HC Deb 21 November 1963 vol 684 cc1187-94
The Minister of Aviation (Mr. Julian Amery)

With your permission Mr. Speaker, and that of the House, 1 should like to make a statement about the British European Airways Corporation and the British Overseas Airways Corporation.

Lord Douglas, who will be 70 in December, will be retiring from the chairmanship of B.E.A. at the end of the financial year. He will then have completed fifteen years as Chairman and I am sure the House will wish to join me in paying tribute to his great services to British aviation. Lord Douglas will be succeeded by Mr. Anthony Milward who has been Chief Executive of B.E.A. for the last seven years. Sir Matthew Slattery will be retiring from the chairmanship of B.O.A.C. in the new year. He has given B.O.A.C. great service in a very difficult period

. Sir Matthew Slattery will be succeeded as Chairman by Sir Giles Guthrie, who is a member of the board of B.E.A. and has an outstanding aviation record in peace and war.

I understand that it is Sir Giles Guthrie's intention to undertake himself some of the functions of the Managing Director. Sir Basil Smallpeice, after many years of devoted service to B.O.A.C., has agreed to retire to facilitate the changes.

I have carefully considered whether a merger between B.O.A.C. and B.E.A. would be in the best interests of British aviation, but, on balance, I have decided against it. I am convinced, however, that the two Corporations need to work more closely together than they have in the past. Sir Giles Guthrie, the Chairman-designate of B.O.A.C., will accordingly retain his seat as a part-time member of the board of B.E.A.; and Mr. Anthony Milward, the Chairman-designate of B.E.A., will also become a part-time member of the board of B.O.A.C.

Before we rose for the Summer Recess I undertook to publish a White Paper about B.O.A.C.'s financial problems, This White Paper will be available in the Vote Office when I sit down. I will not attempt to summarise it now, but the House will want to know the immediate steps the Government are proposing to take. These are set out at the end of the White Paper and are briefly as follows.

First, we have decided to strengthen the management of the Corporation.

Second, I am inviting Sir Giles Guthrie to prepare a plan during the coming year for making the Corporation financially sound. When this plan has been considered we can then decide how to deal with the accumulated deficit and how to provide for the financing of the Corporation.

Meanwhile, some losses are likely to continue before the new plan can be drawn up and put into practice. I will, therefore, shortly be asking the House for an extension of the powers I already have under the Air Corporations Act 1962, to make loans for the purpose of financing deficits on revenue account.

Mr. Lee

I am sure that the whole House will join with the right hon. Gentleman in what he has said about the services rendered to aviation by Lord Douglas and Sir Matthew Slattery.

May I congratulate the right hon. Gentleman on being able to get through a statement of this type without once mentioning the Corbett Report? I assume that when the right hon. Gentleman tells us that Sir Basil Smallpeice agreed to retire to facilitate the changes it was the kind of agreement which the right hon. and learned Gentleman the present Leader of the House made to retire a year or so ago.

In view of the concern which we all now feel about the affairs of B.O.A.C., will the right hon. Gentleman now agree to publish the Corbett Report in full? The right hon. Gentleman is to publish the White Paper. What guarantee have we that the main recommendations of the Corbett Report are even mentioned in the White Paper? Is it the case, for instance, that the Corbett Report recommended that the £80 million of accumulated deficits, most of which came about as a result of the Government's own policy, should be written off and that the Government have refused to do so, and that it is failure to agree on this point which has led to the fourth retirement, of Sir Matthew Slattery and the chief executive of B.O.A.C.?

Is it the case that the right hon. Gentleman and his colleauges are arguing that if the £80 million is to be written off it may as well be done by the incoming Labour Government and not by the present Administration? Is it also the case that the original intention in the White Paper, and the reason why we have had to wait so long for it, was an announcement that there would be a joint board of both Corporations of which Sir Matthew Slattery would be the chairman?

