BEAGLE AIRCRAFT COMPANY

HC Deb 10 March 1970 vol 797 cc1123-200

3.39 p.m.

Mr. F. V. Corfield (Gloucestershire, South)

I beg to move, That this House regrets the mishandling by Her Majesty's Government of the Beagle Aircraft Company. I stress at the outset that, from the Opposition's point of view, this is not yet another debate on the merits or demerits of nationalisation. Our concern is the loss of a very substantial sum of public money resulting from what appears, from an examination of the facts, to have been the mishandling of this affair in which the House, from the start, has been completely and, at times, misleadingly informed. According to the Minister of Technology, in his statement on 2nd December, the sum of money involved was £6 million, which I estimate will be increased by about £1¼ million by his very welcome decision to accept liability for Beagle's creditors.

I remind the House that the Beagle Aircraft Company was created in 1960 as a wholly-owned subsidiary of Pressed Steel Fisher Limited and was based on the amalgamation of the old Auster and Miles Aircraft Companies. By 1966, negotiations which culminated in the take-over of Pressed Steel by the British Motor Corporation were under way, and Pressed Steel had indicated to the Government that they wished to withdraw from the light aircraft industry. According to a subsequent Ministerial statement, it was then that the then Minister of Aviation, the present Minister of Transport, made inquiries about the possibility of participation by other commercial concerns but without success.

It is relevant to remind the House that at that time the established aircraft manufacturers were still very much in the process of trying to adjust themselves to the situation which had been created by the Government by their drastic cancellation of military projects—TSR2, P1154 and the HS681. Far from being over- stretched at that time, they were particularly active in searching for and evaluating alternative projects. Hawker Siddeley, for example, was already in the executive aircraft field with the HS125 and Handley Page with the Jetstream. Britten-Norman was developing the Islander and the Government-owned factory at Short Brothers and Harland had already moved away from the highly-sophisticated airline field to the much less sophisticated Skyvan.

It is, therefore, quite untrue to say that none of the established aircraft manufacturers had the capacity to undertake light aircraft production in the same category as the Beagle 206, which was the only aircraft actually in production with the Beagle company at the time—it was a seven to eight seater twin-engined aircraft—or that none of the established manufacturers was interested in this type of market. But it is against this background, in which these manufacturers evaluated Beagle and found it wanting, that the Government decided that they would, nevertheless, purchase the Beagle Aircraft Company.

The Government agreed purchase at a price of £1 million subject as soon as the necessary enabling legislation could be passed and, in the meantime, they agreed to meet the company's full liabilities, and that proposition was announced to the House on 12th December, 1966. The enabling legislation did not appear until we had the Industrial Expansion Bill, the Second Reading of which was on 1st February, 1968. During the intervening period—that is, up to 31st March, 1968— the Government had advanced £2.5 million under the powers of Section 1 of the Civil Aviation Act—the Section which enables the Government to give launching aid for civil aircraft.

To use those powers for this purpose undoubtedly represented a significant extension of the purposes for which they had previously been regarded as apropriate. First, there was no doubt that the purchase money for this company would be paid whether or not parliamentary approval for the enabling legislation was given. It would be used to purchase a company. Secondly, it is worth noting that the justification for these powers and duties which is normally regarded as arising from the special characteristics of the aircraft industry, with which we are all familiar, does not at first sight apply to the manufacture of light aircraft such as Beagle.

Those characteristics can be summarised very quickly by referring to the high cost of developing sophisticated civil aircraft and the very long time scale required for development which, in turn, involves a prolonged period between initial expenditure and the return, and peculiar difficulties in forecasting markets such a very long time ahead. But neither the cost of developing a light aircraft nor the time lag between initial expenditure and return begins to be in this class. On the contrary, both are of a nature that is well within the experience and requirements of a very large part of modern British industry. This is an important point.

We on this side of the House fully accept and support the need for Government subvention of sophisticated products of the aerospace industry. We also accept that in such projects the risk and forecasting difficulties are such that from time to time some of these projects will have to be abandoned. I would go so far as to say that if one attempts to insure 100 per cent. against failure one will almost certainly insure against success. But neither the Beagle Aircraft Company as a whole, nor any of the aircraft with which it was concerned, falls into this category. That must be borne in mind.

I remind the Minister, if he needs reminding, of the very considerable efforts made by my hon. Friends during the Committee stage of the Industrial Expansion Bill to elicit from the Government sufficient information on which to form a judgment on the commercial wisdom of their decision. If one reads the discussion on Clause 11 on 14th March, one is struck by the unnecessary acrimony with which our efforts were received by the Government. They were not only perfectly legitimate efforts, but necessary efforts, if my hon. Friends and the Committee as a whole were to carry out their duties.

Suffice it to say that the Minister eventually produced a statement which gave much of the relevant financial information. The statement is dated April, 1968. From an earlier Answer to a Question, it appears that up to 1st July, 1966, Beagle's total losses were in the region of £2 million, mostly associated with the B206, and exclusive of subventions by the parent company totalling £1,135,000. It appears from the statement of April, 1968, that between that date and 31st December, 1967, further losses were incurred amounting to £1,597,000. Therefore, by the time that the Government were in a position to purchase, £4.7 million had already been spent in developing this one aircraft, and designing another.

The Government paid £1.1 million—purchase price plus interest—and made good the losses incurred between August, 1966, and March, 1968, to the tune of £2.5 million, and they estimated—I refer to paragraph 3 of the statement—that a further £2 million would be required to break even by 1972 with eventual annual sales at that time of between £5 million and £6 million. In the event, however, it is clear from the Minister's statement of 2nd December that a further capital injection of no less than £6 million would have been required to achieve a break-even point by 1975—in other words, three years later than the original estimate.

That represents a really mammoth miscalculation, a miscalculation based on a period of only 18 months, from April, 1968, to 2nd December, 1969. It is no use the right hon. Gentleman or his noble Friend in another place defending this miscalculation by implying that the Government were then faced, for the first time, with the alleged need to develop and introduce a wider product range, including new designs of twin-engine aircraft, for it is abundantly clear from the proceedings in Committee that this was envisaged from the outset. In Committee, my hon. Friends were told time and again that it was the great merit of this proposal that Beagle was a company—indeed was apparently the only company —in a position to produce this range.

I doubt the validity of this theory that one must have a range. Considering the history of most light aircraft companies, it is clear that they first developed an extremely successful aircraft, from which evolved a family of aircraft at a later stage; that is, after the first had proved profitable. If one wants a modern example of this, one need only consider the HS125. However, that was the theory put forward at the time and it is no good the Government now saying. "We want another £6 million to do what we said we intended to do and estimated that it would take £2 million to do only 18 months before".

It is hardly necessary for me to remind the House that the Minister and his predecessors head a great Department which has enormous expertise in these matters. These people are, after all, monitoring, financially and technically, such immensely technical projects as the Concorde, the M.R.C.A. and the development of the RB211 in various forms. It is their duty—and I have no doubt that they have the expertise to do this—to evaluate such propositions as are put before them, such as the 311, the 300 airbus and other projects which various aircraft companies put to them.

It is absolutely inconceivable—indeed, it is unfair to the right hon. Gentleman's Civil Service advisers even to conceive, to suppose—that they are likely to make such a very grave miscalculation. Does the Minister really intend to say that in making his financial calculations he acted on their advice? Will he suggest that his great Department, with its vast expertise in engineering and financial control and with its enormous responsibility for hundreds of millions of pounds of the taxpayers' money, could not do better than a 300 per cent. error in what, by any standards, must have been the simplest project, both financially and engineering-wise, they could ever have handled, in those terms as well as in terms of the time-scale involved?

Is it not much nearer the truth to say that advice was received by the right hon. Gentleman, that £2 million was nothing like enough money to forward this project and that he took it upon himself to over-rule that advice? Certainly, he was clearly warned by my hon. Friends. He was also clearly warned by a number of people outside the House. I have with me a copy of a letter which was written to him by the son of the founder of the Auster Aircraft Company, to which the right hon. Gentleman replied with complete assurances that he was satisfied that this was the soundest possible investment.

There was also at the time a letter in Flight, expressing grave doubts whether the selling price in relation to the cost could ever yield a profit, on the ground that the selling price had throughout been substantially lower than the cost, and that even if taking into account all the advantages of the learning curve, to make a profit equivalent to the sort of profit made by light aircraft companies in America, of between 11 and 12 per cent., a production line of 1,200 aircraft would be required, representing a period of 30 years at the then contemplated rate of production. But, again, the Minister ignored those warnings.

Are we really to believe that this further requirement for £6 million just came as a bolt from the blue in late November of last year? It certainly appears that the Government's decision not to accept further financing of Beagle came as a bolt from the blue to the company; that is, unless the company was behaving very dishonestly indeed, which I cannot believe it was, since it was accepting equipment to a considerable value to within a day of the receiver being appointed.

It is also relevant to ask what degree of supervision, both monetary and technical, over the company's affairs was assumed by the right hon. Gentleman's representatives. In 1966, when the initial decision was made, we were clearly told that the public's investment in Beagle would be safeguarded by a Government representative as financial director. Later, when the Government purchased, we were told in Committee that there would be three Government-appointed directors, giving the Government a majority on the board.

In the statement of April, 1965, it was stated, in paragraph 3: On the enactment of the necessary legislation the purchase will be completed and a new Beagle company set up; the Government's interest will then be represented by shares in the new company. Further payments to the company by the Government beyond the vesting date will be taken out in the form of further issues from authorised share capital. I referred to the articles of association of this company. The first thing one notices, on turning to "capital" on page 13, is that the authorised capital was only £1 million; so that from the outset there was no possibility of issuing shares to the tune of the £3.1 million envisaged in the statement to the House. In fact, from what I can make out, only two shares were ever issued, and those presumably to two nominees of the right hon. Gentleman, members of the Ministry of Technology. As far as I am aware, no further shares were issued.

The whole of the financing of this company was done by a series of increased borrowing powers which related to the borrowing power articles of the articles of association, which lay down that any sum over £100,000 is not to be borrowed without the consent of the Ministry of Technology. There is pinned to the Library copy of the articles of association a series of borrowing power permissions, so to speak, gradually raising the total borrowed to £1.6 million just before the collapse.

It is abundantly clear that each application to borrow had to be made to the Ministry, and was presumably vetted by the Ministry and subject to some inquiry, as to the reason the money was required, by that Department. It therefore cannot be argued now that the Ministry was unaware of the financial development of this company or of the difficulties with which it might be faced.

If one looks at the various Questions that have been asked on the subject in the House, one finds some interesting Answers. For example, my hon. Friend the Member for Woking (Mr. Onslow) asked about the monthly internal financial reports, a copy of one of which I have with me. The Answer was to the effect that those reports were made available to the Ministry, but that they were not made the subject of any discussion. Why not? Is it now the proposition that if information comes into the hands of people with this responsibility, and they do not bother to look at it, they are thereby relieved of responsibility? That is a new doctrine and it is a very different one from the one which the Minister applies to directors of private companies.

The question of loan and share capital is extremely relevant to the position of the creditors. Unless it was made quite clear that all this loan capital was to be deferred from the point of view of the creditors, it is clear that the Minister's original intention, declared in the House, was to leave the creditors to what they could get from the receiver. That would have ensured that they got absolutely nothing because the receiver would have been swamped by the size of the Government's loans, despite the fact that parliamentary approval was given on the understanding that it would be done in the form of shares.

So we have a situation in which, much as we welcome the Minister's change of heart, we ought to look for just a moment at the sort of situation which arose when he had his first reaction, in which he said, "No Government support for the creditors". I have a number of letters—a very large number—from creditors from which it is abundantly clear that they relied, and were encouraged to rely, on the fact that this company was owned by Her Majesty's Government.

The Minister of Technology (Mr. Anthony Wedgwood Benn)

I think that the hon. Gentleman has inadvertently made a mistake, because he will not find a statement made by me that there would be no settlement of the creditors' claims.

Mr. Corfield

With respect to the right hon. Gentleman, we did press him on that in the debate on the Consolidated Fund Bill and he was singularly uncommunicative about the creditors. I will check it up and if I have misjudged the right hon. Gentleman I certainly withdraw.

But however that may be, I have letters which show that the creditors were clearly encouraged to believe that they could rely on the Government. One letter in particular is interesting, and it comes from a company supplying jigs and tools. A bill was run up to the tune of about £7,000 and the company was so concerned about this that it issued a writ. It was then contacted by Beagle's financial director or accountant, and asked whether it would withdraw the writ if £3,000 could be paid at once and the balance as soon as the Government's next instalment was forthcoming.

The company did this and supplied a further £2,000 to £3,000 worth of jigs and tools a day before the receiver was appointed. So there is no doubt that there is a very strong case. As I say, we welcome the right hon. Gentleman's decision even if I am inaccurate in saying that it is a reversal of a previous decision. I hope that the right hon. Gentleman will tell us what additional loss to public funds this decision involves, because my calculations show that it will be at least another £1¼ million.

There are a number of other matters which need touching upon, although I hope that my hon. Friends will have a chance to deploy them further than I can. First, coming back to the Consolidated Fund Bill debate, we were there largely concerned with the position of the employees, because my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) tells me that about £58,000 is owing to the employees' pension fund. This, I gather, was approved—or at least there was an agreement with the trustees of the fund.

But did the Government know this? Did they know that the money was, in effect, being borrowed by the pension fund; and if they did—and they certainly had means of knowing—did they approve it, because it surely is very reprehensible financing at the best of times to borrow from the pension fund. This was done, certainly as far as I know, without any attempt to obtain the consent or agreement of those who were most interested in that fund.

Again, I should like the right hon. Gentleman to tell us what conclusions really were made in his Department to check the viability of the proposed rate of production and the estimated decrease in cost as the learning curve proceeded and to see if this was in any way realistic.

We also have a curious situation in which £131,000 of Government money or thereabouts was spent on putting up a building on land which the company did not own. It had a lease which ran out in August, 1969, and the building was completed only a matter of months before that. As I understand, no attempt was made to obtain a renewal of the lease. I appreciate that while the company remained the legal tenant it had certain rights to carry over under the Landlord and Tenant Act, but as soon as it went into liquidation and became Beagle (1969) that was an asset which went through the window and it was Government money which was completely lost and presented on a plate to three or four corporations.

Whether we should rejoice that it has gone from one public pocket to another, I do not know. But it is a loss and is a present to local authorities which they do not particularly want because its function was concerned with the building of aircraft.

Mr. Tom Boardman (Leicester, South-West)

It may be helpful for my hon. Friend to know that the statement of affairs put the total value of all the leasehold property of the company at £25,000.

Mr. Corfield

I am grateful to my hon. Friend, because I understand that the other factory is leasehold, too, but that the lease has rather longer to go.

Then there is the disturbing question of the Swedish contract—an order by the Swedish Air Force for, I believe, 58 Bulldogs in the first place and an option on a further 45, with a lump sum down of no less than £250,000 for which, of course, there is nothing at all represented in the assets. It so happens that the Swedish Government, with a shrewdness which is commendable, but, nevertheless, does not reflect very much faith in the integrity of our own Government, took the precaution of getting a guarantee from Barclay's Bank. But I cannot think that this sort of transaction can appeal to any hon. Member as likely to improve relations with our Swedish allies in E.F.T.A., or improve the reputation of British business and of the British aircraft industry in particular, abroad.

This is particularly so when this is allied to the problem which is still unsolved, of the large number of aircraft which have been sold and for which no spares and no maintenance facilities have been arranged for the future. If the right hon. Gentleman or any other hon. Member thinks that this is likely to enhance the reputation of the industries of this country, or to increase our export trade, which was the basis of this whole sorry affair, they really want to see a good man and that their National Health cards are paid up.

This is a sorry affair. Although there are aspects other than the loss of this very substantial sum of money, and although the right hon. Gentleman, by his various letters and statements, has assumed personal responsibility, I have to express some sympathy with him because I have no doubt that what happened was that when he went to the Treasury he was told, "If you want £6 million you cannot have it for both this and Upper Clyde Shipbuilders. Where are the most votes for the Labour Party?".

But be that as it may, this is a very unsatisfactory state of affairs. Whether it be the right hon. Gentleman's own fault or the fault of his colleague in the Treasury, I think that the Government have mishandled this affair in a way which is really deplorable. There has been no word of regret, no word of explanation —merely a statement that it was worth while doing it to try to save the light aircraft industry. It is not worth while doing these things unless they are conceived and managed with a degree of commercial and financial acumen which was wholly lacking and, in this case, lacking to the point of negligence.

4.8 p.m.

The Minister of Technology (Mr. Anthony Wedgwood Benn)

I very much welcome the debate that we are now having on this company's affairs, because Parliament ought to be involved in industrial matters, since industrial decisions under all Governments come up for Ministerial consideration, and public money is involved in those cases. It really is quite right, where one has a complete case study of an intervention of this kind, that the House should examine what happened and consider why the decisions were taken and exactly what the outcome was.

