§ 9.27 p.m.
§ The Earl of KIMBERLEY rose to ask Her Majesty's Government what are their immediate plans for the British Aerospace Industry, particularly for the Anglo-French Concorde, prior to nationalisation. The noble Earl said: My Lords, first I should like to apologise for my non-appearance last Thursday and for any inconvenience it may have caused to noble Lords. I have for many months been trying to ascertain from Her Majesty's Government what their policy and plans are for the Concorde, whether or not the British aerospace industry is nationalised. I was not originally going to put down this Question, thinking, as many others did, that we would be having the Second Reading of the Aircraft and Shipbuilding Nationalisation Bill this month, but in view of the delay there are some matters that I am going to raise this evening that are so important that they cannot possibly wait till the autumn.
§ The facts are, one, BAC is closing down its activity as the only test airfield in England capable of supporting Concorde operations; two, in the autumn the civil section of BAC will have to decide whether to make redundant up to a further 4,000 of their workforce, and this out of a total manning level of approximately 11,500 men; three, Concorde 208 is blacked at Fairford with no apparent solution to 1311 resolve the dispute. I should like to come back to this later on.
§ On 4th February I put down an Unstarred Question on the future of BAC's flight test centre at Fairford. At that time I could not understand why BAC, backed by the civil servants of the Concorde management board, wanted to shut this vitally important facility, particularly at the very critical stage that Concorde had reached in both its development and sales. Basically, the answers given by the noble Lord, Lord Melchett, were, one, that Fairford cost £2.7 million a year and, therefore, it was too expensive; two, BAC had completed the development work on Concorde and as a result in conjunction with the British members of the Concorde management board it was decreed that there was no justification for letting Fairford remain open; three, any predicted testing and development that might arise in the future could and would be done from Filton; four, any other unpredicted tests or snags that might arise would be carried out and dealt with by the French aircraft 201 from Toulouse.
§ After much careful thought about these answers, I reached the following conclusions: very simply, that there was a very serious lack of policy and forward planning for the sale and/or lease of Concordes to foreign airlines. My second conclusion was that I could understand why Fairford should be closed if Concorde was a failure, but not only is Concorde not a failure, it is an outstanding and unqualified success. Only last week British Airways announced that it was a phenomenal success and one of the newspaper headlines said there are queues for tickets.
§ I think we must realise that here we possibly have two conflicting forces, BAC who are the contractors, and the British members of the Concorde management board. These two parties for some extraordinary reason in many instances do not seem to see eye to eye. Bear in mind that BAC do not even own the aircraft, but Her Majesty's Government do. When I say "Her Majesty's Government" it must be realised that the owners are you and I—in other words, the British taxpayers. It is we who have paid £600 million for this wonderful aircraft.
§ I would be the first to admit that if we were going to start off on a new project 1312 like this right now and that we realised perhaps what the final cost might be, it might be prudent if we did not start it. But Concorde is here, it is a success, and it has cost us £600 million. So surely any rational person cannot fail to agree that the project should now be exploited to the full, not only to justify the initial investment but also finally to get a profitable return on this money, which can be done if the right initiative and drive is injected into the programme. In other words, do not spoil the ship for a half-pennyworth of tar.
§ I decided that the only course open to me was to investigate these answers of 4th February in detail. As a result I found that the operating costs at Fairford were £1.2 million after the purchase of the ICL computer and not the figure of £2.7 million quoted and given by the Department of Industry. This figure has not so far been refuted by the Department. I found that Concorde meets its design specification, but in the light of present airline experience it would be a much more acceptable aircraft if both its payload and range could be improved.
§ Performance is the British design responsibility. In fact BAC have carried out a feasibility study which would necessitate a flying programme to incorporate and test these improvements and modifications. Filton's runway and facilities do not make it suitable for supporting Concorde operations. I consider it perhaps some small measure of my campaign that British Airways crew training and production flying is now, and for the near future will still take place, at Fairford. Furthermore, if the performance improvements of increasing the payload by about 20 per cent. are accepted, then they too will have to be tested from Fairford. I estimated that this method of operation will escalate costs by £1.1 million to £2.3 million a year, and once again the British members of the Concorde management board have not refuted this estimate.
§ With regard to the French aircraft, 201, to be used as the four company aircraft, it has been stated that BAC will be able to use this aircraft when required, but why has the British instrumentation been removed from this aircraft and French equipment installed? I can hazard a guess; so as to ensure that it is not practical to fly 201 from Britain, let alone 1313 to know which airfield would be used. Once again 50 per cent. of all costs of the French aircraft will be charged to the British taxpayer. Again my estimate of 20th March of £2.2 million per annum has not been refuted. Therefore, I think that most of your Lordships would agree with me that Fairford is not being closed because of expense reasons or because of lack of work, or because of the suitability of Filton. So I ask myself who is going to reap the benefit of its closure? It is certainly not going to be the British taxpayer who will be helping subsidise a foreign aircraft industry, and it is certainly not going to be the British worker who is going to be made redundant. So what is the reason? Why did the Department of Industry give these answers on 4th February?
