§ LORD TEVIOT rose to call attention to the acquisition by His Majesty's Government of Power Jets Limited, and to ask whether it is their intention to create and maintain a State monopoly in the production of aeroplanes, or to compete with private enterprise in the production of these and other consumption commodities, and to move for Papers.
§ The noble Lord, said: My Lords, I consider that this Motion of mine raises a great many questions, but I am going to confine myself to-day to the question of the production of aeroplanes, and, in particular, jet propelled aeroplanes. I understand—and I think I am correct—that the Government now own three if not four aeroplane producing companies. So far as I can find out, they own these companies lock, stock and barrel. That is to 224 say, they own the works, they own the shares; in fact they own the whole of the assets of these companies. It is not my intention to question the advisability of having acquired these companies' interests in war-time. It would be impertinent on my part, without full knowledge of all the circumstances, to question such a proceeding. What will the Government position be at the end of the war? They will be aeroplane producers. I do not think anyone will dispute that the development and the expansion of civil aeroplane production after the war will be enormous, and there are three questions that arise out of this. There are the commerical question, the economic question and the political question. I will deal with them in that order. First, the commercial question. A great many new types of transport planes, passenger planes, seaplanes and landplanes will, undoubtedly, be produced. Do the Government intend to compete with various important companies and private enterprise organizations in this market, not only in this country but in the Empire and in the world? I put it to your Lordships: What chance have the Government in setting up a new Department with no commercial experience? After all, private enterprise produced the Spitfire which won the Battle of Britain; and history tells us that all great inventions have come in the past from individual enterprise, ingenuity and speculation.
§ Now I come to the economic side of the matter. We know that Government construction is expensive. For instance, I believe that the cost of building a battleship in the ordnance factories is far more than that for which it can be built in, for instance, the establishment of Messrs. John Brown, or some of the other great shipbuilding organizations. Undoubtedly the same thing will apply in the case of the aeroplane, and Government factories will very surely lose money. That money will be the taxpayers' money. Some people go about saying: "Oh, the Government will do this and the Government will do that" in regard to the spending of money. But the Government have got no purse, as we well know, they have no money except the money they get out of the pockets of the people of this country. I hold the view that before this important departure from custom is made the electorate should have an opportunity of registering their opinion, because any 225 losses—and in my view losses must come—will have to be met out of their pockets.
§ Then there is the political side of the question. We are aware that there is a Party in this country, which is now, united with other Parties within the National Government, which has quite clearly stated that its policy is the nationalization of industry. Moreover, the Minster of Aircraft Production has been for years, quite honestly and consistently, an advocate of that policy. I and many others feel that before this innovation becomes a fait accompli the electorate should have an opportunity of deciding whether they are willing to foot the bill.
§ Coming back to Power Jets Limited, there are at present five companies of very high repute who are developing this method of propulsion. I have not asked them whether I can mention their names, but I am perfectly willing to give their names to my noble friend if he so desires. There are certain questions which I think, should he answered. There is no parallel between this case and the ordnance factories, the products of which do not enter into ordinary trade, are not for sale to private individuals, and do not compete with the products of private enterprise. The Government's acquisition of jet Propulsion Limited is a wholly different matter. Not only is it to be a permanent policy of the Government in peace-time, but it relates to an article which will in peace-time enter into ordinary competitive trade, unless the production of civil aircraft is to become a Government monopoly. If the production of civil aircraft is not to be a Government monopoly, the Government's action in acquiring Jet Propulsion Limited means that they will be entering into competition with private enterprise.
§ In that case the following questions arise: (1) What will be the relation between the Government and private firms producing jet-propelled aircraft? (2) Will the results of research in connexion with the Government-owned factory be made available to private aircraft firms? (3) Will the prod acts of the Government-owned factory compete with those of private firms in the home market and in the export trade? (4) What about the priority of raw materials and various other questions arising therefrom? I must conclude 226 that the Government have considered these matters, and I presume that I shall receive very definite replies to these most important and far-reaching questions in regard to the future prospects of this great and expanding world industry. We hear much about the control and planning of industry after the war, and I put this question to your Lordships: By whom? By those who in the nature of things can have little knowledge and no experience, or by those who have vast knowledge and experience? I want it to be clearly understood that in war-time I question nothing; my concern is entirely with the post-war position of the Government and the aeroplane industry. I beg to move.