The only thing which I found slightly hard to take from the hon. Member for Gloucestershire, South (Mr. Corfield) was the suggestiton that there had been any reluctance on my part at any stage in this matter to give the view that I took and the reasons for it. I shall certainly take the opportunity now of going back over the story, because the House is entitled to hear what happened and why.

Mr. Cranley Onslow (Woking)

I am much encouraged to hear that. May I assume that the right hon. Gentleman intends to publish the approved programme of work?

Mr. Benn

I think that the hon. Gentleman had better listen to my case.

I am also grateful to the hon. Member for Gloucestershire, South for the way he introduced the debate, in marked contrast to the Motions of censure which we have had hitherto.

A number of questions are raised by the Beagle case, and I want to go into them one by one. The first, on which I think there will not be disagreement in the House, is whether the Government should help the aircraft industry as a whole. I believe this to be generally agreed.

I follow the speeches of the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph). He has completed his fourth. In his first speech he said that there were certain sectors, like aircraft, shipbuilding, some electronics, and others, which looked to the Government for help for special reasons. The Government are involved in the aircraft industry, and in my judgment are bound to remain involved in it, partly because of the original defence interest, partly because of the high technical risk of certain projects and the cost involved, and because other countries help their aircraft industries. To hear some of the points made by the hon. Gentleman today, one would think that we were the only country which was involved in the support of parts of the aircraft industry. In the United States, there is massive support for aircraft and space programmes.

The implication of some of the speeches —and I thought that this was so even in what the hon. Gentleman said today—is that there is something wrong about the Government being interested in the light aircraft industry. If I am wrong, I shall give way to the hon. Gentleman, to let him put the matter straight. The reason for the Government's interest is partly the balance of payments interest. Every aircraft produced in this country is an import saving, and some export advantage can be obtained from it.

In the light aircraft industry, which the hon. Gentleman differentiated from the highly-sophisticated aircraft industry, the case for support is rather different in character. I recognise that in respect of a supersonic aircraft the reason the Government go in is the high technical risk, and the fact that it will take a long time to produce, but in the case of light aircraft there is a mass market of a different kind; and unless one can break into that mass market one misses what in 1969 represented a market of about 13,000 light aircraft, with a value of £200 million.

The argument for going in on light aircraft is not like the other argument. It is that here there is a big market, and that if we can break into it with help we may get our share of it. The expectation of future growth in this market was, and remains, very strong indeed.

Having given that general background, I come to the central question which is whether the Government should themselves have taken over Beagle. We were guided by a number of considerations, and not, as the hon. Gentleman knows, without having studied what the Plowden Report said about the light aircraft industry. It said, in paragraph 389: It was represented to us that the manufacture of light aircraft ought to be well suited to the aptitudes and resources of British industry at the present time. The market is buoyant, the sums at risk in development are not excessive,"— certainly, compared with some other aircraft projects— and lower wage rates should give British manufacturers a marked initial advantage in costs over their American competitors. Later, the report said: If, on the contrary, light aircraft business were not approaching this objective by then,"— that is, after a few years— the case for continuing assistance would be open to question. I am not shielding behind Plowden. I am only saying that in examining the problems of the light aircraft industry in about December, 1965—we reached our decision in 1966—we concluded that here was a big enough market to justify Government help to get into it, and that if it did not work the right thing to do would be to come out of it, and that is what we have done.

Let me make it clear now, and reiterate again and again, that I am responsible for this decision. The hon. Gentleman asked me the view of my advisers. He knew that that was a most improper question, because if, in answering such a question, a Minister could come to the House and say, "But I was advised to do this", that would put the responsibility upon his advisers. The reason Ministers take responsibility for what they do is to avoid that.

I do not know whether the hon. Gentleman knew what he was doing when he put the question. If he really thinks that a Minister could or should come to the House and seek either to put the responsibility on his advisers, or in some way to get out of his responsibility to Parliament, he has misunderstood the whole basis on which government works.

Mr. Corfield

The right hon. Gentleman knows that in the speeches of any Minister, of any party, one can find references to, "I am advised". Ministers have to rely on their professional advisers, and they say so.

Mr. Benn

I know, but the hon. Gentleman was trying to put me into the position where I was to reveal to the House what advice I might have had. He even used the extraordinary phrase, "Did the Minister overrule his advisers?". I have given the public advice which the Government sought from Plowden on the aircraft industry. I, personally, have accepted full responsibility for what we did, and I do not want to budge from that position.

The fact is that Beagle was a private company. It was referred to by Plowden as being rather a promising development. This is to be found in paragraph 387. Early in 1966 Beagle came to the Government and made a number of suggestions. One was a partnership arrangement with the Government, which we were not prepared to accept. An American company, General Dynamics, had a look at Beagle early in 1966. That company's view was that the range of aircraft was sound, and that eventually there were good prospects, but that the time to get the return was rather long. That is exactly the reason we reached the judgment, which I am now defending, that we should go in. Indeed, there was a suggestion at one stage that Handley Page might be linked with Beagle. I shall come back to Handley Page in another context.

At any rate, the decision to acquire it was taken. It was a matter of judgment. It was an evenly balanced argument. There was a real risk, and in the event that risk did not come off, but there were also real prospects of success for Beagle. Risk is inseparable from support for the aircraft industry. The question which the hon. Gentleman might have asked, but did not, is, "Is it wrong for the Government, in supporting the aircraft industry, to take a risk?". If the hon. Gentleman is asking that—and that is the only ground on which he can really attack the view that I took, even though, in the event, my judgment has turned out not to have been justified—he is saying that it is wrong to take a risk in this respect in the aircraft industry.

Mr. Corfield

The right hon. Gentleman knows that I do not take that view. Will he advert to the point that we are covering a period of 18 months, and at the most two years?

Mr. Benn

I am dealing with whether we were right to take the risk at that time. In Committee on the Industrial Expansion Bill I was perfectly frank. I said: In this area of aircraft projects, we are entering into an area of considerable interest and also uncertainty, but I was not unaffected by the fact that Plowden said that in this area there is a market, and with a bit of Government help there is a reasonable chance that this market, which is particularly suited to our skills, could be exploited. As I can only put my judgment against that of hon. Members opposite, I am bound to make that point."—[OFFICIAL REPORT, Standing Committee E. 14th March, 1968; c. 404.] Let me look at the risks the Government take in the aircraft business so that this debate is against a background of reality. On 17th December last I was asked by an hon. Member to give a table of Government financial contributions to and recoveries from civil aviation and engine development since 1959. I want to read to the House some of the figures and sums involved.

Let me take the Trident I and 1E. The Government contribution was £7¼ million and recoveries, £505,000; that is to say, the sum outstanding is £6.75 million; 93 per cent. of the money is still outstanding from the Government contribution. No Motion of censure on that. No condemnation of the Government for mishandling of the Trident matter. We shall come to that in a minute.

Let us come to the VC10. The Government contribution was £10.25 million, recoveries to date £943,000; amount of Government money outstanding, 91 per cent. No Motion of censure on that. No criticism of the Government for their handling of it. Then, the BAC111: £18.75 million Government contribution; recoveries to date, £1.629 million. There, 91 per cent. of the Government contribution is outstanding; no criticism and no Motion of censure on that. And why? Partly because these were private com- panies receiving money from the Government.

That is one reason. The other is that, of course, it is much easier for the hon. Gentleman to get up and make his speech on risks that did not come off without referring to risks we have taken with brilliant aircraft which are selling abroad, but where it may well be that in the end the Government return will not be as great as the contribution.

I will not go on, but I could give further examples, and I would ask the hon. Gentleman to look at a Parliamentary answer on 17th December, cols. 349–50. The fact is that this was a risk. I took, and take, responsibility for it. In the event, for reasons to which I will come, the risks did not turn out to be justified, but it has to be set against a background of risk inseparable from support for the aircraft industry. Was the method of acquisition right? There has been much criticism from the hon. Gentleman about the way it was done. It was done by specific Parliamentary authority. Unlike launching aid—and I am not drawing a comparison because I agree that one was the acquisition of a company and the other was launching aid, under existing legislation—which we pay to companies without specific Parliamentary authority other than the general voting of money, we brought forward a special clause in the Industrial Expansion Bill. We tabled—and the hon. Gentleman may say it was a little late but he might have added that it was the first time it had ever been done—a forecast of the prospects of the company. The hon. Gentleman might have read what we said. No doubt the hon. Gentleman, who follows this most carefully, will have the reference before him, in paragraph 4: It is expected that trading losses will continue to be incurred during the period while the planned programme is being built up. and in paragraph 7: As this complete range comes on to the market and turnover builds up it is estimated that a break-even point will be reached in 1972 with annual sales of £5 million to £6 million. Therefore, nobody can deny—and the hon. Gentleman was on the committee at that time—that when Parliament was asked to support the acquisition of Beagle it was not given the fullest information available to us. I am sure that there is no suggestion that we were in any way deficient in providing our best estimates. The acquisition was supported by the House. In fairness, hon. Gentlemen opposite voted against it, I know. They did not want it, and therefore, to that extent they can say, "We told you so". But hon. Gentlemen opposite also voted against the Industrial Expansion Act which supported the QE2. We do not hear much of our wisdom in supporting that. We do not hear much about our financial support for the Concorde. Their attitude on Beagle in the event, was justified, but we acted in a way which conveyed our forecasts, figures, anxieties and uncertainties more fully and frankly than had ever been done by any Government in presenting to Parliament a project for consideration of public support.

The next question is: did the Government, having acquired the company, handle its relations with it correctly in subsequent period? Of course, it was, and remains, a new type of enterprise. It was under the Companies Act. I suppose we might just draw a parallel with Cable and Wireless, but that was under very different circumstances. It was not a public corporation; it was not a mixed enterprise. We considered exactly what we thought would be right by way of surveillance and supervision. We appointed the chairman, sought a new managing director and appointed a new financial director. But we insisted—and when I was cross-examined by a sub-committee of the Nationalised Industry Committee I made clear—that this company should operate in a commercial environment. I am sure this was right.

I am sure that it was right to maintain a broad surveillance of the company before acquisition. We used to have quarterly meetings in which technical and financial aspects of the company were examined and the statements of accounts and directors' reports were available. After the company was set up we moved to six-monthly meetings with the directors. Internal reports and the directors' minutes were available to my Department; but, broadly, we left it to the company, and my own view is that that was absolutely right, because if we really want a company faced with an extremely difficult competitive position to prosper we ought to leave it to the board of the company, having appointed it, to carry out its remit as best it can.

Mr. Onslow

Had not the Government long before the Industrial Expansion Bill came before the House already committed themselves to the equity and also made the appointments to the board of the company?

Mr. Benn

Yes, but the hon. Gentleman is now raising an extremely interesting but much wider question. Of course, Governments have always done this kind of thing subject to legislation. The reason for the Industrial Expansion Act was, as the hon. Gentleman will discover if he reads the debate, that we wanted to lay down a framework which would allow this to be done and allow Parliament to discuss this, issue by issue.

In the case of Beagle Aircraft it was not a general project under the Act but under—I believe—Section 12 of the Act. Looking back on the history the hon. Gentleman will find that Governments, because of the difficulty of legislation coming later, have always had to undertake certain things subject to Parliament; Parliament had absolute freedom, had it chosen, to oppose the Clause on Beagle, and to delete it, or to oppose the Act. But since I am the "father" of the Industrial Expansion Act I must repeat that it was intended to introduce a better system under which the House could decide and projects like International Computers Limited could be looked at on their merits.

The right hon. Member for Leeds, North-East (Sir K. Joseph) says in his most recent speech—and there is something in it—that business men have increasingly complained of excessive changes and diversion from their primary task by ceaseless floods of questionnaires. I believe it is right that if one reaches a policy decision to acquire a firm one must provide the money, set up the company, appoint directors and then let them get on with the job. My own view is that in handling this we operated correctly.

Mr. F. A. Burden (Gillingham)

The right hon. Gentleman has quite properly accepted full responsibility for what has happened, but I would like to ask him whether, if monthly board meetings of the company were held, reports of those meetings were sent to him, and whether he personally examined them.

Mr. Benn

I cannot pretend that I examine personally all the matters in which public money is involved. We have a 69½ per cent. interest in Shorts and now an interest in the old Board of Trade Advisory Committee Local Employment Estates; and I cannot pretend that I personally examine the accounts of those matters. But I entirely accept responsibility for decisions reached under my authority within my Department, including decisions reached in the intervening period. My hon. Friend in answering will give such reply as he can but I am not shielding behind my officials in respect of the amount of surveillance that was undertaken. In discussing the right level of surveillance with the company, I was satisfied that the level to be instituted was the right one.

Did the company handle its affairs properly? Not much was made by the hon. Gentleman of that. He made some references to certain aspects of the framework which was set, the borrowing limits laid down and the operation by the company within those limits and that framework.

The hon. Gentleman also referred to the pension fund. Whatever his comment may have been on that, there was nothing improper in the company wanting to continue; and this is, in any case, a Motion of censure upon me and not on the company. That is quite right and I make it clear that it would be wrong for the company or the work force to be blamed for the outcome of the affair.

Was it right for the Government to end the support when they did? The hon. Gentleman made a great deal of what he called the 18-month period which had elapsed. I remind him that escalation is not unheard of in the aircraft industry. [An HON. MEMBER: "The right hon. Gentleman can say that again."] I will. Escalation is not unheard of in the aircraft industry. It is certainly not confined to Beagle. In any case, forecasts by anyone are liable to uncertainties and in this case the situation changed for the worse.

All I put to the House is that we told the company that we would support it to a certain extent and that, when it came to us in the autumn and said that it could not do the job on the money provided, we said, "All right. You cannot go on." We set this environment of the limits of public support and at the end said that the company could not go on.

The company had asked for a further £6 million. If that money had been put in, it might have worked. The Bulldog had been sold to Sweden and Zambia against competition. The Pup was a popular aircraft and had received very good references from those who had flown it. The whole thing might have worked if we had put the extra money in, but of course, there would have been a three-year slippage of the break-even point.

The hon. Gentleman himself suggested that break-even would have been put back from 1972 to 1975. In addition, the marketing problem of selling a light aircraft in a world 91 per cent. dominated by the American light aircraft manufacturers is such that we thought it right not to go on. The loss involved has been £5.98 million in terms of money out of £6 million, plus whatever the outstanding liabilities to creditors may happen to be. That is the price paid for the risk.

This is not the first crash of an aircraft company. To listen to the hon. Gentleman, one would think that only Beagle had gone wrong and that the reputation of all other aircraft firms was such that they would never be bankrupt. I remind him, however, that the Opposition are criticising us for not doing enough for Handley Page, which is to be debated later in the week. The fact is that Beagle was not the first company to go bankrupt. If the Government decide to go in with a company, with a clear objective and a limited sum of money, and that project goes wrong and the Government decide to stick to their original intention and not provide more money and the company goes bankrupt, then the Government have behaved perfectly correctly and in a completely defensible way.

Mr. Corfield

I hope that the right hon. Gentleman will bear in mind that he will find no reference from me to the fact that we should put money into either of these bankrupt firms.

Mr. Benn

I would never believe that the hon. Gentleman would want to put any money into public enterprise, or either Handley Page or Beagle. But week after week he rises, with an eager look in his eye, to show his support for private aircraft companies which we have defended and supported.

Mr. Eric Lubbock (Orpington)

The right hon. Gentleman is lucky that he does not have to bear Lockheed's burden.

Mr. Benn

That is another question.

I come now to two consequentials. The hon. Member for Gloucestershire, South did not raise them, but some of my hon. Friends may do so in the debate. They revolve round the question whether we handled the staff properly in the circumstances following the decision not to go ahead.

Mr. Julian Amery (Brighton, Pavilion)

Will the right hon. Gentleman expound on the reasons which led the Government not to put in more money? He passed it over rather lightly, simply saying that they took a view and a judgment.

Mr. Benn

I will do my best. I was taking up the points put by the hon. Member for Gloucestershire, South.

A contrary view has been expressed that it would have been better even so to have put this £6 million in, recognising that the money would have come back at the earliest three years later. We considered this very carefully. The best way to handle matters of this kind is to be clear from the outset what one's objective is—in this case, to break into the light aircraft industry, with the Beagle Aircraft Company as the instrument. One decides the amount to be spent and upon the minimal but adequate surveillance which will be necessary, ensuring that one does not interfere. One gives an absolute commitment in and out. That is right.

Of course, the temptation to any Government to go on and on and hope that things will come out right is extremely great, as the right hon. Member for Brighton, Pavilion (Mr. Amery) knows. If one is thought to be the sort of Government or Minister who succumbs to such temptation, one is immediately taking the pressure off the board of the company concerned. Instead of dealing with the company on the basis that, "We have given you the job to do and the money to do it with", one would be dealing with it on the basis that, if it came back to one, it might get more money.

