THE AIRCRAFT INDUSTRY

HL Deb 16 July 1958 vol 210 cc1123-91

3.3 p.m.

VISCOUNT DE L'ISLE rose to draw attention to the prospects of the aircraft industry; and to move for Papers. The noble Viscount said: My Lords, I have thought for some time that your Lordships' House ought to have an opportunity of discussing this highly important and, as I think, rather urgent question of the future of the British aircraft industry. I cannot claim any special knowledge. I am not an aviator—though I have taken an aeroplane up in the air and brought it down in one piece—and I am not a manufacturer. In this matter, if I may without impertinence plagiarise General de Gaulle, "Je suis un home seul." But I hope for the powerful support of noble Lords who have far more knowledge of this industry than I can ever have. My interest first arose, I confess, from the four years during which I had the honour to sit at the Air Ministry when I was very much taken with what I may call the romance of manned and powered flight.

I thought, and still think, that this is a splendid field of endeavour, well adapted to our national talents. The uniting of the imagination of the designer, the knowledge and devotion of the scientist, with the courage and adventurous spirit of the test pilot is an enterprise well worth while. But what of the future? The aircraft industry, as we know, has in its relatively short career seen violent fluctuations. We are happy to see in the world with us still some of the people whose names were household names forty years ago as pioneers of this industry. Sometimes the industry has been pressed by the Government of the day to produce in large numbers, from plants which were quite inadequate, newer and faster and better aircraft. At other times the industry has had to subsist on small orders eked out for a small Royal Air Force.

I feel that the industry is in for a new lean period, when manufactureres will be occupied not so much with maintaining the impetus and pace of technological advance as in the grim task of economic survival. I am not worried for the investor in this or that company. Indeed, an acceleration of the process which may be brought about by the impending situation may thereby lead some firms to seek an even larger measure of diversification. This, from the point of view of the investor, might be financially more profitable than concentration on the actual business of aircraft construction. What I fear for is the national interest. I fear for the air power of this country, unless the industry which supports it is progressive and prosperous. I fear the wider effects upon industry at large.

The aircraft industry is one of three or four main industries in which, my scientific friends tell me, it is vital to our national future that we should gain and maintain a leading position. There is nuclear energy. That is the subject of a public authority. I think that that was a wise measure on the part of Sir Winston Churchill's Administration. Great sums have been spent, and are being spent, on research and development, as well as upon the actual construction of power stations and ancillary equipment. There is the chemical engineering industry. in that industry, private enterprise has managed (ii is notable in the case of one very large firm), in the price it charges for its products, to provide a sufficient sum of money to carry on a vast programme of research and development which has in the past enabled it, and I hope will continue to do so, to keep in the van of progress in this field.

There is the field of electronics, a new and exciting industry, where there is an increasing demand for the products of firms who manufacture electronic gear. I feel there is good hope that they too will be able to recover, in the price of their machines, sufficient to keep up the impetus of their research programme. Then there is the aircraft engineering business. Of all these industries, I am told—and I believe this to be true—that it is in the aircraft industry that the demand for ploughing back money in research and development is the most insistent. Sums of 20 to 30 per cent. of turnover are necessary if we wish to reach and keep the leading place in the aeronautical field. Of course, the economic position of that great industry is far different from the position of the other industries that I have already enumerated. The pace of development of aeronautics, certainly in the postwar world, has been the result of these fierce power rivalries which since the advent of nuclear fission and fusion, have made plain the immense importance of air power in the modern power complex.

These exceedingly rapid developments, both of engines and airframes have hitherto been met, in effect, out of public monies. It is the same in the United States; it is the same in Russia. The civil operators have managed, as a result of the opportunities thus afforded, to purchase from the constructors of civil aircraft, whose overheads have largely been met out of the development and construction contracts for military aircraft. I need cite only one current example: the American Boeing 707, which was, I understand, the child of the Boeing tanker aircraft provided for the United States Air Force in large numbers; and that, in turn, was the development of the B.52 bomber.

This is not a strategic debate, and I do not propose to trench upon that ground. But it is necessary to look at the Defence White Paper of 1957, The Outline of Future Policy and, in particular, at two paragraphs. Paragraph 61 states: Having regard to the high performance and potentialities of the Vulcan and Victor medium bombers and the likely progress of ballistic rockets and missile defence"— and these are the words to which I would draw attention— the Government have decided not to go on with the development of a supersonic manned bomber, which could not be brought into service in much under ten years. Paragraph 62 states: In view of the good progress already made "— that is, in the development of ground-to-air missiles— the Government have come to the conclusion that the Royal Air Force are unlikely to have a requirement for fighter aircraft of types more advanced than the supersonic P1, and work on such projects will stop. As I said, I do not propose to discuss the strategic background of those statements, except to say that I entirely disagree with them both. But whether we agree or disagree, both the United States and Russia are going ahead with the development of supersonic aircraft. The United Kingdom industry, on the other hand, since publication of the 1957 Defence White Paper, has been on notice that it can expect no further help from the most advanced developments of military aircraft for the Royal Air Force. According to my calculation, that leaves only the possibility of further aircraft for Coastal Command; possibly a further ground attack and/or reconnaissance type; and, finally, large transports. If I am right, the Royal Air Force will wither away (to use the Marxist expression) as a leading exponent of the art and science of the most advanced manned aircraft.

If Her Majesty's Government have further plans, and if my calculations and deductions are wrong, I hope that we may hear so to-day. But I feel bound to assume that the Royal Air Force is unable to issue more operational requirements for advanced conceptions. So the design teams of our great manufacturers are warned to look or to go elsewhere. Where are they to look? To the export market for military aircraft? I do not think the fate of the Saunders-Roe fighter (I think it is the 177), with its highly ingenious mixed power propulsion, is a great encouragement to manufacturers to do that. I do not know what went on between Governments and firms. I should be interested to know whether the Government went out to help that firm to sell the type to the Germans or other of our N.A.T.O. Allies. But it is unlikely that foreign Governments will order types of aircraft for which our own Government have placed no orders. If then, there are no Government plans in this direction, it means that the military market for aircraft is lost and that we shall be living on our capital. Our industry has made great strides, and the figures for exports of aircraft goods are most encouraging, until we look to the future.

So there is left the transport field. I am sure that in eight to ten years we shall see in service supersonic civil aircraft. Is this the field in which the United Kingdom industry must "maintain a leading position"? (to quote the words of the Minister of Supply). If it is, I ask: how is it to compete with the United States? The United States will have the "lead in" of at least one type —and possibly more than one type—of supersonic bomber. Do Her Majesty's Government consider it feasible for our industry in this country to produce a supersonic transport without that "lead in"? If they think that, let us hear so; and let us hear why. The aircraft industry, with the best will in the world —and I think it has shown its patriotism in two wars—will derive no inspiration from imprecise ministerial declarations of hope and will receive no spur from the implied threat to withdraw Government facilities if it does not do what the Government want it to do.

We have in this field the unhappy precedent of the Comet. How much better it would have been, in the event, had a development of that aircraft, possibly not so advanced as the civil version, gone into service with Royal Air Force Transport Command, to have the "bugs flown out of it" if I may use a colloquialism! With the competition from across the Atlantic, is it likely that the industry can (again to quote the words of the Minister of Supply) "progressively assume financial responsibility" for research? I am reliably informed that it may cost as much as £l5 million to develop the engines for a new subsonic airliner. Can the research and development costs of such an enterprise be recovered over a small domestic market? Is that a fair commercial proposition, and one which would enable the industry "progressively to assume" further liability for research?

What plans have Her Majesty's Government for enlarging the field? What are they doing in Europe? Are they seeking the co-ordination of the European industries, so that together we may produce, in competition with the great complexes of Russia and the United States? What an opportunity, both for the coherence of the manufacturing industries and the enlargement of the market for civil and military aircraft! At the moment we have certain advantages. We have well-proved design teams still working away, as I know in two or three instances, on most advanced projects. We have some of the best engine manufacturers in the world. But these advantages will pass. I beg the Government to see what can be done while the opportunities are here.

I must confess that I am not greatly encouraged by what I hear about what has recently been done in the military field. I should like to know, for instance, what is happening about a ground attack fighter which can take off with a short run, possibly with a supersonic performance. Is N.A.T.O. looking to us, or looking elsewhere—possibly to Italy? I see all the signs in this of a lack of a continuous Government theme for the aircraft industry. There is, I believe, within the Government circle no unifying force, and policy is fragmented between the various Ministers: the Secretary of State for Air, the Minister of Supply, the First Lord of the Admiralty, the Minister of Transport and Civil Aviation, the Minister of Defence, and possibly the Lord President of the Council. Either we need an authoritative external body to advise the Prime Minister, or there should be a Minister responsible for all the developments of aircraft, civil and military, and possibly taking in nuclear power as well.

There are many distinguished speakers on the list to-day, and I will not detain the House much longer. I should, however, like just to summarise what I have said by putting certain questions, of which I have given Her Majesty's Government notice. The first question I should like to ask is: Do the Government still consider that there is no foreseeable need for a further development of a manned supersonic fighter? Secondly, do the Government consider that it is possible to sell abroad military aircraft of types for which there are no orders domestically; and, in particular, what steps did the Government take to help the manufacturers sell the Saunders-Roe fighter 177?

Thirdly, do Her Majesty's Government consider that there is a need for a ground attack and/or reconnaissance aircraft for the Royal Air Force; and, if so, is such an aircraft on order and will it be supersonic? Fourthly, do the Government consider that it will be possible to develop a supersonic civil aircraft without first constructing a supersonic bomber and/or tanker for the Royal Air Force? Fifthly, do Her Majesty's Government consider it will be economically possible to recover the research and development cost of any large civil aircraft for which a certain market is limited to one or both of the civil Corporations or by the Royal Air Force for Transport Command? Sixthly, and finally, what steps have been taken by the Government to co-ordinate the British aircraft industry with the industries of the leading N.A.T.O. Powers in Europe, so as to provide both the civil and military aircraft with a market of economic size which could support a fully equipped and progressive European aircraft industry? Shakespeareans will recall that Glendower said: I can call spirits from the vasty deep. to which Hotspur cautiously answered: Why, so can I, or so can any man; But will they come when you do call for them? My Lords, I beg to move for Papers.

3.23 p.m.

LORD OGMORE

My Lords, this debate takes place against a background of events in the Middle East of a very serious nature, and it is an anxious time for us all. For that reason I think the debate is opportune, for unless we have an efficient and enterprising aircraft industry we shall indeed be in danger. I am pleased that the noble Viscount, with his experience as Secretary of State for Air, has put clown this Motion at this particular moment. The questions he has asked in the interesting speech which he has made are those which no Government can brush aside; they call for an answer.

In the last few years the aircraft industry has been subject to constant change, and it has, as the noble Viscount so rightly implied, a highly uncertain future, at any rate in this country. At the moment the industry is to a large extent rudderless: it is not getting a clear lead from anyone. This, in my opinion, was the underlying note in the speech of the noble Viscount. The structure of the industry, as many of your Lordships know, is that there are some 200 firms in the aircraft industry, large and small —air-frame manufacturers, aero-engine manufacturers and makers of accessories —employing some 254.000 workers. Nevertheless, in spite of the large number of firms, many of which are quite small, about six of them are responsible for between 80 and 90 per cent, of the total output. The need for so many small firms can be seen from the fact that a modern jet bomber needs something like 40,000 different parts.

The exports of the industry run at some £150 million a year, and the Government have forecast a run-down of this industry over the next five years from 254,000 workers to 150,000, a serious diminution. They also feel that three or four air-frame, and two aero-engine firms, are all that the potential business can sustain. That is on their view of what the potential business should be—a view that is, of course, very different from the view of the noble Viscount who has just addressed us. The Government see the role of the industry in this country as that of providing for their total war needs by the manufacture of ballistic missiles. These, of course, will be manufactured, and have been manufactured, only by a comparatively small number of large firms. So far as the limited war needs are concerned, the Government see manned aircraft against opportunity targets, fighters and bombers; support of ground troops; reconnaissance aircraft and transport and supply, and then, rather nebulously in the background, is civil aviation and its needs. I agree with the noble Viscount that the Government are underestimating the position of the aircraft industry in this country and of the needs of defence. But, as he said, this is hardly the debate to go into the second proposition.

I would remind your Lordships, however, that the aircraft industry is a very important one, not only to ourselves but to the Commonwealth. It is a suitable one for this country, because it employs highly skilled craftsmen and also makes the maximum use of imported raw materials. But it is true to say, I think, that if the industry has to look to civil aviation, as the Government suppose, for its main customers, then its field is restricted, because the expense of meeting these needs is enormous unless there is a military potential. It is a highly competitive and not always very fairly competitive field, and the number of aircraft needed at any one time is not great. In view of the large number of highly expert speakers who have indicated their intention to speak in the debate, I do not propose to be long today. But there are some questions that I should like to ask, in addition to those asked by the noble Viscount. I think your Lordships will see that to some extent they link up with the questions he has asked. They are not so much separate questions as different facets of the general questions to which the aircraft industry wishes to have an answer.

In the first place, my noble friend Lord Pakenham and I have for some years past from these Benches urged the Government to have an independent inquiry into the needs of the industry. In the first few years of our pressure we were fobbed off by the reply that no inquiry was needed; that the aircraft industry was perfectly able to think out for itself what its needs were, and, that any inquiry would be adding, as it were, insult to injury. Within the last year however, we were told that perhaps an inquiry was needed, but that it would be an inter-departmental inquiry. That means, of course, that nothing would come out which people did not want to come out, and that the views of the Department would have full weight. So an inter-departmental inquiry was ordered. So far as one can judge, that inquiry is now meandering around; it does not appear to have made any published report, and it has yielded nothing that can lessen the confusion which is at present so apparent in this subject.

