AVIATION

HC Deb 21 November 1966 vol 736 cc945-1080

3.42 p.m.

Mr. Robert Carr (Mitcham)

We wish to take advantage of this opportunity to raise a debate on the subject of aviation. In doing so the Opposition have two main purposes in mind. First, we wish to expose what we regard as the gross indecisiveness and incompetence of the Government over the last two years in their conduct of aviation policy. We believe it to be the proper rôle of the House of Commons, particularly the Opposition, to do that and we are glad to notice that the threat of this debate has already produced some results.

It has at last produced the decision which we have just heard from the Prime Minister and, judging by his last remarks, it will produce at least a statement from the Minister of Aviation later this afternoon about the future structure and ownership of the industry. In taking up these matters we are seeing that Parliament does its proper job. Our second purpose is to outline what we regard as the proper and constructive guidelines of policy for the future.

We are taking advantage of this debate on the Motion for the Adjournment partly because this is such a wide subject and we do not wish to limit the various aspects of aviation which might be raised and partly because for technical reasons of parliamentary procedure which you, Mr. Speaker, will understand better than I do. Ministers, unlike pheasants, are at the moment enjoying their close season and cannot be shot down in the sense that we cannot move to reduce their salaries. But I hope that the Government will not be under any illusion and think that, because we cannot move to reduce their salaries, we would not wish to do so. We feel that their performance in this respect has been most undeserving of the present salaries which they receive.

I cannot deal with all the aspects of this subject, even briefly, and my hon. Friend the Member for Woking (Mr. Onslow), if he succeeds in catching your eye, Mr. Speaker, when winding up the debate from our side of the House later, will make good some of my omissions, and, in particular, deal with the crucial subject of the brain drain which is very much wrapped up in this subject.

Two years ago, this country's aircraft industry was plunged into a state of chaos by some of the Labour Government's earliest and most stupid actions. Now, two years later, the industry is still in a state of uncertainty with no firm policy for the future, no balanced programme of projects to carry it into the 1970s and with its very structure and ownership still in the melting pot, a plaything of Socialist politics.

Superficially, the industry might now look healthy compared with its state a year ago, but I hope that the Minister will not make much of that. It is true that the industry's order books are now full for the next few years. It is true that the industry's exports this year are running at a record level of about £200 million, a magnificent contribution to our economy. But that is a very deceptive picture. Potentially, the aircraft industry can continue to be one of the country's major export earners and, just as important, import savers. But it cannot export what it does not make and modern aircraft take a long time to design and develop.

The industry's present order books and its current exports are almost all for projects on which the original and basic decisions were taken five and more years ago, long before the Labour Government had anything to do with it, and the industry will not have much to export in the middle and late 1970s unless it is quickly given a firm policy and a stable programme of action. The Government's record of delay and indecision in these matters has been disgraceful.

The Economist of 12th November—and nobody could say that in these matters the Economist was exactly the spokesman of the Tory Party's views on aviation—spoke of the terrible indecision which had gripped the Government over their aviation policy. They have chopped down, but they have failed to plant for the future. They have preached planning, but they have never yet had a plan. If they had set out two years ago deliberately to create the maximum of uncertainty about the industry's future, not only at home but among its potential customers abroad, they could hardly have done that job better.

In the first mad flush of instant action after coming to power in 1964, the Labour Government cancelled all three of the future military projects which the British industry had on its books. They would also have cancelled the Concord civil airliner had not President de Gaulle, thank goodness, prevented them. They thus created a vacuum which they had not the slightest idea how to fill. They wanted an aircraft industry, but they did not know what they wanted that industry to do. And so, in December, 1964, they appointed the Plowden Committee to try to find out.

But they then refused the Plowden Committee enough time to do the job properly. That was made clear in the Committee's Report, in a way which is a little unprecedented in reports to Governments on this sort of subject. It was made even more clear by Lord Plowden himself in a debate in another place on 1st March. Since it was not in this Parliament, I am told that I shall be in order in quoting shortly what Lord Plowden said in that debate. He said: We were extremely short of time, and pressed against our will and judgment to report in less than a year after we were appointed."— strong words for the chairman of a Committee of this kind.

Lord Plowden went on: Even two more months would probably have doubled our "thinking" time, and the paradox is that just as we were reaching some understanding of the problems of the industry we finished our Report and the Committe disbanded."—OFFICIAL REPORT, House of Lords, 1st March, 1966; Vol. 273, c. 618–9.] What idiocy to appoint a Committee to find out and then to refuse it the time to do the work given to it. Having denied the Plowden Committee time, on the grounds of extreme urgency, of which we were certainly seized, one would have expected the Government to have shown some alacrity in acting on the conclusions of the Committee.

The former Minister of Aviation, the present Home Secretary, said to the House on 16th December last, the day upon which the Plowden Report was published and presented to this House: …I am sure that the whole House would want us to make a considered statement on Government policy when we report to the House again, in a few weeks' time."—OFFICIAL REPORT, 16th December, 1965; Vol. 722, c. 1471.] It is now 11 months later and we have had no considered statement.

In the debate on the Plowden Report on 1st February, on behalf of the Opposition I asked for a White Paper not later than last Easter. No reply was given to my request and no White Paper was produced. I repeated the request in a Question for Written Answer to the right hon. Gentleman on 24th May. The Answer said: The Government will in due course give the House its considered conclusions on this Report in the form that appears most appropriate."—OFFICIAL REPORT, 24th May, 1966; Vol. 728, c. 77.] This is one of our major industries. I ask hon. and right hon. Gentlemen opposite to look back to our record when we were in power. It will be found that when major reports from a committee were presented to the Government and the House, the normal practice of the Government was to publish a White Paper as quickly as possible, giving their comments and conclusions. It is now over 11 months since the right hon. Gentleman made his statement and we have had no White Paper or considered comments in any form. I repeat the request made on 1st February: please can this House have a White Paper and have it quickly? Let us have it before the right hon. Gentleman and the Ministry disappear, early in the new year.

The Plowden Report ended with no less than six pages summarising its recommendations. These are on pages 92 to 97, and the summary contains 24 guide lines of policy and another 24 detailed recommendations. We still do not know what the Government think of the great majority of these recommendations and guide lines or of what action, if any, they have taken. It is a terrible indictment of any Government that one of the country's major industries should be treated in this way. It is bovine incompetence and monumental muddle.

Amidst all of this welter of indecision, the Government, in the summer, made a show of trying to be decisive. The Prime Minister had a flash of inspiration—we saw it fizzle out a few minutes ago. He came to the House and announced that he proposed to abolish the Ministry of Aviation. The great power-house in Downing Street had at last got up steam; this was an example of redeployment for the nation to follow. Then it incredibly transpired that although the Prime Minister had decided to abolish the Ministry of Aviation, he had not thought out in advance, let alone decided, what he wanted to do with its principal functions when it was abolished. We have heard of this only a few minutes ago, more than five months later.

For the last five months we have had the unedifying spectacle of the Prime Minister's Whitehall warriors charging and counter-charging, as they battled for position and leaking occasional communiques to the Press as to how the battle was going. Meanwhile, the industry waited and waited for the vital decisions upon which its future depends. At last, we have something settled. We still think that it is wrong to do what the Prime Minister has announced now. The right hon. Gentleman knows that many of his own hon. Friends behind him think this, too, and that many of the best qualified and experienced people outside of this House also think that this is the wrong moment to do this.

Even those who agree in principle that it should be done think that this is the wrong time to take this step. Before this great change was undertaken, we should have had decisions taken about the future structure and ownership of the industry, about its comprehensive long-term programme and about the reform of Government procurement measures. These were the vitally urgent decisions and the present administrative upheaval is merely causing further distraction and delay, and will go on doing so as this new machinery is set up.

There are four important current projects which are causing considerable concern. The first is the Anglo-French variable geometry military aircraft. In the words of the Defence White Paper, earlier this year, this aircraft was to be … both operationally and industrially,… the core of our long-term aircraft programme. Those were strong and definitive words, and we on this side of the House warmly welcomed them. But we assumed, as, I think, we have the right to do, that before such firm and definitive words were used by any Government in an annual Defence White Paper, they would have been based upon some firm foundations.

Now we see that they were not. We now see that it all depends upon a decision by the French Government. The core of our future aircraft programme, militarily and operationally, is exposed to the veto of the French Government. In international co-operative ventures both parties must have their own rights. But before something is presented to the country and the world as the core of our future programme, militarily and industrially, surely an agreement with the other Government should have been reached, so that we were no longer dependent, as we were then and apparently still are, on decisions not taken at the time and still not taken by the French Government.

All of us on this side of the House, and I think that I speak for nearly everyone on the other side of the House, too, hopes that the French will decide to go ahead with this project. We realise that the Minister cannot say much today because the matter awaits a decision by the French Government, which cannot be taken until the early part of next month. But if the project does not go ahead, what then? This is so vitally important that the Government must tell the House, what are their alternative plans if the core for the future, unfortunately, turns out to be a rotten one.

The Minister of Aviation (Mr. Frederick Mulley)

On reflection would the right hon. Gentleman think it wise, in considering one's determination to carry out a project of this sort, to have a long discussion about considerations based upon its failure?

Mr. Carr

I suspect that it might considerably strengthen the British Government in their negotiations with France if the French Government knew that we had a firm alternative. I believe that it would greatly strengthen our case, not weaken it. Too much discussion may do so, but a firm statement from the right hon. Gentleman, making clear to the country and to the French Government that although we want to co-operate in this project we are not dependent upon it, and that we know very well what we will do instead, could do nothing but good. Far from weakening, it would strengthen our cause, so I would repeat my demand.

I turn to another military plane, the P1127. This is the only remaining project in the British programme which utilises the principle of vertical take-off in which the British industry was undeniably the world pioneer. This plane first flew about five years ago. I ask the House to reflect on that fact. Can hon. Members imagine the United States of America having had a plane of this kind, flying as long as five years ago, without a proper production order for it, if they intended to go ahead with it? [An HON. MEMBER: "Who was the Government?"] An hon. Member asks, from a sitting posture, "Who was the Government?" We were the Government when the basic decision was taken. We had not only done the prototype work on the P1127, but we had decided to go ahead from the P1127 to its much more advanced brother, the P1154—and we take no responsibility for the fact that that project has been cancelled.

Having cancelled the P1154, we then went on in a state of suspense for nearly a year—or it may even have been a full year—not knowing whether or not the P1127 would share the same fate. Then came the Defence White Paper and relief. We saw that this plane was to be in the programme.

It is true, we understand, that some initial production orders have been placed; but the right hon. Gentleman must know, as well as I do, if he mixes in aviation circles, as he does and must, that, rightly or wrongly, there are still grave doubts in the industry and all the associated industries as to whether this plane is really free from the shadow of the axe. I say "rightly or wrongly". I hope that the right hon. Gentleman will be able to say "wrongly" and will be able to give us today a firm assurance that this plane is not threatened with the axe and that the small initial production order is indeed to be followed by a full-scale production order. I remind him that any equivocation on his part on this matter today will be interpreted in only one, and the worst, way not just by this side of the House, but by the world outside.

I should now like to refer to two civil aviation projects. First, the European airbus. On the civil side, this has been held out as the centrepiece of European co-operation, equivalent to the Anglo-French variable geometry project on the military side.

The idea of an airbus was conceived in Europe. It germinated, I believe, actually in our own Royal Aircraft Establishment in 1961, and it took shape following the British European Airways specification of 1963. It has since been studied at length and in depth; but, meanwhile, as so often before, the Americans, coming later into the field, look as if they may well scoop the pool. As Flight said in a recent editorial, "Unfortunately, airlines do not place orders for Anglo-French Committee meetings".

The Minister should tell us today where he thinks we now stand and what he believes our chances to be on this question of an airbus. It will be tragic if, in the end, there is no European airbus. On the other hand, it would be disastrous for the future of European aircraft production if we were to produce a white elephant—too little and too late. Have we left it too late or have we not, and, if not, what urgent action is being taken? Those are essential questions which we ask the Minister to answer on the question of the airbus.

I come now to the fourth and last of these current topics, namely, the question of the new jet aircraft for British European Airways. I am very glad that the President of the Board of Trade is in his place. We appreciate the fact that not only is he in his place, but that he is personally winding up the debate tonight.

Here, the Government and/or the Corporation really seem to have taken leave of their senses. I do not know how the blame should be apportioned between them, and I shall not attempt to do so; but I do know that it is disgraceful that this argument between the Government and the Corporation should be conducted, as it has been, in public. The whole House should tell those concerned that we are not amused by this spectacle and that we demand that any future negotiations with nationalised corporations, however difficult they may be, should be conducted in a way which takes account of the overall national interest rather than the short-term vanities and positions of those who are involved in them.

I am sorry to use harsh words, but the affairs of the last week or two on this project have done much damage to Britain's export chances, quite apart from the damage to the aviation industry in particular. The BAC111s already in service, are, in fact, proving their competitiveness in the toughest market of all, the United States. There is every reason to believe that the new, larger version of the BAC111, which British European Airways wish to purchase, will also be competitive and could also have a world market—all the more so because we are moving into a position where the American industry has become overstretched in relation to its production capacity and is finding it difficult to meet demands for orders in the time required. Therefore, the BAC111 in general, and the larger version of the BAC111 in particular, probably have better chances than any other current British aircraft to capture a worthwhile world market, provided that that project goes ahead quickly and does not have its reputation sullied before it starts.

It is heartbreaking, as well as scandalous, that the argument between British European Airways and the Board of Trade should trumpet around the world the suggestion that this plane will not compare favourably with its competitors—because that is the implication that has now gone out. I believe it to be unfounded and that we have, all of us, somehow to try to repair the damage which has been done by proving that the implication is unfounded. The President of the Board of Trade must tell us tonight that he has given the allclear and that this project is going ahead quickly and urgently.

I cannot help commenting that if only the Government had listened to the Opposition's Amendment which was proposed to the Air Corporations Bill last year, namely, that B.E.A., like B.O.A.C., should have been given a proportion of equity capital, the present difficulty need never have arisen, the argument in public between the B.E.A. and the President of the Board of Trade need never have occurred, and this damage need not have been done.

The President of the Board of Trade (Mr. Douglas Jay)

I will be giving the facts tonight. I would say at this time that I deplore these statements as much as does the right hon. Member, including one speech of his own; but I can no more control the Press in this country than he can.

Mr. Carr

It is true that the right hon. Gentleman cannot control the Press, even though some of his right hon. Friends have given indications of wanting to do so; but did or did not the Press give a reasonably accurate report? If the right hon. Gentleman did not leak it to the Press, did the chairman or members of the Board of B.E.A. leak it to the Press? This had a remarkably substantial ring about it.

In the statement which I issued, to which, I imagine, the right hon. Gentleman takes objection, I launched my attack at the President of the Board of Trade because I felt that, as a politician, he was able to answer an attack and was, therefore, the proper person against whom to launch it. It would not have been proper, and I had no means of apportioning the blame, to have launched an attack against the B.E.A. board, which could not answer it. The fact remains that this has done great damage, and it must be repudiated. What happened needed public criticism in order to get public recantation.

So much for the present and past. What of the future? I want to conclude by briefly outlining the main headings of policy under which we on this side believe that positive action must be taken as a matter of urgency.

First, there must be a firm commitment by this country that it is an objective national policy that we should have an advanced aviation industry. I know, and I welcome the fact, that the Plowden Committee came to this conclusion, and that this is one of its few recommendations which the Government have already said publicly they accept. We welcome that, but the Government must recognise that their verbal commitment to this policy does not yet carry conviction either at home or abroad, for the simple reason that, so far, their actions in so many ways still belie their words.

There is still doubt about the reality of the commitment among those who manage the industry and among those private sources that could and should provide its future capital. There is still doubt among those working in the industry—as the brain drain so clearly indicates—and there is doubt among the industry's potential customers throughout the world. The Government's first job is to remove that doubt, and make people at home and abroad really believe that we have a firm commitment to a national policy to continue to have an advanced aviation industry.

Secondly, this commitment to have an advanced aviation industry has to be translated into terms of a definite long-term programme of specific projects for research, development and production. Nothing but a long-term programme for at least five—and possibly for even as much as 10 years ahead—is any good, because of the very long development period required for advanced modern aircraft. The selection of projects for inclusion in this programme must be extremely rigorous—far more rigorous, I frankly admit, than has been the case in this country in the past—because we have to make sure that the projects we undertake are designed to meet a genuine world market, not just a limited British use, and we have to recognise that we can no longer try to do everything.

But, once laid down after this very rigorous selection process, this programme, though subject, of course, to regular review in the light of changing market conditions and technical progress, must not be subject to arbitrary fluctuations. We have had experience of the fact that the surest way to escalate costs, to waste money and to miss the boat, both technically and commercially, is to make violent chops and changes. But to avoid making violent chops and changes, let us not just have, as the Government have at present, no programme at all. A firm long-term programme is essential.

A third essential heading of policy is that there should be a determined drive to develop European co-operation. Although other European Governments share the responsibility with Her Majesty's Government, we believe that the lead in showing the tremendous determination required to make European cooperation successful must come from Britain. We believe this, partly because we have the largest and most comprehensive aviation industry in Europe, and partly, also, because we have to face the fact that our European partners still have suspicions about our motives. They still think that we are interested in European co-operation when it suits us, but somewhat distant about it when it suits them.

This is a long-standing suspicion, and whether it is justified or not we have to face it. We know that these suspicions, which have been held for a long time, were aggravated by the Government's attempt to run out on the Concord agreement two years ago; by their obsession with buying American aircraft, and by their recent devious antics over British membership of E.L.D.O.

What has to be done on the production side of European co-operation? Full efficiency will only be achieved in the long run in one or both of two ways. The first is by genuine mergers between companies across national boundaries, and this is one of the main reasons why it may be so wrong to do what I fear the right hon. Gentleman is proposing to tell us this afternoon, namely, merging the two main British companies, because it may make these international mergers more difficult. He could be making a fatal mistake for that reason. The alternative or additional way is by an allocation of projects to single prime contractors in different countries, backed by an undertaking from all the co-operating countries to buy the resulting products.

But, as I said in the debate on the Plowden Report, successful European cooperation must start at the market end. The essence of European co-operation as a solution to our problems is to enlarge the size of a unified home market. The most essential step, therefore, is the establishment of common European requirements for as many military and civil planes as possible.

It was to that end that in paragraph 267 of its Report the Plowden Committee recommended that …Britain should take the initiative in arranging a conference of European aviation ministers. Eleven months later, this still has not been done. On 6th July, the Minister told the House that he did not think that it was worth while calling a conference until it was clear what kind of useful agenda could be drawn up, but he hoped that it might be possible to do so later in the year. We have got to later in the year—indeed, we are almost to the end of the year—but the conference has not yet been held. Will the Minister be able to tell us that the conference is about to be held?

Has the right hon. Gentleman taken the initiative recommended by the Plowden Committee? Perhaps I may remind the House what Lord Plowden had to say about this in another place on 1st March. He reiterated the need for …a strong and firm initiative from this country. He said: … A piecemeal approach within the present administrative framework will not be enough. He went on: I accept that a European Conference takes time to prepare, but I hope that this will not be made an excuse for delaying it until it is too late."—OFFICIAL REPORT, House of Lords, 1st March, 1966; Vol. 273, c. 613.] We hope so, too, but we have our fears.

The fourth heading of policy is that there should be an end to the uncertainty about the future structure and ownership of the industry. From the Prime Minister's closing remarks earlier today, it would seem that we are at last to reach the end of that uncertainty. I made clear in our debate on the Plowden Report in February that on this question the Opposition accept the minority Report by Mr. Aubrey Jones and reject the majority proposal. We are fundamentally opposed to any degree of nationalisation, not only on general grounds but for particular reasons applying to aviation.

The Government are the industry's dominant customer, directly controlling about 70 per cent. of its orders for military requirements, and indirectly influencing a considerable portion of the remaining 30 per cent. We believe that it is the effective use of this power of the Government as a customer that is the most powerful instrument both in safeguarding the large outlays of public money and in putting pressure on the industry to achieve greater efficiency. Once the Government become even a part-owner of the industry, their power as customer is fatally compromised.

Quite apart from the vexed and controversial question of ownership, I make a further plea to the Government which I hope the Minister will take seriously, even at this stage—

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

One of the problems we used to find—and this position was considered during the war—when considering whether the industry should be nationalised was that if the industry were too well safeguarded at home it had no inducement to find customers abroad. It could rely entirely on the Government for development costs and for Government orders.

Mr. Carr

The right hon. Gentleman has made my point for me. Once have the Government owning the industry and it is an indestructible monolith, not sufficiently subject to competitive pressures. It will always be protected from those pressures to which most of us on this side, even those most passionately committed to a future for the industry, feel it should be subjected. The right hon. Gentleman has underlined my point.

Mr. John Rankin (Glasgow, Govan) rose—

Mr. Carr

I must not give way. Giving way is most enjoyable and interesting, but it adds minutes to the length of one's speech and I have already been too lax about giving way.

I say to the right hon. Gentleman that, whatever may be the theory on paper, industrial mergers do not bring benefits in practice when they are not related to market needs for rationalisation and when management in the companies to be merged is not strong enough to drive through quickly the changes which alone can make a merger worth while. We gravely doubt whether these conditions exist among the large aircraft companies. In addition, we have the doubt which I mentioned earlier, that to merge the two big Corporations—if that is what the right hon. Gentleman is to propose—may inhibit the sort of arrangement which should be made with Europe if we are to get maximum European efficiency.

Quickly, but most important, the fifth main heading of aviation policy must be a radical reform of Government methods—the selecting and specifying of projects; the estimating of their costs; the controlling of their progress; a more widely applied and effective system of incentive contracts. In the debate on the Plowden Report in February I put forward, on behalf of the Opposition, a series of specific proposals in this field. They were not unkindly received by the Government or by hon. Members on both sides of the House, or, indeed, by those experienced in these matters outside.

I hope that the Minister can give a progress report on what has been done since in this vital field. Whatever may be the inevitable party division about other aspects of aviation policy, the whole House, I think, can and should be united on this. Surely the history of the last 20 years under successive Governments of both parties has proved that traditional Whitehall methods are ineffective when applied to the complexity and long time scale of modern advanced technological projects. We should all be putting our heads in the sand if we failed to commit ourselves to changing them drastically.

That leads on to what it was right to do with the Ministry of Aviation. In the long run, we see nothing sacred in having for ever a separate Ministry of Aviation. But, equally, we see little sense in merely transferring great blocks of civil servants from one Government Department to do the same job in another. Therefore, I hope that, in spite of what the Prime Minister said just now to my hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing), a further look will be taken at the possibility of finding some way of removing the management of research and development in aviation one stage from a Government Department.

We achieved a lot in atomic energy—and large sums of public money and questions of defence were involved there —by setting up an authority one step removed from the Government machine, providing it with a staff and career structure more comparable to that of large-scale industry, giving it firm but broad objectives and an allocation of finance and then leaving it substantially free to get on with the job without detailed interference or arbitrary chops and changes in its programme. I beg the Government, even though they have just announced a different sort of change, to consider this possibility in the future. Perhaps the Minister of Technology, who comes fresh to these matters, will have a chance to look at it anew.

Lastly, in our view, no new aviation policy can be complete without a review of our policy in relation to air transport as a whole, both passenger and freight. The more efficient, vigorous and expansive our air transport operators are, the better it will be for the British aircraft industry. But, apart from the country of origin of the planes which they fly, it is of vital national interest that Britain should have the greatest possible stake in the rapidly growing world business of air freight and passenger transport.

Airline operation is not a field in which one can have uncontrolled competition. Let us have that in common between the two sides of the House. Some controlling body has to be established by the Government. The Conservative Government established the present Air Transport Licensing Board. That was a step forward. But, after six years of experience, I doubt whether, in its present form, it is the best machinery which can be devised.

Mr. Rankin

It is out of date.

Mr. Carr

It is out of date. There should be a new look at its terms of reference, procedures and resources.

The more I study this subject, the more impressed I become by the advantages which American air transport has derived from the more positive—indeed, one might say aggressive—rôle of the United States Civil Aeronautics Board. I do not say that American machinery could or should be lifted lock, stock and barrel and applied unchanged in the British environment. But I believe most strongly that we have to think hard and without prejudice about the expansive rôle which can be played by competition and by the need for licensing machinery which provides not just a negative control, but a positive stimulus to development.

I have exposed what we genuinely believe to be the indecision, incompetence and delay of this Government. I have demanded a White Paper on the whole of the matters raised in the Plowden Report. I have asked for answers to specific questions on a few of our major current projects, and I have outlined what we regard as the seven heads of a successful aviation policy for the future. I have indicated the Conservative attitude under those heads. I ask the Government to indicate theirs.

4.26 p.m.

The Minister of Aviation (Mr. Frederick Mulley)

The right hon. Member for Mitcham (Mr. R. Carr) has, as usual, covered a lot of ground. The House will agree that, between his usual party political introduction and ending, he made a large number of very constructive suggestions. Just as he apparently anticipated many of the things which I should say, I, also, anticipated some of the matters which he has raised. It may, therefore, be more convenient if I deal with the points he raised in my remarks covering roughly the same ground.

The main burden of the right hon. Gentleman's complaints was that the Government had taken a long time to reach decisions on a number of key problems affecting the industry. Many of them were, naturally, the subject of comment and recommendation by the Plowden Committee which reported, as the right hon. Gentleman kindly told us, last December. I accept as much as he does the desire and the need of the industry to have certainty and all its outstanding questions settled. The important thing is not to take quick decisions, but to try to take the right decisions. If right hon. Gentlemen opposite had been more concerned to do this, our task would have been much easier and the condition of the aircraft industry today much better.

I need not remind the House of the situation when we came to office two years ago. The programme bequeathed to us bore no relation to the needs of the country, placed impossible demands on the economy and would have resulted in the production of aircraft too late to meet the urgent operational requirements of the Royal Air Force. It was for these reasons that we had to cancel the P11154, the HS681 and the TSR2.

Mr. F. A. Burden (Gillingham)

Does not the right hon. Gentleman realise that the TSR2 was the most sophisticated aircraft which the world has seen, that it was far in advance of any other aircraft and certainly was not too late for the requirements of the R.A.F.?

Mr. Mulley

I was not questioning the sophistication of the TSP.2. If the hon. Gentleman looks at the note of dissent by Mr. Aubrey Jones to the Plowden Report, which was commended as stating Opposition policy, he will see that Mr. Jones begins by saying that, in his view, the Government landed the industry with an over-ambitious programme.

I do not propose to go over the ground again today, except to say that all the gloomy prognostications of the Opposition about total disaster and massive redundancies in the industry proved to be without foundation. In September, 1964, manpower was 269,000; in August last, it was 256,000—a drop of 13,000.

Before hon. Members opposite are tempted to follow the right hon. Gentleman's bad example and to try to make political capital out of this situation, I would suggest that they reflect on the difference in the situation of the aircraft industry in 1951 as compared with 1964. The dominance of American industry and the declining British share of world aircraft sales took place in these years. Incidentally, the industry's profits on captial employed were 22.8 per cent. in 1951 as compared with 6.3 per cent. in 1964. I acknowledge my debt to an Aims of Industry publication for drawing my attention to these figures.

The development of all the most successful of post-war British military aircraft—the Hunter, the Canberra, the Javelin and V-bombers—started under the Labour Government, as did the Comet and the world-beating Viscount in the civil field. This was how we left the industry in 1951, poised for successful expansion.

