§ 5.22 p.m.
§ The Earl of KINNOULL rose to call attention to the current state of the British aircraft industry; and to move for Papers. The noble Earl said: My Lords, if one was invited to comment on the present system of short debates in this House, which I feel it would be both possibly imprudent and ungracious of me to do, the comment would be that it resembles a popular method once used by students when confronted with an enormous list of unpaid bills. In that case, any aggrieved creditors who indicated by letter their growing impatience would be immediately threatened that unless they changed their tune, their particular bill would not even go into the next month's ballot. I mention this only to illustrate that sometimes the timing of these debates, or subjects under discussion in a short debate, may appear somewhat in the lap of providence. But as is the case with so much of the mystical workings of this House, I believe the timing of this debate on the state of the British aircraft industry to be remarkably fortuitous. I refer, of course, to the one dominating subject of the industry that could influence the whole future structure of the industry, namely, the proposals of the Government to nationalise the airframe industry. For this reason, I am particularly grateful to other noble Lords who have indicated their intention to take part, and particularly to the noble Lord, Lord Briginshaw, for choosing this debate in which to make his maiden speech. I am sure we are all looking forward to listening to him.
§ Although the nationalisation issue will be the dominating flavour in this debate, I hope we shall be able to cover all the other current topics that make up the state of the industry—the performance of 331 the industry in comparison with our foreign competitors, the success of the current projects, the plans for future projects, and the policy on continuing international collaboration. In all these matters, and others, I believe we have the opportunity to probe deeply into the brief of the noble Lord, Lord Beswick. I am sure the House will agree that in the noble Lord, Lord Beswick, we have a Minister who speaks on aviation matters with an accepted authority, a long experience and a well earned reputation in industry.
§ The Consultative Document published in January, setting out the proposals of the Government to nationalise the airframe industry, is a subject, I suspect, that this House can discuss with a greater degree of detachment than the other place. The issue of nationalisation, whether it concerns the airframe industry or the shipbuilding industry, I believe can be separated into two distinct parts—the political objective and the commercial need. As to the political objective, I am personally totally and fundamentally opposed to it, not only because it strikes at the way of life of our country and the system of our individual effort and choice, but also because I believe that unless this new giant corporation in its early days is organised with extreme dexterity, there is a very real fear that it could fracture the impetus of this industry and become an unwieldy, unmanageable metamorphosis in the same mould as the now limping giant, British Leyland.
§ As to the commercial need, the frailty of the case put forward in the Consultative Document and, indeed, the unanimous reaction of industry to that document is, I believe, evidence enough to show that no convincing case has been made out to justify the proposals of the Government. Indeed, the priority given to this policy by the Government at a time of acute national economic crisis I find wholly baffling. Is it really in the national interest to seek from the Treasury precious funds in the form of compensation, which could exceed £100 million, to buy out two highly successful companies at a time when the Treasury must be inundated with urgent requests for financial assistance from industrial companies and, indeed, from local authorities with their projects of housing, education 332 and health? Surely these should have priority. I find the timing here most extraordinary. I hope that the noble Lord will be able to clarify for us why the Government have chosen this time to introduce these proposals.
As to the Consultative Document itself, the House will recall that it cites the Plowden Committee Report published in 1965, which looked into the aircraft industry. It cited the Report as recommending—and I quote from the Consultative Document which tends to quote from the Plowden Report:
That the Government should take a majority shareholding in BAC and in the airframe and guided weapons interests of HawkerSiddeley.
§ As I am sure other noble Lords have done, I have taken the trouble to re-read the recommendations of the Plowden Committee and the paragraphs referred to in the Consultative Document. Nowhere have I found either the wording or the implication of majority holding or, more bluntly, nationalisation. What the noble Lord, Lord Plowden, recommended, as I understand it, was a Government investment on the lines of BP, a degree of public investment, not a majority holding or nationalisation. It is perhaps a small point in this debate, but I should be grateful, when the noble Lord, Lord Beswick, comes to reply, if he could advise us where the Plowden Committee recommended nationalisation. If it does not do so, I fear the Consultative Document has inadvertently been misleading.
§ If one assumes that despite all the political and commercial opposition to the Government's plans to nationalise, nevertheless the Government forge ahead, and that the Aircraft Corporation of Great Britain becomes reality, there are, I believe, a number of points and indeed assurances on which I am sure other noble Lords will wish to press the noble Lord, Lord Beswick, today. I should like to raise with the noble Lord two aspects particularly mentioned in the Consultative Document.
§ The first aspect is the need for a greater degree of public accountability. I am sure this concept will be welcomed by everyone, but the thinking that only nationalisation improves public accountability really seems illogical. It must, 333 surely, be up to Parliament to legislate what information should be made available both in the public and the private sectors. The noble Lord will know that in America, through the CAB, the public accountability is far ahead of the British system. Detailed information is published every month on such aspects as the punctuality of, for example, the PAN AM service, the depreciation policy for their aircraft, and, indeed, their military charter rates. If a Member of Parliament went to British Airways and asked for similar information, I suspect that he would be told to go and whistle. I find that the present system of public accountability—certainly in the public sector, in the nationalised bodies—is not something of which either the Government or Parliament should be proud. I hope the noble Lord will be able to say that the whole matter of public accountability in this area is being reviewed.
§ The second aspect I would briefly touch en—which again is set out in the Consultative Document—is the future policy on industrial democracy. I say "briefly ", because I am sure other noble Lords whose experience far exceeds mine in this field will be commenting on this matter. I do not believe anyone in his right mind objects to the improvement in industrial democracy, as obviously it can lead only to welcome improvement in industrial relations. But the brief point I wish to put to the noble Lord is this: we have seen his right honourable friend in the last few months freely expressing his new and often radical, and no doubt highly popular, theories, particularly at the Filton Works of BAC. He is floating ideas, based, I presume, on the words of the Consultative Document, on increasing the democratic participation of aircraft workers in decision-making at all levels of the industry. He is floating ideas which have gone on occasion far in excess of this. The criticism one hears—and I think it is valid—is that the noble Lord's right honourable friend tends to float ideas way beyond the practicalities of running a highly advanced aircraft industry. Indeed, some of the ideas would be perhaps more suited to a collective farm. The fear expressed is that the words of the Minister—and he is never short of words—may in time prove wholly mis- 334 leading and could even prove counterproductive to the sensible advancement of industrial democracy.
§ My Lords, I would ask for one more assurance from the noble Lord on the question of nationalisation. It concerns the many thousands of equipment companies in the aircraft industry. I am sure that he will know that they view their future with a great deal of uncertainty. They fear that the hand of nationalisation will spread to themselves in due course. Such uncertainty, I suggest to the noble Lord, is very harmful, and I hope he will today be able to give an assurance that the Government have no intention of extending their nationalisation plans beyond the airframe industries.
§ Turning from the nationalisation issue to the industry itself, the impression one forms both of the present state of the industry and of what the future holds seems to add up to what I would suggest is a somewhat conflicting picture. At the present time we have a number of projects in production and close to production, which indicates that the level of the order book over the next five years is very encouraging. We have Concorde, of course—a unique supersonic civil project due to be in service at the end of this year or early next year—which will place our industry and the French industry in a highly competitive position for years. Thank goodness we still have that project! We have the MRCA, a project far larger in financial terms than the Concorde, still under development, but due to go into production in very large numbers. We have Jaguar already in production and in service, and we have Harrier already in production and in service. Indeed we have Harrier in the Royal Air Force and, of course, in the US Marine Corps. We have the Hawk Trainer aircraft under development. And on top of these, we cannot forget the RB211, servicing all the TriStar sales along with the other Rolls-Royce engines. Undoubtedly, all of these add up I believe, to a healthy order book at the present time. To prove this we see the record export figures for 1974 of some £620 million, recently announced by the SBAC. I hope the noble Lord can indicate whether his Department agree with the SBAC figures on this point.335
§ The gloss of all this good news and these figures is, I suggest to your Lordships, temporarily dulled by the news that the French aircraft industry—half our size in manpower—has apparently achieved export figures last year not far short of £550 million. Again, I ask the noble Lord whether he can confirm this from his Department's information. Whereas the immediate future of the industry appears bright, the picture changes when one delves into what is in the pipeline for future projects. Will further Government development support be coming forward for the upgrading of the RB211 engine to meet the 747 Jumbo Jet requirement? Will the upgrading of the Spey engine be coming forward for the possible stretched version of the BAC 1–11? What is the future of the advanced Harrier development? Are we to allow this brilliant concept simply to die or be taken over by the Americans? What are the plans for the research and development programme to be awarded to the MRCA variant, the air defence version, which one understands the RAF are anxious to obtain? And what future collaborative ventures are in the mind of the Government?