My Lords, my noble friends have asked me to say a few words on the Motion brought before your Lordships by Lord Teviot. It raises a matter of important political principle. With the concluding remarks of the noble Lord I do not think any of us would quarrel. He says that the test of all present arrangements is whether the war effort will be furthered, and there we agree with him. That is indeed the test of all the steps taken and of all the policies embarked upon and of everything that we do. There is no quarrel between us there. However, he apparently proposes that at the end of the war the Government shall abdicate all their properties and interests, which they hold as a trustee on behalf of the nation, and hand over the results of their researches, experiments and development, carried out at tremendous cost, to private enterprise. That, I understand, is the noble Lord's contention, and it requires a little more consideration before we find ourselves in agreement with him.
He quoted the analogy not of the Royal dockyards, as I thought that he would, but of the Royal Ordnance factories. I do not know whether he meant to say the Royal dockyards, because he spoke of battleships being built in the Royal Ordnance factories. If he refers to their armament that may be so, but the battleships and other warships themselves have been built in the Royal dockyards. They form a perfect analogy. The Royal dockyards, especially before the last war, used to be heavily attacked by members of the Conservative Party as being extravagant and expensive and so 227 on, but as a matter of fact they were a tremendous national asset. If you ask any officer of the Navy about the quality of the work on the ships produced by the Royal dockyards, you will be told that it was in every way excellent. As for price, the question has been gone into again and again, and I believe I am right in saying that in all cases the Royal dockyards' price compared favourable with the price in private shipyards. That is an analogy from the Navy which may be applicable in, future.
I do not want to rake over old troubles too much, but it is well-known—Lord Teviot knows this as well as I do—that between the wars there was an aeroplane manufacturing ring. That is not disputed. Certain firms banded themselves together —quite properly; it was in the interests of their shareholders that they should—and it was most difficult for any new firm of aeroplane manufacturers to get any share of the market. Many of these firms were efficient; that is also true, and, as the noble Lord said, some of the finest aircraft with which we began the war were produced by the designers employed by these private firms. But the existence of that ring was not altogether in the national interest. It was, for example, difficult for the Air Ministry to check prices against the ring, in the absence of any Government-owned manufacturing plant. I think I am right in saying that when these matters have to be settled in the future my friends will wish to see the Government retain a foothold in the great business of manufacturing aeroplanes, if for no other reason than as a check on prices.
At the same time, speaking still of future policy, I think we all recognize—certainly all my friends to whom I have spoken recognize—that it is in the public interest that there should be a flourishing aeroplane industry as well, and that what we can do to support it and foster it and stimulate it we of course will do. As the noble Lord points out, if we are going to make aeroplanes for export and sale abroad that must obviously be done by private firms, and I hope that whatever Government may be in power will always encourage such a business, because that means that you have more plant, more experts and more trained people in the country to draw upon in case of war or 228 other emergency. In the same way Governments before the war—I return now to the naval analogy—Governments of whatever complexion were very careful to do all they could to stimulate the building and production of warships in this country by the great private shipbuilding firms. One very good reason for that was that in case of war any uncompleted warship on the stocks, say for a South American Republic, was promptly taken into the Royal Navy. We were very glad to get them. I imagine that, in the same way, whatever Party is in power will do its best to stimulate a flourishing private aeroplane manufacturing industry, but that does not mean that we should hand over the whole business of research and development to private enterprise.
I feel, after the Government have spent a great deal of money, as the Government have done on behalf of the nation, in developing the jet-driven aeroplane, that it requires a little consideration—to put it no more strongly than that—before all the results of these costly experiments and long years of development should be handed over to the private financiers behind the private aeroplane making companies. I think there would be criticism if that were done and I suggest that the whole policy requires very careful thought. I would like to see the nation as a whole benefiting from the expenditure made on behalf of the nation in developing this wonderful invention. I do not think the case is as simple as the noble Lord, Lord Teviot, has made out. I do not think it would be in the public interest, without a great deal of thought, to hand over all our inventions and special knowledge acquired during the war to promoters in the City of London. Because they are not the people who make aeroplanes or design Spitfires; they are the men who control the money side of the business. I have no doubt they are responsible and respectable people, but I do not see why they alone should have the whole advantage of what, after all, has been a great national effort in building up the finest Air Force in the world, technically superior I believe to every other, and that was not done by the gentlemen of Throgmorton Street or Lombard Street. The noble Lord, Lord Teviot, thought fit to make some reflection on my right honourable friend Sir Stafford Cripps.
