HC Deb 20 March 1967 vol 743 cc1279-300

2.58 a.m.

Mr. Cranky Onslow (Woking)

This is a daft time of the night to start talking about Britain's civil aircraft development programme which involves hundreds of millions of pounds of the taxpayers' money, and employs some of the most highly skilled manpower in the country, but it is the only chance we seem to get.

If there were more time, and if it were not so late, I would have liked to have taken up a number of points concerning investment grants and the workings of the Air Transport Licensing Board, both of which at present constitute a considerable drag on the expansion of our civil aviation and, therefore, on the potential of our aircraft industry.

I want to concentrate on two specific projects: the B.A.C. 211 and the Concord. The House will know that the 211 is a 185-seater project which is a second generation derivative of the British Aircraft Corporation's very successfull 111 and the VC 10. B.E.A. has applied to buy at least 30, and possibly 40, 211s to come into service from 1971 to meet the capacity gap it will then be facing.

The Chairman of B.E.A., Sir Anthony Milward, has said: For B.E.A. to remain competitive in the European air travel market … we must by 1971 have economic aircraft to do our job". He describes the 211 as having a very considerable export potential. It is a natural successor to those aircraft operated by airlines flying medium-size jets such as the 111 and the Caravelle". Sir Anthony has also called the 211 the great remaining hope of the British civil aircraft industry". These are strong words and the arguments in favour of the 211 are, I believe, strong ones.

Where, then, is the catch? o The catch is that the Government, or at least the Minister of Technology, have got themselves all wrapped up in the European airbus project, as it has come to be known. Although B.E.A. has said that its choice of the 211 will in no way diminish our interest in the so-called airbus which is really just a 250-seater aircraft to be built on an Anglo-French-German basis, on an in-service date of 1972 at earliest, there is a considerable area of conflict between these two aircraft projects.

Part of the conflict is technical. It seems unlikely, for instance, that both aircraft can have Rolls-Royce engines. The 211 needs two engines of 30,000 lb. thrust each. The European airbus needs two engines of 50,000 lb. thrust each. It is doubtful, to say the least, whether Rolls-Royce could do both in the necessary time. Rolls-Royce may well take the view that, if it goes ahead with the 50,000-pounders this would give it the second option of engining another airbus, let us say perhaps the Lockheed 1011.

A good deal of the conflict is what I can only call aero-political. We know how obsessed the Minister of Technology has become with European aircraft cooperation as a political exercise, as a bargaining counter in other negotiations, if not just as an end in itself. I believe that co-operation in this field ought to have as its main end the building of aircraft for which there is a genuine market. This is the only real purpose which can justify such co-operation.

The airbus market is a problematical one. A number of European airlines have agreed that there will be a need for 50 250-seater aircraft in Europe by 1975. B.E.A. says that it will want "some" from 1974 or 1975 onwards, probably the latter date. By 1980 there could be a market for an airbus of between 100 and 200 aircraft. But a European airbus would be behind the Americans, in all probability. The Lockheed 1011 will be there first and many European airlines will want to buy that. Even Lufthansa, the German airline, is likely to have a strong preference in favour of the Lockheed.

I wonder whether the Minister really feels that the German Government have the power to order Lufthansa to buy the European airbus. I also wonder whether the Italian Government could order Alitalia, or the Dutch Government could order K.L.M., or the Scandinavian Governments could order S.A.S., to buy the European airbus simply because it was made in Europe.

I suggest that, if we proceed with the airbus, we face considerable outlay. We face all the problems of tri-national cooperation, which must be very much more difficult than simply bi-national co-operation such as we already have between ourselves and the French. We have a good chance of being beaten at the post by the American competition. This does not seem to be necessarily the best way of keeping Europe in the subsonic aircraft business and it certainly is not the only way.

What about the 211? The market for that is problematical, too. This aircraft is not built any more than the airbus is yet built. But this specification does fill a known gap, and a gap where there is as yet no known competition. The passenger growth projections leave an unfilled demand in the 185–250 seater range by 1971 when a lot of airlines will be needing new aircraft. We have already seen the dangers of traffic loss through inadequate capacity in the difficulties which B.O.A.C. is experiencing at this very moment. It will be true that the frequency with which the 211 can operate will be much more economical than that with which the airbus can operate.

