AIRCRAFT INDUSTRY

HC Deb 09 February 1966 vol 724 cc488-515

7.42 p.m.

Mr. Cranky Onslow (Woking)

I am glad that this opportunity has arisen to put to the Minister, who I hope we shall soon see in his place, some points and anxieties which are felt here and in the country about the research and development work of the aircraft industry and particularly about the Concord project. I believe that my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) may want to make some reference to the cancellation of the P1154 and the HS681, if he catches your eye, Mr. Speaker, and to the unexpected increase in spending on other projects, but I wish to concentrate on the Concord and, in particular, on its costs. In doing so I have no wish to disparage the project in any way. We all want to see it succeed. We on this side of the House do not regard it as a prestige project but as a business venture which must be run on sound and profitable lines.

Sir Arthur Vere Harvey (Macclesfield)

On a point of order. I apologise for interrupting my hon. Friend, but this part of the debate was due to start at 7 p.m., it is now nearly 7.45 p.m. and there is no Aviation Minister or Government Whip to listen to the debate. I think that the Opposition are being treated with the greatest discourtesy. We are talking to Front Bench representatives who are not responsible for this subject.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler)

We had expected the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) to raise the subject of railways and we are fully prepared to deal with that subject. The hon. Member is, however, absent.

Sir A. V. Harvey

The Minister of Aviation did me the courtesy of telephoning me—I was in Cambridge—and I told him that we expected this debate to begin at about 7 p.m. He understood the position. Could someone approach the Leader of the House to give us guidance? This is the greatest discourtesy to the Opposition.

Mr. Speaker

It is very difficult. These days of miscellaneous debates are very difficult to timetable. I had intended to call next the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) to raise a subject of which he has given me notice. He was not here. But the point which the hon. Gentleman raises is not a point of order for me. It is a point of argument between the Opposition and the Government.

Mr. Onslow

We all understand the difficulty in which you may be placed, Mr. Speaker, by the absence of the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel). If blame is to be attached to anyone it lies with him, and, as my hon. Friend the Member for Macclesfield comments, with the Liberal Party, as usual.

Mr. Speaker

Order. May I say that the Chair is in no difficulty.

Mr. Onslow

I was merely trying, for once, to exculpate the Government.

From all we hear, the development of the Concord project is going very well. The development programme is on schedule, no component is more than two weeks behind time, and the first engines have been delivered ahead of their schedule. The first aircraft is due to fly from Toulouse in the spring of 1968 and the second protoype from Filton in the autumn of the same year. Meanwhile, supersonic flight testing with the BAC221 is continuing and the programme to test the Olympus engines in a Vulcan flying test bed is well advanced. The hopes are that the aircraft will be ready to be put into service by the end of 1971, and a total of 50 options has been placed with the manufacturers.

This is an extremely encouraging picture, and great credit is due to the efforts of the British and French manufacturers. Half the credit for this project goes to our partners in France for their cooperation and for the smoothness with which it is all working out.

But the rising costs must worry us. A figure of £400 million has recently been quoted as the cost of research and development to the point of production of Concord. Probably a more responsible estimate would be nearer to £350 million. But the increase in cost and the amount of money involved must cause concern unless we have all the facts at our disposal, particularly in view of the threat presented by the possibility of the American supersonic transport coming forward as a serious contender.

It is possible to understand that there are good reasons why there has been this considerable increase from the originally quoted figure of about £175 million for Concord R, and D which was made four years ago. This is a rise of 100 per cent., but I estimate that 45 per cent. of it is probably due to the rise in the cost of labour in that period and that 40 per cent. of the remainder is due to the greater size of the aircraft now to be built. The original specification has been changed twice, largely to meet the expressed needs of the customers in world airlines, to provide more seating, to improve the operational cost and to increase range.

This leaves 15 per cent. as an element in the cost increase which is not accounted for, but possibly this is not an exceptional increase on an estimate originally made four years ago, particularly when we bear in mind that precise definition became possible only when the project had been under way for some time and had reached a moderately advanced stage and that no definite figures could have been assessed much before January of last year.

We hope that the costs which have now been established will not be subject to any further uncertainty, with the single remaining exception of what must be called the Brown factor—in other words, the forecast or unforecast escalation of man-hour costs in the industry. I recognise that this factor is not the direct responsibility of the Minister for Aviation or his Parliamentary Secretary, but there are a number of points affecting the cost of this project on which the Minister has a direct influence and I should like to put certain points concerning them to him and to ask for certain assurances about them.

The first point is the cost of delayed decisions. We have seen in the past the effect of this on other projects. A complete technical reassessment of Concord is due very shortly, after which it will fall to the Government to make the really crucial decision to go ahead with the tooling up for production. I hope that the Parliamentary Secretary can give an assurance that this decision will not be put off or delayed.

The second point concerns the costs arising from some remaining uncertainty concerning the aircraft's design, with particular reference to the importance of the noise factor. The tolerable limits within which Concord's noise can be defined still, I believe, remain to be set. I understand that some airport operators are concerned with the noise that the aircraft is likely to make while still on the ground, while others are chiefly worried about the noise that it will make when climbing after take-off, if not also when it is approaching to land.

To a certain extent I believe that it lies within the Minister's power to speed up definite decisions on these issues. I should like to hear tonight that he is prepared to take every possible action to get these questions settled, and if international negotiations have to be undertaken I hope that we shall be told tonight that he will undertake them, and with all speed.

