HC Deb 13 December 1949 vol 470 cc2592-615

7.0 p.m.

Mr. Gage (Belfast, South)

The matter which I desire to raise tonight—namely, the question of preferential treatment of the British Overseas Airways Corporation by the Overseas Food Corporation—is one of some gravity, and I think the House will agree when they hear the facts that it is one on which an urgent explanation is required from the Parliamentary Secretary. The facts are these. From its inception the Overseas Food Corporation have had to find air transport for many of their personnel between London and Dar-es-Salaam. At first, the arrangements that they came to were on an individual basis, whereby various members of the Corporation should be carried, as to about 50 or 75 per cent., by B.O.A.C. at £146 per seat, and as to the remainder by individual private charter companies at £120 per seat. I do not think that any great criticism can be made of that arrangement at that stage, bearing in mind that the Corporation was, as it were, in its infancy, and that it of ' course takes a little time for corporations to find their feet in these matters.

However, the discrepancy between the prices charged by B.O.A.C. and the individual private charter companies of £26 per passenger was very soon noted. I understand that officials of the Overseas Food Corporation went to B.O.A.C, pointed this out, and suggested that as most of the personnel being transported from East Africa to London and vice versa were Overseas Food Corporation officials B.O.A.C. might do something about reducing their charges. The answer of B.O.A.C. to that was a flat refusal. So, quite properly—and I do not think any criticism can be made at this stage—the officials of the Overseas Food Corporation proceeded to approach the reputable charter companies in London. As a result of that, a charter company, which I understand is of very good standing, called Hunting Air Travel Limited was selected.

Negotiations commenced with a view to a long-term contract—which of course was more sensible than buying individual seats—which was to last at any rate a year, or to be renewed each year. It was negotiated, and the price per seat—and this, I think, is very significant in a contract of this nature—was £63 6s. 8d. The price that they had been paying to B.O.A.C. on an individual basis was £ 146-odd. Of course, that price of £63 6s. 8d. was to be on the basis of 100 per cent. load factor. That meant a saving to the Overseas Food Corporation of about £100,000 a year.

Not unnaturally, this woke B.O.A.C. up, and instead of the flat refusal which had been given earlier they came along to see the officials of the Overseas Food Corporation. In October, 1948, there was a meeting—and it is of some significance—between Lord Pakenham, Sir Miles Thomas and Sir Charles Lockhart. Now I think that is an unfortunate way of doing business. Private charter companies cannot approach such high personages, holders of such important offices in our country, and I think it should be left to the officials themselves, whose business it is, to do this. However, there was a meeting, and I am happy to say that the Minister of Civil Aviation appears to have rejected the view of B.O.A.C. that simply because they were a Government Corporation they were entitled, as it were, to be assisted, and to some extent subsidised, by another Corporation. He rejected that view, and as a result Huntings got the contract.

I understand that the contract was carried out perfectly satisfactorily and properly for the period of one year. It was due either to expire or to be renewed—I understand it could expire by notice—on 1st November of this year. Before that certain things happened. The first thing was that in the summer of 1949 a senior official in the Ministry of Civil Aviation drew the attention of an official in the Ministry of Food to certain Questions that had been asked in the House about charter companies operating in contravention of Section 41 of the Civil Aviation Act. The House will know that that was a very proper Section to put in, making it an offence for a private charter company not to pay their servants and staff a proper salary. Of course, it was quite right that that should be so, but the scarcely veiled suggestion in that official letter was that the Overseas Food Corporation might possibly be conniving at an offence as Huntings were paying their people below the proper amount. That was at once investigated by the Overseas Food Corporation and found to be quite wrong. In fact, the staff of Huntings were being properly paid, in some cases in excess of B.O.A.C. I need hardly say that, if an action such as that had occurred in private business it might well have laid the foundation for a substantial action for defamation. However, as it came to nothing I pass to the second matter, which I think is even more important.

B.O.A.C. started negotiations to submit a tender so as to obtain the contract themselves, and on 27th July, 1949, a highly important and significant meeting took place between representatives of B.O.A.C. and representatives of the Overseas Food Corporation. The first thing B.O.A.C. representatives said at that meeting was this: that there had been a luncheon between Sir Miles Thomas and Sir Leslie Plummer at which it had been agreed that B.O.A.C. were to get the contract. Now, of course, at that time the representatives of B.O.A.C. did not know the amount for which Huntings were tendering, and they were asked what they proposed to tender. They made a tentative approach of £80 a seat, and were told that that was quite unacceptable.