My first question, then, is: Will the Government appoint an independent high-level Committee to inquire into the construction and situation of the aircraft industry? As the noble Viscount told us, there have been two White Papers on Defence, as well as an important statement by the Minister of Supply on May 13, and a speech by him in another place on May 22. The result of these speeches, statements and White Papers has been not to clarify the situation but, to some extent, to confuse it. On June 20 last Sir Frederick Handley Page, who, as we all know, is a very experienced aircraft manufacturer, issued this statement, and I quote from the Daily Telegraph which published it: The various official statements that have been made, both within and outside the House of Commons, need now to be translated into more precise specification terms so that the British aircraft industry can organise itself accordingly. When such requirements are known in relation to its civil aircraft commitments and opportunities, the industry can go ahead with such reorganisation, if any, which may seem desirable to improve its technical productive and financial resources. The report goes on to say: It was unreasonable to expect firms regarded as too big for the likely amount of aviation work, to re-group themselves into even more powerful and productive units, if they were not enabled to assess the work for them to do in the future. So I would put this question: Will the Government give a clear, practical policy lead to the industry, in precise and detailed terms, as to its future, because it is quite obvious from what Sir Frederick Handley Page has said that up to now those concerned in it have not had that practical detailed lead which is the only one upon which they can work.

Another important question was touched on by the noble Viscount to-day when he raised the problem of whether it is possible to provide the necessary research and development for the supersonic airliners and aircraft of the future if we are not to have research into the supersonic bomber of the future. We have made that point from this side on more than one occasion; it has been made in other parts of the House, too. It is clear, I think, from the statement of the Minister on May 13 that he has to some extent cleared up the position. I do not say that I agree with the decision, but we know a little more now of the Government's intention, because the Government say that they will pay for research on military aircraft and guided missiles—and if they will not, nobody else will—and, further, that they will continue aeronautical research for a certain period at about the same level as at present for civil aviation.

Then the Minister went on to make this statement. He said [OFFICIAL REPORT, Commons, Vol. 588 (No. 108), col. 232]: As civil research becomes more and more identifiable, then the cost of that research will be passed in course of time on to the industry itself, although the actual execution of the research may well still be done in a Government establishment. If I were a director (which I am not) of an aircraft company, I should be rather perturbed by that statement; I should be rather confused about it. "As civil reseach becomes more and more identifiable —what exactly does that mean? It does not seem to me to be English. Does it mean "as it becomes separable from military research "? As we all know, it is very difficult to put research into different compartments; research is research. Since this is one of the statements upon which the industry is expected to base its future and its research expenditure, I think we ought to have from the Government a more precise indication of their views. Will the Minister clarify this important statement of the Minister of Supply?

Other Commonwealth countries, of course, are vitally affected by our decisions here. Unfortunately, just lately there has been some misunderstanding over the supply of British aircraft to Commonwealth countries. I have to mention the situation in which the Tasman Airways found themselves when they were anxious, as I understand it, to buy British aircraft but had pressure brought to bear on them to take American aircraft, because certain inducements were held out in the military sphere by the Americans if they took civil aircraft. That is what is being said. I would ask the Government to discuss with the other Commonwealth countries at the forthcoming Commonwealth Conference the general problems of the supply of aircraft.

There are two other questions I have to ask. Obviously, noise is a big factor to the population in the neighbourhood of airfields, as we know only too well. There are at the moment, as I understand it, no international standards with regard to noise, and it is difficult to get international standards, or, indeed, any standards at all. It is an entirely new subject, but it has been brought to the fore by the jet aircraft coming into operation, and particularly the Russian aircraft TU104. I have not discussed this matter with my noble friend Lord Douglas of Kirtleside—I am raising it "off my own bat"—but, as I understand it, he was hoping to have this summer the first link with Moscow so far as an outside civil airline was concerned. Owing, however, to the fact that the TU104 is not permitted as yet to land at London Airport, Sabena have been able to make the first contact, and other airlines may follow suit. So B.E.A. is unable to obtain this traffic. Other European competitors are able to obtain it, because the Ministry of Transport and Civil Aviation here do not take the same view on the amount of permissible noise that the Ministries of Aviation in other countries do. That may have a serious effect on our own aircraft industry and on our own jets. It is a matter which the Government should take up on an urgent and international basis. The question of noise from jet aircraft should be considered by the international board which deals with these matters and a ruling obtained, so that we are all alike and on the same basis.

My last question deals with Transport Command. It has now approximately 100 four-engined aircraft. Those are Blackburns, Beverleys, Comet Il's and Hastings. There are on order eight Beverleys and twenty Britannias. At present, and to a large extent even when the new aircraft come into service, they are inadequate for the needs of the Forces. Just lately in the airlifts in both Suez and Cyprus, we had to call in Coastal Command Shackletons; and in the case of the recent Cyprus airlift we had to call in chartered aircraft in addition to the Shackletons. The chartered aircraft made eight charter flights.

This is no new subject, as the noble Lord, Lord Mancroft, knows. We have raised it on many occasions for several years past. We think this reliance on charter companies is dangerous. You cannot rely on them, and there is no reason why you should rely on them. You cannot expect them to provide the sort of aircraft that are needed to supply our Forces and to transport them and their equipment. For years past we have been begging the Government to build up its own fleet. They have to some extent accepted that proposition and have ordered these Britannias and Beverleys, and they have also got the squadron of Comets. But in our view on this side they have not gone far enough yet. They want more aircraft, and aircraft of a larger type, which can deal with the problems they have to face. In normal times these aircraft can do trooping and in abnormal times they will be ready to give a powerful airlift. So my last question is: will the Government build up Transport Command by giving it a sufficient quantity of long-range, trans-ocean, heavy load-carrying aircraft, so as to transport troops, their equipment and supplies to the places where they are needed? My Lords, once more may I say how grateful I am to the noble Viscount for bringing before us this important subject at a time of great anxiety.

3.40 p.m.

LORD BRABAZON OF TARA

My Lords, we have had two delightful speeches, and it is indeed, I think most refreshing to find that the feelings on this matter on both sides of the House are more or less the same. This industry is peculiar, and I think some people might indeed ask, "Why should we help it when we do not help others?" I think the answer is twofold. First of all, it is a wonderful form of export. We get £15 for every 1 lb. in weight of aircraft we sell; whereas we get only a few shillings on a motor car. Our exports during last year amounted to £116 million and this year it is anticipated that the figure will be £155 million. Those are considerable figures. We are exporting brains and workmanship and not a lot of material, and that is the best form of export we can indulge in. But, apart from that purely material side, there is the prestige side which we must never forget, because as aircraft touch down all over the world they really are ambassadors of this country and they show to the whole world what this country is capable of producing. The natives marvel, quite rightly, at the ingenuity of the British engineer. That, surely, is a thing which we should help.

Of course, nobody is going to deny that this particular science is a very restless one. As I have said before, there never has been a successful aeroplane which was not obsolescent by the time it became successful. Trees do not grow to the skies, but we have a long way to go before we get to a stopping point in the development of aircraft. Let me first speak about what one might call the blue riband type—that is, generally, the fastest machine across the Atlantic. We hold that proud position to-day with the Britannia, which is far and away the best aircraft crossing the Atlantic. It has got over its "teething" troubles and is behaving exceedingly well. But, of course, there are coming in very shortly the great American jet aircraft which have been produced on the experiences we had with the Comet. They are going to be most interesting. For myself, I am not particularly happy about that situation.

When you look into the question of accidents you will find that 80 per cent. of the accidents are due to pilots' errors, and here we are going to ask these hardworking, skilful people to take on even more difficult tasks in flying machines which go much faster and land at the appalling speed of nearly 140 knots. When you think of men having, day after day, often in rain and partial fog, and at night, to bring down on to the tarmac these machines carrying 140 lives, it is a tremendous responsibility that we put upon them. These machines need enormous runways—up to 3,000 and 5,000 yards, which we can ill afford except at our big cities.

I am glad that my noble friend mentioned the question of noise. I see that the Minister was criticised the other day for having talks with America. I cannot see that he did anything wrong there. All he was doing was to see what was the American attitude relative to their own machines at a New York airport. He was only saying that if they were going to say that the noise was too much, we should stand by them. I think that that is a reasonable thing to do. One of the troubles about this industry is that you cannot make these great machines at an economic price unless you get fairly substantial orders. They are tremendously expensive, and I do not think that the Government could help the industry more than by going on with that oft-repeated plea that Transport Command should fit themselves with the most up-to-date machines and in large quantities.

Let us just see what is done in America. We are all familiar with the Stratocruiser. It is not a very popular machine. It is used by B.O.A.C., North West, and Pan-America, but nobody would say that necessarily it is a wonderful aeroplane. Yet the United States Air Force ordered 800 of them. It is a very easy thing to produce aircraft for export all over the world when you have as a background an order of 800 for your own Government. The great firm of Vickers are now, somewhat belatedly, attempting to rival these new American aircraft—and good luck to them ! I think they are approaching it from a design point of view in a most imaginative way, and with their quaint, curious, revolutionary design, they may be able to come down at less speed and get off at a lower speed. I think that that will occur. But where we are going to get sufficient orders to justify that enterprise, I still do not know. My noble friend Lord Ogmore said that the Dominions are not really rallying round us in the way that might be expected. The story of dear New Zealand and the way they were frustrated in getting the machines they wanted is a story which we do not want to tell here, but it is indeed a sad one.

Some years ago I was made head of a committee which tried to express to the Government users' requirements for civil aviation. I must say I thought we did our job pretty well. But the situation is still there to-day as to what are the long-term users' requirements. They ought to be studied out by a committee of high standing. I mention just a few of the departments which are closely concerned—the Ministry of Supply, the Ministry of Transport, Transport Command, B.O.A.C., B.E.A., and the charter companies; and I should like to see the Dominions in that also. As Chairman of the Air Registration Board I should like to make a plea for ourselves to be on that committee, because we are responsible to the State for the safe construction of aeroplanes. We do not want to be a brake on progress, but if revolutionary designs come in, we on the Board must know, by virtue of basic research, whether a thing is or is not suitable and safe, otherwise we cannot certify it and we become a brake upon progress. That I should greatly dislike to see. I know it is politically one of those impossible things, but I should have liked to see the Opposition in upon that long-range programme, so that it could be an agreed long-range programme. When I say that, I and all the aircraft industry, remember with gratitude the services of those Ministers of Civil Aviation who sit on the opposite Benches in both Houses; they rendered great service to us at a time when we sadly needed it.

Now these supersonic machines are to be developed. There is a tremendous amount to be done. There is the development of the aircraft which will get off in a short run, the development of the vertical take-off machine and, of course, the "hardy annual" which is always with us—what is called the replacement of the D.C.3, though we have never got one yet. Then there is the vast field of freighters and crop sprayers; and I believe we have entirely forgotten the private man's aeroplane. I quite admit that this country is not very suitable for the private machine; but overseas and in some of our Dominions there is going to be a big market for that type of aircraft. Only yesterday I was shown particulars of an organisation in North America from which one can hire a plane to fly oneself in the same way as one would hire a motor car. When it has got to that pitch in America it really is a developing market; and although I quite agree that this country is unsuitable for that, it should go very well in our Dominions as an export.

A word about helicopters: some of our firms in this country have done good work along those lines, although a little late, but here we have, from one of the great firms—Fairey's—the Rotodyne, which is a very useful development and is certainly years ahead of anything else that has been dreamed of, to carry 38 to 40 passengers. That should be a world winner, and I should like to know from Her Majesty's Government whether they are prepared to support that right to the very end, because I believe that if we can get through with that particular machine we shall have an export of tremendous value.

I believe it is true to say that, apart from the great machines of what we might call the "blue riband" type, the world to-day is hungry for aircraft of all kinds that wilt fit into the various demands up and down the world. One of my friends was in New Zealand the other day and people there complained bitterly that they could not get a seaplane. Those machines are singularly useful for going to a small island where they cannot put a landing ground for an ordinary land machine. I believe, also, that we were very foolish to give up the idea of the great flying boat.

SEVERAL NOBLE LORDS

Hear, hear!

LORD BRABAZON OF TARA

I know that nobody among the "powers that be" agrees with me in this matter, but I am not going to give up my hope that one day we shall see a great flying boat made in this country. Here we should really lead the world. Flying boats do not lend themselves to conditions in America and they do not want them there; but in the British Empire, which is mostly by the sea, all over the world, we want them more than anywhere else. A flying boat is a wonderful type of machine with peculiar advantages for comfort, and I maintain that to-day, throughout the world, operators have forgotten all about the comfort in the air for passengers. A ride in a motor bus on the highways of London is a good deal more comfortable than a flying trip in an aeroplane. In a flying boat there is the room and the comfort, and if one were built there would be an appeal for them. Why else do people go to America by sea, taking five or six days in the "Queen Mary" and the Queen Elizabeth," if it is not because they enjoy themselves with that form of transport? Nobody on earth can say that they enjoy a trip across the Atlantic by air.

In these days of daily crises it is difficult to get Her Majesty's Government to give this subject the consideration that it deserves, but we in this country have done so much in the past. We have pioneered with blood and brains and treasure, and it would be a lamentable thing if we were to throw it all away for lack of sound, co-operative, national planning.

3.55 p.m.

VISCOUNT KNOLLYS

My Lords, although I have to declare a very real interest in the aircraft industry I do not speak in any way for that industry today, but only from the point of view of one particular section of it. I felt that someone with responsibilities in it might be able to contribute to-day something to this valuable debate. My noble friend Lord Brabazon of Tara has, as usual, given us, from his unique knowledge of the subject, a most penetrating and impressive analysis of the many problems that there are in this whole field to-day. I thought I might offer your Lordships a few "facts of life" on the more down-to-earth side which the constructor has to face at the present time.

First of all, the true position and prospects of the British aircraft industry are not yet fully realised, because it looks so prosperous at present and because parts of it can continue to appear prosperous, provided that they have enough civil orders to carry them through the time when military orders are declining. The real prospects, however, can be very grim, unless certain facts are realised and some constructive support—not necessarily directly financial, and certainly not pure subsidy—is provided by Her Majesty's Government or by a Government-controlled organisation. As the noble Lord, Lord Ogmore stated, the number employed in the aircraft industry is about 250,000. The Minister of Supply has stated that he sees, before long, a time when that number will be reduced to 150,000, but I believe that it is not always realised that the number can fall very much below that unless aircraft firms, however big and however grouped together, are given some help to avoid their being left financially completely on their own.

