SKYWAYS COACH AIR LIMITED (Hansard, 25 January 1971)

§ The Minister for Transport Industries (Mr. John Peyton)
With permission, I shall now answer Question No. 95.
In October, 1970, the Transport Holding Company, which, in 1967, had purchased a half share in Skyways Coach Air Ltd. for £27,000 sought my permission to lend it £300,000.
As the Transport Holding Company had already lent the company £1,200,000 and was owed a further £160,000 by way of interest, I considered that the time had come to put a limit on the amount of public funds invested in such a high risk venture. I had in mind also the fact that the company had made an estimated loss after interest of £200,000 in 1970.
Accordingly, while I agreed to a loan of £100,000 to meet immediate liabilities, I refused consent for the larger amount.
Subsequently, in order to give the company further breathing space to find alternative finance, and having in mind the number of jobs at stake, I agreed that the Transport Holding Company should make available a further £50,000 to tide the company over until 20th January. I was influenced in this decision by the fact that many people had booked and paid for passages over Christmas.
Neither the Transport Holding Company nor Skyways was, however, able to secure any firm offer, and the Transport Holding Company decided, with my full 32 agreement, that there was no justification for putting further money into the company.
The Transport Holding Company, has, therefore, appointed a receiver but has undertaken to make such payments to employees as would, in its opinion, be fair and reasonable in the light of their contracts of employment, to make refunds for unusable tickets, and to pay in full claims of the company's outstanding trade creditors up to 20th January.
I should, perhaps, add, in view of some suggestions of the number of people whose holiday arrangements have been affected, that the figure of 300,000 people represented hopes rather than bookings.

§ Mr. Mulley
The House is grateful to the right hon. Gentleman for making a statement on this matter. Since he can, I understand, in respect of the Transport Holding Company give directives which he does not need to report to the House as he does in respect of other nationalised industries, will the right hon. Gentleman consider making a statement when he gives directions to the Transport Holding Company on this or other matters?
Can the right hon. Gentleman deny that the injection of a little more capital, as is suggested, would save this company, to the benefit of the employees and those who do business with it? Further, although I have sympathy with his desire to reduce the losses in this case, will he give an assurance that he will not sell Transport Holding Company assets which are profit-making?

§ Mr. Peyton
I gladly undertake to keep the House informed on this matter. As regards the other point which the right hon. Gentleman makes, I have no idea when the call on public funds would cease, and this led me to my decision, which I reached with great reluctance, that the time had come to halt this process. I felt that the process should stop.

§ Mr. Costain
I accept the reasons which made him come to his conclusion, but does my right hon. Friend appreciate that his decision will lead to increased unemployment in the Folkestone and Hythe constituency? May we have an assurance that an effort will be made to keep the aerodrome in operation, thus helping to continue the employment of the people concerned?

§ Mr. Peyton
My hon. Friend has brought his anxieties very much to my notice. I greatly regret that this misfortune should have fallen upon many of his constituents. I would hope that the airfield could continue to be used as an airfield, and I very much hope that my right hon. Friend the Secretary of State for Employment will be able to help in finding alternative jobs for the people who are thus displaced.

§ Mr. Barnett
How does the right hon. Gentleman reconcile his decision to approve the payment of creditors in full in this case while agreeing to a scheme in respect of the Mersey Docks and Harbour Board under which small investors were to have 30 per cent. of their investment written off—in addition to which we are now told that there is to be a moratorium, which may mean their not getting anything at all?

§ Mr. Peyton
The hon. Gentleman will be the first to realise that I am not answering questions about the Mersey this afternoon. [HON. MEMBERS: "Come off it."] I shall look forward to doing so on Wednesday. The cases are in no way comparable. What one wanted to do here was to terminate Government liability in this matter as quickly and as decently as possible.

§ Mr. Bruce-Gardyne
I congratulate my right hon. Friend on calling a halt to the pouring of public funds down this particular open drain. As there are even larger open drains about, may be have an assurance that his example will be closely followed by the Government as a whole?

§ Mr. Peyton
I am sure that my right hon. Friends will speak for themselves. For my part, if there are any open drains which I can stop, I shall be glad to do so.

§ Mr. Tinn
Will the right hon. Gentleman give the assurance for which my right hon. Friend the Member for Sheffield, Park (Mr. Mulley) asked, that, as regards this undertaking for which he is responsible, he will not sell off assets which are yielding a profit?

§ Mr. Peyton
I am concerned only with the public interest. If I find that assets owned by the State have either become a source of loss or are not earning inything like what they ought to earn, I shall consider what action is appropriate.