EUROPEAN COMMUNITY (AERONAUTICAL SECTOR)

HC Deb 28 June 1978 vol 952 cc1459-90

6.20 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

I beg to move, That this House takes note of EEC Documents Nos. R/2461/75, R/1860/76, R/222/77 and R/1964/77 on the Aeronautical Sector. The motion before the House follows a previous debate on 23rd January. The previous motion concentrated on developments in the civil aeronautical sector, and aroused concern among hon. Members as precluding them from discussing military aspects of European aircraft collaboration. It was certainly not the Government's intention to restrict debate. That is why we have naturally accepted the wishes of the House and put down the present motion. Accordingly, it inevitably follows that there will be some repetition of the material in my speech during the debate in January and I hope that the House will in the circumstances be forbearing about this.

It is becoming increasingly clear that this is a crucial period for the future of the civil aircraft industry. Over the past few months there has been a great deal of activity at both industrial and governmental levels. No decisions have yet been taken, but we are moving towards them and it is therefore a useful occasion for the House to consider these matters before the decisions are taken. First, however, I must briefly refer to the documents which are the subject of the motion we are considering. They are described fully in the explanatory memoranda submitted to the House and I believe it will be unnecessary for me to discuss them in great detail.

It was in October 1975 that the European Commission submitted to the Council of Ministers the "Action Programme for the European Aeronautical Sector"—communication R/2461/75. The main proposals of the action programme were contained in a proposal for a Council decision concerning the creation of a common policy in the civil aircraft and aviation sector", supplemented by a draft resolution on the establishment of an EEC military procurement agency. These ambitious proposals were the response of the Commission to the Council resolution of 4th March 1975 calling for consultation and concertation on future aircraft projects amongst the member States.

Communication R/1860/76 of July 1976 is a Commission document—"The European Aerospace Industry: Position and Figures"—which supplemented and updated the statistical information contained in the action programme.

Communication R/222/77 is an alteration by the Commission to the draft Council decision contained in the action programme and relates to the proposals for action in the field of air transport. It reflects in part the views of the European Assembly.

Communication R/1964/77 is a more recent development. It is concerned with aeronautical research and recommends initial programmes in the field of helicopter technology and airframe structures.

These, in brief, are the documents which are mentioned in the motion. The action programme itself has not been considered in full by the Council of Ministers, but I think it is fair to say that there has been general agreement amongst the member States that the Commission's proposals, as originally conceived, were unacceptable. This view, with which the Government agreed, has greatly influenced the course of action stemming from the action programme.

At the request of the committee of permanent representatives, a study of the proposals for the establishment of a joint programme for civil transport aircraft was carried out. This study resulted in the identification of a number of objectives for the future development of consultation between member States, notably a strategy for the manufacture of new large civil aircraft; joint action by European manufacturers towards cooperation with American manufacturers and joint research efforts. These objectives were approved by the Council in a statement in March 1977. It was also decided that member States examining potential civil aircraft projects in their countries should assist the Commission in the preparation of a report, for submission in due course to the Council, on the opportunities for co-operation offered by those projects.

In the last few days, the Commission has agreed on a communication to the Council of Ministers in pursuance of the resolution 4th March 1975 and the statement of 14th March 1977 to which I have referred. This document will no doubt be examined by the House in the usual way. There has not been time in which to formulate the Government view on it and the House will not expect me to discuss it in detail now.

In brief, however, the communication sets out the current state of development of the main aircraft projects under consideration and attempts to define a role which the European Community might play in supporting the development of the European aircraft industry. This role, it is suggested, should include promoting discussions to draw together the interests of both manufacturers and users of civil aircraft in the EEC; and the mobilisation of resources, including the possibility of wider financial participation. Looking further ahead, the Commission suggests possible Community action to create a larger internal market for civil aircraft and to carry some of the industrial risks of new civil aircraft programmes. It also suggests back-up measures in the fields of trade and technology.

I have thought it right to draw the attention of the House to this very recent development since I am naturally anxious to give hon. Members the latest information about developments within the institutions of the EEC. I should also briefly mention developments in the field of research since our previous debate. Communication R/1964/77 was examined by the committee of permanent representatives on 26th January and has been referred to experts for more detailed study.

This history brings out the fact that the member States of the European Community, including ourselves, have approached the problem of aircraft collaboration in a practical way, based on specific projects. I would not deny that the Community institutions may have some role to play, but the main responsibility must rest with the manufacturers themselves, whose job it is to assess the market prospects and to design aircraft suitable for the market. National Governments will also be closely involved, given the enormous costs of developing a new civil aircraft. Finance for British Aerospace would normally be provided in the form of loans or public dividend capital on which British Aerospace would be required to pay a proper rate of return. Even so, the sums of money required would be so large as to need careful consideration as part of the Government's financial planning for the public sector as a whole.

The House will recall that the two European projects under consideration are the B10, a derivative of the A300 Airbus with about 220 seats, and the JET aircraft—the joint European transport —a new design for the short- and medium-haul market. Two main versions of the JET aircraft have been discussed with leading airlines: the JET I with 136 seats, and the JET 2, with 163 seats. In the event, the market—which will be the final arbiter of all the projects under discussions—appears to have reacted more quickly to the B10 than to the JET concept.

British Aerospace has been playing a full part with its Continental colleagues, including Airbus Industrie, in the studies of design, market prospects, possible work-sharing and financial arrangements relating to these aircraft. As hon. Members know, British Aerospace is not a member of the Airbus Industrie consortium. However, it has a sub-contract to make the wing box for the A300 B3—B4. It has an overall design consultancy and British Aerospace staff are seconded to Airbus Industrie and have made important contributions in marketing and other areas. The House will have been pleased to note the recent deal between Airbus Industrie and Eastern Airlines in the United States. This will bring substantial new work to British Aerospace factories.

The deal with Eastern Airlines has enhanced the market prospects for the B10. It seems likely that decisions on the launch of the aircraft will be taken in the next month or so. British Aerospace is well aware that it will have to decide in the near future whether to join the project. The House will not expect me to reveal details of commercial negotiations, but I can say that British Aerospace is treating the negotiations as a matter of the utmost urgency and importance. The ultimate decisions, by both the Corporation and the Govern. ment, will naturally pay the closest regard to the prospects for commercial success of the aircraft. It cannot be said too often that we are interested only in aircraft that will sell.