§ I realise that it is not a propitious moment to be seeking a vast research and development programme from the Government. Nevertheless, as the noble Lord knows, unless the seed corn is sown now the harvest in eight to 10 years' time will begin to look a very thin crop. What is the future, as we see it, of new projects? Undoubtedly, the greatest problem is the civil market. Given the civil market with its world recession—the growth of airline businesses having declined—there undoubtedly is on the civil side a rather gloomy picture. But on the military side we have some very hopeful news. We see that BAC have an order book of over £900 million on military sales. This is very encouraging. I hope the Government will be looking in this area particularly for further projects to be supported.
§ Turning briefly to certain specific projects, I should like to ask the noble Lord what efforts have been made by the Government, and indeed, by the French Government, to encourage the Jaguar to be considered as an alternative replacement to the Starfighter for the four 336 nation order, the four nations, of course, being Sweden, the Netherlands, and so on. One understands that this replacement order could come to something over 500 aircraft, and clearly it is of considerable importance.
§ I hope the noble Lord will again be able to advise us what is the up to date position on the maritime Harrier for the Royal Navy. Will this matter be dealt with in the next Defence White Paper? I believe this to be a decision very vital to the welfare of Hawker Siddeley. Perhaps the noble Lord will also bring us up to date, briefly, on Concorde, on how that development is going, and tell us when the endurance proving flights are due to start. In moving this Motion, I am very conscious of the fact that the real value of this debate will flow from the speeches of the noble Lords to follow. 1 trust that the debate will prove of value, for the value of the aircraft industry to the nation in both defence and export terms is inestimable. Its record is one of achievement, and nothing politicians do should disturb its future growth. My Lords, I beg to move for Papers.
§ 5.41 p.m.
§ Lord BESWICK
My Lords, it might be for the convenience of the House if I made a brief intervention now on the public ownership issue. With the permission of the House, I then propose replying at the end to the points that the noble Earl himself made outside of that one subject, and I can maybe at the same time answer similar points raised by other noble Lords. May I first say how genuinely indebted I personally am, as I am sure the House is, to the noble Earl for giving us this opportunity of discussing the aircraft industry, and for the manner in which he introduced the debate. As he said, it is timely; the debate can form part of the consultative process, and I agree with him that it is possible to discuss these matters with a degree of detachment somewhat different from another place.
Having said that, I would say that I think the noble Earl went on to exaggerate a little the effect of the transfer of ownership upon our present strained economy. I agree with him that in the transition period there will be extra calls upon management, but there really is no new demand upon national resources stemming simply from the fact of transferring 337 from one set of owners to another. The consultative document has been criticised for its form as well as for its content, but it has stimulated a great deal of valuable comment. I have here a substantial file of comments from employer organisations, and I have a similarly weighty file from some 25 employee organisations. In addition, there have been something over 30 different submissions from individuals, professional organisations and similar informed and authoritative bodies.
It may be no surprise if I say that the employee organisations welcome public ownership, while the employer companies and associations deplore it. I should add, however, that while the CBI, sadly in its present mood, rely more on strength of language than on reasoned argument, the companies immediately concerned with the transfer of ownership, while being quite firm in their opposition of principle, at the same time offer constructive advice and pose pertinent questions which must be carefully considered and, clearly, further discussion with them will be needed.
I have heard it said, and on one occasion I myself suggested some years ago, that the possible solution to the public ownership problem is what one might call the BP type compromise. But the scene has changed, and I think the argument now supports the policy which Her Majesty's Government propose to take. It has changed in so far as project costs have increased and the need for Government funding has become even more important. It has changed in so far as collaborative projects have involved more Government-to-Govemment negotiation. The tendency towards consolidation of national resources in this industry and the inability of the domestic civil and military market to support two major producers of airframes or guided weapons have meant that private ownership, even in part, is less easy to justify. A monopoly under any ownership has incipient dangers, but under even part private ownership those dangers surely are increased.
Moreover there is a shift; of opinion in professional management in that ownership of capital is less important than its availability in adequate quantities, granted always—and I shall return to this 338 —that there is a clearly defined responsibility. Then there is the remarkable evidence that the bulk of those who earn their living in this industry feel that outright public ownership offers greater opportunities for a profitable and satisfying future. In addition there is this public accountability argument, but I personally am inclined to agree that this is much less simple than it seems. Of course the CBI, the SBAC, and the noble Earl just now are right when they say that there is accountability today, but it involves checking and monitoring, possible inquests of the Public Accounts Committee, and altogether more negative involvement than is desirable.
I believe the Plowden Committee got nearer to the truth of this issue when they spoke of the need to remove detailed technical and financial control, and to inject the public interest at an earlier stage of decision-making; namely, at board level. It can be argued that with more complete ownership than Plowden envisaged—and I am not seeking to try to suggest that Plowden was suggesting nationalisation—there should be more delegated responsibility. That was their argument in favour of this public participation, and certainly if there is the same apparatus of Government supervision and control as now, superimposed upon a publicly-owned corporation, then we shall have failed. I agree with the noble Earl, too, that proper public accountability must mean more openness of information —to Parliament to those who work in the industry and to the taxpaying public generally. Our proposed system of planning agreements, for industry generally and not only for the aircraft industry, is based on the proposition that open discussion and exchange of views with the Government, in which the work force of the company or corporation can participate, can mean practical economic advantage.
Having said that, I must refer to the criticism made and the fears expressed about the degree of power to be vested in the Secretary of State. It will be seen from what I have already said that this is a matter which must be considered very carefully, though I think the fears are not well based. May I offer two relevant considerations to support this view, and I offer one of them with a degree of modesty, because I see the noble Lord, 339 Lord Nelson of Stafford, chairman of one of the bodies to which I am going to refer, sitting before me. Whereas with most companies the intervention of shareholders is minimal, in the case of BAC, with their most sophisticated corporate shareholders—namely, Vickers and GEC —their powers have been used effectively; and I imagine there is much the same combination of financial discipline and constructive comment from the Hawker-Siddeley Group towards the HSA and HSD. These shareholders will be changing, but it would be a mistake to assume that their intervention will be increasing.
The second point is that a measure of so-called Government intervention is and will be unavoidable. It is absurd to think that projects like the Concorde or the MRCA or SEPECAT, or indeed the HS 146, can be taken independently of economic, social or defence matters in which Her Majesty's Government are so clearly involved. So while I agree that we have to recognise that successful management must mean maximum possible independence and initiative, there are important facts of life which place ultimate responsibility upon the sponsoring Minister. It is this that will be reflected in the legislation.
In this context of Government-corporation relationship, the development of industrial democracy can be significant. The more successful the development of this concept, the more constructive the participation of the workforce, and the more complete the agreement between all categories of workers, then in my view, the less excuse or need there will be for Government intervention. The comments on this section of the Consultative Document on industrial democracy make absolutely fascinating reading. From the far Right to the far Left there is complete agreement that worker participation, good industrial relations, indeed industrial democracy, is a good thing; indeed, the noble Earl said that no one in his right mind would oppose it. But from that point of agreement opinions differ. The employers, with one voice, say that the present position is satisfactory, and the employees, with one voice, say that it is not. There is no doubt in my mind that we are now ready, in this progressive industry more than most, to take a sig- 340 nificant step forward in this sensitive but highly stimulating field of human relations.
