§ Mr. Speaker
Before I call the Opposition's Motion it will probably be for the convenience of the House if I say that the Amendment standing in the name of the right hon. Member for Orkney and Shetland (Mr. Grimond) and other hon. Members is not selected.
§ 3.53 p.m.
§ Mr. Frederick Lee (Newton)
I beg to move,That this House is gravely concerned at the lack of financial control in the negotiation, placing and administration of Ministry of Aviation contracts, and with the terms of agreement with the French Government over the production of the Concord supersonic transport.We wish today to ask the House to look at the Ministry of Aviation's conditions of contracting and some of 849 the agreements and the arrangements being made by the Government both with contractors in this country and with foreign Governments, for we believe that the methods, if that is the right expression, now being used are causing grave losses to the public and that the House should be aware of these problems.
If left to finance itself from its own resources, private enterprise in the aircraft industry could not function. This being the case, it is right and proper that the Government should form very strong links with private industry so that new products and new processes can from time to time be developed. We on this side feel that the concentration of the Government's participation in industry upon defence industries to the neglect of some of our other capital and consumer industries is causing a failure to modernise in many parts of our industry. We should like to see the system widened to cover many of those industries.
Unlike the Government, we would demand the very closest scrutiny of the way in which public money was spent. We would demand an efficient system of the placing of contracts, and we would most certainly demand a return to the public on the investment that it makes. For the purpose of this debate, we shall concentrate on the contracts awarded by the Ministry of Aviation, on those which have been either cancelled or changed, and on those which have been badly administered. To get in perspective the scale of these matters concerning the Ministry of Aviation, perhaps we should look at the figure of £3,400 million of Government spending on the British aircraft industry between 1950 and 1963. That of itself would be an understatement, because small contracts have not been included in the expenditure.
For this vast expenditure we get prototypes, the hardware itself, but there is practically no provision for any return on the capital employed. It is true that there is a system of royalty payments when more than a certain number of components are produced. There is practically no return on research expenditure, and on production contracts only, so far as I can see, there has been a return on the Viscount on the Dart engine and, apparently, on the Comet IV. We maintain that this kind of 850 financial picture is simply not good enough.
The second Report from the Estimates Committee, paragraph 47, states:The Minister, in announcing the new policy"—that is, the new policy in February, 1960—stated that 'suitable arrangements will be made for the Government to participate in the proceeds from sales'.It goes on to tell us what the present formula is—a formula which, I think, the aircraft manufacturers consider to be extremely satisfactory from their point of view—and I do not blame them—but which the Committee does not recommend to us. Indeed, it recommends changes in the methods in which we arrange, these things, and certainly we on this side of the House would accept the findings of the Committee on these issues.
Government-backed contracts, if they fail, do not in any way inhibit the manufacturers from making profits. The public money is lost, but the contractor makes his profit. When contracts are successful, the contractors make a bigger profit and the State gets nothing. That is, broadly, the picture which emerges from the present position.
The second Report from the Estimates Committee recommends that there shall be better methods of profit sharing in the new methods of placing contracts. It asks that we should consider the kind of contract which would return payment to the public in the way that a private financier would expect if he were financing great corporations of this type. In addition, we have an utterly abysmal Government record of vacillation, bad judgment and financial cancellation of aircraft which, on the Minister's own figures of 17th June, 1963, showed losses of £240 million between 1951 and 1963.
Some of us have an unpleasant feeling that there may be more cancellations to come in the not distant future. The Defence White Paper has done nothing to assuage those fears. It began with a figure just below £2,000 million and left out anything which pushed the global figure beyond that.
Perhaps the Minister would help all of us, and the industry in particular, if he would tell us today what is the 851 future, if any, of the P1154 aircraft. Around it, all kinds of rumours are now circulating. There has already been a year's delay in deciding whether to develop this plane as a replacement for the ageing Hunters of the R.A.F. and of the Sea Vixens of the Fleet Air Arm. It has resulted in a suggestion which I have read that we should be producing Hunters at about double the cost of the original planes.
Quite apart from the financial side, the aircraft industry itself cannot possibly decide its own long-term employment policies while this sort of thing goes on. This results in insecurity for the workers in the industry, and a great deal of uncertainty for the employers. I think that it is true to say that because of this kind of thing we have sort of tottered through a decade of aircraft and missile production in which, at enormous cost to the public, we just about managed to keep the industry afloat.
I turn to the question of research and development, and again, to keep the matter in perspective, perhaps I should quote the figures. Expenditure on research and development for civil and military purposes by the Ministry of Aviation between 1960–61 and 1963–64 was, in 1960–61, £211,371,000; in 1961–62, £210,500,000; in 1962–63, £228,589,000; 1963–64, £260,328,000. I know that the vast majority of this went on defence, but if we take civil research by the Ministry over the same period we find that in 1960–61 it was £16,765,000; in 1961–62, £19,853,000; in 1962–63, £26,832,000; and in 1963–64, £37,778,000. So we are not discussing chicken feed under the heading of research and development.
Whether we think in terms of military or civil research and development, the bulk of this expenditure was, of course, spent by the Ministry in private industry. I do not dispute that it is extremely difficult to measure whether we are getting value for money with many of these projects, but the complete lack of method in the contracting arrangements has often been criticised in this House. I did it in the debate on 22nd March, 1962, and my right hon. Friend the Leader of the Opposition has done it on many occasions.
This, I think, is basically responsible for the shocking situation which has been 852 revealed in the Report of the Comptroller and Auditor General, published on 24th January this year. We know that he first queried the Ferranti Bloodhound contract with the Ministry on 14th August, 1963. On 24th January, 1964, the Minister announced that he was setting up an inquiry into the facts as revealed by the Comptroller and Auditor General.
I would ask the Minister: what happened in the five months between 14th August, 1963, and 24th January, 1964? I know that in reply to a Question by an hon. Friend of mine, he said that during those five months they had looked at their papers and had talked with the firm. I should have thought that five days was excessive for that kind of thing, let alone the five months which we know have elapsed. Is it not the case that the publication of the Comptroller and Auditor General's Report and the certainty that the Public Accounts Committee, as well as other Members of Parliament in general, and the Press, would swoop on this Report caused a sudden burst of activity between the Ministry of Aviation and the Chancellor of the Exchequer after five months during which they had done very little?
This action of setting up the Lang inquiry is a most unusual departure from our usual practices. The usual practice is for the Public Accounts Committee to look at these things and report to the House. I should like the Minister to explain why he thought it necessary to set up the Lang inquiry at all. In any event, when it was set up there was not even an announcement made in the House. We read about it either in the Comptroller and Auditor General's Report or in the Press.
It leads me to ask: could it be that after hushing up the matter for five months the Minister calculated that a further few months of leisurely inquiry by these three gentlemen would take him safely to the other side of the General Election and that the Public Accounts Committee and other Members of Parliament would accept a sort of sub judice plea and would not ask for investigations into this matter while Sir John Lang and his colleagues were investigating? I read a report that a spokesman of the Ministry said that the inquiry will take a few months. Quite 853 frankly, this will not do. I am asking the right hon. Gentleman today to give us a date—it may be an approximate date, but, nevertheless, a date—by which the Lang inquiry will be finished and we will know the findings.
In any event, I do not accept the inquiry as at all necessary, and I certainly do not accept that these three gentlemen are the appropriate ones to man such an inquiry. Sir John Lang and Mr. Hobbs are eminent and able men of a type one respects very highly in their departmental work, but Sir John, before his retirement, and Mr. Hobbs, are or were instruments of the very machine into which they are now inquiring. If they now condemn that machine, we are entitled to ask why, for years, they condoned and applied it. Therefore, it is quite unfair that we should be asked to take a lot of notice of the inquiry by these gentlemen. Indeed, there is some irony in the thought that the Minister now calls upon Sir John to tell him what was wrong with the contracting system.
The last time I mentioned Sir John's name in the House was on 25th June, 1959, when he was Secretary to the Admiralty and his Department was selling S. G. Brown, a firm owned by the Admiralty, to private enterprise, and 49 per cent. of the shares to an American firm. None of these problems of contracting needed to apply to a firm which the Admiralty owned, but today, as we are discussing contracting, 12 per cent. of the men in S. G. Brown, which is now private enterprise, are under notice of dismissal for lack of Government contracts.
It seems to me a very strange way of conducting Government business, when we can dispense with a firm which was under our own control, in which there was no need for the complications in our contracting system, and when we see the results of the system enshrined in the Report of the Estimates Committee and in the Report of the Comptroller and Auditor General—
§ Sir Ian Orr-Ewing (Hendon, North)
I hope that during the hon. Gentleman's speech, or, perhaps, in the Opposition's winding-up speech, we shall be told whether the party opposite intends to nationalise the aircraft industry, accord 854 ing to the T.U.C. resolution. If that does come about, will there be any redundancies in that industry, as have happened on the railways?
§ Sir Ian Orr-Ewing
But will the Labour Party nationalise the aircraft industry, and, if so, will there be redundancies?
§ Mr. Lee
In this instance, the firm which was doing a remarkable job of work in persisting with simplification of contracting was thrown away, and now unemployment faces the men working in it.
I ask the Minister: will Sir John Lang be asked to give a comparison between the methods of contracting which then obtained in the Admiralty-owned firm and those in the jungle he is now asked to report on? And also a comparison of profit rates—which, the hon. Gentleman will be pleased to know, the Admiralty fixed at 5 per cent. Even the Government, in the Steel Act, 1953, provided that if industry was holding them up they would provide, or have power to provide, more capacity so that steel should be produced. I cannot understand how a Government who will enshrine that in the Steel Act will not do something to ensure that they have the right to manufacture and carry out research and development in the firms owned and controlled by themselves.
Now let us consider the Ferranti case, which I look upon merely as the latest example of mismanagement. The case arose because the Comptroller and Auditor General had an opportunity to check the amount charged to the Government for labour costs and overheads incurred on the Bloodhound guided weapon contract against the total costs for these items in the same factory over the same period. This method of checking is seldom useful, since most companies are heavily engaged in commercial work as well as in work on Government contracts. On this occasion, however, the Comptroller noted thatthe sum total of the amounts included for direct labour and overheads in the agreed prices, relating to production up to 31st March, 1961, exceeded by 70 per cent., or £2.7 million, 855 the total direct labour overhead costs for that period …Although these figures were available, the Ministry never compared the two sets before the prices in question were fixed.
This method may not always be readily available, but when it is not there may be even greater abuses than when it is. If we have a factory in which a number of both Government contracts and commercial contracts are going through, what is to stop cross-booking on a mammoth scale, in which case the Government may be paying for a great deal of the expense incurred by the firm in its private contracts? I cannot see that we can isolate the Ferranti case. I should think that there is a real suspicion and a danger that the £2.7 million which we now know about is merely a very small item in the whole lot of items which have gone through in this way.
§ Mr. Victor Goodhew (St. Albans)
The hon. Member is suggesting that expenses could be charged to Government contracts which were, in fact, incurred on private contracts. Is he saying that he believes that the aircraft industry is indulging in this sort of fraudulent practice? If so, he should say which firms are doing this.
§ Mr. Lee
We are discussing one that is. [Interruption.] I am saying that if one can do it a great many others can. [Interruption.] If the Comptroller and Auditor General is wrong about that, I will withdraw what I have said. But up to now, the Comptroller having investigated the matter and taken it to the Ministry of Aviation, the Ministry has itself agreed that this is a vital issue, and it is setting up an inquiry to look into the question. If, as the result of the inquiry, the Comptroller and Auditor General is proved wrong, I will withdraw what I have said, but at the moment the onus is upon the industry, and not upon me.
I am saying that the scope for abuse in these matters is even greater where there are a number of contracts both on Government account and private commercial account going through the same firm. I believe that it is not sufficient merely for the Minister to set up an inquiry into what happened 856 in the Ferranti case. We want a complete review of the whole contractual system, which we have argued for before, rather than merely a concentration on this one issue. It is clear from the Report of the Comptroller and Auditor General that there is a great deal of laxity in investigating the work done by private companies on Government contracts. In some cases, the firms themselves are extremely difficult but the largest blame must rest on the Ministry, which is responsible for administering the work done.
Not only the Government negligent; the system itself is utterly wrong. The standard contract condition provides access for the Ministry to the contractor's premises so that the Ministry may examine methods and ascertain costs. It does not, however, provide for access to the contractors' financial records in order to establish the out-turn of the contract. Surely an accurate estimate of the cost to the Ministry is, therefore, virtually impossible. It is made far and away more difficult—and I hope that hon. Members opposite will not defend this—by the practice of fixing prices after the contract has been let. These are the kind of anomalies about which we are protesting, and I want the Government to answer.
A further aggravation is being caused by what can be described as the breaking down of the system of competitive tendering. The examination which the Comptroller made of all fixed price contracts of £5,000 for electronic valves during the period of four weeks during 1962 showed that competitive tenders were received for only five types of valve, to a value of £23,000, out of a total of 47 types, to a value of £364,000. Contracts for 26 types had been let after inviting only one contractor to tender. In the case of another 18 types only one contractor had responded. In this last case, during the four weeks contracts were placed to a total value of £191,000 by acceptance of the only tender.
Does the Minister know what is happening in this case? This is the complicated law of "Buggins's turn next", when only a cad would dream of putting in a tender if old Buggins had waited for his turn all this time. We often hear from hon. Members opposite about 857 the virtues and virility of private enterprise. This is it—"Buggins's turn next."
The Ministry's reply to this is that the specifications needed to meet Service Departments' requirements are so rigorous that the company which develops the product nearly always gets the contract. This may seem a reasonable argument, but it rules out any possibility of competition, unless development contracts are duplicated, and so leaves the company in an unassailable bargaining position, when deciding the contract with the Minister, especially under the system whereby the contract is made first and the price is fixed afterwards.
For two-thirds of the valve contracts examined by the Comptroller there had beenno effective competition in the previous three years at least.In no case did the contracts allow for access to the contractor's financial records. There was one remarkable case which the Comptroller quotes as follows:a particular contractor, with whom orders to a total of £74,000 were placed … appears consistently to have refused to accept conditions of contract which would entitle the Ministry to carry out cost investigations, although on occasion the Ministry have considered such investigation desirable.Are hon. Members opposite so certain that I am wrong when they read that kind of thing? Why should any firm competing for a contract refuse to allow the people with whom it is contracting to carry out a simple investigation of this type? I know many employers who would not dream of refusing to agree to that kind of thing. Why does this firm refuse? If we put upon it a construction that hon. Members opposite do not like, will they tell us what they believe is the reason for this kind of refusal?
Paragraph 58 is a remarkable one. It says thatby comparison with commercial prices; by confirmation the Department was getting 'most favoured' treatment…If this is "most favoured" treatment goodness knows what we shall get if we ever get away from most favoured treatment.
It seems to me that here there is a question of incompetence on a colossal scale. 'We on this side of the House cannot be satisfied with the kind of 858 answers which we received at Question Time the other day, when we asked the Minister to take note of what we say and give us a reasoned reply. Merely because the Lang investigation is proceeding, we do not consider that the matter is sub judice in this House We believe that there is a little political chicanery about this, with the General Election approaching before the report of the Lang inquiry can ever come about.
I wish to say a few words about the condition of the industry following the creation of the consortia produced by the present Colonial Secretary. The other day I asked the Minister whether he was happy about helicopters. I know that Westland has a virtual monopoly. I am not satisfied with the performance of Westland. I know, from looking at its returns, that the organisation is making adequate profits. But we know that since the consortia was brought into existence people not within it have been victimised. The Herald is a case in point.
I wish to ask, with the contracts for Army helicopters very much in mind, whether the Minister will continue to ostracise Short Bros. and Harland because that arm is not inside the consortia? I ask him seriously to consider the position of this firm. It is situated in an area where there is massive unemployment it has the facilities to do the job, and it is hanging on to its labour force in the hope of getting more work. It would be a great relief to that firm to obtain assistance in the form of production work on the helicopters.
I turn now to supersonic transport—
§ Mr. George Wigg (Dudley)
A little earlier my hon. Friend mentioned the words "sub judice" in relation to the Comptroller and Auditor General and accounts. Surely it is quite wrong to refer to the matter being sub judice. It would be a grave breach of duty on the part of this House if this problem is not investigated to the full, quite apart from any accounts before the Comptroller and Auditor General. He reports to the House and the House must discharge its duty by getting right to the bottom of what has happened, not only in relation to the Minister but to others associated with him.
§ Mr. Lee
I am obliged to my hon. Friend. That is what I was trying to say to the Minister.
I wish now to turn to the position of supersonic transport and discuss the Concord. The second Report of the Estimates Committee for 1963–64 dealt in some degree with this matter and unearthed what I believe to be a fantastic story of muddle and ineptitude. We know from the Report of the Committee—indeed, we knew from the Minister's statement in 1962—that the cost of the project was provisionally estimated at between £150 million and £170 million, of which our contribution would be from £75 million to £85 million spread over the next eight to 10 years.
In addition, about £2 million has been spent already on study contracts and other moneys spent in Ministry establishments. It has been revealed by the evidence submitted to the Committee that the estimated £150 million to £170 million was "speculative"—that is the word which is used—and that "no precise estimate" was available when the decision was taken.
It was, however, made clear by Treasury witnesses that the Treasury, at least, expected this estimate to be exceeded. Treasury witnesses said thatit would be idle to pretend that the estimates we have been working on, although the best we have been able to make, will necessarily stand up over a period of time.It sounds almost like the Foreign Secretary describing the Prime Minister. A Ministry of Aviation witness pointed out that not only the cost but the time estimate was also provisional.
Then we come to an amazing disclosure, namely, that Treasury authorisation has not yet been given to the project, in spite of which, the Treasury is convinced that the Government are now so fully committed that the authorisation of the projectis to some extent a formality.The House must demand to know where financial responsibility lies in this matter. The Treasury has still not authorised the project. We know that the Treasury played no part in the preparation or signing of the agreement. There were no discussions with the French Ministry of Finance prior to the signing of the agreement, and the Treasury is not represented on the com 860 mittee of officials set up under the agreement to supervise the progress of the project.
When, on 4th February, I asked the Chancellor of the Exchequer whether he would try to get membership of the Committee and more financial control he said:I very much doubt whether greater control over this project is attainable in this way, but I will discuss the report of the Estimates Committee containing a recommendation broadly to this effect with my right hon. Friend the Minister of Aviation."—[OFFICIAL REPORT, 4th February, 1964; Vol. 688, c. 972.]The right hon. Gentleman said that he would discuss it with his right hon. Friend now. But the contracts are signed and I take it that now, even if the Treasury wanted to refuse permission, we should have to go ahead, because the signature must be honoured as it was signed by the right hon. Gentleman on behalf of the Government.
We want an explanation from the Government why the Chancellor, or the Treasury, have still not authorised this; why there is no representation on the Committee running the project; why there have never been discussions on the matter with their opposite numbers in the French Government. According to the Report it would seem that the only information we have is that on the assumption that the cost per aircraft was between £3 million and £4 million, we might be able to recover a good deal of this money from the sales of, say, 150 to 200 aircraft.
Those are the only indications that we have of any cost factor. Did not the Chancellor feel just a little inquisitive when he read the list of organisations and great international airlines which do not want supersonic aircraft? I should have thought that if we were thinking in terms of selling 150 to 200 aircraft at £3 million to £4 million each we ought to be making an assessment of how many airlines were likely to buy them.
The irony of the situation becomes apparent when we are informed that nobody considered it worth while to ask for a break clause in the Agreement for fear that it would create a bad impression on the French Government. The Estimates Committee stated:From a perusal of the agreement and after considering confidential evidence"—861 which is not in the Report—from Ministry witnesses, it is clear that, if the French Government decided for any reason whatever to abandon the project, the British contribution might well have to be written off entirely.We are glad the other day to have an assurance from the Minister that rumours that the French were thinking of breaking off were unfounded. But in the absence of any break clause, we must look at the consequences if such a position arose. I suppose that two problems would face us. We should have to decide whether to write off our losses or double our stakes. For all practical purposes a decision to proceed would more than double the cost, unless the French were willing to give us the results of their research and development.
But I think that the time factor is probably of even greater significance. In a statement of 29th November, 1962, the Minister said:The first flight of the aircraft is expected to be in 1966; and the aircraft should be ready for airline service by 1970.In reply to my question about the American Mach 3 he said:…we do not think that it is possible to built a Mach 3 aircraft within the same time scale as we are now discussing".—[OFFICIAL 12.F.Poa-r, 29th November, 1962; Vol. 668, c. 670–3.]But in his recent lecture to the Institute of Transport, Sir George Edwards was reported as saying:The production programme on which B.A.C.-Sud are working is scheduled to produce deliveries to the airlines starting in 1971.Among the three supersonic proposals for Mach 3 now being studied in the United States, the Boeing proposal states:First production aircraft would enter service in mid-1971.That could be as over-optimistic as the right hon. Gentleman was two years ago, but if either France or ourselves were forced to go it alone the problem of the time factor would then be very serious indeed. I wonder what date the right hon. Gentleman would give for production of the Concord under our own steam.
I am not trying to "knock" the Concord. [HON. MEMBERS: "Oh."] If hon. Members opposite want to spend £170 million or £200 million of the taxpayers' money without a word being said, then let them say so. What is this 862 House for? Is it their view that the Opposition should not query this kind of expenditure? This is not a question of "knocking" the Concord, but of expressing very genuine doubts which the present position brings to those who, like myself, hope for the great success of the aircraft.
Answering a Written Question on 29th January, the right hon. Gentleman said:We are considering proposals to increase the power of the Olympus 593 engine and to make certain changes to the wing design of the aircraft in order to achieve better range and payload."—[OFFICIAL REPORT, 29th January, 1964; Vol. 688, c. 57.]This, of course, has been widely interpreted as meaning very major modifications to the Concord. I wonder whether Sir George Edwards took this into account whim he spoke of 1971 as the date upon which the airlines would get it. Again, do we take it from what the right hon. Gentleman has said that the medium-range version announced in November, 1962, will not now be proceeded with? If that is so, what will be the effect of redistribution of work and on the cost of the programme?
I understand that great difficulty is being encountered in producing greater thrust by the engines, although some has been achieved. Is it enough, however, for the operation as described by the right hon. Gentleman? There is danger now that, if a break were to come between ourselves and the French, we could not possibly produce the Concord or our own before the American mach 3 aircraft came into service.
It was crass negligence to produce an agreement in which there was no break clause and that we are not to be represented by the Treasury on the committee supervising the financial progress of the Concord. From that angle alone the House and country should indict the Government. On other issues of contracting I have quoted from the Estimates Committee's Report. I have not sought to interpolate any considerable amount of my own opinions into it. I have reported to the House on the Committee's findings. The recommendations of the Committee are far-reaching and very wide but they are the minimum necessary if the public is to get any adequate return from the huge investment of taxpayers' money in the aircraft industry.
863 I have been asked whether we would nationalise this, that or the other. Frankly, if this story is told and understood by the nation, it will certainly demand very great changes in the British aircraft industry. It has invested thousands of millions of pounds from which it is getting no return. In addition, the contracting system now used leads to anomalies such as those revealed in the Ferranti case.
I have tried to show that the Ministry's ambitions are impossible of accomplishment in these conditions and that it is incumbent upon the right hon. Gentleman to tell us that he accepts the indictment of the Report of the Comptroller and Auditor General and that he will immediately get to work to alter the contracting system.
§ Sir Ian Orr-Ewing
Since this is probably the last debate on aviation which we shall have in this Parliament, many of us whose constituents work in the aircraft industry want to know whether it is to be nationalised by the Labour Party.
§ Mr. Walter Monslow (Barrow-in-Furness)
On a point of order, Mr. Deputy Speaker. May we have an assurance that those who have an interest in the aircraft industry will declare their interest if they take part in the debate?
§ Mr. Deputy-Speaker (Sir William Anstruther-Gray)
The practice of the House is very well known. That is not a point of order.
§ 4.36 p.m.
§ The Parliamentary Secretary to the Ministry of Aviation (Mr. Neil Marten)
This debate is bound to be one of fairly detailed criticism and my right hon. 864 Friend feels that it would be better and more courteous if he listened to the many points of criticism and answered them at the end.
I listened to the speech of the hon. Member for Newton (Mr. Lee) with great interest, but I was surprised by the lack of constructive suggestions in it. He made a great number of accusations without being on very firm ground and trotted out a catalogue of fairly well-worn facts. I recall that in the recent debate on B.O.A.C. his speech was very largely one of quotations from Press cuttings and that the Press and the B.B.C. called it a "devastating" speech. I wonder what adjectives they will find today.
§ Mr. Bruce Millan (Glasgow, Craigton)
The speech of the Parliamentary Secretary is not likely to be described as devastating.
§ Mr. Marten
A very encouraging remark from an undevastating person.
We must, in this debate, put the aircraft industry and its achievements in the right perspective. Output in the year 1963–64 was £465 million, of which £345 million was on Government account. About half of this Government expenditure was on airframes, about one-third on engines and the remainder on guided weapons and equipment. A total of £345 million in a year is a lot of money and there is always in our country a very healthy public concern to see that not only are we getting value for money, but that it is being properly spent.
Parliament is quite right to examine this question very carefully, as we are doing today. In this context we should be very grateful to the Estimates Committee and its staff for their detailed work and the Report on transport aircraft. But I must say, with the greatest respect to them, that I cannot fully agree with all their recommendations, some of which are still being considered.
§ Mr. Marten
I will come to that in due course, if the hon. Gentleman will exercise patience.
The House should know that Goverment expenditure in the aircraft industry is likely to continue at a high 865 level so far ahead as we can see. Those who work in the industry should now feel able to look forward to the future with confidence. During the last two years, the labour force has fallen a little, but it has now stabilised at around 270,000. As we know, there are political events which could happen, beyond the control of the present Government, to change that confident forecast. We on this side of the House believe that they will not, but if the party opposite should by any chance get into office there would he a number of cancellations.
The other thing which needs to be put into perspective is the cancellation of projects. Unjustified abuse such as we have heard is frequently hurled at the Government for having started and then cancelled projects. However, if a project is started in good faith, for example, to serve a particular military need, and during its long development stage—and nearly all of these things take a long time to develop—it becomes clear that its useful rôle is much reduced, perhaps because of a change in strategy, I can see no shame in cancelling it.
To continue it unnecessarily would surely be the sort of bad administration to which hon. Members opposite refer.
§ Mr. Marten
I was speaking of those started in good faith. It would be not only bad administration, but thoroughly bad government to go on with them, and, therefore, cancellations have to be made from time to time.
However, against these cancellations it is only fair to remember the vast volume of work which has been satisfactorily completed and brought into service. Of guided weapons, there are Bloodhound, Thunderbird, Seaslug, Blue Steel, Seacat and Firestreak, all giving excellent service. In the second generation there are the Mark II versions of Bloodhound, Thunderbird and Seaslug. These weapons are expensive, but peace is often expensive, too.
The impression is sometimes given that we in this country are worse than the administrations in other countries for cancelling projects, but the Americans have very much the same problem and I should like to put it into perspective. These immensely complicated weapons 866 take a very long time to develop, often through relatively unknown areas of technology, and it is impossible to know in advance, within very close limits, what their performances will be and what they will cost. That is accepted. No country has yet discovered how to estimate accurately the cost of advanced military research and development projects.
An American study in 1962 of 12 major projects of aircraft and guided weapons showed that development costs turned out to be between twice and seven times the original estimate, with an average increase of three times, and that the time taken averaged one-third more than the first estimate of the time. Our experience is very much the same. We have recently studied 10 projects and found that our development costs on average were 2.3 times the original estimate, compared with the American average of three times, and that the time taken increased by a little more than one-third. We know that the French have similar problems. The Director of Defence Research and Engineering in America, giving evidence before the House Sub-Committee, is reported to nave said that in America, during the past 10 years, 61 projects had been abandoned before going into service at a cost of £2,100 million. The point I am trying to make is that, whatever the Opposition may think, we are not alone in this difficult problem.
