HC Deb 19 May 1936 vol 312 cc1029-111

Considered in Committee under Standing Order No. 69.

[Sir DENNIS HERBERT in the Chair.]

Motion made, and Question proposed, That, for the purpose of any Act of the present Session to amend the Law with respect to aviation and matters connected therewith, it is expedient—

  1. (1). to authorise the Secretary of State to agree, with the approval of the Treasury, to pay subsidies to any persons and to furnish facilities for their aircraft, in consideration of undertakings entered into by those persons with respect to the carriage by air of passengers or goods (including mails and animals), and to authorise the payment out of moneys provided by Parliament of any sums required by the Secretary of State for the fulfilment of any such agreement; and
  2. (2). to authorise the Secretary of State to contribute such sums as he may, with the approval of the Treasury, determine, to the payment of any expenses which may be incurred by any body to whom functions in connection with aviation are delegated or entrusted by the Secretary of State under the said Act, and to authorise the payment out of moneys provided by Parliament of any sums required by the Secretary of State for making such contributions.
Provided that—
  1. (a) the aggregate amount of the subsidies payable under all the agreements made in pursuance of paragraph (1) of this Resolution and all the agreements which, before the passing of the said Act, may have been made under the Air Transport (Subsidy Agreements) Act, 1930, shall not exceed one million five hundred thousand pounds in any financial year; and
  2. (b)no subsidy shall, after the thirty-first day of December, nineteen hundred and fifty-three, be payable under any agreement made in pursuance of paragraph (1) of this Resolution."—(King's Recommendation signified.)—[Sir P. Saswon.]

Colonel ROPNER

On a point of Order. With regard to the procedure this afternoon, is it proposed to have a general discussion on the Resolution before taking the Amendments?


The established practice is that the Debate on the Resolution proceeds in the ordinary way and that Amendments are not called until a later stage, because, directly an Amendment is called, the discussion is, of course, limited to that Amendment.

3.58 p.m.

The UNDER-SECRETARY of STATE for AIR (Sir Philip Sassoon)

The Financial Resolution before the Committee provides the foundation of Clauses 1 and 2 of the Air Navigation Bill. Moreover, it so happens that it gives financial authority to the Secretary of State for action under those provisions of the Bill about which misunderstanding seems to have mainly centred and to which the comments of substance which have been made, from time to time, appear principally to relate. It, therefore, gives me an opportunity, which I am glad to take, of doing my best to clear away those misunderstandings and to deal with those comments and points in detail. That, I am sure, is what the Committee would wish me to do and I, therefore, ask for the indulgence of the Committee if my remarks are necessarily somewhat disjointed and occupy a considerable period of time.

The Resolution covers, in the first place, the proposed subsidy payments to air transport undertakings and, in the second place, the proposed financial contribution to the new Airworthiness Board. It is to the subsidising of air transport that previous discussions have been mostly directed. It has been suggested in some quarters that, in dealing with applications for subsidy from air transport undertakings there has been some sort of unfair discrimination. It has even been said that it is necessary to know the right people at the Air Ministry. I would like to take that criticism first. There is no use in mincing words. Charges amounting almost to corruption have been made. I have already said that those charges are without foundation. There has been no unfair discrimination. There are no sinister influences at work, nor indeed is there any scope for such influences. I do not propose, however, to restrict myself merely to this bare denial, and I do not think that the Committee would wish me to do so. The Committee is entitled to a full explanation of the precautions that are being taken by the Ministry and by the Government to ensure that; real occasion for such charges shall never arise.

There are those who appear to be opposed to the decision to continue to employ Imperial Airways as the chosen instrument for the development of Empire air routes, and for the North Atlantic. But that is not a departmental decision of the Air Ministry. It is the considered Government policy arrived at after the most exhaustive review by His Majesty's Government of all the conditions; and I have not the slightest hesitation in saying that Imperial Airway's record fully justifies that decision up to the hilt. I am reluctant to inflict upon the Committee figures which I have repeatedly quoted, but critics who persist in ignoring them give me no option. Therefore I repeat that in the latest year for which we have complete figures available, Imperial Airways carried a ton-mileage some 25 per cent. greater than their French, 150 per cent. greater than their Italian, and 50 per cent. greater than their Dutch competitors. I anticipate that the traffic figures for 1935 when available will make an even better comparative showing.

Now let us turn to subsidies. In 1935 Imperial Airway's subsidy was little more than one-third of that enjoyed by the French, about half that of the Germans, and about two-thirds that of the Italians. If I may put it in a different form, whereas the subsidy paid by the French per ton-mile carried, in the latest year for which we have figures, appears to have been about 9s., and the corresponding German and Italian figures about 4s. and lls. respectively, the subsidy paid to Imperial Airways is now a little under 2s. If the object of subsidies is to secure that commercial air transport shall carry the maximum volume of passengers, freight and mails at the minimum cost to the public purse, then I think Imperial Airways' record compares very favourably indeed with that of its Continental competitors. I repeat again that last year Imperial Airways carried across the Channel, in and out of Croydon, a greater number of passengers than all their Continental competitors, French, German, Belgian, Dutch and Swiss, combined.

In the teeth of these facts and figures it is ludicrous to suggest, as has been suggested on more than one occasion, that nobody travels by Imperial Airways except for patriotic motives. The real facts of the matter are that the company's record of safety and reliability is such that a marked preference is shown for them, even by foreign nationals. Travellers by Imperial Airways can insure against accidents, at the same rates as if they were proceeding by rail or steamship.

Before leaving the question of safety I would like to refer to a curious fact which experience has shown to be a fact, namely that both in service and civil flying, accidents tend to occur in patches. Therefore, to take an isolated period and to use it as material for attack on the safety record of an air transport company, is unfair and misleading. Contrasts have been drawn in this field between Imperial Airways and the Dutch. Let me remind hon. Members that the accident to the "City of Khartoum" was the first fatal accident to an Imperial Airways machine for over two years. On the other hand in the period December, 1934, to July, 1935, the Dutch—let me say that in my opinion Dutch air transport is exceedingly efficient—had a bad patch of accidents to Douglas and other aircraft, of which four were fatal. In fact so bad was this patch of accidents in that period that 33 persons lost their lives, some services had to be suspended altogether, others were considerably reduced or operated temporarily by foreign pilots, and one important service was made over to a German company. Again in 1935 Air France had three fatal accidents, and, I am sorry to say, has already had two this year. Pan-American Airways has had at least four serious accidents since last December, three of them involving fatalities.

It is with reluctance that I give these figures. They may give an entirely misleading impression of the dangers of air transport. That, of course, is the last thing I wish to do, and I hope that the figures will be viewed in their right perspective. I give them only as an answer to unfair and prejudiced criticism of Imperial Airways, which takes exception to the proposed subsidisation of that company under the powers that this Resolution will confer upon the Secretary of State. I sometimes wonder why it is that the company's critics find it necessary to wear spectacles which are so curiously focussed that they can see only failure in British air transport and success in foreign air transport. I wonder whether they realise how eagerly their very biased and prejudiced criticism is seized on abroad and used for purposes of anti-British propaganda. I am sure they do not intend in any way to play the game of our foreign competitors, yet that is exactly what they are doing beyond a shadow of doubt.

The record of Imperial Airways was not the only reason which influenced His Majesty's Government to come to the decision they have taken. All recent experience in the field of transport and communications has very forcibly driven home the lesson how necessary it is to avoid at all costs any wasteful duplication. I am glad that that is a lesson the value of which is well appreciated by not a few hon. Members opposite. If I may borrow the words used recently by an acknowledged authority in another field of transport, the fact is that "in our contact with the air we have already come to the point at which the operators on the sea have arrived only after much loss of money, time and temper."

The British Government are not alone in the view they take. There are in Europe to-day no fewer than 12 countries which practise the system of a single national air transport undertaking. The French have copied us the Germans and Italians have copied our methods, and the United States of America, in the comparable field of external operations, have adopted the same methods. To abandon our system, based as it is on the lessons of experience, and now that it has been very widely copied in the world, would be the height of unwisdom, and the Government are not prepared for a moment to contemplate such a course.

Let me say a few words to the Committee as to the general methods which govern the selection of companies for subsidy, for it is not only Imperial Airways which is to benefit by the subsidies which the Financial Resolution covers. The selection is not made by the Air Ministry acting independently and without advice. Decisions are come to in the light of the recommendations of an interdepartmental committee, under the chairmanship of Sir Warren Fisher. That committee is not a Treasury committee; it reports to my Noble Friend the Secretary of State. A word as to the constitution and nature of that committee. It is a standing committee which advises the Secretary of State on all matters concerning oversea air communications which affect more than one Department. One can say that that means virtually on all such questions. Sir Warren Fisher is an independent chairman, and the committee comprises representatives of the Treasury, the Air Ministry, the Foreign Office, the Dominions Office, the Colonial Office, the Board of Trade, the India Office, the Admiralty and the Post Office.

Therefore, for any one to suggest that a committee so composed could be subjected to undue pressure or influence, is manifestly absurd. Moreover, besides sending a representative to that committee, the Post Office as a Department is obviously closely and vitally affected in nearly all questions of air transport to-day. That Department, therefore, as well as the Air Ministry, requires to be fully satisfied that the operation of particular services is entrusted to the right hands. Then inside the Air Ministry there is the safeguard of independent financial and contractual control, upon which Members of this Committee have in the past laid considerable emphasis. The Director-General of Civil Aviation, of course, advises the Secretary of State on all technical matters connected with these contracts, but the actual negotiation of the contracts is the responsibility of the principal Financial Officer of the Air Ministry, the Permanent Secretary, and his staff. Therefore, both these officials have to be independently satisfied that the right choice has been made, and have then to satisfy Ministers. Here, then, we have every conceivable form of safeguard, of check and counter-check. Indeed, I do not know of any other sphere of Government business, in connection with the granting of subsidies or placing of contracts, which is subject to such close scrutiny by one independent authority after another. The Committee can therefore rest assured that the subsidies for which the Resolution provides will be administered with scrupulous fairness.

As an illustration of the way in which Sir Warren Fisher's Committee will normally proceed, when considering the inauguration of a new service, I may say that it has at present under review the possible operation of a service across the South Atlantic. Enquiries have indicated five different "interests" or undertakings who are interested in this service and who may like to be considered for it. All five have been asked to submit proposals. I take this opportunity of giving the very widest publicity to our intentions in this sphere. In order that in future there may be no conceivable grounds for grievance or misunderstanding, my Noble Friend proposes that, so soon as a decision has been reached in principle that a new service shall be inaugurated or a new route opened up in an area not covered by existing arrangements, publicity shall be given to that decision, whether by announcement in this House or through the medium of the Press, so that all who are, or may be, interested shall have an equal opportunity of submitting proposals.

It has been suggested that all future contracts shall be placed on a basis of competitive tendering. In the present state of air transport development, there are serious practical difficulties in the way of such tendering, and we do not consider that it would be in the best interests of the efficient development of air transport—though, of course, the proposals which will be put forward under the procedure I have outlined will naturally be on a competitive basis. I may add that our conclusion in this matter is reinforced by experience abroad, where the difficulties in the way of competitive bidding in connection with air services are well recognised.

I must come back to Imperial Airways to clear up another point on which there appears to be misapprehension. This Resolution and the Bill do not earmark any part of the £1,500,000 to this or any other company. The Bill merely authorises us to spend up to £1,500,000 on subsidies to Imperial Airways or any other undertaking that we may select. Of course, the Empire and projected North Atlantic routes will eventually absorb a substantial proportion of the £1,500,000 maximum specified. Actually the only major contract at present under detailed discussion with Imperial Airways is for the Empire routes, other than the North Atlantic. That contract is expected to absorb an estimated average figure of £600,000 over the fifteen-year period as a whole.

But before it passes this Resolution empowering the Secretary of State to subsidise air transport undertakings, the Committee may wish to be reminded of the three main features of the new Empire service. The scheme was designed to provide, firstly, a striking acceleration of schedules; secondly, a largely increased frequency of service; and, lastly, the carriage, in so far as concerns the United Kingdom, of all first-class mail matter within the Empire by air at the rate of 1½d. per half-ounce.

As regards the acceleration of schedules, we shall work by degrees to a 2½-day schedule to India and to East Africa, a 4½-day schedule to South Africa and to Singapore, and a six to seven-day schedule to Australia. As regards frequencies, we have already duplicated the services to South Africa and Singapore. If we are successful in our negotiations with Australia and the whole scheme can be brought into operation as originally planned, there will ultimately be nine services a week to Egypt, five to India, three to East Africa and Singapore, and two to Australia and South Africa, respectively. Negotiations for the extension of the Australian service to New Zealand are in progress. When all the services for which we are planning are brought to fruition, the United Kingdom will be operating a route-mileage of over 41,000 miles—that is to say, nearly twice the route-mileage which any other country save the United States is operating to-day, and, if you take the route-mileage of the Empire as a whole, it will then exceed even that of America.

All this we hope to get, as I have said, for an average subsidy of £600,000. When the outline proposals were drawn up, Imperial Airways were receiving a total subsidy of approximately £570,000. The new scheme represents no less than an eight-fold increase of ton-mileage capacity for an average subsidy only £30,000 above that figure. Postal rates are for my right hon. Friend the Postmaster-General, so under this head I will say no more than that the scheme will give us results without parallel in the world. The Committee can rest assured that if it passes this Resolution, and our plans in due course mature, this country will be getting good value for its money—record value, I may say.

Seeing that our programme in relation to the Empire routes is already so fully outlined, it may perhaps be asked why the draft agreement with Imperial Airways is not annexed to the Bill to which this Resolution relates. The answer is very simple. While the proposals are now formulated in their main outline, there are a certain number of subsidiary, but nevertheless important, points to be clarified. More important still, until our negotiations with Australia have been brought to a successful conclusion, the proposals must obviously be liable to alteration. My Noble Friend has, however, already undertaken to lay a White Paper giving a full account of its principal provisions before the agreement is signed. I would emphasise, however, that neither the Resolution nor the Clause in the Bill to which it relates and which gives power to make this and other agreements introduces any new principle. All that either does is to extend the period of time for which subsidies may be given and the maximum amount which they may cover by some 50 per cent. in each case. Moreover, whereas we have to-day, under the Act of 1930, what might perhaps be styled "blank cheque" powers, it is the intention in future that the cheques shall be filled in before they are signed, so that the House may see each cheque before it is signed.

Doubts have been expressed as to the necessity for a 15-years agreement. I should say first that this period was decided on after the most careful consideration of the point by His Majesty's Government. The scope of the new services is so vast, and represents such an expansion of Imperial Airways' present activities, that it is estimated it will need a capital of at least £2,000,000 to enable them to be successfully and efficiently organised. The present capitalisation of the company is approximately £650,000. It is clear that if these large sums are to be raised from the public, there must be some security of tenure, and 15 years was considered to be a minimum. I may add that one of Imperial Airways' principal foreign competitors has already been given a 15-years contract, and a lesser term, even if otherwise practicable, would inevitably handicap Imperial Airways in maintaining and consolidating the position of British air transport against foreign competition. It must not be overlooked that the company will have to sink large sums in ground organisation, just as in the past they have, at their own cost, provided 12 rest houses at different points along the existing Empire routes, substantial workshops, and all the other many items of ground equipment which are requisite to the operation of services on the scale proposed over and above those facilities which the Governments concerned will provide.

It may be asked whether the agreements contemplated under the powers which this Resolution will give us are open to the charge of "monopoly." Imperial Airways has to-day under existing agreements a formal monopoly of subsidy over certain routes. It has, of course, no monopoly of operation. In the new agreement, the Company will no longer have in law even the formal monopoly of subsidy. At the same time, while we have thought it best that the new agreements shall not even give the formal monopoly of subsidy which exists to-day, we have, of course, no intention of giving contracts over the same Empire routes to different competing concerns. That would lead to economic chaos. I know that there are certain Members who are very critical of subsidies in general. I can only say that if, in present circumstances, subsidies were to end to-morrow, our Empire services would terminate forthwith. To give a postal contract in place of subsidies would be no remedy, because for a contract of that kind to be operated successfully without a separate subsidy would involve the Post Office in immense losses such as have been incurred in the United States of America. The losses on a postal contract are, of course, concealed subsidies. Our own method, the adoption of which in America has been strongly urged by an important Government Commission, is, to our way of thinking, the best method because it enables Parliament, the taxpayer, and the general public to see much more clearly where they stand.

The new agreement will contain new safeguards against excessive profits. There is, for example, to be a triennial review of operating costs. If it is clear that costs have fallen or are falling, half the resultant savings will accrue to the State. Again, the Secretary of State, through his accredited officers, will have full access to Imperial Airways' books and accounts. The Government will continue to have two Directors on the Board of the Company, and, by virtue of its deferred shareholding, will take 50 per cent. of any profits in excess of the stipulated rate.


It is all very well to state that the State will get 50 per cent. of the profits over a stated figure, but it does not convey much if we do not know what the figure is.


Is it not a fact that the capital of the company is to be increased and therefore that the prior charge before the Government will participate in the profits will be increased?


We must wait and see the price of any new issue. It is impossible to know until that comes out. Under the original 1923 Agreement it was only one-third of the excess profits. In this case we are to get at least one-half.

That brings me to another matter which has a close bearing on this point and which, I think, deserves mention in any explanation of the purpose of this Resolution. Of late, the value of Imperial Airways' shares has advanced substantially. There has, however, I am glad to think, been nothing in this country like the experience of the United States. The immense losses incurred by the American investing public in the field of air transport and aeronautical development show that speculation of this kind has nothing to do with our system of air transport organisation. We are determined to do everything in our power to prevent any possibility of the "financial ramps," as they have been described, which marred American aviation development. I may say that some of the worst of them were shown to be due to the association of air transport with aircraft manufacture.

