§ 3.45 p.m.
§ Mr. Angus Maude (Stratford-on-Avon)
I beg to move, That Item Class IV, Vote 7 (Ministry of Aviation), be reduced by £1,000.
The Opposition have chosen to debate the question of Government policy in respect of civil aviation and civil airlines. This arises largely out of the Minister of Aviation's statement on 17th February last. We recognise that this is a subject which has been excessively bedevilled by political controversy and, indeed, by dogma.
936 There is little doubt that any Minister of Aviation is subject to considerable pressures from the airways Corporations and the Treasury—which, in the last resort, has to meet any deficit which a Corporation incurs—to try to secure and protect the position of the Corporations on the scheduled and other services of the world. There is, therefore, always some pressure to reduce or, at least, to prevent the growth of the services of independent operators.
I hope to show that this is a shortsighted policy, that British civil aviation should be taken as a whole, that the object of the Minister of Aviation, and of any body who has the interests of British trade at heart, should be to secure a growth in the total of British air transport and traffic, and that this can best be done by securing that the interests of both Corporations and independent operators are properly secured. Indeed, this is the duty which Parliament laid on the Minister.
We understand through what are rapidly becoming the usual channels— that is to say, the Press—that the Minister intends to make a statement on B.O.A.C. finances during the course of his speech. We shall await this with interest. But I hope that it will not divert his and the Committee's attention too far from the problem of the relations between the Corporations and the independent civil airlines, which is what we wish to debate.
I do not want to weary the Committee with too much of the history which lies behind this controversy, but it is as well that we should be quite clear what the legal position is and what has been briefly, at any rate since the Air Corporation Act, 1949, the history of the relative positions of the two sets of operators.
The Air Corporations Act, 1949, gave the two Corporations a specific monopoly of scheduled services in and from this country. The independent operators were restricted to charter flights, including—and this was of particular importance at that time—the right to tender for trooping contracts. It is worth making it clear, since there seems to have been an impression among some hon. Members opposite, and, indeed, among hon. Members of the Liberal Party, that the independents' monopoly of trooping contracts was introduced by Conservative Governments after Governments after 937 1951,that this is not so. Until now, the Corporations have never been invited to tender for trooping contracts. The position was just the same under a Labour Government after the 1949 Act as it was under Conservative Governments after 1951.
After 1951, however, Conservative Governments took the view, I think rightly, that British aviation would expand faster if independent operators were given more scope to operate in fields which had previously been the monopoly of the Corporations. An experiment was tried of allowing independent operators to enter into association agreements with the Corporations and their applications were, in effect, although not formally, licensed by the then Air Transport Advisory Council. This system, I think most people would agree, was far from being an unqualified success. Nevertheless, during that time there was an enormous growth in the total traffic carried by British operators. It is well to remember that during this period the independents pioneered many new types of service to the public.
In 1960, however, it was clear that both the independents and the Corporations had much to offer to civil aviation as a whole and that there would be advantage if the system were regularised and put on a formal basis. Therefore, the Civil Aviation; (Licensing) Act, 1960, abolished formally the Corporations' monopoly of the scheduled services and set up an independent Air Transport Licensing Board to regulate British air services.
Here I come to the most important thing about the 1960 Act and I ask the Committee to bear this in mind in considering the new policy which the Minister has recently enunciated. It is quite clear that the 1960 Act placed all British airline operators, whether independent or Corporation, on a completely equal footing before the Licensing Board. The Board had a duty to decide each application strictly on its merits with two main tests, one of them being the benefits to passengers, and the Board had the specific duty, which is laid down in the Act,to further the development of British civil aviation.There is nothing said there about favouring or furthering the interests of one sector of the operators more than another. It is this equality of Corporations and independent operators before 938 the Board, which was clearly laid down in the Act, that the Minister has now thrown overboard. We believe this to be the central fault of his policy.
During the period after 1960 there continued to be a big growth in the total British traffic carried. It cannot be said that the 1960 Act and the right given to the independent operators to apply for and to be granted licences on scheduled services did any serious damage to the continued growth of the Corporations. On the contrary, both Corporations and private companies continued to expand and to give a better service to the public than either had given before. The total result was enormously to the benefit not only of the British carrying trade, but also of the passengers.
I do not want to weary the Committee with figures, but it is interesting to see how, in some instances, this worked out. For example, if we take the growth of the total British effort in civil aviation, we find that over the 11-year period from 1952–53 to 1963–64 the capacity ton-mile of the two Corporations increased roughly fivefold. During the period 1960–61 to 1963–64, it increased by 54 per cent., or just over half. During this period of three years, the total effort increased by exactly the same amount, 54 per cent. Therefore, certainly the two Corporations were enabled to expand at exactly the same rate as the total British effort was expanding.
If we consider the domestic services, those totally within the British Isles, we find that the total traffic in load ton-miles increased between 1960 and 1964 by about 75 per cent. That of B.E.A. still increased by 61 per cent. despite a considerable increase in the operations of the independents. B.E.A.'s share of the total traffic, even though the total traffic had enormously increased, fell only from 83 per cent, to 76 per cent.
Taking the traffic between the United Kingdom and Europe as a final example, we find that while B.E.A.'s share of the total air traffic fell from about one-half to about 43 per cent., during the years from 1959 to 1963–64 the number of passengers carried on B.E.A.'s scheduled services actually rose by 46 per cent., or nearly half. It cannot, therefore, be claimed that the increase in the operations of the independent airlines has seriously damaged the capacity or the effort of the 939 Corporations. Unless this can be proved, the Minister's present change in policy seems to me to be entirely without justification.
One essential point for the Committee to bear in mind at this stage is the enormous disadvantage under which, under the Act and under the operation of the Licensing Board, the independents have always suffered. This is not always recognised. The Board has never given to an independent operator the right to an unrestricted frequency of flight on any service. The Corporations enjoy very much more freedom in this respect than do the independents. If this is not remembered, the balance which the Minister is now seeking to strike between the two sections of the industry is much more difficult to understand in its implications.
I now come to the first major change in the status quo since 1960, which was the Minister's statement on trooping policy which he made on 25th November last. This was followed by a further statement on 17th February this year on his policy with regard to the licensing of independents. When the Minister announced that for the first time the two Corporations would be allowed to tender for trooping contracts in competition with the independents, who had hitherto had a virtual monopoly of them, lie said two things in reply to questions by me.
I had asked him whether he was satisfied that independent long haul operators had acquired sufficiently good foreign rights to enable them to hope to get a reasonable share of overseas scheduled routes to compensate them for the possible loss of trooping contracts, and the right hon. Gentleman replied:The international rights of the independents mostly fell to be negotiated by my predecessor, but in the case of B.U.A. and the South American route I have done what I could to assist the company. I think that the independent operators are fairly well provided for."—[OFFICIAL REPORT, 25th November, 1964; Vol. 702, c. 1288.]Well, it might, perhaps, though even this is arguable, have been thought that they were fairly well provided for under the policy which had existed up to that time. It cannot conceivably be claimed that they are well provided for under the policy which he has now enunciated for 940 the future. The right hon. Gentleman went on to say:In any event, however, I do not think that it is right to place the Corporations under a special and, to my mind, unfair disability in tendering for these contracts."—[OFFICIAL REPORT, 25th November, 1965; Vol. 702, c. 1288.]It is reasonable to ask why it is wrong to place the Corporations under a special disability in respect of trooping, but it is right to place the independents under a special disability in respect of frequencies on scheduled routes. There seems to us on this side of the Committee to be absolutely no fairness or justification for this at all. By all means, there is something to be said for a policy which says that one side suffers from this disability, so we will, therefore, place the other side under a counter-balancing disability; but what the Minister is now doing is to load all the special disabilities on to the independents and to relieve the Corporations of nearly all of them—this when the Act made it quite clear that the intention was that both the independents and the Corporations should have equality before the Licensing Board and that the decisions should be taken on their merits.
We now come to the final chapter in this story, which was the Minister's more recent statement on 17th February last. Here he dealt with three sections of the trade: first, with the arrangements in the inclusive tour holiday charter business; secondly, with scheduled services on overseas routes; and, thirdly, with the scheduled services on the domestic routes at home. I should like to comment on the statement he made in respect of these three different sections.
In the case of inclusive tour holiday charter services, where, it is right to note, the independents have pioneered nearly all that is new in this business, but the Corporations now have the right to compete, the Minister has left the position substantially unchanged—and, indeed, has gone further, and said that he will accelerate the licensing procedures before the tribunal.
On the face of it, that looks like something of a concession to the independents. However, there are two comments which must be made on this. The first is that new international agreements on inclusive tours on scheduled routes really mean now that an increasing proportion of inclusive tour work is to be carried on scheduled 941 routes. This is the almost inevitable result of the developments which are taking place. So independents will tend to lose even much of the business which they have if they are to be kept off the scheduled routes on to which an increasing amount of traffic is to be diverted.
The second—and it is a very important point indeed—is this. This holiday charter work is the most intensely seasonal traffic of any kind that can be imagined. It is nothing for a company to find itself doing 80 per cent. of a year's business of this kind on 80 days in the year. This is a very uneconomic way to operate expensive aircraft, unless there is a background or a basis of scheduled routes over which operation of the aircraft can be spread for the rest of the year. Indeed, I think that it is true to say, and many companies would say this, that it is only the fact that the jet revolution in civil aviation has put on to the market a considerable number of comparatively modern turboprop aircraft like the Britannia that has enabled independent operators to buy large modern aircraft comparatively cheap.
This is a completely non-recurring situation. The companies will not be able to do this again. In these circumstances, it is fairly clear that no independent operator can hope to live on this sort of work alone. Some of it will cease to be economic; it is highly seasonal; and more and more of it is likely to be diverted on to the scheduled routes from which the independents are to be, in effect, progressively removed.
So much for the charter work. Now for the international scheduled services. Here the Minister made several points which are extremely important. He made it clear that he was against dual designation on overseas scheduled services. He said that he did not think it was, in general, in the national interest that there should be two British carriers on an overseas scheduled route, and pointed out that no European country other than Britain attempted to do this.
Well, this is, of course, true. There are fairly good reasons for it. No other European country could do it sucessfully, for one thing. One can point out, of course, that the United States has two or three operators on the North Atlantic route and does not find that this results, 942 so far as I know, in a total diminution of American trade on the North Atlantic route. But—and this is an important question which I think the right hon. Gentleman must answer—if he is against dual designation on the overseas routes, is this to apply to B.O.A.C. and B.E.A. or not?
In other words, if an independent operator is to be prevented, and the Board is to be directed to prevent an independent operator, from getting on a line where B.O.A.C. or B.E.A. is ensconced, are the Corporations equally to be prevented from inserting themselves on a route which an independent operator has pioneered? If not, I think that the Minister will have to explain why he again loads the scale against the independents in this respect. It seems to me that if the spirit of the Act is to have any meaning at all, if this is to be applied one way, it must, in justice, be applied the other, against the Corporations.
The second point—and this is one of considerable importance to some independent operators, I suppose, in particular to British United Airways—is: what is to happen in respect of the renewal of existing agreements if foreign countries object to the renewal in particular cases? Will Her Majesty's Government support the independent operators or not? Because, if not—and there is some reason to suspect, at least from the Minister's statement, that they may not—-then, with one or other of the British Corporations opposed to the independent operator, and in view of the pooling and association agreements which the Corporation have with foreign airlines, it seems almost inevitable that, in time, British independent airlines will be pushed off all the scheduled routes which they now have. Indeed, it seems to us that the worst feature of the Minister's statement is the effect which it is likely to have abroad on foreign opinion, and in particular on the attitude of foreign airlines.
If British airline operators are known not to have the support of their own Government at home, it is not difficult to imagine what will be the result. Every foreign airline anxious for more trade, particularly if it has a pooling agreement with one of the British Corporations, will seek to push the independent off the scheduled routes on which it already exists, and the result will be a loss in 943 total to British civil aviation traffic. It is this danger which makes the Minister's statement in this respect so extraordinarily irresponsible.
I turn now to the domestic scheduled services where, frankly, the Minister has gone even further in an unsatisfactory direction than he has in respect of the overseas scheduled services. I have said already that where the independents have managed to get a footing into the home scheduled services, they are strictly limited in frequency, often to a maximum of one flight a day, whereas the Corporations are able to compete often on a basis of unrestricted frequency. It is obvious that in this case it is possible for B.E.A., for example, virtually either to freeze an independent off a route, or to make quite sure that he is unable to operate it economically.
It is possible for the Corporation to blanket the scheduled route with flights on either side of the single frequency flight which the independent is able to operate, and to make it scarcely worth while for the independent operator to continue without some assurance that it may be possible in the future to extend the frequency as—and let us never forget that this is happening all the time—the total volume of traffic to be carried increases. As it is increasing all the time, there is room for increasing independent operation, just as there is room for increasing operation by the Corporation.
There is little doubt—and I think that any passenger who has travelled on, let us say, the Glasgow and Belfast routes knows this—that even though these routes of a limited frequency have not proved economic for British Eagle, as a result of them there has been a marked improvement in the service given by B.E.A. on these routes. Many people travelling on the Manchester route, for example, have wished to goodness that they could have a little independent competition there to improve the B.E.A. service on those flights.
When the Minister made his statement on 17th February, and I suggested that the removal of competition from these routes was likely to be detrimental to the service, he said, in a rather tart way, that I was enunciating a very extreme position, and advocating unrestricted competition. He repeated this 944 later in answer to one of my hon. Friends. With respect, this is the most unmitigated nonsense. How can one possibly have unrestricted competition in a situation where every application has to be made to the Licensing Board—and nobody has suggested abolishing the Board—which virtually dictates the terms on which the service shall be flown? There is no question of unrestricted competition.
§ The Minister of Aviation (Mr. Roy Jenkins)
What I objected to in the hon. Gentleman's question on 17th February was when he asked whether I would recognise that competition in civil aviation was the only safeguard for the passenger. That was an extreme position.
It was the manner, more than the substance, of his hon. Friend's question which I thought extreme.
§ Mr. Maude
What I said is true. To say that in the last resort the presence of competition is the only safeguard for the passenger is not in the least to say that that competition has to be unrestricted. In civil aviation, competition can never be totally unrestricted. Because of safety regulations, and of the need to have a not unreasonable number of aircraft in the air at any one time, there can never be totally unrestricted competition, and nobody was suggesting that. The Minister was putting up a political smokescreen to divert attention from the real changes that he was making.
Ever since, I understand, to the independent operators, to the airlines, and whenever this has come up, the Government's attitude has been, "Oh, but we are not really making any change at all"; but the Minister gave the game away completely in two different places in his statement. Let us look at the two sentences which he used when referring to the independent operators on domestic trunk routes. He said:I do not think it right to offer them the prospect of an unrestricted or extended frequency in the near future.We would be grateful if the right hon. Gentleman would tell us how he defines, "in the near future": whether this means three months, six months, a year, two years, five years, or whatever it is, because this is a matter of considerable importance to airline operators who are 945 trying to plan ahead their capital investment programmes and their purchases of aircraft. It may make a considerable difference whether a company withdraws the existing service which it is now flying on a scheduled route if it knows how long it may be before the Minister will graciously give it some hope of an extension of frequency.
Perhaps I might draw the attention of the Committee to the rather peculiar phrasing of that sentence. The Minister said:I do not think it right to offer them the prospect of an unrestricted or extended frequency …The use of the word "unrestricted"—which nobody has ever suggested should be offered to the independents—is sharply limited by the use of the words "or extended frequency".
§ Mr. Lubbock
The hon. Gentleman said that no one had suggested that unrestricted frequency should be offered to the independents. Mr. Bamberg has said that there should be unrestricted frequency for the operators on all routes when more than 200,000 passengers per annum were carried, and that applies to all the United Kingdom trunk routes.
§ Mr. Maude
But that is not unrestricted competition. What Mr. Bamberg said applies to a limited sector of the field, and all 1 was saying was that nobody on this side of the Committee advocated unrestricted competition, or unlimited frequency; and that is true.
It is no good the Minister suggesting, as he has been, and as he will no doubt try to suggest again today, that the removal of the hope of extended frequencies makes no, or little, difference to the independent operators. It is no good suggesting that they are just as able to continue with the services they have as they were before.
The right hon. Gentleman gave the game away completely in the very next sentence of his statement, when he said: 946In these circumstances, it will be for these companies to consider whether they wish to continue as at present, or to withdraw completely from these routes.Why did he mention that, unless he had some reason to believe that the effect of what he was doing would be to drive them off the routes—unless he was fairly certain that without any hope of making these services economic by extending the frequencies these companies would be faced with the certain necessity of cutting down their services or withdrawing altogether? As we know, British Eagle, which had made a considerable investment in beginning to build up these routes, withdrew its restricted services from Glasgow and Belfast.
The Glasgow route of British Eagle provides an interesting example of the way in which the Minister's policy is now likely to operate. British Eagle originally intended its single flight service to Glasgow to be a feeder service for an international flight which never came into existence. British Eagle, however, felt that there was something to be said for continuing to fly this service, however uneconomic, because if it made a go of it and gave a service which the British public wanted, so dense and rapidly growing is the London-Glasgow route that there would be room not only for B.E.A. but for British Eagle to expand to more frequent services. This route is about the densest air traffic route in Europe. On it, there is plenty of room for competition, and, so far, competition on it has had nothing but a good effect.
There was no question of removing the restrictions altogether from this route, but there is equally no question—
§ Mr. Maude
I hope that the hon. Member will forgive me for not giving way. I am sure that he will be making a speech himself later, and I would like to complete this point.
It is all right, up to a point, to protect a small and uneconomic service, but it is not in the public interest to seek to protect a large and growing one where there is plenty of room for both kinds of operator to improve their total traffic and their service to the public.
I have no doubt that the hon. Member for Glasgow, Govan (Mr. Rankin) will 947 talk about the minor routes in Scotland. We know that the question of the Highlands and Islands services is a matter of considerable importance to our Scottish colleagues. They have frequently pointed out that B.E.A. is, often in a quite uneconomical way, providing services along these routes. That is true, and none of my hon. Friends would wish to detract from B.E.A.'s service in this respect. But hon. Members opposite must recognise that no independent operator could hope to operate uneconomic services of this kind unless he was also given some entry to the profitable trunk routes.
What enables B.E.A. to operate these services uneconomically is the fact that at the moment it has almost a monopoly—and when the Bill comes into effect it will have a total monopoly, as far as I can see—of the profitable schedule trunk route services to Scotland.
§ Mr. Rankin
Surely the hon. Member is aware that for years B.E.A. has been running these uneconomic routes in Scotland because of the success that it has made of the Mediterranean routes, and the profits from them.
§ Mr. Maude
All I can say is that if B.E.A. can operate the Scottish services only because of the profits it gets from the Mediterranean, one or two independent British operators might be able to show it a thing or two. Certain British companies would be prepared to take a share of the Highland and Island services if they could also have a share, with a reasonable frequency, of Scottish trunk routes. That is enough about Scotland. The hon. Member and his Scottish friends will no doubt have an opportunity to blow their bagpipes at a later stage of the debate.
The Minister gave the game away finally and completely—it is not a very funny game, but a game it undoubtedly is—when he said that if the result of removing from the independents all hope of extending the frequency of their services was to be that they withdrew altogether from the domestic routes, B.E.A. would revert to being the sole operator. Then he said:I therefore propose to institute special measures to ensure that B.E.A. pays particular regard to the consumer interest."—[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1188.]948 He said that he would seek an early opportunity to appoint to B.E.A.'s Board a member with special duties to look after the interests of domestic passengers and would strengthen the terms of reference of the regional advisory committees, and so forth.
Unless the right hon. Gentleman was really accepting our contention that the existence of competition on the domestic routes forced B.E.A. to look after the consumer better, why does he have to take these steps when he is turning it back into a monopoly? Are we to understand that B.E.A. has not been looking after the interests of the passengers? If not, why not? If he feels that it may look after the interests of the passengers worse when competition is removed from the domestic service schedules it is a serious reflection on B.E.A., and it concedes absolutely our point as to the need for competition.
Does the Minister seriously seek to convince us that if B.E.A. has not been properly considering the interests of passengers before, the existence, on the Board, of one more man, who can easily be voted down, will make all the difference? Of course it will not. This was merely an attempt to disguise the implication of what the Minister was saying.
The right hon. Gentleman used to be thought of—and, no doubt, still is thought of—as one of the Labour Party's leading economists. He knows quite well the need for at least the opportunity for growth if any undertaking is to be able to give of its best, is to have an intelligent investment programme for the future, and is to be efficient. The need for any Minister of Aviation now is to secure a real total growth of British civil aviation—not growth by one sector of the market or another, but by all of them together.
To do this it is necessary that no inhibition should be placed upon reasonable growth, subject to the tests which the Licensing Board has always imposed. Let it be remembered that these licences were obtained by independent operators on the merits of the case submitted to the Board, and that the Board, when it granted the licences, accepted that there would be advantages to be obtained by introducing what it described as "some carefully regulated competition"—I 949 emphasise that; it is not unrestricted competition—into international and domestic air transport.
The Minister's statement that no expansion will be permitted on existing routes flying more than one operator has clearly very serious implications. He is, in fact, casting the Act and the Licensing Board firmly on one side. He said that there will be no increase in capacity except in the pioneering of new routes. Incidentally, we hope that anyone who does pioneer a new route will get some guarantee that he will have reasonable security of tenure on the route. The Minister has said that there is no longer any significance in any of the criteria which, in the past, the Board has applied in deciding a case. Such factors as "material deviation", "need or demand for services" and the need to "further British civil aviation" apparently are no longer relevant.
Evidently the Minister is deciding all cases in advance, without consideration of any of them. It cannot be pretended for a moment that this ought to be done without considering the wealth of evidence which used to be submitted on the merits of every case to the Licensing Board—and very often had to be submitted all over again to the Minister if the Corporations appealed. Ts it reasonable to try to regulate civil aviation by political directive irrespective of the merit of individual cases? The result could hardly be anything but unhappy.
So disastrous do we think this policy is likely to be to the future development of British civil aviation as a whole, that I want to make quite clear that the Conservative Party, when it is returned to power, will restore to the independent airline operators the opportunities to expand their scheduled services which the licensing system was intended to allow.
Now that the Minister has demonstrated so clearly what a Socialist Government can make of the licensing system, how totally and completely they can ignore and circumvent the spirit of the Act which the Minister himself is purporting to continue to operate, it seems to me that a future Government would find it at least desirable, if not necessary, to take a broad, searching 950 look at the whole system of licensing and appeal and at the relations of independents and Corporations on the scheduled routes of the world and particularly this country.
The policy of the Minister represents a very great change compared with what has been happening since 1960. What is, to us, most ominous and unsatisfactory is that he has produced, in his statement and subsequently, no shred of evidence or argument whatsoever to suggest that it will represent an improvement in the total position. He has not argued that the Corporations have been suffering grievously and unreasonably from the competition of the independents. He has not argued that the total amount of traffic carried has been suffering. He has not argued that British civil aviation as a whole has suffered from this competition—he cannot, because it must be clear to most people that the total has increased enormously and that the Corporations have continued to show a satisfactory rate of growth.
The Minister has produced no justification for the policies that he is suggesting, which, ultimately, are likely to have the effect of driving British civil independent airline operators off world routes, to the detriment of the total British effort. He has produced no justification for his action and we are, I think, entitled to assume, in those circumstances, that he has been motivated by nothing more than a doctrinal Socialist desire to favour a nationalised industry at the expense of enterprising and expanding private enterprise operators.
§ 4.35 p.m.
§ The Minister of Aviation (Mr. Roy Jenkins)
I must, at least, congratulate the hon. Member for Stratford-on-Avon (Mr. Maude) on one thing, that he has succeeded in introducing a considerably quieter note today than that which existed when I made my statement just over two weeks ago. Indeed, in some senses the hon. Gentleman rather overdid it. As he quietly unfolded his tale of gloom about independent aviation, at one stage implying that the independent companies did not want to go on with charter services, I thought that he was painting a very exaggerated picture; and if I were an independent operator I would not have in mind employing the 951 hon. Gentleman, in his mood this afternoon, as a public relations officer.
§ Mr. Jenkins
I greatly welcome the opportunity provided by this debate to expand upon the statement which I made just over two weeks ago. Several hon. Members then, and the hon. Member for Stratford-on-Avon again this afternoon, spoke as though that statement marked a great switch of policy away from the free competition encouraged by the previous Government and towards a new restrictionism. That is not true, and I will try to show why it is not true.
One of the disadvantages from which we now suffer in these aviation debates is that the Leader of the Opposition pursues with great determination a policy of allowing no one who previously had any responsibility for aviation to take any part in them. We had the right hon. Member for Preston, North (Mr. J. Amery) snatched away from us before the Parliament was a week old. The right hon. Member for Monmouth (Mr. Thorneycroft) has now followed. The hon. Member for Banbury (Mr. Marten) and the right hon. Member for Stafford and Stone (Mr. Hugh Fraser) have been cast into the outer darkness, and the hon. Member for Eastleigh (Mr. David Price), just joined, seems, on this occasion, to have been superseded before he started. As a result of these masterful moves, those who do speak seem to me to be rather hazy about what has gone before.
I think that the hon. Member for Stratford-on-Avon, who did me the compliment of subjecting my statement and answers of 17th February to the most meticulous textual criticism, might have done well had he studied equally carefully the policy and previous statements of his right hon. Friend the Member for Preston, North. Had he done so, he would have seen the position more clearly. For the benefit of other new spokesmen I repeat that there is no new restrictionism. There is no air service, domestic or international, which an independent operator could run under my predecessor and which he cannot run today. There are, of course, three Eagle domestic services which have ceased. But that was not by my edict. It was by the free decision of Mr. Bamberg, and the alacrity with which 952 he took it suggests that he was not altogether sorry to withdraw from his commitment.
I am not blaming him. I agree that the frequencies at which he was permitted to operate were not such as to give him a sound commercial basis. But I was not responsible for those frequencies. If the previous Administration believed that those frequencies could, and should, have been increased without unacceptable harm to B.E.A., why did they not do it?
§ Mr. F. A. Burden (Gillingham)
Of course, the previous Government did so on one occasion. The original licences were for one flight a day, seven days a week. In 1964, Mr. Bamberg appealed to the Minister, and the flights were increased to 12 on Glasgow and 10 on Edinburgh, and still retaining the same frequencies on Belfast.
§ Mr. Jenkins
I was coming to precisely that point in a moment, but I think that it would be more appropriate if the hon. Member, who has a direct financial interest in this matter, kept quiet.
What is the history of the matter? In 1961, Eagle asked for unlimited frequencies on these routes. It was refused by the A.T.L.B., and offered one service a day which, as a start, it freely accepted. In 1963, the company asked for a big increase; on the Glasgow route it wanted to move to about three Britannia return services a day and, later, to about six. At this stage it also wanted a restriction on B.E.A.'s frequencies. Once again, the application was refused by the A.T.L.B.
The matter then came before the right hon. Member for Preston, North, on appeal. The right hon. Gentleman could have done whatever he thought right. What he presumably thought right was to give Eagle two services a day on the Glasgow route, a little less on the Edinburgh route, and to leave it with one a day on the Belfast route: in other words, the apparently unviable frequencies which existed before my statement.
