I beg to move, That the Bill be now read a Second time.
I should like to make my speech on the Bill in three parts.
The Edwards Committee, which reported to the Government of the day in April 1969—over 18 months ago—said in paragraph 1052 that it accepted that its consideration of the whole and very complex issues of civil aviation could not be expected to be right in every detail.
But we doubt whether more time would alter the main lines of our thinking … There are pressing anxieties in the industry and great uncertainty until the Government declares its policy.
No one in the industry over the last 18 months could dispute this. I hope, therefore, in the first part of my speech, to give the House the Government's decisions on at least some of the problems involved. In the second part I should like to explain the Government's decision on the second company—what is widely known as the second force—and in the third part to explain why this short Bill is before us today. Only in this way can I set the background clearly for the future and show how the Bill fits into the general picture. I accept that there are some gaps, and these will be filled as soon as is humanly possible. But until the main background was properly established, the anxieties of which the Edwards Committee spoke were bound to persist and were damaging to our overall effort.
There was a broad consensus in the last Parliament, and I think in the country, as to the main lines that civil aviation should take. The previous Government accepted—in their White Paper of November, 1969—with relatively few variations the main recommendations of the Edwards Committee. The present Government accept them also, perhaps with even fewer variations.
We accept the concept of a Civil Aviation Authority. This will bring together, within a single independent authority, the responsibility for both the economic and the entire safety regulation of the industry, including airworthiness, and, because of its close connection with safety, air traffic control.
There is a considerable and increasing interdependence between the different aspects of airline operations. The Government believe that it is right, if we are to maintain the very highest standards of safety in the air, that the institutional arrangements for regulating the industry must reflect this. Separate compartments will no longer do.
I referred above to a "single independent authority". Parliament, of course, must lay down the policies to be pursued in all aspects of the regulatory machinery. But, having done this, the C.A.A. must have wide discretion on the detailed decisions involved in implementing these policies. At present, as the House knows, there is only indirect and limited control, in the public interest, over the policies pursued by either the Air Transport Licensing Board or the Air Registration Board.
The C.A.A. will be a constitutional innovation in that it will relieve Whitehall of detailed regulatory and operational functions which, for the most part, have hitherto been carried out by Government Departments. In this way it will help to streamline Whitehall and improve the quality of government. But this could not be done without giving the C.A.A. full responsibility for the control of airworthiness and for air traffic control along with its other economic and safety functions.
Nobody looking at the past 30 years could reasonably criticise the performance of the A.R.B. This is the measure of its success in the past. The proposal, therefore, is to set up an airworthiness council representing the same sections of the industry as is today represented on the A.R.B. Lord Kings Norton, the present chairman, has recently suggested to me that it would be valuable for this airworthiness council to retain the name Air Registration Board so as to help preserve the high reputation and the goodwill which is associated with this name. This is an interesting suggestion which I am only too happy to consider.
The C.A.A. will have a statutory duty to consult the airworthiness council on airworthiness standards and on the certification of prototype aircraft. If the A.R.B., which I see as becoming the airworthiness council, feels that in theory it has lost some independence, it will in return be close to the heart of the C.A.A. which itself will have great independence in all these affairs. Its expert knowledge of the industry will be available on call to the C.A.A.
These changes will affect the basis of employment of around 6,000 of the staff of the Department of Trade and Industry and, in addition, the staff of the A.R.B.—another 400. The Government will ensure that the terms and conditions of employment will be at least as good with the C.A.A. as those now enjoyed. The Government will also encourage the development within the C.A.A. of a comprehensive system of staff consultation.
Next, the Government have decided to establish an Airways Board to exercise strategic control over the public sector of the industry. It will, as the Edwards Committee recommended, be expected to secure gains and economies which should result by treating the resources and the route networks of B.O.A.C. and B.E.A. as a single system.
There are those today, perhaps for one reason, perhaps for others, who feel that B.O.A.C. and B.E.A. should be amalgamated. There are some violently opposed to this. In my view, this is not something which can properly be judged by somebody looking at the two corporations from outside. It must be done from within when many of the problems can be studied in depth and the proper conclusions can be made. There will be no question of either corporation losing its identity without Parliament being consulted.
The aim is to introduce legislation this Session to give effect to both these decisions—the C.A.A. and the Airways Board—so that both can be in existence in 1972. These decisions clearly have implications for the appointments to the boards of both corporations and the A.T.L.B. The new appointments will be announced very soon.
I now come to the second part of my speech. As the House knows from the statement of 3rd August, as well as from the policies of the present Government when in Opposition, we believe that it is in the national interest that the independent sector should be strengthened and should include a strong company carrying the British flag in addition to the main flag carriers, B.O.A.C. and B.E.A.
Not unnaturally, this is opposed on good commercial grounds by B.O.A.C. and B.E.A. who would like to do the whole job themselves. Equally naturally it is opposed by those who dislike all private enterprise. What is clear is that it was not opposed by the Government of the day when they issued their White Paper last year, and it was not opposed when the right hon. Member for Barnsley (Mr. Mason), as President of the Board of Trade, put a stop to B.O.A.C. buying out B.U.A.
It was accepted as a good proposal by the Edwards Committee, which, in paragraphs 1065 and 1066, said:
Our proposal for a second force airline presents difficulties that should not be glossed over. One motive for proposing it is a sense of fair-play. We are most anxious, if it can be done without damage to the total British aviation effort, to give those who have ventured their resources in the building up of air services a fair chance to go on doing so. A second is that we would like to see in this expanding industry a substantial and efficient additional source of airline innovation and management. Third, on the limited number of routes where a second British operator is desirable, we would like to be sure of its strength and skill.
Despite the difficulties we believe that, without undue sacrifice on the part of the Corporations, it should be possible to provide scope for such an operator. If our proposals are accepted by the Government, it should be possible to find acceptable ground on which a consortium of airlines could build. If no group of airlines is prepared to take on the task we shall be greatly disappointed. The process will, however, almost certainly take time and the territorial concessions must be limited.
Where I think there is a genuine difference between the two Front Benches, whatever may exist below the Gangway, is this: Right hon. Gentlemen opposite were prepared to will the end but, perhaps for political reasons, fought shy of willing the means.
Air travel today is in a transitional stage. The distinction between scheduled and charter services is at times a bit blurred. The difference between the big corporations, be they British, American or of any other nationality, and the people who primarily operate charter flights may be a difference of size, but is no longer a difference in aircraft types, safety records, and so on.
If we are to have a private airline to carry the British flag alongside, and sometimes in competition with, the national air corporations, and if it is to build and maintain the sort of reputation that we need to increase the overall British share of world aviation which is so important to our prosperity and invisible earnings in particular, it follows that it must have a secure basis from which to operate.
B.U.A. has had many successes on scheduled services, and Caledonian has a success story in the charter field. These two great companies have agreed to come together on 1st December, and adequate finance has been obtained to cover their immediate needs. This finance could not have been obtained without a guarantee from the Government that some modest transfer of profitable routes from the existing air corporations would take place. The extent, in general terms, was set out in the statement of 3rd August—2½ per cent. to 3 per cent. of the annual revenue, which is about £200 million, of B.O.A.C.
Has my right hon. Friend borne in mind the importance, not so much of giving a number of routes to the second force airline, but of its ability to operate at a density that it requires? Can we take it that there will be no restriction on the number of operations and flights that it can carry out on the routes that it is awarded?
Those factors are being carefully thought out. I do not think that the Government can say at the moment what number of flights might be possible on certain routes which may be transferred, because these are often arrived at only after international negotiation.
I want to stress the figure that I gave earlier in order to put into perspective some of the things that have been said about the transfer. The total size of the proposed transfer is substantially less than one year's growth in traffic. In determining the routes to be transferred, a major consideration will be the need to minimise the impact of the change. The transfer must be enough—and I should like to stress this—to give the new airline a good send-off, but the Government have no intention of making further transfers of this kind. When the routes are finally fixed, as they will be very soon, it will be up to Caledonian and B.U.A.—I do not know what name this new company will finally choose for itself—to prove themselves the success that we believe they can become.
Leaving aside the amount involved, how can the right hon. Gentleman justify the transfer of public assets to private enterprise with no compensation? Could he justify it the other way round?
I do not want to go into the whole of this problem now. I am sure that it will be raised on many occasions during the debate, and my hon. Friend who will wind up the debate will deal with it then.
I am not going into this question in depth. I am sure that it will come up over and over again during the debate, and my hon. Friend will answer it in detail at the end, because there is a wide range of ways in which hon. Members think that compensation is payable. I merely say that in many cases in which the Government own licences for all sorts of things no compensation is payable when they are transferred. One simple example of this is that when British Eagle collapsed there was a suggestion that the routes for which it had a licence had some value to the liquidator, but that was firmly denied by the court which considered the point.
If there are people who think that a private airline today can compete in the world simply by being more efficient and providing a better or cheaper service, I remind them that every country jealously guards its own routes and bargains for them on an international basis. Over and above that, fares are internationally regulated. It is possible for an independent airline to break into the magic circle only if, as a matter of public policy, the Government are prepared to accommodate it and negotiate the necessary rights.
To follow that to its logical conclusion, is there any reason why B.O.A.C. and B.E.A. should remain nationalised? Why should they remain nationalised when they are ordinary commercial airlines and the Government want that money back to put into something else where it can fructify far more usefully?
I am sure that the debate on the Bill will be very interesting. There are many matters into which one could be diverted, and I would rather not be asked to follow that line at the moment.
It is our aim to strengthen British civil aviation in both the public and private fields so that it can compete more effectively and the success that has been built up by Britain in world aviation since the days of Imperial Airways may continue to grow and continue to give fast, safe and cheap transport for both passengers and freight.
I come to the last part of my speech. The Bill is short. It is important, in order to get the new airline securely established, that the route transfers should take place smoothly and without delay. This is where the Bill comes in. The new airline will have to apply for licences in the usual way. The air corporations, quite understandably, have said that they cannot properly surrender these routes unless they are told to do so. The Government have power to require the air corporations to cease to serve any routes that may be specified by an Order made under Section 3(5) of the Air Corporations Act, 1967. They also have the power should that be necessary, to grant an exemption to the new airline, under Section 1(3) of the Civil Aviation (Licensing) Act, 1960, enabling it to start serving the transferred routes from the desired date even though the licensing processes have not been completed.
The Government are quite satisfied that the powers they already have may be used in these ways. The Bill does not seek to remove any doubt which might be felt to exist on these points—there is no doubt—nor does it convey any new power. What the Bill does is to minimise the possible risk of delay.
The Government's attention has been drawn to the possibility that their use of the powers, so far as this might prove necessary, could be made the subject of legal action. Although the outcome of such action is not, in their view, in doubt, such action could have the effect of protracting the transfer process so as to impair the propects for a smooth transition and a good start to the new airline's operations. The Bill therefore seeks to remove any basis for legal action which could only cause useless and unacceptable delay. It does so by declaring simply that the Government may use their powers in the ways that they have said they would use them should the need arise.
Supposing that the Government were to deprive a private airline of certain licensed routes in this way, would the right hon. Gentleman consider that compensation should be paid to it?
The right hon. Gentleman is a long way from the point that I have reached in my speech. If that occurred, I would guess that the answer was "No", but it is a hypothetical question—[Interruption.] If it is purely on the transfer of routes, I think, that no compensation is payable. This is the point.
To continue with my speech, it does so by declaring simply that the Government may use their powers in the ways that they have said they would use them should the need arise. The Government hope, however, that, given this Bill, all the interested parties will come to the view that it would be preferable to allow the normal A.T.L.B. licensing procedures to be followed within the time available.
The point of controversy is not whether the Government's powers can be used in these ways—indeed, the power of exemption was used several times by the last Administration so that there should be no interruption of service while licensing processes were completed—it is about the purpose for which they may be used. That purpose is to ensure that the new airline is successfully established.
The last Administration said that they wanted such an airline to be established, and took some courageous decisions to ensure that it had a fair chance to be formed. Where the last Administration lacked the courage of their convictions was in balking at the one step which was essential to get the new airline off the ground. If the House agrees that this one key step of a modest route transfer should be taken in pursuit of a policy objective which both sides of the House support, they will support the Bill.
In view of the great importance of the Bill, I thought that that was not only a very disappointing speech but an extremely thin one which did not inform the House of the gravity of the Bill. Indeed, the Bill is of such importance—the one Clause of it—in that it reveals the Tory philosophy which will be enunciated in the early 'seventies, provided that they stop in power for two or three years.
First, on the format and make-up of the right hon. Gentleman's speech, Edwards suggested a civil aviation authority, and also an air holdings board. We accepted most of what he said about the civil aviation authority, and it appears that the right hon. Gentleman is going down that road. Indeed, he has reiterated much of what I said the last time that we debated civil aviation. I take it that the air registration board, which he will call the Airworthiness Council, will be absolutely and completely under the umbrella of the Civil Aviation Authority.
Second, on the Airways Board, it appears that the right hon. Gentleman has it in mind, as we had, that initially it would be responsible for the marrying of similar operations between B.E.A. and B.O.A.C., with the long-term possibility of a merger in mind as well.
Then, the right hon. Gentleman came on to what really matters to the House—the question of the second force. He said that, by 1st December, the companies will have adequate finance, backed by a Government guarantee of profitable routes from B.O.A.C. and B.E.A. I rise to condemn and oppose the contents of this miserable little sheet that we have before us. This one-Clause Bill, as I said, is primarily concerned with enunciating Tory philosophy for the 'seventies, hiving off State assets to feed private speculators.
This is a sad day for British civil aviation, and not just for either of the Corporations. It is a sad day for all civil aviation and also for the second force—and indeed for the smaller independents as well. The Corporations will be forced, very much against their will, to surrender profitable routes to private enterprise, the second force will be born amidst political controversy and will be diseased by trade union opposition and industrial discontent from the outset, and the other independents fear that this second force, being the Government's child, will be pampered and reared to their exclusion, so the whole of British civil aviation, with the passing of this small Bill will suffer—every section of it.
The right hon. Gentleman should make it clear to the House what he means by his very clear statement that this merger would be opposed by the trade unions. On what grounds will they oppose it? I have spoken to the trade unions about this point and we met every one of their suggestions about the conditions and the service of their men and the trade union factors. On what ground will they oppose?
The right hon. Gentleman is obviously not keeping abreast of the trends. I know that he has been abroad and may not have read all the Press comments, but he must be aware that the trade unions themselves have stated that they will not only oppose the launching of the second force but take steps, if necessary, to black its operations overseas, and that during this afternoon a lobby is taking place in the House by the B.O.A.C. and B.E.A. staff against the launching of the second force. Therefore, it is already being bred in political controversy and trade union discontent—
The hon. Member must be aware that many of my hon. Friends are outside receiving the lobbyists in the Central Lobby.
I say to the right hon. Gentleman—who should take the grin off his face when such serious matters are before the House—that once more civil aviation, because of the presentation of this Bill, to the detriment of our whole nation, has been thrust into the cockpit of controversial politics. That is my first charge against the Government.
The hon. Gentleman is wrong. I did not commit myself to certain route transfers or any route transfers. if I may continue without further interruption, I will repeat what I said in the last civil aviation debate and what is contained in the White Paper, to get the record clear.
We were determining an orderly growth of civil aviation both in the public and the private sector, and I do not think anybody on either side of the House would deny that. We set up the Edwards Committee, which involved a two-year inquiry. We gave serious consideration to all its recommendations and, indeed, accepted almost every one of them, including the idea of an independent second force airline but not, as the Edwards Committee suggested and as the right hon. Gentleman has now announced is his policy, on the basis of a transfer of routes from B.O.A.C. or B.E.A.
We were always worried about the number of small independent airlines and especially their periodic collapses. Many of us were concerned with the small shoestring operators and the question of safety in the air, because insolvencies and accidents are often synonymous. We were also acutely aware that massive periodic investments were necessary to buy into the next generation of jets or wide-bodied aircraft, a problem which bedevilled B.U.A.
For all these reasons we thought it right to welcome the emergence by amalgamation of a viable, financially sound operator which could command serious attention from the Air Transport Licensing Board when applying for new routes.
The hon. Member for Woking (Mr. Onslow) questioned what we did. Paragraph 39 of the White Paper "Civil Aviation Policy", Cmnd. 4213, stated:
The Government would welcome the emergence, by amalgamation, of such a new airline if it resulted in the strengthening of the industry as a whole and contributed to the realisation of the Government's policy objectives. They agree with the Committee's view that this would almost certainly take some time. A new airline of this kind must evolve progressively, proving itself at each stage. It is for the airlines to decide, in the exercise of their commercial judgment and in the light of market forces, whether and in what ways to come together.
I also made it clear on 12th November, 1969—
I am coming to that. I said:
… We would like to see a second force airline developed, but we are not intending to carve up B.O.A.C. or B.E.A. routes to assist it. We would hope that some independent airlines would merge, and gradually become strong and viable enough to contest overseas in their own
right."—[OFFICIAL REPORT, 12th November, 1969; Vol. 791, c. 415.]
Before dealing with the question of route transfers, I will explain what we had in mind about the second force. The obvious possible amalgamation was Caledonian and British United Airways. B.U.A. had already been to the Government for certain routes which they wanted to be taken away from B.O.A.C. These applications were refused. B.U.A. then approached B.O.A.C. and asked it to consider a take-over. It came to our notice and Ministers decided in principle that they had no objection, subject to a satisfactory financial bargain, especially since B.U.A. at this time was a willing seller. It was not in tune with our White Paper policy, but it was not our fault that B.U.A. approached B.O.A.C.
Unfortunately, the Chairman of British and Commonwealth was not aware of the progress being made in talks between the Chairman of B.U.A. and Caledonian. Once this was known, Ministers decided to freeze the B.O.A.C./B.U.A. talks and await the outcome of takeover or merger negotiations between Caledonian and B.U.A. This was clearly in line with our White Paper policy. It was not, as the right hon. Gentleman said, a courageous step on our part; it was a just and honourable course at the time. There was now emerging the possibility of a bigger independent airline, viable and financially strong enough to merit the serious attention of the Air Transport Licensing Board when it applied for new routes.
Later, when the Civil Aviation Authority was established, we envisaged it carrying out an exercise in route rationalisation, seeking the co-operation and agreement of the corporations and the independents. That is where the argument raised by the hon. Gentleman about significant and insignificant comes in. Even if there had been no mergers at the time of the institution of the Civil Aviation Authority, reallocations and readjustments would not be ruled out if they would benefit the international competitiveness of the industry as a whole and the balance of payments.
The hon. Gentleman drew attention to paragraph 41 of the White Paper. I will quote it so as to put it in its proper context. It will reveal to the hon. Gentleman, who has not read it properly, that
the Government had no intention of giving B.O.A.C. and B.U.A. to the independent airlines:
The Government cannot accept that the formation of such an airline should be made conditional upon the transfer to it of a significant part of the Corporations' route networks … Some reallocation or readjustment of routes, which might include some exchange of routes, would not he ruled out where, in the judgment of the Civil Aviation Authority, this would benefit the international competitiveness of the industry as a whole and the balance of payments … These are matters to be determined by the Authority in the light of detailed study and argument and the Government do not intend to impose a preconceived reallocation of routes on any airline, which has borne the cost of developing the routes and is serving them well.
There was never any question of launching a second force independent airline on the basis of stealing profitable routes from the Corporation.
Is the right hon. Gentleman telling the House that he intended to set up a second force, denying it routes, he having been told by B.O.A.C. that it would not give up any routes and that B.U.A. then said that it could not operate under those conditions? Is he saying that B.U.A. then told B.O.A.C. that this was the only way in which it could exist, whereupon he would not give it any future and would not allow it to merge with B.O.A.C.?
No, the hon. Gentleman should realise that we had no intention of encouraging an amalgamation between B.O.A.C. and B.U.A. We were encouraging Caledonian and B.U.A. to get together so that in their new viable and financially strong position they would be able to approach the A.T.L.B. for new routes and on that basis gradually grow. That has been understood from the outset. I know the hon. Gentleman has taken an interest in civil aviation matters, but he has obviously not read the previous civil aviation debate or listened to my speech when I spelt it out. I said:
The fact is that no independent airline, or combination of airlines, could be given a very rapid and extensive increase in its scheduled service network without taking routes away from someone else, and that someone else must be one or both of the Air Corporations. I find this a very difficult proposition to justify, on grounds either of sense or of need … We are talking about routes that B.O.A.C. has built up over the years. A great deal of the taxpayers' money has been invested in them. If they are profitable, and that is why B.U.A.
wanted them, then they are the basis on which B.O.A.C. can expand into new markets. There would be no gain to our earnings of foreign currency by taking these routes away from B.O.A.C. and there could be a loss if B.O.A.C. were weakened as a result … the White Paper makes it clear that there has been too much fragmentation of our national effort in the past and we shall not strengthen it now by carving up the strongest airline we have."—[OFFICIAL REPORT, 18th March, 1970; Vol. 798, c. 436–7.]
Throughout, we have resisted the giving away of Corporation routes.
The right hon. Gentleman gave the House no information about the Bill and what it purports to do, but from what he said at a Press conference and in his previous statement on 3rd August it seems that because of the Bill we shall witness a switch of £6 million of annual route revenue, with all the annual profits that will flow from that going from B.O.A.C. and B.E.A. to the second force.
All this was agreed with the companies before any agreement with the Corporations or talks with the trade unions. Both these bodies, Corporations and unions, were informed after the companies had had assurances. This is happening at the worst possible time when profits in civil aviation are declining. At the moment T.W.A. is an example. B.O.A.C. is probably over its peak, with declining profits in the offing; and by this Bill the Government are now to take away £6 million of annual route revenue. Secondly, it has shattered the morale of B.O.A.C. and B.E.A. staff; the pilots are disturbed, as is every union in civil aviation under the umbrella of the National Joint Council for Civil Air Transport. I repeat that, unfortunately, this second force, because of the technique adopted by the right hon. Gentleman, is now being bred with political controversy and trade union discontent.
What of the Government's legal right? They gave the impression that Section 3(5) of the Air Corporation Act, 1967, and Section 1(3) of the Civil Aviation (Licensing) Act, 1960, empowered them to act. I have read all the Committee reports dealing with those provisions and obviously the situation was very doubtful. It certainly was not the spirit and intention of those Sections and nothing of this sort of operation was mentioned in Committee. Only when B.O.A.C. and B.E.A. refused to co-operate willingly in the discussions about transfer of route and the unions threatened to test the Government's legal position in the courts did the Government hurriedly have to introduce this Bill. Indeed the courts could well have stopped their having a second force airline even if Parliament itself might prove helpless in this situation. If there had been no opposition from the Corporations and the unions, this Government, without recourse to fresh legislation, without parliamentary debate and consent, might well just have taken the routes away.