Imperial Airways, on the other hand, unlike the American companies, have been from the first strictly debarred from interesting themselves in aircraft or engine manufacture, directly or indirectly, without the consent of the Secretary of State. That rules out one fruitful source of abuse. Fluctuations in Stock Exchange prices, however, neither His Majesty's Government nor the board of Imperial Airways can control. Everyone knows from experience that at times of great share activity, imagination is liable to outrun reasonable estimates of prospects, and any reasonable investor would be well advised to exercise a wise caution in attempting to forecast the future. I have already said that the new agreement will contain careful provisions to prevent excessive profits. If, none the less, profits rise above the stipulated figure, the Exchequer, by virtue of its deferred shareholding, will take half the balance. I have heard it suggested that the company's directors might increase their remuneration, in order to avoid the Exchequer getting a return on its deferred shares. That is really a most unfair reflection on the integrity of the board, which is above suspicion. When the company was in low water a few years ago, the directors voluntarily reduced their remuneration. That action on their part presents a true picture of the character of the board, but a surreptitious raising of fees is, in fact, impossible, since they are fixed by the company's articles of association. In short the board can of their own motion reduce their remuneration—and did so some time since; but they are not free to increase it. This can only be done in accordance with normal company practice, by the shareholders in general meeting.

I have, I fear, already spoken at great length; but, if the Committee will bear with me, I should like to cover as many as possible of the points with regard to which doubts or misgivings have from time to time arisen, in one quarter or another, and upon which, I think, the Committee will like to be assured before it approves this Resolution. I have already said that the authority which this Resolution gives will be exercised with scrupulous fairness. It has been suggested that the attitude of the Air Ministry towards a scheme promoted by a body styled the Irish Trans-Atlantic Corporation changed as soon as it became clear that Imperial Airways was interested in the northern route across the Atlantic. Again, I can give the Committee a positive reassurance. There is not a shred or scintilla of truth in that suggestion. Imperial Airways were interested in operating services across the Atlantic by all possible routes long before the corporation in question approached the Air Ministry. Further, the Air Ministry has at no time received any concrete proposals for the operation of air services from the Irish Trans-Atlantic Corporation. I may add that that undertaking does not, so far as know, possess a single aircraft—on the British Register at all events.

Concern of a like kind has been expressed regarding the reason why British Airways, rather than British Continental Airways, were selected to operate the Scandinavian services. The reason is simple enough. On the recommendation of the Fisher Committee, informal negotiations had been entered into with British Airways, in respect of the proposed Scandinavian service, months before British Continental Airways gave any indication to the Air Ministry of their wish to operate to Scandinavia. British Airways were selected after the fullest consideration, because they had far wider operating experience than any other concern save Imperial Airways. The company is the result of a merger of several undertakings with some years' experience of the operation of regular services, including Continental services. One of the merger companies—Hillmans Airways—had been operating since 1932. British Continental Airways, on the other hand, was formed only in April of last year, and they started operating a seasonal service to the Belgian coast only in July, 1935. Moreover, it was not until the middle of November that British Continental Airways applied to the Air Ministry to extend their Amsterdam service, which they had only started a month, to Sweden. At that date negotiations with British Airways were well under way, and the Fisher Committee, after careful review, adhered to their previous recommendation. They had advisedly selected a company with by far the widest operational experience available; the entry into the field of a new company, which had only been in existence a few months and whose operating experience was exceedingly short and limited in extent constituted no reason for a change in policy. As my Noble Friend has recently stated, we should be glad to see an amalgamation of these two companies to avoid unnecessary duplication of resources and effort. But that is a commercial matter, which is for the companies themselves to decide. I hope that I have made it clear that no injustice has been attempted or perpetrated as far as British Continental Airways is concerned. There are a number of smaller and more detailed points on which I propose to give the House information in order to relieve doubts and misapprehension which some hon. Members may still have.


Will the right hon. Gentleman make clear to the Committee what seems to be rather important, namely, the allegation that the trans-Atlantic company concerned have been misled into spending a great amount of money in preparatory experiments? Will the right hon. Gentleman make clear whether a definite decision has been arrived at as to the use of land either in Northern Ireland or in the Irish Free State for a jumping-off place?


I do not know what money this company can have spent on any trial services, because, as I say, no concrete proposals were put to us, and they have no aircraft. The only proposal about which they ever approached us of which I have heard was in connection with the establishment of an air port in Ireland. They never at any time made any concrete proposals to us with regard to operating any service of any sort or kind.


Did they spend money on the air port?


Not to my knowledge. I do not see what that has to do with it, because it was not due to our encouragement that they spent any money. With regard to the stopping place in Ireland, it has been decided for reasons of shortening the journey that we shall have a site on the most westerly part of Ireland, but it will only be a stopping place. The terminal base of the service will be in England.


My right hon. Friend stressed the point that he made a public announcement that he was considering the South Atlantic route. Did he make a public announcement before he considered the Swedish route?


We did not make a public announcement in that way. We knew all the firms concerned. It must surely seem reasonable to hon. Members that this was a case where it was necessary to inaugurate a, first-class service which was to enter into an area where there was the most eager, subsidised foreign competition. Therefore, it was necessary that we should operate this service and select what we considered to be the most efficient and most experienced instrument for it. It seemed obvious to us that when you compare an amalgamation of companies which have had great operational experience, for two years at any rate, with another company which, however good it may be, had had only three months' seasonal experience,. the choice that the Fisher Committee made was the right one. In case there is any doubt still in the minds of hon. Members as to the Continental Airways Company being too late to be considered, I will say that they were considered fairly and impartially by the Fisher Committee when they made their application, and if their claims had qualified them for being selected, they would have been selected. There was no public announcement. That is a new method of policy which we are adopting to meet the general views that have been expressed on this question.


Is my right hon. Friend now stating that representative's of Continental Airways were heard by the Fisher Committee at some time?


I did not say that. I said that their claims were considered by the Fisher Committee. We knew how many months they had operated and where they had operated, and we did not think that they were capable of entering into this field of competition.


Is it not clear from what the right hon. Gentleman has said that under the old conditions British Continental Airways had not the same knowledge as British Airways that the Scandinavian route was under consideration; they came in at a later stage? But I understand that in future the conditions will be different, owing to the publicity which has been decided upon.


It is always understood that the Financial Resolution has as its object to enable the Committee upstairs to consider certain Clauses of the Bill, and it has frequently been ruled from the Chair that details of the Bill which are suitable to Committee are not appropriate subjects of discussion on the Financial Resolution. I should like to ask whether that is the rule or not?


Broadly speaking that is right, but I think all the matters which have been mentioned have a distinct and direct bearing upon the payments which this Resolution sanctions.


Is it not the case that when this matter was before the House a month ago the Prime Minister, in order to save an all-night sitting, promised that on this occasion we should have a discussion on the broadest possible lines?


We cannot go into any question of what the House did during a debate in the House. We are now in Committee.


In answer to the hon. Member for East Wolverhampton (Mr. Mander), although the publicity was not as wide last year as it is to be in the future, British Continental Airways lost nothing by it. There are other points with which I should like to deal. There has been an impression current that the service from Singapore to Brisbane has been taken over by the Australian Government owing to dissatisfaction with Imperial Airways. As a matter of fact, this service has been subsidised by Australia and operated by an Australian company in partnership with Imperial Airways ever since its inception. As to the point that they have purchased Douglas machines to run that service, I can only say that I have heard nothing about it at all This company, which is closely associated with Imperial Airways, is under contract to operate the service until 1939. It has been suggested that owing to dissatisfaction with Imperial Airways South Africa has begun to purchase German aircraft. The Committee know that the Government of the Union of South Africa have had German aircraft for many years. I saw a report the other day that they were thinking of introducing British engines into those German aircraft, and, anyhow, I am happy to say that the Government of South Africa have ordered a fleet of seven civil aircraft of British design and construction.

To come now to that part of the Financial Resolution which relates to the Airworthiness Board. Questions have been asked as to the composition of the board. Of one thing the House may be assured. The persons appointed will be men who really know the essentials of the aircraft industry and air transport. Study of a list of leading personalities of the aircraft industry, from among whom the board will be in part selected, shows that there is hardly a body of manufacturers in the country with more practical working experience. Apart from this, the board is to have a staff of experts to assist it. The Committee may wish to have some idea of the amount of the Exchequer contribution to the board. It has not been completely settled but I think I can say that roughly it will be of the order of £12,000 per annum for the first five years.

The Committee will very properly be concerned to see that the provision for the establishment of the new board does not prejudice in any way the making of adequate provision for public safety. Some Members, indeed, may be inclined to think that devolution is carried too far. All I can say is that it does not go so far as either the Gorell Committee recommended or the interests themselves would wish. His Majesty's Government have felt it essential to retain some control over the airworthiness of the larger passenger-carrying aircraft. As for private aircraft, we have every reason to anticipate that the insurance companies, in their own interests, will provide a sufficient safeguard. I may add that there is nothing new in the principle of devolution. Ever since 1929, actual airworthiness work has increasingly devolved upon a body known as the Joint Aviation Advisory Committee representing Lloyds Register and the British Corporation Register. The new board will replace that body. It will not deal with the investigation of accidents. That will remain the concern of the Air Ministry's inspector and his staff.

Before closing this, I fear, discursive but, I hope, comprehensive statement, there is one major point of principle to which I feel I ought to refer briefly, and upon which I hope I shall not be going outside the scope of the Motion before the Committee in saying a few words. It has been suggested that Imperial Airways should be reconstituted on the lines of the British Broadcasting Corporation; in which case, of course, this Financial Resolution would be in very different form. I would not say dogmatically that such a proposal must be ruled out for all time. We are none the less convinced that, at the present stage of development, British air transport can best meet the very keen competition from abroad if it is handled by a commercial company in which the Government has a financial stake.

Moreover, there is no complete analogy with such bodies as the British Broadcasting Corporation and the London Passenger Transport Board, whose sphere of action is primarily domestic. The vast bulk of the activities of Imperial Airways takes place oversea and through many different foreign countries. I think that a State-controlled organisation might very easily find itself severely handicapped in such a sphere of operations. There is the further danger that such a change might result in too cumbrous a unit of management, with a consequent rigidity which might well prove a handicap to efficiency and progress. For these reasons, and without prejudice to the ultimate future, His Majesty's Government are convinced that a change to-day, or for a considerable time to come, would be definitely disadvantageous. I should like, before I close, to make it clear that, outside the routes entrusted to Imperial Airways or which it is proposed to entrust to British Airways, other undertakings are entirely free to make proposals and all such proposals will receive full consideration. We must, of course, keep within the limits of our financial resources, but within those limits all proposals will receive full and impartial consideration from the Air Ministry and the Post Office, with the help and advice of the Fisher Committee.

In conclusion, I have only this to add. The adoption of this Financial Resolution is, of course, essential to Clauses 1 and 2 of the Bill. The Bill itself is intended to bring existing legislation up to date, and to open the way for the more rapid expansion of British air transport. It is a Bill which has been kept close to precedent, wherever precedent is available. Where new matter is introduced, that new matter is the result of close consultation with those who, by their knowledge and experience of air transport matters, are most fitted to give advice. I have no doubt that in this Debate hon. Members will bear in mind the nature and objects of the Bill to which this Resolution relates, and give to it the unbiased consideration which its importance merits. I have done my best to clear up some of the many points of misunderstanding and misgiving in the minds of hon. Members, and, of course, if any other points have even now been overlooked I shall do my best to deal with them on the Committee stage of the Bill itself.

4.57 p.m.


I am sure that many hon. Members, listening to the right hon. Gentleman, must have wondered why he did not make that speech on Second Reading. Had he done so it would undoubtedly have dispelled a great number of the objections and misgivings towards parts of the Bill which were sincerely and honestly held in many parts of the House. The Bill as it stands throws into very sharp relief the difference between the two main sections in this House on the questions of policy and principle involved. The right hon. Baronet and his friends are for continuing a policy of subsidising private corporations. I could not understand that sentence in his speech in which he said that as a result of this Measure the State had acquired a considerable stake in Imperial Airways. We can find no justification for that statement. He never explained how the British nation had acquired that stake. It is true that the nation holds£24,000 in shares, which were acquired as a result of giving up financial claims over the old company, but there is no new stake in Imperial Airways which the Treasury have acquired as a result of this Bill.

Under the old company arrangement, we had to give £1,000,000 per annum for 10 years. Under the right hon. Baronet's Bill we are to give £1,500,000 per annum, as a sheer subsidy, for 17 years from the present day. That is public money, handed out to a private corporation. I will say something later of the effects of that donation upon the fortunate shareholders. At the moment I will merely repeat that we are to give £1,500,000 by way of subsidy to certain so far undefined corporations, but with the knowledge that the bulk of the money is to go to a particular corporation, called Imperial Airways. As far back as Disraeli's time, the State had to face similar difficulties to those which the right hon. Gentleman is facing with his Bill. Disraeli had the Suez Canal problem to deal with, but he did not hand a subsidy to a corporation to engage in running the Suez Canal. Disraeli acquired over £4,000,000 worth of shares which have been a very fortunate investment for the British nation. That investment gave to the nation the right of control over the passage of the Suez Canal, exercised through our directors on the Canal Board.

In the days when it was seen that oil would be necessary as a means of transport to the British Navy, the right hon. Gentleman the Member for Epping (Mr. Churchill) found himself in a similar position to that of the right hon. Gentleman. He stepped forward on behalf of the then Government, and spent £7,500,000, not in subsidising the AngloPersian Oil Company, but in acquiring the preference stock, and so becoming a dominant force in the Anglo-Persian Oil Company. We appointed directors, with power of veto upon the policy of the Anglo-Persian Oil Company, and I believe that the only appeal against the decision of the Government directors is to His Majesty's Government themselves. The right hon. Gentleman the Member for Pollok (Sir J. Gilmour) was faced with another and similar position a few years ago, when the extraordinary situation arose that the steamship services, the sole means of transport between the mainland and the Western Isles of Scotland, had collapsed, or were on the point of collapsing. The right hon. Gentleman, after a Select Committee had inquired into the facts, got the then Government to agree that the subsidies given to the company should henceforth be on the basis of a public utility corporation. There was to be a limited dividend, and there were to be State directors and Government control over freights, fares and additional provision of new boats, and so on. There are three instances of where the principle has been applied that when State money is given for a public service of any kind, the State has to acquire ownership and control to the extent of that subsidy.

Most of us on these benches would accept that condition. It is a step, probably all the step we can get now, in the socialisation of property. It is a step in ownership and control. But we are not getting that in the Bill. We are getting nothing by way of ownership or control. There is a definite pledge from the State Treasury, for a period running for about 17 years from now, of a grant, donation, subsidy, present—call it what you will—of £1,500,000 of public money. The right hon. Gentleman, in an endeavour to placate us this afternoon, said that he was getting something. He said that there would be a fifty-fifty division of the spoil, after an agreed-upon level of profits. We asked him what was the agreed level of profits, but it is not yet fixed. It will not be more, said the right hon. Gentleman, than 10 per cent. That 10 per cent. is hopelessly illusory. No 10 per cent. can be earned unless there is a changed method in allocation of capital expenditure by the company. Here is a company which is developing a new service, and will have to spend lots of money in new ground arrangements. In 17 years it never will, on paper, earn 10 per cent., but it will, in fact, earn 10 per cent. It is earning 10 per cent. now, but on paper it earns 7 per cent. It is piling up new capital reserves and is acquiring property at the expense of the State subsidy.

The Government are making a habit of this kind of thing. It is no good saying that this is a particular service which we must subsidise. I think the words of the right hon. Gentleman were that if we had a corporation like the British Broadcasting Corporation, there would be a certain rigidity. If it were not for that rigidity, the right hon. Gentleman would, I gather, be happy to see a sort of British Broadcasting Corporation running this service. This Government continually uses the device of raiding the State Treasury for particular groups and getting nothing in return. In wheat deficiency payments, it gives £7,000,000, about £83 per grower; beet sugar, £50,000,000, and gets no stock or debenture for the State in return; meat subsidies, £3,000,000; milk, £1,250,000, and no return in stock to the State; shipbuilding, for the "Queen Mary," £1,500,000 for working capital, and up to £5,000,000 promised for a new sister ship, but no State ownership, no control, no acquisition of property by and on behalf of those giving the subsidy; tramp shipping, £2,000,000, and no shares for the State; hydrocarbon oils, £1,000,000, and no shares for the State. Now, with this civil aviation Bill, the right hon. Gentleman says that we cannot, if you please, run the service as a social service, as a nationalised concern, because of a certain rigidity which might be obvious in the structure.

It is difficult for us on this side of the Committee to see any dividing line between military aviation and civil aviation. Would the right hon. Gentleman and his friends offer to hand over military aviation to a private company? Never. That would not be tolerated for five minutes, even if they tried it. They would never dream of handing over the Navy, the Army or the Post Office, and they would never try to do it. Those are services vital to the nation. The contention on this side of the Committee is that civil aviation will become as vital to the life of the country, and a great deal more so, than military aviation; certainly as vital as the Post Office. It is, in our view, essential that civil aviation and air transport in the world in future should be owned and controlled by the nation as a whole, even as we control our Navy, our Army, or our roads. The other day I saw in the "Daily Telegraph," dated 6th August, 1868, a remarkable letter by John Ruskin, in which he said this: Neither the roads nor the railways of any nation should belong to any private persons. All means of public transit should be provided at public expense by public determination, where such means are needed, and the public should be its own shareholder. Neither road nor railroad nor canal should ever pay dividends to anyone. That was written 68 years ago, but here are the right hon. Baronet and his friends, in the year 1936, asking us to hand over the future development of civil Aviation in this land, with public subsidies to the extent of £1,500,000, to a private corporation.

