Aerospace Production Policy

– in the House of Commons at 12:00 am on 10th July 1978.

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4.38 p.m.

Photo of Mr Terence Walker Mr Terence Walker , Kingswood

I beg to move, That this House, mindful of the high technology of the British aircraft and aeroengine industries, calls upon the Govenment to come to an early decision on the future aerospace production policy of the United Kingdom; and to ensure that choices on the best collaborative projects are made on commercial grounds in order to protect Great Britain's capabilities in design and development as one of the world's leading aircraft manufacturing nations, as well as protecting the jobs and livelihoods of many thousands of workers employed in these important industries in this country. Since the last debate which I initiated on a similar subject, on the Adjournment of the House on 26th May, when I sought to impress upon the Government the urgency of making a decision about the future manufacturing programme of British Aerospace, the situation has developed considerably. My right hon. Friend the Prime Minister saw senior management of Boeing, McDonnell Douglas and Eastern Airlines during his visit to the United States. I realise that these discussions were for information rather than negotiation.

The fact remains that these talks, together with the fact that Secretaries of State for Industry and Trade, had similar talks with Boeing, Lockheed and McDonnell Douglas, and also talks with French and German Ministers about the situation in Europe, must mean that the British Government are moving towards the time when they will have to formulate a decision on the matter as a whole. They are fully conversant with the magnitude of the decision that must be taken.

The question is, with which nation or nations should we collaborate on aircraft production in the future? The choice is between working with Europe on the development of a new short-to-mediumrange airliner, or accepting a deal with Boeing or McDonnell Douglas on one of the new jets those companies are planning for the future.

The outcome of that decision will affect the future of both British Aerospace and Rolls-Royce engines. It will also have an effect on the fleet that British Airways will fly in future. For the British Government it is a decision of the highest importance with important political implications. All three companies—British Aerospace, British Airways and RollsRoyce—have different views on the way in which the industry should develop. However, in the end the Government will have to decide, and the main consideration will have to be commercial.

The aircraft must be a seller and therefore the commercial considerations are of the highest importance. On both sides of the Atlantic the manufacturers are moving to meet market needs with similar kinds of aircraft. The Europeans rightly feel that the present production set-up—Boeing with 60 per cent., McDonnell Douglas-Lockheed with 30 per cent. and the United Kingdom and Europe with a mere 10 per cent.—is unacceptable. They feel that if the United Kingdom and Europe join together they could prise away a larger share of the market from the Americans.

Conversely, the Americans feel that if they could keep Britain away from the European industry, it will weaken the European project which will then be less of a threat to the Americans and their domination of the market in the future. Not for many years has this country been in a position in which so many people wanted to be our partners on an aircraft project. This bears out the fact that the British aircraft and aero engines industries are very good and very healthy. With so many people wanting us as partners, we should rejoice.

The Europeans want us because they feel that, together with them, we could secure 20 per cent. of the market in future. There are two main projects under consideration by the Europeans. These are the B-10, a derivative of the A-300 Airbus with 217 seats, and the two versions of JET—one with 130 seats and one with 160.

I was with a delegation from the aviation group of the Government side of the House which went to Toulouse last weekend to talk to senior management of Airbus Industrie about the way things were moving. Those people made it quite clear to us that they favour a decision by the partners in going ahead with the B-10 within a matter of days rather than weeks. If the United Kingdom did not want to collaborate with the present airbut partners they gave the strong impression that they would go ahead on their own.

But the first question I put to the Government is, are they prepared to make a decision on the B-10 in view of the time scale laid down by the European partners, or do they think that it is too early to commit themselves to this kind of development?

While we were in France the airbus partners also made it clear that it would not be enough for the United Kingdom just to make a decision on the B-10. Germany and France will want us to buy into the A-300 airbus consortium. British Aerospace is not a member of the consortium although it has contracts to make about 17 per cent. of the A-300.

Are the Government now prepared to buy into the A-300 project and, if so, how much will it cost? We were not told this and we want to know before we say that we should proceed with this project. The French and Germans made threatening noises, suggesting that unless we were prepared to buy in on the airbus, we would not be allowed on the B-10. Moreover, if we refused both, and went with the Americans, we would be in danger of losing our 17 per cent. production share of the A-300, because there was a clause in the contract that we must not produce any aircraft which is a competitor. In partnership with either Boeing or McDonnell Douglas, we could be held to be doing just that.

This is a matter of concern to those people who are working on part of the airbus at Chester. This was brought home to us last week when the delegation visited Chester on our way back from France in order to see the situation at first hand. Do the Government feel, therefore, that we should buy back into the A-300? Can we afford to do so? These questions make us rather reticent about the European collaboration.

The big point about the European deal is that Rolls-Royce seems to be excluded from those projects. One of our provisions in going in on the B-10 project surely must be that we should be allowed to produce Rolls-Royce engines for the customers who require them. This is possible if we are allowed to do so. If the airbus consortium seriously wants us in on the B-10, it must be prepared to give us greater involvement than is envisaged at present. The supply of American engines must be questioned. At the moment there is 28 per cent. American involvement on the A-300, including the engines and we would feel that we have a right to put Rolls-Royce engines into the B-10 if it comes forward.

It will not be an easy option to go in with the European airbus consortium. The matter will need strong negotiating on our side if we are to be successful in getting our fair share of the work in the United Kingdom. I hope that when the Prime Minister next meets the European Heads in Bonn he will speak to the Germans and the French about this matter. We are told that the decision is imminent.

Boeing's widely publicised offer to the United Kingdom is a partnership in the 757 project. This sounds most attractive to many people because we have been assured that the plane will have Rolls-Royce engines, and Rolls-Royce has made its views known. It supports our going for the Boeing offer.

One factor must be borne in mind. The airlines that will buy these aircraft specify the engines that are used. Boeings can never include as part of the deal the guarantee that Rolls-Royce engines will be used in every case. Indeed, one wonders whether Boeing intend to push Rolls-Royce at all. I have a copy of a Boeing presentation to Eastern Airlines produced in May this year showing comparisons involving three engines. That showed the Rolls-Royce engine to be the heaviest and to have the highest fuel consumption and the lowest cruise thrust—three distinct disadvantages. Even though Rolls-Royce wants to go with Boeing, I wonder whether Rolls-Royce has gone deeply into the matter and is aware of what is being put out by the Boeing company.

Photo of Dr Maurice Miller Dr Maurice Miller , East Kilbride

I appreciate the kind way in which my hon. Friend is putting forward his argument, but will he take it from me that there is, to say the least, some doubt about the figures we were given in Toulouse? Of the three engines he has compared, only two are in existence. The engine which is looked upon as the best of the three is an engine only on paper. I am sure he agrees that there is a very big difference between an engine which is already in use being tested against one which has not yet been put into action.

Photo of Mr Terence Walker Mr Terence Walker , Kingswood

I appreciate my hon. Friend's comment. It is crystal clear to everybody now that perhaps the Boeing arrangement does not represent such a good deal as Rolls-Royce at one time thought. When we consider that it is the airlines which must decide eventually what goes into their aircraft and which engine is to be used, that is not part of the deal and must be discounted if figures of this kind are to be bandied about.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

The hon. Gentleman is right to make that point, but does he agree that Rolls-Royce has hardly gone out of its way to make it as clear as possible that that is the case? Information sent by Rolls-Royce to certain hon. Members seeks to give the impression that if British Aerospace and Boeing join up in the so-called 757 project, a whole string of orders for Rolls-Royce will follow. That is a quite erroneous impression.

Photo of Mr Terence Walker Mr Terence Walker , Kingswood

I was about to come to that point, and I am glad that the hon. Gentleman mentioned it. To many of us it appears that the Boeing deal is not as attractive as we were lead to believe. Boeing does not particularly need us, and perhaps could manage without us. If we go in with Boeing, I am worried that in future we shall end up as sub-contractors to Boeing. Boeing can see this arrangement as a way of breaking the European competition to the 757, when it appears. The ultimate aim of this country must he to get away from the two separate blocks on either side of the Atlantic. In the long term there must be some collaboration between Europe and the United States.

The situation that is now developing, where similar projects are being embarked upon on either side of the Atlantic, must be deplored because it will lead to fierce competition. That will not be in the best interests of any of the people who work in the industry on either side of the Atlantic. Therefore, the offer of a partnership with McDonnell Douglas on its proposed ATMR aircraft appears to be the most attractive. The big question that remains unanswered is whether it could be linked with the proposed European projects. Perhaps the Minister will deal with this matter in his reply.

The McDonnell Douglas suggested collaboration, based on a third for the United Kingdom, a third for Europe, and a third for that company, seems to be a most attractive offer. However, the best collaborative project for Great Britain relies on some complex factors, including the best deal that can be obtained for design and work-sharing—a very important consideration—and aircraft marketing. We want to be partners, not sub-contractors. To collaborate on our own with the Americans would lead to our being in a very weak position, but I feel that if we and the Europeans collaborate with the Americans we shall get a fair deal and we shall be in a much stronger position.

ATMR is a new technology aircraft which makes it more attractive to British industry than the half-new, half-old 757, and McDonnell Douglas would be happy for Rolls-Royce RB211–535 engines to power it. We are given to understand that a deal would also include joint work on military projects, and marketing of the HS146 airliner when it has been produced.

This brings me to the HS146 project itself. We were told by Lord Beswick some time ago that a decision was imminent. Judging by the newspaper comment over the weekend and again today, a decision is about to be made. It is to the Government's credit that this project still exists. Certainly the Government have been far-seeing enough to keep the project going, but a decision one way or the other has still to be made. This decision is of significance to Bristol because we understand from the British Aerospace management that some of this work will go to Bristol and some to the constituents of my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman).

We all hope that some way will be found to put a Rolls-Royce engine into the HS146. I hope that we shall be able to go forward with this project, because the time is coming when we need some decision in view of the need for work to keep the factories going. I hope that in his reply, the Minister will deal with this matter.

It will be unthinkable to conclude this debate without referring to the Concorde. That is a great technological achievement, and now that the aircraft is fully in service many more airlines are showing an interest in running Concordes on a leasing or buying basis. I hope that the Government will be able to give an assurance that production lines will not be dispersed once the last aircraft comes off the line. If the valuable technical teams are broken up, we might be unprepared for the demand when further aircraft are required.

Looking to the future, supersonic travel, despite the attitude in the United States, is here to stay. At some time the Americans will want to become partners in producing a mark II version of Concorde. I hope that we shall be in a position in future to use all the technology amassed by Britain and France in producing the mark I Concorde to enable us to be at least equal partners with the Americans in producing supersonic aircraft until the end of the century. I believe that supersonic flying will go into the future, despite the dog-in-the-manger attitude by the Americans.

