§ 2.59 p.m.
§ THE EARL OF GOSFORD rose to call attention to the Aircraft Industry; and to move for Papers. The noble Earl said: My Lords, in view of the announcement made a few moments ago by the Government Chief Whip, I should have liked to ask that the House be adjourned during pleasure, because it may well be that what I have to say is out of date.
§ THE MINISTER OF DEFENCE FOR THE ROYAL AIR FORCE (LORD SHACKLETON)
My Lords, perhaps I can help the noble Lord by saying that the Statement will not bear on the subject of to-day's debate.
THE EARL OF GOSFORD
I am grateful to the noble Lord; I am relieved to hear that—well, I am not so certain that that is true. However, we will wail and see.
Last week your Lordships discussed the vital subject of exports, and you were not overpleased with the steps which the Government are taking to increase them. It appears to me that the decisions which the Government have made, and might still make, in connection with the aircraft—or, as I think it is now called, the aero-space—industry might well be disastrous, not only to the 494 industry itself, but also to our export position, both in the short term and in the long term. Our basic raw materials, apart from coal, are brains, skill and initiative. The aero-space industry has all these, and is one of our major foreign currency earners. From the orders and the contracts which had already been made and received—prior, of course, to the decisions which the Government have taken—the industry expected to export this year approximately £180 million worth of aircraft and aircraft equipment. The Government say that the new figure will be only £150 million But this still represents a substantial amount of exports. Every £1 worth of production—or every £1 million worth, for that matter—which the aircraft industry will no longer be able to export, or build for home use, means not only that some other industry will have to increase its exports by the same amount, but that other industries will have to export even more so that we can pay for the aircraft we shall now have to buy from abroad. This will not reduce the trade gap one whit. In order to do this, we shall require the extra exports and the exports from the aircraft industry as well.
As I understand it, the Government's argument is that the manpower in the aircraft industry will be needed for other exports. But surely, if it is manpower that is required, then it should come from a non-exporting industry, and not from a major exporting industry and one whose brains and products lead the world. The products of the aircraft industry are, to my mind, particularly suitable exports from this country, as they involve relatively little imported raw material but a very high proportion of skill. The industry's main raw materials are aluminium and some high-grade steel and copper, which cost in the region of 3s. per pound weight. The aircraft which the industry make sell for approximately £20 per pound weight—a ratio of 130 to one; whereas the motor industry and the shipbuilding industry require imported materials which cost approximately 6d. per pound weight, and sell from 10s. per pound of product to as little as 2s.—a ratio of between 20 and 4 to one.
To my mind, therefore, the aircraft industry's products are advantageous exports, and it is nonsense to argue that 495 the industry should be "cut down to size" in order to release skilled labour for more important work. What more important work? What is more important than exports to this country, which cannot afford to feed itself and which has virtually no raw materials? Also, what is more important than safety? What the Government seem to object to, judging by the cancellations which have already taken place, is that a large percentage of the aero-space industry is involved in producing military aircraft, which they call unproductive. But if we do not manufacture our own military aircraft, we shall have to buy from abroad and make more exports to pay for them. This is a fact of life, and until such time as total disarmament has arrived it must continue to be so.
Furthermore, in present circumstances it is not possible to have a prosperous or viable civil aircraft industry without the stimulus and stability provided by an active Defence programme, and the cost of research and development must largely be borne by it, so long as our competitors do the same. In the United States, Government contracts, since the war at any rate, have never been responsible for less than 80 per cent. of the American aircraft industry's order books, which is why their civil aircraft can be so competitive. Our native ability to defend ourselves and to provide all the key weapons of our defence must not be given away and surrendered to America. It will not save any money. Furthermore, once the market is captured, we shall never get it back.
The aero-space industry is what I should call a frontiers-of-knowledge industry, pioneering not only for itself but, indirectly, for many other important and associated industries, such as electronics and metals. We must not reduce it to a half-cock industry, in fact a subcontracting industry, building only third-rate humdrum aircraft. This is merely a suspended sentence of death. The industry will lose its impetus, its ability, its key men, and will die on the vine. To keep at the forefront, to be competitive, to have any technological impact, it must be kept at its frontiers. Up to the arrival of the present Government this, I think, was done, and as a result great ideas have flowed from it. Admittedly, these ideas have not all 496 been backed or exploited as they should have been. Our lead in variable sweeps and V.S.T.O.L., both of which we pioneered, have been lost to our competitors. But that was not the industry's fault.
