§ Amendment proposed: No. 1, in page 1, line 11, leave out "any part" and insert "all the engineering divisions".—[Mr. Benn.]
§ Question put, That the Amendment be made:—
§ The Committee divided: Ayes 252, Noes 291.
935| Division No. 158.] | AYES | [10.3 p.m. |
| Abse, Leo | Broughton, Sir Alfred | Crosland, Rt. Hn. Anthony |
| Albu, Austen | Brown Bob (N'c'tle-upon-Tyne,W.) | Cunningham, G. (Islington, S.W.) |
| Allaun, Frank (Salford, E.) | Brown, Hugh D. (G'gow, Provan) | Dalyell, Tam |
| Allen, Scholefield | Brown, Ronald (Shoreditch & F'bury) | Darling, Rt. Hn. George |
| Archer, Peter (Rowley Regis) | Buchan, Norman | Davidson, Arthur |
| Ashley, Jack | Butler, Mrs. Joyce (Wood Green) | Davies, Denzil (Llanelly) |
| Ashton, Joe | Callaghan, Rt. Hn. James | Davies, G. Elfed (Rhondda, E.) |
| Atkinson, Norman | Campbell, I. (Dunbartonshire, W.) | Davies, Ifor (Gower) |
| Bagier, Cordon A. T. | Carmichael, Neil | Davies, S. O. (Merthyr Tydvil) |
| Barnes, Michael | Carter, Ray (Birmingh'm. Northfield) | Davis, Clinton (Hackney, C.) |
| Barnett, Joel | Carter-Jones, Lewis (Eccles) | Deakins, Eric |
| Beaney, Alan | Castle, Rt. Hn. Barbara | de Freitas, Rt. Hn. Sir Geoffrey |
| Benn, Rt. Hn. Anthony Wedgwood | Clark, David (Colne Valley) | Dempsey, James |
| Bennett, James (Glasgow, Bridgeton) | Cocks, Michael (Bristol, S.) | Doig, Peter |
| Bidwell, Sydney | Cohen, Stanley | Dormand, J. D. |
| Bishop, E. S. | Coleman, Donald | Douglas,Dick (Stirlingshire, E.) |
| Blenkinsop, Arthur | Concannon, J. D. | Douglas-Mann, Bruce |
| Boardman, H. (Leigh) | Conlan, Bernard | Driberg, Tom |
| Booth, Albert | Corbet, Mrs. Freda | Duffy, A. E. P. |
| Bottomley, Rt. Hn. Arthur | Cox, Thomas (Wandsworth, C.) | Dunn, James A. |
| Boyden, James (Bishop Auckland) | Crawshaw, Richard | Dunnett, Jack |
| Bradley, Tom | Cronin, John | Eadie, Alex |
| Edelman, Maurice | Lee, Rt. Hn. Frederick | Price, J. T. (Westhoughton) |
| Edwards, Robert (Bilston) | Leonard, Dick | Probert, Arthur |
| Edwards, William (Merioneth) | Lester, Miss Joan | Rankin, John |
| Ellis, Tom | Lever, Rt. Hn. Harold | Reed, D. (Sedgefield) |
| English, Michael | Lewis, Arthur (W. Ham, N.) | Rees, Merlyn (Leeds, S.) |
| Evans, Fred | Lewis, Ron (Carlisle) | Rhodes, Geoffrey |
| Fernyhough, E. | Lipton, Marcus | Richard, Ivor |
| Fisher,Mrs.Doris(R'ham,Ladywood) | Lomas, Kenneth | Roberts, Albert (Normanton) |
| Fitch, Alan (Wigan) | Loughlin, Charles | Roberts,Rt.Hn.Goronwy(Caernarvon) |
| Fletcher, Raymond (Ilkeston) | Lyon, Alexander W. (York) | Robertson, John (Paisley) |
| Fletcher, Ted (Darlington) | Lyons, Edward (Bradford E.) | Roderick, Caerwyn E.(Br'c'n&R'dnor) |
| Foley, Maurice | Mabon, Dr. J. Dickson | Rodgers, William (Stockton-on-Tees) |
| Foot, Michael | McBride, Neil | Roper, John |
| Ford, Ben | McCartney, Hugh | Rose, Paul B. |
| Freeson,reginald | McElhone, Frank | Ross, Rt. Hon. William (Kilmarnock) |
| Galpern, Sir Myer | McGuire, Michael | Sheldon, Robert (Ashton-under-Lyne) |
| Garrett, W. E. | Mackenzie, Gregor | Shore, Rt. Hn. Peter (Stepney) |
| Gilbert, Dr. John | Mackie, John | Short, Mrs. Renée (W'hampton,N.E.) |
| Ginsburg, David | Mackintosh, John P. | Silkin, Rt. Hn. John (Deptford) |
| Golding, John | Maclennan, Robert | Silkin, Hn. S. C. (Dulwich) |
| Gourley, Harry | McMillan, Tom (Glasgow, C.) | Sillars, James |
| Grant, George (Morpeth) | McNamara, J. Kevin | Skinner, Dennis |
| Grant, John D. (Islington, E.) | MacPherson, Malcolm | Small, William |
| Griffiths, Eddie (Brightside) | Mahon, Simon (Bootle) | Smith, John (Lanarkshire, N.) |
| Griffiths, Will (Exchange) | Mallalieu, E. L. (Brigg) | Spearing, Nigel |
| Hamilton, William (Fife, W.) | Marks, Kenneth | Spriggs, Leslie |
| Hannan, William (G'gow, Maryhill) | Marquand, David | Stallard, A. W. |
| Hardy, Peter | Marquand, David | Stoddart, David (Swindon) |
| Harper, Joseph | Marsh, Rt. Hn. Richard | Stonehouse, Rt. Hn. John |
| Harrison, Walter (Wakefield) | Mason, Rt. Hn. Roy | Strang, Gavin |
| Hart, Rt. Hn. Judith | Mayhew, Christopher | Strauss, Rt. Hn. G. R. |
| Hattersley, Roy | Meacher, Michael | Summerskill, Hn. Dr. Shirley |
| Hefter, Eric S. | Mellish, Rt. Hn. Robert | Swain, Thomas |
| Hilton, W. S. | Mendelson, John | Taverne, Dick |
| Horam, John | Millan, Bruce | Thomas,Rt.Hn.George (Cardiff,W.) |
| Houghton, Rt. Hn. Douglas | Miller, Dr. M. S. | Thomas, Jeffrey (Abertillery) |
| Howell, Denis (Small Heath) | Milne, Edward (Blyth) | Thomson, Rt. Hn. G. (Dundee, E.) |
| Huckfield, Leslie | Molloy, William | Thorpe, Rt. Hn. Jeremy |
| Hughes, Rt. Hn. Cledwyn (Anglesey) | Morgan, Elystan (Cardiganshire) | Tinn, James |
| Hughes, Mark (Durham) | Morris, Alfred (Wythenshawe) | Tomney, Frank |
| Hughes, Robert (Aberdeen, N.) | Morris, Charles R. (Openshaw) | Torney, Tom |
| Hughes, Roy (Newport) | Morris, Rt. Hn. John (Aberavon) | Tuck, Raphael |
| Hunter, Adam | Moyle, Roland | Urwin, T. W. |
| Irvine,Rt.Hn.SirArthur(Edge Hill) | Mulley, Rt. Hn. Frederick | Varley, Eric G. |
| Janner, Greville | Murray, Ronald King | Wainwright, Edwin |
| Jay, Rt. Hn. Douglas | O'Halloran, Michael | Walden, Brian (B'm'ham, All Saints) |
| Jeger,Mrs.Lena(H'b'n&St.P'cras,S.) | O'Malley, Brian | Wallace, George |
| Jenkins, Hugh (Putney) | Oram, Bert | Watkins, David |
| Jenkins, Rt. Hn. Roy (Stechford) | Orbach, Maurice | Weitzman, David |
| John, Brynmor | Orme, Stanley | Wellbeloved, James |
| Johnson, James (K'ston-on-Hull, W.) | Oswald, Thomas | Wells, William (Walsall, N.) |
| Johnson, Walter (Derby, S.) | Owen, Dr. David (Plymouth, Sutton) | White, James (Pollok) |
| Jones, Barry (Flint, E.) | Palmer, Arthur | Whitlock, William |
| Jones, Dan (Burnley) | Pannell, Rt. Hn. Charles | Willey, Rt. Hn. Frederick |
| Jones, Gwynoro (Carmarthen) | Pardoe, John | Williams, Alan (Swansea, W.) |
| Jones, T. Alec (Rhondda, W.) | Parker, John (Dagenham) | Williams, Mrs. Shirley (Hitchin) |
| Judd, Frank | Parry, Robert (Liverpool, Exchange) | Williams, W. T. (Warrington) |
| Kaufman, Gerald | Pavitt, Laurie | Wilson, Alexander (Hamilton) |
| Kelley, Richard | Peart, Rt. Hn. Fred | Wilson, Rt. Hn. Harold (Huyton) |
| Kinnock, Neil | Pendry, Tom | Wilson, William (Coventry, S.) |
| Lambie, David | Pentland, Norman | |
| Lamond, James | Perry, Ernest C. | TELLERS FOR THE AYES: |
| Latham, Arthur | Prentice, Rt. Hn. Reg. | Mr. Ernest Armstrong and |
| Lawson, George | Prescott, John | Mr. James Hamilton. |
| NOES | ||
| Adley, Robert | Biffen, John | Buchanan-Smith, Alick(Angus,N&M) |
| Alison, Michael (Barkston Ash) | Biggs-Davison, John | Buck, Anthony |
| Archer, Jeffrey (Louth) | Blaker, Peter | Bullus, Sir Eric |
| Astor, John | Boardman, Tom (Leicester, S.W.) | Burden, F. A. |
| Atkins, Humphrey | Body, Richard | Butler, Adam (Bosworth) |
| Awdry, Daniel | Boscawen, Robert | Campbell, Rt.Hn,G.(Moray & Nairn) |
| Baker, Kenneth (St. Marylebone) | Bossom, Sir Clive | Carlisle, Mark |
| Baker, W. H. K. (Banff) | Bowden, Andrew | Cary, Sir Robert |
| Batniel, Lord | Boyd-Carpenter, Rt. Hn. John | Channon, Paul |
| Barber, Rt. Hn. Anthony | Braine, Bernard | Chapman, Sydney |
| Batsford, Brian | Bray, Ronald | Chataway, Rt. Hn. Christopher |
| Beamish, Col. Sir Tufton | Brewis, John | Churchill, W. S. |
| Bell, Donald | Brinton, Sir Tatton | Clark, William (Surrey, E.) |
| Bennett, Sir Frederic (Torquay) | Brocklebank-Fowler, Christopher | Clarke, Kenneth (Rushcliffe) |
| Bennett, Dr. Reginald (Gosport) | Brown, Sir Edward (Bath) | Cockeram, Eric |
| Benyon, W. | Bruce-Gardyne, J. | Cooke, Robert |
| Berry, Hn. Anthony | Bryan, Paul | Coombs, Derek |
| Cooper, A. E. | Hunt, John | Pink, R. Bonner |
| Cordle, John | Hutchison, Michael Clark | Powell, Rt. Hn. J. Enoch |
| Corfield, Rt.Hn. Frederick | Iremonger, T. L. | Price, David (Eastleigh) |
| Cormack, Patrick | Irvine, Bryant Godman (Rye) | Proudfoot, Wilfred |
| Costain,A. P. | James, David | Pym, Rt. Hn. Francis |
| Critchley, Julian | Jenkin, Patrick (Woodford) | Quennell, Miss J. M. |
| Crouch, David | Jessel, Toby | Raison, Timothy |
| Crowder, F. P. | Johnson Smith, G. (E. Grinstead) | Ramsden, Rt. Hn. James |
| Curran, Charles | Jones, Arthur (Northants, S.) | Redmond, Robert |
| Dalkeith, Earl of | Jopling, Michael | Rees, Peter (Dover) |
| Davies, Rt. Hn. John (Knutsford) | Joseph, Rt. Hn. Sir Keith | Renton, Rt.Hn. Sir David |
| d-Avigdor-Goldsmid, Sir Henry | Kaberry, Sir Donald | Rhys Williams, Sir Brandon |
| d'Avigdor-Goldsmid, Maj.-Gen. Jack | Kellett, Mrs. Elaine | Ridley, Hn. Nicholas |
| Dean, Paul | Kershaw, Anthony | Ridsdale, Julian |
| Deedes, Rt. Hn. W. F. | Kilfedder, James | Roberts, Michael (Cardiff, N.) |
| Dighy, Simon Wingfield | Kimball, Marcus | Roberts, Wyn (Conway) |
| Dixon, Piers | King, Evelyn (Dorset, S.) | Rossi, Hugh (Hornsey) |
| Dodds-Parker, Douglas | King, Tom (Bridgwater) | Rost, Peter |
| Douglas-Home, Rt. Hn. Sir Alec | Kinsey, J. R. | Royle, Anthony |
| Drayson, G. B. | Kirk, Peter | Russell, Sir Ronald |
| Dykes, Hugh | Kitson, Timothy | St. John-Stevas, Norman |
| Eden, Sir John | Knight, Mrs. Jill | Scott, Nicholas |
| Edwards, Nicholas (Pembroke) | Knox, David | Scott-Hopkins, James |
| Elliot, Capt. Walter (Carshalton) | Lambton, Antony | Sharples, Richard |
| Elliott, R. W. (N'c'te-upon-Tyne,N.) | Lane, David | Shaw, Michael (Sc'b'gh & Whitby) |
| Emery, Peter | Langford-Holt, Sir John | Shelton, William (Clapham) |
| Eyre, Reginald | Legge-Bourke, Sir Harry | Simeons, Charles |
| Farr, John | Le Marchant, Spencer | Sinclair, Sir George |
| Fell, Athony | Lewis, Kenneth (Rutland) | Skeet, T. H. H. |
| Fenner, Mrs. Peggy | Lloyd, Ian (P'tsm'th, Langstone) | Smith, Dudley (W'wick & L'mington) |
| Fidler, Michael | Longden, Gilbert | Soref, Harold |
| Finsberg, Geoffrey (Hampstead) | Loveridge, John | Spence, John |
| Fisher, Nigel (Surbiton) | McAdden, Sir Stephen | Sproat, Iain |
| Fookes, Miss Janet | MacArthur, Ian | Stainton, Keith |
| Fortescue, Tim | McCrindle, R. A. | Stanbrook, Ivor |
| Foster, Sir John | McLaren, Martin | Stewart-Smith, D. G. (Belper) |
| Fowler, Norman | Maclean, Sir Fitzroy | Stodart, Anthony (Edinburgh, W.) |
| Fox, Marcus | McMaster, Stanley | Stoddart-Scott, Col. Sir M. |
| Fry, Peter | Macmillan, Maurice (Farnham) | Stokes, John |
| Galbraith, Hn. T. G. | McNair-Wilson, Michael | Stuttaford, Dr. Tom |
| Gardner, Edward | McNair-Wilson, Patrick (NewForest) | Sutcliffe, John |
| Gibson-Watt, David | Maddan, Martin | Tapsell, Peter |
| Gilmour, Sir John (Fife, E.) | Madel, David | Taylor, Sir Charles (Eastbourne) |
| Glyn, Dr. Alan | Marples, Rt. Hn. Ernest | Taylor,Edward M.(G'gow,Cathcart) |
| Coodhew Victor | Marten, Neil | Taylor, Frank (Moss Side) |
| Gorst, John | Mather, Carol | Taylor, Robert (Croydon, N.W.) |
| Gower Raymond | Mather, Angus | Tebbit, Norman |
| Grant, Anthony (Harrow, C.) | Maude, Angus | Temple, John M. |
| Gray, Hamish | Maudling, Rt. Hn. Reginald | Thatcher, Rt. Hn. Mrs. Margaret |
| Green, Alan | Mawby, Ray | Thomas, John Stradilng (Monmouth) |
| Grieve Percy | Maxwell-Hyslop, R. J. | Thomas, Rt. Hn. Peter (Hendon, S.) |
| Griffiths, Eldon (Bury St. Edmunds) | Meyer, Sir Anthony | Thompson, Sir Richard (Croydon, S.) |
| Grylls, Michael | Mills, Peter (Torrington) | Tilney, John |
| Gummer, Selywn | Miscampbell, Norman | Trafford, Dr. Anthony |
| Gurden, Harold | Mitchell,Lt.Col.C.(Aberdeenshire,W) | Trew, Peter |
| Hall, Miss Joan (Keighley) | Moate, Roger | Tugendhat, Christopher |
| Hall, John (Wycombe) | Molyneaux, James | Turton, Rt. Hn. R. H. |
| Hall-Davis, A.G.F. | Money, Ernie | van Strauhenzee, W. R. |
| Hamilton, Michael (Salisbury) | Monks, Mrs. Connie | Vaughan, Dr. Gerard |
| Hamilton, John (Exeter) | Montgomery, Fergus | Vickers, Dame Joan |
| Harrison, Brian (Maldon) | More, Jasper | Waddington, David |
| Harrison, Col, Sir Harwood (Eye) | Morgan, Geraint (Denbigh) | Walker, David (Clitheroe) |
| Harvey, Sir Arthur Vere | Morgan-Giles,Rear-Adm. | Walker, Rt. Hn. Peter (Worcester) |
| Haselhurst, Alan | Morrison, Charles (Devizes) | Walker-Smith, Rt. Hn. Sir Derek |
| Hastings, Stephen | Mudd, David | Wall, Patrick |
| Havers, Michael | Murton, Oscar | Walters, Dennis |
| Hawkins, Paul | Nabarro, Sir Gerald | Ward, Dame Irene |
| Hayhoe, Barney | Neave, Airey | Weatherill, Bernard |
| Heath, Rt. Hn. Edward | Nicholls, Sir Harmar | Wells, John (Maidstone) |
| Heseltine, Michael | Noble, Rt.Hn. Michael | Whitelaw, Rt. Hn. William |
| Hicks, Robert | Normanton, Tom | Wiggin, Jerry |
| Higgins, Terence L. | Onslow, Cranley | Wilkinson, John |
| Hiley, Joseph | Oppenheim, Mrs. Sally | Woodhouse, Hn. Christopher |
| Hill, John E.B. Norfolk, S.) | Osborn, John | Woodnutt, Mark |
| Hill, James (Southampton, Test) | Owen, Idris (Stockport, N.) | Worsley, Marcus |
| Holland, Philip | Page, John (Harrow, W.) | Wylie, Rt. Hn. N. R. |
| Hordern, Peter | Paisley, Mr. Ian | |
| Hornby, Richard | Parkinson, Cecil (Enfield, W.) | |
| Horsby-Smlth,Rt.Hn.Dame Patricia | Peel, John | TELLERS FOR THE NOES: |
| Howe, Hn. Sir Geoffrey (Reigate) | Percival, Ian | Mr. Walter Clegg and |
| Howell, David (Guildford) | Peyton, Rt. Hn. John | Mr. Keith Speed. |
| Howell, Ralph (Norfolk, N.) | Pike, Miss Mervyn |
§ The ChairmanI inform the Committee that a Paper showing the manuscript Amendments should now be available to all right hon. and hon. Members in the Vote Office. We come now to Amendment No. 3, in the name of the right hon, Gentleman the Member for Bristol, South-East (Mr. Benn), in page 1, line 15, after "on" insert "on a permanent basis".
For discussion, we shall take at the same time the following two Amendments in the name of the hon. Member for Honiton (Mr. Emery):
No. 4, in page 1, line 15, after "on", insert
for a limited time which shall expire on 31st December, 1975, save as is provided in subsection (2) of this section".No. 5, in page 1, line 19, at end insert:(2) The period during which a Minister may carry on any undertaking acquired under section 1 of this Act may be extended for further periods of 12 months by resolution which shall be subject to the approval of the House of Commons".
§ Mr. R. J. Maxwell-Hyslop (Tiverton)On a point of order——
§ Mr. BennI am on a point of order, too. I had indicated that it was our desire formally to move Amendments 2 and 3 together. Grouping the three makes the matter rather more complicated.
I beg to move Amendment No. 2, in page 1, line 12, after "assets" insert "connected therewith" and Amendment No. 3, in page 1, line 15, after "on" insert "on a permanent basis".
§ The ChairmanOrder. I think the right hon. Gentleman is under a slight misapprehension. Amendment No. 2 has
§ fallen, so now we come to Amendment No. 3.
§ Mr. Thomas Torney (Bradford, South)On a point of order——
§ The ChairmanOrder. May I finish what I have to say and then I shall be glad to listen to the hon. Gentleman. The Amendment we are to discuss reads: In page 1, line 15, after "on" insert "on a permanent basis". With it is the much longer Amendment for discussion—[HON. MEMBERS: "No."]—of the hon. Member for Honiton (Mr. Emery).
§ Mr. Peter Emery (Honiton)On a point of order——
§ Mr. EmeryThe Amendment that I wish to move is in direct contradiction to that of the Socialists. I believe that it would be for the convenience of the Committee if it could be moved separately.
§ The ChairmanWe need not take any time over this. If the Committee wishes it so, it is absolutely entitled to have it so. All that the Chair tries to do is to help the Committee and facilitate matters. If the right hon. Gentleman would like to move his Amendment alone, we shall take it alone and then consider the hon. Gentleman's Amendment.
§ Mr. BennI beg to move Amendment No. 3: In page 1, line 15, after "on" insert "on a permanent basis".
§ Question put, That the Amendment be made:—
§ The Committee divided: Ayes 255, Noes 295.
