HL Deb 13 July 1988 vol 499 cc826-7

2.54 p.m.

Lord Bruce-Gardyne asked Her Majesty's Government:

What further progress has been made into the request from British Aerospace for additional financial support from the taxpayers towards the cost of its participation in the Airbus consortium.

Lord Beaverbrook

My Lords, I have little to add to the answer which my noble friend gave on 6th June. He met the chairman and chief executive of British Aerospace to discuss difficulties faced by the company with its participation in the Airbus project. Discussions continue and must remain commercially confidential, but we have received no firm proposals for additional support.

Lord Bruce-Gardyne

My Lords, I am grateful to my noble friend for that reply. Will he confirm that now that the dollar exchange rate is back almost precisely at the level at which —as my noble friend the Secretary of State pointed out six weeks ago—the last launch aid was made, there can be no logical case whatsoever for providing additional support in connection with exchange rate exposure for those contracts? Can my noble friend assure the House that there will be no question of compensating British Aerospace through the revision of the terms of its launch aid for the Airbus for any changes which might emerge from the terms of the takeover bid for the Rover Group?

Lord Beaverbrook

My Lords, of course I am aware of the problems that British Aerospace believes that it faces over the dollar exchange rate. My noble friend is correct in pointing out that the dollar is approximately back to its level when the agreements were made. I cannot give an unconditional guarantee that British Aerospace will receive no further assistance. No prudent Minister would. However, I repeat what was said on 6th June, that should in any way launch aid be varied my noble friend will come back to tell your Lordships.

Lord Underhill

My Lords, will the Minister confirm what has been stated previously, that there is no question of a grant involved in launch aid to British Aerospace, and that it is a loan which is repayable? That is a very important principle. Is it not also the case that Airbus Industrie has recently concluded an agreement with Rolls-Royce under which the Rolls-Royce engine will for the first time be offered as a complete engine for the A.330? Does he agree that that is another factor to be considered in connection with British employment?

Lord Beaverbrook

My Lords, of course the Government attach the highest importance to creating employment in this country. I think that the Airbus programme so far deserves full praise for the employment that it has created through British skill and British technology. I would say to the noble Lord that launch aid for the A.320 is fully repayable and a rate of return of 7 per cent. is to be achieved.

Lord Bruce-Gardyne

My Lords, my noble friend did not answer the second part of my Question. Can he give an assurance that there will be no question of the deal with British Aerospace or negotiation of that deal being used as a way of compensating British Aerospace for any change in the terms of the takeover deal with Rover Group?

Lord Beaverbrook

My Lords, I can give my noble friend that undertaking.