This pressure of the aircraft industry against the frontiers of knowledge was represented, up to the other day, by four major and great projects: the P 1154, the HS 681, the Concord, and the TSR 2. To-day, suddenly, two of these four leadership projects are dead, both of them Hawker Siddeley projects. The TSR 2 is on probation, and the Concord alone continues, although at what pace we have not been told. Hawker Siddeley have been given the sop of a revised Comet for maritime work, from which they will not learn much, and they keep some V.S.T.O.L. interest with the 1127. But even that valuable British know-how is to be given on a plate to the U.S.A. In return for what? It is not stated. Not in return for a partial surrender of any of the American aircraft industry's plans to dominate the Western world markets. I think that can be safely assumed. It is much more likely that they will use to our disadvantage what they learn, however well intentioned the American Government may be—and being half American myself I think I can say this.
Hawker Siddeley have no advanced project at all. The 1127 has been flying for a long time and, even with the essential modifications to make it into a fighting aircraft, can hardly be in the same class of technological importance as the supersonic 1154. The British Aircraft Corporation are luckier, and still have one firm advanced project, the Concord, with the hope of retaining the TSR 2.
Those, my Lords, are the facts. It cannot be denied that these cancellations must gravely impair Britain's ability to keep at the front of progress and to develop new machines in an industry where to lag behind is to die. But, having argued that we cannot afford to let our aircraft industry die, and, furthermore, that it must be allowed to give of its best—and there is none better—I must now admit that the industry has been suffering from malaise. It is based on a small home market, works too much in a straitjacket and 497 is plagued by "Stop-Go" policies both in civil as well as in military projects. I have no doubt that the Plowden Committee will confirm this when the time comes.
Not much can be done about the size of the market except to maintain it and not give it away. But there is something that can be done: our aircraft industry should be allowed to design and build for world markets—I am talking of military as well as of civil aircraft—and not be tied to the narrow specifications of B.E.A., B.O.A.C, or even B.U.A. This is why the French aircraft industry is so competitive. Whenever our aircraft industry has gone ahead on its own initiative the end product has been a success: the Comet, after its disastrous start; the Viscount; the BAC 111, judging by orders already received. But the aircraft built to narrow B.E.A. and B.O.A.C. specifications—the Vanguard, the Trident and the VC 10—while all, admittedly, magnificent aircraft and making money for their operators, have not made money for the industry, though the VC 10 may well end by doing so, and I hope it will.
To turn to the military side of the medal, whenever in the past the industry has produced to its own specification the aircraft has been a success. The Spitfire and the Mosquito are the prime examples. If it had been allowed to go ahead at full speed with the V.S.T.O.L. and variable wing aircraft we would have been ahead to-day and consequently be exporters of these to NATO and elsewhere; instead of which America is rapidly capturing the European market in military aircraft and doing it with our own inventions. I realise that this is not the fault of the present Government—
THE EARL OF GOSFORD
—but let them take a lesson from it.
Military requirements are, to my mind, of two types: one, where the military specification can be flexible; the other, where it must be sacrosanct for operational reasons. Presumably, the HS 681 and P 1154 came into the "flexible" category or the Air Staff could not have agreed to the down-grading of there projects—or did they? The design of projects in this "flexible" category must 498 always be looked at in the future with one eye on the export market. This will be of benefit to the Services as well as to the industry, for it will permit of increased production runs. Never again must the tragedy of the HS 681 or P 1154 be repeated. These orders look like being lost to America by the Government's own action. It was not the industry's fault, nor yet really the Air Staff's, in the absence of what I have already called a "flexible "policy. And I think it criminal for the Government to have damaged Hawker Siddeley in this way for the sake of one-fifth of the subsidy which they give annually to British Railways. This is a blow from which Hawker Siddeley's may never recover; this Company which gave us the Tempest, the Hurricane and, later, the Hunter, the backbone of our defensive strength.
