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From International Socialism, No.33, Summer 1968, pp.10-14.
Transcribed & marked up by Einde O’Callaghan for ETOL.
The major aircraft manufacturing monopolists have several aspects of ownership, finance and operation in common:
‘The present situation is dominated by the increasing dependence of the industry on Government decisions in both the military and civil fields. The military programme has for many years been determined and paid for by the Government. The scope for independent initiatives and action on the part of industrial managements is small’ (p.81).
‘... it would seem that the average degree of Government support in recent years has been somewhere between 30 and 45-50 per cent. It has probably been higher still’ (p.35).
About one-third of all Britain’s defence costs concern the aircraft industry. In fact, the aircraft industry has been central to any British military policy. The cost and waste of such programmes has been and still is considerable. Since 1945, the British taxpayers have subsidised the private aircraft monopolists to the extent of over £3,000m on military aircraft and missiles.
The British aircraft manufacturers have been and continue to be heavily subsidised in the production of civil aircraft too. In the polite language of the Plowden Report:
‘Since the Second World War it has been Government policy to encourage the development of civil aircraft in this country. Promising aircraft and aero-engines have been aided by Government finance when the manufacturers could not find all the money themselves or considered the risks too great to bear on their own. Whenever possible the Armed Forces have ordered derivatives of civil types to meet their needs for military transports.
‘Despite this, the United States continues to dominate the world civil aircraft markets. Few British aircraft have secured a substantial share of world markets. The hope of successive Governments that the industry would eventually finance its own civil programme has been disappointed’ (Plowden, p.18).
British Governments contributed £88 million to the aircraft manufacturers’ civil projects between 1945 and 1959, and less than one third of this has been recovered – and, as the Plowden Report comments, ‘not much more can be expected. On projects started since 1960, excluding the Concord, £39 million has been spent. It is too early to know how much of this will be recovered in the end, but the Ministry of Aviation do not expect to recover all their investment.’
Of course, the Ministry figures are simply estimates (or guesses) which, in several important cases have since been proved to be drastically wrong – Ferranti, Hawker Siddeley (Buccaneer) and Bristol Siddeley Engines, are just recent cases which have come to light.
This brings us to a brief study of the financial relationship between Government and the aircraft manufacturing companies.
The Lang Committee, set up by the Tory Government in 1964, investigated Ferranti Ltd.
The Lang Report shows that Ferranti made £5½ million profit on a Government contract for the Bloodhound missile worth just under £13 million – ‘this profit represented 82 per cent on costs’ (p.3). As the Report shows, the Government did not have control over the way Ferranti used taxpayers’ money. The investigation refers to the ‘failures on the accountancy side (of the Ministry) largely symptomatic of an approach that is more concerned to check the accuracy of the figures and facts put in front of them by the firm than to probe thoroughly the charges which the Ministry would be called upon to bear.’ A Second Report came out in 1965. It deals with the problem of secrecy in company accounts. The Report says that a principle of ‘equality of information’ between Government and aircraft firms should exist. In other words, the aircraft companies’ books should be completely open to the full inspection of the Government. It is very significant that the Report specifically mentions the importance of having access to the full shop-floor accounts. Aircraft workers strongly agree with this demand. This is how the Report puts it:
‘We think that “equality of information” is an apt term to describe the relations mat should, in our opinion, exist between the Ministry of Aviation and its contractors up to the time when prices (or targets costs) are fixed; namely, a relationship that entitles Ministry of Aviation staff to have access to a contractor’s shop floor; to details of his manufacturing facilities and production plans; and to his records – mainly of time taken and costs incurred – on any contract on which prices are to be fixed (or target costs agreed) – for the sole purpose of fixing prices (or target costs) on that contract.’
It is only now that the Government, the taxpayers and aircraft workers are beginning to know something of the way in which the aircraft companies have been deliberately concealing their full account books on shop-floor costs and profits. The recent cases of Hawker Siddeley and Bristol Siddeley Engines are instructive.
