HC Deb 11 November 1938 vol 341 cc453-5
Mr. Attlee (by Private Notice)

asked the Secretary of State for Air whether he has any statement to make regarding the future relations between Imperial Airways and British Airways and between those two companies and the Government?

The Secretary of State for Air (Sir Kingsley Wood)

Yes, Sir. The Government have had this question under consideration with a view to the creation of the most suitable instrument for developing our overseas civil aviation communications. The House will recall that under the Air Navigation (Financial Provisions) Act, which was passed earlier this year, the statutory limit on the aggregate amount of subsidies was increased to £3,000,000 and that it is intended to devote the greater part of this to overseas development. Large additional payments would consequently fall to be made to the companies selected by the Government for this purpose, and in the light of the opinions expressed by the Cadman Committee that dividends of subsidised air transport companies should be restricted to public utility rates and of the Government agreement in principle that public money should not be used for raising dividends to undue levels, it appears desirable to take steps to ensure that the large additional capital needed for development should be raised on terms which would not prove unduly expensive to the Exchequer. The rapid expansion of overseas services coupled with the great technical advances which are being made in this sphere moreover call under present circumstances for the pooling of resources and the strengthening of administrative and operating organisations to the fullest possible extent.

In these circumstances the Government are of opinion that the most satisfactory instrument for the development of overseas civil aviation would be provided by the association of the two chosen instruments—Imperial Airways, Limited, and British Airways, Limited—in a single public corporation. The Government, therefore, propose to recommend to Parliament legislation setting up a Public Corporation which will acquire the existing undertakings of Imperial Airways and British Airways. Before the Bill in introduced, the Government hope to fix with the directors of the two companies a fair and reasonable price for each undertaking which can be submitted to the shareholders for approval, and, if agreed, can be inserted in the Bill. If agreement cannot be reached, the Bill would provide for the price to be fixed by an independent arbitral tribunal.

It is proposed that the new Public Corporation should obtain the funds for the purchase of the two existing undertakings and for its further capital requirements by the issue of fixed interest stocks guaranteed by the Government. Full details of the proposals will be contained in the Bill which I hope will be available at an early date.

Mr. Simmonds

While it is true that the Cadman Committee suggested amalgamation on the London-Paris route, is it not a fact that they stressed the value of competition throughout the Empire, and is my right hon. Friend quite right, therefore, in bringing in aid to this scheme the Cadman Report?

Sir K. Wood

Yes, I think so.

Mr. Ede

Will the right hon. Gentleman take steps to ensure that the price to be paid will be fixed as the value of the companies at some date prior to the statement in the House this morning?

Sir K. Wood

All those matters will be taken into account. If an arrangement is not arrived at the matter will have to go to arbitration.