§ 4.4 p.m.
§ LORD CHESHAM
My Lords, I hope it may be convenient for me now to make a Statement about the size and composition of the British Overseas Airways Corporation fleet of aircraft. I will use the words of my right honourable friend the Minister of Aviation in another place:
472 "As the House knows, B.O.A.C. have ordered 30 Super VC 10s. These aircraft, with the 12 Standard VC 10s now being delivered, and the 20 Boeing 707s now in service, would make a total fleet of 62.
"When Sir Giles Guthrie assumed the Chairmanship of B.O.A.C. on January 1, 1964, I sent him a directive, which was published in Hansard on February 5. In this I asked Sir Giles to prepare a plan for putting the Corporation on its feet financially. This plan is intended to cover all aspects of B.O.A.C's operations, and Sir Giles has not yet completed his work on it. He has, however, already made a detailed study of the Corporation's route pattern. He does not propose to make many reductions in this and, indeed, has plans for extending it. He has, however, concluded that by higher utilisation of aircraft he can maintain B.O.A.C's services in 1967 with 23 less passenger aircraft than the Corporation had previously planned. In other words, he judges that he will need a fleet of about 39 passenger aircraft in 1967 instead of 62.
"As the House knows, the question which now has to be decided is what is the best solution to the problem which has arisen as a result of B.O.A.C. having ordered more aircraft than it now appears will be needed.
"Sir Giles and the other members of the Corporation have reached the conclusion that the right course for B.O.A.C. to follow would be to cancel the order for 30 Super VC 10s.
"This would involve heavy cancellation charges. It would reduce the fleet to 32. To meet their requirements B.O.A.C. wish to buy 6 new Boeing 707s. The fleet would then consist of 26 Boeing 707s and 12 Standard VC 10s.
"The main consideration that has led B.O.A.C. to this conclusion is the fact that the 20 Boeing 707s now held by B.O.A.C. have a number of years of life before them and have already been largely amortised in the Corporation's accounts. The cost of amortising new Super VC 10s would be much greater than the further depreciation of the Boeing 707's now in service.
473 "In the opinion of B.O.A.C, the continued use of the Boeing 707s would be more profitable than their replacement by Super VC 10s, and it would be more economical to buy new Boeing 707s rather than to take Super VC 10s.
"Sir Giles has told us that B.O.A.C. will need about 8 further aircraft after 1963. If B.O.A.C. were now to buy 6 new Boeing 707s, this further requirement would almost certainly have to be met by further purchases of Boeing 707s.
"Implementation of this proposal would thus mean the cancellation of 30 Super VC 10s and the purchase of 14 new Boeing 707s. The fleet would then consist of 34 Boeing 707s and 12 Standard VC 10s.
"I wish to stress the point that the question is not simply what aircraft B.O.A.C. should now order to meet their estimated requirements, but whether they should cancel the order already given and at the same time embark on a policy of replacing some of the cancelled Super VC 10s with Boeing 707s.
"While I appreciate the force of the considerations advanced by Sir Giles Guthrie, I do not think it would be right to allow B.O.A.C. to cancel the order given by them for Super VC 10s with a view to buying more Boeing 707s.
"The trials of the Super VC 10 show that they will be aircraft of very high performance and quality. Their quietness, slower landing speed and relatively short take off and landing capacity should give them great appeal both to passengers and operators.
"The result of following B.O.A.C's. commercial proposals would be to inflict extensive injury on the British aircraft industry and those who work in it and also serious damage to the prospects of a fine and promising aircraft.
"I have had several talks with Sir Giles, and in view of all these considerations, including the existence of the contracts, he has agreed that B.O.A.C. will take 17 of the 30 Super VC 10s. This means that he will take 7 to meet his estimated requirements up to 1967 and subsequently a further 10. As the House will appre- 474 ciate, this is 2 more than he now thinks will be required after 1968, and B.O.A.C., if their present forecast of future traffic requirements does not in fact prove to be an underestimate, may decide when they get the additional 2 VC 10s to dispose of 2 of the Boeing 707s.
