CIVIL AVIATION POLICY

HC Deb 26 February 1976 vol 906 cc635-700

4.2 p.m.

The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore)

I beg to move, That the Statement on Civil Aviation Policy Guidance, to be given by the Secretary of State to the Civil Aviation Authority in pursuance of section 3(2) of the Civil Aviation Act 1971 with respect to the performance of its functions, a draft of which was laid before this House on 11th February, be approved in pursuance of section 3(3) of that Act.

Mr. Speaker

For the convenience of the House, with this motion we shall discuss the motion in the name of the Leader of the Opposition. That this House rejects the Secretary of State for Trade's decision to cancel Laker Airways Skytrain designation and to require the Civil Aviation Authority to revoke the Skytrain licence contrary to the Authority's considered view that it should be allowed to stand.

Mr. Shore

I welcome the opportunity which this debate provides for the House to consider the proposed changes in civil aviation policy. In due course I shall comment on Skytrain in particular, which is the subject of the separate motion in the name of Opposition Members.

I shall also try to take full account, Mr. Speaker, of your very formidable strictures about the length of speeches. However, these are rather comprehensive guidelines which somehow I must try to cover in the time available.

I know that many people in the airline industry and indeed on both sides of this House believe that there have been too many changes in aviation policy in recent years. That is a view which I share. We all know that success in the aviation industry now demands massive investment, long-term planning and sustained attention to the needs of the market over a long period. Frequent changes are therefore to be avoided, and it is my hope that the Policy Guidance that we are debating today will remain substantially unaltered for a considerable period of years ahead.

Nevertheless there were two fundamental reasons why I considered a review of policy in 1974 to be essential. First, the oil crisis at the end of 1973 had radically changed the airline industry's future prospects. For a quarter of a century the industry had enjoyed rapid and virtually uninterrupted growth. Naturally some years were better than others, but the clear trend was for our airlines to carry more and more traffic, for fares to go on declining in real terms and for new routes and services to be introduced every year. All this was brought abruptly to an end by the oil crisis.

The price of aviation fuel rose within a year by about three and a half times and inflation hit other costs and so fares in real terms, far from continuing to decline, had to go up sharply. Passenger traffic carried by British airlines fell by over 10 per cent. in 1974. That is a setback much greater than the industry has faced in the past.

The Civil Aviation Authority's latest figures show that in terms of passenger miles international traffic carried by our airlines was up by only 4 per cent. last year as compared with 1974. In other words, our airlines will need to have a good year in 1976 if they are to get back to the traffic levels first achieved in 1973. Looking ahead to the rest of this decade, there is nothing to suggest that traffic growth will be approaching the rates of 12–15 per cent. to which the industry had become accustomed in the years before 1973.

So our airlines have to face a more difficult and more uncertain prospect at least for some years to come. I am sure I was right to ask what policy changes were needed to reinforce their competitive strength in this period.

My second main reason for deciding to review policy was the growing and widespread concern that double designation of British airlines, especially on long-haul routes, was the wrong basis for aviation policy. Even when the Edwards Committee reported in 1969, it concluded that although markets were rapidly expanding then, scope for double designation was very limited. Apart from the United States, there were even then few other countries prepared to allow unfettered competition by British airlines with their national flag carriers.

Nevertheless, the Policy Guidance approved by Parliament in 1972 presupposed that double designation was in principle desirable and indicated that the Civil Aviation Authority should license more than one British airline to serve the same scheduled route wherever it was satisfied that certain criteria were likely to be met. British Caledonian had already been given licences to serve New York and Los Angeles and in 1973 it was licensed by the CAA to operate to Toronto, Boston and Singapore via Bahrain as well. In addition, of course, the Authority had licensed Laker Airways to operate Skytrain on the London-New York route.

BCAL's unsuccessful attempt to establish itself on the New York and Los Angeles routes in 1973–74 showed just how difficult it was for a second British airline to secure and retain a profitable share of major long-haul markets, in direct competition with other countries' main flag carriers as well as with British Airways. After the oil crisis, it became more difficult than ever for us to introduce a second British airline on to a major route on terms which left any possibility of increasing our share of the earnings from that route.

Even where the other country concerned is still prepared in principle to accept double designation of British airlines, it is almost invariably only on conditions which completely protect the interests of its own national airline. In these circumstances, it really makes no sense at all to insist on dividing up our predetermined share of the market between two British carriers. The effect would only be to increase costs with little or no prospect of increasing revenues.

The effect of double designation on BCAL has already been noted. It was forced to withdraw from New York and Los Angeles in September 1974. But the effect on British Airways of the double designation policy was damaging, too. It found, in a whole series of cases, that it was being expected to face competition from another British airline in circumstances in which it would inevitably lose some of its share of the market without being able to make a commensurate saving in costs. Not only that, but it was left in a state of uncertainty about the future of many other routes, so that it could not plan ahead with the necessary confidence. And when new international routes became available, BA was always left as the second in the queue, since the present Guidance requires the CAA to give preference to BCAL. So it seemed to me that, in important respects, existing policy was neither sensible nor just.

When the review of policy was completed last summer and I came to take decisions, I had four objectives very much in mind. I wanted, first, to strengthen our airline industry and to ensure that its resources and energies were in future turned, not against itself in unnecessary and damaging competition between British airlines but against foreign carriers which constituted the main challenge on international routes.

My second objective was to safeguard the employment the airline industry provides, particularly in a period when unemployment is a growing menace to the well-being of our people.

Thirdly, I wanted to produce an outcome that would be fair not only to the private sector airlines which make their own varied and valuable contribution to the industry but also and demonstrably to British Airways, which, as the national carrier, plays much the largest part in our total civil aviation effort and which was subjected to such arbitrary and discriminatory treatment some four years ago. Finally, my aim was to achieve a settlement sufficiently strong in aviation terms and in its general acceptability that it would last and so give the industry that greater stability which it undoubtedly needs.

As the House knows, I considered a number of policy options, including the nationalisation of BCAL and a merger with BA. But it was clear to me that such a merger must inevitably have been followed by a process of rationalisation that would have cost many of BCAL's workers their jobs. It would also have caused a serious setback to our policy of building up traffic at Gatwick and so to the general airports strategy we have been developing. I bore in mind, too, the views of many of BCAL's own staff who were very anxious that their airline should retain its separate identity, and I also bore in mind the views of many members of the travelling public, in England and Scotland, who have found BCAL to be a well-run and effective airline.

I also considered very carefully, as indeed I was bound to do, the proposals of my own party to reverse the route transfers which the previous Government had imposed in 1972 and thus to return to BA the West African and other routes which were then so peremptorily taken away. This was a perfectly feasible course when it was first proposed and remained so until the oil crisis in late 1973 altered the whole aviation picture. Up to then BCAL would still have been able, in the growth conditions that then pertained, to sustain itself on other dual designation routes and in the charter field. But to return those routes in the conditions of 1975 and 1976 would have been to threaten the very existence of BCAL and to put in jeopardy thousands of jobs at Gatwick and elsewhere. At the very least, if I were to avoid a collapse of BCAL, I would have felt obliged to continue the policy of double designation, to put BCAL at the earliest moment on Toronto and Singapore—even though this would have damaged BA and would have been against the new strategy that I have announced.

So I concluded that the best solution was to end double designation and establish instead separate long-haul spheres of interest for BA and BCAL. The industry's reactions to the statements I made to the House last July and earlier this month suggest that in this way I have had some measure of success in meeting the four objectives I set myself. I did not expect to satisfy everyone completely. But I believe that there is a widespread feeling in the industry that the new Policy Guidance we are debating today will provide a sensible and reasonable framework within which all our airlines can work and develop.

I believe, too, that there has been general acceptance that my decision on BA's and BCAL's spheres of interest was fair and likely to benefit both airlines. BA will gain considerably both from the route exchanges in Africa and from the withdrawal of BCAL's licences on the double designation routes. BA will now be able to make long-term plans for developing the routes to North America and Singapore without the anxiety that at some point in the future BCAL would want to introduce services which would inevitably have cut into BA's share of the market.

For its part, BCAL will in my view have substantial scope for future expansion. In addition to the network it is already operating it will have the route to Venezuela, Colombia and Peru, which should in due course be capable of expansion to include Ecuador. And it will also be the British airline designated to operate the route to Atlanta and Houston when it becomes available for international services. With a sphere of interest that includes West and Central Africa, South America and the Atlanta-Houston route, BCAL will be established in markets that should grow rapidly in line with the development of the local economies.

Mr. Tim Renton (Mid-Sussex)

What steps will the Secretary of State be taking with the American authorities to ensure that BCAL is approved by the American authorities on the Atlanta and Houston routes?

Mr. Shore

That is a matter of our tactics or approach under the Air Services Agreements and, in consultation with BCAL, we shall certainly be prepared at the right moment to put forward our proposals for that route.

I was glad to see that both BA and BCAL have expressed resasonable satisfaction with my decision, although I naturally appreciate that both would have preferred an outcome that was more favourable to their particular point of view. BA said in a statement that this route exchange is…one which we can live with.…The industry badly needs stability and we welcome the declared wish that the new policy should stand for a considerable period of years. BCAL has made it clear that it believes that it has been given "a workable system" and it, too, has welcomed the ending of uncertainty so that it can plan positively for the future.

Perhaps I for my part could take this opportunity of expressing my thanks to both airlines for the co-operative way in which they conducted the long and detailed discussions I had with them and of welcoming the determination both have shown to achieve further success in the future in their respective spheres of interest.

I now turn to Skytrain. Clearly, in the wake of BCAL's financially enforced withdrawal from the London-New York route as recently as September 1974, and having in my policy review subsequently arrived at the strong conclusion that double designation on long-haul routes is not in the interests of British aviation, it would need arguments of quite exceptional strength to persuade the Government to sanction a new scheduled service on this long-haul route.

Few people will argue, and few do, that we should do so today. In its review of the Skytrain proposals at the beginning of last year the CAA conceded: We are forced to the conclusion that the Skytrain service should not be inaugurated until the market has resumed a healthy rate of growth…clearly on all forecasts it is unlikely to be for at least 12 months but nobody could today foresee with any degree of precision the date which may be appropriate for launching the service. Certainly we have not yet reached that healthy rate of growth that makes it even possible to contemplate such a service.

So the issue before us is not that of starting a Skytrain now—about which I think we would all agree—but whether we should keep it on ice or make a decision. If I had been seeking a quiet life, and with full knowledge of Mr. Laker's formidable powers of advocacy, I might well have been tempted to the former course, but I do not think it would be right to do so, and for these reasons: first, we are not contemplating a small or experimental service in Skytrain. We are dealing with a massive addition to airline capacity on the New York route.

I must confess that the figures startled me when I looked in detail at what was proposed. Skytrain has been licensed to provide 250,000 extra seats yearly on the New York run, when the total number of passengers on both scheduled and charter flights between London and New York is only 1.1 million. Further, it is our firm view and, indeed, that of the CAA that a British Skytrain would be matched probably from the start with an American Skytrain of the same capacity—so in total we are talking about an extra 500,000 seats on the New York-London route. Let me remind the House that the total number of passengers that BA carried from London to New York and back last year was some 330,000.

The consequences of such a massive extension of capacity are in my view wholly predictable. There would be a major diversion of traffic from the scheduled carriers, both BA and the American airlines, to the new competing Skytrains. In the last few years, as everyone connected with aviation knows, there has been continued over-capacity on North American routes as a whole and on New York in particular. Total losses on North Atlantic services, according to IATA figures, reached some £300 million in 1974.

Second, it is not true today, whatever was the position in 1972, that passengers cannot cross the Atlantic at much reduced fares. ABC Charters were introduced in 1973 and now offer return fares of £150 at the peak, £124 at the shoulder and £108 in the winter against the Skytrain fare of £118 return. There is not much in it. More recently, in April 1975—very recently indeed—APEX was introduced on scheduled flights, offering seats at £167 in the summer and as litle as £123 in the winter. Of course, these seats have to be booked in advance and there are further conditions affecting the length of stay in the United States and United Kingdom respectively, but certainly a substantial new opportunity has been provided for cheap air travel across the Atlantic since the Skytrain licence was issued in 1972. That is a fact that the House must face.

I will not weary the House with all the complex calculations about balance of payments gains and losses which have been set out in Mr. Laker's own imaginative pamphlet and which have been reexamined in a somewhat more sober way in the paper that was placed in the Vote Office yesterday. But our best calculations are that the balance of payments would not gain from such services—although I would not go to the stake on any particular figure, negative or positive, up to £10 million a year either way. But what is quite certain is that BA would suffer a substantial loss of revenue—at least £6 million a year—and that all attempts to make sense of over-capacity on the New York-London route would be undermined.

Mr. Churchill (Stretford)

The right hon. Gentleman has referred to the London-New York route. What is the present ratio of sharing between British and American airlines, and what does he envisage as the figure he would like to achieve?

Mr. Shore

I would like, of course, to achieve the maximum possible. I have a figure for the present ratio in mind but prefer to check it first, so I will ask my hon. Friend to supply it at the end of the debate.

Lastly, I have, of course, considered the effects on Laker Airways and I have not approached this in anything but a serious way. But we would be naïve indeed if we accepted that Mr. Laker's decision to order two DC10s just 10 days after the licence was issued by the CAA, before the appeal against it had even been heard, before the Department of Trade had designated Skytrain, or the authority of the American Government had even been sought, and before Mr. Laker could have known what conditions would be applied, was wholly dependent upon the Skytrain licence. Not so. Mr. Laker has made, with his accustomed flair, substantial and profitable use of his DC 10s and we would be even more naïve if we were to believe, as some hon. and right hon. Members have suggested in the motion on the Order Paper, that a Rolls-Royce powered DC 10 would be launched with six orders from Mr. Laker if only he were granted his Skytrain licence.

My belief is that Laker Airways will continue to be successful in its charter business and particularly in North America. In my view it is not a company that depends on Skytrain for its future. It is a large and growing business and my Department is ready to continue to support it in its future development.

