B.O.A.C. AND B.E.A. (Hansard, 21 November 1963)

§ THE PARLIAMENTARY SECRETARY, MINISTRY OF TRANSPORT (LORD CHESHAM)
My Lords, I hope it may be convenient for me to make a statement about the British European Airways Corporation and the British Overseas Airways Corporation similar to that being made in another place by my right honourable friend the Minister of Aviation.
The noble Lord, Lord Douglas of Kirtleside, who will be 70 in December, will be retiring from the Chairmanship of B.E.A. at the end of the financial year. He will then have completed fifteen years as Chairman, and I am sure the House will wish to join me in paying tribute to his great services to British aviation. He will be succeeded by Mr. Anthony Milward who has been Chief Executive of B.E.A. for the last seven years.
Sir Matthew Slattery will be retiring from the Chairmanship of B.O.A.C. in the New Year. He has given B.O.A.C. great service in a very difficult period. Sir Matthew Slattery will be succeeded as Chairman by Sir Giles Guthrie, who is a member of the Board of B.E.A. and has an outstanding aviation record in peace and war. I understand that it is Sir Giles Guthrie's intention to undertake himself some of the functions of the Managing Director. Sir Basil Smallpeice, after many years of devoted service to B.O.A.C., has agreed to retire to facilitate the changes.
My right honourable friend has carefully considered whether a merger 464 between B.O.A.C. and B.E.A. would be in the best interests of British aviation, but on balance he has decided against it. He is convinced, however, that the two Corporations need to work more closely together than they have in the past. Sir Giles Guthrie, the Chairman-designate of B.O.A.C., will accordingly retain his seat as a part-time member of the Board of B.E.A.; and Mr. Anthony Milward, the Chairman designate of B.E.A., will also become a part-time member of the Board of B.O.A.C.
Before the House rose for the Summer Recess my right honourable friend undertook to publish a White Paper about B.O.A.C.'s financial problems. This White Paper will be available in the Printed Paper Office when I sit down. I will not attempt to summarise it now; but the House will want to know the immediate steps the Government are proposing to take. These are set out at the end of the White Paper and are briefly as follows. First, we have decided to strengthen the management of the Corporation. Second, my right honourable friend is inviting Sir Giles Guthrie to prepare a plan during the coming year for making the Corporation financially sound. When this plan has been considered we can then decide how to deal with the accumulated deficit and how to provide for the financing of the Corporation.
Meanwhile, some losses are likely to continue before the new plan can be drawn up and put into practice. My right honourable friend will, therefore, shortly be asking for an extension of the powers he already has under the Air Corporations Act, 1962, to make loans for the purpose of financing deficits on revenue account. That is the statement.

§ EARL ALEXANDER OF HILLSBOROUGH
My Lords, I am much obliged to the noble Lord for giving us the statement which has been made in another place, and at the outset I would say that we appreciate very much the tribute which is made in this statement to the services of Marshal of the Royal Air Force, Lord Douglas of Kirtleside. We feel that the continuation of his services for the last twelve years of the Conservative Government in itself was 465 a tribute to an appointment we made three years before that.
The point that strikes me about this statement to-day is that it is like shoving a large part of the problems concerned under the carpet until after the Election. In the first place, I would ask why it is that, in spite of a request made months ago, we have never yet seen the Corbett report on the general position of B.O.A.C. May we ask now that we get the Corbett report published immediately? It is essential that Parliament should know about this, in view of the statements made in this announcement to-day. Is it only because of the Press reports this morning that we have now had a statement the very next day from the Government? We were all disturbed to read the changes proposed and the manner, apparently, in which matters were to be left, not very far removed from the statement which has been made, all in the Press. At last a reference is made to a White Paper that was promised months ago; and still to-day a statement is made in another place, before the White Paper is available. That seems to me to be an extraordinary state of affairs.
I notice what is said with regard to the resignation of Sir Matthew Slattery, who is well-known to Members in all parts of this House for his services to the State, the Admiralty, the Ministry of Aircraft Production, and, in this difficult period as mentioned in the statement, to the B.O.A.C. It is said in the statement that he has agreed to resign, apparently to assist reconstruction or something of the kind. Has he been persuaded to resign, or did he offer before anything was given out at all? I should like to know something about that. It seems to indicate to me, as I read the statement, that apparently the Government are not satisfied with the management that he has given, because it says that his successor, Sir Giles Guthrie, is to be at once engaged in preparing an entirely new plan. It also says that the Government propose to strengthen the management. Under what sort of pressure has Sir Matthew Slattery been on this point, and why is it we have not got alongside that the Corbett report, the up-to-date report on the position?
When it comes to the financial situation, everybody knows what a huge 466 deficit has unfortunately arisen in regard to B.O.A.C., not entirely the fault each year of the management, and carried forward in the manner it has been. And now there is to be no attempt before the General Election, after the Government have been twelve years in office, to deal with that situation. A further sum is to be loaned, and what is to be done to put the Corporation on a firm financial basis to take its next steps, is to lend it more money and consider the situation after the Election. That seems to me an amazing position. I am rather astonished to read of the resignation, in order to assist the changeover, of Sir Basil Smallpeice. He is known to many of us as an exceedingly able businessman as well as being a professional accountant, and he has served us in other public offices as well as the one he is in now. I must say at this moment I feel entirely unhappy about this statement.

