HC Deb 18 March 1957 vol 567 cc136-58

8.30 p.m.

Sir Spencer Summers (Aylesbury)

I hope it needs no apology from me if I take up a part of the time of the House to discuss a matter other than that which has been debated for the past few hours. I wish to refer to some of the implications arising from the Report of the Select Committee on Estimates on Civil Aerodromes and Ground Services, which was published in November, 1955.

The Report contained 17 recommendations. Some were accepted by the Ministry, some partly accepted and the remainder rejected. The Committee examined the observations from the Ministry and was particularly concerned that four of the recommendations should have been rejected. Three of the recommendations were allied together. They were Recommendations (9), (10) and (11) and they were concerned to urge that the Ministry should increase the charges made for the use of aerodromes, be they landing charges or passenger charges, because the Committee felt that too great a burden was being placed on the taxpayer and too little on the companies using the aerodromes.

The other recommendation which was rejected, the comments on which were disappointing to the Committee, was Recommendation (8), urging that there should be a positive attitude of mind in the Ministry with a view to attracting traffic rather than a purely negative one of relying on such traffic as chose to come forward and servicing it as best the Ministry could when it came. The reply from the Ministry came in July, 1956, eight or nine months afterwards.

Here, I should like to express my regret that so long a time is taken not only by the Ministry with which we are here concerned, but with other Ministries, to reply to the recommendations of the Select Committee. Regarding the last three recommendations which have been submitted, 11, 12 and 13 months elapsed before the reply from the Department concerned was forthcoming. Not only is the information relatively stale under those circumstances, but it also means that those replies are considered in the next Session of Parliament, when a different Select Committee has been constituted. If the work of the Select Committee on Estimates is to bear fruit I hope that the Departments will play their part and provide their replies sooner than is the case in many instances at present.

The Ministry replied to the recommendation urging higher charges that it did not feel that it would be right to act upon it in advance of the international conference to be held in November of that year. The Ministry expressed the fear that an increase might have the effect of diverting traffic either to other forms of transport or, perhaps, to other countries. The Committee's recommendation that there should be a more positive attitude towards attracting traffic was met by the plea that there was little more that could be done because 80 per cent. of the traffic using airfields in Britain at present was serviced by the Ministry's aerodromes and of the remaining 20 per cent., half was catered for at Ferryfield.

The attitude of the Committee, which I would like to express, was that if the evidence was to be relied upon—and I think it was—far the best hope for reducing the loss inherent in the operation of the Ministry's airfields lay in increased traffic. It seemed to us self-evident that there was a duty upon the Ministry to seek to attract increased traffic to its airfields with a view to increasing the volume of business, reducing overheads and, in turn, reducing the loss.

Indeed, having that in mind, we were particularly surprised that this phrase should be included in the reply from the Minister, and particularly from a Conservative Minister: The Minister doubts whether a practice of encouraging rivalry between separate aerodromes, would be conducive to the best development of civil aviation in this country. I cannot feel that the view expressed is at all in keeping with the policy that was inherent in the Monopolies Act. It was a conflicting expression of opinion measured by the policy in that Act.

When the observations of the Ministry were received, the Select Committee studied them and felt constrained to issue a further Report, which was published in December, 1956. I would like to quote the last few lines of that Report to illustrate the impact of the Ministry's observations on the Committee. These are the concluding words of the Report: In view of the fact that the losses on operating the Ministry's aerodromes have increased by over 11 per cent. in the year subsequent to that examined by the First Report of the Select Committee of last session, and notwithstanding this, the Minister is apparently reluctant to take adequate steps to reduce these losses, Your Committee recommend that urgent consideration should be given to the Vote for Civil Aviation by the Committee of Supply. Here I confess I am sorry that the Opposition did not see fit to follow up that recommendation of the Select Committee by taking a part, at any rate, of a Supply day to debate the matter.

It will be noticed that by the time the Committee reported the second time, in December, 1956, another year's results were available, subsequent to the results which were studied in detail by the Committee dealing with the first Report. The case presented to the Committee was, particularly in relation to charges, to be very careful in recommending any increase in charges lest such increases should hold back that expansion of business through which reduced losses would follow.

We must bear in mind that the year after we had examined the Estimates there was 18 per cent. more freight, 39 per cent. more passengers and yet 11 per cent. increase in the loss sustained by the Ministry in running its aerodromes. It was gratifying that the Minister, in answer to a Question put by an Opposition hon. Member in February of this year, when he asked what steps the Government were taking in this matter, said that he felt that the charges would be increased. At any rate, there seems to be some movement in the direction urged by the Select Committee. I hope that the Minister has by now had time to study the outcome of the conference in November last, and that he will be able to tell us that he will go very much further than was foreshadowed in reply to the Question which I have quoted in February of last year.