How are we tackling it? The hon. Member for Newton said that there was a complete lack of method in our contracts. Clearly, I must explain to him what the method is.
§ Dr. Jeremy Bray (Middlesbrough, West)
Can the hon. Gentleman compare the ratio of cancellations to total cost in America and in this country?
§ Mr. Marten
I gave them because they are perfectly valid figures to give to the House.
The hon. Member for Newton did not seem to know much about the method of contracts. He said that there was no method, but I will tell him what the 867 methods are. As hon. Members know, we start with feasibility and project studies. Through these we try to ensure that the project is fully defined and the cost analysed before we commit ourselves to a full contract. Throughout the whole programme we keep a very close watch on technical and financial progress. The main problem is to relate to the cost estimates the hundreds of technical problems and difficulties which become apparent in development and which affect the cost. In this, the application of what is known as "critical path techniques," sometimes known as "PERT," are of great value.
With the enthusiastic encouragement of my predecessor, my hon. Friend the Member for Morecambe and Lansdale (Mr. de Ferranti), major firms in contract relationship with the Ministry of Aviation in which "PERT" is applicable have been encouraged to adopt systems of this type in their major projects. In addition, for each major project we have a management board, which consists of senior officials from the Ministry of Aviation and the customer Departments, which may be the Air Ministry or the Admiralty, with, in attendance, representatives of the contractors carrying out the work.
These management boards were set up as the result of experience gained by the Ministry in working with the Admiralty and the Air Ministry on these various projects. Their task is to supervise the administration of the project and to see that all problems which arise get quick attention to top level. That is another way in which we are supervising these contracts. In the Ministry of Aviation there is also a working group of senior officials, to which representatives of the aircraft industry have been invited, studying the whole question of estimating methods and cost control in the industry.
The House will recognise that there is no lack of trying to get at the answer to this problem, nor attempts to improve the financial administration of Ministry of Aviation contracts. It is a continuing process which has been going on for many years with much energy and much thought and research at home, and overseas in America and France, to find a solution. If the hon. Member for 868 Newton has any views which will help us, we shall be happy to have them, but so far we have not heard a word.
§ Mr. John Rankin (Glasgow, Govan)
Even admitting what the hon. Gentleman has said about the efficiency of the administration, and so on, and the watch being kept, would he not agree that one of the great weaknesses in the Department has been the policy of constantly changing Ministers since right hon. Gentlemen opposite came into power? Does he not think that that constitutes a great weakness when such vast sums of money are at stake in the running of the Department?
§ Mr. Marten
Referring to the calibre of Ministers of Aviation—I am not referring to Parliamentary Secretaries—I think that, as they follow one another, they do an extremely good job.
I hope that I have shown what we are doing to try to find a solution to this problem. It has existed for many years and the search for the solution has been continuous. During the last five years, great efforts have been made. But when we are trying to improve on these things, the fruits of any improvement over the very long contracts, perhaps 10-year contracts, may not come as quickly as we would hope. We hope that the fruits will come as soon as possible.
There is also a constant search to find a cheaper way of doing the job. We must always remember that the industry is conscious of the great responsibility that it carries for the reliability of its products—for those who fly the planes and for the accuracy of the guided weapons. When I go round aircraft factories I am deeply impressed with all the intricate pieces of electronic equipment which go to make up any guidance system. I am sure that any hon. Member who has paid similar visits has been equally impressed, and I might even say baffled. The point that is left in my mind is that just one slip in a small piece of wiring being done by somebody working on the bench could bring an aircraft worth perhaps £1 million crashing to the ground. Great credit is due to those who work on the bench and who have built up this feeling of reliability in British projects and the equipment that goes into them.
869 We do not want to depreciate this absolute need for reliability, but we must try to find the point at which cuts can be made without sacrifice of quality. The Americans—and this comes back to what I said about searching overseas—are applying a new technique known as value engineering in an attempt to solve some of these problems, and we are considering its application to our aircraft industry.
The alternative to what we are doing, namely, to search for the perfect solution, is to station an army of civil servants right the way down the line of production. Perhaps that is the solution of the party opposite. The hon. Member for Newton did not mention a solution today, but perhaps that is it. But I believe that we are right to search for a system by which we can improve our control over development programmes whilst leaving the contractors a proper degree of freedom to exercise their industrial skill and initiative.
We are still trying to find a solution, but things still go wrong with cost control, mostly when we are concerned with invention rather than production, and when they do they are a matter of great concern to us on both sides of the House.
The Comptroller and Auditor General recently drew attention to a case, now known as the Ferranti case, in which it appears that the Ministry of Aviation has paid excessively for some of the equipment concerned with the manufacture of Bloodhound I. The prices in this contract were based on quotations by the contractor, negotiated in the light of the estimates made by my Department's technical costs staff, of the direct labour and material content of the work, with additions for overheads which were calculated as a percentage of direct labour. Those overheads were based on figures reported by the Ministry's professional accountants. Our aim in production contracts is to fix prices before a contract begins.
§ Mr. Diamond
The hon. Gentleman seems to be saying the opposite of what is in the Comptroller and Auditor General's Report. The hon. Gentleman said that overheads were based on the accountants' figures. The Comptroller and Auditor General, in paragraph 50, says precisely the opposite. He says: 870These comparisons suggested that these allowances"—that is, the allowances for overheads—exceeded to an unreasonably large degree the costs of labour and overheads as shown in the accountants' report.They did not rely on their own advice. That is what the hon. Gentleman has to explain.
§ Mr. Marten
The hon. Member for Gloucester (Mr. Diamond) has risen too soon. Perhaps he will read my speech and see what I said.
The overheads were based on figures reported by the Ministry's professional accountants. Our aim in production contracts is to fix prices before the contract begins Frequently though, with sophisticated projects, this cannot be done because either the Minister or the contractor is not sufficiently sure of his ground. But as soon as that uncertainty is cleared a way, we negotiate and fix the price. The alternative is to relate prices to ascertained costs, but, in avoiding this type of contract, usually called cost-plus, we have the support of every Parliamentary committee which has studied that method.
The facts seem to suggest that Ferrantis made excessive profits. The Comptroller and Auditor General reported that our allowances for labour and overheads exceeded the expenses actually incurred under those heads. Discussions have been going on with the company about this, and they are still continuing. The accounting officer of the Ministry of Aviation will be examined tomorrow by the Public Accounts Committee on behalf of the House. Therefore, I am sure that it would be wrong, although I am not saying that it would be out of order, to be drawn into detail.
§ Mr. Deputy-Speaker
I am grateful to the hon. Member for his observation, but I have heard nothing out of order yet, so the debate will continue.
§ Mr. Marten
I am sure that it would be wrong to allow myself to be drawn 871 into a detailed discussion today. [HON. MEMBERS: "Why?"] Because the case involves several different contracts spread over different factories and over quite a long period of time. It is an extremely complicated case. Nevertheless, in the light of the facts reported by the Comptroller and Auditor General my right hon. Friend, quite rightly, set up an inquiry, under the chairmanship of Sir John Lang, to go into the whole matter. It is my right hon. Friend's task to put right anything that has gone wrong, with the minimum of delay. This he intends to do, and, as the House knows, the report will be published.
§ Mr. Marten
The hon. Member for Newton raised the question of the levy arrangements. In our arrangements for recovering our contributions to launching costs, we must always bear in mind what the market can bear, and the fact that manufacturers want a sufficient incentive to invest their own money in the project. In 1959–60, when the formation of the major groups was taking place, part of the understanding between Government and industry was that a policy would be adopted of increased support to promising civil air craft and aero engine projects. A new form of levy arrangement was, therefore, created which gave the manufacturer some degree of preference in the recovery of his money. Broadly speaking, the arrangement was that the manufacturer should receive a higher proportion of the proceeds of each sale up to the stage where he broke even, and after that the proportions would be reversed, and the Government would receive the higher proportion.
The justification for this priority to the manufacturer was that the market for civil aircraft was, and I believe still is, most difficult. The Government are right to consider the long-term prospects 872 of the industry. We must recognise that while we may not obtain the full return on all our current projects, we would hope to do so. It was suggested by the hon. Member for Newton that these arrangements should be changed, and the Estimates Committee came to the same conclusion, but I believe—and I have gone into this—that it would be premature, because I do not think that we have yet seen the fruits of the 1960 policy. When the fruits of that policy have been seen and studied, then will be the time to consider changes. But we are considering very carefully the arguments advanced by the Estimates Committee.
§ Mr. Wigg
Would the hon. Gentleman be good enough to clarify the position on the Ferranti case? What is important is the dates. The Minister told me that the first audit query was on 29th August, 1963. Can the hon. Gentleman tell the House when it was that his Department first knew that there was something wrong here? Would he also tell the House when Ferranti's first knew that there was something wrong. How comes it that the Minister knew on 29th August that something was wrong, but did nothing about it until the report was published?
§ Mr. Marten
The answer to that was given by my right hon. Friend to the House of Commons on 5th February when he said:I do not think that there was any excessive delay. We first had to investigate our own papers after the Comptroller and Auditor General had drawn our attention to the problem."—[OFFICIAL REPORT, 5th February, 1964; Vol. 688, c. 1150.]We then got in touch with the firm and it was not until Christmas that we were satisfied that the situation was very serious. We then considered what should be done, and the announcement of the appointment of the investigation was held up pending the return of my right hon. Friend. I think that that answers the question. I must get on with the debate.
§ Mr. Marten
The matter was first brought to our attention in August.
I will now deal with the second part of the Motion, which refers to the Concord. The Motion refers to the 873 terms of the agreement with the French Government for the production of the Concord, but before I deal with the terms of that agreement I would say a word about the working of the agreement. The House will be pleased to know that good progress is being made and that the collaboration with our French friends is extremely close at all levels.
§ Mr. Marten
I am sure that the hon. Member for Dudley (Mr. Wigg) will be able to put his point if he catches your eye, Mr. Deputy Speaker, and he is called.
§ Mr. Deputy-Speaker
I hope that the House will allow the Minister to proceed and to make his speech.
§ Mr. Marten
As I was saying, the House will be pleased to know that good progress is being made and that the collaboration with our French friends on the Concord is extremely close at all levels. The constructions of jigs and tools for prototype manufacture has already begun.
§ Mr. Mendelson
On a point of order. It is recognised under our procedure, Mr. Deputy Speaker, that if a debate is to be completely stultified because the Government refuse to give the essential facts to begin with, the House will not be in a position to proceed with the debate on such an important Motion as this. It is the Minister's bounden duty to help the House of Commons in this respect.
§ Mr. Deputy-Speaker
The House knows our procedure quite well. If an hon. Member is making a speech and does not give way to another hon. Member who wishes to intervene, he is entitled to proceed with his speech. In fact, the Minister has given way several times already.
§ Mr. Marten
I have been trying to get on with my speech in spite of these interruptions, but the whole point—[HON. MEMBERS: "Answer the question."]—is that the matter is the subject of an inquiry by Sir John Lang. it is going before the Public Accounts Committee, and I do not believe that until 874 we have the facts sorted out it would be right to start to debate the facts here. I think that it would be better if we went on with the debate, got the facts from the Public Accounts Committee and then, if necessary, had a debate on them. The timing of this debate is unfortunate.
§ Mr. Lee
Will the hon. Gentleman agree that the terms of the Report have been published to the House? We are not trying to say, indeed, that we were unaware that the P.A.C. were investigating the matter—I do not think that we have a right to know what that Committee does—and, therefore, it is the duty of every hon. Member, basing himself on the Comptroller and Auditor General's Report, to seek the facts from the Government. They have had the Report longer than we have, and we are very curious; to know the facts.
§ Mr. Marten
I take the hon. Gentleman's point, but we are awaiting the outcome of Sir John Lang's investigation to find the facts.
§ Mr. Wigg
On a point of order. Surely, Mr. Deputy Speaker, this is getting very near to a breach of privilege. The Comptroller' and Auditor General has submitted a Report to the House. It has been considered by the Estimates Committee and that Committee has submitted the Report not to the Minister, but to the House of Commons. The Minister has chosen, on his own initiative, to do nothing about it for six months. Now he comes along and says that the House has no right to ask for the facts. I submit that the House has every right to do so.
§ Mr. Deputy-Speaker
There is nothing disorderly in the way in which the debate is being conducted. Perhaps the hon. Member for Dudley (Mr. Wigg) will have a chance later of catching the eye of the Chair. So far as the debate goes, it is quite orderly, and I invite the Minister to continue.
§ Mr. Wigg
The point is not whether the debate is orderly or not. That is a matter for you, Mr. Deputy-Speaker. It is a matter of safeguarding the privileges of the House of Commons. Therefore. I ask for your Ruling whether it is appropriate and right and, indeed, the duty of the House to consider this matter.
§ Mr. Marten
I have heard nothing in the hon. Member's argument that cannot be debated across the Floor of the House and I propose to continue my speech.
§ Mr. Deputy-Speaker
I invite the House to accept my Ruling that what has been said is subject for debate and that so far no point has been brought to my attention that requires me to interrupt the debate.
§ Sir John Eden (Bournemouth, West)
Is there not some way, Mr. Deputy-Speaker, in which the interests of other hon. Members may be protected? Cannot it be made quite clear to the hon. Member for Dudley (Mr. Wigg) that he is not the only hon. Member in the House? Could not the hon. Member take the point that in the number of interruptions which he has made, and the number of abuses of the privilege of the House which he has perpetrated by reason of a number of bogus points of order, he has sufficiently bored the House and that he should not be called further?
§ Mr. Wigg
I would welcome a Ruling on the matter, Mr. Deputy-Speaker, which has now been submitted to you, but pending that, may I submit to you for your consideration that there are no rights of the private Member in this House? The privilege of the House is for the House as a whole. It is a matter which goes to the heart of democratic government. We have asked for times and dates so that we can come to a decision. The Minister has refused to give them, and my submission is whether business should be interrupted in order that a 876 Motion may be put to you on the matter of privilege.
§ Mr. Marten
I do not see it in the way that the hon. Gentleman sees it. I have merely said that at this juncture, while we are awaiting the report of Sir John Lang, I would not be prepared to go further than I have done in the matter. I think that that should end the matter.
§ Mr. Deputy-Speaker
If I may intervene to reply to the hon. Member for Dudley (Mr. Wigg), the words of Erskine May, page 357, say:The refusal of a Minister to answer a question on the ground of public interest cannot be raised as a matter of privilege.I hope that the House will accept from me that so far nothing disorderly has occurred. That being so, it is my duty to see that the debate continues. If hon. Members want to argue against what the Minister has said they will have an opportunity during the course of the debate, but they cannot argue with the Chair about it.
§ Mr. Wigg
If the hon. Member wishes me to be named he should get up and say so. The point at issue is not the point which the hon. Gentleman has made; it is not whether the Minister refuses to reply. That is a matter I accept. What is in issue is that the Parliamentary Secretary has challenged the right of the House to consider this matter—[HON. MEMBERS: "He has not."] He has put to the House that as the Minister has set up an inquiry he ought not to comment. He said that it would not be right. That is an affront to the House.
§ Mr. Marten
I did not say that at all. I merely said that in view of the inquiry being set up we were awaiting its results and that I was not prepared to be drawn into this matter further at this stage until we got the report. That, I think, a very reasonable thing to do.
§ Mr. Mendelson
On a point of order. The Minister said quite clearly that it would not be right for him to go on discussing this matter, thereby implying that it would be equally wrong for anyone else to discuss it. The Minister is 877 stultifying debate on a matter which is being urgently debated up and down the country.
§ Mr. Diamond
On a point of order. The Parliamentary Secretary said, in our very clear hearing, to my hon. Friend the Member for Newton (Mr. Lee) on the Opposition Front Bench, thereby speaking to the whole of the Opposition, that it was unfortunate for the Opposition to bring this Motion before the House now. The word he used was "unfortunate". Is that not challenging the right of the Opposition and of the House to debate this issue?
§ Mr. Deputy-Speaker
No. Surely that is expressing an opinion with which hon. Members may or may not agree. I hope that we may now get on with the debate. Mr. Marten.
§ Mr. Marten
The hon. Member for Dudley will, I am sure, get called in this debate if he goes on like this.
I was referring to the development of Concord. Development engines for bench testing are being built and we are examining proposals for increasing the power of the Olympus 593 engine and enlarging the wing area to obtain the best possible range and payload. There seems to be some confusion in people's minds about the range of the Concord when compared with the paper proposals currently being considered by American authorities for their super-sonic transport. No one yet knows exactly what the Americans will choose, but on present form I think that it is known fairly well that if they choose anything it will have a range of about 4,000 statute miles.
With the Concord we have always called for a range of 3,250 nautical miles. That equals 3,750 statute miles. I think that here there might be a case for more inter-service harmonisation on disstances. With the proposed engine improvements there is every hope that the Concord will also achieve a range of approximately 4,000 statute miles. This, 878 in due course, should enable it to cover the routes from many Western European capitals to New York. It can, of course, cover other major world sectors, including even the long Pacific route from Nandi to Honolulu.
§ Mr. Rankin
If we do increase the speed of Concord—[HON. MEMBERS: "The range."] I beg pardon, the range—I think that the Parliamentary Secretary also said that there would be an increase in speed owing to the increased power in the engines. Is that not the case?
§ Mr. Marten
I am coming to the question. After that brief and encouraging progress report on the Concord, I return to the Opposition Motion, which says that hon. Members opposite aregravely concerned…with the terms of the agreement"—
§ Mr. Marten
If the hon. Member will listen, he will find that I am coming to the question of cost and payments.
§ Mr. Marten
Criticism has been made of the fact that we entered the agreement with no provision for a break clause. The Estimates Committee considered a hypothetical situation—I underline "hypothetical situation"—in which the French might decide to abandon the project. This gave rise to rumours in this country that the French had this possibility in mind.
I must say to the House that nothing could be further from the truth. We are assured that the French are firmly behind the project, and so are we. Suggestions to the contrary—and the very terms of the Opposition Motion—have been viewed with utter dismay on the other side of the Channel; but I am not responsible for how it is viewed there.
We are engaged in a great collaborative project the success of which means an enormous amount to the future 879 of our two countries. The agreement, I believe, is a sound, sensible and far-sighted document. It provides for the equal division of labour, costs and proceeds of sale of one of the most advanced technological projects of the century. It halves the cost to each country and doubles the market. It binds four of the principal aircraft and engine firms on both sides of the Channel through the 1970s and up into the 1980s. It enables us to face American competition in this field. The Americans have expressed the view, in their business magazine Fortune, thatWhile the American SST flounders, the French and British have moved swiftly to make the most of the situation.Neither the French nor the British Government, with all their advisers—
§ Mr. Marten
I am sorry, but I must get on with my speech—with all their advisers accepted the need to write break clauses into the agreement. It would seem rather like writing a divorce settlement into a marriage contract.
Of course, it is a risk inherent in every interdependent project that one of the partners might back out. It is a two-way risk which would equally affect the French if we chose to back out. It is clearly a matter of judgment and opinion whether there should be a break clause. On the one hand, we have the opinions of the British Government and their advisers and the French Government and all theirs that there should not be a break clause, and, on the other, we have the opinions of the Estimates Committee. The Committee disagrees, but it is a matter of opinion and judgment and we judged that there should not be such a clause.
This whole project is very much interlocked. If it were decided, for some totally unforeseen technical reasons, not to go on with it, both sides, presumably, would agree to this. In any event, I doubt whether either side would have the technical and industrial resources at this stage to go on with it alone in the same time scale. If, however, one side felt bound to withdraw for political or economic—but in this case not technical—reasons, there would surely be negotiations on the situation as it then existed. In the last resort the fact that 880 there is no break clause written into an agreement does not rule out the possibility of taking steps to obtain compensation in the event of a breach of that agreement.
§ Mr. Marten
Any lawyer could give the answer to that.
Criticism was made that we entered this contract with an imprecise knowledge of the cost, but what project of this kind can be precisely costed at the outset? For example, the increased engine power and wings will add to the original estimate of the cost, but I cannot give the revised figures at this stage because the technical reassessment is not yet complete. I made it clear, in replying to the debate on the Concord on 21st December, 1962, that any estimates produced at this stage, however thoroughly prepared, could only be provisional.
We are also criticised because the Treasury did not fulfil its obligation to the public revenue and the suggestion is that the Treasury should join with the French Ministry of Finance and exercise joint control over the Concord project. I believe that the Treasury has played a perfectly correct part in all of this and that its evidence to the Estimates Committee bears this out. [Interruption.] I maintain that the part played by the Treasury in this was correct; that in the British constitutional way it was correct.
It is best to consider the difference between the French and British approach to this. The French Ministry of Finance has a different standing from the Treasury in relation to general administration and specific projects, of which the Concord is one. In the United Kingdom the primary responsibility for financial control rests with the Department concerned. That is normal practice and it was borne out in the Plowden Committee's Report. In France, the Ministry of Finance appoints its own accountants to work and control payments in each Ministry, nationalised industry or project. The primary responsibility rests in that case with the French Ministry of Finance, with its representatives either in the Ministry, nationalised industry or project.
881 It would have gone right against the recommendations of the Plowden Committee, whose Report on public expenditure was accepted by this House in January, 1962, if the British Treasury had tried to fill the same rôle as the French Ministry of Finance.
§ Mr. Marten
I am sure that the hon. Member for Orpington (Mr. Lubbock) will be called. He always is.
Britain and France lead the world in the supersonic business. We could not have got into this business without taking risks. We had to be prepared to stake a lot of money for an uncertain reward. [Interruption.] For better or worse we have done it. That was our judgement and I sincerely hope that the criticism made of it will not damage its prospects.
The Motion criticises us for our agreement over the Concord or for the terms of that agreement, the lack of a break clause, and so on. This agreement was signed in November, 1962 and published in January, 1963, as a White Paper, Cmnd. 1916. That was 13 months ago. The Opposition have had 13 months in which to register their so-called grave concern. During that time we have not heard a squeak out of them. Why have they left it for 13 months? Why have they felt fit to mention it now? Have they been saving it up for their pre-election run?
§ Mr. Marten
I have nearly finished my speech. If they have been saving it up for their pre-election run it throws very grave doubt on the sincerity of the Motion. Or is it because this small agreement—of two pages in English and two in French—has only now been read by them for the first time? Is that it, or have they been swung into action because of the Estimates Committee—
§ Mr. Hale
On a point of order. I have not interrupted the Minister before. I must do so now because only a few minutes ago I was reading the speech made by my hon. Friend the Member for Dudley (Mr. Wigg) in the last debate on this project. For the fifth successive t[...]me the Minister has made the comment that—
§ Mr. Deputy-Speaker
Order. I invited the hon. Member for Oldham, West (Mr. Hale) to put a point of order. The point he puts to me must, in fact, be a point of order.
§ Mr. Hale
My point of order is that it has been previously ruled that one should not interrupt except on a point of order. Surely one is entitled to move the Adjournment of the debate in view of the fact that all the information given during the last half an hour is not in accordance with the known facts and since the continuation of the debate is becoming farcical under these conditions.
§ Mr. Lee
My point of order is this. The Estimates Committee stated, in paragraph 85 of its Report:From a perusal of the Agreement, and after considering confidential evidence…After the word "evidence" appears an asterisk. The reference to that asterisk in the Report states "not reported". This shows that the evidence taken was not reported. This is the basis of what we are saying; that one can read the agreement, but see that there is no detail in it. I am submitting to you, Mr. Deputy-Speaker, that the Estimates Committee made its determination on evidence which has never been submitted to the House and that, therefore, it is not the case that one can know the details of the agreement merely by considering the Estimates Committee's Report.
§ Mr. Deputy-Speaker
I have been listening to the hon. Member with attention, but I have not noticed anything in his remarks that requires me to rule.
§ Mr. Marten
I am sorry that I have stung the Opposition into this, because, clearly, they have been asleep on this point—[Interruption.] The agreement is there. If they have been asleep it is a sad commentary on the alertness of Her Majesty's Opposition. It was 13 months before they realised that the agreement did not contain a break clause.
It is interesting to note what was said by the hon. Member for Newton at the Labour Party conference in 1962. I wish to quote only one sentence from his speech, and I did not read it in an Aims of Industry document. He said:I do not believe we can get a proper build-up in the aircraft industry until it is publicly ownedThe hon. Gentleman meant, but he did not like to say, "nationalised".
In the unlikely event of there being a Labour Government, the hon. Member for Newton will probably be the Minister of Aviation. He will be the one who will have to run the nationalised aircraft industry. All I can say to him is that it will be a great pity for the workers in that industry if he went to sleep for 13 months about the presence or lack of a clause in an agreement.
The hon. Member said that he wanted a build-up in the industry. I believe that if he took it over there would not be a build-up, but a total collapse. The country should be warned about this. We see in an advertisement for the Labour Party that while at the beginning, at the top of the pamphlet, there is an advertisement about the smoking of tobacco, in the lower half of the advertisement we read, "We live in a jet age".
§ Mr. Diamond
On a point of order. Will we be in order, Mr. Deputy-Speaker, if we reply to the well-made point of the Parliamentary Secretary about smoking?
§ Mr. Deputy-Speaker
The Parliamentary Secretary very quickly went from smoking to the jet age; and the jet age is entirely in order.
§ Mr. Marten
I will not press the point about smoking but, as I was saying, the advertisement goes on to say,—"We are living in a jet age" and—
§ Mr. Marten
The hon. Member for Dudley obviously wants to be called. He is continuously drawing attention to himself.
§ Mr. Marten
I must get on with my speech. The hon. Member for Dudley will be pleased to hear that it is nearly at an end.
The Labour Party advertisement said that we are living in a jet age. I am saying that it has taken the Labour Party 13 months to wake up to the Motion.
§ Mr. Deputy-Speaker
Order. I hope that the hon. Member for Dudley (Mr. Wigg) will help the House to conduct the debate properly and not interrupt continually.
§ Sir J. Eden
On a point of order, The hon. Member for Dudley (Mr. Wigg) is not rising to a point of order.
§ Mr. Deputy-Speaker
Order, order. I had understood that the hon. Member for Dudley had risen to a point of order. It may be that I was wrong. Is the hon. Member for Dudley rising to a point of order?
§ Mr. Deputy-Speaker
The House wants to get on with this important debate. Surely hon. Members are wasting the time of the House by carrying on as we are doing. What I did was to 885 invite the hon. Member for Dudley to allow us to continue without constant interruption. That required no reply.
§ Mr. Marten
I feel that I ought to start my peroration again, and I will go on starting it again as long as hon. Members opposite continue to shout. We were talking about the jet age. The Labour Party advertisement says that we are now in a jet age. I was saying that to take 13 months to wake up is not very jet-like. The only sort of jet that I can dunk of to which the Labour Party must be referring is the sort of jet known in the industry as a reverse thrust, which slows down progress.
§ 5.32 p.m.
§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)
We can excuse the Parliamentary Secretary for having a little fun at the end of his speech, which was perhaps designed to cover up the fact that he did not reply to the very pertinent question put by my hon. Friend the Member for Dudley (Mr. Wigg).
The Parliamentary Secretary's fun consisted of suggesting that the Labour Party would nationalise the aircraft industry. I was a Minister at the Ministry of Supply after the war. It was just after the period of Sir Stafford Cripps in the Coalition Government. The Parliamentary Secretary may be surprised to learn from me that his party and my party in coalition considered 'whether the industry should be nationalised. Both parties recognised that this was an industry which depended entirely on Government support and Government money; in other words, we helped the industry, whether we owned it or not.
