THE BRITISH AEROSPACE INDUSTRY

HL Deb 15 April 1970 vol 309 cc449-524

2.58 p.m.

THE EARL OF BESSBOROUGH rose to call attention to problems facing the British aerospace industry; and to move for Papers. The noble Earl said: My Lords, it occurred to me recently, when reading that a third team of American astronauts was soon to set off for the moon, that it was over eight years since we had a debate exclusively relating to space research and technology. That was a few months after President Kennedy decided to go for the moon; and, as we know, the Americans got there months earlier than expected. And now to-day I am sure that all your Lordships are hoping and praying that the American astronauts will return to earth alive, and safely, on Friday. They have been very much in our minds during the last 36 hours. We must all be praying for them, and our hearts go out to their wives and families. It is good to learn that British ships are moving into the probable area of splashdown.

In so far as this debate is concerned, it seemed to me that since the public at large knew little about Britain's consider-able efforts in this field—to say nothing of our own contributions to the moan-shots—or what our role may be in the future, it might be appropriate to raise these matters again. It was, however, pointed out by my noble friends that it would perhaps be more profitable to have a debate on the British aerospace industry generally, and I agreed. Therefore, I should like this afternoon to look at some of the principal aircraft and space pro- jects with which this country is concerned. My noble friends and other noble Lords will, I know, also have valu-able contributions to make on this subject.

I should like to begin by stressing the importance of our looking well ahead to ensure that we always have interesting new schemes in the pipeline, so that we shall not let down the many thousands of skilled engineers and technicians in the industry, nor, indeed, those scientists who are fast returning to this country—the brain-drain in reverse—as a result of a certain cut-back in the aerospace endea-vour of the United States. The efforts of such men can still in my view be very remunerative to Britain. Last year's £300 million worth of exports is no mean figure. But apart from the multi-role combat aircraft, most of the projects which we know about—the Concorde, the Harrier jump jet, the Jaguar strike trainer, and, in rockets, Blue Streak and even Blue Arrow, were all initiated while the previous Government were in power. We know that the present Government cancelled the TSR 2. We know what a tragic decision that was, in view of all the troubles encountered by the F 111. And we know that they tried to with-draw from Concorde.

Mistakes have been made, but what concerns me now is this. What role is the British aerospace industry to play during the remaining years of this century? This is not just a vain desire to crystal-gaze. I am thinking of the morale of those in the industry. What seeds are we now sowing? Are we to have an aircraft industry in the future, or are we not? We do not want the industry to run out of business. It seems to me, for example, that without the BAC 311 we may drop out of manufacturing subsonic aircraft. I realise that the Government have difficult decisions to take. It is creditable that Hawker Siddeley should be building the wings for the Franco-German A 300B airbus, but this is a relatively limited project. And I hope that it will be possible for the 311 and the A 300B to exist side by side. But the critical first big orders have, I gather, yet to be won in both cases. And I read on Sunday that the Ministry of Technology were delaying their decision on whether to grant Rolls a £50 million loan to develop the RB 211–50 engine for the airbus. No doubt the noble Lord, Lord Delacourt-Smith, will have something to say about this.

I am also worried about some of the schemes on which we have been collab-orating with the French. We all must believe that the Concorde is already a successful advanced technological achievement, but I am disturbed about other Anglo-French co-operative efforts. France seems, if I may put it like this, to have left us at the altar over the swing-wing, variable geometry aircraft. She seems to be having second thoughts about the Jaguar strike trainer, preferring her own Mirage; and there seem now to be difficulties over the package deal in regard to our joint production of the three new helicopters. I shall be grateful to the noble Lord if he can tell us what the present situation is. There have been various newspaper reports, one of which last Friday was to the effect that Britain would review its own order for 300 French Sud helicopters if France can-celled her order for the 80 British WG 13s.

Then in regard to the multi-role combat aircraft, the M.R.C.A., in which, as your Lordships know, B.A.C., through the joint Company Panavia have a considerable interest, I read in the Press that the Italians may be having cold feet. This was a project in which initially, I think, six countries were interested and now only Germany and ourselves seem to be reasonably firm partners. I under-stand that we must make up our minds about this project by May 1; that is to say, whether we should go into the development stage of this aircraft. I do not know whether the noble Lord can confirm this.

Then added to all this, as your Lord-ships know, as a result of the Government's—I regret having to say this—mis-management and consequent liquidation of Beagle Aircraft, our effort in the light aircraft industry is now to be severely limited. The situation looks somewhat grim. I believe, however, that with the tremendous expertise which we have in this country in aircraft design and con-struction—witness, for example, the VC 10, or the list of achievements given in the B.A.C. chairman's annual report which is in the Press to-day—we must still have a very important part to play both on our own and in co-operation with others. I have no doubt that the Government will agree that we should continue with a judicious "mix"—if I may have the noble Lord's attention, because this is a very vital point—of national, Anglo-American and European co-operative effort.

I am certain that there are areas, especially in short and vertical take-off aircraft, in which we can play a considerable role, and I think that the noble Lord, Lord Kings Norton, will have something very important to say on this subject this afternoon. Certainly, the Harrier jump-jet is a tremendous break-through. We seem to be ahead of others in this field. At all events, I should not like any Government, either Labour or Conservative, to let down those working in the industry, but I think we may do so if we do not look out. I am certainly not convinced that the present Government attach sufficient importance to the value to be gained from encouraging the industry, and maintaining and stimulating its rate of growth.

In this shrinking world I have felt for some time, like the noble Lord, Lord Plowden, that multi-national and European co-operation is very important, not only from the economic point of view of spreading research and development costs, but also from the selling aspect. An air-craft of ours, in the same way as a nuclear reactor, may be just as good as those built in any other country. But other countries may be chary of ordering a purely British plane if they have not shared in its development and construction.

I should like at this point to ask the noble Lord what was the total cost of air-craft ordered in Britain last year. I gather that some £273 million was spent on purchasing aircraft from abroad—that is to say, mainly American Phantoms and Hercules and a few 707s—but that this figure does not include 747 jumbo-jets, nor indeed expenditure on the abortive F 111. However, an important figure of £273 million alone is a very considerable sum in our balance of payments.

In regard to engines we must all be concerned about the position of Rolls. Our remarkable exports in recent years have been largely due to Rolls being able to supply as good as and better turbine engines than the Americans. I only hope that the Lockheed 1011 Tristar, to which Lockheed decided to fit the Rolls RB 211, will proceed. At the same time, it was disturbing to learn that what is known as the Kuss consortium, which comprises K.L.M., the French U.T.A., the Scandinavians and Swissair had opted for the DC 10 Trijet with American General Electric engines. I wonder what the position is in regard to other major airlines in the world. I gather that the American airlines are divided in their allegiance here. Certainly, the customer is all-important in these matters, as the noble Lord, Lord Beswick, knows only too well.

But looking at Lockheed, they certainly have a remarkable capacity. Their giant C5 American Air Force transport air-craft, which they are building with a lot of sophisticated British electronics in it, is in my view the only aircraft to fill ade-quately the military and the cargo require-ment, and it is good that British industry should be brought into such projects. I dare say, my Lords, that it is to a certain extent with the Americans that our future may lie—I shall say more about this later—although I hasten to add that I should not like this country to be relegated purely to the role of sub-contractor to a major Power. I wonder if the Government can tell me, for example, whether in the case of the BAG 311 there is any chance of the B.A.C. going into partner-ship with an American firm. The noble Lord told my noble friend Lord Kinnoull last Thursday that talks between B.A.C. and companies in other countries were continuing.

While on the subject of co-operation with the United States, I should like to turn to our space efforts—which, as an astronaut said recently, are, after all, only an extension of flying. I understand that over the last three years we have spent on these space efforts over £56 million nationally and over £62 million internationally. I certainly deplored at the time our partial withdrawal from ELDO, the European Launcher Development Organisation; but, with our limited resources, our achievements in space (whether the part we have played in the Apollo moonshots, the Bacon fuel cell and the water-cooled space suit, or in producing our own scientific satellites, such as Ariel, and those we have built for ESRO, the European Space Research Organisation; or in producing our technological satellites, to be launched by our own Black Arrow) have, so far as they go, been highly impressive.

Our efforts in application satellites, including the military skynet system and Intelsat 4, are also outstanding. In addition to the manufacture of major hardware sub-systems for three of the four flight satellites, a British company has been entrusted with the assembly, integration and test of two of the satellites. I am glad, too, that Britain has already indicated its willingness to support a communications satellite in Europe, and I hope that this project will proceed. In all launches to date, the reliability of British satellites or British equipment in other satellites has, I know, been ex-tremely high. Indeed, there seems to have been no significant failure within the planned life of the satellites attribut-able to defects in British equipment. As is stated in the Grey Paper on the Exploitation of Space Technology in the U.K. which I think was issued to the Press yesterday by, I gather, the National Industrial Space Committee, the British space industry, together with various Government agencies and universities, have demonstrated their ability to provide satisfactory equipment if given the oppor-tunity—and I would emphasise those words, "if given the opportunity".

The United Kingdom industry is also now recognised as leading in the design and supply of earth stations in both civil and military fields. For the global com-munications system, Intelsat, we have built stations at Goonhill, Bahrain, Hong Kong, Jamaica and Kenya—all well situated—and we have undertaken traffic for both the Intelsat system and the moonshot programme at the Cable and Wireless Station on Ascension Island. In radio astronomy, at Jodrell Bank, Chilbolton and Cambridge we have interesting projects afoot; and for meteorology we have earth stations—already eight of them—in a number of other places around the globe which receive information by automatic picture trans-mission.

In regard to military applications, we have supplied earth stations for Anglo-American defence purposes as well as for the British skynet and NATO satellite communications system. However, I do not want to pre-empt from the Government a whole list of British achievements, which, as I say, are not inconsiderable. And yet when we compare them with the United States list they are, of course, pretty small beer. I have here a chart showing only the major projects and studies in the United States aerospace programme. They number 115, and I understand that all these projects are still being pursued, are still in the pipe-line, despite the cut-back in the American effort.

My object this afternoon, therefore, my Lords, is to look ahead for Britain in order to see what is in the pipe-line here. Can the Government tell me whether they agree generally, for example (I know it is a little out of date; it is about a year old), with the list of new aerospace pro-jects which the industry feels should be pursued and which are mentioned on pages 11 to 16 of the S.B.A.C. paper which is called, Into the Seventies—A Future Plan for Britain's Aerospace Industry. That is, that we should continue to develop supersonic as well as subsonic transport and also vertical and short take-off aircraft and engines, guided weapons and space projects such as those mentioned in that Paper? Of course, I know that the Government have very difficult choices to make. I do not envy them: and yet choices must be made.

In addition to the application satellites I have already mentioned, I am thinking, too, of earth resources surveillance, of air traffic control and of a navigation system. The market possibili-ties for space communications and other application satellites, including those for educational television from satellite to rooftop—for example, in India—are in-deed enormous. This is going to be very big business in the 'eighties and 'nineties. From certain calculations it seems that Intelsat made a considerable profit in 1968. Again, there are some interesting examples and estimates regarding the market for space systems in the N.I.S.C. grey paper.

I should not fail to refer also to equipment, including avionics, which con-stitutes approximately 30 per cent. of the cost of a civil and perhaps up to 40 per cent. of a military aircraft. Again British industry has great contributions to make, and I am sure that the noble Lord, Lord Nelson, with his great expertise, will not fail refer to them. But what I should like to ask the Government in my few brief remarks is this: could they also give their views on the various recommendations on pages 10 and 11 of the Grey Paper, particularly regarding the better co-ordination through MINTECH of our own space work, and also the formation of a unified European space organisation?

To return to the question of co-operation with America, I learnt recently that the Space Administration there had made certain proposals to the British, French and German Governments regard-ing our possible co-operation in consider-ably more advanced projects which the Americans have in mind by way of space shuttles and manned space stations, including the proposed sky laboratory. I see that the President of the United States confirmed in his statement on March 7 that he has approved the recommendations of the American space task group, presided over by Vice-President Spiro Agnew, regarding this forward-looking, long-term programme which will be the successor to Apollo, which has been America's main concern during the last nine years.

I was glad to learn that a meeting took place in London last week—I think the noble Lord, Lord Delacourt-Smith, announced it in Bristol a few days ago— between our own Minister of Technology and the French and German Ministers for Science, and that the three Ministers have at least agreed to study the detailed technical and financial implications of the American proposals, and that a response to the American Space Administration should be made by all the members of the European Space Conference, which I gather is to meet in June or July. I am glad to hear this news, for I had under-stood from American friends that, while Germany and France had responded with some alacrity to NASA'S proposals, we had at first been somewhat slow off the mark.

It seems to me that no country which wishes to remain in the forefront of ad-vanced technology can fail to be involved in space, not only because of the spin-off in medical and metallurgical research and micro- miniaturisation—to mention only a few of the by-products—but because we just do not know what benefits we may ultimately derive from this work. If therefore we can go in with the Americans on the space shuttle and connected projects on satisfactory terms, and with an assurance that British industry will receive its full share of the business (I do not think it always does so in these co-operative efforts), then I hope that the Government will go ahead. I hope that the decision to refer these proposals to the European Space Conference will not result in undue delays nor in losing valuable business to our European partners.

My Lords, there are just one or two other points that I should like to raise. We know that there is no "little Neddy" in the aerospace industry. The "little Neddies" are perhaps not tremendously popular organisations, but I think that most of them do an important job. I wonder whether it might not be desirable to have one in the aerospace industry, so that the firms concerned can be brought into even closer touch not only with the Government but also with the trade unions —who I am sure the noble Lord, Lord Delacourt-Smith, will agree must be kept fully in the picture. I certainly think that they should; and I put this forward as an idea to your Lordships.

As in the whole field of the administration of science and technology, I am disturbed, as I have said on previous occasions, by the complexity of the administrative machine—and this applies to this specific area, too. The delays are indeed considerable. I often wonder where decisions are taken, and who is responsible. I know that there is the Air Transport Requirements Committee but I think that this body is only advisory; and commit-tees are notoriously slow in producing their recommendations. I heard the other day a new definition of the word "committee". It was, "procrastination between consenting adults"—and I am sorry that the noble Earl, Lord Arran, is not here to debate this matter this after-noon.

On the other hand, I believe that all the project managers in MINTECH are first-class men; although I sometimes wonder whether they ought not to be somewhat higher in the hierarchy and perhaps have broader powers of decision. The Elstub Report on The Productivity of the National Aircraft Effort is of great interest on this point, and I should be grateful to noble Lords opposite if they could say something particularly on this question of project management.

The Elstub Report is indeed an illuminating document. It points out, for ex-ample, that measured by value added for each of its employees, the British air-craft industry's productivity is approximately one-third that of the American industry; and that, because British productivity is lower than the American, British industry forfeits the cost advantage which it should gain from its lower wages and salaries. Another disturbing fact is that British projects tend generally to take longer than American. For ex-ample, the Trident flew more than one year earlier than its American counter-part, the Boeing 727, but it got into ser-vice one month later.

Certainly, the area where the British industry has in the past lagged furthest behind is in production control. A friend in the American aircraft industry told me recently that aircraft firms in this country had no concept of production engineering (no doubt he was exaggerating a little) and no concept of how to keep all the people informed all down the line, and that drawings and designs sometimes tended to remain in the mind of one man. We really must look into this whole problem of job control and improve our capabilities.

