§ 5.30 p.m.
§ Order of the Day for the Second Reading read.
§ LORD CHESHAM
My Lords, after a somewhat delayed take-off due to conditions which to me were slightly foggy, I think in moving that the Bill be read a second time that we can deal with this short Money Bill itself quite briefly, though the background to it will take a little longer. As your Lordships know, the Air Corporations raise new capital by borrowing from the Government. Most of the money they borrow is used for capital purposes, such as the purchase of new aircraft, but I must make clear that this Bill is not concerned with borrowings of that kind. It is concerned only with borrowings for the purpose of financing deficits incurred on revenue account.
The Air Corporations Act, 1962, authorised the Minister of Aviation to lend, and the Corporations to borrow, for this purpose, subject to two limitations. First, the powers were limited to the period ending March 31, 1964. Secondly, they authorised such lending and borrowing only if the accumulated deficit on revenue account did not exceed £100 million in the case of British Overseas Airways Corporation, and £10 million in the case of British European Airways. The purpose of the present Bill is to extend these powers for a further two years to March 31, 1966, and to increase the figure of £100 million in respect of B.O.A.C. to £125 million.
Your Lordships might first ask why B.E.A. have been mentioned in this Bill at all, in view of the fact that they are now doing so well. The answer is that they have been included as a precautionary measure. In fact B.E.A's deficit has been held well below the £10 million limit I have just mentioned. It stood at £2,400,000 at March 31, 1963. Results this year are very encouraging and it now appears that by the end of this financial year almost all of the deficit will have been paid off, and that B.E.A. will be well set on a further series of profitable years. Therefore, the Bill does not propose any increase in the figure of £10 million, only that the period should be extended from March 31, 1964, to the same date in 1966, 447 even though, as we see it to-day, it is unlikely that it will be necessary to make use of this extension.
This House has so often heard praise of Lord Douglas of Kirtleside that it is difficult to find new ways to express it. I am sure, however, that your Lordships will not wish to let this occasion pass without a further word of tribute to him. Under the fifteen years of his leadership B.E.A. have built up a reputation for safety, service and efficiency second to none. We shall all be sad to see him go. I think, if I may say so, that the manner of his going is typical: he is leaving at the end of a year that promises to be one of record prosperity for B.E.A., with the promise of more good years to follow, largely as the result of his excellent work in the past, and with the favourable prospect of the Trident coming into service next year. This promises to be a very good aircraft, which should bring added success and profit to B.E.A., as well as prestige and export sales to the British aircraft industry.
I now come to B.O.A.C. In the sixteen years since it began its commercial operations, B.O.A.C., like B.E.A., has earned a reputation for safety and service which is likewise second to none. It has held its position as the second largest long haul airline in the world; and in 1962 it raised its net contribution to the balance of payments to £20 million; while in the last ten years it has almost trebled its traffic and revenue. But even with all that, by March, 1963, it had built up a deficit of some £80 million. The losses go on and the total will rise to about £85 million by the end of the current financial year, of which some £50 million, well over half, were brought to account in the year 1961–62. These figures are formidable and Parliament is entitled to know how they have arisen. That was why my right honourable friend recently presented a White Paper analysing the losses and setting out his proposals for putting the Corporation on to a sound footing. The story of the growth of deficit is fully set out in that White Paper, and I also have no doubt that many of Your Lordships have read the OFFICIAL REPORT of the debate in another place. I do not, therefore, feel I need spend any time in taking your Lordships through this story yet again.
448 Incidentally, I might point out that B.O.A.C. is by no means the only airline suffering financial difficulties of this kind. Faced with the same kind of problem, at least three of the leading world airlines—Trans-World Airlines, Scandinavian Airlines and K.L.M.—have each had to undergo a major reorgansation within the last three years. The underlying reasons for all this were the same. World conditions have become more difficult. The introduction of the large jet made propeller fleets prematurely obsolete. More capacity, coupled with a slower rate of growth than was earlier hoped for, has resulted in many cases in unprofitably low load factors. Competition is growing. There is pressure, on the other hand, for lower fares. Bigger sums of money are at stake and the financial risks are greater. All these things have underlined the need, in the minds of Governments and airlines alike, for a surer financial return and for a more robust attack on management problems.
I want to come on now to the suggestion that has been made more than once—and probably will be again to-day —that Government interference has been a major cause of B.O.A.C.'s difficulties.
§ LORD CHESHAM
The noble Lord says, "Hear, hear!" but there is no evidence to support this. The noble Lord can have his turn. He has his name on the list of speakers. I should like to make my speech in my own way, if he does not mind. There is an inevitable interplay between Government policy and the commercial interest of the Corporation, but only twice in recent years has B.O.A.C. acted against its commercial judgment because the Government said so.
§ THE EARL OF LONGFORD
My Lords, may I ask the noble Lord if no interruptions are going to be allowed? Is the noble Lord laying down a special rule?
§ LORD CHESHAM
My Lords, noble Lords are quite at liberty to interrupt, but whether I deal with the interruption at the time must be at my discretion. Does the noble Lord wish to say something?
§ LORD LINDGREN
My Lords, if the noble Lord wants to be rough, we will 449 have a rough and tumble when our turn comes.
§ LORD CHESHAM
My Lords, I do not want to be rough. I had hoped that the noble Lord would wait until I had taken my theme a little further, and then, if he wished, I would have given way to him. The last thing I should like to be accused of is "playing it rough". I wanted to mention these two exceptions before the noble Lord had interrupted me. The first exception was in 1957, when the Government requested B.O.A.C. to make advance payments to the Brisol Aeroplane Company in respect of certain 13ritannias, to give the Company the necessary financial relief and breathing space to enable it to solve, as it eventually did, the technical problems that were holding up completion, so that B.O.A.C. got the aircraft.
The second, and more significant, instance was the Corporation's agreement for the management and operation of Kuwait Airways' services, with entitlement to a share of any profits and responsibility for losses. That agreement was negotiated in 1958 and expired in May, 1963. While it lasted, the Corporation sustained losses amounting to 1,400,000. B.O.A.C. was unwilling on commercial grounds to enter into that agreement. The Government insisted that the Corporation should undertake this venture in order to help a friendly State, and authorised them to mention the circumstances in their next annual report. In both cases B.O.A.C. sought, and obtained, the Government's formal recognition that they were acting in the national interest. It seems to follow that B.O.A.C. were aware that this was the proper course for them to take in cases of this kind, and that if they had believed that similar considerations applied to other decisions the same thing would have been done. I am proposing to pass on from that point, unless the noble Lord, Lord Lindgren, has anything that he wishes to put in.
§ LORD CHESHAM
I pass on to the alternative charge—namely, that the Government have not done enough, and have allowed these deficits to grow. The evidence does not support this charge 450 either. As long ago as 1955 the present Chief Secretary asked the Air Corporations, with their auditors, to draw up principles for amortisation of their aircraft, because he was not satisfied about the way they were being dealt with at the time. In 1957 the Minister of the day warned the Corporation that in his opinion their charges for depreciation were inadequate. In 1959 we had the Select Committee. In 1961 there was an inquiry into B.O.A.C. investments in associated and subsidiary companies in the Middle East. That was disquieting. Also in 1961, following the White Paper, on the Financial and Economic Obligations of the Nationalised Industries, the Ministry of Aviation started discussions with the Corporation to see what financial target they could achieve. It was through these investigations that the true scale of the deficit came to light, and it became obvious that drastic measures would be needed to put matters right. Plans were discussed, but no agreement was reached.
In 1962, therefore, the present Minister was faced with the decision whether to hold a public inquiry into B.O.A.C.'s affairs or to have a private investigation by outside consultants. He thought—and quite rightly, in my view—that the Government should settle their own policy, rather than get an inquiry to do it for them. The right course, he decided, was to check the facts he already had, from his Department, from previous inquiries and from the Select Committee, and then to arrive at his own conclusions. As we all know, Mr. Corbett was appointed to check the facts, and the Minister's conclusions are set out in the White Paper.
That brings us to to-day, my Lords, and provides the final touch to the background of the Government's proposals.
§ LORD SHACKLETON
My Lords, may I ask which particular facts were in doubt which had to be checked? I wonder if he could just expand that.
§ LORD CHESHAM
It is difficult for me to itemise a catalogue of facts, if that is what the noble Lord is after.
§ LORD CHESHAM
I would say that, for one, there was the question of depreciation. There was the question of (I 451 may need to expand this later) the financial control; and there was a certain amount on the engineering and maintenance side. I hope that will be enough for the noble Lord. I should have thought that it would be enough to make anybody think seriously at the time.
§ LORD CHESHAM
Now, my Lords, I should like to come on to the question of the need for changes of management. Over the last few years a good deal has been done to improve B.O.A.C.'s efficiency in the fields of engineering and maintenance that I have just mentioned. But there is still a great deal more to be done. Your Lordships will see that the Corporation's average costs are shown in the Annex to the White Paper to be higher than other airlines concentrating on long-haul services, and it is essential that we recognise the fact that the cost levels of the most efficient airlines will increasingly set the standard to which the level of fares and freight rates will be related. If the Corporation's costs are any higher than they need be, whether because of the aircraft they operate or for any other reasons, it will inevitably affect their financial viability. The reason for bringing in new blood at the higher levels is not, therefore, simply to correct weaknesses of the past, but also to arm B.O.A.C. to meet the difficult problems to be expected in the future. As I have already said, competition may get even keener. There is likely to be this continuing pressure for lower fares. Costs of materials and labour may well go up. But what is beyond doubt is that a vigorous new drive is needed to cope with it all. The Government certainly could not stand by and watch mounting losses and mounting problems without doing everything in their power to strengthen B.O.A.C.
My right honourable friend then proceeded to discuss his conclusions and proposals with the Chairman of B.O.A.C., whose appointment was due to expire in July next year. My right honourable friend told him that his view was that the Chairman ought to take on some of the duties that now fall to the Managing Director. Sir Matthew Slattery said that he did not 452 himself feel disposed to attempt this double task. In the circumstances, the Minister decided to appoint Sir Giles Guthrie, and Sir Matthew Slattery thought it in the best interests of the Corporation for the change to come sooner rather than later. He therefore suggested that he should go at the end of the year and that Sir Giles should take over on January 1, 1964, and this my right honourable friend accepted.
When the Minister told Sir Basil Smallpeice of his intention, he offered to retire in order to facilitate the reallocation of responsibilities, and that offer was accepted. This is all made very clear in the exchange of letters which has been published. Perhaps I should say again, for the Record, that these changes are by no means a reflection on the abilities of either Sir Matthew or Sir Basil, both of whom have given valuable service to B.O.A.C. in a very difficult period.
§ LORD SHACKLETON
May I again ask what the noble Lord means by "by no means a reflection"? Does he mean "no reflection"?
§ LORD CHESHAM
A trick of words. I had not attributed any particular significance to the words that I used. If there is any doubt on the matter and it will clear the noble Lord's mind, I am quite happy to say "no reflection".
§ LORD LINDGREN
If the noble Lord now agrees that it is no reflection, can he give us the meaning of his previous words, in which he said that the reason for the new appointments was to correct weaknesses on the part of B.O.A.C. and to enable them to meet the difficult problems of the future? When he says that there have been weaknesses to correct, is that not a reflection on the management?
§ LORD CHESHAM
Not, I think, in the sense that I used the second words to which the noble Lord refers. In a sense, it is. But I still think I was correct in using both sets of words. I do not think, either, that that is any reason for me to depart from what I said about the reflection on either of those two gentlemen. Sir Giles Guthrie, who agreed to become Chairman as from the beginning of next year, is a man who combines great 453 financial ability with enthusiasm for aviation, and I am confident in saying that he will prove a fine leader of B.O.A.C.
The question of a merger between B.O.A.C. and B.E.A. is something that has often been mentioned, but it is not the belief of the Government that it would help B.O.A.C. to solve their immediate problems. The Government, however, think that efficiency can be improved by closer collaboration between the two Corporations, and accordingly the Chairman of each Corporation will be a part-time member of the other. Already there has been an instance of this kind of collaboration in the recent announcement of the pooling arrangements for the route to Israel—that is, if I can say that without having to resign.
During the coming year Sir Giles Guthrie will be preparing a plan for making B.O.A.C. financially sound, as my right honourable friend has requested. Your Lordships may ask why any further plan is necessary in view of Mr. Corbett's inquiry and all the other consultations my right honourable friend has had. The answer is that consultants are only advisers to Ministers, and Ministers are in the position, so to speak, of being bankers or sponsors, if you like, to the Corporations. The task of putting any organisation on a sound financial basis surely must rest squarely on the management itself.
The Government are sure that it would be wrong and illogical to deal with the question of the accumulated deficit until a plan for the future has been produced. It may—and I have said this before—well prove necessary, or it may not, to ask the House to agree to write off the deficit, but this should be a matter for consideration at the same time as the plan comes forward. In the meantime, the present Bill is a stepping stone in the right direction. It will enable the Corporation's deficit to be financed pending the measures of reconstruction. That is all I ask your Lordships to-day. B.O.A.C. is basically, I think we are all agreed, a very fine airline, and I am sure all your Lordships will join in wishing Sir Giles Guthrie and the Corporation well in the task that is ahead of them. I beg to move.