It is a pity that British Aerospace and Rolls-Royce are totally divided on their views about which way the industry should go. The decision must be the right one for all those who are employed in the aero engine and airframe industries. The aero engine industry cannot be divorced from airframe interests. I hope that both sides will recognise their interdependence and how important it is for both sides of the industry to be kept in a healthy condition.

My preference would be the establishment of a strong European collaborative aircraft industry, but I realise that this may not be possible. The price may be too high and the fact that Rolls-Royce engines will probably not be used in European projects may be a factor that the Government will take into account.

To go in with Boeing would reduce us from the mainstream of aircraft production to the role of a sub-contractor to the Americans some time in the future. From what we have been told—and this is all that we have to go on—the McDonnell Douglas offer looks the best, provided that the French and the Germans are prepared to come in on a project with us.

The best project must be a viable one on commercial grounds. That is most important. Whatever is produced must be something that we can sell. Our great experience in design, development and production must be protected and the jobs of the workers employed in these important industries must also be protected. I hope that the Government will be able to pledge to keep the British aircraft and aero engine industries viable and independent long into the future.

5.2 p.m.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

I am grateful to the hon. Member for Kingswood (Mr. Walker) for initiating a debate on this vital subject which affects the fortunes of 250,000 people in this country. As an aeronautical engineer I must declare my interest, but the future of the industry affects not only those people but many families and many business men around the industry's factories. They will be affected by whether the Government are prepared to make a statement and whether it is the Government's responsibility to make a statement at all.

The hon. Member for Kingswood said that he was worried about the delay of the Government in making a statement. Perhaps I may remind the House and the Ministers of the time that a number of hon. Members, including the Ministers and myself, got ourselves into the "Guinness Book of Records" by taking part in the longest sittings recorded in the House since 1265 in the Committee discussions on the Bill to nationalise the aerospace and shipbuilding industries. The hon. Member for Feltham and Heston (Mr. Kerr) and I were even able to take time out to go on a Concorde to Bahrein as part of our contribution to those debates.

The Minister of State, who was most assiduous during the whole passage of that Bill, stated categorically on 10th February 1976 that the market strategy in new projects must be for the board of British Aerospace and not for the Secretary of State. I do not expect from him today a statement on behalf of British Aerospace.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

My hon. Friend may have been in the House earlier at Question Time when I asked the Secretary of State for Industry whether he thought that it was for him or for the board of British Aerospace to make the marketing strategy decisions. It is curious that, contrary to what the Minister of State said during the passage of the Bill, the Secretary of State told me that he did not know—though he wrapped it up in a lot of waffle.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

I am grateful for that intervention. It takes me on to the next point. In a recent Question, I asked the Secretary of State whether the Government were able to give us an idea about the market that existed for the HS146. I was told that the Government had no idea about this because they were not equipped to give such information and that only the board of British Aerospace could do so.

I also asked the Minister of Defence whether there was an operational requirement for the HS146, and I was told that there was no military requirement for that aircraft. Yet in The Sunday Times yesterday we were told that, at the British Aerospace headquarters in Weybridge last week, a group of 30 civil servants, including senior representatives from the Treasury, Ministry of Defence, Department of Industry and the head of the Think-Tank —that puts the coup de grâce on it— listened to a full review of the State aircraft manufacturer's future. That would be fine, but the Minister of State dismissed the Treasury in our Committee debates. He said that the Treasury was not equipped to make an independent judgment about future projects.

I am fed up with the fact that now, as then, the Government admit that they are not equipped to make decisions and we are forced to use the sort of vehicle that the hon. Member for Kingswood has used to bring to the Floor of the House a debate which is crucial to the future of high technology in this country and to the aerospace industry in particular. I am fed up with the fact that we shall not hear from the Government any authoritative statement. They may say that they have backed the HS146 or that they have not, but they do not have the authority, because they have said that they do not have the authority, to say anything other than that which their paymasters in the trade unions have said they must say.

The tragedy is that throughout the Committee debates we were told repeatedly that industrial democracy would come. The hon. Member for Bristol, North-West (Mr. Thomas), the hon.

Member for Feltham and Heston and all their friends in ASTMS and TASS were fobbed off with the excuse that they did not have to worry because there would be consultations and that more than 50 per cent. of the members of the board would be trade unionists. We were told all this, but we ended up with one luckless individual finding his way on to the board of British Aerospace and no decisions have ever come out of that corporation.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

It may have been when the hon. Member was flying down to Bahrein in Concorde, but I recall that in Committee the Government rejected an amendment providing that 50 per cent. of the number of board members should be from trade unions, and such a provision has never, as far as I know, been incorporated in the Bill.

Can the hon. Gentleman tell us whether he thinks that the House ought to have some influence on aerospace policy? It has not been clear from what he has said so far.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

I assure the hon. Gentleman that I shall give my view on the second point, but, on the first matter, the Minister of State said in Committee that he would be grateful if his hon. Friends did not continue with the amendments that promoted industrial democracy.

I am sure that the hon. Member for Bristol, North-West remembers that. He, the hon. Member for Feltham and Heston and the other trade union lackeys who expected to get something for the unions were fobbed off. I resent not only the fact that they did not get anything for the trade unions but that the workers on the shop floor have got nothing either.

Photo of Mr Russell Kerr Mr Russell Kerr , Hounslow Feltham and Heston

The hon. Member for Hastings (Mr. Warren) will understand that I do not particularly enjoy being described as a trade union lackey. However, I was on the Committee representing, in part, my union. I certainly understood the meaning of the communication that passed between the Minister of State and my hon. Friend the Member for Bristol, North-West (Mr. Thomas) and myself. It was to the effect that, because of certain things that were already being formulated in the Government's mind, it was unneces- sary for us to push at a door that would be opened from the inside anyway.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

Unfortunately, the door has remained locked. I thought that the hon. Gentleman represented Feltham and Heston. I did not know that he represents trade unions.

The problem is whether we in the House have the ability to debate such important questions and to get answers. I hope that we shall get some answers from the Government. In Westminster, this hothouse of politics, we must get away from the belief that there are only political answers to these very difficult questions. There are not. The most important fact is that the decisions on the next generation of civil aircraft can be made only by the customer airlines. The customers choose not only the airframes but the engines.

I was interested in the comments made by the hon. Member for Kingswood about the Rolls-Royce engine. The hon. Gentleman failed to observe that the Rolls-Royce engine happened to be the cheapest of the three engines that he mentioned. Secondly, many airlines already have an existing engine type, whether it be General Electric, Pratt and Whitney or Rolls-Royce. They will not change on account of the marginal differences shown in the analysis that the hon. Gentleman quoted.

I have seen the Boeing analysis in Seattle. I was advised by Boeing that the company thought that about one-third of the engines for the projects that it had in mind would be supplied by Rolls-Royce because the airlines wanted those engines. That is why Boeing has Rolls-Royce engines in its inventory.

It is the customer airlines that will decide whether aircraft are bought. Unforunately, it could be the politicians who decide whether they are built. I am frightened that, without sufficient cuscapital available to the British Aerospace corporation eaten up by a project such as the HS146, a project that buys jobs because it is based on a political decision but does not provide continuing employment for those in the industry.

I recognise the sincerity of interest of the hon. Member for Welwyn and Hatfield (Mrs. Hayman) in the HS146. I served on the shop floor of the Hatfield factory as an apprentice and I feel deeply that the Hatfield enterprise has great talent and should be able to suceed. However, when the last Trident has been delivered or is on its way to China, I recognise that it must be felt on the shop floor that there is no more opportunity.

I plead with the Minister not to take a political decision that buys jobs on the shop floor at the expense of not making available to the rest of the corporation the opportunity to proceed with other projects.

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

The hon. Gentleman seems to suggest that it is only the Government who are interested in building the HS146. The House gave to the board of British Aerospace responsibility for formulating its plans and making the very assessments that he has been saying should be made of what is for the good of the industry. It was the board of British Aerospace that requested permission to proceed with the HS146.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

That is what I do not understand. Why does it have to do that? The Minister of State said throughout our debates on the Aircraft and Shipbuilding Industries Bill that it was the right of the board to take such decisions. We gave it the authority in the Bill, when enacted, to have the working capital to fund the project of which the hon. Lady speaks. That is why we provided for capital of up to £50 million.

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

It may be helpful if I intervene to clear up any misapprehension about the lines of decision-making. I refer the hon. Member for Hastings (Mr. Warren) to section 7 of the Aircraft and Shipbuilding Industries Act, which makes two important statements. First, section 7(1) states: in formulating its corporate plan in each year and in determining the period to which the plan is to relate, and in the general conduct of the operations of the Corporation and its wholly owned subsidiaries in each year, the Corporation shall act on lines settled from time to time with the approval of the Secretary of State. That is what the Act states, and the hon. Gentleman participated in the enactment of the Bill.

Section 7(3) goes directly to the argument that the hon. Gentleman is making. It states: If the estimated cost to British Aerospace and its wholly owned subsidiaries of the development of any aircraft or guided weapon exceeds such amount as may for the time being be notified to British Aerospace by the Secretary of State for the purposes of this subsection, British Aerospace shall secure that neither it nor any of its wholly owned subsidiaries undertake, or participate with others in the undertaking of, that development except with the consent of the Secretary of State. The hon. Gentleman was present for a large number of the sittings in Committee, but he and the hon. Member for Chingford (Mr. Tebbit) seem to be unaware of section 7.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

I believe that subsection (4) still exists. I was hoping that the right hon. Gentleman would quote it. The subsection states that 'estimated cost' does not include any cost which British Aerospace or any of its wholly owned subsidiaries expects to be reimbursed under the terms of a contract. That implies that if the corporation and its subsidiaries do not get the money back from customers, subsection (3) will prevail. That makes the HS146 an even more unlikely proposition.

British Aerospace is the only group in Europe that could run a medium jet project as the prime contractor. Airbus Industrie could not do it as it is too heavily committed to its own efforts. It is only because British Aerospace has the capability that McDonnell Douglas and Boeing come to Great Britain to try to get us to opt out of the one chance of prime leadership that remains in Europe.

It is important to remember that if British Aerospace takes that prime leadership it is not expected to provide all the money. The business of McDonnell Douglas and Boeing makes that clear. The prime contractor has to put up only 25 per cent. or 50 per cent. of the capital required for a project. That is quite within the capability of subsections (3) and (4) of the 1977 Act.

I hope that the corporation will take the lead. It must do so if it is to stay in the race. If it fails to do so, it will not be able to get into the following generation of aircraft. To take the lead would not pre-empt it in any way from taking part in such sub-contracts as it can win from McDonnell Douglas, Airbus Industrie and Boeing. There is nothing to stop it from tendering for anything on a good business basis, exactly as it is now doing, for instance, with the Boeing 747.

