§ 4.20 p.m.
§ Mr. F. V. Corfield (Gloucestershire, South)
I beg to move,That this House deplores the approval in principle by Her Majesty's Government of the proposals by the British Overseas Airways Corporation to take over British United Airways, thereby undermining their own policy for civil air transport as stated in Command Paper No. 4213; and urges Her Majesty's Government to ensure that the establishment of a second force independent airline is not frustrated either by the implementation of this proposal or by surrender to threats of industrial action.As our Motion makes clear, this debate is concerned with the Government's intention, as evidenced by their approval in principle of this take-over, completely to overthrow their own policy as set out in the White Paper which was laid before the House only four months ago. That White Paper represented the Government's reactions—indeed, their considered reactions—to the report of the committee which they themselves have set up, under the chairmanship of Professor Sir Ronald Edwards.To inquire into the economic and financial situation and prospects of the British civil air transport industry … and to propose … what changes may be desirable to enable the industry to make its full contribution to the development of the economy and to the service and safety of the travelling public.The Edwards Committee reported to the Government on 1st April, 1969. Its Report was laid before Parliament about a month later. The Government have therefore allowed themselves some seven months for its consideration, during which period, according to paragraph 8 of the White Paper, they have invited comments from all interested parties, having… taken account of the many views expressed in the course of extensive and thorough consultations.In these circumstances, and even with this Government, with their dismal record of broken promises and reversed policies, the House, the industry and the country are entitled to assume that those proposals set forth in the White Paper represented the genuine policies of the Government on which they could rely.
But an absolutely cardinal theme of the White Paper was the acceptance in very large part of the Edwards Com- 418 mittee's recommendations in relation to the private sector and its relationship to the public sector and the preservation and encouragement of competition. The White Paper refers toThe principle"—to use the Government's own phrase,of the minimum of restraint on competition or innovation …".What greater restraint on competition can there be than a monopoly?
It is a thousand pities, though perhaps not untypical, that having so assiduously canvassed the views of what they called the interested parties, the Government should, by their steadfast refusal to allow time to debate either of these documents, have failed to take into consideration the views of hon. Members. That is not a defect which the time available today enables one to make good, but I have to say that though there are matters of substance in the White Paper with which we on this side would take issue, there nevertheless remained—and I use the past tense advisedly—a good deal of common ground. I believe that there was enough common ground at any rate to have taken the air transport industry at least out of the more bitter areas of party politics. The Government's proposal wholly reverses that situation.
A large and crucial part of the common ground lies in the Government's proposals in regard to the private sector, but there is also common ground in much that they say about the C.A.A. and, indeed, in what they propose for B.E.A. and B.O.A.C. I mention it only in passing because it is only indirectly relevant to the debate.
But what is also crucial is the fact that British United Airways is the only independent airline operating scheduled services on international and domestic trunk routes on any scale at all. The addition of its substantial inclusive tour business puts the airline well ahead of all other independent airlines in most measurements of size, though it is not significantly ahead, in terms of passenger seat miles, of Caledonian, whose business is confined to the inclusive tour and charter markets. So much is this the case that, throughout the Edwards Report, B.U.A. is specifically accepted by name, as the obvious and, indeed, the essential nucleus of the "second force" 419 independent airline to which the Committee gives very much attention, and the emergence of which by amalgamation—and the Edwards Committee clearly had Caledonian in mind as the appropriate partner—we are told in paragraph 39 of the White Paper the Government "would welcome". The paragraph continues by saying that the Government[...] agree with the Committee's view that this would almost certainly take some time. A new airline of this kind must evolve progressively, proving itself at each stage.The Government have allowed precisely four months—
§ Mr. Corfield
I will do so, if the hon. Member wishes—indeed, I would willingly read the whole of the White Paper and the Edwards Report, but I do not think that to do so would help the House. As I was saying, the Government have allowed precisely four months.
The paragraph goes on:It is for the airlines to decide, in the exercise of their commercial judgment and in the light of market forces, whether and in what ways to come together.I do not know whether the hon. Member for Orpington (Mr. Lubbock) or the Government is suggesting that when the Government drafted that sentence which appears in a paragraph which, in turn, appears in a section of the Report devoted exclusively to the private sector, they had in mind a merger of B.U.A. and B.O.A.C. or, indeed, that such a merger could in any way fulfil the objectives of their policy. Can it seriously be contended that the disappearance of this nucleus—this essential nucleus, because of its significant scheduled services—does not utterly destroy the whole concept of the second force? This, indeed, is the view of the industry, and it is the view of my right hon. and hon. Friends.
It is relevant to recall the principle reasons for the Edwards Committee advocating a strong independent sector to include a second force airline licensed to operate a viable network covering scheduled and inclusive tours and charter traffic both long and short haul. The committee devoted many pages to this matter, and it is fair to summarise by saying that the committee's first concern was to secure the maximum degree 420 of competition within the control that is inevitable and essential to an airline of this character. The committee's views are set out quite clearly in paragraphs 293, 294 and 295.
Paragraph 294 is, perhaps, the significant paragraph. It states:In a regulated system competition is itself an important instrument of regulation: a means by which the licensing authority may maintain a check on the efficiency of airlines which have been granted the protection of a licence. As a means of measuring the efficiencies of licensed airlines the existence of competing airlines provides the regulatory authority with yardsticks for which it is extremely difficult to find adequate alternatives. But over and above this advantage, we think that competition is the most effective way by which the travelling public may be assured that they will get confortable and efficient service; that there will be enough capacity; that they will gain the advantages of technological advances; and, perhaps most important, that they will be able to enjoy the satisfaction of being able to choose between alternative carriers. All of us are aware of the frustrations of dealing with monopoly suppliers and some of us have had experience of the difficulties and disadvantages, in terms of public relations, of being monopoly suppliers.Turning to paragraph 295, one reads:We have been told many times that service on domestic trunk routes in the U.K. has much improved since competitive services were authorised in 1963.I believe that is the experience of every one of my hon. and right hon. Friends who travel to and from this country and to Scotland and Northern Ireland.
Of course, the Government appear to have accepted these tenets without any qualification whatever. Paragraph 10 of the White Paper says:In setting these objectives for the industry, the Government consider that the minimum restriction should be imposed on it or on the users of its services, and that arrangements which restrain competition or innovation should be tolerated only to the extent that they are necessary to achieve the main objectives of policy.Monopoly is the greatest restraint of all. In paragraph 34 the Government say that theyalso agree broadly with the Committees's views about competition on domestic routes. There are already two carriers licensed to serve the trunk routes between London and Belfast, Edinburgh and Glasgow. In the longer term, as the volume of traffic increases, there may be room to license a second carrier on other primary routes. But the main need of the immediate future is to consolidate the position of the second carrier on those routes where competing services already exist, with a view 421 to the eventual removal of limitations on the frequency of its services,".One may ask, where is that competition to be now?
§ Mr. Robert Howarth (Bolton, East)
Surely the hon. Gentleman should distinguish between the situation domestically where there is justification for the strictures he has made, and when we move anywhere out of the United Kingdom where both corporations are up against very stiff competition from other countries' airlines?
§ Mr. Corfield
That has not escaped my attention, and the hon. Member will be aware that it did not escape the attention of Sir Ronald Edwards. The second contention of the committee is in the middle of paragraph 47:even when direct competition is not desirable"—that is the condition to which the hon. Member for Bolton, East (Mr. Robert Howarth) was referring—we believe it is valuable to have more than one source of expertise, judgment, experience and enterprise including commercial innovation.It goes on to illustrate B.U.A.'s running of South American routes and illustrates the third important point:we already have the beginnings of a second force.The committee's third concern is directed to the other side of the coin, the size and efficiency of B.O.A.C. Throughout Chapter 6 of the Edwards Report there runs a common theme, or, as the committee calls it, a "philosophic assumption". It is described in paragraph 232, and it is basically a desire to ensure that no airline should be greater than it need be to obtain the economies of scale and the necessity of different approaches to problems of management, and as many of those different approaches as possible without loss to the economy. I wholeheartedly endorse that assumption.
§ Mr. Corfield
No. I have dealt with the hon. Member. He missed the point once and he has had his shot.
Let it be recalled that the Edwards Committee was appointed by this Government. It was not composed exclusively of Conservatives. Of the eight members, 422 if we include the assessor, no fewer than four had considerable experience over a considerable period in important positions in nationalised undertakings. If we assume, as I think we can, that the General Secretary of the National Union of Public Employees may also have fairly intimate knowledge of large-scale public organisations, there are five of the eight who have this type of experience.
Here again the Government appear quite specifically to endorse this line of thought. That appears in paragraph 14 of the White Paper which says:The Government agree that structural changes should be encouraged, on the broad lines proposed in the Report. Greater size should not be pursued to the exclusion of desirable competition.Surely this is precisely what this B.U.A.-B.O.A.C. tie-up will result in. In paragraph 7 of the White Paper one does not find much evidence that the Government's view of management of the nationalised corporations has reached such a stage of perfection that a self-evident conclusion emerges that the airlines would benefit immediately by widening their responsibilities by taking charge of a successful national competitor.
When one recalls the constant trouble over B.O.A.C. pilots, one wonders whether it makes any sense to bring in a body of pilots of whom B.A.L.P.A. has always said it would not welcome into the system. Does it make sense for the Board of Trade even to contemplate allowing B.O.A.C. to buy up a competitor—its most active competitor in the independent field—and whose rates of productivity do not quite come up to those of B.O.A.C., but substantially exceed those of B.E.A.? My authority for saying that is table 3.4 on page 24 of the Edwards Report.
The Government have, of course, argued that since the initial approach was made by B.U.A. to B.O.A.C. there can be no question of deliberate reversal of policy. They have implied that we are suggesting that B.U.A. has been acting improperly in making such an approach. This is a defence which simply does not wash. I have no doubt that many people would like to unload their businesses for cash on to the nearest nationalised corporation. If reports of the purchase price that have been heard are accurate, compared with the price paid by British and 423 Commonwealth three years ago, perhaps this was not an unattractive offer. However that may be, it is no function of a nationalised undertaking, and it is not the function of a nationalised corporation, deliberately to go against public policy. Nor indeed is it the responsibility of B.O.A.C. The deal stands or falls on approval by the President of the Board of Trade and the responsibility is on him alone.
I hope that the right hon. Gentleman will reverse that policy today. In any case, as I understand this story, although no doubt the truth is not the whole truth, the Edwards Committee believed that to establish a second force airline it would be necessary to transfer some routes from the corporations and the committee had B.O.A.C. principally in mind. In the White Paper in paragraph 41 the Government reject that approach. They equally rejected informal direct applications to the Board of Trade by B.U.A. Whether they were wise or unwise to do that is an argument for another day, but I think it relevant to remark that this is not a precondition of Caledonian's current bid. That is a matter of its commercial judgment as opposed to the commercial judgment of B.U.A. and it is not for me to judge between the two. Perhaps that is not for the right hon. Gentleman either.
After these proposals had been rejected by the Board of Trade, then and then only did B.U.A. approach B.O.A.C. and, I understand, in the first place discussed the possibilities of the transfer of routes and later other methods of possible co-operation. It was during those negotiations that the proposal that B.O.A.C. might buy B.U.A. emerged and the price was mentioned which the owners of B.U.A. regarded as one which should be accepted in the interests of its shareholders. That is a rather different impression from the one we got from some of the Press and Government statements to the effect that B.U.A. approached B.O.A.C. with the initial and sole object of selling if it possibly could.
§ Mr. Leslie Huckfield (Nuneaton) rose—
§ Mr. Corfield
I shall not give way. I still have a lot to say.
424 As the House remembers, the news of this proposal and that it was to be accepted in principle by the right hon. Gentleman was made public on Friday, 6th March. It has generally been described as a leak, and I believe that it was a leak. If it was a leak, one can only assume—and perhaps the right hon. Gentleman will be in a position to confirm or deny this—that the intention had been to tie up this deal completely and present it to the House and to the country as a fait accompli without any opportunity for debate. But whether it is true or not, it is curious that the announcement was made that the deal had been approved in principle. We should ask the right hon. Gentleman what exactly that means.
As I understand it, the actual figures had been agreed between the two negotiating parties and, therefore, I imagine that they must have been available to the Board of Trade for detailed analysis. But I could not believe even of this Government that, had they known that parallel to the British and Commonwealth negotiations with B.O.A.C. there was also negotiation with Caledonian with a view to a merger which would have been very close to what the Edwards Committee and, as we thought, the Government had in mind, they would have allowed this deal to proceed.
The Minister of State assured me—and I want to make it absolutely clear that I am not for one moment suggesting that he was not telling me the complete truth—that the Board of Trade was wholly unaware of this possibility. I have no doubt that the Board of Trade was not aware of it. My impression was that the Board of Trade was not only unaware of it but had the definite impression—and I am not sure that I was specifically told this, and I would not like to say it if it is not correct—that such a possibility was utterly and wholly non-existent as far as B.U.A. was concerned. It is only fair to say that there are different views of the discussions held by B.U.A. on the one hand and Caledonian on the other.
Having seen some of the documents which were prepared and agreed, I have not the slightest doubt that had it not been for the bid by B.O.A.C., the further discussions, which should have started on the following Tuesday, would have opened up a very real possibility of the merger which Edwards and others had 425 in mind. There was at that time no question of a take-over of B.U.A. by Caledonian; that came later when Caledonian heard of the B.O.A.C. takeover proposal. But I have no doubt now that the report that Caledonian is willing and able to make a takeover offer is genuine, and I have even been given to understand that it is prepared to top the B.O.A.C. offer provided that it can be substantiated as a sound offer on the basis of the financial figures.
As the House knows, other independent airlines have also been reported as showing a somewhat similar interest. So the President of the Board of Trade is therefore in no position to say either that there is no chance of a second force as envisaged by the White Paper, or that B.U.A. is likely to suffer either in the contribution it can make to British air transport or the service it can render to the public if B.O.A.C. now stands aside, unless the B.O.A.C. bid is more than is justified by the valuation of the assets. In that event, the right hon. Gentleman has a clear duty as guardian of the public money to institute now a very thorough investigation.
That brings me to the question of what B.O.A.C. will use for money? My information is that this is definitely a cash deal. The House will recall the debate on 9th December—this is col. 376 in the OFFICIAL REPORT—On the last B.O.A.C. (Borrowing Powers) Order. The whole of the amount currently available under the current Act was voted to B.O.A.C. specifically wholly and exclusively to meet the costs of re-equipment. It is abundantly clear that if B.O.A.C. is to use that money to purchase its competitor it will be using it for a wholly different purpose from that for which it was voted by Parliament. If it is true that B.O.A.C. had sufficient reserves for this operation, it must also have been true that it had sufficient reserves to meet a great deal of its re-equipment and need not have come to the House when it did—
§ Mr. Corfield
No, I will not give way—nor need it have come to the House as early as was forecast by the then Minister of State in that debate.
The House will also recall that when this matter was raised on Monday, 9th March the Minister of State gave us an 426 assurance that applications which by then had been put in by the independents in respect of B.U.A.'s routes would be considered by the A.T.L.B. without political interference. We very much welcomed that assurance, and I am convinced that it was absolutely right that it should have been given. But it raises other important side issues, for it must be remembered that all B.U.A.'s scheduled routes—with the exception of the South American route which it took over because B.O.A.C. withdrew—were awarded to B.U.A. by the A.T.L.B. in face of opposition from either B.O.A.C. or B.E.A. Therefore there is no reason to assume that the Board will not again prefer an independent to B.O.A.C. Indeed, if A.T.L.B. has regard or feels it incumbent upon it to have regard to Government policy—and it certainly set a precedent for this in the recent fares inquiry—it must he a probability rather than a possibility, for the White Paper remains the only authentic written statement of Government policy.
If this should happen the question arises again of what is B.O.A.C. buying and what is its value? I do not think that there can be much doubt that the value of B.U.A. to B.O.A.C. is B.U.A.'s route pattern rather than its aircraft. It is difficult to see how B.U.A.'s aircraft will fit comfortably into B.O.A.C.'s fleet. B.U.A.'s four VC10s, are, I understand very early models which B.O.A.C. frequently tells us have excessively high direct operating costs, and too small a capacity. Its eight BAC 1–11 200 series are substantially more expensive to run than the 500 series and in any case one can only see a rôle for this type of aircraft in charter services, certainly not in the scheduled services of B.O.A.C. I am also informed that the hanger at Gatwick owned by B.U.A. is too small for the 707.
How can B.O.A.C. and the Board of Trade, for that matter put a value on B.U.A. until the A.T.L.B. has made its decision? My information is that the A.T.L.B. is unlikely to be able to start its hearing before June and whatever decision it makes then is subject to appeal to the Board of Trade by the defeated party.
It was rumoured in the Press this morning—and various members of the Lobby rang me up last night—that the right 427 hon. Gentleman will tell us that he is to postpone his decision. I hope that he will at least do that because there is really no rational alternative in view of the procedures of the A.T.L.B., although I am bound to say this Government are not always very rational in dealing with public money as was evidenced by the Beagle affair last week. I hope that the right hon. Gentleman will bear in mind—even if he is to tell us today that he withdraws his approval in principle—that it has already done much damage in the apprehension which it has raised throughout the independent sector of the airline industry and the anxieties and even antagonisms which have been aroused which will take years rather than months to heal.
The further question arises: what does B.O.A.C. propose to do with B.U.A.? Is is to be retained as an entity and run as such, a wholly-owned subsidiary like B.E.A. Air Tours? If that is the intention, we shall, presumably, see B.O.A.C. competing with B.E.A. on the domestic trunk routes. Whatever the merits of that may be—and there may be some—it cuts right across the whole underlying argument which the Government themselves used for the setting up of the Airways Board, and that, incidentally, is a provision of the White Paper with which this side of the House would agree as being more logical than that of the Edwards Report, though it is only right to add that our acceptance will have to be reconsidered if the takeover is completed, for then we shall have had a drastically changed situation.
What about B.U.A.'s charter and inclusive tour activities? Are these to be operated in competition with the independents, with public money? If so, there is an important principle here. Whatever the arguments may be for the provision of public funds to support scheduled services in this country's interest, those arguments do not apply to supporting let alone subsidising, purely holiday traffic originating in this country and, far from adding to the balance of payments, having the reverse effect.
There can be no doubt that there is a degree of subsidisation of B.E.A. Air Tours. One has only to talk to the managing director or read his reports to realise that B.E.A. Air Tours has been 428 set a target of 9 per cent., about what B.E.A. could secure if it lent the money to a local authority, and substantially below the target which the Government set for B.E.A. itself.
I turn now to the disastrous intervention of Mr. Clive Jenkins. This was a clear and unambiguous threat to enforce the takeover by industrial action and to undermine the authority and status of Parliament. The right hon. Gentleman is reported as having said categorically that he will not be intimidated by these or other threats. We welcome that assurance, and I sincerely hope that his attitude will be unanimously and unequivocally echoed and supported by hon. Members throughout the House. The right hon. Gentleman the Member for Southwark (Mr. Gunter) has been reported as saying, "We have dealt with the Clive Jenkinses of this world in the past, and we shall deal with them again". I wish that I shared his confidence, for behind Mr. Jenkins' irresponsible and dangerous attitude there lies this Government's supine ineptitude in their attitude to industrial relations as a whole.
§ Mr. Corfield
I am coming to the position of the trade unions. The Government must share responsibility for a situation in which the elected representatives of the people can be threatened, if only by words, by a trade union leader or by any leader of any sectional interest, whatever it be. The fact that this is a small union, and Mr. Jenkins is elected by a very small minority, is only an illustration of the absurdity of the situation. It is anarchy, whatever the sectional interest—and I doubt that it has the protection of the Trade Disputes Act.
The right hon. Gentleman has no alternative but to resist this threat and, more than that, to make clear for all to see that he is resisting it. This is a situation which I deeply regret, for I do not want him to make the decision to withdraw on those grounds, or to have to make it on those grounds. I want him to make the decision to withdraw because I believe that to adhere to the policies in the White Paper is essential if we are to restore some faith, not in this Government since they are beyond redemption, but in Government as an institution, and I want him to 429 restore a degree of confidence and certainty to the airline industry, for that is essential to the contribution which it makes to the economy and the services it renders to the public.
Having referred to Mr. Jenkins and, therefore, indirectly, to the trade unions—perhaps this will interest hon. Gentlemen opposite a little more—I wish to add a further word. I have not tried to assess the reactions and interests of employees. This is not because I do not regard them as important. They are of immense importance. It is simply that I have not the facilities to do it. However, I can only say that my mail certainly does not suggest any unanimous enthusiasm for employment by B.O.A.C. among the present employees of B.U.A. Indeed, as I came to the Chamber this afternoon I was handed this telegram:British United Airways staff at Victoria air terminal totally disagree with the irresponsible and unfounded statements of Clive Jenkins. We do not wish to work for B.O.A.C. and wholeheartedly support the initiative of Freddie Laker and other independent airline operators in their bid for our airline. Good luck in today's debate—Officers and staff B.U.A. Victoria Air Terminal".
§ Mr. Orme
The hon. Gentleman has just quoted a communication from workers at the B.U.A. terminal. Will he not recognise that the thousands of workers at London Airport, many of them in my union, the A.E.F., have a right to voice their opinion about what should happen at that terminal, that it is democratic for them to do so, and they will continue to do so irrespective of what the hon. Gentleman says?
§ Mr. Corfield
As far as I recall, I made no suggestion to the contrary. I simply said that, in my judgment, and from what my mail has shown, there is no unanimous enthusiasm on the subject.
I end with a plea to the President of the Board of Trade, not merely to postpone but to reject this take-over, and to reject It because to do so is in the interests of civil aviation today, as those interests have been seen not only by the Government themselves but by the Edwards Committee and by right hon. and hon. Members on this side and, I believe, many on that side as well.
I remind the right hon. Gentleman that, if he does not reverse this deal, he lays himself open—let us forget Mr. Jenkins 430 for the moment—to the charge that behind the façade of the Edwards Committee there has been a determined effort to eliminate the independents. For months, we have had the Edwards Report regarded as the excuse for inaction. Before that, we had the pronouncement by the right hon. Gentleman the Chancellor of the Exchequer, when he was Minister of Aviation, that no scheduled routes would henceforth be given to the independents in competition with the Corporations. We have had the Government subsidising B.E.A. to use an aircraft which other airlines use quite happily with profit and without subsidy. We have had the nationalisation of an important sector of the air tour market. We have had the establishment of B.E.A. Air Tours, which is clearly operating on a subsidised basis in competition. We have had the attempt by the President of the Board of Trade to restrict the inclusive trade tour traffic across the North Atlantic by private letter to independent operators restricting them to 1 per cent. of scheduled services.
Now, the Government propose, or were about to propose, or have approved in principle, a merger which would shatter all hope of the emergence of a viable independent scheduled operator and put a question mark over the whole future of the independents, even in the inclusive tour and charter sector. And all this behind a smokescreen of lip-service to a mixed economy, competition and service to the public.
Our Motion states our views. To it I add a charge of ineptitude, insincerity and cynicism.
§ 5.0 p.m.
