage of our plan to help it to recover. We need aviation. It is vital to our future as a global trading nation and plays a critical role in local economies, whether in Manchester or elsewhere. We have established the restart and recovery team, with an expert steering group to ensure a truly collaborative approach between Government and industry. Last month, we published the aviation health guidance for operators, as well as the safer air travel guidance for passengers. This forms a vital first pillar as we seek to ensure that our aviation sector returns to its full strength as soon as possible.

Photo of Andy Carter Andy Carter Conservative, Warrington South

The Minister has mentioned the Manchester economy, but does she agree that Manchester airport affects not just the Manchester economy but the north-west economy—particularly Warrington, Cheshire and across to Merseyside? The size of Manchester airport means that it is a much bigger operation and affects much more than just the Manchester economy.

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Transport)

My hon. Friend is correct. Major infrastructure such as airports always have a wider impact than the activity that they directly partake in. The success of Manchester airport has been a big contributor to the wider local economy and the supply chain, and that is something that we are very mindful of within the Department for Transport. We are working with our colleagues across Government to ensure that we understand the full impact of the difficulties within the aviation sector.

I would like to point out that the Manchester Airports GroupMAG—and Manchester airport were among the leading members of the expert steering group working with us to devise that health and passenger guidance, and I thank them very much for that. We have built on progress, and on Monday we announced that the Government would shortly begin to ease the health measures at UK borders, allowing passengers to be exempt from self-isolation requirements in certain circumstances on arrival in the UK. The joint biosecurity centre, in close consultation with public health and the chief medical officer, has developed a categorisation of countries and territories that present a lower risk, so that passengers entering the UK from those places will not require 14 days of self-isolation. This has been informed by factors including the level of covid within a country, the number of new cases and the expected trajectory in the coming weeks. Further details, including a full list of those countries from which arriving passengers will be exempt from self-isolation, will be announced shortly.

Throughout this process, public safety has been at the heart of our decision making. We have worked closely with health and policy experts from across Government to ensure that the steps we are taking are gradual and minimise the risk of new covid-19 cases, while helping to open up our travel and tourism sectors. We want the aviation sector to return to normal operations as soon as possible. However, even with this week’s announcements, there is a great deal of uncertainty around how long this will take, given the truly international nature of the sector. We want to ensure a safe customer journey in the UK and abroad. We also want aviation to be as sustainable and environmentally friendly as possible. The aviation sector must be a green one that creates high-quality, high-skilled jobs.

Photo of Navendu Mishra Navendu Mishra Labour, Stockport

Will the Minister commit to looking at the proposals put forward by the French Government to support the sector, and the conditions that they have introduced with regard to using cleaner fuel, reducing emissions and supporting the wider economy with a sectoral package?

Photo of Kelly Tolhurst Kelly Tolhurst Parliamentary Under-Secretary (Department for Transport)

The hon. Gentleman will have heard, and maybe seen, the Secretary of State announce last week the formulation of the Jet Zero Council, which has been supported by the industry and will bring together the Government with aviation and environmental groups to make net-zero-emissions flights possible. I have spoken with Manchester airport and others across the industry this week, and there is a real determination from the sector to make this a vital pillar of the recovery. We have an industry that wants to deliver on this agenda and are working with the industry, with or without that bespoke support. It is important that we understand the profound impact that covid-19 will have on the way that people’s lives, work and travel will change. It is clearly sensible that our plans to reduce emissions understand that and take it into account.

I thank the hon. Gentleman for securing this debate. Manchester airport is the only British airport other than Heathrow to operate two full-length parallel runways. It handled its first scheduled flight in 1938—a KLM Douglas DC-2 to Amsterdam—and in 2010 it became the first airport of its size in the world to have a daily A380 service. As Aviation Minister, I have been given the opportunity by this debate to address concerns. I am mindful of and take on board the concerns he raised around slots, the green recovery and the particular strain that local authorities may feel as a result of supporting their local airports.

As I have highlighted to the hon. Gentleman, the Department for Transport is committed to staying close to our airports and working with them in the best way possible. We are all aware of the scale of the challenge facing the aviation sector and the economy as a result of covid. The efforts that we are making in partnership with the sector are intended to ensure that UK aviation can recover, and that airports such as Manchester and the communities they serve can recover and prosper in the future, just as they have done in the past.

Question put and agreed to.

House adjourned.