HL Deb 09 June 1975 vol 361 cc94-109

7.8 p.m.

Lord KINGS NORTON rose to ask Her Majesty's Government how they view the importance of the continuing development of the Rolls-Royce RB211 engine programme and whether they plan to continue their support for the RB211–524 engine. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. It was in February 1971 that we debated in this House the Rolls-Royce purchase Bill, and as the noble Lord, Lord Carrington, said on that occasion, the RB211 engine was the centre of the debate. I have no intention of recalling that momentous occasion, except to say that at that time the fate of the RB211 was in the balance. In my speech then I said that the RB211 was a good engine and it represented a remarkable achievement, and certainly subsequent developments have confirmed that opinion. At the time it was touch and go. Fortunately, the decision was go, and it has been amply justified.

The RB211 is the biggest single export earner of the United Kingdom aviation industry, and four years ago the White Paper on the engine estimated that 25,000 people were engaged on it. Since deliveries of it began in 1972, engines and spares worth over £280 million, mostly for overseas, have been produced. The current output is over £2 million a week, and of the total orders to date for 700 engines more than 450 have been delivered. This is substantial business, but the country and the company will get the maximum value of that considerable investment in the RB211 programme only if the engine is continuously developed to meet the market requirements.

The original RB211 engine used in the Lockheed TriStar has a maximum thrust of 42,000 lb. The engine under active development now is externally indistinguishable from it, but it will be certificated this year at 48,000 lb. thrust, and is expected quickly to develop to 50,000 lb. thrust. This is the RB211–524–B engine. Its development and initial production is costing £55 million, shared between the Government and the company. The engine is intended for the long-range versions of the Lockheed TriStar.

I have so far, my Lords, been describing what appears to me to be a very satisfactory situation, and I come now to more recent history, which I hope will develop equally satisfactorily, and on which I hope the noble Lord, Lord Beswick, will be able to be reassuring. In parallel with the development programme of the RB211–254 engine for the TriStar, Rolls-Royce and Boeing are working on a programme to certificate it for use in the Boeing 747–200 aircraft required by British Airways for delivery from the spring of 1977 onwards. The plan is for the engine in this application to enter service with a maximum thrust of 48,000 lb. and to move to 50,000 lb. about a year later. I believe that it is vital to the maximum exploitation of the RB211 engine that this plan goes forward. Whatever the future development of the Tri-Star, the future of the Boeing 747—unique in its great size, and likely to stay unique for many years to come—will be on a much greater scale. It will probably continue until the end of the century, and I feel that we must ensure that the vast engine market it represents is not just cut up between Pratt and Whitney and General Electric. This means that a policy of continuous concentrated development on RB211 is essential.

Already Rolls-Royce and Boeing are planning to engine the projected heavyweight 747 with Rolls-Royce RB211–524D engines of 53,000 lb. thrust, but—and now I come to the heart of the matter—my information is (and it comes from a very reliable source) that unless the British Airways initial order of four Jumbos with RB211–524 engines is confirmed by the end of this month, the joint work between Boeing and Rolls-Royce on the later Jumbo model—the heavyweight—is in danger and may cease. The development and production of the British Airways initial 747–524 aircraft, besides being eminently desirable in itself, is therefore an essential part of the long-term plan. Furthermore, an immediate favourable decision is needed from Her Majesty's Government, because British Airways need for 1977 deliveries of their 747s would mean that, in the absence of such a decision, there would have to be a switch to Pratt and Whitney high thrust JT9D engines.

I have now been told that the current view of Her Majesty's Government—and I hope that the noble Lord, Lord Beswick, will be able to clarify what at first seems a rather odd situation—is that they cannot translate the British Airways' desire to have Boeing 747 Rolls-Royce R13211–524 aircraft in 1977 into a firm order unless there is another order for the same aircraft from another airline. I believe that the future of this splendid engine of ours, which is improving all the time, should not be allowed to depend on such a condition, and it is my earnest hope that Her Majesty's Government will give the go-ahead immediately, without waiting for another order. My information is that then All Nippon Airlines, South African Airways, and Saudi-Arabian Airlines are likely in due course to follow suit.

The need for a decision on the matter of the engines for the four British Airways Jumbos for 1977 has lasted through the whole life of the present Government, and as I have indicated, has now become urgent—very urgent. When I was looking into this matter just before the recess, I found that without a favourable decision Boeing's work on the aircraft destined for certificating the RB211–524 engine in the British Airways 1977 machines would cease on 31st May. The aircraft would be lost to Rolls-Royce and to British Airways, and there is no other aircraft under construction to take its place.

