HC Deb 17 May 1944 vol 400 cc300-12

Motion made, and Question proposed, "That this House do now adjourn."—[Captain McEwen.]

Sir Oliver Simmonds (Birmingham, Duddeston)

A subject which has recently engaged both this House and Noble Lords in another place is that of air transport, and of the many questions which have arisen in that connection perhaps one of the most important is that of the monopoly chosen instrument which has been adopted over the past few years as a United Kingdom operating instrument in the sphere of air transport. Hon. Members will agree with me when I say that we have been both disappointed and dismayed at the lack of policy which has been manifest throughout the statements made by responsible Ministers. I submit that it is time we pressed the Government for more specific assurances and more specific information on this matter. As regards the chosen instrument, the House will remember that we passed the British Overseas Airways Corporation Act just before the war, and that we made specific provision for this House to be informed of the state of the finances of the Corporation. I think that was necessary in order that the House might annually, or from time to time, review the health of the Corporation, and that it was fair to the taxpayer who is the unfortunate person who, whether he likes it or not, has to find the money to make up the loss on operations of the Corporation. Further, it is only elementary justice to the Corporation itself that its achievements, which may very likely be meritorious, should be appreciated by this House and the country. Therefore, as in all other matters which are not intimately bound up with war secrets, I say, "Tell the House of Commons the truth." Up to date that has not been done.

I asked my right hon. Friend the Secretary of State for Air on 5th April last the following Question: Whether he receives, at regular intervals, information from the British Overseas Airways Corporation regarding their detailed operational costs? To the surprise of many hon. Members my right hon. Friend replied: Yes, Sir, but the degree of detail usual in peace-time costings is not, of course, practicable in present conditions. Well, that is not an argument used by the Supply Departments when they invite war contractors to indicate to them how their costings are arrived at. In these matters we have learned that what is sauce for the goose is not, in the Governments view, always sauce for the gander. I pressed my right hon. Friend, following that reply, as to whether he would look into the matter, and as his reply was rather important I will read what he said: My hon. Friend will remember that when this Bill was passed through Parliament it was recognised that there was certain information which it was proper that the Corporation should be called upon to render to me, but which could not be made public. The Act says: 'The corporation shall, as soon as possible after the end of each financial year, make to the Secretary of State a report … containing such information with respect to the proceedings and policy of the corporation as can be made public without detriment to the interests of the undertaking of the corporation'."—[OFFICIAL REPORT, 5th April, 1944; Vol. 398, C. 1981.] I emphasise those words, "without detriment to the interests of the undertaking of the Corporation." I can conceive of quite an amount of information which would be highly detrimental to the interests of the undertaking of the Corporation, if it ran its business in a certain way, should it find its way into the hands of Members of this House. The interpretation which my right hon. Friend the Secretary of State places upon those words is highly material to the point we are discussing. It could, of course, be claimed that, as the directors of an ordinary limited liability company do not give every financial secret to their shareholders at the annual general meeting, therefore the House of Commons should not ask for too much information from the Corporation. In the case of an ordinary limited liability company the directors have to protect the interests of the shareholders inter alia from competitors who are manifestly seeking to under-cut the company and take away the profits from the shareholders in succeeding years. But a monopoly corporation backed financially by the State, and relying on the over taxed taxpayer finding the deficit, is certainly in no position to advance the argument that it should be allowed to withhold relevant information from the House of Commons as regards its operational costs. Thus I was very interested to have a look at the information which the Secretary of State for Air has laid on the Table for the past three years with regard to the financial operations of the Corporation. I will deal only with the last year.

It is a rather scrappy document. It reveals that the expenditure of the Corporation was £8,250,000 exclusive of obsolescence. No estimate of obsolescence appears anywhere in the document, yet obsolescence is a vital and important charge against the revenue of the company. There is a note which says that, after receiving revenue credited to the Air Ministry amounting to £2,000,000 odd, the net revenue comes down to £6,000,000. There is a further note which says that revenue arising from the carriage of mails accrues to the Air Ministry, and there is credit for certain other traffic revenue the charge for which has been waived in accordance with Air Ministry directions. It amounts approximately to £3,750,000. Therefore there will apparently be £2,250,000 loss, plus obsolescence. But there is another note which says that certain aircraft spares, premises, equipment, petrol—no mean item in the operation of an air line—and stores have been provided free of charge from Government sources, and therefore no charge appears in the above account in respect thereof, or in respect of certain services and facilities similarly provided, whatever that may mean. That is the degree of detail to which the Secretary of State feels that the House is entitled under the British Overseas Airways Corporation Act. What, in pounds, shillings and pence, can this all mean? It certainly means a loss of £2,250,000. It certainly means £1,000,000, or maybe £2,000,000, more for obsolescence. It certainly means millions for all the other items which the report states have not been included. I fail to know whether, in fact, the taxpayer in the financial year ending 1943 had to find 5, 10, 15 or 20 million pounds to make up the loss of B.O.A.C. operations.