§ Moved, That the Bill be now read 2a. —(Lord Chesham.)454
§ 5.53 p.m.
§ LORD SHACKLETON
My Lords, I think we obviously start on one point on which there will be agreement, although there is almost a monotony in the repetition of it; that is in paying tribute to British European Airways. It is rather fortunate, from the point of view of narrowing and clarifying the view (at least, I hope so), that in our House this will not be a general debate on the merits or demerits of nationalisation. We are agreed that British European Airways have been very successful. There are factors other than personal factors, although one pays tribute to those personal factors in this success. We have analysed this before—the success of the various aircraft, the Viscount being a steady performer, and so on. Certainly it is satisfactory that it is a Member of our House who has led this Corporation so successfully.
We are confronted with a pretty sorry business when in either House of Parliament the Government spokesman makes a speech such as we have heard regarding B.O.A.C. with a praise so faint as not to be praise at all. He got as far as saying that they were by no means to be condemned, or words to that effect; or that there was no reflection on them. And yet we had a story which did not explain the factors. I acquit the noble Lord, Lord Chesham, of any blame for not going through the whole of the story again, because it is only a year to-day since he went through it, in a similar way. It was December 19, 1962, that we had this very same debate. But the atmosphere seems to have sharpened a bit, and it is right, if we are to agree to pass this Bill, that we should examine responsibility.
I think our first criticism would not be criticism of the Government for interfering with B.O.A.C.—although there are specific criticisms we could make—but of apportioning blame to B.O.A.C. and concealing their own part in certain aspects of it. When the blame takes the form of the words that were used last year by the Minister of Aviation in another place, then I think we are entitled to condemn the Government. I make no apology for again referring to something for which no apology has been made. Last year the Minister of Aviation said [OFFICIAL REPORT, Commons, Vol. 666, col. 814]: 455What I cannot accept so easily is that the depreciation in the value of the Corporation's aircraft fleet has only been fully revealed this year. This is not a situation which has come up upon us in the night. It has been building up for two or three years past; and in any business efficient management must call for a clear understanding…".If there is one thing that must have been known to the Government all these years, it was the state of the finances of B.O.A.C. If there is one thing in which they were directly concerned, it was in the presentation of the accounts.
Once again I would draw attention to the rather curious switching in the attitude of Ministers on this matter. This year we have been told (because in fact it was necessary to tell another place) that the Minister concerned himself only with the form of the accounts. Yet last year we were told by the noble Lord himself that it was not only the form of accounts, but that it was the Minister's concern that the Comets should not be written down too fast. This is more than the form of the accounts. He may have been justified in objecting to the Board's proposal that this major amortisation should be put straight into the balance sheet instead of going through the profit and loss account. If there is one thing this makes clear, it is that the Government have known this all along.
One of our major criticisms would also be that they have dallied, and that the Minister must have been aware of these facts (after all, he had the Corbett Report long ago) for a long time. I should like to know whether there is any way in which the Minister can reveal what was said to us in the Corbett Report with regard to the Government's position in all this. I fully accept that the Government must be entitled to call on consultants and advisers, and there is probably much to be said for not having a public inquiry. But the fact is that all we know—and this must give rise to grounds for suspicion and criticism—is what appeared in the White Paper. I confess that I know no one who has seen that Report: I am told that the Chairman of B.O.A.C. himself, Sir Matthew Slattery, has not seen it. I should like to ask the Minister specifically what comments were made in the Corbett Report with regard to the Government's part in the commercial and other policies of B.O.A.C.
456 This aspect is important, because in another place the Minister said [OFFICIAL REPORT, Commons, Vol. 685 (No. 15) col. 909]:I do not think it is entirely in keeping with our constitution, which provides that the Government's job is to govern, that every aspect of what the Government do should be studied in detail by the Opposition.Noble Lords opposite may have some strange ideas about what the rôle of an Opposition is. They will perhaps soon have an opportunity of finding out for themselves. But if there is one thing that an Opposition should do, it is to study in detail; and it would seem to be a weakness in our constitutional situation that we have no means of getting at this particular part of the facts. We have pressed the Government to publish whatever recommendation might be made, and even to summarise the findings; yet we have no exact information. The noble Lord said that the task of the Corbett Committee was to establish the facts. I asked the noble Lord what facts, and he was unable to tell me what they were. I should like to establish certain facts, too. I should like to know whether there are some statements in the Corbett Report which reflect on the Government. There is enough trouble caused. It is no good pretending that there is not a crisis of confidence. It is no good pretending that the exchange of letters between Sir Matthew Slattery or Sir Basil Smallpeice and the Minister make the situation clear. They make it clear only if one deduces what is concealed in these letters; and we are handicapped.
We do not have any Committee system such as the Americans have. Members of the Board of B.O.A.C. are themselves debarred from speaking publicly on this matter, but we know enough to be aware that there has been a crisis of confidence. I suspect that the board of B.O.A.C. themselves have demanded an apology on certain of the matters the Minister has said. We know, because all of us have friends in B.O.A.C., not necessarily at board level, and they tell us there is a deep mortification and, indeed, anger in B.O.A.C. It is no good the Government thinking they can do that sort of thing without damaging the morale of a body of this kind. B.O.A.C., like any great undertaking, depends greatly on its morale 457 and its esprit de corps. I do not know what representations have been made on this subject; but one thing that is clear is that there was confidence in the present management, and that Sir Matthew Slattery, especially, had acquired the support of that great Corporation. This seems to me to be the only explanation of the reluctance of members of the board to co-operate, as the Minister wished, in resigning at this moment. One would like to know why the Minister wanted them to resign—indeed, this really is the burden of our complaint.
We grant everything the noble Lord has said about losses: they are there for us to see. There may have been errors, though the part of the Government in this matter is difficult to establish. We know that the Board of B.O.A.C., in the rather loose terms in which their responsibility was laid down, regard it as their duty to serve the British interest broadly. In fact, previous Chairmen have sought to have their responsibilities more clearly defined. It will be a very sad day when nationalised industries, or any public body—or, indeed, I would say, private body—wait for a directive from the Government before they do what is their national duty; but this is something the Government have achieved. They have made it abundantly clear that any public body of this kind, before it does anything which the Minister suggests is in the public interest, must, in fact, have a certificate exonerating them from doing their duty.
Before Sir Matthew Slattery was appointed three years ago he was asked, among other things, to produce a plan to improve the efficiency of B.O.A.C. and I am sorry that the Minister did not reveal all the facts of the extent to which there is an improvement in efficiency. I would say that it was very unfair for him to reveal only the present situation with regard to the operating cost per ton-mile, or whatever figures he gave, or the passenger load factors without drawing attention to the very great improvement that has taken place recently. We know that these figures are available. They have been given publicly. I think it would have been fairer if the Minister had given some of the available figures of recent months. 458 There has been much criticism in the past of B.O.A.C.'s engineering costs, but we know that since 1958 they have come down from about 12d. per ton-mile to little more than 4d. Indeed, to-day, they are lower than those of many other airlines, including British European Airways. There may be reasons to account for this, but what is abundantly clear is that the B.O.A.C. position, in regard to efficiency and to all those tests which are properly applied to efficiency, has been improved enormously in recent months and years. Improved savings have been made in engineering costs only this year.
I should like to turn for a moment to the Corbett Inquiry. Certain of their conclusions have been illustrated in the White Paper. I understand that the inquiry by Associated Industrial Consultants was all part of the Corbett Inquiry. Mr. Corbett asked them, I understand, to make an investigation for him; indeed, it was indicated in another place that this information was being given to the Chairman and the Board of B.O.A.C. They have mentioned that a possible saving of £4 million is obtainable on the engineering side. I shall be interested to know whether that was Associated Industrial Consultants' own plan or was B.O.A.C.'s own plan; because any consultants who go in are bound to work these facts out with them. We know perfectly well that B.O.A.C., under Sir Matthew Slattery and the present Board, had in hand many of the changes and improvements which are now to be put into effect under the new management. It is, moreover, a relatively weak management—and I stress this, because any new management coming in, when slaughter like this has taken place, is bound to take some time to get into a position where it can really affect matters.
Why are we to have another plan? Why is the policy which I presume the Minister has wanted to be put into effect over the last few months not been put into effect now? We can only conclude that the Minister has decided that some thing of a dramatic nature has to be done, and that in such circumstances the easiest thing is to say, "Sack the lot". I think this is a very sad day. I think we are losing certain people of very great value. This is no reflection on the new Chairman of B.O.A.C., when I say 459 that we are, in fact, losing a quite outstanding man, who might well have continued for several years, aided, as necessary, by additional staff.
We have been told something in the White Paper about the Controller's Department. Is it conceivable that the Chairman of B.O.A.C. might also have had similar views? Did it really call for Mr. Corbett to investigate this? One suspects that the trouble with B.O.A.C., as with so many subjects—defence for instance—is this perpetual change of Minister. We have seen Minister after Minister, each determined to make a mark. Now we are coming up to a particularly awkward deadline, a General Election, and we have a Minister who has to produce some sort of gesture to postpone the writing off of the £80 million that has been lost, and who hopes either to be back with time to solve the problem or to leave it to the other side to tackle.
There are other criticisms one could make of the Government. There is the position with regard to independence. I do not want to initiate too much discussion on independence. The situation there may or may not have contributed very much to the B.O.A.C. weakness. The B.O.A.C., under its present Board, has some very considerable achievements to be proud of. Labour relations, which at one time were not good, are probably as good to-day as anything to be found in this country. And I would only ask the Minister that he contrives to persuade his right honourable friend to give us a bit more information about this subject; to do something, if that be possible—and it may not be possible—to undo the damage that has been done to B.O.A.C. by certain remarks, one of which I have quoted, and in future to pursue the national interest rather than this particular Government's interest.
§ 6.12 p.m.
§ LORD OGMORE
My Lords, this is a sad Bill for all of us who are interested in civil aviation and in the health and well-being of the two great Corporations. It increases the borrowing powers to finance the deficit of B.O.A.C., while B.E.A. powers are left unaltered, and it extends the period for accrual of deficit in B.O.A.C. It discloses a serious situation with these staggering, mounting deficits. For many years I 460 have been interested in civil aviation and the development of civil aviation and flying, not only among the Corporations but among other aircraft operators, and in private flying—of which there is far too little for various reasons—and in those circumstances, looking at it purely objectively over the years, I cannot help feeling that the Government must take a considerable amount of responsibility for the situation.
I believe that so far as B.O.A.C. are concerned the root cause of the problem has been that the Government have never been able to make up their mind as to what they wanted B.O.A.C. to do. In the first place, they were expected to maintain British prestige in the air as the major long distance British carrier —almost the only one, or among very few of them, I think. They were expected to fly British aircraft. Your Lordships may remember that seven or eight years ago we had a great tussle over this when Mr. Watkinson became Minister of Transport and issued the edict that B.O.A.C. must fly British. We got him away from that idea. Then, they have been expected to prove British aircraft in service. In the United States to a large extent new aircraft are proved in conjunction with the Air Force. Here, B.O.A.C. have had to spend vast sums in proving, aircraft. Take the first Comet for example; take the Britannia and all the trouble it had. Great sums have had to be expended in that way. Then they have to publicise these aircraft. I should like to know what the original Comet cost in publicity alone. I know that Sir Miles Thomas went on an extensive tour of the United States and elsewhere for this purpose at great expense to the Corporation.
Moreover, they have to be competitive. The Government, rightly or wrongly, are constantly giving licences to independent airlines in competition with them. That may be quite a good thing. I am not arguing against competition; I believe in it. But that is another aspect in which the Government see B.O.A.C. Then they have to face competition very often on existing routes which they have pioneered. They have to face competition from independent airlines and from new Commonwealth airlines which are springing up. Again, they are excluded from trooping contracts. The Minister to-day told us in how many cases the Government had 461 to give them a direction. In how many cases have they had to do things outside their own commercial judgment? I would like to know how many trooping contracts B.O.A.C. and B.E.A. would have if they were allowed to apply. They are not allowed to apply. Then they have to provide V.I.P. aircraft at short notice, at great expense—£20,000 to turn an aircraft around. No ordinary airline would have to do that. They have to take on unremunerative services, such as in the Highlands and Islands of Scotland, which B.E.A. have to do. They have to take on some highly unremunerative partners all over the world. Finally, they have to make both ends meet, taking one year with another, after paying depreciation and interest charges et cetera, et cetera.
Some or any of these things may be quite in order. I am not against them. Taken one by one, many are in order. The fact is they are incompatible. We cannot insist on an airline doing all these things at one and the same time, and I believe this, more than anything, is the real difficulty B.O.A.C. have been put into. If the Government would tell them exactly what they were expected to do and how they were expected to do it without any incompatibility between the various rôles they are expected to undertake, I believe this situation would be cleared up.