I cannot conceal from the House that, having given money to the company, the outcome has been a great personal disappointment to me. We deeply regretted to have to conclude that it could not go on. It was a very painful decision for the Government.

Mr. Burden

The right hon. Gentleman said that the American industry has 91 per cent. of the light aircraft market. It has had this for a long time. Was this factor considered at the beginning of the Beagle project or at the end? It was obvious at the beginnig that the Americans had a very great control over the market. Surely the considerable difficulties which must face Beagle were realised.

Mr. Benn

I pointed out that the Americans dominate the market and that this is one of the reasons that the Plowden Committee recommended that we should attempt to get in. We tried, and in the event did not succeed. The American dominance proved extremely difficult to overcome.

I turn now to the staff questions with which some of my hon. Friends were deeply involved. We were determined to treat the people working for the company in the same way as good commercial employers would treat them. Superannuation and redundancy and holidays for 1970 were not an issue. The Contracts of Employment Act and the question of contracts and supplementary payments were discussed. In the event, the settlement of £140,000 which was reached commanded the general understanding of those involved.

In Shoreham, the latest figures for unemployment showed that, out of the 230 Beagle people who had been on the books of the local employment exchange, only 37 were still left—and this number has probably fallen since then. From the employment point of view, therefore, the situation has not been as serious as it might have been if it had occurred in other areas.

Miss Mervyn Pike (Melton)

Will the right hon. Gentleman give the figures for Rearsby as well as Shoreham?

Mr. Benn

My hon. Friend, in replying to the debate, will deal with the hon. Lady's question.

I come now to a question of which the hon. Member for Gloucestershire, South did not make much. Indeed, he could not do so. We decided to pay the creditors in full. The decision was based on the unique circumstances of Beagle's acquisition by the Government and the circumstances I have described in my speech. I detected in what the hon. Gentleman said a suggestion that, had we not done this, he would have censured us for not doing it. But we have done it and it was right to do it. I cannot give the figures of the amount involved, because valuation claims have not yet come in.

I come now to the question of what lessons must be drawn from the Beagle story. My first lesson, I think the House must recognise, is that risk is inevitable if one is going into this area at all. The hon. Gentleman said this himself. Judgments have to be made by somebody—in this case by Ministers. I made the judgment; I am answerable to the House for this, and this is right and proper. With no risk, there is no gain.

Take other projects which are urged very strongly in the House by Members, Handley-Page, which some urge as the case to be supported; the BAC211, which we did not support; BAC311 and the RB211–50 series which are now before us. I am extremely cautious in giving support to aircraft projects. The criticism normally levelled against me from the other side of the House is that we take too commercial a view. I think it right we should do so; at the same time, there is bound to be risk; it will not always come off.

Does this story justify a Motion of censure? Even though moved so very courteously, politely and modestly by the hon. Gentleman, I think that the Opposition's Motion of censure is humbug. There is a double standard on all these questions from hon. and right hon. Gentlemen on the other side of the House. On the one hand, if they can use a story like this as a means of attacking public enterprise it is a Motion of censure, a three-line Whip, Press releases from the Conservative Central Office. But if it is asking for money for private enterprise, whether in the aircraft industry or any- where else, it is a totally different story. Whether it succeeds or whether it fails, if it is private enterprise there is never the examination afterwards of the kind we have had today; an examination which, the House should know, I welcome.

There is a second element of humbug about the Motion: the sharp contrast between the public speeches of right hon. Gentlemen and hon. Gentlemen opposite up and down the country, seeking to give the impression that Government should play a smaller part in relation to industry, with the host of hon. Members of the House coming in a private, constituency, or trade association capacity, seeking Government support for one project after another.

I have absolutely no complaint if a Member comes from the other side of the House as a constituency Member to ask for Government support for industry in his constituency. I have no complaint if the Member comes—there are some of them who have occupied, or still occupy, senior positions in a trade association—asking for Government support for the trade which is represented by that trade association. I do not object if there are firms that come for Government support and have hon. Members on their board of directors. What I object to is that whilst this goes on and on privately, publicly it is denounced by hon. Gentlemen opposite as Government waste, regarded as an example of intervention by Government in industry.

I say that the open palm for help and the open mouth of denunciation is basically a fraudulent view to put to the electorate. I ask hon. Members opposite to be a little more honest about how they present these issues to the electorate.

If the weekend speeches by the party opposite had been acted upon, there would have been no Beagle; Shorts would have closed; Upper Clyde Shipbuilders would have closed; and, according to Sir John Hunter, if R.E.P. were withdrawn Swan Hunter would be faced with, I think his word was, "bankruptcy". The VC10 would not have been built, the BAC111 would not have been built if the weekend speeches are to be believed —but nobody does believe the weekend speeches because everybody in industry knows that the Government must help in certain cases.

They will not always succeed if they help, but, on balance of payments grounds, on industrial policy grounds, on technological grounds, and on employment grounds it is necessary to bring those public speeches in line with what hon. Members know to be necessary for the survival and strength of our economy, particularly in the engineering industry.

A Motion of censure like this looks grand when presented as part of the broad Conservative vision of withdrawal from industry, but nobody would squeal louder than people who support the party opposite and individual Members were I to take the slightest notice of what was said in weekend speeches—if they came to us to support them in the project. For that reason, I do not believe that the Motion is serious, or to be taken seriously, or that the House ought to pass it.

4.45 p.m.

Mr. Tom Boardman (Leicester, South-West)

The Minister is saying that the Motion of censure is not to be taken seriously, and shows this in the somewhat lighthearted way in which he is dealing with this.

The right hon. Gentleman has cost the country, by his own incompetence, some £7 million; he has put out of work 1,000 or more skilled men. He has damaged the name and reputation of Britain overseas by the arbitrary cancellation of contracts. If this does not justify a Motion of censure, then what does?

The Minister made much play of the commercial approach here. In private enterprise such a record would have justified the sack. A Motion of censure is letting the Minister off lightly.

Mr. Lubbock

Mr. Arthur Weinstock has just closed a factory in my constituency employing well over 1,000 men. The shareholders have not passed a motion of censure on him.

Mr. Boardman

Mr. Weinstock has also produced some very large dividends for his shareholders and has carried out a reconstruction which his shareholders support.

We have a different story here. The Minister raised the point whether it is wrong to take a risk. Of course it is not, provided the right advice is taken. Why did he not accept the challenge by my hon. Friend in saying whether or not he had, from the outset, been advised that this venture was justified only if it were backed to the tune of a further £10 million? If that was the advice he received —and I believe it may well have been—then he was quite wrong to make the decision. His judgment was unsound and the risk was unjustified.

The Minister makes the further point that his belief is that when one appoints people to the top one should let them get on with the job. In this case, however, it was not so. He has only to refer to the articles of association of the Company to see how the management was hamstrung. It could not move without the consent of 90 per cent. of the shareholders—that is, the Minister; they could not borrow more than £100,000, and so on.

I have some constituency interest with employees and creditors, which I do not propose to develop here. On the question of employees, thanks to the pressure that has been applied principally by my hon. Friend the Member for Melton (Miss Pike) and hon. Members on both sides of the House, the terms offered to them are very much better than when first announced. But this does not compensate these men for the loss of jobs or for breaking up these skilled teams. This is entirely due to the incompetence of the Minister who accepts the responsibility.

Mr. Benn

The dismissal of the staff would have occurred four years ago if the Government had not come in. If the hon. Gentleman is to explain to people that they would still be working if it were not for the Government, would he perhaps tell the House exactly on what basis and who would have been financing it?

Mr. Boardman

The situation in 1966 was different from that which exists today. In 1969 the Minister was going round to the places concerned saying "All is well with Beagle". I have forgotten the exact phraseology, but he was keeping people in the job and giving them every encouragement to stay there. In 1966 many of them saw the way the industry was going; many of them were moving out into other occupations. It may well have been that if the Government had not intervened at that time the company would have taken a different form, maybe a smaller form; I do not know. This is not the subject of the debate today.

Mr. Burden

In 1966 two companies, including an American company, showed an interest in Beagle. The American company thought it could be viable in a couple of years. Since the decision by the Government, nobody has taken any interest whatever in the company and it is looked upon as a complete failure.

Mr. Boardman

I move from the employee question to that of creditors. We are glad the creditors will be paid in full, but let the Government take no credit for this. After all, it is coming out of the public purse.

I fail to understand how the Minister could say that there had never been any doubt expressed that the creditors would not be paid in full. If I have misquoted him, I apologise, but, in the debate on 27th January, the Parliamentary Secretary said: The Government have received representations from a number of creditors from the company which raised a number of issues which are still the subject of legal advice." —[OFFICIAL REPORT, 27th January, 1970; Vol. 794, c. 1252.] This is hardly something to console creditors. People cannot, with that, be sure that they will get their money. There was grave doubt and grave anxiety in the minds of many of them, as the Minister knows, about whether they would be paid or not. Yet these are the people who granted credit only because of the Government backing and the flurry of optimism, with statements like, "We believe in Beagle", and the Minister's attitude of confidence, which encouraged people, believing that this was a Government industry and that the Government would foot the bill, to put money in.

Had they not been paid, it would have been very close to fraud—[An HON. MEMBER: "How?"] The fact that the Minister had never expressed a doubt—[Interruption.] He never expressed doubt. Why did he not say on the first day that every creditor would be paid in full? In fact, he issued a debenture and obtained priority for part of the Government loan, leaving the unsecured creditors low down the line. Of course that was a device to get a receiver appointed, but if the Minister had, from the word "Go", intended that creditors would be paid in full, that should have been said, and it would have removed a great deal of doubt—

Mr. Russell Kerr (Feltham)

The hon. Member's priorities are very interesting.

Mr. Boardman

The Government must recognise this. If the position is that creditors in such cases will always be paid in full, let us think through the consequences. Can we assume that in every venture in which the Government invest money the creditors will automatically be paid in full? This is something which the Minister had better say—

Mr. Lubbock

The hon. Gentleman cannot have been listening to the Minister, because the right hon. Gentleman said that the company was taken over before the Industrial Expansion Act and that, therefore, it is a special case. So the hon. Gentleman is not entitled to assume that, in future, if such a company goes bankrupt, the creditors will be paid in full.

Mr. Boardman

I am talking about creditors subsequent to the taking-over by the Government. There was already an undertaking that the creditors of the former company would be paid in full, but from the time the Government acquired all the capital, the creditors legally were not entitled to be paid in full. The right hon. Gentleman now says that he had always intended that they would be paid in full—[Interruption.] The Minister did not say that at the beginning, so there remained a doubt that they would he paid in full. This is what I said.

The Minister must think through the consequences. Whenever the Government intervene in industry they give a false credit-rating to the company; they must think carefully of the consequences to creditors if they are not willing to back their takeover with a complete undertaking to pay the bills.

Mr. Russell Kerr

On a point of order, Mr. Deputy Speaker. Is there any way in which we can prevent the hon. Member for Leicester, South-East from chasing his own tail around in this fashion?

Mr. Deputy Speaker (Mr. Harry Gourlay)

The hon. Member knows that that is not a point of order. He must listen to the comments of the other side.

Mr. Boardman

For the record, it had better be made clear that my constituency is Leicester, South-West. I would hate my hon. Friend to be accused of chasing his own tail.

The normal warning lights are missing from a case like Beagle. In private enterprise, the failures of a company to pay in time, to take discounts and so on, are the warning lights which prevent large bills mounting up. When Governments are involved there are no warning lights. The Government must accept the consequences of this danger to which they and creditors are exposed.

The damage to overseas trade here has been brushed aside very lightly by the Minister. Contracts with overseas Governments have been arbitrarily broken. When The Prime Minister gives his next pompous lecture to exporters, about exporters falling down on deliveries, I suggest that he puts the Minister in the corner with a dunce's cap on. If ever we wanted proof that export achievements are made despite and not because of the Government, it is here. The damage done to the reputation of this country when a Government-owned company accepts orders and then cannot fulfil them is very grave and not one to be dismissed lightly, as hon. Members opposite seem inclined to do.

Mr. Lubbock

This is the very opposite argument from the one put by the hon. Member for Gloucestershire, South (Mr. Corfield), who said that, in the end, the Minister had made the right decision to appoint a receiver. The hon. Member is saying that he should have put this £6 million in so that the exports to Sweden could have continued. Which is the policy of the Opposition?

Mr. Boardman

The hon. Gentleman should pay more attention and allow me to develop my argument. My hon. Friend's argument was that the investment was probably wrong from its inception. My hon. Friend made it clear, as I make it clear, that we are not suggesting putting more money in. What we are censuring the Minister for is creating a state of affairs in which substantial contracts are placed by an overseas Government with a company here which is Government-owned, and they are then broken and cancelled. We cannot dismiss the damage which has been done.

The Minister implied that there has been complete frankness and that, from the outset, this investment had specific Parliamentary authority. I query whether the 1966 agreement was fully and frankly explained to the House. To all intents and purposes, it amounted to the taking over by the Government, to an undertaking to pay the £1 million for the equity capital in any event, to pay the debts, and to find all the finance that was needed; an agreement that the Government would appoint the majority of the directors and that the company would act in accordance with the instructions of those directors.

From 1966 until the Industrial Expansion Act could make it legitimate the company was, through the device of that agreement, operating in exactly the same way as it has been operating subsequently. For the Minister to come here in a white sheet and claim that there was a specific Parliamentary authority is not being completely frank with the House. If the agreement had not been approved by the House, the obligation still remained upon the Government—

Mr. Benn indicated dissent.

Mr. Boardman

The right hon. Gentleman shakes his head, but he should read the agreement. The company would have been wound up and the Government were then bound to pay £1 million for the equity and meet the bill for the losses, and they were entitled to any profit that was made. The only thing that would have altered is that, instead of the company continuing, if the House had not approved the agreement, it would have been wound up. During the interval 1966–68 the Government operated in exactly the same way, or had the power to operate in the same way, as they did subsequently.

Mr. Austen Albu (Edmonton)

The hon. Gentleman claims that if the House had not passed the Bill the company would have been wound up. How, then, would he have kept employment for the 1,000 people in his constituency who are now losing their employment because, he says, of the Government's action?

Mr. Boardman

The hon. Gentleman has returned to an earlier point. If this company was not viable in 1966, it might have been reformed in some other way.

Some private enterprise might have taken it over—

Mr. Albu

None was interested.

Mr. Boardman

We have heard from my hon. Friend the Member for Gillingham (Mr. Burden) that there would have been interest in it at that time. But we are not debating 1966 now: we are debating the situation in 1969 and 1970, and the conduct of the Minister in the interval.

There has been less than frankness in some of the figures disclosed. We have been told that the amount of the deficiency might be expected to be £1.2 million. I have seen the declaration of solvency in the files, and I doubt very much whether the Minister has told the House fully the extent of the likely loss. The figures show assets estimated to realise just under £1 million, of which stock and work in progress account for £590,000. I believe that a more realistic assessment of realisable assets is well under £100,000, and a figure as low as a few thousand pounds has been quoted.

Has the Minister really given the attention to the extent of the deficiency that the figures justify? There seems to have been some covering up.

Mr. Benn

indicated dissent.

Mr. Boardman

The Minister shakes his head, but there has been a lack of frankness throughout in the disclosure of the figures.

I would ask the right hon. Gentleman to turn his thoughts to the pension fund. I have given him notice of points I would raise. The fund was originally raised by me in a letter to the Minister on 6th January, on the question of deficiency. I did not receive a reply until 15 March, and this referred me to the debate in another place, where the noble Lord, Lord Delacourt-Smith, had said: Perhaps I should add a brief word about the superannuation fund. As a result of changes which were taking place at the time the receiver and manager was appointed, arrangements with the life assurance companies broke down and Her Majesty's Government accordingly made arrangements with those companies to ensure that valid claims would continue to be met."—[OFFICIAL REPORT, House of Lords, 19th February, 1970; Vol. 307, c. 1328.] That was not the whole story by a long way.

It was in reply to a Question by the hon. Member for Poplar (Mr. Mikardo) that we got the true story. The hon. Gentleman asked on 23rd February what deficiency would have to be made up, and, after repeating a statement very similar to that given in another place, the Minister's reply said that the arrangements to appoint a receiver broke down: The amount outstanding at the date of the appointment of the receiver and manager was approximately £58,000."—[OFFICIAL REPORT, 23rd February, 1970; Vol. 796, c. 222.] The question had related to a deficiency in the appropriate amount of the company's and employees' contributions. Does the Answer mean that the employees' contributions have not been paid into the pension fund? Does it mean that the employers have not paid their contribution? Did the trustees provide that there should be an obligation on the company to make such payments and the trustees to receive them? If so, it is a state of affairs which would be intolerable in the private sector.