I believe that the answer to this lies in a report produced by the unions at Fairford, and I will quote one short paragraph from it:
In the aircraft industry Flight Test is all things to all men. To the designer it is the testing ground of his ideas and concepts; to the production engineer it is the department that accepts his aircraft; to the project office it is the last hurdle to the Certificate of Airworthiness and the aircraft's entry into service; to the sales team it is the company shop window where the product is demonstrated. To the financial staff it is an expensive department; it is the last obstacle to overcome before obtaining a return on invested capital, i.e., a new aircraft; and, finally, to the customer it is where he collects his new aircraft and his crews are trained.
I believe that if you destroy the flight test capability of an aircraft company you in effect destroy that company. This is endorsed by BAC having to consider its attitude for up to 4,000 more workers, the majority being made redundant at the Filton plant. These are skilled aircraft workers forced into redundancy and thereby destroying the civil capabilities of BAC, and once they have left they will never return to the industry.
§ I carried out a very small market survey on the attitudes of some of the world's airlines to Concorde and I can state categorically that the majority would buy or lease the aircraft if the range and payload were improved slightly. So I ask: why are we not building a Concorde with these improvements installed? I am sure that it would be more beneficial to Britain to build aircraft than to make Bristol an area of very high unemployment. I have said before that Concorde is a 1314 success. Why, therefore, does not Britain back it? The reply of the noble Lord, Lord Melchett, will probably be that these improvements would cost money, but President Marcos of the Philippines wants Concorde to transport the delegates to the IMF conference in Manila in October. What better shop window to demonstrate the aircraft, and what a boost for Concorde to carry this august body of people half way round the world! Alas, the only aircraft that might be available for this is 208, which is presently blacked at Fairford as a result of the withdrawal of funds for the support of the flight test centre.
§ One must ask, therefore, how this dispute can be resolved. BAC does not have the money or the authority to accede or negotiate to the workers' requests, since Concorde 208 is a wholly owned Ministry aircraft on a Ministry airfield and the BAC employees are paid by the Ministry. The noble Lord, Lord Beswick, does not have the power to intervene, since his Board will not have control until after nationalisation. The British members of the Concorde management board do not want to concede because if they did it would be an admission that they have not advised the Secretary of State for Industry wisely. The Department of Employment cannot intervene because there is no dispute with the BAC management.
§ Lord MELCHETT
My Lords, I am sorry to interrupt the noble Lord, but I think it would be helpful to noble Lords to know that British members of the Concorde management team advise the Ministers at the Department of Industry and if any criticism is to be levelled at anyone it should be levelled at those who take the decisions, who are the Ministers involved, and I am quite happy to have the criticism levelled at me.
§ The Earl of KIMBERLEY
I take the noble Lord's point, my Lords. In any event, the only way in which I can think that this dispute could be resolved would be by the Secretary of State, Mr. Varley, accepting that all is not well in the land of BAC. Aircraft 208 is now well behind its delivery date to British Airways and, as I have said, it is the only aeroplane that could be used for the IMF conference. Briefly, the workers' request at Fairford is 1315 that it should remain open until June 1977 to enable discussions to take place between Her Majesty's Government, BAC and the unions so that the possible dissipation of assets prior to nationalisation will not occur. Yesterday I endeavoured to see the Secretary of State or the Minister of State for Industry because I had a very humble proposal which might have helped to resolve the dispute at Fairford. Alas, I could see neither of the Ministers. However, I should like to say briefly what my solution was.
The closure of Fairford should be delayed until 30th June with Lord Beswick being given authority to negotiate on behalf of Mr. Varley to resolve the dispute between the CMB, BAC and the unions. The probability of success is high, the cost of the solution not high—a saving of up to £500,000 due to Concorde not having to fly from Filton and stage through Fairford.
I even thought of a proposed forward programme: from the beginning to the end of August, the aircraft would be on a test programme for British Airways acceptance; end of August to 27th September, crew training for British Airways; 27th September to 18th October a wet lease to Philippine Airlines for the IMF Conference and on the 19th October the aeroplane would be available for the London/New York flight. The image which would have resulted from this would have been good for Britain. It would have been valuable to fly a British Concorde to the conference at Manila and it would have been good for Lord Beswick to get credit for resolving the dispute and it would have been a very good start to the nationalisation of the aerospace industry to see the Government backing Lord Beswick. However, since that did not happen, we now have the situation that BAC has delivered an ultimatum to its workforce to unblack 208 or be removed from the payroll. I can see that this action will cause even more problems throughout the aircraft industry.
The trouble is that the decision to shut Fairford should never have been taken. The history of Government concerning aviation is a long, sad tale, not unlike the mouse's tail in Alice in Wonderland. It has been a chapter of disasters which could have been avoided if only those 1316 responsible had had the grace to admit that they had sometimes been wrong. It is not too late at this late hour for the Government, in conjunction with the CMB, to announce that, after careful thought, they will reconsider the situation. It has been said that great men admit their mistakes and learn by them, but, alas! small minded men do not have this magnanimity and grace.
In my search for information to try to obtain the truth, I have written many letters to the Secretary of State for Industry. I actually succeeded in having one meeting with him in person but, alas! most of the answers I have received have been misleading or prevaricating. I have been politely told that it was none of my business. I consider that, in this time of so-called open Government, it is my business, along with all the other British taxpayers, to know what is happening to our investment of £600 million.
