HL Deb 13 April 1943 vol 127 cc151-70

LORD TEVIOT rose to call attention to the exercise of power by His Majesty's Government under Defence Regulation 78 in the case of Short Brothers; and to move for Papers. The noble Lord said: My Lords, before moving the Motion standing in my name I wish to make a few observations. The first one is that I have not now, and have not had at any time, any interest in the shares of Short Brothers. I do not propose to criticize the Minister's action in taking over the management of this undertaking. In fact, without full knowledge of all the circumstances, it would be an impertinence to do so. In war-time, with the powers that the Minister has, it is permissible that he should do anything he feels justified in order to further the war effort. What I propose to bring before your Lordships is the question of taking over the shares of this company. This action on the part of the Minister has caused considerable alarm and concern in the business and financial world. I look upon it as establishing a very dangerous precedent, not only from the commercial point of view, but from the political point of view.

Your Lordships are aware that there has been a considerable amount of discussion for some time past in regard to nationalizing all the means of production, distribution, and so on. This is a very drastic step which has been taken. I wonder why it has been done. The Minister, so far as I have studied what took place in the other House, has not given a satisfactory answer to that question which was put to him. He merely said, as far as I can remember, that he was acting on the will of Parliament under Defence Regulation 78. I have discussed this matter with a great many people, and so far I have been unable to discover why, in order to get efficient management and production of whatever commodity a company may produce, it should be necessary to take over the shares. If the Minister could show us, or even tell us, that this information is inadvisable because it would be giving information to the enemy, one would immediately drop the question. But what has happened here is that this company—lock, stock and barrel—has been taken over by the Minister. It is a public company of some standing. It has been in existence for a great many years, but has only been a public company since 1936. I am a little bewildered by a question that was asked of the Secretary of State for Air in the other place with regard to the quality of the various aircraft which this company produces. It was an amazingly praising reply. He said that these aeroplanes, flying boats, etc., were of very good quality, that they had always given great satisfaction, as indeed all the products of this undertaking had always done. It set one thinking why, then, this drastic operation on the company's activities.

What of the future? I notice that in another place, according to the Official Report, Mr. William Spens, now Sir William Spens, on August 6, 1941, raised this very question as to the danger of implementing Defence Regulation 78. In that debate he withdrew the Motion he had on the Paper because the Minister who at that time answered his query, Mr. Harold Macmillan, gave what appeared to be the reassuring statement that this only applied to war-time and would not be maintained in peace-time. That was just what one would expect and what one had hoped. Let me develop this a little. It is well known to your Lordships that the privileges of the trade unions, which have had to be interfered with during the war, are going to be restored in their entirety after the war. I can see no reason why any business or affairs which have been interfered with owing to the war, where the interference has been necessary to the war effort, should not similarly be reinstated if all the privileges of the trade unions are to be returned after the war. We have, I think, an analogous case to this one in the railway companies. The Government came to the conclusion, quite properly I think, that they could not expect the railways to run efficiently during the war, in view of the immense amount of business that the Government would necessarily give them, but the Government did not take the shares of the railway companies. They came to a very amicable and successful arrangement on the financial side with the railway companies, and I can see no reason why the same sort of arrangement cannot be made with all companies the management and general conduct of whose business it may be found necessary to take over—that is to say, the production side of companies.

I have looked up the record of dividends of this company, and I find that since they became a public company in 1936, they paid substantial dividends up to 1941. They have paid rather less dividends during the war than before the war. Surely it would be quite easy to go to the company and to the shareholders and say: "We are going to pay you during the war, while we are managing your company for you, a certain dividend—shall we say an average dividend such as that which you have been accustomed to receive?" What is the Government's position going to be after the war in this particular case and the cases of other companies that may be dealt with in the same way? I do not think I am exaggerating when I say the Government will find themselves in possession of a competitive commercial undertaking. What are they going to do about it? There is no mandate from the country for such an operation. I do not believe that the House of Commons appreciated that under Defence Regulation 78 the Government were given authority to take over a business and run it in a competitive manner after the war. The Prime Minister has reassured us on this matter up to a point in a statement made the other day, when he said that the Government would never think of introducing anything of the sort I have indicated. But in my view, and in the view of a great many other people, that is what has in effect happened in regard to this particular company.