So much for the view that free competition existed under the present Government, and that I stopped it—
§ Mr. Julian Amery (Preston, North)
The right hon. Gentleman says that there is no difference between what he is proposing and what I did, but I was seeking 953 to open the door by degrees as the independents established themselves, and he is trying to close it.
§ Mr. Jenkins
I certainly think that there is a difference between what I am doing and what the right hon. Gentleman did.
I will come to that in a moment, but, before doing so, I want to say that if, as suggested by the hon. Member for Stratford-on-Avon on 17th February, free competition is the only safeguard for the airline passenger, the airline passenger was getting a pretty poor deal from the party opposite.
Is it, then, the case that the previous Government and the right hon. Member for Preston, North would have acted as we acted on 17th February? I do not think so, and I will try to tell the Committee what I believe the differenecs would have been. I do not, in fact, believe that the previous Government would have done much more for Eagle, but I think that they would have dangled a carrot in front of the company's nose and pretended that they might have done more in the future.
I did riot think that this was a right or sensible way to proceed. The two years leading up to the change in Government were not noticeable for decision-making in the Government, and this was particularly so in the field of aviation. Choices were not faced, incompatible objectives were simultaneously pursued, and trouble was constantly built up for the future. This was true with the military aircraft projects, which we debated three weeks ago; it was true of the Government's relations with B.O.A.C., upon which I shall say something later, and it was true of air licensing policy. I was determined not to go on in this way.
Several of the interests involved, notably but not only, British Eagle, asked me for a statement of the Government's intentions. I could have avoided giving one, leaned heavily on the A.T.L.B., and left the whole matter open. But I thought that those interests and the House were entitled to a clear answer, and I tried to give them one. It is much better that those who have considerable and legitimate interests at stake should know the Government's mind, even if they do not agree with it in all respects, than that 954 they should be left to go on groping in the dark.
I turn now to explaining the answer I tried to give them in somewhat greater detail. The policy, as the hon. Member for Stratford-on-Avon said, falls under three heads. First, charter services and inclusive tour operations. There has been a great expansion of this type of business, particularly on holiday routes in Europe, during the recent past. In general, it is not, in my view, desirable to apply restrictions to this type of service. Its growth has been made possible by the liberal licensing policy of ourselves and many European Governments, and it has done a great deal to bring holidays abroad within the reach of a wider public.
This traffic may have some effect on scheduled carriers, but I am not prepared to restrict licences in a way which would prevent some members of the public who want inclusive tours from booking them, and which, in addition, might tilt the balance of trade within the restricted market against British operators.
On the contrary, I have asked the A.T.L.B. if it can simplify and expedite its procedures for dealing with the applications of British operators for this type of service. I am anxious that the airlines should be in a position to offer their services to tour organisers with the minimum of administrative effort and procedural delay. For the present, I intend to apply this liberal policy in Europe and the Mediterranean, where the great majority of the applications arise. I do not intend to generalise about applications for inclusive tours to other areas where circumstances are somewhat different. I have one such application before me on appeal at the moment, so, for me, the matter is sub judice.
Secondly, there are the scheduled services on international routes. As I told the House on 17th February, although I have no intention of disturbing existing services, I am, in general, unconvinced that the national interest is served by attempting to insert more than one British carrier on to the same route. No other European country does this, and the European countries are mostly very resistant to our attempts to secure second rights.
Their resistance is of great practical significance. The A.T.L.B. can grant licences for dual operation, but the 955 Government then have to negotiate the foreign traffic rights. Although, under the last Government, the A.T.L.B. granted such licences sparingly, they remained a dead letter in at least six cases. The previous Government failed to get the traffic rights, and I am convinced from a study of such cases that it is in many instances impossible to get the rights at all, and in most others impossible without disproportionate damage to the existing British operator.
I would apply the same approach whoever the existing British operator was—
§ Mr. William Shepherd (Cheadle)
The right hon. Gentleman said that he found difficulty in six cases. Can he give us the total number of cases dealt with in that category?
§ Mr. Jenkins
I cannot say offhand. There were six cases with which the right hon. Member for Preston, North found difficulty, and which he left on my doorstep. No new cases have arisen. But my hon. Friend will give the hon. Gentleman an answer later in the debate.
As I was saying, I am convinced that in many cases it is impossible to get the rights at all, and in most others it is impossible without disproportionate damage to the existing British operator. This does not merely mean that passengers might be sucked away from B.E.A.; it means that B.E.A. would be required to reduce the frequency of its services in order to insert the second operator. I do not, therefore, propose to press the outstanding cases involving dual designation, but where no dual designation is involved we will continue to press vigorously. That is the answer to another point advanced by the hon. Member for Stratford-on-Avon.
Furthermore, to avoid the waste of everyone's time in future, I shall be prepared to direct the Board, when such a result looks inevitable, to refuse similar applications from the outset. The hon. Member for Stratford-on-Avon himself referred to the cumbersome procedure, first, before the Board, and then, frequently, before the commissioner on appeal. In this type of case that cannot be desirable. I intend to avoid this tedious procedure if there is no possibility of anything resulting at the end—
§ Mr. Lubbock
Has the Minister powers to direct the A.T.L.B. to refuse applications for a particular class? Is he not able to do this only in regard to individual applications?
§ Mr. Jenkins
I have the right, it has always been held—indeed, it was clearly strongly stressed by the right hon. Member for Streatham (Mr. Sandys), in moving the Second Reading of the Civil Aviation (Licensing) Bill—where foreign rights problems are involved. The right hon. Member for Streatham then laid great stress on the fact that it would be wrong to put the Board in the position of forcing the Government to negotiate with foreign Governments. We will, however, encourage the opening up of new routes by independent operators or by the Corporations, and we will be liberal in our interpretation of what is a new route.
This policy will lead to no diminution of competition on international routes. There is plenty of that from foreign operators, even allowing for the wide extent of pool arrangements.
§ Mr. Jenkins
I partly answered that question, but the hon. Gentleman was so busy talking to his right hon. Friend the Member for Bexley (Mr. Heath) at the time that I think he omitted to hear the answer. [HON. MEMBERS: "Offensive."] It is not offensive in the least. I do not regard it as offensive to suggest that an hon. Member was talking to the right hon. Member for Bexley. Surely, even in the present state of the Opposition Front Bench, that is not particularly offensive. What I said, quite clearly, was that in cases where there would be disproportionate damage to the existing operator—and I interpreted that to mean any British operator, whether an independent operator or a Corporation—we would not press for dual rights. As to existing licences, none of them falls in until 1969–70, and I suggest that we see how we get along when we come to that.
§ Mr. Maude
The right hon. Gentleman was so busy trying to demonstrate that I 957 was not listening to his answer that he did not listen to my question. He has answered the wrong question. I am not talking about dual designation here. I asked this question: when an independent operator has already got foreign agreement to, and is operating, a schedule service overseas and that agreement falls to be renegotiated, and there is any objection from a foreign Government, will the right hon. Gentleman support that independent operator to get the rights renewed?
§ Mr. Jenkins
Yes, of course we will, extremely vigorously. I have already said it, but the hon. Gentleman did not seem to appreciate this. I am glad to give the hon. Gentleman the assurance that he needs. Indeed, I went further than this. I said that on routes where no dual designation was involved we would press vigorously for new licences where British operators wanted to open up such routes. Therefore, I go rather further than the hon. Gentleman asked me to go in this respect.
When I was interrupted on that point I was dealing with the question of pools in international airline operations. In my view, pools have their advantages and their disadvantages, but it would be a mistake to think that we would escape from the disadvantages by allowing independent operators on the routes. They participate in pool arrangements just as much as do the more established operators. B.U.A., for instance, is already in pool with the Corporations on three routes. Indeed, the picture sometimes built up of the independents as rugged free enterprisers of the air, anxious in open competition to meet and beat everyone on the tarmac, is to a large extent a fallacy.
Once in, they want protection as much as anybody else. British Eagle, for instance, having been granted freedom for its charter services to Majorca, has recently lodged a claim with the A.T.L.B. that B.E.A. should be made to cut back on its scheduled services, lest this should have an adverse effect on its charters. This is a field in which poachers turn into gamekeepers more quickly than in some other fields.
At the same time, the pool system can sometimes work against legitimate pas- 958 senger interests. I say frankly to the Committee that I am dissatisfied with the position on the London-Paris route today. Under international agreements—not B.E.A.'s own responsibility—fares and load factors are very high. I would like to see B.E.A. taking the lead on this important route in pressing for a better deal, both for the economy-minded passenger and for the passenger who wants to make a short notice booking.
I turn now to the third aspect of the policy and the one which, I freely confess, caused me the most difficulty. This is the question of competition on the main domestic routes. It will be obvious, I think, from what I have already said, and, indeed, from the actions of British Eagle, that the position we inherited was unstable. The issue I had to face was whether or not to move in the direction of unrestricted frequencies, and I say "unrestricted frequencies" advisedly, in spite of what the hon. Member for Stratford-on-Avon said, because this is the logical direction in which to move and I have no doubt that we would have been pressed, had we given a small increase, for a larger increase after a very short period.
There were some attractions in moving in this direction. I would never deny that competition has many advantages. It can improve standards of service, it can put the existing operator on his toes, it gives the passenger a choice, and in the short run it may appear to exert a pressure for lower fares. But how true is this in the special circumstances of civil air transport, with its very heavy capital costs, in the longer run?
The first problem is that of the competitive replacement of aircraft. At first sight, the quick introduction of jets on to these routes might seem a great benefit to the passenger. But the Vanguard, the mainstay of B.E.A.'s services on the domestic trunks, is of all the aircraft currently in service the closest to the concept of a low cost, high capacity aerobus. It has many useful years of life before it. Its early replacement under the stress of competition by more glamorous pure jet aircraft would, for the sake of marginal improvements in passenger appeal and a small reduction in sector time, substantially increase capital charges. In the longer run, either the passenger or the 959 taxpayer would have to pay, and pay heavily, for this.
Even in the short run, however, the fare argument for competition has been made to look pretty threadbare. B.E.A. acting with a great sense of public responsibility and far differently from the normal image of a harsh monopolist, responded immediately to the new statement of policy by withdrawing its application for fare increases on the three routes where Eagle had operated. On these routes, without question, the fares over the next months will be lower than those which would otherwise have been asked for. Every passenger between Glasgow and London, Edinburgh and London, and Belfast and London, should pay due regard to this.
§ Mr. Stephen Hastings (Mid-Bedfordshire)
Can the right hon. Gentleman explain to the Committee when B.E.A. will be equally responsible in regard to its fares on the London-Manchester route?
§ Mr. Jenkins
I am coming to that in a moment.
On other domestic routes, B.E.A. and the independents, excluding British Eagle, have asked for increases, but, as this issue seems likely to come before me on appeal, I cannot say any more about it in this debate. I ask the Committee to note that B.E.A. is not alone in this respect and that it is only on routes where it was trying to secure a position that British Eagle refrained from asking for fare increases.
There is another big factor to be set against the apparent advantages of competition. The customer buying transport, to a much greater extent than the customer buying an ordinary commodity, is concerned about when and where it is provided. Neither individual nor national needs will be met if there is too great a concentration upon the densest routes and the densest times. The best use of our national air transport resources will not necessarily be secured if there is headlong competition for the nine o'clock in the morning and the six o'clock in the evening London to Glasgow traffic.
We need good services throughout the day. We need to maintain the Highlands and Islands services, which B.E.A. at present performs as a social duty and 960 at a substantial loss; and we need a big growth of inter-city services throughout the country, a rôle in which I believe that the independents can play a most useful and expanding part. I will be very glad to do my part in helping them to security of tenure on these routes.
Considerations of this sort, and not dogma, have led to regulation rather than competition in almost all our transport services. The historical trend of our railway system has been that of merger and eventually single operation; and so, too, has been the trend in the field of bus and coach operations. These developments have come about not as a result of doctrinaire views—Administrations of all political parties have introduced the governing legislation—but as a result of hard economic facts and unhappy experience of the results of competition on the standards of service. This has been true over almost the whole world.
Even in the field of American air transport, which is sometimes cited as an exception, the rôle of competition can easily be exaggerated. The circumstances in the United States are quite different. The size of its internal market is 50 times as big as ours. Even so, there are many routes with only a single operator, the trend is away from multiple operators, and national reports, like President Kennedy's "Project Horizon", have stressed the dangers of competition.
With these considerations in mind, we decided against a move towards full competition on the domestic trunks even though this involved facing certain marginal disadvantages. These I am endeavouring to eliminate by my proposal for a "consumer" member of the Board of B.E.A., by a strengthening of the regional advisory committees—and I hope to meet the new Scottish one next week—and, most of all, by B.E.A.'s acceptance of the national duty which it bears to act as an imaginative and passenger-conscious public carrier. It has a fine record of building up services and I am confident that it will do still better in the future.
I cannot understand the view that this is a contradictory approach, and I am surprised at the logical slovenliness on the part of the hon. Member for 961 Stratford-on-Avon which leads him to think that it is. Of course, monopoly has its dangers, but in transport those of wasteful competition may be much greater. There is nothing logically inconsistent about admitting and mitigating the one without plunging into the waste of the other.
I turn now to a separate but not entirely unrelated matter—the Government's proposals for the reorganisation of the financial structure of B.O.A.C. These may serve as a reminder of the difficulties and the waste of public money which can arise from shortsighted and wavering policies towards the nationalised air Corporations. B.O.A.C's accounts for the year ended 31st March, 1964, showed an accumulated deficit of £90.5 million. Of this sum, about £80 million represented past losses.
The causes of these losses have been analysed at length and are a matter of public record. I do not want to take up the time of the Committee, or to reopen old controversies by going over them once again. While the deficit and its associated interest payment remains as a dead-weight on the Corporation, it serves only to impair morale and stultify the determination of the management and staff to put the Corporation's policies and programmes on a sound basis.
In his letter to Sir Giles Guthrie of 1st January, 1964, the right hon. Member for Preston, North charged him to produce within a year a plan which would enable B.O.A.C. to achieve a break-even. It was recognised that the plan would involve a review of the route network, the size of fleet needed to meet estimated traffic requirements, and some tautening of the administrative and technical fabric of B.O.A.C's internal organisation. This plan is now to hand. The route network has been surveyed and, apart from the excision of a service to South America, remains intact.
The fleet now on order matches the estimated requirements and Super-VC10s will come into service as needed. The last 10 of these aircraft remain in suspense, but I am hopeful that they will eventually form part of the Corporation's fleet. Steps have been taken to rationalise the Corporation's labour force and although their full benefit will not 962 be realised immediately I believe that the results achieved so far are encouraging.
The commercial remit to Sir Giles Guthrie led, however, to considerable controversy last summer about the composition of the Corporation's fleet. As a result of the compromise solution then reached, the right hon. Member for Preston, North, in his letter to the Chairman of B.O.A.C. of 31st July, 1964, which was published in the Corporation's Report, gave an assurance that the Government would take the necessary action to reorganise the capital and financial structure of the Corporation so as to enable it to operate as a fully commercial undertaking with the fleet now on order. That pledge we have quickly honoured. It is the logical counterpart of the measures which B.O.A.C. has itself taken to set its affairs in order.
As to the actual sums involved, it is, I think, common ground to all on both sides of the House who have considered this problem that the bare minimum must be the writing-off of the accumulated deficit as it will appear in the accounts on 31st March, 1965. This step is a recognition of the fact that the part of the Corporation's borrowings from the Exchequer used to finance this loss cannot now be substantially repaid and that the interest on it is now a discouragement rather than an incentive to a good financial performance by the Corporation.
We propose to go a little further in order to put B.O.A.C. in a position to operate in a fully commercial fashion without obscuring its true financial result. Long-haul air transport is peculiarly susceptible to trading fluctuations and to hazards both as to cost and as to revenue. We therefore propose to establish a reserve against contingencies. The write-off of the accumulated operating deficit and the creation of an adequate reserve will, in all, entail a cancellation of debt to the Government to the sum of £110 million and I hope to introduce early legislation to this end.
No new money or call on real resources is involved, but assistance on this scale clearly calls for appropriate safeguards for the Exchequer. The Government therefore propose to take powers to control any transfers from the reserve to 963 revenue account, to determine the distribution of any profits earned by the Corporation, and to control the investment of any surplus cash which the Corporation may accumulate. The Committee may also wish to know whether any part of the reserve would, as a result of the commercial and financial arrangements between B.O.A.C. and B.O.A.C.-Cunard Limited, find its way to B.O.A.C.'s private partner in the latter company. I assure the Committee that the nature of the reconstruction to which I have referred will be such that this will not occur. I hope that the measures proposed will help the Corporation to put its past troubles behind it and, in future, to match with financial success its deservedly high reputation for safety and service.
This problem, which I believe not even the most determinedly partisan Member opposite can deny came to me as a direct inheritance from the previous Government, illustrates the interest that we all have, or should have, in the success of the air Corporations. They operate in a difficult field. They deserve the full support of Ministers—and from this Government they will get it. We are not willing to see the profit eaten out of the routes which they have pioneered and built up, and the taxpayer left to deal with the resultant deficit.
This appeared to be the view of the right hon. Member for Streatham when he introduced the Civil Aviation (Licensing) Act, 1960, and said:Nobody is prepared to put up the large sums of money required for the purchase of modern aircraft and the setting up of maintenance bases and sales organisations without some measure of security. They naturally wish to be assured that, having built up custom on a particular route, they will be given some reasonable protection against interlopers who seek to reap where others have sown."—[OFFICIAL REPORT, 2nd March, 1960; Vol. 618, c. 1233.]We intend to give meaning to those brave words—stronger words than those we have used—of the right hon. Member on that occasion. At the same time, I repudiate entirely the view that we have any vindictiveness towards the independents.
§ Mr. Kenneth Lewis (Rutland and Stamford)
The right hon. Gentleman used the word "interlopers" in relation to the routes of B.O.A.C. Most of its competitors are foreign carriers, but 964 recently B.O.A.C. handed over one of its runs to independents to pioneer it.
§ Mr. Jenkins
I am sorry that the hon. Gentleman misheard me. The word "interloper" was used by the right hon. Member for Streatham, and the right hon. Gentleman, in that part of his speech, which I have here, was dealing specifically with relations between the Corporations and the independents.
As I have said, I repudiate entirely the view that we have any vindictiveness towards the independents. One of my first actions on taking office was to confirm B.U.A. on the South American route, and we have since given the airline every assistance, with my hon. Friend the Parliamentary Secretary playing a notable part, in the quest for traffic rights.
I have myself a considerable respect for the initiative of many of those concerned with independent operations. I have no desire to stifle that initiative, and I do not believe that this policy will have any such effect. Indeed, I shall be very surprised if the next few years do not see a continued and rapid growth in the prosperity and scale of operations of these companies. But I do not want to see that initiative devoted largely to struggling with the Corporations for peak services on a small number of high-density routes. I do not consider that to be the best way of building up British civil aviation. We want a wider spread of energies, and I believe that this policy will help to achieve it.
§ 5.11 p.m.
§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
I rise to address the House for the first time, and, as is customary, I ask the indulgence of right hon. and hon. Members. I am very conscious of being one of a rapidly diminishing band of hon. Members who, with the passage of the past four months, have probably now acquired something of a scarcity value.
I do not know whether my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) realised how prophetic he was when he said that the Scots would have plenty of time to blow their bagpipes. I admit not only to being a Scot, but to playing the bagpipes, though I shall reserve the playing of the pipes for another occasion.
965 First, pay tribute to my predecessor, Sir Colin Thornton-Kemsley, who, almost a year ago, celebrated his twenty-fifth anniversary as a Member of the House. I know how respected he was both here and in the constituency. I owe him a particular debt of gratitude for his kindness and guidance to me, qualities which, I am sure, can be testified to also by hon. Members who knew him when he was a Member.
Having listened to several maiden speeches. I understand that it is customary to extol the virtues and beauties of one's constituency. However, I shall confine myself to saying that my constituency is no less virtuous and no less beautiful than any of those of which we have heard. Listening to what is sometimes said, I think that the British Travel and Holidays Association, or, perhaps, the Scottish Tourist Board, could make more use of hon. Members in boosting the holiday trade and tourist traffic in their areas.
North Angus and Mearns has problems very similar to those in more remote constituencies. Fortunately, we do not suffer the problem of unemployment, because people in my constituency have initiative and enterprise to move elsewhere, but this migration presents one of our bigest problems. Because we have a low unemployment rate as a result of migration, most of the constituency fails to qualify for assistance under the Local Employment Act, which has been of such benefit elsewhere and has changed the face of Central Scotland.
The benefit which comes under the Local Employment Act is only one benefit which can help areas such as mine. Many other benefits are equally important, and one of these is good communications. In the list of good communications, good air services rank very high indeed. This was most forcibly stated in the Toothill Report on the Scottish Economy, a few years ago. That Report pointed out that, if areas such as Scotland were to have their share of industries based on technology and science—something which we had missed in previous decades—it was essential that those working in such industries should have easy access to other centres of industry in order to keep information up to date and to maintain an exchange of ideas.
966 In a country such as Scotland, where we rely so much on sending away or exporting what we produce, it is most important that firms should be able to establish a good market relationship with the areas which they serve. In view of the distance we are from the main consuming centres, it is essential that we have good air services. It has been said that, on the one hand, we must have ease and speed of personal travel if, on the other, we are to have jobs and development.
One of the Toothill Report's conclusions was that, in areas such as Scotland, communications must be not of a standard similar to that in other areas, but of a higher standard. Two of the most important factors for us in relation to air travel are that we should have a good frequency of flights and a ready availability of seats.
I pay tribute to what B.E.A. has done in Scotland not only on the trunk routes, but in opening up services within Scotland. There have been references to this already in the debate. Nevertheless, deficiencies are developing now. One of our greatest weaknesses is that, while we have, at Prestwick, an international airport with, perhaps, the best record for weather of anywhere in Europe, there are no internal links with that airport. In Scotland now, there are about 70 firms of American origin, and for these firms there must be a good and easy link with America, yet, unless a firm happens to be based in the West of Scotland, near Prestwick, it is easier to travel to America via London than it is from our own airport at Prestwick. This, I suggest, is a very roundabout way by which to go.
Another of our deficiencies is in our links with Europe. Scotland's export trade with Europe is running at present at a value of £130 million a year, almost one-third of our total exports, yet in our links with Europe we have only four flights a week with Holland, three with West Berlin and seven with Denmark. Moreover, all these flights are operated by foreign airlines, and they are at the tail end of transatlantic services, with consequent loss of punctuality. We have, it is true, one direct flight via Birmingham with France every day from Glasgow, but with important industrial countries in Europe such as Belgium, West 967 Germany and Switzerland, and other countries as well, there are no direct service links whatever.
One of the consequences is that anyone travelling from Scotland to the Continent has usually to go through London Airport. The congestion of goods in the London docks today is common knowledge, but we are witnessing an equal congestion of passengers at London Airport. If more direct links with the Continent were developed, perhaps from Scotland via the Midlands, not only would this be an enormous service to Scotland, but it would help relieve congestion at London Airport.
Another vital need is for adequate feeder services within Scotland. I cite the example of Dundee, a city which, with enterprise, has developed an airstrip. We have air charter firms which are prepared, also with enterprise, to operate flights from this airstrip. But an airstrip and charter flights are no substitute for a proper air service and a proper airport, and I suggest that, with the development of the Tay Road Bridge, consideration should be given to the use of Leuchars Airport for a service to Dundee. Until Dundee has this, not only the city itself but the surrounding counties of Perth-shire and Angus will be denied one of the essential prerequisites if we are to have the right degree of industrial development.
As has been mentioned in the debate, a further blow has been struck at air services to Scotland in the withdrawal of independent airlines from the trunk routes. The reasons for this decision have already been examined. But in the granting of a virtual monopoly to B.E.A., we are losing in Scotland a spur which we previously had to good service and punctuality. Anyone who has used these services regularly over recent years appreciates the improvements which have taken place.
I should like to look at the further implications of this withdrawal of the independent services to Scotland. One of the most serious of these implications is that it will destroy the prospects of getting more feeder services, which Scotland needs so much. Unless an operator has the opportunity of working a good trunk route, it is most unlikely that he 968 will ever consider running a feeder service. The independent airlines have already shown their enterprise—Cambrian Airlines is one example—in how feeder services can be operated efficiently and so as to provide a good service to those living in a particular area. I believe that in this action which the Minister of Aviation has taken we have turned the clock back on the hope of getting better feeder services within Scotland.
May I also mention the Highlands and Islands service? I believe that independent airlines should be given opportunity of working these services. A great deal is made of the loss at which these services run. It is worth while getting the loss into perspective, particularly if it is related to the services which are provided. It is very little higher than that incurred in the services, for example, to the Scilly Isles.
We must look at the loss on these services not just as an economic loss, but as a social cost—a cost which the community should be prepared to bear if we are to continue to support life in those areas. If we are prepared to accept that these services are worthy of a subsidy, there is a case to be argued for putting them out to tender to different airlines, including the independent airlines, and for saying that whichever company is prepared to offer this service at the lowest subsidy, should be given the opportunity to run the air service. In this way not only would independent airlines have the opportunity to run good services but it would also save money.
It is interesting to note that the cost per seat-mile of B.E.A. at present is 4.1d., whereas the cost per seat-mile for British Eagle, the airline which was competing on the Scottish service, is 2.63d. I believe that, given the opportunity on trunk routes, independent airlines would be able to improve services not only within Scotland, but from Scotland to Europe and from Scotland to America. This could be vital to the future economic prosperity of Scotland.
I thank hon. Members for their patience and forbearance.
§ 5.25 p.m.
§ Mr. Raphael Tuck (Watford)
It falls to me, happily, to congratulate the hon. Member for North Angus and Mearns 969 (Mr. Buchanan-Smith) on his maiden speech and to welcome him to this assembly as a fully-fledged Member. While he was making his speech I envied him considerably. It is not many weeks ago that I made my maiden speech, falteringly, hesitatingly and very nervously indeed. In fact, although the House must have suffered agonies while I was speaking, these were not to be compared with the agony which I suffered. Yet how kind was the hon. Member for Edinburgh, West (Mr. Stodart) when he congratulated me, for he purported not to notice any of these shortcomings.
There were none of these shortcomings in the speech of the hon. Member for North Angus and Mearns. He spoke fluently, cogently and even convincingly. At one part of his speech I wondered whether he should not be on this side rather than on the Opposition side. However, there is always hope for everyone on the benches opposite. His speech was very well delivered. May I congratulate him upon it and express the hope, which I am sure that I am expressing for Members on both sides of the Committee, that we shall hear from him on many occasions in the future.
I congratulate, too, my right hon. Friend the Minister on his successful attempt to make order out of chaos. Aviation and the aircraft industry in this country were in a state of chaos when he found it. Unfortunately, it has never been planned in the way which I should like to suggest it should—this is an heretical suggestion but I feel that it should be planned right throughout the way ahead by a planning body so that we do not have the spectacle of aircraft going into disuse without other aircraft to replace them immediately instead of a time lag intervening.