Where the military requirement is overriding, as with the TSR 2, it must be sacrosanct and no other considerations must be allowed to intervene within reasonable financial limits. Luckily, the TSR 2 has been reprieved, temporarily at any rate, but only after the present Government found that they had been wrongly briefed into thinking that the TFX I could do the job. There is no TFX 2 as yet, and no one knows the extent to which TFX Mark I will have to be modified and, therefore, how much it will eventually cost. In spite of the Air Minister's remarks yesterday in another place that the Mark II is only a Mark I with an improved "Nav/Attack Fit" (whatever that may mean) this is a far greater unknown quantity than the cost of the TSR 2, whatever the Americans or the Government may say. As to the cost of the TSR 2, compared with the cost of the TFX 2, I cannot see that in the final analysis there will be any differential. The cost may well be the same for both, and at least the money for the TSR 2 goes back into our own pockets, gives employment to our own people, keeps good brains in this country and also helps the trade gap, to say nothing of its contribution to our safety.
Finally, my Lords, I come to the Concord. This, to me, is the signpost of the direction in which the Government must go: co-operation with Europe. Not only does the Concord give Europe the world monopoly in the next stage in civil aircraft, but our collaboration with 499 the French shows what the future can bring—except that the Government very nearly knocked it for six. We should collaborate with France. The Air Minister sees it; Mr. Amery saw it. France is our natural partner in this. With France as a design and cost-sharing partner on projects like the Concord, the P 45, the bus-jet airliner and the new air-to-surface weapon, we have the solid start for a European technology. This is a technology which can hold its own with that of the U.S.A. on all fronts, in space and in communications as well.
If we are to avoid U.S.A. technological domination of the Western world, this European club is essential to all of us. Italy, Belgium and Holland would all, I am sure, be willing to help in this work. They need such work. Then there is the Commonwealth: Australia and India want to build an aircraft like the P.45. That is the pattern. To my mind it is the only rational answer. It reduces individual costs; it quadruples or more the initial markets; yet, if there were a crisis, it would not remove from us our ability to supply our own weapons from our own production lines. This is urgent. If we delay we shall find the U.S.A. has got there first, via Germany, and then, indeed, the cause will be lost and the grave part dug. Technical and industrial co-operation with the U.S.A. is strictly a one-way valve. Co-operation with Europe is not. Europe really needs our skills and facilities, and we need hers.
I beg Her Majesty's Government to think again about our aircraft industry. To think of it as a potential and valuable exporter, and not a a pariah; as a provider for our own safety until such time as armaments are no longer needed. We must use our brains and our know-how for our own industries' benefit and not for the benefit of our competitors, or our standard of living must decline. I beg to move for Papers.
§ 3.19 p.m.
§ LORD BYERS
My Lords, there has been a great deal of public discussion in the last few weeks of this very important matter, and I do not propose (because there are many noble Lords who also wish to speak) to follow the noble Earl, Lord Gosford, over the very wide field he has so properly covered. I prefer to limit myself to a smaller area, although I 500 should like to say a word on the employment aspect, which is very important—the re-deployment of our craftsmen and of our skills—and on the export side.
Much of our present trouble seems to have stemmed from two causes, the delay in the availability of new types of aircraft and the mounting costs of the different projects. As your Lordships know, the mounting cost can itself often be a function of delay. Whatever the reasons may be—and I think previous Governments must accept a considerable measure of responsibility, though I do not want to labour that aspect—there is obviously a very serious gap which we have to face to-day between the end of the useful life of some British types of aircraft and the date when their successors will be available; and it is the question of this gap to which I wish to address myself.
The noble Earl, Lord Gosford, has mentioned the P 1154, which I believe is the replacement for the Hunter; the HS 681, which is the replacement for the Beverley and Hastings; and, of course, the TSR 2, which is the Canberra replacement. Of course, the industry appears at the moment to be extremely unbalanced, perhaps because, as has been said, it has become dependent on far too limited a market. For this reason I think that the Government are absolutely justified in undertaking the serious reappraisal that is now going on. There should be no question about that at all. But, to my mind, the question is whether the Government are setting about this in the right way, and whether the right decisions are being made.
I should like to put forward for your Lordships' consideration two propositions. First, if the Western Alliance means anything to the Americans and ourselves, ought we not to be prepared to help one another over difficult times? And we are facing very difficult times in the aircraft industry in this country, because it has become unbalanced. I can never be accused of being anti-American, but the American aircraft industry salesmen are some of the toughest and shrewdest operators in the world. In the ultimate, let us face it, their aim must be to benefit their own industry, and I do not think they would mind a great deal if, in the process, as a result of their activities, the British aircraft industry was destroyed. I suggest that we might remember here the story of Red Riding Hood. The 501 refrain which goes through my mind is "All the better to beat you with". It certainly seems to many of us that this country is heading for a pretty one-sided deal with the United States—a deal which is not, to my mind, within the spirit of the Western Alliance, and a deal which must inevitably, if it goes on as it is scheduled to do, harm the British aircraft industry. Let me explain what I have in mind.