"Of the balance of 13 Super VC 10s, the R.A.F. will take 3 in addition to the 11 Standard VC 10s now on order by the Air Force. These 3 aircraft will be needed to maintain our strategic airlift capacity as existing transport aircraft cease to be operational.
"Work will therefore continue as planned on 20 of the 30 Super VC 10s ordered by B.O.A.C.
"What should be done with regard to the balance of 10? I have found this a very intractable problem. B.O.A.C. are in my view quite rightly not prepared at this time to say how many more or, indeed, what aircraft they may need at the end of the decade in addition to the 47 for which they now have a requirement.
"In April, 1963, the then Chairman of B.O.A.C. asked the British Aircraft Corporation to suspend work on 10 of the Super VC 10s ordered by B.O.A.C. This B.A.C. agreed to do. The work on these aircraft is not very far advanced and a final decision with regard to them need not now be taken. Work on these aircraft will remain in suspense for the time being. This is, of course, without prejudice to the contractual position.
"B.O.A.C.'s fleet as now planned will consist of 17 Super VC 10s, 12 Standard VC 10s—in all 29 VC 10s and 18–20 Boeing 707s. It could well be that, in the light of operating ex-perience, B.O.A.C. may wish to replace the Boeing 707s as they age with Super VC 10s. It may be that some new features can with advantage be incorporated in the Super VC 10s, and it may be that B.O.A.C.'s requirements after 1968 will exceed present forecasts.
"It does not therefore appear to be sensible now to decide to cancel the order for these 10. As I have said, work on them will remain in suspense for the time being.
"I have assured Sir Giles Guthrie that it is the Government's intention 475 to take whatever action may be necessary to reorganise the Corporation's capital and financial structure so as to enable it to operate as a fully commercial undertaking with the fleet of aircraft now planned and with those which may be ultimately selected. The detailed implementation of this assurance will be worked out between my Department, the Treasury and the Corporation in the context of any other steps necessary to put B.O.A.C. on its feet financially.
"Sir Giles Guthrie, on behalf of B.O.A.C., and Sir Charles Dunphie and Sir George Edwards, on behalf of Vickers and the British Aircraft Corporation respectively, have assured me of their full co-operation in the discussions which must necessarily take place in view of the decisions I have announced. I would like to express my thanks to them for their help in seeking to find the best solution of the difficulties which have arisen as a result of B.O.A.C.'s ordering more aircraft than are now required."
§ My Lords, that is the Statement.
§ 4.12 p.m.
§ LORD SHEPHERD
My Lords, I am sure the House is grateful for the Statement which the noble Lord has given us. Parliament has been waiting anxiously for a Statement on the situation between B.O.A.C. and the British Aircraft Corporation. Some of us, in reading our newspapers, will have had prior notice of the statement the noble Lord has made; much of what he has said was reported in this morning's newspapers. It seems to me remarkable that the results of a meeting of two persons, which I understand took place yesterday, with the agreement which the noble Lord has now announced, should be able to appear in our morning newspapers. This is not the first time, it seems to me, that Parliament perhaps is being brought into contempt. Whether it is or not must rest, I think, upon the shoulders of those who took part in that conference.
May I say this in regard to the VC 10s? Much has been said in the newspapers, and much that may appear to be critical of the aircraft. We on this side of the House who have had some 476 information on the aircraft are convinced that this is a first-class aircraft, and we all hope that B.O.A.C. will be able to make it a success. The noble Lord stressed the silence of the aircraft and the slow landing speed. But I think the noble Lord equally should have drawn our attention to the power of its engines which give so much in safety. We are pleased, therefore, that this aircraft is going to be developed and to be brought into B.O.A.C.
