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Jaguar Aircraft

Volume 884: debated on Thursday 23 January 1975

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10.1 a.m.

It is not necessary for me to remind the House of the performance specifications of the Jaguar because this excellent aircraft is now in service on both sides of the Channel and is, I understand, meeting the very high and exacting requirements of the Royal Air Force and the French Air Force.

The Jaguar has been produced jointly by Britain and France. I pay a special tribute to all those who have worked on the projects especially in this country at the British Aircraft Corporation.

The Jaguar is an aircraft which will be suited to the needs of air forces not only now but in all probability for the best part of the last quarter of the century It is, therefore, obvious that it has enormous sales potential abroad, and it is critically important for our balance of payments and for maintaining high and satisfactory levels of employment in the aircraft industry. I hope that in these troubled times it is not necessary for me to stress the importance of those two points.

It is accepted that the selling of aircraft is a fiercely competitive business, but I have a suspicion that we British do not compete as hard as we should in international markets. If my suspicions should prove to be correct, successive British Governments must bear a heavy responsibility, because our ineffectiveness is more a product of an attitude of mind than of any particular political dogma.

We have opportunities here that must be grasped, because in the Jaguar we have in service a highly successful proven project which we know is wanted by foreign countries.

That brings me to the question of the sales of the Jaguar to the Indian Air Force, a matter which I had occasion to raise with the Minister at Question Time before Christmas. I understand that about 100 aircraft—or approximately five squadrons, with a few spare aircraft—are involved in the sale. It is no secret that the Indian Air Force wants the Jaguar, and wants it very badly, but it will not wait for ever. It has already waited far too long. There is strong pressure on India from the Soviet Union to buy the MiG fighter. But those aircraft do not meet the operational requirements of the Indian Air Force, and, therefore, the only way in which the Indian Air Force would accept these aircraft would be by changing its operational demands.

The French F1 is also being peddled extremely strongly, as the French have a habit of doing. It is an interesting commentary on the French understanding of a collaborative project. The Jaguar is an Anglo-French project, and yet here are the French competing hard against the Jaguar with one of their own. This is the sort of thing we are up against in competitive markets. Time and again we seem to be the nice guys who stand back and hold the door open for other countries and salesmen to make their pitch.

The Jaguar and the F1 have already been tested against each other and evaluated by the Indian Air Force, and the Jaguar came out on top. Therefore, one would have assumed, in a world other than the one we inhabit, that the French would have folded their tents and departed, saying "We have lost that". But, no, their hopes are kept alive by the dilatoriness of the British Government because the French can see that perhaps the Jaguar sale will not go through and, therefore, there is an opportunity for them.

I understand that the French are making a massive presentation in Delhi in March when they will deploy all their formidable selling resources and techniques, and still there is no decision coming from the British Government.

I have some experience of India and of commercial matters there. Does my hon. Friend agree that experience shows that the French Ambassador and, indeed, his staff follow a strongly commercial line when these matters come to the fore? I hope that my hon. Friend will be able to get an answer from the Minister showing whether he is similarly confident about our own diplomatic and economic resources in these matters.

I am grateful for that intervention. Without touring the world and assessing the capability of the British diplomatic service in all markets, one suspects that our diplomatic service is not as commercially-oriented as, say, that of the French. There are many examples of French ambassadors sending cables to Paris commenting on whether a contract is going in a favourable direction. This always produces a response, sometimes from the highest level. I have known instances of the French President taking in a country which was not on his itinerary, with a satisfactory sales outcome.

What is happening in this country which is causing delay? I understand that the Indian Government require very generous credit terms, and, in the present circumstances, one can understand that. The financial criteria are important. We cannot give away a fine aircraft like the Jaguar. Plainly we must have regard to the return on capital and all the other important stringent financial criteria. But there must come a point when strict, almost actuarial and financial, considerations must give way to overall national policy, such as the balance of payments and maintaining full employment in the aircraft industry.

I suspect that the Ministry of Defence supports this sale. I do not want to embarrass the Minister because he may well be fighting extremely dogged and vicious battles behind the scenes. One detects in this the dead hand of the Treasury. The Treasury's purpose is to do a job, but it cannot take overall decisions on whether this sale should be allowed to go ahead in the British interest and having regard to the immense potential sales on the Indian subcontinent. In either event we need a decision. Will the Minister say whether he expects the decision to be taken in the near future? Can he give the House any idea what that decision is likely to be?

