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Aviation History
1960
1960 - 0266.PDF
266 FLIGHT, 26 February ]%0 Mr Sandys' Blank Cheque SOME CRITICAL THOUGHTS ON THE RECENT MINISTERIAL ANNOUNCEMENT ON February 15 the remarkable Mr Sandys waved a blankcheque before the House of Commons and blandly,informed the Members that he proposed to sign it in favour of the aircraft industry. Scarcely an order paper rustledin disagreement. Only Emrys Hughes (Lab., S. Ayrshire) uttered a word of criticism and that merely to complain that Scotlandhad not been mentioned as a beneficiary. G. R. Strauss (Lab., Vauxhall), for the Opposition, welcomed the statement. Conceivably the process of parliamentary probing will soonbegin, but so far the Minister has had nothing more than an after-lunch speech to ruffle his composure. His personal successhas in fact been considerable. The aircraft industry, the Treasury, and the Commons have in turn permitted him to have his way. Of course the triumphs to date have been limited to what hehimself described as the "initial process." Ultimate proof of success can only be shown in the order books for British aircraft.An obvious first need is for more information, especially about financial assistance. If parliamentary and public comment is to behelpful then it must be based upon some reliable figures. Of course there are difficulties, but they tend to be exaggerated. One is the old business of security. That can cover not onlya multitude of sins but many millions of pounds. When the Minister murmured that he would "show as much informationas is possible in the Estimates," many must have recalled that it was the predecessor of the MoA, the old Ministry of Supply,which contrived to spend over £100,000,000 on the manufacture of the atomic bomb without identifying a penny of that amountin the Estimates. It can be argued that the development of the nuclear deterrent has itself rendered much of the accepted securityprocedure out of date: since each side has enough knowledge to destroy the other the case for concealing financial details is lessstrong. Mr Sandys might well take this opportunity to suggest to his colleagues that a small, objective and authoritative committeebe appointed to look into this business of classifying information —in the expectation that an incidental result of their findingswould be greater freedom to tell the taxpayer what is happening to his money. In many ways there are more genuine difficulties when it comesto giving details about civil projects. A rival firm at home would not be slow to demand more if he thought his own contract to beless favourable than the published details of another. A competitor abroad would no doubt be equally ready to raise the hare of"unfair subsidies." Probably even more important would be the complaint of the customer who considered himself the subject ofundue "recoveries." . Wanted—a Balance Sheet It would be foolish to pretend that the problem is an easy one,but it would be equally irresponsible to accept that the present situation is satisfactory. Public money is now being placed at thedisposal of private firms on a scale not known before. The Chancellor disclosed the other day that since 1951 no less than£2,311m had been disbursed in subsidies to private industry and agriculture. A part, and now a growing part, of this vast sumis to go to the aircraft industry. It would be sensible to act on the assumption that the taxpayer will not always take this forgranted unless some account is rendered. And it is difficult to believe that ah alert and mature Parliament will indefinitelytolerate a situation illustrated by this question and answer: — Mr Strauss: "How much was paid by Her Majesty's Governmentand the two air corporations to aircraft firms in the last financial year for research and development; and how much was repaid by suchfirms on sales of products resulting from development contracts?" Mr Sandys: "The bulk of the research contracts are in respect ofmilitary projects, and it would not be in accord with established prac- tice to disclose the expenditure involved. I am informed that nopayments were made for research and development by either of the two air corporations in 1958-59. During the year some £.1\ millionswas paid to my department in respect of sales of aircraft developed ' with Government assistance." • • - ; . . It is possible for a Member of Parliament with time, money andcontacts to get further information from private sources. It is also possible, well after the money has been spent, for Members collec-tively, through the Select Committee on Estimates, to prise out more information. But if this new policy is going to mean, in anyreal sense of the word, the "partnership" between Government and industry which .we.all hope it to be, then ways must be foundfor providing more information about "how much money has been invested, with whom,, and on what terms. When terms are considered there is one point, riot covered inthe -Commons exchanges, which