The Document refers to the need for organic development, and my understanding of that is that one cannot impose by legislation a new pattern of human relations: it has to grow, and grow freely but without artificial forcing. There are those on the Left who see the way forward through worker representation on the policy-making board—something along the lines of what is already happening on the Continent. There are others who wish to experiment in other ways, and see the objective as an elected Workers Council of Control, which would, in their words, hire the management and have the power to fire. My own experience as an elected Member of Parliament leads me to think that a capability to dismiss as well as appoint encourages a proper degree of respect. I have also seen evidence, however, of a readiness to curry favour with the electors which was not always consistent with sound judgment.
Moreover, it surprises me, at any rate, that there are those who so keenly recognise the need to encourage self-respect and a feeling of independence, but who overlook the fact that senior management have the same natural feelings. I am not certain that this formula of hiring management will promote that dynamic initiative and the new motivation which we must develop among those who have, by merit, worked their way towards the top. There is in the British aircraft industry an enormous body of talent, some of it latent, some of it needing more opportunity for expression. We have to find new and better ways of using this talent. But we must beware of changes which appear to favour one section of workers at the expense of another.
One other section of the Consultative Document has been assailed from opposing sides; namely, that relating to diversification. I was asked by the noble Earl whethcr I would say something about that. There are those who think we should have gone wider, taken over other industries; and, on the other hand, there are those who condemn the proposed powers of diversification. Nothing that I have seen so far leads me to think that we were wrong in limiting the scope of 341 public ownership to those companies which account for about 80 per cent. of employment and turnover in the airframe and guided weapons sector. It will be quite a task to get that 80 per cent. into proper shape. I think we should see how we get on before we consider widening that scope. If there is an obvious need to acquire, by agreement other companies in the airframe sector, it is right that the powers should be there. I might say in this connection that I have been asked by deputations, by at least one other company, that we should include them in the airframe companies that are to be taken over. But I think the decision that we have put forward in the Consultative Document is probably the right one.
If we are to maintain stable employment, or to spread overheads, or profitably to use floor space, then some appropriate diversification is possible— as I think noble Lords opposite will agree, there is nothing new in this—and the powers should be there. I see that one firm making equipment points out that 75 per cent. of its output goes overseas, and another claims to supply 450 airlines and air forces in 138 different countries. These were precisely the kind of considerations which led to the decision that we took regarding scope. But of course if the situation changed, or if at any time the corporation in any particular field thought it could develop some instrument, some item of equipment, ought we really to say, No? But this permissive power ought not to give rise to the kind of fears that the noble Earl had in mind. In this sector, too, with proper discussion, I hope we might get wider agreement. Those are some of the thoughts which I hope will be helpful, and I look forward to hearing the remainder of the debate.
§ 5.58 p.m.
§ The Earl of AMHERST
My Lords, may I also congratulate the noble Earl, Lord Kinnoull, on allowing us to have this debate. Perhaps I might be allowed in advance to congratulate the noble Lord, Lord Briginshaw, on his maiden speech. When the date for this debate was first put on the Order Paper, I was told that I would be in order if I raised some salient points with regard to the airline position, improvement at Heathrow, 342 and IATA. I have since been told that this is not so, so I shall confine my remarks to the construction industries and the proposals for nationalisation.
The noble Earl has already referred to the Plowden Committee. I shall do so again, but in a slightly different reference. We note that it recommended that the Government should take a majority shareholding in the amalgamated British Aircraft Corporation and the Hawker Siddeley Group. The Government now say that the only way of achieving a satisfactory framework for the industry's future is for the Government to take over the industry in full ownership, which presumably also includes what I believe to be some 300 ancillary businesses and possibly 200,000 employees. This excludes—and if I am wrong perhaps the noble Lord will put my figures right when he replies—defence and space projects, and the Westland Helicopter Company. Can the noble Lord tell us why the Westland Company has been chosen for exclusion?
The Consultative Document, which has already been referred to, which was published by the Department of Industry in January last, contains some high-sounding and faintly benign phrases, such as: To secure the long-term viability of the industry by giving it motivation to make the best use of available resources; unification of major production units as a means of using available resources to their best advantage; to establish a framework in which the industries' interests can be reconciled with the national interest; to enable the industry to operate flexibly in a competitive international market; to encourage strong and organic forms of industrial democracy and to facilitate diversification into areas where the capacities and skills can be advantageously employed. Possibly, all well and good.
However, is not the existing industry aiming at just these objectives? Would they not be able to carry them out under the Plowden Committee's recommendations? Can we be told just where and how the Government think these people have been or are falling down? Perhaps we might be told to what extent the new shareholders (presumably the taxpayers), the 300 firms, the 200,000 employees and the international sales effort will benefit. 343 At the risk of being accused of searching for sinister motives, I would draw attention to the pronounciamento that while the Government state that they want the new Corporation to have the greatest possible commercial freedom consisent with public accountability and broad Government policy, the powers of the Secretary of State in the Nationalisation Bill will have to be the minimum necessary to give him strategic control.
However, to secure this control the Secretary of State will appoint the chairman and the Board, and he will approve annually the Corporation's corporate plans and its annual operating budget; he will receive regular returns of performance against budgets; he will approve major development programmes, barring the exclusions I have mentioned, and he will give general direction in the national interest. In fact, he is to have a veto on practically every facet of the business. Neither my colleagues nor I like nationalisation for any doctrinaire sake of nationalisation, and we are seriously alarmed that any Minister should, in times of peace, be given such wide dictatorial powers, without, it seems, any reference to Parliament.
Lastly, we note that the industry has been given 28 days in which to study the proposals and make its views known to the Minister. We think this is far too short a time in which to study properly such a vast project and we would ask the Government to think again and to give more time. I know that I have asked several questions of which I have not given notice to the noble Lord, and if he cannot answer me today, perhaps he will write to me.
§ 6.2 p.m.
§ Lord BRIGINSHAW
My Lords, in addressing you for the first time this evening, in accordance with tradition I seek your indulgence. What is said outside about this House—its past, its traditions, its usages and even its future —could not detract in any way from the sure knowledge that anyone will have a deep understanding of a subject within a short while of entering this House, nor could it contest in any way its courtesy. On the matter before us this evening I shall take advantage of and conform with the almost unanimous desire of the House for brevity. What I say this evening 344 may disappoint some noble Lords, but I am sure that another occasion will arise.
I would remind your Lordships that the British aircraft industry is second only to the United States in the Western world. It is the largest in Europe and, perhaps, the only point of contention on which I shall be drawn this evening, is the fact that over the past 25 or 30 years it could not possibly have been in that position had it not been for the intervention and continued support of State capital for research and development. This has provided the basis for the successes and the genuine pride that has been expressed by noble Lords already this evening. Although on this occasion I cannot be drawn too deeply into controversy or contest, I believe that Rolls-Royce would like the opportunity of having Government support for the development of an aircraft engine that is within their capacity—one that would be the quietest in the world. I also know that British Airways would be delighted to co-operate and participate in the development of such a project. I am sure they would both be happy if there were indications of Government support. I am sure it is unnecessary for me to emphasise the export possibilities of an engine of this kind. People in all countries would be appreciative of a silent aircraft, and this would be a contributory factor in solving the problem of siting airports. Therefore, there would be every encouragement for us to enter this vast field of possible exports.
In order to avoid any controversy during the few minutes in which I will address your Lordships this evening, I will merely, as it were, think aloud on one matter which has been raised in this debate. Perhaps through our mass media, particularly our national newspapers, we should be encouraged to consider whether we ought to have a new concept of patriotism in our attitudes towards our State industries. On both sides of the House this evening there is pride in our aircraft industry; its place in the world is undoubted.
Perhaps some consideration could be given to this "thinking aloud", so that this idea might become part of our national concept, the concept of patriotism in the State industries, that will be so important to us in these difficult days.
345 I could so easily drift into contention and, while I may have disappointed many noble Lords this evening, I promise that on future occasions on a number of other subjects and problems that have been raised, I will seek the opportunity to return in more contentious form with a more robust presentation. Suffice it to say that I am very appreciative on this occasion of the attention and courtesy of your Lordships.
§ 6.9 p.m.