Pleading the disruption caused in other business by the referendum campaign, Rolls-Royce managed to persuade Boeing to extend the contract to 10th June. I believe that the Secretary of State for Industry himself then intervened because there was a later extension of the contract to the end of this month. I cannot think that any further extension will be possible. My information on what has become an extremely complicated matter is that Boeing are prepared to continue to commit their resources to the end of this month, incurring considerable expenditure on the way, so that if on 30th June Her Majesty's Government regrettably decided not to proceed, some 2 million dollars will have to be paid. Thereafter the programme can continue only if Rolls-Royce or British Airways engage to buy the aircraft earmarked for the certification work. This would involve the firms, or the Government, or both, in a substantial irrecoverable down-payment and a contract with cancellation penalties. In other words, my Lords, there is plenty of incentive to Her Majesty's Government to make up their mind.

I am told that the net cost of proceeding with the 524 installation in the 747 after the end of the current contract—that is to say, after the end of this month—is an additional £12 million at current prices, and the uprating to 53,000 lb, thrust another £24 million. These sums would he spread over some years. I feel that we tend in these days to talk in millions rather lightly, but indeed these sums which I have mentioned do not seem to be great in comparison with certain other items of intended Government expenditure, and I certainly make the strongest possible plea for their authorisation. The benefits in future to our balance of trade from this capital expenditure would, in my view, be tremendous—possibly, over the lifetime of the engine, of the order of £1,000 million—and I hope that the "go" spirit which saved the RB211 in 1971 still animates the decision-makers.

I was encouraged to believe that it does when I read what the Prime Minister said on Saturday at Mansfield: Britain's future"— he is reported by The Times to have said— depends on our own efforts here, our own inventiveness, our technology.

I believe that he made the same point in his EEC Statement today. How right he is. Investment in this technology must be right, my Lords. We must back our great technological achievements. To let our own decision depend on the decisions of foreign airlines would be an unworthy policy: indeed, I have never quite believed that this ever was the policy, but it has been widely believed to have been, and I hope that the noble Lord, Lord Beswick, will be able to deny flatly that it is, or ever was. We must, my Lords, have faith in ourselves and in our works, and of those, my Lords, the RB211 engine is a shining example.

7.20 p.m.


My Lords, I thank the noble Lord, Lord Kings Norton, for introducing this subject and we look forward to hearing what the noble Lord, Lord Beswick, has to say in reply. It is fair to say that it depends on the noble Lord's reply—whether, of course, he can give it in its entirety tonight is another matter—whether the RB211 engine is going to be permitted to be of use in its advanced form in future generations of aircraft. The original 211 was, as the noble Lord said, designed for the TriStar, and very successful it has been. The engine is now being developed with greater thrust to be put into the long-range TriStar. The whole nub of the noble Lord's Question is whether this self-same engine is to be allowed to be put not just into the TriStar but into future 747s. The engine is identical, the only difference being the way in which it is hung on to the aeroplane, and, as I understand it, that is the only research and development that has to be done. In this, Rolls-Royce have agreed to meet the cost of the limited redesign of the 747 wings provided, of course, that the Government are prepared to underwrite that cost. As the noble Lord, Lord Kings Norton, said, that part of the contract terminates at the end of this month.

I very much hope—and I have no hesitation in saying this—that the Government will be prepared to back this project. The cost is relatively small, though I agree with the noble Lord that we should not get complacent about figures when we talk about millions of pounds. But if the contract is cancelled not only will all the expenditure and work that has been done up to date on fitting this engine into the 747s been wasted, but we will be giving over entirely to the United States the provision of engines for future 747s. We should not willingly do this, and I believe that there is a demand for future 747s to be fitted with this engine. For a start, British Airways would like two of these long-range Boeings in 1977 and two more in 1978, and this could be increased to twenty-five by 1985: and if this requirement were met in full, British Airways could be responsible for taking some 125 engines, and this alone could justify the research and development expenditure. If the 747 with this developed 211 engine goes ahead then, as the noble Lord said, other airlines will be interested, too. But of course nobody is going to declare an interest or an open requirement for something that is still a myth; if we make it a reality almost certainly other airlines will go for it.

