Rolls-Royce Limited

HC Deb 24 March 1971 vol 814 cc515-23

4. Mr. Sheldon

asked the Minister of Aviation Supply if he will now make a further statement on Rolls-Royce.

14. Dr. Gilbert

asked the Minister of Aviation Supply if he will make a further statement on Rolls-Royce.

18. Mr. Barnett

asked the Minister of Aviation Supply if he will now make a further statement on Rolls-Royce.

22. Mr. Raphael Tuck

asked the Minister of Aviation Supply if he will make a further statement on the progress of negotiations regarding Rolls-Royce Limited.

Mr. Corfield

No, Sir. I have at present nothing to add to the answer I gave to my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) on 19th March.—[Vol. 813, c. 405.]

Mr. Sheldon

Is it the Government's intention that a senior Minister should go to Washington to ensure—

Mr. Marten

He has gone.

Mr. Sheldon

He has gone, has he? Would the right hon. Gentleman say whether it is the intention of the Minister who has gone to Washington to seek an indemnity from the United States Government for any withdrawal by Lockheed from the present contract which may be entered into? What inducement is being offered to British airlines to purchase the TRISTAR.

Mr. Corfield

The answer to the first part of that questions forms part of a later answer, but my hon. Friend the Minister of State for Defence and my right hon. and learned Friend the Attorney-General have left to take part in the negotiations.

Mr. Sheldon

When did they go?

Mr. Corfield

One hour ago. What was the second part?

Mr. Sheldon

About indemnity—

Mr. Speaker

Order. We cannot have this backwards and forwards discussion. Dr. Gilbert.

Dr. Gilbert

Would the Minister first of all answer by hon. Friend's supplementary—

Mr. Sheldon

On a point of order Mr. Speaker. It is clear that the Minister has not followed by question and was only asking for clarification.

Mr. Speaker

One tries to get on with questions and allow as many supplementaries as possible. There will be three or four more supplementaries and I have not the slightest doubt that the answer asked for will be given in the course of those—as I think is already about to happen.

Dr. Gilbert

Further to that, what attempts, if any, were made in the recent negotiations for the sale of the patents of Rolls-Royce to ascertain whether any other interested buyers were in the market for them, so that the Receiver got the highest possible price in the interests of the unsecured creditors? Can the right hon. Gentleman update the information which he gave me in his undated letter of March, in which he said that the unsecured creditors were owed something over £50 million for supplies? Has he any more precise figure?

Mr. Corfield

On the last point, I have not. No pressure is being put on any British airline with regard to the choice of equipment which it buys. The patents are an integral part of the functions of Rolls-Royce (1971) Limited.

Mr. Barnett

Would the right hon. Gentleman care to deny the report that the compensation is not as high as the amount which he told the House? If the main reason for the liquidation was the contract for the RB211, and if there is a chance, as appears from reports, that the Government are prepared to renegotiate, perhaps giving up to £90 million, why has he allowed the Receiver to break up the company and at the same time jeopardise the interests of the workers and the sub-contractors, rather than wait for the outcome of negotiations?

Mr. Corfield

There has been no breaking up of the company. I can certainly deny the report referred to by the hon. Gentleman.

Mr. Raphael Tuck

As it transpires that the financial penalty for late delivery of the engines for the TriStar was much less than supposed because of the ceiling on the financial liability, and the contract included an escalation clause allowing Rolls-Royce to increase the price of the engines, what has the right hon. Gentleman to say in reply to the American feeling, referred to in The Times of 19th March, that it is doubtful whether the Receiver should have been put in, and, secondly, that the British Government have been at best less than frank and at worst positively misleading in not admitting the presence of this favourable clause in the contract?

Mr. Corfield

That really is a fabrication. It was for the board of Rolls-Royce to make the decision, and it was on the advice tendered to it as to the possible costs of delay that it took it. There is no question that we could have begun to make the sort of contract which may now be possible if that had not happened.

Mr. Rost

Is my right hon. Friend aware that the Government's energetic negotiations to get the RB211 contract moving again are being received with great satisfaction, in South-East Derbyshire particularly? Will he confirm that discussions with Lockheed and the American Government have also included discussion with regard to possible American defence contracts with Lockheed and the RB211?