The Government, too, have demonstrated the importance which they attach to the subject. Last month, my right hon. Friends, the Secretaries of State for Trade and Industry, met senior management of the three leading civil aircraft manufacturers in the United States—Boeing, Lockheed and McDonnell Douglas. They also saw their French and German counterparts, Monsieur le Theule and Herr Gruner. More recently still, my right hon. Friend the Prime Minister, saw senior management of Boeing, McDonnell Douglas and Eastern Airlines during his visit to the United States last weekend. As has always been made clear, these discussions were for information and were in no sense negotiations. Their purpose was to enable Ministers to get first-hand information in preparation for the decisions they will eventually have to take.

The House will expect me to refer to the HS146 feeder-liner. British Aerospace recommended to the Government towards the end of March that the aircraft should go ahead. Since then, the Government have been giving that recommendation the most careful consideration. I entirely recognise the anxiety of hon. Members, particularly those with British Aerospace factories in their constituencies, that there should be an early decision, but I must remind them that even a relatively small aircraft such as the HS146 costs a great deal of money to develop. The Government would be failing in their duty if they failed to make a thorough examination of the project. Nevertheless. I very much hope that it will be possible to announce a decision before long.

If the HS146 goes ahead, British Aerospace would hope to collaborate with overseas partners. It is in particularly close discussion with the Italian firm Aer Italia and the Swedish firm Saab. We often talk of "Europe" as meaning the EEC, but, of course, European collaboration can go wider than the EEC, or even than Western Europe, as the recently announced deal with Romania makes clear.

In view of the comments made by several hon. Members during our previous debate in January, I should say a few words about defence aspects. The links between the manufacture of civil and military aircraft are well known. Some two-thirds of the aircraft business of British Aerospace is military and similar statements could be made about the other main aircraft manufacturers in both Europe and the United States. The only major exception is Boeing and even it has substantial military business. Indeed, Boeing's first major success in the civil aircraft market, the 707, was based on a military design. The American civil aircraft manufacturers owe a good deal of their success to military research funded by the United States Department of Defense.

Collaboration in the military field is therefore important in its own right and because of its implications for the civil aircraft business. There are already important examples of successful European collaboration on military aircraft. The Anglo-French Jaguar is already in service. The Tornado, which is a joint venture between the United Kingdom, Italy and Germany, has entered series production after a very successful development and among the helicopters there are the Puma, Gazelle and Lynx. It is naturally our aim to build on these successes. Again, however, it seems to us that the right way forward is by discussions at national level.

We do not support the suggestion made by some that to overcome the alleged lack of political will to standardise, some sort of supernational procurement agency should be created—either European or NATO. The creation of such an agency to exercise detailed management control of the development and production of military equipment across the board would require a very large and expert staff and would involve very great transitional problems. The larger the number of countries and the wider the range of projects with which a single international organisation attempted to deal, the greater the risk of impairing the intimacy of communication and interaction required between industry and national procurement and operational staffs throughout the procurement process.

The need for trade-offs during the development process would also necessitate constant reference back to capitals. To the extent that such an agency exercised autonomy, problems could well arise from the reduction in the degree of national control over the allocation of funds or the distribution of work. We would not accept the sovereignty implications which the creation of such an agency would involve. Nations must have the responsibility for equipping their own forces and making available the necessary resources.

So far I have been discussing the airframe industry, but, particularly in this country, we cannot forget aero engines, which provide roughly as many jobs as does work on airframes.

There is a good record of collaboration between Rolls-Royce and other European aero-engine manufacturers on a number of projects, notably the Adour, the RB199 and the Olympus 593 which powers Concorde. Future prospects for collaborative ventures are less clear. While the Government encourage Rolls-Royce to undertake major new projects on a collaborative basis if this offers reasonable commercial advantages, it has to be recognised that the likely opportunities in the civil market are fairly limited. Other European aero-engine manufacturers are already linked to a greater or lesser extent with United States companies—notably SNECMA with GE—and therefore the potential for any Rolls-Royce involvement within a European context is difficult to foresee. On the military side, engine development and procurement and the role of Rolls-Royce play a significant part in our consideration of possible future collaborative aircraft projects.

As to aeronautical research, the Government, including my defence colleagues as well as my Department, fully support the importance of collaborating within Europe in order to bring together our interests and to get better overall value from the resources available to us. In our earlier debate, I outlined three separate multinational activities with this aim. Since January, relatively little progress has been made with the discussions based on document R /1964/77. Although attempts are still being made to establish Community-wide programmes on airframes and helicopters and provision has been made for the money involved, we seem to be no nearer real agreement than we were in January.

However, this is not the complete picture. We have other, perhaps better, and certainly more fruitful, routes to the underlying objective. Our collaboration with France, Germany and Holland in Garteur continues and shows signs of a healthy growth, and, with the same nations, we have established a small international group in Amsterdam to take further our studies of a possible transonic wind tunnel.

In our earlier debate, emphasis was properly placed on the difliculties of this sort of collaboration and of the implicit risks to United Kingdom industry. I should like to reassure the House that we are acting with the full support and encouragement of our industry which is deeply involved in the work. Indeed, one member of the wind tunnel team in Amsterdam comes from British Aerospace.

It is right that the House should have this renewed opportunity to discuss the Community documents that are mentioned in the motion. However, as I have made clear in my earlier remarks, the Government do not believe that much of the policy outlined in the documents is realistic. What counts is a practical and commercial approach to particular projects. That is the approach that British Aerospace, the Government and our counterparts in Europe have adopted.

6.40 p.m.

Mr. Norman Tebbit (Chingford)

The very dates after the obliques in the description of the documents speak for themselves. In many instances they are rather old documents in a world in which things move pretty quickly, not only in the air but in terms of the concepts that we discuss when various projects are put forward.

The debate on the documents to which the Minister of State referred, which we had on 23rd January, was partly abortive. I entirely accept that that was not through any intention. The motion that the Government placed on the Order Paper was somewhat tighter than intended. It precluded us from discussing military affairs although they were referred to in the documents. I had expected that this evening's debate would be restricted to military matters until I saw that the Government had drawn carefully a wide motion so that we might talk of any of the matters to which the documents refer, or those that have flowed from them.

