HC Deb 10 December 1962 vol 669 cc171-82

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fraser.]

10.15 p.m.

Mr. Stratton Mills (Belfast, North)

I would like to commence by congratulating the Parliamentary Secretary on his appointment and by welcoming him on this, his first occasion on the Front Bench. We particularly welcomed his visit to Shorts within 100 hours of his appointment and hope that this shows his true sense of priorities in these things.

I would, however, begin with the important point that Short Brothers and Harland is not just another factory. It is something very much more to Northern Ireland. It is our second largest employer, the centre of new techniques and skills and it plays a vital role in apprenticeship training, the effects of which go right through the whole of Northern Ireland. Her Majesty's Government have a shareholding of some 69.5 per cent. in the firm and, therefore, we treat this firm above all as a vital barometer of the sincerity of the Government in regard to Northern Ireland's economic development.

Before dealing with the present situation in this firm, I must say that I was a little disturbed by the Answer given to Written Question No. 42 this afternoon. It showed that the total proportion of the Air Corporations and Government orders which Short Bros. and Harland is undertaking, is down to 1.3 per cent. of the total for the first nine months of this year. In 1961 the proportion was 1.7 per cent. In 1960 it was as high as 4.1 per cent., in 1959 it was 3.1 per cent. and in 1958 it was 4.2 per cent. It seems that there has been a drop in the percentage of Government and Air Corporation orders which Short Brothers and Harland are now undertaking.

The present position on the production side—and I put it no higher than this —is reasonably satisfactory for the foreseeable future. But for the design and technical staff, the position—again, to put it no higher—is unhappy and uncertain. If this is to remain a healthy industry in Northern Ireland, it is of vital interest that the firm should be maintained not merely as a production unit but as a balanced design and production unit.

The main purpose of the debate tonight will, I hope, be to cement together certain assurances which have been given by the Government in the last few years. I hope that we cam get a clear reiteration from the Front Bench tonight that those assurances have not been diluted. I will not quote them all, but I think that the basic assurance was given by the then Minister of Supply, my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones) in reply to a Written Question in December, 1957, when he stated: It is the Government's wish that Short and Harland's shall continue as a fully balanced aircraft production unit and everything practicable is being done both by the firm and the Government to this end. My right hon. Friend went on to qualify it a little by saying: Success, however, must depend primarily on the quality and cost of the company's work relative to that of other companies; and the Government cannot be expected to place contracts even with their own firm regardless of this consideration."—[OFFICIAL, REPORT, 2nd December. 1957; Vol. 579. c. 3.] That has been the basic pledge to the firm by Her Majesty's Government. On the same day art agreed Press statement was issued, following a meeting by the then Minister of Supply with Lord Glentoran who was then Northern Ireland Minister of Commerce and certain of my hon. Friends, when the Minister emphasised 'that all practical steps were being taken by the Government and the management in an endeavour to maintain the firm as a balanced aircraft design and production unit. Some five months later, on 28th April, 1958, there was a similar meeting between Lord Glentoran and the then Minister of Supply, my right hon. Friend the Member for Hall Green, and an agreed Press statement was issued repeating the terms of the previous assurance, and saying that all practical steps would be taken in an endeavour to maintain Short Brothers and Harland as a fully balanced design and production unit. There was another assurance in 1958, when the hon. Member for Bradford, North (Mr. W. J. Taylor), winding up a debate as Parliamentary Secretary to the Ministry of Supply, used exactly the same words. On 17th February, 1961, the then Minister of Aviation, now the Minister of Defence, visited Belfast and gave a similar assurance. There is, therefore, a very considerable record of assurances to take all practical steps to maintain the firm as a balanced design and production unit.

My hon. Friend may rightly say that, to some extent, the word "practical" qualifies the phrase "balanced design and production unit". But when, on the one hand, Her Majesty's Government appoint the majority of the directors and control 69.5 per cent. of the shares and, on the other hand, place the bulk of the orders that Shorts are likely to receive, one feels that the practical opportunities for assistance are very great. I believe this to be the basic point that we must realise; that Her Majesty's Government have, above all, a dominant position in regard to the maintenance of Short Brothers and Harland as a balanced design and production unit.