941| Division No. 159.] | AYES | [10.18 p.m. |
| Abse, Leo | Bottomley, Rt. Hn. Arthur | Corbet, Mrs. Freda |
| Albu, Austen | Boyden, James (Bishop Auckland) | Cox, Thomas (W andsworth, C.) |
| Allaun, Frank (Salford, E.) | Bradley, Tom | Crawshaw, Richard |
| Allen, Scholefield | Broughton, Sir Alfred | Cronin, John |
| Archer, Peter (Rowley Regis) | Brown, Bob (N'c'tle-upon-Tyne,W.) | Crosland, Rt. Hn. Anthony |
| Armstrong, Ernest | Brown, Hugh D. (G'gow, Provan) | Cunningham, G. (Islington, S.W.) |
| Ashley, Jack | Brown, Ronald (Shoreditch & F'bury) | Dalyell, Tam |
| Ashton, Joe | Buchan, Norman | Darling, Rt. Hn. George |
| Atkinson, Norman | Butler, Mrs. Joyce (Wood Green) | Davidson, Arthur |
| Bagier, Gordon A. T. | Callaghan, Rt. Hn. James | Davies, Denzil (Llanelly) |
| Barnes, Michael | Campbell, I. (Dunbartonshire, W.) | Davies, G. Elfect (Rhondda, E.) |
| Barnett, Joel | Carmichael, Neil | Davies, Ifor (Gower) |
| Bewley, Alan | Carter, Ray (Birmingh'm, Northfield) | Davies, S. 0. (Merthyr Tydvil) |
| Benn, Rt. Hn. Anthony Wedgwood | Carter-Jones, Lewis (Eccles) | Davis, Clinton (Hackney, C.) |
| Bennett, James (Glasgow, Bridgeton) | Castle, Rt. Hn. Barbara | Deakins, Eric |
| Bidwell, Sydney | Clark, David (Colne Valley) | de Freitas, Rt. Hn. Sir Geoffrey |
| Bishop, E. S. | Cocks, Michael (Bristol, S.) | Dempsey, James |
| Blenkinsop, Arthur | Cohen, Stanley | Doig, Peter |
| Boardman, H. (Leigh) | Concannon, J. D. | Dormand, J. D. |
| Booth, Albert | Conlan, Bernard | Douglas, Dick (Stirlingshire, E.) |
| Douglas-Mann, Bruce | Kinnock, Neil | Perry, Ernest G. |
| Driberg, Tom | Lambie, David | Prentice, Rt. Hn. Reg. |
| Duffy, A. E. P. | Lamond, James | Prescott, John |
| Dunn, James A. | Latham, Arthur | Price, J. T. (Westhoughton) |
| Dunnett, Jack | Lawson, George | Probert, Arthur |
| Eadie, Alex | Leadbitter, Ted | Rankin, John |
| Edelman, Maurice | Lee, Rt. Hn. Frederick | Reed, D. (Sedgefield) |
| Edwards, Robert (Bilston) | Leonard, Dick | Rees, Merlyn (Leeds, S.) |
| Edwards, William (Merioneth) | Lestor, Miss Joan | Rhodes, Geoffrey |
| Ellis, Tom | Lever, Rt. Hn. Harold | Richard, Ivor |
| English, Michael | Lewis, Arthur (W. Ham, N.) | Roberts, Albert (Normanton) |
| Evans, Fred | Lewis, Ron (Carlisle) | Roherts,Rt.Hn.Goronwy(Caernarvon) |
| Fernyhough, E. | Lipton, Marcus | Robertson, John (Paisley) |
| Fisher,Mrs.Doris(B'ham,Ladywood) | Lomas, Kenneth | Roderick, Caerwyn E.(Br'c'n&R'dnor) |
| Fitt, Gerard (Belfast, W.) | Loughlin, Charles | Rodgers, William (Stockton-on-Tees) |
| Fletcher, Raymond (Ilkeston) | Lyon, Alexander W. (York) | Roper, John |
| Fletcher, Ted (Darlington) | Lyons, Edward (Bradford, E.) | Rose, Paul B. |
| Foley, Maurice | Mabon, Dr. J. Dickson | Ross, Rt. Hn. William (Kilmarnock) |
| Foot, Michael | McBride, Neil | Sheldon, Robert (Ashton-under-Lyne) |
| Ford, Ben | McCartney, Hugh | Shore, Rt. Hn. Peter (Stepney) |
| Fraser, John (Norwood) | McElhone, Frank | Short, Mrs. Renée (W'hampton,N.E.) |
| Freeson, Reginald | McGuire, Michael | Silkin, Rt. Hn. John (Deptford) |
| Galpern, Sir Myer | Mackenzie, Gregor | Silkin, Hn. S. C. (Dulwich) |
| Garrett, W. E. | Mackie, John | Sillars, James |
| Gilbert, Dr. John | Mackintosh, John P. | Skinner, Dennis |
| Ginsburg, David | Maclennan, Robert | Small, William |
| Golding, John | McMillan, Tom (Glasgow, C.) | Smith, John (Lanarkshire, N.) |
| Gourlay, Harry | McNamara, J. Kevin | Spearing, Nigel |
| Grant, George (Morpeth) | MacPherson, Malcolm | Spriggs, Leslie |
| Grant, John D. (Islington, E.) | Mahon, Simon (Bootle) | Stallard, A. W. |
| Griffiths, Eddie (Brightside) | Mallalieu, E. L. (Brigg) | Stoddart, David (Swindon) |
| Griffiths, Will (Exchange) | Marks, Kenneth | Stonehouse, Rt. Hn. John |
| Hamilton, James (Bothwell) | Marquand, David | Strang, Gavin |
| Hamilton, William (Fife, W.) | Marsh, Rt. Hn. Richard | Strauss, Rt. Hn. G. R. |
| Hannan, William (G'gow, Maryhill) | Mason, Rt. Hn. Roy | Summerskill, Hn. Dr. Shirley |
| Hardy, Peter | Mayhew, Christopher | Swain, Thomas |
| Harper, Joseph | Meacher, Michael | Taverne, Dick |
| Harrison, Walter (Wakefield) | Mellish, Rt. Hn. Robert | Thomas,Rt.Hn.George (Cardiff,W.) |
| Hart, Rt. Hn. Judith | Mendelson, John | Thomas, Jeffrey (Abertillery) |
| Hattersley, Roy | Milian, Bruce | Thomson, Rt. Hn. G. (Dundee, E.) |
| Heffer, Eric S. | Miller, Dr. M. S. | Tinn, James |
| Hilton, W. S. | Milne, Edward (Blyth) | Tomney, Frank |
| Horam, John | Molloy, William | Torney, Tom |
| Houghton, Rt. Hn. Douglas | Morgan, Elystan (Cardiganshire) | Tuck, Raphael |
| Howell, Denis (Small Heath) | Morris, Alfred (Wythenshawe) | Urwin, T. W. |
| Huckfield, Leslie | Morris, Charles R. (Openshaw) | Varley, Eric G. |
| Hughes, Rt. Hn. Cledwyn (Anglesey) | Morris, Rt. Hn. John (Aberavon) | Wainwright, Edwin |
| Hughes, Mark (Durham) | Moyle, Roland | Walden, Brian (B'm'ham, All Saints) |
| Hughes, Robert (Aberdeen, N.) | Mulley, Rt. Hn. Frederick | Walker, Rt. Hn. Peter (Worcester) |
| Hughes, Roy (Newport) | Murray, Ronald King | Wallace, George |
| Hunter, Adam | Ogden, Eric | Watkins, David |
| Irvine,Rt.Hn.SirArthur(Edge Hill) | O'Halloran, Michael | Weitzman, David |
| Janner, Gneville | O'Malley, Brian | Wellbeloved, James |
| Jay, Rt. Hn. Douglas | Oram, Bert | Wells, William (Walsall, N.) |
| Jeger,Mrs.Lena((H'b'n&St.P'cras,S.) | Orbach, Maurice | White, James (Glasgow, Pollok) |
| Jenkins, Hugh (Putney) | Orme, Stanley | Whitlock, William |
| Jenkins, Rt. Hn. Roy (Stechford) | Oswald, Thomas | Willey, Rt. Hn. Frederick |
| John, Brynmor | Owen, Dr. David (Plymouth, Sutton) | Williams, Alan (Swansea, W.) |
| Johnson, James (K'ston-on-Hull, W.) | Palmer, Arthur | Williams, Mrs. Shirley (Hitchin) |
| Johnson, Walter (Derby, S.) | Pannell, Rt. Ho. Charles | Williams, W. T. (Warrington) |
| Jones, Barry (Flint, E.) | Parker, John (Dagenham) | Wilson, Alexander (Hamilton) |
| Jones, Dan (Burnley) | Parry, Robert (Liverpool, Exchange) | Wilson, Rt. Hn. Harold (Huyton) |
| Jones, Gwynoro (Carmarthen) | Pavitt, Laurie | Wilson, William (Coventry, S.) |
| Jones, T. Alec (Rhondda, W.) | Peart, Rt. Hn. Fred | |
| Judd, Frank | Pendry, Tom | TELLERS FOR THE AYES: |
| Kaufman, Gerald | Pentland, Norman | Mr. Alan Fitch and |
| Kelley, Richard | Mr. Donald Coleman | |
| NOES | ||
| Adley, Robert | Benyon, W. | Brocklebank-Fowler, Christopher |
| Alison, Michael (Barkston Ash) | Berry, Hn. Anthony | Brown, Sir Edward (Bath) |
| Archer, Jeffrey (Louth) | Biffen, John | Bruce-Cardyne, J. |
| Astor, John | Biggs-Davison, John | Bryan, Paul |
| Atkins, Humphrey | Blaker, Peter | Buchanan-Smith, Alick(Angus,N&M) |
| Awdry, Daniel | Boardman, Tom (Leicester, S.W.) | Buck, Antony |
| Baker, Kenneth (St. Marylebone) | Body, Richard | Bullus, Sir Eric |
| Baker, W. H. K. (Banff) | Boscawen, Robert | Burden, F. A. |
| Balniel, Lord | Bossom, Sir Clive | Butler, Adam (Bosworth) |
| Barber, Rt. Hn. Anthony | Bowden, Andrew | Campbell,Rt.Hn.G.(Moray&Nairn) |
| Batsford, Brian | Boyd-Carpenter, Rt. Hn. John | Carlisle, Mark |
| Beamish, Col. Sir Tufton | Braine, Bernard | Cary, Sir Robert |
| Bell, Ronald | Bray, Ronald | Channon, Paul |
| Bennett, Sir Frederic (Torquay) | Brewis, John | Chapman, Sydney |
| Bennett, Dr. Reginald (Gosport) | Brinton, Sir Tatton | Chataway, Rt. Hn. Christopher |
| Churchill, W. S. | Howell, David (Guildford) | Peyton, Rt. Hn. John |
| Clark, William (Surrey, E.) | Howell, Ralph (Norfolk, N.) | Pike, Miss Mervyn |
| Clarke, Kenneth (Rushcliffe) | Hunt, John | Pink, R. Bonner |
| Cockeram, Eric | Hutchison, Michael Clark | Powell, Rt. Hn. J. Enoch |
| Cooke, Robert | Iremonger, T. L. | Price, David (Eastleigh) |
| Coombs, Derek | Irvine, Bryant Godman (Rye) | Proudfoot, Wilfred |
| Cooper, A. E. | James, David | Pym, Rt. Hn. Francis |
| Cordle, John | Jenkin, Patrick (Woodford) | Quennell, Miss J. M. |
| Corfield, Rt. Hn. Frederick | Jesse], Toby | Raison, Timothy |
| Cormack, Patrick | Johnson Smith, G. (E. Grinstead) | Ramsden, Rt. Hn. James |
| Costain, A. P. | Jones, Arthur (Northants, S.) | Redmond, Robert |
| Critchley, Julian | Jopling, Michael | Rees, Peter (Dover) |
| Crouch, David | Joseph, Rt. Hn. Sir Keith | Rees-Davies, W. R. |
| Crowder, F. P. | Kaberry, Sir Donald | Renton, Rt. Hn. Sir David |
| Curran, Charles | Kellett, Mrs. Elaine | Rhys Williams, Sir Brandon |
| Dalkeith, | Earl of Kershaw, Anthony | Ridley, Hn. Nicholas |
| Davies, Rt. Hn. John (Knutsford) | Kilfedder, James | Ridsdale, Julian |
| d'Avigdor-Goldsmid, Sir Henry | Kimball, Marcus | Roberts, Michael (Cardiff, N.) |
| d'Avigdor-Goldsmid, Maj.-Gen. Jack | King, Evelyn (Dorset, S.) | Roberts, Wyn (Conway) |
| Dean, Paul | King, Tom (Bridgwater) | Rossi, Hugh (Hornsey) |
| Deedes, Rt. Hn. W. F. | Kinsey, J. R. | Rost, Peter |
| Digby, Simon Wingfield | Kirk, Peter | Royle, Anthony |
| Dixon, Piers | Kitson, Timothy | Russell, Sir Ronald |
| Dodds-Parker, Douglas | Knight, Mrs. Jill | St. John-Stevas, Norman |
| Douglas-Home, Rt. Hn, Sir Alec | Knox, David | Scott, Nicholas |
| Drayson, G. B. | Lambton, Antony | Scott-Hopkins, James |
| Dykes, Hugh | Lane, David | Sharples, Richard |
| Eden, Sir John | Langford-Holt, Sir John | Shaw, Michael (Sc'b'gh & Whitby) |
| Edwards, Nicholas (Pembroke) | Legge-Bourke, Sir Harry | Shelton, William (Clapham) |
| Elliot, Capt. Walter (Carshalton) | Le Marchant, Spencer | Simeons, Charles |
| Elliott, R. W. (N'c'tle-upon-Tyne,N.) | Lewis, Kenneth (Rutland) | Sinclair, Sir George |
| Emery, Peter | Lloyd, Ian (P'tsm'th, Langstone) | Skeet, T. H. H. |
| Eyre, Reginald | Longden, Gilbert | Smith, Dudley (W'wick & L'mington) |
| Farr, John | Loveridge, John | Soref, Harold |
| Fell, Anthony | McAdden, Sir Stephen | Spence, John |
| Fenner, Mrs. Peggy | MacArthur, Ian | Sproat, Iain |
| Fidler, Michael | McCrindle, R. A. | Stainton, Keith |
| Finsberg, Geoffrey (Hampstead) | McLaren, Martin | Stanbrook, Ivor |
| Fisher, Nigel (Surbiton) | Maclean, Sir Fitzroy | Stewart-Smith, D. G. (Belper) |
| Fookes, Miss Janet | McMaster, Stanley | Stodart, Anthony (Edinburgh, W.) |
| Fortescue, Tim | Macmillan, Maurice (Farnham) | Stoddart-Scott, Col. Sir M. |
| Foster, Sir John | McNair-Wilson, Michael | Stokes, John |
| Fowler, Norman | McNair-Wilson, Patrick (NewForest) | Stuttaford, Dr. Tom |
| Fox, Marcus | Maddan, Martin | Sutcliffe, John |
| Fry, Peter | Madel, David | Tapsell, Peter |
| Galbraith, Hn. T. G | Marples, Rt Hn. Ernest | Taylor, Sir Charles (Eastbourne) |
| Gardner, Edward | Marten, Neil | Taylor, Edward M. (G'gow, Cathcart) |
| Gibson-Watt, David | Mather, Carol | Taylor, Frank (Moss Side) |
| Gilmour, Sir John (Fife, E.) | Maude, Angus | Taylor, Robert (Croydon, N.W.) |
| Glyn, Dr. Alan | Maudling, Rt. Hn. Reginald | Taylor, Robert (Croydon, N.W.) |
| Goodhew, Victor | Mawby, Ray | Tebbit, Norman |
| Gorst, John | Maxwell-Hyslop, R. J. | Temple, John M. |
| Gower, Raymond | Meyer, Sir Anthony | Thatcher, Rt. Hn. Mrs. Margaret |
| Grant, Anthony (Harrow, C.) | Mills, Peter (Torrington) | Thomas, John Stradling (Monmouth) |
| Gray, Hamish | Miscampbell, Norman | Thomas, Rt. Hn. Peter (Hendon, S.) |
| Green, Alan | Mitchell,Lt.-Col.C.(Aberdeenshire,W) | Thompson, Sir Richard (Croydon, S.) |
| Grieve, Percy | Mitchell, David (Basingstoke) | Thorpe, Rt. Hn. Jeremy |
| Griffiths, Eldon (Bury St. Edmunds) | Moate, Roger | Tilney, John |
| Grylls, Michael | Molyneaux, James | Trafford, Dr. Anthony |
| Gummer, Selwyn | Money, Ernie | Trew, Peter |
| Gurden, Harold | Monks, Mrs. Connie | Tugendhat, Christopher |
| Hall, Miss Joan (Keighley) | Montgomery, Fergus | Turton, Rt. Hn. R. H. |
| Hall, John (Wycombe) | More, Jasper | van Straubenzee, W. R. |
| Hall-Davis, A.G.F. | Vaughan, Dr. Gerard | |
| Hamilton, Michael (Salisbury) | Morgan, Geraint (Denbigh) | Vickers, Dame Joan |
| Hannam, John (Exeter) | Morgan-Gibes, Rear-Adm. | Waddington, David |
| Harrison, Brian (Malden) | Morrison, Charles (Devizes) | Walder, David (Clitheroe) |
| Harrison, Col. Sir Harwood (Eye) | Mudd, David | Walker, Rt. Hn. Peter Worcester) |
| Harvey, Sir Arthur Vere | Murton, Oscar | Walker-Smith, Rt. Hn. Sir Derek |
| Haselhurst, Alan | Nabarro, Sir Gerald | Wall, Patrick |
| Havers, Michael | Neave, Airey | Walters, Dennis |
| Hawkins, Paul | Nicholls, Sir Harmar | Ward, Dame Irene |
| Hayhoe, Barney | Noble, Rt. Hn. Michael | Weatherill, Bernard |
| Heath, Rt. Hn. Edward | Normanton, Tom | Wells, John (Maidstone) |
| Heseltine, Michael | Onslow, Cranley | White, Roger (Gravesend) |
| Hicks, Robert | Oppenheim, Mrs. Sally | Whitelaw, Rt. Hn. William |
| Higgins, Terence L. | Osborn, John | Wiggin, Jerry |
| Hiley, Joseph | Owen, Idris (Stockport, N.) | Wilkinson, John |
| Hill, John E. B. (Norfolk, S.) | Page, Graham (Crosby) | Woodhouse, Hn. Christopher |
| Hill, James (Southampton, Test) | Page, John (Harrow, W.) | Woodnutt, Mark |
| Holland, Philip | Paisley, Mr. Ian | Worsley, Marcus |
| Hordern, Peter | Pardoe, John | Wylie, Rt. Hn. N. R. |
| Horney, Richard | Parkinson, Cecil (Enfield, W.) | TELLERS FOR THE NOES: |
| Hornsby-Smith Rt.Hn.Dame Patricia | Peel, John | Mr. Walter Clegg and |
| Howe, Hn. Sir Geoffrey (Reigate) | Percival, Ian | Mr. Keith Speed. |
§ The ChairmanI think it would be safer if I read the next two Amendments which we are taking together, in case hon. Members have not got their sheets. They are Amendments Nos. 4 and 5 standing in the name of the hon. Member for Honiton (Mr. Emery) and his right hon. and hon. Friends. They are:
Amendment No. 4:
Clause 1, page 1, line 15, after "on" insert:
for a limited time which shall expire on 31st December 1975, save as is provided in subsection (2) of this section".Amendment No. 5:Clause 1, page 1, line 19, at end insert:
(2) The period during which a Minister may carry on any undertaking acquired under Section 1 of this Act may be extended for further periods of 12 months by a resolution which shall be subject to the approval of the House of Commons.
§ 10.30 p.m.
§ Mr. EmeryI beg to move Amendment No. 4, in page 1, line 15, after "on" insert:
for a limited time which shall expire on 31st December 1975, save as is provided in subsection (2) of this section".First, it must be made absolutely clear that in dealing with a terminal date for the acquisition we, on this side, are just as interested in and concerned as hon. Gentlemen opposite for those people who are creditors, sub-contractors and small shareholders. It would be quite wrong, because this is and has to be a limited debate at this hour and because I have been asked to keep it fairly short—[Interruption.] I have been asked by hon. Members opposite to keep it short. [HON. MEMBERS: "No."]The Amendment sets out to do two things. The first is to ensure that the words which we have heard from the Government are put into the Bill; namely, that this is a caretaking operation, an operation which is necessary to ensure that Rolls-Royce can continue, can survive and can be made viable. Not surprisingly, the view of many hon. Members on this side is that the company is not likely to continue to survive and be viable if it stays nationalised. Therefore, we believe that it would be extremely helpful to have a terminal date in the Bill.
944 A terminal date raises two problems: first, the date to be chosen; and, secondly, the powers to be given to the Minister so that the market is not rigged against him at any time of disposal.
On the latter point, we have made it clear in this Amendment and in Amendment No. 5 that the Minister can, if he comes back to the House, have an extended time to continue the holding if it is not possible to dispose of it.
We on this side have fought for six years to try to ensure that we do not have government by edict or by governmental statement. Therefore, I believe that it makes sense to have the assurances which have been given by the Government incorporated in the Bill. Unless the Minister persuades me that there is some specific reason for not doing this, it would seem that it is to the benefit of the Government and, indeed, to the benefit of what many of us stood for at the General Election. [Interruption.] We should like to have that clearly understood, because many hon. Gentlemen opposite seem to believe that we are less interested now than we were before. They are so wrong.
§ Mr. BishopOn a point of order. Will you, Sir Robert, ask the hon. Gentleman to address his remarks to the Committee, so that we can all hear, and not speak to the Conservative Party conference?
§ The ChairmanOrder. I am sorry that the hon. Gentleman should not be able to hear the hon. Member for Honiton (Mr. Emery). I was certainly hearing him as well as I should wish to hear. I thought that the whole Committee could hear the hon. Gentleman.
§ Mr. EmeryI was trying to address my remarks to you, Sir Robert, which I have always believed was the correct way of addressing the Committee.
I believe that by accepting the Amendment the Government will be, first, carrying out what they told the country—[Interruption.]—secondly, ensuring that this is a temporary caretaking operation; and, thirdly, ensuring that people outside, not just those who have attempted to make fun of part of this debate—[Interruption.] That laughter is indicative 945 of the kind of attitude being adopted by hon. Gentlemen opposite.
§ Mr. Gerald Kaufman (Manchester, Ardwick)On a point of order, Sir Robert. Can you do something to get silence in the Committee so that the hon. Gentleman can be heard with the respect that he deserves?
§ The ChairmanI think that if the hon. Member would use his undoubted influence with his hon. Friends we might get that.
§ Mr. EmeryI am asking the Minister whether he can give the type of undertakings which the Amendment demands. May I say to him personally that—[Interruption.]
§ The ChairmanOrder. We are on a very serious subject, and I think that the Committee would serve the interests of Parliament best if it heard the hon. Member who has the Floor in reasonable silence. I hope that I can rely on hon. Members to help me as much as possible.
§ Mr. EmeryI believe that the Minister has conducted himself and the Government's business during the last week to 10 days in an exemplary manner, but I ask him to reply to one question. One problem which has not been dealt with is that to which he referred in his opening speech. My right hon. Friend talked about a negotiated price which would be fair and reasonable. We are faced with the possibility of escalation. Would it not be fair to say that the Government want to ensure that they are not buying at knock-down prices but at a price which will be negotiated between a willing seller and a willing buyer properly valuing the assets? If that is said, it will be of immense help to shareholders and sub-contractors.
I urge the Minister to consider most carefully whether he can give an undertaking that, if not now, in another place he will ensure that in the legal writing in the Bill there is spelled out the position of holding on a temporary basis for a caretaker operation.
§ Mr. CorfieldWhen I opened the debate this afternoon I referred specifically, amongst other things, to the problems of trying to strengthen the whole European aero-engine industry, and I mentioned certain possibilities, which I simply do not 946 think is compatible in any way with a firm date on which one should try to sell this proposed new company back to private enterprise.
I am sure my hon. Friend will agree that very often nothing is more permanent than the temporary. To write in "on a temporary basis" is clearly no good without a date, and I do not think it is true to say that one gets away from the problem of the market being rigged against one by putting in a provision by which a date can progresively be moved forward.
Equally, this might well be a definite disadvantage to trying to arrange a stronger European aero-engine industry across the frontiers. Of course I do not like having to nationalise any more than my hon. Friend does. It would be the Government's intention to bring in the maximum private participation as soon as is practicable.
It is only fair to emphasise that I regard it as essential to keep open the options which I mentioned, and I would find the Amendment very inhibiting. I hope that my hon. Friend will accept my assurances.
§ Mr. EmeryOn the reasoning about the possibility of a European factor, which obviously must be a major consideration in everyone's mind, I would ask leave of the House to withdraw the Amendment.
§ The ChairmanIs it the pleasure of the Committee that the Amendment be withdrawn?
§ Amendment negatived.
§ Question proposed, That the Clause stand part of the Bill.
§ 10.45 p.m.
§ Mr. John Stokes (Oldbury and Halesowen)I shall not detain the House for long. I have waited for a long time to speak, and I shall speak from knowledge and experience—[Interruption.]
§ The ChairmanOrder. Will hon. Members please remain quite quiet so that the hon. Gentleman who has the Floor and who is a new Member has every possible chance to be heard?
§ Mr. StokesThank you, Sir Robert. I must make it clear that this is not my maiden speech. It is my third speech, 947 and, therefore, I am prepared to give and take.
I do not believe that the Government had any alternative to nationalising at least those parts of Rolls-Royce which directly affect our national defences. The Conservative Party—I have studied its history for many years—has always been pragmatic and I do not consider that party dogma has any place in the present critical situation. The essential action which we are taking should have the support of the whole House of Commons.
A subject which has not been mentioned so far is the management of the company, which is vital, whoever owns it. We all know that the present disaster was a stern and terrible warning to the country. It was a lesson for Governments that exports alone are no good unless the firm makes profits first. All parties were to blame for the ecstatic welcome which they gave the Lockheed contract. and politicians do not always have the best judgment in commercial matters.
I do not wish now to blame the previous Minister, but the fashionable worship of technology which we heard in his day is, I hope, a thing of the past, for unless technology can be harnessed to business enterprise it is useless. There are always dangers for private enterprise firms where Government money appears to be on tap, and this non-competitive element must have entered into the thinking of both managers and workers. [Interruption.]
§ The ChairmanOrder. I ask hon. Members please to observe reasonable silence so that the hon. Gentleman can be heard.
§ Mr. StokesI believe that there are also lessons for the trade unions that workers, however devoted and able—we know that many of the Rolls-Royce workers are—cannot go on expecting endless rises in pay where productivity and profits do not follow suit and that profits, far from being a dirty word, are essential for furture growth and development, and particularly so in a science-based industry which requires a massive amount of research and development.
It is, however, on the lessons for management that I shall concentrate above all else tonight, because I believe 948 that these lessons may also, unfortunately, apply to two or three other large firms in Britain. I do not believe that it was the one disastrous contract which broke the back of Rolls-Royce. I fear that it may have been only the last straw in the way in which the company had been managed for many years, certainly since 1961. I do not claim inside knowledge, but from my common sense and experience in industry, and from what I have heard from many suppliers to Rolls-Royce who have known that company well for many years in my constituency, in any disaster the men at the top must be to blame. If they are to blame they should go. I have no doubt, unfortunately, that many heads will have to roll at headquarters. This may be a harsh judgment. But it happens in war if a general loses a battle, and the same should apply in business.
We are told that there is new management. But how many are new? Many of the old management must still be there. The outside directors, who should have acted as watchdogs, seem especially worthy of censure.
The first task of the greatest importance for the Government and their advisers is to choose a chief executive for the enterprise, together with new directors and managers, not only in financial control but in the commercial and production departments, and in control of research and development, which is always difficult and where an axe has to be handled. A hard look must be taken at the way the company is run. I speak with sincerity. Worship of techniques is the curse of modern industrial management. It is the men who matter. Systems are only secondary.
§ Mr. Bob Brown (Newcastle-upon-Tyne, West)Is it in order that, during the most interesting speech which the hon. Gentleman is making, a sub-committee of the 1922 Committee should be holding a meeting above the Gangway?
§ The ChairmanIt is in the best interests of Parliamentary decorum for hon. Members to be as quiet as possible so that the hon. Member speaking should be heard. I was hearing the hon. Gentleman fairly well and I thought that the rest of the Committee were. But if hon. Members feel that other hon. Members ought to observe a little more silence, perhaps that might be a good thing.
§ Mr. StokesI was trying to make the point that specialist staff, management services, corporate planning, economic advisers, systems of all kinds and computers are not a panacea and can never be an excuse for faulty judgment at the top. When industry was small and owners used their own money, they had a discipline which some modern managers lack. Over the weekend I heard that repeatedly in my constituency, where the firms are still mainly small and overstaffing by functional specialists is not allowed. One hard-headed and practical man at the top of an enterprise is worth a host of sophisticated advisers.
§ The ChairmanI am sorry to interrupt this very interesting philosophical speech, but it is a little wide of Clause 1 of the Bill. If the hon. Gentleman agrees that hon. Members will feel that, perhaps he would like to come to a conclusion.
§ Mr. StokesThe lesson in Rolls-Royce is that technical excellence alone is not enough. It is useless and even dangerous if an enterprise is not directed by business considerations. If war is too serious a business for the soldiers, perhaps an engineering company is too serious a business for the engineers. I do not mean to give pain to the countless devoted engineers of Rolls-Royce but something more than technical skill is required in business. These are the lessons of the Rolls-Royce crash.
§ Mr. WilkinsonI have worked in aircraft and flown aircraft, and I represent a city where aeroplane engine components are made. I do not believe that the RB211, brilliant a project as it is, is essential to the survival of our engine industry. The fact is that it was very good but very late, and that is a factor which will not win orders in the hard world of commerce.
We cannot hope to maintain a strong engine industry without a strong British airframe industry. If there is another lesson which we can learn for the future, it is that British power plants can be developed only on the basis of the availability of British airframes in which to put them.
The right hon. Member for Bristol, South-East (Mr. Benn) is still totally wedded to Plowden. I thought that Plowden had been exploded long ago. I remember the classic phrase in the 950 Plowden Report about there being no predestined place for an aircraft industry in Britain. I believe that there is a future for our aircraft industry, as do the many fine people who have lobbied us today. That is why my right hon. Friends have had the courage to overcome ideology and bring forward this Bill.
We are not the only country to renege on our responsibilities. [Interruption.] Right hon. and hon. Gentlemen opposite roll in their seats, but in other less privileged parts of the country people stand to lose their jobs. This is not a matter for hilarity. The example to which I was about to refer is the United States, our great friend and ally, which welshed on the Skybolt and put our whole defence posture and strategic deterrent at risk. The U.S. Government also offered us the F111, at a prodigious price and late. Quite rightly, right hon. and hon. Gentlemen opposite decided that it was not suitable. The TSR2 was suitable, but they had already turned that down.
