§ 5.8 p.m.
§ Order of the Day for the Second Reading read.
§ THE PAYMASTER GENERAL (THE EARL OF SELKIRK)
My Lords, this is a short Bill, which is intended to do three things. The first is to increase the borrowing powers of the two Airways Corporations, and the other two are to bring these two Corporations into line with the other nationalised industries in that they are given powers to make a pension scheme for members of the boards, and to extend the period during which the Corporations are liable in an action at law from one to three years. I will examine each of these points a little further in detail. Under the Bill, British Overseas Airways Corporation will have their borrowing powers extended from £60 million to £80 million. At March 31 last, they had drawn only to the extent 962 of £36 million. Their programme up to 1960 envisages expenditure, which is very tentative, of something in the order of £63 million. This figure, of course, is offset by depreciation of about £20 million. British European Airways have their borrowing powers extended from £20 million to £35 million. On March 31 last, they had drawn only £16 million, but their programme up to 1960 involves a net expediture of another £16 million. Again, this is tentative.
It is clear, therefore, that both Corporations will exceed their present borrowing powers in the near future and that for their programmes up to 1960 they will need the maxima increased by the amounts which I have mentioned. The main object of this additional expenditure is the purchase of aircraft. B.O.A.C. are now ordering, or considering ordering, Comets II and III and two versions of the Britannia. B.E.A. are ordering two versions of the Viscount and, eventually, a Viscount replacement and an advanced helicopter. These estimates are intended to carry the Corporations to about the year 1960. I must again emphasise that the amounts are necessarily tentative, but it is necessary to remember that aircraft take a long time to build. Orders must be placed well in advance and accompanied first by a deposit and subsequently by progress payments. Moreover, the cost of these aircraft to-day is very high. We believe, however, that they will show themselves to be, and indeed to a considerable extent have already done so, more efficient than the existing equipment. The fact that they are all British aircraft will undoubtedly serve to give a considerable stimulus to the export trade of the aircraft which they are using. This clause gives the Corporations statutory power to borrow within the maxima laid down. They cannot, however, proceed to issue stock without Treasury approval.
It is, I think, apparent to everybody that the last seven years have seen an enormous development of world air traffic. Between 1947 and 1952 the world traffic doubled. Between the financial year 1947–48 and the financial year 1952–53, the two Corporations trebled their traffic. Whilst the two periods I have taken do not absolutely correspond, they do show beyond a peradventure that the Corporations are more than keeping pace with other air- 963 lines in the world. B.O.A.C. have increased their percentage of traffic between this country and North America from 18 per cent. in 1947 to 42 per cent. in the present year, in the sphere where, I suppose it is fair to say, the most keen international competition in the world takes place. I do not think anyone seriously questions that we wish to hold our position in the field of commercial aviation, and the only way in which we can do it is by enabling the two Corporations to purchase the best equipment which is available. We are glad to recognise this means British equipment.
Clause 2 takes powers to frame a pension scheme for the members of the boards of the two Corporations. The first subsection deals with the case of an employee of the Corporation who is already included in a staff pension scheme of one of the Corporations. This can now be extended to cover him whilst serving on the board. Subsection (2) deals with the case of members appointed to the board from outside. The emphasis I should like to make there is that it is essential for the Minister of Transport and Civil Aviation to have powers to enable him to place such members in broadly the same position as those entitled to continue their membership of the staff scheme under the preceding paragraph. Indeed, I think your Lordships will agree that it is right to have the power to give a member of a board a pension after, perhaps, many years of faithful and full-time service. In any case the powers for which we ask here are identical with those which exist in the other nationalised industries.
Clause 3 takes from the Air Corporations a special protection in connection with the limitation of action which is not enjoyed by other nationalised industries, and will place the Air Corporations in exactly the same position as those other industries are in at the present time, with, however, the proviso that it will apply only in the case of actions arising after the passing of this Bill. The effect of the clause is to remove the Air Corporations from the general class of public authorities who can rely on the Public Authorities Protection Act, 1893, and on Section 21 of the Limitation Act, 1939, which limit to one year the period during which proceedings may be brought against such bodies. Your Lordships will 964 no doubt be aware that one of the recommendations of the Tucker Committee was that the distinction between public authority and private persons in regard to the limitation of action should be abolished. Your Lordships may also be aware that a Bill with this object in view is under consideration in another place. I am able to say that the Government will give every support to this general and comprehensive Bill, which would have an overriding effect on the legislation that we are now considering and on other nationalised industries. In the meantime, I urge the House to agree to the present proposals, which are a step in the right direction, and can be regarded as a stopgap measure to remove the anomaly of the position of the Air Corporations being different from that of the other nationalised industries. I beg to move.
§ Moved, That the Bill be now read 2a.—(The Earl of Selkirk.)
§ 5.15 p.m.