The right hon. Gentleman the Minister for Trade and Industry on 9th November, when challenged in the House, said that there was doubt but the Bill was being introduced because he could see that the intention was to forestall. It is for that reason that legislation is now being introduced, otherwise, we might not have had a debate at all on this important matter.
We now have before us a lawyers' statement, a one-Clause Bill and a Ministerial diktat which is designed to twist the arm of the Corporations and blackmail them into submission. It is an attempt to legalise a national, immoral act. Perhaps this is what one would expect from this so-called high-principled Government.
We are bound to ask what are the pressures that have been brought to bear on B.O.A.C. and B.E.A. The treatment of B.E.A. and B.A.O.C. and their boards must be borne in mind when we consider that board members' contracts end in five weeks' time. Why has there been no announcement by the right hon. Gentleman about these contracts? Do we have to read into this that a pistol-at-the-head technique might have been deployed and that, because of their opposition to the Government, their jobs are now at risk?
I rise immediately to set the right hon. Gentleman's mind at rest on this score. The reason was the decision whether or not to go for the Airways Board. It had nothing to do with the rest of it.
That was an interesting intervention, but we shall await the announcement on these contracts with unusual interest. Who will be prepared to chair these boards after this exercise?
There will need to be some strong assurances from the right hon. Gentleman to chairmen of the Airways Board and the Civil Aviation Authority, and indeed to the Boards of both B.E.A. and B.O.A.C., before they will take on further contracts.
Sir Charles Hardie and Mr. Anthony Milward have been right to oppose the Government. They are in charge of blocks of State assets—taxpayers' investments—and have proved more honourable than the Ministers, who are prepared to bleed the State Corporations to feed their friends and speculators, especially foreign speculators.
On a point of order. The right hon. Gentleman has firmly impugned the honour of Ministers in his last remark. I suggest to the Chair that it is completely out of order unless he can prove that they have been dishonourable.
This Government do not seem to have any qualms at all about barefaced stealing. They are now prepared to pinch from the Corporations to featherbed the privateers. In regard to the figure of £6 million, the Minister has given no indication about compensation. If I remember his words aright he stated that there would be no compensation payable where licences are involved. I noted him as saying that on a transfer of routes no compensation would be payable.
We would like to know about compensation. B.O.A.C., in particular, has invested in the development of routes; it has taken time to prove them; it has engaged in international advertising; it has developed all the services; it has established agreement and a close understanding with Governments; and has built up enormous good will for the airline and the nation. B.O.A.C. sees all that effort, negotiation and anxiety going for nothing.
What of the losses the Corporation must now suffer? How do the Government intend to cook the Corporation's books? I remember a Tory Minister on 1st January, 1964, sending out a letter to the Chairman of B.O.A.C. about the commercial freedom of that Corporation.
In the last paragraph he said this—and I wonder that the Minister did not use this to whip B.O.A.C., instead of bringing in this Bill:
It is important that the interchange of views between the Government and the Corporations should not blur the fundamental responsibility of the Corporations to act in accordance with their commercial judgment.
The right hon. Gentleman ought to squirm at that statement, in view of his own intervention. The letter goes on:
If the national interest should appear, whether to the Corporations or to the Government, to require some departure from the strict commercial interests of the Corporation, this should be done only with the express agreement or at the express request of the Minister. How losses, if any, resulting from such a political decision should be presented in the accounts will depend on circumstances in each case.
How are the losses to be recorded by the Corporations? They cannot write in—or perhaps they can—the fact that "We was robbed", and we do not want that to be a recurring theme every 12 months.
It was interesting to hear what the right hon. Gentleman said about this being a once-for-all transfer. I hope that the hon. Gentleman in winding up will spell out this matter a little more clearly Although the right hon. Gentleman at the Press conference after his statement in August said that this was a once-for-all transfer—and this has been widely reported in Flight, the Financial Times, and he even told this to the T.U.C.—he will remember that on 9th November, his right hon. Friend the Secretary of State for Trade and Industry, in answer to a Question by one of my hon. Friends, said:
With regard to the transfer of the routes, I could not give an undertaking that never again would I take a step of this kind."—[OFFICIAL REPORT, 9th November, 1970; Vol. 806. c. 29.]
Do I understand therefore that he is over-ruling what his right hon. Friend said? Do I take it that what he said today, reiterating what he said previously, by-passes what his right hon. Friend said and that there will never be another transfer of this kind of a once-for-all nature? I ask that this matter should be cleared up when the hon. Gentleman comes to reply.
I made it absolutely clear in my speech. We do not contem- plate any other transfers of this kind. The point is that my right hon. Friend the Secretary of State for Trade and Industry was asked a different question. There may be times, with other airlines, in quite different circumstances, where transfers will be supported or opposed. It is a quite different question.
I am sorry, but the right hon. Gentleman's reply is not good enough. My hon. Friend asked the Secretary of State for Trade and Industry:
Can the right hon. Gentleman give an assurance that the proposal to transfer £6 million-worth of B.O.A.C. business to Caledonia/British United Airways will be a once-for-all transfer?
The Minister, in reply, said:
With regard to the transfer of the routes, I could not give an undertaking that never again would I take a step of this kind."—[OFFICIAL REPORT, 9th November, 1970; Vol. 806, c. 29.]
The right hon. Gentleman must come clean. He said that it is a once-for-all transfer. A senior Minister in his Department has said that that is not true, and that he cannot give that undertaking. What is the truth? Is it a once-for-all transfer, and are we to understand that it will never happen again? I see that the right hon. Gentleman is nodding his head in agreement.
I hope that the right hon. Gentleman will tell his hon. Friend who is to wind up to make it absolutely clear that what the Secretary of State for Trade and Industry said is not true and that his assurance that it would be a once-for-all transfer really stands.
On the question of the establishment of the Civil Aviation Authority, I noticed that there was a passage in the Board of Trade statement in August indicating that the independent airlines were to get priority over the Corporations. I hope that we shall not see any more transfers.
The right hon. Gentleman is making heavy weather of this matter, especially in view of his own past interest in it. When he talks about compensation he must recognise that what has happened in the past can happen in the future. B.O.A.C. previously transferred to the independents a route which it could not make profitable and which the independents then made profitable. There was no question at that point of B.O.A.C's saying to the independents who took over, "We shall give you something to go with this transfer because it is loss making".
That is absolute nonsense. Hon. Members pop in from time to time to hear what is said about civil aviation—and that goes for the hon. Member. If he wants to know about the Latin American route and B.O.A.C. going out and B.U.A. coming in, I can tell him that there was the question of different aircraft, a different structure, and different stopping points on the routes. There was a vast change. There was no comparison between the aircraft that B.O.A.C. were operating and those that B.U.A. were operating.
On the matter of the transfer of routes, for which the Bill seeks permission, we are also bound to wonder what will be the attitude of foreign Governments to this change. According to what I can glean from The Times—and that newspaper seems to be able to get the right leaks from the Minister's Department—Portugal, Gibraltar, West Africa and other points on the routes in question may be affected. Hitherto the Governments concerned have been accustomed to dealing with B.O.A.C.—a British State airline with a great international reputation, and a highly successful airline.
When those Governments, were talking to Sir Charles Hardie, or Keith Granville, or to Tony Milward, or any senior members of B.O.A.C., or B.E.A. staff, they felt that it was like having a link with Her Majesty's Government. They felt that there was a special relationship involved. I have no doubt that all that helped in the establishment of services in those countries—link lines, pooling arrangements, and so on. We should like to know what their reaction has been to having foisted upon them this private airline, born of political controversy because of the technique of its launching, and obviously not of the status and fiancial stability of B.O.A.C.
What fears do those Governments have about trade union discontent and about the future not only of this new airline service but also the hitherto shared operations and pooling arrangements? Those Governments must have serious doubts about this shameful act, and it is right that Parliament should know what their reaction has been.
The amputation of these limbs from B.O.A.C. in the nations affected may encourage the growth of new limbs from other successful international airlines, with a consequent loss to British civil aviation route networks, and a loss of foreign currency. We have a right to know how those Governments have reacted and whether we should visualise further losses.
This is a small but highly dangerous Measure, which could be the forerunner of many. We visualise the Conservative Government hiving off from nationalised industries some of their profitable ancillary activities. Unfortunately, the second force happens to be the first, assisted by this robbing technique. I have no doubt that this is starting a pattern; this is a precedent. The chairmen of the British Steel Corporation, the National Coal Board, the Gas Council, the Electricity Authority, the Post Office Corporation, and so on, must all be aware that it will be a testing time for them. The pattern has now been set.
We should also ask how many more Oliver Twists of the speculative world, egging on private industry, are to parade their begging bowl before the Department of Trade and Industry and its old close friend, who is now to be regarded as the dotty chairman. How many more chairmen of nationalised industries will be subjected to this disgraceful technique, and these back-door pressures—and, in the end, who will want to serve on these boards?
Indeed, they are just as full of guile and not to be trusted.
Because I feel that British civil aviation is bound to suffer as a result of this Bill, and because of the shady, immoral, barefaced stealing of public assets in order to buttress private enterprise, I must say that the Bill cannot command any support from this side of the House. When the truth of this operation is known I doubt whether it will command much public support.
I want to draw the attention of the House to a statement made on 26th May—before the election—by the hon. Member for Gloucestershire, South (Mr. Corfield), who was then the Opposition spokesman on aviation. He said:
It must be fully understood that if the President of the Board of Trade were to approve a B.O.A.C. take-over of B.U.A. before the General Election, a Conservative Government would not regard itself as bound by any such decision.
Her Majesty's Opposition issue the same warning to all who are concerned in this venture. We shall not be bound by this shameful act and will, on return to office, return these routes to B.O.A.C. and B.E.A., without compensation. The independent companies are not paying for them now, and they will have profiteered in the meanwhile. They will have had their quick quid, and a Labour Government will take the view that the State and the taxpayer have a right to the return of these stolen assets.
As a maiden speaker I believe that I should make some remarks about my constituency. First, however, I feel that I should say how much I have enjoyed the two speeches that have been made so far—my right hon. Friend's for its content, which was most pleasing to us, and the speech of the right hon. Member for Barnsley (Mr. Mason), because it took me back to the days when as a small child I was taken to a revivalist meeting in a Welsh valley. There was exactly the same tang to it. Regrettably, it said nothing—and in exactly the same style—that had not been heard before.
What sticks in my mind about my constituency, as I am sure stuck in the mind of my predecessor, Mr. Newens, a most energetic and hard-working Member, is its sheer size. It has the second largest electorate in the country. It is interesting to reflect that the hon. Member for Billericay (Mr. McCrindle) and I represent in this place almost as many people as are represented by some of the delegates to the United Nations. I am prompted to remember the wise words of another of my predecessors, Sir Graeme Finlay, who was wont to say that the constituency had everything except a shipyard, a fishing industry and a coalmine. The Lee Valley regional park is spreading and doing a fine job. Before long with the emphasis on water as a source of amusement and recreation, if not of refreshment, I hope I shall have a boatyard or two if not a shipyard, certainly better fishing, and I hope that I shall be excused from the coalmine.
Epping is an enormous constituency, with a new town, soon to be a fast-growing new town again, and small market towns in one of which I live. It includes Waltham Abbey, a most splendid building, with the most splendid choir singing the greatest sacred music in the South of England. It has an electorate of 36,000 in the Greater London area. I often wonder whether I am the only hon. Member with 36,000 London electors who has a strong agricultural and horticultural interest in his constituency. I should like to comment further about my constituency, but this is not the time for it. The debate promises to have too much interest for us all.
I sincerely regret that hon. Members opposite, who are in such a high state of indignation about a political decision, should have chosen to go outside and discuss it with those who want to take direct industrial action about political decisions which should properly be discussed in this House.
As a member of the British Airline Pilots Association of 17 years' standing—and as I spoke only yesterday to the Chairman of the British Airline Pilots Association in B.O.A.C.—I can say that they are not interested in the sort of thing that is going on out there. They deeply resent any suggestion that they would be a party to industrial action when the place for these matters to be discussed is here. I am not talking about legitimate industrial action for purposes of legitimate industrial ends. I am speaking of industrial action for political ends. The remarks made by the right hon. Member for Barnsley implying that the Airline Pilots Association sympathised with such action should be withdrawn.
Before we are carried too far into this, we should also remember that the airline industry situation which faced the Government on coming into Power was different in degree from anything we had seen before. The position in the past has always been that the private sector has been discriminated against right, left and centre. I regret that it has been discriminated against, by Governments of left and right and, had the right hon. Member for Orkney and Shetland (Mr. Grimond) been called to form a Government, I am sure that it would have been discriminated against by a Government of the centre. During those years of discrimination the private sector was always denied a cut of any profitable scheduled services.
Thus, it developed different areas of work. It developed originally, and became very dependent upon, troop charters and War Office charters for dependants. That business withered, as did our bases overseas. The private sector then developed, at great expense and effort and in the teeth of opposition from the air Corporations, the inclusive tour holiday market. Not only did that become a profitable business but it brought sunshine holidays to many millions who had previously known only Blackpool. It went on from there to develop to some extent the business of running emigrant charters from this country to Australia and New Zealand. That is the only side of the private sector business which benefits when right hon. Gentleman opposite sit on this side of the House. As we know, that is when emigration figures go up.
These have been the mainstays of their business. They have always weathered the storm up to now. Many of the storms have been caused by gusts of wind coming from this place. But on this occasion they were faced with a new situation. They were faced with a Government that was determined to starve them sooner or later into submission. The Edwards Report came out and as has has been explained today, the Government said: "Certainly, we would love a second force airline. Have a second force airline. But you cannot have any routes to run it on."
The example of the Egyptians refusing straw for bricks has stood a long time, but this was even refusing the clay for the bricks. It was a statement to the independent industry: "Go ahead and die, but we will give you one word: take your own time over it, so long as you hurry."
I am sorry that I have provoked the hon. Gentleman, though I had rather intended to. I know that a maiden speech should be non-controversial. I have waited five months to find something non-controversial. Unfortunately, in these days even motherhood is controversial and sometimes frowned upon in view of the population explosion.
There is only one way to keep the independent sector of the industry operating, and that is for it to have a fair crack of the whip, and that includes route transfer. This subject will obviously run right through the debate. One has to look first at the question of compensation. If the Corporations are asking for compensation for the money they have sunk into developing routes, one has to look at their case closely. At the same time and by the same token, one has to look at the fact that the factor which was beginning to squeeze the independent sector was that their chosen centre of business, the inclusive holiday tour, which they had developed exclusively at their expense, was the one which B.E.A. Air Tours was being set up to enter with public money, and, whatever B.E.A. says, with a subsidy to under-cut and break the independent industry. If it is argued that there should be compensation one way, surely it must be argued that there should be compensation the other way.
On the other hand, if the argument is that a route traffic right is an asset for which, whenever it is transferred, there is a compensatory money payment, that is a most dangerous and convoluted argument—because it leads us to wonder what exactly happened when B.O.A.C. decided not to operate to South America, to Washington and to Los Angeles. Did the Chairman say to the Minister, "Here is your route traffic right back. May we have our money back?" No, he could not. He did not pay for it in the first place. There never was and never has been a payment made. The suggestion that there should be takes us back to Elizabeth I selling monopolies. It simply is not on. It does not make sense. The arguments about it will probably continue, but speaking from the experience of half a lifetime spent in civil aviation, I can say that we have to look closely at the overall benefit of the British air-traffic industry.
If right hon. and hon. Gentlemen opposite had had their way, the inclusive holiday market would never have been created. They would still be firmly protecting their creatures which were totally unenterprising about that sort of business. There is no reason why a modest transfer of routes of the kind envisaged should do any lasting harm to B.O.A.C. or B.E.A. Having worked for one of the Corporations for 17 years until coming into the House, certainly I detected no panic or sudden striking of breasts and rolling in the dust when it was announced that there was to be a second force. Of course, there were demonstrations in Trafalgar Square, and my constituent, Clive Jenkins, spoke in great metaphors about tearing the living flesh off the bone, though not quite about amputating the limbs. Matters get more gory every day.
But what protests came when the original Eagle was taken over by B.O.A.C.? There was no froth, no noise, no agitation and no threat of direct industrial action for political ends. All was quiet. I wonder why. Was it because there was no element of public interest involved, or was it because it was a case of a nationalised industry getting bigger as opposed to smaller?
Sooner or later we shall have to return to the subject and discuss which routes are to be transferred. I would only ask my right hon. Friend to look at this most carefully, as I know he will. There are areas in which damage could be done to the Corporations and to the British industry. Of that we are well aware. There are areas in which B.O.A.C., Britain and good operating practice are virtually synonymous. It would be sad to let in another airline to replace B.O.A.C. in those areas. There are other areas in which the name of B.O.A.C. is not held in such high regard. Hon. Members will no doubt recall that when Eagle was taken off the route to Bermuda there were strong protests for a long time from the people of Bermuda about losing what they regarded as their airline. I hope that we shall see their airline again on that route and that the route through to Central America and to the southern states of the United States—where the name of B.O.A.C. is not well established—will provide a firm base of operations.
The hon. Gentleman may think that it is nonsense. Clearly he did not go there almost weekly as I did. It is not nonsense to me. The Corporation has never broken into that area of Central and South America, with its strong Spanish ethnic association. The Bill provides a splendid opportunity for a new British flag carrier to improve the standard of British airlines and the British share of a market which has been declining.
It falls to me to observe the custom and privilege of this House in following a maiden speaker. I do so on this occasion with not quite as much generosity as one usually accords to maiden speakers. Maiden speeches are supposed to be non-controversial, and this House usually accords a maiden speaker the courtesy and privacy of this Chamber by hearing him without interruption. The hon. Member for Epping (Mr. Tebbit) started very well by referring to his constituency. Some of us know the Lee Valley scheme and the great developments planned for it which we hope to see come to fruition. After all, the plans for the area were formulated by the Labour Government.
However, before the hon. Gentleman strayed into more controversial areas of aircraft policy he would have been wiser to have had a word with his Chief Whip. I am sure that he would have been advised to follow the practice of this House by not being quite so controversial. However, I do not intend to savage the hon. Gentleman. That is not the custom of the House. I warn him, though, that having heard him the House will be aware of his potentialities and treat him accordingly.
This debate and yesterday's run concurrently. One would think that the conclusions of both debates would be consecutive. But they never are. The troubles of the aircraft and the air transport industries have been aired in this House almost since their inception. They do not grow less severe, though they become more concise and narrow.
Several Estimates Committees have investigated the air transport industry. One upon which I served in 1954 and 1955 lasted 14 months and came up with the conclusion that the industry was so based that the capital employed was too narrow to support an industry of the size required by the United Kingdom. Out of that report arose the amalgamations in the aircraft industry, together with some bankruptcies. The intention was to consolidate the resources of the nation into a vast capital expansive industry where research and technological developments were mostly needed.
Sir George Edwards, whom I regard as being second to none, has always managed in one way or another to keep his company alive in the face of intense home and international competition. The paradox is that the issues confronting B.O.A.C. confront every other airline in the world. The reasons are the same. They are heavy capital costs, heavy running costs and low returns on capital. There are hundreds of Boeing 707s on the ground in America which cannot be sold. Any successful aircraft such as the Viscount, the 111 or the strategic 311 has a viable life of only a few years, until a competitor comes up with an aircraft which is better, faster or safer. Aer Lingus is still flying Viscounts very successfully. The reason is that there is not a great deal of time to be gained in travelling from A to B or Y to Z a little faster. A certain amount of time is saved, of course, but the only reason for bringing a new aircraft into service is to provide a better turnover on capital. That is why B.O.A.C. and B.E.A., being State airlines dependent on national policy and finance, are operating so successfully after a long period of initial difficulty. At this juncture, when there is a plus on the balance sheet, their Conservative philosophy is to take away £6 million from their most successful operations.
The hon. Member referred to a revivalist meeting on this side of the House. It is not. What we are seeing is the rebirth of capitalist intervention in public industries which are making a profit. They see the chance of clawing some back. Considerable capital has been sunk in industry. We should think not only of the aircraft themselves but of safety, navigation, research, development and airfields. Mistakes were made at London Airport because we were first in the field and all this had to be paid for. They were paid for out of the proceeds of aircraft sales and the operations of B.E.A. and B.O.A.C. They are not paid for by private aircraft or private airlines which license their flights and routes.
This is why it is so important to get this debate in perspective. Financial circles show no inclination to take a stake in the coal mines or British Railways. They want a stake in what is profitable—not that the financial life of the Corporations is by any means assured. This is an act of financial exploitation against the State. The House should not give a Second Reading to this miserable little Bill. B.O.A.C. and B.E.A. are as English as a spinning top, a pease pudding or a pint of ale. Everybody knows and appreciates them and their reputation throughout the world, wherever they go. Many people I know will not travel unless they can travel on British State airlines—they are afraid of certain consequences—and I am one of them.
I should tell the hon. Member and the House that there were airfields built before Heathrow and that there were very good reasons why we should have looked elsewhere very often for better ways to build it and why it has been financed, and the British Airports Authority is running it not only with revenues from the landing charges of the aircraft of the Corporations—one or two foreign operators go in and out there as well, I am told. Hon. Members might like to spend a day there some time to see.
I not only spend days there: I have members there. I understand the hon. Member's argument about foreign airlines, but foreign competitors under licence did not put down the hard cash to build the airport at Heathrow: the British taxpayer did. They are trying to provide for themselves a capital bonus out of something which is established. It is the same when one rents a house from a landlord: the landlord built it in the first place.
Our aircraft industry has to stay in business. It is highly technical, inventive, scientific and expensive and as yet no adequate cost-effective system has been devised for it. With regard to commerce, industry and finance, mergers take place and there are criminal frauds which are so obscure and involved that the courts cannot prosecute or determine where the blame lies. One example recently was the Bloom enterprises, where the Q.C.s, highly specialised though they were in the business, concluded that they could not unravel this thing in 20 or 30 years. The Treasury had to accept those conclusions and come to an accommodation.
We have had the same thing in industry. We have debated the costs of the Rolls-Royce engine in aircraft development. There are not enough adequately trained accountants to investigate these industries. I know, because we spent 14 months on the subject in Committee. One of the most surprising things that we came up with about the aircraft industry was that in one case as much as £22 million had been spent on an aircraft which never left the drawing-board.
