HC Deb 21 March 2002 vol 382 cc415-7
1. Dr. Doug Naysmith (Bristol, North-West)

What steps she is taking to encourage research and development in the UK aerospace industry. [42845]

7. Mr. Andrew Turner (Isle of Wight)

If she will make a statement on the future of the aerospace industry. [42853]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt)

The Government are taking a number of steps to support and improve the competitiveness of the United Kingdom aerospace industry. These include providing substantial launch investment and we are providing support of £20 million a year through the civil aeronautics research programme.

Dr. Naysmith

I thank my right hon. Friend for that reply. May I, however, press her on the funding of CARAD—the civil aircraft research and technology demonstration? The aerospace industry, which has been identified by the Government as a priority area for investment and encouragement, depends heavily on research. Yet UK public investment in research, particularly in aerospace research and development, has decreased significantly over the past decade. Funding through the CARAD programme in particular has fallen by 80 per cent. over that period. Will my right hon. Friend undertake to review that programme and commit more resources to aerospace research and development?

Ms Hewitt

I entirely agree with my hon. Friend's point about the importance of research and development in this world-class sector. I am looking at whether it is possible to do more through the CARAD programme and others to support research and development in aerospace.

Aerospace companies will benefit significantly from the Chancellor's proposal to extend the research and development tax credits from the small and medium-sized enterprises, to which it already applies, to larger companies. I am sure that my right hon. Friend the Chancellor will take account of my hon. Friend's views in reaching the public spending settlement.

Mr. Turner

I thank the Minister for agreeing to visit the Isle of Wight, a visit that is eagerly anticipated by former staff of GKN Westland and the many others on the island who work in the aerospace industry. Can the Secretary of State give some hope to those who still have jobs in the industry that those jobs will be secure in the future, and reassure them that help will be given to attract new jobs to the island for the benefit of the 650 who have lost their jobs at Westland?

Ms Hewitt

I should like to extend my sympathy to the hon. Gentleman's constituents who lost their jobs at Westland and to their families. Talking to a number of business leaders and trade unionists in the aerospace sector, I find that although the sector is going through a very difficult time, exacerbated by the effects of 11 September, the medium-term outlook is very bright as demand recovers in the world economy, and particularly as the impact of the Lockheed joint strike fighter contract is felt. I look forward to my visit to the hon. Gentleman's constituency, and believe that the medium and longer term outlook for workers and companies in the aerospace sector is bright.

Mr. Kevin Barron (Rother Valley)

I thank my right hon. Friend for the support that the Government have given, both directly—and, through Yorkshire Forward, indirectly—to the investment in my constituency for an advanced manufacturing aerospace research and development project between Boeing and Sheffield university. I hope that we can get the same support for the neighbouring manufacturing companies that are working on aerospace projects in my constituency to make sure that we build from research and development into the most advanced aerospace manufacturing base not only in the United Kingdom but potentially in the world.

Ms Hewitt

I entirely agree with my hon. Friend. I was delighted to hear Tom Bell, the chief executive of Boeing in the UK, say recently that in order for Boeing to be a world-class company it needed to be in partnership with the United Kingdom's world-class universities. Those partnerships between industry and our science base will ensure that our aerospace companies remain at the forefront of innovation and are thus in the competitive position to take advantage of the upturn in demand that will quite clearly come through in the world economy.

Mr. Richard Page (South-West Hertfordshire)

Will the Secretary of State place in the Library details of the support that the Government give to small businesses in the supply chain for this most important industry—particularly for project and development work and enabling them to quote for projects? Will she include comparisons relating to what our European competitor countries do for their small businesses?

Ms Hewitt

I shall be happy to provide a note along those lines. I remind the hon. Gentleman that through programmes such as the SMART awards, through the research and development tax credits for small and medium-sized companies and through partnerships with the universities, we are already doing a great deal. Over the next year centres of manufacturing excellence will be established in every region of the country, along with programmes like the Centre for Aerospace Innovation in the north-west of England. All that will help to ensure that the smaller companies in the supply chain, in aerospace in particular and in manufacturing in general, have the chance to go on increasing their productivity and sales and continuing to provide good employment.

Paddy Tipping (Sherwood)

Companies such as Rolls-Royce, which has a strong base in the east midlands, have suffered badly since 11 September, but in the long term they have the opportunity of a very good future. That will come about only if they are able to compete in research and development for the future against countries like Canada.

In my right hon. Friend's discussions with the Chancellor, will she point out the real need for investment in research and development?

Ms Hewitt

I continue to make the case not only for an increase in our investment in the science base but for an increase in both public sector and private sector investment in research and development and in knowledge and technology transfer. Next month I shall open the centre for manufacturing excellence in the east midlands. That will benefit aerospace and manufacturing companies in the region.

We have, of course, examined the Canadian scheme to which my hon. Friend referred. It is always helpful to see what we can learn from other countries' initiatives. However, it is worth pointing out that, according to the latest figures, business research and development investment is lower in Canada than in the United Kingdom.

Lady Hermon (North Down)

As I shall be visiting Shorts-Bombardier Aerospace in Belfast tomorrow afternoon, could the Secretary of State outline what measures are being taken to encourage research and development there?

Ms Hewitt

I have had several discussions with executives and trade unionists at Shorts-Bombardier since I became Secretary of State. That company, like others in the sector, will benefit from the tax credit for R and D from larger companies as well as from the support that we can give, for instance, through the Export Credits Guarantee Department. We shall continue to support the company, and many others across the country, in ensuring that they have the skills, technology and access to export markets that they need to continue to succeed and to provide good jobs in high-technology manufacturing.