§ 6.39 a.m.
§ Mr. Ron Thomas (Bristol, North-West)
I am sure that my hon. Friend the Under-Secretary of State will understand when I say that I am disappointed that the Minister of State is unable to be with us at this early hour of the morning. I say that because, with one or two honourable exceptions, I do not know of any other Minister who has continually made himself so readily available to listen to the representations of those who work in the aerospace industry and, indeed, has been prepared to go to all parts of the country to hear what aircraft workers have to say.
I think my hon. Friend will also agree that, if Britain is to retain any semblance as a manufacturing country, we need to concentrate more of our economic resources on industries of high technology—industries which push forward the frontiers of technological advance and which have a high value-added or conversion ratio. Few, I think, could dispute that the British aerospace industry leads the field in these requirements. What better example is there of pushing forward the frontiers of technological advance than Concorde, which, of course, is a supreme example and a credit to the innovating skills, talents and creative energies of aircraft workers?
In terms of added value—the essence of any exporting nation—the aircraft industry is well ahead. Its exports of over £800 million in 1976, which are likely to be £1,000 million this year, are, of 809 course, high technology products. They contain little, if any, import content. Their considerable export value is almost wholly made up of the injection of the creativity and skills of aircraft workers. Even given North Sea oil, our survival as a manufacturing nation still depends on our real and only indigenous resource—the skills and creative energies of our working people.
Bristol, as my hon. Friend the Under-Secretary will know, has the highest single concentration of aircraft workers in the country, and Bristolians are rightly proud of a long record of aerospace achievement, culminating in Concorde. I regret that it was not found possible to site the headquarters of British Aerospace in Bristol, because there clearly, I think, was its natural home.
In my judgment, by far the majority of aerospace workers in Bristol welcome the public ownership of BAC and the other airframe manufacturers. At the same time, however, I must in no uncertain tems make clear to my hon. Friend that at the moment there is considerable concern, apprehension and frustration among the aircraft workers I represent. In essence, they are calling for decisions—clear and immediate decisions—to give them confidence for the future regarding their jobs and the industry.
We are told that outside the Soviet Union there are about 1,700 airliners which are eight to 10 years old and about 500 ranging from 14 to 19 years old. Equally, we are told that the estimated potential civil aircraft market will be in the region of £25,000 million in the 1980s and 1990s. Again, we are told that, for example, there is a positively identified market for about 1,200 of the 150-to 160-seater class aircraft by 1990.
I think it is fair to say that aircraft workers want an assurance from the Government that everything conceivable is being done to ensure that British aerospace factories get a sizeable chunk of that market. I want to say as strongly as I can that in no circumstances will aerospace workers, or certainly Labour MPs from Bristol who represent those workers, even begin to tolerate our publicly owned aerospace industry becoming some sort of sub-contractor either to the Americans or, indeed, to anyone 810 else. Of course, we fully realise that a new generation of civil projects will, because of costs and achieving markets, demand a collaborative approach. But the strength and potential of our industry demand that we should take the lead in a more positive, thrusting and aggressive way.
The workers at Filton are angry and frustrated with the threats of redundancies and with the actual redundancies. They want to know what is the Government's attitude to a new supersonic aircraft. They have faith in supersonic travel and see the Americans poised on the touchline ready to come in and exploit our effort. The workers want an assurance that, now that we have a publicly owned entity the work that is available will be shared equitably among the establishments. They want an assurance that there will be a decision on the HS146, as promised. I understand that a decision was promised for January and that a promise was made that the HS146 would be flying in 1981. The Rolls-Royce workers in Bristol want an assurance that the RRM45 engine, and not the Canadian engine, will power that aircraft.
Aircraft workers also would also like to hear the Minister tell Mr. Ross Stainton, the Deputy-Chairman of British Airways, that they and many hon. Members are very angry indeed at his recent prima donna negotiating posture in New York. His statement was the height of irresponsibility, especially at a time when we are engaged in important negotiations with the Romanians on the 111. It is indefensible for the deputy chairman of a nationally owned national carrier to dismiss this aircraft. It would be the economics of lunacy to buy aircraft from the Americans when British Aerospace is capable of producing the product that is required.
No doubt we shall hear a lot about commercial advantage and economic viability, but never in such cases do we see a detailed balance sheet showing the real industrial and social costs to our national industry and the multi-powered effect of such decisions.
When private firms use such arguments, they are always tainted with hypocrisy. For example, a few days ago we were told that the saving of imports, which is linked to British Airways new 811 orders was sufficient to justify giving £10 million to Unilever, a multinational company. For its £100 million investment in Workington, that company will get a 22½ per cent. investment grant—that is an other £22½ million. On the assumption that this investment results in a profit, the firm will receive a 100 per cent, depreciation allowance. In 10 years' time the taxpayer wil have paid for it all.
We have the right to expect that publicly owned industries have a wider vision of the total repercussions of their actions. We are not clear whether Government thinking in terms of the future is one project based on our own resources or more than one project in co-operation with other European countries. If the latter is the case, I suggest that aircraft workers also want to see a much more confident, hard-hitting and aggressive approach in support of the X-11 to carve out a chunk of the market mentioned earlier of about 1,200 medium civil aircraft by 1990.
I understand that the X-11 is ready for launching while the A200 is unlikely to be ready before the two American competitors enter the field. I understand also that work would be immediately available to the airframe industry if a way can be found to co-operate over the A200. There are in essence, therefore, a whole range of decisions which are urgently and positively required to give workers in the industry confidence in the future, and that is something they have a right to expect from a publicly owned industry and a Labour Government.
§ Mr. Geoffrey Pattie (Chertsey and Walton)
In view of the hon. Gentleman's well-known reticence on defence matters, does he welcome the F111 repair work that his workers are doing in Filton, or does he think that that work should be done in some other part of the British aerospace industry?
§ Mr. Thomas
I have always made it clear that I would much prefer that the innovating skills of the workers in the aircraft industry were used on something other than defence. I have also made it clear, however, that while we have a million and a half people unemployed, I am not advocating that we put skilled aircraft workers into dole queues. But it 812 would be indefensible to suggest that the only way we can employ the wonderful skills that these workers have is on weapons of destruction, because if that is the case it is clearly an indictment of our society and it is something that I and, I hope the hon. Gentleman would very much regret. When hospitals in my constituency are crying out for kidney machines and I see the sort of work done by Lucas aerospace shop stewards, it makes me want to see the workers now engaged on defence work employed on something much more socially desirable.
I turn now to the overall structure of the industry. Rightly or wrongly, I have always believed that our nationalisation proposals should have embraced both the airframe and the engine sectors in one publicly owned aerospace industry.
I realise that there are arguments suggesting that Rolls-Royce should remain under the umbrella of the National Enterprise Board, but there are more convincing arguments for a fully integrated aerospace industry. Those arguments will be even more convincing in the future. We need to examine more closely the relationship of the national carrier to British Aerospace. That has become even more urgent in view of Mr. Ross Stainton's remarks, although I am not surprised, with some of the people who are appointed to public boards, at the sort of statements we hear. I remember one individual, I think on the day he was appointed to a board, making it clear that he was absolutely opposed to nationalisation.