I do not believe the people of the country generally or the House of Commons had any idea of such an eventuality arising out of this particular Regulation, and I believe that if they had had such an idea at the time when this Regulation was passed through the other place, it would not have had their consent. These remarks apply, of course, to any other organization which is operating and helping the country during the war. If the same thing happens in regard to other companies, the result will be that which I have described accurately. Finally, I want to ask the noble Lord who will reply to give us an answer to the questions I have raised, and particularly give us an assurance that any business or undertaking which has been taken over in order to assist the war effort will be reinstated in its business when peace comes, in exactly the same way as it has been decided that the trade unions are not to suffer but are going to be reinstated in all their privileges after the war is over. I beg to move.

THE EARL OF LISTOWEL

My Lords, I think the House must welcome the opportunity provided it by the noble Lord opposite to discuss this extremely important and interesting case. It is the second occasion, I think, within a few months on which the noble Lord has made it possible for us to debate a matter of considerable public interest. In this case public interest has fastened upon two special aspects of the problem: firstly, whether the Government have in fact given this firm of Short Brothers a perfectly square deal, whether they have behaved in a perfectly fair and reasonable way; and, secondly, whether it is not vitally important as a matter of principle that in war-time the Government should acquire the same compulsory powers in relation to capital as it has in relation to labour. Such control on the part of the State would obviously show that no section or class interest could, in any circumstances, be allowed to interfere with the war effort, and I am very glad from what the noble Lord has said to find that he and I, and I imagine everyone else in this House, is of one opinion on this aspect of the matter. I think it is most important for the public to realize that Parliament will deal equally drastically with any section of the community that puts the brake even to the smallest degree upon our war production.

It is the first aspect of the problem which I think has occasioned the liveliest controversy. The noble Lord said he did not take exception to the Government taking over the management and control of this firm, but what he did object to was that the Government should acquire the financial assets of the business. I hope, although I am not sure that I shall succeed, to be able to convince him that it would have been impossible for the Government to establish full and effective control of the firm without acquiring its financial assets. From the information I have received the state of affairs in this firm had been unsatisfactory for a very long time. My noble friend Lord Brabazon, who I am pleased to hear will take part in this debate, will, I am sure, bear out what I say on this point. Indeed, it was evident for a considerable period before the present Minister of Aircraft Production took office. Left to their own devices the management of Short Brothers had not succeeded in putting their house satisfactorily in order. The Minister then tried to help the firm out of their difficulties by co-operating with the existing board of directors. Mr. H. D. Short re- signed from the chairmanship of his own accord in order to make room for Sir Frederick Heaton, who was recognized as being a man of even wider administrative experience. It should be noted that Sir Frederick Heaton was appointed by the original board of directors and was not in any sense a nominee of the Minister. Nevertheless, things continued to drift along very unsatisfactorily.

It was only at this juncture, after private enterprise had been given every possibility to prove itself worthy but when nevertheless the state of production in the business continued to be unsatisfactory, that the Minister availed himself as a last resort of the compulsory powers under Defence Regulations to put a Controller into the firm. I understand that up to this stage he had the approval of the noble Lord opposite. It was a difficult decision for the Minister to take and it was a brave decision. Many Ministers would have allowed things to drift. Evasion of difficulty is not unknown in Government Departments. The Minister, however, decided that the moment had come to put in a Controller. Having taken this decision and sent his Controller to be in charge of the management of Short Brothers, it was obviously necessary for the Minister to give his nominee authority without which the policy for speeding up production in this particular firm could not be effectively carried out. He had, for instance, to overcome any differences that might arise on the existing board of directors. This necessitated the resignation of those who felt on grounds of policy that they could not agree with the view of the Minister's nominee and their replacement by new directors. But the capital assets of a firm and its management are interlocked. The right to appoint directors lay with the shareholders and the Minister was therefore obliged to acquire their interests in order to acquire the right of appointment to the board of directors.

This expropriation of the shareholders of Short Brothers does not show any wanton interference with private property. It was necessary in order to establish full legal control over the affairs of the company. Critics of the Minister have said that the shareholders have not been altogether fairly treated. I beg to submit that there is no substance in that complaint, and that in fact the Government, by a curious piece of self-mortification, have deprived themselves of certain security with the result that the shareholders may receive more than they are actually entitled to. It may be argued, though the argument was not used by the noble Lord this afternoon, that the shareholders have had to sacrifice any appreciation in their investment that might accrue by expanding business during the course of the war or by the development of civil aviation after the war. But even if the shares were to rise in value under Government management, and owing to the enormously increased demands for military aircraft, it is hard to understand what claim the shareholders have to benefit, seeing that they were unable to put their affairs in order through the instrumentality of their own nominees.