This 211 is not an interim aircraft. It has a market right through the 1970s, probably longer, to replace the existing 100 to 130 seaters. It could sell in the United States. Indeed, I believe that it is more likely to sell to American airlines than the airbus, and more aircraft will be needed in any case. It could be made European. There is no reason at all why much of the work on it could not be contracted out to the French or German manufacturers; and it would be a quiet aircraft, which makes it a subject of importance in the minds of many, many members of the public today.

I ask for an assurance that a decision on this will be made on the real merits of the case, and not on aero-political grounds. I ask particularly that this should not be what I would term "a Concord-type decision". The Concord was a bold decision, taken in time—and taken, incidentally, by the last Conservative Government—and one for which this country has reason to be grateful. But this other decision is strictly orthodox and time now is not on our side any more.

I now turn to Concord, which is a matter of business, and not of reputation, and I do not ask tonight for a progress report; but I do ask, first, whether the Minister can take this opportunity to clear up confusion and real doubt which has arisen as a result of what he is reported to have told the Labour Party's aviation group, to the effect that the Government are "saddled with Concord and would still like to cancel it".

Secondly, what action is the Minister taking to stand up for the Concord venture? What is he doing to counter some of the damaging criticism, such as that, especially, in the B.B.C.'s "Panorama" programme of 27th February? I hope that he has seen a transcript of it, but I will quote one or two passages to illustrate my claim that it is damaging and ought to be clearly refuted.

Mr. Charlton, introducing the discussion, made a number of statements not favourable to Concord. First, he said: Three years ago, Britain tried to pull out". But that was the position two years ago, or nine months ago; but the emphasis on that point is not particularly encouraging. Nor was it encouraging to hear that At Toulouse and Bristol they keep doggedly on … as though this was a hopeless cause. Then it was said that All that's flying now is Concord's engine". How much better, and equally truthful it would have been to have said that it had already been flying for six months.

Later in the programme, there were some remarks by Miss Mary Goldring, aviation correspondent of the Economist, who said: It's too small, it's too slow, and it's too short on range. The pay-load is just not adequate and there is no way of building in an engineering stretch. You're up on the limits of the materials and of the engines, and there's nothing more you can do to it". The expert speaks, and the expert, when asked: Would you cancel the Concord now? replied: This afternoon".

This reminds me of "off with his head"—good Alice in Wonderland stuff. But I recall that the Red Queen once told Alice: Sometimes I have managed to believe as many as six impossible things before breakfast". Does the Minister consider that this whole programme was fair comment, or does he regard it as I regard it—as "knocking" copy? Certainly, it provoked many letters of protest from people connected with the industry.

In the British Aircraft Corporation's house journal, Airframe, on 17th March, there was a letter written by three engineers engaged on Concord work at B.A.C., Filton, which reads: As engineers engaged on the Concord project, we would like to make the strongest possible protest against the B.B.C. documentary on this subject, screened in its Panorama programme of last week. Constructive criticism of the project is always welcome, but destructive, biased and ill-informed criticism of the sort the B.B.C. saw fit to encourage is pernicious and damaging to one of Britain's major export industries". If there were time, I should have liked to quote a lot more of this, but perhaps I can quote two other brief passages from B.A.C. spokesmen, who say: … many have asked us why the B.B.C. takes such a delight in knocking Concorde and almost every other aspect of British aviation whenever it can. In conclusion, it is said: On many, though happily not all, British television programmes it is increasingly difficult both to inform and defend. This is not because our case is not sound, but because the format, direction and editorial pre-conclusions of the programmes are so weighted as to make it virtually impossible to develop logical and responsible discussion". These are projects which need logical and responsible discussion—I hope that the Minister will agree with that—and I believe that we have a right to demand that the Minister should do what he can to ensure that such discussion takes place.

The Government have left the men in the aircraft industry precious few reasons to take real pride in their work. Why should any man of reputation, attainment or professional integrity in this or any other sphere of industry try to pull out the extra effort that makes for real success? His financial incentives are being progressively whittled away. His freedom to order his own life and the life of his family has been steadily suppressed by the all-pervading State. All that he has left is his sense of technical achievement; and even this is being taken away from him by programmes of the kind from which I have quoted which treat the men in this industry as if they were, to borrow a phrase from the Secretary of State for Defence, "overgrown and mentally retarded children".