I am far from happy with the management organisation proposed by British Aerospace. The report published in October by British Aerospace on the structure of the industry proposed the splitting of the organisation into two groups, aircraft and dynamics. In my judgment, this will lend itself far too easily to a future Tory Government, if we ever get one—it looks very doubtful at the moment—hiving off the profitable military guided weapons group, or part of that group, the profits of which are guaranteed by the taxpayer.
I believe that at Filton the proposal would create divisions between groups of workers, who to all intents and 813 purposes share a common site and common services, rather than what is suggested in the British Aerospace report:An essential feature of the new organisation is a desire to maximise the advantages of unity and to encourage loyalty to the new Corporation.The idea that at Filton there should be this far more clear-cut division than we have at the moment between guided weapons and dynamics and airframes seems to be rather ludicrous. The proposed structure is hardly likely to assist the proposals on industrial democracy which are set out in the other report which has just been published.
In any event, I make it clear to my hon. Friend that I find the industrial democracy report very disappointing, indeed. The amendment which the Government accepted, that "it shall be the duty of each Corporation to promote industrial democracy in a strong and organic form", was almost word for word the amendment which my colleagues and I pushed in Committee. In the report, however, the definition is written in terms of joint consultation, participation and so on, and not, as we had hoped, in terms of real and effective involvement in decision-making. I am sure my hon. Friend will know that over much of British industry joint consultation is seen by management simply as telling the workers what management intends to do.
I remember the famous report on the Ford Motor Company. When it was suggested to the employers that the unions had a complaint because there was not sufficient consultation, Ford's response was "We do not understand why they should make that compaint, because we always tell them what we are going to do." It is either a system of telling workers what they are to do or a system in which there are long discussions about the canteen tea and the state of the toilets.
The aircraft workers' support for public ownership of the aircraft industry was based, as I am sure my hon. Friend realises, on a vision of a different kind of public ownership from that which we had in the past. The key to unlock that vision, in my judgment, is contained in the section of the Act placing for the first time a duty on the board to develop industrial democracy. I can only hope 814 that these interim proposals are soon replaced by some positive steps towards meeting the demands of those who work in the industry to be really involved in the decisions which affect their working lives.
§ 6.59 a.m.
§ Mr. Norman Tebbit (Chingford)
I suppose that I might observe to the hon. Member for Bristol, North-West (Mr. Thomas) that the degree of interest and concern which Her Majesty's Government show for the aircraft industry, which affects the constituents of the hon. Member so greatly, is perhaps best expressed by the fact that we are discussing that industry at 7 o'clock in the morning, that to answer the debate we have the most junior Minister that the Government could find, and that, despite all we have sought to do, we have still not had any Government time to discuss the proposals from the Commission relating to the European development of the industry or the Commission's proposals for a programme of research for the industry. That puts it in its proper setting.
What we heard from the hon. Member for Bristol, North-West was, I suppose, a typical Adjournment debate speech. It could have been made any evening had the hon. Gentleman been fortunate enough to have gained a debate on the Adjournment. I suspect that the quality of the reply will not be very different.
Of course I hope—I always live in hope—that things may get better. I hope that the Minister will make a sensible, responsible speech that is full of information and full of answers to questions that hon. Members have asked. I hope that we shall hear whether the HS146 is to be launched. I hope that we shall hear what the Government are going to do about organic growth, and all that sort of industrial democracy stuff, in the industry. I hope that we shall hear about the X-11, what the precise status of that project is and what were the Government's reasons for agreements that have been reached about that project with the French.
I hope that we shall hear precisely what the Government are going to do about the next generation of supersonic transport and which engine will go into the 146 if it is produced. I take it that the Minister knows. Perhaps I am asking too much. I take it that somewhere 815 there is a civil servant who is capable of writing the answers on a piece of paper and that the Minister is capable of reading them out.
I shall not approach this subject in a partisan manner. The hon. Member for Bristol, North-West laughs. But I am repeating his questions and asking for his questions to be answered. I have a feeling that as we walk out of the door at the end of this debate the hon. Gentleman will say "We did not get any answers, did we?" He knows darned well that we shall not get any answers.
I shall not be partisan, because until the next Government are elected the question of the ownership of the industry is not at issue. The question of how it will earn its living is at issue, and that is what we are talking about. The Government must understand that they own an industry and that they are responsible for providing the capital which the industry requires or for telling the industry why it cannot have the capital.
§ Mr. Ron Thomas
I am grateful to the hon. Gentleman for giving way at this terrible hour. By implication, he was suggesting that if perchance a Tory Government are ever elected they will possibly denationalise the airframe part of the industry or even Rolls-Royce. Is that what the hon. Gentleman has in mind?
§ Mr. Tebbit
The hon. Gentleman is unnaturally perceptive for this hour of the morning. That is not what we are discussing at the moment. The Government have to run the industry—good God, let us save it from being run by the Government. Rather, they have to provide the funds and see that they are prudently used. I take it that the half-dozen of us who are present in the Chamber at 7 o'clock in the morning to discuss this great industry are at least agreed that there should be a British industry.
I take it we are agreed that there should be an industry for reasons of defence. As I understand it, however, the hon. Member for Bristol, North-West would prefer that we did not have any defence. So would I, if I could believe that there was not a potential threat against us.
I take it we are agreed that we should have a policy for the purpose of backing 816 the industry's great efforts in the export market and with regard to import substitution—the area to which the hon. Gentleman referred—and for the spin-off of a high technology industry, not least management techniques.
I take it we are agreed that we should have an industry for the effect that it will have as a research and development pacesetter and as a market for other advanced industries and, not least, for the employment opportunities it offers, especially in the regions. After all, distance is no object when one is manufacturing aircraft. There is no particular economic disincentive for running such an industry in the regions.
On the other hand, the industry is greedy in its demands for resources. That is the very subject of this debate. It hogs a large proportion of Government research and development funds. It hogs many skilled technicians which, it is conceivable, could be better used elsewhere. It hogs a large part of Government aid to industry. Lastly, it is seldom profitable on civil projects.
I fancy that it would be out of order to dwell upon the military aspects of the industry, but they are an important backcloth, and sometimes I wonder whether, even now, Government Ministers and Back Benchers realise that when the TSR2 was cancelled the cost of Concorde were vastly escalated, because from that moment Concorde was the only user of the supersonic version of the Olympus engine. That made a great deal of difference to the look of the Concorde costs.
In broad terms, the civil side of the industry employs about half as many people as the military side, so it will be a long time before the hon. Member for Bristol, North-West sees come to pass his dream of an industry which is dependent primarily on civil work.
Over the years, our performance on the civil side of the industry has been mixed. If we are to consider the wise use of this and other money that the Government may bring forward for the industry, we ought to recollect how mixed it has been.