The Excess Profits Tax, quite apart from its significance to the Chancellor of the Exchequer, is an acknowledgment by Parliament that public opinion does not tolerate any substantial measure of private profit out of the war. The long-term prospects of the firm are not perhaps so rosy as the immediate future. Judging by what he said about the desirability of the return of the shares to their owners after the war the noble Lord opposite may take a different view, but I submit that my forecast is one that is worthy of consideration. Whatever may happen after the transition from war-time production to peace-time requirements, it must surely be evident that the present activities of aircraft manufacturers will not continue on their gigantic war-time scale. I should have thought it ought to be some solace to the shareholders that whatever may be the possibility of a lost chance of improving their position in the near future, they are also protected against any loss they might have sustained at a later date. They are also safeguarded, and very effectively safeguarded, against inequitable compensation in the terms offered by the Government by a right of appeal within three months of the purchase to an independent arbitrator. That arbitrator is to be a chartered accountant, a perfectly independent and unbiased person, appointed by the noble Viscount, Lord Caldecote, the Lord Chief Justice. If his award exceeds the price offered it is binding upon the Government.

I submit that this procedure is very favourable to the shareholders of this firm or of any firm that may be taken over by the Government in the future. If an arbitrator is considered competent to give a sound and impartial award then his award should be binding upon both parties whether it exceeds or falls below the price offered. Your Lordships will remember, because it happened not so very long ago, that this type of procedure was adopted in the case of appeals by the owners of coal-mining royalties against the price offered by the Government of the clay. In that case the royalty owners were unfortunate. I do not suggest that similar circumstances would arise again, but if they did then the decision of an independent and expert arbitrator should be accepted whether it is in their interests or prejudicial to them. It has also been suggested, and I am not sure whether it was not in the mind of the noble Lord opposite, that this action of the Minister is the thin edge of the wedge of nationalization. The Prime Minister dealt very effectively with this argument in the course of some remarks he made at question time in another place. He pointed out that public control of the aircraft industry, whether producing for military needs or for civil purposes, was a matter of broad general policy which must be referred to the electorate. It rather astonishes me that anyone should have so little confidence in his own political leaders as to imagine that they would nationalize industry under the cloak of Defence Regulations.

I have tried to be short, following in that respect the admirable example of the noble Lord who introduced this Motion. I should like to summarize our point of view—and I think that on this rare and notable occasion I am speaking for all my friends on these Benches as well as for the Party which some of us endeavour to represent—by saying that we endorse the action that has been taken by the Minister on this particular occasion. We hope that if similar circumstances arise in the future the Minister will not hesitate to avail himself of the powers that have been conferred upon him by Parliament under the Defence Regulations, because we maintain—and I am sure that on this point there is very general agreement—that every step must be taken, whether it interferes with the interests of labour or the interests of capital, to extract the maximum of war production from our industries during the course of the war.

LORD BRABAZON OF TARA

My Lords, I hope that your Lordships will forgive me if I say a few words on this point. I have a particular affection for the firm of Short Brothers, and it is a sad thing, from my point of view, to see the individuality of this firm disappearing. I am not so much interested in that side of the case which relates to shares for I have never been a shareholder of the company at any time since it started. But I have been deeply attached, not only to the three brothers who started the firm, but also to the firm itself throughout its whole history. My mind goes back to the very early days of flight when I and Charlie Rolls gave the two Short brothers their first order for a balloon. Later I gave Short Brothers their first order for an aeroplane. They made for me an aeroplane which never looked like flying, and never did, in fact, leave the ground. Then they made another plane for me which did leave the ground, and it won the Daily Mail prize. Those are heroic days of the past. With great imagination, boldness, and trust in the future, those three brothers achieved great things, and I little thought that a few years afterwards I should be the Member of Parliament for Rochester, where they established their works. Of course, like other industrial undertakings they had a certain boom during the last war. Afterwards they had to go through that dreadful period which befell the aircraft industry in which they were just kept alive—chiefly by being given orders for the manufacture of omnibus bodies for London omnibuses. It was not really until the possibilities of civil aviation became generally realized that the firm came into its own.

