ROLLS-ROYCE (Hansard, 8 March 1971)

§ The Minister of Aviation Supply (Mr. Frederick Corfield)
The House will wish to have an account of recent developments with respect to Rolls-Royce.
Last week the Government had lengthy discussions with Mr. Haughton and his colleagues about the basis for a new RB211 contract.
Against the background of widely differing estimates on the part of Her Majesty's Government and the Lockheed Aircraft Corporation of the losses likely to arise from continuing the programme, the Government offered Mr. Haughton the opportunity of backing his own judgment.
The Government proposed to contribute the£60 million estimated by Mr. Haughton to be sufficient to cover future development costs, in addition to the money already spent. Development costs beyond that would be borne by Lockheed; on its judgment, there would not be any. The mean price increase for each engine would not exceed£150,000—a figure which we feel could still be well below cost, and one which, as was agreed with Mr. Haughton, was negotiable. Any excess or saving in production cost would be shared between Rolls-Royce and Lockheed. Profits from the sale of spares would be shared. Lockheed thought these would be much greater than the Government's figures, so again Lockheed was called on to back its own judgment. In return, delivery penalties under the old contract would be formally waived by both Lockheed and the airlines. Under new arrangements, there would be no penalty for six months' delay, and only light penalties for a further three months.
Helpful cash flow arrangements were to be negotiated by Lockheed with American bankers. The management of the new project could be conducted as a joint Rolls-Royce/Lockheed venture in whatever form seemed most effective. Her Majesty's Government would give, through Rolls-Royce, a warranty to provide servicing and spares support during the life of the engine. It would be for Lockheed to arrange a satisfactory 32 warranty to recompense Her Majesty's Government for all the money invested under this new agreement if the TriStar programme were abandoned.
Mr. Haughton undertook to present these proposals to the airlines and the banks, and I believe that he has done so. I have had no report of how the proposals have been received by them.
I should add that I understand that the receiver has this afternoon informed the trade unions concerned of his decision to make redundant some 4,000 employees of Rolls-Royce Ltd., mainly at establishments in the Derby area and in Scotland. The redundancies are in addition to any which may arise if the RB211 project does not proceed.
Meanwhile, within the scope of the Rolls-Royce (Purchase) Act, negotiations are continuing with the receiver in respect to the acquisition by Her Majesty's Government of certain assets of the Rolls-Royce Company Ltd. Twenty million pounds has already been advanced to the receiver from the Contingencies Fund. A Supplementary Estimate will be laid later this week covering this sum and likely further payments on account to be made to the receiver in the current financial year.
I shall continue to keep the House regularly informed as the situation develops.

§ Mr. Benn
The right hon. Gentleman will realise that he has told the House nothing that we have not been able to read in the Press or on the tape, and we are further handicapped in that the negotiations are being conducted by a Minister not accountable to the House. However may I put to him these questions?
First, how do the Government expect Lockheed to manage this without actually being in charge of Rolls-Royce? Second, does the guarantee contemplated involve the American Government? Third, are the Government's proposals negotiable or are they the last word of the Government in this matter?
Next, will the right hon. Gentleman confirm that all the Government are doing, in fact, is offering a further£18 million above the figure mentioned in November? Finally, will he say whether the Government or the receiver are now in charge of Rolls-Royce, and how many 33 further redundancies would be contemplated if the RB211 programme were to fail?

§ Mr. Corfield
As regards the Press reports, I am sure the House will appreciate that it was necessary to give guidance to the Press simultaneously with Mr. Haughton's Press conference in the United States, and this meant postponing it, because of the difference in time, to late on Friday afternoon.
With regard to the arrangements for Lockheed's participation, there are, as the House will know, various patterns for this—such as Panavia—and these are the sort of systems which we had in mind; but this particular aspect did not appear to worry Mr. Haughton at all.
As regards the warranty, this really is a matter for negotiation between Mr. Haughton and the United States Government or the United States banks, as the case may be. We have made abundantly clear that these proposals are negotiable and that we are also open to counter-bids not necessarily connected with this particular type of proposition.
It is not true that the Government have merely put up another£18 million, because there are likely to be very substantial losses on the production even under the scheme suggested.
As regards the future, I am sure the House recognises that the Receiver is in charge but that he does make these decisions in regard to redundancies in consultation with the board of Rolls-Royce, the executives of which represent continuity from the old board which had already been working on the problem of over-staffing.