The picture in 1964 was very different. Three major military projects were being developed at a totally disproportionate cost, far too late and with no prospects at all of export sales. I suggest, therefore, that hon. Members opposite are in no position to criticise us for taking time to reach the right answers to what are generally understood to be complex and difficult problems. When the right hon. Gentleman talks about these matters, he talks about a rigorous and selective examination. But when we do just this, it becomes a matter of delay and uncertainty.

The Financial Times on 8th November, for example, stated: What is clear from the U.K. industry's standpoint is that while there may be some apparent delay by the Government in settling these major projects this stems from a genuine desire to see that the best decisions are taken and that nothing is started that ultimately proves to be either a flop or a waste of resources. The vigour and determination with which Britain is pressing the 'VG' case proves this. While it may at some future time be smaller than it is today, there is little doubt that the long-term future for the aerospace industry is far from being as bleak as some might suppose. It is a pity that hon. Members opposite did not follow the principles about which they talk today when they were in office.

Nor is it true that the Government have been guilty of undue delay in dealing with the recommendations of the Plowden Committee. The Committee made 24 detailed recommendations, many of which involved discussions with industry before final conclusions could be reached. Of these, 16 recommendations have been wholly accepted, six more have been accepted in principle, and only two have been rejected.

However, it is the section of the Plowden Report concerning the relationship between Government and industry which has aroused the greatest public interest and which, I imagine, will occupy a good deal of today's debate. The Committee recommended that the Government should review the future of the Ministry of Aviation, and my right hon. Friend the Prime Minister has this afternoon announced the outcome of this review. I can understand the feelings of those who would like to continue a separate Ministry for all aviation matters, but I have no doubt that the new arrangements are better calculated to serve both the interests of industry and the interests of the nation. And for those who accept the principle but criticise the timing, I would say, after 11 months as Minister, that I am convinced that there is never a wholly convenient time for such a change.

Responsibilities for all aspects of civil aviation have already been transferred to my right hon. Friend the President of the Board of Trade. The remaining functions of my Department are to be transferred to the Ministry of Technology, which was set up in 1964 to co-ordinate and develop research and development programmes on the civil side for the whole of industry. It must surely be right that the aircraft or aerospace industry should be a major part of this Ministry because of the contribution it makes to advanced technology beyond the confines of its own field. It is already established that much of the scientific advance made in aviation has fundamental application for other industries too. Equally, aviation has profited from technological progress in other fields. Much remains to be done to achieve the maximum industrial application of knowledge derived from aeronautical and defence research, and the transfer of the research establishments to my right hon. Friend the Minister of Technology and the placing of the aircraft industry with the sponsorship for engineering and electronics should greatly facilitate the fruitful interchange of technical information.

As my right hon. Friend has explained, there has been a thorough examination of the case for separating military procurement from the other functions of my Ministry. It is extremely difficult to separate civil from military research in, for example, engines, and impossible to draw a rigid line of demarcation between research and development or development and production—the seamless robe of research development and production as it is called. There is much force in this analogy, and equally I am convinced of the indivisibility of advanced technology and that it is detrimental to industry and the nation alike to seek to isolate or fragment one part from another. I hope, therefore, that the proposals made by my right hon. Friend will commend themselves to the House.

At this point I should refer to the very constructive proposals put forward by the Member for Mitcham in the Plowden debate and to which he again referred today to improve the Government organisation and procedures in dealing with very complex and advanced technological projects. I welcome his non-partisan approach. As he recognises, these questions have occupied successive Governments. Progress has been made, but, as he suggests, radical rethinking may be required not only on the part of Government, but also by this House before we reach the right answers.

I can assure him that project directors have been appointed with a supporting team for all major projects. For example, the new Director General of the Concord programme is a chief scientific officer. This method of management is still evolving and it will be possible to make further improvements in the light of experience. In the same way the joint control of Anglo-French projects is also improving.

The right hon. Gentleman also raised the question of getting more effective incentive contracts. But in negotiating any fixed price or other incentive type of contract, the first essential is to have a precise specification and it is rarely possible to have such a specification at the outset of development. The extent to which the specification can be defined also affects the reliability of the development cost estimates. A group of my senior officials who have been studying this problem expect to report shortly, and I shall consider whether the report should be published.

We have also discussed with the S.B.A.C. the setting-up of a committee to examine the efficiency and performance of the industry, and I hope that it will be possible to get this examination under way fairly soon.

Mr. David Price (Eastleigh)

Bearing in mind the argument which the right hon. Gentleman has been developing, will the responsibility for space now be concentrated in the Ministry of Technology and not divided, as has been the case, between a number of Government Departments?

Mr. Mulley

The hon. Member knows that the responsibility for the machinery of government does not rest with me. The space functions of the Ministry of Aviation will go to the Ministry of Technology, but the Department of Education and Science will retain its responsibility for E.S.R.O. and the Post Office has responsibility in respect of communications.

There remains the Plowden recommendation on the ownership of the airframe groups to provide the basis for a suitable partnership between public and private capital in the circumstances peculiar to the industry". As I said in the debate on the Report earlier in the year, this question is naturally linked with the question of merger, whether there should be one large airframe group or two. The Committee considered that a merger would offer scope for economies and that the existing competition between both the main airframe groups and the main aero-engine groups was neither particularly real or useful.

The real competition, as we all know only too well, comes from abroad. Nevertheless, the Committee made no recommendation, since it seemed to it too early to form a definite view. Since then a commercial merger, which the Government welcome, has been brought about between Rolls-Royce and Bristol Siddeley and the resultant aero engine organisation should ensure that Britain keeps her lead in this field.

There would seem to be no possibility of a similar commercial merger taking place between B.A.C. and the airframe interests of Hawker Siddeley. This is not a matter that can be left to be settled—as I believe the right hon. Member for Mitcham would be content to leave it—as a result of commercial forces in their own time and manner. Both airframe groups are engaged upon major projects for the Government and have considerable commitments to home and export customers.

The Government consider, therefore, that in deciding whether or not to participate in the equity and management of an industry in which they already provide so large a part of the working capital and take the critical decisions on projects, they should also decide on the desirability of a merger of the companies concerned. These decisions should be taken together.

We have also been concerned, as I said in the Plowden debate, that a partnership along the lines proposed between the Government and the airframe industry should, if possible, be arranged on a mutually agreed basis and that the nature and terms of any Government participation should be settled in negotiations with the companies.

There is also widespread recognition of the special position of the airframe companies and the new situation which has arisen. The Government have always found the working capital for military projects, but they are now expected to find the whole or greater part of the risk capital for all new major civil projects as well.

In the light of these considerations and the discussions with the companies, the Government have come to the conclusion that the national interest would be best served by a merger of the airframe interests of B.A.C. and Hawker Siddeley into a single company in whose equity the Government would take a substantial minority interest. In these circumstances the two companies concerned have indicated their willingness to co-operate with the Government and to examine in detail with us the best means of achieving this objective. We shall shortly begin negotiations to this end.

We shall also consider with the companies the desirability of including their guided weapons interests in the merger. The aim will be to bring about the merger in such a way that the combined resources and skilled manpower of the companies are deployed in the most effective way to press on with the work already in hand and to meet the formidable and challenging tasks that lie ahead.

The Government are confident that a large airframe group organised on these lines, together with the new aero-engine organisation formed by the commercial merger between Rolls-Royce and Bristol Siddeley, will improve the competitive position of the industry in world markets and will in this way contribute to the maintenance of a high level of employment in the industry.

Mr. Eric Lubbock (Orpington)

Would the right hon. Gentleman explain why the companies, which are willing to cooperate with him in bringing about a merger with Government money, will not be able to do the same thing with private capital?

Mr. Mulley

I cannot explain why the companies have not sought a merger between themselves. They have agreed to explore with us the possibilities of doing it on the lines I have indicated.

Mr. Anthony Royle (Richmond, Surrey)

Would the right hon. Gentleman say what percentage minority shareholding the Government intend to take in the new organisation?

Mr. Mulley

I suggest that the hon. Gentleman should follow the advice given to the House some years ago by the present Leader of the Opposition, that when one is starting negotiating one cannot, at the beginning of the negotiations, expect to know all the answers.

The detailed arrangements must naturally flow from the negotiations which I am about to start. I thought it right that the House should be told of the Government's decision in principle before we begin the negotiations with the companies.

Mr. Stanley R. McMaster (Belfast, East)

Would the right hon. Gentleman say what the position of Shorts will be in the new combine?

Mr. Mulley

I should have thought that, from what I have said, it would not be likely that Shorts would be taking part in this merger. As the House has been told on many occasions—and I believe there is agreement on this—the best future for Shorts is to increase the diversification of the company; and, in this sense, it would not be appropriate to associate so intimately with a company wholly concerned with airframe production.

Mr. Carr

Could the Minister tell us under what powers the Government intend to proceed to bring about this State participation? We appreciate that he might not wish to discuss the details of the negotiations, but can he say under what aegis it will be done?

Mr. Mulley

I am in some difficulty here, because one cannot discuss legislation on the Motion before the House. I would anticipate legislation being brought forward if, as I hope, the negotiations prove successful.

The right hon. Member for Mitcham also referred to Anglo-European collaboration. The Government have made clear their determination to further this collaboration, but I sometimes wonder if some of the problems involved are fully appreciated. It is difficult enough to sort out one's own national requirements and specifications. But it is a very much more difficult task to harmonise one's own national requirements with those of a partner.

I do not present these as obstacles which cannot be overcome, but solely as an illustration of the reasons why it can sometimes seem to take a long time to reach a decision on certain projects. Again, the phasing of expenditure and of production deliveries may present problems between partners. On the other hand, the advantages of shared development costs and a larger market are self-evident.

The development of the Jaguar strike and trainer aircraft is making good progress and contract negotiations for this programme are now under way. The Martel air to ground guided weapon development programme is also continuing satisfactorily. Good progress has also been made towards agreement for collaborative arrangements in military helicopter procurement.

But the Anglo-French variable geometry aircraft illustrates the difficulties to which I referred. At our recent meeting, the French Minister, M. Messmer, made it clear that certain budgetary problems made it impossible for him to agree then, as we had hoped, for the project to proceed. We hope to arrange a further meeting before Christmas and, as my right hon. Friend the Secretary of State for Defence has made clear, we shall do all we can to get agreement to go forward.

This programme is of great importance to the French as well as to our own industry and failure to go ahead would be a grave disappointment and a blow to the hopes—which, I believe, are shared on both sides of the House and on both sides of the Channel—of increasing Anglo-European collaboration.

On the civil side, the Concord development programme is on schedule and on my visits to the firms, both in Bristol and Toulouse, I was greatly impressed with the determination of all concerned to make a success of this very advanced supersonic transport despite the immense technical problems involved.

On the proposed airbus, about which the right hon. Member asked several questions, the progress is less satisfactory. The industrial companies working on the proposals in this country and in France and Germany responded well to a request from Governments in September to attempt to reconcile their ideas into a single proposition for a European airbus. They have now presented their joint proposals and these are now being evaluated by officials in the three countries.

Cost, in particular, is a matter for concern. The launching costs of an aircraft of this kind might exceed £100 million, leaving aside any engine launching costs attributable to the project. A decision on the economic case is not to be taken lightly. I think that the remarks by the right hon. Member in the debate on 1st February are very relevant. He said: But European co-operation must start at the market end rather than the production end…It will be difficult, even if it were right, to force European airlines to buy a European aircraft if an American one were available at a time or with a cost effectiveness which suited them better. The current short range air bus project will perhaps prove to be a critical test case."—[OFFICIAL REPORT, 1st February, 1966; Vol. 723, c. 918.] I agree that the airbus is indeed a critical case. That is why we are, with the French and German Governments, examining it very carefully. I hope to meet the responsible French and German Ministers for a further discussion on this project next month.

The right hon. Member also asked why we had not had a meeting of European Ministers, despite the fact that he said in the previous debate that he agreed this required full and careful preparation. There is absolutely no point in having meetings unless there are concrete matters to talk about. In fact, during the past year I have met all my European counterparts in one context or another. I have had many meetings on the collaborative projects with the French and German Ministers, but there is no good having a meeting unless it is to discuss more than general principles. We must get the future of the two major projects, the V.G. and the airbus, clear before it is worth while having a general meeting which could queer the pitch for future co-operation if it were not to prove a success.

This brings me to what I consider to be the central question confronting the aircraft industry today: its efficiency and competitive ability. If the industry is to succeed it must produce the right planes at the right time and at the right cost. This is all the more important when, as at present, the Government are expected to provide virtually all the finance for projects, whether military or civil. There is, of course, nothing to stop the industry from making any aircraft it wishes, but industry shows no enthusiasm to put its own money at risk in aircraft projects. Against this background we would be failing in our responsibility if we did not consider any project very carefully before we decided to commit public funds. The size of the industry and its future success must depend upon its ability to export since our national requirements of both civil and military aircraft are clearly insufficient by themselves to support a major industry.

Mr. Stephen Hastings (Mid-Bedfordshire)

Is not this a little unfair? Does not the right hon. Gentleman think that the BAC111, the 125 and the Jetstream are all examples of considerable capital being injected by the industry?

Mr. Mulley

I specifically spoke as to the future and major projects. While I have the highest regard for the Jetstream—which is of special interest to the hon. Member for Mid-Bedfordshire (Mr. Hastings) and to which the Government have given full launching aid—I would not say that it was a major civil aircraft project in the same sense as the airbus. On the BAC111, we have given some launching aid in the past. That was produced by the companies and they have their own capital largely at risk, but in the development of that aircraft they are looking for full launching costs from the Government, as I announced when I announced the decision that B.E.A. should buy British.

It is manifestly not true that our industry is in a rapid state of decline or that the Government are not giving very substantial support to it. Last year, 1965, the Government spent £345 million in the industry—£110 million on research and development, £215 million on procurement and £20 million as assistance to transport aircraft. This is an all-time record for Government support to the industry. This year it will be even higher—probably around £360 million. With the growing commitments of Concord and the fact that no military or major civil project is likely to be financed by private capital, it is not likely to decline in coming years.

Right hon. Members opposite criticise us for what they deem insufficient support. They should give some indication of the size in figures of the support which they think the Government should give. It would be extremely interesting to know how they would relate that to their other demand that there should be substantial reductions in taxation.

Mr. Lubbock rose—

Mr. Rankin

On a point of order, Mr. Deputy Speaker. The right hon. Member for Mitcham (Mr. R. Carr) objected to interventions in his speech on the ground that that was consuming debating time. His colleagues are not setting a good example. Can we be assured that these interrupters will have the time of their interruptions deducted if they happen to catch your eye?

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. I am sure all hon. Members will bear in mind the case for brevity. Mr. Lubbock.

Mr. Lubbock

I am not sure whether the hon. Member for Glasgow, Govan (Mr. Rankin) is aware that I am not a colleague of the right hon. Member for Mitcham (Mr. R. Carr).

Mr. Rankin

It seems so.

Mr. Lubbock

Is the Minister aware that most people complain not of the current work load, which is quite satisfactory to the aircraft industry, but of the absence of a long-term programme?

Mr. Mulley

I am quite aware that it is the long-term which causes concern, but I hope that hon. Members will try to get this quite clear. The future of any project or any industry must depend on the success of selling the projects developed. If our industry gets great success with planes such as the BAC111 and Concord there will be a great deal of work in the years ahead, but there is never any future in just providing development work if that work does not go into long runs of production.

Last year, the exports of the industry leached the highest figure since 1959 and this year—hon. Members will have seen (he recent encouraging figures for September—I am sure that it will be an all-time record of around £200 million. While I would not wish to take credit away from industry, which must have the major credit for this contribution to our exports, the fact is that the Government have done more to assist aerospace exports than any previous- Government, and this has been widely acknowledged.

Special attention has been paid to Commonwealth requirements. Under the chairmanship of my hon. Friend the Parliamentary Secretary, a successful conference was held in June to permit Commonwealth airline chairmen and leaders of industry to have a full and frank discussion of their problems. In addition, the Commonwealth Air Transport Council, under the direction of the Prime Ministers' conference, has been reactivated to facilitate inter-governmental discussion of aircraft issues and met in London last September.

The military programme was set out in the Defence White Paper—the P1127 and the Maritime Comet, as well as the Anglo-French projects to which I have referred.

The right hon. Gentleman had much to say about his doubts about the security of the P1127 programme. I really do not know what will satisfy him, because he asked these questions of my right hon. Friend the Secretary of State for Defence as recently as last Wednesday and was given the clearest and most forthcoming of replies. Surely he does not expect me to add to the very clear statement which my right hon. Friend then made that the development is going well and that production contracts are in an advanced state of negotiation.

It might well be that if this aircraft had not been cancelled by the Tory Government it would have been in service with the Royal Air Force today. What happened was that after dithering about it for a very long time the Tories embarked on an extremely ambitious programme, the P1154. Practically nothing was done to develop that. This is shown by the fact that the cancellation figures for the P1154 are not very great. The Tory Government killed a good project, seeking vainly after the best—exactly the opposite to the advice they now give us.

On the civil side, Concord is developing well and we have given launching aid to the Britten Norman Islander and to the Handley Page Jetstream. The House will know that this is the first Government assistance to this firm since the reorganisation of the industry in 1959–60 and, I hope, will approve that we approach these matters on a basis of economic merit and have not pursued the doctrinaire policy of Conservative Administrations in denying support to Handley Page. We are also in negotiations with Pressed Steel Fisher about the future of the Beagle Aircraft Company.

Perhaps most important of all, we have decided that B.E.A. will buy British aircraft for its re-equipment programme, despite the fact that substantial sums will be required from the Government as launching aid to enable new models of the aircraft chosen to be developed by the industry. This decision has been warmly welcomed by industry and, I believe, by hon. Members on both sides and will bring upwards of £100 million in work to the industry as well as increased export opportunities. My right hon. Friend the President of the Board of Trade, who is now responsible for the Air Corporations, is, I know, anxious that decisions shall be taken as soon as possible on the aircraft chosen.

I would have liked to have taken up the right hon. Gentleman's remarks about the conduct of the B.E.A. negotiations, but since I know that my right hon. Friend is more than able to look after himself I do not think that I should intervene in what seems to be a developing argument between the two.

In the space field, we have been able to reduce our contribution to E.L.D.O. from 39 per cent. to 27 per cent. and at the same time the project has been put on a better basis with improved organisation and control.

Finally, hon. Members from Northern Ireland especially, and the House generally—

Mr. Neil Marten (Banbury)

The right hon. Gentleman has devoted one sentence to space in his great speech this afternoon. Can he give us any idea of what is to happen to Black Arrow? Is it still on a holding contract? Could he tell us something useful?

Mr. Mulley

I am sorry, but, obviously, I cannot satisfy all hon. Members without taking up a disproportionate amount of the time of the House. The Black Arrow programme is still continuing on a holding contract. We are considering its future in conjunction with a great number of other space decisions which will be required during the next months.

Finally, hon. Member's from Northern Ireland especially, and the House generally, will want me to say something of the situation at Short Bros. & Harland. About 450 workers were declared redundant and left up to the end of September. No more are expected to be discharged this year, but there are likely to be further redundancies next year, but substantially less than envisaged in the Plowden debate earlier in the year. The Government have provided further finance for the production of the Skyvan, on which the company places great hopes. On the guided weapons side, there is work for several years ahead.

However, as has been stated in previous debates, the aim is to improve long-term prospects by diversification of the company's activities to reduce its dependence upon the aircraft industry. My right hon. Friend the First Secretary is making strenuous efforts to this end and the House will have noted with pleasure the decision of Rolls-Royce to open a factory in Belfast, which will provide work eventually for over 2,000.

I do not suggest that all the industry's problems are solved, but, with the proposals announced today and continuing Government support, we shall create an environment in which the industry can secure its future by its own exertions and go forward with increased strength to play an even more prominent rôle in world aviation. I am confident that it will do so.

5.5 p.m.

Sir Ian Orr-Ewing (Hendon, North)

I thought that the speech of the Minister of Aviation had a sad tone about it. I shall refer to the reasons for it during the course of my speech. What my right hon. Friend the Member for Mitcham (Mr. R. Carr) said was only too true. Two years ago the Labour Government came to power. As a scientist, even I felt that they might inject some enthusiasm and some new ideas. We heard about the "white hot scientific revolution" and that the Government were "poised for instant action". We read this in the Labour Party's election manifesto.

There can be no place where disappointment has been so grievous as in the aerospace industry, where disillusionment follows muddle and indecision. I was interested to hear the right hon. Gentleman use an argument which seemed to stand the normal Socialist argument on its head. He said that when Labour left office in 1951 the aerospace industry was making lush profits of 22 per cent. When Labour came back to office in 1964 the aerospace industry was making profits of only 6 per cent.

When the right hon. Gentleman and his colleagues were in opposition, they lambasted successive Ministers of Aviation by saying that there were lush and easy profits in the feather bedded aerospace industry. Are profits of 6 per cent. lush when money can be lent to local authorities at 8 per cent.? It is ridiculous. The right hon. Gentleman should not take any credit for this. This is a most disturbing feature of what he announced today.

Mr. Mulley

I hope not to interrupt too many times. The hon. Gentleman has not understood my point. The point I was trying to make was quite simply that all was not well with the industry in 1964. The impression might be gained from the speech of the right hon. Member for Mitcham (Mr. R. Carr), and from other speeches which will no doubt be made, that all the troubles sprang from the time of the Labour Government in 1964.

Sir Ian Orr-Ewing

As long as the Minister withdraws the accusations about lush and easy profits in the areospace industry, and Labour comments about the need for an agonising reappraisal and a rundown of the industry, and now rests his argument on the fact that all was not happy with 6 per cent. profits, I would think that he. is not being totally irrational. I will certainly accept his apologies.

The fact is that after all the promises the aerospace industry was faced with these violent cancellations. Naturally, this was very disturbing for all who worked in the industry. The right hon. Gentleman's argument that the numbers employed in the industry had not fallen as markedly as had been suggested and threatened was, again, a poor one. As the hon. Member for Orpington (Mr. Lubbock) said, the yardstick is not the number currently employed, because all these are employed as a result of the tremendous impetus which 13 years of Conservative rule gave to the aerospace industry, as I shall show later. The disturbing feature is the forward planning: the research and development and project teams are beginning to fall apart, or are operating on holding contracts. This is what is leading to the brain drain. The Minister must not be complacent about numbers employed.

Moreover, if there is a shortage of orders, I regret to say that the natural thing to do is to spin out the work and work fewer hours per day or even have a shorter working week—perhaps four days a week instead of a full working week. All this does not show that the aerospace industry is at present in a healthy condition. That is far from being the case.

I heard the Prime Minister say that a new organisation under the Ministry of Technology was to be "a major instrument of progress". I wonder why he thinks that by taking the massive numbers in the Ministry of Aviation and putting them into another relatively new ministry this will somehow totally reorganise and revolutionise the whole ordering and control procedures in the aerospace industry.

The aerospace industry will now be competing for the time of a Cabinet Minister, with the machine tool industry, the electronics, telecommunications and computer industries and the Atomic Energy Authority. The Minister also has sponsoring responsibilities for the electrical and mechanical industries and a number of old D.S.I.R. functions now all under his wing. This industry, which has been so sadly disorganised in the last two years, is to be one of many competing for a Minister's time. This is a poor reflection on the new proposals.

On 2nd February, 1965, the Prime Minister said that British economy demands… a healthy…aircraft industry."—OFFICIAL REPORT, 2nd February, 1965; Vol. 705, c. 936.] That was nearly two years ago. It is sad that only today we are beginning to see only the skeleton plans of the organisation, and those skeleton plans are not in any way impressive. I do not blame the Minister of Aviation. He has been patient, painstaking and hardworking in his tenure of office. We on these benches blame his predecessor—the present Home Secretary—to a great extent. When he came into office he immediately threatened the cancellation of Concord. He cancelled the HS681 and the P1154. He said that the TSR2 was being reappraised, but we only learned, later on, that the Labour Government had decided four months before they came into office that they could cancel the TSR2.

Before the right hon. Gentleman honoured the promises which he made, and which my right hon. Friend quoted in his opening speech, about the implementation of Plowden, he rapidly took promotion and went to the Home Office. Even he could not blame Lord Brooke for his misdemeanours, as he did in a recent debate in this House.

The Minister of Aviation correctly turned to the export performance of the industry and seemed to take some credit for the fact that it exported £145 million worth last year and was likely to export £200 million worth this year. He said that this was the result of Labour rule. I wonder whether he could name a few of the aircraft which have been exported and which make up these figures, which have come about as a result of Labour Labour decisions and rule.

Mr. Mulley

If the hon. Gentleman had listened, he would have understood that I said the major credit for the exports must be with the companies concerned. Obviously, none of the items exported was developed under the present Government, because we all know that it is not possible to develop anything significant in this field for two years. But a lot of help can be given to the exporters.

The selling has been done in the period of the Labour Government. Despite what hon. Members opposite have said about the offset arrangements, a number of items of a successful character, like the Spey engine, have come about as a result of decisions taken by the Labour Government.

Sir Ian Orr-Ewing

Unless one has good products to sell, they cannot be sold, however easy the terms. As a result of 13 years of Conservative rule there were some products on the shelf and in the pipeline which other people wanted.

Mr. Burden

Will my hon. Friend not agree that the Government are claiming—

Mr. Deputy Speaker

Order. The hon. Gentleman must adress the Chair.

Mr. Burden

Will my hon. Friend not agree that the Government are claiming that they are acting as the salesman for the British aircraft industry? This is surely denigrating men who do a great job for that industry.

Sir Ian Orr-Ewing

I agree with my hon. Friend. The major sweat, toil and tears come from the salesmen in the industry who have to do their best to compete against their American competitors. It is not easy competition.

Perhaps I may sound a note of encouragement with which both sides of the House will agree. We must not denigrate the past performance of the aircraft industry. People in all parties—I have not heard it so much from my party, but this is certainly true of the Labour Party when in opposition—have been very critical of the aerospace industry. The Press, the B.B.C. and I.T.N. have been equally critical. I have been reflecting on some of the major developments which originated in this country in the aircraft industry.

First, there is the gas turbine civil aircraft, the Viscount, which is now sold all over the world. There are 300 or 400 of them and they are the only gas turbine aircraft flying today. We invented the first civil jet aircraft, the Comet. Then we produced the first vertical take-off aircraft which started with the Rolls-Royce "flying bedstead", which went on to become the P.1127 and, had we remained in power, would have become the P1154. Then there is the swing-wing concept, which we did not develop but which we invented in this country. Then there is the Hovercraft, which is going very well. Laminar flow, as fitted to the Buccaneer, was entirely invented and developed in this country.

In avionics, our pre-eminence is even more outstanding because we have a history during the war which gave us a flying start. We had the ground radar and airborne radar.

Then we had secondary radar which helps traffic control to land our civil aircraft; sideways looking radar, the Magnetron; Doppler radar and P.P.I.—the Plan Position Indicator. We invented all these. We also invented terrain-following radar which was to go into the TSR2. We invented hyperbolic navigation as in the Gee system during the war, and is now to be found in the Decca system which, if its merits had been appreciated earlier, would have outstripped the American systems. We have recently seen the development of auto-landing which was developed by the blind flying research unit at Bedford.