We must not take a great leap in the dark in technology. That is another point all too often forgotten by the right hon. Member for Bristol, South-East, whose enthusiasm I admire but whose judgment I do not always respect. In order to make profits, it is essential to produce a policy of product improvement. The trouble with Rolls-Royce is not only that the RB211 is too far ahead of its time——
§ Mr. WilkinsonIt is a great money spinner——
§ Mr. WilkinsonIt is ahead of its time compared with its American counterpart—
§ Mr. WilkinsonIt is ahead but only in design. The American engines are heavier, fatter, smokier, noisier and thirstier—rather like right hon. and hon. Gentlemen opposite.
I am very pleased at my right hon. Friend's courage, because there are other projects, important projects, on which our nation depends. There is the RB199, another three-shaft engine, very advanced, with immense possibilities and overseas sales potential. There is the Adour, the 951 further development of which is going well, though, as my right hon. Friend reminded us, it needs still further development. Then there is the Pegasus, the thrust of which could be augmented 100 per cent. These are all valuable projects which——
§ The ChairmanOrder. We must try to keep to the terms of the Clause.
§ Mr. WilkinsonIdeology, whether it be that expressed in Amendments Nos. 1, 3, 4 or 5, will not serve the country best. I believe the Measure which we have debated today will, and I commend it to the House.
§ 11.0 p.m.
§ Mr. G. B. Drayson (Skipton)The Clause would give the Government power to acquire certain undertakings and assets of Rolls-Royce, and I am very glad to think that it will enable the Government to acquire the Rolls-Royce factory at Barnoldswick in my constituency, which has been responsible for all the development work and the production of the prototype of the RB211.
It may not be generally realised that we were responsible at Barnoldswick also for the development work on the Derwent, the Clyde, the Avon, the Conway and many others. I speak, therefore, with some feeling on this, the effective Clause of the Bill, since several thousands of my constituents are vitally concerned.
I was glad—I know that my constituents will be—to know that it is the Minister's intention to continue the RB211 production programme for another four weeks, while the contract can be renegotiated with Lockheed. We all wish the Government every success in that project.
The factory to which I have referred, which will be affected directly under the Clause, is known as an experimental manufacturing unit. All those who work and have been working there on the RB211 are sure that the engine can be made both a technical and a commercial success. At this point, I thank the Minister very much for seeing a party of shop stewards from my Rolls-Royce factory only yesterday afternoon, when they were able to tell him of the amount of hard work and overtime they have put in in trying to bring the project to fruition.
952 It was because of the high technical skills and ability of the teams built up at the Barn oldswick plant that my constituents were given the job of producing the prototypes of the RB211 engine which were flown at Hucknall—we had a reference to that earlier—and the engines which went out to California and were used in the Lockheed airframes there.
We all hope that the fine assets at Barnoldswick will be among the assets which the new Rolls-Royce company will acquire. I was most pleased yesterday when the Minister gave an assurance that someone would come and familiarise himself with what as going on in my constituency, and would see the plant before any final decisions were made. I would like to think that the Clause enables the Minister to acquire some of the liabilities which have been incurred by the subcontractors, because many of them, particularly in my constituency, are extremely worried about the position.
I conclude by saying that all is not lost; that, while this is undoubtedly a tragedy, I hope it will not turn into a disaster, and although it may be said that Rolls-Royce is bust, we can say, "Rolls-Royce is bust—long live Rolls-Royce"; and I think that in its new form, and with that part of the business in my constituency still running, it still has a tremendous future.
§ Mr. James Kilfedder (Down, North)I intend to speak for only two minutes. First of all I wish to say, as an Ulster Unionist, that I cannot comprehend the doctrinaire attitude of some hon. and right hon. Members. I cannot understand why some hon. Members opposite feel that Rolls-Royce should not be sold back to private ownership. At the same time, I do not share the distaste which has been expressed by some of my hon. Friends about Rolls-Royce being taken into public ownership. I certainly could not agree with my hon. Friend the Member for Hendon, North (Mr. Gorst), who said that the State should not involve itself in commercial risks. Of course it must, on occasions. There have been splendid examples of that in the past, and I hope that Governments in the future will take on commercial risks when necessary, and when the national prestige is involved.
As the only Ulster Unionist who has a Rolls-Royce factory in his constituency, I would emphasise the concern, which 953 has already been expressed by hon. Members who have Rolls-Royce factories in their areas, about the future of these employees. The Rolls-Royce factory in Dundonald was established in 1966, through inducements, no doubt, from the Stormont and Westminster Governments. It is a spendid factory. I saw a number of trade unionists last Saturday and today, and they assured me of the viability of that factory, and I hope that the Government will preserve it. It manufactures exclusively Code F items, not only for the RB211 but also other aero-engines used by civil airlines and military air forces, too. That factory produces 33 per cent. of the items for the RB211. Rolls-Royce sub-contracts Code F items, and if those were placed at the Dundonald factory, then not a single employee there need be made redundant.
I rose only to express my concern about that factory, and to ask for an assurance from the Government that, come what may, that Rolls-Royce factory in my constituency will be preserved.
§ Mr. DalyellBefore turning to my own problems, with now 18 per cent. unemployment in Livingston new town, I should like, without in any way wanting to make mischief—I see present the hon. Member for Belfast, East (Mr. McMaster)—to ask a few rather genuine questions about Short Brothers & Harland. I do not know the affairs of that firm as intimately as does the hon. Gentleman, but it is certainly the impression of some of us that it is not only the medium-sized sub-contractors who are owed a great deal of money by Rolls-Royce.
Part of the reason why some of us were earlier making such a fuss about wanting the Solicitor-General with us is that long-term decisions necessarily have to be made in a hurry—perhaps tomorrow, perhaps on Monday. My hon. Friends the Members for Dudley (Dr. Gilbert) and Birmingham, All Saints (Mr. Brian Walden) and other hon. Members with whom I have discussed the matter know that there is an urgent problem facing us, and that time is not on our side.
The story of the Cameron Iron Works at Livingston—the largest in the world—is perhaps typical in that, like other firms, we are geared to TriStar, and to Concorde and the Harrier as well. If I do 954 not go into details it is simply that many hon. Members have precisely the same problems in their constituencies, and enough has been said about that. I simply present my credentials for asking questions, if I may, of the Fnancial Secretary to the Treasury, whom I must praise for having been here for a very large part of the debate. If we have certain criticisms to make about certain other Ministers, it reflects great credit on the Financial Secretary that he has been here almost throughout the debate. So, without being unduly earnest, I should like to address some questions to him.
The Solicitor-General said that suppliers need not reach adverse conclusions. A number of suppliers will ask me and some of my hon. Friends why they should not reach adverse conclusions. On what basis is it suggested that they should not do so? From all that has transpired in the last six hours here, there seems to be little optimism on which to base any other kind of conclusion. Perhaps the Financial Secretary would like to intervene now?
Next the Solicitor-General said that it would depend on the overall position of each of the suppliers—that was one of the criteria. What is meant by the "overall position"? Does it mean that those who are heavily committed are in some way to be treated differently from those with only small commitments? I simply ask for an explanation of what the hon. and learned Gentleman meant by saying that "action will be taken on the dependence on the overall position of each of the suppliers". Would the Minister now like to intervene? I ask, because some of us will have some very difficult questions to answer on Saturday, Sunday and Monday from many people.
The Solicitor-General next said that there was no reasonable prospect of the creditors being paid. Who is to determine what is or what is not a reasonable prospect? Who is to judge that? If the P.P.S. is giving the Minister information I will, of course, give way, because these are urgent questions that many hon. Members will be asked.
Again, without undue repetition, may we return to what was said by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan)? He raised some important questions about Section 332 of the Companies Act. I do not blame the 955 Parliamentary Secretary for not answering them in detail, but I hope that now that the House is quieter and emptier he will take the opportunity of answering in some detail the issues raised by my hon. Friend the Member for Craigton.
11.15 p.m.
I come now to the speech of the hon. Member for Bradford, West (Mr. Wilkinson). He said that this was a very good engine, but very late. Is that the view of Her Majesty's Ministers? Some of us would say that comparisons have to be made about lateness. What does lateness mean? It is relative—and, relative to what Pratt and Whitney or General Electric could do, this engine is not late. Surely it is on this issue of comparability that the lateness or otherwise of the engine must be judged. It seems that renegotiation in terms of time is still possible, and I should like to know the view of the Minister on that issue.
My hon. Friend the Member for Stockton-on-Tees (Mr. William Rodgers) may recollect that I interrupted him when he was speaking about possible bidders. The Minister used the phrase "any acceptable bidder". It would help us if the word "acceptable" was defined. On what criteria is it acceptable? On whose judgment? These are questions that many serious people will be asking.
Some of us represent international companies, many of them based in the United States. We are having to go home to face American executives, some of whom have flown over in a hurry as a result of this crisis, and we want to know what we shall say to them about our country. They think that this is an act of infinite perfidy. I interjected "banana republic". It was not my phrase; it was the phrase of an important American executive, respected by certain hon. Members opposite from Scotland—a man who has been a friend of this country, and has invested a great deal of his money in it. He is owed millions of dollars by Rolls-Royce.
These are the people whom we must face over the weekend. They are the people who think that this has been an act of perfidy—who cannot believe that a British Government can have done this thing. I am merely asking what we should say to them when they confront us and ask whether this is really in the British tradition.
§ Mr. Stanley R. McMaster (Belfast, East)I do not intend to detain the Committee for more than a few moments. I want to answer the points raised by the hon. Member for West Lothian (Mr. Dalyell).
This has been a confusing debate. In my constituency in Northern Ireland much concern is felt about the point raised by many hon. Members opposite regarding the position of creditors. A great deal of nonsense has been talked by hon. Members opposite, and particularly by the right hon. Member for Bristol, South-East (Mr. Benn). They seemed to suggest that the Government should have given an open-ended undertaking to Rolls-Royce that no matter what the cost of these engines turned out to be they would keep the company going; that, even if Lockheed itself was insolvent, Rolls-Royce would be kept going at all costs, and the engines, having been built at the expense of our taxpayers would be supplied at below their true cost to the American aircraft industry. That is not a sensible suggestion.
On the other hand, my right hon. Friend the Minister of Aviation has got himself into considerable difficulty over the valuation of the assets. I should like my right hon. Friend, in reply, to give some indication of the way in which the assets will be valued. This would place the creditors in the position that all Members who have spoken in the debate have sought.
If the Government are able to renegotiate the Lockheed contract they will be in a peculiar position, because they are wearing two hats in the negotiations. On the one hand, they are acting as bankers so that Rolls-Royce can carry on for another four weeks, so that time is allowed to renegotiate the contract and Rolls-Royce can be sold to the Government at perhaps a higher price than if they did not advance this money and the contract were immediately to fall. They are apparently, when wearing the banker's hat, acting against their own interest. But as the Government interest has been clearly stated to keep Rolls-Royce as a going concern, then in buying the assets they can perhaps treat them at historic cost, less depreciation.
But I suggest that that is not the appropriate method of valuing assets in this case. The correct way would be to 957 appoint independent valuers to value the property, land, plant and machinery at replacement cost and add to this a value which also can be supplied by an independent valuer of the goodwill of the concern. This would be paid to the Receiver and should be sufficient to secure the debts of the creditors, both secured and unsecured—the ordinary trade creditors—so that they would know where they stood and be in a position to carry on in business.
The Bill is, apparently, a blank cheque. The Financial Memorandum says
It is not at present possible to make any reliable estimate"——
§ Mr. William Molloy (Ealing, North)I find it confusing when two hon. Members who, I understand, are Ulster Unionists advocate different approaches. Notwithstanding the asinine remarks which the hon. Gentleman made about my right hon. Friend the Member for Bristol, South-East (Mr. Benn), will he try to help us to understand why his argument is almost completely and absolutely diametrically opposed to that of the argument advanced by his colleague from Northern Ireland, the hon. Member for Down, North (Mr. Kilfedder)?
§ Mr. McMasterThe hon. Gentleman has not been following. I am not addressing myself to the arguments put forward by my hon. Friend the Member for Down, North (Mr. Kilfedder). There is nothing inconsistent in what I am saying. My hon. Friend and I are both concerned about the employment position in Northern Ireland and the position of the creditors.
There is a duty on the Government before the debate closes to give an indication to the House, and, therefore, to the country, of the way in which they will estimate the price to be paid for Rolls-Royce so that the creditors of the company in Northern Ireland and elsewhere will have some idea of how the sum is to be arrived at and, therefore, whether there will be enough money to pay them.
§ Dr. GilbertNow that some of the passion of the day is spent, perhaps we can get from the Minister some serious answers to some serious questions.
958 First, have the Government yet made any survey of the number of sub-contractors and suppliers of Rolls-Royce who will be affected by this decision? Secondly, does the Minister have any idea of the number of men who will be thrown out of work as a result of this decision? If he has those figures, will he give them to the House as soon as possible?
Can the Minister also confirm that there is in the Rolls-Royce group an intricate network of corporate relationships, and that the receiver cannot ignore the corporate significance of this network when he is distributing the funds that come from the assets that the Government are buying from the group? Can he further say with which company or companies in that group Lockheed has stood in a contractual relationship, and how many firms of British domicile also stand in the relationship of creditor to those companies with which Lockheed had a contractual relationship?
Can the Minister say anything about the total amount of debts owed by those companies in the group as a proportion of the total debts of the Rolls-Royce group so that we can have some idea of what is involved as far as Lockheed is concerned?
I imagine that the Minister will accept—it is hardly beyond dispute—that the principal objective of this sorry exercise has been to welsh on the Lockheed contract. Let us abandon the fiction that the Government and the receiver are completely at arm's length, because his hon. Friend said earlier this evening, "The receiver will be acting in close accordance with our views".
§ Mr. David PriceWith qualification. This concerned a question over the sale of assets. I said that in the case of a new contract with Lockheeds it was necessary for the receiver to be indemnified. That was the point. That is not in accord with the line the hon. Gentleman is taking. It concerns the particular case of a new contract with Lockheeds. If one should arise before the new company comes into operation the Receiver can negotiate in accordance with our views, provided that he is indemnified.
§ Dr. GilbertI am grateful for what the hon. Gentleman has said, which makes it clear that it will not be the Receiver's policy—because he will not be 959 under the influence of the Government—in any way to discriminate in favour of British suppliers as against Lockheed. Therefore, Lockheed and the British suppliers, unsecured creditors, will have to be taken on all fours, and so the greater the degree to which the Government can welsh on the Lockheed deal the worse off will be the British suppliers. That seems to be axiomatic in the situation.
A further problem, as explained from the Government Front Bench, is that we do not know at this stage what the total liabilities will be with respect to Rolls-Royce before 4th February, 1971, as it will necessarily take a long time to ascertain what the total liabilities will be when penalty clauses, damages and so on are taken into account. Will the Government therefore give an undertaking to try to make an out-of-court settlement as soon as possible of any claims for damages that will arise for non-performance of these contracts?
Are we to understand, as seems to be clear from the debate earlier, that the price to be negotiated with the Official Receiver is totally exclusive of any considerations of the costs arising from the penalty clauses? The considerations in determining the price, I understand, will be purely and simply related to the value of the assets, whatever the basis of valuation is to be.
The sub-contractors have no idea how many shillings in the pound they will get on their debts, if any, and who will get them. The whole question of the interlocking corporate relationships that I mentioned earlier is very significant in this respect.
11.30 p.m.
Therefore, we have the problem that it will be a long time before the receiver is in a position to make any distribution in favour of the unsecured creditors. The creditors must have some idea as soon as possible of what amount in the £ they are likely to get. It is no good the Government simply saying that commercial bank credit will be available to firms strapped for funds in the short run. A great many firms are highly dependent on Rolls-Royce business. What bank in its right mind—and I sometimes wonder whether any bank in this country is in its right mind—will lend funds to a medium or small sized engineering company 960 whose biggest asset is a bad debt from Rolls-Royce? But without such funds they will go out of business.
The real problem—which has not been mentioned by the Minister—is that if these sub-contractors go out of business there is simply no point in trying to keep Rolls-Royce in business. The whole operation is vitiated. He is floundering around with blinkers on, looking at one segment of the problem. Unless he looks at the thing in the round and tries to do something urgently for the sub-contractors, there is no point in going on with the other side. Rolls-Royce is dependent on them for supplies of specialised materials and specialised work, and the sooner the hon. Gentleman realises this, the better, otherwise he will be in an even worse position.
Mr. Eddie Griffiths (Sheffield, Brightside)There is another very important point. How could the reconstituted Rolls-Royce firm go back to these sub-contractors to whom it owes, in some cases, £1 million or more, and ask, "Will you supply us with specialised equipment?"
§ Dr. GilbertI am grateful to my hon. Friend for that point. The vice-chairman of a company in my constituency asked me this week, "Why should I supply the receiver with materials under this new set-up? Why should I not hold him to ransom in order to try to get my money out?" It is difficult to give him an answer in the affirmative.
On the other hand, let us be clear that a great many of these sub-contractors, unless they get an assurance of money in the near future—something of the order of 15s. or more in the pound—will be in dead trouble. But the more generously the Government treat the sub-contractors, the more they have to pay Lockheed. So the whole thing was pointless in the first place.
Another point concerns the pension position. It has not been touched on so far, and if the Minister cannot give me information about it tonight I shall understand and shall put Questions down. Is he in a position to give information now about the pensions position, not just of the former employees but of the former board of di rectors and the existing board of directors? Can we know what arrangements are being made for the board of directors as constituted on 4th February, 961 1971? Can we have an assurance that no public funds will be made available for pension or separation allowances for the board of directors while the ordinary working people in Rolls-Royce are suffering from the erosion of share values in their pension funds? It would be monstrous if the directors got away scot-free with their £20,000 or more while ordinary people on the shop floor got strapped once again.
The Government are technically right in that they were not party to the contract between Lockheed and Rolls-Royce; but in the eyes of the rest of the world they were, and they know it. If the Government do not know it, I can tell them that salesmen for Japanese, German and American firms are going to be telling our customers about it all over the world from now on for months ahead.
§ [Mr. HAROLD GURDEN in the Chair]
§ Sir Harmar NichollsIs the hon. Member telling the Committee that his right hon. Friend the Member for Bristol, South-East (Mr. Benn), when he had full power, committed this country to the extent that the hon. Member is now suggesting?
§ Mr. BennI cannot speak for my hon. Friend, of course, but, as the question has been put, may I say that I think that my hon. Friend the Member for Dudley (Dr. Gilbert) is confusing the legal obligation which lay between the companies and the good name of this country which became involved because we were a partner. I only wish that the Prime Minister devoted 1 per cent. of the time which he devotes to our alleged obligation to supply arms to South Africa to the moral obligation to see this deal through in the United States, as that would reflect very much better on this country.
§ Dr. GilbertBefore the General Election we were promised by the Conservatives that if they were returned to power there would be a "new style of Government"; we certainly have a new style of Government; for the first time, we have a Government of welshers, and I defy an hon. Member opposite to deny that. We were told that we were to have as 962 Prime Minister "a man of principle". I wish he had been here tonight; he has not been here for a moment throughout the debate. His principles extend far enough to make sure that 6d. is taken off the tax for his surtax-paying friends, but he does not have time for the thousands of people thrown out of work by this disgraceful decision.
§ Mr. BarnettI should like the Minister to deal with a matter which I raised earlier. His last recorded statement in the House was that the £42 million was to be made available regardless of the accountant's report. I am sure that he will agree that that is what he said in answer to me when I asked a question following his statement. He then corrected that statement in a private letter to me, a letter which, of course, will not have been read by the creditors and suppliers, and I asked him whether he would correct the statement in the House, as it was so important. He refused to do so. That leaves creditors and suppliers with the last statement by the Minister being that the £42 million was to be supplied regardless of the accountants' report.
I then asked the Leader of the House to ensure that the Minister made a statement so that he could correct the misleading statement which he had previously made. I imagine and accept that it was made by accident, although I asked in correspondence for it to be corrected, pointing out how serious it was, although not thinking that it was as serious as this. It means that there could well have been suppliers who gave additional credit on the understanding that there was £42 million additional money provided by the Government. This is a serious matter, and in other circumstances people would be brought before the court over it. I hope that the Minister will answer that this evening.
I do not want to apportion blame prior to all this happening. My own experience as an accountant is that bankrupts are all too ready to blame the Government, bankers for being so stupid as to lend them money, suppliers, customers, workers, lawyers and even their accountants. They are prepared to blame everybody, or at the end of the day say that they were just plain unlucky. It is never a very pleasant picture when these things happen. 963 But there is generally one strand running through it all, one thing which they all have in common—that the blame rests primarily on the bankrupts, because if they did not know what was happening, they should have known, and generally they were closing their eyes to the situation. But that is in the past; it is solutions with which we need to concern ourselves.
One has to ask whether the Government's solution is necessarily the best. The way they have chosen is nationalisation without compensation, and I hope that they recognise the sort of example which they are setting. It is an interesting example of nationalisation without compensation, not only without compensation to the shareholders but, so far as one can see, very little for the unsecured creditors, unless the Government are prepared to say what they have not said all day to satisfy the sub-contractors—that they are prepared to buy Rolls-Royce as a going concern rather than at break-up value. In that way the sub-contractors would be in a much stronger position than if they went on anything said by the Solicitor-General.
In having to decide whether to do what Rolls-Royce did under Section 332 the sub-contractors are in a much worse position. Rolls-Royce had net tangible assets of £200 million. The sub-contractors will not have anything remotely like that. They will have, largely, a bad debt, and if they are told that the Government intend to take over whatever it is they are to take over as a going concern and not to steal the assets, then it will mean that the sub-contractors can feel assured that in carrying on trading they are likely to be paid a reasonable proportion of their debt.
§ Mr. DalyellI could not help noticing the Minister nodding his head. Could we have his explanation at this point?
§ Mr. BarnettI will rise again but will happily give way to the right hon. Gentleman if he wishes to make it clear to sub-contractors that they are likely to get money on the basis of payment by 964 the Government as a going concern rather than on break-up values.
§ Mr. CorfieldI am sure the hon. Gentleman realises that I am not a professional valuer, but, as I understand it, those sections that form a trading unit will be valued either on the basis of a going concern or, if another form of valuation gives a higher price, then on that one. There might be a situation when the land occupied by a small factory was more valuable than the factory and it might be more profitable to market it on the basis of the land rather than as a going concern. In that case the Receiver would be entitled to claim the higher figure. Clearly, he has an obligation; he is in a position of trust in exactly the same way as those who negotiated on behalf of the company. As I visualise it the greater part will be on the basis the hon. Gentleman mentions, as a going concern. There may be some small parts where another basis is more profitable.
§ Mr. BarnettThere is another basis, as we heard from the Parliamentary Secretary, and it is a most interesting one. A more inept method of putting it I have never heard. It is the idea that if there was a bid from elsewhere then the Government would beat that bid. This was a most interesting method of buying the business. It baffles the imagination. Lockheed's is owed a great deal of money and it is told that if it puts in a serious take-over bid of a particular price then the Government will beat it. All that Lockheed has to do—and I am sure it does not need me to tell it—is to put in a reasonable bid at a figure that will enable it to be paid out in full and the Government will have to beat it. On the basis of that statement the sub-contractors could go to their banks tomorrow and say "We can carry on trading under Section 332. We have no fears because we are bound to be paid out in full."
§ Mr. David PriceThe hon. Gentleman exaggerates the argument. I said that if there were a foreign bidder who was a serious bidder, the Receiver would have to take it into account because it is his duty to the debenture holders. Therefore, there would have to be an adjustment in the price that the Government would have to pay. If we got to the ridiculous point 965 put by the hon. Gentleman it would involve a certain bidding-up, or could involve that. We have to remember the position of the Receiver.
§ 11.45 p.m.
§ Mr. BarnettI appreciate the point which the hon. Gentleman makes. I should only say in passing that the point, if it was ridiculous, was not mine, but the hon. Gentleman's.
§ Mr. MillanIs it not even worse than the Minister would say? Is it not conceivable that one might have an outside bidder, like General Electric of America, which would not necessarily bid for the whole of the aero-engine division of Rolls-Royce but might wish to take over particular units? This must be well within the financial competence of General Electric. Is it not a fact that the principle enunciated by the Minister would involve him, even if only a part of the undertaking was involved, in overbidding on a General Electric bid?
§ Mr. BarnettI could not agree more with my hon. Friend, who has experience of receiverships and liquidations. The receiver will be in a position, if he gets these bids, on the basis of what the hon. Gentleman said, of receiving enough from the taxpayer, whom the Government are always telling us they are there to protect, to enable all the creditors to be paid in full. I suppose, on that basis, we may take it that the sub-contractors can feel reasonably happy that they will also be paid in full.
Anybody who knows anything about the way that liquidations and receiverships work will know that what the Government have done is commercially the nastiest and most dishonourable way known of legally robbing shareholders and creditors. If the Minister does not know it, I ask him to have a word with accountants and others in practice who have seen this kind of thing happen.
Was there an alternative to what the Government have done? It is a bit late, but the country is entitled to an account of what happened. Strictly, only the company and the creditors were able to appoint a receiver or liquidator, but it is an unworthy legal quibble for the Government to disclaim responsibility. It is no use saying, in view of the connection between the Government and the company, that they did not have power to 966 appoint a receiver or liquidator. It is a legal quibble, and I hope that we shall not hear it again from the Government.
The argument that if the Government gave themselves room for manԓuvre, gave themselves time to decide what would be the best way before doing this untold harm, by putting in a small loan, it would render them falling foul of Section 332, which is what the Minister suggested, is complete nonsense, as any reading of the section will show to any reasonable person.
The relevant words are "intent to defraud". Can it be suggested that the Government and the board of directors were intending to defraud creditors by trying to keep the company going as a viable proposition—a company with nearly £200 million of net tangible assets at the last balance sheet date, not taking account of another £18 million of under-valuation on properties? I think that one could say there was intent to defraud the other way if the creditors are not to get much back. To suggest that the Government needed to take this precipitate action and plunge the whole thing into this nightmare—as the Minister described it—on the basis of Section 332, is a crazy situation.
§ Mr. McMasterThe hon. Gentleman has raised this point before. He must know, from reading the directors' statement, that the liabilities which they were likely to incur under the penalty clauses were in excess of the company's assets. When this kind of Clause comes before the court for interpretation, the court cannot examine the state of a man's mind but it applies the principle that a man is taken to intend the reasonable consequences of his act. Here the reasonable consequence of the act was the bankruptcy, and that is the end.