May I call the Minister's attention to a very important matter which, in my view, may have a lasting effect upon our aviation prospects? It concerns the granting of certain credit facilities, which I shall outline later in my speech. Middle East Airlines, which is pro-British in its attitude, has been at pains to replace its fleet of Comets, and the two protagonists in the field for this order are the British and the Americans—the British Super VC10, which my right hon. Friend mentioned, and the American Boeing 707.
970 Middle East Airlines will need between five and seven of these planes, and the order will be of about £14 or £15 million. The United States is fighting hard, as it always does, in competition with Britain for this order, and it has been able to make a more attractive offer than has Great Britain. The United States intends to slash the price of each Boeing 707 by £300,000 and to grant credit facilities extending over 10 years.
There are signs that Middle East Airlines is beginning to be wooed by this more attractive offer. The British Aircraft Corporation has made a counteroffer; last week we saw that it was slashing its figure by £200,000 and possibly by £300,000. But it was able to offer only seven-year credits. Boeing hopes, we are told, to sell other jets to the Middle East, particularly in view of the expected delay in the supersonic Concord. We know that Boeing is trying to sell medium-range 727 airliners. These are direct rivals to the Hawker-Siddeley Trident. Once it establishes its position there, a pool of spares will be created, and Boeing then will have a very big head start when it comes to the short-haul planes—its 737 in competition with our B.A.C. 111, the so-called bus-stop plane.
Middle East Airlines had a board meeting on 11th February to decide where it would place the order—for VC1Os or Boeing 707s—a very important order of £15 million. But the final choice was delayed, and Sheikh Alamuddin was authorised to continue negotiations. Why, one might ask, this reluctance to reach an early decision? Is it because it is pro-British, or is it because it has a preference for the VC10; or is it because of the uncertainty in which the British aircraft industry finds itself?
The sheikh is said to be concerned with the question of comparative credits offered by the United States and Great Britain. Then we find that Boeing gave an additional inducement. It guaranteed a five-year backing of a full range of spares, maintained at Beirut, with payment necessary only as and when the spares are used. That may be felt to be a very attractive offer.
The sheikh is known for his favourable attitude towards the British aircraft industry. In the past we have seen the purchase of Viscounts and Comets, and the sheikh is also a Concord customer. But 971 the American temptation may prove too much for him. This would be serious because the Middle East Airlines jet order is of major importance. One great fact may be unknown to many hon. Members—that Middle East Airlines is a very big trend setter in the Middle East through its maintenance and operational tie-ups with other Arab airlines. Whatever it buys, therefore, will have a marked effect on the re-equipment decisions of other airlines in the area. Other airlines will probably follow suit and do as Middle East Airlines does.
What I have just said is exemplified by the fact that some years ago Middle East Airlines bought Comets. This was immediately followed by another company in the Middle East buying Comets also, a company now known as United Arab Airlines, although that was not then its name. Therefore, if Middle East Airlines buys Super VC10s, it will probably be followed by other orders for those aircraft in the Middle East, possibly totalling 12, whereas if it buys Boeings the others will follow its lead.
Twelve may seem a small number. But there are only 58 Super VC.10s on the order book at the moment, including 13 for the Royal Air Force. Therefore, 12 is quite a large proportion. As they would cost about £15 million, the extra 12 would considerably add to our exports, to say nothing of the possible easing of redundancies if the TSR2 should be cut. If, on the other hand, Boeing gets the order, with the pool of spares and the organisation in the Middle East which the order will enable it to set up, the prospects for our giving future comparative and competitive advantages to any purchaser look very bleak indeed.
I have already mentioned short-haul aircraft. Perhaps I might remind the Committee that Lufthansa has recently announced the purchase of 21 Boeing aircraft in preference to our B.A.C. 111, the reason being the better financial terms which the Americans were currently able to offer. The British Aircraft Corporation cannot offer a credit of more than seven years. I would urge the Government to underwrite the order for the three additional years after the expiration of the seven-year period which the British Aircraft Corporation is prepared to risk. In that way the British Aircraft Corporation would be able to offer a 10-year credit, 972 and, of course, a spares arrangement in line with that proposed by Boeing.
§ Mr. R. J. Maxwell-Hyslop (Tiverton)
I was under the impression that the Export/Import Bank in America also limited the term of credit that it would underwrite, the object being that there should not be an unlimited credit war between the E.C.G.D. and the Export/ Import Bank. I understood the hon. and learned Gentleman to suggest that the Export/Import Bank was enabling Boeing to offer a credit of 10 years and that, therefore, the E.C.G.D. should underwrite a Vickers credit for 10 years.
§ Mr. Tuck
No. I was asking the Government to underwrite the credit for an extra three years to enable the British Aircraft Corporation to be on the same bargaining power level as Boeing. If that happened, it is most probable that the sheikh would order the British aircraft instead of the American. This would be welcomed by the British Aircraft Cor-poration—the heads, the management and the trade unions. It should not be forgotten that the order would be for £15 million, and that it would open the gates for other sales. It might be a turning point in the progress of the British aircraft industry.
I felt so strongly about this that this morning I attempted to table a Private Notice Question to the Minister, but, unfortunately, I was unable to do so. Therefore, I have taken this opportunity to urge my right hon. Friend and the Government to consider making available the credit facilities that I have mentioned. It is not very much to ask, but the results would be extremely revealing, possibly out of all proportion to the risk.
§ 5.37 p.m.
§ Mr. F. A. Burden (Gillingham)
I hope that the hon. Member for Watford (Mr. Raphael Tuck) will forgive me if I do not follow him to any great extent, but I was interested to hear what he said about the proposed purchase by Middle East Airlines of VC10s. Things have not been made any easier for the sale of the VC10s by the panning which that aircraft, an extremely good one, received from the Chairman of B.O.A.C. It is greatly to the credit of B.U.A. which, despite it, purchased the aircraft, and has given most glowing reports of its performance.
973 Every effort which can be made to induce persons overseas to purchase the VC10 is of tremendous value and advantage to the British Aircraft Corporation. The hon. Gentleman's suggestion about extended credit has a very great deal of common sense in it, because it is evident to most people that we have reached a stage in subsonic aircraft when there is unlikely to be any tremendous improvement in the next few years and that 10 years might now be reckoned to be a reasonable period of amortization. Consequently, the hon. Gentleman's suggestion is extremely commendable, and I hope that the Parliamentary Secretary will pay great regard to it and bring it to the notice of his right hon. Friend the Minister.
I turn to the major question of the debate, which is the situation of the independent airlines. As I invariably do, I at once announce my interest. I am a director of British Eagle, but I hope that that will not in any way mean that I shall not deal with the subject as impartially and as factually as I possibly can.
It is essential at this stage that we should get the whole matter into perspective and to do that we must go back to the Conservative election manifesto of 1959 which, dealing with the nationalised industries generally, said:In addition, we shall review the situation in civil aviation, and set up a new licensing authority to bring a greater measure of freedom to nationally and privately owned airlines.Indeed, it was through the activities of the Air Transport Licensing Board which was to be set up that this policy was to be introduced. At this stage, it is also interesting to refer to one or two statements made by Ministers during the proceedings of the subsequent Act, the Civil Aviation (Licensing) Act, 1960. The then Minister of Aviation, moving the Second Reading, stated that the Bill fulfilled a pledge given by the Conservatives at the General Election and that it would establish an independent authority to which all airline operators could apply on an equal footing for licences to run regular services.
Winding up the debate, the then Parliamentary Secretary said: 974The main aim is to bring the law into line with reality, by abolishing the now quite fictional monopoly of the Corporations and securing equality for both public and private enterprise before an independent Board.Later, he said:There should be no thought of a battle between the Corporations and the independents. This is not a great ideological issue. The independents may well try to seek a bigger share of an expanding traffic, but that does not necessarily mean a bigger percentage."—[OFFICIAL REPORT, 2nd March, 1960; Vol. 618, c. 1308–11.]During the Committee stage of the Bill, in Standing Committee B, the Minister said:I believe that hon. Members opposite completely underrate and under-estimate the strength of the position the Corporations … The problem is whether the independents will, as a result of the Bill, be able to get a look in."—[OFFICIAL REPORT, Standing Committee B, 22nd March, 1960, c. 52.]I believe that those quotations put into perspective the functions the Act was intended to fill. The present Minister of Aviation has quite a few misconceptions about the Air Transport Licensing Board and should try to get them straight. He must remember that the Board came into being as a result of that Act and that, ever since it has been formed, it has kept well in mind the interests of the Corporations.
The licences granted to the independents have been very limited in frequencies—and no one objects to that because no one, least of all the independents, ever expected that they would be able to cut right in on the present services of the corporations. In fact, they have had, as my hon. Friend the Member for Stratford-upon-Avon (Mr. Maude) said, only a little share of the growth of traffic, and they have not cut back in any way the traffic that existed at the time that the Board was set up.
In addition, of course, at the same time, and even on the routes on which the independents were licensed, there were no restrictions whatever on the Corporations, which could introduce as many new frequencies as they wished. In other words, they were in a position of being able completely to blanket any independents that got a very limited frequency on any route.
British Eagle was given the opportunity to operate on three domestic traffic routes: London—Edinburgh, London—. 975 Glasgow and London—Belfast. It started to do so in November, 1963. It started to operate with one service per day on each route, except for the Edinburgh route where, in winter, frequency was restricted to five flights a week. In 1964, because this was obviously a pattern which could not result in anything like a reasonable aircraft utilisation nor any possibility of building up traffic or being able to satisfy any traffic needs, British Eagle applied to the Minister and I want to take up a point on this which was made by the right hon. Gentleman today.
The right hon. Gentleman said that his predecessor had done nothing to encourage the independents to get better frequencies. That is not true, because there is an instance where, in the light of growth at the time, my right hon. Friend the Member for Preston, North (Mr. Amery) increased the number of flights to Glasgow to 12 and to Edinburgh to 10. But there were still only seven London—Belfast flights. It is my experience and my knowledge that, unless one has a reasonable frequency, it is quite impossible to make a profit. That does not matter where the Corporations are concerned; they are not affected the same way because they go to the Treasury, which extends them loans that build up to a terrific deficit and then conveniently wipes them off and lets them start again. But it is not the same for private industry and can never be the same generally for private industry, on which the whole economic basis of the country really rests.
British Eagle continued in the hope that, in the long run, the loss could be turned into profit by a reasonable extension of frequencies and all that the company has asked for at this stage is that the frequency should be increased to three services daily to Glasgow—on that one route, only. That would give it only a fair, a reasonable share of the increased traffic.
§ Mr. Rankin
The hon. Gentleman refers to three flights that British Eagle has asked for. Do I take it that he is referring to the report in the Press today and the three mentioned there, or to the three flights in addition to the three that he is talking about?
§ Mr. Burden
No, not at all. I am talking of a total of three flights, to Glasgow alone.
976 What is to be taken into account on this route? The right hon. Gentleman talked about the London-Paris route and how he hopes to improve it. Somehow, I presume that this will be done by introducing extra competition, although there is already competition from the French and other airlines. But the point is that the London-Paris route is less able to carry a second carrier even than Glasgow.
The London-Glasgow route is the densest in Europe. In 1962—not so very long ago—it carried 1,000 passengers a day. It has been estimated that, in 1972, it will be between 4,000 and 5,000 passengers a day—a very big growth. Surely, on that basis, it is not asking too much to be given three flights a day, or perhaps a little more.
In any case, as the Minister knows, if the traffic increases to such a degree, and one carrier alone is allowed to expand to pick up the whole of that increase, then the importance of the carrier restricted to one or two flights a day becomes so low that no one will travel by that line anyway. He would be swamped. This is what could happen.
§ Mr. Roy Jenkins
Is the hon. Gentleman saying that that is precisely what would result from the difference between two and three flights a day?
§ Mr. Burden
I am saying that three flights a day would be much better because it would allow the spacing to be much better and would provide an opportunity for a profit to be made. I was hoping that as the number of passengers on that route increased there would be an increase in the number of flights allowed to the independents.
Many of us on this side of the House have many times asked hon. Members opposite when they were in opposition—and I assure the hon. Member for Watford, who was suggesting what my right hon. Friends would have done if they had been the Government, that we shall soon be back on that side—what they would do for the British aircraft industry if they should ever come to power. But we tried without success. Labour Members dodged and evaded and prevaricated.
In view of the far-reaching and drastic changes in the aircraft industry which they have made, one might have expected some mention of the aircraft 977 industry in their manifesto, but although I went very carefully through it, not twice but thrice, yesterday afternoon, in case I had missed it, I could not find a word about their intentions towards the British aviation industry. At least the Tories made their intentions clear to the public and the industry before the 1959 election.
I doubt whether the employees and others in the aircraft industry would have been as happy, as many of them undoubtedly were, about voting for the Labour Party if they had known what was in store for them. Obviously, this was something about which the Labour Party did not wish to be very forthcoming, in view of the disruption which it intended to create.
We did not have to wait very long. At the end of November, we had the Minister's statement about trooping and on 17th February we had his statement which was responsible for this censure Amendment. Despite what the right hon. Gentleman may now say, believe that the aircraft industry, the independent operators as well as the manufacturing industry, is in danger of being bled slowly to death by the policies of the Labour Party. The Government are forcing the independents into choosing between getting out and going into bankruptcy.
Why did the Labour Party not make its intentions clear before the election? The reason was that in the independent airlines there are 10,000 employees, quite a sizeable number of voters. If anything too drastic were to be done, so that the independents reacted immediately by saying that they could not go on, the 10,000 employees would have immediately gone on to the labour market. The Government's view is that it does not matter so much if there is an extended period of close down, for it is then much more difficult to lay the blame at the feet of the Government. They also hope that those employees will more easily find other jobs in other industries.
If the right hon. Gentleman believes that, he should get in touch with the trade unions. They will tell him that whatever expansion comes about in the Corporations, the Corporations will be able to take only very few of the people now working for the independents. If the 978 independents have to go out of business, the effect will be felt by men working in the aircraft factories, perhaps men of 54 or 55, who have been working in in the industry for 30 years, highly skilled and highly paid and having built up a position in which they can expect an honourable and reasonably comfortable retirement.
Does the right hon. Gentleman believe that those men will be able to find jobs with pay as rewarding as in the aircraft industry, in which they have been trained and in which they have spent their lives, even with the assistance of training schemes and other projects which the Government may bring forward? These are very urgent matters, matters about which Labour Members would be up in arms if they were in opposition.
§ Mr. Rankin
Would not the hon. Gentleman agree that it is also important to maintain trade union conditions and trade union wages among the independents? What is he doing to achieve that?
§ Mr. Burden
Of course it is, and it is the one thing, above all, which the independents want. But if the independents are not to be given the opportunity to make a profit and to make a decent living themselves, how are those other things to be done?
§ Mr. Burden
No, I shall not give way to the hon. Gentleman again. He will speak at very great length. I can assure him that there is a wonderful ésprit de corps among the staffs of the independents who believe in their companies and who are prepared to work happily with them.
On 17th February, the right hon. Gentleman said that the independents should be given little or no protection while the Corporations would have every assistance to destroy them, as I understood what he was saying. In the past, trooping has been reserved almost entirely to the independents, but the right hon. Gentleman has said that this is no longer to be the case, that it is not right that there should be a closed market for trooping, that there must be competition, that the Corporations should be allowed 979 to compete, and that competition in trooping is an extremely good thing.
The right hon. Gentleman also said that inclusive charters would be preserved for the independents. The last thing in the world he would dare to do is to interfere with the holiday arrangements already made by the independent operators. The last thing he would dare to do is cause disquiet among the thousands of people who rely on the services of the independents for their inexpensive holidays abroad. Of course he will not cut those back so that people are forced to fly on scheduled routes. If he did, there would be uproar among holiday makers, and he knows it. He is playing it very close to the chest and very cagily.
The right hon. Gentleman went on to say:In the short run, unrestricted competition might produce a better service to passengers … The longer term results could well be to force up fares, or to lead to a lower frequency after one operator had been eliminated. The benefits to the passenger would be short-lived."—[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1188.]But it is strictly laid down that the A.T.L.B. will give second frequencies only where there is no dilution or diversification of the traffic of existing carriers. If the Minister likes to question that, I have it here.
§ Mr. Roy Jenkins
Even the present very limited unviable frequencies are greater than those which the A.T.L.B. was prepared to allow. They were increased on appeal by my predecessor. Therefore, to call the A.T.L.B. into evidence is quite irrelevant.
§ Mr. Burden
That is not quite true, because it is laid down that this shall be the policy. The Minister also has the power, within that policy, or he had until he changed it, to vary it slightly, but not to destroy it. There was no question of destruction here.
In the second place, the Minister admits in his statement that monopoly is against the best interests of the consumer. But, in the third place, he has created the situation which he agrees is against the best interests of the consumer—in other words, a monopoly by the Corporation. He says glibly, "To protect the consumer we will create an ombudsman for the aircraft industry, someone who will look 980 after the consumers' interests". As has been said, what chance would that gentleman have of changing policy if he were one of a board of high-level airline directors?
I am extremely disappointed in the Minister.
§ Mr. Burden
The hon. Gentleman may not be, but I am extremely disappointed in the Minister, because he had his business experience in private industry.
§ Mr. Burden
Yes. The organisation in which the right hon. Gentleman was engaged was a great believer in competition. Its vans went round the country—
§ Mr. Eric S. Heffer (Liverpool, Walton)
Is the hon. Gentleman suggesting that it is not a good thing to read and study books?
§ Mr. Burden
The vans of the Minister's former organisation went round the country with the words writ large on them, "We are never knowingly undersold". I had hoped that his experience in that firm would have enabled him to bring the same ideas about competition to his present office, but apparently he has left them all behind. Or is it that the pressure from some members of the Left-wing—[HON. MEMBERS: "Oh."] I am sorry, but those gentlemen, throughout the years, have made it perfectly clear that, in their view, there should be no independent operators and very few independent privately-owned firms of any kind in this country.
The Minister talks glibly about the security of the independents under the Government. I remind him that no longer are operators chasing one another to obtain new aircraft which are coming off the stocks and which must be purchased for prestige and policy purposes. We have reached the twilight period between the supersonic and subsonic aircraft. It is likely to go on for some years. It is unlikely that there will be any great improvement in subsonic aircraft, certainly in the next 10 years. 981 Therefore, the Corporations will be able to operate the aircraft which they already possess for seven to 10 years.
In the past, the aircraft which have been declared to be out of date by new purchases by the Corporations have gone to the independents, who have been able to buy them at reasonable prices and to run special services at low rates. Now, if they are to compete and if they are to hold and improve their position, independent operators will have to buy pure jet aircraft from the manufacturers. The Minister must bear this in mind in the interests not only of the operators, but of the British Aircraft Corporation and the people working in it.
In his speech, the Minister said that one of the factors which had influenced him concerning British Eagle's application was that if it competed with B.A.C. 111s against Vanguards of British European Airways on the trunk routes it would take traffic from the Corporation. That was an extraordinary thing to say. What the right hon. Gentleman said, in effect, was, "I shall deny the best aircraft to the consumers. I shall refuse to allow the British Aircraft Corporation to have an order for six jets because I do not believe that B.E.A. would like it."
The right hon. Gentleman must realise that the aircraft industry, even now, is in a state of youth—vigorous, alert and alive in most places in the world. But if we are not very careful, as my hon. Friend the Member for Banbury (Mr. Marten) said—I cannot repeat it, but I will tell the Minister later—the industry in this country will be in an emasculated position and it will never grow into the virile industry which it can be.
I therefore ask the Minister to look again at this matter. I do not believe that he is so imbued with nationalisation and public ownership as many of his colleagues. If he considers the matter dispassionately and without dogma, he will realise that not only is there the opportunity but a very great platform from which the Corporations and independents can work together in making the British aircraft industry much greater than it is today.
§ 6.9 p.m.
§ Mr. John Rankin (Glasgow, Govan)
I congratulate my right hon. Friend the Minister on his speech today, as well as on the policy which he has declared on civil aviation. It is sane and sensible and will not only bring great credit to him, but will serve the needs of the country very well.
Before I get into my speech, I should like to put a point to my right hon. Friend. I have observed in the Press that British United Airways proposes to take over the services which British Eagle is surrendering at Renfrew Airport on the Renfrew-London and other routes. To me, it was an astonishing statement that any operator could step in and say that he would take over and operate services which have been granted to another operator who is resigning from those services.
I listened with great interest, as I always do, to the hon. Member for Gillingham (Mr. Burden). He and I have been in the unfortunate position of having to listen to each other for a good many years. I am sure that the hon. Member must have profited by listening to me, but my profit account in the other direction is very low.
I do, however, pay some attention to the hon. Member and I listened to him emitting the wail which has come from every Tory Member who has spoken today, except from the Scottish Member, the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). It was not only a wail from hon. Members opposite, but it was a bitterly savage attack upon the Government for doing something allegedly to the independents which the Government are not, in fact, doing. This represents a steadfast refusal by hon. Members opposite to face the truth of the position.
When the Labour Government were in office and the party opposite were in opposition, we brought in the Civil Aviation Act to create the nationalised services. If we on this side were today attacking the independents as hon. Members opposite attacked the State airlines in those days, in the vicious way that they did with their attempts to undermine them and the continual Divisions which they forced upon the House of Commons to try to break them, we 983 would have had no airline service worthy of the name in Britain today.
My right hon. Friend's attitude concerning the independents is perfectly proper. It is my attitude also. I am not in any way against the independents, but I feel that it would be far better for them to try to open up services in the new areas which still need them rather than merely to make an easy profit by cashing in—
§ Mr. Rankin
The hon. Member can sit down until I have finished the sentence. [HON. MEMBERS: "Oh."] It is rude to interrupt. It is not the behaviour of a 'gentlemanly party. Let me at least finish the sentence before I give way.
§ Mr. Hastings
On a point of order. Is the expression that the hon. Member for Glasgow, Govan (Mr. Rankin) has just used to my hon. Friend in order, Mr. Lever? Will you rule upon it?
§ Mr. Bruce-Gardyne
I am grateful to the hon. Member for finally giving way. I wanted to ask him how he thought the independents were to open up new services, which were bound to be unprofitable in the early stages, if they are not allowed to compete on the profitable services which they have already.
§ Mr. Rankin
If the hon. Member would restrain his impatience, he would find out the reason. If he is to learn, he must listen. I said that for my part I would welcome the independents seeking to try to open up air services in those areas which are not presently served instead of seeking to cash in, as they are doing, on the routes which have already been developed by the State airlines. I have never heard Glasgow mentioned so often in the House of Commons as it has been today. It is a very popular place and has been spoken about by a number of people who do not know anything about its connection with airways.
British European Airways did not start with a yearly turnover of a million pas- 984 sengers. B.E.A. built that up over 18 years. I started flying on the initial machine that opened the service, a DH Rapide carrying five passengers. Now, B.E.A. is earning the kudos and the credit.
When they saw what was happening, in 1960 the party opposite, then in power, brought in a Bill to create the Air Transport Licensing Board. I was on the Standing Committee which discussed the Bill and I opposed the creation of the Board, as did most of my party, because it had only one purpose. The Government saw plenty of cream developing in the milk of aviation and they wanted to skim it off into private hands. That was the main purpose of the Air Transport Licensing Board and that is what it is doing.
That is why I say that the sooner my right hon. Friend the Minister looks at the Board's functions or the way in which it is functioning, and either tries to modernise it or abolishes it, the better it will be for aviation in Great Britain. I hope that my right hon. Friend is listening seriously to that proposition. The sooner the functions of the A.T.L.B. become the functions of the Minister, the better it will be for the future of aviation in Great Britain.
Hon. Members opposite should not think that the State airlines simply walked into the great passenger list which they have now created. They had to build it up.
§ Mr. John Tilney (Liverpool, Wavertree)
Will the hon. Member also bear in mind that not many years ago B.E.A. said that there would not be enough traffic to warrant a service from Liverpool, and that it was up to the independents to show how wrong B.E.A. was?
§ Mr. Rankin
That is the trouble with hon. Gentlemen opposite, though I notice that their Front Bench is much more sensible, though perhaps that is the reason why there are only four Members on it tonight. However, the hon. Gentleman is merely anticipating what I was about to say.
I do not want to attack the independents; I was going to pay tribute to the independents. Every one of us who has any knowledge of the industry pays his word of tribute to Silver City for opening 985 between Lydd and Le Touquet the service which enables an individual with a car to get across the channel in 20 minutes and make his journey in Europe. But when the venture became successful it was taken over by B.U.A. The big lot stepped in and took it over. I pay tribute to the independents who started the London-Chester route. Every Friday night I find at London Airport passengers for Chester, and for Newcastle, and for Liverpool, too, I think.
Why is it that they do not continue that work? The hon. Member for North Angus and Mearns talked about the need for commercial services from Scotland to Europe. Every businessman in Scotland is clamouring for them. Where are the independents who do not see only the route from London to Glasgow? Where are all the pioneers amongst them? When business is asking for more services to and from Scotland where are the men who profess to do the pioneering work? Not a single hand is raised to help the businessmen in Scotland by providing them with the air services they want.
What about Prestwick? How often have we talked about Prestwick here? [HON. MEMBERS: "Too often."] Why does not anybody here ask for a service from Prestwick to the Continent? Why are they not asking for services, which are desired, from Glasgow to Newcastle—inter-city services, carrying businessmen within the country and also outside the country? Not a single application is made by any independent in the whole of the United Kingdom for any of these routes. What are they doing? As I say, they are looking for easy money, and that is the way in which most of them have lived and made their profits.
§ Mr. Lubbock
The hon. Gentleman was saying that the independents should try to develop new routes for Scotland, from Glasgow, in particular, to the Continent. He will realise that it is totally impossible in France, with the present bilateral agreement between the British and French Governments?
§ Mr. Rankin
Listen. I do not like that word "impossible". I am certain that if my hon. Friend puts that to my right hon. Friend the Minister he, with his fertile brain, will show how the impossible becomes possible.
986 If there is an idea, let us have it, to see whether it can be made a practicality or not. If there is an idea which anyone has let us hear about it to see if there is anything in it. I am certain it will be considered. That consideration does not apply to all the independents. Take the case—
§ The Temporary Chairman
Order. The hon. Member must address his remarks to the Chair, and remember he is doing so. He has already invited me to listen to him, which I was doing with great attention. Now he is asking me to take something.
§ Mr. Rankin
I am terribly sorry, Mr. Lever. I apologise. I shall try to remain in a static position, which is a very hard one for me to occupy. I do hope I am forgiven.
The need of Scottish businessmen for airway connections with the Continent has been mentioned by the hon. Member for North Angus and Mearns, and I support most of what he said. For a long while now Dundee has been pressing for an airport, and I am asking my right hon. Friend to take note of that fact, because Dundee is growing in business activities, and where business activity is increasing then fast services are absolutely necessary. Therefore, in my view an airport is necessary for Dundee.
If it fails, what then? Some of the ventures of B.E.A., for instance, the London-Edinburgh route when it was first started, failed initially, and that failed because it did not get support from the people of Edinburgh. I remember that in 1950 I pled, supported by my colleague who is now the Minister of State for Scotland, that Edinburgh be given another chance, and the Government at that time gave Edinburgh another chance. Now the route is so rich that we cannot blame the independents for looking for traffic rights on it. If you do not succeed, try again. B.E.A. has done that. I flew on the opening flight of the Aberdeen to London service 18 years ago. That failed, too—not because I flew on the opening flight: I was the advertisement for it. But that failed, too. B.E.A. was not discomfited. It tried again, and now the Aberdeen route is flourishing. So all these things can be done. 987 B.E.A. has shown the way independents will follow.
