HL Deb 20 July 1949 vol 164 cc274-301

Order of the Day for the Second Reading read.

LORD PAKENHAM

My Lords, I rise to move the Second Reading of the Airways Corporations Bill. In doing so, I should like to express my gratitude to the Opposition for helping us in the way they are doing. I am rot as yet aware what their reaction will be to the Bill, but it seems to me they have shown a wise and generous attitude in enabling us to proceed with it as rapidly as possible, and allowing the Corporations to know where they stand. This is a short Bill and I will therefore ask permission of the House to deal with it fairly briefly, although the issue is important. The purpose of the Bill is simple. It is to amalgamate two out of the three British Airways Corporations—the British Overseas Airways Corporation and the. British South American Airways Corporation. The single issue before the House to-day is whether or not this amalgamation shall take place. As I think is generally known, the amalgamation is approved and supported by the Board of B.O.A.C. and the Board of B.S.A.A., and by the National Joint Council of the civil aviation industry, on which the trade unions, of course, are represented on an equal footing with the managements. It would be fair to suggest that if the companies concerned were operating under private enterprise the merger would go through with the agreement of all concerned. Let me remove any possible doubt as to whether I am influenced here by the opinion of others—I am convinced that it is the right and essential step in the circumstances, and I am hopeful that this House after due consideration will take the same view this evening.

Let me make another point absolutely clear. The Bill does not in any way, actually or potentially, affect the third of the British Airways Corporations—British European Airways. That Corporation carries on a different kind of business from the two which it is proposed to amalgamate. It flies different types of aircraft over shorter stages. It is responsible also for the internal services of this country where special circumstances arise. So far as it is possible to see into the future, there is likely to be no advantage in merging British European Airways with the other Corporations, and I would underline the fact to-day that the Government has no such intention. British European Airways can go on their way with the good will of all of us and, I may add (though I have been in civil aviation just long enough to touch wood and cross my fingers whenever optimism overtakes me) British European Airways is putting in some particularly impressive work at the present time.

I feel sure that in discussing the proposed amalgamation of the other two Corporations, we can keep ourselves clear of Party politics. So far as I can see, no moral or political issue is involved. As I said, it is simply a question that might arise between two private companies as to which is the most efficient way of conducting the business. In so far as a Minister in my position might be supposed to start with a political bias, it would probably be in favour of maintaining a status quo and avoiding the necessity of asking for an important amendment of the Civil Aviation Act, 1946. But it was made plain at the time the Civil Aviation Act was passed that there was nothing sacred about the number of three Corporations, nothing immutable about that arrangement, and the House I am sure shares the view of the Government that if, in the light of circumstances, it seems that the arrangement should be modified, it is our duty to come down to Parliament and ask for permission to modify it.

Towards the end of last year, when I had been Minister for a few months, I went thoroughly into the problem of the amalgamation of two or more Corporations. I reached the definite conclusion, from which I have never receded and in relation to which I have never wavered, that British European Airways should be left as they were, but I was much more doubtful at that time about B.O.A.C. and B.S.A.A. I ought to say at once, and I am particularly glad to say it in the presence of my noble friend, Lord Lindsay, who deals out praise and blame impartially to his own side and others, that I am no blind fanatical amalgamationist. You can very often find reasons, as you can in this case, for an amalgamation between companies undertaking comparable work; you can usually point, as you can here, to some overlapping of functions at headquarters and elsewhere, and to economies that could be effected if this overlapping were eliminated. You can often point to the advantages of a more coherent and systematic structure.

On the other hand, my Socialism owes quite enough to Mr. G. K. Chesterton, Mr. Hilaire Belloc and my old tutor who sits behind me, the Master of Balliol, to be aware of the dangers of bigness. I am quite aware that the optimum unit may not be the most efficient or most socially desirable unit in various ways; and I am aware that you do not inevitably improve a coupie of "good shows" by throwing them into one. In short, it is in my view a practical matter that has to be considered on its merits in each particular case as it comes along. I would make it plain that at the beginning of the present year, after studying this question for quite a little while, I had an open mind about the ultimate future. But I was quite clear that the balance of argument in favour of amalgamation, if it existed at all—as many thought—was far more than offset at that time by the disturbance that would be caused at a moment when a great deal of reorganisation was going on, and by the fact, which weighed heavily with me at that moment, that the board of B.S.A.A. were strongly opposed to a merger. I therefore decided definitely against a merger at that time.

That situation was rapidly changed by the loss of "Star Ariel" in January of this year. The House will remember that after a most searching inquiry, undertaken by the greatest of all experts on aviation, the noble Lord, Lord Brabazon, which left the cause of the disaster unexplained, it was necessary to withdraw from passenger service the nineteen Tudor IV aircraft, four in service and the rest nearing completion, on which B.S.A.A. were relying for all their future plans until the big flying boats and the De Havilland jet planes—the Comets —should come along in 1953 or thereabouts. We were confronted then—I want to put the House into the situation with which I was confronted—with a problem of replacing by the most economical means the capacity lost by the withdrawal of the Tudors. It was a very troublesome problem, as noble Lords are aware, although one honourable member in another place, usually particularly thoughtful and well-informed, seemed to think— whether he was speaking seriously or not I do not know—that all I had to do was to show a little initiative and "winkle" (that was not his expression; it is mine but it conveys his meaning) a few extra British aircraft out of my friend the Minister of Supply. There were and are, in fact, no suitable British aircraft which could be made available in time to restore the services and meet the planned expansion.

Reviewing, therefore, the new situation —first, the original arguments for and against amalgamation; secondly, the fact that it was no use trying to avoid a disturbance, because the disturbance had already occurred; and thirdly, the aircraft problem as it now presented itself—I had little doubt that the case for amalgamation was now overwhelming. And this is a very significant fact: I found that the board of B.S.A.A.—who were, of course, represented by the chairman in his dealings with me—who had previously been opposed, were now clearly in favour, and that B.O.A.C. agreed with this view. Having secured the approval of my colleagues in the Government, I announced in this House on March 15 our intention to introduce legislation to bring the amalgamation into effect.