I have indicated where I disagree with the CAA on this matter. The CAA would like to be given greater freedom to allow double designation on long-haul routes, but I do not think that this is possible without introducing an undesirable element of uncertainty which would disrupt the long-term planning of both BA and BCAL. The House will however have noticed that in the second half of paragraph 7 of the Policy Guidance I have provided scope for the Authority to licence another airline to operate a long-haul scheduled service within the sphere of interests of BA or BCAL subject to certain conditions. I believe it is right that the Authority should have this discretion to deal with the situation in which one or other of the preferred airlines might not be doing as much as they should to develop services in their respective spheres.

The Policy Guidance is intended to cover the whole range of the CAA's activities. Outside the important area of long-haul scheduled services I have made, as the House will recognise, only minor changes. My aim has been to leave the CAA with a substantial measure of discretion. Many aspects—the economic regulation and determination of fares is just one example—require from the Authority decisions that are crucial to the health of the industry. In terms of investment and manpower, its chief functions are the provision of navigation services and safety regulations. Neither as to its performance nor as to its finance am I proposing any material change in policy. My hon. Friend the Under-Secretary of State will seek to deal with any aspects of these activities that may interest the House at the end of the debate.

The Authority has been in existence for only four years and this is not perhaps a long enough period to allow us to make a final judgment on the merits of the major change in the machinery of government which its establishment involved. I am sure that the House will agree, however, that our preliminary assessment must be a favourable one. In commending to the House the revised Policy Guidance I propose to give to the Authority, I should like to underline my view that what is needed now is a change of emphasis, not a completely fresh start. I am confident that the new Guidance gets the emphasis right and so will provide a framework within which the British civil aviation industry will continue to develop and prosper.

Mr. Stephen Hastings (Mid-Bedfordshire)

I wonder whether the right hon. Gentleman would say a word—or encourage his hon. Friend to do so at the end of the debate—about the small independent airlines which he did not mention at all, particularly with regard to the contradiction which seems to exist between paragraphs 6 and 15 of the Guidance whereby they are encouraged to develop domestic routes which, by and large, are uneconomic, yet have none of the advantages of the more profitable longer international routes.

Mr. Shore

I will ask my hon. Friend to say something about small independent airlines with which, I am glad to say, we have had considerable discussions and from which we have received evidence during the course of the policy review. But their position overall is that they have come out of the review with their position more or less unaffected.

4.28 p.m.

Mr. Terence Higgins (Worthing)

The Secretary of State has moved his motion seeking approval of the new Policy Guidance set out in Command Paper 6400. I say "moved his motion" because curiously enough it does not carry an asterisk and does not appear to be a Government motion. I make no direct comment on that because for reasons which I will explain I will recommend to my hon. and right hon. Friends that they should not vote against the Secretary of State's motion.

I am glad to know that Mr. Speaker has been kind enough to suggest that we might debate with this motion that standing on the Order Paper in the names of my hon. and right hon. Friends and myself. At the appropriate movement I shall hope to move that motion formally and call on my right hon. and hon. Friends to support me in the Division Lobby in favour of it.

I also hope that we shall have support from hon. Members of other parties in view of the Early-Day Motion which has been signed not only by hon. Members on this side but by Labour Back Benchers. I therefore hope that we shall succeed in persuading the House to approve the Opposition motion.

I shall deal with the details of the Skytrain argument towards the end of my speech. I would only say now that there is an intrinsic contradiction in the Secretary of State's position. He argues that Skytrain offers passengers nothing significantly better than is currently available but also that the public would prefer it to such an extent that it would have a traumatic effect on its competitors. He cannot have it both ways. That is the heart of the matter.

It is difficult to avoid the conclusion that the Government have some inbuilt prejudice against encouraging initiative and enterprise or allowing an entre- preneur to take risks which if successful would bring profits and if unsuccessful would bring losses. Of course it is not as simple as that, and I shall deal with the details of this matter towards the end of my speech.

I want to keep my speech as short as possible because, as Mr. Speaker has said, many hon. Members wish to speak and it is unfortunate that we do not have more time to debate these issues. If in curtailing my remarks I concentrate most on Skytrain, I hope that that will not be taken as an underestimate by me of the importance of the other issues. Certainly the major issue is the division of routes between British Airways and British Caledonian. I should not like the brevity of my speech to imply that I have any lack of perspective about the importance of the various questions involved in the review that we are debating.

The Secretary of State is probably right to say that the route transfer is not now at the centre of controversy. I did not envy him his task in trying to work out a suitable exchange of routes. He had to make a judgment of Solomon. Curiously, once he had made the judgment, in the same way as Solomon made his—by cutting up the "baby"—the two "mothers" said "That is fine. We shall settle for our piece of it." It would be wrong to suppose that the baby was split down the middle. I am not sure of the exact figures, but the proportions were about 90–10 in revenue terms.

As I said in response to the Secretary of State's statement on 11th February, I believe, as he believes, that what is necessary now is a framework within which the airlines can undertake investment, particularly in wide-bodied aircraft, which necessarily requires some political stability. We welcome the fact that the Secretary of State has come out in support of the second force concept, but we should appreciate that there is still a big imbalance between the two forces. I am sure the right hon. Gentleman will agree that no one believes that it is possible to forecast exactly how these things will develop, because of the number of variables. Some of the routes which have been changed are already highly developed, while others are comparatively undeveloped, so we cannot tell at this moment how the balance will change in future. Although the general framework is set, we shall have to watch the precise situation in the light of developments. This is a rapidly developing industry and one of the most difficult to forecast.

That being so, the Secretary of State has arrived at a good arrangement in dividing the routes so that British Caledonian has the centre of the map, the area in which British is slightly offset to the right—

Mr. Neil Marten (Banbury)

Hear, hear.

Mr. Higgins

I had not seen that interpretation of my remark, but indeed I believe that the United Kingdom is slightly offset to the Right.

A map of that sort, with. British Caledonian having the centre, is among the more sensible arrangements which could be devised. We hope that the fact that it still has rights to Houston-Atlanta will enable it to develop in future. The important thing is that both airlines should have a framework in which they can invest with reasonable certainty about the future.

The airlines face a difficult situation at present. As the Secretary of State has said, there will not be competition on routes by dual designation. In present circumstances he makes a powerful case for that, but it would be a shame if we were not to appreciate the real advantages which may come in more buoyant conditions from dual designation on particular routes. That also is something that we shall need to watch carefully in the light of events. The Secretary of State himself said that there would need to be arguments in quite exceptional circumstances for him to change his view. I hope that that means that he is not proposing to take a dogmatic attitude.

That brings me to the guidelines. In his statement on 11th February, the Secretary of State said that the CAA would prefer…generally, that wider discretion should be left to the licensing system in the control of long-haul scheduled services."—[Official Report, 11th February 1976; Vol. 905, c. 444.] That is probably right, but the crucial thing at this stage is that the guidelines should be clear. It is apparent that they have been drafted many times, and I am somewhat concerned about some of the redrafting. If the drafting is not clear, a great deal of time, money and effort may be wasted in arguing a particular case before the CAA.

Paragraphs 7 and 8 of the guidance are remarkably obscure. There appear to be some contradictions. This is only guidance, but, unlike the situation in which a Minister's views are not taken into account in a court of law, the Minister's views on this matter could be taken into account by the CAA. I therefore hope that the Under-Secretary will be able to clarify the precise relationship between paragraphs 7 and 8. The guidance given there is rather like the guidance one would get by asking directions of a man one bumped into in the fog.

There is clearly a Concorde exception, but there are also exceptions which apparently enable the CAA, under paragraph 7, to grant licences, provided that there is no objection. But there is then a further qualification in paragraph 8, which says that the CAA can do that only if the airline concerned has given its consent.

Mr. Shore indicated dissent.

Mr. Higgins

The Secretary of State shakes his head. That shows that this needs to be spelled out precisely. I should be grateful if the Under-Secretary would make clear the intention of paragraphs 7 and 8, read together.

Paragraph 8(b) and (c) says that British Airways or British Caledonian respectively shall have to agree to the CAA authorising another carrier. I hope that the Under-Secretary will make it clear that that will apply only if consent is not unreasonably withheld. I am sure that that is the Government's intention, but it would help if it could be stated without qualification that that amounts in effect to part of the guidance which we have to consider.

Mr. Marten

The only danger about leaving it to the Under-Secretary to answer when he replies is that there may be an awful row at the time so that he never gets round to it. Therefore, it is most important that we should have the Secretary of State's view now. Will my hon. Friend ask the right hon. Gentleman—who clearly took on board the point he was making, because he was nodding—to intervene to clarify the matter?

Mr. Shore

I am always anxious to respond to the hon. Gentleman. I recently wrote him a letter in which I hoped I had dealt with the matter. Paragraph 8 does not seek to add to the restraints in paragraph 7. On the contrary, what is in paragraph 8 is additional to the exceptions allowed for and the criteria in paragraph 7.

Mr. Higgins

We are grateful to the right hon. Gentleman for his intervention, but I hope that those exchanges do not come out of the time allowed for my speech. Perhaps I may still ask the Under-Secretary to make clear that it is subject to the consent not being unreasonably withheld by other airlines. I am sure that that is his intention and the intention of the airlines, but we should like to see it clearly stated in Hansard.

I have many remarks to make about IATA and the fare structure, but I shall curtail them. The fare structure comes up, rather like the grin on the face of the Cheshire Cat, in a number of parts of the White Paper. The review has not carried out any comprehensive assessment of the present fare structure or the way in which IATA and other fares are decided. I believe that such a review is long overdue. I think I quote correctly the noble Lord who is Chairman of the CAA when I say that he has suggested that IATA should be abolished. From the Press reports of the past few days, there is no doubt that there is great confusion about the new fares. I understand that IATA still does not take account of charter rates, which are sometimes regulated and sometimes not—at all events, not by IATA. There may be a strong case for looking at the whole question, not least the unanimity rule, which sometimes does not produce a satisfactory outcome. I hope that we may have an assurance from the Secretary of State on another occasion, if not today, that he will examine that question, which has been left out of the review entirely.

Although I should like to say something now about Concorde, we have all expressed our views recently and there can be no doubt about the importance which hon. Members on both sides of the House attach to its being allowed to fly on the experimental basis suggested recently by the United States Secretary of Commerce. We very much hope that that can happen, because it is only if those experiments are carried out that people in the United States can provide a fair view on the noise question.

I turn to Skytrain, with which I wish to deal in some detail, because the arguments are complex. I said at the beginning that the essential weakness of the Secretary of State's case was that on the one hand he argues that Skytrain offers consumers nothing significantly better than is now on offer and on the other hand he says that it will be so successful, because passengers want it, that it will have a traumatic effect on its competitors. The right hon. Gentleman cannot have it both ways.

Our position is clearly set out in our motion. Essentially we support the opinion of the CAA on this issue, which means that the question of timing remains open. The Secretary of State thought that no one would wish to argue that Skytrain should commence immediately in present economic circumstances. That is probably the right position for us to take at present. The market is still very depressed. The CAA view, which the Secretary of State fairly reported to the House in his statement on 11th February, is that both the designation and the actual licence for Skytrain should remain in being. I believe that the CAA is right. That designation and that licence should stand, and in due course Laker Airways should be given the chance to prove in the market place that their product is different and is preferred by potential passengers.

The Secretary of State said that the whole position was very different from that in 1972. There are APEX fares, ABC fares and so on which are much lower than the fares on scheduled services in 1972. It is rather like that ghastly-Post Office advertisement saying that it is cheaper to 'phone after 6 o'clock and at weekends. When we consider the matter, we need to bear in mind the alternatives to Skytrain.

There are several important points to be made. First, Skytrain offers a single fare, and therefore the normal limitations which many people find onerous—that they shall stay for not less or not longer than a certain time—do not apply. Secondly, no advance booking is required. Thirdly, one therefore does not pay a cancellation fee, as one does on some of the advance booking charters. Those matters, as well as the level of fares, need to be taken into account.

The fact is that the proposed Skytrain fares are substantially lower than the economy fares, so-called. I do not have time to give all the detailed comparisons, but let us consider the normal single fare for a scheduled economy flight or on ABC or APEX. Although there are certain periods when they are roughly in line, or perhaps Skytrain is dearer, there is no doubt that for considerable periods, particularly on the terms I have mentioned, Skytrain fares compare very favourably. Consumers should be given a choice. I believe that the Skytrain fares would be found to be competitive.

I must deal with the other objections which the Secretary of State raised. They are, first, the balance of payments effect; secondly, the matter mentioned in the White Paper, that Skytrain would wreck the present rationalisation agreements on the North Atlantic run; and thirdly, the loss to British Airways. The right hon. Gentleman said, wisely, that he would not set much store by the calculations and assessments he placed in the Vote Office today, give or take £10 million either way. Even as an economist I might make it a little tighter than £10 million either way. I agree with his original statement on 11th February that the effect on the balance of payments was likely to be minimal.

My hon. Friend the Member for Chingford (Mr. Tebbit) asked for the figures and was told last Monday that they would be put in the Library. The Government must have had them for many months. I see no reason why they should be suddenly produced the night before this debate, so that Laker had no chance to make detailed comments to hon. Members on the proposals.

Mr. Shore

The figures were in response to a specific request by the hon. Member for Chingford (Mr. Tebbit). I thought I was helping the House by making sure that the figures were available before the debate took place.

Mr. Higgins

The Minister certainly made the figures available before the debate took place—they were available last night. In my view, we had only a short time to get outside reaction to the figures. My hon. Friend tabled his Question last Monday. Therefore, I see no reason why the Secretary of State could not have provided the figures earlier. However, I do not want to take up time on this procedural matter.

There are no fewer than 16 assumptions in the document. A great many of those assumptions are open to an immense amount of dispute. I do not accept the Secretary of State's view that there is bound to be a corresponding American Skytrain moving in the other direction. There are a great many cartels where an interloper cuts rates but where no one else feels bound to match those rates. I do not accept the doubling-up argument.

I find myself in disagreement with approximately half the total number of assumptions contained in the document. I think that the Opposition can agree with the Secretary of State's comment that £10 million or £5 million either way would have no significant effect on the balance of payments.