To show your Lordships how the Department of Industry is trying to give me the brush-off, I shall read the last letter from Mr. Kaufman, the Minister of State. It is very short.Thank you for your further letter of 22nd June to Eric Varley about Concorde. This only serves to underline the wide differences of view between us on this topic, which persist in spite of repeated attempts to resolve them by correspondence and by discussion, as well as by replies in the House of Lords.I can therefore only suggest that we agree to differ and that you should regard Eric Varley's letter of 14th June as a definitive statement of our decision.
§ Lord MELCHETT
My Lords, I apologise for interrupting the noble Earl again, but it seems slightly misleading to read out the last of a long series of letters between the noble Earl and the Department without reading, for example, the letter which my honourable friend the Minister of State says the noble Earl should consider as the definitive reply. It is giving a slightly misleading view of a very long correspondence.
§ The Earl of KIMBERLEY
My Lords, I was in no way trying to mislead anybody, only to say that the Department of Industry and I so far disagree that nobody in the Department wishes to talk to me when I have tried to speak to them. As I said, I have had copious letters and correspondence and I believe that the noble Lord has had copies of that correspondence. 1317 No doubt your Lordships will remember that I put down a lot of Questions for Written Answer not long ago. When they were answered, it was implied that most of the Questions were not ones which required Ministerial answers but that they were company matters.
I beg to differ. I asked those questions in my search for the truth and also because I needed the information so that it might perhaps be possible for me to make some sort of constructive suggestions about the future of the project. I hasten to add here that, once again, the answers that I got were either negative or of very little help.
Why could my questions not be answered satisfactorily? I am forced to the unhappy conclusion that the Department of Industry has something to hide which would be very unpalatable to the British taxpayer. So I wish to ask Her Majesty's Government if they will agree—and, if not, why not?—the following point: would they agree that industry should be free of Ministerial interference over the supply of information, of cost estimate decisions, fare prospects and so on? For surely it is only by this method that the confidence of the public, the Press, Parliament and the unions will ever be achieved. Alas, even today freedom of information offends the Civil Service and causes flutterings of the Official Secret Act. I think that the one sector that needs the breath of fresh air to blow through it in this instance is the Department that deals with Concorde. If a Minister is asked for a detailed break-down of Goverment spending on civil aircraft and engines the answer is invariably negative, and further inquiries usually reveal that no such break-down exists.
I should like to ask the Government whether they would not agree that the Official Secrets Act be replaced by a Freedom of Information Act? Why can we not have the French approach in this country? The only kind of Government secrets they protect is information affecting national defence. The present Home Secretary is sympathetic towards more open Government. Perhaps now that he is leaving for Europe he could initiate this.
I should not be surprised if the Minister, when he answers for the Government, will say that I am a nuisance, 1318 that I have been given all the information that I require, and that I have upset foreign airlines. But I am also sure, regrettably, that he will say that there are no further orders for Concorde. So I ask, why is there no prospectus for the future of Concorde? Why are up to a further 4,000 workers probably to be made redundant? Why is Concorde 208 still blacked at Fairford? Why are Philippine Airlines, one of the hottest customer prospects for Concorde, being refused landing rights at London Airport by the Department of Trade? Here is an airline that has bought British aircraft for 20 years, against all the most high-powered and hot salesmanship from the United States. Why is the British taxpayer subsidising the French aircraft industry? Why will the Department of Industry not exploit the improvements of the existing aircraft by increasing the payload by about 20 per cent. at relatively small cost? At a time when public expenditure has to be cut by £1,000 million industry must be supported to improve our balance of payments. Air travel has a major impact on our balance of payments.
I have very nearly finished, but I should like to demonstrate how much the payload modifications can improve Concorde and British Airways' profitability. I have had these figures checked by Flight International and I must say that I do not think that they can therefore be very far out. It is absolutely pointless flying 20 or more empty seats to and from Washington or any other city. Let us assume that each Concorde should fly 3,000 hours a year and that each Concorde seat should return £100 per flying hour. Therefore 20 seats equals £6 million per aircraft per year, or for five aircraft £30 million a year. This more than justifies the relevant cost needed to improve the payload by 20 per cent. In fact within three years it justifies the cost of the Mark II Concorde.
How can the world's airlines ever have any confidence in the aircraft if we do not show any in this country, by refusing to build or set down the keels of more than the original 16 and/or carry out further improvements? Why is it necessary to withhold from the public information such as this? At this very moment there are plans to axe, as I have already mentioned, a further 4,000 jobs from BAC prior to nationalisation. I have suggested to the 1319 Secretary of State that possibly certain members of the Concorde Management Board might move on, because let it not be forgotten that it was these members who actually recommended the axing of Concorde in 1974—
§ Lord MELCHETT
My Lords, I am sorry to intervene again, but I think that the noble Earl is not sticking to the traditions of the House, as I understand the position. I am here to answer for the Government. The Government make these decisions—not our advisers. If the noble Earl wishes to criticise the decisions, I suggest that it would make his case more effective if he criticises the people who take the decisions; that is, Government Ministers.
