§ The following Question stood upon the Order Paper:
§ 59. Sir P. MACDONALD
To ask the Minister of Supply whether he is now in a position to make a statement regarding the Government's future policy for research and development in the aeronautical industry.
§ The Minister of Supply (Mr. Aubrey Jones)
With permission, Sir I will now answer Question No. 59.
Yes, Sir. As the House will be aware the Government have had under consideration, in the light of current defence policy, the future of the British aircraft industry and, in particular, the future extent of Government support for that industry.
Like the aircraft industries of other countries, the British industry, as an important defence industry, has from its early days been supported by work done in Government establishments and has developed with the help of Government contracts for research, development and production. The current reduction in defence demands, both in numbers and for certain types of manned combat aircraft, will inevitably entail some contraction in the present size of the British industry, but there will still be a need for an efficient and economic industry to meet the Services' requirements for aircraft and guided weapons. The Government will, therefore, continue, as necessary, to sponsor and finance aeronautical research and development to meet these defence requirements.
In addition to its defence rôle, the aircraft industry has been making a valuable contribution to the general economy of the country and to technological progress over a wide field of industry. It has been helped materially in this by the research work undertaken under Government auspices primarily for defence purposes. So long as the achievements of the industry justify the expenditure of the public money involved, the Government intend to continue to make a financial contribution to aeronautical research in the expanding field of civil transport, where this is not already covered by the research 227 necessary for defence purposes; such finance will be on a scale adequate to enable the industry to maintain a leading position.
The Government have taken this decision in the expectation that in course of time the industry itself will progressively assume financial liability for this research. In the Government's view, however, it would be fruitless to continue this expenditure unless the industry reorganises and strengthens itself to the extent necessary to meet the changed conditions with which it is now faced. The future of research depends, therefore, on the progress made by the industry itself.
In the case of civil development, the industry has already accepted responsibility for most of the development costs of the new major civil aircraft projects. The Government consider that, provided the necessary reorganisation is carried out, the industry should, in general, be able increasingly to finance the development of new civil projects without Government assistance. It is, however, recognised that the development of a future generation of aircraft may require a measure of Government help. The Government will, therefore, be prepared to consider individual applications for development assistance on their merits.
Other factors which affect the future of the aircraft industry are being kept under review.
§ Sir P. Macdonald
Arising out of that very important statement, may I ask my right hon. Friend whether he can say what are the intentions of the Government with regard to a supersonic civil aircraft? Does his statement mean that the Government are to contribute towards the development of supersonic civil aircraft in the future? May I also ask what is to be the future of the Royal Aircraft Establishment, Farnborough? Is it to be maintained by the right hon. Gentleman's Department? Who will be responsible for it?
§ Mr. Jones
Research is being undertaken into the possibility of a supersonic civil transport. Were the research to develop to a point where a design was chosen and an aircraft manufacturing firm were to develop such a project, the Government, recognising that the finances involved might well be beyond the capacity of the firm, would consider on its 228 merits, and in the light of circumstances then obtaining, the possibility of a Government contribution.
Naturally, Farnborough will continue. It will continue to do research work for military and civil aircraft, for manned and unmanned aircraft and research into subsonic as well as supersonic flight.
§ Mr. G. Brown
This is, of course, a very important but also an excessively vague statement. Incidentally, may I express the hope that it was cleared by the Chiefs of Air Staff before the Minister made it.
I wish to ask two short questions. There are many references to existing subsidies and to new subsidies, both to the industry as a whole and on the application of individual firms. Will the Minister give an estimate of the amount by which we shall be committed, under this statement, to pay new subsidies to the aircraft industry? Does he know how much a year is involved?
What machinery is the Minister setting up to enable the industry to expand to Government requirements in the civil as well as the military field, and also to enable him to exercise his powers in relation to the industry to which he is offering these new subsidies if the industry does not reorganise itself? Or are we leaving ourselves with an almost bottomless purse and without control over a private enterprise industry to which we are giving all this money?
§ Mr. Jones
I will endeavour to clarify the vagueness of the right hon. Gentleman. The word "subsidy" is misplaced. The aircraft industry is an example par excellence of defence work being of inestimable value to the civil side. The civil and military techniques are beginning to diverge. My statement made clear that as such divergence continues the responsibility for the financial cost of civil research will be placed in the course of time where it belongs, on the industry itself.
I am always in touch with industry and I endeavour as soon as possible to inform it of coming requirements.