My Lords, it is a seldom and rare privilege to have heard a speech like the one we have just heard. So far as I am concerned, it is a unique privilege to follow the noble Lord, Lord Briginshaw, and to tell him that not only those of us on this side but the whole House, respected enormously not only what he said but the way he said it. In his gentle and attractive method of delivery one could not help feeling that all his natural impulses were straining at the leash to prevent his being controversial, and he succeeded to a quite extra-ordinary degree. We are not at all disappointed in his contribution. Indeed, to witness someone making a maiden speech without a note in his hand, is most impressive.
Those of us who have not had the privilege of seeing him before feel that we know him slightly because he is in charge of a union, not noted for its reactionary views, which periodically delights the public by removing from it the opportunity of reading all the miserable news that the purveyors of information seem to think we need to have. He is well known and respected for his firmness of operation in his work. What is not so well known is his erudition and learning, and the fact that one of his pastimes is that of being an expert on military strategies of the past, of which I think Clausewitz is his main interest. Doubtless he derives his tactical experience in his every-day work from the historical military mentors of the past.
We are glad to see the noble Lord and we look forward I hope on many occasions to hearing from him in the future. This is a special week for him. He has made his maiden speech today, and tomorrow he celebrates a party which is being given in his honour, he having been a full-time officer with NATSOPA for 346 25 years. I would congratulate him on his new triumph, which he celebrates today, and wish him well on the long-term triumph which he is celebrating tomorrow.
My noble friend has certainly introduced a subject of extreme interest and topicality. We all want to see the British aircraft industry succeed. Rather like the affiliation small boys have with trains, the great British public feels a sense of attachment, pride and almost personal involvement with the aircraft industry. I suppose this is because its products are in the vanguard of research and technology and are the result of an extraordinary amalgam of boffin-type brains, hard industrial manufacture and a financial control which must almost be regulated by zombies, so complex are the ventures in which they are concerned and which are really on the threshold of the unknown. There is therefore a built-in reflex action of great sympathy by the British public. We want to see this industry successful, not only for those working in it but also for the country as a whole so that we may play a part in the advancement of the frontiers of knowledge and also as an encouragement to exports and their promotion. Yet today we find this industry turned into turmoil because of the Government's stated intention to nationalise it.
Here we accept entirely that totally different points of view are adopted by noble Lords opposite and by those who sit on these Benches; there are different points of view taken by people who work in the aircraft industry and by management. But if we are at one in trying to seek what is best for the industry then there should be room for intelligent argument as to how that is best achieved, and I am grateful to the noble Lord, Lord Beswick, for having intervened on this specific point right at the beginning, and for having portrayed the arguments both courteously and delicately. I was impressed with his manner and his arguments, but was sorrowful about his conclusions.
If we leave out the arguments which are motivated by theoretical political philosophy it might be said that the real purpose of nationalisation is twofold. The first argument is that because the Government have to spend so much 347 of the taxpayers' money in backing projects, then they should have not just a stake in but a control over the industry. This premise masquerades under the attractive, and, incidentally inaccurate, title of "accountability". The second argument says that we ought to have one airframe business, not two, and that nationalisation will achieve this. I do not think it follows that if a Government put money into the manufacture of something necessarily it will be better manufactured if the Government owns it. The best way to get a product manufactured properly is to employ the professionals to do it, and this is precisely what the Government do when they give manufacturers contracts for military requirements. They say, "You have the knowledge, the expertise, the ability. You make it, we will pay". That is a straightforward commercial contract.
Launching aid for specific products is totally different: it can be given by the Government on their terms and does not of itself invite or require ownership of the business, any more than the fact of, for instance, giving grants to farmers necessitates Government ownership of farms. The mere fact that the Government may be the biggest purchaser does not impose the requirement of ownership. But of course the Government are not the biggest purchaser. For instance, Hawker-Siddeley Aviation sells more than half of its products for export. BAC already have outstanding orders for £900 million, £600 million of which are for export. Therefore, construed on that basis, those companies might be more appropriately owned by a collection of foreigners; but of course nobody in his right mind would suggest that course.
My Lords, too often the impression is given that nothing can be produced by The British aircraft industry unless it is subsidised by the Government. That is not so. The figures need to be examined. Indeed nobody could put it more clearly than Sir Arnold Hall put it a short while ago when he said that out of every £1 spent by the Government on civil aviation projects over the last ten years, about 92p went between Concorde and the RB 211, a little under 3p went to Hawker-Siddeley and the other 5p went to other parts of the industry. So it is Concorde and the RB 211, both prestige projects, 348 which we have rightly, as some people think, wrongly as others think, entered into which have taken the lion's share of Government funds. We should dispel the view that without Government help the aircraft industry is on its last legs. Of course, if the Government feel that they do not have enough control over the funds which they allocate, that could be an argument for strengthening the system of control. But I find it hard to believe that Government accountability is inadequate.
There is the Government Contracts Review Board, the defence contracts machinery and the Public Accounts Committee. The noble Lord, Lord Beswick, said that theirs was a negative interest. I find that hard to believe, because I should have thought that theirs was a very positive interest. These three totally separate but public bodies are far more in a position adequately to assess the imprudence, inadequacy or shortcomings than is possible with the self-criticism, or inevitable inhibition of it, imposed by a nationalised industry upon itself.
But there is an argument for the rationalising of the industry, by making one airframe construction business instead of two. The previous Conservative Administration were in favour of this, but my question would be: Will nationalisation achieve rationalisation? I think not. Few would doubt that in a theoretical world if you put Hawker-Siddeley Aviation and BAC into a mixing bowl and stirred them up you would get, at least on paper, a more efficient business and a general tidying up—but at the expense of several thousand jobs and the closure of some factories. Some would argue that in the interests of efficiency—and I am bound to say that I am never quite certain what efficiency is, because I am sure it is more than what the cost accountants would have one believe—this should be done.
However, I do not believe that any Member of your Lordships' House would expect a Government—least of all a Labour Government—at this time deliberately to create unemployment by rationalisation, and this will certainly not happen by nationalisation. To make one firm out of two without economies would, I suggest, be disastrous, apart from being quite pointless, but I myself am not so certain that it will be best to have one unified whole. When there are two enti- 349 ties, one can very easily see the theoretical advantages and the economies which can be achieved by making them one. It is only after the single entity has been created that one may realise that gone for ever are the advantages of competitiveness, rivalry and a sharp cutting edge which went with a non-monopolistic industry. The Hawk Trainer is a typical example of this. The design went out to tender to both the BAG and Hawker Siddeley. They both wanted the contract. Each knew that the other wanted the contract. Hawker Siddeley finally got it and the result of the competition was that it was a better aircraft technically; that it was better for the RAF and that the cost was better for the Government.
My Lords, there is one person above all who should be considered: that is the customer. Without the customer there is no point in having an aircraft industry. For all the arguments, this is not a philanthropic institution for the creation of employment. I should be the first to agree that good industrial relations are of extreme importance, but the whole purpose of the industry must be to provide products which its customers, whether they be Government or airlines, require. Therein must lie success and the success of those employed in the industry. Nationalisation, if it were to take place —and 1 still hope that it will not—must be carried out in order to make a positive contribution to that end. That is why I find this booklet, A New Approach to Public Ownership, quite terrifying. It is published by a body called the Bristol Aircraft Workers' Study Group and the name carries the insinuation—though, to be fair, it explains that it is not so—that it represents the views of the British aircraft workers. While advancing the cause of and suggesting the methods for nationalisation, not once does it refer to how nationalisation will benefit the customer. Its paramount concern is related topushing forward the frontiers of industrial democracy ",whatever that may mean, and to worker involvement and control. I quote from the booklet:Our proposals would require the direct election of representatives from among those who work in the industry to constitute the overall decision and policy making body.My Lords, this may be fine for advancing the theories of industrial demo- 350 cracy and worker participation, but it contributes absolutely nothing to the debate on how to make the industry more efficient. Frankly, I should have dismissed the booklet as an utter irrelevance and as the work of people on the periphery of the political scene who are obsessed with Party dogma of some sort. After all, all Parties have them. But my concern is with the fact that on the outside front cover it shows the Secretary of State for Industry, Mr. Wedgwood Benn, addressing a mass meeting of aircraft workers and that on the inside of the back cover it carries an advertisement saying, "Speeches by Tony Benn, the authentic voice of British Socialism, cloth, £3."My Lords, this blatant display of advertising and of a desire to be associated with the Secretary of State makes me wonder how much influence the Secretary of State has had over the views expressed in this book or how much those views have influenced him. I hope; that the noble Lord, Lord Beswick, will dissociate his right honourable friend entirely from connection with, reliance on or concurrence with the views expressed in the book. I have given notice to the noble Lord, Lord Beswick, that I should be asking him this question and I shall look forward to hearing from him that there is no association.
