Clause 3.—(PROVISION OF FUNDS AND FACILITIES FOR EUROCONTROL.) (Hansard, 4 December 1961)

§ Mr. Cronin
We on this side of the Committee are anxious that progress should be as rapid as possible, but we cannot completely ignore the financial aspects of this very important Bill and I should like to ask the Parliamentary Secretary some questions.
It would be very helpful if he could give us some information about the contributions in respect of civil aircraft from States which are not members of Eurocontrol but which are actually using the facilities of Eurocontrol. If one looks at Article 23 of the Convention, it would appear that there is some doubt as to what extent non-participating countries' aircraft will have actually to pay for the use of the services concerned.
We should like some information on that because it seems that if Eurocontrol is to provide free or cheaper services to non-contracting States and if the countries which form part of Eurocontrol are to subsidise those services, it would obviously be more profitable for those other countries to stay outside Eurocontrol. We all hope that the baby Eurocontrol will grow into a large adult organisation, but if there are to be marked financial advantages for other countries in staying outside the baby's growth will be stunted and it will be a dwarf.
I should like the Parliamentary Secretary to be more specific about the actual total amount this country is likely to be obliged to pay in respect of Eurocontrol's expenses. If we turn to the Explanatory and Financial Memorandum and the paragraph headed "Financial Effects of the Bill" we read: Contributions under the Bill to the expenses of the Organisation will vary according to the provision of the Organisation's needs which is approved from time to time by its member states, It also says: and will also be affected by the working of these formulas.… Later it says: The likely level of United Kingdom contributions over the life of the Organisation cannot be forecast at this stage; but so far as the present state of planning permits even a tentative indication, they may if a year early in the full operation of Eurocontrol be of the order of £3 million capital and some £2 million recurrent expenditure". 1056 It is rather disturbing to read that when the Explanatory and Financial Memorandum to the Bill is of such a vague nature. The information we received on Second Reading was rather unsatisfactory in some ways. For instance, the Minister said: The costs are not easy to estimate. The picture is continually changing."—[OFFICIAL REPORT, 17th November, 1961; Vol. 649, c. 844.] If we turn to Articles 23 and 29 we find that our contribution is to depend upon the proportion which our gross national product makes to the gross national products of the other countries concerned. The statistics to be used are those of the O.E.E.C. and this will be indicated in thousands of millions of French New Francs according to the factor costs and current prices. There will be some difficulty to say least for an unskilled person to assess what will be the total cost involved.
On Second Reading the Parliamentary Secretary said that the United Kingdom would probably pay about a third of the whole, but we have no idea what the whole is likely to be. If we had some real confidence that the Ministry of Aviation would apply an eye to economy perhaps we would feel more comfortable about the situation. I thought it might be desirable to cast our minds back to see how the Ministry has fared in the past with regard to its estimates. It is rather difficult to find estimates used by the Ministry of Aviation, because the Ministry of Aviation is an organisation which has been formed from the Ministry of Supply and the previous Ministry of Civil Aviation.
9.30 p.m.
In the Second Report of the Public Accounts Committee for the Session 1959–60, which is the nearest I could get to it, in pages xxxi-xxxiv, one finds that a guided missile, the "Sea Slug", which is called Type A, was estimated to cost £1½ million, and the ultimate cost was £70 million. Similarly, the missile "Thunderbird" was estimated to cost £2½ million and eventually cost £40 million. The guided missile "Fire-streak" was estimated to cost £4 million and ultimately cost £33 million. We want to be fair to the hon. Gentleman. It may be suggested that guided missiles are in a class by themselves, in which 1057 estimates are often difficult to achieve, but if one turns in the same document to page xxviii, one finds an estimate for the investigation and evaluation of navigational aids—

§ The Temporary Chairman (Dr. King)
Order. I have listened to the hon. Member with interest, but there is no mention of guided missiles or "Thunderbirds" in the Clause we are discussing. By all means, a passing reference may be made to items which are outside the Clause, but I hope the hon. Gentleman will not go into detail on them.