There have been a number of failings too often present. Concepts have often been too advanced for the technology available or for the state of the market. I think of projects such as the Comet 1, the Brabazon, the first airbus, which was 817 probably 30 years too early, and Concorde, the first supersonic transport, probably in advance of the technology available to do the job commercially. One can even go back to the R101.
One has to ask on many occasions how many of these projects have been political as opposed to commercial projects. We have exhibited a preference for new projects rather than for the development of current aircraft. We have neglected the development of families of aircraft in favour of going for another new one. Perhaps this is a case where the Americans have shown us that family planning means bigger families and not smaller ones. Perhaps that has been because it has been easier to obtain launching aid and other Government aid for new projects than it has been to get assistance with carrying through projects to their proper fruition.
We have suffered from excessively close tailoring of projects to the requirements of BOAC, BEA and now British Airways—the so-called captive home market. It may have been captive, but it has often seemed to escape, and the hon. Member for Bristol, North-West is upset now that the market may escape again. He would do better to ask himself why that market escapes. He would do better to consider how it was that BEA favoured the Apollo rather than the Viscount originally and got it wrong, how it close-tailored the design of the Trident in a way which prevented its being a success on world markets, how it rejected the 111, which is the closest thing to a success that the British industry has had in recent years, and how it specified the Vanguard and the VCIO, neither of which was successful in the world market.
We have the traditional British failing of a rather poor world market assessment, of marketing which could have been better and of a lack of political support in export markets by Governments. We have suffered often in the past from less than good project management, from time slippage which is cost slippage, and from time slippage which means slippage in orders. We have suffered from poor labour productivity and an inability to shed labour to keep the industry viable when the market has decreased.
That is how Boeing has got to the position where it sells half the civil jet trans 818 ports in the world. It is flexible and has been able to contract and expand as the market has contracted and expanded. Boeing builds aircraft for customers. It does not engage in occupational therapy for its workers. They are successful. I would rather work for Boeing than BAC if I were an aircraft worker. At least my job would be more secure.
We suffer from restrictive practices, inflexible labour and short production runs. The figures show just how short—and I am dealing here with comparable aircraft. The figures are: VCIO, fewer than 100; Boeing 707, almost 1,000; Trident, 80; Boeing 727, 1,500; BAC 111, 250; DC9, 850. Only the Viscount with around 500 had any real success in commercial terms.
If we are to get it right, we must remember the things in our favour. We have very able design teams, highly skilled labour and a work force that is hungry for work at all levels from the top to the bottom. Over the past five years there has been an increasing awareness of the faults and an increasing determination to cure them.
How is this money to be spent against that background? Let us turn to Rolls-Royce. Can the Under-Secretary say whether the corporate plan is expected to be approved very soon? Back in April we were told that it would be. What progress has been made on that front? What are the prospects for new sales opportunities for the RB211? Tri-Star sales are still not good and the RR747 has not sold, other than to British Airways. How much of the money will go towards getting the performance of this aircraft, with Rolls-Royce engines, up to expectations. Prospective customers know that it is not up to expectations. Rolls-Royce maintains—and I think it is true—that it can bring the aircraft up to performance. What progress has been made?
Are any decisions being made for extension of the RB211 family? It has been suggested that there will be. Is any of this money going towards the M45 programme? If it is to be supported, into which aircraft will the M45 go? Which engines will fill the gap between the M45 and the RB211? I hope that the Minister is taking note of these questions. He does not appear to be writing anything down, but perhaps 819 he has an extremely good memory or is relying on his Civil Service briefs.
On 27th April the Public Accounts Committee interviewed NEB representatives about Rolls-Royce. They told the Committee that the company had been spending more than £50 million a year on R & D. Is any of that money coming from the Vote? Lord Ryder gave some interesting replies about that. Intriguingly, he observed that, had it not been for the fact that £50 million was spent on R & D, Rolls-Royce would have made a profit, not a loss. That may be fundamental arithmetic but it is irrelevant to running a company. How much was out of funds voted by this House? The Committee was told by Dr. Lickley that whether the new civil aircraft had two by 50,000-lb. trust engines or three by 30,000-lb. thrust engines, Rolls-Royce would be well placed to supply them.
Can the Minister remind us what engines it is proposed to put on the BACX11 if that were ever to be launched, or on the collaborative JET, the joint European transport project? Am I right in thinking that in both cases it is proposed that it will be the CFM56, an engine of about 20,000-lb. thrust? If so, was Dr. Lickley right in giving the view of the National Enterprise Board that Rolls-Royce was well placed to get the order to put the engines on the new transport? What is Rolls-Royce doing to secure orders on this class of aircraft which, it is proposed, will be constructed in Europe?
I turn now to airframes and refer first to Concorde. As the Eighth Report of the Public Accounts Committee points out, and as is generally known, the line runs out in 1978, and this huge investment, equal to one year's losses on the British Steel Corporation and the Crown Agents' City adventure combined, is likely to be gone without any further result. What are the plans to exploit that expenditure? Is there any spending on this programme to see whether there is a commercial use for the technology which we have gained? Is there an intention to go for a new supersonic transport?
I take next the Hawker Siddeley 146 programme. I remind the Minister that I advocated the fifty-fifty venture between 820 Hawker Siddeley and the Government, and that formula was proved to be correct when Hawker Siddeley pulled out on commercial grounds. The company made plain that, if the Government wished to indulge in a non-commercial course and proceed, it would act as a contractor, and the project would have become a sort of mini-cost-plus Concorde, because there would have been no incentive fur the manufacturer to keep costs down. Because Hawker Siddeley was sharing profit and loss fully with the Government, it had to decide whether the project was commercial.
Nothing that I have heard since that cancellation makes me believe that that has become a more commercial venture. Indeed, the current proposals, which, understand, are for a collaborative project, which is certain to increase the cost, and with engines which the hon. Member for Bristol, North-West advocated, which are not optimum engines for the aeroplane, suggest to me that the commercial liability of the aeroplane is lower now than it was at the time it was cancelled. My fear is that it will be launched for political and not commercial reasons. We recall that Hatfield is a marginal seat. and the Hawker Siddeley factories in Manchester are not all that far from Ardwick, so we have our doubts about the motives for launching the project.
Now we have had the bad news of the so-called shelving of the BACX11. I say "bad" because the X11 team showed every sign of having taken on board almost all the failings which I have listed. It has understood them, and in the X11, in my view, it has dealt with them. But the X11 is not shelved. It is in the garbage bin. My hon. Friend the Member for Chertsey and Walton (Mr. Pattie) will deal with that in detail, and I say only that the effect on prospective customers of setting the X11 aside for the JET proposal, apart from the seriousness of the delay itself, is to put the X11 under not a dust sheet but a shroud.
Now we have the JET, the joint European transport—or perhaps we do not have it. I understand that British Aerospace originally claimed that it should have design leadership, final assembly and control of marketing of such a project. Is the Government's intention to 821 support the JET project if those conditions are not met? Is it true that those demands are already being watered down?
It is no good the Minister reading the notes for the speech he got ready before he came into the Chamber. It is about time he started taking some notes to answer some of the questions which are being put to him.