§ LORD OGMORE
My Lords, as the noble Earl, Lord Selkirk, has said, this Bill has three purposes. The first is to increase the limit of borrowing powers of the Corporations, the second to make certain provisions as to pensions for directors, and the third refers to an amendment of the law relating to the limitation of actions. May I deal with directors' pensions first? As I understand it, there are two types of director who will be affected by this measure. The first is the director who has served for many years as a member of the Corporation, who has possibly worked his way up from lower down the ladder and in the course of time has been found fitted to become a director. Under Clause 2 (1) of this Bill that person can now receive a pension, and his previous service will be taken into account. I have no objection whatever to that proposal; in fact, I think it is a thoroughly sound one which is in full accord with the development of the Corporations, and I support the Government in it.
Obviously we do not want the Corporations to have on the board merely people who have served in the Corporations as employees; it is equally desirable that we should have people from outside who can bring to the board the experience they have gained in other fields. That brings me to the second 965 type of director who will be affected; that is to say, the director who has served many years, and possibly most of his life, in undertakings outside the Corporation: he may be a banker or anything else, but he has not served as an employee of the Corporation. This clause, as I understand it, enables such a person to be pensioned in certain circumstances, That I believe to be right in principle. In these days of high taxation it is becoming increasingly difficult for people to save towards their old age. It may be found—I certainly found it when I was Minister in charge of these Corporations, and I think it has been found by others—difficult to persuade the type of man you want from outside to become a member of the board if you are unable to make some arrangements about a pension. Therefore, in principle this is right, and I support the Government in their proposals in relation to the type of director to whom I have just referred.
There are, however, one or two observations that I should like to make. First of all, the salaries of directors, and particularly the salaries of the Chairman and the Deputy Chairman, were fixed originally on the basis that there would be no pension. They were fixed at a much higher rate than the salary of the Minister and the salary of the Permanent Under-Secretary of the Ministry under whom, to some ex[...]t, they come. They were fixed at that rate because there was no pension—at least, that was one of the reasons. It may be that if the Government are now proposing—and I am fully in sympathy with their proposal—to make an alteration in the terms under which the Chairman, the Deputy Chairman and other directors will serve, that point will heave to be taken into consideration, and in future appointments an adjustment of the salaries made.
As I have already mentioned, the salaries of the Chairman and the Deputy Chairman are in most cases considerably higher, not only than those of the Permanent Under-Secretary, but of the Minister; and we have now got into the extraordinary position, which I think has never happened before, of Ministers in charge of Departments receiving less than the Permanent Under-Secretary, who gets a pension on top of his salary, and also less than the Chairman of the Board, who may under the Bill get a pension 966 on top of his salary, too. Although I am not in favour of too large salaries, I should feel inclined to support any suggestion that Ministers should be put back to where they were before. They are the only people who have had a cut and, on constitutional grounds, I think it is extraordinary that Ministers should now be getting considerably less than their own Permanent Under-Secretaries. I fancy I see a welcoming look on the faces of Ministers on the Front Bench opposite.
This is a Bill which creates a completely new class of pensioners. It creates a class of pensioners who are getting substantial salaries. Some of the people affected—not many, of course—will be getting £6,000, £7,000 and £8,000 a year, and expenses. To some extent that is the type of man for whom you are catering, or he is included among those for whom you are catering. It is rather odd that this Bill should come up within a week of the turning down by the Government of the suggestion that the old Regular officers, who have served us so faithfully in previous wars, should not have their pensions made up to the level they were at before the cut in the 'thirties. As we know, those officers receive a pension 9½ per cent. less than they received in 1919, and the Government have stated that the reason why they are not restoring that cut is because its restoration might open the flood-gates to other claims. It was not because there was no injustice: the Government admit the injustice; they admit the fact that these unfortunate people are the only members of the whole community who are getting less than they were in 1919. Yet they say, "We cannot do anything for these people, unjust though it may be, because it would open the flood-gates to other claims." Well, here is a case where the Government are not putting right an injustice; they are creating a whole class of new pensioners and pensioners who, in some cases, are receiving many thousands of pounds a year. I will not hold up the Bill on that account, but I would just point out to the House how completely anomalous it is for the Government to bring in this particular Bill this week, when they turned down the case of the pensioners.
§ THE EARL OF SELKIRK
The noble Lord must not say that we are creating a new class of pensioners. The word is 967 outrageously out of line with what the Bill is doing. We are doing no more than taking enabling powers which have been taken in the case of all the other nationalised industries, because at some time it may be necessary to create a contributory pension system. We are not creating pensions at all.