§ The Earl of KIMBERLEY
My Lords, I apologise. But let it not be forgotten that there was a decision made to axe Concorde in 1974. But it was only through the enthusiasm and foresight of the then Secretary of State for Industry, Mr. Benn, that it was reprieved. I am sure the noble Lord, Lord Melchett, when he answers, will deny some of my allegations, but I will leave your Lordships to judge how correct is my assessment of the situation. My last question to the Government is: How can a Labour Government justify the action of making British workers redundant by transferring their work to France?
§ 9.50 p.m.
§ Lord GAINFORD
My Lords, my support for the noble Earl is not going to be so much a recital of further facts about Concorde; I merely say that I am one of those British taxpayers for whom there seems to be some rather unpalatable news. Abroad, the British taxpayer seems to be considered quite a peculiar creature. It is considered that he must be a lover of paying his taxes because he pays up so quickly and without much murmuring; but he certainly likes to feel that he is helped in any scheme which shows success, and if it is threatened in any way he wants to know why. One might say that a row is a weak description of what he can rise to if he does not receive a satisfactory reply. I should also like to support the suggestion of the noble Earl about the possibility of replacing the Official Secrets Act by a Freedom of 1320 Information Act. I recall particularly during the last war, when we had the troops involved so much in censorship, that it was far easier to create the necessary atmosphere of security by telling people what they could say rather than trying to din into them a whole long list of what they could not.
Most of my speech on this Unstarred Question set down by the noble Earl is going to be about other parts of the British aerospace industry, or, rather, the possibilities; and some of it will certainly be echoing another speech of the noble Earl which he made on the 15th July on an Unstarred Question by my noble friend Lord Strathcona and Mount Royal about the policing of the proposed 200-mile Exclusive Economic Zone. In that, he made reference to Dirigibles and Blimps, including a reference to a subsidiary question raised by the noble Lord, Lord Balfour of Inchrye, about using such aircraft for reconnaissance over the oceans. That was in October 1975. On 15th July the noble Lord, Lord Winterbottom, answering for the Government, referred to the lighter-than-air craft, and said it was an interesting suggestion. A number of noble Lords in this House know my interest in this matter. I have spoken on it previously. The last time was about two years ago; and on the occasions when I raised the matter it was mostly in connection with theory. I wanted to wait until I had some facts before I spoke again.
The noble Earl remarked that the airship industry is making slow progress in this country. Perhaps better slow than none at all. In the last few years we have been visited by the Goodyear airship. In 1973 I was with a party of Members of your Lordships' House who were taken for a very pleasant ride in it—a very lovely way of flying, I found, and very pleasant travel. As regards airship construction in this country, I believe that at Cardington there is a company called Aerospace Development Company, and there was a notice in the Press that it had received an order from Venezuela for a number of lighter-than-air craft. The facts, I believe, are that so far one airship is being constructed, and if it proves to be successful further orders will follow. It seems that at least we have some form of export trade in that line.
One slightly fortunate result of the Unstarred Question having been delayed 1321 since last Thursday is the fact that last Friday there was a television programme about a man who constructed his own airship. I did not see all of it; but I arrived home to see the last ten minutes of it. I do not know whether any of your Lordships saw anything of it. The airship concerned was what I would call a blimp; and it was a form of flying which television described as "deliciously primitive". In fact, it was made a victim of wind variation, but it showed how safe it was because the helium did not catch fire when it crashed into trees; although after it had collapsed it was taken away, repaired and was soon in the air again.
But there are people at work in this country trying to develop and design a completely new form of lighter-than-air craft. This new design will have hardly any resemblance to the old airship, the very mention of which conjures up mental images of famous disasters of the 'thirties or the lurid destructions of some of the airships in World War 1. If the new design can become a fact, almost a door-to-door transport of freight could be achieved and indeed leisurely travel for passengers. If some of the derelict dock areas of London can be made into airship ports, taking into consideration that much of this area has been considered for the vital matter of housing, it could be possible to travel from central London to a point 200 miles away with about 2 hours' flying and a short time at each end for the necessary door-to-door travel. At present, I believe, it takes a good 4 hours to get from London to Paris.
On July 14th, this month, there was a Question asked by my noble friend Lady Emmet about the congestion at Heathrow. This resulted in ten minutes of lively subsidiary questions and answers. The Airship Transport Service which I mentioned is being attempted and designed to enable a considerable reduction of the pressures on present airports, and there is also the fact that the airship airport would not require as much space as do the present airports for modern aircraft. 1322 So, as the last words on that, I ask whether Her Majesty's Government could possibly consider an airship programme in their future policy. Finally, another reference to the speech of the noble Earl on the 15th July about our coastguard service. Could Her Majesty's Government possibly consider improving our security services, and possibly lifeboat and ambulance services, by the inauguration by a service similar to that in the USA called the Civil Air Patrol? This organisation is made up of private aviators who liaise with the authorities and have full recognition as a national service. Private aviation in this country is hampered not only by expense but by very stringent regulations, all of which are very necessary because this country has become one of the greatest international centres of commercial aviation. Private aviators would be only too happy to devote their skills to the service of their country.