All these are outstanding contributions by any standards. Therefore, here is an industry which has achieved results and which is worth supporting and looking after. I am only sorry that we have this rather diffuse Ministerial control which I think will make it more difficult for this industry to compete in the world markets. I heard the Prime Minister say that because there was public money in the aircraft industry to a great extent—the right hon. Gentleman gave a figure of 70 per cent.—it must be partially nationalised and that it was unsuitable to set up a National Aircraft Authority about which I had asked him. I do not see that this is a logical sequitur because the Atomic Energy Authority is financed almost entirely by public money. Yet we have hived that off as a separate organisation and it has operated fairly efficiently in the 20 years since its formation. The Americans have the National Aircraft and Space Authority, an independent authority, dependent almost entirely on Government funds. Yet it operates as a separate organisation.

At a time when the Government have chosen, and, I think, rightly chosen, to hive off the G.P.O. and try to run it as a separate organisation, it is curious that in the aerospace industry they should have rejected the Aircraft Authority idea. Speaking after seven years as a junior Minister in Defence Departments, I do not believe that a Government Department is the right organisation. It is too clumsy and too diffuse. Its moment of inertia is too long to enable quick decisions to be given which are necessary when one is developing a complicated and highly sophisticated product like the modern military or civil aircraft.

Mr. John Ellis (Bristol, North-West)

I am grateful to the hon. Gentleman for giving way. I am interested in what he has been saying about an aircraft authority. What about the control of such an authority? Whom would the hon. Gentleman expect to control it? There is a great deal of money in the aviation industry. I should like the hon. Gentleman to develop the question of control if it were outside private enterprise.

Sir Ian Orr-Ewing

It is exactly as the Atomic Energy Authority is controlled, and as, I imagine, the G.P.O. will be. It is possible to have a Minister at the head and answerable in Parliament for the general strategy and general finance without being concerned with the detailed handling and control of day-to-day administration.

The right hon. Gentleman said today—I was pleased to hear it—that he had appointed a chief scientific officer from Farnborough to be in charge of the Concord. I hope that the President of the Board of Trade will tell us whether exactly the same is being done for space communications. It is absolutely essential that one project leader should look after, this rather than space matters being diffused over five or six different Ministries.

I want now to touch on two matters of civil importance. However good the British industry is, it is the air-lines which are of paramount importance to the travelling public and our survival as a trading nation. They must be efficient in the carrying of freight and the handling of passengers. I have been examining the terms of reference of the Air Traffic Licensing Board and its comparable authority in America, the Civil Aeronautics Board, and I wonder whether we have our terms of reference right.

I am sure that nobody would want to make politics out of this, and I agree that we devised the terms of reference. But times are changing and I should like the right hon. Gentleman to see whether the Air Traffic Licensing Board accepts the principle that it has the task of developing air traffic for all the people of this country. That is the task imposed on the C.A.B.

Secondly, I should like him to see whether it is making enough use of the powerful tool of competition on the airways to achieve this. My impression is that this is not being done. When one makes an application to the C.A.B. one must state the number of years during which one will operate the service for which one applies for a licence; that this will continue throughout those years even if one has made a misjudgment and it is being run at a loss; and the frequency—the minimum not the maximum. If the travel requirements demand that there shall be more planes on the route concerned one is entitled to run more, albeit that if one has made a mistake one will lose money. I think that we should have more planes and more competition on many of our routes. One must also state the fare and file one's accounts. All the airlines must draw up their accounts on a common basis so that the air correspondents of the various technical papers can examine them and see how one airline is being more efficient in operating than another. That is wholly helpful, and the President of the Board of Trade might examine it as being useful in our own interests.

I should also like the President of the Board of Trade to examine the pooling arrangements. Under the present arrangements, if B.E.A. and Air France, for example, each run each day eight flights from London to Paris, which is perhaps one of our most heavily travelled routes, no one else is allowed to operate on it. Is this in the interests of passengers? If one airline finds that it is overloaded it just passes its passengers to the other. If one is giving better service, perhaps by being more punctual, more comfortable, or quieter, with more modern aircraft, it is not in a position to put on additional flights on that route, unless the other international airline also did so. That may not suit its route patterns.

Pooling with this arrangement can only help the inefficient. If our airlines are inefficient, which I do not believe, they should be made more efficient and there should be more competition. We operate a mixed economy, with public and private enterprise competing, and what I suggest is not at odds with that philosophy. Why not license one of the independents on that route to see how it gets on? They did admirably on the Scottish route and there were many passenger incentives, such as "trickle loading", by which the airlines allow people into aircraft when they arrive. B.E.A. had said that this was impossible, but as soon as the independents started to operate on that route, they told their passengers that when they had arrived that they could sit in their aircraft, choose the seat they liked best and settle in. They did not have to go from the passenger lounge, through the outgoing lounge, into a bus and then to the aircraft, but could do it all in their own time. Within a few weeks, B.E.A. found it quite possible to introduce "trickle loading", and it was something that all passengers enjoyed. The same might happen in other respect.

It might be said that if British Eagle or British United Airways went on the lucrative London to Paris route the French would be entitled to operate one of their independents on that route, but why not have competition for passenger comfort and punctuality and everything that all hon. Members want?

I should also like the right hon. Gentleman to examine the foreign exchange position and see whether it pays us to share the revenue from all the pooled routes with S.A.S., K.L.M., Air France and others. How does this work out in terms of foreign exchange?

One of the problems on the President of the Board of Trade's plate is the question of a third airport for London. I wonder whether the Committee which examined this problem two and a half years ago was right in saying that we must have a third airport in operational service by the early 1970s. The average hourly rate of aircraft movements during peak month at some international airports shows wide variations; at Chicago, for instance, in 1965, there were 63 landings per hour. At New York, there were 44 and at London (Heathrow) there were 30. Therefore, New York has 50 per cent. more than London and Chicago 110 per cent. more. We all know that Gat-wick is only one-third as heavily loaded as Heathrow.

If a third airport were set up, whose interests would it serve? Few passengers will want to use it because they want to go to a main airport, where they can change aircraft and catch feeder lines. This is one of the reasons why Gatwick has not become as popular as Heathrow. If they were forced to operate out of three airports the airlines would need three lots of service teams and three lots of spares for all their aircraft. The nation would have to provide either fast express trains or motorways to the airport for passengers. Therefore, the passengers, the taxpayers and the operators would not want a third airport.

How are we to solve this problem? I would put my investment into avionics. Instead of spending £30 or £40 million on extra miles of concrete, with all the cost of terminal buildings, it would be much cheaper and in the end more desirable to invest in more sophisticated avionics. We were unique in developing so much of the original avionics, and we have been able to land aircraft more closely and with greater safety as a result.

Therefore, I ask the right hon. Gentleman not to accept a report which is two and a half years out of date. It may well be that modern sophisticated electronics can solve the problem much more cheaply and with much greater efficiency, and, incidentally, it will not create a new centre of noise for all the unfortunate ratepayers who live round a modern airport.

To summarise what I have said, I feel that the Government, during two and a half years, have dealt some devastating blows to the aerospace industry. I am not convinced that the solution we have heard today will solve those problems. I hope that the President of the Board of Trade will look at the Air Traffic Licensing Board, its terms of reference, and its position, to see whether it could not be made more like, and just as effective as, the C.A.B. in America. I ask him also to examine pooling arrangements between B.E.A. and its international competitors and B.O.A.C. and its competitors. Lastly, I ask him to look at the question of a third London airport, which, I believe, is not so essential as achieving a more sophisticated development of our air traffic control systems.

5.30 p.m.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I congratulate the hon. Member for Hendon, North (Sir Ian Orr-Ewing) on his speech. It was the least controversial or least partisan and the most constructive speech I have ever heard him make. I agreed with many of the points he made, and I hope that the Minister will pay careful attention to his comments about the scientific use of London Airport before we embark on spending a great deal of money on another airport.

We must give proper weight to the improvements which are taking place in the use of "executive" buses, of new trailers and other methods for saving delay in passage through the terminal when people are boarding or leaving aircraft. I do not know how all the problems associated with the new piers will eventually be solved. It seems that, whenever the new piers are tried, they cannot be used for both loading and embarking at the same time, but this will be a matter requiring careful study and, perhaps, when the new terminal is developed, it may be possible to incorporate some of the suggestions which the hon. Gentleman made.

I welcome the hon. Gentleman's constructive approach to the subject. Many of the problems arising now are due partly to the fact that the Opposition, whoever it may be, use every weakness and every failure of the aircraft industry to bombard the Government in power at the time. The aircraft industry is a gamble. Let us face this fact. When the Spitfire was developed, there were only about 6,000 parts in it. Today, there are 25,000, 30,000 or even 40,000 parts in an aircraft. Development time has increased from three or four years to five, seven or even eight years. No one can say what will be a successful aircraft eight years from now. Therefore, whoever is in control of the aircraft industry must take a gamble.

Every aircraft industry egg cannot hatch. Whatever Government may be in power, and whoever may be in charge of the aircraft industry, there will be a considerable proportion of failures. If we admit this, we can stop the nonsense of bombarding the Government in power, whoever it may be, because some project has had to be abandoned.

The inventions which the hon. Gentleman mentioned are no sooner invented and worked out in practice to the stage of prototype than America is able to pinch the ideas and put enormous resources on to their development, beating our own smaller aircraft industry in making a success of them. This means that not only are we developing our own aircraft but we are fighting against odds with which this country alone cannot compete. This is the great argument for reaching a European basis so that we have resources to do things as America can. If we do that, European brains can come in as quickly as American development can bring British brains into the field.

No one in America believes that the Viscount was developed in this country. The people who ride in it have no idea that it was developed in Britain. I remember seeing, when I was at the Ministry, a pamphlet written by one of the most prominent American aircraft manufacturers explaining how President Roosevelt had sent for the general manager of one firm and said, "We must have an aircraft propelled by a jet turbine", and he described how this firm went ahead to make the aircraft. Thus, so it was said, America developed the jet aircraft. My right hon. Friend seems to be mistaken in thinking that Whittle and British industry developed it.

Of course, the success of the jet aeroplane did not come from Whittle alone. It came because our metallurgists developed the metal which made possible the development of the jet turbine. The gas turbine science was known for 40 or 50 years before then, but no one could find a metal which would stand the enormous heat. With the combination of our metallurgy and Whittle, we developed the jet turbine.

It has been suggested that someone should plan the development of aircraft. This was the policy at the end of the war. The Government gave the aircraft industry a number of projects. The biggest one was for a non-stop plane from here to America, and that came out in the design for the Brabazon. There were to be Commonwealth planes, and these projects were handed to Handley Page and to de Havilland, and out of them came the Comet and another one from Handley Page, both successful aeroplanes. There were also several aeroplanes for domestic routes, of which the Viscount was the successful one, although the Ambassador was an equally good aircraft and, if it had not had only two engines, would perhaps have been the greatest aeroplane of its generation. Then there were the smaller planes like the Dove and others.

That was the scientific planning of the aircraft industry in those years. The great and courageous decision was made that Britain should go jet, and America decided not to go jet. We had, therefore, an enormous start. As the House knows, the fact that the Comet did not have sufficient strength to resist the variations of temperature was one of the great tragedies of civil aviation. If it had been a success and had remained a success, we would still have been far ahead of the world in jet aircraft.

By the development of the gas turbine and then by the development of the turboprop, this country was ahead of the world, and it is still ahead of the world. Most people think of the development of the pure jet as the greatest triumph, but the most complicated engineering project was not that but the development of the turbine-propellor aeroplane. When Rolls-Royce developed that, it completed a much more complicated operation than the development of the jet itself.

Just as there are horses for courses there are aeroplanes for different purposes. The jet aeroplane is efficient only above 20,000 ft. or at nearly 30,000 ft., and at speeds of 300 m.p.h. and more. Below that, at about 20,000 ft., the jet turbine is the most efficient, and below that again the propellor aircraft is still the most economic and most successful. This is the problem with the Concord. There is the time when the aircraft is rising to the height at which it will be really efficient and there is then the time coming down at the other end. The short period when the Concord will be flying really economically makes it a difficult project.

The research and development problem for Britain is that putting so much of our resources into an enormous project like the Concord means that fewer resources can be put to all the other projects. Obviously, if out of our 100 per cent. of scientific and technical ability we devote 50 per cent. to the Concord, there is only 50 per cent. left for all the others. If one is dealing only with smaller projects, one can put a fair proportion of one's resources to each. The Government must face this problem because they cannot put more scientific and technical manpower into aircraft research and development projects than they can into any other projects. This is the reason why I approve of the Prime Minister's decision today to concentrate as much as possible of the industry under the Ministry of Technology. It is like peace. One cannot divide the aviation industry and say "This is the aviation industry, and there is nothing outside connected with it."

I should like to know that D.S.I.R., with its wind tunnels and research facilities, and Farnborough, with its wind tunnels, and other establishments were co-ordinated and working in co-operation. I believe that they did this while they were under, so-called, separate Ministries. It means a better basis for one's scientific industry.

There has been a great deal of talk about the success of private enterprise in the aircraft industry. Another false idea is that there is any separation between the Government establishments and private enterprise. Farnborough and the research establishments of the Government are the places where one gets the co-ordinated brain that supplies the best information on scientific development to all aircraft developers.

The reason why the National Gas Turbine Establishment was prevented from developing gas turbines was that when it was developing gas turbines in competition with private enterprise, private enterprise refused to go to the Establishment to discuss its affairs and its own inventions. Sir Stafford Cripps decided that, although all the industry should feel free to go to the Establishment and discuss matters with it, he would take away from it the opportunity of producing gas turbines.

The same happens with Farnborough. The aircraft industry gets its tests carried out at Farnborough in a way it could not do itself, and it is able to draw from Farnborough, without any breach of etiquette, all the most up-to-date scientific achievements of all the industry, because those things go to Farnborough and Farnborough knows what is going on. We have an advantage over America in having this national Government technical brain which supplies information to the whole of industry about gas turbines, engines, fuselages and so on.

In that connection, I would stress this country's great tragedy in trying to separate things one from another. The National Gas Turbine Establishment will still have the best knowledge of gas turbine working in the world. There is probably no one in advance of us in that knowledge. The aircraft industry has made use of all that knowledge, has been feeding on it and developing it in every way possible. The curious thing is that it has developed as much knowledge about general industry, but we cannot get general industry in this country to make use of the scientific knowledge about gas turbines that is lying on its very doorstep.

Many of our scientists have broken their hearts because they have developed science that industry refuses to use. Ferranti, in conjunction with Edinburgh University, developed the finest scientific machinery for controlled and guided milling machines, but it cannot get anybody to use it. Unless Ferranti pays firms to use it, the firms will wait till somebody else tries it out. One of the tragedies is that our industry generally will do nothing to use modern scientific knowledge. I hope that the Ministry of Technology will be able to get industry on the move in this direction. It is because of this reluctance to use modern scientific knowledge that this country is so far behind America and every other country.

I suggest that the Government should be given encouragement to do this, and that no one should attempt to boost private enterprise here as though it had all the virtues and the Government had all the faults. The Government will, of course, make mistakes, but many of the mistakes are not Government mistakes but the mistakes of the industry.

As I say, research and development is a long process, and as one is working towards an aircraft eight years ahead, it is a tremendous problem for the aircraft industry and the Goverment. Nobody need pretend that private enterprise could possibly take the risk of developing a Concord or another major aircraft that might be a failure eight years ahead. One cannot risk perhaps £500 million on something that may be out of date when it is produced. It is no good the Opposition pretending otherwise. It must be realised that this is a case for co-operation between the Government and the aircraft industry. It may be said that the Government and the aircraft industry will have to take a gamble. The previous Government took a number of gambles over missiles and other things which came a cropper. It is no good saying that things will not come a cropper. If the House wants the best results from the aircraft industry and the Government, hon. Members must stop the nonsense of using the industry as a whipping boy for the Government that happens to be responsible for it. The industry does its best, and the Government do their best. We must try to get the maximum cooperation and stop a great deal of this political controversy.

Speeches have been made suggesting that the Government could in two years have done something about an aircraft. There has never yet been a Government who could design and build an aircraft in two years. One might adapt an existing aircraft or an existing engine, but nobody could invent and produce an aircraft in two years. This is another instance of nonsense that people should stop talking about.

We have also to recognise that aircraft develop as families. Once one has developed an aircraft like the Viscount or the Comet, it goes on developing and improving and becoming a sort of father of a family. One should develop the best type of aircraft, for nobody can develop another best type. Some of our unfortunate position has arisen from the fact that we did not recognise the best type of aircraft when it was there and proceed to develop it. The French have never forgiven us for not appreciating that the Caravelle was a good aircraft. They thought it nonsense for us to go about duplicating it when they had produced a first-class aircraft. There was a British engine in it. It seemed such nonsense. As I say, the French have not forgiven us yet. This is one of the difficulties that the Minister will face in co-operating with the French—because of this "Little England" idea of building an aircraft which is completely out of date.

We ought to think of European resources. I believe that sooner or later we must think of European airlines. Europe is too small an area for all these competing little airlines. Clearly, as the hon. Member for Hendon, North said, if we are to have the spares and other first-class equipment for keeping aircraft in fit and good order, we must have aircraft that are common to the whole of Europe. The sooner we get to this basis the better. There will be ways of dividing up the production of the aircraft. The sooner we have a European airline the better.

I know that it is difficult to get Europe to agree on anything. However, I hope that the French realise from what is happening in Bavaria and Hesse that extreme nationalism might bring dangers even to the nations that are nationalistic. But there is no question that if we are moving towards Europe, as I hope we are, this is one of the fields in which we might achieve sensible co-operation. I hope that European capital and resources will become available for the production of new aircraft.

I turn now to the question of domestic air routes. A great deal could be done to develop civil airlines here but again politics is an obstacle because no Government can develop aircraft at home without risking loss of money. If the Government are to be peppered by the Opposition whenever an airline loses money, they will not take risks. Thus, the Opposition, of whichever party, can tie the hands of the Government in having public service instead of profit.

If right hon. and hon. Members opposite demand that everything should make a profit it means that one can have no public service in parts of this country outside the main profitable air routes. But if there is to be competition then the competing airlines may destroy their profit generally. The right hon. Member for Mitcham (Mr. R. Carr) recognised that we could not have in the same town two tramway systems, for example. But the hon. Member for Hendon, North wants competition.

I must admit that the coming of competition to Scotland put some ginger into B.E.A. and that is one of the tragedies of such a situation. The coming of independent television to Scotland improved the B.B.C. tremendously. If public concerns are to succeed, they must give the same courtesy and service to their customers as they would if they were a private competing organisation. I am sorry to say that some of the services of B.E.A. and the B.B.C. fell down in this regard.

I have had the greatest courtesy from B.E.A. and good service but there are occasions when hon. Members of this House who have been in touch with B.E.A. have received nothing but a type of superior arrogance with the attitude that they must take what they get and not ask for service. I hope that B.E.A. will not take such an attitude because, if it does, it provides more argument for people like the hon. Member for Hendon, North for more competition, which may not be good for the service as a whole. For example, we had this competition with Cunard. What happened? Cunard was going to lose money, so it got B.O.A.C. to take over its share. Now we have a nice combination of B.O.A.C. and Cunard.

Mr. Burden

With respect, the right hon. Gentleman is talking nonsense. B.O.A.C.-Cunard, which operated the North Atlantic, has made a very substantial profit and will go on doing so. The North Atlantic is one of the most profitable areas of the whole of B.O.A.C.'s operations. That was not the reason at all.

Mr. Woodburn

B.O.A.C. was making a profit already. Cunard wanted to have a profit on its own but found that it could not make a profit on its own. If it had been making a big profit on its own, it would never have joined with B.O.A.C. It found it to its advantage to go back into the public field and join up with B.O.A.C. If we have B.O.A.C.-Cunard, what is the purpose of having two companies if there is no competition?

Mr. Burden

B.O.A.C. and Cunard were in partnership and shared the profits, Therefore there was no question of any sort of operation such as the right hon. Gentleman suggests.

Mr. Woodburn

There is no point in having two separate organisations if they are doing the same job in co-operation. B.O.A.C. could have done it without Cunard and there was no point in Cunard getting into it at all. Cunard wanted to be on its own but then came back into the field of public organisation. I do not blame it but, as the right hon. Member for Mitcham said, we cannot have too many people running aircraft systems on the same route.

The question is how we can get the benefit of efficiency if we do not have something to control the arrogance of a monopoly. I admit that this is a problem that we have not yet solved, but solved it must be. Whether we get it by competition of this kind or not on a transport system, it is very difficult. One cannot easily have two tramway or bus systems in one town. That sort of thing has to go by the board. Certain things become natural monopolies. As the right hon. Gentleman said, the Paris route is shared between two companies but it might as well be done by one company because these two themselves become one in this respect, sharing a common interest. Whether there can be any competition between them I do not know, but it is a problem which must be looked at.

Mr. Robert Howarth (Bolton, East)

Does not my right hon. Friend agree that when an independent company is awarded a route in this country one of its first actions is vigorously to oppose further competition from any other independent? I understand that the independent invariably suggests to B.E.A. that they might pool. Thus, the idea of competition is not quite as outlined by the Opposition.

Mr. Woodburn

It does not exist. If we did not have B.E.A. and other companies doing this, there would be a monopoly in no time. The companies concerned would converge and join up because it is a natural thing to achieve efficiency and cut out waste from overlapping and double services. But the problem has to be solved by the Government and all of us. I hope that, in the future, right hon. and hon. Members opposite will take a leaf from the hon. Member for Hendon, North and deal with this matter objectively, not using it as a sort of battleground for the scoring of party political points because, in doing so, they hamper the Government and make it difficult for them to take risks in the future developments of the aircraft industry—and if the Government are to put capital into these companies we must face the fact that many of the eggs laid will never hatch, for we have world competition from America to face and the fact that, during the development of an aircraft, so many people invent improvements that it is obsolete before it gets into the air. An aircraft may also be made obsolete by the fact that America has anticipated what is happening, with the result that one loses one's money and can do nothing about it.

The aircraft industry has always depended on the Government for purchases and for money to do its development. The only reason it has not been nationalised long ago is that the Government wanted to leave the industry of its own free will to get some profit by selling aircraft abroad—not for philanthropic reasons but because the Government wanted some return on development costs by a share of what the industry got from sales abroad. If the industry did not have sales abroad and simply sat back, saying, "You pay us for what we do", it would mean a considerable loss to the Government in foreign exchange and in the return on development costs.

I hope that this matter will be treated objectively and scientifically because, if the House does so, the industry can be developed to the best possible extent. But it means that we must take the risk of failures because, if we do not risk failures, we will never have successes. I am disturbed and sorry that Short Bros. & Harland is not to be made full use of. It was developed as the finest modern aircraft factory in the country. It took many years to build up the research and development team and although the firm belonged to the Government it did not get any failures. I regret that it has not been possible to develop it for aircraft alone. I hope that the Government's idea of giving it alternative outlets will be a success and that, sooner or later, the firm will come into its own.

5.58 p.m.

Mr. F. A. Burden (Gillingham)

I hope that the right hon. Member for East Stirlingshire (Mr. Woodburn) will forgive me if in the debate I do not follow his arguments. I found some of them a little vague and wondered whether he had been advising the Government over the past months. If so, that may account for some of the confusion in which the aircraft industry finds itself today. I propose to try to deal with certain aspects of the industry, and I must declare my interest. I am a director of an independent firm, a forward-looking one—indeed, the one which inspired B.E.A. to give much better service on the Scottish routes.

I am sure that we have to accept that the whole position of the aircraft industry stems from passenger and cargo demand. Most of the other aspects of the industry must fall into the framework created by the estimation of growth over the years ahead, and the aviation industry is undoubtedly an enormous growth industry. Every estimate indicates that there will be a great expansion in air travel. Britain's future prosperity will depend on making as much use of air transport as we did in the past of the mercantile marine which gave this country enormous advantages. Undoubtedly, in civil aviation particularly, with which I want mostly to deal, there will be tremendous opportunities and it is essential to the country that we grasp them.

The Chairman of the British Airports Authority has declared that civil air traffic will be fifteen times as heavy twenty years from now as in 1965. The International Civil Aviation Organisation's dramatic new forecast estimated that the North Atlantic passenger traffic alone was likely to rise from 4,199,000 in 1965 to 8,250,000 in 1970 and 15,250,000 in 1975. Thus, in the peak month of August, in 1975 westbound daily traffic is estimated to be 48,000 passengers compared with 12,000 in 1965.

The most significant forecast of the I.C.A.O. is for cargo carrying. It is estimated that North Atlantic cargo weight will triple in four years and almost triple again by 1975. That means an increase from 177,000 metric tons in 1965 to 1,651,000 metric tons by 1975. Quite apart from the opportunity and challenge which this will provide for British aircraft manufacturers and operators, it will also enormously increase the demand on airport facilities and equipment generally.

It is comforting to note that the Chairman of the British Airports Authority is fully aware of the potential increase in traffic and with a man like Mr. Peter Masefield, with his enormous background of aviation, one would expect this to be an aspect of the matter which he would take into serious consideration when assessing the weight and challenge of his future duties. An enormous responsibility will be placed on the Authority.

At the moment, possibly because of the wisdom which its chairman has shown in discussion, there is considerable confidence in the Authority which has already done extraordinarily good work. I am sure that that confidence will continue, but will it continue in the Government and are the Government thinking about what all this means?

It is important that they should do so. I am glad that the Minister of Civil Aviation is present as I speak. I have known him for many years and I have always had the utmost courtesy from him. I regret very much that he is leaving the Ministry. He has had to deal with a most difficult stop-gap period and much of the criticism which has been levelled against him he has not earned. If he had had longer to put through his own policies, he would have been a considerable advance on his predecessor, although that would not have been difficult.

All this growth means that there must be an appraisal of airport requirements and vast expenditure on general airport equipment and on avionics. But if passenger flow at London Airport is greatly increased, as it will be if the suggestion of my hon. Friend the Member for Hendon, North (Sir Ian Orr-Ewing) is taken up, it is essential to ensure that there is a free and easy passenger flow and no great hold-ups in Customs. That is also especially important if we are to take full advantage of the enormous increase in potential as well as in actual freight flow.

London Airport will have to be adequately equipped with the most modern machinery to handle all sorts of freights, but I stress that there must also be an efficient and expeditious Customs service, for it is not the slightest good expecting to increase freight flow through London Airport, with freight flown here in a few hours, if it is to be held up for days because of the lack of speedy Customs services.

But although the flow of passengers into London Airport might be doubled, that would create tremendous difficulties if the links with the centre of the city were not automatically greatly improved. I ask the right hon. Gentleman and the Government seriously to consider even at this late stage the possibility of a monorail service to London Airport, particularly if a third London airport is not built, so that London Airport can be equipped to take many more passengers. Unless some such facility is provided, there will be absolute chaos getting passengers to and from the centre of the city. That consideration might still apply even if a third London airport is built.

The increase in freight and passenger services largely destroys many of the positions adopted by the right hon. Member for East Stirlingshire (Mr. Woodburn). With this enormous growth, there must be a much broader concept of what is required in British aviation. Let us no longer concede the view that the Corporations are threatened, provided that there is reasonable and adequate consultation, by the independents. With this tremendous growth there must be some greater future for the independents. They should be encouraged to take a much greater part in the industry than they have done hitherto.

I wish to be quite open about this—I have an interest. This does not preclude me from seeing more of the potential than, perhaps, others. The independents could back up and reinforce the efforts of the Corporations without any loss of prestige or profit to the former. Surely the time has come to remove the shackles which have confined the independents almost entirely to the fringe operations of charter work and trooping? They should be phased into scheduled services with a viable operating pattern so that they can play their proper part in the tremendous growth period lying ahead.