I said to myself, Mr. Lever, that I would keep what I had to say within an hour at least, and that I have tried to do, but you think of other things as you talk, you see; that is the trouble. However, I want, not to break off, but to come to another aspect of air traffic and to explain an interruption which I made when the hon. Member for Gillingham was talking about the need to provide rights. I asked him if he would also stand up for the rights of those men and women, aircrews, captains, pilots, and all the other, working to carry and all the others, working to carry us about in the air safely, and to supply us with the amenities which help to make a flight pleasant
I want him to realise that at this moment there is grave trouble amongst the men who are the basis, the foundation, of the activities of an aircraft, the men who work on the ground, the men who work at London Airport. British United Airways at this moment is in trouble, just as British Eagle was in trouble with aircrews a year ago.
§ Mr. Burden
The hon. Gentleman must be impartial in these things. B.E.A. and the B.O.A.C have been in trouble with their employees on many more occasions than the independents have.
§ Mr. Rankin
I do not want to speak for as long as the hon. Gentleman did, and I shall therefore not take that any further. I am talking about the present, not about the past. I am saying that at this very moment trouble is brewing at London Airport with B.U.A. because the ground staff are demanding parity of pay with the ground staff in B.E.A. and B.O.A.C. Does any hon. Member think that it is wicked to claim that two men doing the same kind of job, on the same type of aircraft, should get the same pay? The difference between wages paid to the two categories of men is £7 per week. This is not so in every case, but it is a fact in many instances. The question is, is that a sufficient reason for a dispute? I am sure that hon. Members on both sides will agree that it is. Surely no one can justify a difference of £7 between the wages of two men doing similar jobs. To try to find a peaceful solution to the problem, a Conciliation Committee was set up by the National 988 Joint Council. The Committee recommended that those working at ground level should be given an increase of 7 per cent., and that there should be further talks on the principle of parity.
I am certain that right hon. and hon. Gentlemen opposite know that Section 15 of the Aviation Act lays down that the wages of employees of the independent airlines should not be less favourable than those of employees of the State airlines, unless an agreement to the contrary is executed between those workers and their employers. B.U.A. has refused to accept this, and has resigned from the National Joint Council for civil air transport. It did so in a letter dated 10th February of this year. At the same time it issued an ultimatum to the staff offering them re-engagement with another company called Aviation Traders, Ltd., which is not covered by the Civil Aviation Act. This Act was passed by the Tories when they were in power, and its intentions are being thwarted by an operator who is seeking to transfer his manual staff to a company which is not in the aircraft industry. This sort of dodgery is intolerable.
Some time ago the captains and officers of British Eagle were fighting for parity of pay with B.E.A., so one sees that this kind of struggle is not confined to what we call the manual workers. It has occurred at a higher level in every sense of the word, if I may use that term without offence. British Eagle fought its captains for quite a long time. The trouble was that the captains of the Britannias which flew from Glasgow to London were being paid £3,250 per annum, while their colleagues flying Vanguards from Glasgow to London were getting £4,300 per annum.
We have heard a lot of nonsense from hon. Gentlemen opposite about profitability. The independent airlines made their profits because they were paying their staff lower wages than those paid by the State airlines. British Eagle's fight with its captains went on for quite some time. Eventually the captains threatened to strike, and the case was taken to court. The captains' union, B.A.L.P.A., won the case. It is therefore not unnatural that the manual workers at London Airport are trying to get that decision applied to them. They want the parity at ground level which the officers won in the air.
989 As I have said, I am not against the independents, but if we are to have them, we can lot afford this kind of anarchy among some of them. I hope that my right hen. Friend has taken note of what has happened, and that he will intervene in the fight. One sharp and decisive way in which he can show his disfavour with B.U.A. is by repealing forthwith the licences which he has granted it to operate on the South American route, and on other routes for which he has recently granted it licences; because unless speedy action is taken the employees concerned will probably be on strike tomorrow night.
I am not making an announcement. I am saying that they will probably be on strike. I can say that because I happen to be a member of the union concerned. I do not believe in strikes. I do not want the men to strike. I do not think that strikes help in the long run, but this battle has been going on for a long time, and the men are becoming convinced that the only way in which they can bring their grievances to the attention of the public is by taking action which I am sure none of us wants them to take. I hope, therefore, that my right hon. Friend will exercise his commanding influence to prevent desperate action by the men.
If the independents have a rôle to play in the future of British aviation, they must give all those employed in the industry, at all levels—operating and manual—the status that is given to men employed by the State airlines.
§ 6.40 p.m.
§ Mr. Neil Marten (Banbury)
I much enjoyed the high-ranking statement of union policy put forward by the hon. Member for Glasgow, Govan (Mr. Rankin), but I trust that I shall not be as long in delivering my speech as he was. I congratulate my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) on his maiden speech, which was very well delivered and also showed a very good understanding of Scottish aviation problems. I was glad that he referred to the ready availability of seats on the Scottish runs. In the new circumstances B.E.A. must make plenty of seats available. It must not allow a situation to arise in which it is necessary to book a seat two or three weeks ahead.
990 My hon. Friend also mentioned the deficiency of links with Europe, and especially of an air service from Dundee, which the hon. Member for Govan also mentioned. In my limited experience of this matter I am sure that if there were a sufficient demand from Dundee or any other place in Scotland for traffic to ply direct from there to the Continent or to London, the airlines—B.E.A. or independent—would come in and snap up any opportunities.
§ Mr. Rankin
I thought that the hon. Member was in the House when his hon. Friend spoke. I should point out that his hon. Friend indicated that Scotland wanted to cut out the route to London and to go straight across.
§ Mr. Marten
I was in the House and did understand that. But I still think that if there were a demand for flights from various population centers—say, from Scotland or the Midlands—the airlines would snap up any opportunities to run such services. But it requires the existence of a demand for those services.
During his speech the Minister dealt with the question of writing off B.O.A.C.'s debts. I imagine that we shall be debating this matter later when the relevant legislation comes before the House, but I am sure that the decision is a right one. In fact, it is the only one to which the Minister could have come. My right hon. Friend the Member for Preston, North (Mr. Amery) hinted that it would be done, and I am sure it is right. I do not mean to be disrespectful to B.O.A.C., but they do appear to have dipped into the Government till and paid out a good number of golden handshakes before the big write-off comes along. Nevertheless, I am sure that the whole House wishes B.O.A.C. well with its new account and particularly wishes Sir Giles Guthrie, the Chairman, every success in what he is trying to do. I hope that as a result of this writing-off of its debt B.O.A.C. will now place orders for further VC1Os when and if it can.
Both the Minister and the hon. Member for Govan went to great lengths to show that the new statement of policy of the Government would not harm the independents. Whatever they may say—however they may try to wriggle out of it—the fact is that the independents will not share in 991 the growth of future routes. That means that the future for the independent airlines is not as good as it was, and that some of them may well have to go under as a result of the new Government policy.
I want to follow up the closing remarks of my hon. Friend the Member for Gillingham (Mr. Burden), who referred to the political aspect of this matter. The strife that exists today within British civil aviation is a basic reflection of the conflict between the two main political parties. The Socialist Party believes in nationalisation, and in monopolies for nationalised industries, as is demonstrated in the new aviation policy. As a Conservative, I do not believe in nationalisation. In my view, competition is a good thing.
In our aviation industry we have two nationalised Corporations and about 19 independent airlines, many of which are operating on scheduled services. These independent undertakings are owned by public and private shareholders. The trouble is that this mixture of nationalised and non-nationalised firms causes trouble. The non-nationalised firms feel—and they are right in feeling this—that the Socialist Government favours nationalised Corporations, and that the Minister is going out of his way to cosset them; and that he is equally going out of his way to squeeze the independents for—as my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) said—purely ideological reasons. It is a clear political conflict between the two main parties.
§ Mr. William Baxter (West Stirlingshire)
Does the hon. Member agree that when the Conservative Government were in power they were prejudiced in favour of private enterprise as against the nationalised undertakings?
§ Mr. Marten
I am glad that the hon. Member raised that point. It is right to debate these questions of politics. When we were in power we tried to hold the balance between the two in such a way that both Corporations and independents grew and made a useful contribution not only to our economy but also to the convenience of the passenger. That is a very important factor. That is what we did. The policy of my right hon. Friend the Member for Preston, 992 North, achieved that. We allowed competition of the very kind that the Minister is now destroying, because we believed in it. It was only just beginning to develop. It would have increased and there would have been a better share both for the independents and the Corporations. If that had been allowed to continue we would have had a healthy aviation industry throughout the country, whereas under the new policy the situation will be very healthy for the Corporations but much less healthy for the independents and, therefore, for the aviation industry as a whole.
There is no getting away from the fact that competition on the Scottish and Irish routes did a lot of good. I have talked to many people in B.E.A. about this and they have said that it was good. To say that conditions improved for other reasons only is sheer nonsense.
One of the most revealing insights into the mind of the Minister when he made his statement was the way in which he expressed his opinion of B.E.A. itself. He is going to appoint to the Board a representative to look after the interests of domestic passengers. Surely B.E.A. has been looking after its passengers throughout its life. Why does the Minister suddenly have to appoint one man to look after something which the Corporation has been trying to do for the whole of its corporate existence? Perhaps the Minister will change his mind about this when he has read some of the speeches in the debate.
When this man or woman is appointed I should like to know what his function will be. He will attend B.E.A. Board meetings, and will presumably tell the other members all that they already know, or ought to know. If they do not know it already it is clear that B.E.A. is a pretty poor commercial firm. I am sure that the Board already knows what the traveller wants, but this new member will repeat it all. Presumably the matter will then be discussed, and then his recommendations will be overriden by the majority of the Board. What will he do then? What purpose will he have served? B.E.A. would have taken action if it had wanted to, without his presence. So what does he do? Probably he will trot back to the Minister and say, "Well, I have done my best. 993 I have tried to bring the consumers' point of view to the Board of B.E.A. and they will not do anything about it." The Minister will then have to say, "Neither can I do anything about it. I have no powers to give B.E.A. a direction on matters of day-to-day management such as that." What, in the final analysis, is the purpose of appointing this gentleman? We all know that the only purpose is to try to mislead the public by putting up this "gimmick" as a substitution for genuine competition. It is the product of a so-called Socialist intellectual; that is what it is.
B.E.A. have had competition, and when we look at the accounts for 1963–64 we find that B.E.A. made a profit. Its target profit, before interest was 6 per cent. In fact, it achieved a profit of 9 per cent. and paid a dividend of 5 per cent., retaining 4 per cent. That is pretty good going by any standards, I think, for an airline. But that was done without being able to tender for long-term trooping and it was done in the face of full competition from 1st November, 1963, from British Eagle. For five months of the year B.E.A. had competition, but it made a 9 per cent. profit and paid a 5 per cent. dividend. I do not think that competition hurt B.E.A. at all.
Look at B.E.A.'s traffic expansion. Last year the major European airlines expanded over the previous year by 11 per cent. but B.E.A. expanded by 16 per cent. B.E.A. did a lot better than its European rivals. Its domestic services, about which we are talking, expanded by 14 per cent., despite the competition which existed for five months of that year. So one is forced to ask, "Why on earth is this competition virtually being cut out by the Minister?" One is forced to the conclusion that it is purely and utterly Socialist doctrine that there shall not be competition against the Corporation.
When I was at the Ministry with my right hon. Friend the Member for Preston, North we had a very interesting case, illustrating the usefulness of a strong independent airline. It was last August that B.O.A.C. said that it could no longer continue to run its South American route unless it had a subsidy of £1¼ million a year for four years, a total of £5 million. B.O.A.C. came to my right hon. Friend 994 and said, "If you cannot give us this subsidy, we shall have to close that route."
This was discussed in the Government, and, quite rightly, the Government felt that if there were £5 million to spend, the way in which to spend it was not in subsidising B.O.A.C. to run its route to South America; and so in the end B.O.A.C. withdrew from this route. Almost immediately up came B.U.A. and provided, not quite, but practically the same service without a single penny of subsidy from the Government. That could be done by a strong, independent private airline, yet the nationalised Corporation, even assuming it could get its debts writen off and its finances put right—it was said that B.O.A.C. wanted a subsidy for four years ahead—was asking for a subsidy of £1¼ million. So I say God bless the independents. We now have a service to South America and it required an independent airline which was strong to do it without a subsidy.
As has been said in the debate, these independent airlines are a great asset to our country. If they go into decline we shall lose this asset. They were used extensively in the Berlin airlift. We all acknowledge the great role they played on that occasion. They support the British aircraft industry. Indeed, it was B.U.A. which ordered the B.A.C.111s which generated and allowed B.A.C. to go into production with this magnificent aircraft. They play a great rôle in the inclusive tour business, providing cheap holidays and doing a good job for international relations.
I must declare a very remote interest, as I have a part-time job in shipping. I deal with oil tankers and so on, but the company has a subsidiary company which has a small private airline. I have nothing to do with that. I have no shares in it, unfortunately—or perhaps fortunately—and I enjoy no benefit from it at all. It has one advantage, that when one proposes to take part in such a debate as this one has an entrée and one is able to ask, "What are your views about this question of civil aviation?" My hon. Friend the Member for Stratford-on-Avon mentioned the utilisation of these independent aircraft during the summer season on inclusive tours; their utilisation is only for about 80 days on 995 average in the year. For the other 280 days other employment must be found for the aircraft and the independent companies look to the scheduled services, and some run small scheduled services to minor places in the country. They hope to get on to the major routes of the scheduled services, but now, I am afraid, all that is gone. For them, with all their potential for ordering new equipment from the aircraft industry, the future would seem to be clouded by the Government's new policy.
The hon. Member for Govan made a long speech about wages. That has been mentioned several times today. The independents feel that the two Corporations with their unlimited recourse, ultimately, to Government funds—at about tuppence-ha'penny a bucket, they always seem to be able to dip down into the funds—can allow wages to rise beyond what the independent companies can afford. The independents feel that if the Corporations push up, or allow wages to go up much higher, the Corporations will know that by so doing they will greatly embarrass the finances of the smaller independent airlines. Once that happens, the smaller independent airlines will be unable to re-equip with modern equipment.
All these are points which I think the Minister should have discussed with the industry before making his statement, and before he made his decisions. His failure to discuss these things with representatives of B.I.A.T.A. showed not only a grave contempt for the minorities and small airlines but quite an astonishing political arrogance. At the time the right hon. Gentleman made his statement, I asked whether he had received a memorandum from B.I.A.T.A. and whether he was going to see B.I.A.T.A. the next day. The right hon. Gentleman replied that,… the policy of the Government … is not determined by policy memoranda of this kind."—[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1190.]It struck me as being unbelievably arrogant, that he would make a statement such as that without having had the courtesy to listen to what these people had to say. Doubtless the Minister was told by other people what they thought, but he did not do them 996 the courtesy of seeing them before he made the statement. I asked the right hon. Gentleman why, and he said that he was under great pressure. He has not told us what the pressure was or where it came from, or why he had to give in to that pressure. I shall be interested to know a little more about that pressure from the Parliamentary Secretary at the conclusion of the debate.
Can the Minister answer this one? Were the airlines, or some of them, informed of his statement before he made it in the House of Commons? If so, I think it was a discourtesy to the House of Commons. Did the Minister consult—not just inform—the A.T.L.B. and take its views, and go over the whole matter with the A.T.L.B. before deciding on this policy?
Unlike the hon. Member for Govan, I think that the A.T.L.B. is an admirable body, has great experience, and has done an extremely good job in dealing with a complex and very difficult matter which not many people can grasp; but I would put forward for thought the following point. At present there is the right of appeal from the A.T.L.B. to a commissioner, and then, if need be, to the Minister. I do not see why an appeal from the Board should not go to a quite independent body, and stop there. The verdict of that independent body should be accepted.
On the other hand, if the Minister wanted to call in the appeal he would have to give political reasons for his action to the country and everyone else. In that way, Government could disengage themselves just a little from running businesses, and doing this sort of thing—
§ Mr. Lubbock
Would the hon. Member give any instructions to this independent body beyond what is laid down in Section 22 of the 1960 Act, or would that body be required to hear the whole case from scratch?
§ Mr. Marten
It might go on in much the same way, but we might broaden the composition of the appeal body and give it wider terms of reference. As I say, this is a point for discussion, and I merely throw it out as an idea for getting politicians disengaged from commercial decisions.
We have heard a lot about the national plan for co-ordinated transport, which is 997 supposed to include air transport. The party opposite has appointed Lord Hinton to deal with this, yet the Minister of Aviation is taking rather fundamental decisions on air transport before Lord Hinton has made his study. If Lord Hinton recommends reinstatement of the services that are being taken off, will the Minister be allowed to reinstate them? Is Lord Hinton allowed in his report to mention competition? I should like to know.
The policy of the Minister of Aviation, and I mean the Minister—I include the party opposite, but I hold the Minister responsible—has been disastrous to aviation generally. To the aircraft industry, the right hon. Gentleman has been a disaster, as he has been to the civil airlines of which we have heard in this debate, arid to the private flyers. He has cut out aid to the private flyers, and I now understand that he has cut out the Junior Wings Scheme, yet it is in this way that so many potential pilots get interested in civil aviation. I sometimes wonder whether the right hon. Gentleman was put into the Ministry of Aviation on the grounds that if he effected these reluctions there would be no need for a Ministry of Aviation. I suspect that he was put in to liquidate the Ministry.
As I said at the beginning, there is in my view in British civil aviation a conflict between the philosophies of the two main political parties. How is this to be solved? When I was at the Ministry my right hon. Friend tried to get the Corporations and the private operators together so as to encourage a better feeling between them. I remember a very agreeable luncheon that the two sides had. I felt that things were going a little better. We tried to start a Chamber of Air, where these people could get together and speak as one industry. I do not think the Corporations thought very much of that idea, and in any case it has not yet come to pass.
Strife has been opened up again by the new policy of the Government. The Government have shown that they will favour the nationalised Corporations. What a re we to do about that? The hon. Member for Govan encouraged us to throw ideas into the pool and I want to throw in what I emphasise is my own 998 personal idea. I believe that the whole conflict would be settled if there were no nationalised Corporations. In other words, if all the firms running aviation were of equal status and all independent, we would not have these terrible conflicts which I believe are ruining the industry.
I must say that when I was at the Ministry I saw little point—and this is not really being political—or advantage in B.E.A. being nationalised. If anyone can tell me what the advantage is, I shall be very pleased to know it. My view is that B.E.A. as a commercial airline does not want the odium of monopoly to be put on it by the Ministry, nor, with respect to the officials, does it want Ministry officials looking over its shoulder, or Ministers trying, as they have done, to interfere with its policy of purchasing aircraft. All that sort of thing would go out of the door if the Corporations were denationalised.
The Government have an investment of about £100 million in B.E.A. What is that money doing there? It is earning the country 5 per cent. interest, but I believe that there are other projects far more worthy of investment. If that money were taken out of B.E.A.—in other words, if the Corporation were denationalised—it could be put to another and better use. That is how we should look at the matter. Just because B.E.A. has been nationalised for so long, there is no reason for thinking that it should be nationalised for ever and ever—
§ Mr. Lubbock
In all fairness to B.E.A., its profit in 1963–64 was 9 per cent.; the 5 per cent. was the interest the Corporation paid to the Treasury on advances received.
§ Mr. Marten
That is just what I said—I was reading from their report. Regardless of what the hon. Gentleman says, I can see no reason why that investment of approximately £100 million should remain in B.E.A. for ever and ever. Why should we not take out that money and put it into something where it will fructify to the greater advantage of the people of this country? Such a step would also end the great political struggle between the two parties over civil aviation.
§ 7.8 p.m.
§ Mr. Eric S. Heffer (Liverpool, Walton)
The hon. Member for Banbury (Mr. Marten) very clearly revealed his basic thinking when he said that he would be very happy if there were no nationalised aircraft industry at all. Listening to his rather eloquent speech, I thought that he had completely misunderstood, or had failed to read, what the Minister said. For instance, he said that the independents would not share in the growth of the industry, but what my right hon. Friend said was:At the same time, any British operator, public or private, who wishes to provide a genuinely new service or open up some fresh market for British aviation will have my full support."—[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1187.]Did not the hon. Gentleman read that sentence in the statement? Did he not hear it spoken from the Treasury Bench? This is not a question of doctrinaire nationalisation. This is common sense in the present circumstances of aircraft routes.
No one suggests that everything in the garden is lovely. The hon. Member for Liverpool, Wavertree (Mr. Tilney) said in an intervention that B.E.A. had decided that Liverpool Airport had no future. I hope that the hon. Gentleman will speak later. He should recall that the Conservative Government were in office at the time. Although B.E.A. and the Conservative Government had no belief in the future of Liverpool Airport, the Labour-controlled local authority in Liverpool was happy to take over the airport and develop it so that it is now one of the best airports in the North-West.
I was rather sad to hear the rather snide personal remark made by the hon. Member for Banbury, when he spoke about a so-called Socialist intellectual in relation to my right hon. Friend the Minister. I have disagreed with my right hon. Friend many times within the Labour Party, but I have never regarded him as a "so-called" intellectual. Anybody who knows anything about intellectuals recognises that my right hon. Friend really is one and that the hon. Gentleman's comment was a snide remark which ought never to have been made.
§ Mr. Heffer
It is rather unfortunate that you have not understood intellectuals. That was rather underlined by one of your earlier remarks. [HON. MEMBERS: "Order."] I am far more used to talking to thousands of workers in industry in direct language which they understand than I am to making speeches in the House of Commons and having constantly to think in terms of hon. Gentlemen, right hon. Gentlemen, hon. and gallant Gentlemen and all the other things that go with our debates. Therefore, I ask the indulgence of the Chair if I sometimes forget that I am addressing the House of Commons and not a mass meeting of Liverpool workers. Incidentally, I feel equally happy in both places, but there is a slight difference, perhaps, in the terminology that one uses. I was saying that the hon. Gentleman's attitude was made clear earlier when he spoke as though it was a terrible crime for someone to read books. If our debates sink to that level, we shall not make much progress in solving the problem facing the industry.
§ Mr. Heffer
The inference was that somebody who had anything to do with books was beyond the pale. Surely it is common sense that there must be a planned approach to the industry and to our airports. No one would suggest that competition on the railways should be reinstituted. No hon. Member opposite would argue that we should begin to have competition between one railway organisation and another. It is now recognised that a planned approach in the railway industry is essential. There is competition in road transport at present, but there is also chaos. Many materials which ought to be transported from one part of the country to another by rail are transported by road.
§ Mr. T. G. D. Galbraith (Glasgow, Hillhead)
The hon. Gentleman says that they ought to be transported by rail. The question is—ought, in whose opinion?
§ Mr. Heffer
Obviously not in the hon. Gentleman's. Apart from my maiden speech, I have not yet made a speech in the House of Commons without being interrupted about five or six times. I am pleased about this, because it proves one thing. Obviously I am making certain points which are very annoying to hon. Members opposite.
1001 It is row recognised that in certain industries unrestricted competition is silly. It is recognised that it is not in the national interest to have competition as it was understood in the past. However, the Minister is not suggesting that there should be further expansion of nationalisation in the industry. He certainly did not suggest so in his statement. He said this:On other internal routes there may be a case for more enterprising development of air services by independent airlines, and for giving them reasonable security of tenure of licences."—[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1188.]Hon. Members opposite who argue against the Minister's policy have no real confidence that the independent airlines can expand, because they are not prepared to consider where it is possible to expand and then get to grips with the problem and ensure that real expansion takes place in those areas.
It has been argued that there is a danger that the industry is being bled slowly to death. What has happened at Liverpool Airport in the past few years is the proof that this is not so. It has been proved that there is a great future, providing that there is the will, the desire and the feeling that something should be done. In fact, certain independent airlines have a virtual monopoly. If they are taking their aircraft from one route or from a number of routes and if there are opportunities elsewhere, they should expand in those places. One of the dangers we feel in Liverpool is that perhaps there is a little too much reliance on one company. We would like to see the expansion and the development of other companies in Liverpool.
It will be argued that this is in contradiction of the Minister. It is not in contradiction, because my right hon. Friend's statement explains clearly that there are great opportunities within our internal lines and externally for new routes to be pioneered. Surely it is the responsibility, not only of B.E.A. and B.O.A.C., but also of the independent airlines, to go out of their way to develop and expand these new routes. This is not doctrinaire. The Minister's statement is far less doctrinaire than some of the statements which I have heard from hon. Members opposite today.
1002 We want to see an expansion of the industry. No one suggests that there ought not to be expansion, but we hope that the independent airlines will use the opportunities which are now presented to them. If British Eagle wishes to expand, let it have a look at the possibilities of expansion of services from Liverpool to the Continent and let it develop new routes. The local Conservative Party in Liverpool, and some hon. Members opposite, have suggested that the Minister's statement would mean the strangling of Liverpool Airport. There is nothing further from the truth. As I read the statement, the opportunities are there if the independent airlines wish to take them.
The local authority has confidence in Liverpool Airport. When it was argued whether the local authority should give a subsidy to run the airport, Conservatives in Liverpool were supporting a policy of subsidy for the airport whilst at the same time arguing against subsidising council houses in Liverpool. They wanted matters both ways. The airport was taken over and since then £2.7 million has been or is being spent on a runway which is now under construction. We also have plans for developing new terminal buildings which will cost approximately £3 million. There will be in Liverpool a modern airport with up-to-date facilities, and if the independent airlines want somewhere from which to operate and expand their routes here is a great opportunity for them.
There is also a great possibility for the expansion of freight services. They ought to be expanded, because goods can be brought into Liverpool by ship and then flown from the airport to various parts of the country. Assistance could also be given to our export drive. If, for example, samples were required by industrialists abroad they could be flown out quickly. Later, after orders had been accepted, the goods could be shipped out of Liverpool. Here is a great opportunity. It is a gross exaggeration on the part of the Conservative Party in Liverpool to predict the death of the airport as a result of the Minister's statement.
At the moment there is too much reliance on London. The capital city already has two airports. Stanstead Airport is coming along and a fourth one is envisaged. I should like to see further expansion of provincial airports. 1003 Although it is important that London should have an additional airport, this should not be provided at the expense of the development of airports in the provinces. We could do a great deal more in the development of freight services not merely on Merseyside but nationally and there must also be an expansion of inter-city routing within the United Kingdom.
The Minister's statement is sensible and intelligent. One cannot read into it all the horrific things which hon. Members opposite tried to read. It does not mean, as they say, the end of the industry. It means that great possibilities are being opened up from the point of view of both the nationalised sector and the independent airlines. The important thing is to grasp the nettle and to take the opportunities presented. We can do this on the basis of accepting my right hon. Friend's statement.
§ 7.26 p.m.