There was an attempt some years ago by a private organisation to form such a service. It was called the National Air Guard. It did manage to carry out some work to help the police and the coastal and ambulance services. In fact, for a short period I was a member of that organisation. It died a death, not as a result of lack of support but because the authorities could not give it enough recognition. Personally, I can see their point of view. They would not wish to discourage the zeal and enthusiasm of the members. In fact they probably would say that they wished more people were so publicly spirited. But here was an organisation run almost on military lines. The chief organiser was at the time a foreigner, although he is now a naturalised Englishman. The great danger is if the wrong people get into it. If something similar to the Civil Air Patrol could be formed, it would not lack recruits. It could provide great assistance to the military and civil services. I am glad that we have been joined in this debate by the noble Earl, Lord Kinnoull, and I am sure that after we have heard him we shall welcome the comments of the noble Lord, Lord Melchett.
§ 10 p.m.
§ The Earl of KINNOULL
My Lords, despite the late hour it was with eager anticipation that I took my seat this evening to listen to the noble Earl, Lord Kimberley, and I was relieved to see him in his place in order to ask the Question which had been put down on the Order Paper last Thursday. I am sure the whole House are grateful to the noble Earl for raising his Question and for the very energetic interest that he always takes in pursuing the welfare of the Aerospace Industry, even if perhaps tonight he has had to resort to what one might term a "verbal bashing". I am not sure whether it was at the BAC or at the Department of the noble Lord who will be replying, but I am sure he will be bashing back.
I pick two small quarrels with the noble Earl on his Question. First, his Question asks: what are the Government's immediate plans for the British Aerospace Industry prior to nationalisation? That must presuppose that what is taking place in another place at this moment, and what is due to take place tomorrow and the following day, is that the Bill will get through quite unharmed. Some of us feel from what we read about the majority of the present Government in another place, that the Bill may not get through at all. Possibly the timing of this subject tonight is not too happy.
The second quarrel that I raise with the noble Earl is that if one assumes that nationalisation will come, it will happen under the present Bill in two months. The noble Earl is restricting the reply of the Government to cover a period of two months when I am sure both he and the whole industry would like to see what the Government's plans are for the next 10 years. Knowing his skill and recognising what he has already been through earlier today, I hope the noble Lord, Lord Melchett, when he replies, will be able to say something about the general policy not only of the Concorde but also of other projects which are of interest.
I hope that the noble Lord, Lord Melchett, will be able to give two positive assurances this evening. Because, in the view of everyone, the industry has suffered 1324 far too long from the buffeting of un-certainty regarding its future, if the Government lose their Bill on nationalisation this Session, I hope that the noble Lord will be able to give us a categorical assurance that they understand the damage that can occur to the industry from this continuing uncertainty and that they will drop the Bill and not reintroduce it for yet a third year.
The second assurance I seek from the noble Lord is that, if the Bill succeeds and becomes an Act, the Government will do everything in their power to retain and encourage the impetus, drive and hard-earned successes of this magnificant industry and so continue to win the respect of the world and the gratitude of the many foreign customers. To achieve this second assurance, the noble Lord will need to add one further vital ingredient; that is, that the Government's policy towards the industry will not waiver or stray in the face of the occasional economic storm, and that their determination will be to retain a steady, workable flow of research and development investment to continue to sow the seed corn in new projects which may be harvested, one hopes, anything from 5, 10, 15 or 20 years' hence.
The noble Earl's Question tonight reminded me of a very similar debate some five years ago when one shrewd noble Lord, in referring to future projects, asked: what is in the shopping basket? Looking back at that debate, there was a certain luxury in those days which was clearly not appreciated at that time. There were then over five aircraft projects in the basket, which of course included Concorde. I suggest to the noble Lord, Lord Melchett, that tonight there is only one, although he may give me a different answer.
One major aircraft project is now in the pipeline. I refer of course to the MRCA, the cost of the programme for which is twice that of the Concorde. I should like to ask how this project is progressing. For example, have the first production orders yet been placed, and is the timescale of delivery to the three air forces 1325 still the same? Another project which was cancelled in 1974, at the time of the oil crisis and the inevitable air travel recession, was the HS.146. I understand that last February Hawker-Siddeley asked the Government for a design study to be set up again, in order to look at this project. I know that from time to time there have been questions on this subject in another place, but can the noble Lord, Lord Melchett, say what has happened to that request, what points are the Government still considering and will a decision soon be reached?
Again, looking at the other major company, BAC, I believe that for some time they have been studying a possible project for a 150-seater airbus; and I should like to ask whether the Government have been asked about research and development or any design studies for this.
Finally, on specific projects, I should like to ask the noble Lord about Rolls-Royce. I think that most of the House will have seen that, in a recent Press statement, the chairman of Rolls-Royce stressed what seemed to be an urgent need for further Government support towards the development of a medium-sized engine. I think it would be very helpful, even at this late hour, if the noble Lord could refer to that tonight.
