asked the Secretary of State for Air whether he can make a statement concerning the manufacture of aircraft in Canada?

I will defer my reply till the end of Questions.

Negotiations with the representatives of the Canadian industry have now been successfully concluded, and agreements have been signed under which His Majesty's Government in the United Kingdom have placed an initial order for the manufacture of large bomber aircraft; and the Canadian aircraft firms concerned undertake to maintain during the next 10 years a manufacturing capacity available for further potential orders of a similar character if required.

The contractual arrangements have been made with the new central company, Canadian Associated Aircraft, Limited, which has been brought into being expressly for the purpose of this scheme. That company will control the whole scheme and provide two central establishments, located at Montreal and Toronto respectively. These two central establishments will themselves in due course develop manufacturing facilities, whilst also serving as central erecting establishments fed by components supplied by six associated aircraft companies, namely:

• Canadian Car and Foundry Company, Limited.
• Canadian Vickers, Limited. Fairchild Aircraft, Limited.
• Fleet Aircraft, Limited.
• National Steel Car Corporation, Limited.
• Ottawa Car Manufacturing Company, Limited.

The initial order will ensure immediate implementation of the plans and will enable the increased potential progressively to be developed. It is the intention that further orders should be placed as and when necessary to maintain the progressive development of the manufacturing potential and the desired flow of production. In addition to the arrangements for group manufacture of large bomber aircraft, negotiations are now proceeding in London with two Canadian companies for the manufacture of fighter and general reconnaissance types, at Fort William and Vancouver respectively.

I should like to express the thanks of His Majesty's Government to Sir Hardman Lever and his colleagues in our Mission; and to Sir Charles Gordon, of the Bank of Montreal, Mr. Morris Wilson, of the Royal Bank of Canada, Mr. A. B. Purvis. of Canadian Industries, Limited, and to Sir Thomas White, of the Bank of Commerce, all of whom greatly facilitated the course of negotiations.

Can the right hon. Gentleman give the House some further particulars with regard to the initial order?

The type of aircraft to be manufactured under the initial order is the "Hampden," which is now in production in this country. The aircraft orders are due for delivery during 1940, and although it would not be in the public interest to disclose the numbers ordered, I can say that the order represents a considerable development of Canadian manufacturing capacity in preparation for the large production programme which will call for aircraft of a still more advanced type running in parallel with the later stages of the initial order.

Can the right hon. Gentleman state at this stage how the Canadian machine compares in price with the English machine?

Perhaps the hon. Gentleman will put a question down. The matter has been the subject of careful negotiation and scrutiny so far as the Treasury is concerned, and I think that on the whole a reasonable price has been arranged.

Would it be possible to arrange for any percentage of British workers to take part in the construction of these factories, or to work in them afterwards?

Perhaps my hon. and gallant Friend will put that question down.

Will these contracts which are being placed in Canada be subject to the same price control as contracts placed in this country?

I should like notice of that question. I know that very careful consideration has been given to all those matters.

In view of the enormous amount of unemployment in the distressed areas ought not some of this work to be allocated to those areas?

While I have due regard to the necessities of the distressed areas, obviously there are a good many more implications in this scheme.

Has the Minister really come to the conclusion that with 2,000,000 unemployed here there are not sufficient persons in this country to produce these aircraft?

Yes, Sir, but it must be obvious to the House that there are other and important considerations.

Is the Minister not aware that this is a sign of inefficiency on the part of the Government rather than of lack of efficiency on the part of the people?

No, Sir, and I must say that I think that question shows a very false and small conception of the position.

Is it not a fact that the Opposition have been constantly clamouring for Empire aeroplanes?

Could my right hon. Friend assure the House that these arrangements have been carried through in harmonious accord with the Canadian Government, and has he in mind making similar arrangements in any other part of the Empire?

That is a matter for further consideration. So far as the Canadian Government are concerned, this has been a matter of negotiation between His Majesty's Government and the Canadian industry, and, of course, the Canadian Government have been kept fully informed.