HC Deb 09 March 1970 vol 797 cc912-9
Mr. Corfield

(by Private Notice) asked the President of the Board of Trade whether he will make a statement in regard to the proposed take-over of B.U.A. by B.O.A.C.

Sir G. Nabarro

On a point of order. Before this Private Notice Question is answered, Sir, may I draw your attention to the fact, your having given leave for this Question to be asked, that an identical Question is on the Order Paper in my name, on page 4517, tabled on Friday morning last within minutes of the news having arrived in the House.

Is it correct for another hon. Member to supersede me in getting a Question for answer specially by a Minister, with precedence over mine?

Mr. Speaker

It used to be an absolute rule that Mr. Speaker refused a Private Notice Question if there were a similar Question on the Order Paper at all. If the hon. Gentleman looks up the Report of the Select Committee on Procedure, on Private Notice Questions, he will see that the House instructed Mr. Speaker to use his discretion. I have done so today.

The Minister of State, Board of Trade (Mr. Goronwy Roberts)

The answer to the Question is as follows:

The proposed purchase of British United Airways by B.O.A.C. results from an initiative by the principal shareholder in B.U.A., the British and Commonwealth Shipping Company. The negotiations took place between a willing seller and a willing buyer.

B.O.A.C. sought the Board of Trade's approval for this investment. The Board of Trade came to the conclusion that the proposal was acceptable in principle, subject to its being satisfied on a number of financial points.

The Government's policy remains as set out in their White Paper of last November. This was to welcome a merger of independent airlines that would have strengthened the industry. The Government could not, however, accept as a condition of such a merger the transfer of a significant part of the air corporations' routes.

Following the issue of the White Paper, B.U.A. sought from us a guarantee that such transfers would take place, on the lines of the applications it had already made to the Air Transport Licensing Board to take over by stages all of B.O.A.C.s African routes. We could not, consistently with the policy in the White Paper, give a guarantee for this or for any substantial transfer.

In view of the British and Commonwealth Shipping Company's apparent unwillingness to participate in a second force airline without such a guarantee, and its decision instead to offer B.U.A. for sale to B.O.A.C., there was no ground of policy for the Board of Trade to make any objection of principle.

It has now been reported in the Press that Calendonian Airways proposes to make a competing offer to purchase B.U.A. and it has applied to the A.T.L.B. for B.U.A.s routes to be transferred to it. It is for the shareholders in B.U.A., in the first instance, to consider any such offer and for the A.T.L.B. to consider in the usual way any applications that are made to it. I shall, of course, be glad to consider any point that Caledonian may wish to make to me.

As far as the proposed purchase by B.O.A.C. is concerned, the Government are awaiting further financial information before reaching a final decision.

rose—

Mr. Speaker

Order. It is customary for the Chair to have a copy of the statement. It helps the Chair in taking supplementaries.

Mr. Corfield

Is not the right hon. Gentleman aware that, parallel to the negotiations between B.U.A. and B.O.A.C., B.U.A. was also negotiating with Caledonian and was on the point of an agreement which would have entirely fulfilled the Government's policy as set out in the White Paper?

It is all very well for the Minister to say that the Government's policy remains that set out in the White Paper, but does he not realise that the President of the Board of Trade's approval of this proposal completely and utterly contradicts his own policy?

I remind the right hon. Gentleman that the current borrowing powers of B.O.A.C. have been sought from, and afforded by, the House on the understanding that they are required for re-equipment of B.O.A.C. and not for the purchase of potential competitors. I assure the right hon. Gentleman that the use of this money for any such purpose as he has in mind will be regarded on this side of the House as a gross breach of faith.

Finally, may I ask the right hon. Gentleman for his assurance that the hearings by the A.T.L.B. will be left to the board, a body set up by Parliament for this purpose, and that the licences will not be made the subject of a political diktat by the Board of Trade? I assure the right hon. Gentleman that the attainment of a powerful, one-force independent airline remains, and will remain. Conservative policy.

Mr. Roberts

The hon. Gentleman has asked a number of questions. If I do not remember every one that he has asked, perhaps he will forgive me.