The noble Lord said that Sir Giles Guthrie, Chairman of the Corporation, requires 39 aircraft by 1967, and, as I understand it from the reports in the newspapers, this is the maximum number of aircraft that he thinks B.O.A.C. can fly and be economic. The Government have laid down, as the noble Lord stressed at the beginning of his Statement, the requirement that B.O.A.C. should run on an economic basis. However, the Government are now pressing—in fact directing—B.O.A.C. to take 10 more aircraft than they need. This raises the question—and I hope that the noble Lord, Lord Chesham, will inform us how this can be done—of how B.O.A.C. with 10 extra aircraft will be able to run on an economic basis. If it is not possible, are we to take it from the Minister's Statement that the Government's intention to reorganise the Corporation's capital and financial structure and to take other steps means that the Government are prepared to make contributions to B.O.A.C. for bringing these new aircraft into service?
With regard to the 10 aircraft that will come into service after 1968, I would also ask the Minister this question: Will there be a contract between B.A.C. and B.O.A.C. as to the dates when these aircraft are to come into service, or is this date to be decided upon by B.O.A.C.? Has there been a firm commitment to the British Aircraft Corporation as to when the extra 10 aircraft are to be brought into service? May I also ask the Minister, if there is a delay in their being brought in, whether the Government have undertaken to give some financial assistance to the British Aircraft Corporation?
We welcome the idea of the three extra Super VC 10s going to the Royal Air Force. We feel that this is a good thing. We on this side of the House have been concerned for many years 477 about the strength of Transport Command. At this stage we wonder whether it would not have been advisable, in regard to the 10 aircraft that are being put into long-term suspense, for the Government to take over these aircraft completely, and either put them on to contracts with various airlines—perhaps the independent airlines—or place them with the Royal Air Force.
I have one last point. In view of the fact that B.O.A.C. is to be made viable, and the fact that the Government are requiring them to take aircraft in excess of what their own Chairman considers necessary, will the Government now reconsider their attitude in refusing to allow the public Corporations to tender for trooping contracts? This is a very sizable item of business, and if it were possible for it to come the Corporation's way it would do a great deal to assist them in their present difficulties. However, we welcome the fact that the Super VC 10 is to be proceeded with, but we are rather disturbed and concerned about the ability of the Corporation to meet the requirements of the Government in laying down the taking of these excess aircraft.
§ 4.20 p.m.
My Lords, I am not going to add to the load of questions which the Minister has been asked to answer. I should like to thank him from these Benches for his Statement and for telling us of this decision. It is a big question, and I think it would be unfortunate to turn this opportunity into a debate on the subject which needs a lot of thought. On the whole, I think the right decision has been come to. My first reaction is one of sympathy both with the Secretary of State and with B.O.A.C. for being in a most difficult position and having a difficult decision to make. The decision is obviously a compromise decision, and I am inclined to think it is a good one.
There is just one point that I do not think the Minister put before us. I wonder whether he would confirm that this is so. If we are going in for this VC 10 we are going for the more modern machine, in a sense. Its take-off and landing take much less space on the ground than those of the other machines, and presumably the industry is going to expand. If it expands it will mean the building of new airfields and surely there 478 will be a tremendous saving from building long, heavy, solid airfields for the old types of machine. This difficulty will be overcome if we take the VC 10, which needs less space. With those few words of slightly doubtful welcome, I thank the noble Lord for giving us this Statement.
§ 4.22 p.m.
§ LORD CHESHAM
My Lords, if I may reverse the order of reply, I am grateful to the noble Lord, Lord Rea, for what I regarded, and with a little less doubt than he did himself, as his words of welcome. However, no doubt he knows what was in his own mind. Certainly we agree that the performance of the VC 10 must be a most useful factor in relation to the airfields of the world, and more particularly the airfields of the future. The noble Lord, Lord Shepherd, first mentioned what he had read and pointed to suggestions available to be read in the newspapers. Implicit in what he said was that there had been some kind of leak; but I can tell the noble Lord that in so far as his ministerial responsibility is concerned my right honourable friend knows of no leak, and he is certainly not responsible for it. I do not suppose the noble Lord did, but if he implied that my right honourable friend had treated Parliament with contempt, then I can only say, with great pleasure, that the noble Lord is mistaken in that view.