It being the hour appointed for the interruption of Business, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."—[Captain McEwen.]

Sir O. Simmonds

If I turn elsewhere to a country which publishes all its figures, and which, curiously enough, is run on a highly competitive basis of private enterprise, the United States of America, I find that in the same period, not only did the American air lines not dip into the pockets of the American taxpayer to the tune of many millions of dollars, but the surcharge on mail rendered a profit of no less than 33,000,000 dollars in the year as a relief to the American taxpayer. Here we have the difference between a statutory monopoly which would long ago have sunk under the load of its own debt were it not for the unhappy taxpayer, and an enlightened, vigorous, active, successful private enterprise undertaking relieving the taxpayer to the tune of some £8,000,000. I think I have said enough to show that this is a wretched story. I think that it is time the Government, without sheltering themselves behind what Goebbels will think or say, or what the B.O.A.C. Act says they may suppress in the interests of the Corporation, should be frank with the House and say exactly what this Corporation is costing.

I think I should also ask my right hon. and gallant Friend this cognate question: What are the Government really asking private enterprise to propose as regards its ability or willingness to operate air transport services? We have had so many contradictory statements from representatives of the Government. Indeed, in the Debate on the Report stage I took up the Lord Privy Seal's previous speech, in which he had said: "Why do not the shipping companies come in?" I analysed that, and said to my right hon. Friend the Secretary of State for Air: "Does he not agree with me that they do not come in, although the B.O.A.C. may only legalistically have the monopoly, because the Foreign Office would not negotiate with other Foreign Offices to obtain permission to fly for other British companies in the light of the B.O.A.C. Act?"

Mr. Wakefield (Swindon)

Is there not the further point that monopoly exists for the Corporation in personnel and aircraft?

Sir O. Simmonds

I am indebted to my hon. Friend. That also is true. On that occasion my right hon. Friend the Secretary of State was very frank with the House, and said: "Yes, the hon. Member for Duddeston and I are quite correct. No Foreign Office would endeavour to obtain facilities for any other instrument than the chosen instrument." So we were left dangling again in mid-air, wondering what the future of British air transport might be. We had a similar process in another place last week, and we are still left wondering.

I say to my right hon. and gallant Friend that it is really time the Government stopped fooling private interests in this matter. If they want to have a perpetuation of the State monopoly, let them say so and let them take the attack that will come after that announcement has been made and justify their policy. Do not start running away, saying: "Why don't they bring their propositions? We have not received their propositions." Let us have an assurance that the Department honestly desire to receive from intelligent organisations proposals for air-line operation, that they will consider them with an open mind, and will attempt to negotiate with them in order that some arrangement may be made whereby British airline operation after the war shall no longer be the monopoly of this Corporation—though not necessarily with the complete elimination of the Corporation, which could continue to fly on a certain sector. I should like to see that. We should have the Corporation flying on one route and private enterprise flying on the other. I do not fear that comparison. I trust that hon. Members opposite who may be rather interested in the principle of the Corporation will see the advantage of testing out whether that is, in fact, the best system, or whether another system could be found. I appeal to the right hon. and gallant Gentleman to tell the House whether he wants these proposals from shipping and railway companies or any other ad hoc group, adequately backed financially, or whether he is merely paying lip-service to the principle of having some other air line than the Corporation.