At that point there took place a very significant thing. Mr. Ormerod, who was one of the Overseas Food Corporation officials present, left the conference; he visited Mr. McFadyen, who is Vice-Chairman of the Overseas Food Corporation; he returned to the conference and said that his instructions were that B.O.A.C. were to have the contract, provided they could quote within 10 per cent. of the Huntings contract. At that point, of course, all that the B.O.A.C. officials needed to know in order to make things quite simple for them was the amount of the new Hunting's tender. There again matters were made easy for them, because a Mr. Somerville and Mr. Ormerod left the meeting, went to Mr. Somerville's office and there worked out Hunting's figures for an 85 per cent. load factor—because Huntings had tendered a! a 100 per cent. load factor increasing to a 90 per cent. load factor, which was some £66 per seat. They then added 10 per cent. and found that the answer came to £72 10s. a seat.

They returned to the conference, and the B.O.A.C. officials were informed that if they quoted at that amount they could have the contract. There is no offence known to the law in allowing this matter to become known to people, who, although a Government corporation, were, after all, competing for this contract. There was nothing for which the law could punish any of these people, but I think that I am right in saying that morally such a course was most questionable and it was quite improper.

It is not surprising that as a result of this, on 28th July, B.O.A.C. put in a tender for £72 10s. a seat, which was accepted on 29th July. Notice to terminate the Hunting agreement was given the same day to expire on 1st November. On 1st October this year, a new contract embodying these terms was signed between B.O.A.C. and the Overseas Food Corporation. The result of all this is, that in order that these two great Government corporations should help each other, the taxpayer has to bear the burden of an additional 10 per cent. per seat over the amount which could have been negotiated with Hunting's. When I say that the Overseas Food Corporation are now carrying about 2,500 personnel per year, that is not a small matter and no small' loss to the taxpayer.

That is not all, because if one wants to buy a ticket to Dar-es-Salaam B.O.A.C. charge £146, and their operational figures on the cost of such a flight work out at £122 10s., so by tendering at £72 10s. they are loosing £50 for every person carried, and that is a burden which the taxpayer must also shoulder. So in order that these two corporations shall assist each other, the taxpayer takes on a really ' heavy burden.

There is even a worse aspect because when the Civil Aviation Bill was in Standing Committee it was recognised by many hon. Members that this great Government monopoly might be in a position to crush out of existence private companies by a system of what might be called subsidised competition. By being heavily subsidised they might be able to tender much lower than any private company could. The Government's attention was drawn to this not once but on many occasions. If hon. Members care to look at the proceedings in Standing Committee of 23rd May, 1946, they will see that this matter was raised on many occasions, and on each occasion the hon. Gentleman who was then in the position that the Parliamentary Secretary is in now gave an assurance that this would not be done. The matter was returned to later on 19th June, when my hon. Friend the Member for Central Glasgow (Colonel Hutchison) expressed himself as somewhat dissatisfied with the assurance that had been given, and said that he wanted more than the personal assurance of the Parliamentary Secretary. He said:' As I said at an earlier stage of the Committee, he may be promoted—let us hope so—or he may disappear—let us not hope so—but in any case, we cannot rely on him being there permanently and on his always being able to see that what he has said in Committee will be implemented. That was answered by the hon. Gentleman, who said: The hon. and gallant Gentleman also raised the question of grants for charter services. I shall not deal with that at length because we have already dealt with it at great length. I gave a pledge that public money would not be used for under-cutting private firms in respect of charter work. On several occasions, it has been explained that it is not possible to write a statutory provision into the Bill for that purpose, but the undertaking which I gave was given, after due consideration, in the name of the Government, and whether I remain in this office or disappear in any manner—either by the trapdoor or the ladder—is irrelevant to the point. So long as I speak here, I do so in the name of the Government."—[OFFICIAL REPORT, Standing Committee B, 19th June, 1946; c. 667–8.]. Here was an undertaking given on behalf of the Government in the firmest possible terms. There can be no doubt, I think, that the very evil that the hon. Gentleman undertook should not occur has now, in this particular case, come to pass.

Finally, in the contract—and this, perhaps, is also a serious matter—with British Overseas Airways Corporation, it was agreed that if the personnel should exceed an anticipated amount, B.O.A.C. would be entitled to charter a special flight carrying 39 passengers at £5,000 per plane. If the personnel exceeded the amount set out in the contract, which seemed very likely judging by the rate at which these air journeys are increasing, it would cost the taxpayer, even if only one person went in this special plane, £5,000. Even if the plane was full, it would cost them about £127 per person. I have tried, with the means that are available to me, to be as precise and accurate in dealing with this matter as I can. I think that I am entitled to ask the Parliamentary Secretary either to deny or confirm the facts which I have given. If they are correct, I think that I am justified in saying, as I said at the outset of my remarks, that this is an urgent matter of which an explanation is required.

There is, of course, also the matter of the internal arrangements in East Africa with regard to these charter companies, about which I should like information. I should like to know, for instance, whether one contract was negotiated with Airwork Ltd. at 10s. a mile which was afterwards increased to 14s. a mile. If that is so, I should like to know why, and I should also like to know whether a contract was made with Skyways, Ltd. for a Dakota at 7s. 6d. per mile, and is not that amount 30 per cent. above current rates. If so how can that be justified. There is also a subsidiary question about which we are entitled to inquire which concerns these 2,500 gentlemen who apparently find it neces- sary to travel by air between Dar es Salaam and London. We should like to know in how many cases their journeys are really necessary. The main question, however, remains—the agreement between B.O.A.C. and the Overseas Food Corporation.