Until we get some order into this, both as regards engines and aircraft manufacture, we shall have this situation. The industry has to live: they bring forward every year new ideas and plans. B.O.A.C. and B.E.A. want new designs. Their research officers and scientists constantly submit specifications for new plans, because they must stay in business. All this is very expensive. The independent air lines play no part in this. This is borne by the taxpayer. And now we have to give away the extent of the earnable revenue of 12 months—£6 million.
This is the economics of bedlam. We cannot go on like this, with air frame manufactures, an aircraft industry and an air transport industry which are established and paying their way, and take away their viable margins. If we do, they will not be able to break even, and then we will have the same arguments in the House about why they cannot. For God's sake let us have a little common sense. The Government should take the Bill back where it belongs—in the archives of Tory Central Office—and leave it there.
Is the hon. Gentleman saying that morally it is unjustifiable to expect an intervention by private industry in nationalised industry, shall we say, in November, 1967, when that nationalised industry might be able to show a profit on its books, and that it is justifiable to have similar intervention in the same two organisations in July, 1967, when they are writing off £95½ million public money? Is that his argument?
That has been repaid. But I was never in favour of the proposition formerly peddled by my side of the House to buy either B.U.A. or Caledonian or to agree to an amalgamation. When we are engaged in enterprises like this I believe in the forces of State competition. If the private man cannot compete I would buy him out not at a bargain price but for nothing. We have now reached a stage where competitors are worldwide in aviation, and they all have the same problem.
In the space of a few weeks, we have to make a political decision about the air bus or the 311. Both sides of British industry are competing for the favours of the House of Commons in this argument—one for the airframe and the other for the engines.
On the one hand, the people who wish to enter Europe favour the airbus project, which may or may not have the capacity to earn about £1,000 million in three years. I am not sure whether it will occur in dividends. On the other hand, we have the 311 with a Tristar engine which will give employment to thousands of Rolls-Royce workers—and that is probably the only high-class technical industry that we have left in this field.
The House must decide between the two. Whichever we decide, the decision should be in the interests of the British taxpayer, completely and authoritatively. This will never be achieved if we syphon off the marginal profits of an industry which we have built up.
The Minister introduced the Bill with a short speech. It is not too late for him to take it back to where I explained it originated. If he does not take it back, then either the present Government or the next one will have to ask the House for a subvention for B.O.A.C. and B.E.A.
In future we will have to face the acute problem of air space. Anybody who flies regularly knows the difficulties that are being faced today by the main airports of the world. I was at New York Airport two years ago in mid-summer when the temperature was 98 degrees and the humidity extremely high. We had to agree to board the plane and wait until we could get off the ground. We sat in the plane, hot and sweaty, for two and a half hours while the aircraft queued up to leave the ground.
Indeed so crowded is that airport—the same can be said of many other inter- national airports—that aeroplanes must usually queue to both take-off and land. This and similar problems must be tackled not nationally but internationally. In both time and space, the operating difficulties of the airlines are acute throughout the world.
We cannot subsist on the margins. There must be an adequate return on capital—[Interruption.] I have always been a great believer of this and for this reason B.O.A.C. and B.E.A. should not be interfered with. They should be left to do their own bookkeeping, now that they have achieved success, particularly in view of their immense worldwide reputation. They should be given the support which the taxpayers have sent us here to provide.
Whether in steel, gas, electricity or the railways, it is being proved conclusively—the Americans are now thinking of nationalising their railways—that certain industries can exist only within the framework of the State. It is to be regretted that hon. Gentlemen opposite appear to be prepared to sacrifice the aviation industry.
If the Bill is passed, my hon. Friends and I will watch developments with interest. I am sure that within two or three years the Government will, if they are still in office, be asking for a subsidy or subvention to make good the harm they are now doing—and then the attack from this side of the House will be far more fierce than it is today.
I must be careful how I express my compliments. I did not mean old in the sense of age. He is a valued hon. Member, but while I will not deal with the points he raised about the aircraft industry, I must quarrel with him about the robust and avowedly controversial maiden speech of my hon. Friend the Member for Epping (Mr. Tebbit).
I hope that it will not be taken amiss if I congratulate my hon. Friend, both on his speech and on his courage in making that sort of maiden speech. I think it not such a bad thing that when an hon. Member stands up in this House for the first time, hon. Members should have some hint of the sort of person with whom they will have to deal. I have known other hon. Members in the past to give some hint of what is in store for us in their maiden speeches.
I would, however, dissent from one comment made by my hon. Friend. He is not wholly right in saying that there is an unavowed subsidy being given from B.E.A. to B.E.A. Airtours. There is, of course, an element of protection. Any company would consider itself lucky to come into this business having got its capital for what should be a risk operation at very much less than a risk price. It is also true that a considerable advantage is being given to B.E.A. Airtours by way of the established connection on which it can depend for its business. However, I have satisfied myself that there is no question of a subsidy being given improperly or that anything is being done which is not open.
The dear little Bill, if I may call it that, on which such a vast pyramid of debate has been erected prompts me to return to a theme which I have raised before. It is my wish that we could have, instead of an explanatory memorandum. a memorandum which really explains what the Measure is all about.
To look at the Bill one would hardly come to the immediate conclusion that it is the cornerstone of British aviation for the next 15 or 20 years. I wish that it could have over-printed on it in bold lettering, "This is a Bill which is designed to make Britain more competitive in a field of endeavour in which we have the most to gain from exploiting our skills". To take such a step might be a departure from precedent, but I regret that it cannot be done.
I advise the right hon. Gentleman to wait a little longer before intervening. I will be dealing with him shortly, and then he may be glad of the opportunity to intervene.
I welcomed the speech of my right hon. Friend, which I will study with care in the OFFICIAL REPORT, because it contained much of what my hon. Friends and I have been anxiously awaiting for a long time. I was particularly glad to hear his commitment to the creation of a Civil Aviation Authority, an independent authority responsible for the economic and safety regulation of British civil aviation.
I hope that when my right hon. Friend drafts the legislation which will set up that body he will not hesitate to look across the Atlantic and take, as a possible model, Section 102 of the Federal Aviation Act, 1958. Hon. Members will be instantly familiar with the fact that it contains a positive, progressive and competitive statement of the framework within which the licensing authority of the world's greatest aviation nation sees itself working. If we wish to live in the world in which they live, we had better adopt attitudes not dissimilar to theirs.
I come next to the question of the Air Registration Board, its future and perhaps its name. I am glad to note that my right hon. Friend has not closed his mind on the question of the actual title of the board. However, it is more important that its functions are right. The continuing importance of the board, within a Civil Aviation Authority structure, will turn on the independence which it enjoys in practice. We do not want to become too bogged down by theory.
What we want to know is how the board will work in practice and how the members of the board will be prepared to go on making it work.
When we come, as we shall in due course, to consider the difficult problem of how to absorb within the Civil Aviation Authority some 6,000 staff at present employed by the Ministry of Trade and Industry, I hope that my right hon. Friend will commission within his Department a study of one past experiment which might provide useful evidence. I refer to the establishment of the British Airports Authority. I believe that it is agreed in retrospect that there was too little streamlining and too much straight transfer of Civil Service functions from openly within Whitehall to openly outside Whitehall and that in the process the methods and the men remained too immune from change. I set considerable store by my right hon. Friend's intention to relieve Whitehall of this work and to streamline its administration.
I am sure that no hon. Member can quarrel with the intention, in respect of the Airways Board, to go for economy of resources. Nevertheless, it is clear to many of us that though this may not be a final commitment to the merger of B.E.A. and B.O.A.C. it will certainly open up the way. If one side of the enterprise were in the manufacture of some light industrial object and the other side were in the aviation business there would be no degree of correspondence between the two that would make sense of a merger. But since both Corporations exist to fly people and things around the world, a merger would seem to be the obvious and logical result of bringing the two closer together in this way.
But, again, I note that my right hon. Friend's mind is not firmly made up on this point, and I would say that if experience suggests that it is not desirable to proceed as far as merger, he might consider the possibility that it would no longer be necessary to perpetuate the Airways Board after it had performed the necessary functions in the fringe areas where it can certainly do a useful service.
So far as concerns B.E.A. and B.O.A.C. board appointments, the House will understand that this has not been easy to resolve until now. I am sure that if my right hon. Friend could have given us names this afternoon no one would have been more pleased than he to do so. I still hope that he can assure us that "very soon" means what it is usually understood to mean—and preferably this week.
It emerges from what the right hon. Member for Barnsley said that the previous Government's commitment to a second force was not only wrong in its timing but somewhat hypocritical in its intent. If the right hon. Gentleman relies on the wording of paragraph 41 of his own White Paper to release him from any intention ever to have transferred routes from the Corporations to a second force, and if he relies particularly on the statement:
The Government cannot accept that the formation of such an airline should be made conditional upon the transfer to it of a significant part of the Air Corporations' route networks …
why bother to put in the words "a significant"? In what way is the intention of the Government made more clear by putting in a word which can only raise doubt?
If he had said that there was no question of transferring any route we would have known what he meant, but because that is not what he said many people assumed, and I think that they rightly assumed, that at that time, when he held the Ministerial responsibility, the right hon. Gentleman had not closed his mind to the possibility of route transfers. It may be too much to press him to admit this, but I tell him quite frankly that he cannot eradicate the suspicion, because the words are there.
The hon. Member will have taken note—and I know that he follows civil aviation matters with great interest—that I made two statements in the House even after the publication of the White Paper, once during Question Time and once during the civil aviation debate—that we had no intention at all of allowing B.O.A.C. and B.E.A routes to go to a second force.
Again, it would have saved any question of suspicion ever arising, and remaining, if in the White Paper—which presumably was the subject of some careful preparation and in which transfer. Again, the point that has been words did not appear wholly by accident—this question of significance had never been raised at all. So I repeat that I cannot convince myself that the Minister never at any time intended any such thing.
It is important, and I believe that the right hon. Gentleman knows it, that if there is to be a second force it must have a secure base. He should have known—because he took a close interest in these matters, although not on a day-to-day basis; he did not concern himself continually with them—that security, in aviation, is as essential to operators as it is to their employees, and I was sorry to note that he did not acknowledge this in that somewhat intemperate speech, the only redeeming feature of which was that even he failed to keep a straight face in some of the most purple passages.
Therefore, when my right hon. Friend tells us that he accepts the need to minimise the impact of any transfers I hear him with great pleasure, and when he says, and I accept that this is so, that he does not envisage further transfers I hear that with pleasure, too, because what appears to me to be essential is that the morale of the men who work in what is the present public sector and the present private sector should be buoyed up by the knowledge that their jobs are in no sense at risk. I do not believe that this present Measure will put anybody's job at risk.
I might remind the hon. Gentleman, who daily gets more embarnacled and who is, I think, the hon. Member for Nuneaton (Mr. Leslie Huckfield) that Mr. Adam Thomson himself has clearly stated that there is no question of any redundancies or loss of jobs. If there are staff around the world who might as a result of route transfer find that they were no longer working for B.O.A.C. but in a position to take jobs with the second force corporation, I doubt very much whether they would in any way suffer in the process of stressed by Mr. Adam Thomson, speaking as a potential employer, is that he is working on the basis of comparability with the Corporations, and that there is no question here of anyone being left without a job or of anyone doing the same job for less money, and this has been generally accepted by those who have been engaged on the union side.
I know that the hon. Member is an opponent of the Bill, and I know that he is one of those who braved the weather in Trafalgar Square for the protest meeting to which my hon. Friend the Member for Epping referred. I have had from my constituents cards reading:
We urge you to oppose any handing over of Public Airline Routes, Business and Revenue, or Privileged Treatment to private Operators.
I have had 16 of those cards, and perhaps one from the hon. Gentleman, who is not one of my constituents so I need take no notice of it.
I took the pains to write back to them asking them to explain the grounds for their objection, because it is not clear from the card. I got only four replies, which suggests that this form of protest is not particularly heart-felt: but so far as it is useful at all, I was able to find three grounds of opposition to the proposal. The first and I would say the most important is purely personal. The constituent in question writes:
… any handing over to private companies can only have an adverse effect on my future.
That is from a man who is concerned about his job—
Will not the hon. Gentleman agree that it is quite conceivable that we shall have two aircraft running to the same airport, such as an airport in West Africa, as has been quoted, but that the total trade or revenue will not be increased, and that there is therefore bound to be a running down in costs and some redundancy? It might not necessarily mean a lot of unemployment, but there could be some loss of jobs.
No, I do not agree.
The second point of objection—a practical one and a more attractive one, perhaps, in some ways—is phrased in this way by a constituent:
… it must be bad business to take away profitable parts of B.O.A.C.'s routes (thereby jeopardising their profits and future planning etc.) and giving them to a private airline that will obviously demand more and more routes until it eventually folds up anyway leaving Britain with a run-down national airline instead of being a world leader as it is at present.
That is just wishful thinking on the part of the hon. Member for Nuneaton who is amongst those who are most anxious to see the venture fail. The defeatist, the pessimist, the person who believes that, although it might be a good idea, it will never work, will be proved wrong; because a purpose of this venture is to bring into British civil aviation, and to give greater opportunity in British aviation to, men of real calibre in management.
I say to hon. Members who have not been fortunate enough to meet Mr. Adam Thomson—[Interruption.] I find it so difficult not to provoke the tender sensitivities of the erudite on the Front Bench below the Gangway. I believe that the emergence of Mr. Adam Thomson as. a major influence in British aviation management will be greatly to the country's good, because he has the capabilities and the qualities which Britain will need if the second force is to become the success that I wish it to be but which the hon. Member for Nuneaton does not.
I am taking more time than I should.
I have other things to say, and I will go on if the hon. Gentleman will allow me. My third point is the objection with which we are mainly confronted now, which is wholly doctrinaire and which is represented by the revivalist ravings of the right hon. Member for Barnsley—" This will not work, because I do not want it to work. I will put a spell on it, too, if I can think of one strong enough". This is putting in the frighteners—"At all costs this must not work because, if it did work, it would be a terrible blow for Socialist dogma". Bad luck for Socialist dogma, because we have the chance, and we are going to take it, to make this venture work. Why?
The barrage of antipodean courtesy to which I am subjected will serve only to prolong my speech and keep out the pearls of wisdom to which the hon. Gentleman is so anxious to subject the House.
I want to make this point. Indeed, I intend to make it. We have it within our grasp, an opportunity to exploit the skills which the nation possesses, to exploit the assets which are ours sometimes by accident, and to do so in such a way that will not damage the success which we have built in the past. [Interruption.] Hon. Members opposite are very muddled about this.
Order. Running commentaries from sedentary positions do not help the debate. There are many hon. Members who hope to have an opportunity to express their point of view.
I am grateful to you, Mr. Deputy Speaker. I did not give way to the hon. Member for Gloucestershire, West (Mr. Loughlin), who seemed to be so comfortably sitting, because experience told me that it makes no difference from what position he intervenes.
I will come as swiftly as I may to my final point—[HON. MEMBERS: "Hear, hear."]—with the co-operation of the House. We talk, we have talked, and I dare say that other hon. Members will go on talking as if the whole purpose of the operation was either to advance private, and therefore dishonourable, interests—
The hon. Member for Feltham (Mr. Russell Kerr) has plumped for dishonesty. Whichever he plumped for, he would have been wrong. The point of the Bill is to advance the general interest of Britain as a whole. It may in the process involve some temporary foregoing by the Corporations of positions which they have built up, but this is not something which is being thrown away or squandered. In the course of their growth both Corporations went through a very difficult period when they required and were given substantial and expensive public protection.
As an act of policy we are now saying that we wish to call into existence another major international airline under the British flag. We must accept, because it is inescapable—history tells us this—that it will require protection whilst it grows—for no longer and no greater purpose than that.
However, we should be very foolish indeed to delude ourselves into believing that simply to say, "Let there be a second force" will suffice. If we wish there to be a second force, as the House does—as right hon. and hon. Members on the Opposition Front Bench claim they do—we must recognise that the second force must be protected until it is firmly established. I believe that it will be, and soon.
I hope that in three years' time we shall see a second force able to hold its own with any airline in the world. When that time comes, if I may anticipate the roar of protest from the Front Bench below the Gangway, I shall be happy for ordinary members of the public to be invited to place their savings in either the second force or the State Corporations, and I believe that we shall then find that we have moved into a situation where there will no longer be any need for the taxpayer to subsidise British aviation in any way.
As one who disagrees with every last syllable of the maiden speech of the hon. Member for Epping (Mr. Tebbit), I, too, offer him a somewhat muted congratulation on it. I do so for three reasons. First, I, like him, before coming to this House was engaged in a part of the aviation industry. Second, having listened to the hon. Gentleman's maiden speech it is obvious to me that certainly in the discussion of aviation matters there is a total end to consensus politics in the House. Third, I fear for the hon. Member for Woking (Mr. Onslow), because the hon. Member for Epping will obviously provide some severe competition for him in terms of rock-ribbed reaction on aviation politics.
I was especially interested in the remarks of the hon. Member for Banbury (Mr. Marten), who seemed to reflect a rather greater degree of honesty than did some of his right hon. Friends on the Government Front Bench. The House will recall that the hon. Gentleman asked: Why not go ahead and denationalise the lot? Considering what lies behind the Bill, I should very much like to hear from the Minister who winds up the debate a rebuttal of the idea underlying that suggestion, or, failing that, I hope that the Government will come clean and tell us that that is precisely their purpose—this last being what I suspect to be the truth.
I hope that the country will not judge from the relatively small number of hon. Members present that this is a debate of no consequence. Without doubt, we are concerned today with a great deal of money. What is being perpetrated under the Bill, taking into account the background against which these developments have taken place, is very close to larceny on the grand scale, and, as such, had the perpetrators of it not been Ministers of the Crown, they would most likely have ended up behind bars for a long time, certainly far longer than the six months which my hon. Friend the Member for Mid-Ulster (Miss Devlin) recently endured.
I come now to the vexed question of the routes which, should the Bill become law, B.O.A.C. will be forced at the point of a gun to hand over to the Government's blue-eyed boys, the newly-merged consortium of Caledonian-B.U.A. These routes, we are told, will be such as to produce about £6 million gross revenue per year, and they will be passed on a silver plate—or, perhaps, more accurately, a gold plate—to the new company totally without payment, in order, so to speak, "to see it on its way".
I have been looking into the question of what is involved here, and, in particular, the value of such an extremely generous hand-out to the Government's political pals, not so much in terms of revenue as in terms of the capital value of the stolen routes, regarding them, as they must be, as income-producing assets. These are rather technical matters on which even eminent chartered accountants offer widely differing views, as happened when eminent firms of chartered account ants had occasion recently to investigate the affairs of Pergamon and one of our colleagues lately in the House.
I took the opportunity to consult a friend of mine, a qualified accountant to know what in his opinion was the capital value of these revenue-producing assets, that is, the routes which are about to be stolen from B.O.A.C. I was rather surprised that his answer was: certainly not less than £15 million. I am not qualified in these matters. Suffice it to say that there is a great deal of money involved in these routes in terms of assets capable of producing sums of that kind.
When I come to the end of this passage. I have prepared careful notes, and I shall stick to them, if I am allowed to get on.
Certainly, it is far too much money for even the present Government to ask the British taxpayer to fork out.
I am obliged to the hon. Gentleman for his question. Obviously, I was leaving it in a fairly general form because, until we know precisely—[Laughter.]—all we have to go on is the agreed figure of £6 million revenue produced from the routes which are to be stolen.
If the routes concerned cost £7 million to run although the revenue was £6 million, would the hon. Gentleman's chartered accountant still think they were worth £15 million?
It was good, was not it? It is interesting that hon. Members opposite have been so quick to deliver on their promise to their friends and backers outside the House.
The question has already been touched on, and answered by the Minister, about whether these routes are to pass on a once-for-all basis. Having heard the Minister today, and recalling the reply of the Secretary of State for Trade and Industry on 9th November to a Question put by my hon Friend the Member for Brentford and Chiswick (Mr Barnes), I am totally dissatisfied with what the Minister said. I hope that we shall have some clarification. I am sure that the House is every bit as dissatisfied as I am with the present situation, when we have two senior Ministers in violent contradiction one with another. I believe that it was the Answer of the Secretary of State for Trade and Industry on 9th November which was the truth, but I should like that confirmed by the Government spokesman tonight.
This has created in the mind of many people—certainly among many of us on this side of the House—the suspicion that someone has been lying. We are left to choose between Government spokesmen as to who it is, either the President of the Board of Trade as he then was, and his Minister of State, on 3rd August and subsequently, or the Secretary of State for Trade and Industry. It is, in my opinion, intolerable that the House should be left in that kind of doubt.
The one thing certain about the powers which the Bill would bestow on the Government is that they would have no trouble at any future time in handing over B.O.A.C. and B.E.A. routes in addition to those presently being discussed. This is the aspect which worries me. One can almost predict when that sort of thing will happen. It will come as soon as the new airline runs into difficulties and learns the hard way that the world of international airline operation is a tough world, and certainly no place for a feather-bedded bunch of Johnnie-come-latelys who are heavily under-financed and almost wholly dependent on political favours from a Tammany Hall-style Government, who, happily, are unlikely to last for any great time. [HON. MEMBERS: "Hear, hear."]
I was pleased to hear my right hon. Friend the Member for Barnsley (Mr. Mason), the former President of the Board of Trade, state unequivocally that the next Labour Government, which, we pray, will come very soon, would be totally committed to the renationalisation of the stolen routes, without compensation to the robber barons.
My advice—these people have been referred to—to those in the City and elsewhere who are currently licking their lips at the prospect of a plate of thick cream handed to them by their ever-loyal friends in the House—I am looking especially at one or two hon. Members directly opposite now—would be to "cool it". I say that particularly—I am sorry that he is not here at the moment—to the right hon.
Member for Barnet (Mr. Maudling), the present Home Secretary, who until recently had close connections with the merchant banking firm of Kleinwort Benson, which, through its investment trusts, is one of the principal new backers of Caledonian-B.U.A., according, at least, to Flight magazine of 29th October. Such people might, perhaps, save themselves a lot of money if they take my advice and pull out of this nefarious enterprise before they get their fingers burnt on the return of a Labour Government.
As one who had the pleasure of interviewing Mr. Cyril Kleinwort when he came before the Select Committee which investigated the Bank of England recently, I should be greatly grieved to see him queuing up for his social security benefit as a result of heeding the Home Secretary's advice rather than mine.