It would be a tragedy if they and Britain failed to accept the challenge and opportunity, or if it was made impossible for them to accept this challenge and opportunity, because of political bias and dogma. There has been play across the Floor of the House, to some extent on party lines. We all enjoy this, but despite the criticisms which have been levelled, it is encouraging to note that underlying everything there is such a wide area of agreement. I hope that this will continue.

In the past we have produced aircraft which were the envy of the world and of which we could be rightly proud. Even today, and despite its many vicissitudes, next to America, Britain has the biggest aerospace industry in the world. It is no secret that America would like to increase its influence in Europe and reduce competition from the United Kingdom. If we are to benefit from the growth in maritime air transport that has been envisaged, it is essential that we remain one of the great suppliers of aircraft, not only to minimise foreign exchange expenditure on aircraft which otherwise we would have to import, but also to maintain and expand what is already a great exporting industry.

As the Minister has said, our exports this year will amount to about £200 million. Since the war, the aerospace industry has earned no less than £1,700 million worth in foreign exchange. This is an industry in which technological brains and skills are pre-eminent, and they are our most marketable commodities. Man for man, woman for woman, our designers and scientists are the best in the world. This is why the U.S.A. is so avidly recruiting them. It is an asset that we can neither afford to drive abroad nor allow to be frittered away.

Britain cannot afford to export her brains, she can afford to export only the products of them. This is tremendously important and cannot be said too often. Unfortunately, in the aerospace industry, because of uncertainty which has surrounded its future this has not always been happening. No matter what excuse may be given, the Concord and TSR2 are classic examples, for whatever reasons, of what has brought about uncertainty in the industry.

Mr. Rankin indicated dissent.

Mr. Burden

An apprehension has been created at all levels by the cancellation of TSR2. It was the most advanced and sophisticated military project in the world. It was literally broken up by the present Government. Whether it was right or wrong, it was broken up. It was flying; the F111 was not even in the air. I know of one instance where a man who was engaged in making equipment for TSR2 went to America upon its cancellation and was received with open arms there. He is now involved with the F111A. We shall be purchasing from his American firm equipment which would have been made in this country and used in TSR2 and probably sold to America.

Mr. Rankin

I was shaking my head because although I do not dispute the fact that TSR2 was abandoned, I dispute the reasons which have been popularly given for its abandonment.

Mr. Burden

With great respect to the hon. Gentleman, I have not put forward any reasons, I have merely stated the facts. Whatever the reasons, no one can dispute the facts. This also happened in the case of the P1154. There was the occasion, still remembered in France, when the right hon. Gentleman the then First Secretary of State, went there to try to cancel the Concord project because, as he said, it was only a prestige product.

That same Concord is now conceded, even by the Americans, a world market of at least 300. This estimate was given to me by a very eminent American last week. Despite the Americans' view, there is still a lingering feeling in France that the British Government would like to step out of the project. The only way in which these rumours can be finally banished is for the Government to make a firm statement that Concord will go into full-scale production as early as possible. This is absolutely essential. We cannot go on waiting. Because I know the Minister so well, and know how he feels about these things, may I ask him to press for this in the unfortunately short time that he will be in charge of the Ministry?

Mr. Mulley

I am grateful to the hon. Gentleman for the kind things that he has said about me, but he must understand that it would probably create doubt if every day, or week, we were confirming what a project was doing. I said today that the Concord project is on schedule and it is our intention to keep it on schedule.

Mr. Burden

But the prototype is to fly in 1968, and it is afterwards that really matters. It is the production that must be confirmed.

Mr. Mulley

Surely the hon. Gentleman would not expect us to take decisions beyond the prototype stage before we reached that stage? We are keeping the programme on schedule, as agreed.

Mr. Burden

I have gained a little comfort from what the right hon. Gentleman has said. I hope that the industry will lalso have done, too, but I am not fully convinced. In my view it is not the British aerospace industry that has caused the French to patronise and pity us, but the Government's vacillation and procrastination. The French call it the "English sickness". It is time that the Government realised the enormous part that the aerospace industry has to play in the future prosperity and prestige of Britain. Almost every step taken by the Labour Government over the past year has either considerably damaged, or tended to damage, the industry in foreign markets.

Mr. Rankin indicated dissent.

Mr. Burden

Yes, indeed. No doubt the hon. Member for Glasgow, Govan (Mr. Rankin) will have the opportunity to speak later and will endeavour to say that this is not true and that everything that has been done points to the contrary, but this is the view of industry and of the people concerned. They are not like us, cosily sitting on their benches in Parliament—they are the people around whom the wind is blowing and it is very chilly at times, as a result of the Government's policies. What is required urgently is an expression of faith, preferably by the Prime Minister. Unless such a declaration that we intend to continue production is made, a large number of our up-and-coming designers and technicians will depart these shores, and we shall drop to a humiliating level in the world aerospace league. The aerospace industry is at an all-time low. Many of the men engaged in it are wondering about the future. They expect the Government to produce a plan. The industry needs it and I believe that the Government could produce it.

I hope that the Government will allow me to offer them quickly a little advice. One of the first things that they could do would be to gather together the aeroplane engine manufacturers, the airline operators, including the independents, and a Government project team and tell them to examine the projects which are now in hard and assess their value. I think that some would fall into place immediately. There are the Concord, Jaguar and BAC111 development and others which should be continued. They might well consider that the airbus should be cut and they might decide on aircraft that could carry 172 or 272 passengers. But they should get the priorities right. They should then work out a future programme that would enable us to produce aircraft before or in line with anything comparable which is produced in America. They should be locked up together and not released until they produced a national project plan.

We have been behind too often in the past and we can be in the front in the future. We have the brains and the technology to do so. We should make some urgent and sensible decisions over the full ownership of the Ministry. The Minister went a long way towards that this afternoon, and I hope that the negotiations which are being carried out on the future ownership of the industry will be brought to an end as soon as possible. The country should make up its mind that we have an industry in which we can take great pride. This industry, after all, as my right hon. Friend the Member for Hendon, North said, gave the world a jet engine and radar, the first jet and turbo-prop airliner, the first jump jet and devices, the first swing wing and Hovercraft and the wonderful avionics of TSR2. Britain needs the men in this industry. They are entitled to know that she intends to use their experience and knowledge, and I hope that this Government will give them the necessary faith in the future as quickly as possible.

6.24 p.m.

Mr. Maurice Edelman (Coventry, North)

The hon. Member for Gillingham (Mr. Burden) very properly paid tribute to the workers, technicians and designers in the aircraft industry, and in that I fully concur. It is precisely for that reason that I listened to the obituary speech of my right hon. Friend the Minister for Aviation on his own Ministry with a certain melancholy. That melancholy deepened when he reached the point at which he described the intentions of the Government regarding the ownership of the merged airframe companies.

I must say that the decision to take a minority shareholding, however much, will not be received very gratefully by aircraft workers in my constituency. I doubt very much whether it will be accepted with much joy by the Confederation of Shipbuilding and Engineering Unions which has gone on record as being in favour of nationalisation. I doubt very much whether the A.E.U. will be very happy about the decision.

In this decision, which was received with welcoming silence by hon. Gentlemen opposite, I seem to detect the hand of my right hon. Friend the President of the Board of Trade, and an echo of an old controversy on Clause Four, when my right hon. Friend the President of the Board of Trade, during the debate on shares in industry, was one of the foremost advocates of minority shareholding in companies.

The reason I am personally strongly opposed to a minority shareholding by the State in any company is that it implies responsibility without power, and, in the exercise of that responsibility without power, I must warn my right hon. Friends that they will come up in the future against some major difficulties. I will not dwell on that point because I wish to proceed to some larger considerations and to some particular discussions which affect our immediate future and the long-term interests of the aircraft industry.

This debate is very timely. Its subject is whether the British aircraft industry is to live or die, no less; for despite its robust production record, despite the guarantees which the captive market of nationalised air transport may give it, and despite even the current export records, the truth of the matter is that the British aircraft industry is in a highly vulnerable and, indeed, dangerous condition.

Despite the fact that we can advertise our £200 million export record for the coming year, the fact is that the most important pointer to the future of the industry in the 1970s is that there are no new all-British aircraft on the designing boards. The former Minister of Aviation, now the Home Secretary, once boasted to a round of cheers that never again would Britain produce a sophisticated military aircraft. There was perhaps some justification for the boast in that to produce such an aircraft is a highly expensive undertaking. Despite the fact that my right hon. Friend may think that a general discussion on a delicate matter like the F111 and even the V.G. may be somewhat embarrassing, I propose to consider and to initiate a discussion on this subject today because I see no reason why the F111 should be considered in detail before a Senate Committee in the United States, which has already taken over 2,000 pages of printed evidence on the subject, or why the V.G. should be discussed in the French aviation Press as well as in the general Press, and yet discussion should be inhibited here. It may well be, and I will deal with this in more detail later—

Mr. Mulley

I hope that my hon. Friend will not suggest that I want in any way to restrict the discussion here or that any suggestion has been put to him that he should not make any point that he wishes.

Mr. Edelman

I understood that the comment earlier of my right hon. Friend seemed to indicate that the ventilation of the question of suitability or adequacy of the swing-wing, V.G. aircraft might cause him some embarrassment. I am happy to think it will not do so, and therefore I will continue with my argument liberated from any sense of inhibition.

I said that the F111, which was to replace the TSR2, may fall below its specification. We may have to consider that. The swing-wing V.G. may never reach the stage of agreed specification and therefore we have to consider what is, in fact, going to be the successor aircraft to the liquidated TSR2. Will we find ourselves in the position in which once again we will have to consider whether from our own resources we can develop an aircraft which will be suitable for our strategic and tactical needs in the 1970s?

It has been very properly suggested already that the gestation period for an aircraft is at best five years and, more likely, 10 years. Before we can get an important aircraft into production it needs at least 10 years of preparation—10 years of planning, 10 years of laying down jigs and tools. It takes 10 years to get it into full production.

But ever since this decision was taken by the former Minister of Aviation to break up the TSR2, it is an undoubted and uncontrovertible fact that technicians and designers have been seeking jobs overseas, and production teams have been broken up. Only two days ago we heard that American and Australian firms which have been advertising in my constituency had had a thousand applications from highly-skilled technicians and workers in the aircraft industry to emigrate, and that out of that thousand they had chosen 500. They chose the biggest fish, and the rest they tossed back into the pool.

We are therefore facing a very grave situation in this industry, and it is not enough to consume its seed corn—we have to plan for the future. That being so, I want to examine three major matters. The first is the state of the industry's order book. The second is the Government's plans for the administration of the industry. The third is its future structure and ownership.

A lot has already been said about Concord, this project that was at one time derided as a prestige project, and one which had to be—and I am sure that it was a euphemistic term—re-examined and reassessed—but which is now, very properly, our pride and joy. We know that it is a viable aircraft, and the lowest estimate of what it will earn in aircraft sales alone, quite apart from operation by British companies, is something over £1,000 million.

We can therefore praise those who conceived, promoted and sustained the Concord project. It shows that Anglo-French co-operation in the air is a reality and however committees may have proliferated it indicates that it is the men on the job, working together, who are able to produce these aircraft. If these committees proliferated by the Ministry of Defence and the Ministry of Aviation were aircraft, there would not be any aircraft problem at all—we would have all the aircraft we needed. The fact is that, ultimately, when it comes to creating aircraft, it is the men who design and produce who matter.

The TSR2 was not cancelled because it was a bad aircraft. It is important to emphasise that point, because the wrong impression got about—and it is a wrong and a bad impression—that it was cancelled because, as an aircraft, it was no good. The Prime Minister himself, in a speech at Preston called it: … a triumph of British aircraft electronics design, revolutionary and highly sophisticated in its conception. One could not ask for a higher or more appropriate testimonial to the aircraft than that.

The TSR2 was designed for an east of Suez strategy and, admittedly, it was an extremely costly plane, but one of the reasons for its admittedly extravagant cost was the very high overheads resulting from delays at the Ministry of Aviation and the Ministry of Defence—and at the Treasury, too. Since we have had the Plowden Report—that miserable Report that has been so often quoted in this debate—it is important to emphasise that the Committee, which was responsible for many of the recommendations that are now being taken up, did not go to even one aircraft factory in Great Britain.

It sent some of its members to visit Shorts, but not one of its members visited any aircraft installation in this country. Therefore, when we consider efficiency, on which I shall touch later, in evaluating the Plowden Committee's work we should take into account the fact that its members did not visit factories, and that it was therefore impossible for them to see how the costs of aircraft escalated, not because of technical inefficiency but because of production inefficiency brought about, to a great extent, by some of the delays in ordering the aircraft.

It is worth recording that when the TSR2 died, an American Senate Committee was examining the origin and the cost of the purchase of the F111—then called the TFX—in the United States. That Committee was under Senator McClellan. The major point brought out in the earlier part of the hearing, which covered 2,000 pages of print, was that a cheaper and more efficient tender had been made by another United States aircraft company.

Since that Committee first sat, the F111 has escalated in its domestic price. What was called the "commonalty" between the Army and Navy versions has been done away with because the aircraft became too heavy for naval purposes. It is almost certain that the Navy will not take it, so that instead of there being a line of production of 1,700 it will be much less, with correspondingly higher costs per aircraft. Today, as we are debating this subject, the Senate Committee inquiry is continuing.

As we have bought our version of the F111 in preference to the TSR2 because of the high cost of the TSR2, I should like my right hon. Friend to tell me whether the F111 will be delivered to specification. Secondly, will it be delivered on time? Thirdly, and this, perhaps, is the major point, because I know that many hon. Members are on record as having put this question: after the original fixed-price contracts have been fulfilled, will the United States price to Great Britain escalate in order to write off what are manifestly losses on the basic contract?

Speaking of the basic contract, when the Senate Committee continues its investigation, I wonder what will be said about an aircraft that may need a U.S. subsidy, when the Americans are selling the aircraft to Britain below cost price? That, however, is a matter for the Senate Sessional Committee.

If we surrender our east of Suez rôle we can save, perhaps, the £150 million or more that we are committed to spend on the F111, but if we retain that commitment and need the F111, is it true that the incidence of drag, which has been widely reported, has now been overcome? Is it the case that on trials at the Eglin air base at Florida the aircraft had violent compression stalls, and that because of its lack of acceleration, as has been stated in the United States, the aircraft today is …no match for the Mig 21? Is it true, further that the Navy version has been finally dropped?

A few weeks ago I discussed in a private telephone conversation with Senator McClellan the merits or demerits of this aircraft. I was anxious to know, as it has relevance to our future defence programme. I will not be betraying any personal confidence, because the Senator has expressed his anxieties publicly, when I say that he has very great doubts whether the F111 can fulfil the existing British specification. There is no doubt that General Dynamics will deliver a plane—the F111 has been flying, just as the TSR2 had been flying—but the question is whether it will be the right plane.

Apart from public relations hand-outs, and the ebullience of reporters who have been taken to see the plane flying, and who have been dazzled by the operation of the swing wings, I want to know whether this aircraft, which now weighs five and a half tons more than provided for in the original specification—and I adhere to that figure—can, in fact, carry out the purposes for which we have bought it, and to which we are now committed. Let us assume the possibility that the F111 may not be up to specification and that the variable geometry aircraft, its successor, does not come off. Does that mean that we are "hooked" on the F111 and that, apart from the aircraft which are delivered, we shall have to purchase its successor? Having scrapped the TSR2, are we to find ourselves moving in to buy F111s which, in the long run, apart from specification, may well prove to be costly in dollars and costly in our surrender of technological science and skill to the United States?

Mr. Rankin

Would it be a breach of confidence if I suggested to my hon. Friend that when we met the President and Vice-President of General Dynamics upstairs they did not show the confidence in the F111 shown by our own Front Bench?

Mr. Edelman

I am obliged to my hon. Friend for that sad intervention, which, unhappily, reinforces the point which I was very reluctant to make.

I turn briefly to the question of the variable geometry aircraft. I do not think that anybody would be disposed to accuse me of a lack of sympathy with Anglo-French co-operation in any sphere and perhaps particularly in the air. On this very day there is a meeting in Paris between the French trade union concerned with aircraft and leading trade unionists in this country, to which I have been invited, which is considering the question of co-operation in the air industry at shop floor level. I therefore hope that no one will accuse me of any hesitation about the value of Anglo-French co-operation.

Much as I admire the determination and optimism of my right hon. Friend the Minister, I should be untrue to my conviction if I left the House with any impression that it will be possible for a variable geometry aircraft to be evolved between this country and France which is capable of satisfying the ideal specifications which each country seeks to put forward. The reason is simple. We are concerned with an aircraft which will be successful with the same sort of rôle as the F111. On the other hand, the French are concerned with a fighter and an aircraft which, in my judgment, is designed to operate in Europe and not far beyond. Consequently, I think that my right hon. Friend the Minister will find it extremely difficult to obtain a compromise specification which will synthesise the two rôles which each country has in mind.

Dassault has its own variable geometry design and would like nothing better than the kind of co-operation with Britain which would consist of the French making the aircraft and this country buying it. I hope that my right hon. Friend will find that that simply is not on.

As I say, we are in a grave and difficult position. The time has come for a thorough reassessment of the intention and design of our industry. The industry, in terms of men and management, remains a dropsical one which has relied on Government subventions for too long. The result is that it has become fat and flabby and still has not recovered from that. We have a hard core of first-class, highly efficient workers and technicians in the industry. On the other hand, because there has been no direction given to the industry, it has trundled along, occasionally doing bursts of magnificent work, yet always open to the charge that it is too costly.

No Government is immune from failure or free from responsibility in connection with the fiascos of the past. But now we have a new arrangement, with the Ministry of Aviation associating with the Ministry of Technology. Let us remember how many Members there were during the debate on the TSR2 who spoke of the value of technological fall-out from the aircraft industry. I hope that as a result of this association the Ministry of Technology will atone for the shortcomings and failures of the past.

6.45 p.m.

Mr. Stephen Hastings (Mid-Bedfordshire)

The hon. Member for Coventry, North (Mr. Edelman) has, as usual, made a thoughtful and most important speech. I found thoroughly disturbing what he had to say about the variable geometry project and the F111. I only hope that the Government are seized of the dangers into which they are running. The hon. Gentleman has experience and a good deal of knowledge of this subject and he knows very well the deep dangers into which the industry is falling. He described them with great skill.

There are, however, one or two small bones which I wish to pick with the hon. Gentleman. He said that he welcomed the fact that the proposals presented to the House by the Minister today were received in silence and, therefore, were, perhaps, accepted by the Opposition. Let me assure him that as far as I am concerned that is not the case.

I agree with the hon. Gentleman in one remark which he made about the minority shareholding. It is true that a minority shareholding brings responsibility without power and makes no sense in business and will make no sense in this instance. The only thing that can be said about it is that perhaps it will be less disastrous than full nationalisation. But it will bring to the boards of these companies representatives of the Government machine. I am sure that this will inhibit their efficiency.

I welcomed, in particular, what the hon. Gentleman said about TSR2 and the F111. The words of the Prime Minister about the TSR2 which the hon. Gentleman quoted will make bitter reading to hon. Members on this side of the House. I hope that the Government will take note of the hon. Gentleman's speech.

In a notable after-dinner speech recently, Prince Philip is reported to have said that after all the cancellations which had taken place in the recent past it was poetic justice—no more than that—that the Ministry of Aviation should be cancelled in its turn. It may be poetic justice, but it does not make practical sense, and I shall try to show why.

The last two years have been a period of almost unrelieved bungling and disaster for British aerospace. The present Government are responsible and they should never be allowed to forget it. That is not to say that all the Ministers who have had anything to do with this have not done their best. I am sure that the present Minister of Aviation and the Parliamentary Secretary do their best. The man who should be here to face the blistering indictment of my right hon. Friend the Member for Mitcham (Mr. R. Carr) is the Home Secretary; he was the hatchet man. Nevertheless, the damage has now been done and it is probably beyond full repair.

The ghost of TSR2 will haunt this Government into their political grave, and, if I am am not much mistaken, the apparition will grow steadily more substantial as the difficulties about the F111 which the hon. Member for Coventry, North mentioned, continue, as I think from all the information we have received they are bound to do. I have said and indeed written my condemnation of what the Government have done to aerospace and I do not intend to carry recrimination any further today, but to try as best I can to be constructive. Some of the things which I have to say may seem unpalatable to the House, but I have given them a good deal of thought and I believe them to be true.

First, let there be no doubt about the importance of these activities. We debate this afternoon the leading technology in a technological age. The most important quotation from, as the hon. Member for Coventry, North called it, the "miserable" Plowden Report—and I do not think that that is an exaggeration—is in the paragraph on technology, paragraph 165: It seems probable that no other single industry would have such a pervasive effect on the technological progress of the nation. That is quite inconsistent with a good many of the Committee's conclusions, but it is an extremely important statement.

I have to suggest to the House that our debates on this subject over past years—and one should be consistent and not make an exception over this one—are largely a waste of time. Very few of us are technologists and those who are are so busy with other things that generally they are pretty out of date. We do not possess the requisite information to deal competently with these matters, so we pursue our constituency causes—at any rate, a number of us—or our pet theories, without serious instruction. I would not mind laying odds that if all of us had a meeting upstairs this afternoon on aircraft noise we would have double the number of hon. Members than if we were to hold a meeting on the economics of supersonic flight, for instance.

When they have been able to inquire into these matters, our Select Committees, although they have made a number of post facto recomendations of great importance, have not represented systems of control at all, but rather manifestations of retrospective amazement. Instead of being perpetually concerned with the question, "Where did all the money go?", we should be more actively and currently concerned with the success of these projects.

Some of us at least should be conversant with the main technological problems concerned in airframe design and engines and control systems. We should be able to understand how the great jigsaw is put together; we should be familiar with the critical path schedules, so that we would know where and why delays occurred. We should be concerned with value engineering techniques and with the saving of money during the production process. But all this is impossible for us unless we are properly provided with impartial and expert advice and not exclusively, or even mainly, by officials who, naturally enough, have their own Departmental axes to grind.

I understand why we cannot all do this; nor do I think that this Chamber is ideally suited to debates on these matters. The fact that we face each other is a constant encouragement to polemics in any case. It may be essential to great occasions, but it is just not suited to the objective appraisal of technical facts. We need access to papers and, above all, constant reference to technical advice. Therefore, we must have standing specialist committees, not in two years' time, not next year, but now, not as a tentative experiment restricted to the activities of the Ministry of Housing and Local Government, but concerned with the vital areas of aerospace and defence technology.

In the technological revolution there is just not time for party politics—and here I agree with the right hon. Member for East Stirlingshire (Mr. Woodburn)—on the scale practised here. To subject our major projects to this form of barren criticism and thus to risk delays is crazy today. Moreover, this fact is becoming more and more clear to people in the country, particularly people who are involved in industry or technology in any shape or form.

Let us suppose that we succeeded in arranging our affairs in the way I have tried to indicate and are in a position to conduct an inquiry into where the main weaknesses in the administrative system lie. I believe that the Ministry of Aviation is not the target at which we should be aiming. Certainly, it was imperfect. The separation of customer from maker on the military procurement side made for a good deal of trouble—and I dare say that Ministers would agree with that—but on the civil side the Ministry did much better and its achievement in that respect is very considerable.

It resurrected the VC 10 and sponsored the BAC111 and the Concord. It was responsible for the E.L.D.O. project and the rationalisation of the aircraft industry. Now that its swan song has come, it is only fair to recognise these achievements. It has been a great Department and although its life was short, it achieved a great deal in that time. Not least because it provided a forum where these complex activities were more or less co-ordinated and understood and, about all, defended.

The target should not be there. Who should be in the dock if not the Ministry of Aviation? I make no bones about it—the Treasury. I once heard the position of this country described as that of a retired burglar sitting on the swag. The analogy was not at all inept right up to the beginning of the last war, and, of course, it has been the business of the Treasury ever since its inception at the beginning of the nineteenth century or at the end of the eighteenth century to guard the swag, and a magnificent job it made of it.

But now the swag has gone. Yet the Treasury is still resolutely committed to guarding the I.O.U.s on behalf of Parliament which still conceives itself responsible for controlling public expenditure. Our first concern—we, in this House—should be to look back at how the swag was collected in the first place. I am not suggesting piracy, but I am suggesting that we can learn from the attitude of mind of those who built up our great national fortune and power.

The Treasury is not concerned with making money, but only with preventing it from being spent. The Ministry of Aviation was a vast spender—quite rightly—and that is why it was the enemy and that is why, at least to a great extent, it is now being destroyed. Let us not forget that the Treasury has opposed every single worth-while project since the creation of the Ministry of Aviation, including E.L.D.O. and the Concord. It has its representatives on every major committee concerned with these big projects, and they are not there as members of a board to ensure success, but to question and to object like a sort of financial Gestapo.

It is important at this point to consider what undoubtedly has been and still is the war in Whitehall in respect of these projects. Some hon. Members are sure to be familiar with the stages of the Gibb-Zuckerman procedure for aircraft procurement. They are, first, the idea or the staff target which passes to a definite operational requirement; then there is the feasibility study, and then the project study, at which point industry comes in for the first time; and then, where necessary, there is a holding contract, and, finally, a development contract.

The aim of all this, laid down in 1963, was: to provide a more formal definition of the stages of development". I am sure that nobody would quarrel with this aim, which was right in principle, but the result has been simply to provide a battlefield for the continuing war between the Treasury, and those who oppose, on the one hand, and those who have to defend these projects stage by stage, on the other.

The holding contract is the loophole, because whenever there is doubt and the Ministry of Aviation is fighting hard to keep a project going, there is a holding contract. Sometimes these holding contracts run for only a month, and at the end of that time the whole question, not of how the project is progressing, but the validity of the idea in the first place, is debated and argued about again. And so our great contracts limp from one wrangle to another and every time they come up for review, work is stopped and resources are left idle and costs rise, and then the Treasury objects and cancellation looms, almost with the precision of a Greek tragedy.

Mr. Tam Dalyell (West Lothian)

If the Treasury is a financial Gestapo, to use the hon. Gentleman's own words, how would he allocate resources? Does he think that that should be the business of the new Zuckerman Committee which has been set up?

Mr. Hastings

I shall come at the end of my remarks to some recommendations on these lines. At this stage, I am simply trying to argue that the Treasury is entirely negative and not constructive and not concerned with success. It has other weaknesses as well.

By all means we must have exhaustive consideration of the requirements in the first place and much more money should be spent, in my view, at the feasibility stage than is spent at the moment, but once the Cabinet has taken the decision to go ahead every moment counts. Everything should be concentrated on saving money in the production process. Of course, cancellations will occur from time to time because of the many unknown factors, but, in general, industry will always accept—any reasonable man would—being told that it was a good idea in the first place, but that because of a technological break-through, by either the enery or ourselves, it is no longer valid, and that is that.

What is unacceptable is to be told, "We thought we had enough money in the first place, but now we find that we do not have enough". This is enough to drive good men out of the aviation industry for ever, and that is exactly what it is doing.

At least, the Ministry of Aviation provided a solid defence in the war in Whitehall. Now, as far as I can see, if there is to be any defence at all, it will be considerably less effective—diluted, as the administration will be, in the Ministry of Technology. I regret to say that the motto of the Treasury might easily be "Divide and rule"—and there is little doubt that they will succeed. Any firm or business the fortunes of which fall into the hands of its accountants is in a bad way. The same could be true of the nation.

The misunderstanding and frustration which result have led to a state of helpless conflict between industry and the Government machine. A close involvement with the Government in some form is inevitable, and if we cannot get this straight we might as well surrender the technological race.