In passing, I would, if I may, draw your Lordships' attention to a rather curious episode in the history of the firm, the rise of Gouge. The two elder brothers Short died, and the firm was left vested in the youngest of the brothers. Slowly he ceased to have a tight control, and Gouge rose in the firm from such a humble beginning as sweeping the floors in his capacity as office boy. He trained himself at night on the technical side of aircraft, and on the technical side of life; he went into the drawing office and he became one of the most outstanding designers of flying boats in the world. The proof of that is that the great firm of Short Brothers has been known throughout the world as builders of first-class flying boats. Now everything was perfectly all right while the factory was, so to speak, a family affair, with the men all in one area, one man knowing everything that was going on and knowing every side of the work. In those circumstances Gouge got on very well, producing his two or three aircraft a year. Then came the war and I do want your Lordships to appreciate how it affected this particular firm.

It was said in the House of Commons the other day that the greatest industry in this country was the aircraft industry. Perhaps your Lordships do not appreciate that the industry has grown sixty times since 1939. Can you imagine the strain and the difficulty associated with this growth; growing pains, multiplied sixty times over, as it were? One result has been that, instead of single firms, shadow firms have arisen here and there. Short Brothers, in these conditions, became a great industrial organization to manage, and there were many breakdowns. It must be borne in mind that most of the people in the industry now are new workers. It is true that they work very well, but you must remember that they have no background of general training in the industry, and you cannot switch them around from one job to another as you could the workers in the old days. The girls in aircraft factories, for instance, work better than anyone else in the world, but if a difficult phase in the requirements of a particular factory is reached, you cannot switch these girls around to a different branch of the industry as you could the old engineers with their all-round training and experience of manufacture as a whole. And there are certain changes in the demands made on these factories when you have a Ministry changing its mind every three weeks or so with regard to types or models which it thinks that it requires. It is very difficult to meet these changing demands.

There have been some firms which have achieved great success in spite of the difficult conditions. On the other hand, there have been some firms which have, so to speak, failed to get a proper grip on production so as to be able to go ahead like others. When I was at the Ministry, I tried to give Short Brothers all the help I could by detaching personnel to them and so on. But things got no better and it was obvious, considering the money the Government have put into the firm— nearly three times their capital—that the Government must take measures to improve production. As the noble Earl, Lord Listowel, has said, a Chairman was suggested. The Chairman the Ministry of Aircraft Production proposed was not acceptable to Short Brothers. They chose their own Chairman, and then real trouble arose when Sir Frederick Heaton investigated the company and made certain proposals. Those proposals were overruled by the board, and from that moment the situation was as bad as it had been at the start. And it was due to that—not to arty other reason, I would ask your Lordships to note—that the Minister had to appoint a Controller, and having taken control of the policy of the firm, what sort of position would be have been in unless he took over the firm, lock, stock and barrel? If he did not, he was going to lay himself open to charges of damage from the point of view of the effect of his action on the policy and prosperity of the firm.

It may be, I do not say that it is so, that this firm in the future is not going to make Short machines. If that were so, then it might well be claimed that the action of the Minister had affected the goodwill, and there might he legal action for damages in respect of such loss of goodwill. I see no reason to complain of what the Minister of Aircraft Production has done in this matter. The blame rested entirely on the directors of Short Brothers. To suggest that Sir Stafford Cripps is trying to nationalize the industry by a tick is a most unworthy suggestion for anybody to put forward. I do not believe it for one moment. Frankly, had I been in Sir Stafford Cripps's place I would have done exactly the same sort of thing.

However, those are matters that are over, but there remains the point that the individuality of this firm has gone. What are we going to do with this concern? We now have vast works throughout the country, and consideration of the question as to what is to be done with them is going to give somebody a pretty bad headache after the war. Are we going to look upon the undertaking and use it as one of our shadow factories? I have no strong feelings on the nationalization of essential industries; I do not care whether you nationalize the railways or electricity or gas. I refuse to get excited about it, because it is a question of dealing with essential things which are more or less standard, and which do not call for an immense amount of imagination. So far as the aircraft industry is concerned, however, I hope that your Lordships will remember how young it is. The only occasion on which an effort has been made to nationalize it was in France, and from the moment that it was nationalized it never produced any machines at all which were worth anything. A large part of France's trouble during the war was due to lack of aircraft. This industry, as I say, is very young; it wants imagination, vision and the willingness to take risks. If you try to run an industry of that kind from Whitehall with civil servants, you will fail.