The whole essence of the debate is that those outside the House, such as the workers on the shop floor, should remember that they were told two and a half years ago by the right hon. Gentleman that the Aircraft and Shipbuilding Industries Bill was about the extension of Socialism. They should now realise, two and a half years later, that those words have been utterly repudiated and that they do not count any more in Socialism.

5.16 p.m.

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

I shall not attempt to take up in all its aspects the somewhat muddled argument of the hon. Member for Hastings (Mr. Warren). I shall deal with the case for the HS146 as I have done on many occasions before in the House. It was the subject of my first speech in the Chamber and I hope that today it may be—

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

I can assure the hon. Member for Chingford (Mr. Tebbit) that it will not be my last speech in the House, whatever his wishes may be. However, I hope that it may be the last of my speeches imploring the Government to go ahead with the project.

The hon. Member for Hastings correctly said that only the airlines determine the buying of aircraft. That is exactly the point that many of us have been trying to make to Rolls-Royce on aero engines. The company seems to be seduced by the Boeing offer for the 757 and collaboration. However, airlines cannot buy aircraft unless Governments and aerospace manufacturers build them, and that is what the HS146 decision is all about.

For the past four years the HS146 project has been in the balance. That is because Hawker Siddeley decided before nationalisation to withdraw from the partnership that it had with the British Government to go ahead and develop a feeder liner, for which there will undoubtedly be a market throughout the world in the 1980s. The only thing that has been on our side during the delay of the past four years has been the recession in the aircraft market throughout the world. That is why other countries have delayed decisions. However, there is now a flurry of activity in Europe and across the Atlantic. It is clear that the market is picking up. That is especially true for the 70 to 100 seater feeder liner jet market, which is the slot that the HS146 would fill.

We have now reached the stage when, if we do not have a decision, we shall lose out on orders. There are airlines throughout the world that are interested in the HS146. There are airlines that are making their choice now whether to buy the 146 or its competitor, the Fokker F28, one of the second hand jets on the market, or even to remain in the turboprop league.

The HS146 has many advantages over its competitors in terms of fuel economy, cost per passenger mile and its ability to be used on grass strips by third world airlines. I have never argued the case for the HS146 in political or job saving terms. I believe that it can be argued in strict commercial terms and the safeguarding of the design capacity which has been the greatest asset that this country's aerospace industry has ever had.

I do not believe that it is possible for the Government to make major collaborative decisions at this time. There are still things of which, as my hon. Friend the Member for Kingswood (Mr. Walker) pointed out, we are unaware—for example, the exact terms being offered to us in all the possible deals. Whatever our individual predilections for co-operation with Europe, McDonnell Douglas or anyone else, I hope that we are not so blinkered in our approach that we are not willing to listen to the terms of any collaborative project being offered to us. But we do not have the kind of information on which to decide immediately where we are going on the question of the major larger aircraft.

If we make no decisions on aerospace policy now, we shall let the industry go by default. In the last four years we have lost skilled men, designers and engineers, who will be extremely difficult to replace when, as I hope, this country has a positive and dynamic aerospace policy involving many projects and showing that it can compete successfully with the major aerospace manufacturers in the world.

I do not believe that the HS146 is a political aircraft. Of course, it will have an impact on jobs. Every hon. Member should be concerned about the possibility of wide-scale redundancies in the aerospace industry. Opposition Members with constituency interests would not be on their high horses so much about the HS146 being a political aeroplane if it were in their constituencies. Of course, it makes a difference to jobs. There is the possibility of 1,500 redundancies in my constituency, 1,500 more throughout British Aerospace and 15,000 in the 1980s in Hatfield, Filton and Manchester, including all the subcontractors in Great Britain.

If hon. Members talk to the designers, the skilled men, the work force, who want to build the HS146, they will not find them arguing in selfish personal terms. These people believe that they have a product that can do this country credit, a product to sell to the third world, a product which will bring in overeseas revenue, a product of which they can be proud.

The hon. Member for Hastings may accuse the Government of all kinds of vile manoeuvring—they could have given us a positive answer much earlier if they wanted to maneouvre—but I pay tribute to my right hon. Friend the Minister of State, who has always shown an interest in this project, and to the Government who have kept it alive, because, if it were not for the intervention of the Labour Government it would have been dead and buried in 1974.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

The hon. Lady was not here in 1974.

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

I should be interested to hear what the hon. Gentleman had to say if he would care to stand up to make his remarks.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

Perhaps the hon. Lady was not here in 1974. I am not being disrespectful. She won her seat in 1974. The fact is that Hawker Siddeley, faced with the threat of nationalisation, not surprisingly decided that that was no fair way to speculate with its shareholders' money. That is the reality of the HS146. If the Labour Party had not won the 1974 election, that project might have gone ahead then. Indeed, it looked a lot different then from what it does now.

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

I am interested to hear from the hon. Gentleman that private industry makes such political decisions on its investments. Far from the Government making political decisions, if private industry makes such political decisions about where to put its money, it is a fine reflection on the ability to judge what is in the best interests of the aerospace industry and of this country as a whole.

We have waited four years for this decision. The hon. Member for Christchurch and Lymington (Mr. Adley), not I, said that when Sir Arnold Hall heard about nationalisation he did not want to put the shareholders' money into the HS146. We have waited since then and through nationalisation for the board of British Aerospace to make a decision, which it did not make on any narrow sectarian basis. It had to weigh up all the interests not only of constituents, but of constituencies, and of the industry as a whole. That was its remit in giving advice to and asking the Government for permission to go ahead to spend money on projects such as this one. We delegated that responsibility to the board of British Aerospace in the nationalisation measure.

At the end of March the board decided that it could sell this aeroplane. I recognise that if we get the decision today, no one in Hatfield will sit back and say "We have a meal ticket for the next 10 years." We realise that we have to go out and sell 250 of those planes to get a return on the money invested, that we have to sell 350 to make a profit and that we have to develop a military application and sell 100 in order to prove that the plane can be a winner.

I believe that the Opposition, in their attitude to the HS146—an attitude which has changed much in the last few months—are adopting a political stance. They want to knock any positive decision which will give the aerospace industry the best boost that it would have—confidence in this Government and in its designers, engineers and workers to produce an aeroplane that we can sell in the civil market. I hope that the Minister will tell us today that that is precisely what we shall be allowed to do.

5.26 p.m.

Photo of Sir John Cope Sir John Cope , Gloucestershire South

I congratulate my neighbour, the hon. Member for Kingswood (Mr. Walker), both on his good fortune in the Ballot and on his choice of subject which, as my hon. Friend the Member for Hastings (Mr. Warren) said, is both timely and extremely important to the country and to many constituencies. I am delighted that the hon. Gentleman used this opportunity to give us the chance to discuss this great series of decisions which are linked, though in some ways they are separate, before the Government take them.

I take the view that any Government must have a great financial interest in these decisions. After all, whatever else happens, the Government will have to put up a lot of the money for these projects, whichever of them goes ahead. As has been amply demonstrated in the debate, no one can be dogmatic about the correct decision at this stage. Apart from Government Members, no one in the House has the full details of what is on offer. That point was made by the hon. Member for Welwyn and Hatfield (Mrs. Hayman). These are matters of judgment. No one with all the figures at his command, however clever he may be and however much he may know, can say whether A or B is the right decision from every point of view. These are matters of judgment—less politely called guesswork. That is what this whole debate is about.

There are genuine divisions of opinion—not all on party lines. There are many divisions within the unions. One of the local TASS branches from Rolls-Royce sent Opposition Members a long paper in favour of the Boeing option. That goes against what the general secretary of TASS said not long ago, because he was in favour of the European option.

I should like to refer to the HS146, which occupied most of the speech made by the hon. Member for Welwyn and Hatfield. There is no unanimity of view on that project on the Opposition side, any more than there is in the country. The Government have frequently said that the decision must be a commercial one. I entirely agree, and I hope that it will lead to the HS146 going ahead.

One element in the commercial decision on this project is the question of in Filton in my constituency. The retenkeeping the skills in Hatfield and, indeed, tion of those various facilities would be assisted by a decision to go ahead with this project. I emphasise that this is one of the important commercial factors in considering the HS146 project.

I turn to the next decision in the scale, going up in size. A decision has to be made by the Government about whether to allow British Airways to go ahead with its request to buy the Boeing 737. This is a shorter term decision in the context of the time scale involved. The rival is the BAC111, about which the argument are familiar. I am on record as being in favour of British Airways buying the BAC111. I do not wish to develop my arguments but the Government should bear in mind two factors when examining British Airways' figures and making a decision.

The 737 is the more expensive aircraft. It is the slightly larger of the two. We are told that the costings of the 737 make it the better and cheaper buy for British Airways. There is talk of its remaining in service until 1994. Yet British Airways, on a piece of paper that it sent to me and to other hon. Members, talks of the 737 being replaced by a new stretched BAC111 in the late 1980s. There seems to be some discrepancy about dates. I believe that the argument is in favour of the BAC111. A stretched BAC111 could be a good aeroplane, not only for British Airways and its markets but for sale elsewhere in the world in places where American aircraft will not be so available or suitable. I am thinking of China and Eastern Europe.

Photo of Mr Geoffrey Pattie Mr Geoffrey Pattie , Chertsey and Walton

Is it not the case that the larger stretched aircraft would have the Rolls-Royce 432 engine and that this would therefore be a worthwhile project to develop? Is there not a good reason for keeping that project going in the short term?

Photo of Sir John Cope Sir John Cope , Gloucestershire South

My hon. Friend has anticipated my next point. I agree with him.

When making a decision, the Government must bear in mind the question of import duties. It is a matter which I have raised before and I make no apology for doing so again. If British Airways decides to buy the wholly American aircraft, including some American equipment for it, no duty will be payable either on the aircraft or on the equipment. But if British Airways decides to buy the BAC111 with the same American equipment it will have to pay import duty on that American equipment. This must be nonsense.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

Is my hon. Friend aware that if we try to export the BAC111 to the United States we shall not enjoy the reciprocity that the Americans have when they export to this country? We have to pay duty when exporting to America.

Photo of Sir John Cope Sir John Cope , Gloucestershire South

I am aware of that. I know how the situation has arisen. I have had correspondence with the Department of Trade and I have asked questions of that Department. I always receive negative answers. The Department admits that duty is payable, but it will not take action to end the practice. It is a nonsense that we are in that position.

I hope that the Minister will say that when making a decision he and his officials will exclude in their calculations the element of duty on the BAC111. One hopes that by the time that these aircraft are built, bought and paid for they will have been able to sort out the nonsense involved in import duties which leads to the necessity of including them in calculations.

