HC Deb 07 November 1968 vol 772 cc1079-85

Mr. Corfield (by Pivate Notice) asked the President of the Board of Trade whether he will make a statement upon the implications of the decision of British Eagle to cease trading in the context of British civil air transport.

The President of the Board of Trade (Mr. Anthony Crosland)

I much regret that one of the oldest and most respected of British independent airlines, British Eagle, with its charter company, Eagle Aviation Limited, has had to cease operations.

I have been aware of the companies' growing financial difficulties, but this was a commercial enterprise and the Government would not have been justified in intervening.

The cessation of its operations must cause inconvenience to some passengers, but arrangements are being made to re-book on other airlines all or most of the passengers booked with Eagle; carriers and travel agents are at present busily making such arrangements.

It will, of course, be necessary for any alternative services to comply with the relevant licensing, safety and operational requirements. Subject to this, my Department, which is already in touch with a number of carriers, will seek to ensure a continuity of service to the public, particularly from provincial cities.

I would also trust that any reallocation of services, in advance of the Edwards Committee's report, would not significantly affect the present balance in the structure of the industry. We must, however, await this report before the Government's future policy for the civil aviation industry as a whole can be formulated.

As regards employees, the Department of Employment and Productivity is in touch with the airline and its employees. The Department will take all the steps it can to help those employed by the firm to find new jobs quickly.

Mr. Corfield

May I join the right hon. Gentleman in expressing sincere regret on behalf of my right hon. and hon. Friends that this distinguished airline should have been forced to this decision, and may I ask him three questions? Will he now realise that we cannot afford to wait for the Edwards Committee? Will he radically review the Government's policy, as set out by the Chancellor of the Exchequer when he was Minister of Aviation in February, 1965, and ensure a genuine effort on the part of the Air Transport Licensing Board to hold the balance fairly between the nationalised Corporations and the independents, and to cease to give automatic priority to the Corporations?

Secondly, will he now admit, in the light of the increasing proportion of British civil aviation, whether nationalised or independent, devoting itself to inclusive tour operations, that it was folly to increase the landing charges at Heathrow, and Heathrow alone, simply to cash in on devaluation, which increase, in the terms of the I.A.T.A. fare structure, could not benefit the inclusive tour operator?

Thirdly, will he again ask his right hon. Friend the Chancellor of the Exchequer to review the whole idea of the £50 travel allowance? It is doing enormous damage to British civil aviation—he will be aware of the remarks of the Chairman of B.E.A. on this matter—and that damage is clearly outweighing any possible benefit it could bring in other directions.

Mr. Crosland

Mr. Speaker, you rebuked me and hon. Members yesterday for excessively long answers, but it is hard to give short answers to questions as long and complicated as that. I shall however, do my best.

The answer to the first question: will we radically review our policy for the industry before Edwards, is, "No". The industry has certainly had a bad year, as have airlines in most countries in the world, owing to the failure of traffic to grow at the rate that had been expected. Nevertheless, a number of firms have shown improved results this year. Most of the firms expect improved results next year. The eagerness shown in telephone conversations with my Department today by many firms to take over the British Eagle services shows a greater degree of optimism than that shown by the hon. Gentleman.

We have discussed landing charges many times. There are two reasons why we increased them. The first was to avoid what would otherwise be a serious loss of foreign exchange as a result of devaluation. The second reason was, looking ahead, to limit the growth of public expenditure, as we are constantly asked to do by the Opposition.

The £50 travel allowance was not the sole or main reason for the difficulties of British Eagle. There are a variety of reasons which I could list. This was only one of them.

Mr. Cronin

While I have every sympathy for the unfortunate people who worked to save British Eagle, without success, is it not the case that successive Conservative Ministers were warned on numerous occasions by hon. Gentlemen on this side of the House about the risks of this sort of thing happening when they insisted on increasing the scope of private airlines to an excessive extent?

Is this not also an indication of the confusion which will overtake national affairs if we ever have a Government formed by right hon. and hon. Gentlemen opposite, with their obsessional insistence on private enterprise when it is wholly inappropriate?

Mr. Crosland

My hon. Friend has great experience of this industry and great knowledge of these matters, and his opening comments were absolutely right. As to the latter part of his comments, hon. Members opposite are doing a disservice to the industry in constantly treating its affairs in ideological terms.

Sir A. V. Harvey

Is the right hon. Gentleman aware that over 2,000 employees are involved, including over 170 aircrew? Will the right hon. Gentleman say if whether the I.R.C. has made any attempt to help the company? [Laughter.] Is it too late to do so? Will the right hon. Gentleman deprecate the amusement at the failure of this company shown by some of his hon. Friends behind him?

Mr. Crosland

I do not think that it is the failure of this company that has caused amusement; it is the tone of some questions that have come from the opposite side of the House.

No, the I.R.C. has not been called in to examine this industry; it would be inappropriate to call it in while the Edwards Committee is doing precisely that. In any case, it is not the function of the I.R.C.—and I am glad to see the hon. Gentleman so strongly supporting its rôle—to use public money to aid one of a number of commercial firms in this industry.

Mr. Mikardo

Will my right hon. Friend bear in mind that he and his right hon. Friends and right hon. Gentlemen opposite, when they were in office, have always enjoined industry in a situation such as this to consult the workers concerned at the earliest possible moment? Does he know that the employees of British Eagle were informed of this shut-down only after the company had informed the Press, and that the company is not undertaking even to pay out money in lieu of notice and has said nothing to them about the fulfilment of its statutory obligations to make redundancy payments?