Of course, the noble Earl referred in his Question, as well as in his speech, to Concorde. I think that the most convincing argument against the Concorde "knockers" is to look at the passenger response which British Airways are having on the two routes which they now operate, to Bahrein and Washington. If one looks at the passenger load factor between London and Washington alone—and here I mean both ways—one sees that it is as high as 93 per cent., and indeed is fully booked until September. This is despite the cost of the air fares that they have to charge, and despite the fact that Washington is not nearly so attractive as New York to many business people. I feel that that figure alone must encourage other airlines which are hovering on the point of making the decision to go supersonic.
I agree that every avenue should be explored to hasten the sales of Concorde, and one thing I always find it difficult to understand is why the Government have not as yet set up their own leasing system 1326 to would-be airline customers. Surely, it would pay them, even on terms which are more favourable to the airlines than to the Treasury, to set up a leasing system which would encourage both sales and getting Concorde further into service.
The noble Earl referred to the present "blacking" of BAC on the delivery of their Concorde III to British Airways. I do not know the ins and outs of this flatter at all, and I am not taking a stand on it. But what I do know is that this move may restrict British Airways' operations of Concorde and only do harm to their splendid flag carrying demonstration to world markets of both the potential and the success of Concorde. British Airways Concorde operations not only help to sell Concorde but also help its future production. Any question about aerospace that is raised in this House quickens the pulse of those who are interested in it, and I am only sorry that tonight there are so few people whose pulses are able to be quickened.
I should like to ask a final question of the noble Lord. It concerns Concorde's route to Australia. My noble friend Lord Orr-Ewing, who unfortunately could not be here tonight, has sought on a number of occasions to obtain information on the progress of the route to Australia. I hope that tonight the noble Lord will be able to tell us whether agreement has yet been reached and when the service is likely to go into operation.
I should like to thank the noble Earl for raising this Unstarred Question. I has indeed been a fascinating debate, which has ranged from Concorde to airships, and I look forward to listening to the inspiring reply of the noble Lord, Lord Melchett.
§ 10.11 p.m.
§ Lord MELCHETT
My Lords, I am very grateful to the noble Earl, Lord Kinnoull, for that preliminary advertisement of my speech and I hope that I can live up to his expectations. Certainly the noble Earl is quite right in saying that it has been a very wide-ranging debate and I am grateful to him for mentioning some of the many future and current possibilities for British aerospace. If I may say so to the noble Earl, Lord Kimberley, 1327 he tended, rather against the terms of his own Unstarred Question, to concentrate exclusively on Concorde. One is in the difficulty when replying to Unstarred Questions of this kind of knowing whether to reply to the Unstarred Question on the Order Paper, or whether to reply to the speech of the person asking the Unstarred Question, or whether to reply to the speeches of everybody who has taken part in the debate. My understanding is that it is usual to reply to the Unstarred Question on the Order Paper. If, therefore, I make a speech that does not deal exclusively with Concorde, the noble Earl will understand why and will not, I hope, accuse me of attempting to dodge the issue or failing to answer some of his questions.
There can be no doubt about the Government's commitment to Concorde, a determination which we share with our French partners in this uniquely collaborative project. I was sorry that the noble Earl did not make more of the collaborative nature of the project and of the fact that any future developments and all the past successes are due not only to British aerospace and the British people involved but to our French partners as well. This determination to ensure Concorde's future was reaffirmed at the meeting between my honourable friend the Minister of State at the Department of Industry, Mr. Kaufman, and the French Transport Minister, M. Cavaille, on 29th March, when both Governments agreed that the key to the success of the project and the prospect of further orders lay in the profitable operation of the aircraft already sold.
We have always maintained that the acid test of Concorde will be on the North Atlantic route, where the load factors of over 90 per cent. achieved on the Washington route are proof of the attractiveness of Concorde to the traveller. Indeed, on many flights airlines have had to turn passengers away. The noble Earl, Lord Kinnoull, made particular reference to this point. I understand that on the London-Washington route the load factor has been about 93 per cent. and that on the Washington-London route it has been about 92 per cent. These are very encouraging figures. The London-Bahrein and Bahrein-London figures are considerably lower—34 per cent. and 63 per cent. respectively—but I think that we are 1328 all agreed that the London-Bahrein route has never been seen as a complete route in itself but merely one leg of a longer route.
§ The Earl of KIMBERLEY
My Lords, when the noble Lord says that the load factor is 93 per cent., it is 93 per cent., is it not, of 80, not 100, seats because of various conditions? The Americans will not allow it to fly out fully laden.
§ Lord MELCHETT
Yes, my Lords, the noble Earl is quite right. The figures I have given are a percentage of the seats available in practice, not the theoretical payload of 100 seats altogether. The Government are working vigorously to open up other routes for Concorde, and the most important of these routes is to New York. Mr. Kaufman personally attended the environmental hearing in January, after which Secretary Coleman gave permission for Concorde to operate to New York and Washington. Access to New York has been delayed by legal problems but the British and French Governments are assisting the airlines to overcome these. Noble Lords will also welcome the recent developments in Australia where, as a result of the Environmental Impact Statement prepared by British officials in association with British Airways and the British Aircraft Corporation, the Australian Government has decided that Concorde may fly into Melbourne.