Mr. Corfield

I thank my hon. Friend for the first part of his supplementary question, but cannot comment on the second.

Mr. Benn

Could the right hon. Gentleman publish the contract signed between Rolls-Royce and Lockheed in 1968 so that the House itself may judge whether the charges made about the contract have any validity?

Mr. Corfield

I will consider that but I have made it clear that one must be guided by the legal advice one obtains at the time.

8. Mr. Scott-Hopkins

asked the Minister of Aviation Supply what is the cost to public funds of purchasing the aero and marine engine divisions of the Rolls-Royce Company from the official receiver.

Mr. Corfield

The price to be paid for the assets we are acquiring will be a matter for negotiations between Rolls-Royce (1971) Ltd. and the receiver. These negotiations will be based upon a fair price between the receiver and a willing buyer but until they are concluded it will not be possible to say what the cost to public funds will be.

Mr. Scott-Hopkins

Can my right hon. Friend indicate how soon the negotiations will be concluded? Is he aware that the longer they drag on, the more difficult it is for the board of Rolls-Royce (1971) Limited to get going and the more uncertainty is created for unsecured and secured creditors of the old Rolls-Royce board? Will he do his utmost to expedite the matter?

Mr. Corfield

I appreciate the anxieties, but Rolls-Royce (1971) Limited will be able to start operations within a matter of, I hope, weeks—certainly not months. This will be possible before the final price is settled. A very large number and variety of assets are involved, and the process is, I am afraid, bound to take some time.

Mr. Walter Johnson

Will the right hon. Gentleman ask the Receiver or the new Rolls-Royce company to make an early announcement about workers' shares and industrial injury provisions which are outstanding with the old company?

Mr. Corfield

I can go no further than I have said already—that these are matters of considerable difficulty which are still being considered. The final answer can be found only when we know the fate of the RB211 negotiations.

9. Mr. Wilkinson

asked the Minister of Aviation Supply whether he will make a further statement on the present financial position of aero-engine component manufacturers for Rolls-Royce.

12. Mr. Dalyell

asked the Minister of Aviation Supply if he will make a statement on the progress of his continuing study of the problems of sub-contractors to Rolls-Royce.

15. Dr. Gilbert

asked the Minister of Aviation Supply what estimate he has made of the number of employees of firms engaged as sub-contractors or suppliers to Rolls-Royce who have been declared redundant or placed on short-time working since 4th February, 1971, as a result of the Rolls-Royce insolvency.

Mr. Corfield

On redundancies or short-time working, no precise estimate can be given, but I understand that the Department of Employment has been notified of redundancies involving some 7,500 employees at sub-contractors or suppliers to Rolls-Royce, of whom 3,600 have already been dismissed. Approximately 8,000 employees of such firms are on short-time at present. Beyond this, I have nothing to add to what I said in the debate on 11th March.

Mr. Wilkinson

Can my right hon. Friend assure us that the Receiver will give priority to indemnifying those companies which have suffered grievous loss on contracts specifically for Her Majesty's Government in terms of military work—non-RB211 work—as this amounts to a very large sum of money?

Mr. Corfield

My hon. Friend will appreciate that the Receiver is governed by the Companies Act.

Mr. Dalyell

Without wishing prematurely to press the hon. Gentleman on a mission which all of us will welcome, may I ask him whether he can put at rest the minds of those sub-contractors who are concerned about the attachment in American law of the RB211 engines by the Pacific Airmotive Corporation of California?

Mr. Corfield

I do not know how this directly affects the sub-contractors. At the moment, the engines are being released to Lockheed and there is no interference with their use.

Mr. Dalyell

Not to the sub-contractors?

Mr. Corfield

I should not have thought so.

Dr. Gilbert

The right hon. Gentleman said, understandably, that he could not give any guarantee that there would be no more redundancies even if the RB211 programme were proceeded with. Can he say whether we are intended to infer that some further redundancies may be expected, and, if so, at what volume and at what time? Secondly, are any other Rolls-Royce programmes in danger at this stage? Lastly, can he say why he is not able to give with any precision a figure of the sum owed to unsecured creditors, even at this stage, several months after liquidation? Are the books of Rolls-Royce still in such a shambles?