Hawker Siddeley has been profiting from the Buccaneer contracts, including the arms deal with South Africa, for many years. Indeed, Hawker Siddeley has been making excess profits on the Buccaneer contracts. The 1967 Report of the Public Accounts Committee (the House of Commons’ financial watchdog) on the Hawker Siddeley Buccaneer contracts indicates that such excessive profits were made. According to a report in The Times:
‘It now looks as though the sum involved in the Government’s overestimating of costs on the Buccaneer aircraft contracts awarded to Hawker Siddeley is at least £12,500,000.
‘... the total payment to Hawker for all Buccaneers delivered to the Government or on order would be £114,500,000. Applying a profit margin of 17½ per cent on costs – this was the percentage in excess of which Hawker agreed to refund any profit – gives the figure of £97,450,000.’
In 1966 another Public Accounts Committee Report criticised Hawker Siddeley secrecy over the Buccaneer accounts. As The Sunday Times summarised the report at the time:
‘The most significant post-mortem is on the Hawker Siddeley naval jet-bomber. A critical question in fixing the price was the number of man-hours required to build the airframe. Ministry officials worked out – clearly rather haphazardly – sets of figures which varied between 135,000 man-hours and 176,500 man hours. Hawker claimed that 207,940 man-hours were needed. After a series of arduous meetings a compromise of 171,500 was agreed – but the Ministry still do not know whether that figure was correct. In fact nobody outside Hawker does.’
This Hawker Siddeley secrecy and excessive profiteering has been going on at the Company’s Brough plant. In a statement issued on 5 August 1967, Hawker Siddeley said that the question of repayment of excess profits to the Government did not arise. In other words Hawker Siddeley is refusing to pay up. Here is a firm which is operating on a guaranteed minimum of 17i per cent profit on Government contracts, which receives subsidies and yet keeps its shop floor accounts, ie man-hour costs, secret and sacks 500 men when it wants. (500 Brough workers have been dismissed so far this year.) Only last year this Company spent £30 million to take over the Leeds-based electrical engineering company of Crompton Parkinson. Such cases cannot be regarded as isolated incidents. It is quite clear that private aircraft companies do all they can to avoid public access to their detailed accounts – and so make excess profits. The scandals continue with the Bristol Siddeley Engines affair. The Sunday Times reported recently:
‘The Bristol Siddeley affair in which the company overcharged and then repaid to the Government £3.9 million on an engine contract, is now blowing up into a major political issue ...
‘It is clear from our inquiries that Bristol Siddeley originally made about 60 per cent from the contracts, which were for maintenance of RAF aero-engines between 1959 and 1963. Even after returning £3.9 million, they still retain a profit of nearly 20 per cent.’ This last point is bound to strike aircraft workers, but apparently normal practice is, as The Sunday Times pointed out: ‘a profit of about 20 per cent: roughly the same as Ferranti were allowed to keep.’
Under the present position, even though the excess profits of aircraft firms are found out, the firms still keep a 20 per cent profit margin. They are not even fined. The Sunday Times played an important role in filling in the background to the scandal. BSE is left without excuses:
‘Bristol Siddeley’s virtuous pose is even more heavily damaged by another point that emerged from our inquiries. Although they made this much-stressed confession in 1964, this only happened after changes had been made in Ministry of Aviation contract procedure. These would have made discovery inevitable whether they had chosen to own up or not.’ And, as has been mentioned earlier in the section on Rolls Royce, the company (BSE) tried to settle for only £2 million. We owe more to The Sunday Times for making known these facts than we owe to Mr Stonehouse of the Ministry concerned. He did not come clean on the matter at all. As The Sunday Times editorial said: ‘The extraordinary Bristol Siddeley affair is a disgrace to the Government, Opposition and aircraft industry alike.’
The Labour Government did not rule out the future disclosure of other cases of excess profits. The cases we have got to know about so far may very well be the ‘tip of the iceberg,’ as Maurice Edelman, Labour MP for Coventry, suggested in the debate in the Commons.