Let us admit that we are dealing with probably the most complicated area of administration which any Government has to deal with and there is no perfect answer. That applies anywhere in the world among our competitors, although in some important respects they do better than we do.

If this negative financial dominance by a Department which does not understand how to organise research, development and production has been the greatest single cause of our failures, there are others, too, and I will briefly describe three of them.

The first is the question of contracts, which the Minister mentioned, as did my right hon. Friend the Member for Mitcham. Whitehall attempts to contract on a basis of 7 per cent. to 8 per cent. profit on capital employed. But no sensible industrialist could possibly engage in this sort of risk—particularly in something as unpredictable as aerospace—and the officials know it. This results in a form of Byzantine bargaining in which both sides are seeking to contrive a result which they can conceal from each other. Miscalculation is frequent—as we have seen, Ferranti, for example—and on the other side we have the story of the Argosy and Hawker Siddeley and my own firm, Handley Page, over the Victor Contract.

We must admit here that the American system is more efficient and efficacious. It is based on an agreed fee between the prime contractor and the Government, and this takes account of overall profit. But in any case this is inadjustable, so that serious slippage means a loss to the firm concerned. This scheme is supplemented by a system of bonuses and penalties for fulfilment or non-fulfilment of detailed sections of the work, as the case may be.

Hon. Members should be aware that in this system some extremely large sums are involved. For example, it is worth considering the F111 programme. In that, the maximum bonus is 26 million dollars, with the maximum penalties total 9 million dollars. The sort of work parameters involve delivery on schedule of 20 pre-production aircraft, the attainment of the gross weight requirement, take-off performance, and so on. Some categories carry penalties while some simply carry rewards, but the effect is to maintain the profit incentive throughout the contract and to establish a clear sense of priorities. Above all, in the United States there is a mutual respect between industry and the Government a respect which is tragically absent here. We had better face up to this fact because, if we are to succeed, we must create conditions in which men of ordinary integrity can contract with one another.

The second cause of failure is project management. It is a sad manifestation of our condition—perhaps it is a psychological condition—that this term "leadership" is frequently frowned upon in industry. We speak of decision-takers and control experts. But no great enterprise can succeed without leadership. But if leadership in industry is camouflaged, in the Government machine it is smothered by committees. So there is no system of leadership for our great projects—yet no great project can succeed without it.

It is true that since the appointment of the Zuckerman system—and perhaps it was to that that the Minister was referring—the Ministry of Aviation decided to appoint project directors, although their control of general management is strictly limited. The reason, I believe, is that the specialists on those committees regard themselves as responsible first to their specialist directors and only second to the project director. Thus, there is no central figure, no drive, no risk-taker, just a sort of amorphous general influence.

The Americans put Admiral Raeburn in complete charge of the Polaris project—over each component process and everything else—and made him completely responsible. It can hardly be said that he failed. Project managers should be the best men we can find from either industry, the defence forces or the Government machine, and the rewards for success for those in charge of a project should be great, both in terms of fortune and honours.

The third weakness lies in our management of research and development. Broadly, the Government recognise three stages of research. First, there is pure, basic research, where there is no recognisable sphere of application. It is just a question of adding to man's knowledge, and this is properly the concern of the universities. The second is objective basic research; that stimulated by practical need. The third is applied research, or the problem of how to turn the knowlege gained to practical purposes.

Only then do we come to the development stage. In 1963—and these were given as average figures—£17 million was spent on basic research, of which only £2 million was on basic research for defence, "nearly all" in Government establishments, according to the Zuckermann Report, while about £45 million was spent on applied research for defence, "most of which", as the Zuckerman Report pointed out, was also spent in Government establishments. Of course, industry spends money too, but its facilities are nowhere near as great as those of the Government establishments mentioned by the right hon. Member for East Stirlingshre (Mr. Woodburn).

In any case, industry is restricted and limited by the fact that it does not know what the Government are after or what the operational requirements will necessarily be. Industry comes into the picture only at the development stage, and it is true to say that the major portion of the money spent at that stage is in extramural contracts to industry. This exclusion is rigorously maintained and support is refused for good ideas unless they relate to a specific operational requirement. But since industry does not know the operational requirement, it is lucky if it can get anywhere near the target.

Of course, the Government have a responsibility to guide research in the national interest. However, it is crazy to exclude those who will be responsible for and understand production processes, and it leads to costly delays. This happens for two main reasons: first, because the designs may turn out to be impractical and in need of modification; and, secondly, because they may turn out to be too complex to be undertaken by a firm which has had no previous experience of them or has not had a part in the research process. In this way, a number of expensive white elephants have been born—and a number of good ideas have been killed in the process.

The answer lies in the American "building brick" approach. A modern weapons system may be too complex to justify a prototype ab initio. Thus, one breaks down the project into its main component parts and advances funds for individual development. It is essential that funds are easy to obtain for new feasibility investigation but difficult to obtain for a study that is already in progress. The creation of the bricks is encouraged, but the assembly of the structure is discouraged before the bricks are proven. The Plowden Committee concluded that we could not afford to go over to the "building brick" approach. I believe that we cannot possibly afford not to.

These are some of the things that we must get right if we are to compete at the frontiers of knowledge. The shuffling of responsibility between Departments in Whitehall will cure nothing. It will simply increase frustration and incompetence and make it easier for the Treasury to do what is conceives to be its duty—and this duty is near the heart of our difficulties and disasters of the past. Nationalisation will cure nothing and the scheme announced by the right hon. Gentleman today will also cure nothing.

We must conclude that the failures have been failures of the Government machine and that instead of extending the tentacles of this administrative creature, we need to do the precise opposite. We need to move efficient technological management into direct executive government, and this leads, in conclusion, to one of two suggested solutions which I wish to put to the House.

Here I come to the point made by the hon. Member for West Lothian (Mr. Dalyell). I believe that there is a short-term and a long-term need for change. On the short-term, we should appoint to a few key positions of State—I know this is an extravagant hope—men from outside Parliament who combine the qualities of the technologist, the industrial leader and the successful businessman. Secondly, we should create all-party standing specialist committees comprising hon. Members with the background or capacity to know or to learn how to monitor massive research and development production programmes in aerospace. Thirdly, we should appoint an aerospace board with full power to frame requirements, supervise research and development, to place contracts and administer all allocated funds.

The chairman should be a technologist of Cabinet rank and the board should consist of a small and manageable number of men drawn from the industry that is airframes, engines and systems, from the defence forces, airline operators, the Treasury, commerce and communications. Their overall decisions should be subject only to Cabinet approval and their proceedings should be regularly exposed to examination by our standing committees.

The board would work ideally on a seven- or eight-year rolling programme. I see no reason why we should not have quinquennial defence reviews by inter-party standing committees. The present Ministry of Aviation, or its successor, should be reduced in size, and its officials made interchangeable with industry so far as practicable. Its tasks should be to provide a secretariat for the Board, to devise and negotiate incentive contracts, to find project managers, to check cost effectiveness and production control and value engineering techniques.

The interchange with other Departments should be kept to a minimum. One of the weaknesses of the Ministry in the past has been the frequency with which officials were swapped around. One cannot be expected to do a job like this efficiently if it is to last for two years only. That does not make sense. Lastly, these officials should be of the highest possible technical capacity and standard.

One long-term dream I have is that one day we may see in this country a great college of administration and technology with a stringent entrance examination and a system of selection lasting perhaps over years. It would be open to boys from every kind of school, something on the lines of the Ecole Polytechnique, in France, combining the arts with technology and a general experience of the world. The courses, undergraduate and graduate, would last for four or five years. It would make use of the universities, but would be independent of them, and would produce at last an annual output of perhaps 500 born and developed leaders equally at home in industry and Government service and, above all, speaking the same language.

With men like this in charge of our future many of our musty and barren arguments—I hope that the House will forgive me—would be seen for what they are and Parliament and Government could again take up the task of shaping our destiny instead of frustrating our present potential. Then we should live again as a nation. Aerospace must be the leader. I recall Lord Plowden's proposition: No other group of industries has such a pervasive effect on the technology of the nation. This is the modern equivalent of the Atlantic and North-West Passage; of the adventures of the fifteenth and sixteenth centuries. It is just possible that if we sink our differences we shall get things right in time, but the sands are fast running out.

Several Hon. Members rose—

Mr. Speaker

Order. I must remind the House that every long speech cuts out someone who has sat right through the debate trying to get in.

7.16 p.m.

Mr. John Rankin (Glasgow, Govan)

Evidently I come in at an unfortunate moment. I have to set a fashion—brevity—which has not been very fashionable up to now today. I shall do my best, but if I fail I hope that I shall have the sympathy, if not the understanding, of all those who are hoping to get into the debate after me.

I listened to the hon. Member for Mid-Bedfordshire (Mr. Hastings) with great interest. I, too, look forward to that college of which he spoke. I hope that we shall have one in Scotland. I should like to hear more reference to Scotland when we are talking about aviation. If any part of the United Kingdom has had a more miserable deal in aviation aircraft matters and technological matters than Scotland I should like to know where it is.

Of a force of 256,000 people whom we have been assured today are engaged in this great industry, 12,000 are working in Scotland. So, as I start my contribution with my usual reminder to the House which may fall on deaf ears, I hope that on this occasion a little more success may follow my opening words than has been my fortune in the past. Scotland deserves a better share of this industry.

It is to the everlasting credit of a Labour Government that it was the very first Government to take any steps whatever to move this industry, which, in 1945, was clustered round the Home Counties. By that I mean that it was in the counties immediately surrounding London. It was a Labour Minister at the Board of Trade who urged on the industry that it should get away from this over-populated and over-centralised part of the United Kingdom which we call London. That started a movement which finally came to a partial conclusion in the formation of a little industrial development on aircraft at Prestwick.

As you, Mr. Speaker, have suggested that I should not speak for too long, I do not want the hon. Member for Mid-Bedfordshire to leave the Chamber without my reminding him to be careful about technical experts. I listened to him telling the House all about experts and what they would do. He was praising them, as they are entitled to be praised, but when they come to the conclusions of their expertise the body which has to decide on the merits of what they have suggested is the Cabinet. Will the hon. Member tell the House that the Cabinet is full of experts?

Mr. R. J. Maxwell-Hyslop (Tiverton)

Oh, no.

Mr. Rankin

Does one need to be an expert to get into the Cabinet? Surely not.

There seemed to be a slight logical inconsistency in the hon. Member's conclusion in suggesting that all these valuable expert deductions and findings should go to a body which did not necessarily contain any experts. Of course, he will tell me that they would call in more experts to advise them as to the type of decision they must take. That is how the machine runs. We depend on the expert at all times. The hon. Gentleman said that today we were sitting on a nest from whence the swag had gone. I think he said "swag".

Mr. Hastings

Not today.

Mr. Rankin

It could not have been yesterday, because yesterday was Sunday.

Mr. Hastings

The swag existed up to the beginning of the last war. It exists no longer.

Mr. Rankin

There is no swag?

Mr. Hastings

There is no swag.

Mr. Rankin

He has come to the very thing I was going to say, without knowing it. The hon. Gentleman is an expert. It has landed at my feet. I shall show that there is swag.

I welcome the first part of my right hon. Friend's statement, to the effect that we are to do what Hawker Siddeley and B.A.C. have been hoping we would do. These great private institutions have been waiting on this decision. I know—I have been in touch, as have some of my colleagues—that they welcome the Government's decision. It was absurd that a nation of this size should have two great industrial institutions like Hawker Siddeley and B.A.C. continually competing for the same sort of orders. One organisation is sufficient for our purposes.

I regret the other part of the statement. I do not welcome the break-up of the Ministry. During my membership of the House, which extends to 21 years, we have had 13 Ministers of Aviation. Thirteen is an unlucky number. Some say that it is not unlucky, but events in this case may be taken to prove that it is unlucky. The average tenure of office is one and two-third years per Minister. What can any Minister do in that time? He is there just long enough to get kicked out. He can hardly get accustomed to his job. During the whole period of the first Labour Government all the aviation Ministers were in another place. If there is one thing that gives prestige and status to a Department it is having its Minister on the Floor of the House of Commons and not in the void of another place. Yet from 1945 to 1951 all those Ministers were in another place.

That does not mean that I look lightly upon a junior Minister. Some of them are my close friends. However, everyone who is not the Minister in charge knows that automatically he acts under limitations on the Floor of the House. Therefore, that arrangement was not a way of building up the Ministry of Aviation.

When the Tories came to power, they kicked the Ministry into the Ministry of Transport. They almost suppressed him. It used to be regular to see only three or four Questions to the Minister responsible for civil aviation. That is what those who have criticised us so much did when they came to power in 1951. They put the Ministry under transport, where, in the Parliamentary sense, he was more or less smothered by a great Department.

Then aviation emerged for a little and continued on its present path. Now the Labour Government administer the coup de grâce by kicking the Ministry entirely apart. Part goes to the Board of Trade. Part goes to the Ministry of Technology. Part goes to the Ministry of Defence. This is not good. It is very unfortunate that we should have taken this decision.

I said that I would show that the swag has not left us. There are people who are doing their best to get it from us. The hon. Member for Mid-Bedfordshire and others have referred to the brain drain to the far West—the external bleeding. None of them has so far referred to a greater danger—the internal bleeding which is going on in Britain today.

In February's debate I warned the House of this new snake that had come in amongst our grass—Comprehensive Designers Ltd., registered in Delaware, United States of America, working on behalf of the Lockheed Aircraft Corporation, registered in Georgia, United States of America. By and by, we shall have to be on the look out in case this ancient and honourable institution is registered some day in the State of Washington, because there are bits of swag in Britain that are still coveted.

What is happening in our midst? When I spoke about this organisation in February it had only just started. It had a small place at London Airport. Now it has a magnificent establishment at Southall. Three gentlemen on the board are Americans. The fourth gentleman on the board is a Member of this honourable House who sits on the benches opposite, but who is not present at the moment. At least, we have a contact. Maybe this is an example of British penetration. One of the four in this organisation speaks for us.

The organisation now has 700 skilled craftsmen. One hundred of these are Americans. The rest are all skilled British craftsmen. They earn £37 10s. for a 37½ hour week. That is a good wage. In addition, they get 5s. per hour overtime on their flat rate and can do 7½ hours overtime every week. So their wage is getting better and better. Three pounds ten shillings per week is paid into a fund to safeguard their future welfare.

An allowance of £3 15s. is paid by the firm for superannuation. If these people should have to leave the firm for any reason, they get 85 per cent. of that money back. If they live 40 miles or more from Southall they get an additional £10 a week. Is that not causing dissatisfaction amongst other British workers? Why should they not get equal conditions? Their wages are frozen, and this is a sad state of affairs.

Here we have these British people working in Southall, getting these wages which go up and up, while our trade unions are handicapped because they cannot ask for equal conditions and wages for other British people, first, because wages are frozen and also because the Americans will not recognise trade unionism. There is no such thing as trade union negotiation and agreement freely reached between workers and management. There is part of our swag. There is an example of the internal bleeding which is occurring in Britain today. I say to my Front Bench that it is surely time that British workers were able to compete freely with American workers.

I now leave the subject of the brain drain because of the pressure of time, and look briefly at one other matter. We are bound by the very nature of things to make changes in our civil aviation organisation. The independents have been mentioned, and I feel that they must come into the circle and be recognised as part of our civil aviation structure. However, this takes me back to my lament about having no separate Minister of Cabinet rank in charge of aviation. If I had a scheme to propose for the future development and evolution of the aircraft industry in Britain, it would postulate, first of all, that there should be a Minister of Cabinet rank in charge to maintain contact between the industry and Parliament. Under him there would be a Department which I would call the Department of Transportation and Procurement. Somebody might think of a better name than that, but mine would cover it.

That Department would have under its control, or acting under it, a company which I would call British Airways Holdings. This would provide the direction, policy and control, and it would be representative of the Government, workers and private capital—every major group in the country today—and it would be divided into compartments. The first compartment would cover internal aviation; the next would cover European aviation; the other compartment would take in overseas aviation, and the fourth—which could be expanded—would take in the independents.

The difference between British European Airways and British Overseas Airways Corporation is quite false. We all know that B.E.A. operates to Beirut and to Ankara. It is now operating in territories where before it was not expected to function. B.O.A.C. operates internally. So this old distinction has gone completely by the board. I therefore think that we should look for something which, in the long run, will be forced upon us, namely a different set-up which will recognise the facts of aviation today.

Under this organisation would come procurement of military and civil aircraft. Under my scheme the Air Transport Licensing Board would disappear, for it is an anachronism. One has only to look at some of the jobs which are thrust upon it to realise that they are almost unworkable. If the Board grants to an independent a licence to operate to Greece, it follows that the Greek Government will have something to say about what aircraft should operate between the two countries. Therefore, the Board has to await a decision by the Greek Government before its own decision can become effective.

I think that I have made the rudiments of the situation clear without needing to elaborate further. It has been borne in amongst those of us who take an active everyday part in aviation that the structure under which civil aircraft now operates is outworn and no longer fits into the times in which we live. This must be remedied. The plan that I have suggested is in keeping with the times, and it will work.

7.39 p.m.

Mr. Eric Lubbock (Orpington)

As you have asked us to be brief, Mr. Speaker, I shall confine my remarks to the two extremely important statements that we have heard this afternoon from the Prime Minister and from the Minister of Aviation.

I wish to say at the outset that it is not for the convenience of the House to have two such important statements immediately before the debate and for hon. Members not to have adequate time in which to consider them and obtain advice from the industry and various people whose lives and livelihoods will be affected by these two extremely important statements.

I would have preferred to see a White Paper dealing with these various changes published at least a week before the debate, so that we had the opportunity of giving them a thorough consideration and study. It is also obvious that neither statement would have been made without the debate. We should still have been waiting until the Opposition chose to discuss aviation on a Supply day, and we would still have been completely in the dark about what the right hon. Gentleman and the Prime Minister had in their minds about the future of the industry and, indeed, about the Ministry.

I do not think that the Minister refuted some of the charges made by the right hon. Member for Mitcham (Mr. R. Carr) and we had confirmation not only from his side of the House, but from the hon. Member for Coventry, North (Mr. Edelman) that the industry is in a highly vulnerable and dangerous condition. I took down his words, and I am afraid that we are compelled to agree with what he said. It is not a political question, and I hope that I can approach this subject with complete lack of bias and only from the point of view of what people in the industry are telling me.

I had a discussion the other day, as I expect other hon. Members have, with the newly formed group known as the Action Committee for European Aerospace, and it made a number of extremely interesting proposals. Among the things with which it dealt was the question of the Comprehensive Designers International, about which the hon. Member for Glasgow, Govan (Mr. Rankin) told us. It is true that this company now employs about 500 designers and 100 stress engineers which it has recruited from British industry. They are the cream of the aircraft industries in this country. I do not think that the Minister can maintain that everything is all that satisfactory when numbers of very highly qualified people are going into this organisation known as C.D.I.

It would be interesting to see from the figures the Minister gave us for the drop in employment in the industry over the last year how many of these people are the highly-qualified technicians whose training cost this country a great deal of money, and who are now engaged on designing the Lockheed C5A, which will be entirely American. None of its production will be in this country and therefore it will not benefit workers on the shop floor who will be looking for jobs within a few years when the fruits of the C.D.I.'s work are carried into effect by the Lockheed Company.

I wish to touch, in passing, on some of the things the hon. Member for Coventry, North said about the F111 decision, because we agreed with the cancellation of TSR2. We thought that it would be an extremely expensive aeroplane, primarily designed for an east of Suez rôle, and did not see any need to replace it with the F111. Now the chickens are coming home to roost with the F111's technical difficulties beginning to make themselves apparent in the hearings of the Senate Committee to which the hon. Gentleman referred. It will be a very expensive bargain for us, even if we get these aeroplanes for the contract price of £150 million.

Do hon. Members really think that the expense will stop there? To be able to use them in the Far East, it is necessary to construct expensive bases in the Indian Ocean. Why otherwise have we bought islands there for that purpose in co-operation with the Americans? We shall have to have airborne early-warning radar aircraft to protect them and expensive logistic supply aircraft, and we shall, perhaps, find ourselves buying more CI30s to take stores to the bases which we are constructing in the Indian Ocean.

It will not be £150 million that we spend on the F111s. If we take account of the organisation that goes with them, I guess that it would be at least £500 million. Hon. Gentlemen opposite who agree with us that the east of Suez policy is absolute folly and something we cannot afford should look into this and become well-informed, so that they can join in criticising this policy of the Government It has been only partially revealed to us so far, although I expect that more of it will come out in the next Defence Review.

I now turn to the statements we have heard on the aircraft industry's future. When the Minister spoke at the S.B.A.C. dinner on 7th September he said: We… have not yet decided the best arrangements for the future as we thought that it was important first to take decisions about the military programme announced in the Defence Review and about the future requirements of the Air Corporations. I agree that those are important decisions that should have been taken before a decision was made on the industry's future.

It is a matter of great regret to me that we still do not know what the future decisions of B.E.A. will be. We still do not know what some of the military procurement decisions of very great importance will be, and, therefore, the Minister has not kept to the prognostication he made that this review of the aircraft industry would not be made until the Government decided on the industry's work load.

I sincerely hope that it will not be long before firm decisions are made by British European Airways on whether to buy the Super VC10 or the Trident III. What is required above all in the industry—here I agree with the right hon. Member for Mitcham—is procurement decisions. It is necessary to give people some work to do if they are to be satisfied that the Government mean what they say when they claim to seek to maintain a strong and viable aircraft industry.

I think that the solution of a minority shareholding in Hawker Siddeley and B.A.C. can be justified only if the Government can prove that without it there would be no merger between the companies. I want much more satisfaction on that than I got from the Minister today. I am wholeheartedly in favour of Hawker Siddeley and B.A.C. merging, and I thought absolutely conclusive the reason given by the Plowden Committee that, having a small internal market in this country, we cannot maintain separate research and development establishments in two companies. In the United States there are vast organisations very much more powerful in finance and brain power, and the only way we can seek to compete with them is by organising on a much larger scale than hitherto, not only on an all-British scale but, I hope, ultimately on a European scale as well.

If the Government can prove to me that the merger is only to be promoted by taking a minority shareholding in Hawker Siddeley and B.A.C. I would be reluctantly prepared to accept it. I am disposed against the minority participation in Hawker Siddeley and B.A.C. not for doctrinaire reasons, but because of five factors which I wish to put before the House. First, there is no indication that this participation will further collaboration with Europe on which Plowden laid a great emphasis. Indeed, a case could be made out for saying that it will make collaboration with Europe more difficult than it would otherwise have been.

Secondly, we have been talking about the incubus of Government interference all the way through contracts with the aircraft industry, and there is no reason to think that that will be lessened in any way by taking a minority shareholding in the combined enterprise. If hon. Members doubt that, they should ask themselves whether there is any difference between the experience of Shorts, in which there is a. 69 per cent. Government holding, and the other sections of the airframe industry.

Thirdly, as Mr. Aubrey Jones said in his reservation to the Plowden Report, the Government purchase of even a minority part of the equity of the airframe companies would be in the nature of a rescue operation, and it would not necessarily be dictated by economic considerations. This may be the reason why the companies are prepared to accept it and why the Minister said that, without this Government investment, the merger would not take place. B.A.C. is short of capital and, in present circumstances, it would be difficult, if not impossible, for the company to raise capital on the market. Perhaps the Minister who is to wind up the debate will tell us a little more about that aspect of the matter.

Fourthly, I should be inclined to oppose minority participation for the reason mentioned by the right hon. Member for Mitcham, that it would tend to give the industry political protection. Even with a minority shareholding, there would always be an inclination to defend the aircraft industry against objective criticism for political reasons.

Fifthly, if one is trying to keep public spending under control, as we should in this period of economic stringency, Government investment in the aircraft industry will make it more difficult. It will take money away from other investment projects, for example, the N.R.D.G., which might need money in the near future and which would be more valuable economically to the nation.

Now, a word in passing on the idea mentioned by the right hon. Member for Mitcham and his hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings), of a national aviation authority. The right hon. Gentleman said that this would be in some way comparable with the Atomic Energy Authority, but I respectfully suggest that that is not a fair comparison. The Atomic Energy Authority is not only engaged in design work and in development, but it actually constructs large-scale prototypes and, in addition, it has a very big production facility for fuel elements and carries out reprocessing of both its own fuel elements and those of customers all over the world.

As I understand, the right hon. Gentleman's proposed national aviation authority, on the other hand, will not carry out any production itself. It will be very difficult to see where to draw the line between research work which it would undertake and the development and production which would continue to be carried out by the companies.

One more point on the industry itself before I come to the position of the Ministry. I ask the Government to bear in mind that, if rationalisation is to have the effect which we hope for and which the Plowden Committee stated, it must be in the form of concentration into fewer units and it must not be a purely financial exercise as was the last round of amalgamations after the 1957 White Paper when the right hon. Member for Streatham (Mr. Sandys) promoted a number of mergers in the industry. If this is to be only a paper merger not resulting in any economies on the research and development side and in the number of production establishments in the industry as a whole, it will be valueless and will not achieve the results to which Plowden drew attention.

Now, the future of the Ministry of Aviation. As the right hon. Member for Mitcham said, with perfect justification, this has been a story of indecision and procrastination. As long as a year ago, the Plowden Committee distinguished the six functions, which, it said, one ought to consider separately, and discussed very shortly how these might be transferred to other Ministries. The six functions were: procurement for the Services; the research and development programme for civil and military aircraft; the operation of research establishments such as the Royal Aircraft Establishment; the activity of sponsoring Departments for the industry in Whitehall; the oversight of the Air Corporations and independent airlines; the various responsibilities for civil aviation such as traffic rights, airfields and safety regulations.

Clearly, the last two belong to the Board of Trade. There was never any doubt about that. The second, third and fourth obviously belong to the Ministry of Technology. It was only on the question of the research and development programme that difficulties arose, as mentioned by the Prime Minister in his statement of 16th June. Bearing in mind the state of indecision which the industry felt had gripped the Government, a decision could have been taken on this matter in a much shorter time than a year, certainly very soon after the Prime Minister's statement of 16th June.

It is the delay in coming to a conclusion and in deciding where to put the research and development programme for civil and military aircraft which has caused a lot of people, with perfect justification, to accuse the Government of procrastination and indecision. For the Prime Minister to say that these changes will not be made until early in the new year is unsatisfactory in itself. Legislation will be needed, and this means that the changes cannot be put into effect until some time towards the end of February at the earliest, allowing time for a Bill to go through both Houses of Parliament. Being as fair as I can to the Government, I think that a period longer than a year should not have been allowed to elapse before coming to an effective decision on the matter.

It must be admitted on both sides of the House that, in spite of a few outstanding triumphs, things have not been going at all well for the aircraft industry. Now that it has been decided to transfer research and development entirely to the Ministry of Technology, I hope that this aspect can be considered by a new Select Committee—this has been mentioned by several hon. Members—established to oversee the whole field of science and technology, and I hope that this will be one of the first tasks which that new specialist Committee undertakes.

The longer I take an interest and take part in debates on aviation in the House, the more I come to the conclusion that we are not equipped on the Floor to deal with the complex questions in this complex subject as they deserve. We do so only intermittently and sporadically, as best we can, with a few hon. Members taking part—they are always the same ones—and we have not managed to create in the House that interest in aviation matters which the subject deserves and which it would receive in such a specialist Committee.