§ Mr. BarnettI totally disagree with the hon. Gentleman. The company had two choices: either it liquidates and the unsecured creditors get very little, or it tries to keep going as a viable proposition, in which event, if it is able to renegotiate, the creditors get as much as they would have got under the liquidation and possibly get paid in full. To say that that was an intent to defraud is a nonsensical way of reading Section 332.—[Interruption.] If the hon. Gentleman disagrees with what I am saying, let him say why.
§ Mr. Cecil Parkinson (Enfield, West)I ought to declare an interest, because I, too, am an accountant. The basic problem in a situation like this is to maintain confidence. The detailed position was that the directors were searching the City to pay the week's wages, and that is no way to maintain confidence in a company which has huge overseas liabilities and big contracts. If it is done for one week, it might be possible to keep the fact quiet, but if it is done for two weeks or three weeks, confidence in the company will be lost.
The directors of Rolls-Royce were searching for ways in which to pay the wages of the workers, and at the same time were trying to maintain the posture that they could fulfil a huge overseas contract. The hon. Gentleman knows that in this situation confidence is the key factor, and confidence is bound to be lost when the company runs out of cash to pay wages. That was the situation of the company.
§ Mr. BarnettThe hon. Gentleman is talking about a totally different thing. He is talking about——
§ Mr. ParkinsonI am talking about the reality.
§ Mr. BarnettI accept that that was the reality of the situation. I have not denied that. The hon. Gentleman is saying that the company was illiquid, and that is right; but it was not insolvent. The hon. Gentleman should know that. He must understand that we are talking about an intent to defraud under Section 332. To say that the directors in an attempt to safeguard creditors' money were intending to defraud is a nonsense. It is no use the hon. Gentleman saying they were illiquid. I do not deny that, but that does not invalidate my point. If the hon. Gentleman thinks that he has made that point, I am sorry to disillusion him by telling him that he has not.
What are the alternatives now open to the Government? The Government's method of the straight liquidation and buying the assets only is in one sense, and the narrowest sense, the cheapest method, but it does untold harm to the purchaser, and the right hon. Gentleman said nothing further today to what he said to me in reply to a Question yesterday, when he said that he was keeping 968 open the option not to liquidate. I hope that he still has that option open, because I believe that there is still a possibility of avoiding a liquidation, and I should like to explain the two methods by which one can avoid a liquidation.
The first method is to try to renegotiate the RB211 contract. I do not know whether the engine is good enough, or whether the contract is good enough. The Minister may have been right on Monday, when he said one thing, or on Wednesday, or on Thursday when he said another. I am not in a position to know whether the engine is a good one. If we are successful in renegotiating this contract, there is no need to liquidate, unless it is the Government's intention to rob the creditors here, as well as Lockheeds. If the Minster does successfully renegotiate, there is no need to liquidate. I hope that the Minister will accept that.
The Minister may not be able to renegotiate successfully. I accept that it may not be possible; but in that case it should be possible to try for a composition, because, as things are under the present arrangements, the creditors will recognise that their chances of getting very much are slim. Anthony Harris in the Guardian yesterday thought that it might be 25 per cent. My experience of liquidations is that once they start, once the vultures get in, the creditors do not get very much, and certainly they would be prepared to do some kind of composition. When that is done it would be possible to take it over as a going concern without liquidation. So either way, whether or not there was successful re-negotiation, there would be this possibility.
But, at the end of the day, this has to be a hard-headed commercial calculation, and normally one would expect a Government like this to be able to make such a calculation, but one must now have some doubts, to say the least. Without going into all his figures, some of which were inaccurate, Anthony Harris in the Guardian yesterday concluded that the cost of keeping it going might be about £100 million. He made many assumptions, and I have made some myself, but even if he is wrong and it is £200 million, it would be very strange if the Government were not prepared to pay £200 million to save Britain's commercial honour, if for nothing else. 969 The cynical may say that that is not worth £200 million. In liquidations I have seen creditors screaming their heads off and the next day trading with the same company and giving credit. We should not, as a nation, be cynical about that that would not be pleasant—but it might be done. But, in addition to Britain's commercial honour, there is the real economic and social cost of massive unemployment, which is a genuine cost.
There is the cost of buying advanced engines from monopoly companies in the United States. There is the difficulty of trying to sell engines and advanced technology to the United States and the rest of the world, with the difficulties about delivery dates and the rest. There is the loss of the sub-contractors and the consequent loss of tax, and the social and economic cost to those sub-contractors. If any people were concerned about these small firms and their employees, I should have thought that it was hon. Gentlemen opposite.
There is also the real cost of this on the whole question of risk taking. Previously, if one were owed money by Rolls-Royce, a bank would gladly lend money against it. Now the banks will be looking with a jaundiced eye at people owed money by companies which previously one would not have dreamed of worrying about. This will have a serious effect on the general economic climate. Some of it will be calculable and some will be incalculable.
There is the question of workers' shares. I cannot see workers being happy about taking up shares in their companies, especially if they are partly paid up shares, and they are then liable in this sort of situation. Fortunately, I understand that the workers' shares in Rolls-Royce were fully paid up, but workers with partly paid up shares could be the only shareholders with a liability. So there are some serious costs in addition, which one would ignore at one's peril.
Of course, one can still assume that there is a saving of £200 million, a significant sum. The Chancellor told us on Monday that he was taking care of the taxpayers' interests. But, even if my figures are not accepted—I would have said that it was much less than £200 million, and would have liked to present figures if it were not too late—it is a 970 saving only in the narrowest sense. I believe that at the end of the day the taxpayer and Britain will have paid a heavier price than we yet know.
§ 12 midnight.
§ Mr. Michael McNair-Wilson (Walthamstow, East)Now that we are coming to the end of what is an enabling Bill to allow nationalisation to take place, one question which keeps entering my mind and which never seems to be satisfactorily answered is whether this act of nationalisation arises because Rolls-Royce is bankrupt and that it is bankrupt because the Government were not prepared to bail it out over the increasing costs of the 211 engine.
If this simple proposition is the case, as I believe it is, it is difficult to understand why my right hon. Friend continues to talk about renegotiating the contract. I should declare an interest, in that I am one of those unhappy individuals who are shareholders in Rolls-Royce. If we are to spend a large sum on Rolls-Royce and then renegotiate the 211 contract with Lockheed, surely we shall finish up at the end of the day having spent very much more money than it appears at the moment we would have had to spend to bail the engine out.
Another question which seems to be posed is: how importent is this engine? I cannot claim any technical expertise which allows me to know whether the engine is, as the right hon. Member for Bristol, South-East (Mr. Benn) said, the launching pad for a series of new technology engines or whether it is one more civil aero-engine which if Rolls-Royce does not build it will not necessarily be crucial?
The extremely reputable air correspondent of the Financial Times argued in an article in yesterday's edition that this 40,000-1b. thrust engine is the beginning of this new break-through into very much more powerful engines and that, therefore, if Rolls Royce did not build it it would not get in the big league. No doubt this question was considered by the Government, and they have decided that they should not support the project, for all sorts of commercial considerations, all of which I accept.
I should be grateful if my right hon. Friend would make it clear to me, to the Committee and to all shareholders and, 971 indeed, to others with interests in Rolls-Royce that the Government are not welshing, that they are not trying to get out of compensation to Lockheed. They were asked to bail Rolls-Royce out, and in their judgment, which after all is exercised on behalf of the people, they decided that the sum which they were being asked to provide—there is no particular reason why they should provide it—was too much and the risk was too great and, therefore, that it was best to let Rolls-Royce go bankrupt, with the Government picking it up in terms of nationalisation.
§ Mr. DalyellIn the hon. Gentleman's genuine interest, which the House respects, in matters of perfecting airlines and aircraft in general, what does he think about the issue of having to buy aeroplanes in future across the exchanges?
§ Mr. McNair-WilsonIf the hon. Gentleman will forgive me, I will not explore that very long argument at this moment, although I appreciate his intervening.
I come to the question of the value of the company. Clearly, we shall need another statement as to exactly how the value of the assets will be worked out. I do not care for the concept of one bid being put on another to some astronomic figure, and I feel sure that it is not in the Government's mind. I welcome the possibility mentioned by my right hon. Friend of an arbitrator coming in between the receiver and the Government to decide what is a fair price. This is very near the point.
I want to put in a word for the shareholders. I would not go so far as to say that any of the shareholders—myself included—bought Rolls-Royce shares because we knew that there was a great deal of Government money in the company, but it is true to say that that is the situation.
The shareholders find themselves in a very curious situation, because I do not believe we have ever had a nationalisation of a bankrupt company before. The shareholders are in a position where they might have to take an arbitrary figure for the company, which may mean that they will have to take a very small figure or nothing at all. I should like to think that the Government will be able to find a way to re-float either the company or 972 some portion of it and that preference could be given them. There are 18,000 workers in Rolls-Royce who have shares, so it is not a question of just giving the big institutions large sums of money or preference. It means giving that to ordinary people who put quite small sums of money into the company.
How are we now to make the State-owned Rolls-Royce accountable to the public? We have heard a great deal about the problem of monitoring public expenditure in advanced technology. The right hon. Member for Bristol, South-East was very honest when he said that Ministries no longer have this capability, and that advanced technology is so advanced that only quite small numbers of people are able accurately to assess it. If that is the case, clearly we shall have to set up some sort of machinery to give the feeling at least that, on broad lines, we know what the company is up to and that its spending is roughly within the limits expected.
We can think of the RB211, and we can just as easily think of Concorde and wonder how we could start with a figure of £80 million and reach £850 million. Where does accurate monitoring come in there?
I am extremely sorry that neither the previous nor the present Government have seen fit to publish the I.R.C. Report on Rolls-Royce. It must be a document of some value. It would have helped us all today because we would have had that much more information. But I wonder whether such a distinguished accountant as Mr. Ian Morrow of Rolls-Royce was not able to get some idea of Rolls-Royce's situation soon after he was appointed. I wonder whether the RB211 is the whole story, or whether the Rolls-Royce pyramid is shaky in more ways than one. I wonder whether the Government's decision not to back the RB211 was arrived at through something in their minds about that.
I will not admit for one second that we on this side of the Committee have any intention of welshing on any obligations. That is a good attack to make on us, but we are not nationalising Rolls-Royce for that reason. We made a judgment that it was the best policy to pursue in the country's interest.
I will end by one more question to my right hon. Friend. Now we have the 973 company, how do we intend to capitalise it once we have been able to sort out the receiver's problems, the question of assets, sub-contractors and so on?
§ Mr. Leslie HuckfieldI return to the point made by my hon. Friend the Member for Heywood and Royton (Mr. Barnett), that many firms must be under the impression that Rolls-Royce' had already been guaranteed the £42 million which was assured in the Minister's statement last November. When he said that, he was getting very near the mark. From inquiries which I have made round my constituency, it is my impression that many of the Coventry sub-contractors of Rolls-Royce were genuinely under this impression.
I should like to quote part of a letter which I have received from a firm in my constituency, which clarifies this point:
This company, during November, when the Government promised £42,000,000 was led to believe that Rolls-Royce had official and intense Government backing and on such a belief was quite prepared to carry on with sub-contract work and in fact, in good faith, took on substantial additional work, I might add, to the detriment of other customers. I would therefore ask you to make sure that all trading since that date be completely honoured being insured by the Government.The letter ends:Hundreds of jobs and thousands of pounds are in jeopardy and unless something positive is actioned quickly the consequences could be catastrophic.That is just one letter, but it exemplifies and typifies the sentiments being expressed by sub-contracting firms in my constituency and the Coventry region.These are not firms which are exclusively concerned with work on the RB211. They are general Rolls-Royce sub-contractors. The impression has been given today that only firms concerned with the RB211 are affected. In fact, a great many other projects involve sub-contractors. When one looks at the Coventry complex of small firms on sub-contract work from Rolls-Royce and realises that many have a very high percentage of their total annual output connected with Rolls-Royce, one appreciates their very strong feelings. When my secretary and I telephoned some of them in the past week, it was difficult to get them to speak for the first five minutes of anything but their anger. That has been the reaction of many firms in my constituency.
§ Mr. DalyellThat is absolutely true.
§ Mr. HuckfieldAnother point which has not been made so far is that when the deputation of Coventry Parkside shop stewards visited this House a few days ago we were told that an internal communications memorandum issued by middle management in Coventry Parkside stated that Rolls-Royce had already been guaranteed the £42 million. Even the shop stewards and middle management of Rolls-Royce in Coventry Parkside had worked on the assumption that the £42 million had already been handed over, guaranteed, or at least credited to Rolls-Royce.
Having heard about the letter received by my hon. Friend the Member for Heywood and Royton and about his attempts to get the Minister to make the position clear in this House, I can only add my endorsement that the right hon. Gentleman should give far more information to the House when making statements of this nature.
Many of us have people who work in Rolls-Royce factories among our constituents who are all waiting to be paid—quite apart from the creditors. Those who are paid by means of weekly wage packets are all right: they have their cash. But those who have been prudent and chosen to take their wages in the form of transfers to their banks may find that their cheques are not accepted. There must be hundreds of examples up and down the country of creditors and workers who are in exactly this kind of position. I believe strongly that the Government have a moral obligation to give some kind of guarantee to the firms concerned that they will get back some of their money. I am not an accountant, but I do not think that any hon. Member on this side who represents any profession has been satisfied by the attempted explanations that we have had from the benches opposite during the day. Despite the fact that we have had the Minister, the Parliamentary Secretary, the Solicitor-General and even the Lord President having a go, many of the vital matters about which firms will want information in order to pay their workers tomorrow still have not been explained by the party opposite.
§ Mr. Barnettif the Ministers are not able to put at rest the minds of the workers whom my hon. Friend represents, 975 I might be able to. I am sure that the receiver will provide the cash. This would be a pre-preferential debt, and if workers are not being paid, they should be. Their cheques should be honoured. I am sure that the money will be available and that the workers will have no difficulty.
§ Mr. HuckfieldI am grateful for that intervention. I would normally go to my hon. Friend for accounting advice. However, in this case an hon. Member should have been able to find out from the Front Bench opposite.
If the local creditors of Rolls-Royce were in some doubt about the £42 million, I wonder about the position of Lockheed. It is interesting to read the statement on behalf of his company made by Mr. Haughton, the Chairman of Lockheed, in which he said:
… we were completely surprised and appalled at the precipitant decision made by the Rolls-Royce board of directors and the sudden withdrawal of the British Government's financial support for this key industrial firm. The Government's stand today represents a distinct change from its announcement, made last November, when it agreed to advance the Rolls company £42 million.The statement was printed in full in Flight International this week.12.15 a.m.
We have heard various allegations in the past week about assurances given to the Lockheed Corporation by Ministers on continuity of support for the TriStar and the RB211 project by the Government. We ought to have a far better explanation of exactly what kind of assurances of continuity of support for the RB211 have been given to Lockheed since last November.
I hope for some clarification on that point, because The Times last Saturday said that the Government told Lockheed in advance that it need not look to the penalty clauses for compensation. I do not know whether the Financial Secretary to the Treasury, the Minister now on the Front Bench, has any further evidence to adduce on that tonight, but when even The Times comes to the conclusion that the Government's solution is being sought in order to welsh on the contract that Rolls-Royce has with Lockheed, the Committee is owed an explanation from the Government.
§ Mr. Ernie Money (Ipswich)Will the hon. Gentleman deal with the rumour reported in the Press this evening that three American airlines—T.W.A., Eastern and Delta—have offered to allow Lockheed to increase the price of each TriStar by £250,000, and that negotiations on that subject are at this moment going on?
§ Mr. HuckfieldI am grateful to the hon. Gentleman. He knows that the reason for that is that T.W.A., Delta and Eastern are already committed to extend 100 million dollars of credit to Lockheed. Since T.W.A., for instance, has already pledged about £57 million, it was only in the airlines' interests to allow the price of the aircraft to go up. I am surprised to realise that the hon. Gentleman did not see what a natural follow-on the statement to which he referred is, assuming that a pledge had already been made to give additional credit to the Lockheed Corporation.
Apart from the way in which all this has been done, the most important matter which has not yet been mentioned is that these events have occurred just at the stage when Lockheed was growing very confident about performance, about options and about the operational economics of the TriStar. One has only to read the report in Flight International this week to see that. Just before the RB211 announcement was made, a reporter of Flight International reported from Palmdale and the Lockheed plants in California:
The genuine optimism in this respect is still complemented by a belief that not only will the TriStar survive the financial troubles of the Corporation, which revolve around the C5A, but that in the long term it will be a profit-maker".That is the kind of optimism which existed in the Lockheed Corporation just before the Minister's statement to the House.One can only assume that Lockheed had at last settled its contract difficulties with the Department of Defence over the C5A, the Cheyenne helicopter and a few other things, having got the credit facilities from the airlines to which I referred in answer to the hon. Member for Ipswich (Mr. Money), and having got most of its basic difficulties sorted out, it was starting to feel very confident in the options and orders for the TriStar. But now the Rolls-Royce affair has suddenly been flung in the face of the corporation. 977 I could make a lot of other points of great importance. With the RB211 Rolls-Royce has a stake in the North American market. To many of us who follow the aviation world it has been apparent for a long time that Rolls-Royce could not succeed without some prolonged stake in the North American market. We know the company was not successful in getting the engine order for the Boeing 727 or 747. We know that it was only after a great amount of difficulty that Boeing was persuaded to offer the Rolls-Royce Conway as an option for the 707. It was, therefore, a great triumph and a great joy for the British aero-engine industry that Rolls-Royce managed to get the RB211 put into the Lockheed TriStar, because that meant that Rolls-Royce at long last would have an attachment with an American airframe manufacturer, not just for this generation of trijets and twinjets but possibly for the next generation.
As hon. Gentlemen on both sides have pointed out, this was for Rolls-Royce a real breakthrough in the making. I know it had difficulties with the Hy-fil and titanium blades, and I know there were some difficulties with the trishaft principle, but I am quite convinced that Rolls-Royce had opportunities not only to become attached to a whole new family of engines and airplanes but also at last to achieve a connection with an American airframe manufacturer which had so far eluded it. All this has been put back into the melting pot by the present Government, and put back into the melting pot at the very time when Lockheed had started to feel confident about TriStar.
I could make a big point, I suppose, about the Minister's lack of explanation about why the development costs of RB211 escalated to £60 million. He has still not explained it to the Committee or to the House. He said in his statement last November that labour costs amounted to a mere 15 per cent. of the escalation. Well, if labour costs have gone up a mere 15 per cent. of the escalation, what is the real cause of the escalation in costs? Is it the fact that Rolls-Royce was carrying on dual research with Hy-fil blades and titanium blades? Was it the fact that the engine had to be substantially redesigned because the titanium blades were heavier? Was it because performance could not go beyond 40,000 lb. thrust? What is 978 the real explanation of an escalation of £60 million in the range of costs? So far we have not had any real attempt at an explanation.
Obviously, as hon. Members on this side have hinted several times this evening, one of the best things which the Central Capability Unit we are assured has been installed—at No. 10, or somewhere—could do would be to inaugurate a full social benefit cost analysis. My hon. Friend the Member for Heywood and Royton has already hinted at some of the social costs involved, not just a Roskill user cost at Foulness, or how much is the beauty of a village church in the country. We are dealing with social costs which will be a charge on the Exchequer, and what the Government ought to be doing is thinking not just of the 6d. off the income tax in the next Budget but of the full range of costs and benefits of continuing or not continuing the sub-contracting for the RB211.
It is not just the compensation to Lockheed. It goes far beyond that. It goes as far as paying out unemployment benefit; it goes as far as contributions to the Redundancy Fund; it goes as far as the loss of corporation tax from Rolls-Royce and from the sub-contractors. These are things the Central Capability Unit might be investigating, and the possible contraction of the social benefit basis. We have not had the full figures. and judging by some of the meagre and paltry excuses we have had during the day, I do not think that we shall get them, but since many of these claims will fall on the Treasury, there is a crying need to bring far more of these costs into the equation.
I believe that we have to work out a formula whereby under the Bill we shall have some public accountability in respect of Rolls-Royce. I have never been satisfied about this. In the past, when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) was Minister of Technology—and in his various other capacities—every time we put down Parliamentary Questions about Rolls-Royce we were told, "This is a matter not for the Government but for the commercial judgment of the company." I can only say that it seems to me that the formula being offered under the Bill for nationalisation means that 979 we shall have even less opportunity to put down Questions. But I am concerned not only that the nationalisation of Rolls-Royce should be extended much further than is proposed but that provision should be made for public accountability and parliamentary questioning.
What is at stake is the fact that if we miss out on this generation of turbojets—and it is a very important generation indeed—we shall not get back at all into the next generation, because we cannot get into the generation of 90,000 lbs. or 100,000 lbs. thrust unless we have been through this generation, and it appears that the Minister is trying very hard to cancel this generation. If we do not go through this generation I cannot see how we can break through into the next. That is the immediate stake of the industry.
What, in the long term, is even more at stake is whether anyone in the world will ever trust us again. Many of us have found one of the pleasantest things on going abroad has been what has been said about our parliamentary system, our government and the integrity of British government. People abroad have said: "Well, I suppose you British always stick to your word." They will not say that in future: they will just say "Rolls-Royce." That is the kind of situation many of us can envisage.
That being so, will the Minister, apart from trying to give some kind of assurance on the points I have put to the Committee, say that he will seriously consider continuing with the RB211 project? There are airlines which ordered TriStar specifically because the RB211 was to be the engine. Eastern Airlines ordered 60 and TWA ordered 44 specifically because the engine was to be the RB211. They are very disappointed and sore airlines at the moment. What is at stake is not just the airlines or the British aero industry, but the whole integrity, reputation and standing of the country.
§ Mr. T. L. Iremonger (Ilford, North)The hon. Member for Nuneaton (Mr. Leslie Huckfield) has really made a Second Reading speech, which is, of course, entirely right and proper for the House, but I want to ask the Minister just one question which I hope he will later answer. I was very worried to 980 hear my hon. Friend the Member for Eastleigh (Mr. David Price), in winding up the Second Reading debate, say what he did about the possibility of foreign offers being made for the company, and the determination to overbid any such offers. The Committee has been left in some anguished doubt as to what exactly this implies.
I should be grateful if my right hon. Friend would comment on this point, because this Clause, which is the heart and the only important part of the Bill, merely says, in effect, that the Crown may buy Rolls-Royce—it does not say that it shall—and it is open to any bidder from any foreign interest to step in and make a higher offer and any official receiver will have a duty to accept the offer because he has to protect the interests of the company's creditors.
12.30 a.m.
Since the object of the Bill is for the Crown to acquire the company in the national interest, I should like my right hon. Friend to say at what stage steps will be taken to see that the company is so acquired by the Crown and by nobody else. If a balance has to be struck between the duty of the Official Receiver to the company's shareholders and the need to prevent the company going to a foreign firm it will be a bad thing if that balance is tilted so that it does go to a foreign firm.
At what stage, if any, and by what means, does my right hon. Friend intend to step in and see both that a fair price is paid for the assets that are acquired and that they are acquired by the Crown and nobody else.
§ Mr. Elystan Morgan (Cardigan)A number of hon. Members on both sides of the Committee have referred with great indelicacy to "welshing". That term is obviously offensive to one of the nations of the United Kingdom, and it is particularly ironic when it is used in connection with probably the most un-Tory and anti-Tory nation on the face of the earth——
§ Mr. Michael McNair-WilsonWould the hon. Member not also regard it as a gratuitous insult to talk disparagingly about a "banana republic"? Just because a country grows bananas as its crop, is it more dishonest than one that does not?
§ Mr. MorganI was considering this matter very chauvenistically, thinking only of the good name of the countries of the United Kingdom. Many hon. Members would regard it as grossly offensive to people who are English if the term le malaise Anglais were used to describe homosexuality. I submit that the same courtesy should be extended to the Welsh nation in relation to a situation which can be described by the use of many other terms of abuse in the English language.
My first question relates to the statement made last week by the Minister of Aviation Supply. He described the arrangement made last November—less than three months ago—between the Government and the company in such terms as to suggest that there was nothing in the situation that would put Ministers of the Crown upon inquiry in relation to the general financial state of Rolls-Royce. It is true that when the loan of £42 million was made the transfer of the money was made conditional upon a satisfactory accountant's report, but the agreement on behalf of both the Government with regard to the £42 million loan and the banks in respect of their £18 million share was made upon the supposition that there was little wrong with the general financial state of Rolls-Royce.
Were preliminary inquiries even of the most cursory kind made at the time, or was it assumed that the general financial stability of Rolls-Royce was beyond all doubt? Is it true, as my hon. Friend the Member for Heywood and Royton (Mr. Barnett) has said, that the consideration of the accountant's survey came rather as an afterthought? Was any general appreciation of the situation made before the agreement in principle to make the £42 million loan was arrived at?
My second question concerns Section 332 of the Companies Act, 1948. As I understand it—rather heated passions were exhibited in the House at the time—the statement of the Solicitor-General was to the effect that it would have been highly dangerous for the Government, if they had seen fit, to back Rolls-Royce once they knew the true financial position. It is even suggested, I understand, that the Government would come very near to committing the offence, if not 982 actually committing it, of compounding an offence under Section 332.
Does the Minister really say that that is the position? Does he agree that the operative phrase in Section 332 is "intent to defraud"? That means two things. It means a deliberate commitment to defraud, or recklessness on the part of directors and those who have the management of the company to such a degree that they care not whether the remaining assets of the company be frittered away in a situation in which it is impossible for the company ever to recover. If the Government accept the definition—the two heads of fraud in that connection—how can it possibly be that when a Government with almost unlimited resources hitches its wagon to a company there can be any question of either a deliberate attempt to defraud or complete financial recklessness?
The Minister owes it to the House to say whether that is his definition and whether he says that the Government were inhibited in the courses of action they could have taken because they feared that, actually or by analogy, they would have been enmeshed in the offence described in Section 332.