§ Mr. Rost
We all recognise the Government's skilful initiative—[HON. MEMBERS: "Oh."]—in putting forward a commercial bargaining position, which we all hope will lead to a successful renegotiation of the RB211 contract. But are the Government taking any action to prevent a liquidator being appointed in the meantime while the negotiations are continued? Is it still their intention to try to prevent a liquidation and have a reorganisation rather than a liquidation and a nationalisation?

§ Mr. Corfield
While thanking my hon. Friend for his initial comment, I can only express the hope that the Opposition 34 will not make a satisfactory conclusion of these negotiations more difficult. On the question of a liquidation, the Government have no power in this matter, but, as I have repeatedly told the House, we are considering such schemes as have been put to us and are prepared to consider other schemes.

§ Mr. Palmer
The right hon. Gentleman said that the redundancies are expected mainly in Derby and in Scotland. How many redundancies are expected in the Bristol area?

§ Mr. Corfield
None, Sir.

§ Mr. Michael McNair-Wilson
Can my right hon. Friend say how many of the redundancies are caused by the RB211 and how many are caused by overstaffing?

§ Mr. Corfield
As I tried to make clear, the whole of these redundancies are due to over-staffing and are not affected by the future of the RB211 one way or another.

§ Mr. Thorpe
May I ask the right hon. Gentleman three short questions? First, since the Government had a considerable part to play in the bankruptcy, can we know how much longer they intend to finance the RB211 project? Will the right hon. Gentleman confirm that it will be for a sufficiently long period to allow negotiations to continue? Second, while I accept the need for a warranty, will the right hon. Gentleman confirm that the£60 million offer would be approximately the cost of closing down the project when assessed in terms of redundancy payments, unemployment payment and loss of tax? Third, can he confirm or deny the suggestion that the wide-scale redundancies which have already taken place were one of the conditions the Government put to the Receiver before expressing their willingness to come in?

§ Mr. Corfield
As to the continuation of the indemnity, so long as there is reasonable expectation of a settlement, the answer to the right hon. Gentleman's first question is, "Yes". The answer to his second question is, "No". The article to which I think the right hon. Gentleman refers does not take into account the very substantial other losses which could and probably would fall upon Her Majesty's Government. There has been 35 absolutely no suggestion that any condition of the sort the right hon. Gentleman described in his last question was put to the receiver.

§ Mr. Costain
Does my right hon. Friend realise that the Opposition's attitude will make negotiations more difficult? They turn any national calamity to political advantage; they even tried to gain political advantage from the incident last week when a Greek ship ran into a wreck in the English Channel.

§ Mr. Corfield
Some of their attitudes do not help.

§ Mr. Ross
Will the right hon. Gentleman give us a breakdown of the 4,000 redundancies between Derby and Scotland, including Barnoldswick? Are we to take it that there have been no discussions between the Receiver and the Government about this matter or between the Receiver and the trade unions, and that the trade unions are merely being informed?

§ Mr. Corfield
The breakdown is approximately 1,700 in the Glasgow area, 2,000 in the Derby area, and 240 at Barnoldswick. I understand that the Receiver has consulted the trade unions. As to other consultations, this is primarily a matter for the commercial judgment of the new board, the executives of which are the same as the old board, but of course the Government have been kept informed.

§ Mr. Scott-Hopkins
Can my right hon. Friend say a little about the employers' side of the redundancy payments? Will it be secured? Do the workers get top priority in a liquidation?

§ Mr. Corfield
The National Redundancy Payments Fund will meet all the obligations, and my right hon. Friend the Secretary of State for Employment will rank as an unsecured creditor with the receiver.

§ Mr. Whitehead
In view of the rather depressing news about the negotiations over the RB211 engine and the astonishing speed with which the receiver has acted in executing the redundancies in the Derby division, what is the right hon. Gentleman's estimate of further redundancies in the event of a failure to renegotiate the RB211 contract?

§ Mr. Corfield
I can only give the hon. Gentleman the rather broad bracket which was given to me by Rolls-Royce, which was between 12,000 and 18,000.

§ Mr. Lane
In view of the importance to Britain's commercial reputation and prospects of salvaging the RB211, can my right hon. Friend confirm that the Government will continue to show the greatest possible flexibility in the negotiations with Lockheed?

§ Mr. Corfield
As I have already told the House, the Government have made it quite clear that we are open to counteroffers.

§ Mr. Sheldon
Is not the right hon. Gentleman aware that it is unrealistic to expect Lockheed to go ahead on the basis that he has outlined in a company over which it has no control? What he is suggesting is that he has decided that it is time to wind up operations on the RB211. What is the right hon. Gentleman's estimate of the cost to the Exchequer of redundancy payments and unemployment pay if the RB211 were scrapped?