One must be more speculative about the big decision that has to be made in the long term. The big decision is which of the large aircraft—the 160 to 230 seat aircraft—for the 1980s the Government should back. There are two categories of aircraft which are separate and which should therefore be considered separately. There is the 180 seater and the larger 200-plus seater. They are not comparable aircraft. The question is whether there is a market for both sizes of aircraft.

Boeing has estimated that there is a market for about 1,000 of the 180 seater and a market for about 1,200 of the larger aircraft. Boeing is concentrating its effort on the larger of the aircraft. It is offering us participation in the smaller of the two types. McDonnell Douglas is offering us participation in the smaller aircraft as does the JET project. The difference could be extremely important to the commercial markets in the 1980s and beyond.

The A-300 B-10 is in the larger bracket and will be in competition, not so much with the 757 but with the 767 and the 777 which will be of a comparable size. If the Government's commercial judgment indicates that the larger bracket is the better commercial bet—and that is Boeing's judgment—that improves the case for going for the B-10 as opposed to either of the other two options.

British Airways currently is speaking about the 757—the slightly smaller category rather than the larger category. British Airways argues that the benefit of that is the use of Rolls-Royce engines.

I have an even larger Rolls-Royce aero engine factory in my constituency than the BAC airframe factory at Filton. I am conscious of Rolls-Royce's position and of that company's arguments. The arguments in favour of the use of Rolls-Royce engines apply equally to the McDonnell Douglas aircraft which can be fitted with Rolls-Royce engines. The question boils down to how much advantage there is in having the so-called lead engine in an aircraft project. It is not nearly as big as an advantage as it used to be. There is no such thing any more as a lead engine. The airlines decide the engine that they want, provided that it will fit, from the options that are available. Saying that the Rolls-Royce engine is the lead engine is not as important as it is sometimes thought to be by those who study these matters.

The principal advantage of the McDonnell Douglas offer is the completeness of the package. It is a much greater package than that which is on offer from Boeing or the Europeans. The package includes the offer of marketing help for the HS146 and the offer of co-operation with the next generation of supersonic aircraft. We have spent vast sums on developing the Concorde, which is now proving successful on the Atlantic and other routes, and we have established with the French a world lead in this aspect of aviation, the great value of which we should not forget.

By the end of the century I believe that more advanced supersonic transports will be flying and in the course of preparation. I do not see such aircraft in terms of a mark II Concorde—the phrase used by the hon. Member for Kingswood. I should be most disappointed if whatever package emerges from the Government's decisions does not include work on a future SST. I do not mean that the project should be decided now. I mean that work should be done to determine what the project should be and to examine possibilities of future co-operation to enable us to capitalise on the existing project and get more value out of the money we have spent in getting this far with the Concorde.

The hon. Member for Kingswood has done a service to the House in initiating the debate and allowing us to use the time to discuss this topic. I hope that the Government will listen to the debate and will take the decisions that lie ahead as soon as they can. Once the decisions have been taken, I hope that the Government and the country will be able to stick to them. We have a very bad record of dithering over aircraft projects and of building up a lobby against all sorts of projects that we are building. We have never seen that to greater effect than with the Concorde. All the time we have damaged and destroyed our projects by dithering, bickering and arguing after the decisions have been taken. These decisions are finely balanced, and that is all the more reason not to dither after they have been taken but to make whatever decision we take the right one.

5.43 p.m.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

I agree with the last sentiment expressed by the hon. Member for Gloucestershire, South (Mr. Cope). I want briefly to support the hon. Member in congratulating my hon. Friend the Member for Kingswood (Mr. Walker) on producing an extremely clear and concise introduction to a very complex and difficult subject.

We have been assured by the press that this debate might see not one but three announcements by way of policy decisions. I rather suspect, looking at the Treasury Bench, that we shall be lucky to get all three, but I believe that all of them are in the offing.

There is immense speculation about what the British Airways order is to be, about the go-ahead or otherwise for the HS146, and about launching aid for the RB211–535 engine. I have a constituency interest in that engine since Rolls-Royce is located in Derby. However, it will become clear to hon. Members that I cannot claim to represent the views of Sir Kenneth Keith in what I propose to say.

The strong pressure from the management of Rolls-Royce is for decisions to be taken which will be facilitated but not entirely clinched by a go-ahead on the launching aid for the RB211–535 to enter into a collaborative venture with the Boeing Corporation for the 757 aircraft. That would be with its fuselage already more or less stretched to the limit, with about a 20 per cent.-plus share of subcontracting work for British Aerospace, and with the RB211–535 as the launch, but not necessarily the only, engine for the project. As the hon. Member for Hastings (Mr. Warren) said, an aeroplane can be sold with a variety of engines. The launch engine is not necessarily the only engine. We have to look carefully at the whole pattern of development of the new family of aircraft which Boeing intends to introduce.

It is clear that there are considerable advantages in having a project of this kind. There is the advantage that Boeing already has 60 per cent. of the civil aircraft market. It has a world dominance which this kind of collaboration might intensify. In addition, it has had a succession of winners. If one thinks of its aircraft from the 707 on, it is clear that it has managed not only to penetrate the world market in rapid succession to the American market but to dominate with each of its arcraft. It would launch the RB211–535 engine in a very dramatic manner.

That seems to be the American strategy of Rolls-Royce, which has been followed under various managements and over many years, and which survived the bankruptcy of 1971. The American strategy has a good deal to be said for it. The Americans are dominant in civil aviation throughout the world, and within that dominance Boeing is pre-eminent.

We understand that British Airways would also wish to go along with that, not merely because it proposes and would like to buy the existing Boeing 737, but because it sees a considerable role for the proposed 757 in the 180 seater class aircraft.

I can understand all of these factors. I can understand that British Airways would like to have an all-Boeing fleet with the exception of an extended run of the Tristar aircraft and a few Concordes. I can understand that that would be a neater and simpler solution for it. I find it slightly more difficult to understand why it should claim that there would be no market requirement between the proposed 757, or an equivalent when it flies it, and the Tristar which carries very many more passengers. It rules out completely any aircraft like the A-300 B-10 or any successor in that category. I shall deal in a moment with the question of our collaboration with Europe, but it seems that to clinch the Boeing deal at this time would be to strike a mortal blow at future collaboration with Europe to which many of us have looked for a long time.

It is true that Boeing has always eschewed collaborative ventures in its own production. That is probably one of the reasons it has been so successful. It has not spread the design leadership around, and it has not had a number of production lines in different places. It has kept it all to itself, subcontracting a little risk here and there, and ladling out a little gravy. But essentially it has kept things for itself, and very successfully, too. The choice for us is between getting some considerable crumbs from the rich man's table for British Aerospace if we go ahead with this deal and the opportunity for a place at the table for a meal which may not be very well cooked if we go in with the Europeans.

Photo of Mr Kenneth Warren Mr Kenneth Warren , Hastings

Does the hon. Member accept that it would be much nicer if, instead of talking in terms of our collaboration with Europe, we spoke of Europe collaborating with us? We are the strong men in Europe.

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

I fully agree with the hon. Member's last point. That fact has been reinforced by the terms in which McDonnell Douglas has put forward its proposed collaboration, which is one-third for itself, one-third for the rest of Europe and one-third for us. I think that is seeing the matter about right in terms of the kind of collaborative projects we want. I shall deal in a moment with the McDonnell Douglas option and say why it is possibly the best of the three.

It seems to me that, if we rule out any further collaboration with the Europeans, with the B-10 project, and if we go in now with Boeing over the 757, we shall deal a blow to the JET project which it will not survive. We saw the announcement on Friday that the Europeans are to go ahead with the B-10. It was previously suggested that they would wait until they saw which way the British Government moved. They have not done that. They felt strongly enough to go ahead, with launch orders from Lufthansa, Swissair and, I believe, Air France. They have already been enormously encouraged by the sort of market penetration which they are getting with the A-300.

Anyone who has flown in the A-300, not merely in Europe but in, shall I say, less sophisticated areas of the world and with less sophisticated pilots, and seen how well the aircraft handles and how much the margins of error have been eliminated, will, I think, pay tribute to that design and regret now more than ever that we withdrew in such preremptory fashion from the airbus consortium some 10 years ago. I believe that we should have stayed with it, and I believe aI3o that we should leave the door open now for a collaborative venture with the Europeans, a venture which includes, I remind the House, two possibilities—one in the aero engine sector and the other in the airframe sector.

The great problem in this debate, feel, has been that in British terms the aero engine industry has been set at the throat of the airframe industry, and vice versa. This is totally a tragedy for Britain. We cannot expect to be dominant in either. We can expect a share in projects in both sectors provided that we are, on the one hand, not too greedy and, on the other, not too cowardly or supine. I believe that there is a possibility in joint discussions with either the Europeans or with McDonnell Douglas, or possibly at a later stage even with Lockheed—Lockheed's proposals seem to be somewhat vaguer at this stage—for the utilisation of the Rolls-Royce engines, either the 535, as has been proposed, I think, by McDonnell Douglas, for the ATMR project, or the 432 engine, which has been referred to in the debate.

The extension of the 432 project and a go-ahead for it allows us a certain number of other European options. One of these, which has been referred to already, would be the option of proceeding with a new version of the BAC111 rather than going ahead necessarily with JET 1 and JET 2, which are not expected to have British engines in them.

Photo of Mr Geoffrey Pattie Mr Geoffrey Pattie , Chertsey and Walton

Does the hon. Gentleman not feel, not only from the Rolls-Royce point of view but from the standpoint of British Aerospace interests generally and the good use of resources somewhat under pressure, that that might be a better option than the HS146 option, which will use American engines?

Photo of Mr Phillip Whitehead Mr Phillip Whitehead , Derby North

The hon. Gentleman anticipates me. I shall say a word in a moment about the HS146 and the decision which may come on that. At this stage I wish to finish my point about collaboration with the Europeans and possibly with McDonnell Douglas. It seems to me from what we have seen of the offer from McDonnell Douglas that McDonnell Douglas is proposing to us something which allows triple design leadership, something which does not rule out the compatibility of the ATMR and the JET project, and something which allows a role for the very successful Rolls-Royce company on the aero engine side. All these things keep options open. Going in with Boeing simply forecloses them.

That, I think, was the conclusion which my hon. Friend the Member for Kings-wood reached, and it is a conclusion in which, somewhat regretfully, I have to concur. One would very much like to see pre-eminent in this whole argument the interests of the major firm in one's constituency, but we have to look wider here. I think that Derby workers think of workers elsewhere throughout British Aerospace as much as they think of their own interests and their own future. They realise as much as anyone else does that a total collapse of British Aerospace, or at least of its technical and design capacity, would ultimately be disastrous for them, too.