I could continue with many more criticisms of the administration. Throughout the whole pattern of the company there has been a type of trading with large deficiencies which would become very close to fraudulent trading in the private sector—large deficiencies mounting up and yet the company continuing trading without any assurance that the debts would be paid.

I have said enough to show that, instead of being brushed off lightly by the Minister, the matter is a public scandal which cannot be hushed up by buying off the creditors and employees, by buying off trouble out of the public purse. This is the kind of operation the Government put in the forefront of their strategy. "Agenda for a Generation" has this type of operation in it. We are entitled to a full public inquiry into the management of the company and the whole sordid story. It is the Minister's sole responsibility. He has poured £7 million down the drain.

Mr. Russell Kerr

My right hon. Friend is an amateur compared with some of the hon. Gentleman's lot.

Mr. Onslow

I wholeheartedly support my hon. Friend's call for a full public inquiry. Does he agree that it is significant that the Minister made no response to my question on why he did not publish the approved programme of work?

Mr. Boardman

I entirely agree, and I waited anxiously for that, because the right hon. Gentleman's reply suggested to my hon. Friend that he was coming to that point. But he evaded it.

Whatever qualities the Minister has—and no doubt he has many—to leave him in charge of a vast, overgrown Department which is meddling and muddling in every aspect of industrial life is irresponsible.

Mr. Russell Kerr

Speed it up.

Mr. Boardman

The hon. Gentleman would like to brush the matter off lightly. If Ministerial responsibility meant anything, as it did once upon a time, the Minister should not need to be told either that a public inquiry was needed or that it was right for him to resign. He has not responded to either of those appeals, but I hope that by the end of the debate he will have second thoughts.

5.5 p.m.

Mr. Douglas Jay (Battersea, North)

The hon. Member for Gloucestershire, South (Mr. Corfield) seemed to show a certain amount of moderation and courtesy, though not very much sense. The hon. Member for Leicester, South-West (Mr. Tom Boardman) seemed to show neither sense nor moderation, and he did not show very much courtesy either.

The real question before us is whether the decision the Government have now taken is right. What I found rather shocking about the speeches of the hon. Gentlemen opposite was their almost complete indifference to the future of the British light aircraft industry or the future of British aircraft, or of all the assets and technical expertise involved in the production of the Beagle Company. On the evidence before us, the question is whether the Government are justified in abandoning the enterprise at this stage. I have listened to what my right hon. Friend said, and agree that it is an arguable case. But what is the use of having a Ministry of Technology, an I.R.C., or an Industrial Expansion Act if we are not prepared to take a risk in enterprises of this kind?

Until I heard the two Opposition speeches I thought at least that we were all agreed that we in this country must foster modern high-technology industries. I also thought that there was no dispute amongst us on the facts that the light aircraft industry is an expanding world industry. Some people would say that it is the most rapidly expanding form of aircraft manufacture. It has both a civil and a military market, and, as my right hon. Friend said, the Plowden Report thought that it had a considerable future.

I did not think that there was any dispute either—but hon. Gentlemen opposite did not raise or discuss this question—that if the Beagle Company goes out of business altogether the light aircraft industry in the non-Communist world will be almost entirely handed over to the United States.

There is also not much doubt that if an enterprise of this kind were successful very large exports are possible for this country, and that if we have no manufacturer there will be large imports of light aircraft. I believe that home sales are about 300 a year; and, therefore, the balance of payments is considerably affected one way or the other.

I agree that all these general considerations might be quite irrelevant if the company were technically unsound or had been proved incapable of attracting orders at home or abroad. But that is the reverse of the truth. It was neither true in 1966, when the original decision was taken, nor is it true now. According to my information, at the end of November, when the receiver was appointed, the Beagle Company had altogether about 350 planes on order. In the six months up to that date it had received orders for another 190 planes, of which 160, or rather more, were for export.

Mr. Michael McNair-Wilson (Walthamstow, East)

Does the right hon. Gentleman know that Beagle cannot say what the break-even figure on the Pup was, and that the 206 was not a successful aircraft?

Mr. Jay

There were very considerable orders available to this company. I am coming to the question of whether these might have been profitable.

The Minister made clear that at this moment the company is short of cash and its operations are not immediately profitable. As my right hon. Friend has already said, when mentioning Upper Clyde Shipbuilders, all that could have been said of Fairfields and Upper Clyde Shipbuilders three or four years ago. Their operations at that time were unprofitable and they could be kept going only if some infusion of capital was made available from the Government. The position today is that Upper Clyde Shipbuilders has a flourishing order book and Q.E.2 is earning large profits. It would have been extremely short-sighted on the evidence available in the case of Fairfield and John Brown's to abandon an enterprise of this kind when the project was doing well and there were long-term prospects but an immediate shortage of cash.

According to my information not merely the company itself but the Ministry of Technology was satisfied that, provided that the extra money was made available, this company by 1974 or 1975—I agree that is some years ahead, but that is the nature of aircraft production—would be earning a reasonable return on the capital employed. Hon. Members opposite are clearly aghast at the money put into this business, but, as my right hon. Friend said, we did not have similar protests when capital was put into Trident, the BAC1–11 and other ventures.

Mr. Onslow

I am able to explain it to the right hon. Gentleman. We have so far no reason to suppose that there has been anything like the mismanagement in those cases as in this.

Mr. Jay

As the hon. Member for Woking (Mr. Onslow) has so much to say, perhaps he will make a speech later in this debate.

I was about to say to the Minister, however much the hon. Member may know about aircraft production, that one does not have to go simply to the aircraft industry to find curious comments on the scale of values in Government expenditure. One of the Greater London Council's single motorway proposals which has some effect on areas connected with my constituency, against which hon. Members opposite made no protest, is now expected to cost £16 million a mile. It is an extraordinary sense of priorities if we are prepared to abandon the British light aircraft industry, which no doubt has some risks but has enormous export possibilities to save £6 million and yet are prepared to put up the same amount for 600 yards of a motorway which the great majority of people in London do not want to be built.

There seems to be something totally wrong with the judgment of priorities. We do not have any Motions of censure, however, moved by hon. Members opposite about either other aircraft projects or the lavish spending of public money on motorways such as I have mentioned. Speaking purely for myself, I would rather have a British light aircraft industry than 600 yards more motorway in South London. If people differ from me about this, they are welcome to do so; but I do not think they are showing a very balanced judgment on financial or human priorities.

What has emerged from this debate is that the party opposite takes a narrow accountancy view, to put it at its best, and a narrow political partisan view, to put it more realistically, and shows an extraordinary indifference to the future of this section of British industry and British exports which might have been won by perhaps a little more constructive infusion of capital. If anyone is deserving of censure today, it is not my right hon. Friend but the narrow and irresponsible attitude of hon. Members opposite towards the future of the British aircraft industry.

5.15 p.m.

Mr. Cranley Onslow (Woking)

We have to hand it to the Minister of Technology. He managed to speak for 36 minutes without answering any of the real questions or touching on any of the real issues. It is not a bit surprising to me that some people tip him as a possible Socialist Prime Minister, because he seems to have what it takes for that. [Interruption.] I shall not take long unless I am provoked, but I can be provoked.

I want to ask only five questions, four of which are addressed to the proceedings which I think will take place in due course in the Public Accounts Committee of this House, questions which in other circumstances I should be happy to address not to the Chairman of the Public Accounts Committee but to the Director of Public Prosecutions.

The first of these questions is: why was the Beagle Aircraft Company never properly capitalised? The Minister promised us that it would be. In the Standing Committee he said: the £2.5 million to be provided will be £2 million in shares issued by Her Majesty's Government and the balance by bank overdraft secured in the assets but possibly subject to Government guarantees."—[OFFICIAL REPORT, Standing Committee E, 14th March,1968; c. 405.] That assurance was repeated in the memorandum which, by something of an innovation, was subsequently made available to the House, but was never debated in the House. Part of paragraph 3 states: On the enactment of the necessary legislation the purchase will be completed and a new Beagle company set up; the Government's interest will then be represented by shares in the new company. Further payments to the company by the Government beyond the vesting date will be taken out in the form of further issues from authorised share capital. It is envisaged that the fluctuating balance of working capital will be provided by bank facilities; this is estimated to be of the order of £0.5 million. Hon. Members who have been lucky enough to see the memorandum and the articles of association of this company will know, as my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) reminded the House, when he opened the debate, that the company was given an authorised share capital of 1 million £1 shares, of which apparently only two were issued. This point was made by my hon. Friend, and the Minister carefully ignored it. The House will also know that such capital as was made available to the company came mainly in the form of loans ad hoc from the Ministry of Technology under Section 103(2) of the articles of association; but the company was not capitalised as the House had been told it would be. Why not?

I think I can say why not but I would rather that the Minister did so. If he does not wish to do so, I can tell the House that it was not for want of requests from the company. I believe that in due course we shall have documents laid before the House which will show that I am not exaggerating in that statement. I believe we may also see some papers ultimately which will show that the Minister has grossly over-simplified the loan situation, and that, in fact, money was made available to the company only in small dribs and drabs doled out by the Department of which he is the head, to meet debts which had already been incurred. This is not the capitalisation the House was told there would be.

I believe the reason for this was that throughout the over-riding objective of the Minister's civil servants was to minimise the amount of money the Government stood to lose. I shall be interested to hear what the Minister has to say on that point.

My second question is: why has the Minister refused to publish the approved programme of work? I asked him last week if he would do so, and perhaps I may remind the House what he said. The final paragraph of his reply is as follows: The approved programme was fully discussed with the company and it would not be normal to publish this kind of document.— [OFFICIAL REPORT, 2nd March, 1970; Vol. 797, c. 21.] I do not suppose the Minister will contradict me if I tell him that it would not be normal for a company owned by the Government to go broke, so I do not think that the defence of abnormality will get him very far.

I think I can tell the House what is the true reason, although I would rather the Minister did so. He does not seem to wish to. I believe that the reason is that if it were published it would invalidate the excuses which he has given to the House for precipitating the winding up of the company. It would show—and I believe it will show—that the family of aircraft was a matter which was in the approved programme of work, and that there is nothing new here, carefully though the Minister has sought to pretend that there is.

My third question is: did the Government ever believe that £2.5 million capital was enough? I do not believe they did. My hon. Friends quite properly expressed doubts about this on the information which was presented to them when the Industrial Expansion Bill was in Committee. I do not think that there was anything in the memorandum, which was subsequently published but never debated, which could be held to have allayed those doubts.

The truth is that the Minister knew, and had been told, that it would take as much as £10 million to make the project succeed. I believe that documents may subsequently become available to the House to show that to be so. These are matters in which the Public Accounts Committee may, very properly, be interested. I believe that the Minister was told that £10 million would be needed, that he said that if the company could show it was on the way to success it could come back to him in due course and ask for, more money, and that he encouraged the company to proceed on precisely this basis. When he says that there was an element of risk in this enterprise, he is right, but he has not told the House how large he knew the risk to be. In course of time, the House will be provided with proof of that.

My fourth question is: why was the cancellation decision taken when it was? I do not believe in the alibi of the family of aircraft. I think that is untrue, and that in time we shall come to know it is untrue. It is interesting that there is no indication in any statement made by the Minister, or in his speech today, that consideration was ever given to anything but cancellation, and we are carefully led to believe that the action that was taken was inevitable. Why? This company still had some money to draw on. It had not exhausted its borrowing powers; there was still about £400,000 which it could raise from the Ministry of Technology and it still had—I suppose unused, unless under this head is covered the borrowing from the pension fund—an authorisation to borrow up to £500,000 from private sources. It seems that there was £900,000 to be drawn upon, unless the Minister has not been completely frank with the House.

I notice, with interest, that the right hon. Gentleman prefers to leave us rather than be frank with us. [Interruption.] Hon. Gentlemen opposite say that the Minister has been sitting here for two hours. If he had been, as in other circumstances he might have been, in a court of law, he would have had to sit here for longer than two hours. Perhaps for the Minister, it is just as well that it is not a court of law.

The Government, without telling the House whether they have looked at any alternative, have said that the company must close. They have taken steps to make it necessary for it to close. They have pulled the rug out from under it. My hon. Friend touched on the reasons for this. It is plain what happened. The Minister probably genuinely believed that if he could show that the company was succeeding he would be able to go back to the Treasury in time and get leave to borrow the balance of the money needed to make the project a success, which was, let us say, between £6 million and £8 million.

The Minister in his enthusiasm may have thought that he would be able to pull that off when the time came, but when the time came those two great friends of the British aviation industry, the Chancellor of the Exchequer and the Chief Secretary to the Treasury, said to him words to this effect: "We are sorry about your predicament, but you have just been to us and asked for some money for another project in an area where, to put it bluntly, there are some marginal seats for Labour, and we see no marginal seats for Labour in Sussex".

Mr. Jay

The hon. Gentleman is a great believer in interruptions. Will he say whether or not he would have put more public money into this venture at this stage?

Mr. Onslow

The right hon. Gentleman is a great believer in irrelevancies. I will make my speech in my own way.

When the Treasury said to the Minister of Technology that there were no marginal seats to be bought—[HON. MEMBERS: "0h."] Hon. Gentlemen opposite are naive in the extreme. I must remind them, in case they are unaware of it, that they are in an election year, and if they believe that they will hold every seat in Scotland they are considerably mistaken.

My last question to the House—[HON. MEMBERS: "Oh."]—I do not expect hon. Gentlemen opposite to like this, and I do not expect them to like my final question, which is this: what, in honour, prevents the Minister from resigning? His defence—and he has reminded us of it—is as follows: In this area of aircraft projects, we are entering into an area of considerable interest and also uncertainty, … and with a bit of Government help there is a reasonable chance that this market, which is particularly suited to our skills, could be exploited. Then there are these important words: As I can only put my judgment against that of hon. Members opposite, I am bound to make that point."—[OFFICIAL REPORT, Standing Committee E, 14th March, 1968; c. 404.] It would be a fair point, and one which the House would accept, if we could also accept that the Minister's judgment was an honest one.

The House would have been prepared to accept that today if the Minister had shown the least willingness to get up when I gave him the chance to do so and answer from the Dispatch Box the questions which I put to him. The fact that he did not answer them seems to me to indicate quite clearly that he knows that the answers would destroy his ambitions.

When the right hon. Gentleman the Member for Battersea, North (Mr. Jay) says how sad it seems to him that he has heard no word from this side of the House to lament the destruction of this promising area of British aviation, I would say that he can hear it now from me, with interest. It seems to me to be the most shocking and callous act of irresponsibility that the Minister of Technology has been prepared to sacrifice this company on the altar of his own political ambitions. I am sure that the truth will catch up with him. I believe that if he does not resign now, he will be destroyed later.

5.31 p.m.

Mr. Eric Moonman (Billericay)

What can one say when following such a nasty little speech? [HON. MEMBERS: "Ignore it."] It is difficult to know exactly what has been happening since the hon. Member for Woking (Mr. Onslow) has been performing in the debate like a roaring yo-yo. His speech has been presented throughout the whole afternoon in episodes, like a detective thriller. His speech was not worthy of him or of the House.

Mr. Eric S. Heffer (Liverpool, Walton)

His speech was very worthy of him.

Mr. Moonman

We began the debate with two very good speeches. My right hon. Friend the Minister of Technology made one of his best speeches in the House when explaining his area of responsibility and the detailed action he took.

The speech from the Opposition Front Bench was most courteous and explained the tragic nature of this particular case.

It would be a great pity if the Opposition decided that the General Election campaign should start this afternoon. Some of their utterances sounded a bit like it. The first shots have been fired. This is a pity because we are here to examine an important technological problem involved. It is not only a reflection of the aircraft industry, but of many other industries as well. I would suggest that we have a responsibility to look at the whole question of the relationship between Government and industry, and this is what I shall seek to do in the brief time available to me, since this is to be a short debate.

The first thing that strikes any reasonable observer of the Beagle aircraft matter is that there is an apparent confusion in Government industrial relations. Those who would dispute the supporting rôle of government over the last few years would seem to be unable to recognise the changing economic and social needs. Few would deny the contribution made by the Government to key industries like the computer industry, or in support of the development areas, or in aid to stimulate management technological skills.

The Government's policy on the Beagle matter is somewhat ambiguous. It emphasises the absence of any distinctive policy over the last 20 years on the broad question of Government industrial relations. Contrary to what has been said by the right hon. Member for Wolverhampton, South-West (Mr. Powell) outside the House, no philosophical dispute has triggered this off. I do not believe that the Government are aiming to take over large sectors of industry. I do not believe that there is a particular Socialist conspiracy at work. In fact, this may be part of the problem. It may be that we have not thought out the exact relationship, the degree of control, the sectors of management responsibility necessary when government become a partner in industry.