I said that the Committee was very concerned at the burden falling upon the taxpayer, of the cost of operating aerodromes under the present system. It is proper that one should give figures to illustrate the size of the problem. If all relevant factors are taken into account, the total of about £7 million annually spent in the service of airfields includes about £3 million at headquarters, about £1½ million interest and depreciation of the capital invested in the enterprise, and about £1¾ million actually lost in operating the airfields under the control of the Ministry, including, of course, the technical charges.

I realise that to some extent the Minister is in a dual position. On the one hand, he must bear in mind the burden on the taxpayer but, on the other, he has a responsibility vis-à-vis the corporations, who are the prime users of the airfields carrying the loss to which I am drawing attention. We felt, and it was implicit in the Report, that the Minister was too prone to listen to the plea of the corporations to do nothing to increase their costs, and insufficiently prone to remember his responsibilities to the taxpayer.

After all, what are the relative impacts of increased charges? We find, for instance, that landing fees, which represented one of the main instances of charges which we recommended should be increased, in the case of B.E.A. represent only 4 per cent. of their costs, and in the case of B.O.A.C. represent only 1.6 per cent. of their costs. So that if, to reduce the current losses on operating airfields, an increase in landing charges were made, a relatively small addition to the total cost of operating aeroplanes under the charge of the corporations would follow.

Why should flying be subsidised by the taxpayer as much as it is at present? There is a very large bill—as I said earlier, about £3 million—which it would not be reasonable to pass on, and I am not arguing that it should be passed on, but, at any rate, it is incurred at headquarters and in the regions on behalf of civil aviation. The loss of about £1¾ million, plus the interest and depreciation on capital concerned, is a burden which. I suggest, is greater than it should be. If people want to have the benefit of quicker, and, some say, more comfortable, travel—and I must admit that I always prefer it—I do not see why the travelling public should not pay the additional costs which are entailed on the ground as well as in the air for the benefits that this form of travel makes possible.

The question examined by the Select Committee was really how far the additional advantages of air travel should be paid for by the traveller and how far they should be subsidised by the taxpayer through insufficient charging for the use of airfields. I will ignore the details in this debate, because I think that the main point which the Committee had in mind was to get across to the Minister the realisation that something must be done to reduce the losses, and that there were only two ways of doing this. One was to put up the charges and the other was positively to seek additional traffic.

I have alluded to the first, that it should be for the traveller to pay. The burden on the operators need not be serious and there is no reason why such a burden as was passed to them by the Ministry should not be passed on by them to the users of their planes. As to the second, I think it behoves the Ministry to realise that until there is a more positive approach to its responsibilities of attracting traffic and increasing turnover, the Ministry will not do all that lies in its power to reduce the losses incurred by it.

It is the duty of the Select Committee to examine Estimates, to see in what way value for money is received, and in what way reductions can reasonably be sought. I believe that its examination of this subject and its Report were valuable. Although a substantial time has elapsed since the Committee reported, I hope that the Minister will be able to tell us that now that the international conference is out of the way—which he said at the time impeded him from going the length we wanted—active steps will be taken to reduce what we regard as excessive losses on the operating of airfields.

8.45 p.m.

Mr. James MacColl (Widnes)

I think that the hon. Member for Aylesbury (Sir S. Summers) has done well by the House and well by the country in taking the opportunity to raise this question. I agree with all he has said except for one thing. I will express my disagreement with him and dispose of it.

I think that the hon. Member was a little unfair to my right hon. and hon. Friends in criticising us for not having taken an opportunity to raise this matter on a Supply Day. After all, the Supply year is still young. The Second Report of the Select Committee, as the hon. Member reminds us, was not published until December, 1956. We are now just in March and therefore there has not been very much opportunity to take one of the Supply Days. Such opportunities as there were have been reduced by the unaccountable conduct of the Prime Minister in the matter of the leakages of the President of the Board of Trade. So we are now at an early stage, and the hon. Member has very wisely taken this most appropriate opportunity on a Consolidated Fund Bill to raise this question.

I agree with him entirely that it ought to be one of the functions of Supply Days to consider Reports of the Select Committees on Estimates. I should like to see one of the allotted days set aside for the Chairmen of the Select Committees to put down one Report of the Select Committee for discussion. I think that is the only way in which we can be sure that the control which this House has over finance is adequately expressed. It is far too easy at the moment for a Minister or a Government Department which dislikes a Report of a Select Committee either to sit on it so long that it becomes dead history or to brush it off with a few rather ill-chosen and unfair remarks.