Thirdly, there are the costs inherent in the existing procedures of the Government. Many people associated with the aircraft industry hold the view that the system of cost control operated by the Ministry is frequently time-wasting and sometimes downright niggling. The hon. Gentleman may remember that this drew some quite severe criticism in the second Report of the Lang Committee, published about a year ago—on which, as far as I am aware, no remedial action has yet been taken. I hope the hon. Gentleman will appreciate that, when the time of the men who control a project of this kind is wasted, big money is wasted as well. I recognise that, in referring to this point, I am also raising the problem of how to establish an effective Parliamentary check on spending and I shall return to that later.

Fourthly, there is the cost of false economies. I think it is agreed that good use could have been made of the completed TSR prototypes to try out some of the equipment which will be needed when the Concord reaches a stage where it is ready for flight test. I seem to recollect that the last Minister of Aviation was asked to sanction a programme of work which would have taken care of this. The request was turned down, particularly unfortunately since the cost originally assessed by the contractors for a limited programme of 100 flying hours was quoted, quite firmly, as far as I recall, at £1½ million. The Minister, in turning it down, appeared to do so on the rather specious ground of inflating the figure to between £2 million and £3 million.

The right hon. Gentleman may have wanted to turn the programme down and have chosen that argument as the reason for doing so, but the fact that he used it does not argue that there is any great mutual trust between the Department and the manufacturers in the aviation industry on the question of what a project will cost. The net effect is unfortunate.

The fifth point concerns the uncertainty surrounding the aircraft industry. Manufacturers are experiencing great difficulty in attracting and holding qualified technicians. Few young men at this point in time can take the brave decision of regarding aircraft manufacture in Britain as a career to which they can dedicate their lives. That is a bad situation. It lies largely within the Minister's hands to remedy it by making it plain that the Government agree with the Opposition in the certainty that we can and must have a healthy aircraft industry, one that will attract young men with the certainty of a worth-while career.

In the context of the Concord project, I am sure that the hon. Gentleman will appreciate how absurd it would be if a stage were reached where jobs and money were available and customers were waiting to buy but the project increased in cost because men could not be found to take on the work.

The hon. Gentleman may remember that my right hon. Friend the Member for Mitcham (Mr. R. Carr) put, in a recent debate, an impressive list of constructive points and suggestions for action to remedy many of the problems facing the aircraft industry. I recall that the Minister responded to this in a most encouraging way. He did so before he had had the opportunity to hear the final point that my right hon. Friend wanted to make—possibly the most important point—concerning the need for greater Parliamentary control over public expenditure in this sphere by the extension of the Select Committee system.

No one suggests that in the Concord project, there are manufacturers who are free-loading or getting away with public funds or making excessive profits. I do not believe it. But this project would, I believe, make an excellent test case for such an extension of the system. It would be the most satisfactory way of controlling or attempting to control the spending of very large sums of money on a project of this kind, rather than that we should have to resort to such opportunities as are afforded to us by the chance composition of the Supplementary Estimates before us now.

Half the money involved is not ours but French, but our 50 per cent. share adds up to many millions of pounds. Although we here must believe—and I do believe—in the fundamental soundness of the Concord project, that belief would be still firmer, as would the public's, if the Minister now agreed to take whatever steps are necessary to secure the setting up of a specialist Parliamentary committee to keep this great but expensive venture under strict and public control.

8.0 p.m.

Sir Arthur Vere Harvey (Macclesfield)

The House is glad to see the Parliamentary Secretary to the Ministry of Aviation here to listen to the debate. I want to refer quite briefly to expenditure under subhead C.1, that is, research and development in the aircraft industry, dealing mainly with the cancellations of the P1154 and the HS681. The Government are asking for another £11,500,000. The paragraph at the bottom of page 12 of the Supplementary Estimates says: The provision made at this stage represents approximately 50 per cent. of the increase likely to be required. It can, therefore, be assumed that at any rate some £23 million will be required to meet these cancellation charges. This is a little vague, because the paragraph also says that the money is to meet expenditure which for a number of other projects is higher than expected.

During the General Election, the Government assured the electorate that the aircraft industry would be prosperous and given every encouragement to go ahead. However, in the intervening year four major projects have been cancelled. The industry has been placed in a most precarious position and when an industry is run down to this extent, it is ripe for taking over, even if only 50 per cent. of it is taken over, as was suggested in the recent debate on the Plowden Report. I sometimes wonder whether, not having the courage or the facilities to nationalise steel, the Government are now telling their supporters on the Left wing that if they get hold of part of the aircraft industry that will be better than nothing. I hope that it will not happen.

The cancellation of these projects was a tragedy, although I am the first to admit that if a Conservative Government had been returned in 1964, one of the projects would have had to have been cancelled. I do not think that the industry would have been capable of going ahead with all four, but the P1154 was one project in which Britain was leading the world—vertical take-off—and it should have been kept going. We were well ahead of the Americans when we developed the P1127. Incidentally, about a year ago we were told that there had been an order for about 100 P1127s. In the Press in the last few days I have read—I do not know whether this is so, but it was a responsible newspaper—that there is not to be an order for the P1127. In view of the cancellation of the P1154, I should be interested to hear what is in fact to happen with the P1127. At least it would have kept us in the vertical takeoff business and would have given the Royal Air Force experience of this type of flying. The HS681 and the P1154 were both being manufactured by the Hawker Siddeley group. The HS681, a vertical take-off transport, has been replaced by a good, but out-of-date, transport aircraft, the American Hercules, for which British taxpayers will have to pay in dollars.