I turn to another aspect of the Government's proposals which has had too little attention, namely, the repercussive effects and the damage that would be done to B.O.A.C.'s competitiveness if, for example, some of the Corporation's East or west African routes were handed over to Caledonian-B.U.A., as has been strongly rumoured and as has been suggested in the debate. It is well known that a considerable volume of traffic comes to B.O.A.C. because it can offer trans-Atlantic clients, especially Americans, a through service via London, Heathrow to various points in Africa and elsewhere. If these African routes were handed over to the new operator, there is little doubt that a sizeable part of that business would be lost completely to British aviation, public or private. Not only would there be reluctance on the part of prospective customers to commit themselves to a private, relatively untried operator, but as a matter of sheer convenience they would avoid if possible the rather messy changeover from Heathrow to Gatwick, where the Caledonian-B.U.A. terminal exists.
This is one of the answers to those who claim that with two sales outlets British operators are certain to increase the total number of passengers they carry. Such arguments are not only self-interested and therefore suspect, but they fail to take sufficient account of the infinite com- plexity of airline operations and the many pitfalls far Conservative Ministers who, from the goodness of their hearts, want only to reward their friends and political backers.
I have given way quite enough already.
I should like to touch briefly on an aspect of the wretched story which has been kept very largely from view, or at least from the general public's view. I refer to the fact that the growth sector in civil aviation, at least for the next few years, is almost certain to be the charter market, rather than scheduled services, a fact well supported by the story of Caledonian's growth in recent times. This being so, naturally B.O.A.C., in spite of the difficulties it encounters from being one of our scheduled service flag-carriers, is anxious to maintain its position in this part of the international market. But to do so will almost certainly require new and additional equipment, especially Boeing 727 and 737 aircraft, which are expensive items and which will probably require temporary financial assistance from whatever Government are then in power for their purchase.
In view of the stated determination of the present Government to give route priority to the new airline and generally to ensure the commercial success of their friends' new enterprise, it is hardly conceivable that that type of financial help will be forthcoming from them. So a further body blow will have been struck at B.O.A.C., no doubt to the delight of the Conservative Party and all who view successful publicly-owned enterprise as anathema.
The only people who may not be pleased are the taxpayers, who may have to pick up the bill for the salami-type destruction of a great national asset in the interests of a group of hard-faced and greedy men who, as has been said before, know the price of everything and the value of nothing.
I am coming to my final point, and I do not want to delay the House by yielding to inconsequential interruptions.
My final point has to do with the men and women employed in the industry, numbering many thousands, who help to make such a great success of the great British industry. As one who has not only had the privilege of representing a great number of them in Parliament but who is also an executive member of one of the principal airline unions, I warn the Government that they are building a heap of red-hot coals around their heads if they go ahead with this filching of hard-earned public assets in the interests of their political friends and backers.
Already this year we have seen the sort of stuff these people are made of. Last February about 14,000 of them attended a demonstration rally in Brent-ford football stadium to protest over the G.A.S. issue, which in their opinion, as in mine, represented a gross imposition on them by the present management of the British Airports Authority. Whether or not hon. Members share the view of the workers involved in that issue, who are largely the same people as are involved in this argument, I can assure the House that the demonstration on that day last February will pale into insignificance by comparison with the struggle which lies ahead of the Government on the issue of this bastard child conceived in sin, the second-force airline. Knowing them as I do, I must tell the Government that from the highest to the lowest the workers in both B.E.A. and B.O.A.C. are determined to resist these proposals to the limit. Not only do they see these class-conscious proposals as a threat to their livelihood; their very British sense of fair play has been outraged [Interruption.]
On a point of order, Mr. Deputy Speaker. A few minutes ago you quite rightly rebuked me for making sedentary observations on the speech of the hon. Member for Woking (Mr. Onslow), who is now giggling. It would be invidious if the strictures were restricted to one side of the House, so may I ask you to exercise the same degree of control over hon. Members opposite as on hon. Members on this side?
Further to that point of order. It is a valid point of order in that it deals with the procedures of the House. I am not seeking to criticise the Chair. I am seeking to have demonstrated that the same kind of strictures as were applied to me shall be applied to any other hon. Member, whether on the opposite side of the House or this. There is no criticism of the Chair, except that if the Chair applies strictures in relation to conduct it must apply the same strictures to other hon. Members, otherwise it is manifestly unfair. I submit that during the time my hon. Friend has been speaking there has been the same kind of conduct as that for which I received censure, and there has been not one word of stricture. I submit to you, Mr. Deputy Speaker, that if you apply strictures to me it is imperative that you do so to other hon. Members, on whichever side of the House.
Order. The Chair will certainly apply such strictures wnenever it hears what appears to be a continuous running commentary. The hon. Gentleman may be assured of that.
Perhaps I can set my hon. Friend's mind at rest. I have learned to live with the giggling of the hon. Members for Gillingham (Mr. Burden) and Woking. Far from finding it a distraction, I have come to look forward to the giggling which is regularly a background to most of the speeches I make here, particularly from those two hon. Members.
If hon. Members opposite doubt the truth of what I have just said—and I imagine that many will have forgotten it—I suggest that they go outside the Chamber and talk to some of my friends and constituents who are in the Lobby expressing a point of view to various hon. Members on this subject, but the only thing I would suggest is that if they do go there, it would be as well to hide their identity, because this is no time to be having an unscheduled by-election.
In the interests of industrial peace and of the future of what I, at any rate, unlike the giggling hon. Members opposite, regard as a great British industry, I desperately appeal to the Government to throw away just this once their ideological prejudice on this issue and thus make posible, for the general health of British aviation, a chance for it again to hold its head high as one of the world leaders, and certainly the leader in this country of an industry vital to our prosperity.
I will not comment to any great extent on what the hon. Member for Feltham (Mr. Russell Kerr) has said, except to point out the error of his remark that B.U.A. and Caledonian, in their merger, are the blue-eyed boys of the present Government. It is extraordinary how the Opposition have completely lost sight of the fact that they engineered the association. They seem conveniently to have lost sight of that fact, but nevertheless it was they and not the present Government who started the negotiations between B.U.A. and Caledonian.
The hon. Member talked about money bags and the barons on this side of the House. But a good number of barons were created by the Labour Government only recently, so the creation of barons does not apply to one side of the House only.
That is an interesting remark, but if there are robber barons on this side I would like to know who they are so that I can keep my hands in my pockets when they are around. I hope that he will tell us if he really knows some robber barons on this side.
I listened with considerable interest to the speech of my right hon. Friend and I welcome the fact that a single independent civil aviation authority is to be set up and that it will have the control over the allocation of routes and various other matters. I know that we shall have further clarification in the weeks ahead. I hope the authority will have flexibility, power and independence from Government intervention.
I had serious concern about the Air Transport Licensing Board when it was set up because I always felt that, in the background, for political or other con- siderations, the Minister responsible could overthrow its decisions which had been taken after due consideration and in the light of what it believed to be in the interest of British civil aviation without looking at the political aspects. What I feared would happen did happen.
As the House is aware, I was a director of British Eagle International. The board gave that company the right to fly the North Atlantic, albeit with very limited security and on a very limited sequence. There was, of course, tremendous pressure from B.O.A.C., and the Conservative Minister of the day threw out the board's decision. He withdrew the authority which it had given to British Eagle. From that day to this, in my view, the board has always had to be looking over its shoulder, no matter what decision it has made, in order to try to consider what might be the view of the Minister in the background. This has been no good at all for British civil aviation at any stage. I believe that it has caused a great deal of apprehension and many problems.
Some hon. Members opposite try to give the impression that for the independents there are different standards of safety from those operating for the Corporation. They know that this is not true and I wish that they would stop endeavouring to imply it, unless they have a specific case of where this has been so and where the inspection authority has fallen down on its job. If it has, that is not the fault of the operators but of the A.R.B.
The hon. Gentleman is going back a very long time and I would like to see this matter brought up to date, because safety regulations have been tightened. Let us deal as much as we can with the present situation. What I am complaining about that hon. Members opposite are now stating this as if it were a fact today. I regret I have not read that report in full, but my own experience of the facts is that the independents right across the board have been every bit as jealous of safety and that it has been enforced as strongly by them as by the Corporations in the past.
This issue of safety is a canard which should be nailed once and for all, and today is as good a time as any. If the record is examined, it will be found that there was a period when independent companies were so financially constrained that they were using cast off aircraft which related to a previous era when safety standards were lower, and clearly the safety standards related to the aircraft and not to the operators. There is no question that now that the independent operators are using aircraft like the BAC111 their record is as good as any, and if hon. Members opposite care to look outside this country they will find that some of the finest safety records are in North America, where the airlines do not have the benefit of being mucked about by their Governments.
Interventions with such a knowledgeable background are extremely valuable not only to me but to the House. I am sure that the hon. Member for Nuneaton (Mr. Huckfield), who is an expert on safety, has paid great regard to the experience of an airline pilot with a considerable number of flying hours. I am sure that the message will have got home to him very strongly and that he will have welcomed it, because I know that he is as receptive as he is argumentative on occasions.
Of course, B.O.A.C. and B.E.A. and the Labour Government, or certain members of the Labour Party, took every possible step they could on every possible occasion to stop any strengthening of the independent airlines. But the Edwards Committee realised quite frankly the difficulties of the independents and recognised that they could play a very important part in the future of British aviation. So it suggested, and came out most strongly for, a second force. Indeed the Edwards Committee's Report must have been very carefully considered by the Labour Government and it must have impressed them. Whatever Labour Members may say this afternoon, the Labour Government made it perfectly clear that they wanted to set up a second force airline. Indeed, they took steps to ensure that there would be a second force airline which would be privately owned and backed by private capital.
The demise of British Eagle was very sad. Many people remember it with nostalgia and affection, not only in this country, but in airports throughout the world. Messages were received from all over the world, and the people of Bermuda in particular made their feelings perfectly clear. British Eagle showed what the independents could do. B.O.A.C. would not operate a mid-Atlantic route, but British Eagle decided to do so, and within a short time it was a very profitable route. That is one indication of developments undertaken by an independent under great difficulty and with considerable problems.
Labour Members have suggested that B.U.A. has experience and expertise in scheduled flights. It also sponsored the VC10 which B.O.A.C. was not prepared to support. Today, the VC10 is one of the greatest aircraft in the world. If I am wrong in that, I hope that my hon. Friend the Member for Epping will intervene to say so. The VC10 is an aircraft in which people like to fly and which they much prefer to its competitors. It was sponsored by B.U.A., and that demonstrates one of the advantages of independence.
The hon. Gentleman shakes his head. No doubt when he speaks he will be able to give the complete lie to what I am saying by facts and figures and from his experience in the airline business, either in administraton or in flying. No doubt he will be able to give the lie to what I have said—I have some knowledge; not a lot and I have much to learn, but I am always prepared to learn—and to what was said by my hon. Friend the Member for Epping (Mr. Tebbit) who spent many years flying. No doubt the hon. Member, who has flair and colour but lacks experience will be able to give the complete lie to our more mundane remarks which are based on some experience.
Caledonian has been successfully built up on the exploitation of the charter market. Why do Labour Members now object to the setting up of a second force? I shall later refer to the speech of the right hon. Member for Barnsley (Mr. Mason) who was President of the Board of Trade in the Labour Government. Why do Labour Members now object so strongly to a proposal which before the election seemed to have virtue? Why has it suddenly become a prostitute? The lady has not changed her character, but at this stage it has become wicked and evil even to talk about it.
The real Socialists have made their position clear all along the line, and it is something we all understand: they are against any competition. They believe not only in preserving the State industry as it is, but extending it as far and as wide as they can. But that is not and has not been the position of right hon. Gentlemen opposite. If it had been, they would have started to nationalise many more industries during their six years of office. The real Socialists must be very disappointed men, and somewhere within the ranks of the Labour Party there must be a clash.
What has interested me has been the attitude that by setting up a second force, for which it is proposed to give away at the most not more than £6 million of the route income now obtained by B.O.A.C., the Government will somehow murder the giant B.O.A.C. and/or B.E.A. if it is interested in the routes concerned. How weak that giant must be! What feet of clay it must possess! Is this an airline of which we can be proud? Is this an airline able to stand up to the fiercest competition in the world, an airline which will collapse because £6 million of its route income is lost? Let us get it into perspective: it is no quite as bad as that. I give way to the right hon. Member for Greenwich (Mr. Marsh) who has not been here all the time.
I apologise for not being here all the time. I was here earlier to listen to both opening speeches.
The hon. Gentleman knows perfectly well that this was not the argument. The argument which has been accepted by most hon. Members on both sides of the House is that expropriation, whether of private or public assets, cannot be defended. These are public assets being expropriated.
I shall use the arguments which suit me. I shall put the arguments which I believe to be valid. I am too old a bird to be caught by that, as the right hon. Gentleman should know.
When the Labour Party was in power, right hon. Gentlemen opposite carried out the wishes of some of their socialistic friends to some extent and they did everything they could without completely destroying the independents. They slowly starved them to death. They took every step to make it impossible for them to continue. They withdrew the trooping which had been so important to the independents. They made it possible for the Corporations to go into the charter market. The then Chancellor of the Exchequer cut the holiday allowance to £50, which caused tremendous losses to the independents. These were some of the actions of the Labour Government which got the airlines into their present serious difficulties.
The independent company with which I was associated, the Eagle Company, introduced package holidays to this country and made it possible for thousands of people to enjoy holidays abroad more cheaply than ever before. Hon. Members opposite, including the hon. Member for Nuneaton, have spoken of equipment. The hon. Member for Nuneaton knows full well that any airline today must have a viable cash flow and income and assets that provide it with the ability to re-equip itself with aircraft which will enable it to compete with any other airlines.
If the hon. Gentleman had been as bright as I thought he was he would have realised that most of their income had been taken away when trooping was taken away, when charter flights were taken away and the £50 holiday allowance was introduced. That stopped many people going on holiday and cut back the routes.
The hon. Gentleman shakes his head, but he has not got much of a business head. He may know a lot about air safety, but he does not know a lot about business. It does not matter what the airline is, it must have a viable route system to exist.
I turn now to the speech made by the right hon. Member for Barnsley. It is extraordinary the way that the Leader of the Opposition is putting some of his right hon. Friends in the hot seat. The right hon. Lady the Member for Blackburn (Mrs. Castle), who declared in this House that it was vital for the country to have an Industrial Relations Act, is now saying that this was rubbish—
—for whom I have a great deal of affection—we have the ex-President of the Board of Trade. My affection for him is so great that I had forgotten about his change. Today the same right hon. Gentleman who came to this House and said that there must be no union between B.U.A. and B.O.A.C., who said that he would not allow it because there had to be a second force airline consisting of B.U.A. and Caledonian, today comes to the House and says that that was a nonsense. The seats of some hon. Gentlemen opposite might be a little more comfortable if they could be shuffled around a bit so that they do not have to answer today for the things they said yesterday.
The hon. Gentleman, along with only one or two of his hon. Friends, as is evidenced by the sparse attendance opposite, knows that the White Paper policy was quite clear, that we welcomed the emergence of a second force by amalgamation but not on the basis of route transfers from B.O.A.C. and B.E.A. That is clear and has been spelled out in speeches and questions from that Dispatch Box when I was President of the Board of Trade. The Government are using a dastardly technique to launch this second force, carving up B.O.A.C. and B.E.A., and that is where we part company.
What faith can this House or the country have in what is written in White Papers when the day after a White Paper there is a complete reversal or another White Paper which completely reverses the decision of the previous?
When the right hon. Gentleman was President of the Board of Trade he had a position of responsibility. Now he can be a real Socialist and pander to his friends and expose his complete irresponsibility. Quite seriously, the hon. Member for Nuneaton would have occupied the right hon. Member's position this afternoon much more comfortably. The right hon. Gentleman should have come to the House this afternoon draped in a white sheet, but instead he is here trying to bluff. There has been a lot of bravado and, I regret to say, not a little hypocrisy in view of the previous Government's attitude.
They say we are hiving off State assets, the assets of the Corporations. In the airline industry, as in many other industries, many people are beginning to wonder whether there is any virtue or value in their owning these industries. They are wondering whether it will bring them any benefit, whether they are saving money as a result and getting a better service. Let us not hide from ourselves the fact that there is a great deal of criticism and dissillusion.
As to the remarks about the trade unions, hon. Gentlemen opposite would do well not to try to stir up strife there. Would they have adopted the same attitude towards this operation if the policy that they had put forward had been approved? Of course not, and they know it. This is a purely political manoeuvre. I do not believe that the trade unionists will oppose the second force, I do not believe that they will obstruct it. They will see it go on. It is not necessary to give B.U.A.-Caledonian a wide spread of routes. What is necessary is that it should have routes on which there is a possibility of an earning capacity which would enable it to equip the airline. After all, it will represent Britain. It should have the latest aircraft. One of the first considerations, along with the routes, is the frequency that will be allowed upon those routes. If airlines are to make profits it is necessary not only that they should have the routes with a reasonable traffic density but that they should be able to keep their aircraft flying.
B.O.A.C. will resist this and we understand that. Just as the Labour Government was determined to create a second force airline, so too are we. But whereas it was the deliberate intention of the party opposite to create a second force airline purely and simply as a gesture and then do everything possible to drive it into the ground, we are determined to ensure that it will be a success. Today air power is as vital to our future as was maritime power in the past. The air is a considerable and constant growth area. It is essential to the future of this country, irrespective of what hon. Gentlemen opposite call political dogmatisms, from a pure commercial point of view that our airlines are able, as they do, to compete with the best in the world and to continue to carry as great a proportion of the world's traffic as possible.
I make one final point which is a great indictment of the right hon. Member for Barnsley. The right hon. Gentleman said that if we make this airline viable by giving it some routes then, when Labour is returned to Government, they will take them away. Earlier this evening the right hon. Gentleman talked about cutting the limbs off B.O.A.C. Mr. Clive Jenkins talked about stripping the flesh off B.O.A.C. The right hon. Gentleman has, in effect, said that although they were in favour of setting up a second force airline, if it is set up and now made viable they will ensure not only that it loses its limbs and that every bit of flesh is taken off it, but that, when they come to the skeleton, it will be crushed under a sledgehammer.
I do not believe that the party opposite will have that power. I believe that it will be in the wilderness for many years. If and when it does come to power I believe that there will be a viable second force airline of which this nation can be proud and they will not dare dismantle it.
The Minister for Trade was not very convincing this afternoon when he said that the Bill was being introduced not because the Government had doubts whether they had power to transfer these routes, but to forestall arguments taking place that might delay the transfer of the routes.
The Government cannot have it both ways. If they have power to transfer these routes the Bill is not necessary. Alternatively, if the Government fear that they will be held up by litigation, this is a good indication that the powers which they have at the moment are inadequate. I think that it is doubtful whether the Government have this power.
Section 3(5) of the Air Corporations Act, 1967, gives the Government power to
limit the powers of the corporation … as they think desirable in the public interest".
That Section was not intended to apply to air routes. The Government ought to admit that they do not have power at the moment, that they will not have power until this Bill becomes law, and that they are bringing it in to force through a transfer of routes against the wishes of B.O.A.C. and B.E.A.
It is not much of an advertisement for the picture of private industry, which hon. Gentleman opposite like to hold out and for which the Secretary of State for Trade and Industry got such cheers at the Conservative Party conference at Blackpool, that the only way to persuade private industry to have a go at a second force airline is to say, "Here is £6 million worth of your competitors' business to set you on your way".
What happens if it does not work out like that and this new airline runs into difficulties? When the deal was announced in August serious doubts were expressed whether it would be viable. The Economist at that time took the view that the Government had offered the independent airlines
the bare minimum to keep them alive, not enough to guarantee them a commercial future.
I was glad to hear the Minister for Trade this afternoon give an assurance that the Government would not contemplate making more orders under the Bill to transfer more routes. But the Bill gives the Secretary of State, at any point, power to make further orders to transfer other routes from B.O.A.C. or B.E.A. to the new second force airline. If this is done it will weaken B.O.A.C. and B.E.A. even more than it is weakening them at the moment and will make it
harder for them to compete on international routes. I hope that when the Under-Secretary of State winds up he will firm up that statement made by his right hon. Friend in his opening speech.
I believe that B.O.A.C. should have been allowed to take over B.U.A. Both the airlines wanted this at the beginning of the year. It was the natural course of events. It would have been good for British aviation and would have strengthened the airline's position in the world. It would also have been in the interests of people in the industry.
But this merger of B.O.A.C. and B.U.A. was prevented by the politicians. I find little difference between the attitude taken by the Government and that adopted by my own party when in Government The Labour Government favoured the setting up of an independent second force airline. This Government, of course, favours the setting up of a similar independent second force airline. The only difference between those attitudes is that the Labour Government did not accept that this should be done by a significant transfer of routes from B.O.A.C. Indeed, the White Paper, Cmnd. 4213, published in November, 1969 states:
The Government would also welcome the emergence of a 'second force' airline, formed by the amalgamation of two or more existing independent carriers, but cannot accept that the formation of such an airline should be made conditional upon the transfer to it of a significant part of the Air Corporation's route networks.
The hon. Gentleman is arguing against himself. If he believes that with the transfer of these routes this second force may or may not be viable, how could it be viable without them?
The hon. Gentleman is anticipating my argument. I think that my argument may appeal to him more than he may think at the moment if I may develop it.
A similar comment to that in the White Paper was made by my right hon. Friend the Member for Barnsley (Mr. Mason) in the House on 12th November, 1969, when he said:
But we do not accept that the creation of such an airline should be made conditional on the transfer of a significant part of the air corporation's routes."—[OFFICIAL REPORT, 12th November, 1969; Vol. 791, c. 411.]
My right hon. Friend has already quoted part of what he said in his speech in the debate on 18th March, but he did not quote the statement a little later in his speech when he said that he could not believe that the wholesale transfer of routes such as B.U.A. had sought made any kind of sense at all. The implication to me, and I think to some of my hon. Friends, of the use of the words "significant" and "wholesale", on which great emphasis was placed in the White Paper and in the statement and speech to which I have referred, is that it was clear that the Labour Government envisaged some kind of transfer of routes. This must surely follow from the great emphasis on and constant repetition of the words "significant" and "wholesale".
We have been trying to get out of the right hon. Member for Barnsley (Mr. Mason) exactly to what extent they intended to transfer routes. The right hon. Gentleman now denies that there was any intention to transfer any routes and says that they will take them all away if they get back.
If, as I believe, the Labour Government were contemplating a transfer of routes, the question then arises: would the transfer have been enough for the independent second force airline to be viable? In view of the doubts which the Economist had about the transfer of £6 million worth of business, surely there must have been even graver doubts about the viability of the transfer of a lesser amount of business?