My third point relates to the statement made by the Parliamentary Secretary in winding up the debate on Second Reading. He seemed to be saying that in order to ensure that control in the part of Rolls-Royce in which they are interested would be kept in Britain at all costs, the Government would trump any genuine bid made by a foreign concern. I appreciate that there are two matters there. One is the legal obligation of the receiver. He is in a trust capacity. He must sell in the best market possible consistent with a fairly early sale and an expeditious division of the assets. But is the Minister saying that an unreserved guarantee has been given by the Government that control in the remainder of Rolls-Royce will not be allowed to pass beyond these shores?
§ Mr. David PriceThe Government have said that the control of the new company will be in wholly British hands, certainly initially. My right hon. Friend talked about possible S.N.E.C.M.A. participation, but initially, when the company is formed to take over the assets, it will be British. The point concerns the 983 hypothetical possibility of the bidding going up. Clearly there would come a point, if bids went on up, when the market was being rigged, in which case one would call the bluff. May I say in response to the hon. Member for Stockton-on-Tees (Mr. William Rodgers) that the Receiver is not the creature of the Government. He has his duty to the debenture holders, and, therefore, if he gets a better bid it can affect the price at which the Government make their bid to the receiver.
§ Mr. DalyellThis might be a convenient moment to ask what the rôle is in the next few weeks of Lazard Brothers?
§ Mr. MorganI am deeply grateful to the Parliamentary Secretary for his intervention. These questions arise from what the hon. Gentleman has said now. Is he saying that in the initial presentational exercise control will be maintained in British hands, but that no guarantee is given with regard to any further statement? We are not talking about bluffing and false bids. Is the hon. Gentleman saying that if there is keen international competition to acquire the assets the Government will see to it that they top all the bids? If he is, it must be his clear duty to say how that could possibly be consistent with the speech by the Prime Minister last Sunday.
The right hon. Gentleman then said that it was a great tragedy that Rolls-Royce should have collapsed, that it was a great national disaster and disgrace and a great tragedy for the persons concerned, but that the paramount consideration was the interest of British taxpayers. How can one on the one hand say that one will commit oneself to an open-ended commitment to trump all international bids, however high, provided that they are genuine, and on the other hand say that one's taxpayers come first? Are we to keep control in Rolls-Royce at all costs, as if it were a priceless, sacred talisman, and damn the taxpayers, or must the taxpayers' interests be paramount? It is a simple question, and it admits of a straight, simple, clear answer.
My last point concerns the statement by the Solicitor-General in the context of such part of the assets of Rolls-Royce 984 as are located in the United States. I well understand that he would not be expected to go into the detail of United States law in relation to each and every situation that might develop in this connection. But will the Minister who replies tell us whether any of those assets consist of movables as defined in private international law, and, if so, what percentage of them? I believe that it is accepted the world over that the law relating to movables is always that of the country in which they are situated. Therefore, it does not at this moment matter to us exactly what the conditions would be but we want the Minister to tell us categorically that the operative law with regard to those movables will be that of the United States, either Federal or State law.
I do not put those questions in any spirit of malice. Each of them goes deeply to the root of the problem. They are questions deserving an answer, and the Committee expects that answer to be given.
§ Mr. BishopI come to the Dispatch Box rather late—or early—in the day, but I do so without apology because, although we have been kept from our beds, thousands and thousands of people up and down the country will also be awake with anxiety tonight. Many people in the Public Gallery have shown their concern and interest, and thousands of people who have lobbied hon. Members today have demonstrated their concern and anxiety. When we go to bed we may suspect that many will be worrying about their losses—financial losses, the loss of jobs and prospects, and other losses. There must be many shopkeepers and others throughout the country who will fear the results of this national disaster, which is very much like a tidal wave that has swept across the shores from the United Kingdom to the United States.
§ Mr. IremongerOn a point of order, Mr. Johnson. I am sorry to interrupt the hon. Gentleman, and I hope that he will not take it amiss, but is it not strictly out of order in the Chamber or any part of the House, in full session or Committee, to refer to the Public Gallery? If the hon. Gentleman wants to spy strangers, let him do so.
§ The Temporary Chairman (Mr. Carol Johnson)Order. It is strictly out of order, but I do not think that anyone could object to the manner in which the hon. Gentleman used his illustration.
§ 12.45 a.m.
§ Mr. BishopI think that we can leave it to you to say when I am out of order, Mr. Johnson.
The point remains, now that the madding and perhaps maddening crowd has left the Chamber, that we have had a very orderly Committee stage. We have heard extremely good speeches on both sides from hon. Members with experience of accountancy and the law. But I suspect that the views of the engineers and designers have not been heard as they should have been, and that brings me to the core of the Clause. I suspect that there has been a great deal of anxiety and concern about the rather unfortunate remarks made by the Minister on Monday, when he gave some indication that he was not quite so keen on the technical aspects of the RB211 as he might have been, although I recognise that since then he has tried to retrieve the situation.
This is one of the most important points if we are to talk about this Bill as a message of hope to thousands, not only in this country but abroad, and as an indication of the desire of hon. Members on both sides to do all they can to retrieve the position. I recognise also that hon. Members opposite have had to say and accept unpleasant things tonight in going as far as they have in this degree of public ownership. We feel that the Bill does not go far enough, but at least we have all been united in a common desire to do everything possible to retrieve the situation.
But I suggest that the core of Clause 1 is whether or not we want the RB211 engine. That is why I made my comments a few moments ago to the Minister. The criticisms levelled at the RB211 engine by the Minister, on the research and development uncertainties and escalating costs and the effects of delays before production, apply with equal force to every aircraft and every aeroengine manufactured in Britain and abroad. This will continue to be the situation for years to come. The RB211 escalation problem is by no means a rare situation. We have had it before, 986 and we must live with it for a long time to come.
We need the vast resources which only the community can give in order to deal with these eventualities. There are two main points to be borne in mind on the subject of the contract. There is no proof that what happened to the RB211 on its research and development and costs would not have happened to any other manufacturer who might have secured the order, even at a higher price. That part of the problem is not only related to the commercial difficulties of Rolls-Royce but applies to the shaky financial situation facing Lockheed. Lockheed must have been anticipating to some extent what eventually happened. Those of us who know that the aircraft industry and the extent of the escalation which is inevitable in it must have suspected when the fixed price contract was signed that this situation was a real possibility. There has been justifiable comment about the effect on Concorde itself.
It is all very well for people with hindsight to claim that the last Government should not have agreed to the contract in the form they did. But we have heard often enough, probably too often, from the present Government about the need to trust private enterprise to know its own business best. One wonders about the possibility of having an army of civil servants, many of them quite unacquainted with the industry, with the job of going round to private firms to check whether their estimates and calculations and forecasts are reliable before we agree to any contract. In this unique situation, where there is specialisation in the industry, we have to trust the people concerned to know their job. In the light of their present policy, would the Government have backed a contract which would have allowed for the escalation of costs?
I referred earlier in the day to the fact that 64 hon. Members opposite agreed to a Motion which placed full confidence in the prospects and applauded the efforts of Rolls-Royce teams technically, and also applauded the work of the financial institutions which made the deal possible. It gave no credit to the Government of the time, and I had to initiate a Motion to do that. But it seems rather unfair to say that the Government of that time should have no credit for the deal, and then suggest that my right hon. Friend the 987 Member for Bristol, South-East (Mr. Benn) should now take a full share of the blame. At least he has asked for a Select Committee of Inquiry into the matter, and I hope that something is done about that.
The point is that whenever cancellations take place hon. Members rightly point out that what is wrong is suddenly to stop not just the project but the prospects of future developments with so much promise. My hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield) has made this abundantly clear. This is the core of the situation. First and foremost in the Bill we have to show confidence in the RB211 itself. If we do not have that, all the debate today and all the anxieties of the House of Commons and millions of people in the country will have been useless. Whether or not the Government are committing themselves to this engine, which technically and in many other ways has much to commend it—we know that many air forces and airlines are relying on it and its future stages of development, which we now have the prospect of seeing—that would make the exercise worth while.
The editorial in The Times on Wednesday mentioned some of the technical aspects which were well worth reading about. There are many aspects to the engine itself which are a major breakthrough, with low noise, a significant step forward in design, flexibility, better performance and so on. All of these are of tremendous importance to the development of this engine and those which are to follow.
I believe that renegotiating must be the basis of the Government's policy in future. In this we may be encouraged by the Financial Times, which, reporting from New York on 9th February, quotes Mr. Haughton, Chairman of the Lockheed Corporation, as saying that it was now up to the British Government to pull the RB211 contract out of the fire. He said that it was an assurance that was absolutely imperative to both Lockheed and the airlines which wished to buy the L 10–11 airbus. He went on to say that there was no reason at all why we should not get together on this matter, and he was of the opinion that if we had the intention of doing something about it, this could be achieved. This is a most important point.
988 We say that there should be not partial but full nationalisation of Rolls-Royce. One wonders whether the Government dealt frankly with the Lockheed contract when they knew the position. Why did they not offer to put in more money so as to complete the contract? There has been defaulting with Lockheed, but I believe that there is still time to renegotiate and take over Rolls-Royce fully in order to renegotiate the contract itself.
It is also important that we act as quickly as possible in order to preserve confidence not only in the firm, but in the sub-contractors and to keep the design teams together. If we lose the design engineers and technicians and those whose skills have been bound up in this great enterprise for many years, we shall lose the very essence of Rolls-Royce itself. At the weekend and in the days to come there will be many people whose jobs are bound up with the firm who will be looking for alternative forms of work and employment elsewhere. Once design teams are broken up, it takes a year or two or even longer for those people to be brought together again to work as a useful unit.
There has been talk of the interests of the taxpayers. Many of us who heard the Chancellor talking of those interests heard the word "taxpayers" more often than we would have liked. We would have liked the right hon. Gentleman to have mentioned the word "workers" more often in that context. When we recognise the contribution of the taxpayer we should also recognise the social costs which have to be taken into account, as my hon. Friend the Member for Nuneaton mentioned. There are such matters as redundancy payment fund contributions which have to be made, unemployment benefits, social security and the effect upon the business community, the shopkeepers and many others.
At the end of the debate we are perhaps thinking of the great technical strides which have been made. In the recent Apollo moon mission we read that the module landed at a point marked only 22 metres from the target. If we are able to do that, it seems inconceivable that with the vast resources of these great firms we cannot ensure that we land the RB211 engine into the airframe where it is desperately needed. I am sure that this can be done. It must be done. 989 As we end our deliberations and place our hope in a piece of green paper we call the Bill, we ought to send out a message of hope, not false hope, but a message saying that at the end of a rumbustious day of sincere debate between the parties we are united in our endeavour to make sure that the people who have made their contributions to this venture are able to carry on. There is no alternative, because to replace the engine means at least three years' work and a complete redesign for the aircraft. We rely upon the Government not only to be sincere in their intentions to keep this engine but also to be willing to keep us informed of what is going on.
§ Mr. CorfieldWe have had a long debate, and I hope the Committee will forgive me if I sometimes get my pile of notes muddled.
The hon. Member for Newark (Mr. Bishop) and others have asked me to say that we are sincere about the RB211. I have already done so, and I repeat this willingly. The hon. Gentleman put his criticism of my remarks on Monday a good deal more moderately than some of his colleagues. It is clear from reading what I said in its context that I was referring to time. I used the word "time", not "inferior".
It is right that we should look at the result of delay. I agree that delay and escalation are not, alas, unique to a particular engine or firm. Where there is delay it is sensible to look at the effect on the market, and I did my best to make an assessment. I did that in large part because I do not believe that it is right, as several hon. Gentlemen have suggested, that this is the beginning and end of everything. The technology is enormously important. I do not believe that we can say that there is absolutely no future for the British aero-engine industry. One of the first things I did was to put in hand studies so that if we cannot re-negotiate, we do not lose the technology and can get some value from this.
1.0 a.m.
Escalation has been touched on by a number of hon. Gentlemen. The Committee must try to appreciate that as at, I think, 20th July—it may have been a little later—it was thought that the launching cost was £75 million. Very 990 soon afterwards—I cannot remember the exact date, so I hope the Committee will bear with me—it was £135 million. That was the figure on which we were working in November. By January it was £170.
Hon. Gentlemen asked for a White Paper with the figures. I really had no faith in the figures. I am sure that the hon. Member for Heywood and Royton (Mr. Barnett) will agree that with accounts in this state it is not easy to sort them out quickly. It is certainly beyond me, and I dare say that it would be beyond the hon. Gentleman, to sort them out in a short time. However, I am sure that, given time, he could do it.
This has been one feature which has made the decision so difficult and made it almost impossible to produce the kind of information to which the Committee may feel it is entitled and which I should like to have given.
Returning to the Section 332 problem, I am sure that the hon. Member for Cardigan (Mr. Elystan Morgan), as an ex-Minister, the right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Member for Stockton-on-Tees (Mr. William Rodgers) realise that Governments seek their advice from the Law Officers of the Crown, not from Ministers of Aviation or anything else. Even if they happen to be lawyers, they are not good company lawyers. So what I say is not my view but the Government's view. I think that is the right way to put it.
I understand that the interpretation is precisely, not surprisingly, the view of my hon. and learned Friend the Solicitor-General, who intervened in the debate earlier. I suspect—again, I do not want to express a legal opinion—that the reasoning against the argument used by the hon. Member for Cardigan was accurately put by my hon. Friend the Member for Belfast, East (Mr. McMaster). No doubt this is a matter which the hon. Member for Cardigan and others who are interested can look up in the Law Reports. I can only say that this was the interpretation, and it was a real inhibition on the time scale. It was abundantly clear that not only was it our advice but it was equally the advice of counsel consulted by the Rolls-Royce board. They therefore felt themselves 991 to be in a very precarious position if they extended the time.
§ Mr. Elystan MorganI know that the right hon. Gentleman appreciates that he is on a very important point. If the Government felt that they were inhibited taking a course which they might otherwise have taken on account of the advice given by the Solicitor-General turning on the wording of section 332, surely the issues with which we are concerned are so important that Parliament could have repealed, amended or replaced Section 332 by something more appropriate.
§ Mr. CorfieldI must say that it would seem a fairly unconstitutional operation to repeal the law to get a Minister off the hook. But we could not have done it while the law was there, and I think that we might have taken longer than would have been comfortable for the gentlemen concerned.
However that may be, that was the situation. I assure right hon. and hon. Gentlemen that I and many of my colleagues sat up long into the night arguing how we could make more time to see whether we could negotiate on a less rushed basis with Lockheed.
My hon. Friends the Members for Oldbury and Halesowen (Mr. Stokes), and Bradford, West (Mr. Wilkinson) both made gallant attempts to try to draw some lessons from this catastrophe. I shall not repeat what they said. I can only say that this again is something that we have already put in hand to try to see where things have gone wrong, but can be improved, and, in particular, we have to look at the whole concept of launching aid; and this is not a criticism of the right hon. Gentleman.
We had got to the stage in this contract that had we gone on, except for the first tranche, it would from then on have been 100 per cent. underwriting of the company, and, as the right hon. Gentleman has said on many occasions, the whole basis of launching aid is that the element of risk gives one a certain guarantee of incentive and efficiency which enables Ministers to feel that they can reasonably safely not set up a parallel organisation, which would be expensive and probably inefficient, to monitor everything the industrial company does. But once one gets to the stage of 100 992 per cent., from there on this is not launching aid as we originally conceived it, and I am sure that the right hon. Gentleman would agree with that. That is one of the difficulties. Whether we have learned the right answer is another matter.
One of my hon. Friends referred to the question of top management and the necessity of men, and how much more important they are than the system. That is something with which we all fully agree, and I have little doubt that my hon. Friend is right that at certain middle management levels there has been a good deal of over-staffing.
The hon. Member for West Lothian (Mr. Dalyell) raised a number of points, one of which was in connection with Shorts. This company is directly under the Government's control. There is no doubt that it will be seriously hit if the RB211 does not go on, but it is a matter which I am considering under my hat as being responsible for that company as well as in relation to the matter that we are debating tonight.
As regards the engine, I do not think that I can say any more. The technology is of tremendous value. I am sure that we ought to do our best to renegotiate, but I do not think we ought to think that the end of the world has come for the future of the aviation industry if we cannot.
I am surprised at the suggestion made by several right hon. and hon. Gentlemen that we shall never again be trusted in America. When one looks at America, one realises how much more ruthless they are in these matters of commercial discipline. I cannot pretend that I find it difficult to recall any occasion but I find it difficult to recall any occasion on which the American Government have bailed out a private company, whatever the effects on its creditors, and I find it difficult to believe that they can honestly turn to us and use the sort of argument that has been suggested.
Another matter which has been raised by a number of hon. Members is this difficult question of valuation. As I explained, I am not a professional valuer, and again the time-scale is such that to have identified all the bits of Rolls-Royce, even if we were accepting the Opposition's Amendment to nationalise the whole lot, and put a value on them in a 993 week would have been asking the impossible. I am sure that on reflection hon. Gentlemen opposite will realise that that is so. I realise how immensely important this is to the Government and to the House as representing the taxpayers, and to the receiver as representing the debenture holders in the first place, and creditors in the next, but I hope the Committee will realise that it would have been an impossible exercise to have valued the undertaking by now, or even to have given an approximate price as to what would be reasonable.
§ Mr. BarnettI entirely accept the Minister's point. No one could have expected him to do so inside this time. But would he at least make it clear that he is intending to buy the enterprise not "on the cheap", on break-up values, but at going concern values? This would make a considerable difference, as I am sure he realises.
§ Mr. CorfieldThe usual expression is, on a "willing seller, willing buyer" basis. But I can visualise cases in which the going concern value might be less than the site value, particularly in places near London, where the value of the sites is often enormously high, particularly if they are sites with plant which is relatively obsolescent. It could work out that way; but I have no means of doing that complete individual identification.
The hon. Member for Dudley (Dr. Gilbert) asked me many questions which, frankly, I would find it much easier to answer if I could read them in HANSARD in the morning. He asked whether we had yet made any survey of the subcontractors affected. This was something which I put in hand immediately, but while it was still in doubt what the future of Rolls-Royce would be, one could not run to the creditors and ask, "How much are you owed by Rolls-Royce, because it may be in difficulties?" In any case, we should only have had two days in which to do it.
Now, with the intervention of the receiver, the next stage has to come from him, because he is in possession of the information. I certainly do not think that I would be able to give any indication of the proportion of the debts due in respect of the Lockheed contract compared with the total debts due, which 994 was one of the hon. Member's questions. Anyway, I will certainly look at them in the morning and ensure that we do our best to answer them or to tell the hon. Gentleman why we cannot.
§ Dr. GilbertWould it not be possible—I accept that it would be out of the question at the moment to put a value on this situation: no one is suggesting that—for the Government to make a range of estimates from the worst to the best that they would come out of this situation, allowing for penalty clauses and costs and so on? If they want to, they could make some sort of indication available to the creditors that within that range of total costs they could pitch the price so that the creditors could expect a certain range of relief from these problems.
§ Mr. CorfieldThe biggest difficulty here is the question of the unquantifiable claims of Lockheed, if they eventuate. If we can negotiate, of course the first base of those negotiations would be to eliminate those claims. The receiver would be in a position, when he has had time to collect the information, to begin to see where people stand. But it is an almost insuperable problem to give an accurate estimate one way or the other. It would be for the receiver, if the worst came to the worst, to settle out of court. But I do not believe that anyone will go to court on an immensely complicated matter of this sort, with the New York law, if he can possibly help it. But, like my hon. and learned Friend, I do not profess to be a New York lawyer.
§ Mr. John Mendelson (Penistone)The Minister must be fair, as we are trying to be fair to him, and relate this to the debate which has taken place during the past day. The point of my hon. Friends was rather different. Surely the Law Officers of the Crown had a duty to advise the Cabinet in the weeks preceding the decision, and then a duty to inform themselves of the legal position of the United States.
§ Mr. CorfieldIt was not a question of weeks, and the contract between Lockheed and Rolls-Royce was a very bulky document. But it was the property of Rolls-Royce, and I am not even certain that it was in our possession at the time. Certainly it was only a question of two 995 or three days. To learn the New York law and then study the document I think even the hon. Gentleman would find a fairly formidable task.
§ 1.15 a.m.
§ Mr. KilfedderWhen the contract was entered into between Rolls-Royce and Lockheed, did the Law Officers at that time examine the legal position and inform the Minister of Technology of the day?
§ Mr. CorfieldI hope that I am not putting words into the mouth of the right hon. Member for Bristol, South-East, but, knowing how these things work, I should doubt it very much. I should think that undoubtedly what happened was that the contract went to the contracts department in the right hon. Gentleman's Ministry, which is now mine, for no other reason than to negotiate the contract for launching aid and the levies payable, but I greatly doubt if other lawyers came into it. Perhaps the right hon. Gentleman can remember.
I looked into the pensions position earlier today. As far as I am aware, the situation is that there should be no difficulty about the transfer of pensions in respect of employees who are taken on either by the newly-formed Government company or by any other purchaser of a complete division. I qualify that by saying that I have not had time to obtain expert advice on all the pension schemes, because there are a very large number of them.
I am glad to have the opportunity to deal with the point raised by the hon. Member for Heywood and Royton about what I said in answer to his question. There is no doubt that I made a mistake, and I wrote to him. Although a reading of the answer to that question by itself would be misleading, it happens that on the same day I gave another answer of precisely the same nature in which I said quite clearly:
I would do what anybody else would do: consider the matter as it arises and not jump fences before reaching them."—[OFFICIAL REPORT, 9th December, 1970; Vol. 808, c. 388.]It was for that reason that I did not think that the hon. Gentleman could be asking the same question that I misunderstood him. The hon. Gentleman 996 will agree that in my statement it was made clear that it was a condition.In replying to the debate on Rolls-Royce launching aid I said this in November:
One or two hon. Members asked what was meant by the £42 million being subject to the appointment of an outside accountant. It was solely because the sums varied so rapidly and so often.I never thought that they were going to repeat themselves.I thought it right, because of the magnitude of the sums, to make sure exactly what the shortfall was, because the sums required to meet the cash flow depend upon the degree of shortfall."[OFFICIAL REPORT, 23rd November. 1970; Vol. 807, c. 157.]No one who had studied these matters could be in any doubt. Anyone who had read what I said in reply to the question in the very same column of HANSARD, I think, could not be misled. However, I admit that I was wrong, and that is why I wrote to the hon. Gentleman.When I looked at it, I thought, "Suppose the accountant comes out with a lower figure; we do not stand in with the whole £42 million". I was worried about that aspect; because, as I said the other day, never in my wildest dreams—or nightmares—did I think that this would happen.
§ Mr. BarnettI am sure that the Minister will agree—indeed, he has agreed—that his last statement on the record was in reply to me and was to the effect that the £42 million would be provided whatever the accountants' report was. That was the last statement before the Receiver was appointed. That was the last thing that was on the record for everyone to see, whatever had been said earlier. There would have been some suppliers who would have been entitled to take that statement as the right hon. Gentleman's last word, as it was.
§ Mr. CorfieldAny supplier who was taking an interest in these things would have read the whole statement in the original case and the longer debates and the very large number of questions that have been asked since. I should be very surprised if anybody was misled by that. It must be borne in mind also that the whole basis of launching aid is to attach it to a particular project so that 997 once the project had been stopped by the Rolls-Royce board, it stopped.
I suppose that to some extent it was purely fortuitous that we had this decision in front of us given by the Rolls-Royce board before the £42 million had become due to be drawn. I am not sure what I would have done had I been called upon to make it available before the accountants had reported. That is hypothetical. But if one had had no indication that there was trouble brewing, one would probably have made payments available. It was because we had this really disastrous picture put before us, and it came at that time, that the money was not there.
§ Mr. Leslie HuckfieldWould the right hon. Gentleman offer comment on the fact that I have seen in the House an internal communications memorandum submitted from the middle management of Rolls-Royce at Coventry Parkside to the joint shop stewards committee which states, in typewritten and photo-copied sheets, that Rolls-Royce has already been guaranteed the £42 million? If this was the impression of some of the sub-contractors, it was certainly the impression of many of the middle-tier management in Rolls-Royce.
§ Mr. CorfieldI find it very difficult to find an excuse for that, because I am convinced that the Department, whether under the right hon. Gentleman or myself, would have made that quite clear. It does not matter whether he or I was there, because that would be absolutely standard. After all, they are the people who officially deal with Rolls-Royce management in these matters. It is difficult to believe that that mistake could have arisen.
The hon. Member for Heywood and Royton suggested renegotiating the contract. I merely confirm that there were possibilities in that direction which we have not neglected. Another matter which he raised was the question of the workers' shares. This matter has given me a great deal of concern. I accept that they are peculiar types of share, with advantages in some respects over other shares and in many respects disadvantages. I have been looking into this very carefully to see whether something could be done in the new company, but I do not want to give any firm 998 undertaking to that effect. This is a matter which I will look at.
My hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson) asked whether we had allowed the company to go bankrupt because we were not prepared to bail out the RB211, and, if so, why did we not renegotiate the contract. I hope I have answered that. It was the time factor. In so far as there was time—I had about one day to see Mr. Haughton—it was quite clear from questions I put to Mr. Haughton that he was unable to make any offer at all either on increasing the price he would be prepared to pay for the engine—our information was that that had risen by £110,000 per engine more than the contract price—or on giving us any undertaking about claims for the engine being late. I do not blame him for that because it was very short notice, and we all know that Lockheed has had financial troubles, and clearly he had to go back to his bank. There was considerable evidence that Rolls-Royce was right when it advised me that it was unable to renegotiate.
§ Mr. Michael McNair-WilsonMy point was not why the hon. Gentleman did not renegotiate but that, if we are nationalising, how can we also be talking about renegotiation. It is "either/or" surely.
§ Mr. CorfieldThe hardware, skills and facilities are there. If we can re-negotiate a new contract which enables us to sell the engines to Lockheed at a price much more realistically related to the cost, and if we can go ahead relieved of claims for lateness, then we shall be in an entirely different situation on the RB211 to that in which Rolls-Royce found itself and which led to such great difficulty.
§ Sir H. Legge-BourkeHave we not tended to lose sight of who is the end customer? It is not Lockheed but, eventually, the airlines. When we consider the possibility of renegotiating with Lockheed, would it not be wise to ensure that the airlines are brought in, so that we do not get a similar situation played back on us because Lockheed goes bust?