First, we are apparently being offered the C 130E at a bargain-basement price. This is loss-leading. The acceptance of this, if we do accept it, knocks out the Belfast as it may be developed, as I understand it, as a plane which can do far more than the C 130E. It can, apparently, use 2,000-foot grass runways. It has a slightly better range and it has a 70 per cent. higher payload. It can take all the equipment the Army want to move and not just 75 per cent. of it. I think one is justified in saying: Why do we have to have the C 130E? Is it purely a question of cost? Would it not be possible to reinstate the Belfast instead of taking this bargain-price, loss-leading American plane? Then there is the comparison between the TSR 2 and the TFX 4. I would ask whether the costs are really comparable? Are we comparing apples and apples or apples and pears? I know how difficult it is to do the forward estimate of costs in any large project, but the one thing one can do at each stage in the procedure is to say, "Are we still comparing like with like?" It does not seem to me that in these two projects we are doing that. I understand the TSR 2 can take off on an unprepared runway, the sort of runway that we used in the war for Dakotas. The TFX 4 needs 3,000 feet of prepared concrete, which is a very big difference. The TFX 4 cannot fly at supersonic speeds below 500 feet; the TSR 2 can fly at supersonic speeds at about 50 feet, according to reports in the newspapers. These are very different types of aircraft if this is right. I believe the TFX 4 in its new model is getting heavier.
§ LORD SHACKLETON
I was wondering what aircraft the noble Lord was referring to. I have never heard of the TFX.4.
§ LORD BYERS
It is the plane comparable to the TSR 2. I understand the Government are considering whether they 502 will buy it. I have probably got it wrong; I am told it is the TFX 2. What I am trying to suggest is that we have a straight choice between going on with the British aircraft, the TSR 2, and what the Government consider is the American replacement. I am saying that the specification, the performance, of the TSR 2 seems to me to have a higher operational value than anything we could get at the moment from America. I quite understand there might be a difference in cost; but I would say, if there is a higher operational value of the TSR 2 than in the American replacement, is there not a case for reconsidering the deal? Where we have such a plane and where there is a delay in delivery, could we not hire or borrow the American replacement for two or three years to bridge this gap on the basis of lend-lease? Could we not, if the Alliance is workable, do something on this basis by using the American equivalent to bridge our own gap? And then I would go further and suggest that, as our TSR 2 comes forward, we can return the American equivalent for the re-equipping of the later American squadrons. If this British plane has the high operational value, why should we not have some American squadrons equipped with it? Why are we always to be the people with the small production run? Is it not something which the Defence requirement needs, not just for Britain but for America and other nations in the Western Alliance as a whole? I would plead with the Government, when they come to negotiate, to put forward that there ought to be far more give-and-take within the Western Alliance when we are considering who is going to make the sacrifice and who is not.
Finally, I would follow the noble Earl, Lord Gosford, when he referred to the European Space Agency and the necessity of doing something in the long run with Europe. I believe that we have to build up some unit in Europe which will be able to command a much larger market. Obviously the first step is greater collaboration with France. I should like to see a European agency set up, and I wonder whether the Government would give some thought to the corporate structure of such an agency. Would it be possible, for instance, not only to associate the aircraft industries of Europe, Britain, France and Germany, but to 503 bring in some of the major airline operators so that at an early stage one can get some form of agreement on specifications for civil aircraft? Is it possible to assess the Defence requirements of NATO at a much earlier stage and see that we do not waste year after year, as we appear to have done for so long? Therefore, I end by saying that I hope that when we come to the difficult negotiations with the Americans, a better deal will be done than appears to be scheduled at the moment; and I hope that the Government will accept that, in the long run, collaboration with Europe may be the answer.
§ 3.28 p.m.
My Lords, I am very glad my noble friend Lord Gosford has taken us aloft to-day. I am sure it is right that your Lordships, who can bring a great weight of knowledge to bear on this matter, including, I am glad to say, a great weight of ecclesiastical knowledge, should be debating this matter to-day. It is right that my noble friend, whose longstanding interest in aviation is known to us all, should have introduced this debate this afternoon. My noble friend spoke, I thought, in very moderate and measured terms and I shall do my best to emulate him; but I hope noble Lords opposite will not make the mistake of thinking that we do not feel very deeply indeed about these matters.
