HL Deb 05 March 1987 vol 485 cc721-4

3.17 p.m.

Lord Bruce-Gardyne

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government when they now expect to respond to British Aerospace's request for £750 million of launch aid from the taxpayer towards the cost of the Airbus 330 and 340.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth)

My Lords, Her Majesty's Government are aiming to reach a decision on British Aerospace's application for launch aid in respect of its participation in the Airbus 330 and 340 programme as soon as possible.

Lord Bruce-Gardyne

My Lords, I am grateful to my noble friend for that Answer. Is he aware that it appears to be the opinion of the partners in Airbus Industrie that the best reason for proceeding with the A330 and A340 is to try to prevent Boeing from cross-subsidising its short-haul airliners? Surely that is not an adequate or suitable reason for committing this country's taxpayers to launch aid on the scale of £750 million, or anything like it.

Lord Lucas of Chilworth

My Lords, I am sure Airbus Industrie has a number of commercial strategies that it would wish to deploy in the programme. But, as the Government have not yet committed £750 million, or anything at all, towards the programme, my noble friend's question is somewhat hypothetical.

Lord Beswick

My Lords, will the noble Lord make it clear that we are not talking about a request for launch aid as it was known in the aircraft industry before public ownership? Does he agree that British Aerospace is one of the few, the very few, successful high technology industries in this country, that we must support it, and that it would be wrong to expect long-term projects coming from that high technology to be wholly financed at exorbitantly high interest rates under the present financial system?

Lord Lucas of Chilworth

My Lords, I can agree with some parts of the noble Lord's question. Here is an extremely profitable, successful, high-tech company. The Government would wish to give careful consideration to any application British Aerospace may make for support in the furtherance of its activities.

Baroness Burton of Coventry

My Lords, can the Minister say why his noble friend Lord Bruce-Gardyne is so prejudiced against British Aerospace? Is he aware that the noble Lord always stresses, as he has today, the cost to the taxpayer, without mentioning that loans and interest are being repaid?

Furthermore, did the noble Lord see the "Money Programme" on Sunday, 15th February in which the noble Lord, Lord Bruce-Gardyne, appeared, put these prejudiced views and was then allowed to wind up so that there was no retraction? Is it not clear that British Aerospace now has an export record and orders which are of great value to this country?

Lord Lucas of Chilworth

My Lords, in reply to the earlier questions of the noble Baroness I do not think that I can answer on behalf of my noble friend. No doubt he will answer for himself in due course, perhaps outside the Chamber.

I confirm that British Aerospace has a very fine record. It has orders outstanding now of £9 billion. Its contribution to the economy of the country in terms of money and employment is to be regarded as a success.

Lord Orr-Ewing

My Lords, will my noble friend bear in mind that in addition to the factors referred to by the noble Lord, Lord Beswick, and others, there is also the fact that America already has 86 per cent. of the world trade in civil aircraft? It is important that there should be another centre for research development and production in Western Europe with co-operation among the leading countries in Western Europe.

Lord Lucas of Chilworth

My Lords, that is indeed right. I am grateful to my noble friend for his question. It is the collaboration among the constitutent countries in Airbus Industrie which has made it such a success.

Lord Underhill

My Lords, is the Minister aware that his original Answer was in full accord with the answer given by the noble Lord, Lord Beaverbrook, on 11th February? Is there not some urgency for the Government decision? They have had this request from British Aerospace since October. An announcement will soon require to be made to British Aerospace in conjuction with its European partners. Did not the Government have the same apprehension, perhaps rightly so, about the launch aid for the A320, which has proved to be one of the biggest successes of British aircraft?

Lord Lucas of Chilworth

My Lords, the answer to the noble Lord is two fold. The Government's consideration of the present application is proceeding in parallel with the decision-making timetables of the French and German Governments. We shall take account of the progress of Airbus Industrie and its partners towards the launching of the programme. It is certainly right that the £250 million given to the A320 launch is proving at this moment to be a successful support programme. We continue to monitor it.