In conclusion, my Lords, I should like the Government to tell us what projects they think are likely to be maturing in the late 1970s and 1980s so that the British aerospace industry need have no fears for its future. We have quite exceptional expertise and it must be kept employed. I only wish that all systems were "Go" in Britain now—as I know we must all wish they were also all "Go" in Apollo. I beg to move for Papers.

3.25 p.m.

EARL AMHERST

My Lords, on behalf of noble Lords on these Benches, I should like to join in the expressions of anxiety that the noble Earl, Lord Bessborough, has voiced on behalf of the American astronauts, and in his hope that they will return safely to their own country.

My Lords, the prominent mention of the word "problems" in the Motion be-fore the House to-day seems to me to imply that £.11 is not as we should like it to be in our aerospace industry. The noble Earl, Lord Bessborough, has asked some vary pertinent questions on this matter, and I hope to go perhaps a little further in one or two of the things that he has said. The description "aerospace industry" covers a very wide range of aircraft, all the way from civil aircraft to various kinds of military ironmongery, including guided weapons but not electronics per se. But it is to the civil aspect that I should like to limit my remarks to-day.

In 1964 a Committee of Inquiry into the industry, chaired by Lord Plowden, was set up by the then Minister of Aviation. Its findings, calculations, con-clusions and recommendations were pre-sented to Parliament in 1965. Since then many things have happened. Some of these conclusions and findings have been superseded, but some are still rele-vant. Then, in March 1967, another Committee was appointed by the Minis-ter of Technology and the President of the Society of Aerospace Companies, under the chairmanship of Mr. St. John Elstub. He finished his work in 1969 and now the Report of the Committee's findings and conclusions is to hand. It is a very formidable document, well pre-sented and full of valuable and interest-ing facts and figures. My Lords, may I take the opportunity of congratulating the noble Earl, Lord Bessborough, on selecting what I think is a particularly appropriate moment at which to initiate this particular debate? There are some 11 speakers on the list so I should imagine that most, if not all, of the points raised in that Report will be covered by one or other of them. I should like therefore to limit my participation to a few salient issues that seem to be facing the industry and which are urgent.

The first is production. Both the Plowden and the Elstub Committees seem to be in agreement that world production of civil aircraft, excluding the Communist countries, can be roughly divided fifty-fifty as between the U.S.A. and the rest. So far as Europe is concerned, for the moment at least it looks as if "the rest" are mainly ourselves and the French. It is true that Sweden manufactures some military aircraft for its own defence, but I do not think it has yet embarked on any significant manufacture of airliners. The Dutch produce the Fokker Friendship, which has had a fair world-wide sale. Now that the Germans are participating in the airbus project, it looks as though they too will once again enter this field. So if we are to retain our position, let alone advance our place, in the 50 per cent. left by the Americans, it looks as it things will get tougher and tougher.

I turn to demand. Nationals who have their own production are, perhaps not un-naturally, inclined to favour buying their own products. The disappearance of the Empire and the shrinking of the Commonwealth has tended to cut down what once might have been termed a "favoured nation" market for our own productions. Both Committees seem to be equally convinced that our home demand is not, by itself, enough to sustain a production run big enough for the end product to be priced internationally at a figure that can successfully compete with the U.S.A. overseas sales, where the American sales effort is formidable. The American home market for civil aircraft is largely closed to us on account of the policy of "Buy American first"; al-though this does not so much apply to military aircraft, as there are certain reci-procal arrangements for these. But we can compete in the provision of ancillary equipment, such as undercarriages, wing sections, fins, instruments and, of course, engines—provided that at least 50 per cent. of the airframes in which they are to be fitted are of American or Canadian manufacture. With the exception of the Vickers Viscount and the BAC 1–11, in recent years British-built civil aircraft do not seem to have achieved anything like the world-wide sales of their American counterparts.

Why is this my Lords? I suggest that we can usefully ask ourselves about some of the more cogent reasons why this seems to be so. The Elstub Report points out that while we might have expected to reap an advantage through the differential between what we in this country pay in the way of salaries and wages and what the Americans pay, this is offset by certain major discrepancies in our respective methods. For instance, the Americans appear to devote much more capital than we do to the provision of up-to-date, high-speed machine tools (and automatic metal riveting comes to mind) in sufficient quantities, so that their work force is not held up waiting to use a particular tool. They also spend more in ensuring a full supply to the factory of materials and parts, to avoid operatives' being involved in waiting time. Greater and greater use of computers seems to be the order of the day to co-ordinate quickly the requirements of all the various parts of a factory, and also to ensure the smooth provision of materials and parts to be fitted. The object of this, of course, is to save a great deal of clerical time and effort.

In order to cut down production time the Americans ask—in fact demand—a great deal more forging and machining of parts and materials to be supplied by sub-contractors before delivery to the factories. It seems that the Americans are prepared to lock up more capital than we do in the provision of back-up spares for immediate delivery to their customers, not only on the home front but on a world-wide basis. Above all, they set tremendous store on the importance of adhering strictly to delivery dates, and on the dot. We should do this, but apparently we do not.

The Elstub Committee lay great emphasis on the importance of the careful preparation and setting out of final specifications before work starts. The U.S.A. apparently expends much more time, money and care than we do on evaluating all the facts, with the object of mini-mising subsequent modifications, changes in design—even re-jigging—and amendments of specifications resulting from last-minute thinking with all the ensuing delays, broken delivery dates and expense that have bedevilled our industry from time to time. The Report comes down heavily against the tailoring of a project to suit a particular customer unless that customer can place a firm order large enough to ensure an important production run; and only the largest operating companies, I think, can do this. Instead, it advocates that, before a new type is decided upon, detailed care and trouble should be taken to find out whether it has a genuine good expectation of meeting the general requirements of the world market. It deprecates spending time and money on new types that can attract only small orders.

Regarding engines, my Lords, for some time now, apart from the Communist countries, the two major protagonists in the world to-day for the production of engines have been Rolls Royce and Pratt and Whitney. I do not know whether this is still true to-day. Unless I have been wrongly informed, it seems that Rolls Royce have put most, if not all, of their American eggs into the Lock-heed basket, either deliberately or because those two large potential customers, Boeing and Douglas, were out of their reach. I do not know which of the three— Boeing, Douglas or Lockheed—is now in the lead in world sales. I am informed that Rolls Royce will be coming to the Government for financial aid for the development of the RB 211/50, the engine to power the long-range Lockheed 110. Perhaps the noble Lord who is to reply for the Government may be able to tell us something about this.

The Report advises the seeking of ways of co-operating with other aircraft pro-ducers in Europe. The noble Earl, Lord Bessborough, went further and mentioned America as well. With the Government's withdrawal from the European Airbus project, the Concorde seems to be our only national civil effort in co-operation with Europe. Messrs. Hawker Siddeley are reported to have taken, as a private venture, a share with the French and the Germans in the production of the Euro-pean Airbus. Presumably, now that the Government have decided to withdraw from this project, this must remain a private venture since any subsequent Government participation could only be a reversal of policy.

My Lords, the other day in this House the Minister, in reply to a Question, said that the British Aircraft Corporation were continuing to seek overseas partners in the production of an aircraft—which I think is the BAC 311—for delivery to B.E.A. in 1974. Again, the noble Earl, Lord Bessborough, went further and said that participation was possible with partners in America. I have the impression that B.E.A. will be coming to the Government seeking financial assistance to cover the launching aid; that is, the research and development, tooling and production of the prototype. I am also under the impression that a decision on the matter is awaited with some urgency, and it would therefore be of considerable interest if the noble Lord who is to reply could enlarge on these aspects.

We all know about, and some of us are apt to look a little askance at, some of the brasher methods of American selling techniques. If I remember correctly, it was not very long ago that some of our British manufacturers were inclined to adopt the attitude, "That is what we make: take it or leave it." Is the Minister now satisfied that, generally speaking, our sales techniques are competitive and satisfactorily modern in their forcefulness?

The Elstub Report makes an interesting reference to the valuable service in helping to promote sales overseas rendered by the air and service attachés posted to our various embassies. But it goes on to say that sometimes, just as an attaché is getting into his stride, getting to know both the country and the potential customers, he is posted else-where; and his successor has to start all over again from scratch, with the result that much time and effort is wasted. I do not know who orders these postings, but perhaps the noble Lord who is to reply will take up the point with the appropriate authority or authorities. In conclusion, my Lords, I suggest that if our aerospace industry, with the help, encouragement and good will of the Minister of Technology, can straighten out some of these discrepancies we should feel confident that it will become more and more successful even though it may have to be a little smaller; but the going is likely to be very rough indeed.

3.39 p.m.

THE MINISTER OF STATE, MINISTRY OF TECHNOLOGY (LORD DELACOURT-SMITH)

My Lords, the noble Earl, Lord Bessborough, has directed our attention to a very large and important subject. I wish to begin by associating myself, and the Government, with what he said, and what the noble Earl, Lord Amherst, echoed, about the situation of the American astronauts. We cannot approach the subject of this after-noon's debate without the thoughts of all of us, and our hopes and anxieties, turning inevitably to them. Their situation is a chilling reminder of the human hazards and human courage which have been so involved in the space programme.

The subject which the noble Earl has raised is one in which there are of course responsibilities of Government and responsibilities of industry; and it may perhaps be most useful if, speaking at this stage in the debate, I seek to try to describe the framework within which, and the background against which, as we see it the Government and industry have to take their respective decisions and the factors which have to be taken into account in reaching decisions which will affect the future of the industry. My noble friend Lord Beswick, when he replies to the debate, will be touching more fully upon some of the specific projects to which reference has been made. Naturally, in setting the course I have indicated, I shall be touching on some of the points which have been raised by those noble Lords who have already spoken.

Like the noble Earl, Lord Amherst, I propose to begin with a brief reference to the Plowden Report, presented in December, 1965. That Report looked back over a period during which the aircraft industry had been making a series of painful adjustments to the circum-stances confronting the country in the 1950's and early 1960's. The Report of the Committee emphasised the need for realism, for further concentration of the industry and for an examination of its productivity and efficiency. Perhaps most important of all it recognised that in both the civil and military aircraft fields Britain was handicapped by its small home market and that there was little prospect for substantially increased sales for the British industry standing on its own. It argued that for all major civil types an association with partners in Europe was likely to provide the only promising foundation on which to launch a project competitive with those of the United States. The Committee in that sense endorsed the policy which had, for example, already led to the launching of the Concorde on a collaborative basis with France.

Since the Committee reported there have been a number of developments, as the noble Earl has said. There has been some reduction in employment. The aerospace industry has contracted from 260,000 to 245,000 employees, but its turnover has in fact been more than maintained. In 1964 its products reached some £380 million and the corresponding figure for 1969 will be greater than £500 million. When allowance is made for price changes, this is an effective increase of 7 per cent. Military production has declined sharply in favour of civil work. In 1964 more than two-thirds of production was for military purposes and by 1969 the proportions were much nearer half and half. This, of course, brought great problems of adjustment to the industry.

The export record, to which the noble Earl referred, is particularly striking, and since he referred to aero engines I should perhaps mention that aero engines account for some 40 per cent. of our ex-ports in this field. Against the 1964 figure for aviation production as a whole, aerospace exports reached a peak level of over £300 million in 1969, an effective increase since 1964 at constant prices of some 125 per cent. The industry and the Department are hopeful that in the years to come this level will be maintained and perhaps surpassed. Moreover, in the cur-rent year and in future years imports of military aircraft will diminish with the completion of the deliveries of Phantoms. The contribution of the aircraft industry to our balance of payments, which was positive in 1969, is likely to be substantial in the present year. The industry deserves credit for these and for other achievements. Moreover, they belie the gloomy fears of those who saw final disaster for the industry in the Government's decisions to cancel some substantial and expensive projects.

Thus we are dealing with an industry with a deservedly high world reputation, where the immediate prospects—and I stress "immediate"—in terms of output and of contribution to exports are good; an industry, too, which is intimately bound up with those technologies which will be of growing and perhaps dominant importance in the remaining third of this century. But it would be foolish and dangerous complacency to ignore the severe problems with which the industry is faced. These arise in essence from technical and commercial considerations which are part of the world-wide developments in aviation which have taken place and which are still taking place so rapidly. It is an industry in which, as the noble Earl said and I agree with him, it is vital to look ahead. The prospects for the middle and late 1970s and the 1980s turn upon decisions which are currently being made or on decisions recently made which are in the early stages of implementation.

Like every industry, the aircraft industry exists to meet the needs of those who purchase its products—that means, substantially, airlines, who want civil products, and Governments, who want military products. In the field of civil aircraft there cannot be any doubt of the likely continuing growth of air trans-port. But the behaviour of airlines is influenced by that of their customers, the travelling public and those who to an increasing degree are likely to send their cargo by air. Airlines must therefore be sophisticated in the timing of their purchases and in matching the types of air-craft which they purchase to their route requirements and to their operational and maintenance programmes. While the long-term growth in air traffic is as certain as anything can be in an uncertain world, the aircraft manufacturing industry, in making its commercial decisions, can never be sure that airlines will order to a time scale that is convenient for development and manufacture, nor can they necessarily expect that airlines will always be satisfied with what manufacturers offer.

The size of aircraft projects has grown with great rapidity and so decisions are relatively few but critical, both for the manufacturers and for the Governments who, in all countries which have a substantial aircraft industry, find themselves in one way or another involved in such decisions. The development cost of air-craft has risen threefold or fourfold over the last ten years and we are in an era when new projects are of a magnitude likely to be beyond the unaided re-sources of a single European country. As is known, and as the noble Earl re-marked, even the large United States companies are feeling financial strains. With increased costs there has come a great increase in the productivity of air-craft. They can go farther and faster and carry bigger loads, with relatively lower operating costs. Increased develop-ment and production costs are inevitably reflected eventually in the selling prices. I should like to take this opportunity of welcoming the increasing interest which banks and other institutions in the City are showing in the financing of airline purchases of aircraft, either through straight sales or through leasing. If we are to retain a vigorous aircraft industry, it is essential that this sort of backing should be developed to match the in-creasing sums of money and the increasing risks which are involved in the operation of aircraft in the civil field.

In the military field, the discipline of defence needs has led to an ever-increasing level of sophistication. Air-craft are not any longer regarded as an assembly of independent parts but as integrated weapon systems, and as a result of that the task of designing, testing and producing the aircraft which our Services require has become immensely more complicated and calls for much greater integration of all the elements and processes at each stage in a military project. The performance of military aircraft has greatly increased and we may perhaps need fewer aircraft than we have done in the past, but certainly there has been no corresponding reduction in cost.

Perhaps I should turn aside for a moment to say that this rising cost of successive projects is not the same thing as cost escalation, and I should not like it to be thought that the Government have not been very concerned with the latter problem.

A thorough investigation has been carried out by the Steering Group on Development Cost Estimating. They produced a Report (sometimes known as the Downey Report) into the problems of estimating the cost of developing advanced projects. The results, which have been published, have been recognised to have had a most valuable influence. Although it will be some time before we can see the ultimate results of the implementation of the recommendations contained in this Report, owing to the need to assimilate experience over a considerable period, I feel that the first indications are such as to give us cause for optimism. For example, in the case of Harrier, Nimrod, Jaguar and the Sea King helicopter—programmes all started since 1964, and where we controlled the project in accordance with the Downey recom-mendations—the costs have been held to levels which were estimated at an early stage.

