THE HOVERCRAFT INDUSTRY

HL Deb 01 May 1975 vol 360 cc52-86

5.38 p.m.

The Earl of KINNOULL rose to ask Her Majesty's Government what current support is being given to the British hovercraft industry in their research and development, what future prospects there are for civil and military home and export markets, what monitoring is made of the experience of operators; and how they see the industry's progress in relation to the development of the hovercraft industry abroad. The noble Earl said: My Lords, I believe that the last occasion that the House considered the British hovercraft industry was in July 1973. In that debate the noble Lord, Lord Beswick, lent his moral support to it in an unusually short, sharp and effective speech which was recorded in Hansard in no few[...]r, or no more than 11 lines. At that stage, he urged my noble friend Lord Drumalbyn that, if his prepared speech reacted unfavourably upon the general tenor of the debate, he should lay it aside and deliver another one. I hope that the noble Lord will not need to heed the wise advice that he gave then and, indeed, that today he will come with a hopeful reply.

May I say how grateful I am to the other noble Lords who have indicated that they intend to take part in this debate, and also how sorry I am that the noble Earl, Lord Halsbury, cannot take part in it. He is somewhat of a godfather to hovercraft. I regret, too, that the noble Lord, Lord Kings Norton, is unable to take part in the debate. However, I am grateful to see that we have a Liberal spokesman in the guise of the noble Earl, Lord Kimberley. I rather feared that, after the experience of the Leader of his Party in his interrupted assault on the beaches of Devon during the last Election, Liberal views may have been somewhat jaundiced towards hovercraft!

The Question on the Order Paper is framed in a fairly wide form and I hope that the noble Lord, Lord Beswick, and his advisers have appreciated that its purpose is to seek an up-to-date report on the continuing development of what some people feel will be a very great industry. The most intriguing part of hovercraft undoubtedly is its numerous applications, from the very large passenger-carrying craft across the Channel to the leisure "fun" craft across the Serpentine; from the industrial platforms, moving oil-platforms and tanks over water and ice floes and deserts, to the little medical hoverbed designed for treatment for badly burned patients. Looking back over the debate two years ago, I think it is true to say that at that time the industry faced a bleak future. It seemed then that the Government of the day were showing signs of a certain increasing indifference to the industry. There was evidence that the hard-won technical know-how of this industry was beginning to slip away from the grasp of Britain and to move across the water, indeed to move across not only to France but to America and Japan.

When one looks back to the time of the invention of the hovercraft by Sir Christopher Cockerell one obviously hopes that it will not join the long and shameful list of British inventions wantonly and wastefully thrown away for other countries to exploit. What has happened in the last two years to this industry? Abroad we see that there has been a continuing growth of investment in hovercraft research. I am advised that in the United States of America the re- search programme up to 1975 has now grown to some 206.9 million dollars, all principally involved with defence. For the 1976 Budget, the Department of Defence is requesting, I understand, some 38 million dollars together with an amphibious assault craft programme amounting to some 20 million dollars. That is a very substantial programme and we know that in France the Government is supporting the N 500 craft which, when it goes into service—if it goes into service—will he a direct competitor across the Channel of the SRN 4. We know that in Canada there is another Government programme for tackling operations in the Arctic. Finally, of course, we know that Japan is very interested in hovercraft and its development, and is building hovercraft under licence. Perhaps when the noble Lord, Lord Beswick, replies to the debate, he will be able to give us more information on what is really happening abroad.

At home in the last two years, I suggest that the industry has had somewhat mixed fortunes. I think it is fair to say that in Whitehall the industry has not been viewed with much enthusiasm. In 1973 the industry was given what many people may have thought was a Mafia type kiss of goodbye by being given its terminal grant to be used up by 1974 to develop existing craft. At the same time the hovercraft directorate within the DTI was abandoned. But perhaps worst of all was the publication of the White Paper on the Channel Tunnel project which gave only four lines to the hovercraft and its potential, despite the fact that, at that time, five hovercraft were taking some 30 per cent. of the traffic across the Channel.

The noble Lord, Lord Beswick, may say "Ah, but that took place in the previous Administration ", but I regret to tell him that things have not improved with the present Government. In January of this year the Government were asked in another place for information on the current hovercraft exports and support, and they gave the figures as being 0.9 million in 1972, 2.3 million in 1973 and 1.5 million in 1974. When one looks at only one hovercraft company, namely BHC, one sees that, in fact, these figures are not accurate. Again, I hope that the noble Lord will be able to clarify the position, and, indeed, the position with regard to the research and development programme, which again was challenged by the industry.

The main purpose of my short speech now is not necessarily to bring up these old points but really to ask the Government whether they will recognise the very important part they need to play in the hovercraft industry. I think few would disagree that the industry is still facing—indeed even more so—very challenging competition from abroad. We know, as well, that the original patents protecting this British invention have now a fast-diminishing life-span before being open and unfettered in the world markets. I believe the Government cannot afford to adopt a policy of inaction and indifference to this industry if it is to thrive as a British industry. The role of the Government in industry and the part it can play, not just in the funding of research and development but also by information and credit assistance, and indeed by purchasing craft, is something which should be examined. I should like to suggest to the noble Lord that an independent committee should be set up by the Government to investigate and study the hovercraft industry. Perhaps the study could be made by the Centre of Transport Studies at Cranfield. Evidence could be drawn from manufacturers, from operators and from consumers and consultants, to examine not only the potential of the industry, its employment, its export earnings, but also the vital role between Government and the industry.

My Lords, what has the industry achieved in the last two years? I say two years because it was two years ago when we had our last debate. I believe that its achievements, and indeed its future, appear much more heartening. The result of its exports we have seen with the Hover Marine Company in Southampton, which employs some 150 people; they have exported no fewer than 30 passenger-carrying craft to 14 different countries. We have seen the British Hovercraft Corporation—the largest manufacturer, employing 2,000 people at Cowes—again with a good record of exports, mainly in the military field at the present time. Indeed, I believe it exports some 74 per cent. of its production and it was awarded the Queen's Award for Industry only a couple of weeks ago. One also has Vosper Thorneycraft, a highly independent and profitable company, which as we know has been developing a large military craft but now faces the uncertainty of nationalisation. I hope the noble Lord will be able to say what the Government intend to do to maintain the hovercraft division within Vosper Thorneycraft.

But there is one other factor which has been a major encouragement to the industry, and that, of course, was the cancellation of the Channel Tunnel project. This obviously involves the large SRN 4 craft. The Channel at the moment has only five craft operating between two operators—Hoverlloyd and Seaspeed. I understand that Hoverlloyd has shown a profit for three years and Seaspeed certainly showed a profit in 1973. The position of the Channel crossing and the SRN 4 is quite clear to the noble Lord, I have no doubt, but perhaps it is worth emphasising that there are two issues facing the industry and the Government at the moment. The first is that the Government—or initially British Rail—should give the go-ahead for a stretched version of the existing SRN aircraft to offer an additional 50 per cent. capacity. The second decision is, of course, the second generation of the SRN 4 to give a better operational performance and one which, I understand from the manufacturers, could lead to a fuel saving of some 60 per cent.