§ Mr. CorfieldThat is a very relevant point. My hon. Friend has reminded me that there were direct contracts with the airlines as well, so that has made it more 999 difficult to assess what the total claims are likely to be. We are dealing not merely with the claims of Lockheed against Rolls-Royce, but with those of the airlines as well. There again, Mr. Haughton has been having discussions with the airline customers, and, no doubt, he will be able to keep me up to date on the situation there.
I come, then, to the hon. Member for Nuneaton (Mr. Leslie Huckfield). I am afraid that I was out of the Chamber during part of his speech, but I think that his most important point concerned the Lockheed belief that the £42 million would be paid, and he mentioned the assurances alleged to have been given by the Government since November. There again, I find this difficult to accept. Shortly after I took over this Ministry, Mr. Haughton came to see me in my Ministry, and I am as certain as I can be that he was fully aware of the situation. At that time, we were concerned with what I might call the November problem. We made it clear that we were very worried about the Rolls-Royce situation and that we could not offer an open-ended commitment. There must have been a misunderstanding or some misreporting, and I have since talked to Mr. Haughton on the telephone and explained the position.
My hon. Friend the Member for Ilford, North (Mr. Iremonger) was worried about foreign offers or bids for this portion of Rolls-Royce. This is a matter which I took up early in November when Rolls-Royce shares dropped fairly low, and I was worried that they could easily be bought up by overseas organisations. As I understand it, however, any buying by an overseas organisation could be controlled by the Exchange Control Act—certainly if it came to buying any shares. The situation otherwise is that of likelihood or practicality. Again, I took advice, and one has to accept the advice that any firm thinking of taking over a vast complex of this sort or even part of it will require considerable investigation into the accounts, and so on. If there were any fear of a genuine bid, there is no doubt that we could take other action.
The reason why we did not take compulsory powers to ensure that we had the situation in hand was simply one of time. As I have stressed throughout the 1000 affair, we felt that we had to be quick if we were to restore confidence. Unfortunately, the procedure of this House is such that, if we had wanted compulsory powers, a Hybrid Bill would have been necessary, and that would have taken a long time to get. It seemed better to take the power to negotiate, knowing that, if the worst came to the worst, we might have to come back. I am sure the Committee will agree that it is very much better to have it quickly.
§ Mr. BennCan the right hon. Gentleman confirm my recollection that, so long as it was a voluntary acuisition, the Industrial Expansion Act on the Statute Book would have allowed him to acquire Rolls-Royce by agreement, without requiring this Bill?
§ Mr. CorfieldThe right hon. Gentleman is probably right. But we have always taken the view that if this sort of thing had to be done, we ought to come with a special Bill for the special purpose. I think that that is the right way of doing it.
I trust that I have dealt with most of the points which have been raised. It has been a long debate. I hope that we at least understand each other better. I am sure that the Committee agrees that we were right to act quickly, and that we were right to do it as a special Measure. I know that there is a difference of opinion between the two sides on how far we should go, but at least there is a measure of agreement, and the Committee feels that we are right to hold open the options on the RB211 and hopes that we shall be able to re-negotiate the contract.
§ 1.30 a.m.
§ Mr. DalyellAny fair-minded Member will appreciate the spirit in which the Minister has in the last hour or two tried to answer the serious questions which we have put to him. If I say that his reply will not do, it is not that I mean to be impertinent or rude at this time of night.
The right hon. Gentleman began with, as his first substantial point, the observation that the RB211 was not the "beginning and end of everything". It is all very well to say that, but there are serious people who believe that it will have the gravest effect not only on the RB211 but on the Harrier and on Concorde. It is said that the problem of the sales teams who will have to try to sell the Concorde 1001 will be well nigh impossible, and that those who will go out and try to sell the Harrier and the whole Harrier family of aircraft will be in great and real difficulty.
I may be doing the Minister an injustice, but, as I understood him, he got out of that one by saying, in effect, that the American market is far more ruthless, that we did not really understand how ruthless people were in the United States, giving the impression that this would be some sort of seven-day American wonder. That is not our information on how the Americans have reacted.
I shall gladly give way to the Front Bench if they can produce a single instance of a major situation in recent years in the United States which can be called a parallel in any meaningful sense to what the British Government have done. My hon. Friend the Member for Birmingham, All Saints (Mr. Brian Walden) has an extensive knowledge of the United States, and I wonder whether he has any example in mind. Seriously, I cannot think of any parallel example.
It is all very well to say that the Americans are ruthless. It is the climate of opinion which is affected here, the climate of opinion of the international and multinational companies. The important point, as I tried to say earlier, is not whether the hon. Member for West Lothian thinks that this is a "banana republic" act. This is what is being written and put abroad in the United States, and, rightly or wrongly, for better or worse, it is considered an act of infinite perfidy.
§ Sir H. Legge-BourkeI am sure that they have plenty of publicity with which to put that sort of stuff across, without our doing it here.
§ Mr. DalyellI should not have thought that anything done here at this time of night would exactly add to the publicity. It is all over the American Press, and it is what the American salesmen are saying. If I repeat it, I do so simply because I want to see the decision changed. These things have to be taken into account. One does not say such things just for the fun of it. One says them because one wants the policy of the hon. Gentleman's party to alter.
The hon. Gentleman the Member for the Isle of Ely (Sir H. Legge-Bourke) is an honourable man. He holds two im- 1002 portant positions, one of them non-political, as Chairman of the Parliamentary and Scientific Committee—I shall not refer to that—and the other as chairman of an extremely powerful party group. If he dislikes reference to perfidy, I can only say that, by implication in his intervention, he accepted at least that it was true. He said, "Do not publish it abroad"; but the understanding was that what I was saying was at least true. I am afraid that that is the situation. If this is the situation it is a question of altering the policy, and I hope the hon. Gentleman will use his powerful position to try, even at this late state, to alter the policy. I will give way to the hon. Gentleman.
§ Sir H. Legge-BourkeI am grateful to the hon. Gentleman for that. I do not want to delay the Committee any longer, but I should like to say that I certainly do not accept some of the implications of the hon. Gentleman's remarks, and I personally believe that as honourable allies of the United States we are doing the right thing.
§ Mr. DalyellWell, I should like to see the argument developed later in this Committee on how as honourable allies of the United States we are doing the right thing. I hope that the hon. Gentleman will catch the eye of the Chair and work that argument out.
§ Mr. Brian Walden (Birmingham, All Saints)I apologise for interrupting my hon. Friend's speech, but I would give just one illustration to buttress his case in answer to the hon. Member for the Isle of Ely (Sir H. Legge-Bourke). Of course nobody wants to publicise the situation which exists between us and the United States, but if Lockheed is left holding the bag on this the people who are helping us to sell the Harrier to the United States will not have a cat's chance in hell. There is enormous Congressional opposition to buying British, anyway. We have a strong chance of getting the contract, but not if this is done. There can be no question about that.
§ Mr. DalyellIt is this action which plays into the hands of Senator Proxmire; it is a gift to the kind of argument he and those who agree with him are using. People like Senator Proxmire will certainly use this argument enormously to our disadvantage, and the only way it 1003 can be put right is to change the policy. This is a very widely held view, not least in the British Aircraft Corporation. This is the true situation, and if I say it, it is not in any sense of fun, for I do not like to see any British Government, whether of my party or that of my political opponents, getting into this kind of situation. I would much rather it had not come about.
Again, it is all very well to say that this is not the beginning and end of everything; but is it seriously suggested that there is any chance of catching up in this whole family of aircraft? Here the case was well put by my hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield). It is a question of a series of engines. The first and second may not be profitable, but is there any argument that this is not the right line of development? Is anybody saying it is not the right line of development? If so, the argument has not got far——
§ Mr. Leslie HuckfieldThe real profit comes when the company is asked to extend versions of the basic engine. This is precisely the case with the Pratt and Witney JT9D, the TF139, and the CF6 which was the basis of the DC10. All American experience is in line with British experience and confirms what my hon. Friend has been saying. The real profit of engine development comes from extension of a family, and the RB211 is the basis of a very good family.
§ Mr. DalyellFollowing what my hon. Friend has said, what bothers me is: are we taking the line to an aircraft peasant economy"? The words are not mine but an American's. That is what it is all about. If we do not go along what are accepted as the right lines, then, presumably, we are not continuing on the frontier of knowledge but becoming, in this field, a sort of "peasant economy". This is a serious view, and again, it is not only mine, and I am not coining a phrase for the fun of it. This is the kind of argument which really has to be taken into account.
§ Mr. Michael McNair-WilsonAs has been said already in the debate, this engine is wanted for only one airbus, which is not a winner. Other companies are going for an American engine. Nor is there necessarily a suggestion that 1004 there is to be a stretched version of this project anyway. The hon. Gentleman is arguing for simply one engine for one aircraft which is not a winner but lost the race.
§ Mr. DalyellIn the light of our experience of lack of orders for Concorde, I find that argument quite grotesque.
§ Mr. Leslie HuckfieldI am sure that the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) realises that before Lockheed had to face this debacle as a result of the activities of the Front Bench opposite, it was confident of the possible order position, which was almost the equivalent of the order position of the DC 10, and both the DC 10 order position and the TriStar order position were immaculately an improvement on the A300 B order position. I am sure that he will also realise that the linchpin in TriStar getting the equivalent order position of the DC 10 was the Court Line order, which hinges very much on the RB211.
§ Mr. DalyellThis is a fairly full explanation of the position, and, as I say, I find the intervention of the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) quite grotesque.
§ Mr. Michael McNair-WilsonThe facts are quite simple. We know that 128 TriStars have been ordered, and these 50 for Air Holdings. The DC 10 is well over the 200 mark. The hon. Gentleman cannot tell me that over 200 DC 10s equals 128 TriStars, because, clearly, they do not.
§ Mr. DalyellThis is an extraordinary argument, particularly in connection with the potential orders from Delta Airlines, Eastern Airlines, and TWA, and, indeed, from Britain. Otherwise, one has to buy across the exchanges.
§ Mr. BennIs it the view of the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson) that if in future a British engine gets into an American or a European airline and within a year or two of the aircraft being launched that engine and that aircraft are second in the race, we are then to say: "This is not worth pursuing"? The logic of what is being said is that no one would ever trust a British aero-engine manufacturer again because he had knocked the project 1005 into which his engine had gone and he would not be taken seriously. The logic of this would be destructive of our export effort.
§ Mr. Michael McNair-WilsonOnce upon a time we may have imagined—the Europeans certainly imagined—that there would be a Rolls-Royce engine of the RB211 type in the European airbus, and also a RB211 engine in the Lockheed TriStar. We were therefore to get a number of aircraft using this engine. We know that the last Government did not see fit to support the European airbus, and that must have prejudiced the chances of the Rolls-Royce engine being put in that aircraft. So much for European collaboration. We know that they finalised down to the single Lockheed project, and everyone knows that Lockheed has not and does not look like having an airbus which will sweep the North American market. This is a matter of fact. It is a question not of being second but if not even being in a break-even position, and heaven knows where the orders are to come from to put it in that position.
§ Mr. DalyellThe hon. Gentleman having supported the Government's decision, I am rather amazed at his intervention.
The next issue is the reaction of the Americans. After all, when any of us are treated with a lack of candour, how do we react? I do not want to burden the Committee with that too much, because it has been put by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), but Ministers must understand the feelings of American executives in international companies when they have been treated with a lack of candour.
My right hon. Friend has described the very different way in which Lockheed treated him when it was in difficulty, and I should have thought that the least we could have done was to treat Lockheed and the United States with the same degree of candour as that with which they had had the courtesy to treat us. A good deal more has to be said, even tonight, by the Government about the replies they have given to those on both sides, who want to protect the good name of Britain against charges of lack of candour. I respect the Parliamentary Secretary in many ways, from many years of 1006 association with him, and I hope that he will give us some kind of answer that we can pass on at the weekend when we see the Americans who are making these charges.
1.45 a.m.
The Minister went on to the question of needing more time. I can sympathise with him, he having sat late into the night round some sub-committee table wondering how he could get more time. But are we completely wrong in thinking that an indemnifying Bill would have done the trick? If we are wrong, the situation should be spelt out. Would an industrial expansion Bill have done the trick?
I return to the argument put forward by my hon. Friends the Members for Glasgow, Craigton (Mr. Millan), Heywood and Royton (Mr. Barnett), Ashton-under-Lyne (Mr. Sheldon) and myself. We all asked what on earth was happening between 22nd January and 3rd February. How was this time used? There is no clear picture. We can read the Sunday and Monday newspapers for a long time but no clear picture emerges. Any picture that emerges is the result of speculation. Before we go home for the weekend we should be given an indication whether the Government will reveal, and perhaps justify, what they did in that crucial period.
I am not clear what is to be the next step in the investigation. Is it to be a Select Committee of the House of Commons? Is the matter to be given to the Select Committee on Science and Technology, which I believe is already heavily burdened? Or is it to be done by a tribunal? Tribunals have been set up to deal with much less serious matters than this. They have been set up to deal with matters concerned only with the past, and I am not over-concerned with the past——
§ The Temporary Chairman (Mr. Harold Gurden)Order. Will the hon. Member relate his remarks to Clause 1?
§ Mr. DalyellYes, Mr. Gurden.In this matter we must address ourselves to the question of the way in which we should react to the situation. The purpose behind the Bill is to take account of the fact that Rolls-Royce may not be the last concern in which we shall be involved in this kind of agony. 1007 I hope that it will be the last; I hope that this kind of thing will never happen again. But it might happen again. If it does, I hope that there will not be the same kind of reaction. If the Government say that firms must stand on their own feet, and uphold that kind of oppressive philosophy, right or wrong, we must be prepared for the reaction—because the gut reaction, or the immediate reaction, is very important.
The Minister of Aviation Supply said that Short Brothers and Harland would be seriously hit. I speak with some feeling on that question, because, with the exception of the former Prime Minister, I probably represent more Irish constituents of the first generation than any other hon. Member, and, therefore, have a vicarious interest in Ireland. There is a chronic situation there. I wish that the hon. Member for Belfast, East (Mr. McMaster) who often talks of Short Brothers, was here.
A serious question arises, first, in connection with regional policy and, secondly, in connection with the question of the thought that has been given to the effect upon the unemployment situation in Northern Ireland of Short Brothers being seriously hit. I do not know of any proof that unemployed men create more difficulty in Northern Ireland; but there is no proof that they do not. Therefore, the Government should take the earliest opportunity of saying what they propose to do about Short Brothers and Harland, how it is to be preserved and what kind of work will be sent there instead of TriStar work, because we have heard from the hon. Member for Belfast, East how the firm of Shorts is involved up to its neck in this matter. The Parliamentary Secretary should deal with this issue in his reply.
The next issue concerns the unquantifiable claims by Lockheed. I return to a question asked earlier by the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd). What is known about the issue of penalties? At what stage were they discussed? Was the issue of penalties discussed between 22nd January and 3rd February? We deserve a factual answer. If we are not to have a tribunal or a Select Committee, this is the only opportunity we have of delving into these 1008 questions. We should have an answer on the question of penalties.
The next question raised by the Parliamentary Secretary concerned the issue that is urgent to many of us, namely, relations with suppliers. He gave a long answer to my hon. Friend the Member for Heywood and Royton. I know that there are difficulties with the post, with which I can sympathise. But what has been done by the Parliamentary Secretary's Department to contact the major suppliers? My information is that they have not heard so much as a cheep from any Government Department, unless they have physically gone to London. It is my impression that the officers of the Departments, who often serve the regions very well, have not been given any kind of instructions about how they can be helpful.
Whereas my hon. Friends the Members for Derby, North (Mr. Whitehead) and Nuneaton (Mr. Leslie Huckfield), who have Rolls-Royce factories in their constituencies, may be in a more difficult situation than those of us who represent suppliers, we have, if not the greater, then the more urgent problems. Decisions will be made this weekend.
The Under-Secretary of State for Home Affairs and Agriculture, Scottish Office, is present. He is not smirking or smiling, but he is wondering why I am going on. I have news for him. Tonight I telephoned the general manager of the New Town Development Corporation at Livingston—a great growth area—where there is a figure of 18 per cent. unemployment among males. If I speak at inordinate length, it is because I want to change the policy, because unless the policy is changed, Concorde and Harrier are in jeopardy. If they go, we can say goodbye to certain great factories which the hon. Gentleman and I would consider essential to the growth of the Scottish economy.
§ Mr. Leslie HuckfieldI agree with my hon. Friend about the immediacy of the suppliers' problems, because in my constituency—perhaps my hon. Friend's experience is the same—lay-offs and redundancies have started already. A lot of people, including hon. Members on both sides, have been under the impression that the lay-offs and redundancies have not started; but they have. Certainly in 1009 the Coventry area, where we have had lay-offs recently at Alfred Herberts and other factories, there is an overall atmosphere of great uncertainty. If it is bad in the Coventry area, it is bound to be much worse in the area which my hon. Friend represents. An assurance should at least be given to the firms and the employees whose jobs are at stake to ease their troubled minds a little.
§ Mr. DalyellIt is the overall uncertainty that is very bothering. Serious people at Livingston and in the Scottish trade union movement are afraid of a chain reaction. The hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) should ask the Secretary of State for Scotland in the morning what kind of answer the Scottish Trades Union Congress can expect when it meets the Prime Minister, as I hope it will. I hope that it receives as good an answer as it got when Harold Macmillan was Prime Minister.
When one has 18 per cent. unemployed in a new town area, when one has over 300 unoccupied houses in a new town, when this situation has blown up in a very few weeks, when there is a fear of a chain reaction, one does not worry too much about taking up the time of the Committee at inordinate length, because there is no indication from the Government that they propose to step in and do anything about it.
§ The Temporary ChairmanOrder. I have listened to all of this debate. The Chair has been pretty generous, but we must stick to what is in the Clause.
§ Mr. Arthur Lewis (West Ham, North)On a point of order, Mr. Gurden. The Clause says that it gives the Government powers to take over certain factories and so on. My hon. Friend is suggesting that if he agrees to the Clause an existing situation might well get worse. Before agreeing to its standing part, he wants an assurance on whether his constituents will be worse off with regard to unemployment, housing and so on. Surely, that must be relevant.
§ The Temporary ChairmanOrder. The Chair owes it to the Committee to remind hon. Members that we are discussing the Question, "That the Clause stand part of the Bill." That is all that I was doing.
§ Mr. DalyellI am not filibustering. I am merely pointing out that there is a critical situation. Any joy that we might have had from having a special development area in the West of Scotland, which does not include my constituency, is completely offset by the Rolls-Royce situation, which is the subject of the Clause, I accepted the special development area decision in the spirit in which it was made.
Things like the Rolls-Royce situation have chain reactions. If money is to be earmarked for the development areas, let it be put now into Rolls-Royce at Hillington or elsewhere, because it is urgently required, rather than into the special development areas, League Division 1. in the future.
I return to the Minister's speech. In all this controversy we have listened longer and longer to references to the management of Rolls-Royce. Sir Denning Pearson was a friend of mine, is a friend of mine, and, I hope, will be a friend of mine, so I have in a sense a prejudice to declare.
But what is all the business of saying that the middle-level management was less than it should have been? That is slightly glib. I do not say that it was perfect in all it did. My hon. Friend the Member for Nuneaton (Mr. Leslie Huck-field) and I, and others of us on the Labour Party aviation group, have seen a good many Rolls-Royce executives, and we know that before sweeping statements like that are made there should be some evidence. I hope that if they had any faults those faults were not markedly greater than those of Pratt and Whitney, nor markedly greater than those of many of the mergers of General Electric.
2.0 a.m.
This is a very difficult industry. Furthermore, what evidence is there that if Rolls-Royce had had a resident financial genius—I am not saying that Ian Morrow is one; he might not claim that himself—for five years, in the light of certain decisions it would have made more than a marginal difference? It is Sir Denning's view—he has taken it modestly and well, without rancour or bitterness—that even if Rolls-Royce had had an expert resident accountant, given the policy, the decisions and costs would not have been more than marginally different. 1011 Rather than make glib statements, the Committee should look at this at a rather deeper level. One of the problems is what happens when a firm grows from being middle-sized to being a really big one. Is it any accident that Rolls-Royce had many problems which were new to it when it merged with Bristol-Siddeley? People in Leyland's have said that their worries really started when Leyland's merged with B.M.C. The hon. Member for the Cities of London and Westminster (Mr. Tugendhat), in his maiden speech, had a very important message about what happens to managements when mergers take place of this order.
The next issue on the Minister's speech is the question of the airlines. I understand that there has been a statement by Delta, Eastern Airlines and T.W.A. It may be an amplification of a statement in the Daily Telegraph that they had unofficially approached Lockheed, Rolls-Royce and the British Government. Is this true? The power of a purchaser is very great. It may be that they have found what we suspect is true—that it is extremely difficult, granted the TriStar frame, to have any kind of interchangeability of engine.
§ Mr. Leslie HuckfieldMy hon. Friend will realise that, with the size of orders these airlines have taken, it will also be very difficult for them to switch to the DC 10. When one considers the magnitude of the individual orders which airlines like Eastern and T.W.A. in particular have put in, they would have to go to the back of the queue for the DC 10. It is not just a matter of having an alternative engine, which in itself would present many difficulties; more difficulties would be presented in switching to an alternative aircraft. These airlines are committed in a very technical sense to the TriStar.
§ Mr. DalyellThis is an important issue. Interchangeability is very difficult, according to our information. The airlines might be more co-operative than the Government think. It may be surprising to the Government to learn of the degree of co-operation by the airlines before any final decision is taken. I hope that at least senior officials, if not junior Ministers, will go and talk to Delta and Eastern and the other potential customers.
1012 I do not want to keep the hon. Member for Derbyshire, South-East (Mr. Rost) here. I will make my point and then release him, as it were. He said that firms believed that they were in partnership with the Government. We are talking again about sub-contractors. My view is that there is a whole grey area here as to what understandings were given and what were not given by both this Government and the last. What is true is that some sub-contractors, at any rate in their minds, perfectly honestly felt that they were in partnership with the Government. I agree with the hon. Member for Derbyshire, South-East that these are people who honestly believed that they were in partnership with the State. In this sense, there is a moral obligation to do something about it. It is just one more argument for the subcontractors.
Another issue raised by the hon. Member for Derbyshire, South-East, to whom I listened with great attention, was that of workers' shares. Without being difficult about it, I must say that we did not get any kind of answer from the Minister. He said that it was peculiar. You bet it is!
Are workers' shares to be treated differently from other shares? Are some shares to be considered more worthy of help than others? I would go a long way with the argument that workers' shares should be treated differently, but here we are enunciating a new doctrine, and there are important issues of principle. Everyone agrees that workers' shares in Rolls-Royce should be protected, but what about the shares of pension schemes, some of which have in-vested in Rolls-Royce? Although its shares are widely spread across the board, as would be done by any prudent insurance organisation, I.C.I., for example, has invested relatively heavily in Rolls-Royce shares. Should such shares be peculiarly protected? In the absence of a Select Committee, this is the only occasion on which we may ask such questions. Again I hope for answers.
As the hon. Member for North Angus and Mearns is still here, I should like to return to the ramifications of this decision which those of us in the development areas will have to face. Earlier today I was talking to senior officials 1013 of the South of Scotland Electricity Board who reckoned that in the Bathgate area the loading because of the Cameron situation, would be 40 per cent. less. This is just one example of how the effects on industry will go right across the board. That is why the whole social and industrial situation has to be taken into account.
What is our vision of the future of Rolls-Royce? Is it to become simply a repair organisation? I am not sure that an engineering firm like this can stay static; it must move forward, or it will go back; it cannot stand still. It must be understood that unless it continues its research at the frontiers of knowledge and goes forward, there will be a danger of its going back.
In all the statements, especially those of early on, little has been said about the role of the joint stock banks. Why was it that Lloyds and the Midland, as I gather from the Press, took fairly hurried decisions which brought the crisis to a head? Were there discussions with the joint stock banks, or did they take that action off their own bats?
I have mentioned Lazard Brothers. I am not interested in vilifying anybody and I do not suggest that Lazard Brothers has done anything wrong, but we are interested in what Lazard Brothers is doing about the future of the company. In the next few weeks the role of the merchant banks will be important, and we have not had any indication of the role which the Government intend that they should play.
Timing comes into all these banking decisions. I do not think that the Government have understood the issues. It is no good the hon. Member for Bradford, West (Mr. Wilkinson) saying that the engine was very late. Late by what criterion? Later than it was said it would be, granted. But later than any alternative engine? Certainly not. Late by the standards of anything that Pratt and Whitney or G.E. might produce? Certainly not.
§ Mr. WilkinsonWill the hon. Gentleman accept that in commercial terms the engine was so seriously late as to mean that very grave penalty sanctions would have to be imposed upon Rolls-Royce in addition to the over-run of £110,000 per engine which the company was having to pay anyway? It was that factor that 1014 led the board to its decision. On the technical point, of course, the Pratt and Whitney and General Electric designs were there, because they were more "state of the art" engines. They were two-shaft. I understand that, but from the point of view of the financial future of Rolls-Royce the lateness in producing the engine had the most serious implications.
§ Mr. DalyellI would agree that this question of being with the "state of the art", as the Parliamentary Secretary describes it, is important. I am not filibustering, but this raises a subject about which we have not been told sufficient; namely, the question of the penalty clauses. What discussions took place about the activation or non-activation of these clauses? This is the sort of thing that should have been discussed in private first. It is all very well to say that a lot of milk has been spilt about penalty clauses. That will not cut very much ice with the constituents of my hon. Friend the Member for Derby, North.
Some of us believe that Lockheed and Mr. Haughton would not have talked so much about penalty clauses and there would not have been so much talk about such things in the United States if the Government had treated them with candour and taken them into their confidence at an early stage.
§ Mr. WilkinsonLockheed would have faced most serious penalty clauses with its customers who stood to receive the TriStars, for which they had options, extremely late. That is another factor.
§ Mr. DalyellThis is why it is almost illiterate not to talk to Eastern Airlines, Delta and all other potential customers. If anything comes out of this exchange, it is the need for an urgent conference of potential purchasers. I have heard nothing this evening to say that such a conference will take place, and so I ask the direct question: what plans have the Government for a conference of purchasers, preferably behind closed doors? Certainly no one on this side of the Committee would make any trouble and ask about what was said. [Hon. Members: "Oh!"] If we appear to be unhelpful, it is because we have faced a chronically difficult situation. The Minister was out when I explained about the 18 per cent. 1015 unemployment in the new town of Livingston. This is the sort of pattern repeated all over the country and the sort of general reaction that is feared.