My personal view is that we should favour a much closer look at the proposals which have come from McDonnell Douglas for a collaborative project with ourselves and the other Europeans, for a co-ordination of the European projects with the ATMR. That offers us rather more.

A moment ago, the hon. Member for Chertsey and Walton (Mr. Pattie) asked me about the HS146. I must pay tribute here to my hon. Friend the Member for Welwyn and Hatfield (Miss Hayman), who has campaigned long and hard for this project. No one could have pursued a constituency interest more closely or more eloquently, and it may well be that she is successful and the aircraft will be launched.

I think it appropriate, therefore, that it be said—and perhaps especially appropriate that it be said from these Benches—that there are reasons for serious reservations about the financial viability of any HS146 project. If my right hon. Friend the Minister of State refers to the HS146 when he replies to the debate, I should like him to deal with the following points.

First, I believe that the launching aid for such a project to get off the ground will be in excess of £200 million. What kind of sales forecasts do we have for this aircraft, especially since it would enter the market with a rather old-fashioned design many years after an aircraft successfully flying which has over 50 per cent. British components within it'? I refer to the F28. The F28 itself has had a pretty difficult and perilous passage. It is now, I think, breaking into the domestic airline markets of the world. To envisage the HS146 successfully following it—not being abreast of it but following it—rather stretches credibility.

Therefore, if the gallant campaign pursued by my hon. Friend the Member for Welwyn and Hatfield is successful, we shall, I think, need to hear from the Government, if some announcement is to be made, a careful account of how that £200 million can be justified. There are other ways of keeping British Aerospace design teams and British Aerospace workers in business more successfully in the longer term than by following out that project. That is my instinct. I must honestly give it to the House.

I conclude, therefore, by asking my right hon. Friend two other questions. First, when may we expect a decision about launching aid for the RB211–535 engine? The 535, building as it does on the already enormously successful RB211 project, with a scaling down as an earlier development which the Government did fund having managed to increase the power of the engine already, makes it the most attractive offer of those proven engine designs in the market for both Europe and North America. In my view, therefore, we should go ahead, and go ahead without delay, on that project.

Finally, can my right hon. Friend tell us at what stage we shall have an announcement from the Department of Trade about the British Airways deal? These things have become interwoven now with the future of HS146 and things of that kind. It would not be right if we made investment decisions about the British aircraft industry as a palliative to balance buying decisions of British Airways, and it seems to me that we are heading again in that direction. I should like to know why British Airways is to buy the 737, if it is, and in that event will it buy that and that alone or will it also be asked to buy some BAC1 111s? It seems to me that the BAC111 is not at the end of its useful life. It is not half as bad an aircraft as publicity and propaganda from British Airways would sometimes have us believe. I should therefore like to hear my right hon. Friend's views on that.

We are always caught short in the civil aviation business. For many years now, it seems, we have been trying to persuade successive Governments that they should hold the line in the great shortfall of orders following the world recession post-1973. Suddenly now the market is opened up again. We see at Rolls-Royce, as is seen elsewhere, that the company does not have the skilled personnel to do all the jobs necessary, suddenly finding that the forecasts for sales and the time scale for new projects have been foreshortened.

We have to make the right decisions. I acknowledge that they are complex, but we cannot make all the right decisions unless we start off in the right way, and there are many of us in the House today who want to be assured that the Government will do just that.

6.0 p.m.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

I, too, begin by thanking the hon. Member for Kingswood (Mr. Walker) for his choice of subject and congratulating him on his good fortune in being able to give us the opportunity to talk about the future of the aerospace industry.

We have already seen this afternoon that many of the decisions which face the Government are not only difficult but can be reached across party lines, if there be any party lines in these matters. I agree with the hon. Member for Derby, North (Mr. Whitehead) in having serious reservations about the HS146 project. It is now many years out of date, and it would be idle to deny that the apparent unanimity of view within the board of British Aerospace about it is matched right the way down the line by those within the corporation who will be responsible for the day-to-day decisions and for building the plane. There are people within British Aerospace who have grave doubts about the project.

The hon. Member for Welwyn and Hatfield (Mrs. Hayman) was rather scathing about the role of Sir Arnold Hall. His decision in 1974 on the HS146 may have been influenced, as I am sure it was to a degree, by the possibility of the future nationalisation of the industry. It was also influenced by the oil crisis. Now it is a decision which is four or five years out of date. Going back to an old project of that kind would cause many people to wonder and worry whether the Government, if they took the decision, were taking one that was strictly "commercial"—the word used in the motion.

In a short speech, one cannot deal m great detail with every possibility and prospect for the future of the British Aerospace industry, but some things are clear. The industry is a storehouse for the skill and ingenuity for which this country has always been renowned, but many skilled workers—and not only in the aerospace industry—are sullen and resentful over the way in which they have suffered under the Government's incomes policies. We have seen this in the motor industry and in many other industries. Therefore, the Government have a double duty, not only to the aerospace industry and to those who work in it but in the wider sphere, to those who earn their living by their skill, to see that a viable aerospace industry, with a design capacity, is retained for this country.

We know that we can no longer go it alone on any major new project. Therefore, the question is not "Do we need partners?" but "Who shall our partners be?" I am glad that tonight I think I have detected amongst hon. Members who have spoken the realisation that we are not faced with a simple choice between America and Europe. There is a good possibility of the British aerospace industry's becoming involved in two new projects. One could be a form of collaboration with Europe and one with the United States.

My view on co-operation with the Amercians is that co-operation with Boeing is rather like a mouse trying to co-operate with a cat. Partnership under those circumstances is extremely difficult. I suspect that the idea of Boeing is little more than, first, to pay lip service to the need to placate the British Government and British Aerospace in order to obtain an order from British Airways and, secondly, to further Boeing's long-term aims of destroying the independent design capability of the British areospace industry.

On that basis, Boeing has certainly found some remarkable and consistent allies within British Airways over the years. The hon. Member for Derby, North referred to that, and the hon. Member for Kingswood referred to the comments from British Airways. I remind my hon. Friend the Member for Hastings (Mr. Warren) that when he and I first entered the House in 1970 the first public comment that I think either of us made was a joint comment addressed to Mr. Keith Stainton, who had produced a violently anti-Concorde statement.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

That was not a Freudian slip. I appologise to my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) in absentia.

Ross Stainton saw it as his interest only to take account of the financial future of British Airways. He put at nil his wider responsibility as a senior executive of a nationalised corporation for any other part of the British aerospace industry. I am sorry to say that I think that that attitude still pervades many of those within British Airways. We must recognise that a nationalised industry has a wider responsibility than purely a commercial one. The fact that the Government are involved in such decisions means that they are inevitably to a certain degree political.

I want later to discuss briefly the BAC111 versus the Boeing 737 argu- ment. First, I wish to finish dealing with the question of partnership with the United States. I do not think that Boeing points the way to partnership. We have a far more likely successful partnership in prospect with McDonnell Douglas, as a number of hon. Members have pointed out.

Perhaps what we should examine is the twin evils, as many people see them. of partnership with French manufacturers or with American manufacturers. Speaking in private, many people will be very rude about both. Possibly the difference for our industry is that between partnership with a seducer and partnership with a rapist.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

I agree.

I fear that the American industry takes the role of the rapist. I believe that the British industry is more likely to emerge smiling after a difficult liaison with France than after a voracious relationship with the Americans, and particularly with Boeing.

I have touched on the question of the obligations of nationalised industries and whether British Airways buys the BAC111 or the 737. We have heard brave speeches from the Prime Minister about buying British. I pay tribute to him in that I know that he is taking a personal interest in the decision, and I am certain that he wants to get it right. I hope that his words about buying British, aimed particularly at Government Departments and the nationalised industries, will be taken to heart by the Government when they have their final say in the decision whether British Airways should buy the BAC111 or the 737.

A massive propaganda campaign has been carried out by Boeing, aided and abetted by British Airways and Rolls-Royce. When one is dealing with public relations, in the triumvirate of Lord Beswick, Frank McFadzean and Kenneth Keith, Lord Beswick comes a very poor third in the sort of proganda exercise to which many hon. Members have been subjected over the past few months. I think that the Government have come to realise just what has been going on. I hope that as a result their decision will have been aimed rather more at trying to get the right solution for the British aircraft industry.

The Government may try to say "We can't please everybody. Let's tell British Airways to buy a few 111s and a few 737s." That would be an unsatisfactory solution, because British Airways is already operating a fleet of 111s, although to hear it talk one would not know it. One would think that the 111s were the most unsuccessful aircraft British Airways had ever flown, which is not true.

The Government should come down clearly on the side of the BAC111. Let us take a positive step, perhaps tonight, in this respect. The Government must he aware that a great deal more than simply this order hangs on the decision. British Aerospace has been in lengthy negotiation with the Japanese on a cooperative venture with the BAC111. It is not credible to expect people in countries such as Japan merely to shrug their shoulders and take no interest if the British nationalised airline, the final decision on whose purchases is in the hands of Her Majesty's Government, shows its total disinterest in the 111 by being authorised to buy the 737. I have little doubt that it would have a damaging effect on the sales efforts in Japan if it happened.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

My hon. Friend is being a little unfair to British Airways. We are all delighted when it turns in good profits. It does it by sound management and sound commercial sense. My hon. Friend should understand that British Airways has not said that the 111 is a no-good aeroplane. What it has said is that the 111 has 100 seats and it wants a 120 seater. My hon. Friend is dong very little good to the BAC111 by putting it about that British Airways is criticising it as a no-good aeroplane. British Airways is not doing so.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

Unusually for him, my hon. Friend is being a little naive. Instead of British Airways coming to British Aerospace two years ago and saying that it wanted a specification for a 120 seater or a 100 seater, whatever it was, it gave British Aerospace just under four weeks to produce a detailed specification and proposal for a new plane. I do not believe that a major international airline with an open mind in looking at its forward purchasing projects would come up with a lead time of four weeks for a decision like that.

I am speaking frankly about the way in which British Airways has gone about replacing its Tridents. I am sorry if I am offending my hon. Friend about the way in which I say it, but I believe that British Airways has done considerable damage to the BAC111 by the statements that have been made, including those at the press conference in New York given by Mr. Stainton. One recalls also the agreement by the chairmen of the three nationalised industries that they would not indulge in public debate on the issue, yet time and again British Airways has come up with statements. My hon. Friend may not think that those statements have been damaging, but I think that they have, and those involved in the sales effort of British Aerospace in Japan—and I put it no stronger than this—do not exactly think that British Airways has helped them.