I should like to express my thanks to the Minister for coming to the House tonight, with great courtesy, to listen to this discussion. I know that he has come here at very great inconvenience. I should like to say that, because it is the only nice thing that I can say to the right hon. Gentleman in the course of my remarks and I want to be sure that I get it in.

My first criticism is not directed primarily against the right hon. Gentleman, it is directed against the Treasury. Surely one of the things that we have to ask ourselves when we are examining whether or not an undertaking is being run efficiently is whether we have adequate accounts to see that it is being run efficiently. One of the points raised by the Select Committee was the question of publication of trading accounts. The point was made that there were not available adequate trading accounts for examination of the position at the various aerodromes. The Treasury points out in its observations, which are printed in the Second Report that there are considerable accounting problems in providing adequate trading accounts. It says that this is a matter which requires, and will be given, further and detailed study over a period. That is very impressive; the watch dogs are really on the job.

But in point of fact what has been going on? I should like to quote from the evidence we had from the representative of the Treasury. The hon. Member for Aylesbury asked the representative of the Treasury—I am quoting Questions 1182 and 1183. Since 1950 or thereabouts, when this was examined at the suggestion of the Public Accounts Committee, has the Treasury embarked on any further review of the position to see if a better method could be devised?—No, not as far as I know. Are you aware of any adequate figures for the purpose of enabling those in charge of one aerodrome to compare their opinion with that of another?—I know of none. That made it perfectly clear that, although the Select Committee has raised the question now and the Treasury informs us that it is giving the matter detailed study over a period, from 1950 to 1955 it did absolutely nothing about it. So little, apparently, did the Treasury care about whether or not the expenditure of public money was being properly supervised, that it made no attempt to ensure that the facts and figures were available which would make it possible to judge, as between one aerodrome and another, whether they were working adequately.

It is important to make it clear that, so far as I am concerned, this is not an attack upon public enterprise. The hon. Member for Aylesbury may not in his public life have been identified particularly with the putting forward of the virtues of public enterprise and there may be some sort of tendency to brush off what he says on the grounds that he is prejudiced. I believe passionately in public enterprise, and I believe that it is the duty of those who do so believe to make certain that public enterprise is not used as an excuse for inefficiency and slack administration. It is all the more important that those of us who do believe in it should bring these matters forward, because it is easier for us to do so without being accused of introducing ideological differences than it is for hon. Members opposite.

I found my views on this point on what was said by one of the architects of public enterprise, my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) on this point. I quote from a supplementary question which he put on 6th February, 1957: Can he assure us that it is his policy to see that the large and efficient airports, on which a great deal of public money has been spent, will, as soon as possible, be made self-supporting, and not a burden on public funds? To that, the right hon. Gentleman, to whom the question had been addressed answered: I could not agree more …"—[OFFICIAL REPORT, 6th February, 1957; Vol. 564, c. 429.] I want to make it perfectly clear that what we are talking about is not the kind of airport known as the social service airport, which is doing a particular job, and cannot, of its nature, be self-supporting. One cannot expect such a service as that at Benbecula, which is provided to transport sick people to and from the mainland, to pay. No one is talking about that, but it is very important that the "Benbecula mind" should not be applied to the problems of London or, indeed, of Glasgow. We are not here dealing with a dying industry, such as perhaps the railway industry, which has a long history of neglect and which it is almost impossible to salvage.

We are dealing with a healthy, growing, vigorous, lively, model industry—the industry of air transport, with an infinite potential. It is really rather alarming to find that the whole attitude into which the righ hon. Gentleman and his advisers are slipping is the rather slack view, "Some day we may be able to make it break even, but, at the moment, it is obvious we cannot, and we are not really going to get very worried about it, and the Select Committee, which pointed out to the House that this was the situation, is getting rather a nuisance and must not be taken too seriously."

As the hon. Member has said, three questions are at issue. It is agreed that the losses, at any rate on the figures we have had, are getting worse instead of better. What can be done about it? One thing is to raise the charges. That is something which, of course, the Corporations naturally do not like. On the whole, we thought that there was a case for raising the charges, and the right hon. Gentleman, I think, agrees with that. It seemed clear in his answer to my right hon. Friend that that was his view.

Another is to increase the revenue from the amenities in the airport. We were told that, in the United States, airports expect, on the whole, to get about 40 per cent. of their revenue from the concessions and amenities, and that the Manchester Corporation, to which I shall refer later, was aiming at a figure of about 60 per cent. At London Airport. the most modern and up-to-date airport at the time of which we were talking, in 1955, the percentage of total income from amenities was only 25 per cent. I think there was something there to be considered and something that we were right to point out to the House.