Finally, it is the case that during the negotiations with the B.O.A.C. board, which, I understand, did not even know the contents of the Corbett Report, the right hon. Gentleman was threatening that the whole of the southern route of B.O.A.C. might well be hived off to B.U.A., a private corporation? Has the right hon. Gentleman seen a statement in the Evening Standard today that Radio Rentals representatives have stated that a Mr. Charles E. Hardie, of Radio Rentals, has also been given a seat on the board of B.O.A.C? As the new chairman also belongs to Radio Rentals, could the Minister assure us that this is not a further take-over by that organisation? We should be grateful if the right hon. Gentleman could answer these questions, because, frankly, we are thoroughly dissatisfied that a vital report made as a result of the right hon. Gentleman sending these people to B.O.A.C. is still not available to us, and we still insist that it should be made available at once.

Mr. Amery

The hon. Gentleman has asked a number of questions and I will try to deal with them. It is quite true that Mr. Hardie, a very distinguished accountant, will be joining the board of B.O.A.C. This is a vacancy, which arises in January on the retirement of Mr. Staple, the present secretary of the company. This has nothing to do with the other changes that I have announced.

There has been no discussion whatever of hiving off the southern routes to anybody else, nor has there been any particular discussion of the southern routes with the Corporation.

Equally, there has been no discussion with the Corporation about a joint board. I took the opinions of both B.O.A.C. and B.E.A. on merger earlier on, and the White Paper contains a summary of the arguments for and against. I have already expressed the Government's views on this

The hon. Gentleman suggested that Sir Matthew Slattery had resigned on the question of writing off the deficit. It may help to clear the air on this, in view of Press statements this morning if I read to the House the letter of resignation which I received from Sit Matthew Slattery on 19th November. It reads: You have told me in our recent talks of your plans for reconstituting the B.O.A.C Board In particular, you expressed the view that it would be necessary, at any rate for the next couple of years, for the Chairman to undertake many, if not most, of the duties that are at present assumed by the Managing Director. I explained that I would not myself feel disposed to attempt this double task. You then told me that in these circumstances you would propose to appoint Sir Giles Guthrie to the Chair when my term of office expired on the 28th July, 1964. On reflection, I have come to the conclusion that it would be in the best interests of the Corporation if the changes you have in mind were introduced as soon as convenient rather than after a delay of some months. You will be telling Parliament about your plans in the course of this month, and to avoid leaving uncertainty in the minds of Corporation's staff it would be best, in my view, if the new appointments were made as soon as possible after your statement. If you agree, therefore, I would propose to vacate the chairmanship of the Corporation on 31st December, 1963 and so make way for Guthrie to succeed me as Chairman. This letter makes it plain that there was no issue of policy at stake. [HON. MEMBERS: "Oh."] Indeed, there has been no discussion of the question of writing off the deficits. The issue has been simply one of organisation and the best time for reorganisation to take place.

On the question of the deficit itself, our view is that it would be illogical and wrong to ask the House to write off £80 million of public money until we can recommend a plan to the House, which we think will put the Corporation on its feet financially. When we are in a position to do that, we can then tackle the question of the deficit and consider whether it should be written off, in whole or in part.

On the hon. Gentleman's first point concerning publication of the Corbett Report, I have already explained to the House that it was commissioned on the understanding that it would be confidential, and the evidence was given to Mr. Corbett on this understanding. I am not, therefore, prepared to publish the Report.

Sir J. Eden

Is my right hon. Friend aware that, in view of the heavy losses sustained by the Corporation, any step which could put the whole of this important national asset on a sound commercial basis would be very much welcomed by all sides of the House? Can my right hon. Friend assure the House that every encouragement will be given to Sir Giles Guthrie to proceed as rapidly as possible with his plan, which, at the same time, will bring a new spirit to the Corporation and give new opportunities to ensure that we hold our place in the forefront of this market?

Mr. Amery

The Corporation has done a tremendous job in terms of reliability, safety and service to passengers. It has not yet been able to break even financially. I hope that under the new management it will be able to achieve this result. I am sure that both sides of the House will wish to give Sir Giles Guthrie all possible support in the task which he has undertaken.