Lord Briginshaw

My Lords, why is it such a low key presentation? This is in absolute contrast with the speech of the French Prime Minister last week in which he made it quite clear that the French were enthusiastic but that they were on the side of development, whereas it appears from what the Minister is saying now that that does not matter much. It depends on finance, and finance itself is a matter of certainty, investment and development of techniques in technology. The whole matter is tied together. It needs a wider presentation. It requires the kind of presentation that the French Prime Minister made, and a robust one with regard to Boeing, and so on. In addition to that—

Noble Lords

, Speech!

Lord Briginshaw

—perhaps I may ask this question. Why is there that difference between this and the presentation of the German Bavarian Prime Minister, who gave a robust indication of their commitment? That is what I should like to have heard, and why not?

Lord Lucas of Chilworth

My Lords, the noble Lord will forgive me, but I cannot quite follow what he is asking me. The partners in Airbus Industrie's government are at one in investigating the application for support for the programme. They are in harmony over that. When those considerations have been completed, joint decisions will be made to Airbus Industrie and British Aerospace is a partner with that organisation.

Lord Bruce-Gardyne

My Lords, in view of the question from the noble Lord, Lord Underhill, and the reply of my noble friend, can he at least make sure that, before this House and another place consider any decision to grant £750 million, or any part of it, from the taxpayer towards these projects, we are given the evidence on which to make a judgment as to how many of the sales of the A300, the A310 and the A320 to date have been concluded on a basis which offers the assurance of a commercial return to British Aerospace?

Lord Lucas of Chilworth

My Lords, I undertake to do the best I can in that regard. To date, at pre-introduction, there are 439 orders for the A320. That is well on the way to meeting the criteria that the Government set down at the time the £250 million was advanced.

Lord Beswick

My Lords, I ask the noble Lord this question. Why did he use the term "support programme" for the A320? Was it not an investment programme which will pay a dividend? With regard to the request for the A330 and A340, will the noble Lord make it absolutely clear that there should be no question of £750 million of taxpayers' money being granted simply as a gift or as support? It must be a properly related advance or investment.

Lord Lucas of Chilworth

My Lords, I am sorry if I have upset the noble Lord by using the word "support". They are moneys loaned to the company to help it launch the programme. The criteria for that are clearly set down. There has to be a commercial rate of return. That is negotiated, as it was with the A320. All those considerations will be brought into account in assessing the viability of the A330 and the A340 and arrangements, perhaps on a similar basis, will be made in that regard.

Baroness Burton of Coventry

My Lords, on a point of information, may I ask the Minister whether I am correct? Is not this application for £750 million over several years and will not the rest of the development costs be met by British Aerospace?

Finally, regarding the repayment to the taxpayer, does the Minister not agree that it is only because British Aerospace has been so successful that the Americans are now squealing as they are losing their monopoly?

Lord Lucas of Chilworth

My Lords, I would not suggest that the Americans are squealing. They believe that the launch aid which is now being asked for contravenes the GATT arrangements. My right honourable friend has discussed this with the Americans, and the GATT air committee is meeting to ensure that we do not breach the GATT rules.

Lord Hatch of Lusby

My Lords, does the noble Lord recall this fact? Following a parliamentary delegation to Zimbabwe some two and a half years ago I asked him what support the Government were prepared to put behind British Aerospace in the re-equipment of the Zimbabwean civil air fleet, which would have affected the whole of central Africa. Is it not the case, and has it not been shown by the Select Committee of your Lordship's House on Overseas Trade, that our industry, and in particular the aircraft industry, is greatly handicapped in contrast with its competitors by lack of government investment and support?

Lord Lucas of Chilworth

My Lords, the noble Lord. knows that his question is very wide of the original Question on the Order Paper. I shall be delighted to answer his question if he likes to put it down.