I should like my hon. Friend to reaffirm that the 1957 pledge still stands, and that all practical steps will be taken to maintain the firm as a balanced design and production unit. In a debate at the end of July, the then Parliamentary Secretary, replying to a query from my hon. and gallant Friend the Member for Down, South (Captain Orr) avoided answering that point. At the end of the debate all the Northern Ireland Members abstained from voting. I hope this will give some measure of the importance we attach to the assurance which I seek to have re-affirmed.

Most important of all in the new orders for which the firm is anxiously looking is the replacement of the "Hastings" and the "Beverley" aircraft. I understand that a decision on this matter will be announced perhaps early in the new year, as my right hon. Friend said several weeks ago in this House. I want to emphasise the urgency which all people in the aircraft industry feel about this decision. Some of us, of course, though not all, will be happy with the decision when it is announced —we cannot all be pleased with the actual result, but none the less we feel that, whoever is to get the order, a decision is of vital importance to the whole industry.

I believe that the adaptation of the "Belfast" freighter is the ideal plane to fill this role. I shall not spend time in arguing that case now, but if we do not get this contract in Belfast I hope that if the contract goes to a firm in an area of high employment it will be made a condition of the contract that part of the design and production work should be sub-contracted to Short Brothers and Harland. This was recently done when the order for the VC 10 was placed. The work which has been given to Belfast is much appreciated, having, I believe, been written into that contract by my hon. Friend's Department. If we do not receive the order, I hope that something like this can be done.

We recognise that this is a very big order indeed. It is estimated that something like £200 million is involved, which is about six times the cost of the order in which Short Brothers and Harland are currently engaged on the Belfast air freighter. It is a giant order. I can say that Ulster Members would be most disappointed if Short Brothers and Harland did not have at least a finger in this pie.

The other day in the House the Minister of Aviation announced details of the supersonic plane. Bristol Aircraft Limited is involved in this work, and it is, of course, a minority shareholder of Short Brothers and Harland. I realise that the production of this plane is a long way off and that it is quite unrealistic to think too closely in terms of actual production, but a tremendous amount of continuing research will go on for the next few years. If it could be part of the contract that Bristols might sub-contract part of the research to Short Brothers and Harland I am certain that this would be widely welcomed.

I had intended to say a few words about Skyvan and the SC.1 vertical take-off plane, but time is running against me. I understand that Skyvan is to fly later this month and that application has been made to the Technical Aircraft Requirements Committee for funds for continuing research. I hope that my right hon. Friend will do all he can to encourage speed of decision on this matter. As for the vertical take-off plane, I cannot help thinking that the position is at present a little unsatisfactory. It seems to have got into a cul-de-sac where work is not really proceeding nor entirely stationary. Can anything be done by my hon. Friend's Department to help? I hope that he will be able to say something about it tonight.

After the recent debate on the Hall Report of the Joint Working Party on the Economy of Northern Ireland, my right hon. Friend the Home Secretary said that an air-freight inquiry between Great Britain and Northern Ireland would be undertaken by the Air Licensing Board. When he made that announcement I suggested that, as Short Brothers and Harland was one of the leaders in air freight, it might well be practicable to consider some method of associating the firm with that inquiry. The Home Secretary said that he would pass that suggestion on to my hon. Friend's Department. I hope that my hon. Friend may have something to say about it tonight as I feel that it would be most useful if the firm could be associated with that inquiry.

Another suggestion which I made at Question Time several weeks ago was that some sort of White Paper should be issued annually on Short Brothers and Harland. It was suggested then by my right hon. Friend that this would be inappropriate in view of the private shareholding involved. That may be so, but will my hon. Friend look at the idea behind this suggestion? Short Brothers and Harland tends to get the worst of both worlds. If it were a fully nationalised firm we should have a White Paper or an annual report to Parliament. If it were a private firm it would be a statement to the shareholders in the form of a chairman's report. But in falling in between the two, it seems to be getting the worst of both worlds. I wonder if each year we could have some kind of public report which would review the work in hand, would comment on the progress in the course of the year, would give some indication of the prospects of the firm, I feel this would give a greater sense of direction to the firm, and would perhaps help to improve the morale in the company which is not as high as it should be, largely because of its lack of direction and drift which has been evident in recent years.

These are a few of the ideas which I should like my hon. Friend the Parliamentary Secretary to answer. I hope that in so doing he will give particular attention to my point about the maintenance of the firm as a balanced design and production unit.

