BRITISH AEROSPACE

HC Deb 26 May 1978 vol 950 cc1906-24

Motion made and Question proposed, That this House do now adjourn.—[Mr. Walter Harrison.]

11.6 a.m.

Mr. Terry Walker (Kingswood)

There is an urgent need for a decision about the future manufacturing programme of British Aerospace. The importance of this decision is such that it will settle the direction which this country takes in civil aviation manufacture for the rest of the century and beyond. Everybody agrees that our future production programme must be a collaborative one with other nations. No longer can we go it alone as we have in the past.

The question is—with which other nation or nations should we collaborate on aircraft production in the future? The choice is between working with Europe to develop a new short- to medium-range airliner and accepting a deal with Boeing or McDonell Douglas of the United States to participate in the development of one of the new jets which those companies are planning. The outcome of the decision will affect the future of British Aerospace and Rolls-Royce engines, and of course it will have an effect upon the fleet that British Airways flies in the future. For the Government it is a decision of the highest importance. It has important political implications.

It is an important decision. All three of the companies involved—British Aerospace, Rolls-Royce and British Airways—seem to have different views on this matter. Therefore, in the end the Government will have to decide and the main consideration will have to be commercial. Whatever aircraft is produced must be a seller. It is no good participating in the production of an aircraft the sales of which are in doubt.

For the British aircraft manufacturing and aero-engine industries the decision is doubly important. The decision will settle whether we shall stay in the mainstream of production in the future or whether we shall end up as sub-contractors for others. The future of the industry and the jobs of everyone involved are at stake. The trade unions have been in touch with us. My union, the Transport and General Workers Union, has been in discussions on this matter and is concerned about the future job prospects of its members who are employed in the aircraft industry.

At the root of our decision is the fact that a new generation of short to medium-range civil airliners is on the way. The world's airlines want an airliner seating around 160 to 180 passengers and capable of flying a distance of up to 2,000 miles. It is estimated that about a thousand such jets will be needed in the next 10 to 15 years, and many more by the end of the century. This will be the biggest market of all, and all the world's manufacturers are interested in it. That is the background to the decision that has to be made.

The problem for us in the United Kingdom is that manufacturers on both sides of the Atlantic are moving to meet the needs of this market, and broadly comparable types of aircraft are being planned. We have to collaborate with one option or another, which is why the present decision is so vital.

Boeing's widely publicised offer of a partnership in building the 160-seat twin engined 757 jet, the wings and engines of which could be built in this country, has attracted much support. Boeing is the world's biggest jet builder, with more than 3,300 aircraft produced to its credit. Some sources say that the 757 Boeing would offer us 50 per cent. of the work, taking into account design development and production of the wings, rear fuselage, part of the tail, the undercarriage, nose-wheel and the engines for all 757s to be built. This point must be borne in mind. In many cases airlines specify which engines are to be fitted to the airliners they purchase. It would therefore not be possible for Boeing to guarantee that Rolls-Royce engines would go into all 757s. Some airlines might want other engines. That part of the offer, therefore, may not be so attractive after all, and Rolls-Royce should bear that in mind.

The other new Boeing jet—the 767—has also been mentioned as part of the deal. It is reported that United Kingdom participation in the 757 programme would enhance the possibility of Rolls-Royce getting its RB211–524 engines into that aircraft. But that idea is little more than a long-term gamble.

Compared with the Boeing offer, the European programme seems not so secure. The Europeans have two projects. The first is the Eurojet which will seat upwards of 130 people. But it would have Franco-US CFM-56 engines, and the aircraft could be regarded as a competitor to the 757.

The second European venture is the proposed B-10 version of the A300 airbus. That would seat roughly 217 passengers and be a competitor of the 767. It could—and I repeat could—be fitted with the 524B Rolls-Royce engines. But the position is not yet clear. No one doubts the technical competence of the European industry, but its collective experience in the world jet airline market is fewer than 600 aircraft—and these mainly British. So its position is much less well established than that of Boeing. If we in the United Kingdom pulled out, that would greatly weaken the base of the project. Accordingly, many Europeans would regard British collaboration with Boeing as destroying any hope of a deal with Europe and would cut Britain out of the European civil project until the end of this century.