Many people in the aircraft industry and outside it believe that the B.B.C.'s concept of a balanced programme is one in which truth and falsehood are given equal time. I wish to ask the Minister this: is he prepared to give the House an undertaking, not just because of the vast sums of public money involved, but because of the importance of ensuring that there is intelligent, balanced and reasonable discussion on matters of this kind, that he will do all in his power to put these matters right?

3.13 a.m.

Mr. Edwin Brooks (Bebington)

Few of the remaining Members in the House will dissent from the opening sentence of the hon. Member for Woking (Mr. Onslow) about the idiocy of the time at which it is necessary, apparently, to discuss these most important matters. Although I dissent from the conclusion drawn by the hon. Gentleman, I feel that it is fitting and appropriate that we have had this opportunity to debate these extremely important and expensive ventures.

The hon. Member for Woking will recall that more than a year ago—on 9th February, 1966—he spoke about Concord. It is not without relevance to refer to his forecasts at that time about the cost of the Concord venture. He said: But the rising costs must worry us. A figure of £400 million has recently been quoted as the cost of research and development to the point of production of Concord. Probably a more responsible estimate would be nearer to £350 million."—[OFFICIAL REPORT, 9th February, 1966; Vol. 724, c. 490.] Since those remarks were made—and, indeed, within three or four months—the cost of Concord, far from being "a more responsible" figure of £350 million, has soared to a figure of £500 million. It is difficult to anticipate the nature of the problems involved in detail. One must be careful in making forecasts even for the next 12 months, let alone the next three, four or possibly even as much as 10 years.

Mr. Onslow

Is there not a possibility that the hon. Member is not comparing like with like, and that in the much higher figure which we now have there may be a great deal of work that was not budgeted for in the original calculations?

Mr. Brooks

It is true that part of the explanation for the earlier escalation in costs from between £150 million and £170 million in November, 1962, to £275 million in May, 1964, involved the implications of the so-called "stretched" version of Concord. It is also true—and I accept what the hon. Member has just suggested—that in the more recent escalation to £500 million there is a figure of about £80 million now specified for post-certification development. But we must bear in mind that the post-certification development is still part of the research and development programme for the Concord, presumably to make it a viable commercial undertaking.

While the figure has risen to £500 million not only as a result of that £80 million, but also £50 million for additional contingency reserve, the £500 million is not the end of the story. Many of us perhaps suspected that when the figure of £500 million was given to us six or more months ago. As was made clear in an Answer to my hon. Friend the Member for West Lothian (Mr. Dalyell), only a few days ago, it does not include the costs of intramural development—the costs of research and development borne by Government research establishments, such as Farnborough. I hope that before very long it will be possible for the House to know the implications of that additional cost, which I suspect to be of no small order.

We are, therefore, well above the £500 million already. We are considering the research and development for an aircraft on which it is now certain that not more than one-third of the research and development costs will be recouped as the result of a levy on sales. The figure of one-third has been currency for some time. The last report of the Committee of Public Accounts, published last September, referred to the matter as follows: Your Committee were informed by the Treasury that it was not contemplated that the Concord project would be economic in the sense that the Governments would recover all their expenditure on development by levy on sales. 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. There is a good deal of ambiguity about the way in which the production costs of the Concord will be financed. There is evidence that perhaps we now have more information than we had a few months ago.

In a debate in the other place on 20th February, the noble Lord, Lord Shackleton, said: There is no delay in the Concord programme. I am informed that satisfactory interim arrangements have been made for production financing in the coming months, and that the need for large sums of money does not arise immediately."—[OFFICIAL REPORT, House of Lords, 20th February, 1967; Vol. 280, c. 598.] I would be interested to know what this so-called satisfactory interim arrangement amounts to. If it is true that it does not involve the large sums of money which are undoubtedly to be needed when the aircraft goes into production, what does the statement mean? Could we have information about the way in which the French Government, perhaps, now are well ahead in their proposals for the production financing of the aircraft and to what extent is there perhaps a discrepancy between French and British Government views on this important matter?

A good deal has been said about the need for European aircraft programmes and production and as a committed European I see much merit in this technological co-operation which we can see as the launching pad for much greater and more ambitious projects. But it is important, when looking at these highly sophisticated and novel ventures such as the Concord, that we should draw the appropriate lessons from what has happened. Here I am a little dismayed to see the dilatory way in which both the Treasury and the former Ministry of Aviation have approached the problem of carrying out a thorough review of the experience so far gained in these bilateral arrangements.