§ The President of the Board of Trade (Mr. Roy Mason)
The White Paper that I laid before the House last November was the first fully comprehensive statement of civil aviation policy to be made by any Government since 1945. It was based on the extremely thorough and authoritative report of the Edwards Committee, which in its turn was the first complete independent inquiry into this industry since before the war.
In fact there are not many cases where a Government have accepted so many of the recommendations of a committee covering so wide a field. The report and the White Paper are major landmarks in the industry's history and it is 431 right for the House, now that there has been time for everybody to reflect upon them, to debate some of the issues raised in them.
I did not find it hard to predict that the hon. Member for Gloucestershire, South (Mr. Corfield) would accuse me today of departing from the policy set out in the White Paper before we have had time to put the proposals into effect. It is an accusation which hardly befits the spokesman of the party that, in 1960, legislated to establish a licensing system that was little better than an elaborate framework enclosing a policy vacuum. The Tories established the Air Transport Licensing Board but gave it no guidance on the policy it should pursue, hoping instead that a policy would somehow emerge spontaneously. They then proceeded in 1961 to undermine the position of the A.T.L.B. and the confidence of the independents by reversing the A.T.L.B.'s decision to allow Cunard-Eagle to operate North Atlantic Schedule Services.
So much for the mealy-mouthed talk of the hon. Gentleman about confidence in civil aviation in the independent sector. Within a year of establishing the licensing system the Tories turned down an independent's application to go on the North Atlantic route. That seriously upset civil aviation, seriously undermined the A.T.L.B., and was also a kick in the mouth for the independents. The Tories are, therefore, mealy-mouthed when they talk about standing up for, and championing the cause of, independent civil aviation.
Before I explain how wrong the Tory Motion is, however, I should like to say something about the industry itself and what has been happening to it, and about the reasons that led the Government to adopt the policy that they did adopt and that they still adhere to. I think it is necessary to begin by doing this, in what is the first major debate since the White Paper appeared, so as to put the Motion into its proper perspective. I hope that the House will bear with me for a while if I set the scene in this way. The hon. Gentleman spelt out some of the background.
It is a commonplace to describe civil aviation as a rapidly growing industry. The astonishing thing is that everybody 432 takes it for granted. People seem to regard it as quite normal that civil aviation should double its output every five years or so and that it should show every sign of going on doing so. The truth is that sustained growth at a rate like this is quite exceptional and almost fantastic. The industry that we have today is no longer the same industry that the House legislated for in 1960. In 1980 it will be a different industry again—technologically, commercially, and in every other way. If it is to thrive, our thinking about the industry must seek to be at least one step ahead of the changes that are taking place.
Traditionally, the main effort of the industry has been the development and expansion of a worldwide network of scheduled services. This has been the main contribution of the two Air Corporations, B.O.A.C. and B.E.A. Nobody can deny that theirs has been a magnificent performance. B.O.A.C. is now achieving a level of profits that is the envy of its international competitors. B.E.A. is the largest airline within Europe and about the only airline to be making a profit on its European business.
We must recognise that there have been miscalculations and shortcomings in the past, and that there is always room to improve on a level of performance that is already high. Their achievements are none the less for that. B.O.A.C. and B.E.A. are our two greatest airlines. Indeed, they are among the world leaders. Quite clearly, we must do all we can to ensure that they are adapted and strengthened so as to remain among the world leaders in future.
§ Mr. Cranley Onslow (Woking) rose—
§ Mr. Mason
I know the point that the hon. Gentleman wants to raise—about the write off. That was done. It has lessened B.O.A.C's interest payments and benefited the Corporation. I accept that. Since that, they have done remarkably well and paid £31 million on public dividend capital. That is an achievement also.
At the same time, and quite often in the face of great difficulties, our independent airlines have their own considerable achievements to their credit and to the country's credit. Their special achievement has been in the development of 433 charter traffic, the fastest growing sector of the industry today and one that can no longer be regarded as a second-class activity. Again, performance has been somewhat uneven and there have been failures, some of them spectacular. Does the hon. Gentleman want to challenge that? The best among the independents, however, can stand comparison in their skill and in the quality of their performance with the best in the world. They, too, are a national asset.
The Edwards Report and the White Paper both placed considerable emphasis on the interests of the consumer. After all, it is in order to serve the consumer that the industry exists. There has, perhaps, been too much emphasis in the past on the running of air services for their own sake. At the same time, however, the consumer can only be served if the industry is viable, and the advantages that competition can bring to the consumer have to be weighed carefully against the hard facts of airline economics.
All our airlines are, in one way, or another, in competition with each other, but the nature of that competition is often not fully understood. Over the years people, both inside and outside the industry, have tended to see this competition in terms of a fight between the Air Corporations and the independents for the right to operate scheduled services.
To an increasing extent, however, this way of seeing it is likely to be misleading. The Edwards Committee rendered us all a great service by pointing out that the nature of the market is changing, and slowly but increasingly the implications of these changes are being realised, not only in this country but in the United States and elsewhere. To a growing extent the real competitive battle today and in the next few years will be the fight between scheduled and charter services for the bulk travel market, even though that market is only part of the total. Nevertheless, a great network of scheduled air services must be maintained. It is one of the foundations of modern commerce needed by all countries and by this country perhaps more than most. It should not, and need not, be disturbed by the growth of bulk travel, but it is in that market that the future 434 growth of the industry will mainly be found.
There is in fact relatively little direct competition between British carriers on scheduled service routes, nor can there be. On international routes they compete mainly with foreign carriers and on domestic routes they compete mainly with surface transport, which, as is noticeable in the past week, is now fighting back.
There are two essential conditions which must be satisfied before it makes sense to licence two British scheduled carriers to compete with each other on an international route. First, the traffic must be heavy enough and, second, our bilateral agreement with the other countries concerned, for the exchange of traffic rights, must allow a second British carrier to be designated on terms that would allow a reasonable expectation that the British share of the market would be increased.
The fact is that there are relatively few such routes. As the White Paper points out, it is mainly on routes to the United States that a second British carrier might be newly designated with advantage at this time. But this is the very area where international competition is at its fiercest—competition both with foreign scheduled carriers and with charter services—and any independent airline that is licensed to serve these routes in competition, not only with B.O.A.C. but with everybody else, too, must without question have the very considerable skill and resources that will be necessary if it is to make a successful go of it.
This is the reality that we have to deal with, and it is this reality that led the Government to reach two of their main conclusions. First, we accepted that there could be advantages in licensing a second British carrier on the North Atlantic, provided it was strong enough. We set out in paragraph 33 of the White Paper the criteria that would have to be satisfied before a licence is given. They are tough criteria, but whoever gets the licence is in for a tough time and, as the Edwards Committee said, there is no use sending a boy to do a man's job. Secondly, we said that we would welcome a merger of independent airlines that would strengthen the industry.
Two years ago some of the independent airlines applied for licences to run scheduled services across the Atlantic. 435 The Air Transport Licensing Board rejected the applications, wisely as events have shown, because one has since collapsed and the other has, pleasingly, considerably strengthened its position. That is Caledonian. The A.T.L.B. did, however, give a very broad hint that if a stronger application was presented by a combination of airlines it might be granted. That is what the Edwards Committee meant by a "second force" and what we meant in the White Paper. As it became possible to open up new routes or introduce a second carrier on old ones such an airline would command consideration. In spite of what the hon. Gentleman has said the Government were quite sincere in what they said about this in the White Paper. I have said that our independent airlines are a national asset. We should like to see that asset used to the best national advantage. We think that the best national advantage would flow from an amalgamation that would result in an independent airline strong enough to compete on the North Atlantic. If it can hold its own there, it can hold its own anywhere. But, at the same time, we have got to be satisfied that it is strong enough.
That is why the Government will not say to anybody, "If you get together with so-and-so, you will be the second-force airline". We want to see what the airline looks like first. The proof of a pudding is in the eating and the proof of a merger is in the airline that results. It is for much the same reason that we are not attracted by the proposition that any existing airline by itself be labelled "the second force". Experience in running scheduled services is not enough. Successful experience of the United States market is also needed, and incidentally, so is the right attitude towards industrial relations.
The hon. Gentlemen opposite ask how a combination of independent airlines can achieve the necessary strength if they are not given more scheduled services to fly. I have been reading the comments of the hon. Gentleman in The Times, in letters, articles and broadcasts and this is one of the points he has consistently made.
§ Mr. Corfield
I challenge the right hon. Gentleman to give a single reference when 436 I have called for extra routes for B.O.A.C. in anything that I have written.
§ Mr. Corfield rose
§ Mr. Mason
If the hon. Gentleman says that I have picked it up wrongly, I withdraw. There is this argument—and we ought to get it out of the way because Edwards dealt with it, and we deal with it in the White Paper—that the independent airlines can only achieve the necessary strength if they could be given more scheduled services.
I have already suggested this afternoon that this argument is symptomatic of the thinking of the past rather than of the present and future, mainly because, as I have tried to explain, the real growth is in the bulk travel area.
The fact is that no independent airline, or combination of airlines, could be given a very rapid and extensive increase in its scheduled service network without taking routes away from someone else, and that someone else must be one or both of the Air Corporations. I find this a very difficult proposition to justify, on grounds either of sense or of need.
As the White Paper says, we do not rule out some rationalisation of airlines' route networks under the supervision of the Civil Aviation Authority, where this is in the national interest. Rationalisation in that sense could be of benefit to both or all of the airlines concerned in it. But the tidying up of route networks is a very different thing from taking a large block of routes away from one airline and giving it to another, such as the whole of B.O.A.C.'s African network, which is what B.U.A. originally asked for. That is ridiculous in the extreme.
The Edwards Committee suggested that some transfers of routes would be desirable, although it made it clear that in its view a viable network could be built up on considerably less than B.U.A. had proposed. We are talking about routes that B.O.A.C. has built up over the years. A great deal of the taxpayers' money has been invested in them. If they are profitable, and that is why 437 B.U.A. wanted them, then they are the basis on which B.O.A.C. can expand into new markets. There would be no gain to our earnings of foreign currency by taking these routes away from B.O.A.C. and there could be a loss if B.O.A.C. were weakened as a result. I cannot believe that a wholesale transfer such as B.U.A. has sought, would make any sort of sense. The White Paper makes it clear that there has been too much fragmentation of our national effort in the past and we shall not strengthen it now by carving up the strongest airline we have.
Now as to the need. I come back to the question of the changing nature of airline competition. We stand on the threshold of a major expansion of long-haul bulk travel and especially of long-haul inclusive tours where, as the White Paper makes clear, the time is approaching for a reappraisal of our pricing policies. Nobody at this time can predict what shares of the bulk travel market will be taken by scheduled and charter services respectively. All I can predict with reasonable confidence is that, in the world as a whole, as has already happened in Europe and on the North Atlantic, bulk travel is likely to increase its share substantially, and we want British airlines to be well to the fore in developing this traffic.
There is ample room for a combination of independent carriers to achieve the scale that is needed for strength, without the acquisition of any more scheduled routes that may come its way through dual designation and such new routes as become ripe for development from time to time as the market grows. If an airline says it must have more scheduled services in the world of the '70s it is not because it can only expand in this way, but because it prefers to expand in this way and, as I have tried to suggest, this may well be symptomatic of outmoded thinking.
It is for these reasons that we said, in paragraph 31 of the White Paper, that there should be no attempt to lay down, in quantitative terms, a hard and fast share for each sector. Nobody can be sure today what the future balance will be. That is why the prudent airline will engage in its business in whatever terms will best enable it to keep abreast of market changes. That is why it is 438 right that B.E.A. should now be entering the charter market, so that it can allocate its resources flexibly to the best advantage as the total market for bulk travel develops. That is why the Government do not propose to erect fences between one part of the market and another.
Our aim throughout is to strengthen the industry, at home and abroad. At home the industry has been weakened by fragmentation and, to an increasing extent, by offering services that are too elaborate. We aim to put this right by amalgamations and by rationalisation and, if this does not prove sufficient, then by subsidy too, where an air service is shown to make a real contribution to regional economic and social development. Overseas, where the great bulk of the industry's business lies, we aim to strengthen it in every way we can. In the public sector, we propose to set up an Airways Board whose task will be to strengthen B.O.A.C. and B.E.A. in every way, including all form of co-ordination up to and including complete merger if that turns out to be in the national interest.
The other main thing that the Government will do to strengthen the industry is to set up a Civil Aviation Authority that will bring together all aspects of the regulation of the industry under a single roof, other than those for which Ministers must remain directly responsible to Parliament—the formation of policy, the primary responsibility for the conduct of international negotiations, the control of the public amenity, and the investigation of accidents. By bringing the various regulatory functions together in this way, we hope to establish a body that will build up a breadth and depth of knowledge and understanding of the industry such as will enable it to guide and assist the industry's development in the best possible way. Under the broad guidance of a statement of Government policy, which it will be bound to observe, the Authority will have a considerable discretion in its day-to-day decisions, and our intention is that it should be left to get on with its job.
I have explained at some length what the Government's policy is and the reasons for it. Let me now turn to the events which have occasioned this debate. The Government's policy is, and remains, 439 to welcome the consolidation of the independent sector of the industry through amalgamations that will strengthen it, in pursuit of the objectives set out in the White Paper and provided that the conditions set out in the White Paper are satisfied. But we have no intention of forcing any particular merger upon the airlines concerned if they are not willing to act voluntarily.
My Department was aware that, after the publication of the Edwards Report and again immediately after the appearance of the White Paper, discussions had taken place between British and Commonwealth and Caledonian on the possibility of a merger. My Minister of State and officials met the chairmen of both companies before Christmas in this connection and, despite what had been said in the White Paper on this point, we were asked by B.U.A. for assurances that substantial transfers of B.O.A.C.'s routes would be granted. This appeared to be an essential element in the discussions.
Subsequently, in late January, this year, I was approached by B.O.A.C., which sought approval for its purchase of British United Airways. The initiative—and I make this clear in view of what the hon. Member said—for this came from the British and Commonwealth Shipping Company, which is the principal shareholder in B.U.A. I therefore invited the chairman of British and Commonwealth to see me early in February. The clear impression that he then gave me was that there was no real possibility that a merger between B.U.A. and Caledonian would take place.
As I understood him, this was because he saw B.U.A. as predominantly an operator of scheduled services and so in a different category from the other independent airlines, which are mainly in charter and bulk travel. For this reason he saw nothing worth while resulting from a merger with any other group of independents. He wished B.U.A. to expand as an operator of scheduled services and he did not think that the idea of a second force airline was practical because achieving it would involve depriving B.O.A.C. of routes it already had. He thought that the sale of B.U.A. to B.O.A.C. was therefore the course that would best serve the national interest.
440 In reply to a direct question from me as to what he would do if B.O.A.C. were not allowed to buy B.U.A., he did not mention a merger with Caledonian as an alternative course. For reasons that I have explained, although I can understand his point of view, I cannot agree that the acquisition of scheduled services is the only or the right way in which expansion should be sought; nor can I give guarantees that would result in the weakening of B.O.A.C.
In the light of what was said to me, however, I concluded that the prospect of a combination of airlines emerging on the lines envisaged in the White Paper no longer existed, at least so far as B.U.A. was concerned. There was thus no reason of policy to prevent the acquisition of B.U.A. by B.O.A.C. from taking place, provided that the financial arrangements were satisfactory. It was a transaction between a willing seller and a willing buyer. I also had it in mind that if, as it intended, B.O.A.C. continued for a period to run B.U.A. as a going concern, the jobs of B.U.A's. 3,000 employees would not be put at risk.
On 5th March, I authorised an announcement confirming that this transaction was acceptable in principle, subject to further discussion of the financial arrangements. Very quickly thereafter two important developments took place. First, it was brought to my knowledge that, despite the impression that I had been given to the contrary, British and Commonwealth had been in real and close discussion with Caledonian Airways right up to the time of the announcement by my Department. Evidently, I had been seriously misled in supposing that there was no prospect that a merger could take place. Secondly, Caledonian made certain applications to the A.T.L.B. which materially affected the appraisal of any investment by B.O.A.C., and announced that it was preparing a rival offer to purchase B.U.A.
In these new circumstances, it is clear that my proper course is to withhold approval from the investment proposal put to me by B.O.A.C. until the situation has been clarified.
§ Mr. Mason
It is no good my hon. Friend saying that it is shocking when 441 he has probably not even read the White Paper on aviation policy. It remains our policy to encourage the independent airlines to form a stronger element in the industry by amalgamation, whether that takes place by way of merger or purchase. One of the dangers in civil aviation today is fragmentation of the industry into many small airlines. We have to do something more positive to try to get them together. If we can encourage them to amalgamate so that they are stronger financially, those who work in the airlines will have a more secure future.
I am told on all sides that there is a genuine possibility of this merger happening, and I want to allow ample opportunity for B.U.A. and Caledonian, which are the two airlines named in the Edwards Report as forming the most likely nucleus of an appropriate combination, to resume their negotiations and take them to a conclusion. I trust that I have made it abundantly clear that there is no intention of carving up B.O.A.C. to facilitate the process, but I firmly believe that the industry will be strengthened if the negotiations are successful.
Accordingly, I have asked the chairmen of British and Commonwealth and of Caledonian to resume their negotiations on the basis of merger or, failing that, of take-over, and to pursue them with all possible speed and sincerity. I have drawn their particular attention to the need to reduce to a minimum the period of uncertainty for the staff of British United Airways.
The hon. Member for Gloucestershire, South argued that it would be a misuse of B.O.A.C.'s borrowing power to buy B.U.A.
§ Mr. Lubbock
It appears that British and Commonwealth refused to give figures to Caledonian on which to base the offer. As the right hon. Gentleman has provided a breathing space, will he make sure that Caledonian is able to obtain all the information required?
§ Mr. Onslow
What the right hon. Gentleman has said will be welcomed in the country and in some parts of the House, although not necessarily by his hon. Friends. Can he give us his idea of the time scale for these negotiations? Does he expect that if they require legislation, it will be introduced in this Parliament?
§ Mr. Mason
I do not think legislation would be required for a merger or a take-over. I do not want to lay down a time scale, for I do not want to be subject to a demarcation dispute if there is trouble.
The suggestion about B.O.A.C.'s misusing its borrowing powers if it wanted to buy B.U.A. is nonsense. B.O.A.C.'s borrowing powers are intended to enable it to borrow funds for capital purposes within the limits set by Parliament from time to time, without further specifying what particular purposes. That is the legal position. I have taken borrowing powers Bills through the House in respect of many nationalised industries, and I know that we do not specify any particular purposes. The important requirement is that B.O.A.C.'s investments should be approved by me, whether they are financed by borrowing or in any other way. In fact, B.O.A.C. would not need to borrow from the Government to purchase B.U.A. The borrowing limit needed to be increased last December, and will need to be further increased this summer for a quite different reason, not because B.O.A.C. is short of money but because of the Government requirement that the purchase of American aircraft should be financed by borrowing in the United States. So the hon. Gentleman is quite wrong, and has not fully comprehended the Act.
§ Mr. Corfield
I am well aware of the legal position, probably better so than the right hon. Gentleman. If he refers to col. 373 of HANSARD of 9th December, he will see clearly that we were told with all honesty by his right hon. Friend the Minister of State precisely what the borrowing was for. I reckon that to tell the House, "We want to buy sweets", and then to buy atom bombs, or anything else that is quite different, is not playing the game.
§ Mr. Mason
I am sorry that the hon. Gentleman is trying to press me through 443 what my right hon. Friend said. It is always true that when a borrowing powers Bill comes before the House the Opposition press for, and the Government try to give, as much information as possible on what the money is for, but they cannot specify because there will be many needs during the course of a year's borrowing that one can never foresee. If B.O.A.C. wishes to buy B.U.A. it does not have to come back to the House for borrowing powers to do so, because the special borrowing powers that it has are quite satisfactory.
I have referred this afternoon to the legislation that we shall introduce. The preparation of this legislation is necessarily a complex and time-consuming task. I cannot say today precisely when I shall be able to lay a Bill before the House. This must depend on the availability of time and we have a full programme. I can assure all those who take an interest in the subject, however, that there is no deliberate procrastination on my part. Nobody could have seriously expected a Bill of this kind to come out before the spring at the earliest. Legislation is being prepared and the task is well advance.
Meanwhile we must continue to operate within the framework that exists. We must take the decisions that have to he taken as and when they arise, and we must measure our policies against the realities of the situation as they develop. If, at the end of the day, a policy has to be abandoned because the facts have changed, this is something that has to be accepted. But, until that happens, I can assure the House once again that our policy is precisely and in all respects what we have said it is—and that is something more than hon. Gentlemen opposite could have said about their civil aviation policy at any time in their last 10 years.
The Motion before us makes two points. The first is that the establishment of a second-force airline should not be frustrated by the sale of B.U.A. to B.O.A.C. At the moment that proposal is on ice. We are giving the major independents a chance to come together and prove that they can fill the rôle which the White Paper envisages. That is a decision that we took before the terms of the Motion were known to me.
444 The second point is that the establishment of a second-force airline should not be frustrated by the threat of industrial action. That point also falls. This threat—which could have put 3,000 jobs at risk—is being ignored. I have made it clear that the Government have not been, are not being, and will not be influenced by such ill-considered and improper pressures. If B.U.A. and Caledonian succeed in coming together—and other airlines might come in later—not only the 3,000 employees of B.U.A. but all the employees concerned in civil aviation in the independent sector should be able to look to the future with greater assurance.
The Motion, as we now see, was an impetuous act. It has brought the matter into a higher level of political controversy than before. It has now been proved to have no substance in it, and it has proved to be meaningless. The decision that I have announced today was taken before the Motion was even tabled.
§ 5.35 p.m.
§ Mr. Michael McNair-Wilson (Walthamstow, East)
I thank the President of the Board of Trade for his statement, which will be welcomed by the civil air transport industry and all those who work in that great industry. It shows a commendable change of mind on his part, and also shows that he remembered what his policy was as set out in the White Paper.
However, the right hon. Gentleman has put me in the unfortunate position of having to revise what I was going to say. I shall do my best in these changed and happier circumstances not to let the side down.
I do not want to attack B.O.A.C. It now has a remarkable record. It has an excellent modern fleet of aircraft and is the second largest international air carrier in the world, second only to Pan American. It is probably the greatest earner of foreign currency from the carriage of passengers and freight.
It will be useful to remind the House of the scale of the fleet B.O.A.C. possesses, because we must compare it with B.U.A.'s and see whether much good will come out of a mix of the two fleets. B.O.A.C. has 18 707s, six 707 cargo aircraft, 17 Super VC10s and 11 ordinary VC10s, a total of 52 aircraft. That is the size of fleet that I think Edwards said was about right for the long-haul operator today. B.O.A.C. has 445 on order a further three 707 cargo aircraft and 12 747 Jumbo Jets, the first of which is to be delivered in the middle of next month. That is an aircraft which may revolutionise air transport in the world, and certainly will do so across the Atlantic. It may conceivably bring a surplus of passenger seats to the air transport world.
Obviously, the decision about buying those aircraft and deciding the generation of aircraft to be bought after the 747 is a highly difficult one for any major carrier. But at present B.O.A.C. appears to have the right fleet mix, and its profit record over the past four or five years has been remarkably good, showing a return of, I think, about 17 per cent. on its capital. It is a healthy and successful international carrier of which we may all be proud, even though we should remember that the Government wrote off £110 million of its debts to put it in its present position.