Why am I so certain that this amalgamation is the right thing? I will try to explain briefly and clearly, distinguishing between many various pros and cons, one fundamental argument which seems to me conclusive. The beginning of wisdom in the light of the present aircraft situation—because I am not going to dogmatise about the past—is the proposition that the North and South Atlantic must be run by a single company, however much devolution or decentralisation you provide within that framework—and I have no doubt that a good deal is required. Without going too much into detail of past history, experience of the last three years has shown that North and Central America, the West Indies and the Northern Republics of South America can, from the operational point of view, best be treated as one area. They can best be served from the United Kingdom by one or two main arteries, along which all the traffic would pass to a focal point on the other side from which connecting services would radiate. Already, as the House knows, the service to Central America and West Indies is operated via North America, and the experience of the last three years convinces us that both operationally and commercially the most economical method of transporting the traffic on the common Atlantic stage is by the use of a single fleet under the control of one operating organisation.

This method possesses two clear advantages. I know how difficult it is to sum up the arguments for or against any particular organisation or levelopment, but if I may put it briefly I will do it in this way. First, it provides flexibility in the disposition of aircraft capacity to meet varying incidence in seasonal traffic demands in this area. North American seasonal traffic demand; do not arise at the same time as Caribbean area seasonal demands, and the necessary switches of capacity can readily be made from the resources of a single 11,2,t under a central control. Secondly, and perhaps more fundamental, even apart from the seasonal factor, the use of a single fleet as an alternative to separate fleets of two Corporations enables the capacity available to be put to its maximum use over the common stretch across the North Atlantic. In the result, less overall aircraft capacity, operating, of course, to higher load factors, is necessary. In that way you secure the greatest possible economy in numbers of aircraft and the highest possible earnings per aircraft. Admittedly, as some noble Lords will wish to point out, the route to Brazil, Argentine, Uruguay and Chile is a separate operational task—I am not disputing that—but it represents roughly only a half of B.S.A.A.'s present activities. No one would seriously suggest that that sector forms the basis in itself for a separate Corporation. Indeed, many advocates of the optimum unit theory would consider that B.S.A.A. was already too small. Once it is accepted, as I think it must be, that you cannot, for reasons of aircraft utilisation, separate the North and Central lines, you are committed inevitably, I would submit, to a single management for the whole Atlantic area.

I pause there, because we are now passing the crucial stage of the argument. What follows from that in regard to the number of Corporations? Two possible decisions could be discussed, but only one surely can be seriously entertained. Theoretically, I admit that I could have asked Parliament to remodel the Corporations in a different way from that now proposed. Theoretically, I could have thought of a different plan. B.O.A.C. has about 19,000 employees, B.S.A.A. about 2,000, and under our existing proposals we are joining the 2,000 with the 19,000 on terms that are approved by the Boards of both. We could instead, I agree—though I do not think the House will wish to pursue it very far—have split the large Corporation, B.O.A.C., from top to bottom. We could have taken its Atlantic or Western elements, a number a long way in excess of the total engaged in B.S.A.A., and hooked together this element and B.S.A.A. to retain the original mystic number of three Corporations. That was the only other conceivable course.

By so doing we should, I submit, have created far more disturbance than the proposed arrangement and would just as effectively have ended the separate identity of B.S.A.A. Moreover, we should have acted in the teeth of the considered judgment of the Boards of both companies concerned. In the circumstances, would that not have been an inconceivable course? I am sure it would. I hope and believe that nobody will recommend it in this House, 'because I am sure it would have been a very bad course. With that one exception, which in the circumstances I decline to take very seriously, I am sure that the one thing we could do is the one that we have done. We are following out the logic of a single control for the Atlantic area by unifying the North and South Atlantic managements while maintaining the present unity of the North Atlantic and Empire routes; and that means, of course, an amalgamation on general lines such as we propose. In short, in taking this decision we have gone hack to first principles.

Of course, a great many detailed calculations arising out of the particularities of the aircraft situation had to be worked out. As your Lordships are aware, we have gone some way to fill the gap left by the disappearance from the scene of the nineteen Tudors by acquiring four Stratocruisers which will probably carry as many passengers across the Atlantic as eleven Tudors. It may be said, though not I think by anyone well-informed in these matters, as noble Lords are: Why not give them to B.S.A.A., and why not get B.O.A.C. to hand over to B.S.A.A. some other aircraft? Well, my Lords, if the House wishes, I can attempt in my reply to deal with these points in detail hut, frankly, while those projects would have been most impracticable, the issue really goes deeper. The vital point lies where I sought to place it earlier. In principle, it has become clear that it is better to organise the Atlantic from a single headquarters. I agree that it was differently organised before, for a number of historical reasons which perhaps need not detain us now. It would almost certainly have been wrong, I agree, to disturb the existing organisation, but fate stepped in and effected the disturbance herself.

VISCOUNT SWINTON

Would the noble Lord elaborate that? If it is fundamentally right to have this new organisation, what has fate to do with it? It is either right or wrong.

LORD PAKENHAM

If fate had not stepped in, in the disappearance of the Tudors, we should have had a different aircraft situation. We should have had nineteen Tudors which we do not now possess. We should have found that the Corporation of B.S.A.A. were strongly opposed to the change. I do not believe that in these circumstances the noble Viscount, whatever his view of abstract argument, would have considered it prudent to intervene; and that was the view I took, as I explained at the beginning of my speech.

In the new circumstances it would have been far more certainly wrong, and indeed I personally should have been acutely conscious of betraying not only British civil aviation but the general body of taxpayers if I had declined to make use of this sad disaster—for that is what it was—to the Tudors by making a fresh start along the lines mentioned that commended themselves o to the shrewd business managements concerned. The managements in question included, of course, the particularly capable chairman of B.S.A.A., Mr. Booth, who had originally played so enterprising and valuable a part on behalf of private shipping interests in launching that separate concern. I know that I can quote Mr. Booth, with his consent. He was emphatic that in the new circumstances the amalgamation was necessary and proper.