The Minister did not have time to answer some of the specific questions of interpretation What was meant by the Solicitor-General when he said that suppliers need not reach adverse conclusions? Why should suppliers reach adverse conclusions? What am I to say, this very day, to people who ask: Why should we not pay off even more men? The Cameron Works paid off 200 yesterday and 90 members of staff. Other firms in Scotland may follow suit. In the North of England and other areas—in and around the Minister's constituency—it is probably worse. What are we to say to them? Why is it that suppliers are not to reach adverse conclusions? As the Member who agitated for the Solicitor-General's appearance, with less manners than I hope I usually show in this Chamber, I thought it was the most barren speech from a law officer. After all, the hon. and learned Gentleman may be busy with the Industrial Relations Bill, but he has the most powerful civil service team at his command.
§ Mr. CorfieldMy hon. and learned Friend has five.
§ 2.15 a.m.
§ Mr. DalyellThere was a very powerful team in the box when the hon. and learned Gentleman appeared. These are able people. Surely if the policy had been brought out they could have briefed him.
We still have not discovered why suppliers need not reach adverse conclusions. So we go away empty handed on that.
I am not being pedantic or quibbling, but I come back to the question: what is an acceptable bidder? The Minister says that we must sell certain units—what units is unclear—as advantageously as possible. The Solicitor-General and others have talked about an acceptable bidder. The two may not be mutually antagonistic, but at least they have to be reconciled and something needs to be said about them.
What are the criteria of the acceptability of a bidder? That is a question which I shall go on repeating.
§ The ChairmanOrder. The hon. Gentleman must not go on repeating it. Otherwise it will become tedious repetition.
§ Mr. DalyellI was hoping that I should not have to make a Third Reading speech. If I get answers to the questions which I am putting I shall not make a Third Reading speech.
Again, no real answer has been given about Section 332 of the Companies Act. What efforts were made for a renegotiation? If anything has come out of the debate, it really is that it is balderdash to suppose that all this had to happen because of Section 332. This is a grotesque excuse. I cannot believe that the British Government were bogged down like that. If they let themselves get bogged down like that, they certainly should not have done so. I do not know whether they are meekly taking the advice of the Law Officers of the Crown. Lawyers are not infallible. In fact, sometimes in this kind of situation they are very fallible.
I must ask about the "reasonable prospects" of creditors being paid. Who judges what are "reasonable prospects"? I am not playing with language. This is the phrase which the Government have used. We want to know what they are up to.
Again on the issue of law, what was done to find out about the law of the State of New York? It seems absolutely incredible that we should go ahead with projects without inquiring about the law of our partners.
New week Assemblyman Stein is coming to see some of us. As far as I know, there has been no indication yet from the Government that they will see him. But his visit is crucial to the future of Concorde. If it does not land at New York or New Jersey, I am not sure where on the Eastern seaboard it will land. These seemingly small points appear to have gone unthought about.
The hon. Member for Langstone, who made an outstanding speech—one can understand why he was Keynes's favourite pupil, or one of them—asked a number of interesting questions which should be repeated. One question was: why was it that on 3rd February there appeared what looked like a leak from the White House? This question was 1017 asked by the hon. Member for Portsmouth, Langstone, and it deserves an answer.
The hon. Gentleman also asked: did Lockheed do any talking about penalties? That, again, is a question which deserves an answer.
§ Mr. CorfieldI have answered it. I said, quite clearly, that it was put to Mr. Houghton whether he could do anything about penalties, and he said, quite definitely, "No". How many times it was put I do not know, but I put it myself, and I told the House that I had put it. It is no use trying to answer the hon. Gentleman if he goes on asking the same question. I gave a clear answer.
§ Mr. DalyellIt may be my misunderstanding of the situation. When I heard this I thought that it was only at the most recent discussion. In the discussions which took place before the announcement was made, before anything became public but when something of the situation was known from November onwards, were there any discussions about penalties? This is a crucial issue. If the Minister feels aggrieved at my going on asking these questions, let me tell him that a lot of trouble would have been saved if the Government had had the courtesy to set all this out in a White Paper. Had they done that, I should not have had to make this speech.
It is all very well pretending that questions have been answered, but on three occasions the Minister was asked questions about the M.R.C.A. What discussions have taken place with Panavia and the consortia? What discussions have there been with the Italians?
§ Mr. CorfieldThe Vice-Chief of the Air Staff went to Germany coincidentally with the time that I was making my statement to the House, and he has had conversations with the German Defence Minister.
§ Mr. DalyellI am genuinely glad to hear that. I do not know whether my hon. Friends knew that, but I did not, and that adds to knowledge, and it is rather important knowledge because, if we are to have the M.R.C.A.—and I have expressed grave doubts about it, but it is now a forward project—we want to know what the position is. Not only we want to 1018 know, but the factories involved in creating the M.R.C.A. want to know.
I think that a great deal more information has to be given at some time, perhaps not tonight, on the whole issue of S.N.E.C.M.A., because it is my information that this is not an altogether natural or easy merger, and just to say that we want a European industry seems often enough to be taking refuge in some kind of cliché. Once we begin to talk in slogans, we get into great difficulties. There is great danger in thinking of slogans. Throughout this whole episode there has been far too much sloganising, without any depth of thought behind it, and this creates troubles.
The Minister will remember that I questioned him at some length on the post-Apollo programme, and that there have been Adjournment debates on this subject. This is a very important, and not an esoteric, issue——
§ The ChairmanOrder. I should be glad if the hon. Member would address the Chair, because I have to watch very carefully what he says, and I cannot hear if he turns his back to me.
§ Mr. DalyellI apologise, Sir Robert. I simply say that I had a meeting-and I am at liberty to say this-with a senior member of the British Aircraft Corporation this very week. He is a man who has great knowledge of these matters. He was a member of the Department of Trade and Industry when it was the Ministry of Technology, and he is desperate to know the outline policy, because B.A.C. is under contract with North American Rockwell, and the whole future of Rolls-Royce——
§ The ChairmanOrder. I must ask the hon. Member to relate this exactly to the terms of the Clause. I think he will agree that I have not bothered him unduly, but I think that the Committee is entitled now to have the hon. Member's speech related to the Clause in question.
§ Mr. DalyellI do not want to abuse the procedures of the Committee, and I never have. I shall come to an end, because I have been speaking for nearly an hour. I do not apologise for that. Every issue concerns many people, and I simply say that if we have an offer on the table, as we have from N.A.S.A., if we have to give answers to M. Lefevre, the Belgian negotiator and other European 1019 countries, if we have to resist the cause of the French national programme C.N.E.S., we at least have to be certain that Rolls-Royce is in existence and that its suppliers are in existence.
The point made by my hon. Friend the Member for Dudley (Dr. Gilbert) cannot be reiterated too often. If, over the next few weeks—and it is a matter of the next few weeks, and in some cases days—these supplying companies, the sub-contractors, go out of business, Rolls-Royce will find it extremely difficult to operate. Either they will not have the supplies at all or they will have to go to sub-contractors abroad, who will probably have to do constant re-jigging at the shortest notice, and this will create an even worse mess. So the whole policy is at stake, a policy which affects almost every constituency in the country. I have spoken at great length at a time of night when I do not normally make long speeches, but I cannot apologise, because these are issues which deserve a reply.
§ Mr. Arthur LewisI had not intended to take part in this debate, but my hon. Friend the Member for West Lothian (Mr. Dalyell)—I do not think that he spoke at great length—did not go into enough detail on his admirable suggestion about having a tribunal before agreeing to the Clause. The House should have more information, and from a source which is not biased for or against the Government.
The Clause says:
There may be defrayed out of moneys provided by Parliament any expenditure which a Minister of the Crown may, with the approval of the Treasury, incur …".That is carte blanche, an unspecified amount. It could be hundreds of millions or thousands of millions. It says that that money shall be usedwith a view to or in connection with the acquisition for the benefit of the Crown …of any part of the undertaking and assets of Rolls-Royce Ltd.or any of its companies.I should like a thorough investigation of whether the Government should have this power. This could be untold millions. Only this week there was published the independent report of the Wilberforce Committee on whether or not a few million pounds—or a few hundred thousands even—should be given to 1020 workers. This independent body, which happened to be chaired by an ex-Tory candidate——
§ The ChairmanOrder. I am sorry to interrupt the hon. Gentleman, but we shall have to come more strictly to the terms of the Clause.
§ 2.30 a.m.
§ Mr. LewisBut are we or are we not discussing Clause 1, and does it or does it not say that unlimited money should be provided for the purchase of the specified company? I cannot see why I should give this authority to the Government. Therefore, I am inclined not to agree that the Clause should stand part of the Bill until I can be assured that the Government are capable of looking after unlimited sums for the purpose specified in the Clause. I distrust the Government. I do not think that they have the ability, the political knowledge, or the right Ministers properly to spend unlimited funds which the taxpayers will have to find. Many millions of people showed at the General Election that they do not trust the Government. Therefore, there should be an investigation into whether we should give this authority. Before giving this authority we might consider having an independent inquiry.
The inquiry could take one of several forms. There was the Bank Rate Tribunal which inquired into an incident which involved no money. However, here the Government want untold millions so that they can take over a company which may or may not be good. It may not be an asset to the nation if it is acquired.
The ideal committee of inquiry might be one like the Wilberforce Committee, because Lord Wilberforce, as a former Tory candidate, must be unbiased. Who could be more unbiased that a former Tory candidate? One of his colleagues on the Committee—a director of Guest, Keen and Nettlefold—is also a Tory. He, too, would probably be unbiased. As he gave about £20,000 to Tory Party funds, he is, if possible, even more unbiased.
§ The ChairmanOrder. The hon. Gentleman now goes a little far in suggesting the qualifications of people who might be appointed to such a committee, although I am prepared to accept the main thesis of his argument that there could be such a committee.
§ Mr. LewisI am glad, Sir Robert, that we have agreed between us that my suggestion of a tribunal is valid.
§ The ChairmanOrder. I am not to be put in the position of expressing an opinion on the merits. I am here only to decide whether the hon. Gentleman's speech is in order. I think that what he said was in broad terms in order. If he pursues it, it will be out of order.
§ Mr. LewisI am trying to help the Government and point out how unbiased such a committee would be.
Rolls-Royce workers will be affected. Indeed, they are affected now. Whether the Clause is ordered to stand part of the Bill or not, the hours, conditions, wages, pension rights, and so on of the workers will be affected. In view of the way the Government have treated workers in general so shabbily, I do not know whether I can permit myself to authorise the Government to take over a company like Rolls-Royce and be responsible for its workers. Every day I hear the Government viciously attacking the working class and trade unionists. Therefore, knowing that they are viciously anti-trade union and that the workers of Rolls-Royce are good trade unionists, I wonder whether I should trust the Government to deal fairly and properly with these workers and look after their interests if the Bill were passed. I may be wrong in my impressions but——
§ Mr. Patrick Cormack (Cannock)You are.
§ Mr. LewisThe hon. Gentleman as interjected from a sedentary position. He was not in the Chamber when my hon. Friend the Member for West Lothian (Mr. Dalyell) gave the facts and figures to prove that the Government have already put out of work 18 per cent. of his constituents in one new town. That is not a laughing matter. It is all very well for people in employment who have a good salary at the end of the week. These Rolls-Royce workers are not getting salaries or wages. If the Government take over, I have doubts whether they will look after the workers' interests.
I agreed with my hon. Friend when he said how much he admired and respected the directors of Rolls-Royce. I am not saying anything against them. I know none of them. By accident I happened to 1022 read in the Press, when this tragedy was reported, that one of the directors said, "I'm off. I'm going to the Arctic region." He has been a company director all the time, drawing his fees no doubt, and he has decided now to go on a £2,000 tour of the Arctic region.
I should like to know to what extent the workers will have their conditions safeguarded. I am not so much worried about the directors. Knowing the directors, no doubt my hon. Friend the Member for Dudley has a good word for them. But I am interested in the workers rather than the directors. If the directors are able to go on £2,000 trips, I assume that they will not be too hard up and will not be drawing supplementary benefit. The workers may well have to draw it.
I assume that if the Bill is passed a board of directors or a Government board will be established.
§ Mr. Michael McNair-WilsonIs the hon. Gentleman trying to say that he would like to have seen Rolls-Royce go bankrupt and be sold to private enterprise? Is it the nationalisation which worries him? Is it that which he feels will not safeguard the workers?
§ Mr. LewisThe hon. Gentleman is asking me to be tedious, and that would be out of order. I thought that I had made it clear, certainly to you, Sir Robert, and that what I was saying was clear enough for anyone to have understood. I have nothing against the board of directors of Rolls-Royce or the workers of Rolls-Royce. I am against the Government because I do not trust them. They do not have capable Ministers, the political judgment or the people able to spend unlimited money. My attack is upon the Government. I have had proof almost every day of every week of every month of the year that since their election they have been deliberately attacking the standard of living of the lower-paid workers.
I cannot trust this Government. They have declared that they will slash workers' conditions in the public sector. They are in the process of attacking the Post Office workers, who are out on strike. The Government are responsible. They have attacked our refuse collectors and municipal workers. They have attacked the power workers. They have attacked all 1023 our lower-paid workers, and they are trying to stop them getting a decent standard of living.
How can I trust this Government? If they take over Rolls-Royce, under Clause 1 presumably they will appoint a board of directors to run the company. I am all in favour of keeping the company going. I am not against Rolls-Royce. I am against the Government. If the Government appoint a board to run the company, can we be sure that it will be the right kind of board?
§ Mr. CormackDoes the hon. Gentleman want a job?
§ Mr. LewisI could not make a worse mess of it than the directors of some companies that I could name. I will not name them, of course, but I am sure hon. Gentlemen can guess who I mean. I do not think that I could trust any directors appointed by this Government. But certainly not me: no one would ever appoint me. I am not an ex-Tory candidate.
§ Mr. CormackWe would not have the hon. Gentleman.
§ Mr. LewisI am not the sort of person who would give way to this Government's directives to keep down the wages and conditions of lower-paid workers, whereas the directors appointed by the Government would be compelled to carry out the policies now being forced upon the other nationalised industries.
Whether it be the Coal Board, the Post Office, or any other industry in the public sector, these boards are attacking the standard of living of their workers. That is why I doubt whether I should agree to this Government having unlimited funds for the purpose of taking over Rolls-Royce, establishing a board to run the company which will be weighed down with reactionary Tories—because very few Tories are not reactionary—and then, if past experience is any guide, attempting to attack the standards of the company's workers.
When the board is appointed, shall we have the usual course of action that this Government have adopted since they have been in office? Will the directors get £20,000 salaries? Shall we see a number of part-time directors appointed at £10,000 a year? Will the directors then 1024 turn round to the Rolls-Royce workers and tell them that they cannot have an extra £1 or £2 a week in wages because it will be inflationary and against the dictates of the Government's policy?
If we agree to Clause 1 we shall give authority to this inept and very bad Government to make use of unlimited funds. If the Minister assures me that the unlimited funds will be used to give Rolls-Royce workers wage increases, I may be persuaded to support the Clause, but if those funds are to give well paid jobs, with all the "perks" going with them, to ex-Tory Ministers, ex-Tory judges or ex-Tory candidates, I shall have my doubts.
§ 2.45 a.m.
§ Mr. Michael McNair-WilsonThe hon. Gentleman's whole argument is callous. He wants to set up a committee and he wants to spend months looking into the abilities of the Government or the company to look after its affairs. What happens to the workers who he himself admits will have no wages? He shows no concern for them at all.
§ Mr. LewisNo. The hon. Gentleman does not realise that the Government can get a committee moving in two or three days, and, if it suits them, get a report literally overnight. The Wilberforce Inquiry took only about a week. But even then, with their 8 guineas a day expenses, and 16 guineas for the chairman, the Wilberforce Committee went into recess for three or four days. Just after a serious fuel and power crisis, it went on strike, not sitting for about four days.
The terms of reference of such a committee could require it to go into the matters which my hon. Friend the Member for West Lothian has raised, and, what is more, could require it to sit night and day, as we are doing, not on a 9 till 4 routine, until it produced a report. I should like a committee to go into wages and conditions, and also to investigate why this tragedy took place and who was responsible.
This week we have been debating the question of lost hours of work and lost production through strikes. Yet hundreds of workers are about to be put out of work. Thousands are already out of work, and there is the possibility of hundreds more joining them. But the Government are not anxious to have an investigation to ascertain the reasons why 1025 this has happened. Always we are told it is the workers who are responsible, because of strikes.
§ Mr. Michael McNair-Wilson rose——
§ Mr. LewisIn a moment. The hon. Member, who may or may not have been here during the debates on the Industrial Relations Bill, should know that we were told all the time that it is the workers who are to blame. It may be that in this case they were to blame. I do not know. It may be the directors who are to blame. It may be the financial advisers of Rolls-Royce who are to blame. At the moment no one knows who is to blame, and I am suggesting that before we pass this Clause we ought to have a thorough investigation into all the aspects of this business to see who is responsible for the collapse of Rolls-Royce. Is it the directors who have fled the country and gone on a tour? Is it the directors who have remained here? Is it the workers on the job? Is it the foremen and chargehands and technicians? No one knows.
§ Mr. Michael McNair-WilsonIn his search for information, has the hon. Member ever sought to ask his right hon. Friend why the I.R.C.'s Report was not made available to the House?
§ Mr. LewisI think that if I were to ask that on this Clause I would be out of order, because that is something which is past and is not relevant.
§ Mr. McNair-WilsonIt is very relevant.
§ Mr. LewisIt is not relevant, because I am adducing reasons why I should not support this Clause. I cannot see why it would be relevant to see whether or not a report which has already been drawn up should or should not be published. I think that Sir Robert would then say that that is not relevant to the Question, "That the Clause stand part of the Bill."
There are a number of points in this Clause to which I take strong exception. I should like to know what "any expenditure" means. The Financial Memorandum is wider and says that the Government cannot give any undertaking whatsoever of what money is to be spent on this venture.
That leads me to my next point. Can the Government give me an assurance that from this unlimited sum there will be money to look after the Rolls-Royce people who are now suffering?
§ Dr. Anthony Trafford (The Wrekin)You have developed five or six points of criticism of the Rolls-Royce management and of the Government and have ended each one with the phrase "of which I know nothing". I wonder if you would like to explain why you do that if you do not know.
§ Mr. LewisThree or four times, Sir Robert, the hon. Member has accused you of knowing nothing and of not knowing what you are talking about. I would never do that. The hon. Member must be careful how he chooses his words. I did not say Sir Robert knew nothing. I said I was not in a position to pass judgment on Rolls-Royce directors or workers or executive staff or financial advisers and the rest, because I have no information on which to form a judgment. Nor has any hon. Member, because the Government have refused to give it. There is no information available. Hence, I was suggesting that there should be an independent investigation into all the aspects of the matter so that we could study it and then judge whether the collapse was the fault of the workers and technicians or of the absentee directors who have fled the country and are doing a world tour. I do not know who was at fault. Hence, I am not going to blame anyone.
Before the hon. Member interrupted me I had started to question the sum of money to be expended under this Clause—for "any expenditure". I was asking what that meant. Perhaps I will give consideration to supporting the Clause. I might be able to support the Clause if the Government were to say to me that in return they would give some of this global sum, which might amount to hundreds of millions of pounds, either to safeguard the jobs of these men or to provide the men with redundancy payments or pensions. I would not mind agreeing to the Clause if the Minister could say, "To all workers who have given 5½ years' service we will give a pension of £5,000 a year for the rest of their lives, as this is the way in which we treat our civil servants and other people who give service to the State."
§ Mr. Michael McNair-WilsonIf the hon. Gentleman would give a pension of £5,000 a year to any workers who had 1027 worked for five years, why does he find it so difficult to agree to the former Speaker being allowed a pension of £5,000 a year?
§ The ChairmanOrder. That intervention is not in order.
§ Mr. LewisI baited the hook, Sir Robert, but I cannot catch the fish tonight. But if the hon. Member is here at 4 o'clock or 5 o'clock on Monday morning, I will give him the answer.
If the Government were to do as I have suggested, they might then look after those represented by the 18 per cent. unemployment figure quoted by my hon. Friend the Member for West Lothian. The Government did not even attempt to give my hon. Friend any answer, despite his repeated efforts to get one. I therefore ask the Government to tell us what definite action they intend to take in the interests of these people.
The Government tell us that they cannot give any information about what is happening with the negotiations with Lockheed or about what is likely to come out of the Rolls-Royce discussions as to whether or not the RB211 project is to be continued. The Minister told us that it was all very complicated. The Solicitor-General, after five hours of study, could not find the answer, nor could the five officers in his Department. But the Minister must be able to say that, technical and difficult though the problem may be, a remedy must be found for the tragic situation of the unemployed in West Lothian. He could say, "If hon. Members agree to Clause 1, out of this global sum that is mentioned we undertake that the 18 per cent. of unemployed people in West Lothian will be guaranteed a reasonable income." It might not be £5,000, but most would be satisfied with £2,000 a year. If the hon. Member treats West Lothian in that manner he must treat in the same way other parts of the country where Rolls-Royce workers will be unemployed.
3.0 a.m.
The hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson), who kept interrupting me, pointed out that when setting up the inquiry into the shares it was necessary to bear in mind the special relationship of Rolls-Royce workers who have shares in the company. 1028 He said that they should be treated somewhat differently, either at present or in the future, when there was a chance to repurchase. I support the hon. Member in that argument, but I suggest that there is some difficulty about it. I support the principle, but the hon. Member will bear in mind that in addition to Rolls-Royce workers there are the widows and orphans.
We are always being told about widows who have money invested. They, too, will expect to receive special treatment. No doubt some sick and disabled people have shares in the company. They will need special attention. I revert to my biased approach. I admit that I am biased, unlike hon. Members opposite who claim to be unbiased but always support big business interests. I am biased towards trade unions. I know that many trade unions have investments in Rolls-Royce—investments derived from members' contributions. I assume that the hon. Member would go one step further with me. I support him over the Rolls-Royce workers, but I submit that if there is to be special treatment for shareholders those trade unions which hold shares in the company should have special treatment, because they invested on behalf of their members and they are, naturally, entitled to something.
Many insurance, friendly and sick societies are concerned. The Workingmen's Club and Institute Union has investments in Rolls-Royce. The union is the working man's equivalent to White's Club, or the Guards Club, which hon. Members opposite are used to attending. The union can ill afford to lose its investments, and I assume that it would also be entitled to special treatment.
Mr. Eddie GriffithsMy hon. Friend suggests special dispensation for people who have shares in Rolls-Royce and can be said to be hardship cases. Would he include in the list of those to be helped the hon. Member for Walthamstow, East (Mr. Michael McNair-Wilson), who said that he was also a shareholder?
§ Mr. LewisI am obliged to my hon. Friend. What he has said will help me develop my point. I was about to explain that all these poor people could reasonably expect to be specially treated. In parenthesis, I would point out that it was not I who made the suggestion; it was 1029 the hon. Member for Walthamstow, East. I am tagging along, giving him a little moral support. If he wants to compensate all these penniless, hard-working individuals, who can ill afford the investments they have in Rolls-Royce, I am a fair man, and I suggest that he, too, would be entitled so to claim. But that leads me to the question: how can we judge who is penniless, and in need?
If I were to tell the average voter in my constituency that a person had £10,000, he would say, "That is a fortune." But £10,000 is nothing to many hon. Members opposite. To many workers in my constituency £500 is a very large sum. I do not know whether the hon. Gentleman has £500, £5,000 or £10,000; it is not for me to investigate.
I return to the question of a committee of investigation. Such a committee might well, independently and without bias and prejudice, investigate whether the hon. Gentleman should be classified among the poor, penniless and hard-up investors who should receive preferential treatment. The committee could also investigate whether the Government should, in the national interest—that is the new slogan being adopted by the Government—appoint the directors. An independent tribunal could not only discover where the fault for the present tragedy lay, but ensure that the mistakes made in the past were not made in future.
Under the Clause a board of directors of the most incapable sort might be appointed—the sort of people the Government would think capable because they judged them by their own standards. We know the mess they have made of many aspects of their own administration. This is not personal, and I like hon. Members opposite even though they may be sleeping or dozing, and I am sure that they would not willingly or wittingly appoint incapable people to the new board of directors; but they might judge that because a man was an ex-Tory Minister or was a strong Tory or had been a business man in another venture which had collapsed he should be appointed as chairman or as a director. That might not be the best answer.
An independent committee might suggest—and this may shake hon. Members opposite out of their slumbers—that Mr. Hugh Scanlon should be chair- 1030 man or that someone like Jack Jones should be on the board.
§ The ChairmanOrder. We are back to where we were before. We had better keep off those personalities.
§ Mr. LewisI will not mention any more personalities. A committee of inquiry appointed to discover the cause of the present situation with terms of reference to find ways of preventing a repetition of it might well make suggestions about appointments to the new company which would surprise even you, Sir Robert, and myself. It certainly might surprise the Government Front Bench. Therefore, I am not sure that enough information has been given to the public, the Press and the trade unions.
I do not know to what extent the Ministers had consultations with the trade unions before introducing the Bill. Has the Minister had full discussions with the Federation of Engineering and Shipbuilding Unions? I am glad that he is nodding his head, though I am not sure whether he is dozing off again or signifying assent. Assuming that he is nodding assent, I should like to know whether the unions have agreed with the Government's approach and have made any suggestions to him. What is the union approach on the matter? Have they suggested that we might have a new system of State boards?
In the past State boards have nearly always been composed of people who have not come from the workshop. One exception is that the last Labour Government wisely appointed one of the workers from the bench in the steel industry. That is progress. Can the Minister give an assurance that if we pass the Clause the board of directors of the new company will include workers from the shop floor? I shall feel much happier if I know that actual workers off the shop floor will go on to the board of directors. They are not liable to make so many mistakes as the financial tycoons and the people who usually have the old school tie and a family tree. I have great confidence in the man on the shop floor, and great respect for him. He speaks not from theoretical knowledge but from practical experience. When he makes suggestions he can say, "I am not working this out on paper. I have actually done 1031 the job, and I know what I am speaking about."
