As announced to the House at the time, a contract for the development of the Tyne-engined Rotodyne, to meet military as well as civil requirements, was placed in February, 1960. The Government have been reconsidering the future of the project against the general economic background, and the need to restrict Government expenditure. They have decided that, so far as the military version is concerned, it is necessary to forgo the operational advantages offered by this aircraft in view of the cost involved. At the same time, British European Airways have now informed me that, following a careful reappraisal of their forward plans they have concluded, with reluctance, that the commercial prospects of the Rotodyne on their routes are not sufficiently assured to justify the heavy liabilities involved in the placing of an initial production order. In the absence of any firm production order, West-land's have decided that they would no longer be justified in proceeding with the project and steps are being taken to terminate the development contract.
Would my right hon. Friend agree that a great deal of enthusiasm and enterprise has been displayed both by the present developers and by their predecessors in regard to the Rotodyne and that this information will, therefore, come as a bitter blow? Can he give any information about whether there will be a serious financial loss to these developers and how it will be covered?
No, Sir, there will not be a serious financial loss to the developers because they are working under a development contract the termination of which will be a matter of negotiation between the Government and Westland's. I would myself pay tribute to the work of all those who have been engaged in this project. Nevertheless, it is necessary for me to face the fact that, without customers, I would not be justified in proceeding with the project.
Westland's, who are the helicopter group, are engaged in carrying out substantial contracts on Government account for the development and production of military helicopters. They are exploring the possibility of alternative civil helicopter projects, but they have not yet formulated any firm proposals.
I think that I would have felt the same regret as I feel standing here, namely, that what I had hoped was a promising engineering project cannot be carried through to fulfilment.
Yes, Sir. The Tyne version, the contract for which I referred to in my Answer, was placed with a limit of £4 million on it. Not all that money will now be spent, because the contract will not be completed, but the terms of termination will be a matter of negotiation between the Government and the firm. The hon. Member will understand why I do not wish to be more specific than that. Of course, the Rotodyne, or something comparable to it, has been under research and development for a number of years. Taking the whole of that into account, prior to the present contract about £11 million must have been spent. That would include £7 million on the development of the Eland engine, which is not now part of the project.