The issue was raised as to whether it should be brought under complete national control, or nationalised. This was not done, for the simple reason that it was hoped that a large number of civil aircraft would be sold abroad and it was felt that, if the industry was a nationalised one, it might deter other countries from buying aircraft from us.
It was also considered that it would be a good idea to let the firms hang by their own heads so that they would have an inducement to try to sell aircraft abroad and so that in this way the Government could recover some of the costs of research and development 886 which was put into the firms. It fell to my lot as the junior Minister there, who was mainly responsible for research and development in the industry, to carry out the Government's policy of reducing the industry from the biggest industry in the land to 12 firms which could be regarded as efficient. If that is not Government control of an industry, I should like to know what is.
The Government had to settle what was to be the size of the industry, what it would cost the country, how it would be planned, and which firms would get the orders. It was my duty to tell one firm that, unless it pulled up its socks, it would not be one of the firms which would be sustained and maintained. All this shows that during the war and since the war the Government have been responsible for the industry, and without the Government the industry could not exist.
I perhaps, have a further qualification for intervening in the debate, because I spent 25 years in the engineering industry at the other end of the process, knowing what goes on in a works, what goes on in estimating, and what goes on in contracting. The Parliamentary Secretary referred to one of the greatest dilemmas that afflicts a Government in contracting. The best and cheapest method is cost-plus, if one can trust to the honesty of the firms involved. The reason one cannot have cost-plus is that one cannot trust firms rot to take advantage of cost-plus and charge what they like. Private enterprise cannot be trusted on a cost-plus basis.
Therefore, we are driven to an estimating basis. When a firm estimates, it must cater for every eventuality. If these eventualities do not arise, the firm gets away with a huge profit that it does not need. This is what has happened in the case of Ferranti. Because of the estimating system, Ferranti has carried out this job at much less than it estimated in order to cover all expenses, and it has got away with a great rake-off, which is obviously unfair to the nation. Ferranti has done a great disservice to the relationship between Government and firms. It has destroyed the confidence that the Government must have in the industry if they are to give it contracts for development and spend money on it.
887 If Ferranti has done this, as I say it has, it should come honestly to the Government and say, "We have made too much money. We will hand some back". As a matter of fact, one of the firms with which the present Home Secretary was concerned during the war found that, although other firms were getting 22s. 6d. for making a shell, by ingenuity it was able to reduce its cost to 14s. 6d. and eventually to 12s. 6d. That firm said to the Government, "We are able to do this for 14s. 6d. We do not want 22s. 6d. We want only a reasonable profit". The Government gave the firm 6d a shell, and the firm made a bigger profit by reducing the cost still further.
Ferranti has done a disservice to the whole relationship between the Government and firms in the industry. This is not to suggest that firms are necessarily dishonest. When a firm is making up its costs, it naturally tries to recover all that it thinks is necessary. This can be expanded very considerably if there is no check on it. I agree with the Parliamentary Secretary to the extent that it is impossible to have enough civil servants and technical cost experts to keep control of private industry and watch everything that is going on.
I remember the Government sending a costs expert to our firm after the First World War. For a fortnight he sat in the directors' room and drank whisky. At the end he went away and made his report on what had happened. He knew as much about what was happening in the firm as if he had come straight from the juvenile class at school. Things would not have been much different if he had been an expert. No expert can go into a big works and discover all the intricacies of cost and charges. This largely depends on the honesty of firms. It is a good thing in this country that so many firms are honest and decent and play the game with the Government. During my time at the Ministry of Supply, when I was connected with the aircraft industry, I learned that there was a remarkable degree of co-operation from firms. So far as I know, they played the game. Ferranti has rather destroyed this understanding.
Though it may be some years since I was intimately connected with the prob 888 lem, the principles are still the same. It must be remembered when developments are being talked about that not every egg can be hatched. All sorts of things happen between the date when a start is made on the design of a new aircraft, or when it is conceived, and the date when the aircraft becomes a reality. The period of gestation may be very long.
Our inventive genius is so great that no sooner is an aircraft designed and different parts go out for production to different firms than the inventors of those firms start to improve on the parts. Other inventors improve the engines and by the time all the suggestions come back there is an entirely new aircraft and one has to start redesigning all over again. This process goes on and on, and at some time or other invention has to be stopped, and it has to be said, "This aircraft will be developed and produced and we shall listen to no more talk of improvements until we have a new aircraft." It was only because invention was stopped at the right moment that we had the Spitfire, otherwise improvement would have gone on for years without final development and production.
I had to tell inventors after the war, when we were no longer producing aircraft and having them destroyed at the rate of 60 or 70 a day, that they could go on inventing but they must not expect their inventions to be incorporated in aircraft as soon as they had made them. No country could afford to go on doing that. The inventions had to be allowed to accumulate on the drawing board.
After the war, there was a great step forward in this process with the application of science. Before the war there was a great deal of trial and error and waste of money; but afterwards scientific method was developed so that before an aircraft reached the drawing board people could compare designs and ideas and eliminate a great deal of waste. The aircraft reached the drawing board and production only after the idea was quite clear. It is remarkable today that before an aircraft design reaches any kind of production people all over the world can have sufficient confidence in it to place orders. As I have said, not every egg is hatched. If, in scientific terms, people are laying eggs all over 889 the world, once one produces a better hen than the other the rest of the eggs are obsolete before they are hatched.
This is one of the problems in design and invention, and I should not like to deter any Government or the aircraft industry merely because there are losses here and there. We cannot have design development without having considerable losses and what appear to be failures after time has gone by. Mistakes must be made if we are to make progress.
The trouble about the cost of development is that aircraft work is in the form of a huge pyramid. Research goes on all over the country on a great many ideas. Eventually, they reach the development stage, then they undergo lengthy trials, and, finally, the choice must be made whether this is the right weapon or right aircraft before it goes into production. Even when the aircraft or weapon is produced in the final stage there is a year or two before it can go into service, and at that moment the whole thing may have to be scrapped because it has become obsolete.
I do not mean that all this is entirely lost. There are great side-benefits which cannot be calculated. It is because of this that I sometimes fear for this country, in that we may not be experimenting sufficiently in connection with the space age. In America, for example, an entirely new miniature engineering is being developed which will revolutionise engineering in the next generation. If we in this country do not become expert and skilled in miniature engineering we shall miss the bus of a whole generation of skill and science. This is of great importance. Even if it costs the country a great deal of money we should be involved in this miniature engineering so that we shall be as far ahead in it as any other country.
The speed of scientific invention is increasing at such a rate today that hardly an invention can be developed before it is out-of-date by the time it is in production. This is a problem of which no one knows the solution. Our scientists are constantly developing things which are obsolete before they are produced.
In my view, there is today far too much overlapping. There is no reason why all countries should go through the 890 process of losing enormous sums of money. There is no reason why the Americans the French, the Germans and the rest of us should all make the same mistakes al the same time. Some system of co-operation should be developed among these countries as the quickest way of eliminating a great deal of this cost. On this basis, I greatly welcome the co-operation with France in the production of the Concord. I regret that it has come some years too late. We might not have had a breakdown of Franco-British relations if this had happened at the time of the production of the Caravelle. No one can calculate the offence given to France by our refusal to co-operate in the production of the Caravelle.
Everybody realises today that the Caravelle is one of the finest aircraft ever produced. It has a Rolls-Royce engine and is already a combination of British and French: engineering. Great offence was caused not to General de Gaulle but to many members of the French Parliament and to people in the industry, because we did not co-operate in that venture. At that time some steps should have been taken to bring about a European basis for the development and production of aircraft. This is a step which the Minister might consider.
The Parliamentary Secretary asked for constructive suggestions. I make the constructive suggestion that there should be some staggering in the development of aircraft that everybody should not try to produce the same type. An aircraft type becomes obsolete in about six years. There is no reason why countries should not take turn about so that if we cannot co-operate and produce one type then at least each country can produce alternate types. This would prevent overlapping and a great waste of money. The time has come for clearer planning not only in the production of aircraft but also in the production of missiles.
No one country in the world can bear the cost of research and development for all the things we are trying to do—for aircraft, projectiles, missiles, the nuclear deterrent, ships, submarines, guns and vehicles. Something must "go west". It was one of the tragedies before the war that nothing had been done to develop an engine to motivate tanks in between the two world wars. At the beginning 891 of the Second World War we had to obtain bus engines from America and adapt them to drive tanks.
It was not until the Churchill tank came along that an entirely new engine was developed. People sneered at the Churchill tank, but it was a masterpiece in a way, because it went straight from the drawing board into production. It was not the tank that was wrong when failures occurred, but the fact that at first cavalry men who had never seen an engine were put to operate it. Tanks were also carried on the top deck on transports to Egypt and when they got there they were red with rust. It was no wonder that they could not be moved. As I have said, all these engineering projects are out of the question for one country only at one and the same time.
Even during my period of office, aircraft production and development was too big a job for this country alone. It had to be done within the Commonwealth, and although the United States was not, of course, a part of the Commonwealth the Americans sat in on our discussions because even they could not produce on their own without the advantage of our experience.
It is a mistake to produce anything but the best. When another country produces the best and we produce something that is less good it is a waste of money for us. The reverse is equally true. Nobody is going to buy anything but the best. Once a country realises that its product is not the best, it is sensible to scrap it because it will be a dead loss.
The Government's error in this case is that they did not discover soon enough that some of these weapons were obsolete before they went into production. Sometimes the Government have shown a lack of courage in cutting their losses and stopping production. This is very apparent today in the Prime Minister's insistence on retaining the independent nuclear deterrent. I was recently at a large conference where people from all over Europe decided that it was futile even for Europe to try to have its independent deterrent. Yet it is sought to pledge this country to unlimited expenditure to carry on with our nuclear deterrent which everybody knows is not 892 independent, which could never be used independently, and this is done by the Government in the interests of prestige and through lack of courage in not cutting their losses.
This is perhaps the greatest mistake of the Government, that they have not had the courage to stop producing an article once it has been seen to be no good. Sometimes what has been produced has not been good enough; at other times it has been too late, and at other times too expensive. I do not blame the Government for all the losses. Some were unavoidable and, as I say, there are bound to be losses whenever we experiment and fail.
The Government seem to be continually grasping hot potatoes and being unable to drop them. They keep holding on to them, and eventually they will burn their fingers. I hope that happens very soon. As I say, the Prime Minister is hanging on to this hot potato of the nuclear deterrent, and he may find that he has grasped more than he can hold. The Guardian today has a leading article which completely debunks the whole case that the Prime Minister made in his speech last night.
The Government ought to face this situation courageously. Merely to continue to suggest that we on these benches will drop the whole defence of this country is not sensible politics, and nobody will believe it. The Labour Party is not going to give up any defence. What we shall do is to see that we do not continue to waste money on something which will never be practicable, and add to something which already exists and is available to us. What we should do is find out how we can use the things which are in existence, instead of producing useless stuff costing millions of pounds.
No country can stand alone today. I am sure that the Minister will accept that statement. No country can defend itself alone today. Take the case of Cyprus. That is a little country, with a population no greater than that of Edinburgh, which we are trying to police. What use is an atomic bomb for that purpose? With all the unilateral bombs in the world, how does that solve the problem of Cyprus? What problem will it solve? We cannot do much about past events except have a 893 post mortem on them, but we can stop this sort of thing in the future.
The first thing that the right hon. Gentleman should do is to advise the Prime Minister to drop this pretext of using our nuclear weapons and stop the huge expenditure involved, by which means he will get more money for the proper development of the Concord and sensible aircraft which are coming along in the future.
§ 5.55 p.m.
§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
I am sure that everyone on both sides of the House will have listened with great enjoyment to the speech of the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn). Speaking as a relatively junior Member of this House, I particularly felt that we had the benefit of his experience as a Minister as well as his experience in international co-operation. I thought that the spirit of his speech lay rather counter to the forbidding terms of the Motion which he was supporting, deploring the terms of the agreement with the French Government. I thought, as a matter of fact, that the right hon. Gentleman was getting a bit offside. However, at the close of his speech he got onside again with his reference to the nuclear deterrent, in which I shall not follow him.
The right hon. Gentleman referred to the Churchill tank, which is not particularly germane to the debate, but, having some reasonably close connection with the cavalry and also having had experience of that same weapon from what I may call the sharp end, I do not think his strictures on the cavalry are justified. I am sure that on reconsideration he will feel that it was not the lack of mechanical ability which caused the relative failure of that weapon at certain stages of the war.
I particularly enjoyed the right hon. Gentleman's speech when he brought us back to the leisurely decorum with which the Reports of the Estimates Committee are usually debated in this House, and perhaps one of the reasons for that is that there is not usually a vote at the end of such a debate. Anyway, thanks to the perspicacity of my right hon. Friend, now the Secretary for Technical Co-operation, we selected for 894 inquiry a year ago a subject which is now a subject of major topical importance. If he brings that same sense of foresight into the conduct of his present Department as he did when leading our sub-committee, he will be serving his country very well indeed. I have lived with this question for about a year, and I do not propose to detain the House for more than a few minutes on it, as I am sure that those who have studied it less will have a great deal more to say.
I should like to say to my right hon. Friend, however, that we in our Committee made about 25 recommendations and we are hoping for answers to them. These recommendations were the result of a good deal of thought and discussion, entirely unpolitical in their phrasing, and I hope that they will not be dismissed, as I am afraid my hon. Friend the Parliamentary Secretary did, just as a minor opinion of some not very distinguished Members of the House. I think that some are really worth consideration. I was grateful to him, too, for his comments on the services that the Estimates Committee receive from their Clerks. These are especially valuable to us. We always pay our tribute to them; it is very well deserved, and in this case we were exceptionally well served.
The Ministry of Aviation, in its whole make-up, carries a vast number of responsibilities. It seems to me as if the Ministry of Aviation is, in another way, a Ministry of Motoring, responsible not only for building roads but also cars, and not only for dealing with traffic but also for providing petrol stations. Those are some of the problems which fall on the Ministry of Aviation. It is the sponsor in many ways of the British aircraft industry. It is the treasurer of the air Corporations and it is the shopper for the Services—the Navy, the Army and the Air Force. This is a very large rôle indeed.
I think that in our inquiry we were a little surprised to discover the large amount of responsibilities falling particularly on the division known as Air "A". This division is responsible for general policy, the economic and financial aspect; of civil and military projects, for advising the Service Departments and the Ministry of Defence on all non-technical aspects of requirements and 895 programmes for military aircraft, for overseeing all current projects, for staffing the Transport Aircraft Requirements Committee—which includes the Concord project—for helping the industry on overseas sales efforts, and for maintaining import and export controls on civil aircraft.
The Estimates Committee does not usually complain that Government Departments are under-staffed, but we did have something to say on the subject of this committee. Those very wide and varying responsibilities are carried by six officials with 13 supporting staff. I leave it in my right hon. Friend's lap. One wonders whether those responsibilities might be shared, and we did make a recommendation to that effect.
I have mentioned the Transport Aircraft Requirements Committee particularly because attention was specially drawn to it by the Select Committee on the Nationalised Industries in 1959. This is what the Select Committee then said:
At the heart of the matter lies the Transport Aircraft Requirements Committee: here, the wishes of the Corporations meet the policy of the Government, the experience of the nation's scientists, and the capability of the aircraft industry. If there is a place at which the procedure can be be improved, it should he at this focal point.For an official publication, that, I suggest, is really a "purple" passage, and it seems to me that that purple passage might have had slightly more attention paid to it than apparently was the case.
With reference to the Transport Aircraft Requirements Committee, our Committee said, in paragraph 25:They had hoped to discover a body which was active, met regularly, considered common problems of aircraft requirements, prepared reasonably long-term requirements, and thus assisted users, the industry and the Minister. Your Committee do not wish in any way to disparage the work that has been done by the T.A.R.C., but they consider that steps should be taken to reconsider the rôle which it should play and the best methods by which it could play it.We have written extensively on this subject, and I do not think that I need say more about it. I merely emphasise now to my right hon. Friend that this seemed to us to be the key to the whole situation of the Ministry of Aviation.
The Motion refers particularly to the Concord project. I was rather suprised when my hon. Friend the Parliamentary 896 Secretary quoted the Plowden Report on the Control of Public Expenditure because I was proposing to quote it at him. It is well known that the devil can quote scripture to his own purpose, but I remind the House that my hon. Friend the Member for Farnham (Sir G. Nicholson) takes special pleasure in anything to do with the Plowden Report because he was responsible for the Committee over which Lord Plowden presided being set up to examine Treasury control. It was a great feat to get that accepted, and this Report is the fruit.
With the procedure in connection with the supersonic aircraft project in mind, I look at the Plowden Report. It seems to me that the clash is very sharply revealed. We know the history of the project and I need not go into it now. A committee was formed by the Ministry of Supply in 1956. Then all we heard was that there was an agreement with France on 29th November, 1962, and the treaty was published in January, 1963. Taking the first point first, I wonder whether, if the Minister had taken the House of Commons a little more into his confidence when announcing the agreement, all the sting would have gone out of this debate.
In paragraph 75, the Plowden Committee said:In our view, it would be impossible to work efficiently any system of Parliamentary control of commitments which went beyond what is already implied in the present processes of Supply and legislation.Now comes the point—This view does not however alter our opinion that it would be desirable for the Government to develop means of informing Parliament and enabling it to consider and approve the broad issues of policy involving public expenditure for some years ahead at a time when the effective decisions are taken.This seems to have been an absolutely golden example of a missed chance. We could have had a very good debate on the subject when the agreement was announced. I am quite sure that no Member of the House would have desired to challenge the agreement, which, obviously, is a very reasonable one in the circumstances. But we did not have that opportunity. It lay in the pigeonhole, and it has now been discovered, we notice, by the Opposition.
In our Report, we also drew attention to the Treasury's lack of activity in connection with the same matter. I quote 897 again from the Plowden Report, this time paragraph 36:The Treasury is the Department with the central responsibility for economic and financial policy, the custodian of the Exchequer, and the authority for Civil Service and establishment matters, It bears the responsibility:—This was an agreement of a very special kind. It was a treaty. One would have thought that just this sort of thing would be right up the Treasury's street. I think that Lord Plowden also would have expected the Treasury to interest itself in it particularly. This makes all the harder to understand the very placid part which the Treasury played in it all. I still think that the Plowden Report, a very valuable Report, was in this instance not followed at all.
- (a) for allocating the amount of money and economic resources to be made available for each purpose to each Department;
- (b) for advising the Departments on economic and financial matters, and for assisting them to maintain proper practice in the expenditure of public money ".
I shall refer only briefly to the position of the Corporations because this has been very much clarified by my right hon. Friend's statement about a fortnight ago. In paragraph 111 of its Report, the Estimates Committee said:Your Committee recommend that, in the absence of special statutory authority conferred on the Minister of Aviation, the responsibility for the choice of their aircraft should rest exclusively with the Corporations.I am very glad that the Minister has gone into black and white on this point. I think that his statement is a very valuable contribution which will save some of the misunderstandings which we encountered.
The hon. Member for Newton (Mr. Lee) said that he was not "knocking" the Concord. I think that there is a tendency to "knock" the super-VC10. From such knowledge as we have been able to gather, I am quite certain that the passenger in the super-VC10 will get the best ride of any long-distance aircraft in the world. Whether it will be a profitable machine for the air Corporation to run is yet not fully clear, but, from the passenger's point of view, it certainly offers the greatest attractions, and I am convinced that it is about three years ahead of any of its competitors.
I could go on a long time, but I do not propose to do so. In the words of 898 one of our witnesses, we are here in a realm which is on the fringes of knowledge. I think that the right hon. Member for East Stirlingshire said something of the sort. We cannot be sure that every step we take is right, but we can be sure that it is a mistake to stand still. We have a duty and a purpose here, and I believe Mat the Ministry of Aviation is on the way to fulfilling that duty in the best interests of the country as a whole.
§ 6.10 p.m.
§ Mr. George Wigg (Dudley)
I am sure that I voice the view of my hon. Friends when I congratulate the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) on his wise and sane speech. I only wish that he was Minister of Aviation. If he had been Minister of Aviation, and certainly if he had been Parliamentary Secretary, we should not have had the child-like exposé which we had this afternoon. If he had been Minister of Aviation, we might have had some aircraft, and the prestige of this country would have stood a lot higher than it does and the country and the House of Commons would have had the satisfaction of knowing that they had been told the truth.
I agree that in this business one cannot throw bricks at every failure. The man who hopes to hole in one in these matters will never hole at all. We cannot win if we are afraid to lose. It may even be that some of the great triumphs in this matter have been because of the failures. I accept that and I certainly throw no bricks at the Minister o: Aviation or the Minister of Defence because the list of failures is a long one.
My complaint on this score is rather different. It is that these Ministers have carried on projects for too long for political reasons when wisdom—indeed, I would say patriotism—demanded that they should be cancelled. It always affords me the greatest amusement to hear words coming from the lips of hon. Members opposite about the merits of Polaris when I read what the present Secretary of State for Commonwealth Relations had to say about Polaris when he was running Blue Streak. Heaven knows what it cost this country in knowledge and the possession of effective weapons that from 1959 until 13th April, 899 1960, we persisted with a weapon because the right hon. Gentleman was afraid of the stupidity of his own back benchers, a force, which, I readily agree, is one of the most formidable in the world.
We are faced with the same point now. There is nothing wrong about the Ferranti business. Mistakes could have been made. I have always tried to credit the other chap with the same sincerity and honourable approach that I should like people to believe I possess. Of course, mistakes could have been made, but what the House of Commons wants to know—indeed, what the House of Commons will find out at some time—is just when this information was discovered. About a week ago I had a Written Answer from the Minister to a Question asking him when this information was given to the firm. He said, "In August last year". Let me tell him frankly: I do not believe it.
I should like to see representatives of Ferranti in the witness box, under oath, or before a Select Committee—and I should like to see the Minister there as well—to tell us just two or three things. First, when did the Minister's Department find out? When was it first learned in the Ministry of Aviation that a mistake had been by Ferranti? Secondly, I should like to know when Ferranti's found out, because if in fact there was knowledge in the Ministry of Aviation before August, and if Ferranti knew several months before, which I suspect, this matter should never have been referred to a Departmental Committee set up by the Minister, because the person who is in the dock is the right hon. Gentleman.
When I criticise aircraft and firms, the person I am criticising is the person who has to answer—not the Parliamentary Secretary, but the Minister. He is accountable to the House of Commons—and there is no more dodgy character in this House. This man does not think in terms of defence. He thinks in terms of politics all the time.
§ Mr. Deputy-Speaker
Order. I do not want to interrupt the hon. Member unnecessarily, but I hope that he will be careful of his language.
§ Mr. Deputy-Speaker
I am obliged to the hon. Gentleman. I think that I would be right in inviting him to withdraw the expression "dodgy character".
§ Mr. Stephen Hastings (Mid-Bedfordshire)
After using the expression "dodgy character" the hon. Member added that my right hon. Friend takes no decisions except for political motives. Is he suggesting that the Concord, with all that it implies, was a political decision?
§ Mr. Wigg
The hon. Member knows perfectly well that I sail under the skull and crossbones. I speak for nobody myself.
I believe that in due course the Concord will be cancelled. I do not believe that it is a practical proposition. It is a continuation of what I might call the subconscious repressions of the Minister when he dodged his hon. Friends over Suez. It is forgotten that this character was at one time a member of the Suez group and that one of the first persons to "rat" on his friends was him. What he was engaged in doing in the Concord proposal was sublimating the guilty conscience, which he justifiably possesses.
Let me go into the Ferranti case. If the Minister knew about this as long ago as last August, how comes it that he did not go to the Prime Minister? Why did he not make an announcement in the House? Why did he not come to the House and, like an honourable man say, "There are allegations about Ferranti. My Department is involved. I have this information. I am taking the advice of the Law Officers of the Crown, because this is a serious business." Contrast his 901 actions with the actions of the Prime Minister in the Labour Government over the Belcher case. As soon as there was a breath of suspicion, did he get any sympathy from hon. Members opposite? Not a word. But he took action to investigate.
When it comes to the point, and the truth can no longer be concealed, what does the Minister do? Has the House been told about this to this day? No. The right hon. Gentleman uses a Press statement. Earlier on I raised this question, and I still wonder whether this is a breach of Privilege. I will not press that. However, it is certainly a breach of propriety. An honourable and courageous man who had respect for this House, or who had any respect for his hon. Friends, would have come to the House and said, "Certain events have happened. Perhaps I have delayed. However, I have decided, with the authority of the Prime Minister, that a committee of inquiry should be set up".
What does the right hon. Gentleman do? He sets up a committee, composed of three civil servants, to judge him. This is not right. Not only that, but there happens to be £2,700,000 of public money involved. Do hon. Members opposite ever stop to recollect the "hoohah" that they created about £30,000 over the groundnuts scheme? [HON. MEMBERS: "Thirty thousand?".] In the first instance, it was the comparatively small sum of £30,000. I was in the House at the time, and I remember the debates and the song and dance created as if it was £3 million. The point that I want to make is that it is not the amount which matters but the principle. The principle here is the same.
What the firm of Ferranti has done is to strike right at the heart of the trust which exists between the aircraft companies and the State, because, properly, a number of people will say, and do say, following that wicked aphorism about there never being smoke without fire, "How many more are there?" I do not believe that there are any more, but, if the word goes round, the man who is responsible is sitting on the Front Bench. The Minister is the man who stands indicted.
This is not the first time that the right hon. Gentleman has done it. He 902 did it only a few months before; indeed, he did it a few weeks ago when he did his best to dodge the column over Skybolt. First, he gave notice to my right hon. Friends the Leader of the Opposition and the Deputy-Leader on 12th March last year that he would come to the House and refute the statements they had made. In the course of the debate he charged them by implication with either being mistaken or not telling the truth. He said, "I have been to the United States. I have heard what has been said there. I met the same people as you, and what you have said is not what they told me". That was on 12th March, 1963. Then, we had an article by Mr. Brandon, published in the Sunday Times on 8th December last.
To this day, nobody not even the Prime Minister, has challenged the accuracy or truthfulness of those articles. They include direct quotations. No man of average intelligence with any regard for veracity can escape the fact that the right hon. Gentleman was told at the White House that Skybolt was a gamble and the President told him not to depend upon it. The right hon. Gentleman got red in the face and insisted that it was the basis of our nuclear defence. Then, irrespective of the consequences to his country or to the defences of the country, Skybolt was persisted with until the truth could no longer be concealed.
Then, something else had to be invented, and we had the record of the right hon. Gentleman—this is even more distasteful—in connection with TSR2. Associated with one of his hon. Friends, he attempted to pretend that what my hon. Friends on this side said about TSR2 or the questions which they asked were asked for disreputable reasons. He suggested that attacks made here were attacks upon the defence of the country. He posed the matter in terms as though the TSR2 was a great triumph and we were attacking the technological skill of British industry.
The Minister, above all men, knows the truth. TSR2 was a Canberra replacement. If it has a nuclear rôle to fill, it is by way of a bonus. I have asked the right hon. Gentleman over and over a gain, and I have had the request on the Order Paper, for a Select Committee to be appointed, not to knock the TRS2 or the Concord, but because the House of Commons owes it to the 903 country, if astronomical sums of money are being spent, to do what is done in the United States. If it can be done there with due regard for security, we ought to be able to have a Select Committee to establish the facts.
The right hon. Gentleman, however, shakes his head and says that the TSR2 is not a Canberra replacement. If it is not, let him come and debate it in Dudley and Preston, because the statements on this issue have been made over and over again. If the right hon. Gentleman gets his Parliamentary Private Secretary to go out and turn up the first statement that was made on this House by the then Secretary of State for War, it was that TSR2 was the Canberra replacement.