Nevertheless, critics of the Government's rôle in industrial affairs sometimes advocate a return to a state of laissez-faire. Such critics can hardly be taken seriously, nor can the hon. Member for Leicester, South-West (Mr. Tom Boardman) when he talks of a return to such an earlier state of affairs. We have not really had such a economic free-for-all since the middle of the 19th century when the appalling social consequences of rapid industrialisation forced governments to intervene with Factory Acts and the like. Because of the need to get the most out of our industrial opportunities, because of trend towards research and development and the exploitation of industry government has become involved in industry.

And so we have a system of grants and loans, especially advantageous in development areas—which are often places whose original prosperity depended on an industry now superseded—and our system of loans and allowances to encourage workers to become more mobile. Scientific and technological advances have affected the structure of industry making the small unit uneconomic and fostering the group enterprise. Industry itself, as the Minister has said, has been driven to seek Government assistance, mainly financial, in restructuring and in setting up and forwarding the research and development without which few enterprises can go forward. This assistance the Government have been willing to provide and indeed to initiate because it makes our industries more competitive in the international market.

The result of both these trends is that government and industry are moving steadily into an ever closer relationship. This is inevitable. I realise that this is a censure Motion which we are now discussing, but one would have thought that more of the Opposition time would be more usefully spent in trying to see how this relationship could be improved in the future. But we have heard nothing but sheer destructive criticism, and perhaps this is inevitable. What is also inevitable is that the fate of an industrial nation is inextricably bound up with the conduct of individual industries. This means that not even the United States dedicated as it is to the idea of private enterprise can allow total laissez-faire. Government there has become actively interested in the way decisions are taken in industry.

There are four distinct matters which must be raised. First there is the moral question. The ending of the Beagle light aircraft business has brought into focus a Government's responsibility, when it wholly owns a company, towards the company's creditors. We are delighted to hear that the Government have accepted full responsibility and the creditors will be paid in full. Beagle was a limited liability company and a receiver and manager took over in December. There is therefore no point in anybody saying what they might have done or might not have done if they had not fulfilled this obligation to the creditors since we now know the answer.

What is important is that the Ministry should now look at the whole relationship between itself and such similar companies. There will be other examples in which a Government supported company may go bust placing an obligation on the Government to say at an early stage what they intend to do. I am glad that a decision has been reached, but we should learn from it.

The second point involves the conduct of industrial relations. It was significant that it was only in the later stages of Opposition speeches that this matter was raised at all. The matter has been of great concern to this House and indeed hon. Members on this side have had down an Early-Day Motion on the subject.

I believe that the Government have passed the test well. There was a responsibility not only for finding alternative employment and to ensure adequate compensation, but we now know that a figure of £140,000 has been agreed. Although some hon. Members may argue for more, it is surely the case that the sum is as good as one could get from the best private firms. I repeat that on moral grounds and from the aspect of industrial relations the Government have passed a crucial test.

The third aspect I want to touch on is the company's marketing and production policy. In this direction the policy in relation to Beagle and similar projects will fail in advanced technology unless there is a determined attempt to provide a European base. There have been discussions in various European forums about how we can use our resources in those areas of technology where the resources of one country are not enough. This is an important question.

The British Aircraft Industry's difficulties in competing with the United States in large civil and military aircraft are known. But the Beagle affair also showed that the economics of scale apply to light aircraft also. In some respects there is a parallel with Handley Page. Both firms designed what are basically good planes which could become classics. Yet both firms struck difficulties with new aircraft, which is not unusual. But neither company could overcome the cost of development snags.

How much more can a nation invest in R & D? It is necessary to remind the House that Britain is spending enormous sums on research and development. In the public and private sector we spend about £1,000 million a year which is two-thirds of the total amount spent on the Continent of Europe. Another comparison is, however, also relevant with Western Europe as a whole if we include E.E.C. and E.F.T.A. countries which spent about a quarter of the sums spent by the United States on research and development. It is clear that the scale of science and technology is becoming increasingly complex, uncertain and expensive. Whether it is the Beagle or one of the many industries which have yet to be exploited, time and time again we shall come back to the problem that it is quite unrealistic for a manufacturer or the Government of any country in Europe to imagine that it is possible to go it alone. It was always very doubtful whether it could be done with a traditional industry, but certainly it is not possible now. That means that we have to look to Europe not only in terms of the possible market but also in terms of how we can collaborate across national boundaries and so spread the enormous costs of research and development in building up an industry.

With the increasing number of links between the Government and industry, it is vital that the information supplied to Ministers is founded on reality. I accept what my right hon. Friend said in taking full responsibility for the decision. He has been frank with the House, and one respects that. It is only fair to say that, and it is by no means a criticism or an attempt to reintroduce that argument that I would like to try and explore the basis of information within the Ministries. I would like to know who was responsible for advising the Government that Beagle would be profitable in 1972. What information system has the Minister established to incorporate the best expert advice from industry? Is there any truth in the allegation made by the hon. Member for Leicester, South-West, that a top-heavy management structure was created after the Government took over which killed the previous initiative. I hope that my hon. Friend will explore this point when he replies to the debate and that he will be able to satisfy us that there is no truth in that last allegation. It may be that there were a variety of problems in the management of the organisation, but this is a very serious allegation which requires an answer.

The quality of information and advice given to the Government on industriai matters is crucial. Most of their advice comes from the Civil Service, but a good deal of it comes from industry, usually via the C.B.I. Perhaps because of the traditional hostility between industry and the Labour Party, it should not be relied on too heavily. Nor can it be said to reflect the views of industry as a whole. The Government should make a greater effort to discover the views of those who will be affected by a measure. It is rather like the example of the chemical manufacturer who claimed that the cost of accounting for every drop of a chemical imported in bulk in order to claim an export rebate virtually outweighed the amount of the rebate. It is to be hoped that such complaints can be avoided.

By making the Ministry of Technology responsible for virtually all their dealings with industry, the Government have tackled the question of the basic structure. Time that was previously wasted discovering which of several Ministries to deal with should now be used to get on with the job. However, there is now the question of the way in which decisions are taken within the Civil Service, and I hope that the Government will look at this. The Fulton Report attempted to show what was wrong with the Service. Perhaps the experience and range of industrial competence in the Civil Service is too limited. Too few civil servants are trained managers, and the specialists do not carry the weight of authority that their expertise entitles them to. In addition, there is too little movement of personnel between the Civil Service and outside employers, and too little contact with the community.

A start has been made to remedy the defects. The structure of the Civil Service is under review, and training techniques are being changed. The Fulton Committee's recommendation that modern management techniques such as organisation and methods and management by objectives should be applied to the work of departments is being followed up.

This is not a drift from the main point of the debate. The Government and industry are coming closer together. I accept my right hon. Friend's criticism that the Opposition may make their weekend speeches implying a rather depressing state in relationships between the Government and industry and suggesting a new form of capitalism which may be civilised or Central Office. However, the fact remains that the partnership is quite firmly wedded, and I do not see any change of policy here, even if there is a change of Government. It is not only humbug but completely dishonest, and my right hon. Friend is entitled to an answer to this question from the Front Bench opposite.

The Beagle Company experience is a tragic one. Both the Government and industry must take it to heart because there are likely to be many more examples of firms supported or sponsored by the Government. Unless there is a clear commitment by the Government as to what they intend to do, and how far they will back a firm, they will make a mockery of their obvious good intentions and the nation's resources.

5.46 p.m.

Mr. Julian Amery (Brighton, Pavilion)

I have a constituency interest in this debate in that a number of my constituents are employees of the company and one or two of them are creditors of it. As far as they are concerned, some progress has been made since we last debated this subject on the Consolidated Fund Bill, and I welcome that. There is also a problem concerning Shoreham Airport. However, I will write to the Minister about that rather than delay the House now.

I have a personal interest in the matter, though not in terms of money. Apart from the Concorde, this is the last of the aircraft projects which I helped start to have fallen into the holocaust for which the right hon. Gentleman and his pre- decessors have been responsible. It is the fourth or fifth major cancellation that we have experienced at their hands.

I agree with the hon. Member for Billericay (Mr. Moonman) in one respect. This is not an ideological debate. Anyone who has been mixed up with the aviation industry knows that the private sector and the public sector are inextricably interlinked in all that goes on in aviation. Whether as a customer or as the provider of launching costs, the Government are bound to play a great part.

The right hon. Gentleman put up something of a smokescreen in fastening on to one or two sentences in the peroration of my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) and suggested that we on this side were turning this debate into an ideological one. It must be stressed that we are not, because this is a practical and straightforward issue.

What happened was that Pressed Steel came to the conclusion in 1966 that it could not carry on any longer. The Government faced a challenge: should they let the light aircraft industry go by the board, or should they try and rescue it? It was a big issue, and not an easy one to resolve.

I do not know what private advice they received. The Plowden Committee said that the light aircraft industry was one in which Britain could go it alone. The hon. Member for Billericay was exaggerating when he suggested that we could not. However, I have usually found the Plowden Committee's advice to be wrong. Nevertheless, there was a very strong case for going to the support of Beagle, and the Government decided to do it.

It must however have been clear from the beginning that the Government were taking on quite a big operation. As the right hon. Gentleman says, the American industry controls more than 90 per cent. of the world's light aircraft market. Anyone going out to shoot elephant does not equip himself with an airgun. Similarly, anyone preparing to take on the American light aircraft industry should be willing to go quite a long way and to put a good deal of money into it. It might be said that it is quite possible to kill an elephant by getting an airgun pellet through its eye. However, anyone trying that and missing gets nowhere.

Mr. Burden

My right hon. Friend will agree, I am sure, that when assessing the situation it had to be clear that Beagle could put an aircraft on the world market which would more than compete with any product that came out of Beech or Cessna or any other American company.

Mr. Amery

My hon. Friend has a good point. From what I saw of Beagle products, they were very good. They might well have produced the right solution.

In passing judgment on the Government, three possible hypotheses face us. It is conceivable that the right hon. Gentleman went into this thinking that the small amount of capital provided was enough to win the battle against the American giant. If he thought that, he is not worthy of the office that he holds. I pay him the compliment of not believing that he thought the initial sums authorised by Parliament and by his Ministry were sufficient to win that battle.

It may be that in the course of fighting the battle the right hon. Gentleman came to the conclusion that there would not be a break-through and that Beagle would never be able to compete with the American giant. If he thought that, that would be a respectable reason for withdrawing from the battle and admitting defeat. But that is not what the right hon. Gentleman has said.

On the other hand, it is possible—this seems the more likely assumption and the one at which the right hon. Gentleman hinted in his speech—that at a certain price—whether at £6 million or £10 million more, or whatever it was—a breakthrough could have been made and we could have placed ourselves back in the forefront of the light aircraft industry. If this was the case, the Government's justification for not putting up the extra capital could have been because it would have diverted necessary money from other more important projects. The Minister would have made a more convincing speech if he had been able to say that had we gone on with Beagle we would have had to sacrifice or forgo something else.

I should like to know whether the money saved is going into some other technological project. Are we to be given something else instead of a lead in light aircraft as a result of the cancellation, or will the money simply go into more unproductive Government expenditure on one form of consumption or another?

It seems that the right hon. Gentleman went into battle without enough troops. He went into a battle which he could only have won if he had been carrying with him the support of the Treasury and of his own party. He failed to carry the Treasury with him, and he seems to have forgotten the strange psychological complex which his party has against anything with wings.

On any hypothesis, this is a sorry story which deserves our censure. I do not say that it calls for the right hon. Gentleman's resignation. He presides over a large technological empire, and this is a fairly small item in it. But the Minister must not be surprised if his handling of it and his defence of it today diminishes whatever respect he still commands in the House.

5.53 p.m.

Mr. Russell Kerr (Feltham)

It is a personal pleaure for me to follow the right hon. Member for Brighton, Pavilion (Mr. Amery). For our sins, we found ourselves locked in almost mortal combat in Preston, North not many years ago. This is the first opportunity that I have had since then to speak in the same debate as the right hon. Gentleman.

I was undecided when I entered the Chamber this afternoon whether or not to make a contribution to the debate, but two factors made up my mind rather rapidly.

The first was my right hon. Friend's reference to the redundancy settlement about which, as is fairly well known throughout the House, myself and a number of hon. Members undertook a fair amount of activity about two weeks ago on behalf of constituents and, in my case, on behalf of my trade union members.

The second reason why I thought I ought to make a contribution was the speech of the hon. Member for Leicester, South-West (Mr. Tom Boardman) followed by that of the hon. Member for Woking (Mr. Onslow), who, I am sure, has only temporarily left the Chamber.

The redundancy pay offer, to which my right hon. Friend made reference, is, according to my calculations—my right hon. Friend mentioned £140,000 as the figure that the Government were now prepared to make available—about £65,000 above the original offer that the Government had in mind and will, I believe, represent about £75,000 above the amount for which the Government were liable under the Contracts of Employment Act and also under private contracts of employment. Although I am not in a position to speak for the men concerned —they must make up their own minds about the offer—my guess, from a fairly intimate knowledge of the situation at the employment end, is that this will in general meet with the approval of the men concerned. The only comment that I offer is that, though probably adequate, it is a little belated.

To be fair to the Government, I am now persuaded that their original "parsimony"—that is the word used in an Early-Day Motion drafted by myself and signed by a number of hon. Members on both sides of the House—was partly due to a lack of precedents in this difficult situation. I am prepared to concede that the Government were without any firm guidelines about the way that they should react to the situation. I should like to believe that this development and this reasonably satisfactory outcome will enable them to have a precedent to guide their future course should there, regrettably, be another similar occasion.

I pay my tribute, finally, to a welcome flexibility of approach which the Minister of Technology and his colleagues in the Ministry have shown during the negotiations which has not always been matched by a similar attitude on the part of some of his right hon. and hon. Friends in other Ministerial positions.

I turn now to the remarks of the hon. Member for Gloucestershire, South (Mr. Corfield). I have seen him on a number of occasions in far more of a bulldog mood than this afternoon. He seemed at times—I mean no disrespect—a bit like a legal aid solicitor presenting his twenty-seventh plea of "Not guilty" for the day, his remarks by this time being amiable but rather uninvolved. I am saying in a roundabout way that the hon. Gentleman's heart did not seem to be in his job this afternoon. Listening to the case presented by him and by other hon. Members, I am not at all surprised, because when my right hon. Friend came to the Dispatch Box, he made the most complete demolition job to which I have ever listened in the four years that I have been honoured to be a Member of this House. Indeed, I was tempted—though I am sure that you, Mr. Deputy Speaker, would not have accepted the Motion—to move the Closure there and then on the ground that the House would be wasting its time. It is perhaps as well, in the light of the amusing speeches that we have had from one or two hon. Members since, that I was not led into that temptation.

The hon. Member for Gloucestershire, South made a most revealing remark when he said that, despite certain warnings which the Government had been given prior to the acquisition of Beagle in 1966, they nevertheless decided to buy Beagle. In other words, the hon. Gentleman was censuring the Government for having entered into this contract. I reflect how different the picture has been when the private aerospace industry has been out with the begging bowl for Government funds with, of course, no suggestion that the Government should take any equity. The attitude of mind in the two cases seems very different indeed.

I should like to quote, I hope with the approval at least of hon. Members on this side of the House, the remark some years ago of someone who is still a Member of this House, when he referred to the aircraft industry with its enormous subventions of public funds as being a classic case of "socialising the losses and privatising the profits." That is in some measure still true today.

I now deal with two remarks made by the hon. Member for Leicester, South-West, the first concerning the position of creditors. As the hon. Gentleman was speaking, I again reflected how very different the priorities of hon. Gentlemen opposite are when it comes to who shall come first as between creditors and those on the receiving end of a redundancy deal—the employees. The obsession of the hon. Member with the interests of the creditors, in marked contrast to the employees, led him even to misrepresent the Minister's statements to sustain a pretty weak case—

Mr. Tom Boardman

Would the hon. Gentleman recall that I joined him and others in doing what could be done for these employees, and that I was probably the first to write to the Minister-about redundancy pay?

Mr. Kerr

I freely concede that the hon. Gentleman was pleased to join a deputation which I led to my hon. Friend the Minister of State, Ministry of Technology, at which what we hope will be a final agreement was informally announced to us. But my point is that, although the hon. Gentleman is not necessarily neglectful of his constituents' interests, he has revealed today for all to see that there is a massive priority in his mind for the creditors as opposed to the employees. That is my opinion: perhaps he will think about it.

He also criticised the Minister for what he called "boosting" Beagle Aircraft around the country for many months before the final crash. Would he, given the chance, have advised the Minister to go around the country "knocking" that company, so that he could make sure that it would hit the dust, so that he could remove all confidence from creditors, so that the employees would be living in a state of perpetual nerves during those months of crisis? Is that his idea of helping out in this situation? If it is, it most certainly is not mine.

Mr. Tom Boardman

Would the hon. Gentleman not accept that, if the Minister goes around inspiring the creditors with a confidence which is not justified, he has a duty to see that those creditors are paid?