On the British Airways requirement alone there is a fairly strong case for the developed engine, for if British Airways can purchase the 747s with the 524 engine fitted, then all their long-range aircraft will be fitted with 211 engines and the long-range Boeings will have the identical engine as the long-range TriStar. This desire for conformity and standardisation is understandable and, I suggest, quite necessary. But if British Airways are to get their requirements for two of these aircraft in 1977, the aeroplane must fly by August of next year; so relatively little time is left, and the Government's decision should not only be imminent, it is vital. One wonders, of course, why we cannot go ahead. We come back to the classic chicken and egg situation—British Airways have said that they want to place an order for aircraft but this needs to be approved by the Department of Trade. My understanding is that the Department of Trade cannot approve the order until the Department of Industry has approved the installation of the engine, and of course there is a firm requirement for only four aircraft. But nobody else is likely to put in an order for these aircraft until they actually exist, and they cannot actually exist until the Department of Industry gives its approval.

Behind this lurks, quite rightly, the steely hand of the Treasury, and I cannot help thinking that we are in a way seeing the same situation as we had over the Maritime Harrier, where nobody would place an order until Britain did so. Of course there is risk, and of course there is cash involved in this decision, as there was over the Maritime Harrier. I congratulate the Government on their decision over that and I realise it was a difficult and complex one. I do not believe that they will for one minute regret the decision they took over the Maritime Harrier, and I believe that if the noble Lord, Lord Beswick, were able to say, "Yes, the Government are going to back this project, too", they would not regret that decision either.

It is right to say that our future depends on our own efforts, skill and technology. If I recorded those words correctly, they were the very words the Prime Minister used this afternoon in his Statement on the after-effects of the EEC referendum—that in the end the future of this country depends on our own efforts, skill and technology. Here in this engine we have a classic example of how we can succeed. I hope the Government will ensure that this comes about.

7.26 p.m.


My Lords, I too wish to thank the noble Lord, Lord Kings Norton, for bringing this urgent Question to our attention and I strongly support what he said on the subject. I will not go into the technical details because I do not feel capable of doing so. I should like simply to consider what I believe to be the three main stages of the matter. The first stage, as I understand it, involves bringing the Rolls-Royce RB211 up to 50,000 lb. of thrust and I gather that this has been funded. The second stage is to fund the fitting of the engine into the extended Tristar and the Boeings. The third and final stage is to bring it up to 50,000 lb. of thrust to power the bigger version of the Jumbo, which I understand British Airways want to take delivery of after 1977. These requirements are to be spread over several years—they are not immediately required—but I understand that they are based on present prices. The first stage has been funded jointly by Her Majesty's Government and Rolls-Royce. The second stage is to cost £12 million and the third stage a further £24 million.

We are accustomed to speaking in millions of pounds when considering these matters and while these sums are not inconsiderable, compared with the amount of money which may be spent or have already been spent on, for example, Leylands, steel and Ferranti, they are surely not very much out of line. The exception is that in the Rolls-Royce case the provision of money is really the financing of an investment in an engineering project and not an injection of cash to meet an immediate week-to-week emergency. Unless the bottom is to fall out of the civil aviation market, from what the noble Lord, Lord Kings Norton, has already told us, the provision of these sums should provide a profitable investment both for Her Majesty's Government and Rolls-Royce, and I am told should provide over £1,000 million towards our balance of payments by way of exports.

I believe that at the moment there are some 25,000 people employed in Rolls-Royce on this project and probably a higher figure if one includes sub-contractors. I am told on good authority that the best results can be obtained only from the development of all three stages if the work at Rolls-Royce can go forward in succession and continuously and that there is not any "stop-go". However, as the noble Lord, Lord Kings Norton, explained, serious difficulty now arises in that Her Majesty's Government are reported to be reluctant if not actually adamant that Government finance cannot be provided for stages two and three unless there is at least one further order from a major airline, over and above the British Airways requirement for the four big Boeings for delivery after 1977. Surely this is hardly a realistic point of view to adopt at the moment, when the industry has rather straightened out into a near standstill and nobody seems anxious to buy seats.

I believe that we have arrived at a point when we ought to take a serious look at the position which is likely to develop if, as a result of the Government's decision, stages two and three are not proceeded with. Presumably, any further work on the development of the RB211 beyond the 50,000 lb. thrust mark would cease and, as the years went on, this superb engine would become less and less competitive in the international world market. The final stage would be that this section of Rolls-Royce would have to close down and that the skill and know-how so carefully fostered and worked on by 25,000 people would be lost. The export of this famous engine would come to a stop.