§ The Minister of Aviation (Mr. Julian Amery)
I am sure that the hon. Member does not want to mislead the House. I will not try now to deal with his personal attack. I want to get the facts straight. The TSR2 is a Canberra replacement. The hon. Member is quite wrong in saying that it was not intended to have a nuclear rôle. The Canberra has a tactical nuclear rôle today. What the hon. Member means is that the strategic rôle is a bonus. It would be more helpful to the House if the hon. Member were accurate.
§ Mr. Wigg
Certainly, I accept that. I do not deny that the Canberra's rôle is reconnaissance. I readily accept that the TSR2 was also looked at with favour because if the Army had had Blue Water, which it does not have, it would have needed a reconnaissance aircraft. I believe that the Army still wants a reconnaissance aircraft.
If the right hon. Gentleman cares to make the legitimate point that the Canberra in certain circumstances has a nuclear rôle, but a limited one, it also has a photographic and reconnaissance rôle. But the TSR2 in the rôle in which the right hon. Gentleman has tried to put it across is additional and never broke surface, like Blue Steel never broke surface until Skybolt was a dead duck and the fiction about it could no longer be maintained.
I do not want to keep the House for more than a few minutes, but let us probe a little more into what the right 904 hon. Gentleman calls a personal attack. The way I prefer it is to say that we are examining the record of the man in the dock.
§ Sir Godfrey Nicholson (Farnham)
The hon. Member has made a strong personal attack, to which everybody in the House of Commons must be open, but in doing so he has impugned the honour and veracity of my right hon. Friend. In doing that, he has not only run counter to the experience of hon. Members on this side, but he has done great harm to the House of Commons. I suggest to the hon. Member that, if Ministers are attacked in such a personal way, it harms not so much the Minister who is attacked but the whole traditions of the House. I invite the hon. Member to some extent to dissociate himself from such a personal vendetta.
§ Mr. Wigg
This is a place of debate. As the Minister knows, I have tried through Question and Answer to bring him to account at Question Time. I have failed. If I am impugning the right hon. Gentleman's honour and veracity over Skybolt, he can, here and now, get up and say that what Mr. Brandon wrote was untrue and that the words that were put into the mouth of the President in Quotations were untrue. If they are untrue, if the right hon. Gentleman says they are untrue, I will withdraw what I have said.
If the Minister says that he did not give notice on 12th March, 1963, to my right hon. Friends, I will read the HANSARD report. In that case, if there has been a misprint, I will equally withdraw. If what I say about Ferranti is not right and the Minister can give a satisfactory explanation of why he did not come to the House and give an account of what happened, I will withdraw. But as long as he cannot withdraw, I should not be charged with making a personal attack when what I am doing is discharging my duty.
§ Sir G. Nicholson
I still put this to the hon. Member. I do not wish to spoil his speech, and I am sorry if I am doing so. The hon. Member cannot, however, have been aware of the intensely offensive nature of the innuendoes Jin his attack. We on this side know that my right hon. Friend is not always infallible, but he is a man of the utmost honour and has a fine military record.
§ Mr. Wigg
I am dealing with the facts. If my innuendoes are offensive, I am telling the truth. If the hon. Member for Farnham (Sir G. Nicholson) wants me to be mealy-mouthed and gloss over great issues of public importance which are involved, I cannot do so. If, however, the hon. Member or any other Member of the House will tell me that any of the statements which I have made is untrue, will withdraw it.
Now, let me go on. Let us turn to paragraph 24 of the Defence White Paper. Here we have a Bill for £2,000 million. During the time that the present Administration has been in office, they have had £20,000 million on defence. Since 1947, £5,200 million has gone to the aircraft industry. That is no small sum. A number of aircraft have been under consideration, both in this House and in the country, for a considerable time. There are the TSR2, the AW681, the P1154 and the light helicopter for the Army.
§ Mr. Wigg
Yes, but I will leave that to others. It cannot be dealt with in a few words. Let us deal with the projects which I have mentioned.
One would have thought that as statements have been made, there would be something specific in the Defence White Paper. One would have thought that hon. Members opposite, including the hon. Member for Farnham, who might prefer me to be mealy-mouthed, would have been alongside me demanding that the House of Commons should he given the information. What does the hon. Member think that the House of Commons is? We are told in the White Paper thatDetai[...]ed studies as to future aircraft have been and are being carried out, and there will he an announcement on plans shortly.A year ago, in the Defence White Paper, the P1154 was announced as a replacement for the Hunter. At the end of July, it was announced that it would replace the Hunter and the Sea Vixen. On 20th November, we were told that something had gone wrong; the Government were marking; time. Now, we are to be told—every Press man knows it, every Lobby correspondent knows it—that the future 906 of the P1154 is to be announced in the defence debate.
In the speech of the Minister of Defence, the House will get an announcement, which it will thus not have had a chance to assimilate, that the P1154 will replace the Hunter. The Government—and this is the dodgy one for the right hon. Gentleman—will buy the Phanton II from the Americans to replace the Sea Vixon. So we have had statements in the 1963 White Paper, statements in the House of Commons and withdrawals in the House of Commons, but the House of Commons has still never had the facts spelled out.
Let me turn to the AW681. The British Army is stretched to its utmost. Hon. Members on both sides of the House this afternoon cheered, and rightly cheered, in acknowledgment of the debt that the country owes to the British Army. Let them remember something. I was going to ask at Question Time this afternoon whether this debt of gratitude extended to making sure that the Army had efficient equipment and whether units were up to establishment. In 1959, we were told that no ba[...]talion in Cyprus should be under 700 strong. There is not a battalion in Cyprus today that is 700 strong. What the Army needs is a little less thanks through the lips and a little more thanks in action. When we went into Cyprus the other day all the medium-range aircraft—the Argosy, the Beverley and the Hastings—landed in Nice or Malta because they could not get to Cyprus in one hop for they did not have the range. The Minister knows that the Estimates Committee in paragraph 40 said:Your Committee considered the present number and age of the transport aircraft possessed by the R.A.F. is an adequate commentary on the efficacy of the Air Ministry's advance planning of the ten types now in service, only two (the Argosy and the Comet 4) could be described as modern aircraft. The bulk of the strategic aircraft are Britannias and Comet 2's, the only replacements likely to enter service in the next five years are 10 Beltasts and 11 VC10's.On 5th March last year an announcement was made about the future AW681, but nothing was said about the engine. So I have asked, as other hon. Members at other times have asked, what about the engine? What about some firm plans for the AW681? On 907 20th November I was told, "An announcement shortly". I asked a few days ago the same question and I was told—ominous words—"If it is decided to go on, then no delay will occur". Surely it the Government were really concerned about defence, as opposed to the political dodginess and the effect of their decisions, there would have been straight speaking and the House would have been told.
Then there is the helicopter. We know that in Borneo at the present time the Army badly needs a light helicopter. No decision has been taken. There are all sorts of rumours as to who will make the American Hiller E12. Then the hon. Member for Orpington (Mr. Lubbock) has mentioned the Shackleton. Of course there ought to be a Shackleton replacement. It was mentioned in the White Paper a year ago, but there is nothing here now. Then we come to the TSR2. If the TSR2 is what is claimed for it, why has not the order been placed for the 30 operational aircraft? Or is it because the Government wanted to make quite sure it did not fall in this year's Estimates but came in next year's?
The defences of this country have been carried out on the basis of the expenditure of a great deal of public money regardless of the consequences. As long as the politics, as long as the dummies in the shop window can be made to look attractive, the Government think that some pretence can be made of nuclear defence. How many changes have there been on it? Only a week ago we were told that we had to have this deterrent in order to have a place at the conference table. By the end of the week the song had changed. First we got the Defence White Paper. Then we got another speech from the Prime Minister, and it changed again. In the White Paper we were told that we must have nuclear weapons in case the Americans rat on us in the event of a European conflict. If that is the reason, what happens to the defence planning of the Government? If the Americans rat on the use of Strategic Air Command, would they not rat also on the use of the atomic tactical weapons, the only formidable weapons in the possession of the Rhine Army?
908 Only yesterday I saw an advertisement in the Observer. It made my day. I had read the Prime Minister's speech and the White Paper. Then I picked up the Observer, and there is was:Today's Army officer in the missile age.Of course, the young man who is thinking of making the Army a career thinks of the missile age and he thinks of atomic weapons as a part of it. If hon. Members accept the Government's policy and think that the Americans are going to rat on us, let us recollect that the three missiles mentioned there were Honest John, the atomic Howitzer and the Corporal. They have three characteristics—they are all obsolescent, they are all American and the warheads are all under American control—but, of course, they are part of the independent British deterrent. The Government are at it all the time. If one comes to the House of Commons and speaks the truth, hon. Members opposite have become accustomed to being so mealy-mouthed that they think that one is making a personal attack. Not at all. I have the highest regard for the right hon. Member for Bromley (Mr. H. Macmillan). I have been opposed to his defence policy, but I always thought and still think that he was doing his honest best. I have many friends on the other side of the House, but that will not stop me from speaking the truth about them.
Let me give another example. I have here the N.A.T.O. letter for February, 1964, published by the North Atlantic Treaty Organisation Information Service. I will read the last sentence:Some of these deadly weapons await transportation to their supersonic Vulcan II carriers.Would any hon. Member opposite, including the Minister, say that the Vulcan II is supersonic? No takers?—not one!
I turn to current events. It has cost us £20,000 million since 1951. The dummies are arranged in order to satisfy the needs of the Conservative Party. Let me read two extracts, one of which I have read to the House before. This is a Staff study prepared for the use of the committee on Foreign Relations of the United States Senate on 14th September, 1962. It states:The British strike force is already approaching obsolescence. Its credibility as an 909 instrument of British policy is steadily declining. Its future, if it has one, may be as a contribution to and a integral part of a multi-national 'European' force.That is what the Americans thought about it. That is the truth about it, but the right hon. Gentleman cannot go to Preston or to the 1922 Committee and tell them the naked unvarnished truth about the defences of this country, and so we get these bits and pieces and we get them by a side wind.
Let me give my last quotation from the United States News and World Report, United States, 10th February, 1964. The article is called "World-gram", from the capitals of the world, London, Washington, Paris and Bonn: It reads:At the rate things are going, Britain will soon be out of the running altogether as a world power. Its power is eroding much faster than expected. The United States is being called to pick up the pieces in one danger spot after another.This was not written by Transport House. [Interruption.] If anyone speaks the truth one is being offensive, and if one reads from a foreign newspaper one is being anti-British.
§ Sir G. Nicholson
That particular paper has an anti-British record. I think the hon. Member is falling into the mistake of thinking that anything which backs up his case must be true and anything which goes against it must be wrong.
§ Mr. Wigg
That, of course, is the routine objection. Again I make the challenge. There are plenty of experts here, even on the other side of the House, the hon. Member for Macclesfield (Sir A. V. Harvey), for instance, and the right hon. Gentleman himself, who has not interrupted me.
I make this challenge. If on any point I have misinformed the House, then do not let the hon. Members make general charges of the kind the hon. Member for Farnham has just made, the kind of thing said only to deceive the poor nitwits of Farnham, but let them get up and tell me where I am wrong, if I am wrong. If the Vulcan II is supersonic, let them get up and say so. If what I have said about the Vulcan, the TSR2, the AW681, the Shackleton and the helicopter is wrong, let them get up and tell me, and I shall 910 be ready to withdraw. But if no hon. Gentleman will do that, then I ask the House to believe what I said, or, at least, accept that I have made out a prima facie case If I am right the House has a duty to the country, and the House of Commons should get rid of the Minister. That is our duty. We can then hope that, in due course, the electorate at Preston will finish the job.
§ 6.41 p.m.
§ Sir Arthur Were Harvey (Macclesfield)
I shall deal with some of the points raised by the hon. Member for Dudley (Mt. Wigg) in the course of my speech. I must say that this has not been a very happy debate from the point of view of British aircraft industry and the achievements of its management, designers, and workers. We can look back to the end of the war and find fault with the administration and the method of ordering and so on until we get to the present day, when large sums of the taxpayers' honey are being spent, but there is a fairly good horizon for a good many of these projects and I propose to address my remarks to some of them this evening.
The hon. Gentleman the Member for Newton (Mt. Lee), opening for the Opposition, made, I thought, one very grave charge, if I heard him correctly—and I wrote it down. He referred to either the industry or to part of the industry "cross-booking" in its bookkeeping. "Cross-booking" I think was the word he used.
§ Sir A. V. Harvey
Well, we shall see tomorrow in HANSARD what the hon. Gentleman did say but I think it was an unfortunate thing to say about reputable people with reputable accountants. If the hon. Gentleman had got any evidence it would be a different case, but I question whether he has, and it was a grave charge.
I thought that the right hon. Gentleman the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) uttered some very wise 911 words—from his experience and wisdom acquired over quite a few years. He looked back some years, but what he had to say was relevant to today.
Of course, Parliament is the watchdog for the taxpayer. That is our job in Parliament, to do what we can to see that the taxpayers' money is correctly spent. That always has been so. It is our main duty as private Members. Of course one can find many faults in the methods of placing orders and in following up processes, and so on, but a great deal has to be done on trust. I have been out of the aircraft industry now for some seven years, but I think that there have been vast improvements in Government control of the industry over the years. Not everything is perfect, but, after all, estimating modern projects, which are far more complicated than they were 10 or 15 years ago, is extremely difficult. The science and the electronics in the equipment which is put into a modern aircraft or missile make it virtually impossible for any firm at the beginning of the project accurately to estimate what it will cost.
I am not going to talk about Ferranti. I am quite prepared to, but, quite frankly, I know very little about it except what I read in the newspapers. I look forward to the report for which my right hon. Friend has asked and I hope that my right hon. Friend will do ail he can to speed up its presentation. What I should like to know is what my right hon. Friend knew about this before he brought this to investigation. I should like to know whether he had any talks on this—if there is anything to it. There may not be, but one has to keep an open mind, I think, to some extent.
I have a very great regard for my right hon. Friend's ability. Since he has been in his job he has brought a breath of fresh air to the way decisions are made. I realise that some are still outstanding, but, on the other hand, it would not be right to make them in a hurry or till due consideration has been given to all the facts. The fact is, however, that he has made decisions, and I have heard it said by those in the industry that he has got a move on in getting decisions made. That is to his credit. When hon. Members make attacks upon him I am quite sure he 912 is capable of looking after himself, and does not want any help from me.
I want to refer to a few of the projects under consideration, to make some comments and some criticisms. First, there is the BAC111 which had that most unfortunate accident last autumn. It has made a most remarkable comeback. Two of the aircraft have flown since then, and I think there was a third only last week. Here is a British effort which is up to schedule, having recovered from this unfortunate accident. There are orders for 70 of the aircraft, representing £70 million, and 41 of those orders are from the United States, and some of the orders from the States are repeat orders since the accident. Surely every hon. Member of this House ought to be proud of the fact that here we have a team which is earning some £40 million worth of exports. That is something to be proud of. The time has come when we in this House should praise the good things which the industry does, and in doing so we praise not only the management but the men with the tools in their hands, the craftsmen. There will be export orders to be earned during the next 10 years through the selling of spare parts. It is a remarkable aircraft, which is at least two or three years ahead of any comparable American project.
I come to the VC10, which has been under much discussion for many years. B.O.A.C. was asked to buy British, but it was not dictated to, but wrote its own specification. It went out to tender, but the Government at no time had foreign currency to throw away, and if the job could have been done in Great Britain it should have been done in Great Britain. Vickers won the contract, but, as I say, the aircraft was made to the specification laid down by the Corporation itself. I think Corporation officials say that this was wished on them, that they were compelled to take it. They were not. They were asked to take a British aircraft, but they wrote their own specification, and if they made mistakes five or six years ago they ought to come clean and admit it.
But do not let us deride the specification. It may be a very good one. The performance of the Super VC10 is quite remarkable. I think that this aircraft may well be a real winner. It has 913 got a very much slower landing speed than the Boeing and takes off in very nearly half the distance. I have heard many Americans say they detest the Boeing's take-off and having to rumble along for two miles before becoming airborne. The VC10 will land in less than this distance, and it is an aeroplane of modern ideas—for instance, with the engines at the back. I believe that this aeroplane will be a success, that it will have a great pull with the Americans, and that many Americans will fly in it. It should be to our air services today what the "Queen Mary" was on the Atlantic 25 or 30 years ago.
If B.O. A.C. collects the traffic, as I think it will, other airlines will be compelled to follow suit and order some of these aircraft, or go without the business. There is no other airliner like it in the world today. It is no good saying that this will be overtaken by the supersonic aircraft, either the British or the American, if it comes along; because both will be delayed, for that is unavoidable with complicated projects like those. I am sure we all wish the VC10 well, for the sake of Britain and all those involved in it.
Now I come to the TSR2. It is due to fly, I am told now, in May. It has been delayed mainly because, instead of flying from Wisley, because of difficulties it was taken to be flown at Boscombe Down. It seems to me a wise decision to go for a long runway testing with this fast and complex aircraft. I am told that the performance of the TSR2 is better than that of the TEX—probably two years ahead at least. I do not think that my right hon. Friend has ever misled the House about what it was intended that the aircraft should achieve. It is a tactical strike reconnaissance bomber. The hon. Member for Dudley said that as the project progressed there was a further development in the form of a strategic rôle. It is a very good thing if an aircraft is found to be capable of doing more than it was originally intended that it should do.
We have heard a great deal about de Havillands losing the contract with Japan over the Trident. I should like to try to put this matter into perspective. The Trident was designed to meet the European requirements for B.E.A. It was prepared for comparatively short 914 routes. Afterwards B.E.A. asked for a stretched version of the aircraft, to give another 18 or 20 seats. It was this mark which the Japanese required, and delivery dates could not be met compared with the Boeing project which was started with the stretched version. I understand that de Havillands very nearly pulled it off. It was not a question of lack of finance or credit. All the terms, I am assured, were met, and de Havillands had every assistance from the Government and the embassies. They lost this order. But only a few weeks later they collected an order from Pakistan for three Tridents with an option for two more, and I think that very encouraging.
De Havi[...] lands have gone to the Commonwealth and sold some Trident aircraft. I only wish that Australia would purchase British aircraft. I cannot understand why the Australians go American time and time again, when British aircraft can match the Americans. In fact, no British aircraft of any note has been sold in Australia since the Viscount. When this Government and Britain was considering entering the Common Market the Australians were the people who shouted most. I should like to see them becoming more British aircraft-minded, if all the factors required could be met by British aircraft. I think that the Australians owe this to us and it is not a case of asking favours.
In the pamphlet, Twelve Wasted Years, a figure of £300 million is mentioned in connection with the missile Blue Streak. I am assured that the figure should be £84 million, and the first-figure seems to me a pretty good exaggeration, to say the least. The Blue Streak and Blue Water projects were cancelled during development. The point has been made that it is far better to cancel something before the project has progressed too far. Over the years since the war the mistake has been made of allowing contracts to go too far before they were cancelled.
§ Sir A. V. Harvey
I said that it was cancelled during development. It was thought that the TSR2 could fulfil that rôle and it probably will. We shall have to see.
As my hon. Friend said, there are many weapons, seven or eight missiles, which are performing excellently, and about £50 million has been collected from the export of missiles. That is not an inconsiderable figure. Blue Streak is now being used in connection with the European space programme which will aid research into navigation, and other advantages will accrue later, so that some dividend has been secured. Even when a project is cancelled the scientists and technicians who have worked on it will have learned a great deal. They continue in the business, and the knowledge gained may help with a follow-on contract, which may be for a project of quite a different type.
§ Mr. John Biggs-Davison (Chigwell)
My hon. Friend has been critical of the Australians, and I agree with him; but would not he agree with me that the Australians are co-operating fully in the European project?
§ Sir A. V. Harvey
Yes, but it is a comparatively small project compared with the matter to which I was referring, the direct export sales of aircraft. If the British aircraft industry is to survive, it must have a fair deal in respect of overseas sales. Sometimes I wonder whether, when we are competing with the Americans, we always get a square deal because there are methods involved which I question.
§ Mr. Woodburn
Is the hon. Gentleman aware that when I was in South America I learned that one of the problems about selling the Viscount was that the Americans were practically giving away aircraft and hoping to recoup by selling spares? The attitude of British aircraft representatives was that they felt they were being subjected to unfair competition.
§ Sir A. V. Harvey
The right hon. Gentleman has confirmed what I was trying to say. The United States has cancelled at least 61 missiles before they 916 went into service, at a cost of £2,100 million.
I wish to discuss the question of the P1154 and the Phantom. One reads many reports about this in the Press and we shall expect some clarification during the defence debate next week—
§ Sir A. V. Harvey
I wish that the hon. Gentleman would allow me to make my speech uninterrupted. I did not interrupt him when he was speaking. In fact, I do not think that anyone interrupted him.
I read about the probable purchase of American Phantom aircraft for the Navy. I appreciate that there are special requirements for Naval aircraft compared with those for the Royal Air Force and that only a limited number would be required. I have been assured by those in the Hawker Siddeley group responsible for the specifications that the P1154 could be modified and made to fulfil Naval requirements—two seats, and so on. In the light of that information it would be a great tragedy for the British aircraft industry if an order were placed in America. Even if the British plane cost more to modify, it would pay to keep the project in Lancashire. At least 60 per cent. of the P1154 specification would be similar, the main wing spars, fuselage, engine, undercarriage—many parts will be the same. It might mean a delay in delivery, but I am sure that it would prove well worth while to keep the work in this country.
I am told that the Hawker Siddeley group in the Midlands is negotiating in respect of redundancies among workers at the present time, and it would not make sense to place an order for aircraft in America when some of our own men are being put out of work. There would also be a saving in foreign currency. I look forward to the time when the Americans will be ordering British aeroplanes. Why should they follow on two years later by building something like the TSR2? Surely there is a case for the countries to get together to prevent duplication of effort. The money so saved could be used for a more worthwhile purpose. There is, of course, the collaboration between this country and France at the present time.
917 If we order another aircraft for the Navy, we shall lose the independence of operation in an aircraft carrier. Spare parts would have to be obtained from abroad. It would be fitted with Rolls Royce engines, but the Phantom has been designed for use with large American aircraft carriers so that it was possible to contemplate on a high mach number performance without worrying about landing speeds or the catapult launching speed. With British aircraft carriers the limitations would be greater. Arrester gear would have to be redesigned and this would be costly.
The span of the Phantom is 5 ft. or 6 ft. greater than the P1154 and this might cause difficulties about putting the aircraft below deck. The range of the P1154 is one-and-a-half times that of the Phantom and this is a very important factor. I am not making sales talk for this aircraft, because I have no personal interest in it. My only interest is to see that the project is retained in Britain. The P1154 could land vertically on the deck. What an opportunity for the future of aviation. Here we have an aircraft landing vertically on deck, while the American type cannot do it.
We are assured that the Anglo-French effort on the Concord is going extremely well. Let us remember that the United States is in a dilemma. Last year Mr. Black went round the world, including this country, collecting all the information that he could in order to report back. In May the United States authorities will consider three tenders for three different types of supersonic aircraft and may not make a decision for another year, if at all.
On the other hand, we and the French are working together, which is an excellent thing. Whatever may have happened over the Common Market, it is splendid that we should be collaborating with the French—and let us not underrate the ability either of their designers or their workers. The fact is, the Americans in this case have lost the initiative because they are approaching the problem in an entirely different way. They want an aircraft that will carry over 200 passengers with an all-out weight of over 400,000 lbs. and a top speed of about 2,000 miles an hour. They plan to build it with new materials.
918 On the other hand, the Concord will have a top speed of 1,400 miles per hour and the block time from London to New York would be very little different between the two aircraft in hours and minutes, The Concord is to carry over 100 passengers. I am told by those with expert knowledge that the American aircraft, were it to have a weight of 400,000 lbs., would be quite unacceptable to any large city because of the noise factor in going through the noise barrier. One British designer told me, "I would like to see the Americans go right ahead with this project. They would have a millstone round their neck for twenty years."
Let us not be discouraged about the Anglo-French effort. Not a great deal of money has been spent on it so far, but no doubt the bill will go up. My right hon. Friend told me in reply to a Written Question on 29th January:We are considering proposals to increase the power of the Olympus 593 engine and to make certai[...] changes to the wing design of the aircraft in order to achieve better range and payload."—[OFFICIAL REPORT, 29th January, 1964; Vol. 688, c. 57.]My hon. Friend the Parliamentary Secretary said today that it was hoped to get a range of some 4,000 miles. My experience has always been that, when an aircraft is being built, over seven or eight years the engines increase in power and enable the aircraft to grow and allow increased fuselage weight and more fuel to be carried. Usually it ends up by giving a far better performance than expected in the first place. I hope that the Concord's range will go even beyond 4,000 miles.
There are a great many things to commend the building of supersonic transports, although I am not one of those to apply for a seat on the first flight of the Concord. Indeed, there are many advantages. For instance, the collision risk is reduced when flying at the height envisaged. The factors required in operating them will bring about greater safety, because the more care that has to be taker in operating aircraft the safer they are. There will be greater weight ratio thrust, which means greater power and more safety.
So far, 37 of these aircraft have been sold, and I ask my right hon. Friend to watch this very carefully and keep Parliament informed of progress. At the right time he should publish a White Paper 919 giving the story up to date. I recognise that there will be some technical matters which we shall not want our competitors to know, but let the British and French people see what they are to get for their money. This would also help to sell the aircraft in the long run.
The House should be told more of the British automatic landing device. We were told some few years ago that we had the lead in such devices. No doubt something is being done now, but we should like to know about it. The industry is to be congratulated also on the Hovercraft, ten of which are now being built on "spec" at Cowes.
Today, the industry is spending a great deal of its own money on research and development, and that is good because, if there is risk for both the taxpayers and the shareholders money, it should he divided. But there is a particularly difficult case, that of Messrs. Short Bros. and Harland. We all know that the firm is having a very difficult time. A large order was given for ten Belfasts, but it seems that it is not to be increased for it is probably not necessary for the Royal Air Force to have more. But, along with my hon. Friends representing Ulster seats. I am concerned with what is to happen to Shorts when that order runs down.
This is a great company, but it cannot go on having an injection every two or three years by subsidy in order to keep going. Either the character must be changed or something else drastic must be done. I hope that my right hon. Friend will give this his attention, because the people in Belfast who work for the firm are living under great difficulties. They are anxious about their future and the firm's continued place in the aircraft industry. I do not know whether the answer lies in amalgamation or something else, but if we are to support Ulster, as I am sure we must, let us do something practical and of lasting effect to those trying to earn their living at Shorts.
I understand that there is a helicopter possibility for Shorts or for Westlands. I do not like monopolies. Westlands has done a remarkable job, but helicopter production is a monopoly and I would like to see Shorts being allowed to go ahead with a helicopter type and making it for export.
920 Right hon. and hon. Members opposite have for many years criticised the aircraft industry too much.
§ Sir A. V. Harvey
Too much. There is little point in going into history, but I would remind them that during the Korean war vast orders were given for aircraft almost overnight. Venom fighters ordered would normally have taken years to build. Modern, sweptwing fighters were put into production from the drawing board. Insufficient prototypes were ordered. Yet the lessons of this sort of thing were well known before the Korean war.
No production orders were placed for any guided weapons. There was no research into long-range ballistic missiles and no supersonic research aircraft was ordered. The United States was well ahead in all these projects. The number employed in the industry was jumped to an artificial total by the addition of some 50,000 to 60,000 people in that period.
When the Conservatives came in—and the same would have been the case had the Labour Government remained in office—they had to look at the picture again. Out of the 1,000 Venoms which had been ordered 750 had to be cancelled. Hon. Members opposite talk of planning and, as I have said, I do not want to go back too far because times have changed. But I remind them that the Canberra order had to be cancelled by one-third. Vast sums of taxpayers' money were spent and no proper thought or consideration could have been given to what went on.