They further feel that such a move would jeopardise continued co-operation in the military area. Moreover, the more pessimistic voices in Europe say that the Americans wish to kill off the European competition by splitting us from the rest of Europe, thus killing the challenge to Boeing's supremacy, destroying the European industry now, and reducing Britain's role to that of a sub-contractor to the Americans for the future.

Against that, many in the United Kingdom feel that it is now a fact that the Eurojet will not have British engines. The British share of manufacturing in the B-10 is not clear either. The financial terms involved are so high that the Government may not be prepared to entertain them. I hope that my hon. Friend the Under-Secretary can help us with these matters when he replies to the debate because it is in the area of the European project that the big question mark lies. That has to be cleared up before a firm decision can be made.

It may be too early for my hon. Friend to say how the talks between the Secretary of State and the Germans and the French went this week. I was, however, heartened to know that my right hon. Friend had these talks. This is a Government matter which involves public funds. The British corner in these negotiations must not be left to others. I believe that direct negotiations are called for when the Government's money is at stake.

It is said that because Rolls-Royce has so far been excluded from the Eurojet and because it has only a limited interest in the proposed B-10, it is anxious to see the Boeing deal go ahead. Rolls-Royce believes that it stands a better chance of a big long-term market by linking with the 757 and 767 programmes.

Aero-engine interests cannot be divorced from airframe interests. Each relies on the other. If we ceased to produce airframes, how long do hon. Members think we could continue in the aero-engine side of the business? I hope that the airframe and aero-engine manfacturers recognise the existence of this mutual dependence. The question about all this is whether talks are in progress between British Aerospace and Rolls-Royce on the subject of common interest. If they are not they should be.

There is then the partnership offered by McDonnell Douglas which has indicated its willingness to consider collaboration with more than one European partner. The centre piece of any partnership would be McDonnell's ATMR—the advanced-technology medium-range transport—which would be a direct rival to the Boeing 757. Detailed designs are not complete, but it would be powered by Rolls-Royce engines. It is also said that as part of the deal McDonnell Douglas could help with marketing the HS146 and possibly the development of a more advanced version of the Harrier.

There is the suggestion that the ATMR could be linked with the Eurojet project, but it is difficult to determine whether this suggestion is conceivable. Perhaps my hon. Friend the under-Secretary will comment on that matter in replying to the debate.

In all this the role of British Airways is vital. It has publicly confirmed its wish to buy 19 Boeing 737s to replace the existing Tridents from 1980 onwards. Some people believe that by pressing for Boeings as replacements rather than buy- ing more BAC 111s British Airways is doing a disservice to the British aircraft manufacturing industry. It is believed that if when the United Kingdom is trying to sell 111s to Romania and Japan our own flag carrier does not buy the aeroplane, foreigners will interpret that as a lack of confdence in the home product. That will have extremely damaging effects on sales and will lead to a loss of jobs in the industry.

Mr. Norman Tebbit (Chingford)

I hope that the hon. Member will not press that point too heavily. It is very important for everyone to understand that the 111 which is being marketed in Japan seats approximately 75 passengers, and that is directed at that market. British Airways says that it wants a 120-seat aeroplane. If it goes for the 737 in the end that will be because it is a larger aeroplane which is in no way comparable with the aeroplane that BAC is marketing in Japan.

Mr. Walker

While I agree with the hon. Gentleman, I believe that it is necessary that we review the whole picture with regard to aerospace. What I am saying is not necessarily what the facts are; it is what others will interpret them as. This is very important. If we do not make these sales of 111s, the hon. Member knows full well that many of my constituents and many of his will be adversely affected by this matter. This is the problem in regard to the 111.