must be taken into account. Over what period is finance to be made available on the scale now contemplated? Mr Sandys' policy is itself a reversal of that of hispredecessor Mr Jones; what guarantee is there against another reversal in another twelve months' time? The Chancellor'sbudgets are compiled on a twelve-month basis, but the production of an aircraft means at least a five years' programme. If industry jis to plan ahead sensibly there must be some continuity of Govern- j ment support. This particular industry has had experience in the ipast of changes in Government policy; it has therefore an interest I in common with the taxpayer if it seeks a pattern of partnershipwhich is an improvement on that of the past. Which brings me to i a proposal that I first made some five years ago. Why does the jGovernment not formalize its partnership by taking an equity. | share interest in the companies it is now committed to support? ' One Labour backbencher, John Diamond (Gloucester), raised :the idea again last week and was promptly slapped down by j the Minister. It was significant that next day the Liberal, anti- Inationalizing newspaper The Guardian described the proposal as ; an "excellent investment." I might well ask—where are thebetter alternative ideas? Mr Sandys assured the House that there would be "adequateGovernment control." Has he any new methods of ensuring this? Does he still rely only on the inspectors and accountants—"thefellows," as Lord Hives once described them in evidence to a select committee, "who go around and investigate us." The committeeon that occasion did not express complete confidence that "the fellows" could get at all the information which they needed, anda Ministerial observation post in the board-room might well help to build up the confidence that is necessary between a large investorand the company in which the investment is placed. Moreover, an investment placed on these terms might also helpto satisfy doubts expressed about the return to the State on monies advanced. The Minister explained that "suitable arrangementswill be made for the Government to participate in the proceeds from sales." There was no indication that a new formula hadbeen evolved which will be better than the old. And as The Guardian again moderately phrased it, "the past experience inseeking to recover the costs of assistance given for aircraft development has been far from happy," A Changed Situation Of course the equity-share idea is not without its complications,which is no doubt one reason why Mr Strauss did not see fit to advance it last week as Opposition policy. For one thing a com-pany cannot be expected to fulfil an order and accept in return only a bid for a number of share certificates. Capital paymentsare no substitute for income earned; nevertheless, much of the assistance promised looks very much like a capital provision.Moreover, we should all do well to recognize that the aircraft industry is now entering an entirely new phase. The old answersno longer fit the new situation. An objective and specialist appraisal of the equity-share proposal might well show that itgoes some way to meet some of the doubts expressed. Sir Arthur Harvey raised a different issue in the Commons.He asked, "Will my right hon. Friend confirm that companies which are not taking part in this rationalization will not beexcluded if they have something new and different from other groups?" The Minister replied that it was his hope that "someof the firms not so far included in the new groups will still join . . . but we do not exclude the possibility of placing ordersoutside the groups for specialist requirements ... or it might be social or public policy to place a particular order." One is left wondering a little about this line of thought. In thisbig, new, neat and tidy set-up, will there be scope for the uncon- ventional and the nonconformist? What happens to the man whohas a contribution to make but whose "face does not fit" either of the two groups within his field? I recall the comment ofSir Frederick Handley Page when I asked him about rationaliza- tion: "The Conservatives sr>ell the word with an 'r' and theSocialists begin it with an 'n.' In practice it amounts to the same thing." I think I understand what he meant. No doubt there will be many more questions asked in. Parlia-ment. The' taxpayers' representatives will probably badger the Minister until a clearer picture is produced showing the presentrelationship between State and aircraft industry. But it would be quite wrong to imply that down in the factories, where the realwork is done, everything is poised motionless whilst Westminster continues the debate. By all accounts things are working outmuch moire smoothly than might have been expected. The fact is that Britain has some of her greatest characters in the aircraftindustry and there is now no reason why their finest achievements should not still lie before them. • ••" FRANK BESWTCK
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