The Secretary of State also referred to the wrecking of the rationalisation agreements on the North Atlantic run. That matter is referred to in paragraph 6 of the White Paper. Although one can see an argument for rationalisation in respect of resources and the airlines, it is difficult to understand how it would have a favourable effect on passengers. It is also said that fares would be substantially higher without the rationalisation. What is crucial is that the Secretary of State has apparently been engaging in an arrangement with the airlines and with the United States authorities. As far as I am aware—the right hon. Gentleman will correct me if I am wrong—the House has at no stage debated this matter, and the merits, advantages or disadvantages of this particular arrangement have not been analysed. This may have been justifiable during the oil crisis of 1974 but I am doubtful whether it is necessarily true of the future.

Many of the Secretary of State's figures are based on the Laker figures in connection with the 1974 overall picture. In my view, that is not the relevant comparison to make when trying to reach a sensible conclusion on this matter.

The right hon. Gentleman also said that there would be substantial losses to British Airways. Indeed, in the White Paper a specific figure is quoted at the bottom of page 4 where it states that Her Majesty's Government estimate that BA"— that is, British Airways— would incur losses of about £6 million a year if the Laker Skytrain and one corresponding US service were to be operated. I believe that if any hon. Member present were asked what was meant by the expression "would incur losses", he would assume that it meant losses as opposed to profits. I do not believe that there is any other meaning of those words when they are unqualified. If it is said that British Airways will incur "about £6 million losses", it is assumed that they will incur £6 million worth of losses as opposed to £6 million worth of profits. I understand that this particular matter has been taken up by Laker Airways with the Secretary of State and that the Secretary of State has given a reply. I think that the right hon. Gentleman was asked for a definition of the £6 million losses and in effect he replied "There is no mystery about the £6 million losses. I understand that they are actually gross revenue".

Apart from the assumptions which I have already disputed, I believe that the passage which indicates that British Airways would incur losses of about £6 million is most misleading. The Secretary of State has still not corrected that passage. He says that it is a loss of gross revenue and not a loss of profit. Therefore, the House has been given a deceptive impression about this matter. It is most unfortunate, and I hope that the Minister will feel it appropriate to apologise to the House at the conclusion of the debate.

In those circumstances, I do not believe it right to oppose the Secretary of State's motion on the guidance. I think that the arrangements which have been made on a number of points are reasonably satisfactory. However, on the main issue which I have raised I hope that the House will take the view that the arguments which I have put forward are convinc- ing and that it is right to support the CAA's view that the designation and the licensing of Skytrain should remain in being. Although leaving open the question of actual timing, I hope that the House will feel it right to countermand the Secretary of State's decision on this particular issue. I hope that at the appropriate time we can move our motion and that the House will feel it right to support us.

4.58 p.m.

Mr. Russell Kerr (Feltham and Heston)

First of all I should like to apologise to the House for the condition of my throat. Unfortunately, the dulcet cadences which the House has come to associate with my voice are now more like an antipodean growl. I am sure that most of those who have had the opportunity to hear the words of my right hon. Friend the Secretary of State for Trade will have little doubt on one score, namely, the very fair-minded way in which he has done his best by these guidelines to produce a period of peace and stability within British civil aviation the like of which it has hardly ever known throughout its now lengthy history. Indeed, whatever one's criticism of individual items in the Secretary of State's dish, even his most ferocious critic must admit that the present proposals should produce a high degree of stability in the industry.

At a time when all sorts of storm signals have been operating, and when there have been predictions of a rough time for the industry, my right hon. Friend seems to have produced out of the hat an answer which, according to my researches, is reasonably acceptable and satisfactory to both sides—that is, to British Caledonian and British Airways. Of course, it is always possible that one or other of the sides in this argument has seriously under-estimated its position and that the limited approval it now gives to the Secretary of State's proposals will be replaced in due course by bitter self-recrimination. However, I do not believe that to be so. In my view the present proposals, though a compromise that is rather too heavily weighted towards private enterprise for my taste, will in the event prove workable and will in these uncertain times result in the retention in employment of many thousands of British Caledonian workers, many with high and scarce skills of the type that Britain will certainly need in the years ahead.

I turn to the vexed question why my right hon. Friend has set out before us a resolution of a long-standing difficulty which appears to fly in the face of election undertakings given previously by a Labour Government.

Perhaps I may digress a little on the events which produced that difficulty. In the latter part of 1969, as a result of the severe financial and other difficulties facing British United Airways, merger talks took place between BOAC and BUA which reached provisional agreement and required only the agreement of the then President of the Board of Trade, my right hon. Friend the Member for Barnsley (Mr. Mason), to become operative. For reasons best known to himself he refused his agreement and thereby, in the belief of many of us, opened the way for the establishment of a major independent airline operator—nowadays known as BCAL—in direct competition with the then two major State airlines, BEA and BOAC.

My right hon. Friend's reasons for so doing were in large part concerned with the recommendations in the Edwards Report that henceforward double designation—with two British airlines competing not only with other airlines but with each other over the same route—was now to be the order of the day. On the strength of this my right hon. Friend the Member for Barnsley was prepared to encourage the survival and growth of BCAL, and in so doing he delivered a blow of such weight that the aviation business is still suffering from it.

Double designation was always a nonsense, and subsequent events have amply confirmed the antagonistic views expressed by, amongst others, myself, my hon. Friend the Member for Nuneaton (Mr. Huckfield) and my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), in opposition to my right hon. Friend the Member for Barnsley.

Not the least of the achievements by my right hon. Friend the present Secretary of State for Trade is that he has recognised the double designation argument for the fraud it always was. Despite that, he has managed, it would seem, to save something from the ashes in the shape of a formula which, on the gloomiest view, has a good even-money chance of proving sufficiently viable over the next few years at least to avoid the massive redundancies—I would put them at about 20,000—which would attend the total collapse of British Caledonian.

The price that my right hon. Friend will have to pay is that he has, on the face of it, had to renege on an undertaking given by Labour when in Opposition that the "stolen" routes handed over to British Caledonian by the new Tory Government to help the airline on its way would be returned to the State airlines, now British Airways, without compensation. The great majority of my constituents who work at London Airport believe that the routes were stolen, and neither my right hon. Friend nor I will have an easy job in persuading our airline colleagues over the alternative method he has proposed in these guidelines. However, the fact that he has effectively rejected double designation permanently and has evolved a future formula of operation that will avoid massive unemployment will serve him in good stead when, as he has promised me, he comes to meet the London Airport shop stewards in a week or two.

I should like to pay a small tribute to my right hon. Friend. For my sins, as a member of a trade union national executive and also as Chairman of the Parlimentary Labour Party Aviation Group, I have had a fair amount to do with aviation matters and Ministers. The thing that distinguishes my right hon. Friend from most of the others is the impressive humility—nearly always the prelude to a deeper understanding—which he brings to the problems of the industry and the people who have given their lives to it. It is a complex job, and the attitude displayed by my right hon. Friend augurs well for his continued success as the Minister most involved in it. If my experience in the aviation world is anything to go by he will find that a combination of consultation and honesty—much along the present lines—will pay off handsomely in the future. As part of the industrial elite force in the nation, the aviation worker has no trouble recognising frauds and "phoneys", but he is big enough to accept that changed circumstances can force even a good Minister to change his mind.

My right hon. Friend the Secretary of State knows that I agree with him that for the time being it would have been a criminally perverse decision to approve Skytrain and thus to have spat in the face of our national flag carriers. Even that ignores the virtual certainty of an application by the Americans to operate a similar "no-frills" service out of the United States. Nevertheless, I hope that my right hon. Friend will not allow the idea to be buried for ever. There still is a need to bring civil aviation within the reach of the masses. Its long-term future is bound up with that. It still is the case that flying in Europe costs roughly twice as much as flying in my native Australia—and that is not a statistic that I can ever view with any sort of equanimity, so long as I have anything to do with aviation in this country.

Therefore, one of the Secretary of State's own acknowledged duties should be to resist any complacency on the part of the airlines, to seek always better and cheaper flying for the mass of the people for whom flying could be—but is not yet—an unimaginable boon. Whatever reservations one may have about the guidelines, they represent a good start by the Minister whose hand is currently on the tiller.

5.6 p.m.

Mr. Kenneth Warren (Hastings)

In July 1975 the Secretary of State threw away the rights of this country to operate services into New York City, Los Angeles, Toronto, Chicago, Bahrein and Singapore, when he announced that dual designation would stop. At no time did he seek to negotiate with the airlines of those countries, or their Governments, on the capacity limitation they would expect in return for throwing away those rights, which were worth money. We are not a rich nation. We cannot afford to throw away rights that we have fought so hard to win. We are faced with capacity limitations. An agreement between Pan-American, TWA and British Airways runs out in March. There is no forward programme in the White Paper to cover that, and there has been no declaration of what is to happen on the North Atlantic, in terms of capacity. We are told that no United Kingdom dual designation is to be allowed. It would, we are told, disrupt the long-term planning of BCAL. The Secretary of State has ignored the advice of Lord Boyd-Carpenter, who says that it is a good thing. In ignoring that advice he has ignored the fact that certain countries have rights to carry passengers out of Heathrow to New York. Yet he has done nothing to negotiate them out of the scene, while restricting British airlines. The countries to which I refer are Belgium, Burma, Denmark, Japan, Holland, Norway, Sweden, Switzerland and West Germany. None of them has been approached to limit its capacity or rights to take on passengers in this country at the expense of British Airways or any other carrier.

What is dual designation? The ban on it has not been applied to the Americans. They are allowed to operate both Pan-American and TWA into this country. Why did the Secretary of State not argue them out of the scene when Laker was taken out by the scruff of the neck? What about Air India, E1 A1 and, particularly, Aeroflot? The iron birds can carry people out of this country. May the iron lady soon rule.

Seven airlines and 10 countries are allowed to operate out of Heathrow, but Laker and BCAL are not. When the Secretary of State says that Skytrain would have to wait at least 12 months he is in accord with what Laker has said. It does not want to start its service before the summer of 1977, but while that is happening what is going on in the world outside the Department of Trade? What is happening in the real world, where the professionals of airline operations live and work? Last night at the Royal Aeronautical Society, Mr. Robert Whitby, the planning co-ordinator of British Airways—just the sort of person who would be affected by Skytrain—said that the North Atlantic growth rate for scheduled passenger traffic would be 6½ per cent. per annum over the next five years. We are half way back to the original growth rate predicted by British Airways and the undertaking which said that it would not be affected by the Laker Skytrain. It even took advertising space in the national Press to say that it would not be affected.

What is the phrase "dual designation"? It has existed in passenger terms since 1952. When I was in BOAC I flew on one of the first tourist-class flights to East Africa. That was dual designation. First-class passengers were at the front and tourist-class passengers were at the back. Economy flights were introduced at a later stage. British Airways now operates umpteen classes of designation. There is Concorde first class, and good luck to it. The hon. Member for Feltham and Heston (Mr. Kerr) and I have ridden in Concorde to Rio and Bahrain and back. There is 747 first class and 747 economy. There is advance booking in many different forms, and charter. There are five general classifications. The phrase "dual designation" is nonsense in itself.

This afternoon I shall talk only about Skytrain. I am a signatory to a motion that has now been signed by 200 hon. Members from both sides of the House. The Secretary of State said that his little red book reviews in a somewhat more sober way the statement made about Skytrain. As my hon. Friend the Member for Worthing (Mr. Higgins) said, where have all the facts been? Why could not we be given them before last night?

In the little red book it is said that British Airways would suffer a loss of revenue of at least £6 million per annum. I have already said that British Airways has argued that it would not lose anything. Incidentally, £6 million happens to be a doubling of the figure that was first claimed. The argument supposes that there will be Skytrains, but the Americans have never made application.

The Under-Secretary of State for Trade (Mr. Clinton Davis)

Is the hon. Gentleman unaware that a number of American airlines—the major carriers and the supplementary carriers—have indicated that if the licence were to become operative they would instantly wish to operate a Skytrain?

Mr. Warren

I am not aware of that. In the four years since the licence was granted none has applied for it.

The document that was put before us last night is a scandal. It is a misrepresentation of a brave man's endeavours, enterprise and devotion to his country. Not only is it a misrepresentation; it is a danger to the right hon. Gentleman and his Government. There is good cause to examine the restriction that he is seeking to apply to the Laker Sky- train, it having been granted a licence to operate under the terms of Articles 85 and 86 of the Treaty of Rome. I do not know whether Mr. Laker intends to take legal action against the Government, but if not, he has good reason, along with the 300 members of Laker Airways who marched to the House today and who are now trying to lobby Labour Members, to ask what the ombudsman thinks about the matter. It is not good enough that these people should be turned away because they do not fit in with some political dogma that has been expounded rather hurriedly.

On reading the little red book it seems that it does not matter what Fred says. He may fly aircraft at a profit, but the right hon. Gentleman's advisers can beat him on paper calculations, especially when they will not show him their calculations. What have they been allowed to show Mr. Laker? There has been some rather acrimonious correspondence between the Secretary of State and Mr. Laker. I am sure that we all agree that Mr. Laker has not had any answers to the questionnaire which he submitted. His letter of 16th February reads: Your Department has steadfastly and deliberately set out to ensure there could be no further serious consideration of the Skytrain licence…this delaying process continued until 12th December. A meeting was then held where the adviser concerned was unable to discuss the papers we had previously submitted, although he did undertake to have them studied fully so that further discussions could take place…". When further discussions took place with the Under-Secretary of State it was Mr. Laker's opinion that the hon. Gentleman was surprised to hear it confirmed that the papers on balance of payments and other matters had still to be discussed with his own officials. That is not good enough. A man should not have to wait six months to have discussions with officials who are trying to take away not only his livelihood but the livelihoods of all those employed by him at Gatwick or Stansted.

In another guise, I happen to be a Fellow of the Chartered Institute of Transport. I must say that the little red book would not qualify for even studentship examination. Certain assumptions are made in the little red book. I hate to dispute this matter with my hon. Friend the Member for Worthing, but there are 53 separate assumptions on which the right hon. Gentleman's case is based, not 16. For example it is said that the loss of revenue must be doubled. When I said that there have been no other applications, no one rose to deny that statement. Why must the figure be doubled? British Airways has not asked for it to be doubled.