That, as I say, is somewhat of a digression from my main theme, to which I will now return. The market for aircraft, whether civil or military, is an international market, so it is impossible to ignore the relative size of the United Kingdom industry compared with that of other nations. Scale of production is of great significance in the manufacture of aircraft—and I shall a little later touch on the main point raised by the noble Earl about the bearing of the scale upon productivity. To take the main airframe design companies, the situation is that the combined strength of the personnel of our three companies in the United Kingdom is about 70,000, that of the French companies 50,000, and of the German companies about 35,000. But these figures must be compared with an aggregate of nearly 350,000 for the three major American companies.

We must also recognise that if one looks at the market for planes, any one of the four leading American airlines is a match for the combined strength of the national airlines of the United Kingdom, France, Germany and Holland put together. Passenger traffic on scheduled airlines within the United States runs at some twelve times that of Western Europe. So on the one hand we have the increasing size of new individual air-craft projects; on the other, we have the great scale of manufacture and of the market in the United States of America and the growth of the industry in Continental Europe. It is these and related factors which lead to the view, confirming that of Plowden, that the long-term prospects of the United Kingdom industry lie largely in collaboration with other nations.

I would emphasise, however—as, indeed, it should be emphasised—that for the Government this is not a matter of dogma. There is no reason why it should be followed willy-nilly, and no automatic bar rules out all-British projects when in all the circumstances that is the right course to follow. While the facts of life suggest that consideration of international collaboration is likely to be an important ingredient in the decision-making process on major projects, we must remember that joint ventures can prosper only where there is a mutuality of advantage between genuine partners. If the necessary conditions for a joint venture do not exist, or cannot be created, then we must take the decisions to proceed or not to proceed on a national basis.

Of course, in examining the possibilities of international collaboration we are bound to give special attention to Europe. Here, in particular, there is a good deal of experience to draw upon and evaluate. It may well suggest that if European col- laboration in the development of aircraft projects is to flourish there will be the need to create a basis of confidence that there will be a mutuality of interests between the parties, and to examine soon the sort of arrangements that are going to be needed if any kind of European aerospace industry is to become a reality.

In addition to the problems which I have already indicated, the aircraft industries of the world will have new challenges to face—and to these the noble Earl made reference. First let me refer to the likely growth in the use of vertical and short take-off and landing aircraft for inter-city services. Some Members of your Lordships' House attended the presentation that officials of the Ministry of Technology gave to Members of both Houses on the studies that are in hand on the potential for VTOL services. We have since extended those studies and are looking carefully into the problems of short take-off and landing aircraft, and the possibilities that such aircraft would use marginal capacity at existing airports or new airfields on the periphery of cities. A considerable amount of study is being given to both STOL and VTOL by the main aerospace companies, as well as by B.E.A. and Government Departments. Our present thinking is that it is possible that STOL services may be introduced into the United Kingdom in the late 1970s, but we do not think that they will take any important share of total short-haul air traffic before the early 1980s at the best; and it would be naive to expect any quick solution to air traffic congestion problems from either system.

Then there is the question of the possibilities of space. The Government's policy is that of using space techniques wherever necessary, or where they are preferable as a means of achieving broader objectives of national policy, whether in the scientific, commercial, social, economic, political or defence fields. Within the framework of this policy it is the Government's aim to create and maintain a national space technology capability sufficient to enable us to support an adequate programme of scientific space research, to permit us to participate with other countries in such application satellite programmes as seem likely to make economic sense, and to enable United Kingdom industry to compete for international contracts for the supply of satellite hardware.

Reference has been made to what may well prove an important development both in the field of space technology and international collaboration; that is the invitation recently issued to the United Kingdom and to other European countries by the United States National Aeronautics and Space Administration to consider participating in the American Space Programme in the 1970s and 1980s. Such a programme would clearly have a considerable impact on the development of space activities in Europe and else-where. It might cause new thinking about rocket launch vehicles of the type now being developed in Europe, and perhaps make possible a much wider range of scientific research programme.

The implications, both technical and political, are being currently studied by the Government, as the noble Earl has said, in consultation with the other members of ESRO and ELDO. I am sorry that the noble Earl has gained the impression that the British Government have not moved as fast as some others, but I think it is fair to point out, as he mentioned, that it was the United Kingdom Minister who took the initiative in inviting his French and German colleagues to a discussion on this subject. Any response will have to take into account current developments in European space activity and the particular interests of Europe; and it will certainly be the intention of the Government to seek to ensure that British industry is able to play a full part in any collaborative programme and to maintain its competitive position in the world markets.

Developments of this kind will have great significance for the aerospace industry and for those firms manufacturing avionics equipment. The production and exports of avionics has been expanding over recent years and the future seems promising. United Kingdom manufacturers can offer equipment that com-pares well with that of their competitors and should be able to prosper in generally competitive conditions. Collaborating with the British airlines and industry, we are involved in a continuing programme of research and development to-wards airfield and airborne equipment to permit all-weather operations at civil airports, a field in which we have been the acknowledged leaders for some time; a very good shop window for the British avionics industry and a major contribution to future safe flying. Other successes include the sale in the U.S.A. of British trainer simulators for use with American civil aircraft, and growing world-wide sales of British radars and communications equipment.

Perhaps I may now come to the re-marks made by the two noble Lords who have spoken about the Elstub Report. The aircraft industry is no exception to the rule that to secure a viable long-term future constant steps must be taken to ensure maximum productivity and efficiency. The Elstub Report arose, as has already been said, from one of the recommendations of the Plowden Com-mittee. The great value of the Elstub Report—and I endorse the praise that has been given to it by noble Lords—lies in the depth of its inquiry into the efficiency and productivity of the United Kingdom industry. Its comparisons with the United States are particularly valuable. This Report really confirms that by far the most important factor contributing to the productivity gap between the United Kingdom and the United States—the 1 to 3 which the noble Earl mentioned—is the difference in scale of production.

The most important step, therefore, to-wards improving productivity would be for the United Kingdom to make each type of aircraft in larger quantities. If we could produce in larger quantities we could then hope to achieve comparable levels of efficiency and the lower wage rates would give British and, for that matter, European industry a fair opportunity to capture a reasonable share of the world market in competition with the Americans. The achievement of such longer runs depends in essence upon a careful selection of projects, based in turn on a careful prior study to ensure that each project has an adequate market.

I should go on to say that the scale of production is not the sole cause of the differences in productivity between the two countries. There is scope for improvement of efficiency in the United Kingdom industry, apart from that. The Elstub Report estimates that, even after making allowances for difference of scale, the relationship of the United States to the United Kingdom productivity is some- thing between 1.2 and 1.5 to 1. It points out the need for a number of tests to be considered, including the revision of wage structures which may currently not offer adequate incentives to operatives, or may not fully exploit the effect of the learn-ing curve; for the wider use of schemes to promote quality consciousness among employees, without conflicting with the principle of payment by results and, per-haps most important of all—(and I here take up the point made by Lord Bessborough), the improvement of production planning and control. This would ensure a smoother flow of work, a more efficient use of shop floor labour, and a well-balanced load, so that delivery dates can be met. It would allow lead times to be shortened so that stocks and work in progress would be reduced, and so less capital would be absorbed.

The industry is aware of these problems, as are the Government. We shall do our part, and I hope that both management and workers will face up effectively to the challenge before them which this Report has helped to define and spot-light. The Government have, of course, carefully considered the issue raised by the Elstub Report on the improvement of consultation between Government and industry to permit more effective long-term planning. We are coming here to the question raised by the noble Earl about the possible value of a "Neddy" for the aircraft industry. We are always ready to consider improvements, and to consider proposals which may be made for improvements in the present extensive channels of communication between Government and the aircraft industry. We feel that it would be wrong to duplicate them. They provide already for exchange of information between the Government and industry at many levels, and for the best possible information on the future level of Government purchases.

On the military side, there is the National Defence Industries Council, with its important role, and on the civil side there is the Transport Aircraft Requirements Committee which, so far as my experience of it runs, does not altogether match the definition of a committee which the noble Earl gave. Apart from this, there is a continuing dialogue—a very necessary one—between industry and the departments on forecasting of forward loading. There is, it is true, one respect in which, in the Government's view, the present arrangements are defective. No continuing channel of communication exists by which the views of the trade unions representing workers in the aircraft industry can be brought to bear on the formulation of the industry's general policy, or on the elaboration of national policy in this field. The fact that aircraft workers are organised in trade unions which, generally speaking, span a considerable number of industries, must be borne in mind when devising any satisfactory arrangements. Hitherto, discus-sions with the trade unions have been ad hoc occasions. The Government are considering what steps they can take to bring the trade unions more effectively into consultation on the industry's h problems.

The Government hold firmly to the view which Plowden so clearly expressed, that it cannot accept a commitment to maintain the industry at any particular level as a matter of policy. If there is dissent from that general view in the House then it ought to be explicitly stated. The size of the industry, as the Plowden Committee suggested, should and must reflect the amount of work which it succeeds in obtaining. The industry has shown, and is showing, that it has the technical ability, imagination and the determination that are needed to survive in the competitive markets of to-day. We are confident that those qualities are not lacking now, as they have not been in the past.

It is the task of the industry to assess the commercial market and to design its products to meet the demands of that market. The Government's policy is to do all that can be done to help civil projects which, after careful evaluation, seem to offer the prospect of commercial success and national economic benefit. As military orders have declined, launching aid for civil projects has increased. In no sense have we withdrawn from supporting the industry, but the emphasis has necessarily changed. In considering support, great attention has to be paid to commercial considerations; the sparkle of technical attractiveness alone is not enough by itself. We adopt a rigorous method of investment appraisal and the very large sums involved in the current discussions, such as those on the BAC 3–11, demand the fullest consideration. There cannot be hurried or premature decision. At the same time, the Government cannot be accused of failing to sup-port civil aircraft and engine projects. In 1964 support for these projects was £11 million. By 1966 it had risen to £37 million. In 1969 it was £86 million. While I am on the subject of figures, perhaps I might confirm the noble Earl's figures that our expenditure over the past four years on national and international space activities has been of the order of an aggregate of £120 million.

Pursuing the issue of space activities, perhaps I may say that British industry has been put in a position to obtain substantial orders for the supply of equip-ment to Intelsat, ESRO and similar inter-national organisations, as well as being enabled to develop through the national programme of space technology a grow-ing competence in techniques which will assist it to win further business in this growing market. We also give the industry much support in other forms. Through the aeronautical research programme, funds are channelled into areas of research which are likely to prove beneficial to future projects. Military programmes for development and production provide a foundation on which the industry has built a substantial business in exports of military equipment. In addition, the industry, as I think all noble Lords interested in this subject will agree, derives a great deal from the aerospace work of the Government-owned research and development establishments.

My Lords, to conclude, this is an industry in which the United Kingdom has played a pioneering part; which has attracted, and continues to attract, men of high ability. It is an industry well suited to the United Kingdom situation. It demands and generates high degrees of skill. It is one where there is a high conversion factor with an insignificant import content. The Government will not fail to play their part in the industry, and in conjunction with the industry, on the basis and within the necessary framework which I have tried to indicate. But, major though the Government's role may be, it is essentially for the industry to carry out its own long-term planning in the light of its own commercial judgment based on the best information available. The aircraft industry must, and I believe will, achieve its aims, whether they involve stability or change, primarily by its own efforts.

4.12 p.m.

LORD KINGS NORTON

My Lords, the noble Earl, Lord Bessborough, raised a number of very important matters in his wide-ranging speech, and the noble Earl, Lord Amherst, and the noble Lord, Lord Delacourt-Smith, have between them covered a very wide front. For my part, in contrast, I want to concentrate on just one sector, but one which I believe to be vitally important. The noble Earl, Lord Bessborough, remarked that he expected me to speak about VTOL (vertical take-off and landing), a matter also referred to by the noble Lord, Lord Delacourt-Smith. Indeed, I want to speak on this one matter alone, particularly in its relation to civil aviation. Judging by what the noble Lord, Lord Delacourt-Smith, said, I think he may judge me to be naïve. Well, so be it; I shall disagree with him.

One of the greatest difficulties in every field of rapidly advancing technology is to decide what to do next; where to put the emphasis; and this is very much the case in aeronautics. The possibilities are so many and the projects so numerous; how to decide what we should do our-selves, what we should do in partnership with others, what we should leave to others to do, is a many-sided problem of very great complexity. However we set about it, we should find it difficult of solu-tion; and the task of the Ministry of Technology in deciding how to distribute the £150 million per annum, or there-abouts, with which it supports the indus-try's aerospace research and development is an unenviable one. I believe, how-ever, that there are some lines of advance which, because of their immense potential, and because of the benefits flowing from their successful prosecution, deserve very special consideration; deserve, in-deed, priority. The supersonic aircraft, the Concorde, is one of those. The Government are to be congratulated on over-coming their doubts and going ahead with this wonderful project, the development stage of which is so full of promise for the future.

In civil aviation (and to-day I am con-fining myself to civil aviation) there is this one other project which I regard as of equal, and possibly greater, importance: vertical take-off and landing. One day the supersonic aircraft, perhaps the successor to the Concorde, will have VTOL. I am deeply concerned that, despite years of calculating and project design, despite the successful development of the Harrier, we appear to have done so little towards developing VTOL for civil aviation. I hope that the noble Lord, Lord Beswick, when he replies to this debate will be able to tell us that action is imminent, and that the impression of indecision (and I hope that the noble Lord, Lord Delacourt-Smith will forgive me) with which I left the meeting to which he referred was in fact unjustified. Congestion in the air is our problem, my Lords. Congestion in the air is already upon us, and it is difficult to see any way out of it, except by developing the use of short take-off and landing (STOL) and VTOL.

It is surely remarkable that, 67 years after the Wright brothers first flew, we still adopt their method of charging along the ground to get into the air. It did not take those great men long to realise how defective this method was, and in 1905 they tried to develop a system of short take-off. But their example was not followed, and as the century advanced progress towards VTOL has been in the hands of the champions of the rotating wing, the designers of the autogyros and the helicopters. Their achievements have been remarkable. But they have been bedevilled by two handicaps: one, in-evitably, the slowness in horizontal flight of the rotating-wing machine relative to the conventional aircraft; the other, un-justified in my opinion, criticism of their economy. This criticism is already being applied to other VTOL machines. This is a matter I should like to return to in a few minutes.

With STOL and VTOL now achievable by jets and by fans and by propellers, the speed of the STOL or VTOL aircraft can be as high, or virtually as high, as that of the comparable conventional machine. Its noise in translational flight need be no greater, and may well be less. As its take-off can be approximately vertical, the area over which objection-able take-off noise is distributed is extremely small compared with the area affected by the conventional take-off machine. One calculation which I saw recently makes the ratio of these two areas 1:120. Its landing can also be approximately vertical, and its landing noise correspondingly small.

In safety, I believe the VTOL aircraft will rank even higher than the convetional aircraft. Most accidents, as your Lordships will know, are take-off and landing accidents, and the operation of vertical take-off and landing is less sensitive than conventional take-off and landing. For both, the bugbear is engine failure, and for both there are means of mitigating its effect. Traffic control of a skyful of VTOL machines will be simpler than for an equal number of CTOL (conventional take-off and landing) machines, which are dependent for sustentation on careering around the sky at high speeds. The picture, with which most of us are only too familiar, of a line of conventional aircraft waiting to take off while we are waiting to take off as well will disappear, because with the vertical take-off we shall be able to achieve approximately simultaneous operations.

I suppose that the greatest contribution which VTOL will make will be in relieving the rapidly growing congestion in transport on land and in the air. Also, in general overall convenience and economy VTOL scores heavily. It makes no demands for miles of concrete runway, so that the problem of airport siting is greatly eased. Not only is less space needed, and consequently less sterilisation of valuable land, but sites can be conveniently nearer to urban centres with-out creating a noise nuisance. One can visualise a VTOL network, not only for this country but for many others, giving far greater flexibility, capacity and celerity than any existing at present, whether on land or in the air. It will be a disaster for VTOL if the economic criticism is allowed to stick.