When these projects were cancelled, we were told that the men concerned would go into export industries and so help to contribute to exports. I read in The Times some 10 days ago, however, that 103 aircraft workers, many of them from the TSR2, had gone to work in Germany and had settled in extremely well. That is very alarming, for those men have been lost not only to the aircraft industry, but to the country's economy as a whole. I well remember the Labour Party talking about the brain drain two or three years ago, but my reports are that men are going not only to Germany but to South Africa and the United States of America in greater numbers than previously.

Only last week, we read that an American consortium is to set up an organisation in Britain consisting of about 500 experienced technicians who will be recruited from the British aircraft industry and offered about one-third more than they are getting now. I am alarmed at the prospect of the Americans invading Britain to this extent. Not only do they want to kill the British and Western European aircraft and electronic industries, but to employ our people in our country. The House must have an explanation.

The men who have left the aircraft industry are not going into export trades. They are not in a position to move from Weybridge, for example, into a job in the export trade, because they cannot buy another house or get a mortgage for another house, and so they have to get another job in Weybridge which is probably not in an exporting trade and which pays considerably reduced wages. We have got ourselves into quite a pickle over the whole business. I hope that the Minister will explain how these cancellation charges are brought about and what is involved.

In a few years, if not sooner, the British people will have to pay between £400 million and £500 million, on my estimates, if these orders are placed in America, and we shall have to pay in dollars. When the Chancellor of the Exchequer is introducing these semi-Budgets every so often and when the country has just borrowed £1,000 million—and I do not quarrel with that—I cannot understand why the Government should now be contemplating orders in the United States costing hundreds of millions of pounds in dollars. This does not begin to add up and we are laying up trouble for ourselves.

I want to refer to the Concord. I have always been a supporter of this project, but of course one has reservations about whether it will sell, whether it will meet its performance requirements and whether it can be afforded. It is not easy to get information about a project like this and I hope that the Parliamentary Secretary will be able to confirm the information which I have been given. I understand that the option list for the Concord is now about 50 aircraft, that is to say, that 50 airlines have taken up options and that recently Sabena and the Japanese airlines have also taken up options. I understand that an airline which orders the Concord pays a deposit of about £100,000 which is not returnable if the option is not proceeded with.

I am told that the potential market is regarded by the French and British companies making the aircraft, assuming the worst about the sonic boom and assuming that the Americans come in within three years, as 200 Concords by 1975. That figure is based on recent market surveys. The Americans, who are watching this project very carefully, as we watch theirs, think that the sales of the Concord could be about 170, so that there is very little between their estimate and that made by the British and French.

The prototype was discussed with the customer airlines last May and as a result modifications have been introduced bringing about a 15 per cent. reduction in operational cost, so that the aircraft is now competitive with any subsonic airliner. We were originally given the figure of £140 million as the overall cost to be divided between Britain and France, but that figure has grown to about £350 million. In view of the growth of the costs of the TSR2 and other projects, not only in this country but abroad, one can understand that figure, even though it is enormous. The project has been changed twice, almost redesigned twice, to make it more competitive and to give it extra range.

The first prototype should fly during the first half of 1968. I am told that work is only two weeks late. The testing programme is on schedule. Contributing to this there is the BAC221 which is doing considerable high-speed flying on behalf of the Concord project, and later the Royal Aircraft Establishment at Farnborough will continue to fly the 221.

One of the most interesting things—and I should like the Parliamentary Secretary's confirmation of this—is that all the structural drawings have been issued to the workshops, which is quite a feat, and that in the last year so much progress has been made that 50 per cent. of the accessory drawings have been issued.

The aircraft is to have the Olympus 593 engine. Experimental work has been undertaken with 17 engines and three have been delivered ahead of schedule. These engines develop the equivalent of 35,000 lbs. thrust with a possible 10 per cent. reserve, so that they are capable of producing about 40,000 lbs. thrust. The engine programme is, I believe, estimated to be £115 million. It is an enormous sum of money and I should like some information on the cost. I am told that at present the figures are under-spent by £1 million and that is encouraging. It would be interesting to know what the country is going to get for this £115 million. My information is that 17 engines will be delivered, with a tremendous amount of spares, the flying test bed of the Vulcan, which will carry two of the engines for flying and also 52 engines ready for flight for the production line. If one takes the figure of £350 million as the total overall cost of the project, and subtracts the £115 million for the engines, that leaves £235 million for the airframe, for the two prototypes and two production models which would be delivered. All of the development flying would be carried out.

I am told that the cost of the development flying on this is something like £1,000 per hour. The bill is therefore enormous when one thinks in overall figures. The weight of the Concord has gone up from 130 tons to 170 tons, which gives one some idea of the growth of this aeroplane since the design started. This is not unusual. Normally when an aeroplane is being built over a period of seven or eight years the engine gets 30 per cent. or 40 per cent. more power at the end of the development, which enables the pay load to be increased accordingly. The estimated selling price of a Concord is approximately 16 million dollars. The makers are quoting in dollars because they are dealing with international customers. I do not know why they did not quote in £s but that is approximately £5½ million for each Concord. The Americans, who are three years behind Britain and are doing development trials through two firms, and preparing designs and drawings, estimate that their costs for the plane, should they go ahead, would be between 20 million dollars and 27 million dollars. So the French and British have still a bit in hand on the final selling price.