Therefore, I believe that the message to the Government is this: do not let British Airways press us into the arms of Boeing, whose real aim is to give themselves a monopoly of aircraft production in the future. The best collaborative project for Britain depends on complex factors, including the best deal that can be obtained for design and work-sharing, as well as aircraft marketing. We must not be pushed prematurely into this decision before all the factors have been taken into account. This is the reason why the British Airways intervention at this stage has confused the situation.

The total labour force in the aerospace industry has fallen from some 300,000 in 1957 to 195,500 in 1977. Of the work force, 36 per cent. work on airframes, 30 per cent. work on engines and 34 per cent. work on equipment and avionics. It is still a very viable industry. It must not be allowed to contract any further. Britain's industry has dropped in financial turnover in the Western world from second place to the United States in 1971 to third place, after France, in 1975. But ours is still an industry which is strong in exports and which helps the balance of payments tremendously. That is why it must not be allowed to contract.

Those employed in the industry, who welcomed the public ownership of the old companies, now look to the Government for a lead. The partnership must be one that will preserve both the airframe and the aero-engine sides of our industry. There must be a market for the product produced. We all remember the despicable way in which the Americans tried to kill off Concorde. Many people wonder whether this kind of thing will happen again if we go it alone with Europe on the European jet. Will there be further pressure and sanctions against us from across the Atlantic?

The Rolls-Royce lobbying compaign designed to get the Government to buy American aircraft has raised fears that people are being misled. What has emerged is that British Aerospace and Rolls-Royce are totally divided in their views about which way the industry should go. In my view, attempts have been made to stampede British Aerospace into decisions on future projects that will have far-reaching effects for many years.

The decision made must be the right one as the jobs of workers and the livelihood of everyone concerned in the industry are at stake. My preference is for establishing a strong European collaborative aircraft industry. Then we can explore the possibility of collaborative projects with North American industry. But to go in with the Americans now and destroy the European competition to the Americans would be an act of folly which would reduce us from the main stream of aircraft production to the eventual role of sub-contractor for the Americans. This must not be allowed to happen.

We have an industry of which we are justly proud. Now is not the time for the Government to stand by while this heritage is given away. I hope, therefore, that in replying to the debate, my hon. Friend the Minister will give us as full a reply as possible, though I do not expect him to go all the way, because the fears about the proposals that I have outlined are very strong. The Minister's reply will be listened to with interest by many thousands of workers and their families. Will he give a pledge that Britain's independence as an aircraft manufacturer will be safeguarded long into the future?

11.25 a.m.

Mr. Ron Thomas (Bristol, North-West)

I shall take up only a few minutes, because other hon. Members wish to speak in the debate and my hon. Friend the Member for Kingswood (Mr. Walker) has given a very detailed exposition of many of the major problems facing the industry. I, too, hope that the Minister will reply in some detail.

First, I entirely support what my hon. Friend said: the industry faces crucial decisions. They are crucial decisions to be taken against a background of an industry on which, if we are to have any semblance of being a technological power in the future, we ought to be concentrating resources. The aerospace industry is constantly pushing forward the frontiers of technological advance. We need to bear in mind that these decisions have to be taken against a background of British manufacturing industry caught in a spiral of contraction and decline. The aerospace industry is one on which we ought to be concentrating resources. Therefore, these decisions will be absolutely crucial for the future.

It seems to me that British Airways has put out all kinds of information about whether it will be buying BAC 111s or Boeing 737s, and that that information is based on all kinds of extrapolations of figures which are highly dubious. Indeed, British Airways already admits that when thinking about figures well into the 1980s and 1990s, there is a margin of error, such as to make some of the figures highly suspect.

I believe that there has been a considerable seduction attempt by the public relations officers of Boeing. As far as I can see, it is not the engineers who have done this but the PROs. They have come here and have gone to many other places, and they have made all kinds of promises. My hon. Friend is absolutely right. Boeing cannot guarantee that Rolls-Royce engines will go into the aircraft. Only one firm can guarantee that—Rolls-Royce itself. If Rolls-Royce produces the best engines, they will be demanded.