Mr. Kerr

In dealing with the Minister's behaviour in regard to the creditors, the hon. Member has been most unfair today. The documents of what the Minister said on various occasions, notably in the debate which has been quoted, show that at no stage did he make remarks which could be given that interpretation. The fact that he was not then, due to the legal and other complexities of the situation, able to give precise information, does not detract from the fact that at no stage did he mislead the creditors or anyone else by any public statement. Indeed, his subsequent be- haviour, fully emphasising that the creditors along with the employees are provided for, is a complete proof that the Minister acted with complete integrity and probity.

This to me has been the number one parliamentary squib of my brief parliamentary career. it is very much to the Opposition's discredit that we should, at a time like this, be wasting valuable parliamentary time on an effort which was absolutely bound to fall flat on its face.

6.3 p.m.

Mr. Stanley R. McMaster (Belfast, East)

We have had an interesting debate and every hon. Member who has spoken has clearly criticised the actions of the Government and the Minister. I look forward to seeing the right hon. Member for Battersea, North (Mr. Jay) in the Lobby with us. He was critical of the Government for pulling out now, and this critical line has been followed by several other hon. Members.

The Minister criticised the Opposition for raising this subject today. The future of the British light aircraft industry since the Government's decision to support the Beagle Aircraft Company lies in rapid development. The right hon. Member for Sheffield, Park (Mr. Mulley), when Minister of Aviation, pointed out in 1966 that this was a rapidly growing part of the world market and that Britain should play her part in it. It is no function of Government ordinarily to intervene in private industry. I am sure the right hon. Gentleman will agree that Governments are not geared to run industry efficiently. Owing to the pressures through this House, they often make the wrong decisions in spending money and in the interests of the country.

But there are certain exceptions to this general proposition in defence and the international sphere, in which industries in this country face unfair competition from overseas firms which, directly or indirectly, are receiving some Government assistance or, in the case of the aviation industry, where their competitors are supported by substantial defence programmes which help with their research and development.

In all these cases, it is legitimate for the Government, in order to maintain industries essential to our economic welfare or defence or the development and progress of technology, to step in and assist. Examples are to be found not only in aircraft manufacture but in shipbuilding and in other vital national industries in which both Conservative and Labour Governments have assisted in the past. Also, benefit can be obtained by other industries from spin-off, which comes, particularly in the aircraft industry, from the know-how in advanced metallurgy, in miniaturisation, and developing specialised radio components. A particular beneficiary is the motor car industry. These are important, as also is national prestige, which indirectly helps —it is difficult to quantify—our export drive. These are the considerations behind the Government's decision in 1966 to intervene.

The Beagle Aircraft Company was formed in 1960 from the amalgamation of the Auster and Miles aircraft companies, which had a wonderful history in the manufacture of light aircraft and produced aircraft which could compete easily on equal terms with the products of either Beach or Cessna or any other American company. Beagle aircraft were tailored more than those of any other manufacturers probably in the world, to the needs of the customer. I have seen some of its products and they presented perhaps the best value for money in this specialised field which could be obtained anywhere. As I said, and as the responsible Ministers have pointed out both in Committee and to the House, this is a rapidly developing part of the aviation industry. Therefore I feel that it was quite right—and I do not think that the decision itself has even been criticised from this side of the House—for the Government to step in and support this industry.

The criticism has been in the way the Government have mishandled the aircraft industry, as indeed this whole affair of Beagle has been mishandled. But the actual decision to assist the aircraft industry has not been criticised.

Mr. Benn

The hon. Gentleman will recall that his party voted against the acquisition and support of Beagle, and that he put a Question to me on 6th May, 1968, asking if I would merge Beagle with Shorts. Therefore the voices that have been sounding to us from hon. Gentlemen opposite have been somewhat mixed.

Mr. McMaster

I congratulate the right hon. Gentleman on his research on this subject, but I come back to my proposition that the burden of our criticism —I also have gone through the OFFICIAL REPORTS of the previous debates— rests on two grounds; first, the mishandling of the Government's assistance to the aircraft industry and, secondly, their refusal to give full information to the House when the subjects were raised at Question Time or in debate. I do not want to go into this at length. It is on the records and I have with me various extracts to support what I have said.

Having decided to take over Beagle in 1966 and put in £6 million or £7 million of the tax payers' money, the whole project has suffered from the economic stringency with which this country has been faced during the past four or five years of Labour mismanagement. The Government's economic theories in such matters as the high tax on petrol, the lack of support for private light flying and the lack, in the wider sphere of financial growth, as forecast in the National Plan and in the election promises of the party opposite, have made it very difficult for Beagle to manufacture and sell their aircraft here in Britain. This, I hope, will be only a temporary phase, until the election comes, and I hope it comes sooner rather than later. Then the growth of the country will be resumed along the lines which pertained up to 1964, and then there will be an expanding wide market in the field of light aviation as indeed the Ministers themselves forecast when they took over Beagle, and here there will be a place for a company like Beagle.

What is required at this moment?—a little bridging finance. My right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) said that having decided to support Beagle, having already spent some £6 million or £7 million, then surely the Minister should have just a little more courage. Some kind of financial reconstruction might indeed be necessary or desirable. But to have cold feet at this moment illustrates that the Government should not have gone into the project at all in the first instance, or once they had gone in and had put so much public money in then they should carry it out to its logical conclusion and enable Britain to retain her stake in the manufacture of light aircraft.

Mr. Lubbock

I am seriously puzzled by this debate. I would like to know what is the official policy of the Conservative Party, because the hon. Gentleman the Member for Gloucestershire, South (Mr. Corfield) said the one thing he was not criticising was the decision to pull out in the end. I gather the hon. Member for Brighton, Pavilion is saying still that the Minister should have the courage of his convictions and put in another £6 million or £7 million. Which one is the official Conservative policy?

Mr. McMaster

I cannot answer that, not being on the Front Bench. I think I am entitled, as many back bench Members are, to have my own independent and free opinion on these matters. The Motion is quite straightforward: That this House regrets the mishandling by Her Majesty's Government of the Beagle Aircraft Company". So far as I can see, every hon. Member who has spoken, with the exception of the Minister, has supported that Motion. We might have different reasons for supporting it. But nevertheless mishandling there has been. Whether or not the Government should have taken on Beagle is a matter for some debate. I think that they should have assisted Beagle. Certainly, having spent some £6 million or £7 million, I feel it is totally wrong to have pulled out at this stage. I feel that the enterprise has been bungled, that we must show more courage and confidence in the future of the aircraft industry of this country. Therefore, for this reason I feel that hon. Members who have spoken on both sides of the House should support this Motion.

6.17 p.m.

Mr. Austen Albu (Edmonton)

The hon. Gentleman referred to bridging finance, but my experience of the last few years, and especially during the period of the tenure of office of the right hon. Gentleman the Member for Brighton, Pavilion (Mr. Amery), has been that bridges of this kind often become very long and develop into expensive roads. I happen to have been in Government, like my right hon. Friend the Member for Battersea (Mr. Jay), at the time these decisions were being discussed. As the right hon. Gentleman the Member for Brighton, Pavilion said, we inherited the crisis, as it were, from the Conservatives. I am not blaming them for that, but the point is the situation was developing at that time. It was an extremely difficult decision to make.

During the periods of light rather than heat during this debate, hon. Members on both sides have recognised that this is an extremely difficult problem. It is said the Government started with a great desire to nationalise the company. Of course, this is talking absolute nonsense. The truth was, despite what has been suggested by the hon. Gentleman the Member for Gillingham (Mr. Burden), nobody wanted to take it over, and it was not possible for us to find anybody else to carry on the company. The Government were anxious to carry out the Plowden recommendation on the light aircraft industry. As my right hon. Friend said, it is not so much a very advanced technological type of aircraft as one which requires large-scale production, and, therefore, a long time to bring into the market. Certainly we took, if I remember rightly, the best advice we could of market possibilities, but it is now clear that the estimates we accepted at the time were over-optimistic. My hon. Friend the Member for Billericay (Mr. Moonman) said that more sophisticated methods would have helped. My right hon. Friend will be aware that the Government of the day were responsible for the decision.

However technically good the aircraft may be, I cannot help feeling myself that there must have been, somewhere or other, a failure in management. This is something, of course, that Governments have always a great difficulty about when they are trying to support an enterprise, whether a private company or public company. They have great difficulty in ensuring that the management of the enterprise is good enough; and certainly production and management weaknesses are not unknown in the aircraft industry, or in other branches of engineering.

In my opinion, the latest N.E.D.C. Report on machine tools is absolutely disastrous. Good management is as much a problem for Government as for private industry. The Government made an attempt to save this firm and to save the industry for Britain. But in all enterprises a time has to come when decisions to stop have to be made. I believe one of the failures of the Conservative Administration, particularly in this field, was that they were unable to come to a decision as to when to stop. It is equally difficult to decide when to start. I believe probably the Government has taken the right decision in this case. But to suggest this is an occasion calling for a censure, I have never heard a weaker one in my life.

6.20 p.m.

Mr. Terence L. Higgins (Worthing)

This has been in many respects a fascinating debate, and I wish at the outset to comment on the remark of the hon. Member for Edmonton (Mr. Albu) that there have been shades of light while some heat has been generated on certain aspects. We are censuring the Government because we have not the slightest doubt that if sufficient light had been shed on this whole issue the amount of heat that would have been generated would have been very great indeed.

One must, in considering this matter, study what was said in earlier debates. My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) hit the nail on the head on Second Reading of the Industrial Expansion Bill when he said that the Measure should be re-titled a Bill to lend and often lose the money of the taxpayer. Fundamentally, this has been the story of the Beagle affair.

It is common ground on both sides that this is not a debate involving ideological claims for or against nationalisation or Government intervention. There is no question of natural monopolies being involved or questions of the commanding heights of the economy. We are concerned with the question of commercial judgment and efficiency.

As the Minister rightly said, Beagle is in a peculiar area and there is no real question of our approaching the frontiers of knowledge. This is, therefore, merely a question of whether or not the Government should try to save a particular industry. In this instance, the Government said, in effect, "Private industry is not prepared to take the risks involved in this area. Private industry does not believe that it can make a profit. We believe that we can". This was, therefore, essentially a matter of commercial judgment, and the events which we are now debating make it absolutely clear that the commercial judgment of the Minister has been appallingly bad. We censure him for this.

I wish to emphasise that we are censuring the Government, first, because when we debated the matter in Standing Committee the Minister did not provide the information which was necessary for the Committee and Parliament to make a reasonable judgment of whether the risks involved were justifiable and whether the House would be right to support the project.

Our first charge, therefore, is that the right hon. Gentleman refused to give us information which he had—or, at any rate, information which he said he had —although we still do not know whether or not he had that information, a subject to which I shall return.

Secondly, we believe that, even on the information which he had, he made a grave error of judgment, and that is the reason why a large sum of the taxpayers' money has been completely wasted. The Minister rightly said that he must take responsibility for this. I agree, and the sums involved are considerable. In other words, if his judgment in matters of this kind cannot be relied upon to be right, can we possibly rely on his judgment over such matters as the Concorde? It is on these grounds that we rest our case.

A number of subsidiary points arise. Once the decision to withdraw was made, it was clear that there was absolutely no contingency plan whatever either to cope with the question of redundancies or with the question of unsecured creditors. But the Government must have known for a considerable time that this situation was likely to arise. They must have known for some time that they would have to consider whether or not to go on with this project. It is our contention that the matter was completely mishandled, and that is another reason why we censure the Government.

The financial side of this matter is complex. Let us consider, first, if the Government were wrong to get involved in this matter in the first place. My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) pointed out that the Government went for a considerable time—indeed, for about two years—without any clear parliamentary authority for what they did. They then introduced a provision into the Industrial Expansion Bill, and in Committee we examined the matter as closely as we could.

On that occasion we raised a number of cogent points. For example, we asked how much it was thought the Government should pay for Beagle. The question of the valuation of the assets was discussed at considerable length. We never got to the basis on which the assets had been valued and on which the price which the Government paid for Beagle had been calculated. We still do not know what that basis was.

The Minister claimed that he gave lots more information than had been given previously, but on that occasion he was less than frank with the Committee. The basis for valuation purposes for the purchase price was never put before the Committee or Parliament. There was, therefore, great confusion on that score.

The Minister said in Committee that it was a risky business and that reasonable figures had been given. I pointed out that presumably discounted cash flow calculations had been made and that, as there was not expected to be any profit until 1972, it was reasonable to discount the future profits heavily. I asked for figures, but no reasonable figures on this basis were produced. For this reason I claim that he was less than frank with the Committee.

The crucial point surrounds the question of risk. On 14th March, 1968, I asked the Minister in Committee about these figures and I said: … the hon. Gentleman has given only one figure. On the sensitivity analysis, what range are we to be given? It is no good the hon. Gentleman saying that we have to do it on a sensitivity basis. This is not what the figures which he has given represent." —[OFFICIAL REPORT, Standing Committee E, 14th March, 1968; c. 376.] In less technical jargon, we were asking for a range of figures; the most optimistic and the lowest figure which it was thought would be most likely to apply. Although the Minister claimed that he was frank with hon. Members, he did not produce those figures. I therefore ask tonight if the events which have taken place were inside or outside the limits, and which, presumably, the Minister must have calculated before he decided to take the risk.

The situation which we are now facing has come to pass after a matter of only 18 months. We were asked to consider putting in about £6.5 million. This, we were told, would carry the project through to 1972. Yet after only 18 months the whole of that sum has, it appears, been used. Is that so? If it is not, and if we needed twice as much as the Minister said we needed only 18 months ago to create a break-even point—three years further on than he originally said—what kind of commercial judgment has this been?

It is clear that the Minister did not give us the figures and that his commercial judgment, based on the figures which he said he had, must have been faulty. That must be so if we are faced with this position. Again, I have no doubt that we are right to censure the Government in this way.

In Standing Committee on 14th March, 1968, I said: The hon. Member for Tottenham (Mr. Atkinson) pointed out that this was not a board meeting. That is true, and some hon. Members might think that this is unfortunate. Nevertheless, if the Government are to finance projects which are essentially business, but also risk, projects, we, as guardians of the tax payers' money, must seek to get the correct figures. Many of the figures given today do not add up."—[OFFICIAL REPORT. Standing Committee E, 14th March, 1968; c. 399.] It is not surprising, since those figures do not add up, that we are faced with the present situation, which can only be described as a fiasco for the Minister and the Government. We do not take pleasure in censuring them over this. It is not pleasurable for us to say "We told you so" when so much of the taxpayers' money has gone down the drain. We censure them because this matter must be examined and because they need censuring over it.

Another point which bears examination is the whole question of the Government changing their mind. The Government have put up a considerable smoke-screen, notably in another place where, on 19th February last, the Minister responsible said: In the autumn of 1969 the board of Beagle came to the conclusion that if the company was to obtain a commercially viable future a wider product range, including new designs of twin-engined aircraft, would have to be developed and sold."—[OFFICIAL REPORT, House of Lords, 19th February, 1970; c. 1325.] If that is so, is it the same family of aircraft that we were discussing in Committee? Even then, it is no excuse for cancelling the project after only 18 months. However, if it is a totally different family of aircraft, one must ask what has happened to the first family which the Minister was so keen to back only 18 months ago. This is very good as a smoke-screen. It conceals the real point, but it does not help us to find out what the Government were really up to.

This raises the crucial question raised by my hon. Friend the Member for Woking (Mr. Onslow) concerning the content of the approved programme of work. Did this include one family—if there is only one family—or did it include two families? I hope that the Minister, for the sake of his reputation will place in the Library a copy of the approved programme of work so that we can see clearly what was actually agreed, because the House is in the dark about this.

I turn to the actual way in which the project was to be financed. The Minister tells us that the matter was approved by the House, but the fact is that the House was told that the matter would be financed partly by an issue of shares up to £2 million and partly by bank loans of £½ million. But the fact is, as I understand it—and it has been very difficult to get at the details from the registry and so on—that only £1 million worth of shares were actually issued. If this is so, why was it not carried out in accordance with the undertaking given by the Minister about the finances. He did not attempt to answer this in opening. He went on a great deal about other irrelevant matters, but he did not attempt to answer this specific question. I hope we shall have a clear answer from him when he winds up as to why, if in the debates in Committee we were told that shares would be issued for £2 million, only £1 million worth of shares were actually issued.

Mr. Onslow

I wonder whether my hon. Friend could tell me where he got the information about the £1 million, because I was unable to get any information from the company on this subject. Where did the information come from?

Mr. Higgins

I can understand my hon. Friend's difficulty, because I gather that the file was not available in the company's office for much of the past week. It has only subsequently come to light and I was able at a later hour to obtain that particular information in preparing for this debate, though I understand that the shares were issued a considerable time ago, way back in 1968. Certainly it has not been the easiest thing in the world to prepare for this debate.