The last point but one that the hon. Gentleman made related to the A.T.L.B. Of course, the proceedings of the A.T.L.B. will not be subject to any political diktat. The Board will consider the application on its merits, and the procedures already laid down will be fully followed.

On the first point the hon. Gentleman made about B.U.A. having approached Caledonian and, as I understood the hon. Gentleman to say, gone a long way towards reaching an agreement with Caledonian, this is not the impression B.U.A. gave when it met my right hon. Friend and myself. The impression B.U.A. gave was that it had decided to make this offer to B.O.A.C., and it justified its decision in a manner which did not seem to us to leave room for any assumption that it thought that an arrangement could be made between itself and Caledonian.

On the hon. Gentleman's third point, namely, that the White Paper looks to the emergence of a merger of independent airlines, that remains the policy. If there is a firm, considered bid by Caledonian, it is still for B.U.A. to entertain such a bid and to proceed on the lines of the White Paper.

Mr. Leslie Huckfield

Was it not originally the Conservative Government that formed B.O.A.C. in 1939 because private enterprise just could not cope? Is not B.O.A.C. now a very successful and competitive airline? When the proposed take-over of B.U.A. by B.O.A.C. goes through, will it not finally render the whole concept of a second-force competing private airline unnecessary and superfluous?

Mr. Roberts

My hon. Friend anticipates a decision which is still not finalised. It will be for the House, no doubt, to consider the situation which will emerge. We have heard of another bid. I have said that that bid will in no way be invalidated by any scrutiny that the Government have given to the first offer. It is for B.U.A. to entertain that bid or not to do so.

On the question concerning control of investment, raised by the hon. Member for Gloucestershire, South (Mr. Corfield), investment by B.O.A.C. is controlled by the Government.

Sir G. Nabarro

Is it not the Government's policy, manifest in their support for this bid by B.O.A.C., to create a single State monopoly in overseas civil airlines without the competition of independent airlines, as suggested by the hon. Member for Nuneaton (Mr. Leslie Huckfield)? Can the right hon. Gentleman confirm to the House that it will ultimately be the purpose of the Government to refer this transaction, or any other transaction that takes place affecting B.U.A., to the Monopolies Commission?

Mr. Roberts

Reference to the Monopolies Commission is made when the Government seek advice on a proposal to merge. The Government have already concluded that the proposed purchase by B.O.A.C. is acceptable in principle, subject to examination. This is the provision under the Monopolies Act. There is nothing to prevent the Government from seeking the advice of the Commission.

Mr. Cronin

Does my right hon. Friend agree that B.O.A.C. is subjected to powerful competition from foreign airlines and that, therefore, it is in the best interests of British aviation that it should take over an airline which competes on foreign routes? What possible objection is there to B.O.A.C.'s having the ordinary commercial freedom to take over another company, apart from the unreasonable prejudices of hon. Gentlemen opposite?

Mr. Roberts

My hon. Friend is right. It would be unreasonable to deny to B.O.A.C. or any other airline—we have heard of an independent one today—the right to make a bid. The fact is that B.O.A.C. did not make a bid; B.U.A. approached B.O.A.C. Once that had happened, it was reasonable and right that the Government should take an attitude, and they have done so after the most stringent examination, particularly of the finances. [An HON. MEMBER: "Rubbish."] It is not rubbish. The finalised approval has still to be made, and will be subject to further scrutiny of information coming to us from B.O.A.C. and B.U.A.

Apart from four countries—the United States, Canada, France and ourselves—every country in the world has decided that international competition is best met by national airlines.

Mr. Lubbock

The right hon. Gentleman is absolutely correct in saying that up to the moment of the deal being announced there was no sign whatever of a merger between B.U.A. and Caledonian, however unfortunate some of us may think that.

On the question of competition, is the right hon. Gentleman aware that, while the hon. Member for Loughborough (Mr. Cronin) may be right with regard to the international routes, there is some anxiety about the elimination of competition on the domestic routes which, under the proposal to create the Airways Board, will be operated entirely by the nationalised corporation? What proposals will the right hon. Gentleman have if the deal goes through for ensuring that the consumer on the domestic routes does not suffer?

Mr. Roberts

I agree that domestically a situation will arise which will have to be very carefully examined. I agree that we do not wish to see a situation created here in which consumer choice and the results of competition are not available. This is a matter for very careful study, but the situation is created not by the Government but by the action of B.U.A. in offering itself for purchase to B.O.A.C.