However, I believe that what will happen is that Boeings will say "Yes", the engines will go into a few of these aircraft, but from then onwards it will be pure open competition with American companies, and so on. Therefore, I am not impressed at all by this public relations exercise, this attempted seduction by Boeing.

We have received a very detailed document from British Aerospace. It raises a whole number of questions. I shall mention some of them quickly. I understand that British Airways has said that the 111 cannot be as profitably operated as a mixed-class aircraft. In reply, British Aerospace has pointed out that about 160 DC9s are operating in Europe on a mixed-class configuration. I am sure that the airlines concerned cannot all be wrong.

The whole question of commonality is given a very low sum in terms of the "guesstimates"—I cannot think that they could be anything more than that—that British Airways has made. There is the whole question of the balance of payments and the sum of £140 million. I find it rather strange that the 5 per cent. import duty on the 737s would apparently be waived. I understand that that is another £13 million. There are all kinds of questions such as these to be considered.

Then there is the whole question of the numbers of crew that will be necessary. The document from British Aerospace points out that Air France has recently dropped its option to lease Boeing 737 aircraft because, like United States airlines, a three-man crew is considered necessary by its flight crews. This could reduce British Airways' "guesstimate" of an operating surplus by about £55 million. All kinds of questions such as these are being raised.

This House ought to have an opportunity to go into these figures in detail, because figures are being thrown at us from all kinds of direction. We have had no real opportunity to debate these figures with the Ministers concerned.

I make two brief points in summing up. First, we must do something about the seeming lack of co-operation between British Airways, British Aerospace, Rolls-Royce and, indeed, the Government. We must knock some heads together and get those concerned to discuss what is best for the whole aerospace industry.

Those of us who, night after night, sat on the Committee dealing with the Bill to bring the aerospace industry into public ownership, with all the attempted machinations of the Tory Party to defeat that legislation, did not do so to bring that industry into public ownership so that it would become a sub-contractor to the Americans or to anybody else.

11.30 a.m.

Mrs. Helene Hayman (Welwyn and Hatfield)

My hon. Friend the Member for Kingswood (Mr. Walker) has done a service to the House by initiating this debate, thus giving hon Members the opportunity to comment on some major decisions that face the aerospace industry.

My hon. Friend clearly set out most of the options and dealt with the problems. But, as my hon. Friend the Member for Bristol, North-West (Mr. Thomas) pointed out, we all have difficulty in trying to cope with the many facts and figures that have been presented to us by the protagonists of one option or another. I do not believe that the decisions we make should be arrived at on the basis of simple prejudice. Nobody should take the view "I believe in European collaboration" or "I believe in American collaboration" and rule out any option that might present itself to be more in the interests of our workers and consumers. We should not work on that sort of blind prejudice. We should work on a rational discussion of the options. To arrive at a rational debate, we need much more information than we are now being given.

I share many of the reservations about the Boeing 757 option which have already been voiced. When weighing the options offered on a 160-seater or larger plane, we must consider not simply that particular plane and package but the effect of the building of that aircraft and entering that collaborative project on the future of the industry. This is my main fear on the Boeing option. I believe that Boeing, by offering a package that presents itself in attractive terms, is crudely seeking to buy off, at sale price, 20 years of competition from the European market. That would be a tragedy both for our industry and for Europe's.

We have already spoken about the difficulties of reconciling the interests of the three great State corporations, Rolls-Royce, British Airways and British Aerospace. It is somewhat blinkered of Rolls-Royce simply to look to the Boeing option as a save-all. It does not recognise the intensity of the competition in aero engines in America. Anybody who examines the airbus programme—an aircraft that is sold with an option of two rather than three engines—and considers what the American producers are offering to customers in discount terms to buy each other off in the airbus stakes can see the dangers for Boeing.