The main argument for the merger is the one I have just stated. I can summarise it by saying that that is the only way of using our aircraft fleets to the best advantage on the routes now served by B.O.A.C. and B.S.A.A. Putting that in terms of output per man employed, the benefits will accrue rather from a larger productive result achieved by the employment of the same kind and number of men than by drastically cutting down staff and getting the same total result as before with a smaller number employed. It is a question of getting the same number of people to produce a much better result. It would be most improper, in my opinion, and the reverse of courageous, to say the least, if I sought to avoid redundancies for fear of public criticism if, in fact, such redundancies were necessary in the interests of efficiency. It seems unlikely, however, that any appreciable number of men will lose their jobs as a result of the merger in addition to those vacancies arising from normal wastage which will not be filled. I am referring to vacancies which will occur mainly among the headquarters and administrative staff.

One should bear in mind that B.S.A.A. unlike B.O.A.C., were in the process of building up to meet the needs of the Tudors. As I stated in this House on March 1:5—and by leave of the House I wish to repeat it now—any staff redund- ancies resulting from the merger will be shared fairly between the two Corporations and in accordance with National Joint Council procedure. On the other hand—I again stress this fact—redundancies arising from the internal reorganisation of B.O.A.C.—I stress this again as I stressed it in Marc:I—which brought down their numbers from 24,464 in March, 1947, to 20,890 a year ago and 18,871 to-day will be restricted in fact to B.O.A.C. personnel. I cannot pledge that no single man in B.S.A.A. will lose his job because of redundancy arising from the merger, but I do net think from this point of view the staff of B.S.A.A. have any cause for anxiety.

This then is the purpose of the Bill to provide for the amalgamation of B.O.A.C. and B.S.A.A. Unfortunately, it is impossible to make a clean merger of these two Corporations by a single legislative action. B.S.A.A. have various operating rights, contracts and permits in South America which cannot be transferred to 13.O.A.C. merely by legislation in this country. The contracts will have to be negotiated individually between the parties concerned, and their transfer will take some time. Meanwhile, it is necessary to keep B.S.A.A. legally alive. Clause 1 of the Bill, therefore, provides for a two stage merger. The first stage is that under subsection (I) all B.S.A.A.'s property in the United Kingdom and aircraft, and all their rights and liabilities enforceable in the United Kingdom, are to vest in B.O.A.C. immediately on the passing of the Act. Under the remaining subsections, B.S.A.A are empowered to transfer any other property or rights to B.O.A.C., and B.O.A.C. are empowered to undertake any other liabilities or obligations of B.S.A.A., in both cases without consideration and without payment of stamp duty. The second stage is reached when the Minister is satisfied that the necessary arrangements have been made. He may then direct by statutory instrument that B.S.A.A. shall be dissolved on an appointed day.

The other clauses, with one exception, are mainly technical and I do not think the House would wish me to discuss them at this stage. But I would say one word about Clause 5, which concerns the Board of the Corporation Hid, in particular, makes possible the appointment of a second deputy chairman to B.O.A.C. It is the intention, as I announced on March 15, that the present chairman of B.S.A.A., Mr. Booth, should become a joint deputy chairman of the new Corporation with Mr. Whitney Straight. I believe I carry the whole of the House with me in saying that we have here two first-rate lieutenants with the new chairman, Sir Miles Thomas —a most inspiring leader to succeed that great public servant, Sir Harold Hartley.

My Lords, I have presented this simple but important measure in broad outline, and I am ready to attempt to-day, or later, to reply to any questions that may be raised. At this stage the House has a very simple issue before it— namely, to allow or not allow these Corporations to amalgamate in the way that all directly responsible consider to be in the best interests of British civil aviation. I have great confidence in the future of the Corporations in their new form, but if we are shortly to take leave of B.S.A.A. let us not do so without paying tribute to the men at all levels who got it going and who under its auspices have accomplished so much. I would not be asking the House to approve this measure unless I felt sure that in the future their opportunities would be as wide, perhaps wider, and their services as great, perhaps greater, in the years ahead of them. To them, to their new colleagues and to all those actively engaged in British civil aviation, II believe that this House is ready to send out a message of hope and encouragement, and in that spirit I beg to move that this Bill be read a second time. Once again, I would like to thank noble Lords for coming together in a way that has facilitated this movement forward.

Moved, That the Bill be now read 2a.—(Lord Pakenham.)

8.58 p.m.

LORD BALFOUR OF INCHRYE

My Lords, the noble Lord, to whom we are indebted for his explanation of this Bill, was good enough to express in terms of appreciation the action of the Opposition in facilitating the progress of the Bill. I am sure I speak on behalf of all noble Lords on this side of the House when I say that we are grateful for his appreciation. We are always willing to help. When something proposed by the Government is good, we welcome it with open arms; but if wrong is to be done, then let us know the worst and face it. Let me say at the outset, that we on this side of the House do not like this Bill. The noble Lord said that we have to allow or not allow this amalgamation. So far as this House is concerned, I think that direct issue does not quite arise. In another place this amalgamation was sanctioned by a majority of the Members. We must in this case acquiesce with that majority, but in acquiescing with the majority decision we do not in any way give up our rights of objecting to and criticising the measure.

The noble Lord summed up the advantages and disadvantages of this Bill—or he said he did. If I may say so, it was rather a one-way traffic. His praise of the Bill would have conveyed greater conviction to me had he been a little more balanced. It may be that there is some criticism to be made and that not everything that is to be said should be in terms of praise. By the time I had listened to the noble Lord's speech, taken in what he was saying and absorbed all those forcible arguments which he put forward, I wondered why the Government had ever proposed three Corporations originally. The noble Lord's speech was very special pleading. From the other side I would like to put forward, I hope in a reasonable manner, four criticisms of this Bill. Then let noble Lords, even though we do not vote against it, at any rate make up a balance in their minds concerning the advantages of this Bill on what I and perhaps other noble Lords may put forward.