We know that looming large in this decision is the French craft, the N 500, and we know that, if no decision is taken in the reasonably near future, the French craft could become more and more competitive. If one assumes that Seaspeed can persuade its parent company, British Rail, to proceed with, and ask the Government to give the go-ahead to, the stretched hovercraft, I hope the noble Lord will be able to give us an assurance that the approval of the Government to any such application will be as speedy as possible, and approval will not be linked with some other Railways Board requests. It is vitally important that any hovercraft policy by Seaspeed should be judged individually on its merits. The importance of the timing of the decision of the Government and the Railways Board has been reinforced by the joint trade unions at the British Hovercraft Corporation, as well as by the management. I hope the, noble Lord will be able to say something firm on this.

My Lords, turning to the next generation of the SRN 4, I hope the noble Lord will be able to say whether the Government are encouraging both operators and manufacturers to get together to hammer out an agreed specification. With reference to the smaller craft of hovercraft, I know the noble Lord, Lord Selsdon, will be dealing with this particular aspect and, indeed, with other funding problems. I should like to ask the noble Lord three specific questions on this and other applications of the hovercraft.

My first question involves the industrial hover-transporters. I believe there are a number of very successful small companies in this sphere which have won large export orders. I should like to have an assurance that the Government are giving support to these companies, if asked, not only with funds, but with credit facilities and even better, information from embassies about the markets abroad. My second question refers to the hoverpad for crashed vehicles at airports. This matter was raised in 1973. I do not know whether there are plans for any of the airports—or, indeed, whether Heathrow has plans—to have a hoverpad available to lift off any aircraft requiring it.

My Lords, the third matter concerns the hoverbed. As the noble Lord, Lord Beswick, will recall, this bed was heralded with some acclaim five or six years ago when it first was introduced at the Mount Vernon Hospital. I do not think much has been said about it recently. It would be interesting to know whether the medical world have proved its application, and whether the Government is continuing with research. The hovercraft industry is still a young industry. It is very virile, fascinating, and totally opposite to a lame duck. For some years its potential has been somewhat marred, I believe, by a degree of overenthusiasm and by extravagant claims. I hope that it is now passing through its puberty stage, and that its passenger-carrying capability has been proved viable. Competition is increasing from abroad, and our technical lead will not long remain. Unless the Government show their resolution and support, I am sure that the hovercraft industry will be lost from our grasp.

5.54 p.m.

The Earl of KIMBERLEY

My Lords, as the noble Earl, Lord Kinnoull, said, the Liberal Party has been involved very intimately in the past with hovercraft, and even if not in every sense satisfactorily, still with enough faith to continue in praise of them. The noble Earl explained very eloquently about the SRN 4 and about cutting it in half to make a stretched version. However, I have been led to understand that, if this is to go ahead, it is very important that the order for the first one should be given by July, as, otherwise, it will make life very difficult for the British hovercraft factory.

There is a further point worth raising on this matter; namely, that the French N 500 already referred to is Government subsidised. I have been led to understand, and knowing the French it is probably true, that they will be delighted if they can drive our hovercraft off the Channel. The British Hovercraft Corporation, unlike many firms today, is not asking for any money from the Government. The Corporation has a large labour force. If it cannot find a more certain future, it may be possible that this will lead unnecessarily—and I hope that it would not—to redundancies, as well as putting into jeopardy the whole future development of the hovercraft industry in this country.

As your Lordships will know, this is a British invention. It would be tragic if the United States of America—and, in particular, France—took the lead in this industry, despite the British pioneering that we have done. It may interest some of your Lordships to know that, if you add 48 ft. by cutting an SRN 4 in half, you increase the capacity from 30 to 54 cars, and from 254 to 394 passengers. This machine, then, would compare more than favourably with the French N 500 which carries 65 cars and 385 passengers. The SRN 4 has proved it is commercially competitive in service. If it can get the order to stretch one of these, it would give great incentive to the British hovercraft industry to enlarge itself, and to keep well ahead of any foreign competition.

It is an interesting point that, since 1966, the Government have put only £9 million into the British Hovercraft Corporation. I have been led to believe that the Government have spent money elsewhere, but not with the British Hovercraft Corporation. The total figure for research and development is £15 million. That has mostly been funded by private investment. Each year, the hovercraft grows more efficient—the power/weight ratios improve, the service reliability gets better, the seaworthiness and seakeeping in bad weather improve. In the new generation craft, it has been worked out that fuel consumption would be 15 per cent. less than ships per unit of payload. It may be coincidental that many aircraft seem to work better when stretched. This seems to work also with the hovercraft. All these points really need no new total technology.

My Lords, I repeat that the British Hovercraft Corporation is not asking the Government for more money. If possible, it would like an endorsement by British Rail, which would be, of course, subject to Department of the Environment and Treasury approval, hovercraft. That is a possible reason I should like to mention. During the last few years, I believe no fewer than seven Ministers have held responsibility for hovercraft. That is a possible reason why we do not have a rather more concerted policy. Perhaps the noble Lord, Lord Beswick, can give this matter some active consideration—possibly in consultation with the right honourable gentleman the Minister for Transport—to allow a publicly-owned sector of the operating industry to undertake freedom of choice in its routes and commercial judgments, and to rid it of the fetters of the British Railways Board.

My Lords, my last question to the noble Lord, Lord Beswick, stems from the fact that I believe the United Nations have published a book entitled Air Cushion Vehicles for Developing Countries. This book is being published in English, French and Spanish. I should like to know whether our commercial attachés in each of the developing countries are in possession of this publication. It contains much information about the use of hovercraft. Most of these are British by reason of our lead in the technology. It seems slightly curious that successive United Kingdom Governments have done so little to publicise the potential for hovercraft in the developing countries. It is to the credit of the United Nations that they have undertaken this work.

6 p.m.

Lord SELSDON

My Lords, my noble friend Lord Kinnoull and I are to some extent in cahoots in this debate, not really as Back-Bench Conservatives, but, I hope, more as patriots. I shall speak on a fairly wide-ranging theme, with no intention at all of criticising or attacking the policy of the present Government or the last Government or previous Administrations since the hovercraft industry began. I think there is one point of concern. It is a fairly true statement that if the right steps are not taken now, yet again Britain will fail to take advantage of turning her technology into good export orders and dominating an industry which we founded. The question I ask is, does the United Kingdom want to have a hovercraft industry? Is there any reason why she should?

I am not making a plea on behalf of the industry to pump yet more public funds into a Selsdon lame duck, nor am I suggesting that we need any other legislation or change of organisation from what exists already in the hovercraft industry. The hovercraft industry at the moment is not an ailing industry, it is a fledgling industry. It has a turnover of £10 million, £11 million, or £12 million; it employs under 2.000 people. and is divided roughly into three areas: the large manufacturers of large craft which sell at a price of £4 million or £5 million upwards; the manufacturers of platforms which do not have prime movers, which means they have to be towed or moved about for oil rigs or drilling operations, and which sell for up to half a million pounds; and the manufacturers of the smaller craft, going right down to tiny operations which sell for as little as £1,500.