The Swift fighter was ordered off the drawing board and the first production order was given in the same month as the first prototype. The Brabazon was a wartime decision, but the Labour Government went on with it.
The hon. Member for Newton made it clear that the industry is not going to be nationalised. I am sure that both managements and workers will be reassured to know that. Their achievements have been remarkable and reflect great credit on all of them. We have heard lately a great deal about the "brain drain", but I am assured that there has been no significant loss by 921 emigration of our aeronautical scientists and engineers. I understand that the loss is about 2 per cent. per annum, allowing for death, retirement and emigration. In addition, a great many scientists from the Commonwealth and other countries are working in our aircraft industry.
In the long term, our industry has to take great care of itself against its competitors. Our American friends are out to get the world market for civil aircraft and military aircraft where they can. The sooner we get together with the European countries and the Commonwealth the better. I am very proud of our British products and the people in the aircraft industry and I hope that this House will give them all the support that it can.
§ Lord Balniel (Hertford)
Before my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) sits down; as the right hon. Member for Huyton (Mr. H. Wilson) is now present, and as the hon. Member for Newton (Mr. Lee) has given—
§ Lord Balniel
—categorical assurance that the aircraft industry will not be nationalised, may we have confirmation from the right hon. Member from Huyton?
§ Mr. Speaker
If he is not present, that cancels one premise out of several which preceded the noble Lord's question.
§ Lord Balniel
As the right hon. Member is now present, would he be so kind as to confirm the absolutely categorical assurance given by the hon. Member for Newton that the aircraft industry will not be nationalised should a Labour Government be returned?
§ Mr. Speaker
That is hopelessly irregular and it does not depend on the fact that the preceding speaker had sat down. It amounts to an intervention, unsolicited, inviting a speech from somebody else.
§ Mr. Harold Wilson (Huyton)
However, as the hon. Member for Hertford (Lord Balniel) has put that question and as it was probably designed to get into the Press that I did not answer, may I intervene, not having previously caught your eye in this debate, Mr. Speaker, and say that, as is well known, I have the fullest confidence in my hon. Friend the Member for Newton (Mr. Lee) and all that he says? If the hon. Member for Hertford, who, no doubt, learned to read some time ago, has not been capable of reading Labour Party policy statements on this and other issues in all these years, he requires no word of mine to help him to understand.
§ 7.11 p.m.
§ Mr. Bruce Millan (Glasgow, Craigton)
In the circumstances, perhaps I had better follow the speech of the hon. Member for Macclesfield (Sir A. V. Harvey). The hon. Member always speaks extremely knowledgeably about aviation matters, knowledge which I cannot hope to emulate, and there was much in what he said with which I agree. There are considerable achievements to the credit of the British aircraft industry, but there are still appalling problems, and I cannot imagine that any hon. Member is happy about the present state of the industry.
I fully agree with the hon. Member that we could profit greatly from much more information about the industry and about par[...]icular projects such as the Concord. That is one of the main criticisms of the speech of the Parliamentary Secretary. He conveyed no information at all about any of the matters in which hon. Members are extremely interested. After all, the Estimates Committee's Report contains a number of reasonable suggestions, at least suggestions requiring some kind of answer, but there was not even an attempt to provide any of these answers.
§ Mr. Marten
As the hon. Gentleman well knows, many of these answers to the Estimates Committee are coming along. The debate this afternoon is on a Motion and not on the Report of the Estimates Committee.
§ Mr. Millan
I was glad to give way to the hon. Gentleman who was discourteous 923 enough not to give way to me when he was making his speech. However, he has not helped by that information, because the fact still remains that many of the matters brought out in that Report are relevant to the debate and, even if the hon. Gentleman did not answer specific recommendations, he could have given at least some indication that the Ministry was seriously considering the issues brought to the attention of the House by the Estimates Committee.
My interest in the debate is as a member of the Sub-Committee of the Estimates Committee which published the recent Report. I should like to pay tribute to the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) for the very hard work which he did as Chairman of that Sub-Committee. These sub-committees depend very largely on the assiduity and perseverance of their chairmen, and the hon. Member is extremely good at unearthing matters of consequence and seeing that they are pursued to a conclusion.
Although I want to speak particularly about the Estimates Committee's Report, I want to make one or two comments about the Report of the Comptroller and Auditor General. The Parliamentary Secretary's speech was particularly unhelpful in this respect and he seemed to go out of his way to evade the questions of my hon. Frend the Member for Newton (Mr. Lee) and others. At the very least, there has been considerable negligence by the Ministry of Aviation about the Ferranti affair. The best kind of interpretation which one can place on the Report of the Comptroller and Auditor General is that there has been gross neglect by the Ministry.
That Report deals with figures up to 31st March, 1961, nearly three years ago, and yet the Ministry apparently has not been able to find that anything went wrong. The Ministry will have to reorganise its administration in the control of these contracts. There seem to be two directors now involved, the Director of Technical Costs, responsible for engineering staff, who goes into the prime costs of these contracts, and the Director of Accountancy Services, who deals with overheads. From the Report it appears that there has not been the appropriate co-ordination between these two departments of the Ministry.
924 I was appalled by the complacent way in which the Parliamentary Secretary dealt with this matter. The most unsatisfactory feature of all is that of timing, which is of the essence, and I am sorry that the hon. Gentleman said nothing about it. At the very least, the Ministry knew about this matter in August, 1963, and one suspects that it knew some time before that. An independent committee of inquiry has been established and we are told that it will be several months yet before the committee of inquiry can draw out all the facts about this business.
Some hon. Members opposite were very irritated—more than irritated, angry—about what they took to be the implication in some of the remarks of my hon. Friend the Member for Newton. They thought that he was accusing Ferranti of fraudulent practice. My hon. Friend was not doing that, but if the Parliamentary Secretary wishes to give currency to the idea that there may be fraudulent practice in this case, continued delay is the best way of doing so. In my opinion—and I give it for what it is worth as an accountant—if this is a perfectly straightforward case, it seems reasonable that it should take a matter of weeks, not more, to get to the bottom of it. If it is so complicated that it has taken already from August, 1963, till February, 1964, and will still take several more months to get to the bottom of it, then the conclusion can be only one of two things—that the Ferranti records are in a muddled condition, or that there is some deliberate intent to obscure the right position with something like fraudulent intent. If that is not the position and if there is no question of fraud, then the Ministry must get this matter dealt with very quickly, because continued delay and the whole record of evasiveness by the Ministry suggests that this is a scandalous affair.
It happens that the Estimates Committee made two recommendations with a certain relevance to the Ferranti business. In Recommendation No. 8 it suggested that as well as a resident technical officer—we are here dealing with civil contracts on the whole—being established at the contractor's factory, there should also be some kind of resident financial officer available for the scrutiny of Government contracts. It seems to 925 me that this is relevant to the Ferranti case which again makes it the more surprising that the Parliamentary Secretary did not mention it.
Another aspect of the Estimates Committee's Report which is relevant is the tracing of the history of the Avro 748 and the Dart Herald military versions, and the decision of the Ministry to go for the Avro 748 although the Dart Herald was the first choice of the B.E.A. and the Royal Air Force. In addition, it was also cheaper than the Avro which started with an original price higher than that of the Dart Herald, and ended with a price 15 per cent. higher still.
The Ministry in its evidence given to the Estimates Committee said that the Avro 748 was chosen partly because it was being produced by one of the rationalised air corporations, whereas the Dart Herald was being produced by Handley Page, which was outside the rationalised corporations. That in itself was not a verygood reason, but the second reason which the Ministry gave was astounding and I hope that tonight we shall get some answer to this. The Estimates Committee was told that the difference between the price of the Avro 748 and the price of the Dart Herald would not be so great in the event, because, if the contract was not placed for the Avro 748, overheads in the Hawker Siddeley factories would go up to such an extent that they would have a prejudicial effect on the price of military contracts.
§ Mr. Hale
I have listened with admiration and bewilderment to my hon. Friend, but I hope he will remember that it was said in evidence that there was considerable redundancy in the Hawker Siddeley group at the time, in which I have a personal and constituency interest, I should have thought that that was a reason which would be acceptable to Socialists. If one preserves an industry one should have regard to existing redundancy.
§ Mr. Millan
But it is also fair to say that as the order did not go to Handley Page it did not help that organisation to provide full employment for its workers. This argument cuts both ways.
There was a direct relationship between a civil contract on the one hand and a military contract on the other, 926 because the fact is that if the civil contract had been taken away from Hawker Siddeley the Ministry would still have paid the money in increased overheads on military contracts. I suggest that that was not a good reason for choosing the Avro 748 as opposed to the Dart Herald.
In our placing of military contracts—this was beyond the scope of the Estimates Committee but it is relevant to the Ferranti question—there is still a tendency for us to work, in practice, on something like a cost-plus basis. In theory we do not call it a cost-plus basis. The contracts are not drawn up on that kind of principle, but in practice it works very much as a cost-plus contract, and I think that the Ministry ought to give much more consideration to this matter.
Quite apart from what has happened on military contracts, the Estimates Committee drew attention to the fact that the arrangements for helping with the launching costs of civil contracts are unusually favourable to the manufacturers, and I hope that the Ministry will look into this matter also. On the question of the control of civil contracts when the Ministry makes a contribution to launching costs, we were told that there was no need for the Ministry to look closely into the actual costs of the contract because the manufacturer himself has an equal stake with the Ministry in the contract and that therefore, without any detailed control, he has an incentive to keep costs down. In other words, then: is less control of civil contracts than there is of military ones.
In view of what has happened with Ferranti in military contracts, I think that we ought to pay some attention to the fact that we have less control in civil contracts, and I think that I carry the rest of the Committee with me when I say that if, when we were drawing up our report, we had known about the Ferranti affair, we would have paid more attention to, and laid more emphasis on, this control of expenditure on launching costs.
This comparative soft-heartedness towards aircraft manufacturers is not repeated when it comes to dealing with the air Corporations, and I hope that 927 the Ministry will look at the Estimates Committees recommendation that there should be some kind of assistance to the air corporation for their introduction costs. This is particularly important in the B.O.A.C. which has spent about £18 million on introduction costs over the last 10 years, and is now faced with considerable costs in introducing the VC10.
I do not think that there is any need to go into great detail about the VC10. Anyone who reads the Estimates Committee's Report on the VC10 could not possibly accept the version which has been given by the Ministry of this project, that there was no undue Ministerial interference with the B.O.A.C. on the choice of this aircraft. This answers the point made by the hon. Member for Macclesfield. It was not a question of the B.O.A.C. shopping around among British aircraft manufacturers to decide whether to have the VC10 or some other aircraft. The fact is that the VC10 was the only aircraft on offer, and once the B.O.A.C. had been prevented from ordering aircraft from overseas, it was forced to buy it.
§ Mr. Hastings
The point made by my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) was that the VC10 was built to a specification laid down by the B.O.A.C. The hon. Gentleman has not dealt with that point.
§ Mr. Millan
I agree that to some extent that modifies what I said, but the fact is that the B.O.A.C. did not have a choice. There was only one manufacturer with one kind of aircraft on offer at that time. The VC10 was not something which was designed by the B.O.A.C. It was very much a Vickers design, taken up by the B.O.A.C. and manufactured to its specification.
§ Mr. Millan
The Ministry certainly intervened on the question of numbers. There is no doubt about that, and I do not know why the Minister keeps refuting it. The argument that I would accept is that there may be circumstances in which it is right for the Minister to intervene; that it is right for him to do 928 so from the point of view of the British aircraft industry. After all, the Government are spending a lot of money on the industry and they have some responsibility for ensuring that that money is not wasted. My objection is not so much to the Minister intervening, but to him pretending that he has not intervened. If he intervenes, it ought to be made clear, and if anything goes wrong with the project we ought to know whether it is the responsibility of the Corporation, the manufacturers, or the Minister, but at the moment the Minister is trying to evade all responsibility for the VC10 project.
What is the position at the moment? We are assured that in terms of passenger comfort the VC10 will be an excellent aircraft, and I have no doubt that that is so. For the sake of the British aircraft industry I hope that it is so comfortable that it will considerably increase the number of passengers carried by the Corporation, but the fact remains—and it is wrong to try to conceal this as it is accepted by everyone who is informed on these matters—that the VC10 is not as economic an aircraft as the Boeing.
This comes out in what is published in the Estimates Committee's Report, and it is something which is accepted by well-informed people in the aviation industry. Whether the VC10 in practice will turn out to be more economic than the Boeing is something we have yet to see, but there is no harm in saying that there is at least a danger that it will be less economic. Therefore, while it might be a good aircraft from the point of view of the passengers, it might not be so good from the point of view of B.O.A.C. One hopes that will not turn out to be so, but that is how the position looks at present.
I want to say a word or two about Concord, because it has been mentioned a great deal this afternoon and what the Parliamentary Secretary said was particularly unsatisfactory on this matter. The Estimates Committee made reference to the fact that the Treasury took very little active interest in this project at any stage. The Treasury was not involved in preliminary discussions about the economic assessment of the aircraft. It had no consultations and has never been in touch with the French 929 Ministry of Finance on this matter. Both the Treasury and the French Ministry made economic assessments, but the Treasury never asked the French Ministry to compare assessments to see whether they were working on the same basis.
Unlike the French Ministry, the Treasury is not represented on the working party of officials. The Parliamentary Secretary made a ridiculous excuse for this. He tried to make it appear that it would have been constitutionally improper if the Treasury were to be represented on a working party of officials. If so, why did the Treasury not tell us that in evidence before the Estimates Committee? It must have known that that was the answer, but the witnesses from the Treasury kept saying that they had an open mind. What they meant was that they had been found out and they were leaving this exuse as an escape hatch. The Treasury has completely slipped up, and it might be as well to admit that that is so.
The Estimates Committee was not in any sense criticising the Concord project from the technical point of view. We had not the technical information to be able to do that. We know that we are involved in a major project of far-reaching significance involving large sums of public money. No one would wish the project to be a failure. We want it to be a resounding success, but the fact remains that we are not able to be certain of that, certainly not the non-technical members of the Estimates Committee. The manufacturers are enthusiastic, but the airlines are not enthusiastic about the project. They are not enthusiastic because there is still quite a period of life for the subsonic jets to run and they do not want the additional expense of supersonic aircraft before the subsonic aircraft have finished their useful life.
The Royal Air Force is taking an "objective interest", which means that it is taking no active interest in the project at all. We have the peculiar position that, although the French have been able to say that Air France has been committed to buying the Concord, the British Minister is not able to say that B.O.A.C. is committed to buying it. There is the contrast. The VC10 was an aircraft started originally without any Govern 930 ment participation. The Government washed their hands of it and would not contribute any money. Yet B.O.A.C. was instructed to buy it. This is a case where nothing but Government money is involved, yet the Minister says that we must not in any case tie the hands of B.O.A.C. and tell the Corporation that when the aircraft is available it will have to buy it. We are in a Gilbertian situation on the question of orders.
I hope the Minister when winding up the debate will be much more forthcoming than the Parliamentary Secretary this afternoon. My conclusions from the experience I have gained on the Estimates Committee are that there is a need for a thorough review of Ministry policy on transport aircraft requirements certainly on the evidence we had before the Committee, and on military aircraft requirements certainly on the history of the last 10 years. In the case of transport aircraft there is need to look into the functions of the Transport Aircraft Requirements Committee. No one knows what that Committee is doing. Everyone attributes an important function and rôle to it, but it does not appear to discharge that function and rôle. There is a need for a complete review. I hope the Minister will make it very quickly.
This is an appallingly complicated industry. There is much public money involved and there is a lot of public concern about the industry at present. Nothing we have heard from the Government this afternoon will allay that concern in any way. The speech of the Parliamentary Secretary was calculated to increase it substantially.
§ 7.36 p.m.
§ Lord Balniel (Hertford)
The hon. Member for Glasgow, Craigton (Mr. Millan), as a member of the Estimates Committee, has given the House a most interesting, competent and extremely well-informed speech, which I am sure the whole House enjoyed listening to. He took us into details of the work of the Committee on which those who do not have the privilege of being members found it very difficult to follow him.
He and the hon. Member for Newton (Mr. Lee) gave a great deal of attention to and made substantial criticism of the methods which are used by the Ministry 931 of Aviation in placing contracts and controlling the costs as developments advance. It is only right—the hon. Member for Craigton made this point—to say that the procedures for controlling the cost of development of guided missiles with all the electronic equipment involved in them, and the procedures for controlling the development of civil and military aircraft, are very complex. I believe the procedures are based on the Gibb-Zuckerman Report. In that Report it was laid down that each project should be broken up into specific and distinct stages. It is laid down that the developer should produce a development plan showing the costs of development at each distinct and specific stage. Of course, each stage is checked by Ministry officials and technical costs officers, Ministry accountants and persons with high qualifications in science and technology. It is right to record that through their great skills and ability they save the taxpayer immense sums of money.
None of us knows the details, but whereas possibly a mistake may have occurred in this particular contract by Ferranti for Bloodhound, a Committee has been established under Sir John Lang. Before being too savage in his criticisms of the Ministry, the hon. Member for Newton should await the result of that inquiry because, until the facts are available in detail—of course I have read the report by the Comptroller and Auditor General—it is impossible for any hon. Member to pass judgment and to comment.
The hon. Member for Newton should also bear in mind that the development of a guided missile or an aircraft is not a static thing. The development is constantly taking account of scientific development in our country. It is constantly taking account of scientific developments among our allies, and—more difficult still for an accountant—it is constantly taking account of new techniques and advances made by potential enemies of this country. Therefore, it is almost inevitable that in the development of guided missiles and military aircraft and also of civil aircraft it is most unilkely that the estimate will be the exact cost of the finally developed project.
The hon. Member for Craigton, to whose speech I listened with great 932 interest, dealt rather more with military projects. I want to refer in my remarks more to the civil aircraft side. When we look back on the past year it is right that we should record that 1963 has been a year of considerable achievement for the aircraft industry. We have completed the rationalisation, mainly undertaken in 1958 and 1959, of the industry. We have brought together many small aero-engine and air frame companies into four or five large companies. We see that the value of British aero exports in the past year amounted to £112.5 million—compared with £.114.6 million in 1962. I agree that there has been no dramatic leap upwards in aero exports, but in view of the competition which exists in world markets in this equipment, those who work in the industry are entitled to have a real sense of pride and achievement on what they have undertaken in the past year.
If one does not judge this only in financial terms but also looks at specific aircraft developments, one sees that during the past year the first Tridents have been delivered to B.E.A., ahead of schedule, and that by April of this year they will already be flying the scheduled flights to Geneva, Nice, Zurich and Frankfurt. We have seen the first of the VC10s handed over to B.O.A.C. I hope that the fears expressed by the hon. Member for Craigton about this aircraft will not be realised but that it will provide economic and good service for B.O.A.C. for a considerable number of years to come.
We have seen the first flight of the BAC111, an aircraft with an immense potential, whose early history was marred by an accident but which was quickly redeemed by their having a second prototype flying within a very short time. No one connected with the industry—and my connection is solely that I represent many thousands of people who earn their livelihood in it—will pretend that there have not been disappointments in the past year. The general picture, however, which must be received by any impartial observer is that it is in a far healthier state than it has been for many years and that the production lines of the main aircraft companies will be running to full capacity for the next two or three years.
933 One of the most heartening features of the past year is obtained when one compares the quality of certain specific products of the aircraft industry with the quality of the products of our main rivals overseas. For instance, the Trident was flying a full year before the Boeing 727, its direct rival. The Trident is equipped with automatic night landing equipment and a whole variety of different designs are being produce so that it will be tailor-made to the needs of different airline companies.
§ Mr. Frank Tomney (Hammersmith, North)
Is the noble Lord aware, when he mentions the Trident and it being ready a year before the Boeing, of the present sales position of the Boeing compared with the Trident?
§ Lord Balniel
Of course I do. I realise that 154 Boeing 727s are on order—and I was going to devote the main part of my speech to this point. I had intended to explain why this has happened and to ask whether the Ministry could help. It is a question of trying to increase the number of production runs. The hon. Member must remember that the Boeing company is able to give short delivery dates because it is running four production lines, compared with the one which we have for the Trident.
I was making a comparison of quality and I was going to compare, for example, the BAC111 with its main rival, the DC9 in the United States. Most hon. Members will agree that the BAC111 is a full two years ahead of its nearest rival and that the VC10—at least, I believe this—is a better and more economic aircraft than the Boeing 707. Whatever the economics of it, certainly it has far greater passenger appeal than the Boeing 707 which, on the whole, is an unpopular aircraft with passengers because it must trundle along the runway for a full two miles before take-off, whereas the VC10, admittedly in an unladen state, took off on its first run within 750 yards.
As I say, the picture of the aircraft industry is a heartening one, but there are some disappointing features. The most disappointing was, perhaps, the order by Australia of the TFX instead of the TSR2. This was a damaging and hurtful blow to the aircraft industry. We saw in Canada the purchase of the DC9 in 934 stead of the BAC111. More recently, we have seen the two Japanese airlines, J.A.L. and A.N.A., after intense competition, decide ultimately in favour of purchasing the Boeing 727 instead of our offer of the Trident.
We must recognise that in attempting to market aircraft today, the American industry is simply out to kill the British industry. This is, after all, perfectly fair commercial practice. It is out to try to secure monopoly conditions for the United States for the providing of civil airlines and military equipment throughout the world. In these highly competitive conditions it is absolutely essential the, the delivery dates of our aircraft are shorter than those of our competitors, that our salesmanship is better, that the quality of our products is superior and that in no respect whatever do we fall below the standards set by our competitors.
It is for this reason that I warmly welcome the statement of the hon. Member for Newton, on behalf of the Opposition, that they now have no intention of nationalising the aircraft industry. That categorical statement will be warmly welcomed by those who maintain their standard of life by working in the aircraft industry.
§ Mr. Rankin
Does the noble Lord remember, when he welcomes that statement—as ho interprets it, although it was corrected later—that the French aircraft industry is wholly nationalised, not merely in its production but in its operation and airport side? How does he propose that the British industry should work with the French nationalised industry under those conditions, particularly with a project such as the Concord?
§ Lord Balniel
He should realise, secondly, that the greatest of the achievements of the French aircraft industry is surely the Caravelle, which is equipped with Britist aero-engines and cabin equipment provided by what was then the De Hav[...]lland Aircraft Company.
I now come to the question of the Trident negotiations in Japan. In this case, as in so many cases of competition in selling our aircraft, the crucial factor 935 is that of delivery dates. We have found considerable difficulty in shortening these. The Hawker Siddeley Company had a first-class team selling aircraft in Tokyo. Hawker Siddeley made an extremely attractive financial offer to J.A.L. and A.N.A. The company has gone out of its way to declare that it was content with the co-operation which it received from Her Majesty's Government and that credit facilities were available. The aircraft is of a quality without comparison in the world today. A first-class sales organisation was offered to Japan. Indeed, Hawker Siddeley undertook to establish a spare parts store in Tokyo. At the end of the negotiations, when Boeing had won and clinched the deal, Boeing itself said that "this was the hardest fight it had had to sell the 727." It had the hardest fight ever in the face of competition from the Trident, in a market which since the war has traditionally looked to the United States to provide its aircraft.
The core of the problem was solely and simply a question of delivery dates. It is understandable that Boeing was able to offer better delivery dates. It has four production lines in operation at the moment. It is able to produce the aircraft at the rate of five a month. Indeed, in two months' time it will produce them at the rate of seven a month. Although the Trident was flying fourteen months before the Boeing 727, today there are 20 727's flying and only seven Tridents flying.
This is in no way to the discredit of the British aircraft industry. The short delivery dates offered by the United States aircraft manufacturers are made possible almost entirely by the fact that they have an extremely large home market. One hundred and fifty-four Boeings are on order, and every single Boeing being produced today is absolutely indentical with the first one which rolled off the production lines last November. The advantage which United States aircraft companies have over our aircraft industry is basically a mass home market.
If we are to achieve shorter delivery dates for British aircraft and if we are to reduce costs, it is of the utmost importance that the absolutely maximum home market should be estab 936 lished for any aircraft right from the very outset. We will always have a limited home market. We all recognise that. We will always depend upon export orders for long, steady continuous production runs. This merely emphasises the fact that we must go out of our way, with Government assistance, to create the widest possible home market. The order book for Trident aircraft today consists of 42. Twenty-four were ordered originally in August, 1959, by B.E.A. Negotiations are now going on for a further ten Trident 1Fs for B.E.A. Overseas we have sold two Tridents to Kuwait, three to Iraqi Airways, and three recently to Pakistan Airways.
I am sure that my right hon. Friend the Minister appreciates that, if we are to shorten our delivery dates, we must be able to increase our production lines. I would like to see negotiation within the Commonwealth to see if we cannot create a wider home market.
Also, as the hon. Member for Dudley (Mr. Wigg) said, we lack a replacement for Coastal Command Shackleton aircraft. There is merely a possibility of converting the Trident airliner for military usage. This would be another ideal opportunity for widening the home market for the Trident. I should like my right hon. Friend either to reply to this point at the end of the debate today or at least to give serious consideration to helping widen the home market in this way.
§ 7.55 p.m.
§ Mr. Leslie Hale (Oldham. West)
The noble Lord the Member for Hertford (Lord Balniel) finished an informative speech on a very good note. It was rather a pity, however, that he introduced the rather childish bogy of nationalisation for the election audiences. His main economic thesis towards the end was a basically Socialist thesis, that we must create an extensive home market to establish a competitive industry. This was one of the grounds on which I took part in the discussions on United Europe at a time when United Europe could have provided such a home market and could have been effective, a cause which the Conservatives betrayed when they came to power, and a great opportunity of world reform was then abandoned.
937 I agree with what the noble Lord said about the industry, except that he thinks that it is private enterprise. It is a rather strange form of private enterprise in which the Minister can bully firms into amalgamation, whose principal and virtually prime and essential customer is a nationalised industry, whose costings are vetted, which borrows tools for national supply, which is being lent development apparatus, and so on.
The British aircraft industry has a post-war record to be proud of. It has highly skilled and highly competent personnel. It has very highly skilled workmen, many of them in my division. My division is deeply concerned at the moment about the implication of redundancy on the A. V. Roe factory of the Hawker Siddeley group at Chadderton or Middleton, on the borders, part of it no doubt due to the disappointing sales of the Trident.
This is a serious position. It is a worrying position. One of the things we have asked the Minister for from time to time is information. We have never got it. I have no desire to criticise the Minister of Aviation personally, but amongst many Ministers the attitude has developed that if they can get away with a rather silly answer it is a good idea. Today the Parliamentary Secretary was asked, "When did you first hear about the Ferranti business?", to which I will come later. Instead of replying, the hon. Gentleman said, "The Comptroller and Auditor General told us on 24th August", which is in the Report, which everybody knows, and which has been stated in the House before. The hon. Gentleman knew perfectly well that he was not answering the question. No one could think that he is so dumb as that, although it was not a very good speech. He knew full well that that was a form of falsehood. Suppression of the truth or concealment of the truth is part of the law of fraud. One may not be actionable if one sells a house with dry rot and does not say anything about it, but one certainly is if one conceals it knowing it was there when the purchaser came to look at it.
I do not want to be discourteous. I dislike high controversy. The Parliamentary Secretary will find on reading his speech tomorrow that, although 938 there are half a dozen issues in the Report of the Estimates Committee, he did not refer to some of them at all. There was the question of transport aircraft for the R.A.F. The hon. Gentleman will find that he has not added a single spark of light on the question of Ferranti's as raised in the Comptroller and Auditor General's Report. He will find, I am sorry to say, that most of his sentences were in the form of verbal padding to inflate a speech which appeared to be deliberately uninformative. To say that it was deliberately uninformative is more flattering than the alternative explanation.