These are serious charges. Here are. two great Government corporations that appear to have flouted completely the undertakings given by the Government on behalf of B.O.A.C. They use great resources to filch from respectable private charter companies lucrative contracts which they were operating perfectly satisfactorily, and all at the expense of the public whose interests they are supposed to serve.

7.21 p.m.

The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren)

The hon. Member for South Belfast (Mr. Gage) has stated the facts of the case from the information at his disposal. At the end of his speech he referred to contracts stated to have been made between the Overseas Food Corporation and Airwork, Limited and the Overseas Food Corporation and Skyways. I have no information about these contracts, because they are purely commercial arrangements between two organisations and have no relationship to my Ministry. No doubt the information could be obtained from the Ministry of Food.

It is stated that at one time there was a contract between the Overseas Food Corporation and Hunting Air Travel, Limited, for the bulk carriage of traffic between two given points, and that later on a change-over was made from one firm to another following the re-issue of tenders. Surely there is nothing much to complain of in the fact that the corporations are so commercial that they can meet in open competition the tenders of other concerns. The corporations are in a special position which enables them to do it.

The hon. Member stated, in all good faith, that these 2,500 people are being carried by B.O.A.C. at £72 10s. I accept the figure, because I do not know what it is. The hon. Member then went on to say that this is below the normal rate for the journey, and that it means a loss for the Corporation. That is not the case. If the amount is £72 10s., it is additional revenue for the Corporation. For every passenger carried the deficit of the Corporation is reduced by that amount. A normal scheduled service runs on this route between this country and Africa. To put it in transport language, this is a "fill-up" load. Any vacant seats that are available on these aircraft are taken up by these people at the reduced rate. It means that where there was previously a 60 per cent. load factor, there is now a 100 per cent. load factor, and that this extra 40 per cent. at the cheap rate is a contribution towards reducing the Corporation's deficit.

There is nothing new about this. It is the normal method of running a transport undertaking. I have often said that I was a railwayman prior to entering this House. On the railways we had group tickets and special facilities for ramblers, parties and tours, which made an additional contribution to meeting our overheads and were therefore encouraged. In the case of freight traffic, we had a rate book classifying merchandise and special rates for manufacturers who wished to convey goods in bulk from one place to another. We even had agreed charges that were outside the rate book. I am not personally acquainted with shipping, but from my slight acquaintance with coastwise shipping I have reason to know that the same considerations apply. I believe, too, they apply to what is termed the "long sea haul."

This is traffic which arises on the normal scheduled routes of the Corporation. It is a special traffic which is used as a fill-up load, and it makes a contribution to the revenue of the Corporation without adding a single penny to the costs, apart from such minor things as loading and invoicing. We cannot accept the inference that the cream of the traffic on a given scheduled route shall be given only to charter companies. If bulk traffic is to be creamed off, it means that we are condemning the scheduled services to run at a loss.

Mr. Gage

Surely the Parliamentary Secretary is not suggesting that this was an agreement for a scheduled service? It was an agreement for bulk carrying.

Mr. Lindgren

I agree. When one is closely associated with a subject, there is a tendency to use phrases that are not clear to others. The Overseas Food Corporation are engaged upon a particular undertaking and at a particular place, and of necessity a large amount of traffic in personnel and merchandise arises. It arises on an ordinary scheduled service of the Corporation, and therefore it is normal to expect the traffic to go on that scheduled service. The Overseas Food Corporation, being a commercial undertaking, thought that they should get their traffic carried at the cheapest possible rates. They said that as this traffic was in bulk, we should give them special rates, but they were not available with B.O.A.C, so they put out tenders for the traffic. I think that B.O.A.C. tendered at the same time as Huntings, but Huntings' tender was lower on the first occasion, and the B.O.A.C. tender was lower on the second occasion.

Mr. Gage

I did not say that the second B.O.A.C. tender was lower. On the contrary, it was 10 per cent. higher, and the contract was obtained by discovering Huntings' tender and adding 10 per cent.

Mr. Lindgren

I accept that in all good faith as coming from the hon. Member. I am not in a position to verify his statement, but if it is correct it is a very strange way of fixing up a contract. I am in no position whatever, certainly on the information available to me—

Mr. Lennox-Boyd (Mid-Bedford)

Does the hon. Gentleman deny that the charter was arrived at in that way?

Mr. Harrison (Nottingham, East)

Can the Parliamentary Secretary say whether the charter companies were in possession of full information about B.O.A.C. charges or proposed charges?