§ Mr. Eric Lubbock (Orpington)
I agree with the hon. Member for Liverpool, Walton (Mr. Heffer) that one cannot read into the Minister's statement all the horrific things which Conservative Members tried to read into it today. As I listened to their speeches, I thought that the Minister had been sending in the bailiffs to clear out the independents and leave everything to the Corporations. On the other hand, hon. Members opposite tend to see things in black and white as well. The hon. Member for Glasgow, Govan (Mr. Rankin) said that the main function of the A.T.L.B. under the Conservative Government was to skim off the cream and give it to the independents, but that, too, is an extremist point of view.
The hon. Member for Banbury (Mr. Marten) introduced the idea of denationalisation which I did not hear mentioned during the election nor read in the Conservative Party's manifesto. If the party has any such ideas it would be better for it to produce them before the election and not afterwards so that the electors can consider them. Conservative Members spoke today about the disruption of the airlines industry, but this idea of denationalisation would be far worse than anything that the airlines have had to put up with under 1004 either Labour or Conservative Governments since the war.
The hon. Member for Banbury recalled how when he was in office with the right hon. Member for Preston, North (Mr. Amery) they tried to secure a proper balance between the independents and the Corporations. He spoke of the pleasant luncheons which they used to have. It is the right policy to secure a proper balance between the independents and the Corporations, and I wish we could get away from the idea that everything must be to the advantage of the Corporations when Labour happens to be in office and everything to the advantage of the independents when the Conservatives are in office. Sometimes it happens that Ministers take decisions for the best of reasons, that is for the good of the British aviation generally, and I honestly believe that that is what the Minister is trying to do in this case.
Liberals, of course, are in favour of competition generally. [Laughter.]. Hon. Members should wait until the end of my sentence. They are in favour of competition generally, but there are special features of the airline industry which, as the hon. Member for Walton has said, make it quite distinct from any other commodity. It is not the same as supplying a washing machine, a suit of clothes or something like that. By the very nature of air transport, the classical rules of economics do not apply, and completely unregulated competition does not benefit either the airlines concerned or the travelling public. I think that that is common ground between the two sides of the House.
§ Mr. Shepherd
Is the hon. Gentleman saying that the Liberal Party takes the view that the absence of competition in the airline business—I am talking about it internationally now—has presented us with a favourable pattern?
§ Mr. Lubbock
No. I am saying that the circumstances of the airline business are such that one cannot have completely unregulated competition, either internationally or domestically.
§ Mr. Lubbock
That is common ground, apparently, and, when the hon. Gentleman 1005 intervened, that was exactly what I was saying. The only question between us is the extent to which one can have regulated competition.
It is interesting that in the United States the increase in competition over the past few years has been financially disastrous for the airlines themselves and has led to the wasteful use of resources which, in this country, the Civil Aviation (Licensing) Act, 1960, was meant to avoid. In 1952, 12 out of the top 100 routes in the United States were served by three or more competing airlines, the average passenger load factor was 67.1 per cent., and the return on capital was 15.3 per cent. In 1962, ten years later, 38 of the top 100 routes were served by three or more competing airlines, the load factor had dropped to 54.5 per cent., and the average return on capital had fallen to 3.6 per cent.
Some people may say that that is all right, at least one has three or more competing airlines on many routes, and this indicates that competition is probably good for the passenger. But, if one is to draw that conclusion, one must look carefully at the volume of traffic on American routes as compared with those which we are discussing tonight. The difference is very striking. In 1964, total passenger miles flown between London and Glasgow were 171 million to the nearest million. The total between New York and Washington was 64,296 million, 370 times as great as the traffic between London and Glasgow. That is a good illustration of the reason why much greater competition is permissible in the United States than it is here. But, even there, many voices are being raised now saying that it has gone too far and that on certain routes too many airlines have been licensed in parallel.
There cannot be effective product differentiation, to use a jargon term, in air transport as there can be in other fields. The only advantage that one carrier can gain over another is either by providing greater frequency of service than is economically justifiable or by putting on more modern equipment and forcing competing operators on the same route to do likewise perhaps before the aircraft which they are using at present are fully amortised. The advent of modern jet aircraft, with vastly higher productivity than 1006 their predecessors, has meant that a given volume of traffic cannot sustain the same number of operators.
Where there is a multiplicity of operators on one route as a result of international agreements, as on many international routes, such competition as there is is strictly limited by the I.A.T.A. There is no competition in fares, and no one has suggested that there should be, except that the hon. Member for Gillingham (Mr. Burden) suggested it by implication in his remarks about the slogan of the firm with which the Minister was connected at one time. There is no competition on fares prescribed for a given class of service, whether tourist or first class. There is no competition on the type of aircraft because, as soon as one airline introduces jet aircraft, another has to follow suit, and there is virtually no difference, from the passenger's point of view at least, between one aircraft and another of a certain generation.
§ Mr. Lubbock
They may get their jet aircraft more quickly—this was exactly my point a few moments ago, if the hon. Gentleman had been listening—but in some cases airlines are forced to introduce new equipment earlier than they otherwise would because of the pressure of competition, and this can lead to a wasteful use of resources, which is one of the things that the Civil Aviation (Licensing) Act was designed to avoid.
In fact, there is very little difference between one aircraft and another of the same generation. Last summer, I had the interesting experience of flying in a Boeing 727 and in a Hawker Siddeley Trident on the same day. As a patriot, I should like to have said that I preferred the Trident, but I found absolutely nothing to choose between them. I think that this is generally true from the passenger's point of view.
On the international services, the I.A.T.A. has specified in detail the standard of service which can be provided, even down to the ridiculous extent, on one occasion, of devoting hours and hours at an I.A.T.A. traffic conference to arguing about the definition of a sandwich which could be provided on 1007 similar services. This is not competition in the usually accepted economic sense of the term.
After those general remarks, I come to the question of the internal services within the United Kingdom. We have left this job so far to the Air Transport Licensing Board, but there has been no guidance given by the Government to the A.T.L.B. beyond what is contained in the rather vague criteria in Section 2(2) of the 1960 Act. The A.T.L.B. has evidently felt for a number of years, almost since it was set up, I think, that there was a need for a more precise statement of Government policy. In successive Annual Reports, the Board has criticised in almost precisely the same words the absence of such a statement. In its Annual Report for 1964, for example, the Board said:As we said in previous Reports, the Act does not provide positive guidance on policy for the Board to follow in deciding whether or not to grant an application and it appears to have been the intention of the legislature to leave the Board unfettered as regards the general policy they should pursue. The absence of a statement of general policy continues to be criticesd from time to time. The development of aviation calls for large and long-term investment whether by the Corporations or by independent operators and, it is said, such investment may be inhibited or, if made, in part wasted if the operator is unable to form a reasoned judgment of the licences he and his competitors are likely to secure and retain and hence of the volume and nature of the traffic which will fall to him.I apologise for a rather long quotation but it was important to read the paragraph in full because its reasoning shows how necessary it was, for the removal of uncertainty, that a statement of Government policy should be made. This is true whether or not one agrees in every detail with what the Minister said in his statement the other day. It is much better that those who have considerable and ligitimate interests at stake—I think this is how the Minister put it this afternoon—should know what the Government have in mind, and this was why I welcomed that statement in principle.
I always thought it wrong for the Government to delegate what are, in essence, political decisions to the Licensing Board, which is a non-political body. It is clear from the debate today that the question of parallel licensing on both the domestic routes and the international routes is very largely a political one. It 1008 is interesting to consider what might have happened if the Tories had been returned to power last October. I think it basically improbable that they would have tried to impose a more open-handed licensing policy on the A.T.L.B. because they have always professed themselves to be perfectly satisfied with the workings of the 1960 Act, although there was something in the speech of the hon. Member for Stratford-on-Avon (Mr. Maude) which made me think that they are beginning to change their mind. I understood the hon. Gentleman to say that, if the Tories are ever returned to office, they will restore to the independents the opportunities for expanding their schedule services of which they are now deprived. This means that he would do precisely the same as the Minister has done, that is, issue some sort of directive to the A.T.L.B. as to what kind of licence applications it should accept or, at least, add some new criteria to those already set out in Section 2(2) of the 1960 Act.
§ Mr. Lubbock
I am sorry if I misunderstood what the hon. Member said. A little later—we can read it in HANSARD tomorrow—he said that a future Tory Government would take a long, hard look at the whole licensing procedure. If he thinks that I am misquoting him, let him intervene, but I got the impression from his remarks that he intended to revise the procedure of licensing.
§ Mr. Maude
No. Of course I said what the hon. Member suggests, but that does not mean in the least that it is necessary for a Minister to give special directions to the Licensing Board. I said that what needed a long, hard look was the system of appeal. I am anxious to take politics out of it as much as possible.
§ Mr. Lubbock
Then let us consider the next alternative. If a Tory Government had not imposed a fresh policy on the Licensing Board, then the Board would have been left itself to consider the matter in order to decide whether British Eagle were entitled to some increase in the frequency which they had 1009 already. In his Press statement recently, Mr. Bamberg said thatas a general principle all domestic routes with an annual traffic potential of more than 200,000 should be operated by two separate carriers, each with unlimited frequency.But I co not think that, without an explicit direction, the Air Transport Licensing Board would have been prepared to grant British Eagle anything approaching an unlimited frequency on the domestic trunk routes within the foreseeable future.
I do not know what the hon. Member for Stratford-on-Avon is muttering, but he also pointed out in his speech—I was taking down most of his remarks carefully—that it was noticeable that the A.T.L.B. had never yet granted an unrestricted licence for an independent airline on any of the domestic routes. A moment ago in his intervention he said that he would leave Tory policy to be carried out by the A.T.L.B., but in another part of his speech he pointed out that it was impossible for independent airlines, unless there were a change in the Board's policy, ever to be granted such licences.
§ Mr. Lubbock
I have the report in front of me of Mr. Bamberg's statement. If the hon. Member would like to read it, I will pass it to him.
§ Mr. Lubbock
I know that the hon. Member is not responsible for Mr. Bamberg but he keeps saying that nobody has ever made this statement. I am pointing out that somebody in a responsible position has said this, rightly or wrongly. There are some discussions which take place outside the House, although one sometimes would not think it. It is highly disrespectful to Mr. Bamberg for the hon. Member to suggest that nobody ever said such a thing when an important leader of the airline industry has made that statement.
I am just pointing out—if the hon. Member will let me get on with my speech—that it is very unlikely that the A.T.L.B. would ever have granted such a thing as unlimited frequency. In its 1010 third Annual Report, in paragraph 35, the A.T.L.B. said—
§ Mr. Lubbock
I wish that the hon. Member would also let me get on with my speech. I will tell him what the Liberal Party would do. I have here a statement which we issued last March. I will pass this to him and he can be reading it while I get on with my speech. This is what the A.T.L.B. said in paragraph 35 of its Third Annual Report:… we would not be discharging our statutory duty if we licensed competition on routes where the benefits would clearly be outweighed by the wasteful provision of resources, or the waste of facilities already being provided.In its Fourth Annual Report, in paragraph 7, there is an even more significant paragraph:… we are not minded to cause or permit any sudden far-reaching changes in the present operating pattern.I think that if British Eagle were to be awarded unrestricted frequency on the domestic trunk routes, and they were to take them up, it would not cause just far-reaching changes in the present operating pattern; it would cause an absolute upheaval and would mean financial disaster not only for B.E.A. but also for British Eagle. I am not suggesting that if they were awarded an unrestricted licence they would begin operating to that capacity immediately. Indeed, I suppose that one of the things which Mr. Bamberg had in mind in his statement was that it would put British Eagle in a much stronger bargaining position relative to the Corporation, even if British Eagle intended to work up to parity of traffic only over a period of very many years.
This is what would happen if there were a sudden increase of capacity on the domestic trunk routes. It is obvious that if both operators on the same route secured the same volume of traffic then, disregarding the traffic growth—which I know is substantial—the load factors would be halved and the losses made by both parties would be astronomical. It is said, with some justification, that the presence of a second operator on a route leads to some expansion of the traffic, but the evidence available on the domestic trunk routes shows that British Eagle were rather disappointed with their experience. 1011 I am told—I do not know how accurate this is—that they were carrying fewer than 50,000 passengers a year on all the domestic trunk routes—Glasgow, Edinburgh and Belfast—compared with half a million by B.E.A. on London-Glasgow alone, and that during the period of their operations since November, 1963 the company have lost £375,000.
It does not seem likely, therefore, at first sight, that a limited increase in frequency, if they had been able to secure it, would have helped British Eagle. They were not even planning to operate in the summer of 1965 all the services which they were entitled to operate under their licences. On London-Glasgow they were licensed to operate twelve Britannia services a week and they planned to operate eleven. On London-Edinburgh they were licensed to operate ten Britannia services a week and they planned to operate six Viscounts. On London-Belfast they were licensed to operate seven Britannias a week and they planned to operate five Viscounts. A Viscount has about half as many seats as a Britannia.
But British Eagle, after this statement by Mr. Bamberg which I have mentioned, said that a modest increase in frequency would have been enough to satisfy them. They said that if they could have mounted three services a day it would have made such a big difference to the pattern of the operations that they could have managed to continue. They spoke of purchasing six BAC 111 aircraft for delivery in the spring of next year, and if they had been able to secure these, they said, it would have been enough for them to put on eighteen frequencies a week between London and Glasgow. But the total amount of traffic with those aircraft would have been about the same as that being carried in their Britannias at present, because the Britannia has about 124 seats and the BAC 111 has only 74.
I put it to the Minister that it would be quite reasonable to grant British Eagle an increase in their frequencies on the London-Glasgow route if they were planning to operate with BAC Ills instead of with Britannias. I know that this would probably be opposed by B.E.A. on the ground that the introduction of jets would force them to take their Vanguards out of service before they were fully amortised, but I do not think that this is a valid argument. The amount of capacity 1012 which would be provided by 18 services a week with the BAC Ills, even if they had had 100 per cent. load factor, would be less than 10 per cent. of the total number of passengers carried on the route by 1966–67 if the present rate of growth is maintained, as I think it shows every likelihood of being maintained. While, therefore, I agree with his policy in general, I ask the Minister to consider allowing British Eagle to go back on to these routes as from the spring of 1966 with BAC 111s, because they had planned to purchase these aircraft and I think that this would be a valuable order and a great help for the British Aircraft Corporation.
I now want to say a word about inclusive tour operations. If in present circumstances the independents cannot compete on the domestic trunk routes network, it is all the more important that they should be allowed the maximum freedom on inclusive tour work. Here it is not a matter of taking traffic away from the Corporations, because they do not keep aircraft specially for this work, and the amount of capacity or effort devoted to inclusive tours on these routes is limited. But in the past few years inclusive tour operations have been growing fast, and if we do not allow the British independents to undertake this work, the foreign flag airlines will step in, which has been happening.
I welcome the Minister's statement that it will be made much easier to obtain I.T. licences, but I should like to ask for clarification of his statement. He said:In general, it is not, in my view, desirable to apply restrictions to the inclusive tour charter services on holiday routes."—[OFFICIAL REPORT. 17th February, 1965; Vol. 706, c. 1187.]The words "in general" would seem to imply that there are circumstances in which he thinks that restrictions would be justified. It would be helpful from the point of view of the independents if he would give more detail of what he has in mind. Does he mean that his statement applies only to the European routes? I understood him to say that the position is still open in regard to, for example, North America and the Caribbean.
Now that the right hon. Gentleman has started the policy of spelling out in 1013 more detail the criteria to be applied in awarding licences, this should be extended beyond the European boundaries. While most people think of holidays in terms of Spain and Italy, as incomes rise and there is more leisure and holidays become longer, people will think of going further afield, perhaps to Bermuda. It was only a week before his statement in the House that the right hon. Gentleman turned down an appeal by British Eagle against the rejection by the A.T.L.B. of its application for an I.T. licence for a service to Bermuda. It is a shame that it should have these two blows in less than a week. If we are to make it more difficult for the independents to stay on the domestic routes, let us help them on the international ones and in their I.T. work.
The same thing applies to Caledonian Airways, in respect of which an appeal will come before the Minister shortly. There is a great deal in what Mr. Thompson said a few weeks ago, that if the Minister turns down the appeal the Americans will be taking over the initiative in the development of I.T. work on the North Atlantic route. The Minister may repeat the mistake made by his Tory predecessors in allowing foreign flag airlines to cream off the bulk of the I.T. work in Europe. It may also happen on the North Atlantic route. Although the Minister said that this matter is sub judice in a sense and, therefore, I cannot expect him to comment, I would ask him to consider the point carefully.
It is a good thing to have some policy to fill the vacuum left by the previous Administration. I do not interpret the Minister's present policy as one of showing favouritism to the Corporations for doctrinaire reasons, and I hope that he will continue to emphasise the important role of the independents in developing British civil aviation. On inclusive tour work, on important international scheduled routes such as South America, and on domestic feeder routes, I feel sure that, despite the anguished cries of some hon. Members on this side of the Committee, there has been struck a reasonable balance between the Corporations and the independents and that now both can get down to the job of planning their future investment and opera- 1014 tions in the knowledge of the licences which they will get.
§ 7.55 p.m.
§ Mr. William Baxter (West Stirlingshire)
I listened to the speech of the hon. Member for Orpington (Mr. Lubbock) with a great deal of interest and pleasure. I think it was a speech that it will be interesting to read from the point of view of gaining knowledge and experience. Like the hon. Member, I deplore to some extent the jaundiced points of view raised sometimes from one side of the Committee and sometimes from the other, one diametrically opposed to private enterprise and the other diametrically opposed to nationalisation.
I do not think that either of those points of view does the House of Commons much credit. We do not expect our economy in the air or in business to be entirely one thing or the other. In this country we must live with private enterprise, and it is no crime to be in private enterprise. We have also to live with public enterprise, and it is no crime to be in public enterprise. If we started our deliberations on the broad basis that our aim and object should be to try to get the best not for our own political panty but for the nation as a whole, we should then set a pattern which could well be followed by others outside the House of Commons. That is one of the reasons why I applaud to a great extent the excellent speech made by the hon. Member for Orpington, paying a tribute to my right hon. Friend the Minister of Aviation for his unbiased manner in looking at the very difficult and very important problem of the future of British aviation.
I incline to the view that serious consideration must be given in the not far distant future to the claims of British Eagle or another company of similar status to participate in some of the more important British routes. It is not right that we should expect private enterprise in this very difficult and competitive industry to take bad routes only and not some of the good routes. It might be wise to consider the possibility of doubling the flights to Scotland, and if they were by jet aircraft so much the better. As the hon. Member for Orpington rightly points out, the percentage of the trade would not in any way undermine British European Airways. That is because there 1015 can be no doubt about the growing desire of the people of Scotland and elsewhere to use the modem means of transport now at their disposal. So this will be an expanding traffic. It will not be a bad thing if there was a little competition between the privately-owned industry and the State-owned industry. I can see no fault that would come from that competition provided that it was controlled by the Minister.
Like many other hon. Members, in the last six years I have travelled practically 100 per cent. from Renfrew or Turnhouse to London and back in order to attend this House, and I have almost inevitably been compelled to travel by B.E.A. Since British Eagle has come upon the scene, if I have been unable to get a seat on a B.E.A. aircraft I have travelled by British Eagle. I do not think that I committed a great crime in returning from this place to Scotland in a privately-owned aircraft. It was surely a reasonable thing to do. I am sure that because British Eagle had a number of flights to and from Scotland, the standard of the B.E.A. flights increased considerably. I should deplore it very much if the departure of British Eagle from those routes meant that the food and comfort standards on the other flights were in any way impaired.
I believe that this might be so. Only last Thursday I had occasion to go to Thomas Cook and Son in this building to book an off-peak period flight from London to Renfrew. An assistant there telephoned the B.E.A. office and was informed that I could not get a seat on the plane to Renfrew. I put my name on the waiting list and said I would return in the afternoon. I did so, when the assistant telephoned B.E.A. again and found that still no seat was available. She then asked whether I could have a seat on the off-peak flight to Edinburgh. Again she was informed that no seat was available and that I should have to put my name on the waiting list for that flight.
I waited a little while, talking to the senior official at Cook's, wondering what I could do, because it is very difficult to get home to Scotland after a Division here at 10 p.m. An assistant again telephoned B.E.A. and. lo and behold, a seat was available on the off-peak flight to Edinburgh.
1016 Today, I returned from Scotland and during the flight was informed by my hon. Friend the Member for Glasgow, Gorbals (Mrs. Cullen) that, in fact, a whole area of the off-peak plane to Renfrew that night—the first-class compartment—was empty of passengers. I hope that there will be no possibility of flights going to Scotland more or less half-full because some person does not care very much whether or not the planes are filled. I do not accept that these empty seats were cancellations. This sort of thing has happened before, and sometimes a little competition in this direction can help very considerably.
But competition is reasonable in another direction too. The Conservative Government did not permit competition, and what is good for the goose is good for the gander. They would not permit B.E.A. to compete for charter flights or for trooping contracts. That, again, is prejudice which should not be. It is no use the Opposition throwing stones at the Government for limiting a certain amount of competition in another aspect of the industry.
I intervened in the debate only to point out the need for a realistic approach to this very difficult problem. I ask my right hon. Friend to give very serious consideration to the question of a certain amount of competition on the Scottish routes, because, as a Member for a Scottish constituency, I am most anxious that every facility possible should be provided for people to travel to and from Scotland and that there should be no restrictions through prejudice either for or against private enterprise or nationalisation.
I know that my right hon. Friend is a very broadminded individual and is not motivated by prejudice. It is my earnest desire and hope that he will give serious consideration to the plea of the hon. Member for Orpington and see what improvements can be brought for Scotland. We cannot afford to lag behind. Scotland in the past has lagged behind in many respects. From London to many parts of the world we face competition in trade and commerce and for passenger services. But from Scotland the air routes will be a complete monopoly if the present process continues—and I do not like monopoly, be it public monopoly or private monopoly.
1017 We must look at this problem from the broadest posible angle and, as a simple Member of Parliament, desirous of coming from Scotland to London and then going back, I should like to be able to get on the plane, whether it be private or a B.E.A. plane. I appeal to my right hon. Friend to be very broadminded on this issue, not to be swayed one way or the other but to give impetus to opportunity and commerce in Scotland by giving us every chance to use the air as freely as the wind that blows.
§ 8.5 p.m.
§ Mr. Hector Monro (Dumfries)
It is a great privilege and honour to speak in this Committee under your chairmanship, Dame Edith. [HON. MEMBERS: "Hear, hear.] That view is echoed by all right hon. and hon. Members present.
I shall not take up time by making a forced landing in West Stirlingshire, however pleasant it may be there, but I hope to touch on Scottish problems a little later. I wish first to refer to what was said by my hon. Friend the Member for Banbury (Mr. Marten), who touched on the problem of private flying and flying clubs in general. We shall certainly not have any airlines unless we have airline pilots, and, while the airlines may now get recruits from the Royal Air Force, in general, their pilots come from young men with an urge to fly that has been brought to them through private flying clubs.
The present Government's policy towards flying clubs, private pilots and the light aircraft industry so far has been exceptionally disappointing. Last month I put down a Question asking about the petrol tax concession on light aircraft. The Parliamentary Secretary indicated that the concession would be withdrawn as from today, 1st March. He said that this was a vigorous movement and would adapt itself to the change. I must disagree with this view to a very large extent, and I would like more detail as to why the tax concession has been withdrawn, and, indeed, as to the financial implications. It cannot be shrugged off lightly. It will be a far-reaching and serious handicap to the aircraft industry. Even more serious, it 1018 discriminates between British aircraft and American and Continental aircraft.
I have here some approximate figures for rebate per hour on some existing light aircraft, all of which are in current use with the private clubs. The British Beagle Terrier has an approximate rebate of 11s. 11d. per hour; the British Beagle Airedale, 10s. 4d. per hour; the American Piper Tripacer, 9s. 7d. per hour; the American Piper Caribbean 9s. 7d. per hour; and the American Cessna 172, 8s. 8d. per hour. Therefore, British light aircraft have been receiving a higher rebate than American aircraft.
Because of the change, during the last three months the flying clubs have had to put up their rates very considerably. In November last the increase was 5s. because of the 6d. extra per gallon fuel tax. In March, because of the loss of the concession, the rate will be increased by another 12s.—a total of 17s. an hour within three months, or 16 per cent. In terms of cash this represents an increase from £5 5s. to £6 2s. an hour. For flying club aircraft with public transport certificates—needed for approved Ministry instruction courses—the increases bring the total to £7 5s. per hour.
This is hardly encouraging to those who want to take up flying as a career and, indeed, for pleasure. Let us consider what it costs a pilot these days to have a licence at all. I hold a licence. It costs me £36 5s. for the hire of an aircraft to get the minimum number of five hours flying. Then there are the medical examination and renewal fees, and, of course, the subscription to a flying club. It costs me over £40 a year to keep a flying club licence current. Contrast this with the 5s. for a licence to drive a motor car, which is one hundred times more dangerous.
With the expenditure of that £40, it was to be hoped that the Ministry of Aviation would show some enthusiasm for and encouragement of private flying, but that is far from being the case. It is a miracle if one is allowed to take off at all. The Ministry seems to want to make sure that nobody with a flying licence takes off and immediately commits suicide. Even if one is allowed to take off, it is very rare to be allowed to fly in a direct line to where one wants to 1019 go, and it is almost inevitable that one commits some form of minor aerial misdemeanour before landing. Whenever I fly, I try to do so without a radio in order to make sure that I get "rockets" on the ground and not when I am flying as well.
Rising costs are making it almost impossible for the private flyer to carry on. The sum allowed to flying clubs for Air Training Corps cadets under the flying scholarship scheme is £7 17s. 6d. an hour for British aircraft and—more discrimination—£8 5s. for American aircraft, because, theoretically, American aircraft cost more, although in fact flying clubs usually buy them second-hand. This may be the beginning of the end of A.T.C. flying if the flying clubs now have to disband.
There is a further argument for continuing the tax concession. A reserve of pilots is needed in this country in case of an emergency. In the 1930s, we had pilots trained in the Royal Auxiliary Air Force, the Royal Air Force Volunteer Reserve and the Civil Air Guard and when war came they were soon operationally proficient. They served in the Royal Air Force and the Fleet Air Arm and some flew in the Battle of Britain. 600, 601, 602 and 603 Squadrons are well known throughout Britain, but young men today have no comparable opportunity to learn to fly.
I am a past member of 603 Squadron and I know the arguments for disbanding it. Perhaps the aircraft were obsolescent and perhaps it was difficult to keep weekend flying programmes going and of course we were not able to fly first-line aircraft and perhaps it is true that age has now caught up with us. Nevertheless, there are plenty of eager young men who would jump at the opportunity to fly if they were given the chance. In 1939, there was no difficulty about converting pilots of Tiger Moths into being able to fly Blenheims or Spitfires on operational work, and I see no reason why pilots, trained to first-class club standards, should not be operationally proficient in a very short time for R.A.F. Transport Command, or even jet fighters.