What about those 25,000 jobs? Messrs. Boeing would be forced to go either to Pratt & Whitney or to General Electric for their engines. I do not know how the Pratt & Whitney and the General Electric engines match up to the final development of the RB211 or, indeed, whether they can give the same performance and reliability which British Airways are counting on, but the result will be that Pratt & Whitney or General Electric will scoop a world market which I am told will, in the next 10 years, be worth something in the region of 50 billion dollars. Surely at this time of national stringency the Government cannot afford to turn up their nose at such a vast potential market. But, if Pratt & Whitney and General Electric are to be left to capture the market, surely our airlines will still need these engines and the Treasury will have to find the dollars to buy them, which will hardly improve our balance of payments problem.

It is a gloomy and dismal picture. I rather wonder if an alternative might not present itself if the Rolls-Royce company were allowed to go to the market to raise the money on normal commercial terms. If the Government refuse to finance stages two and three and also refuse to let British Airways, which they own, go to the market, can we be told precisely why? Are the Government aware that the delays and hesitations which have taken place in this matter are sapping the confidence of the international world of aviation, not only in Rolls-Royce, but also in the Government's ability to treat this matter in an urgent and businesslike way? However, I have the greatest hope that when the noble Lord, Lord Beswick, comes to reply he will be able to allay all these fears and to provide an answer which will not only fully reassure Rolls-Royce, but also British Airways and Messrs. Boeing, and, indeed, this House.

7.36 p.m.

The Earl of KINNOULL

My Lords. I should like to support the noble Lord. Lord Kings Norton, and to congratulate him on raising what is undoubtedly a very important subject in what I felt was a very persuasive and powerful speech. Although the House can, technically, draw on a deep reservoir of knowledge among its Members, it seems all too often that the experts are not available. However, the noble Lord, Lord Kings Norton, is an exception. He is an expert, he makes himself available and he speaks with wide knowledge and telling effect.

The noble Lord's Question about the RB211 and its continuing development concerns what I believe forms one of the cornerstones of the British aircraft industry. It is one which about three years ago resembled more of a gravestone, but I believe that today that cornerstone has turned into a pillar of strength for the British aerospace industry in its continuous and relentless drive for exports. The RB211 engine no longer relies on paper forecasts, thank goodness! It has now been in service with TriStar for over two years and it has proved a very remarkable engine. It has proved—as was originally claimed for it—to be relatively quiet; it has proved to be reliable; above all, it has proved to be economical in the use of fuel. I am told that it produces results some 5 per cent. better than the Pratt and Whitney and GE engines. I am sure that that will in the future mean a lot to the customer airlines. Again, from the sales point of view, the engine has also proved wholly satisfactory to Lockheed on deliveries and wholly satisfactory to the customer airlines on performance. All that, I suggest to the noble Lord, Lord Beswick, bodes well for the present and encouragingly for the future.

Since the traumatic experience of 1971, both the Government and the new Rolls-Royce Company clearly saw the importance of what the noble Lord, Lord Kings Norton, suggests in his Question; that is, that there is a need for the continuing development of the engine. This need was markedly demonstrated by the Government, or rather by the previous Administration, some two years ago when, in conjunction with Rolls-Royce, they entered into a fairly massive development programme, amounting to some £55 million, as the noble Lord, Lord Kings Norton, and other speakers have mentioned. We know that this development was intended to catch up with the other competitors and to uprate the engine from 42,000 to 50,000 thrust. As we know, this development programme was initially designed to meet the needs of the "stretched" TriStar. Here, I feel that it would be very interesting to hear from the noble Lord, Lord Beswick, what success the stretched TriStar has so far had, what its sales have so far been and what prospects he sees for it.

At the stage when the £55 million development programme was entered into, I believe I am correct in saying that no precondition was laid down by the Government that firm orders were required. I think it is important to recall that, when one looks at the fact that one of the reasons why the Government have been so slow in supporting Rolls-Royce in the Boeing situation is that they have laid down the precondition that Rolls-Royce had to obtain a second order in addition to that of British Airways before they could be given the go-ahead.