In any comparisons that are made, credit must be given for the fact that VTOL machines do not require a runway. While conventional take-off and landing exists—and it will exist for many years to come—STOL and VTOL (short take-off and landing and vertical take-off and landing) and CTOL will all share the same airports. It will, however, be most unfair if they are all expected to share the same overheads. Some clearly are equally applicable to conventional take-off and landing, and to vertical take-off and landing aircraft, but concrete runways and all that flows from them and to them are not. The VTOL machine has, so to speak, its runway built in: it is in the capital cost of the machine and it must not be charged twice. It would of course be best if VTOL aircraft had their own airports, and no doubt when there are enough of them this is what will happen. Perhaps some of the many small war-time airfields which, when one flies about the country, one sees dotted all over the place will be found to be adaptable. But we know that, somehow or other, we shall have the network to which I have referred.

My Lords, this, or something like it, is eventually bound to happen. Of this I believe there can be no possible doubt. The doubts that do arise are of a differ-ent kind: doubts about when it will happen, and about whose machines will be used when it does happen. The "when" depends on the development end. This is an effort which we have begun—indeed, we began it a decade ago —and which has led to the Harrier. There are doubts, technical in character (with which I will not to-day trouble your Lordships), about the direct applicability of the Harrier swivelling jet System for civil use; but there are no doubts at all about the immense lead which we have achieved in the technology of vertical operation, of controlling transition from vertical to horizontal flight, of the control in the air of an almost stationary object, of indeed the handling of a new type of flying machine.

Are we going to fritter away this lead, or are we going to cash in on it? I hope that the Minister, when he replies, will tell us that we are going to do the latter, but I must confess that, from what the noble Lord, Lord Delacourt-Smith, said, I feel that I am not going to hear that answer. Certainly I believe that VTOL is potentially a tremendous money-spinner, and it could swell the exports of our aerospace industry. But time is running out. Our great Rolls Royce company has developed the vertical take-off engines, but where is the prototype being used? In Germany, my Lords, the Dornier DO 31 has four RB 162/4D engines on each side, as well as Rolls Royce swivelling jet engines which are used for horizontal flight. If we are to meet even the sort of dates that the noble Lord, Lord Delacourt-Smith, referred to, of STOL in the late 'seventies and VTOL in the 'eighties, I think we have to get a move on.

I said earlier that the supersonic air-craft would have VTOL. I cannot help recalling that this was foreseen more than twenty years ago by that great man, A. A. Griffiths, of Rolls Royce, when, at a time when I was Chairman of the Civil Aircraft Committee of the Aero-nautical Research Council, he showed my Committee a design in outline incredibly similar to the Concorde but with Rolls Royce lift engines. I believe that that kind of machine for long-distance oper-ation is inevitable. But long before it arrives, a much smaller machine will be needed for the national and continental inter-city services to which the noble Lord, Lord Delacourt-Smith, referred; and this machine, unlike the Concorde, is, I believe, a machine that we could produce ourselves and out of which we could make a great deal of money. If we do not feel we can "go it alone", then I suggest that perhaps we can collaborate with the Germans, who have given a great deal of thought to VTOL projects.

My Lords, I have spoken in simple terms about a complex subject. Our aircraft companies have applied years of study to it, and they are prepared with calculations, statistics and designs to make the case for moving towards VTOL. I know they believe that the route to VTOL passes through STOL, and I am sure they are right. But I know that they believe, too, that the ultimate is vertical take-off and landing. I hope the Government have already decided that the time has come to move from STOL and VTOL brochures to prototype construction, and I hope that the Roskill Commission, in their deliberations about the next major airport, realise that catering for conventional take-off and landing is only part of the problem and that the planning of the VTOL network is the greater task ahead. It may not be within their terms of reference, but that some group should be considering this matter seems to me to be essential. Per-haps when the noble Lord replies he will be able to say that this planning is going on now. If so it will be a great comfort—an indication that in high places the thrilling shape of things to come is recognised.

4.27 p.m.

LORD NELSON OF STAFFORD

My Lords, I rise to speak in this debate, but before doing so I must declare an interest as being involved in the aerospace industry. I also have an interest in a number of projects to which my noble friend Lord Bessborough has referred. Therefore, unlike the noble Lord, Lord Kings Norton, I must deal with the subject in general terms and not with any specific project. However, I should like to say that in my opinion the initiation of this debate by my noble friend is extremely appropriate. There are many important decisions pending which will affect the welfare and future of this industry, both in the aircraft field and the aero-engine field, so it is appropriate that we should be discussing it this after-noon.

We are discussing an industry which employs a large number of people— nearly a quarter of a million. It is one of our largest exporting industries: last year the figure was £ 305 million, or 30 per cent. of its turnover. It covers not only aircraft, aero-engines and guided weapons, but also avionic equipment of all types—airborne for navigational communication purposes and also ground equipment of every type; radar, traffic control equipment, ground handling equipment and so on. These products invade practically every part of the advanced technological industry of this country.

The industry covers a wide spectrum and, therefore, has extremely important influences. I was glad to hear the noble Lord, Lord Delacourt-Smith, refer to this in his remarks. By its very nature the aerospace industry is always probing at the limits of technical knowledge and experience. It lives by this, whether it be in the success of a military machine, by extra performance, or whether it be the success of a commercial machine as a result of extra economic attractions. It is an industry which is dealing in a growing world market; ICAO have esti-mated the civil market as growing at 12 per cent. per annum. So there are plenty of opportunities. Of course, the sums of money involved are very large indeed. But so are the prizes. And our industry has a record of successes on which to build.

I think we have to look at some of the fundamental issues which govern the problems of the aerospace industry. First of all, there is the question of the long time-cycle involved. This point has been touched upon already but should be emphasised. A civil aircraft takes up to four years to develop; a military air-craft up to eight years. That is a long time, but its market success goes on for a long time, too—possibly up to ten years. So one is looking ahead possibly longer than in any other industry—five to fifteen years. The year 1980 seems a long time off to us sitting here to-day, but our decisions will determine what share of the world's market we have in aero-space from 1985. Therefore, it is very appropriate to be looking at the subject to-day.

The cost of developing aircraft is so high that a successful project must be based on a world market; and I am glad that this point has been referred to already. Therefore, it is important to establish where the world markets are and how best we can get a share of them. Only by doing this can we produce in sufficient quantity to recover the enor-mous investment in research and development and tooling; and, if I may refer to a previous point, made, I think, by the noble Earl, Lord Amherst, on the question of means of production, only by having quantity can we afford the type of machinery of production, the type of sophisticated production control to which he referred. The two are inti-mately geared together; they can only be paid for if there is sufficient quantity of aircraft on which to recover them. I think it is worth emphasising that while the export of aero-engines is important, while the export of avionic equipment is important—and they are very big business in their own right; aero-engines export approximately £ 1,000 million a year, avionics £ 70 million a year—they cannot live on their own. It is quite impossible to have a successful aero-engine industry world-wide, or an avionics industry, unless there is a successful aircraft business on which it is based.

The sums of money involved, as I have said, are enormous. The home customers are largely in the Government orbit, whether it be defence or nationalised air lines. Therefore, whether we like it or not, Government is intimately involved in the decisions. I accept the point that the noble Lord, Lord Delacourt-Smith, made earlier on, that the industry must make its own commercial decisions; that is absolutely right. But they cannot make the whole decision on their own because of this involvement. Whether we like it or not, the Governments of all other countries involved in the aerospace indus-try are equally involved; and if we are going to stay in, we have to play the game the way they are playing it. There-fore, the problem is a joint one between Government and industry.

In looking at the market I think it is extremely important to bear in mind the outlook of the purchaser. He wants to buy proven equipment. No operator of aircraft wants to be a guinea pig. In the aircraft industry being a guinea pig is a very expensive business, so that if he can buy proven equipment, if he is offered proven equipment, this always has a tremendous attraction. Therefore to be successful in the world market we must be able to offer proven equipment. No operator wants to be left with an orphan child: in the aerospace industry there is nothing more expensive than an orphan child. The operator wants to see the development shared with others. He wants to see progressive development of his equipment over a period of years, spread over a large number of users, and also to share servicing facilities and the like. And there is nothing worse than for him to find himself with an orphan child carrying the whole burden himself.

The need for a healthy home market is thus vital, and in this, without a doubt, the United States have a big advantage. But so long as we recognise the problem we can put ourselves in the same position and be in a position to put forward proven equipment, to put forward equipment which the customer will know is going to be continuously improved upon and continuously developed. Because cost is high, we have to recognise that a national industry of a country of our size cannot do everything, and for this reason we should look to co-operative ventures. But, equally, if I may say so, we must also recognise that to maintain credibility among world customers we must ourselves do something: we cannot sit back and be always waiting for the other man to make the decision as to what to do. The noble Lord, Lord Kings Norton, has already mentioned that the most difficult problem of this industry is to decide what to do. But to be credible we must be decisive, and we must be able to make up our minds on some things.

Faced with these fundamental points, may I stress one or two questions which I think we must ask ourselves? The long time cycle, the high technological con-tent, and the important market influences on decisions in this industry make those decisions extremely professional ones; they must be made by people who have lived and slept and dreamt with the problem over many months, and discussed it with all the knowledgeable people in the business. I think we have to ask our-selves whether our set-up is sufficiently good to bring in the professionalism which is necessary to arrive at these decisions. This is extremely difficult, because so many people are involved, in one way or another, but it is an extremely professional decision, and an extremely difficult one, that has to be made.

The second thing I would like to emphasise is the importance of timing. Again, because of the issues involved the decisions get wrapped up with all sorts of other questions—conflicting priorities and the like. The aerospace world does not stand still while these issues are resolved, and a good idea today, which could be backed successfully by many millions of pounds, will not necessarily be such a good idea tomorrow: the question of the timing of the decisions is all-important. I wonder sometimes whether this is fully recognised and sufficiently stressed. This country has in its aerospace industry a great asset. It is an asset, primarily, of people, experience and skills, whether it be in the industry or in the Government research establishments. Continuity is absolutely essential to ensure the proper exploitation of these assets. A successful aerospace policy must be based on a long-term consistent policy, building up on past market and technological success; and we have many of these. I sometimes feel that the decisions are not sufficiently consistent and long-term, and that they do not take sufficient account of building upon past success. This, I am sure, must be the basis for the future, and we must ask ourselves: do we have a sufficiently coherent long-term policy within which to make the important decisions that arise?

Reference has been made to sharing with others the costs and the markets. Obviously, this is an extremely desirable objective, which gets down to the roots of some of the problems of the industry. Obviously, this approach should be pur-sued as vigorously as possible. But while we should be prepared to co-operate with others, and even in some cases to buy from others, possibly col-laborating under their technical leader-ship, we must be prepared from time to time to go ahead on our own. I do not think it is of any use saying, "We will go ahead if others will join us." I think we have to make up our own minds and say, "Here is a market. Here is a successful project. Now is the time to go ahead. "We go ahead and, if we are right, others will be quick to climb on the bandwaggon; but we shall be in the lead and we shall keep the lead. To my mind, that is essential for the future.

The problems of the aerospace industry are large, complex and costly. They involve some of the greatest brains and skills in this country. Those who have to guide and manage this industry must ask themselves the questions to which I have referred. From time to time I have heard some people ask, "Can the country afford to be in this business?". Often, it is said that we are a country without natural resources and we have to live on our brains and our skills. Surely, as this is an industry which is dependent upon brains and skill, it must be inconsistent to say that it is an industry we cannot afford to be in; that the price is too high.

In approaching the problems of the industry I think we must comfort our-selves by emphasising the contribution made by exports to the balance of payments, and I was glad to hear reference to this made by the noble Lord, Lord Delacourt-Smith. The sum of £ 300 million a year is a lot of foreign ex-change, but that is not the end of the story, because without an industry which can earn £ 300 million from exports, we should probably have another £ 300 mil-lion of imports to pay for, if we were relying on buying that equipment from outside.

Also it must be borne in mind that if we look at the national industrial activities which show the best prospects for contributing to our balance of payments, we find that the conversion factor in the aerospace industry is better than that in any other industry exporting on this scale. By "conversion factor" I mean the ratio of exported cost content to imported cost content. It is much better than the motor car industry in this respect; therefore I think it is an industry which we should support to the full. It seems to me that this is an ideal activity for this country (and I agree with the noble Lord, Lord Delacourt-Smith, on this point) as it is one which is dependent upon its brains and skills.

I hope that this debate will emphasise some of the advantages to be gained from an industry which can, as my noble friend Lord Bessborough said at the beginning of the debate, do enormous business in the years ahead, and particularly in the 1980s. But to be successful, we have to make the right decisions to-day. I hope that this debate will help those who have to guide those decisions in the forthcoming months.

4.45 p.m.

LORD WYNNE-JONES

My Lords, both the noble Lords, Lord Kings Norton and Lord Nelson, have made it clear that in our discussions this afternoon we are dealing with a very special industry, the aircraft industry, employing some-thing of the order of about 170,000 people, and having well over 10,000 people, if one includes Government establishments, working in research. In other words, it has a high content of research and development. As the noble Lord, Lord Nelson, has just pointed out, it has a high conversion factor from the cost of the primary material to the final product. Of course that is not always a good thing, because it is possible to lose as well as to make a lot of money in this process. Although there is a high conversion factor, the costs are there in the manufacture, and the costs are very largely in the manpower, the skill and the time which have gone into the whole business.

At this point I think that we should pay some attention to the remark made by the noble Earl, Lord Bessborough, in—if he will forgive my saying so—a somewhat jeremiac approach to the whole problem of the industry. He said that most things were wrong, that the Government never reached the right decisions, and then he finished, I think, by saying that he had been told by an American that British firms had not the slightest understanding of production engineering. This suggested to me a pretty grim picture; and one might as well pack up the whole industry if, first of all, the wrong decisions were always reached, and even if the right decisions were reached the manufacturing know-how and methods were so bad that nothing was ever done efficiently. I do not believe that that is the position, and I am sure that the noble Earl will not want the idea to get abroad that we are dealing with a derelict industry. We are not. We are dealing with a very active industry, and one which is capable of doing a great deal and doing it very well.

I hope that my noble friend Lord Beswick, in replying, will be able to deal with the important remarks of the noble Lord, Lord Kings Norton. I think that they were among the most important re-marks that we in this House have heard at any time on this whole subject of the aviation industry. He is a man who, ever since I can remember, has been known for reaching correct decisions, especially in fields connected with aviation. I think that his warning on VTOL and STOL is vital. VTOL has repercussions all round. It has repercussions on noise, as he has pointed out; it has repercussions on airfields. Therefore it is essential that the right decision be reached, and reached rapidly, in this field. So I hope that the Government will pay serious attention to this matter.

With regard to the rest of the industry, I do not wish to go into the problems of manufacture, of which frankly I know but little; but I do want to refer to the problems of research in this industry, because it is so much a research-based industry. We in this country have been fortunate in having some first-rate teams of research people. We have had them on the engine side; we have had them on the airframe side; we have had them in the avionics field. In all those fields we have had first-rate teams in industry. But it is important to remember that they have been substantially backed up by the resources of the Royal Aircraft Establishment, of the R.R.E., and also of places like Pystock and Bedford; and I think that we must also include Cranfield among the places which have contributed tremendously to our aicraft industry.