I, for one, believe that by their actions the Government have managed in a mere matter of months to put the whole future of one of our greatest industries at risk. They have treated us to a dazzling display of order, counter-order, disorder and cancelled orders. My noble friend has explained that the British aircraft industry last October was seized with four major projects. By November, it looked as if the present Administration were intent on torpedoing all four projects. If they had done so, I am quite convinced that this country could not have survived as a foremost Power in world aviation. That being so, I must echo my noble friend's satisfaction that the Concord is still alive, But I should like to ask, is it really kicking? That rather unenthusiastic statement of January 20, I think it was, by the Minister of Aviation, has left 504 some doubt and some disquiet at least in my mind. Time here is absolutely of the essence.
Some of your Lordships will doubtless have read an interesting series of articles which came out in The Times a week or so ago. The Times correspondent took the view that if the Concord became available a good two years ahead of its American rival—and let us have No 1llusions on that; if we go ahead the Americans will certainly follow us quickly—it should sell well. I have no reason myself to dissent from that judgment. The Minister of Aviation has told another place that he does not intend to get the worst of both worlds—to spend money and then to lose the market. But this seems to me precisely the risk which we can conceivably be running if we build only a couple of prototypes and sit back on preparing for full production. At present the risk of falling, as it were, between two prototypes seems to be real. The Times article concluded with these words:If this were to be done, it were well that it were done quickly.M. Jacquet, the French Minister of Transport, was over here yesterday for talks with Mr. Jenkins. Can the noble Lord tell us something about the outcome of those talks? I hope that he will be able to say something reassuring about the momentum of this great Anglo-French project.
While I am on the subject of civil aircraft, I should like to pose one question to the noble Lord about the BAC 111, that excellent aircraft to which my noble friend quite rightly drew attention. Last week in another place the Minister of Aviation held out the hope of further Government help for this project. The export prospects of the BAC 111 are, I believe, pretty bright; but of course they would be brighter still if the Government were to remove the "sword of Jenkins" hanging over the future of the aircraft industry in general, and the future of the British Aircraft Corporation in particular. This is by far the most important way in which they can help to promote this potential winner in the export markets. But do they have other forms of assistance in mind? And, if so, can the noble Lord enlighten us as to what 505 they may be? I trust that in dealing with the civilian sector of the industry I have shown myself not only charitable but also objective.
On the military side, while I shall continue to try to be objective, I may be able to extend less charity. We on this side of the House hold the noble Lord, Lord Shackleton, who will be replying, in both respect and affection. Because of this, and because of his direct responsibilities in this field—and not only for the Royal Air Force, but, as I understand it, he has overall responsibilities within his Ministry in these matters of procurement—I shall listen most carefully to what he has to say, as indeed we all shall. I would not wish for one moment to seek to argue that we should debar ourselves at all times, and for all time, from buying military aircraft from the Americans or from anyone else. Having pressed as hard as I possibly could the case for buying Phantoms for the Fleet Air Arm, I could not in honesty argue the case against any purchases abroad. But one swallow, or one hundred Phantoms or so, does not make a whole summer. It is one thing to make a limited buy off the foreign peg, but it is quite another to switch the main weight of our procurement across the Atlantic.
I am glad that the noble Lord, Lord Shackleton, is to reply. Anything that he can say to alleviate the present unease in the Royal Air Force, or to clarify the strategic backdrop against which the Government have taken their decisions, will be most welcome. But I think he will have a good deal of clarifying to do. One of the greatest assets, as I see it, which a technically advanced Power like Britain has in the strategic sense is the ability to exploit mobility to the hilt. It was precisely with this in mind that the operational requirements of the TSR 2, the P 1154 and the HS 681 were drawn up. As I understood it, the advice given to the last Government was that in the 'seventies we should increasingly require highly advanced aircraft, because we should increasingly have to reckon with sophisticated opposition from even relatively minor Powers in the purely military sense.
This calls for a high ability to disperse our front-line aircraft—a high degree of dispersion on a large number of short 506 and perhaps quite rough runways. Hence the requirement for vertical or short takeoff; hence the P 1154 and the TSR 2, both of which, given the level of possible opposition, needed to be supersonic. Hence, too, the requirement for the HS 681, a fast long-range supply aircraft, able to fly into and out of small, and possibly quite rough, airstrips right forward. As I understood it, that was the strategic air concept which we had in mind last October. I must confess that, to me at least, it made good sense.