It is not an industry which needs vast amounts of capital. It is not an industry in which vast amounts of capital have now to be spent on technological development. I believe that the public funds pumped into the industry since it began total something around £16½ million, and indirectly the Government have already received back something between £2 and £2½ million. We are not saying to the Government, "Find large amounts of public funds "; but what we are saying is that if there is not the right cooperation between Government, the industry and the potential purchasers in overseas markets, then our industry again will be upstaged.

I must declare an interest in this. It is a rather roundabout interest, in that the group with whom I work did have an investment in one of the operators of hovercraft, a rather disastrous investment which we sold not so long ago. We also, in one of the other companies in our group, insure hovercraft in various areas. When I suddenly, about six months ago, thought that there must be a future for the hovercraft industry, I started to take an indirect commercial interest. I found to my surprise that many of the smaller companies were in dire financial difficulties; that few of them could finance any major orders or contracts which they might receive; that much of the expenditure which was needed to turn the technology into money could not be met.

The Americans often have an appropriate phrase. The word "know-how" is the magic phrase for converting commonsense into cash. We have the development in the industry. We have virtually all the technological development that we could require, so much so that the rest of the world acknowledges this quite readily, but with a certain amount of cynicism, because again they believe that yet another British invention will help to make money for another country, and that we will be funding the technological development on behalf of our international competitors.

As your Lordships may know, or as I believe is the case, in five years' time many of the patents expire. The American industry is sitting waiting for this to happen, waiting for all the problems to be ironed out, with plans to move in and take over the hovercraft industry and make a profit, as it has done so often with other British inventions. The Japanese, who are past masters at using other people's technology to develop their own exports, are doing the same. They have licences, but they have been buying British hovercraft; some are being taken to bits, and in due course throughout the South-East Asian market and other areas Japanese hovercraft will appear with Japanese engines, with wonderful service and no problems, and with great reliability. The French are perhaps more cunning than many others, because they take a much longer and broader view. They are sitting on the other side of the Channel with this hovercraft. It is not just a hovercraft; it is the start of the French hovercraft industry. If they can get their hovercraft on the Channel route, it becomes the showroom of the world; everyone will be taken to look at it. We know the efforts the French are making in the Third World to sell their technology and know-how and to obtain funds for recycling in French industry. If that hovercraft is operating on the Channel route, then we have very little hope of selling any of ours when the French become involved.

These are three competitors, and for the moment the world cannot afford four hovercraft industries. It is going to be a medium to long-term potential, and although the potential lies to some extent in certain areas of transportation within Western Europe, the bulk of the potential lies in the Third World, in the developing countries, where the principles of the hovercraft and the hoverplatform offer considerable advantages. I have made these inquiries myself as I have been round the Middle East and some of the developing countries in recent times, and it is sad to find a lack of knowledge of what the hovercra[...]t can do, a little misunderstanding of the concept. But some people—I speak of the French again, and I have spoken with them of the future which lies in all sorts of areas—have said to me that the hovercraft is the first means whereby war could be made in mid-winter in the Arctic, where from Soviet Russia major attacks could be made on Scandinavia in the middle of the night, at high speed in warm comfort. I myself never thought that a hovercraft would go running over ice. We look at the Alaskan pipeline, where one of the British companies has just sold £1 million worth of hoverplatforms and is well respected and regarded by the Americans. This same company was forecasting that in this year it would have a turnover of just £1 million, but it has already exceeded that in the first quarter. We have some of the smaller people who in developing countries, whether it be Zaire or Indonesia or parts of Africa, have the inquiries, not necessarily the orders. The smaller craft are selling at low prices and make up only a very small section of the industry.

My Lords, I have spent 17 years working in the international field, often in a marketing role. I often regret the way that we British have never been capable of selling or delivering many of our products abroad. We are continually being upstaged. The hovercraft is more than just an invention; it is an emotional thing, it is a prestige thing. Those of your Lordships who know the realities of that sale to Iran by BAC realise the power and feeling that has been given to the Iranians for the future of their activities in the Gulf. The other Arab countries all have interests in hovercraft, often again for emotional reasons. We know that the Americans and the Japanese are waiting to exploit these as time goes by. I was saying earlier that we do not ask the Government to "fork out" large amounts of money for the industry. What we ask would be the ideal here of the mixed economy: of Government with industry, with the private sector, and also within the context of the European Community. In all of these things there has to be some form of co-ordination and some form of centre.

It is not an industry that the Government would wish to nationalise; nor would it be wise to do so, because it is a fledgling industry, not a developed one. It is not an industry which in the next two or three years is going to offer large job opportunities; nor is it an industry which can produce vast export orders immediately. But it is an industry which, within a period of five years, could became the subject of a major world operation. If we took the right steps now, we could put ourselves so far ahead of the rest of the world that they could not afford the investment to catch up. As your Lordships know, there are areas of the private sector where Government involvement through NRDC has been very helpful in providing money for technological development, improvement of innova- tions, et cetera. Many of the hovercraft currently manfactured may not be up to standard; there are technical faults.

There are criticisms of the "meccano and glue brigade ", who have sold things in certain parts of the world which did not work, and which perhaps put people against the hovecraft principle as a whole. There are criticisms of, "A bunch of Spitfire pilots who do not know a thing about money and just want to go flying around over water and land ". That may have been the case a few years ago, because every industry of this sort takes a generation to develop, a further generation to make a lot of money, and it then seems to take another generation to fade away and die. I do not think particularly of the motor industry, but there are others where this technological development has a certain life period. One of these definitely lies in the developing world.

The applications are legion if people can apply their thoughts to it. The people back at home cannot understand the applications to which a hovercraft can be put unless they have been out in, say, Indonesia and have seen a road being topped up and sinking continuously into the marshes, and costing thousands of pounds each year to rebuild, when a hovercraft could carry people over quite happily. Then there is the 90 day or 100 day demurrage in the major ports where people cannot get their cargoes unloaded, and have suggested to me that dumb lighters on the hovercraft principle which could go straight up the beach could easily be used, and could recover their costs within a period of months. Then, in the Middle East, the Arabs have said to me, "Will you run a hovercraft service from Jedda across the Red Sea?" Others have said, "We need things for pilgrims," and for all forms and areas of activity which I have never thought of before.

We tend in this country to be almost too Western orientated, and to think in terms of Western economics. In the past, perhaps, we looked down on the developing world as somewhere where we should provide aid, but hardly ever thought of it as an area for marketing opportunities. The hovercraft industry, in itself, cannot afford to launch the major campaign which is needed to educate people throughout the world. Nor should it do so, if the markets and opportunities are to fall into the hands of the Japanese, the French, or the Americans. There are some possibilities, and I think it is always better to try to be constructive even if, at times, you may tread on people's toes. The hovercraft industry is obviously against being nationalised in the big league. It is certainly wrong that the hovercraft division of Vosper should be completely in national control. I will not go into the reasons why, but when you have a fledgling industry which depends upon entrepreneurial feel and drive, it is totally different from a developed industry.