My Lords, I do not believe that the case for nationalisation has been made out by commercial or industrial arguments; it rests on political arguments. However, the mere threat of nationalisation has already presented some of the companies with unexpected problems over financing for new equipment if no allowance for such additional expenditure is to be made. The aircraft industry is a highly sensitive field where quick decisions of great importance have to be made, and one wonders how a nationalised industry will compare in that respect with its American counterpart which is and always has been absolute "mustard "in that respect. Historical analysis would not indicate that this would lead to our advantage. Here, with a great deal of modesty, I would offer a word of caution. When thinking of the future the aircraft industry may consider that its future lies in association with Europe or in partnership with America. We should remember that we have a thriving and—contrary to what many people think—a highly 351 profitable industry. It is the largest in Europe, being twice as large as that of France and four times as large as that of West Germany, and it is in Europe and even in Britain that the future of the industry should lie. I suggest that we should guard against any inclination to turn our backs on Europe in favour of short-term advantages which may appear to lie across the Atlantic. Mutual participation with America may be possible to a limited extent; too big an involvement may be attractive the first time round, but it is not impossible that at the second time round the American companies may say, "This time we want to do it on our own, thank you. "At worst, we should then have lost our new-found association in America and have severed our natural association with Europe and, at best, we should have become a sub-contractor to the all-powerful American aircraft industry and the prosperity of our industry would be regulated by the latter's considerations. We are not subcontractors; we are, have always been and should be determined to remain, pioneers not only in construction but in techniques and in thought.
My Lords, the RB.211 engine is an example of what I mean. It is a fine engine, one of the most efficient in the world. It is quiet, economical and good from the point of view of pollution. Yet the only aircraft that it is being put into is the Lockheed TriStar, though there is the possibility that it will be put into the Boeing 747. The whole future of this engine is therefore dependent upon its being put into an American airframe. I wonder whether it is not possible to get ourselves out of the highly exposed and vulnerable state in which we are. I suggest that it might be possible to build a British airframe to take this British engine, and I would ask the Government to consider whether we could not even now make an updated version of the 311 aircraft which was turned down some years ago. The situation is different now. When it was turned down we had no engine, but now we have the RB.211 engine and, even if a certain amount had to be spent on research and development, it would be minimal compared with the £200 million or so which has already been spent on the engine. Yet it would give us an up-to-date, all-British, wide- 352 bodied aircraft which would be efficient, quiet and clean to operate. It would also give us security for the future of the RB.211 and more orders for it.
In that connection, my Lords, could the noble Lord, Lord Beswick, confirm that the Government have agreed to give aid for development for the "hottedup" version of the engine to which my noble friend Lord Kinnoull referred, and, if so, how much? I believe that work is also going ahead to fit it to the Boeing 747, which will give it a higher payload and a longer range. I think that this has been agreed, provided that Rolls-Royce accept responsibility for the alteration of the aircraft design and for the subsequent programme of certification which will have to be carried out. Can the noble Lord, Lord Beswick, say whether this project has or will have any Government participation?
Any new aircraft venture has its fearful problems, and I am glad that, despite their very hesitant start, the Government have agreed to go ahead with the Concorde. I am sure this is right and time—it will need time—will show this. But British Airways expect delivery of their first £25 million aircraft in November, and the second in December, and scheduled flights are due to start in January. But, as yet, they cannot fly it, because they have no landing permission anywhere in the world. I accept that there are difficult negotiations going on, but if the noble Lord, Lord Beswick, were able to say how these negotiations are progressing, it would be much appreciated.
Another vitally important decision is awaited—my noble friend referred to this, as well—about the Harrier. About 220 of these have been sold—half, I think, to the United Kingdom and half to the United States Marines. Are the Government to go ahead with the maritime version?—because if they are, then there are opportunities for considerable exports abroad. But if the Navy, who I understand want this aircraft, are not prepared, or are not permitted, to have it, the overseas exports will be put in jeopardy.
My Lords, we are going through difficult times, both for aircraft manufacture and aircraft operation—apart from inflation and recession—and we have seen many airlines cut down on their operations. Yet the funny thing is that in the 353 last year every airline which has cut down on its operations has lost more money and more passengers by so doing. In fact, the passenger loss which airlines have sustained is almost directly related to their reduction in capacity; in other words, those who reduced their capacity by 20 per cent. have reduced the passengers which they have carried by almost the same amount. Conversely, each airline which has increased its capacity has increased the number of passengers which it has carried and has increased its profit —and all of this at a time of recession! There must be a moral in this somewhere, if one can find it. I suggest it could be that despite the recession there are more people actually in work today in this country than in 1972; despite inflation, in the past three years the net disposable income of the country as a whole has gone up by over £4,000 million, and a similar picture exists in the United States.
The point is, therefore, that the cash is there; people have got it and want to travel, and the demand is there. Our only problem is how to tap them both, and the only way to do that is to provide the right type of service and the right type of aircraft. If we do that there is a future for our airlines, both national and private, and a future for our manufacturing industry. But we must go out and seize the opportunities, which I believe are there.
§ 6.33 p.m.
§ Lord TREFGARNE
My Lords, it is a special pleasure and privilege for me to rise so soon after the noble Lord, Lord Briginshaw, has made his maiden speech, which I found so interesting and full of promise for the future. Like the noble Earl, Lord Ferrers, I noticed how he was straining at the leash a little, but that, no doubt, is an experience of which we shall have the pleasure in the future. I also wish to pay a tribute to the noble Earl, Lord Kinnoull, for introducing the Motion and giving us the opportunity to discuss this matter. I have an apology to make to the noble Lord, Lord Beswick, because I did not take up his offer to consider in advance any points I wished to make, so that he could be better prepared to answer them. I do not think I have anything to say that is unpredictable, so far as the aoble Lord is concerned, 354 but if I say anything that he feels unable to answer until a later point I shall understand.
What I have to say is concerned principally with the Consultative Document which the Government published a few weeks ago. Like the noble Earl, Lord Kinnoull, I wondered how it was that the Government came to the conclusion that Lord Plowden—and I quote from paragraph 3 of the document… recommended that the Government should take a majority shareholding in the British Aircraft Corporation and in the airframe and guided weapons interests of the Hawker Siddeley group …because I cannot find that in the Plowden Report, either. If that is the major platform on which the Government are basing these nationalisation proposals then it does no): get first place, but there are other objections as well, which I shall endeavour to show—
§ Lord BESWICK
My Lords, I hope the noble Lord will excuse me. I should like to dismiss that point about Plowden. I am not, and the Government are not, basing their case on that. I think that if we take paragraphs 474 and 493 together, they indicate that the majority of the Plowden Committee, as distinct from the minority of the Plowden Committee, suggested that the Government should take up over half the equity in the three firms.
§ Lord TREFGARNE
My Lords, I am obliged to the noble Lord for that point. I will not pursue it at this stage. I do not have a copy of the Plowden Report with me, and there are other points which I should like to make. Noble Lords opposite and their colleagues were in power in 1965 and, if the Plowden Report recommended nationalisation or a majority shareholding, why did they not do something about it then? They were in Office until 1970. Of course, the right honourable gentleman the Secretary of State was not, I think, Secretary of State then; so, perhaps, it is he and he alone who is promoting these new proposals. If one reads the Consultative Document it bears his stamp and not that of the noble Lord sitting on the Front Bench opposite.