§ LORD TEVIOT
I would like to correct the noble Lord at once on that. I made no reflections at all on Sir Stafford Cripps, in fact I thought that it was rather a development of a policy which the noble Lord believes in and indeed the Minister believes in. I cannot see that there is any reflection on him in mentioning the policy that he has pursued for many years.
Of course reflections can be complimentary and also derogatory. In this case Lord Teviot was apparently making a complimentary reflection on Sir Stafford Cripps. His remarks about Sir Stafford Cripps were praiseworthy, I understand; he was praising him because he believes in public enterprise.
Because Sir Stafford Cripps is a Socialist in other words, as I am. But surely Lord Teviot would admit that Sir Stafford Cripps and every other Socialist in the Government have sunk the whole of their political principles when they conflicted in any way with the national war effort. My colleagues who are in the present War Cabinet, the leaders of my Party, have never allowed the political tenets which we hold in any way to interfere with anything that could further the national war effort.
§ LORD TEVIOT
I am sorry to interrupt, but I never made any suggestion of that sort. The whole of my remarks were concentrated on what is going to happen after the war is over. I made it particularly clear that that was so.
Well, why was it necessary to mention the fact that Sir Stafford Cripps is a Socialist. There could be no other meaning except to suggest that Sir Stafford Cripps's ideas might be coloured by his political doctrine. I do not think there has been any case in which one of the Labour or Socialist Ministers of the Government has allowed his political doctrines in any way to colour his action as a member of the Government. In fact I rather regret that in some cases they have been too anxious to abrogate their political doctrine when their colleagues of other Parties in the Government have insisted on their own political doctrine being observed, war or no war. However the test, as the noble 230 Lord said—and here we all agree with him—is what will help the war effort, and if it is going to assist the war effort that Power Jets Limited or any other aeroplane making companies should be completely controlled and owned, lock, stock and barrel, as Lord Teviot has said, by the Ministry of Aircraft Production, let us do it. I am sure Lord Teviot would not question that, and if it is going to prejudice private enterprise after the war, well that is just too bad and we cannot help it.
§ THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR AIR (LORD SHERWOOD)
My Lords, you will not expect me to follow the two noble Lords who have spoken in the dispute they seem to have had about Sir Stafford Cripps's views in the political sphere. What I am asked to do—and I am grateful to the noble Lord, Lord Teviot, for bringing up this matter—is to give some information on a very important matter, and I would like to give a fairly full answer. The Motion which the noble Lord has put on the Paper really covers two points: first, is it the Government's intention to create and maintain a State monopoly in the production of aeroplanes; and, secondly, are we proposing to set up a concern which will compete with private firms in the production of aircraft and other consumer goods? The answer to both these questions is an emphatic negative. That is quite clear. We are not proposing to set up a Government monopoly, nor are we going to enter into any form of trading or manufacturing activity that will compete with industry. I can assure noble Lords—perhaps not so much the noble Lord, Lord Strabolgi, who may perhaps be a little disappointed—that this is not the thin end of the wedge of State enterprise.