Assumption after assumption appears throughout the document. The little red book does not qualify for serious examination by the House. It is said that it must be questioned whether the United States authorities would accept a Laker and United States Skytrain combined. What is the purpose of such a statement, when there is no application from the United States? The best one of the lot is that which I have described as assumption No. 41—an assumption that sums up the whole document. The section reads: The actual reaction of other carriers is so speculative that for the purpose of this paper it has been assumed that all the other carriers would remain passive. What is the purpose of this document? In the end it comes to the conclusion that nothing else will happen.

This is a glaring example of a man who has had an idea that has been rejected. Why should people from Britain, the United States or anywhere else not be able to choose whether to fly with Mr. Laker? Why should they not fly with him? Have they no right to a new enterprise of this sort? Throughout the little red book it is made clear that the Government are worried about the way in which others might operate. I suppose they might reduce their fares—but is not that what the whole process of air transportation has been about? Has it not been intended to bring air travel to more and more people? Have we not been attempting to make it available to ordinary men and women—namely, students, housewives, business men, and even my mother-in-law? They all have a right to travel in the cheapest possible manner. Why should we restrict people, including my mother in-law? Why should they not travel as they wish and when they wish?

Mr. Norman Tebbit (Chingford)

My hon. Friend's mother in-law could have a one-way ticket.

Mr. Warren

I am willing to pay for her to travel both ways if she is able to fly with Mr. Laker. Perhaps I should add that she is not in the Gallery.

An argument has been deployed by the right hon. Gentleman that has created a bad policy that is totally unfounded on fact. Let the House and the British people be rid of this nonsense.

5.19 p.m.

Mr. Donald Stewart (Western Isles)

I think that the whole House will agree that the presentation of the White Paper has a useful immediate gain in ending almost two years of uncertainty for the airlines. They will now be able to plan ahead and shape their development, in the knowledge that matters will remain as they are for a reasonable span. Whatever one's point of view, I assume that all hon. Members will agree that they should be settled for a considerable time ahead.

I welcome the Secretary of State's assurance that he wants British Caledonian to continue as a scheduled carrier so as to retain a second centre of airline expertise in the United Kingdom, thus making more secure the jobs of a substantial number of British Caledonian workers.

These are worthy objectives. It is essential that competition with British Airways should exist. One wonders what the service might have been over the years without competition. I regard the current shuttle service as having diminished seriously in a period of five years. I have not time to go into all the complaints, but I believe that without competition the situation might be worse than it now is. It would be instructive to find out from British Airways the cost to the taxpayer of keeping standby aircraft available on every flight.

Paragraph 24 of the White Paper deals with Scottish services to the Highlands and Islands. These services were reduced last year, providing only one flight per day from Stornoway to Benbecula on the winter service. In other words, the normal service has been halved. The situation is now most inconvenient and will have serious consequences for passengers, mail and newspapers. I do not think the Secretary of State should permit British Airways to slide out of its obligation to maintain a reasonable service to the Highlands and Islands. Incidentally, the fare from Stornoway to Glasgow is only £1 cheaper than the fare from Glasgow to London, almost double the distance. If there is any question of subsidy, it is a question of who is subsidising whom.

An omission from the document that will cause great resentment in Scotland is the lack of reference to the resumption of direct flights from Scottish airports to foreign destinations. Certainly a Scottish Government would reverse this policy, but in the meantime there is no justification for continuing the present policy which discriminates against flights from Scottish airports.

I do not have any serious opposition to the way in which the cake has been cut between the two airlines. However, experience of airlines in France and Canada, where the second airline carries over twice the share of the State airline, against British Caledonian's share of 10 per cent., has worked very well. The Department should bear this matter in mind for the future, although I accept that at present the package is fixed.

No doubt British Airways and British Caledonian will not be entirely satisfied with the White Paper but, given the situation in which the Secretary of State had to shape his policy, the White Paper proposals have emerged as as fair and rational a division of routes and planning as could be expected—which is what we would have expected from the Secretary of State.

The main objective now is to proceed with all speed on the follow-through. We must now stop pulling up the plant by the roots to see how it is growing. The Secretary of State calls on the authority to develop consultative arrangements. This is highly desirable, and I submit that the right hon. Gentleman should take an active part in bringing the parties together to this end.

5.25 p.m.

Mr. John Stonehouse (Walsall, North)

The hon. Member for Worthing (Mr. Higgins) has already referred to some loose wording in the White Paper, but on page 9 of the guidance there are some clear words. The White Paper asks the Authority to encourage the provision of profitable services by British airlines that will foster the development of the United Kingdom's trade and tourism and strengthen the balance of payments". In paragraph 2, on page 9, the White Paper says: The Authority should seek to ensure that the scale and character of the operations of British airlines are within their skills and resources". We can all applaud those words, but they are inconsistent with the decision given by the Minister in paragraph 15, on page 5. There is no justification, either in the White Paper, in paragraph 14, or in the Secretary of State's words this afternoon, for the reversal of the Government's view about the operation of Skytrain. Along with the 200 other hon. Members who have signed the motion on this topic, I have grave misgivings about the decicision of the Secretary of State to decide, without proper information—information which he has not yet given to the House—to withdraw this licence.

It is worth reminding the House of the original terms on which the licence was granted by the Civil Aviation Authority. In 1972 the decision was given in a report which I now have before me. That report says: Laker proposed to meet this demand by providing a 'no frills' economy class of service with no advance booking facilities and on which meals and drinks had to be paid for by the passenger as extras.…They expected such a service to operate at a high load factor". The CAA went on to give as a reason for its decision to allow the application the requirement to satisfy public need. The CAA said: We accept the contention of the applications that there is a substantial demand for cheap 'no frills', short-notice mass travel which is not at present adequately catered for. We welcome their enterprise in seeking to meet this demand and we view with favour the innovation involved in this application. We are not, however, convinced that all the traffic would be new traffic and we deal below with the question of diversion. There then follows a long series of paragraphs on that score.

The situation on the question of principle has not changed since that time. There has been a trend on the North Atlantic route towards lower load factors, but that was taken into account last year when British Airways opposed the granting of the "Skytrain" permission by the CAA in January of last year. All the arguments which we are now asked to consider were ventilated on that occasion, but the CAA confirmed its decision that Laker Airways should continue to have the licence—although, as the Secretary of State said, it did not think that it could be brought into operation at an early date. However, nothing the Secretary of State said this afternoon justifies the decision to overrule a decision taken by the CAA only last year. All the factors we are now asked to consider applied then. It is deplorable for the Secretary of State to overturn a verdict of the CAA, which went into this matter very much more closely than he could have done.

I agree that there is a certain amount of prejudice in this matter, which I very much deplore. I thought that prejudice came out in the Secretary of State's speech when he made some trivial and almost offensive remarks about Mr. Laker and the way in which he conducted his business. The Secretary of State gave the impression that the DC10 aircraft were acquired rather recklessly. Laker Airways were given permission to put on those flights. That permission was granted by the CAA. One surely expected that the full resources of the British Government would be put behind that decision to enable United States permission to be obtained.

We can see how ridiculous that allegation is when viewed against the Concorde situation. Concorde was conceived and built at a cost of £1,000 million, without any landing rights having been obtained on the main routes. The Secretary of State is now involved in a great tussle to try to find somewhere for Concorde to land. The whole matter has been developed without any permission having been granted. It does not become the Secretary of State or any other member of the Government to attack Mr. Laker for acquiring aircraft after he had obtained initial permission, when we all know that Concorde was developed with no indication that permissions would be granted.

The CAA, in its decision last year, said that the development was held up partly because of United States opposition. It is very sad that the United Kingdom Government have not given more support to the attempts to obtain the permission that the United States should have given a long time ago. Despite all the problems and objections raised by British Airways, the CAA said last year: In sum, notwithstanding the weighty and well argued case advanced by British Airways, we conclude…that it would be wrong to revoke licence 1B/24214 and we decide accordingly". It pointed out that this concept could meet a real public need and that British Airways had forecast, on the optimistic side, that there would be a growth in 1975. We know there is quite a subtantial growth to be expected on the North Atlantic routes and, within a year or so, it might be perfectly proper and sensible for a no-frills service like Sky-train to be inaugurated.

For the Secretary of State to turn down that project without justifying his decision to the House is a deplorable breach of faith and should be condemned. It is ridiculous for him to talk about 1.1 million seats on the North Atlantic routes as though they would be threatened by Skytrain. He is completely ignoring the potential of the 200 million people in the United States and the United Kingdom. The figure of 1.1 million is less than ½per cent. of that potential. He should look at the traffic generated within the vast area of the United States by a policy of frequent services and comparatively cheap fares. He would see the potential for transatlantic flights if air fares were reduced. I am sorry that he has ignored it. I regret that, although the CAA was set up to analyse all the problems involved in the regulation of civil air transport, and to hear appeals from interested parties, its decision has been thrown aside. In view of the lack of information from the Secretary of State, I shall vote for the amendment unless, in his winding-up speech, the Under-Secretary gives an explanation for this extraordinary decision.

5.33 p.m.

Mr. R. A. McCrindle (Brentwood and Ongar)

I start by declaring a slightly remote interest as parliamentary adviser to the Guild of Business Travel Agents.

I am pleased that we are at last discussing a new order for civil aviation. For far too long, decisions by airlines have been subject to political considerations. I am sure the House will agree that freeing airlines from the necessity to look over their shoulders and wonder which way the political cat would jump must be greatly to their advantage in planning for the future.

There is quite sufficient competition from foreign airlines. We do not need undue interference by the Governments or wrangling within the British aviation industry. I welcome the White Paper, which at least reaches decisions, even though some of them may be controversial. The Secretary of State will become extremely embarrassed if he continues to receive tributes from this side of the House, but I pay him another tribute, because the policy he has outlined is as night to day when compared with the proposals for civil aviation policy in the Labour Party manifesto. It must have taken some political courage to fly in the face of pressures which no doubt came from hon. Members sitting behind him.

Seen in the setting of international competition, the Secretary of State's decision to end dual designation is broadly right. Against the backcloth of the success so far achieved by British Caledonian, the Secretary of State was right to give it a permanent place in the sun.

This debate must be conducted bearing in mind three factors—strong international competition, the continuing recession in air travel, despite some optimistic forecasts, and the acceptance within British aviation of a major private operator. The three main interests involved are British Caledonian, British Airways and Laker.

British Caledonian has had a very fair deal from the Secretary of State. It has been given quite enough scope, as well as undisputed spheres of influence, which can only benefit the airline's executives in their planning. There is just one quibble, with which I hope the Minister will deal in winding up. I understand the separation of East Africa and the Seychelles, the absorption of Lusaka into the BCAL network, and the logic of expanding the South American area with BCAL flying to Lima, Caracas and Bogota, but why has one destination on the American mainland—Georgetown—been retained in British Airways' sphere of influence? There may be a simple explanation. I hope the Minister can tell us the reason.

The Government's change of position on the Houston/Atlanta routes gives BCAL its major opportunity. However, I express concern, which BCAL may echo, at the Secretary of State's reply to an intervention, which seemed to indicate that he was less than positive on the pace at which the Government would pursue negotiations with the American authorities to enable BCAL to start operating the new routes as soon as possible.

Perhaps unusually from these Benches, I want to say some kind words about British Airways. I hope the airline does not take too much to heart the implication, which must sometimes be drawn from our remarks, that we are not well disposed to it simply because it is a nationalised industry. I believe the British Airways' management is the best it has had for a long time, and of all the nationalised industries with which I have come into contact, British Airways have the most commercial approach. This may be because there is a major element of competition, but it would be unfair to allow the debate to pass without some comment on the airline's high standard of efficiency and management. I have travelled fairly widely on British Airways and the airline does us credit in many parts of the world.

British Airways cannot have enjoyed losing routes, either now or in 1971. Yet, in the words of their statement, they are prepared to live with it. Why should they not have been prepared to live with Laker? I warn my hon. Friends that the remarks I shall make from here onwards will be less eulogistic of the Laker Airways Skytrain than those made by some of my hon. Friends have been. I am as much an admirer of Mr. Laker and his forthright approach to free enterprise as anyone, and I go along with the motion in the names of my hon. and right hon. Friends that a complete cancellation of the Skytrain licence was neither necessary nor desirable, but suspension could have met the immediate difficulties seen by the Secretary of State without its being necessary to say that the Laker Skytrain idea was dead for all time.

I am not opposed to the decision taken by the Secretary of State on Skytrain. We are underestimating the enormous amount of international competition on the North Atlantic routes. We are perhaps forgetting that there are other ways of getting to the United States fairly cheaply—ways that did not exist a few years ago. I instance ABC as one example. British Airways and British Caledonian have not been slow to react to these opportunities. Although there is potentially a large market for cheap travel to the United States, to some extent it has already been supplied by the enterprise of British Caledonian and British Airways. The time for Skytrain will come, but it is not yet.

If any of my hon. Friends asks why we should not give Mr. Laker a chance to see what he can do with Skytrain, I can do no better than remind them that the travel trade is strewn with the corpses of people who have said that, and the consumer has not always been the beneficiary. It is right that the Skytrain concept should be put in perspective.

In summary, I am delighted to welcome British Caledonian as a permanent and accepted entity into British civil aviation and look forward to a prosperous and profitable future for it, I congratulate British Airways on flying the flag most successfully round the world, and I am confident that Laker's day will come, but not yet.

5.42 p.m.

Mr. Les Huckfield (Nuneaton)

I am chary about speaking in aviation debates. Each time I do so the Roger Bacon column in Flight accuses me of having written another book, and all the airlines write and ask me for a copy. Two years ago, after my contribution to a debate, an insertion appeared in the Roger Bacon column to the effect that I had written a book telling airlines how to deal with abusive passengers. Subsequently I received requests from British Airways, British Caledonian and other international airlines asking urgently for a copy of the book. I had to reassure them that I had written no book.

After putting down two Questions to my right hon. Friend about civil aviation, it was alleged in the Roger Bacon column that I had written a book on how to build new airports. Once again, from all parts of the globe I had requests for an autographed copy of a book that I had not written. The remarks I shall make tonight do not appear in any piece of literature to which I have contributed. Although I may have written on aviation matters in the past, I have not written a book about the subject that I shall raise tonight.