Finally, since I do not want to detain the House and hold up other debates, let me turn to a completely different area. I wonder how many hon. Members realise that last year the Beech Corporation delivered 1,250 aircraft, and Piper delivered its one hundred thousandth aircraft last year. Cessnar pushed total sales of its 150 to 23,000 units, of its 172 to 27,000 units, and the twin-engined 310 series to 4,500 units. Do the Government know about the light aircraft industry, and have they any proposals for a light aircraft industry? Do they care? Are they interested? Has the Beagle experience finally convinced the Government that there is no prospect for a British light aircraft industry?
Does the Minister know that there is a proposal for a design competition for a commercially viable British light aircraft in a mass market? Would he feel that such a competition should be supported? Would he consider using funds from this account to invite a technological miracle of British design to out-fly and outsell rivals in the States and on the Continent? It is no good the Minister looking bored and huffing and puffing. I know that it is 7.20 a.m., but it is his job to answer the debate and he had better start thinking of the answers.
Would £100,000 of petty cash out of this account be suitable to stimulate construction of prototypes and development of a marketable project?
The subject tonight is too wide for one to be able to do more than dip lightly here and there, and from the attitude of the Minister I fancy that even that will be a waste of time. It is a matter of the deepest regret that the House has not yet been able to discuss the industry and its relationship with Europe. I hope, at least, that the Minister might think just for a moment of answering some of the questions instead 822 of spreadeagling himself in a pose more suitable for the British aircraft industry, because that has been crucified, too.
§ Mr. Terry Walker (Kingswood)
The hon. Member for Chingford (Mr. Tebbit) has posed a number of questions to the Minister, the answers to which will take up perhaps the whole of his reply, and in the course of what I have to say I shall be posing a few more questions to my hon. Friend. However, I should say to the hon. Member for Chingford that I enjoyed his look back into the recent past—since the war—and the projects that we have undertaken as a nation. It strikes me that, as the hon. Member said, on a number of occasions, we were probably ahead of our time and we have suffered because we have launched projects ahead of time. There was the Brabazon, which was an aircraft ahead of its time, and we in Bristol suffered dearly for it. We thought then of the lunacy of such a large aircraft flying in the skies, yet we have only to look at the jumbos to see how wrong we were.
The need for the United Kingdom to come forward with new aircraft projects is now overwhelming, and many employed in the industry and many hon. Members are impatient for the new corporation, British Aerospace, to come forward with firm plans for the future. Development of the industry is extremely important. We rejoice at the birth of British Aerospace and hope that it will not take too long to make up its mind about which way it will move, because all the time—this point has already been put today—our competitors, both in Europe and in America, are watching and waiting to see which way the British industry will develop. British Aerospace has to create its own identity as a new corporation. It was born from companies like BAC and HSA, and to think in terms of British Aerospace as a corporation will take a long time for many of us.
I always think that when Bristol people talk about BAC they are referring not to the British Aircraft Corporation but to the Bristol Aircraft Company, which disappeared many years ago. Old attitudes die hard, and old opinions can often adversely affect the thinking of new companies. It is important for the new corporation to have a new start and a fresh approach.
823 Many people in the British Aerospace management structure made up many of the managements of the old companies, and they fought hard and long against nationalisation of the industry. Many of those in the management structure of the old companies failed those companies. If British Aerospace is to thrive, as we all hope it will, those attitudes must change.
One of the problems of public ownership has been getting the right people to run the nationalised corporations. I am a little concerned about the way we are developing. The overriding problem is to get people of the right calibre with the vision and drive to run these corporations when we bring public ownership proposals to fruition. This is a matter that the Government will have to consider carefully, especially in future appointments to the board. I shall say no more on that subject, because, to be fair to the individuals concerned, it is early days yet. We want a more positive attitude in future, because the lives of many of our constituents are at stake.
§ Mr. Tebbit
I do not want to develop this topic in a personal way, but would the hon. Gentleman accept that the take-home pay of the top management in our nationalised corporations looks pretty ridiculous when compared with what men of ability who run organisations of a similar size receive in the United States, Germany or France? Is it not about time that we recognised the old American adage that if we pay peanuts, we get monkeys? Many people apply that adage to this House as well.
§ Mr. Walker
The hon. Gentleman has a point. The calibre of people is importtant, and I would not shirk the responsibility of paying the rate for the job. That is where we fall down. We think we can penny-pinch, but we cannot. We get second class rather than top class. We need the best if we are to succeed.
The British aviation industry is fighting for its life against its competitors. If we do not expand and prosper, we shall shrink and in future we shall be compelled to rely on our competitors to produce aircraft for us. Our technology will quickly be exported. I recognise that the projects that we hope British Aerospace will bring forward will have to be considered carefully and will have to be viable, but while we await them decisions 824 have to be made. Reference has already been made to British Airways having to decide on the replacements for its short-haul fleet. That decision will not wait very long, and it is important that British Airways should know exactly what is happening in British Aerospace.
The proposal by Mr. Ross Stainton, the Deputy-Chairman of British Airways, to consider buying American aircraft as replacements for British Airways' older short-haul aircraft is the height of irresponsibility. It is a kind of madness that we should spend £120 million on American aircraft when our own industry, if it is properly organised, is perfectly capable of producing the aeroplanes required.
To my mind, the BAC111 is perfectly capable of fitting the bill. I recognise that that there have been problems with regard to the Spey engine and that there is a noise factor about this which inhibits the development of BAC111s, but improvements are a distinct possibility. What we all hope is that if modifications to the engines are made they will be acceptable, and certainly it will be 111s that British Airways will go for. It is of the utmost importance, because at a time when we are trying to sell BAC111s to the Romanians what would they think if our own flag-carrying airline did not have the confidence to purchase 111s itself?
Secondly, I believe that to buy aircraft from America would be going very close to economic suicide and would result in a loss of jobs and job prospects within British Aerospace. For a long time the Americans have done their best to bring about the ruin of the British aircraft manufacturing industry. They have not helped us much by keeping Concorde out of New York for so long. To go to them to produce aircraft for us would be most galling, indeed, and would be a blunder of baffling magnitude, and it could eventually lead to the end of Great Britain as an aircraft producer.
I believe that British Airways must certainly be kept in close touch with the situation within British Aerospace. When a decision has to be made about replacing the Tridents, British Airways should be persuaded to buy British if that is at all possible. I hope that there will be close liaison between my right hon. and hon. Friends at the Department of Industry and 825 those at the Department of Trade, because, of course, it is the responsibility of the Department of Trade to supervise the affairs of British Airways. It is certainly very important that close liaison is exercised to overcome the problems that we now face.
As I have said, I believe it is important that we come forward with proposals for the future. My hon. Friend the Member for Bristol, North-West (Mr. Thomas) has mentioned the go-ahead for the HS146 project. That project has been kept on ice for a long time. It has been funded by the Government. I believe that a decision must be made now one way or the other. It is fair that a decision should now be made. There is a need for this kind of aircraft.