§ LORD CHESHAM
My Lords, the noble Earl who leads the Opposition will understand, I am sure, that I was not particularly surprised at the points he put forward, and I will do my best to deal with them. It is important to be quite clear about this matter. My right honourable friend on behalf of Her Majesty's Government carries a responsibility for this very good airline—a very good airline; let us make no mistake about that—which is, however, not at the present time proving the fact by successful financial results. When your Lordships come to read the White Paper, which no doubt you will be doing in a very short time, you will find that it reveals some weaknesses, some of which have been corrected and some not. The proposals of my right honourable friend have been made to enable B.O.A.C. to confront the problems that lie ahead and to get it on its feet. The attitude of Sir Matthew Slattery and Sir Basil Smallpeice to this I think will be made quite clear if, rather than coming from me, it should come from the exchange of letters to the Minister which will be made available later this afternoon.
The noble Earl called for the publication of the Corbett report. He sees no reason why it should not be published—but I do. The reason is that 467 that report was commissioned as a confidential report. The evidence collected by Mr. Corbett was on a confidential basis, and on that basis there can be no question of publishing that report. Furthermore, it is clearly and squarely the responsibility of Her Majesty's Government, and not of one particular man. Her Majesty's Government must, I think, be free to employ the services of a professional consultant if they so wish, because what is important or should be important to your Lordships is the conclusions and recommendations of the Government which are to be put forward in the White Paper. I agree that the Corbett report was a useful and major factor in coming to those conclusions, but it was not the only one.

§ EARL ALEXANDER OF HILLSBOROUGH
But it is six months old.

§ LORD CHESHAM
Nevertheless, reports of this nature and other matters have to be given proper consideration. As to the further complaint that the White Paper should have been produced before the statement, I can only say that the purpose of this statement is to draw attention to the White Paper; so I daresay we could go on stepping backwards, and doing one thing before the other. I most certainly assure the noble Earl that there is no question of this statement's having been made because of what was published in the Press this morning. I think it can be quite easily discovered that this statement was planned some days ago.
Finally, on the question of the deficit, the noble Earl said that it should have been dealt with; but I would say, with an open mind, that when there is a sound plan, leading, one would hope, to B.O.A.C.'s getting on its feet, then that is the time to consider how to deal with the deficit, and that to consider writing off large sums now with no particular prospect seems to be illogical and quite wrong. It is rather like asking Parliament to give a blank cheque. I think I have now dealt with the points raised by the noble Earl.

§ LORD SHACKLETON
My Lords, the noble Lord has not dealt satisfactorily with the question of the Corbett report. Even if the Corbett report as a whole is confidential, there is no reason why its 468 recommendations should not be published, and there is no reason why there should not be at least a reference to it in the White Paper, which I have seen because it was available in another place. The White Paper, in fact, not only is one of the dullest and most inadequate of documents, but fails to deal with the serious accusation which the Minister of Aviation made at the time against B.O.A.C. and the conduct of its financial affairs. The Corbett investigation was particularly concerned to look into those matters, and we have had no information whether the accusation in regard to depreciation policy and other matters which the Minister of Aviation made are justified. Will he not now consider carefully the desirability of publishing these recommendations, so that we may see, in broad terms, what advice was given to the Government?

§ LORD CHESHAM
My Lords, I noticed that the noble Lord had nipped smartly off, and I guessed what was his destination. Therefore, as he and I are almost at a sole advantage in your Lordships' House in having seen this White Paper, perhaps it would not be for the noble Lord and me to initiate and carry on a debate on it this afternoon. But whatever the noble Lord may think, I still maintain that it is the job of the Government to put forward their recommendations based on their considerations. And to us confidence is confidence.