At last year’s public inquiry, Sir Reginald Verdun-Smith, who was then the chairman of the BSE board of directors (and now vice-chairman of Rolls Royce) and also on the board of Lloyds Bank, was very vague and evasive about excess profits. And a few months ago came the latest bombshell in the BSE scandal. According to the latest House of Commons report, the BSE management ‘budgeted for and achieved exorbitant profits’ on Government contracts. The Report adds that, concerning the 1959-63 RAF contract, the BSE management spokesman had committed what ‘amounted to intentional misrepresentation, by which the (Government) department were deceived.’ The BSE bosses did not make the excess profit ‘by accident.’ As the latest Report says:
‘The approximate extent of the profitability of these contracts was, at the time, known to the company at all levels of management. We do not accept that the overcharging has been justified by any of the arguments put forward by the company.’
It is pretty clear from the latest Report that the main technique that the BSE management used to make their excess profits was that of keeping their account books closed to Government inspection. In particular, the Report says:
‘... the main reason why the department failed to prevent excessive profits from being made on the overhaul contracts was that the estimates of man-hours made and accepted ... were too high.’
In other words, the Government, which put up the money, was not allowed to see shop-floor accounts and BSE were saying that wage costs were much higher than they were. And, of course, the same sort of deceitful and unacceptable management arguments were used against the workers in that period too as a way of opposing wage claims. The Government now claims that it has tightened up on aircraft employers. The National Shop Stewards Combine of BSE has a workers’ control study group which is working on a plan for the future of the industry. It is becoming increasingly clear that the following immediate demand will be made: all the account books of BSE must be fully open to shop steward inspection – and not just government inspection.
The ‘open the books’ demand can be most useful to such aircraft workers. The more politically advanced workers at BSE are taking it up. It may well be that the ‘open the books’ demand is of more use to aircraft workers than any other single group of industrial workers.
In the aircraft debate in the House of Commons in November 1966 the Labour Minister of Aviation, Mr Mulley, announced that the British Aircraft Corporation and Hawker Siddeley were willing to co-operate with the Government in merging their airframe interests into a single company, in whose equity share the Government would take a minority interest. So the Government was then following the weaker, minority report of the Plowden Committee. Apparently at the time Labour did not intend to take a majority interest in the air-frame companies as Plowden recommended. Since then the Labour Government has decided to shelve any plan to alter the ownership structure of the aircraft industry. A statement to this effect was made by Mr Wedgwood Benn, Minister of Technology, in December 1967.
Answering a written parliamentary question, Mr Benn said that the Government had decided to postpone the merger proposals between BAC and Hawker Siddeley ‘for the time being’ as a result of having re-examined its policies in a number of fields following devaluation.
Both Plowden and the Labour Government are simply adopting ‘corporate state’ solutions to capitalist problems. Since the Plowden Report was published, the case for nationalising the aero-engines section has become overwhelming – as Rolls-Royce now has a sole monopoly. But the Government completely avoids the issue. The views of the TUC in its evidence to Plowden also fall in line with Plowden Report recommendations. The TUC can say ‘on the engine side the structure of the industry appears to be reasonably satisfactory.’ The socialist arguments against this kind of ‘state participation’ in industry have been clearly made.
The growth of shop stewards in British industry represents a rank-and-file challenge on both matters of shop-floor control and pay. This has been particularly true of the engineering industry, including aircraft. The number of shop stewards in the aircraft industry has increased considerably since 1945 and joint shop stewards’ organisations, with convenors, and national combine shop stewards’ meetings have become established features of the industry. The higher paid aircraft workers are at the plants in the London area (Weybridge, Kingston, Watford, etc) and Coventry. Fitters at Coventry (BSE) get about £31 for a 40 hour week; fitters at Brough, East Yorkshire (Hawker Siddeley) get only half this.
The workers in the better organised aircraft plants have built up good trade-union organisation which produces useful shop-floor representation on questions of wages, work allocation, labour load, etc. In fact, the production methods in the industry are so involved that even under private ownership the management have to consult and co-operate with the shop-floor workers in order to maintain production.