My hon. Friend the Member for Bristol, North-West also mentioned the M45 Rolls-Royce engine. If it is at all possible, I think that we should go ahead with the British engine because there is a need, and certainly our information is that there is a need for more work at Rolls-Royce as well as at the BAC works at Filton. We should be thinking of job prospects within the industry. If that project were proceeded with, it would overcome the problems of the run-down of the Concorde lines in the Bristol area. Surely that is something that has to be done. Too often in the past we have tended to dilly-dally. The decision, for example, on the HS146 has been delayed too long. The answer should be given one way or the other. That cannot be shirked.
Reference has been made to the X11 as a medium type aircraft. The hon. Member for Chingford naturally made reference to it because there are not only rumours but articles about it in the newspapers. There is a need for a reply to be given about the present position, which is extremely worrying.
It is true, as has already been said, that there is a world market for about 1,200 X11 aircraft by 1990. The Americans are trying their best to delay the European decision as long as they can because they have their aircraft, the DC 9-80. They have already been given orders for that aircraft. The British Aerospace X11 and the French A200 are both 150-seaters and are in a lucrative market 826 that the European collaborative set-up must not allow to escape. Whether we proceed with the X11 or whether we go in for JET, there is a need for some decisions to be made.
It would be futile to go ahead with a project of such magnitude on our own. I believe that it would be beyond our financial capabilities. We must go forward with some kind of leadership, because we need to get some partners within Europe if we are to proceed. The options now seem to be narrowing themselves down. Newspaper reports seem to indicate that we are ditching the whole idea of the X11. It is said in one newspaper report that we are goinginto a kind of fall-back position".I do not see how we can go into that sort of position. As has already emerged in the debate, we are thinking of building not only for home consumption but for selling to the airlines of the world. To go into a fall-back position really means the end of the whole affair in terms of making it a viable proposition. The reports need to be clarified.
The Concorde programme is of concern to my hon. Friend the Member for Bristol, North-West and myself. The statements over the past few days following the visit of the French President to the Prime Minister in London seem to indicate that the Government and the French Government have reaffirmed their position of the past that there should be no further Concerdes built until such time as there are further orders. We have reluctantly accepted that position. I cannot say that all those to whom we speak in the industry would accept it. However, I believe—I have said this in the House to my hon. Friend the Under-Secretary of State and to the Minister of State in his Department—that, because of the money that has been spent and the high level of technology that we have developed, there is a need to get together both production teams and design teams so that when there are further orders, as I believe there will be, we are in a position to build more Concordes.
We are doing work on the military side, and I believe that that is completely acceptable in order to keep the work force together. It is a sensible thing to do, but I do not want us to be simply servicing F111s for ever. We cannot keep a 827 viable aircraft production unit in Bristol if we merely service a few aircraft for the Americans occasionally.
However, as Concorde is now into New York, the whole future of the Anglo-French supersonic aircraft is different. Sooner or later Pan-Am and TWA will have to consider leasing Concorde from us if they are not to be left behind in the Atlantic race. It would be helpful if my hon. Friend could say something about that. There have been discussions about the matter between my right hon. Friend the Prime Minister and the French President. There have been reports to the House and newspaper reports, but we all want to know a little more of the thinking behind the whole matter.
At the back of all our minds is the belief that there must be a possibility of developing a stretched version of Concorde at some time. I realise that any stretched version would have to have a much longer range, a larger payload and quieter engines. We should need the Americans in as well for it to be a viable proposition.
I emphatically believe that supersonic travel, as initiated by Concorde, is here to stay. It will not go away, whatever happens in America and whatever pressures are put on the viability of the present Concorde. We do not want to waste all the money we have spent, all the technology we have gained and all the sweat of our work force over the past 15–20 years. We want to be in a position to talk to our partners and the Americans about the possibility of going ahead with such a project some time. It will come, and I want to be sure that we are there when a decision is made.
British Aerospace must produce policies to ensure employment and the stability of employment of our highly skilled manufacturing staff, the labour force and the excellent design teams that we have developed. I pay tribute to my hon. Friend the Under-Secretary for all he has done to help us and to the Minister of State, my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) for all that he has done. I must thank them both for the very courteous way in which they have always met Bristol Members when we have had queries. Some of those queries may have seemed rather small to them, but to us they were rather large. 828 I must also thank my hon. Friend the Minister of State for the courteous way in which he has received members of the shop stewards' joint committee when they have come to London and for the help he has given us in furnishing it with information. I am indeed grateful.
I hope that the Government will use their best endeavours to get British Aerospace to come forward with its plans a little more quickly than was at one time envisaged in order that we can outstrip our competitors, in economic and environmental terms, well into the 1980s and the 1990s and keep our lead in the development of aircraft production, of which we are proud.
If we can do that, I am sure we shall ensure prolonged employment for all those in the industry and that we shall be able to keep our industry viable in every sense. But it is important to make decisions looking far ahead in the sure knowledge that we have the skilled work force and the necessary high technology. To achieve that, we must be very sure that we do not become bogged down and lag behind.
§ 7.46 a.m.
§ Mr. Geoffrey Pattie (Chertsey and Walton)
It is very important that we should be having a debate when key decisions have to be taken affecting the British aerospace industry. One does not have to be clairvoyant to see that the civil part of the aircraft industry will face disaster if the right decisions are not taken very quickly.
In this debate we have had a very interesting historical review. My hon. Friend the Member for Chingford (Mr. Tebbit) reminded us of the history of the British aerospace industry. Many exceptional projects—some before their time, some killed by inadequate marketing or being talked to death—have failed to come to fruition. It would not take long for us to have a debate reviewing the existing or potential projects in civil aerospace industry.
We know that Concorde, sadly, must end in the middle of next year, and the only other project at the moment, apart from some work on the Trident, is the BAC111, which the national airline does not wish to purchase. For the future—in which we are all interested at the moment—we are looking to the HS146 829 and the XII. The HS146 is a political aeroplane, and political aeroplanes are rarely, if ever, successful in sales terms. The XII has at least the advantage that it has been extremely well researched. It has been widely toted around the airlines of the world, showing—as my hon. Friend the Member for Chingford so aptly described it—that for once a British sales team seems to have learnt the lessons of the past and to have remembered the American adage, which is simply "Give the customer what he wants."
There has been criticism of the European aerospace industry and of people producing aircraft that have been suitable for indigenous or captive airlines but not so saleable in other parts of the world. But the X11 team has gone round and ascertained what it is that the medium-level interlinked airlines want.
The hon. Member for Bristol, North-West (Mr. Thomas) said that his constituent workers in the industry are calling for decisions. I would say that he is getting those decisions, although they are not being arrived at in the organic way that he pleaded for so eloquently on so many occasions during the passage of the Bill. I do not think that he ever believed that they would be arrived at in that way. I think he had that sinking feeling that things would go on exactly as before, only worse, and that the name over the gate would change but that, instead of having some of the best of the management that we had before, we would have other people. We have all been thinking of one person; his name never remains out of our debates for long. There is the feeling that the name over the gate has changed but that the decision-making process goes on as we knew it before.