It may be wondered why, since B.O.A.C. seems to have the right fleet and the right routes, it needed B.U.A., why it was ever really interested in the deal and why the negotiations that started in December between B.O.A.C. and B.U.A. were allowed to continue when the Government's own White Paper implied that it was the Government's intention to keep B.U.A. within the private sector. It is all very well for us to be told today that we on the Opposition benches knew more about B.U.A.'s dealings with Caledonian than the Government. But, when the White Paper talked about a second-force airline, why did the Government allow the talks between B.O.A.C. and B.U.A. to go on without saying at some stage, "Do you not realise that if this deal goes through it will destroy the policy we have set down?"
The Government said clearly in the White Paper that there was a place for both publicly- and privately-owned airlines, a point which has been made again by the President of the Board of Trade today. They agreed that there should be no attempt to lay down in quantitative terms a hard and fast share for each sector. The White Paper extols competition, a point on which we on this side of the House all agree. It makes the point of the value of rivalry between airlines to create the best airline efficiency, which is again what we are 446 all interested in. In paragraph 32 of the White Paper the Government go so tar as to say:… the benefits of competition should be actively pursued wherever the practical considerations allow.Yet when this same policy is put up against a deal between B.O.A.C. and B.U.A. suddenly the arguments fly out of the window. This is why one is happy that the President of the Board of Trade recognised that his own policy was in grave danger if he gave a blessing to this deal without giving the independents the opportunity for which they asked to see about the possibility of their being allowed to form the second-force airline.
The opening words of paragraph 39 of the White Paper say:The Government would welcome the emergence, by amalgamation, of such a new airline if it resulted in the strengthening of the industry as a whole and contributed to the realisation of the Government's policy objectives. … A new airline of this kind must evolve progressively, proving itself at each stage. It is for the airlines to decide, in the exercise of their commercial judgment and in the light of market forces, whether and in what ways to come together.
§ Mr. Robert Howarth
Why does not the hon. Gentleman relate this to the decision of B.U.A., which decided in its commercial judgment to make an approach to B.O.A.C. to find out whether B.O.A.C. was interested in buying it? Does the hon. Gentleman criticise this? Does not it square with what is said in the White Paper?
§ Mr. McNair-Wilson
We are talking about the Government's policy, not the policy of B.O.A.C. or B.U.A. We are talking about what the Government have said that they want to see happen. If one is arguing that the Government have no civil air transport policy, that is another subject. I submit that they have a policy, which is clearly set out in the White Paper, and I am quoting that policy to the House to show where the Government stand. In the light of those remarks, it seems incredible hat this deal was ever allowed to get off the ground, as it strikes at the very root and branch of the policy to which the President of the Board of Trade has now returned, for which I give him my personal sincere thanks.
The White Paper, unlike the Edwards Report, makes it clear, and one may think 447 reasonably, that the Government did not intend to give away any of the B.O.A.C. or B.E.A. routes to help in the creation of a second-force airline. That may be an arguable point on this side of the House, but it is perfectly reasonable from the Government's policy position. But, surely, the only interpretation to be placed on those words is that the second force was to be an airline with some scheduled services, charter routes and inclusive tours, etc. Therefore, if the Government did not give routes from the nationalised airlines, the only way in which those routes could be found was by allowing the airlines already existing in the private sector to be created into one much larger airline.
Again, we appear to have returned to that position, and again I ask why this conversation between B.O.A.C. and B.U.A. was allowed in the first instance. Will the President of the Board of Trade say that he did not know what B.O.A.C. was doing because it did not tell him, as apparently he did not know what B.U.A. was doing with Caledonian Airways?
I do not want to continue too strongly with this attack on the President of the Board of Trade; I wish to raise another point about the allocation of routes. The bids which have now been made by Caledonian and Laker call in question the whole deal between B.O.A.C. and B.U.A., because if the Air Transport Licensing Board decides that B.U.A.'s routes should be allocated, B.O.A.C. would find itself in the position of buying second-hand aircraft which in my opinion do not mix with its present fleet. Conceivably the VC10s might be used, but I find it difficult to see how the BAC111 would mix with the B.O.A.C. fleet.
§ Mr. F. A. Burden (Gillingham)
Does not my hon. Friend agree that airlines can get into difficulties by having too big a mix of aircraft? To operate properly, they must ensure that their aircraft fleet is brought into line, with one or two types of aircraft to do the job that they have in mind, rather than having a mix, which leads to tremendous difficulties.
§ Mr. McNair-Wilson
That is an extremely good point, which makes one raise ones eyebrows and wonder whether the intention of the deal was that it should be merely between B.O.A.C. and B.U.A., 448 or whether it was the first stage of what Flight ruefully calls "a British Aeroflot."
The routes possessed by B.U.A.—domestic trunk services between London-Glasgow, London-Edinburgh, London-Belfast—are clearly not B.O.A.C. routes, and would, therefore, rightly go to B.E.A., as indeed would its European routesLondon-Rotterdam, London-Amsterdam. Will the Minister say whether those routes would be likely to continue to be flown by B.O.A.C. or whether he would agree with me that those routes would more likely go to B.E.A. if this deal went through? The routes that B.O.A.C. is interested in are long-haul routes to East, West and North Africa, and that old chestnut the South American routes that B.O.A.C. was so unsuccessful in operating, albeit for all sorts of extenuating circumstances, but which B.U.A. ran, and ran successfully, at a profit.
I raise this question because, had this deal come off, as it appeared that it would come off, and as most of us expected to hear this afternoon that it would come off, there was rather more in it than a pure deal between B.O.A.C. and B.U.A. It would have marked the end of the private scheduled carrier in the true sense of that word because no doubt B.O.A.C. would have taken the long-haul routes from B.U.A. and farmed out the European and domestic routes to B.E.A. That flies directly in opposition to the Government's stated policy, and cannot in any conceivable way be said to strengthen competition or airline efficiency.
The Government's White Paper states that the reallocation of routes should be the job of the C.A.A. This is probably a good argument, but we seem to be putting the cart before the horse, as it appears that the Government's White Paper is not to be the policy, but that we shall let things happen piecemeal so that the reallocation of routes will not be the responsibility of C.A.A. because they will already have been reallocated. Surely, if the Government's policy makes sense, we should have taken the Bill first, and from there have moved to the re-organisation of civil air transport. Why should this route allocation be allowed to happen before the Government have set up the C.A.A. since they said that they wanted it to reallocate routes?
449 I have already mentioned the point about the Government refusing to give up B.O.A.C.s and B.E.A.s routes to make a second-force airline. But if the deal goes through, and B.O.A.C. purchases B.U.A., it will mean that the Government will be safeguarding the corporation and robbing the independents of any chance ever again to be an effective force in British aviation. B.U.A. argue—it may not be a very strong argument—that the reason behind its decision to sell out was that it could get no clear indication from the Government that it would get any new routes and that, as a viable alternative scheduled carrier, it had no worthwhile future that would give it the opportunity to get the investment which a private company must get if it is to have a future and, indeed, if it is to buy the expensive modern aircraft that it will soon require. Thank goodness for Caledonian and Laker. Thank goodness for the fuss they have made, which has brought this deal out into the open, and persuaded the President of the Board of Trade to let them see what opportunity there is for creating a second-force airline, which the Government have said they want and which they have been forced to say they still desire.
I conclude by quoting what was said by Flight which seems to sum up the matter:It remains the responsibility of government to ensure that competition preserves the quality of service to the public.That is what this debate is about. It is about the policy of the Government, which seemed to want to follow that line but which appeared to be nearly destroyed before it was allowed to start. It is a policy which we on this side of the House believe in. We want service to the public. We want the competitive goad that brings efficiency. We want a strong civil air transport organisation in this country and we do not believe that a second-force airline will do anything but good and will strengthen and improve the competitive efficiency of the corporations.
§ 5.52 p.m.
§ Mr. Robert Howarth (Bolton, East)
This debate has proved what many of us who are interested in aviation have felt for some time, and that is that we should have had a debate some time ago on the Edwards Report and the White Paper on civil air transport. Unfor- 450 tunately, we are reacting to events rather than trying to direct them in the way in which we should like to see them go. It is a pity and a matter of great regret to me that we are not today discussing the Second Reading of a Bill to set up the Civil Aviation Authority. It would have been a rather useful way to spend a Wednesday afternoon in the House.
Having listened to what my right hon. Friend the President of the Board of Trade has said about the prospects of legislation arising from the Government's White Paper, I hope that the Minister of State in winding up the debate will be able to be a little more specific about legislation. I understand there is some doubt whether the whole of the White Paper will be implemented in the current Session of Parliament. If there is to be a choice as to which part of the White Paper is to be implemented, then there is no doubt in my mind that the Civil Aviation Authority should receive top priority.
I wish briefly to comment on the charges made by the hon. Gentleman the Member for Gloucestershire, South (Mr. Corfield), in moving the censure Motion on the Government. He omitted a number of important points from his speech. One was the fact that the owners of B.U.A. are free partners and are able to go where they wish with their airline if they are looking for a buyer. It was not on the initiative of B.O.A.C. that these negotiations were undertaken. That, as I understand it, is the position today.
In fact the decision announced by my right hon. Friend today does not alter the situation as it existed a couple of weeks ago. If the negotiations with the independents do not succeed, I assume that the B.O.A.C.-B.U.A. merger could still take place if the other negotiations collapsed for reasons that everyone will understand.
Another point upon which the hon. Gentleman the Member for Gloucestershire, South did not, enlarge for obvious reasons, was the point about competition, on which I intervened in his speech. In the air transport business there is fierce competition for the corporations. My right hon. Friend made the point that domestically there is also fierce competition. An example lies in the new competition facing B.E.A. When one looks at the international routes into Europe and tries to appreciate how fierce 451 is the competition for B.E.A. and B.O.A.C., to talk about monopoly in such circumstances without spelling out the true situation tends to mislead people.
The hon. Gentleman also ignored the rôle of the Air Transport Licensing Board. My right hon. Friend rightly reminded him of the decisions of previous Conservative Governments in setting up the Board and then rejecting some of its major decisions. It is odd that we should have these criticisms from Conservative spokesmen in view of their record in the early 'sixties when they did not by any means appear to be the champion of the independents as they now set themselves up to be.
I hope that B.U.A. and its owners will now feel able to reveal all the facts about negotiations between B.O.A.C. and B.U.A. so that they will be known to those who are also making a bid for the airline. Equally, I trust that B.O.A.C. will be allowed to use its commercial judgment as to the value of B.U.A. to the corporation's operations. We do not know the figure arrived at, but I assume that B.O.A.C. at the moment regards the figure which has been negotiated as reasonable for the purchase of B.U.A.—a sum of money which I assume can be obtained easily by the use of some of the substantial operating surplus of about £22 million made by B.O.A.C. in the last financial year.
There is no doubt that B.O.A.C. has the money to purchase B.U.A. if this merger goes ahead. But I hope—and my right hon. Friend's announcement today does not change the situation—that B.O.A.C. will have the commercial freedom to continue with its possible purchase of B.U.A. should the other possibilities open to the owners of B.U.A. collapse. From what my right hon. Friend has said, and from what I know of his views, I am sure that this is the case.
The hon. Member for Gloucestershire, South, not unnaturally seized on the rather incautious and unhelpful statements of a certain trade union leader, who will no doubt have his defenders today in this debate. Knowing the gentleman involved, I was a little taken aback that he was able to make such a claim without knowing the views of those employees of B.U.A. I gather that we will be hearing 452 something about this later in the debate. A meeting has been held today, and I am sure that if one of my hon. Friends is able to speak in the debate he will tell the House about it.
I do not think Mr. Clive Jenkins' statement was at all helpful. I can only hope that his Welsh fervour is restrained in the interests of a fair settlement from the point of view of British aviation and of those employed in the corporations and the independents.
§ Mr. Lubbock
The hon. Gentleman must be careful in what he says about Welsh fervour, since he has a Welsh Minister of State sitting on the Front Bench.
§ Mr. Howarth
We have yet to hear my hon. Friend. No doubt he will collect a lot of material on which to reply as time goes on.
§ The Minister of State, Board of Trade (Mr. Goronwy Roberts)
I am most grateful to the hon. Member for Orpington (Mr. Lubbock) for his thoughtful intervention on my behalf. My hon. Friend the Member for Bolton, East (Mr. Robert Howarth) has been indulging in one of the many myths about the Welsh people for which the late Matthew Arnold was responsible. We are not all fervent, always.
§ Mr. Howarth
I am just an Englishman, and I know that we have these Welshmen here. We also have an Australian. Then we have a number of Irishmen, just to add to our problems.
I was about to comment on my right hon. Friend's statement about how he saw the rôle of the corporations and the independents in the current decade. I can endorse what he said, having myself had the privilege of travelling extensively throughout many parts of the world. I have taken a great interest in the subject and I know that both corporations have an outstanding reputation. Naturally, they are subject to criticism. It would be surprising if they were not. Overall, their reputation is good. B.E.A. carries 20 per cent. of Europe's traffic. That is an outstanding achievement by a public corporation. It is a leader in many technical achievements, such as automatic landing, and has first-class aircraft. Its ability to win and hold new routes is there for all to see.
453 B.O.A.C. has gone through a very difficult period, and there are still problems besetting it. However, those are not for debate today. Certainly it is a very profitable airline, accepting that a great deal of money has been written off which has given it a good start. There is no doubt that it is now making a good return on the public investment which has been made, and any move which threatened that great investment would be unacceptable not only to hon. Members on this side of the House but to most people in the country.
§ Mr. Howarth
I see no reason to think from what my right hon. Friend the President of the Board of Trade said that that is his intention.
My right hon. Friend paid tribute to a number of the independents. I know the accomplishments of Caledonian, which is one of the independents involved in these events, and I can only add to my right hon. Friend's praise. It is an outstanding independent airline. In a very difficult market, it has been able to win a great share of long-distance charters. The only difficulty in this connection which my right hon. Friend should note is that, whereas my right hon. Friend said that the independents could probably continue to expand as matters stand at the moment, in the case of a long-haul charter company like Caledonian that is not necessarily so. There are restrictions on charters across the North Atlantic which result in Caledonian having to turn away traffic. I have been informed that, in the current year, it has turned away many millions of dollars worth of business because of the restrictions placed on the operation of charters across the Atlantic to which it is subject because it does not have scheduled services across the North Atlantic.
§ Mr. Onslow
Will not the hon. Gentleman agree that some of the restrictions are imposed upon such airlines by the policies of the Board of Trade? Should not that be taken into account?
§ Mr. Howarth
I did not think that that was the case. I may be informed otherwise in the course of the debate. As I understand it, these are international 454 agreements. Because an airline like Caledonian is not a scheduled carrier, it is obliged to take as many people one way as travel the other way, and that has limited its expansion because obviously it can obtain more American passengers.
My right hon. Friend referred to current developments and made an important point about the growth of group travel. Certainly such developments can be seen to be very important to the scheduled operators. It does not only concern B.O.A.C. but all the scheduled carriers, particularly across the North Atlantic and, if it has not done so already, I assume that it will soon extend to the Pacific. The scheduled carriers are worried about the success of companies like Caledonian and many others in carrying groups of people over these routes at greatly reduced rates.
I do not share my right hon. Friend's confidence that this is a naturally developing pattern. Certainly there is an obvious area of disagreement between the scheduled and charter operators, and I am not clear how it will develop in the future. I notice with interest that B.O.A.C. has begun to develop forms of group travel which offer travel across the Atlantic at greatly reduced rates. It will be interesting to see how matters develop in the next few years. I know that there has been discussion amongst the scheduled carriers as to how to meet the competition.
I do not know whether the Opposition are reconsidering their censure Motion. Before coming to the current dispute, perhaps I might comment briefly on the Edwards Committee's Report by way of introduction.
The Edwards Report contained an excellent proposal for the setting up of a Civil Aviation Authority, and I gather that it is generally welcomed. I am very keen to see it done as soon as possible, and it would be a great disappointment to me if it was not set up in the next six months. I hope that my right hon. and hon. Friends will look at that recommendation very closely with a view to bringing forward the necessary legislation in the near future to set up a Civil Aviation Authority. Unfortunately, this is not the debate in which we can go into the subject in detail, but it is of vital importance to British aviation that this body is set up as soon as possible.
455 In addition to that recommendation, the Edwards Committee proposed the setting up of a Air Holdings Board. I do not favour that, but unfortunately it was endorsed by the White Paper. The intention was that it would oversee the operations of the two corporations. In the past six months, I have thought about it a great deal and discussed it widely with all those involved, and I have come to the conclusion that it is a quite unnecessary step at this stage. As my right hon. Friend has said, the corporations are doing an excellent job. They are developing in the face of fierce foreign competition. On the basis that, if something is working well, why not leave it alone, I do not see why it is necessary to set up such a body. I have read the arguments advanced by the Edwards Committee, but I remain unconvinced.
The two corporations have established a workmanlike chairmen's committee which, we are promised, will bring fruits to both corporations as a result of joint working in areas where they can come together. I hope that they press ahead with this and that it works out as they hope.
The main difference between the Edwards Report and the Government's White Paper concerned the creation of a second force which was outlined by Edwards but with which the White Paper was in almost complete disagreement. The Edwards Report suggests the somewhat artificial and unnatural formation of a second force consisting not only of B.U.A. and Caledonian, but also with a minority holding by the Air Holdings Board. It seems a strange attempt to get the best of both worlds.
My view is that we should have the Corporations. I should also welcome a successful independent area if it brings a return to the nation. In other words, if it strengthens British aviation, I am all in favour of there being a successful, thriving independent force. But as the Edwards Report put it, I thought it a most impracticable suggestion. Events since publication of the Edwards Report have tended to confirm my view.
I note that the discussions which have been going on between Caledonian and B.U.A., until the spur of these events, came to nothing. I am not surprised.
456 The White Paper, outlining the opportunities for a second force, abandoned the idea of a shotgun marriage between the independents with a minority holding by the Air Holdings Board, and left it to the independents to try to work out their own arrangements for mergers to give them the kind of basis outlined in paragraph 33 of the White Paper which covered this point about the opportunities which could be given to a second force by the Civil Aviation Authority under strict criteria, listing among those criteria the obvious point that applicants for scheduled services must be viable, strong companies capable of undertaking operations in a fiercely competitive environment. I agree with this paragraph. It seems to set out criteria—I have not listed them all—which, if the Civil Aviation Authority was able to enforce them quite strongly, would be in the interests not only of British aviation, but also of the nation.
I had hoped that we might have seen the operation of this policy later this year with the formation of the Civil Aviation Authority. This leads me to the point at issue today, namely, the events which broke when it was announced that B.O.A.C. had been approached by the owners of B.U.A. with a view to purchasing this independent airline. I was surprised. I had assumed that discussions had taken place between Caledonian and B.U.A. and possibly other independents. I do not regard my right hon. Friend's statement as basically changing anything today. My right hon. Friend made clear that the Government's view is set out in the White Paper. If my hon. Friends have read the White Paper they will not be surprised that this is the Government's view.
I assume that if the current negotiations, for which my right hon. Friend said he was now prepared to give time to establish, if they had any validity, fail, then presumably there is nothing to stop the B.U.A. take-over going ahead, as was possible a week ago. I hope that the attempts being made to set up a viable second force will not be on the basis of a carve up of, say, the B.O.A.C. routes in Africa. This was one of the proposals that B.U.A. put forward—[Interruption.] Why should it be that way? I cannot foresee what can happen under future governments. I do not envisage a change of 457 government. I do not see why my right hon. Friend should depart from the policy outlined in the White Paper.
§ Mr. Burden
The hon. Gentleman said that his hon. Friends should not be surprised at the difference between themselves and the Government. The situation is that the hon. Members to whom the hon. Gentleman refers seem to disagree with the Government's policy almost as often as we on this side.
§ Mr. Howarth
That is up to my hon. Friends. They are free agents, just as B.U.A. is free to make an approach to B.O.A.C.
I hope that we will soon be able to get back to what I thought was the reasonably steady path of progress outlined in the White Paper. I realise that the developments under discussion now are outside the control of this House so far as they relate to discussions between the independents. But we shall obviously want assurances, if it appears that certain independents are going to make a realistic bid for B.U.A., that this is a bid to continue operating B.U.A. and to ensure the employment of these people in civil aviation. I have not much confidence in some of the characters who have surfaced in independent aviation since this news broke. Needless to say, I exclude from those remarks, Caledonian.
I hope that this problem will soon be resolved, that we shall have legislation before us shortly for the establishment of a Civil Aviation Authority, that we drop the idea of an Air Holdings Board, and that the Civil Aviation Authority will be operating by the end of the year along the lines of the criteria outlined in the White Paper.
§ 6.18 p.m.
§ Mr. Eric Lubbock (Orpington)
I certainly agree with the hon. Member for Bolton, East (Mr. Robert Howarth) that it is a pity that this House has not had a debate on the Edwards Report or the White Paper. It is 10 months since the Edwards Report was published. I daresay that we would not be discussing these matters now had it not been for this crisis suddenly arising.
458 It is all the more a pity that the Tory Motion should be couched in such narrow terms and not attempt to give the House an opportunity of discussing the general issues raised by the Edwards Report and by the White Paper on the future relationship between the corporations, which account for 70 per cent. of the output of the air transport industry compared with 30 per cent. by the independents; the functions of the proposed Civil Aviation Authority, about which the hon. Member for Bolton, East is a great deal more enthusiastic than I. I will come back to that matter, because I think that we should examine the arguments for treating operational safety and airworthiness under the same heading as economic regulation of the industry. There is also the whole question of subsidies on certain domestic routes, and the need for co-ordination between domestic air services and other transport facilities available to the public.
I am sorry that the Tory Opposition are so blinkered by their determination to make party political capital out of every issue that comes up in the House that none of these matters have found a place in their Motion—[Interruption.] Of course, they are relevant to the situation of the private companies and, therefore, it is right for us to discuss them today.
I am sorry, too, that, instead of considering this problem of British United Airways calmly and objectively, the Tories have sought to raise the temperature and make it that much harder for us to get the right solution in the long run. I say to the hon. Member for Gloucestershire, South (Mr. Corfield) that his speech was a typical piece of Tory electioneering, such as we have come to expect from him.
I shall assume, as the hon. Member for Bolton, East does, that if no deal materialises between B.U.A. and Caledonian we shall come back to the question whether B.O.A.C. ought to be allowed to take over B.U.A. I shall assume, too, that the Government will find no reason to stand in the way of such a deal, since the Minister announced last week that in principle they were prepared to accept it, before they knew how far on the road Caledonian and B.U.A. had progressed in their discussions. It is still useful to examine the implications of that deal assuming that it goes through in the end and for the House to make up 459 its mind about what consequential steps might be taken as a result. I think that the Minister of State knows what my anxieties are in this respect.
The "second force" idea is not sacrosanct just because it is laid out in the Edwards Report and endorsed, with slight modifications, in the White Paper. One has to note that during the ten months since the Edwards Report there have been no amalgamations in the private sector, and that was one of the essential pre-conditions for the additional licences which were to be awarded to a second force; additional in the sense that they were to parallel routes already held by the corporations, and not taken away from them, as originaly proposed by Edwards.