Clearly, both the Government and Rolls-Royce had their eyes not only on the stretched TriStar when the £55 million development programme was entered into, but also on every other wide-bodied aircraft in the market, including of course the Boeing 747. This would make obvious sense to maximise the exportation of this great engine. As other noble Lords have said, my prime purpose in supporting the noble Lord, Lord Kings Norton, this evening has to do with the Boeing situation. I believe it true to say that Boeing and Rolls-Royce got together some 12 months ago on this development contract and that at that stage the Government had full knowledge and were consulted as to the wisdom of entering into the contract, which was simply to explore the possibility of strapping the engine on the 747. Either then, or soon afterwards—I am not quite sure which—along came British Airways and announced its decision to place an order for the four 747s, but specified with the Rolls-Royce engines. Those of us who recall the history of British Airways—or perhaps BOAC and British European Airways—will remember that they did not place orders on sentiment alone; they placed orders on hard facts.

The development contract between Boeing and Rolls-Royce had a time limit, as the noble Lord, Lord Kings Norton, said. Initially it was to the end of May and then it was extended until, I think tomorrow. Then, I understand—and I am sure that the noble Lord will confirm this—Rolls-Royce negotiated it up to the end of this month. But there was a condition on the extension; that is, that if ultimately Rolls-Royce, British Airways or the Government did not proceed with an order in the book, Rolls-Royce would be subject to very substantial damages against Boeing, and this, I understand they will realistically have to accept.

I do not intend to ask a series of questions, but there are one or two matters I wish to raise. First, I wish to ask the noble Lord, Lord Beswick, whether, if the Government decide not to proceed by the end of June and to scrap the hope of Rolls-Royce going into Boeing, will they agree to underwrite Rolls-Royce against subsequent damages that may fall upon it? I think that this is a fair point and I hope that the noble Lord will be able to say something about it. We have three more weeks for the Government and Rolls-Royce—the Government, really—to decide on this issue. After that date the chance of the RB211 strapped to the 747 will be lost—I think everyone here agrees on that—and the immediate future possible orders, which Rolls-Royce has been discussing very energetically over the past months, will also be lost. The noble Lord, Lord Kings Norton, mentioned the potential that is there.

What is delaying the Government? Is it really the financial commitment? The evidence one is given is that of £30 million in the first stage and then, perhaps, another £20 million, which does not seem huge when compared with the overall development cost of this engine. But what are the rewards? The noble Lord, Lord Kings Norton, has spoken about the 747; its uniqueness, its size; the fact that it was the first wide-bodied aircraft to come into service; its reputation; and its future. I am sure there will be very few people who could not argue a very sound case that to put Rolls-Royce with Boeing would make very sound commercial sense. I feel, like the noble Lord, and indeed like everyone who has spoken in the debate, that this is a decision of very great importance. I heard today on the BBC that the right honourable friend of the noble Lord, Lord Beswick, was asked basically this very question about the Rolls-Royce and Boeing situation. If I may paraphrase, he said that the Government were looking carefully into the matter, but that they had not long received the Rolls-Royce brochure. If that was the answer that was given—and my information was to that effect—I hope that the noble Lord, Lord Beswick, will be able to say that the Government do not rely wholly on colourful brochures.

7.43 p.m.


My Lords, noble Lords will have realised that I am glad to sec their interest in the future of the RB211 engine. As the noble Lord, Lord Kings Norton, and the noble Earl, Lord Kinnoull, reminded us, the whole project was threatened by the collapse of Rolls-Royce Limited in 1971, and it was out of those difficulties that the present company emerged, as well as the renegotiation of the contract to supply the RB211 engine for the Lockheed L1011 TriStar aircraft.

We remember—as the noble Lord, Lord Kings Norton, reminded us—that in 1971–72 the Government agreed fully to fund the remaining launch costs of the RB211, and that task will be completed later this year. It was also agreed that the Government would fund the production of the first 555 engines and the last of these is expected to be delivered before the middle of next year. My noble friend—if I may so call the noble Lord, Lord Kings Norton—rightly told us of the export success of this engine, and the noble Earl, Lord Ferrers, said that the present position was satisfactory. But I remind them that the net cost of Government support for this project was estimated in the 1972 White Paper at £170 million. Although there have been some changes in the basis of the estimate, there have also been savings, and the present estimate of net cost is still close to £140 million. Therefore, as the noble Lord says, we have got £280 million worth of exports, we have done so at a loss of £140 million, and I do not think that we should be criticised for lacking in financial support for the engine. Other noble Lords have commented that over 450 RB211 engines are now in service, which they are—and they are doing well.

The Earl of KINNOULL

My Lords, I have just one point to raise. Is it correct to say that this came under the fixed contract basis—for the first 555 engines at a loss of £140 million—and that already 507 have been delivered?