Having made clear that on the broad issue I can see a future for this country which does not rule out participation, I believe that enormous assets would be gained from building on the success that we have had with the airbus programme and going ahead with the B10. I believe that the airbus has been a great success because it is just beginning to break into the American market. The significance of that breakthrough should not be underestimated. I believe that the B10 would be an excellent plane. There is the possibility of Rolls-Royce engines, and in view of the boost to morale in Europe and other factors I believe that we should go ahead with that project.

In regard to the 160-seater aircraft, I believe that the McDonnell Douglas option looks more attractive, particularly if we could bring about a partnership involving Europe and Britain.

There is one other option that faces British aerospace—a project which is very much further advanced than all these others and on which we could now go ahead in this country. I refer to the HS146. I believe that the first decision that should be made when considering aircraft in this country is to go ahead with the HS146.

My hon. Friend the Minister knows as well as I do the history of this aircraft, but it is now four years since it was put on ice by the Government. Workers at Hatfield, Filton and Manchester, as well as those at Short's and Scottish Aviation—indeed, throughout British Aerospace—would be affected if that project were given the go-ahead.

Those workers have been given a variety of reasons for the delaying of decisions on the HS146. The first excuse was that the market had receded and that the project had to be kept on ice to see whether the market would return. We then had to wait for nationalisation because there was such a question mark over the future of the industry. Because of the parliamentary position, we had to wait for two years during nationalisation. Then we had to wait, so we were told, because the Government would not encroach on the commercial judgment of British Aerospace but had to await a recommendation from the board of British Aerospace.

At the end of March, British Aerospace came to the Government and said "We want to go ahead and build this plane". What happened then? Instead of an answer being given, the decision on the HS146 was taken up and submerged in the larger decisions involving the future of the aerospace industry. The HS146 project is different because it is much nearer to a go-ahead. If we are to go ahead and participate in the major, larger projects, it is very important that we should get on with them now, otherwise there will be a problem of human resources in designers and engineers if we start on three major projects all at the same time in six months.

There is another point which is particularly important and significant in Hatfield. We are losing design staff and engineers day by day and week by week. I was talking to the design office staff yesterday in Hatfield, and the chairman of the staff unions co-ordinating committee said "We used to have in our design office a cricket team and a football team. We now have a bowls team". That is the age of the people who are working on design in British Aerospace. Those people are our nation's most precious asset in an industry which has served us so well financially and in other ways in the past.

I believe that a decision on the HS146 can be taken separately. I believe that market considerations and the commercial viability of the aircraft dictate that we take it separately and in advance. It is obvious from the customer surveys which have been checked out by McDonnell Douglas in the United States and which are taking place in Third world countries and in the Commonwealth that customers in those countries will have to replace their turbo-props and Viscounts. They are not particularly interested in any option that is now on the market, but they do not know whether the HS146 will ever be built. They will not give an affirmative answer until somebody makes up his mind.

British Aerospace has said what it wants to do, and the workers in British Aerospace have made it clear what they want to do. Despite the background of other decisions that need to be made, I implore the Minister to give an answer at the earliest possible date.

11. 38 a.m.

Mr. Norman Tebbit (Chingford)

I wish to add my congratulations to the hon. Member for Kingswood (Mr. Walker) on securing this debate. I hope that he is not disappointed that there are not more hon. Members present. He and I know why there is not a greater attendance, but I am sure that what has been said this morning will be read by many people outside the House as well as inside it.

I do not intend to refer to the current order by British Airways for 111s or 737s. I do not think that that matter is relevant to the broader issue we are examining this morning. What I have to say will be said in a spirit of nonpartisanship, and I hope that it will be received in the same way. There is, I believe, no partisan difference between us over these matters at the moment.

I hope that the HS146 project will not become an object of partisan controversy, but I fear that if it is launched without the backing of substantial orders to confirm its commercial viability it will run that risk. I know how strongly the hon. Lady the Member for Welwyn and Hatfield (Mrs. Hayman) feels, but she must understand that in this market at the moment the F28 is selling, and 40 per cent. of every F28 that sells is already of British manufacture. It would seem foolish to spend a very large sum of money to secure perhaps an extra 2 per cent. or 3 per cent. share of that market.