The Public Accounts Committee, last year, referring to earlier Committees which had asked for similar reviews, commented: Your Committee are of the opinion that the likely extension of the number of collaborative projects requires that a thorough study of the efficiency and economy of the sharing arrangements should be made as soon as possible. Surely the time is long overdue when some such thorough investigation of the sharing arrangements should be carried out. Yet we find that in November the Treasury, in its minute upon this Report, stated—and here it shared its view with the then Ministry of Aviation—that they appreciate the importance which attaches to a review of cost sharing arrangements for Concord but consider it premature to proceed to this review without further experience of the arrangements in operation. I wonder what further experience of the arrangements in operation can possibly be required. This is not a new project. The arrangements upon which we are now building for Concord were set in motion at least as early as 1962. We have had well over four years—now getting on for five years—during which these sharing arrangements have surely been in a position at least to be assessed and conclusions drawn. It would appear that the aircraft will be flying and possibly even obsolescent before we decide to carry out some such review, which is urgently needed at the present time.

There has been a good deal of criticism of the Concord project. Some of it, I believe, unlike the hon. Gentleman, to be undoubtedly justified. It seems to be an extraordinary attitude for a party which prides itself on commercial acumen in effect to be urging the Government to pour money endlessly and apparently without restraint into a project when the production companies, the aircraft manufacturers, have made it clear that they will not be in a position to put money into the production financing of the project.

We can argue that there will be technological side effects, some sort of fallout spread over many sectors, and many of the most important sectors, of the British economy as a result of a venture such a this. I hope that that will happen, and suspect that it is bound to happen, to an extent. At this point, we must draw a distinction with the United States and their evaluation of the space programme, because what we do not know, even in the broadest terms, is what that technological fall-out will comprise.

Before we take what may be irrevocable decisions to go ahead with the production financing of Concord, it is important that we should carry out an adequate series of field tests to see what are the tolerability problems of sonic boom over our cities. I tried to develop that point recently in an Adjournment debate, and I do no more than repeat it now. I find myself somewhat apprehensive having read a report in yesterday's issue of The Guardian which seemed to suggest that the Government have decided not to go ahead with such adequate field tests.

I have spent most of my speech so far in discussing the Concord venture. It gives me no solace or happiness to make these criticisms of a venture which is imaginative and full of potential to the whole of British aviation and beyond.

When I see some of the more unjustified criticisms of the venture, I begin to wonder to what extent American interests are busily deploying or encouraging arguments designed to "knock" the Concord and give the American supersonic transport an uninhibited run in the market which otherwise Concord might be able to seize. I begin to wonder to what extent there are many hidden motives at work in the evaluation of Concord which is going on.

If it is true that there is this element in the criticism of Concord, it is all the more important for the British and French Governments to put their house in order and state clearly where they stand. Although there must be many reservations about decisions taken at this stage which might be irrevocable, especially when taken without the sort of knowledge that we should have had a long time ago, if they are going ahead with it, the time is coming when that fact should be made clear. There must be no more dithering.

As for the airbus project, it is a pity to polarise the 211 and the airbus in the way which has been done earlier. It is very difficult to talk remotely intelligently about these projects since, as the hon. Member for Woking has made clear, neither of them is anything more than a design project. It is premature to anticipate that the market for the airbus will be any particular number. I agree that it is important that we should begin to evaluate it, but estimates which we see vary enormously. The hon. Gentleman estimated that, by about the end of the 1970s, there might be a market for the European airbus of between 100 and 200—

Mr. Onslow

I was quoting from B.E.A. News. The figures which I gave were ones arrived at by the European airlines, meeting together to discuss the matter.

Mr. Brooks

I do not dispute them. That is an estimate based upon good sense. However, I have before me an article from the Financial Times of 9th February, by its extremely well-informed air correspondent, which discusses this aspect of markets and says that, by the early 1970s, world air traffic is expected to have at least doubled from the present level and is likely to multiply even faster thereafter. He goes on to say: The Market"— that is, the market for the airbus, the 250-seater project— has been estimated at up to 1,000 aeroplanes throughout the world by about 1980. I would not even know how to begin to estimate whether this sort of estimate is any more accurate than the one we have had, but here is a discrepancy of about 10 to 1 in what are apparently reliable estimates. This does therefore suggest that it is premature to assume that the market for the European airbus will encounter quite so many of the difficulties to which the hon. Gentleman has drawn attention.