The next point is the question of extending traffic, about which the hon. Gentleman has said something. This is one of the really crucial questions.

The Minister of Transport and Civil Aviation (Mr. Harold Watkinson)

I do not want to interrupt the hon. Gentleman, but this is a very interesting point, and he would assist the House and help me in my reply if he would illustrate what kind of traffic the Select Committee meant in these mystic phrases about increasing traffic.

Mr. MacColl

I was coming on to mention some of the grounds on which the Select Committee made these recommendations. The right hon. Gentleman sneered at the "mystic" recommendations of the Committee. I wish the right hon. Gentleman would remember that he is talking about a Select Committee set up by this House, on behalf of this House, to supervise the administration of his Department. I think he ought to take a little seriously what the members of that Committee said. The Report was produced as the result of inquiries conducted by two sub-committees, the first one of which was under the chairmanship of Mr. Ian Winterbottom, at that time Member for Nottingham, Central, a man whose ability is equalled only by his courtesy and distinction in the chair of the subcommittee.

Mr. Watkinson

I am sorry to interrupt again, but I notice that the hon. Gentleman is going off the point. I should not have been here, as the hon. Gentleman has said, at some discourtesy to a foreign Minister of Transport, if I had not taken this matter seriously. I have not been sneering or cynical. I want to know clearly what kind of traffic the Select Committee was talking about—because it did not say—when it said that we should increase it. If the hon. Gentleman will do that, it will help me very much.

Mr. MacColl

The right hon. Gentleman is wrong. I was not going off the point; I was warming up to it. What are the grounds for saying that a rise in traffic is an essential part of this problem? The first question arises in connection with London Airport. The hon. Member for Sunderland, South (Mr. P. Williams) asked: Is it true that the more traffic you have going through London Airport the sooner London Airport will become profitable? With a rise in traffic are you going to come nearer to the point of profitability? The Controller of Ground Services replied: Yes. A rise in traffic means a rise in revenue but a much less rise in costs. That refers to London Airport, and is to be found in Question 1320.

The other airports were referred to in Question 1369. The hon. Member for Aylesbury asked: What about the other aerodromes? The Controller of Ground Services replied: You could possibly double the landing fees. It is probable the actual traffic would fall off, and they would not pay. It is a matter of traffic. Given the traffic you can do anything; without traffic you cannot. The right hon. Gentleman has made it quite clear that he agrees that in an industry where a great deal of capital is being sunk, the Ministry and the tax -payer have a vital interest in the development of more traffic.

Mr. Watkinson

Of what kind?

Mr. MacColl

This is an industry of enormous and at the moment unplumbed potential. As I said earlier, we are not dealing with rail traffic which is fighting against more modern equipment and more modern types of transport and which is perhaps fighting a rearguard action. We are dealing with the transport of the future.

Sir S. Summers

Has not the hon. Member forgotten that the only reason why Continental traffic was brought to Manchester was that Manchester pressed very hard for that form of increased traffic to be brought, despite the reluctance shown at that time by the Ministry?

Mr. MacColl

I propose to deal with Manchester in a moment. I want to refer in this context to the comment of the Minister about the Report, that some of the remarks of the Permanent Secretary about not being concerned with an increase in traffic had been completely and unfairly misconstrued. One has only to know the hon. Member for Aylesbury to know that any sub-committee over which he presided would be conducted with great skill, fairness and courtesy. The hon. Member for Aylesbury is no Senator McCarthy and the Permanent Secretary is no innocent abroad, caught all unawares in a trap skilfully laid for him to trap him into some unwary remark.

The sub-committee went to the Northern Region to have a look at the situation in Merseyside and Manchester. While there it interviewed the divisional controller, the civil servant responsible for airports in that area. In his evidence, in discussing the very remarkable developments which had taken place in Manchester, he talked about municipal development. In Question 1645 he said: It is a development which should be encouraged because to my mind essentially the people who have the responsibility of trying to make an aerodrome pay, apart from the expense of technical services, should be the people on the spot because they have got an interest in it much more than either I can have sitting in Liverpool or my masters can have sitting in Berkeley Square. That was a clear indication that he thought somebody should be tackling the job of extending traffic.