Since then the debate has been a very remarkable one, but we are discussing in the main the Report of the Select Committee on Estimates, with its recommendations. The Parliamentary Secretary says, "Well, they are all being taken into account." How often have we heard that said? I will be quite frank and say that I raised some of these issues first in 1947 on the question of the Tudor aircraft. How many years of delay we have had, how many committees interfering, and how many modifications brought into force. In answer to Parliamentary Questions we have been told of about 350 modifications, with all the delay and the alterations. According to my information, which came from the workers, planes were being held up to alter the colour of the ladies,' lavatory because it did not suit the adviser on pastel shades, and so on.
The whole tenor of the Report of the Select Committee, which is moderately phrased, as one would expect from an all-party Committee of men selected by the House for their repute and knowledge of finance and their diligence, is a massive indictment to which very little attempt has been made to reply. The Parliamentary Secretary, among his observations, said that the Labour Party never said anything about the Concord. I know that my hon. Friend the Member for Dudley (Mr. Wigg) has spoken about it more than once and has had Questions on the Order Paper, but one of our troubles was that we could not get any information about it.
It is worth recalling what the Committee said about it. It said, and the evidence was clear, that the Treasury 939 took no interest in the matter, and on this the Parliamentary Secretary was rather less clear than at other stages. He said, or one of my hon. Friends understood him to say, that this would be unconstitutional. I did not understand him to say that. I understood him to say that this was not the moment, not the time, for the Treasury to intervene. This was not the appropriate point. The whole of the evidence given before the Select Committee, and the view which the Committee accepted, was that although the Treasury frankly admitted that it did not assume responsibility and the Treasury said that it never saw the estimates or never approved them, the Treasury did accept a situation in which we have now reached an impasse in which it has to foot the bill in the end. We could not go back on it.
The Treasury sat back and allowed all the essential steps to be taken and the country was committed and had to face a figure, which was described in evidence by one with a talent for coining words as a "guesstimate". No one who was before the Committee said that he expected the figure to be less. There was a great volume of opinion that it might be very much more.
The Concord is a great venture and one hopes that it succeeds. We want to create confidence in the venture. The Parliamentary Secretary hopes that the Select Committee's Report will not cause loss of confidence in France or cause a diminution in the excellent relationship with France, which resulted very recently in Liz Taylor having to deputise for Princess Margaret at a public function in Paris. The hon. Gentleman hoped that the Select Committee in calling attention to this appalling failure of accountancy had done no harm. I do not intend to spend any more time on that. I promised to be brief and I will carry out my promise.
I concede at once that the problems are not easy to solve. There is the problem of control of planning, of new scientific developments, of new engines coming into being, of new needs developing, of long-term production, and so on. There is the problem of leaving things to private enterprise and exercising a major system of Government financial control and direction. All these pro 940 blems are not easy to solve, but it is difficult to find what anyone has ever done to try to solve them.
An astonishing experience in reading the evidence of expert witnesses before the Select Committee was to note the hesitancy. It was rather like that of the evangelist, whose name I forget, who was asked what he would do about the hydrogen bomb. He said that he had not thought about it yet. It was an interesting suggestion and he would like to consider its ethical implications. This was rather the attitude of these witnesses. It is not good enough.
The hon. Member for Hereford said something which I am glad he mentioned. He spoke of the all-out intention of the American aircraft industry, presumably with full Government support—in other words of American policy, which the Parliamentary Secretary ascertains by reading Fortune—to wipe out the British aircraft industry. It is important that it should be said and I am not criticising the hon. Member for saying it. I do not like to jump at this opportunity, savoured by hon. Members on both sides of the House, of criticising our relatives across the sea unnecessarily, but I believe it to be true.
There is the problem of the Tridents. One thinks of the limited number of orders which we succeeded in obtaining abroad. This was not primarily because of price and performance. The reason was primarily political, and one can understand it. One thinks of the wealth of affection which Australia had for this country until the Common Market negotiations, and probably still has, but Australia has to remember that in the last war we were unable to help her because we were more than fully occupied ourselves and in the end the integrity of Australia was defended from the United States.
These are political implications and it comes a bit rough when the President of the United States is blaming us for supplying buses to Cuba. I do not think that the Americans can have it both ways. I believe that the hon. Member was right in saying that the time may have come when we have to consider expanding a home market for aircraft products and parts and try—and this again is Labour Party policy—in association with the Commonwealth to provide an expanding 941 home trade. Anyone can say these things in a speech in the House, but it is terribly difficult to understand the problems of the industry.
The problem of redundancy is real. Heaven knows that there were cases of uncertainty in the Select Committee's Report. There was the case of the Beagles, for instance. According to the evidence, which was not disputed, that venture was negotiated on a virtual promise of a purchase of 50, which went up at one stage to 79. In the end the order was for 20 to 22, after spending £250,000 in the preparatory development work. This work is ruined unless one is lucky, and this is one of the fundamental causes of the basic uncertainty.
This is why, if only the Minister would realise it, the more information he gives and the more frank and forthright he is the better. I will not criticise him for taking into account the question of redundancy in purchasing. We were not criticising him for a certain amount of use of aircraft orders to support a vital industry, but what has happened? This is another matter on which the Parliamentary Secretary made no observation. According to the Select Committee's Report—which justifies what my hon. Friend the Member for Dudley has been saying in the House for the last three or four years, to my certain knowledge—there is complete inadequacy of transport aircraft available for the R.A.F. at this moment when it has greater need for the aircraft than ever in its peace-time history, if this be peace. When our troops are spread over Africa and problems are developing in Cyprus we are told by the Committee that the situation is grave indeed and there are no adequate plans whatsoever for putting it right.
I have no authority for my next point. I say this reluctantly because it is a serious thing to say, but I believe it to be true. One of the things which create uncertainty in the aircraft industry is this habit of having a look at the national estimates for the year, of withholding orders because it may make the balance of trade look easier, of saying, "Let us put it off till 5th April and try to put it into the estimates for next year ", or, if the figures are not good, and if the national expenditure seems high, of withholding them and using the displacement of orders as part of 942 the complicated Piggery pokery of creating political confidence.
I did not wish to say anything about Ferranti, which is a firm of good repute and a good employer in my constituency, with which in my limited personal relations I have always got on very well. I think the Government have been remarkably unfair to the firm of Ferranti. Here again there is a complete failure to give any indication to the House, which shows a denial of responsibility. Mistakes can be made, but in an expenditure of £5,000 million even a figure of £2.7 million begins to assume less relative importance.
We have wasted a good deal of money in this form of expenditure, but in connection with this highly reputable firm my hon. Friend the Member for Dudley said, "When did you first know about it?" The hon. Gentleman said, "We have got to wait for the Report of the Committee." Why? Does the Minister, or the Parliamentary Secretary, say that he does not know the facts now? Of course, he may not know them to the tune of 11s. 9d., but is anyone seriously suggesting that when one has looked at the figures and at the report of the Comptroller and Auditor General, everybody on the Ministerial side and on the firm's side does not know whether the Comptroller and Auditor General was wrong or whether Ferranti has made a mistake?
§ Mr. Frank Allaun (Salford, East)
My hon. Friend is talking about the responsibility of the Government and I agree with him, but would he agree that this is not only the responsibility of the present Minister of Aviation? If we take the period 1959–60, the present Secretary of State for Commonwealth Relations was then at the Ministry of Aviation and was followed by the present Minister of Defence. Would not my hon. Friend think, first of all, that there is a much longer period involved than the period which he describing and, secondly, that it involves not one Minister but three important Ministers in the present Government?
§ Mr. Hale
Yes—although I am afraid that my hon. Friend has taken two out of my last five minutes. However, I think that the point is fair to make and it is undoubtedly true.
943 As the Report of the Comptroller and Auditor General ending March, 1963, was presumably not seized of the matter till then, all we know is that on 24th August he sent a communication, not yet revealed, and presumably the Comptroller and Auditor General would not send the communication until at least he had partially satisfied himself that there was a prima facie case of some sort. He is not the sort of man to write letters like this, calling in question accounts of this magnitude without having made a preliminary investigation. If he has made it, what else is there to do?
I confess that on reading the Comptroller and Auditor General's words, I am not sure precisely what he is saying because the word "estimates" is used when he probably means the submission of draft accounts. Therefore, I am not sure. But he does refer to an error "which appears to be of the nature of 70 per cent." Once one's attention is called to the matter, one does not have to call in expert accountants to find out whether there is a mistake of 70 per cent. One could do that with a competent ferret.
The total amount of contracts involved was £70 million, and the error, if the Comptroller and Auditor General is anything like correct, is of the order of 4 per cent. Thus it is 4 per cent. only on the labour costs. It is at least 40 per cent. of the overheads and indirect labour figures which were submitted, and it may be more. There may be a genuine mistake. I do not think anyone under the sun believes that the directors of Ferranti, who have borne a high reputation for many years, have deliberately conspired together to do a silly thing like this. Not only their reputation but their common sense would absolve them.
The real indictment is the continuance of a system which permits such a mistake to be made, if it was made. Have Ferranti's said, "There is no error", or have they not? I cannot believe that, the matter having been raised in October, they would not by now have said, "We are terribly sorry; there is an awful blunder". They may say, "We are still going into it", or "We deny there has been a blunder and we stand by our figures". Either way, this firm 944 with its high reputation here and abroad is entitled to have the facts made known. If they want to say that a blunder has been made they should say it now. If they want to stand by their figures and if the Minister wishes to say, "I am setting up this wholly inadequate and improper committee", he should at least have said, "I am referring the matter to a committee because the firm of Ferranti denies that there is any truth in the Comptroller and Auditor General's Report and I feel there should be an impartial investigation".
The right hon. Gentleman has done neither. Having done neither, I think he has been unfair to the firm. The suggestion that my hon. Friend made in forceful terms that there seems to be a desire to mislead the House, or to delay giving the House information, or to suppress information, is established unless and until the Minister replies fully on this matter tonight.
§ 8.17 p.m.
§ Mr. Stanley R. McMaster (Belfast, East)
I am sure the hon. Member for Oldham, West (Mr. Hale) will forgive me if I do not follow him. I always have great pleasure in listening to his speeches, particularly after Question Time, when he sees fit to introduce one of his Ten-Minute Rule Bills.
I should like to refer to a topic which has been mentioned a great deal during the debate today. The Opposition, including the hon. Member for Newton (Mr. Lee), started this, and I regret not having been in my seat at the time. The Opposition have been attacking the British aircraft industry. They particularly attacked the Concord project. They said that the aircraft will probably be too late and also too small. I feel that they are not doing any good either to their own cause or to Britain as a whole in putting down this Motion and having devoted themselves to attacking our own industry.
§ Mr. Diamond
As my hon. Friend the Member for Newton (Mr. Lee) is not here, I am sure that one of us on these benches should remind the hon. Gentleman that my hon. Friend said in specific terms, "I hope the Concord is a great success". That represents the view of these benches.
§ Mr. McMaster
I do not wish to waste time. The record will be available tomorrow and we shall all be able to read in HANSARD what was said. I believe that my own recollection of what the hon. Gentleman said is accurate.
I should like to refer to the record of our aircraft industry. We have produced and are producing many fine aircraft. The BAC111, which has already been referred to, is at least two years ahead of anything else. The VC10 has a much better passenger appeal than any other jet aircraft. It has a 20 knot lower approach speed to the runway, which is a matter of great importance and comfort to the passengers. The TSR2 is at least two years ahead of the American TFX. As regards the Concord, the Americans have not yet decided which of three aircraft they will build, and, as regards vertical take-off, we have the P1127 a research aircraft ordered jointly by Great Britain, Germany and the United States which first flew in 1960 and for which there is no other comparable project in view in the United States. Finally, there is the Trident, which first flew in 1962, and, as we know, the 727 flew only last year.
Although the Americans have a tremendous advantage in their large home market, it is plain from the projects to which I have just referred that Britain is very often well ahead of the rest of the world in the aircraft which she develops whether in vertical take-off, jet transport or the new supersonic projects. It ill-behoves the House to devote a full day's debate to attacking our aircraft industry in a way which can only lose us orders abroad.
In paragraph 40 of its Report, the Estimates Committee refers to transport aircraft and says that the policy of the Government in ordering transport aircraft is open to criticism. There are ten types in service at present and only twocould be described as modern aircraft".The Committee points out also that a Ministry of Aviation witness said that his Ministryplaced considerable pressure upon the Air Ministry to formulate R.A.F. transport requirements as early as possible, and 'in fact, the pressure is such that they find it distasteful'. Treasury witnesses, although agreeing in principle, did not appear to be particularly conscious of the advantages to be gained from 946 improved long-range forecasting of R.A.F. requirements.I have a constituency interest to press in connection with what is said in that paragraph. It is obvious that this country will in future need a far better fleet of transport aircraft. It is reported in the Press today that the United States is already planning for the 1970s a large fleet of very big transport aircraft capable of carrying 50-ton loads over a range of 10,000 miles or more.
I should like my right hon. Friends the Minister of Aviation, the Secretary of State for Air and the Minister of Defence to take the lesson to heart. We see today in Borneo, in Malaya, in Cyprus and in many parts of Africa the need to move our troops quickly from one part of the world to another. For instance, we need to be able to move troops quickly from Europe to Kenya. The only way to do it is by using a lot of antiquated aircraft which have to stop at many points en route. The only new aircraft coming into Transport Command are 11 VC10s and ten Belfasts. In recent Answers to Questions, the Minister of Aviation and the Minister of Defence have said that these are all the aircraft we shall need for the remainder of this decade, I suggest to my right hon. Friend that he should look at the problem again and take particularly to heart the opinion expressed in paragraph 40 of the Estimates Committee's Report.
Britain alone, perhaps, cannot pay for all the transport aircraft which she will require. But the interests involved are not confined to the United Kingdom; they are world interests. I do not see why our colleagues in N.A.T.O., in South-East Asia and in the Commonwealth, particularly in Australia, should not get together with Britain in placing orders for such transport aircraft.
I turn now to paragraph 120 of the Report which deals with light aircraft. The Committee says:Your Committee are not satisfied that sufficient attention has been given to the considerable export possibilities of British light aircraft, particularly of the smaller and cheaper types.The Committee's view is summed up in its recommendation No. (xxiii), thatConsideration should be given to allocating a larger proportion of funds for assistance to launching costs to light transport aircraft projects".947 I have in mind a particular project which has been put forward by Short Bros. and Harland of Belfast. A year ago, the company put forward proposals for the Skyvan light freighter aircraft. The aircraft first flew about nine months ago, powered by ordinary piston engines, and it has since been equipped with turbo-prop engines. It is a wonderful project. Many firms from as far afield as Alaska and Australia have shown definite interest in it. But it needs the support of my right hon. Friend. Already competitors are looking at it seriously. I understand that Messerschmidt in Germany has already launched such a project, and in the Argentine there are plans to build a similar type of light transport aircraft.
I ask my right hon. Friend to pay particular attention to the new proposals which were put to him by Short Bros. and Harland at the end of last year, with new costings of the project. Having regard to the recommendations of the Estimates Committee, will he expedite a decision before we lose this valuable potential export earner and a chance to diversify the production of Short Bros. and Harland in the way already suggested by my hon. Friend the Member for Macclesfield (Sir A. V. Harvey)?
The same company has put forward a project for building in Belfast a light helicopter to meet Army requirements. This helicopter is known as the Hiller 12E. We have been told at Question Time that several different proposals to meet its requirements are being considered by the Army, but, obviously, the most suitable aircraft is either the Hiller or the Bell. The Hiller would, by agreement between that company and Short Bros. and Harland, be constructed or assembled in Belfast, whereas the principal agent for the assembly of the Bell is an Italian firm, but it has. I am told, an agreement with Westland. If there is an Army requirement for the Bell, Westland would assemble these aircraft to meet British defence needs.
I ask my right hon. Friend to consider these two propositions carefully and to remember that if the Hiller is thought to be the best—and I believe that the aircraft are very comparable; if anything, the Hiller is more widely used by the United States Armed Forces and by the 948 Navy than the Bell—and if it is ordered, there is the possibility of selling it in Europe. If these aircraft are sold in Europe—and there is a very big need for them in Europe to meet all kinds of military and civil needs—they would be made in the United Kingdom and would be an important export earner.
On the other project which I mentioned a few moments ago, I have one final suggestion to make to the Parliamentary Secretary which I hope he will convey to my right hon. Friend the Minister. It relates to the suggestions put forward by Lord Brabazon. He pointed out quite recently, and has done so on a number of occasions, that perhaps too much attention is devoted in this country to very high speed super-sonic transports. The public are not given a choice. Many people, both here and elsewhere, might prefer a slower aircraft which got them to their destination almost as quickly, within an hour or two, but which was very much safer and cheaper.
For instance, it would be possible to adapt the large freighter aircraft, the Belfast, which was ordered originally to meet both civil and military requirements, perhaps with the adoption of a laminar flow, to meet this need. It would be possible to seat a large number of people—200 or more—in such an aircraft, and to fly them on either short or long journeys across the Atlantic and reduce the cost of their flight by as much as 25 or 30 per cent. This estimate was quoted quite recently in the Guardian.
A certain Dr. Lundberg, Director of Aeronautical Research in the Institute of Sweden, has said that a series of successful laminar controlled airliners—that is, airliners which have adopted a form of boundary layer control, which is well within the capabilities of firms in this country—could be built for only a fraction of the money needed to develop supersonic transports.
§ Mr. Hastings
Would my hon. Friend agree that what is needed first is adequate money for the laminar flow project itself?
§ Mr, McMaster
Certainly. I agree that that is a sine qua non, and I agree that the work on both boundary layer control and laminar flow which Handley Page is doing is most valuable. What 949 I am suggesting is that the research and development teams in Handley Page and Short Bros. and Harland should get together on this project, which would do great good for the British aviation industry and make a valuable export earner. They could not only achieve that very desirable end but also create employment in these two firms.
I have particularly in mind the employment conditions in Short Bros. and Harland in Belfast about which my hon. Friend the Parliamentary Secretary knows. There is a great fear about what will happen when the order of ten aircraft for Transport Command is completed. It is not sufficient that that firm should go on making nose and tail units for VC10s at slightly higher cost than the firm of Vickers can make them and sub-contracting parts for the WG681. It requires projects of its own.
I have suggested three projects—the Skyvan, the Hiller helicopter and further adaptations of the Belfast—which I should like my right hon. Friend to consider. If he is not in a position to reply on them tonight, I should like him to consider them carefully and make an announcement on them as soon as possible.
§ 8.34 p.m.
§ Mr. John Diamond (Gloucester)
With what the hon. Member for Belfast, East (Mr. McMaster) has been saying about the need to help Northern Ireland, and particularly to help Short Bros. and Harland, I am sure that everybody on this side of the House would agree. Nobody wants to see a continuation of the present 8 per cent. unemployment from which the population in that area has to suffer under the present Government.
With what the hon. Member had to say about the Concord, however, I disagree. It is inevitable that this House should constructively discuss present problems affecting the future of the aircraft industry, otherwise the future of that industry will be prejudiced. Indeed, as I pointed out in an intervention, my hon. Friend the Member for Newton (Mr. Lee) made it clear that he hoped—and it is a hope which we all share—that the Concord will be a great success. Nevertheless, this does not enable the Government to ride out of their responsibilities.
950 It has been suggested that if one has a partnership, one should go into it and never consider breaking it, and somebody—I believe, the Parliamentary Secretary—talked about providing for divorce in marriage. My answer to the hon. Gentleman is that this is not marriage but a business partnership, and a sensible one. I have attended the inauguration of many business partnerships and I have never yet come across a contract for a business partnership, which, it was hoped, would continue for many years and be entirely successful and prosperous on both sides, which did not provide in detail what would be called, if one was referring to, say, the Concord a "break" clause. There is no such thing as a partnership agreement which does not provide for this very thing. The Government have made no attempt to explain this or to explain their lack of interest in it.
Time is short, however, and I wish to devote myself exclusively to the one topic of the Ferranti affair, as it is coming to be known, and to try to do something to remove the complacency with which the Government, as expressed by the Parliamentary Secretary, are dealing with the problem. I do not know whether the Government realise quite the extent to which this could become a near-scandal. It will grow into a scandal unless the Government do something to dispel it and unless there is allowed to be a breath of fresh air on a series of facts which, unexplained, are wholly damning.
What has happened is that we have, in the view of the Minister himself, a "very serious" situation. I quote from c. 1150 of the OFFICIAL REPORT of 5th February, when the Minister was answering a question addressed to him by my hon. Friend the Member for Salford, East (Mr. Frank Allaun) and said:we then got in touch with the firm to see what it had to say, and it was not until just before Christmas that we were satisfied that the situation was a very serious one."—[OFFICIAL REPORT, 5th February, 1964; Vol. 688, c. 1150.]So the Minister himself is satisfied that it is a serious situation.
The Comptroller and Auditor General makes no bones about it in his report to us. He is our servant, and in his report to us he makes it clear that on figures supplied by the Ministry and 951 the Ministry's accountants, for a period prior to March 1961, there was evidently 70 per cent. or £2.7 million excess price paid. To whom? It was to a firm called Ferranti.
The next thing one wants to do, therefore, is to know a little about the firm which is called Ferranti. I have attempted to look it up as shortly as I can and I find that this was a firm which in March 1962, the latest date for which I have a published balance sheet, had an equity capital of about £2 million, which on balance-sheet figures alone was worth at least £10 million. One cannot find the quotation of those shares because they are all held privately.
Prior to the war, according to the same published reports, the firm was worth about £1 million. Therefore, its value has increased, not out of new money but out of profit from about million before the war to £10 million in March 1962, and the whole of that value is attributable to the equity capital, the whole of which is privately held. When we read that it is privately held, we know from problems which related to a certain junior Minister, who was in difficulty about continuing with his Ministerial responsibilities, what "privately held" means. It means that it was held very largely within the family.
One therefore has a situation in which this firm, which does a good deal of work, both commercial and for the Government, has increased out of profits the value of the family holding—and we know who certain members of the family are—from £1 million to £10 million, and that some of those profits have come out of Ministry of Aviation contracts. I think that for a short period after this event in 1961 a member of the family was a junior Minister in that very Ministry.
This company, with an equity capital of £2 million on paper, has made £2.7 million profit. On a £2 million issued nominal equity capital prior to 1961, it has made excessive profits—not profits but excessive profits—because the Comptroller and Auditor-General makes it clear that these are excessive. It is not merely the repayment of the total cost plus a reasonable profit allowed. This is something in addition, an exces 952 sive profit of £2.7 million. I do not know how much more the Government want before they think that it is worth looking at something. I do not know how much more the Parliamentary Secretary wants before he thinks it is worth being a little less than fully complacent. I do not know how much more he wants before he thinks it is right that we should have a debate about it. Why did not the Government bring it forward?
I shall be very unkind to the Parliamentary Secretary, so let me say that everyone who knows him personally and his war record knows him as one of the most courageous men in this country. But he is serving as a Parliamentary Secretary and he is responsible as an occupant of the Front Bench. I recognise that he is being held responsible for a period before his time in office, but he carries the responsibility constitutionally and I know that he welcomes it. Therefore, I will only address myself to him.
The questions that I want to ask him are several. Why did not he and the Government arrange immediately that there should be a debate so that this superficially scandalous situation could be explained? Is it scandalous? As my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) asked in a most persuasive, well argued, logical and moderate speech, is the reason for the long delay that there are things other than purely accounting matters to be looked into? Is it a case that there are questions of fraud to be looked into? Is it fair to the firm to allow a situation to arise where through holding back by the Government and by the Parliamentary Secretary these conclusions may be drawn?
If it is not a question of fraud, is it a question of negligence of a degree which I find incredible? I would feel that the whole thing was incredible were it not for the fact that the Comptroller and Auditor General says that it exists, and the Minister says that it is a serious situation. I cannot conceive that people would be so stupid as to do a thing like this fraudulently. I cannot conceive that the Ministry would be so stupid as to do a thing like this by negligence. I do not know what the answer is, but it is one or the other. It would be negligence of a most extreme type because, 953 let me make it perfectly clear, what we are concerned with here is not—I repeat "not"—what the Parliamentary Secretary told us was the case.
There are two parts to this, and I speak with some little past experience of having had to deal with it. I will not say on the factory floor but on the factory managers' and the accountants' floor. There is a difficult part and a straight forward part. The difficult part is getting agreement between the company's accountants and the Ministry's accountants as to what are the relevant figures, agreement as to what is a reasonable figure for the overheads, agreement as to the percentage to apply to labour, and agreement as to the estimated technical costs. These are difficult things, and there is room for a difference of opinion, and there is always a difference of opinion and a long argument, as can well be imagined.
We are not, however, dealing with that difficult situation; it has been established. What we are dealing with is a situation where, that having been established, the difficult part having been overcome, we come to the easy part of applying the answers as discovered by the accountants to the contract figures being placed. Here we are told that those answers were ignored. The reason why the £2.7 million excess was paid was not because there was difficulty in ascertaining the facts—which are difficult to ascertain: it is difficult to attribute what applies to one factory in a group of factories, it is difficult to say what applies to a particular contract as opposed to a series of contracts within one factory. But all this having been ascertained, the Ministry then apparently ignored all that and agreed prices. Had it not ignored it it would have seen at the time the contracts were being placed that it was making an excessive gift of £2.7 million to a firm which had a net capital of £2 million only, to a firm where the equity capital was held privately, and one of the private persons was the Parliamentary Secretary subsequently at the Ministry of Aviation.
I am trying to stimulate the Government into realising this is a situation they cannot ride off, and they are doing a great damage to themselves and to the firm by attempting to ride it off. If the Parliamentary Secretary does not 954 think "ride off" a quite fair term, let me tell him what has happened.
This information was publicly and formally raised with his Ministry as long ago as August. I repeat, it was formally raised; because one's assumption, and it is a pretty reasonable assumption, is that it was informally raised, that there were people informally aware of it, a good deal earlier. I find it inconceivable that no one was aware of this or of the possibility of this a good deal earlier than August when it was formally raised by the most responsible officer of this House, the Comptroller and Auditor General himself. What was raised was the possibility of a serious situation and a possible scandal.
In those circumstances, Mr. Deputy-Speaker, you do not sit around scratching your head and saying, "What shall we do about it?" You really get a move on, and all the practical facts are established. I deny, without having seen the books or seeing the accounts or the contracts, that it could possibly be necessary in such an urgent situation to take the six months which have passed since then, without arriving at any conclusion whatsoever. I deny that it is possible. From my experience as a practising accountant I deny it.
I am, therefore, just forced to the conclusion, unless there is a very satisfactory explanation of it, that this is what the Ministry has been doing: it carried on this to-ing and fro-ing, not getting to the heart of the matter, until it came to nearly Christmas, and then waited for the Minister to come back from some trip he was on, and he then made an announcement. Not in this House. The first thing any one of us knew about it was by reading a newspaper telling us that there was something serious afoot and we could hardly inquire into it because it had already been put to a committee of inquiry, it being hoped that thus further inquiries would be fobbed off. If it goes on like that, that the only conclusion one can come to.
I am coming to the one question which I think is going to settle the whole issue of good faith. If the Minister is going to say it was inevitable that he should take all this time, it was inevitable he should look into these facts—perhaps there were further facts of 955 which the House is not aware, although I cannot conceive of them—then the Minister has to justify the length of time the report is going to take. On the present basis the conclusion to be drawn quite clearly is that the Committee was appointed in order to take time to report. It is a well-known procedure. It looks to me as though that is the conclusion which people are going to draw, unless something else is proved to the contrary. This is a Committee on procedure, but we do not need any procedure.