I venture to suggest several reasons for this rather uncomfortable position. There is, first of all, the growing difficulty of selling transport aircraft in an increasingly competitive market throughout the world. At the moment we are faced with the normal competition that we have had to meet for so long, but it may be that before very long we shall have a powerful addition to that field of competitors—I refer to Russia. Then there is the very strained financial position of air lines all over the world, including those in the United States of America. They are finding it increasingly difficult to finance the purchase of the most modern airliners. We have, too, the demand, which has grown strongly in the last twelve months, for long credits and even for the trading-in of second-hand aircraft, due to this financial stringency which in many cases is coupled with exchange difficulties in particular countries.

Finally, there is the greatest problem of all —the enormous cost of development. I am sure that everyone was very pleased to hear the statement of the Minister of Supply assuring another place that the research facilities of Her Majesty's Government will continue to be made available to the industry. But it is this enormous cost of development, as distinct from research, that is the main worry of aircraft constructors. The cost includes the expenses of the elaborate jigs and tools which are used for only one particular type of aircraft, the salaries of the large design staff necessary and the costly but all-important testing and development flying. All this expenditure has to be spread over the number of aircraft that it is estimated will be sold. Some figures may give your Lordships an illustration of this expenditure which has to be incurred before a single aircraft is delivered.

In the case of the Vanguard, a large turbo-prop aircraft to carry over 100 passengers, which my own company is making and which is due to fly this autumn, my company has already provided during the last two years, for development and tooling alone, over £4 million. That is only part of the total cost of development; there will undoubtedly be more—indeed, a great deal more, one way and another—to be provided for this aircraft. If this is so in the case of a medium-large aircraft, how much greater it is going to be, and is, in the case of the large transatlantic nonstop aircraft and supersonic aircraft of the future? If sufficient aircraft are finally sold, these development costs can be covered; but in the meantime any prudent company has to provide against commercial risks, which are always present and inherent in these ventures. I would suggest, too, that these ventures are themselves not without benefit to the country. We ourselves have at present two private ventures of this kind being financed entirely by the company's own money. But I say frankly that, unless some aid is available, even limited aid, these may be the last we can undertake entirely out of our own resources, unless and until they have paid off reasonably and capital is released for further projects.

There is little use in stating these difficulties and problems without some kind of suggestions for their solution. The ones which I am going to put before your Lordships are straightforward; they are not new, but I think it reasonable to emphasise them to-day. I should like to say at once that the answer which in some quarters might seem the obvious one to all this, nationalisation, is, of course, not the answer at all, for several very obvious reasons. To begin with, only limited Government aid is really required. Then the product of the nationalised industry, from what I know in travelling about the world, would undoubtedly lose a great deal of its sales value in a great many parts of the world. Again, the scope for the personal and individual initiative, which has been the foundation, I think, of the success of the British aircraft industry, will undoubtedly be lessened under such conditions. In that particular connection it is interesting to note that the United States, which we can hardly call a country that welcomes Government intervention in business, has accepted this very kind of indirect aid which is being suggested here.

Some of the practical suggestions that I should like to mention are these. First, a limited amount of Government financial help for development costs could be recovered by a royalty on sales; and some such method as this can certainly be profitable to the Government in some cases, as we know. There has already been mentioned in more than one place of the position of Transport Command, and if we could get firm orders placed by Transport Command, additional to those placed in the normal way by the independent operators, for trooping and other purposes of that kind, we should be in a position to go ahead at home on our own. Surely there must be a great opportunity for this, with the demand for mobile troops and arms which is not only envisaged under the new defence policy but is also taking place at this very moment (and it illustrates the point well, I think) in the Mediterranean.

There is one important point on the question of these orders, if they are going to be placed. They should be placed at the same stage as the airlines here, B.O.A.C. and B.E.A., have been prepared to place their orders—in other words, at the earliest possible moment when the customers are satisfied that the aircraft to be developed and produced is what they want to meet their needs. That sort of thing has been done in the case of our two airlines, and it has made the production of several aircraft possible. But is must be a really firm order. There is a difference between that type of order and the ordinary commercial orders, some of which are placed on behalf of the Ministry of Supply. I would suggest, too, that the firm most capable of doing the job should be given the order, irrespective of whether or not another order has been placed with it.

We have to remember (this point has been mentioned to-day but I want to emphasise it once more) how the great aircraft constructors in the United States are helped. We have mentioned already the Boeing 707 produced on the back of the large tanker order. Other aircraft companies have been able to have the largest part of their production from military orders, and they have produced civil aircraft in that way. As for new aid, your Lordships may have noticed that recently a very large order was placed by the United States Air Force for a version of the Lockheed Electra aircraft, a transport aircraft, for use in anti-submarine reconnaissance. Perhaps there are possibilities in the future as to that kind of use to aid civil air transports. Then there is now more and more of the proper kind of assistance to finance this long-term credit which I mentioned. In these days it is impossible to improve aircraft sales in any way without being faced with a demand for this very unusual type of long-term credit. That can be provided by the Export Credits Guarantee Department, as the Government agency concerned. Perhaps it is now even necessary to consider some form of strong and specially developed finance company, possibly on the lines of Air France, which is doing valuable work in that direction. So far as the Export Credits Guarantee Department is concerned, I am sure that they now recognise the special problems and the claims of the aircraft industry.

I would emphasise to your Lordships that I am perfectly sure that there is no spirit of defeatism in the aircraft industry here. It feels strongly that it must receive proper and reasonable support and help for those parts of its enormous task, which it cannot really be expected to carry out entirely on its own. It is just because it wishes to maintain its great position in the future that it is so concerned in these matters. The aircraft industry, I think I can say without fear of contradiction, has the talent, the productive capacity and the sales record and, of course, its high world-wide reputation; and under proper conditions it can provide most of the very large sums of money which are required. I am sure that it is prepared to collaborate and rationalise, so long as that is achieved realistically. It does not expect to be "spoon-fed", but why should it be expected to do what the American aircraft industry has not been called upon to do—to design, to develop and to construct large civil air transports, while carrying the whole burden and strain itself? It wants only some of the same kind of help, though naturally on a much smaller scale, as the great American competitors have received and are still receiving, and without which they would not be the competitors they are.

Given that reasonable assistance, combined with the realistic improvements that it must always be prepared to make in its own affairs, the British aircraft industry can continue to provide for this country inestimable benefits comparable to the one mentioned by the noble Lord, Lord Brabazon of Tara; and. I would add, technical prestige and employment for technical youth of this country. and foreign exchange. As we must assume that the Government wish to ensure that an aircraft industry continues to exist in this country, I am sure that they must and will find their share of the solution. Without that it will be impossible for our aircraft industry to carry on effectively or, indeed, to survive as the great, essential national asset which it undoubtedly is.

4.9 p.m.

THE EARL OF SWINTON

My Lords, I think this is a very timely debate, and one of the most agreeable features of it is that there is absolutely no politics in it. Here you have men of wide experience, administrators, manufacturers and scientists, merely determined to see what is the wisest policy for this industry. I must say that I should have liked this debate to start with a Government exposition on policy and plans, both on the future of aircraft as they see it and on the future of the aircraft industry. As I see it, if we are to have the right policy we must try to be certain of three things. We must be certain, first, of the facts of the present position. That is not so difficult. Lord Knollys has put them admirably to us. Secondly—and this is harder—we must try to see the future, so far as it is foreseeable. Then, thirdly, in the light of the first two considerations we must decide what should be our aim in the national interest.

As the House knows, I take the view that piloted aircraft on the military side, both the bomber and the fighter, are likely to have a much longer life than some authorities appear to consider. I do not propose to go into that question again to-day. I dealt with it at some length in the debate on defence. I gave my reasons for thinking that, and I was greatly comforted and reinforced to find that, not for the first time since we started working together, Lord Tedder was of the same mind. I think that informed opinion is gravitating more and more in that direction. Certainly in the great aircraft manufacturing countries of the world—the United States and Russia —and in the countries with the greatest Air Forces, I see no tendency to rely on the guided missile of the future as against the bomber and the fighter of the present.

But, whether I am right in that or not, there is no doubt at all that there will be an increasing need for aircraft both for commercial service and for military transport. Let us never forget—because this is fundamental to the whole of this problem—that research and development on military and civil aircraft are absolutely interdependent and inseparable. I do not for a moment understand—and I shall be greatly interested when Lord Mancroft tells us—what was meant by the Minister when he said, as quoted by Lord Ogmore, "as research gets more identifiable". That was the word "identifiable". I have not the faintest idea what it means. Of course, I know a bomber when I see it and I know an airliner when I see it. But I am sure that everybody in this House with experience of development in the past would agree with me that the last thing he could tell when initial research was being done—and, indeed, not only initial research but research carried a long waywas whether that was going to prove of greater value for the civil or for the military side. The one thing that is quite certain is that it is going to be important for both; and if you drop the military side I do not think it will be long before the civil research goes by the board, too.

Therefore, I am sure that there will be a considerable demand on this industry, and a considerable demand, may I say, on the Government. But, even so, there will not be enough work to go round the industry at its present size. Lord Ogmore has given us the figures, and I gather that the Government take 150,000—that is a cut of at least 100,000 in the present personnel—as their estimate of the future figure. What, then, is the national interest? I am sure that the national interest demands this: that both for defence and commercially we should have a thoroughly efficient aircraft industry.

I am not going to be long, but there is an important aspect that has not yet been touched on. Lord Knollys, being the head of a great and successful firm, was perhaps too delicate, but having no interest at all in any aircraft firm but having had some experience of placing orders with aircraft firms and having helped or stimulated reorganisation in that industry, perhaps I may say one or two things which it might be harder for anybody with a direct interest to say. I would put as the prerequisites to an efficient aircraft industry these three points. First of all, the industry must be strong financially. Secondly, it must be strong in design and production. Thirdly—and, if I understood Lord Knollys aright, I am going to say something with which he will concur—contracts, whether they are for civil aircraft or for military aircraft, must be placed for the best aircraft and must be placed with the best firm to produce those aircraft.

My Lords, I emphasise that last point because I am quite certain that quality, performance and efficient production must be the overriding test of what should he ordered and where the order should be placed. Nothing but the best will do for defence. Nothing but the best will give the great British airliners the passengers to fill them in competition with the other airliners of the world, and nothing but the best will command the export market which can perhaps be the most valuable export market of the lot. I submit that those are the essential prerequisites of a successful aircraft industry, and I should like to ask the Government whether they accept those principles as the premises on which Government policy should be based.

As I said, firms must be financially strong. Lord Knollys has emphasised that they must be strong, not by theory but by showing us in practice, as his company has done; and there are other companies both in airframe production and in engine production which can match what he has told us. The stronger those firms are, the more they will be able to do themselves in research and development, although I am quite certain—and I will come back to this point in a moment—that even the strongest will need Government help in research and development. My Lords, you do not make an efficient firm financially strong by making it take on weak partners. By that I do not mean small partners—I do not at all exclude the small firm. Those of us who know this industry and have known it in the past can think of quite small firms which have had a designer of genius and of keenness and which have produced something very remarkable. To give that man and his team the full chance of development and expansion. he wants a great deal of money behind him, and the marriage of a small firm like that with one of the larger firms would be of great advantage.

But I am quite sure that it is no good trying to keep every firm alive. Some of them must go into something else. An industry which is so big that it can only be partially employed is uneconomic and inefficient. It could continue only with huge Government subsidies, and that would be demoralising and debilitating. Such an industry could not hold its own in this highly competitive world. But all this does not in any way imply laissez-faire on the part of either firms or the Government. The firms themselves have a duty to seek marriages or association—I will not call them liaisons—which will be sound and fruitful. I am not pressing them to take on weak partners or to take on liabilities, but I urge them not to be too eclectic, too perfectionist, or too exclusive.

It would be a great pity if the right amalgamations failed to come off because of some difficulty over personalities. Conscious as we are of each other's short- comings, we always see the difficulties of potential colleagues. But if I may say so after a great many years' experience, you do not always choose your own colleagues, but when you get down to working with them you find them, and they find you, in the rough and tumble of practical life more accommodating and more practical than at first blush you both supposed. I do not know if there is any noble Lord in the House now who was associated with either the Bristol or the Rolls-Royce companies, but if there is he will remember a long negotiation stimulated, I might almost say forced, at one time by myself, over variable-pitch propellers, where a successful and fruitful marriage took place which, for all I know, is now producing in the third and fourth generations.

The alternative to these amalgamations might be much less agreeable "shot-gun weddings ", sponsored or forced by the Government, or in the last resort, nationalisation, which, I agree with my noble friend Lord Knollys, would be a disaster all round. I think that the Government have the duty to use their influence in this way. They should apply inducements, both the carrot and the stick; but the more the Government use their power in this way, the more important it is that they should accept and apply those principles which ought to govern amalgamations, principles and tests which, I have ventured to suggest, would ensure a strong and efficient industry.

The Government also have a duty, and I think it is the stronger duty, to have a definite policy of research and development and to make it plain to the industry. I would beg the Government, whether they agree with me about bombers and fighters or not, not to skimp over research and development. Do not be afraid to spend on it. We really cannot afford not to spend on research and development. It is an essential contribution to defence and, I believe, an essential and relatively cheap contribution to what might be one of the greatest assets in maintaining through the coming years and coming decades our successful trade balance. Let the industry know now, as soon as you can. Certainty and security are vital to this industry and time is of the essence of the contract. If this debate encourages both firms and the Government—and I think that perhaps the Government need as much stimulating as the firms; I would not be invidious; I should like to see the carrot and the stick applied impartially to both partners in this business—to get on with the job, to achieve sound and fruitful amalgamations and develop a forward policy for those firms to carry out, then certainly this debate will have served a useful purpose.