My first criticism is that this is a premature, permanent alteration to correct a passing phase. The noble Lord has said that what finally brought about the introduction of the Bill was the very tragic loss of the "Star Ariel," the subsequent withdrawal of the Tudor aircraft and the consequent shortage of aircraft resulting upon that withdrawal. But the answer is, I think, that aircraft can be replaced; and the right action, I believe, should have been not to make this a permanent alteration in the structure of our civil aviation, but to concentrate upon replacing the deficient aircraft in some way or another. It might well be that by a reorientation of the aircraft available, including the use of the Tudors again in certain areas upon which B.S.A.A. operated, we could have got over this awkward time without having to disintegrate the third Corporation.

This permanent change in structure sweeps away the element of competition which Cabinet Ministers of the noble Lord's Government themselves, on the introduction of the Civil Aviation Bill in 1946, praised and said was a desirable thing. If I may, I will quote just a few words from the speech of the Lord President of the Council, Mr. Herbert Morrison. He said this on the Second Reading of the Civil Aviation Bill: We wish to introduce and develop in the industry the spirit of emulation, of gathering a varied experience, and a certain degree of competition between various undertakings. He went on to say: The Minister of Civil Aviation has deliberately decided on the basis of three Corporations, each of which will have its set degree of responsibility to him and for the general operations of which he and the Parliamentary Secretary will be answerable to Parliament. I must be fair and tell your Lordships that the Lord President further went on to say: If future experience should show either that three are too many and that two or even one would be enough, modifications can be made. I admit, straight away, that he said that.

Then my mind goes to the debate which we finished not long ago, the debate which was wound up so eloquently by the noble Viscount the Leader of the House in a speech in which he was defending the position and said that we must not judge the achievements of the national corporations on a short-term view. The noble Viscount said that it would be a short-sighted view to take the measure of the success or failure of concerns which had been in public ownership for only two or three years. What is sauce for the goose is sauce for the gander. If we are to accept that argument from the noble Viscount the Leader of the House, we must not draw conclusions as regards airways Corporations which have been in public ownership for only two or three years. Like other noble Lords, I have read the debates in another place, when it was put with force that there cannot be competition in civil aviation because we cannot compare this line running with one particular aircraft with that line running with another par- ticular aircraft. But I submit that competition can exist not only in direct operational qualities, but in many other ways—in maintenance, in handling passengers and freight, in catering and road transport. In these and in many other directions we can draw valuable comparisons between one organisation and another.

I ask the noble Lord what has altered, beyond a temporary shortage of aircraft at the present time caused by the withdrawal of the Tudors, to cause this Bill to be introduced. Why should we not take a long-term view of civil aviation, in the same way as the noble and learned Viscount the Leader of the House asked us to take a long-tem view as regards other nationalised corporations? I believe the answer is that this is a further indication of the application of Socialist theory in our national life. I know the noble Lord disclaimed this and said he was not an amalgamationist.

LORD PAKENHAM

Not a fanatical amalgamationist.

LORD BALFOUR OF INCHRYE

Not a fanatical amalgamationist. Nevertheless, in every direction we are seeing the Three Graces of nationalisation—size, monopoly and centralisation—becoming ever more present. The noble Lord was careful to say that this amalgamation of two Corporations out of three was not a preliminary step to the formation of one gigantic Corporation. The noble Lord said that it does not affect British European Airways and there was no prospect in the foreseeable future—

LORD PAKENHAM

It has no effect on it whatever.

LORD BALFOUR OF INCHRYE

The noble Lord said that in the foreseeable future there will be no difference. I ask with great respect what is "the foreseeable future"? In another place the Parliamentary Secretary, the noble Lord's junior Minister, was questioned on this matter, and on that occasion the Parliamentary Secretary replied to a question as to whether we could expect an amalgamation of the two, "Not at the present time." When the noble Lord replies, could he go a little closer in definition and say whether "the foreseeable future" and "the present time" mean three years, five years, seven years or ten years? We would like to know w hat is in the minds of the Government when they say, "Not in the foreseeable future."

I pass now to my second criticism. It is that the supply of aircraft is not increased by one single civil aviation liner by this amalgamation; no increase in passengers or freight is brought about; and there are no great economies in manpower which could not be effected by a rationalisation of the efforts of the two Corporations without legal amalgamation and the elimination of one. To us on this side of the House it seems that something almost intangible is being lost by this amalgamation; a spark of individuality and keenness is being extinguished. I could give noble Lords comparable figures of the alleged efficiency of B.S.A.A., as against B.O.A.C.

LORD PAKENHAM

It is very difficult.

LORD BALFOUR OF INCHRYE

I agree. I could give a set of figures, the noble Lord could give another set of figures to counter me; I could give another set of figures, and the noble Lord could give yet another set of figures. I agree that it is very difficult to quote chapter and verse in figures. But what I believe is indisputable is that there is something—I repeat the word—intangible in the spark of individuality, which is so valuable and which is being extinguished. The noble Lord claims that there will be a planned use of the aircraft fleets in the future. But all his plans, which have been debated at great length in another place and in less detail here to-day—if I may say so, quite rightly—were based on the assumption of deliveries of aircraft from America, the Boeing Stratocruisers and the Canadairs. I believe we are supposed to have ten Boeing Stratocruisers by the end of the year. I wish the Boeing Stratocruisers good luck, but I would hazard a guess that the noble Lord's Corporations will not have ten Boeing Stratocruisers by the end of the year. The Tudor was a much-abused aircraft, but there have been more accidents in Constellations than there have been in Tudors. The trouble is that the Tudors disappeared without any explanation. There has always been some explanation of the Constellation accidents, whether it was a right one or not. The Stratocruisers, we read almost every day in our papers, are having to turn back through various teething troubles. I would hazard the view that improvisation will be just as necessary under the noble Lord's plan as it would be under a policy which did not amalgamate but tried to rationalise the fleets in order to overcome this temporary shortage, because the expectation of aircraft deliveries on which he bases his whole plan will not be fulfilled.