Now, suddenly all this, this whole strategic scenario, has changed. At least so far as the P 1154 and the HS 681 are concerned, there seems to have been a complete reversal of policy. The Government are proposing to substitute a mix—the precise mix is not at all clear to me—of the 1127 and Phantoms for the P 1154 and the Hercules (the C130E, I think it is designated) for the HS 681; and they claim the backing of their professional advisers for this serious decision. Frankly, this sudden switch, so catastrophic for our aircraft industry, calls for far more and far better explanation than has yet been given by the present Government, so mute as it is with Parliament, so loquacious as it is with the Press. We hope that the noble Lord will give us that explanation.
Can he tell us, for example, if the dates for the P 1154 and the HS 681 have slipped? Or has the strategic concept changed? Or have the Government's professional advisers changed their minds? If so, why? But let me put this quite frankly to the noble Lord. Let me tell him that until October, as I understood it, the Air Staff were resolute in rejecting the 1127 as an operational aircraft. They were absolutely adamant in the view that, at any rate outside Europe, it was absolutely useless in the operational rô le. Why was this so? The explanation, as I understand it, is perfectly simple. The 1127 is a marvellous piece of machinery, an aerodynamic wonder. Yet in range, in speed, and in its present weapon fit, it falls far below the operational requirement. Unless you develop an almost new aircraft, a sort of P 1154, there is not sufficient "stretch" in this aircraft—or so I am informed—to measure up to that operational requirement. So much for the 1127 which, having always been unacceptable, has 507 suddenly and mysteriously become acceptable.
What about the Phantom? Again it certainly does not lie with me to disparage this aircraft, of whose quite exceptional performance I have a certain first-hand experience. I am glad to see that the Government are proposing to buy the Royal Naval version, presumably thus—and I hope the noble Lord will be able to confirm this—making the Phantom cross-operable between the Royal Air Force and the Royal Navy. But the Phantom has no short take-off ability. It is married irrevocably to a long stretch of concrete or to the flight deck of a carrier. That being so, it cannot protect itself by tactical dispersal, like the P 1154 could have done. And the 1127 is basically subsonic. It, in its turn, cannot protect itself through sheer speed, like the 1154 could have done. So instead of one aircraft for two rô les, the P 1154, we shall need two aircraft, the 1127 and the Phantom. This, unless I am a Dutchman, must mean far less flexibility and far, far less cost effectiveness.
As for the transport, I have often heard the noble Lord, Lord Shackleton, sing the praises of the C 130; and he may be pleased that he has brought this oldish pigeon home to roost. Yet here again I must tell him, if he does not know already, that in and out of season, in fair weather and in foul, the last Government's professional advisers were always unanimous in rejecting the C 130.
§ LORD SHACKLETON
My Lords, the noble Earl is making a large number of assertions, I should have thought of a slightly doubtful kind, about professional advice. I wonder whether he has actually checked up on the advice which his colleagues received on this.
I am making these assertions only because the Government sheltered in part behind the alleged opinion of their professional advisers in their statements in another place.
The Government and their advisers are perfectly entitled to change their minds, but, if they have, we are entitled to know what has happened since October to cause this change of mind.
There may have been a slippage as to the possible dates of entry into service of the HS 681. If this is so and if a stopgap was needed, then a stop-gap was to hand in these Islands. There was the one mentioned by the noble Lord, Lord Byers; there was also the Argosy—and there is still an Argosy production line open. There may have been a change in rô le. I should like to learn how the rô le which the HS 681 was to discharge is now to be carried out. How are the 1127s, presumably dispersed well forward, to be supplied? In any event, it is quite clear that there has been a radical downgrading of the operational requirement. Again, I do not necessarily query that decision. What we do query is a decision to down-grade the requirement and then not give the British aircraft industry a fair chance of quoting for that downgraded requirement.
The Government have been examining all this since October. But my information is that Hawkers were asked to quote for this down-graded requirement only a fortnight or so ago, the day after the Prime Minister's announcement in another place. And only a week later the Minister of Aviation told another place that he could not accept their offer. The noble Lord will again correct me if I am wrong, but I myself cannot see how the Government can claim that Hawkers were given a fair opportunity to quote for the HS 802. Nor do I see how they can claim that they gave themselves a fair opportunity of looking at this particular question. They gave themselves only a week.