Paragraphs 2 and 4 of the Consultative Document talk about greater public accountability. The noble Earl, Lord 355 Ferrers, and indeed the noble Earl, Lord Kinnoull, also mentioned this point, but I fail to see how it is that public ownership extends public accountability to these industries. After all, the coal industry, the railways, British Airways and others are already in public ownership and who can say that they are more accountable now than before they were nationalised? The present contractual arrangements in the aircraft industry already provide better accountability than is likely to exist after public acquisition.
Paragraph 7 of the Document touches on the scope of the proposed nationalisation and the noble Lord, Lord Beswick, has already mentioned that; but like the noble Earl, Lord Amherst, I am very puzzled as to why the Westland Helicopter Company has not been included in the proposals. I do not think that the reasons advanced by the noble Lord, Lord Beswick, for omitting that company, and, perhaps other companies—he did not, in fact mention that company specifically—are very convincing. If the arguments which the Government advance for the acquisition of the other companies are to be taken seriously, surely those arguments must apply equally to the Westland Helicopter Company and, for that matter, to the major systems and components manufacturers, like Dowty-Rotol and Smiths Industries.
In Paragraph 8 of the Consultative Document, we are told about the effects of public ownership on the companies that it is proposed to take over. I found that paragraph perhaps the most distasteful of all in the Document, because of the rather thinly veiled threats as to what would happen to these beastly people if they scuttled the ship before we got there; if, for example, they sold off all the assets before we were able to take them over; or if they helped themselves to enormous pensions before we finally got in to prevent all that. I think—at least, I hope—that the Government will want to reconsider some of the remarks in that paragraph, because if I were in the manufacturing industry—which I am not—I should have been rather offended by them. That same paragraph talks of fair compensation to be paid for the companies to be taken over. That would be fine if it were not for the remarks which we have already heard from the 356 right honourable gentleman the Secretary of State about taking into account the public money—mostly in the form of grants or development contracts—that has already been paid to these companies. One noble Lord—I think it was the noble Lord, Lord Briginshaw—talked about State capital being put into these industries; but there has been no State capital put into these industries; there have been grants and items which could be classified as of a revenue nature, but not capital. There is, I submit, a distinct difference.
The noble Lord, Lord Beswick, talked about the transfer of ownership and did not understand how that could strain the economy. If that is the case, the fair compensation referred to in paragraph 8 can only be very small. Like other noble Lords, I have no special comment to make about the proposals to extend the industrial democracy arrangements or about the general proposal under the organisation of public ownership in paragraphs 9 and 10. But I wonder how it is imagined that the new Corporation is to become more efficient and more competent under the direction of the Secretary of State—because there is no doubt in my mind that the Secretary of State has taken very wide powers to control the day-to-day actions of the Corporation in the proposed legislation—and I wonder how it is he imagines that he and his successors will be able to exercise better management control of those companies than we have today.
I would refer to paragraph 13 in the Consultative Document which talks about the extension of the scope of the new Corporation by diversification. I find this a rather sinister proposal, because I think it will be difficult for Parliament to control the scope of the diversification of an aircraft enterprise, as opposed to moving into another industry altogether. Perhaps this might well be covered by the legislation when it comes before the House. I hope so.
My Lords, I should like to make one further proposal which is not contained in these Documents, but is one which, I hope, will commend itself to the Government; that is, to make provision in the legislation for the accounts of the new Corporation to be audited by outside accountants. I cannot pretend that I am an expert in these matters. I believe that this is not done, in the case of the 357 nationalised industries that we have at present, but that it might go some way towards allaying the fears over the extension of accountability that I have mentioned if the accounts were audited annually by independent accountants, accountants not related to the Government and upon whom we can all rely for an unbiased view.
In paragraph 16 we have provision for the financial arrangements of the Corporation; and the Government suggest that the new relationship that they propose between the Corporation and the Ministries—the Ministry of Defence, for example, who will be an important customer—will promote the smooth running and accountability (to use a wellworn word in this context) of the Corporation. I find it difficult to imagine how it is that a contract between two Government Departments, where any excess profits or losses if any, are borne by the customer, can lead to greater accountability. Surely this is a total lack of control rather than an improvement! I have already touched on the question of the control to be exercised by the Secretary of State which seems to me to be more detailed than is provided for in the nationalisation of other industries. It is, I think, especially undesirable in this case, bearing in mind that the industries to be taken over are, by and large, very profitable anyway. There seems to be nothing to suggest that the new arrangements will be any improvement at all.
The final point, which is really an expansion of one that I have previously made, is the question of the cost of taking over. There is nothing in this document to suggest what that cost is to be. As other noble Lords have said, in these strained economic times it is surely vital at this early junction that we have some idea of how much money the Government propose to spend.
§ 6.46 p.m.
§ Lord KINGS NORTON
My Lords, I think that the Motion of the noble Earl. Lord Kinnoull, has been on the "No Day Named "list for a long time; but it could not have come off at a more opportune moment because it has given us this opportunity of considering the nationalisation proposals in a particularly easy atmosphere and one in which I hope we can express views which will be of value to the Government. To 358 begin with, I should like to add my congratulations to the noble Lord, Lord Briginshaw, on his maiden speech. He may have overlooked it, but he and I have a connection; and if he wishes to devote more of his time to developing his interest in aviation then he must come more often to Cranfield where he is a member of the court and I have the honour of being the Chancellor.
My Lords, I feel that so far the argument has gone very much against the Government proposals in the Consultative Document. When we consider the weight of the argument put forward by the SBAC, by the CBI and by noble Lords in this House this afternoon, I feel that the noble Lord, Lord Beswick, persuasive as he was in his intervention, is really having the worst of it—but he is to have another go later on. Nevertheless, although it is my view that the whole weight of the argument is against the Government, I do not think that there is much doubt that they are to press forward with this legislation; and, in case they are successful, I should like to make one or two points which, if accepted, might mean that they could achieve their aim with the minimum of discomfort to the industry.
First, I should like to support the noble Lord, Lord Trefgarne, in his plea for maintaining the present machinery for monitoring expenditure in the industry. I think that it should be left unchanged. I think that in their organisation of technical cost estimators, their accountants, their contract officers, the Contract Review Board and the Public Accounts Committee, the Government have already a means for detailed supervision of the expenditure in the industry. In so far as there have been errors in the past, the machine has been strong and efficient enough to expose the errors, and adjustments have been made. But there have in the past been severe losses to the public purse—not because of any defect in this machinery but mainly, I would suggest, because of changes of mind by the Government on development policy; and not this Government particularly, but all recent Governments. We have had severe losses due to errors of judgment like the cancellation of the TSR-2 and like the ordering and cancellation of the Fl-11 and similar mistakes which in previous 359 speeches in your Lordships' House I have referred to and need not refer to again.
So I believe that, whether or not an Aircraft Corporation of Great Britain is set up, we need some form of permanent agency, some kind of continuing organisation for guiding civil aircraft development policy, outside the Departments of State and unaffected by changes in Government, but planning of course within a budget agreed by Government. I appreciate the difficulties inherent in a suggestion of this kind, but believe that, whether or not the industry is nationalised, some very positive steps must be taken to avoid the great losses occasioned by oscillations in development policy. What is more, looking to the future, and realising that the enormous current success, which has been referred to, of the aircraft industry today is largely due to design work which they did years ago, we need some planning for the next decade to ensure that in ten years' time the success is as great as it is now.
Secondly, if the nationalisation process is to be pressed through then it should be pressed through as quickly as possible—… if it were done when 'tis done, then 'twere well it were done quickly.We must avoid, once the die is cast, if it is to be cast, a long twilight period of uncertainty, with financial confidence in the industry sapped by, for example, ignorance of the terms of compensation, and money for investment consequently hard to come by.