I have spoken with the various hovercraft companies over the past two months. I have spoken with other people from other countries when I have been at the Council of Europe, or elsewhere abroad, on this subject. The admiration which is expressed for the potential of the hovercraft is considerable. The backbiting which used to exist within the industry seems to have disappeared and faded away. There appears to be one common sense of purpose, and a willingness to try to co-operate with the Government—preferably at arm's length and as far away as possible, but certainly to co-operate.

I should like to suggest that one gives some consideration, not to rationalisation because that is an emotive word, but to co-ordination within the industry within existing legislation, which might help it to take better advantage of the potential which will lie abroad. We have to look at the sources of finance for the industry. There are Government funds in this country, where large amounts—not large by national standards, but certainly large by private company standards—have already gone in, and more funds are available to develop and improve the industry. In many cases the industry would accept that what has been done by the Government in this area was good and right. There are criticisms that money may not have been provided for a certain project, or someone employing one man may feel that he should have £3,000 today to help him do something else. So there is the British Government as a source of funds.

Then there is the private sector, which covers the companies themselves, or, one could say, our financial institutions and the individual entrepreneur. The economic climate makes it very difficult to raise any funds for new development from the private sector at the moment. In times of high taxation, the individual entrepreneur was willing to take some risks, but in times of exorbitant taxation he would rather not have any money at all. It is wrong to think that we could rely on the private sector to try to finance, in the short term, a fledgeling industry where the potential return is two or three years away.

There are other things that we often do not think of. Hovercraft technology is regarded within the EEC as an EEC asset. Thinking that I might be able to do something to help, I went off to see the European Investment Bank in Luxembourg. I asked them, Will you provide funds for companies in the hovercraft industry? "They said, after some discussion, "In principle, yes, provided the British Government would approve, because it meets the criteria which we have laid down, and of course the United Kingdom is not asking for as much as we would be willing to give ". I said, "May I tell the industry that?" and they replied, "Yes. The application has to be made in the right way. We will not put up less than £1 million."

It does seem to fit very well, but if you consider the industry as a whole, it meets the criteria in that there is one company in an assisted area, it is high technology, it is connected with energy and transport, and it is without doubt in the interests of the EEC. I would hate to have to argue that with them, but it is within the interests of the EEC. If we can upstage the French by getting EIB to support our industry first, it will be a political move. It will also be a good thing at this time, as a pro-Marketeer, to encourage funds to come from the EEC, because this may give the British the feeling that money is available to help our industries—which indeed it is.

In order to do all these things on the financial side and to bring in the private sector, I went further. When I was out in developing countries I said to people, "If and when, as it will, the British hovercraft industry becomes powerful, is it the sort of thing in which you would like to have an investment? "Some of these countries, some with funds in the Arab world, said, "Yes, because this has an application in our country, and it would appeal to us." I then came to the conclusion that with the right approach, adequate funds could be made available. These funds are not for technological development, because the NRDC can provide them. They are really to help finance the industry when it needs financing, and to help with a co-ordinated marketing programme to produce hovercraft on a worldwide basis.

Then I asked what other sources of money could be made available under current legislation. I was told that under Section 7 of the Industry Act money could be made available to an assisted area. One of the companies is in an assisted area. I was told that under Section 8 it might be possible, if there were some reorganisation of the industry, to obtain funds. I thought that it would be totally wrong in these hard times to announce to the country that the Government ought to put millions of pounds into an industry which employs only 2,000 people. Then I thought we ought to see how, and in what way, all of this could be co-ordinated. As your Lordships will know, within the NRDC there is a company, Hovercraft Development Limited, which has done a lot for the industry. But the NRDC function tends to be technological, when the problems now are really marketing, rationalisation of production and, when the craft are in operation, servicing and the provision of spares.

First, one has the role of selling the hovercraft concept. It so happens that by pure coincidence the different companies within the industry do not really compete with each other to a very large extent. There is overlap, but all of them have found a narrow sector where they believe there is a market of their own. I should like to suggest to the Government that they consider giving Hovercraft Development Ltd. a slightly less Government "feel" and a slightly more independent attitude. We should try to use Hovercraft Development Ltd. as a vehicle not only for channelling technological resources, but also for co-ordinating marketing, and perhaps production, and bringing the industry together. I should also like, as a Conservative, to suggest that in due course the Government might consider spinning off Hovercraft Development Ltd. into the private sector, which could be a possibility if we were looking for funds in the future.

I have spoken with companies in the industry, and all of them seem to believe that there is a need for some form of co-ordination. I believe that the first stage should be some form of promotional and co-ordinated research programme. Under current legislation of the BOTB, the Government offer to provide a large proportion of the cost of a research project. It could be a worldwide research project, costing a fair amount of money. This, again, could help the industry, because in doing research there is the selling of the principle as well. Rather than necessarily charging off, as individual companies, to major air fairs with major expenditure in far-flung parts of the world, would it not be better to bring the people here?

You cannot sell hovercraft unless someone has seen one, or so I submit. It is expensive to ship a hovercraft or a collection of hovercraft to Indonesia, but under the Inward Mission Scheme of the BOTB the Government could be willing to accommodate missions from countries where the potential lies. This leads one to suggest that we should perhaps have a common demonstration area within the country, probably on the Solent where most of the industry is concentrated. One is led to suggest: why do we not do this now, this year, without a great deal of expenditure? Perhaps one could suggest, too, that Cowes Week would be an appropriate time to get the industry together and to invite potential purchasers from the developing countries.

The hovercraft principle definitely has a potential. That I think everybody will accept. People may criticise the application of that potential. One may say that it could apply only for military purposes; that small hovercraft have no potential. Others may say that it is best for hoverplatforms, and that hovercraft should never try to compete with ships. But whatever it is, there is a potential. The question I have for the Government is: Do they believe there is a potential for a British hovercraft industry? I know that the Americans believe there is a potential for theirs, while the French and Japanese wish to develop their own. I suggest, too, that we give consideration to co-operation within the Commonwealth on this basis, because the Canadian hovercraft industry is in similar straits to our own and is wondering in which direction it should go. If the British should fail, the Canadians may wish to co-operate with the Americans. But co-operation with us would surely be more beneficial, particularly in view of the vast Canadian market, developments in Alaska and the need to move into Latin America as well. I know that the noble Lord, Lord Beswick, will be sympathetic to the industry as a whole. I hope that he may give consideration to some of the suggestions I have made. I hope that in three years' time we may see in this country a thriving hovercraft industry which is no longer a fledgling.

6.22 p.m.

Lord WYNNE-JONES

My Lords, after listening to the speeches of the noble Earls, Lord Kinnoull and Lord Kimberley, and also the noble Lord, Lord Selsdon, I feel that I have little of technical importance to contribute, because they have already exhibited very clearly the technical significance of hovercraft. However, there is something to which I must refer. It was in 1968 that the noble Earl, Lord Kinnoull, asked in your Lordships' House a similar Question about hovercraft. On that occasion I took part in the discussion. On balance, I was opposed to any idea of the development of hovercraft. The noble Lord, Lord Selsdon, has given us a wide-ranging account of hovercraft. At that time in 1968, having had a pleasant lunch at Cowes with the Hovercraft Company, I had returned convinced that hovercraft had no future, because it seemed to me that they were developing along lines which could not possibly lead to anything useful economically. I should explain that at that time they had built the SRN 5 and the SRN 6—for some peculiar logic the SRN 4 came later—and the SRN 6 was considerably smaller than the present SRN 4, which is used across the Channel. I travelled on the SRN 6 to Cowes. It was a bumpy, noisy and unpleasant ride. It seemed to me that when you took into account the cost of building that version, it was not worth while.