I welcome some elements of what my right hon. Friend said. He has made a valuable decision in ending dual designation, particularly on the North Atlantic. In enunciating his "spheres of influence policy" he has at last ended some of the conflicts and uncertainties which have prevented British Caledonian from taking the longer-term investment decisions it had to take, particularly on whether to go for wide-bodied equipment.

In his allocation of spheres of influence, my right hon. Friend has been motivated primarily by the need to preserve employment, which I hope will be welcomed on both sides of the House. However, I have doubts on some aspects of the policy statement about the future of civil aviation. I have always recognised that the creation of a second force in British civil aviation was an entirely political decision. It was a political decision that many of my hon. Friends did not welcome at the time. When the previous Labour Government issued their White Paper on civil aviation policy we were told by the then Minister of State that no combination of any two British independent carriers could come together under the conditions laid down in the White Paper and that, because the conditions could not be met, there was no chance of a second-force concept getting off the ground. Despite that assurance, British Caledonian came into being through the merger of Caledonian Airlines—a charter carrier—and British United Airways. Some of my hon. Friends at that time firmly resisted that policy and declared that they would do everything they could to make sure that the decision was reversed.

It became part of Labour Party policy that the routes which had been transferred by succeeding Tory Governments to keep British Caledonian going should be transferred back to British Airways without compensation. Having stood on many platforms throughout the country and argued in favour of transferring back those routes without compensation, my right hon. Friend is now making an about-turn, although I recognise that he does so with the best of motives.

When British Caledonian was helped by the Conservatives the then Minister of State told the House that the transfer of routes from British Airways to British Caledonian was a once-for-all transfer and that there would be no more transfers from British Airways to British Caledonian. He also said that all that British Airways would lose was £6 million of route revenue.

In other words, we have a situation in which the aviation policies of both Governments seem to have been overturned, because they are not the policies that those Governments have enunciated in the past. I say that without any feeling of personal rancour, because I recognise that the Ministers concerned take these matters seriously and that they have come to a decision through very good motives. I also recognise that the hon. Member for Worthing (Mr. Higgins) and the hon. Member for Chingford (Mr. Tebbit) did not hold ministerial responsibility for this matter during the Conservative Government, but I ask them to recognise that their policy commitment also was to preserve British Airways as it stands and not to secure any more route transfers to British Caledonian.

Mr. Shore

What was agreed following discussions between the two airlines and myself was an exchange of routes, not a purloining of routes. The exchange is almost exact. British Airways gives up four points in South America and Zambia, while British Caledonian gives up four points in Africa and Asia. It is a balanced exchange.

Mr. Huckfield

I recognised that my right hon. Friend takes these matters very seriously, but many of us felt that British Airways had given away too much in the past and should not have been asked even to consider giving away any more routes in any circumstances. In their Civil Aviation Act, the Tory Government inserted the need to keep British Caledonian going. Many of us called that Act almost the "Preservation of British Caledonian Act". The Opposition are in a rather peculiar position in having written into their civil aviation legislation the need to keep a private enterprise independent carrier in existence against the nationalised carrier. I do not know of any other circumstances in which a Government have written into legislation the provision that a nationalised industry must have a private enterprise carrier not only competing against it but given priority over it.

Mr. Tebbit

The hon. Gentleman will recognise that when British Caledonian was originally set up assurances were given that the Tory Government did not preclude the granting of route rights, either in competition with British Airways or, indeed, to new destinations which were not at that time served by British Airways.

Mr. Huckfield

That is the point I was about to make. In the Tory Government's guidance to the Civil Aviation Authority, the Authority was told that it not only had to keep British Caledonian going but had to give it priority on new routes. When a Government write into legislation the provision that a private enterprise organisation not only must compete against a nationalised industry but must be given priority over it, I wonder whose best interests that Government are seen to be looking after by the people.

What worries me is that in these route transfers, in all this carve-up of the world between the two airlines, until recently British Airways have always had to give way. What kind of successive Governments are they who are always chipping away at a nationalised industry in order to keep private enterprise going?

I recognise that my right hon. Friend has tried to arrange not just a transfer of routes but a balancing out. He has done it in a fairer, more precise and more equal way than hitherto, but many of us regret that in the past, in order to keep British Caledonian alive, British Airways have had to make the sacrifices, have had to lose the route revenue and have had to see a dent made in their profits. Nevertheless, although they have had to assume these burdens it is always the State carrier, British Airways, to which the Government go when they want to impose non-commercial obligations. I wonder whether, in future, we shall see British Caledonian having to carry some of the non-commercial obligations that are still imposed on British Airways. I am thinking not just of Concorde but of some of the destinations that British Airways more or less have to serve on a strategic basis but would not wish to serve on a purely commercial basis.

My right hon. Friend has taken this decision with far better motives than lay behind the decisions in the past. The Government have deliberately created a permanent mixed economy in British civil aviation operations. That is a step forward which does not enthuse me, but, since it has been done, I hope that we shall not go as far, for example, as the French Government have done. They have literally given the Northern Hemisphere to Air France and the Southern Hemisphere to UTA. I hope that we shall not see such a parcelling out of the world between British Airways and British Caledonian. That is not the purpose of this new mixed economy. If we are to have such a mixed economy in civil aviation operations, I hope that in future British Caledonian will have to prove itself on its commercial ability.

In creating this policy of having two flag carriers, my right hon. Friend will, I hope, recognise that we shall become one of the few Western nations that have two flag carriers in this context. The United States may have Pan-Am and TWA, while France may have Air France and UTA. Nevertheless, we could be heading for a different set of negotiating problems, because we have two flag carriers and most European nations have only one.

In this mixed economy, if we are to have two competing air lines, we must ensure that British Airways does not accumulate a whole series of non-commercial or quasi-non-commercial operations. I am thinking, for example, of Australia where, theoretically, TAA and Ansett exist side by side, but it always seems to be the case that if any new legislative obligations are going TAA has to stick to them, because it is State-owned, while Ansett finds ways of making them a little more flexible. I hope that if, in future, we are to have new legislative or statutory obligations, particularly if they are of a non-commercial nature, they will be placed fairly and squarely on both British Airways and British Caledonian.

Finally, in creating this policy of having two flag carriers we should remember that we have two different flag carriers, with two different operating bases.

At the moment, looking at the interchange points of the world, three of the most important in Western Europe are London, Paris and Frankfurt. I suppose we have to take Amsterdam into account as well. I wonder whether, by encouraging two separate operating bases, at both Heathrow and Gatwick, we shall in future get the number of aviation passengers coming through London that we used to have. When one considers Frankfurt's facilities, the very interesting new transfer facilities at the third Paris airport, and the facilities at Amsterdam, one wonders whether London, with its dual operation of Heathrow and Gatwick, will in future be the kind of place through which people will choose to travel.

I think that my right hon. Friend has done the right thing about Skytrain. There is already too much capacity on the North Atlantic. Having worked out a régime under which fares have more or less settled down to what the traffic will bear, I believe that the kind of instability that Skytrain would create would upset much of the delicate balance now achieved.

In saying this, I recognise that my right hon. Friend has taken an important step forward. I support his motives for taking the kind of step forward that he has taken because I recognise that these are some of the best motives that a Labour Government have had in civil aviation policy for a long time. But, though I recognise and support my right hon. Friend's motives, I am more than a little worried about some of the longer-term results that this policy has created.

6.1 p.m.

Mr. Tim Renton (Mid-Sussex)

I wish to make an unreservedly constituency point. I am alarmed at the unique and somewhat isolated emphasis in the White Paper, in paragraph 26 of Part I and paragraph 14 of Part II, on the Government's wish to promote the build-up of traffic and of scheduled services at Gatwick. I am concerned that this will be growth by stealth and that it will take place in a haphazard and ill-planned form, leading to the conversion of what is still a rural and beautiful part of the United Kingdom into a noisy concrete jungle.

I accept that Gatwick lies today within a major growth area, as designated in the South-East Strategy, but the West Sussex County Council has come to the conclusion that this is a mistake. It regrets that it ever agreed to that designation and it has emphasised that, while it accepts the natural growth of the families and firms already in our area, it does not accept the idea of many new firms moving into our area, with all the additional growth that that will bring. Also, around Gatwick, particularly to the south and the east, there are areas of outstanding natural beauty.

One of the heaviest clouds lying ahead of us is the consideration of the amount of growth that there will be at Gatwick over the next generation. The tables in the first part of the document "Airport Strategy for Great Britain", dealing with the London area, are most alarming. They show Gatwick traffic going up from around 5 million passengers last year to perhaps 16 million passengers—that is the high forecast—by 1981, and to 25 million by 1986 if a second terminal is built.

Naturally, those who live in and around Gatwick and south of there are most concerned at this prospect. We accept that wide-bodied aircraft will relatively diminish the noise problem, but this is not likely seriously to help until the 1990s. It certainly does not ease the burden for those who are already suffering from a noise problem and who are worried at the extent to which this will increase, according to the Government's plans, in the years ahead, and who are alarmed at the amount of countryside that must be lost if Gatwick grows as envisaged.

Of course there will be growth at Gatwick, but this should be planned growth, serving the needs of those who live within Gatwick's own traffic generating area. This, I submit, is south of London and the South-East counties only. This should be Gatwick's rôle.

With respect to my hon. Friend the Member for Uxbridge (Mr. Shersby)—who, I know, wishes to catch your eye, Mr. Deputy Speaker—Gatwick should not act as a dustbin for all the growth that Heathrow cannot take, nor should it take the growth that is not going to the regional airports because these have not been fully developed.

On page 22 of the Airport Strategy document there is a table showing that in 1972 82 per cent. of passengers using the London area airports had origins or destinations within the South-East. But surely this is a chicken-and-egg argument. Until there are adequate airports at Manchester, Newcastle or Leeds, new companies will not go there. That in turn tends to concentrate the movements in and out of South-East England

There is a case in point in my own constituency. An international company recently moved its British head office to Burgess Hill. One of the reasons for this, I am informed by the company, was that in the specification given by the headquarters the new office was to be within 45 minutes of a major airport. If such a major airport had existed in the East Midlands, the North-East or the North-West, it could well have gone there.

There is a ratchet effect here. Once a certain level of passengers is reached at a regional airport, it encourages the airlines to put more scheduled flights in and out of that regional airport, and that in turn brings more passengers.

I accept that the plans for British Caledonian, outlined in the White Paper, give a reasonable prospect of viability to BCAL and of continuing employment. I am glad of that, but I cannot accept the White Paper as a whole because of its isolated emphasis on growth at Gatwick. This matter must be studied and, I hope, controlled in the context of a total airport strategy for airports throughout the United Kingdom. This we still have not received from the Government.

6.8 p.m.

Mr. Terry Walker (Kingswood)

It is regrettable that so much of the debate has been taken up on the Skytrain issue when the whole debate is about the future aviation policy of this country as set out in Cmnd 6400. The major issue facing us is what is best for Great Britain If we do not work out the best policy, I am sure that our competitors will laugh all the way to the bank and get a greater share of the market.

It is sufficient to say that if Skytrain—this is a valid argument which has been made—had been allowed to go ahead in the conditions likely to prevail in the North Atlantic market in the next few years following the oil crisis, it would have been particularly damaging to British Airways. This point has been laboured quite enough in the debate. We have a capacity-sharing agreement with the Americans, and permission for Laker Airways to run Skytrain would have led to the Americans running one of their own. Chaos would have resulted, and the casualty would have been British Airways.

The adjustment of the existing routes network, which has been agreed in the White Paper, is in my view sensible, and I applaud the Secretary of State's decision in coming out strongly, as he has done, against dual designation. We cannot bolster British Caledonian at the expense of British Airways. British Caledonian should be well satisfied with the routes it has been allocated, and I believe that the Secretary of State is right at the moment not to seek to take it into public ownership, in view of the redundancies.

It is right that British Airways must have their fair share of the routes which were taken away from them. They are a publicly-owned national flag carrier and, as such, I believe that they must be protected by the Government. British Airways have a tremendous responsibility which they share with Air France in introducing the Concorde on to the world stage.

Some comments are made in the White Paper about Concorde, and I have a constituency interest in it. I hope the statement is correct that the operations of Concorde will be extended to fly to New York, Washington, Melbourne and Tokyo and that those routes will come to Britain, because they are the most lucrative routes.

The United States is seriously jeopardising the development and even the very existence of the Concorde project by the nonsense which is going on in New York about landing rights for Concorde at Kennedy Airport. Investment and the jobs of workers are being put seriously in jeopardy. I hope that there will be some breakdown of the market between the American and British carriers across the Atlantic, because this is very relevant to the debate.

It may be that it is time we took some action to protect our carriers against the action which is being taken by the Americans over Concorde, and, although I recognise and greatly welcome what is said in the White Paper, I ask for the continued vigilance of the Secretary of State in terms of the future of Concorde on which so many of our hopes depend.

6.11 p.m.

Dr. Reginald Bennett (Fareham)

As this is the first occasion on which I have had the good fortune to catch your eye, Mr. Speaker, since you took up the Speakership, may I briefly but very sincerely offer you my felicitation?

Mr. Speaker

I am much obliged to the hon. Gentleman. Those are the best words in the debate.

Dr. Bennett

On the policy that we are debating today, I shall not surprise anyone if I say that I welcome the chance for a symbiosis between British Caledonian and British Airways rather than the obliteration of one by the other in the fashion of the film "Jaws". This at least is a matter for which we can be thankful, because it is possibly not in the manifesto of the party now in Government that this should happen. I for one welcome it. I do not doubt that there will be every chance for everyone to watch the relative efficiencies of the two companies in their operations and, therefore, that there will be every chance to show whether British Caledonian justifies the tolerance accorded to it.

However, I wish to make a few observations on the topic which appears to occupy us most in this debate, and that is the shameful withdrawal of the licence of Freddie Laker's Skytrain. The arguments have been rehearsed from all parts of the House and the documents have been referred to amply. I am sure that I am not being unfair if I say that every argument which has been adduced to justify the withdrawal of the licence seems shallow and not to be valid at all.

We have heard mention of £6 million losses to British Airways. However, if this is examined more closely we find that it appears to amount to £6 million reduced revenue, not losses on trading. As one who has had a share in some loss-making activities in this House, I speak with some feeling on this matter.