One of the objectives that the Government have stated in the Consultative Document, of which I heartily approve, although I think it is achievable by straightforward negotiation between the companies concerned without nationalisation, is the unification of the main aircraft production units. I do not know that I care much for the word "unification", because it sounds like the creation of some vast central factory. "Rationalisation "would perhaps be better. But certainly, if reorganisation can produce a more efficient production organisation, then let us by all means reorganise. What must not be done, I suggest, is to centralise the design organisation. It is absolutely essential that a number of separate design teams be kept in being with their own special skills and esprits de corps. It may not often be necessary to have 360 competing designs, and certainly competing prototypes would be very rare indeed; but competing brochures, so to speak, are necessary and talented designers must always have the means of full expression. I have had a lifetime of experience in administration, particularly the administration of technological enterprises, and I know that overcentralisation spells disaster.
I want to mention another matter which has already been referred to by the noble Earl, Lord Ferrers, in his quite splendid speech. It is so important that I do not hesitate to mention it again. It is not connected with the pros and cons of nationalisation. I believe that industrially, commercially, scientifically, technologically, this country must collaborate with the rest of Europe. I happen to object, and object very strongly, to many aspects of the Treaty of Rome, but in the present context I regard it as unimportant. In the aircraft world we developed a number of co-operative projects with Continental countries. Three of them, which have been mentioned this afternoon already, are Jaguar, the MRCA and Concorde. We developed those long before the Treaty of Accession.
Even if the forthcoming Referendum takes us out of the European Economic Community, there is no reason on earth why our industrial, commercial, scientific and technological connections with Europe should be any different in character from what they were before we went in. To the aircraft industry, nationalised or not, I regard the European connection as vital. Without it we should gradually be forced, as the noble Earl, Lord Ferrers, said, into a transatlantic connection, and that for our aircraft industry, I am convinced, would be the suffocating kiss of a lingering death. As the noble Lord, Lord Briginshaw, said in his speech, our aircraft industry is the most powerful outside the United States of America and the USSR. It can be a major part of a European consortium, but could never be more than a junior partner in a transatlantic association. So I should like to be assured, when the noble Lord, Lord Beswick, replies, that a fundamental plank in the policy of any national aircraft corporation that may be created by the Government is the maintenance and development of the European connection.
361 I do not say that change is unnecessary. If the primary objective of change is seen as a concentration of our aeronautical resources, then I agree with the objective. But I do not believe that nationalisation is necessary to achieve it. Indeed, I believe that the kind of nationalisation adumbrated in this famous paragraph 15, which has been referred to several times already this afternoon, would be of the worst possible type. inevitably this nationalisation, if it goes through, is going to be expensive because the shareholders can scarcely expect to be given less than the net tangible assets of the industries which the merchant bank Fraser Ansbacher calculate to be £121 million. If we have to regard it as inevitable, I suggest that the organisation should be modelled on that of the Rolls-Royce Company, which though nationalised seems to be extremely well run with the minimum of official interference.
My Lords, in this matter my noble friend Lord Beswick is, I fear, for the first time in our long acquaintance on the opposite side from me in an aviation debate. This I very much regret. Aviation has many friends in this House but has no greater friend than the noble Lord. He and I have seen eye to eye on many aeronautical issues in the past. All I can say on this one is that if the nationalisation goes through; if it is done with due regard to the criticisms that have been made; if the organisation has an independence comparable with that of Rolls-Royce, and if the chairman and the board are a team of knowledgeable enthusiasts, then—who knows?—we may see eye to eye again. I hope that when the noble Lord replies he may be able to encourage me to believe that this will happen.
§ 6.58 p.m.
Earl ALEXANDER of TUNIS
My Lords, I have listened with much interest to the arguments put forward by previous speaker. I am grateful to my noble friend Lord Kinnoull who has brought forward this Motion. He has done much in this 'House for the benefit of the aircraft industry; he has given it his great support, and he always speaks on the subject with depth of knowledge. I would also add my congratulations to the noble Lord, Lord Briginshaw, for his splendid off-the-cuff maiden speech. It was indeed 362 a great pleasure to listen to. Many of the points I had intended to raise have been dealt with in a concise and informative manner—I am sure your Lordships will agree on that point. There are, however, one or two points I should like to raise. I apologise to the noble Lord, Lord Beswick, for not giving him private notice of them.
A great deal of comment has been bandied about in the national newspapers concerning worker control on the boards of nationalised companies. I wonder whether the noble Lord could make any comment about that. Secondly, would the commercial decisions of the nationalised companies be left in the hands of the present managers, or would they be made by Whitehall? We should like to know the answer to that question. Other than that, as I am the final speaker tonight, all the points that I wished to make have already been made. My only comment, therefore, is that if the Government feel that it is right to nationalise the aircraft industry, which is a vital dollar and foreign currency earner, I hope they will make sure that in future it is run in what I believe is the successful way that it is run now.
§ 7.1 p.m.
§ Lord BESWICK
My Lords, it would be difficult for me to claim that in the debate I have had overwhelming support for the proposal to bring this industry under public ownership. I do not intend to rehearse again the points that I made in support of my Government's proposal, but I shall have one or two comments to make. First, may I add my congratulations to those which have already so warmly and rightly been given to my noble friend Lord Briginshaw on his maiden speech. If I may say so, I especially approved of his proposition that a successful aircraft industry can be not only an economic benefit but can add considerably to national morale.
It was asked by the noble Earl, Lord Kinnoull, who opened the debate and by the noble Earl, Lord Ferrers, about the development of the RB.211–524. The position is rather complicated. This also raises the question of the quiet engine which was mentioned by the noble Lord, Lord Briginshaw. The estimated total launch cost for this version is £45 million at 1973 prices. The Government will make agreed phased contributions 363 towards these costs until 1978. These contributions, including the payments which have already been made, will bring direct Government support to a total of £26.3 million. The payment for 1976 and later years will, however, be subject to escalation based on cost increases after 1975. If there are any further points upon which the noble Earl feels that I should give him information, I should be grateful if he would raise them with me or write to me.
On the Boeing 747 application of the -524, the Government have informed Rolls-Royce (1971) that they will support further development and application of the -524 for use in the Boeing 747 when a further major order is obtained in addition to that of British Airways. I was asked about the maritime Harrier. I am afraid—
My Lords, am I to understand from what the noble Lord has said, that the Government are giving a contribution for those engines to go into the Boeings which British Airways already have, or is this not so?
§ Lord BESWICK
My Lords, certain work has been done on the necessary modification to the Boeing 747. I am not absolutely certain whether that sum of money, which is not considerable, is being given directly by Her Majesty's Government, or through the accounts of Rolls-Royce (1971). However, I will let the noble Earl know.
I was asked about the maritime Harrier. I am afraid that there is nothing I can say about a Government decision on the future of this aircraft. We recognise the export potential of the maritime Harrier. We recognise also that it will depend a good deal upon the use which is made of it by the Royal Navy. However, I am afraid that it is something about which further thought is required. Design work is continuing, and a Statement will be made as quickly as possible.
The noble Earl, Lord Kinnoull, and the noble Earl, Lord Ferrers, asked me about the Concorde situation. The fact is that the Department of Trade are pressing forward as rapidly as possible their discussions with the countries who will be concerned with the routes and the landing rights for Concorde when it enters airline service. We are making 364 progress; but because these matters are rather complicated it is difficult not to prejudice the position if interim public statements are made. We are determined to go ahead with the necessary negotiations, and I hope that the noble Earl will accept that as soon as it is possible to do so we shall make a Statement.
I was asked especially by the noble Earl, Lord Kinnoull, about endurance flying. We expect that in March or April Concorde will receive the special certificate of airworthiness which it needs before it begins its programme of endurance flying. The programme will begin later in the year. The position about further authorisations remains the same as that contained in the agreement which was reached between the Prime Minister and President Giscard d'Estaing in July 1974. As the House will know, there is a proposal that M. Cavaillé and my right honourable friend will meet again, and I am hopeful that there will be a meeting in the middle of March. The full certification of airworthiness and the operational programme should start certainly at the beginning of next year and, if possible, at the end of this year.
I was very pleased to hear the noble Earl, Lord Kinnoull, the noble Earl, Lord Ferrers, and my noble friend Lord Kings Norton, raise the question of European collaboration. I think that the points that they made are sound ones. In my view, collaboration here is a quite separate argument from that on the European Economic Community negotiations, of EEC membership or otherwise.