Perhaps your Lordships may forgive me if I indulge in some minor statistics on this matter. There are various ways in estimating the capital cost of transport, but I think I am right in saying that when you are discussing hovercraft you have to compare it on the one hand with an aeroplane and on the other with a surface ship. I am not now referring to certain devices for going across swamps but for travelling across open water. If you do this, then there seems to be little doubt—I am not sneaking as an expert but as someone who has studied the expert evidence—that the appropriate way of discussing it is in talking about ton-knots; that is to say, the number of tons that you can transport at a certain speed of one knot. Going back to the time I am talking about, eight years ago, one finds, in making this comparison, that the cost per ton-knot of the SRN 6 then was about 30 per cent. more than the cost of a Boeing 707. It was something like three times as much as the cost of a surface ship. That seemed to me—I may have been wrong—to exclude the hovercraft as a possible means of transporting people or vehicles across the open seas, such as the Channel.

Since then the SRN 4 has been built. Its cost has dropped per ton-knot. I think I am right in saying that the cost of the SRN 4 is now just about the same as the cost of a Boeing 707 and about twice as much as the cost of a surface vessel. This means that the SRN 4 is at least competitive with an aircraft, but not competitive with a surface ship. So it begins to come into a range at which one might think of its potential. Since that time I have had another lunch with the Hovercraft people. I must admit my indebtedness to them and say that undoubtedly they have influenced me: the first time they influenced me against them; the second time I listened to them carefully. I have taken their figures and have looked at them carefully. I have the figures here as I do not wish to quote just from memory. What I now find is that, whereas the cost of the original SRN 4 at the present time is £500 per ton-knot, which is about the same as the Boeing, the stretched SRN 4, cut in half and in which is inserted another section, or alternatively built as an entirely new vessel of equivalent capacity, is £200 per ton-knot. That is practically the same as the cost of a surface ship.

This is a sensational improvement. I am, of course, relying entirely on figures given to me, but if they are correct it seems that the economic position has changed dramatically in the last few years. As I said, I took part in the debate which was initiated by the noble Earl, Lord Kinnoull, on 26th March 1968 and on that occasion I was highly critical of hovercraft development. Looking at the matter afresh, I have changed my opinion and I now feel that there is a very good case for looking at the SRN 4 in its stretched version and for going ahead with it.

This case is reinforced by the fact that we have, in my opinion correctly, decided that the building of the Channel Tunnel would be a ludicrous piece of prestigious nonsense. Instead, we have decided to rely on other means of transport, surface and air. The capital cost per ton, knot would be less for hovercraft than for aircraft and it would he virtually identical with surface craft. This seems to me to mean, when one considers the flexibility of hovercraft, that we should go ahead with this form of transport. I say that because for surface vessels one must have ports at both ends, as it were, because one must have the capacity to get on and off ships. This is not the case with hovercraft. One must, of course, have something, but not ports of the conventional type. In other words, one produces flexibility of transport, and in my view this is highly significant.

The time has come for us to look at this matter from a totally different point of view from that when we considered it, and rightly so, eight or ten years ago. The industry has reached the point when it can do this job in a sensible way. I am not fully satisfied that it has necessarily produced the right means of production, but I recall that when I saw hovercraft being produced some years ago I was shocked at its hand-made construction aspect, the way buoyancy tanks were being bolted together, something totally different from the operation involved in making aircraft. I thought at the time that if the Americans got in quickly they would be able to do it much more efficiently than us. But we now seem to have reached the point where we can do the job properly, and I hope that we will give every encouragement to our industry to go ahead and do that job.

Like my noble friend Lord Beswick, I was an advocate back in 1964 of what was then called "white hot technology." I am still an unrepentant advocate of white hot technology, because the one thing that could destroy this country is the mentality that we should make only things like fruit machines, soda water syphons or can openers. That will not save us. It is only by making technological advance, in which this country can excel, that we stand any hope of going ahead. I therefore feel, years after my first speech on this subject, that I must now support the idea of the hovercraft.

6.36 p.m.

Baroness WARD of NORTH TYNESIDE

My Lords, I have no technical knowledge of hovercraft, but after having been in another place for 38 years representing two constituencies in the North of England I think I can modestly claim to have some experience of helping forward the Government machine when we want action, and that is why I speak today. I have always been interested in developments with which this country can be connected and, as I say, I have always been interested in finding out how the Parliamentary machine, whether in another place or, now that I am a Member of your Lordships' House, in this place, can be moved.

I have no idea how sympathetic or otherwise the Minister is towards this subject, but I listened with interest to the tremendously interesting speech of the noble Lord, Lord Selsdon. Though I have been in your Lordships' House for only a short time, I have managed to extract details of the grants of one kind or another which have come to the United Kingdom from the EEC. I have been grateful for these details and I was therefore particularly interested to hear the noble Lord, Lord Selsdon, speak of having been to Luxembourg where, I understood him to say, he received a reasonably satisfactory reply. That does not surprise me, in view of the vast number of grants that have been given over a very wide field of development, some of which will presumably be successful. Suffice it to say that we have had great success from Europe in this respect, and I was therefore delighted to learn that the noble Lord had make his mark there.

I am equally sure that the Minister is delighted with the number of grants and support that we have received from Europe, and I see no reason why, providing he can get a satisfactory basis with the EEC for going forward, a grant should not be made available from the same source for this purpose. After all, we do not live in a world in which we can afford to let anything go by that has a possibility for development in the future, and I am sure, from the speeches made on this subject today, that a good opportunity lies here.

One thing the noble Lord, Lord Selsdon, mentioned was the problem of getting people to see the hovercraft. I hope that those who are so interested in it will forgive me for saying that, so far as my part of the world is concerned, we are absolutely delighted that we are at last going forward with the Seahorse engine for merchant navy work. I have only fairly recently received an invitation from the three firms on the North-East coast which are to have an open demonstration of the engine so that they can show it off. In a way, I should have thought—devoted though I am to the Seahorse engine, and proud as I feel of our efforts—that the hovercraft would be more interesting than the Seahorse engine for such a demonstration.

As I say, although I can make no technical contribution, I was very interested in what the noble Lord, Lord Wynne-Jones, said when he admitted that he had changed his mind. I think that that is absolutely marvellous. I believe that we ought to change our minds when reasonable evidence comes forward which enables us to do so. I believe we have a marvellous opportunity now to go ahead with the development of the hovercraft. Once again, I refer to the fact that we have had such marvellous grants from the EEC. I believe that that ought to have a great impact in making the United Kingdom answer "Yes" to the referendum, because, at least in my part of the world, if we know that we are benefiting we are much more inclined to put our weight behind whatever is available for us to put our weight behind.