What has already happened here financially? It is all very well for the right hon. Baronet to say that Imperial Airways received £570,000 last year. I think that was the figure which the right hon. Gentleman gave, but I have not been able to trace it in the accounts, from which it appears to be only £548,000.


I said that was what they were receiving when the proposals were outlined two years ago.


I beg the right hon. Baronet's pardon, but, at any rate, it is only a small difference. It is, then, £570,000 per annum, on a capital of £628,000, almost 100 per cent. of the capital of the company, handed away last year in subsidy, and they are to get more, and more, and more, in the years to come. It is not only the direct subsidy that matters, although that is quite enough, and is difficult enough to justify, but there is the indirect subsidy, over which the right hon. Baronet lightly skated. If the right hon. Baronet will look at the share value of Imperial Airways for 3rd September last year, he will find that the shares stood at 46s. Four days ago they stood at 55s. 3d. That is slightly less than the figure at which they stood at the time of the Second Reading Debate, but nevertheless there was an increase of 9s. 3d. per share, which on 624,000 shares represents a capital appreciation of £288,000—almost a third of a million pounds—which the fortunate possessors of those shares might unload on the market to-day as against the value of their shares last September. The right hon. Baronet says that there is to be a new issue, an issue of I think he said, £2,000,000, and he hinted rather broadly that investors had better be careful. That was a curious way of boosting a new issue, but I congratulate him on his frankness. That sentence of his will stand him in good stead later on. "You had better be careful," he says. "Do not expect that you are always going to get 7 per cent., or 10 per cent., or any fabulous sum." Nevertheless, there is to be a new issue of £2,000,000, and, if it is successful in the market, it is going to be the more difficult for this Government or any future Government to acquire the added values and the added properties from the monopolies that are now being created by the State, and to reach the position, at which the right hon. Baronet hinted, when even he, an anti-Socialist, would welcome a public utility corporation on the lines of the constitution of the British Broadcasting Corporation.

We do not want to make heavy weather for the right hon. Baronet on the details of this proposal. He spent a considerable portion of his time this afternoon in proving that it was better that Imperial Airways should very largely get a monopoly than that the subsidy should be spread over 20, 30 or 40 corporations. I agree with him. There is no justification for duplicating what went on in America. If hon. Members care to look at the files of the London "Times" for February, 1934, they will see a record of continuous collapse and of losses by investors of dozens, scores, hundreds of millions of dollars—the savings of countless poor folk swept away. We must take steps, and it will be the duty of the Opposition, if the Government will not do it, to see that steps are taken, to warn investors in this country against being exploited and plundered by mushroom corporations which we know, and the right hon. Baronet knows, are ready to spring to the front if there is the slightest chance of robbing and plundering the investors through this Measure.

He refuses our remedy of a State service; he refuses even a public utility corporation. He says that he is trying as far as he can to limit the subsidy to a particular firm. So far, so good; but the vital difference between us remains. Either he is building up a vast capitalist monopoly or he is tempting investors in this land to invest their savings in a company where they lose their money. There are only the two choices. We believe this to be a vital service, absolutely essential to the life of the nation. We think that it should be a State service, that we should own the capital, that we should control it as we control every other form of public service; and, because we hold that belief, and because we are so utterly at variance with the right hon. Baronet and his party on this matter, we shall divide the House. But we congratulate him on at any rate partially closing the door against such financial ramps as those which occurred in America, and which many of us were gravely afraid were going to begin here.

My last appeal to the right hon. Baronet on this matter is this: Can he not take steps, if be is going to have a £2,000,000 issue, to appeal to the Treasury to let us have a national investment board? Can we not get a beginning of control of finance in these matters? Must we for ever be at the mercy of the hawks and the vultures who, generation after generation, sweep away the savings and the thrift of our people? The right hon. Baronet stands at the parting of the ways. This is as big a service as steam-power was 100 years ago. This is the beginning of a new era. If the right hon. Baronet would take his courage in his hands and say that what is vital to the nation should be owned by the nation, he would not find any small, niggling opposition from this side of the House. Neither will he now. But we shall divide the House at. every possible stage in favour of a public service, in favour of Socialist ownership; and I hope it will not be long before the right hon. Gentleman's, hint of at any rate something on the lines of the British Broadcasting Corporation will be so far developed that he will be able to go to that sad taskmaster of every Government, the Treasury, and say, "I insist, in the interests of the nation, on this great civil aviation service being run as a public service in the interests of the nation, and not for the profit of a comparatively small number of shareholders."

5.24 p.m.


The Under-Secretary, in his full and interesting speech, dealt with a number of points that were raised in the Second Reading Debate, and I think he has been able to reassure us at any rate on some of those points. We have before us to-day a Resolution for a very considerable sum of money in the way of a subsidy. None of us likes subsidies; one's first instinct is to oppose and resist them; but I think that, if ever there were a justifiable subsidy, it is in connection with the development of civil aviation. All other countries are doing it; they are spending very large sums upon it; and it is essential that we, for the purposes of national prestige if nothing else, should take every possible step to render ourselves supreme in air development, just as we have been all down the ages at sea. In passing I would say that it seems to me somewhat humiliating to think that day after day we read of the Zeppelin "Hindenburg" flying backwards and forwards across the Atlantic, at a time when we have no airship of any kind, and have completely given up the idea of airship construction. But we are dealing to-day with heavier-than-air machines.

Like the right hon. Gentleman the Member for West Stirling (Mr. Johnston), I contemplate, as the Under-Secretary did, that the time may arrive when civil aviation will be run by a public utility company of some kind, but I think that the present structure of Imperial Airways is probably the most effective way of dealing with the problem at the present moment. A private company, capable of taking more risks and showing more active enterprise than a Government Department could, is well fitted to be entrusted with this activity at the present time, coupled with a certain amount of Government control and Government representation; and, while we all feel, naturally, that a great deal can be said in criticism of the policy of Imperial Airways, as indeed it could be said of most things, I think it is only fair to say that Imperial Airways have built up an organisation of which this country has reason to be proud. Their flying is very safe, and attracts people for that reason; and, if they are behind other countries as regards the speed at which they fly, I hope that that will be overcome, and I believe it is being overcome by the machines that are now being built. But it cannot be doubted that among those interested in the development of flying services there is a great deal of dissatisfaction at the way in which the Air Ministry has dealt with various proposals that have been brought forward from time to time.

The subsidy paid to Imperial Airways is, of course, very much more than is actually disclosed by the figures given in the Resolution or in any agreement with them, because there are all sorts of unseen subsidies, such as the provision of aerodrome guards, the provision of aerodromes, wireless services, experimental services, and meteorological services, while experimental tests of aircraft are carried out by the Royal Aircraft Establishment, and also from time to time, I understand, the Royal Air Force is called upon, in connection with forced landings, to take out petrol and supplies and render help in that way It would be very interesting if the Solicitor-General were able, in his reply, to give some information, if it is available, as to the total amount represented by all these different headings in the way of subsidies which Imperial Airways are actually receiving.

I hear certain criticisms of the charges that are made by Imperial Airways, at various aerodromes under their control, to private owners flying round the world, that the charges are such—£5 or £2 10s. a day or night—as to discourage private flying. I should like to know whether there is anything in those criticisms. I believe it has been suggested that private owners are being discouraged from landing at Croydon, and are going rather to Gatwick, where the conditions are more favourable and where incidentally, there is, I think, likely to be less fog.

There is undoubtedly very great dissatisfaction with the way in which the Air Ministry has been handling possible contracts, and the right hon. Baronet dealt with that matter to some extent in his speech this afternoon. I have put down an Amendment, which I understand will not actually be called, but which, if I might refer to it, is an attempt to meet the criticisms which have been made. It suggests that in future full publicity should be given to any proposed routes, and on this point the Under-Secretary has gone very far—indeed, I think he has gone the whole way—to meet the intention of the Amendment, because now everyone will know beforehand exactly what route is contemplated, and all will have an equal chance of corning in and putting forward their proposals. In addition, the idea is put forward that a particular contract, before it becomes binding with the force of law, should be brought before this House, so that Members may have every opportunity of discussing it and finding out, by questioning the Minister, that everybody has had fair play and an equal chance. After all, there are many precedents—the Import Duties Advisory Committee and many others—for bringing matters of this kind before the House. They could not take a great part of our proceedings and I hope, before a decision is taken, the right hon. Gentleman will give some consideration to the possibility of going still further than he has to-day in meeting the very real feelings of dissatisfaction which exist.

It is suggested in my Amendment on the Paper that tenders should be dealt with on a competitive basis. I quite agree, if it is assumed that "competitive" means the lowest tender, that is not the right test, but it is one of the elements that must be taken into consideration, and I never intended that it should be more than that. There are obviously other things, such as, who could supply the best and most reliable service, who has the best reputation for safety, who has the widest experience and what company is of the greatest financial soundness? All these, and probably other matters too, should be taken into consideration in granting a tender to any particular organisation. I am obliged to the right hon. Baronet for his information about the Fisher Committee and its composition, but in spite of the very full information that he gave us it is only right that I should say again that, whatever may be the case in the future—and I fully believe things will be very much better—as regards the past there is a feeling amongst those who have been to the Air Ministry and put forward their proposals that they have not had a square deal. That is quite a different thing from being unsuccessful. You may be unsuccessful and feel that, after all, you have had a fair chance, and you may be unsuccessful and feel that you have not had a fair chance.

I am not vouching for the details of particular cases but I have been in contact with a number of people who have given a great deal of time and thought to various proposals and have brought them before the Air Ministry, and undoubtedly, whatever the reason may be, they have gone away feeling that they have not been fairly treated, that they have not been dealt with on their merits and that others have been favoured.. That may be entirely wrong, but that is the impression left upon their minds, and. it is very much to be hoped that nothing of the kind will ever occur in the future. I fully believe it is the right hon. Baronet's intention to prevent any criticism of that kind arising in the future. He has dealt with the case of British Airways versus British Continental Airways, and it is clear that there was a certain grievance in the sense that the latter company only heard about it some time after the first company had been in negotiation with the Air Ministry. That is not likely to occur again. Then there is the case of the Irish Trans-Atlantic Corporation, Limited. I really cannot accept altogether what the right hon. Baronet said about that, because I believe that, whether that company had practical schemes or not, they certainly were encouraged to hope that they had a chance for a considerable period of time, and then suddenly, in October last, they were told that the whole matter had come to an end. The complaint that they have against the Air Ministry is that they ought to have been told at a very much earlier stage that it was no good going on, that they had not a chance and that the Air Ministry had other ideas, instead of their being allowed to hope when there really was no hope at all.

The right hon. Baronet referred to the fact that he only knows of one case at present of a route being under active consideration, and that is South America. He says there are five companies bringing forward proposals. It is interesting to note that, at any rate, one of the companies—possibly more—is quite prepared to put forward a scheme without any subsidy at all, owing to the fact that oil fuel of a cheap grade is used; and it will be most interesting to see whether a proposition which would involve no cost upon the Exchequer is one which will come out of the investigation by the Fisher Committee. Then there is the Atlantic route. I should like to know whether there will be any possibility of other companies in addition to Imperial Airways, particularly if they do not want any subsidy, having a chance of competing for the Atlantic route, or whether it is definitely handed over to Imperial Airways regardless of any proposal, however advantageous, that may be brought forward.


The hon. Member has referred to one company which is willing to do the South Atlantic route without a subsidy. It is only right to say that I am interested in one of the propositions that are before the Air Ministry, and it is quite untrue to say that any route could be covered entirely without a subsidy, because it would be necessary in any case to have a mail contract from the Government, which would in some way amount to a subsidy.


I am not dealing with any particular company in which any Member of the House may be interested. I am dealing with propositions which have been brought forward in my knowledge. It may be that there is an element of that kind involved, but I agree that it is no good having a hidden subsidy in the form of a mail contract. Can any indication be given whether in the near future there is a possibility of a service down the West Coast of Africa? I do not know whether the Government feel that they are prohibited from dealing with that, owing to the fact that Imperial Airways are going to the East coast. I hope that is not the case, because there are others who are willing to put forward proposals to go down the West Coast of Africa, flying day and night, in two-and-a-half days instead of the four-and-a-half days that it takes to go down the East coast. I understand that there is a possibility that, if the British Government will not encourage any service to go down there, the German Government may very well do so. It is not necessary for me to point out the meaning of that, and to say how desirable it is that any service running down the West Coast of Africa should be British, and I hope consideration will be given to that.

There are certain other routes in the Mediterranean that ought to be developed at some time, and I hope the Solicitor-General will give a rather more extended list. Cannot he say what other routes are in contemplation in the next few months which will be open to general competition? I should like to thank the right hon. Baronet for the considerable advance that he has made in his speech to-day. He has certainly adopted one part of the Amendment that I have put down and I hope he will consider whether he cannot go still further and in that way give general satisfaction and complete agreement amongst all parties that they have had a fair opportunity. I hope that by passing this Resolution we shall be doing something which will put us absolutely in the first rank in the world as regards civil aviation.

5.40 p.m.

Captain F. E. GUEST

The Chair has been so good to me in previous Air Debates that I promise to take up very little time to-day, but there are naturally one or two observations that one is anxious to make. The first is that the amount of interest now taken in Air Debates is most encouraging to those who have, I might almost say, laboured with that subject for the last six or seven years. I am convinced that the country is appreciative of the interest that is being taken and is looking for guidance. That places upon the shoulders of the Ministry a very heavy responsibility because, rightly or wrongly, for one reason or another, perhaps particularly in a military sense, British aviation is not holding the position that many of us would like to see it hold in relation to the activity of other countries. If there is time to make up leeway, so much the better, but do not let the Government be complacent about it. A very short time ago large sums of money were voted for purposes of defence. To-day a very modest little sum is being voted to help, to stimulate and to encourage civil aviation. I have submitted time and time again, and at last I have got a few people who believe I am right in what I am saying, that civil aviation is the foundation of all military national air defence.

This Money Resolution is, of course, a step in the right direction, but a. very small one, and I do not see any reason why there should be a limitation attached to it. The Under-Secretary, in his most admirable and valuable contribution to the Debate, said that aviation was not static and that no one knew where it was going to lead you. No one knew how much it would develop, no one could say to what extent it would take the place and fill the part of other forms of transportation, and yet to-day we are going to put a limit upon it until a date something like 1953. I do not understand the mentality that could conceive a limitation of that nature. Whether it means that the Government next year may change the figure and increase it, or cut out the year 1953 altogether, I do not know. I should have thought, dealing with a brand new scientific development of this nature, it would have been far better to have asked the House for a sum of money for, we will say, the current year and next year, when the Estimates, come along; to ask for more, and they will always get it if they put their case.

I shall naturally vote for the Resolution, which is part and parcel of the Bill, but I disapprove of it on the ground that it is limited in point of time. Further opportunities will be granted to us on the Committee stage of the Bill, and I think it is wise on the Financial Resolution to stick to general principles and not go too much into detail. The fact that the Under-Secretary went very closely into detail should not necessarily be a guide to us to follow him. I am sorry that there is no reference to any assistance to private flying. I do not mean the plutocrat who buys a valuable machine and goes to Monte Carlo. I mean the light aero club where poor people can learn to fly at a cheap rate. This is all dealing with companies. I want to see a little more attention paid to the enterprise of the private person. But that may appear at a, later stage. Another reason why I am dissatisfied with the amount is that there seems to be a kind of ban upon, or disinclination to use, the word "airship." I started, a great many years ago, an anti-airship campaign, when, I believe, I was responsible for locking the doors of Cardington after the terrible disaster to "R' 36." But in spite of the accident which happened eight years later, there is no doubt that an example of what at airship can do has been presented to the world by the German performances both of the Graf Zeppelin and the Hindenburg. I thought that possibly I should be ruled out of order, but I think that the words which appear in paragraph (1): To authorise the Secretary of State to agree … to pay subsidies to any persons and to furnish facilities for their aircraft must cover the word "airship" Unless the Chairman feels inclined to ask me to desist, this is my opportunity to give to the Committee one or two impressions which were left upon my mind of the trip which I was able to make last week in the "Hindenburg." It required a good deal of courage to go on board, but I thought to myself that as the Graf Zeppelin had done 60 crossings, possibly the "Hindenburg" might be safe at least on its second crossing. Therefore, I got on board. The developments carried out during the last 14 or 15 years by the German scientists, and their courage and the money they have had to spend upon those developments, have produced something that we have never had much chance of dreaming about until. to-day. They have now, undoubtedly, an instrument of passage and transportation which personally I would rather get into than I would get into an aeroplane to travel the northern route to North America. The point is that Great Britain, who is rich, should not close her mind completely to the possible development of that form of air transport. A hundred persons were carried from New York to the west coast of Ireland in 36 hours, in the greatest possible comfort, without a movement of any sort or kind, and without even the sound of the engines, and that is something which is truly amazing. If we had been allowed to land at Croydon we would have had a 40-hour trip, but, unfortunately, the schedule was that we should be taken on to Frankfurt, and English passengers who had been on the airship had to fly back again, the loss of a day. But 62 hours against the wind, and 48 hours with the wind is a striking per- formance flying with 100 persons. I think that there is more in it now than meets the eye, and I should like to see the Ministry pay more attention to it, and when I say that, I mean it.