However, that apart, I think that the issues are pretty clear, and the hon. Member for Kingswood has laid them out. There is no future for our industry in non-commercial aeroplanes. There is a future for it granted that it has the dynamic leadership which it deserves. That is the rub at present.

The Opposition think that the Government were right to invite the United States manufacturers to discuss with Ministers their programmes and possible collaboration, as they have done recently, because we were becoming increasingly worried that the concentration of British Aerospace on the European options was a dangerous policy, a policy which we feared might lead to the loss or rejection of the other options by default before they had been adequately considered.

We should welcome participation for Britain in a secure international programme to which each partner was fully committed—a programme in which the costs were equitably shared, as were the jobs which would flow, and, indeed, the profits. To be secure, however, such a programme must be commercial. The Prime Minister and many other Ministers have made this point. To be commercial, the programme must offer an airliner which the airlines want to buy, when they want to buy it and at a competitive price. It must not just be a programme for the airliner which we would happen to like to make or even for the one which happens to suit the engines which somebody has available and wants to find a market for.

I hope that that message will be clearly understood. It is, perhaps, directed not so much at Derby as at Paris and Toulouse. Of course, the interests of Rolls-Royce must be protected, and those of British Airways, too. The stakes are high. The sums of money for investment—they have not been mentioned this morning—are enormous. I believe that the 146 programme is guesstimated now at about £200 million. The cost of the derivative 535 version of the RB211 engine is suggested as being in the £300 million to £350 million class. That is all before we come to any question of investment in what the hon. Member for Kingswood rightly described as the major market for a 160 to 180-seat aircraft, which can run to 1,000 or more aeroplanes over the next 10 or 15 years.

The number of jobs involved is huge, too. The scale of this industry is often forgotten. I believe that British Aerospace employs about 60,000 people directly—curiously enough, about the same number as are employed by McDonnell Douglas and Boeing. I only wish that our production were as large and as profitable as that of those two aerospace giants.

The hon. Member for Kingswood rightly concentrated on the civil market, but the military market requires collaboration too. He mentioned some of the possibilities there, such as the Harrier, and I hope that the Minister's colleagues in the Defence Department will be emphasising to the United States that we accept that the defence sales arrangement is, indeed, a two-way street, but, unhappily, all the traffic at present seems to be in one direction. Certainly the prospects for selling into the United States would be greatly enhanced if we could secure collaboration not only on civil but on military projects. The Hawker Hawk as a replacement trainer for the United States military is an obvious case in point.

It is our view that this is most certainly not a two-horse race, a contest between Boeing and Europe. McDonnell Douglas is another powerful contender with an excellent balance between military and civil work, and, because its plans are not yet so firm as those of Being, it may offer a chance to secure a multinational programme involving not only America and Britain but France and Germany. Certainly access to the rich American market will be much easier in such a partnership. I believe that it would be difficult to secure adequate access into America, especially if protectionism took a further hold, without our having an American partner.

We are unhappy—I have to say this—at the apparent lack of leadership from British Aerospace. I do not believe that that is a partisan comment. It would, I am sure, be reflected in the comments of a number of Members on the Government Benches too. But while the Government's policy is directed towards exploring—and, one hopes, securing—an option of collaboration, preferably across the Atlantic, and across the Channel too, they will have our support. As their policy decisions become clear, we hope that they will be such that we shall be able to continue to give them support.

11.46 a.m.

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

I am sure that the House is grateful to my hon. Friend the Member for Kingswood (Mr. Walker) for giving us an opportunity this morning to discuss the decisions which will have to be made very soon about future aircraft production. I welcome not only his contribution but also the clear way in which he set out the options available.

