Rolls-Royce Limited

Oral Answers to Questions — Aviation Supply – in the House of Commons at 12:00 am on 10th February 1971.

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Photo of Mr Robert Sheldon Mr Robert Sheldon , Ashton-under-Lyne 12:00 am, 10th February 1971

asked the Minister of Aviation Supply when he expects to receive the report of the accountants investigating the financial position of Rolls-Royce.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

To a large extent, this has been overtaken by events, but in the Government's assessment of the position, Messrs. Cooper Bros' preliminary assessment was, of course, of considerable assistance.

Photo of Mr Robert Sheldon Mr Robert Sheldon , Ashton-under-Lyne

In the Minister's reply to my intervention on Monday, he was courteous enough to say that the reason why he did not intervene in the negotiations with Lockheed was that there might be a contravention of Section 332 of the Companies Act. Is the Minister seriously saying that the reason why he did not try to renegotiate the Lockheed contract and so save the firm of Rolls-Royce in a compromise settlement was that it might be interpreted as a contravention of Section 332—as an attempt to defraud the creditors of Rolls-Royce?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

There is no question of defrauding the creditors. As I sought to explain before, the situation was that the time was excessively short because the Rolls-Royce decision was made when it was, as I think I put it, right up against it from the point of view of meeting its liabilities. Within that time, we did our best, and we got in touch with the United States Government and with Lockheed.

Photo of Dr John Gilbert Dr John Gilbert , Dudley

Can the Minister say anything about the position of the unsecured creditors of Rolls-Royce, particularly the sub-contractors and suppliers? Will they be left in the same position as Lockheed? Or, if not, how does the right hon. Gentleman propose under our bankruptcy laws to arrange to discriminate in favour of unsecured creditors of United Kingdom domicile and Lockheed? If the sub-contractors go there is no point in trying to save Rolls-Royce itself, as I am sure the Minister agrees.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

These are matters for the Receiver.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

asked the Minister of Aviation Supply whether the independent accountants who are currently investigating the affairs of the Rolls-Royce Company Limited at the request of Her Majesty's Government will be authorised to investigate the fulfilment of their obligations to minority shareholders by the management of this company between June, 1968 and November, 1970, with particular reference to their obligations under Section 165(b)(iii) of the Companies Act, 1948; and whether the accountants will be authorised to publish reports on such matters if they so desire.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I think this matter is now best left to the inquiry under the Companies Act that the Board of Rolls-Royce has proposed. The report will be published.

Photo of Mr Jock Bruce-Gardyne Mr Jock Bruce-Gardyne , South Angus

I am grateful to my right hon. Friend for that reply and for the company's announcement that it is to call for the appointment of inspectors. In view of the vital importance of the RB211 in destroying the value of investors' shareholdings in this company and the extent of the involvement of the Ministry of Technology and the I.R.C. in that contract, can my right hon. Friend assure the House that the inspectors will be empowered to investigate not only the conduct of the board towards its shareholders but also the extent to which that conduct may or may not have been influenced by the Ministry of Technology or the I.R.C.?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

As I understand it, the powers of the inspectors under the Act are very wide indeed, certainly wide enough to cover all the matters my hon. Friend has in mind, and wide enough for them to go in as much detail as they regard as necessary into any one aspect.

Photo of Mr William Molloy Mr William Molloy , Ealing North

Would the Minister be prepared new, with the benefit of Monday's debate, to make a recommendation to his right hon. and hon. Friends that the Bill which is to be debated tomorrow should be amended so that full public ownership of Rolls-Royce should take place?

Photo of Mr James Scott-Hopkins Mr James Scott-Hopkins , West Derbyshire

Can my right hon. Friend say a little more about the position of the suppliers for the RB211 and other existing engines? Their position is absolutely crucial, as I am sure my right hon. Friend realises, and they would be very grateful if any indication of the Government's attitude could be given as soon as possible.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I appreciate the anxieties, but I am not in any position to add to what I have already said.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Has the Department had any official approach from Eastern Airlines, Delta Airlines and T.W.A. about continuing the RB211 as mentioned in this morning's Press?

Photo of Mr Michael McNair-Wilson Mr Michael McNair-Wilson , Walthamstow East

asked the Minister of Aviation Supply what financial assistance his Department is giving to Rolls-Royce in the development of vertical lift engines.

Photo of Sir David Price Sir David Price , Eastleigh

The Department has supported the RB162 lift engine, to which the French and German Governments also contributed. In addition, the XJ99 experimental military engine was developed in conjunction with the Americans.

Other projects are under consideration.