The Americans had two observers on board. We had a limited number of Press correspondents. The American naval section had two officers on board to make observations in the machine, in the control tower, and, if necessary, in the engine room, with a view to reporting to their Government what they thought of the possibility of re-introducing air- ship travel. We did not do this. I wonder whether the Under-Secretary of State will answer that point and give some reason why we ignored this amazing modern performance. It is the business of the private Member not to press too hard, especially if he is in support of the Bill as a whole, but to press and to stimulate if possible, increased activity and enterprise in the Government, and in the Department which controls the Air Service. It cannot be for want of money, and, therefore, there would be no harm in trying further experiments in this extraordinary means of air travel. It was said on the "Hindenburg" that, "we must not go too close to London," and, in fact, Dr. Eckener was asked to keep a little away from London. I am telling no secrets because it was known to every passenger on the ship. Only the week before I left these shores in the "Bremen," the German ship, sailing from Southampton, and I did not see any reason why the German airship should not be allowed to pass over Cardington on its way home.


Can my right hon. and gallant Friend tell the House who told Dr. Eckener that he was not allowed to come over London?

Captain GUEST

I must not tread upon the ground of difficult foreign or diplomatic negotiations, but it was public knowledge that we were not to pass over London. In spite of that fact we passed over New York and had a marvellous time. I want to-day, if possible, to convince the Minister on the desirability of taking up this dropped subject, as I am certain that there is more in it than we have appreciated up to now. That is all I have to say. There was a sentence used by the Under-Secretary which, I think, I shall take up on the Committee stage. It relates to the composition of the new board which is to control such matters as the certification of airworthiness and the carrying out of other responsibilities. But a curious incident occurred, which, I think, will strike a hopeful note in the minds of everyone. It related to the peaceful results and the friendliness between nations which may accrue from air travel. A prize was offered by a leading journal, consisting of a free trip to New York and back in the "Hindenburg," to anyone who could put into five words the greatest and most important significance of this great form of air travel. A young man, I think he was in his bathroom, told his wife to write on a piece of paper what he thought of it, and it was this: A giant shuttle on peace work. He won the prize, and went over to America and back on the "Hindenburg."

5.53 p.m.


I did not know that my right hon. and gallant Friend the Member for the Drake Division of Plymouth (Captain Guest) was going to raise the question of airships. I and the Home Secretary were engaged on the investigation into the loss of the R.101, and although I went into that investigation a tremendous believer in the airship, a more studied consideration of that disaster left me very sceptical as to the future of the airship. But the consideration of the question of starting experiments again could not be wrapped up with the provisions of this Bill, but would have to be a question of policy by the Air Ministry at a later date, and financed according to the yearly expenditure on the subsidising of aviation generally. I do not think that one could really ask for the inclusion of words in a Bill of this sort to enable us to start building airships again.

I am very grateful to the right hon. Gentleman the Under-Secretary for the very lucid explanation which he gave to the Committee this afternoon. It might have saved a good deal of trouble if it had been given a little earlier. His explanations are always effective, but I thought that to-day the Patronage Secretary rather wanted us to have a sort of shorthand Debate, and that he wanted to close it at a very early hour. It was not an encouragement to many of us to speak for a short time. However, I hope to get through in the required time. I like the right hon. Gentleman imparting information but I do not like him in the role of a schoolmaster administering rebukes in rather a threatening way. I see no reason why anybody cannot criticise Imperial Airways without being told in a voice of great indignation that they are unpatriotic. Surely, we can criticise even more august bodies, and even the Government themselves, without being called unpatriotic. If that principle is to be laid down, are we to be called unpatriotic when in opposition we criticise a Labour Government? I think that there is danger along those lines.

We must remember that when we talk about Imperial Airways we are referring to a very strong organisation. First of all, there is the Secretary of State and his Under-Secretary, who go up and down the country with Sir Eric Geddes making speeches and saying how excellent each Department really is. That has a very big effect upon the country, and then we are deprived of one of the great organs of the State, the "Daily Mail," criticising aviation, at any rate, from the point of view of Imperial Airways, although that paper has contributed tremendously towards aviation. They even gave me £1,000 for flying one mile. That is a long time ago, and it was worth much more than £1,000, but it shows how interested they have always been in aviation. Now that great voice is muzzled because Mr. Esmond Harmsworth is a director of Imperial Airways, and again, a most extraordinary thing, although to-day we are discussing the future of a great public company the "Times" comes out with an article of two columns on the middle pages by the managing director of this private company. How very timely and how marvellous is the publicity behind it; and the climax of the whole business is the extraordinary fortuitous circumstance that the great lawyer who beat them in the one case when they were really in the Court is going to defend them tonight.

I put down an Amendment, which, apparently, is out of order—every Amendment you put down on a Financial Resolution is out of order—not because I asked the country to find more money, but apparently because I changed the direction in which that money should go. I should like the Solicitor-General to tell me, so that I do not have to press the point at a later stage, whether the provision of aerodromes really is included in the Bill, in addition to the providing of money for companies to run aeroplanes. There are many of us who think that you cannot subsidise aviation in any better way than providing really first-class ground organisation, which is a very expensive matter. You have to clear great tracks of land, and it is very difficult in some parts of the world. You have to provide radio, accommodation and services for fuelling and all that sort of thing. One of the dangers about a scheme such as that which we have before us to-day is that that type of provision made in any part of the Empire, if it is made by a private company, belongs to that company, and consequently it would be impossible for any other concern at a later date, without paying compensation, to run from that particular place. If the Government are to subsidise aerodromes up and down the Empire, they should be Government aerodromes and not owned by a private company.

The hon. Member for East Wolverhampton (Mr. Mander) seemed to think that by the publication of a White Paper the House would be satisfied with the explanation as to what the contracts were to be. I am not satisfied with that. A White Paper is not a thing you debate or vote upon. All that you can do is to read it. I hope that the Solicitor-General will be able to say that we shall be able to confirm the decisions which the Air Ministry comes to with regard to contracts. I am not particularly pleased with the fact that the Air Ministry feeling apparently so s1-aky on what they should or should not do, have placed the whole decision on these matters on the Fisher Committee. The Fisher Committee is a committee of civil servants. On that committee there are civil servants from every Department. Why should they have all the brains that are denied, apparently, to the Air Ministry to decide who are to run separate air services up and down the world? It seems to me that it is the Air Ministry that should deal with that matter and not a committee of civil servants, and I am sorry that they should feel that they have any lack of competence to deal with it.

I should like to learn from the Solicitor-General why there should be a pledge by Parliament as to this subsidy for so many years. Does it mean that every successive Administration is to be pledged to the payment of this money? What is the objection to having a Vote every year put into the ordinary Budget? Surely, this Bill would never override the Budget. I am persuaded that if the Chancellor of the Exchequer said: "I am afraid that this year we cannot afford this money," that a Resolution of the House would overrule any Bill of this sort. I am not interested whether it goes on for 10 or 30 years, because I feel that it is going to be a matter of immediate concern to us year by year, and therefore if the occasion arose I do not think that any Government, whether it be a National Government or any other Government, would take any notice of this Bill.

I welcome my right hon. Friend's statement that he is not proposing to run lines in competition on the same routes. I have always tried to plead that Imperial Airways should not, ipso facto, he a bar to the starting of new lines. The right hon. Gentleman told us that there was to be free competition for new firms to try and start new lines. I agree with him that once you have started a new line you should not allow parallel competition, but I welcome the announcement that on new lines the field is open to competition by tender. With regard to the second part of the Resolution, the setting up of an authority for the granting of certificates of airworthiness, etc., to private machines, that seems to me highly desirable and very wise. It was a recommendation of the Gorell Committee, on which I served.

6.4 p.m.


A fit of nostalgia makes me return for a few minutes to the field of aviation to make some observations upon a subject which once occupied very much of my time. I must confess that I am the father of the Imperial Airways Company, and as I listened to my hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore-Brabazon) I felt very proud that my child should apparently have become so influential that not only in this House, but in the world at large and even in the Press it is not criticised. I know how tiresome it is for an Air Minister or any other Minister to become reminiscent and tell the House what happened at some remote period in the past, but I will be very careful to avoid boring the House with memories of that kind.

The problem that confronted me when I was dealing with questions at the Air Ministry is the same problem that is confronting the Committee this afternoon, and it can be summarised in a single sentence—how can we free civil aviation from subsidies altogether? Subsidies are an unmitigated nuisance. They impede the free workings of the company, they are an embarrassment to this House, and they give rise to complex controversies such as we have listened to in these Debates. If once we could get rid of subsidies, immediately the House would be freed from many of the embarrassments that have weighed upon us in recent years, and immediately the aircraft industry would have at its disposal what it has always needed and what it has always lacked, and that is a large demand for civil machines. This was the problem which faced me 13 years ago, and it is the problem that we are discussing this afternoon.

What is the best plan of freeing civil aviation at the earliest possible date from the necessity of receiving subsidies from the public funds? There are four ways in which we can approach the problem. One of them was suggested by my hon. and gallant Friend the Member for Wallasey. He emphasised the need for giving extensive ground facilities for any air line that was able to operate. I agree with him that more should be done in that direction than has hitherto been done, but none the less I believe that indirect assistance of that kind in the present state of civil aviation is insufficient, and I regret to say that for some years to come more direct assistance will still be needed.

The right hon. Member for West Stirling (Mr. T. Johnston), who made a very interesting and on the whole a helpful speech, not unnaturally took the line that services of this kind should be a Government monopoly. It is inevitable that, speaking from those benches, he should take that line. Let me, however, suggest to him that, whatever may be the rights or wrongs of private enterprise and State management in other walks of life, there is a great difficulty in a Government monopoly of an Imperial air service of this kind. The lines pass over many countries, and it seems to me that it would be nothing but an embarrassment and a danger if all the questions that constantly arise in the operation of these services between the companies in this country and the companies abroad immediately became controversies between the Government here and the governments of other countries. On that account, if for no other, I think that the conception of a Government monopoly of a service of this kind which extends over many different countries is objectionable.

That being so, there are two other alternatives. There is the alternative of free competition and subsidies to a number of different companies, and there is the alternative that is the basis of the Government's proposals to-day, namely, subsidies given to a large and well-established organisation. I well remember appointing the Hambling Committee, and it is well worth the while of hon. Members to look at the report of that committee, where they will see set out the great disadvantages of excessive duplication of competition which is not really competition, but competition that is only between one Government-subsidised company and another. The Hambling Committee came to the view that the right course was to concentrate subsidies for the most part on one well-established organisation. That was the history of the origin of the Imperial Airways Company, and I think most hon. Members will admit that the statistics which the Under-Secretary of State for Air gave to-day amply justified the recommendations that were made by the committee.

He showed that the company are working their services more economically than any other comparable company in the world, that they have advanced further along the path of economic self-dependence than any other comparable company, and that so far as safety was concerned the insurance rates were no higher on their machines than the rates on railways or ships. In fact, the record that he gave showed that the experiment of concentrating our subsidies upon one well-established organisation has put our services into the first rank of civil air lines in any part of the world. I admit that these facts do not dispose of the question that we are discussing this afternoon. They show that so far as the past is concerned the experiment has been very successful. How far, however, do new conditions modify the policy that was then adopted'? I am inclined to think that they modify it in two directions. They seem to me to show that it is now possible to launch out upon more ambitious programmes than we contemplated when the Imperial Airways service was started, and I am glad to think that in the present proposals there is to be a really spectacular advance in the shape of extending the frequency of services to every part of the Empire, and generally speeding them up.

I think also—and here I find myself to a certain extent in agreement with my hon. and gallant Friend the Member for Wallasey—that the experience of the last 12 or 13 years shows that it is now possible to encourage other companies besides the Imperial Airways Company. I am glad to think that in these proposals it is contemplated that other companies are in future to have their share of the subsidies that we are approving this afternoon. With these two modifications a policy which has proved so successful during the past 12 or 13 years should be maintained, and it would be a great mistake to alter the basic principle—namely, that we do not unduly dissipate our financial help but concentrate it on well-organised companies that are not only likely to run their services safely and comfortably but are likely to help the problem, that in course of time civil aviation may be able to do without a subsidy altogether.

My last word is 1 o say to the Committee—persist in this policy. The danger of experiments of this kind—and after all in the field of civil aviation these services are still something in the nature of experimental service—is that the House of Commons and the Government are tempted not to persist, but to adopt new policies to suit the whims of a particular moment. I listened with great interest in that connection to what the hon. and gallant Member said about the airship experiment. Let that be a lesson. Looking back at the airship experiment—I was in daily contact with it for five or six years—I believe that if we had persisted in the policy of airship development, if there had not been quite so much criticism in the House nor quite so many demands for a reversal of the programme which was started, we should have made a success of that experiment. With that lesson in mind I say, do not let us make a similar mistake in dealing with these Empire air routes. We have, I believe, a sound policy. Let us by all means adapt it to modern conditions and persist in it, and not be drawn aside by changes which would inevitably undo the good work which has been done in the last 13 years.

6.19 p.m.


The right hon. Member for Chelsea (Sir S. Hoare) began his speech by claiming with some pride that he was the father of the company whose operations are engaging our attention this afternoon. Therefore, he appears in the Debate in the somewhat novel role of the prodigal father. Since the days when he occupied his position at the Air Ministry he has wandered into a far country with disastrous results, and it now only remains to be seen when the fatted calf will be slain for his return. If and when that happens we on this side of the House shall watch the festivities with some interest, but we shall not be able to participate in them, and nothing that the right hon. Gentleman has said on the subject of civil aviation this afternoon will encourage us to do so. Our main objection to this Financial Resolution is that it refuses to accept the principle of State control for an industry which, above all others, is particularly fitted for that form of control. The sole reason given by the right hon. Member for Chelsea against the adoption of State control was that if there were State control of Imperial Airways we should find that the diplomatic operations of the company in order to secure rights of way and other privileges in foreign countries, would be a constant source of difficulty and embarrassment to the Government.

Many fallacies fall upon your ear, Mr. Deputy-Chairman, when you have to listen to these debates, but I say that this is the grossest fallacy to which you have had to listen for some time. The Government have, in fact, to encounter these difficulties at the present time. The first thing Imperial Airways does if it encounters opposition in any foreign country is to come to His Majesty's Goveronment, and all the diplomatic resources of the Government are employed in order to secure for Imperial Airways the privileges it desires to enjoy in foreign countries. If no better reason than this can be found for declining to inaugurate a system of State control, it will not be long before we shall establish this principle for this company, and for others like it. We are in the strange position this evening—indeed it is no longer a strange position, because it is becoming the normal—that there are more supporters of the Government anxious to criticise these proposals than there are hon. Members on this side of the Committee, and, therefore, I do not propose to detain the Committee very long because I am anxious to hear what supporters of the Government have to say against these proposals.

I want to make clear our two main reasons for objecting to this proposal. The first is the financial reason. We do not believe that a sound financial case can be made out for the payment of this subsidy, and nothing that the Under-Secretary has said has justified it from the purely financial point of view. Indeed, the Under-Secretary did not attempt to justify it from the financial point of view. But a sum of approximately £25,000,000 is being guaranteed in the payment of subsidies to private enterprise by the passing of this Financial Resolution. Not only that, but in one year we are paying to this company an amount equal to about 75 per cent. of its paid-up capital. During the past few years the shares of this company have appreciated from 1s. to 50s. entirely owing to the subsidy paid by the Government, and now we have coming into view a further source of substantial capital appreciation which the company is going to enjoy on the guarantee of the Government paying its losses and also paying its profits. That is an aspect of the matter which the Under-Secretary let out during the course of his speech in which he told us that they were going to raise more capital—£2,000,000 I think—and that that sum was to be raised at a premium. There is no doubt about that. The shares are standing at 50s. in the market to-day, and they will probably be able to raise the £2,000,000—I am not an expert financier—they will probably be able to get almost anything they want. These shares, no doubt, can be raised at a premium of 100 per cent., no doubt they will be underwritten and fully subscribed on that basis. Therefore, we have the position that on the top of this £25,000,000, which is being guaranteed to private enterprise under these proposals, with no effective participation in profits, this company is going to raise at a premium a new capital issue of more than the present amount of its capital.

Is there anybody in the Committee who can honestly say that from a purely financial point of view these proposals are justified? The question answers itself. If they cannot be justified from the financial point of view, on what ground can they be justified? This company, so far as its position as an example of private enterprise is concerned, is a sham and a, pretence. That is no exaggeration. There is not a vestige of private enterprise, in the true sense of the word. left in the administration and control of this company. The Fisher Committee which supervises the policy of the Government in this regard shows that nearly every Department of the State has to make its contribution towards the government and management of this company. It gets financial State aid, and diplomatic State aid; meteorological State aid and technical State aid. There are two Government directors on the board, and in various other ways the State gives this company assistance and has some control. In no single respect, if the matter is regarded in the light of pure reason, could the Committee vote in favour of this Financial Resolution to-night. However, we cannot hope that the Committee will take that view, but I hope, nevertheless, that hon. Members opposite will be perfectly frank on their speeches on this proposal.