It was not only that the motion was restrictive in January that inhibited the debate. The Minister, in January as in June, was unable or unwilling to answer many of the questions that were raised. In general, as I think this evening, he could delineate the policy of Her Majesty's Government only in the general terms that it was rather a good policy and that he was terribly in favour of it whatever it happened to be. However, it seemed that he was in no position actually to reveal it to us. It seems that that position has not changed.

We welcome what the right hon. Gentleman said in January about some of the collaborative research projects. I think that they are eminently sensible, as does the Minister. We are glad that Garteur and other organisations have carried on.

The Minister referred today to the latest communications on these matters from the Commission, which no doubt we shall consider before too long. There were some references to Community financing. I take it that the Minister and I find ourselves in complete agreement that we do not see much prospect of financing civil aircraft projects through the Community. I imagine that at least we can find that common ground.

Let me take the right hon. Gentleman through some of the matters raised in January. The hon. Member for Bristol, North-West (Mr. Thomas), who I see in his place, and the hon. Member for Welwyn and Hatfield (Mrs. Hayman), who is unnaturally absent when an opportunity is presented to take up the issue of the HS146, were present when the debate took place in January, as was my hon. Friend the Member for Chertscy and Walton (Mr. Pattie), who I see is seated behind me. They all asked about the XII, the A200 and the HS146.

Alas, the XII. In January the right hon. Gentleman said that the XII had been shelved. I suggested that its shelf life would be rather short. In fact, I said that it had been killed and not shelved, although he insisted that it had been only shelved. There was not a word about the project this evening. I take it that the right hon. Gentleman now accepts that it is dead. He would not accept that in January, but having not spoken a word about it for five months he Prob- ably now accepts that it was killed. Nobody has seen any sign of life recently

The hon. Member for Bristol, North-West was anxious about the project in January. I take it that he will agree with me that the only thing to do with it now is to bury it decently.

The A200 is now called JET. We have a whole series of JETs. They spawn in all directions. There were some interesting things said about the HS146 back in January. The right hon. Gentleman said that British Aerospace was not in a position to decide whether it wished to make a recommendation, but he promised that when it did, if it did, it would be dealt with swiftly. We have moved on from March to June. Is that what the right hon. Gentleman meant by "swiftly"? I accept that these are major issues, but they have not crept up on the Minister by surprise. He has known for a long time that they were coming.

In January the right hon. Gentleman was still saying that nobody had even decided what the engines were to be and that there was still a chance for Rolls-Royce. We now know that the project has no place for Rolls-Royce engines. British Aerospace has made up its mind When will the Government make up their mind? What is holding them back from a decision on the HS146? Are they as yet unconvinced that it is a commercial project? Do they not trust the commercial judgment of British Aerospace?

We know that the Government do not trust the commercial judgment of British Airways. That has been made plain already. However, do they not trust the commercial judgment of the board that they appointed so recently? Or is it that the Government are so short of cash that they cannot authorise the HS146 to go ahead without the risk of prejudicing major decisions on the A300, the B757, JET or AMTR?

The right hon. Gentleman must know that British Aerospace now believes that it is fast losing potential customers for the HS146. Does he accept that it is, or does he think that he can continue to dilly and dally while trying to make up his mind what to do about the project? We have the feeling that if there were to be a General Election we might get a decision fairly quickly, bearing in mind the majority of the hon. Member for Welwyn and Hatfield. I hope that we shall not have to play the silly game of pumping money into marginal Labour seats as an act of politics rather than taking a rational decision on economic grounds.

The right hon. Gentleman was cocky when he was nationalising the industry not that long ago. His hon. Friends were optimistic about the golden days that they saw ahead. We were told in Committee that in those days all the decisions would be taken out of the sordid capitalist concept of profit. We were told that decisions could be swiftly reached by a band of happy Socialist brothers. We were told that there would be no problems in future. We were told that there would be no rancour or delay, that there would be no mucking about and that everything would be easy.

I recollect warning Labour Members time and time again that whatever they thought there would be a third party apart from the Department of Industry and British Aerospace—the Treasury. The right hon. Gentleman was always loath to admit that there would ever be a shortage of resources. He is now less cocky. I notice that his hon. Friends are lacking in the optimism that they had in earlier days.

In January the news was that the Prime Minister had had talks in December with the President of France about collaboration on the 130–170-seater aircraft. The right hon. Gentleman made a good deal of that. As a consequence, the XII was scrapped. The salesmen were called back home and the project was cancelled. That was the only result of the talks with the President of France.

The big news from the Minister now is that the Prime Minister has been talking to the President of America about collaboration with the United States. What is it that is to be announced before long? Are we to be told that this time we have lost our shirts? What came of the talks? The right hon. Gentleman said that they were talks about talks about talks. I wish that the Prime Minister would get down to something rather more concrete. At least the civil options have become clearer to all of us in the past five months.

I shall not repeat what I said in January or during an Adjournment debate at the end of May. I would rather the time were used by the Under-Secretary of State to answer some of the questions which the Minister ducked. I am sorry that the Minister of State for Defence is not taking part in the debate because we have not heard a word from him on this subject.

I turn to the question of military aircraft and guided weapon collaboration. As in the civil sphere we seem to invent a different form of co-operation for every project. The Minister seems to like that way of behaving. We had SEPECAT for Jaguar. We had PANAVIA for MCRA. Is there to be no follow on programme to Jaguar for SEPECAT or to Tornado for PANAVIA? Is there a follow on collaborative programme in the military field at all? Will there be anything to follow, Puma, Lynx and Gazelle? Are there to be any more projects? What progress is being made on a definition of the combat aircraft to replace Harrier and Jaguar?

We know that the Government's thinking is that the requirements of the other principal European air forces are not easily fitted into the same time scale as ours. But is any effort being made to do so? With which other air forces are we looking to try to get a common agreement on what sort of aeroplane it should be? Have we yet made up our minds whether we are to launch a unilateral combat aircraft or whether we are to seek to make it a collaborative venture?

What is the Government's reaction to the noises from Europe suggesting that if we collaborate with the United States on civil aircraft the Europeans will blackball us in the military field? Do the Government take that seriously? It is difficult to know whether the Government take anything seriously, other than the Lib-Lab pact. whatever that was.