Rear-Admiral Sir Murray Sueter (Hertford)

All those who are interested in air matters are indebted to the hon. Member for bringing forward the question of air transport. Many Debates have taken place in the other place, where a noble Lord who was a very efficient Air Minister is always raising the question of civil aviation. He gets answers from the Government spokesman, the Lord Privy Seal, who is a very astute politician and who speaks many columns of HANSARD but gives very little information indeed. It is high time that the Government gave us a little more information about their civil aviation policy. I asked the Secretary of State for Air the other day how much money British Overseas Airways Corporation received. The answer was that under one Vote they got a certain amount of money. I should like to ask the Under-Secretary of State the total amount of money that the Corporation receives and whether he can give an assurance that they give a sufficient return for that money. It is only right that the taxpayer should know. With regard to the legal position of shipping companies developing airlines in conjunction with their shipping movements, I would like to ask whether a shipping company is allowed to create its own air service for working in the South Atlantic, say, with its ships. I would like to know the legal position in that matter, and also the position with regard to the railway companies.

I wish to ask the Under-Secretary of State about flying boats. Is the Corporation going to develop flying boats as it did the air-mail service before the war or to trust to large-dimension aeroplanes? We should like a lead in that matter. There is also the question of aerodromes that are to be retained or to be developed after the war. For instance, is Malta to be developed as a great civil aviation centre? I should like to see it developed with Egypt. I should like a little more information as to whether any committee or body is going into this question of aerodromes to be retained or developed. For instance, is Portsmouth to be developed as a great air centre? Also, with regard to the air port of London, what is being done in that connection? We are being deluged with all sorts of schemes for developing civil aviation, and it is high time, I submit to the Under-Secretary, that we should be told exactly what the Government are going to do. Surely by now they have had sufficient time to give us some guidance in the matter. People who return to this country from America tell me that everybody over there is civil air minded. They have tremendous schemes that they are going to develop, not only for internal air services but international air services. I think it is high time that the Government gave us a little more information about how they are going to develop civil aviation after the war.

Wing-Commander Grant-Ferris (St. Pancras, North)

I rise for one moment to emphasise the last part of the remarks of my hon. Friend the Member for Duddeston (Sir O. Simmonds). I do appeal to the right hon. and gallant Gentleman the Under-Secretary. No one in the House will deny that there is in this House or the country any stauncher supporter of private enterprise than he. I appeal to him to try and get his Government to decide something about the future of civil aviation. Everybody is asking, hon. Members all over the House are being asked, When are the Government going to make up their mind? I merely rise to ask him to try to get this matter settled quickly.

The Joint Under-Secretary of State for Air (Captain Harold Balfour)

My hon. and gallant Friend who has just spoken, my hon. and gallant Friend the Member for Hertford (Sir M. Sueter), and my hon. Friend the Member for Duddeston (Sir O. Simmonds) all said that it was high time the Government made a declaration on major issues concerning future post-war civil aviation. That is a matter of opinion, and. I am not offering any views upon it on this occasion. What I would submit is that this is not the time for such a declaration, when I am rising to speak on the Motion for the Adjournment, notice of which was given by my hon. Friend the Member for Duddeston on 5th April, and to which of course I have paid due attention between then and now, and upon which I hope to give the House some measure of satisfaction and some information. I was certainly not warned that these large major issues were to be raised, and that I was to be called upon to make a Government declaration. I think the House knows sufficient about Government procedure and Government working to be aware that no Under-Secretary of State would dare to be so bold as to do that without prior reference to those who are in superior authority to himself.

I would like to come to the particular issue raised by the hon. Member for Duddeston. The first thing I want to get clear in my mind, and I hope I have interpreted his wishes aright, is, What does he want? I gather he wants greater detail of the operational costs of British Overseas Airways Corporation to be laid in front of this House. I think we must, as my right hon. and learned Friend the Attorney-General said in a Debate which finished a short time ago in this House, differentiate between peace time and war time. What is to happen in peace time is for Parliament to say in the future. I do not think that in the realm of civil aviation, any more than in any other direction in life, we shall start exactly at the end of the war where we left off in 1939. But in the field of aviation, as in other fields, Parliament will have its say as to what it wishes the Government of the day to execute in the way of policy. Therefore, as regards post-war I will not say anything, but I would like to concentrate on the war-time position.