4.25 p.m.

LORD KINDERSLEY

My Lords, there is such a distinguished list of noble Lords who are to speak to-day and who are far better qualified than I am to speak with authority on the aircraft industry as a whole, that I hesitate to take up your Lordships' time; but if you would bear with me, I should like to make certain points which apply particularly to the aero engine industry. Here I must declare an interest as chairman of Rolls-Royce. It is apparent to all, I suppose, that it is impossible for an aircraft (I am not referring to gliders) to fly without engines, and that equally aero engines are of no avail without aircraft. The two industries are indivisible. At the same time, there are certain factors in the aero industry itself which might be of interest to your Lordships. There are two points in particular to which I wish to draw your Lordships' attention. These are, first, the time it takes to develop an aero engine, and secondly, the cost of that development.

As regards the former, I think I can say without fear of contradiction that five years is the minimum period of development, if all goes well, and it has been known to take even ten years before an engine is ready for delivery. As regards cost, the development of the modern jet engine costs anything from £15 million to £20 million or even more before it is in production and ready for delivery to the customer. Some of your Lordships may he surprised at these figures, but I think they make it clear that the £116 million of exports to which the noble Lord, Lord Brabazon of Tara, referred, out of which £40½ million was accounted for by aero engines, were the products of development carried out during the past decade while the industry was enjoying the full support of Her Majesty's Government in defence expenditure and when our defence policy was based on large fleets of bombers and fighters, which were the very foundation of the experience on which our successful export trade, both commercial and foreign Government, was built.

Those days have changed. Orders for bombers and fighters have been cut down and strung out. The industry has been put on notice—again, I am referring to the aero engine industry—that it must stand on its own feet for future development of engines of commercial aircraft. It must be clear to your Lordships that there are limits to the number of types of aero engine which the industry can afford to develop off its own bat at £15 million to £20 million a time. With the rug pulled out from under its feet, the industry is left with the hard task of developing successfully for the future in the face of indirectly subsidised competition, where the wealth of the United States of America and of individual corporations in the United States of America dwarf the facilities available to the industry here. The stakes are large, but I am firmly convinced that the international aero engine business is worth fighting for, particularly when we start as the pre-eminent country in that industry.

It is a basically sound business for this country. Of course, its products are technically difficult to develop and manufacture, but there is no country that possesses higher technical skill and technique than we have, and only the highly industrial countries can afford to compete. It is a relatively stable industry where an increasing proportion of export turnover will consist of spare parts and overhaul work. It is an industry with low imported material content and a high labour content, which should enable it to compete on a price basis with the U.S.A. There is also a forward urge to provide British made aircraft and aero engines for our national corporations. But to do so it is essential to have an export market for the same types, or their cost would be quite prohibitive. In order to be technically competitive, and remain so, we must be in a position to match the Americans and the Russians in essential development facilities, and to be able to keep this up to date.

If it is accepted that the business is worth fighting for, it is essential with an industry that has made the maximum contribution that it can towards development from its own resources that the Government should finance the remainder and help those who have helped themselves. In my opinion, every effort should be made in the interests of economy and efficiency to try, where possible, to combine military orders with ultimately fulfilling a civil export need. I also feel that R.A.F. Transport should give the maximum help possible in endurance-flight testing of new products. I will end by reminding your Lordships that what development is carried out to-day will be reflected in the export figures of five to ten years' time; and in this light I would suggest that a new look should be given to the policy of to-day.

4.32 p.m.

LORD ADRIAN

My Lords, in much of what I have to say I shall only be repeating what has been said with much more skill and knowledge by the noble Viscount who opened this debate, but the warning he then gave cannot be repeated too often; and there is one part of it that I want particularly to emphasise. Our aircraft industry does much more than produce aircraft: it is in the front line of our technological advance. If we weaken it severely, we endanger our position as a nation which has to live by its technology. At present, the aircraft industry is one of the major directing forces in technological development over a wide field. Of course its development was enormously helped by the two wars. They were periods of intense scientific activity in applied science, and they produced the remarkable machines that we have now—machines that were not dreamed of when I was young.

I think it is true to say that there is hardly any field of technical progress which has not received an immense stimulus from the development of those aircraft in war time: radio, metallurgy, engine design, electronic control, and fine engineering of almost every kind. Nobody wants a repetition of those two periods when we had to develop aircraft or lose the war, but the industry is still one of the most fertile sources that we have of technical advance. It is so, I suppose, because there is still such a wide field ahead of it, and because it has to work so near to the limit of what is possible. Aeronautical engineers seem to be quite accustomed to making what seem to be impossible demands and finding that some of them are fulfilled—I am thinking of demands for even stronger and lighter materials, the sort of demands that may be met by Titanium; demands for better engines, better electrical equipment, and for new kinds of structure and new manufacturing processes.

There are many advances in general engineering which are eagerly sought, such as the storage and transmission of power, turning coal directly into electricity and so on; but in many of these activities there is not the same wide field ahead. Our cars go quite fast enough already, and we do not expect them to be so different ten years hence; but we do expect our planes to look quite different. Developing them ought to give the same sort of stimulus as developing the new field of atomic energy. That, like the aircraft industry, ought to give us the same kind of harvest over the whole range of industry. To-day we can claim that our aeronautical industry is as good as the best in the world. It has been brought to that position, admittedly, by the great subsidies that have been paid to it in the past by the taxpayer. But it was worth it, because it helped us to win our wars, and because of the direct profit derived now from the export trade and the much greater indirect profit that we get from the general technical advance that it has brought about. The industry has had these subsidies primarily because of its importance in defence. Now that it seems to be less likely to be important in the future no one can blame Her Majesty's Government for feeling that they cannot afford to go on paying for planes which will never be wanted.

The problem, however, is whether we can afford to lose the technology which would go into them, which would be applied to machines and have just as much influence on the development of our industry as many of the developments in the atomic field. While the Government, I think wisely, have decided to make no immediate reduction in the research which goes on in their own establishments at Farnborough, Bedford, Malvern and elsewhere, they seem to have decided on a sudden and drastic reduction in what they are paying the aircraft firms for developing the prototypes of new machines. That is the decision which may have such serious results.

In the past, it has been the Government research establishments which have produced much of the basic knowledge and from which new ideas have come. The translation into a particular engine or a particular plane has been left to the aircraft firms. That has been a good way of proceeding; both sides understand it, and they have built up teams which carry out the particular side of the work they have to do. The Government research establishments have not been designed to produce prototypes of engines or planes, and they could scarcely expand in that direction, because it is a matter of considerable experience. That basic research, of course, has to go on; it must be there to supply the guiding principles. Work on wind tunnels, models and so on can supply them, and can show at once that some ideas are not worth following up. But the applied research which is needed for building a full-scale machine can have just as much effect on the technical development. It will be concerned with getting the details right; but that will give the prospect of a learning great deal about the whole process of advance.

In the improvement of anything as complicated as a modern plane there must be the actual translation of the basic ideas into the finished product. We do not yet know anything like enough about complicated machinery to be able to say how it will work merely by looking at the blueprint. Engines have to be run until they break down to see why they do so. New needs and new ideas must be allowed to come in at every stage, and the research is not finished until long after the first flight. And "Mark II" of the prototype is always a great deal better than "Mark I", because so much has been found out in the process of manufacture and running. Basic research is very important, but it is, after all, directed to a practical end. It is only in the universities that we are free to spend our time acquiring entirely useless knowledge. If the basic research in applied engineering is not built into a new machine, it will lose an important stimulus arid an important guide into what it should do next. I do not want to suggest for a moment that the Government research establishments will be reduced to academic exercises if new planes are not built; but it is difficult to believe that there is not an important case to be made out for sponsoring by the Government of the design and construction of some advanced machines.

4.42 p.m.

LORD WEEKS

My Lords, like my noble friend Lord Knollys, I should say immediately that I do not pretend to speak as a representative of the industry. Unlike him, I am no longer concerned with the hurly-burly of aircraft manufacture, but I still have certain interests, either directly or indirectly, with aircraft companies. A somewhat similar debate to this took place last December, and the noble Lord, Lord Ogmore, who introduced the debate on that day, made the criticism that people like myself (he did not mention my name, but the cap fitted) spoke on these matters outside the House but did not take the trouble to come here to express their views. I think your Lordships will agree that on this occasion we have a considerable amount of talent to talk on this subject.

Nearly all industries have their ups and downs. We have seen it in shipping, steel, and textiles, and no doubt we shall see it in aircraft manufacture. Although the situation may not have what I might call a gloomy outlook, it certainly has rather a grim one. You can do nothing at all, and you can let the law of the jungle operate; but the result, in my opinion, will not be a highly civilised one. Many people, myself included, have pointed out that there are too many units in this highly complicated industry. I am following much the same lines—and I shall not be repetitive—as those which the noble Earl, Lord Swinton, has already stated. I consider that a certain amount of amalgamation or grouping is desirable, and in any contemplated grouping it is desirable to strengthen those parts of the industry which have shown themselves capable of earning exports. But there is only one agency which can instigate and stimulate a reorientation of an industry; and that is the Government itself. It is also essential, of course, that the industry must co-operate in such a plan, and again I go along with the noble Earl. I am not advocating any "shot-gun wedding."

Other speakers have already enlarged on the essential help that is required for development of airframes and aeroengines. Your Lordships have had facts and figures, from both the noble Viscount, Lord Knollys, and the noble Lord, Lord Kindersley, and nobody knows better than they what the situation is. I am not sure that engines are not much more important than airframes. Other noble Lords have spoken—and I agree, with them—of the need for long-term credit facilities. I will not go into the comparisons made with the United States, where the domestic civil market is equal in operating capacity to the rest of the world's scheduled airlines put together. I think I am right in saying that in 1956 the United States aircraft industry was the largest employer of labour in the whole of that country, and it operates, as others have stated, on the back of enormous Government orders. Nevertheless, I believe that the British David can take on this American Goliath.

I proposed to try to confine my real remarks in this debate to what I consider the lack of focus in the industry, and working up to that point I should like to try to analyse what sort of courses the Government can take. What I might call course A is outright nationalisation. Course B could be participation by the Government in the equities of the variety of companies which comprise the industry—I think this was suggested in principle in the Labour Party's policy statement Industry and Society last year. Having put up these two Aunt Sallys, if I may so call them, I should like to shoot them down before I go on to others. Those who support the policy of outright nationalisation will argue that this industry is largely an armaments industry; that the State has been, and will continue to be, the chief customer; that in the past the State has provided the resources to develop many projects and has also given all the production orders for Service requirements; that the State conducts a large part of the fundamental aeronautical research, and, finally, that the industry is inefficient. That last point is something with which, from my own knowledge, I entirely disagree.

There is one line of argument which has been brought out by other speakers, and especially by the noble Viscount, Lord Knollys: that because the cost of development of future projects is so large, no individual manufacturer can face it without help. That is true, but it is not in itself an argument for nationalization, as the noble Viscount, Lord Knollys, has already pointed out. All that is required for a company engaged on a large civil project is to have the buttress of military orders, as the Americans do, to overcome the gap which can arise if the number of planes ordered is not sufficient to enable the company concerned, if I might put it vulgarly, to "wash its face ".

The arguments against what I have called course A and course B are very strong. First, this industry, if it is to be successful, must depend on its export trade, which means high efficiency and keen prices; and I have no doubt whatever that overseas buyers would be less willing to deal with a Government organisation than with free enterprise. Secondly, private enterprise provides quick decisions and flexibility, and it is true that the advance in the technology of this industry has been so fantastically rapid that the last thing wanted or needed is any form of bureaucratic control. Thirdly, the enormous benefit which arises from competition in design would be lost under State control, and I submit that neither nationalisation nor Government control are in the best interests of those who work in the industry. Fourthly, this industry is engaged in designing, developing and producing complicated machines, whether for civil or for armaments purposes, and this involves collaboration with all kinds of other manufacturing industries who certainly would not welcome a change from working with a fellow-industrialist to a bureaucrat.

I do not want to elaborate courses A and B any further. Any case, I think, for the extension of State ownership or control, if it is looked at in the light of what has happened to those industries already nationalised, collapses as a potentially successful form of industrial organisation which will operate either efficiently or in the national interest. I am sure that Ministers know all the arguments, but it is courses of this sort of which they must be conscious, and they have got to find the remedy.

The next course, which I might call course C, could be something analagous, but not entirely similar, to what is now the Iron and Steel Board. This would provide a focus, but if one examines the effect of such a course one sees that it becomes "bogged down" because of the large number of Government Departments concerned with the industry. The Minister of Transport, with his civil aviation responsibilities, has an important voice in the policy and efficiency of the Government-operated Corporations and the independent operators; and I may say, in parenthesis, that I should like to see still more sympathetic consideration of the tasks that these independent operators can fulfil in the national interest.

The Air Ministry have a vital interest in the specification of their defence requirements for aircraft, for guided weapons, including the important function of Transport Command which can and should be, as has been already mentioned by other speakers, closely associated with civil requirements. The War Office is not only concerned with the fact that its troops and services have to be carried very long distances at short notice, but it also has a tactical requirement of its own. The Ministry of Supply is responsible for overall research; and in the past it was almost entirely—though it is not so much now—responsible for development. This Ministry has to obtain specifications for Service requirements and also has a brief for civil requirements. It places production orders for the Services and works with the Minister of Transport and Civil Aviation on the requirements of the Government-operated companies. As I have pointed out on other occasions, this Ministry stands between the user and the manufacturer, and that is never a good principle.

The Ministry of Defence has an overall responsibility for Service matters and has laid down the overall pattern in this respect. I think that if your Lordships look at paragraph 6 of the new Defence White Paper you will find the definition described a little more accurately than I have been able to do. The Admiralty has its own peculiar requirements which depend on the co-operation of the Ministry of Supply. The Treasury watches all, and has just as much interest, if I may say so, in the ability of the industry to sell overseas as in acting as a watchdog in keeping down the expenditure of any of the Ministries to which I have referred.