Those of us who have taken any interest in Concorde will undoubtedly have visited the Royal Aircraft Establishment, Farnborough, and have seen there the test facilities which were set up some years ago in order to be certain that every piece of Concorde would be fully and adequately tested. There was the large shed that was put where they are going to test (or probably now have tested) a complete frame, and where they are also testing, under conditions both of pressure and of low temperature, the fuel distribution system, which is of such extreme importance in keeping the trim of that aircraft correct. They have also —what to-day hits us in a dramatic and sad way—been very much concerned with the problems of risks in space. As many noble Lords will know, work has been going on at Farnborough on this problem of the exposure of people in high-flying aircraft to radiation; to ascertain what the risks are and what means can be taken to minimise them.

All this sort of thing has been in what I consider to be a very fine concerted research effort in this country. In spite of the scale of American work, I do not think they can say that they have bettered our research work, which has been done extremely well. This is something which it is essential that we should continue, because the aircraft industry is one that depends upon continuous major innovations. It is true that steady developments are taking place, but there was, for instance, the dramatic changeover from the piston engine to the jet engine. This was a dramatic change, and it took place in a relatively small number of years. The noble Lord, Lord Kings Norton, was involved, as I recollect, in the chairman-ship of committees concerned with this problem. One now has the problem of supersonic flight; and we also had, as the noble Lord, Lord Kings Norton, has rightly pointed out, this vital question of VTOL.

In each of these cases, my Lords, we are not getting just a minor change in aircraft. It does not mean to say that one simply takes the old model and refurbishes it, or that one puts another decor on in order to improve sales. It is not this at all. One is stepping for-ward into an entirely new field, and, because of this, research and development will remain absolutely at the heart of the aircraft industry. Therefore I would ask my noble friends on the Government Benches to pay considerable attention to this problem of research, and to make certain that, whatever we do, whatever decisions we reach (and they are difficult decisions) we should ensure that on no account do we run down the effective research effort to a point at which the aircraft industry can no longer make those jumps forward which are essential for its survival.

4.54 p.m.

LORD MERRIVALE

My Lords, I propose this evening to confine my remarks to the problem of widening the market, and, under that heading, to the question of our association with Europe —in particular with the French. As stated in the Plowden Committee Report, partnership between Britain and France offers many attractions, with our aero-space industries being the two largest and strongest in the Free World outside the United States. On the civilian side, as has already been mentioned, one can appreciate the developing joint success of the Concorde. I would not agree with my noble friend Lord Bessborough who feels that possibly the Jaguar, on the military side, is not a complete success from the point of view of the French; my feeling is that the French are in fact quite satisfied with the Jaguar. I should therefore like the Minister to consider my remarks this evening in the light of our application to join the Common Market, and in the reasonable expectation that negotiations will begin soon.

The White Paper, Membership of the European Communities, Cmnd. 3269 of May, 1967, states: All of us are aware of the long-term potential for Europe, and therefore for Britain of the creation of a single market of approaching 300 million people, with all the scope and incentive which this will provide for British industry, and of the enormous possibilities which an integrated strategy for technology, on a truly Continental scale, can create. In other words, the "dynamic" effects of membership. The Plowden Commit-tee also said that in their view, most future development projects must be co-operative ventures ", with a greater effort being put behind the policy of collaboration, and with a clearer sense of direction.

I am well aware that aeronautical partnerships are not without difficulties, but the aim should surely be (as stressed by Plowden in 1964–65) the promotion of a European aircraft industry, with Europe as its basic market. Under the heading, "Political Initiative by Britain", Plow-den recommended that Britain should take steps to arrange a conference of European aviation Ministers to formulate a common long-term policy for aircraft manufacture and procurement in Europe. Regretfully, I submit that this suggestion does not seem to have been implemented to any large extent. Maybe with the passing of years Her Majesty's Government have changed their attitude and that there is now the political will to seek a harmonising of requirements.

In another place on February 25 last, the Leader of the Opposition said at col. 1217: "I want to bring about a wider European unity "—and, as far as I can gather, the Prime Minister agreed with him when he said that he found himself in "very considerable agreement" with the first 45 minutes of Mr. Edward Heath's speech. In this context, I do not find the remarks contained in paragraph 190 of the Elstub Committee Report very helpful, namely: We also have some sympathy with the view that Britain's partners of to-day may become the competitors of to-morrow, when they have fortified themselves technically through contact with the most experienced aircraft industry in Europe. I cannot see how one is to achieve this desirable European unity in the field of aircraft manufacture and procurement if one is to accept the Committee's recommendation, on the one hand, that the industry should take the initiative for partnerships regarding civilian aircraft and, on the other hand, to take as inevitable individual Governments taking the lead in the promotion of new joint ventures regarding military aircraft. I should have thought that whether it is military air-craft or civilian aircraft—as I think was stressed by the noble Lord, Lord Nelson of Stafford—it should be a joint effort on the part of industry and Government. It would appear to me, too, that the Elstub Committee was thinking far more in terms of a purely British aircraft industry, while (as we are proposing to enter Europe) I should have thought we should be thinking more in terms of a European aircraft industry.

A truly integrated and competitive European industry is surely desirable if one considers, for instance, the recent re-marks of Admiral Thabaud in France regarding the Westland WG 13 helicopter for the French Navy. Although he was not speaking for the Government, I under-stand that his remarks were to the effect that these helicopters were too expensive. This point has also been made by my noble friend Lord Bessborough, and I hope that the noble Lord can give an assurance that the French have no intention whatsoever of cancelling their order for the WG 13 helicopter. It will also be interesting to know the position regarding the two Sud helicopters.

Another worrying question is what will be Her Majesty's Government's decision regarding the Airbus, with its good sales potential. With two designs available— the European A 300B and the British BAC 311—that are similar in market con-cept, will the Minister not agree that Her Majesty's Government are going to find themselves in an increasing quan-dary? If Hex Majesty's Government pro-ceed with their share of the funding of the BAC 311, the French will assuredly regard the threat of a "go-it-alone" British Airbus as a betrayal of the Euro-pean spirit of co-operation. On the other hand, if B.A.C.'s market research figures are correct and by 1985 there will be a demand for 1,100 Airbuses, then—assum-ing that there will also be a United States producer of an Airbus—I understand that 40 or 50 per cent. of the market will buy American, that 20 per cent. will buy the British BAC 311, and only 12 to 15 per cent. will buy the European A 300B air-craft, the rest probably being made up by the use of larger and longer distance jets.

I wonder whether Her Majesty's Government have any figures to show what they feel will be the market for an air-bus up to 1985, bearing in mind that, as I understand it, an American producer will probably enter the fray within the next six months. At this period of time, on the eve of the E.E.C. negotiations, it is most regrettable that Her Majesty's Government find themselves in this dilemma. I hope the noble Lord will be able to say that they are not really in a dilemma, but I feel that they probably are.

I should like to ask the Minister whether any cost/benefit analysis has been made by MINTECH of the BAC 311. Secondly, are we not in danger of find-ing ourselves in a curious position with Hawker Siddeley, on the other hand, completely committed to the idea of the A. 300B? That is why I am not quite sure that I agree at the moment with my noble friend Lord Bessborough, who thinks that both projects should go along in parallel. I wonder whether this is something that could be looked at again and threshed out by the Governments con-cerned. It may well be that if any investigation carried out by Her Majesty's Government showed that the BAC 311 was a superior aircraft, then, as the noble Lord, Lord Nelson, said, foreign Governments may wish to jump on the bandwagon. If European unity is to mean anything and be effective, should we not work for a common European procurement policy for our air forces and airlines, rather than work along diver-gent lines?

5.5 p.m.

LORD RITCHIE-CALDER

My Lords, "aerospace" has acquired a drama and a poignancy which we would not have foreseen 48 hours ago. I have been publicly, and still am, impenitently sceptical about the Man-on-the-Moon programme. I have never believed that its scientific value was worth the fantastic expenditure of 40,000 million dollars. Ex luna, scientia, the motto of the Apollo mission, is a complete exaggeration; in fact, it has practically no scientific value. I have always deplored it for the waste of human ingenuity and the diversion of talents which could have been better employed tackling the problems of this planet; and, indeed, indulging in the kind of exploration of technological advance that we are discussing here to-day. It is churlish even to say this at this juncture, and, like all of your Lordships, I earnestly hope that the three men will return safely; that perhaps the greatest achievement of the Apollo programme will be the prodigious technical achievement of bringing that crippled spacecraft safely back to earth, and that world concern will prove that three human lives are more important than moon rocks.

When the three men were facing the dreadful hazards of the disaster drill in the last 24 hours out there in space, Captain James Lovell said to Joseph Kerwin, at ground control at Houston, "Joe, I am afraid this is going to be the last moon mission for a very long time." His concern was not with his own fate, but with the fate of the Apollo programme. This, of course, was already being questioned. It had already been very restricted by drastic cuts which were even then rocking the United States aero-space industry and were responsible for the world tour by Thomas Paine, chair-man of NASA, the Space Agency, seeking international participation to spread the cost of the new proposals to which the Minister and others have referred.

Those proposals still have to be spelled out in terms of purpose and cost, but they would involve the development of re-usable space vehicles to take up loads of 100,000 lb. and return to earth. This would in time provide the shuttle ser-vice for a space platform carrying up to 100 men, with all the services needed to maintain them in space. The third proposal would be for orbital transport vehicles and geosynchronous payload satellites which could establish fixed positions in relation to points on earth.

My Lords, I am all in favour of return-able rockets. I am informed by Jodrell Bank that at this moment there are some 1,500 discarded rockets going around like the non-returnable bottles and throw-away containers which have become our terrestrial litter problem. I know that there is an awful lot of space, but that does not justify us in scattering litter throughout space with unpredictable effect through interference. By all means let us have returnable rockets which, when they have made 100 or so round trips, will be disposed of and decently buried where they belong. I am quite convinced that, with time and acquired wisdom, we shall have space laboratories and space stations, as staging posts for future activities and observatories for studying natural phenomena beyond the restraints and distractions of the earth's envelope.

I should hope that this would be a combined enterprise of mankind, and not another highly competitive "space race" project by, for instance, the United States of America or the Union of Soviet Socialist Republics, or any other nation. I emphasise that because ever since Sputnik 1 went up, in October, 1957, every project, every fresh advance, has been construed as a military threat or as a pretext for higher military appropriations, because the other fellow was sup-posed to have stolen an advantage. And, whether the Pact of Outer Space exists or not, a national space station would certainly be regarded as a sort of space Gibraltar, or as a base for potential military activities.

So also would space observatories and geosynchronous payload satellites. This goes for the direct broadcasting satellites, beaming programmes directly into the homes of whole regions, to which the noble Earl, Lord Bessborough, referred. This question of direct broadcasting into the homes of whole regions is, to me, very important: a cultural takeover bid unless the cultural privacy of peoples and nations is protected by making not only the programmes but also the hardware subject to international co-operation and conventions.

I do not want to hustle my noble friend the Minister, or the Government, into an agreement on the lines of Thomas Paine's tentative proposals—themselves, I should say, very much subject, and still doubt-fully subject, to the consent of Congress. I advisedly use the phrase "with time and acquired wisdom", but I hope that we shall—very emphatically shall—if the opportunity becomes real and not as speculative as it is at the moment, get in on the ground floor, both in terms of the technical contributions we could make and in terms of the need for ensuring that this would be a truly inter-national enterprise, decontaminated of suspicions and military temptations. I am glad to hear we are entering into discussions on this matter with the European Space Conference, but I think we ourselves, with our neighbours, and in-deed we ourselves without our neighbours, if necessary, should set up a study group to anticipate the kind of proposals which NASA may put forward. I mean that, because I think that in many cases we are inclined to be faced with a fait accompli of decisions or proposals with-out having carried out (and I am not saying this apropos of anything in particular) the kind of groundwork research or thinking forward which is involved.

My Lords, I should like to take up the question of vertical short take-off and landing and with it, as a corollary, the question of aircraft noise. I want to say how much I appreciate the remarks of the noble Lord, Lord Kings Norton, sup-ported as they were by my noble friend Lord Wynne-Jones. This is unquestionably the problem of the future. I agree with Lord Kings Norton that these problems of noise are greater than is realised at the moment. I am not sure that Lord Kings Norton will not think that I am a sort of neo-Luddite, but I am interested in this problem from the other point of view involved. It is a perfect example of the need for studying not the isolated units, not just the areas which are affected, not even the shortsighted or short-term demands of the customer, the man who is going to get the short-term advantage, but also the system into which these will have to fit—the cost-benefits, in-cluding the social costs and the social benefits. We have learned by bitter experience that a bright idea, however mechanically attractive or even commercially promotable, is likely to be a social liability. When one asks this question, one is likely to be regarded, as I say, as a neo-Luddite. I am often so accused, although I have never yet said "No" to a good idea. I have always said "Yes, but… "; and the "but", of course, is what are the secondary consequences.

I think we ought to look into this subject very expeditiously and very thoroughly, using the kind of criteria I have suggested; the social criteria as well as that of transport, the pure getting from here to there, or even the question, "Are we going to sell it? "—because we can and we shall; there is no question about that. This is the next phase. Thinking about it this morning, I suddenly realised that twelve years ago I put on a television programme describing practically everything that Lord Kings Norton was saying to-day. He said, rather reproachfully, that VTOL was still in the doldrums. I think that is true, it is still in the doldrums; but I should like to point out two or three things about it.

It is a most appealing idea, but it has to be remembered that it carries an enormous on-cost, or possible social on-cost, of public noise. I am sure that by now, in considering these matters, we must have realised that noise pollution is one of the biggest factors which will restrain anything from being used effectively. Therefore, if we are thinking of vertical take-off we must think of how far and how close we can get into the centre of towns and yet still be able to live with it; otherwise, we shall lose very much of the direct advantage of vertical take-off. Your Lordships and Members of the other House took great care about the heliport when an effort was made to set one up near here, because in fact you cannot live with it; you cannot tolerate it. Therefore, the amount of work which the Government have done in terms of research into aircraft noise —and it is very substantial work, as I discovered on looking into it—which is the fundamental research, basic to this subject, encourages me to believe that if we do step up the pace towards vertical take-off we shall be doing so with safe-guards against the decibels and the noise pollution. The second thing I should like to say is this. I think it was Lord Kings Norton who said that the vertical take-off vehicle has its own built-in air strip. I hope it has also got its own built-in sewage disposal system, so that we shall be able to take away from the centres of towns, or wherever it is, the waste materials—the gas, and so on— which afflict areas around present airports.

My Lords, I think the discussion to-day is something which will redound to the credit of your Lordships' House, because we have at last been thinking about some-thing which is, in terms of the 1970s and into the 1980s, a hopeful as well as a profitable and also a challenging area of development. I agree with my noble friend Lord Wynne-Jones, and indeed with Lord Nelson as well, that in this industry we have the most effective way of converting our brains and skill into something which will have enormous commercial advantage, provided, as I say, that we take into account in advance the social cost.

5.18 p.m.

LORD TREFGARNE

My Lords, we are all very grateful to my noble friend Lord Bessborough for initiating this Motion. I must say that in formulating my own remarks this morning I very nearly fell prey to the temptation to dogmatise too much, and to say that the problems of the aircraft industry were this or that and that they were soluble by this or that solution, then sitting down to a round of well-earned applause. But I am glad to be able to tell your Lordships that I resisted that temptation, and I will there-fore merely refer to what are perhaps some of the problems of the aircraft industry. Certainly their solution will not solve all the difficulties, but it may per-haps solve some of them.