I hope to convince my hon. Friend and other Members that there are some very genuine and solid reasons for the present practice, particularly during the time when the Corporation is run for the sole benefit of the war effort. I regret that, although my hon. Friend said that I was not to pay too much attention to the Act of 1939, I must mention it. Under that Act, the arrangements are that, for normal times, the Secretary of State for Air can, with the approval of the Treasury, make grants to the Corporation, not exceeding £4,000,000 in any one financial year. That power exists up to 31st March, 1953. The Corporation, for their part, have to submit, at the beginning of each three-year period, a programme and an estimate of costs and receipts; and, after examining these, the Secretary of State has to determine what grants, if any, should be paid to the Corporation during that three-year period. There is provision for later supplementary estimates being submitted to, the Secretary of State by the Corporation, and for the grants being amended accordingly. This system has never worked, because the war came just when the Corporation was formed, and immediately after the war began the Corporation came under Section 32 of the Act, which requires that the whole of the undertaking should be placed at the disposal of the Secretary of State during a period of emergency.

Under this war-time provision, the Secretary of State controls both the programme and the policy of the Corporation; and he undertakes to pay the Corporation a deficiency grant, covering the difference between the expenditure and the revenue of the Corporation each year. It is necessary that in war-time the Secretary of State should exercise more control over the expenditure of the Corporation than in peace-time. In order that he should do this, it has been arranged, firstly, that the Corporation shall submit an estimate at the beginning of each financial year, to be approved by the Secretary of State, and, secondly, that any proposal to incur capital expenditure on aerodromes, of any amount or elsewhere of an amount exceeding £5,000, must receive the prior approval of the Secretary of State, and that at the end of each financial year the report and accounts must be submitted in detail to the Secretary of State. These accounts are examined by officials in my Department, who can, and do, obtain information on any matters on which they require it. Also, there is provision for a brief summary of the report and accounts to be submitted to Parliament, in so far as security considerations allow. My hon. Friend said, "Pay no attention to Goebbels," but I hope that he will listen with that patience and pleasure with which I listened to him, while I try to deal with that security consideration.

The critics of the Corporation say that they would like to have these detailed costs, but there are three reasons which prevent my right hon. Friend from following that course. The first is security. At the present time the British Overseas Airways Corporation are engaged on exactly the same work as the Royal Air Force Transport Command. Here, I would like to interpose a reply to a question put by my hon. and gallant Friend the Member for Hertford, as to whether we are getting good value for the expenditure on the work being carired out by the Corporation. I can assure him that the British Overseas Airways Corporation, their personnel and their management, are making a very fine contribution, of which I think he is aware, in many directions, to essential war transport needs, over a much larger part of the globe than, I think, many Members of this House realise.

Sir O Simmonds

Might we be clear on this point? I gather now that the Minister said we cannot have this information for security reasons, but the Secretary of State, on 5th April, said we could not have it because he did not receive the information himself from the Corporation.

Captain Balfour

Time is limited, but if my hon. Friend will wait, I am coming to that very point. There are three reasons. The first and main reason is security. No hon. Members in war-time would contemplate asking for Transport Command's operational costs even on routes outside, but running into, operational areas, and even to the limited extent contained in the accounts of the Corporation submitted to Parliament. No analysis of British Overseas Airways Corporation's cost accounts of routes which would be in sufficient detail to serve any useful purpose could escape objection on security grounds, for disclosure of valuable information to the enemy as to our war transport, its extent and direction. Therefore, I come to the point raised by the Secretary of State in reply to a Question in the House. The man-power shortage operates throughout the whole of industry, and it has forced many industrial enterprises to reduce their preparation of detailed costs schedules, and British Overseas Airways Corporation have shared this shortage to the full. It is quite unable to contemplate the same sort of detailed costing, even within its own far-flung organisation, as is naturally expected in peace-time. Even within its own organisation, apart from submission to Parliament, it cannot, for its own purposes, owing to the man-power shortage, collect all these costs from all over the world.

Thirdly, and finally, there is this consideration, which, with the technical knowledge which my hon. Friend and other hon. Members possess, will be appreciated by the House. In war-time the Corporation are directed to operate types of transport aircraft, which they would not select themselves had they a free choice, but types which are available at the present time. Many of them are converted military aircraft, and others are certainly not suitable, in design, for transport use, but have to be used and used on routes where ground facilities are limited, which, very often, causes uneconomic operation. In peace-time, civil aircraft would have aerodromes best suited for the type of aircraft where they would be able to enjoy maximum efficiency. Any costs of the British Overseas Airways Corporation in war-time, even if they could be extracted would, I submit to the House, be valueless for the purpose of deductions on efficiency of operation or cost per mile.