What we want to know is about this £2.7 million excess. How did it come about? Has the firm offered to refund it? It is a simple question. It is established that there was a £2.7 million excess which was paid in one year, prior to 1961, but none of us knows how much more has been placed since 1961. We know only that it is a continuing process. There is 1962 and 1963, and most of 1964—we are mainly in the end of 1963–64—a further three years. The figure was £2.7 million only up to 1961. Has there been an offer to repay? As was said earlier by my right hon. Friend, the first thing that happened in relation to a firm which, during the war, realised that an excess had been paid, was that there was an offer to repay. It was suggested that this firm has done enormous damage by allowing a position to continue in which excess profit was being earned and not doing anything about it. This view received considerable approval from hon. Members opposite, the idea being that one firm was being too greedy and spoiling it for the rest.
We wish to know whether the firm has offered to make a refund. If not, one would like to know why it is that time was taken for this inquiry. Is it to put us off? Is it dilatory procedure—those words, Mr. Speaker, are not unknown in this House. Is it dilatory procedure or not; and, if not, will the Minister establish that that is so by telling us when we may have an answer from the Committee and that the answer will be received before the next General Election?
§ Mr. Lubbock
Would not the hon. Gentleman agree that as the terms of reference of this Committee are divided 956 into two parts, the first being concerned with the situation in which an overpayment to the company occurred and the second with changes of procedure which might be required to prevent the same thing happening again, the question of time could be met by asking the Committee to report in two parts?
§ Mr. Diamond
I am grateful to the hon. Member, who has anticipated almost the exact words which I was proposing to use. I see that I have a reference in my notes to the possibility of an interim report. I agree entirely with the hon. Gentleman. There is no reason why an interim report should not be made in the shortest possible time.
Even if the Minister says that he cannot control the time at which the Committee will report, the Government can control the date of the General Election and see to it that we get at least an interim report before the General Election. If that is done, we shall know that the appointment of the Committee was made in good faith. I would add the corollary that if it is not done we shall know that the appointment of the Committee was in bad faith—which many of us suspect. It is up to the Minister to get himself out of that jam.
§ 8.53 p.m.
§ Mr. Colin Turner (Woolwich, West)
I am certain that the hon. Member for Gloucester (Mr. Diamond) will forgive me if at this late hour I do not follow him in his comments about the Ferranti affair.
The hon. Member for Glasgow, Craigton (Mr. Millan) referred to the VC10. One thing which has not come out in the debate on this subject is, as I understand it, that the original B.O.A.C. requirement which was put out to tender—it may be that there was only one firm which tendered—was for an aircraft for the African and Eastern routes. One of the advantages of the ordinary VC10 is that it can use airfields which the 707 and equivalent American aircraft cannot use. We have heard much about the short take-off of this aircraft and also the shortened landing distance.
957 A lot of the blame must be taken by B.O.A.C. for having ordered an aircraft for the purposes which I have outlined and then deciding to have an aircraft for the Atlantic route. The manufacturers then produced specifications for a super-VC10, but the noise from this aircraft was found to be intolerable at London Airport and similar airports. So now we have come back to a modified super-VC10. Nevertheless, I am absolutely certain that this aircraft will eventually prove to be a winner. I support the plea made by my noble Friend the Member for Hertford (Lord Balniel) regarding the possibility of using an existing aircraft—.he referred to the Trident—to replace the Shackleton. Although I did not mention the Trident, I suggested the possibility of doing this in the debate on the Estimates last year. I hope the Minister and his Department will give very serious consideration to this. If, as my noble Friend said, we hope to compete with the Americans in civil aviation we must have a larger home market. Any additional means of doing this will be welcome.
We have heard criticism from hon. Members opposite and much of it may be given with great sincerity. But destructive criticism, even if sincere, does not hell) the industry to sell its products overseas. When hon. Members opposite are apparently seeking for the truth, sometimes they do considerable harm to the prospects of British aircraft.
It is interesting to realise that the Americans have no vertical take-off aircraft on the drawing board; indeed, they have no such projects in mind at all. We dominate this development and all the projected V.T.O.L. aircraft in Europe are based on British engines.
We have heard today of the tremendous export success of the industry. The total is about £112 million to £114 million in the last two years. I believe that the export orders on the books now amount to about £160 million. That is an astounding achievement.
As my right hon. Friend will remember, I have been a persistent critic of the ordering of transport aircraft. I support the comments made by the Select Committee on this, but I would not support those we have heard today about the performance of the R.A.F. Transport Command. Anyone who has seen its 958 operations in recent months throughout the world will want to pay great tribute to Transport Command for the way in which it has succeeded in getting men and materials to the right places at the right times.
We have heard a lot about aircraft today, but, of course, we have also achieved great success in other aviation developments. Over 50 per cent. of the civil turbo-jet aircraft in the world are powered by British engines. This is a fine achievement also.
My hon. Friend the Member for Belfast, East (Mr. McMaster) referred to the part that Short Bros and Harland has played in the future of the aircraft industry. It does no harm to remind the House And my right hon. Friend—although, no doubt, with all the pressures upon him, he has not forgotten—that this firm has had great success with Seacat, a missile exported to numerous countries. Despite the integration of the aircraft industry, it would be a great shame if we could not find some part in it for Shorts and the other independents.
There has been criticism of at least one electronics firm. Let us remember, however, that the TSR2, which the hon. Member for Dudley (Mr. Wigg) has had so much to say about—I do not know whether he has been able to see it yet—is a first-class aircraft and contains a wonderful set of black boxes. These alone probably offer the best form of guidance available in the world. It is often suggested that we should get together with other countries in order to cut costs of development, as with the Concord. The TSR2 is an example of where this could be done. It is a far better aircraft than the American equivalent and it is a pity that our American colleagues have not the courage of their convictions on this occasion to order a British aircraft.
In spite of the criticisms of the Government and of the British aircraft industry, it is worth remembering that military development never stands still and that the Government and the industry have a proud record.
§ 9.0 p.m.
§ Mr. John Cronin (Loughborough)
From the point of view of the Opposition, the debate so far has been very 959 unsatisfactory, simply because we have had no clear statement from the Government that we could debate. The Minister has adopted the tactic, which he has adopted before, of reserving himself to the last so that no one could comment on his remarks. He put up the Parliamentary Secretary, who gave absolutely the minimum possible amount of information on what is a very serious subject.
I shall address myself chiefly to two principal points. One is that the Ministry of Aviation and its predecessor the Ministry of Supply have consistently made contracts involving unnecessary and excessive expenditure for inadequate return. Secondly, Ministry of Aviation contracts have usually been financially excessively advantageous to the aircraft manufacturers and the manufacturers of aircraft systems at the expense of public funds.
To deal with this subject adequately, we must first consider the background. The history of events shows that the Ministry of Supply and the Ministry of Aviation have constantly ordered in excess of normally reasonable requirements. Let us take the instance of the V-bombers. In 1951, as soon as right hon. Gentlemen opposite took over, they went ahead with the production of the Valiant. But, in case the Valiant was not successful, they also put the Vulcan into production. In case the Vulcan was unsuccessful, they put the Victor into production. As a further assurance, they even went so far as to have Short Brothers and Harland tooled up and jigged to produce a fourth V-bomber. This was a most extraordinary extravagance, for each time that a different firm makes a different model, jigs and tools have to be produced and expense is multiplied. Even in the case of the V-bomber force, there was this extraordinary extravagance.
§ Sir A. V. Harvey
If the hon. Gentleman studies the record, he will find that the original contracts for the prototypes for the Vulcan and the Victor were placed when the Labour Party was still in power.
§ Mr. Cronin
That does not affect the point. The design studies were ordered by the Labour Government, but the development and production, which is 960 the expensive part, was ordered by the present Government.
As the years passed, by 1953 the Korean war had ended and the Government felt that they should have a large supply of fighters and strike aircraft for both the Royal Air Force and the Royal Navy. They ordered a fighter from de Havillands, a fighter from Hawkers, an intercepter from Avro, an all-weather Javelin fighter, a Fairey supersonic and three different types of Swift fighters. To make sure that the Navy was not left out, they ordered for it the Saunders-Roe 177 and two supersonic fighters. One would think that this was a prodigal expenditure of public funds, but in addition it should be remembered that the one thing common to all these aircraft was that every one was cancelled. The money was spent on research and development, on jigging up and production, but every one was cancelled.
I shall not enumerate all the missiles which were ordered and then cancelled. I do not want to weary the House, but we are all familiar with Blue Streak, which cost £84 million, with Blue Water, which cost £32 million, and with Skybolt, which cost £27 million. Enormous sums of money were spent on those missiles, which were then cancelled.
According to a Written Reply, including the money spent on transport aircraft, by 17th July last year the Government had spent £240 million on aircraft and missiles which had all been cancelled. In other words, no benefit had been derived by anybody. They had not gone into service, and they had not helped to strengthen our forces.
§ Sir William Robson Brown (Esher)
There has not been a single project which has not contributed good and scientific knowledge to the development of aircraft in this country.
§ Mr. Cronin
I accept that point, with this modification: has that scientific knowledge been worth £240 million? It could not possibly have been.
§ Mr. Cronin
I cannot give way.
The Parliamentary Secretary said that all those projects had been started in good faith, and cancelled in good faith. We accept that, but it is not only good 961 faith that we want from the Government. We want good sense and reasonable intelligence.
We have discussed the Second Report of the Select Committee of Estimates on transport aircraft to a considerable extent today. I think that one must bear in mind that there are certain structural evils in the aircraft industry, and that these have been brought about by the Government's policy. The Colonial Secretary had many painful effects on the aircraft industry. Perhaps one of the worst was when he decided that manned aircraft should be abolished, but one of the unfortunate effects was to force aircraft manufacturing firms to form large consortia. As a result, in practice, there are only two large groups of airframe manufacturers, B.A.C. and Hawker-Siddeley, and only two large groups of aero-engine manufacturers, Rolls-Royce and Bristol Siddeley.
Because of that, the Government have been forced to give contracts alternatively between the two groups irrespective of the merits of the design concerned. One has only to look at paragraphs 57–64 of the Estimates Committee's Report to see that. When there was competition for a transport aircraft between the Herald and the Avro 748, the R.A.F. preferred the Herald, but the contract was given for the Avro 748, even though it was the more expensive aircraft.
To a large extent there has been a monopoly in the manufacture of airframes and aero-engines. It could be said that two firms are enough to provide competition, but in practice if the Government fail to alternate the contracts, the firm which does not receive a contract can say that it has unused capacity and that therefore the overheads on other contracts which it is carrying out for the Government will rise. The Government are therefore blackmailed into accepting a monopoly position,. A situation has been brought about by their policy.
The counter-argument could be used that the consortia are essential for large projects, but I submit to the House that there should be competition on designs. The contracts should be awarded on merit, and the firm which is unsuccessful should be given a certain amount of 962 the sub-contracting work, which would help to keep its employees at work.
Dealing next with helicopters, one finds that the Government have given one firm a complete monopoly. This was referred to by my hon. Friend the Member for Newton (Mr. Lee). Before 1960 there were three firms which made helicopters, Saunders-Roe, Bristol and Westland. Now only Westland makes helicopters. It is obviously an unsatisfactory position for one firm to have the monopoly. I hope the Minister will not think that I have any personal prejudice because I was a little unlucky on one occasion in one of these aircraft. This monopoly seems an unhealthy situation. Although I do not question the excellence of Westland's helicopters, there have been complaints about them. I recollect my hon. Friend the Member for Barnsley (Mr. Mason) drawing attention to delays in delivery and there have been complaints about after-sales service.
Obviously a monopoly for Government orders cannot be in the public interest. Tie Government pay a lot of lip-service to competition. In 1960 they found it intolerable that the air Corporations were not faced with competition, but when dealing with private enterprise aircraft manufactures they hand out monopolies. This is an extraordinary inconsistency of policy.
Not content with giving aircraft firms monopolies, the Government have made contracts with aero-engine manufacturers much more profitable in other respects. According to the Estimates Committee Report, they Government invest very large sums of money in aircraft production, at present to the tune of nearly £20 million a year. Often the amount which the Government invest in launching a project is as much as 50 per cent. of the total cost. When the project is sold the Government receive a quarter of the profits and the manufacturer receives three quarters until the manufacturer has been fully recouped. This seems an extraordinarily favourable situation for the manufacturer. I should like hon. Members to look at some of the results. Between 1959 and 1963, £40 million was invested in aircraft and so far of that £40 million only £17 million has been recovered. One understands from the Estimates Committee's 963 Report that only minor further recoveries are possible.
Here we have a big subsidy given by the Government to aircraft manufacturers from public funds, but it does not appear in the Estimates. We had idea that this was happening to this extent until we read the Report which has just come to light. It is very unsatisfactory that public money should be dispensed in that way without some explanation being given to the House.
What happens when a contract is abandoned? If the Government are the cause of abandoning the contract, the Government certainly do not demand back the money which has been invested. If the project is abandoned by the manufacturer or abandoned because he has failed to fulfil the project's guaranteed requirements, he gets all the money the Government have paid to him. This again is extraordinarily favourable to the manufacturer, I do not think it can be tolerated if one has regard to proper control of public expenditure.
One ought to see some of the results which have come to light chiefly as a result of the Estimate Committee's Report of the Government's policy in awarding contracts. For instance, the Estimates Committee pointed out that the Government have to pay a very different sum of money for a military transport aircraft than for a civil transport aircraft. One has to bear in mind also that military transport aircraft are ordered by hundreds and hundreds of millions of pounds are involved.
§ Mr. Cronin
Hundreds of millions of pounds are involved. I cannot keep up a dialogue with the hon. Member, but he must be aware that the AW681 contract alone is worth more than £100 million.
The Estimates Committee found that the Government pay much more for a transport aircraft than does an airline or an air Corporation. In some cases the Government pay double the amount 964 paid by other organisations. Hon. Members are bound to wonder why the difference; why should more be paid by the Government when these aircraft have the same function—of transferring passengers from one airfield to another—and when there is no big structural difference? Why should the Government pay double? The Minister should give us an explanation of this tonight, because in the absence of an explanation we must think that the reason is simply that when these aircraft are sold to air Corporations and airlines they are sold to businessmen, who insist on a fair price, while when they are sold to the Government the Government just pay an excessive price. I believe that this is due in large measure to negligence in the handling of contracts.
I turn now to guided missiles. The certain thing that emerges when one considers guided missiles is that the Government have been persistently unlucky over these up till now. Hon. Members may recollect that when the Public Accounts Committee made its second Report in the 1959–60 Session we learned that three different guided missiles were produced on different estimates the final prices of them were three-and-a-half times, six times and 16 times the original estimates respectively. This hardly suggests satisfactory accounting.
Against this background we must consider the Report of the Auditor General. In the first guided weapon contract the Auditor General's officer found that allowances for labour and overheads were exceeded to an unreasonable degree. The Ministry challenged this on the ground of insufficient information of the amount of sub-contracting. I hope that the right hon. Gentleman will now tell us whether, in this case, he will make inquiries and obtain the further information about sub-contracting. Here is a case where the Auditor General definitely stated that there had been excessive profit, which the Ministry challenged. The fact that the Ministry challenged this does not mean that excessive profits were not made. The right hon. Gentleman should include this matter in the inquiries which he should make.
I now come to the Ferranti case, about which many hon. Members have spoken. 965 This is puzzling and difficult for us to follow. One gathers from the Auditor General's Report that the Ferranti Bloodhound cost £2.7 million, or 70 per cent. more than it should have cost according to the figures obtained by the Minister's own accountant—it is incredible to think that the Ministry had these figures in its office when this price was fixed. The apparent negligence is so extraordinary that it is difficult to conceive. One wonders whether there has been some sharp practice in this or whether it has been a simple case of negligence. So far we have had no information from the Government.
The Parliamentary Secretary said that the Ministry was formerly told about the situation—about this £2.7 million excess profit—in August of last year. Why was no action taken? Why was not the House informed? There is one thing characteristic of this House—that if a Minister frankly admits that a mistake has been made the House is always indulgent, but on this occasion we have been given no information.
§ Mr. Frank Allaun
My hon. Friend has said that this came to light in the Ministry in August of last year. Is it not worse than that? Does not the Auditor General's Report show that this happened in the period up to 31st March, 1961? Does it not seem, therefore, that two other Ministers are involved, the Minister for Commonwealth Relations and the Minister for Defence, who must he involved as well as the Minister of Aviation?
§ Mr. Cronin
I am grateful for my hon. Friend's intervention. I am giving the Minister the benefit of the doubt. I am merely accepting the Parliamentary Secretary's statement, that they first heard of it in August, 1963. Even so, the situation seems to be quite inexcusable. Why has no statement been made to the House? The matter has been discussed only because of initiative by the Opposition. It was the Minister's bounden duty to come to the House at the first opportunity and make a clean breast of it. If someone does not come to the House and make a clean breast of it, the House is entitled to the gravest suspicion.
I should like to ask the Minister some questions. Does he accept the Report of the Auditor General? Does he agree 966 with its contents? The Parliamentary Secretary refused to discuss the matter. So far there has been no denial by the Ministry. There has been no denial by Messrs. Ferranti. They have merely said that they welcome an investigation. I could hardly imagine that they would say that they did not welcome an investigation. Will the Minister tell us when we shall receive the Report of the Lang Committee? Will it be before or after the General Election? Will the Report be published? The Minister may recollect that the last time that there was a big scandal at his Ministry the Corbett Report was the result. We have had great difficulty in getting any information about that. Will the Lang Committee's Report be published in full?
In the meantime, we should have some more definite statement from the Ministry. I hope that when he winds up the Minister will not say that the matter is sub judice, because the situation is unfair to Ferranti, it is unfair to the civil servants in the Ministry of Aviation, and it is grossly unfair to the House. We should have a proper statement.
We have heard what happened in the case of the Ferranti Bloodhound. We wonder to what extent this apparent negligence occurs in other contracts. Is the Ferranti affair the part of the iceberg which is above the water? This is a very real and pressing worry. What happens when other contracts are made? Is there the same laxity in investigating them and fixing prices? The Auditor General has said that in many cases it is not possible actually to fix the price clearly because of confusion with contracts done for commercial firms. Is there the same carelessness about fixing prices? This is an appalling nought, because, as the Parliamentary Secretary said, last year alone Government orders were worth £345 million. How much of that may be excessive profit, as in the Ferranti case? We do not know. It is a most alarming possibility.
One of the most unfortunate aspects of the Ferranti case is that the Bloodhound has been one of our most useful exports and the price to overseas countries has been based on the price to the Government. The implications are world wide and affect Britain's reputation all over the world.
967 My hon. Friend the Member for Newton referred to the Concord Agreement. Most of us have been rather astonished that this Agreement was signed without any arrangements being made for a break clause in case the French decide to abandon the Agreement. The Parliamentary Secretary asked why we did not think of this thirteen months ago when we first saw the Agreement. The answer simply is that the Agreement is merely one of principles; it did not go into details. A complicated matter like the Concord must involve hundreds of different and specific agreements. Obviously an agreement such as a break clause would have to be confidential. We were entitled to expect that the Government had taken action along these lines. That certainly was the impression of the Estimates Committee, otherwise it would not have said that it had also made confidential inquiries.
The Parliamentary Secretary also said that the argument works both ways and that we perhaps could decide to abandon the agreement, but the point that he misses is that it is the duty of the Ministry to look after British interests first of all. This is a situation which has been grossly neglected.
I turn now from the supersonic aircraft to the aircraft provided for the Corporations. Here we come to a rather unsatisfactory aspect of matters from the Minister's personal point of view. My hon. Friend the Member for Dudley (Mr. Wigg) expressed in no uncertain terms his dissatisfaction because the Minister had not explained clearly what happened when he had conversation with President Kennedy over the cancellation of Skybolt and subsequently made a statement to the House which conflicted with the reported conversation. We on this side of the House have been far from satisfied by the Minister's explanation, but this is not the first time that we have been dissatisfied with his explanations.
I am not impugning the Minister's veracity. I am merely saying that there is a difference between what the Minister said and what has subsequently emerged as being the fact. The Minister has a duty to explain himself to the House. Hon. Members may recollect 968 that in November, 1962, we were debating the air Corporations and it emerged about then that B.O.A.C.'s enormous deficit contained an item of £30 million which referred to other years. In other words, in previous years the Corporation has not been showing the true value of its assets.
The Minister in that debate expressed criticism of B.O.A.C. and yet, as a result of perhaps a lapse on the part of the noble Lord the Parliamentary Secretary, we subsequently learned that B.O.A.C. had failed to show the correct value of its assets, because it had been told by the Government not to do so. It had been told by the Government to cook the books. [HON. MEMBERS: "Oh."]
I now approach the situation as far as B.O.A.C. is concerned, and I refer to the VC10 order. When we have had debates on the Corporation's affairs we on this side of the House have put it several times to the Minister that the Government have improperly influenced B.O.A.C., or the Corporations, in the purchasing of their aircraft.
§ Mr. Cronin
The hon. Member may call it rubbish, but this is the point which we put to the Minister. On 2nd December, 1963, the right hon. Gentleman said:It would be quite wrong to accept easily the idea that the VC10 was something pushed down the throat of the Corporation."—[OFFICIAL REPORT, 2nd December, 1963; Vol. 685, c. 905.]In November, 1962 he said:…I do not think that the Corporations would suggest that we share their responsibility for arriving at a decision on the right aeroplane to fly…I think the hon. Gentleman will find that the Corporations take the decicision as to what aeroplanes they fly."—[OFFICIAL REPORT, 6th November, 1962; Vol. 666, col. 892–3.]Yet we find from the Select Committee's Report that the Minister would not authorise expenditure on the Trident project to begin with. He insisted upon Bristol and Hawker Siddeley aircraft for B.E.A. Later on he would not agree to the Boeing order unless the Corporation accepted another project.
Finally, the Committee says:Nevertheless it is clear that the combination of Vickers' financial difficulties which imperilled the production of the Standard 969 VC10 and the urgings of the Minister forced B.O.A.C. into ordering additional aircraft…I suggest that the Minister has again misled the House and that the right hon. Gentleman must give a personal explanation on this occasion.
There has been some criticism of the Minister in the newspapers. Even Conservative newspapers have said that the Minister is accident-prone and that he ought to go. I do not accept that. I do not think the Minister ought to go by himself. I think all Ministers should go. We have these right hon. Gentlemen who are clinging tenaciously to their offices regardless of the public interest. All of them are tired, confused and careless. The time has come to make way for a Government who will invigorate the aircraft industry, the economy, the social services and the defence of this country.
§ 9.31 p.m.
§ The Minister of Aviation (Mr. Julian Amery)
I think the hon. Member for Loughborough (Mr. Cronin) was less than fair to my hon. Friend the Parliamentary Secretary when he criticised him for not making what he called a clear statement on the issues raised in the Motion. The trouble is that the issues raised are matters which are under further consideration.
The question of the Concord agreement, to which I shall be referring in a moment, and the other questions about transport aircraft have been the subject of an extremely valuable study by the Estimates Committee. I am due to reply to this officially very soon, and when I do so I shall, of course, take full account of the remarks that have been made and the Amendment in the name of the Liberal Party on this subject. The only comment I would make at this stage—and I think it disposes of the hon. Gentleman's rather curious comments on the VC10—is that I am sorry the Committee did not see Sir George Edwards or some representative of B.A.C. in the course of its study.
The other part of the discussion related to the Ferranti contract, and this is the subject of an inquiry at official level by Sir John Lang and, I understand, by the Public Accounts Committee. There was some discussion during my hon. Friend's speech as to whether matters before the P.A.C. should or 970 should not be debated in the House, and so I went to what I understand is the highest authority on the other side of the House and I sought the views of the Leader of the Opposition. This is what he sail on the subject in 1960, and it is illuminating:Since the hon. Gentleman has referred to me, will be now get me right? What I said was that, while I suggested it would be out of order while such an important matter was before a particular Select Committee, I further said that any matter on which the Comptroller and Auditor General had reported to the House is within the province of this House to deal with at any time without waiting for a report from the Public Accounts Committee."—[OFFICIAL REPORT, 11th April, 1960; Vol. 621, c. 875.]So we have it both ways from the right hon. Gentle man. First it is out of order and then it is in order. He was a Bevanite and he was not a Bevanite.
§ Mr. H. Wilson
Will the right hon. Gentleman get it right? I remember it very clearly. I said that what is not in order in a is House is to refer to an investigation being conducted by the Select Committee. That is what I said was not in order, because there were questions arising at that time in this House about what the P.A.C. was doing about the C.A.G.'s Report, which was out of order. The right hon. Gentleman was improper in telling the House just now that he understood that the P.A.C. is inquiring. He has no right at all to assume that the P.A.C. is inquiring. We can guess whether they are or not, but the statement that I made was not in any sense a contradiction. It was dealing with two different things. If the right hon. Gentleman refers to what I said in its context he will see that I was right.
§ Mr. Amery
As I was saying, I was interested that neither of the official spokesmen referred to the TSR2. The hon. Member for Dudley (Mr. Wigg), on the other hand, did refer to it. I have some useful information for the House on this subject. I received a letter this morning from Dr. Warlow Davies, the chief engineer of the engine firm, informing me that two flight-worthy engines were delivered to Weybridge for the TSR2 and that the programme of bench tests had been completed to clear these engines for experimental flights. On the technical side, it is going forward well.
The hon. Member for Dudley made some play with this project. I can only repeat what I said earlier, that I think that the criticism of the TSR2 on the benches opposite has not been in any sense helpful to its export prospects, and was certainly a contributory factor in the failure to secure the Australian order. I do not know what the future of the project would be if the Opposition came into power, but, of course, if they are determined to contract out of the nuclear rôle, strategic and tactical, it does not look very bright.
§ Mr. Cronin
The hon. Gentleman challenges us on that point. The position is quite simple. If the TSR2 is satisfactory, and if it can continue to be produced economically, we shall certainly carry on with it; but what we are appalled by is the expense incurred so far, and we still think that it is unsatisfactory.
§ Mr. Amery
We are determined to stay in the nuclear business, so it makes sense for us to have it. Whether the cost effectiveness will be justified for the Opposition, in contracting out of the nuclear business, I do not know.
I have been asked a number of questions about the military programme, about the Hunter replacement, the Sea 972 Vixen replacement—I have noted the words of my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) on this—and the Beverley replacement. Project studies on all these aircraft have been carried out, and the information available is now in the hands of the Minister of Defence. It is for him, as the customer, to decide what he wants, and to recommend accordingly to the Government. I understand that he will be making a statement shortly.
It is rather curious that the Opposition should be criticising the care which my right hon. Friend is taking to arrive at the right answer in these matters. We have had a great song and dance about a few million £s. There are hundreds of millions of £s at stake here, and my right hon. Friend is fully justified in studying the matter very carefully.
I must say, at the same time, that there is no question of our ostracising any one firm. The hon. Member for Newton (Mr. Lee) suggested that we were ostracising Shorts over the unit light helicopter. We have gone out to tender to three firms on this. I deprecate the criticism the hon. Gentleman made of Westland, which has done some very fine work, sonic of which is very much appreciated in Borneo at the present time. I say also to my noble Friend the Member for Hertford (Lord Balniel) that we are considering what would be the best replacement for the Shackleton; it may well be an existing aircraft.
As regards the research programme, I have an announcement to make. As the House knows, there have been two techniques of vertical take-off, both of them British. There is the vectored thrust technique developed by Bristol Siddeley Engines and there is the multiple direct lift developed by Rolls-Royce and used, for example, in the SC1. We have thought for some time that, while the vectored thrust was the most useful for light combat aircraft, it might well be that the Rolls-Royce technique was better suited to transport aircraft. We have accordingly agreed with the Government of the Federal Republic of Germany to undertake a joint feasibility study to this end. The study would relate to a Dornier 31 experimental aircraft powered with Rolls-Royce RB162 engines.
