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Shipowners (Investment Grants)

Oral Answers to Questions — Board of Trade – in the House of Commons at 12:00 am on 13th March 1968.

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Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury 12:00 am, 13th March 1968

asked the President of the Board of Trade what is the amount of investment grants that have been committed or paid to United Kingdom subsidiaries of foreign shipowners in respect of ships built elsewhere than in the United Kingdom, to date.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

On the latest information available, I estimate that over the next few years approximately £36½ million will be paid in investmant grants to British shipping companies controlled by persons resident outside the United Kingdom, in respect of ships built abroad.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Can the Minister give any possible justification as to why British taxpayers should subsidise competitors of British shipowners to build ships in foreign shipyards, thereby robbing our own shipyards of orders?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

Yes, because there has been no change of policy from that pursued by the previous Government. [HON. MEMBERS: "Oh."] Let me make this clear. The payment of investment grants to ships abroad is in line with the previous Government's policy. They paid 40 per cent. investment allowance on ships whether they were built in this country or built overseas, and to the same shipowners we pay 25 per cent. investment grant. The purpose of the grants, of course, is to help to encourage investment in new ships so that the British mercantile marine can be the leading shipping service in the world, properly equipped, and continuing to bring us in about £300 million a year to help our balance of payments. We cannot discriminate against ships built abroad—

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. Answers are getting long.

Mr. J. T. Price:

Is my right hon. Friend aware that that answer is not good enough for us on this side of the House, that to say we are following the practice of the previous Government in this context is not a satisfactory answer to the criticism now launched through this Question? Is he aware that so far as I am concerned—I am sure he is—as a persistent critic of the system of investment grants as compared with the old system of investment allowances I reiterate my contention that before investment allowances were given a profit had to be shown by the business—

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. Questions must be reasonably brief. The Minister.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

I quite agree with my hon. Friend's first observation, that just because a policy was pursued by the previous Government that is no reason for our following it. My right hon. Friend has already taken steps to ensure that the situation which has been described is not exploited to our disadvantage.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

asked the President of the Board of Trade what is the amount of investment grants that have been committed or paid to United Kingdom shipowners in respect of ships built elsewhere than in the United Kingdom, to date.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

On the latest information available, I estimate that £29 million will be paid over the next few years in investment grants to United Kingdom controlled British shipping companies in respect of ships built outside the United Kingdom.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Will the Minister not rely upon traditional Conservatism to justify the expenditure of a further £29 million of taxpayers' money for subsidising our competing shipyards abroad?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

Yes. I agree that we must see that more ships, whether for British or foreign shipowners, are built in British yards. As the House knows, we have taken steps in that direction through the new shipbuilding industry arrangements, but many of these so-called foreign businesses are in fact businesses, although foreign-controlled, which have been registered in this country, and they pay British tax in this country, and they bring us returns in this country, and they have got an honourable association with the British mercantile marine.

Photo of Mr Jon Rankin Mr Jon Rankin , Glasgow Govan

Has my right hon. Friend weighed the practice he has just told us about against the fact that at this particular moment we are threatened with the close down of a shipyard on Clyde-side and with putting thousands of men out of work? The same applies to Teesside. So we are losing exports. How do the two things balance out?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

A number of the ships involved here which are being built abroad are ships which British shipyards did not, and perhaps could not, tender for because of their special design, but I can assure my hon. Friend that the amount of investment grant going to British ships being built in British yards is increasing and will go on increasing, and I think these figures will be reversed before long.

Photo of Mr Ian Lloyd Mr Ian Lloyd , Portsmouth Langstone

Is the Minister aware that the choice for many British shipowners is not at all whether to build in Britain or whether to build abroad, if they are to operate certain types of tonnage at an economic level, because in some circumstances these types of tonnage simply cannot be built in this country?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

That was, I think, a point I made a moment or two ago.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepools, The

Is my right hon. Friend aware that it is now public knowledge that the financial support of the shipbuilding industry in this country through Government agencies compares favourably with that of the rest of the world, but will he understand that the modem shipyard on Tees-side which is now going to be closed involves unemployment for 3,000 people, and that those 3,000 people will not understand the reason for subsidies for creating work for shipyards abroad and not at home?

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

Yes, I think we are all aware of the distress caused by the decision to close the Furness shipyard, but I would doubt very much whether refusing to give investment grants to ships built abroad would have saved the Furness shipyard.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

On a point of order. In view of the unsatisfactory nature of those replies, I give notice that I will raise the matter on the Adjournment at the earliest opportunity.