There is one further point to which I desire to draw the attention of the Committee, and that is in regard to the complaint made by the Under-Secretary of State of the criticisms from this side of the House in regard to the operations of Imperial Airways. It will be a strange thing if Imperial Airways are to be allowed to make the most skilful and exhaustive propaganda in favour of their right to a subsidy and that Members of Parliament, whose duty to their constituents and to the country pledges them to criticise these proposals, are to be charged with a lack of patriotism or unfairness towards the company if they reply. I have here a very attractive looking leaflet which is entitled "The other side of subsidies," and is a reprint of an article published in the "Aeroplane" on 11th March, 1936. I do not intend to read it because I am certain that it can be obtained in thousands from the offices of Imperial Airways. It lends some force to the remarks of the hon. and gallant Member for Wallasey (Lieut.-Colonel MooreBrabazon) in which he commented on the timely nature of the articles in the "Times" of yesterday and to-day, in the most prominent position in that influential journal, written by the managing director of Imperial Airways. Some two or three months ago, in what is perhaps the most influential trade paper dealing with these matters, an article was published, with no indication that it was other than an editorial article, in which occurred the following sentences: That Imperial Airways is the Government's chosen instrument to receive a subsidy and technical help is reasonable enough; that the subsidy should be the means of paying increasing dividends to shareholders is another matter. Why should the subsidy which comes out of the pockets of the taxpayers as a whole be used to pay higher and higher dividends to a body of shareholders? The maximum rate of dividend payable should be fixed at 3 per cent., which is better than the rate at which the Government can borrow unlimited millions any day of tile week, and any profits remaining after this rate is paid should be handed back to the Exchequer against the subsidy payment, or should be spent on improving flying stock or a higher pay for the ground staff.


In what paper is that?


It was the "Aeroplane" of 26th February. We can well imagine what a flutter that caused in the board-room of Imperial Airways, and it may be in. the rooms of the Air Ministry as well, where, I believe, 19 copies of this journal are distributed. However, the directors got busy, and a week or two later there appeared another statement in the "Aeroplane" which had as its object the complete reversal of any suggestions previously made. I have that statement in my hand. But instead of printing the original and, as I submit, the spontaneous and true view of that journal, Imperial Airways had the reply printed—and circulated thousands of copies—as an answer to the previous complaint without quoting that complaint at all. But I am not at all sure that after making their answer their last state will not be worse than the first, because their main answer to the complaint about subsidies is this: If the Government took on the development of air mail services themselves, probably the way they would go about it would be to borrow the money from the public through Treasury bonds or some other kind of interest-bearing fund. On that money they would pay a guaranteed interest, or, in other words, a guaranteed dividend, and the whole of the trading risk would fall upon the Government. I thought the whole object of our proceedings to-day was eagerly to accept the whole trading risk of this corporation. The risk already falls upon the Government; the risk of loss falls upon them, but the prospect of profit is not shared by them at all. Then, by way of a little reciprocal compliment, Imperial Airways include in this statement a little compliment to the Government. The leaflet reads: Instead of that, the Government is much cleverer. It gets the public to lend the whole of the money to develop the Empire air mail services with no guarantee of interest or dividends, and the public takes all the risk. What, then, is this subsidy which we are voting in such an enormous amount this evening? The public is going to subscribe a, further £2,000,000 to this company—we have not had full details, and I am speaking merely on the basis of the information which was given by the right hon. Gentleman—and the company, presumably, will pocket, in addition to the vast annual subsidy, the whole of the premium on the shares which it is shortly to issue. On financial grounds and on managerial grounds, I believe that this proposition is unsound. I believe it would be far better to scale up the whole of the operations of Imperial Airways into a State organisation, which it is, in effect, already. I believe that would be far better for the development of Imperial aviation. It is the only method which in logic we can adopt, and I venture to predict that before many- years have passed that will be the system on which our air services will -be run.

6.35 p.m.


Before venturing to offer one or two criticisms of the Financial Resolution, I would like to express a word of sympathy to the Under-Secretary of State for Air. It is never an easy matter for a man to carry out the duties of Under-Secretary of State in this House if his chief Secretary of State is in another place. It is doubly difficult to do so when, on critical occasions in this House, he is liable to be deserted by all his colleagues. On the back of this Bill, in addition to the name of the Under-Secretary of State, there appear the names of the Financial Secretary to the Treasury and the Solicitor-General. Why were those two hon. Members not in their place on Second Reading? I do not know what was the reason. I am not sure that perhaps in the case of the Solicitor-General it may have been impossible—

The DEPUTY-CHAIRMAN (Captain Bourne)

We are now discussing the Bill, and we had better leave the Second Reading Debate alone.


I wanted only to point out that many hon. Members feel that they did not have all the information given to them on Second Reading that they might have had. I wanted to exonerate the Under-Secretary of State from any blame for that owing to the fact that he was left alone to carry the whole burden. As you say it is not fitting to discuss the matter now, I will not pursue it, but will come to the terms of the Resolution before the Committee. Briefly, it might be described as a proposal to continue for a further term a system of subsidies similar to that at present in operation under the 1930 Act, the principal difference being that the total limit of possible subsidies is to be increased and the total period for which the subsidies may be granted is to be prolonged.

I do not wish to detain the Committee now by arguing the case for subsidies to civil aviation, and I think other hon. Members have done that adequately. There seems to be in the Committee a general appreciation of the importance of civil aviation and of the impracticability of carrying it on at the present time on any large scale without some Government assistance. If that be granted, so far as I can see the assistance can only take one of two forms, either that of an open subsidy, as proposed under this Resolution, or that of a concealed subsidy by way of airmail contracts. Personally, I much prefer the open subsidy. At this stage I do not wish to object either to the suggestion that a subsidy to civil aviation should be continued for a further period or to the amount suggested in the Financial Resolution, but I do object to the time suggested, because I think the period is too long.

The Under-Secretary of State laid stress on the scope of the scheme which is now before the Air Ministry. I do not consider that has anything to do with the matter. The scope of the scheme, although clearly it should affect the amount of the subsidy, does not seem to me to affect the period, which surely depends upon the nature of the expenditure. It depends upon whether the expenditure is such that it can be recouped only after a long period of time—expenditure for which many years of amortisation have to be provided—or whether it is expenditure of a character which in the ordinary course of events would be provided for over a short period of years. For example, if we were asked to consider a concession for a railway, I can well imagine that if the expenditure was to be devoted to laying down a permanent way, it would be necessary that any subsidy should run over a long period of years. I submit, however, that in the case before us the facts are entirely different. No doubt there are certain charges of a more or less permanent character for ground expenses, but I have yet to learn that they form a relatively large part of the total expenses of one of these civil aviation companies. I thought that the bulk of the cost went either in wages or in the provision of the machines themselves. The machines clearly are short-lived and the depreciation that has to be provided for them would in the normal course be provided over a short period of years. I cannot see that there is any real argument why the period suggested in the Financial Resolution for the subsidy should be 15 years instead of, say, 10 years.

Looking at the matter from the other point of view, it seems to me to be most desirable that the period should be as short as possible for two reasons, first, on the general grounds that this House likes to keep control in such matters of subsidies and does not wish to part with that control for a longer peiod than can be shown to be reasonably necessary, and, secondly—I am sorry to have to say this—on account of the unsatisfactory record of the Air Ministry in the matter of the administration of these subsidies. Much has been heard in the discussion on this Resolution of the case of the Scandinavian air route. Hon. Members will recollect that there are two private companies having somewhat similar names—British Airways and British Continental Airways—both of which are anxious to establish a service to Scandinavia and to get whatever Government assistance may be going in the establishment of that service.

The Air Ministry proceeded to open secret negotiations with one of those companies. I know that this afternoon the Under-Secretary of State pushed the responsibility on to some anonymous committee, a committee the members of which we have been told only this afternoon it is not suitable should be named in this House. I do not think the Air Ministry strengthened their case by trying to take refuge of that sort; they had better come boldly forward and take the responsibility that is theirs. They carried on the negotiations with this company so secretly that its rival, which was naturally closely interested in what was going forward, was entirely unaware of what was taking place until a point had been reached at which the negotiations had gone so far that the Air Ministry did not see fit to break them off or to modify them. No invitation had been issued to the other company—British Continental Airways—to say what they mile prepared to do or what were their plans. We are told vaguely that this committee of anonymous persons had before it the facts about this company. I asked the right hon. Gentleman to-day, when he was speaking, whether any representatives of the company had ever been heard by the committee, and he said, "Oh no, the committee has the facts before it; it did not hear any representative of the company." I suppose the facts were put before the committee by the representatives of the other company.

What was the result of all this secretive business? An agreement, which was not, I understand, signed, was negotiated for the payment of a subsidy to British Airways. At the same time an agreement was negotiated by the Postmaster-General for the carriage of mails by this same company, and as was pointed out to us this afternoon, a contract for the carriage of mails can very easily be a disguised form of subsidy. It is interesting to note in this connection that the Assistant Postmaster-General has coolly announced in the House that he is not prepared to give to the House the terms of that contract for the carriage of mails on the ground that it would be contrary to public policy, and he said that in spite of the fact that every hon. Member knows that the terms of every contract for the carriage of mails by sea are always published. I should like to know what are the considerations of public policy which make the Postmaster-General so anxious to keep quiet this bargain with British Airways. We are not allowed to see the details of the contract for the subsidy.


The hon. Gentleman must pursue this on the Post Office Vote.


If I may not pursue the subject of the contract for mails, although it has been declared by the responsible Minister to be interwoven with the contract for the subsidy, I will say a little more on the question of the subsidy. These two contracts were entered into, and, as I have explained, the other company was not consulted, was not allowed to explain what it could do, and was left out in the cold. I hold no brief for either company, but in a case like that it is desirable, in the public interest, that the Ministry should hold the scales evenly between different sections of private enterprise. It is in their own interests to get the best bargain they can and to consider all possible alternatives.

Not merely have they ignored the second company in this case, but they have actively discouraged that company from opening an air route to Scandinavia. I understand that when the company wished to get the necessary permits a good deal of discouragement was put in its way. When the Air Ministry, in the ordinary course, forwarded the company's application to the Swedish authorities for permits to open the air route, the Ministry mentioned that, in no circumstances, would the company be considered for the carriage of His Majesty's mails. That is as if I were asked to give an introduction to somebody who wanted a favour and sent a message like this: "This is to introduce Mr. So-and-so who, I understand, wants something from you and I ought to mention that he is not a person whom I would, in any circumstances, employ" That was the kind of recommendation sent by our Air Ministry in respect of this company. I think it shows a bias which is most unfortunate.

Having regard to the way in which these negotiations have been conducted, I think it is not desirable to extend the period for which subsidies may be granted under this Measure. It may be that it is not too late to remedy the harm that has been done. We must all recognise from the speech which we heard this afternoon that the Air Ministry appreciate the undesirability of any repetition of such a case. We are told that in the case of the South American route all the interested companies, some five in number, are to be invited to say what they can do.


A great deal has been said about this company. Is it not a fact that the company in question had only one large machine and four small machines?


The facts, as far as this company is concerned, are that it was actually running a service to Amsterdam before the other companies started, and had made a survey with its own machines to Scandinavia before the other company. Of course, when they were informed that the other company was to have all the Government assistance, it was hardly to he expected that they would maintain five big machines.

I was saying, when interrupted, that it was not too late to put the matter right. The Under-Secretary has quoted his Noble Friend as being in favour of the idea that these two companies should amalgamate though, as he said, he himself could not suggest it to them. When two enterprising young British companies are endeavouring to establish a service on this route and neither of them is strong enough to do it without Government assistance, it seems common sense that they should pool their resources. It has to be remembered that at the moment it is the Air Ministry which is preventing anything of the kind. While they say "We will give our support to one company only" and refuse to look at the other they destroy any possible basis of amalgamation. I understand from the Under-Secretary that the agreement is not yet signed. This is a matter which really affects the reputation of the Air Ministry and the Government and I would appeal to the Government to look into it and see whether the difficulties cannot be smoothed out by doing what was done in the case of Imperial Airways—getting the conflicting interests to join together to form a stronger unit and then giving to that unit the assistance which it was intended, originally, to give to only a. part of it.

6.51 p.m.


The right hon. Baronet the Under-Secretary of State has been fortunate to-day in that he has had the weighty support of the right hon. Gentleman the Member for Chelsea (Sir S. Hoare) and even the opposition from the right hon. Gentleman the Member for Stirling and Clackmannan (Mr. Johnston) has been of a qualified nature. The right hon. Gentleman opposite is a good Socialist and while he sees that he cannot hope to convert to Socialism the right hon. Baronet—who appears to offer a poor field for such missionary enterprise—he does not quarrel very seriously with the Bill. Of course the idea of people getting any return for their money is abhorrent to the right hon. Gentleman and causes him pain, and I can appreciate that feeling in anyone holding the opinions which the right hon. Gentleman holds with such obvious sincerity. The farming out of civil aviation to a private company may well be the most appropriate way of dealing with a very difficult problem which is causing growing concern especially in regard to the starting of new enterprises.

The right hon. Gentleman opposite, in his very interesting speech, asked why not use private companies for warfare as well as for other things? We look at the matter from the practical point of view and take what we think is the best working principle. Private companies were tried for war in Italy in the Middle Ages and were found to have grave disadvantages. So we do not think that private companies are good for war. State ownership has been used for transport, notably in the case of railways and shipping and State ownership has been found to be a singularly unfortunate way of running transport. For those reasons we try to use the system which will work best in each case arid on this side of the House we believe in State ownership for warfare and private enterprise for commerce. As regards this particular company I have no great objection to it, not even to the shareholders making a small profit, so long as it is not too much, if their company is efficient. Perhaps I ought not to say "profits" because it is not the fashionable term now in use. The more progressive section of the House never allude to giving anybody any money but merely to giving them more purchasing power. I would not object to the shareholders of Imperial Airways having a little purchasing power as long as it was not too much.

I would, however, make two provisos. One is that reasonable competition on routes which are not covered or not adequately covered should not be stifled. I think Clause 5 of the Bill shows, as the right hon. Baronet said, that competition would not be stifled. The second point is that while we are subsidising a company to carry out the public work of aviation that company should make no secret political agreements—that is, it should make no agreements with other countries or communities of which this House is unaware. What check have we in that respect? Surely the only check the House has upon the activities of a company to which civil aviation is being entrusted in such a large degree, is in the voting of money. Here to-day, apparently, we are paving our last opportunity in that respect until 1953. The right hon. and gallant Member for the Drake Division of Plymouth (Captain Guest) rather alarmed me by asking for indefinite sums of money without any check. I do not think this Committee would be fulfilling its duty in allowing indefinite sums to be voted and I think there is something in the idea of giving the House an opportunity for review at a rather earlier period than 1953. From now until that year is a very long run. I think, however, that there should be reasonable confidence in continuity, in so far as continuity can ever be possible in a world which has many misfortunes, one of the greatest being the existence of people who believe in nationalisation. It is very hard to see how one could guarantee absolute continuity, having regard to that fact, although, possibly, I overestimate the importance of that influence.

I wish to ask my right hon. Friend the Under-Secretary, as I have asked him before, certain questions on how this money is to be spent. Although to-day he gave us a speech of great lucidity and of much assistance to us all, he has, like all other distinguished occupants of the Front Bench, a notable capacity for reticence when dealing with questions. I wish to ask him now what is the situation with regard to the North Atlantic air routes? Is there an agreement with the Irish Free State or is there not?


Now we are getting at it.


Yes, now you are getting at it.




If any of this money which we are voting is to be spent in the Irish Free State, I think we ought to be told how much is to be spent in that way. I am informed that the base of this service is to be in England, but the last point of land before setting out on the long journey across the water will be in some part of Ireland, and apparently it is now suggested that it is to be in the Irish Free State.


Not Belfast?


I am glad to hear that no contract of a large nature is contemplated at present, but the right hon. Baronet alluded to the company having to sink large sums in ground organisation and obviously at such an important point as the last stage before the machines set out on their long trans-Atlantic journey, many important establishments will have to be erected. Are we going to pay this money to the Irish Free State Government? If so, is there any agreement? Who is to have control over any establishments which are put up there? It is a matter of great importance bearing in mind that this would be a British service of an almost national character, in a Dominion where it is, I think, impossible to fly the Union Jack and where it is certainly impossible for British officers in uniform to go about freely. It seems to me that if this plan is carried out, it is giving another hostage to a community with whom we have had out differences and are having differences at present who are not paying us the money—


Do you?


I do not know what these interruptions are about, but they seem to be singularly inconclusive. If they were a little louder I might know what they were and be able to answer them. What this Committee ought to bear in mind is the possibility of more money being poured into that country with no control whatever over it. The one argument which is always of great weight, and which cannot be brushed aside, is that a serious additional element of risk would be added to the flight by going anywhere else than the Irish Free State. If that is established, one cannot ask men to add an appreciable degree of risk to a terribly perilous undertaking. But the more I consider this question the more it seems to me that the technical aspect, of the margin of risk is not the deciding factor in this decision. If the margin of safety is to be seriously affected by the 70 miles longer journey from the Free State into the United Kingdom, and is not provided for in a service of more than 2,000 miles, the service should not be undertaken. As I understand it, there is a considerable margin of safety, allowing for doing the passage with a 50 or 60 mile-an-hour gale blowing in either direction, which hardly ever occurs. Before this Resolution is passed, we should be told frankly what the position is regarding the North Atlantic service, what engagements, if any, have been entered into with the Free State, and to whom and of what amount will payments be made for building bases for the service. This is going to be a big service, and perhaps in future one of the most important in our national life.

7.3 p.m.


As one who was very dissatisfied with the scanty replies given in the Second Reading Debate, I want to be generous enough to thank the Under-Secretary for his full statement this afternoon. I also want to thank him for telling us that there is to be some sort of competition when these subsidies are given, some sort of public advertisement which will give everybody an opportunity of receiving some benefits. I am opposed to subsidies of any and every kind to private enterprise, but at least, if there is to be a subsidy, let there be fair and equitable opportunity for different companies to compete for it. It is a great pity that what is now to take place has not been the principle from the beginning. It is a striking thing that, after all the criticisms of the way in which these subsidies have been given, and the doubts expressed by several hon. Members, there has not been some grasp on the part of those responsible for giving subsidies that the idea that there was something hidden about it could have been avoided if the policy which the right hon. Gentleman has enunciated this afternoon had been followed from the beginning.