The Concord should be in service by 1971. Its range would be Paris to New York comfortably and could well be stretched later on. If this project is to go ahead, how much enthusiasm has B.O.A.C. shown? I do not want another Super VC 10 situation when it was said that B.O.A.C. was pushed into buying by the Minister, so that eventually the taxpayer had to pay. Let us see B.O.A.C. doing a bit of research, like Pan American, which looks 15 to 20 years ahead into its airline requirements. B.O.A.C. must accept responsibility. It and Air France are at the top of the list of those options with six, plus two each. That makes 16 aircraft between the two airlines. This needs clarifying, because if this aircraft is to be successful and the extra money that is being voted is to be well spent, then the aircraft must have the real backing of the two national airlines of the countries behind the project. No one wants to see B.O.A.C. landed with an aircraft which will not earn revenue, but the fact that other airlines are interested shows that there is something to it.

What is worrying us is the problem of noise. The Parliamentary Secretary has made himself well informed on this subject and if he could tell us something about it, this would be very reassuring. Noise is a difficult problem to estimate, because the definition by the authorities in various countries varies enormously both on the ground and on the climb. I am told that, as far as investigations go, the noise effect, as at present estimated, satisfies 50 per cent. of the countries concerned. The remainder are not very far adrift.

We are lucky that this project has gone on. I well remember the present Home Secretary, when he was Minister of Aviation, in the early weeks of the present Labour Government, being put in a most invidious position, going backward and forward to Paris trying to get out of the contract. But General de Gaulle outsmarted the Prime Minister and held him to the contract and I am very glad, for Britain's sake, that he did. There have been many people saying that we cannot afford to do these sort of things, but if we are going to drop right out of technological development where is this country going to end? If one can build this type of aircraft and engine one is training men to a very high standard. If we fail to do so the loss of technological fall-out in metallurgy, hydraulics and so on would be enormous. A value cannot be placed upon the effects of such a failure to the engineering industry. We cannot afford to drop out. In many respects we lead the United States and we ought not to have a complex about competing with it. Our weakness is the smallness of the home market. Had a little more prudence been shown by the air Corporations in working out their specifications, so as to be in line with what other air- lines required, we might have sold more Tridents. Instead they were tailored for B.E.A.

I am sure that this project is right. I understand that the new specifications are to be examined in the coming months and by midsummer the companies concerned will have to be given the green light. I should like an assurance from the Minister that, as far as he knows, the project is going to go ahead. It would be very satisfying to the men and women employed in this great industry to know where they stand and to know that their efforts are not being wasted, that they are not going to wake up in the middle of a financial crisis in a few months' time and find that we are opting out and leaving it all to the French. The Minister will be doing a great duty to Britain and the industry if he can give that reassurance.

8.18 p.m.

Mrs. Shirley Williams (Hitchin)

I do not intend to be very long in what I have to say, and I do not intend to follow the hon. Gentleman the Member for Macclesfield (Sir A. V. Harvey) in some of the technicalities of the Concord project. There are three brief points I would like to make on the Supplementary Estimates concerning the Ministry of Aviation. The first concerns the additional Supplementary Estimate for the costs of cancellation, which, we gather, account for the main part of the £11½ million additional Supplementary Estimates under the heading of research and development. It is worth going back a little way to see what was the source of these cancellations. I would like to quote the Financial Times for 3rd February, 1965, which said: The Tory Government's last years were marked by dangerous indecisiveness over aircraft defence and prestige…The result was that labour was left a mixture of policies, development contracts, half-built aeroplanes and undertakings which satisfied nobody and put a huge burden on the Exchequer. Those remarks are very accurate and apposite to our consideration of the burden on the taxpayer. There were undoubtedly far too many projects spread thinly over the aircraft industry. When one looks back, there has been a far too desperate attempt on the part of the Opposition to off-load the political blame for the cancellations on to the Government. We have to recall that the source of the cancellations pre-dates the coming into power of the present Government.

Looking back, one has also to bear in mind that the economic cost of a cancellation is quite distinct from the social cost to the community. Here I would agree with the remarks made by hon. Gentlemen opposite who referred to the amount of skill as well as investment in plant which is sunk into the aircraft industry. That is not entirely reflected in the cost of any particular cancellation. When we look at the social cost over and above the budget cost of cancellation, I do not believe that hon. Gentlemen opposite have very strong grounds for their argument. In my own constituency there were substantial redundancies in 1962 arising from an earlier cancellation which also led to a Supplementary Estimate—the cancellation of the Blue Water missile. On that occasion, many hundreds of men were put out of work without any prior consultation with the firm involved. Only three weeks before the cancellation a statement was made in the House by the then Government to the effect that their intention was to continue with the contract.

The three cancellations which have been mentioned today and which are part of the sum concerned in the Supplementary Estimate we are considering were all made after due consultation with the firms involved, after full consideration had been given to the redeployment of the labour involved and after a far greater effort had been made to reinvest the skill and experience of the men involved in producing the aircraft.

Mr. Onslow

If this is the case, I wonder whether the hon. Lady can explain the steady trickle of the most skilled men in the industry to employment in South Africa, America and Germany? Is this redeployment?

Mrs. Williams

The numbers involved have been considerably exaggerated.

Mr. Onslow

No.

Mrs. Williams

If the hon. Gentleman looks at the numbers involved, he will find that they are not great. In the case of those who have gone to West Germany, this is a parallel with what happened in earlier years when people in, for example, the shipbuilding industry took up employment in West Germany, many of whom have returned. I do not regard this as being particularly relevant. The hon. Gentleman will find that this is a feature of medicine, science and of many industries and professions which arose just as much under previous Governments as it has under the present Government.