Mr. Lindgren

In reply to the hon. Member for Mid-Bedford (Mr. Lennox-Boyd), I am in no position to deny the statements which have been made by the hon. Member for South Belfast. The hon. Member for South Belfast generally does his best to make sure that the statements he makes in this House are based on accurate information, and I accept what he said. I have no information available to me, and I cannot contradict them. In reply to my hon. Friend the Member for East Nottingham (Mr. Harrison), I would point out that the only information available to Huntings Air Travel, Limited, was the normal passenger rate available on B.O.A.C. scheduled services, the knowledge of the operational cost of the aircraft and their assumption of what the charge was likely to be.

There is, however, one point on which the hon. Member for South Belfast has been completely led astray by those who have given him the information which he has put before the House tonight, and which may show that some of his other information is not in accordance with the facts. The hon. Member said that during the time the Huntings contract was in operation, my Ministry drew the attention of the Overseas Food Corporation to the fact that Huntings were not observing the fair wages clause. That is correct. I think it was absolutely right for my Ministry to call the attention of the contracting department to the fact that their contractors were not observing the fair wages clause. That applies to any contract under any conditions.

Mr. Lennox-Boyd

This is of great importance to a reputable private firm. Is the hon. Gentleman saying that this firm did not observe the fair wages clause because, if so, as that clause is virtually enshrined in an Act of Parliament, why was no action taken if the charge were true, which it is not?

Mr. Lindgren

What I have said is correct and what the hon. Gentleman has just said is incorrect. Further, B.A.L.P.A. took Huntings to the Industrial Court and an award was made against them last August.

Mr. Lennox-Boyd

If all this was known, surely it is inconceivable that Huntings and other private companies should have been asked to tender for a further period. Our charge is that tendering was reduced to a farce, because the decision had been arrived at to give the tender to a sister Corporation.

Mr. Lindgren

This argument started with my contradicting the argument of the hon. Member for South Belfast, made in all good faith, that this firm have honoured Section 41 of the Civil Aviation Act, 1946, which is now covered by Section 15 of the 1949 Act. The Ministry had good reason to believe that Huntings were not observing the provisions of Section 41, and the observance of this Section was a condition of the contract. That was subsequently proved to be the case because B.A.L.P.A. took Huntings, with a large number of other charter companies, to the Industrial Court and got an award made against them. My information, as late as last week, was that in spite of the fact that B.A.L.P.A., as a result of the Industrial Court award, had been trying to get an agreement with these firms, through their Air Charter Association, no satisfactory conclusion had been come to as a result of the negotiations. I do not intend to mince any words about air charter operations. Apart from one or two of the larger charter companies, there is not a single charter firm which is observing the fair wages clause.

The hon. Member for Mid-Bedford asked why we went through the farce of asking these firms to tender when they were not observing the fair wages clause, and we knew they would not observe it. The air charter business is new and—if I may express a personal view—I have pointed out the desirability of creating a recognised list of those firms which honourably accept wages and conditions in the industry as being fair. Some of the trade unions in the industry have said, "Do not go along too quickly. We will try to encourage these firms to come to an agreement with us." I must say that B.A.L.P.A. in particular, acting on behalf of the pilots, have been most reasonable in their attempts to secure agreements with these firms. I hope we shall soon come to a position in which certain firms which will not recognise the rates as being fair, will be excluded from the opportunity to tender. This is now under discussion by the Ministry of Civil Aviation and the National Joint Council for Civil Air Transport, which is the joint industrial council dealing with wages and conditions within the industry.

To sum up this was a tender secured in fair and open competition as between two air operators. Instead of increasing the deficit of the Corporation, it increased the revenue without any additional cost being incurred. It is said that there is a condition in the contract that if the traffic cannot be carried by the normal scheduled service, an additional aircraft must be provided and that because of that, the Corporation are entering the charter field. I cannot accept the inference that bulk traffic such as this is available only to charter companies. It is available, so long as it is real charter work and they enter it on a real charter basis. The Corporation is available to offer special rates for particular traffic.

The hon. Member for South Belfast made the point that undertakings have been given in this House—he could have gone further and quoted undertakings given in another place—that the Corporations would not enter the charter field. That assurance, in the terms in which it was made, still operates and this in no way infringes it. Charter operations are in the field of traffic of either personnel or merchandise. They are to take a particular load at a particular time from one particular place to another. That field of activity is still open to the charter companies. The Corporation are not entering it. If there is a special load to come from Rome or to go somewhere else, or a special crew to go here, there or anywhere, that is for the charter companies, and the Corporation are not going to enter the special charter field. It is going to enter the field in its own schedule services, thereby securing the maximum possible revenue from the services which it operates, as well as operating as economically as it is possible for it to do.

Colonel J. R. H. Hutchison (Glasgow, Central)

Before the hon. Gentleman sits down, will he elaborate the statement about fair wages which he has made? Is he saying that the charter companies are not paying the agreed rate of wages as laid down in negotiations?