In Question 1654 he was asked: Whose job is it to convert that loss into a profit by increasing the ways of contributing towards it? He replied: It is no part of my function, so far as air services are concerned. To make certain that he had not misunderstood, he was asked: Do you understand that responsibility lies at the Ministry's headquarters in London for taking initiative in these matters? He replied: No. It was that remarkable and startling evidence, faced with a service piling up its losses, with everybody agreed what was needed was more traffic, that the subcommittee asked to see the highest authorities in the Ministry. In Question 1790 the hon. Member for Aylesbury asked: We would like to know where the responsibility rests for attracting more traffic to aerodromes for which you are responsible? The reply was: I think the answer to that again is that we do not try to attract traffic. If I may say so, with respect, I do not think we ought to do that. Wanting to make certain that there was no doubt about what we were asking, the hon. Gentleman asked in Question 1791: Is there not, therefore some financial incentive by the very nature of the case— talking about the finance tied aerodromes— to see that it is brought into use as possible? The answer was: No, Sir, I do not think so because we are not entering into the business of providing aerodromes as a business which is to make money. … The object is not to make as much money as we can on the aerodromes, or even to make them pay. And yet the right hon. Gentleman, in answer to my right hon. Friend the Member for Vauxhall, said that he could not agree more, when asked whether we should get aerodromes to pay as quickly as possible.

Is it really right to say that, faced with that evidence, the sub-committee and the Committee which approved its Report were being unfair in their interpretation of what was said, not by an office boy caught unawares, but by the Permanent Secretary of the Department, with full knowledge of the implications of the questions that were being put to him? Therefore, I resented the remark of the Minister. I resented it on behalf of the hon. Member for Aylesbury, because I thought it was an unfair slur on the patience, courtesy and skill with which he carried out all those arduous examinations.

Finally, I come to the question of municipal ownership. We are faced with the situation that the Ministry says that it is not its job to go out and look for business. If nobody gets business, the losses will pile up. Therefore, it seemed to us that the obvious answer—this again, is not an ideological question but of one of municipal versus State ownership—was to find somebody who was prepared to go out and look for business. As far as we could see, Manchester did not think that we were being unfair or talking a lot of nonsense in saying that the aerodrome owner should look for business.

This is what Manchester said. In answer to Question No. 349 from me, a former chairman of the Airport Committee at Manchester said: If you will allow me to enlarge a little on this point, we do not just provide the aerodrome and leave it at that. We do an awful lot of liaison work and development work for new services with the Chamber of Commerce, in particular the Air Transport committee, and with the local branches of the Federation of British Industries. As a result of that, there is no doubt whatever from the figures we have seen that Manchester has succeeded to a large extent, not in making things work at a profit, but at least in reducing its losses, which is not what is happening with the State aerodromes.

In the last figures which we quoted in our Special Report from Manchester, in Appendix V, a loss is shown of £55,000. It is greater than the loss for the previous year, but it includes an increase of £16,000 on extensions and additions and an increase of £5,000 in loan charges. It is clear that the increased loss is due to development and not to maintenance work.

Therefore, it seemed to us that, putting the matter as moderately as one could, there was a case for encouraging municipal ownership. Although the Department, running a national concern, might feel that it was difficult to push the claims of one aerodrome and possibly annoy another, a local authority with its own aerodrome could go all out to try to get the business and to go into this new trade.

The right hon. Gentleman challenged me to give illustrations. The divisional controller quoted the case of traffic to Ireland. He said he had no doubt at all that a vigorous drive would increase the air traffic to Ireland. That is simply an illustration and it was the view of one of the representatives of the Ministry.

What does the right hon. Gentleman say in his reply to our proposals? He agrees in principle that municipal ownership might be a good thing, and on page 10 of the Special Report he says that he is always ready to consider proposals from local authorities who are prepared to undertake the ownership and operation of the State-owned aerodromes serving their areas, provided that they are prepared to undertake their full and reasonable share of the cost. Circumstances vary from aerodrome to aerodrome and the Minister is not prepared to generalise on the terms he would he prepared to offer in any case. That is very condescending of the right hon. Gentleman when running a concern which was getting, apparently, more and more into debt and faced with the possibility that this may be a solution and one which a number of authorities and a number of the private owners of airlines said that they thought would be a good solution to be left to the municipalities. The right hon. Gentleman is prepared to consider that if the municipality is sufficiently polite, and if it will not inconvenience the Department he might consider quoting terms. Is it any wonder that, with that attitude from the Ministry, local authorities are not taking up the aerodrome? They are not anxious to go into this onerous work; of course, they are not. I am sorry to have been so long, but I was asked to develop the point about the extension of traffic.

We have raised this matter in the House because we feel that the right hon. Gentleman and his advisers have left the impression in the country, if not in their own consciences, that they are not really worried at all about the fact that a new, developing industry is gathering up these losses at an increased rate, that they are indifferent to criticism, that they think it is rather impertinent of a Select Committee of this House to point out what is happening to public money, and that they think that the whole situation is entirely satisfactory and there is no need to bother about it. That is no more than what we think—and I think I can speak for most hon. Members who have studied this Report—of the administration of the right hon. Gentleman.