In response to the question put by the noble Earl, Lord Kinnoull, about the route to Australia, I do not think there is anything I can add to what I said in response to his noble friend Lord Orr-Ewing when he asked me a question about that very point quite recently, but it is something to which the Government continue to attach the utmost importance.
§ The Earl of KINNOULL
My Lords, if, as I think, the noble Lord is now moving away from the subject of New York, I wonder whether he can advise us whether there are any further environmental inquiries to be held in New York or whether now, as I understand the position, it is a question of the United States Government taking the decision after this period of 18 months of operation to Washington?
§ Lord MELCHETT
My Lords, so far as I know there are no more environmental inquiries to be made, but of course it is a matter for the American Government and the City of New York and the other authorities concerned to make decisions about that and not for me. So it is not necessarily something that lies in my hands.
The Government are reinforcing the general support for Concorde with specific measures aimed at bringing the aircraft into service with other interested airlines. They are providing the strongest possible support to the negotiations in progress with Iran Air, where there is the prospect of the sale of two aircraft, and with Japan Airlines, who are actively interested in leasing two Concordes. I can assure noble Lords that any serious inquiry from airlines will be pursued with vigour if it offers the possibility of a fair and reasonable return in relation to the investment in the aircraft.
The Fairford flight test centre is having to be closed. As I informed your Lordships on the 4th February, the amount of testing still required on the Concorde is not sufficient to justify keeping this expensive facility in operation, nor are there any foreseeable new civil aircraft projects which will call for such a facility. I feel sure that noble Lords share my regret that the closure decision has led to the "blacking" of Concorde 208, which, whatever the reasons, is bound to be detrimental to Concorde's prospects, both with the airlines which have purchased it, and particularly of course as regards possible sales to other operators.
I do not intend to answer all the detailed questions asked by the noble Earl because I think that not only would I not have the opportunity to answer any of the other points mentioned by other noble Lords, but also I should keep the House here until well after midnight. But I should like to say to him that the suggestion that the Government are not taking all reasonable steps to exploit Concorde is one which I simply cannot accept. To state categorically, as the noble Earl has done, that airlines would purchase Concorde if it were to have a greater range than is now the case simply flies in the face of the reality of our problems. We are faced with the Coleman decision by which, until a 16-month trial period is ended at each of Dulles Airport, Washington and Kennedy Airport—and this will 1330 not be until late 1978 at the earliest—no airline other than British Airways and Air France will be allowed to fly into the United States. The airlines most interested in Concorde wish to fly to the United States or they wish to fly to Japan.
It is to cope with these, the real problems, that British and French Ministers on the 29th March expressed their determination to open routes. That is why we are working strenuously to open routes, with considerable success as is shown by the Australian decision. That is why my honourable friend the Minister of State took part in the Coleman hearing in January, again with considerable success as is shown by the decision reached by Mr. Coleman. That is why we are supporting British Airways in their legal argument for access to New York.
To suggest that nothing is being done to exploit Concorde other than—if I may say so with great respect—the noble Earl's letters to various airlines, is to belittle the great efforts being made by the British Aircraft Corporation to sell and lease the aircraft. All the airlines with an interest in Concorde, including Philippine Airlines, are visited. All possible means of exploiting the aircraft, sale and lease, are investigated. Discussions with Iranair are well advanced for a sale. A lease to Japan Airlines is under discussion, and leases with other Far Eastern airlines are being looked at.
As to further investment, whether in additional aircraft or in major modifications, the Government have made clear that this would have to be justified by the returns. We are at one with our French opposite numbers, who are adopting a similarly businesslike approach, that no convincing case has yet been made out for further major expenditure. Meanwhile developments continue to be scrutinised and authorised on strict cost effective criteria. I would hope that that approach, besides having the full support and agreement of our French partners, would be something to commend itself to all sides of this House.
The noble Lord, Lord Gainford, mentioned airships. I am certainly well aware of the interest shown in this form of air transport. I can assure the noble Lord that the Government are ready to consider all proposals from firms for the development and the production of commercially viable airships. We are in 1331 contact with aerospace developments on the issue he raised. Elsewhere on the civil side, the industry is faced with a severe shortage of work. This is common to manufacturers throughout the world. As a consequence of the 1974 fuel crisis and the recent world economic depression, the growth of air traffic is currently very slow and, pending the expected improvement, airlines are simply not buying new aircraft in any substantial numbers.
I regret to say that over the past few years, the major United Kingdom firms have failed in some instances to invest in improvements and further developments of their existing major aircraft, which might have strengthened their position in the present difficult market conditions. For example, although HSA are continuing to build HS.748s and planning to introduce a re-engined version of the HS.125 next year, both in anticipation of further orders, the only really new project in recent years has been the small commuter airliner, the SD.3–30, developed and now being produced by Short Brothers, a Government-owned company.
This lack of confidence by our firms cannot be fairly attributed to nationalisation. The Government are doing all they can to counteract the firms' timidity. They have enabled the BAC 1–11 line to stay open by underwriting production of a small order from Roumania and the manufacture of parts for a further five aircraft on a speculative basis. Following HSA's abandonment of the HS.146, which had been launched with major public assistance, the Government have kept open the option to restart the project wholly at public expense.