Mr. Lindgren

I have said in this House on many occasions—and we want to get it clear—that apart from one or two of the air charter companies, there is not a single air charter firm which is paying the rates of wages and honouring the conditions of service which are in accordance with the National Joint Council of Civil Air Transport. They are, in fact, paying under the rate and working under conditions which are considered unfair.

Mr. Speaker

Sir William Darling.

Mr. Stokes (Ipswich)

On a point of procedure. The hon. Gentleman the Member for South Edinburgh (Sir W. Darling), of course, has a right to speak, especially if you, Mr. Speaker, called him, but it is rather unusual on an Adjournment Debate after a Minister has made a speech for that particular Debate to continue. I want to make it clear that if it is suggested that the Minister should further reply, I shall feel very much inclined to object.

Mr. Speaker

The hon. Gentleman says that he will object to the Minister speaking again. The Minister can only speak by leave of the House, and if anyone objects he cannot speak, so that is that.

7.42 p.m.

Sir William Darling (Edinburgh, South)

I am grateful for that introduction by the hon. Member for Ipswich (Mr. Stokes). Apparently I do not speak by leave of Mr. Speaker, but by leave of the hon. Member for Ipswich. However, even he will agree that this is a matter of the greatest public interest. The Parliamentary Secretary, with his usual enthusiasm, has made a lengthy but not to me very satisfactory explanation of the circumstances as he sees them. He has been ingenuous in a number of matters. He compared his experience in railway traffic with his experiences in the office which he now holds. The comparison was between the competition of the railways seeking to enlarge their profit and opportunity and, for example, the bus companies. In those circumstances he said quite rightly that it was legitimate for the one to do what it could do to get business from the other. But we are discussing not equal competitive units in an industry, but the power and authority of a great national corporation and an independent company. The hon. Gentleman has made observations which, while germane to the other circumstances, are quite inappropriate in these circumstances.

The Debate has revealed the extraordinary circumstance that the Government are, apparently, empowered to operate a fair wages clause which they are not operating. The Parliamentary Secretary reminded the House many times that the fair wages clause is not operated except in a few of the larger charter companies in that industry, but if that is so, the responsibility would be on the Parliamentary Secretary and not with the charter companies at all.

Mr. Lindgren

The responsibility so far as my Ministry is concerned only lies as and when those firms are employed on Government contracts. That equally applies to the firm and to the air corporations which are associated with the company. If a charter company pays unfair rates and asks its employees to work under unfair conditions, it is a direct matter for the trade unions and the company. We only come into it if, in fact, there is a Government contract.

Sir W. Darling

I am grateful to the Parliamentary Secretary for further amplifying the position because it makes it even more clear that I am right in what I have said. Will the hon. Gentleman disagree that a contract from the Overseas Food Corporation is a Government contract, and that it is being carried out by a charter company which is not paying wages in accordance with a fair wages clause? His recent explanation seems to me to bring the matter nearer to his door step. He is agreeing that the Government have had a contract with an independent air line which is not carrying out the fair wages clause. He is at fault beyond all admission.

Mr. Lindgren

This is a serious matter, and it ought to be cleared up as we go along. During his speech the hon. Member for South Belfast (Mr. Gage) quite rightly drew attention to the fact that the Overseas Food Corporation was told by my Minister that this firm was not considered to be operating Section 41 of the Act. The firm, I believe, stated that in their opinion they were operating it. They were not, and the trade unions took them to the industrial court and secured an industrial award against them. Surely the hon. Member for South Edinburgh (Sir W. Darling) is not going to say that the industrial court award given against the firm, does not support the contention that they were not, in fact, honouring the fair wages clause and the conditions of employment?

Sir W. Darling

The Parliamentary Secretary would be well advised not to be so long in these explanations because the more he says, the more does he confirm that what I am saying is right. I repeat, the Overseas Food Corporation, a public body, were allowed to enter into a contract over which the Minister of Civil Aviation had direct control and that they were not operating the fair wages clause. They were brought to the industrial court and a ruling was made against them. I accept that, but it still remains unchallengeable that the Ministry of Civil Aviation in this matter have been dilatory. They have been neglectful in. their duty, and the charge that the fair wages clause is not operated adequately in the charter companies goes by default.

I want as a member of the taxpaying public to make a more general observation. This particular company, Hunting Air Travel, Ltd., is a company which operates for profit. I am informed that it makes a good profit, and that goes to relieve the heavy burden of taxation which the Parliamentary Secretary and I among many others have to bear. The effect of the operations of this powerful monopoly, which the Parliamentary Secretary represents, is going to put Hunting Air Travel, Ltd. out of business, and that will add further to the burdens of taxation which we have to bear. Is that the policy to which the hon. Gentleman and his right hon. and learned Friend the Chancellor of the Exchequer lend their support? Is it in the public interest that companies contributing to national efficiency and making substantial contributions towards taxation are to be driven out of business by State monopolies which are making a loss? Is that the kind of finance the Parliamentary Secretary is inclined to endorse?