§ Mr. Woodburn
Is the right hon. Gentleman aware that his statement gives the impression that there is to be a change in the policy whereby, as in the case of the Brabazon Committee, a scientific appreciation of the future needs of aircraft for the whole country was the guide for the industry? Is he aware that his statement would make it appear that he is leaving the future of aircraft to the inspiration of the industry? Do his scientific advisers think that this is right? Would it not be better to continue the policy which was proved so successful in the past and which put us in the forefront of the world?
§ Mr. McKibbin
In any arrangements being made will my right hon. Friend see that Messrs. Short and Harlands is retained as an effective unit of the British aircraft industry, and allowed to make its own design and to carry out its own manufacture? Is he aware that yesterday 1,100 men were given notice that they would be paid off before the end of the year, owing to the cessation of the Canberra contract?
§ Mr. Beswick
Does the right hon. Gentleman agree that if he cannot put any figure to the research programme for the next few years the conclusion will be drawn that he has no idea of the size of the industry for which we are planning? Is he seriously telling the House that, the cost of basic research in aeronautics being what it is today, it will be possible to fragment this research and farm it out to separate firms? Is it not absolutely essential to have centralised research, and, if it is being done at cost to the State, can he isolate that question from the question of the ownership of the aircraft industry as a whole?
§ Mr. Jones
The intention of my statement is to indicate to the House that the 230 level of research expenditure will continue unchanged. I cannot give the House precise figures, for to do so would be in breach of security. The two things—civil and military—are inextricably intertwined. As to the hon. Member's concluding question, I should have thought that this speculative and risky export industry—the most speculative there is—was the worst possible candidate for nationalisation.
§ Mr. Bevan
Is it not a fact that the right hon. Gentleman, maybe unintentionally, has not been sufficiently frank with the House? Has he not said today that in the event of research for defence purposes proving inadequate for civil development, the Government will find civil research facilities? Has he formed any estimate of what that will cost? How can he say that he does not regard it as a subsidy? If the research is undertaken on Government account for commercial aircraft, what other description can be found for it except that it is a subsidy? Have the Government made any estimate of what it will mean?
It is not also a fact that in his statement he said that in the event of an individual aircraft project being undertaken and a private firm not being able to carry the whole burden, the Government will themselves step in and help? Has he formed any estimate of what that will cost? Has he not, maybe unconsciously but by using very unfelicitous language, concealed the real burden from the House?
§ Mr. Jones
I endeavour to be as frank with the House as I can. I am trying to say that both military and civil research have been one whole and have been done together. The demand for military aircraft is subsiding. It is impracticable to pass over the whole of civil research, even if we could disentangle it, to the industry straight away. The Government therefore propose to continue research as a whole for the time being at roughly the existing level. As civil research becomes more and more identifiable, then the cost of that research will be passed in course of time on to the industry itself, although the actual execution of the research may well still be done in a Government establishment. [HON. MEMBERS: "What is the cost?"] I have said that the broad scope of the 231 research and the broad level of expenditure remains for the time being about as it is now. I cannot give a figure, because to do so would be to conflict with security considerations.
§ Sir J. Hutchison
Would my right hon. Friend say what, if any, assistance, presumably under the policy of interdependence, is being given by the United States, as stated in the Press the other day? Is that entirely a private arrangement between firms, or does it enter into the Government's calculations?
§ Mr. Jones
I think that my hon. Friend may possibly have in mind the Swallow aircraft, which has been mentioned in one or two newspapers lately. I understand that the Americans, as they normally do, are considering the possibility of giving some financial aid for such a project, but there is no decision.
§ Mr. G. Brown
What arrangements is the Minister envisaging, when grants are made to individual firms under the new policy, to obtain a repayment out of the specific earnings to which those facilities may lead? What call-back will the Government have and what machinery exists for it? Does he know of any other industry which, justifiably or unjustifiably, gets a subsidy to which no figure is ever placed?
§ Mr. Jones
Again, I think that the right hon. Gentleman is misleading in using the word "grant". There are no grants. The practice has been for the Government to contribute towards the development of a civil aircraft and there- 232 after to exact a levy on the sales of the aircraft. In the case of the Viscount aircraft, for example, if it is not too unethical to say so, the Government did quite generously on the investment.
What I am trying to say about normal aircraft is that that investment—because it is an investment—on the part of the Government will cease. When it comes to future aircraft embodying a great technological advance, the Government will consider the possibility of some help on its merits and in the light of the circumstances of the case.
§ Sir P. Macdonald
In view of the vitally important statement that he has made, would my right hon. Friend consider issuing a White Paper explaining what these proposals are? May I ask the Leader of the House, who is now leaving the Chamber, for an opportunity for a debate on this subject, which will affect not only the aircraft industry but the engineering industry as a whole?