The reason why we have taken over Power Jets Limited is perfectly simple. It is that the development of gas turbine engines, or what is known as jet propulsion, has reached a stage when, if the nation is to receive the full potential benefit of this very revolutionary invention, it is essential that we should set up a permanent Government-owned research centre. There is nothing new in this. The National Physical Laboratory and the Royal Aircraft Establishment at Farnborough are examples. The possibility of constructing a new centre was con- 231 sidered, but was turned down, for obvious reasons. There is not at the present time the building, the labour or the material for setting up another research laboratory. This firm, Power Jets Limited, which the Minister has decided to take over, was a private company, in which some £20,000 was invested, and in which the Government have put over £1,000,000. From the middle of 1939, when this company ran out of capital, the State—that is to say the taxpayers—have defrayed all the expenses and paid a fixed profit based on the company's capital with an allowance for management. Virtually this company was a State-controlled establishment for nearly five years. We built the factory and provided the necessary facilities and equipment at a cost of some £350,000. The decision to take over this firm's organization for a national centre implies no reflection at all on the competence of the management or on its technical achievements, and we so informed the directors. Moreover, the two managing directors have been offered seats on the Board of the new company which, I am glad to say, they have accepted.
The Minister of Aircraft Production has now taken over the company and appointed a board of directors. I should like to read the directive he has given because it makes perfectly clear what this company is there to perform. This is the Minister's directive:To act as the recognized national establishment for furthering, in collaboration with industry and the Services, the advancement of knowledge on the subject of gas-turbine engines and their use in aircraft; and for this purpose—Then there is another part. The Minister has also set up a Gas Turbine Technical Advisory and Co-ordinating Committee under the chairmanship of Dr. H. Roxbee-Cox, who is chairman of this company. This Committee includes representatives of all the industrial firms directly engaged on gas turbine work for the Ministry of Aircraft Production, and it will be extended as necessary to cover any other interests involved. The Minister has informed the Chairman that it is his wish that, on questions of technical policy, the directors should seek the advice and assistance of, and work in the closest collaboration with, the Committee. Noble Lords will see that this is not a question of the State taking over something which is to be in competition with private enterprise. It is a matter of research. The taxpayers have put over £1,000,000 into this firm, and the firms are quite agreeable to the terms which have been settled. The terms include looking after all those who are employed in the company in a proper way. The taking over has been amicably carried out in every way by His Majesty's Government. I do not think anyone need be afraid that this is the thin end of the wedge of State enterprise. As the noble Lord has said, there are other companies involved in furthering this great new invention, and this will mean that we shall have an advantage which we should not necessarily have had before. These private companies will be able to draw on this research company which otherwise, being competitors themselves, they would not have been able to do. In this way, we in this country will get the full advantage of this great new invention and see that it goes forward in the public interest.
- (1) To conduct research on such engines and their components, accessories, and materials of construction;
- (2) to design, construct, and develop prototype engines, components, and accessories and to develop materials for their construction;
- (3) to devise methods of manufacture appropriate to such engines and to manufacture small batches of such engines so as to carry development up to the production stage;
- (4) to test such engines, their components, accessories, and materials of construction on the test bed, in the laboratory, and in the air, and to design, develop, and construct apparatus for this purpose;
- (5) to make available to those concerned, by reports and otherwise, the knowledge obtained by such work;
- (6) to train Service and civilian personnel for the various countries of the British Commonwealth in the technique of the gas turbine engines and the other work carried on at the establishment; and
- (7) to do such work or things as the responsible Minister may direct on behalf of His Majesty's Government."
Would I be justified in assuming that private companies taking advantage of any discoveries as a result of this research will be able to use the discoveries, as it were, under licence, paying licence fees just as any private company does now to other private companies whose patents they use, and that in that way there will be a 233 return on the moneys invested in this research?
§ LORD SHERWOOD
I could not give a definite answer to that. What I do say is that this research will be available, and in fact the Minister has set up this Committee in which these other firms are interested to see that they get full advantage of what comes out of the research. As regards the details of what happens afterwards, that is another question.
May I ask whether the private firms are, in fact, to get a form of disguised subsidy, or whether there will be a return on this public money?
§ LORD SHERWOOD
There will be eventually a return on public moneys in the shape of better work as a result of this research.
§ LORD ADDISON
My Lords, the statement made by the noble Lord creates serious misgivings in my mind. We are entitled to know a little more. I do not press him to-day because, of course, that would clearly be inconvenient; but if a million pounds of public money, and perhaps more before we are finished, is to be, spent, we are entitled to have some assurance as to the terms and conditions upon which other persons may be able to take advantage of that expenditure. I am not wishing to prejudice the case by suggesting the conditions, but it is of the first importance that we should have some information on this subject. If it were convenient for the noble Lord to give us a White Paper or something of that kind we ought to have it, because as the matter stands we clearly cannot be satisfied with his statement.