Does my right hon. Friend think that this sort of behaviour reinforces the plea of hon. Gentlemen opposite for more tenderness towards these private enterprise companies?

Mr. Crosland

I was aware of some but not all of the facts which my hon. Friend has mentioned. Certainly, on the assumption that all of them are correct, which I do not doubt, he raises a very serious matter. In the light of that, I shall now urgently discuss it with my right hon. Friend the Secretary of State for Employment and Productivity, to try to improve the situation.

Mr. Fortescue

In the light of this news about British Eagle, which has served Liverpool so faithfully for many years, with many of its employees living in my constituency, and in the light of the recently expressed view by the Air Transport Licensing Board that no British airline is able to make its domestic routes pay, will the right hon. Gentleman assure the House that he will not wait for the report of the Edwards Committee before doing something to make our domestic lines viable?

Mr. Crosland

No, Sir. I have already expressed the reasons why I do not propose to change basic Government policy before the Edwards Committee reports.

Mr. Rankin

Does this happening not make my right hon. Friend see that there is still too much penetration of British aviation by private capitalism, and that the sooner that the State spreads its tentacles more widely over the industry the better?

Mr. Crosland

Possibly my hon. Friend might have phrased his point of view more tactfully, but I give him the answer that I have already given to hon. Gentlemen opposite. I do not propose to make any basic policy changes about the industry until we have the Edwards Report.

Mr. Lubbock

I appreciate that the right hon. Gentleman must await the findings of the Edwards Committee before making long-term decisions about the future of the industry, but could he not ask that Committee to submit an interim report in the light of this latest and very serious development? Could he also consider the position of British Eagle's employees and whether or not they will receive redundancy payments before other creditors of the airline are paid? Cannot the company's assets be disposed of to pay its employees redundancy money? Will the Minister also say what steps have been taken to restore the loss of capacity on our domestic routes as a result of the failure?

Mr. Crosland

I am reluctant to ask for any interim report from the Edwards Committee. Many of us have long experience of these matters and know that interim reports are seldom satisfactory.

As for redundancy payments and their degree of priority, I will look into that and write to the hon. Gentleman.

As for the loss of capacity on domestic routes, the indications at the moment are that all the more important scheduled services will be taken over by other airlines, though I cannot be definite about that because discussions are going on at the moment.

Mr. Crawshaw

Irrespective of the argument of private versus national airlines, the loss of British Eagle is a great one to the North-West and especially to the City of Liverpool. May I urge on my right hon. Friend that, until the situation is stabilised, he should be prepared to waive licensing restrictions in respect of other airlines which are willing to take on cancelled flights?

Mr. Crosland

In the case of flights to Liverpool, Cambrian Airways is applying to the Air Transport Licensing Board for a variation in its current licence so as to be able to serve Liverpool as a destination from London without the present limitation on its licence.

As regards a waiver, using the procedure by which in certain circumstances I can exempt the need for a licence, I shall do that without hesitation if a clear case can be made out for it.

Mr. Onslow

How can the Minister dare to pretend that there is no connection between this sad event and Government policy over the last four years? How does he dare say that we must wait for the Edwards Report to be put into legislation, which means another 18 months, before anything can be done?

Mr. Crosland

I made no such statement. I merely made a statement about the £50 travel allowance, pointing out that it was only one of a number of factors which have led to the present difficulties.

Mr. Russell Kerr

Further to the questions and observations of my hon. Friend the Member for Poplar (Mr. Mikardo), is my right hon. Friend aware that the trade union representatives on the National Joint Advisory Council for the industry, following the recent redundancies in British Eagle, have been seeking to have a meeting with Mr. Harold Bam-berg, the head of British Eagle, so far with a complete lack of co-operation from him? Can my right hon. Friend tell us what are the Government's plans to prevent this kind of threat to the livelihoods of many decent men and women in the industry?

Mr. Crosland

Again, I am obliged for the information that my hon. Friend has given me about the trade union side. As I said earlier, I would like to discuss the case with my right hon. Friend the Secretary of State for Employment and Productivity and decide what action should be taken.

Sir J. Langford-Holt

The right hon. Gentleman said that landing charges at Heathrow had been raised so as not to forgo the currency advantage. Does he not recall that both he and the Chancellor of the Exchequer urged companies, especially those dealing with exports, not to raise their prices following devaluation because of the effect that it would have on exports?

Mr. Crosland

No, Sir. Neither my right hon. Friend the Chancellor of the Exchequer nor I have ever urged companies, as a general piece of advice, not to raise their prices following devaluation—[HON. MEMBERS: "Oh."] On the contrary, we have consistently said that companies must judge their price policy in the light of the situation and the market concerned. A considerable number of companies which could sell all that they are already producing at the existing dollar price have behaved in the same way as the British Airports Authority, and rightly.

Mr. Thornton

Did not the last Labour Government guarantee the payment of redundancy money from a central pool when firms got into financial difficulties and were not able to meet their obligations?

Mr. Crosland

I would not like to answer questions on the redundancy point off the cuff. If my hon. Friend will allow me, I will look into the matter with the Department mainly responsible and see what action they ought to take.

Several Hon. Members rose

Mr. Speaker

Order. Mr. Maudling. Business Question.