My Lords, in my view the difficulties in which the industry now finds itself are perhaps, in some respects, the result of that catastrophic week shortly after this Government took office when, in one fell swoop, they cancelled three projects— the TSR 2, the 1154 and the HS 681. From the simple point of view, the cancellation of the HS 681 (which was a vertical take-off military transport aero-plane, but from which the civilian rub-off would have been great) was perhaps the largest catastrophe of all; but from a military point of view there is no doubt that the cancellation of TSR 2 was of equal if not greater magnitude.

What was it that lead to that catastrophic débacle? There is no doubt that political creeds played some part. It has been suggested—I cannot say with what justification—that the Labour Government saw in the TSR 2 the final embodiment of our imperialist past and for that reason thought that it ought to be can-celled. But I think it is fair to say that the industry themselves were to some ex-tent responsible. I think that one of the great evils under which the industry has laboured for the past twenty or more years has been the cost-plus contract. The TSR 2 had exceeded its original cost expectation by two or three times, and it seems that even then there was no limit to the amount of money that the Government might have to put up to see the air-craft into service. The same was no doubt true of the HS 681, although that aircraft was at a much earlier stage of development.

LORD WYNNE-JONES

My Lords, I hope that the noble Lord will forgive me for interrupting. I think that he is slightly underestimating when he refers to a factor pf 2 or 3 in the escalation of costs. There was a debate in this House, I believe on February 13, 1965, and my recollection from that occasion is that the costs were considerably more than that—that they were more than five times.

LORD TREFGARNE

My Lords, I am grateful to the noble Lord for that intervention. It serves to emphasise the point that I was trying to make: that the cost-plus contract is an enormous difficulty for any Government when they have to de-cide whether they must continue to invest further in a project, particularly a very advanced project of that nature. The same problem appeared, although on a smaller scale, in the case of the Beagle Aircraft Company only recently, when the Government had to decide whether it was worth investing additional funds

But we cannot exclude any manufacturer from responsibility in this matter. Had the manufacturers, even in the early days, been prepared to enter into a fixed price contract for the TSR 2 then I doubt whether it would have been cancelled. Of course, it must be admitted that at this stage in the game the manufacturers really do not have sufficient knowledge or expertise to be able to determine in advance the costs of very sophisticated projects. But that means that they must continue their studies along those lines to try to arrive at methods of deter-mining the future costs of these projects.

My Lords, I suggest that a solution might be—particularly in the civil field —for the Government to adopt the position that they are ordering prototype air-craft, perhaps one or two in number, of which they pay at least part of the research and development costs. It may be that the manufacturers' contribution, in terms of the capital they are putting at risk, is reflected in the purchase price that the Government would agree to pay. Then, after the prototype has been produced (or, in the case of a civil aircraft, certificated) there is a saleable product which the manufacturers can produce and offer on the world market and on which the Government can perhaps recover some of their expenditure by way of royalties or a levy on the sales, rather as they do at present.

I was interested to read what is called the Downey Report in connection with the determination of development costs. The manufacturers would do well, I suggest, to study that Report closely—as I am sure they will—with a view to improving their costs estimation techniques which have so often proved to be disastrously wrong. It may be asked: what would have been the fate of the Concorde project if this more severe regime had been applied to that? After all, that aircraft, too, has by a very large margin —and for fear of upsetting the noble Lord, Lord Wynne-Jones, by my in-accuracy, I will not suggest a figure— exceeded the cost which was originally envisaged. Some months ago, when the Minister of Technology in another place mentioned the increase in costs, it was a factor at least four times that of the original estimate. If, therefore, a fixed price contract arrangement had been applied to that aircraft there would have been a lot of heart-searching long ago.

But Concorde is rather a special case because not only is it even more advanced than most, but of course we are building it in collaboration with the French. It would have been difficult perhaps to secure a fixed price contract with no less than four parties: the British Government, the French Government, the British manufacturers and the French manufacturers. But even so, I think it wrong that this Government or any other Government should enter into an open-ended commitment of that nature without there being some way of calling a halt some-where in the process. I have no idea what cancellation provisions there were in the Concorde contract, but it was certainly not a fixed price arrangement. I am not for a moment suggesting that the escala-tion in price of Concorde should have resulted in its cancellation; nobody is more strong a supporter of the Concorde idea than I. But it may be that the problems that have arisen in that project have been the result of some optimistic planning at the French end of the arrangement in the early days. After all, the Sud Aviation Company had little or no experience of sophisticated aircraft of that or of any other nature.

In suggesting that this fixed price arrangement may be going somewhere to-ward solving the difficulties, it is perhaps worth while considering how it might work. If the Government are to order prototype aircraft, two things must be done: first, specifications must be settled; secondly, the price must be agreed. We have already in existence the Transport Aircraft Requirements Committee. I hope that when the noble Lord comes to reply he will be able to give us a little information about that Committee. We hear a lot of them but not much about them. I have no idea who serves on the Committee or whether the Committee's reports are made public. Certainly they never come my way—but perhaps there is no reason why they should. Perhaps the T.A.R.C. could be the vehicle for settling the specification of future civil projects. No doubt even now they contribute to the specification; but if the Government are to take the lead in ordering prototype aircraft, then the Government, advised by T.A.R.C, must take the lead in settling the specification.

Clearly, the purchase price of the air-craft would have to include the Government contribution to research and development costs; and any recovery by the Government of this investment could be made by royalties or by a levy on sales. I see no reason why a similar arrangement could not be used for military projects also; but here the difficulty is slightly greater because military aircraft are not always saleable commodities. Sometimes they are; perhaps more often they are not. It is not always in the interests of a State that the most sophisticated military aircraft should be made available to other countries. So it may be that in these cases the Government are not able to recover a great deal of the research and development costs.

It was once thought—indeed, I think that this was the view of the Committee under Lord Plowden—that we should never again embark on a large civil air-craft project (or indeed a military one for that matter) except in collaboration with other nations. At the risk of displeasing my noble friends Lord Bess-borough and Lord Merrivale I would tend to disagree. From our experiences to date, collaborative projects have not been wholeheartedly successful. The abortive A 300B springs to mind. It seems that we are not going to participate in that except through the Hawker Siddeley contribution. Although we are, perhaps, temporarily blinded in the euphoria of the Concorde's successful trial programme, we must not forget that it is very much behind schedule, and, as I have already said, is also much more expensive than we originally anticipated. I tend to think that at least the increased costs of the programme, if not the in-creased time-scale, is a result not of collaboration with the French in particular but of collaboration in general.

The A 300B which I have already mentioned, the Anglo-European aircraft, with which the French are not involved at this stage, was, in my view, an ill-conceived venture from the start. In the opinion of many people it had a lot of technical difficulties. But Hawker Siddeley have now got the contract to manufacture certain of the components. We understand that this is very much on a commercial basis and that they are not risking any capital in the venture. If, therefore, we are to have a stake in the future subsonic aircraft industry, the BAC 311 seems at this stage to be the only contender. My noble friend Lord Kinnoull has asked a number of Questions about this aircraft in the past and I have no doubt that he will mention it again to-day, and I hope that the noble Lord, Lord Beswick, will be able to give us a clear indication of the present position regarding the aircraft. Once again may I thank the noble Earl, Lord Bess-borough, for moving this Motion, and I look forward to hearing the Minister's reply.

5.32 p.m.

LORD GRANVILLE OF EYE

My Lords, I did not intend to intervene in this very interesting, although technical and rather complicated, debate on aircraft procurement, but I should like to join in the expression of sympathy and hope for the three young men in the Apollo 13 spaceship who are fighting their way back to what one hopes will be a successful splashdown.

I listened to the interesting speech from the noble Earl, Lord Bessborough, who took us through the whole range of the very complicated problems which MINTECH and the Government have to face as a matter of policy. We hold these debates almost every year; they are like a hardy annual. I am not sure what we really get from the Government in this annual technical review, or what, in the end, we derive from the debate. I think that the highlight in the debate to-day, and the matter upon which more emphasis has been placed than on any-thing else, is the question of the vertical take-off aircraft. It was referred to specifically by the noble Lord, Lord Kings Norton, who spoke with considerable knowledge. I hope that when my noble friend Lord Beswick replies he will be able to define more closely the attitude of the Government and their policy for the immediate future with regard to this very interesting and hopeful project. I know that my noble friend the Minister of State dealt with it in his speech, but he rather took the matter in his stride and, in effect, he has been asked in sub-sequent speeches whether the Government can more clearly define their attitude to this project.

Of course, the Government and the Ministry have to face claims from many directions in respect of a variety of ventures. A good deal of research and technical development goes on and people believe in their own projects; but it is the responsibility of the Government and of the Ministry concerned, bearing in mind the amount they have available to spend, to decide which "winner" to back and which project the Government will support. With the noble Lord, Lord Kings Norton, I hope that the Government will bear in mind the tremendous export potential of the VTOL. After all, when we are talking of the balance of payments, and of exports and imports, it should be remembered that when we export technology or even hardware we are not merely exporting packets of some-thing but importing large sums of money which are of considerable help in solving the problem of the balance of payments. My noble friend the Minister of State said that this year the aerospace industry has reached an export total of £300 million; but he said a little later that our imports of aircraft from the United States of America were, I think, £280 million, or £270 million.

THE EARL OF BESSBOROUGH

I said that.

LORD GRANVILLE OF EYE

My Lords, I should like to ask my noble friend what is the policy of the Government regarding the purchase and importation of American aircraft. Is it too late to have another look at this matter? I am not going back into the history which was referred to by the noble Lord, Lord Trefgarne, or asking whether it was right to take "off the peg" from the United States and pay when we could— although one notices in all the statements made by the Treasury that we are con-tinually repaying loans and paying for these aircraft. In this country we have an aircraft industry with a proud and wonderful record of achievement in design, technology, research and develop-ment. Only too often in the past other nations have cashed in on this. Why should we have to depend on the United States of America? It is true that it has the largest market in the world, which gives it a big start in the matter of sales, but why do we have to go on purchasing these aircraft? Has not the time come for MINTECH and the Government to reconsider this matter and to get together with the British aerospace industry to see whether we can give more of these projects to our own industry?

The noble Lord, Lord Trefgarne, referred to Beagle. It is tragic that this country, which almost pioneered the light aircraft industry, should see the disappearance of this company and the passing of anything like a real place for us in the light aircraft industry, in respect of both the home and the export markets. Should this be allowed to disappear, and the efforts of Mr. Peter Masefield and his colleagues prove to have been in vain? I should like to ask whether my noble friend can also tell us about the position of Handley Page, a great and famous company which pioneered many projects in the past. Often that was done under the umbrella of individualism; nevertheless the company had a great name. There have been in the Press from time to time reports of discussions, again with the United States or some particular concern in the United States, about whether this company can be resuscitated or taken over.

These debates are technical, complicated and difficult for us to understand. Has not the time arrived when we should be better served, or at least served equally as well, if we had a specialist committee, comprising representatives of both Houses of Parliament, which could meet from time to time, rather like a Select Committee? The Minister of Technology could appear before it with specialists from his Department, and the committee could be told something of what the Government have in mind; what is going on to-day and what will happen in the 1980s and the 1990s. It is difficult for ordinary Members of Parliament and Members of your Lordships' House to grasp these complicated problems. Perhaps it is true that only the Government and the Ministry know all the facts and that it is their responsibility, but at any rate I make the suggestion to my noble friend and hope that he will give some consideration to it.

5.40 p.m.

THE EARL OF KINNOULL

My Lords, we have had a fascinating debate this afternoon and I feel that my noble friend Lord Bessborough is to be congratulated on two counts: first, upon introducing his wide-ranging and import-ant Motion with such skill and eloquence and, secondly, upon encouraging and attracting a number of specialist Members of the House to take part in the debate and give the House the benefit of their considerable knowledge and experience, so widening its scope. If I may, I would mention two of the speeches which I particularly enjoyed, that of the noble Lord, Lord Kings Norton, on the future of this important new technology of VTOL, and that of the noble Lord, Lord Nelson of Stafford, who I am afraid we do not see very often, on the Government's partnership with industry. I hope that the Government will give careful thought to the speeches of both noble Lords.

As I have said, the House is grateful to my noble friend for initiating another of his technological debates, and for those amateur enthusiasts like myself who are unwise enough to take part my noble friend's Motion has proved a good recipe for work. During my researches for to-day's debate, I came across the debate which my noble friend initiated in 1961 on space technology. Although the terms of that debate were a good deal narrower than the terms of to-day's debate, the message of most of the speeches made on that occasion was to press the Government of the day not to allow our aerospace industry to slip from the top world league through lack of Government financial support. Their message went further: to say that as a nation we cannot afford to let that happen.

Since then, we have had a number of Committees which have inquired into the industry and its viability, notably the Plowden Committee and, more recently, the Elstub Committee. Each in turn recognised fully the national importance of the industry and urged Government support to keep it competitive. Speakers to-day have repeated the message of support. But I suggest that there have been two important caveats. The first is that, despite the short-term glow of a record year for exports for the industry, the long-term future is shadowed by the lack of projects in the pipeline. The second is that the need for stability of the industry is now paramount for its future prosperity. I hope that both these caveats will strike a warning bell through the corridors of power in White-hall.

I believe that one of the values of looking back to my noble friend's debate in 1961 is that it showed the changing conditions of the industry. I think that one particular note comes through, and that is the rise in the cost of development. This is a matter which concerns the whole industry, because not only has the cost gone up but also the foundation on which the industry survives— the home market—has not progressed in keeping with the rising cost. The evidence of this change can be seen by the fact that research and development costs for the Spey engine totalled something like £20 million, whereas research and development costs of the next generation of engines, the RB 211, looks to be approaching not far off £100 million.

This large increase in capital sum requirements for the development of the industry emphasises the urgent priority need for a stable long-term policy. It leads one to feel, as things are going to-day, that the industry is poised at the crossroads: one road leading to success, and the continuance of the industry as a world aero industry, and the other leading to a narrowing cul-de-sac, to relegation to the role of sub-contractor. I do not for a moment underestimate the difficulty of choosing the right path, and I do not doubt the Government's good intention to do so. What I fear, with the benefit of hindsight and with the experience of the last six years of Government policy, is whether or not: the Government are capable of choosing the right path.

As others have reminded us already this afternoon, in the last six years (and I am not trying to make any political point out of this) the industry has been dominated and bedevilled by one remarkably consistent ogey—cancellation. Never, I believe, in the history of the industry have so many cancellations taken place over such a relatively short time. They were not limited to British projects only: they have covered, as we know, collaboration projects with France and orders for American military aircraft, the ill-fated F 111. In fairness to the present Government—and I want to be fair—I do not claim for one moment that all these cancellations were of their doing. Indeed, one could hardly feel that they were party to the cancellation of the future core of their defence policy, the A.F.V.G. project. Nevertheless, six cancellations of major aircraft projects in six years has, I submit, had a crippling effect on the industry which leads, in turn, to a feeling of considerable instability and, as my noble friend has pointed out, has been the direct cause of the long-term projects in the pipeline looking pretty thin on the ground.