For the future health of the industry, this leads me to the sort of focus the Government might make effective—I will call it course D. I only wish that I had the detailed knowledge to outline exactly what I think course D should be. I hope that the noble Lord who winds up this debate may give us a clue as to what the Government have in mind. As I see it, it could be a sort of High Court, a Governing Body, if you like, or a Committee at ministerial level (much as we all dislike committees), presided over by a Cabinet Minister, which can give full direction on policy. I think the industry might be much better off if suitable machinery could be set up. This machinery should have some technical "teeth" to assist it. I do not presume to suggest who the Minister should be who should preside.

One would like to feel assured that all the implications of, say, alterations in fares, needs for new bombers, fighters or freighters, or guided weapons, or new civil aircraft, have been reviewed before the decision is taken, not by one Ministry but by a body which covers all Ministries. Someone or some body must decide on the broadest basis what new developments are worth pursuing and, still more important, what are worth cutting out; what aeroplanes and what engines are worth backing; so that they can finally take their decisions and allow those companies which may be left in this business —there will be fewer than there are today—the hope of making some profit from the machines they are asked to produce. In any case—I will make the same old remark—I hope it can be secured that the customer and the manufacturer can be allowed to have free contact with each other.

The industry may have been "featherbedded" to some extent in the years before the war, but unless some focus like the one I am advocating can be brought into being, with the duty of watching, co-ordinating and fostering the growth of British aviation effort as a whole, both civil and military, I can only repeat my warning that the outlook is grim. This may be a little pessimistic, but as my noble friend, Lord Knollys has already stated, I think we must face the "facts of life." This is a vital industry. It contains some brilliant leaders and technologists. It has one of the most attractive and one of the most favourable conversion ratios as an export. Lord Brabazon of Tara gave certain figures; I think he said £15 and 2s.; my information was £10 and 1s. There it is. That is an enormous figure for a conversion ratio. My only final request will be: let the Government give us (I speak now as a member of the industry) the tools of policy and the necessary signposts, and we will do the job.

LORD PAKENHAM

My Lords, before the next speaker addresses the House, I wonder if I might put one question to the noble Lord, who has obviously made a speech of great importance? Before doing so, I must apologise for not hearing the first part of his speech. I gather that he is proposing the establishment of an important and representative Committee, with a technical team attached, which would report to a Cabinet Minister. He has also criticised the very existence of the Ministry of Supply. Do I gather that he is recommending the abolition of the Ministry of Supply?

LORD WEEKS

My Lords, I am sorry to tell the noble Lord that I did not think it was within the terms of reference to-day that I should go into the question of the Ministry of Supply. But at any other time I should be only too delighted to try to do so. I was not thinking at the moment of the abolition of the Ministry of Supply. If I might expand my comment, I only regret that I have not the necessary detailed knowledge to define completely what that course D should be. But the noble Lord has more or less set out what I have tried to say.

5.2 p.m.

LORD SHEPHERD

My Lords, I am quite certain that the noble and gallant Viscount, Lord De L'Isle, will be very satisfied with the course of this debate. It has been of a high standard from the beginning, and I think the noble Viscount himself set the tone of the debate. We have also been fortunate in having a speech from the noble Lord, Lord Weeks. I am sure that my noble friend Lord Ogmore would he pleased at his strictures of certain noble Lords who have given their advice in public and have not come to this House to do so. This afternoon we have had a classic example, and we are gratified that the noble Lord has come here. We do not all agree with all that he has said, but he has given us a lot to think about.

When I was listening to the noble Viscount I could not but come to the conclusion that he had grave concern at the whole trend of Government policy so far as it affects the aircraft industry. This concern is nothing new; it has been repeated again and again from the Oppo- sition Front Bench. I remember that only last December my noble friend Lord Ogmore called for a full inquiry into the aircraft industry. We were told then that there was to be an interdepartmental inquiry. We have heard little from that inquiry. What I think concerns us particularly is the Government's general attitude towards the aircraft industry. It seems to place the aircraft industry in the same group as manufacturers who produce for the general consuming industry. I believe that to be fundamentally wrong. There is little similarity between the aircraft industry and the consuming industry. I believe one noble Lord this afternoon mentioned Imperial Chemical Industries, Limited. There is a classic example of a company with many diverse industries, but each dependent upon the other. The company has been able to develop because of the strength of one particular division. The aircraft industry is unlike that type of industry; it has only a limited number of customers, whereas the consuming industry generally can change and adjust itself according to the times. It can seek new lines and new markets and, generally speaking, it can obtain finance from many quarters. I believe that that is where the Government are causing a great disservice to the aircraft industry.

My noble friend Lord Ogmore again made a plea for an inquiry into the aircraft industry. The time is very pressing, and I wonder whether we can afford the time for a full inquiry into all the aspects of the industry. We have heard repeatedly in this House and in the Press that there must be contraction and reorganisation within the industry. To some extent, that contraction is taking place now, but I wonder whether this unorganised contraction is in the national interest. I personally feel that it will end in disaster—that certain sides of the industry will go. Therefore, I would call upon Her Majesty's Government to consider the setting up of a corporation to go with the industry into the whole question of organised contraction, to see that the strong can be married with the weaker but essential parts of the industry, and to bear in mind the projects and the constructions that are already being undertaken by the industry.

I believe that this corporation should be provided with funds to help exports. We are aware of the great work that the industry has done in export, but we well know now that it is not a question purely of producing an aircraft. To-day, the airline operators are short of finance. I would submit that if this corporation were set up and were provided with finance, it could well provide the capital and the loans to the operators so that they could produce new and modern machines. I have particularly in mind the independent airlines.

LORD MANCROFT

My Lords, may I interrupt the noble Lord for one moment? He is making a most interesting point. What soft of corporation has he in mind—a Government agency, an independent corporation, or a body like B.O.A.C. or B.E.A.? To whom would it be responsible? Who would have control of it?

LORD SHEPHERD

It could be a corporation similar to B.O.A.C. but I think it should be a corporation on which there could sit representatives of industry, representatives of the Government and some representatives of the operators, so that into that corporation you would get many interests. I think that that is a great point for the financing of our exports.

My last point is on the question of the Government's attitude towards the supersonic bomber. The Government have maintained that by the time the supersonic bomber could be developed and manufactured for squadron use it would be out of date and the missile would have taken its place. The Government have their advisers, and they may well be right; equally, they may well be wrong. I believe that the danger is that if their advisers are wrong and the Government have ceased research into the supersonic bomber, in five or ten years' time the Government may well find themselves without any bombers, and that would be a most serious situation. I would ask Her Majesty's Government, therefore, to see whether they could not continue research on at least one type of supersonic bomber, so that if the advisers of Her Majesty's Government are wrong we should have at least continued our research and should not have to start in two or three years' time with nothing on the drawing board.

I believe this is very important. When I was in America quite recently I was very much struck by a remark made by the Commanding General of the Strategic Air Command. He said that so far as he could see in the foreseeable future we should need the bomber. He may be wrong and the advisers of Her Majesty's Government may be right; but he may be right and the advisers may be wrong. I sincerely hope that we shall carry on with the design and development of the supersonic bomber.

5.11 p.m.

VISCOUNT CALDECOTE

My Lords, I, too, must declare an interest in the subject of this debate, but I should like to make clear that I speak for no one but myself. I believe we should all be very grateful to the noble and gallant Viscount who has put down this Motion to-day, for the debate has been extremely interesting: many of us who have spoken towards the end of it have found that a great deal of what we were to say has already been said very much better.

The Motion before the House concerns the prospects of the aircraft industry. I do not think anyone will dispute the fact that the prospects of the world aircraft industry are very bright, in that the use of aircraft as a means of world communication is bound to expand. The question before the House—the important one for us—is: what share is Britain to get of that expanding market? That will surely depend on the effort we are prepared to devote to it. Over the last ten years the Ministry of Supply have spent some £600 million on research and development for the aircraft industry, of which about one tenth—£60 million—has been spent on work for civil aircraft. That, of course, includes work in private industry and Government establishments. During a similar period exports have amounted to about £650 million and they are now running, as we have heard, at about £150 million a year.

That seems to me to be a pretty fair record and not a bad return on the money invested; but there arises a question which always arises when Government money is spent: could that money have been spent better elsewhere or in some other way? I am very doubtful whether it could. The noble Lord, Lord Brabazon of Tara, has already pointed out the extremely good conversion ratio of aircraft: they sell for £10 or £15 per 1b. weight, whereas cars sell for about 10s. per 1b. and ships for only about 1s. per lb. Another way of looking at it is that with aircraft 15 per cent. of the total cost is the cost of raw materials whereas in ships the raw materials cost is about 65 per cent. That means, of course, that the export content of aircraft is very largely labour and brains.

In addition, as the noble Lord, Lord Adrian, has pointed out, the aircraft industry performs a vital service to the community by stimulating technical progress. Mainly because of the importance of weight, the great accuracy of shape required and high performance, new techniques, new materials and new methods of calculation all spring from the aeronautical industry and fertilise the whole field of engineering. These great contributions have been made possible mainly by developments supported by military requirements but partly by developments devoted specifically to the requirements of civil aviation. Now, as we have heard, these conditions are changing. There are to be fewer military aircraft, and, apparently, less civil development.

Under these conditions, can the industry remain prosperous and can exports be maintained? Those are not two different questions, for, owing to our very small home market, without a prosperous export trade the industry cannot survive as a useful industry. Clearly the answers to those two questions depend partly on the competence and efficiency of the industry itself but partly, as we have seen, on the support that the industry gets from Government policy. Since the war the industry has had great ups and downs, contractions and expansions—and its share of failures as well as great successes. But now the record speaks for itself and the equipment in the industry, both in Government establishments and private companies, is of the highest quality.

We can never match the United States in quantity, but we can and do match them in quality; and there is no doubt at all that in many fields—in propeller-turbine aircraft and in engines of all kinds, to give two examples—we are leading the world. There is no reason why we should not continue to do so. I believe there is some danger that we in this country have got an inferiority complex, due to the tremendous flood of American production of all kinds. I do not believe there are any grounds at all for that, for we can continue to lead the world in many fields provided that Her Majesty's Government provide the proper environment in which the industry can continue its achievements. Competition is strong and we have to organise to meet it. At the present time the main competition comes from the United States of America. In future, no doubt, Russia will add to it.

In America the aircraft industry enjoys many important advantages. A large proportion of its capital assets—a much larger proportion than in this country—is Government-owned. The Aircraft Industries Association of America recently announced that about two-thirds of their assets were Government-owned. Very substantial credits are provided by the Export-Import Bank. Then there are two other factors of tremendous importance of which we have already heard this afternoon: the continuing military programme and the large home market. For instance, the great Douglas Aircraft Company, which perhaps many people think of as a civil aircraft company, had a turnover of sales of about £400 million in 1957 but only approximately 20 per cent. of that represents civil aircraft construction. That shows the enormous support that that great company gets from military aircraft sales and development.

Those two advantages—a continuing military programme and a large home market—lead directly to the fact that in America new aircraft can be and are developed on a military budget and all the early difficulties can be ironed out. They can then be sold on the civil home market and any further expenditure needed to make them into good civil aircraft can be recovered. Those aircraft can then be put on the markets of the world at a price which, of necessity, is far below the price that must be charged by a company which has no such support from its Government. Without doubt, if the British aircraft industry does not get the kind of support that has been mentioned by the noble Lord, Lord Weeks, it is going to operate at a very grave disadvantage. This is a fundamental point. If there were no military aircraft development in the world we should all be selling aircraft at higher prices in order to recover the development costs; the whole price level would rise and we should be competing on an equal basis. But as things are now, we have to compete on the basis of this large, continuing military programme in the United States.

Recent Government statements indicate that there is going to be a drastic reduction in military development, and support for civil aircraft development only in special cases of quite revolutionary designs. That new policy brings great problems in its wake. The industry must adapt itself—it is already changing—but that alone is not enough. First, I believe that the Government must take a firm and clear decision that they believe the aircraft industry is worth while supporting, as I am sure they should. They must make that decision quite clear to all concerned. Having made that decision and indicated it, they must accept the implications of it—that in some way or another research and development must be supported. It must be supported not in dribs and drabs, with the tap being turned on and off to suit changes in the political and financial climate. It would be a tremendous help to the industry if the kind of allocation of money that is made for the universities over a five-year period could also be made for aircraft research and development. Then, some new arrangement is needed for the control or for the allocation of any funds that are available, in the kind of way which the noble Lord, Lord Weeks, suggested under his plan "D". And in all due humility, I should like to support all he said in that connection.

The noble and gallant Viscount, Lord De L'Isle, mentioned the large number of different authorities which were responsible for aircraft development; and it seems to me vital that some new committee or agency should be formed in order to allocate funds to and to coordinate the requirements of the aircraft industry. I, too, find it difficult to make any clear suggestions how that agency should work. Clearly it must have knowledge of all the requirements, both civil and military, and the operators must be represented on it; it must have technical staff to evaluate the proposals; and as well as having technical "teeth" it must also have financial "teeth". I am strongly of the opinion that some such agency, like the Atomic Energy Authority, would be far more suitable than one subjected to the day-to-day control of the Treasury. I know that that is a difficult problem and it is clearly a case where the balance of advantage must be considered; but basically the problem is one of competition on level terms. Quick decisions have to be taken, and I think all your Lordships will agree that the existence of Treasury control does not make it easy for decisions to be taken quickly.

The aircraft industry is unlike all other industries, in the sense that I have explained—in the sense that it is competing, not on straight commercial terms, but with another industry, in the United States mainly, which has great Government support. At present the airlines are in some difficulties, but who can doubt that there will be a new extension of air travel and a new surge of requirements for aircraft in the years to come? Surely no great industrial country such as Britain can afford to be out of the aviation industry. At present we have a great, leading position in many fields, but time is running out. The industry will play its part in reorganising itself to meet these changing conditions. But there is, I believe, a most urgent need for a clear, firm and positive policy from the Government, without which this important industry cannot survive.

