I will, if I may, make use of this occasion to go somewhat more in detail into two matters of great importance which affect Upper Clyde Shipbuilders. The first is to consider and elaborate more than a brief statement could do yesterday the reasons why, after very careful consideration and thought, I had to come to the painful conclusion that this concern was unlikely within the foreseeable future to reach any reasonable state of viability which would justify the Government in once more putting in a large sum of money to sustain it.
The second is to elaborate equally the steps which are now proposed to try to do what is possible to see survive from this unfortunate situation the best possible part of this shipbuilding industry of the Upper Clyde. Both of these issues are of great importance and interest to both sides of the House and I should like to review objectively the story of this group in the three brief years of its life.
The group was composed of the fusion of a certain number of companies and yards on the Upper Clyde, notably John Brown, Charles Connell, Alexander Stephen and Fairfields, together with a 51 per cent. interest in Yarrow (Shipbuilders) Ltd., which up to that time had been a subsidiary of the Yarrow Company Ltd.
It is worth recalling that Fairfields has a long history of Government interventionary activity before the fusion which gave rise to U.C.S. As early as 1966, Fairfields had been in serious trouble and had been helped out by the then Government and provided with a considerable additional loan, even as well as some considerable subscription to equity. But these five concerns, in one form or another, were fused in February 1968 to form Upper Clyde Shipbuilders.
The inheritance of this group was, I freely admit, uncomfortable. It had inherited a very large number of contracts to build ships of specialised kinds at prices which no doubt at the time of their contracting were regarded as satisfactory but which, in the face of heavy inflationary tendencies and the inadequacy of the escalation provisions within the prices, clearly would not provide profitable operations. One of those inheritances was the QE 2. Hon. Members will remember the many difficulties which ensued before that great ship got into action finally and so successfully. So U.C.S. encountered a great host of different financial problems as its life unfolded.
The first of these, I suppose, was at the very institution of the concern, when the Shipbuilding Industry Board was prevailed upon to undertake to put loans of £5½ million into U.C.S. so as to get the organisation off to a start. Of this, £3½ million was put in at once and a further £2 million was to be reserved for such time as the new group would undertake major capital investment, which would justify the drawing of these additional sums.
Of this £2 million, only about £1·2 million was ever drawn, because there were never the major capital projects which would have justified the drawing of the remainder of the sum. The £1·2 million was largely devoted to building a covered yard at Yarrow's, which I had the pleasure of visiting some time ago and which undoubtedly constitutes a great addition to the facilities of the Clyde.
Not so long after that—a year later—U.C.S. was in trouble once again. This time it had to show that its financial prospects were gloomy indeed, and it turned once more to the Government for help. At this stage, the Government once more, through the vehicle of the Shipbuilding Industry Board, undertook to put another £3 million of equity and £5½ million of outright grants into the concern to try to see it through. At that time it was expected that this was the end of the financial injections into U.C.S., and the then Minister of Technology, the right hon. Member for Bristol, South-East (Mr. Benn), said so very clearly to the world at large. But three months later, by the end of May, 1969, it was back in trouble again and the financial difficulties were very great.
At this time the Shipbuilding Industry Board, which was consulted about the matter, considered that so great already had been its contribution to U.C.S. that it could not feel it correct, in the light of the demands of the British shipbuilding industry as a whole, to go beyond the funds which it had already made available to U.C.S. So a special arrangement was entered into whereby a further sum of £7 million was made available on loan by the right hon. Gentleman—a special arrangement devised by himself, on easy rates of interest and reasonably easy reimbursement terms, in so far as the loan was to be subordinated to all other creditors.
Shortly after that an arrangement was entered into whereby the originally acquired 51 per cent. interest in Yarrow (Shipbuilders) was to be returned to the Yarrow Company Ltd. under an agreement between the two concerns. This was in recognition of the fact that that acquisition had in any case not served to strengthen the performance either of U.C.S. or of Yarrow (Shipbuilders).
This was the situation on the change of Government last year. It was not very long after the new Government came into office that U.C.S. was once again in trouble. The trouble at this stage was communicated by a member of the Shipbuilding Industry Board who sits on the board of U.C.S., informing the board—the board informed the Government—that the prospects of this company were again so questionable that it must be a matter for concern as to whether the Government were within their rights to continue to maintain shipbuilding credit guarantees to new shipowners who were wishing to pass—
This information was passed in October, 1970.
Accordingly, after considering the information given to them, the Government concluded that they were not within their rights to maintain these guarantees. I would recall to the House that it is not a question of the Government making money available. The Government in fact make available a guarantee to those who lend money to the shipowners who pass the orders. From these guarantees arise the liabilities for the shipowners, before their ships are delivered, to make progress as the ships are progressively put together.
