Taxpayers could foot £110m bill if defence giant quits Yorkshire

The defence giant faced a wave of political anger in the House of Commons yesterday and was accused of planning to move the entire production of its iconic Hawk aircraft – the plane of the Red Arrows – overseas even before announcing plans for 900 redundancies in Brough and another 2,100 across the country.

BAe was accused of acting “disgracefully” and treating a loyal workforce “cruelly” by Tory MP David Davis while Defence Minister Peter Luff said management had to “take responsibility for their actions” amid anger that British workers are being sacrificed despite the company benefiting from vast sums of taxpayers’ money through Government contracts in recent years.

Mr Luff said he would be “robust” in fighting any BAe claim for taxpayer funds towards redundancy costs, for which the Government could be liable under rules drawn up in the 1960s.

The Minister’s comments – also accusing the company of being “disingenuous” in a letter sent to MPs ahead of yesterday’s debate – mark a distinct shift in the Government’s tone towards BAe.

Until now, Ministers have focused on putting in place measures to help workers facing redundancy and minimise the impact on the area rather than challenging the firm’s decision to axe jobs, something bosses claim is essential amid declining orders.

Mr Luff said BAe has a “significant role” to play in rebalancing the economy and reviving manufacturing, but warned: “BAe Systems must also be prepared to take responsibility for its decisions and to understand the debt that it owes to the country and the taxpayer.”

A series of MPs condemned the company’s decision and called for the company to rethink. Haltemprice and Howden MP David Davis branded it “outrageous” that a deal set up in the 1960s means the Government could be forced to pay between £60m and £110m in redundancy costs. The “Yellow Book” agreement to maintain a viable defence industry means the Government agrees to contribute towards redundancy payments on some deals to protect defence firms against cuts in orders.

“A policy designed to defend our defence capability is being used to make us subsidise the destruction of that capability,” he said. “A policy designed to defend and protect British jobs is being used to destroy British jobs.

“If I were the Minister, I would not pay BAe a penny. I would say, ‘This is your decision. This is the outcome of your strategy. If you don’t like it, I’ll see you in court’.”

Mr Davis, who has asked the Public Accounts Committee to probe the arrangement, also quoted comments from defence bosses in India to accuse the company of planning to move manufacturing of the “emblematic” Brough-made Hawk, which would transfer to Lancashire under the company’s plans, overseas.

Hull West and Hessle MP Alan Johnson also turned on the firm, saying it had lost the respect of its loyal workforce and contrasting its actions with those of pharmaceuticals firm GlaxoSmithKline whose boss has criticised British businesses turning themselves into “mid-Atlantic floating entities with no connection to society”.

Mr Johnson said BAe had decided that “in difficult times they’d rather impress their shareholders with how tough they can be than impress their workforce with how loyal they can be”.

The consultation on BAe’s plans, unveiled in September and which would end manufacturing at Brough, is due to end on Boxing Day, but MPs question how seriously it is being conducted.

Ian Gent, staff unions convenor at Brough, said it was a “nonsense” that workers could fund their own redundancy payments. “The money has to be better spent than that,” he said, and vowed to carry on fighting to save the jobs.

A BAe spokesman said negotiations on redundancy with the MoD had begun but there was no indication of the outcome.

“We announced potential job losses in September because of a reduced workload at a number of our sites,” he said. “To remain competitive and have a long-term future, we need to reduce the overall costs of our businesses in line with this reduced workload.

“These job losses are regrettable but are required to make sure we have a cost-effective and efficient business. We understand that this is a time of uncertainty for our employees and are committed to working with them and their representatives to explore ways of mitigating the potential job losses.”

The Government said it would be looking closely at the rules regarding how redundancy is funded.