5.25 p.m.

LORD SEMPTLL

My Lords, I am very glad to join with your Lordships who have already spoken in this debate in congratulating the noble and gallant Viscount, Lord De L'Isle, on his informed opening speech. The importance of the matters under discussion cannot, in my view, be exaggerated. Aeronautics as a profession, as your Lordships will know, is the most highly disciplined and advanced form of engineering thought in existence to-day and is the nursery of practically all new engineering developments in design, machine tools and materials. Quite apart from the manufacture of civil and military aircraft, we must have an active and live, virile aircraft industry. Without it we cannot lead the world in our other engineering projects.

I suggest that the changeover from manned aircraft to guided missiles will be much slower than was at one time contemplated. The guided missile development has brought about a division in thought, and some have been inclined to see the manned aircraft as on the way out; but I believe myself that nothing could be further from the truth and that we shall need manned aircraft for defence and civil purposes for a long time. This uncertainty has shaken the confidence of those who work in the aircraft industry. As I see it, a condition of unease has arisen, similar to that which resulted in the United States some ten years ago. That element of uncertainty resulted in that country when, there as here, many voices expressed conflicting views.

President Truman, as your Lordships may remember, established a committee of investigation known by the name of its chairman as the Finletter Committee, whose report entitled Survival in the Air Age is an example of what such a report can be, but seldom is. All who served on the Finletter Committee were able to approach the problem from an entirely independent angle, not having been responsible for anything that had been done on air policy affairs before. They had complete power to summon all parties irrespective of their position. As a result, a remarkable report was produced, which is very well worth reading. The effects of it can be seen from the vigour in action of the United States aircraft industry to-day, which has been referred to by several of your Lordships who have spoken.

As several of your Lordships have emphasised, we cannot afford to cut down on research and technological training in air matters. We must not forget that our total national research Vote is only some 240 millions compared with 3,000 millions in the United States. The problems are many and complex, and as one who has worked in and with the aircraft industry for just on fifty years, I would beg Her Majesty's Government to consider the urgent necessity of setting up an entirely independent—I emphasise "entirely independent"—air tribunal, consisting of a small group of the best brains in the country, backed by an adequate team of specialists. That, as I understand it, is similar to the suggestion submitted to your Lordships by the noble Lord, Lord Ogmore, who spoke second in this debate.

5.29 p.m.

LORD MERRIVALE

My Lords, in a debate on the future prospects of the air- craft industry, it is perhaps fitting that one should recall to memory certain past achievements. Going back exactly ten years from to-day, on July 16, 1948, the Vickers Viscount, the world's first turboprop airliner, first flew. A year later the de Havilland Comet first flew. That that aircraft should have suffered certain setbacks at that time is understandable, for we did not then have the knowledge about metal fatigue that we have now. Similarly, when the Bristol Britannia first flew certain problems arose, for at that time that aircraft was, if I may use the expression, "breaking new ground." Since then those problems have been very satisfactorily settled, and I certainly think that that aircraft now reaches the performance which its manufacturers expected. In fact, I think that is highlighted by the fact that it is manufactured in Canada by Canadair as a Naval reconnaissance aircraft under the designation "C.L.28".

To quote another example of a highly successful aircraft, I should like to mention the English Electric Canberra, with its great versatility and superior performance. This aircraft is produced in America by the Martin Aircraft Company, under the designation "B.57". Whilst not wishing to weary your Lordships with a long list of highly successful aircraft, I should like to mention the de Havilland Dove, of which nearly 500 are now in operation and the success of which led to the production by the de Havilland Company of a four-engined version of this elegant aircraft, named the Heron. In the same way, I imagine, the Vickers Vanguard is being produced as a successor to the Viscount on account of increasing air traffic and, as I have mentioned, the marked success of the Viscount.

A further and recent instance of an aircraft with which we have again been first in the field and have stolen a march, shall I say, on our foreign competitors is the Fairey Rotodyne, the world's first vertical take-off airliner. That airliner flew for the first time last November. It is certainly the only vertical take-off aircraft in the world in which the transition from vertical flight to horizontal flight is achieved in such a smooth manner. In fact, it was recently referred to by the Chief Executive of the Air Registration Board as an example of a perfect aeroplane. I sincerely hope, therefore, that the recent planning permission granted by the Minister of Housing and Local Government to the Westland Aircraft Company to provide London with a Thames-side heliport will act as a definite incentive to the British European Airways to consider this British aircraft for inter-city service. Apart from asking the noble Lord, Lord Mancroft, whether any progress has been made by B.E.A. on the question of consideration of this aircraft for inter-city work, I should also like to ask him whether Her Majesty's Government are fully satisfied that the technical information they have obtained on this aircraft is sufficient, having regard to any future development possibilities, or is it a case of a Treasury decision conflicting with a technical requirement? I ask that, my Lords, because Government support was withdrawn from this aircraft after it had flown only eight hours.

To consider but two aspects of this problem of the future prospects of the aircraft industry, I think (I hesitate to mention the point, as so many speakers much more qualified than myself have already stressed it) that there is need for a Government lead in this respect. I would certainly stress it with regard to research and development and with regard to transport aircraft. Concerning the former, as stated in the Observer of the 8th September last: The future lies in research and the application of British engineering ingenuity to the right projects at the right time. But to achieve this end a non-decreasing number of design teams must be maintained and a sufficient number of channels, if I may be permitted to put it in that way, of technical thinking must continue to exist from which the right project at the right time may be extracted. Research cannot be stopped and re-started. The momentum of research must be maintained—or should I say sustained—if the aircraft industry after forty years' existence is to maintain its position in the world.

Her Majesty's Government cannot close their eyes to the fact that a number of designers who unfortunately left this country to work in Canada have been attracted over the border and are now working within the American aircraft industry. I well appreciate the fact that the support that Her Majesty's Government can give to the British aircraft industry cannot in any way be on a scale such as that provided by the United States Government. But it should be remembered that this industry is our major defence industry, and it cannot be expected to maintain leadership in this constant game of "leap-frog", as one of our manufacturers called it, or entirely to finance development, solely by its rising export orders. I will not go into the export figures of the industry because those have been mentioned by the noble Lord, Lord Brabazon of Tara, but I should like to point out that the motor industry exported last year up to the figure of £447 million. But that industry owes a great deal to the aircraft industry in the various fields of development, such as streamlining, alloys, brakes, engine efficiency and fuels. In fact, I think it is generally recognised that developments pioneered by the aircraft industry are a considerable asset to the country's general engineering.

Turning now to the second aspect, that of transport aircraft, where a Government lead is certainly required, I would draw your Lordships' attention to the fact that the Americans have produced an aircraft, the Lockheed C.130, the Hercules, which may prove a threat to our aircraft industry. For instance, Australia has recently ordered twelve of these aircraft for the Royal Australian Air Force. I will not go into the technical details of this aircraft, but the larger loads which this aircraft cannot carry can be easily carried by the Douglas C.133A Cargomaster. Your Lordships will no doubt be aware that the Cargo-master can easily accommodate the Thor intermediate-range ballistic missile.

To mention another respect in which the Americans constitute a certain commercial menace (I cannot think of a better word at the moment) for airline operation, the United States aircraft industry is proceeding with the Convair CV.880, the Douglas DC.8 and the Boeing 707, which, as the KC.135 tanker, has been extensively proved as an aircraft. There are also at least three leading American aircraft manufacturers working on supersonic airliner projects. Let us not forget, too, the fact that valuable information is and will be forthcoming from their 110A weapons system, or Mach.-3 chemically fuelled B.70 bomber. In this country, first deliveries of the Vickers VC.10 to B.O.A.C. are scheduled for 1963—three years after the Convair 880 will be available for service. Moreover, according to an article which appeared in the Daily Telegraph on June 30, the Army and R.A.F. clash over transport." Whether or not it is Government policy to continue to develop existing types of transport aircraft on the grounds of lower cost, certainly a decisive lead must be taken by the Government; and this must take into account world demand and American competition. But, as I said earlier in my speech, my Lords, the momentum of research must be maintained. That is extremely important, and it has been stressed by many speakers this afternoon. It cannot be slowed down or halted. In the same way as the industry requires a satisfactory number of production lines to make its maximum contribution to our economy and to our defence, so it requires a far greater number of lines of research, a matter to which I hope the Government or their inter-departmental committee will give urgent consideration. I should like to end by saying how grateful we all are to the noble and gallant Viscount, Lord De L'Isle, for initiating this timely debate.

5.45 p.m.

LORD PAKENHAM

My Lords, I would certainly echo the last words of the last speaker, in repeating the gratitude that has been already expressed by my noble friend Lord Ogmore from these Benches and in all parts of the House to the noble Viscount, Lord De L'Isle, who not only initiated this debate but set it going in so effective a way. I find it an impertinence to begin to congratulate speakers who in many cases have given far more of their lives to the aircraft industry than I have, but I should like to say how pleased I am to think that the noble Lord, Lord Brabazon of Tara, and the noble Earl, Lord Swinton, have been able to participate, in view of my own close association with them when I was Minister of Civil Aviation for three years. In those days I used to regard them as the great twin brethren, the Castor and Pollux, of civil aviation. We have heard something to-day about the carrot and the stick. True, Castor applied the stick to me a little more than Pollux applied the carrot, but both were very helpful in their own peculiar idioms. I should like to say also how interested I have been in all the other speeches.

To-day's debate takes place in something of a different atmosphere from the debate of February 1, 1956, which was initiated by the noble Lord, Lord Brabazon of Tara. I think that perhaps it is worth quoting one or two points made at that time which have reappeared to-day, in a slightly different context. At that time the noble Lord, Lord Brabazon of Tara, and I think all the other speakers, took an extremely gloomy view of the aircraft industry, not because of any cuts that were being forced from outside, but because the whole thing was rather close to a mess. Those words were not actually used by the noble Lord, but he felt bound to say of those who had been concerned with the aircraft industry—I think that he was referring to the Minister, officials and leaders of the industry [OFFICIAL REPORT, Vol. 195, col. 725]: … they stand condemned before the whole nation as being responsible for an incompetent piece of organisation. That was what the noble Lord said rather more than two years ago. Later in that same speech, he said [Col. 727]: What is so bitterly resented today is that from now on apparently, we are to give up the struggle; we are to admit that we are beaten … To-day, the noble Lord was critical of many things that were being done and not being done, but I think that the improvement in the export record, the enormous strides that have been made in exports in the last year, have perhaps altered something of the atmosphere since the beginning of 1956. To-day we find the noble Lord, Lord Adrian, saying, "We can claim that our aeronautical industry is the best in the world "—a submission that did not arouse violent dissent from your Lordships, although, like all such propositions, it is open to argument. I take rather a middle position in all this, perhaps through not being sufficiently close to it nowadays. I stand halfway between the view expressed two years ago, and to some extent to-day, by the noble Lord, Lord Brabazon of Tara, and that of the noble Lord, Lord Adrian, both speaking with greater knowledge than mine.

There has been a general change in emphasis. I would agree, if it is possible, with almost all the main contentions of this debate: and certainly where the Government have been pressed for more financial assistance for research and development; where the Government have been asked to take much more effective steps about Transport Command, and, above all, where the Government have been pressed, as they have been throughout the debate, for decisions. I do not think that the noble Lord's friends—and he has many—would expect him to-day to go into lyrical transports about the speech of the Minister of Supply in another place. Certainly the Minister's own political friends, at any rate in one leading case, found themselves criticising that speech very sharply.

I do not think—it may be no fault of the Minister, who I believe is a very able man—that anybody feels at the moment that the all-important decisions have been made; and therefore I think that most of us will agree that the industry is still left very much in the dark. It may be too much to-day to expect the noble Lord, Lord Mancroft, in the short time that has elapsed since the Minister spoke the other clay, to give us any clear decisions not already announced. I only hope that he can do so; but unless and until he can, I think we must preserve in many cases, quite apart from Party politics, an atmosphere of scepticism and anxiety.

However, as I do not wish to repeat what already has been so ably said, I should prefer in the few remarks I make to touch on another aspect. It is one that certainly the noble Lord, Lord Weeks, was dealing with—and once again I apologise for missing some of the earlier part, and I believe the more controversial part, of the noble Lord's remarks. It is the question of supervision. In every industry—and I am talking outside Party politics; it is true of banking, education and almost every human institutional occupation—everyone likes assistance, clear decisions and encouragement from the Government, but does not want supervision from the Government. That is a fact of human nature, if you look for it in university circles, in industrial circles or wherever it may he looked for. When great men from industry come and speak clearly from the point of view of industry, it is important, but one has always to ask oneself: How can this be fitted in with a broad national point of view, which all those gentlemen concerned are per- fectly capable of embracing in other activities?

Therefore I come for a moment to the question of supervision. I hope that I shall not be accused of dragging Party politics into a non-Party debate. I understand that when I was out of the Chamber the Labour Party, of which I am a devout member, was criticised by the noble Lord, Lord Weeks. I hope that I shall not be accused of introducing Party politics for the first time if I say that I should be more inclined to accept the views of the noble Lord on this matter if I felt sure that he knew exactly what the Labour Party stood for. That is perhaps a fair reply to a Party "crack", and as I did not hear the "crack", the noble Lord will not expect me to reply at greater length. I understand that he did make a comment of that sort. I know how fair the noble Lord is, but I imagine that he would be the last person to describe himself as a political expert, and perhaps he will not wish to emphasise the political aspect of this question.

LORD WEEKS

May I say that it was not my intention to make a political "crack". I was referring only to what appeared in a Labour statement last year.

LORD PAKENHAM

While I am not here this afternoon to defend nationalisation of any particular industry, in my view it is no more political to defend nationalisation than to criticise nationalisation. Perhaps I may leave the matter there. I was not, however, concerning myself with nationalisation or with topics of that sort, but was trying to deal with this matter in a way that would be reasonably acceptable to all noble Lords and all Parties.