I have no interest, financial or otherwise, in any operating company or in any company that has anything to do with air navigation. I am only concerned that there should be fair play. I understand from the speech of the hon. Member for Colchester (Mr. 0. Lewis) that the contract for Scandinavia has not yet been signed. I do not like using the names of companies, but two names have been given—British Airways, Limited and British Continental Airways. The right hon. Gentleman suggested that these two companies should come to some commercial agreement. [HON. MEMBERS: "No!"] I understood he suggested that they should amalgamate. That is an agreement. You cannot amalgamate if you do not agree. One company at the moment stands in a tremendously privileged position. It is aware of the fact that it is to receive the subsidy. The other is in the unfortunate position of knowing that it is not to receive it. If they are to discuss amalgamation, they cannot meet one another on equal terms. While I acknowledge that it is no business of the right hon. Gentleman to enter into these discussions, I suggest to him that he should keep open that contract until there is some opportunity of the two companies meeting. That would meet the objection of those hon. Members who feel that one company has not been treated fairly. I wish that we could have a White Paper giving the basis on which in future these contracts and subsidies will be given. The electorate of this country is looking keenly on all these subsidies, and they want to know on what principles they are granted. Let us know that when subsidies are given there is fair play between one company and another.

7.8 p.m.


I would like to join with other hon. Members in thanking the Minister for the full statement he made to-day, but I think that the Committee is put into some difficulty when we have a reply which we had a right to expect at the end of the Second Reading Debate given to us on the Financial Resolution. It leaves hon. Members in some difficulty in studying the Minister's reply. The Minister not only resented any criticism of Imperial Airways, but said that those of us who have criticised Imperial Airways were lacking in patriotism. I do not think we are lacking in patriotism or faith in aviation. It seems strange, if one has love for and faith in aviation, that one particular company should always be debarred from criticism, especially when it has forcible backing from the Government. The Under-Secretary to-day made no reassuring statement regarding the speeding up of Imperial Airway services as compared with other countries. He told us that the proposed service to Singapore was to take six or seven days.


Four and a-half.


I think I am right in saying that the proposed service of the Dutch K.L.M. will take two and a-half days. When we consider the granting of these privileges for another 15 years, many of us feel that it is not right to grant a subsidy for that period when we are behind in time compared with many other services in the world, and also when some of our machines are not as advanced as the machines being built by other countries. There is a description in the "Sunday Times" of a new seaplane called Do 20 under construction at the Dornier works at Friedrichshafen, which will have eight Diesel engines totalling 6,400 h.p. and will be the largest and fastest in existence. Have we any comparable seaplane under construction in this country? Have we reached any definite stage in our agreements with Pan-American Airways for the North Atlantic routes, and how does our agreement with Pan-American compare in advancement with the agreements of Germany, Holland and France? The point made by the hon. Member for East Wolverhampton (Mr. Mander) with regard to the charges made by Imperial Airways to private flyers using their grounds is worthy of note. Under the 1926 Agreement for the Egypt-India service, guards to aeroplanes are paid for by the Government, but a charge is made to the private flyer by Imperial Airways for the guard. I have a large number of bills of a private flyer using his own machine from here to India.


That cannot possibly affect the subsidy, and therefore does not arise on this occasion.


I am less fortunate than some of my predecessors who mentioned this matter when you were not in the Chair, Captain Bourne. I only wanted to say that it seems strange to pay one guinea for the guard at an aerodrome when the guard is already supplied under the subsidy arrangement to Imperial Airways. With regard to the South Atlantic route and other routes not already granted to Imperial Airways, the Minister has much reassured the Committee that these routes will have fair consideration, but I deplore the suggestion made by the hon. Member for East Wolverhampton that discussion of the grant to whichever company is given the service should come before the House. I cannot imagine anything more unfortunate than the House discussing the details of various technical schemes already exhaustively considered by the Fisher Committee. I have told the Committee that I have an interest in this matter, as a scheme in which I am interested is one of the five concerned. In regard to what the hon. Member for Colchester (Mr. Lewis) said about direct and indirect subsidies, I would like to point out that the Post Office mail contract is not an indirect subsidy but is a payment for services rendered. Every company, whether it is getting a Government subsidy or not, if it is the chosen instrument of the Government will get the mail contracts. The hon. Member's remarks were not quite accurate.


Does the hon. Lady suggest that the contracts for the carriage of air mails in America, which involved the American Post Office in immense losses, are not indirect subsidies?


We cannot discuss what happens in America.


That is indeed as well, because the subsidies for Post Office contracts in America rest on an entirely different basis from those in this country, and therefore the question cannot arise. I join with other hon. Members in deploring that the Government subsidy to Imperial Airways has done so much to raise the value of the shares in that concern. On the 23rd January, 1936, before the announcement of the increased subsidy, Imperial Airways shares stood at 53, but a fortnight later, after the disclosure of the increased subsidy, they stood at 67, and I certainly think that unless we are assured that all routes upon which Imperial Airways have a monopoly will run an air service with really modern, up-to-date machines, that all of their routes and aerodromes will have modern ground organisation, and that we shall have a speedier service, they have no right to be paid any dividends whatever.

7.16 p.m.


I would like to add my congratulations to the right hon. Baronet the Under-Secretary of State for Air upon the very clear and extensive way in which he presented his case this evening and answered the questions the lack of an answer to which caused so much concern on the day when the Second Reading of the Bill was taken. I am sure the Committee feel very satisfied at the way in which the matter has been handled this evening and that we are in possession of much fuller and more valuable information on the position of civil aviation in this country than we were at the end of the last Debate. I would like to make it perfectly clear that the attitude of the Labour party to the Amendments which are on the Paper, one of which is in the name of the hon. Member for Frome (Mrs. Tate), will be one of support, but that it has nothing to do with the point of view which the hon. Lady and her friends have put before this House from time to time. We are not in the slightest degree concerned about the quarrels between the various companies that desire to get a share of subsidy in preference to Imperial Airways.

I would like to point out—and hon. Members, of course, will know the fact upon reflection—that after all Imperial Airways was sponsored by the British Government. It is not altogether a private company; it is a company which was created by this House of Commons. Our criticism about subsidies and about the relations between the Government and Imperial Airways is one that, as one speaker has said, comes quite naturally from this side of the House, but at the same time Imperial Airways is a Government-instituted concern and does, at least to that extent, represent the principle that in the matter of civil aviation the Government have some sense of responsibility for its progress. For that reason, at any rate, I desire to make it clear that in supporting both of the Amendments which are on the Paper we have our own point of view and do not follow the line of argument that is favoured by those who are responsible for the Amendments.

I think it is very useful, in discussing subsidies, to consider what has been done in relation to civil aviation since the War, since the report of the Hambling Committee and the agreement for the creation of Imperial Airways out of two or three companies. There have been subsidies for many years, but on the 9th March, 1929, on the 22nd October, 1930, and on the 16th February, 1935, three successive agreements were signed between the President of the Air Council and Imperial Airways, Limited. Those were agreements in respect to subsidies and the management of the company and its ventures in connection with the various developments of Imperial aviation.

The first agreement was threefold. It included subsidies in respect to European routes, to the routes to Egypt, and to the ruotes to Karachi. The total amount that was sanctioned in the agreement of the 9th March, 1929, was £905,000, that is, in respect of the European routes. The amount for the Egyptian route was £715,000 over a period of 10 years, and for the Karachi route it was £860,000. Then came the larger development to Cape Town. There was a preliminary agreement for a subsidy, for an amount of money supplied by the Government, of £80,000 in reference to the Cairo-Mwanza route, part of the way to Cape Town, and the total subsidy for five years for the Cape Town route was £900,000. Then the last, as recently as 1925, from Karachi to Australia arid Singapore, with the arrangement, as we know between Singapore and Brisbane with the Australian company, was for £100,000 over a period of three years.

The total amount of money sanctioned under those three agreements, which does not take into account the subsidies that preceded them, the amounts which have been paid by the Treasury to Imperial Airways and others for development purposes, amounts to the quite colossal total, relatively speaking at any rate, of £3,480,000. Parliament has sanctioned for varying periods—10 years, five years, and three years—subsidies to the extent of £3,480,000. The total original capital of Imperial Airways, Limited, is in the neighbourhood of 2624,000, of which the odd amount, £24,000, is held by the Government, a very small holding considering the amount of money that has been sanctioned by this House. That means that the total subsidies so far sanctioned, quite apart from those which are considered in this Bill and quite apart from the proposal to increase the maximum from £1,000,000 to £1,500,000, could have bought Imperial Airways, lock, stock, and barrel five and a-half times over.

I am not for a moment criticising Imperial Airways. I am not even criticising the policy, so far as it goes, because, after all, the Labour Government were responsible for a continuity of that policy. We did not expect to be able to get our own particular ideas carried into effect. It was quite impossible that we should have been able to nationalise the air services of this country, and I am prepared to admit, if you are going to develop civil aviation in this country and the British Empire, that there is a case for Government support, but we do think that, in view of the proposals in this Measure, the time has come when the whole policy should be reconsidered.

Some criticism has been put forward, notably by the right hon. Baronet the Member for Chelsea (Sir S. Hoare), of the policy for which our party stands, that is to say, the policy of a State air service. He said that he and his friends were opposed to a State air service, whatever might be said for the principle in other regions of commerce and of trade. His objection in the case of an air service was that there were a number of difficult diplomatic negotiations taking place between this country and other countries in regard to air arrangements, and if the organisation of Imperial airways was run by the Government in some such form as we have suggested from this side, with the idea of the British Broadcasting Corporation as a model, there would be very delicate considerations to face, and it would be exceedingly awkward if the matters under negotiation were made political questions between the various countries.

One would imagine that the right hon. Baronet the Member for Chelsea, who was for so long Secretary of State for Air, had had no experience of delicate negotiations with foreign countries under present conditions, but it has always happened. Continually we have had difficulties and troubles and negotiations with this country and with that in reference to our own Imperial routes. I remember the long, anxious hours during which we discussed with foreign representatives the subject, for instance, of the routes to Karachi, with reference to Persia. We are travelling to-day upon the Arabian side of the Persian Gulf because of those very difficulties that we had with the Persian Government. Those discussions were undertaken by the Air Ministry, and I fail to see how the right hon. Baronet can for a moment talk in that way about politics being brought into the question if we were to nationalise civil aviation in general. Politics are brought into the question to-day.

Another matter that the right hon. Gentleman the Under-Secretary of State will remember very clearly was the long, difficult, and involved negotiations which we had with Italy with regard to the route from Basle down through Italy in contradistinction to the Marseilles-Genoa route. All these things are constantly going on. They were at the time when I was at the Air Ministry, and the negotiations were conducted by the Government, by the Air Ministry. Yet the right hon. Baronet the Member for Chelsea thinks it is sufficient for him to Say that the real objection to making a national public service of Imperial airways—I do not mean the company, but Imperial airways in the general sense of the term—is that we should bring politics into the question of our Imperial air routes.

Another point of considerable importance is the composition of the board which will have so much control over aircraft and its operation. The Under-Secretary said that every interest would be fully and properly represented upon the board. The recommendation of the Gorell Committee was that manufacturing and insurance interests should be represented. I understand that recommendation is to be enlarged and that more manufacturing, insurance, and operators' interests are to be brought in and that one-quarter of the representatives will be of other interests. The Committee ought to be told who the other interests are to be. No one disputes that the people who are in charge of aeroplane manufacture should be responsible and valuable constituents on a board of this character, but surely the interests of the public should be represented. What about the interests of the private owners and of the pilots also? I remember attending the first meeting of the Guild of Air Pilots, which was sponsored, I believe, by the late Sir Sefton Brancker. That Guild is an important organisation representing the interests of the pilots, and I would like to know whether they are to be included. What about the technical side and the people who have technical experience?


I am rather loath to interrupt the hon. Gentleman, but I cannot see how this question is connected with the Resolution.


It is connected because in the financial provisions of the Bill is the proposal to finance the board. A certain amount of money is to be granted. It is uncertain how much is required, but there is a provision in the Bill that the money shall be supplied until it is possible for the board to carry out its own financial responsibility. I submit that that justifies my reference to the board. The Under-Secretary also referred to the composition of the board. I am asking whether it is not possible to include on the board, which will have so many important responsibilities and be of such great importance in connection with the future of aircraft and its development, people who will represent the public, the air pilots and the practical and technical side of the industry.

I would like, in conclusion, to say that we on this side stand for the nationalisation of the air service. By nationalisation we do not mean some kind of rigid organisation of air affairs under the State in a departmental sense. We are prepared to recognise the fact and to admit that various types of industrial and commercial concerns can be dealt with, and should be dealt with, in various ways. We have, for instance, the example of the Post Office. In that case we have an essential national service that requires rather rigid national organisation. We do not want that. We want some kind of flexible organisation which will do away entirely with the motive of private enterprise and profit, and at the same time will be so organised as to provide for great elasticity and as much efficiency as the interests and the future of aircraft demand.

7.36 p.m.


The last time these matters were discussed in the House an unfortunate impression was left on the minds of many hon. Members, including myself, in regard to the granting of subsidies to British Airways and British Continental Airways. Owing to the fact that under Parliamentary procedure the Under-Secretary was not able to reply, we came away with a false impression that the subsidy had been given to British Airways because of some kind of hole-and-corner business, that it had been fixed up by people who knew the right people in the Air Ministry, and that the rival firm had not bad a square deal. The Under-Secretary has to-day made a full and frank statement, and we now understand the reasons that actuated the Air Ministry. I am satisfied with everything my right hon. Friend said, and I am convinced that British Continental Airways have no grounds whatever for complaint. We have had my right hon. Friend's word that this firm will be allowed to compete for any other services that come along, and I suggest that, in view of the fact that they showed such initiative in starting the line to Stockholm this year, they ought to be given a tiny preference over other air lines. I want to suggest to the Under-Secretary that he is making a big mistake if the principal qualification for receiving subsidies is the fact that a company must have a great deal of experience and that the most experienced air line will get the subsidy. The effect of that will be that on every occasion when Imperial Airways quotes for an air line, they will always get the subsidy and no other air line will ever be able to stand in opposition to it. That is rather a dangerous precedent, and I hope that when the Solicitor-General replies he will say that that is not the only qualification that will be necessary in future.

I want to say a word about the granting of the subsidy for 15 years to Imperial Airways. The suggestion has been thrown out that we should not criticise Imperial Airways. I do not mind how unpopular I am, but I am going to criticise them. I do not believe that we are doing the right thing to sell our birthright for the next 15 years. It is too long a period. We have often been told that Imperial Airways carry more passengers across the Channel than all the other air lines put together. That is true. We have been told that Imperial Airways are probably the safest air line in the world. I agree with that. The Under-Secretary, however, has not told the Committee that Imperial Airways at this moment are probably the slowest air line in the world, and that the vast Imperial Airways fleet are all practically obsolete. He has not told the Committee that Imperial Airways are the third to consider crossing the Atlantic. The Germans and the French are going across, and now we are just beginning to think of it. He has not told the Committee that it was the flying Dutchman who blazed the trail 1 o India and on to Singapore, and that we followed second. He has not told us that Imperial Airways during the last 10 years were one of the last firms to introduce night flying. He did not tell us that the Board of Imperial Airways are more interested in profits than service to the community. He did not tell us that over one-quarter, nearly one-half, of the subsidies which have been paid to Imperial Airways have been passed on to their shareholders as dividends.

The Under-Secretary did not tell us any of these things. Although I think that we ought to continue the subsidy to Imperial Airways, we are unwise to hand it to them for the next 15 years. Suppose in five years Imperial Airways go to sleep and they go back and do not continue in their present progressive mood. Those of us who have been to Short's and seen the new flying boats know that they are trying to turn over a new leaf, so that we may lead the world in civil aviation in the next four or five years; but there is a danger that they might slip back. This House will then be powerless, for under an agreement for 15 years we would be able to do nothing. Ten years would be long enough, and in the Committee stage I shall do my little bit by moving an Amendment to limit the subsidies to any one firm to 10 years, so that this House will have the opportunity of spurring companies on to greater efforts, and, if it is not satisfied, have the opportunity of giving the subsidy elsewhere.

7.42 p.m.


I rise in order to follow up the point of my hon. Friend who has just spoken. We are approving the grant of these vast sums of money to Imperial Airways and I would like to know whether it carries with it any inferential or actual obligation as between Imperial Airways and other civil aircraft operators in this country and the Empire. That is an important matter, as recent events have shown. Imperial Airways have the power to assist British civil aviation in this country and the Empire, or they have the power to frustrate every other effort which is made by a private subsidised or unsubsidised company. Do the Committee think that in granting this money we grant it on condition that Imperial Airways assist the development of British civil air transport, or do we approve it in the full knowledge that a hard competitive policy will be adopted by Imperial Airways to all other civil air transport operators? I can throw some light on this matter by quoting from art instruction from Imperial Airways to their staff as to how they should treat all other civil aircraft operators. It is this: If they"— that is other civil aircraft operators— ask us to carry loads and freight, which for some reason or another they are unable to accommodate, we politely regret that owing to lack of space we are unable to assist them. With regard to any passengers they might not be able to carry on their services through cancelled services, we are not prepared to accept them straight from the companies concerned with a view to carrying them on behalf of those companies. Therefore, it is obvious that the view that Imperial Airways take of their responsibilities to the Government and to the country is such that they feel entitled to adopt a hard competitive policy towards all other British civil air transport companies, all except one operating without subsidy. My right hon. Friend the Under-Secretary of State stressed the fact that the money which we are invited to approve was to be given in order that air transport shall get on to its feet and be able to run without a subsidy, but the companies to which this memorandum refers are to-day flying without a subsidy, and I know that two of them, at any rate, who are flying from this country overseas are flying at a profit. It would seem, therefore, that we are scarcely going the right way to encourage civil aviation to fly without a subsidy, if we do not make it perfectly clear to the directors of Imperial Airways that we expect them to adopt a liberal attitude towards all other operators of civil aircraft from or within the Empire.