Another worrying factor when examining the present state of the industry (this again is a matter to which my noble friend has referred) is the trend of the increasing value of aircraft purchased abroad. The noble Lord, Lord Granville of Eye, commented on this. Although it is a tremendous tribute to the industry that last year's exports were £304 million, it is disturbing to see this trend of purchasing from abroad aircraft and their spares, and aero engines and their spares. I have compiled a list which shows that in 1964 we imported aircraft and spares, engines and spares, to the value of £43 million. Figures for ensuing years were: in 1965, £47 million; in 1966, £57 mil-lion; in 1967, £108 million; in 1968, £240 million and in 1969, £273 million. The figures for the last two years include the orders for the Hercules and Phantom. If these figures are correct (and perhaps the noble Lord, Lord Beswick, will confirm them), I believe that this trend of purchasing is a matter which Her Majesty's Government should look into closely. Perhaps I should add that the figures I have quoted do not include the order for jumbo-jets.

Many of the speakers this afternoon have drawn attention to what I believe are the two major issues facing the industry: the future and improvement of collaboration, and the future of the Government's role in participation. My Lords, in the past the theoretical logic of collaboration was considered by many to be the saving answer to the increasing problem of rapidly rising costs in development. If one traces since then what has happened in practice, as my noble friend Lord Trefgarne mentioned, we find that with our European partners we have entered into six major aircraft projects— Concorde, Jaguar, M.R.C.A., A.F.V.G., the European Airbus and helicopters. Two of these projects have collapsed; one appears to have partially collapsed, and the remaining three are continuing, I hope successfully.

Besides the success or failure of any particular project, we know also, so far as our home industry is concerned, that there has been a great deal of disquiet at the role in which the Government have often placed our home industry in these joint collaboration ventures. Despite the fact that we are the largest and most advanced industry in Europe, we have found that the design leadership has been awarded on no fewer than four out of six occasions to our European partners. I think that we have only one design leadership which is solely ours, and that is the WG 13 helicopter, and we share M.R.C.A.

One might ask oneself what is the significance and importance of design leadership, and whether it is just a matter of national pride. My Lords, I believe that the answer to that question is clearly shown in the equipment industry. Per-haps I may quote from the most recent issue of Flight International. In a leading article, this ever-watchful technical journal draws attention to a statement by the Electronic Engineering Association. This Association said in their statement: In the case of the Jaguar, extreme pressure was placed upon industry to negotiate manufacturing arrangements in France. Any British company attempting to negotiate such an agreement was placed in a position of negotiating from weakness as it was a prior condition that manufacture must take place in France in order to have equipment specified on the air-craft. The terms imposed on British industry were such that an enormous amount of know-how and development experience was given to France without any corresponding benefit to the industry. I think this might be a good opportunity for the noble Lord who is to reply to comment on this statement.

Collaboration, as my noble friend has said, has had a chequered career, and I am sure that we all hope that in future it will be more successful. I was interested to see in the Elstub Committee's excel-lent Report that they suggested possible improvements in the collaboration arrangements. In particular, it suggested that industry itself should organise collaboration, backed up closely by the Ministry of Technology. I was particularly glad to hear the noble Lord, Lord Delacourt-Smith, say that he welcomed the Committee's Report. I hope that this suggestion may come to fruition.

While on collaboration, I should like to ask the noble Lord, Lord Beswick, what is the latest position in regard to the progress of the M.R.C.A. project. When, for instance, is the anticipated time that it will come into service? What are the current estimates of cost involved for Her Majesty's Government? And what contingency plan, if any, have the Government if this project should ever be abandoned?

The noble Lord, Lord Nelson of Stafford, has already given us the benefit of his considerable experience on Government participation. The immediate issues facing the Government, as I see them, are really two-fold. The first is support for the airframe industry over the BAC 311 project; and secondly, support for the aero-engine industry. These, I know, are problems with which the Government are at grips at the moment, and one appreciates that there are no easy decisions. Nevertheless, as my noble friend has said, if we fail to support the BAC 311 project, after pulling out of the European Airbus project, the industry for the first time in its history will have dropped out of the manufacture of subsonic aircraft.

As to the position of Rolls Royce and the support that they require, I personally have a good deal of sympathy with their case. They are, as we all know, a fore-runner in a highly competitive inter-national business. Their main competitors, Pratt and Whitney and General Electric, receive 100 per cent. support as to the development of their military engines, and I am told that they receive something like 90 per cent. support in the development of their civil engines. As we know, Rolls Royce only receive 50 per cent. support in the development of their civil engines. The continued support by Her Majesty's Government both of the airframe industry and the aero-engine industry I personally consider is a fact of life which the Government must face.

Of all the many aspects of the industry touched on to-day, there is one section in which I believe the Government have shown a singular lack of leadership, and that is the light aircraft industry. The collapse of Beagle Aircraft Company has already been mentioned. This represented some 90 per cent. of the industry. The subsequent mishandling by the Government of this collapse has already been discussed at some length both in your Lordships' House and in another place. The effect of the collapse of this company has led, I believe, to a very serious loss for the industry in the next decade, unless the industry in some way is able to pick up the valuable work Beagle have done over the years. I hope that when the noble Lord, Lord Beswick, comes to reply he will be able to give us some encouraging news as to exactly how this industry is to recover the developments of the Beagle company.

May I now turn briefly to two specific aircraft projects, and to seek further in-formation on them from the noble Lord when he comes to reply. The first is the Harrier. I should like to know whether the noble Lord can tell us how soon the Army, who I gather have now taken over responsibility for the Fleet Air Arm, expect to reach a decision from their recent evaluation of the Harrier in its Fleet Air Arm role. Secondly, as regards the development of the Harrier engine, Pegasus 15, can the noble Lord advise us whether the Government are continuing to support this development?

The second project on which I seek further information again concerns helicopters. As others have mentioned, disturbing rumours have been circulating as to the possibility of the French Navy pulling out of their proposed order for 80 Westland helicopters. One is re-minded that Westlands have the design leadership in this project. I would ask the noble Lord to clear up to-day the position as to this rumour, and say whether the French Government have given an assurance that it is malicious gossip which has no foundation.

I should like to refer, also quite briefly, to Lord Kings Norton's speech on VTOL. AS Chairman of the Air Registration Board, the noble Lord speaks with particular knowledge, and I believe is a worthy champion of this new technology. I was particularly struck by two factors of VTOL as he explained it. The first is the immense advantage of environment around airports; and the second, that the German interest is such now that they are developing this technology on some scale. We know that Hawker Siddeley have for many years carried out pioneer-ing work on this technology, particularly with the Harrier. I think it would be of general interest if the noble Lord, Lord Beswick, could advise us whether any development contracts have been awarded to Hawker Siddeley in the development on the civil side of VTOL.

My Lords, this interesting debate has covered a wide area of all the many aspects of the industry, from satellite communication, space shuttle, VTOL collaboration and Government participation. It comes, as others have said, at a time when our thoughts are anxiously turned to the safe return of Apollo 13: and I should like to be associated with the words of my noble friend Lord Bessborough.

The industry in certain areas is faced with a number of acute decisions. It is not, of course, alone in this. Other countries have had similar problems. For instance, French aerospace exports have declined in the last year where ours have risen by £12 million. We know that the United States airframe industry is also facing a market recession, albeit a temporary one, with their home airline customers. My noble friend asked at the beginning of the debate what was to be the future role of our aerospace industry. This, I believe, above all else, is the key question we need to answer to-day. And if the Government can answer this question, the next most vital one is whether they can show us their plans to give this industry the stability it requires. I believe that this has been a valuable debate which the House, I am sure, is grateful to my noble friend for initiating. I hope that in winding up, the noble Lord, Lord Beswick, will be able to make it the more valuable by giving some clear answers to the fundamental questions that have been posed to-day on the future of this industry.

6.1 p.m.

LORD BESWICK

My Lords, there have been about as many questions asked in this compact debate as there are systems in the comparatively narrow fuselage of the Concorde. I am sure that I shall not be expected to answer them all, but if I am allowed I will answer some by writing afterwards. I know that my noble friend Lord Delacourt-Smith has been taking a careful note of everything that has been said this afternoon. As the noble Earl, Lord Kinnoull, said, this has been a valuable debate, an interesting debate and, above all, a timely debate. I congratulate, too, the noble Earl, Lord Bessborough, who initiated it. I congratulate him not only on the timing but for the substance of what he said in his speech.

Ever since the Second World War when this industry, above all others—as Sir Stafford Cripps used to say—saved the country, the industry has been facing real or imaginary crises. Even the extravagant language used by the noble Lord, Lord Trefgarne, has been exceeded on occasions by critics who have said that successive Governments—Conservative no less than Labour—were about to bring the downfall of the aviation industry. The corridors of the Commons have been worn absolutely smooth by both workers and management who brought along various complaints and warnings that unless this or that were done the industry would collapse. I will say nothing at all of the coincidental persuasion that has been tried in other parts of Whitehall, not to mention the persuasion that has also been applied in some not inexpensive restaurants.

Despite all this gloom, the facts are, as stated by my noble friend, Lord Delacourt-Smith, that this industry today provides employment directly for 245,000 people. It has an output of £500 million a year, and an export record last year of £300 million. This, as was said by the noble Lord, Lord Nelson, is something of which we can all be proud. We have to set that against the background of some of the quite inconstructive criticism that is made about this Government, or about others. Having said all that, I am bound to add that in my view the industry today is in all probability about to pass through one of the most decisive phases in its history. It is not so much the immediate future that is at stake—my noble friend gave a very full report on that account—it is in the longer term, as the noble Earl, Lord Bessborough said, that the certainty is less clear. This is an industry in which long-term planning is essential. I can think only of forestry as being another industry in which one has to plan far ahead before results are seen.

One of the two most interesting statistics that I have come across in all the material that has been given to me for this debate is that one-third of all sales of this industry to-day are of spares, replacements and modifications of aircraft in service. That means that up to one-third of current sales stem from decisions initially taken up to 15 or more years ago. Noble Lords, understandably, are anxious, as the noble Earl said, that decisions should be taken now which will provide orders for spares, et cetera, in 15 years and more from now. Much of what my noble friend said in his most comprehensive and authoritative speech was designed to show that the proper share of those decisions must be taken by the industry itself. The truth is that over the years the opportunities of the industry have increased in almost direct proportion to the problems. Many of the opportunities are themselves the problems. The opportunities are increased by the immense development of air transport and the extraordinary—almost limitless— potential offered by space for communications of one kind or another.

Perhaps I can deal with the problems in more detail. One of the problems is that of amenity, raised by my noble friend Lord Ritchie-Calder and others. He asked about aircraft noise, and of course this Government is closely concerned with its civilised duty to reduce aircraft noise. My right honourable friend in another place has laid a draft Order in Council which will permit enforcement in the United Kingdom of the aircraft noise standards which have been agreed upon recently by ICAO. The first fruits of the increasing research into the wide range of technical problems involved, on which the Government are currently spending about £1¼ million a year, will be realised in the new technology engines of which the RB 211 is an example.

Then there is the problem, which is also an opportunity, of getting aircraft off the earth without this ever-lengthening carpet of concrete. We must consider very carefully the remarks of the noble Lord, Lord Kings Norton. In some respects the noble Lord seems to have emerged as the star of the debate. My noble friend made a general comment on the prospects of VTOL and STOL, and to that general assessment I add that the Roskill Commission are well aware of the possible long-term implications of vertical and short take-off operations. The noble Lord went into some formidable detail, and it ought to be considered against a fuller background of the facts. The noble Lord referred to the efforts which the German Government are making in this field, in particular with the Dornier 31. We had long discussions with the Dornier company and the German Government in the period 1964–65, when we tried to set up a joint research programme involving collaboration between the Dornier company and H.S.A., and the Federal Republic and Her Majesty's Government. Those came to nothing because of the financial pressures on our aeronautical research programme and the fact that we could not anticipate in the foreseeable future any requirement from the R.A.F. for an operational VTOL transport aircraft.

But that has not meant the end of our own flight research in this area. On the contrary, we maintained flight research on the P1127, which of course was the basis of the Harrier and the Short S.C. 1 aircraft, and both of these were fitted with advanced control systems. Germany did not possess those research vehicles, and her need, therefore, to get flight experience on the Dornier 31 was essential to her. The aircraft, if I could use the term—although it is not a developed aircraft—is now flying, and some may have seen it, and heard it, at Paris last year. It is a prototype vehicle, as will have been evident from the noise level generated.

For our part we regret that we were unable to collaborate on the Dornier 31. Nevertheless, we believe that our own research programme has put us in the position where we are well placed to develop any operational vertical or short take-off transport aircraft, whether with civil or military market prospects, to the stage at which an operational aircraft can be sensibly launched. We are exploring, with full support from the aircraft manufacturing industry, from the airlines, from the British Airports Authority, and others, the way in which the economics of the market, the ground environment and technology of VTOL aircraft can be brought together to produce a viable civil transport system. The officials of the Ministry of Technology are also holding talks with their German and French colleagues on these subjects.

The noble Lord said it would be a disaster for VTOL if the economic criticism is allowed to stick. But, of course, economics are at the heart of this matter. We cannot afford to develop at great cost a system which offers a service at a fare which passengers refuse to pay. However, any vertical or short take-off transport will almost certainly be based on a Rolls-Royce engine technology, springing from the engines used in the Harrier, the Dornier 31 and the SC 1. Credit ought to be given to the Government for the fact that those engines are in those aircraft as a result of the support we have given.

The fact that we have not ourselves built an aircraft like the DO 31, or joined the Germans in the DO 31 programme, does not mean that we have insufficient technical background. In fact, our technology in this field is second to none. We are expecting proposals from Rolls-Royce for a new lift engine of advanced design, the RB 202, and we are ready to consider proposals for launching aid, provided that they meet the usual economic criteria. I might also mention the advanced military lift engine, the programme of which we are on the point of completing with the Americans. This is a joint Rolls-Royce/ Allison development which was going to be used for the U.S. F.R.G. fighter, the AVS. I think the noble Lord will agree, therefore, that it is not fair to draw the conclusion that in this country nothing has been done in this field.

The problem of efficient production was stressed by the noble Earl, Lord Bessborough, and answered, effectively, by my noble friend Lord Delacourt-Smith; and I do not think I should take up time in dealing with that matter fur-ther. Logically, following the problems of productivity is the spectre of cost escalation. I doubt whether any other industry has contrived to get its customers to accept such open-ended commitments as this industry has with some of its Government customers. I shall never forget the occasion—and the noble Lord, Lord Trefgarne, might well at some time look back at the history of ten or so years ago before he makes the kind of remark he made this afternoon—when Mr. Julian Amery, in the House of Commons, in the course of a supplementary answer to a question, announced that the Concorde cost had doubled from £70 million to £140 million. Never in the whole history of Parliamentary accountability has so big a commitment been announced in such a surreptitious, manner. For two decades, at least, successive Governments have claimed to have got the measure of this cost escalation problem. But from all the evidence it seems that costs have never been so successfully under control as they are now, thanks largely to the work of Mr. Downey and the Report to which the noble Earl, Lord Bessborough, and my noble friend Lord Delacourt-Smith have referred.

I was asked a number of questions about specific aicraft by the noble Earl, Lord Bessborough, and by the noble Earl, Lord Kinnoull. Lord Bessborough asked about the shopping list which the S.B.A. set out in Into the Seventies. On the military side, the S.B.A.C, understandably, put the Hairier at the top of the list. Like the Nimrod, it has newly entered into R.A.F. service. With the Harrier, the R.A.F. will be the first Air Force in the world with a VTOL close support capa-bility—a fact which the noble Lord, Lord Kings Norton, I am sure, will be happy to weave into his next speech. Develop-ment of the dual version of the Harrier is coming along, and deliveries to the R.A.F. should start shortly.