§ LORD SHEPHERD
My Lords, could the noble Lord say how he would expect the Press to be able to obtain a report and to print it this morning in practically the identical terms that are now put before Parliament?
§ LORD CHESHAM
My Lords, I do not know the magical workings of the mind of the Press. We often see the results of its workings. If the noble Lord would like me to repeat what I have just said, I will willingly do so. This is not a matter which is solved by ministerial responsibility, because my right honourable friend has no ministerial responsibility for what appeared in the Press this morning. I hope the noble Lord will take my word for that.
The noble Lord asked one or two most interesting and serious questions, and I am grateful to have the chance to answer 479 them. He referred to the directive given, that B.O.A.C. should behave as commercially as possible. He asked whether that meant that if they were to take further aircraft which in their commercial judgment they did not want to take, they would, so to speak, be helped out in that connection. May I just remind him of the rest of that particular directive? Part 1 was what he quoted. Part 2 was that the policy should be to "fly British", and Part 3 was that if the Government wanted B.O.A.C. to do something which B.O.A.C. did not particularly wish to do, then the Government should clearly state it. The implication is, perhaps, that the Government will help out. That, I think, is implicit in what is said towards the end of the Statement, when I said that it was the Government's intention to take whatever action may be necessary to put the Corporation on a sound basis. Whilst I should perhaps hesitate to say that they would take the special instance of these aircraft, it would naturally be included in that consideration of becoming properly commercial and the necessary steps that the Government have to take to make it so.
The date when these aircraft may be expected to be delivered is a matter of the negotiations which I mentioned and of discussions which are yet to be held between Sir Giles Guthrie and the heads of Vickers and B.A.C. More than that, I cannot say, except that the question of assistance to B.O.A.C. is not one that arises at the moment, in view of the fact that these discussions have yet to take place. It seemed to me that the question of troop contracts was not necessarily directly related to the introduction of the VC 10, although perhaps this, too, may be included in the general discussion. I cannot say, but I will let my right honourable friend know what the noble Lord has said about it.
What I like more, and a point in regard to which I thoroughly agree with him, is that this has every indication of being a good aircraft. I liked particularly his reference to its power. I understand that the power now available is a considerable safety factor. I understand that the available power is by no means exhausted, and we can look forward to more to come, as and when this 480 is necessary. I hope, therefore, that we can all join together in wishing success to the VC 10 as a British aircraft.
§ 4.28 p.m.
EARL ALEXANDER OF HILLS-BOROUGH
My Lords, whatever else may be said during any discussion which continues the consideration of this matter, I should like to thank the Minister for the detailed and courteous answer he has given. I have always paid tribute to him in this respect. But we are concerned with the publication this morning, in advance of the noble Lord's speech here and the speech in another place to-day, of a fact that ought first to be communicated to Parliament. The noble Lord is quite right to defend his Minister if his Minister has had nothing to do with it himself. But we do not want another abject position such as that which happened in the case of the frigates for Spain, where it was assumed that there had been no leak, but there had been a leak all the time. Perhaps this was due to a misunderstanding, nevertheless it was a leak. Parliament does not like that kind of thing. So when there is a highly confidential matter of this kind discussed only between the Minister and the Chairman of B.O.A.C., it is not unreasonable that my noble friend should ask the questions that he did.
May I say that the safety question is surely a most powerful factor in coming to a decision. I hope that this has been one of the factors in the decision of the Government to allow the purchase of up to 17 to 20 VC 10 aircraft. It is also a factor, surely, against buying a less safety-boosted aircraft. I think, therefore, that from that point of view the Government are right.
