Taxpayers 'face bill for redundancies at BAE Systems'

In September, bosses at the defence giant confirmed that there will be 565 redundancies at Samlesbury and 843 at Warton, with a three-month consultation over jobs due to finish on Boxing Day.

The firm also signalled the end of production at its factory in Brough in East Yorkshire, which currently employs 1,300 workers.

But Conservative MP David Davis today claimed the Government could have to pay tens of millions of pounds to help make the workers redundant under rules designed to provide guarantees for certain sensitive industries.

He said: "When BAE lays off 3,000 workers, it's not the BAE shareholders who are going to meet the cost.

"The way the system works is that between £60 million and £110 million will be paid by the taxpayer - not by BAE - in order to destroy 3,000 jobs.

"This is outrageous: a policy designed to defend our defence capability is being used to make us subsidise the destruction of that capability.

"A policy designed to defend and protect British jobs is being used to destroy British jobs."

The revelation came as the Commons debated how to preserve skilled British defence jobs following BAE's announcement.

Mr Davis (Haltemprice and Howden) urged the Ministry of Defence (MoD) to refuse to pay any redundancy money and tell BAE: "This is your decision, the outcome of your strategy. If you don't like it, I'll see you in court."

Mr Davis said the National Audit Office would investigate any redundancy deal, which he hoped would "stiffen the MoD's spine".

He went on to raise fears for the jobs of staff building BAE's Hawk jet, which is used to train RAF pilots.

Mr Davis said the plan to axe jobs was "an agonising shock" and "grievous and symptomatic of the decline in manufacturing in this country".

He branded it a "human and industrial tragedy" and warned of further job losses over contracts for BAE's Hawk T-X, the plane used by the Red Arrows display team.

Mr Davis said: "If we win the potentially huge order for the T-X, between 350 and 1,000 advanced Hawk aircraft will be manufactured in Texas, not in Britain."

He added: "Whether by accident or design, BAE is effectively moving to a position where the emblematic Hawk aircraft, the Red Arrows aircraft, is going to be made abroad.

"That is where some of our jobs are going."

He drew comparisons with the Harrier jump jet, designed by BAE's predecessor British Aerospace and flown in the 1982 Falklands War.

The technology was given to the US, with American firms building the plane.

"It was developed with British taxpayers' money and tested by British test pilots, yet today it is an American aircraft," said Mr Davis.

"As far as I can tell the Americans paid very little, if anything, for the transfer of the intellectual property rights in the most innovative aircraft development post-war.

"British money, British skill - and American jobs."

He added: "What happened to the Harrier yesterday, what is happening to the Hawk today, will happen to other aircraft tomorrow."

Mr Davis accused BAE of "strategic stupidity" by abandoning commercial airliners and selling its stake in European aircraft manufacturer Airbus.

Mr Davis said: "Five years ago, before the banking crash and the sudden constraints on public spending, defence sales looked lucrative and civil aviation looked just a bit too competitive.

"Now it is all reversed, with commercial aviation booming.

"But in 2006, in what must count as an astonishing piece of strategic myopia, the company made a hideously short-term decision and disposed of its stake in Airbus and withdrew from civilisation.

"Now, Britain, the creator of the first jet airliner, no longer owns any producers of civil airliner.

"Today the workforce are paying the price for that strategic stupidity."

Mr Davis also pointed out BAE's top bosses' pay had rocketed over the past three decades.

He told MPs: "There has been a lot of criticism in recent weeks of very high level executive pay; some senior executives have enjoyed an increase of over 4,000% in 30 years.

"I do not disapprove of high pay when it is earned.

"Despite severe criticism of its senior management over the years, BAE senior executive pay has grown by 8,000% in the same period.

"Perhaps they can justify that by doing their duty, not just by their shareholders, but by their employees and their country too."

Defence Equipment Minister Peter Luff said BAE had sent members a letter in advance of the debate but described it as "disingenuous".