The question then arises whether the Labour Government were serious at all about the proposal to set up an independent second force airline, and here I should like to refer to an article in the Sunday Times of 9th August, 1970. This was written shortly after the announcement by the Government, and it dealt with the whole issue in depth. The authors of the article at one point quote a comment which they had obtained from an ex-Minister in the former Labour Government. They do not say who it was, but they say that he said:
There was never any intention of helping to create a second force. We only put the idea in to knock it down.
Some people may say that that was a devilish clever bit of politics, but that is not what I would say. This is a style
of decision making which I detest, and which I believe my Government inclined to on more than one occasion.
It is a thoroughly sound principle in politics never to give the wrong reasons for anything that one is proposing to do. If someone fears that the real reasons are unconvincing, the wrong reasons will be even more unconvincing. If someone has doubts about doing something, he should not do it. But if he overcomes those doubts then he must have the courage of the decision that he has made, and he must state the real reasons for taking that decision.
My own feeling is that this hiving off of routes is most retrograde. I regret to say this, but I believe that we have our own Labour Government to thank almost as much for it as the present Conservative Government, because our Government took the initial steps that have culminated in the Bill being brought before the House today. I regard this as a retrograde step. It will weaken Britain's position in the forefront of world aviation. To achieve the highest standards of safety and efficiency it is necessary for airlines to be big. The State airlines have done magnificently in this respect. These things cannot be achieved on the cheap, and I believe that the Bill, by seeking to hive off these routes to this independent second force airline, is jeopardising so much that has been achieved in British aviation by the State airlines. For that reason I shall have no hesitation in voting against the Bill tonight.
I, too, must declare an interest, though a past one. I had the pleasure of serving with B.O.A.C. for 11 years during, if I may say so, the golden era of flying immediately after the war, and perhaps B.O.A.C.'s bias towards pioneering routes has made it naturally very protective.
Immediately after the war the Lancastrian and Halifax and flying boats, with virtually cannibalised R.A.F. equipment, were flying these routes, and naturally B.O.A.C. must feel quite possessive. The losses on the Princess flying boat were a great blow to B.O.A.C. The Brabazon was a second failure in which B.O.A.C. had placed a lot of faith. Following that there were the tragedies on the B.S.A.A. routes to South America. There was the loss of the Star Tiger, and several other planes, which even now people are saying was sabotage. It might have been at the time. Nevertheless, all that made B.O.A.C. very possessive, quite rightly so from its point of view, and perhaps quite rightly so from the point of view of hon. Gentlemen opposite.
The fact that we have to face is that we are now in a modern age, when routes are no longer being pioneered. Routes must be commercially viable. Only the other evening the Chairman of B.E.A. told a group of Members of Parliament that he agreed that any route of less than 500 miles must be a loss leader. I think that we were all horrified to hear that at the time. One or two people asked, "Who picks loss leaders?" and the Chairman had to say, according to his brief, that he had to pick these routes and maintain them regardless of the fact that they were not commercially viable.
The thought which occurred to some of my colleagues was, "Why confine this to B.O.A.C.? Why not see whether B.E.A. would like some of its loss leaders hived off?". It may be that B.E.A. will come forward in the future and hand over some of its routes to this second force airline. I hope that it will. If the second force airline can make a success of the South American routes, as was done in the past by Eagle and B.U.A., why should it not make a success of the short hauls on which B.E.A. has admitted it is losing money?
Perhaps I could make a suggestion to my right hon. and hon. Friends. Let us not all the time think of routes of an international flavour for Caledonian-B.U.A. Let us remember that some of the most profitable routes that were built up in the past were achieved through B.O.A.C.-subsidised companies. I can think of many of them. I have in mind Aden Airways and Arab Airways, and no doubt hon. Members can think of many more. I suggest that it is routes such as those which a conglomerate like B.O.A.C. might want to have taken over by Caledonian-B.U.A., but there is this possessive nature of B.O.A.C. about pioneering routes and I can understand why the Corporation is reluctant to release them.
It is surprising to me how we can talk on this subject until ten o'clock, because this is a very simple issue. We are talking this evening about £6 million gross. The hon. Member for Feltham (Mr. Russell Kerr) said that he had got his accountants to find out the capital value of these routes and was told that they were worth £15 million. They are very good accountants, unless one is paying income tax. Whatever the value of these routes—and we do not know where they are—if there is a second force airline, and if we are looking to it as a national emblem, we must support it in any way that we can.
The hon. Member for Feltham has tried to create the impression that B.O.A.C. will stagger under this fatal blow to the heart, that it will barely recover from the hiving off of this gigantic portion of its empire. When one breaks down the figures one finds that it is a simple hiving off of £6 million worth of business, and B.O.A.C. has said that each year it can look forward to a 15 per cent. increase in its routes and revenues. I believe that within six months B.O.A.C. will have recovered from this "dastardly blow", as I think it was called earlier.
What I think is appalling—and I am sure that my hon. Friends agree with me about this—is that every time we try to do something to implement our policies we get a threat from the other side, "Watch out. If you do that, when we get back to office we will make you all suffer." That kind of attitude will bring instability to the money market. It will not support Caledonian-B.U.A. if there are threats of that kind.
If that is the idea, we must let it be known that we shall support Caledonian-B.U.A. as much as we can within our terms of office. Certainly I look forward to many years, as I am sure my right hon. Friends do.
Trooping contracts were mentioned. It so happens that, by a complete coincidence, I had lunch today with an ex-stewardess of Eagle Airlines and her husband. She mentioned that trooping contracts were the one thing that kept that airline prosperous in those days. I suggest that that was part of the former Government plan to reduce the indepen- dents to a very minor level; in fact, it was said earlier that not only was this a salami-type destruction of B.O.A.C.—whatever that means—but that Caledonia/B.U.A. would not be able to go to the money markets for the re-equipping of the airline that must follow. I particularly made that point to the Chairman of Caledonia/B.U.A. at the meeting that I mentioned earlier. He reassured me and said that if that airline can keep the routes that it has been offered and receives the co-operation of the Government it will not have to ask the Government for any further financing.
The hon. Member for Brentford and Chiswick (Mr. Barnes) made a slight mistake in that he read the wrong Section of the Act when he said that he could see no connection between it and the question of particulars of flights. The Act is the Civil Aviation (Licensing) Act 1960, and the relevant Section is Section 1(3), which reads:
The Minister may by regulations provide that paragraph (b) of the last foregoing subsection shall not apply to flights of such descriptions as may be specified in the regulations, and may by instrument in writing exempt from the requirements … any other particular flight or series of flights.
That is the Section that deals with the A.L.T.B. requirements.
The hon. Member for Brentford and Chiswick also said that B.U.A. was most anxious to join B.O.A.C., and that B.O.A.C. was most anxious to have B.U.A. under its wing. Let us remember the stern facts of the situation. B.U.A. was facing a severe crisis. B.O.A.C., with its part-time board members, was only too anxious to get as much under its wing as possible. At that time B.U.A. had nowhere else to turn. Was it not natural that it should be anxious? I suggest that far from doing B.O.A.C. a service by allowing it to take over B.U.A. we should help B.O.A.C. to the degree of allowing a second force airline not only to take over the £6 million worth of routes but to look deeper into the problem and perhaps help B.O.A.C. with some of its subsidiary routes.
I shall comment on only one speech by an hon. Member opposite, whose name I shall not mention, which reminded me of a precept that I was given before I came to Parliament, namely, "If you can't strike oil in 15 minutes, stop boring."
As is my wont, I shall be brief. The Conservatives have always cast greedy eyes on nationalised industry. That is not a new thing. I cannot understand my hon. and right hon. Friends holding up their hands in horror at this move. It is part of our criminal law that if a man is accused of a crime evidence can be given of similar acts if they form part of a system—and this is a system. This is not the first time that the Conservatives have done this sort of thing. They did it in transport. They saw that road transport was the strong sister and the railways were the weak sister, so they hived off road transport to private enterprise and left the weak sister to fend for herself. They did it with S. G. Brown of Watford—the famous manufacturer of gyroscopes. When it was nationalised it was making a profit every year. The Conservatives cast their greedy eyes on it and gave it to private enterprise in the late 1950s, against the remonstrations of the Labour Opposition.
No. I shall admit nothing of the kind. They were profitable under public enterprise, and the Conservatives cast their greedy eyes on them. They were warned that if they denationalised them and gave them to private enterprise serious consequences would ensue—and they did, because when S. G. Brown was given over to private enterprise it made loss after loss, until it disintegrated a few years ago. Unfortunately, the Labour Government did not have the guts to take it back into public ownership. I disagreed with them on that point. I said so on many occasions and in a speech in the House.
We now have the same kind of thing. Incidentally, it is curious that the Government do not know which way they are going. First, we hear a lot about a soft, sodden morass and lame ducks and are told that we must not help the lame ducks at all and that "industry must stand on its own two feet", but then, practically in the same breath, the Government inject millions of £s into Rolls-Royce and are now going to help Caledonia/B.U.A.
We cannot expect the Government to know which way they are going when they speak with a double voice. Somebody may write a book in the near future, with apologies to Robert Louis Stevenson, about, "The Strange Government of Dr. Edward and Mr. Heath." We cannot expect the Government to be consistent but we can expect them to be honest. My hon. Friend the Member for Brent-ford and Chiswick (Mr. Barnes) cast doubts upon the late Labour Government. Be that as it may, we are not judging this Government by the actions of a former Labour Government; we are judging them on their actions today. In my submission, they are far from honest.
Under our law, if a servant takes the property of his master and appropriates it to his own use or to the use of another person for his own purposes he is guilty of the offence called embezzlement and may be sent to prison for a long stretch. Here the public servant is taking the property of his master—the public—and misappropriating it to his own use, or the use of private enterprise. If such a thing is done on a small scale the offender may be put in prison, but this is being done on a large scale and the Government can therefore get away with it. It is nothing less than public embezzlement on a large scale and the Government should be ashamed of their dastardly action, which should arouse the contempt of every decent thinking member of society.
It ill becomes any member of a party that presided over the most fantastic embezzlement of money through inflation to talk about embezzlement in terms of transferring from one person to another traffic routes that had no fixed asset value and have never been purchased or sold before.
First, we are not judging the actions of past Labour Government. We are judging the actions of the present Conservative Government, who come before us with the Bill. Secondly, the resources of B.O.A.C. and B.E.A. were built up by public money, public taxation. They are public property and it is absolutely dishonest to appropriate them to the use of some other party.
The hon. Member for Watford (Mr. Raphael Tuck) will excuse me if I do not follow too closely the short but powerful arguments he has made. I should like to compliment the hon. Member for Brentford and Chiswick (Mr. Barnes), who I am sure will have earned the respect of hon. Members on all sides of the House, for what he saw to be the somewhat dubious actions of the previous Government in seeking to introduce a Bill for the second force airline.
We on this side can be honest in stating our reasons for wanting to introduce a second force airline. We believe in competition. It is understandable that the Government, who did not believe in competition, should be criticised by some of their back benchers for seeking to introduce competition into the airline industry. We believe in competition, enterprise, and fairness for all airlines in Britain, not just the nationalised airlines, in respect of applications for route licences.
The hon. Gentleman has said that he believes in competition. If one of these new airlines competes successfully and drives the other out, will he then resurrect a second airline to have fair competition?
I am not sure that the hon. Member for Kingston upon Hull, North was here when the hon. Member for Brentford and Chiswick made his remarks. The tone of his remarks, as a Labour Party back bencher, was that he found it hard to respect his Front Bench for introducing a Bill which they did not believe in. We on this side of the House have no difficulties in supporting our Government.
I shall not prolong this discussion. I agree with and respect the hon. Member for Brentford and Chiswick for what he said.
I have been speaking for about three minutes, with two minutes of interruptions. A new British civil airline is one of the most exciting prospects facing us. I wholeheartedly welcome the Bill. Apart from anything else, it represents the policy on which the Conservative Party went to the country. That is not a bad reason for supporting a Bill when it comes before the House so quickly.
Hon. Gentlemen opposite seem to delight in telling us that it is immoral to create an airline by taking away from the State a part of what they consider to be the State's assets, and yet they seem to consider it moral at any time to nationalise or take over any industry which they consider would be better run by nationalisation. We do not believe there is any morality or immorality in nationalisation. We put forward our policies which we believe to be right. The Opposition put forward their policies which they believe to be right. It is unfortunate for the Opposition that we happen to be in Government, but not so unfortunate for the people of this country.
I listened with great interest to the remarks of the hon. Member for Feltham (Mr. Russell Kerr) when he chastised what he called the robber barons of British industry in their connections with Caledonian/B.U.A. I am sorry that he did not give me an opportunity to question him about the worthy part being played in this great Caledonian/B.U.A. enterprise by my predecessor, the former Labour Member of Parliament for Bristol, North-East. It gives me great pleasure to know that he has accepted an invitation to join the board of Caledonian Airways. He will be a great asset to this enterprise, and I wish him every success in his new activity.
The hon. Member for Feltham told us at great length of the attitude of the trade unions towards this merger. My experience of talking to trade unionists connected with the civil aviation industry is at various levels and it includes talking to stewards and stewardesses on airlines on which I have flown who also happen to be members of trade unions. It is not my impression that there is any clear indication of solid trade union opposition to the Bill. Many people working in the industry welcome this opportunity and the opportunity which it provides for alternative employment. That is one of the main advantages which the Bill will offer to those working in the industry.
I have been involved in the transport, travel and tourist industry for most of my working life. I recognise from the point of view of the customer the great advantages he will have from the choice of yet another British airline to carry him round the world.
Some weeks ago it was suggested—the criticisms have now been muted—that this new airline had in some way a non-British heritage. I am glad to say that in reply to a Written Question I received the Answer that 57 per cent. of the new airline's operational fleet would be British, as opposed to 50 per cent of B.O.A.C's. present operational fleet.
On the question of routes, hon. and right hon. Gentlemen opposite have seemed to insinuate that the routes which were being transferred from B.O.A.C. and B.E.A. to the new airline were somehow sacred and that they somehow belonged to those airlines. Those routes do not belong to the airlines but to the nation. Just because for the last 20 years no other airline has succeeded in having its full claims for new routes satisfied, whereas the State Corporations have always succeeded in having their claims for new routes satisfied, and because the tradition has grown up that the nationalised carriers own all the routes, this does not mean that those routes belong to the nationalised carriers.
I should like to deal with the point about the pioneering spirit of B.O.A.C. We have seen how well that worked on the South American routes. They have not been pioneering. They have been taking advantage of a monopoly situation. The Bristol Bus Company, which has a monopoly when it puts buses on a new route on a housing estate, does not claim to be pioneering but simply taking advantage of its monopoly situation.
The hon. Member for Gillingham (Mr. Burden) spoke about the successes of British Eagle, about their difficulties and final dissolution due to inability to obtain routes. As a former director of Eagle, he was too modest to make the point, but perhaps I might illustrate it. When Eagle had its route to Liverpool, it was the first airline to put on jets, while B.E.A. running to Manchester was still operating Vanguards. In addition, Eagle was the only airline to offer a refreshment service on the route. Had the company been able to achieve the route realisation that it requested to enable it to have a firm base for its commercial operations, there is no doubt that the higher standards that it pioneered would have set an example very soon afterwards to the nationalised carrier, which with its inferior service, would have been unable to compete for business.
Civil aviation and the travel and tourist industry represent one of our major growth industries. The introduction of a third British civil airline will help our competitive position, the spreading of the British flag round the world, and increase the revenue that we receive from tourism. It is with the greatest pleasure that I support the Bill.
Like my hon. Friend the Member for Brentford and Chiswick (Mr. Barnes), I have never accepted the concept of a second force airline. I could not accept the Edwards Committee's recommendations about a mixed economy in civil aviation and certainly I do not accept that we have a need for or should deliberately go out to create a second force.
Until the statement made by my right hon. Friend the Member for Barnsley (Mr. Mason), there appeared to be very little difference between the two Front Benches. I am glad to see that the hon. Member for Woking (Mr. Onslow) has returned to the Chamber. I hope that he will not giggle too much. As he pointed out, most of the difference appears to reside in paragraph 41 of the Edwards Report.
The official position on this side of the House has always been that we would rely upon the Civil Aviation Authority to make route transfers, whereas in the Bill we are giving power to the Government to make them. What it comes down to is that the difference between the basic positions of the two Front Benches is that the solution proposed by the Conservative Party is likely to make it happen more quickly.
As for the political differences between the two parties, I am sorry that the Conservative Party, in the past and now, believes in a second force. I do not accept the need for a second flag carrier and for an airline in competition with B.O.A.C. and B.E.A., and that is why I do not accept the need for this Bill.
One or two hon. Members opposite have conveniently neglected the fact that we are discussing our most successful nationalised industry. We are discussing a State-owned undertaking which overall made a gross profit of £31 million last year. We are discussing a State-owned airline which made a higher rate of return on the capital employed than any other international scheduled carrier. Apart from that, we are discussing the world's biggest international scheduled carrier.
Bearing in mind some of the scruples, aspersions and doubts which hon. Gentlemen opposite cast on nationalised and State-owned enterprise, this side of the House can hold up B.O.A.C. to them as a very good example of what a State-owned enterprise can offer, provided that it is left alone to do its job and is not messed about as it will be by this Bill. If the Bill goes through all its stages, it will contain all the potential necessary to create under our eyes a second British Eagle. We have had one British Eagle fiasco, and we could have another.
It is curious to hear the Secretary of State for Trade and Industry talking about lame ducks and then, a couple of weeks later, proposing a route transfer of £6 million in public money to a new airline operator. Is he saying that Caledonian-B.U.A. is part of his "sopsodden morass of subsidised incompetence"? Is he saying that we have to give out money to private airlines because, just like Rolls-Royce, this private airline is different? Right hon. and hon. Gentlemen opposite have changed their tune a bit since 18th June. I can remember that they were saying right up to the election that we did not need this kind of public money in private enterprise.
I am grateful to the hon. Gentleman. It will be only for a short time. Is the hon. Gentleman aware that he is misdirecting himself? We are discussing not £6 million worth of public money but £6 million of route revenue. There is a difference. I think that he might detect it.
I am grateful to the hon. Gentleman for making his deliberate mistake. He realises of course that this is £6 million of route revenue which the public taxpayer and B.O.A.C. will not get in future.
I am sorry, but it is revenue lost to a State-owned undertaking.
With all the talk recently about not giving away public money, this is a complete turn-round for a Government who have said that they will make private enterprise stand on its own two feet. It is the most complete turn-round that we have had from them since last night. I do not know whether the Government intend Caledonian-B.U.A. to start business as a lame duck, but certainly it would fit in with the kind of description that they have been applying to certain of our subsidised private industries.
My fear arises not from the provisions in the Bill. It is a weak little Bill. It contains only a couple of Clauses and, frankly, it does not deserve all this attention in the House. I am worried about the thinking behind the Bill. The Bill makes possible a direction on the part of the Government telling B.O.A.C. exactly what to do. I cannot think of any other undertaking, State-owned or private, which has the same amount of directive as B.O.A.C. will receive under the Bill. Does Pan-Am get this kind of directive? Does President Nixon exercise that sort of control over TWA, Pan-Am or any of the American companies operating the trans-Pacific or Atlantic routes? The fact is that the Government are afraid that private enterprise will go to the wall. After all, they have before them the not-too-shining example of British Eagle.
In addition to the directives that the Government may give to B.O.A.C. under the Bill, the Minister for Trade has committed himself to saying that Caledonian-B.U.A. will get route priority. It is not only a matter of £6 million of routes. Irrespective of whether it is a once-for-all operation, we are told that, when the second force goes before the Air Transport Licensing Board or its descendant the Civil Aviation Authority, it will get route priority.
Then we have an even more serious situation developing, and I was glad to hear my hon. Friend the Member for Feltham (Mr. Russell Kerr) refer to it. In addition to the Bill's provisions and in addition to the route priority, Adam Thomson has already declared that the second force will have 60 per cent. of its capacity on charter. We all know that the growth sector is in chartering. If B.O.A.C. wants to extend its chartering activities, many of its planes are VC 10's, which are not very good charter aircraft. The VC 10 has not enough seats. If B.E.A. Airtours wants to extend its charter or I.T. operations, it will have to buy new aircraft—737's or 727's—because its Comets are wearing out.
In other words, we have the possibility that the second force will be already well embedded in the industry's growth sector and, when B.O.A.C. and B.E.A. come before this House for borrowing powers in order that they may buy new aircraft and get into this sector themselves, assuming present rumours are anything to go by, they will be restricted. So we can have, apart from the provisions of the Bill, because of the general presumption behind the Conservative Party's thinking, a situation in the end in which the two Corporations will be left in the static sectors of the market, and the second force, because of its basic charter commitment, in all the growth sectors. That is the thinking behind the Bill and the long-term threat that I see facing B.O.A.C.
I say that the main topic in civil aviation in the 1970s is not ownership of the 'planes but what kind of flights they operate. It is the whole question of charter versus scheduled flights. That is the main issue to which the House should address itself—not whether it is British Eagle, B.U.A. or Caledonian but how we can resolve the question of how the scheduled lines will reconcile their policies and accounts with the increasing competition from the American supplementals and the British charters. My opinion is that we must have more charters and more group traffics and fewer scheduled flights—except that I want to see B.O.A.C. and B.E.A. maintaining their share of the market.
But the interesting thing is what will happen if B.U.A.-Caledonian tries to join I.A.T.A. If we are to have some of this second force on international schedule routes, as the Bill will allow, it will have to join I.A.T.A. What will I.A.T.A. say to the fact that, at the beginning of this year, the Civil Aeronautics Board in the United States, the basic regulating body for civil aviation in that country, was listing Caledonian as one of the major violators and one of the major participants on the West Coast of the United States against the C.A.B's regulations? We had a situation in which Caledonian was one of five charter carriers accused of over 70,000 violations of American aviation regulations. What is the International Air Transport Association going to say about that?
I hope that the Under-Secretary will say that Caledonian has been cleared of these accusations. I hope that he will say that the major component part of this new British second force is not that kind of airline at all. I hope that he will say that the C.A.B. was wrong. Unfortunately, if he does, the C.A.B. will not agree with him.
The other component part of this second force also, presumably, will have to assume some degree of international respectability. The number of charters cancelled or forced to cancel by the Board of Trade shows that some of the very latest examples have been charters to be flown by B.U.A. If we are to have this second force operating on international scheduled routes, I hope that it will be a little more respectable and will respect the rules and regulations more than it has in the past.
I have already given way to the hon. Member, and I would prefer to make my own speech.