The hon. Gentleman also told us that Labour Members of Parliament would not tolerate this absence of decision. It is clear now that a decision on the future of the X11 has been taken. The Prime Minister, when he made his statement on the Summit visit of President Giscard, said that in future commercial considerations would be paramount. I am sure that the Under-Secretary recalls it well.
At the moment, in the key sector of 160-seat aircraft, everyone whose opinion one must value on this kind of matter seems to agree that there is a market for 830 1,200 aircraft of that type in 1990. The question is who will get that market.
We have been dithering about on the edge of the pool long enough already. British Aerospace has spent £2 million working up the X11 to its present position, and it has talked to the airlines that I have mentioned. While we still hesitate and wonder whether the water will be too cold, in come McDonnell Douglas with an aircraft which will do the job but will not be as good as the X11 will prove to be. No doubt Boeing will also enter.
Therefore, we find ourselves asking: are there to be three entrants in this market—the third being the X11 if it is allowed to enter—or four entrants, the fourth being some other aircraft designated variously as the A200, which the French are keen to produce?
One thing that I regret in this kind of debate is that, for shorthand reasons, one is forced into talking about the British project and the French project. I should make clear that which, for reason of space, I was not able to do in an article of mine which appeared recently in The Times—namely, that the X11 is, by historic standards, by no means a British project. The engines, for example, would be French, and various other work would not be produced in Britain. Therefore, we are talking about a project which will be no more than 50 per cent. British.
When I argue for the XII, I am arguing for a project which is now ready to go and which would give the British taxpayer a reasonable prospect of a good return, because all the market research has been done. The team went out and spoke to the airlines, and the airlines said "Yes, we like it. Will you now tell us that you mean business?"
The most serious condemnation of the way that British Aerospace is being run is the suggestion that it is apparently making at the present time. The teams, having gone round the world selling this project, will now be asked to wait until there has been consideration of the A200 project. The hon. Member for Kingswood (Mr. Walker) referred to the Daily Telegraph, which talked about a fall-back position. It sounds to me like a long fall-back. It has been put on the shelf, or whatever the phrase is.
§ Mr. Pattie
Or, as my hon. Friend said, the drop dead position. I suggest that, no matter what market we are talking about, in straightforward human, psychological terms, there is no way that any sales team from any country with any product can offer that product and, a short time later, say "We are not offering that product. We are offering another product in its place" and then, some time later, say "Do you remember the first product that we offered you which was replaced by another product? Well, we have dropped the replacement product, and we are now going to offer you the first product."
What would a prospective purchaser, whose money had to go on the table, say to that? We have not got the market to ourselves. While newspaper reports are coming out saying that the X11 is canned in the fall-back position, McDonnell Douglas and Boeing, being the good competitive people they are, will be placing those Press cuttings before the bosses of Ozark and other airlines which are, or were—one has to use the word "were"—close to signing letters of intent. Within weeks we were actually receiving letters of intent to purchase the X11, but the project has been held back in the fashion of a latter-day Grand Old Duke of York who marched his troops up the hill and then marched them down again. There is no way that we can revitalise the project.
Many people in the industry would welcome the choice that was put before the manager of British Aerospace. On the one hand, there is the X11, a derivative aircraft with known technology with none of the extra risks involved in a totally new project and which is ready now. On the other hand, there is the A200, which is to be studied by a joint engineering team. It is a new aircraft of which the world aviation consensus is that it will not be economically desirable or feasible for this purpose.
It will cost an extra £100 million on top of the cost of the X11 to go for the A200. That extra cost will mean that the unit cost per aircraft will be higher, it will be more difficult to sell and more will have to be sold to reach the break-even point. I should have thought that the glimmerings of an inclination towards a decision might emerge from that.
832 It is not a case of whether it is invented here or whether it is given to France—which we do not like to do. It is the case of two projects—one of which will make a loss and the other of which will make money. If the Prime Minister says that commercial considerations are paramount, I hope that the Under-Secretary will say that commercial considerations are paramount and that the Government will step in. Let the Government step in and make these decisions which the hon. Member for Bristol, North-West wants and which have been taken already without his knowing anything about them.
This is a plea for the future of a once great industry. Can the Minister say whether a memorandum of understanding has been signed already which, in effect, not only takes account of the X11 being put on the backburner but waves away the so-called rights that we were hoping to have in the A200? Even if we go for the A200, we should build it. But can anyone imagine that the French, with their determined chauvinism, would allow that? If one believed that, one would believe anything.
I have reason to believe that a document already exists bearing certain key signatures and which indicates not only the death of the X11 but the surrender of whatever rights all hon. Members wish to see maintained for British Aerospace. The French are determined to maintain their aerospace effectiveness, and they do not mind at whose expense they do this. We all know at whose expense it would be.
In the last few days, with no accountability to Parliament and no debate in the House, a decision has been taken which is tantamount to saying to British Aerospace that it should get into a warm bath and cut its wrists. None of us wants to see that.
§ 8.0 a.m.
§ The Under-Secretary of State for Industry (Mr. Les Huckfield)
I welcome this opportunity to debate the present and future of what I, too, regard as a very important industry, though I regret the hour at which this is being done. I can only say to the hon. Member for Ching-ford (Mr. Tebbit) that if he really feels that matters concerning the aircraft industry ought to be pursued with the vigour with which my hon. Friends the 833 Members for Bristol, North-West (Mr. Thomas) and Kingswood (Mr. Walker) pursue them, the Opposition have their own ways of doing that within the parliamentary timetable. I am sure that the hon. Member, who has been here a fair amount of time, understands the ways which are open to him.
§ Mr. Huckfield
I would prefer not to give way to the hon. Gentleman but to make progress, particularly after some of the nasty and insinuating comments that I had to listen to while the hon. Member was on his feet.
I congratulate my hon. Friends on the vigour with which they have pursued the interests of their constituents and of the British aerospace industry. Certainly they have made significant contributions, and I believe that they have the interests of British Aerospace and their constituents at heart. They are right to do this, particularly in view of the successes which have been achieved and the successes which the House should hear about, and particularly when one recalls the overall performance of the British aircraft industry. It is far from mixed as the hon. Member for Chingford suggests. To date, some 219 BAC 111s have been delivered, about 150 of them to export markets. British Aerospace is actively pursuing discussions with Romania and Japan for future sales of 111s. If those discussions are successful, they will mean substantial export earnings and employment for the United Kingdom.
Some 313 HS748s have been delivered, about 260 of them to export markets. While there have been problems, we hope that there will be further sales, particularly of the Coastguarder version. No fewer than 367 HS125s have been delivered, over 300 of them being exported. Nor should I neglect to mention the success of the Harrier and those two splendid collaborative programmes, the Jaguar and the Tornado. Finally, there is the recent success of Concorde, which is now in service on two routes on the North Atlantic. Negotiations are in progress for other routes, and I am pleased to note the progress made so far on the Singapore route.
