HC Deb 22 May 1978 vol 950 cc1085-90
1. Mr. Arnold

asked the Secretary of State for Industry what recent discussions he has had on future aircraft projects with representatives of Boeing, Lockheed and McDonnell Douglas; and if he will make a statement.

17. Mr. Whitehead

asked the Secretary of State for Industry what communications he has received from the Boeing company about possible collaborative ventures with the British Aerospace Corporation.

19. Mr. Tebbit

asked the Secretary of State for Industry if he will make a statement upon his discussions with United States aerospace companies.

21. Mr. Adley

asked the Secretary of State for Industry if he will make a statement on his recent discussions concerning the future of the British aircraft industry.

The Secretary of State for Industry (Mr. Eric G. Varley)

In order to secure first-hand information about the plans of the leading American civil aircraft manufacturers, I recently invited senior management of the Boeing, Lockheed, and McDonnell Douglas companies to visit London for discussions. Those discussions were for information, and not in any sense negotiations. The results will form part of the Government's current consideration of future civil aircraft policy. The timing of decisions on aircraft projects will depend mainly on commercial factors.

Mr. Arnold

How are the conflicting interests and ambitions of British Airways, British Aerospace and Rolls-Royce to be reconciled in these matters? Does the right hon. Gentleman agree that any future decisions should be based upon commercial criteria and upon the size of potential markets, since that would be the best way of securing employment opportunities and the interests of the taxpayer?

Mr. Varley

I thought that I had made plain that the factors that have been taken into consideration are mainly commercial. Every corporation operates within the framework of its own legislation. We have to co-ordinate as best we can. However, the hon. Gentleman's point is very much borne in mind.

Mr. Speaker

I shall call first those hon. Members whose Questions are being answered.

Mr. Whitehead

Will my right hon. Friend bear in mind that some very seductive offers can be put forward by American manufacturers for the short term in order in the long term to kill off the design capacity of the European aircraft industry? Will he also bear in mind that it is not necessary for us to go ahead on the basis of a launch order from British Airways on any of these collaborative projects, and that the sure test of the collaborative project should be British participation in design leadership and engine supply throughout the production run?

Mr. Varley

These are the factors which have been discussed with the American companies. British Aerospace has discussed them, too, with the European companies and interests. Tomorrow I shall be going to Bonn and Paris to take up these matters directly with German and French Ministers.

Mr. Tebbit

We think that it is right that the Government should have engaged in these discussions in order to ensure that no options are foreclosed by the passage of time while British Aerospace is engaged in Europe. Will the right hon. Gentleman bear in mind that if he takes notice of what the hon. Member for Derby, North (Mr. Whitehead) said, not only about the necessity for British leadership in the design of the airframe, but about the fitting of British engines, he will be foreclosing on the options for doing a deal with the French, who are excessively attached to their own engine?

Mr. Varley

I know something of the French aero engine industry, because in February I was able to go to SNECMA and take part in discussions. However, all these factors, particularly that just mentioned by the hon. Member for Chingford (Mr. Tebbit), will be borne in mind.

Mr. Adley

Is it not a simple fact that when airlines order aircraft they specify the engine just as they specify the airframe? Is it not, therefore, a dangerous delusion to believe that, merely because British Airways might specify an aeroplane with a Rolls-Royce engine, Boeing will insist on all its other customers fitting their aircraft with the same engine? Is not a Boeing partnership with British Aerospace rather like a partnership between the wolf and Little Red Riding Hood? Ought we not to consider the possibility that the Boeing 999 might be the number we should be referring to as a warning of what could happen if, as the hon. Member for Derby, North (Mr. Whitehead) said, we allow our industry to be seduced in this way?

Mr. Varley

I think that what we have to bear in mind is that no decisions have been taken at this stage, either by British Aerospace or by some of the other interests involved. I understand that British Aerospace is willing to discuss further with Boeing, but, of course, the top consideration of British Aerospace has to be given to the commitment that it has made to the European interest.

As to the first part of the hon. Gentleman's supplementary question, I understand that there is some advantage—not a total advantage—in an engine being a lead engine in any new aircraft. There is some advantage, but it is not absolutely crucial.

Mr. Terry Walker

In view of the fact that every week we are given different accounts of what offers are being made to the British Government, and bearing in mind that the British Government have to finance these projects in any case, will my right hon. Friend give an assurance that a statement will be made to the House that will allay the fears of the workers before a final decision is made about this matter?

Mr. Varley

There will certainly be a statement made to the House in due course. As to consultations with the work force, it is our intention to consult the aerospace committee of the Confederation of Shipbuilding and Engineering Unions. We plan to do that within the next few weeks.

Mr. Cope

Will the Secretary of State ensure that in considering these matters and, for that matter, any shorter-term decisions on the future of the aircraft industry, the figures that are used to compare different projects are adjusted to ensure that they do not reflect the present disgraceful discrimination against British aircraft and in favour of American aircraft in the present set-up of our Customs duties?

Mr. Varley

Again, this is one of the factors that is being examined by the Government in a co-ordinated way and by the interests involved, British Airways and British Aerospace.

Mrs. Hayman

Does not my right hon. Friend agree, however, that the Government could accede to the request of British Aerospace for permission to go ahead with the HS146 without in any way prejudicing the options on the larger aircraft, and is it not true that it is an important commercial factor that delay is extremely damaging to the market prospects for the HS146? If my right hon. Friend does agree, when may we have the "Yes" that we need?

Mr. Varley

I know my hon. Friend's interest in the HS146, and she will know, too, that proposals have been put to us by British Aerospace. These are under active consideration. A statement will be made in due course.

Mr. Pattie

Does the Secretary of State agree that, in a complicated situation, the defence aspect is important? Bearing that in mind, does he agree that the Boeing Corporation does not seem to be the best of the American contenders, even assuming that one wants to have an American involvement at all?

Mr. Varley

That is another part of this complicated matter. I think that Boeing has 60 per cent. of the world's civil or commercial airline interests, and other American companies, of course, are much more oriented towards military aircraft. We know that our aerospace industry is weighted in the military field, too. But I think that we must look at all these options and come to conclusions which are in the best interests of the British industry.

Mr. Speaker

I shall call one more hon. Member from each side of the House on these Questions.

Mr. Hoyle

Will my right hon. Friend say whether in considering the longer-term plans he has had any talks with British Airways about the BAC111 and the possibility of buying that aircraft instead of the Boeing, and whether failure to buy that aircraft could affect our plans to sell it to the Japanese?

Mr. Varley

I am not responsible for British Airways. As my hon. Friend knows, that responsibility lies with my right hon. Friend the Secretary of State for Trade. However, I can tell my hon. Friend that I engaged in discussions with my right hon. Friend at a joint meeting that took place between British Airways and British Aerospace, at which we asked them to take this factor into account. I understand that both corporations are talking to one another.

Mr. Rost

Why, in the meantime, is the Minister holding up finance for the development of the derivatives of the RB211 engine which will be needed in order to secure the future for Rolls-Royce in any case, whatever tie-up the Government finally agree with either American or European interests, or with both?

Mr. Varley

We are not holding up finance for the further development of the RB211–535. It is wrong for the hon. Gentleman to suggest that we are doing that. We have received proposals by way of the National Enterprise Board on the RB211–535. We are considering this. Of course, it is part of this whole question, as the House understands.

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