The interesting feature, however, is that British Airways do not seem to think that they will be expecting to lose money from this endeavour. The Secretary of State himself said that he could not say that there would not have been a firm prognostication of losses to the balance of payments if the licence had been granted. The commercial arguments and the financial arguments do not appear to be capable of being sustained from what has been put before us so far.

On the question of trading and passenger seats, we understand that the Laker Skytrain would produce 250,000 seats if a full load factor obtained. Against that, the seats normally offered annually by British Airways amount to 330,000. This, when compared with 250,000 of the Sky-train, looks like formidable competition, but surely it has been very much glossed over that with Pan American, TWA and the rest there are more than I million seats on the higher IATA fare structure from which some might be taken, but not necessarily off British Airways.

Certainly the cheapness of the new service is a matter which has not been given the serious consideration that it deserves. In the many years that I have been a Member of this House, I have heard the argument advanced again and again that proposals of this kind would only damage the existing services. It is always said that any cheaper services will damage the existing ones. It is never credited that they will be expected to bring their own new traffic, such as the mother-in-law of my hon. Friend the Member for Hastings (Mr. Warren) who otherwise might not choose to travel by a more expensive route.

The great gift which has been overlooked in this argument about Freddie Laker's Skytrain is that, unlike the ABC or APEX services which charge certainly no more than the Skytrain intended to charge off season, it was a very different matter at peak season when the ABC fare to New York would be £150, the APEX fare would be £176 and the Freddie Laker fare would still be £118. Surely it is in the high season that this would have generated the new traffic which we would like to see accruing to this country. Therefore, the arguments about capacity also fall to the ground.

I am left with the serious doubt that, by maintaining over-capacity and high-cost IATA-type routes, the arguments will not always be provided for cutting out low-cost services.

The pleading about the recession is justifiable on the evidence which has been printed. The same applies to the oil crisis. I found myself marooned in a distant part of the world when all the services of British Airways were suddenly removed because of the oil crisis. It was not a disagreeable part of the world, so I do not complain. But the oil crisis and the recession have done their damage. However, the evidence before us today indicates that that is now over and that traffic is increasing again. Therefore, I cannot feel that there are really sound arguments which justify this decision, which personally I resent. As a former psychiatrist, I can only attribute them to what we call rationalisation—that is, finding respectable arguments to justify conduct which is not altogether respectable.

I plead with the Government that they should not regard this as an irrevocable decision for all time. They should not close their mind for ever. If there is a sign of revival, it should be made possible for such services to be reinstituted, even if they do not help Mr. Laker financially.

6.18 p.m.

Mr. Norman Tebbit (Chingford)

I should declare at once that I have an interest in these matters as a British Airways pensioner, so, like my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle), I too have considerable admiration and regard for British Airways and their predecessor corporations, especially the one for which I worked, British Overseas Airways.

I agreed very much with the hon. Member for Kingswood (Mr. Walker) when he said it was a pity that we had to spend so much time on one aspect—that of the Laker Skytrain—in what was a very short debate about a large topic. It may be that that reflects what so many people outside this House often misunderstand—that we talk all the time about what we disagree about but that we seldom talk about what we agree about. This can give a wrong impression of the way things are here.

On what I see as the central issue—the relationship between British Caledonian and British Airways—the Secretary of State obviously felt that he had delivered a judgment of Solomon. At the end of this debate, however, we still seek assurance that the British Caledonian sphere of influence is now sufficiently large to ensure a margin of safety in the case of unforeseen circumstances. We acknowledge that that is a difficult judgment to make. It is a judgment that cannot be overruled by all the old neolithic chants that we heard last year, although not, I am happy to say, this year, about the manifesto and the taking back of the routes which have been stolen so unjustly from British Airways.

The Secretary of State has expressed his will that British Caledonian should succeed and his judgment that his guidelines will give it the means to do so. Our judgment is that he has cut the margins pretty fine—but he had to do so. However, we take him at his word that he now shares our objective, which is the continuing prosperity of an independent second-force scheduled flag carrier alongside the continuing prosperity of British Airways.

That is why we do not wish to divide the House against the whole of the new guidelines. Of course we have reservations about the guidance and of course we totally disagree with the way in which the right hon. Gentleman has handled the Skytrain affair. However, we agree overwhelmingly that the industry needs a period of non-interference by politicians. In view of the progress that the Secretary of State has made towards our views and away from the primitivism of some of his hon. Friends, we should try to meet him at least half way and find some middle or common ground—whatever the current "in" expression is for this area—on which the air transport industry can find a firm footing for its battles with foreign competitors.

I should not have used the words which the Secretary of State uses in paragraph 12 of his guidelines where he says that he hopes that the guidance should remain substantially unchanged for a considerable period of years. I should have used words which suggested that the guidance should remain unchanged until the market conditions changed significantly. No one can know whether that will be soon or way ahead in the future. However, that is not a matter on which we should come to blows.

The Secretary of State has been remiss, to put it gently, in failing to give a lead on fares policies. I put it gently because there is some guidance in paragraph 16 of the guidelines. There the Secretary of State enjoins the Authority to seek to secure tariff provisions and associated conditions that are rational, simple and enforceable. A clearer description of the Skytrain fare proposal could hardly have been written, and a more different prescription from the witch's brew of the present IATA carrier Atlantic fares would be difficult to find.

The snag is that, although the Secretary of State has directed himself correctly in paragraph 16 of his guidance, he has promptly shot off in the opposite direction. The hon. Member for Felt-ham and Heston (Mr. Kerr) may have come close to the issue when he said that one of the problems was that fares are twice as high in Europe as they are in his native Australia. A cynic might say that that could be because the hon. Gentleman is here instead of in his native Australia and that his activities have had something to do with that. It is certainly true that fares here are very much higher than they are in the United States. However, I shall not pursue the hon. Gentleman's argument too far, particularly when he is not present. I understand that he is almost certainly attending a Standing Committee upstairs.

In nailing his colours to the mast of the policy of two flag carriers, although, unwisely, the Secretary of State has ruled out direct competition between them, he has shown a good deal of courage and common sense. As we all know, there are moments when one needs a great deal of courage to show common sense in politics. The right hon. Gentleman has written the recipe which he thinks is right for the occasion in his guidelines, but the proof of the pudding is in the eating. If the flavour turns out to be not according to the menu, is the right hon. Gentleman committed to adding a little more sugar or to changing the mix until it comes out right? I do not want to discomfort him by asking. The recipe which he has laid down is a mixture of politics and economics, and that is always a pretty dangerous and unstable brew.

If that is added to aviation, which is a pretty unstable industry at times, the right hon. Gentleman could easily find that he has to change the recipe a little. It might not come out right. A revolution or a natural disaster—apart from the victory of a Socialist Party in any one of the countries involved—something totally outside the control of the airlines of Her Majesty's Government—again, it is hard to know what is within the control of Her Majesty's Government these days—could change the whole picture.

Is paragraph 6, the commitment to the policy of two scheduled international carriers, the heart of the policy to which the Secretary of State is now committed? Are paragraphs 7 to 10 and Annex A merely the means to the end or are paragraphs 7 to 10 written on tablets of stone, even if they thwart the intent of paragraph 6? Indeed, is paragraph 12 a paragraph of real significance, or is it a mere throw-away form of words when it says: the Authority should, when circumstances warrant, examine with the British airlines concerned the scope for adjusting, exchanging or reallocating routes"? Is that simply a form of words—a throw-away—or does it have real significance along with paragraphs 7 to 12?

The Secretary of State said that he wanted to turn the competition of British carriers against foreign carriers. He makes it difficult for us to believe him at times because he implies that the shares of the North Atlantic market are fixed between British and American carriers. What sort of competition is it that he will turn on the American carriers on that route if the shares are already fixed? We are not sure that we understand him on that matter.

I turn to some of the sins of omission of the Secretary of State. He claims to know better than the Civil Aviation Authority how to run aviation policy, otherwise he would not have overridden the Authority on the Laker Skytrain affair. Will he define his attitude towards the present fares structure and indicate what he wants done to improve it, if he is to take a lead in these matters? Will he tell us what policy he wants adopted towards the development of third-level services outside the favoured—indeed, if I may say so to the hon. Member for Western Isles (Mr. Stewart), the pampered—Scottish Highlands and Islands? They are in this respect rightly pampered, but none the less pampered.

Is the Secretary of State pursuing policies within the EEC that would allow services akin to those operated in the United States under FAR 298 to prosper, or is he content to allow the increasing French penetration of this particular market to continue? The Minister may think that these matters are small beer. They are little aeroplanes, they do not carry many people and they are not very significant. I hope that the Minister and all hon. Members have noticed how the old arthritic giants of air transport—for example, Pan American World Airways, and TWA—are now being led in the competitive race by the United States regional carriers such as Eastern and National, which are themselves being pushed hard by the competition coming from below by airlines such as Pacific Southwest Airlines and other third-level operators. If we are to achieve growth and keep our own large carriers as spritely as they should be, we need to engender that growth right the way down to the third level.

I want to ask the Secretary of State about non-scheduled freight services. The preference given to British Airways and British Caledonian seems slightly stronger under the new guidelines than under the old ones. Is that so? The prime market for these services is Africa, apart from Hong Kong, and British Airways are now given a strong preference there—stronger than it has been in the past. How will that affect independent freight airlines. As the Secretary of State knows, if they are to stay in business the British carriers need to raise new capital to buy expensive new aeroplanes, and nothing should be done to cast any doubts about their position in the future.

As the hon. Member for Kingswood said, the debate has constantly turned towards the Skytrain affair. Indeed, several of my hon. Friends, notably my hon. Friend the Member for Hastings (Mr. Warren), spoke very effectively. although very briefly, about Skytrain, as indeed many of us have done in earlier debates. Let me make my position and, I think, that of my hon. Friends absolutely clear.

I have no special brief for Mr. Laker beyond this. He has built an airline on nothing but his own efforts and those that he has inspired in the people who work with him. He has risked his own money, his hard-won money, in an industry in which not very many chairmen or managing directors stake their personal fortunes on their commercial judgment. If sometimes he seems to express himself strongly, perhaps we should remember just what he has at stake.

Freddie Laker has never come to the Government with a begging bowl asking for money. He has profited solely by serving the needs of the consumer and doing that better and more cheaply than some of his competitors. He saw the chance to widen the market for air travel and to go for a genuine new market. He convinced the CAA. He convinced his bankers as well. He convinced the public. However, the Secretary of State chose to ignore the expert advice and, indeed, to ignore the customer that Freddie Laker had convinced. In this instance the Secretary of State has fallen for the old argument that passengers exist to serve airlines, rather than that airlines exist to serve passengers.

Therefore, these questions about the judgment of the Secretary of State are still unanswered. He made much of the capacity limitation agreements between North Atlantic carriers. We are still not clear about this. We have just not been told exactly which carriers have agreed to just what limitations. Which are they and what are the limitations, and how would they be affected by licensing Sky-train? Does the Minister know? Has he really explored this matter? I hope that he will not rely on an airy sort of assumption, such as that given to my hon. Friend the Member for Hastings, who said that no American carrier had applied for a licence for a Skytrain operaton. "Oh", said the junior Minister, "but one or two of them have said that they might like to do so." However, they have not done so. Therefore, let us have what has actually happened and what agreements have been made, and not those which might be made in the future.

The Secretary of State constantly fell between two stools in his argument. As my hon. Friend the Member for Worthing (Mr. Higgins) said, on the one hand the Secretary of State implied that Skytrain benefited the customer but little, and on the other hand that it would be hair-raisingly diversionary if it were licensed. Let us look at the facts. There is a very wide measure of opinion—shared, I think—that Skytrain would develop at least some new traffic. I think that the Government see it as developing about 25 per cent. new traffic. We can argue about the amount—25 per cent. or 50 per cent. After all, the Secretary of State is not too sure about his own statistics. At one stage it was a matter of £10 million either way. Even these days that is a fair amount of money.

However, the Secretary of State is not prepared to allow Skytrain because it would divert traffic, although it would create new traffic as well. On the other hand, he is prepared to dual-designate Concorde, on routes even alongside BCAL if necessary—and we appreciate the reasons for doing that. However, there is little doubt that the only people who will travel on Concorde are people who already travel in the first-class compartments of other aeroplanes. Like many people, I believe that they would travel more often, but I do not believe that this would generate a totally new class of travel of the width, size and scale that Skytrain would generate.

Mr. Shore

Before the hon. Gentleman pushes that analogy with Concorde any further, he should refresh his memory on the wording of paragraph 8(a) and precisely the pledge that is given there that there should be adequate arrangements to alleviate any adverse affects on the airlines so affected. The same argument clearly cannot and does not apply to the introduction of Skytrain.

Mr. Tebbit

Indeed. The Secretary of State is absolutely right. The point I make is that he, like us, is not absolutely opposed to dual designation. He would open the door to dual designation. Where we differ is on just where we would open it and to what extent we would open it.

I repeat that we do not wish to divide the House against the whole of the guidelines. Unlike the curate, we cannot even try to take the good and the bad out of this particular egg. While it is none too good, it is certainly not so bad that we should throw it out entirely. However, the Secretary of State's decision to close the door on Skytrain is a different matter. It is against the best advice that he could get—that of the CAA. It is unfair, and it is discriminatory to Laker. It is restrictive and oppressive. It is against the interests of the consumer and it springs from a misplaced bias, I believe, against the entrepreneurial little man and in favour of the big battalions and of monopoly in industry.

That is why I ask my hon. Friends and, indeed, the friends of the passengers, the consumers and customers, in other Opposition parties, and indeed on the Benches behind the Secretary of State, to join us in the Lobby this evening in voting to reject the Secretary of State's view of Laker, although we accept the remainder of his guidelines for what they are—a brave and honest attempt to stabilise the British air transport industry.

6.37 p.m.

The Under-Secretary of State for Trade (Mr. Clinton Davis)

At the outset I offer my congratulations to the hon. Member for Chingford (Mr. Tebbit) on his first offering from the Opposition Front Bench. I hope that he will long remain a Front Bench Opposition spokesman.