I think it would be extraordinary if the noble Lord, Lord Beswick, were to give us an unhappy reply, though I do not imagine that he will do so. I believe he will give an exciting reply and will say that we should get on with it and should do everything we can. I should like to put forward all the matters included in the Written Answer which I received to my Question and which appears in Hansard for last Thursday. They have had great success. There could not he a "No" from the noble Lord; it would not be reasonable. I know that all politicians like to think they are reasonable people, and, though quite often people have hit me down, I always pop up again.

I should like to ask my noble friend Lord Selsdon whether this particular matter has ever been brought before the All-Party Parliamentary Scientific Committee. That Committee ran very successfully for many years while I was in another place. It was there that I became enthusiastic about the Seahorse. I remember very well when my own Party was in Government, when the Secretary of State in question said that the money could not be found, even though the whole development had been financed out of private capital. He said that he had to be quite certain that it would be a great success in terms of export orders.

My Lords, here we are with an old new development or possibly a new old development. I cannot see that any of us in this House would not be in favour of that development. We must have everything we can which will be technologically successful in this modern age. I have been delighted to hear the arguments which have been put forward. As I say, the only contribution that I can make is that I can, in my own way, be rather a bother to Governments if I start arguing for something I think worth while and I do not receive a reasonable answer. I do not think that I need say that, because I feel sure that the noble Lords who have spoken today will get a sympathetic answer. The thing is to try to get as much as we can from a European commitment which would welcome the opportunity of helping us to go forward with this hovercraft service. That is all I have to say. I am very excited and I hope we shall have a happy and constructive reply from the Minister.

6.46 p.m.

Earl FERRERS

My Lords, I am glad that my noble friend is excited by the prospect of the hovercraft. I rather gathered that from the tenor of her remarks. I believe that the whole House is indebted to my noble friend Lord Kinnoull for having produced a further example of the knowledge, expertise and initiative in relation to yet another specialist subject which we have come to expect from him. Up to the present moment, I have found the whole debate to be quite fascinating. I thought that the speech of my noble friend Lord Selsdon was very remarkable for its knowledge, wisdom and common sense and it was all done without a note. I believe that it will contribute very greatly to the consideration of the subject.

My noble friend has this evening asked a Question which I find both interesting and important. It is interesting because it asks a number of specific questions of the Government, which I have no doubt the noble Lord, Lord [...]eswick, will answer with his customary precision. What future prospects do the Government think there are for civil and military craft both at home and overseas? That is quite a question, and it is a very important one. I look forward to hearing what the noble Lord says, and I hope that he will be able to give the House a perfectly frank answer and will not feel inhibited about giving too open a recognition of the value of the hovercraft for fear that that might lead to pressure on the Government to participate in the industry either as a major purchaser or as the provider of financial incentives. I hasten to add that by "participate" I do not mean the somewhat bizarre activities of participation by the Government in spheres which have recently been mentioned in the newspapers. As in almost every sphere of life, the Government, even if they do not actively participate, are inevitably involved. Their attitude influences matters, and I hope that that influence will be helpful and constructive, and will be neither destructive nor even an attitude of passive indifference.

The other part of my noble friend's Question which I think to be of particular interest is how the Government see the industry's progress in relation to the hovercraft industry abroad. I should have liked to add a further question which is how the Government see the future in relation to other forms of travel. All these questions are interesting because we have in the hovercraft a relatively young, new and different industry, which could and should do well, but which could and might well fail. One is bound to ask the question: should it be allowed to fail? Clearly if, as a method of transport, it has no reasonable place in the future, then it should be allowed to fail; but if it has a place in the future, then it should not be allowed to do so. I want to make it perfectly clear that I am not talking about the financial position of any company because I do not know the financial position of any company in the hovercraft business: I am talking merely about the method of mobility with which the hovercraft industry, by its very nature, is involved. If there is a place for this type of travel or mobility in the future, it should not be allowed to fail simply because of lack of initiative to buy, or lack of encouragement, or because of general lethargy, whether by Government or by business. Nor should it be allowed to fail simply because ab initio there is not worldwide clamour for its products.

I thought that my noble friend Lord Selsdon was so right when he said that it takes a generation to develop a product and a generation for it to make money. Of course, you cannot get to the second generation without having first gone through the first generation. If you want to sell any new product you have to test the market and see whether it is required; then make the product; and then go out and sell it. That is fine if the product consists of tins of cat food selling at 30 pence each, though I daresay that the cat food manufacturers would tell you that it is a very dicey business, fraught with appalling financial risks. But when you are trying to sell a totally new concept of travel and propulsion, where you have to make inroads into methods of propulsion that are universally accepted and proven and which have stood the test of time right across the board, and where the unit cost is not 30 pence but £2 million or £5 million each, you are on to a very different kind of ball game.

One has merely to look right at the other end of the spectrum—at Concorde—to appreciate the point. The tough part of commercial business life can be appreciated when one realises that the first contract for the SRN 4 which the British Hovercraft Company had was for the second craft it built, not the first. The company had to make the first craft "on spec." in order to achieve the guaranteed contract for the second one. Therefore there is obviously a substantial element of risk in this type of enterprise. I am no maritime expert, but it has always seemed to me that through the whole of life on this earth the one limiting factor to the speed of ships has been—one thing, friction; the friction of the water. To have overcome this resistance by, as it were, taking the boat out of the water and resting it on a cushion of air, making it theoretically resistant-less, is, at the same time, so simple, yet something which has defied human beings until just the other day.

I venture to think that the system must have a part to play in transport in the future, though I am not certain exactly where that part will be or how large it will be. Let us be clear, the invention of the system is a British one and we are the leaders of the world in it. My noble friend Lord Kinnoull said that we must not let it become another wonderful British invention to be dropped. I agree with him. Nor do we want to see the axe swinging over it as we see it swinging over some other new enterprises. As I sat on the Bench this afternoon I could not help thinking wryly that whenever there is a really exciting invention—particularly if it is something that moves—that is likely to come into trouble, it is the noble Lord, Lord Beswick, who always has to sit there and answer the case for the Government. He always does it well and with his heart in the right place and we hope that he will show both those qualities this evening.

My Lords, I have had the advantage of travelling in a hovercraft on only two occasions, once going to France and once coming back. I came away with two totally divergent opinions. On the first occasion it was a beautifully sunny day, the sea was calm, we whistled across the Channel and arrived in 35 minutes. My heart swelled with pride and I thought how wonderful it was to see this superb British invention. On the way back it was a choppy day—not a rough day. The machine crashed into the troughs of the waves and then shot up, rather like a golf ball. It was a very frightening experience, and it reminded one of being in something which was a cross between a scenic railway and a high-speed lift. It was not only a disagreeable experience, but an extremely frightening one. We were all holding on to the bars in front with the whites of our knuckles showing, when all of a sudden a piece of the ceiling fell down, just for good measure. I can assure your Lordships that nobody was talking at all. All of a sudden a little boy piped up from the seat behind me, to break the verbal silence. There was a lack of mechanical silence but there was considerable verbal silence. The boy said in a succinct way, as only the innocence of youth, with youth's pristine clarity, could "Daddy, I don't like this." He voiced the thoughts of all of us.