In default of anything the noble Lord may tell us, I myself feel that the underlying reason for the Government's dramatic and, I would hold, disastrous switch in policy probably lies elsewhere. The Secretary of State for Defence has told us that if the Government had gone ahead with all three of these big projects, the TSR 2, the P 1154 and the HS 681, this would have put Defence expenditure right through the roof in 1970 or thereabouts. I wonder whether the noble Lord, in his 509 reply, can tell us what his right honourable friend had in mind by this vague phrase, "through the roof". Hitherto, it has been customary to regard our Defence expenditure as a percentage of our gross national product. I know that there would have been a "bunching" of Defence expenditure around 1970, but hitherto our yardstick in recent years has been 7 per cent., plus or minus, of the gross national product. Now we read—again, of course, in the Press, not in Hansard—that the Government are resolved to contain future Defence expenditure within the magic figure of £2,000 million per annum—that is what we have read. If this is so, then the reasons for these cancellations, and possibly also those behind the professional advice which has recently been tendered to them, becomes somewhat clearer.
We cannot, of course, ignore the need for economy and the need to wring the maximum in cost-effectiveness out of our very considerable Defence expenditure. But we cannot let the immediate savings in budgetary costs (savings which may be somewhat magnified in the short-term by the hire-purchase terms for the aircraft which have been contracted for, or semi-contracted for, and which the Government have wrung out of the Americans) blind us to other considerations in judging the Government's decisions. I will not detail the considerations; my noble friend has already done so. We cannot ignore the impact on our balance of payments, the effect on the aircraft industry as a major leader industry; not least can we ignore the dangers of total dependence on a foreign source of supply, even so friendly a source as our American allies.
With those considerations in mind, I should like to put, through the noble Lord—even though it may be very late in the day, perhaps too late in the day—these pleas to the Government. First, would the Government at least consider the development of the P 1154 as a research project? It seems rather lamentable and ironical that we should be deciding to opt out of this sphere just at the moment when we read about the trials of the French Mirage IIIV. Secondly, would the Government reconsider the HS 681, or, failing that, the HS 802, or the Belfast, as the noble Lord, Lord Byers, has urged? I cannot believe that these 510 alternatives have had really full consideration.
Thirdly, and above all, I would ask the Government to weigh very carefully indeed their ultimate decision on TSR 2. They have dealt one of our great airframe groups a body blow. They must think very hard indeed before dealing out the same medicine to the other great group. We need a lot more information about the factors involved. I should like again to support what Lord Byers has said. For example, we need to know how it is possible to make anything like a realistic estimate of "buying American" on the basis of a comparison with an aircraft which has not flown, which has not yet been made, and which has not yet been "funded", to use an American technical term. It is rather mysterious.
Fourthly, I must again ask the Government to give us, and to give Parliament, the facts on all this. To judge the Government's decision correctly, we need full facts on time scale, on performance, on cost and so on. We have managed to squeeze very little indeed out of them so far. The noble Lord, Lord Shackleton, was curiously coy the other day about Mr. Healey's agreement with Mr. MacNamara. I was looking for the reference in Hansard and could not find it, but I remember his telling me only last Thursday that the Government have not yet decided how many American aircraft they are proposing to order. But only a moment before the Government, through the noble Lord, Lord Shepherd, were telling my noble friend Lord Ferrers, that they were going to make an annual saving of £30 million a year. How can they possibly make these estimates if they do not know how many aircraft they are going to order? It really does not make sense, my Lords.
I could take other examples. One in particular interests me. I am very glad, personally, that the Government have decided to order a Shackleton replacement—and that is no aspersion on the noble Lord opposite; we do not want to replace him just yet awhile. But here again is a highly technical issue and we really have none of the technical facts to go on as to whether it is really sensible to order in this rô le an air-frame as old as the Comet IV. I am quite prepared 'to believe that it may be. I am 511 rather inclined to believe that the Government may, by some curious fluke on this occasion, have managed to take the right decision. But at present we really have not got the facts to go on. Can the noble Lord, therefore, tell us that the Government have decided to make available the relevant facts in a separate White Paper, or to embody them in the next Defence White Paper?