The time wasted on the roads these days far exceeds anything which might be wasted at a business lunch, and in an age of advance we have to get business 1020 men airborne, flying from factory to factory and country to country, so that it can be shown that we believe that speed means something and counts for something. We are years behind the Americans in the encouragement of getting private business into the air. We have just seen in the newspapers that the Government have made a grant to the Beagle Aircraft Company, but this will not help if nobody can afford to fly an aeroplane. The Beagle 206 is a fine aircraft and we wish it well, but the rest of the light aircraft industry is pretty pushed to keep performance up with the Americans and the Continentals. I should like the Parliamentary Secretary to say something tonight about the encouragement to be given to the light aircraft industry.
I support what has been said by hon. Members from Scotland. I live in a constituency which is not remote by any stretch of the imagination yet I cannot fly there. The nearest aerodrome is about 80 miles away. This difficulty might be remedied, as some hon. Members have suggested, particularly my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) in a very fine maiden speech, if the airlines were able freely to compete and to run feeder services. If Carlisle Airport had a feeder service, I might be able to fly to London. As it is, I can fly from Carlisle to the Isle of Man, which is a great deal of use if I want to come here! I hope that the Government will make every effort to encourage feeder air services between London and Scotland, and not only to Edinburgh, Glasgow and Aberdeen, but to equally important areas. Over the years I would have liked helicopter services to have been encouraged at Dumfries and Galloway, or the use of that fine aircraft the Twin Pioneer, about which we completely missed the boat.
I am sorry that the Secretary of State for Scotland paid us such a short and flying visit. I had hoped that he would have listened at length to what we had to say about vital air communications between Scotland and London. I now see that he is standing behind the Speaker's Chair. I am delighted that he has come back.
I would have liked to have seen the development over the years of feeder 1021 services to many small airports in Scotland. Airports like Dumfries, West Freugh, Connell, Evanton, Edzell and Dundee need developing and I hope that the Government and my right hon. Friends when they come to power will make every effort to ensure that all types of airlines, within Scotland and from Scotland to London and the Continent, are developed. I hope that tonight the Parliamentary Secretary will give a full and detailed reply to my serious complaint about the Government's lack of enthusiasm for private flying.
§ 8.18 p.m.
§ Mr. Cyril Bence (Dunbartonshire, East)
Dame Edith, I should first like to congratulate the hon. Member for Birmingham, Edgbaston (Dame Edith Pitt) on being the first lady on the Chairman's Panel since 1951. I think that the late Mrs. Paton was the last. She was appointed by a Labour Government, and we then had 13 years of the dark ages, and now, under another Labour Government, we have another lady on the Chairman's Panel. I am sure that whenever she presides over the business of the Committee, we shall have first-class debates.
I have listened to most of the debate and I have been amazed at the series of complaints against the administration of and policy towards air services in this country. As hon. Members opposite were in power for 13 years and have been in opposition for only six months, I must assume that these complaints were latent for 13 years, but that when hon. Members opposite were on this side of the House, their Whips successfully suppressed the expression of these complaints against the organisation of the air industry.
§ Sir John Gilmour (Fife, East)
Is it not true that it is only the Labour Party which has suppressed private flying? Has not that been the tenor of the complaint?
§ Mr. Bence
I was dealing with the complaints made by hon. Members opposite. The hon. Member for Banbury (Mr. Marten) said that the Government should have got rid of British European Airways long ago, should have taken the £100 million invested in it and found somewhere else to invest it. The hon. Member has been in the House since at least 1959, but I have never heard him speak like that in previous debates on 1022 aviation. He always supported the Conservative policy, which was to support B.E.A. and B.O.A.C. Now that he has crossed the Floor of the House, he has suddenly discovered that £100 million should be taken out of B.E.A. and he suggested it in a way which made it seem that he assumed that B.E.A. had the money in a strong box.
§ Mr. David Price (Eastleigh)
In fairness to my hon. Friend the Member for Banbury (Mr. Marten), I should point out that he said that this was the result of two years' experience as a junior Minister at the Ministry of Aviation. This was a personal view.
§ Mr. Bence
I do not want to be unfair to the hon. Member for Banbury. The last thing I want to do is to be unfair to anybody. I only wish that the same spirit was exhibited by some hon. Members opposite when they refer to some of the things that we do. I am sure that had the hon. Member for Banbury been on this side and had he spoken from the Government Dispatch Box, he would not have used such language as that, although he had been at the Ministry for two years. My view is that if he had been there for five years he would have been keener to support the Department which he represented than he is now when he is in opposition. It seems that the hon. Gentleman has concluded that being in opposition means that one must change one's point of view. One can only feel that that is his attitude.
In a mixed economy there must be variations in the structure of transport operations, whether by sea, road, rail or air. But I am amazed to hear the cry for more competition from hon. Members opposite. There has been no competition in many industries over the last 13 years. In fact, in one industry, a transport industry, there is no freight competition at all. When the United States Maritime Commission decided that conference lines was a monopoly, there was an agreement about freight rates. In the last Parliament—I remember the arguments; many of us tabled Questions and raised the matter time and again—under pressure from the then Opposition, a Bill was introduced to stop the United States demanding information from these shipping companies. The House passed the Bill forbidding British merchant owners 1023 supplying information on their conference rate agreements between maritime lines working between this country and the United States ports. An agreement was made on freight rates; there was to be no competition in freight rates. Hon. Members opposite supported that small Bill forbidding the giving of information to the United States Maritime Commission on conference rate agreements.
§ Mr. Galbraith
Surely the hon. Gentleman will agree that the situation at sea is entirely different from the monopoly situation which the Government are creating in the aircraft industry.
§ Mr. Bence
Manchester Liners had a monopoly of the North Atlantic routes. This was the allegation which was made. We passed the Bill forbidding Manchester Liners, which was the dominant line plying between Manchester, Liverpool and the east coast of the United States, giving information. There have been discussions with the American Maritime Commission on finding a way of getting round this difficulty because it objects to conference line agreements on freights across the North Atlantic.
§ Mr. David Price
The equivalent of the conference line agreements in the air are the I.A.T.A. arrangements. The hon. Gentleman will know that both B.E.A. and some of the American airlines on certain routes would like freights to be at a lower level, but I.A.T.A. is tied up over flying rights. A similar situation exists with conference lines. The hon. Gentleman is being very naughty in raising this parallel, which is not a parallel, in terms of domestic airlines in this country.
§ Mr. Bence
The hon. Gentleman forestalled me. Obviously he knew the point towards which I was sailing. We have similar agreements on air transport fares and air transport rates. So do not let right hon. and hon. Members opposite talk about competition, because they know as well as I do that throughout the air transport industry there are the same sort of air freight agreements between private companies, the state corporations of America, the nationalised companies of Belgium and France, and so on. This has existed for the last 13 years.
When a man is trying to get in on anything, he believes in competition, but my 1024 experience in industry and commerce is that once he gets there he wants to stop it. I always remember after the war when things were bad a man coming to me who looked upon me as a good old radical Liberal of the old school. He wondered what sort of influence I had to get him a licence to open a grocer's shop in Handsworth, Birmingham. I told one of my hon. Friends about it and he said that he would do what he could. Eventually, the man got a licence to open a shop and he wrote to me a very friendly letter. He must have told somebody else about it who wanted to open a shop in Aston. This other fellow came to me, and I said, "I will see my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman) about it". The other fellow for whom I had got a licence in the first case heard about it and wrote me a most offensive letter; I was helping to set up a competitor who would take his living away.
This is the sort of thing that happens in industry. I know hon. Members opposite—and I am not saying this disparagingly—who have been employed by I.C.I. I have done work for them myself. has had a monopoly in caustic soda for 40 years. I have never heard anybody complaining about it—only the customers. I am amazed at this sudden resurgence of nineteenth-century laissez faire and the demand by hon. Members for competition six months after they lost an election when during all the 13 years that they were in power we never heard the cry for competition except when it came to State corporations.
The passenger and freight side of the aircraft industry in this country surely was developed by Imperial Airways and the Conservative Government and Labour minority Governments—from 1919 right up to 1945. Air services were run by Imperial Airways. I have never heard of a campaign in all my life—and I am no chicken—until now to disband the nationalised public air Corporations and to replace them. This was the demand of the hon. Member for Banbury.
We know that the Opposition are divided completely—from the right hon. Member for Wolverhampton, South-West (Mr. Powell) to the hon. Member for Louth (Sir C. Osborne). The right 1025 hon. Member for Wolverhampton, South-West wants to go back to Adam Smith, and the hon. Member for Louth wants to go back to Dr. Livingstone. We do not know where we are—or they do not know where they are. The development of British European Airways and the British Overseas Airways Corporation is the continuation of a policy followed in this country for 40 years.
This sudden drive to build independent airlines and, as it were, to slow down the development and evolution of the publicly-owned air services is extraordinary. I cannot understand it unless, now that all the ground work has been done and all the tremendous risks entailed in developing the air services and aircraft have been carried, someone sees that there is profit in it. It should be remembered that in the development of aircraft, B.E.A. and B.O.A.C. have had a heavy burden placed upon them. For years, part of their cost structure has been to bear a good deal of the cost of developing prototype aircraft.
It is unreasonable to say that if the independent operators were given an ever-increasing slice of the more profitable routes, by participating in them they would be able to develop the unprofitable lines such as we have in Scotland. It has been said by hon. Members opposite that the independent airlines cannot develop these unprofitable routes in Scotland and in England and Wales because they do not have the more profitable routes, which are almost the monopoly of B.E.A.
If, however, by the passing of legislation or other means, we had a gradual moving over to independent operators is there any guarantee that if they had a complete monopoly of the more profitable routes they would use their monoply position to provide socially desirable but uneconomic routes elsewhere in the country? No hon. Member opposite could give such a guarantee.
If air or other operations are handed over to a commercial transport concern, it must operate commercially and it would drop anything that was non-commercial. It is presumptuous to assume that the independent operators, whether British Eagle or British United, if they had the full running of the most profitable routes, 1026 would take out of the profit from those routes a certain amount of money to subsidise routes that were unprofitable. They would not run them at all. What would happen would be that the people of the Western Isles or elsewhere in Scotland, and of the Isle of Man, to which the hon. Member for Dumfries (Mr. Monro) did not want to go—he wanted to come here, but I am sure that he would be just as useful there as he would be here—
§ Mr. Geoffrey Wilson (Truro)
Is the hon. Member aware that in the bus services, that is exactly what private enterprise has done for many years? It has served many unprofitable services from the profitable routes.
§ Mr. Bence
Oh, no. That is only a half-truth. What the bus services have done is to bring in to local points or centres people from rural areas which in themselves, taken as isolated units, have not been profitable; but they have fed in those people to other services which are highly profitable.
In Scotland, we have ambulance and hospital services to the outer islands. Could we get any guarantee that this would be done by a firm operating on a commercial basis? I would not condemn such a firm if it did not. If any company functions on the basis of having to operate commercially, one can only expect it to operate commercially. We cannot expect it to operate as society or the Government decide that it should. The only way to get these desirable services is by having a public corporation and placing upon it the duty of performing certain tasks which are socially desirable for certain parts of the country. If we had private enterprise in the Post Office, we could not see anyone delivering a letter for 3d. from Glasgow to Stornoway. That is why we have a public institution to do it. The same is partly true of air services.
Like my hon. Friend the Member for West Stirlingshire (Mr. W. Baxter), I am quite partial to the idea of a mixed economy. I want certain sectors of private enterprise and of public enterprise, but this is a sector in which, for many decades, the major operations must still be by public enterprise.
§ Mr. David Price
The hon. Member is not being quite fair. He will recall that 1027 B.E.A. made it clear to the Select Committee on Nationalised Industries that the Western Isles routes were unprofitable. Indeed, the Select Committee recommended to the House corporately that it would be proper that if B.E.A. was to continue to run these services, which we all acknowledge it does particularly well, it should have a subvention from the taxpayer to pay its losses on these services. The hon. Member is not being quite fair because even a nationalised Corporation has the problem of running economic services which, nevertheless, are socially desirable.
§ Mr. Bence
That is quite right. The foresight of the hon. Member for Eastleigh (Mr. David Price) is terrific and a great help to me in making my case. The hon. Member is always generous and he makes the point for me that even B.E.A., with the State behind it, is saying that it should have a subvention to run these uneconomic services in the west of Scotland. If it claims that, backed by the State, surely private enterprise will ask for it also. Private enterprise will say, "The State-backed organisation could not do it without a State subvention, and we cannot, either."
MacBrayne's get a subvention to work the west of Scotland. We had an Act passed in the last Parliament at the instance of the ex-Secretary of State—not the present one—giving him power to build ships and to hire them out at moderate rates of interest at long-term easy payments—to the Highland Shipping Company, I think it was. Even the Liberals supported the Tory Party's nationalisation plans.
§ The Secretary of State for Scotland (Mr. William Ross)
They demanded it.
§ Mr. Bence
They demanded it.
I do not understand the revolution which is taking place on the other side of the Committee. What is happening there is just beyond comprehension. We had from them denationalisation and nationalisation, and for 13 years the public felt paralysed by those nationalisers and anti-nationalisers on the benches opposite. No wonder the Press of this country is confused by the Opposition—not by the Government, but by the Opposition. The Opposition con- 1028 fuses the Press. Every weekend we read reports in the Press about the weakness of the Opposition— [HON. MEMBERS: "Nonsense."] —it is not nonsense; it is true, perfectly true.
We cannot get a consistent proposition from the other side of the Committee. We had the hon. Member for Banbury saying, "Get rid of the £100 million. Invest it in something else ". He did not say what else, but he said, "Sell off B.E.A. assets". He assumes that they must be worth £100 million. "Sell them off", he said. "Get somebody to buy them", he said. Who? British Eagle? At a bargain price? Is that what he wants? Is that what hon. and right hon. Gentlemen opposite would have done if they had been in the Government—sold national assets at bargain prices? We know they sold Trinidad Oil to the Americans and Courtaulds were forced to sell shares to get dollars. There was the great selling of Ford's back to the Americans. Now the hon. Member for Banbury would sell the British aircraft industry, get rid of it, and put the money into more profitable lines, while at the same time the hon. Member for Gillingham (Mr. Burden), I think it was, is saying "Put more money into the British aircraft industry"—because it pays high wages, high dividends, there is a lot of money to be made in aircraft, in missiles. Of course there is. I can understand that some hon. Gentlemen opposite are pressing for more and more money to be piled into this industry, but they do not seem to care a hang what comes out of it. They are not worried about that. It is what goes in they worry about. Of course, that is because they are at the dividend receiving end of the stick.
Does the hon. Member for Banbury ever consider who is paying? Really, it is about time that there was a realisation that the taxpayers of this country cannot go on year after year piling up Government expenditure. [HON. MEMBERS: "Hear, hear."] Yes, there were 13 years of it. I am on the Estimates Committee. We have last year's Estimates before us. We are examining the Estimates for 1964–65. Let hon. Gentlemen opposite not tell us we are responsible for them. I am amazed at their impudence. It is really impudent to treat the matter as though those 1029 Estimates now being examined were our responsibility, when we had nothing whatever to do with them. They were drawn up when hon. and right hon. Members opposite were in power.
I find it difficult to understand the Opposition. There is this frightful Government expenditure going up year after year and the hon. Member for Gillingham says, "Put it up more. Put more money into the British aircraft industry". That is what he said, because it pays high wages, and because it is highly profitable. If I were a director of the British Aircraft Corporation I would be saying the same thing. That is human nature, but the taxpayer will he an idiot if he supports it any longer.
I think that it was the hon. Member for Banbury who accused my right hon. Friend of taking up this appointment in order to liquidate the aircraft industry. The public believe, and I am wholeheartedly with them, that my right hon. Friend was appointed to stop the taxpayer from any more Ferrantis. That is why he was put there, and I am convinced that he will do the job very effectively indeed.
Let us stop this nonsense: let us stop pumping all this money into the British aircraft industry which is making fat profits out of the taxpayer, for aircraft that never reach operational units. I dare say that some good sound operations are being performed by the aircraft industry, but the taxpayer has paid very dearly for what he has had from the industry during the last 10 years. I know that the technological problem is a difficult one. I appreciate that by the time the cleverest designer gets a military aircraft off the drawing board—and this is happening with civil aircraft, too—it is out of date, and outmoded, thanks to someone else having designed an aircraft, and that this means an awful lot of expense, but it is unjust to attack a Minister because he is trying to do something which the previous Administration did not have the courage to do. I applaud my right hon. Friend for what he is doing.
Naturally I should like to see an expansion of both public ownership and private enterprise. I am sure that everyone would like to see enterprise being successful. It is on the success of all sorts of enterprises that the prosperity and wealth 1030 of this nation depends. Our prosperity will not increase if our enterprises are inefficient. It will increase only if they are efficient. Not for a moment would I like to see private enterprise inefficient. I want it to be as efficient as possible.
I do not think that the private airlines can be regarded as efficient if all that they can manage to do is to fly on routes which have been established by the State corporations over 20 or 30 years. If they cannot open up new routes, they are not playing their proper part. The air Corporations have built up certain routes. They have built up a great tradition. They have established certain planes by flying them. They have established a whole coterie of expertise in the aircraft industry. The independent companies can learn a great deal from what the air Corporations have done. Not everything that they have done has been perfect, but they can learn from the experience of the nationalised Corporations, and fly routes which B.E.A. and B.O.A.C. do not operate. Surely this is what private enterprise should do?
An example of private enterprise is the shipbuilding industry, which has learnt from the experience of the Admiralty, and which for centuries has been the envy of the world. If the independents want to succeed, they can do so by being adventurous and by opening up new routes, instead of attempting to succeed within the limited sphere now operated by the B.O.A.C.
§ 8.44 p.m.
§ Mr. John Tilney (Liverpool, Wavertree)
As the representative of a great provincial port, I want to add my congratulations to you, Dame Edith—a representative, much admired, of the greatest provincial English city—on taking the Chair in Committee of the whole House for, I think, the first time.
I want the Parliamentary Secretary to answer one or two questions about provincial airports. It is apposite that we should be discussing the provinces at the moment, but because one or two of my hon. Friends wish to catch your eye, Dame Edith, I will not follow up the caustic soda speech of the hon. Member for Dunbartonshire, East (Mr. Bence) on competition, except to say that I would welcome B.E.A. on the London-Liverpool route, provided that independent airlines were able to operate on 1031 the London-Manchester route. I believe in competition. I only regret that the hon. Member for Liverpool, Walton (Mr. Heffer) is not on the benches opposite at the moment, because even he asked that one operator, such as British Eagle, should not have the monopoly of the London-Liverpool route.
Competition can be both in kind and in cash. The trouble is that in the case of the provincial airports, such as Liverpool, where the independent operators are so important, those operators have less confidence in the future. This may affect the progress of Liverpool Airport. It will probably be agreed by members of all parties in Liverpool—the Socialists, who are in control, and the Conservatives and Liberals—that it is desirable that that airport should be a great success. We are frightened that because of the Minister's decision the airport will not go ahead as it should do in the future, because confidence is a shy animal, and it can be lost in the air as easily as it has been lost in other directions since 15th October.
I now refer to the Fourth Report of the Air Transport Licensing Board. I hope that the Parliamentary Secretary will comment on this. On page 11 it says:For good or ill London is the hub of the nation's international air services.We who are on the rim of it, in Manchester, Liverpool and Birmingham, feel that we are also important. It will be remembered that it was B.E.A. which refused to start a service from Liverpool to London, and that it was private enterprise which came in and made such a success, with Starways, which has now been absorbed in British Eagle.
The Report continues:If, as is usually the case, the volume and frequency of the internal services, both air and surface, between London and other main centres in the United Kingdom are good, the relatively much higher frequency of operation out of London airports will result in a combined service which, despite the longer elapsed journey time, will prove to be more attractive to the traveller."—Surely it is for the traveller to choose, and not someone in Whitehall—Moreover, the break of a journey at London, e.g. to visit a head office, is a not infrequent feature of business travel.Have they never heard of head offices in the provinces? Some of the finest companies still operate in the north of England. The Report says: 1032It may, however, sometimes be the case that the places overseas to which holidaymakers wish to travel direct—and they form the bulk of the traffic in question—are those which have little in the way of commercial connections with the area of the United Kingdom from which the holiday traffic originates.It is up to private enterprise to find that out, at the risk of losing its money and not the taxpayers' money.
The Report continues:We have commented above that, even as regards existing airports outside London, some of which possess excellent facilities, the provision of new air services is a very slow process, and that such few services as do exist are not necessarily those best calculated to further trade and development."—How does the Board know that it must be left to private enterprise? —It may be that some of the services in contemplation for the new airports, which in due course we should be invited to license, would, if mounted, materially divert traffic from services using another airport in the same region.We on Merseyside heard this argument times without number in the days when we were told to go to Manchester because it was in the same region as Merseyside. Anyone who has experienced the difficulty of navigating the roads between Liverpool and Ringway will know the immense amount of time that is absorbed.The end result would be that, despite heavy capital investment, the area as a whole would be worse served in the matter of air communications.I am glad to say that we allowed private enterprise to go ahead in Liverpool and Hawarden by Chester to the great help of the business community of Merseyside.We should, in this context, perhaps emphasise that the fact that one airport is significantly nearer, in terms of surface journey time, to a given centre of population than another airport, is not in itself weighty argument in support of a separate but similar service from the former airport. Savings in surface journey times are valueless …".Who is to decide whether they are valueless other than the consumer and others using the service? I hope that the Parliamentary Secretary will comment on that Report, because I fear that in it there is the somewhat Socialist dogma which has already been shown by the decision of the Minister and which seems to have triumphed over common sense.
§ 8.51 p.m.
§ Mr. E. S. Bishop (Newark)
I do not think one can engage in a debate on the civil aviation industry without having some regard to the problems facing the industry. There are many, and among them must be included increasing competition from foreign airlines. We have the problem of the industry having to use costly and ever-more complex aircraft, and there is a costly servicing and maintenance system. At the same time we must recognise the growing trend towards over-capacity and losses among nearly all the airlines of the world. All these things are of relative importance to any Minister who has to decide on policy for his Government.
There seems to be some idea that the problems we face—all of which are of great magnitude and due in some respects to the factors I have mentioned—having arisen since 16th October. In the last few months we have seen the effects on the aircraft industry, and we are told that this Government are responsible for changes of policy that have been described as disastrous. Today we have this debate in which the Minister is being censured.
We must appreciate that the problems we face are great and one may ask how we can compete in the present world situation. The Labour Party has been referred to as being doctrinaire. It seems extraordinary that anyone who disagrees with the policies advocated by hon. Members opposite are described as being doctrinaire whereas the policies of the party opposite are considered to be sensible and suited to the needs of the time. The Civil Aviation Act, passed by a previous Labour Government, envisaged the right of the Corporations to compete in scheduled services, and the provision of non-scheduled services by other operators. Since 1946 B.E.A. and B.O.A.C. have tremendously expanded their services and their trading operations. The capacity ton miles of the two services in 1951–52 totalled 247 million, and in 1961–62 the total was 1,169 million. The B.E.A. traffic has increased to a far greater rate than the average for all the world's airlines. Both Corporations have pioneering services to their credit.
The Minister has made a realistic statement about the finances of our nationalised airlines, which I am sure will he 1034 welcomed by the aircraft industry and those who adopt a realistic view of the problems with which we are faced. It should be recalled that the serious change in the finances of B.O.A.C. has been caused partly by the rapid emergence of jet services on the world air routes, taking over from the turbo-prop machines formerly used. That meant that B.O.A.C. had to write off a substantial loss, though it was, perhaps, a book loss rather than an operational one. We also must keep in mind the great competition there is in world airlines generally.
Labour's aviation policy started with the 1946 Act, which also made possible the acceptance of the independent operator for specialist services such as car ferrying, trooping and chartering services. In 1952, with a change of Government, there was a change of policy. The independents were allowed to operate as associates of the nationalised airlines, and were forced on the Corporations for that purpose. Then came the 1960 Civil Aviation (Licensing) Act, which aimed at a proper regard for standards of air safety and set up a licensing authority to which both public and private operators could apply on an equal footing to run services.
At that time the Labour Party did not object to these changes, although it expressed misgivings at the power to decide, in effect, what national civil aviation policy should be. We also recognised that the change could have very serious consequences to the Corporations, in which was invested over £300 million of public money. As a result of these changes, an increasing area has been taken over by the independent airlines. The capacity ton miles show how this has come about. In 1954–55 there were 18 million capacity ton miles in the scheduled services, and 84 million in 1961–62. Chartered and contract operations in 1954 amounted to 100 million capacity ton miles, compared with 146 million in 1961. This is a major expansion in independent airline operation.
At that time the public Corporations were prevented from taking part in air trooping which, as we recognised at the time, was becoming increasingly predominant here as compared with sea trooping. The nationalised concerns were thus placed at a great disadvantage compared with the independents. At the same time we had the B.O.A.C.-Cunard merger, 1035 in which B.O.A.C. had a 70 per cent. interest, the other 30 per cent. being taken by Cunard. That hived off about one-third of the business of the nationalised undertakings to private enterprise.
The Labour Party has stated from time to time its belief in competition, and I think that this is true. The fact is that under previous Administrations, nationalised undertakings, not only in civil aviation but in other directions, have been tied to a ball-and-chain and so were restricted in their efforts to compete fairly with private enterprise. There is nothing in my right hon. Friend's statement that shows anything different in that respect. He has said that there are no new restrictions on our domestic or international routes, and that any routes previously operated by independent operators can still continue to run.
But we appreciate that in the face of intense world competition, we must have regard to the need to provide our publicly-run airlines with a fair slice of the trade. I think that that will come about, and that with the changes that are taking place in the aircraft industry and civil aviation the present Government's policy is the one that will put our country on a sound footing.
§ 9.0 p.m.
§ Mr. Edward Heath (Bexley)
The Committee will agree that the debate has been distinguished by the maiden speech of my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith). I congratulate my hon. Friend on behalf of the Committee on his well-delivered and attractive speech, which dealt entirely with very practical matters. Perhaps it was not surprising that I found myself very much in agreement with what my hon. Friend had to say. He emphasised, first, the importance of more direct links between Scotland and the great cities of this country and of Europe. This met with a response on both sides of the Committee.
Then my hon. Friend advanced the powerful argument that we should get away from a situation in which everything appears to go through London. At the time that I was dealing with regional development I felt this very much myself. Thirdly, I found myself in agreement with my hon. Friend's statement that the policy being pursued today by the Minister of 1036 Aviation and his colleagues will destroy one major possibility of getting more feeder services which are badly required, and, indeed, which are essential for the development of the aviation industry. All these were practical points which were directed to the improvement of service for the traveller and are in the interests of the consumer.
There was a considerable contrast between what my hon. Friend said in his maiden speech and what was said by the majority of those hon. Members opposite who spoke in this debate. We heard from them all the old shibboleths, all the old epithets about private enterprise and profit, all the old cries about creaming off the routes, and so on, and, with one honourable exception—the hon. Member for West Stirlingshire (Mr. W. Baxter) —never a word about the interests of the one person who really matters—the consumer.