I do not care who this learned gentleman from the City is, this chartered accountant on the Board, and how many Mr. Corbetts they get. It does not matter. This is not an accountancy issue at all and the Government are quite wrong in thinking it is an accountancy issue. It is not. It is a ministerial issue, it is a Cabinet issue if you like; it is a political issue. How do you want these Corporations to act? It does not matter if you have all the chartered accountants in the City of London, they could not make a ha'p'orth of difference, because it is not a matter for chartered accountants. We have far too much reliance on chartered accountants in these days, and in my opinion they are by no means always the best people to advise on policy. They are all right to look at the petty cash and see if anyone is fiddling the accounts, but in my opinion they are by no means the best people to advise on policy.
462 I want to take the next point. It is all very well getting this issue into the political field and having arguments on nationalisation and all that, and having great fun. The noble Lord, Lord Shackleton, was quite right to-day when he said we do not want this issue to become a nationalisation dog-fight in this House; it would be most unfortunate. In fact, we have to think of the people who are handling these aircraft in the air; we have to think of the staff, and I do not think it does them a bit of good. It is a highly nerve-racking business, as we all know, with these great aircraft, in view of their speeds, the speed of landing, the speed of take off, the angle of take-off because people in Uxbridge do not like noise, and all the rest. We are imposing enormous responsibilities and burdens on these young men. I do not suppose men have ever had these split second responsibilities before. At the same time, that their career should be at the mercy of a Party dog-fight is, I think, disgraceful and despicable, and we should take this question right out of the dog-fight altogether.
I am going to quote from Flight International, the official organ of the Royal Aero Club. It is not a political organisation; it is the official body. This is said in the issue of November 28:The B.O.A.C. leaders are cast aside on the basis of evidence which, since it is known to the Minister alone, they cannot answer. Some may feel this is a most disagreeable political act. Sir Giles inherits a difficult personal task. His first preoccupation must be for B.O.A.C.'s morale. He has to win the confidence of an airline which has suffered the deranging experience of witnessing the political immolation of a leadership in which it had great confidence.That is what the Government have to answer—not any financial situation at all. Those are the people I am afraid for. It is the morale of the pilots, the engineers, the navigators, the people who control these great airlines that we have to think about.
The B.E.A. Corporation is much better placed. They have a much denser population to serve. They have been fortunate with aircraft, especially the Viscount and the Comet, and now we hope that the same situation will apply to the Trident. Also, as has been said, they have been fortunate in the personality of Lord Douglas of Kirtleside, 463 who certainly would not stand any nonsense from a Minister or anybody else. This shows the great importance of choosing the right man to be chairman of bodies such as these. I should like to join those noble Lords who have paid tribute to Lord Douglas of Kirtleside, because I believe that in any Corporation, firm or industry there must be one man above all who can impress his personality upon that organisation. There is no doubt about it, Lord Douglas of Kirtleside has done that.
So I would urge the Government to give a clear lead to B.O.A.C. and to get away from all this muddle. In my view they have wonderful Corporations here from the flying point of view. I do a fair amount of flying, and I never fly anywhere in the world other than with B.O.A.C. or B.E.A. if I can possibly help it, and if they fly on those routes. I think we have a great asset here. They are magnificent Corporations; they really do the job splendidly, and I do not think we should do or say anything that would in any way upset their morale.
There are some changes that I should like to see. First of all, there is this supersonic race into which we are apparently going. I believe that that should be a long time ahead; but if, for prestige reasons, the Government believe that it is necessary for us to go into the supersonic aircraft era, then I do not think one single penny of the expense of it should fall on the Corporations. If it is necessary for our prestige—though I doubt this myself; I think it is a sort of threadbare plan—it is the Government's responsibility. If they think that it is necessary for British prestige—if the people in the Solomon Islands will not think so much of us if we do not get this great supersonic aircraft first in the air—then let them do it; but let them pay for it. Do not let any of the charge fall on B.O.A.C., as I strongly suspect that it will otherwise do, with the result, unless we are careful, that there will be a mounting deficit, and Lord Chesham, or his successor, of whatever Party, will come here and put the blame on B.O.A.C. So I give fair warning now.
Then I suggest that we should be careful about allowing competition on scheduled air routes. B.E.A. and 464 B.O.A.C. have to fly all the year round on scheduled air routes. If a licence is given to an independent airline, they take the cream, because they fly only at certain times of the year. This applies to some of the new Commonwealth airlines that are cropping up. I think it is highly unfair. Last year I went to Uganda. I went out to Entebbe in a Britannia, which has seats for about 100. Eight of us were going out there. I came back in a Comet from Nairobi. At the start we were one more—we were nine. Before we reached London we had dropped one or two off and we were about seven. That is the sort of thing that happens in the off-peak season. B.O.A.C. have to fly and B.E.A. have to fly. They cannot do that sort of thing and have the cream of their traffic taken away from them.
Secondly, I would think that there is need for administrative economies, not so much individual but joint. Why is it not possible to have joint services, joint facilities and joint offices? For instance, in London there are various offices for B.O.A.C. and B.E.A. There is one large air terminal at Victoria for B.O.A.C., and there is a large traffic terminal at Cromwell Road for B.E.A. This latter is an enormous affair. It has just been built. Unfortunately, there was a fire there in the first week. It has been quickly renovated; Cromwell Road is, I may say, in many ways a much more convenient place than Victoria. Why cannot the Cromwell Road terminal serve both Corporations? There are several other things like that. I should have thought that the catering and the medical services could be joint services.
Finally, there is a suggestion that the Boards should be joint. That idea is worth pursuing. I know there are things to be said for it and against it, but I think it is well worth pursuing to see whether we could not have a joint board and gradually get into the way of having a single Corporation. I think that this is only a question of time. I firmly believe that in time we shall have one single Corporation to cover the whole field; I think the pressure of events will force that in time. As, in my view, that is inevitable, I think it would be well to start to meet the inevitability by means of this joint Corporation.
465 That is all I have to say. I feel that it is most unfortunate that this kind of mounting deficit has come about, but I want to express my confidence and that of my Party in the future of these two great Corporations, which have had such a magnificent past and will have an equally magnificent future.
§ 6.27 p.m.
§ THE MARQUESS OF HEADFORT
My Lords, this is the first time I have spoken in your Lordships' House, and it was not without a great deal of thought that I decided to make my maiden speech today. As some of your Lordships may know, I have a great interest in aviation, being a pilot for over ten years, and I hope I may be treated with your usual indulgence. In considering this Bill, which is to give more money to B.O.A.C., perhaps we should consider some of the underlying causes why this money is needed.
There has been criticism in the White Paper of the management of the Corporation, implying that the Corporation's management has been negligent or even incompetent. From a study of the annual accounts of B.O.A.C., one might conclude that some of the difficulties have been caused by operating the wrong aircraft at the wrong time. I do not wish to suggest that these aircraft were inherently unsuitable for the Corporation's routes, but I believe it to be true that a large amount of development flying was necessary with some of the types of aircraft, and I do not think that this should normally be regarded as the proper work of an air transport undertaking. In addition, delays in the introduction into service of these types—I am thinking in particular of the Britannia—meant that, from the economic point of view, they had a short life and a high depreciation had to be allowed for, due to competition from more modern aircraft operated by other air lines. Again, we might consider whether routes which are operated for political reasons and may not be profitable commercially should be operated without some form of subsidy.
Moving from the particular problems of B.O.A.C. to the problems of commercial air transport generally, I wonder whether some of the underlying reasons for poor load factors—the problem of 466 too many seats chasing too few passengers—are not that the ordinary man in the street is not flying sufficiently often. I myself feel that possibly this is not due entirely to the economic reason: high fares. I believe it may be high fears. It may not be possible to lower fares very much, but certainly we should do all in our power to make air transport as safe as is humanly possible. I do not wish to suggest that airlines which are members of IATA are unsafe—indeed, they have the highest safety record of any airlines in the world—but what matters is what the ordinary man in the street feels. His ideas are coloured by aircraft disasters. If 50 or 100 people die horribly in a few moments in one crash, this makes a much greater impact on his mind than equally horrifying statistics of road accidents to a few people in many individual crashes. One has only to visit any airport departure lounge to notice an air of tension; whereas most people awaiting a train or bus do not normally exhibit fear.
I believe we are far too complacent about safety and the need for more rapid development—the introduction of better equipments and procedures. In this country the air traffic control services are doing a magnificent job, but they would be the first to agree that the existing equipment is rather inadequate when one takes into account the considerable growth in air transport which has occurred during the last decade. New equipment and organisation is coming along, but it may be several years—I am told possibly five to ten years—before it is fully implemented. In the meantime there may be a gap which a little more forethought some years ago could have prevented.
Whatever may be the case in this country, there is no doubt whatever that abroad there are large areas of the world in which jet aircraft are operating where the facilities are totally inadequate for their safe operation. It has been mentioned by the Guild of Air Pilots and Air Navigators that as much as 80 or 85 per cent. of some of the aerodromes throughout the world are not adequately equipped. This, of course, is not the direct responsibility of Her Majesty's Government. Nevertheless, while the situation exists there is a serious risk of disasters occurring which would not have occurred if the correct equipment 467 had been installed and operated by properly trained personnel. It may be worth while for the Government to consider whether they could provide further technical assistance, possibly on favourable terms, to some of these countries, because I believe lack of finance may be the main reason why the ICAO recommendations have not been implemented.
It is a sobering thought that if no improvement in the existing safety rates occurred, the number of headline accidents per unit period of time increase in proportion because of the increase in the volume of aviation. At present in scheduled air transport in ICAO States about 800 deaths per annum occur, equivalent to about one fatal crash per fortnight. If aviation grows by 8 per cent. per annum (which is less than the past rate of growth) in twenty years' time there will be one fatal crash every three days. That is an appalling thought. To take a specific example of the difficulties of operating these high-speed modern aircraft, the Boeing 707 and 720 aircraft have now flown over 3 million hours. This has been done by approximately 350 aircraft. But of these air craft one-seventh—no fewer than 55—have suffered accidents involving substantial damage. In 13 of the 55 accidents the aircrafts were totally written off. I trust I have not taken up too much of your Lordships' time in advocating greater efforts to improve safety in air transport, but I believe airlines will have arrived as a means of transport only when the ordinary man in the street boards an aircraft with a tranquil mind.
Returning briefly to B.O.A.C. and the problems of the associated companies, I do not think it is entirely fair to blame the Corporation for the post-war political trend. The transformation of the Empire into an independent Commonwealth naturally has meant that the new countries have wished to operate their own airlines, with an inevitable reduction in the amount of traffic which is carried by the Corporation. Again, criticism of the lack of financial control by the Corporation over wholly-owned or majority-controlled subsidiaries may not be completely fair. A financial requirement of drastic pruning of staff to make operations commercially profitable could be a political impossibility if the 468 country concerned was about to achieve independence. I put forward Trinidad and the British West Indian Airways as an example. Nevertheless, considerable losses have occurred; and it may be useful to consider whether there are any off-setting advantages which have accrued from the associated companies. I believe there are, particularly to the aircraft industry of this country.
To take some examples, Middle East Airlines have bought 7 Viscounts and 4 Comets, worth (including spares) over £10 million; British West Indian Airways have bought 8 Viscounts worth £3 million; Kuwait Airways have ordered 1 Comet, 2 de Havilland Tridents and 3 BAC IIIs. The total value of these aircraft and engines and other aircraft and engines which have been sold abroad must be at least £23 million. This is a not inconsiderable sum. It is also true that but for the commercial and technical assistance given by B.O.A.C. these sales might never have occurred.
In conclusion, my Lords, I wonder whether we should take a leaf out of the Americans' book over the question of the development and the proving of new types of civil aircraft. In the United States of America the Boeing jet tanker flew for some years with the United States Air Force and was proven as a successful aircraft before its successor, the Boeing 707, was produced for the airlines. Perhaps if we in this country could get the Royal Air Force Transport Command to do likewise, we might find that B.O.A.C's operations in the future would be more profitable. Finally, my Lords, I know that all those engaged in civil aviation in this country will take great comfort from your Lordships' considerable interest in their problems and hope for their successful future.
§ 6.40 p.m.
§ LORD LINDGREN
My Lords, it is a great pleasure to be able to compliment the noble Marquess on his maiden speech, a well-informed and excellently delivered speech. I understand that the noble Marquess has Irish associations, and it might perhaps have been better had my noble friend Lord Longford been the first to congratulate him, because with his associations with Ireland he may no doubt have been a little more eloquent. But, certainly, he would have been no more sincere than I am in 469 paying a compliment to the noble Marquess on ale excellence of his speech. One would have liked to say this in any event, but I say this more earnestly because I agree with everything that he has said.