I should like to consider a different aspect of the cancellations which are being debated. I should like my hon. Friend the Parliamentary Secretary to refer to the question which I want to put to him, when he winds up the debate. He will be aware that as a result of the cancellations under consideration 1,850 men in one plant near my constituency, at Luton, have been declared redundant. Although most of them are likely to be re-employed—and indeed there are signs that they will be rapidly re-employed—it is necessary to make sure that the redundancy arrangements associated with these men shall not only meet the needs of the men but the need to retain their skill so that it can be used in industries where an equivalent degree of experience is required. I should be obliged if my hon. Friend the Parliamentary Secretary would comment on this when he replies. I have discussed this matter with my hon. Friend the Member for Luton (Mr. Howie).

Turning to the question of the costs of aircraft cancellations and the way in which they have flowed from an overextended industry in the past, I should like my hon. Friend to comment on the possibility of introducing greater diversification to ensure the maximum retention of skilled teams and skilled men in the industry, even though the final product may be something other than aircraft, and the retention, as far as possible, of the money which the taxpayer has invested in plant in this industry. I hope that my hon. Friend will bear that in mind as the industry engages in the contraction which has been taking place since 1959.

I turn to the Concord project to which the hon. Member for Macclesfield referred. We have seen a Supplementary Estimate which is clearly, together with the original Estimate, far below the final cost of the research and development for Concord. The figure given in the Supplementary Estimate together with the original Estimate is £14 million. I should like to deal with one or two aspects of joint projects, not with particular reference to Concord, but in a general way.

I wish to refer to a remark made by the right hon. Member for Mitcham (Mr. R. Carr) in a recent debate on the aircraft industry when he pointed out, absolutely correctly, that there is very little economy to be gained from a joint project if it involves dual production lines rather than a single production line. I should like to ask my hon. Friend the Parliamentary Secretary whether he will look at this problem of budgeting for joint projects in terms of whether it is better to diversify the work on them as between different parts of an aircraft or between different aircraft, which, it seems to me, makes greater sense to the taxpayer, rather than have a sharing out of what is almost certainly too short a production line in view of the overheads which need to be carried.

Here I refer to a point which was made very well by the Director of E.S.R.O., an organisation under consideration in this Supplementary Estimate, Mr. Auger, who said about joint projects: The best way of selling the scheme to the Chancellories of Europe originally was by emphasising that there would be valuable feedbacks from E.S.R.O. contracts to the national economies". In saying this he made a point which all of us here are aware of, namely, that often the only way in which a joint project can be made acceptable to each national economy is by suggesting that there will be the greatest return to each national economy. Clearly this is not possible by the very nature of joint projects.

Therefore, it seems to me that the Ministry of Aviation needs to give very great attention to the costing of joint projects, to the way in which, as far as possible in advance, the work on such projects can be specified, to the ways in which overheads can be spread in the widest possible way over the production run and the absolute necessity to be clear about specifications so that there is as little interference as possible with the specification as the project unrolls. I do not claim to be as expert as most Mem- bers who are in the Chamber at present, but it is clear to a laywoman like myself that the continual interference with projects as they get off the ground is something which most rapidly escalates their cost and thus has a disastrous effect on sales.

I hope that my hon. Friend the Parliamentary Secretary will deal with the points which I have raised when he winds up the debate.

8.26 p.m.

Mr. Robert Carr (Mitcham)

I support what has been said on this important subject by my hon. Friends the Members for Woking (Mr. Onslow) and Macclesfield (Sir A. V. Harvey). The House should be grateful to them for having taken advantage of this opportunity to raise these matters. Aviation is of great importance not only to the industry and general welfare of the country but to us in Parliament because of the large amounts of taxpayers' money involved.

Like my hon. Friend the Member for Macclesfield, I begrudge—indeed we must all begrudge—money spent on cancellations. Surely what we want to see is money spent on producing something. In the last 18 months far too much money has been spent, or at least committed—because we have not heard the end of the story yet; there is no mention of TSR 2 in this Estimate—on the negative business of cancellations. We on this side of the House protest against that in the strongest possible terms.

I was surprised to hear the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) say some of the things which she said. It is true that cancellations are not anything new. It is true that there were cancellations when we on this side of the House were in power. But I do not think that it ever happened that there were three major cancellations which formed the backbone of the industry's future programme as there have been under this Government. They have created a vacuum, and it is evident that they have as yet no idea how it should be filled.

However, that is not a matter into which we can go tonight, though, as my right hon. Friend the Leader of the Opposition and others have made clear, it is almost certainly a matter about which we shall have more to say before very long.

Mrs. Shirley Williams

I wonder whether the right hon. Gentleman is aware that within a period of two years there was first the cancellation of Blue Streak, followed by the cancellations of Blue Steel and Blue Water, which, together, went a very long way to weaken confidence in one section of the aviation industry.

Mr. Carr

I am very well aware of what the hon. Lady says, and I do not deny the bad effect of any cancellations. But I do not think that the particular cancellations that she has mentioned can be compared, either in scale or in their effect on the whole industry and the industries associated with aviation, with the cancellation within a matter of a few months of the three major future projects which the industry had before it. It is going to take us very many years to recover from that disastrous action.

As I say, tonight is not the occasion when we can go into that at any length. But there is one other comment that I want to make about it in support of what my hon. Friend the Member for Macclesfield said, and that is the evil effect which those cancellations have had on our skilled manpower.