However, in conditions of less than full employment and with a tough Government wages policy at national level, the employers are prepared to take a harder line with the workers at shop-floor level. Under the name of ‘productivity bargaining,’ the employers are aiming to revise payment-by-results wage structures. This trend is clearer in the car industry at the present time, but the aircraft industry is not unaffected. Nationally, the employers want to re-assert the shop-floor supervisory powers of management by demanding ‘a more flexible use of all labour’ – craft and process, more shift-work, work-study, speed-ups and little or no overtime. In return for this the workers are simply offered a cash increase in their basic wages; and profits invariably increase by an even greater percentage. There have been several redundancies in aircraft recently. Hawker Siddeley have closed their aircraft plants at Portsmouth and Coventry and cut back at Brough. The recent order for Rolls Royce engines by the Americans will relieve the work situation on the engines side for a few years. But even that order was ‘touch and go.’ There was some talk among aircraft workers recently that if Rolls Royce did not get that US order and Concorde was scrapped, Pratt and Whitney, the US aeroengine giant might bid for Rolls.
Another problem confronting aircraft workers is that of automation. As PH, an aircraft shop stewards’ convenor, puts it in New Left Review No.48:
‘Management’s counter-attacks are not confined to earnings. The introduction of new, capital-intensive machinery that displaces a certain amount of labour is constantly with us. We are not against technical progress, we are not Luddites, but as soon as there is no control the workers are under grave attack.’
This convenor goes on to explain the problems for the aircraft workers that come with the introduction of tape-controlled machines. As the convenor implies, such technological problems involve issues of workers’ control:
‘The point is this: while the planners who make the tapes are quite good on theory, they don’t know how to combine theory with practice. They are always running down to the lads on the shop floor to ask whether this speed and feed is right, whether the theory will, in fact, work. They have to come to us.’
Workers’ control demands are very relevant to this sort of situation. It is very appropriate that workers demand that there should be no change in any labour practices without workers’ control. Similarly, because the workers do not have access to company accounts and therefore do not know what extra profits the firms will make out of these ‘productivity deals,’ it is also useful for the workers to say: ‘no productivity deal without the opening of the books.’
It seems clear that the future organisation of the British aircraft manufacturing industry will not be transformed into a socialist structure when the decisions on the industry are left to the present owners, the Plowden Committee or the present Government. If anyone is going to come up with a socialist alternative for the aircraft industry it will be the aircraft workers themselves.
Not all aircraft workers will find it easy to convince themselves that they must work out their own political plans for the industry. There are the usual understandable inhibitions. Such workers might feel that they are educationally unqualified and that they will leave such matters to ‘the experts.’ The fact is, of course, that there are no ‘experts’ on the issue of the ownership of the aircraft industry. For instance, Aubrey Jones’ remarks in his Reservation to the Plowden Report are simply his political arguments in favour of continuing the private ownership of the whole of the aircraft industry. He is no more an ‘expert’ on aircraft than Lord Melchett is a steel industry ‘expert.’ Most aircraft workers will be able to recognise their own ‘expert’ knowledge at plant-level. They know that higher management has to ask the design workers, technicians and factory-floor workers for their advice on the practicalities of all sorts of work projects. It is in the realm of higher finance of private industry that the shop-floor workers are excluded. It is the financial ‘experts’ ie, the aircraft companies’ bankers, who have the power of control; it is they who assess the various aircraft company projects, aircraft and non-aircraft, in terms of profits. The power of such financiers in aircraft is enormous. The aircraft workers’ trade unions are broadly in favour of complete nationalisation of the industry. Several of these unions have made sympathetic noises about workers’ control, but there has been little or no action beyond the passing of resolutions. The AEU’s national aircraft advisory committee appears, on paper, as though it could be an important place where the key aircraft shop steward committees could work out plans for workers’ control. As it is, this AEU aircraft advisory committee does not attract many aircraft shop stewards. Many of the convenors who are eligible to attend do not do so because they feel that the AEU committee has little power and influence for them.