We must accept that there will be difficulties. Those who have looked with an element of jaundice at the experience so far in collaborative ventures with the Continent must accept that the cost sharing will be more formidable when a third member is involved, let alone the old guard member of the Concord project, Britain and France.

I feel that in this whole problem of estimating the future demand for aircraft we may, in an odd way, not be imaginative enough, and I end with this thought. It has been said—and I must revert for a few moments to Concord—that this is a venture of great sophistication and great future potential in the whole field of technology. But is it possible to say that it is not imaginative enough, that the American supersonic transport with a speed of about Mach 3 may well involve far more advantage in terms of technological fall-out than the Concord with its speed of 2.2?

Is it possible to suggest that the sonic boom problems encountered with the supersonic airliners such as we are talking about with the Concord will be considerably diminished, if not removed, if we were considering the so-called hypersonic aircraft, which, I understand, will not involve anything like the same problems of sonic boom? There might be further problems for planes flying at this sort of altitude. We know that a solar burst could be a serious radiation hazard to Concord flying at 60,000 ft. and upwards, but this, I think, is the sort of problem which the accurate forecasting of conditions between the sun and the earth might remove in the foreseeable future.

It may be, therefore, that although Concord is a vision of great excitement, nevertheless perhaps we have gone only half way as far as we should go. Perhaps the time is coming when we should be looking again at the ideas of Barnes Wallis, one of the great technical geniuses not only of this century, but of all time, who, during recent years, has been putting forward suggestions for hypersonic aircraft.

3.33 p.m.

Mr. Tim Fortescue (Liverpool, Garston)

At half-past three I would not dream of seeking to detain the House for very long, but I would like for a few minutes to descend from the hypersonic, the supersonic, and even the subsonic to the rather more mundane problems of civil aviation today, and the effect of these problems on civil aircraft design.

I find from my researches that there seems to be a vicious circle in operation, and as always with such a circle the difficulty is to find the proper point at which to break the circumference to do something about it. I would like for a few moments to try to define the circle and make a suggestion.

British European Airways is a great international airline. Its international services are far more important to it than the domestic ones. To illustrate my point, the Corporation makes about £6½ million a year profit on its international services, but a loss of about £1½ million on domestic services. Therefore, B.E.A. will tend to choose to buy those aircraft which will best serve its international services and will not be so careful about their use on the domestic routes. No brand-new aeroplane has ever been used on the latter when first brought into service. The domestic passengers have to put up with second-best, with used aeroplanes no longer wanted on the international routes.

If circumstances in the business were normal, it would not be so bad, but they are not. B.E.A. has a monopoly on services between London and Manchester and London and Birmingham and a near-monopoly between London, Glasgow, Edinburgh and Belfast. When these trunk routes were recently opened to the independents, which operated the highly suitable BAC111, B.E.A. parried with Tridents and Comets which were unsuitable, because they were designed to fly in longer stages.

Absurdly, therefore, by far our biggest domestic airline flies planes on domestic routes which are either not the best—the jets which passengers prefer—or modern planes which are unsuitable and uneconomic. B.E.A. constantly objects to sug- gestions by the other airlines for reductions of fares and special family fares and any other device for selling air seats, because it could not afford them on its domestic services. This semi-monopoly position means that domestic civil aviation suffers, is suffering and will continue to suffer.

The Minister should carefully consider possible alternative solutions. B.E.A. should be instructed, when considering what aeroplanes to buy, to pay more consideration to modern planes for the domestic routes and—most important—should no longer be permitted to keep its present near-monopoly position.

3.38 a.m.

The Minister of State, Ministry of Technology (Mr. John Stonehouse)

The hon. Member for Woking (Mr. Onslow) is well-informed on these matters, but on this occasion he took a one-sided view. He said some unfortunate and extravagant things. It is absolutely untrue that the Government have given those in the industry few reasons to be proud of their work. He will surely agree that the industry's export performance last year—£230 million, £100 million up on the year before—is very creditable, and that the Government, although not responsible for this, have played some part in helping the industry to achieve it.