It was very fitting indeed that a pilot should speak in this debate. There are many of us who think we know something of civil aviation from a general association with one section or another of it, but there are few of us who can claim actual personal experience of the responsibility of having his own life and the lives of others in his hands as a pilot. It is very fitting, indeed, that we should have heard the noble Marquess speaking on the question of safety, because what he said in his speech was really fundamental. The function of any form of transport—road, rail or sea—is to move goods and people with speed, safety and regularity; and unless there is safety, neither speed nor regularity is of any avail at all. It is the meat in the sandwich. It is therefore very fitting indeed that the noble Marquess should have made his maiden speech in the way that he has done. We hope that we shall hear him on very many more occasions, not only on civil aviation matters, but on other matters with which he is associated.
I am glad that I was able to start on that happy note. My noble friend Lord Shackleton who opened, and the noble Lord, Lord Ogmore, who has already spoken, seemed to want to try to turn this debate into one of high moral tone. But, quite frankly, I do not feel in the mood to speak in a high moral tone, when taking into account the deplorable action of this Government in regard to civil aviation matters and, in particular, those associated with B.O.A.C. If I lay great emphasis on what I say to-day it is because of the disgust that I have for the Government, and particularly the present Minister in his handling of the present situation.
No matter what the noble Lord, Lord Chesham, might say, the White Paper is a criticism of the chairman, the Board and the top level management of B.O.A.C. I do not agree with that, and I shall try to show why during my speech. But let us assume for the purpose of argument that it is correct. Who is responsible?—the Government. They 470 have been in office for thirteen years. They have been the persons responsible for the appointment of the Chairman of the Board, and the directors on the Board. They have been responsible for the day-to-day association of the Minister, and his officials within the Department, with the various sections of the three airlines.
Let us see what the position is. The inefficiency is in the Government. We have had seven Ministers of Civil Aviation in the Government's thirteen years. I am not going to tie myself to that figure; it is certainly no fewer than seven and I can give the names of seven, but I may have forgotten one or two. There have been nine Parliamentary Secretaries. Civil aviation seems to be dealt with by this Government almost as haphazardly as defence. However can there be continuity of policy when in fact they are changing Ministers and Parliamentary Secretaries every five minutes—or, if not every five minutes, certainly every other year?
The noble Lord, Lord Chesham, paid a very fine compliment to the noble Lord, Lord Douglas of Kirtleside, and I am glad to join him in it. But may I say to the noble Lord, Lord Chesham—and I hope he will rub it in to his colleagues in the Government—that in 1951 when the airlines were handed over to this Government they were in good heart. If anything has gone wrong it has been since 1951. As regards B.E.A., the Chairman was appointed during the lifetime of the Labour Government—the same Chairman and the same Board. One of the reasons why I am bitter is that the Tory Party is not sincere in regard to nationalised undertakings and their operation. As Parliamentary Secretary to the Minister in another place, I had to defend the action of my noble friend Lord Longford—Lord Pakenham as he then was—against cries of "jobs for the boys" from rows of Tory M.P.s. when the noble Lord, Lord Douglas of Kirtleside, was appointed. It is music in my ears to hear a Tory Minister getting up here after thirteen years and having to say, "Grand fellow. The best we have ever had in the Ministry. No one could have done better." They did not say that in 1951.
And what about the Chairmen who have been appointed in B.O.A.C. by this Government? What about the Boards 471 that have been appointed by this Government? The Government are now coming to this House and saying, "We appointed inefficient people to do the job, and we have not been able to carry it out." Can the noble Lord, Lord Chesham, not look at his own Ministry? The Tory Government use the nationalised industries as just pawns in a game. What did they do in 1951? They amalgamated the Ministry of Civil Aviation with the Ministry of Transport. Within the Ministry of Civil Aviation there were really first-class civil servants, expert in every degree of airline operation, aerodrome operation, the general arrangements in regard to safety, air traffic control and the rest. It was a first-class Ministry with a first-class technical staff and first-class administrative staff. What did the Tory Government do? They said, "We cannot have this, so we will amalgamate the two Ministries and put everybody who knows anything about civil aviation in to deal with the railways, shipping and the rest", and of course the day-to-day function of the Ministry itself, which was to keep in touch with the various sections in both Corporations, suffered.
It is no good for the Minister to say that the Corporations did not inform the Minister of their problems in regard to finance. My noble friend Lord Longford will follow me later to-day, but when he was Minister I was his Parliamentary Secretary, and we had sections within the Ministry that were in daily consultation with various departments within the Corporations. The budgets were prepared, they were considered, they were discussed. When it was necessary, the chairmen and deputy chairmen came to see the Minister or the Parliamentary Secretary. We knew what was going on. We were told. We were able to exercise influence if it was necessary. If anything has gone wrong it is not within the Corporations, but within the Ministry.
There is further evidence of the Government's mishandling. I want to say that I think even the noble Lord, Lord Chesham, was far from fair in his statement here to-day, not in what he said, but in what he left unsaid. To know things and to deliberately withhold them from the House—to put it quite 472 bluntly in my Cockney language—is distasteful. I am going to prove it.
The present Chairman made a report to the present Minister on his own recommendations for the reorganisation of B.O.A.C. That report was presented to the Minister in July, 1962. The noble Lord, Lord Chesham, never mentioned it to-day. Why not? Because immediately after the Minister received that report (or, at least, in September), he initiated the Corbett Inquiry. Let me say this—and I challenge the Minister to deny it—there were repeated requests from the Chairman and the Board of B.O.A.C. for an answer to the points raised within the Chairman's memorandum of July, 1962, to bring about possible reorganisations within the Corporation.
§ LORD CHESHAM
My Lords, may I ask, just to be clear, whether the noble Lord is telling us about a specific memorandum from the Chairman to the Minister covering a very large variety of points or plans or something?
§ LORD CHESHAM
That is all I wanted to know. I wanted to be clear what in fact the noble Lord was talking about.
§ LORD LINDGREN
Yes. It was a fundamental report. It is known to the Parliamentary Secretary, but he did not mention it here to-day. The Board have had no reply to it except that, when the Board have asked for a reply, they have been told, "We cannot deal with anything until we get the Corbett Report."
The Parliamentary Secretary said today that things have been wrong in B.O.A.C. for some time. It is only three years since the present Chairman was appointed, but sixteen months have gone by and the present Minister has done nothing. He has taken not a single action. The Corporation are supposed, in the language now used, to have been deteriorating day by day. Yet the Minister has not taken any action during the whole of that sixteen months. Now we have the White Paper. The noble Lord, Lord Chesham, puts it forward as some grand document. Really, my Lords! I hope that noble Lords present have read it. If they have, I am sure that they will agree with me that it is 473 a very superficial document, and that all that it says is, "Do nothing for twelve months except sack the Chairman and appoint another one, because nothing is going to happen for twelve months at least." My Lords, in my view it will be much more than twelve months before anything is done.
I think I must join with others who have made their protest in the other place at the whole handling of the question of the Corbett Report. Nobody disputes the right of the Minister to appoint somebody to conduct whatever inquiry he likes. It is his duty, if he thinks it is necessary, to start such an inquiry. He appointed Mr. Corbett to carry out that inquiry. The noble Lord, Lord Chesham, did not say to-day that, in the preparation of his report on the inquiry, Mr. Corbett was given every facility, every help. Everything was placed at his disposal by the Chairman, by the Board and by every section of the staff in B.O.A.C. That was no more than they ought to have done; it is the least they should have done. But is it not elementary justice that, where an inquiry has been carried out into the efficiency of an organisation for which people are responsible, in which inquiry those people have co-operated with the person preparing the report, then, after the report has been presented to the Minister, they should have the opportunity of at least seeing the report and, if they are criticised, of being able to answer that criticism? That is ordinary, elementary justice. If within the Ministry of the noble Lord, Lord, Chesham, there is an adverse report on any one of his civil servants, that person is entitled to see it. Are not the directors of B.O.A.C., appointed by the Minister, similarly entitled? Has not the Chairman, who is taking the responsibility, and who has now to carry the responsibility of the innuendos that are thrown—some of which must stick—in regard to his management of B.O.A.C., a right to know?
The Corbett Report is not the Minister's report. It cost well over £20,000 of the taxpayers' money. Yet the people who were inquired into are not to know; Parliament is not to know; the country is not to know. The only person who is to know is the Minister 474 of Aviation. What distinction has he that we have not? We are just as much answerable to the public—or, at least, Members in another place, if not those in this House, are just an answerable to the public—for the good conduct of public affairs as ever a Minister is. The action in regard to the non-publication of the Corbett Report is, I think, deplorable.
I admit that I have a suspicious mind, but I think I know why the Report has not been published. The reason is that it is not critical of B.O.A.C. at all; it is critical of the Government: and, what with the other scandals that have been going on, the Government cannot stand another scandal by the publication of the Corbett Report showing up their inefficiency. The noble Lord, Lord Chesham, smiles. He is entitled to smile, if he wants to, but the only way in which he can convince those of us who believe that to be true is to publish the Report and let us see it. That is the quickest way of clearing up suspicion. Until the Government do publish that Report, we have a perfect right to say what we have said. I guarantee that that Report is as critical of the Government as ever it is of the Corporation's actions.
What line are the Government taking to deal with this problem? They are appointing a new Chairman. He is to be Chairman and Chief Executive, and as well as carrying out those two jobs, he is to carry out another inquiry into the financial structure of B.O.A.C. and its operational structure, and to prepare a report to the Minister within twelve months for putting B.O.A.C. on a sound financial basis. My Lords, it just cannot be done; and the Government must know that it cannot be done. Three jobs cannot be carried out by one man. Let us look at them individually. I may not have as much business administration experience or executive experience as noble Lords opposite, but the function of a chairman and the function of a chief executive are totally different. Their relationships within an organisation are totally different. Politically, they are totally different in a nationalised organisation. The Chairman is responsible to the Minister: the Chief Executive is responsible to his Board. I do not care who he is: no man can do these three jobs.
475 Furthermore, airline operation as it is to-day—and one has only to take into account some of the things said by the noble Marquess who preceded me—is not a job for an amateur, no matter who he is. Brilliant though he may be in some field or other, when he goes into an organisation such as B.O.A.C. it will take him twelve months, if not longer, to find his feet, to know what it is all about; twelve months before he can start to make an impression on it. Yet this wonderful Government, this super-Minister who has delayed action all the time he has been in office, and who then cuts everybody's head off, is going to put someone in to carry it all out within twelve months. My Lords, this is just panic action by the Government; and it is due to the fact that some of their own Back-Benchers, who are anti-nationalisation and like to take part in any sort of public activity derogatory to any nationalised organisation, are getting worried about the £80 million deficiency within B.O.A.C. It ought to be written off. It has been said by the Chairman of B.O.A.C. that it ought to be written off; and it was said even by the noble Lord, Lord Chesham, to-day that when they get the new Chairman's report there is not the slightest doubt that they will write it off then.
§ LORD CHESHAM
My Lords, I am sorry to interrupt the noble Lord, but he has misquoted me. What I said was that it may well have to be written off, not that it would be.
§ LORD LINDGREN
I accept that correction: it may well have to be written off. Of course it will have to be written off. That is a mere quibble over words. The noble Lord, Lord Chesham, in the earlier part of his speech, referred to the fact that there was a White Paper and that he was not going through it paragraph by paragraph; and for that we were grateful. But when one talks about the £80 million deficiency, then I think it is reasonable to call attention to the fact that well over half of it arises from aircraft problems—the operation of the Tudor, the Hermes, the tragedy of the Comets, the late delivery of the Britannias, and the question of the amortisation referred to by the noble Lord.
But what the Government has not said even to-day—and the noble Lord, 476 Lord Ogmore, called attention to this—is anything regarding the function of B.O.A.C. It was always understood by the Labour Government, and I always thought it was their function under a Tory Government, that it was B.O.A.C.'s job to show the flag, to fly over the Commonwealth and international routes and to support the British aircraft industry. Let me say this bluntly: without the support of the two Corporations, B.O.A.C. and B.E.A., the British aircraft industry, from the point of view of civil production, is defunct. It cannot carry on. Yet £40 million of that £80 million arises from the support that B.O.A.C. have given to the British aircraft industry.
I have said just now that no civil aircraft could go into production unless one or other of the Corporations places a basic order for it; and there will be no orders from any other part of the world unless those orders are placed by the British Corporations or unless the British Corporations take the aircraft, fly it, get the "bugs" out of it and prove its operational economics. Foreign airlines do not buy foreign aircraft as a pig in a poke. They want proved aircraft; they want to know operational costs, pay-load and receipts in fares and what they get out of it. The B.O.A.C. pilots want to fly British. They are glad to see the British flag throughout the world; but, as I have said, £40 million of that £80 million has been lost in showing British aircraft; and the Government say they want to put B.O.A.C. on a purely commercial basis. They cannot put B.O.A.C. on a purely commercial basis unless they give B.O.A.C. the commercial freedom to buy aircraft from where-ever they like on the proved economics of the aircraft on routes they fly. You cannot expect a Corporation to subsidise by development the British aircraft industry and, at the same time, not to make some losses.
