Public Accounts Committee (Reports)

Part of the debate – in the House of Commons at 12:00 am on 3rd December 1973.

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Photo of Mr Reginald Paget Mr Reginald Paget , Northampton 12:00 am, 3rd December 1973

The power and effectiveness of the Public Accounts Committee lies in its nonpartisan nature, and I have no wish to depart from that non-partisan spirit. We are here criticising not merely the present Government but a series of Governments. Having listened to the speech of the hon. Member for Oswestry (Mr. Biffen), at the end of it I was reminded of a former Member of the House who, following Mr. Benjamin Disraeli, leaped to his feet and said "All I can say is ' Ditto, ditto ' to the hon. Gentleman".

Although the Public Accounts Committee is non-partisan, and we are here considering one of its non-partisan reports, we have before us a scarifying indictment of a series of Governments the like of which, I suspect, has seldom, if ever, been presented to the House. In these circumstances it seems extraordinary that the Government benches should be almost empty and that ours should be but poorly attended, for, in substance and effect, the report says that Governments have lost, mislaid or let go astray public funds certainly to the tune of over £1,000 million. It is a formidable challenge.

The subject of North Sea oil has been dealt with in detail by several of my hon. Friends, and I say only this about it. The fact which struck me during the evidence which we heard was the incompetence of public servants in dealing with the oil companies. However honourable, however skilful, however good at organisation within their own field, their incompetence was astonishing when they went to bargaining with the expert dealers of the oil companies. If I may say so, they were about up to the standard of the pre-war Gulf sheikhs ; certainly no better.

Indeed, my suggestion for dealing with this problem was that we should kill two birds with one stone. We should link the North Sea oil problem with the Malta problem. We should give Malta, say, 1 per cent. of our North Sea oil holding which would more than keep up with the demands coming from Malta, on the condition that Mr. Mintoff took over the bargaining on our behalf. I believe that would have been an overwhelmingly beneficial proposition to both our islands. Even if we cannot obtain the inestimable services of Mr. Mintoff we should still have all the oil agreements renegotiated and we should get expert oil men to do the job for us. We are in a position to do that.

We can still correct the effect of these bad bargains by a barrelage tax which would provide the money which the contracts do not. However, a barrelage tax is a blunt, awkward and unfair method. We ought to draw different levels of participation from different fields, depending on the cost of development, production and transport. Separate contracts should be worked out in the light of the events and the technical problems as they develop. The contracts should be worked out by oil men who understand these developments, what the costs are and what we should have and what the companies should have. We have the weapon of a barrelage tax to enforce and impose a renegotiation and we should use it.

I turn now to Concorde. I do not disguise that I have been fundamentally opposed to the project from the start. Since it is an Anglo-French concept perhaps I might say in French that it was au-dessus de notre gare, which means "above our station". I have learned that the governing rule which should guide all directors is never to get involved with a customer or a contract that one cannot afford to lose. Anyone who does that loses his independence and his solvency. We and our aircraft industry are not of a size which permits us to commit resources on this scale to a single development. That is what killed Rolls-Royce. But for astonishing subsidies from the public purse Concorde would do the same to our aircraft industry.

Whenever and at whatever point we have written off this folly, its effect has been to throw our whole aircraft industry hopelessly out of gear. It was a concept which was wrong from the start and it became more obviously wrong as it proceeded. I remember having a long discussion with my right hon. Friend the Member for Birmingham, Stechford, (Mr. Roy Jenkins) when he was Minister of Aviation in which I urged on him the folly of continuing with this contract. He told me that he was advised that his predecessor in office, now the right hon. Member for Brighton, Pavilion (Mr. Amery), had committed us to a contract which made it impossible to reconsider our position in the light of developing events without making ourselves liable to damages in the International Court. I pointed out a certain disagreement with that legal advice to the effect that I found it hard to see how damages for being prevented from going on with a contract which even at that point was plainly and demonstrably unprofitable could be quantified. Further, I argued that, even if I were wrong, any damages my right hon. Friend would have to pay would be trivial compared to the losses he would incur. That is certainly the way it has developed.

Small incidents best illustrate the degree to which costs on this contract got out of control. There was the need to design and provide three seats—one each for the pilot, the co-pilot and the flight engineer. One of those seats required to be able to traverse along a board of dials. They needed, for the comfort of the officers and the engineer, to be electrically adjustable. Seats of this sort are not new. The dental and medical professions have been designing such seats for some time and those for Concorde were not substantially different, although they may have had to be somewhat stronger. They may also have required some special features.