I think it is worth asking ourselves whether, from the point of view not only of supervision of the industry by the Government but also of the Government's decisions which are intended to help the industry, we have the ideal set-up. Here I know that we approach difficult matters. Everybody has his own scheme, and I never find myself able to follow anybody else's scheme until I have studied it carefully in Hansard. Therefore, I do not want to develop an elaborate plan on what might seem to be the spur of the moment. I have thought about it a good deal, however, and, like others, I have had a fairly varied experience close to this subject. It does seem that we have reason to wonder whether, to put it mildly, we have the right set-up.

The Minister in another place—I am bound to refer to him a little, because the excellent Minister who will speak to us this afternoon has not yet begun to disclose his thoughts—indicated that he was not satisfied with the present pattern of the industry. To take only one point —although it is not the only one—he wants to see a reduction in the number of firms; and he indicated that he is quite ready to press the industry until it eventually assumes the right shape. So there is no difference between us there: the Government have some intention of pressing the industry to do something which it is not doing at the moment.

It is worth asking: What is the best set-up for this and other purposes? We are all obviously aware of these things, and the noble Lord, Lord Weeks, has already explained them quite clearly. But the complications, from the point of view of the Government, are fairly obvious. They have to consider the production and the sale of military aircraft, and also of civil aircraft. They have to consider, from the point of view of the Services, the use of the military aircraft, and, from the civil point of view, the transport use of civil aircraft. How can that be handled with the smallest number of Ministries?—if that is the object. At present we can take for granted the Service Ministries—and we have the Ministry of Supply and the Ministry of Transport. However you juggle these Ministries about, you will always be left with an answer that is not quite satisfactory—I think the noble Lord, Lord Weeks, will agree with me there.

I should myself venture to differ from those who would advocate rolling civil aviation into a Ministry of Aviation, a Ministry of Aeronautics, or whatever it may be called. I feel that if that were done—and I know that some experts would like to have something more like a Ministry of Aviation or a Ministry of Aeronautics—then the transport end would lose; they would be the weaker side and would get the worst of it. The noble Earl, Lord Swinton, nods, which suggests that he has some sympathy with my point of view. I feel little doubt that that would be the end of that story, and I should not favour that particular method, which would be to take civil aviation from transport and add it to the Ministry of Supply, or whatever Ministry was set up.

The noble Lord, Lord Weeks, when I somewhat impertinently interrupted him, felt unable to-day to pronounce on whether he would like to see the Ministry of Supply continue. But, however one proceeds, one cannot think of any improvement on some Ministry of that kind. I am going to make a suggestion about it later but, in my submission, we must have a Ministry of that sort. The noble Lord, Lord Weeks, as I understand it, would like to have some Committee which would report to some superior Cabinet Minister, and this Committee would, so to speak, co-ordinate the Ministry of Supply (if it were still there) and other Ministries. That, I think, would make the task of the Minister of Supply still more difficult, and in the end, I think, impossible. With great respect, therefore, I should think that on this point the better method is that which was adopted by the Labour Government—and it may be the policy now, because, the veil has not fallen aside—of having a sub-committee under a senior Minister. There is no secret of the fact that it was the late Lord Addison in our time who had such a committee. That committee brought together the various Ministries, but did not try to do their work for them or set up as a sort of rival to those other Ministers. That was the policy and, so far as I know, still is; and I feel that it is a better policy than that suggested by 'he noble Lord.

What I have just said may suggest that I cannot think of anything better than what has been operated in the past. But I want to disclaim any desire to be too modest, because, in fact, I believe that there is a better answer available. My answer—and all we can do is to pool our minds in these matters—would be to try to render the Ministry of Supply more effective than it has ever been under any Government, whatever its complexion. It seems to me that the real trouble about the Ministry of Supply is that it has never known enough of what was going on. It has never been inside the industry so as to render itself effective. I am not going into the question of powers, because I do not think that is really the problem at the moment. The real question in this, it seems to me, is to make sure that the Ministry of Supply have sufficient knowledge, bearing in mind that in all these matters knowledge is power. So in differing, I dare say, from the noble Lord, Lord Weeks, and others, I should like to see a Ministry of Supply rendered more effective by the addition of a Board.

This Board would contain representatives from outside the industry, but it would also include important individuals with contemporary or recent knowledge of the industry. In some respects it might he regarded rather as the Bank of England is regarded by the other banks, an analogy different from the one used about iron and steel. It should be a Board outside the industry, but respected in the industry. In my opinion, such a Board would be far more valuable in advising the Minister than any Department of the Civil Service, however well-intentioned. And I do not think we can leave it to the industry to supply its own Board. I should like to see something much closer to the Bank of England than any of the other analogies which have been brought forward. My view is, I repeat, that we should make the Ministry of Supply much more effective. Other noble Lords may have better ideas.

I do not want to say more than another few sentences. It is obvious, I think, that none of us is quite happy about the industry, in spite of all the fine work which is done there. None of us is quite happy about the set-up, and none of us, perhaps, is quite happy about his own ideas for reform. The noble Lord, Lord Weeks, said that he was not quite sure that he knew enough to give positive answers to all these questions. If he does not know enough with his inside experience arid his remarkable ability, there is certainly nobody else who does know enough to be dogmatic. I should like to end on that note. Here is the problem of a vital industry which we all think ought to be improved, although none of us is quite sure of our answer. Here, if anywhere, stands out the clear need for an inquiry. I know that in this conclusion I am speaking for the noble Lord, Lord Ogmore, and for my colleagues on this side, but I speak also, I believe, for many other noble Lords. It has been a privilege to throw my small ideas into this great debate.

6.2 p.m.

LORD MANCROFT

My Lords, the starting point for any debate such as this must, as my noble friend Lord De L'Isle explained, be the Defence White Paper of 1957. I do not think your Lordships can be in any doubt that the policies set out in the White Paper will in the long run have as profound an effect on the future of the aircraft industry as did rearmament for Korea. The repercussions of that White Paper will continue to be felt by the industry for many years to come. At the outset, therefore, let me try to put that change in policy into perspective.

During the 1939–45 War this great industry employed nearly 2 million people. The immediate post-war contraction, therefore, was enormous. Indeed, the total labour force for the industry at the outbreak of the Korean War in 1951 had declined to about 150,000. To meet that crisis in Korea the labour force was increased to 275,000, and large sums of money were spent by Her Majesty's Government on machine tools and modern factories. It is easy to be wise after the event, and perhaps in the light of after events that may have been too large. The industry now employs about 250,000 people. The inevitable effect of the policies set out in the 1957 White Paper will be a reduction in expenditure on aircraft production of about 9 per cent. over each of the next two years, and a contraction over the next five years in the industry's labour force of about 100,000. It will return, that is, to its pre-Korean size.

Redundancy on this scale will obviously pose many very awkward questions. It will, of course, be spread over a period, and in fact the numbers involved represent, I believe, a very small fraction of the people who, in the normal course of events, change their employment or retire from work altogether. Her Majesty's Government are well aware of the fact that in some areas, and indeed for some firms, there will be difficulties. Northern Ireland particularly springs to mind. I can assure the noble Viscount, Lord Knollys, who raised this point particularly, that every effort will be made to ease hardship where it arises. But your Lordships will appreciate that no Government can go so far as to order aircraft to be built which will not in fact be required. Individual companies in the industry are now adapting themselves to these circumstances with, if I may say so, commendable resourcefulness and courage. They are spreading their interests well beyond the world of aircraft, and I think more firms will have to follow suit.

In this context, too, your Lordships will remember that the aircraft industry also plays a leading part in the development and production of guided weapons. The labour employed will, however, always be relatively small when compared with that of the aircraft industry proper. It will not, therefore, go far to absorb the redundancies resulting from decreased orders for aircraft. The noble Lord, Lord Ogmore, thinks that we on this side of the House underrate the importance of the industry. I can assure him that we do no such thing. It was, indeed, because of the importance which Her Majesty's Government attach to the aircraft industry that a Working Party of senior officials was set up to consider, in the light of current defence policy, the future of the British aircraft industry and the probable extent of Government support. Both the noble Lord, Lord Sempill, and the noble Lord, Lord Oamore, want a more elaborate high-powered form of committee—one that can carry out closer cross-examination.

LORD OGMORE

My Lords, in case the noble Lord is under a misapprehension, may I say that what we particularly require is an independent committee. We were not criticising the power.

LORD MANCROFT

I remember that the noble Lord put that point in the debate we had at the turn of the year. But I wonder whether it would find much that this committee will not find. I wonder whether it would not jog the elbow of the industry. I bear in mind the noble Lord's point, and I think that this committee is doing a good job of work and finding out what we want to know. As a result of their work, it has been decided that, in addition to continuing to sponsor and finance aeronautical research and development to meet defence requirements, Her Majesty's Government will also continue to make financial contributions to aeronautical research in the expanding field of civil transport where it is not already covered by the research necessary for defence.

I agree with my noble friend Lord Swinton that research is the aircraft industry's lifeblood, and I agree with him that research is indivisible. Her Majesty's Government intend to maintain their expenditure on research at its present level. I agree with the noble Lord, Lord Adrian, too, that more than most industries the aircraft industry must make its plans for the future far in advance. The noble Lord, Lord Kindersley, reminded us that years must pass before ideas can be translated from the drawing board into fully proven aircraft. The expenditure involved, of course, is stiff.

What Her Majesty's Government are doing, therefore, is to underwrite the future for the industry by continuing to support the basic research necessary for it to survive. This research will be carried out partly in Government establishments and partly in industry, including. let me assure the noble Lord, Lord Adrian, the construction of research aircraft, In the long term the industry must stand on its own feet—perhaps one should say on its own undercarriage—but it would be too much to ask it, at this critical stage in its development, to carry the full cost of aeronautical research.

VISCOUNT DE L'ISLE

At what point does the noble Lord see the industry standing on its own feet, if that means covering all its research and development out of its own resources? Does the noble Lord see that happening while the American industry is being sponsored by the American Government?

LORD MANCROFT

I think it is impossible to forecast the date.

VISCOUNT DE L'ISLE

If the noble Lord tells us that as long as the American aircraft industry enjoys this kind of subsidy the British Government will provide a pro rata assistance to the British aircraft industry, that would be telling us something; but if he remains as vague as he is, nothing will be added to our knowledge.

LORD MANCROFT

I said "in the long run." I cannot give the noble Viscount the pro rata figure, because the American industry has the backing of an enormous military defence programme which we cannot possibly equal or bring into the balance sheet. So far as development for civil aviation is concerned, as opposed to research, Her Majesty's Government will expect the industry itself to accept financial responsibility, as indeed it has already done in the case of major new civil aircraft projects. Some help beyond research may, however, be required for developing the next generation of civil aircraft which are likely to embody important advances in techniques. Lot me assure the noble Viscount, Lord Caldecote, who particularly raised this point, that Her Majesty's Government will be prepared to consider on their merits individual cases for financial help.

What we envisage in the immediate future, therefore, is a partnership between State and industry, the one financing basic research and the other financing aircraft development and production. As the industry's financial strength grows, so will the Government look to it to shoulder more of the cost of civil research. In this partnership, therefore, we hope that the industry will be able to exploit to the full the splendid position which it has won for itself in the world of civil aviation. It is this partnership, and the nature of this partnership, that your Lordships have been discussing in considerable detail, and I think we agree with the noble Lord, Lord Weeks, and the noble Lord, Lord Pakenham, that none of us are quite clear in our minds as to how we should like to see this partnership develop. The noble Lord, Lord Pakenham, put his finger on it when he gave the banking analogy and said that we welcome Government interference to our benefit but not when they tell us what to do.

I listened with pleasure to the argument between the noble Lord, Lord Weeks, and the noble Lord, Lord Pakenham, on the political basis. If I may be political, I most firmly disbelieve in the nationalisation of the aircraft industry. I did not hear noble Lords opposite give any firm indication of what their views were; perhaps that will be reserved for another time. The noble Lord, Lord Pakenham, asked me a direct question in the course of putting forward some ideas for the control of the industry in the future through Government channels, ideas with most of which I agreed. Yesterday my noble Leader explained to the House the difficulty constitutionally of stating what is being done in the way of Cabinet Committees. I think it was the noble Viscount, Lord Addison, who set up a Cabinet Committee on that par- ticular subject. Perhaps I can repeat that I thought I agreed with a great deal of what the noble Lord, Lord Pakenham, said.

It is clear, however, that the large number of companies which now comprise the industry is not the most efficient organisation to compete effectively in world markets, particularly against increasingly powerful American competition. It is Her Majesty's Government's policy to encourage greater integration of the companies to bring about a concentration of economic and technical strength to exploit those fields in which this country has an advantage. I am well aware that the policy of rationalisation may not be universally welcomed, but I am sure it is both inevitable and right. It has been discussed in some detail in the debate this afternoon. I was surprised to find how much support it had on both sides of the House. There was talk about shot-gun weddings. That is the last thing we desire. But I was surprised to find that if there was not support for a shot-gun wedding between the aircraft Industry and the Government. at least there seemed to he no opposition to the sight of father being seen twiddling with his gunroom key. That policy has not been worked out in its details by the industry, but I am certain from the reactions I have seen in the last year or so that, whilst accepting the difficulties, they realise that the movement must be in that direction.

One of the fundamental requirements for shaping the industry's future is, of course, a knowledge of the orders which Her Majesty's Government are likely to place. In this respect discussions with the industry have taken place, and so far as is possible—it is not easy—future aircraft requirements have been made known. With this knowledge, and making allowance for prospects in other markets, the industry should be able to reorganise in a manner which will make the best use of the great capital investment which has been made in it over recent years. It should be possible to deploy to the best advantage the skilled labour force which it possesses.