I turn to the question of the current discussions with United States manufacturers. Has Boeing been able to offer the advantage to our military programme in the event of collaboration on the 757? Has the question of a deal across more than the 757 been raised with Boeing? Has McDonnell Douglas given a clearer definition of the possibilities of a full transatlantic partnership to include the European firms on both civil and military projects? Is it the Government's objective to forge such industrial alliances to bridge the Atlantic and the Channel?

The Minister should be able to answer at least some of these questions. He should be able to give us an idea of the Government's policy towards the industry other than that it will be revealed at some time in the future. We get that answer every time. We never seem to get anywhere near that future date. If the Minister thinks that he can fob off the Opposition with the types of answer that he has been giving I hope that he does not think that he can fob off the workers in the industry about which his rubbishy rhetoric spoke as recently as when the industry was being nationalised. Then his rhetoric referred to the march of Socialism. That was the cause in which he nationalised the British aerospace industry.

How much further do we have to march in the cause of Socialism before a single new project is put into the factories? How much longer do we have to wait? These chaps cannot live on that type of rhetoric. They require aeroplanes to make and sell in the world markets. The Minister may shrink and try to get out of the way of his hon. Friends behind him. But they know that it is true. The hon. Member for Bristol, North-West knows how many Labour seats are at risk if there is no work in those factories. Indeed, he is affected.

There is not much march of Socialism going on now. It is the march of customers' feet as they head for Burbank, Palmdale, Seattle, Toulouse, Amsterdam, and every aviation centre except ours. The Secretary of State, after all this time since nationalisation, has been able to find only one partner for our industry—Romania—and I do not think that any of us can have much confidence in the future of aerospace manufacturing in Britain. It is not Romania where the great market lies. It is in a somewhat wider world, even if it is not the wide world which appeals to him. He might prefer Romania, but some of us have wider aspirations than that.

6.55 p.m.

Mr. Ron Thomas (Bristol, North-West)

Listening to the hon. Member for Chingford (Mr. Tebbit) one would imagine that the privately owned aero- space industry, before public ownership, was a leader in dynamic order getting and risk taking and that in a matter of months the whole industry had collapsed round our ears. I do not see any evidence that other and larger private enterprise firms throughout the aerospace world are rushing into new projects. There is no such evidence. That is why McDonnell Douglas and Boeing are over here and willing to wine and dine certain hon. Members in order to develop a collaborative project with British Aerospace.

The Opposition keep saying that we must have some kind of collaborative project. I do not complain about that. But the suggestion of the hon. Member for Chingford is that if we had not nationalised the British aerospace industry, BAC and Hawker-Siddeley would already be producing aeroplanes containing 160 or 200 seats for which we are told there is a considerable market.

We should remind ourselves that the British aerospace industry would have gone down the drain a long time ago if it were not for the injection of hundreds of millions of pounds of public money. That is what kept the British aerospace industry going. The industry has always said taxpayers should pay, but if there is any profit in a project that is different.

If it were not for the Labour Government we should not today be talking about the HS146. Private enterprise would have ditched it by now whatever its merits. The hon. Member for Chingford is producing an argument which resembles the midnight horror movies on BBC2. I do not remember my right hon. Friend when we were in Committee talking of a golden age. I thought that too often—and I chided him about it—he was too much dominated by capitalist ethics. He kept talking about viable projects. All I remember the hon. Member for Chingford and his colleagues doing on the Committee was fighting every inch of the way to ensure that the previous owners of the three firms received the highest level of compensation possible. That was in the forefront of their minds all the time.

If the Opposition had had their way they would have dragged out the debates, and their friends, the "bovver boys" in ermine along the corridor would have created a situation in which British aerospace was in a worse position than it is today.

During the debate in January my right hon. Friend suggested that we were looking at old documents. I accept that we are. I drew attention to the philosophy in the documents, certainly the 1975 document. I said that the bueaucrats of Brussels wanted a European bureaucratically controlled aerospace industry. The only way in which my right hon. Friend could placate me was to suggest that there had been a change in the Commissioner. Commisioner Davignon, because of the Italian General Election, was now the Commissioner responsible. I was told that the new Commissioner looked at these matters in a different and pragmatic way.

I am not happy about that explanation. I still believe that the 1975 documents and those close to them represent the real thinking of the bureaucrats of Brussels. It is all very well to say that provided we have the right Commissioner at the right time he can stop these developments. But suppose that we were to have a Tory Government, what would be the position then? I doubt whether we shall, after the massive handouts that the Opposition have given to those earning over £10,000 a year. If anyone votes for them apart from those earning over £10,000 a year, I shall be very surprised. But suppose we had a Tory Government? I think they would be quite happy, because of their attitude to Europe, to the Common Market and to federalism, to hand the British aerospace industry on a plate to the European bureaucrats, and to have a so-called European aerospace industry, with very little effective control by this House.

Mr. Tebbit

I wonder whether the hon. Gentleman will get to the point of suggesting handing the industry over to the American capitalists. That is the direction in which the Government are veering at the moment.

Mr. Thomas

I do not consider that entering into a collaborative project with Boeing or McDonnell Douglas on the right terms would be handing over the industry to the American capitalists. Certainly I wish that the industry in Britain could go it alone, but one has to be realistic. I should have thought that everyone here accepts that Britain cannot go it alone on a particular project or on the kinds of projects that we are talking about this evening.

As I have said, I am still not happy that we can hold back some of the demands of the European bureaucrats simply by hoping that fortuitously a general election in a particular EEC country will result in getting rid of a particular Commissioner, and that we shall thereby be enabled to retain control of our aerospace industry.

I think it is a pity that we have not had a detailed debate in this House on the aerospace industry. We either have to try to deal with it in an Adjournment debate or in a debate of this kind, which is not very satisfactory.

There appear to be three options open to us at the moment in terms of projects for a 160-seater or 200-seater aeroplane. It is quite clear that there will be a considerable market in the years ahead. There is the McDonnell Douglas suggestion for collaboration, based on a third from British Aerospace, a third from another European country, and a third from McDonnell Douglas.