We know how much better it is in this Chamber when hon. Members on this side, not on the Government side, say, "I know all about this subject. I have practical knowledge and experience because I spent my life working in the pit, at the bench, or in the steel industry", like my hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) and other hon. Members. They have been on the job of producing the wealth of this country. If there is to be the unlimited expenditure that the Government are asking for, I am willing to give it to people like that. I shall not vote against the Clause standing part of the Bill if the Government can assure me that for the first time in the history of their party there will be not only working class representatives but actual workers with practical experience on the board. In that case I would not mind even supporting the £20,000 a year salaries that they are paying. We shall all contribute towards the unlimited expenditure for which they are asking. It is the workers—and they are in the overwhelming majority—who produce the wealth of the country. It is not we who produce the wealth of the country. The workers produce the wealth of the country which the Government tax, and tax very heavily, and from which they will get this unlimited amount of the money. The money will come from those hard-pressed, under-paid, over-worked industrial workers. I doubt slightly whether it is wise to allow the Government to have unlimited funds. Millions of pounds will be spent under this Clause while at the same time the Government take 6d. off the income tax on the wealthy.
§ 3.15 a.m.
§ The ChairmanOrder. I shall have to warn the hon. Gentleman. I have been listening very carefully to everything he has said. I must consider that he is beginning to get within the definition of the Standing Order on tedious repetition. I do not wish to be unkind to him or to stop him or to fetter his freedom of speech, but that is my judgment, which I have tried to make fairly and honestly. I ask him to pay attention to that and either get on to different arguments altogether or perhaps conclude.
§ Mr. LewisI am obliged to you Sir Robert, but, with respect, I had explained at this moment that Clause 1 says "any expenditure". I was explaining that if the Clause is agreed to—and I do not oppose it—any expenditure under it will be found from the taxpayers. I was explaining why I oppose that.
§ The ChairmanOrder. I do not deny that. I am sure that what the hon. Gentleman says is true. But he has done that a number of times in my judgment. He really ought to consider his arguments very carefully now.
§ Mr. LewisWith great respect, Sir Robert, if you look at HANSARD tomorrow you will see that I have only at this moment mentioned how the money has to be raised. It is true that I have explained how the directors and the shareholders and others will be affected, but I have not for a moment explained why I am against any expenditure being given because of how the money is to be raised. I am now going on to say that I am against any expenditure being incurred——
§ The ChairmanOrder. The hon. Gentleman cannot do that anyway.
§ Mr. LewisAre you telling me, Sir Robert, that on the Question, "That the Clause stand part of the Bill", I am not entitled to say that I am against it? The Clause says,
There may be defrayed out of moneys provided by Parliament any expenditure which a Minister of the Crown may, with the approval of the Treasury incur …".Am I not, therefore, entitled to ask how much money and when and where it is come from?
§ The ChairmanThat is exactly right. The hon. Gentleman cannot do that. That would be raising questions of taxation, which would be out of order.
§ Mr. LewisThen I will leave that point and completely forget any question of how they money is to be raised. I will ask—I think I am entitled to do so—whether any estimate of the total amount of money has been made. I will ask how it is to be raised. I will ask whether, if I start putting forward some suggestions, the estimates the Government can give will give me some idea whether they were right or not. 1033 The lowest estimate is probably £700,000 or £800,000, which is about the amount to be raised by increasing the charges for prescriptions needed by the sick. Is that an under-estimate? Would the amount run into millions, or hundreds of millions, of pounds? Surely the Government can given us some idea. I am sure that hon. Members would not hold them to a million or two either way. Of course we know that they never give reasonable or logical estimates. We know that they waste money and use it in ways which are not in the best interests of the country.
The penultimate lines of the Clause would allow the Government money for making loans to any company. What would be the basis? Would there be any restriction? Would there be interest charges? If so, how much would they be? Would the loans be specified in amount and purpose? Could the sums borrowed be used to obtain the securities of the company? Could the loans be used to help unemployed workers? The Clause is loosely worded, and I should like to ask the Solicitor-General——
§ Mr. LewisI assume that he is working out legal answers to some of the questions put by my hon. Friend the Member for West Lothian. My hon. Friends have asked a number of questions which have not been answered. I am being charitable and assuming that the Solicitor-General is in his office trying to get those answers. The Clause is not sufficiently definite, and I should like the Solicitor-General to say why it should not include some of the measures being incorporated into the Industrial Relations Bill.
§ The Temporary Chairman (Mr. Harold Gurden)The hon. Member is now moving towards suggesting what could have been in the Clause. We are now restricted to discussing what is actually in the Clause.
§ Mr. LewisI have been led astray by my hon. Friend the Member for Nuneaton and my hon. Friend the Member for West Lothian. It is naughty of them to lead me astray and take me out of order. I hope, Mr. Gurden, that you will allow me to rebuke them, and I am sure that they will take my rebuke in the spirit in which I give it.
1034 Clause 1 (1)(a) says:
…(whether by a Minister or his nominee …Who could be a nominee? A trade union official? A civil servant? One of the ex-directors of Rolls-Royce? The Clause goes on:…or by a company in which the shares are held for the benefit of the Crown)".I do not know of any company in which the shares are held for the benefit of the Crown except Shell-B.P. That means that Shell-B.P. could come along and be used to acquire or take over some of these shares. Has the Minister considered this? Is it his objective to allow Shell-B.P. to take over Rolls-Royce? How many such companies are there? I can only think of one, but there may be others. Some may not be the best type of company to act on behalf of the Government.Will the Minister be instructing or requesting such a company to take over any part of the assets of Rolls-Royce? I am not sure that Shell-B.P. would be the best kind of company to do so. It is mainly concerned with oil and its byproducts. If this is what is meant by the Clause I would have grave doubts about supporting it.
3.30 a.m.
The Clause also says:
…or in connection with the carrying on of any undertaking acquired in pursuance of this Act".What is meant by "any undertaking"? The present rescue operation is to save Rolls-Royce, which is a highly reputable, internationally famed company. Everybody wishes this company to survive and to achieve again its past successes.Clause 1(1)(b) is very wide. It gives the Minister the opportunity of acquiring "any undertaking". If some of the Minister's Tory friends get their private companies into financial difficulties, the Minister can say, "Under Clause 1(1)(b) we can acquire these undertakings".
What is an undertaking? The Solicitor-General might explain that to us. An undertaking could be a firm—even an undertaking business. I could not agree to unlimited funds being given to the Minister to take into public ownership, under the aegis of the Crown, an undertaking business. I am doubtful whether Tory Members, who are not here now, 1035 would support the Government taking an interest in an undertaking business. But this could happen with such an open-ended opportunity for the Government to acquire "any undertaking".
The Government make vicious attacks on the trade unions. Would they use this power to take over the T.U.C. headquarters? I do not know whether that is an undertaking. The Government might say, "Transport House is a good profitable venture. We will take it over because there is a good property development there". They might classify the Labour Party and Transport House as an asset worth taking over. I could go on.
Some firms in this country are on the verge of bankruptcy due not to maladministration of the directors but to maladministration by this Government. Could the Government, by virtue of this Clause, say to their friends whose companies are on the verge of bankruptcy, "Do not worry, old boy. We went to the same old school; we are members of the same club and the same party. Under Clause 1(1)(b) we have an unlimited sum of money and with a view to or in connection with the carrying on of any undertaking' we are now deciding to take over your company. We can give you good money." I say "good money", but I think the term is "Lolly for the boys."
We know how this Government like to look after the interests of their financial backers. Firms which have given large sums to Tory Party funds might get paid back twofold and threefold. Guest, Keen & Nettlefold—that surely is an undertaking—is a good example of a great contributor to Tory Party funds. The firm might find that it pays it to have a rearrangement, about which the financial wizards could advise it, and to say, "Let us go bankrupt. Let us have a share-out of the spoils. Just as we are on the verge of bankruptcy, and after we have shared out the spoils, we shall ask the Government to come in and use the provisions of this paragraph to take us over." If that were to happen we, the ordinary taxpayers, would have to pay for it, and I am not sure that I can agree that that should be done.
It is all very well for the Government to say at this stage that they have no intention of doing that, and that they will not want to do it. They may not 1036 want to do it at the moment, because they have enough troubles on their plate, but that is not to say that in a month, or six months, from now, if some of their friends get into difficulties because of maladministration on the part of the Treasury and the Government in failing to have a proper prices and incomes policy, and are on the verge of bankruptcy, they will not be prepared to act under these provisions if they are asked to take over—I shall not say Guest, Keen & Nettlefold, but, say, the ABC company.
I think that the Clause as it stands is much too wide. I cannot see why the Government need to have the Clause in these terms. There are no restrictions at all in it. The Government could take over virtually anything. I am all in favour of the nationalisation and socialisation of all industries. If the Government say that they will use these provisions to socialise the whole of our industry, then, provided that the terms of compensation are not too generous, and provided that they assure me that the unlimited amount of money allowed by the Clause will not be squandered, I might support the Clause, because it might provide an easy way of carrying out the Labour Party's programme to socialise all industry.
If that was the reason why the Government wanted the Clause—and, who knows, they may not be in office for all that long—it may be that the next Labour Government could say, "We do not have to introduce any new Bills for nationalisation or socialisation because there is a model Act—the Rolls-Royce (Purchase) Act—on the books, and we can acquire any business or undertaking that we like". If that is the intention, I shall be pleased to see Clause 1 stand part of the Bill.
§ Dr. GilbertI am glad that the Minister is in the Chamber, because I should like to echo the compliment paid to him some time ago by my hon. Friend the Member for West Lothian (Mr. Dalyell). I think that the right hon. Gentleman has genuinely been trying to give us some answers to some of our questions.
The only reason that I rise again is that the Minister said that he did not want to answer many of the questions that I put to him earlier. I appreciate that, 1037 and I have no wish to add to his difficulties, but I hope that he will undertake to write to me and give me the answers to those questions which he did not touch on in the debate.
I should like to come back to this question of the evaluation of the price, and the position of the sub-contractors. The Minister has heard from a number of hon. Members how urgent is the problem of the sub-contractors. One hon. Gentleman opposite said that the whole matter was one of confidence, and confidence is what is so badly lacking among sub-contractors.
We accept that a quick valuation of Rolls-Royce is not possible. But it has been established by the Government that the price to be paid will not be concerned just with the valuation which is arrived at. The Minister said that the Government are prepared to bid if necessary to keep out foreign control. Clearly, then, if other considerations enter, the Government are involved in a political rather than just a commercial decision. Can the Government take such a decision as to the proportion that they want the unsecured creditors to receive for the debts owing to them from Rolls-Royce? Having taken it, can they announce it?
The Minister says, fairly and properly, that he does not know what the total costs will run out at. No one is asking him to estimate the total cost, including the penalty clauses, down to the last million pounds or so, but surely he can make an estimate with a margin or error of £20 million to £40 million. That is not much to ask. After making that sort of estimate, surely he can compare it with what the Government, in the last resort, are prepared to pay. Then at least the sub-contractors can have some idea of what they can expect to rescue from this sorry mess.
If the Minister cannot make an announcement of that sort, does he realise that it may take many months for these firms to know where they stand? That will be just too late. It is absolutely out of the question. Many of them will go under, as I am sure the right hon. Gentleman realises. I hope that he accepts that I am not trying to make a party point. I am trying to help him and us out of our difficulties.
1038 Surely the Government are seized of the effect that the failure of these firms will have on Rolls-Royce itself. I have sat right through this debate, as I sat through Mondays debate. My hearing may have failed me, but I have yet to hear a single mention from the Government Front Bench that they are seized of this crucial matter—that the survival of Rolls-Royce depends on the survival of its sub-contractors. It is as simple as that.
I simply cannot believe that the Government's last word is that the sub-contractors will just have to take pot luck, but that is all the news we have had so far. I simply cannot believe that it is the Government's last word that no estimate can be made of how many shillings in the pound, give or take a little, the sub-contractors can expect to receive.
Worst of all, I simply cannot believe that the Government's last word is that it is impossible for them now to give the sub-contractors any idea of when they will know their fate. If that is their last word, a hopeless shrugging of the shoulders, a Gallic gesture, saying, "There is nothing we can do about it," they clearly have yet to get any idea of the size and complexity of the problem with which they are faced and which they so glibly imagined they had solved with an act of chauvinistic bravado a few very long days ago.
§ Question put and agreed to.
§ Clause 1 ordered to stand part of the Bill.
§ Clause 2 ordered to stand part of the Bill.
§ Mr. DalyellAre we to have no Ministerial reply?
§ Bill reported, without Amendment.
§ Motion made, and Question proposed,
§ That the Bill be now read the Third time.
§ 3.45 a.m.
§ Mr. DalyellI think that most of us would agree that many of the points which were made were of a serious and urgent nature. I do not want to make a long speech again. I invite the Parliamentary Secretary, who was making notes, not to make a long speech. We do not want to trick him into anything, but we 1039 think that some real issues have been raised in relation to sub-contractors whom we are meeting later today, and perhaps he would care to comment.
§ Mr. David PriceThe whole House shares the obvious concern the hon. Member for West Lothian (Mr. Dalyell) has for the 18 per cent. unemployed in Livingston. As the hon. Gentleman knows, I have been to Livingston in a former capacity. I hope that the hon. Gentleman and the whole House will realise that the Government are aware of the real human problems that are involved in this. The hon. Gentleman knows me well enough to realise that I am deeply aware of the problems.
I want to deal with some of the points the hon. Gentleman raised; because, though some of my colleagues may have thought that the hon. Gentleman spoke for rather a long time, I know the sincerity with which the hon. Gentleman made his points.
The hon. Gentleman asked, first, whether the present Government had treated the Americans with the same candour as he felt and as the right hon. Member for Bristol, South-East (Mr. Benn), the reason for whose absence at this time we appreciate, felt applied under the previous Administration.
I can say—I think that this has been in the Press—that we did at the earliest suitable moment contact the American Administration. This is the proper relationship. It was for Rolls-Royce to deal direct with Lockheed. We more than once suggested to Rolls-Royce that they should have early discussions with Lockheed. They knew that Mr. Haughton was coming over. This visit was already arranged before Rolls-Royce were aware how serious their financial position was. Rolls-Royce felt—it was their decision and not ours—that it was better to stick to the timetable, and I believe that they made some effort to see whether Mr. Haughton could come earlier or whether they would be able to see him earlier. However, this was their decision and they decided to adhere to the original timetable. I assure the hon. Gentleman that ahead of that the Government got in touch with the American Administration.
The hon. Gentleman and one of his colleagues said that on these big engine 1040 contracts the normal form has been that the profit is made in the later part of the programme—in terms of engines when it comes to the later sales of the aircraft into which the engines are to go. Equally, it will be agreed that it is a difficult and important calculation to work out the programme and the build up. It is a curve which in terms of return rises at the end. It is important above all to discount it. This is one of the occasions where much of the technique of D.C.F. is vitally important.
The hon. Gentleman and the hon. Member for Dudley (Dr. Gilbert), who knows about this matter, will appreciate that if the timing is got badly out of phase in terms of delivery build-up and also if the production costs on the early engines are going wrong—if one is making a thundering loss and is in danger of delay penalties—this puts the whole thing out. That does not vitiate what the hon. Gentleman said as being broadly true, but the programme went wrong on this occasion.
My right hon. Friend has made the point—and I would have made it if I had had enough time in my winding up speech—that what is clear about the contract is that Rolls-Royce underestimated the time it took to go through development, through prototype and into production. The production people naturally need a long time to fulfil their programme, and in order to meet a very tight production programme things were passing from prototype design into production well ahead of them being finalised in the development stage. The result was that engines would be going to the customer. Lockheed in this case, which were not up to design specification. All right, they worked, but below design specification. They would have had to be returned to be re-vamped. Alternatively, the engines had a much smaller service life, because one of the problems is reliability. They could have been running for a short time, but if it was a short service life the contract would not be fulfilled.
This was the point in the spectrum, from the original idea to ordinary production, at which the troubles arose. It was because of this that it had got completely out of hand. It is fair to say that until very recently Rolls-Royce were 1041 not aware of the scale of this "out-of-phase" in time, and they went on for too long before realising this, and it all happened terribly suddenly. When they really appraised it they discovered that they simply had not the resources to carry on.
Hon. Members opposite spoke about Section 332 as being a grotesque excuse. Like the hon. Member for West Lothian, I am no lawyer, but he and I have been in the House long enough to have a respect for these matters. I can assure him that Rolls-Royce took their own independent legal advice, and it was clear to my right hon. Friend and I that they were very concerned about this matter from the moment they told us how bad the situation was. They were getting their own advice the whole time to see how good or bad the situation was. But Section 332 absolutely personalises this responsibility. Whereas a public company is a limited liability company, under Section 332 the directors are personally and severally responsible to the limit of whatever resources they have and can be at risk on a criminal charge.
On the other hand, from the Government point of view, if we had employed some of the devices suggested in the debate, the Government would have been at risk under Section 332 to the extent that they would have become liable for the whole of the liabilities of Rolls-Royce. I cannot argue about whether this is correct legal advice, but this was the advice we had.
The hon. Gentleman spoke of the dangers of aero-engine contracts. He exaggerates. Although we have all made clear that the RB211 concept is extremely interesting technically and is forward-looking, we must remember that there are other aero-engines which may not be technically quite as exciting but are also very important.
No one has yet raised the wider question of whether there is room in the free world, which is the relevant market, for three companies to be manufacturing large aero engines. When I say that, I am not talking about the sort of engine that we have in the military aircraft programmes. I am not even talking about where I think the next obvious line for the future lies, which is in the really quiet engine of, say, 25,000 lbs. thrust, or what we are thinking about in terms 1042 of the possible civil applications of something very near to VTOL—it may be a little STOL, but certainly a very short take-off. I do not think that the RB211 technology is essential for that.
Furthermore, the House will recognise that, were the worst to happen and it was not possible to renegotiate a satisfactory contract with Lockheeds about continuing the RB211-22, the RB211 technology is mainly known, and we should have the benefits of it. Certainly it should be one of our basic purposes to ensure that the technology is preserved and developed, even if not in the RB2I1-22. I will not develop that thought further. There are quite a number of permutations on it. But we shall not have lost our technology.
The hon. Gentleman mentioned the problems of Short Brothers and Harland, and we all know the importance of the podding contract for the RB211-22 in that connection. Clearly, the company is one of the many contractors to Rolls which are particularly dependent on their contracts. But, equally, a lot of other contractors have a wide range of contracts with Rolls, though possibly not those in the hon. Gentleman's constituency.
It is not for me to supplement what my hon. and learned Friend the Solicitor-General said earlier, but it is clear that for those who are suppliers across the board, the large part of Rolls which will form the basis of the new company will provide continuity of contracts. Legally, of course, the contracts will have to be renegotiated, because a new entity will be involved. But I have no doubt that they will be renewed, since the projects will remain the same.
I might be able to give some comfort to the hon. Gentleman in this connection. Assuming that nothing else happens, these firms would be in a position to renegotiate possibly a higher price with the new company—they could argue that they have outstanding debts owed them by the old Rolls company. Matters will be helped even more if we are able to renegotiate the RB211 contract. I do not want to exaggerate the position, but they will still have claims on what remains of the old company.
Then the hon. Member for Dudley will recall the announcement made by the Governor of the Bank of England, 1043 who has said that banks have been instructed to help with credit, on normal banking terms, those firms finding themselves in difficulty. The firms which the hon. Member for West Lothian has in mind will be in a fairly strong position vis-à-vis their bankers, because they will have contracts from the new Rolls, although large debts will be owed them by the old company. That, in my judgment, should enable them to get accommodation from their banks in circumstances in which they might have found difficulty without that instruction from the Governor. I do not for a moment pretend that this answers the whole of the hon. Member's concern, but I suggest that it is some comfort. He said that he is to meet some of the people concerned in his constituency tomorrow. I think that that will help.
§ Mr. DalyellVery useful and helpful, yes.
§ 4.0 a.m.
Mr. Eddie GriffithsOne firm in Sheffield has £1¼ million owed to it by Rolls-Royce, about £350,000 of which is tied up with the RB211. Assuming that such debts are outstanding and little will be honoured in full, does the hon. Gentleman think that there will be a danger that some of the firms dealing with Rolls-Royce in a big way will on new contracts raise their prices by, say, 5 per cent. over a period of 5 to 10 years in order to recover some of these debts? Even a large firm cannot afford to write off debts of £1 million.
§ Mr. PriceI think that the answer there is that it will simply be a matter of negotiation, to put it at its crudest, between the new Rolls-Royce and such suppliers as he mentions. It would be a matter of straight bargaining. It will depend on how far each is dependent on the other. I can only speak from what one knows of this sort of thing, where it has happened at a lower level of far less national importance. That has been done.
I do not exaggerate the extent of the help, but I say that, marginally, there will be a little comfort in the fact that the new Rolls-Royce will be in business and will be wanting to continue all the projects. Leaving aside the RB211 for the moment, it will wish to continue 1044 everything else. Therefore, the new Rolls-Royce will continue to need the work of its contractors. I do not pretend that that goes a long way towards——
§ Mr. DalyellThis is a most useful and helpful statement, and we are deeply grateful. But this is the first time in 12 hours that we have had the Governor of the Bank of England introduced into the matter, and many of us would be very much easier in our minds if we thought that there was some directive from the Governor of the Bank to the joint stock and other banks, particularly the merchant banks, to help in the next few weeks, at least until such time as a decision is made on renegotiation.
§ Mr. PriceThe hon. Gentleman probably knows what came out on the tape almost immediately after my right hon. Friend made his original statement. I have not with me a copy of what the Governor said, but I shall be happy to send it to the hon. Gentleman. It was to the effect that the ordinary banks with which a firm deals—not the Bank of England—would be able to accommodate these companies in difficulties, within normal banking criteria.
§ Dr. GilbertI am most grateful for the hon. Gentleman's remarks, which are quite the most helpful we have had in the debate on this difficult problem. Would he try to ensure that the suggestions he has been making receive the widest possible publicity?
§ Mr. PriceThey are not my suggestions. I am merely commenting on the statement which was put out by the Bank of England. It is, therefore, a question of firms in the hon. Gentleman's constituency talking to their bank managers. I suggest that they have a copy of the Bank's statement. But he makes perfectly clear that it must be up to the banks, using their ordinary commercial judgment. I see that my hon. Friend the Financial Secretary to the Treasury nods, agreeing that I have interpreted that correctly.
The hon. Member for West Lothian talked about criticism of Rolls-Royce management at the middle level. I was not aware, having listened to nearly all the debates in the House and having read much of the Press commentary, that 1045 there had been any criticism of the middle management of Rolls-Royce. I thought that the criticism was at a much higher level than that. It would be wrong for me to comment. As the House knows, the Board of Rolls-Royce is seeking an extraordinary general meeting of shareholders with the intention to pass a resolution asking, under Section 165 of the Companies Act, I think, for there to be an inquiry as laid down in the law. I think that, in view of the likelihood of any inquiry, it would be quite improper for me to give my own personal judgment of who may or may not in Rolls senior management, or anywhere else, be held to be in any way culpable for bringing about the situation. I think that must be right, because, having privilege at this Box, or the privilege which any hon. Member in the House has here, it would be quite wrong to point even the smallest finger at anybody. I am sure the House will agree with me on that.
Mr. Eddie GriffithsWith reference to middle management, I think the reference was made by the right hon. Gentleman who was replying to one of his hon. Friends who was dealing with management. I know that the right hon. Gentleman was using a very quiet voice at the time, but I thought I caught him saying, "In reference to middle management, I am of the opinion that there are too many."
§ Mr. Corfield"A certain amount of over-staffing" was the term I used.
§ Mr. PriceThat is slightly different from saying that middle management was grossly misinformed over this.
Similarly, I would not be prepared to answer the hon. Gentleman's many questions about the role of the banks or of particular banks in this unfortunate situation in which Rolls finds itself, because, again, all this will be relevant to the inquiry under Section 165, or any other inquiry which takes place, and, quite clearly, what has happened in the general conduct of affairs is going to be inquired into, and I think it would be quite wrong of me to comment at all.
§ Mr. DalyellWhat will be the nature of the inquiry? The hon. Gentleman is in a position to say that.
§ Mr. PriceThere will be, as I understand it, a Department of Trade and Industry inquiry.
May I just return to what I was saying about the statement of the Bank of England? Because my right hon. Friend has given me a copy of the text. It was quite simply that:
Steps will be taken to ensure that bankers will not be prevented by current credit restrictions from accommodating, subject to normal banking criteria, those companies who are either trade creditors, suppliers or sub-contractors of Rolls-Royce and who may need temporary additional finance as a result of these developments.I hope that hon. Members may find that of some modest assistance to their constituents.Finally, I would make mention of the hon. Member's comment about the European industry. What my right hon. Friend said was merely that one of the many options for the future structure of Rolls was some arrangement with the leading aero-engine manufacturers in Europe. The hon. Member will be aware that last autumn there was a tentative approach from the French and Germans—it is true it was in relation to consideration of whether we should rejoin the A300B—about the need to look together at the possibility of working together in the aero-engine field further as a collaborative venture.
It would be quite wrong at this hour to speculate on all the hon. Gentleman had to say. All I shall do now is to mark this out as one option for the future of Rolls. This has relation to what I was saying earlier about raising the question whether there is room in the free world for three major aero-engine manufacturers in the big league.
I hope that what I have said may be of some assistance to the House. I believe, as I said earlier, that this is a right Bill. I appreciate, as do all my right hon. Friends, that it is remarkably general, and that we are asking for considerable powers, but I think the House will agree that in this situation the Government had no choice but to act quickly and decisively and firmly. On some of the more detailed points—I say in response to the hon. Member for West Ham, North (Mr. Arthur Lewis)—one would have liked to have had more to present to the House, but there has 1047 simply not been time. It has been more important to act quickly and show the Government's determination, because if we had not done so, then with the repercussions throughout the economy of lack of confidence, and of uncertainty about the Government's intentions, the situation would have been even more serious than the one we are facing today.
§ Mr. BishopBefore the Parliamentary Secretary resumes his seat, will he bear in mind the very great importance of the need for confidence being based on communications, and keep the House informed at all times of the progress made, because I am sure that many thousands of sub-contractors and others throughout the country will be anxiously awaiting the results of the investigations, and some assurances about their future.
§ Mr. DalyellI take the opportunity of thanking the Ministers, who have been kept up much later than Ministers should be kept up, for answering my questions. I wish them luck in the renegotiation of the contract.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.