The world demand for civil aircraft is growing with rising standards of living. As the noble Viscount, Lord Caldecote, pointed out, it will obviously continue to grow apace. So also is the capacity of our rivals growing to meet this demand—growing formidably. As the noble Lord, Lord Knollys, reminded us, Russia is now one of those rivals. But the partnership to which I have just referred is also a formidable one. The noble Viscount, Lord De L'Isle, asked me what steps have been taken by Her Majesty's Government to co-ordinate the British aircraft industry with the aircraft industries of the leading N.A.T.O. Powers in Europe so as to provide both for civil and for military aircraft a market of economic size which could support a fully-equipped and progressive European aircraft industry. The aircraft industry is still, of, course, a private enterprise, and Her Majesty's Government have no powers to co-ordinate the industry with that of our European allies in any formal sense. Nevertheless, there is a growing commercial association between the United Kingdom and European industry because such a state of affairs is obviously mutually advantageous. For example, British engines are installed in Dutch Fokker Friendships and in the French Caravelle (incidentally, de Havillands gave some assistance in that design); and Bristol engines are manufactured under licence in France and Italy. Conversely, French engines (the Turboméc range) are manufactured by Blackburns.

As to a common market in the military field, the fundamental difficulties are those of framing a common operational requirement together with the dwindling demand for military aircraft. But we do not neglect any opportunities, either in N.A.T.O. or Western European Union, of bringing the merits of our aircraft crisply to the attention of our Allies. In so far as new combat aircraft may be required, the increasing emphasis on interdependence provides the opportunity of evolving a generally acceptable type.

In regard to civil aircraft, the conception of a common European market, protected from outside—that is, from American competition—is frankly something of an illusion. The major European civil airlines operate on a worldwide network, and if they are to remain in business without large subsidies they must, of course, be fully competitive. They are, in fact, driven to buy the aircraft which is economic in operation and has a passenger appeal. If the European industry can produce such an aircraft it will be bought, not only by Europe but by the rest of the world—remember the Viscount, and remember, as the noble Earl, Lord Swinton, told us, that it was bought not because it was British but because it was best. On the other hand, it is unrealistic to expect people like K.L.M. or S.A.S., with little in the way of a domestic industry, to commit themselves to buy British or French types—or a European type—unless they are convinced that it will be better than the product of the American industry.

The noble Viscount, Lord De L'Isle, asked whether we considered it possible for the industry to sell abroad a military aircraft of a type for which there are no orders for the Royal Air Force or for the Fleet Air Arm. He asked, in particular, what steps we are taking to help manufacturers to sell to the Germans the Saunders Roe fighter. I must concede at once the basic argument underlying the question. It is indeed most difficult to sell abroad a military aircraft which does not bear the cachet of an order from the Royal Air Force or the Royal Navy, and with it the assurance that the aircraft will be developed to a satisfactory technical and operational standard. And we must accept that the fewer the types ordered for the Services, the less, after a time lag of several years, will be our export business in military aircraft. I agree also that, in general, it would be a risky financial venture for a manufacturer to put large sums of money into the development of an aircraft merely against the uncertain prospect of receiving orders from overseas. The risk remains great, even if the Government make some financial contribution towards development in the interest of increasing the stock of aeronautical knowledge.

But, as the noble Lord, Lord Adrian suggested, it would be indefensible, economically, to develop and order, at great cost, for our own Services aircraft which are not required in the present strategic design, merely in the hope that it would help to maintain our export trade. Nevertheless, there are two examples where overseas sales have been made, despite the lack of a Service order. The Folland Gnat has been sold to India and Finland; and its engine, the Orpheus, has been adopted for the N.A.T.O. light fighter as well. As regards the unfortunate P.177, I can assure my noble friend Lord De L'Isle that we took all steps we properly could, at ministerial, operational and technical levels, to bring its merits plainly before the German authorities. My Lords, the rest is known to you.

Several noble Lords raised the question of military backing. The point is, I am afraid, that in this country military orders on the American scale are quite impossible. The only alternative is a Government contribution to development costs. That is where financial considerations force us to be selective. My noble friend Lord De L'Isle and others asked me whether it would be possible economically to recover the research and development cost for any large civil aircraft for which a certain market is limited. In general, it is unlikely that an order from the Corporations, or by the Royal Air Force for Transport Command, would, of itself, make development an economic proposition. However, it is one of the principal tasks of the Transport Aircraft Requirements Committee to integrate home demand, both in time and type, as far as it makes sense to do so; and this may go some way, rarely the whole way, to produce orders for the numbers required to reach the "break even" point. In addition, the Transport Aircraft Requirements Committee keeps the need of the export market very much in mind in considering the development of a particular aircraft, and I think it is encouraging to observe the help given by home users in this regard. In the last twelve months the DH. 121, for British European Airways, and the VC. 10 for B.O.A.C. have been launched as completely private ventures; commercial judgments that confirm the belief of sufficient home and export orders being obtainable to justify the cost of development.

Several of your Lordships—Lord Ogmore, Lord De L'Isle and Lord Shepherd, have all touched on the development of a supersonic civil aircraft without first constructing a supersonic bomber or tanker for the R.A.F. It is undoubtedly true that some of the work which would have been done on the bomber now cancelled would have helped in the design and production of our first supersonic transport. But surely no one would be so rash as to propose that we should develop at great cost, merely for the sake of the supersonic transport, this bomber, or any other military project which turns out not to be required for its primary purpose. There remains a large volume of supersonic research and development in our programme, and much of this may well be of benefit to the supersonic transport, whatever form it may ultimately take. The cancellation of the bomber does not affect the Government's determination to press on with the studies of a supersonic transport aircraft which it has launched in co-operation with the majority of the leading aircraft companies. Many of your Lordships have asked about the Canberra.

VISCOUNT DE L'ISLE

May I interrupt the noble Lord for a moment? To me "press on with the studies" has a most sinister sound. Does that phrase mean going to commission and contract for the development of a supersonic aircraft, or does it mean that they are pursuing studies which they will invite the industry to take up for their own consideration?

LORD MANCROFT

It may be that, or several other suggestions. Not much progress has been made.

THE EARL OF SWINTON

It is really important to the industry and to the House to know. Those of us who think that there ought to be a supersonic bomber have our view. If the Government differ from that, then it is a Government responsibility and they will not proceed with the supersonic bomber. Nobody would suggest that if it is wrong to have a supersonic bomber we should make it in order to help with a supersonic civil aircraft. But what does seem to me important—and I think it is most important that the noble Lord should make it clear—is this: if you are not going to do research on a supersonic bomber which would be equally valuable for the civil aircraft, then it behoves the Government to make a larger contribution towards the cost of the supersonic civil aircraft.

LORD MANCROFT

Yes, I fully take the noble Earl's point; I think it is a vital one. But the noble Earl would hardly expect me to do any budgeting at this stage of the procedure. I accept the validity of the point he makes.

LORD OGMORE

Surely the Government must have had views on this matter, having regard to the statement made in another place by the Minister of Supply. This is nothing new. The Minister of Supply laid down this policy: that from a certain time the civil research would become "identifiable." That is the point about which we are confused. What does it mean, and when is the civil research going to be "identifiable" from the military research?

LORD MANCROFT

I think the noble Lord is making rather heavy weather about this word "identifiable". There is no magic in the word. I think I have explained perfectly clearly what is happening, and I am sorry that I cannot go into the category of pounds, shillings and pence in regard to what the Government will do about it. I think I have explained perfectly clearly what the Government's plans are, now that the supersonic bomber has been dropped.

LORD OGMORE

So far as I am concerned—I do not know about other noble Lords—I am as confused as I was when I came into the Chamber. The noble Lord has not clarified the position. I think that that opinion is held by other noble Lords as well as myself, but I do not know.

LORD MANCROFT

Well, I am sorry if I have not clarified it to the noble Lord. I thought I had put the position as clearly as I could. I do not want to weary the rest of the House by repeating what I have already said. I have nothing further to add at this stage on this matter, save to say that I appreciate the importance of it; and I think that the noble Earl, Lord Swinton, has put the problem as clearly as it can be put.

I will return to the vexed question of the Canberra. I am afraid that we have not yet reached a decision on the aircraft to replace the invaluable Canberra. It must be able to fulfil both strike and reconnaissance rôles and it must have the necessary speed for this purpose. The decision to stop development of a supersonic, strategic, manned bomber bore no reference to the potential requirements of the Canberra replacement. This aircraft must also be able with its own airborne equipment, to strike targets by night and by day. It must have a good runway performance and it must have adequate range. I am afraid I am not able to go much further than that at present.

Your Lordships, and particularly Lord Brabazon of Tara and Lord Merrivale, have given some details of the Fairey Rotodyne. We have indeed made fine progress on the development of this unique aircraft. Given suitable sites, the Fairey Rotodyne will be able to do the journey from the centre of London to Paris in approximately the same time that it now takes to drive out to London Airport or to cross Hyde Park Corner on a wet Wednesday afternoon. It will have many other uses—for example, overseas, in such areas as the East and West Indies, and for cross-Channel cargo work. This aircraft represents a completely new approach to the problem of inter-city operations, and we believe, therefore, that the Rotodyne offers an excellent chance of a major break-through in a field of aviation of immense importance for the future. The aircraft has now been flying for some eight months, during which it has completed many hours of vertical and direct forward flight.

So much for the technical progress of the aircraft. However, while this project was conceived and carried out by private enterprise, Government establishments have given active assistance to the firm, and the cost of development has so far been largely met by the Exchequer. The Rotodyne is, however, intended primarily for civil purposes (although it may ultimately have a military application), and in accordance with the policy recently announced by the Minister of Supply we have now asked the companies concerned in this project to show their commercial faith in it by putting up a substantial part of the money required to complete its development. Her Majesty's Government are still awaiting firm proposals from these companies.

The noble Lord, Lord Ogmore, has suggested Commonwealth consultation on aircraft requirements. My right honourable friend the Minister of Supply has convened a Commonwealth Operators' Conference in London in September next. The noble Lord also mentioned the question of noise. That may well be one of the subjects which will feature high on the agenda. The use of London Airport by the Russian TU.104 has been carefully considered, and my right honourable friend the Minister of Transport and Civil Aviation has said that that aircraft will be welcomed as soon as its noise is reduced to an acceptable level. This Russian aircraft has been banned from New York for the same reason. We have had this point raised very often in your Lordships' House. Aircraft noise can be a serious nuisance, and I do not think your Lordships would wish Her Majesty's Government to weaken in their attempts to mitigate its effects in the vicinity of city airports.

LORD OGMORE

My Lords, I was not asking Her Majesty's Government to weaken. I was asking them to try to get an international agreement so that there would not be, as at present, the position whereby certain companies accept the TU. 104, and so get a good deal of traffic, while we do not. We miss that traffic, and I believe that there should be an international agreement on noise.

LORD MANCROFT

My Lords, I agree with the noble Lord, but unfortunately politics rear their ugly head in this connection, as the noble Lord knows. But I entirely agree with what he has said. The noble Lords, Lord Kindersley, Lord Weeks and others, suggested the use of Transport Command for the proving of and "removing the bugs" from civil transport aircraft and their associated engines. I am glad to assure those noble Lords that this suggestion is already being carefully considered, and I hope that something will come of it. I think I have said enough on this complex and difficult subject to show that Her Majesty's Government have every confidence in this great and exciting industry. Indeed, without such confidence it would be irresponsible to continue Government support for civil aeronautical research.

We are well aware that the industry faces a period of pretty sharp readjustment. It has faced readjustments in the past and emerged with success. It is going to face some pretty brutal competition, but it has faced that before with success. But there are plenty of bright spots, too. The industry is exporting aircraft and aero engines on a scale never before equalled. As the noble Lords, Lord Brabazon of Tara and Lord Knollys, told us, last year for the second year running, its exports were valued at over £100 million. In the first six months of this year, exports were running at an even greater rate. The industry has goods to offer which cannot at the moment be equalled by any other supplier. It produced the first short-range turbo-prop—the Viscount—and the first long-range turbo-prop in the Britannia. The Comet will soon be in active airline service—the first pure jet airliner.

The United Kingdom aero engine industry in particular, is in a strong competitive position. Not only do their engines power our own civil transports but they are used by our competitors—the Dutch Fokker Friendship, to which I have referred, the French Caravelle, and in some versions of the latest American jet airliners. Her Majesty's Government do not believe that these achievements will vanish overnight, however stiff and determined the foreign challenge may be. That there are difficulties facing the industry, and difficulties facing Her Majesty's Government in their relations with the industry, are perfectly clear from the debate that has taken place. That there are decisions of far-reaching importance still to be taken is also perfectly clear; and that it would be rash and dangerous to jump to decisions brought about by far-reaching changes in our national policy and in technological development is likewise clear.

Your Lordships will be well aware of the fact that certain of the questions put to me this afternoon are as yet unanswered. They are unanswered because they require an immense amount of consideration, careful discussion and research before a decision is reached. To go off "at half-cock" in an industry as large and important as this, and to produce a decision which might have to be reversed in a short while, to throw the industry into confusion merely for the sake of coming quickly to just any conclusion, rather than reaching a sound decision in time, would, I believe, be wrong. I feel that the industry has as bright an opportunity as it has ever had. It can, I am certain, emerge from this necessary and difficult phase of reorganisation stronger than ever before and with an even more prosperous future; but we are all well aware of the fact that it is not going to be easy.

6.37 p.m.

VISCOUNT DE L'ISLE

My Lords, I should like to start by thanking those noble Lords who have come here to-day and contributed so notably to this, debate. I should also like to thank the noble Lord, Lord Mancroft, who has replied for Her Majesty's Government for the agreeable manner in which he has replied, as he always does to our debates. I wish I could say as much for the content of his remarks. I shall certainly go away as depressed as I came—and I came pretty depressed.

I should have expected that in writing the White Paper of 1957, Her Majesty's Government would have considered all the wider context of the consequences of that; but apparently it has taken another eighteen months, and still major points are undecided. And all the time development goes on in other spheres. Our competitors are going ahead while we wait upon Government decisions which I believe ought to have been taken months, even years, ago. I fear that it may be written as it has been written of so many other episodes in our national life, "Too little, and too late." I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.