Mr. Grimond

Does not Sir Matthew Slattery's letter show that he has reservations about the new arrangement by which the new chairman will discharge some of the functions of managing director, and is it not a fact that these reservations are widely shared? Will the right hon. Gentleman say whether there is to be a managing director and, if so, what breakdown of functions between him and the chairman there will be?

Is it not a fact that the Government have had the Corbett Report since July and that it would appear from the right hon. Gentleman's statement that there is still no plan whatsoever for improving the financial state of the Corporation and, meanwhile, the deficit is increasing? Can the right hon. Gentleman give an assurance that this plan will be put into operation very quickly? Will he bear in mind that the same thing happened over the railways? We were assured for years that the deficit would not be written off, though, of course, in the end it was written off.

Mr. Amery

The appointment of a managing director and the functions of management are matters for the chairman of the board and not for me. Accordingly, I will leave this to Sir Giles Guthrie, though, as I said in my statement, I understand that he proposes to take on some of the functions of managing director himself. As for the plan, it can only be drawn up by the new management. There are, no doubt, sections of the Corbett Report which will be very valuable in helping the management to draw up this plan.

Mr. McMaster

Has my right hon. Friend's attention been drawn to comments in this morning's Press and on television and the radio about serious differences of policy? Can he say whether or not these statements are correct?

Mr. Speaker

It is not in order to ask a Minister whether he has seen something in the Press in order to ask him to deny or confirm it. It is not part of his duty. I am afraid that we sometimes forget that.

Mr. Albu

Can the Minister say whether or not he has accepted now the recommendations made by the Select Committee on Estimates as long ago as 1959 about Government interference with British Overseas Airways Corporation with regard to routes causing part of its losses and to the costs of developing British aircraft also causing losses, and whether he also took into account the Report of the Select Committee in February, 1962, which showed that the Corporation's costs were coming down substantially and had, in fact, been the subject of a much greater reduction than in many other international airlines?

Mr. Amery

The hon. Gentleman's questions raise big subjects which I think we had better treat in the debate which will take place shortly.

Mr. P. Williams

Can my right hon. Friend say when the debate on the White Paper will take place? Will he not agree that one of the greatest tasks of the new chairman is to restore the morale of B.O.A.C. which has sagged considerably, for whatever reasons, over recent years? Would he also accept the thanks of some of us who have taken an interest in these matters that there is not a merger, and that, in practice, a sharing of membership of the boards of the Corporations can produce the best possible results for the two Corporations without destroying the morale of B.E.A.?

Mr. Amery

It is my belief that the system of interlocking boards will achieve the advantages of merger without its disadvantages. I have every confidence that Sir Giles Guthrie will be able to give a very good lead to the staff of B.O.A.C. I think that the morale of the pilots and of the operating staff is very good. I have no anxiety there. My anxiety has been on the financial side.

Mr. H. Wilson

Is it not perfectly clear that there has been for some time a real crisis of confidence between the Government and the board of B.O.A.C, and that we cannot get over that crisis by some of the words used this afternoon? Is it not proved by the fact that here we have a Minister, who, no doubt, considers it right, who has been interfering a great deal more on the question of the allocation of functions between members of the board, between the chairman and the managing director, than is normal in the case of other public boards?

This being so, since there is great public anxiety about this, and since, quite clearly, there has been a clash—and whether he was sacked or has resigned in protest is a matter, to some extent, of words—is there not a real obligation on the right hon. Gentleman now to publish the Corbett Report so that the House can consider it?

Mr. Amery

The right hon. Gentleman's assertions of a crisis of confidence are his own. They are not mine. As I have said, Iam not prepared to publish the Corbett Report. It was commissioned as a confidential document. The evidence was given on a confidential basis. I think that the right hon. Gentleman would be the first to agree that, if we are to have nationalised industries, it is important that the Government should be able to commission a consultant to make inquiries for them, without necessarily having to publish the findings on every single occasion. I believe myself that the problem of B.O.A.C. can be solved and overcome, and I believe that, with the co-operation of the new management, it can and will be achieved.

Several Hon. Members

rose—

Mr. Speaker

Order. We cannot debate this now without a Question before the House.