So essentially, whatever the Minister said during the Committee stage, it seems he did mislead the Committee about the actual method of finance. It looks as though the Minister has kept an extremely tight control on how much borrowing, as against the share capital it was promised, the company has been allowed to have. Perhaps the Minister could tell us how many letters altering the borrowing provisions were sent to the company at different stages. There are one or two placed in the Library, but could he tell us how many there were in total.

I turn to the question of the suddenness of the decision. It seems that the Government announced that they would cut the Beagle Aircraft Company off literally without a penny, as far as one can see, at very short notice indeed. This has resulted in very shabby treatment both of the unsecured creditors and of the employees of the firms concerned. The Government must surely have been able to anticipate this decision to some extent, because they were certainly keeping a very tight control on the borrowing, albeit very often retrospectively. That being so, why were no contingency plans made? It is true that the unsecured creditors are now apparently to get their money, but they went through a period of great uncertainty when they were far from clear whether they would get their money at all. At a time when there is a severe credit squeeze and interest rates at record level, it is a matter of grave concern.

As I pointed out in a question to the Chancellor of the Exchequer a short time ago, the credit-worthiness of the Government is jeopardised if a wholly-owned Government concern fails to meet its obligations on the due date, and this is something which the House should rightly censure the Government for, because the Government's credit-worthiness has been called in question.

Mr. Russell Kerr

It was never in question.

Mr. Higgins

It was in question. Many of those creditors had no idea whether they would get paid or not. I hope that we shall have a very clear statement from the Minister that, as far as wholly owned Government companies are concerned, those companies either are or are not to be regarded by those who may advance either goods or services to them as effectively Government gilt-edged securities. We cannot have the kind of uncertainty which has existed over this matter.

The treatment of employees has been raised both in the debate on the Consolidated Fund and during today's debate. Again, a tremendous amount of uncertainty was created on the spur of the moment when the people concerned could have expected that the Government would have anticipated their position and at least made some contingency plans in advance instead of having constant meetings. The delay of the Minister's Department in sending replies to hon. Members has been extremely great. I take only one case. I received a reply on the 9th March to a letter I wrote on 4th February regarding one of my constituents who had been declared redundant. The Minister took twice as long to reply as my constituent's period of redundancy paw. This is really not satisfactory if one wants to get a situation cleared up and clarified.

Mr. Russell Kerr

I am sure that the hon. Gentleman would not wish to be unfair. The matter was obviously under negotiation between the trade union representatives concerned and there can be no question of any one member receiving special consideration in this context.

Mr. Higgins

I understand that this kind of delay has probably been experienced by many hon. Members. The hon. Gentleman has not taken my point. This decision was taken by the Government on the spur of the moment without any anticipation. They must have been able to anticipate this and give some idea of what proposals they were making, but the fact is that they totally failed to take this kind of precaution.

Finally, I turn to the question of the total cost to the taxpayer which we are told is something like £5.98 million plus the creditors, whatever that total amount may turn out to be. This amount, there- fore, has been spent in 18 months, and it was anticipated to be spent, as I understand it, in a period of four to five years. That being so, would the Minister please estimate what the existing value of the assets is, because there is a great deal of uncertainty about that? At least we ought to know what the scrap value is so that we can get some idea of what we shall get out of the wreckage of the Government's plans. There is considerable doubt about the value of the assets which depend on the renewal of the lease on the airfield, and in the negotiations which have been taking place with possible purchasers the situation must have been confused—unfortunately I have not the time to go into any detail—by the fact that planning permission was still awaiting a decsion from the Minister of Housing and Local Government about the hard runway.

There may be varying views about the hard runway because of the noise factors and so on. But I now understand—and perhaps the Minister will tell me whether I am right or wrong—that the Minister of Housing is proposing to reopen the whole question. His delay in reaching a decision must have created uncertainty as far as any possible purchaser of the Beagle Aircraft Co. was concerned, because without planning permission it would be very difficult for a prospective purchaser to appraise the viability of a new project. Has the Minister spoken to his colleagues, and what is the position about planning permission and his estimate of the corresponding value of the assets on the airfield? These are very complex questions. We have had a short debate, but I have no doubt in my mind that we are absolutely right to question the Minister on the many points which have been raised in the debate.

I do not wish to keep the Minister from replying for more than a moment or two, but the Minister in opening said that he thought that the gloom which we had expressed in Committee was justified. We did express a great deal of qualification, but I am bound to say to the Minister that I do not think any hon. Member on our side could have conceived that matters would have turned out as badly as they have done, or that he would have taken a risk which has now turned out to be as great as we believe it is. We believe that this business has been mishandled from beginning to end.

The Minister did not provide adequate information in Committee, particularly with regard to the sensitivity analysis, to enable us to estimate the risk. The decision to close down the project has been totally mishandled. This is a very sorry tale, and I feel that my hon. Friends may well be right when they say that, for the future record, and to avoid a repetition of this state of affairs, the matter should be referred to the Comptroller and Auditor General and to the Public Accounts Committee for further investigation. At the political level, we think that the picture is sufficiently clear for us to censure the Government, and I hope that my right hon. and hon. Friends will join me in the Division Lobby this evening.

6.41 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Neil Carmichael)

We have had a very interesting debate. The Motion of censure has not been fully made out, and one of the things which struck me is that some hon. Members, on both sides of the House, feel that the Government should have continued supporting the Beagle project and not withdrawn from it. This shows that my right hon. Friend was faced with a difficult decision about whether to support Beagle. My right hon. Friend has admitted from this Box that he was wrong. He made the decision in the light of all the facts that he had at the time, facts which he revealed to the Committee upstairs and to the House, and, with due respect to the hon. Member for Worthing (Mr. Higgins), I say that the facts about the financing of Beagle were more fully exposed to the House than those about the financing of any aircraft project.

Considering the fact that Beagle was a company, set up under the Companies Act, I maintain that it would have been very difficult for my right hon. Friend to give any more information than he did. Would the hon. Member for Worthing want my right hon. Friend, when he is discussing a loan for Rolls-Royce, to disclose the trading figures of Rolls-Royce before a development grant was given? Would he want my right hon. Friend to give all the figures relating to Upper Clyde Shipbuilders, another commercial concern, to be disclosed? I hardly believe that he would.

On the one hand, the Opposition are asking the House to censure the Government and, on the other, they are asking for a public inquiry. They are asking the House to support their Motion of censure before they have any solid facts On which to base it. [HON. MEMBERS: "No."] Why, then, are they asking for a public inquiry? Surely the one should precede the other?

Mr. Higgins

The position is clear. There are far and away enough facts on which to censure the Government, but it would be helpful, to avoid this kind of thing being repeated, if we knew all the facts.

Mr. Carmichael

The hon. Gentleman says that there are enough facts, but what are they? We have had two points of view expressed today. Some hon. Members think that the Government should have provided another £6 million. Others think that the Government should not have become involved at all. There is, therefore, a case for an investigation before putting down a Motion of censure, and if the Opposition had been acting properly that is the procedure which they would have adopted.

The Government wished to preserve a stake for the United Kingdom in the expanding world market for light aircraft, and Beagle appeared at the time to offer a suitable opportunity for this. We therefore agreed to purchase the undertaking as soon as statutory authority had been obtained to do so. The Plowden Committee's Report, which greatly influenced the decision taken by my right hon. Friend and the Government, recommended that the manufacture of light aircraft merited Government support. It took the view, however, that such help should be limited, and that the industry's progress towards self-sufficiency should be reviewed from time to time, and that if the objective of self-sufficiency was not being approached within a few years the case for continuing assistance should be open to question. It is important to note that the Government decided to carry on for a limited period, and not for all time, the affairs of Beagle to give Britain a stake in the light aircraft industry. It was not a question of taking the company over to run a complete light aircraft industry which would never be profitable. It appeared that the company would be profitable.

The question of the purchase price of £1 million was settled in 1966, and was based on the net asset value at the time of about £1.475 million. That price accordingly reflected the fact that without Government intervention Pressed Steel Fisher proposed to put the company into liquidation. In other words, all the jobs would have been lost right away, and that answers the point made by the hon. Gentleman who said that the Government had let all the jobs go. The jobs were maintained for three years longer than they otherwise would have been. The net value of the assets taken over by the Government and transferred to the new Company in July, 1968, was £1.316 million. One million shares of £1 are held by, or on behalf of, the Minister of Technology, and the issue of a further 316,000 shares to bring the shareholding into line with the initial net asset value was interrupted by the appointment of the Receiver and Manager on 2nd December, 1969.

In view of the indefinite period of time between agreement to purchase and the obtaining of the necessary legislative authority, it was agreed that interest should be paid on the purchase price from 1st August, 1966.

Pending acquisition, the company was financed by grants from the Government totalling £3.3 million. The undertaking was eventually acquired in July, 1968, under the authority of Section 12 of the Industrial Expansion Act, and this had been debated at great length. Working capital since that time was provided by the Government in the form of interest-bearing loans, and the question has been asked why loans, and not equity? The facts are that it was subsequently decided to provide further working capital by way of loans to emphasise to the management, at all levels, the cost of providing capital during the years when the profits were small. To ensure that there would be cash available, payment of the interest was deferred until 1971.

A great deal has been made of what went wrong with the project. As the House knows, the American light aircraft industry dominates the world market, with more than 80 per cent. of all sales in the U.S.A., and American manufac- turers are responsible for more than 90 per cent. of the total world production. Competition has become increasingly fierce and intensive in recent years, and any company outside North America is in competition with American firms offering families of aircraft, which allows them to offer the smallest aircraft at very low profit margins to tempt customers to buy the larger, and more profitable, aircraft.

The problem facing Beagle was thus basically one of scale of operation. The large sales required for profitable operation in world markets are difficult to achieve without entering the American market which is one's competitors' home ground. Success in this market demands technical quality to be backed by competitive prices, whilst at the same time price is determined largely by scale of production, and this demands heavy capitalisation.

As my right hon. Friend has explained, the board came to the conclusion in the autumn of 1969 that a wider product range was necessary, including new designs of twin-engined aircraft, which would have to be developed and sold if the company were to be able to look forward to a commercially viable future. The company accordingly put to us a revised programme which required at least £6 million of new capital over the next four years, and probably more later to build on the foundations which would by then have been paid. The Government decided, however, after very careful consideration, that having regard to the need to contain Government expenditure, there was not sufficient priority to justify the investment of further public funds in Beagle; and the company was at that time trading at a loss.

Mr. Higgins

As all these facts were known 18 months ago, why did the hon. Gentleman not read the speech he is now reading out 18 months ago?

Mr. Carmichael

These facts were not known then. It would not be the same speech, for not all these facts were known 18 months ago. I made very much the same speech in the Consolidated Fund debate because the facts have not changed a great deal since January.

It was certainly expected that trading losses would be incurred while the company's programme was being built up. But it was also thought that a cash flow break-even point could be reached by 1972. The board estimated that the programme on which these expectations were based would cost about £4½ million, excluding the cost of acquiring the undertaking. But, for a variety of reasons, these estimates proved too low and the Government were faced, at the end of 1969, with a request for additional finance of £6 million, with probably more to follow.

There have been some criticisms of management. I dealt with this in my speech in the Consolidated Fund debate. Management itself is usually blamed when things go wrong, but, as sometimes happens, in this particular case it was a question of the market being much more difficult than had originally been anticipated. That is not an unknown or an unusual thing in a company in the commercial world. In fact, the management supported by the work force achieved considerable progress in the period following the acquisition by the Government. Trading losses were sustained, but we had always known that that would happen. It was made clear at the Committee stage of the Industrial Expansion Bill that the company did not expect to break even until 1972.

My right hon. Friend the Minister has explained his policy of allowing the board very wide freedom and responsibility of action within the broad prescribed limits. I believe the hon. Gentleman who opened the debate was very concerned about this. The monthly internal reports of the company's board were routine financial reports for the information of directors and were not intended or used as a basis of formal discussion between the company and the Department. As far as general financial supervision was concerned, it was explained to the Standing Committee on the Industrial Expansion Bill that it was never the intention of the Government that they should involve themselves in detailed questions of day to day management.

The finance director appointed by the Government in the period prior to acquisiton continued in office thereafter. The Government maintained a broad non-detailed surveillance designed to allow the management the greatest possible freedom of action within the overall financial limits. The hon. Member for Woking (Mr. Onslow) made great play of my right hon. Friend's objection to publishing an approved work programme of the company. The hon. Member said that the company had asked for something in the neighbourhood of £10 million. I can say categorically that the new company at no time asked for additional money until it asked last November for the £6 million which we have been discussing.

Mr. Onslow

Would the hon. Gentleman state equally categorically that we may see the approved programme of work?

Mr. Carmichael

We will come later to the question of publication of approved statements. There has been some very understandable concern about support for aircraft in service. This is a very important point. I remain hopeful that rights to manufacture spares, etc. for existing aircraft will be taken over by some other company. A spares and support company will be required for the Bassetts for a considerable time and suitable arrangements will be made. The Liquidator is currently having discussions with a number of companies in this connection and is very hopeful that the matter will be settled without undue delay; also, there will be arrangements for spares for the Royal Air Force.

The question of possible loss of good will has been raised by a number of hon. Members. The Government deeply regret the disappointment and inconvenience that has been caused to customers of Beagle by the failure of the company. They recognise also the effort and enthusiasm of many who have contributed to the company. They did not lightly reach the decision to discontinue it. But, taking all these factors into account, the Government believe that the decision was right.

The question of the position of the Bulldog has been raised. A prototype aircraft is undergoing flying trials in Sweden, and I understand that it has proved itself to be an excellent aircraft. The Swedish Air Force would still like to have the aircraft and is still hopeful that some other company will be interested in acquiring the design rights in order to continue production.

Miss Bernadette Devlin (Mid-Ulster)

Would the hon. Gentleman bear in mind, in considering the possible completion of this Bulldog contract, that Short Brothers and Harland are particularly suited to this kind of work; and in view of the financial position in which Lockheed's find themselves, we might find ourselves short of work at Short Brothers and Harland if we do not do something about it?

Mr. Carmichael

The receiver for the company is open to suggestions from any commercial concern which has the ability to produce the Bulldog, and there is the hope that the design rights of this aircraft, which according to all who are acquainted with it is a very suitable aircraft for its rôle, will be taken over. If Short Brothers and Harland or anybody else wish to discuss this with the receiver, I am sure he would be pleased to give every possible help. The Government have invited suitable British aviation companies to consider whether they would be interested in producing the Bulldog to meet the current orders from Sweden, Zambia and Kenya.

Mr. John Hall (Wycombe)

On a point of order. Could I ask that the loud speaker be turned up? It is quite impossible to hear anything.

Mr. Speaker

If hon. Members speak out they will be heard.

Mr. Carmichael

I am quite willing to accept that regional accents are not always "in" in this place. I have heard such complaints before, but people do understand me absolutely in the part of the country from which I come. The Government have been at pains to keep the Swedish Government fully informed of the position and the Swedish Government have expressed their gratitude for

the way in which they have been kept informed. There has been some talk of redundancy and severance payments and whether this was something which should have been foreseen. The question of enhanced redundancy payments was raised by one of my hon. Friends who was very active on the trade union side. This is not something which can be determined early in the process of winding up a company because negotiations are necessary. I am sure that the trade unions would be very annoyed, and rightly so, if the Government had merely come along and said, "That is it. That is what we said three months ago was to be the enhanced redundancy payment." I am very glad that arrangements have been made which have been helpful and acceptable to the trade unions.

The hon. Lady the Member for Melton (Miss Pike) raised the question of employment in her own area. The latest figures I have show that on 4th March there were 383 workers whose employment had been terminated, and 110 were still reported as unemployed at the employment exchanges in the area. This figure is a little misleading, however, since I understand that in the main redundant men and women are proving to be quite selective in the type of employment they accept.

Mr. Francis Pym (Cambridgeshire) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly:—

The House divided: Ayes 228, Noes 297.