I urge on the Minister a possible compromise solution suggested by the British Aircraft Corporation, which is that the sale might be initially on a more modest scale and that 18 aircraft could be considered in the first instance. That would presumably make it easier to phase the payments over the requisite number of years, which would meet the requirements of the Indian and British Governments.

I refer now to one other area of interest to do with the Jaguar aircraft, the so-called "sale of the century" as it is called in aircraft circles. By that we mean the possible two-tier replacement of the F-104 for the air forces of Holland, Belgium, Norway and Denmark. It is for those countries to say whether they wish to change the terms of reference of the working party which, when it was set up, was instructed to look for a single aircraft replacement solution. It has been suggested very forcibly in this country that the combination replacement using the Jaguar and the F-1 would perfectly meet the future needs of the four countries. The sales potential is huge, and, since we are talking about possibly 600 aircraft, this is an enormous market.

I understand that the Secretary of State raised this question at various meetings in NATO in recent weeks. I urge the right hon. Gentleman to do more than simply raise the question.

This brings me back to my point about attitude. A Secretary of State for Defence who cared about the sales of British products would not say, when the group concerned decided to change its terms of reference, "I shall do my best for the Jaguar." Instead, he would say "Why don't you change your terms of reference? I understand your difficulties. Let me assist you, since I have the solution." That is called positive thinking and positive salesmanship, but we do not seem to see any evidence of that. I do not suggest that the Secretary of State for Defence has to be involved as a part-time salesman. However, I should have thought that British interests and the enormous potential for British aircraft should take higher precedence in his thinking than has so far been evident.

I am grateful to the Minister for coming at this rather unusual hour and for the contacts I have had with him. I look forward with interest to his reply.

10.15 a.m.

I have listened with interest to the remarks of the hon. Member for Chertsey and Walton (Mr. Pattie) and I understand his concern about the export future of what, as he has said, is a very great and successful aircraft with a potential use throughout the world.

My concern this morning is whether I shall be able to add a great deal more to what I said in answer to the hon. Gentleman's parliamentary question in November. The considerations that he has raised will be very much in my mind, and I hope that he will believe that, even if the emphasis is slightly different, they are not matters which the Ministry of Defence and its sales organisation or my right hon. Friend the Secretary of State have overlooked.

If the hon. Gentleman had that fear, I am sure that he will feel that his own speech was totally justified in asking us about our responsibilities in this area. So if I do not add significantly to what he and the House already know, I can at least undertake to examine carefully what he has said and do all that I can to ensure that in the proper circumstances this aircraft has a very substantial overseas sale.

We are very anxious to sell equipment, within the proper restraints and given the proper safeguards, to friendly countries. There is no doubt that the RAF is very pleased with the aircraft, and we hope that it has a very substantial future ahead of it in service.

Basically, however, it is not whether we want to sell, but whether a country wants to buy. The hon. Gentleman referred at the end of his speech to "positive salesmanship". But I do not think that he suggested that it was in our interest or compatible with our relationships with other countries to try to sell an aircraft which they may not want or to persuade them to look at it in a rôle which does not apply. So, although positive salesmanship in terms of showing concern at selling and suggesting that there are alternatives in terms of a replacement for the four countries in NATO is right, there comes a point when it would be foolish to seek to persuade an unwilling buyer to change his specification, knowing that it did not make a great deal of sense.

We want, therefore, to sell aircraft at a price and in circumstances which make good economic sense to both the parties to the sale. Inevitably, this raises the question which the hon. Gentleman raised in relation to the Indian order and the credit terms. This itself is a major policy question with all export sales. "The seller wants a realistic period for repayment at a realistic rate of interest. The purchaser often wants very soft terms, a long period of repayment and a low rate of interest. The need is to find a reconciliation between the two which makes good economic sense to both parties.

The hon. Gentleman was right to say that there had been times in the past when our sales organisation had not been as fiercely competitive as it might have been. But I do not mean now. Nor do I mean in recent years. There has been a fundamental change in the attitude to salesmanship, and that is equally true of the Diplomatic Service. I know from my experience that distinguished ambassadors coming to this country spend a remarkably large part of their time going round factories and getting to know techniques lying behind the exports which it is their job to promote. The old-fashioned generation would not have regarded this as proper, but the new generation of diplomats is often more concerned with commercial sales than with the strict orders of diplomacy as we understand them.