The hon. Member for Hitchin said that full consideration had been given to the redeployment of the labour involved. I wish that she had enlarged on that a little more, because I am not aware of what that consideration was

Watching the answers to Questions which have been put down over the last months to the Minister of Labour and other Ministers, one of the points which emerges is that we have no idea of what has happened to the bulk of the skilled labour. We know that some of it has gone abroad, but we do not know how much. We have evidence here and there of where labour has actually gone abroad which, I should have thought, we could ill spare. We suspect with very good grounds that the amount that has gone abroad is actually greater than that about which we know, but we have no idea whether one of the objectives which the Government have claimed for their actions, namely the redeployment of skilled labour into the export industries, has taken place. I cannot accept that full consideration was given to it or that we have any knowledge whether the can- cellations have had any beneficial effect on our export effort. Certainly we have seen none that can be identified.

I turn now to the Concord project. I want to urge the Parliamentary Secretary and his right hon. Friend to have primary regard in their control of the project to the market needs for this aeroplane. After all, what we are producing in the Concord is a commercial plane to operate on the civil air routes of the world. If we are to get a reasonable, direct return on the huge amounts of money which are inevitably being invested in it, then above everything else we must ensure that the plane supplies what a large number of world airlines will want.

The redesign of the plane which has taken place since its early days has greatly improved the project in that respect. The market survey results which my hon. Friend the Member for Macclesfield mentioned seem to indicate that there is now a substantial potential demand for the plane.

I want to suggest to the Parliamentary Secretary that whether that potential demand becomes a real one depends primarily on a matter of timing. Getting the plane into the air on time is the most critical factor. The Americans have not yet made a decision what to do about a supersonic civil transport, but we know that they are going into the matter with their usual energy and thoroughness. Apparently they are not going to enter a direct competitor for the Concord, but we know that if they come into this field they will try to go a jump ahead of it with a still faster aeroplane.

Whether or not there is a reasonably large market for the Concord depends, I suspect, on how many years before the American project arrives the Concord can be got into the air. If it can be got into production and into commercial flight a reasonable number of years ahead of an American project, I think that there will be a good market for it. But if the development times spin out, so that eventually it comes on to the market only a year or two ahead of an American project, I shall not feel very optimistic about its chances. From the information that is available so far, progress on the production of the Concord seems to be most encouraging The companies concerned seem to be keeping on schedule, and it is most important that this progress should be maintained.

If that is to happen, there are no doubt many factors to be considered, but I would mention only two which seem to be important. First, both the British Government and the French Government should be prepared to allow a sufficiently great rate of spend of money. I am not thinking now of the total. I am thinking of the rate of annual spend. We could destroy the return which we hope to get from this amount of money involved in total if we were to ration the money out over too long a period, and hence delay the coming into service of this plane. As I said just now, the date at which it comes into service is crucial in this project.

The second factor to which we must pay regard is one which I mentioned in our debate last week on the Plowden Report, namely, having the courage to prevent the best from becoming the enemy of the good. In highly technological projects of this kind one gets terrified of our brilliant scientists and engineers coming along with better and better ideas; which no doubt are better, but which sometimes have to be resisted. One of the most difficult decisions to make is the stage at which we should go firm on a highly technical project, but that time must come, and I am sure that this is another important factor affecting both overall cost, and the time at which this plane will fly and be available to the airlines of the world. I am not suggesting that I have any evidence that the best is being allowed to become the enemy of the good, but I think that this warning note should be sounded very loudly in case such a situation should tend to arise as the development goes forward.

My last point is to support the plea made by my hon. Friend the Member for Woking (Mr. Onslow) about the possibility of having a Select Committee to look at this project. It seems to me that there is a widespread desire in Parliament—which I am glad to say has nothing to do with party divisions—that our ability as Members of Parliament to take a full part in understanding, and therefore, as we hope, in helping to control, the expenditure of moneys on this sort of project should be extended and made more effective than it has been in the past.

We want to do that not just from the negative point of view of spending less public money, but from the positive point of view of seeing that when we do spend public money we get something concrete to show for it, and that we do not have cancellations, whichever Government is in power, which we then throw across the House at each other with varying degrees of justification and accuracy. I hope that the Parliamentary Secretary will give this matter considerable thought.

We realise that neither he nor his right hon. Friend is in a position to say "Yes", because it is not within their province to do so. But we would like to feel that he will consider the views which I am sure are held on this point by many hon. Members, regardless of party. If, after it has been considered, the request cannot eventually be granted—at least in connection with this project in this Session—as a rather poor substitute but nevertheless as one that is better than nothing, will he present Parliament with regular progress reports on the Concord, as it develops? By regular progress reports I mean printed papers that we can study, setting out what is happening. We should not be so bedevilled by the cloak of security in this matter as we are in military matters. There is an element of commercial security, but we also suspect that our friends across the Atlantic know a great deal of what is going on, and at least we should not be afraid to publish to the very limit of what we judge they will find out in any case. If we cannot have a Select Committee, as we would like, let us at least have regular papers presented to the House giving detailed progress reports.

8.41 p.m.

The Parliamentary Secretary to the Ministry of Aviation (Mr. John Stone-house)

I apologise to the hon. Member for Woking (Mr. Onslow) for not being in my place when he began his speech. I understood that there was to be a debate preceding this, but it did not take place. I believe that it will follow this one. I did not expect the hon. Member to begin his speech at the time he did. I have been most interested in what he has had to say, and I hope that I can give him some of the information that he seeks.