9.11 p.m.

The Minister of Transport and Civil Aviation (Mr. Harold Watkinson)

The relationship between a Select Committee and a Minister is always a difficult one on both sides, and I think that he would be a very unwise and very discourteous Minister who endeavoured to do any of the things which the hon. Member for Widnes (Mr. MacColl) is trying to put in my mouth so courteously. The hon. Member started off by being very polite, and he was perfectly fair, because he said that that would be the only polite thing he would say, and he lived up to that undertaking very satisfactorily.

I believe that any Minister, and certainly myself, pays the utmost attention to the findings of a Select Committee, because it has the means of sifting evidence and getting an impartial judgment which ought to be of great assistance to any Minister. Speaking for myself, I would always take, and did take in this case, the most careful account of what the Select Committee said. I hope that the hon. Gentleman will understand what I am going to say, because I shall have to show, and can show, by the facts, that there has been some inadvertence. I must make that plain.

I am not interested in having an argument with a Select Committee of this House. The Select Committee has seen fit to censure me and my Ministry, and I now have the opportunity of answering the Committee in this House. Therefore, I hope that I shall not be regarded as being personal in any way if I say that the facts show that, quite inadvertently, the Select Committee got most of its findings a little bit off the mark.

I think that that is quite understandable, because the First Report of the Select Committee was in 1955; and this air business is a rapidly changing and developing business. Though I may disagree slightly with some of the findings of the Select Committee, I certainly do not disagree with my hon. Friend the Member for Aylesbury (Sir S. Summers) or the hon. Member for Widnes, because I am extremely grateful to both of them for giving me the opportunity to deal with the matter in this House and to try to put the whole question into a reasonable perspective.

The first thing that surprises me, and surprised me when I first read the Report—although, of course, the Report was not produced during the time when I was the responsible Minister; but I read it as soon as it was drawn to my attention—is that neither in that Report, nor in the first Special Report, or in the speeches of both hon. Members tonight, has there been a single word about the technical aspects of aerodrome safety. Yet in that we find the complete answer to the very considerable misunderstandings, which that Report has played some part in creating, about the finances of aerodrome operation.

Let me just deal with that, because I want only to be purely factual. My hon. Friend the Member for Aylesbury said that there were really two things that were worrying the Select Committee most, and they were that we were not making an adequate enough attempt to make airports pay, and that, in the year after the main Select Committee Report, a considerable increase was shown in the cost of running airports.

How did that arise? It arose on two grounds. The years compared were 1954 to 1955 and 1955 to 1956. The net operating cost rose by only a relatively small amount. My hon. Friend quoted the increase in the total cost of 11 per cent. The point I want to make is that in that figure is an increase of no less than £70,000 for technical services arising from the urgent need of increased safety requirements to cape with greatly increasing traffic.

Sir S. Summers

That may well be not disputed, but why should not those for whose benefit the precautions are taken pay more for them?

Mr. Watkinson

I am coming to that. We must keep the thing in perspective.

In all the findings, and the speeches in this debate tonight, no account has been taken of the immense increase that we have to face in the technical costs of running aerodromes. It is a factor we cannot leave out of account. My hon. Friend quite fairly says that they must be paid for. I shall come to that, but do not let us get a wrong idea about it. I want to look into the future, and I should warn the House of some of the difficulties that lie ahead if we are to maintain the very high standards of safety in the air that this country has so far maintained.

In the year complained of a very large share of the increase arose from a quite necessary increase in technical services, for which I do not apologise. I am not sure of the precedents in cases such as this, and I may be wrong, but I think it is a pity that the Select Committee did not inquire of my Ministry, or of myself, if it so wished, what the position was before it published its first Special Report in the late autumn of last year. Had it done so it could have been told that, as so often happens in this business of the air, a complete change in the circumstances had taken place. Indeed, when the figures are published it will be seen that 1955 to 1956 was a year of exceptional loss arising from quite special and exceptional causes, one of which was this large step up in technical services. Another was a special round of salary increases.

It may interest the House—and this puts a different slant on the remarks of the hon. Member for Widnes—if I say that the estimated figures for 1956 to 1957 of net operating costs will fall to £432,000 from £513,000. That estimate takes no account of any increase in landing charges. I shall come to those. That estimate further proves my point about technical services, but I am afraid that the cost of technical services will go up from £1,342,000 to £1,400,000. The total net operating cost will be only a little down, about £20,000 down, but it will be down, and down taking no account of any increase in landing charges.