Many in the industry are proud of this achievement and glad that the Government and the industry have cooperated to secure it—

Mr. Onslow

Of course I agree that this is an achievement of which the industry can be proud, but I dispute the hon. Gentleman's attribution of credit for it to his Government. In so far as it is anyone's credit, it is due to decisions taken many years ago. The aircraft sold now have not been designed since 1964

Mr. Stonehouse

I do not claim any excessive credit for what this Administration have done in the last two and a half years, but it is the case that the finalisation of many of the orders that have been fulfilled during the last 12 months came about during the period for which we have been responsible. The industry has acknowledged the service that has been given and I go no further than that.

The hon. Gentleman went on to talk about people having freedom to determine this and that and he referred to life being taken away by the all-pervading State. He knows as well as anybody else that without the all-pervading State providing the launching aid for British aircraft, few aircraft would have been produced. Consider the cost involved. The VC10 and Super VC10, £10.25 million; the BAC111, £9.75 million; the Trident I and IE, £7.25 million; and the Islander and Jet Stream, to name but a few. All of these aircraft had money provided by the taxpayer through the all-pervading State so that they could be got off the ground.

Mr. Stephen Hastings (Mid-Bedfordshire)

Speaking as one who is closely concerned with this matter, is not the hon. Gentleman aware that while the firms concerned, including my own, are grateful for the provision of this launching capital, the taxpayer and the Government are getting a fine investment, and on very tough terms?

Mr. Stonehouse

I am not disputing that. As the hon. Gentleman is aware, I am anxious that we have a viable British aircraft industry.

I am satisfied that on the aircraft I have named and on the others I could mention, this country will, in the long run, get a viable return in terms of export performance and import saving. Nevertheless, it is hardly fair of the hon. Member for Woking, who takes such an interest in the aircraft industry, to cast aspersions on the all-pervading State when, without the assistance of the State, many of these aircraft would have had no possible chance of being designed.

The case is even clearer when it comes to the BAC211, because the British Aircraft Corporation is asking the Government to put up almost all the cost of developing this aeroplane. The fact is that it is now impossible for private industry and private finance to raise the money required to develop these sophisticated aircraft. There have been some exceptions, like the HS125, that have been extremely successful, but, excepting those, the aircraft now being developed and those to be developed in future require the taxpayers' money to get them off the ground.

We are anxious to provide that money for projects that can be viable in the long run, that can produce a return for our economy and can keep our skilled men in useful employment. But it would be wrong and wasteful for any Minister to recommend that the House should vote the taxpayers' money on building aircraft which will not produce such a return. Certainly, the Ministry of Technology would not sponsor, with our Ministerial colleagues, any project unless we thought that such a return was involved.

I was asked whether we would sponsor the BAC211. The case for this aircraft, as put forward by B.E.A., is not one which the Government can accept without giving the matter very careful examination. B.E.A. needs interim aircraft. We want to help the Corporation to meet that need, but in its calculations of the economic advantages of the BAC211, B.E.A. does not—and perhaps it is not its immediate job to do this—take into account the enormous research and development costs involved in the development of this new aeroplane.

They would amount to about £50 million for the airframe and about £50 million for the RB211 engine, about £100 million in total. Without successful export prospects, it would be foolhardy of the Government to endorse a project of this character, meeting simply the needs of B.E.A. We cannot afford to make the mistake again of building aircraft in British aircraft factories solely for British airlines, nor can we expect to recover research and development expenditure which is based on developing any one of these aircraft for a single airline demand.

Bearing in mind that the United States has a lead on us in this because of its vast domestic market with home airlines demanding many aircraft of these types, and bearing in mind the vast resources of their aircraft producing firms, we cannot expect to be able to succeed in building these new types of aircraft and exporting them, unless we have a fair idea of the export potential they could enjoy. That is why, in evaluating the aircraft proposals now before them, the Government are paying careful attention to the aircraft commitments of other airlines in Europe.

The Boeing 727 has very similar characteristics to the BAC211 and is already flying. The economics of the 727 compare favourably with the 211, which is no more than a design. So the 727 has a very good start. The 727–200 series is about the same size as the BAC211, so what the hon. Member for Woking was saying, that the BAC211 fills a gap, is not correct. The gap has already been filled. Many European airlines are to fly the Boeing 727, if they are not flying it already. It would be very difficult, if not impossible, to persuade them to switch from the Boeing to which they have already committed themselves, to yet another British aircraft.

Mr. Onslow

By the same token, many American lines are flying the BAC111 and it should not be difficult to persuade them to switch.