Let us also be clear that the American aircraft manufacturing industry post-Lockheed is in bad odour in Japan. No one would be happier to destroy the burgeoning relationship between British Aerospace and the Japanese than the American aircraft manufacturing industry. It is being a little naive not to recognise the interest within the American aircraft manufacturing industry in trying to disrupt or prevent the birth of this long-term partnership relationship between British Aerospace and Japan.

I turn now to a subject which I think will not cause my hon. Friend to chastise me—the situation within British Aerospace. My hon. Friend the Member for Hastings rightly reminded the Minister of some of the things he said to the workers in British Aerospace when the nationalisation proposals were before the House. How sour those words have turned in the ears of those who work on the shop floor in the British aircraft manufacturing industry. The golden era of job security, the preservation and development of technology, and all the other wonderful things that the Minister said would happen have not come to pass.

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

During every one of the visits that I paid to most of the aircraft factories during the passage of the Aircraft and Shipbuilding Industries Bill, I specifically said that nationalisation would not of itself guarantee one single job in the aircraft industry.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

I do not have with me the headline that appeared in the Evening Echo, in my constituency, following the meeting that the Minister had with the trade union leaders at the BAC factory at Hum, but if that was the message that he intended to convey, I must tell him that he did a poor job with the union leaders at Hum or with the press afterwards. The impression was very clearly given that job security was here to stay.

Photo of Mr Russell Kerr Mr Russell Kerr , Hounslow Feltham and Heston

The hon. Gentleman was not born yesterday.

Photo of Mr Robert Adley Mr Robert Adley , Christchurch and Lymington

If the hon. Gentleman could possibly struggle to his feet for a second time in one afternoon, I should happily give way to him. In the meantime, I shall continue with my speech.

The fact is that industrial relations within British Aerospace are a great deal worse than they were two years ago. This may be partly to do with the expectations of better industrial relations through the so-called industrial democracy. That is only one factor.

For example, I can tell the House that the union leaders at Hurn were bitterly disappointed that the management of British Aerospace apparently did not think it necessary to invite any trade unionists to Bristol the other day for the signing of the agreement with Romania on the BAC111, although over 50 per cent. of that order will be produced by BAC at Hurn. At the request of the union leaders at BAC Hurn, I have now established a regular liaison meeting with them so that I can try to find out for them what is going on within British Aerospace. That situation is not very commendable in the light of the promises made about nationalisation improving industrial relations.

I end by referring to the question of the sales of the Harrier. Today the Foreign Secretary, in his statement on the trials of the Soviet dissidents, said that we may well have to reappraise our policy towards the Soviet Union. I believe that the Government, during the past three years, have sensibly and rightly come to share the view which many of us have expressed about the common sense and importance to our industry of making the Harrier available to China. That would be a major advantage to this country because it would simultaneously equip the Chinese with a defensive weapon on their long border with the Soviet Union and would equally supply much-needed work and revenue for a very long time to come, to British Aerospace. If we are to have some positive statements today, I invite the Minister of State to make that one of them.

6.16 p.m.

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

This process is becoming more complex every day. In my day, it was a Merlin water-cooled piston engine and the airframe made of wood by de Havilland, and it was a good aircraft. I wish that we could go back to those days. It would be delightful.

I have listened carefully to the debate and from it I have realised how many different people have had different briefings from different organisations. I think that I have been briefed by every engine company and by almost every airframe company, but I am still as confused as ever. I have some ideas in my mind, but I cannot help feeling that this debate might not have taken place if the chairman of Rolls-Royce, British Aerospace and British Airways had got together much sooner and decided something better for the advantage of the British aircraft industry as a whole.

This is the first time since I have been in the House that substantal numbers of people are wooing the British aircraft industry. It is the first time that we have ever been in that favourable position. That is why I would not like to have to take the decision that has to be taken in the very near future. The ideal situation would be to have all the airframes, all the avionics and all the engines in a superb aircraft selling in every country and made in Great Britain. But we are not going to get that in the next generation. Therefore, we have to try to get the best of all worlds.

What is significant is that hon. Members are speaking very often with their own constituency interests in mind, and I do not blame them for that. I have no constituency interest, although a very small number of my constituents may be indirectly involved. What worries me is that a substantial number of people will be made redundant and research and design teams will be disbanded if, for example, something like the BAC111 is not continued. That has to be said. Whether we like it or not, it would be naive to pretend that the Japanese are not looking at what we decide here now.

My second point about procurement is that Lockheed seems to be left out of the reckoning, apart from a reference by my hon. Friend the Member for Derby, North (Mr. Whitehead). But it is significant that at the moment when specific engines are required Rolls-Royce is deficient, and that is a tragedy; it does not have the right engine at the right time, but it has an engine which, seemingly, will be attractive to Boeing. I have the general feeling from both sides of the House that the House at present does not trust Boeing as far as its care of the British aircraft industry is concerned. We were told clearly that we could become sub-contractors and that we would do well out of the business. However, I realise that time is getting short, so I will quickly end with two observations.

There seems to be a chance of strong collaboration in Europe. The people there seem eager to get us. We have to find a good way in. The late starter from McDonnell Douglas is also very attractive. The one thing which seems to be missing is good consistent figures on the performance and opportunities for each and every one of the industries, whether engine-wise or airframe-wise.

6.20 p.m.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Perhaps I should start by reminding the House that I have some financial interest, albeit an indirect one, in a subsidiary of United Technologies Limited, whose other subsidiary is Pratt and Whitney, but I do not think that the hon. Member for Derby, North (Mr. Whitehead) need worry unduly about my feelings on that account.

As ever in these debates, we have had some extremely interesting speeches. As ever, they have been liable to give rise to those little scenes in which the Minister of State, Department of Industry, says "Hear, hear" as I chastise one of my hon. Friends. That is unusual, but it makes these debates more interesting. There is a considerable cross-current of opinion. Indeed, I do not believe that any of the issues is overtly politically partisan.

We are grateful to the hon. Member for Kingswood (Mr. Walker) for his good fortune and his good sense in getting this debate and in asking all the right questions. I hope that the Minister of State will give some of the right answers, or even some answers. He has not done so before.

My hon. Friend the Member for Hastings (Mr. Warren) was right to point out two important facts—that the customer is king and that the British industry has greater ability than any other in Europe, although its lead is now in increasing danger. The hon. Member for Welwyn and Hatfield (Mrs. Hayman) naturally talked about the HS146. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) referred to the British Airways order, as did the hon. Member for Derby, North and my hon. Friend the Member for Christchurch and Lymington (Mr. Adley).

I say to all of them that I hope that we shall all be fair to British Airways. There is nothing in the legislation relating to British Airways and nothing in the duties which this House lays upon British Airways about considering anything at all except the interests of British Airways. Of course, it is understood that British Airways will not be stupid about these matters and that whenever possible it will assist the British industry. It has done that to no mean extent, for example, in ensuring that the Rolls-Royce RB211 is fitted on the Boeing 747 and goes to other customers as well, and in helping to launch the Tristar with that engine.

We should not be so quick in suggesting that we as politicians should be there at all times, not only telling the aerospace industry what aircraft it should make but also telling the airlines which aircraft they should buy. If we are to do that, why on earth do we need to appoint boards of directors to these great industries? If we continue to look over their shoulders and second-guess them, what sort of men shall we get to take the jobs in these industries?

Photo of Mr Frank Tomney Mr Frank Tomney , Hammersmith North

The decision which British Airways has to make is not one which is pro-European or pro-American or anti-American. The decision relates to aerospace development for the next 50 years and how we envisage that development. I say, quite frankly, that it must be transcontinental, and the bigger the size of the market the better. We ought to be interested in the Russian market, the Japanese market, the Australian market, the Canadian market and so on. We should forget the small continent of Europe and aim for the sort of aircraft which can carry the biggest payload, which has the biggest number of passengers, and which has a world-wide market.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The hon. Gentleman is probably right, but I do not think that his intervention is exactly relevant to what we are discussing.

The hon. Member for Derby, North was a brave man. He was in considerable difference with his major constituency employer, not to mention that formidable figure Sir Kenneth Keith. The hon. Member asked some extremely pertinent questions about the HS146 which may have caused some degree of pain to some of his hon. Friends, and also to some of mine. I agree with him that a decision about the RB 211–535 has to be made pretty soon; otherwise another decision will be made by default—a negative decision.

As in all the recent debates, there has been a theme of anxiety about the decisions running through the speeches of hon. Members from each side of the House. All hon. Members have been asking detailed and specific questions—and, indeed, more generalised ones—in order to try to understand what is the Government's thinking on these matters. I do not think that in the past even the Minister himself would claim to have answered many of the questions or to have dispelled much of the anxiety.

The Opposition have not sought to make partisan capital out of the obvious and growing concern of the Government's own supporters. We know that the decisions are difficult and complex, but we are becoming increasingly concerned—as the Minister must realise his own hon. Friends are—that, for all the brave words, there is a feeling that he is letting things drift and that he is letting events take charge of him rather than taking charge of events himself. We are entitled to expect rather more of him.

The Minister supported the proposal in 1974 to take the aerospace industry into public ownership. That proposal was carried through this House in an atmosphere of muddle, of indecision and of incompetence—so much so that it took over two years for the legislation to be enacted. We had the affair of the hybrid Bill, the disputed votes and all the other touches of nastiness which the Minister so often finds attaching to him. The whole affair of the nationalised industry has led to the near paralysis of decision-making in the industry for over four years.

Photo of Mr Ronald Thomas Mr Ronald Thomas , Bristol North West

Will the hon. Gentleman give examples of the other privately owned aerospace firms in the world which have, over the last four years, been making these dynamic decisions that he is speaking about?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

Douglas has launched a new aircraft, the DC9-80. Boeing has maintained its impetus and will, I fancy, collect a considerable number of orders very shortly. I would not be in the least surprised if Douglas were to collect quite a few more as well.

The Minister said in Committee: I concur absolutely with my right hon. Friend the Member for Sunderland, North, and my other hon. Friends who have made the point, that previous forms of nationalisation are utterly unsatifactory."—[Official Report, Standing Committee D, 16th December 1975: c. 96.] He went on to say that he would nationalise the industry in a way which would be totally different and completely new. He said that nationalisation was about the advance of Socialism, and that that was what the Bill was about.

I put this to the Minister: Sooner or later this board, the aerospace board— which will be dedicated to the advance of Socialism and not to the advance of the aircraft industry, will come into contact with the boards and salesmen of McDonnell Douglas, General Dynamics, Lockheed and Boeing, and they are dedicated to commercialism. My hon. Friends and I fear that when that happens, commercialism will win the day in the world markets, which will thereby prejudice jobs in this country."—[Official Report, Standing Committee D, 18th December 1975; c. 164.] That is still the burden of our concern today. Indeed, we are still concerned today, as we were during the passage of that Bill in 1975 and 1976, about how the industry would be run.