What I think is the dangerous part of what we have done in this matter is that we have, so to speak, dissolved the individuality of a great pioneer firm. I do not know what the Government mean to do with this firm, but I entreat them to preserve it is an individual unit, even if they own it and even if they run it. I do not care whether they hand it back later to the present shareholders or to other people, but I hope that they will do something to keep alive the individuality of the firm, the team spirit and the imagination which it has possessed. We may blame and curse the aircraft manufacturers as much as we like, but do not let us forget that in this war they have delivered the goods. Do not let us wipe out the individuality of these great creative firms, because after the war, if there is anything at all in our dreams and hopes of the establishment of a different world, the aircraft industry will have a very big part to play in it; and I sincerely hope that we shall continue to use in the future those firms, those designers and those workpeople who have done so well for us during this war.

LORD BARNBY

My Lords, my noble friend Lord Sempill was in your Lordships' House last week, when my noble friend Lord Teviot had intended to move this Motion, but unfortunately he cannot be here to-day, and he has asked me to put a point on his behalf. It is a point with which he hopes that my noble friend Lord Sherwood will deal in his reply. The firm of Short Brothers, as my noble friend Lord Brabazon has explained, are a pioneer firm; they built the first power-driven aeroplane completed in this country, and it was piloted—Lord Brabazon, with his usual modesty, said nothing about this, but I welcome the opportunity of saying it, since we have known each other for many years—by Lord Brabazon himself, in 1909.

This firm occupy a unique position in the industry, and they were responsible for the foundation of the Society of British Aircraft Constructors, in conjunction with a limited number of others, who are classed as approved firms. They have a position of privilege in the industry which has existed since the last war. We are given to understand that they have now lost their commercial entity, although, as has been explained in another place, only for the duration of the war. No doubt the Government are anxious to maintain all the privileges which this firm possessed at the time that they were taken over. One of these is a seat on the Council of the Society of British Aircraft Constructors. The question which I want to ask my noble friend is whether this seat is, for the time being, to be occupied by the Minister of Aircraft Production.

With that I have discharged the request of my noble friend; but, while I am on my feet, I should like, with the indulgence of the House, to mention two points of my own. I should like to commend the temperate manner in which my noble friend Lord Teviot has put his case in moving this Motion. In view of the fact that this matter is of intense interest to an immense number of industrialists in this country, a great service has been rendered by raising the matter here. My noble friend Lord Brabazon, speaking with the great authority which he possesses on these matters, has emphasized that the individuality of the firm should be preserved. I am glad that he did not disagree with the policy followed by my noble friend who moved the Motion, and who pointed out that he raised the matter on a question of principle, and not with reference to the specific case.

It is because of that that I venture to suggest that my noble friend Lord Sherwood, when he comes to reply, should try to answer a question which naturally suggests itself to many industrialists. The requirement in this case was to achieve control of production. Can my noble friend say—doubtless there is good reason—why it was not possible, by the exercise of the powers at the disposal of the Minister, to acquire all the facilities of the firm, just as the Government have secured the facilities of the railways, without taking over the ownership? Might it not have been possible in this case, and might it not be possible in other cases where the need may arise, for the Government to have ready management personnel who could be sent to any plant which was taken over, so that the great success which has been achieved in the past in the Royal Ordnance Factories might be obtained also in the case of such firms?

Following from that, we have had an example of a Controller, Mr. Layton Bennett, being appointed to Short Brothers, and then after a short time going to General Aircraft, and then being replaced. I speak without knowledge, and certainly without any interest in the concern in question. I am merely voicing widespread perplexity when I ask why Mr. Trevor Westbrook should not have been invited to resume, on behalf of the Government, the work which he was doing for a period with Short Brothers before the Minister, no doubt for what seemed good reasons, directed his energies into another channel. He was engaged in a field in which, as he occupied so responsible a position under Lord Beaverbrook when he was at the Ministry, his services are understood to have been of great value. I only throw those thoughts out in the hope that my noble friend will in his reply give some indication to a perplexed industry as to this particular point.