Before I come to the observations made by the hon. Gentleman, whose speech was primarily directed, as has been most of the Opposition's case, to the issue of Skytrain, perhaps it would be helpful if I brought the House back to the basic objectives which my right hon. Friend set for himself in initiating this policy. I ask my right hon. Friend the Member for Walsall, North (Mr. Stonehouse) to recognise that these basic objectives are, in our judgment, integrally connected, each one being vital to the other.

The first objective was that we should strengthen British aviation, strengthen the airline industry and harness the effort of the British airlines to compete effectively against foreign competition. That is an objective which has been supported on both sides of the House. The second objective was to safeguard employment and the contribution to the balance of payments. That is an issue which my hon. Friends in particular have touched upon in their contributions to the debate.

The third objective was to produce an outcome which is fair to British Airways, as the national carrier, and which obviously plays the largest part in the total civil aviation effort of this country, and yet at the same time one which is fair to British Caledonian and the other major carriers. The fourth objective, on which the hon. Member for Chingford touched, was to obtain an enduring settlement which would offer greater stability to the entire industry.

The hon. Gentleman asked whether I could give an assurance that we would keep the matter, in effect, under constant scrutiny. I think that what we must do is to preserve continuity as far as possible, to see how the airlines can together make this work. I do not want to see any measure of uncertainty imported as a result of anything that I might say in this respect.

I am bound to say that, if the Opposition accept those objectives, they are in reality caught up in the vortices of their own illogicality when they go on to say that we should consider Skytrain in isolation. We cannot compartmentalise the Skytrain issue, a point to which I shall come back when I have developed certain other matters more broadly in relation to the policy itself.

What it really comes to is that, on the first issue before the House and before the country, the first test of the policy that has been adumbrated and accepted by the Opposition—because they are not going to divide on it—is that they do not want to apply the policy in practice. [Interruption.] I hope that the Opposition Whip, who has not been present for most of the time, will restrain himself.

The hon. Member for Worthing (Mr. Higgins) raised an issue in relation to paragraphs 7 and 8, and I shall try to deal at this time in isolation with various issues raised by hon. Gentlemen. Paragraph 8 widens the scope to take into account the possibility of the preferred airline agreeing. If it does not agree, the Civil Aviation Authority then applies the rules in paragraph 7. These set out the circumstances in which the CAA might license another airline to provide a new service into either BA's or BCAL's sphere of interest. It does not enable it to double-designate. Consequently, if an airline is found to be falling down on a route the CAA's only recourse would be to remove its licence when considering a licence for another airline. This is a fairly complex issue and I am sure that the hon. Gentleman will wish to reflect further on it when he reads the Official Report tomorrow. Some of my hon. Friends, in particular my hon. Friend the Member for Nuneaton (Mr. Huckfield), with whom I had the pleasure of debating this issue in an Adjournment debate when we were here exclusively, expressed some reserve about the policies we have undertaken.

Mr. Higgins

If I may interrupt the hon. Gentleman at this point, I do so simply because he did not clear up one other point on the issue of paragraphs 7 and 8 of the guidance. Will he confirm that in paragraph 8(b) and 8(c), where it speaks of British Airways or British Caledonian giving their consent respectively, it is on the clear understanding that consent shall not be unreasonably withheld?

Mr. Davis

That is not so, and if the hon. Gentleman will look at what I have said he will see that the importation of those words would be otiose.

I want to come to the observations of my hon. Friend the Member for Nuneaton. There is no comparability with the situation in 1971, when important assets of a public company were pillaged by the then Government. There was no measure of mutuality. This policy is entirely based upon a fair deal for both airlines, and I believe that it has been accepted in that spirit by both of them.

It really would not have been possible, for the reasons adumbrated by my right hon. Friend at the commencement of the debate, to have taken any course which would, in effect, have emasculated British Caledonian and yet at the same time preserved employment. I do not propose to say more on that point at this stage, because this argument has been a private one between us although in the House itself.

Mr. Tebbit

Public.

Mr. Davis

Public and private at the same time, because the hon. Gentleman was not there to offer his observations at that particular time.

The hon. Member for Stretford (Mr. Churchill), who has not been here throughout, no doubt for very good reasons, intervened and asked what proportion British Airways enjoyed on the North Atlantic routes generally and on New York-London. The answer is 40 per cent. and 34 per cent. respectively. The hon. Member for Mid-Bedfordshire (Mr. Hastings) raised a point also raised by the hon. Member for Chingford: what was the position of the smaller airlines, and were they to be prejudiced in consequence of decisions made by my right hon. Friend? I really do not see how they are likely to be prejudiced. They will still be free to bid for non-scheduled business in all parts of the world. British Caledonian will enjoy a preference on passenger charter services and freight charter services where the number or capacity of British airlines needs for the time being to be restricted. This is in its sphere of interest, and BA will enjoy a similar preference in those parts of Africa within its sphere of influence. Although there have been no major departures, the interests of independent airlines have been advanced.

The hon. Member for Worthing raised the question of Concorde. Like him, I welcome the robustness of Mr. Secretary Coleman in the United States in the statement he made a day or so ago. We must hope that American public opinion will not be seen to be as adamant as that which seems to have manifested itself in New York at the present time. We shall have to see how these matters develop; and, of course, the British Government with its French partners will ensure that British interests are fully protected in the debate wherever it may occur in the United States.

The hon. Member for Hastings (Mr. Warren), who seemed during the debate to be somewhat unduly influenced by the demands of his mother-in-law, made what I thought was for him, as somebody I have always acknowledged as an expert in this field, a disappointing contribution. I would have though he might have offered some helpful remarks, some positive remarks about the review generally. Instead, he chose to devote himself to Skytrain with only one or two exceptions. He said that we were withdrawing transatlantic rights. The foreign airlines to which the hon. Member was alluding often do not use these transatlantic rights, as he knows better than most people in th House.

The hon. Member went on to suggest that we were throwing away traffic rights as far as the withdrawal of British Caledonian's unused rights were concerned. None of those has been negotiated as yet, so the hon. Gentleman is wrong about that. He went on to charge the Government with dogma.

Mr. Warren

May I interrupt the hon. Gentleman, since he has referred not only to my mother-in-law but also to my speech, and ask him to concentrate his attention very carefully on the fact that 16 airlines have the right to operate out of London Airport to New York carrying passengers? He has consistently refused to negotiate with these people to give British airlines equality of opportunity to operate across the North Atlantic, and he knows it.

Mr. Davis

The hon. Gentleman is quite wrong about that. This does not go to the heart of the debate. Most of the 16 airlines to which he has referred do not exercise those rights. As far as the Americans are concerned, I shall be coming to consider capacity questions in a moment.

The hon. Gentleman said that we were dogmatic in our approach. That is not a reflection that would have come from the hon. Member for Chingford, because I remember what he said during a slightly more public debate during the early hours of the morning on 21st July last. He said that there was no question of dogma dictating Government decisions and that it was "a balance of judgment". That was a comment far removed from virtually all the Opposition speeches on Skytrain that we have heard today.

The hon. Member for the Western Isles (Mr. Stewart) mentioned the Highland and Islands airports. He will know that a consultation document is to be produced—we hope shortly after Easter—to deal with regional airport strategy. It would be more appropriate to deal with his points during those consultations. Where a route deserves support, it is open to the Secretary of State for Scotland to authorise a third-level operation. Incidentally British Caledonian, a company in which the hon. Gentleman firmly believes, is firmly opposed to the Skytrain project. I hope he will accept that advice from BCAL even if he is not prepared to accept it from me.

The hon. Member for Brentwood and Ongar (Mr. McCrindle), because he largely agreed with the Government, made a sensible contribution. The three factors to which he referred—that we are facing up to strong international competition, that we are in a continuing recession when there is little ground for optimism, and that the major private operators have accepted this arrangement—were taken fully into account in the review.

Georgetown is integrally associated with the Caribbean Islands routes and it would not have been possible, in order to achieve a fair and viable operation, for that to have been granted to British Caledonian. All I can say about the negotiations on Atlanta-Houston is that we will press on with them as rapidly as possible.

The hon. Member for Mid-Sussex (Mr. Renton) is right to be concerned about any unplanned growth at Gatwick. Such development as has occurred there has been undertaken after full consultation with the local authorities. The hon. Member will know that the London regional document is subject to consultation at this moment. My hon. Friend the Under-Secretary of State for the Environment and I will be hearing people who wish to make observations about the strategy to be followed.

I come now to Skytrain. We have given this matter the most careful consideration. Our discussions with Mr. Laker have been by no means short discussions. As recently as 15th January, I spent an hour and three-quarters with him and my officials spent four hours with him. The reason why it is difficult to reach any conclusions about the whole variety of assumptions is precisely that there are so many upon which this issue can be based.

Precisely as the hon. Member for Chingford said, it is a balance of judgment. The whole scope of the review has clearly not been undertaken with any dogmatic approach to aviation. We have considered what we think is right. I am not saying that we are infallible—of course not—

Mr. Warren

Hear, hear.

Mr. Davis

—but hon. Members opposite are far from being infallible, as the electorate reminded them not long ago. What we have done is far removed from the "phoney" indictments that we have heard from the Opposition today. They have largely ignored the over-capacity on the North Atlantic and the size of the challenge that Laker would represent in the present context, the fact that Skytrain would add about 255,000 seats a year on the London-New York route and the fact that there is bound to be a competing United States service.

Mr. Warren

No.

Mr. Davis

Of course there is.

Mr. Warren

Of course there is not.

Mr. Davis

The American airlines have made their position plain, and I am not prepared to accept the bogus assumptions advanced by the Conservative Party.

Mr. Warren

Will the Minister give way?

Mr. Davis

No. I have only five more minutes.

Mr. Warren

The Minister is making bogus assumptions.

Mr. Davis

I might remind the hon. Member that a good traveller is one who does not know where he is going but a perfect traveller does not know where he has been. The hon. Member is both a good and a perfect traveller.

There is bound to be a substantial diversion from British Airways. That is something which this Government are not prepared to accept. All scheduled carriers are today making losses on the North Atlantic. British Airways are still losing on their New York service. British Airways have made an estimate, which the hon. Gentleman seeks to confuse, that they would be exposed to grave damage at this moment. That is something that this Government are not prepared to accept in the present context of the North Atlantic.

Capacity agreements must be maintained in the foreseeable future. To allow Skytrain to operate would be wholly inconsistent with that purpose. United States carriers have made it clear in negotiating the present arrangements that Skytrain will have to come out of the British share. That is the issue at stake.

Mr. Stonehouse

How does the Minister dispose of the case, put forward by the CAA itself at least twice, that there is a public need for Skytrain and that it will open up new demand? Has he had information from the CAA in recent weeks that it has gone back on that advice?

Mr. Davis

We and the CAA disagree—we have said that quite openly—but on Skytrain it was operating within different guidelines. What I have said is that the issue of Skytrain is fundamentally linked with the four propositions that I advanced at the start.

When it comes to the balance of payments, I do not believe that Mr. Laker has been consistent. It depends entirely on the forum before which he appears. He has made a whole variety of assertions about the benefits which would accrue. One of those is that there would be a manifest benefit to the Americans if Skytrain were permitted to go ahead. But at whose expense? The answer is that it would be at our expense. That is something that the House should fully understand. Those are Mr. Laker's own words, and that testimony is rather more valuable than that which we have heard today from the Opposition. I also believe that if we were to seek to negotiate further on Skytrain the Americans would demand a major concession from us. I have already said that that is not acceptable.

I thought that the argument about cheapness was heavily indicted by the hon. Member for Brentwood and Ongar. He said, in effect, that cheapness is not always best. Other Conservative Members are falling into the classic Court Line-Clarkson syndrome. We must recognise that we cannot introduce something of this kind in a disordered market. It is essential for the benefit of the whole travelling public to create order out of the chaos which existed before. That is what this Goverment are proposing to do.

The Opposition have said that we have treated Mr. Laker unfairly. We ought to examine the credentials of our accusers on that matter. They were content to pillage the assets of British Airways in 1971, with no question of compensation, for routes which had been worked, developed and invested in.

Laker took a calculated risk in this matter. He did not know what conditions the United States might impose. He bought those DC10s at low prices and on extremely favourable terms. It is abundantly clear that if Mr. Laker were to come on to that route there would be created a risk of unemployment in British Airways, and the Government are not prepared to put up with that.

I commend my right hon. Friend's policy to the House and ask the House

to reject the Opposition's spurious and badly-argued case.

Question put and agreed to.

Resolved,

That the Statement on Civil Aviation Policy Guidance, to be given by the Secretary of State to the Civil Aviation Authority in pursuance of section 3(2) of the Civil Aviation Act 1971 with respect to the performance of its functions, a draft of which was laid before this House on 11th February, be approved in pursuance of section 3(3) of that Act.

Motion made, and Question put,

That this House rejects the Secretary of State for Trade's decision to cancel Laker Airways Skytrain designation and to require the Civil Aviation Authority to revoke the Skytrain licence contrary to the Authority's considered view that it should be allowed to stand.—[Mr. Higgins]:—

The House divided: Ayes 232, Noes 262.