§ LORD SHEPHERD
My Lords, in view of the comments of my noble friend and, in particular, the allegations that were made by the Minister in regard to the Board of B.O.A.C., is it not a fact that the Corbett report has not been shown or been made available to the Chairman of B.O.A.C. and to the Board of B.O.A.C.? Can the Minister confirm or deny that statement? May I further ask the Minister: in view of the fact that the purpose of the Corbett report was substantially to go into the financial working of B.O.A.C. and to make recommendations, will that report become available to the new Chairman of B.O.A.C. in order to expedite his own examination and his own presentation of a plan, so that B.O.A.C. can be put on a sound basis as quickly as possible, and so that there should be no question of evading the issue in the matter of a year or so?

§ LORD CHESHAM
No, my Lords; there should be no reason to evade an issue for any time at all. I agree with that. I can tell the noble Lord that the report as a whole has not been made available to the Chairman concerned.

§ LORD SHEPHERD
Extraordinary!

§ LORD CHESHAM
Not extraordinary; but we will take that up at some other time. What I will say is that there is a section of the report which would be most valuable to B.O.A.C. in considering reorganisation plans, and this will be made available to them.

§ THE EARL OF LONGFORD
My Lords, may I, as the Minister of the day who appointed Lord Douglas of Kirtleside, join in the tribute to his wonderful work? But may I, as someone who has worked closely, as have others, with Sir Matthew Slattery, say that he has been treated abominably in this matter? I should imagine, too, that Sir Basil Smallpeice has been treated in the same way. He is quite a young man as high people go, and no reason whatever has been given for his removal. We are told that the management is to be strengthened. I am quite sure that the Government have weakened the management by the ridiculous steps they have taken.

§ LORD CHESHAM
My Lords, I am surprised to hear those observations coming from the noble Earl, and that he should have prejudged the issue without having found out the facts and, in particular, without having seen the exchange of letters to which I have referred. Had he done that, he would have found that what he has just said was just not so.

§ LORD LINDGREN
My Lords, the Minister has just said that to the Tory Government confidence is confidence. Is it not something of a confidence trick, if there is an inquiry into an organisation and the distinguished people at the head of that organisation are denied the right to see the result of the inquiry and the judgment made on it?

§ LORD CHESHAM
My Lords, I do not think so. I should have thought that if you are charged with responsibility for the competence of something, you are entitled to employ, if you like, a business efficiency consultant to advise 470 you on how it is being run. That is exactly what the Minister has done.

§ LORD LINDGREN
And the business efficiency experts of those who are responsible for the running of the organisation are not given the opportunity of studying the report of the expert.

§ LORD SHACKLETON
Does not the noble Lord realise that the Government's failure to publish the recommendations of the Corbett investigation must lead us to the only possible conclusion: that these recommendations and conclusions justified B.O.A.C. in their dealings and put the blame where it lies—on the interference of the Government in their commercial policy?

§ LORD CHESHAM
My Lords, there is no conceivable way in which I can stop the noble Lord, if he so wishes, from jumping to any conclusion. But if he would kindly read the White Paper—

§ LORD SHACKLETON
I have.

§ LORD CHESHAM
—or will have another, and slower, look at what I have just said, I think he will find that the matter will present itself more reasonably to him.

§ EARL ALEXANDER OF HILLSBOROUGH
My Lords, I am bound to say at once that I feel just as unhappy, even after the explanations given by the noble Lord. I am sure he has done his best for his side in the matter, and I am grateful for the reply he has made, but it has not cleared my mind at all. The fact is that it stands out a mile that these two high officials, Sir Matthew Slattery and Sir Basil Smallpeice, have been pressed to resign, in my view in order to facilitate the turnover. And, like good public servants, they will write letters that will meet the situation required by the Government.
Apparently they have never been shown the Corbett report, a report which was demanded by the Government months ago; and the White Paper, which is now being issued after the statement of the Minister to-day was promised months ago and has only now been published. This statement has been made to-day only after the revelations which have appeared in the Press this morning. In such an important matter the Government ought to have secured that they 471 should first have come to Parliament and notified Parliament of what was going to be done, especially after the questions which repeatedly have been asked. While I am obliged to the noble Lord for the effort he has made this afternoon, we will have to seek an early debate in this House.