My Lords, what happened was that we agreed to pay for the cost of the 555 engines being produced. We, the Government, meet all the costs of the engines and we take what money is received in return for the first 555, and there will be a net loss on that of £140 million.

As I was saying, the engine has been successful and we would expect, as with other engines, to consider higher thrust developments and application to other airframes. In 1972, Rolls-Royce began development of a higher thrust RB211 with Government support. In April 1974, the company put forward proposals to commit fully the launch and production of this engine, called the -524. In August 1974, the Government gave their approval and full support to the launch of the -524 for the TriStar L1011–200, and in September the first order was placed.

We carried out a careful study of the markets and the cost and agreed to support the development of this new higher thrust version for the TriStar. Again, it should be borne in mind, if there is any tendency towards criticism for lack of courage, that the success of this investment depends almost entirely on the future of an aircraft for which we as a Government have absolutely no responsibility.

I was asked by the noble Earl, Lord Kinnoull, about the sales of the stretched TriStar. At the moment they stand at one aircraft for Saudi Arabia, and three more for the same air line will be retrofitted, totalling 17 engines altogether. This is not at the moment good, but we think that sales prospects are.

To return to what I was saying, British Airways had by this time expressed a wish to have all their heavier weight Boeing 747s powered by the -524 engine. At the same time as giving the go ahead for the use of the TriStar, the Government also said that they would support the application to the Boeing 747 as soon as a second major order was obtained in addition to British Airways' requirements. The noble Lord, Lord Kings Norton, said that his information on this point came from a reliable source and I confirm that he was correctly informed. The costs, including those for thrust growth, were substantial and we considered it prudent to have at least one other major order, besides that of the British company, before committing the whole launch programme. That was not an unreasonable decision to take. The noble Earl said what great prospects there were. He was absolutely certain that all the engines were going to be sold, but all we said was that if there could be one other major order in addition to the British company we would support the whole launch programme.

This decision enabled Rolls and Boeing to make a firm unconditional offer to other major airlines. Rolls-Royce and Boeing signed an agreement—as the noble Earl, Lord Kinnoull, reminded us—to carry out initial work on the application until the end of May 1975. It has been said that there are airlines willing to order and that the Government are holding back. This is absolutely untrue. I can only emphasise that if an airline such as ANA, in Japan, is ready to sign, then Rolls-Royce can accept the order and Government support would automatically follow.

The Government are now considering fresh proposals from Rolls-Royce which were not put to the Department in final form—and I emphasise final form—until 16th May. Noble Lords will understand that such proposals have to be studied and that the sums involved are considerable. We have to consider not just the application to the 747 of the engine already under development, but also the costs of developing even the extra thrust which will inevitably be required over the years. I say quite firmly that some of those who have been so certain that we should have gone ahead with this expenditure without demur would have looked much more closely at these costs had it been their own money which was involved.

The noble Earl, Lord Ferrers, said that the British Airways order alone would have justified the extra cost. I suppose it depends on what criterion of justification we apply, but if we apply the criterion of a reasonable return on money invested I can only say that that order from British Airways alone would not so justify the investment. However, the assessment is now complete and we are urgently considering the matter. It is true to say that the longer than usual Recess to accommodate the referendum caused certain difficulties, and my right honourable friend the Secretary of State wrote to the President of the Boeing Aeroplane Company stating that a decision would be made shortly and asking that options should be kept open in the interim period. The Boeing Company have now sent a constructive reply and a decision will be taken within an acceptable time scale. I was asked by the noble Earl, Lord Kinnoull, what financial compensation we will give to Rolls-Royce if they are not given the go-ahead on this application. The noble Earl will not be surprised to learn that I do not answer hypothetical questions. All I will say is that the Government's aim wherever possible is to assist Rolls-Royce in developing and exploiting all its products, always provided that any new or developed project has reasonably satisfactory possibilities of an adequate market.

The Earl of KINNOULL

My Lords, before the noble Lord sits down, may I say that I do not think the question is totally hypothetical. As I understand, Rolls-Royce could have withdrawn at the end of May with no costs at all. They hoped that the Government would reach a decision before then. They then managed to persuade Boeing to wait until 10th June and then negotiated, with Government approval I presume, to the end of June. So is it really a hypothetical question?


My Lords, it is certainly hypothetical. The noble Earl asks what we shall do if the agreement to go ahead is not given and I am saying that a decision has not yet been taken. If when it is taken it is an adverse decision, I shall welcome the opportunity of answering the question which the noble Earl then poses.