Let us consider this fact. The next replacement aircraft of B.O.A.C. is the VC.10. I hope and believe that it will be a winner, as the Trident looks like being. But no one can say. Our aeronautical engineers and designers are first-class people; but no one knows, until the aircraft has flown, what its characteristics are going to be. If it is a winner, then B.O.A.C. is going to have 477 very high operational costs by introducing the VC.10. First of all, it is a very high-purchase-cost aircraft; then it is to be amortised over seven years—and much has been said about B.O.A.C. doing that. There is going to be a high amortisation cost. Then other costs have to be faced. There is the question of training, routes, flight-proving and, as referred to by the noble Marquess who preceded me, maintenance training and engine overhaul, which is a very big factor so far as maintenance costs are concerned. When you introduce the VC.10, I doubt very much whether the engine overhaul period will be more than 750 hours to 800 hours. It will be three to four years before you get it up to the 4,000 hours which can be done after that period of testing and operation.
An engine overhaul is one of the most costly items of engineering maintenance within civil aviation. So, to say you are going to get B.O.A.C. on their feet within twelve months, now you have new aircraft to introduce, is just wrong. What if the VC.10 is the tragedy that the Britannia or the Comets were, or is as delayed as the Britannia was? Can B.O.A.C. then get on their feet? That is not the fault of the Corporation; and the Minister knows it and makes no reference to it to-day. The Minister ought to know, if he has taken the interest that he should, that the operational flying costs of the VC.10 will be £100 an hour more than that of the Boeing. It has a lower pay load. How are you going to get the profit referred to? Of course the VC.10 has some first-class attributes; there is its safety and its blind flying; it can operate from marginal aerodromes, and from that point of view it will be a first-class aircraft. But this talk about getting B.O.A.C. right into the black because of the changing of a Chairman is just simply impossible; and no one knows it better than the present Minister. As my noble friend Lord Shackleton said, it is just a dramatic action in order to cover up Governmental deficiencies.
I should have liked to say much more; but time is passing and I do not want to detain the House unduly. I would, however, emphasise again the unfairness of the noble Lord, Lord Chesham, when he made reference to engineering costs. 478 Would it not have been generous to say why those engineering costs within B.O.A.C. were there; and that they were not due to any fault of the Corporation? Here is an airline which, because of the failure of aircraft it had hoped to buy, is flying five different types of aircraft. When you fly five different types of aircraft, you must have five different sets of maintenance engineers, five different sets of tools, plant, equipment and jigs. You must have five different sorts of spares, and a greater area of hangar space for carrying out general overhauls. If you are going to get good, cheap and easy maintenance within an airline operation, or within any transport organisation, you must operate as few types of vehicle as possible. Why not admit what has happened so far as B.O.A.C. is concerned? Explain it. There is reason for it; there is no reason why it should not be said. There is nothing to be ashamed of. It is equally true, as the noble Lord, Lord Shackleton, said, that the £4 million figure in the White Paper was a figure given by B.O.A.C. and supported by the consultants who came in after checking it. So why claim that it is something the Minister has thought of, when it is what the Corporation itself has arranged for its new programme of maintenance? As I think the noble Lord knows, £l¼ million of that £4 million has already been saved.
My noble friend Lord Shackleton referred to the morale within B.O.A.C. It was suggested—not in this House, I am glad to say, but in another place—that morale in all sections of B.O.A.C. was low. That is completely untrue. Prior to this upset, morale was extremely high, and the Government can take credit for this perhaps, because they appointed as Deputy Chairman, with special responsibility for personnel management, Sir Wilfred Neden, who did a great job within the B.O.A.C. organisation and, together with his Chairman, gained the confidence of all levels, from shop floor to top management. Sir Wilfred Neden is one of those who were sacked by the Minister. I should like to pay tribute to the part he played in increasing morale in B.O.A.C. I am only too unhappy that the good work he did, in conjunction with his Chairman and the remainder of his Board, has been largely destroyed 479 by the incompetent and foolish actions of the present Minister of Aviation.
§ 7.12 p.m.
§ VISCOUNT CALDECOTE
My Lords, I must declare an interest in the subject of the debate this afternoon, as I work in the aircraft industry. Before starting my remarks, may I join with the noble Lord, Lord Lindgren, in congratulating the noble Marquess, Lord Headfort, on his thoughtful and interesting maiden speech. I am sorry that I had to leave the Chamber for a few moments, but what I heard him say interested me very much and I hope that we shall hear many more speeches from him in future.
The purpose of this Bill is to provide the necessary finance to enable B.O.A.C. to continue its work. This provision is obviously required, if B.O.A.C. is to continue on the same sort of scale as it has in the past, and as I believe it must continue to do. Parliament itself has to decide whether this investment is a good one. This, I think, is somewhat unfortunate, because Parliament is not very good, nor is the Civil Service, at dealing with purely commercial matters; and running an airline, as we have seen to-day, is a highly commercial matter. This, of course, is really a basic argument against nationalisation, and particularly nationalisation of a great organisation that has to operate in a highly competitive international field. In a nationalised industry like this it is exceedingly difficult to separate commercial from political factors. Once the Government take a hand, in making recommendations to the management, in bringing in consultants and asking for changes in the form of accounts, it inevitably assumes some of the responsibility that ought to be 100 per cent. with the management.
I know that this is an exceedingly difficult balance in a nationalised industry. It is a problem to which we have not yet entirely found the answer. I was interested to hear what the noble Lord, Lord Shackleton, said earlier in the debate on the problem of deciding how far the national interest should be taken into account. This is very difficult in a nationalised industry. In commercial operations, it is very simple. There is a profit and loss account and a balance sheet, and a company goes as 480 far as it can in assisting the national interest, but cannot go so far as to make the company bankrupt. Unfortunately, in nationalised corporations there are no checks and balances of that sort.
The difficulties on the railways are another interesting example of this, for it is only now that Dr. Beeching is separating out the commercial from the political factors that we are really getting down to brass tacks and, I hope, going to get a solution to the problem. In that way, the Government is left free to decide on the political factors, as it should. So it seems to me that inevitably there is this kind of problem in nationalised industries. This confusion is entirely avoided under private enterprise. But it is no good regretting the past. We have national Corporations to run our airlines, for better, for worse; and we had better make sure that it is for the better. We have to learn what lessons we can from the past, and concentrate, I suggest, on making the airlines efficient and a real credit to the country.
Those who are concerned in any way with aviation are well aware of the major difficulties of the airlines business: complex and expensive equipment; interlocking international agreements which to a large extent limit the freedom of action of management; the paramount importance of safety and reliability; intense competition and the tremendous sensitivity of the profit and loss account to the aircraft load factor. We have to add to these problems, which all airlines have, the problem facing B.O.A.C.—that of a very limited home market. A very different state of affairs exists with the great long-haul airlines in the United States, which have a substantial business within their own country.
Even with these problems, however, B.O.A.C. has had some successes in the past. Some of your Lordships may have read an interesting article in the Statist, showing that employee productivity has more than doubled over four years, which is a better record than many other major airlines. Pan-American Airlines, for example, has just doubled its employee productivity, and all the others are well below. Aircraft productivity—that is, hours worked per day per aircraft—has also increased substantially over the same four-year 481 period. In 1962 it was 60 per cent. above that of Air France, and better than any other major airline in the long-haul business. If we join with these successes B.O.A.C.'s record of good service and safety, this adds further to what has been achieved. It is true that the financial position has been very bad, and is still bad. But, in my humble opinion, if the factors I have mentioned are taken into account, I do not believe that there has been good reason for the way in which the Chairman and Managing Director have been treated. I entirely agree there was need for decisive, even ruthless, action. Changes were no doubt needed—I would not dispute that for a moment. But surely we shall all agree that the way things. have been done is not the best way to maintain high morale in a great organisation, or make it most easy for future managements to operate.
There is one other factor. Mr. Corbett was put in, with others, to investigate the affairs of B.O.A.C. I accept that it is thoroughly reasonable for the Government not to wish to publish his Report, because much of the information was given and obtained in confidence; but I cannot understand why the Report was not shown as a whole to the Chairman and Managing Director of the Corporation. I cannot understand the reason for what seems to be an amazing decision; and I believe it is a grave error in judgment on the part of the Government. With different personalities one might be tempted to say that this was due to some lack of courage. But with the personality of the present Minister, I do not think anyone would be tempted to say that; for he certainly acted decisively and very courageously in this difficult affair. Nevertheless, it is difficult to understand the reason for not showing the Report—in confidence, if you like—to the higher management of the Corporation.
But enough of the past. May I turn for a few minutes to the future? In my humble opinion, B.O.A.C., as a major long-haul airline, is essential to this country. But it must be run efficiently to conserve our resources and use them in the best way possible. We must accept that it has two other functions, as well as to make a profit. It must fly the flag, for the purposes of national prestige, on the routes throughout the world; and for 482 reasons of national prosperity it must collaborate closely with the British aircraft industry. I believe, as I have already said, that better arrangements are needed to clarify objectives. But, in any new look that comes about under the new management, I hope there will be no question of minimising the importance of a healthy British aircraft industry, and the tremendous value of close co-operation between the nationalised airlines and the aircraft industry.
This perhaps raises the whole question of whether the aircraft industry of this country is a good thing and worth supporting—and this would be a subject for a debate on its own. I would say only this. It is an industry which uses the most advanced technology and works to the limits of knowledge, with standards of design and reliability of the highest order. It has achieved most valuable exports, both in quantity and in quality. I would draw attention to the fact, as I have done before in your Lordships' House, that the aircraft industries' exports sell at between £15 and £20 sterling per lb. weight, which means very valuable exports, because they have a very high brain-power content or, in the words of the economist, a high added value. The industry also works in a highly competitive international field. For that reason, an active home market is essential for its prosperity. With cost of development of modern aircraft it is quite essential to have firm assurances of orders for a new civil aircraft in advance of putting it into full development. Such action requires close collaboration between airlines and industry, and it would be quite impracticable, without a British airline, such as B.O.A.C., in the long-haul market, to achieve this kind of trust and collaboration which is absolutely essential for the welfare of the British aircraft industry.
I should like, in passing (I am sorry he is not here) to refer to some of the things the noble Lord, Lord Lindgren, said. I think it is most unfortunate that figures should be quoted out of the air, as the noble Lord quoted them this afternoon, in referring to the increased cost per hour of operating, for instance, the VC10 in competition with the Boeing 707. These figures can be picked out of the air to prove anything. As anyone in the industry will tell you, 483 it is essential to make a full study of every situation, every route and every aircraft before any useful comparison can be made. For the noble Lord, Lord Lindgren (I repeat that I am sorry he is not here), to pick such figures out of the air, and quote them completely out of context, does great harm to an important British industry.
§ THE EARL OF LONGFORD
My Lords, as my noble friend Lord Lindgren is not here, perhaps I can say that all of us on this side felt that the Minister had been remarkably selective in his presentation of what he regarded as the facts.
§ VISCOUNT CALDECOTE
I was always told when a child that two wrongs do not make a right, and the fact that the Minister allegedly left out one or two facts is surely no reason for the noble Lord to quote misleading figures.
§ THE EARL OF LONGFORD
If the noble Viscount is going to argue about Tu quoque, I would say that "Evil communications corrupt good manners".
§ VISCOUNT CALDECOTE
I accept the noble Earl's point. I apologise if he should feel that it was in any way discourteous. I think he made a strong point, and I answered it. I am glad to see the noble Lord, Lord Lindgren, is now back, and no doubt he will read what I said to-morrow. I apologise for saying it in his absence.
As I was saying, these long-term commitments of the British aircraft industry, in which all the nationalised airlines played a valuable part, are of tremendous importance. As has already been said, it may well be that pioneering a new aircraft does involve higher cost. But pioneering is essential if you want to lead the word, and this is sometimes an essential part of running an airline.
§ LORD LINDGREN
My Lords, would the noble Viscount not agree that it is not the function of an air transport carrier, if it is going to be commercial, to develop a particular aircraft of any company, but to find the aircraft most suitable to the traffic it is going to carry? That has already been proved.
§ VISCOUNT CALDECOTE
If that theory were to be put into operation, no aircraft would ever be developed, 484 because no airline would ever start a new aircraft. The point I am making is that if an airline is to lead the world, as we wish B.O.A.C. to do, it is essential sometimes to pioneer new aircraft, which it does. This is part of the general cost of running an airline business. American airlines do it.
§ LORD LINDGREN
Would the noble Viscount say which American airline carries the development cost of any American aircraft?
§ LORD LINDGREN
Can the noble Viscount tell me who carried out the cost of the development of the Boeing 707?
§ VISCOUNT CALDECOTE
Perhaps the noble Lord will wait a moment. No airline in America is expected to carry the development costs of an aircraft. I thought we were discussing the cost of introducing a new aircraft in an airline. That is an entirely different matter.