Finally, the conclusion that was thrust upon me by the very careful statement of my hon. Friend the Member for South Belfast (Mr. Gage) is that this will not be the first of these activities. In this House of Commons we are going to hear of independent traders, representing 80 per cent. of the industry of this country, being increasingly driven out of business by State monopolies, which are run at the expense of the taxpayer. What will be the effect of that 10 years from now, when companies like the Hunting company go out of business and there are no standards by which to judge? When the Government have driven every competitor out of the business what will be the result? Will there be a more efficient system? Is the Parliamentary Secretary claiming this and no more—that he wants to see out of business all the competent, private operators who at present are making profits and are operating good public services? When these are removed from the industry then his own sweet will will prevail without any challenge. I fear that.

This issue of Hunting versus Ministry of Civil Aviation is probably, important though it may be, a minor one in the larger scheme of things. This is the battle of the very near future: whether monopolist corporations, established by the State, subsidised, organised and controlled by the State, and run by boards nominated by the political party in power, are to dominate our lives. This attack upon the Hunting company is the prelude to a series of attacks of a very much wider character. I speak with very real concern and alarm for this possibility which I do not think is very remote, when the British Overseas Airways Corporation will be the unchallenged master of the air, and, I fear, the unchallenged master of the pockets of the British taxpayer.

7.51 p.m.

Mr. Lennox-Boyd (Mid-Bedford)

Before I start my relatively brief speech, it is well that we should clear up this question of what constitutes fair competition in the air. The Parliamentary Secretary lurched into a series of wild accusations against a large number of people, whom he is, nevertheless, very glad to see carrying out important business and whom the Government were very glad to use to carry out the Berlin airlift. The Parliamentary Secretary made his charges on the basis which we advance that the Hunting company did not lose this contract because of any question of unfair competition. If the hon. Gentleman will refer to Section 41 of the Civil Aviation Act, 1946, he will remember that the charter undertakings have either to observe the same conditions of employment as any one of the three Corporations, or to observe various other conditions which are under separate heads. The two relevant ones are that the terms and conditions: (b) are in accordance, with an agreement for the time being in force between the undertaking and organisations representative of the persons employed; or (c) are in accordance with any decision for the time being in force of a joint industrial council … I do not know whether the Parliamentary Secretary was suggesting that the Hunting Air Company, or Airwork, who were also a tendering party in this transaction, did not have an agreement for the time being in force between their company and their employees, for they most certainly did. Their employees were very glad to work for the two companies.

Mr. Lindgren

If that statement is correct, how does the hon. Gentleman account for B.A.L.P.A. taking the Hunting company, together with a whole host of other charter companies, to the industrial court and getting an award against them on the rates of pay and the conditions of employment of pilots? So far as the employees are concerned in some instances there are general engineering agreements that cover them. I am not so certain about some of the agreements, but some of the companies are not honouring the agreements. The main complaint about charter companies is that they are not paying their pilots, the fellows who are in command of the aircraft, the rates of pay to which they are entitled.

Mr. Lennox-Boyd

I imagine that BA.L.P.A. took the Hunting company to the industrial court because they wanted to improve their conditions of employment. At the present moment in a large nationalised industry—electricity—there is trouble. Would it be seriously suggested that the conditions of employment in electricity are bad simply because a body of people working in the industry want to improve their conditions? My charge is that for all the time for which the contracts run, and for which the new tender would have to be operated if the contract had been given, Hunting and Airwork were carrying out their undertakings and agreements made with the men working for them.

If the hon. Gentleman were to carry the story a stage further I should be grateful. Is he suggesting that the contract was not given to Hunting or to Airwork because of some contravention of Section 41 of the Civil Aviation Act 1946?

Mr. Lindgren

No, Sir, the contract was not given, because a lower price was given by B.O.A.C. I should not have mentioned Section 41 but for the fact that the hon. Member for South Belfast (Mr. Gage) brought it out in his speech, as he was entitled to do, that my Ministry had, during the period of the contract, called attention to Section 41. It was stated that they were not observing the proper conditions, and the firm had stated that this was untrue and unfair.

Mr. Lennox-Boyd

If the price offered by Hunting had been competitive, despite the feeling in the back of the mind of the Parliamentary Secretary that they did not wholly observe Section 41, then they would have received the contract? The hon. Gentleman has virtually said that. That being so, I think we are on the same basis for the purposes of this Debate. It is our charge that the tender made by those two private companies was better than that made by B.O.A.C. and that the circumstances under which the contract was given to B.O.A.C. were wholly improper. As my hon. and gallant Friend the Member for South Belfast (Mr. Gage) has shown, it appears to be a story which ought to be cleared up if for nothing else than for the good name of two great Government Corporations. I am sorry that there is no representative here from the Minister of Food, who is seriously involved in this accusation.

Mr. Lindgren

They were not expecting the Debate at this time.