We know that during the whole of those ten months negotiations were proceeding between B.U.A. and Caledonian, and the fact that they took such a long time and did not reach any conclusion shows that the problems inherent in merging two fundamentally different airlines were under-estimated last year by many of those who wanted to see it happen, including myself. The aircraft fleets of these two companies are entirely different. One operates largely scheduled services while the other has none at all, and I think that it is not unfair to say, in the light of events, that there were some directors, at least in British and Commonwealth, who could see no advantage in a merger before the Government were prepared to give the joint enterprise a substantial chunk of the corporation's route network.
To quote Flight, as another hon. Gentleman did earlier, it reminded its readers last week:British United spoilt its own case somewhat by over-reacting to Edwards; the airline laid claim to a much bigger slice of B.O.A.C.'s network—the whole of Africa (in addition to the right to compete with B.O.A.C. on the North Atlantic)—than had been envisaged by the Committee.I was astonished to hear the right hon. Gentleman say that even after the White Paper was published the Chairman of British and Commonwealth was still asking him whether he would reverse the decision and give the combined enterprise some of the routes operated by B.O.A.C. The White Paper made it clear that the most that could be expected by a second force was what is called dual designation, 460 that is, it could be allowed to operate in parallel with one of the corporations where it could be shown that the Corporations' services would not be unduly impaired thereby, and where an increase in traffic would be secured to British aviation as a whole by allowing this second designation.
The White Paper said—and the right hon. Gentleman reminded us of this this afternoon—that that was most likely to happen on the North Atlantic routes because, under our agreement with the Americans, we are allowed to designate more than one carrier on those routes. I think that the American situation is probably unique in this respect. On the London to Paris route under our agreement with the French we can designate only one carrier, and if we choose to put on a second one the frequencies allotted to B.E.A. have to be correspondingly reduced. One remembers that when B.U.A. received a licence to operate to Genoa the Italian authorities insisted on a reduction in the number of flights which B.O.A.C. was permitted to operate through Rome. The question of dual designation must, in the first instance, be confined to the North Atlantic.
It was also made clear in the White Paper that the Civil Aviation Authority, which has yet to be established, and probably will not be during this Session—I think that the hon. Gentleman is rather optimistic in expecting a Bill to be introduced and to go through all its stages before the Summer Recess—would have the function of making any decisions which had to be made about parallel licensing. One can appreciate the difficulties which this policy has caused for the independents. If they are to operate on the North Atlantic routes in competition with many American airlines, as well as with B.O.A.C., they have to consider placing an order for wide bodied jets within the next year or eighteen months. They could hardly embark on such an ambitious investment programme, including not only jets, but the ancillary facilities for handling them at the terminals—one sees the enormous hangers which B.O.A.C. has put up at London Airport to deal with its 747s—without any guarantee that the necessary licences would be forthcoming.
The only alternative which I am not recommending, to the Government's policy is to say now that airline X would 461 be able to secure these licences when the time comes irrespective of whether the criteria laid down in the White Paper were satisfied. It would be rather inconsistent if the Government, having decided to establish the C.A.A., were then to pre-empt the most important decision which it would have to make in the first years of its existence, and that without considering the possible repercussions of such a decision, for instance, the financial viability of airline X to operate these services on the North Atlantic, because the worst that could happen would be for the licences to be granted, for the airline to start operating, and then to go bust. This would cause great damage to British aviation and to the prestige of British aviation, and would result in the loss of the jobs for perhaps thousands of people. I agree with the right hon. Gentleman that it is important to make sure that the criteria set out in the White Paper are satisfied before these parallel licences are awarded.
The major independents had to consider whether, in the light of those circumstances, a merger made good commercial sense. I agree with the right hon. Gentleman, there was never any question of the Government forcing unwilling partners to come together, because they have no power to do so. As the White Paper says in paragraph 39:It is for the airlines to decide, in the exercise of their commercial judgment and in the light of market forces, whether and in what ways to come together.I should have thought that that sentiment was acceptable to the Tory Opposition; that these decisions are better left to those who are running the airlines, rather than being made by people sitting in Whitehall who do not have that experience.
§ Mr. Burden
Would not the hon. Gentleman agree that, to assess the commercial viability of a sale or purchase, it is necessary in these days of costly re-equipment for a company to be sure that if it acquires another company at considerable loss there will be some possibility of getting routes and utilisation which will enable it to make a profit?
§ Mr. Lubbock
I do not know what the position would be if B.O.A.C. had been about to take over B.U.A. and the application by Caledonian to the 462 A.T.L.B. had still to be considered. It is a legal matter, on which perhaps the right hon. Gentleman could advise us. I had always imagined that whoever took over B.U.A. would automatically acquire its routes as well. Apparently this is not so, or not necessarily so. I think that the answer to the hon. Gentleman's question is that the company's financial advisers would say to the board of directors, "The price must be conditional on these routes being allocated to the joint enterprise, and the price would have to be dropped to very much less than £9 million", or whatever the figure was, "if these routes were to be awarded to some other enterprise".
In any case, I was talking about the commercial judgment which had to be exercised by British and Commonwealth. Evidently, they came to the conclusion that a certain £9 million in their pockets was a better proposition than a gamble on future prospects. I do not intend to discuss the ethics of what British and Commonwealth have been up to—conducting negotiations simultaneously with B.O.A.C. and Caledonian and not informing Caledonian of what they were up to, and, perhaps even more extraordinary, positively misleading the President of the Board of Trade as to extent of their negotiations with Caledonian when the chairman saw him, as he explained this afternoon. I was even more astonished that the House took this statement so calmly, because it was a remarkable thing that he told us.
But we are not being asked to censure Mr. Anthony Cayzer and his fellow directors today. The proposition is that the Government, having, I think wisely, left the airline managements to make their own decisions, should now have stepped in and vetoed the rather unexpected solution which British and Commonwealth reached, on the grounds that Whitehall knows best. That is a rather curious doctrine for the Tory party to preach. Of course, if Caledonian had managed to come up with a better offer, equally there would be no call for the Government to interfere with it. I was delighted to have the right hon. Gentleman's reassurance on that.
We know that no such offer has been made, and I rather doubt that a price of much above £9 million could be justified to the shareholders and bankers who 463 have to find the money. At least there is some scope for rationalising the activities of B.U.A. and B.O.A.C., while the same could not be said, with any conviction, of B.U.A. and Caledonian. If Caledonian were looking at B.U.A. purely as an investment based on its existing profitability, they would have to take into account B.U.A.'s rather less than conservative depreciation policy without which the airline would have been only just in the black last year.
But, of course, it was impossible for Caledonian to form a judgment on any of these matters, so long as British and Commonwealth withheld the figures from them. Although, as the Minister said, he has not power to compel Mr. Cayzer to open his books to the directors of Caledonian, if his undertaking today is to mean anything, he should exercise the strongest possible persuasion on Mr. Cayzer to do so now.
If, as seems possible, the deal between Caledonian and B.U.A. falls through, and we revert to the present situation, as several hon. Members have said, we should have to rethink the policy of both Edwards and the White Paper, since then there would not be enough left of the independent sector to form a viable second force able to compete on the North Atlantic or any other routes, where, following the application of the White Paper criteria, parellel licensing was found to be justified. The independents would have to reconcile themselves to making a living from the inclusive tour and closed group charter business, which, as the Minister said, is a fast-growing sector of the business, in which it should be possible to make a reasonable profit.
But there would then be a more important factor which we would have to consider and which I mentioned to the Minister of State when he made his statement last week. That is that competition would be totally eliminated on the domestic trunk routes unless British United Airways Gatwick services to Glasgow, Edinburgh and Belfast, were transferred exceptionally to one of the remaining independents. Of course, it is nonsense to talk about competition—
§ Mr. Leslie Huckfield
Has the hon. Gentleman seen any statement or 464 guarantee given by B.O.A.C. that they would not definitely run these B.U.A. services in competition with B.E.A.? Surely, if the B.O.A.C.-B.U.A. merger went through, it would be possible for B.U.A. services domestically to compete with B.E.A.
§ Mr. Lubbock
It has been said that B.O.A.C. could still operate these services in competition with B.E.A., but these short routes would not fit in with the rest of their network and, with the creation of the Air Holdings Board, one could not genuinely say that there would still be competition between B.E.A. and B.O.A.C. So the best solution would be for B.O.A.C., having taken over the whole route network of B.U.A., then to divest itself of these short routes, which would not, in any case, fit in with the rest of their business, thus enabling competition to continue on the domestic trunk routes.
That is a wholly exceptional case, because it is nonsense to talk, as the Tories do, as if there were competition on the international routes. They are always talking about the need to maintain competition on the North Atlantic routes or in Africa, whereas, as we all know, the competition on these routes comes from foreign-owned airlines and not from the struggle between British independents and the nationalised corporations. On the South American routes, only B.U.A. is involved. It is not competing there with B.O.A.C., and B.O.A.C. would not be competiting with any other British airline if it took over that route. On the African routes, where B.U.A. and B.O.A.C. both operate, there is a pooling agreement, so again no competition occurs.
So I come back to the important point, that only on the domestic trunk routes is there genuine competition, which I think we need to preserve. On thing on which I did agree—about the only thing—with the speech of the hon. Member for Gloucestershire, South was that, on the domestic trunk routes, where there has been real competition, very few passengers would deny that it has worked to their benefit.
I said that, obviously, these domestic operations would not fit in with B.O.A.C.'s general route pattern, and this applies not only to the trunk routes, where competition has been so important, 465 but also to the Channel Islands services, a minor point which I mention only in passing. I hope that means can be found of bringing the independents into all these sectors and I think that they could fit in very well with European I.T. work, but this is all on the assumption that the deal between Caledonian and B.U.A. does not go through.
I turn to some of the other issues raised by the hon. Member for Bolton, East which come out in the Edwards Report or the White Paper, although, unfortunately, they are not dealt with directly in the Motion. First, there is the question of relationships between the corporations and the merits or otherwise of the Air Holdings Board concept. I agree with the hon. Gentleman on this. I do not accept the arguments in the White Paper for treating the two public sector airlines as a single system rather than as two separate systems. These arguments are, briefly, that there would be significant gains in aircraft utilisation from a single integrated network, meaning that fewer aircraft would be required to do the same work; second, that there would be marketing advantages from being able to offer through travel on routes joining points now served separately by the two corporations; third, that one could eliminate ovetolapping services, as in the Near East; and fourth, that there could be better co-operation in industrial relations, catering, transport and training and in inclusive tour charters and hotel investment.
Anyone reading that list would say that co-operation between B.O.A.C. and B.E.A. was unknown at present, and that the profitability of the publicly-owned sector must have been severely damaged in the past by the separation between the short and long-haul routes. But, wherever co-operation has been possible, it has been pursued actively by the corporations, as in the case of the engineering training centre which has just been established under joint sponsorship. The hon. Member mentioned the Airline Chairmen's Committee, which is the way in which these possible avenues of co-operation are now being properly explored.
The other point of course, is that the two corporations have been very profitable in comparison with some other airlines which have operated on a basis of 466 trying to do both short and long haul routes. It would not automatically follow that by putting the two together we would increase the return to the nation.
That is not the view of the corporations. When I have discussed this matter with them they have shown that they do not think much of this proposal, and I therefore hope that there will be time for the Government to consider again this air holding board concept, which I think is an unnecessary tinkering about with the management structure of the corporations. Although I use the word "tinkering" in this context, it could be worse than that because it could do much damage to the morale of the staff. I would like to see the proposal shelved, certainly for the time being.
It is suggested that there would be gains in aircraft utilisation, resulting in fewer aircraft. B.O.A.C.'s utilisation averaged more than 3,700 hours per aircraft last year, which is probably as good as any airline in the world. If it is pushed up any further, the frequency of unscheduled maintenance will increase and passengers will suffer from cancellations.
Moreover, the inference is that utilisation can be increased by operating B.O.A.C.'s long-haul equipment on European short-haul routes, but this is bound to cost more per seat mile compared with aircraft which have been properly designed for the shorter sectors.
Thus, the case for the air holdings board is not proved and it would require a great deal more hard evidence to support it. Equally, the civil aviation authority proposed in the White Paper needs further examination. The hon. Member for Bolton, East suggested that this was the best proposal in the White Paper and that it should be implemented without delay. I admit that, at first sight, I thought that it would be a good idea, but on looking at the functions of the C.A.A. with great care, I am not convinced that air worthiness and operational safety should be under the same management as air traffic control and licensing.
The effectiveness of the A.R.B. is the result of its existing constitution and it would almost certainly be jeopardised if 467 self-government by constructors, operators and insurers, together with representation by the Board of Trade, were replaced by total control from Victoria Street, It is doubtful whether the Board of Trade could attract people of the calibre of Sir Arnold Hall or Sir David Huddie to serve on the new authority as they do on the A.R.B. Council.
I would have no objection to widening the functions of the A.R.B. to include operational safety, as it seems has been suggested by the A.R.B., if I have understood paragraph 91 of the White Paper correctly. But to go further and include both air traffic control and licensing under the same umbrella would yield no positive advantages. On the contrary, it would seriously damage the longstanding methods of proceeding which have been developed by the A.R.B. It would involve taking "a calculated risk", as the Edwards Report puts it… in taking a successful, independent organisation … and making it part of a large whole".I see nothing in either Edwards or the White Paper to persuade me that such a risk should be taken.
I do not have time to refer to the question of subsidies on domestic routes, except to point out that where it has been decided, for reasons of social or regional policy, to keep an air service open or to start a new one, the same considerations should apply as in the case of rail services which are now subsidised under the Transport Act. It is far better for the taxpayer to know what he is being required to pay than for the facts to be concealed by cross-subsidisation.
I repeat that, in my view, the Tory Party has made a grave error of judgment in seeking to concentrate this debate entirely on the problem of B.U.A., instead of using the opportunity of a whole day's debate to discuss civil aviation over the broadest possible front. It is typical of the Conservatives, lacking any ideas of their own, to dwell on negative criticism of a development which had nothing whatever to do with Government initiatives but which came from a private enterprise firm.
The official opposition are doing their best to turn this into a party political controversy for their own advantage. It 468 is clear that at this stage the Tories are interested only in vote catching and not in the welfare of civil aviation. If they insist on taking their censure Motion to a vote, I shall be delighted to be in the other Lobby.
§ 6.45 p.m.
§ Mr. Russell Kerr (Feltham)
I hope that the hon. Member for Orpington (Mr. Lubbock) will forgive me if I do not follow him into the various subjects that he raised because I have other fish to fry. Nevertheless, I am pleased to be speaking following him because, although we are not members of the same party, we are by happy accident members of the same trade union branch. I always listen to his views, particularly on civil aviation, with the greatest interest and respect.
I wish at the outset to apologise for not being in my place for the opening stages of the debate, due to my necessary attendance at an important meeting of the Select Committee which is inquiring into the Bank of England and which the Chancellor of the Exchequer attended. I am particularly sorry to have missed that stage of the debate, because I would have liked to have heard the speech of the hon. Member for Gloucestershire, South (Mr. Corfield).
I understand that he waved at the House a telegram purporting to have come from a mass meeting of five or six clerks and cloakroom attendants employed by B.U.A. at the Victoria air terminal. I have news for him. I have a telegram and, in due course, I too shall wave it at the House, though it may possibly carry a little more weight than his.
Yesterday, 17th March, was a great day for the Irish, as they say, and, no doubt, for the wearing of the green. I have little doubt that today will go down in history as an even greater day for the Tories and as a day for the wearing of the blue. Without question, in my humble opinion, hon. Gentlemen opposite have had their biggest single success since the start of this Parliament.
I will not disguise the fact that it has been one of the unhappiest days for me since I came into the House. I need only look at the smiling faces of, for example, the hon. Member for Woking (Mr. Onslow) and the hon. Member for 469 Gillingham (Mr. Burden), both of whom look like cats just out of the cream, to confirm me in my judgment that this has been a black day for civil aviation and, in particular, for hon. Members who have been proud to be supporters and backers of what, after all, is a great British publicly-owned industry.
§ Mr. Kerr
My right hon. Friend said that his withholding of sanction for the merger would allow certain amalgamations to take place and that that, in his view, would have certain consequential benefits for the staff of B.U.A. He can have his view about what benefits will flow for B.U.A.'s staff and I can have mine, but more important than our opinions is what the workers and their leaders think.
I come now to my telegram, which reached me only an hour or so ago. It was sent by the Joint General Secretary of the union to which I have the honour to belong and of which I am a national executive member, A.S.T.M.S. The telegram, which was sent to me following a mass meeting at Gatwick earlier today, reads:Three thousand"—not just a handful—British United staff at Gatwick behind their management's actions in making direct approach to B.O.A.C. for merger of B.U.A. They support action already taken by their national and local officers in their endeavours to bring about the merger of B.O.A.C. and B.U.A. They see merger as only logical step in bringing into effect an efficient transport industry.
§ Mr. Onslow
To help us assess the value of that telegram, would the hon. Gentleman reflect on the fact that the President of the Board of Trade told the House that he had been seriously misled? Does not the hon. Gentleman think that the same might also be true of some of the gentlemen who sent him the telegram?
§ Mr. Kerr
I was about to name him when the hon. Member interrupted me. It is Clive Jenkins—who else? Who else would fit the title I have just given him?
Moreover, I do not need this kind of confirmation of my views because I am only too well aware, as a person active in an airline union, of the views of our members in this respect. Our members have no doubt at all about what is being done today in their name.
I turn to the merits of the case which, somehow, seem to have eluded previous speakers as far as I understood them. We must remind ourselves that for the past 25 years—rather longer, In one case—the two nationalised, publicly-owned airlines, B.O.A.C. and B.E.A., have borne the heat and burden of the day. They have been the airlines which throughout virtually the whole of their history have been the subject of fierce competition of one kind or another; on the one hand, from international airlines anxious to increase their share of the market and, on the other, from hon. Members opposite, as it might be said, rewarding their paymasters in the shape of preferential treatment being given to various independent operators. The hon. Member for Gillingham utters a cri de coeur. As he was personally identified with one of the independent airlines to which I have referred, I well understand his anguish at such a remark as mine.
One must remind the House that after all these years of travail, of hard work and building up their services right against the odds, these two nationalised publicly-owned corporations together form one of the jewels in the British industrial crown, if I may put it that way. Both of them, as we well know—and I do not know whether or not hon. Members opposite rejoice in the fact—have become highly profitable. Both of them have staffs of which they are proud, and the staffs themselves take a great pride in the achievement of the corporations: they walk very tall indeed.
Both corporations, I suggest, are living testaments to the fact that with an efficient management and skilled workers getting the proper rate for the job, public enterprise can knock spots off any variety of private enterprise supported by hon Members opposite; the spokesmen of 471 those whom the aforementioned gentleman, Clive Jenkins, so very accurately described as freebooting, mercantile adventurers. I myself thought that he was being a little kind in putting it in that way, but I speak as one who was for his sins actively engaged in the industry before coming into this honourable House.
I return to the question of the attitude of the B.U.A. workers because that must surely be relevant to this debate. Hon. Gentlemen opposite, as is well known, speak for their paymasters. This we understand, even if we do not respect it. I speak, and I say it quite unashamedly, for the workers of the industry who, by a curious coincidences, happen to outnumber by a very considerable margin the people who own it.
Leaving aside the telegram that I read out just now and which produced such fury in certain hon. Members opposite, the reason for B.U.A. employees being so much enamoured of the prospect of joining B.O.A.C.—and whose hopes have now been unhappily, though, I hope, temporarily, dashed by the pronouncement of the President of the Board of Trade this afternoon—is simply a matter of pay and conditions.
It happens, again by a curious coincidence, that the employees of B.O.A.C. doing equivalent jobs get £7 or £8 a week more than do the B.U.A. employees. It also happens, again by coincidence, that B.O.A.C. pension conditions are better. Again by coincidence, it happens that B.O.A.C. employees have better conditions of employment, better tools to work with, better equipment to work upon, and all the rest. Any one of those people who have an I.Q. above 50 will want to work in a stable, secure job with a swinging corporation like B.O.A.C. rather than with these knock-'em-down, drag-'em-out companies we have had described this afternoon.
I would refer in passing to these aforementioned private airline owners for whom hon. Members opposite have so much to say so eloquently. Are these the legendary figures of pioneering, risk-taking aviation, as they have been described by hon. Members opposite? Are these the successors to the Lind- 472 berghs, the Kingsford-Smiths, the Amy Johnsons and the rest—well, are they?
As we know, and as anyone who has been in the industry for any time at all knows, what we are talking about in this context are some very well-heeled gentlemen who probably at this moment are drinking themselves silly in their City clubs and other places celebrating the great news they have had this afternoon—and I must say that I do not blame them—just as I am confident that some hon. Members, though not on this side, will be celebrating. I only hope that the celebration will not reach such levels that we have a repetition of last Thursday's disgusting behaviour.
We are talking about people who have big holdings in shipping lines and insurance companies; big people with stakes in merchant banking—and, of course, their wealthy friends; people who, in short, have over the years done "very nicely, thank you".
We are certainly not talking in this context about the workers in the industry. We are talking about people who know a "quick buck" when they see one.
That is why I am very sad, because as I read this afternoon's announcement I believe that the Government have yielded to the people who should not be their friends, and appear to have let down the people who emphatically are their friends—although for how much longer that relationship will last, I would not care to say.
Having got that off my chest, let me make it plain that I am not saying, or even implying, that there is not a rôle for the independents. [HON. MEMBERS:: "Oh."] That is a wider question. I have my own views about it. There may well be a rôle for them in terms of feeder routes, in certain types of charter work and cargo services. But what we in this House of Commons must reaffirm is that national carriers have a paramount rôle to play and must be the unchallenged leaders of our civil aviation industry.
It is the corporations which over the years have had to maintain the scheduled services in good weather and in bad, and whether profitable or unprofitable. It is they which have been saddled with "prestige" flying schedules which are, again, not necessarily profitable. It is they which have played far and away 473 the greatest rôle in building up British civil aviation to its present level of profitability. And it is they, particularly, which have created and kept the standards of safety and maintenance which we now see and which are far ahead of the standards in the independent section—[HON. MEMBERS: "Oh."] Oh, yes—the figures are the most eloquent answer to squeals from hon. Members opposite.
The need here is for a sense of perspective in regard to the proposed B.O.A.C.-B.U.A. deal, now unhappily postponed, though, I hope, shortly to be restored. We must see what it is at attracts B.U.A. workers to this deal. When the merger talks started, the unions concerned had talks with the B.O.A.C. management, so I am informed. What the workers wanted was, first, that the pay and conditions of the B.U.A. staff should be on a par with those in B.O.A.C. Secondly, that there should be no redundancy among B.U.A. staff, and thirdly, that there should be collective bargaining before any work was transferred from Gatwick. That is the answer to some of the wilder allegations made against my trade union colleague Clive Jenkins in terms of his statements last weekend, which suggested that he was calling for political action for industrial ends. I know what is in his mind. It was not for political action but for industrial ends that he said what he did say, and I am sorry that an attempt has been made by hon. Members opposite to put a quite wrong construction on his remarks.