It is success such as that which represents the auspicious start for nationalisation 834 of British Aerospace. I certainly depart from the gloomy prognostications that we have had from the Opposition.—[Interruption.] I note the audible version of the article in The Times of 13th December by the hon. Member for Chertsey and Walton (Mr. Pattie), and I shall be replying to it in due course.
The hon. Gentleman referred to some unfortunate remarks about the future of the BAC 111 deriving from remarks attributed to the deputy-chairman of British Airways. I should, perhaps, therefore explain in some detail the precise procedure that is followed.
The purchasing policy of British Airways is, of course, principally for my right hon. Friend the Secretary of State for Trade. However, I think it would be useful if I outlined the procedure which exists for the sanction of purchases of aircraft by British Airways. Under the British Airways Board Act, the approval of the Government needs to be sought by the airline for the acquisition of any aircraft.
It has been widely known that at some time in the next few years British Airways would need to begin to replace some of the older aircraft in its European and domestic fleets. That is nothing new. The precise timing of the replacement has been dictated by the operating economics of the existing fleet and of possible replacement aircraft, but the airline now feels that it must shortly take a decision on a short-to-medium-range aircraft of 100 to 130 seats with which to begin the replacement programme.
As the House will know, British Aerospace has been approached for a quotation on the same basis as other manufacturers. British Airways has yet to complete its evaluation of the various types of aircraft on offer, including the British BAC111, the Boeing 737 and the McDonnell Douglas DC9. The initial evaluation process is one for British Airways to make on the basis of its requirements in terms of aircraft size, range and other operating factors governed by the markets which it serves. I can assure the House that the British Airways Board has not yet decided on a replacement aircraft.
Once the airline has made up its mind, it will need to seek Government approval for its intentions. While each case has 835 to be considered very carefully on its merits, I can assure the House that the Government will, of course, take into account all the wider implications of national interest, and particularly the interests of the British aerospace industry, before coining to a decision. They will, of course, have to take into account some of the factors which have been mentioned by my hon. Friends in the debate.
I turn now to possible future projects, and I think that it has been right to raise them today. I think the House is well aware that any new civil aircraft project, at least for the 130–170 seat and larger markets, must be collaborative. Collaboration is necessary not only to spread the very large expenses of development over several partners but to improve market prospects. Having said that, I may say that it has been the policy of my Department and of the present Government to maintain as much of an independent manufacturing capacity as we possibly can.
British Aerospace and the French, Dutch and German aircraft industries have had studies in hand for some months to evaluate possible derivatives of the A300 airbus and a new aircraft for the 130–170 seat market. The industries have recently agreed on the next stage of these studies. While they are still at the stage of studies—and it is clear that a decision to launch any new project must depend on satisfactory market prospects and satisfactory arrangements for finance and work-sharing—I am sure the House will welcome this evidence of progress with our European partners.
Let me assure the House that the next stage of these studies does not carry a commitment to launch any new project and, by extension, does not ultimately exclude any project from consideration at the end of the day. Whether we should go for a new design rather than a derivative of an existing aircraft such as the X11 is in the first instance a matter for British Aerospace's commercial judgment, but I assure my hon. Friends particularly—and also by way of responding to the audible version of the article in The Times to which I have already referred—that the arguments they have put forward will be carefully considered by British Aerospace and by the Government when we consider in due course 836 the detailed proposals which emanate from the corporation. We certainly have not got to that stage as yet.
As an indication of the importance which both we and the French Government attach to collaboration on civil aircraft projects, I point out that this was one of the items discussed at the meeting between the Prime Minister and President Giscard d'Estaing earlier this week. The Prime Minister made it clear that decisions should be taken essentially on commercial, not political grounds. We have no wish to saddle the aircraft industry with unmarketable projects, but we are also anxious that we do not delay so long as to miss the market. The Prime Minister stressed the need for early decisions.
§ Mr. Tebbit
Will the Minister answer two specific questions? Has work on the X11 ceased? Have the salesmen who were engaged in selling the X11 been brought home and told not to continue selling it?
§ Mr. Huckfield
I cannot go further than what I have just said. I was very specific and I was deliberate in what I said. I hope that the hon. Gentleman will take account of that. I want to assure him that the kind of concrete decision-taking stages, which one or two commentators seem to think have been arrived at have not been arrived at. We have not yet come to a commitment to launch. We have not yet reached the stage of a specific proposal from British Aerospace.
I should emphasise that, although British Aerospace has been giving priority to discussion with European manufacturers, this is by no means intended to exclude the possibility of eventual collaboration with the United States. On the contrary, we should welcome such collaboration, provided that it was on a basis which was fair to both American and European partners.
As I said before, the matter of market prospects and the size of the work that British Aerospace will get is naturally uppermost in our minds. I want to assure my hon. Friends that, although events appear to have concentrated recently on one particular direction, that certainly does not exclude going in other directions.
§ Mr. Terry Walker
Can my hon. Friend give us more guidance? My hon. Friends and I have the problem of keeping the work force together at Filton. If these decisions are not to be made fairly quickly, there is a date by which the next number of redundancies will have to be considered under the old arrangement with the former company. Can my hon. Friend give some indication about when decisions are likely to be made, because we have that hanging over us and it is a difficulty?
§ Mr. Huckfield
Obviously, I take on board the significance of the timing, but I am sorry that I cannot give my hon. Friend a date at this juncture. He obviously knows the kind of time scale in which these decisions have to be taken, and we appreciate that decisions need to be taken as quickly as possible. But I am sorry that I cannot be more specific than that at the moment.
Perhaps I may refer to the comments of my hon. Friends with regard to the advanced supersonic transport and its possibilities. I want to tell my hon. Friends that the Government's position on Concorde remains, as was stated in another place on 27th July this year, that further production would be considered only if all 14 saleable aircraft had been sold and if further projects would not increase the overall loss to the two Governments.
The House will realise that we have had the opening of the two new routes in the recent past. I hope that that will encourage more airlines to consider operating Concorde services. I would certainly hope that that would have an effect on the demand for Concorde in future. However, the Government's view on further production remains as it was stated in another place in July this year.
Of course, at this juncture we have no plans to embark on work on advanced supersonic transport, although we shall keep in touch with the French on developments in this area. We feel that for the time being our priorities must lie in the subsonic field and in consolidating the experience we have gained on Concorde.
Last, but by no means least, I turn to the HS146. By contrast with the other projects I have mentioned, this is a project for which collaboration is not essential, 838 though it would certainly be very welcome. British Aerospace is proceeding with the present preliminary programme while further evaluation on the HS146 and other civil aircraft options continues with a view to making a firm recommendation to the Government at around the end of the year. It is worth stressing that the Government's decision to keep the project alive in the period immediately before nationalisation has made it possible for the HS146 to be continued.
I must say that, in contrast to the Government's attitude in keeping the HS146 and 111 projects going, we had a rather incredible statement from the hon. Member for Chingford, which I hope will be noted outside the House. That was the hon. Gentleman's statement that he would rather be an aircraft worker working for Boeing than for British Aerospace. I hope the hon. Gentleman knows what he meant by that. I hope that people outside this House will understand what he meant by that. It was a most peculiar statement for the hon. Gentleman to make, and I know that it will be taken notice of by people in the constituencies represented by my hon. Friends.