Mr. Stanley R. McMaster (Belfast, East)

Before my hon. Friend concludes, I wonder whether he would make a point about the hopeless inadequacy of an order for 10 Belfast aircraft, in view of the type of emergency that has arisen recently in Borneo and India, and the necessity to have a developed version of the Belfast in order that the British Army can meet its requirements?

Mr. Stratton Mills

My hon. Friend has made the point much more adequately than I could.

10.31 p.m.

Mr. John Diamond (Gloucester)

I intervene only for a minute to say that there is interest on both sides of the House in this matter and to ask the Government if they will bear fully in mind that, having regard to the situation of this firm, one expects it to receive the most-favoured-nation treatment and not the least-favoured-nation treatment.

Will they also bear in mind that, having regard to the unemployment figures in the past ten years, it must be clear that the Government have not done sufficient to help the economy of Northern Ireland?

10.32 p.m.

The Parliamentary Secretary to the Ministry of Aviation (Mr. Neil Marten)

I should like to start by thanking my hon. Friend the Member for Belfast, North (Mr. Stratton Mills) for his kind remarks on my appointment as Parliamentary Secretary. It is obviously going to be a very interesting job, and I much look forward to having the help, advice and co-operation, not only of my hon. Friend the Member for Belfast, North, but also of my hon. Friend the Member for Belfast, East (Mr. McMaster) and those hon. Members who interest themselves in aviation, and particularly in connection with the problems facing Short Brothers and Harland.

As my hon. Friend said, I started my job on Tuesday of last week, and I hope he will take it as an earnest of my interest in this problem that I went to Belfast two days later to see Messrs. Short Brothers and Harland. On the Thursday I met the management and discussed problems with them, and on the Friday I looked over the works. I also had the great pleasure of meeting the Minister of Commerce for Northern Ireland for half an hour's discussion.

My visit left with me three main impressions. First, it reinforced my awareness of the great importance of this company to the economy of Northern Ireland, Secondly, it strengthened everything I had previously been told about the quality and importance of the work that the company is engaged upon at present. Thirdly, I appreciated the importance of early decisions being made by the Government on certain new projects which will have such a considerable bearing on the company's future.

Before dealing with the need for future decisions, however, I must say a few words about two very important decisions reached by the Government in recent months, which have been greatly to the benefit of Short Brothers and Harland. The first is the decision made jointly by the Government and the Government of Northern Ireland to provide the necessary finance to help Shorts to complete their existing orders for 10 Belfast aircraft. The Belfast project has not so far attracted any of those orders in the civil field which wore predicted at the outset of the project. The majority of expert opinion in aviation circles at the time predicted that the world demand for air freight would grow at a very much faster rate than has, in fact, proved to be the case. There is little doubt that, in time, freight traffic will expand greatly, but it is now open to doubt whether this will occur soon enough to alter materially the civil prospects for the Belfast.

In the circumstances, the two Governments have undertaken to provide the company with additional finance to enable it to complete its existing orders for ten aircraft. This will ensure the maintenance of a substantial volume of work extending to 1965 and 1966. The actual amount of money provided will depend upon a variety of factors such as the volume and profitability of other business obtained by the company, but on present estimates a sum of up to £10 million may be needed. The precise arrangements under which this money will be provided are being urgently worked out, and the House will be given further information in due course.

The other important decision affecting Shorts is, of course, to order a further six VC 10 aircraft for the Royal Air Force. Some of this work will be subcontracted to Belfast. The House will understand that, as there are contracts under negotiation, it would be premature to go into the details at this stage. I can say, however, that the work will be substantial.

As regards future Government orders, it is well understood, and, I trust, accepted by the House, that we cannot place orders for aircraft where no genuine requirement exists. As the House has been told on several earlier occasions, it is doubtful that there will be any further requirement by the Royal Air Force for additional Belfast aircraft of the current type, which, I think, answers the point made by my hon. Friend the Member for Belfast, East. The Short company has submitted a number of designs far derivatives of the Belfast to meet the military requirement for a Beverley-Hastings replacement—the OR 351—and these proposals, along with submissions from other firms in the industry, are being considered by the Government.

It is often asked when a decision on the choice, of aircraft to meet this need will be taken and why a decision has not yet been reached. This decision is primarily one for the Ministry of Defence, not the Ministry of Aviation. The Minister of Defence has been conducting a careful survey of the various possibilities open to the Government, including the harmonisation of the requirements with those of our allies. Whatever solution is adopted, this will be a most expensive project, and it is advisable that, first, it should meet the particular requirements of the Royal Air Force, and also, if possible, an aircraft should be chosen which will have sales appeal outside Britain. We hope to give the House some information on this important matter early in the New Year.

