Orders of the Day — British Aerospace Bill

Part of the debate – in the House of Commons at 9:07 pm on 20 November 1979.

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Photo of Mr Leslie Huckfield Mr Leslie Huckfield , Nuneaton 9:07, 20 November 1979

Under the kind of framework that the Government intend to assemble, the kind of structure that they intend to create, if we dare to put even a parliamentary question about that kind of thing, we shall presumably be told "That is not a matter for the Secretary of Slate; it is a matter for the management." I find that intolerable. When we are not allowed to ask questions even about that kind of decision taking, the House and the whole country will also find it intolerable. After all, it is taxpayers' money that we are talking about.

The other matter that we have not heard about this afternoon is what kind of targets the Government will set for the industry. The Under-Secretary of State for Trade, the hon. Member for Chingford, is very fond of profit maximisation. He used to ask me in Committee and on the Floor of the House, when I was a Minister, what kind of profit we thought we would make on the airbus and on what was formerly called the Hawker Siddeley 146.

But the hon. Gentleman knows, as I do, that if profit maximisation had been the main criterion, if making the biggest possible profit had been the main yardstick, neither British Aerospace nor the British aircraft industry would even be part of Airbus Industrie, and they would not have gone ahead with the Hawker Siddeley 146 project. That is because civil aviation projects, by their very nature, have a long gestation period and a very long profit-making period.

Even Airbus Industrie, which the hon. Member for Ruislip-Northwood (Mr. Wilkinson) told us this afternoon was so successful, will need as the hon. Gentleman knows as well as I do, sales of at least 700 copies before it even starts to wash its face—and it has not even got as far as 350 orders yet. Yet Conservative hon. Members talk about the need for British Aerospace to make a profit. I can only say that had that been the case under the last Labour Government, if we had insisted rigidly and dogmatically on profit maximisation, we would not now have much of an aircraft industry left. That is the truth.

I quote again the Financial Times—Conservative hon. Members' newspaper not ours; their readership, not ours. [HON. MEMBERS: "Does the hon. Gentleman read it?"] I read it daily. The editorial on 24 July this year said: As for the current workload, it is highly doubtful whether the BAC 146 feeder jet—and perhaps the investment in Airbus Industrie—could have been financed on a commercial basis. If the Government follows a totally commercial policy in its attitude towards British Aerospace, then the British aircraft industry will almost certainly contract in size. That is what this proposal is all about. That is the inevitable result of this kind of proposal. Short term profits are what the private shareholders will want; they will not want dividends in 20 years time. If the new company will not be allowed to borrow internationally with a Treasury guarantee, I predict that the only sure long-term result of the Bill will be the contraction of the British aerospace industry. That is what insistence on short-term profit maximisation, and having to borrow externally without guarantee, will mean.

If the new company will not be able to borrow so easily internationally, and is unable to borrow from the Government—we have had some pretty good indications from the Government that the company will not find obtaining finance from the Government very easy—it will have to start selling assets.

It is interesting that Government Members, particularly the hon. Member for Preston, North (Mr. Atkins), who will not be here very long, because the electorate got the name wrong—