When we have our debates here, pieces of information are disgorged piecemeal, as they have been today, and with the greatest reluctance by the Government. This is no substitute for the continuous study of the complex problems of research, development and production in the aircraft industry, with the benefit of expert advice, which we can give only by means of a Select Committee.

7.58 p.m.

Mr. John Ellis (Bristol, North-West)

I should like to comment on the concluding remarks of the hon. Member for Orpington (Mr. Lubbock). It is true that insufficient interest in this enormous industry is exhibited in the House and the case is not sold well enough either here or outside, having regard to the size of the industry itself. We have 250,000 men employed in the industry, an industry which is twice as large as the aviation industry of France and even, taking into the comparison the total size of our economy and the amount of assets and resources we have locked up in the industry, bigger than the aviation industry of the United States. Ipso facto, therefore, we must have a genuine and continuing interest in aviation.

I have said that our aviation industry is twice as large as that of France. I hope that this will always be remembered when we are undertaking our complicated negotiations with the French. I believe that we may well have more to put into the pool than they have, and this should never be ignored.

I come now to the Minister's statement about the arrangements to be entered into with B.A.C. and Hawker Siddeley and the minority shareholding which the Government are prepared to take. I do not want to go over old ground, and so I merely associate myself with the remarks made by my hon. Friend the Member for Coventry, North (Mr. Edelman). I am sure that many of the men in the industry and the trade unions will be most unhappy with it. As my hon. Friend said, I think we shall get to the point where, because it is only a minor holding, we have no say over overall policy but yet have to accept a good deal of the responsibility.

As the debate so far has been reasonably free from political bias, I should like to say that I was very interested in some of the remarks made by the right hon. Member for Mitcham (Mr. R. Carr) and the hon. Member for Hendon, North (Sir Ian Orr-Ewing). Looking at the industry and the amount of money that needs to be involved in it, it is no good saying that private enterprise can do the job on its own. The Minister made a fair point to the Opposition when he said, "If you expect to have it all your own way and there are profits to be made, why is the money not coming forward for investment now for all the projects that we need?" It means that the industry demands, and the Government will ensure that it gets it, an enormous amount of money to keep it buoyant. For that reason, I believe that we on this side have a right to demand that we should have a very full share in saying how the industry is operated.

I was very interested in the suggestions from the Opposition about a national aviation authority. In questioning the hon. Member for Hendon, North, I asked where the authority would lie. I should like to know whether this is the official Opposition attitude. The hon. Gentleman said that we should except the authority from the day-to-day running of the industry but a large say in the main guidelines of policy, as is true of similar organisations, should lie with the Minister.

I do not wish to be sectarian about this, but this goes a long way for many of us on this side who have been saying that because such vast sums of public money are involved there should be nationalisation or some other arrangement which would permit real control over the money expended. If what was said was meant in this way, if the responsibility for the industry were through a national aviation authority responsible in the main for the overall guidance of this House, I am sure that many of my hon. Friends would find this very interesting, and I would commend it to the Minister as a possible way of reorganising the industry.

The Concord is due to fly in the spring of 1968, followed by a second one in the autumn of that year at Filton, Bristol, and it is expected to have its certificate of airworthiness by 1971 and to enter airline service by 1972. This really is a success story. I see that Lockheed, which, after all, is a competitor in this field, is now estimating that we shall sell 316 of these aircraft. This represents earnings of £3,160 million, and Britain's share is expected to be £1,580 million plus all the later money that we shall make on the sale of spares.

I put this carefully to the Minister because of the feeling in the industry that vital decisions that need to be taken about Government sanction to lay down the production lines and so forth need to be taken now. The point was made by the Opposition earlier that there was a need for quick decisions. The Minister said that it was a question not just of quick decisions, but of right decisions. We all agree that we need the right decisions, but the right decisions for this industry need to be taken very quickly. One can take the right decisions, but if one does not take them quickly enough, they may well turn out to be the wrong decisions. So, as far as Concord and the setting down of production lines are concerned, if it is a question of the Minister taking speedy action to let the industry know, I beg him to take that action.

I believe that there is a future for our aviation industry. With the hon. Member for Orpington, I think it a pity that we did not have the announcements that we had at the beginning of the debate earlier so that we had time to consider them in detail. There is one point about reorganisation that I would make, that many of us feel in connection with the aerospace industry that it is a pity to have so many departments concerned—the Post Office, Defence and even the Meteorological Office has a rocket for high altitude research. We should do better if it were all brought under one head.

Whatever arrangements we make for the future, I hope that the various Ministries will speak out and speak concisely and give quick decisions so that the future of our aviation may be made more secure than it is today.

8.7 p.m.

Mr. Neil Marten (Banbury)

I congratulate the hon. Member for Bristol, North-West (Mr. Ellis) on the brevity of his remarks. Until the hon. Member for Orpington (Mr. Lubbock) spoke, speeches were running at a rate of about 28 minutes each, and that was too long. I shall try to keep my speech short, but it will be not quite as short as the hon. Member's speech.

I could not agree with the right hon. Member for East Stirlingshire (Mr. Woodburn) when he advised us not to get too involved in party politics. I want to say a few words about space, and my accusation is that the Labour Government have not done enough about it. I shall put it as nicely as I can, but I am afraid that it is a political point that I have to make.

I would refer to one point that the right hon. Gentleman made, which interested me, about the dissemination of the technological fall-out to industry. This is something that any Government must go into at greater length. If one looks at an organisation such as E.S.R.O.—the European Space Research Organisation—one finds a vast amount of scientific knowledge coming from its experiments. This is available to industry in this country, but I am afraid that industry is not always aware that it is there and is not always interested in getting it. If it could be brought home to industry where that scientific knowledge is applicable, we should be doing a very great service indeed.

Turning to the Prime Minister's statement about the Ministry of Aviation, I am glad that the Government have finally overcome their lengthy indecision. I cannot help wondering whether it would not have been better to have left the Ministry of Aviation as it was and to have put technology into the Ministry of Aviation. At the end of the day, that is what we have really got, except for taking out the civil airlines. The Ministry of Aviation has always had a tremendous spirit. I think I am the last junior Minister on the Conservative side of the House who was in the Ministry of Aviation, and I have tremendous admiration for the staff, their spirit and their dedication, and as the Ministry fades out I should like to congratulate it on the work that it has done in the past.

I now turn to the question of space. It is very much a neglected subject and is hardly ever discussed. I have asked many times for a debate in this House but without success. That reflects the situation throughout the country. I do not believe that our people are interested in or understand what space is about. Perhaps that is partly our fault. We do not debate it or highlight it or explain clearly what benefits there are to the ordinary people, to the housewife and others, from a space programme, particularly a national space programme.

The Conservative Government—and this is my political point—recognised the importance of space and initiated a considerable programme which the present Government inherited. It is my contention that the Government have not done enough in space, that they have marked time and lost two valuable years. To support what I have just said, I will go back over the 13 years of Conservative rule, as they are called.

We were thinking about and planning for space in the early 1950s. In 1955 we placed the contract for Blue Streak, then for a military vehicle and now the first stage for the European Launcher Development Organisation. Also in 1955, we placed a contract for Black Knight, a rocket designed to put into orbit a payload of about 150 lb. purely for research. These two contracts were placed, as I have said, and the research and production went ahead. Then, in 1957, we began shooting Skylark research rockets for scientists to gather operational experience. A Skylark research rocket could go up to 100 miles carrying a payload of 250 lb.

In 1960, after Blue Streak had been cancelled as a military weapon, Mr. Peter Thorneycroft, temporarily out of this House, did an imaginative thing. Mr. Thorneycroft found that he had Blue Streak on his hands, and he took extremely good action for this country by creating E.L.D.O. He realised that this was the moment, if ever there was a moment, and perhaps the last chance, when European nations could get together and produce a European space launcher. Party politics apart, I believe that great credit is due to Mr. Thorneycroft for his vision and determination—and he certainly did have to have some determination at the time to see the thing through.

Although I am a member of the Estimates Committee dealing with the space programme and we have recently issued a report on E.L.D.O., I should point out that I was the only member of that Committee in step on the issue and that my colleagues were out of step—or vice versa—in that I disagreed with those who were critical of the formation of E.L.D.O. I think that they were being wise after the event, and had they been in charge, and been as wise then as they are now, E.L.D.O. would not have been created. A risk had to be taken and Mr. Peter Thorneycroft took it and got E.L.D.O. launched.

The Conservative Government were also responsible for launching E.S.R.O. for scientific research. In 1962, we took part in experiments with Ariel I, an American satellite with British participation in its machinery. In 1963, we authorised the construction of a British satellite, U.K.3, which was an entirely British experiment designed and to be built in Britain. It is to contain 2,000 transistors and some 8,000 other components. Perhaps we can be told when the Government expect U.K.3 to be in the air. In 1964, we took part in Ariel II, another Anglo-American experiment with a satellite. In 1964 also we authorised during the summer the go-ahead with the rocket Black Arrow, a development from Black Knight.

My contention is, therefore, that, by the General Election of 1964, the Conservative Government had laid a very good basis for a space programme with tracking stations and so on to follow all these satellites and also a very good organisation for rockets and satellites. The electorate were told that, if the Socialist Party got back, science would be harnessed to Socialism and, I think, the other way round as well—that Socialism would be harnessed to science.

All that has happened is that science has been shackled to Socialism, but what does Socialism mean in industrial terms these days? It means marking time, for industrial production is down to what it was two years ago in so many industries. Exactly the same thing is happening to the space programme. My criticism of the Government is that they have not gone ahead with what they inherited from the Tories. We left them a good space programme and they have done nothing more than continue with some of it. They have put forward no new projects for space. There is no successor to U.K.3; no authorisation has been announced yet for U.K.4. Black Arrow, a launching rocket, is still on a holding contract. There have been no substantial initiatives that I can recognise.

As a result Britain is falling far behind in space matters as compared with France. I do not blame the Minister, because my researches tell me that he would like more to be done, but I criticise the Government as a whole. They are not broad-minded enough in seeing the real benefits which will stem from space. When I asked the Prime Minister if we could have a national space programme, the answer was, The hon. Gentleman mentioned space, which is important and highly expensive, and there are others which may be less expensive but perhaps no less important."—OFFICIAL REPORT, 25th October, 1966; Vol. 734, c. 821.] I do not know whether or not that was a prepared answer but it was very depressing. It seems to show the attitude of mind that, "space is important but there are other things we can do more cheaply". That is a bad philosophy for a Government who should be harnessing Socialism to science.

Whenever I have mentioned space in this House, it has often been implied by hon. Members opposite—not those present, who are interested in the subject—that Britain cannot afford to participate in space. My reply—and one cannot say this at Question Time—is that we cannot afford not to take part in space.

Mr. Woodburn

Will the hon. Gentleman tell us the benefits which come from participation in space? I take it that he is referring to the technical know-how that this country may have?

Mr. Marten

That is so exactly. I was coming to that point. I was about to pose the question as to why we should get into the space programme and would give a few answers. The first reason is precisely what the right hon. Gentleman the Member for East Stirlingshire (Mr. Woodburn) has in mind—because we need the advanced technological fall-out filtering throughout our industry. This would be a tremendous stimulus. I believe that it would give us a very good commercial return. For example, in putting up a British satellite for television communications, we would get direct commercial benefit, an actual cash yield. If we have our own national space programme with rockets and satellites, when we come to renegotiate the COMSAT agreement in 1969 or 1970, we shall be regarded as a nation with experience of space, and perhaps as a result we shall get contracts for the work which will be given out for the permanent international trunk routes and telecommunications by satellites.

Then there will be the tremendous technical stimulation and the disciplines which industries involved in space have to develop. For example, the reliability of a sample 360 items of electronics in the year 1945 was, 90 hours, or less than four days. As a result of the disciplines of space, the reliability of those 360 items by 1970 will be 200,000 hours, which is about 20 years. As a result of space, electronic components have become extremely reliable and that work will be fed back to industry for use in industry, in the manufacture of things like motor cars, washing machines and so on. I think that that answers what the right hon. Member for East Stirlingshire was saying about feed-back.

There has been much talk today about Concord. I believe that we should have a navigational satellite up for Concord when the Concord starts flying around the world, for it will need that sort of help from space. Another direct advantage of a national space programme would be the education which would result, for space work is the seed bed of invention and a stimulus to learning. With such a programme, there would not be the brain drain of scientists going abroad, for tremendous research opportunities would be provided for our scientists.

I compare what we are doing with what is being done by France, a country of much the same size. In 1966, France spent £30 million on space, £20 million of which was on its own national programme and £10 million on the international programmes of E.L.D.O. and E.S.R.O. We spent £15.3 million, about half what France spent, and we divided it the other way—£1.3 million on our own national programme and £14 million on our international programmes.

I have been preaching the gospel of a national space programme at Question Time in the House for a very long time for the very reason that it would give us all the benefits which I have mentioned and many more. What should this national space programme be? It should be a whole programme complete with ground stations, launchers and satellites. First, we should develop Black Arrow, taking it off its holding contract and going straight ahead. Secondly, we might then mount Black Arrow on Blue Streak and perhaps get a totally British satellite into synchronous orbit from a combination of the two rockets. Then we should put up our own national satellite, perhaps for television or telecommunications purposes, or even for defence purposes.

We should then go ahead with a European regional satellite system to link with the international trunk routes of COMSAT. There is nothing against doing so and I hope that in this reshuffle of the Ministry the new Minister will grasp the nettle and push ahead, because our space programme is now in a state of utter disorganisation. We should then go for a European Space Authority to carry on all the work of space in Europe and we should have one Minister—it should have been the Minister of Aviation, but now it will have to be the Minister of Technology—responsible for every aspect of space work.

That is a brief outline of what I think our national space programme should be. I would have liked to have explained it in greater detail, but I have a feeling that other hon. Members wish to speak. I return to the political point—that the Government must get on with getting a space programme going. I am critical because under a Labour Government we have had two completely lost years in space. Some hon. Members opposite frequently ask how we would pay for it, but I end by saying that a nation becomes wealthier and not poorer by going into space.

8.25 p.m.

Mr. Ron Lewis (Carlisle)

I was happy to see, only a few days ago, that another E.L.D.O. test vehicle was launched in Australia, again confirming the success of the work in the United Kingdom and the thorough testing undertaken at Spadeadam, in Cumberland, before the rocket goes to Australia. Our scientists and technicians and all concerned with the development and manufacture of the first stage of the rocket are to be congratulated on their achievement. Before agreement was reached in July this year, I, with many other hon. Members, was very concerned about the effect on the staff of the rocket establishment at Spadeadam of the uncertainty surrounding the launcher programme.

The site of this establishment was chosen for its remoteness from population centres. Many millions of pounds of public money have been spent on building the establishment, which has justly earned a reputation for efficiency in carrying out its programme even in very adverse weather conditions. Nearly 1,000 people are employed there, many of them highly trained scientists and engineers, and they are, naturally, interested in their personal prospects and in the future of the industry in which they work.

The country cannot afford to misemploy people of this kind or keep them less fully employed. If they think that their work does not present a sufficient challenge, or has little to offer in future, they will, naturally, seek employment elsewhere. In the locality of Spadeadam alternative work of the right kind is virtually impossible to find. People are likely to be attracted from the district, and their replacement will not be easy, and the efficiency of the establishment will fall. Earlier this year the Minister, in his negotiations with our partners in the European Launcher Development Organisation, concluded a most satisfactory agreement.

As a result, the organisation was given a more realistic programme of work and, at the same time—this is vitally important—the rate of United Kingdom contributions was reduced so as to produce a saving of over £14 million for the next five years. The outcome of the conference in Paris in July allayed some of the anxieties, but I confess that it has not entirely dispelled them all. The new programme extends to 1970–71, but the pipeline for this work is very long and already we should be considering what new tasks should be given to E.L.D.O. in the 1970s.

Until these longer-term prospects are settled, the staff at Spadeadam and the other locations engaged on similar work are bound to have doubts about their future. There are possibilities that launchers will be required for scientific purposes in communications work and I hope that the Minister will press for the maximum possible use to be made of European facilities and ensure that the best possible use is made of the Spadeadam facilities and of the staff working there.

Many of the staff have come with their families to this remote part of Cumberland and established their homes there. The E.L.D.O. work has provided employment for local people in an area in which it is difficult to find alternative employment and it is often necessary to travel considerable distances to do so. It would be a great loss to the district and to the country if the level of employment at Spadeadam was not maintained. May I suggest to the Minister that he should make facilities available for Members on both sides of the House to pay visits to Spadeadam from time to time to see the work being undertaken there?

For a number of years the Carlisle City Council, in conjunction with a small, but a good, private enterprise firm, has pioneered, and is developing an airport at Crosby, which is just outside the city. The airport committee has done a great job, but so far it has not been successful in attracting regular airlines to Carlisle. Here I hope that the hon. Member for Gillingham (Mr. Burden) will take notice. There is a great potential in this part of the North-West and the Border area. The Northern Economic Development Council is doing all that it can to assist, and I understand that a number of other local authorities are joining, or are likely to join. I hope that the Minister will use his influence with the airlines in order to tap this potential.

8.34 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

It is inevitable that many of the speakers in this debate have had to speak with their feet firmly in the air. This has been due to the fact that one Ministerial pronouncement was made very shortly before the debate, and the other during the debate, so that it has not been possible for other speakers, including myself, to give due weight to what has been said. Many speakers have tried to probe that most intractable of aerospace problems which is best expressed in the American phrase, "If it flies it is obsolete."

I will not delve into these rarefied atmospheres, but will mention two current problems in the aviation industry which are of very great concern to the civil airlines. I begin by quoting from the foreword in the annual report for 1965–66 of the British Independent Air Transport Association. The chairman says: It would be facile to conclude that all is well in British air transport. This is not the case. Our best years are most notable for their lost opportunities. He goes on to say that Currently… we are concerned about inertia and confusion in the control of inclusive tour tariffs, the restrictiveness towards international scheduled traffic rights for independents which must be the delight of foreign airlines, proposals for operational legislation which are based on unsound principles and—in contrast—the absence of operational standards for smaller air taxi aircraft… These are some of the things which are worrying the independent airlines. The two points which I would particularly like to make are these. For some time there have been Questions asked in the House—and I myself have raised many of them—about a disquieting history of waiving of import duty on the importation of Boeing 707–320C aeroplanes. The facts of this story are quite simple. There have so far been five applications to import these aeroplanes duty free. Two of them have come for B.O.A.C. and three of them have come from independent airlines.

The two applications from B.O.A.C. for duty to be waived have been allowed and the three from the independent airlines have been disallowed. There is a third application from B.O.A.C. now pending and I have been unable to discover hitherto whether it has been allowed or disallowed. I would, therefore, be most grateful if the President of the Board of Trade could give me that information when winding up the debate later tonight.

The reason for this clear discrimination of treatment between the nationalised corporation and the unnationalised private airline has been variously given from time to time. It was at first stated that B.O.A.C. would not have been able to buy in this country a similar aeroplane to the one it wanted to import in time for it to be in service when they wanted it. It was later established that it wanted the Boeing for April, 1966, and a comparable VC10 would have been available in June, 1966. The Board of Trade shifted its ground and said that the Boeings which B.O.A.C. were importing were wanted for all-cargo purposes, whereas the Boeings wanted by the independents were wanted for passenger-cum-freight services which were slightly different.

This explanation does not hold water because the Boeings imported by B.O.A.C. have been specially fitted at an extra cost of nearly one million dollars with various facilities which will enable them to carry passengers as well as freight. They have windows. They have rails for passenger seats. They have passenger toilet facilities, and they have galleys for passengers.

The Minister of Aviation, on 12th August, this year, wrote to the Secretary of the British Eagle Panel at Heathrow, which had been complaining bitterly about this discrimination and said: It is only on the specific understanding that the Corporation would not use the aircraft in any other role than for freight that it was agreed that duty should be waived. Therefore, the question which I ask, and to which I should be most grateful for an answer this evening are these: if the B.O.A.C. Boeings are for freight purposes only, why did B.O.A.C. spend nearly one million dollars extra on configuration which makes aircraft easily adaptable for passenger use? How does the Board of Trade check on the way in which the aircraft is used? How does the Board of Trade know when, on a flight between Hong Kong and Bangkok, these Boeings will not be used for passenger traffic? Is duty to be waived on the third B.O.A.C. Boeing? What reason was there for this clear discrimination of treatment between a nationalised airline and the private enterprise airlines?

Mr. Mulley

The other two were before my time. I had asked specifically to see the application form to satisfy myself that the clear purpose of the purchase was for cargo only and the waiver of duty was made on that basis. I think that it is absolutely disgraceful of the hon. Gentleman to suggest that B.O.A.C., in other parts of the world, is quietly using these planes for passengers. I hope that, on reflection, the hon. Gentleman will withdraw his remarks, and that if he has evidence of their being used for passengers he will draw my attention to it.

Mr. Fortescue

I will willingly withdraw if I can be told why they paid this extra 1 million dollars to have the Boeings converted for passenger transport purposes.

Mr. Mulley

The hon. Gentleman will understand that it is the business of B.O.A.C. to buy its aircraft cheaply, and that it was cheaper in the configuration than it was in the alternative configuration.

Mr. Fortescue

If I can have clear evidence of that, I will willingly withdraw. I have not had the privilege of seeing any letter to that effect.

The second matter I wish to discuss concerns domestic airlines. I should like to say that I am not one of those who go about the world knocking B.E.A. There are people who delight in knocking the national airlines in the Press, but I am not one of them. At one time I was commuting weekly between Geneva and London in the two airlines available, and it was not B.E.A. that always sent my luggage to Zurich instead of to Geneva.

The published accounts of B.E.A. over the last five years—and I will not go back further because the sorry story is the same—show that in those five years B.E.A. incurred a total loss of £9,600,000 on its domestic services. Year after year the same sorry tale of gloom is repeated: All groups of domestic services operated at a loss. Before I go any further on this point, I should like to kill before it starts running the hare that these losses are due to the Highlands and Islands services, or the social services as they are usually known. I was surprised, in conversation with a very senior official at the Ministry of Aviation at a luncheon the other day, to find that he gave this as the reason for the domestic losses. The facts are that during the five years I have mentioned the Highlands and Islands services made a loss of £1,425,000 out of a total loss of £9,600,000 so that there was a loss of £8,100,000 on the other services which should have been run at a profit.

This inefficiency is all the more remarkable because B.E.A. has a monopoly of some of the most profitable services we have. On the London-Manchester and London-Birmingham services it has a complete monopoly, and on the overwhelming majority of services it has preferential treatment — London-Belfast, London-Edinburgh, London-Glasgow, London-Jersey. On the more important routes B.E.A. is there in a very favourable position.

The Air Transport Licensing Board, however, sees no reason why these losses should not be continued and speaks of the obligation to provide domestic services which B.E.A. recognises. In paragraph 91 of its Report it states: Deficits incurred by B.E.A. on domestic services have been met in the past out of surpluses earned on international services. We see no reason why this situation should not continue. I believe that there is every reason why they should not continue—

Mr. Dalyell

Is not the hon. Gentleman using as a basis of argument some obviously informal remarks made to him over lunch by a civil servant?

Mr. Fortescue

I was using that as an illustration of how well-informed people always say, "Oh, no, these are not real losses at all. The losses are made on the social services which B.E.A. is required by the Government to run." I was putting an end to that story before an hon. Member opposite used it to accuse me of inaccuracy.

I say that these losses should not be continued, first, because they ensure that the domestic services of B.E.A. continue to have what might be called a poor relation status in comparison with its international services. When did we last see a modern or new aeroplane on the B.E.A. domestic services? I have here three time-tables, one being the B.E.A. domestic time-table, and the other two being the time-tables of the leading independents, British Eagle and British United Airways.

From these it will be seen that there is only one jet, a Comet, which B.E.A. has been forced to run to Glasgow because of the action of the independents, but the independent time-tables show the independent airlines to be flying BAC111s. The independent aeroplanes on the Liverpool to London route are infinitely superior to those flown by B.E.A. on the London to Manchester route, in both of which the magnificent new train services of British Rail are now in force—

Mr. Hugh Jenkins (Putney)

Will not the hon. Gentleman agree that it is partly the consideration that B.E.A. has given to the man on the ground which has prevented it from flying jet aeroplanes internally as the independents have done, and that the independents have set the pattern of internal jet flight, which is bad for the man on the ground?

Mr. Fortescue

I disagree. The responsibility of B.E.A. is towards its passengers in the first instance.

On the routes between London and Manchester and London and Liverpool, since the new trains have been introduced which do the journey in two hours, 40 minutes, BAC111s are being run by British Eagle between London and Liverpool. The other day I took off from Liverpool at 6 o'clock and was in my house in London at 7.15. On the other hand, B.E.A. has said that it cannot compete with the railways on the run to Manchester and has taken its Vanguards, which are not very modern or very adequate aeroplanes, off the route and have put Viscounts back on it. Its service is now often slower than going by train.

The independents are leading B.E.A. by a long way. They are no longer poor sisters or little organisations which have to be protected. They are perfectly capable of competing on their own terms or with anything that B.E.A. can do on the domestic routes. There are good arguments, with which not all of my hon. Friends will agree, for a nationalised one-flag carrier on international air routes. There are no arguments for the operation of nationalised airlines on domestic routes. The domestic routes should be left to the independent airlines, which are showing that they are far more capable of providing a good service on those routes than B.E.A.

In its latest annual report, B.E.A. says: We shall continue to compete with the independent airlines on domestic routes as we have been doing fully and effectively with foreign carriers on international routes for the past 20 years This is a travesty of the facts. B.E.A. does not compete "fully and effectively" on domestic routes. It loses nearly £2 million of the taxpayers' money every year in running those routes and provides the passengers with a vastly inferior service to that given by the independents.

The Government are hard pressed to find the money for B.E.A. to re-equip itself and to have flying in 1969, which is the earliest date by which it can have them, jet aircraft of the type being flown by the independents on domestic routes today. I should like to make what I believe to be a constructive suggestion. In the interests of the Government, who are trying to cut public spending, in the interests of the taxpayer, who has to provide the money; and in the interests of B.E.A., which cannot enjoy making a loss of £2 million every year, let the President of the Board of Trade decide now that B.E.A.'s licences to operate on domestic services be gradually relinquished to those independent airlines which apply for them, subject to their satisfying all the requirements of the Air Transport Licensing Board and taking over the Highlands and Islands services.

I assure the right hon. Gentleman that there would be no shortage of applicants. Then B.E.A. would be able to concentrate on its international services where it has been so successful. It would need fewer aircraft and less money for them, it would have more profit, and domestic air travel in this country would at last advance fully into the jet age.

8.47 p.m.

Mr. Donald Dewar (Aberdeen, South)

The hon. Member for Orpington (Mr. Lubbock) said rather plaintively that the faces which one saw during aviation debates were becoming a little too familiar. I think that for a variety of reasons, only one of which is my recent arrival in the House, I do not conform to those types who normally speak on these occasions. All too often in aviation debates one hears people who are aviation experts, or who certainly aspire to be aviation experts, or people with strong constituency or professional interests. I do not mean that in a disrespectful sense. We welcome people who can add a little expertise to our debates.

I find myself on my feet because of a recent session of the Public Accounts Committee which brought me face to face, as it were, with some of the realities of aircraft budgeting and some of the harsh facts which face anyone who considers the future of any given aircraft project. I speak very much in a lay capacity in order to ask a few questions and possibly to make a few suggestions about how anyone might be expected to react when he has to look at some of the detailed figures.