I come now to my third criticism, which noble Lords will probably think is the most serious—namely, the danger of all the technical development and operational experience in British long-range aircraft being concentrated in one Corporation, instead of having two outlets, and dual and competitive usage and development work by two Corporations. We are told by the Chancellor of the Exchequer that in the future we shall have to depend a great deal on our export trade in this country for our ability to live. One of the great possibilities for export in this country is in this new field of development of civil aviation. But if we are going to export civil aircraft to other countries in the world, I would submit to your Lordships that we must be in a position to give the best possible product, a product which will beat our competitors from whatever country they may come. We put a handicap on ourselves if we definitely limit the user of long-range aircraft to one instead of two. I would prefer three, four or five users, because the more users you have the greater wealth of experience you can build up. I am sorry to know that all the long-range aircraft developed by the British industry will in the future for civil aviation have to pass through this one channel of home usage, instead of being able to pass through two or more.

I would particularly mention flying boats. The question as to whether or not B.O.A.C. were flying-boat minded was dealt with in another place, and critics were rather brushed aside by the Parliamentary Secretary who said that B.S.A.A. had never seen a flying boat. That was late at night, and perhaps the words were excusable. B.S.A.A. may not have operated them but let us remember the greatest exponent of flying boats, the late Air Commodore Brackley, whose service, experience and wealth of knowledge were at the disposal of B.S.A.A. It was largely upon his advice that B.S.A.A. decided to use the Princess flying boat, which is now under construction, and which was turned down by B.O.A.C. in 1947. We are a seafaring nation, and there is something very pleasing, I believe, to the British character that in our aviation life we should 20 as close to marine life as we can. I should be sorry to feel that those who were responsible for technical decisions in 1947, and the turning-down of flying boats, were able to-day to command a view which might prejudice not the use but the enthusiastic use—and there is a great difference between the two —of the flying boat.

I now pass to my final criticism, which is on the question of personnel. One asks oneself: "Is this amalgamation in the interests of the personnel and the expression of their skill?" I believe the same argument applies here as in other nationalisation Bills which we have discussed in this House—that there is danger to the skilled operative in having only one employer to absorb his skill. I believe the chances of their individual protection for their skill, and the chances of advancement of the technique in which they are skilled, are lessened by the fact that there is only this one main direction in which they can apply their experience. In support of that view, I would say this. Nationalised industries so far do not seem to have pleased operatives. Central control is being increasingly resented by its staffs. Long-distance regulation has aggravated operatives in the coal industry and the railway industry, and certainly in the nationalised industries higher charges are exasperating to the consumers. Of course, I agree that policy cannot be dictated by staffs, but nevertheless their views—and particularly in technical industries—are important.

The noble Lord made the statement —and it was also made in another place —that all those concerned were in favour of this amalgamation. I rather question that. It is true, as he said, that the Boards are in favour of it—the "big boys" are all for it, I am sure with great conviction and with genuine feeling—but the ones down the ladder are not all in favour of this amalgamation.

LORD PAKENHAM

I actually said "of those directly responsible."

LORD BALFOUR OF ENCHRYE

But may I ask the noble Lord whether he would not consider that pilots are directly responsible for certain important phases of operation? Can he tell me that all the pilots in the British Airlines Pilots' Association who fly in B.S.A..A. aircraft are in favour of it? After all, they are "directly responsible." I think the noble Lord, if he looks at the list of those who attended the packed meeting of protest held at Caxton Hall, will find that there were many who were not in favour.

LORD STRABOLGI

In what sense is the word "packed" used?

LORD BALFOUR OF INCHRYE

A full meeting. I am sure the noble Lord would not expect anything but the straightest deal from these men. As to the engineers, I do not want to go into the vexed question of who represent the engineers of the B.S.A.A. and what union is concerned. There has been considerable discussion in another place, and we in this House may come back to that point in Committee. Fait the noble Lord must admit that there is a great element in B.S.A.A. who, out of their convictions, have protested against the action of the Government in bringing about this merger.

Those who take an interest in these matters were greatly comforted by the assurances given by the Parliamentary Secretary in another place the night before last, when he said that the minority organisations would be taken into consideration and that no man would be penalised for expressing his views if be did not belong to one of the big units. I do not believe the noble Lord is going to have a "happy ship" with this amalgamation. The battalions have marched through the Lobbies in another place. We are not going to divide; the noble Lord is going to get his Bill. But I wonder if he might not have done better if he had done what some of us feel might have been done in the case of the dockers: gone down with his Parliamentary Secretary and met the men of B.S.A.A. in an unconventional way and explained to them what the Government were doing and made the Government ease. Incidentally I should have loved to be there to make the case against it. He might have shown what the Government are trying to do. He might then have carried those doubtful elements with him to a greater degree than he has at the present time. I have put forward, I hope reasonably, my grounds of criticism. We feel that this Bill is endangering civil aviation by the suppression of the competitive element for no adequate long term reasons. We shall not oppose the Second Reading, but we cannot resist criticising the Bill.

9.24 p.m.

THE MARQUESS OF WILLINGDON

My Lords, I feel that the attention of this House should be seriously addressed to this Bill, as it is handing over a commercial corporation formed before nationalisation to a nationalised concern. B.O.A.C. are a concern which we all admire. They have built up a reputation of mercantile marine quality; they are manned by professionals who are experienced, loyal and responsible—and. I think, far from overpaid. I should like at once to record the helpfulness of the Minister in giving us so much information and in providing me personally with figures which were previously denied but which, thanks to the request of the noble Viscount, Lord Swinton, have been made available. Now you are handing over to the first nationalised Corporation. Granted that it has a hoard of directors, a chairman, personal assistants to the chairman, personal representatives of the chairman, private secretaries to the chairman and a deputy chairman, but we all know that the real boss is the Minister of Civil Aviation. He has kindly provided me to-day with the figures of his staff. They total 7,535. The Treasury grades are 2,796, and other grades are 5,339. As regards the staff of B.O.A.C. to-day, the figures (again provided by the courtesy of the Minister) are 18,898. Those are split up into figures which are, of course, available. Now the number of planes flying and carrying a commercial load on Monday last in B.O.A.C.—and this is the Corporation, the first nationalised Corporation, the first experiment in nationalisation, to whom we are handing over a concern running at a profit and commercially manned—was sixty-six, with this colossal staff to keep them in the air.