973 Hawkers, who are interested because of the AW681, Rolls and Dornier have been working in this direction for some time. The concept was explained to me when I visited Germany last year, and the two Governments have now agreed to give the firms the necessary support. The knowledge resulting from this experiment will be shared between both parties.
§ Mr. Amery
Perhaps my hon. Friend will put down a Question. I am not exactly clear on that at the moment.
I come to the question of the break clause in the Concord agreement and to the strictures made over this by the hon. Members for Newton and Loughborough. It is important that they should he clear on the nature of the agreement. It is an agreement to develop jointly a supersonic aircraft. It is a full international agreement and as such it is registered with the United Nations. The terms of the agreement can be varied by consent between the two parties, but otherwise it is binding on both.
I want to explain why this is so. Both sides, Britain and France, are committing men, money and industrial capacity to the project. To secure the advantages of partnership—what my hon. Friend the Parliamentary Secretary called halving the cost and doubling the market—we have forgone the opportunity to proceed nationally in the necessary time scale. If either of us had to finish the job alone, we would miss the market. Therefore, we are in this for better or worse, and that is why the decision is that there should be no divorce without consent. I do not think that a break clause would be possible in an interdependent project of this kind. It is interesting that there is no break clause in the E.L.D.O. contract.
Hon. Members opposite feared that the French might back out. I had a message from Paris today. My opposite number, my colleague, Monsieur Jacquet—[Interruption.] This arose because of the Motion put down by the party opposite. As I was about to say, my opposite number sent me a message to say that he had seen the terms of the Motion, and he 974 took the opportunity to say that the French Government had no intention of withdrawing their co-operation; quite the reverse.
I hope that there is no change of heart on the part of the Opposition about the Concord. I have been grateful in the past for their support over this, particularly that of the hon. Member for Loughborough. But I must point out to hon. Members opposite that the terms of their Motion have been misunderstood in Paris as a sign that if they ever came to power they might seek freedom to repudiate the agreement.
If this is not the case, I would make an appeal to hon. Members opposite. I know that there is a three-line Whip out tonight. I do not mind the Opposition voting against the Government—that is all part of the game—but I would regret very much anything which could do harm to our co-operation with our French partners. Could hon. Members opposite—before you, Sir, put the Question—seek the leave of the House and of the Chair to delete those words in the Motion which refer to the Concord agreement, or at least find a way of making it plain that they still support the project?
§ Mr. Lee
Reading the Motion again, I see not the slightest reason why there should be any misunderstanding about what we mean. We have referred to "the terms of agreement" and we have explained that we mean that the lack of any representation of the British Treasury on the organisation which runs the Concord and the question of the Estimate Committee's Report, which brought this matter very forcibly to our attention, are what we have in mind. These are the issues, and no question of our breaking an agreement entered our mind at all.
§ Mr. Amery
The Motion has been noted in Paris. I will do my best to draw the French Government's attention to the rather dodgy explanation of the party opposite.
I come now to the question of the Treasury's part in the Concord project. This was raised by the hon. Member for Newton among others. The Treasury was associated with the project from the beginning. It discussed every aspect of it with us. Naturally, it approved the terms of the agreement. The way our 975 system works, however, was best expressed by my right hon. Friend the Home Secretary when Chief Secretary to the Treasury in these words:the Treasury cannot both place the chief responsibility for sound and economical administration on each Department…and, at the same time, retain all the strings in its own hand and keep tugging at them".[OFFICIAL REPORT, 24th January, 1962; Vol. 652, c. 231.]Therefore, once the decision was taken, it was left to the Executive to carry it out.
What does the party opposite want? Would it like to see closer Treasury control? If so, would hon. Members opposite limit this to the Concord? Shall we be told next that the party opposite wants closer Treasury control over every aviation programme? Is that what Socialist planning means? Is the Chancellor of the Exchequer to be made responsible, not just for the broad economic strategy, but for the detailed control of every aircraft and guided weapon programme? The task would tax the powers of someone of the calibre of the late Sir Stafford Cripps. I wonder where the Leader of the Opposition would find a colleague of this stature. Or is this just another job for the First Lord of the Treasury?
§ Mr. Amery
The Treasury comes in, as it does in all operations under the Whitehall system, in that it co-operates with the Executive at every step, but nearly always behind the scenes. [Laughter]. Does the hon. Member for Loughborough really want closer Treasury control?
I want to say one more word on the Concord before we come to the Ferranti question. The House may have noted that B.O.A.C. and Air France have both increased the number of Concords for which they are reserving places and have also taken places in the queue for the American supersonic aircraft. The Concord, or so it seems, will have very much the same range as that projected 976 for the American aircraft, it will be in service earlier and it will be substantially cheaper.
The United States has been faced with a difficult problem: whether it should produce a competitive aircraft to the Concord or should go for something a good deal more advanced. This has been debated in the United States and the issue is not yet decided, but it seems that American opinion is moving in the direction of building something even more advanced although it may come later into service. This seems to me to be a statesmanlike approach to the problem. If we were both to compete for a limited market, neither side would prosper very much from it and there could be a waste of international resources. I am sure that the House will join with me in taking the view that it would be right that we should build different aircraft, both of which might find a place in the aircraft fleets of our respective countries.
Before coming to the Ferranti contract, I must refer in passing to the rather bitter personal attack which the hon. Member for Dudley made on me earlier. The art of personal invective is a difficult one. I recommend the hon. Member to study the work of Lord Lloyd George and Mr. Aneurin Bevan on the subject. They knew how to do it. As to Skybolt, I would say only this. As I told the House in a personal statement which I made on the subject, I had honest discussions of the merits and demerits of weapon systems under development. I came away with the clear impression that Skybolt was going forward. President Kennedy confirmed this some weeks later in public. If I misled the House, the late President and Mr. McNamara were both misleading Congress and the United States public, and I do not think that this is true of either of them.
On the question of the Ferranti contract, I have been asked when we first knew that something was possibly wrong. The Department, I am told, first received a query on 14th August. I am advised that I was first told, but informally, in mid-October.
§ Mr. Amery
Last year. Discussions were in progress both within the Department and with the firm for some weeks 977 and it was not until 10th December that the Department was satisfied that a serious situation had arisen. I was then so formally advised. Action was proposed after the Christmas Recess and was under discussion within the Government machine, and it was on my return from South America that publication was decided of the decision to appoint an inquiry.
The hon. Member for Newton asked why I appointed the inquiry. He said that there might well be dishonesty in other factories and that what we knew about the Ferranti case might be only a small item. He alleged that there might be scope for much greater abuses. I do not believe that there has been greater abuses. I am inclined to take the same view as the hon. Gentleman the Member for Dudley on that score, but if there is any danger let us far heaven's sake have an official inquiry to see what is wrong with the contracting machine, if anything. That is why I appointed the inquiry. The Public Accounts Committee will also be looking at the subject and I have no doubt that its views will be of the utmost importance on it.
§ Mr. Amery
I cannot give way. I have much more to say on this subject.
I am not going to try to anticipate the outcome of Sir John Lang's inquiry or the Public Accounts Committee's inquiry. I would however ask the House to bear certain things in mind. The Bloodhound has been a most successful weapon, the basic anti-aircraft weapon of the Royal Air Force, and bought by such discriminating countries as Sweden and Switzerland, which belong to no alliance and are in a pretty good technical position to judge.
Fixed price contracts sometimes go both ways. It looks as if the Ferranti profits are excessive on the reports we have before us. However, it has not always worked this way. I had a contract on my desk quite recently and the firm in question had lost more money than Ferranti appears to have gained—a good deal more. The system sometimes works to the Government's advantage as well as the other way. That is the point I am trying to make. We need to strike a balance in these things. The 978 Government have got to avoid extracting the last ounce of flesh; industry has got to be careful not to exploit questionable opportunities to take unreasonable advantage. From my experience most firms deal fairly with us. It is in their interests to do so. We are, after all, much their biggest customer.
I do not think that the Opposition realise quite how far the relationship between Government and industry has become one of partnership. I have been trying to strengthen this. I think that the fruits of it will appear before very long.
This Motion by the party opposite censures the Ministry of Aviation, censures the aircraft industry, and censures the system under which they work together. The two hon. Gentlemen who have spoken from the Opposition Front Bench spoke as though the aircraft industry were crooks and as if my officials were clowns. We are approaching a point in the life of this Parliament when the country has a right to know what the party opposite would do if it were to come in charge of this particular sector of our national life. Would that party seek closer Treasury control and the greater delays which this would involve? Would it buy foreign aircraft so as to cut the British aircraft industry?
The hon. Member for Newton is on record only 18 months ago as saying that he believed in nationalisation. The Trades Union Congress only last year called for nationalisation of the aircraft industry, and the resolution was carried by a quite overwhelming vote. I was very glad to hear the hon. Gentleman say—I thought I heard him say—that he did not think there would be nationalisation of the aircraft industry in the next Parliament, but when one of my hon. Friends put the point to the Leader of the Opposition we got what the hon. Gentleman the Member for Dudley calls a dodgy answer.
Quite frankly, I think we have got to judge the Government's policies towards the aircraft industry against the perspective of the results they have achieved. And I can give those results in a very few seconds. [Interruption.] If the party opposite does not want to hear of the achievements of the aircraft industry there is no need for those hon. Members 979 to do so, but the programme of the aircraft under production and under development is the greatest this country has ever had, and in an age when the relative strength of Britain in the world has declined in certain spheres, here is one where our position is growing fast.
§ I am very glad to stand on the record of our association with the industry over these last 12 years.
§ Question put:—
§ The House divided: Ayes 233, Noes 295.981
|Division No. 24.]||AYES||[10.0 p.m.|
|Abse, Leo||Forman, J. C.||McKay, John (Wallsend)|
|Ainsley, William||Fraser, Thomas (Hamilton)||Mackie, John (Enfield, East)|
|Albu, Austen||Galpern, Sir Myer||McLeavy, Frank|
|Allaun, Frank (Salford, E.)||George, Lady Megan Lloyd (Crmrthn)||MacPherson, Malcolm (Stirling)|
|Allen, Soholefield (Crewe)||Ginsburg, David||Mallalieu, E. L. (Brigg)|
|Awbery, Stan (Bristol, Central)||Gourlay, Harry||Mallalieu, J.P.W. (Huddersfield, E.)|
|Bacon, Miss Alice||Greenwood, Anthony||Manuel, Archie|
|Barnett, Guy||Grey, Charles||Mapp, Charles|
|Baxter, William (Stirlingshire, W.)||Griffiths, David (Rother Valley)||Marsh, Richard|
|Beaney, Alan||Griffiths, Rt. Hon. James (Llanelly)||Mason, Roy|
|Bellenger, Rt. Hon. F. J.||Griffiths, W. (Exchange)||Mayhew, Christopher|
|Bence, Cyril||Grimond, Rt. Hon. J.||Mellish, R. J.|
|Benn, Anthony Wedgwood||Gunter, Ray||Mendelson, J. J.|
|Bennett, J. (Glasgow, Bridgeton)||Hale, Leslie (Oldham, W.)||Millan, Bruce|
|Benson, Sir George||Hamilton, William (West Fife)||Milne, Edward|
|Blackburn, F.||Hannan, William||Mitchison, G. R.|
|Blyton, William||Harper, Joseph||Monslow, Walter|
|Boardman, H.||Hart, Mrs. Judith||Moody, A. S.|
|Bottomley, Rt. Hon. A. G.||Hayman, F. H.||Morris, Charles (Openshaw)|
|Bowden, Rt. Hn. H.W. (Leics, S.W.)||Healey, Denis||Morris, John|
|Bowen, Roderic (Cardigan)||Henderson, John (Cathcart)||Moyle, Arthur|
|Bowles, Frank||Herbison, Miss Margaret||Neal, Harold|
|Boyden, James||Hill, J. (Midlothian)||Noel-Baker, Francis (Swindon)|
|Braddock, Mrs. E. M.||Hilton, A. V.||Noel-Baker, Rt. Hn. Philip (Derby, S.)|
|Bradley, Tom||Holman, Percy||Oliver, G. H.|
|Bray, Dr. Jeremy||Houghton, Douglas||O'Malley, B. K.|
|Brockway, A. Fenner||Howell, Charles A. (Perry Barr)||Oram, A. E.|
|Broughton, Dr. A. D. D,||Howell, Denis (Small Heath)||Oswald, Thomas|
|Brown, Rt. Hon. George (Belper)||Howie, W. (Luton)||Owen, Will|
|Butler, Herbert (Hackney, C.)||Hoy, James H.||Padley, W. E.|
|Carmichael, Neil||Hughes, Cledwyn (Anglesey)||Paget, R. T.|
|Castle, Mrs. Barbara||Hughes, Emrya (S. Ayrshire)||Pannell, Charles (Leeds, W.)|
|Chapman, Donald||Hughes, Hector (Aberdeen, N.)||Parker, John|
|Cliffe, Michael||Hunter, A. E.||Parkin, B. T.|
|Collick, Percy||Hynd, H. (Accrington)||Pavitt, Laurence|
|Corbet, Mrs. Freda||Hynd, John (Attercliffe)||Pearson, Arthur (Pontypridd)|
|Craddock, George (Bradford, S.)||Irvine, A. J. (Edge Hill)||Peart, Frederick|
|Cronin, John||Irving, Sydney (Dartford)||Fentland, Norman|
|Crossman, R. H, S.||Janner, Sir Barnett||Popplewell, Ernest|
|Dalyell, Tam||Jay, Rt. Hon. Douglas||Prentice R. E.|
|Darling, George||Jeger, George||Price, J. T. (Westhoughton)|
|Davies, G. Elfed (Rhondda, E.)||Jenkins, Roy (Stechford)||Probert, Arthur|
|Davies, Harold (Leek)||Johnson, Carol (Lewisham, S.)||Pursey, Cmdr. Harry|
|Davies, Ifor (Gower)||Jones, Rt. Hn. A. Creech (Wakefield)||Randall, Harry|
|Deer, George||Jones, Dan (Burnley)||Rankin, John|
|Delargy, Hugh||Jones, Elwyn (West Ham, S.)||Rees, Merlyn (Leeds, S.)|
|Dempsey, James||Jones, J. Idwal (Wrexham)||Reid, William|
|Diamond, John||Jones, T. W. (Merioneth)||Reynolds, G. W.|
|Dodds, Norman||Kelley, Richard||Rhodes, H.|
|Doig, Peter||King, Dr. Horace||Roberts, Albert (Normanton)|
|Donnelly, Desmond||Lawson, George||Roberts, Goronwy (Caernarvon)|
|Driberg, Tom||Ledger, Ron||Robinson, Kenneth (St. Pancras, N.)|
|Dully, A. E. P. (Colne Valley)||Lee, Frederick (Newton)||Rodgers, W. T. (Stockton)|
|Ede, Rt. Hon. C.||Lee, Miss Jennie (Cannock)||Ross, William|
|Edelman, Maurice||Lever, Harold (Cheatham)||Shinwell, Rt. Hon. E.|
|Edwards, Rt. Hon. Ness (Caerphilly)||Lever, L. M. (Ardwick)||Silkin, John|
|Edwards, Robert (Bilston)||Lewis, Arthur (West Ham, N.)||Silverman, Julius (Aston)|
|Edwards, Walter (Stepney)||Lipton, Marcus||Silverman, Sydney (Nelson)|
|Evans, Albert||Loughlin, Charles||Skeffington, Arthur|
|Fernyhough, E.||Lubbook, Eric||Slater, Mrs. Harriet (S'oke, N.)|
|Finch, Harold||Mabon, Dr. J. Dickson||Slater, Joseph (Sedgefield)|
|Fitch, Alan||McBride, N.||Small, William|
|Fletcher, Eric||McCann, John||Smith, Ellis (Stoke, S.)|
|Foley, Maurice||MacColl, James||Snow, Julian|
|Foot, Dingle (Ipswich)||Mc[...]nnes, James||Sorensen R. W.|
|Soskice, Rt. Hon. Sir Frank||Thompson, Dr. Alan (Dunfermline)||Wilkins, W. A.|
|Spriggs, Leslie||Thomson, G. M. (Dundee, E.)||Willey, Frederick|
|Steele, Thomas||Thornton, Ernest||Willis, E. G. (Edinburgh, E.)|
|Stewart, Michael (Fulham)||Thorpe, Jeremy||Wilson, Rt. Hon. Harold (Huyton)|
|Stonehouse, John||Timmons, John||Winterbottom, R, E,|
|Stones, William||Tomney, Frank||Woodburn, Rt. Hon. A.|
|Strauss, Rt. Hn. C. R. (Vauxhall)||Wade, Donald||Woof, Robert|
|Stross, Dr. Barnett (Stoke-on-Trent, G.)||Wainwright, Edwin||Wyatt, Woodrow|
|Swain, Thomas||Warbey, Willam||Yates, Victor (Ladywood)|
|Swingler, Stephen||Weitzman, David||Zilliacus, K.|
|Symonds, J. B.||Wells, William (Walsall, N.)|
|Taverne, D.||White, Mrs. Eirene||TELLERS FOR THE AYES:|
|Taylor, Barnard (Mansfield)||Whitlook, William||Mr. Rogers and|
|Thomas, Iorwerth (Rhondda, W.)||Wigg, George||Mr. Redhead.|
|Agnew, Sir Peter||d'Avigdor-Goldsmid, Sir Henry||Iremonger, T, L.|
|Allan, Robert (Paddington, S.)||Deedes, Rt. Hon. W. F.||Irvine, Bryant Codman (Rye)|
|Allason, James||Digby, Simon Wingfield||Jackson, John|
|Amery, Rt. Hon. Julian||Doughty, Charles||Jenkins, Robert (Dulwich)|
|Anderson, D. C.||Douglas-Home, Rt. Hon. Sir Alec||Jennings, J. c.|
|Arbuthnot, Sir John||Drayson, G. B.||Johnson, Eric (Blackley)|
|Ashton, Sir Hubert||du Cann, Edward||Johnson Smith, Geoffrey|
|Atkins, Humphrey||Duthle, Sir William (Banff)||Jones, Arthur (Northants, S.)|
|Awdry, Daniel (Chippenham)||Eden, Sir John||Jones, Rt. Hn. Aubrey (Hall Green)|
|Balniel, Lord||Elliot, Capt. Walter (Carshalton)||Kaberry, Sir Donald|
|Barber, Rt. Hon. Anthony||Elliott, R-W.(Newc'tle-upon-Tyne, N.)||Kerans, Cdr. J. S.|
|Barlow, Sir John||Emmet, Hon. Mrs. Evelyn||Kerby, Capt. Henry|
|Barter, John||Errington, Sir Eric||Kershaw, Anthony|
|Batsford, Brian||Farey-Jones, F. W.||Kirk, Peter|
|Beamish, Col. Sir Tufton||Farr, John||Kitson, Timothy|
|Bell, Ronald||Fletcher-Cooke, Charles||Lagden, Godfrey|
|Bennett, F. M. (Torquay)||Forrest, George||Lambton, viscount|
|Bennett, Dr. Reginald (Gos & Fhm)||Foster, Sir John||Lancaster, Col. C. G.|
|Berkeley, Humphry||Fraser, Rt. Hn. Hugh (Stafford & Stone)||Langford-Holt, Sir John|
|Bidgood, John C.||Fraser, Ian (Plymouth, Sutton)||Leather, Sir Edwin|
|Biffen, John||Freeth, Denzil||Legge Bourke, Sir Harry|
|Biggs-Davison, John||Galbraith, Hon. T. G. D.||Lewis, Kenneth (Rutland)|
|Bingham, R. M.||Gammans, Lady||Lilley, F. J. P.|
|Birch, Rt. Hon. Nigel||Gardner, Edward||Lindsay, Sir Martin|
|Bishop, F. P.||Gibson-Watt, David||Linstead, Sir Hugh|
|Black, Sir Cyril||Gilmour, Ian (Norfolk, Central)||Litchfield, Capt. John|
|Bossom, Hon. Clive||Glyn, Dr. Alan (Clapham)||Lloyd, Rt. Hn. Geoffrey (Sut 'nC' dfield)|
|Bourne-Arton, A.||Glyn, Sir Richard (Dorset, N.)||Lloyd, Rt. Hon. Selwyn (Wirral)|
|Box, Donald||Godber, Rt. Hon. J. B.||Longden, Gilbert|
|Boyd-Carpenter, Rt. Hon. John||Goodhart, Philip||Lucas, Sir Jocelyn|
|Boyle, Rt. Hon. Sir Edward||Goodhew, Victor||Lucas-Tooth, Sir Hugh|
|Braine, Bernard||Gough, Frederick||MacArthur, Ian|
|Brewis, John||Gower, Raymond||McLaren, Martin|
|Bromley-Davenport. Lt. -Col. Sir Walter||Grant-Ferric, R.||Maclay, Rt. Hon, John|
|Brooke, Rt. Hon. Henry||Green, Alan||Maclean, Sir Fitzroy(Bute & N. Ayrs)|
|Brown, Alan (Tottenham)||Gresham Cooke, R.||McLean, Neil (Inverness)|
|Bryan, Paul||Grosvenor, Lord Robert||MacLeod, Sir J. (Ross & Cromarty)|
|Buck, Antony||Gurden, Harold||McMaster, Stanley R.|
|Bullard, Denys||Hall, John (Wycombe)||Macmillan, Maurice (Halifax)|
|Bullus, Wing Commander Eric||Hamilton, Michael (Wellingborough)||Maddan, Martin|
|Burden, F. A.||Harris, Frederic (Croydon, N.W.)||Maginnis, John E.|
|Campbell, Gordon (Moray & Nairn)||Harrison, Brian (Maiden)||Maitland, Sir John|
|Carr, Compton (Barons Court)||Harrison, Col. Sir Harwood (Eye)||Markham, Major Sir Frank|
|Channon, H. P. G.||Harvey, Sir Arthur Vere (Macclesf'd)||Marlowe, Anthony|
|Clark, Henry (Antrim, N.)||Harvey, John (Walthamstow, E.)||Marples, Rt. Hon. Ernest|
|Clark, William (Nottingham, S.)||Harvie Anderson, Miss||Marshall, Sir Douglas|
|Cleaver, Leonard||Hastings, Stephen||Marten, Neil|
|Cole, Norman||Heald, Rt. Hon. Sir Lionel||Mathew, Robert (Honiton)|
|Cooke, Robert||Henderson, John (Cathcart)||Matthews, Gordon (Meriden)|
|Cooper, A. E.||Hendry, Forbes||Mawby, Ray|
|Cooper-Key, Sir Neill||Hiley, Joseph||Maxwell-Hyslop, R. J.|
|Cordeaux, Lt.-Col. J. K.||Hill, Mrs. Eveline (Wythenshawe)||Maydon, Lt.-Cmdr. S. L. C.|
|Corfield, F. V.||Hill, J. E. B. (S. Norfolk)||Mills, Stratton|
|Costain, A. P.||Hocking, Philip N.||Miscampbell, Norman|
|Coulson, Michael||Hogg, Rt. Hon. Quintin||Montgomery, Fergus|
|Courtney, Cdr. Anthony||Holland, Philip||More, Jasper (Ludlow)|
|Craddock, Sir Beresford (Spelthorne)||Hollingworth, John||Morgan, William|
|Crawley, Aidan||Hopkins, Alan||Morrison, John|
|Critchley, Julian||Hornby, R. P.||Mott-Radclyffe, Sir Charles|
|Crosthwaite-Eyre, Col. Sir Oliver||Hornsby-Smith, Rt. Hon. Dame P.||Neave, Airey|
|Crowder, F. P.||Howard, Hon. G. R. (St. Ives)||Nicholls, Sir Harmar|
|Cunningham, Sir Knox||Howard, John (Southampton, Test)||Nicholson, Sir Godfrey|
|Curran, Charles||Hughes Hallett, Vice-Admiral John||Noble, Rt. Hon, Michael|
|Currie, G. B. H.||Hughes-Young, Michael||Nugent, Rt. Hon. Sir Richard|
|Dalkeith, Earl of||Hulbert, Sir Norman||Oakshott, Sir Hendrie|
|Dance, James||Hutchison, Michael Clark||Orr-Ewing, Sir Ian (Hendon, North)|
|Osborn, John (Hallam)||Royle, Anthony (Richmond, Surrey)||Tiley, Arthur (Bradford, W.)|
|Osborne, Sir Cyril (Louth)||Russell, Sir Ronald||Tilney, John (Wavertree)|
|Page, Graham (Crosby)||Sandys, Rt. Hon. Duncan||Touche, Rt. Hon. Sir Gordon|
|Page, John (Harrow, West)||Scott-Hopkins, James||Turner, Colin|
|Panned, Norman (Kirkdale)||Seymour, Leslie||Turton, Rt. Hon. R. H.|
|Partridge, E.||Sharples, Richard||van Straubenzee, W. R.|
|Pearson, Frank (Clitheroe)||Shaw, M.||Vane, W. M. F.|
|Peel, John||Shepherd, William||Vaughan-Morgan, Rt. Hon. Sir John|
|Percival, Ian||Skeet, T. H. H.||Vickers, Miss Joan|
|Peyton, John||Smith, Dudley (Br'ntf'd & Chiswick)||Vosper, Rt. Hon. Dennis|
|Pickthorn, Sir Kenneth||Soames, Rt. Hon. Christopher||Walder, David|
|Pitman, Sir James||Spearman, Sir Alexander||Walker, peter|
|Pitt, Dame Edith||Speir, Rupert||Walker-Smith, Rt. Hon. Sir Derek|
|Pounder, Rafton||Stainton, Keith||Wall, Patrick|
|Powell, Rt. Hon. J. Enoch||Stanley, Hon. Richard||Ward, Dame Irene|
|Price, H. A. (Lewisham, W.)||Stevens, Geoffrey||Watkinson, Rt. Hon. Harold|
|Prior, J. M. L.||Steward, Harold (Stockport, S.)||Wells, John (Maidstone)|
|Prior-Palmer, Brig. Sir Otho||Stodart, J. A.||Whitelaw, William|
|Proudfoot, Wilfred||Stoddart-Scott, Col. Sir Malcolm||Williams, Dudley (Exeter)|
|Pym, Francis||Storey, Sir Samuel||Williams, Paul (Sunderland, S.)|
|Quennell, Miss J. M.||Studholme, Sir Henry||Wills, Sir Gerald (Bridgwater)|
|Ramsden, Rt. Hon. James||Summers, Sir Spencer||Wilson, Geoffrey (Truro)|
|Rawlinson, Rt. Hon. Sir Peter||Tapsell, Peter||Wolrige-Gordon, Patrick|
|Redmayne, Rt. Hon. Martin||Taylor, Edwin (Bolton, E.)||Wood, Rt. Hon. Richard|
|Rees, Hugh (Swansea, W.)||Taylor, Frank (M'ch'st'r, Moss Side)||Woodhouse, C. M.|
|Rees-Davies, W. R. (Isle of Thanet)||Teeling, Sir William||Woodnutt, Mark|
|Renton, Rt. Hon. David||Temple, John M.||Woollam, John|
|Ridley, Hon. Nicholas||Thatcher, Mrs. Margaret||Worsley, Marcus|
|Ridsdale, Julian||Thomas, Sir Leslie (Canterbury)||Yates, William (The Wrekin)|
|Rippon, Rt. Hon. Geoffrey||Thomas, Peter (Conway)|
|Robson Brown, Sir William||Thompson, Sir Kenneth (Walton)||TELLERS FOR THE NOES:|
|Rodgers, John (Sevenoaks)||Thompson, Sir Richard (Croydon, S.)||Mr. Chichester-Clark and|
|Roots, William||Thorneycroft, Rt. Hon. Peter||Mr. Finlay.|
|Ropner, Col. Sir Leonard||Thornton-Kemsley, Sir Colin|