Therefore, these allegations that there is a runaway increase in costs on the operation of our main airports, and, indeed, of our subsidiary airports, are just not true.

Sir S. Summers

I think that my right hon. Friend has misunderstood. He has spoken of allegations about runaway costs. The allegation is of a runaway deficit. There is all the difference in the world, because if the cost goes up but sound management is applied the price for the services rendered can make it good.

Mr. Watkinson

I am equally happy if my hon. Friend wants to call it a deficit. The answer is exactly the same. I was not accusing my hon. Friend, but the hon. Member for Widnes, who has been talking about runaway deficits. I must remind my hon. Friend that in the Special Report of the Select Committee it is stated that … the operation of the aerodromes is either so inefficient or so financially insolvent that the more traffic there is, both passengers and freight, the greater the loss becomes. That is not true, because over the periods 1951–52 to 1956–57 passengers have increased from 21 million to over 41 million, which is a considerable increase, and the overall deficit—putting it in its right terms—has decreased not very much but by about £150,000. Therefore, the statement in the Report is not strictly correct.

The reason for that deficit, which is so important, is that the cost of technical services has gone up from roughly £1 million to £1½ million. Operating cost has been halved, from roughly £1 million to £500,000, but it has been counterbalanced, as it must be, by this very large increase in technical services. I wanted to put that matter in perspective, because it puts a different slant on the whole picture. A steady decrease in operating cost has been achieved, but that has been matched by a very steep increase in technical service costs.

I and my advisers felt that if we could hold the position—and we have done rather better than that—we should, on the whole, be doing well. The House should compare our experience with that of America. There, an airport expects to recover 50 per cent. of its capital cost from the Federal Government and the whole cost of technical charges. Therefore, we are doing better than the Americans. I hope that we shall do better than the Americans in safety in the air, otherwise we shall have very great problems here with near-misses and other difficulties.

Mr. MacColl

We saw some of the figures and reports of the Americans and the Germans. Their financial statements were very much clearer and easier to understand than ours. No evidence was put before us, but we were told that in same cases the big American airports were paying their own way without any subsidy at all.

Mr. Watkinson

They are paying their way only with the somewhat large subvention of 50 per cent. of the capital cost and the whole cost of technical services. I will come in a moment to the hon. Member's point about trading accounts.

All this puts the remarks of the Select Committee in their correct perspective on the general point and I should like to deal quickly with one or two specific matters. First, we should consider Recommendation (11), which deals with landing charges, a recommendation to which the Select Committee took exception. In my reply, I said that the position would be reviewed in the light of the results of a meeting of I.C.A.O. in Montreal. That is exactly what I have done, with my advisers. As soon as that conference was over we went into the position carefully. I have already announced in the House that we shall have to make a considerable increase in landing charges. They are now being discussed with the various parties concerned. As soon as the discussions are completed I shall fully implement them. That meets my hon. Friend's point about increasing landing charges.

Again, I must point out, for the record, that since 1948, when basic fees for landing charges were first imposed, there have been some other severe increases. In 1952, my predecessor imposed the passenger service charge of 5s. per passenger and, at the same time, doubled the intercontinental surcharge, that is to say, the surcharge upon the long-distance aircraft.

It may interest the House to know that passenger service charge alone will yield £380,000 in the coming year. It is not true to say that an attempt has not been made to increase landing fees and charges over this period; it is a continuous process. I am sure that the Select Committee was absolutely right to draw my attention to the fact that it was high time that this should be done again. In my reply I said that it would be done as soon as this conference had taken place, and I have exactly implemented that requirement.

Sir S. Summers

Since it is now nearly five months since the conference took place, may we know how much longer we must wait for the advantage of the increased charges?

Mr. Watkinson

I have just told my hon. Friend that the charges will be implemented as soon as I have finished the quite proper discussions that I must have with the various authorities using the airports. It would be a little inconsistent to try to impose very severe increases in charges when we were quite properly trying to attract more traffic. We have to balance these matters.

Difficulties also arise in connection with foreign exchange. if we are not careful we may give a lead to other airports to increase charges in such a way as to earn us less foreign exchange. I do not think that there has been undue delay, but I can give my hon. Friend an undertaking that I shall impose these charges as soon as I possibly can. But I am not prepared not to go through the proper channels.

The other main point which the Select Committee raised very strongly, and which was also raised by the hon. Member for Widnes was in connection with Recommendation (8). I interrupted the hon. Member for Widnes because I said in my reply that I had some doubt about what the Committee had in mind when it advocated a review of the question of attracting increased traffic. I still have some doubt about it because, as I pointed out in my reply, our aerodromes already handle 80 per cent. of all movements and 86 per cent. of all passengers, and half the rest are handled at Ferryfield, in the car transport business.