§ Sir Keith Joseph (Leeds, North-East)
I left the intemperate rubbish in the remarks of the hon. Member for Feltham (Mr. Russell Kerr) unchecked while he was making them because no one will take notice of that, but his reference to a bad safety record could possibly do damage outside. I call attention to the table on page 207, which shows that the record of B.U.A. was slightly worse than that of B.O.A.C., but slightly better than that of B.E.A. The bill for safety given by the Edwards Committee to the independents as well as to the nationalised airlines is first-class. The hon. Member should withdraw his slur against the independents on the question of safety.
§ Mr. Kerr
It would take a lot more than the right hon. Member for Leeds, North-East (Sir K. Joseph) to persuade me to withdraw. Unlike him, I happen 474 to have been in the industry and to have had extensive dealings with the independent operators to whom he referred. If he wants a competition on the safety record of independents and of the two corporations, I will do it in The Times or anywhere else. I should be glad to oblige him any time he wishes. Otherwise, he should confine himself to something other than selective statistics to suit his rather doubtful purposes.
Whatever may be true of the attitude of hon. Members opposite, for hon. Members on this side of the House this is essentially a question of whether B.U.A. should be allowed to merge with B.O.A.C. or not. This is a question not of what opportunities should be given to swashbuckling leaders like Freddie Laker or Squadron Leader Jack Jones, but what will happen to thousands of workpeople affected in one way or another by the proposals put before the House. It is my hope that when the dust has settled, and my right hon. Friend the President of the Board of Trade has a further opportunity to ponder on these problems, he will allow a little more weight to be given to the needs of the airport workers, and to the conditions of the people employed in the aviation industry, in particular in B.U.A., and a little less weight to the "well-heeled" gentlemen who by and large are in support of hon. Members opposite.
§ 7.03 p.m.
§ Colonel C. G. Lancaster (South Fylde)
Like the hon. Member for Feltham (Mr. Russell Kerr) I must apologise to you, Mr. Deputy Speaker, and to the House for not having attended the earlier part of this debate. Having come into the Chamber more recently I realise that a lot has happend while I was engaged upstairs and I shall cut short my speech.
The hon. Member for Feltham is a very assiduous and hard working member of the Select Committee on Nationalised Industries and gives me great help in our inquiries in that committee. I wish that he had been a member of the Committee some years ago when we undertook no fewer than four inquiries into the Air Corporations. On one occasion we found it necessary within two years to inquire into one of those Corporations—B.O.A.C.—because we were by no means satisfied that its level of efficiency was as high as it should be.
475 We do not deal in the Committee with matters concerning nationalisation. Our terms of reference are to consider the Reports and Accounts of these bodies and in doing so, so far as we can, we look very closely into their competence and efficiency. We do not become starry eyed at the end of the sittings and say that B.O.A.C. or B.E.A. is perfect. We know that they do a very good job and up to a point they attain a high degree of efficiency. If they were perfect I think we would not give a moment's thought to the independents. We consider the independents because they represent a little of the aspect of competition.
I agree with the hon. Member for Orpington (Mr. Lubbock) that there is far less competition in the air world than one would like to see for a hundred and one reasons, and hon. Members on both sides of the House are well aware of that. So far as it is possible to have competition we have always wished to see it. It would be in the interests both of B.E.A. and B.O.A.C. if there were as much competition as is reasonable. We are very much impressed by the performance of the Corporations but they have not always attained the heights of proficiency and there may be a time when they lose the keen edge which they have shown recently.
Comparisons are odious and it may be only a cursory view of the Corporations, but I think that sometimes B.E.A. is the more competent of the two. That is a cursory view, although I have spent or misspent four years of my life looking into the Corporation's affairs. I gave evidence before the Edwards Committee and I am concerned at this moment, although I cannot refer to it in detail, with looking into the British Airports Authority.
If I had spoken earlier I would have spoken about the Air Transport Licensing Board. Unfortunately, when the A.T.L.B. came before the Select Committee it gave almost disastrous evidence. It may have been its off day and that view may be harsh, but I do not believe that any hon. Member, if he had been listening to the A.T.L.B. evidence, would wish it to continue as it was at that moment. It was in a difficult situation. It was subject to the Civil Aviation Licensing Act, 1960. Its terms of reference were not clearly 476 defined and it found itself having to settle every application on its particular merits. It could not take a wider view of civil aviation in general. Until the board or its successors is in a position to take that wider view no decision it takes on an individual case could have much bearing on civil aviation in general.
It is, moreover, in a technically difficult position, because if the Board of Trade wishes to turn down a decision taken by the A.T.L.B. it can do so and there is no recourse to a further appeal. Imagine the situation of the A.T.L.B. set up as an independent entity which in the last resort can find that its decision, good, bad or indifferent, is set aside by the Board of Trade, with no appeal.
§ Mr. Burden
My hon. and gallant Friend will remember a classic example of that when the A.T.L.B. gave British Eagle a licence to fly the North Atlantic and it was appealed against by the B.O.A.C. and the Minister withdrew the licence.
§ Colonel Lancaster
I am grateful to my hon. Friend for giving me those facts.
I have no interest in or connection with B.U.A. It happened to come before the Committee to give evidence in the inquiry into B.E.A. while I was Chairman of the Sub-Committee. It was perfectly evident—this was more than two years ago—that B.U.A. recognised that its future was uncertain and it wondered whether it was wise to continue in operation. It was uncertain because, again, we get back to A.T.L.B. and the granting of licences.
As B.U.A. told the Committee, it had to invest on a large scale in sophisticated aeroplanes to remain in the competitive world of civil aviation. It could not come to decisions of such magnitude, on matters which involved its shareholders in such large capital sums, unless it had some assurance that it would be successful in obtaining enough work to justify the use of such large monies in investing for new aeroplanes. It was perfectly evident from its evidence—and as I say we looked at this as an all-party Committee quite dispassionately—that it was being driven into an almost impossible situation.
When recently I read that it was wishing to join in with B.O.A.C., I was not in the slightest surprised. The only 477 surprise I felt was that it had not done so earlier, because it was perfectly evident to us two and a half years ago that the future for it as an independent airline was so uncertain as hardly to justify the injection of new money. We felt— and I speak for the Select Committee—that to both foreign competitors and to our two public corporations competition is healthy. We felt quite certain that both B.E.A. and B.O.A.C. were big enough and strong enough to deal with competition and that they are all the better for it. To say that we are going to leave all civil aviation flying to these two corporations would be essentially wrong. If the independents do nothing else they provide that measure of competition, not in the aeroplanes which they fly—because they are owned by the corporations—but in the type of services which they give, such as the politeness they show, the type of food they provide and many other means by which they can show competition.
If, as a result of today's debate and further debates on the Government's White Paper and on the Edwards Committee's Report, there comes about a situation where the Board of Trade, which is the responsible Department, decides that there shall be a sector which is available to the independent companies I hope that that is made very clear to the A.T.L.B., or whichever organisation succeeds A.T.L.B., that in that area security of tenure shall be given to the independents if they show their worth and are able to give a good service. This would not only enable the independents to do a worth-while job but it would ensure the maintenance of some degree of competition within the country and overseas. I believe that if this happens—contrary to what the hon. Member for Feltham has said—in a small way both B.E.A. and B.O.A.C. will welcome it. I believe that they are big enough to do so and I hope that the day is not far off.
§ 7.13 p.m.
§ Mr. Leslie Huckfield (Nuneaton)
I find myself in a rather difficult position having originally prepared a speech which I was going to use against the Opposition Front Bench. I am wondering how much I am now bound not to use it against my own Front Bench because it seems to me rather unusual, to say the least, that when B.O.A.C. and B.U.A. have come to the 478 final stages of their deal suddenly the whole thing must be held up by the President of the Board of Trade so that the independents can get together with a view ultimately to competing directly against this nationalised body.
The amazing thing about what is supposed to have happened over the past three or four days is that by last weekend there was no definite Caledonian bid. Anybody who had been following the developments of this situation closely knows very well that there had often been talks between Caledonian and B.U.A. but it was not until recently that these talks produced anything. So here we are at the final stages when B.O.A.C. and B.U.A. are almost ready to announce the conclusion of their deal, and suddenly my right hon. Friend steps in and says that the whole thing has to be held up so that we can start all over again and give direct encouragement to private enterprise. If my right hon. Friend had said that he was going to let the Air Transport Licensing Board examine the position I might have been able to understand it slightly. But when he says that he not only wants to delay his approval but that he also wants to give B.U.A. and Caledonian a fair chance to get together to form a second force airline, I can only conclude that this is the type of policy which will directly encourage competition against B.O.A.C.
It will obviously be said by many hon. Gentlemen opposite that they do not want to see the carving up of B.O.A.C. Even the hon. Member for Gloucestershire, South (Mr. Corfield), the Front Bench spokesman for the Opposition, has claimed that he does not want to see the carving up of B.O.A.C. He has gone out of his way to point out in the various broadcasts which he has made and in his various pieces in the newspapers that he is not in favour of carving up the Corporation. Even the right hon. Member for Leeds, North-East (Sir K. Joseph), now on the Opposition Front Bench, knows very well that it is Conservative policy not only to inject private capital into nationalised industries but also to give the independent sector in aviation a fair chance by giving it an even bigger slice of the Corporation routes. If Conservative policy is not to carve up some of B.O.A.C.'s routes to give the independents a chance, I hope that the right hon. Gentleman will deny that tonight. But 479 I can only say that in all of the conversations and meetings and developments which I have been following in civil aviation, it has always been acknowledged that it is Conservative aviation policy to carve up B.O.A.C. to give the independents a slice of the cake.
We have heard a great many things about the second force. We have heard that it is not supposed to impair the Corporation's financial liabilities and responsibilities. In paragraph 33 of the White Paper it is said that the second condition for the second force is… the designation of an independent airline on a route already served by B.O.A.C. or B.E.A. should not unduly impair the Corporations' services, or their capacity to meet the financial obligations laid upon them by the Government.The Minister of State may claim that the emergence of a second force airline will not unduly impair the corporation's financial liabilities. But what happens if the merger between B.U.A. and Caledonian comes off and next year, or the year after, it comes forward to the A.T.L.B. or the Civil Aviation Authority, whichever is then in power, and says, "Look at us. We can now qualify under the three conditions laid down in the White Paper". Once this merger has established itself we shall see this newly created private second force beginning to carve up the already profitable routes of B.O.A.C. Many of us on this side of the House have received rather a kick in the teeth this afternoon because we felt that it was not right that one should interfere with the obligations and with the very successful performance of a nationalised undertaking. This is what is ultimately bound to happen if this second force of two private airlines gets off the ground and comes before a future civil aviation licensing body.
Even if the second force is formed, and even if it comes before the new civil aviation licensing body, will it honestly be able to claim that it will be sufficiently viable to meet the kind of obligations which will be placed on international schedule carriers over the next 20 years? Before the merger with either B.O.A.C. or Caledonian was being talked about, B.U.A. was proudly telling the world that, in order to secure the kind of capital which It needed, it would have to have at least 2,300 of B.O.A.C. scheduled ser- 480 vice seat miles and a guarantee, it wanted, that it would have at least 3,100 scheduled service seat miles. Already, therefore, even before the bids were talked about, B.U.A. said that it must have a substantial guarantee of route mileage.
That substantial guarantee of route mileage has not been given, but, on top of the B.U.A. demand for a substantial guarantee of route mileage, it is admitted by all who have taken part in the bids over the last three or four days that any new kind of second force to meet the sort of obligations which will be placed upon it by the White Paper will probably need a capital of at least £85 million. We are talking here not just about DC8s, DC9s, Boeing 707s and the like. We are talking about the jumbo 747, about Concordes, about vertical take-off and landing and short take-off and landing. We are talking about £85 million, a vast capital investment and far too expensive, I maintain, for the private combination talked about today to afford.
§ Mr. Burden
It is not necessary for an independent or any other airline to invest all that amount of capital in costly jet aircraft. It can be done on sale and lease back. It does not have to spend the total sum which the hon. Gentleman mentions.
§ Mr. Huckfield
The hon. Gentleman has played into my hands. If he wants to see the second British flag carrier on the North Atlantic operating with leased aircraft, that can be his policy.
§ Mr. Huckfield
If there is to be a second carrier—and I would rather not have one—that second carrier will have to invest very large sums in capital equipment. If the hon. Gentleman honestly imagines that an outfit the size of Laker Airways, or having the leasing policy of Laker Airways, can become Britain's second carrier on the North Atlantic, he does not know what he is talking about.
Over the last ten years—here are the facts and figures—load factors on the North Atlantic have fallen by at least 10 per cent. Automatically, the addition of only 12 or 13 jumbos to the B.O.A.C. fleet will increase capacity by 50 per cent. If all the other scheduled carriers 481 put on the number of jumbos which most of them are planning at present, capacity on certain routes may increase by as much as 150 or 100 per cent. Does the hon. Gentleman think that a second carrier operating with leased aircraft can compete against that sort of thing? I can only assume that the hon. Gentleman may have been connected with one or two "tiddly-push" private airlines but he has not examined the real capital requirements which will be called for in the developing situation over the next ten or fifteen years to meet the obligations imposed by international scheduled services.
We have now reached the stage when even Pan-Am, the world's biggest international scheduled carrier, is having financial difficulties. If the sort of second carrier envisaged by the hon. Gentleman is the one we are to have on the North Atlantic, it will, first, be the sort of carrier which will go head on the basis of group and bulk travel and, second it will be the sort of carrier most likely to need the Government to bail it out within ten or 15 years.
Hon. Members opposite should examine the mergers which have already taken place in the United States. Let them consider the forecasts of the changes coming there and the complete breakdown of the Chicago Convention definitions of 1944. All this must be withstood by the sort of new entrant about which the hon. Member for Gillingham (Mr. Burden) is thinking, and I very much doubt that the combination of private interests which he envisages could be viable in such conditions.
We have heard a great deal today about the view of the unions in all this. It has been suggested that certain trade union leaders have been holding a pistol to the Government's head. But let us consider the wages and conditions of those who work on the tarmac. They are important, too. As my hon. Friend the Member for Feltham (Mr. Russell Kerr) said, the wages for B.O.A.C. ground staff are £7 to £8 better than those for comparable workers in B.U.A. Is not this the case of a trade union leader who genuinely wants to improve the pay and working conditions of his members? If their pay and working conditions would be improved by B.O.A.C. taking over B.U.A., it is no wonder that my hon. 482 Friend the Member for Feltham can read out a telegram saying that 3,000 ground handling and other workers at Gatwick support the take-over of B.U.A. by B.O.A.C.
No matter whether one considers pilots or the humblest level of ground staff, it is clear that wages and conditions in the private sector operated by the independents are not as good as those in the public sector.
§ Mr. Huckfield
At this moment, in the Industrial Court the British Airline Pilots Association is having its work cut out in a hard struggle to convince B.U.A. that it ought to pay its pilots as much as B.E.A. pays. So much for the hon. Gentleman's "nonsense".
Apart from those considerations, I cannot see why one should want to carve up a successful airline. Since 1965, B.O.A.C. has increased its scheduled service passenger carryings by about 31 per cent., and in the same period it has contributed about £76 million in profits or surpluses. In the last financial year, this airline made a surplus of £21.7 million. It is one of the most profitable airlines on international scheduled services in the world.
With that sort of record, why can we not let B.O.A.C. get on with the job? Why must we dangle before it the prospect of competition? We have here a successful public enterprise. Why interfere with it?
It has been said that competition helps. Again, one has only to look at the sort of acitvities now being undertaking by airlines in the United States. Let the Opposition look at the situation between Chicago and the East coast, where there are four or five carriers often competing on the same route. Let them look at the sort of route capacity, and excess capacity, which has been the result of so much competition on, for example, the West Coast and Chicago routes. We can see the rationalisation which American airlines are being forced to initiate, bearing out what this Government have been saying for a long time regarding our own domestic routes, namely, that competition on internal services can only force up fares and can only create excess capacity. If the right hon. Gentleman the Member for Leeds, North-East looks at the facts, 483 he will find that, since we have had competition on internal routes in this country, we have had faster fares increases than ever before.
So much for the argument that B.U.A. forced B.E.A. to introduce hot meals on its domestic services. The other side of the coin is that, although people might allegedly be given a greater choice—if one can call Gatwick versus Heathrow a choice—there have been fares increases on these routes since B.U.A. has been competing against B.E.A.
§ Mr. Lubbock
Is not the hon. Gentleman aware that it is a great convenience, as B.U.A. said in its licence application to the A.T.L.B., for people who live on the south side of London to have a service from Gatwick, which is so much easier for them to reach than Heathrow.
§ Mr. Huckfield
The hon. Gentleman will know also that there is a No. 727 bus which serves all three airports and is very convenient.
§ Mr. Huckfield
Hon. Members opposite have said that people in the industry want to see the private second force survive. Why has this not been evident from all the industry? Let us consider the precedent, the awesome precedent for the Opposition, of Hickie Borman Tours, a big previous customer of B.U.A., which only a fortnight ago said that it would switch all its tour bookings from B.U.A. to B.E.A. Air Tours. Is that a testimony to private enterprise? Is that a testimony in independent aviation operation?
Horizon Holidays, which is B.U.A.'s main customer and which has helped B.U.A. to expand its charter and exclusive tour work, stated last week in a television programme in which I appeared that it did not mind if B.O.A.C. took over B.U.A. Therefore, even in the industry there is a substantial amount of support for this kind of take-over.
Many allegations have been made today about the comparative performance of B.O.A.C. and B.U.A. on the South American route. The hon. Member for Woking (Mr. Onslow) made several remarks from a sitting position to the effect that B.U.A.'s performance on the east coast South American route was 484 immeasurably better than B.O.A.C.'s. That argument conveniently overlooks the fact that B.O.A.C. was forced to give up the east coast South American route because it could not get the kind of frequency which it required to operate its VC10 service. It was coincidental that, as soon as B.U.A. started to operate the east coast South American route, it got precisely the frequency for which B.O.A.C. had been asking. If the hon. Gentleman who made that allegation would like me to supply him with more details later, I should be happy to do so. B.U.A. got the route frequency which B.O.A.C. had been unable to get. Consequently, B.U.A. was able to succeed.
Finally, why cannot we let B.O.A.C. behave like any other airline? It is a responsible and financially successful public corporation. It treats its employees well. It has given good service to Britain, contributing over £76 million to the public purse over the past four years. It is a very successful example of nationalised industry.
It therefore came as a great surprise to me that my right hon. Friend said that he would not allow for the moment this very successful enterprise to behave like any other airline undertaking and that he would suspend all of this to allow private enterprise to compete against it.
I hope that the B.U.A.-Caledonian deal does not come off, because I do not believe in the emergence of a second force. I do not want to see the emergence of a second carrier on the North Atlantic. I want to see B.O.A.C. maintaining this nation at the forefront of aviation developments and making aviation history once more, as we always have done with B.O.A.C. and B.E.A.
§ 7.33 p.m.
§ Mr. Stanley R. McMaster (Belfast, East)
In this interesting debate hon. Members on both sides agree that the main purpose of our civil aviation policy should be to create a strong and viable aviation industry. By so doing we create, not only prosperity directly for Britain through the overseas earnings of the Overseas Airways Corporation, but also a market for the aircraft industry.
This industry provides employment directly throughout the United Kingdom and is a leader in technological development, progress and research. It enables 485 British industry to share in advances in metallurgy and electronics; and the technical spin-off affects many other British industries. It is also an important prestige-earner for the United Kingdom.
The aviation industry and the aircraft manufacturing industry between them contribute substantially to our balance of payments, not only because of the passengers carried by the airlines, but also because of the exports of the aircraft industry, which have been rising steadily, and in the savings in costs which would otherwise be charged to our balance of payments for services or products which we would have to buy from abroad. Finally, but by no means least, the aviation industry and aircraft manufacturing contribute vitally to our defence.
Towards the end of his speech the President of the Board of Trade said that he thought the Opposition were largely responsible for the present state of our aviation industry. The right hon. Gentleman mentioned in particular the Civil Aviation (Licensing) Act, 1960. I served on the Standing Committee which considered that Bill. I treated the Bill with the greatest suspicion and was strongly opposed to much of it. Some of my hon. Friends and I sought to amend it in Committee, particularly the provisions relating to the appeal procedure.
I believe that the present unhappy state of our aviation industry arises from that Act. Because of the faults inherent in that Act we do not have strong independent airlines. The bias has always been towards the corporations.
The hon. Members for Nuneaton (Mr. Leslie Huckfield) and for Feltham (Mr. Russell Kerr) gave a strong exposition of the importance of nationalised industry. Though both sides have the strength of our aircraft industry at heart, we are divided as to the methods whereby this can be achieved. I believe that only through competition can our best longterm interests be served.
I speak from personal experience. I fly to Belfast almost every week. The presence on that route first of British Eagle and then of British United has helped to maintain a high standard for the ordinary air passenger. Those companies have kept B.E.A. on its toes. I 486 am not in any way denigrating B.E.A. which provides an excellent service, but it was noticeable that when the independents were given a frequency on this route the B.E.A. service improved and has remained at a high standard. If B.E.A. had a complete monopoly on the route, the standard of service might well decline.
§ Mr. Leslie Huckfield
The hon. Gentleman may have noticed that B.E.A. has started serving him with hot meals and tea. Has he also noticed how the fare increases have increased every year?
§ Mr. McMaster
That is irrelevant, because, unfortunately, fares on buses, tubes and trains, and also petrol and all other costs, have been rising meanwhile. The higher salaries and wages paid by B.E.A., to which the hon. Gentleman made special reference, have perhaps contributed just a little to the fare increases.
I can see why the telegram, which was read out today, was sent, and why hon. Members opposite strongly advocate a Government monopoly in air transport. This puts Clive Jenkins in an unrivalled position. He can then take both the air Corporations and the Nation by the throat, and the trade union movement has not always been reluctant to do so. We have in the past weeks had several examples of trade unions trying to dictate policy to the Government. The Minister of State will remember that earlier this week we were debating the Merchant Shipping Bill. I regret that he gave way to trade union pressure and said that he would look again at a package deal which had been agreed between both sides of the industry. The trade unions had objected to the disciplinary clauses.
Barely a week later, the trade unions in the aircraft industry are attempting to throw their weight about. This is damaging to the interests of the country. The hon. Members for Liverpool, Walton (Mr. Heffer) and Salford, West (Mr. Orme), who I regret to say are not here now, have shown how strongly they feel that what the trade unions say should become Government policy. I was delighted that in opening the debate the Minister said that, at least for the time being, he was not prepared to give way to this type of pressure.
487 If the country is to develop strong airlines and a strong aircraft industry we need the spur of competition to keep the aviation industry on its toes. Eight or nine years ago I took up with B.E.A. a point that many travellers had put to me about a bus service from the airport. As a regular traveller on B.E.A. I have found it inconvenient to get to Gloucester Road, which is nowhere near a "tube" station. I suggested to the Minister of Aviation and the chief executive of B.E.A. that it would expedite the journey, particularly for incoming passengers, if a bus could go to the side of the aircraft and then directly to the centre of London.