VISCOUNT SWINTON

Will the noble Lord give me again the numbers of the staffs?

THE MARQUESS OF WILLINGDON

There are 7,535 in the Ministry and 18,898 in B.O.A.C. There were sixty-six aircraft flying carrying a commercial load on Monday last. Having been in commercial civil aviation for a great part of my life, I know from experience that there are more technical ways of judging this than by the figures available daily to the Minister—for instance, passenger miles per number of staff, ton miles per number of staff. I would like to ask the Minister whether, as regards B.O.A.C., after the experience they have had in the last few years since the war operating on their long haul, the figures completely satisfy him and compare favourably with those of operating companies of foreign concerns.

The second question I wish to put to the Minister—and I think it is the really important thing, for us to-night—is: Can he assure the House that B.O.A.C. are really running on business lines? Because British South American Airways were. I think that is the most important point for us to ask him to answer to-night. Have B.O.A.C. really learnt economy in administration? When we had the last debate on the interests of these concerns, as I understood it there were to be two divisions in the new organisation, the East and the West Divisions, and also a manager of the home stations. They were going to sit in these wonderful new premises, the Simmonds factory on the Great West Road, with communicating doors. They were to employ three men, and a fourth is now to be added. They were to be in constant touch.

I also want to ask the Minister: Where does Stratton House come into the picture? Is it true that the rent and loan for Stratton House is £20,000? Is it true that the whole of Stratton House is devoted to this wonderful Board, with their representatives, their technical advisers and so on, and that only one of the general managers of this Corporation has even a room in the B.O.A.C. headquarters on the Great West Road, and that room is not even in the main building? I ask noble Lords when they are driving past there in their cars to stop and look at it. Look behind Simmonds factory; you will see acres and acres of huts. I am not raising these criticisms from any political motive. All I ask is a fair deal for B.S.A.A., a fair deal for their employees and for all the users, both commercial and passenger, who use B.S.A.A. and B.O.A.C. I do ask for the Minister's assurance that the shareholders, that long-suffering British public, John Citizen, shall benefit from this amalgamation.

9.30 p.m.

LORD STRABOLGI

My Lords, I rise to support my noble friend on the Second Reading of the Bill, and my only excuse is that I happen to have used both Corporations very considerably over recent years and twice this year. I was stranded in the West Indies when the Tudor accident took place. I have never understood, and I do not understand now, why the Tudors were withdrawn. I was most favourably impressed with them and, after all, as the noble Lord, Lord Balfour, pointed out, there have been a great many accidents with American aircraft; and those accidents continue. I had to come back by Trans-Canadair air lines after some delay. I have used B.O.A.C. also to cross the Atlantic in the orthodox way.

In the few remarks I have to make I propose to give my impressions of the workings of these two great Corporations which are now to be amalgamated. I speak only as a passenger—but after all the passenger is the man to whom eventually you have to look for your revenues. Before I say more on that, however, I would point out that on every ground of business management the case for the amalgamation of the two services flying the Atlantic seems to be overwhelming. I hope I shall not enrage my noble friend if, after all he has said, I say that the same argument applies with equal strength to the amalgamation of the three Corporations. Although my noble friend has perhaps placated the Opposition by what he said about the foreseeable future—and what was said in another place we all know—nevertheless the operational reasons and the economic reasons all point to one Corporation to run the whole of civil aviation. I have never fully understood why we started off with three, except (and this is a tremendous compliment to the charm and persuasiveness of Lord Swinton) that when Lord Winster was Minister of Aviation he was anxious to appease Lord Swinton and, indeed, wanted to carry out his original scheme. There was, however, some difference apparently in the Government on this point, of which I have no knowledge—

VISCOUNT SWINTON

I can explain that to the noble Lord. We were unanimous in the National Government but, as usual, the tail wagged the dog.

LORD STRABOLGI

I am talking about the present Government.

VISCOUNT SWINTON

I was explaining what happened subsequently.

LORD STRABOLGI

I am talking about this present Government, which is so adorned by my noble friends who sit on these Benches.

VISCOUNT SWINTON

On that occasion, the tail wagged tae dog.

LORD STRABOLGI

I do not know what the noble Viscount means by the "tail" or the "dog." I do not know how the forces were lined up. All I know is that the original scheme was practically Lord Swinton's, and I am glad to say it w as abandoned in favour of the present modified scheme. But Lord Swinton's charm and persuasiveness had so much influence (and this is all said in full compliment to him) that what I always thought was the worst feature of his scheme——namely, the creation of the three separate Corporations—was agreed to. I know that here I am in direct conflict with my noble friend. It is always sorrowful for me to be in that state. But I believe that the arguments for one Corporation are overwhelming.

I listened with the greatest of care to my noble friend's defence for retaining the two, and I am glad, if I may say so, that he did not use the argument, which I could not follow, of my honourable friend Mr. Lindgren in another place—namely, that B.E.A. operate two-engined machines and B.O.A.C. operate fourengined machines, and therefore the services are entirely diff!rent. I suppose that presently we shall have eight-engined machines. Then will be proposed that companies still using four-engined machines should employ different methods from the ones using the eight-engined machine? I am glad that my noble friend has not been misled into using that kind of argument which I could not understand.

LORD PAKENHAM

I went near to it.

