British Aerospace and Airbus Industrie (Hansard, 14 October 1986)

§ Lord Bruce-Gardyne
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. 675 The Question was as follows:
To ask Her Majesty's Government whether they will make the publication of properly audited profit and loss accounts by Airbus Industrie a precondition for consideration of any request from British Aerospace plc for launch aid towards the cost of participation in the Airbus A330 and A340.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)
My Lords, Airbus Industrie does produce profit and loss accounts, and these are properly audited. Her Majesty's Government receive copies of these accounts as well as other information from Airbus Industrie on its financial results. As a Groupement d'Intérêt économique established under French law, Airbus Industrie is not required to make public its audited accounts. The Government would not be prepared to make publication a precondition for consideration of any launch aid request from British Aerospace.

§ Lord Bruce-Gardyne
My Lords, I am most grateful to my noble friend for that reply. But does it not leave us in a somewhat difficult situation, because the fact is that in the absence of published profit and loss accounts of the normal type from Airbus Industrie, there is surely no means by which we can in any way judge whether any further subsidies from the taxpayer—possibly amounting to several hundred millions of pounds—are likely to offer a commercial return, or whether the moneys that have already been spent on this project show any sign of offering a commercial return?

§ Lord Lucas of Chilworth
My Lords, it certainly would not be open to the Government to require the publication of these accounts, as Airbus Industrie is a GIE properly established under French law. As regards judgment of the worthwhileness or otherwise of launch aid, or other support to British Aerospace, there are certain criteria to which the Government adhere in assessing the value of any approach that might be made.

§ Lord Beswick
My Lords, does the Minister agree that it is somewhat illogical that the noble Lord, Lord Bruce-Gardyne, should come to the House last week to vote to extend the authority of that spendthrift, wasteful bureaucracy inaptly called the European Economic Community when today he comes to criticise the most practical and successful exercise in European collaboration that we have so far known?

§ Lord Lucas of Chilworth
My Lords, it is not for me to judge the illogicality of my noble friend's Question, but Her Majesty's Government would want to examine very carefully any approach made to them by British Aerospace with regard to aid of whatever kind.

§ Lord Underhill
My Lords, does the noble Lord the Minister agree that the original decision to give launch aid for the first two aeroplanes was welcomed and has been thoroughly justified? Is it not a fact that the number of orders that have been placed for the A320 has been almost unparalleled, and that therefore we 676 see no reason whatever why launch aid should not be seriously considered by the Government for the two models referred to in this Question?

§ Lord Lucas of Chilworth
My Lords, it is a fact that so far the A320 is living up to the expectations that the Government had when we provided £250 million of launch aid. With regard to the other two aeroplanes, neither Airbus Industrie nor British Aerospace, jointly or separately, has yet approached their respective governments for support. The project is still in the proposal stage.

§ Lord Gladwyn
My Lords, is it not obvious that in the present political circumstances it is more and more in the interests of this country to come in with European concerns and industry generally, even if the actual commercial prospect is not altogether alluring?

§ Lord Lucas of Chilworth
My Lords, there is no doubt that the noble Lord is right in suggesting that collaborative efforts with our European partners on projects of the scale which the aircraft industry envisages are a desirable feature which should be encouraged.

Lord Bruce of Donington
My Lords, is the noble Lord aware that we on this side of the House have always backed, where necessary, support by the government of the day for any project that is going to be of lasting benefit to the nation as a whole? When giving consideration to this matter and in the absence of accounts from Airbus Industrie Ltd., will the noble Lord also bear in mind the accounts published by British Aerospace? They show for the year ended 31st December 1985 net current assets of more than £1,133 million. Is it not the case that in the normal way, and as part of the objective of privatisation to free private industry from the burdens of the state, it would be wise to give consideration to whether the company is quite capable of bearing its own risk and of bearing its own expenditure?

§ Lord Lucas of Chilworth
My Lords, the financial consequences for British Aerospace of its participation in the Airbus programme and its partnership are reflected in the company's published accounts. That is true of British Aerospace's partners in other countries. Certainly the Government would hope that British Aerospace could finance any investment from its own and other private sector sources. The company certainly is in a stronger financial position following a successful share sale in May of last year than when launch aid was agreed for the A320.
With regard to the noble Lord's first supplementary question, we are obviously well aware of the support which the noble Lord and his colleagues give to any venture into which the Government go that brings lasting benefit to the country.

§ Lord Bruce-Gardyne
My Lords, in the light of these questions and answers, will my noble friend nevertheless agree that the crucial point is not whether the Airbus is gaining orders—there is no dispute that it is—but whether these orders are being obtained at a price which offers any prospect of a commercial return 677 to the participants? How are we to judge that? How is this place or the other place to judge that unless we can see properly audited accounts from Airbus Industrie to tell where the profits are going, if they exist?

§ Lord Lucas of Chilworth
My Lords, I have explained that it is not for the British Government to insist on audited accounts being made public, because that company is established under French law which precludes that. It is certainly true that any application for launch aid has as one of its criteria viability—not just the question of orders. The House can rest assured that my department monitors very carefully the progress of the use of its aid.

Lord Bruce of Donington
My Lords, is the noble Lord aware that, although French law may prohibit the publication of accounts of this kind, EC law, to which the French Government are supposed to subscribe when it suits them, does insist upon the publication of such accounts?

§ Lord Lucas of Chilworth
My Lords, I can only suggest that for my noble friend to get to what he is after he peruses the balance sheets of British Aerospace, which includes, as I have said, the financial consequences of the company's activities with its European partners.

§ Lord Beswick
My Lords, for the sake of the record, may I ask the noble Lord whether he is aware that my colleagues are mistaken when they say that we on this side of the House have always afforded launch aid for desirable projects? That is not so. When in government we on this side of the House specifically excluded British Aerospace from launch aid when it was publicly owned.
I put this question to the noble Lord: would it not meet what the noble Lord, Lord Bruce-Gardyne, is very properly after if any launch aid for these two further airbus projects was made conditional on repayment by British Aerospace and not on the success or failure of the individual models?

§ Lord Lucas of Chilworth
My Lords, in the case of the £250 million of launch aid which we afforded to British Aerospace for its share in the A320, the repayments are £50 million in fixed instalments between 1990 and 1992, and the balance is from levies on sales of the aircraft. I believe that that ought to satisfy all noble Lords as to the repayment of such an aid programme.