Next, there is the Boeing option. I can assure my right hon. Friend—who already knows it—that many of us are very concerned indeed at the threat that British Airways may opt for buying Boeing, because we sincerely believe that any tie-up with Boeing will reduce the possibilities of British Aerospace, in terms of design and development, very considerably indeed. I would not put it as high as saying that it would be the end of British Aerospace, but that has certainly been suggested.

I know that Boeing is putting forward as a carrot the possibility of Rolls-Royce engines being used. We understand from certain information that Boeing is also talking of a particular aircraft with a General Electric engine. I think that Boeing will propose that any engine should go into a particular aircraft if it thinks this will suit its potential customers. There can be little doubt that Rolls-Royce engines will be put into any aircraft provided that they are the best engines for the purpose, and provided that the airline concerned considers them to be the best engines. It will not be because Boeing or any other company says so.

I do not think that the Minister has touched adequated on the JET project. He has told us that negotiations are continuing, but those who work in the industry feel that there seems to be a lack of dynanism in the negotiations which are said to be going on between British Aerospace and certain European countries. There seems to be a lack of information coming through and a lack of consultation with those who work in the industry.

The hon. Member for Chingford said that the X11 had gone completely. I hope that this is not the case. I am disappointed that the Secretary of State has not mentioned the X11, because we were assured that the X11 could be ready before the JET project in order to meet the market which is expected for this kind of aeroplane.

With regard to the HS146, there is the question whether this is to have the Canadian engine or the Rolls-Royce M45 engine. Those who work in the industry are still convinced that the M45 engine can overcome some of the problems which are said to be associated with it.

One of the documents deals with helicopters. I very much hope that the Secretary of State is following closely the position at Westland Helicopters. Westland Helicopters is essentially the helicopter industry in this country. In the judgment of many of my colleagues, the management of Westland is acting like a nineteenth century autocratic employer. It is blaming its work people for its financial problems, which, I understand, are mainly due to the fact that in 1973 it signed a fixed-price contract with the Ministry of Defence to supply Lynx helicopters to the British and French forces. I am very pleased to note that one of the Defence Ministers is here this evening.

Rolls-Royce collapsed because of a fixed-price contract. After the traumatic experience which took place at that time, I find it amazing that a couple of years later the Tory Government should have entered into another fixed-price contract, the consequences of which are now coming home to roost. I blame the company as much as I blame the Tory Government.

In order to try to overcome its present financial problems, Westland is trying to force the workers to accept cuts of up to £13 a week in their pay packets. I urge the Secretary of State for Industry and the Secretary of State for Defence to look at the position very closely indeed. I regret that we did not bring Westland Helicopters into public ownership when we nationalised BAC and Hawker Siddeley, because I am convinced that before very long it will be coming to the Government cap in hand for money, although I understand that the managing director has said that he will not touch the National Enterprise Board with a barge pole, or words to that effect.

Thirty-five of the Secretary of State's hon. Friends have already signed a motion drawing his attention to the position at Westland Helicopters, and I should like to see the company taken over by British Aerospace. Let us have a planning agreement in that part of the industry as well as other parts in order to safeguard the future of those who work in this vital industry.

7.8 p.m.

Sir Anthony Meyer (Flint, West)

I am very conscious of my lack of qualification to speak in the debate. I had not realised the depth of my ignorance on the matter until I found myself in almost total agreement with what the hon. Member for Bristol, North-West (Mr. Thomas) was saying. At that point I concluded that I must be either mad or even more ignorant than I thought. However, I will press on, because I want, for very different reasons, to support the central part of his argument.

I am sufficiently familiar with aeronautical matters to be aware that this is a field in which every speaker is unshakably convinced of the unique rightness of his case—so much so that I wonder whether I am in order in putting forward a highly tentative view, with many reservations. However, I am encouraged by the speech made by the Minister, in which he quite clearly left us not merely on a darkling plain but in a quicksand, blindfold, and in a thick, swirling fog. We had very little enlightenment from what he said.

I should like briefly to plead with the Government, from a committed European point of view, to follow a policy which will keep open the option of co-operation with the European aerospace industry on some kind of medium-range jet while at the same time seeking to enlarge the area of co-operation between the European aerospace industry and an American partner. In practice, this is perhaps not quite backing all ways at once, because it seems to point to the possibility of co-operation with McDonell Douglas rather than with Boeing.

I have no personal interest to declare. I have a semi-constituency interest in that one section of British Aerospace— Hawker Siddeley at Chester—is engaged in manufacturing the wings for the present A300 airbus. As the Minister knows, that is a project which Hawker Siddeley entered into off its own bat, without Government encouragement, in the days when it was independent. Work is still going ahead satisfactorily and is providing a large number of jobs.

Despite this constituency interest, I have made an effort to balance in my own mind the advantages and disadvantages of the obvious option—the partnership with Boeing which would exclude any co-operation with the European aeronautical industry. What bothers me is that it is bad enough to tic Britain to the coat tails of the United States on a Governmentto-Government basis, but it seems very much worse, and very much more dangerous, to tie our now nationalised aircraft industry, which is, therefore, subject to parliamentary scrutiny, control and some degree of interference, to becoming a sub-contractor of a non-responsible United States corporation which, not to be too choosy about words, is sometimes not very careful in its choice of methods. I believe that that kind of partnership would open the door to all kinds of practices which we in this House would find very difficult to accept. Indeed, it would be a relationship which would almost necessarily have corruption running in its veins.

On the other hand, to put the other side of the case, I cannot convince myself with any certainty that there is room for a successful rival to Boeing with regard to the construction of the kind of civil aircraft about which we are talking, or indeed that a European aerospace industry, even in partnership with McDonell Douglas, can in the long run be anything other than a drain on European resources.

It may well be that aeronautics will be able to offer jobs in the industrialised Western world to a substantial number of people on a viable basis only if it is gathered under one single umbrella. The competition from the developing world is accelerating at an alarming pace, and it could well he that in the decades to come, we shall see whole sections of the aeronautical industry going the way of the motor car industry.

Despite these doubts and hesitations, if we decided that there was the possibility of co-operation with the European aerospace industry, might that not in turn enable us to strike a better bargain with Boeing? These are uncertainties. The one thing I can say is that I do not envy the Minister with regard to the decision that he will have to take.