Photo of Mr Michael McNair-Wilson Mr Michael McNair-Wilson , Walthamstow East

May we have an assurance that the Government will now put even more priority behind this research, in view of the importance of these engines to virtually every Western European vertical take-off project and because of their importance for recouping the finances of Rolls-Royce? Further, will my hon. Friend give particular support to the carbon fibre industry since the carbon fibre blades are crucial to these engines?

Photo of Sir David Price Sir David Price , Eastleigh

I had the honour last week of opening the first International Carbon Fibre Conference, when I said that Her Majesty's Government were giving substantial support across the board to the development of carbon fibres. On the first part of my hon. Friend's supplementary question, I have nothing to add to what I have already said.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

Will the hon. Gentleman clarify his phraseology? He said that the Government had supported the RB162. Will he now say that the Government will continue to support the RB162?

Photo of Sir David Price Sir David Price , Eastleigh

The hon. Gentleman knows that we shall be discussing all this tomorrow.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

asked the Minister of Aviation Supply why the contracted details of the agreement with Rolls-Royce (Bristol Engine Division) for the further development of the Olympus 593 engine are confidential.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

The negotiation of commercial contracts is conducted in confidence between the parties concerned, and it would not, therefore, be proper for the details of these contracts to be given.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

That is a totally unsatisfactory reply, because it says precisely nothing. Surely one of the lessons out of the many emerging from the unhappy story of the RB211 is that more information should be freely available, particularly to the House. Will the right hon. Gentleman have second thoughts?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

The answer says almost exactly what the right hon. Member for Bristol, South-East (Mr. Benn) said on 7th March, 1968. I appreciate that saying nothing is more characteristic of him than of me, but that is the case.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

asked the Minister of Aviation Supply what undertakings were sought from the President of the United States of America on Tuesday, 2nd February, or Wednesday, 3rd February, relating to a joint effort by the British and American Governments to save the RB211 project and the Lockheed Tristar; and what answer was received.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

No undertakings were sought or given on either side. Both Governments agreed that the firms should discuss the problem first.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

Is the right hon. Gentleman aware that that reply, like his speech on Monday, will be received with dismay in the Derby area? Why were no satisfactory undertakings sought from the American Administration or the Lockheed Corporation immediately Lord Cole told the Government on 26th January what the Rolls-Royce position was?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

It was a question not of seeking undertakings at once but of putting those people in the picture and giving them some time to consider the situation. That is now going on.

Photo of Mr Merlyn Rees Mr Merlyn Rees , Leeds South

In the Minister's view, is the project worth saving?

Photo of Mr Joel Barnett Mr Joel Barnett , Heywood and Royton

As the Minister presumably would wish to do something to restore some of the lost reputation of Britain, would he at least give the House an assurance that he has not ruled out the possibility of avoiding a liquidation by one of the several options still open?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Yes, I can give that assurance.

Photo of Mr Douglas Jay Mr Douglas Jay , Battersea North

Did the Government approach the American authorities to try to find a satisfactory solution before agreeing to the appointment of a Receiver?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

It was not a question of the Government's agreeing. I am sure that the right hon. Gentleman knows, as an ex-President of the Board of Trade, that this is a matter where the law takes its course. We were left with a very small amount of time, and we did our best to make the maximum use of it.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

asked the Minister of Aviation Supply what is his estimate of the total number of redundancies directly involved in the immediate cessation of work on the RB211 engine by Rolls-Royce Ltd.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

There would be very substantial redundancies. But I do not think that I should anticipate the decision on the RB211 nor the outcome of discussions between the Receiver, the staff and the unions.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

Is not the right hon. Gentleman, in fact, telling the House that the number of redundancies consequent on the cancellation of the project was not calculated when the Government were doing their costing on the full effects of the cancellation? Why cannot the right hon. Gentleman be honest with the House on what the full effects and the numbers involved will be?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Of course these things were taken into consideration, but the plain fact is that the discussions on whether the RB211 can continue are still going on.

Photo of Mr Peter Rost Mr Peter Rost , Derbyshire South East

Is my right hon. Friend aware that many suppliers and subcontractors in the Derby area face bankruptcy, and that the redundancies will be considerably increased unless we can have an assurance that the Government will give sympathetic consideration to this very serious situation?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Of course I am aware of the problem. but I cannot add to what I have said in answer to a previous Question; namely, that the matter is in the hands of the Receiver.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

In view of the danger of redundancies because of the continuing uncertainties about the whole future of the company, will the right hon. Gentleman confirm what the Receiver said yesterday, that those who might wish to continue commercial relations with Rolls-Royce for supplies other than for the RB211 may do so certain in the knowledge that they will not commit themselves to further liabilities?

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I do not think that it is for me to confirm or otherwise the Receiver's instructions.