I was delighted when, as a result of this, an executive coach was introduced, but a little surprised to find that it terminated at Cromwell Road Air Terminal, which as I have said is not a very convenient place. I carried on the correspondence and suggested that the bus might go further into Central London or at least near some "tube" station. In the old days the terminal was at Waterloo and before that at Kensington High Street, which was very convenient. I asked B.E.A. if it would find out what the passengers wanted, and run a temporary service to see whether it was suitable. I got nowhere. Perhaps if B.E.A. has a monopoly this is how it would treat passengers—on the basis that it knows best and the passengers would have no alternative. Now that British Rail is operating faster and more competitive services perhaps B.E.A. will think again.
§ Mr. John Rankin (Glasgow, Govan)
The hon. Gentleman is not being quite fair to B.E.A. He must remember that when the present terminal was agreed upon it was hoped that there would be an underground train service carrying passengers into the centre of London. B.E.A. did not fail with this, it was London Transport which did not co-operate.
§ Mr. McMaster
Perhaps there is some reason why the buses should keep to the present inconvenient schedule. It will however be some years probably before either the Victoria link on Southern Electric or the "tube" line is extended to the terminal and further thought should be given to the convenience of the passengers.
488 I travel to Belfast in a Trident, which was introduced at great expense as a replacement for the Vanguards. It is a much more expensive aircraft and cuts ten minutes off the flight. What is the point of that if passengers waste time at either side waiting to get on the plane? With the benefit of some experience I feel that when a nationalised industry is running a public service particularly a monopoly service, there is nothing to make it serve the customers convenience or to cut costs, in the way that independent airlines might do. I do not accept the remarks of the hon. Member for Nuneaton (Mr. Leslie Huckfield) about the rise in prices and fares. I have seen many examples of inefficiency in manning on the State airlines compared with the efficient and cost cutting service provided by British Eagle and B.U.A.
The duty which lies with the Government in protecting public money invested in the aircraft industry puts them in an impossible position. This was dealt with in the Edwards Report when it was said that the aims of the air corporations and the independent airlines often conflict this conflict comes to a head in the granting of licences.
How can it be expected that a fair share will be handed out to private airlines when so much public money is invested in the State corporations? Once a decision has been made to grant frequencies to independents they should be given at least 50 per cent. to put them in a viable position. When British Eagle was granted a frequency of one flight per day it could not possibly provide a viable service. It soldiered on valiantly, as did B.U.A. It was the restrictions flowing from this Act which led to the present difficulties, and the approach by B.U.A. to B.O.A.C.
The only solution is to unscramble the omelette completely, if it can be done. Civil aviation must either be completely in the hands of private enterprise, with at least two corporations competing to provide an efficient service and a strong market for the aircraft industry, or there must be complete State control, with the independents coming in on the package tour side. I cannot see any sensible halfway house. The Minister is a final court of appeal and he is torn between his duty to protect public investment—sometimes private companies might think it extravagant public investment—and his 489 duty to make an independent judgment. This has resulted in the independents being placed in an uneconomic position during the last 10 years, and many of them have folded up.
My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) referred to the source from which B.O.A.C. gets its money to take over its competitors. When this House votes funds to B.O.A.C. it does not say in detail how the money should be spent. However, money voted to re-equip an air corporation should not be spent on taking over its competitors. The general purposes for which the money will be used are stated when funds are voted, but the taxpayer has no guarantee that it is appropriate for his money to be spent by B.O.A.C. to take over its competitors.
Before a merger of this sort can take place one must consider the value of the aircraft and routes to be obtained and whether the necessary licences will be transferred to B.O.A.C. This matter cannot be glossed over, because it goes to the root of the Motion.
If a State corporation can, under pressure such as that we have seen from hon. Gentlemen opposite, spend money regardless of results by buying out its competitors, so to put it in a monopoly position, one must consider if the national interest is being served.
I submit that when a corporation of this type is in a monopoly position, many disadvantages can result. Not only can there be inconvenience to passengers, because they have no other way to travel, but there can be any number of increases in fares. In addition, as the trade unions know, there can be any number of claims—all sorts of blackmail methods can be used against the public interest—to obtain wage awards which might be totally out of line with awards in other sectors. This, above all, must be resisted by the Government.
I hope that the Government will stick to the policy in the White Paper, based mainly on the Edwards Report, and resist the approach by B.U.A. to B.O.A.C. I also hope that they will do everything to encourage B.U.A., Caledonian and the other independents to form a second force, which would be in the best interest of civil aviation and the aircraft manufacturing industry, for 490 which the State corporations and independent airlines provide an important home market.
§ 7.55 p.m.
§ Mr. John Rankin (Glasgow, Govan)
Normally I enjoy commenting on the various points made by the hon. Member for Belfast, East (Mr. McMaster), particularly when we debate shipbuilding and other topics, but because a number of hon. Members still wish to take part in the debate and because I do not wish to speak at length, I will not do so tonight.
I welcome, in general terms, the policy which the Government are following on this issue. I am glad that a merger has been proposed between B.U.A. and B.O.A.C. Recently in the House I supported B.U.A. as a possible second force, but I did so with a good deal of hesitation, for a variety of reasons. However, any difficulties that may have occurred at that time now appear to have been cured.
For example, I felt that the greater scope would give B.U.A. a better chance to overcome the objections which many of us had to its policy. I particularly objected to B.U.A.'s wages policy, and my objections extended to the company's policy on hours and general conditions for both its flying and ground staffs. I was supported in that view by the continuing correspondence which I had had with the captains and others employed by the company. Indeed, I thought it was generally agreed among hon. Members interested in aviation that B.U.A. was a highly criticised operator.
In a way, therefore, this is an exercise of salvation in that when B.U.A. merges with B.O.A.C. most of these criticisms will automatically disappear, since the employees of B.U.A. will, at all levels, come within the higher standards provided by B.O.A.C.
§ Mr. Eric S. Heffer (Liverpool, Walton)
My hon. Friend may not have heard the Minister say that there was no guarantee at present that there would be a merger between B.U.A. and B.O.A.C.
§ Mr. Rankin
I regret that I was not present for the Minister's speech. An important development affecting shipbuilding in Scotland took place during the night and I had to attend a meeting with the Minister. Naturally, that matter must be my first interest; and it accounted 491 for my absence when my right hon. Friend was speaking.
§ Mr. Rankin
Nevertheless, the possibility remains. I would rather see B.U.A. dealt with in this way and Caledonian given a chance to become the second force. I think a great deal of Caledonian, not because of its name, though it has close Scottish connections, but because it is an adventurous group comprised of young men who are far-seeing. Caledonian's conditions of employment and service do not in any way dissatisfy us and, of course, I want to see a second force in existence. I have always made that clear. A second force necessarily acts as a spur to huge businesslike public corporations. They are always subject to a great deal of criticism.
I have continually prodded the British Airports Authority about the transport link between Victoria and Hounslow. I have asked time and again when the rail link from Hounslow to London Airport will be completed. I am very glad to know that this will happen relatively soon. I am very glad to know that this will happen relatively soon. I say "relatively", comparing it with the great length of time over which we have hoped that it would happen. I gather that it will be relatively soon from what appeared in the Press, but the cost will be great.
I imagine that a great deal has been said about the airport services. Paragraph 76 of the White Paper has a bearing on something that is happening in my city of Glasgow. The paragraph says:It will be a responsibility of the Civil Aviation Authority to study the requirements for aerodromes to match the development of air services. The Government will, however, remain responsible for the allocation of public funds by way of direct or indirect subsidies in this field as in the field of domestic air services. Nor do the Government intend in this context to change the legislation governing land use planning, since aerodrome development affects much wider interests than those of civil aviation alone.At Abbotsinch, Glasgow's airport, which is now in a stage of development, we have come up against a serious difficulty because of the last part of that paragraph.
§ Mr. Onslow
What the hon. Gentleman is saying is not wholly germane to the Motion. It may be that the House, fascinated though it is to hear about Abbotsinch, hopes that the hon. Gentleman can assure us that he will not take too long about it.
§ Mr. Rankin
As I took the invaluable precaution before venturing on this line of approaching the Chair and getting the Chair behind me in this endeavour, I must confess that I was nearly set on fire inwardly when the hon. Gentleman rose, but, being a gentleman, I sat down to listen to him, although I did so with the greatest difficulty.
The problem I have mentioned is a very serious one in the development of aviation in Scotland, a country for which the hon. Gentleman evidently does not have much regard, so he had better not come to Scotland for a wee while yet.
Glasgow wants to extend its runway from 7,000 ft. to 8,400 ft. Other airports may want to do the same. Glasgow is a municipal airport, like Manchester, Birmingham—
§ Mr. Rankin
And Liverpool, so wonderfully represented by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), so that automatically he is on my side too. Teesside is also a municipal airport. Manchester has a 9,200-ft. runway; Birmingham a 7,500-ft. runway; Liverpool a 7,500-ft. runway; and Teesside a 7,500-ft. runway.
§ Mr. Deputy Speaker (Mr. Sydney Irving)
Order. I am sorry. I shall have to disillusion the hon. Gentleman in thinking that he has the Chair behind him. He is getting rather far from the Motion. He should relate what he is saying to the second force or the Government's action in the circumstances that we are considering.
§ Mr. Rankin
I had the Chair initially behind me. The Chair has now modified its views as it has modified its presence. I hope that that will not make too violent a difference to me, because I must have the Chair with me on this point, which I shall deal with briefly.
Surely it is not wrong for Glasgow municipal airport to want to match Liverpool and all the other municipal airports? 493 Surely a group of English Members will not say to a solitary Scotsman that I cannot obtain the right to the same length of runway as they have? Every hon. Member should be supporting me. That is all we are asking for, and we are asking for it for a reason that every hon. Member knows. Aircraft are getting bigger—
§ Mr. Tim Fortescue (Liverpool, Garston) rose—
§ Mr. Rankin
If I am drawn away from the subject, perhaps you may rule some of my interrupters out of order for a change, Mr. Deputy Speaker.
§ Mr. Fortescue
Is the hon. Gentleman aware that the extension of Liverpool's runway was entirely at the ratepayers' expense?
§ Mr. Deputy Speaker
Order. I do not think that we should encourage the hon. Gentleman to go any further on that line.
§ Mr. Rankin
Glasgow did exactly the same, so it was not worth the hon. Gentleman wasting my time with that interruption.
Because aircraft are getting bigger, we cannot help runways getting longer to match them. We are looking for bigger aircraft. The Vanguard and the Trident are ceasing to be used as much and now along comes the Boeing—
§ Mr. Deputy Speaker
Order. I have given the hon. Gentleman a great deal of latitude. He is so far away from the Motion that I must now rule him out of order.
§ Mr. Rankin
I will leave that point, then, in case I finish in disorder.
This desire on the part of Glasgow has led to a little conflict between it and a neighbouring airport. I am sure that neither you, Mr. Deputy Speaker, nor any hon. Member wants to see conflict among airports. So I take it that I shall have the support of both sides of the House in seeking to suggest that this conflict is not something we want to see developing. It would be in complete discord with the civil aviation policy in this document which is before us if we were seeking to develop—
§ Mr. Deputy Speaker
Order. We are concerned with the White Paper only in so far as it deals with this present situ- 494 ation and the conflict about B.U.A. The hon. Gentleman is, I think, rather far from this.
§ Mr. Rankin
I have gone, perhaps, Mr. Deputy Speaker, as far as I can go in safety. I have made it clear that something is brewing which may lead to serious differences of view resulting in action that neither side wants to see between two airports in Scotland—
§ Mr. Deputy Speaker
The hon. Gentleman is in imminent danger of being asked to sit down if he pursues this line.
§ Mr. Rankin
—unless this House takes a more active interest in the quarrel that is developing. I hope in due course that it will acquire more sense than it has at present.
§ 8.11 p.m.
§ Mr. F. A. Burden (Gillingham)
I am sure, Mr. Deputy Speaker, that you would not wish me to follow the hon. Member for Glasgow, Govan (Mr. Rankin). I am sorry that the hon. Member for Nuneaton (Mr. Leslie Huckfield) is not here. I had a close association with his constituency during the war when I was based at Bramcote bomber station, but that association does not mean that I agree with much of what he said. He was extremely fluent and persuasive but I am afraid that he was not too accurate. One of his most fallacious arguments implied that, because of competition from independents on internal lines, B.E.A. had to put up fares. We know that this is not true, and that the fares would probably have risen considerably more if there had not been such competition. We have the example of British Rail, where fares have risen considerably, and we are now threatened with the innovation of surcharges during peak hours, simply because there is no competition.
The hon. Member for Feltham (Mr. Russell Kerr) and the hon. Member for Nuneaton referred rather scathingly to some of the people who run independent airlines; but those people have run airlines successfully. Freddie Laker started B.U.A. and made a success of it, and when B.O.A.C. could no longer continue with the South American routes because it could not get a Government subsidy from the Conservative Government, B.U.A. took over that route successfully. 495 On leaving B.U.A. Mr. Laker set up his own airline, which had small beginnings and which this year will make a profit of £1½ million. I suggest that Freddie Laker, the Caledonian operators and others know far more about operating airlines than any hon. Member.
Why does B.U.A. wish to sell out, when it has a considerable investment, profitability and an excellent management team? It wishes to sell out because, until today, there has been no assertion from the Government that a second force airline, in which B.U.A. must now play an important part, would have a viable route pattern to enable It to re-equip and have a reasonable assurance of profitability.
I am glad to see that the hon. Member for Nuneaton is now in the Chamber. He implied that an aircraft that is sold and leased back is not as efficient as one that is purchased outright by B.O.A.C. If that was not his point, it must be something in the financial arrangements that upsets him.
§ Mr. Leslie Huckfield
I understand that during my absence the hon. Gentleman referred to an airport in my constituency, but there is no airport in my constituency. When I was talking about the leasing of aircraft, I was referring to the fact that the Air Transport Licensing Board had in every case turned down transatlantic applications precisely because the airlines concerned were doing too much leasing and did not have the capital.
§ Mr. Burden
That was not what the hon. Gentleman said. He is trying to be too clever when he refers to remarks made by me which he did not hear. I was stationed at Bramcote, which he will find was a bomber aerodrome during the war just outside his constituency.
§ Mr. Burden
It is just outside the outskirts of Nuneaton. I think the hon. Gentleman will agree to that.
The Air Transport Licensing Board has to assure itself of the financial viability of an airline that asks for operational routes. The hon. Gentleman has admitted that there is nothing against 496 aircraft which are sold and leased back. If a company can do this and get the licence, there is nothing wrong in it, it is a good commercial operation. Although the hon. Gentleman may not like it, much equipment right across the industrial board is sold and leased back or bought on hire purchase. This is a completely fallacious argument. With great respect to the hon. Member for Nuneaton, Mr. Laker knows more about flying and about running airlines and making a profit out of them than the hon. Gentleman will ever know as long as he lives.
§ Mr. Burden
They wished to sell out because at that time they could not see the future they wanted. But now the right hon. Gentleman quite properly has made clear today, in no uncertain terms, that the Government's policy is for a second-force airline. We on this side of the House welcome it as I am sure in their hearts do many people in management in the nationalised corporations.
This proposal was not put forward by hon. Members in this House but by a high level committee, the Edwards Committee, which went thoroughly into the matter. Whatever hon. Gentlemen may think about a second-force airline, that committee studied the matter thoroughly, far more thoroughly than any Member of this House could possibly examine it.
§ Mr. Burden
Again, the hon. Member for Nuneaton is being a little patronising, as he was in his speech. If he thinks that he is in a position to understand the airline industry and report upon it more effectively than did the Edwards Committee, I suggest that he starts to instruct his right hon. Friend.
The position is that several Members below the Gangway opposite are absolute out-and-out extreme Socialists. They want to see everything possible nationalised. They want to see nationalisation of all the means of production. That is their fundamental philosophy and belief. Thank heavens, that in the airline industry at 497 least it is not the philosophy of the Government. The Government are right in refusing at this stage to give their blessing to the purchase of B.U.A. by B.O.A.C. The way is now open for the creation of a real second-force airline through a merger of B.U.A. and Caledonian, and I hope that the Laker enterprise will be included in it.
I hope that this will happen for a very good reason. The two together would provide one of the most dynamic managements possible in this country—far more dynamic and impressive than anything the hon. Member for Nuneaton could do.
§ Mr. Burden
If the hon. Member for Nuneaton is so sure of his facts about how to run an airline, I suggest it would do him good to try to start one. Then the public would have to suffer.
What is necessary from the beginning is that the right hon. Gentleman should give a clear undertaking that the second force will have a viable route structure which will provide good utilisation with fair chances of profitability. This is necessary for the re-equipment that they must undertake in the seventies moving into the period of the jumbos and the supersonics. But if they are to do that it is necessary for the Government to make clear that the utilisation will occur on routes that could provide good profit-ability. If there is such a guarantee, there will be no difficulty whatever in coining the money necessary for the re- equipment. Even if £70 or £80 million were required for finance, that could be found if those who had the money could be encouraged into the project by the possibility of profitability.
Hon. Gentlemen opposite have stated that this will cut into the profits of nationalised corporations. Nobody on this side of the House wishes to see the power and effectiveness—
§ Mr. Burden
One hon. Gentleman opposite earlier in the debate said that we on this side looked like a lot of Cheshire cats over the Minister's statement. The hon. Member for Nuneaton looks rather like a Cheshire cat whose milk has gone sour.
498 Why do the Government want a second force airline? This is what they say in the White Paper:Civil aviation is one of the world's fastest growing industries. The output of the industry on international scheduled services alone grew at an average rate of 17 per cent. a year over the last ten years, or more than doubled every five years. Part of this growth was accounted for by new airlines and those which were catching up from a late start, with the result that the relative share of British airlines like those of the United States, declined over this period.There is the real reason that the Government want to see a second force airline. Because it is impossible for B.O.A.C. or B.E.A. to capitalise fully on the growth that is now taking place and will continue in the years ahead in passenger traffic. There is also a tremendous growth in freight. If this country has any future its performance in the air is just as important to its future as was the mercantile marine in the past. We must not take a narrow line as to whether the corporation should belong to the State and deny to private industry the right to participate. If we are straightforward we must in our hearts believe that what really matters is that Britain should take an increasing part in a tremendous growth industry.
What is said in the White Paper is very germane to the whole debate and it is this:The contribution made by British airlines to the nation's economy depends on their continued growth and prosperity.If we can have a second-force airline, that growth and prosperity will play a great part in the economic future and stability of this country.
I turn finally to the objectives in the White PaperIn any statement of the objectives of British civil aviation policy there is a need to strike a balance which allows the industry to plan with reasonable confidence and continuity, without imposing a crippling rigidity.I am glad that that statement appears in the White Paper. I have know the right hon. Gentleman for a long time and I think that sentence was inserted with good reason. It makes sound common sense. If that is made known in the terms of reference of the new licensing body there will not only be a useful second-force airline, but it will be a successful airline which will bring credit to this country. I was greatly encouraged by the fact that the right hon. Gentleman 499 this afternoon made clear that neither he nor the Government would be bullied by Mr. Clive Jenkins. If any member of the trade unions in this country needed a swift kick in the pants that person is Clive Jenkins, and I am grateful that the Minister has administered one this afternoon.
§ 8.30 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I had no intention of intervening in the debate but, having heard my right hon. Friend's statement and some of the remarks of hon. Gentlemen opposite, I feel compelled to make a contribution.
I want to assure the hon. Member for Gillingham (Mr. Burden) that I do not regard him and his hon. Friends as Cheshire cats. I have always regarded them as a row of extinct volcanoes. They may have had fire in their bellies at one time, but they have not much left now, except when it comes to the defence of private enterprise, their own interests and what they hold near and dear to them. In the defence of private enterprise, the extinct volcanoes have a few rumblings left. They are only too keen to rise to its defence, irrespective of the arguments involved and the issues being discussed.
I thought that my right hon. Friend's statement was exceedingly disappointing, and I can understand the joy which has been expressed by hon. Gentlemen opposite. While we have not had any definitive statement to the effect that the proposed merger between B.O.A.C. and B.U.A. is dead for ever, I take it from my right hon. Friend's statement and the joy of hon. Members opposite that it is felt that private enterprise will get a boost from the decision to hold back the merger.
Like the hon. Member for Orpington (Mr. Lubbock), I do not think that the second force proposal is sacrosanct. Despite the White Paper, we are not tied to it. This House has not discussed the White Paper. We have not had an opportunity to express our views. We have not discussed the Edwards Report. We have had no opportunity of saying what we, as Socialists, feel about the second force.
Some of my hon. Friends—I hope all of them—are Socialists. As a Socialist, 500 I do not apologise for believing in public ownership. I want to see its extension and expansion because I believe that we should have a classless society where people run our industries on the basis of their ability and not that of the class from which they come.
§ Mr. Onslow rose—
§ Mr. Heffer
The hon. Member for Woking (Mr. Onslow) need not try to interrupt me, because I will not accept an interruption from him. I regard him as an objectionable and obnoxious anomaly.
§ Sir K. Joseph
The hon. Member for Liverpool, Walton (Mr. Heffer) is an adequate enough debater to be able to do without personal comments of that sort.
§ Mr. Heffer
I listened the other day to the hon. Member for Woking making reference to one of my hon. Friends on the Front Bench. His every statement was objectionable and obnoxious—
§ Mr. Heffer
He made all sorts of accusations, and came near to calling my hon. Friend a liar. I will not accept that sort of thing from hon. Gentlemen opposite.
I cannot understand why the right hon. Member for Leeds, North-East (Sir K. Joseph) does not say that the Opposition do not intend to push this Motion to a vote—
§ Mr. Heffer
I am not surprised, because they have gained a great deal. We have been told that the Government will not succumb to threats from the workers, yet they seem to have succumbed to threats from the Opposition.
§ Mr. Heffer
I accept what my right hon. Friend says. However, it was fairly clear what the Opposition would do, just as it was clear from the tremendous amount of propaganda and the developing Press campaign that they were directing their threats at the Government.
501 As I have said, I believe in the extension and expansion of public ownership. I want to devote a few moments to the situation where the workers threaten the Government and demand more nationalisation. I have never heard so much rot spoken about this as we have heard in the last few days. When the working conditions of employees are at stake, have they no right to say by whom their industry should be owned? Did not the miners have the right to demand public ownership of their industry so that they might work in safe mines and have decent working conditions, with pit-head baths and other amenities which they did not have under private enterprise? Do not air crews and airport workers have the right to say that they want decent conditions in a publicly-owned industry rather than those which they had under private enterprise?
Let us consider the record of the independents. I know a little about them, though not as much as the hon. Member for Gillingham. I bow to his knowledge, because he has had some interest in the independents. I never have, except to fly on some of their aircraft at various times—
§ Mr. Heffer
I was just about to mention some of the aircraft. I am glad that the hon. Gentleman has raised that point. There was an independent airline operating from Liverpool called Starways. It went out of existence and was taken over by British Eagle. But what happened to British Eagle, and what happened to its workers? In Liverpool, on one day they were employed. The next day, they were out of work. The hon. Member for Liverpool, Garston (Mr. Fortescue) was good enough to concern himself with their problems and, quite rightly, because many of his constituents and mine found themselves out of work as a result of the failure of British Eagle.