I was asked about the Pegasus engine by the noble Earl, Lord Kinnoull. I would tell him that a programme is in hand to up-rate the Pegasus engine and this will substantially improve the air-craft's range and payload. These characteristics will ensure the Harrier a great future with the R.A.F. and the U.S. Marine Corps and should also mean a place in the Air Forces of many other countries. I was asked about the Army and the Harrier. Frankly, I did not follow what the noble Earl seeks there, be-cause it is the R.A.F. who operate the Harriers and, as I have said—

THE EARL OF KINNOULL

My Lords, if I may interrupt the noble Lord, what I was seeking was the Fleet Air Arm requirement of landing in force on the deck of an aircraft carrier.

LORD BESWICK

My Lords, I shall have to let the noble Earl know about that. For strike and reconnaissance at the longer ranges, the R.A.F. will not have a completely new aircraft but an adaptation of the Buccaneer 2 which, of course, has already proved its worth with the Royal Navy. But, looking a little further ahead, the next item on the S.B.A.C. shopping list was the Jaguar. The Anglo-French Jaguar will provide the R.A.F. with a supersonic strike air-craft to succeed the Phantom FGR 2 in the ground attack role, and the Phantom so released will then be available to take over the air defence tasks of the Lightning. The collaborative development of the Jaguar and of the new Rolls-Royce Turbomeca Adour engine is well advanced, and initial production orders have been placed by the R.A.F.

For the longer term, we have the M.R.C.A., about which I was asked. For the R.A.F. the intention is that the M.R.C.A. should, in the first instance, replace the Vulcan and Buccaneer in the overland strike and reconnaissance roles. Later, the air defence version will succeed the Phantom, and finally we envisage that the M.R.C.A. will replace the Buc- caneer for maritime strike tasks. This concept of intimate collaboration with our allies, and the use of variants of a single basic design to fill a number of different roles, give this project a key place in the future both of the aircraft industry and of military aviation in this country.

I should mention two other aircraft which have supporting but none the less very important roles. First, there is the Jet Provost 5, now in production for the R.A.F. and already in service at the C.F.S.—the latest version of a highly successful family of trainers. I should mention here also that the ground attack version of this aircraft, the BAC 167, or the Strikemaster as it is called, is proving very attractive to a number of overseas air forces. The third stated requirement on that list is for a super-sonic advanced trainer. We have it in the Jaguar. We are planning a replacement for the Gnat, Macchi, and the Jet Provost generation of trainer aircraft, and we cannot yet say firmly whether this will be a collaborative or a national project and what precise shape it will take. The question of initiating further military projects does not yet arise.

So much for the military aircraft, which matches the list to which the noble Earl referred. But perhaps I ought to say a little more in response to what I was asked by the noble Earl, Lord Kinnoull, about both the Jaguar and the M.R.C.A. The Jaguar development started in 1966 and, on the whole, it has gone remarkably smoothly. It has been held very close to the cost, as my noble friend said, and also to the timescale estimated nearly four years ago. The aircraft and its engine are now in production. At the recent meeting between the Defence Secretary and Monsieur Debré both sides reaffirmed their faith and interest in the project; they have entered into a commitment to order 200 aircraft each, and we also believe that it has a very good export potential. Very recently there was the unfortunate crash with the first proto-type, and there were Press comments, particularly on the other side of the Channel. A board of inquiry is sitting at this time to try to establish the causes of that unfortunate accident; and I am not going to go into further details about it this afternoon, obviously. But I would say—and I say this quite firmly—that we entirely reject suggestions, which have appeared in some of those organs of the Press, that the aircraft is too heavy for the engine or that it is not capable of landing safely on one engine.

The position of the M.R.C.A. project is that the Germans have come to the conclusion that the proposed single-seater version will not be cost-effective for them, and they have therefore decided to take the two-seater version that has been designed for the R.A.F. On the other hand, they are proposing to take it in smaller numbers—400, instead of 600. This decision has important implications for the project, and this is now being carefully examined by the three collaborating countries—ourselves, Germany and Italy. We hope very much that Italy will continue in the project, either with the one-seater version or, like Germany, coming over to the two-seater. We hope, too, that all three countries will be in a position to launch the development stage of the project within a month or so. I was asked by the noble Earl about May 1. I cannot find any significance attaching to that date, but it is hoped that there will be a decision within a month or two. We shall be ready to come to a decision, but of course we cannot say definitely what we shall do until we have had discussions and know what our partners are going to do.

The project itself is of enormous significance, militarily, industrially and politically. If we and the Germans and the Italians can agree together upon precise operational requirements, and upon the precise definition of the aircraft, and can successfully develop and produce this aircraft, there will be about a thousand aircraft needed in all. This will be a considerable achievement. As I have said, the Rolls Royce RB 199 engine has already been chosen to power the aircraft, and I would say to the noble Earl that the British avionics firms will have a full opportunity to tender for the various items of equipment.

To turn to engines, we have the RB 199 adopted for the M.R.C.A., and this of course is an absolutely vital and crucial decision for the aero-engine industry in this country. We agree on the importance of a sound R and D programme in this field, and continuous discussions take place with the Rolls Royce company. The present programme in such fields as high-temperature technology, noise, aero-dynamics, new materials, et cetera is one with which Rolls Royce are in entire agreement, although of course the company want to spend more money in certain directions. There is the usual conflict here between all that we should like to do and all that we can afford to do; and the same applies not only to the Government programme but to the company-financed programme as well.

In the civil aero-engine field, Rolls Royce again have carried the flag for us into the American market. In the face of the keenest competition from their American rivals, they were able to sell, on merit, their new advanced technology engine, the RB 211, for the Lockheed Tristar. But this achievement, notable though it was, is an initial breakthrough and not the end of a campaign. The follow-through is all-important.

I was asked by the noble Earl, Lord Bessborough about new orders for the industry. I find that for the first nine months of 1969 the main airframe, engine and guided weapons manufacturers received, net, new orders amounting to about £140 million. I was asked (I think by the noble Earl, Lord Kinnoull) about the figures for research and development for the WG 13. I cannot give those because it is not customary to give defence figures of that kind.

The noble Earl, Lord Bessborough, asked certain questions about space. I think that in the main they were answered by my noble friend Lord Delacourt-Smith, but the noble Earl made some criticism about the slowness with which we responded to the invitation of the Americans to discuss NASA'S projects. I think that criticism was unfair. In fact we were the first off the mark, and responded before the French or the Germans. I was asked about the recommendation of Nisc concerning the creation of a unified European space organisation. The fact is that the Government declared their support in principle of such an organisation at the Bad Godesburg Conference in 1968. We played a full part in the subsequent examination of proposals for a unified organisation, and a study group is now working and we are working with it. The noble Earl, Lord Kinnoull, quoted certain figures of imports in recent years. If it gives him any satisfaction I am glad to confirm that he was accurate, but since he probably got them from the same source as myself, I am not surprised.

I was asked by the noble Earl, Lord Bessborough, by the noble Lord, Lord Merrivale and by the noble Earl, Lord Kinnoull, about the Anglo-French helicopter package. Perhaps I may set out the situation about this package, as it has aroused a certain amount of interest. The agreement covered the development and production of the SA 330, which is being developed by Sud Aviation and which is required for the R.A.F. The second helicopter in the package is the SA 341, a light observation helicopter which is also a Sud development, as we know, and which we require for the British Army. The third helicopter, coming last in time, is the Westland WG 13. That is a general-purpose utility helicopter which is required for all three Services.

The package as originally designed contained a fair balance of advantage for both sides. It provided a means of supplying the forces of both countries, at reason-able cost, with the helicopters they needed, and it formed a powerful industrial alliance between the helicopter industries, including the small industries, of both countries. However, there have been some serious cost increases, both in develop-ment and in production, on both sides of the Channel, and both countries have had to review their prospective orders for the three aircraft. Last summer the French decided to cancel their Army requirements for the Attaque variant of the WG 13, and in view of their lessened interest in this development, they asked for a revision of the cost-sharing arrangement. We met them on this point, and last November a revision of the package was arrived at which we thought was fair to both sides. However, the French have recently informed us that, owing to further budgetary difficulties, they will be forced to reduce their requirements for the SA 341, and they have asked for a further revision of the cost-sharing arrangement on the WG 13. This would mean throwing a further considerable financial load on the United Kingdom. The officials of the two countries are now urgently engaged in a further review of the package, and I am not able to-day to say what the outcome will be. The French Government have stated that they wish to continue with the package, and I say that, so far as we are concerned, so do we.

My Lords, I was asked one or two other questions. The noble Earl, Lord Amherst, asked about overseas sales techniques. I thought he made a relevant and cogent observation. All I can say to him is that I am sure that both the industry and the Government are very conscious of the need for a carefully planned overseas sales programme, with up-to-date sales techniques, and no doubt they will take into account what the noble Lord himself has to say. The noble Lord, Lord Merrivale, asked me about the possible market for the airbus, but I pro-pose to come to that later.

My Lords, one theme in this debate has been the importance of international collaboration. It was brought out by the noble Earl, Lord Bessborough, when he opened the debate. My noble friend Lord Delacourt-Smith emphasised at the outset that the economic facts of life led us in that direction. I have myself been arguing the case for at least twenty years. Throughout that time, research and development costs have increased, and also the size, weight, speed and com-plexity of the product. All this argues for collaboration. Concorde, I suppose, was the classic case of collaboration. Even if we took the initial figure of £70 million, nothing could have been contemplated on a national basis. Nevertheless, there are other aspects of real life which we have to take into account. The initial costs of the Concorde had to be shared if they were to be borne at all, but it would be a somewhat blinkered individual, I suggest, who would argue that the very fact of sharing has not helped costs to escalate.

On the military side, having cancelled the TSR 2 and ordered the American F 111, we entered into an agreement with the French on the Jaguar, where they took the lead, and on the AFVG, where we took the lead, and then on the helicopters, which was a complicated pack-age and which I have just described. But our French partners found themselves compelled to cancel the AFVG in 1967, as the noble Earl, Lord Bess-borough said. It is not absolutely certain what the final order for the Jaguar will be, and the future of the helicopter package is somewhat obscure, though I hope that it will go through. But all this indicates the difficulties that we have to face when we enter into an arrangement on an international basis. We have our experience of the F 104 consortium which we entered with a view to col-laborating in a very promising and widely based, from an international point of view, combat aircraft. But during 1968 and 1969, Canada, Belgium and Holland successively left the consortium, and doubts have been raised in other quarters. Germany and ourselves have the present arrangement with what has now come to be known as the M.R.C.A.

Of course, there are these difficulties, and one can understand those who point to the way in which, on our own, we designed and built the Hunter, the Canberra, the Harrier, on the military side, and the BAC 1–11, on the civil side —good, sound, economic, successfully operating aircraft; successful to us for our purposes, and successful as export items as well. All these factors have to be taken into account. Personally, I welcome the fact that these considerations have been ventilated in this debate, and I am sure that an informed and constructive examination of these matters can do nothing but good. My noble friend has indicated that his Department are well aware of the problems involved.

Much effort is being made to establish the right course which we should take from here. It has been said by some, I notice, that we should go forward from here to get an across-the-board agreement on civil and military requirements for Europe and then, with agreement reached at the top, impose some sort of collaborative pattern below. The noble Lord, Lord Merrivale, I believe, appeared to be suggesting that entry into the Common Market would be the solution, but I am not sure that matter is as simple as that. I agree that a trend towards rationalisation within the Six on such matters as company law, patent law and taxation could facilitate integration. But even in the Common Market questions of design leadership, work allocation, and so on, about which the principal arguments now arise, have not been settled.

Another method of approach is, of course, by industrial action and company agreement. There are successful inter-national companies in other spheres, and we might well look at them. I think, for example, of Unilever, or Royal Dutch Shell; and there is the recent development of Dunlop and Pirelli. Or we could have an entirely empirical approach, project by project. There are already examples of inter-company arrangements, such as those between Hawker Siddeley Dynamics and Matra on the guided weapon project. I am not here concerned to come down wholly in favour of one approach or another. A "judicious mix" was what the noble Earl said, and I think this was the view of the noble Lord, Lord Nelson of Stafford, whose view on these matters must carry weight. What form or formula is to be applied I am not here concerned to say. All I can say is that the problem is recognised, that it requires much intensive consideration and that this is what the Department are giving it.

One potential project which is very much involved in all these considerations, and one about which I have been asked by several noble Lords, is of course that of the wide-fuselage subsonic trans-port. I wish I could give a satisfactory reply to the questions that have been asked, but I cannot. Of course we have a stake in such an aircraft, through H.S.A., in the A300B. That is important and we should not underrate it. But I think I take the sense of the House that that is not what we ought to be aiming at alone. The latest proposal for the BAC 311 is based on the RB 211–50 series engine with a further smaller version using the -22. The proposal is dependent on the -50 series being launched; and that in turn depends upon other factors, including ultimately, of course, the State's finding another very large sum of money. Both B.E.A. and the Government are in close touch about B.E.A.'s requirements. I know that B.E.A. are anxious to be helpful, but more than that I cannot say this after-noon.

My Lords, I mentioned at the beginning that there were two statistics which had made an impression on me in going through all these papers. I referred to one. The other was intended to create an impression, but not the one which was actually made on me. I have a note which says that even such successful air-craft as the BAC 1–11 has so far paid back only some £1.8 million of the Government's total contribution of nearly £19 million. That is a factor to ruminate over. But it then goes on to say that back only some £1.8 million of the Gov-the export earnings of the BAC 1–11 lion. This is pump-priming on a very formidable scale. Any country which takes its balance-of-payments position seriously must give weight to a statistic like that. And it must, I think we shall all agree, ensure a proper place in the economy for an industry which is responsible for it. This debate will, I am sure, be studied; it will prove a helpful stimulus to those who have the very considerable responsibility for the future of the industry, and I am sure that we all wish them well.

6.38 p.m.

THE EARL OF BESSBOROUGH

My Lords, I would begin by thanking most warmly both the Ministers who have spoken for the very great trouble which they have taken in giving answers to the numerous questions raised in this debate. I would thank them and perhaps, through them, some of the officials as well. I feel that we have been treated to a great deal of information. The object of my debate was to find out what was in the pipeline, and we now certainly know rather more. I may not be altogether happy about the question of priorities, the criteria of choice, and how we reached decisions, but we certainly know more about what is happening. I should also like particularly to thank my noble friends on this side of the House, Lord Kinnoull, Lord Merrivale, Lord Trefgarne, and especially the noble Lord, Lord Nelson of Stafford. I am very glad indeed that we persuaded him to speak to-day. I am glad, too, that the noble Lord, Lord Kings Norton, made such an important contribution in discussing the prospects of VTOL, which, from what the noble Lords have said, look as though they may perhaps be at the top of the list at the moment.

There is only one other point that I want to make, and that is that I do not think that I am quite the prophet of doom which the noble Lord, Lord Wynne-Jones, tried to make me out to be. I took a great deal of trouble to pay tribute to our expertise in this country, as indeed witness the aircraft and satellites which are flying now and which have quite unique reliability. I should like to repeat that because perhaps the noble Lord did not hear that part of my speech.

LORD WYNNE-JONES

I heard it all.

THE EARL OF BESSBOROUGH

My Lords, even if I am not completely happy about the Government's record of sup-port, I should like again to thank both Ministers for the trouble they have taken. We must still have in our minds the fate of the three astronauts who are indulging in what one of them described as "just an extension of flying". I only hope that the British ships involved—and I see that Russian ships, too, are now concerned— will help in bringing them safely to earth. My Lords, I thank you very much for having borne with me in this debate, and I now beg leave to withdraw the Motion.

Motion for Papers, by leave, with-drawn.