Mr. Lennox-Boyd

No, of course, and naturally the panic flight of the Minister of Food to East Africa would have prevented his own presence here; but we should have been helped if not encouraged if the Parliamentary Secretary to the Ministry of Food had been here. It is the Corporation under her ample wing whose conduct we are investigating today. I am very sorry that the hon. Gentleman has been taking a leaf out of the Minister of Food's own book in not telling the whole story to the House. If the whole story were told from that Front Bench, another Government Department and a Government corporation would have been put in a very embarrassing position. My hon. Friend had ample justification for raising this story and I think that the House will agree with him, without regard to party, that he did it in an eloquent and moderate manner. I. will not go over the story but there are one or two aspects of it which I might mention.

What was the position? The Hunting Air Travel Company got a contract which ran from November, 1948, to 31st October, this year, to transport a large number of people—many people might think that an incredible number—consisting of 2,500 workers for the Corporation and the contractors to or from East Africa. It was a contract subject to three months' notice. Hunting Air Travel did very well indeed. In a letter telling them that they were not to have the contract renewed the secretary of the Overseas Food Corporation wrote: The manner in which the contract has beep performed has given every satisfaction to the corporation. Surely that includes the conditions under which the contract has been operated? How could it have given every satisfaction to the Corporation or the Ministry of Food if the pilots or other workers had been treated harshly? The Hunting Air Travel Company, on 27th July, 1949—only last July—received a letter asking them to continue to carry out this contract until 31st January, 1950, in order to give the Overseas Food Corporation time to look at the matter again. They were to have an extension of the contract. Does that suggest that their conditions of employment were improper? The Overseas Food Corporation is rightly jealous of decent living conditions for Europeans and Africans alike, and they asked the company to continue to carry out the contract until 31st January next.

What in fact happened? Before 31st January, many things may well happen. On 29th July, 1949, the Hunting Air Travel were told by the Overseas Food Corporation that the contract would not be renewed. At the same time Airwork Limited, another highly reputable firm, who had asked what was the last date to tender and had had no answer to that request, received a telephone message to the effect that the contract was not going to be given to any private firm. They had tendered on the actual day, 29th July, when Hunting's received a letter saying that their tender was not to be accepted. The Minister talks as if this were a smooth and normal change-over, but it happened suddenly within two days of Hunting Air Travel being asked to carry on until 31st January, 1950. Those circumstances alone are exceedingly suspicious, and we are entitled to press here or in another place, for a fuller explanation.

The hon. Gentleman says that all this was done for the finest commercial reasons. The first charge we make is the story of how this has developed, and our second charge relates to his argument about commercial considerations. What have been the consequences? My hon. Friend has dealt very fully with the old successful contract of Hunting's, the one which it was said gave every satisfaction to the Corporation. Hunting's offer for the new contract was £59 18s. a seat at 100 per cent. load factor to Dar-es-Salaam, rising if the load factor diminished to 90 per cent. to a cost of £66. On the other hand, Airwork tendered in a different way. Their tender was never even considered. They got a telephone message on the very day they sent it out that it had all been settled between the two powerful Corporations before their tender was even considered. Their tender was £67 with no minimum number of passengers carried on each flight but a minimum number of passengers carried throughout the year.

There we have the two tenders—£66 at a 90 per cent. load factor from Hunting's and £67 from Airwork. B.O.A.C. tendered—I shall come in a moment briefly to the circumstances of how they tendered—£72 10s. to Dar-es-Salaam and Nairobi. They got the contract. But their contract was more, leaving out altogether how they got it. It is a grossly improper story, but on the figures alone their contract was more. What has been the result to the hard-taxed people of Great Britain? B.O.A.C. are carrying these passengers at a loss.

Mr. Lindgren


Mr. Lennox-Boyd

If they are not, what comes of all the calculations we tried to make about how these companies operate? Through the courtesy of the chairman of B.E.A., some of my hon. Friends and I have today been down to Northolt and have been given a clear picture of how the load factor, capacity ton-miles and other calculations are arrived at, and we have inspected the methods by which this is done. We understand that it costs B.O.A.C. to fly anybody in this House—any ordinary person—to Nairobi the sum of £122 10s. We arrived at that figure by using the machinery which the Minister, and. so far as we know, the Corporation, uses. The average cost per capacity ton-miles, which is published, is 58.9d. Assuming 10 passengers to a ton, that gives a cost per capacity passenger-mile of 5.89d. Multiply this by the distance to Nairobi, and the figure is about £122 10s. But B.O.A.C. are taking these people for £72 10s. How can it possibly be argued that that is an economic proposition?

Then came the most extraordinary statement of all by the hon. Gentleman. They are losing £50 for everyone they take. According to the right hon. Gentleman, the more they take the more they make, but one of the tragedies about civil aviation is that at times the more one flies the more one loses. It cannot be pretended that if B.O.A.C. is going to lose £50 per head on every passenger from O.F.C. transported in this way it will end up in the black and not in the red.