The noble Earl, Lord Kinnoull, asked about current proposals. The Government are currently giving urgent consideration to requests from BAC to extend the underwriting on the 1–11, and from HSA to increase the amount of work being done under the holding contract. Their decisions on these questions will have to take account of the public expenditure problems we are now facing, the willingness or otherwise of the proponents to show their confidence by sharing the risks and a realistic assessment of the market prospects. I should add that in the case of the HS.146, Hawker-Siddeley are not recommending a relaunch of the project precisely because of 1332 their uncertainty about the market prospects—and they have not volunteered to invest any of their own money in the project at this stage, notwithstanding the compensation provisions in the nationalisation Bill.
§ The Earl of KINNOULL
My Lords, I am grateful to the noble Lord for that reply. I thought he spoke about sharing the risk, and that was one of the reasons for the delay. Is it a risk that the companies who are about to be nationalised will be putting in risk capital? In which case, would the noble Lord really think that the directors of these companies would do this in the interests of their shareholders?
§ Lord MELCHETT
My Lords, I did not say that was one of the reasons for the delay; but obviously the Government, in reaching a decision about putting money into any of these projects, would look to see what attitude the companies themselves took, and their own estimates of the commercial viability and prospects of the projects under discussion. But continuing commercial investment by the shareholders in a company due to vest under the Bill is fully protected under the terms of the Bill. I look forward very shortly indeed to discussing the Bill with the noble Lord, and see absolutely no reason to give him any undertakings on the hypothetical questions he raised about the progress the Bill is currently making successfully in another place.
The Government are providing strenuous support for the companies in their efforts to sell their existing aircraft—both through the overseas Posts and at home, including maximum assistance through ECGD. There are possibilities for the sale of more Tridents to China and of BAC 1–11s in several different countries. Such orders are proving very difficult to secure, but I can assure noble Lords that the Government will not relax their efforts to do all they can to help the companies to land them.
As to future prospects, there is good reason to believe there will be a resumption of steady growth in airline traffic in the 1980s which will lead to substantial purchases of new aircraft. The precise kinds of aircraft which will be required are still not clear. The situation is fluid because the airlines cannot yet define their requirements with any precision.
1333 It is clear that the investment levels which will be required to launch any projects ranges from around £200 million for a small feeder aircraft to £1,000 million for a completely new 200-seater. Hence, with the possible exception of the smallest kind of aircraft, the Government are convinced that any of these possible projects will need to be undertaken collaboratively in order to share the very large investment required and to widen the market possibilities. Even with collaboration, the commitment of individual partners will be very high indeed. We must, therefore, seek out projects with a high potential for profit.
There are various possibilities for collaboration, both within Europe and between European companies and American companies. All possibilities are being fully explored. Pending nationalisation the Government are doing all they can to encourage and assist United Kingdom firms and the Organising Committee under my noble friend Lord Beswick to narrow down the options, and to examine all the possibilities for collaboration on a sound commercial basis, whether with the principal European firms or with American companies. The United Kingdom companies are engaged with the French, German and Dutch manufacturers (the Group of Seven), in joint studies and in various bilateral discussions on possible projects and collaboration. The Organising Committee are setting up studies with the French and Germans on the Airbus and with the French on the HS. 146 and the future 150-seat aircraft. Individual discussions are also taking place with the United States' manufacturers about possible transatlantic collaboration.
The Government are continuing to stimulate these industrial discussions, and their efforts over the last four months have included a discussion on future collaboration generally between my right honourable friend the Prime Minister and the French President during the latter's recent visit, a meeting between the Prime Minister and Mr. Wilson of Boeing at which my right honourable friend the Secretary of State for Industry was present, and two meetings in the last four months between the Minister of State, Mr. Kaufman, and his French counterpart on Anglo-French collaboration, including studies on a possible advanced supersonic transport. 1334 Officials of the Department of Industry are also engaged in ongoing discussions with their opposite numbers in France, Germany and Holland to monitor progress in the European industrial discussions.
The noble Earl, Lord Kinnoull, asked me about the MRCA project in particular, As he knows, a very substantial RAF requirement for the Tornado, as it is now called, has been announced. It is for my right honourable friend the Secretary of State for Defence to announce when production may start. I trust he will be able to do this soon. The Government look forward to a successful joint programme on this aircraft with the Germans and Italians, and fully recognise the importance of the programme for the United Kingdom industry.
My Lords, I hope I have said enough to indicate the wholehearted and unremitting efforts which the Government are putting into clearing the way for a profitable long-term future for the aircraft industry, but I should mention that with the transfer of Rolls-Royce (1971) Limited to the NEB the Government also look forward to a profitable long-term future for that sector of the industry. To conclude, the Government are committed to ensuring, so far as they possibly can, that the conditions exist for the United Kingdom aircraft industry to carve out a vigorous and successful future for itself, based on sound commercial projects. We are taking all the necessary action towards this end (the most important being nationalisation itself) in order to eliminate the wasteful competition and overlap of the past. The industry must pick up the challenge facing it, but the Government are continuing, and will continue, to do all they can to enable it to do so successfully.