§ Mr. Corfield
Mr. Haughton made it quite clear that if it had not been for his company's difficult financial situation he would be very interested in the proposition we put to him, but that because of those financial difficulties he would naturally have to consult. There was no question of turning the proposition down as impractical. The Government have not decided that the best thing to do is to wind up the RB211 project. We are anxious to negotiate, and I have made it quite clear that we are open to further offers. Estimates have been made, and it is abundantly clear that the figures in the article to which I have referred were wrong.

§ Mr. Kilfedder
I know my right hon. Friend's deep concern for Northern Ireland after the collapse of Rolls-Royce. Are any of the workers engaged on the RB211, either at Short Bros, and Harland or Rolls-Royce at Dundonald, likely to be made redundant?

§ Mr. Corfield
The present redundancies are redundancies that would have taken place anyway. I understand that if there are redundancies in Northern Ireland they will be in tens rather than hundreds.

§ Mr. Harold Wilson
The hon. Gentleman referred to the estimate of redundancies he had been given in the bracket of 12,000 to 18,000. Was that of people in the direct employ of Rolls-Royce, or did it also include consequential unemployment in subsidiaries, suppliers and component manufacturers? If it did not include them, has he an estimate of the numbers who will be affected there? Second, when the right hon. Gentleman shows his sensitivity to criticism in the House, even critical questions, is he aware that this stems partly from the contradictory statements made by Ministers in the House and outside? The House will continue to probe him and his colleagues very vigorously until we can have all the facts. That is why we have suggested a Select Committee to examine the record of successive Governments and the company in this respect.

§ Mr. Corfield
The figures I gave were those given to me by Rolls-Royce affecting its own employees only. I cannot give any accurate estimates on the second head. I have made it clear that I am very anxious to keep the House informed, and I will continue to do so. It has already been announced that there will be a White Paper.

§ Mr. Speaker
Order. I do not think that we can debate these matters now. We have a very important debate ahead.

§ Mr. Benn
I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely: the substantial unemployment announced today affecting workers employed by Rolls-Royce and the redundancies forecast if terms for the continuation of the RB211 are not secured, and the uncertainties now experienced by subcontractors and others as a result of the contradictory statements by Ministers". May I first draw attention to the urgency and immediacy of these matters. The unemployment of 4,300 announced today is already a fact. The redundancies forecast by the Minister of Aviation Supply of 12,000 to 18,000 do not include the secondary effect on employment. Using the normal five to one ratio, we can see that we are talking about the livelihood of about 100,000 people. The uncertainties experienced by the subcon- 38 tractors flow in part from the fact that the Receiver is not answerable to the House but only to the creditors, and therefore there is no one in the House to whom we can now put questions for authoritative answer on the position affecting Rolls-Royce, its subcontractors or its workers.
Since the negotiations are proceeding and the Minister has told the House that the terms are negotiable, I submit that it would be proper for the House to have the opportunity to debate the matter briefly tomorrow.

§ Mr. Speaker
The right hon. Member for Bristol, South-East (Mr. Benn) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely, the susbstantial unemployment announced today affecting workers employed by Rolls-Royce and the redundancies forecast if terms for the continuation of the RB211 are not secured, and the uncertainties now experienced by subcontractors and others as a result of the contradictory statements by Ministers". As the House knows, under the revised Standing Order No. 9 I am directed to take account of the several factors set out in the Order but to give no reason for my decision.
I have given careful consideration to all the representations the right hon. Gentleman has made. I have decided that I cannot submit his application to the House.

Hon. Members
Oh.

§ Mr. Speaker
Order. Other ways must be found to debate this very important matter.
When it was suggested that Standing Order No. 9 should be altered, some people foresaw great trouble for the Chair. I did not think that that was necessarily so, and I hope that I will not be proved to be wrong.
I am not allowed to give reasons for my decisions, but I think that I can say this to the House. The revised Standing Order was approved on 14th November, 1967, following upon a Report by the Select Committee on Procedure, ordered to be printed on 20th December, 1966. In the three Sessions prior to that Report no Standing Order No. 9 Motion had been successful. In the whole of the previous 20 years only 15 had been successful. New 39 criteria for granting a debate were set out in paragraphs 7 to 10 of the Report and were specifically accepted by the then Government and the then Opposition on 14th November, 1967.
It is according to these criteria that I have to administer Standing Order No. 9. Those are the rules, and until they are altered I am bound by the criteria set out. Since my election to the Chair two successful applications for debates under Standing Order No. 9 have been made to me. I suggest, with great respect to the House, that right hon. and hon. Gentlemen should reread the criteria laid down in the Select Committee's Report.

