HL Deb 15 January 1998 vol 584 cc1132-3

3.16 p.m.

Lord Evans of Parkside asked Her Majesty's Government:

Whether they have any plans to provide financial assistance to the British aerospace industry in order to secure and create high-technology engineering jobs in the United Kingdom.

Lord Haskel

My Lords, certainly. The Government consider the aerospace industry to be very important. So, they have recently awarded launch aid of up to £200 million to Rolls-Royce for the development of three new engines, one of which, the Trent-500, will be used to power the new A340-500/600 Airbus. They are also currently considering an application from British Aerospace in respect of this aircraft. In addition, the Government support the UK aerospace industry under the Civil Aircraft Research and Technology Demonstration programme.

Lord Evans of Parkside

My Lords, in thanking my noble friend for his very helpful reply, I ask him whether he accepts that it is absolutely essential that the British Government continue to assist the aerospace industry if this country and its European partners are to produce aircraft in future which can compete with the Americans and maintain or produce further skilled jobs in this high technology industry. Will my noble friend take this opportunity to point out that previous government launch aid has not only been highly successful for the industry but profitable to the Treasury?

Lord Haskel

My Lords, certainly. Of the two Airbus programmes aided by the United Kingdom, one has repaid its capital and is now paying interest to the Government and the other is comfortably expected to pay for itself and provide a good rate of return to the Government. The Government have received over £50 million in each of the past two years.

Lord McNally

My Lords, does the Minister agree that, given the undoubted success of Airbus, it is on European co-operation that the future of aerospace in Europe depends? What encouragement for European co-operation projects do the Government intend to provide, especially as the Minister of Defence recently indicated that there is a need for greater rationalisation and co-operation if that industry is to prosper?

Lord Haskel

My Lords, my right honourable friend the Prime Minister together with his counterparts in France and Germany announced on 9th December that they looked to industry for a plan to restructure the European aerospace and defence industries and a timetable for action by 31st March. My right honourable friends the President of the Board of Trade and the Secretary of State for Defence have discussed with Ministers in other European countries the importance of facilitating industries' attempts to restructure.

Lord Burnham

My Lords, does the appointment of Mr. Kevin Smith of British Aerospace as the sole industry representative on the acquisition organisation review imply that the Government are trying to reduce or eliminate GEC's involvement in the service aerospace industry?

Lord Haskel

My Lords, I cannot comment on a particular case, and I shall write to the noble Lord.

Lord Ironside

My Lords, I welcome what the noble Lord said about investment in Rolls-Royce. What investment are the Government making in upgrading some of the major national test facilities, such as flight chambers and engine test beds, which are located at present at Farnborough? I believe that a major upgrading will be necessary to support the British aerospace industry when dealing with advanced programmes.

Lord Haskel

My Lords, the Government recognise the concern of the Defence and Aerospace Foresight Panel that aerospace R&D expenditure has been reducing. The President of the Board of Trade has indicated that she will consider the case put forward for public funding of some of those actions under the foresight programme for an increase in the CARAD funding as part of the comprehensive spending review. When that review has been completed a decision will be made.

Baroness Strange

My Lords, will the Minister give us a date for the Eurofighter coming into action?

Lord Haskel

My Lords, I am afraid not.