Not only is Imperial Airways hostile to other British civil aircraft operators, but it is bound tightly together with foreign aircraft operators who are in receipt of subsidies in their various countries. It happens that France has just recently been attempting to quell three British unsubsidised aircraft companies operating from London to Paris. I raised this matter a few months ago with my right hon. Friend, and I believe that I then had the unanimous approval of the House for the contention that the policy of the French Government towards these unsubsidised British companies was intolerable. What has happened since? One of these companies, which had been flying for a considerable time, was told on a Tuesday by the British Air Ministry that its permit to fly to France would he withdrawn by the French Air Ministry on the following Friday, three days later. The company protested vigorously and a director of that company, with a member of the staff of the Directorate of Civil Aviation at the Air Ministry, went to France and patched up some agreement. But the agreement was on these lines, that in future this company must fly at the same rates for passengers and freight as Air France and Imperial Airways.


I cannot see what connection the hon. Member's argument has with this Resolution.


I think I can explain that quite clearly. We are asked to approve this money going to Imperial Airways, and surely we should define the obligations which we consider attached to the acceptance of these sums, and I was pointing out here what are the present impressions, judging by their actions, of Imperial Airways as to the manner in which they can act. I trust, therefore, that in making this brief reference I am entirely in order.


I think not. What was done by the French Government is a question which could not possibly arise.


It is true that I did mention the French Government, but that was merely to show the attitude of Imperial Airways and its associated company Air France. But I will leave the French Government to take care of itself. Since the agreement was made whereby this British unsubsidised company was allowed to continue to fly from London to Paris the company have written to the Air Ministry on this very point of the relative position of a subsidised and an unsubsidised company. They wrote on 8th April: Since the above negotiations took place it has come to our knowledge that both Air France and Imperial Airwayss, after succeeding in forcing us to bring our rates into line with their published rates, have now approached one of our customers and deliberately offered to cut the rates they forced us to establish to the original figure at which we were enjoying the business. A member of Imperial Airways staff actually requested our customer to maintain secrecy as regards their offer. Our customer promptly got in touch with us and has undertaken to support these statements of ours should the need arise. That is a very serious situation, that we should subsidise a great company, with a national and Imperial mission, and that it should appear to be playing so dubious a hand, forcing small operators out of the air. Therefore, I wish to close by asking my hon. and learned Friend the Solicitor-General this question, and if he cannot answer it to-day, perhaps the Under-Secretary of State will be able to answer it when we revert to this matter: Are the Government willing to insert in their agreement with Imperial Airways a Clause placing on that company an obligation to co-operate reasonably with other British civil air transport companies?

7.52 p.m.


I wish to offer one or two observations in support of the proposals which the Government have made for this subsidy over so long a period. It seems to me that any such subsidy, if it is to be effective, must be for a long term. There is no doubt that Imperial Airways was chosen as the instrument for providing a national airways service some years ago on account of the inefficiency and wastefulness of giving small sums to a lot of small concerns which showed no national efficiency in the air services they were running. The hon. Member for Stroud (Mr. Perkins) made some criticisms of Imperial Airways and said theirs were the slowest services even if they were the safest. We ought to remember that with a far less subsidy than any foreign air service they have in a short time knit the Empire together in a manner which would once have been regarded as almost inconceivable. Some little time ago I had the privilege of going by air to one of the farthest African outposts, and by that trip I realised more than by anything else what great work Imperial Airways have done in knitting together the Empire with the quickest and one of the safest means of transport that the Empire has ever known. I believe those services can do more than anything else to knit together the Empire.

I said just now that this subsidy to be effective must be on a long-term basis. It is almost impossible to think that civil aviation in this country can be left to fend for itself. We now have an undertaking which has long wince passed beyond the experimental stage and has, with very little State help, given the Empire safe, speedy and regular services. One has only to look at the utility of these services in providing transport to the Continent and contrast the difference with the competing foreign services, to realise how successful its work has been. I would like to make this suggestion. A time-table has been established and I hope that we shall not go back upon it. I should like to think that a condition is to be attached to the subsidy whereby the Government, who are represented upon the board of Imperial Airways, can assure the country that the Empire services will at least be maintained on the schedule which is now projected, and even that the schedule will be extended. It was manifest a little time ago that a weekly service to Africa was insufficient, and that service was duplicated. It may very well be, when the new service comes into operation, with flying boats going along the coast, that the bi-weekly service will be insufficient.

I think the amount of the subsidy cannot be criticised as being too high. It has to be on a very large scale. If ever a subsidy could be justified it would be a subsidy for an Empire flying service such as this, but we ought to be assured that the Empire will get the benefit of a regular and extending schedule of services and that there will be no question of the services being decreased, no possibility that any regular route may be operated only spasmodically. It is a notorious fact that 12 or 18 months ago the service in operation between Croydon and South Africa was wholly insufficient for the demands made upon it, though, as I said, that state of affairs has now been altered by the provision of a bi-weekly service. I hope that no question of services proving insufficient for the needs of the travelling public will arise in the future. I trust that Imperial Airways will at all times have the responsibility of maintaining services which the Government think are adequate for the traffic on the various routes.

It is very easy to criticise and to lose sense of perspective. These regular air services throughout the Empire cannot be looked upon only from the point of view of speed. Speed is very expensive, and not one of the recent attainments in speed ought to be taken as a criterion by which to judge Imperial Airways services. They furnish regular services, knitting together foreign countries with all their differences in customs and with all their differences in climate. Imperial Airways have performed a great national service in bringing the air services in the Empire to their present pitch of regularity. I hope the Committee will support the Government in this scheme and support the subsidy which is so necessary for a service which cannot be left to operate by itself, because if the subsidy were taken off there would at once be a falling away in the service, and we should relapse into the chaos which existed some years ago, before this chosen instrument came into existence. In giving this subsidy for this long period we are assuring the Empire that the service will be maintained in such a manner that Empire traffic will be adequately provided for.

7.58 p.m.

The SOLICITOR-GENERAL (Sir Terence O'Connor)

I should like to ask the indulgence of the House on this the first occasion on which I have to address it from the spot which is hallowed by so many memories and which is so closely intertwined with our history. I deserve that indulgence, or I can demand it, the more on account of the inevitable hiatus in my appearance in the House, the first in 12 years of service, which has prevented me, perhaps, from appreciating the very subtle variations of light and shade which are the very life of Parliament. If that absence results in any errors in the case I am about to conclude on behalf of the Government I hope that hon. Members in all parts of the Committee will forgive me. I can best discharge my task, I think, in winding up what has been a very friendly Debate, a Debate in which the value of my right hon. Friend's exposition of his case has been recognised from all sides, in which misapprehensions have been cleared up on all hands—misapprehensions that, I feel, must have been the misapprehensions of a moment only during the Second Reading Debate—if, first of all, I attempt to answer the various points which have been made in the course of the discussion.

The right hon. Gentleman opposite who opened the discussion pointed out the vital difference that was emphasised in the Resolution. and that effects the cleavage between the two great bodies of political opinion in this country. I am afraid that nothing that I can say this afternoon will narrow or bridge that gap. There is an enormous difference of point of view between us. He spent the whole of his speech in trying to show that we should utilise the subsidy in order to bring the air services of the country within State control, while the whole object and policy of those who sit on this side of the Committee is to be rid of subsidies, and to release this vital service for private enterprise, freed of subsidy. That is a fundamental difference of point of view which nothing that he or I could say would bridge. I would re-echo what was said by my right hon. Friend the Member for Chelsea (Sir S. Hoare), that subsidies are a perfect nuisance from every point of view, and the sooner we get rid of them the better.


I do not wish to interrupt the hon. and learned Gentleman during his maiden speech at that Box, but will he not pay some attention to the hint thrown out by the right hon. Baronet, that he would welcome the day when a British Broadcasting Corporation type of management could run civil aviation?


I am much obliged to the right hon. Gentleman, but I think that when he reads the observations of my right hon. Friend in the OFFICIAL REPORT to-morrow, he may conclude that he was putting a slightly optimistic gloss upon them. What my right hon. Friend said was that the possibility of some kind of structure in the future was not to be ruled out. That was not committing himself, or cornnitting His Majesty's Government, in one way or the other. Of course it is not to be ruled out. That is the difference between hon. Gentlemen opposite and hon. Gentlemen on this side of the Committee. We are empiricists. We can conceive of anything as being possible; we are not hidebound to any particular scheme. I venture to think that that is a more beneficent and generous outlook than that of hon. Gentlemen opposite. All that we desire to see is something that will work effectively; whether it be by private enterprise, State control, or an amalgam of the two, is immaterial to us. We are, as I say, empiricists, and we hope that the result of the subsidy will be to accelerate the moment when this vital service shall become self-supporting. We look upon the subsidy, as he does not, as an effective means of evoking from private enterprise in this country a still further response. We hope, for instance, that the sum of money, which my right hon. Friend put in the order of £2,000,000, will be evoked from private pockets in this country in a way in which it could not be evoked if there were no subsidy to be considered.

With many of the remarks of the right hon. Gentleman I found myself in entire agreement. He gave us a very impressive warning, of which I am sure hon. Gentlemen sitting below the Gangway took account, against the possibility of our permitting the growth of mushroom corporations, such as grew up in the United States of America. It is very largely because the Government are impressed with the experience of America, and are determined that it shall not be repeated here, that we are not prepared to permit competitive tenders of the general kind suggested in the Amendment, which, I understand, is not in order. I shall refer to it to the extent to which the hon. Member for East Wolverhampton (Mr. Mander) was allowed to deal with it, and to no greater extent.

The hon. Gentleman agreed with the Government that if ever there was a case for a subsidy, here it is. I in turn, on behalf of the Government, agreed with him, which shows the concordat which is between us and which has been manifested during the discussion. The hon. Gentleman wanted to know the total amount which Imperial Airways would receive from all sources, in direct and indirect subsidies. I am afraid it is impossible to give him that figure. It is not merely that there is not time to compute, it, but that the computation would be impossible, for this kind of reason: Imperial Airways have the use of certain services in common with foreign and other undertakings, including the meteorological service and certain ground plant. It would not be possible to ascertain exactly how much of the cost of those services was attributable to user by Imperial Airways and how much to user by other undertakings. No such sum as would be worth anything could be calculated.

The hon. Gentleman asked me whether there had been complaints of high charges which were a discouragement to private owners in regard to the use of aerodromes. The answer is that there have been complaints, and that those charges are fixed by the Ministry together with other Departments. In respect of the services, taking them as a whole, the Ministry makes no profit, but, in fact, is out of pocket on the whole transaction. The hon. Gentleman asked me whether any routes beside the South American route were in contemplation for opening up. There are no other routes which can definitely be said to be in contemplation, but the South Atlantic route—the South American route—is very large, and is capable of a good many sub-divisions. It would include, for instance, the route down the West Coast of Africa as far as Bathurst. The omnibus phrase covers a possibility of more than one undertaking, and might represent several undertakings in different parts of the South Atlantic. However, that remains to be seen.

In addition to those points, it is perhaps as well that I should emphasise that the Financial Resolution which the Government as asking the Committee to agree to this afternoon merely authorises the payment of subsidies. It is not restricted, as some hon. Gentlemen seem to have assumed, to any one company. Imperial, Airways are not mentioned. All that we know at present, from the general observations made by my right hon. Friend, is that it is contemplated that, of this sum of £1,500,000, an average of about £600,000 will go to Imperial Airways over a period of 15 years, for the development of Imperial routes, but not including the North Atlantic. There will be left an aggregate balance of about X900,000, which will be available for Imperial Airways on the North Atlantic routes, and for any other applicants who come along with well-considered schemes and proposals that will stand the test of the careful examination which such proposals will receive. If my arithmetic serves me aright, £900,000 is the difference between the £600,000, which, on the average, will go to Imperial Airways, and the £1,500,000 for which authority is taken in the Resolution.

My right hon. and gallant Friend the Member for Drake (Captain Guest) was of opinion that this is a modest sum, and I agree with him. He wanted to know why the period of time was limited to 13 years, until 1953. The exact opposite point of view was taken by my hon. Friend the Member for Colchester (Mr. Lewis) who thought that the time was too long.

Captain GUEST

Perhaps my hon. and learned Friend will not mind my explaining that what I was complaining about was that there should be a limit of any sort or kind. It should either be for one year, or indefinitely.


I fully appreciated that the objection of my right hon. and gallant Friend was to the limitation. The objection of my hon. Friend the Member for Colchester and others was, roughly and in plain terms, that 15 years is too long. They asked why we should enter into an undertaking for 15 years. My right hon. Friend the Under-Secretary of State has dealt with that point to a very large extent, but perhaps I can amplify one or two other considerations. This is what is about to be set in hand: Imperial Airways shall undertake this vast expansion, which will increase their mileage to this enormous extent. They are to undertake the preparation of the ground organisation for that expansion in the development of all these routes, and are to raise capital for the purpose. Can it be suggested that 15 years is too great a security of tenure for arrangements of that kind?

Let us put it the other way. It is possible that all that work may be scrapped at the termination of the 15 years under the proposals in the Resolution. I submit that a period of 15 years is on the narrow side rather than on the generous side. If we take an analogy which is comparable, in some respects, from electricity and gas undertakings, we see that they get a tenure of 40 years in many of the Acts, in order to give them some security for undertaking the vast capital expenditure which is necessary to enable them to give all the services that they have to give.


But they do not get £1,500,000.


I agree; nor do Imperial Airways get £1,500,000. They are to have a share of the subsidy, and all that we know at the moment is that a figure of £600,000 has been given to the Committee by my right hon. Friend. [An HON. MEMBER: "A minimum."] A minimum sum. For that they have to raise capital, they have to organise the route, they have to organise the ground staff beyond what they already have, and they have to multiply to an enormous extent their mileage. The period was the subject of very careful consideration by the Government, and the Government, taking all these matters into account, availing themselves of the best advice that they were able to obtain, and setting aside the views on the one hand of those who, like my right hon. Friend, would wish to see a longer tenure, and those who, like my hon. Friend, would like to see it made shorter, have come to the conclusion that 15 years is a reasonable period; and I venture to ask the Committee to agree with them in that conclusion. MY hon. and gallant Friend the Member for Wallasey (Lieut.-Colonel Moore-Brabazon) asked whether aerodromes were included in the Resolution, and he has an Amendment on the Paper which raises this point.


It is out of order, I understand.


I hope, nevertheless, that I may be permitted to say what the answer is. I think that in terms it is intended that aerodromes should be included; the terms of the Resolution, as I read it, are capable of bearing the meaning that aerodromes should be included. I think that the words, to authorise the Secretary of State to agree … to pay subsidies to any persons and to furnish facilities for their aircraft, might be so read. But the view which is taken is that it is in fact unnecessary to ask for powers by way of subsidy to do this, and that the preferable course is that which is now being adopted, of entering into contracts with the owners of aerodromes whereby the services of the aerodrome are obtained for the Government or the Air Ministry. There is a reciprocal agreement whereby certain services are provided to the owners of aerodromes for the use that they grant. There are such arrangements in force at the present time, without the necessity for any Financial Resolution or any new legislative powers. For example, Messrs. Airports, Limited, are the owners of the Gatwick Aerodrome, and, in accordance with an agreement that has been made, they provide facilities for the use of their aerodrome as an alternative to Croydon in certain states of visibility; and it is an interesting fact that this agreement is for 15 years. In return, they receive certain payments, and, although in a sense these payments could be regarded as subsidies, they are, with the approval of the Treasury, charged under the rents sub-head of the Civil Aviation Vote, and not as a subsidy. That is only one instance—I could give others—showing the procedure that is adopted at the present time, and it is not the view of the Government that it is necessary to take any further powers.

I think I have dealt with my hon. and gallant Friend's question as to the number of years, but he made one point with which perhaps I ought to deal. Future governments, Le said, will not be bound by this Resolution. Of course they will not, but there will be a contract, and, if continuity of government means anything in this country, such contracts will be respected whatever government is in office. In the last resort, of course, Parliament is supreme. Parliament can decide that a contract shall be set aside, but, short of some decision of that kind of a far-reaching character, I think the answer is that, although the Resolution dies with the Government, contracts entered into as a result of the Resolution would continue with full force and effect.

The hon. Member for North Aberdeen (Mr. Garro Jones) made a similar plea for State control to that which was made by the right hon. Gentleman the Member for West Stirling (M r. Johnston), and I must oppose an equally emphatic negative to it. He suggested that the maximum return on the capital to be raised should be reduced to 3 per cent. I would like to see him go to the market and try to raise £2,000,000 for the development of air routes all over the world, including the North Atlantic route, and tell potential investors that 3 per cent. was the return he was offering them for their money.