I turn to the broader issue whether it would be right, supposing these objections did not exist, to lay before Parliament all those detailed costs for which my hon. Friend asks. I would like to expand this particular point, because I believe it to be of very much wider importance than the limited field in which we are debating it to-day. It concerns the whole technique of a public corporation after the war, and how much control Parliament is going to exercise, directly of indirectly, and the form of that control. It seems to me that there are two alternatives. This Corporation and, indeed, other bodies in future, can be managed solely by a Government Department. That is, if you like, Whitehall control in all matters, large and small of what, in fact, would be a direct State trading enterprise, with all the details placed in front of Parliament, and a management, as it were, directly answerable, through a particular Department, to Parliament.

Alternatively, the management could devolve on a body of responsible persons appointed by the Secretary of State who have business experience—business executives who are trustworthy men of great integrity and paid at market rates—an organisation allowing a large measure of executive independence. It cannot work both ways. Management by experienced business executives does not mix with continuous control by a Government Department, and day to day interrogation by Parliament. So long as Parliament intends that the Corporation shall have financial management, it seems to me that the details of management must be left to the responsible board, but that the Minister must have the right to ask for the production of information necessary to ensure himself that the undertaking is being efficiently managed. If he is not so satisfied, be must have the power to remove the Board. If Parliament is not satisfied that the Minister in question is exercising his duties and responsibilities correctly, Parliament can remove the Minister, and the Government, if it so likes. That is the extent of responsibility. If the House wants detailed items of expenditure of the Corporation to be revealed or the executive salaries, these are not provided for.

Let us say that the House expects the detailed salaries of the executive management. The provision of Section I of British Overseas Airways Act says that the Secretary of State appoints the members of the Corporation and fixes the terms of remuneration of members. There is no difference in principle between supplying information about the remuneration of the Director-General, and supplying information about salaries paid to regional workers, pilots, messengers or a whole range of Corporation employees. If this and much other information is disclosed, it is open to debate, and, rightly, the Secretary of State would have to answer to the House on each item on which he might be questioned. Naturally, if he must answer to the House, he must have the power and responsibility of making the appointments. He would have to insist on being consulted by the Corporation before they fixed any salaries-or embarked upon any other minor expenditure. I submit that the whole conception of independent management would then have fallen to the ground.

I ask the House to rest assured that under the Act, particularly Sections 22 and 23, which give the Secretary of State due powers to satisfy himself in regard to any scandals or undue extravagances, the Secretary of State has exercised his powers and rights under these sections and is satisfied that the Corporation is being efficiently and adequately used in the war effort.

Mr. Austin Hopkinson (Mossley)

My right hon. and gallant Friend has failed to differentiate between two sorts of officials —the officials appointed by the Secretary of State and nominated by him, and the ordinary officials of the company appointed by the Board. There is a great difference between them.

Captain Balfour

The Secretary of State has power to appoint the members and to determine their salaries as such. These are told to the House. The House has a right to know the salaries of members. They are laid in the particular account to which the hon. Member referred. It shows that one member of the Corporation is being paid tmo a year. In due course, when the right hon. Gentleman lays the next year's accounts, any changes shown in the payment of members will be shown in those accounts. I submit that in war time, for three practical reasons I have given, we calmot expect to get detailed accounts, but far more important, and for practical reasons with regard to the policy of the British Overseas Airways Corporation, I ask the House to take a wide view of the problem. and not to press and prejudice the position in the future.

Mr. Hopkinson

It is hardly necessary to suggest to those who have listened to the Debate that, in this instance, the explanation of the right hon. and gallant Member is totally and utterly unsatisfactory. His suggestion that for security reasons certain information could not be given is just ridiculous.

Captain Balfour

We must be the judges of that.

Mr. Hopkinson

On the point put in my interruption, my right hon. and gallant Friend failed to distinguish between those officials appointed by the Secretary of State himself and those officials appointed by the Board itself. If I might put the matter brutally, what the House really wants to know is, How many of the greyhound-racing racket are in this show and what are they getting out of it?

Captain Balfour

I consider that a most insulting, uncalled-for remark, because the particular gentleman is unable to answer for himself in this House. He is rendering fine executive service and has rendered good service in the Royal Air Force. I have no concern with his commercial history, one way or another, but I admire what he is doing now, and I am sorry he should have a slur cast on him in this House.

It being the hour appointed for the Adjournment of the House, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.