LORD BALFOUR OF BURLEIGH
My Lords, with the permission of the House, I should like to say that I hope your Lordships will not be unduly disturbed by the misgivings which my noble friend opposite seems to be entertaining. This arrangement appears to me to be entirely in line with present arrangements for scientific research. The State spends enormous sums of money on scientific research, both physical and medical, and otherwise, and a very great return does come directly and indirectly from these researches. I have not the slightest doubt that in due course a suitable report 234 will be made to Parliament as to the results of this research. My only reason for intervening is to express the hope that the House will not feel there is anything sinister because it seems to me that this arrangement is entirely in line with our present procedure.
§ LORD ADDISON
My Lords, by your Lordships' leave, the noble Lord is not representing the case quite fully. In the case of industrial organizations the various industries, in practically all cases, themselves have associations and themselves make contributions to the work of the Industrial Research Council. Research is in that case associated with the industries which themselves make contributions. That is quite a different basis from the thing which has been explained today by the noble Lord. I am not saying that his explanation may not be supplemented. I am only saying that I am not satisfied with it as it stands at present. It is quite different from the basis of the Industrial Research Council. I know that because I, myself, started it.
THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT CRANBORNE) (Lord Cecil)
I am not quite clear as to what the noble Lord desires.
§ LORD ADDISON
I am not pressing for any further answer to-day, but we shall look for some further statement in amplification of what the noble Lord has said and in the absence of it we shall put a Motion on the Paper in the ordinary way.
It is open to any noble Lord to put down a Motion on any subject at any time. I hope they will consider the reply which the noble Lord has made for the Government to-day and then be able to have second thoughts on the subject. But it is always open to put down a Motion.
§ LORD ADDISON
I hope the noble Lord will not put it off so lightly as that. It is a big matter and one of public importance. Perhaps the noble Lord will think it over and see whether he cannot give further enlightenment upon the matter. The conditions have not been mentioned at all in the statement made by the noble Lord.
Of course not only my noble friend who has replied 235 but the responsible Minister will take note of what has been said, and I have no doubt, if the House wishes to have another debate on this matter, it can easily be arranged at any time.
§ LORD TEVIOT
My Lords, I have never heard of this very sinister ring to which the noble Lord, Lord Strabolgi, referred, and from my knowledge of the industry generally—which I must say is not very intimate, but I certainly know a great many people in it—I cannot imagine that there is any justification for saying that there ever was a ring in regard to the production of aeroplanes. I am sure that we must be very satisfied with the noble Lord's reply. It certainly goes a long way to ease my mind and I am sure also the minds of those in the industry in regard to the future. There is just one point that I am not quite clear about. I gather that this organization which has been set up—I hope the Minister will tell me if I am wrong—has on it representatives of the aeroplane producing companies. I gather there was some sort of co-operation.
§ LORD SHERWOOD
The Co-ordinating Committee which is under the chairmanship of Dr. Roxbee-Cox includes representatives of all industrial firms directly engaged on gas turbine work for the Ministry and it will be extended as necessary to cover any other interests involved.
§ LORD TEVIOT
That I think is most satisfactory. The only question which arises out of what was said by the noble Lord opposite is that some perturbation seems to be in the minds of noble Lords that some private enterprise or company would derive benefit from this development by the Government Department. I do not think that there need be any fear in regard to that.
§ LORD ADDISON
The noble Lord is misrepresenting us. We have not the slightest objection to private enterprise deriving benefit. Of course not. The point is we want to know the conditions on which private enterprise is to he entitled to derive benefit. That is the point.
§ LORD TEVIOT
That leads to another point. Supposing it is the case—and I think it highly probable—that the great companies which are now developing the jet propulsion idea, go on at a much quicker rate than the Government Research Department, is there any arrangement by which all the information gained goes into one pool? I presume probably not at this stage. I must say I would like to consider very carefully what has been said but, generally speaking, I must thank the noble Lord very much indeed for what he has said. He has relieved my mind a great deal on many questions in regard to this matter that were obscure to me and I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.