The main basis for the Bill is that we are supposed to want more competition in international civil aviation. One only has to look at the experience which is now confronting every major American domestic carrier, now facing gigantic losses, now seriously examining the possibility of route co-operation instead of competition and of mergers, because they know now that, under the policy of the Federal Aviation Administration and the Civil Aeronautics Board, competition in the United States has been proved to have failed, and failed miserably.
But at the same time, we, under the Bill, are deliberately encouraging more competition. It is still said by hon. Members opposite that competition will increase Britain's market share. I can only quote to hon. Members opposite what has happened on the London-Glasgow route since B.U.A. has been operating. Up until the time that B.E.A. was the sole "flag-carrier" on that route, traffic was growing by 12 per cent. per annum. Since 1966, when B.U.A. has been on the route as well, traffic growth has been stunted to a mere 5 per cent. per annum, and the fares increases have never been higher.
That is the effect of competition, and the kind of thing that this Bill will directly bring about. But it is still said that our two State-owned airlines do not face competition. I do not care how many European flights they fly, how many North American or international schedule flights they fly—they will find severe and intense competition, particularly on the North Atlantic. It is absurd for hon. Gentlemen opposite to suppose that B.E.A. and B.O.A.C. and their ancillaries are not subjected to competition, when every airline employee knows that, if they cannot perform particular peripheral services themselves efficiently, these go out to sub-contractors. That is the policy of the two Corporations—and to argue that there is not competition in the two Corporations is nonsense, because the actual practice of the Corporations proves that not to be so.
The hon. Member says that if the Corporations cannot carry out peripheral undertakings themselves, they hand them out. What else can they do if those services are necessary to the running of the airline?
I am not sure how much the hon. Gentleman has been listening. What I said was that if the two Corporations could not provide their particular peripheral services efficiently against outside competition, those services were handed out to outside competition—and the airline employees know it.
We are being told today that the Bill is necessary because B.O.A.C.'s market share is falling, because it is not performing well. Can we honestly say that B.O.A.C. is not performing well when its load factor is higher than pretty well any other airline on the North Atlantic, when last year its load factor on the North Atlantic was 60 per cent., compared with Pan-Am's and T.W.A.'s 53 per cent? Can we say that it is not proving to be efficient when, looking at this carrier in terms of aircraft utilisation, hours, load factors, revenue, yield and all the other important indicators. B.O.A.C. and B.E.A. are doing very well indeed?
But despite all this, we are still told that we need more competition. Where will it be? Let us imagine the second force carrier on the West African routes. How will the second force cope with the problems that B.O.A.C. has had with Nigerian and Ghana Airways? Let us imagine putting the second force on the East African routes. What will happen to all that goodwill which B.O.A.C. had to pay very handsomely to build up in East Africa? Let us imagine the second force in the Caribbean—again, apparently the hon. Member's favourite route. What will happen to the work that B.O.A.C. has done with the Early Bird fare system? Let us imagine the second force on the South-East Asian and Australian routes. How will it get past the Australian Government's very tight restrictions? Let us imagine that the second force goes on to the North Atlantic, which it has said that it does not want to do—
I have been interrupted a number of times. I listened reverendly to the hon. Member's speech and if I feel generous I will give him a moment later.
What happens if it goes on to the North Atlantic, where excess capacity is bringing overall load factors down to below 50 per cent.? Wherever one looks, under the provisions of the Bill for the second force carrier to go to replace B.O.A.C., one sees difficulties—for B.O.A.C. of course, but above all for British civil aviation. It does not matter where one looks: the Bill threatens the whole future of British civil aviation and the standards, status and reputation of this country in international civil aviation.
What will happen to the pioneering work which B.O.A.C. has done with it; Boadicea computer system? About £47 million of the taxpayers' money is in jeopardy because of the attitude being adopted by hon. Gentlemen opposite. B.O.A.C. has sold Boadicea's programmes abroad and a great deal of the money which was paid to build up experience in this form of computing is now threatened.
Have hon. Gentlemen opposite thought of the complexity of having one British carrier going into Gatwick and another into Heathrow? I suppose that Americans wishing to book a through service from, say, Kennedy to Lagos or Accra will have to fly on a resurrected Westward Airlines shuttle between Heathrow and Gatwick and then board a plane of the second force for the rest of the journey. This is absolute nonsense. We cannot have all the problems of a second flag carrier operating from a different airport. The scheme will not work by this means and airline experience has proved this to be so in America and throughout Europe.
Hon. Gentlemen opposite say that this second force will not be a second British Eagle. They tell us that there will be only one transfusion of money, that this will be a once-for-all operation and that no additional money will be required in the future. Do hon. Gentlemen opposite honestly believe that if, in a year or two, this private enterprise fledgling of theirs comes with the begging bowl, it will be sent to the wall? Of course it will not. I cannot imagine hon. Gentlemen opposite allowing that to happen. They do not like to hear the rattle of the begging bowl of private enterprise, though they seemed to change their tune yesterday. I am sure that they will have to do the same again in future.
I could comment at length about the Air Registration Board and the holding company, not to mention a lot of the other creations planned by hon. Gentlemen opposite. I will not delay the House, however, except to reiterate that I believe in B.O.A.C., as do scores of people throughout the world, and the loading figures of the last two or three years prove this.
I doubt it, considering the sentiments that some hon. Gentlemen opposite have expressed today. If a comparison is to be made between who is on the side of B.O.A.C. and who is not, it is clear that today's debate proves that hon. Gentlemen opposite are on the side of profits for their friends, while we are on the side of B.O.A.C.
Earlier my right hon. Friend declared that the Labour Party would once we become the Government again, renationalise the routes that are being handed over. I hope that he sticks to his word. Indeed, I hope that it becomes Labour policy to renationalise these routes. Wheter the routes are handed over under this Measure or awarded by the Civil Aviation Authority, I hope that when we are returned to power, which will not be long judging by current events we shall renationalise not only the routes but the whole second force as well. Only then will I be satisfied.
I conclude by suggesting a couple of slogans that we should bear in mind: "For some people there is only one airline, B.O.A.C. "and" B.O.A.C. has taken good care of us". Let us make sure we take good care of B.O.A.C.".
I trust that the hon. Member for Nuneaton (Mr. Leslie Huckfield) will forgive me if I do not comment on all the points he raised. But if he honestly believes that my hon. Friends to not admire B.O.A.C. and B.E.A., he knows nothing about either our policy or our views. From my remarks he will gather that I am a great supporter of both Corporations.
The hon. Gentleman is wrong to suggest that charter is where the money lies and not in scheduled flights. I understand that it is a mixture of the two that makes a truly viable airline. It seems, therefore, that if one believes in a second force airline, one must automatically believe in a mixture of charter and scheduled routes.
The hon. Member for Brentford and Chiswick (Mr. Barnes) made an extremely good speech and a particularly honest one. He made an accusation against his own Front Bench to which we have a right to expect a reply. He said that when in Government the Labour Party put forward a policy in which it did not believe and which was simply flown as a kite, to be knocked down on the first occasion. I hope that we will be told exactly what the Labour Party meant when they spoke of a second force and how they thought it could be viable without the transfer of some routes.
I agree with the hon. Member for Nuneaton that it is absolutely sterile to knock the Corporations, but it is also sterile to compare the Corporations with the second force or vice versa. The Corporations have done and are doing an extremely good job and one must, therefore, go right back to first base to see just what it is we are trying to do.
It is easy to work up a great deal of moral indignation as some hon. Gentlemen opposite have done about how we want to destroy the whole structure of civil aviation in this country. That is nonsense. The Government were elected democratically and have a right to change those laws which will affect their future policies. We have made no secret of our support for a second force. From this debate, judging from the remarks of hon. Gentlemen opposite, it is clear that we are a good deal more honest than they are. It was clear early on that we would need to transfer routes from the Corporations to a second force; that is, if the latter was to be viable, and obviously without those routes it could not be viable as was suggested in that mammoth document, the Edwards Report. If we accept those recommendations, then we are doing something which I would like to think hon. Gentlemen opposite did when they were in power but which I doubt whether they did; namely, consider that those recommendations were genuine and worthy of our consideration.
My hon. Friends believe in competition—in the interests of efficiency, profitability and consumer choice. I consider those to be the right principles by which any party should let their policies be shaped. We therefore also believe that all the institutions of this country deserve to be looked at again to ensure that they are being as competitive as possible; and if they are not, then we should see whether competition can be injected into them.
This being so, it does not seem unnatural that the airlines should have taken our interest. Clearly, one has a right to ask whether the State Corporations, B.O.A.C. and B.E.A., are as profitable and efficient as they should be This is the task of any Government because those Corporations are the possession of the people, as taxpayers, and we, as the custodians of them, have a right to act as watchdogs for them.
One can make out a strong case that the Corporations have not been required by Governments to be as profitable as they could be. The remarks of the Chairman of B.E.A., for example, have been quoted. When asked why B.E.A. ran certain routes which made a loss, he replied, "I decided that we should". Is that the sort of remit which any Government should give to a State Corporation which is run on taxpayers' money? I believe that the Corporations should be as profitable as possible, because the profit belongs to the taxpayer. The task of the Corporations is, therefore, to earn as much as possible for the taxpayers.
I will not give way.
If as a nation we want unprofitable routes to be covered, then the Government should say so and offer such subsidy as is necessary for those routes to be covered. Not to do that makes nonsense of the accounting of the Corporations, and confuses the whole issue.
One has also to appreciate that there is something about a State Corporation which is different from a private enterprise company. It is an attitude of mind. It is, I am afraid, an almost narcissistic approach to life which makes the Corporations very resentful of any criticism, and of any suggestion that they should be forced up against competition. Always, when anyone has asked to operate on one of their routes they have resisted, and will continue to resist with all the force at their disposal. It may be said that they are acting reasonably, but it seems that they will resist unduly as though it were somehow wrong to suggest that someone else could operate the route better.
Yet, when they have been forced up against competition, as on domestic routes, they have admitted—certainly to me—that competition has made them more efficient, that it has given the consumer greater choice and, I like to think, has made them more profitable. A reasonable argument can therefore be put forward that competition improves services, as this party has known throughout its existence and will continue to preach, because it is true.
The hon. Gentleman may now be making a very valid point, but the example I quoted of the B.E.A. London—Glasgow route proves everything he has said to be wrong, because since B.U.A. were introduced on that route—and I know all about hot meals, jet services, different booking-in facilities and the rest—the plain fact is that growth went down from 12 per cent. per annum to 5 per cent. per annum and fares went up faster than ever before. That is the effect of competition on that route.
The hon. Gentleman advances a very simplistic argument. He gives no reason other than it was private competition that somehow stunted the growth. He will no doubt explain that that is the same reason for the Manchester—Birmingham service going down, but he knows very well that it is the British Rail city-to-city service which has taken that traffic away. I am not prepared to accept such a simplistic argument.
If competition has been successful at home it is because we can put two operators on to the same service, but once we go overseas we are talking about something else. Here, in fact, and I am talking and thinking particularly of B.O.A.C. routes, one cannot get the same measure of competition. On the North American routes, for instance.
Whereas it is possible on those routes, where there can be dual designation, to have competition, on many other overseas routes we would get, not competition, but substitution, if we put on another carrier. This seems, therefore, to raise the question of how the second force fits in when operating in competition with B.O.A.C., and it seems to me that we have fair reason to ask what the Bill sets out to do.
First of all, we know that it sets out to take from the Corporations certain of their routes. The Bill does not operate the other way round. There is no suggestion that it could be used to take routes back from the second force, but I suggest that this will never be necessary. I do not dispute the need to transfer routes. It is the only way in which the second force can be made viable as a scheduled carrier and it is hypocritical to suggest some other solution, as the right hon. Member for Barnsley (Mr. Mason) tried to suggest. However, to go back to the Bill, in Section 3(5) of the Air Corporations Act, 1967, there is a reference to
… limiting the powers of the corporation to such extent as …"—
the Board of Trade:
think desirable in the public interest …".
It is in the public interest that this debate is taking place, so all our arguments must be advanced towards that object.
That being so, I was very interested when my hon. Friend the Member for Banbury (Mr. Marten) asked my right hon. Friend why, if we believed in the benefits of private enterprise, we did not denationalise the State Corporations. That question is worth asking, even though it seems to raise all sorts of other questions with which I cannot now deal. If we do not denationalise the State Corporations, and if we believe in private enterprise, we must support this second force. I have already expressed my own liking for the State Corporations and my desire that the House should give them maximum credit for the great work they have done in promoting civil aviation in this country. I fear that on this side we sometimes suffer from split personality when we talk of State Corporations; we cannot make up our minds whether we should sell them off completely, or put up with them and castigate them whenever the opportunity offers.
I think that the Corporations can be made profitable—
No, I shall not give way.
In this case we clearly believe that the State should continue to own B.O.A.C. and B.E.A. and accept that we should seek to set up this second force.
My right hon. Friend said that one of the reasons for our wanting to set up the second force was that it would be an additional source of airline management and innovation, several examples of which in terms of private airlines we have heard about tonight like package holidays and the extremely successful way in which Caledonian has built up its charter business. These examples show that private airlines have pioneered all sorts of ways of improving our share of the airline market.
But when all is said and done, why do we want a second force? It is not only because of innovation and airline management but because we want to see Britain getting a bigger share of the world airline market, and we believe, as Edwards believed before us, and as your party once claimed to believe—
I apologise, Mr. Deputy Speaker. I meant to say when the party opposite claimed to believe such a second force would help Britain to get a larger share of the airline market.
One might ask whether this is the right moment to be setting up a second force. It is true that many of the world airlines are suffering from over-capacity, and it is also true that many of them are not making profits, so we must again give all credit to B.O.A.C. and B.E.A. for the fact that they are profitable. But so much of this debate has turned on an imponderable and it is what routes we are suggesting should be taken from the Corporations in order to make the second force viable.
We know that the Corporations are being asked to give up between 22½ per cent. and 3 per cent. of their annual revenue, which has been estimated to be worth £6 million. What we do not know is which routes are in question; how the transferring of those routes from the Corporations will upset the operations of the Corporations, and how profitable those routes are.
Clearly, the second force expects, and reasonably expects, profitable routes, because to give it anything else would he to doom it before it starts, and that is clearly not our intention. Equally, it is not our intention to take from the Corporations such profitable routes as to cause them to bear a greater burden than would be reasonable, or to upset the structure of their world network. Therefore, until we know which routes are envisaged, to some extent the debate must be limited and can only take place on the simple piece of green paper which we have been given and on which our pledges are based.
There is also the doubt in my mind that if some routes in certain parts of the world are transferred there will be an absence of through flying. If a passenger boards a Caledonian/B.U.A. flight for part of the journey but then has to transfer, there can be no certainty that he will transfer to another British carrier. I should like to think that the route transfers will take this into account.
I raise this doubt because, as I said before—I am supporting the whole concept of the Bill that the second force is there to enhance Britain's share of the world's civil airline market. If it does not achieve that object, in a sense it does not achieve the purpose for which it is being established.
Finally, I welcome the assurance given by my right hon. Friend that this is a once and for all route transfer. It is important that the civil airlines of Britain are given a chance to settle down again and get used to the new structure. It is crucial that the Corporations and the second force know where they stand and can plan accordingly.
In those terms I ask the right hon. Member for Barnsley to think carefully about his statement this afternoon that, when and if his party is returned to power, it will take those routes away from the second force—an act of political dogmatism, with no benefit to Britain. If the Labour Party believes in a second force by the same token it must wish that force to be successful and must realise that if the force cannot see a future its whole ability to raise the capital it will require to be operational and of going in for aircraft procurement, which is crucial to itself and to our civil aircraft industry, will be jeopardised. It will mean that it is being asked to operate under a grossly unfair burden. Indeed, in that state of doubt the second force will be made a lame duck before it has even had a chance to spread its wings.
I am glad to see the Minister for Trade in his place. I am sorry that I missed the speech with which he introduced the Bill. I understand that he introduced the Bill in his usual genial manner and put an acceptable gloss on a very dubious piece of legislation.
Even the hon. Member for Woking (Mr. Onslow), to whom I listened with bated breath, said that he could not understand the Bill, that it was not very clear, but that he supported it. Then the hon. Gentleman proceeded to chastise my right hon. Friend the Member for Barnsley (Mr. Mason) and those of us on this side who oppose the Bill for being ideologically orientated. This is a dichotomy of approach which is very difficult to comprehend in any logical sense.
When I hear the sort of pleasantries and sophistries which some hon. Members opposite who are relative newcomers to the House and who are doing their best to make names for themselves inflict upon us in their early days here, I often wish that some senior Tory statesman would take them out, buy them a drink, give them a good talking to, and tell them what this place is all about.
I am a good democrat. As I listened to one hon. Member, who made a reasonable speech compared with some others that we have had to listen to, talking about ideology and moral indignation, I tended to get a little steamed up. I do not easily get steamed up, as the Minister for Trade knows.
This is primarily a moral question. We in this House, who are a mixed collection of all kinds of expertise and all fields of activity, sometimes address ourselves to the mechanical aspect of Bills and tend to avoid facing the moral imponderables of what we are doing. There is a great moral question involved in the Bill.
To anyone who charges me with being ideological, I openly confess that I am philosophically, by conviction and by long association with this party, a Socialist. I make no apology for that. I need not make an apology, as some of my older friends on the other side of the House know full well. When people tell me that they are in some way neutral animals who are not ideological, and when they have the effrontery to stand up in this ancient House and try to make a case in support of a Measure such as this, I am jolly glad that I have stood up so often and put the moral question to the House.
The antithesis of my point of view is the ideological point of view put by the hon. Member for Woking, to whom we have had to listen in deep pain and anguish. I am sorry that the hon. Gentleman is not here, because I do not like to have to say these things in his absence.
I am using the term figuratively. I thought that the hon. Gentleman had been to Eton. I have never been to Eton, but I understand what language is about. I am trying to convey in a simple manner what I feel about this as well as what I think. I feel that this is a piece of political brigandage.
I can remember the sort of Government that was inflicted on Britain immediately after the First World War. I was not a Member of the House in those days—I was too young to be a Member of the House then. However, I remember the Government we had—the Robert Horne collection of business men who, according to J. M. Keynes in one of his famous books, looked to him, when he looked down on them from the Gallery, like a lot of gentlemen who had done rather well out of the 1914–18 War.
Today we are getting a rather different type of politician. Today's politicians are more successful in concealing their real motivations than were politicians in those days. One famous Member of this House, who has long since gone to his last rest, and who sat on the Tory benches in those days, had the nerve to rise in his place and say, "Mr. Speaker, speaking on behalf of the Great Northern Railway, I believe so-and-so". Nobody commits that cardinal error nowadays. Present-day politicians do it more skilfully. They say that they are acting in the public interest and in the interest of the nation, when all the time they have personal business interests and they expect to profit in a financial sense from what is being done in the House. I do not think that that is unfair to anybody.
I have had quite a few years' experience of the House now. I have addressed the Chamber many times and experienced heckling and disagreement. Nevertheless, one puts a point of view in the best words that one can find. I speak sincerely and with deep conviction borne of experience and of reflecting on these problems. Nobody who comes to the House in 1970 can tell me that Britain's capital market, in the mixed economy in which we live, with partly nationalised industries and partly private enterprise, can find the necessary capital for great enterprises such as these.
I am not a bigoted ideological person in these matters. The facts of life are that for the great industries the capital market is incapable of producing the amount of capital required to build and sustain the great airlines, the great steel companies, the railways, and all the other great public services which are vital to the life of Britain.
Last week we had a celebrated debate on the plight in which the great firm of Rolls-Royce finds itself. Without heavy Government assistance, without public money on a very large scale—£89 million—Rolls-Royce is quite unable to carry on its commercial operations in the present-day world. We have had the example of Cammell-Laird, another great company which made a plea to the Government for assistance. We have had the example of other great shipbuilders on the Clyde which would have gone to the wall and thrown thousands of people out of work if the Government of the day had not come forward with help and public money.
In spite of all this, we have to sit here and listen respectfully to the stuff which is talked by hon. Members opposite. I am not given to barracking in the Chamber, though I am often tempted when I listen to the tripe which is spoken from those benches by quite inexperienced Members of Parliament.
I do not want to be offensive to anyone, but it passes my comprehension. Some of us have had to battle with real industrial problems, trying to raise the standard of life of the people under the old dispensation of crude capitalist economics under which so many suffered the various forms of penury and poverty which were a disgrace to a civilised nation. We have seen great change in the past 20 or 30 years. It has been done by planning. Some of it, I agree, was clumsy planning—not all was perfect—but, when one considers the morass handed down to us by previous generations, the morass of slums, of worn-out and inefficient industry incapable of providing the capital required in, for example, coal mining—
Order. The hon. Gentleman is straying a little wide of the Bill. I hesitate to interrupt him, but he is an old Parliamentarian and he knows that it is necessary to address oneself fairly closely to the business before the House.
I am always ready to bow to the Chair on occasions like this, Mr. Deputy Speaker. I know that one must keep to the point. But I am keeping to the point to the best of my ability, approaching this question in as broadminded a fashion as I can. If it had not been for public money, where would our great enterprises have been? Whether one is a nationaliser or a crude commercial capitalist tycoon—whatever one's associations may be with the business world and with life in general—one must realise that, if the State had not taken over the great basic industries of this country, they would have gone to the wall and could not have done the tasks necessary in a civilised community.
One of our greatest mistakes in the past, if I may say so in retrospect now—I thought so at the time—was to pay excessive compensation to the commercial interests which had run our industries down. I am a lifetime member of the Labour Party, and, though I have often disagreed with my party on all kinds of minor issues, on the major issue I am with it all the way. But I feel that one of our great mistakes was to pay too much for some of the industries on which the livelihood of thousands, or even millions, depended, industries which would have gone to the wall if we had not given compensation to the commercial interests which had run them down until they were not worth much. I believe that we paid far too much for the coal mines. We paid infinitely too much for the railways. Much the same applies to the steel industry, which had bled this country white and which handed over assets which were not really viable in return for large sums of public money.
We did it nevertheless in the public interest. I was hoping—
I am not sure that I will. I shall in a minute or two if the hon. Gentleman will allow me to complete a sentence or two more. I was hoping that some hon. Member opposite who thinks that it is a good thing to hive off some B.O.A.C. routes to private enterprise would explain in simple terms to a simple man from the Provinces—
Certainly. I hope that I shall not be barracked from my own benches. I was hoping to hear an explanation in commercial terms, because I believe in commercial probity, whether it be State enterprise or private enterprise. Integrity and probity are an essential element in any business transaction. How do hon. Members opposite defend this rotten Bill to us who have so often paid far too much in public money to compensate the capitalist owners of industries which have been run down? I am sorry to use such a strong term, but it is a rotten Bill. It is a corrupting Bill.