§ Mr. Harold Wilson
Further to that point of order, Mr. Speaker. The House recognises that the decision in this matter is entirely for the Chair and cannot be questioned. Nor can we press you for reasons, although you have made a statement following upon your adjudication. May I make a submission to you—not on today's application, which you have decided? Since it is clear from what the Minister of Aviation Supply has said that negotiations are continuing but that a very much more grievous situation would emerge if the RB211 were cancelled, will you at any rate consider, although not adjudicate on it today, a further application should that very much more grave situation emerge during the week? Certainly we give notice that we would seek to make such application.
Would you, at your leisure, consider certain Standing Order No. 9 Adjournment debates which have taken place since 1967—for example, the debates on the Soames affair and on Nigeria—which arose exactly as the request did today, and inform us what were the criteria which applied in their case but did not apply today?

§ Mr. Speaker
I am not allowed to discuss the criteria for granting a particular Motion, particularly one granted by my predecessors. But I remind the House that in the last three months or so, there have been three successful Motions under Standing Order No. 9 and that if right hon. and hon. Members would only read the relevant paragraphs in the Select Committee's Report they would see why I am acting as I am. This is a very difficult matter for the Chair. When the reform was being discussed many right 40 hon. and hon. Members said that it would put an impossible burden on the Chair, and it is indeed very difficult. I think that the House should find other ways of discussing the Rolls-Royce matter.

§ Mr. Walter Johnson
On a point of order, Mr. Speaker. During questioning, the Minister made it clear that there had been full consultation by the Receiver with the trade unions concerned about the redundancies declared today. I can state that there has been no consultation with the trade unions. They have been presented with a fait accompli, being given the dates when these men would be made redundant. This is a disgraceful state of affairs.

§ Mr. Speaker
Whether that is so or not, it is not a point of order.

§ Mr. Thorpe
May I return to the point put by the Leader of the Opposition, Mr. Speaker? The House will, of course, wish to accept your Ruling and the framework within which you have to give such a Ruling—namely, that no reason need be given for the Chair's decision. It it within the knowledge of the House that one of the criteria is the possibility of a debate on the matter in question in the foreseeable future. Without asking you to indicate whether that was or was not one of the grounds for your decision, may I, for the assistance of the House, ask the Leader of the House whether he sees an opportunity for debate presenting itself in the immediate future?

§ The Lord President of the Council and Leader of the House of Commons (Mr. William Whitelaw)
Further to that point of order. I think that the House appreciates the importance of conducting the negotiations with Lockheed and not saying anything which might make those negotiations more difficult. To that extent, my right hon. Friend has made it clear that he will keep the House informed of the progress of the negotiations whenever he can do so. He has given that promise. Of course there are opportunities for the House, and I shall announce certain opportunities—for example, a Supply Day—when this may be the wish, certainly next week.

§ Mr. Benn
May I raise a wider point of order, Mr. Speaker? When Rolls-Royce collapsed, the Government presented a Bill rapidly to Parliament to 41 permit them to acquire the assets. The Opposition facilitated the passage of the Bill, which went through in one day. We are now in the position where there is no accountability for the conduct of the company. Whereas Parliament has passed and the Sovereign has assented to legislation to permit the company to be taken into public ownership, we are in a position where the company is run by someone who is not accountable to the House. The decisions which have been announced affect workers in constituencies of many right hon. and hon. Members, yet we have no means of raising these problems and getting an answer from the Minister.
The Leader of the House quite properly has said, in another context—the matter of the RB 211 engine—that the Government are in charge of the negotiations. The result is that in relation to part of the company the Government have assumed full responsibility for the negotiation with Lockheed, whereas for the other part, involving our own constituents, the Government disclaim any responsibility whatever. The situation raises a most important point of parliamentary accountability and I wonder whether you could advise us as to where we stand in respect of the accountability of the Government for the conduct of Rolls-Royce.

§ Mr. Speaker
I am not sure that that is a point of order, but I will consider what the right hon. Gentleman has said. There are other ways of arranging debate on the subject than an application under Standing Order No. 9. I think that it is a matter for discussion between the usual channels, not for the Chair. I must adhere to my decision under Standing Order No. 9. If the House decides to alter the criteria, I will try to administer the new Standing Order as best I can.