First, however, I want to deal with some of the questions raised by the hon. Member for Macclesfield (Sir A. V. Harvey). He referred to the Supplementary Estimates and to the HS681 and the P1154. The Supplementary Estimates do not cover all the compensation charges that have been made in respect of these two aircraft. The breakdown of the figures is approximately as follows: for the HS681, £2 million, and for the P1154, £6 million for the engine and £2 million for the airframe.

Those are the Estimates before us now, but, overall, there will be a similar amount which the House will be asked to consider in due course. There is no problem that we cannot resolve in connection with the cancellation charges that have been made in relation to these two aircraft. We are in touch with the firm concerned about them.

The hon. Member made some general remarks about the loss of skilled staff from the British aircraft industry. My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) struck the right note. There has been a great deal of exaggeration about this. We have lost a few skilled men in the last year, but hon. Members, will probably agree that even if the Opposition had won the election in October, 1964, there would still have been a loss of skilled men, because it has been clear that our competitors, especially in the United States, have for many years—going back long before the last election—conducted a campaign to recruit skilled staff here.

Sir A. V. Harvey

The hon. Member's explanation is quite reasonable and understandable. What I was complaining about was the fact that two or three years ago the present Prime Minister attacked the then Government because of the brain drain. He did not put forward the explanation that this had been going on for 50 years. From what was said then we were led to expect that the present Government to stop it. We never thought that they could, but they said they would.

Mr. Stonehouse

I am sure that we have stemmed it, because we have given our young professionals in this country a much better hope of a real career here than was given before the last election during 13 years of rather depressing administration.

I should like to deal with some of the points made by the hon. Member for Woking about the Concord project. As he rightly said, the rising costs which are associated with a venture of this kind must give the country and this House some concern. I cannot, however, confirm the figures which have appeared in the Press about these increased costs. They have increased to some extent, however, and this is due to reasons which, I am sure, the House will appreciate.

First, there has been a certain inflation in cost since the estimates were last presented to the House. Secondly, the specification for the aircraft has been changed. The size of the aircraft is being increased from 118 seats to about 130 seats dependent on the configuration. In fact, if they are all tourist or economy type seats, the number to be carried in the revised Concord could be appreciably more than 130. It depends on which configuration the airlines chooses.

This partly answers what the right hon. Member for Mitcham (Mr. R. Carr) said. We must, of course, be aware of the market requirement. Airlines need more seats in the aircraft than was originally thought, but the seat-mile cost must not be increased. A greater range is also necessary: they want to be able, understandably, to fly non-stop from Paris to New York, and this involves increased costs.

Thirdly, the estimates have been revised by a new system providing a more accurate appreciation of the costs involved and this has meant greater accuracy in identifying those costs. Fourthly, we are now including in the assessment which is being made the post-certificate of airworthiness costs, which will be quite considerable. I am sure that the House will agree that the Concord project is the most exciting adventurous project in which this country has ever been involved. We are breaking a completely new frontier here, providing supersonic transport for civil airlines. Of course, this has been done militarily, but never in civil air transport.

This is a greater revolution than anything which has been done before. Even that revolution which took place when we converted from largely propeller driven fleets to jet fleets was not so great. We must make sure that the aircraft are fully tested before they go into airline service. We must have no shadow of doubt about the safety of this aircraft. This, of course, means increased costs and considerable expenditure. We want to make absolutely sure that we deal with the safety aspects.

We shall have a ground test programme of unprecedented scope. We shall have airframe testing with the research facilities at Farnborough. We shall go through every possible process to ensure that, when this aircraft comes into airline service in 1971 and 1972, nobody need have any concern about flying in it.

The hon. Member for Woking asked about the impact of delayed decisions on the cost of the project. I should like to make it crystal clear—he did not make this point in his speech, but is has been raised elsewhere—that there has been no delay on the technical front, nor has there been any increase in cost as a result of the review which my right hon. Friends conducted into the project between October, 1964, and January, 1965. Any suggestion that there has been any delay as a result of the review is quite inaccurate. In fact, it is quite the reverse; the project was kept up to date throughout that review and we lost no time at all. As the right hon. Member for Mitcham said, the programme is going very well. We are up to date and we hope that the first prototype will be flying early in 1968. But in order to keep up with that we have had to take more staff on the design side at Bristol, and this is partly the reason why some of the costs have had to be revised.

The hon. Member for Woking referred to the noise factor. We are very conscious of the importance of this point and a great deal of work has been done on it. We have in mind not only the noise on the ground and the noise on take off but the sonic bang problem, of which we are very well aware, and much work is being done on this question. We are very conscious of the need to solve the sonic bang problem if this aircraft is to be permitted to fly over land masses, and that is required if we are to reach the sales figures to which the hon. Member referred.

Mr. Onslow

May I make a distinction. I imagine that little could be done to change the design to eliminate the sonic bang. But I stressed that some uncertainty may remain before the design is finally fixed with respect of the conflicting requirements by certain authorities at or around airports into which the Concord would operate. Is the hon. Member certain that everything possible is being done to eliminate those conflicts and to fix a definite requirement for the aircraft?

Mr. Storehouse

We are very much aware of the need for that and we are in touch not only with our French partners to co-ordinate with them but we have been in close touch with the United States authorities. I met them a few months ago when we had a conference to try to tackle some of these problems. They have as great an interest as we have in the certification of this aircraft when it is flying, and we want their co-operation at an early stage to ensure that if they see any snags at the beginning of the development, we are made aware of them.

The hon. Member referred to the use of the TSR 2 in development experiments. We looked at this proposal and we were satisfied that it would be uneconomic to use the TSR 2 in the way suggested, and that is why the proposal was turned down.