§ Mr. Cronin
I entirely bow to your Ruling on this matter, Dr. King, but it seems to me that we might perhaps mention the estimate for the investigation and evaluation of navigational aids, because they are so much a part of this Bill, which deals with navigational matters. This will be the last figure I shall quote. The estimate was £86,500 and the final expenditure was about three-and-a-half times as much—£300,000.
We on this side of the Committee have no wish to emphasise unduly these matters from the past, but I should like to suggest that the past does not give us complete confidence in the Ministry of Aviation in regard to estimates for the future. Therefore, when we find ourselves faced with these rather vague references to what this Bill will ultimately cost this country, we do not feel completely at ease. I should like the hon. Gentleman to help us in this matter, and to give us a little more comfort about the total expenditure likely to be met by this country in the future.

§ Mr. Woodhouse
I think the hon. Member for Loughborough (Mr. Cronin) in the last part of his speech advanced very good reasons for our exercising extreme caution in the estimates that we have put forward in the Preamble to the Bill. I have seldom seen estimates made more cautiously than those in the Financial Memorandum.
I am not able to make them more precise, but I should like to spend a moment, in the course of answering the hon. Gentleman's questions, in trying to explain why it would be impossible in 1058 any circumstances to make them absolutely precise. In calculating these costs, especially for twenty years ahead, which is the duration of this Convention, there are a large number of major unforeseeable factors. For instance, there will be the introduction of new systems and equipment of which we at present know nothing. There will, we hope, be the accession of new members to the Organisation, which may tend to bring our share of the cost down. There will be, we hope, agreements with non-Member States, quite apart from the question of charging their aircraft for services used, and there is the uncertainty about the extent of the use of national facilities, which would be very important in our own case, because our existing facilities are so extensive already. There is the uncertain factor involved of the possible extension of the area covered by the Convention into the lower air space as well as the upper air space, and, above all, there is the very complicated nature of the formula for calculating costs.
I will not go into great detail about that formula except as far as is necessary to answer the hon. Member's specific questions. The method will be spread over a period of 20 years, in stages. In the first stage we merely make a token contribution; that is the stage we are in. In the second stage the calculation of costs will still be based on the gross national product of each individual country and our share, on present levels of gross national product, would be almost exactly one-third.
But it is when we go beyond that stage, after the next three years, that it becomes complicated. After that stage capital contributions continue to be based on gross national product, and gross national product is also the base on which will be calculated the cost of military traffic and the cost of nonmember civilian traffic. I will come back to that in a moment, because it concerns the hon. Member's first question. The costs for civil traffic of the member countries will be apportioned according to the scale of use by each country. Contributions are offset, of course, by services rendered by the national installations available in each country.
1059 In the fourth stage, when the organisation has developed a tariff system of its own, which it has permission to do under the Convention but is not obliged to do, it will decide the tariff by a voting system of a weighted majority of an absolute majority of the members. I mention that because this is a type of voting in which we shall have a very heavy influence, and those tariffs will be applicable to the aircraft of nonmember States as well as member States.
It is impossible at this stage to predict what the tariffs will be, and it is therefore impossible to say exactly what the contributions of non-members will be. I can only say that the Government's weight will always be directed towards making the system pay for itself rather than be subsidised by the member States.
As the hon. Member said, the total amounts mentioned in the Memorandum are very rough approximations. They are based on consultations with the other members in the interim organisation, but inevitably these were consultations only on the general outline of the service. They relate only to a sample year, not to any one particular year, and the capital amount will vary, naturally, from year to year. This is merely a random slice. The recurrent contribution will vary according to the scale of the facilities provided.
In order to give the hon. Member comfort, in conclusion, there are two final points which I should like to make about our contribution. The first is that annual Estimates covering the immediately following year for our contributions to the organisation will be presented to Parliament by the Government—and can be debated. Secondly, air safety is very expensive and is a necessary requirement, and we cannot escape this kind of cost even by not joining the organisation. In fact, we might even find that our own air safety system cost us more if we were outside the Organisation than if we were in it.