If the hon. Gentleman were to see the telegrams which come in, he would realise that a substantial proportion of them deal not with the great issues of our time but with something that we want to sell abroad. Though there may still be room for improvement, the hon. Gentleman can feel confident that our diplomatic staff feel themselves at least as much salesmen in matters of this kind and are fully aware of the importance of the sale of the Jaguar as often as possible. We cannot give it away. But, short of that, we want to sell it to friendly countries wherever they may be.

Jaguar has been in squadron service for some months now in a ground attack role. The RAF is extremely pleased with its performance. Pilots have found it very easy to fly and have been particularly pleased with its low-level performance. It has proved reliable and easy to maintain, which has meant that the flying rate has been considerably higher than was at first forecast. For this reason it is an aircraft with at least some of the qualities of robustness—very difficult to combine with modern technology—which give it good export prospects.

We believe that there will be substantial sales, and BAC has already concluded deals with two countries. It would not be consistent with the policy of successive Governments for me to give further details of these deals. In this area, except for the broad areas of policy, it is for the Government purchasing an aircraft or any piece of defence equipment to make an announcement about it if they wish.

We are very aware of Indian interest in the Jaguar. Whether at the moment it is strong or less strong is not a matter for us. It is for the Indian Government to decide what aircraft they need. We have made, and will continue to make, a real effort to ensure that the aircraft is available at the right price. Certainly, credit terms are central here, and the Indian Government have very good internal economic reasons, because in the aftermath of the oil crisis they face a quadrupling of oil prices, for wanting to get the aircraft as cheaply as possible.

Therefore, one of the major factors to be taken into account is the ability of the Indian Government, faced with this problem, to find the money for the purchase, given other interests that they may have, on anything approaching normal credit terms. It is finally a decision for the Indian Government but they are aware of our present position and know that we are happy to try to meet them if the commercial aspect of the deal makes good sense. It is a question not of bending rules or breaking them, nor of having rules which do not change in any circumstances, but of having arrangements which are practical and represent a good bargain to both parties to the sale.

It has been suggested in some quarters that there might be a certain political reluctance to make this sale because of the nuclear test that the Indians had last year. Could the Minister refute that suggestion?

We have to look at all the circumstances, but I am sure that in this case it is a question of whether the Indians are prepared to meet the credit terms which we feel to be right. It is a very difficult question. There have been long discussions, and we are open to representations if anyone wishes to make them.

Turning briefly to the question of the NATO replacement, I mentioned earlier that the Jaguar was primarily designed for ground attack and interdiction. Although, rightly, BAC had hoped to see it in a wider role, this is the purpose for which it was designed and for which it is employed by the RAF and the French Air Force. On the other hand, Denmark, Norway, Belgium and the Netherlands are currently considering a replacement, optimised in an interceptor rôle, for the F104G. So the real problem is finding some middle way, the sort of compromise that the hon. Gentleman mentioned, between the needs of those four countries for an aircraft that no one claims that the Jaguar is.

As long ago as last June, my right hon. Friend commended the Jaguar to his relevant NATO colleagues as part of a two-aircraft replacement programme. However, at that stage it became clear that the Jaguar was excluded from the list of aircraft which the four-country consortium would be evaluating. But if the consortium fails to agree on a standard replacement aircraft for the F104G—and the French have a particular and special interest of their own in the Jaguar in this—and as a consequence modifies its requirements in favour of the Jaguar's characteristics, or should it seriously consider a two-aircraft procurement, every attempt would be made to persuade it to adopt the Jaguar. The final choice is understood to be a matter of national responsibility, and it is still possible that the four countries will fail to agree on a common solution. At present there is no reason to believe that there is disagreement, though obviously it is a highly competitive situation. This is one of the reasons for delay.

However, my right hon. Friend cares very much about sales here. There has been no complaint, as far as I know, from BAC. I can certainly give the undertaking that if there is a chink at any time we shall return to this. Obviously, we should make ourselves foolish if we were pushing at the wrong time, having introduced the idea. The idea is there; it is lodged in the minds of the countries concerned. Certainly we shall return to it at the right time with whatever strength may be appropriate.

The hon. Gentleman referred to the success of the Jaguar. I join him in the tribute he paid to the skills of those who conceived, designed, developed and built this aircraft. In sales abroad BAC will receive all possible support. I do not believe that BAC has complained about the support it has received so far, bearing in mind our judgment of the sales situation. I do not believe that we shall give BAC any future cause for concern. The hon. Gentleman must know not only of our enthusiasm for this aircraft but of the practical good will which we shall bring to bear on its very high export potential.

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put and agreed to.

Question put accordingly and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee this day.