Those were the early days of hovercraft travel, and that was just one occasion. Things have altered. That was on the route where the future for this initial stage of hovercraft commercial development will take place. Traffic between this country and the Continent is bound to increase, whatever results this wretched referendum produces. Now that the Channel Tunnel project has been abandoned, as the noble Lord, Lord Wynne-Jones, said, this must mean that all the traffic which would otherwise have gone through that tunnel in the future will now go either by air or by sea. It follows that there should be scope not only for more ships but also for more hovercraft. If one accepts that, there are two important points here. Not only is there now more scope for hovercraft to operate on the Channel routes and thereby enable more craft to be built, but—far more important—the industry will be given a chance to develop as an industry.

If the hovercraft principle has a place in the future, it has to develop somewhere. It must be given an opportunity to develop. It must be helped to develop. The opportunity for it to develop is given as a result of the abandoning of the Channel Tunnel. Whether it will be helped or allowed to develop depends upon whether the cross-Channel operators will purchase, or be allowed to purchase, new craft. Here the tough commercial world of market forces comes into play. This I would not seek to eliminate, other than to stress that here lies what could be the seed-bed on which the industry, and the principle on which the industry is founded, can be allowed to develop.

Research and development going on at the moment indicates that future craft could operate at speeds of 55 to 60 knots, as opposed to speeds of 50 knots, which would require 40 per cent. less power. This in turn would mean a fuel consumption of 60 per cent. less than that used on current craft, and this would be a fuel consumption of 15 per cent. less than ship ferries. These are bright and exciting possibilities. If these possibilities are realised, who knows what effect there could be on overseas sales and methods of travel. It may be that it is pie in the sky, but I do not think so. Rather it is something we ought to encourage.

My guess is that there is a good place in the future for this industry and for the method of propulsion which it adopts. My fear is that if we do not get over the hump of what might be called the "post-prototype era ", that place will never become a reality. My guess is that the hovercraft business is fraught with financial anxieties. My hope is that those anxieties will prove to have been worth bearing, because we need the principle. But, my Lords, the industry needs nurturing.

7.0 p.m.

Lord BESWICK

My Lords, as the noble Earl, Lord Kinnoull, has reminded us, he has raised this subject before. If I may say so, he is more helpful each time he speaks about the hovercraft. I congratulate him on the way he raised the matter today and on the support that he has managed to assemble in the House. Despite world economic uncertainties the fact is that the outlook for this industry is better now than on the last occasion when the noble Earl raised the subject. The whole atmosphere appears to be improving since the days when the noble Earl, Lord Ferrers, was hit on the head by a falling ceiling and I hope that the young boy to whom he referred will be now as eager a convert as my noble friend Lord Wynne-Jones. There is a much wider acceptance of a steadily increasing variety of hovercraft as a possible solution to particular transport problems or the use of the principle to solve difficult engineering problems.

This has not come about overnight and I pay tribute to the industry and, with respect, I would say to the noble Lord, Lord Selsdon, that he probably unintentionally underestimated the efforts made by the industry and, maybe, underestimates the efforts they can still make and I have no doubt will make. This technical lead can be maintained only by research and development, which leads me to the first part of the noble Earl's Question. In the current financial year support for the industry is expected to amount to £1.4 million. It is not possible to break this figure down into its constituent items as it includes military commitments.

Apart from military commitments, it includes funds provided by the National Research Development Corporation and by the Department of Industry under the Science and Technology Act, including payments under contracts under the special £2 million assistance made available in 1972 and under contracts that pre-date that time. When the £2 million special assistance was announced it was said that in future the industry would not receive special treatment, but for R and D purposes would be treated as any other industry. This left two channels of assistance open—the NRDC, whose assistance had been available previously, and the Ship and Marine Technology Requirements Board. Since the announcement of the special assistance there has been little interest shown by firms in taking advantage of these arrangements until recently. From recent comments quoted in the Press it would seem that there is some misunderstanding of the NRDC's role in providing assistance to the industry. It may be useful if I say a word about that.

It is part of NRDC's job to take risks; but it took courage in 1950 to back Sir Christopher Cockerell's invention, and I am glad that the noble Earl, Lord Kinnoull, paid tribute to the contribution made by the noble Earl, Lord Halsbury, managing director of the Corporation at that time. NRDC's subsidiary company, Hovercraft Development Limited, usually known as HDL, is not only responsible for the worldwide licensing of important patents but it also provides to manufacturers and operators advice and other technical services from its office in Hythe. HDL is also the company through which NRDC normally channels its funds to industry in support of industry's own R and D projects. Typical of the projects assisted by NRDC is the recently announced development by Hovermarine Transport Limited of a 200-seater side-wall craft, designated HM5, to whose development costs the corporation has agreed to contribute about £500,000.

It is essentially a matter for the Corporation to decide which projects it supports, but I am pleased to say that NRDC seems to be in a healthy financial state—unlike many of us around here at the moment—and is prepared to consider the provision of financial assistance for development programmes in the hovercraft field. NRDC does not make grants, but will share with a company, usually on a fifty-fifty basis, the cost of developing a new product if, in the Corporation's opinion, there are reasonable prospects that the project will be a technical and commercial success. If the project is successful, NRDC will expect a financial return on its investment—and I hope that this is acceptable even within the philosophy of the noble Earl, Lord Ferrers.

The assistance of the character described by the noble Lord, Lord Selsdon, would seem to be somewhat different. It seems difficult to justify promotional activities, especially if for only a selected number of firms; but if there is an element of restructuring, if the company of whom he is thinking could put forward a scheme of merger or strengthening by coming together in some way, then there should be a possibility of assistance under Section 8 of the Industry Act and it might be possible for the noble Earl to recommend that something of that kind be more closely considered. I know that he has done a great deal already. Similarly about the EIB: if anyone puts a proposal to them or sees me and asks how to present such a proposal we should be glad to give assistance. Until there is something definite, I am afraid it is impossible to say that we support them.

I should also say that the Ship and Marine Technology Requirements Board are prepared to consider proposals for assistance towards research projects. I hope—and my feeling is that this particular Requirements Board also hopes—that some proposal will be made. The initiative must come from the companies concerned. Before leaving R and D, I would pay tribute to the companies who are using their own money to invest in the future. It will be clear from the description I gave of how NRDC works that Hovermarine Transport will be providing substantial funds for the development of the HM5. Similarly, I know that the British Hovercraft Corporation are working on developments with the objective of halving operating costs, which would be of tremendous benefit.