§ LORD OGMORE
I presume the noble Earl is not suggesting to the House that he is asking the House for powers he will not use. I agree with him that he should have the powers. All I am saying is that, having done this, which he is right in doing, he might also remedy an injustice and put the Regular soldiers into the position in which they ought to be. Having done this, he has swept away, as it were, his one reason for not doing it in the case of the old soldiers. I should have thought that that was quite a legitimate Parliamentary comment to make on a subject of public interest, and a matter which has often been before your Lordships. I am sorry that the noble Lord, Lord Jeffreys, is not here—he was here earlier—and that the Minister of Defence is not here. Noble Lords have often referred in this House to the point I have mentioned, and feel very strongly on it. I mention it because I think it is deserving of mention.
Turning to the second object of the Bill, that is, the increase of borrowing powers, I agree entirely with the Government's suggestion. It is obviously right that the Corporations should have borrowing powers. They are re-equipping themselves with all these splendid new aircraft, the Comets, the Britannias and the Viscounts, and soon the Corporations will have the best machines in their class in the world and will be in a position to obtain the cream of the international traffic in the areas in which they operate. I can give your Lordships an example of what this means. Only last week I came back from Switzerland in a Viscount. We strolled out on to the tarmac and saw a rival company's machine—a pistonengined type—take off. We made our leisurely adieux and proceeded to our aircraft. We sat in the aircraft for some time, waiting for permission to take off. We took off, and at the other end we landed at London Airport. We disembarked, and we were walking towards the airport buildings when the other 968 machine which had left before us came into sight. That is what it means. In other words, B.E.A. and B.O.A.C. have machines in the air which can at the moment completely outdistance their competitors.
But they will need more money, and the recent Report of the B.E.A. states:A close analysis of the cost of working out initial requirements, of collaborating with the manufacturers in their development, of introducing a new type of which no experience exists, of working up a brand-new type of power plant and of pioneering the increase of overhaul hours from uneconomic short periods to economic, extended figures shows that the airline expenditure on Viscount development is not less £1 million spread over about four years.So it is a factor, which I think is not often realised, that the airline operators—especially those like B.E.A. and B.O.A.C., who are experimenting with new types—often have an expensive period to go through from the time when the machine leaves the aircraft manufacturer until the time that it is actually in service. That is a point which is not always realised by the public.
Also in the Report which has just come out from B.O.A.C. there is a complaint about delays, and they say that they had delays in getting certain permissions from the Minister of Transport and Civil Aviation. I hope that this is not one of the first fruits of the merger. We warned the Government that there might be delays if a more cumbersome system was set up when the two Ministries were merged. The Report of B.O.A.C. says that in September, 1952, they intended to start tourist services between London and Lusaka. They did not receive the necessary authority for some time. Indeed, it was March, 1953, before permission, and then only temporary, was obtained from the Ministry. The Report goes on to say:Such delays must necessarily adversely affect the flexibility of the Corporation and its ability to match its services to public demand.These delays, of course, will affect the ability of the Corporation to earn a substantial income upon their capital, and will mean that the Corporation will have to obtain more capital than they would have to obtain if their affairs were dealt with without delay in the Ministry.
I should like to say a word about troop-carrying. The Labour Government 969 started it—certainly we gave several contracts to charterers—but I think this Government has extended or at least carried out our policy in that respect without any diminution whatever. It means, of course, that B.O.A.C. may have a number of aircraft—at the moment they have at least five or six Hermes—standing idle while the charterers are doing the charter work. That, again, affects their financial position. It is not only on that score that I should like to direct the Minister's attention to this charter work. I have been rather concerned in the last two years as to whether the charter companies have not contracted at a far lower rate than they should have done for the handling of troops and Government passengers. In other words, I hope that there has not been a diminution in the safety precautions. We remember the York aircraft which went down in the Atlantic, and there was recently a Hermes that went down in the Mediterranean. I hope that the Minister and those responsible are looking very carefully into this question to ensure that, because of the rates at which the charter firms have competed for business, they have not been tempted to cut down in the direction of safety.
I had intended to say this anyhow, but—and this is rather surprising—a few minutes ago, when I went into the Prince's Chamber, I saw on the tape a report on the disaster to the York. The report has not yet appeared in the Printed Paper Office, but it makes rather alarming reading. It may not be so alarming, of course, when we see the full report, so I will not say any more about that. But I noted that the suggestions made contain these elements. It is suggested that there should be a tightening of the discipline of the ground staff. Secondly, it is suggested that the question of crew fatigue should be looked into; thirdly that there should be a limitation of permitted operations—I presume that that affects fatigue of aircraft, rather than of crew—and fourthly, that questions of external stowage should be considered. I hope that I am wrong and that these various factors did not, in fact, contribute to the loss of that aircraft with considerable loss of life among the people aboard. The same thing happened with regard to the Hermes in the Mediterranean. When she went down, there was considerable loss of life. I hope that it is not so, as 970 I say, but I have a suspicion that perhaps we are not paying enough for these services, and that consequently it may be that the safety factor is overlooked.