Mr. Stonehouse

That is another story. The BAC111 has been a success story in the United States and I was glad, when I was there about 18 months ago, to be flying in a 111 in service with an American airline. Our study of the export potential of the BAC211 does not yet give us any great cause for enthusiasm. I go no further than that. Where there is £100 million of the taxpayers' money to be invested, I think that the House would agree that we have to be very cautious.

Mr. Robert Carr (Mitcham)

Many of the yardsticks or tests which the hon. Gentleman enunciated would be common ground to Members on both sides, but he disturbed me when he referred to B.E.A.'s need for an interim aircraft. It is very dangerous to look at this as an interim or stopgap, because that is not my understanding of what B.E.A. is looking for at all.

Mr. Stonehouse

I was going on to explain why we think the airbus is a project which should be seriously considered.

B.E.A. will need aircraft in the 170-seat range. It will need aircraft of the airbus type from 1973 and 1974 onwards. Its total demand for the airbus type will depend on the type of aircraft it has of the smaller size, but the Corporation acknowledges—and I think that the hon. Gentleman also acknowledged—that it will need an airbus type of plane in the middle of the 'seventies.

The three European countries—France, Germany and ourselves—have been considering for the past two years the Euro- pean airbus project. If, in fact, we can get the right conditions to start this project study—and that still has to be determined; we cannot determine it before the end of the month, when I will be meeting the German and French Ministers concerned—it is the sort of project which, for instance, the Plowden Committee advised us to undertake, and which it is generally agreed on both sides of the House promises the best opportunity for the British aircraft industry to build aircraft which can produce a viable return to our economy; because this aircraft would start off on the firm basis of a commitment on the part not only of B.E.A., but of other European airlines.

In the talks I had last month in Bonn with the Ministers concerned, we have already said that there should be a commitment on the part of the three national airlines—Lufthansa, Air France and B.E.A. I believe that there is a growing view in Germany as well as in France that if the German industry, like the French and British industries, is participating in building this aircraft, the airline must have some loyalty to it. It is on that understanding that we are approaching these airbus discussions.

If we can establish this European airline commitment—it could be up to 100 aircraft—this would be the best start that any aircraft project in which Britain has participated has ever had. It would mean a basis for a success in exports of perhaps up to 300, or even more, airbus planes. The total market for this type is between 800 and 1,000 and about half of it is in the United States. We might be able to sell some of the airbus sort of plane in the United States to airlines which have a short haul, or shorter haul, and a smaller size requirement, but we would aim to sell European airbus aircraft to the airlines in Europe, and perhaps outside Europe, in quantities which would make this a viable project.

This is our hope. It is too soon for us to give a proper progress report to the House, but we are approaching this project in a realistic mood. We are not emotional about it. We are approaching it with a view to establishing a project which can produce a return to the United Kingdom economy.

I want to say a word about Rolls-Royce. The Rolls-Royce Company is one of the great success stories in Great Britain. It is a company which has been developing some very successful engines, and the reason why it has developed them is that there have been British aircraft in which to put them. If we did not have a share in the development of airframes there would be a danger that in years to come Rolls-Royce might not have the opportunity of putting the engines it is developing into the aircraft.

Discussions are going on with a view to Rolls-Royce participating in the Lockheed airbus. We hope that they will be successful, but they are more likely to be successful if Rolls-Royce has a project in Europe in which it is also participating. During the talks I had last month, I got the French and German Ministers to agree that if the Rolls-Royce engine were chosen—and we have yet to come to an agreement on that important decision—the French and the Germans would share 12½ per cent. each in the research and development of the RB207, the large engine which Rolls-Royce intends to develop.

This is a very good direction to move in. We have Rolls-Royce, a wonderful firm developing engines that everybody agrees are just as good, if not better, than can be produced in the United States, and the French and Germans now coming in to share the research and development costs.

The Rolls-Royce engine, we believe, must be very closely considered for the European airbus if it is to go ahead, and for these reasons I believe that the airbus project is one that we must look at very seriously indeed.

Working back from the provision of a European airbus for B.E.A., we then have the very real problem of what I would call, in shorthand, the interim aircraft need. It is one that must be filled, and it must be filled with an aircraft that can meet B.E.A.'s requirements. The major responsibility for this is with my right hon. Friend the President of the Board of Trade, but we are very anxious, in the Ministry of Technology, to provide all the assistance we can in helping B.E.A. to meet this requirement.