There are two other considerations. A Colonial civil servant or a planter travelling back tomorrow from Dar-es-Salaam to London pays £146 to B.O.A.C. Sitting next to him may be an official of the Overseas Food Corporation whose company is paying £72 10s. The Colonial civil servant and the planter, as taxpayers, are subsidising the Overseas Food Corporation official beside them who is travelling for half their cost. What could be more likely to create bitterness against the Overseas Food Corporation in East Africa than this, and what is more certain than that if a large number of our fellow countrymen in East Africa could be allowed to fly home and back for £150, they would come home far more regularly than they do?

Mr. Harrison

Would the right hon. Gentleman agree that in all contract passenger services, whether by air, water or rail, we find that there are reductions in the fare per head for each traveller?

Mr. Lennox-Boyd

Of course, The misfortune here is that an aeroplane holds so few people. As my hon. Friend pointed out, if any more passengers are taken than the very small number—large in proportion to the undertaking but small in proportion to B.O.A.C.—for which they have contracted, they have to pay at the fantastic rate of £5,100 per plane. If the hon. Member will wait I shall come to that point, and no doubt be will then try to trip me up on that point if he can.

The Parliamentary Secretary talked as if there were a large number of vacant seats on B.O.A.C. planes to East Africa and that this was a heaven-sent chance of filling them. That will not do. If there had been 2,500-odd vacant seats to and from Dar-es-Salaam in the last year it would have been no wonder if B.O.A.C. had been in the red, but we all know that it has not. The sequence has been this. The Corporation have, I believe, recently increased ten-fold the flights to East Africa, and have then got a lot of vacant seats. They have then gone to the charter company and said, "Look at our vacant seats," which they ought never to have created, and they have used that as an excuse to drive the charter companies out of this. A glance at Whitaker's Almanack will show that B.O.A.C. have been allowing one in every 200 of the white population of South Africa and one in every six of the population of East Africa to come home every year. They have saturated the market, and having done that, they use that as an excuse to take away the charter services.

My hon. Friend rightly pointed out that the loss to the taxpayers—the not always inarticulate taxpayers, and taxpayers who may soon have an opportunity of expressing a decided opinion—is twofold. There is the loss in the way I have already shown because B.O.A.C. are losing on every flight, and there is also the loss to the Overseas Food Corporation, a loss which at my calculation is £16,000 and may be more, because they were not allowed to take the offer of Hunting's.

On this question of cost, my hon. Friend quite rightly said that by the contract between B.O.A.C. and the Overseas Food Corporation, B.O.A.C. had to provide 22 seats south with eight marginal and 15 seats north with six marginal per week. If more passengers want to be flown, then the Overseas Food Corporation may not charter a private plane to take them, but, under section 11 of the contract, the Corporation is bound to hire another plane from B.O.A.C. at a price of £5,100 for the return flight, or if there are only passengers for the south flight, then a charge of £5,100 for that alone. Even allowing for what the Government have done, is that fair to private operators? I deny it, surely a field might have been left to those private operators over and above the number for whom B.O.A.C. contracted with her sister Corporation.

I now come to the last part of my argument. With my hon. Friend, I have tried to show what happened and I have tried to show the financial loss. How did this happen? My hon. Friend has told the story. The Parliamentary Secretary made no comment on it at all. If this had been settled by economic considerations we would not have raised it in the House because we agree that B.O.A.C. cannot be precluded from entering charter operations. But it was not settled on these economic considerations.

It is our definite charge that on 27th July, 1949, B.O.A.C. had a meeting with the Overseas Food Corporation; that on that day Sir Miles Thomas and Sir Leslie Plummer agreed to B.O.A.C. taking over the contracts; that B.O.A.C. officials were told by Sir Miles to visit the Corporation and work out the details; that, as my hon. Friend said, not knowing that Hunting had quoted at that moment, they quoted £80; that then a message came from Sir Leslie Plummer saying that if B.O.A.C. quoted a figure within 10 per cent. of Hunting's they were to get it; that two officers of the Overseas Food Corporation were then told to work out a figure at an 85 per cent. load factor, and that they came back and said it was £72 10s.; that the representatives of B.O.A.C. were then told that this was a figure which, if quoted, would secure them the contract—they were told this on the quiet; that the next day, 28th July, B.O.A.C. not unnaturally sent in a quotation of £72 10s. and on the following day, 29th July, Hunting's and Air-work were told they were not to have the contract.

That is the sorry story. My hon. Friend says quite rightly that it is not only the case that the Civil Aviation Act has been broken—for it has been broken in the most monstrous way—since the Parliamentary Secretary said that the Exchequer grant would not be used for the purpose of undercutting private operators and we believe that it has been used to break the Act. However, our charge tonight is much more than that. It is that a squalid deal has been arrived at between two Government Corporations which has driven out of this business a highly reputable firm whose members pay taxes to the State to enable us to carry out these risky experiments. Because it is a monstrous breach of the Act and a reckless misuse of public money, I think my hon. Friend was justified in raising this quite scandalous story.