I am well aware of the anxieties to which my hon. Friend has drawn attention, anxieties not only in his area but in other parts of the country too. But, of course, I am equally aware of the complexity of the issues at stake and of the sometimes differing interests of the various parties to which he has drawn attention. I therefore make no apology for the amount of time which is being devoted by the Government and by the publicly owned industries concerned to a full consideration of the problems involved. I stress that these decisions cannot be arrived at in a hurry, and we do not think that it would be right to try to do so.

In passing, may I say that no one has dwelt much this morning on the contribution which the military side of British Aerospace has been making. The hon. Member for Chingford (Mr. Tebbit) made a brief reference to it. He will have noted that British Aerospace recently announced two contracts with the United States Air Force, totalling about £1 million, and there are hopes, I understand, of more work to follow when these projects are established.

I hope that the House will take note of the successes on the military and guided weapons side of British Aerospace. I refer, for example, to the Tornado, the Hawk, the Harrier and the Jaguar in the Aircraft Group, and Skyflash, Sea Dart and some of the other weapons systems in the Dynamics Group.

We should not lose sight of the contributions which all those activities make to the prosperity of the industry, but, important as the military work is, it is essential that we retain a full design and manufacturing capability to mount a viable civil aircraft programme. I stress that because I know that my hon. Friends who served on the Standing Committee made the point on a fair number of occasions.

That is why the Government share and endorse the determination of British Aerospace that the capacity which we have shall not be eroded and that the undoubted skills and enthusiasms of the work force throughout the country shall not be dissipated.

The House will have seen the first annual report and accounts of British Aerospace, which were published just over a week ago. They showed that the corporation is profitable and is one of our major exporters. It made a profit, before tax and interest, of over £65 million. Its sales amounted to nearly £860 million, of which 62 per cent. was exports. At the end of 1977 its order book stood at nearly £2,300 million, and nearly 70 per cent. of this was for export.

The Government are determined that British Aerospace shall remain a thriving and profitable nationalised industry, and, in response to what my hon. Friends and the hon. Member for Chingford have said we shall therefore insist that any new collaborative civil aircraft projects must make sound commercial sense. We are not interested in non-viable aircraft. This would not be in the interests either of the workers or of taxpayers.

Hon. Members will know that British Aerospace has, for the greater part of the past year, concentrated its planning efforts on studies with some of the leading European manufacturers of a family of aircraft which could be produced and marketed as a joint programme. Out of these studies have come the proposals for a smaller version—the B.10—of the increasingly successful A300B airbus and for the variants, ranging from 130 to 190 seats, of what has become known as the JET aircraft. These projects have been presented to the leading airlines of the world, and the manufacturers' joint study teams are evaluating the results of these promotional efforts. British Aerospace will be advising the Government as soon as possible of the conclusions it has drawn.

However, the Government also felt that first-hand information ought to be obtained about the projects on which the principal American companies might wish to collaborate with our industry. That is why my right hon. Friend invited representatives of Boeing, McDonnell Douglas and Lockheed to meet him on separate occasions earlier this month. As a result of his talks, my right hon. Friend now has a clearer picture of what the American companies have in mind.

Boeing, for example, discussed its proposed 757 project, which is for a medium-range narrow-bodied aircraft with about 160–180 seats, based on the 727/737 fuse-large but with new wings and modified tail group, and to be powered by two engines of 30,000-lb. thrust class. McDonnell Douglas developed its ideas of a possible tripartite collaboration, including Europe, on its advanced technology medium-range—ATMR—aircraft, an all-new medium-range aircraft with about 190 six-abreast seats and two 30,000-lb. class engines. The discussion with Lockheed centred on a potential partnership to develop a derivative, the—600, of its L1011 Tristar, which would be a medium-range twin-engine version with about 220 seats, involving substantial design changes, probably including a new wing. All this additional information will be very useful in the formulation of decisions on our future programmes.

Having said that, I recognise the feelings of my hon. Friend the Member for Bristol, North-West (Mr. Thomas) with regard to collaboration on some of these American projects, and we have to take them into consideration.

