Orders of the Day — Civil Aviation Bill

Part of the debate – in the House of Commons at 9:03 pm on 19th November 1979.

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Photo of Mr Clinton Davis Mr Clinton Davis , Hackney Central 9:03 pm, 19th November 1979

Did the hon. Gentleman consult all the trade unions or carry out a full consultation with management before making that statement? He may deny that as much as he likes. Those denials bear as much credibility as those that appear in the Conservative document to which I referred. There was no consultation. As a result, the Secretary of State has done himself a grave disservice because he gave no one a chance to warn him of the pitfalls in his policy that were exemplified in the speech of the hon. Member for Brentwood and Ongar. Those pitfalls are now clearly apparent and today we have had an astonishing assertion from the Secretary of State—perhaps it came out of the top of his head because I cannot imagine that he had thought about the proposition—that the Government have no intention of mobilising the right to appoint directors in the successor company. Presumably he will bind the proposals of the rest of his right hon. Friends in a similar way.

The right hon. Gentleman is walking away from responsibility, but did he consult the British Airways Board about that proposition? Has he mentioned one word of it to the unions? Is that the way to encourage certainty in the industry—to get rid of some of the suspicions which the Bill has introduced, not only among the work force but among management? It is an extraordinary performance by the right hon. Gentleman—due, I suppose, to his approaching the problem with an open mouth.

The first ostensible purpose of the Bill, according to the right hon. Gentleman, is to reduce the public sector borrowing requirement. We all know that £1 billion needs to be borrowed from outside sources as part of British Airways' massive investment programme of £2·4 billion. They have to re-equip their fleet by 1986 and keep operating within the new noise limits.

Although British Airways are a fine airline of which we can be proud—the largest international airline in the world —although their load factors are very high on any international comparisons, although they are profitable and have made and are making real efforts to improve productivity, and although under the Labour Government they could make purchasing decisions about the new fleet on commercial criteria, what is troubling hon. Members on both sides is whether their productivity record, coupled with the immediate outlook for the aviation industry in the fuel crisis, is sufficient to justify confidence that the airline can satisfy both its need for vast capital and the expectations of private shareholders.

A number of hon. Members have mentioned over-manning, and I intervened twice on that issue. How do they counsel British Airways or the successor company to overcome that very real problem apart from the steps that the airline is already taking? There has been a considerable attack on this problem already through joint efforts by unions and management, and the new aircraft, equipment and technology will improve productivity. But the company must be able to carry their work force with them in achieving that objective. What the right hon. Gentleman has done, both before the introduction of the Bill and in his speech today, is to imperil that objective.

British Airways, freed from the ideological fantasies of the Secretary of State, would be able to weather the tempests. In the past, they have managed to borrow from United States and Japanese banks, or they have entered into leasing arrangements backed by Treasury guarantees. There is no reason to suppose that that could not be done again. Indeed, all the evidence is that borrowing on that basis is not only easier but cheaper than this operation.

Enormous risks are involved in what the Secretary of State is trying to do. A wrongly timed issue which fails—many financial writers have stressed the problems and the dangers—will not only imperil the re-equipment programme of the airline on which their future depends, but will create immense damage to the morale of management and staff.

The Government must remember that they are a trustee of national assets. The matter was put very well in theFinancial Times on 23 July this year: … the Government must consider, in addition to its ideological inclinations, its duties as a trustee of the taxpayers' wealth. It went on: … If the Government sells its shares at a price that is bound to be based on current rather than prospective earnings, Britain's taxpayers will suffer a loss of several hundreds of millions of pounds. It makes little sense to sell a company at the start of its recovery. When we talk about the start of the recovery, we are talking about the implementation of the investment programme, and that will not be completed until 1986.

The Secretary of State said that the Government might postpone the issue. I hope that he will postpone it in order to give British Airways the opportunity to have a good track record in this respect. That can come about only after the investment programme has been implemented. I hope that there will be no issue. I hope that the Government will be out of office before then and that we can get rid of all the rubbish in the Bill.

If the Government simply wanted to achieve a reduction in the public sector borrowing requirement, there was a much easier way of doing it. They could have produced a Bill to take British Airways out of the public sector borrowing requirement.