AN AIRCRAFT FIRM'S CAPACITY. (Hansard, 25 March 1943)

§ LORD WINSTER
My Lords, I beg to ask the question standing in my name on the Paper.

LORD SEMPILL
My Lords, before the noble Lord, Lord Sherwood, replies, may I make a few observations in extension of the remarks of my noble friend Lord Winster a few days ago? I was sorry not to be present in your Lordships' House when the question touching the internal affairs of an unnamed aircraft designing and manufacturing firm was asked by my noble friend on February 23. My noble friend has always something interesting to say to your Lordships, and presents his points in a vigorous and compelling manner, but on February 23 the hour was late when he rose to speak, and perhaps for that reason, and on the assumption that he was very fully informed about these matters, he curtailed his remarks. Before Lord Sherwood replies for the Government there are certain further matters that I submit should be again drawn to your Lordships' attention, as without these the situation cannot be accurately appreciated. I know that my noble friend Lord Winster will allow me to add these observations from personal knowledge during thirty years and more of activity in all branches of aeronautics.
On December 17, 1936, I drew attention to some fundamental points in 952 regard to the handling of the aircraft industry by the Air Ministry, and made reference to the part it was destined to play in what was then a period of rearmament. Certain important changes were urged at that time, and your Lordships will agree, I think, that events have since, and quite recently, transpired which have shown that the recommendations then submitted to your Lordships were fully justified. There is a society known as the Society of British Aircraft Constructors which, while purporting to represent the aircraft industry as a whole, in fact represents the charmed circle of the elect or what are known as the approved firms. The approved firms alone have a vote in the management of the society's affairs. There are fifteen approved air-frame manufacturing firms, and five aircraft engine manufacturing firms, two of whom are offshoots of air-frame manufacturing firms. There are therefore eighteen firms within the magic circle, and very many—some 225—without, amongst whom was to be found a firm whose name is in the mind of my noble friend Lord Winster.
The policy of the Air Ministry, now followed by the Ministry of Aircraft Production, for reasons fully outlined to your Lordships on December 17, 1936, has been to give preference from the standpoint of design and manufacture to these approved firms, and by so doing to maintain a ring of approved firms. That this policy does, as I have urged before in your Lordships' House, call for revision is well illustrated when we observe that, after three and a half years of war, no fewer than three out of the approved fifteen aircraft designing and manufacturing firms have had Controllers of one kind or another appointed by the present Minister of Aircraft Production, and in one case all the shares of the company have been acquired by His Majesty's Government. The firms outside the ring of approved firms were styled by the Air Ministry as "fringe" firms, and by the Society of British Aircraft Constructors as associate constructor members, but with no voting rights. Two of these "fringe" firms, both allied, withdrew from the Society of British Aircraft Constructors about a year ago in protest against this body's undemocratic proceedings. One of these firms is the subject of the remarks of my noble friend Lord Winster.
953 This firm was established some years before the war by a member of your Lordships' House with a view to assisting in the production of military aircraft and air transports for civil purposes. In both directions useful contributions were made. The managing director is a dominant personality, imbued with great vision and an immense vigour in action. He devotes himself to the common task in which we all strive to play our part with a zeal that all may envy and none surpass. He is one of the leading pioneers in aviation. He is a courageous fighter, and has made no secret of his opposition to the principle of the vested interests of the approved firms. He was summoned to appear some time ago before the Select Committee on National Expenditure, to whom he has submitted his views. Such have also been made known to all previous Ministers of Aircraft Production at their request. His company might have been content to remain a small one, and to earn such modest profits as present regulations may allow; but such a course has been spurned and large risks have been taken with no possibility of financial return, but something far more valuable—the supreme satisfaction of knowing that a useful contribution had been made to the war effort.
In November, 1941, in February, 1942, and in June, 1942, the company which is the subject of my noble friend's remarks advised the Ministry of Aircraft Production that the Fairey contract could not be carried out for reasons beyond the control of this unnamed firm. This warning was unheeded, as it was not fashionable to doubt the estimates of one of the approved firms. This has been changed by the present Minister, as your Lordships will be aware, and for this change we are exceedingly grateful. In August of last year a high official in the Ministry of Aircraft Production sent for the Chairman of this anonymous company, of which the individual to whom I have referred is managing director, and stated categorically that this person was deliberately holding up war production. No more serious charge can be made against a man's honour. The Chairman vigorously refuted this charge, classing it as outrageous, but it was repeated to the individual in question when he called on the official at the Ministry to demand an explanation. At that time he urged with great vigour that the matter should be 954 fully investigated. An investigation of a sort was held, and at first an attempt was made to justify the charge, but it broke down completely as there was no evidence at all against the individual in question. But what did emerge was the fact that these charges were made as part of an attempt to disguise a very serious official blunder.
While addressing your Lordships I have in my hand correspondence that has passed between the previous Minister of Aircraft Production and the individual against whom this outrageous charge was made, and it is very significant that the individual not only pressed the Minister for a complete and unconditional withdrawal of all charges, but he rejected on two occasions the Minister's half-hearted and ungenerous form of apology as being insufficient. I can only add that the Minister, when pressed further, did make an unconditional and complete apology on September 29 last. As my noble friend has pointed out, the Minister, in answer to a question in another place, on June 10 last year, said: "This firm is up to date in its contracts." This is a most significant statement, for it was only after the failure of the charge that the individual in question was obstructing the war effort that a charge was made by an official in the Ministry of Aircraft Production that the firm was inefficient in its management.
This charge was first made on September 2 of last year to the Chairman of the company. The firm requested an investigation of the charges of mismanagement made by a representative of the Ministry of Aircraft Production, and the Barlow Committee was set up as a result for this purpose. That Committee's findings fully justified the firm's allegation that a certain line of action taken by the Ministry of Aircraft Production's representative against the company's most insistent advice had led to a disastrous state of affairs. The Committee also took note of the personal attack on the individual referred to, and I think your Lordships would like to hear the relevant passage in that Report which was quoted by the late Minister of Aircraft Production in his letter of apology. It reads: We are informed that as a result of statements made Mr. — — was accused by an official of the Ministry of Aircraft Production 955 of obstruction almost amounting to sabotage of the scheme. We wish to record that we obtained no evidence to support such an accusation, and that it would be best for all concerned for this atmosphere to be cleared at once. I do not propose to detain your Lordships any further by covering all the ground involved in this matter and commenting in detail on the points raised by my noble friend Lord Winster. I am informed that a full statement has been prepared by the firm in question to the points raised in the last debate, and lodged with the Ministry of Aircraft Production, and I hope my noble friend Lord Sherwood will deal with all these points very fully in his reply. I have been most careful in sumitting these observations to your Lordships not to go outside what exists in written evidence. It is sad indeed to see that such a state of affairs can arise in such an important Ministry, and your Lordships will be sorry that the present Minister, a man imbued with the highest ideals, should have to grapple in his early period of office with so lamentable a state of affairs. The Minister, as we are well aware, is taking strong action in various directions, but I hope that he may be respectfully offered these few words of advice, that the appointment of Controllers in every case of difficulty in the aircraft industry should not be considered a sovereign remedy for all its problems.

§ THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR AIR (LORD SHERWOOD)
My Lords, the noble Lord, Lord Winster, on February 23 brought up this case, and asked me what was happening in regard to this company. I then gave him an assurance that the matter was being gone into carefully, that, as has been recounted by the noble Lord, Lord Sempill, someone had been appointed to this company who was making a personal report to the Minister, and that on that personal report, which was going to be submitted in a month's time, the Minister would take action. Therefore it is perfectly proper that Lord Winster should now ask whether that report has been received and what action is being taken. Lord Sempill, I hope, will not think me discourteous if I do not go into all the points he has brought up. We all know in this House that he has immense knowledge of the 956 subject, and I can assure him that all the points he has brought forward will be laid before the Minister responsible.
What I am proposing to do to-day is to answer the special point that was put to me by Lord Winster—namely, what is the result of the report which was made to the Minister? On that I would like to say that the report has been received, that it is personal to the Minister, who has considered it, and that, in the light of it, he has taken action by using his powers under Defence Regulations. He has appointed an authorized Controller, and the person he has selected as Controller is Mr. Layton-Bennett who will be provided with the necessary technical advice to assist him in discharging all his duties. I quite agree that this is drastic action that has been taken by the Minister. As has been brought to your Lordships' notice previously, this action has had to be taken in certain cases of aircraft factories which have grown to such an enormous extent during the war. I am not going into the details of this case other than to state that the Minister is fully advised on all these matters, that he has had this inquiry which has taken some time, and that he has come to this definite decision. The noble Lord, Lord Winster, asked me to give him an answer, and that is the answer I give him.

§ LORD WINSTER
My Lords, I beg to thank the noble Lord for the answer which he has given me.