LORD KENILWORTH

My Lords, I wish to speak for a few minutes from a rather wider aspect of this matter. I have been Chairman of the Society of British Aircraft Constructors. I am therefore well conversant with all the people in the industry and know their various businesses, so far as one can learn it from intercourse over a protracted period. I am entirely in agreement with much that was said by my noble friend Lord Brabazon, more particularly with his eloquent testimony to the firm of Short Brothers. Short Brothers are a rather highly developed type of firm, not entirely dissimilar from the whole basis on which the industry has been created. As Lord Brabazon said, the industry is a young one, as industries go, but, as one who has had wide experience of industrial undertakings, I have no hesitation in stating that it is as efficient as other industries. The men engaged in it are possibly visionaries, men with vivid imaginations and high technical qualifications, and they are very temperamental and from time to time perhaps not easy to work with. Be that as it may, this industry has done great things, as Lord Brabazon said, and we know the wonderful testimonials that have been paid to the young men of the R.A.F. in the Battle of Britain. I would remind your Lordships that the tools with which that Battle was won were made by this particular industry.

Therefore, far from being reproached, as they are being to-day—first one firm, and then another, and then another, whose organization is said to be all awry—I think they should be treated rather as doing their job efficiently and well. Criticism of the kind we have heard in this discussion is breaking down and interfering with the morale of managers, designers and work-people, and I am quite certain that, if it goes on in the way it has been doing, a very great disservice will be done to the country. The industry has always been subject to supervision by the Air Ministry. Some of that supervision has been vexatious, some of it has been helpful. Apart from the work which was done by the noble Lord, Lord Beaverbrook, as Minister of Aircraft Production, I do not think the Ministry has been very helpful to the industry. I suggest that if instead of starting these scares and upsetting people, they made more earnest efforts to co-operate with the industry and in a more tactful manner it would be to the advantage of the country.

LORD GEDDES

My Lords, it so happens that I have had a good many opportunities of seeing the work of Short Brothers during the period of the war. I had also seen some of it before the war, and I had admired the work they had done. I had flown many thousands of miles in their aircraft, and I was very fond of the craft, and very fond of the firm. But, as I watched them during the war period, I saw a great weakness develop. They were artists. They were people rather like the very finest coach builders in the motor trade, and what we wanted for the war was people who could turn out the planes in quantity. Actually at one time—I think it was while my noble friend was Minister of Aircraft Production—they were taking three times as many man-hours to turn out a plane as another firm was requiring to turn out a comparable plane. The actual figures at that time were somewhat in the ratio of 40,000 man-hours and 120,000 man-hours—a tremendous difference, a tremendous absorption of human energy and time. These great differences in efficiency in production—not in design—were what I saw frequently the Minister of Aircraft Production struggling to overcome. I saw that in Shorts there was an artistic temperament which really could not bring itself in any way whatever to meet the situation which existed, and in conversation members of that organization could not bring themselves to realize that there had to be a complete change. It is, I think, a tragedy of temperament as much as anything else, and it was absolutely inevitable that some change should be made in Shorts if we were to get delivery of all that we required. I know that from personal observation.

When it comes to my view, which I would like to express to your Lordships, on the question of the Government taking over the shares, I trust that no one will imagine that I am keen on the nationalization of industry. I think that along that path with certain industries lies absolute death and destruction for the industries themselves. With other industries it does not matter. But in this particular case I think in fairness to the shareholders the Government had to take over the shares. It is a completely different organization that has to be established. The plants which are managed by Shorts, for which the Government have put up so much money, will need to be worked in an entirely different way. I cannot conceive that it would be fair for the Minister of Aircraft Production, or any Government Department, to say, "I am going to make this firm do this, that, and the other thing, and I am going to let the shareholders bear the burden of all this extra expense." The only fair thing to do was to take over the shares. It does not seem to me to raise any general principle at all. Here was a firm which, as a result of its great history, as a result of many of its good qualities even, was unable to meet the requirements of the times, as I saw it. It had to be reorganized, it had to have its methods changed and altered, and I can see no other way of carrying out such a drastic alteration except by the Government taking over the whole concern, lock, stock and barrel. And that is what they have done. I have only one criticism to make of the Government, and that is that they did not do it much sooner.