Division No. 75.]	AYES	[7.0 p.m.
Alison, Michael (Barkston Ash)	Boyle, Rt. Hn. Sir Edward	Costain, A. P.
Allason, James (Hemel Hempstead)	Braine, Bernard	Craddock, Sir Beresford (Spelthorne)
Amery, Rt. Hn. Julian	Brewis, John	Crouch, David
Archer, Jeffrey (Louth)	Bromley-Davenport, Lt.-Col. Sir Walter	Crowder, F. P.
Astor, John	Brown, Sir Edward (Bath)	Cunningham, Sir Knox
Awdry, Daniel	Bruce-Gardyne, J.	Currie, G. B. H.
Baker, Kenneth (Acton)	Bryan, Paul	Dalkeith, Earl of
Baker, W. H. K. (Banff)	Buchanan-Smith, Alick(Angus, N & M)	Dance, James
Batsford, Brian	Buck, Antony (Colchester)	d'Avigdor-Goldsmid, Sir Henry
Beamish, Col. Sir Tufton	Burden, F. A.	Dean, Paul
Bell, Ronald	Campbell, B. (Oldham, W.)	Deedes, Rt. Hn. W. F. (Ashford)
Bennett, Dr. Reginald (Gos. & Fhm)	Carlisle, Mark	Digby, Simon Wingfield
Berry, Hn. Anthony	Carr, Rt. Hn. Robert	Dodds-Parker, Douglas
Biggs-Davison, John	Cary, Sir Robert	Doughty, Charles
Birch, Rt. Hn. Nigel	Channon, H. P. G.	du Cann, Rt. Hn. Edward
Black, Sir Cyril	Chataway, Christopher	Eden, Sir John
Blaker, Peter	Chichester-Clark, R.	Elliot, Capt. Walter (Carshalton)
Boardman, Tom (Leicester, S.W.)	Clegg, Walter	Emery, Peter
Body, Richard	Cooke, Robert	Errington, Sir Eric
Bossom, Sir Clive	Cooper-Key, Sir Neill	Eyre, Reginald
Boyd-Carpenter, Rt. Hn. John	Corfield, F. V.	Farr, John
Fisher, Nigel	Lambton, Viscount	Renton, Rt. Hn. Sir David
Fletcher-Cooke, Charles	Lancaster, Col. C. G.	Rhys Williams, Sir Brandon
Fortcscue, Tim	Lane, David	Ridley, Hn. Nicholas
Foster, Sir John	Langford-Holt, Sir John	Ridsdale, Julian
Fraser, Rt. Hn. Hugh(St'fford & Stone)	Legge-Bourke, Sir Harry	Rippon, Rt. Hn. Geoffrey
Fry, Peter	Lloyd, Ian (P'tsm'th, Langstone)	Robson Brown, Sir William
Galbraith, Hn. T. G.	Lloyd, Rt. Hn. Selwyn (Wirral)	Rodgers, Sir John (Sevenoaks)
Gibson-Watt, David	Longden, Gilbert	Rossi, Hugh (Hornsey)
Gilmour, Sir John (Fife, E.)	McAdden, Sir Stephen	Royle, Anthony
Glover, Sir Douglas	MacArthur, Ian	Russell, Sir Ronald
Glyn, Sir Richard	Maclean, Sir Fitzroy	St. John-Stevas, Norman
Godber, Rt. Hn. J. B.	McMaster, Stanley	Sandys, Rt. Hn. D.
Goodhart, Philip	Macmillan, Maurice (Farnham)	Scott, Nicholas
Goodhew, Victor	McNair-Wilson, Michael	Scott-Hopkins, James
Gower, Raymond	McNair-Wilson, Patrick (New Forest)	Sharples, Richard
Grant, Anthony	Maddan, Martin	shaw, Michael (Sc'b'gh & Whitby)
Grant-Ferris, Sir Robert	Maginnis, John E.	Silvester, Frederick
Grieve, Percy	Marples, Rt. Hn. Ernest	Sinclair, Sir George
Gurden, Harold	Marten Neil	Smith, Dudley (W'wick & L'mington)
Hall, John (Wycombe)	Maudling, Rt. Hn. Reginald	Smith, John (London & W'minster)
Hall-Davis, A. G. F.	Mawby, Ray	Speed, Keith
Hamilton, Lord (Fermanagh)	Maxwell-Hyslop, R J.	Stainton, Keith
Hamilton, Michael (Salisbury)	Maydon, Lt. Cmdr. S. L. C.	Stodart, Anthony
Harris, Reader (Heston)	Mills, Peter (Torrington)	Stoddart-Scott, Col. Sir M.
Harrison, Col. Sir Harwood (Eye)	Miscampbell, Norman	Tapsell, Peter
Harvey, Sir Arthur Vere	Mitchell, David (Basingstoke)	Taylor Sir Charles (Eastbourne)
Harvie Anderson, Miss	Monro, Hector	Taylor, Edward M.(G'gow,Cathcart)
Hastings, Stephen	Montgomery, Fergus	Taylor, Frank (Moss Side)
Hawkins, Paul	Morgan, Geraint (Denbigh)	Temple, John M.
Hay, John	Morgan-Giles, Rear-Adm.	Thatcher, Mrs. Margaret
Heald, Rt. Hon. Sir Lionel	Morrison, Charles (Devizes)	Tilney, John
Heath Rt. Hn Edward	Munro-Lucas-Tooth, Sir Hugh	Turton, Rt. Hn. R. H.
Heseltine, Michael	Murton, Oscar	Van Straubenzee, W. R.
		Vaughan-Morgan, Rt. Hn. Sir John
Higgins, Terence L.	Nabarro, Sir Gerald	Vickers Dame Joan
Hiley, Joseph	Neave, Airey	Waddington, David
Hill, J. E. B.	Nicholls, Sir Harmar	Walker-Smith, Rt. Hn. Sir Derek
Hogg, Rt. Hn. Quintin	Nott, John	Wall, Patrick
Holland, Philip	Onslow, Cranley	Walters, Dennis
Hordern, Peter	Orr, Capt. L. P. S.	ward Christopher (Swindon)
Hornby, Richard	Orr-Ewing, Sir Ian	Ward, Dame Irene
Howell, David (Guildford)	Osborn, John (Hallam)	Wells, John (Maidstone)
Hunt, John	Page, Graham (Crosby)	Whitelaw, Rt. Hn. William
Hutchison, Michael Clark	Page, John (Harrow, W.)	Wiggin, A. W.
Iremonger, T. L.	Pearson, Sir Frank (Clitheroe)	Williams Donald (Dudley)
Irvine, Bryant Godman (Rye)	Peel, John	Wilson, Geoffrey (Truro)
Jenkin, Patrick (Woodford)	Percival, Ian	Wolrige-Gordon, Patrick
Johnson Smith, G. (E. Grinstead)	Pike, Miss Mervyn	Wood, Rt. Hn. Richard
Jones, Arthur (Northants, S.)	Pounder, Rafton	Woodnutt, Mark
Jopling, Michael	Powell, Rt. Hn. J. Enoch	Worsley, Marcus
Joseph, Rt. Hn. Sir Keith	Price, David (Eastleigh)	Wright, Esmond
Kaberry, Sir Donald	Prior, J. M. L.	Wylie, N. R.
Kershaw, Anthony	Pym, Francis	Younger, Hn. George
Kimball, Marcus	Quennell, Miss J. M.
Kirk, Peter	Ramsden, Rt. Hn. James	TELLERS FOR THE AYES:
Kitson, Timothy	Rawlinson, Rt. Hn. Sir Peter	Mr. R. W. Elliott and
Knight, Mrs. Jill	Rees-Davies, W. R.	Mr. Jasper More.
NOES
Abse, Leo	Blackburn, F.	Crawshaw, Richard
Albu, Austen	Blenkinsop, Arthur	Cronin, John
Allaun, Frank (Salford, E.)	Boardman, H. (Leigh)	Crosland, Rt. Hn. Anthony
Alldritt, Walter	Booth, Albert	Crossman, Rt. Hn. Richard
Allen, Scholefield	Boston, Terence	Dalyell, Tam
Anderson, Donald	Bottomley, Rt. Hn. Arthur	Darling, Rt. Hn. George
Archer, Peter (R'wley Regis & Tipt'n)	Boyden, James	Davidson, Arthur (Accrington)
Armstrong, Ernest	Bray, Dr. Jeremy	Davidson, James(Aberdeenshire, W.)
Ashley, Jack	Brooks, Edwin	Davies, G. Elfed (Rhondda, E.)
Ashton, Joe (Bassetlaw)	Brown, Hugh D. (G'gow, Provan)	Davies, Dr. Ernest (Stretford)
Atkins, Donald (Preston, N.)	Brown, Bob(N'c'tle-upon-Tyne, W.)	Davies, Ifor (Gower)
Atkinson, Norman (Tottenham)	Brown, R. W. (Shoreditch & F'bury)	Davies, S. O. (Merthyr)
Bacon, Rt. Hn. Alice	Buchan, Norman	de Freitas, Rt. Hn. Sir Geoffrey
Bagier, Gordon A. T.	Buchanan, Richard (G'gow, Sp'burn)	Delargy, Hugh
Barnes, Michael	Butler, Herbert (Hackney, C.)	Dell, Rt. Hn. Edmund
Barnett, Joel	Callaghan, Rt. Hn. James	Dempsey, James
Baxter, William	Carmichael, Neil	Dewar, Donald
Beaney, Alan	Castle, Rt. Hn. Barbara	Diamond, Rt. Hn. John
Bence, Cyril	Chapman, Donald	Dickens, James
Benn, Rt. Hn. Anthony Wedgwood	Coe, Denis	Doig, Peter
Bennett, James (G'gow, Bridgeton)	Concannon, J. D.	Driberg, Tom
Bidwell, Sydney	Conlan, Bernard	Dunn, James A.
Binns, John	Corbet, Mrs. Freda	Dunnett, Jack
Bishop, E. S.	Craddock, George (Bradford, S.)	Dunwoody, Mrs. Gwyneth (Exeter)

Dunwoody, Dr. John (F'th & C'b'e)	Lawson, George	Pearson, Arthur (Pontypridd)
Edwards, Robert (Bilston)	Leadbitter, Ted	Peart, Rt. Hn. Fred
Edwards, William (Merioneth)	Ledger, Ron	Pentland, Norman
Ellis, John	Lee, Rt. Hn. Frederick (Newton)	Perry, Ernest G. (Battersea, S.)
English, Michael	Lee, Rt. Hn. Jennie (Cannock)	Perry, George H. (Nottingham, S.)
Evans, Albert (Islington, S.W.)	Lee, John (Reading)	Prentice, Rt. Hn. Reg
Evans, Fred (Caerphilly)	Lestor, Miss Joan	Price, Christopher (Perry Barr)
Evans, loan L. (Birm'h'm, Yardley)	Lever, Rt. Hn. Harold (Cheetham)	Price, Thomas (Westhoughton)
Faulds, Andrew	Lewis, Arthur (W. Ham, N.)	Price, William (Rugby)
Fernyhough, E.	Lewis, Ron (Carlisle)	Probert, Arthur
Finch, Harold	Lipton, Marcus	Pursey, Cmdr. Harry
Fitch, Alan (Wigan)	Lomas, Kenneth	Rankin, John
Fletcher, Rt. Hn. Sir Eric(Islington, E.)	Loughlin, Charles	Rees, Merlyn
Foley, Maurice	Luard, Evan	Rhodes, Geoffrey
Foot, Michael (Ebbw Vale)	Lubbock, Eric	Richard, Ivor
Ford, Ben	Lyon, Alexander W. (York)	Roberts, Albert (Normanton)
Forrester, John	Lyons, Edward (Bradford, E.)	Roberts, Gwilym (Bedfordshire, S.)
Fowler, Gerry	Mabon, Dr. J. Dickson	Robertson, John (Paisley)
Fraser, John (Norwood)	McBride, Neil	Robinson, Rt. Hn. Kenneth(St.P'c'as)
Galpern, Sir Myer	McCann, John	Rodgers, William (Stockton)
Garrett, W. E.	MacColl, James	Rogers, George (Kensington, N.)
Ginsburg, David	MacDermot, Niall	Rose, Paul
Gordon Walker, Rt. Hn. P. C.	Macdonald, A. H.	Ross, Rt. Hn. William
Gray, Dr. Hugh (Yarmouth)	McElhone, Frank	Rowlands, E.
Greenwood, Rt. Hn. Anthony	McGuire, Michael	Ryan, John
Gregory, Arnold	Mackenzie, Alasdair(Ross & Crom'ty)	Shaw, Arnold (Ilford, S.)
Griffiths, Eddie (Brightside)	Mackenzie, Gregor (Rutherglen)	Sheldon, Robert
Griffiths, Will (Exchange)	Mackie, John	Shore, Rt. Hn. Peter (Stepney)
Grimond, Rt. Hn. J.	Mackintosh, John P.	Short, Rt. Hn. Edward(N'c'tle-u-Tyne)
Gunter, Rt. Hn. R. J.	Maclennan, Robert	Short, Mrs. Renée(W'hampton, N.E.)
Hamilton, James (Bothwell)	MacMillan, Malcolm (Western Isle.)	Silkin, Rt. Hn. John (Deptford)
Hamilton, William (Fife, W.)	McNamara, J. Kevin	Silkin, Hn. S. C. (Dulwich)
Harper, Joseph	MacPherson, Malcolm	Silverman, Julius
Harrison, Walter (Wakefield)	Mahon, Peter (Preston, S.)	Slater Joseph
Hart, Rt. Hn. Judith	Mahon, Simon (Bootle)	Snow, Julian
Haseldine, Norman	Mallalieu, E. L. (Brigg)	Spriggs Leslie
Hattersley, Roy	Mallalieu, J.P.W.(Huddersfield, E.)	Steel, David (Roxburgh)
Hazell, Bert	Mapp, Charles	Steele, Thomas (Dunbartonshire, W.)
Healey, Rt. Hn. Denis	Marks, Kenneth	Stewart, Rt. Hn. Michael
Heffer, Eric S.	Marquand, David	Stonehouse, Rt. Hn. John
Henig, Stanley	Marsh, Rt. Hn. Richard	Strauss, Rt. Hn. G. R.
Herbison, Rt. Hn. Margaret	Maxwell, Robert	Summerskill, Hn. Dr. Shirley
Herbison, Rt. Hn. Margaret	Maxwell, Robert	Thomson, Rt. Hn. George
Hilton, W. S.	Mellish, Rt. Hn. Robert	Thomson, Rt. Hn. George
Hobden, Dennis	Mendelson, John	Thornton, Ernest
Hooley, Frank	Millan, Bruce	Tinn James
Hooson, Emlyn	Milne, Edward (Blyth)	Tomney, Frank
Houghton, Rt. Hn. Douglas	Mitchell, R. C. (S'th'pton, Test)	Tuck, Raphael
Howarth, Robert (Bolton, E.)	Molloy, William	Urwin, T. W.
Howell, Denis (Small Heath)	Moonman, Eric	Varley, Eric G.
Hoy, Rt. Hn. James	Morgan, Elystan (Cardiganshire)	Wainwright, Richard (Colne Valley)
Hughes, Rt. Hn. Cledwyn (Anglesey)	Morris, Alfred (Wythenshawe)	Wallace, George
Hughes, Hector (Aberdeen, N.)	Morris, Charles R. (Openshaw)	Watkins, David (Consett)
Hughes, Roy (Newport)	Morris, John (Aberavon)	Watkins, Tudor (Brecon & Radnor)
Hunter, Adam	Moyle, Roland	Weitzman, David
Hynd, John	Mulley, Rt. Hn. Frederick	Wellbeloved, James
Irvine, Rt. Hn. Sir Arthur	Murray, Albert	Wells, William (Walsall, N.)
Jackson, Colin (B'h'se & Spenb'gh)	Newens, Stan	Whitaker, Ben
Jackson, Peter M. (High Peak)	Noei-Baker, Rt. Hn. Philip	White, Mrs. Eirene
Jannar, Sir Barnett	Oakes, Gordon	Whitlock, William
Jay, Rt. Hn. Douglas	Ogden, Eric	Willey, Rt. Hn. Frederick
Jeger, George (Goole)	O'Halloran, Michael	Williams, Alan (Swansea, W.)
Jeger, Mrs. Lena(H'b'n & St.P'cras, S.)	O'Malley, Brian	Williams, Alan Lee (Hornchurch)
Jenkins, Hugh (Putney)	Oram, Bert	Williams, Clifford (Abertillery)
Jenkins, Rt. Hn. Roy (Stechford)	Orbach, Maurice	Williams, Mrs. Shirley (Hitchin)
Johnson, Carol (Lewrisham, S.)	Oswald, Thomas	Willis, Rt. Hn. George
Johnson, James (K'ston-on-Hull, W.)	Owen, Dr. David (Plymouth, S'tn)	Wilson, Rt. Hn. Harold (Huyton)
Jones, Dan (Burnley)	Padley, Walter	Wilson, William (Coventry, S.)
Jones, Rt. Hn. Sir Elwyn(W.Ham, S.)	Page, Derek (King's Lynn)	Winnick, David
Jones, J. Idwal (Wrexham)	Paget, R. T.	Winstanley, Dr. M. P.
Jones, T. Alec (Rhondda, West)	Palmer, Arthur	Woodburn, Rt. Hn. A.
Judd, Frank	Pannell, Rt. Hn. Charles	Woof, Robert
Kelley, Richard	Pardoe, John	Wyatt, Woodrow
Kerr, Mrs. Anne (R'ter & Chatham)	Park, Trevor
Kerr, Dr. David (W'worth, Central)	Parker, John (Dagenham)	TELLERS FOR THE NOES:
Kerr, Russell (Feltham)	Parkyn, Brian (Bedford)	Mr. William Hamling and
Latham, Arthur	Pavitt, Laurence	Mr. R. V. H. Dobson.