So much, my Lords, for the immediate or short-term decisions facing the Government. I should like in my concluding words to turn briefly to the future. I trust that when noble Lords reply, they will in fact be able to give us rather more of a glimpse of the Government's longer-term thinking on these matters than we have been vouchsafed so far. Despite the present uncertainty and the present controversy, there at least seems to be agreement between all the major political Parties, that we need to maintain a healthy and efficient aero-space industry in these islands. What I should like to extract from noble Lords opposite is what they consider to be the criteria by which we should judge a healthy and efficient aero-space industry.
What sort of industry have they in mind? Do they, in particular, share our view that you will never in the long run be able to maintain healthy air engine and air electronics industries in these islands, without the foundation of a really healthy air-frame industry? Do the Government also agree that, in a world in which our rivals in civil aviation maintain great military aircraft industries, our aero-space industry will not be able to hold a leading position in civil aviation if it is deprived of a firm root in military aviation? My Lords, these are some of the leading questions which we have in mind.
Noble Lords may of course reply, "Oh, yes. We agree that you are right to ask this sort of question, but how can we possibly answer if we are waiting for Templer, if we are waiting for Plowden?" We are, of course, always waiting for Plowden, and it is an agreeable business. But we have had Jenkins and we have had Healey, and the bright young men on whom the future of this great industry depends—the rising young executives, the design teams and so on—are only too likely to take their cue from what they have seen of the Government so far. I 512 believe that there is a very real danger of a real brain drain away from this industry. I believe that it is only too likely, unless the Government can give us, and it, really solid assurances for the future.
The new orders for the Kestrel and the Comet IV do not really help us very much here. They will assist the employment position, of course, and this is a good thing, but they involve a very limited design effort. They will do little by themselves to engage the talents and the imagination of the best minds in this industry. What would really help here, of course, would be a decision to go ahead with the TSR 2. What would help perhaps even more would be a clear indication that the Government, having thrown a generation of British military aviation out of the window with the P 1154 and the HS 681, are seriously thinking about the next generation. About the next generation I would not dissent from what was said by my noble friend, by the noble Lord, Lord Byers, and, in many ways, by the Minister of Aviation, about the need for partnership in future big aviation projects.
But in this matter of independence in aircraft research and development, and, indeed, in production, we should be wise to choose our partners very carefully indeed. If we have to buy aircraft "off the peg" it may be very sensible to shop on occasions in the United States. But if we propose to carry through a joint project from the start, then the Government would be wiser, in my view, if they have the option, to opt for partnership with our neighbours in Western Europe; and at present, of course, this means, above all, the French. The American aero-space industry is a great Leviathan, and it is only too likely to swallow ours up. That being so, I am glad that the Government propose to continue cooperation with the French in a number of fields.
To be really fruitful, such co-operation presupposes basic decisions, which I suspect have not yet been taken, on military co-operation with France and Europe. Meanwhile, the Government are quite right, in my view, to press ahead with the rather ad hoc projects, in certain cases, which they have inherited from the previous Administration—for example, the development of the airborne early warning system, which is good so far as 513 it goes. But can the noble Lord tell us something about the other possibilities: about the prospects of partnership over the next generation of military helicopters, for example; about the AJ 168 stand-off missile, which we have been developing with the French?
Above all, can he expand on what his colleagues have told us about partnership with the French in the design, development and production of a new advanced air trainer and strike aircraft, the P 45? I should like to underline what my noble friend Lord Gosford said about this project. I gather that it very nearly went by the board when the Brown Paper came out. There seems to be a fair chance of reviving it now and this would be an aircraft, I believe, with much potential stretch and a very considerable potential market. To turn back to the civilian field, can the noble Lord tell us anything more about the possible partnership with the French over the proposed air bus? In many ways this, too, appears a "natural" for an Anglo-French venture.
My Lords, this Government have dealt a savage blow, not I believe out of malice but out of incompetence, to one of our most dynamic industries. In so doing they have dealt a blow at what has always been a somewhat delicate plant—the relations between the Government and this industry. We have criticised, and we shall continue to criticise, what the Government have done, and not least the very clumsy way in which they have done much of that. But it is, I believe, one of the functions of this House to try to offer constructive criticism which is what my noble friend and I, in a minor way, have tried to do. I trust that the noble Lords who reply to this debate will not merely try to justify the Government's decisions. I hope they will also—and this is really far more important for this industry and for the nation—be able to tell us that the Government are taking real steps to mitigate the damage which they have done. I hope, too, that they will also tell us that they have realistic plans to safeguard the longer-term future of this great British industry.