My final point is a very much wider one. This is a question which, if decided on its merits, will eventually give one kind of conclusion. There are many other such questions. For example, there is agricultural policy, energy policy, financial policy and nuclear policy. There are all these separate major issues which present great difficulties to the Government. But if each is decided on its merits, it will give a certain answer. They are all part of our relationship with Europe and part of our status in the world. If they are all considered together, the answers as to what is in Britain's best interests may be very different indeed.

After all, whether we like it or not—I Know that Labour Members do not like it—we are now finally members of the European Community. Unless we want to look perfect fools, we should not even reconsider the question of our membership. We have to make it work. It has to succeed. If it has to succeed, then we must consider all these major decisions in that light. Our membership of the Community must, therefore, be a major factor in every major decision of this type which we take.

I am not suggesting that because we are members of the EEC we necessarily have to choose the European option in relation to aeronautics. I am just anxious to ensure that the Government are giving these matters full weight in their consideration of these problems.

7.16 p.m.

Mr. Tom Normanton (Cheadle)

I should like to take advantage of this debate, because for a number of reasons it gives the House an opportunity of hearing at first hand from hon. Members, from either or both sides, who have been deeply involved in the consideration of the documents which are the subject of the motion before the House. It enables those hon. Members to make a number of points. The first relates to procedure. I should like to restate what I have said on a number of occasions such as this, that the present procedure for so-called scrutinising European legislation and the like is lamentably inadequate. It is lamentably inadequate not for the reason which perhaps some Labour Members were signifying but for very good reasons, some of which I shall put forward—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I doubt very much whether the question which the hon. Gentleman will pursue is in order in connection with what we are now considering. Certain documents are under consideration and perhaps the hon. Gentleman ought to confine his contribution to those.

Mr. Normanton

I note your strictures on this point, Mr. Deputy Speaker, and shall therefore confine my comments strictly and solely to the relevance of consultation and discussion, and the consideration which has gone on for many months—for at least 18 months to my knowledge—in at least one institution of the European Community. With respect to the Chair, I am quite certain that this is highly relevant to the consideration of the documents which are now in front of us.

The point I am making is that we are considering Commission documents. We ought to be considering the reports which have been prepared in the European Parliament on this kind of matter which give a far broader aspect to a study of the Commission proposals than the Commission proposals themselves can possibly do. These documents which we are considering are in a sense consultative documents. They are proposals. They are not necessarily final decisions. They are proposals to put to the Council of Ministers which, it is hoped will lead finally to positive and definite decisions and to Community policies.

We know very well that there is a wide gap between the proposals, which are prepared with an enormous amount of care by the Commission, and the eventual decisions which are reached by the Council of Ministers. This is one of the aspects which we should not ignore in the debate on this set of Commission documents. Unless we see the actual parliamentary and political arguments which have gone into the consideration of these documents we are very inadequately aware of the contributions that hon. Members on both sides of the House have made to the documents. That is relevant to the whole principle of this kind of debate.

The second point that is relevant arises from the fact that I believe that the House should have taken note, in considering this set of Commission documents of the major debate 10 days ago in the European Assembly which was of considerable political significance, as future historians will confirm. This debate covered the whole question of defence equipment procurement within the EEC including aeronautical policy.

Mr. Neil Marten (Banbury)

I am listening with interest to my hon. Friend. But I do not understand how we can do that when the Hansard of the European Parliament is written in six different languages. I can only read his contribution, not those of the Dutch, German and French MPs and so on.

Mr. Normanton

Inevitably for those who are not au fait with the six languages of the Community there is a time lag involved. I include myself among those who do not have a command of the six languages. However, there are hon. Members on both sides of the House who have first-hand knowledge of Community languages other than their own and who have participated in debates armed with this knowledge. I deeply regret that the House does not take cognisance of the contributions that hon. Members have made to this crucially important subject tonight.

Mr. Tebbit

I am sure my hon. Friend will agree that the delay in producing the translation of debates from the European Assembly is very little when compared with the delay in getting any comment from any Minister which means anything at all about anything to do with what has been said inside or outside this House or the European Assembly.

Mr. Normanton

I am always delighted to give way to my hon. Friend the Member for Chingford (Mr. Tebbit), particularly on this point, which he has made so tellingly.

In preparation for the debate on defence equipment procurement, which included aeronautical policy and associated aspects, I was appointed by the Economic Affairs and Monetary Policy Committee to undertake a major study of economic, technological, financial and industrial aspects of European defence procurement, including aeronautics. In the course of this study, throughout last year I was privileged to have personal and private meetings with all the Defence Ministers of the Community, with virtually all the chiefs of staff of Community States, and with the heads of procurement of member States. Out of these discussions arose a number of relevant points which should be considered along with the contents of these documents. These need to be recorded in the proceedings of this House and brought to the attention of those with responsibility for aeronautical policy within the Government.

It has become increasingly clear that the aeronautical industry is dominated by the United States—and dominated is an understatement. The Americans are giants in this field of industrial technology, simply because the European aeronautical industry is fragmented and divided. It is fragmented because in almost every case in Europe it is linked to sovereign States, and therefore linked to different Ministries of Defence.

Here I cross swords with the Minister in presentation of his case tonight because he made the point that this aspect of policy could be pursued only by sovereign States and should not be left to another agency or institution. That statement was insular and myopic. It will be proven to be so in years to come, as each and every individual State finds itself increasingly unable to mount and finance the scale of investment in research and production which is fundamental in military aircraft particularly, and civil aircraft as well, if we are to maintain any role in world trade or technology.

It is in this area that European States are getting more and more out of their depth, and this country is no exception. There is ample evidence to show that even the United States is moving slowly and painfully in that direction as well. In all the discussions that have been held on this subject, the moments of truth have come through.

The other area that is relevant to these discussions is that we are not concerned solely with employment per se. We could have full employment tomorrow by having men dig a hole one day and fill it in the next. But for a continent and a country so totally dependent on their ability to compete in the world, and totally dependent on technology and technological expertise, there is a very sound reason to develop a structure of an aeronautical industry, outside the United States, on a European basis, and not on the basis of individual member States. No State today is sovereign in this field, and this is true of most fields of political activity.

After that important debate In the European Parliament ten days ago, it became clear that the recognition of that fact is coming home increasingly in each and every one of the Parliaments of the member States of Europe. It is certainly coming home to those who serve in the European Assembly from the Parliaments of the nine member States.