LORD SHERWOOD

My Lords, you will certainly agree with me in saying that we are very grateful to Lord Teviot for bringing up this question, and anyone who had any doubt on the matter had only to listen to the speech of the noble Lord, Lord Brabazon, to realize how important this firm has been and what a necessary measure it was that the Government took. But I do not come here in any way to stand in a white sheet and apologize for what the Minister has done or for the methods he has had to take to deal with this very difficult question. This in wartime has got to be judged on war lines. The speeches which have been made in your Lordships' House have shown that this step was necessary. In his closing words my noble friend Lord Geddes asked why it was not done before. There are many reasons for trying to avoid doing something which, as has been so ably pointed out by my noble friend Lord Brabazon, may not necessarily be on the right lines when you are dealing with aircraft production, and not with something stabilized such as the railways.

I agree with the noble Earl, Lord Listowel, as to what has happened in this company. It is some time back since people got disturbed as to what was happening in Short Brothers. It was then that the first inquiry was made by Sir George Schuster and Mr. Robert Barlow. They went carefully into it, and reported that it was quite impossible for the company to continue as it was, and that it would not be able to carry the load of aircraft production we needed in time of war. They also reported that one of the greatest weaknesses came from the executive of this firm. It was then, as has been said, that Sir Frederick Heaton was put in by the board themselves, not by the Minister of Aircraft Production. He went absolutely hard at it, full of hope that he could avoid the next step, but he found the position impossible. This was reported to the Minister, and the Minister had to take action. He put in a Controller for a short time, and it was then that a report came back that it was impossible to go on unless the Government had complete control of this firm. The only way you can get control is by taking over the shares. I assure your Lordships that no other method would have achieved what is absolutely necessary at this time. It was in the higher executive that the interference came. This is where the weakness was, and the shareholders are the people who appoint the directors and obviously have a say. It was therefore necessary to take over the shares.

The noble Lord, Lord Teviot, asked: "Why not do what was done in the case of the railway companies? Why not take over the management, pay so much, and leave it as it was? "But surely Lord Teviot is asking for something which I am not going to argue—that is, the taking over of the whole industry, not just one weak part that has fallen down. All the railway companies have been taken over, and an agreement has been made to pay so much to the shareholders. This step is taken under the stress of war in regard to some weakness which we have found in the fabric of aircraft production. Therefore that system would no more work than if you suddenly said: "Grantham station is not very good, therefore we will take it over as a going concern." This is only part of an industry. It is a different matter altogether from the railways. If shares are taken over a new board can be set up. A new board has been set up and is working now under the same chairmanship as before.

The worry, as I see it, as the noble Lord, Lord Barnby, has said, is really directed to the question of what is going to happen to these shares afterwards. The Prime Minister made it quite clear, in his answer in another place, that there is no idea that this is taking over by nationalization or of keeping the shares which have been taken over because of this emergency. Of course I could not give the assurance asked for that everything taken over in war-time will immediately be handed back in peace-time. Take the simple case of the aerodromes that the Air Ministry has built. It has taken away farm land from farmers, but I cannot promise that that land will be given back. The Air Staff in days to come may need those aerodromes still, a great many of them, and no general assurance can obviously be given on that point. But the Prime Minister gave this assurance that our policy is "everything for the war" and after the war is won a fair and free review under normal political conditions. That is when these questions will come up. I agree with my noble friend Lord Brabazon that if there is one thing that must have freedom, and which it will not necessarily be an advantage to nationalize, it is something like aircraft production. Therefore there is no reason to fear that this is the thin end of the wedge. I can assure noble Lords that that is not in the mind of the Minister who took this action. He took it because it is necessary to the conduct of the war, and that is the only action that I stand here to defend.

LORD TEVIOT

My Lords, in spite of, perhaps, not being successful in putting some of my views sufficiently strongly before your Lordships, I am extremely glad that I brought this Motion before the House. I feel that if this debate had taken place and the answer of the noble Lord to the debate had been given earlier, there would have been no apprehension, no qualms, on the part of a great many people in this country as to what the future was going to be like. The noble Lord who has replied and my noble friends Lord Brabazon and Lord Geddes, speaking with great authority, have shown that, apart from the fact that the taking over of the company was necessary for the war effort, the taking over of the shares, in view of the position of the company, was also necessary. In that way when this debate is read, many of those who were very perturbed about the situation will be reassured. I thank the noble Lord for his speech, and beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.