Indeed in their approach to these general matters of aviation, one would think that most hon. Members opposite who spoke had never read the Civil Aviation (Licensing) Act, 1960. Amongst these I include the hon. Member for Newark (Mr. Bishop), who spoke last, but who unfortunately has just left the Chamber. He spoke as though there was nothing whatever governing civil aviation in this country. Hon. Members opposite have made no mention of the terms under which the Air Transport Licensing Board has to expercise its powers. I remind the Committee that under Section 2(2,c) the Board shall considerany unfair advantage of the applicant over other operators by reason of the terms and conditions of employment ".This is a point which the hon. Member for Glasgow, Govan (Mr. Rankin) dealt with. It is specifically mentioned here as one of the points the Board must consider. Another matter isin the case of any air transport service proposed, the adequacy of any similar service authorised by any air service licence already granted and the tariff, if any, in respect of that similar service".Another matter isthe extent to which any air transport service proposed would be likely to result in wasteful duplication".All these matters are in the terms of reference of the Licensing Board.
Therefore, it is not correct to say that the Government must have the right to 1037 fix the policy. The policy was settled by Parliament. The policy was that the operators, whether they are nationalised or independent, are to be on the same footing. If they want to exercise their rights on a route, they have to get a licence, and the terms on which the licence will be granted were laid down by Parliament. Therefore, it is completely misleading to argue that the Government must have the right to settle the policy, because the policy has been settled. It has been settled by Parliament. It has been implemented by the Board in those terms.
§ Mr. Rankin
Does not the right hon. Gentleman agree that the Minister has complete discretion about the actions of the Board?
§ Mr. Heath
No, I do not agree with that at all. That is a very important point to which I am coming. I conclude this part of my speech by saying that my hon. Friend made a valuable speech and we all enjoyed listening to him. We look forward to hearing contributions from him on this and on other subjects very often in the future, and we offer him our congratulations.
The Minister congratulated my hon. Friend the Member for Stratford-on-Avon (Mr. Maude) on the soberness of his approach to this question this afternoon. Indeed, the Minister indicated his approval of the way in which my hon. Friend kept the temperature at a low level. I wish I could say the same of the Minister and congratulate him. Instead, we had from him this afternoon a petulant, arrogant, performance which has, alas, become all too characteristic of him. It has taken only four months for power to work its effect. That once promising, persuasive, intelligent, backbencher has now become the intolerant, mentally obtuse, Minister that we saw this afternoon. In fact, so intellectually obtuse was he in his arguments, which is most uncharacterstic of him in all his speeches whether from the back benches or the Front Bench, that in my view, and I think of many of my hon. Friends, it could only have been deliberately designed to hide the real purpose of his policy. I cannot conceive any other reason why he should do it.
The first part of the right hon. Gentleman's speech, dealing with his state- 1038 ment of 17th February, argued two opposite and contradictory things. First, he said that his statement meant no change in the position. He might have asked himself a very simple question—why in that case make it at all? He said that consequently there was no change in the situation, but later he went on to say that he was making special provisions as a result of his statement because it meant a change and he had to make special provisions for the board of B.E.A. to deal with a situation which would result from the change he was making.
This intellectual conflict makes complete nonsense of the right hon. Gentleman's policy and everything he said, and I suspect it accounts for the tension with which he addressed the Committee. His speech was evasive. He did not answer many of the questions put to him. He did not bother to deal with them at all. Above all, he gave no justification whatever for the policies which he said he was carrying out.
§ Mr. Heath
I am coming to them and I will tell the right hon. Gentleman. He did not answer the question about the meaning in his statement of the period of time. He did not answer the question whether, if an independent pioneered an overseas route and the Corporations wanted to muscle in on it, they would be allowed to do so.
§ Mr. Heath
We can see tomorrow from HANSARD quite easily. The right hon. Gentleman gave absolutely no justification for the policy which he is pursuing. He gave no evidence that to allow the existing situation to continue would lead to damage to British European Airways. He ended with a splendid fling by saying "I shall not allow anyone to cream off their profits." B.E.A. made £3 million last year. A lot of travellers believe that they should see better service and conditions out of that profit. The right hon. Gentleman did not explain why it should not be possible in a growth industry for the independents to have a share of that growth without damaging the Corporations. It is absolutely no wonder that he 1039 had to work himself into a fever of excitement in order to try to put anything of his policy across at all.
The right hon. Gentleman, reading at a very high speed, dealt with the affairs of the British Overseas Airways Corporation. My hon. Friend the Member for Stratford-on-Avon said that the affairs of B.O.A.C. are not the main purpose of the debate. The Bill will give us a full chance of debate on this, but I must warn the right hon. Gentleman now that we shall expect a complete and detailed explanation of the arrangements which he is making with B.O.A.C. for the write-off of the deficit and for the contingency allowance which he said he is making.
The right hon. Gentleman's statement was full of platitudes. Everything was going to his entire satisfaction. That is all that he told us. We shall want to know the arrangements for the purchase of aircraft, the staffing reorganisation, the financial prospects, the return on the capital demanded by the Government, and the justification of the contingency allowance which the right hon. Gentleman announced. At the moment, to some people, this will look like providing for a deficit in advance of the Corporation making it. And, of course, we shall want an explanation whether the size of the contingency allowance is right, whether the right hon. Gentleman has allowed enough in his plans for B.O.A.C. for contingencies.
§ Mr. Heath
Yes, that is the privilege of the Opposition. At the moment the right hon. Gentleman is giving a blank cheque. We shall want to see published a very clear-cut arrangement for this.
I return to the first part of the Minister's speech. In order to make out a case at all, he had to put forward a blatantly false argument. He said that the only alternative to what he is doing or to what he announced on 17th February is to have unrestricted competition. Throughout his speech, he argued from this base—"What I am doing, or unrestricted competition". But this is a completely false argument. It is not unrestricted competition today. It is governed by the Air Transport 1040 Licensing Board. My hon. Friend the Member for Stratford-on-Avon did not argue for unrestricted competition, neither do I, and neither have my hon. Friends argued for unrestricted competition. We passed the 1960 Act. It is a fundamentally false argument to say, "Have what I am doing, or have unrestricted competition".
The present machinery could and ought to be allowed to work perfectly well. It is true that some of those who deal with civil aviation affairs would like to see more competition emerge from this machinery than has so far emerged, but they have not argued for unrestricted competition. The Minister, however, in order to try to establish his case, has put-up a false argument and knocked it down, which is only done in order to try to justify a dogmatic policy.
In his statement on 17th February, the Minister said:I do not think it right to offer them"—that is, the independents—the prospect of an unrestricted or extended frequency in the near future." —[OFFICIAL REPORT, 17th February, 1965; Vol. 706. c. 1188.]Let us leave aside "unrestricted" because we are not asking for that. We are left withor extended frequency in the near future.The right hon. Gentleman did not explain what is meant by "in the near future", which is very important for the independents in planning their future. Perhaps the Parliamentary Secretary can tell us what it means. If the Minister thinks that he has already answered the question in his speech, perhaps he will tell the hon. Gentleman and then the hon. Gentleman can tell us again. Although my hon. Friend put the specific question to him, the Minister failed to deal with what "in the near future" means.
I turn now to the question of the independence of the Board, to which my hon. Friend the Member for Gillingham (Mr. Burden) drew attention. In introducing the Bill in 1960, the then Minister of Civil Aviation dealt with this. He said:It is my intention that the Board shall be as independent as it is possible to make it, for that is one of the primary purposes of the Bill. I have, therefore, kept down the Minister's powers to the minimum. The only important power which is reserved to the Minister is that 1041 of deciding appeals from decisions of the Board."—[OFFICIAL REPORT, 2nd March, 1960; Vol. 618, c. 1228.]] I put this question to the Minister: under what powers did he make his statement of 17th February? Under what powers is he claiming to influence the Board in this situation? I know of no powers of any kind under the Act for the Minister to do what he is doing. What does it really mean? It means that, if an independent comes to the Board and gets an authorisation, the Minister is inciting B.E.A. to appeal against that decision and saying in advance that he will grant the appeal. That is what the right hon. Gentleman is doing, unless he can show me powers under the Act by which he is enabled to influence the Board to pursue a policy which he wants.
The right hon. Gentleman is prejudging the result. He is abandoning his quasi-judicial status as Minister. He is removing the independent status of the Board and, in so doing, he is flouting the decision of Parliament on how the machinery should work. He has given absolutely no explanation of how he believes the Board should take account of his words here in the House or under what powers it should act. If the powers exist, perhaps the Parliamentary Secretary will tell us exact y what they are.
It is not something we like, although we are becoming accustomed to this Government treating Parliament with contempt. The First Secretary of State does not bother to come down to the House to answer Questions. The Home Secretary overthrows his own decisions on local government boundaries. Now, the Minister of Aviation stands the Civil Aviation (Licensing) Act on its head and does the reverse of what Parliament arranged.
If the Minister wanted to change the policy as he has done, he ought to have come to the House with a new Bill, taking the powers to make the decisions which his hon. Friend the Member for Newark was urging him to make. That would have been the honourable way of dealing with the situation.
What, then, is the Minister's real purpose? I come back to his own statement. He said:In these circumstances, it will be for these companies to consider whether they wish to continue as at present, or to withdraw completely from these routes.1042 What is this but an open invitation to them to pack up? That is what it is—a veiled threat that they should get off the routes, because he knows that with the limited frequency which they have while they are building up, in some cases they cannot hope for a viable service in the future. It was an open invitation, unworthy of him, to take his word, which he has no power to implement under the Act, to pack up the struggle. I am glad to say that most of them have not yet succumbed.
§ Mr. Roy Jenkins
What does the right hon. Gentleman mean by that? There is only one company involved.
§ Mr. Jenkins
I said that only one company was involved in that part of my statement from which the right hon. Gentleman has quoted. I have no idea what he means by saying that most of them have not succumbed.
§ Mr. Heath
One of the companies has withdrawn and therefore most of them have not succumbed. That is what said.
The Minister went on as though they would pack up at once; he went on to make the necessary provision for it. His words are well known. There is to be a new Board member. He cannot go on to argue that there is no real change. His real purpose is to get rid of the independent airlines off the internal trunk routes, because they would no longer have the opportunity of getting their share of the growth of traffic. He proposes to open up the independent airlines to full competition on trooping, which provides about 40 per cent. of their income, but not to open up the Corporations to similar competition from the independent airlines elsewhere. This is what he thinks is striking a balance.
He talked a great deal of what he is doing to help them on charter flights, knowing that this is highly seasonal and gives a very limited load factor taken over the year. Then he said:Both types of operator have an important part to play in the rapidly expanding future of British civil air transport." —[OFFICIAL REPORT, 17th February, 1965; Vol. 706, c. 1186–89.]1043 Most of us will need a lot of convincing that he means what he says.
We come to the question of the interests of the consumer. We have the extraordinary proposal that there should be a special Board member. One thing which has stood out a mile in the natonalised industries in all cases since they were established is that the consumer councils and advisory bodies have been an undisguised failure. They have been completely ineffective. The consumer has no sense of participation. Competition is the only salutary influence.
Before he became a Minister the right hon. Gentleman was a director of a very great store. One can imagine the situation if he had not succumbed to the attractions of becoming a Minister. One can imagine the First Secretary coming to him, taking his arm quietly and saying, "The structure of your board in this store is wrong. You ought to put somebody on the board who will look after the consumer". If the First Secretary had said that to the right hon. Gentleman he would have got a very dusty answer. The right hon. Gentleman would have taken the First Secretary's arm and said, "George, enough is enough. The job of our whole board is to look after the consumer because the future of the firm, its employees and everything else depends on our meeting the needs of the consumer." That is what the whole Board of B.E.A. ought to be doing—looking after the consumer. That is their job.
The plain fact is that B.E.A. have been concentrating on their overseas routes where there is competition and, I think it fair to say, until recently have not paid the same attention to the needs of the consumer on their internal routes. It does not help to give them a greater monopoly, because monopoly is bad for morale. The hon. Member for West Stirlingshire has admitted that B.E.A. services on these routes have become better since they have had competition from British Eagle.
Monopoly leads to grumbling from everybody because they feel that they have no other outlet or alternative. I cannot understand why B.E.A. do not welcome competition and face up to it as they ought to do. Their own history shows how necessary it is and how beneficial it is. It was as a result of the 1044 intervention of the independent airlines, I believe that they moved on to trickle loading, on to seat selection and on to the provision of meals on these routes—and that was a very good thing. That was a very good thing. It ought not to come as a surprise to the Minister of Aviation. We all remember his speeches in the House on the Resale Prices Bill, when he demonstrated clearly and conclusively that what is needed above all in the world is competition and more competition. On the Bill introduced by his Parliamentary Secretary he complained that there was no difference in pricing policy in aviation and said how unfair it was because one had to pay for the meal whether one wanted it or not.
That was the right hon. Gentleman in his glorious days of competition and interest in the consumer. Now see where he is—slumped down on his Bench, appointing a member of the Board to look after the consumers! Who will he appoint? Heaven knows. The Parliamentary Secretary may suggest the chairman of the Scottish Co-operative Wholesale Society, for example, or, like the First Secretary, he may go for this important job to some non-political, non-controversial figure, some guardian of the consumer interest like Mr. Ted Hill, by that definition, or my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones) might find the job offered to him.
It seems to me that this may be described as not so much a commercial operation but more a political way of life. It is really a farce. The right hon. Gentleman has succumbed to the pressures of his own back benchers to do away as far as he can with the competitive element and go back to pure monopoly, if he can get it.
But much more requires to be done. That is why it is important that the independents should be given every encouragement. The interests of the consumers are not being met yet as they ought to be. There is often bad timekeeping, which is embarrassing for those engaged in industry and business who are trying to expand in the region. Often they have to book days and sometimes weeks ahead. I understand that today it is impossible to get a seat on our airlines to Glasgow and Edinburgh before 11th April.
§ Mr. Heath
This has been checked today. What is the justification for a system under which such a situation can exist? It is plain that the services are inadequate and the aircraft not sufficient to meet requirements. I understand the reason, which the right hon. Gentleman himself emphasised for another service to Paris. It is that that service is always at a very high load factor because B.E.A. does not take risks with services or in opening up services or in providing more frequent services. What we need is a more frequent service and more availability of seats and thus encourage greater traffic, getting our rewards back in that way.
Some of these aspects are all bad aspects of nationalisation. [HON. MEMBERS: "Oh."] Yes, this is true. It comes about because the Corporation are subject all the time to a great deal of Parliamentary examination and criticism, criticism of the Estimates Committee, and they are all the time in the public mind. That is why they are naturally cautious and careful about these things. But it does not help this country to become more air-minded.
I emphasise again that we are not arguing for unrestricted competition. We are arguing that the present system should be allowed to continue. I believe that the whole approach to air transport in this country is still old-fashioned. It is still treated as some special undertaking for which one has to make elaborate preparations, such as booking one's ticket seven weeks in advance, in order to travel from one part of the country to another. Booking far ahead, cumbersome ticket arrangements, wasteful arrival times, the rigid system at airports—all these things should be looked at afresh if the country is really to become air-minded in the future.
Turning to regionalisation, it is essential if we are to develop industry as we want to do in the North-East and Scotland, if we are to carry through our programmes, there must be greater opportunities for travel inside the country and direct links to Europe for industry. The Toothill Report has often been quoted. One of the most important things that we did was building up the airports at Wolsington and Middleton 1046 St. George. They will be of immense importance to the industrial complex of the North-East in the future. Edinburgh itself ought to become one of the great conference capitals of Europe, and it could do so. For that, it is essential that it should have the services it requires—and that means that the right hon. Gentleman, instead of becoming more restrictive on these routes, must allow more services in a growth industry, of which the independents ought to get their share.
There is also the question of aircraft supply. I believe that to have strong, independent airlines as well as the Corporations in this country is essential if we are to make progress with aircraft supply for short haul and medium haul routes. The danger is that aircraft are tailored to suit the corporations. It is a fundamental danger. If there are strong independents, then that danger is much less. There is a much greater chance that aircraft will be built as manufacturers' planes for general short haul or medium haul and that they will then stand a better chance of exports.
I always have in mind—because I was involved at the time—the curious example of the de Havilland Ambassador, which became the Elizabethan. In 1947, the whole weight of the Government was put behind that plane and de Havilland's against the Viscount, which was being produced by Vickers. What was the consequence? B.E.A. bought 13 Elizabethans and very few others were sold. But the Viscount went ahead in design and later on B.E.A. took it up. Up to date, 444 Viscounts have been sold in world markets. That was an example of a plane being produced for general use by airlines. Although B.E.A. took it up later on, fundamentally the Viscount was a maker's plane. But the Elizabethan, a tailor-made plane, was not a success.
§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)
I happened to be the Minister responsible at the time. The Viscount and the Ambassador—as it was then called—were two parts of the Brabazon programme supported by the Government.
§ Mr. Heath
I am talking about 1947. Although B.E.A. was taking the Ambassador, the Viscount design was being carried ahead by Vickers. But 1047 let us not argue about this because, fundamentally, my thesis remainns— that if we want to sell aircraft abroad we have to produce aircraft which all airlines will take and not merely tailor them to suit one airline.
I express my disappointment with the policy the Minister has announced, which I do not believe he has any means of enforcing, except by prejudging every appeal which comes to him if the Board gives an answer he does not like. I thought that he, like the Secretary of State for Education and Science, was moving in these last years towards what they used to term? the "competitive public enterprise approach". The Secretary of State for Education and Science said, in his book "The Future of Socialism", on page 476, that competitive public enterprise should have preference wherever possible, and then went on to consider the sort of policies which a radical, progressive, revisionist Labour Party and Government would stand for. This, he said, was the programme of radical reform in the 1960s.
The Secretary of State's sixth point in that passage was protection of the consumer against public and private monopoly. That was what he was aiming at, and I thought the Minister of Aviation was supporting him. The Secretary of State asked:But is the Labour Party ready for a policy at once so radical and contemporary? The truth is that some of its leaders are radical but not contemporary … while others are contemporary but not radical.The Minister of Aviation has achieved the supreme height of being neither radical nor contemporary in what has been so far his policy. He is out of tune with the times and with what is required in this growth industry. This once splendid European's first act was to try to kill the Concord. This onetime exponent of competition's aim now is to try to kill the independents wherever possible.
What an ignominious record for a Minister in his first four months! We deplore this policy which he has announced, because it ignores the needs of the consumer and will also damage the air transport industry and foster further monopoly and have the other consequences which I have described. What is more, we deplore the way in which he 1048 is handling it instead of bringing a fresh Bill to the House and dealing with it in that way, which is what should have been done if he wanted to carry out this policy.
It is because we deplore both of these things that we have moved a reduction in the Vote and given the undertaking that we ourselves, when returned to power, will restore to the independents the opportunities which the Minister is taking from them.
§ 9.30 p.m.
§ The Parliamentary Secretary to the Ministry of Aviation (Mr. John Stonehouse)
Both sides of the Committee followed with great interest the speech of the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). His speech was very well informed and a number of the points he raised will be borne in mind by my right hon. Friend and considered before he visits Scotland next week. The hon. Gentleman spoke about the development of the airport in Dundee. I have discussed this with my hon. Friend the Member for Dundee, West (Mr. Doig) and 1 hope that an independent airline now considering the development of services from Dundee will come forward to develop that route. We will certainly support it all we can.
It is now five years almost to the day since the House debated the Second Reading of the Civil Aviation Act, 1960. My right hon. Friend's statement of last week and his speech today are welcome because they are now helping to undo the mischief created by that Act and the failure of successive Tory Ministers to act sensibly within the system imposed by that Act. Now at last the air transport industry has a clear indication of policy. These guide lines have come none too soon.
For the last five years Corporations and independents have operated under a miasma of doubt and uncertainty. This has inhibited the successful development of British air transport, produced a great deal of inefficiency and wasted much time of directors, executives and lawyers in meaningless appeals and litigation.
What was the justification for the 1960 Act? The then Minister of Aviation, the right hon. Member for Streatham (Mr. Sandys), claimed that a pattern for British aviation would emerge progressively from the decisions of the Board and from the results of appeals 1049 to the Minister. I ask the right hon. Member for Bexley (Mr. Heath) to note that his right hon. Friend specifically referred to the importance of appeals to the Minister in deciding the pattern of British aviation which would develop. The right hon. Member for Bexley did not read that speech before speaking here today.
§ Mr. Stonehouse
The right hon. Member for Streatham said that a sort of case law would be built up. Nothing of the sort has happened. The industry has staggered from one ad hoc decision to another.
§ Mr. Stonehouse
I will give way in a few moments. The point I am trying to make is that since the passing of the Act, the air transport industry has staggered from one ad hoc decision to another, never quite knowing what to do for the best.
§ The Chairman
Order. If the Parliamentary Secretary does not give way, the right hon. Member for Streatham (Mr. Sandys) must sit down.
§ Mr. Stonehouse
I have undertaken to give way when I have finished this paragraph. The point I am making is that executives of airlines have been spending more time preparing for quasi-judicial proceedings than actually running their businesses. The appeals and counter-appeals have embittered relations in the industry, caused frustration and wasted much valuable energy which could well have been devoted to something else.
§ Mr. Sandys
I am glad that after the hon. Gentleman read three more pages he has given way. He stated that I had said that case law would gradually 1050 be built up and would determine the pattern of the industry. What the Government are now doing is frustrating the development of case law by laying down the law themselves.
§ Mr. Stonehouse
For five years we have been trying to build up case law by this procedure and it has simply not worked.
Why did this happen? This sad state of affairs cannot be blamed on the A.T.L.B. The Board was given only a vague policy directive which could be interpreted in almost any way. It should not be blamed on the independents; they were only trying to extract as much advantage as they could from the vague policy. At times they succeeded, but at others it was for them like squeezing blood from a stone. It cannot be blamed on the Corporations. B.E.A. and B.O.A.C. could not stand idly by and watch the route structures which they had carefully built up being eroded away. No, the blame does not lie on the victims of the system. All the bodies which I have mentioned were victims of the system imposed by the 1960 Act. But it was a soulless system completely uninspired by firm policy or coherent policy. The policy was absent because the Minister in 1960 abdicated his responsibility. He ran away, and so did all his successors.
The muddle, muddle, toil and trouble which has followed since must be cleared up. Now that the Minister is giving some clear guide lines, we can get on with the job of building up the industry in a sane and sensible atmosphere. No one would expect the policy statement which the Minister made to please all sections of the industry. But what all sections of the industry—and this includes the independents—are saying today is, thank goodness that a Minister has had the guts to come to a decision and to annouce it.
As the hon. Member for Gillingham (Mr. Burden) knows only too well—
§ Mr. Stonehouse
We are very glad to have the very late entry of the right hon. Member for Streatham (Mr. Sandys) into the debate—we have not seen him throughout the day—but if he chooses to attend the debate we hope that he will 1051 make intelligent and sensible contributions to it.
The hon. Member for Gillingham knows only too well from his great experience how the independent airlines have been seething with discontent during the last five years and how they have failed to get a clear policy from his right hon. Friends.
§ Mr. Burden
At least they had some opportunity, some hope for the future, under the last Government. Under this Government their only hope for the future is ultimate bankruptcy.
§ Mr. Stonehouse
The right hon. Member for Bexley does not read the speeches of his right hon. Friend the Member for Streatham. The hon. Member for Gillingham does not read the articles of his own co-directors. If he looks at the current issue of Airways International he will see an article by his colleague Mr. Brancker, a co-director, in British Eagle International, in which he objects to the policy of the last Government. He says that it was apolitical attempt to have one's cake and eat it. It comes to making expansive conservative gestures while remaining staunchly Socialist at heart".He goes on:To make the situation even more confused, the Government having set up the Board, took the greatest care to avoid giving the chairman and members any policy to follow, except vague directives about developing British Air Transport".I am glad that the hon. Member for Stratford-on-Avon (Mr. Maude) agrees with that. Mr. Brancker goes on to criticise previous Ministers still further by saying thatno attempt was made to define the areas in which the Independents should be permitted to expand … It was quite unfair to expect a Board of nine amateurs with no experienced technical assistance or advice to formulate a policy, and any attempts to do so were effectively snubbed by the reversal on appeal of their first major decision in the Atlantic case. Against this unhappy background, the Board has found it difficult to make any constructive headway. It was not, of course, required to be constructive, nor was it asked to make any real appreciation of the needs of either the country or the public in encouraging a comprehensive network of services.That is what a director of British Eagle says and this is a common view held among the independents.
§ Mr. Burden
The position now is far worse. Those members of the Board have had four years in which to build up experience. The Minister, who left the store business less than three months ago, is now prognosticating as the know-all and end-all of their aircraft programme.
§ Mr. Stonehouse
Previous Ministers have even failed to exercise the responsibility under the 1960 Act. In his March, 1960, speech the right hon. Member for Streatham specifically referred to the powers which Ministers would have to instruct the Air Transport Licensing Board to refuse licences if this would involve inexpedient negotiation of traffic rights with foreign Administrations. It is significant that Ministers have absolutely failed to use these powers except in one case, and that against B.E.A. They allowed the Board to go through the whole rigmarole of hearing applications. They appointed commissioners to hear appeals, and then on further appeal they allowed licences to be granted to independent companies. After all that, they failed to get the traffic rights from foreign Administrations to enable the independents to operate most of these services.
To the outsider, there are two possible interpretations of this situation: that it proved to be impossible to get traffic rights from foreign Governments because the concessions demanded were too great, or that the previous Government failed to pursue these negotiations with enough vigour. If we take the former, the situation surely might have been anticipated. Whatever conclusion we may draw, the previous Government stand condemned for acting as Tantalus to the independents. The independents, to put it bluntly, have been led right up the garden path.
When we on this side of the Committee say that we believe in the Corporations and do not want their position to be undermined, we really mean it and our actions will match our words. There are some hundreds of millions of £s of public money now invested in these enterprises, and it would be wholly against the interests of the public to allow other operators to cream off the profits on routes which the Corporations have pioneered and built up. This is not to say that we do not recognise 1053 the importance of the independents in the development of air transport, but we regard their role as being complementary to and not competitive with the Corporations. The independents, too, must be prepared to pioneer, and where and when they do we will back them to the hilt.
Where the Corporations are investing large amounts of public money in acquiring aircraft, we hope British aircraft —and, incidentally, the Committee will be delighted by the report, which appeared last week, of the plans of B.O.A.C. to buy more British-made aircraft in the future—they deserve long-term stability and the knowledge that they will enjoy the expected rate of growth on the routes that they have spent money and years in building up. Similarly, security should be given to the independents where they have opened up new routes.
If the hon. Member for Stratford-on-Avon will give me some attention for a moment, I will give him the clear assurance for which he asked in his speech. We will back the independents. Where they open up new routes, we will be behind them and we will ensure that no other British operator comes in to take from them what they have built up. But what it is essential to avoid is wasteful competition and needless duplication between these two sides of British air transport.
It is superficial to regard this merely as a question of politics. It is basically a problem of economics. It is no accident that, apart from the United States, where special considerations apply, no other Government allow dual designation on international routes, and hardly any on domestic routes. The policy of designating one airline to operate on a particular route has developed because this enables maximum economy of operation to be achieved. Even in the United States there is a growing feeling that too much competition is being allowed on domestic air routes. The result of too much competition is an increase in the burden of overhead costs of airline operations. Terminal and operating services have to be duplicated or triplicated, and, of course, eventually the customer has to pay. I saw this last week when I went to Belfast. British Eagle has only one flight a day to 1054 Belfast but has to meet the cost of terminal facilities at Belfast and, of course, this is tremendously expensive, and the customer has eventually to pay.