§ VISCOUNT CALDECOTE
It is an entirely different matter. It costs tens of millions of pounds to develop a new aircraft, but it does not cost anything like that to introduce a new aircraft in an airline. The point I am making is that, when an aircraft is developed and ready for operation, it still costs the airline quite a lot of money to put it into operation. The noble Lord himself made that point. What I am saying is that it is essential, if an airline wishes to be in the forefront, as we wish B.O.A.C. to be, for it to take on new aircraft from time to time, as it did with great success in the case of the Comet. I agree that there was subsequent trouble, and that was most unfortunate, but it is an example of working near the limits of knowledge. If the noble Lord will bide his time, he will see that I am not arguing so much against his point of view.
I was just saying that the introduction of new aircraft involves higher cost, and it might sometimes be possible to avoid this higher cost by buying American aircraft or the aircraft of other countries "off the shelf". This would mean that there would not be the 485 pioneering element in B.O.A.C. which we want; but it would also mean that the British aircraft industry, as the noble Lord said, would find life extremely difficult. So I hope that in any new look there will be no question of the airlines abandoning a preference for British aircraft. They must be suitable aircraft and good aircraft. But, as I said just now, the Corporation have done well with British aircraft in the past, and they will do well in the future with aircraft such as the Trident and the VC.10.
May I say one or two words about the new Chairman? I hope there will be an end to this carping criticism. The noble Lord, Lord Lindgren, referred to him as an amateur. He is not an amateur. Is Dr. Beeching an amateur? Is Lord Robens an amateur? The new Chairman of this great Corporation is a keen and competent airman. He has had experience, on the Board of B.E.A., of the problems of running an airline, and he is a wise and inspiring leader in the City, with a very wide knowledge of financial affairs. What more do you need in B.O.A.C. at this moment? I hope this House will send out a word of encouragement to the new Chairman. He has taken on a very big task indeed in the national interest, and I think there should be an end to this continuous carping at him when he is setting about doing a difficult job. I do not doubt that to move away from his accustomed fields is not all joy to him. I should wish him well. I should hope strongly that he will bear in mind that the aircraft industry is ready and anxious, as it has always been, to support British airline Corporations. It is ready to support them, and it is more than ready to collaborate.
§ LORD SHEPHERD
My Lords, before the noble Viscount finishes, may I say that he has made the point that there must be confidence in the new Chairman. But what concerns us all is this. About three years ago we had the same expressions of complete and utter confidence in the present Chairman.
§ LORD SHEPHERD
I remember the noble Viscount, Lord Mills, speaking in the most glowing terms; and now, with- 486 in three years, you denigrate his character—not the noble Viscount, but the Government and the Minister. Therefore we feel a little put out. I hope the new Chairman will receive the loyalty and support of the Corporation.
§ VISCOUNT CALDECOTE
It is no good jobbing back too far. We must face facts as we find them. I have made some comments, and so have other noble Lords, on the way in which we think things could be improved in the future. Whether notice will be taken of them is another matter. I have certainly made some criticisms, constructive I hope, of what has gone on in the past. But I do not criticise it all, for the Minister has certainly acted decisively and quickly. It is no good jobbing back every time a change comes. Let us look forward to the future and support this man who has been put in. We have had our fun and made some criticisms of the Government. Let us now leave the past and get on with the future, and see whether we cannot lend our support, with constructive criticism if necessary, to making a good job of this great airline and helping the Chairman in his extremely arduous task.
Finally, I hope it will be appreciated that the future prosperity of British airlines and the British aircraft industry are inevitably and desirably, I think, linked together. Each will remain dependent upon the other for its prosperity. I hope the Chairman will remember this, and that he will receive the support for which I have asked to-day; he will certainly continue to receive the support of the aircraft industry. I believe the airline has a very great future before it under the new Chairman's leadership.
§ 7.34 p.m.
§ LORD MERRIVALE
My Lords, as an ex-R.A.F. man, perhaps I may be permitted to add my congratulations to the noble Marquess for a most interesting speech and a well-informed one, if I may humbly say so. From this side of the House I do not wish to be unduly or unfairly critical of, the Government's handling of a situation involving the future of B.O.A.C. But it is extremely difficult to assess the present situation correctly when in effect it is only Her Majesty's Government who are in possession of all the facts and figures arising out of the Corbett investigation. A study 487 of the White Paper does not automatically lead one, I feel, to the conclusion that such a sweeping and major reorganisation of the management of B.O.A.C. was necessary. This impression has been confirmed in my mind by the various statements that have been made in another place by the Minister of Aviation, and also by his Parliamentary Secretary, Mr. Neil Marten. For instance, these two gentleman have made such utterances as: losses due to the disaster which befell the Comet 1; the delay in the introduction of the Britannia; the cost of the introduction of these two aircraft in terms of adapted engineering and maintenance departments; the provision of ground equipment; route proving flights; spares along the route, and so on.
The Minister also went on to say that half the losses were due to bad luck. We can write those off then. The Minister also said that many of the weaknesses that have been shown up in the White Paper, and which are due to errors of management, have already been corrected. There are, in particular, two Government statements which, if I may put it this way, were spoken in one breath by the Minister which really cannot be reconciled. They are, on the one hand, the tribute for the very good work done for the Corporation by Sir Basil Small-peice. Then, on the other hand, one sees Sir Basil's consequential "retirement" due to Sir Giles Guthrie taking over many of his functions. It is true that the Minister said that Sir Giles worked for an airline before the war, but he must have been at an age of 22 or 23 at the most. But, of course, he has had the experience of being on the Board of one of our national airlines. Surely Sir Basil's knowledge of airline operation is more extensive and, I would say, more up-to-date than Sir Giles Guthrie's.
I now turn to the question of the submission of the Corbett Report, which comes under three headings. As Messrs. Urwick Orr and Partners were impressed—in the words of the Minister—on the sales and publicity side, and felt that the Corporation was getting good value for money, I will say nothing more on that side of the investigation. Messrs. Associated Industrial Consultants feel that, in spite of reduced engineering costs 488 over the years, £4 million (and this has been mentioned before) could still be saved in engineering and maintenance. It may be that the noble Lord, Lord Shackleton, was right when he said that B.O.A.C. put forward those figures themselves. I was delighted to hear the noble Lord, Lord Lindgren, say that £1¼ million has already been saved of those £4 million. On this aspect of the problem, it would appear, if I read the Minister's words aright in Hansard, that the appropriate sections of the Report on engineering and maintenance have been shown to the existing management for consideration. That would indeed seem fair and just, but what I feel is certainly not just or fair is the withholding of information regarding financial control, which is the crux of the problem. I think most noble Lords have stressed this point, and it is really most important.
B.O.A.C. is certainly not the only Continental airline which is faced with the problem of over-capacity on certain lines. The noble Viscount, Lord Caldecote, mentioned Air France and how in certain respects B.O.A.C.'s figures were better, about which I am delighted. Air France have this same problem of over-capacity. Also, as mentioned by the noble Lord, Lord Lindgren, there is the surge of independent countries of Africa operating their own air lines; there are higher equipment costs uncompensated by an equivalent increase in revenue; and the drawback of having to operate obsolescent aircraft, apart from their being subjected to strong pressure for lower fares.
What of the future? Even if the rate of traffic growth has slackened in the last few years, the trend would still appear to me to be encouraging. Excluding the U.S.S.R. and Communist China, the I.C.A.O. figures for last year compared with the figures for 1961 show the following increases in world air traffic: 11 per cent. more passengers carried; 19 per cent. more freight, expressed in ton miles; 13 per cent. more mail, also expressed in ton miles; and that, with only 5 per cent. more miles flown.
Now that the Corbett Report has been produced, I feel that if there had been proper discussions between the management of B.O.A.C. and the Ministry, with both sides in possession of the document, the present show-down would not have come about and it would have been 489 possible to achieve any adjustments in organisation, financial control or personnel far more smoothly. Forecasting accurately the airline's future share of air traffic would then be facilitated by close contact and consultation between the airline and the Ministry, as this share is so very much associated with the question of fares decided by I.A.T.A. and the problem of air traffic rights.
On this latter question of air traffic rights, I should like to take this opportunity to ask my noble friend—though perhaps he may think from what I have been saying that we are no longer noble friends—whether he has any information with regard to the Comet flight to Mauritius, which started as a Britannia flight in January last year and which called at Tananarive, Madagascar. With regard to that halt, it was only a refuelling halt and, in due course, as permission was not granted for full facilities, B.O.A.C. no longer called there. Therefore, I should like to take this opportunity to ask my noble friend for information, because it seemed to me at a time when Kenya was not independent there could be a quid pro quo, with France bringing pressure to bear on Madagascar on the question of this country giving greater rights in Kenya and the Madagascar Government allowing B.O.A.C. to call and load and offload passengers at Tananarive.
I would now conclude by deploring the manner in which the reorganisation of the management of B.O.A.C. has been carried out, and expressing the earnest hope that the new management will be able to produce within a year, as has been stated, a workable plan so as to put B.O.A.C. properly on its feet, for in the period 1966–67 B.O.A.C. will be operating only two types of aircraft, the Boeing 707 and the VC10, and we shall have the introduction in 1970 of the Concord. I feel perhaps I should end on a kinder note for the Minister of Aviation, and I should like to pay the warmest tribute to him for his share in the effort which has been expended on the co-operation between our country and France on the Concord project.
§ 7.46 p.m.
§ THE EARL OF LONGFORD
My Lords, the noble Lord, Lord Merrivale, is certainly well qualified to take part 490 in a debate on civil aviation for, as he told us, he has a background of the Air Force and also of transport. When I was a Minister I was taught by my very capable Parliamentary Secretary, the noble Lord, Lord Lindgren, as he now is, that a transport background is as important for dealing with civil aviation as a knowledge of flying.
This has been a gloomy debate, and I will deal with that aspect in a moment, but we have all been cheered by the maiden speech of the noble Marquess, Lord Headfort. I hope that I am not revealing to the House something that I should not when I say that he had a very unnerving experience just before he came into the House to make his maiden speech of the noble Marquess, Minister, came up to him and said, "I am glad to see you. I knew your father well. He was a Moslem, wasn't he?" That was an extraordinary thing to have said to someone just before a maiden speech. The noble Marquess had to explain that neither was his father nor is he a Moslem. He does something much more valuable for this particular purpose; he is a well-qualified pilot in current practice. We listened to his speech with much enjoyment.
The noble Lord, Lord Merrivale, obviously felt at the end that he could not go away for Christmas without saying something charitable towards the Minister in another place and the Minister here, and he seemed to be scratching around to find the smallest sector of the subject, so to speak, and I was glad to think there was a point on which he agreed with the Minister.
It is a long time since I can remember a noble Lord, a very popular noble Lord, if I may say so, like Lord Chesham, introducing a Bill of this kind in your Lordships' House and sitting down without a single cheer coming anywhere from anybody. I assume that if he were not so popular there would have been violent protests, although I am sure the noble Lord, Lord Rennell, would have been too well-conditioned to join in. But I think the noble Lord, Lord Chesham, must feel that he is putting a very unpopular cause before the House, not just one that is unpopular with the Labour party, but one that is unpopular with everybody. I am afraid I missed some of the speech of the noble Viscount, Lord Caldecote, but what I 491 heard appeared to be highly critical. I am afraid one must say that not a dog has barked on behalf of the Government this afternoon. I feel sorry, as did the noble Lord, Lord Merrivale, for the Minister, a man of strong patriotic impulses, and a gifted speaker. Attacking him now is like kicking a man who is down. Of course, he is down, but not out; the people who are out are Sir Matthew Slattery and Sir Basil Smallpeice.
§ THE EARL OF LONGFORD
A few weeks, perhaps, or a few months. At any rate, he is not out and, therefore, I know he will understand that he is the object of rather natural criticism.
I can bring a fairly dispassionate mind to bear, so far as anyone is allowed to attribute that sort of psychology to themselves, to this question. I can understand the feelings of a Minister of Civil Aviation, in this case a Minister with a wider office, who feels it necessary to make drastic changes at the highest level in B.O.A.C., and, for that matter, in B.E.A. I did the same when I was a boy and therefore I am not going to take up the attitude, which for me would be ridiculous, that anybody who informs a chairman that his contract will not be renewed at the end of his time is clearly an enemy of the people.
I would, before coming to B.O.A.C. in a little detail, join in all that has been said about the noble Lord, Lord Douglas of Kirtleside. Inevitably I feel a certain pride in this, if only for the reason my noble friend Lord Lindgren mentioned. When I made that appointment there were cries of "Jobs for the boys!" but I think after fifteen years he can be said to have lived them down and been accepted by all as having done a wonderful job for B.E.A. I would join also in an expression of confidence in Mr. Milward, the Chairman-elect, whom I got to know very well in the old days. I feel sure B.E.A. have a first-class man to follow Lord Douglas of Kirtleside.