As my Permanent Secretary pointed out, my Department is making aerodrome policy the servant of general air policy and, as I said in reply to the right hon. Member for Vauxhall (Mr. G. R. Strauss), although we must certainly obtain as large an increase in traffic as possible, we must, at the same time, make sure that in such matters as safety, services and charges our aerodrome policy is the servant of our general air policy, which is to try to make this country the centre of world air traffic and to carry as much of that traffic as we can in British aircraft or British operated aircraft.

Those requirements comes before the requirement of trying to attract traffic. Therefore, my Department's Permanent Secretary was entirely right in saying that we do not try to attract traffic as a definite policy. I hope that that clears up that misconception. There are many other details which the Select Committee quite properly examined, and I have tried to deal with them as fully as I could in my reply.

One other thing that I want to say relates to paragraph 19 of the Select Committee's First Report. I agree in general with the financial statement contained in that paragraph, but I cannot agree with the figure of £3 million for administrative costs away from airports. I am not saying that those costs are not present, but they are costs which would be there without any regard to whether we operated a single aerodrome in this country or not. They are concerned with general air safety and navigation and many other services supplied by my Ministry. I think that a fair figure of the cost which should be placed on the airport side of my Ministry's accounts is more like £5.1 million, which is my computation and that of the Ministry, rather than the £7 million quoted in paragraph 7 of the first Special Report.

We do not very often debate aerodrome policy in this House and, as I say, I am grateful for this chance to do so. I hope that I have made plain that so long as I am responsible for this Ministry, while I welcome all the help and criticism I can get—that is the only way one can improve—I shall put the safety of air travel above any financial consideration. I must warn the House that there is the possibility of immense development in this sphere. A bill of at least £4 million will be necessary in the reasonably near future to face the vast increase in traffic which we expect.

At present, London Airport caters for about 3½ million passengers, but before reaching its peak it will cater for 10 or 11 million; and then we have Gatwick. Blackbushe, Manchester, and the other aerodromes as well. We dare not risk getting into the position in which sonic other nations have found themselves by allowing our air safety and technical services to lag behind the increase in traffic. If we do, we shall have "near misses" and tragic accidents of the type which we have heard about in America.

We must have much more remote control of these safety devices. We must get away from the old idea of the control tower officials doing sums in their heads and replace that by electronic computers, wider radar coverage and many other new devices. That will cost a great deal of money.

The Select Committee has criticised me, but I hope that I have managed in some degree to repudiate the criticisms. In fact, I think that my Ministry and the Committee are at one, because we both wish to provide efficient, well-run airports which will prove as profitable as may be. If we get this increase in landing charges, as we must, and an increase in the number of passengers this year, our figures will look better; they will show am improvement and be nearer parity than they have been in the history of airport administration.

However that may be and however much we may recover, I say again that I am not prepared to save a single penny which I think it necessary to spend on maintaining the highest standards of safety and on control equipment and service. We shall try to get as many services as we can, though I question how we can get more services when they are on a reciprocal basis and we can initiate only one service in and one out. We will get what traffic we can, but we must maintain the highest standards we can.

We are exploiting every possible commercial device at London Airport. Recently, Rolls-Royce opened a service station there and we are attempting to exploit the site in every way. I am examining the possibility of a form of trading accounts, although I should tell the hon. Member for Widnes that the form of accounts we use is that which the Public Accounts Committee asked for. But if we can have accounting of a more commercial kind, I shall be delighted.

Mr. MacColl

Part of the criticism I made was that nothing had been done between 1950, when the Public Accounts Committee made its criticisms and proposals, and 1955, when the Select Committee went into the matter. During that time, nothing had been done to get a form of accounts to show the position of each aerodrome. How can an aerodrome commandant know whether he is doing his job properly?

Mr. Watkinson

I take the point. None the less, it remains true that the accounts are at present in a form approved by the Public Accounts Committee. If we can improve on that form I shall be only too happy to do so.

I am glad to have had an opportunity of setting out a few facts about airport operations. Where I differ from the Select Committee is largely in matters of interpretation. I hope that the Committee will take account of the fact that we must pay this great attention to safety. There will always be a race between diminishing operating costs and increasing technical costs. We shall try, as far as we can, taking that into account, to make the loss as little as we can. If we try to do that, my Department will have fulfilled its function and will have taken careful note of what the Select Committee said.

Question put and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee Tomorrow.