As a result of that long and intensive debate we had a vote that was, significantly, carried by a considerable majority. That vote recommended, indeed pressed, on the Council of Ministers a proposal for establishing a European Community equipment procurement agency or institution. It did not spell out the details of how this should be achieved, but at least it established the principle.

That proposal will form part of the development of industry and company organisations, trade and technology right across the board in Western Europe, and it will make a major contribution to our better expertise and higher technological capability in engaging in world trade.

The Government are said to be having discussions across the Atlantic, and I understand from the Minister has said that they are also discussing this proposal with other interested parties as well. But if from these discussions comes a commitment to the United States or a major aeronautical company there, I am convinced that that will set the seal on the inability of the European aeronautical industry to be competitive in the world. It will be a major setback in the European countries in respect of their ability to be more effective in the high technology sector. Against that background, I earnestly hope that the Government will think seriously before entering into any commitment of that kind across the Atlantic.

The Minister said that these documents were not realistic. I believe that that phrase should be applied to the Government's handling of this matter. It is the Government who are not being realistic because they are seeking to ignore the substance and purport of these documents. Therefore, I hope that they will be realistic when the discussions that take place across the Atlantic and with Europe have been concluded.

7.30 p.m.

Mr. Geoffrey Pattie (Chertsey and Walton)

I wish to make a few remarks on the military aspects of the documents.

I wish to comment on the speech of the hon. Member for Bristol, North-West (Mr. Thomas) on the subject of the XII. I agree with him that there was an excellent opportunity in that respect which could have been grasped. It required a decision at the time, but I fear that we must now pronounce the funeral rites on that project.

On the subject of armament procurement, no study group, committee or symposium or any kind of organisation which has examined the subject of the differing armament procurement requirements of the European NATO nations has taken the view that the present situation is satisfactory. Something must be done about the situation. The list of organisations which have come up with reports on the subject is very long. However, such reports always arrive at the same conclusion. They always go on to say that the answer lies in providing a pan-European procurement agency. In one of the documents we now have before us they are at it again. I refer to document 2461/75 which says: Any policy designed to strengthen and develop the aircraft industry must therefore include common action in the defence equipment field. To this end the Governments of the Member States should decide to create a joint arms procurement agency for airborne weapon systems… to be responsible for joint development and purchasing of airborne weaponry to meet the needs of the European armed forces". I submit that such an agency could only sensibly be part of a totally new context —that involving a European defence treaty leading to a European defence community. At the moment there is no shortage of institutions attempting to grapple with this problem. At present we have the independent European programme group, which is carrying out very good work: we have something called EURONAD, the national armaments directors sub-group of the eurogroup; we have the Western European Union; we have a body called FINABELL, which was set up by the French chiefs of staff in 1953 and which we joined in 1972. In NATO itself we have CNAD, the conference of national armaments directors. We have even more acronyms. For example, we have AGARD, the advisory group for aerospace research and development; we have also the military agency for standardisation. Therefore, there is no shortage of agencies and authorities try-trying to do something about common procurement.

Mr. Tebbit

It is time they were standardised.

Mr. Pattie

I agree with my hon. Friend that perhaps they should be standardised. It appears to be impossible to try to define some form of procurement agency that will work for Europe when Europe is part of an alliance which contains the United States. What will happen when NATO is considering future procurement requirements with the United States sitting on the sidelines so that all the European nations must go into caucus either before or afterwards and take the view "We are thinking of trying to do something separate in purely European terms"? It seems to me that a basic question must be answered, which is nothing less than almost a renegotiation of NATO, if we are to try to get a European military procurement agency to work.

There is a vital distinction between military and civil requirements. A pan-European civil structure is not appropriate, as the Minister has already said, and it is not appropriate for totally different reasons. I believe that the Commission, well meaning though it is, has the matter wrong. I believe that the common civil structure will not work because one has to rely entirely on purely commercial considerations and on whether the airlines will buy one's product. No matter what kind of structure exists, one must have the right kind of product at the right time and at the right price. On the military side, defence considerations must be paramount. We are part of the NATO alliance and, unless we can find some way of devising a new structure which will reconcile the European procurement involvement with NATO, that will not work either.

I wish to reinforce what was said by my hon. Friend the Member for Chingford (Mr. Tebbit) about the AST403. I wonder whether the Minister will be able to tell us, following his discussion with his colleagues in the Ministry of Defence, how far our discussions with France and West Germany have gone and whether we shall be able to standardise that replacement—a highly desirable aim.

As for missiles, very important cooperation is in progress towards a new SAM 3 project involving France, West Germany and this country. This is yet another case in which the achievement of standardisation will in no way be due to our devising a new procurement agency. If we do not get a new SAM 3 project under way through Euromissile, the United States will take the fruits. Whether we succeed will depend on the skills of those involved and will in no way be enhanced by having a new military procurement agency.

7.38 p.m.

The Under-Secretary of State for Industry (Mr. Les Huckfield)

We have had a useful and well-informed debate and some important contributions from both sides, of which I am sure the Government will be only too anxious to take note.

As my right hon. Friend the Minister of State said in opening the debate, we believe that this is a critical moment for the future of civil aircraft policy. I wish to assure hon. Members on both sides of the House that the Government will pay close attention to their views.

Although opinions have differed about the best way forward, I believe that everybody in the House is at one in wanting to foster the long-term healthy develop- ment of all parts of the civil and military aircraft industry in this country.

I can also say with some confidence that hon. Members on both sides of the House share the Government's belief that although the European Commission may be able to help in certain respects, civil aircraft policy must remain largely a matter for the manufacturers, acting, of course, in response to the needs of the market.

We believe that the grandiose plans of the Spinelli report are unrealistic. They are also unnecessary, since the main European aircraft manufacturers, including British Aerospace, are already in close touch. As was made clear earlier in the debate, British Aerospace is playing a full part in current design and marketing studies, of both the Airbus Industrie B10 and the JET aircraft.

Several hon. Members, particularly the hon. Member for Chingford (Mr. Tebbit), pressed for some kind of declaration of preference between Europe on the one hand and the United States on the other.