I have an understanding, at any rate, of the position of the Minister which, if you like, makes me more sympathetic 492 to drastic action than some others might be. On the other hand, I have a bias in another direction, if you like, a very legitimate bias to introduce to this discussion. I happen to know Sir Matthew Slattery extremely well, not in an "old boy" sense but as a working colleague. When I was chairman of the National Bank I brought him on to the board as a director. I know his worth and I regard him as an outstanding example of one who combines the highest type of public service with a great deal of business drive and leadership. I regard him as an absolutely outstanding man, and that, so far as I can discover, is how he is regarded in B.O.A.C. But the Minister has formed the opinion that something quite different must be done and Sir Matthew must be cleared out at the first opportunity. I am bound to say, with, I hope, no personal offensiveness, that Sir Matthew has more business experience than the Minister, and if I had to choose between the business judgment of Sir Matthew Slattery and that of the Minister, leaving out their general intellectual capacity and taking their high moral worth for granted, I would much prefer Sir Matthew Slattery's judgment in anything that affected business, if only by reason of his experience.
May I offer one or two general observations which are slightly less controversial than some things that have been said? We cannot, surely, speaking now, meeting together for a few moments as British citizens, be happy about these continual changes at the higher level in B.O.A.C. They took place under the Labour Government, and they have taken place since. No one is allowed to have a very long run for his money. The new Minister appears, and out goes the Chairman, fairly soon. That kind of cycle is beginning to be accepted by all: but it makes the life of the Chairman very difficult; it is difficult to look very far ahead because he knows that he will not be there to gather the fruits.
Taking any comparison with private business or other nationalised industries, one must recognise that B.O.A.C. have suffered, have been handicapped, by all these changes; and I think it is worth asking whether there is some special explanation in the case of B.O.A.C. We should be astounded if this sort of thing went on in private business. We should 493 be very much surprised if Lord Robens or Dr. Beeching were suddenly treated in this way. I think it is worth concentrating for a moment on the wider question of whether there is any special explanation why B.O.A.C. seem to find it harder to satisfy public opinion. Why is it that the Minister arriving on the scene seems to feel a strong impulse to change the Chairman and apparently appease what he imagines to be public clamour in a great number of cases?
I agree with what the noble Viscount Lord Caldecote, said: we must look to the future; and I hope that what I shall say is aimed at the future. I wish Sir Giles Guthrie well, as I know does my noble friend Lord Shackleton, who spoke so effectively from this side in the first place. I do not know Sir Giles Guthrie. I must say (and it is against myself) that I had never heard of him until he was appointed; but I do not suppose he had heard of me, so there is nothing between us there. On the other hand (and I am glad to say this, because the other thing I want to say is slightly unpleasant), only yesterday I met a high person in B.E.A. who knows Sir Giles very well. He told me that Sir Giles was a very capable man and he felt quite sure from his first-hand experience that he would do a fine job. That is the opinion of somebody who knows Sir Giles extremely well in aviation: it is his testimony, and I. am ready to accept that opinion.
The point about Sir Giles that perhaps needs attention is his peculiar sense of public relations. In the Sunday Times a week or two ago there was an article in which a number of statements were attributed to Sir Giles. The article was headed, "How Guthrie got to B.O.A.C." It started with a story of a lunch—I will not go into that. There are various other strange remarks; but I miss out most of them. I finish with one thing, but not the most fatuous thing which is attributed to him. I cannot believe he said:The public does not know me "—this is in direct quotes; and so far as I know it is not challenged—…but for instance how many of the public know the name of the Governor of the Bank of England? As it happens, I know him by his christian name, and that is the point. Things work differently in the City.
§ THE EARL OF LONGFORD
That was the statement attributed to him, but I refuse to believe he really said that to a responsible journalist. I think that that remark passes the point of fatuity. I think he made a very bad start in public relations by giving a peculiar picture of himself—I do not mean the physical picture; that is very nice, a very charming picture; I am talking of the words, and I hope he will improve on them on subsequent occasions. I must repeat what I did hear at first hand; that he is very capable, and we wish him well.
My Lords, how can we look to a better future, not just in the next year, which was well covered by my colleagues, but in the years ahead, if we take a ten-year view, of this very difficult question of the relationship of the Minister and the Chairman? We are not having a nationalisation debate, as the noble Lord, Lord Ogmore, said, so I would not defend nationalisation as such. I am not conceding anything to anybody if I say that there is bound to by a relationship which needs a great deal of working out between the Chairman and the Minister. One is bound to ask: is there a special difficulty in the case of B.O.A.C.? Is it harder than in other national Corporations?
The noble Lord, Lord Ogmore, who was of course very successful (though he was not long enough at the Ministry) has suggested that the Government—and perhaps it might be said of all Governments; though we did our best and the results are there for all to see, and we are very happy—have failed to give B.O.A.C. a clear directive. I am sure that is true. But I am bound to say that I think it will always be very difficult to give B.O.A.C. an absolutely clear directive. It will always be difficult to distinguish absolutely between what is to be done for public reasons and what is to be done for commercial reasons. We all know that the Corporation are supposed to operate commercially, but undoubtedly the Government have national policy in mind, and B.O.A.C., as patriotic people, are anxious to fall in with the Government's ideas of policy.
The noble Viscount, Lord Caldecote, comes forward quite boldly and after declaring his interest quite unashamedly 495 says his industry must be given preference by B.O.A.C. as compared with foreign aircraft.
§ VISCOUNT CALDECOTE
The noble Earl is taking my words rather out of context. I said I hoped that any new look of the nationalised airlines would continue to give preference to British aircraft provided that the British aircraft industry produce suitable aircraft.
§ THE EARL OF LONGFORD
I am afraid that I regard that as a totally ambiguous sentence which really means nothing at all. Obviously, if the aircraft are the best aircraft, they will go for them without the aircraft being British. But the noble Lord has said that they should give a preference, and they can do that only by setting aside their purely commercial interests. I am not saying at the moment whether it is right or wrong, but that is what the noble Lord, on behalf of the aircraft industry—he has rightly declared his interest—is asking them to do; and on the whole, in one way or another since the war, that has often been done. The noble Lord is speaking for the aircraft industry, and has said that they have given this preference up till now, that they are doing that for patriotic and not commercial reasons, and, if you like, to fit in with the public interest.
I do not think that the matter is quite so simple as the Minister here and the Minister in another place made out. We were asked to give examples of where the Minister has insisted that the Corporation sets its own interests aside in the wider interests of the State. But it will not work that way. It never would work completely that way. I agree with what fell from the noble Lord, Lord Shackleton, when he said that if we are going to have much more of this, with a show-down, with the Government and Ministry of Civil Aviation finding the scapegoat in B.O.A.C., then no one is going to take a patriotic interest unless he has it in writing as a request. But, without wishing to be too controversial, having done this kind of thing myself, I know that neither party, if I may use the expression, can tell the whole truth; and neither side wants to be unpleasant to people they have worked with and probably respect highly as individuals. 496 So I am not going to say that I know the full truth, or that I should ever expect the full truth on the personal side to be proclaimed. I think probably all concerned would hesitate to do that.
It will always be difficult, I think—though one must keep on trying to do better than we have done in the past—to disentangle the commercial interest from the public interest. The speech of the noble Viscount, Lord Caldecote, is an example of how difficult it is to disentangle these interests. But if that is so, it is essential, in my opinion, that there should be close confidence between the Minister and the Chairman, and, indeed, the Board as a whole. It may be said that there will be confidence. I gather from the Sunday Times that the Minister had only recently met Sir Charles Guthrie, so let us say that he has picked him and that there will be confidence between these two. But then some other Minister will come along and he will find things not going too well in terms of profit, and he may find somebody in whom he has confidence.
This question of establishing the kind of confidence that is going to provide continuity on the Board of B.O.A.C. is quite a difficult one. I think that in this matter the Minister made one fatal step, and one step which was almost as fatal, and which has been much criticised; but by that time the damage was done. He came in setting about things with all the earnestness of a new Minister—and I speak with that kind of background—and he asked Mr. Corbett to investigate B.O.A.C. When I was a Minister (I am sorry to give my experience, but perhaps the House will forgive me) I tackled the same sort of problem rather differently. I persuaded B.O.A.C. to agree that the then Deputy Chairman, Sir Miles Thomas, should conduct an inquiry into B.O.A.C. in conjunction with a high official of the Ministry of Civil Aviation, and that inquiry was conducted therefore in full collaboration with B.O.A.C. It seems to me that where the present Minister made his fatal mistake was in setting up his own inquiry and refusing, as it were, to settle many difficult points with B.O.A.C. while his own private inquiry was proceeding. The present Minister and the noble Lord may wish to challenge me here, but I 497 do not think so: it seems plain that all the time the Corbett inquiry was proceeding, as Lord Lindgren said, and afterwards, is was impossible to get decisions out of the Minister. That was the inevitable result of that peculiar method of organising his inquiry.
The noble Lord, Lord Chesham, has said, in effect (and I think it was said elsewhere) that one had either to have a public inquiry or to have what he called a secret inquiry—a personal inquiry, in this case by the Minister. But there are other forms of inquiry open to the Government. There is the same kind of inquiry that we ourselves held in civil aviation when I was Minister. I cannot help mentioning that the deficit which was £11 million in B.O.A.C. about the time when I came in, had, just after I left and after Lord Ogmore left, disappeared altogether. So I think that that inquiry must have been most fruitful.
That, I think, was a fatal mistake. Of course, the point that has been criticised more, and which I also criticise, and the main error which was made earlier, was the refusal to show the Corbett report to the chairman. I cannot think of anything more calculated to sow the seeds of more distrust; and one must assume that by that time the Minister had formed some unsatisfactory opinion about Sir Matthew Slattery. If he had not, this was a mysterious way of proceeding, and I think he had no ground whatever for keeping Sir Matthew Slattery at arm's length in that way.
In my opinion, those were his mistakes. We have here a bad story which has found no one in this House to defend it, apart from the gallant representative of the Government. If we look to the future, it seems clear that we must think hard, whatever Government is in power, as to how to establish greater understanding and more mutual confidence between the Chairman and the Board. If that is achieved as a result of this wretched episode, then Sir Matthew and Sir Basil will not have perished in vain. But, as things are, I join with my colleagues and others in the House who, to a greater or less degree, have said that the whole story is one of great ineptitude and one that is going to do 498 harm for a long time to come to a Corporation which we are all anxious to help.
§ 8.7 p.m.
§ LORD CHESHAM
My Lords, having listened with the care which I always do to everything in a debate in this House in which I have to wind up—and it is only courtesy to the people who have taken part in the debate—I should like to say, in the first place, that I appreciate the sincere and genuine interest in aviation matters that there is all round the House. I am glad to recognise from the noble Earl who has just sat down, in common with the noble Lord, Lord Ogmore, that in the debate on this matter there has been no quibble or argument about nationalisation. I thought that noble Lords opposite might, to a degree, but only to a degree, have paid a little more attention to the words which ultimately came from the noble Lord, Lord Ogmore, who said that he wished the matter was not quite so political. I got the impression from where I was listening that noble Lords opposite were so tumbling over themselves to find every conceivable point which they could hurl at the Government, that some matters were becoming a little obscured here and there. I make no complaint of that. The Opposition are quite excellent, a very dutiful Opposition, and, they have, of course, done what they should do. Having said that, I most certainly agree that there are some serious matters remaining to be discussed, and I shall address myself to some of them.
What strikes me as one of the most serious things in this debate is what has been said about the crisis of confidence which is alleged to be occurring and the consequent damage to morale among the people who work in the Corporation. I am talking, of course, of B.O.A.C. I am wondering how long morale can remain as high as it undoubtedly is on the working side. I make no complaint of the morale, but surely the point is this: what morale is going to be possible in the future for a Corporation with a deficit such as it has, a deficit which is likely to increase—and even if it decreases, not able to be paid off for many years to come unless it is written off? I should have thought that there was at least an argument in favour of measures to put that great 499 Corporation on a sound financial footing so that it could operate not only as a good airline but as a financially successful airline. This is one of the best things one can do in the interests of morale.
There is a further point which is obviously perplexing noble Lords—almost a confusion which appears to range over whether B.O.A.C. knew, or did not know, what its role really was. I must devote myself to that for a moment or two. It has already been pointed out to us by one noble Lord that in 1945 it was made perfectly clear in the White Paper that the Corporations should aim to pay their way; and so far as I am aware that understanding has never been retracted or altered. It was clear in 1945; it was clear in 1951. I quote from the B.O.A.C. Report for 1951-52, paragraph 14, page 6:Finally, though not last in point of time, the fourth phase in reconstruction was the imprinting on the minds of staff at all levels the idea that the Corporation was essentially a commercial undertaking; that the financial aspect of every single activity mattered: and that the ultimate test of the Corporation's success was not only the standard of public service it provided, but also the normal business criterion of whether it could be made to pay its way.
§ THE EARL OF LONGFORD
My Lords, the noble Lord in that last sentence mentioned two criteria. This is why it is a complicated problem. The last sentence he quoted referred not only to public service but to commercial principles.