In regard to the work involved in this matter, the retention of the manufacture of so much of the requirement in this country is of very great importance, so I am glad also from that point of view. However, there will perhaps be opportunity for a longer consideration available. I do not know whether it can be done before the end of this Session of Parliament, but with all the comings and goings in regard to the Ministry of Aviation, the connection between that Ministry and our aircraft industry and its air services to the public, there have been so many changes that we hardly know where we are. I hope that this 481 very important Department before long will have somebody who can really manage it, so that the management of the actual air services will also be given a fair chance.
§ 4.31 p.m.
§ THE LORD CHANCELLOR
My Lords, I should like to reply to noble Lords. I am not in the least surprised that some reference should have been made to a particular report in one of this morning's newspapers. There have been over the week-end a wide variety of reports of very differing character as to what the likely conclusion would be. I have not myself had time to read all the reports in this morning's Press about what was going to happen and, while I share the noble Earl's concern, it by no means follows that because a report of the kind to which he has referred has appeared there has been any disclosure, by anyone having ministerial responsibility, to the Press and not to Parliament. The noble Earl and the noble Lord, Lord Shepherd, have to some extent been misled by the reports in the Press that discussion has taken place with very few people indeed. Perhaps the discussions were a little wider than they thought.
I should also like to correct one statement which has been made more than once, by the noble Lord, Lord Shepherd. He said in his observations, referring again to what he recollects having read in the Press, that Sir Giles Guthrie wanted only 6 or 7 more aircraft and that Sir Sir Giles was therefore asked to take—and I made a note of the noble Lord's words—"10 more than they need". He went on to say "In excess of what their Chairman said was necessary". It is a fact, although it did not appear in the Press, that Sir Giles has throughout said that after 1967 he would have a need for 8 more aircraft. If the noble Lord will look at the statement made by my noble friend when it appears in Hansard he will see that the 8 more are to be met by the 10 more Super VC 10s and that my noble friend referred specifically to the extra two possibly replacing two of the Boeings. I wanted to make clear that there is no question of B.O.A.C. being compelled to take more aeroplanes than they think necessary for their requirements.
§ LORD HOBSON
My Lords, in order to assist your Lordships' House in arriv- 482 ing at an assessment of the Government statements, will the Minister make available a list of those aircraft lines throughout the world which operate without a subsidy?
§ LORD CHESHAM
I cannot promise to do that, because I cannot, here and now, without notice, say whether that information is available. I am prepared to see what I can do about it.
§ LORD MERRIVALE
My Lords, from this side of the House may I welcome the Statement which has been made by my noble friend, and also congratulate his right honourable friend for the firm attitude he has taken vis-à-vis B.O.A.C., particularly in view of his keen interest in the aircraft industry? As a member of a delegation which not so long ago visited the British Aircraft Corporation Works I should like to ask one question——
§ LORD MERRIVALE
A Parliamentary delegation, on which there were Members from both Houses of Parliament, and which was invited by Sir George Edwards to visit the Works. It was explained to us by Sir George Edwards, by Lord Caldecote and others, how versatile the Super VC 10 was, particularly in regard to its use by the Royal Air Force. Would my noble friend approach his right honourable friend to see whether the R.A.F. could not take more aircraft than the 3 Super VC 10s which they are taking, for there is a definite requirement in the R.A.F. for them?
§ THE EARL OF LONGFORD
My Lords, may I, while supporting what has fallen from my noble friend Lord Shepherd, and speaking as a former Minister of Aviation, say what a painful day this is? I do not think it should pass in any atmosphere of rejoicing. The Government have got us into the most tremendous mess, and in the years to come it will be very unfortunate if that fact is not clearly noted. Here was a new Chairman of B.O.A.C., appointed in rather peculiar circumstances, but with everybody anxious to give him a good start, coming forward with a bold scheme, which has been totally reversed 483 by the Government. He has been completely overriden. It may be that in the circumstances that was necessary, but I must say clearly, for the benefit of future generations, that this is in many ways the worst day in the history of British civil aviation and I fear that the consequences will be very grave. At the same time I support what has been done as the least of many evils.