In the debate on the Plowden Report on 1st February, 1966, my right hon. Friend the Minister made perfectly clear, in a succinct way, the Government's aviation policy. He said: I make it clear now beyond doubt that the Government fully accept the case for this country having a substantial aircraft industry… Few of us on either side of the House would disagree with that, although we might in all fairness, when we come to define "substantial", believe that there could be room for variations, to say the least. We are all agreed that a viable aircraft industry is desirable. My right hon. Friend went on to give an idea of some of the ways in which we might develop it, and that was basically uncon-troversial. In column 894 he mentioned collaboration, meaning in this case collaboration with Europe. He said, Collaboration with Europe has been established policy for some years and we must continue to give priority to it. He went on to make one or two provisos, which seemed to me very wise provisos, as reported in column 895. He said, We must aim to collaborate with European partners on all military and all major civil types which have good economic prospects as European projects. More specifically, he said, We must look at each project on its merits. The important thing is that we and our partners should adopt strict economic criteria in deciding which projects to work on."—OFFICIAL REPORT, 1st February, 1966; Vol. 723, c. 892–5.] All that is very fine, and when it is said like that everyone will agree with it. But what is alarming is when we look at some of the projects on the go at the moment and see how they measure up to the criteria which the Minister put forward on that occasion. The one obvious example, which has got the most publicity, is the Concord project.

It is very easy when there is a collection of people who are enthusiasts for an aviation industry, who are engaged in some way in the aviation industry, to accept a principle and a concept of an aircraft and to sweep over the difficulties, especially in a generalised debate like this. I do not want to rehearse the long and rather sad tale of the Concord statistics and costs, but many hon. Members will recall that when my right hon. Friend was speaking on 1st February, 1966, we were thinking, if we were thinking at all, of a Concord estimate of £275 million, which was the price put forward in May, 1964. It was a dramatic enough escalation from the £150 million originally presented to the House, but I suppose that it was still within the bounds of reason. I do not think that any of us expected, certainly no one in my then position as an ordinary lay member of the public, or as an ordinary Member of the House with no expertise in the aircraft industry, that in the very near future my right hon. Friend would be releasing to the country the news that the costs had escalated to about £500 million, and that no one had any idea where they would stop thereafter. I know that this is perhaps a detailed point, but I should like a little more explanation about where this rise to £500 million will stop and how it is made up.

At the very time that my right hon. Friend was releasing that figure to the House, the officials of the British Aircraft Corporation were giving roughly similar, but in some cases interestingly different, figures in their publicity hand-outs. They were saying not £500 million but £398 million, and they were including a post-certification cost of £63 million and contingency costs of £15 million which, to be fair, compared with the £500 million, including post-certification costs of £80 million and contingency costs of £50 million. Nevertheless, even if we make the simple balancing adjustment, we have a significant variation in costs between those produced by my right hon. Friend and those produced by B.A.C. in its publicity hand-outs and its meetings.

We want some kind of reassurance on costs. We want post-certification expenses to some degree to be defined. This is extremely important because, as most hon. Members know, the famous—or should I say notorious?—document or agreement which was drawn up way back in 1962, and signed on 29th November of that year, must be one of the briefest and simplest contracts covering this kind of money the world has ever seen. It runs to rather less than two small pages, and the only thing it says about termination or time scales for continuing liability is Article 7, which runs to 13 words: The present agreement shall enter into force on the date of its signature. Nothing, nothing whatever, is said about what will terminate it or how anyone can break it. This is the A.B.C. of the situation. This is why when people were worried about the Concord—and there were a large number of them—it is said again and again, "We cannot do anything about it because there is no escape clause, and if we try to break it we shall be taken to the cleaners"—if I may use a colloquialism—"at the International Court by the French. We are caught."

The simple point I wish to put over tonight is that if those who are experts and who are, therefore, interested in the future of the aviation industry want the continuing support of people like me, they must give some assurances that never again, in the interests of international collaboration—in particular, European collaboration—or for any other purpose will we be put in the invidious position of having an open ended commitment extending into the 'seventies with the Concord project possibly developing into something unrecognisable. Indeed, it is already unrecognisable compared with the project envisaged in 1962. Never again must we be allowed to foot the bill for a self-perpetuating aviation experiment or invention of this magnitude. I am not arguing against the Concord as such, but against the kind of machinery under which it has been allowed to mushroom almost, I suspect completely, out of control.

This brings me to various points about the Concord and, in mentioning them, we are led back to the same type of point, although it may not be quite so fundamental. I remind the right hon. Member for Mitcham (Mr. R. Carr) that when he was talking about European collaboration and about both sides needing to have their own rights, he was, in fact, speaking of an extremely important principle. It is that the examples of European collaboration which we have seen in the past and to which, to be fair, his party was deeply involved, did not give us any rights in any normal commercial sense. I should have thought that hon. Gentlemen opposite would have been particularly keen on having such rights.

Many questions must be answered about how Britain could have signed such a contract. One is bound to wonder about this when one reads the Third Report of the Committee of Public Accounts for the Session 1964–65. On that occasion the Permanent Secretary to the Ministry of Aviation said that the Concord was a project at a very early stage, a stage at which the Government would not normally be prepared to commit themselves. He went on to argue that if one was to have international collaboration—particularly collaboration with Europe—one could not afford to draw up the designs before signing because, until one signed, no one would be prepared to collaborate on the necessary designs.

As a result, we signed an agreement for an aeroplane which was not even at the advanced drawingboard stage, which had no reality and which would turn out, in the succinct words of the Chairman of the Committee of Public Accounts, the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), to be "a plane that could fly non-stop to a point somewhere 500 miles from New York". And then, bang—which presumably meant it would be unpopular with people meant to travel in it. The whole question of the future profitability of this enterprise is vital. The Second Report of the Committee of Public Accounts for the Session 1966–67 contained this now notorious passage: It was considered that on an admittedly optimistic forecast of the number of Concord aircraft likely to be sold, the levy which production aircraft could bear would, on the basis of present estimates, recover no more than approximately one third of the research and development costs. Although some hon. Members, notably certain hon. Gentlemen opposite, say today that the Concord has a brilliant future—and, as far as I know, the people most confident about that are those involved in the project, including people from the American industry; a high official of the Lockheed Company has been quoted as saying that we might sell 316 Concords, a suspiciously exact estimate—they should remember that there is a lot of evidence to make one doubt the whole future profitability of this enterprise.

Let us not forget the opinion of the Committee of Public Accounts. It is unfortunate that its doubtless adequate evidence has not yet been published to substantiate its statement that, on the most optimistic estimate, we will get back about one-third of the project's cost. We are, therefore, paying an enormous amount of money for the so-called fallout of knowledge and technological advance that will come from it.

On 6th July, in a Written Answer, my right hon. Friend the Minister of Aviation said that already 16 options had been taken out, for B.O.A.C. and Air France, and that there were about another 36 options. How definite are these options? There is a whole mass of evidence—and one does not have to go further than the same Report of the Committee of Public Accounts from which I quoted—to show that options are only a matter of course and do not in any way represent firm orders. The Observer suggested, although the Minister has been coy about the figure, that the options are worth only about £50,000 each and represent only a routine precaution. Thus, in terms of profitability, many questions remain unanswered.

There are questions in terms of American competition which is slow in coming forward, possibly for the very reason that the Americans themselves have doubts as to the whole future of this type of supersonic aircraft while the Americans are spending enormous amounts on projects for a supersonic airbus. Pan-American have spent £190 million on orders for these recently.

I cannot take more of the time of the House, but I make the point that if we look at the whole development of the Concord project and look at its profitability possibilities we shall realise that we are paying far higher prices than we have been led to believe. We are not prepared to go on doing that unless we have an assurance that we shall not have the same situation arising in future.

It seems disappointing, in view of these facts, when one looks at the Treasury Minute to the First and Second Reports of the Public Accounts Committee, which have set out these points, and finds that the Treasury and Ministry of Aviation appreciate the importance which attaches to a review of the cost-sharing arrangements for Concord but consider it premature to proceed to this review without further experience of the arrangements in operation. I am glad to know that they appreciate the importance of this. They have been using these phrases for a number of years now and the costs have gone from £150 million to £500 million. If, after that, it is still not time to put a review into operation, it is time that we who have not a stake in the aviation industry should be told how bitter and expensive the experience necessary must be.

All of us would like to have a viable aviation industry. All of us are attracted to the idea of future collaboration with France, but let us not suggest that when we raise questions that apart from there being no escape clause, it would not be right to challenge the Concord project because we are interested in Europe in the general sense and in E.E.C. and so on. Many of us, including myself, are very susceptible to that kind of argument because we are in favour of Europe and the E.E.C., but, if we are going into collaboration with Europe in terms of the aircraft industry, it must be a two-way process over an industry standing on its own feet. We must not make all the sacrifices.

It is alarming to see how some of the French have tried to backslide on the Jaguar trainer jet even though they were finally called to order. They have shown reluctance to go ahead with the variable geometry plane which is so important to us and which it had been suggested was so important to them. Go on with this collaboration by all means, but do not sign this kind of agreement again and use the sort of inverted argument that says, "It is no use trying to plan unless you commit yourself because unless we commit ourselves no one will collaborate". Do not, for goodness sake, go on saying that we must collaborate with France whatever the cost and that it must be accepted for political reasons, because if so the enthusiasm of people like myself will be choked off and we shall not be persuaded, however viable and attractive an aircraft may be, that the price is not too high.

9.4 p.m.

Mr. Stanley R. McMaster (Belfast, East)

We have heard a very impassioned speech from the hon. Member for Aberdeen, South (Mr. Dewar), perhaps one of the best today, but I cannot agree with the implication of all that he said. He pointed out, quite rightly, that where contracts are placed early one cannot forecast the cost, but the alternative to this country is to contract out of the industry. Here we have an industry which is right on the frontier of knowledge, the technical fall-out of which benefits all other industries in the British Isles. It is an industry which, by producing new methods of miniaturisation, brings great prestige to the United Kingdom as a whole, helps to sell motor cars, radios and all technical projects abroad.

The hon. Member for Aberdeen, South mentioned the cost. Was he correct in mentioning the cost in the way he did? Did he take into account the fact that this country will need military and civil aircraft? If we do not build them, we shall have to buy them from the United States. If we build them, more than half the price we pay goes straight back to the Treasury in the form of taxation. The company is taxed on the profit it makes. The dividends are taxed before they get to the shareholders. More than 50 per cent. of the profits come back. More than 50 per cent. of the cost comes back to the Government. Aircraft built in Britain cost Britain less pound for pound than aircraft purchased from abroad.

I want very briefly, because I have promised to sit down at ten past nine, to mention my constituency interest. The Ministry of Aviation is almost a 70 per cent. shareholder in Short Bros. and Harland. I hope that the President of the Board of Trade will state, because it has not so far been stated, what will happen to this 70 per cent. interest when the Ministry is wound up. I believe that the Minister personally is responsible for this. I should like to know where these shares are going.

The Government have a duty to protect this investment in Northern Ireland. Eight thousand men in my constituency are employed in this industry. Other work cannot be found for these men if they are displaced from Short Bros. and Harland. The Minister said—we are all very relieved—that the number unemployed this year is to be kept down to under 500, but he made no promises in respect of next year. There is great concern among the 8,000 men employed in Short Bros. and Harland and among their wives and families and all the traders who are dependent upon them. No long-term future in Northern Ireland is guaranteed for this firm.

I should like the Minister to consider very carefully what he says about this and consider the comments and promises made by his predecessors and by the right hon. Member for Belper (Mr. George Brown) who, as First Secretary of State, gave certain assurances to Short Bros. and Harland. Are those assurances about the viability of the firm to be maintained? The Minister said when opening the debate that Rolls-Royce is coming to Northern Ireland and will provide employment for 2,000. We welcome this. I remind the Minister that all the efforts over the past year to find other diversification to employ these men have failed.

In the present economic situation unemployment is rising rapidly in Northern Ireland, more rapidly than it has risen at any time since the war. Every week an extra 1,000 are added to the unemployment list. This is happening in a small country with a total unemployment figure at the moment of over 6½ per cent., far higher than that existing anywhere else in the United Kingdom.

Northern Ireland has skills, skills which have been amply shown by this old firm of Short Bros. and Harland, skills which are selling our Seacat missile—one of the best missiles ever produced—all over the world. This firm has produced some of the best aircraft in the world, including the first vertical takeoff and the variable sweep; also the Belfast, the largest freighter. This is a company which can build this type of aircraft.

Why should not these skills be used? Why should not some of the men employed in the aircraft industry in South-East England be used in other export industries? If these men now at Short Bros. and Harland are not employed in the industry, they will go abroad. Most of the men who have left this factory recently have emigrated to the United States. This is a brain drain which is very serious. These are men we have brought up and reared here and in whose training we have invested a large amount of money.

Sir Knox Cunningham (Antrim, South)

Does my hon. Friend recall the pledge given by the Conservative Minister of Aviation that the employment level will be maintained at Short Bros. and Harland until 1970? Will my hon. Friend press the present Minister to do something about it?

Mr. McMaster

Yes. In the few moments remaining to me I will press as strongly as I can, because of the undertakings which have been given. I ask the President of the Board of Trade to tell us what the long-term future is. We are grateful for the present sub-contract work which is being given, but we want some long-term design and production work. We do not want Short Bros. and Harland and the rest of the British aircraft industry to become a mere American garage.

9.10 p.m.

Mr. Cranley Onslow (Woking)

On my first appearance at the Dispatch Box I feel that I should commiserate with the Minister of Aviation on what is presumably his last appearance at the Dispatch Box, at least in his present capacity. I also thank him for his courtesy in listening to so much of this debate.

This has been a wide-ranging debate and a great variety of subjects have been raised. It prompts me to reflect that in some ways it is unfortunate that we shall in future find ourselves much less readily able to have similar debates when the functions of the Ministry of Aviation have been split up. One advantage of the Ministry of Aviation, in purely Parliamentary terms—both sides of the House may agree upon this—is that it has helped to focus attention and attack.

I should like to deal with some of the points which have been made in the debate and to take, first, those which will in future presumably come under the responsibility of the President of the Board of Trade. We have not—and this surprises me slightly—heard a great deal this afternoon on the subject of aircraft noise, although my hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) was right in saying that if one held a meeting upstairs or in Chelsea one might find more people interested in this subject than in the economics of supersonic flight.

Aircraft noise is, for many people, a highly emotive subject. We all know that there is vocal body of opinion whose prime interest appears to be to persuade the authorities to transfer the noise of aircraft to the remotest possible place, regardless of the consequences upon the operational viability of the airlines serving Britain's needs. Where there are such bodies the slogans appear to be, "Complain, complain, complain". Therefore, they must not find it surprising if we regard them as being less than constructive. There are other anti-noise campaigners—

Mr. Hugh Jenkins rose—

Mr. Onslow

The hon. Gentleman must allow me to deploy my argument. I shall be dealing with him in a moment.

There are other anti-noise campaigners who seek to impose unrealistic limits on aircraft performance and operation, which in the present state of technology are inconsistent with economy, or, even more important, with safety. These pressures have found their embodiment in a Bill which, it appears, the hon. Member for Putney (Mr. Hugh Jenkins) is shortly to seek leave to bring before us.

I must say that I see the main proposals of this Bill as being at present impracticable and even dangerous. If it is a propaganda exercise, I regard it as an irresponsible one. The existing noise abatement procedures are already a matter of some concern to pilots, and there can be no case for cutting still further into the margins of passenger safety.

Mr. Hugh Jenkins

If the hon. Gentleman had read the Bill he would be aware that the proposals in that Bill are entirely in line with the necessity for reconciling, on the one hand, the need to have decent aircraft with, on the other, the protection of people on the ground. Would he not accept that these needs are not fairly balanced?

Mr. Onslow

I have read the Bill and I regard it as being dangerous.

I should like to reinforce my argument with a pilot's view. Perhaps the hon. Gentleman will consider this argument, expressed by a pilot who said: Present noise abatement procedures require pilots to throttle back to powers even below their cruising power shortly after take-off, they are required to climb at a speed nearer to the stalling speed than they would like, they are often required to make quite steep turns thus reducing the margin above the stall, and finally, they often are forced into taking off on what would not be the best runway for the particular occasion. I care about the man on the ground, but I also care about the man in the air. I should like to hear more about the man in the air from the hon. Member for Putney.

Mr. Hugh Jenkins rose—

Mr. Onslow

No, I will not give way again.

The right approach is to intensify our research effort into reducing aircraft noise, to produce power units which are quieter but no less efficient than those in use now. If British technology can achieve this, we shall reap a considerable reward, for the problem is international. The airlines of the world are awaiting a breakthrough in this problem.

I heard the President of the Board of Trade, with great interest, speaking at the British Independent Air Transport Association dinner. I do not think that it is good enough for him to say that we have to remember that there are more than 10 million people flying into or out of British airports every year but that, on the other hand, there are many more than 10 million people on the ground trying to sleep by night and work by day. This is true, and we all know it; but it will not do for the right hon. Gentleman simply to nail his colours to the fence.

One or two other subjects which have been mentioned come within the responsibility of the President of the Board of Trade. The future relevance and value of the Air Transport Licensing Board was mentioned by more than one of my hon. Friends. The part which the Customs play in the development of air freight traffic was mentioned by my hon. Friend the Member for Gillingham (Mr. Burden) and the whole status and future of the nationalised and independent airlines was mentioned by my hon. Friends the Member for Gillingham and the Member for Liverpool, Garston (Mr. Fortescue). We shall want to hear the views of the President of the Board of Trade on these subjects, and, in particular, that he will take a close and continuing interest in them.

Another subject linked with the viability of the airline companies is the question of the supply and training of pilots. I believe that at the moment the grants for training pilot instructors are less than realistic in regard to the age limits which are applied. The procedures for testing trainee pilots are less than adequate, there are not enough examining facilities, and pilots awaiting test are kept hanging around for far too long. There is, particularly in the south of England, a shortage of I.L.S. let-down facilities to enable pilot training to proceed as fast as is necessary, and I shall be interested to hear the President of the Board of Trade's views on this. There are many other subjects on which we shall want an opportunity to hear his views and debate them early in the House's programme.

I now turn to the main topic of the debate and to the main announcement which the Minister of Aviation made to the House. I exclude the announcement about the transfer of the Ministry's functions, about which many of us had read in the Financial Times and which we could have anticipated to some extent even if we had not read them there. I refer instead to the proposed merger between the British Aircraft Corporation and the airframe interests of Hawker Siddeley, and the Government's proposals to acquire a substantial minority holding in the combine.

I understand that it may not be easy for the Minister to tell us too much about this at the moment, but it is an exaggeration for the hon. Member for Glasgow, Govan (Mr. Rankin) to suggest that these proposals will be greeted with rapture by the airframe companies. I can think of one airframe company which will greet this proposal with strictly modified rapture.

Mr. Rankin

I did not say that.

Mr. Onslow

I apologise. I understood that the hon. Gentleman said that the reaction was likely to be rapture.

Mr. Rankin

Welcome.

Mr. Onslow

That is the same thing. The Minister admitted that he sees no possibility of such a merger being arranged on a strictly commercial basis, and justified the decision to force the merger on the basis of the extent of public involvment in the industry's finance both as customer and provider of launching money, and suggested that this forced merger will improve the industry's competitive position.

Mr. Mulley

Perhaps we could get the term right. There is no question of its being a forced merger in the sense that it is not to be voluntarily negotiated. The point I made when I said that there would not be a commercial merger was that I doubt whether the merger could be brought about without the injection of Government funds.

Mr. Onslow

I infer from what the Minister told us about this that it will be about as voluntary as a shotgun wedding, and the voluntary element in that has always been highly suspect. I do not see how the Minister can say that the merger will improve the industry's competitive position. Why should it do so? I think that the hon. Member for Coventry, North (Mr. Edelman) was sceptical about this as well.

The merger will not enlarge the market. We can agree on that. It will not make longer production runs more likely, and we can probably agree on that. It will not improve management, but probably the reverse, because it is likely to start a sparring match between the two existing managements to sort out their positions, reduplicating the situation which has bedevilled the industry since the previous round of mergers, and the sparring matches then have still not been settled.

The merger is not likely to get bureaucracy off the industry's back, as the hon. Member for Orpington (Mr. Lubbock) pointed out. It is not likely to improve the prospects of building the right aircraft. In many respects, it may well reduce them. One of the tragedies of recent British aircraft decisions have been that B.A.C. had to decide not to develop the swing-wing aircraft because it did not wish to include in the design for the TSR2 yet another element in which there was—or there would have been if it had been a swing-wing element—a considerable experimental cost factor.

All the merger will do will be to guarantee finance, and this means, virtually, that it is, or can be seen to be, a rescue operation. It will guarantee finance at the expense of allowing the future pattern of the industry to be determined by the weaker of the two groups. This is a point which Mr. Aubrey Jones made specifically in his dissenting opinion to the Plowden Report. If finance is the problem for the future of the aviation industry, as I think it is, are there no other ways of solving it?

We know—the second Report of the Lang Committee, Cmnd. 2581, told us—that there is a lot wrong with the present systems of cost control. Lord Plowden himself repeated this, saying in another place on 1st March last: As our inquiries proceeded, our Committee became increasingly disturbed at the extent of the technical and financial control exercised by the Ministry of Aviation over the industry, and in particular over the airframe companies. … It is imposed in the name of Parliamentary accountability and the taxpayer; but I submit that one of its main effects has been to keep profits low and costs high."—OFFICIAL REPORT, House of Lords, 1st March, 1966; Vol. 273, c. 615.] This reinforces the point made by my hon. Friend the Member for Mid-Bedfordshire, in a very powerful and well-argued speech, that much of what is wrong is directly the fault of the system which does not allow the industry to aim at a respectable and reasonable profit return on the money engaged. I remind the Minister that he has himself recognised the need for a review of the profit formula and that he undertook in the House on 2nd March this year to make a further statement of the subject within six months. No doubt, he realises that he is somewhat out of time in that connection.

It is unfortunate that we have to consider the future of a merged industry without having resolved the basic financial question of the agreed target return on the money involved. We know, of course, that there is a general capital famine which is the product of this Government's financial and fiscal measures, and it may be that in this climate, which no one should welcome, if money is needed for the aircraft industry only Government money can be found. But this is a particular and not a general argument, and I do not believe that it should be impossible for an industry operating in a healthy situation to raise money from private sources for its own purposes.

It is no matter for Government congratulation that they have had to give launching aid for aircraft like the Jetstream or the Britten-Norman Islander. I regard this as a tragic revelation of the scarcity of capital, and I do not believe the Government will, by the merger, go any way towards solving the fundamental problem of finance and the profit return. If we are to have an industry in public ownership, we must still have from the Government an indication of the profit which they regard big industry as entitled to have.

Mr. Ellis rose—

Mr. Onslow

Will the hon. Gentleman forgive me? I have only a few minutes left.

The main burden of the debate has been the attack on the tragic mishandling of the affairs of the British aerospace industry by the Government over the past two years, and it is because we believe this tragic mishandling to be so self-evident that we shall divide the House at the end of the debate. There is no time to go again over the whole dismal catalogue of muddle and mistake since October, 1964. Specific examples have been cited by my right hon. Friend the Member for Mitcham (Mr. R. Carr), and also by my hon. Friends the Members for Mid-Bedfordshire and Banbury (Mr. Marten). The particular criticism that my hon. Friend made of Government policy on space will, I hope, receive some answer.

To summarise, we attack the Government for decisions which were wrong in themselves, the cancellation decisions and the consequential commitments to American purchases, the near-cancellation of Concord, the cancellation of the B.O.A.C. Super VC10 order, the devaluation of the Saudi-Arabian order by its inclusion in the offset agreement, and so on. We attack them for their refusal to allow the Plowden Committee adequate time for its work—and I must say that I have not heard from the Minister of Aviation any convincing answer to the arguments put to him by my right hon. Friend.

We attack the Government for decisions taken in the wrong sequence, the announcement about the Anglo-French variable geometry aircraft, which was declared to be the core of the British industry before there was any agreement with the French that it would, in fact, be built, and the announcement of the decision to disband the Ministry of Aviation before any final decision about what should take its place. The Prime Minister himself was once a civil servant, I believe. He must have known that if he took a decision of this kind the immediate reaction would be to set every civil servant defending his position and to make it impossible to get any policy decision out of the Whitehall machine.

We attack the Government for decisions which were gravely delayed or not taken at all. The orders for the P1127 were gravely delayed. Now we have a situation where, apparently, the negotiations on production contracts will go on at the same time as the negotiations for the forced merger of the industry. I do not believe that to be a very desirable situation.

We attack the Government for their delay in implementing the recommendations on the profit formula, because this is absolutely crucial to the industry, and it has been consistently ignored.

I think that we can also attack the Government for their defeatism. The Financial Secretary to the Treasury told the House on 5th August: In past years, a disproportionate share of the country's resources has been tied up in an industry which has been spiralling in its costs and has been suffering financial losses and falling exports."—OFFICIAL REPORT, 5th August, 1966; Vol. 733, c. 962.] We know much of the reason for the cost increases. We know that they have been largely due to the system of control.

But what about falling exports in 1966, when every other day the Government are boasting how high their exports are and are trying to get credit for that? It is a fundamental piece of defeatism to regard it as inevitable that the industry's exports will fall and to create a situation in which it is inevitable. The Minister was at Farnborough this year. Perhaps he would care to tell me what aircraft he saw flying there which will be earning hundreds of millions of pounds a year in exports for the British aircraft industry in 1970. The Britten-Norman Islander is a fine aircraft, but not in that class.

The Labour Party has always had a fundamental dislike and distrust of the aircraft industry. This was shown by the Minister of Defence in his reference to "overgrown and mentally retarded children". It was shown by the Minister's predecessor in the cynical and calculated way in which he set about dismembering the industry. With delight, he did it. He came in as the hired assassin, as the "Front Bench Bond", licensed to kill, and he did the job with such enthusiasm and skill that he earned himself the title not of 007, but 707, in recognition of his services to the American aircraft industry.

The cumulative effect of all this—the wrong decisions, the delayed decisions, the preoccupation with irrelevant dogma, the defeatism and the distrust on the Government's part—has been to create a continuing crisis of confidence in the industry's future. This has undermined sales prospects abroad. We all know how skilfully and insidiously the fears of potential customers for British aircraft have been exploited by our foreign competitors. We know, too, how grateful the Americans have been to this Government for this service rendered. The crisis of confidence has shaken the faith of Britain's prospective partners in Europe in the creation of a European aerospace industry. We know to what lengths the French have had to go to keep the Concord in being and it is not surprising if now they show signs of dragging their feet, in turn, over the future of the A.F.V.G.

Most serious of all, this crisis of confidence has had a disastrous effect upon the pride and self-respect of the men working at all levels in the industry.

Mr. Jay indicated dissent.

Mr. Onslow

The right hon. Gentleman shakes his head, but I can speak from personal experience. I have many of these men in my constituency and I count them as my friends. I know with what bitterness they look upon the state to which their industry has been reduced by the Government. I know how they feel they have been betrayed.

Mr. Ellis indicated dissent.

Mr. Onslow

The hon. Gentleman may have had different experience, but the navigator who flew in the first TSR2 was a constituent of mine. He has left to work in Canada. The other day, I gave away the prizes at a school in my constituency. I noticed a boy wearing a VC10 tie. I asked him whether he worked for B.A.C. He said, "No. This tie used to belong to my brother, who works for Boeing in America now". I can give many other examples. An American company's European subsidiary recently advertised for an executive and the applicants included holders of the corresponding appointment from both their British competitors. I have here figures provided by the Action Committee for European Aerospace showing that, in the stress office, of one firm, over 60 per cent. of the men have moved to other jobs. In another firm, one-third of the stress office have left in the last three months, most of them to work in the American aircraft industry.