Mr. Rankin

Does my right hon. Friend recollect that before B.U.A. went into the South American route it was operated by the nationalised corporation? Does not it seem logical that B.O.A.C. having taken over B.U.A. it should also take over all its obligations and undertakings?

Mr. Roberts

If the deal goes through that will be the position. It will be a comprehensive arrangement and there will be other details to be hammered out between B.O.A.C. and B.U.A.

Sir A. V. Harvey

Why has not the Edwards Report, which was published almost a year ago, not yet been debated, in spite of prodding of the Leader of the House? Why has the House not had an opportunity to express its view? Does the right hon. Gentleman recall, in particular, what his hon. Friend said, that B.O.A.C. had the opportunity to operate, and did operate, a route to South America and lost millions of pounds and gave it up? Britain did not have a route, but B.U.A. has made a profit.

Is the right hon. Gentleman aware that it is Government policy that has driven the company into the ground and that in the eyes of the public this whole matter stinks to high heaven?

Mr. Roberts

I had expected better of the hon. Gentleman. He understands the industry and knows that the White Paper lays down very clearly the Government's policy if the independent airlines—the two big ones, for example—were to come together. They could break into new markets, subject to certain obvious conditions in the public interest.

As for a debate, the hon. Gentleman should address himself to his Leader as well as to my right hon. Friend the Leader of the House. His side of the House might have chosen a Supply day for such debate.

Mr. Sheldon

If it is intended that B.O.A.C. operates as an independent corporation, surely my right hon. Friend should allow it to take part in these mergers that so much of private industry is also engaged in? Is not it absurd that the party opposite should try to shackle the State corporations whereas they do not insist that the free enterprise companies of which they are such proponents should have similar shackles?

Mr. Roberts

I hope that everything I have said this afternoon shows that neither was ever shackled by Government policy and B.O.A.C. and equally an independent airline were free to make an offer. In fact, B.O.A.C. would not have made an offer had not the offer been made to it; and that is the position now.

Mr. Amery

Does the right hon. Gentleman agree that B.U.A. has saved British airline positions in South America and that if the merger now proposed should take place this would greatly strengthen the case for selling off some of the B.O.A.C. equity to the public on British petroleum lines?

Mr. Roberts

That is an entirely different question which should await a larger debate.

Mr. Hugh Jenkins

Is not it abundantly plain that the objections of hon. Gentlemen opposite and their friends in the Press are not to public monopoly, but to the fact that their interests are not being served in the matter? Is not the case here that they are trying to serve private interests and putting them above the interests of the public at large? Should not my right hon. Friend resist attempts by hon. Gentlemen opposite to make him take a different view of the matter from that which he has already taken?

Mr. Roberts

I am resisting that attempt and propose to continue to do so. If B.U.A. continues to negotiate with B.O.A.C. I see no reason why that should not come about if it is consonant with Government policy.

Mr. Maudling

Is the right hon. Gentleman aware by now that we regard his answers as totally unsatisfactory? He has not dealt with the point about the use of money granted for buying aircraft for buying shares in a private company, nor with the need for reference to the Monopolies Commission in circumstances where, by his own admission, the problem of monopolies is particularly difficult.

Will the right hon. Gentleman make it clear to his right hon. Friend the Leader of the House that we believe that the matter should be debated in the near future, and in Government time, because it represents the collapse of the Government's policy, on his own admission?

Mr. Roberts

The right hon. Gentleman makes a direct attack on B.U.A. If the White Paper is in danger it is because of B.U.A.'s initiative. [An HON. MEMBER: "It is the Government's inaction."] The Opposition do not want to understand that it is not a Government initiative that has led to the situation, but an initiative by an independent airline.

As to the use of public money, I have already said that Government control of investment by nationalised undertakings is very well known to right hon. Gentlemen opposite and that this will govern what is done financially in regard to the merger if it comes about.

As to a debate in Government time, I wish the right hon. Gentleman luck in pressing my right hon. Friend on the point.

Several Hon. Members rose—

Mr. Speaker

Order. I must protect the business of the House.