§ LORD STONHAM
My Lords, can the noble Lord, Lord Chesham, say who will pay B.A.C. for the work they have done on the 10 aircraft which have been put into cold storage, and can he give any idea of the total amount expended on those 10 aircraft?
§ LORD CHESHAM
The 10 aircraft concerned on which the order is suspended do not exist, and therefore they have not, as such, been put into cold storage, if the noble Lord means that in the sense of being, as it were, put into mothballs.
§ LORD STONHAM
I am going by the noble Lord's Statement. In the noble Lord's original Statement he referred to expenditure on these 10 aircraft.
§ LORD CHESHAM
I said that the order for the final 10 was being put into suspense for the time being; that the decision was not called for now—a word that I deliberately emphasised in my Statement. They are at a very early stage of construction. I cannot at the moment tell the noble Lord what expenditure has been undertaken—how much those 10 have cost so far. I also emphasised that this agreed period of suspense was without prejudice to the contracts concerned with them.
§ LORD STONHAM
May I just clear up this point? I have a copy of the noble Lord's Statement, and he said, "The work on these aircraft is not very far advanced". All I want to know is will the B.A.C. be paid for the work that they have done; and, if so, who will pay them?
§ LORD CHESHAM
I was trying to indicate that the time to answer that is also not now. The noble Lord will remember that I talked about discussions yet to be held, and it depends on the future. I am trying to reassure him by saying that that decision is without prejudice to the contractual position.
484 Somehow or other B.A.C., whose interests I think the noble Lord has at heart, are not going to be left completely "holding the baby" so that nobody will pay for it.
I was very surprised when the noble Earl got up with his intervention. I can only imagine that his preference is for seeing B.O.A.C. flying all-American.
§ SEVERAL NOBLE LORDS: Order!
§ LORD CHESHAM
My shoulders, fortunately, are broad enough, even if my friends say, "Order!" That, frankly, was what I thought of the noble Earl's remarks, though I did not say so. I merely thought that if this is one of the worst days in British history, when we decide to equip the British airline with British aircraft, and if that is a contemptible decision or something dreadfully wrong, nevertheless, my Lords, I for one am extremely glad we have taken it.
§ LORD STONHAM
My Lords, may I just ask the noble Lord if he is aware that I have no kind of interest in any aircraft industry? Also, in connection with his remark that I have the B.A.C. very much at heart, would he amend that to the fact that I have the whole of the British aircraft industry very much at heart?
§ LORD CHESHAM
I am delighted. I merely thought the noble Lord was seeking assurance that their interests were protected.
§ LORD OGMORE
My Lords, as one who believes in the VC 10—and, after all, they are flying: some of them—and who believes that both the Opposition and the Government are making very heavy weather of this matter, may I suggest that all we are concerned with here is 10 aircraft—not 1,000 or 100 aircraft. It is only 10 aircraft which are in doubt.
§ THE LORD CHANCELLOR
My Lords, the original question was whether orders for 30 Super VC 10s should be 485 cancelled, and the Government were concerned, naturally, with that request. Originally 30 were involved.
§ LORD OGMORE
I appreciate that, but at the moment the only aircraft whose existence is in doubt is 10, and I should have thought there was ample need for the 10 aircraft. I believe that when they are constructed they will find ready buyers in the world. The Government should have the courage to go forward and take them now, giving an order and getting on with it. Is it not a fact that the R.A.F. alone could use these aircraft? The R.A.F. are desperately short of fast aircraft. The whole strength of our forces depends on fast, mobile aircraft, and here we have the chance to get them. If only the Government would spend a little less on these ridiculous Polaris independent nuclear deterrents which they are buying from the Americans, and more on British aircraft, it would be a very good thing for this country.
§ LORD CHESHAM
My Lords, I am pleased to take note of what the noble Lord has said. Apart from that, all I will say is that I agree with 50 per cent. of what he said.