However, the kind of chair on which all the various adjustments can be made—where the back goes up and down and the feet come up and down—cost for surgical and dental purposes, according to my dentist, £600. I would, perhaps, agree that in these special circumstances the figure would go to double that. That would mean £3,600 for the three seats. I could perhaps have stomached that figure being multiplied by 10 to take account of development. That takes it to £36,000, but when I find that the people who were monitoring this contract on our behalf accept £360,000 for the three chairs I begin to realise just what has happened to control at this level.

We now move from development costs which are certainly and inevitably written off. The issue now is what do we do about production? Are we to go on producing these aircraft? I put the same question to Mr. Thornton. It and the answer will be found on page 63 of the Sixth and Seventh Reports of the PAC, and the particular question I posed is No. 2095. I said : I feel that I am putting the assumptions as favourably as I can towards this aircraft. Supposing that you do get the orders in time to go ahead with 25 without a break, what I am saying is that even assuming that everything"— I think this is an error. It should read, "that everything went right", for that is what was meant to be said—" the cost per aeroplane would still be well over £23 million apiece?—I doubt that, but I would not be able to give you a firm answer. The next question was : Certainly each aeroplane that we sell within that kind of limit, 25 or 30, is going to mean a substantial addition to our losses? The answer was : "Yes"—assuming that everything was in our favour and that orders were produced, assuming that we could have a straight run and reach 25 to 30 aeroplanes. Because there is a security problem I am not allowed to say anything about the British Airways price. I know what it is, and it is a great deal less than £23 million. So each plane that is produced will increase the losses. I doubt that this process will increase our aircraft prestige.

Having said that, I turn to the question of whether there is any prospect of orders from beyond the nine at present. The nine aircraft ordered are for captive customers. British Airways is owned by the Government and Air France is owned by the French Government. Have we any chance of selling Concorde to other countries? The prospect is exceedingly doubtful. We can probably take the Iraqi inquiry as being dead. For purely political reasons the Chinese may be a slightly better prospect. If that is so, we may have a chance to give the Chinese a present of perhaps a score of millions of pounds, for that is what would be involved if we delivered the planes to them.

Since the report, the opinion of the manufacturers has by some method fallen into the hands of the Observer. Summarised, that opinion is, first, that the existing model is unsaleable. That is clearly stated by the chairman. Secondly, it is that the modifications which might make some of the aircraft sell are in doubt because there is no agreement with the French, and that those modifications which improved carrying capacity would increase noise level and those which decreased noise would decrease carrying capacity. All would be difficult and expensive. Indeed, the chairman said that there was not much that could be done for the present aircraft.

We are told that the attempt to control noise has been disappointing. I have no doubt that it is. We have had the optimistic talk about Houston ; somebody said Concorde was no noisier than the major subsonic jets. That is true, but American officials have said that they will no longer accept this level of noise for any future generation. Concorde is, of course, a future generation aircraft. It is admitted, and made clear by the statement, that there is not the smallest chance of Concorde complying with the United States regulations.

The only chance of flying the machine to America is if the Americans are prepared to alter or bend their rules for the benefit of Concorde. It was pointed out that the French considered the noise factor insoluble and a political problem. That political problem could not conceivably be solved unless aircraft were made available to the American companies at prices they were prepared to accept, and with the existing model there is no chance of that happening. So the idea that there will be a competitive effect when the nine existing planes take the cream off the American market will never happen. Concorde will not be allowed to land in America for that very reason. The Americans will not bend the rules in order to have the cream skimmed off their aviation market. That is not the American way of doing business. It never was.

Therefore we are faced with the decision that has been so long and so often postponed. At what stage are we to take our courage into our hands and say, "Enough is enough"? We have a new problem in the oil crisis. I have seen it quantified. The package holiday operators impose surcharges at the airports because of the increased cost of oil. That surcharge, transferred to the Concorde, would amount to £1,750 for each transatlantic crossing. But it is not a question only of additional charges. There is the problem of conserving oil. At this point we have passed from a period of glut in our fossil fuels. In Concorde we have an enormously costly instrument filling no obvious want and consuming fuel at a level never previously conceived. When will somebody have the courage to end this folly?