§ Mr. Fortescue
But is it not true that, at the time of British Eagle's financial difficulties, the amount of loyalty and support that it had from its workers in an effort to keep the airline alive was remarkable, praiseworthy and almost unique?
§ Mr. Heffer
That is quite true. It is amazing how the workers are always loyal at such times, whereas we hear the contrary so often from that side of the House that one would imagine that workers are a lot of layabouts who do nothing and have no concern about their employment. When it suits the argument of hon. Members opposite the workers are loyal. When it suits another, they are layabouts, strike-bound and always causing trouble.
§ Mr. Burden
The hon. Gentleman may not know it, but we made arrangements to re-finance the company, but were informed the next morning that the mid-Atlantic licence had been taken away from it. Secondly, on the hon. Gentleman's point about people being discharged from their employment, he will no doubt recall that the Government are closing down Beagle and a shipyard in the north of England which is financed to a considerable extent by Government money and which will involve some 3,600 men being made redundant.
§ Mr. Heffer
I do not accept everything that my right hon. Friend does relating to some industries. The hon. Gentleman knows that very well. However, that does not excuse what happened at that time.
I should like to quote from the Board of Trade Special Review on "The safety performance of United Kingdom airline operators". On page 20, paragraph 70, comparing the safety of the independents with the nationalised publicly-owned airlines, it states:… the accident rates of the independent operators in columns H to N are all higher than those of the combined Corporations and in a number of cases the differences are statistically significant. Consequently it is reasonable to assume that their safety levels were lower than those of the Corporations. In most cases the rates are considerably higher although in the case of accidents per 100,000 stage flights the Independent rate is only about 16 per cent. higher than that of the combined Corporations.That does not sound very much. It depends how one feels about travelling in such aircraft compared with others.
On page 21, paragraph 71 ends:It can also be concluded that the safety levels of the Independent operators in each period, as in the whole period, were significantly lower than those of the combined Corporations.503 Yet hon. Gentlemen come to this House, put their hands on their hearts, and say, "Of course, the publicly-owned industries lose money". Of course, if they give the proper safety levels and conditions—it is like the mines—they can lose money—
§ Mr. Burden rose—
§ Mr. Heffer
The hon. Gentleman has interrupted me a great deal. With respect, I have been interrupted a number of times and I should like some of his hon. Friends to make their contributions today.
I believe that my right hon. Friend must recognise that many of us are bitterly disappointed at his announcement today. We hope that the time that he has given will not be too long but will be reasonable—by "reasonable" I mean about two or three weeks—and that following this time the proposed merger, which I understand was to be finalised today had this decision not been made, should go ahead.
When I hear that 3,000 workers are quite happy in the publicly-owned industry because their working conditions and wages will be better, that in itself is a satisfactory answer as far as I am concerned.
The one union that hon. Gentlemen opposite have been enthusiastic about is B.A.L.P.A. It is interesting to note that B.A.L.P.A. is at this moment representing B.U.A. pilots before the industrial court demanding parity of wages with the pilots of B.O.A.C. So do not let us have any more of this hand on heart business and these great tears being shed about private enterprise. The day that we get fully expanded public ownership in this country I, as a Socialist, shall be perfectly content.
§ 8.43 p.m.
§ Mr. Douglas Dodds-Parker (Cheltenham)
The whole House realises that the hon. Member for Liverpool, Walton (Mr. Heffer) is an extreme Socialist, and, as such, we respect his views. I have listened to the views of extreme Socialists for 25 years—
§ Mr. Dodds-Parker
The hon. Gentleman is more extreme than the President 504 of the Board of Trade over this issue. If he denies it, perhaps they will continue the argument elsewhere.
The hon. Member for Liverpool, Walton, is usually a fair debater, but it is unworthy of him to begin with the kind of smears about "the defence of private enterprise and of our own interests" for which we on this side stand. In the year or so before a General Election, I have become used to that kind of smear being put forward by hon. Gentlemen opposite. However, I make no apology for saying that the free enterprise system has not only kept this country going but has saved this Government—[HON. MEMBERS: "Oh."]—because it is the invisibles that have made the difference, and the export trade not based on nationalised industries but on free enterprise which has done the job and put them straight. These days it is not a question of public ownership, but more a question of management.
The hon. Member for Walton referred to safety regulations. As far as I know, these apply to all airlines, whether publicly or privately owned.
I shall be fairly brief, as a number of my hon. Friends wish to take part in the debate.
I speak with some diffidence because of all the experts present. I start by declaring an interest, because I am chairman and assistant trainee steward of a small non-scheduled air freight service in the Caribbean. Indirectly, the Minister of Housing was responsible for us getting this going because, when he was Colonial Secretary, he asked me to undertake a constitutional survey in the Caribbean. What they wanted out there was not more paper constitutions, but some decent air freight service in particular. The then existing publicly-owned airline was not producing that service.
I shall not go into details, but with some others who were concerned we started a small operation. Although by the Board of Trade's rating we are probably a fifth force, we have great enthusiasm. We have with us members of the Canadian Air Force, of Bomber Command, and others, and we hope that after ten years of effort, using British aircraft and supplies as far as possible, we may be a fourth force. I do not think that we shall threaten the second force which is being discussed today, but in 505 the course of the last four years I have obtained a lot of experience about the operation of the big companies, both privately- and publicly-owned.
I have been interested in this subject since I did the Empire Air Mail scheme in the Secretariat in Khartoum in 1935, one of the most far-sighted, publicly-instigated, but privately-managed operations that the air world has ever seen. I was a great believer in Imperial Airways, which is now B.O.A.C. I have watched its successes, and shortcomings, in the succeeding 35 years. It certainly has plenty to do. As my hon. Friend the Member for Gillingham (Mr. Burden) said, this is the fastest expanding industry in the world—aircraft, air transport operations, and the passengers who go with it. But in an expanding market there is room for all, and there is no need to say that everything must be reserved to B.O.A.C. and B.E.A.
The over-taxation which has gone on under all Governments since the war, the restriction on routes and frequencies, and the non-use of cabotage routes to points of the world within the Commonwealth which we can use without a by-your-leave from I.A.T.A., are some of the things which have to be looked at in operating a second force.
To come to the Motion, and to keep close to it, I make just one or two points. First, I have watched with great interest B.U.A.'s successful development of the United Kingdom airlines in South America, which were abandoned by a nationalised airline for 17 years. I have written to the right hon. Gentleman's predecessor about this. I hope that the right hon. Gentleman will look at this to see whether that airline can be continued down the east coast of South America and back up the west coast and through the Caribbean and the Mid-Atlantic route, because this is a route on which B.U.A. has carried the flag, and will be welcomed, ever since the decease of British South American Airways.
Those who study this industry realise that it is the development of freight which is of such paramount importance in the future. It is estimated that by 1980 up to 80 per cent. of traffic may be freight, rather than passenger. I believe that this area will be of vital importance to this country, and in the Northern Caribbean, 506 where I am concerned, with Bahamas Airways we can between us help collect Caribbean and Central American traffic to the great benefit of this country though the mid-Atlantic route.
This mid-Atlantic route has been neglected in the past by the nationalised airlines. It could have been developed because, with the growing congestion in the North-Eastern part of the United States, over New York in particular, the southern route from Southern California to Texas and Florida could be developed from Miami using the VC-10, an aircraft which has more passenger appeal to date than any aircraft that has ever flown. So on this route there is room for both B.O.A.C. and B.U.A. to expand British services, particularly utilising cabotage routes.
I too should like to pay my tribute to Mr. Freddie Laker for what he has achieved. It is such men who can build up these airlines from fairly elementary beginnings.
The location of Gatwick has been mentioned. For those of us who live in this part of London, and in South-East England, it is far more convenient than Heathrow. If the Government would look at the routes and frequencies, these routes could be developed out of Gatwick to the Continent to the great advantage of decongesting traffic—both air traffic and road and rail traffic, B.U.A., who operate into Gatwick at the moment, could have frequencies and routes developed which would enable them to build up Gatwick and to take some of the load off the future development of Heathrow. An example is the route to Le Touquet. I find Silver Arrow certainly the cheapest. This is not a commercial programme, but it is the most reliable service for example when going to the Council of Europe—for example 4 hours door to door to Paris all the year round. Flying to smaller airports like Beauvais could take some of the traffic off the other air centres near Paris.
A measure of economy could be exercised in having one central booking centre for overseas travel. In Stockholm, I think it was, I noticed that B.O.A.C. was on one corner of the main square, B.E.A. on another, Thomas Cook on another—all three publicly owned—and the older shipping lines on the fourth. Surely there could be a saving of a great deal of 507 accommodation and duplication on all this.
I am delighted that the Government have agreed that the second force can be established. By setting competition and setting standards, a second employer would be so important these days in case of conflicts of personalities in a nationalised industry. This could help the United Kingdom without damaging the corporations, which give excellent services, and can apply the spur of competition to the benefit of us all.
§ 8.53 p.m.
§ Mr. Cranley Onslow (Woking)
This has been a funny old day, really. We have a minute or two left, and I am grateful that I have managed to catch your eye, Mr. Speaker. It was to have been a fairly predictable sort of debate, but what we have had is a demonstration of bad-tempered insolence from the hon. Member for Liverpool, Walton (Mr. Heffer) and, I am afraid I must also say from the hon. Member for Feltham (Mr. Russell Kerr), neither of whom is here—which caused them to stamp out of the Chamber in indignation—
§ Mr. Eric Ogden (Liverpool, West Derby) rose—
§ Mr. Onslow
I will make no further reference to them, so, if the hon. Gentleman will forgive me, I would prefer not to give way—
§ Mr. Onslow
Yes, and if he were here, I would give way to him, but he is not, so I must continue.
We could have put this time to good use today by having a long overdue debate on civil aviation and the Report of the Edwards Committee. No one made this more plain than the President of the Board of Trade himself, because part of his speech, following the excellent introduction of the debate by my hon. Friend the Member for Gloucestershire, South (Mr. Corfield), was clearly withdrawn from some departmental pigeon hole, where it had been kept since last November, in readiness for a debate on the Edwards Report and the White Paper.
The second part of the right hon. Gentleman's speech was the important 508 event of the day. Much as I welcome what the Minister has decided, I must tell him that, to a degree, he has only himself to blame for landing in this predicament. He told us that he was first officially informed at the end of January that B.O.A.C. wished to take up B.U.A.'s offer. If at that time he had made this development public knowledge, the whole matter could have been debated, not in an atmosphere of crisis or great pressure, but with time for all the facts to be brought out, and the important fact that there was misinformation at large would have emerged much earlier in the day.
When the Minister replies perhaps he will explain why things were allowed to go so far behind closed doors. I have a suspicion that the fact that it all became public knowledge was largely accidental and that the intention of the Government was to present the country with a fait accompli in the form of the purchase of B.U.A. by B.O.A.C. having been signed and sealed. But if that is not so, I find it even more strange that public discussion of the matter was not stimulated by the Minister, as it should have been if he sincerely wanted discussion of the White Paper to proceed in the public domain. That should have been his ambition, and it would have ensured that reason would prevail, and that inflated prices could not be charged.
B.U.A. must also take its share of blame in many respects, not least for the extravagant demands that it made when it initially came forward and claimed to take over the whole of B.O.A.C.'s African service. That was not a helpful approach and must have represented a considerable exaggeration of its real needs.
Given that the Minister has taken his decision—and we welcome it—it Is fair to put it to him that some of the attitudes which he has adopted in the past should now be revised. The President of the Board of Trade said that It was not his intention to build fences between one sector and another—between the scheduled and chartered operators—and then he said that he did not intend to stop B.E.A. Air Tours moving into the charter market, which has hitherto been the independents' preserve. The right 509 hon. Gentleman must understand that there are fences erected against charter companies who wish to move into scheduled traffic areas and that these are not simply those which the C.A.B. erect, but some which are his responsibility, for instance.
An article in a recent issue of Flight dealt with the directive sent to many independent airlines telling them that they must limit the British share of inclusive tour flights on the North Atlantic to 1 per cent. of scheduled flights. This has been subject to hostile comment, particularly since the Minister has not referred the matter to the Air Transport Licensing Board.
The sudden access of authority which the A.T.L.B. has acquired as a result of the Minister's latest decision is to be welcomed. One thing that was needed to make the 1960 Act work properly was real power vested in the Board. In the past this has always been denied to the Board for a number of reasons, notably because there was always an appeal to the Minister, who could not always be relied on to make the right decision.
The new arrangement is to be welcomed, and it may be that, if the Board is genuinely independent, we can afford to wait until after the next election for legislation in this sphere. I hope, however, that we will not have to wait, and I look forward to hearing from the Minister that it is still his intention to introduce the Bill for civil aviation, which my hon. Friends have been so anxiously awaiting.
Because of the lack of time I will make only two more points. The first concerns the consumer, who has not always been given the consideration to which he is entitled in this matter. By chance, I received a letter from a constituent today. He writes:In all the current controversy concerning the future of British United Airways little appears to have been said on behalf of the passenger—their customer. I fly regularly to Scotland and long ago abandoned B.E.A. as I found British United so much better.He goes on to list the reasons for that decision. While his view may or may not be shared by other air travellers, as matters stand air travellers between England and Scotland have the opportunity of choice, and genuine competition 510 exists. I am sure that the Minister should want to stimulate that.
I take my second quotation from this week's issue of FLIGHT International, from a column written by a gentleman—or gentlemen—whom I regard as one of the most perceptive critics of the current aviation scene, Mr. Roger Bacon. In his leading paragraph he writes:Mr. Clive Jenkins, a trade union official, is reported by the Daily Mail to have said of private bids to stop B.O.A.C's take-over of B.U.A.:'Let them bloody well try. We will resist them in every possible way, including strike action.'There speaks the true voice of tomorrow's British airline industry—an industry lavishly financed by the taxpayer exclusively in the interests of the unions, filling the air with political hate, bloated cost levels, fare increases, high load factors, unpunctuality, over-booking, strikes, total indifference to the customer, and bad language in that ghastly Welsh accent every time you switch the bloody telly on.Those are not my words but the comment is one which the House may well endorse, with the slight addition that the same goes when the same things are said in Australian, too.
§ 9.1 p.m.
§ Mr. Tim Fortescue (Liverpool, Garston)
One of the more obvious and thus more quoted aphorisms of the Prime Minister has been that Royal Commissions take minutes and waste years. When he first said it, we thought that he meant it as a condemnation of Royal Commissions and other bodies, but we now begin to see that what he meant was that when one wanted years and years to be wasted one appointed a Royal Commission or a Government Committee of some kind. We have seen this more obviously with the Donovan Commission, which was appointed very soon after this Government came to power and on whose report we have not yet had a single piece of legislation. The same criticism can be made of the Edwards Committee, of whose history I should like briefly to remind the House.
As a result of considerable pressure from this side, the right hon. Gentleman the Member for Battersea, North (Mr. Jay) announced, as President of the Board of Trade—that shows how long ago it was—in 1967 that a committee was being esablished to look into civil aviation. The committee was appointed in November, 1967—five months later—and 511 its report was promised for the spring of 1968. In fact, the report was presented in April, 1969. In November, 1969, a White Paper commenting on the report was laid. We are now in March, 1970, and are having our first debate on the report and the White Paper—although on an Opposition Motion about something quite different—and we are now promised legislation on one or two aspects of the report in the summer of this year.
It will be seen that over three years will have been wasted since the then President of the Board of Trade first announced to the House the appointment of the committee, and in those three years absolutely no action has been taken by the Government to help the independent airlines. The committee was to be set up to investigate, among other things, the part which the independent airlines should play in the aviation scene. The committee reported in many ways favourable to the continuation in being of the independent airlines, yet in the nearly three years that have elapsed, the independent airlines, one after another, have gone out of business or have come off scheduled services. We have heard of most of them in this debate. British Eagle has gone. Autair has given up its scheduled services. B.K.S. and Cambrian have been absorbed. B.U.A. is now looking for a buyer. The only result in those three years has been almost the demise of the leading indepndent airlines.
I should like to say a word or two about the domestic air services, because it seems to me that they are in a very parlous state. In paragraph 34 of the White Paper, the Government categorically state:But the main need for the immediate future is to consolidate the position of the second carrier"—that is, British United Airways:on those routes where competing services already exist, with a view to the eventual removal of limitations on the frequency of its services.In his opening speech, much of which we welcomed, the President of the Board of Trade rather skated over the effects on the consumer of competition on domestic routes, pointing out that on the international routes the Corporations had plenty of competition from foreign airlines. But he said very rapidly that on the domestic routes the chief competition 512 was provided by British Railways, another nationalised industry. He appeared to have forgotten that he said in the White Paper:the main need for the immediate future is to consolidate the position of the second carrier on those routes where competing services already exist, with a view to the eventual removal of limitations on the frequentcy of its services.There was considerable inconsistency in the views expressed by the President of the Board of Trade this afternoon and the apparent policy of the Government.
It must be remembered that B.E.A. makes profit on not a single one of its domestic routes. They are all loss-making and all subsidised by the taxpayer, or indirectly by B.E.A.'s international routes. Several years ago I suggested that there is no place for a nationalised airline on domestic routes in this country. One can see the argument for a nationalised flag carrier on the international routes where it would have to compete with large foreign nationalised airlines, but it has always seemed to me that the domestic arena could very properly be left to independent airlines which, as we have seen, are able to make profits in spheres where the nationalised industries do not, as B.U.A. did in South America.
There is no need for British air passengers to be carried in the United Kingdom by a nationalised airline which loses money at the taxpayers' expense. [HON. MEMBERS: "Oh!"] This is true. If there were independent airlines to carry traffic on the domestic trunk routes, that should be encouraged and B.E.A. should be encouraged to get off them because the financial position of B.E.A. would thereby be improved. This aspect of domestic air routes should be looked into again.
As for the second force, about which we have heard so much this afternoon, one must recognise that it is a very difficult problem for the present. It is a classic chicken and egg situation. No second-force airline will be strong enough to compete with B.O.A.C. and the large nationalised flag carriers unless it has important scheduled routes. It cannot get those scheduled routes, according to what the President of the Board of Trade said, until it is large enough to compete with B.O.A.C. It does not get scheduled routes unless it is big enough, and unless it is big enough it cannot have scheduled routes.
513 How can those routes be provided for the independent airlines? The Edwards Committee suggested that some should be provided by depriving the two nationalised corporations of a number of their routes, but in the White Paper the President of the Board of Trade almost categorically refuses to do this. In paragraph 39 he starts by using words which seem to suggest that he will be encouraging by saying:The Government would welcome the emergence, by amalgamation, of such a new airline if it resulted in the strengthening of the industry as a whole.Yet paragraph 41 says:The Government cannot accept that the formation of such an airline should be made conditional upon the transfer to it of a significant part of the Airline Corporations' route networks, as distinct from double designation in appropriate cases.If there is to be a second force, from where will the scheduled routes for that second force come? One or two may come from double designation, as the President of the Board of Trade suggested, but the only obvious one at the moment is the trans-Atlantic route where there are already 19 carriers in fierce competition and where, as he said this afternoon, it would be very difficult for an independent airline to break in starting from scratch. If therefore this new, to-be-created second force is not to have some of the existing routes run by the corporations, it must look for new scheduled routes which have not yet been taken by the nationalised airlines. But, as everybody knows, the nationalised corporations have already taken unto themselves, with the encouragement and blessing of the A.T.L.B. and of the President of the Board of Trade, all the plum schedule routes which exist in the world anyway. So there is nowhere at all for the independent airlines to go.
Whoever heard of B.O.A.C. being refused a good route for which it applied? Whoever heard of the A.T.L.B. turning down an application from B.O.A.C. or B.E.A.? They always get what they want, but the independents, when they apply in competition with the nationalised airlines, are always left with the dirty end of the stick and always get the minor routes, whereas the Corporations get the major routes. It is only when the corporations have failed to make a go of the routes—as B.O.A.C. did in South America—and give them 514 up that they are handed over to an independent airline which promptly makes them profitable.
§ Mr. Leslie Huckfield
The hon. Gentleman has conveniently forgotten to mention first the very unprofitable old Imperial Airways routes in various parts of the world, which B.O.A.C. simply had to take over, and second the services to the Highlands and Islands which B.E.A. has to provide, all loss making and without subsidy.
§ Mr. Fortescue
First, the hon. Member for Nuneaton (Mr. Leslie Huckfield) talked of Imperial Airways. It is really fascinating that the party opposite always talks about the past when it should be thinking of the future. It is one of the characteristics of the Labour Party that it loves to dwell on the 1920s and 1930s. We are talking about the 1970s. As for the Highland and Island routes, I asked the President of the Board of Trade in the House the other day whether he would accept applications from independent airlines to take over these unprofitable routes from B.E.A. I was howled down by hon. Members opposite almost before I got my question out, and the President of the Board of Trade gave me a dusty answer. For some reason B.E.A. likes to keep hold of these unprofitable routes because it likes to have the power to its elbow.
§ Mr. Fortescue
If that is not so, why does B.E.A. insist on continuing to fly on loss-making domestic routes?
§ Mr. Leslie Huckfield
The hon. Gentleman knows very well that if in future an independent takes over those loss-making services it will know through the White Paper that it will get a subsidy.
§ Mr. Fortescue
That just is not logical. B.U.A. took over the South American route upon which B.O.A.C. was making a loss without a subsidy and it made a profit.
§ Mr. Fortescue
The hon. Gentleman cannot have it both ways. This is what happened. This is a fact. It is what did happen and not what might happen. The hon. Gentleman can shake his head until the cows come home but he is wrong. We 515 have a situation on the route pattern which the Biblical quotation fits more perfectly than any other. Adapting it slightly—"To him that hath shall be given and from him that hath not shall be taken away even that which he thinketh he hath". This is precisely what happens with the "haves" and "have nots" in the air route pattern of this country. The big boys who have all the routes get the others that come up and the little boys who do not have any scheduled services never get anything for which they apply. So the President of the Board of Trade must make up his mind how this second force is to be created. He has agreed that it should be created, but he says that it cannot have any of the corporation's routes. This does not show any consistency at all. He cannot create the second force without there being new routes for it, and without the new routes the second force will not come into existence.
§ Mr. Arthur Lewis (West Ham, North)
The hon. Gentleman has paid tribute to B.E.A. for the good job it does on its external international routes, and he has said that it is making a loss on internal or domestic routes, even with a subsidy.
§ Mr. Fortescue indicated dissent.
§ Mr. Fortescue
I do not blame him, but the hon. Gentleman cannot have been listening to me. I have explained that, because B.U.A. has been running its affairs in South America more efficiently than B.O.A.C. did, because it cut its overheads, and because it obtained permissions from South American Governments which B.O.A.C. was unable to obtain, it was able to make a profit where B.O.A.C. made a loss. If a private enterprise company with slimmer overheads than a nationalised corporation has can do that in one place, there is no reason why it should not do it in another.
