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Cross-Channel Transport

Volume 161: debated on Wednesday 14 March 1923

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I come now to what is a much more important question connected with civil aviation, the question of civil air transport and subsidies. When I took office I found in existence an arrangement under which £600,000 was to be distributed in three yearly grants to certain civil air transport companies. There were three such companies in existence, and a fourth company was coming into existence in the course of this year. I found, further, that the period of the contract would end in 12 months' time, that is, in April, 1924, and that the companies concerned were already asking, and in my view rightly asking, what the policy of the Government would be at the end of the 12 months' period. It seemed to me that the question to be decided was mainly a business question. We already had a great mass of aeronautical information on the subject. We already knew that cross-Channel services could be worked regularly and punctually We already knew, for instance, that 77 per cent. of the passengers who were carried last year, of a total of 12,300 passengers, were carried on British machines. We also knew that not a single fatal accident had occurred on any British machine to any passenger during last year. All those facts we knew. We also knew that, looked at from the national point of view, civil aviation had not succeeded as much as we had hoped. If the subsidies were regarded solely from a national point of view, £600,000 would have been spent at the end of the coming financial year, and only 18 pilots and 20 civil machines were engaged upon the work.

It seemed to me, in view of all this, that it would be well to have a short, restricted inquiry by two or three impartial business men, who would look at the question without prejudice and with no pre-conceived opinions. Accordingly, I appointed the Committee of three, that is now known as the Hambling Committee, the report of which many hon. Members have no doubt read. Whether hon. Members agree or not with the recommendations of the Committee, they will, I think, be grateful to these three fully occupied business men, who sat almost continuously from day to day through January considering this difficult question. The Committee has reported, and hon. Members will, I hope, consider seriously its recommendations. The Committee came to certain definite conclusions:

(1) That after three years of the existing system of Government subsidies civil aviation had made little or no progress.

I wish to be quite clear, and the Committee wish to be quite clear, that they make no criticism of the three existing companies which have been operating this service. These companies have been doing pioneer work, and, as the figures show, they have been fulfilling a public demand. When I say that the subsidies have not proved successful, it is the system and not the companies that are wrong. I hope that all hon. Members will accept from me the fact that I wish to make no sort of criticism against the three companies.

(2) That subsidies of some kind were necessary for a further period if civil aviation was to continue to exist.

(3) That two conditions were essential if the subsidies were to be of value to the nation:

  • (a) security of tenure in the matter of subsidies and in the matter of facilities for a period of not less than 10 years;
  • (b) the subscription of a large sum of private capital, amounting to one million, as an essential condition to be carried out before any subsidy is given.
  • The Committee also came to the conclusion that as things are now there is not sufficient business for a number of small competing companies, and that all that is happening under the present arrangement is that the State, that is financing in fact all the companies, is merely competing against it self. The only real competition comes from the French, heavily subsidised companies. France is spending 100,000,000 francs a year on civil aviation, and not less than 50,000,000 francs on subsidies. This competition will continue, whether the cross-Channel service is operated by one or more than one British company. It was on that account that the Committee came to the conclusion that one strong company would be better than a number of small companies. The Committee therefore recommended that the State should be prepared to give for the next 10 years a sum of not less than £1,000,000, provided that a corresponding amount is subscribed by the public.

    In each case it is a total amount £1,000,000, against £1,000,000 subscribed. Unless there is a big amount of private capital behind the undertaking there will be no development or little development, and little incentive to progress. Without a big amount of private capital the company or companies will continue to exist on their subsidies, and any big development of civil aviation will be out of the question. If private capital is to be subscribed, the Committee thought, there must be a continuance of subsidies for a period. The House does not like subsidies. I do not like subsidies. I would, however, point out that without subsidies it seems likely to be impossible to face the subsidised competition of the French, and to get subscribed the large amount of private capital which I regard as a necessary condition for any big civil aviation development in the future.

    Let me remind the House of two further facts. Supposing the broad outlines of this scheme were accepted, the average amount of subsidy would be £100,000 a year, which is exactly one half of the amount of the subsidies we have been giving during the last two years. That is a fact in its favour. Secondly, I ask the House to remember that subsidies, not exactly similar to those I have suggested, but none the less subsidies, are already being given by the Admiralty to certain liners, while the General Post Office for its mails is giving other liners very nearly £500,000 a year. The Government has considered these proposals and I am authorised to state on their behalf that the Air Ministry is prepared to negotiate with any responsible person or persons upon the basis of (1) the subscription of £1,000,000 of private capital; (2) a State subsidy of not more than £1,000,000 to be spread over 10 years; (3) the satisfactory settlement of a number of details connected with the operation of the services, such, for instance, as the use of the machines and pilots in times of national danger. The House will, of course, he kept informed as to any action that may be taken.

    During the next 12 months. The present contracts have still 12 months to run and there is that period for negotiation and consideration.

    Will the Handley-Page, the Daimler and the instone Line firms have preference in coming to an arrangement with the right hon. Gentleman as they have already been pioneers and have knowledge and experience of this work?

    I cannot say that anyone will have a preference. I can assure the House that the Ministry will certainly take into account the fact that these firms have been pioneers, that they have done excellent work and that it is desirable from every point of view that they should have a part in any arrangement made for the future. The hon. Gentleman may be assured of that. The Air Ministry as I say is prepared to negotiate with anyone who can fulfil the necessary conditions, and if these companies can fulfil the necessary conditions so much the better.

    If they do not succeed in raising the £1,000,000 capital is the Ministry prepared to give the same consideration to any other company?

    Certainly. In the meanwhile I can assure the House that no action will be taken without the House having an opportunity of discussing the question should it so desire. My personal view is that it is a choice between some such scheme as this—without pledging ourselves to the details of it—and running the risk of civil aviation coming to an end altogether.