§ LORD CHESHAM
That is so, my Lords, but I understood doubt was being cast as to whether B.O.A.C. had a commercial rôle or was only a prestige affair. I am trying to make this clear. I thought it was understood that it was expected to pay its way. I do not think, following on what I have just quoted, that there has ever been any retraction of that.
§ LORD LINDGREN
One accepts that. But can the Corporation be commercial on a basis of carrying the aircraft industry? Under the Labour Government the Handley-Page Hermes was three years late. The effect upon the Corporation of carrying on with the Yorks and Lancastrians, and the rest of them, was to increase its difficulties. The Britannia was two years late. By 500 the time it came into operation it was almost obsolete because of American developments. Can B.O.A.C. carry that financially?
§ LORD CHESHAM
I got the noble Lord's point in his speech and was going on to deal with the question of aircraft policy as I went along. Of course, it has been equally recognised, as the noble Earl, Lord Longford, pointed out to us, that there are other considerations and responsibilities of a non-commercial character which have to be borne by the Corporation, but this applies also to other transport undertakings. I should have thought it a sorry day with an airline like B.O.A.C. when there were no considerations of prestige entering into the matter, particularly in relation to the effect abroad. These factors have always been recognised. The noble Lord, Lord Ogmore, detailed the kind of duties which the Corporation faces and argued that they were mutually inconsistent. That was the great trouble for B.O.A.C. I would only say that the success of B.E.A. in very similar circumstances hardly supports the argument that it is impossible to operate commercially if you have those duties laid on you.
§ LORD OGMORE
Not at all. I pointed out that the situation is quite different. B.E.A. is a short and medium haul operator. B.O.A.C. is a long-haul operator, and B.E.A. has not the same prestige considerations as has B.O.A.C. That is my point, and I am quite certain in my own mind that the Government have to face this fact. If they want these incompatible considerations to be taken into account by B.O.A.C., they have to do something about the financial situation: otherwise B.O.A.C. will never be able to make itself pay.
§ LORD CHESHAM
I think I have already dealt with that in the course of my speech. I apologise to the noble Lord if I did not take his point quite correctly.
I want also to deal with the point as to the duties and obligations which are laid upon the Corporation and the point raised by the noble Lord, Lord Shackleton, about requiring a certificate every time they do something which is believed to be in the national interest. Of 501 course they should not require a certificate every time they do something which may be said to be in the national interest. It is perfectly right, I think, for B.O.A.C., as an international airline, to take political, social and other aims into account; because, as often as not, the national interest may well lie in exactly the same direction as sound commercial judgment. If there is some action in the national interest which is quite contrary to commercial judgment, I should have thought that there is room for recording the fact in writing and that one would have expected that where the national and commercial interests lay poles apart the fact would be recorded, as it has been in the cases I mentioned. I do not want to make any more of that than I must.
I know that the noble Lords, Lord Shackleton, and Lord Lindgren, have suspicious minds. Of course they have, and as far as the Corbett Report is concerned they will just have to have suspicious minds.
§ THE EARL OF LONGFORD
My Lords, if another Government come in, a Labour Government, would the Corbett Report be found waiting for them?
§ LORD CHESHAM
I must tell the noble Earl that that is too fast a ball for me to play. I am prepared to inquire and let him know.
§ LORD CHESHAM
My right honourable friend, I think—and I know that noble Lords opposite do not so think—was quite right when he was suspicious of a situation and set about finding out all about it for himself. Noble Lords opposite think and have said—and they have said it again to-day that this Report ought to be published. The noble Viscount, Lord Caldecote, pointed out to us that this Report was commissioned as and evidence taken under pledge of its being confidential. The noble Lord looks doubtful, but in fact it was. I have told the House so before and that is the fact of the matter.
§ LORD CHESHAM
May I just finish this point and then I will give way. What I want to say is that a lot of the evidence that was taken for that Report was taken under pledge of confidence, and if that pledge had not been given the Report would not have half the stuff in it that it has. There is no question of being able or being willing to publish this Report. It was for the Minister, and with him it must rest.
§ LORD LINDGREN
This is a most remarkable statement to come from a Junior Minister. What the noble Lord is now saying is that the Minister of Aviation pays a person to go behind the back of the Chairman of the Board, to report and to get information from members of the Chairman's staff on the basis that it will not be divulged because it is confidential. Such an action is completely scandalous and any other person who did it would be hounded from here to Land's End.
§ LORD CHESHAM
No, that is not what I said. I said that my right honourable friend, as he desired to inform himself as to what went on—because he takes the responsibility, as the noble Lord pointed out to us earlier —appointed an accountant, Mr. Corbett, to do it for him, to conduct this inquiry on his behalf, to inform him under pledge of confidence. That is the important part.
§ LORD CHESHAM
Very well, then. The noble Lord will not agree. Noble Lords want the Report published. I want to know if the noble Lord, or perhaps one of the noble Lords who spoke from the Opposition Dispatch Box, would say whether, if he were in my 503 right honourable friend's shoes, he would publish that Report?
§ LORD LINDGREN
No really trustworthy person would go behind the back of a chairman to get his staff to talk, and to undermine his position within an organisation. Such an action is disgusting.
§ LORD CHESHAM
But it is not an answer to my question. There is no question of going behind the back of the Chairman. The noble Lord has invented that for himself and I never said that. I merely said that this Report was taken under pledge of confidence. The noble Lord presses me to publish it. Would he?
§ THE EARL OF LONGFORD
My Lords, the noble Lord has put that point about going behind the back. I gather opinions were elicited. I gathered that the noble Lord said earlier that he wanted facts. If the noble Lord was concerned only with collecting facts, they could have been put clearly in a way which could have been shown to the Chairman. But I gather there was something which could not be shown to the Chairman or to the Managing Director, and it was something which was elicited from juniors about their seniors. That is going behind the back of the seniors.
§ LORD CHESHAM
I do not think it is like that at all. But I can see that I am clearly not going to get any answer from the Benches opposite on the question that I have now twice posed, as noble Lords have raised another issue on each occasion.
§ LORD LINDGREN
My working-class decency would never get me to ask another person to "rat" on his chief.
§ LORD CHESHAM
All I will say is that I take note, my Lords, that when it comes to pressing and making a great deal of impassioned argument about the unfairness of concealing, the unfairness of not publishing, the Corbett Report, and when it comes to a decision on 504 whether or not it would be published, I receive nothing but silence.
§ THE EARL OF LONGFORD
The answer to this is perfectly obvious, I am sorry to deprive the noble Lord of what he may have hoped for a moment was his main debating triumph of the day, but the answer is perfectly obvious. Nobody without seeing the Report can possibly tell whether it can be published. One can be quite sure that it should be shown to the Chairman. Whether it should be published is something one cannot pronounce on till one has seen it. It would be much more satisfactory to see it. Until one has seen it one cannot tell whether that Report should be published.
§ LORD CHESHAM
That is exactly right, and I am very grateful to the noble Earl for putting it in that way.
§ THE EARL OF LONGFORD
No, the noble Lord does not see it in the same way. We think he went behind the backs of the officials, and behind them in a most unpleasant way, by getting these people to sneak on their superiors. That is what we say and, so far as we can understand, that is what has been done. But we cannot know what they have said, because we have not seen the Report. The noble Lord says that there are things which would damage this country if they were published, but of course we cannot speak in advance without seeing the Report. But it would have been much better if, in all these circumstances, they had produced a Report which could have been published.
§ LORD CHESHAM
There is only one real point at issue. We have established everything now except this "going behind the backs" business. How do you go behind the back of anybody when you announce to Parliament that you are going to do this, which was done before Mr. Corbett went to work? My right honourable friend announced this to Parliament, and it is not going behind the backs of anybody. No, the charge is too ridiculous to stand up for a moment.
§ LORD LINDGREN
My Lords, I am sorry, but this is an important point. I said during the course of my remarks that Mr. Corbett had received the fullest co-operation in every phase of his inquiry from the Chairman, the Board and all 505 sections of the staff of B.O.A.C., in order to carry it out. Yet the Minister is now saying that when it gets below the Board level the persons gave their evidence in confidence, because in fact they were speaking against their chief at the top.
§ LORD CHESHAM
I did not say that at all. The noble Lord is putting words into my mouth. I said that the whole Report was prepared in confidence and evidence was taken in confidence, but I said nothing about the level at which it was taken. The noble Lord is trying to put words into my mouth which I never said were even thought of. I am glad that we now have it fairly obvious—
§ LORD MERRIVALE
My Lords, might I interrupt my noble friend? I have not interrupted him once yet. Could he say from whom evidence was taken in confidence?
§ LORD CHESHAM
May I ask my noble friend whether he would have the courtesy to wait till I have finished my sentence before interrupting me?
§ LORD CHESHAM
I am not in the least getting cross. I am asking my noble friend for the normal courtesy of the House. At least I should have thought I could do that. I do not know whether my noble friend wants me to give a list of the people who gave evidence. I do not have one. I do not know how I can use shorter or simpler words, to say that the Report was prepared in confidence and evidence was taken on the basis that it would be treated as confidential. I trust that that makes the matter clear once and for all.
§ LORD CHESHAM
Mud has its uses at times, my Lords.
I want now, if I may, to go on to a question raised by noble Lords opposite. The noble Earl, Lord Longford, and the noble Lord, Lord Lindgren, raised this question of the Slattery plan, and I had to do a bit of quick thinking to discover quite what they meant. That is why I was sufficiently rude to interrupt the noble Lord, when I did not want to do so, to 506 ask him to be quite clear what it was he was talking about. It is perfectly true that a series of ideas were put forward for reconstructing B.O.A.C., and a number of these—certainly most of them, I think—have been made public. But whether you can add them up and call them a plan for putting B.O.A.C. into financial prosperity is a slightly different matter. One idea was redefining the rôle; another one was relieving B.O.A.C. of its debt, writing off the deficit. There was mention of greater continuity of management, and of allowing B.O.A.C. to have equity capital. I do not know whether your Lordships want me to discuss all those things at length—
§ LORD CHESHAM
—but I do not feel greatly inclined to do so. But, my Lords, those ideas were hardly in a shape which would enable decisions to be taken on some scale. The basic measures which would have put B.O.A.C. back "on the financial ball" would still have to be worked out, and the Minister thought that major steps of financial reconstruction could not be put to Parliament until the reasons for the losses had been thoroughly investigated. I do not think that that line of thinking can be interpreted as in some way ignoring the Chairman's existence or his suggestions. I think that that was the actual sequence of events. It would be true, I think, had a real, full plan been put forward, and not just certain ideas.
§ LORD SHACKLETON
Will the noble Lord forgive my interrupting? He is being very patient. This is rather interesting. We have had something secret revealed, even if not from the Corbett Inquiry. Would it be possible to see the plan? Or could we even know whether the Minister communicated with the Chairman on what he wrote to him, possibly even only to say that it was not good enough, or to ask for more details?
§ LORD CHESHAM
Because I do not know. But I will certainly see what I can do to oblige the noble Lord in that respect.
§ LORD CHESHAM
I cannot off-hand, for reasons that he well appreciates, say very much more than that at the present time.
My Lords, I am taking a very long time, I am afraid—
§ LORD CHESHAM
—but I want to have just a very quick word about this question of "Fly British". The noble Lord, Lord Ogmore, raised it first, and my noble friend Lord Caldecote also mentioned it. Basically and I make this point because I want to get it clear —I am perfectly sure that, wherever possible, whenever possible, "Fly British" is the right policy, and I do not think anyone in this House, in any quarter of it, is going to disagree with that. But the criterion is "when possible". I think it is recognised that they must be able to have the best aeroplanes they can get according to their commercial judgment. In fact, I do not think it is true to say that B.O.A.C. have been denied the freedom to choose the aircraft they wanted. There have been, I will agree, limitations. There were limitations, because of dollar shortage, against the Boeing 707's which they wanted to buy in 1956; but, by and large, my Lords, they have not been directed here and directed there. Planes like the Comets, Britannias and VC10s they have chosen themselves; and I believe that that is the right policy wherever possible.
I should like just to point something out to my noble friend Lord Headfort, whom I would congratulate on what I thought an excellent and well-thoughtout speech. I only hope that he will go on, and will not be flying off to Ireland and depriving us of his company and further speeches. But I would say to him that routes may be unprofitable, but there is no route that I know of which B.O.A.C. flies at present other than from commercial choice. There is no route that they are pushed into flying or are requested to fly, or which it is insisted they fly, or anything of that kind. I thought I would make that point, so that it would comfort him in case he thought they were pushed around in that way.
508 Finally, my Lords, I should like to agree wholeheartedly with something said by the noble Lord, Lord Ogmore, when he referred to B.O.A.C. as a magnificent Corporation. My Lords, we are doing what we propose because we think so, too. We want to keep it that way, and we want to keep it financially successful as well.
§ On Question, Bill read 2a; Committee negatived.
§ Then, Standing Order No. 41 having been suspended (pursuant to the Resolution of December 12), Bill read 3a, and passed.