Lear Fan Project (Hansard, 3 July 1984)

§ Lord Bruce-Gardyne
My Lords, I beg leave to ask the second Question standing in my name on the Order Paper.

§ Viscount Whitelaw
My Lords, in my own right, with perhaps a little more preparation and a little more understanding, I shall seek to answer my noble friend.
Under agreements concluded before September 1982, Her Majesty's Government provided Lear Fan Limited with funds totalling £25.3 million and a bank guarantee of 15 million dollars out of a total funding 140 requirement of 90 million dollars. In September 1982 Her Majesty's Government agreed to provide further public funds up to a maximum of 30 million dollars in the form of loan capital, matching private sector funds of 60 million dollars, and to extend the bank guarantee to 31st December 1986. To date, the company has received approximately 20.9 million dollars from public funds under the September 1982 agreement.
In addition, since 1980 the company has received £1.02 million under various other schemes—primarily training and short time working schemes.
At present the company has about 350 employees in Northern Ireland. On 31st May the company announced the temporary closure of the Northern Ireland factories for a period of 6–8 months from the beginning of July. This will mean some 320 of the workforce being laid off, leaving 20–30 people working for the project.

§ Lord Bruce-Gardyne
My Lords, I am most grateful to my noble friend for that information. Would he be inclined to agree that after all the delays and disappointments which have occurred in this project, and in particular its consistent failure to obtain certificates of airworthiness in the crucial United States market, hope deferred is beginning to make the heart a bit sick; and that this, following on the De Lorean project, is entitled to make one wonder whether the Ulster Province is really altogether wise in relying so heavily on apparently thousand to one outsiders? Can my noble friend assure the House that there would be no question at all of any further funds being transmitted to Lear Fan at least until an American certificate of airworthiness has been obtained?

§ Viscount Whitelaw
My Lords, I am grateful to my noble friend. I am informed that the company is now well into its certification programme. Everything of course will depend on the success of getting that certification. Without a certificated aircraft there will be no jobs either in Reno in the United States of America, where certification work is taking place, or in Northern Ireland. It is therefore necessary that the company concentrates its resources on achieving that goal. Certainly I can assure my noble friend that the Government will be extremely cautious so far as any further funds are concerned, and that the main purpose at the moment is to achieve the certification programme.

§ Lord Underhill
My Lords, does the noble Viscount recall that these matters were dealt with very fully in our recent appropriation debate on 21st June when his noble friend Lord Lyell answered a number of these points? Can the noble Viscount confirm that if the certification of airworthiness is granted the production will be centred in Northern Ireland? Can the noble Viscount say what has happened, or will happen, to the 315 workforce which has been laid off? Does this mean that they are eligible for redundancy pay, or does it mean that the whole skilled workforce is being dispersed?

§ Viscount Whitelaw
My Lords, on the noble Lord's second point I understand that discussions between the 141 company and their workforce are proceeding at this moment. I think it would be unwise for me therefore to comment in detail on that. If certification is achieved, then certainly the work will be carried out in Northern Ireland, and indeed would represent considerable employment opportunities in Northern Ireland. It must therefore be the very great hope that that certification programme will be carried forward and that certification for the aircraft will be achieved.

§ Lord Dean of Beswick
My Lords, would the noble Viscount agree that if the Government cut off funds immediately, as suggested by the noble Lord, Lord Bruce-Gardyne, the total withdrawal of Government support now may well prevent certification being obtained, which of course is crucial to the whole future of the project? Would the noble Viscount use his best endeavours with Her Majesty's Government to deal with this very carefully before taking any such tragic decision because of the high levels of unemployment in that province?

§ Viscount Whitelaw
My Lords, certainly I assure the noble Lord that it is the Government's hope that the certification programme will go forward, that the aircraft will be certificated, and that therefore the work on this aircraft will be carried out in Northern Ireland. That has been the purpose of the loans put forward so far by Her Majesty's Government and it is our wish that it should succeed. If it does succeed that will be greatly to the benefit of the employment in Northern Ireland where it is so desperately needed.

§ Lord Blease
My Lords, would the noble Viscount not agree that from the earliest stages the Lear Fan project was recognised and acknowledged as a high risk enterprise project? Will he not agree also that with the use of this new technology Lear Fan has a fair lead time in this area? Will he accept that his assurances to the House today, that the Government and the Northern Ireland Office are making every effort to ensure that the agreement that has been reached to maintain employment in Northern Ireland, will be warmly welcomed by the workers at the Lear Fan factory? I understand it is a fact—and I ask the noble Viscount whether he is aware of it—that workers are still being employed on the project at Nevada. Let us hope that this project will be revived in Northern Ireland again.

§ Viscount Whitelaw
My Lords, I am grateful to the noble Lord. I think he will know that the company is now well into the certification programme. Extensive static testing has revealed several defects in the initial design. The correction of these defects, in particular the most recent fuselage failure, has resulted in a significant degree of slippage in the schedule. The company's revised certification programme forecasts that the initial certificate for an unpressurised aircraft will be obtained by mid-November 1984, and the supplement to the certificate for a pressurised aircraft will be obtained by mid-February 1985. If these dates are met that would mean a considerable reassurance to everyone. Those are the aims at the moment and we must all hope that they will be achieved.

§ Lord Bruce-Gardyne
My Lords, may I press my noble friend one stage further on what I think he said earlier? I thought I understood him to say that Her Majesty's Government would be extremely cautious about committing more funds this side of the endlessly deferred satisfactory conclusion of the process of certification in the United States. But surely all experience suggests that it would be the height of folly to commit any more funds, over and above those that have already been committed, at least until this certification has been achieved.

§ Viscount Whitelaw
My Lords, naturally I agree in principle with what my noble friend said. When I said that the Government would be extremely cautious, I meant that. I always think it is fateful in these sort of negotiations and discussions to close up all options altogether. I was merely being very cautious in saying that the Government would be extremely cautious.