The MRCA, the Jaguar and the Concorde programmes are going forward. There is, of course, the Hawker Siddeley interest in the A300. With the encouragement of the Governments concerned, some of the major European airlines—British Airways, Air France and Lufthansa— have been discussing their future operational requirements, and are hoping to evolve a common specification for the aircraft they will need during the 1980s. In parallel, six of the major European airframe manufacturers, including the British Aircraft Corporation and the Hawker Siddeley Aircraft Company—and I am very pleased to see how well these two organisations and the technical people who are concerned are collaborating in advance of unification—have agreed 365 among themselves at the industrial level to avoid wasteful duplication of their efforts, to assist each other to sell non-competing existing types of aircraft and to explore the possibilities of collaborating on future developments. I hope that this outlook will be acceptable to those who spoke about the possibilities of European collaboration.
I was asked by the noble Earl, Lord Kinnoull, about the multi-role combat aircraft. In his Statement on the Defence Review the Secretary of State said that there is to be a sizable reduction in the rate of production of this aircraft for the Royal Air Force. The reduction will be about one-third. The production programme is still some way off, so the impact is not at all imminent. The Ministry of Defence are continuing with the project definition studies for an air defence variant of this aircraft.
Several noble Lords asked me why the Westland Company has been excluded from the proposals for nationalisation. I am not absolutely certain whether or not they are pressing me into extending the boundaries of nationalisation. I thought I had made it clear that in our view there will be a major task of re-organising the two major airframe companies, that the problems and prospects of the Westland Company are somewhat different, and that there is no reason therefore to extend the proposals to them.
A point was made by the noble Earl, Lord Kinnoull, about the size of the aircraft company that will emerge as a result of public ownership. He indicated that there will be a disadvantage so far as size is concerned. I thought he referred with some degree of criticism to the gigantic size of this new Corporation. I have the figures of some American airframe companies. Although Boeing has, of course, slimmed down, because they had a most: amazing programme of redundancies, they still have about 68,000-plus employees; North American Rockwell have over 100,000, Lockheed have 66,000 and McDonnell Douglas have 78,000. Each of them therefore will be about the size of, or bigger than, the combined British Corporation. I think this will put us in a better position than before to compete, and I do not think the idea can be supported that we should be unmanagable at the size considered.
§ The Earl of KINNOULL
My Lords, I am grateful to the noble Lord for giving way. The point I was making was that we see from British Leyland that a huge conglomeration makes management extremely difficult, and in the case of British Leyland I believe this has been adverse to the interests of the motor industry. I hope the same situation will not be repeated in the aviation industry. The fact that the noble Lord offers us comparisons with the American industry prompts me to say that I hope very much we never reach the same state of affairs as the American industry, going up and down like a yo-yo, which is most unsatisfactory.
§ Lord BESWICK
My Lords, in another connection recently I had occasion to say that I do not think an organisation that is bigger is necessarily better. Nevertheless, there is a case for thinking that a size of 70,000 is quite a different matter. The noble Earl, Lord Amherst, quoted a figure of 200,000, but I think he had in mind the aero-engine and the helicopter companies as well. I have dealt with the point concerning the power of the Secretary of State, about which I think some unnecessary alarm has been raised.
The noble Earl, Lord Kinnoull, asked me about the French export figures. I have no reason to believe that the figures are not as the French statement maintains; I have not had the details and so I have been unable to study them. So far as the British figures are concerned, there is some discrepancy, as he rightly said, between the figures used by my Department and those used by the SBAC. For this year the SBAC quoted a figure of exports of £631 million; our comparable figure is £607 million, but that does not include various items which have gone out under other categories, for example, spare aircraft tyres and radar aids. Nor do we include in the net export figure re-exported goods—goods which have been brought in and re-exported. If one takes the net figure, we reach £512 million as against the SBAC's figure of £631 million, but on any reckoning this is a remarkable industry which is doing a first rate job of work.
I agree with what was said by the noble Earl, Lord Kinnoull, the noble Earl, Lord Ferrers, and the noble Lord, Lord Kings Norton, about the need for proper plan- 367 ning of this industry. The importance of this is brought home to me when I look at the figures; I find that of the total employment at the present time, no fewer than 40 per cent. is on spares and repairs. It is the spares and repairs on goods which were sold up to—I have reason to believe in one case—12 to 15 years ago; so clearly it is the seed corn about which the noble Earl was speaking that we should be concerned about. On the other hand, it was said by a number of noble Lords that we were exporting rather more than 50 per cent. of the industry's output. In fact, I have looked at the total figures between 1964 and 1973. I find that of the total output of the industry 51.5 per cent. went to Her Majesty's Government, 13.5 per cent. to home and civil orders, and 35 per cent. to export. Here again there is an important and substantial export element, but I simply say that we do not want to spoil the case by exaggerating.
There were some differences of opinion with the noble Earl, Lord Ferrers, and the noble Earl, Lord Alexander of Tunis, about industrial democracy, and I was asked in very categorical terms whether I would dissociate my right honourable friend from the booklet to which the noble Earl referred. I am afraid I cannot do that; I have no authority for doing that. What I can tell him is that I believe the picture which appears on the cover was of my right honourable friend addressing the workers at Bristol on the occasion when their livelihood was threatened as a result of the review of the Concorde project put in hand before we took Office, and those workers were very gratified by the action which my right honourable friend took at that time.
If this eventually goes into service and if, as I hope and believe it will, it becomes a credit to our industry and to the French industry, a large part of that credit will be due to my much criticised right honourable friend Mr. Anthony Wedgwood Benn. I cannot say that he is entirely unconnected with the kind of thinking behind that booklet, because I know that he is keen on encouraging people to do thinking on this and on other subjects.
§ Lord BESWICK
I know, my Lords, and I am giving the noble Earl the facts. I am trying to be factual about this, and I was going on to say that, if the noble Earl gets very worried—and it is possible to think that here we are not only going up to the frontiers but beyond them in terms of democracy—I get a little solace, a little encouragement and am a little less worried when I think what was said when we made advances in political democracy.
May I remind your Lordships of what was said by Lord Macaulay on the occasion of the Second Reading of the 1832 Reform Bill, which I believe, was passed—I speak in the presence of experts—on Second Reading by one vote. Looking at the Opposition Bench, Lord Macaulay said,The jaw of Peel fell, the face of Twiss was the face of the damned, and Herries looked like Judas taking off his necktie for the last operation.That perturbation, which was even greater than that displayed by the noble Earl, was at a proposal that there should be a vote to those who had a £10 rateable tenancy, or to tenant farmers—and then only if they were male.
My Lords, we have developed in that area of political democracy. I should not like to say where we shall eventually go in industrial democracy. We have to make progress. The rate at which we make it, I agree, is a most important factor. I should like to think that the good wishes extended by the noble Lord, Lord Kings Norton, to those who will take the eventual responsibility of this Corporation will be justified because, among other things, they will take proper care of this important factor of industrial democracy.
§ 7.21 p.m.
§ The Earl of KINNOULL
My Lords, we started this debate at about 5.20 this afternoon, and since then one has had a nightmare in remembering whether we were allowed two or two and a half hours. I should like to thank all noble Lords who have taken part in the debate, and particularly to single out the noble Lord, Lord Briginshaw, for three splendid aspects of his maiden speech—brevity, no notes and the fact that he was non-contentious. It must have taken steely determination on his part, and we are all grateful. If I may single out another 369 speech, it is that of the noble Lord, Lord Kings Norton, whose expertise in aviation matters is well known. I hope the views he put forward today will be considered by the Government when they read the report of the debate.
My Lords, the issue of nationalisation is today a matter only of skirmish, and we will be returning to this in due course. I convey my thanks to the noble Lord, Lord Beswick, for the care which he has taken in giving us a great deal of information during the debate. There is one aspect on which I think we are all agreed; that is, whatever reorganisation takes place within the air frame industry, nothing should be done to harm the future of the industry. On that happy note, I beg leave to withdraw this Motion.
§ Motion for Papers, by leave, withdrawn.