How will hon. Members opposite explain to the country the taking over, without compensation paid by the private operators, of assets and goodwill established and built up by public money in our nationalised airways? No one has faced that question yet.
If someone buys a brewery—I say "if" because breweries are big business nowadays, and this has become very much a topical issue—not only does he have to pay £X million for the plant and machinery which produces the beer but he has to pay almost as many millions in respect of the goodwill of all the licences subsisting in the properties which the brewery owns. Is there anything wrong in that?
I give way to the hon. Gentleman now.
I do not want to give an academic lecture. I am speaking off the cuff, as the hon. Gentleman knows, and with some conviction. It is in the public interest that people shall have trains to ride in, that they shall have enough food to eat, that they shall have a ready supply of steel for all the nation's major works, that they shall have aeroplanes to fly in, if they want to fly—that they shall have these things to do the job efficiently and without imposing an undue burden on the public purse.
Those are the terms in which I put it. It is a rough-and-ready definition, but there it is. Does the right hon. Gentleman the Member for Argyll (Mr. Noble) wish to intervene? If I say anything wrong, I shall be only too pleased to give way to him, especially as he is wearing such a delightful flower in his button hole.
I do not want to waste the time of the House, but this is an important question. Earlier in the debate, I sat listening demurely to a speech from one of my hon. Friends who put unanswerable arguments on this question of the goodwill subsisting in the nationalised industries. If it had not been for hundreds, or probably thousands, of millions of pounds of public money poured into the British aircraft industry, there would have been no British aircraft industry. The market is incapable of raising sufficient capital to finance these vast operations.
During the time the right hon. Gentleman himself has been a Member, both in opposition and in Government, his own party nationalised one of the great industries basic to our country's future economy. Some of the newer hon. Members opposite who have just come straight from the Primrose League or the local parties—[Interruption.] Yes, the hon. Member for Shrewsbury (Sir J. Langford-Holt) knows better; he is agreeing with me. Some of the newer Members come here forgetting that the Tories nationalised atomic energy, an industry basic to our future development, and one of the foundation stones of any future industrial expansion. It was done by the Tory Party, not by the Labour Party, yet junior members of the Tory Party keep singing their song about the evils of nationalisation. It makes me want to vomit, and I am not sick easily.
I have rambled a bit in this speech, but I am dealing with the ethics of the matter in my own way. The ethics of the Government's proposition do not bear examination. They are proposing to hand over to commercial operators, without compensation, assets which have been valued by a competent accountant as being worth about £15 million. That figure has been given. I am not an accountant, and I am willing to be corrected if the figure is wrong. It may, of course, be greater than that. But this proposal simply cannot be defended by any Government of whatever colour. As Labour Party men and Socialists, we on this side have always stood firmly in the forum of public opinion by the rule that, if we took over any business or any industry, we would compensate the owners on fair terms. We have always done it. This is a moral issue. I have always stood for fair compensation when the State has found it necessary to take over an industry. But there is no such acceptance of a similar moral code by hon.
Members who come here under the Tory banner. The Government are coolly proposing to hand over assets without any payment for them. In other words, they are handing over public money of an ascertainable amount to private enterprise, which can do what it likes with it. It could pass it over into the hands of foreign operators. Once the equity goes to a private airline we cannot guarantee that the play of the market will not make that private British airline a foreign airline in a very short space of time.
I have made a study of these affairs. I may be very amateurish at it, but I have had a great deal of experience of this sort of thing. The Government propose to take away two of the most profitable routes now operated successfully by B.O.A.C. not because B.O.A.C. has been inefficient or has fallen down on the job but because it has been too successful for the liking of people in private enterprise, who want to get their hands in the till. It is as simple as that.
In terms of political activity, it stinks. It cannot be defended within morality as I understand it. Even if it were justified on ideological grounds to set up a private airline, the least that hon. Gentlemen opposite can do is to name their pals with whom they have the closest links in the City. Many hon. Members opposite no doubt hope to profit by the pickings available once the good routes are handed over to their friends. I do not want to make individual charges, but hon. Members should stand up and declare their interest in these operations. Nobody has done it in my hearing.
The same sort of thing has happened on previous occasions. It happened when commercial television was established. We had all kinds of impassioned speeches on ideological grounds, and all kinds of people skilfully concealed their movements, but all the time they were asking around the City, "If we get this Bill through the House, what is in it for us?" The results began to reveal themselves to public examination very quickly.
I shall not give way, because I am trying to be brief.
I should like the right hon. Gentleman to tell the House whether he had any conversation with operators in South America about these routes, because it may be that that part of the globe is one of the areas that are looked upon as providing desirable pickings. We shall be very interested to know whether part of his mission to South America was concerned with that. We hope that he had a successful trip and that he obtained more trade for the British flag. I am all in favour of that.
I am glad to hear that, and that the right hon. Gentleman had a good trip. I am not suggesting that he has been wasting his time. I am all in favour of Ministers going abroad. My regret is that some of them come back too early.
I lose my thread if I have too many interruptions.
Many occasions have been brought to my notice when Ministers have gone abroad and returned early and made a nuisance of themselves. I would give some of them a one-way ticket, though not the right hon. Gentleman, whom I like very much. He is one of my favourite Tories. I hope that that remark does not do him any harm. The right hon. Gentleman means well. But Nietzsche, the great German philosopher, said that all men mean well; it is the motivations of what they do that matter. A mere expression of good intention does not mean that the man is doing the right thing.
I do not want to go on any longer, because other hon. Members may wish to speak. However, I must say that I listened with great respect to the very thoughtful and informed speech of my hon. Friend the Member for Hammersmith, North (Mr. Tomney). He is a considerable expert in these matters. I hesi- tate to enter into debate on these technical matters with people who know so much more about them. I have merely put the political question as I see it. My hon. Friend drew attention to a number of important things, and at the end of his speech made a well-sustained appeal to the Government to withdraw the Bill and think again.
As sure as night follows day, if hon. Members opposite, whose only concern is their own commercial interests in a matter like this, skim off the cream and leave B.O.A.C. hanging together as a bag of bones, the nation will have to foot the bill. The private operators will probably sell out their share of the operation to foreign operators and instead of having a British monopoly on certain routes we shall have so fragmented and scattered them that we shall no longer enjoy the high reputation that B.O.A.C. enjoys in the world. I have flown with a great many of the world's airlines, and I know that B.O.A.C. and its subsidiaries are looked upon with great respect in every part of the world. The Bill will tarnish that respect if it results in fragmentation of the kind it proposes.
I am sure that the hon. Member for Westhoughton (Mr. J. T. Price) will forgive me if I do not follow him up all the attractive little by-ways that he explored.
However, I should like to deal with his last point. He was somewhat carried away towards the end of his speech when he described a loss of about 2½ to 3 per cent. of the Corporations' routes as skimming off the cream and leaving it a bag of bones. If the poor old State Corporations depend on about 2½ to 3 per cent. for their entire profit, they must be in a sorry state.
I speak as a frequent user of the air Corporations. I fly with them almost once a week, and have done so for the past 10 or 12 years. Therefore, I speak with some knowledge of the operation of both B.E.A. and B.O.A.C.
Much of the debate turns on a vital point of principle on which there is a difference between the two sides of the House.
In suggesting an alternative to the air Corporations, I and many of my hon.
Friends, including my hon. Friend the Member for Walthamstow, East (Mr. Michael McNair-Wilson), whose arguments were very cogent and well-reasoned, are not thereby implying any criticism of them. I have flown both in the United Kingdom and abroad on their flights, and they are very fine flights. They stand up to the best in the world. However, in the past few years the Corporations, particularly B.O.A.C., have seen a fall in their share of some vital routes, including the North Atlantic route. The B.O.A.C. share in the route to Canada is down to between 20 and 25 per cent. This is not a satisfactory state of affairs either for the Corporations or for the country, because we are all shareholders in them.
I have listened carefully to the arguments put by the Chairmen of the Boards of B.O.A.C. and B.E.A. as to why the second force should not be called into being. Heavy emphasis has been laid on the fact that, if this 2½ to 3 per cent.—some £6 million worth out of £200 million in the case of B.O.A.C.'s annual income—is taken away, then it will not amount to an increase in Britain's share but will simply be a substitution of one carrier for another. I cannot accept that argument. When the air Corporations have been advancing their case for buying more aircraft, we have been told how rapidly the industry is growing. We are told that it is one of the growth industries of the generation. But if that is so, and if, after the temporary pause which not only Britain but other countries are experiencing, the growth continues, surely B.O.A.C., if it is as strong and viable as it says it is and as I believe it is, will soon make up the 2 or 3 per cent. which it is losing.
Hon. Members opposite have talked about compensation as though some of B.O.A.C.'s equipment is being taken away and given to the second force, but all that is being given to the second force is a small percentage of the total routes which have been covered by B.O.A.C. The hon. Member for Feltham (Mr. Russell Kerr) referred to an estimate which he said an accountant had made of the value of these routes. When I asked him what figure he was taking for profitability, he said he did not take any figure for it because he did not know which routes were to be taken from B.O.A.C. for the second force. Indeed, the hon. Member for Westhoughton said that one of the most profitable routes of B.O.A.C. was being taken away. He was being carried away a little by his own verbosity because no one knows what routes are to be granted to the second force.
It is nonsense, without knowing the profitability of a route, to advance any estimate as to its value. One cannot put a value on it. To a certain extent I accept the argument that perhaps some value should reasonably be put on it, but the medal has another side to it. If one is to place a value on a route to be taken away, one must also place a value on the charter flights in which B.O.A.C. and B.E.A. are engaging and some compensation should be paid if inroads are made into the independents' share of this work. But the true value, if there can be a valuation, is of course the market value, the value in a free market if the route were sold. It might be fair and equitable that some assessment should be made and some compensation paid. As a lawyer, I would reject any idea of confiscation in the procedure we are debating here.
I want to move now to my main point, which is the concept which has underlain most of the debate but which some hon. Members have only hinted at, while others have not been prepared to face up to it directly. The difference between us surely is the fundamental difference between those who believe in a free enterprise system as being the best and most efficient in the interests of the consumer and the nation, and those who believe in socialism, that is, State enterprise. The hon. Member for Westhoughton—I am sorry he is not here now—referred to coal, the railways, gas, electricity and so on, and he was asked what he meant by the job of the Government. I suggest that the functions of the Government are very clear and they definitely do not include running an airline or running an airline for profit.
The functions of the Government have been well laid down in the past. They consist of administering the country, of looking after such matters as those which the great Departments of State, the Foreign Office, the Defence Ministry and the Board of Trade look after, the police, the keeping of law and order, and so on. Those are the functions of Government. They cover the legislative functions—making the law and applying it—and the judicial function in so far as that is part of the functons of Government.
Yes. I will cover that point if the hon. Gentleman will allow me to do so in my own time and without getting carried beyond the rules of order.
The basic functions of Government therefore are administrative legislative and judicial. They include, of course, running enterprises where there is a monopoly. Hence the gas, electricity and water boards, which are ideally the function of Government because, if such functions were given into the hands of any one person, as he would be a monopoly he could charge any price he liked. It is right and proper, therefore, that such essential services as gas, electricity and water should be run by the Government.
But where there is an element of competition, and where there can be an element of competition, it is no part of the job of the Government to go into the market and run a business for a profit. As my hon. Friend the Member for Walthamstow, East pointed out, if B.E.A. runs a Highlands and Islands service, and if it does not charge an economic fare on the route because of its poor usage, and if the Government do not give it a subsidy, then it is charging a rate structure which does not maximise its profits as a Corporation. If it does maximise its profits and has a complete monopoly, then it is just being used as an indirect way of taxing the public.
If, on the other hand, the air Corporations operate inefficiently and have to be subsidised—and a lot of the losses have had to be written off—all our people, whether they fly or not, every man, woman and child, every pensioner and widow, have to pay part of what they would otherwise enjoy towards subsidising the air Corporations, which means subsidising them presumably for the flying public and perhaps indirectly for the aircraft manufacturers.
Is it the job of the Government to decide which of these two alternatives shall be used? Does State-run enterprise provide the best service? As I have said, I frequently use the air Corporation routes and I noticed, as other hon. Members have noticed, the very big improvement when British Eagle came on certain routes. I discussed this with B.E.A. and it admitted that its service had improved because of the competition from British Eagle, now B.U.A., on the Belfast route. I believe the same thing has happened on the Glasgow route. I believe that it takes the spur of competition to produce the best services.
This must be what we are talking about tonight. If we are not discussing efficiency, which is providing a regular, comfortable, reliable and punctual service for the public at the lowest seat-mile cost possible, what are we discussing? It takes the spur of competition to create the greatest efficiency, stemming from the fact that someone's very livelihood and the money invested by the public are at stake, so that they know that unless they provide the services properly and carefully they will lose not only their jobs but their savings.
The approach to a State monopoly has to be different. One has the "take it or leave it" attitude which we know so well, the idea that Big Brother knows best. They may be only minor pinpricks, but I have raised complaints on behalf of myself and constituents with the Corporations and, unfortunately, I have sometimes come across exactly that attitude, that inflexibility which one always gets with a body like a State enterprise. It becomes top heavy and loses its flexibility and its aggressiveness. I have referred to how our share of the Atlantic routes has fallen. This is because we could do with an aggressive operator on the international routes, and we could do with the spur of competition on routes within the country.
It is a matter of disappointment to me that my right hon. Friends have not gone the full hog. I hope that they will do so during their period in office. I took part in the debates in 1960 on the Civil Aviation Licensing Act. I remember complaining bitterly in Committee that it was not fair to the independent operators, that it gave the Minister the final say in an appeal, so that he was judge in his own cause. The Minister was responsible for a colossal public investment in the aircraft which the Corporations had ordered to fly the routes. The Corporations had objected to any of their routes being given by the board to the independents. Among the arguments they advanced was the fact that they were committed to buying new aircraft, an investment which would be jeopardised if the independents had a share.
This gave very little security to the independents. They were operating against vast Corporations which had the backing of the public purse. Even if the Licensing Board granted an independent a route after a careful study of its application, it was still possible for the Minister to cancel it for some reason, and that did not seem to me to incorporate the best principles of justice, because the Minister himself was an interested party.
I still feel, as I did then, that if one wants an efficient air service, one must have a service operated independently. I do not believe that we can have a mixture of State industry and private companies, for one is able to draw on the public purse for its capital in a way which is denied to the other. The total available to the one is much higher than for the other, and the rate of interest is often advantageous. If the State enterprise incurs substantial losses, it may have them written off, and in that way be directly subsidised. It may be given a favourable route pattern. In these ways, competition between the independents and the State Corporations is not fair.
In the long run we shall not have a proper pattern of aviation developing in the country with such a mixture. It is not the function of the Government to engage in air transport when there is no monopoly. I should like the Government to sell their shares in the Corporations. This may not be possible, because of the large amounts involved, in one fell swoop. However, the Corporations are now profitable bodies and well founded, and I see no objection to handing them over to private enterprise over a period so that they may be run competitively, keenly and efficiently in the interests of the flying public.
This would be the best solution to the problem of the Corporations in the interests of the nation. It would be best for the user, the flying public, for it would offer a competitive air service at an economic rate. The independent private companies would be operating and competing against one another and it would be the function of the Government to ensure that competition continued. If monopoly conditions arose, when one company swallowed the others and began to exploit the monopoly, there would be just cause for the Government to intervene. However, so long as services are operated by independent operators, the best interests of the flying public and the taxpayer would be served by denationalising the great Corporations.
This would lead to a growth in air traffic. I have seen this on a small scale on the Belfast route. When the independent operator, British Eagle, later B.U.A., took over the route, services were improved. The net result was that more people flew. This in turn increased the amount of business done by the companies.
When the second force obtains the overseas routes, the British share of the market will be increased and there may be an increase in the size of the market as a whole. The public has a choice of whether to go by sea or air, or, with overland routes, by train, car or air. The only way in which to ensure that the maximum number fly is to have the most efficient, prompt and best timekeeping services possible. Indirectly, that would assist the aircraft industry, because a strong and viable aviation industry would lead to orders for more aircraft. The chances are that British companies would be more likely to order British aircraft and indirectly that would help the aircraft manufacturing industry.
I therefore support the Bill. I should like my hon. Friend when winding up to discuss the future of the Corporations. I should like more competition, an enlarged, buoyant and flexible market, not only for the Corporations and the independents, but for the British aircraft industry.
I did not originally intend to take part in the debate. When I take part in debates I like to hear every speech. I have heard the speeches of both Front Benches and many from the back benches, but not, unfortunately, all, so that my speech might suffer a little as a result. I very much hope that the Bill will be defeated tonight because it is a particularly backward step. My constituency of Southall is not far from Heathrow Airport and many of my constituents work there, some for the independent airlines and some for B.E.A. and B.O.A.C.
In recent weeks I have been virtually smothered with letters from employees at the airport asking me to do all that I can to see that this Measure does not go through. I have not received a single letter applauding what the Government propose. I would have been content to remain silent and register my vote had it not been for the fact that there has been no powerful expression of the point of view I seek to put forward.
I want to criticise my Front Bench for its ready acceptance of most of the Edwards Report. As a result of the discussions that I have had with workers at the airport, I have yet to be convinced that we need to cling, at least continuously, to the concept of a second force. At the least if there is to be such a force, for the time being, it certainly should not be one subsidised as a result of taking the most profitable routes from the nationalised parts of the industry.
I cannot remember the exact years when B.O.A.C. and B.E.A. were set up but it was during the period of the postwar Labour Governments from 1945–51. I was not in the House then, but I do not recall that the Tories were disposed to do what they seek to do now. There were hints at nibbling away and weakening the Corporations. It was never suggested that they would conduct this frontal attack. The contributions from hon. Members opposite have been a mass of contradictions as they were yesterday in the Rolls-Royce debate. On the one hand they applauded the management of an enterprise and on the other hand criticised it. We have had nothing but applause for B.O.A.C. and B.E.A. as a nationalised enterprise.
It is not suggested that the Corporations are inefficient. Both are subject to fierce competition. International flying means that we have to comply with the international fare structure within which there is a great deal of competition. This calls for the efficient use of aircraft.
With B.E.A. there is competition from other forms of transport getting to and from Europe and in and around this country and to Northern Ireland. There is the choice of sea or air. I made a recent "mixed" trip to Germany and thoroughly enjoyed it. It was more leisurely by ship and train as well as aircraft. With business, speed is usually the criterion. Another form of competition is the railways. Part of the story of inland transport is the revival of rail travel, particularly for business men. This is because it is comfortable, sometimes even more comfortable than air. There will always be competition on inland transport. There are the roads. Hurtling about in a tin box on the motorway is not my kind of enjoyment but that is what I have had to do occasionally in the interests of speed and efficiency. But I am inclined to use other forms of transport.
Within the concept of modern transport there is ample room for competition. So I ask: why is this Measure being brought in? Why is the clock being turned back? In 1970 we should be considering how we can extend social enterprise, ownership by the nation, for the giant tasks which confront this old country in the changing world scene.
A Measure of this kind, added to the other Measures which we have had since the election of this Government—the trade union measure in store, the mini-budget proposals, and so on—will divide the nation. But Measures of this kind cannot be taken in isolation. They come out in sequence.
The suggestion has been made that our attitude stems from political dogma. It is easy to accuse political opponents of mouthing dogma. Dogma is a position from which one does not shift. That has never been my position. The true intellectual approach is to think and to act, but always to have a chink in the door for the reception of new ideas. We are not getting new ideas in the Bill. We are, as it were, getting old wine in new bottles. This is a barren proposal. I remain unconvinced. I believe that my constituents, who have smothered me with protests, are absolutely right.
With my hon. Friend the Member for Feltham (Mr. Russell Kerr), whose constituency abuts London Heathrow Airport—he may be regarded as the London Airport Member of Parliament; I know that it is not the only airport in the British Isles, but it is considerable—I went to see my right hon. Friend the Member for Caernarvon (Mr. Goronwy Roberts) on the problems involved, and we took with us a deputation of workers and trade union representatives who are tremendously concerned about this matter.
I was pleased to hear the Minister for Trade say that the wages and conditions of workers in the new second force will compare with those in B.O.A.C. and B.E.A. However, that remains to be seen. The workers in B.O.A.C. and B.E.A. will not take that statement on its face value. There may have been certain verbal assurances, but those workers know that the relatively good conditions which they have achieved are the result of their own efforts and organisation operating in an expanding industry. They will jealously guard the conditions which they have built up by hard struggle.
Whatever the result of our political views or considerations, the workers in this Tory Government-inspired second force—many of whom might in the new circumstances come from B.O.A.C. and B.E.A.—will carry over their "know-how" and experience, but they will not allow a deterioration in their standards and conditions, because they represent a powerfully organised unit of the trade union movement. They will not allow any element of the tail wagging the dog, which is the basic concept of the Measure before us. The Bill will take away the most profitable aspects of the activities of B.E.A. and B.O.A.C.
I hope that we shall get an explanation of the apparent contradiction between two points of view. Is this the final stroke? We are accustomed to hearing the word "stroke" being used in this Chamber. Is this to be a once-and-for-all stroke, or is this, as the workers fear, the thin end of the wedge, and will the process be continued until the whole of the nationalised aspect of civil aviation is dismantled? That may be in the mind of the Government. It is obviously in the minds of many backbenchers who have spoken tonight, but that will not come off. We are living, not in the 1920s, or in the 1930s, but at a time when the British trade union movement has never been more coherent, so large in numerical strength, and so united. I advise the Government not to try to turn back the clock and to adhere to the dogmatic idea that only private enterprise can succeed in the tasks facing this nation. If the Government persist in that idea, it will lead to the division that I have described.
There has been much reference to lame ducks, in particular by the Secretary of State for Trade and Industry. Having introduced this interesting phrase by verbal explanation, and by theoretical presentation, he then immediately proceeds to kick it in the teeth by subsequent action. B.E.A. and B.O.A.C. are far from being lame ducks, but they are sitting ducks for those who cling to the outworn and outmoded idea that this is the only way to get efficiency. I could not help thinking that this Measure might be described, not as something assisting a lame duck, nor necessarily as attacking a sitting duck, but as shooting down a flying duck, because no hon. Gentleman opposite has suggested that these Corporations are inefficient in meeting international and other forms of competition.