The private enterprise companies operate more for the convenience of passengers. We have heard already today that it is more pleasant to fly internally by an independent airline than by B.E.A. I do 516 not know whether any hon. Gentleman present has ever flown from London to Glasgow, Edinburgh or Belfast by both B.E.A. and B.U.A., but, if there is one such Member present, I should like to know which he prefers. There is no doubt in my mind that every passenger will say that he would rather go by B.U.A. because the service is better. Moreover, the service given by B.E.A. on the domestic routes is now far better than it used to be before B.U.A. was running in competition. That is what competition has done.
I ask the President of the Board of Trade to consider the basic reason why B.E.A. continues to fly on domestic routes at a loss to the taxpayer. Why should this not be examined again, in the light of the necessity to create a second force? Second, will he explain, now or at another stage, how he imagines that a second force can be created without routes for it being taken from the Corporations?
§ 9.18 p.m.
§ Sir Keith Joseph (Leeds, North-East)
As my hon. Friend the Member for Woking (Mr. Onslow) said, this has been a relatively unusual Parliamentary day. We welcome the change of policy announced by the President of the Board of Trade. We do not rejoice at the background to his change of policy. The right hon. Gentleman used strong words. He said that he had been seriously misled in a certain conversation which he had had. Generally, in most aspects of life, there are two sides to any question, but we presume that the President of the Board of Trade weighed those grave words seriously.
We do not welcome that background, but we do rejoice that the Minister, finding that he had made a provisional decision on what turned out to be a misunderstanding, and that there was a chance of a potential second force being born, has withdrawn his provisional approval to the B.O.A.C.-B.U.A. merger. We are glad that the Minister has in substance, therefore, accepted the main purpose of our Motion.
In the light of that acceptance of the main purpose of our Motion, I shall not advise my right hon. and hon. Friends to take the matter to a vote tonight, and, after the Minister of State has spoken, my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) will 517 ask the leave of the House to withdraw the Motion. I think that for that reason the debate will take its place in Parliamentary history, for there cannot be all that number of Motions of censure which have been withdrawn because of an announcement by the Minister opening the debate.
Having paid tribute to the sensible way in which the President of the Board of Trade announced his decision, it remains for me to ask whether perhaps the Minister and the Government could have saved the country and all of us a few days of anxiety and obviated the necessity for the Motion being tabled.
My hon. Friend the Member for Gloucestershire, South, said that he took the first opportunity he could after the announcement of the B.O.A.C.-B.U.A. discussions to visit the Minister of State, because he could not believe that the President would have approved, even provisionally, of any such merger if he had known that there was any possibility of a Caledonian-B.U.A. agreement. My hon. Friend expressed his full acceptance that the Board of Trade had no knowledge of what now emerges as parallel discussions between Caledonian and B.U.A.
He warned the Minister of State of them. He entirely accepted, as he explained in his speech, the Minister of State's assurance that he knew nothing about them. The question remains for the House to consider whether the President himself, for whom the decision was, having been warned by his right hon. Friend the Minister of State, could have taken an earlier opportunity to tell the House, the country, and all those concerned that, in the light of the possibility of agreement between B.U.A. and Caledonian, he would withdraw his provisional acceptance of the B.U.A.B.O.A.C. merger.
Having failed to act on that information, the President can scarcely blame the Opposition if we table a Motion of censure. He has explained to the House that the Government reached their decision before the Motion of censure was on the Order Paper. Had the announcement been made earlier, there would have been no need for a Motion of censure.
518 We on this side join the President in the unstinted tribute he paid to B.O.A.C., to B.E.A., and to the independents. However, because B.O.A.C. and B.E.A. are world-famed, established, great, airlines, with innumerable achievements and high performance to their credit, and because the Edwards Report largely focuses on the structure of the industry, the debate has tended to concentrate on the independents.
All of us can confess—some of us with sorrow, a very few of us with satisfaction—that the climate for the independents in the last few years has been discouraging. My hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) mentioned the relationship between A.T.L.B. and the independents and the havoc that the Board's unpredictable decisions have played in the expectations and life span of the independents. Nearly all of us regret the passing of British Eagle and a number of other independents.
The President boasted that the Government, in setting up the Edwards Inquiry, had set in hand the first independent inquiry into civil aviation since the war. So be it; let the Government have the credit for that. One of the benefits of setting up an independent inquiry was surely to wipe the slate clean of the mistakes that had been made before—mistakes made by both parties, because it is true that under a Conservative Government agreement was refused to the Cunard-British Eagle licence application. Under the present Government, when the present Chancellor of the Exchequer was Minister of Aviation, the independent airlines were denied any hope of ever getting a sniff of a scheduled air route licence.
Because the independents have had such a discouraging climate, it has become all the more important that the post-Edwards treatment of them should create a new climate. The Edwards Report raised many important issues and the President of the Board of Trade chose today's debate to deal with some. The hon. Member for Orpington (Mr. Lubbock) chided the Opposition for failing to concentrate on the Edwards Report today. The House will recognise that it is for the Government to find time to debate a report resulting from a Committee of Inquiry set up by them. We on this side of the House have constantly urged the Government to find time for a 519 debate on Edwards and on their White Paper. It is not for us to be chided if the House has not had the opportunity to debate Edwards or the White Paper.
The essence of Edwards for today's debate can be found in a single sentence on page 260 where the Report, which was unanimous, says:… we would like to see in this expanding industry a substantial and efficient additional source of airline innovation and management.For shorthand purposes we are apt to refer to this additional innovation and management as competition. Hon. Members who pointed out that there is ample competition for B.O.A.C. in many of the international routes are right. The word "competition" is a shorthand we use for the stimuli that comes to any industry when there is access for newcomers and scope and encouragement for innovation and enterprise. B.O.A.C. and B.E.A. in their continental activities, are already in fierce competition, although not everywhere because where pool arrangements operate the pressures of competition are alleviated. There was no competition for B.E.A. on domestic trunk routes.
Hon. Members have paid tribute to the benefits that competition on the domestic trunk routes has brought to the British traveling public.
§ Sir K. Joseph
Edwards is particularly strong about this. It says, at page 120:All the intevention, interference, efficiency audits, etc., in the world will never be as effective a spur to efficiency as the prospect of losing business to others who serve the customers better either in price or in service.The evidence of public choice is that both B.E.A. and the independents have improved their service to the public on the domestic trunk routes. There is ample scope for increased enterprise and innovation elsewhere. B.U.A. took up the B.O.A.C. South American service and made a profit where B.O.A.C. had lost money. The hon. Member for Nuneaton (Mr. Leslie Huckfield) said that this was explained because B.U.A. got a higher frequency of operations than B.O.A.C. Edwards paid tribute to the skill of B.U.A. in converting a route loss into a profit without ever mentioning the qualification which the hon. Gentleman introduced.
§ Mr. Leslie Huckfield
The right hon. Gentleman knows very well that B.O.A.C. was operating that route with Comets and wanted to operate it with V.C.10s but never had the frequencies that B.U.A. got.
§ Sir K. Joseph
I rest on the fact that, knowing all these things, Edwards unanimously gave credit to B.U.A. for the transformation. The independents also deserve credit for pioneering the inclusive tour market. All that we are saying, and the Government are accepting it in their White Paper, is that every industry including the airline industry benefits from additional sources of commercial, entrepreneurial, technical innovation and enterprise. This is not because B.O.A.C. and B.E.A. are lacking these qualities but simply because the scope for increasing them brings benefits to the public and the nation.
I must take a moment to refer to the allegations made about the safety record of the independents. I am not an expert in this subject and I have to reply on the Edwards Report. It is clearly shown, on page 207, that while the other airlines who are grouped together and who do not include British Eagle or B.U.A., and who flew a much smaller number of miles, have a worse record than the nationalised airlines, B.U.A. has a better safety record than B.E.A., although worse than B.O.A.C. The allegations of low safety standards in the independent world—
Mr. Deputy Speaker (Mr. Harry Gurlay)
Order. When Mr. Deputy Speaker is on his feet the right hon. Gentleman and the hon. Gentleman should resume their seats.
§ Sir K. Joseph
The Government accept the second force in their White Paper. We feared that the President of the Board of Trade would prove faithless to his own White Paper and that it would turn out to be mere lip service to the theme of innovation, access for newcomers, and competition. A second force may not come about. We on this side of the 521 House hope that it will, and so do the Government. The hon. Member for Nuneaton does not. He depicts the nationalised corporations as nervous giants afraid of the pigmy independents. He gives us a picture of timidity and lack of self-confidence which we are sure is not really true. We are sure that B.O.A.C. and B.E.A. have ample self-confidence, based on their great records, not to he frightened of a second force. We agree with the Edwards Committee when it says on page 107 of its report that it believes that… a second force can be made viable … without serious adverse effect on B.O.A.C.Obviously, the Government, with all the careful qualifications in their White Paper, accept that point of view in general.
We are very glad that the Government are standing by their White Paper and that the Minister gave a firm reply to Mr. Clive Jenkins. I want to make it plain that we on this side of the House entirely accept that the implications for workers of any change of management are an absolutely legitimate factor to be taken into account by those who make a decision on that change of management, and that it is entirely legitimate that those who represent the employees should make their views known. What we quarrel with, and what I think the Government quarrel with, is the threat of strike action to see that the Government do or do not do any particular thing.
§ Mr. Russell Kerr
Does the right hon. Gentleman agree that on average B.U.A. workers are £7 to ££8 a week worse off than B.O.A.C. workers?
§ Sir K. Joseph
That is absolutely legitimate as a subject for the knowledge of all those concerned. It is not a legitimate subject for the threat of a strike, not against the employers but against the public interest and the Government elected by the people as a whole. It is an attempt to coerce the duly-elected Government of the people. That is why the President of the Board of Trade is right not to accept such coercion. [Interruption.]
§ Sir K. Joseph
But we have to ask who encouraged the present situation, who set the climate in which Mr. Clive Jenkins 522 made his threat. We have to ask why first the dockers and now Mr. Clive Jenkins threaten strikes.
§ Sir K. Joseph
The farmers have not theatened to withdraw their labour. They are spending their leisure time demonstrating, and doing so peacefully.
We are here seeing yet another consequence of the Prime Minister's capitulation to trade union pressure last summer—[Interruption.]—a capitulation that has caused what the right hon. Lady the First Secretary describes as an avalanche of wage claims and a capitulation that has encouraged threats of coercion, of which we are complaining.
We recognise that the disputes going on at Heathrow are quite unconnected with threats of coercion, but because the news this evening is so contradictory we would be grateful if the Minister would tell us the latest position known to the Government about the state of play in connection with the strike at Heathrow.
We rejoice that the Government have accepted the substance of our Motion. We hope that the Minister will answer the points made in the debate and, after he has spoken, my hon. Friend the Member for Gloucestershire, South will seek leave to withdraw the Motion.
§ 9.36 p.m.
§ The Minister of State, Board of Trade (Mr. Goronwy Roberts)
This has turned out to be a useful debate. The Motion was never necessary and, in the event, the debate has established with great clarity how consistently the Government have pursued the policy set out in the White Paper.
Some of my hon. Friends may disagree with the White Paper. That is for them to say. A statement of Government policy is enshrined in the White Paper and the essence of what my right hon. Friend said in rebuttal of the Motion—I repeat it tonight—is that we have been consistent in our support of that policy.
While the White Paper follows the Edwards Report very closely indeed, it differs in two important respects. One is the decision to establish an Airways 523 Board instead of a loose Holdings Board as proposed by the Committee. The other, which is directly relevant to the Motion, is the decision that the formation of a second-force airline cannot be made conditional on the transfer of any significant part of the public air corporations' route network. If any hon. Member has not read that, I emphasise it. We are for a second force on the conditions set out in the White Paper, and the major condition is that it should not rest on a significant transfer of routes from the publicly-owned air corporations.
The debate has demonstrated the emptiness of the Motion. [Interruption.] It is entirely for the Opposition whether to withdraw or vote on the Motion. The Motion does not in any way challenge the Government's policy, and hon. Gentlemen opposite do well not to challenge it. This is something for which the industry has been in genuine need for a long time because it is something that previous Administrations completely failed to provide.
The Motion accuses the Government of undermining their own policy by saying that the proposed purchase of B.U.A. by B.O.A.C. was acceptable in principle. But there was never any question of the Government undermining their own policy. If the policy was being undermined, then this was the result of events—and of one event in particular, which was the decision of British and Commonwealth to sell out.
As my right hon. Friend made clear, the Motion ignores the fact that it was British and Commonwealth which approached B.O.A.C. It also ignores the fact that it was British and Commonwealth which led us to believe that there was no prospect that this aspect of the Government's policy, as stated in the White Paper—the possibility of a second force—could be achieved. We now know that this was not so. Surely, if anyone was undermining the White Paper, it was the leading independent operator who chose to sell out to a public corporation. The Opposition's censure has been delivered to the wrong address.
It is no answer to say, as some Members opposite have tried to say, that British and Commonwealth was forced into the action it took. The Opposition 524 cannot have it both ways. If B.U.A. concluded, because of the White Paper policy, which the Opposition do not challenge, and which precluded a significant transfer of routes, that it saw no future in a merger, as envisaged in the White Paper, why then did it engage in prolonged and serious negotiations with Caledonian throughout the period in which it was offering itself for purchase by B.O.A.C.? Either it believed that there was no future without guaranteed substantial routes or that there was a future in joining up with Caledonian, even though the routes were not guaranteed.
§ Mr. McMaster
In a business like this, is not there the alternative of seeing who will give the highest price for the airline?
§ Mr. Roberts
I do not think that interjection is relevant. In any case, it would be a fruitless policy, unless the airline believed that it could make a go of it with Caledonian even though it would not have the routes it wanted.
It is well to remind the House of what B.U.A.'s ambitions were. B.U.A. proposed to the Edwards Committee that a very substantial proportion of B.O.A.C.'s routes should be carved off and given, not to an amalgamation of independent airlines, but to B.U.A. alone. The least of its five alternatives was that the whole of B.O.A.C.'s African network should be transferred to it. This is one of the more profitable parts of B.O.A.C.'s total network that supports B.O.A.C.'s efforts elsewhere in the world. What is more, B.U.A. wanted these transfers to be guaranteed before it put in any of its own money. How could any Government do this? Is this what the Opposition really want?
Granted that no prospect of a merger was in sight, and granted that the alternatives for British and Commonwealth were either to sell out to B.O.A.C. or to close down, then the purchase of B.U.A. by B.O.A.C. would clearly be the better of those two alternatives, and one to which no objections of policy could be made. It would not be the result envisaged in the White Paper, but it would, at least, ensure that B.U.A.'s important routes continued to be properly served, and that 3,000 jobs were not put in peril.
A takeover, either by a public Corporation or by a private company, would set 525 up certain difficulties, and the hon. Member for Orpington (Mr. Lubbock) has pointed to them. I wish to assure him that the Government have no desire to see the disappearance of competition on the domestic trunk routes that are at present served by B.E.A. It does not follow, however, that this would have been the final and inevitable result. It is perfectly feasible, as my hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield) pointed out, for competition to ensue between the two public corporations, B.O.A.C. and B.E.A. Indeed, competition is growing between British Rail and B.E.A. As my right hon. Friend pointed out, British Rail is fighting back. This is competition between two nationalised transport undertakings. Just as competition is possible between British Rail and B.E.A., so would competition be possible, if B.O.A.C. took over B.U.A., between B.O.A.C. and B.E.A. on the domestic trunk routes. The A.T.L.B. can license another airline to serve these routes in competition with B.E.A., and licences have been applied for by Caledonian. This is possible now and is being done. Caledonian has applied for a revocation of licence from B.U.A. which is currently running the routes. Caledonian has now done that. It would be equally possible for B.O.A.C. to arrange with B.U.A. to run this particular airline if no other airline applied to the A.T.L.B. for transfer of one or more of these routes. They would have to prove their case and it is possible for them to do so.
This brings me to a point which was made by the hon. Member for Woking (Mr. Onslow). He mentioned the rôle of the A.T.L.B. as an agency that would govern the monopoly position. This question could be referred to the Monopolies Commission. The Government have a discretionary power which may be used in regard to this or any other industrial matter of this magnitude. I join with those who think that this is not necessary as the procedures of A.T.L.B. can sufficiently deal with the question of monopoly or competition because A.T.L.B. operates on a wide remit. This to many of us is a reason for thinking that it must be reformed, but to many more it is a source of strength to which A.T.L.B. could address itself in hearing an application to consider questions such as the public interest and 526 the monopoly arrangements on a particular line.
The Motion before the House urges that the establishment of a second-force independent airline should not be frustrated by the implementation of the proposal that B.O.A.C. should take over B.U.A.—or, to put it another way, that we should not allow British and Commonwealth to frustrate the White Paper policy. I can only quote what my right hon. Friend said with crystal clarity earlier today in pursuance of the White Paper policy. He said:… it is clear that my proper course is to withhold approval from the investment proposal put to me by B.O.A.C. until the situation has been clarified.This is not to prejudge the ultimate destiny of B.U.A.
§ Mr. Speaker
Order. It is always difficult for hon. Gentlemen to address the House against a background of a number of conversations.
§ Mr. Arthur Lewis
On a point of order. Is it not the usual custom in a debate in the House to hear arguments for and against a Motion, with the Chair usually calling for a speaker for the Motion and one against? But when there is unanimity, can the Question not just be put so that we may get on with the next business, which is much more important than this? There is no argument on this Motion and there is no debate.
§ Mr. Roberts
What my hon. Friend regards as unanimity in the House is a broad consensus in favour of the White Paper policy.
§ Mr. Roberts
That is the policy which my right hon. Friend sustained as soon as he realised that the circumstances were such that he ought to redress the position so that this policy could reasonably go forward.
Returning to the Motion, there is a final reference to the threat of industrial action. What my right hon. Friend has said conclusively shows that there has not, is not and there will not be any question of the Government's policy being affected by threats of this kind. This is 527 quite definite. This is a parliamentary democracy. It is also a country where our trade unions have every right to press the claims of their members. My hon. Friend the Member for Feltham (Mr. Russell Kerr) rightly pointed to a marked disparity in the wages paid to the employees of B.U.A. as compared with those paid in the nationalised corporations. It is right that trade unions and their leaders should point to these disparities and argue for reform. They would have the support of everyone in putting forward their case, but they would have no support from anyone in endeavouring to influence Parliament and the Government of the day by industrial action.
§ Mr. Sydney Bidwell (Southall)
Since I have constituents involved, will my right hon. Friend assure us that in his reconsideration of the problem the attitude of the bulk of the staff affected will weigh heavily with him?
§ Mr. Roberts
This is a matter which must be taken into account, but what my hon. Friend regards as being a one-way opinion may not turn out to be the position.
§ Mr. Roberts
We shall have to weigh all views in deciding what is our best course. In any case, the rôle of a trade union in such a situation is to press its legitimate claims to whoever legitimately takes over or continues the running of that airline.
§ Mr. Roberts
If the hon. Gentleman will forgive me, I will not give way. I want time to refer to the request of the right hon. Member for Leeds, North-East (Sir K. Joseph) for some information on Heathrow.
The accusation has also been made that the problems which we are discussing result from delay on the part of the Government. That is manifestly absurd. This Government inherited the policy vacuum created by our predecessors. This Government tackled the difficult task, which the previous Administration found too difficult, of working out proper objectives and policies for the industry. We set up the Edwards Committee, cer- 528 tainly not as a way of postponing decisions but to help us come to good decisions. Its report was published last spring, and no reasonable person would expect a report of this authority and magnitude to have been produced more quickly. The Government took some months to reach their decisions on it, and no reasonable person could say that they were easy decisions which could or should have baen thrown off in a few weeks. We are now working on legislation which must inevitably be no less demanding of time and of proper consideration. The work is in hand. It is proceeding expeditiously, and we are aiming to produce legislation enshrining the White Paper policy this Session.
There is a tendency on the part of right hon. and hon. Gentlemen opposite to represent themselves in these matters as the champions of the independent airlines. I have no time now to go into that piece of theology. The fact is that the A.T.L.B. procedures have bestowed favours pretty equally between the independents and the public Corporations—
§ Mr. Burden rose—
§ Mr. Roberts
No, I am sorry. I cannot give way to the hon. Gentleman.
I come now to the question which the right hon. Member for Leeds, North-East put to me about the position at Heathrow. I cannot add much to what hon. Members probably know already, except that an inquiry into the current and threatened disruption at London Airport will be set up by the First Secretary—
§ Mr. Speaker
Order. I again remind hon. Members that it is discourteous to carry on conversations whilst the Minister is addressing the House.
§ Mr. Roberts
The First Secretary and the President of the Board of Trade have decided, following consultation with all concerned, to appoint an inquiry into the current and threatened disruption at London Airport. The membership, terms of reference and arrangements for hearings will be announced as soon as possible. The organisations directly concerned have already been informed of the decision to appoint the inquiry.
The employees' side of the N.J.C. for Civil Air Transport did not meet until 529 this afternoon. We have not, therefore, had the benefit of their considered views on the proposed terms of reference or on the background conditions aimed at maintaining the status quo which we hope will enable the inquiry to go forward in an atmosphere of industrial peace. I do not doubt that these matters are being pursued vigorously at this very moment.
Nevertheless we—and I am sure that the House will join me—hope that the decision to hold an inquiry will lead immediately to normal working at the airport and put an end to the disruption of air services and to the deplorable inconvenience and, indeed, hardship which has been suffered by the travelling public.
I should add that we are aware of the allegations that have been made, and we will ensure that the terms of reference are wide enough to permit an investigation into the circumstances in which the contract was let—that is, the contract with G.A.S.——as well as its economic and operational merit. I do not doubt that these matters will be pursued fully at the inquiry. Indeed, the inquiry may propose certain matters to be looked into.
§ Mr. William Molloy (Ealing, North)
Will my right hon. Friend allow representatives of trade unions to appear before the commission or inquiry to state their views?
§ Mr. Roberts
I should expect that to happen. I cannot anticipate the composition of the inquiry. It has still to be set up. However, I should expect that evidence from the sources to which my hon. Friend has referred would be among such evidence that the inquiry would need to consider.
I turn now to the position at the airport tonight. Heathrow closed at 8 p.m. this evening when the fire officers, as they have been doing for the past few weeks, came off. If the fire officers 530 follow I.P.C.S. instructions the airport will stay closed tomorrow—[HON. MEMBERS: "Oh."]—but it is not certain that they will decide to do this. I have been waiting for some message which might make it possible for me to give the House further information—
§ Mr. Speaker
Order. The Chair does not need any help. The hon. Gentleman can withdraw the Motion only with the leave of the House. He does not seem to have leave.
§ Mr. Roberts
I had hoped to be able to give fuller and later information about the position at Heathrow before the debate concluded. That is all that I can say at the moment.
The Government have stood by their White Paper policy. They have not deferred to the Opposition. They are implementing their own policy. No one can say with any certainty what the outcome of these bids may be, but it could be that the B.O.A.C. bid may be the one that is successful.
That this House deplores the approval in principle by Her Majesty's Government of the proposals by the British Overseas Airways Corporation to take over British United Airways, thereby undermining their own policy for civil air transport as stated in Command Paper No. 4213; and urges Her Majesty's Government to ensure that the establishment of a second force independent airline is not frustrated either by the implementation of this proposal or by surrender to threats of industrial action.
§ Question negatived.