I. too, must apologise for interrupting,. but, if the Solicitor-General will do what he suggested we should do, that is to say, if he will read my speech in the cold type of the OFFICIAL REPORT, he will find that I never suggested anything of the kind. I was reading a quotation from a trade paper, the "Aeroplane," which had been put into the hands of Members of the House as propaganda in favour of this proposal. If the money were to be raised at 3 per cent., it could only be done, as we very well know, by a Government guarantee, which would be less expensive than a subsidy.


I apologise at once if I misunderstood the hon. Gentleman. One of the disadvantages of replying from this Box is that one cannot consult the OFFICIAL REPORT beforehand in respect of what has been said the same day. If the hon. Member was only quoting a point made by Imperial Airways in a pamphlet, I can only say that I am not responsible, and the Government are not responsible, for what was circulated in that pamphlet, but I would add this: The hon. Member seemed to take some objection because Imperial Airways had circulated in the form of a pamphlet something that was favourable to them, and had not circulated something that was unfavourable. Possibly that may be the difference between private enterprise and the Socialist State, but, if anyone is going to pay for the circulation of anything that matters, one would imagine prima facie that he would consider it preferable to circulate something nice about himself rather than something which criticised him.

My hon. Friend the Member for Londonderry (Sir R. Ross) wanted an assurance that reasonable competition would not be stifled. I gladly give that assurance. All the routes will be open; applications will be given thorough examination; and, although it would not be right to go as far as one hon. Member, who suggested that no advantage should be given to operators of experience—experience, of course, must count—every relevant consideration will, I am sure, be borne in mind. My hon. Friend also wanted an answer as to whether there was an agreement with the Irish Free State Government with respect to a taking-off and landing ground as a terminus for the Transatlantic service. The answer is that inter-governmental discussions have taken place between the British Government, the Government of the Irish Free State, and the Government of Canada, but nothing with reference to those discussions is involved in this Measure. That is to say, no part of the subsidy that the Committee is being asked to authorise has any relation to any expenditure in connection with a terminus in the Irish Free State but, as my hon. Friend has raised the matter, it is right also to say that all the experts, both of the Air Ministry and of Imperial Airways, and all the different parts of the Empire, are apparently in agreement that a site in the Irish Free State is the only practical site as a landfall for the projected route to-day.

The hon. Member for South Bradford (Mr. Holdsworth) in regard to these two companies around which so much discussion has turned, British Airways and British Continental Airways, who are apparently in competition in reference to the proposed Scandinavian route, wanted an assurance that the terms of the contract would remain open in order that both companies might be on equal terms in their mutual discussions as to amalgamation. I do not think I could promise that. The company that was chosen for this was chosen, as my right hon. Friend has proved, upon its merits. It had advantages both of experience and of organisation which the other company could not claim at all, and in those circumstances to lay it down that this contract was not to be ratified until these companies had discussed amalgamation among themselves would really involve the Government in trying to impose compulsory amalgamation upon the successful company at its own expense. I am sure my hon. Friend will recognise that this is a matter between these two companies. All that my right hon. Friend has done is to express a pious hope that they might resolve their difficulties by means of amalgamation.

The hon. Member for Frome (Mrs. Tate) wanted to have a reassurance as to the speeding up of Empire services. It is precisely with the object, among others, of enabling Imperial Airways to equip themselves with modern machines with which they can effect a speeding up that the subsidy agreement is in contemplation. Of course, it is necessary to make some kind of compromise between speed and cost. The greater the speed the greater the cost. Some compromise always has to be arrived at, and the policy of Imperial Airways, which has been encouraged by the Ministry, is that there should be a fair balance between speed and cost, so that you may not have a service which is unduly expensive, like so many American services, at a quite disproportionate cost.

Finally, the hon. Member for West Islington (Mr. Montague) wished to know whether we could state the composition of the board that is to be set up under Clause 2. As he knows, there are three groups of representatives decided on already—insurers, manufacturers, and operators. It is my right hon. Friend's intention that a fourth group should be left open to represent as fairly as possible all other interests which have a title to representation on the board. That, of course, could include representatives of the public and any other interests which could be fittingly represented. There is, therefore, a fourth compartment, the composition of which has not yet been decided upon, which has been left open for the representation of other interests.


May I take that as a promise that representatives of pilots will be included?


I am afraid I could not answer that question

in the affirmative. Nothing has been decided yet as to the composition of this fourth group, but the intention is that it shall be representative of all other interests which do net come under the three sub-heads that I have mentioned. There has been no serious challenge to the main principles upon which this Resolution is based. There has been no serious challenge to the principle of subsidies. There has been no serious challenge to the question of amount, £1,500,000, involving, in the case of Imperial Airways, as my right hon. Friend put it, an additional £30,000 a year for services which are eight times as great in extent. There has been no serious challenge to our proposal to do as my right hon. Friend the Member for Chelsea said—concentrate our subsidies on one well-established organisation. Lastly, I think upon a true analysis the period that has been adopted, compromise though it be, is the fairest period and one which in all the circumstances ought to commend itself to the Committee. For these reasons I submit the Resolution with confidence, and I hope, as the discussion has been full and complete, it may be possible for the Committee to come to a decision.

Question put,

The Committee divided: Ayes, 259; Noes, 122.

Division No. 190.] AYES. [8.35p.m.
Acland-Troyte, Lt. Col. G. J. Campbell, Sir E. T. Dower, Capt. A. V. G.
Adams, S. V. T. (Leeds, W.) Cartland, J. R. H. Drewe, C.
Agnew, Lieut. Comdr. P. G. Cayzer, Sir H. R. (Portsmouth, S.) Dugdale, Major T. L.
Albery, I. J. Cazalet, Thelma (Islington, E.) Duggan, H. J,
Allen, Lt.-Col. J. Sandeman (B'kn'hd) Channon, H. Duncan, J. A. L.
Allen, Lt.-Col. Sir W. J. (Armagh) Chapman, A. (Rutherglen) Dunglass, Lord
Aske, Sir. R. W. Christie, J. A. Dunne, P. R. R.
Assheton, R. Clarry, Sir Reginald Eastwood. J. F
Astor, Hon. W. W. (Fulham, E.) Cobb, Sir C. S. Eckersley, p. T.
Baldwin, Rt. Hon. Stanley Colfox, Major W. P. Eden, Rt. Hon. A.
Balfour, G. (Hampstead) Colman, N. C. D. Elliot, Rt. Hon. W. E.
Balniel, Lord Cook, T. R. A. M. (Norfolk, N.) Ellis, Sir G.
Barclay- Harvey, C. M. Cooke, J. D. (Hammersmith, S.) Emery, J. F.
Beaumont, M. W. (Aylesbury) Cooper, Rt. Hn. T. M. (E'nburgh.W.) Emrys-Evans, P. V.
Beaumont. Hon. Ft. E. B. (Portsm'h) Courtauld, Major J. S. Entwistle, C. F.
Belt, Sir A. L. Craddock, Sir R. H. Errington, E.
Bennett, Capt. Sir E. N. Craven-Ellis, W. Evans, Capt. A. (Cardiff, S.)
Bernays, R. H. Crooke, J. S. Everard, W. L
Birchall, Sir J. D. Crookshank, Capt. H. F. C. Fleming, E. L.
Blaker, Sir R. Groom-Johnson, R. P. Fremantle, Sir F. E.
Blindell. Sir J. Cross, R. H. Furness, S. N.
Bower, Comdr. R. T. Crossley, A. C. Fyfe, D. P. M.
Bowyer, Capt. Sir G. E. W. Crowder, J. F. E. Ganzonl, Sir J,
Brass, Sir W. Culverwell, C. T. Gluckstein, L. H.
Briscoe, Capt. R. G. Davidson, Rt. Hon. Sir J. C. C. Goodman, Col. A. W.
Brocklebank, C. E. R. Davies, Major G. F. (Yeovil) Gower, Sir R. V.
Brown, Rt. Hon. E. (Leith) De Chair, S. S. Graham, Captain A. C. (Wirral)
Brown, Brig. -Gen. H. C. (Newbury) Denman, Hon. R. D. Greene, W. p. C. (Worcester)
Browne, A. C. (Belfast, W.) Denville, Alfred Gridley, Sir A. B.
Bull, B. B. Despencer- Robertson, Major J. A. F. Grimston. R. V.
Burgln, Dr. E. L. Dodd, J. S. Guest, Capt. Rt. Hon. F. E. (Drake)
Burton, Col. H. W. Dorman-Smith, Major R. H. Guest, Mai. Hon. O (C'mb'rw'll. N. W.)
Guinness, T. L. E. B. Meclay, Hon. J. P. Savery, Servington
Gunston, Capt. D. W. Maltland, A. Scott, Lord William
Hannah, I. C. Makins, Brig. -Gen. E. Selley, H. R.
Hannon, Sir P. J. H. Mander, G. le M. Shakespeare, G. H.
Harbord, A. Manningham-Buller, Sir M. Shaw, major p. S. (Wavertree)
Hartington, Marquess of Margesson, Capt. Rt. Hon. H. D. R. Shaw, Captain W. T. (Forfar)
Harvey, G. Markham, S. F. Shepperson, Sir E. W.
Haslam, Sir J. (Bolton) Maxwell, S. A. Simmonds, O. E.
Hellgers, captain F. F. A. May hew, Lt.-Col. J. Simon, Rt. Hon. Sir J. A.
Heneage, Lieut.-Colonel A. P. Meller, Sir R. J. (Mitcham) Smiles, Lieut.-Colonel Sir W. D.
Hepburn, P. G. T. Buchan Mellor, Sir J. S. P. (Tamworth) Smith, L. W. (Hallam)
Hepworth, J. Mills, Sir F. (Leyton, E.) Smithers, Sir W.
Herbert, Major J. A. (Manmouth) Mills, Major J. D. (New Forest) Somervell, Sir D. B. (Crewe)
Herbert, Captain S. (Abbey) Mitchell, H. (Brentford and Chiswick) Somerville, A. A. (Windsor)
Hills, Major Rt. Hon. J. W. (Ripon) Mitcheson, Sir G. G, Somerville, D. G. (Willesden, E.)
Holmes, J. S. Moore-Brabazon, Lt.-Col. J. T. C. Southby, Comdr. A. R. J.
Hope, Captain Hon. A. O. J. Morgan, R. H. Spears, Brig. -Gen. E. L.
Hore-Bellsha, Rt. Hon. L. Morris-Jones, Dr. J. H. Spens, W. P.
Horsbrugh, Florence Morrison, G. A. (Scottish Univ's.) Stanley, Rt. Hon. Lord (Fylde)
Hudson, Capt. A. U. M. (Hack., N.) Morrison, W. S. (Cirencester) Stanley, Rt. Hon. Oliver (W'm'l'd)
Hudson, R. S. (Southport) Munro, P. Stewart, J. Henderson (Fife, E.)
Hulbert, N. J. Nicolson, Hon. H. G. Stourton, Hon. J. J.
Hume, Sir G. H. O'Connor, Sir Terence J. Strauss, E. A. (Southwark, N.)
Hunter, T. Orr-Ewing, 1. L. Strauss. H. G. (Norwich)
Jackson, Sir H. Peake, O. Strickland, Captain W. F.
James, Wing-Commander A. W. Peat, C. U. Stuart, Hon. J. (Moray and Nairn)
Jarvis, Sir J. J. Penny, Sir G. Sueter, Rear-Admiral Sir M. F.
Joel, D. J. B. Perkins, W. R, D. Sutcliffe, H.
Jones, Sir G. W. H. (S'k N'w'gfn) Peters, Dr. S. J. Tasker, Sir R. I.
Jones, H. Haydn (Merloneth) Petherick, M. Tate, Mavis C.
Jones, L. (Swansea, W.) Pickthorn, K. W. M. Taylor, vice-Adm. E. A. (Padd., S.)
Kerr, J. Graham (Scottish Univs.) Pilkington, R. Thomas, J. P. L. (Hereford)
Kimball, L. Ponsonby, Col. C. E. Tree, A. R. L. F.
Knox, Major-General Sir A. W. F. Porritt, R. W. Tryon, Major Rt. Hon. G. C.
Lamb, Sir J. Q. Procter, Major H. A. Tufnell, Lieut.-Com. R. L.
Law, R. K. (Hull, S.W.) Radford, E. A. Turton, R. H.
Leckie, J. A. Raikes, H. V. A. M. Wakefield, W. W.
Leech, Dr. J. W. Ramsay, Captain A. H. M. Walker-Smith, Sir J.
Lees-Jones, J. Ramsbotham, H. Ward, Lieut.-col. Sir A. L. (Hull)
Leighton. Major B. E. P. Ramsden, Sir E. Ward, Irene (Wallsend)
Lennox-Boyd, A. T. L. Rankin, R. Wardlaw- Milne, Sir J. S.
Levy, T. Rathbone, J. R. (Bodmin) Wells, S. R.
Lewis, O. Reid, W. Allen (Derby) Wickham, Lt.-Col. E. T. fl.
Liddall, W. S. Remer, J. R. Williams, H. G. (Croydon, S.)
Lindsay, K. M. Rickards, G. W. (Skipton) Wilson, Lt.-Col. Sir A. T. (Hitchin)
Little, Sir E. Graham- Ropner, Colonel L. Windsor-Clive, Lieut.-Colonel G.
Lloyd, G. W. Ross, Major Sir R. D. (L'derry) Withers, Sir J. J.
Loftus, P. C. Ross Taylor, W. (Woodbridge) Womersley, Sir W. J.
Lovat-Fraser, J. A. Rowlands, G. Wood, Bit. Hon. Sir Kingsley
Lumley, Capt. L. R. Ruggles-Brlse, Colonel Sir E. A. Wragg, H.
Lyons, A. M. Russell, A. West (Tynemouth) Young, A. S. L. (Partick)
MacAndrew, Colonel Sir C. G. Salt, E. W.
McCorquodale, M. S. Samuel, M. R. A. (Putney) TELLERS FOR THE AYES.—
MacDonald, Rt. Hn. J. R. (Scot. U.) Sanderson, Sir F. B. Lieut. Coclonel Llewellin and Captain
MacDonald, Rt. Hon. M. (Ross) Sandys, E. D. Waterhouse.
McKie, J. H. Sassoon, Rt. Hon. Sir P.
Acland, Rt. Hon. Sir F. Dyke Ede, J. C. Hollins, A.
Adams, D. (Consett) Edwards, A. (Middlesbrough E.) Hopkin, D.
Adams, D. M. (Poplar, S.) Edwards, Sir C. (Bedwellty) Jagger, J.
Adamson, W. M. Evans, D. O. (Cardigan) Jenkins, A. (Pontypool)
Alexander, Rt. Hon. A. V. (H'lsbr.) Frankel, D. Jenkins, Sir W. (Neath)
Ammon, C. G. Gallacher, W. John, W.
Anderson, F. (Whitehaven) Gardner, B. W. Johnston, Ht. Hon. T.
Banfield, J. W. Garro- Jones, G. M. Jones, A. C. (Shipley)
Barnes, A. J. Gibbins, J. Kelly, W. T.
Burr, J. Graham, D. M. (Hamilton) Kennedy, Rt. Hon. T.
Batey, J. Greenwood, Rt. Hon. A. Kirby, B. V.
Benson, G. Grenfell, D. R. Kirkwood, D.
Sevan, A. Griffith, F. Kingsley (M'ddl'sbro, W.) Lathan, G.
Bromfield, W. Griffiths, G. A. (Hemsworth) Lawson, J. J.
Burke, W. A. Griffiths, J. (Llanelly) Leach, W.
Cassells, T. Groves, T. E. Lee, F.
Chater, D. Hall, G. H. (Aberdare) Leslie, J. R.
Cluse, W. S. Hall, J. H. (Whiteehapel) Logan, D. G.
Cocks, F. S. Hardle, G. D. Lunn, W.
Compton, J. Harris, Sir P. A. McGhee, H, G.
Cripps, Hon. Sir Stafford Henderson, A, (Kingswinford) MacLaren, A.
Daggar, G. Henderson, J. (Ardwick) Maclean, N.
Dalton, H. Henderson, T. (Tradeston) Marklew, E.
Davies, D. L. (Pontypridd) Hills, A. (Pontefract) Marshall, F.
Day, H. Holds worth, H. Maxton, J.
Dunn. E. (Bother Valley) Holland, A. Milner, Major J.
Montague, F. Ritson, J. Viant, S. p.
Moreing, A. C. Robinson, W. A. (St. Helens) Walker, J.
Morrison, Rt. Hon. H. (Ha'kn'y, S.) Rowson, G. Watkins, F. C.
Morrison, R. C. (Tottenham, N.) Seely, Sir H. M. Watson, W. McL.
Muff. G. Sexton, T. M. Welsh, J. C.
Oliver, G. H. Shinwell, E. Westwood, J.
Owen, Major G. Silkin, L. White, H. Graham
Paling, W. Sinclair, Rt. Hon. Sir A. (C'thn's) Whiteley, W.
Parker, H. J. H. Smith, Ben (Rotherhithe) Wilson, C. H. (Attercliffe)
Parkinson, J. A. Smith, E. (Stoke) Windsor, W. (Hull, C.)
Pethick-Lawrence, F. W, Smith, Rt. Hon. H. B. Lees-(K'ly) Woods, G. S. (Finsbury)
Potts, J. Stewart, W. J. (H'ght-le-Sp'ng) Young, Sir R. (Newton)
Price, M. P. Taylor, R. J. (Morpeth)
pritt, D. N. Thorne, W. TELLERS FOR THE NOES.—
Quibell, D. J. K. Thurtie, E. Mr. Charleton and Mr. Mathers.
Richards, R. (Wrexham) Tinker, J. J.

Resolution to be reported To-morrow.