Several noble Lords referred to the cancellation of the Channel Tunnel. Obviously, this has been a most significant factor in the new situation. British Rail have gained a good deal of experience on their services although they are still not as reliable as British Rail would wish. However, they make an important contribution to carrying the cross-Channel traffic and with competitors, as the noble Earl has said, on some of the routes, they have about 30 per cent. of the passenger traffic. In the light of this situation British Rail are considering their requirements. The Board are re-examining the whole of their plans for re-investment in the Channel crossing. Hovercraft clearly have economic attractions because of their speed and effective capacity in a given day. The decision is one for British Rail, and preliminary assessment of their investment needs in this new situation shows considerable potential for hovercraft. The Department of the Environment have not yet received proposals from British Rail, but they and British Rail themselves are aware of the urgency of a decision if the craft are to be in operation by the summer of next year.

On the military side, the most important event is the Navy's investigations into the role of hovercraft as mine countermeasures craft. The Royal Navy's Hovercraft Trials Unit, which succeeded the old Inter-Services Hovercraft Unit, was commissioned at Lee-on-Solent on January 17th and its work will be directed towards this end. Any successful outcome of that could open up an important market for the industry. As a number of noble Lords have said, exports have always provided a good market for the industry; and this continues to be the case. On the civil side, in the United Kingdom we have a well-established transport system, so that the introduction of hovercraft had particular difficulties in competition with existing facilities. But abroad there are much greater opportunities, as the noble Earl said, where existing competition is not so well organised, or where conditions are met in which the unique advantages of the hovercraft give it an edge.

Hovermarine Transport have been particularly successful in their marketing of their HM2 craft. I gather some 30 are operating in different countries. They now have craft operating in a number of countries overseas and have recently sold four to Hong Kong and another to Bolivia. The manufacturers of the smaller craft look mainly to overseas markets and here there have been some notable successes, although I understand the financial problems which face some of them and to which the noble Earl referred.

Whereas Hovermarine Transport have been successful on the civil side, the British Hovercraft Corporation have experienced more success with military craft and there are good prospects for them, particularly in the Middle East where they have already made good sales. Like the noble Earl, I offer my congratulations to them for their achievement in obtaining the Queen's Award for Industry.

The Earl of KINNOULL

My Lords, I should not like to mislead the House. I believe Hovermarine, although of British origin, is an American-owned company at the moment. That is a point which would demonstrate some of the efficiency of the American system of marketing abroad.

Lord BESWICK

My Lords, I am going on to say something else which might support that point of view. One important overseas contract that the British Hovercraft Corporation have won is that for development of the bow seal for the United States 2,000-ton surface effect ship development programme. It was suggested by the noble Earl that the figures given in another place for exports were inaccurate. I do not think that is the case. They were possibly misleading, because they referred to civil exports and not total exports. I gather the military exports are listed under warships and do not appear in the export figures. That is the reason for the apparent discrepancies.

Before leaving the sales prospects, I wonder whether I may mention what was described as an intriguing side of the industry, and, in terms of potential, as important as the other; namely, industrial applications. It has been part of the education process that industry is at last becoming aware of the possibilities in the field of materials handling offered by the air cushion principle. These range, as the noble Earl said, from the small hoverpallets to large hoverplatforms and include perhaps the most remarkable of all—the movement of large oil storage tanks in one piece without the need to dismantle them. Air Cushion Equipment, the company which pioneered this method of moving tanks, have recently made a breakthrough in the United States where the potential is great. After successfully demonstrating the method, they have now gone into partnership with a large American company for the exploitation of the method in that country.

The main markets for the hoverplatforms appear to be overseas, where there is a need to work in an inhospitable terrain, to which the noble Earl referred, or where there are particularly difficult work or transport problems. Among their successes Mackley-Ace Limited have built two 750 ton air cushion transporters specifically for us in the Persian Gulf and have just obtained an important order for two transporters to be used on the Alaska pipeline. Hovertrailers International Limited have developed a range of air cushion vehicles capable of working on undeveloped ground such as marshes. These have been sold in a number of countries. The British Hovercraft Corporation in co-operation with the CEGB have developed a system for reducing the axle loading on transporters which makes a great contribution to reducing the expense of moving extremely heavy loads which in the past have required the strengthening of bridges and roads. I am told that over the past few years this transporter has saved the Board £1,250,000.

I was asked by the noble Earl, Lord Kinnoull, about the position regarding the hoverbed. I find that the burns unit at Mount Vernon hospital, with its equipment which was partly financed by NRDC and by the Department of Health, was opened in February 1974. I believe that a second special burns unit is being commissioned this week at a Belfast hospital, and the company concerned have also received several inquiries from abroad.

To give wider publicity to the achievements of these companies and, it is hoped, to encourage other firms both at home and overseas to make use of the techniques they have to offer, the Department of Industry have commissioned a film produced by the Central Office of Information entitled, At Work on a Cushion of Air and I am told it is a good film. A film can be more persuasive than many of us in this Chamber, and maybe we might arrange for it to be shown in the Palace of Westminster if it is felt there will be a demand for that.

I was asked about the practical relationship of the Government with industry. In so far as Her Majesty's Government are an operator—mainly through the Royal Navy Hovercraft Trials Unit—there is close co-operation with the manufacturing companies. We know, too, that the manufacturers keep in close touch with the operators of their craft. A new development which promises well for the future is that the two cross-Channel hovercraft operators, Seaspeed and Hoverlloyd, are having discussions with the HDL to consider specifications for the successors to the SRN 4 series of hovercraft. The first meeting was held last week. This, I should have thought, was a hopeful sign; it is the operating companies who know what they want and if we get these two sides working together it should be a constructive, co-operative exercise.

It has been a long educative process, as the noble Lord, Lord Selsdon, said, in achieving this wider acceptance of hovercraft; and with this wider interest, as I said earlier, it is inevitable we shall get competition from abroad. I was asked by the noble Earl, Lord Kinnoull, about this. Potential competition comes mainly from developments in the United States and in France. A vast amount of money is being spent in the United States on development of the 2,000-ton surface effect ship for the US Navy. We cannot hope to match the Americans in what they spend on defence, but although there is bound to be spin-off for any civil developments, the United States effort so far is still directed towards establishing whether the next step should be a 2,000-ton ship or something smaller. Most other American developments have been in the military field and at present there is no direct competition with our companies. We were given a warning by noble Lords opposite about French activity in this field, and we should not underrate the SEDAM N 500; but, at the same time, it would be a mistake at the present stage to think they have anything which is necessarily more successful economically than either a stretched hovercraft in use on the cross-Channel service or the new craft which is being considered. So far as Japanese competition is concerned, they produce craft under licence from this country, and Russia, which at one time was thought to be a great competitor, now gives first place to hydrofoils.

As to industrial applications, it is perhaps significant that the United States are seeking the assistance of our companies. I hope, although sometimes we think we give away too much, that this is a development which could he very promising. I agree with the noble Lord, Lord Selsdon, who modestly said that this industry was not a Selsdon lame duck, and I agree with other noble Lords that this is an industry to which we should give support. At the same time, I do not think it is necessarily the best way of giving support if we think simply in terms of grants and finance. I have said what the limitations are there; I have indicated the possibilities. I hope those possibilities will be utilised, and if there is anything more I can do to help—for instance, by bringing together various parties—then certainly I shall be very glad to do anything I am asked to do. In the meantime, I again congratulate the noble Earl for having brought this subject before us.