The Government are coy about such figures. They say that it is too difficult to obtain and publish statistics. But we can see the results ourselves in the mere fact that the industry has to advertise. The labour force may have gone down by 13,000 net during the last two years, but the gross loss has been far more than that when one considers how much the work load has been reduced. The industry has been forced at Filton, Preston, Weybridge and elsewhere to advertise for men to carry on its programme. The brain drain has made it self most strongly felt in the aircraft industry.

Mr. Ellis rose—

Mr. Onslow

I cannot give way. I have only a few minutes left.

The Minister of Technology has nominated his "top ten" and it is gratifying to find included Sir Frank Whittle, Sir George Edwards and Mr. Martin, of the Martin-Baker Company. But that is not much use in practical terms. What is wanted is some confidence that the Government will respond to the appeal Sir George made in his powerful speech at Manchester last month. What the men want is an industry that is stable, competitive, technologically progressive and capable of expansion.

If this is not forthcoming, nobody should be surprised if these men elect to vote with their feet, if they choose to take their skills and careers to a country where they have better prospects. No one can blame them if they work for firms like C.D.I., which the hon. Member for Govan calls "a snake in the British grass". But who created the grass to which the snake could come? It is not the fault of the Americans. The men who go there are free men, proud men. They are not directed men—not yet, anyway. We have to remember that these men have skills which are essential to the survival of this industry and to the whole technological future of the country. We have no right to condemn them or the overseas firms so eager to recruit them.

The blame for the brain drain and the predictament of these men rests with the Government. The Minister may pretend that the Government have created an environment in which the industry can secure its future by its own exertions but I believe that, to the men in the industry, the announcement will go down like a lead balloon. For this reason, above all, we are right to divide the House against the Government tonight.

9.35 p.m.

The President of the Board of Trade (Mr. Douglas Jay)

I must congratulate the hon. Member for Woking (Mr. Onslow) on being a newcomer to the Dispatch Box as I am to civil aviation. I am very much less defeatist than he is. I should have hoped that every hon. Member could agree that both our civil aviation and aircraft industries which are two of the science-based industries in which we must excel as a nation, are very valuable national assets. Although, of course, the main responsibility for making them a success must rest on the industries themselves, I agree with all those hon. Members who have said that it is certainly the duty of the Government to foster and sustain them in every legitimate way as a viable and efficient section of our national economy. Both the shipping and shipbuilding industries have traditionally made huge contributions to Britain's overseas earnings for a century or more. Since in the future more and more passengers and more and more freight will go by air, it is clear that we must as a nation make sure that we remain in the forefront of both the civil aviation and the aircraft production industries.

Both are already making a bigger contribution to the balance of payments than is is perhaps generally realised. The hon. Member for Woking mentioned the VC 10. Speaking as a passenger, I think that it the best aircraft in service anywhere in the world and it has certainly proved extremely popular. The aircraft production industry this year as has been said, is likely to show the gross earnings by exports of aircraft, engines and spares of more than £200 million, an all-time record. The BAC111 in particular has proved our best export aircraft since the Viscount and is likely to continue selling well in a number of overseas markets. The British civil aviation industry last year showed net overseas earnings of £27 million, after allowing for British residents' expenditure on overseas airlines, and this is actually a larger net figure than British shipping today. Both B.O.A.C. and B.E.A. have operated at a profit this year, although, naturally, present limits on foreign exchange for travel may affect airlines somewhat in the next year although, I hope, not seriously.

Perhaps at this point I should mention that B.O.A.C. will publish its half-yearly financial results on Friday of this week. This carries out the Government's assurance that the Corporation would from this autumn make available interim statements. I shall place copies of B.O.A.C.'s half-yearly results in the Library. The B.E.A. statement will be available within a few weeks.

I agree with those hon. Members who mentioned aircraft noise that certainly the enthusiasm of the public, and particularly of the inhabitants of Greater London, for civil aviation has been damped, or perhaps deafened by the growing problem of aircraft noise. As one who has both a constituency and a home in London, I am acutely conscious of it. But civil aviation is emphatically a growth industry and unless we are to abandon it altogether, there can be no quick or complete cure for this problem. Whatever hon. Members may say, we must consider not merely the 20 million people who now use British airports in total every year, but the even larger number of millions of people on the ground who work and who try to sleep. I therefore welcome the international conference on the reduction of aircraft noise which the present Government took the initiative in calling and which is meeting in London tomorrow. This conference proposes to investigate all possibilities of noise reduction—quieter aircraft, control of land near airports, new operating techniques and the insulation of dwellings.

Meanwhile, I intend to take whatever action is practicable to keep this nuisance within bounds. There are a number of ways in which it can be attacked. One can limit the number of jet flights at night, control directly the actual noise made by aircraft taking off, adjust flight paths to minimise noise, insulate dwellings near airports and, in the long term, influence aircraft design so as to curtail the volume of noise.

Mr. Hugh Jenkins

Would my right hon. Friend confirm that, with reference to the Bill which has now been signed by Members on both sides of this House, with greater knowledge of flying and of the aircraft industry—although my right hon. Friend has not yet seen fit to support it—it has at no time been suggested by him or by the Minister of Aviation that there is anything in it which is menacing or threatening danger to aircraft?

Mr. Jay

That is correct but I must take responsibility for my own proposals. I know that the hon. Gentleman is very interested in this subject. As air traffic, both goods and passengers, is rapidly increasing there is great pressure from the airlines, perfectly naturally, to increase the number of night jet flights into Heathrow. I have decided, in order to curtail noise, that no further increase can be permitted and that last summer's restriction on night jet movement into Heathrow must be maintained next summer.

I have consulted the Heathrow Consultative Committee, which accepts this limit, and am in touch with the airlines about the working orbit.

Mr. Marten

Does that relate to the number of flights or the perceived noise?

Mr. Jay

Both, which is the way in which the restriction has always been enforced.

Secondly, we now limit directly the degree of noise that may be caused by aircraft taking off from Heathrow. I am considering whether this restriction can be tightened and whether it should be applied more widely. This will not prove easy with the aircraft now in service.

Mr. Woodburn

Will my right hon. Friend bear in mind that it is mostly the poorer section of the community who have to engage in these night flights because of the bargain offered? Will he keep this in mind when considering further restrictions of these flights?

Mr. Jay

Yes, but if the flights are limited at Heathrow it does not necessarily mean that they do not take place at all.

Thirdly, the trouble can be diminished by the insulation of houses in the areas such as the immediate neighbourhood of Heathrow. The present Government introduced a scheme this year under which the British Airports Authority will pay 50 per cent. of the costs of the insulation of homes in a wide area round Heathrow up to a maximum of £100. These grants are open to local authorities as well as to individuals, and I hope that both will take full advantage of them. We are the first country in the world to introduce such a scheme.

Sir Beresford Craddock (Spelthorne) rose—

Mr. Jay

No, I have not time. Fourthly, it is possible to control, within limits, the routes by which aircraft approach and take off from Heathrow and other airports. Here I am sure that the House will agree that safety must be the first and paramount aim. Subject to that I am examining whether it is practicable for noise to be further mitigated in this way. Already the steepness of approach to Heathrow and Gatwick is greater than the airlines would wish and in my view, as at present advised, any compulsory increase here would not be consistent with good safety practice.

In the case of British airports other than those under the direct control of the British Airports Authority, I am willing to advise the authorities on anti-noise measures. I understand that Manchester Corporation has also limited the number of night jet movements. Still more than this needs to be done and we must probe energetically the longer term possibilities of limiting noise of jet aircraft.

The United States Government are considering whether noise can be included as one factor in the certification of aircraft and there is a Bill now before Congress to provide for this. I welcome these proposals and, since the provision of quieter aircraft would be by far the best solution, I am considering whether it is possible for us to take similar action.

Very naturally, fears have been expressed about the Concord and Jumbo jets in this connection. It is our intention that these should be at least no noisier than the present heavy jets, and if possible quieter when near to airports. We shall certainly expect the Concord and Jumbo jets to meet at least the current take-off noise limits in force at Heathrow.

No doubt all of this would have been easier if London had not selected, at the end of the war, as its main airport a site on a more or less direct east-west line from Central London which, with the prevailing wind, compels modern jets to land or take off over highly-populated areas. We must keep this fully in mind when selecting the site for the third great airport which, on all information available to me, will plainly be necessary.

I note what the hon. Gentleman the Member for Hendon, North (Sir Ian Orr-Ewing) said about this. Of course, one effect of concentrating on Heathrow would probably be to make the noise worse for many millions of people living in London and particularly in West London. The hon. Gentleman spoke of certain United States aerodromes by comparison, but I am sure he knows that we are operating a higher standard of noise prevention and of safety than are certain American airports.

On the question of the third airport, I found, when responsibility for civil aviation was transferred to the Board of Trade, that the report of the inspector appointed to hold a public inquiry into the proposal to develop Stansted as the third London airport had just been submitted. Since then I have been reviewing all the possibilities in detail from every point of view, and I hope that a decision can be reached and a statement made before too long.

The right hon. Gentleman the Member for Mitcham (Mr. R. Carr) raised the question of the future re-equipment of B.E.A. with modern British aircraft. I think we all want to see B.E.A. go ahead. I am glad to have this opportunity to make the simple facts clear, since a number of rather gross distortions have been published and they have amounted, in some cases, to outright mis-statements. If I may say so, I join with other hon. Members in deploring this way of conducting public discussion of aviation affairs, and I regret particular statements, of which there are far too many, likely, quite falsely, to discredit British aircraft overseas.

The facts are these: last summer the Government decided, for the sake of our balance of payments and the future strength of our aircraft industry, that B.E.A. should re-equip with British jet aircraft. My right hon. Friend the Minister of Aviation said in the House on 2nd August that the Government …will take steps to ensure that B.E.A. is able to operate as a fully commercial undertaking with the fleet it acquires."—OFFICIAL REPORT, 2nd August, 1966; Vol. 733, c. 261.]

It has been my wish throughout that, with that assurance, B.E.A. should proceed as quickly as possible with ordering the necessary aircraft.

I wrote to the Chairman of B.E.A. on 12th September reaffirming my right hon. Friend's pledge of 2nd August, but explaining the difficulty of elaborating it further before I had a clear idea and picture of B.E.A.'s re-equipment programme and the basis on which it had been compiled.

On 28th October the Chairman of B.E.A. wrote to me stating formally for the first time that B.E.A. wished to buy BAC111 aircraft of the 500 type, and also making, for the first time, the proposal that as a condition of its placing an order for the purchase of 18 of these aircraft there should be a capital reconstruction of B.E.A. on the same terms as that now accorded to B.O.A.C.

I wrote in reply on 3rd November again reaffirming my right hon. Friend's pledge of 2nd August, which promised to ensure that B.E.A., is able to operate as a fully commercial undertaking with the fleet it acquires".

As I had then reaffirmed this assurance twice, it was somewhat surprising to read in the Daily Mail of 14th November The Government has so far refused to recognise Mr. Mulley's promise.

That, to put it mildly, was a direct reverse of the truth. It compelled me very reluctantly, because otherwise there would have been greater uncertainty, to issue a denial. Whether the right hon. Gentleman was under the same obligation to make a statement, I must leave it to him to judge. At any rate, the upshot is that I am now examining with Sir Anthony Milward the detailed proposals for the purchase of 111s which have now emerged from the consultations held over a number of months between my officials and B.E.A. In addition, I am in consultation with Sir Anthony about the Government's undertaking of 2nd August. I see no reason whatever why we should not reach a satisfactory settlement on both points.

I should like to make clear to the House that it was not possible for me to agree at short notice to a capital reconstruction of B.E.A., on the same terms as those now afforded to B.O.A.C., because until I knew clearly not merely the full case for the 111 purchase but also the basis for the further and, I gather, larger purchase of other British jets necessary to re-equip B.E.A. fully, which is to follow, it was impossible for me to say what sort of financial arrangements would have to be made. Any such condition, indeed, attaching to the purchase of the 111s would be bound to delay seriously the placing of the order, and it is delay in this, above all, that I am seeking to avoid. Indeed, had this condition not been made, the whole matter—or at least this instalment of it—might well have been settled by now.

I should like to make clear, too, that I do not rule out some element of capital reconstruction as one method of fulfilling the Government's pledge. In all this, let us remember—and I agree with what one of my hon. Friends said about the expenditure of public money involved in the civil aviation as well as in the aircraft production industries—that we have to protect the taxpayer and public money, as well as to build up the civil aviation and aircraft production industries—

Mr. Lubbock

Is this specification of BAC111–500 absolutely finalised, and is it purely the financial aspects that hold up the decision? If that is so, why not issue a general direction to Sir Anthony to complete the order?

Mr. Jay

We are now having consultations and discussions to work out the final details, and I hope that these will be settled very soon. I see no need for a general direction, because there is no serious difference between us, but certain technical details have to be worked out about the pledge given by my right hon. Friend. I hope, therefore, that after these consultations, and following all the work that has been done both by B.E.A. and my Department, this matter of the 111s will very soon be settled. I am also hopeful that, soon after this, B.E.A. will let me have its proposals for the extensive further orders of British jets that it plans. There will then be ample time, without prejudice to any one's interests, to work out a complete financial settlement based on details and figures covering both instalments of the re-equipment programme.

There is every chance that this will provide B.E.A. with a very fine and up-to-date fleet of jet aircraft. Sir Anthony Milward, in the November B.E.A. Magazine, has described the new 500 type of 111 as …a 97-seater with very attractive economic possibilities. Not merely technical, but also economic. I believe that this new 111 has excellent export prospects, as well as being highly suitable for B.E.A. With adequate load factors, these new aircraft may well prove to be commercially very attractive. In all this, we shall continue our close consultation with B.E.A. throughout the re-equipment programme. In order to speed matters up I am prepared, and I think that this might save time, either to proceed with the first instalment of the programme separately or, if B.E.A. so wishes, to settle both together.

My right hon. Friend's undertaking, therefore, still stands, and the House can be confident that the decisions which the Government are to reach will be based on the best information available to us.

I note the statements which various hon. Members have made about the Air Transport Licensing Board system. I will not say more, because there is not much time, but I gather that quite a number of hon. Members do not regard the present system as perfect.

As my right hon. Friend announced today, following the Plowden Report, the Government have felt bound to take a direct interest in the air frame industry. In view of what the hon. Member for Orpington (Mr. Lubbock) has just said, I remind him that we have acted in accordance with the firm majority opinion of the Plowden Committee. It is inevitable in today's conditions that both the aircraft and civil aviation industries and the Government should be directly concerned with one another's affairs. It is also clear that both industries face very keen and indeed fierce competition all over the world.

I have no doubt that we can meet that competition and ensure that both industries steadily gain ground if they

and the Government work together in close and active partnership with perhaps rather less internecine controversy than in the past. If we so work and abandon some of the unnecessary defeatism of recent years of which I saw some traces in the hon. Gentleman's speech, I am sure that great economic benefits for the nation can be secured. Above all, although, as I said to the right hon. Member for Mitcham, the Press is free to say anything it likes, nevertheless both sides of the House and the leaders of both industries can agree henceforth that we should like to see a truce on public statements, usually unfounded, which are calculated to discredit one industry or the other to the great advantage and delight of our overseas competitors.

Mr. R. Carr

Before the right hon. Gentleman sits down, would he say whether the Government will accept our request to publish a White Paper on the 48 recommendations of the Plowden Report? I feel that the House should have the benefit of the Government's views on that.

Mr. Jay

My right hon. Friend gave a detailed account earlier of the Government's decisions on a number of recommendations in the Report. But if there is a wish for a White Paper, certainly we will examine it.

Sir Ian Orr-Ewing

Would the right hon. Gentleman give way?

Mr. Speaker

I think that the right hon. Gentleman has sat down.

Question put, That this House do now adjourn: —

The House divided: Ayes 164, Noes 191.

Division No. 201.]	AYES	[9.58 p.m.
Astor, John	Brewis, John	Craddock, Sir Beresford (Spelthorne)
Atkins, Humphrey (M't'n & M'd'n)	Brinton, Sir Tatton	Crosthwaite-Eyre, Sir Oliver
Awdry, Daniel	Bromley-Davenport, Lt. -Col. Sir Walter	Crouch, David
Baker, W. H. K.	Brown, Sir Edward (Bath)	Crowder, F. P.
Batsford, Brian	Bruce-Gardyne, J.	Cunningham, Sir Knox
Bennett, Sir Frederic (Torquay)	Bryan, Paul	Dalkeith, Earl of
Bennett, Dr. Reginald (Gos. & Fhm)	Buck, Antony (Colchester)	Dance, James
Berry, Hn. Anthony	Bullus, Sir Eric	d'Avigdor-Goldsmid, Sir Henry
Biffen, John	Burden, F. A.	Dean, Paul (Somerset, N.)
Biggs-Davison, John	Campbell, Gordon	Digby, Simon Wingfield
Birch, Rt. Hn. Nigel	Carlisle, Mark	Elliot, Capt. Walter (Carshalton)
Black, Sir Cyril	Carr, Rt. Hn. Robert	Errington, Sir Eric
Blaker, Peter	Channon, H. P. G.	Eyre, Reginald
Bossom, Sir Clive	Cooke, Robert	Fisher, Nigel
Boyd-Carpenter, Rt. Hn. John	Cooper-Key, Sir Neill	Fletcher-Cooke, Charles
Boyle, Rt. Hn. Sir Edward	Corfield, F. V.	Fortescue, Tim
Foster, Sir John	Lambton, Viscount	Rawlinson, Rt. Hn. Sir Peter
Galbraith, Hn. T. G.	Langford-Holt, Sir John	Rees-Davies, W. R.
Gibson-Watt, David	Lewis, Kenneth (Rutland)	Renton, Rt. Hn. Sir David
Gilmour, Ian (Norfolk, C.)	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Ridsdale, Julian
Glyn, Sir Richard	Loveys, W. H.	Rippon, Rt. Hn. Geoffrey
Goodhew, Victor	Lubbock, Eric	Roots, William
Grant, Anthony	McAdden, Sir Stephen	Russell, Sir Ronald
Grant-Ferris, R.	MacArthur, Ian	Scott, Nicholas
Gresham Cooke, R.	Maclean, Sir Fitzroy	Sharples, Richard
Griffiths, Eldon (Bury St. Edmunds)	McMaster, Stanley	Shaw, Michael (Sc'b'gh & Whitby)
Gurden, Harold	Macmillan, Maurice (Farnham)	Smith, John
Hall-Davis, A. G. F.	Marten, Neil	Steel, David (Roxburgh)
Hamilton, Marquess of (Fermanagh)	Mathew, Robert	Stodart, Anthony
Harris, Reader (Heston)	Maude, Angus	Stoddart-Scott, Col. Sir M. (Ripon)
Harrison, Col. Sir Harwood (Eye)	Mawby, Ray	Summers, Sir Spencer
Harvey, Sir Arthur Vere	Maxwell-Hyslop, R. J.	Tapsell, Peter
Hastings, Stephen	Mills, Peter (Torrington)	Taylor, Edward M. (G'gow, Cathcart)
Hawkins, Paul	Miscampbell, Norman	Temple, John M.
Heald, Rt. Hn. Sir Lionel	Mitchell, David (Basingstoke)	Thatcher, Mrs. Margaret
Heath, Rt. Hn. Edward	Monro, Hector	Thorpe, Jeremy
Heseltine, Michael	More, Jasper	Turton, Rt. Hn. R. H.
Higgins, Terence L.	Munro-Lucas-Tooth, Sir Hugh	van Straubenzee, W. R.
Hiley, Joseph	Murton, Oscar	Vaughan-Morgan, Rt. Hn. Sir John
Hill, J. E. B.	Nabarro, Sir Gerald	Wainwright, Richard (Colne Valley)
Hirst, Geoffrey	Noble, Rt. Hn. Michael	Walker, Peter (Worcester)
Hobson, Rt. Hn. Sir John	Nott, John	Walker-Smith, Rt. Hn. Sir Derek
Holland, Philip	Onslow, Cranley	Walt, Patrick
Hooson, Emlyn	Orr-Ewing, Sir Ian	Webster, David
Hornby, Richard	Osborn, John (Hallam)	Wells, John (Maidstone)
Howell, David (Guildford)	Page, Graham (Crosby)	Whitelaw, William
Hunt, John	Pardoe, John	Wills, Sir Gerald (Bridgwater)
Hutchison, Michael Clark	Pearson, Sir Frank (Clitheroe)	Wilson, Geoffrey (Truro)
Iremonger, T. L.	Peel, John	Wood, Rt. Hn. Richard
Irvine, Bryant Godman (Rye)	Percival, Ian	Woodnutt, Mark
Jenkin, Patrick (Woodford)	Pink, R. Bonner	Worsley, Marcus
Kaberry, Sir Donald	Powell, Rt. Hn. J. Enoch	Younger, Hn. George
King, Evelyn (Dorset, S.)	Price, David (Eastleigh)
Kirk, Peter	Prior, J. M. L.	TELLERS FOR THE AYES:
Kitson, Timothy	Quennell, Miss J. M.	Mr. R. W. Elliott and
Knight, Mrs. Jill	Ramsden, Rt. Hn. James	Mr. Francis Pym.
NOES
Ashley, Jack	Eadie, Alex	Hunter, Adam
Atkins, Ronald (Preston, N.)	Edelman, Maurice	Hynd, John
Atkinson, Norman (Tottenham)	Ellis, John	Irvine, A. J. (Edge Hill)
Bagier, Gordon A. T.	English, Michael	Jackson, Colin (B'h'se & Spenb'gh)
Barnett, Joel	Evans, Albert (Islington, S.W.)	Jackson, Peter M. (High Peak)
Beaney, Alan	Faulds, Andrew	Janner, Sir Barnett
Benn, Rt. Hn. Anthony Wedgwood	Fernyhough, E.	Jay, Rt. Hn. Douglas
Bidwell, Sydney	Fletcher, Raymond (Ilkeston)	Jenkins, Hugh (Putney)
Binns, John	Fletcher, Ted (Darlington)	Johnson, James (K'ston-on-Hull, W.)
Bishop, E. S.	Foley, Maurice	Jones, Dan (Burnley)
Blackburn, F.	Ford, Ben	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Booth, Albert	Fraser, John (Norwood)	Kenyon, Clifford
Braddock, Mrs. E M	Freeson, Reginald	Kerr, Russell (Feltham)
Bradley, Tom	Galpern, Sir Myer	Lawson, George
Bray, Dr. Jeremy	Gardner, Tony	Ledger, Ron
Broughton, Dr. A. D. D.	G arrow, Alex	Lee, Rt. Hn. Frederick (Newton)
Brown, Hugh D. (G'gow, Provan)	Ginsburg, David	Lestor, Miss Joan
Brown, Bob (N'c'tle-upon-Tyne, W.)	Gourlay, Harry	Lewis, Arthur (W. Ham, N.)
Buchan, Norman	Gregory, Arnold	Lewis, Ron (Carlisle)
Buchanan, Richard (G'gow, Sp'burn)	Grey, Charles (Durham)	Lipton, Marcus
Cant, R. B.	Griffiths, David (Rother Valley)	Loughlin, Charles
Carmichael, Neil	Griffiths, Will (Exchange)	Lyon, Alexander W. (York)
Castle, Rt. Hn. Barbara	Hale, Leslie (Oldham, W.)	Lyons, Edward (Bradford, E.)
Coe, Denis	Hamilton, James (Bothwell)	Mabon, Dr. J. Dickson
Coleman, Donald	Hamilton, William (Fife, W.)	McBride, Neil
Cronin, John	Hannan, William	McCann, John
Crossman, Rt. Hn. Richard	Harrison, Walter (Wakefield)	MacColl, James
Cullen, Mrs. Alice	Haseldine, Norman	MacDermot, Niall
Dalyell, Tam	Hattersley, Roy	McGuire, Michael
Davidson, Arthur (Accrington)	Hazell, Bert	Mackenzie, Gregor (Rutherglen)
Davies, Harold (Leek)	Heffer, Eric S.	Mackintosh, John P.
Davies, Ifor (Gower)	Hilton, W. S.	Maclennan, Robert
Davies, Robert (Cambridge)	Hobden, Dennis (Brighton, K'town)	McNamara, J. Kevin
Dewar, Donald	Hooley, Frank	MacPherson, Malcolm
Diamond, Rt. Hn. John	Houghton, Rt. Hn. Douglas	Mahon, Peter (Preston, S.)
Dickens, James	Howarth, Harry (Wellingborough)	Mahon, Simon (Bootle)
Doig, Peter	Howarth, Robert (Bolton, E.)	Manuel, Archie
Driberg, Tom	Howell, Denis (Small Heath)	Mapp, Charles
Dunnett, Jack	Howie, w.	Mason, Roy
Dunwoody, Mrs. Gwyneth (Exeter)	Hoy, James	Maxwell, Robert
Dunwoody, Dr. John (F'th & C'b'e)	Hughes, Roy (Newport)	Mellish, Robert

Mendelson, J.J.	Price, Thomas (Westhoughton)	Snow, Julian
Millan, Bruce	Price, William (Rugby)	Thornton, Ernest
Mitchell, R. C. (S'th'pton, Test)	Randall, Harry	Wainwright, Edwin (Dearne Valley)
Moonman, Eric	Rankin, John	Walden, Brian (All Saints)
Morgan, Elystan (Cardiganshire)	Redhead, Edward	Walker, Harold (Doncaster)
Morris, Alfred (Wythenshawe)	Rees, Merlyn	Wallace, George
Mulley, Rt. Hn. Frederick	Reynolds, G. W.	Watkins, David (Consett)
Newens, Stan	Rhodes, Geoffrey	Wellbeloved, James
Noel-Baker, Francis (Swindon)	Richard, Ivor	Wells, William (Walsall, N.)
Noel-Baker, Rt. Hn. Philip (Derby, S.)	Roberts, Albert (Normanton)	Whitaker, Ben
Norwood, Christopher	Robertson, John (Paisley)	Whitlock, William
Oakes, Gordon	Robinson, W. O. J. (Walth'stow, E.)	Wilkins, W. A.
O'Malley, Brian	Rodgers, William (Stockton)	Williams, Mrs. Shirley (Hitchin)
Orbach, Maurice	Roebuck, Roy	Williams, W. T. (Warrington)
Orme, Stanley	Ross, Rt. Hn. William	Willis, George (Edinburgh, E.)
Oswald, Thomas	Rowland, Christopher (Meriden)	Wilson, William (Coventry, S.)
Owen, Dr. David (Plymouth, Stn)	Ryan, John	Winterbottom, R. E.
Palmer, Arthur	Shaw, Arnold (Ilford, S.)	Woodburn, Rt. Hn. A.
Park, Trevor	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)	Woof, Robert
Parker, John (Dagenham)	Silkin, Rt. Hn. John (Deptford)	Wyatt, Woodrow
Pavitt, Laurence	Silkin, Hn. S. C. (Dulwich)
Pentland, Norman	Skeffington, Arthur	TELLERS FOR THE NOES:
Perry, George H. (Nottingham, S.)	Slater, Joseph	Mr. Alan Fitch and
Price, Christopher (Perry Barr)	Small, William	Mr. Ioan L. Evans.