HC Deb 17 November 1965 vol 720 cc1149-54
The Minister of Aviation (Mr. Roy Jenkins)

With permission, I would like to make a statement about the future of the Spey engine for the Phantom aircraft.

The House will recall that the decision to adopt this aircraft for the Royal Navy was taken last year by the previous Administration following failure to achieve a version of the P. 1154 which would have been acceptable to both the Royal Navy and the Royal Air Force. At the time the engine had not been sufficiently defined for reliable estimates to be produced, and the cost assumptions which were then used have proved to be too low. When we took office, we became aware that the P. 1154 would not meet the R.A.F. time scale for a Hunter replacement, and in view also of the urgent need to contain the size of the Defence Budget, we decided to order the Spey engined Phantom for the R.A.F. as well.

The costs of developing and producing the version of the Spey required for the Phantom have increased substantially above the 1964 assumptions, and we have therefore found it necessary to carry out a most intensive examination of comparative cost and performance between Phantom aircraft with the Spey and aircraft with the existing American engine.

Although the aircraft with the American engine is adequate for Naval and R.A.F. requirements, the Spey offers a greatly enhanced performance and a greater potential for future improvement. In addition Rolls Royce have been prepared to negotiate guarantees on costs performance and time scale much firmer than have been achieved in the past. Against the greater cost of the Spey these considerations might not in themselves have justified its adoption. But we must also take into account the very great economic technological and industrial advantages of going ahead with the development and production of this very advanced engine, with its big export potential. In the Government's view these considerations are decisive.

I am therefore glad to inform the House that we have decided to continue with existing plans for the installation of the Spey in the Phantom.

Mr. R. Carr

May I first ask the right hon. Gentleman whether he is aware that a copy of his statement reached the Opposition only at 3.26 and that this really does make it very difficult to express any considered view? This is by no means an isolated example and applies not only to the Minister of Aviation but to Ministers generally.

Having said that, may I say to the right hon. Gentleman that we on this side warmly welcome this decision. We hope this is only one of many decisions which the industry and the nation are awaiting in this field, and that this is only the first of a number of decisions which will do something to restore confidence in the procurement policy of the Government in these fields.

May I ask certain specific questions? First of all, can the right hon. Gentleman tell the House something about the total costs involved in the Phantom plus Spey engine such as now envisaged compared with the costs involved had the previous Government's plan been proceeded with? Can he tell us something about any escalation in the price of the Spey engine? He referred to this in his statement, but I was not quite clear about his meaning. Is it the case that Rolls Royce prices have now escalated compared with the estimates which they put in when they were asked to quote for this development? Will he tell us when production orders will be placed? Finally, will he tell us when he will be implementing the other half of the Prime Minister's promise in relation to British equipment in the Phantom aircraft, principally avionic equipment?

Mr. Jenkins

On the question of the time at which the hon. Gentleman was given the statement, we always, of course, endeavour to meet the convenience of the Front Bench opposite and the House. In this case, in view of some singularly misinformed rumours circulating in the Press this week, I thought it essential, outweighing even the advantages of giving a good deal of advance notice, to make this announcement to the House at the earliest possible opportunity. That precluded a large amount of notice being given.

An Hon. Member

Very poor.

Mr. Jenkins

Is the right hon. Gentleman really saying he would rather have had a little extra notice, even though holding up the industry for 24 hours or more?

As for the other questions which the hon. Gentleman put to me, there is no reason at all to think that the saving over the programme which we inherited from the previous Government will still not be substantial. Nevertheless, the reasons for cancelling the P. 1154 were not primarily those of cost, though the cost was great, and it was right at the beginning of the programme, but primarily those of the time scale. There was no prospect of the aircraft being ready when the R.A.F. needed it. As for escalation of Roll Royce costs, they were then found to be very substantially above the estimates which we inherited from the previous Government. We had decided, in the interests of the industry and the firm, to go ahead with this proposal, and I am glad the right hon. Gentleman welcomes that, but he should not under-estimate the inheritance which his right hon. Friends left us in this respect.

On the question of British equipment beyond the Spey in the Phantom, our policy remains as stated, and we are endeavouring, even at the cost of a premium, to keep as much British equipment as possible in, and I am hoping the results will be satisfactory.

Mr. R. Carr

Will the right hon. Gentleman answer somewhat further about when production orders will be placed and about the scale, because it is a fact that the aircraft industry has received virtually no production orders during the 12 months since the cuts were announced, and it is really a matter of great urgency that we move away from expressions of intent and get down to hard orders for purchasing, so that the industry can get down to cutting metal on a production scale.

Will he please also give the House, if not today, a little more information about this escalation of costs? Is it really a fact that Rolls Royce estimates have escalated compared with the specification of which we are now talking, or is it the case that the costs have gone up because the specification has changed? I think that this really is a matter of great importance to clear up, and we ought to be quite clear whether any reflection does fall on the efficiency of this great company.

Mr. Jenkins

So far as production orders are concerned, we will go straight ahead now with the Spey Phantom programme of development and production orders, because it is a very tight programme and we want the aircraft to be in service by 1968. We have every reason to believe it can and will be in service by 1968.

As to the question of responsibility, I of coarse wish to say nothing to damage the position of Rolls Royce. It is largely because we appreciate the great importance of the industrial value of this firm that we have taken this decision which we have announced at the present time, but there is no doubt at all that the position was that the previous Government took a decision on an engine required to perform a particular task and that the cost of this engine proved to be very much larger than was expected.

Mr. Dalyell

Is it realised that we welcome the concept of guarantees in relation to cost, performance and time scale, but, after all the Public Accounts Committee has said about cost estimates being loo low in the past, what is the Ministry doing to improve cost estimates in the future?

Mr. Jenkins

As I indicated in my Statement, we have in the case of the Spey programme now been able to secure guarantees about costs, about the time scale and about performance that are quite different from those which it has been possible to secure in the past.

Mr. Lubbock

While endorsing what the Minister said about the great advantage of going ahead with the Spey programme, may I ask him what he estimates will be the saving in our balance of payments in the period of this programme? Secondly, how many naval Phantoms is he ordering, bearing in mind the agreement with the French over variable geometry aircraft, which provides for a carrier-based version of it? Is he planning to replace all the Hunters with the Phantom or giving any consideration to a British specification of the COIN type such as they have in the United States?

Mr. Jenkins

A number of these matters are, of course, matters for the Secretary of State for Defence. So far as the Anglo-French variable geometry project is concerned, to which we attach the greatest importance, there is no reason to expect that the Phantom programme will in any way get in the way of this project. We shall pay the most careful attention to that aspect of the matter.

Mr. Philip Noel-Baker

May I congratulate my right hon. Friend on his Statement and on his decision to make it today, and may I thank him for what he said about my constituents, the firm of Rolls Royce? It will be greatly appreciated in Derby.

Mr. McMaster

While welcoming this statement, may I ask the right hon. Gentleman whether he can say when the sub-contract work on other frame parts, including the tail of the Phantom, will be placed, bearing in mind the responsibility placed on the Government, in their own firm of Short Bros., to fill the gap created by the cancellation of the H.S. 681 and to place some of the frame work with Short Bros.?

Mr. Jenkins

I will bear this in mind, and I am glad that Short Bros, have secured this sub-contract. There is no question of delay in the placing of this or other sub-contract orders.

Several Hon. Members rose—

Mr. Speaker

Order. I know we all like to debate Private Notice Questions, but there must be found other opportunities of doing so.