He said: "In May 2010 a request was made by the Eurofighter Typhoon industrial consortium - and I emphasise industry, not Government - to slow down the rate of production of aircraft to free up industrial capacity in Eurofighter parts companies.

"The UK along with the other partner governments agreed to this proposal in July 2011 on the basis it would not adversely effect build up of our own Typhoon fleet.

"As a result there is now the prospect of Typhoons being made over a longer time frame with production lines open until 2018 rather than 2015 as previously planned.

"A letter BAE Systems has sent members ahead of this debate does not accurately explain the reasons for the slow down.

"The letter was disingenuous in a number of different respects.

"The MoD has invested £190 million on potential unmanned combat air vehicle programmes.

"BAE Systems has been our partner in this, as has the industry team from Rolls Royce, QinetiQ and GE Aviation.

"An unmanned combat air system programme could form a cost-effective solution to the future of the air to air combat role.

"The letter sent by BAE Systems to members does not really do justice to the part it's played in this programme, it just seeks to take all the credit for it.

"It does not emphasise the Government funding or the other three partner companies involved in the project.

"I think they need to be a little more modest about the claims they make on the part of the company.

"Government does need an efficient defence industry, I make no apologies about that.

"Another lie in the letter to members seemed to suggest that we were somehow to blame for wanting BAE Systems to be more efficient.

"We want them to be more efficient for the sake of the taxpayer interest and also to ensure export opportunities as well.

"I make no apology for demanding efficiency from our suppliers.

"The letter from BAE Systems alludes to the withdrawal of the Harrier aircraft.

"It did not provide the context to that decision - I say that in a bipartisan spirit.

"We had a very challenging financial situation at the MoD.

"The previous government took the decision to delete the Sea Harrier in 2006 and subsequently in 2009 took the decision to reduce the remaining Harriers which meant it wasn't large enough for extended operations in Afghanistan and then as a contingency for the unexpected on its own.

"Although the withdrawal of the Harrier was taken with regret, it was effectively forced upon us."

Mr Luff told the Commons the MoD had now agreed the sale of the final 72 Harrier airframes as spare parts to the US Marine Corps for £110 million. He said the money would be invested in other projects, including the Joint Strike Fighter.

Shadow defence minister Alison Seabeck said: "We have an economy that is flatlining.

"We have the lowest growth of any country in the G7 bar Japan - and they suffered an earthquake and a nuclear disaster.

"We have a Government department which repeatedly states that decisions where redundancies follow are nothing to do with them.

"We are talking here about very skilled workers in the North West and Humberside who have so much to offer the company and UK PLC and yet they face an uncertain future.

"It's far from clear whether in this case the process has been properly managed.

"The 90 day consultation process - has it been a genuine one or not?

"Has this company been paying lip service to its requirements?

"I can well understand why people here and outside this place feel frustration and anger with BAE.

"What we saw in the 1980s was the loss of large defence industrial employers.

"What a devastating effect that had on communities, effects that last for generations.

"This is a test for the Government's willingness and ability to support manufacturing."

Labour's Mark Hendrick (Preston) said the Government's "ill-thought through" and "rushed" Strategic Defence and Security Review was in part to blame for the BAE decision.

He said: "Rather than produce a carefully constructed industrial strategy, the Ministry of Defence is now planning to halve the UK's tranche three order (of Typhoon jets).

"BAE will now cut its production from 61 to 36 jets annually."

Tory Mark Menzies (Fylde) said he hoped workers could find a future in civil aviation if they lose jobs with BAE.

"No stone should be left unturned in that field," he said.

Mr Menzies also asked whether RAF maintenance work currently carried out on airbases could be brought into the BAE plants.

Labour's Diana Johnson (Hull N) said ministers had a role to play in protecting the jobs at Brough.

She said: "This is not a factory making widgets, this is an important defence manufacturer, strategically important to this country and in an area of the country that is suffering disproportionately in the economic downturn."