(by Private Notice) asked the President of the Board of Trade whether he has been informed that the Cunard Shipping Company has decided to stop the construction of their New Liner in the Clydebank Shipyard; whether he is aware that such a decision involves the dismissal of several thousand people from the yard, and many more from firms engaged with subsidiary contracts; and whether the Government will intervene with a view to prevent this happening?
The Board of Trade were informed confidentially some days ago that the Cunard Company considered it necessary to suspend for the present the building of the new express steamer. The reasons for this decision are given in the statement which the Cunard Company have issued to their shareholders, and which has been quoted in the Press. The salient points are that the company has this year, for the first time for many years, been unable to earn depreciation on its old ships. It is the practice to finance the construction of a ship like the new express steamer by making use of bill market finance, and repaying these liabilities out of the earnings set aside annually to cover the normal depreciation of the fleet, and partly out of the earnings of the ship herself during the first few years of her operation. The company's statement points out that the international crisis has changed the whole financial background and made continued use of this type of finance less easy than formerly.
The consequences of the suspension of building were realised, but the inquiries made showed clearly that no stone had been left unturned by those concerned in the effort to avoid suspending the work on this steamer.
The question of direct Government assistance was not raised, and, if it had been raised, it would not have been possible to give financial assistance.
The Cunard Company is building this ship out of its own resources, and the only assistance asked for from the Government was in respect of insurance, and this was given, with the approval of Parliament, by the Cunard Insurance Agreement Act, 1930.
As the Schedule to that Act shows, the company were unwilling to order the building of the vessel until satisfied that they would be able to obtain and maintain sufficient insurances against construction risks and ordinary marine risks on reasonable terms. They therefore asked the Board of Trade to agree to provide insurance for such part of the value of the vessel as the company might from time to time be unable to insure in the open market on reasonable terms. The construction risk on the vessel was placed some time ago, £2,720,000 being taken up by the market and £1,780,000 by the Board of Trade.
The suspension of work on this vessel is very much regretted, but I am afraid that any idea of direct Government financial assistance is out of the question, and we can only hope that circumstances will permit the building to be resumed before long.
I would add that all bills of exchange current on the ship will be paid off as they mature, out of the company's liquid cash resources, which are ample for the purpose.
I hope that the right hon. Gentleman will reconsider his statement that direct Government financial subsidy is out of the question. Will he consider the possibility of Governmental support of some other kind, such as might enable the company to secure a cheaper way of financing operations if the Government were behind it?
I am afraid that the Government cannot undertake to give any direct financial assistance in this case, but, if the company have any proposals to make, they will, of course, be most seriously considered.
Is it not a fact that one of the main reasons why the building of this ship cannot be proceeded with is that the ship cannot be run except at great loss to everyone in the existing conditions of shipping?
I wish to put two direct questions to the President of the Board of Trade. The first is: Is he going to wait now until some approach is made to the Government by the firm themselves? My next question is: Have the Government considered how much expenditure they will require to give, not simply as the result of the discharge of 3,000 or 4,000 workers in my constituency, but on account of the fact that it is going to involve about 100,000 workers throughout the length and breadth of Britain? Have the Government considered what that means in expenditure on the Employment Exchanges? Had the right hon. Gentleman considered these things before he gave his answer to my original question?
The hon. Member may rest assured that we have already taken that into account, but the considerations which are set out so fairly by the Cunard Company in their circular must also be taken into account. We have kept in close touch with the builders since the question was first mooted to us, and I am afraid the decision I have announced is the result of that careful consideration and discussion.
I am sorry to press the question, but it is very serious. This is not a matter simply affecting my constituency. The stopping of the ship affects the prestige of Britain. She was being built in order to wrest the blue riband of the Atlantic back to this country, so it is not simply a matter of my local concern or simply of the workpeople who are going to be thrown out. I will raise the matter on the Adjournment today.
Will not the Government try to arrange a consultation between the Cunard Company and the banks responsible for the meeting of their bills to try to find some way out by providing money at cheaper rates of interest, and thereby prevent a great deal of distress over the period of Christmas and the New Year?
The Government have well in mind the necessity for keeping people at work, especially on a great undertaking of this size, but it would be a pity if it became the general idea either inside or outside the House that the Cunard Company's finance was not capable of dealing with the whole of their obligations, and what they have set out in their circular is a plain statement that they do not wish those obligations to go beyond their present means.