LORD STRABOLGI

I am going a little further, and here I am afraid that I may enrage one or two noble Lords opposite—I hope I shall. Civil aviation (and here I address myself to the noble Marquess whose speech from the Liberal Benches I listened to with great interest) is paying in scarcely any part of the world. I understand that Swiss Air show a profit though I do not know what subsidies they receive; K.L.M. show profits with very high subsidies, and one airline which runs in the Eastern states of America, a purely domestic concern—Lord Balfour of Inchrye will know about this; I think it runs traffic between Baltimore, Boston, New York and Washington—also shows profits. But the great external air organisations, Pan-American, T.W.A. and others do not, I believe, show a profit. And that will continue to be the case. I do not think they will ever show a profit while there is the same degree of overlapping and wastefulness which are bound to occur when you have a number of separate national lines using the same aerodromes and operating their own transport. In such circumstances there is bound to be waste and loss.

An argument which I do not intend to pursue, but which I have advanced for many years, is that to overcome this waste and to operate economically, airlines must be internationalised. I have believed in that for a long time and I shall go on advocating it. I believe that when the nations wake to the realities of the situation and show a little sense, civil aviation will be internationalised; and what a great service to the cause of peace that would be! I have said what I have said only to reinforce the arguments put forward by my noble friend for at any rate amalgamating the South Atlantic Service and B.O.A.C., I think that the case which Lord Pakenham made was overwhelming, and I am very glad that your Lordships are not going to take the trouble to-night to divide against the Bill.

There is one question which I wish to ask and which has already been touched upon by the noble Lord, Lord Balfour of Inchrye. I have given my noble friend notice of it. I happen to be a flying-boat "fan." I am an enthusiast for the great flying-boat, very largely for the same reasons which have been advanced by the noble Lord who spoke for the Opposition. I think that sea experience and sea sense incline one that way, and in view of our control over so many harbours and so many maritime territories all over the world, the need for us to develop the large flying-boat, in my opinion is incontrovertible. I ask my noble friend, without going into great detail, to tell us what are the views of his Ministry on this matter. I hope they will coincide with mine. The views of the Ministry will, of course, influence the decisions of the new amalgamated Corporation. That is putting really the same question as Lord Balfour of Inchrye put in a slightly different way. I had experience of the flying-boat over twenty years ago and again last year. I think the case for it is very strong indeed. It is only a matter of arrangement to reduce the admittedly heavy overheads.

I would like to say how sorry I am that civil aviation is once more being pulled up by the roots to see how it is growing. I am sorry for the changes; I am sorry they are necessary. I believe that notwithstanding all that has been said about extravagance, and so on, by the noble Marquess and others, the record of British civil aviation, of the two Corporations, and also of the British European Corporation, is very high indeed, and I believe that reputation is acknowledged by foreign users. I have been using the services of these two Corporations as an ordinary passenger for a good many years. I was one of the first civilians to fly out to India with the old Imperial Airways; and I have watched developments ever since the days when in Handley Pages we went at eighty miles an hour, stopping at a capital each night —and most agreeable it was. I have seen the latest developments and the wonderful achievements and advances that have been made. In spite of all difficulties about machines, I believe that both these Corporations have done a magnificent job. Their reputation for safety, especially that of B.O.A.C., is very high. They look after passengers extremely well. If one really wants to see the contrast, travel by some of the foreign lines, especially the American, and see the difference in treatment, courtesy and efficiency. If you want to be delayed and kept kicking your heels two or three days, travel in an average American line—and I am afraid some of the other foreign lines are not much better. But if you want efficiency, certainty and the feeling of confidence, go by British Airways.

Why should all these deteriorate because we wish to bring about a more or less paper arrangement of amalgamating the two? Pilots with experience in the South Atlantic will continue to fly the South Atlantic, and maintenance crews will continue to serve on the same machines belonging to one Corporation instead of to two. What difference will that make? I cannot see the idea that the amalgamation of these two well-tried instruments will destroy the men's spirit, alter their appreciation, and injure that intangible psychological value that the noble Lord, Lord Balfour of Inchrye, described so vividly. Why should not these men continue to do their best for the country, to whichever service of civil aviation they belong? I hope the noble Lord will be fully justified in the steps which have been taken. On balance I think the justification is overwhelming, and I hope there will be no unreasonable criticisms, certainly not of the efficiency and devotion of the great mass of personnel of these two Corporations, now to become one great service.

9.43 p.m.

LORD PAKENHAM

My Lords, I do not think anyone will accuse the noble Lord, after his remarks, of being a Government "stooge." The general effect of his remarks, which are based on firsthand experience, is all the more helpful to us. May I say from the Front Bench that we were interested in all that the noble Lord, Lord Balfour of Inchrye, had to say. He speaks with a great wealth of practical experience behind him. I will not follow him at great length through his remarks, as we shall have another stage to thresh out these things more closely, but I think it would be discourteous not to touch at least on the four main headings he raised. I hope he will accept from me—as I am sure he will—that I have not been influenced by any kind of political pressure or any ideology in deciding that this change is necessary. If I have a personal interest, I hope it is one proper to my position—to bring down the deficits and secure thoroughly creditable results for British civil aviation. I am sure the noble Lord will take it from me that that is the only way to act in the circumstances.

I would like to say a word on the subject of competition. The noble Lord was the first to point out that in no real sense can we talk about competition between B.O.A.C. and Perhaps we can talk about emulation—two different public bodies doing different jobs and returning figure; which may be taken into comparison with one another. But I ask him—and he has far more experience of flying than I shall ever have —whether, in fact, the real test and the real competition will not always be between B.O.A.C. and those foreign companies flying similar routes. That must be the yardstick, although tonight it has not been discussed so freely as it was in another place. However. I go some way in the noble Lord's direction. I think it is very important that we should have the fullest light thrown on the various activities of the Corporation. In another place my honourable friend my Parliamentary Secretary was able to reassure the members on that subject, and I hope I shall also be able to reassure the noble Lord at another stage.