Instead, aircraft workers have been using the shop steward committees at plant and combine level as the most useful places to discuss not only wage matters but also issues of nationalisation and workers’ control. For instance, in 1963 the British Aircraft Corporation shop stewards’ committee produced a statement which emphasised the need for a switch of production from military to civil projects and for complete nationalisation of the industry. The statement recalled the Plan for Engineering adopted by the Confederation of Shipbuilding and Engineering Unions which stated: ‘The aircraft industry with its almost complete dependence on the State for its orders, finance and further development, should be brought under public ownership.’ The BAC stewards’ statement suggested: ‘To facilitate the overcoming of the problems in the industry, a conference could be organised by the CSEU with participation from factory committees besides full-time officials. Such a meeting could at the same time deal with the immediate problems of redundancy confronting large numbers.’ But as yet the CSEU has not discussed issues of workers’ control with lay aircraft workers.
During the past two years or so it has been the British Siddeley Engines shop stewards who have given a lead on issues of workers’ control. There is a national Bristol Siddeley Engines shop stewards’ combine, which represents the manual workers of the main BSE plants at Coventry, Bristol, Watford and Sunderland.
This BSE combine group set up a workers’ study group to produce a pamphlet on aircraft nationalisation and workers’ control.
This step represents a political advance for the shop stewards. However, it is well to remember that the aircraft workers have quite a long tradition of militancy and political action. The aircraft workers’ shop steward movement was reborn in the 1930s after the paralysing effects of the 1922 engineering lock-out, the 1926 General Strike and the Depression. Some key documents describing these earlier developments in the aircraft industry have been reprinted in an important new study of the industrial democracy campaign in Britain. [2] The BSE aircraft workers’ study group have already made a critical examination of the Government’s ‘steel plan’ and it was generally agreed that a similar plan must not be foisted on to the aircraft workers under the Plowden recommendations. After its initial meetings, the BSE study group was extended to include not only AEU stewards but also DATA aircraft workers. Some of the several meetings of the study-group have been held at conferences on workers’ control. At such meetings there has been lively discussion on basic questions: for instance whether it is realistic for aircraft workers to go ahead with their plans for workers’ control. The aircraft workers involved in these discussions generally agreed that it was useful and realistic to work on their own plans for the industry. This is not to say that the workers expect the Government or the aircraft industry interests to simply accept an aircraft shop stewards’ plan for nationalisation and workers’ control. This is not how politics works. But it seems clear that the more the aircraft workers study the present ownership structure of their industry (and the whole of society) and the more they campaign for a workers’ control programme, the more likely it is that the political ideas of the workers can be advanced. The aircraft workers are unlikely to advance their political interests if they do not get beyond the stage of relying on slogans. Many aircraft workers have found it necessary and useful to go beyond this stage. This does not mean that an aircraft workers’ plan for the industry will have much chance of success if it is pursued as an isolated political objective. It seems obvious that a ‘plan for aircraft’ should be linked to a workers’ ‘plan for engineering’ as well as to a workers’ ‘plan for steel.’ This line of discussion leads on to a consideration of trade unions and political action.
But, as a first step, it is not surprising that such aircraft workers’ groups as that of Bristol Siddeley Engines should work for a future plan for the industry starting from square one – the shop floor. The stewards are keen that workers’ control at plant level should be in the form of workers’ councils made up of the present well-developed system of shop stewards and shop-floor gangs. Such shop-floor gang schemes are particularly well advanced in many aircraft plants. The allocation of work, and questions of shop-floor discipline are largely settled by this democratic gang system already. It is clearly a basis for the extension of shop-floor democracy under nationalisation. The aircraft workers fully appreciate this. It is not the idea of the nationalisation of the aircraft industry which creates most enthusiasm. The fate of the railway workers and miners is a daily reminder of this. But the practical possibilities of shop-floor democracy give some immediate meaning to workers’ control. The BSE workers are clear that such possibilities should be written into their basic demands: all trade-union representatives at national and plant level in any nationalised industry should be elected or sponsored by the shop-floor workers to whom they should be responsible and accountable.
1. This article is part of a chapter by the author on ‘the case for the democratic public control of the aircraft industry’ which will appear in a forthcoming Sphere paperback publication Can Workers Run Industry? edited by Ken Coates, which is due out late summer.
2. Industrial Democracy in Great Britain by A.J. Topham and K. Coates (MacGibbon and Kee 1968). See Section 2, Chapter 2, pp 148-160.
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