Mr. Corfield

The original figure was approximately accurate to the nearest £1 million, to which I gave it. The answer to the hon. Gentleman's second question is "No". The only one slightly in a difficult position is the M45—and that is simply because negotiations were in progress with the German Government about financing when the Receiver was appointed. Those negotiations are going on.

Mr. Scott-Hopkins

Will my right hon. Friend realise that many sub-contractors are in a difficult position? I accept that of course, the Receiver cannot act outside the Companies Act, but cannot the Government find some method by which help may be given to those sub-contractors who are engaged in defence contracts through the old Rolls-Royce company?

Mr. Corfield

As far as I can foresee at the moment, the only help that can be given is an assurance that these contracts can continue and that there is every opportunity of the sub-contractors being able to continue to trade. I can only add that, so far as I know, there are not likely to be further major redundancies, but I am not prepared to guarantee that.

Mr. Benn

Would the right hon. Gentleman say something about the carbon fibres, because there has been anxiety among the staff engaged at Huck-nail and redundancies have been declared at Rolls-Royce Composite Materials in Bristol?

Mr. Corfield

There is a later Question specifically on that matter.

27. Mr. Whitehead

asked the Minister of Aviation Supply what conversations, between Ministers and the receiver appointed in connection with Rolls-Royce or his representatives, took place between 4th February, 1971, and 8th March, 1971; and whether possible redundancy schemes were discussed.

Mr. Corfield

I have nothing to add to what I said on this subject in the debate on 11th March.—[Vol. 813, c. 617.]

Mr. Whitehead

Is the right hon. Gentleman aware that, quite apart from the redundancies which have already been effective at Rolls-Royce, a number of redundancy notices were given out in the Derby engine division and then subsequently withdrawn? Is he further aware that, apart from that, many people in the division have received letters asking whether they will take cuts in grade and salary? In the light of that, is he still prepared to say that in these matters neither the Government nor the board of Rolls-Royce (1971) Ltd. guide the Receiver in any way?

Mr. Corfield

The situation is quite simply that in certain cases redundancies have been declared by the Receiver but a change of personnel has been requested by the board of Rolls-Royce (1971) Ltd. because it clearly wanted to retain some of these people in preference to others.

Mr. Speaker

Mr. Finsberg.

Mr. Finsberg

No. 26, Sir.

Mr. Speaker

I was calling the hon. Member to ask a supplementary question to No. 27.

Mr. Finsberg

On a point of order, Mr. Speaker. With great respect, you went from No. 24 to No. 27.

Mr. Speaker

I did, because the hon. Member's Question No. 26 had already been answered with Question No. 10.

Mr. Onslow

Further to that point of order. I believe I saw my hon. Friend rise in an effort to catch your eye when No. 10 was called.

Mr. Speaker

If the hon. Gentleman saw that, he saw something which I did not see, and I think that I was looking more closely than he.

30. Mr. Whitehead

asked the Minister of Aviation Supply what is to be the future of carbon fibre research under Rolls-Royce (1971) Limited; and if he will make a statement.

Mr. Corfield

Rolls-Royce (1971) Limited proposes to continue carbon fibre research work.

Mr. Whitehead

While thanking the Minister for that assurance, may I ask him whether he is aware that the declaration of redundancies extending to most of the research team, and also the team at Littleover, near Derby, severely damaged the confidence of this team in the future of the project? Could he tell the House why these redundancies were declared when the 211 project in particular was still being negotiated?

Mr. Corfield

I am afraid there was some misunderstanding in regard to the future of the carbon fibre plant at Hucknall. I would point out that the Question is about research and this is a production unit which the board of Rolls-Royce (1971) Limited had decided not to take over.

Mr. Warren

Would my right hon. Friend confirm recent reports that substantial stocks of carbon fibre have disappeared from the Hucknall plant together with the machines to produce this material, bearing in mind particularly that Rolls-Royce has recently achieved a break-through in the construction of carbon fibre blades to meet the specifications required by the Americans?

Mr. Corfield

I will certainly investigate the report to which my hon. Friend refers. I do not think that the question of the manufacture of blades is specifically connected with the Hucknall facilities.