Division No. 71]	AYES	[7.00 pm
Alison, Michael	du Cann, Rt Hon Edward	Hunt, John
Amery, Rt Hon Julian	Durant, Tony	Hurd, Douglas
Arnold, Tom	Eden, Rt Hon Sir John	Hutchison, Michael Clark
Atkins, Rt Hon H. (Spelthorne)	Edwards, Nicholas (Pembroke)	Jenkin, Rt Hon P. (Wanst'd & W?df'd)
Awdry, Daniel	Elliott, Sir William	Jessel, Toby
Bain, Mrs Margaret	Emery, Peter	Johnson Smith, G. (E Grinstead)
Baker, Kenneth	Fairbairn, Nicholas	Jones, Arthur (Daventry)
Banks, Robert	Fairgrieve, Russell	Joseph, Rt Hon Sir Keith
Beith, A. J.	Farr, John	Kaberry, Sir Donald
Bell, Ronald	Fell, Anthony	Kellett-Bowman, Mrs EIaine
Bennett, Sir Frederic (Torbay)	Finsberg, Geoffrey	Kershaw, Anthony
Bennett, Dr Reginald (Fareham)	Fletcher, Alex (Edinburgh N)	Kimball, Marcus
Benyon, W.	Fletcher-Cooke, Charles	King, Tom (Bridgwater)
Berry, Hon Anthony	Fookes, Miss Janet	Knox, David
Biffen, John	Fowler, Norman (Sutton C'f'd)	Lamont, Norman
Biggs-Davison, John	Freud, Clement	Lane, David
Blaker, Peter	Fry, Peter	Langford-Holt, Sir John
Body, Richard	Galbraith, Hon T. G. D.	Latham, Michael (Melton)
Boscawen, Hon Robert	Gardiner, George (Reigate)	Lawrence, Ivan
Bottomley, Peter	Gardner, Edward (S Fylde)	Lester, Jim (Beeston)
Bowden, A. (Brighton, Kemptown)	Gilmour, Sir John (East Fife)	Lewis, Kenneth (Rutland)
Boyson, Dr Rhodes (Brent)	Glyn Dr Alan	Lloyd, Ian
Braine, Sir Bernard	Godber, Rt Hon Joseph	Loveridge, John
Brittan, Leon	Goodhew, Victor	McAdden, Sir Stephen
Brown, Sir Edward (Bath)	Goodlad, Alastair	MacCormick, Iain
Bryan, Sir Paul	Gorst, John	McCrindle, Robert
Buchanan-Smith, Alick	Gow, Ian (Eastbourne)	Macfarlane, Neil
Buck, Antony	Gower, Sir Raymond (Barry)	MacGregor, John
Bulmer, Esmond	Grant, Anthony (Harrow C)	McNair-Wilson, P. (New Forest)
Burden, F. A.	Gray Hamish	Madel, David
Chalker, Mrs Lynda	Griffiths, Eldon	Marshall, Michael (Arundel)
Channon, Paul	Grimond, Rt Hon J.	Marten, Nell
Churchill, W. S.	Grist, Ian	Mather, Carol
Clark, Alan (Plymouth, Sutton)	Grylls, Michael	Maude, Angus
Clark, William (Croydon S)	Hall, Sir John	Mawby, Ray
Clarke, Kenneth (Rushcliffe)	Hall-Davis, A. G. F.	Maxwell-Hyslop, Robin
Clegg, Walter	Hamilton, Michael (Salisbury)	Mayhew, Patrick
Cooke, Robert (Bristol W)	Hampson, Dr Keith	Meyer, Sir Anthony
Cope, John	Hannam, John	Miller, Hal (Bromsgrove)
Cordle, John H.	Harrison, Col Sir Harwood (Eye)	Mills, Peter
Cormack, Patrick	Hastings, Stephen	Mitchell, David (Basingstoke)
Corrle, John	Hawkins, Paul	Moate, Roger
Costain, A. P.	Hayhoe, Barney	Monro, Hector
Crawford, Douglas	Henderson, Douglas	Montgomery, Fergus
Crouch, David	Hicks Robert	Moore, John (Croydon C)
Crowder, F. P.	Higgins, Terence L.	Morris, Michael (Northampton S)
Davies, Rt Hon J. (Knutsford)	Holland, Philip	Morrison, Charles (Devizes)
Dean, Paul (N Somerset)	Hordern, Peter	Morrison, Hon Peter (Chester)
Dodsworth, Geoffrey	Howe, Rt Hon Sir Geoffrey	Neave, Airey
Douglas-Hamilton, Lord James	Howell, David (Guildford)	Nelson, Anthony
Neubert, Michael	Rost, Peter (SE Derbyshire)	Tebbit, Norman
Newton, Tony	St. John-Stevas, Norman	Thomas, Rt Hon P. (Hendon S)
Normanton, Tom	Scott-Hopkins, James	Thompson, George
Onslow, Cranley	Shaw, Giles (Pudsey)	Townsend, Cyril D
Oppenheim, Mrs Sally	Shelton, William (Streatham)	Tugendhat, Christopher
Osborn, John	Shepherd, Colin	van Straubenzee, W. R.
Page, John (Harrow W)	Shersby, Michael	Viggers, Peter
Page, Rt Hon R. Graham (Crosby)	Silvester, Fred	Wainwright, Richard (Colne V)
Parkinson, Cecil	Sims, Roger	Wakeham, John
Pattie, Geoffrey	Sinclair, Sir George	Walder, David (Clitheroe)
Percival, Ian	Skeet, T. H. H.	Walker, Rt Hon P. (Worcester)
Peyton, Rt Hon John	Smith, Dudley (Warwick)	Wall, Patrick
Pink, R. Bonner	Speed, Keith	Walters, Dennis
Price, David (Eastleigh)	Spence, John	Warren, Kenneth
Prior, Rt Hon James	Spicer, Jim (W Dorset)	Watt, Hamish
Pym, Rt Hon Francis	Spicer, Michael (S Worcester)	Weatherill, Bernard
Rathbone, Tim	Sproat, Iain	Wells, John
Rees, Peter (Dover & Deal)	Stainton, Keith	Welsh, Andrew
Rees-Davies, W. R.	Stanbrook, Ivor	Whitelaw, Rt Hon William
Reid, George	Stanley, John	Wiggin, Jerry
Renton, Rt Hon Sir D. (Hunts)	Steen, Anthony (Wavertree)	Wilson, Gordon (Dundee E)
Renton, Tim (Mid-Sussex)	Stewart, Donald (Western Isles)	Winterton, Nicholas
Ridley, Hon Nicholas	Stewart, Ian (Hitchin)	Wood, Rt Hon Richard
Ridsdale, Julian	Stokes, John	Young, Sir G. (Ealing, Acton)
Rifkind, Malcolm	Stonehouse, Rt Hon John
Rippon, Rt Hon Geoffrey	Stradling Thomas, J.	TELLERS FOR THE AYES:
Roberts, Wyn (Conway)	Tapsell, Peter	Mr. Spencer Le Marchant and
Ross, Stephen (Isle of Wight)	Taylor, R. (Croydon NW)	Mr. Michael Roberts.
Rossi, Hugh (Hornsey)	Taylor, Teddy (Cathcart)
NOES
Abse, Leo	Davidson, Arthur	Huckfield, Les
Allaun, Frank	Davies, Bryan (Enfield N)	Hughes, Rt Hon C. (Anglesey)
Anderson, Donald	Davies, Denzil (Llanelli)	Hughes, Robert (Aberdeen N)
Archer, Peter	Davis, Clinton (Hackney C)	Hughes, Roy (Newport)
Ashley, Jack	Deakins, Eric	Hunter, Adam
Ashton, Joe	Dean, Joseph (Leeds West)	Irvine, Rt Hon Sir A. (Edge Hill)
Atkins, Ronald (Preston N)	Delargy, Hugh	Irving, Rt Hon S. (Dartford)
Atkinson, Norman	Dell, Rt Hon Edmund	Jackson, Colin (Brighouse)
Bagier, Gordon A. T.	Doig, Peter	Jackson, Miss Margaret (Lincoln)
Barnett, Guy (Greenwich)	Dormand, J. D.	Janner, Greville
Barnett, Rt Hon Joel (Heywood)	Douglas-Mann, Bruce	Jay, Rt Hon Douglas
Bean, R. E.	Duffy, A. E. P.	Jeger, Mrs Lena
Benn, Rt Hon Anthony Wedgwood	Dunn, James A.	Jenkins, Hugh (Putney)
Bennett, Andrew (Stockport N)	Dunnett, Jack	Jenkins, Rt Hon Roy (Stechford)
Bidwell, Sydney	Dunwoody, Mrs Gwyneth	John, Brynmor
Bishop, E. S.	Eadie, Alex	Johnson, James (Hull West)
Blenkinsop, Arthur	Edge, Geoff	Johnson, Walter (Derby S)
Booth, Rt Hon Albert	Edwards, Robert (Wolv SE)	Jones, Alec (Rhondda)
Boothroyd, Miss Betty	Ellis, Tom (Wrexham)	Jones, Barry (East Flint)
Bottomley, Rt Hon Arthur	English, Michael	Jones, Dan (Burnley)
Boyden, James (Bish Auck)	Ennals, David	Judd, Frank
Bradley, Tom	Evans, Fred (Caerphilly)	Kaufman, Gerald
Bray, Dr Jeremy	Evans, loan (Aberdare)	Kelley, Richard
Brown, Hugh D. (Provan)	Ewing, Harry (Stirling)	Kerr, Russell
Brown, Robert C. (Newcastle W)	Faulds, Anthony	Kilroy-Silk, Robert
Brown, Ronald (Hackney S)	Fernyhough, Rt Hon E.	Kinnock, Neil
Buchan, Norman	Flannery, Martin	Lambie, David
Butler, Mrs Joyce (Wood Green)	Fletcher, Ted (Darlington)	Lamborn, Harry
Callaghan, Jim (Middleton & P)	Foot, Rt Hon Michael	Lamond, James
Campbell, Ian	Ford, Ben	Latham, Arthur (Paddington)
Canavan, Dennis	Forrester, John	Leadbitter, Ted
Cant, R. B.	Fowler, Gerald (The Wrekin)	Lee, John
Carmichael, Neil	Garrett, John (Norwich S)	Lestor, Miss Joan (Eton and Slough)
Carter, Ray	Garrett, W. E. (Wallsend)	Lewis, Ron (Carlisle)
Carter-Jones, Lewis	Gilbert, Dr John	Lipton, Marcus
Cartwright, John	Ginsburg, David	Litterick, Tom
Castle, Rt Hon Barbara	Golding, John	Loyden, Eddie
Clemitson, Ivor	Gould, Bryan	Luard, Evan
Cocks, Michael (Bristol S)	Gourlay, Harry	Lyon, Alexander (York)
Cohen, Stanley	Graham, Ted	Lyons, Edward (Bradford W)
Coleman, Donald	Grant, George (Morpeth)	Mabon, Dr J. Dickson
Colquhoun, Ms Maureen	Grant, John (Islington C)	McCartney, Hugh
Concannon, J. D.	Grocott, Bruce	McElhone, Frank
Conlan, Bernard	Hamilton, James (Bothwell)	McGuire, Michael (Ince)
Cook, Robin F. (Edin C)	Hamilton, W. W. (Central Fife)	Mackenzie, Gregor
Corbett, Robin	Hardy, Peter	Mackintosh, John P.
Cox, Thomas (Tooting)	Harrison, Walter (Wakefield)	Maclennan, Robert
Craigen, J. M. (Maryhill)	Hattersley, Rt Hon Roy	McMillan, Tom (Glasgow C)
Crawshaw, Richard	Hayman, Mrs Helene	McNamara, Kevin
Cronin, John	Healey, Rt Hon Denis	Madden, Max
Crosland, Rt Hon Anthony	Heffer, Eric S.	Magee, Bryan
Cryer, Bob	Hooley, Frank	Mallalieu, J. P. W.
Cunningham, G. (Islington S)	Horam, John	Marks, Kenneth
Cunningham, Dr J. (Whiteh)	Howell, Rt Hon Denis	Marquand, David
Marshall, Dr Edmund (Goole)	Price, William (Rugby)	Thorne, Stan (Preston South)
Marshall, Jim (Leicester S)	Radice, Giles	Tierney, Sydney
Mason, Rt Hon Roy	Roberts, Albert (Normanton)	Tinn, James
Maynard, Miss Joan	Roberts, Gwllym(Cannock)	Tomlinson, John
Meacher, Michael	Roderick, Caerwyn	Torney, Tom
Mellish, Rt Hon Robert	Rodgers, George (Chorley)	Tuck, Raphael
Mendelson, John	Rodgers, Wiliam (Stockton)	Urwin, T. W.
Mikardo, Ian	Rooker, J. W.	Varley, Rt Hon Eric G.
Millan, Bruce	Roper, John	Walden, Brian (B'ham, L'dyw'd)
Miller, Dr M. S. (E Kilbride)	Rose, Paul B.	Walker, Harold (Doncaster)
Mitchell, R. C. (Solon, Itchen)	Ross, Rt Hon W. (Kilmarnock)	Walker, Terry (Kingswood)
Molloy, William	Rowlands, Ted	Ward, Michael
Moonman, Eric	Sandelson, Neville	Watkins, David
Morris, Charles R. (Openshawe)	Sedgemore, Brian	Watkinson, John
Mulley, Rt Hon Frederick	Shaw, Arnold (Ilford South)	Weetch, Ken
Murray, Rt Hon Ronald King	Sheldon, Robert (Ashton-u-Lyne)	Wellbeloved, James
Newens, Stanley	Shore, Rt Hon Peter	White, James (Pollock)
Noble, Mike	Short, Rt Hon E. (Newcastle C)	Whitehead, Phillip
Ogden, Eric	Short, Mrs Renée (Wolv NE)	Whitlock, William
O'Halloran, Michael	Silkin, Rt Hon John (Deptford)	Willey, Rt Hon Frederick
O'Malley, Rt Hon Brian	Silverman, Julius	Williams, Alan Lee (Hornch'ch)
Orme, Rt Hon Stanley	Skinner, Dennis	Williams, Rt Hon Shirley (Hertford)
Ovenden, John	Small, William	Williams, Sir Thomas
Owen, Dr David	Smith, John (N Lanarkshire)	Wilson, Rt Hon H. (Huyton)
Padley, Walter	Snape, Peter	Wilson, William (Coventry SE)
Palmer, Arthur	Spearing, Nigel	Wise, Mrs Audrey
Park, George	Spriggs, Leslie	Woodall, Alec
Parker, John	Stallard, A. W.	Woof, Robert
Parry, Robert	Stoddart, David	Wrigglesworth, Ian
Pavitt, Laurie	Strang, Gavin	Young, David (Bolton E)
Peart, Rt Hon Fred	Strauss, Rt Hon G. R.
Pendry, Tom	Taylor, Mrs Ann (Bolton W)	TELLERS FOR THE NOES:
Perry, Ernest	Thomas, Jeffrey (Abertillery)	Mr. Joseph Harper and
Phipps, Dr Colin	Thomas, Mike (Newcastle E)	Mr. Jobn Ellis.
Prentice, Rt Hon Reg	Thomas, Ron (Bristol NW)

Question accordingly negatived.