Mr. Tebbit

If the Minister has gained that impression I want to correct him. I think that the Government are perfectly correct in the way in which they are approaching the problem in the sense that they are looking for a commercial deal which is not to be dictated in terms of a preference for collaboration with America or Europe. Do not let the hon. Member misunderstand what I said.

Mr. Huckfield

I am glad that the hon. Member, on behalf of his party, appreciates the pace at which these discussions are going. The most important thing is to get the decision right. Obviously it is only fair and proper that the Government should be considering all possible options and taking things at the pace that they are.

Certain hon. Members in the debate apparently suggested that the Prime Minister's recent talks with United States aircraft manufacturers seemed to be an indication that we had already decided in favour of transatlantic co-operation to the exclusion of Europe. This attitude is based on a misapprehension. British Aerospace, with Government approval, has given priority to discussions with its Continental colleagues. But the aim should not be for Europe and the United States to form two competing blocs. Our ultimate aim should be collaboration between Europe and America. Perhaps at this stage that aim may prove to be overambitious, and that is why both the Government and British Aerospace are examining possible alternatives. But it would be premature to conclude at this stage that that is unattainable.

The recent discussions between the Prime Minister and leading United States companies do not, I must stress, imply that decisions have been taken. As my right hon. Friend said at the beginning of the debate, they were simply for the purpose of getting information about the plans of the companies concerned. The importance and relevance of the plans both of Boeing and of McDonnell Douglas hardly need further description. Eastern Airlines, which is the second largest airline in the world, in terms of the number of customers carried, is a potential launch customer for the proposed RB211-535 engine. In undertaking these dicussions my right hon. Friend gave the clearest possible indication of the importance that the Government attach to getting the impending decisions right.

I turn now to the HS146. I am glad that my hon. Friend the Member for Bristol, North-West (Mr. Thomas) made the point very firmly once more that but for this Government we should not now still be talking about that aircraft. Several of my hon. Friends have in the past stressed the need for an early decision on this project, and I accept the force of what they say. The Government are fully aware of the reasons, particularly the market reasons, for speed in coming to a decision.

A number of doubts have been expressed from time to time from the Opposition Benches about the aircraft's prospects. No one could deny that forecasting the market for any aircraft is an uncertain business. But I do not believe that one should paint an unnecessarily gloomy picture. This is a question not of dilly-dallying but of giving these matters the fullest possible consideration and, in the end, getting the decision right.

It is generally agreed that the market for which the HS146 is designed can be expected to expand during the 1980s. There have been expressions of interest in the aircraft from a good many airlines. It is an extremely quiet aircraft, a point that will become increasingly important in the future.

Let me say now a few words about the aero engine business since several hon. Members have been referring indirectly to the need for an early decision to launch the RB211-535. If hon. Members advocate that argument they are putting the cart before the horse because before we can agree to the launch of a new engine and the investment of many millions of pounds that that involves, we must be assured that it has adequate market prospects, and in practice that means having launch orders from major airlines. I am sure that Rolls-Royce and the National Enterprise Board can reasonably look to the Government for a decision which will enable them to respond with a "Yes" or "No" if there is a prospect of such orders. That the Government will do their best to give them.

Mr. Tebbit

It is important that the Minister gets this right. I think that he referred first to orders for the engine and, secondly, to prospects of orders as a condition of the launch. I think that he would probably want to stick by the latter expression if there were any doubt about it. He must be aware that there is no possibility of manufacturers coming forward and ordering an engine unless there is absolute certainty that it will be available in the aircraft they want on the day that they want it.

Mr. Huckfield

Of course the hon. Member is right, and that is what I was stressing to him. There has to be an airframe as well.

Perhaps I may now refer particularly to the points which the hon. Members for Chingford and Chertsey and Walton (Mr. Pattie) made about military collaboration. They seemed to be saying that there was a need for some kind of better, more continuous framework. I must tell them, however, that what I might describe as the ad hoc collaboration on the military side has been very successful. I can only quote the best and most recent example of the Tornado project. I believe that this programme has seen a good and beneficial transition from development to production. We hope that the aircraft will be in service with the RAF in the 1980s, and I hope that the hon. Members will give credit where it is due to that kind of collaboration.

Mr. Pattie

I certainly should like to give credit where it is due on that point. I hope that I did not mislead the Minister in what I said. My point was that this is precisely the type of project and the way by which we should be proceeding rather than having some great structure beneath which everything should be flitted in.

Mr. Huckfield

That is what I was hoping the hon. Gentleman would say, because that is very much the Government's view. I am sure that he recognises that IEPG is probably the best way forward. It is not a centralised or bureaucratic way. It does not have a strong central secretariat—indeed, it does not have a central secretariat. But it means that projects such as the TCA and new helicopters can be discussed within that framework, and that is what is taking place at the moment.

On TCA, there are currently national studies on about six basic aircraft, and it is hoped that we can narrow the options during the coming year. On helicopters, I am sure that hon. Members appreciate that there is a need for some replacement for the Sea King, and discussions are now continuing about a possible family package for future helicopter development. But, once again, the fact that the TCA discussion and the helicopter replacement discussion are taking place within the IEPG framework shows that that is the best way forward.

Mr. Ron Thomas

May I stress as strongly as possible the seriousness of the situation at Westland Helicopters? The latest news I have this evening is that the management is threatening to close the plant down.

Mr. Huckfield

I was coming to what my hon. Friend said about the Westland situation. I have visited the factory in the past and I am familiar with some of the discussions which have taken place. I certainly recognise the very serious implications of developments of recent weeks. That is why I say to my hon. Friend that we are of course watching them very closely. I fully recognise the strength of feeling that my hon. Friend has expressed on this subject this evening.

The decisions which we and our European partners seem likely to be taking in the coming weeks and months may determine the future of the aircraft industry on this side of the Atlantic at least for the rest of the century. That is why it is utterly right to have these decisions taken at the right place and to get them right in the end.

We should be grateful for any help which the institutions of the European Community can give, but it seems clear that the decisions will be taken by manufacturers and their national Governments. What has been said today demonstrates the conviction of the Government about the urgency and importance of these decision and their wish to take full account of the views which have been expressed in the House, particularly tonight.

Question put and agreed to.

Resolved, That this House takes note of EEC Documents Nos. R/2461/75, R/1860/76, R/222/77 and R/1964/77 on the Aeronautical Sector.