One assurance I can give the House is that, before a decision is reached, the most careful account will be taken of the industrial and social consequences of all the alternatives being considered as well as the operational, financial and technical factors.

Mr. Stratton Mills

My hon. Friend uses the expression "some information" and says that he hopes to be able to tell the House more in the new year. I noticed that his right hon. Friend used the same expression in the House at Question Time, speaking of "more information". Does this mean that there will not, in fact, be an announcement of the order but merely an interim statement? Can my hon. Friend expand on that?

Mr. Marten

I would not like to expand on it at this stage. We shall certainly give more information about it.

My hon. Friend asked about the future of the Skyvan aircraft. I myself saw this when I was in Belfast. I found it very interesting indeed, and I wish it, as a project, the best of luck. The Ministry has carried out a careful technical and commercial evaluation of the aircraft, and my right hon. Friend has also had the advice of the Transport Aircraft Requirements Committee, a body which includes experienced airline operators who give him advice on future requirements. Our view of the future of the project cannot reasonably be determined before the first flight of the prototype, which the firm expects to take place before the end of this year. We should then be able to form a clearer judgment of its technical merits and, therefore, its prospects.

I should be glad to pass on to the Board my hon. Friend's suggestion that Short Bros. & Harland should be invited to give evidence to the Air Transport Licensing Board, particularly as its study will probably consider developments in freighter aircraft. As my hon. Friend knows, the scope of the inquiry and the method of work are now being determined by the Board in consultation with the Ministry of Aviation and the Northern Ireland Government.

In considering the industrial aspects of the Hastings/Beverley replacement project, we must look at the British aircraft industry as a whole. The number of major new aircraft projects likely to accrue on Government account and with Government support in the next few years may not be sufficient to maintain the existing major units in the industry, at a level which one would like to see.

I can, however, assure the House that we shall not lose sight of the particular circumstances of Short's. When, in the course of the statement of policy in February, 1960, it was stated that the Government intended to concentrate future orders on the major groups in the industry, a specific reservation was made to cover circumstances in which public policy might make it desirable to do otherwise. In making that reservation, the Government had in mind the special position of Short's. We cannot promise Short's any particular favours in this regard, but the company will certainly be considered when decisions about placing future orders are being made.

My hon. Friend asked whether the Government would consider the publication of an annual policy report outlining the current situation of Short's and its future prospects in order to give what he called a sense of direction to the people in the firm. As my hon. Friend mentioned, we must remember that although the Government have a 70 per cent. shareholding, there are also private shareholders, and hitherto in our relations with the company we have endeavoured to treat it on a commercial footing. In common with other companies, accounts are published annually by Short's.

As to the employees, there are the usual channels of communication through the trade unions. The management is fully alive to the need to keep the workpeople informed to the fullest extent possible of significant developments. In the circumstances, my right hon. Friend does not consider that any exceptional arrangements for reporting on the affairs of Short's would be justified. I will, however, certainly draw to the attention to the board of Short Brothers the point made by my hon. Friend.

My final point concerns assurances. My hon. Friend has recalled several statements made by Ministers about the future of Short's as a unit. It seemed clear to me, however, that they were expressions of wishes and endeavours rather than of guarantees.

Mr. Diamond

Shame.

Mr. Marten

They do not amount to an assurance that employment would be maintained at any particular level. Having read the whole sequence of those assurances, that is my conclusion. For my part, I cannot give any guarantee at this stage on either design or production. I ask the House to wait until the decision on the Hastings/ Beverley replacement has been taken, which, we hope, will be early next year. The position will then be much clearer. It would be unwise of me to hazard predictions about the level at which work and employment can be maintained. However, there appear to be prospects of a substantial volume of production work accruing to the company in one form or another for several years to come.

Here I might mention the recent announcement by my right hon. Friend of the decision to build, together with the French, a supersonic airliner. The decision to embark on this project means a substantial addition to the volume of future work available to the aircraft industry. Production work on the aircraft is several years away and it is too early to say whether Short's will benefit directly. However, the company's general prospects should certainly be indirectly improved by the increase in work which must accrue to the industry as a whole through this very large and advanced project

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Eleven o'clock.