There are five broad ways in which it can be filled. One would be the BAC211 with the Rolls-Royce RB211 as the power unit. This, I think, must be rejected on the ground of the RB211 and the RB207, which is the bigger thrust engine, being beyond the capacity of Rolls-Royce at one and the same time.

The BAC211 with the Spey is a possibility, but there are some disadvantages to this in view of the fact that the export potential, bearing in mind all the research and development costs, would not be very great.

The Trident IIIB, the VCIO and the Boeing 727 are the other three, and all these must be carefully evaluated before any decision can be reached. The Government must take a broader view of the problem than B.E.A. can be expected to take. When B.E.A. makes its proposal for the BAC211 it is, of course, considering it from a narrow point of view. It is even considering a quoted price to the Corporation that cannot possibly include the full research and development costs, amortised over the aircraft it intends to buy. If the research and development costs were fairly amortised over the few aircraft B.E.A. intends to buy, it would make the aircraft uneconomic from its point of view. It is this broad view of the total cost to the economy which the Government must bear in mind.

I come to the Concord—a very big question indeed—

Mr. Speaker

Order. I hope that the hon. Gentleman will not think me discourteous, but this is the fifth of 15 debates we are having tonight. I hope that the hon. Gentleman can be reasonably brief.

Mr. Stonehouse

I am always ready to be reasonable, Mr. Speaker, but some very serious questions have been raised. There will not be an opportunity before we rise for the Recess for these matters to be raised again in the House, and they are matters of public controversy outside, in the Press and elsewhere. Despite the lateness of the hour, I believe that it is vitally important that some points should be recorded in the House. I hope that I do not transgress too far in time—

Mr. Speaker

I have no power to prevent the hon. Gentleman.

Mr. Stonehouse

The Concord is costing £500 million in research and development, and it is quite right and proper for hon. Members to raise questions about this expenditure. My hon. Friend the Member for Bebington (Mr. Brooks) asked a number of questions about production financing. We have already undertaken to provide £500,000 for advance materials and for machine tools and for other requirements to B.A.C., and there is no hold-up to the development of concord.

The French systems are not quite the same as ours and I do not think that any comparison can be made between what we are doing in Britain and what France is doing in regard to production financing. We are fully in accord with the French. We are in close liaison with them through the Concord Directing Committee, of which the Ministry of Technology's Controller of Aircraft is the chairman.

My hon. Friend raised the question of sonic bang tests. I repeat what I said to him in an Adjournment debate. These proposals are being considered by the Ministers concerned.

The Concord project raises a great deal of emotion on both sides, both for and against. The hon. Member for Woking referred to the B.B.C's "Panorama" programme. I am sure that he would not expect me to comment in detail on that programme. Any such programme is the responsibility of the B.B.C., but five hours ago I went on a programme for I.T.V. during which I was asked a number of questions about Concord. I hope that I answered them in a way which would satisfy the hon. Member. I said that Concord could produce a return for the economy of Britain if the costs are controlled. This is a very important factor. We cannot allow anyone to get away with the idea that there is a blank cheque. We have to have efficiency and rigorous control not only of development costs, but also of production costs. Bearing in mind that all the money is provided by the taxpayer, it is the duty of the Government to see that there is firm control.

The Concord project will be considerably ahead of the United States. My hon. Friend the Member for Bebington asked whether it would not be better to go for a Mach 3 aircraft, like the Americans. This, he said, could have more advantage, particularly in terms of sonic bang. I do not agree. The disadvantage of the American aircraft is that as it involves complicated materials it will cost a lot more and take a lot more time. As a result, Concord will be well ahead of the Americans and this will give us, with the French, an opportunity to scoop the market in advance of the Americans.

Mr. Brooks rose—

Mr. Speaker

Order. Interventions prolong speeches. There are still 13 or 14 subjects ahead of us.

Mr. Stonehouse

We are anxious that our co-operation with the French in the control of Concord should be efficient and effective and that we can produce on time—as I believe we shall—an aircraft that can pave the way for successful production aircraft. There are many questions which are still to be resolved, as the House would expect in an advanced project of this kind, but I can assure the House that the Ministry of Technology is keeping a very close eye on the development of Concord and providing every possible support and encouragement to it.