It is a pleasure to serve under your chairmanship, Sir Edward. I apologise for my lateness; I had to be in a Delegated Legislation Committee. I congratulate my right hon. Friend Chris Grayling on securing this important and timely debate. I will focus my remarks on aircraft manufacturing, as Filton in my constituency is at the heart of the UK’s Aerospace Centre of Excellence, which is in the south-west of England.
The south-west hosts one of the largest and most significant aerospace clusters in the UK, and the top 14 global aerospace companies have a significant presence in the region. Some 17,500 people work in the sector, which generates £1 billion annually for the greater south-west. That includes the wider supply chain and research work in local universities, such as the University of the West of England in my constituency.
We must not forget that the UK aerospace sector represents more than 110,000 jobs across the country. The aviation sector is worth £52 billion a year, which equates to almost 3.5% of the UK’s entire GDP. In 2019, the aerospace sector contributed £32 billion in exports to the economy. In my constituency well over 10,000 jobs directly depend on it, and many more are involved in the supply chain.
The challenges are clear. The aerospace industry has been disproportionately hit by the pandemic, owing to the shutdown in global aviation. The sector has seen a contraction of 32% since February. Although UK GDP grew 15.5% between June and September, the aerospace industry saw only modest growth of 2.7%, which suggests that demand remains low, and that it will be one of the last sectors to recover. Manufacturers have therefore had to cut production rates significantly—by more than a third in some cases. Demand for new aircraft may not significantly increase until 2025 at the earliest, and possibly much later in the decade for long-haul aircraft. If aircraft are not being delivered, the industry will not be able to generate revenue and continue to invest in the technology, apprenticeships and jobs that we need to maintain the UK’s place in a very competitive global market.
The Government have given great support so far, which I welcome. The furlough scheme is now extended until March. There is support from the Bank of England’s corporate finance facility and funding for the Aerospace Technology Institute, which supports research and development. That sum is now approaching £9 billion.
Nearly 70 aircraft flown by UK-registered aircraft are more than 15 years old. They could be replaced by new aircraft that have better environmental standards and use at least 25% less energy. The Prime Minister announced the ambition that this country should be the first to build an all-electric commercial airliner. That will encourage the development of jet zero technology—a net zero carbon emissions target by 2050. The Government should support the scrapping of those 70 aircraft, allowing manufacturers and designers to build newer aircraft, to protect jobs and skills for the future. I have also been working closely with the West of England Combined Authority and I applaud the action it has taken, under the leadership of Tim Bowles, to support the aerospace sector, with £5 million of funding for the digital engineering technology and innovation initiative—DETI—delivered with the National Composites Centre. The combined authority is supporting both initiatives as part of the regional recovery plan. It has pivoted to focus to ensure that it supports our recovery, accelerating access to skills and ensuring that our major industry can keep going.
Apprenticeships are a great way of providing high-skilled jobs and social mobility. The Government need to be a bit more flexible on the levy. Finally, we need to get aircraft flying back to more normal numbers and see the aerospace industry earning revenue again, or we risk losing the industry in this country and our world-renowned expertise.