§ Mr. Stonehouse
They may operate on their internal routes but not on international routes. I was saying that special considerations apply in the United States, and I was also saying that no other Government allow dual designation on international routes.
§ Mr. Stonehouse
I was getting to the discussion of domestic trunk services, and I am making the point that if we allow competition on these domestic trunk services we lead to waste and inefficiency. [HON. MEMBERS: "Oh."] Oh, yes, because extra terminal facilities need to be provided.
Even on high density routes the full value of the economies of high intensity operations cannot be achieved if there is more than one operator, because a second operator must add more than proportionately to the total overhead costs. In the end, although the customer may appear to get some temporary advantage through choice at peak hours he is bound to pay in terms of higher fares. The airline which intrudes into an already established service may, if it makes a profit by operating at peak hours, make this profit at the expense of the airline which established the route and has to run the services at less profitable times. Is it fair, the Committee may well ask, that the intruder airline which has not had the expense of building up the route, can cream off the profit made at peak hours? If it did this, would it not jeopardise the public service aspect of travel at less profitable times, when lower load factors are to be expected?
Actually, as the Committee knows, this is a purely theoretical argument—[HON. MEMBERS: "Hear, hear.") —so far as 1055 British Eagle was concerned, because although it was choosing times at which to fly its planes and it was choosing to fly them at peak hours it never made a profit on those routes. In fact, it made a loss—since November, 1963—of over £300,000. Its load factors have been small. It wanted to increase its services. It is not very helpful of the hon. Gentleman the Member for Eastleigh (Mr. David Price) to say it should be allowed to increase them, because the Government of which he was a member took no steps at all to allow it to increase them. [HON. MEMBERS: "Yes, they did."] The effect of allowing them to increase their services would be to force the existing airlines on the route to enter into pooling arrangements with the intruder airline. In his speech on 2nd March, 1960, the right hon. Member for Streatham acknowledged that this would happen. In fact, he said during that debate that he expected pooling arrangements to develop. What would happen when these arrangements developed on the lines of pooling between the existing Corporations and the independents? In the long run that would be bound to happen, and we would be right back to square one, but with this vital difference: the Corporation would have had to share its routes with the independent, and possibly because of the waste that had occurred during the interim period fares would be higher than they need to be.
The dilemma becomes clearer when we consider other forms of transport. Would it be sensible to allow parallel services to compete with publicly-owned trains? [HON. MEMBERS: "Yes."] It could be argued that during peak commuter hours there should be special private enterprise trains from stockbroker country to Charing Cross. Do the Opposition advocate that course? Is that what the right hon. Member for Bexley has in mind? Hon. Members who have contributed to the debate today—including the hon. Member for Gillingham and others—and called for more competition seem to have forgotten the story of railway development in this country, and the tremendously uneconomic heritage which has been left for the Dr. Beechings to clear up.
I turn now to the vexatious problem of negotiating air traffic rights, and if the 1056 Committee will allow me I should like to refer to my personal experience a few weeks ago when I went to South America to try to assist B.U.A. to obtain traffic rights on the South America run. The Committee will be aware, I think, how difficult that job is becoming. Other countries jealously safeguard their traffic rights because they want to protect their own corporations or their own companies.
Perhaps I might give the Committee another example. When B.U.A. wanted a licence to fly to Basle in Switzerland, these traffic rights to Switzerland could be obtained only if we were prepared to allow some concession which would have affected the position of the B.E.A.-Swissair pool, and that would have affected the Corporation. An alternative would have been to allow Swissair to operate on the North Atlantic route, which would have meant that B.O.A.C. would have been affected. Either way, the granting of traffic rights to B.U.A. on the London-Basle route would have meant some sacrifice on the part of the Corporation. Does the right hon. Gentleman want that position?
If the right hon. Gentleman wants to continue his studies on this question of air transport economics, perhaps I might refer him to the book written by Stephen Wheatcroft, in which he will find exhaustively examined the whole problem of dual designation on international routes. The author argues that there is no advantage to the first operator; in fact there could be a considerable cost if a second airline was given these international rights.
The right hon. Gentleman made a number of points in his speech. Most of them seemed to me, and to my colleagues, to have been born of only a few hours' swotting, without a very careful examination of the case which he should be deploying today.
He made one remark about seats to Scotland which was patently untrue, because since he made the point I have had it checked, and I have discovered that not only is it possible to get seats on airlines to Scotland before seven weeks have elapsed, but it is possible to get a seat on routes to Scotland next week. [HON. MEMBERS: "On B.E.A."] On B.E.A. The right hon. Gentleman 1057 could easily have verified this if he had made a phone call himself to B.E.A., instead of leaving it to one of his henchmen to do so.
§ Mr. Stonehouse
The right hon. Gentleman is wrong, as he was wrong in many other things he said. The only thing that I agree with him about is the need to consider the exportability of civil aircraft during the early stage of their development. But it is extraordinary that he should be making this and other criticisms of the position as he finds it, when only a few weeks ago he was standing at this Dispatch Box accepting responsibility for the Government which created the situation as we find it. When he says that he finds the present state of air transport in Britain to be so intolerable, it is a criticism of the Government of which he was a Member.
My hon. Friend the Member for Watford (Mr. Raphael Tuck) raised a number of questions about Middle East Airlines buying the VC10. I can assure him that we have these points very much in mind. We hope that the British Aircraft Corporation will obtain this order.
I now turn to the speech of my predecessor as Parliamentary Secretary—the hon. Member for Banbury (Mr. Marten). He made an interesting speech, during which he repeated a point that he made in his speech in December calling for the denationalisation of B.E.A. Does the right hon. Member for Bexley support his hon. Friend in this demand? I am not very concerned about the opinions expressed by the hon. Member for Banbury, because he now speaks from the back benches, and cannot be held to be responsible for the official policy of the Opposition, but I am concerned when I read in
§ The Guardian, of 12th December last, that the right hon. Member for Wolverhampton, South-West (Mr. Powell) said that he supported the hon. Member for Banbury in asking for the denationalisation of B.E.A.
§ The right hon. Member for Wolverhampton, South-West—perhaps we should call him the Poor Bitos of the Tory Party—is the "shadow" Minister of Transport. If the right hon. Member for Bexley and his colleagues do not support his right hon. Friend they should repudiate him now; otherwise we must assume that the policy of the party opposite is the denationalisation of the air Corporations as soon as they are making a reasonable profit. Is that the policy of the right hon. Gentleman? I will give him a chance to answer.
§ Mr. Stonehouse
My right hon. Friend is not dogmatic in his attitude. In particular, he will consider the reasonable points made by the hon. Member for Orpington (Mr. Lubbock). But what the Committee will be impressed about in respect of this debate is that the right hon. Member for Bexley, who has suddenly been thrust into the position of "shadow" Parliamentary Secretary for the Ministry of Aviation, has absolutely failed to put forward a coherent policy for the Opposition. That is what the Committee is concerned about and that is why I have every confidence in asking it to reject the Motion as moved.
§ Question put:
§ The Committee divided: Ayes 275, Noes 296.1063
|Agnew, Commander Sir Peter||Batsford, Brian||Bossom, Hn. Clive|
|Alison, Michael (Barkston Ash)||Beamish, Col. Sir Tufton||Box, Donald|
|Allan, Robert (Paddington, S.)||Bell, Ronald||Boyd-Carpenter, Rt. Hn. J.|
|Allason, James (Hemel Hempstead)||Bennett, Sir Frederic(Torquay)||Boyle, Rt. Hn. Sir Edward|
|Amery, Rt Hn. Julian||Bennett, Dr. Reginald (Gos & Fhm)||Braine, Bernard|
|Anstruther-Gray, Rt. Hn. Sir W.||Berkeley, Humphry||Brewis, John|
|Astor, John||Berry, Hn. Anthony||Brinton, Sir Tatton|
|Atkins, Humphrey||Biffen, John||Bromley-Davenport, Lt.-Col. Sir Walter|
|Awdry, Daniel||Biggs-Davison, John||Brooke, Rt. Hn. Henry|
|Baker, W. H. K.||Birch, Rt. Hn. Nigel||Brown, Sir Edward (Bath)|
|Barber, Rt. Hn. Anthony||Black, Sir Cyril||Bruce-Gardyne, J.|
|Barlow, Sir John||Blaker, Peter||Bryan,Paul|
|Buchanan-Smith, Alick||Heald, Rt. Hn. Sir Lionel||Peel, John|
|Buck, Antony||Heath, Rt. Hn. Edward||Percival, Ian|
|Bullus, Sir Eric||Hendry, Forbes||Peyton, John|
|Burden, F. A.||Higgins, Terence L.||Pickthorn, Rt. Hn. Sir Kenneth|
|Butcher, Sir Herbert||Hiley, Joseph||Pike, Miss Mervyn|
|Buxton, R. C.||Hill, J. E. B. (S.Norfolk)||Pounder, Rafton|
|Carlisle, Mark||Hirst, Geoffrey||Powell, Rt. Hn. J. Enoch|
|Carr, Rt. Hn. Robert||Hobson, Rt. Hn. Sir John||Price, David (Eastleigh)|
|Cary, Sir Robert||Hogg, Rt. Hn. Quintin||Prior, J. M. L.|
|Channon, H. P. G.||Hordern, Peter||Pym, Francis|
|Chataway, Christopher||Hornby, Richard||Quennell, Miss J. M.|
|Chichester-Clark, R.||Hornsby-Smith, Rt. Hn. Dame P.||Ramsden, Rt. Hn. James|
|Clark, Henry (Antrim, N.)||Howard, Hn. G. R. (St. Ives)||Rawlinson, Rt. Hn. Sir Peter|
|Clark, William (Nottingham, S.)||Howe, Geoffrey (Bebington)||Redmayne, Rt. Hn. Sir Martin|
|Cole, Norman||Hunt, John (Bromley)||Rees-Davies, W. R.|
|Cooke, Robert||Hutchison, Michael Clark||Renton, Rt. Hn. Sir David|
|Cooper, A. E.||Iremonger, T.L.||Ridlėy, Hn. Nicholas|
|Corfield, F. V.||Irvine, Bryant Godman (Rye)||Ridsdale, Julian|
|Costain, A. P.||Jenkin, Patrick (woodford)||Roberts, Sir Peter(Heeley)|
|Courtney, Cdr. Anthony||Jennings, J C.||Robson Brown, Sir William|
|Craddock, Sir Beresford (Spelthorne)||Johnson Smith, G.||Rodgers, Sir John (Sevenoaks)|
|Crawley, Aidan||Jones, Arthur (Northants, S.)||Roots, William|
|Crosthwaite-Eyre, Col. Sir Oliver||Jones, Rt. Hn. Aubrey(Hall Green)||Royle, Anthony|
|Crowder, F. P.||Jopling, Michael||Russell, Sir Ronald|
|Cunningham, Sir Knox||Joseph, Rt. Hn. Sir Keith||St. John-Stevas, Norman|
|Curran, Charles||Kaberry, Sir Donald||Sandys, Rt. Hn. D.|
|Dalkeith, Earl of||Kerby, Capt. Henry||Scott-Hopkins, James|
|Dance, James||Kershaw, Anthony||Sharpies, Richard|
|Davies, Dr. Wyndham (Perry Barr)||Kimball, Marcus||Shepherd, William|
|d'Avigdor-Goldsmid, Sir Henry||King, Evelyn (Dorset, S.)||Sinclair, Sir George|
|Dean, Paul||Lambton, Viscount||Smith, Dudley (Br'ntf'd & Chiswick)|
|Deedes, Rt. Hn. W. F.||Lancaster, Col. C. G.||Smyth, Rt. Hn. Brig. Sir John|
|Digby, Simon Wingfield||Langford-Holt, Sir John||Spearman, Sir Alexander|
|Dodds-Parker, Douglas||Legge-Bourke, Sir Harry||Speir, Sir Rupert|
|Doughty, Charles||Lewis, Kenneth (Rutland)||stainton, Keith|
|Douglas-Home, Rt. Hn. Sir Alec||Litchfield, Capt. John||Stanley, Hn. Richard|
|du Cann, Rt. Hn. Edward||Lloyd, Ian (P'tsm'th, Langstone)||Stodart, J. A.|
|Eden, Sir John||Lloyd, Rt. Hn. Selwyn (Wirral)||Stoddart-Scott, Col. Sir Maicolm|
|Elliot, Capt. Walter (Carshalton)||Longbottom, Charles||Studholme, Sir Henry|
|Elliott, R. W.(N'c'tle-upon-Tyne,N.)||Longden, Gilbert||Talbot, John E.|
|Emery, Peter||Loveys, Walter H.||Taylor, Sir Charles(Eastbourne)|
|Errington, Sir Eric||Lucas, Sir Jocelyn||Taylor, Edward M.(G'gow, Cathcart)|
|Farr, John||Maclean, Sir Fitzroy||Taylor, Frank (Moss Side)|
|Fell, Anthony||Macleod, Rt. Hn. Iain||Teeling, Sir William|
|Fisher, Nigel||McMaster, Stanley||Temple, John M.|
|Fletcher-Cooke, Charles (Darwen)||McNair-Wilson, Patrick||Thatcher, Mrs. Margaret|
|Fletcher-Cooke, Sir John (S'pton)||Maginnis, John E.||Thomas, Sir Leslie (Canterbury)|
|Foster, Sir John||Maltland, Sir John||Thompson, Sir Richard(Croydon, S.)|
|Fraser, Rt. Hn. Hugh (St'fford & Stone)||Marlowe, Anthony||Thorneycroft, Rt. Hn. Peter|
|Fraser, Ian (Plymouth, Sutton)||Marples, Rt. Hn. Ernest||Tiley, Arthur (Bradford, W.)|
|Galbraith, Hn. T. G. D.||Marten, Neil||Tilney, John (Wavertree)|
|Gammans, Lady||Mathew, Robert||Turton, Rt. Hn. R. H.|
|Gardner, Edward||Maude, Angus||Tweedsmuir, Lady|
|Gibson-Watt, David||Mawby, Ray||van Straubenzee, W. R.|
|Giles, Rear-Admiral Morgan||Maxwell-Hyslop, R. J.||Vaughan-Morgan, Rt. Hn. Sir John|
|Gilmour, Ian (Norfolk, Central)||Maydon, Lt.-Cmdr. s. L. C.||Vickers, Dame Joan|
|Gilmour, Sir John (East Fife)||Meyer, Sir Anthony||Walder, David (High Peak)|
|Glover, Sir Douglas||Mills, Peter (Torrington)||Walker, Peter (Worcester)|
|Glyn, Sir Richard||Mills, Stratton (Belfast, N.)||Walker-Smith, Rt. Hn. Sir Derek|
|Godber, Rt. Hn. J. B.||Miscampbell, Norman||Wall, Patrick|
|Goodhart, Philip||Mitchell, David||Walters, Dennis|
|Goodhew, Victor||Monro, Hector||Ward, Dame Irene|
|Gower, Raymond||More, Jasper||Weatherill, Bernard|
|Grant, Anthonv||Morgan, W. G.||Webster, David|
|Grant-Ferris, R.||Morrison, Charles (Devizes)||Wells, John (Maidstone)|
|Gresham-Cooke, R.||Mott-Radclyffe, Sir Charles||Whitelaw, William|
|Grieve, Percy||Munro-Lucas-Tooth, Sir Hugh||Williams, Sir Rolf Dudley (Exeter)|
|Griffiths, Eldon (Bury St. Edmunds)||Murton, Oscar||Wills, Sir Gerald (Bridgwater)|
|Griffiths, Peter (Smethwick)||Neave, Airey||Wilson, Geoffrey (Truro)|
|Gurden, Harold||Nicholls, Sir Harmar||Wise, A. R.|
|Hall, John (Wycombe)||Nicholson, Sir Godfrey||Wolrige-Gordon, Patrick|
|Hall-Davis, A. G. F.||Noble, Rt. Hn. Michael||Wood, Rt. Hn. Richard|
|Hamilton, Marquess of (Fermanagh)||Nugent, Rt. Hn. Sir Richard||Woodhouse, Hn. Christopher|
|Hamilton, M. (Salisbury)||Onslow, Cranley||Woodnutt, Mark|
|Harris, Frederic (Croydon, N. W.)||Orr, Capt. L. P. S.||Wylie, N. R.|
|Harrison, Col. Sir Harwood (Eye)||Orr-Ewing, Sir Ian||Yates, William (The Wrekin)|
|Harvey, John (Walthamstow, E.)||Osborn, John (Hallam)||Younger, Hn. George|
|Harvie Anderson, Miss||Osborne, Sir Cyril (Louth)|
|Hastings, Stephen||Page, John (Harrow, W.)||TELLERS FOR THE AYES:|
|Hawkins, Paul||Page, R. Graham (Crosby)||Mr. McLaren and Mr. MacArthur.|
|Hay, John||Pearson, Sir Frank (Clitheros)|
|Abse, Leo||Foley, Maurice||McGuire, Michael|
|Albu, Austen||Foot, Sir Dingle (Ipswich)||Mclnnes, James|
|Allaun, Frank (Salford, E.)||Foot, Michael (Ebbw Vale)||MacKenzie, Gregor (Rutherglen)|
|Alldritt, W. H.||Ford, Ben||Mackie, George Y.(C'ness & S'land)|
|Allen, Scholefield (Crewe)||Freeson, Reginald||Mackie, John (Enfield, E.)|
|Armstrong, Ernest||Galpern, Sir Myer||MeLeavy, Frank|
|Atkinson, Norman||Garrett, W.E.||MacMillan, Malcolm|
|Bacon, Miss Alice||Ginsburg, David||MacPherson, Malcolm|
|Bagier, Gordon A. T.||Greenwood, Rt. Hn. Anthony||Mahon, Peter(Preston, S.)|
|Barnett, Joel||Gregory, Arnold||Mahon, Simon (Bootle)|
|Baxter, William||Grey, Charles||Mallalieu, E. L. (Brigg)|
|Beaney, Alan||Griffiths, David (Rother Valley)||Mallalleu, J. P. W. (Huddersfield, E.>|
|Bellenger, Rt. Hn. F. J.||Griffiths, Rt. Hn. James (Lianelly)||Manuel, Archie|
|Bence, Cyril||Griffiths, Will (M'chester Exchange)||Mapp, Charles|
|Benn, Rt. Hn. Anthony Wedgwood||Grimond, Rt. Hn. J.||Marsh, Richard|
|Bennett, J. (Glasgow, Bridgeton)||Gunter, Rt. Hn. R. J.||Mason, Roy|
|Bessell, Peter||Hale, Leslie||Maxwell, Robert|
|Binns, John||Hamilton, James (Bothwell)||Mayhew, Christopher|
|Bishop, E. S.||Hamilton, William (West Fife)||Mellish, Robert|
|Blackburn, F.||Hamling, William (Woolwich, W.)||Mendelson, J. J.|
|Blenkinsop, Arthur||Hannan, William||Millan, Bruce|
|Boardman, H.||Harper, Joseph||Miller, Dr. M. S.|
|Boston, T. G.||Harrison, Walter (Wakefield)||Milne, Edward (Blyth)|
|Bowden, Rt. Hn. H. W. (Leics S. W.)||Hart, Mrs. Judith||Molloy, William|
|Boyden, James||Hattersley, Roy||Monslow, Walter|
|Braddock, Mrs. E. M.||Hayman, F. H.||Morris, Alfred (Wythenshawe)|
|Bradley,Tom||Hazell, Bert||Morris, Charles (Openshaw)|
|Bray, Dr. Jeremy||Healey, Rt. Hn. Denis||Morris, John (Aberavon)|
|Broughton, Dr. A. D. D.||Heffer, Eric S.||Mulley, Rt. Hn. Frederick (SheffleldPk)|
|Brown, Rt. Hn. George (Belper)||Henderson, Rt. Hn. Arthur||Murray, Albert|
|Brown, Hugh D. (Glasgow, Provan)||Herbison, Rt. Hn. Margaret||Neal, Harold|
|Brown, R. W. (Shoreditch & Fbury)||Hill, J. (Midlothian)||Newens, Stan|
|Buchanan, Richard||Hobden, Dennis (Brighton, K'town)||Noel-Baker, Francis (Swindon)|
|Butler, Herbert (Hackney, C.)||Holman, Percy||Noel-Baker, Rt. Hn. Phillp(Derby, S.)|
|Butler, Mrs. Joyce (Wood Green)||Hooson, H. E.||Norwood, Christopher|
|Callaghan, Rt. Hn. James||Horner, John||Oakes, Gordon|
|Carmichael, Neil||Houghton, Rt. Hn. Douglas||Ogden, Eric|
|Carter-Jones, Lewis||Howarth, Harry (Wellingborough)||O'Malley, Brian|
|Castle, Rt. Hn. Barbara||Howarth, Robert L.(Bolton, E.)||Oram, Albert E. (E. Ham S.)|
|Chapman, Donald||Howell, Denis (Small Heath)||Orbach, Maurice|
|Coleman, Donald||Howie, W.||Oswald, Thomas|
|Conian, Bernard||Hoy, James||Owen, Will|
|Corbet, Mrs. Freda||Hughes, Cledwyn (Anglesey)||Page, Derek (King's Lynn)|
|Cousins, Rt. Hn. Frank||Hughes, Emrys (S. Ayrshire)||Paget, R. T.|
|Craddock, George (Bradford, S.)||Hughes, Hector (Aberdeen, N.)||Palmer, Arthur|
|Cronin, John||Hunter, Adam (Dunfermline)||Pannell, Rt. Hn. Charles|
|Crosland, Anthony||Hunter, A. E. (Feltham)||Pargiter, G. A.|
|Crossman, Rt. Hn. R. H. S.||Hynd, H. (Accrington)||Parker, John|
|Cullen, Mrs. Alice||Hynd, John (Atter-cliffs)||Parkin, B. T.|
|Dalyell, Tam||Irvine, A. J. (Edge Hill)||Pavitt, Laurence|
|Darling, George||Jackson, Colin||Pearson, Arthur (Pontypridd)|
|Davies, G. Elfed (Rhondda, E.)||Janner, Sir Barnett||Peart, Rt. Hn. Fred|
|Davies, Harold (Leek)||Jay, Rt. Hn. Douglas||pentland, Norman|
|Davies, Ifor (Gower)||Jeger, George (Goole)||Perry, Ernest G.|
|Davies, S. O. (Merthyr)||Jeger, Mrs. Lena (H'b'n & St. p'cras, S.)||Popplewell, Ernest|
|de Freitas, Sir Geoffrey||Jenkins, Hugh (Putney)||Prent'ce, R. E.|
|Delargy, Hugh||Jenkins, Rt. Hn. Roy(Stechford)||price, J. T.(Westhoughton)|
|Dell, Edmund||Johnson, Carol (Lewlsham, S.)||Probert, Arthur|
|Dempsey, James||Johnson, James (K'ston-on-Hull, W.)||Pursey, Cmdr, Harry|
|Diamond, John||Johnston, Russell (Inverness)||Rankln, John|
|Dodds, Norman||Jones, Dan (Burnley)||Redhead, Edward|
|Doig, Peter||Jones, J. Idwal (Wrexham)||Rees, Merlyn|
|Donnelly, Desmond||Jones, T. W. (Merioneth)||Reynolds, G. W.|
|Driberg, Tom||Kelley, Richard||Rhodes, Geoffrey|
|Duffy, A. E. P.||Kenyon, Clifford||Richard, Ivor|
|Dunn, James A.||Kerr, Mrs. Anne (R'ter & Chatham)||Roberts, Albert (Normanton)|
|Dunnett, Jack||Kerr, Dr. David (W'worth, Central)||Roberts, Coronwy (Caernarvon)|
|Edelman, Maurice||Lawson, George||Robertson, John(Paisley)|
|Edwards, Rt. Hn. Ness (Caerphilly)||Leadbltter, Ted||Robinson, Rt. Hn. K. (St.Pancras, N.)|
|Edwards, Robert (Bllston)||Ledger, Ron||Rodgers, William (Stockton)|
|English, Michael||Lee, Rt. Hn. Frederick (Newton)||Ross, Rt. Hn. William|
|Ennals, David||Lee Miss Jennie (Cannock)||Rowland, Christopher|
|Ensor, David||Lever, L. M. (Ardwlck)||Sheldon, Robert|
|Evans, Albert (Islington, S. W.)||Lewis, Ron(Carlisle)||Shore, Peter (Stepney)|
|Evans, loan (Birmingham, Yardley)||Lipton, Marcus||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)|
|Fernyhough, E.||Lomas, Kenneth||Short, Mrs. Renee (W'hampton, N. E.)|
|Finch, Harold (Bedwellty)||Loughlin, Charles||Silkin, John (Deptford)|
|Fitch, Alan (Wigan)||Lubbock, Eric||Silkin, S. C. (Camberwell, Dulwich)|
|Fletcher, Sir Eric (Islington, E.)||McBride, Neil||Silverman, Julius (Aston)|
|Fletcher, Ted (Darlington)||McCann, J.||Silverman, Sydney (Nelson)|
|Fletcher, Raymond (Ilkeston)||MacColl, James||Skefflngton, Arthur|
|Floud, Bernard||MacDermot, Niall||Slater, Mrs. Harriet (Stoke, N.)|
|Slater, Joseph (Sedgefield)||Thornton, George (Dundee, E.)||Wigg, Rt. Hn. George|
|Small, William||Thornton, Ernest||Willey, Rt. Hn. Frederick|
|Smith, Ellis (Stoke,S.)||Thorpe, Jeremy||Williams, Alan (Swansea, W.)|
|Snow, Julian||Tinn, James||Williams, Mrs. Shirley (Hitchin)|
|Solomons, Henry||Tomney, Frank||Williams, W. T. (Warrington)|
|Soskice, Rt. Hn. Sir Frank||Tuck, Raphael||Willis, George (Edinburgh, E.)|
|Spriggs, Leslie||Urwin, T. W.||Wilson, Rt. Hn. Harold (Huyton)|
|Steele, Thomas||Varley, Eric G.||Wilson, William (Coventry, S.)|
|Stewart, Rt. Hn. Michael||Wainwrlght, Edwin||Winterbottom, R. E.|
|Stonehouse, John||Walden, Brian (All Saints)||Woodburn, Rt. Hn. A.|
|Stones, William||Walker, Harold (Doncaster)||Woof, Robert|
|Strauss, Rt. Hn. G. R. (Vauxhall)||Wallace, George||Wyatt, Woodrow|
|Summerskill, Dr. Shirley||Warbey, William||Yates, Victor (Ladywood)|
|Swingler, Stephen||Watkins, Tudor||Zilliacus, K.|
|Symonds, J. B.||Weitzman, David|
|Taverne, Dick||Wells, William (Walsall, N.)||TELLERS FOR THE NOES:|
|Thomas, George (Cardiff, W.)||White, Mrs. Eirtne||Mr. George Rogers and|
|Thomas, lorwerth (Rhondda, W.)||Whitlock, William||Mr. Gourlay.|
§ Original Question again proposed.
§ Mr. Bence rose—
§ It being after Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.1064
§ Committee report Progress; to sit again Tomorrow.