§ Mr. Tebbit
What I said, and what the Minister might have heard me say had he been paying attention to the debate instead of rereading his previously prepared speech of non-statements was that had I been an aircraft worker I would have regarded my job as safer if I had been working for Boeing, especially in the long term, than if I had been working for British Aerospace, particularly with a Minister in charge of it who cannot take a decision, even when it is served up to him on a plate.
§ Mr. Huckfield
I always think that the hon. Gentleman sounds better when one is not looking at him. However, he made that statement and he must live with it.
The other progress to which I wanted to refer was that which has been made by the British Aerospace Corporation in the two important papers that have now been issued on management structure and industrial democracy, and I take note of what my hon. Friend the Member for Bristol, North-West said about both. These reports were laid before the House on 6th December.
839 From 1st January next year, British Aerospace will operate through two groups—the Aircraft Group and the Dynamics Group. The British Aircraft Corporation and Hawker Siddeley as such will no longer operate as named units. The report on management organisations shows that the corporation is working to establish an integrated management structure which strikes a balance between the decentralisation of management—an objective mentioned in the Act—and the need to promote unity and consistent policies within the corporation. British Aerospace has emphasised that changes in management structure will follow as experience and decisions on major projects make these necessary. Already, as a result of consultations with certain groups of work force, there have been some minor adjustments. But, since we have only just embarked upon a new chapter in the history of British Aerospace and have had nationalisation only from April of this year, my hon. Friend will appreciate that there are still a number of developments in this direction to go through.
When my hon. Friend talks about industrial democracy, naturally I take to heart what he said, because I recognise the contribution he and his hon. Friends made in getting this amendment carried into the legislation. It was a very important amendment, and it has become a very important part of the Act.
The report on industrial democracy which comprises the recommendations to the joint working party established by British Aerospace and the Confederation of Shipbuilding and Engineering Unions envisages a series of participatory councils composed of management and employee representatives. The corporation has accepted the general approach of the joint working party. The detailed recommendations are to form the basis of further discussions with British Aerospace employees. It is the firm intention of the corporation to seek agreement with those concerned to make the speediest progress in the development of industrial democracy in a strong and organic form.
British Aerospace will also be including in its annual report a statement about the performance of its duty to promote industrial democracy. Here I pay tribute to the activities of the director with responsibility for industrial relations matters, 840 Mr. Les Buck, who, with his experience as general secretary of a very significant union, as president of the Confederation of Shipbuilding and Engineering Unions and as a member of the TUC General Council, is now giving British Aerospace the benefit of that experience and showing a great understanding of trade union matters and trade union representation in these affairs. I understand that my hon. Friend the Member for Bristol, North-West is making arrangements to have a further discussion with him. I am sure he will find that discussion very useful. I hope that he will be able to put his views forward on that occasion.
There are those in this House and outside who have criticised the proposals as inadequate. British Aerospace has been in existence for less than eight months and the corporation is determined to build on firm foundations which are acceptable to its workers rather than be guided by theoretical blueprints which do not fit its own circumstances. It accepts that what it has done so far is only a beginning—in the time available it could not have been otherwise—but it is confident that it is the right beginning. So am I.
I will conclude, Mr. Speaker, with some remarks about the position of Rolls-Royce, which has been referred to by hon. Members on both sides. The firm's future business in military engines looks assured for the next few years. In particular, the prospects for the RB 199 engine, which powers the Tornado, look very promising and should secure a very satisfactory work load. Future sales of the Pegasus engine are heavily dependent on the success of the Harrier, particularly in export orders, but we are confident that this aircraft will do well in the future and that important benefits will accrue to Rolls-Royce from this business.
The civil side of Rolls-Royce's business will continue to depend very largely on the RB211. The original RB211-22 version, which was a remarkable technological achievement, has done well; over 500 of these engines have already been sold, and it is expected that they will continue to sell well into the 1980s. It is a mark of Government confidence that we have continued to show faith in this very important engine development by 841 funding the uprated version—the 524 version—at a time when conditions in the aircraft and aero-engine business have been extremely difficult world-wide. There are signs that airlines will need to embark on a substantial re-equipment programme within the next few years but the timing of such investment and the likely aircraft and engine requirements are notoriously difficult to predict with any degree of precision.
Rolls-Royce expects and I hope that the RB211–542 engine will achieve a fair share of the future aero-engine market. However, it would be rather foolish not to recognise that the firm will face intense competition from its American rivals for this new business. Success in this—and, indeed, all markets—will depend very largely on producing reliable, high-quality engines at a competitive price. Progress is being made in improving efficiency and productivity in Rolls-Royce plants, but it is now more than ever necessary for the company to sustain its efforts in all directions with the active co-operation of all employees.
In the last few days my Department has received the NEB plan for Rolls-Royce covering the period 1978–82, and this is now being considered. Hon. Members will understand that consideration of the plan will take some considerable time, and that is why I cannot give any detailed answers. It would be improper for me to make any comment on it at this stage.
§ Mr. Huckfield
I have given way to the hon. Gentleman on a number of occasions.
I am grateful to my hon. Friends for the strength of their representations and I note the enthusiasm, keenness and willingness to pursue these matters on the part of the hon. Member for Chingford. He has been here long enough to stimulate his own party into doing something about getting these matters on the House of Commons agenda. I hope that he will pursue that within his own party. My hon. Friends have shown determination to get these matters debated, and I only hope that the Conservatives, with the hon. Gentleman's assistance, will do the same.
§ Mr. Speaker
Order. Even at this time of the morning, we cannot have two hon. Members on their feet at the same time.
§ Mr. Huckfield
I was about to be nice to the hon. Gentleman, Mr. Speaker, and say that since he puts his points in a more gracious fashion than does his hon. Friend the Member for Chingford, I shall, of course, give way to him.
§ Mr. Pattie
I am grateful to the Minister. Could he tell us how much R and D expenditure is covered in the Rolls-Royce document?
§ Mr. Pattie
Albeit that it has just been received, he must have seen what it is, and he must know how much comes on this Vote, which, after all, is what the Consolidated Fund Bill is all about. How much is the R and D?
§ Mr. Huckfield
I think that the hon. Gentleman is rather confusing the issue. The corporate plan has only just been received by my Department within the last few days and I cannot go into that detail at this time. I note, of course, the willingness and determination of the hon. Member for Chingford to pursue these matters—I see that he has just left the Chamber—and I hope that those for whom he pretends to speak will take similar note.
I believe that British Aerospace has made an auspicious start. We have some valuable endeavours and initiatives which it has been undertaking so far. I hope that the success of the projects which I listed at the beginning of my speech will be continued and built upon and that the efforts of my hon. Friends' constituents will play their rightful part in ensuring that we maintain a successful, productive and efficient exporting aerospace industry in this country.