The hon. Member for Macclesfield raised a question about engine costs. I cannot confirm the figure of £115 million which he used. It may be slightly less than that. When I check on the accurate figure I will write to him about it. These costs are very considerable. They are a sign of the great pioneering job which is being done. We are all very glad that the Olympus has been such a success story so far. There has been successful testing and we are reaching very fine results indeed in the development of Olympus. I do not think there will be any snag on that side of the project, although it is costing an enormous amount of money to develop.

Figures were given about the engines to be supplied in the course of the programme. I can confirm that 52 engines are being considered. The eventual number may be somewhat less; this is still being examined. But a great number are required not only for testing but for spares for aircraft as they go into flying service.

It will not surprise hon. Members to hear that on this project, with which we and the French are very much involved, we are in constant touch with our French friends about the programme. The conference which I am about to describe to the House will, therefore, not be considered in any way exceptional. This conference, on the costs of the project, is of a routine nature, and I hope that the House will not take any particular note of the fact that we will be meeting with the French to have a full-scale conference on the subject towards the end of this month to discuss the progress of the Concord on the financial side.

The right hon. Member for Mitcham spoke about the need for the House to have effective control over expenditure. Our French friends are also very much aware of this. Between us we have devised methods of cost control which I am sure will help to make certain that on both sides of the Channel we have rigorous control of expenditure to ensure that this development takes place at the least cost to the taxpayers of France and the United Kingdom. As I say, the conference which will be held towards the end of the month will help us along that road.

We are anxious to achieve the best possible results for any cost-control system that is used. I confirm one point mentioned by my hon. Friend the Member for Hitchin. She said that a joint development arrangement increases costs. This is undoubtedly the case. The Concord project would have been less expensive if the development had taken place completely on this side of the Channel or completely in France. Nobody disputes that.

I am sure that the House will agree, however, that it would have been impossible for either France or Britain to have "gone it alone" on this project. As the right hon. Member for Mitcham said, it is important that we get the market right with Concord. We can do that only if it is a collaborative project. We could not have expected to have achieved the market of the size we have in mind for Concord if it had not been a joint project.

On the production side, we hope that the cost can be kept as low between the two of us as it would have been had Concord been developed on only one side of the Channel. One of the problems which will have to be considered by the firms is this. If the Concord development is as successful as we all hope it will be —if we can reach the sales we hope to achieve—every airline in the world will want the aircraft to be delivered within months and not years. That means that the production programme will have to be considerable and that we will need the maximum use of production facilities in France and Britain to meet the demand placed on us.

I will summarise the responsibilities we have for the Concord under five headings. First, we have a responsibility to make sure that it is technically feasible and safe. We have already come to the conclusion that it is technically feasible. We know that this job can be done. Our scientists, engineers and design staff are doing a first-rate job and are breaking new frontiers all the time to devise an aircraft which will fly at 1,400 m.p.h., which will travel between London and New York in just over three hours and which, flying at this tremendous speed, will be 100 per cent. safe. That is the responsibility of the Ministry with which I am connected.

Secondly, we have to ensure that the air traffic control procedures at our airports can cope with this aircraft. We must ensure that time that is saved in travelling at supersonic speeds across the Atlantic is not lost when the aircraft comes into the air traffic control network.

Thirdly, we must ensure that the sonic bang is acceptable, otherwise the aircraft will be restricted to flying across the wastes of the desert or the sea, and that will restrict its operating appeal to many airlines.

Fourthly—this is a most important point—we must ensure that the huge cost of research and development on this aircraft, reaching hundreds of millions of £s, is justified to the taxpayer. We must ensure that the return we shall get from this massive investment will be sufficient to justify this huge expenditure. In this we have a common interest with the French, because they are spending a like sum to ourselves and we are in constant touch with them. As I have said, in a few weeks' time we shall have another review of the financial implications of the Concord development.

Fifthly—this was touched on by the hon. Member for Macclesfield—there is the responsibility of B.O.A.C. to bring this aircraft into airline use. That is also partly the responsibility of the House. We must ensure that the Air Corporations, and B.O.A.C. in particular, are run commercially and we want to ensure that they operate aircraft that can bring them an economic return. So we have this responsibility to add to the other four I have described.

I refer now to some of the points raised by my hon. Friend the Member for Hitchin. My right hon. Friend the Minister of Labour is well aware of the problems of the redundancy at Luton and is dealing with them. We have every confidence that the men, particularly the skilled men, will be redeployed in useful and constructive jobs within a very short time. I should be very pleased to meet my hon. Friends the Members for Hitchin (Mrs. Shirley Williams) and Luton (Mr. Howie) to discuss this problem if they feel that there is any useful information that we can give to them and their constituents. I take note particularly of my hon. Friend's point about the importance of maintaining the skilled teams.

My hon. Friend referred to the costing of Concord and of other projects. We take note of the suggestion that there should be a Select Committee. I am sure that my right hon. Friends concerned will consider this proposal. Quite apart from their consideration of the proposal, I know that my right hon. Friend is very anxious to provide all the information he can in the House in response to any direct question which may be raised about the Concord programme and its development.

I agree with those who have said during this short debate that it is essential that the House and the country should know how this project is developing. They have a very big stake in it; a very great deal of public money is involved. They are excited by the prospect of our scientists and our industry helping to break new frontiers, as they are doing, and I am sure that it is in their interests, as it is in the interests of the House, that the fullest possible information should be made available about the progress of this very exciting venture.