Following that series of talks, my right hon. Friend concluded, in association with the Secretary of State for Trade, that it would be desirable to have an exchange of views with the French and German aerospace Ministers so that there should be no misunderstanding either of the European collaborative options or of the Government's stance.

As the House will be aware, my right hon. Friends the Secretaries of State for Trade and Industry therefore visited Bonn and Paris on Tuesday this week for discussions with Herr Gruner, the West German State Secretary for Economic Affairs, and M. Le Theule, the French Minister of Transport. Like the discussions with leading American manufacturers, the talks were for information, not negotiation. They touched on the current prospects of the airbus programme and possible derivatives, the possibility of developments such as an aircraft or family of aircraft of the JET type, and the part that British Aerospace might play in such programmes. The results of these discussions will also form part of the Government's consideration of future civil aircraft policy.

In taking final decisions regarding the future production programme of British Aerospace, we must obviously take account of their impact on Rolls-Royce. We must also remember that Rolls-Royce's major product suitable for powering existing and future civil aircraft is the RB211 and its derivatives. The Department is currently considering the National Enterprise Board's recommendation on the projected lower-thrust-535 version of the engine. This would be suitable for, and is aimed at, the next generation of short- to medium-haul civil aircraft, especially the Boeing 757.

Rolls-Royce will, of course, as my hon. Friend the Member for Bristol, North-West has said, have to continue to sell its engines on their merits, and this fact is unaffected by whatever may be decided on collaboration on airframes. My Department is also currently considering, as my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) said, the HS146 project. She raised this matter in an Adjournment debate about a month ago, and I recognise her strong feelings and those of her constituents about the matter.

While this is not directly related to the major international collaborative projects, it is, of course, of considerable importance to the work loading of some of the factory sites, and, of course, it is British Aerospace's most recent recommendation to the Government that full development and production of the HS146 feeder liner should proceed.

I can tell my hon. Friend that the Government are taking very careful cognisance of all factors in their appraisal of the proposal, but they also have to consider the prospects of the considerable investment involved earning a satisfactory return. A decision will be announced as soon as possible.

Mr. Tebbit

Is it possible that that announcement could be made before the overall programme on the larger aircraft is decided, in view of the competing requirements for capital?

Mr. Huckfield

I recognise the point that the hon. Gentleman is making, but I am afraid that I cannot go further at this stage.

Another matter which has been of concern to the House is the request by British Airways to my right hon. Friend the Secretary of State for Trade for authority to acquire Boeing 737 aircraft to replace its Trident 1s and 2s. The Government do not regard the outcome of this request as necessarily having any bearing on the decisions on future collaborative programmes for new airliners, and Boeing has agreed that that is its view also.

We are fully aware of the expressions of opinion which have come from parts of the British aircraft industry—we had another this week to make the case—in favour of a purchase of the BAC 111 which has been offered to British airways. I know the strong feelings of many of my hon. Friends' constituents on this, but it is the Government's task to take into account these industrial interests and to arrive at a decision which will best satisfy the national interest, because we must obviously take that into account.

This has been a constructive debate, although short. I congratulate again my hon. Friend the Member for Kingswood. Hon. Members on both sides of the House have quite rightly urged upon the Government the need for urgency in deciding the future production programme of British Aerospace. I know they will realise that similar difficult questions are being faced in several other countries whose civil aircraft industries have to decide which way they will go.

I know that there is wide recognition in the aircraft industry that the world's airlines will during the next few years have to undertake re-equipment of their fleets on a large scale, particularly of short- to medium-range aircraft in the capacities between 150 and 220 seats. The stakes are high. Development and production programmes of new types occupy a long period of years, and it has been said that the decisions which will be made during the next year or two will be the last major ones of the present century.

Therefore, while I accept that it is important that conclusions should be reached as a matter of urgency, I suggest that it is just as essential that we get the ultimate answer right. It is also necessary that the commercial prospects should be satisfactory. In their detailed examination of the various options, the Government have to take all this into consideration.