Let us now look at the Minister's words: As the Bill has proceeded through its Committee stage, it has become clearer and clearer that there will be greater advances of industrial democracy in these industries under public ownership than we have ever had in any publicly-owned industries … The days of imposing decisions upon the workers in industry are gone."—[Official Report, Standing Committee D, 22nd January 1976; c. 348.] That may be true, but the workers in the industry are not imposing any decisions either. In fact, it seems that no decisions are being imposed upon or, indeed, made by anyone.

The Minister was clear enough on 10th February about who would make the big decisions in the nationalised corporations and, despite section 7(1) and (3) of the Act, he said—the words have been quoted to him today by my hon. Friend the Member for Hastings—that the market strategy of the corporation would be in its hands and not those of the Government. Today, it is not even in the Minister's hands. The Prime Minister has felt it necessary to set up a Cabinet committee to consider the options in future civil aircraft construction. That does not sound like the board making the decisions.

We still have some great puzzles, of course. The Government have not yet announced the 146 decision. We expect them to do so soon. But what did the Minister say about that all that time ago? For how long did it go on? On 20th January 1976, the Minister said of the 146 project: That will be a matter for the board of British Aerospace to decide, not the Government."—[Official Report, Standing Committee D, 20th January 1976; c. 341.] But who is making the decision today? It is not the board. The board has made its decision. It has asked for permission to go ahead with the project. If the Government were not stopping it, it would have gone ahead with it by now. The board made that decision in March.

On 6th May 1976, the Minister was even more emphatic. He said that he had just visited the workers at Hatfield, and he spoke today about those visits. In May 1976, he said: I told them that the decision on the HS146 is open and that the representatives of, for example, the CSEU could discuss it with the organising committee. If the organising committee comes forward with recommendations before vesting day, and if those recommendations are accepted by the Government, a decision can be made before vesting day, and we do not have to wait for that."—[Official Report, Standing Committee D, 6th May 1976; c. 2979.] Vesting day was more than a year ago, and the Minister has still not announced his decision. He was talking nonsense, as he usually does in this House.

Who is managing the industry's affairs? Is it the board or is it the Minister? Is it anyone at all? It is well known that the decision of the board to go for the 146 was reached only after some agonising within the corporation. Some of the professionals in the corporation believed that the £250 million of resources which it would require might be better spent elsewhere. The problem is that the Government do not seem to be able to make up their mind, after all this time, whether that is so or not.

Profitability is all, as the Minister put it at that time. We agree with him. But two factors worry us about the 146. The first is whether it will be profitable—or will it be just another Humber Bridge or another Stocksbridge bypass at Penistone to be brought out in celebration of an election—a touch of sugar on a Socialist pill—rather than because it will secure real jobs in a profitable programme?

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

Surely the gravamen of the hon. Member's case was that the Government should accept the recommendations of British Aerospace as the people competent to make decisions in this matter. British Aerospace says that it wants to build the plane. Surely the hon. Member is now going completely against that and setting up a whole set of red herrings against the 146.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

On the contrary, I am sure that those who were contracted to build the Humber Bridge wanted to build it, just as those who are contracted to build the Stocksbridge bypass want to build that. The point is that the Government have sat on this decision, and they continue to sit on it. We want to know whether they have sat on it because they do not believe that the aeroplane is a commercial proposition, whether they have sat on it because they do not believe that the country can afford to build it although it is a commercial proposition, or whether they have sat on it in order to bring it out as a by-election or General Election bribe in a marginal seat.

If it is commercially viable, what has been the reason for the delay? British Aerospace says that it is losing orders now because of the delay. It says that it is not launched and that it cannot launch it because of the effect of section 7(1) and (3) of the Act. But, in fact, it is going ahead with spending at the rate of about £1 million a month, and so the project drifts, as so many of these projects drift.

Photo of Mrs Helene Hayman Mrs Helene Hayman , Welwyn and Hatfield

Would a Conservative Government build it?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

I cannot say whether it would be built. I do not have the information that the Minister has. If we were privy to all the information to which the Minister is privy, we could make decisions. But we cannot make decisions on the commercial activities of a corporation without having the full details of those commercial activities. It is absurd and totally ridiculous to expect anyone to do so. Is it not time that the Minister told us whether that delay has been due to doubts in the Government or whether it has been held up for other reasons?

This morning, I was told that at the meeting last week of the CSEU aviation section with the Secretaries of State for Employment, Industry and Trade the union members present formed the impression that the Government would allow British Airways to order at least some of the 19 737s which it wants and that the Government would then launch the 146 as a sop to British Aerospace, which has not got its way and had the whole of the British Airways order for 737s changed to ills, but that this strategy is delayed—if "strategy" is not too grand a word for it—by the fact that the board of British Airways is being notably obstinate and is not willing to accept the Government's interference with its commercial judgment. I believe that that is true. Is that the way to run an industry? It is rather like the way the rest of the programme seems to be run.

The major options have been rehearsed today, as they have been on many occasions, almost ad nauseam. The Minister perpetually is peering over the shoulders of the British Airways board, second-guessing the opinions of the very men whom he appointed to make the market strategy. Then the Prime Minister sets up a Cabinet committee because the decision is too big to be left to the Minister whom he appointed. Not content with that, the Prime Minister, to the publicly expressed dismay of British Aerospace, goes off and talks not only to the aerospace manufacturers but to the airlines in the United States. Presumably he does not trust the Cabinet committee, the Minister, British Aerospace or anyone else.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

My hon. Friend says that he is very wise, but is this really the way that these decisions should be reached?

The big decision to be made is whether we commit ourselves to go it alone or ally ourselves to Boeing, Douglas, Lockheed or Europe. Very few of us think it possible to go it alone in the big league. I am told that the Boeing 757, on which we were offered collaboration, is now being offered to Eastern Airlines in a larger version than that which had been offered earlier, and that takes it perilously close to the Boeing 767 which will be launched earlier.

Then we have the possibility of collaboration with McDonnell Douglas. Are the Government pursuing this vigorously, or are they letting it drift? We know that the Prime Minister saw Mr. Sandy McDonnell recently. But who is taking the lead? Are we waiting for propositions from other people, or are we making the proposition?

More than two years ago, I put it to the Minister that he was in danger of seeing the A-300 decisions drift away from him. The airbus is now Europe's most successful programme, though it is a long way from profitability. The Minister will remember, as the hon. Member for Derby, North said that the Socialist Government pulled out of that in 1968 and left it to private enterprise to stay in, with the result that British Aerospace proudly put out a press release pointing out that it had £200 million worth of business out of that private enterprise decision which the present Secretary of State for Energy did his best to muck up.

What is the Government's reaction to the launch of the B-10? Is the Minister content to see us drift out of that programme too? Is he determined to leave the airbus programme, or is he determined to stay—or is it another great"don't know "?

Recently the Prime Minister saw President Giscard d'Estaing, and no doubt these matters were discussed. Probably the right hon. Gentleman discussed them with President Carter too. But is it not time that the Government actually took an initiative? The Prime Minister has been heard to describe the position of our industry as that of the blushing young maiden with a large dowry being courted by a horde of ardent suitors. The danger is that unless the lady says "Yes" or "No"—or even "Come on"—she will be left on the shelf as an old maid.

Could we not take an initiative? Have we put any proposals to the partners in the airbus consortium? Are we trying to discover what investment commitment the partners would require from us? Are we seeking an arrangement to stay in the airbus project and seek a transatlantic partnership as well? Does the Minister take the view that European and American partnerships are mutually exclusive or is he trying to get away with one of each? If not, what is he doing to try to achieve that aim?

The message to the Government that the Minister should understand from the industry and from our prospective partners is short and simple. It is "For God's sake say something, even if it is only goodbye."

6.40 p.m.

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

The odious and contemptible speech that we have just heard has demeaned the debate, which up to then was of a very high standard.

I should like to congratulate my hon. Friend the Member for Kingswood (Mr. Walker) both on his good fortune in the Ballot and on the use he has made of it. Like others of my hon. Friends, he is a fine and active champion of his constituents who work in the aircraft industry. The decisions on civil aircraft policy which seem likely to be taken in the near future will go far to decide the future of the aerospace industry in this country for the rest of this century. It is right, therefore, that both the House and the Government should give those decisions most careful consideration.

Our debate today has concentrated on civil aircraft. Civil aircraft policy is a vitally important matter. But we must not forget that two-thirds of the aircraft business of British Aerospace and two-thirds of the employment which that business provides relate to military aircraft.

Of course, we have to consider the needs of Rolls-Royce, a major part of the aerospace industry in this country. It is of roughly the same size as British Aerospace, and it faces some of the same problems. In particular, it must seek a proper commercial return in fiercely competitive markets.

Rolls-Royce, as hon. Members will know, is devoting considerable effort to the successful development and promotion of the existing members of the RB211 family. The deal with Pan Am is a most important step in that direction. For the future, the Government are considering the recommendations of the National Enterprise Board regarding the launch of the RB211–535, a proposed crop-fan derivative of about 33,000 lb. thrust. This new engine would be suitable for some members of the Boeing 767/777 family; but its most important potential market would be in airframes such as the Boeing 757 and the McDonnell Douglas ATMR.

We are examining the proposals of the National Enterprise Board very carefully. As with airframes, we shall require clear prospects of commercial viability. I cannot give my hon. Friend the Member for Derby, North (Mr. Whitehead) any more information on that, but I assure him that we share his concern about the importance of these decisions.

A number of hon. Members asked questions about British Airways procurement policy, which has exercised the minds of many people. The Secretary of State for Trade has answered a Question on this matter today telling hon. Members that, following exhaustive discussions and consultation with all interested parties, he has decided to grant approval to British Airways to acquire 19 Boeing 737 aircraft. British Airways has also carried out an evaluation of its needs, and my right hon. Friend has said that he will at the same time grant approval for the company to enter into negotiations with British Aerospace for the acquisition of between three and six BAC111s.

I come to the question of airframe manufacture, which, naturally, has dominated this debate and which is very close to the hearts of my hon. Friends who have taken part. On the civil side, of course, there is continuing production of the HS125 business jet, which has now sold over 400 copies, and the BAC111, a plane which this Government kept alive by underwriting further production in 1975–77. The recently announced deal with Romania will provide further valuable work. The deal is worth some £300 million and production work for the deal in British Aerospace is expected to last until 1985. The factories at Filton, Hurm and Weybridge all of course do work on the BAC111.