I would settle for the way in which the Government were proceeding to accept the idea of a second force airline for the time being, but I think it has been amply demonstrated that that is not what we require in the years ahead. This is a miserable Bill. I can understand the attitude of the workers on the job. I hope that these proposals will not lead to any deterioration in safety standards.
I think that it is legitimate for me to express these fears, because a few years ago there was a nasty crash at Southall, as a result of which some people living in council houses were killed. I am not suggesting that everyone operating private enterprise civil aircraft is in the same category. That was an exceptional case. It was a freighter aircraft, the crew of which were killed. It was shown that the plane had been flying for too long, that the crew were overtired, and that there was not sufficient inspection. As a result of that crash new rules were written into the safety code which is applicable to civil aircraft, and I shall jealously guard those rules as long as I am a Member of the House. From time to time I have tabled Questions to find out whether any changes have been proposed as a result of changes in the industry itself.
I want it to be clearly understood that in presenting this case I do not want to be unfair to anyone involved in civil aircraft who does his job efficiently and dutifully, whether on the nationalised side of the industry or in the private sector. I do not think that there is any justification for the division of this industry in the long run—certainly not by means of this Measure, and what it intends to do.
My hon. Friend the Member for Hammersmith (Mr. Tomney) made an excellent speech. He has much more knowledge of the industry and its economics than I have. He pointed out that this process must inevitably lead to a continuing worsening of the economic position of one sector if the other sector advances too far ahead. The one that is left behind is likely ultimately to collapse. If one fights shy of a frontal assault on B.E.A. and B.O.A.C. in terms of their dismantling—as most of the Government seem to want to do—a situation will inevitably arise in which the private appetite will be whetted, and weople will say, "The public sector does not pay. It must be inefficient". As in the case of publicly-owned bus services and railways, the Corporations are trying to run services that serve the nation although they do not necessarily serve the altar of profit.
I do not think that the Tories would be all that worried about such a development. Dogma or not, this is the political theory of hon. and right hon. Gentlemen opposite. They need get no big heads about it, because they did not receive a mandate from the nation for this Measure at the last election. If they study the voting figures at that election they will realise that they have no mandate to turn the clock back to old-fashioned and doctrinaire Toryism. What happened at the election was mainly because of the action of Labour voters. That situation will change.
If the Tory Government do not watch out they will throw up crises which may mean a new General Election on some of the outstanding issues of our time. That is when the catalogue of crime of the present Government will go too far and we shall have a return of a Labour Government. Everyone knows that. I hope that it will be a damned sight better Labour Government than the previous one.
I want to make only a brief intervention at this late hour. We have heard some interesting speeches, although there seems to have been a lot of hot air from the Labour benches. Perhaps it is something to do with the jet age.
The hon. Member for Southall (Mr. Bidwell) said that they intended to extend nationalisation when the Labour Government were returned to power. Was not that one reason why the Labour Government were thrown out? If it were not, what was the reason? It has been said that there will be no compensation for the assets involved in the routes which the new airline—the second force—is taking over. What about the assets of the municipal bus companies. What happened to them? They received no compensation when they were nationalised under the Transport Act. What about the routes of private enterprise buses that were taken over? There was no compensation in respect of them.
The hon. Member for Watford (Mr. Raphael Tuck) talked about the law of servant and master, with reference to embezzlement. I was interested to hear that he referred to our Government as the servants of the people. We know that when the Labour Party is in power, they are "the masters".
Many professional people who have a great interest in the aviation business have spoken in the debate. I am not a professional. My interest stems directly from my constituency, where we have the B.A.C. factory at Weybridge. As everyone in the House knows, we are extremely anxious about the BAC311 aircraft. I need say no more about that, because it was adequately covered yesterday.
Without the BAC311 we shall not have a viable airframe industry, and without that we shall not have a viable aircraft industry, and without that we shall not have a viable aviation industry. We shall not be able to afford the foreign currency to buy aircraft.
The airlines cannot operate in a vacuum. They have their own environment in which they operate, and that environment is becoming increasingly difficult. One has the difficulties of the routes and traffic to the airports, and the absurd situation in which one spends just as much time getting to the airport as one spends flying. There is the lack of airports and the troubles we are having now about the third London Airport. We have the problem of security at airports, for instance the Kennedy Airport in New York, where there have been 16 acts of sabotage since the B.O.A.C. terminal was erected. There are many problems which make it extremely difficult for airlines to operate these days. It is axiomatic that they should have all the help that they need.
In the Report of the Edwards Committee, which the Government set up, independent airlines were described as the ginger group of the aviation industry, and it was also said that they had set the pace. I am glad that the Committee said that. In recommending the routes for the second force, the Edwards Report said that the viability of the second force would require limited concessions of Corporation territory. As this Report was commissioned by the Government, presumably they had some interest in it. But the Government White Paper was then published, and the words here were that the Government "cannot accept" the "transfer of a significant part". But the part that is being transferred, 2½ to 3 per cent., one could hardly call significant.
One of the most significant remarks in the Edwards Report was this:
It is therefore our earnest hope that the Government, the industry and the public will accept the philosophy of a mixed economy in air transport.
This is the very thing which the Opposition, when in Government, did not accept. It seems that when they were in Government they accepted the Edwards Report on the theory of the second force but lacked the courage to provide the means to make it possible.
In the debate yesterday on launching aid for the engine industry and in the debate this evening it seems that the Opposition have been extremely hypocritical. In the case of Rolls-Royce, they have either been condemning their own action in the past, or, as in the case of the debate tonight, the action which they have failed to take.
I am sure the House will join me in warmly congratulating the hon. Member for Epping (Mr. Tebbit) on a most interesting maiden speech based, as it was, on direct experience of civil aviation. We look forward to listening to him on future occasions, especially on this very important subject.
Debates on civil aviation often engender contention, but in the past they have usually revealed a fair amount of consensus. However, there can be little or no consensus in this House or in our airlines about this Bill and the policy that it intends to promote. It is a Bill to gerrymander the air at the expense of the public interest and for the advantage of private gain.
It would be very difficult to exaggerate the importance of air transport to our economy. In itself and as part of civil aviation as a whole it is a great and growing industry, and its potential is immense. But so are the difficulties facing it and the competitive challenges to which it must increasingly address itself.
The lesson of experience is that its development is best promoted by strong State-owned corporations, and that is no mere point of doctrine. It is the conclusion reached by most other countries, and it has been abundantly proved by all the tests of efficiency, safety, viability and technical and managerial innovation that B.O.A.C. and B.E.A. have served the country well, earning not only profits for the community but, as the Edwards Report testified, the high esteem of the counterparts of these two famous corporations throughout the world. Currently, B.O.A.C. has no indebtedness to the Government, whose current financial interest is confined to the public dividend capital.
Those who support the Government on this Bill have attempted to show, not without some support from hon. Members behind me, that there is no difference between the proposals in the White Paper issued by my right hon. Friend the Member for Barnsley (Mr. Mason) and this Bill. However, there is a world of difference. My right hon. Friend quoted in extenso the relevant passages in the White Paper to show that we wished to see a merger in the independent sector, badly needed on restructuring principles if not on any other basis, but not at the cost of the transfer of any significant part of the Corporations' route networks and certainly not with routes being transferred as a precondition of merger. There is a deep divide between that statement of policy and what the Bill will make possible.
I would add this quotation from the end of paragraph 41 of the White Paper which is conclusive in defining the fundamental differences between our approach and that of the Party opposite.
These are matters to be determined by the Authority"—
the Civil Aviation Authority—
in the light of detailed study and argument and the Government"—
the then Government—
do not intend to impose a preconceived reallocation of routes on any airline which has borne the cost of developing the routes and is serving them well.
That is conclusive.
It is a little early to be interrupted, if the hon. Gentleman will forgive me. I have promised to sit down promptly, and I delayed the start of my speech to enable one of his hon. Friends to intervene.
When the White Paper was produced by my right hon. Friend it was generally acclaimed—in the industry, in the country and in this House. That valuable con-census has been wrecked by the Bill and the policy it serves.
Since the Government first decided on compulsory transfer of routes, the President of the Board of Trade has been at some pains to show that it involves only a small and modest transfer. One is reminded of the story of the illegitimate baby which was explained away as being "only a very small one". But the right hon. Gentleman can no longer protest even that this will be the only one. This brings us to the great question of whether the proposals of the Bill are a once-for-all operation. We are still uncertain.
The right hon. Gentleman began some weeks ago by assuring the assembled Press that this was to be—I quote him— "a once-for-all operation", a mere trifle of about £6 million a year, very small indeed. But very soon that position was shot away from under him by his right hon. Friend the Secretary of State for Trade and Industry, who flatly told the House on 9th November that he could give no undertaking that this was to be a once-for-all operation. What the right hon. Gentleman said today on this vital question has in no way reassured us that, once they get their way with these routes, there will not be repeated plundering of the assets and routes of the public Corporations in years to come.
The intention of the Bill is not only to transfer some routes now, immediately, to have them operating by 1972: it is to make it possible to raid the public Corporations as and when necessary to prop up the private sector. It is a Bill for an open-ended policy of despoiling the public Corporations and it can also place the other smaller independents in peril. Indeed, they were in constant peril from successive Tory Governments—more so than from Labour Governments.
Having abandoned the criteria of the White Paper, the Government are now committed to the viability of B.U.A.-Caledonian regardless of what happens to others, whether private or public, in the industry. That is the position that they have got themselves into, that they got the country into and the industry into.
Then there is the question of compensation, on which I understand the Under-Secretary is to expatiate. We are told that licences are not assets. But what about development costs? Is a private concern to have handed to it on a plate, for free, a route, a business, which has been made viable by heavy public investment? Under the open-ended policy announced by the Secretary of State for Trade and Industry, what will be the effect of routes which ripen into profitability as a result of public investment?
Do right hon. Gentlemen opposite accept that, as the independent sector of the industry developed, on its own money, the inclusive tour traffic that B.E.A. Air Tours is now after, that independent sector should also be compensated?
This was according to the hon. Member's favourite dictum of competition—it was not a compulsory transfer. What we are talking of here is a smash and grab raid. That is not the position which obtained when B.E.A. competed with independent operators and succeeded in that field. The circumstances are completely different.
The question whether this is to be a once-for-all operation is vital, because there are now important routes which, as a result of heavy public investment, are likely to prove profitable within a year or two. The South Pacific route is one of these. What guarantee have we—there is nothing in Bill—that such routes will not as and when they ripen into profitability be taken over to sustain and develop private enterprise in this sphere?
Is there to be compensation? If so, on what basis will it be paid? Or have the Government embraced the principle of confiscation as long as the public bear the loss? What is the Government's attitude on the need to amend the target set for the return on capital as a result of their policy? Do they intend to exercise this principle in a flexible way so that the losses which may result from their policy can, in part at least, be made good?
To what extent have the Government consulted the men and women whose livelihood depends on the viability of the Corporations? The Minister said that he had met the unions, but did he really go into this matter with them and test their reaction? He will need their co-operation to run any system in the airlines industry.
We did not propose it. We said that if in the independent sector companies came together to effect mergers—in the case to which the hon. Gentleman referred it was a particular merger—we would assist them progressively to reach a point at which they could act as a second force, but on the conditions which I have repeated tonight and which my right hon. Friend has stated. [Interruption.] It is no good hon. Gentlemen opposite challenging my right hon. Friend and others who, with a sense of public responsibility, now warn the Government that there is, to say the least, deep misgiving and suspicion among the work force of the airlines about these proposals. This is not to say that my hon. Friends welcome demonstrative action of a certain kind in protest against these proposals. [Interruption.] Of course not. We as a responsible Opposition are warning the Government that they have hurtled into this without thinking it out. And part of thinking it out must always be what might be the effect nowadays on the work force of the industry.
The time when workers could be bandied about without being consulted by management or government is over. It must be a cardinal principle in all industrial rearrangements that the workers and their representatives are fully and properly consulted by government and management. Their co-operation must be sought, especially in revolutionary proposals of this kind.
Then there is the crucial question of the rôle and powers of the new civil aviation authority. I wish that the right hon. Gentleman had given more details of what he proposes for this new authority.
At the moment we are forced to conclude that the Bill re pre-empts the rôle of the Authority in a vital matter. Before the Authority is set up the Bill takes away a vital part of its work, which is the award of licences to operate routes, for under the Bill the Government decide who gets which routes and for how long. We have all been agreed on the need to improve on the A.T.L.B. system, good as it was in many ways, and to create another and improved agency in any new civil aviation authority.
That applies particularly to the subject of appeals. To whom will a dissatisfied party now appeal? Will there be means of appeal? Appeal cannot be to the Minister because, under the Bill, it is he who says what is to be done with the routes. What is to be the system? In a debate like this, on a Bill as far-reaching in its effects as this is, short as it is, we expected to hear a fairly considerable explanation of the structure of the Authority under which these routes were, if at all, to be regulated. We did not get it.
A good deal has been said about the need for competition, but the difficulty is that we do not know which routes are to be transferred. We expected that the Minister would this afternoon have indicated to us the actual purpose of the Bill, and which routes needed this legislation before they could be legally transferred. We are getting the Bill without having explained to us what it is for, so we can only speculate about what routes are to be immediately transferred. There have been suggestions in the Press, and anyone's guess is as good as mine, but as far as I can see the routes which are likely to be transferred do not provide for competition but only for substitution; that is to say a monopoly is all right so long as it is a private monopoly.
The hon. Member for Belfast, East (Mr. McMaster), diverted us with a lecturette about the rôle of the Government. Of course, that a Northern Ireland Member should thus address a Welsh Member was most acceptable. The hon. Member made the classic case for the Tory way of handling these things. He wanted to denationalise everything, and to unload the shares. He had quite as much support from the very few hon. Members then present on his side as the Minister had earlier. I know that the Minister will understand what I mean when I say that if he has Belfast, East I have Brent-ford and Chiswick. It was a most interesting speech, expressing very well, I thought, the true classic Tory view that nothing should be nationalised, but that if it has been it should be denationalised—until, of course, it breaks down, when the taxpayer must be conscripted to nationalise it again and put it back on its feet.
Heaven knows that B.O.A.C. and B.E.A. already have as much competition as they can handle. They compete with all the world's major airlines. They have to be on their toes in order to prevent large segments of the British intercontinental trade from being picked up by nearby agencies on the Continent. The competition is there. What we need is concentration of resources, of expertise, of finance, of equipment, in order to face the already existing competition, which is growing more acute every day.
I know that the right hon. Gentleman is doing his best to overcome his natural good nature and make a fighting Opposition speech. If what he is saying about competition is true, can he explain why in paragraph 33 of his own White Paper he seemed content that the second force should be a competitor with British carriers on the North Atlantic?
I know the hon. Gentleman so well and I know that he really knows his way round this subject, and certainly round the White Paper. He knows that we said that we would consider the possibility of double designation on certain routes, including possibly the North Atlantic. That is not to say what he has just said to the House.
To truncate my remarks, my hon. Friend the Member for Nuneaton (Mr. Leslie Huckfield) reminded us that compulsory transfer of routes is not the only way in which the Bill will enable the Government to penalise the Corporations. Apparently there is to be automatic preference in the allocation of new routes in favour of independent companies. Is this really the Government's intention? Is the criterion to be, not which applicant makes the best case in the national interest and in the public service, but whether it is in the independent sector? If that is to be the criterion, this is dogma run mad, and nothing but harm can result to the airline industry and to our economy.
Finally, there is the question of timing. The Government propose to hand over on a plate almost immediately £6 million worth of revenue generating anything between £1 million and £12 million annual profits. [An HON. MEMBER: "Less tax."] Everything must be regarded as being less tax. The Government propose to hand over this fat slice of the revenue of B.O.A.C. to the private sector, and this is at a time when almost all the major airlines of the world are facing massive losses, leading in the most unlikely countries to proposals for something like nationalisation through mergers, and when B.O.A.C. itself, the most successful of them all on every count, for all its splendid profitability in the past few years will have to face increasingly acute competition from these very airlines fighting desperately for survival. Is not this the worst possible time to reduce the strength of national Corporations which have proved their worth to this country in the international market?
The Bill and the policy it promotes is ill-considered, hasty and fraught with danger to the airline industry. It is a charter for private gain at the expense of the public interest. We shall vote against it tonight, and we shall seek to undo the damage it will undoubtedly inflict upon the airline industry as soon as we return to power.
My first pleasant duty is to congratulate my hon. Friend the Member for Epping (Mr. Tebbit) on an extraordinarily able and fluent speech. It was based on great experience and was delivered in a wholly acceptable manner.
The hon. Member for Hammersmith, North (Mr. Tomney) seemed to think that my hon. Friend's speech was controversial. It is not the first time that it could have been said that a maiden speech was a shade controversial, but I did not think that my hon. Friend's speech was controversial. I thought that it was factual and full of experience and common sense. I know that the whole House will look forward to hearing more from my hon. Friend on this and other subjects.
First, I shall underline one or two of the observations which my right hon. Friend made about the need for the Bill. One of the prime objects of introducing the Bill is to give the House an opportunity to debate the Government's policy and to put fairly and squarely before the House their proposals for the second force and for setting up their new airline. There is little doubt in the Government's mind that the powers under existing legislation are adequate to effect the transfer. The only danger, as my right hon. Friend said, might have been that litigation took place which would have delayed and frustrated the quick transfer of the routes, which in turn would have had the effect of tying the whole of our civil aviation industry in a morass of legal proceedings and delays, which would have been to the benefit of no one. The Government have no doubt whatever that they have the legal powers to do what they want to do, but they are putting the matter beyond doubt by bringing forward the Bill.
Next, I take up the question whether this is to be a once-for-all operation or whether there will be further transfers of routes under the powers given by the Bill. My right hon. Friend the Secretary of State was asked about this, and he replied that he could not give an undertaking never again to use these powers. The powers relate to the power under the Air Corporations Act, 1967, Section 3(5), a power to stop an airline flying a particular route. Clearly, my right hon. Friend could not give that undertaking. An airline might wish to fly to an enemy country or to a foreign country, or might wish to engage in activities in which the Government definitely wished it not to engage. As was explained in Committee on the 1967 Bill by the previous Government, there are many possible circumstances in which it might be necessary to use these powers.
I confirm, however, that it is not the Government's intention to use the powers in the Bill to effect further transfers of routes in the way proposed on this occasion.
The hon. Gentleman would do better to wait to hear what I have to say before jumping in and wasting the time of the House.
The second power to which my right hon. Friend is giving emphasis in the Bill is his power under the Civil Aviation (Licensing) Act, 1960, Section 1(3), to exempt an airline from the need to complete all the stages of the A.T.L.B. procedure so as to avoid delay in operating a route. Again, it would be impossible for my right hon. Friend to give an undertaking never to use that power again. It has been used several times in the past by Governments of both colours. It is a useful power to exercise so that a service is not interrupted by the delays which the A.T.L.B. procedures can create in holding up actual transfer and power to fly.
After the Bill has become law and the transfers have been made, any further questions about who flies which route will be for the new A.T.L.B., in the form of the C.A.A., to consider under the criteria which will be the subject of later legislation and debate in the House.
The hon. Member for Westhoughton (Mr. J. T. Price) seemed to fear foreign ownership of any second force airline. I need only tell him that the Air Transport Licensing Board has as one of its duties to satisfy itself that there is not foreign control of any airline to which it grants franchises or licences. So it would be perfectly possible to revoke the licence of any airline which at a later stage came under foreign control. We are satisfied, however, that the shareholders and owners of the Caledonian-B.U.A. airline are overwhelmingly United Kingdom residents. The proportion which could be described as foreign is not greater than 1·9 per cent.
I am much obliged to the Minister for referring to that passage in my speech in which I expressed doubts about the possibility of a foreign take-over. Perhaps, as an experienced man of affairs in the City, he will now tell the House how he will prevent any such take-over if the equities that go with this dubious transaction go on to the stock exchanges of the world and can be bought by the nationals of any country. Would he care to answer that serious point?
The hon. Gentleman gets himself into deeper and deeper water. If that happened, the A.T.L.B. could refuse the continuation of the airline's licences. The moment it is known that any airline has come under foreign control, it is possible to take action. That power is a sufficient threat to frustrate anything of the sort happening.
There have been insinuations from some hon. Members opposite that the proposed new airline would have a less good safety chance than the State Corporations. I must rebut that absolutely. The two airlines, B.U.A. and Caledonian, from which it will be formed, have an absolutely first-class safety record. Whatever may be the picture for the independents as a whole, there is no reason whatsoever to believe that anything intended here is likely in any way to reduce safety.
I should be grateful if hon. Members would not interrupt me in the middle of sentences. I am prepared to sit down at colons or full stops, but not at commas.
My hon. Friend the Member for Epping gave the reasons why the independents have faced some difficulties. The whole House should now acknowledge that there is no need whatsoever to try to cast alarm and despondency on this operation.
I have not the slightest idea. [HON. MEMBERS: "Oh."] That is a matter for the commercial decision of the airline, just as where B.O.A.C. and B.E.A. do their maintenance is entirely a matter for their commercial decision.
It is our intention to transfer these routes, representing between £5 million-and £6 million-worth of revenue, which is only equivalent to 2½ to 3 per cent. of B.O.A.C.'s total business, much less than the annual growth of B.O.A.C.'s business as a whole. To say that that in some way truncates or cuts out B.E.A. or B.O.A.C. makes a mountain out of a very small molehill. I emphasise that what we are talking about is not profit but gross revenue. What will be the profit that is transferred depends on the efficient operation of the airlines.
My right hon. Friend said that we shall proceed with the Airways Board, which will have the effect of bringing together in one form or another, not yet determined, B.O.A.C. and B.E.A. This will be an enormous strengthening of the public sector of aviation. The old division of long and short-haul may well not be the right division, and, as my hon. Friend the Member for Southampton, Test (Mr. James Hill) said, the 500-mile route is becoming less and less economic if that is the only route in the mix of routes an airline has. So the Government proposals are, broadly, both to strengthen the public sector by bringing together the two State airlines and to strengthen the private sector.
I come to the question of compensation which it is suggested by hon. Members should be paid in this case. As my hon. Friend the Member for Epping said, a route licence is a franchise to fly and in this country it is the property of the State.
I will come to that. A route licence is granted by the Air Transport Licensing Board on behalf of the State and it is the Government's responsibility and duty to distribute these licences as they think fit. There is no question of the licence being the property of the airline concerned. That position has been the policy of successive Governments on both sides of the House. No Government have ever charged for these franchises to the airlines which operate them, either by trying to sell them outright or by trying to lease them. So, where nothing has been paid, no property right has been created and the airlines have no right whatever to the property which these leases represent.