There is another point I would mention. Quite recently a former Permanent Secretary to the Ministry of Transport and Civil Aviation has become a member of one of these boards. I have nothing but praise for this particular Permanent Secretary: he is a man of the greatest probity, who has done everything with the utmost propriety. But I ask the Government whether, in fact, it is right, when he retires, to appoint a Permanent Secretary of the Ministry—who, to a great extent, particularly now that the Minister has so much to look after, is a link between Minister and Corporation, a watchdog—as a director on the board. It used to be said, many years ago, when rearmament seemed to be much more a topic of dispute than it is to-day, that there were far too many admirals getting jobs in armament firms at the end of their service. I am sure that that was not a just criticism, and that the admirals behaved perfectly properly; but it did not look right to the public. Those were private firms in which those officers were used, but in this case employment was in one of these Government Corporations under the control of the Minister. I suggest that this is the sort of tendency that we do not want to encourage in any way. They could be employed in otherspheres—for instance, the Meat Marketing Board, if there is such a thing; or the Gas Council, the Electricity Authority or the National Coal Board; but not a board which to a large extent the man has been supervising during his Civil Service life. I put that forward merely as a suggestion. The idea just strikes me, and it might strike other people, too.
The third section of the Bill deals with limitation of actions. There again, I support the Government's proposals; I think they are right. When I was Minister we had some difficulty with this matter. I wonder, therefore, why the Government have put the matter into this Bill, particularly as, from what the noble Earl has said, they are soon to introduce, or to support, a Bill in another place which deals with limitations of actions generally and affects other bodies of a statutory kind, and not only with these Corpora- 971 tions. That is possibly a small point, but I think most practitioners would say that it gets more and more difficult to know what the law is. One would not normally expect to find proposals dealing with limitations in a Bill which deals primarily with the increase in the borrowing powers of the statutory Corporations. However, I do not press that point; I merely bring it forward for consideration by the Government. I should have thought that it would be better if they were embodied in a general Bill.
Finally, I hope that under the new dispensation not only the Corporations but the whole of the charter companies will be encouraged. I hope the Corporations and the charter companies are getting a fair deal from the new Ministry. They are the young children of transport, the new and growing element in transport. I hope that the very powerful interests, like the railways, shipping, and road transport, are not completely overshadowing them outside the Minister's door and inside his room. I have no reason to suppose that they are, but I hope they are not. It would be a tragedy, now that British civil aviation is right at the top, if we did not give them in every possible way the support they deserve.
§ 5.37 p.m.
§ THE EARL OF SELKIRK
My Lords, I should like to thank the noble Lord, Lord Ogmore, for the warm welcome which he has given to this Bill and for his remarks. In so far as they were relevant to it, I thought they were very satisfactory indeed; I have no complaint. But it is to the remarks which were relevant that perhaps I may reply. It is true that there is a Bill in another place, but that may or may not be brought, in time, to this House. We do not know. All we are doing here to limit actions is to put the Air Corporations in line with the other Corporations. The wider question is far too big a matter to deal with here. The noble Lord has spoken of certain journeys to Lusaka. It is not only this Government that has taken the action he mentioned, but other Governments also. But this is an isolated case and has nothing to do with the present Bill.
The noble Lord mentioned Sir Arnold Overton. I recognise that if such appointments became a common practice it would 972 be open to objection. This appointment was looked at carefully at the time and was scrutinised with these particular points in view. It was, however, felt that there were special reasons why it was desirable that Sir Arnold Overton's experience in the field of civil aviation should be made available to the Corporation, and in particular his experience on the financial side. Therefore, without differing from the principle raised by the noble Lord, I recognise that this is a special case and that it is the particular qualifications of Sir Arnold Overton which are the justification of this action and which make it right and proper. The noble Lord treated rather lightly, I thought, the question of the aircraft accident——
§ LORD OGMORE
I object to that word. I asked the noble Earl to look into it because I am very much concerned with this very problem. I am not dealing with it lightly.
§ THE EARL OF SELKIRK
With great respect, quoting from the ticker tape on these matters seems to me to be going rather far. When the noble Lord has had as much experience of these matters as I have he will take more care, instead of quoting from ticker tapes as they come out. They are likely to be misleading in some respects. The particular accident referred to is one of which we know nothing of what has happened. We are told that "the possibility of fire cannot be disregarded." That means that nothing is known of what has happened. I can tell the noble Lord that the safety precautions are in no way reduced. The licensing system stands as it did. The certificates of air-worthiness are just as severe as they ever were, and I have no reason to suppose that the essential standards of safety are not being maintained. It would be a great pity if it should go out from this House that there has been the slightest slackness as far as that is concerned. We do examine and shall examine most carefully all the evidence on these accidents. If the noble Lord would like a full discussion on this point we can have it later. I hope I may leave it with those words.
§ On Question, Bill read 2a; and committed to a Committee of the Whole House.