As for the new civil aircraft projects that are being so widely discussed, my right. hon. Friend the Prime Minister said during Questions on 29th June that the facts relating to the difficult decisions we shall have to take must be laid before the House. My hon. Friend the Member for Kingswood has done the House a service by providing an opportunity for these facts to be set out.

The option which British Aerospace has given top priority to investigating is a package involving the B10 derivative of the airbus, and a new design known as the JET—joint European transport. The B-10 is a derivative, with about 215 seats, of the successful 270-seat airbus. Like the existing B-2 and B-4 versions, it would be a wide-bodied, eight-abreast aircraft. It would have two engines, either derated 25-tonne engines or normally rated 20-tonne engines. Rolls-Royce produces suitable engines of these types within the RB211 family; but it must be recognised that existing airbus customers, who would be most likely to order the B-10, might tend to prefer GE or Pratt and Whitney engines because of the well-known argument of "commonality".

The part of the future airline market for which the B-10 is intended is sub- stantial. It derives both from the growth of traffic and from the need eventually to replace aircraft such as the Boeing 727. Depending on the rate of growth of air transport, it might require, say, 800–1,000 aircraft during the 1980s. Most of this market—perhaps as much as 60 per cent.—lies in the United States. The B-10 will face formidable competition from the Boeing 767 and 777 and possible other American aircraft. But the recent Eastern Airlines deal has shown that it is possible for a European airframe manufacturer to break into the United States market.

Airbus Industrie has decided to launch the B-10 aircraft subject to respective Governments' approval. It is still possible for British Aerospace to join this programme. This is being considered urgently by British Aerospace and Government.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

How long does the Minister think that the offer will remain open? The French have made it plain that it is open for only a very short time.

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

We realise that there is not a very long time in which to make a decision. However, there is still time, and we are considering the matter urgently.

The JET aircraft is a new design in two main versions—the JET1, with 136 seats, and the JET2, with 163 seats. Both would have a six-abreast fuselage, though with a rather wider cross-section than existing narrow-bodied aircraft, such as the Boeing 727. They are designed to be powered by two Franco-American CFM-56 engines of about 24,000-lb thrust. The overall concept is that they would form part of a family of aircraft to be made by Airbus Industrie, and including the airbus and its derivatives.

The market sector at which the JET aircraft is aimed derives partly, again, from traffic growth and partly from the eventual need to replace existing versions of aircraft such as the Boeing 737, the Douglas DC9 and the BAC111. Total requirements for this part of the market during the 1980s seem likely to be very substantial—perhaps as many as 1,500 aircraft. Unlike the market for which the B10 is primarily intended, it is not dominated by the United States. It is expected to split much more equally between the United States, Western Europe and the rest of the world outside the Eastern bloc.

It is for this sector of the market that the Boeing 757 and McDonnell Douglas ATMR, which have been the subjects of offers of collaboration to British Aerospace, are also intended. These aircraft would be rather larger than the JET2 and are intended to be powered by engines of the type of the proposed RB211-535, of about 30,000–35,000 lb. thrust.

The other collaborative possibility which is under consideration by British Aerospace is the Lockheed Twinstar, also known as the L1011–600. This would he a derivative of the Tristar, of much the same size as the B-10. It could be powered by two Rolls-Royce RB211–524s. It is agreed by both Lockheed and British Aerospace that this possibility would require extensive market and technical studies. British Aerospace is therefore treating it as a less immediate prospect than the others.

These are the aircraft which are the subjects of the collaborative possibilities under discussion. We have to consider them against the context of the organisations with which we would be collaboratting. I emphasise that we shall take our decisions when we have the commercial facts.

First, there is Airbus Industrie—roughly equivalent to a consortium, the members of which are jointly and severally responsible for its liabilities. The existing members of Airbus Industrie are the French firm Aerospatiale, Deutsche Airbus and the Spanish firm CASA. British Aerospace and the Dutch firm Fokker are associates. The main current involvement of British Aerospace lies in its contract to make the wing box for the B2-B4 version of the airbus.

It seems clear that if British Aerospace wishes to collaborate in future Airbus Industrie programmes, it will be expected to become a full member of the organisation instead of an associate. Quite apart from the detailed implications of such a change, which are far from insignificant, British Aerospace would effectively be undertaking a major long-term commitment. Before it could do so, or the Government could back it, it would need to satisfy itself about the long-term commercial prospects. The airbus has been successful. But we must not overlook the fact that Western Europe provides a much smaller home market than the United States and that over 40 per cent. of the total of the market sectors I have described lies in the United States. This is one of the reasons why both British Aerospace and the Government are examining the possibility of collaboration between Europe and the United States, if it can be achieved.

I am discussing the possibilities in strict alphabetical order. I do not want hon. Gentlemen to think that we are favouring one more than the other.

I now come to Boeing. Boeing is easily the largest manufacturer of civil aircraft in the world. The company's past record suggests that any aircraft it markets is likely to sell in substantial numbers. So its offer of collaboration on the 757, under which British Aerospace would develop and manufacture the wings and associated components, is naturally very attractive. But there are difficulties. There would be much hard bargaining on the terms of any deal. British Aerospace must naturally take account of the consequences of collaboration with Boeing for its long-term future and its designs and marketing skills.

Lockheed, as I have said, is a less immediate possibility.

Then we have McDonnell Douglas, which has offered British Aerospace collaboration on a long-term basis. The immediate prospects on the civil side would include collaboration on marketing the HS146 and on design and manufacture of the ATMR. But the offer goes much wider than this. It includes collaboration on military aircraft and guided weapons. It also envisages wider collaboration, involving Europe.

These are all attractive features, but there are problems too. In particular, the B-10 and the AMTR are very close in size, and they may conflict in the market This is a matter which is being carefully considered by British Aerospace and its potential partners.

The House will see that all the various possibilities have both their attractions and their difficulties. Difficulties can be overcome. But it is abundantly clear that there are major commercial and industrial issues which require the most careful consideration.

This also applies to another potential project to which many hon. Members have referred—the HS146. The HS146 is a four-engined jet aircraft intended to relace turbo-prop aircraft on feeder and commuter routes and, to a lesser extent, small twin-jet aircraft. Two civil versions covering a range of about 70 to 100 seats, and a military version are proposed.

The project was originally launched by Hawker Siddeley Aviation Limited in August 1973. The then Government decided to support development of the aircraft by launch aid equal to 50 per cent. of the estimated launch costs. In October 1974 Hawker Siddeley Aviation decided unilaterally to suspend work; but this Government decided to place a holding contract to keep the project alive. Some work continued, first under Government contract and then financed by British Aerospace, to keep open the option of proceeding with full development of the aircraft.

On 22nd March this year the chairman of British Aerospace wrote to my right hon. Friend the Secretary of State for Industry recommending on commercial grounds that full-scale development of the aircraft should be resumed. It was clear that the project, if approved, would require the commitment of substantial resources, in both money and manpower. The Government accordingly felt obliged to give it the most searching examination.

I can now announce that the Government have decided to approve the proposal from British Aerospace, so that full-scale development of the HS146 can now proceed. The first civil version of the aircraft should be in airline service by early 1982. A second civil version and a military version should follow. The Government regard the decision as independent of decisions regarding future collaboration on larger civil aircraft.

Depending on the extent to which British Aerospace arranges to collaborate with other manufacturers, the project will entail an investment of the order of £250 million at today's prices. This expenditure will form part of the corporation's approved capital investment programme which will be financed in the first instance from internal resources and, to the extent that further finance is required, from loans from the National Loans Fund and advances of public dividend capital. British Aerospace will be expected to earn an adequate rate of return on the whole of its capital.

British Aerospace is in discussion with other European manufacturers on collaboration on the HS146. The engines, subject to satisfactory terms, will be supplied by the United States firm Avco-Lycoming. Avco has also offered to act as risk-sharing contractor for the manufacture of the wing; this is being carefully considered by British Aerospace. All such collaboration will enhance the market prospects for the aircraft.

Work on the airframe of the HS146 is expected to provide over 7,000 jobs in British Aerospace. It is estimated that it should provide a further 4,000 to 5,000 jobs among suppliers of equipment. Both British Aerospace and the Government regard it as of the utmost importance that workers in the aerospace industry should commit themselves to achieving a high level of productivity on this new aircraft and their other work.

The HS146 is the first new aircraft project which British Aerospace has undertaken since it was created a little more than a year ago, and is the first new civil airliner to be undertaken by this country for a good number of years. With the wholehearted commitment of management and workers, I have no doubt that it will succeed.

I wish to pay tribute to my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) for the way in which, ever since she entered this House, she has campaigned for this aircraft and on the great success which she now deserves. I also wish to pay tribute to my hon. Friend the Member for Manchester, Blackley (Mr. Rose), who has also campaigned for this aircraft, knowing the important employment consequences which it has in the Manchester area.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Waltham Forest Chingford

The Minister has spoken of the jobs that this decision will create. How many jobs does he think will be lost at Shorts of Belfast, where the wings for the competitor are manufactured?

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

This helps with over 400 jobs at Shorts. The factories affected are Hatfield, Brough, Filton, Manchester, Chester and Prestwick, with over 400 at Shorts and 4,000 or more jobs in United Kingdom suppliers.

I am sorry that the hon. Member for Chingford (Mr. Tebbit) has crabbed this announcement. Of course, he crabs everything. The House has a right to know what is the policy of the Tory Opposition. The hon. Gentleman spends his whole time niggling, knocking and narking. He does not state the policy of the Conservative Opposition on any issue. He attacked the BAC 111 deal with Romania.

Photo of Gerald Kaufman Gerald Kaufman Minister of State (Department of Industry)

Yes, the hon. Gentleman attacked that deal in his last speech. What is the Opposition's view on the HS146? Do they support this British enterprise? The Government have made their position clear. The aircraft workers at Hatfield, Filton and Manchester have the right to know clearly and unmistakably whether the Tories support or oppose this decision. All that they do is crab.

In our last debate, the hon. Member for Chingford insulted workers in the British aircraft industry. He said: I do not think that any of us can have much confidence in the future of aerospace manufacturing in Britain."—Official Report, 28th June, 1978; Vol. 952, c. 1471.] What a statement from the spokesman of a party that forlornly aspires to become the Government of this country. How are our potential collaborative partners to judge that? If the would-be alternative Government think so little of our aircraft industry potential collaborators might ask why they should think any more of it. But the happy fact is that our potential partners have a far higher opinion of our aircraft industry than has the Tory Party, and while Conservative Members belittle our aircraft industry the great aircraft manufacturers of the world are queueing up to become collaborators with British Aerospace. That is no thanks to the Tory Opposition, whose reckless and negative opposition to the nationalisation Act placed our industry in jeopardy.

It being Seven o'clock, the proceedings on the motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business).