The noble Lord asked me—and I am glad he did—to say ye: again that we have no intention whatever of bringing B.E.A. into this amalgamation. He said I alluded to the "fore seeable future." To be pedantic, I believe the actual words I used were: "So far as it is possible to see into the future." They have the same meaning, and I, of course, accept those as my words. I am ready to go any distance, short of giving a pledge to people in B.E.A., which they might afterwards say had been broken if events took a completely unexpected turn. That is the long and short of it. So far as I am concerned, this will not happen. But I really cannot stand here and say on behalf of the Government that it will not happen, because if something peculiar occurred and it was done, and I had given a pledge, noble Lords would rightly say: "You cannot act in that way as you have given a pledge." I am ready to go as fix as possible to emphasise the fact that it will not happen, short of giving any kind of pledge.

I now come to the third point, which is admittedly rather difficult to assess across the Table—namely, the question of whether it is desirable that there should be only one consumer for long-range aircraft, with all that that implies in the way of technical development. I myself believe that no adverse results will occur, but that the effect will be the opposite. Under that same heading the noble Lord raised the question of flying boats, to which the noble Lord, Lord Strabolgi, also alluded. Lord Balfour made the point that it would be regrettable if the same people who, according to him, turned down the flying boats in 1947 were still in charge of the situation, because they could hardly be expected to be enthusiastic about flying boats. I must reserve my attitude as to what exactly took place in 1947, because I was not then responsible for these affairs. From what I know, I believe there has been a good deal of misconception on the point of the attitude of certain gentlemen who were previously responsible for B.O.A.C. But this I do know, and it comes directly under my eyes. The new chairman, Sir Miles Thomas, who was not connected—at least, I presume he was not—with B.O.A.C. at the time the noble Lord has in mind, is most enthusiastic about flying boats. Therefore, I can say—and I know he would wish me to say it—that he will guarantee that there will be enthusiastic use of the flying boats that have been ordered.

I think it will suffice if I deal with only one more point to-night—namely, the attitude of the pilots. I have, in fact, seen the representatives of the pilots generally, and no protest was made on this subject. I can inform the noble Lord and the House that the General Secretary of the British Air Line Pilots' Association was present when this policy was approved, and he was among those who raised no objection to the merger. In other words, there is no reason to suppose that the pilots as a body are opposed to the merger. If any official objection had been raised on their behalf it would certainly have come to me. I cannot speak for every individual, but that is the official position.

I turn now to the observations of the noble Marquess, Lord Willingdon, which, if I may say so, even at this late hour, were far too short—short, but pregnant. I would just touch upon one or two of his points. He seemed to indicate that my Ministry was rather large. I should have hoped that the noble Marquess, with his great knowledge of aviation, would realise that a very small proportion—a few score—are directly concerned with supervising the corporations. The great majority are not in London at all, but are running the aerodromes, and at the headquarters a very large proportion are directing those who are running the aerodromes and ancillary activities. Really, the noble Marquess should not have begun to discuss my Ministry in this connection! We should be delighted if he would come and look at our arrangements to see all that we are doing, and if he can suggest any way in which the staff can be reduced it would be interesting to hear it. I would say this. We have had a very close examination lately of my staff. Undoubtedly quite a number of them are overworked, and therefore I do not want to hold out any suggestion that there is any economy to be made there. If the noble Marquess has any concrete suggestions, let us hear of them, but it does not bear closely on this point, because, relatively speaking, only a handful are concerned with the Corporations.

The noble Marquess asked about Stratton House. With regard to the figure for the rent I cannot help him, but I can inform him that Stratton House is occupied by the members of the senior staff as well as members of the Board. When the Brentford accommodation is improved, it will accommodate more staff and enable Stratton House accommodation to be released, except for small requirements. I therefore hope that the noble Marquess will realise that we are doing everything possible to economise in this connection. The noble Marquess then put wide questions of a kind to which I am certainly not going to give a dogmatic and complacent answer—indeed, that would be the worst possible service to render. He asked about B.O.A.C., and whether I am satisfied that we are running on business lines. Sir Miles Thomas, who is the new chairman and who has been concerned with the reorganisation with Mr. Whitney Straight for the last year is, I think we shall all agree, a first-class business man, and if he does not run the Corporation on busi- ness lines, I do not know who will. I hope the noble Marquess will be assured that business lines and commercial practice will be the essence of the whole affair.

I will give the noble Marquess one set of figures— and one only—for the expenditure in pence per capacity ton mile. In 1946–47 it was 76.2d., in 1947–48 69.7d., and in 1948–49 it is estimated at 59.11d., so the figures are improving fairly rapidly.

LORD STRABOLGI

That is B.O.A.C.?

LORD PAKENHAM

Yes. I emphasise that we shall not achieve the results we are all looking for until the new aircraft come along, and we hope that when that happens we shall see a great deal of improvement. I will not go over the old ground again. We know that B.O.A.C., compared with its main foreign competitors has been handicapped as a result of the decision (from which none of us is now going to run away) to pursue the "Fly British" policy. That has handicapped B.O.A.C. and B.S.A.A. in the past. The handicap has not been so great in the case of B.E.A.C. Therefore, to compare our Corporations with foreign operators in any way which is really helpful is not easy. If noble Lords ask me whether I am satisfied with the level of costs, even with the existing aircraft, let me say that I am never satisfied. I shall never be satisfied in that regard. But I am satisfied with the spirit and the way in which the thing is beginning to move. I am certainly very hopeful about the future of British civil aviation, and in particular about the results which will accrue from the amalgamation we are now discussing. I look forward to noble Lords going into these matters in greater detail later.

I end as I began, and as I indicated in the middle of my speech, by thanking noble Lords for coming forward to try to get this matter settled as soon as possible. If I may venture one personal regret it is—in spite of the extraordinarily compelling remarks of the noble Lord, Lord Balfour of Inchrye— that the noble Viscount, Lord Swinton, has sat there beside him all through without saying a word. I hope there will never be another Civil Aviation debate in the future when that occurs.

On Question, Bill read 2a, and committed to a Committee of the Whole House.