I am undoubtedly aware that the withholding of these guarantees was a sore blow to U.C.S., but I ask the House to remember that the Minister concerned has responsibility for ensuring not only that the shipowners themselves are credit-worthy in this respect but that there is every reasonable prospect that the ships in question will be delivered to them in due time, and this prospect could not honestly be said to be fulfilled at that time.
This was shortly followed by U.C.S. itself coming to see me and telling me that its troubles were indeed very great and that it had little prospect of being able to get out of a situation of deficit unless a variety of different things were to happen. I will endeavour to enshorten the matter because hon. Members have clearly followed the whole of this history with some interest. It is, however, important to remember just what those things were.
First and foremost, there was the requirement of a substantial additional financial input, and this was to be secured by negotiating with the shipowners who had ships on order with U.C.S. to increase the prices that they were prepared to pay to bring them perhaps more in line with current price levels, but nevertheless to sums over and above the contract prices originally entered into.
The second was a requirement that the total of the Government's input of money by a variety of methods, whether through Fairfields or the Shipbuilding Industry Board, or direct from the Minister of Technology, into the company should be the subject of other interests, with a total reconstruction, to diminish very considerably the company's outside liability—and, incidentally, to diminish the annual outgoings in terms of interest payments.
The third requirement, which was no less a problem to U.C.S., was to obtain a return of the 51 per cent. interest of Yarrow Shipbuilding to Yarrow & Company Ltd. because at that time, through a complex situation, the future of Yarrow Shipbuilders was itself extremely precarious and the great risk was that Yarrow Shipbuilders might founder and that U.C.S. would founder with it.
I repeat these details simply to show that at that time I, many of my colleagues and many people in my Department spent an enormous amount of time and effort trying to secure the future of both these concerns. After great effort, in which I had innumerable meetings with the management, the shipowners concerned and others, it proved possible to rearrange things in such a way that, without further inputs of Government money to U.C.S., its future could, as U.C.S. saw it, be assured. At that time, U.C.S. spoke confidently about its future. It said that that confidence arose by virtue of arrangements with shipowners and the Government's willingness to see substantially written down the £20 million or so which at that time had been lost. Its whole argument reposed on the fact that we might as well accept the reconstruction because the money had gone. We had no prospect of anything other than that fact—that the money had gone—so that we might as well accept the reconstruction, with a total write-down. Against that background, it seemed likely, U.C.S. said, that the concern was really on the road to recovery and that it foresaw no need for recourse to Government help in future.
It was, therefore, with some real concern, and, I must say, with real dissatisfaction, that I was encountered last week—this only five or six months later—with the news of still further problems.
I will elaborate exactly the situation that occurred. The company went off confident in its ability to attain these objectives and re-enter profitability. It had on its board a member of the Shipbuilding Industry Board, the holder of the principal interest in U.C.S., though it may be said to do so on behalf of the Government, while being an entirely separate organisation. It was at the insistence of this director, Mr. Mackenzie, that the absence of adequate cash forecasts were enforced on the company's mind so as to bring into commission a special study of its cash position in future. It was as a result of his insistence—
I think April was the month, I am not sure of the exact date. I was, during this time, pressing strongly for further information about the reconstruction which I had been led to believe was the source of the future of the company.
Be that as it may, after the insistence that there should be this cash forecast, the forecast finally appeared, I am given to understand, in the hands of the management only on Monday of last week. This cash forecast showed a truly alarming state of affairs. It showed, in fact, that by the end of August of this year the company would have debts amounting to over £9 million and that it would have a net asset deficiency of between £4 million and £5 million, and maybe even greater.
Although it still maintained that the corner was shortly to be turned and profits were to be realised, this forecast gave absolutely no reason to believe that within any foreseeable future the serious assets deficiency position of the company would be overcome.
I come to the events of last week. In the light of the information apparently bursting for the first time on the consciousness of the senior management on Monday, communicated to the board on Tuesday, which informed me of the situation, I asked the management to come and tell me the story. The management came to see me on Wednesday to reveal the full seriousness of the situation, which was then brought to my attention officially for the first time.
Yes, officially. I have been told that there is some question of a letter apparently having been sent in early May. The only letter I have been able to find in the Department which has any reference to this is one which painted a glowing picture of the profit forecast, though pointing to the fact that it was still in substantial cash difficulties. But bless my soul, it gave no indication whatever of such a serious situation as I was faced with on Wednesday of last week.
The House will recall that it was on Wednesday of last week that the management told me that it would not be able to pay wages after this coming Friday and that it was, therefore, obliged to declare this situation then and there. I was, therefore, given less than 48 hours in which presumably to do something—and the only thing of which they could think was the injection of upwards of £6 million into the company on a loss basis, certainly as far as I was concerned, for it was without any assurance of any positive kind that we would move into a satisfactory and prosperous condition in future.
I sought some time in which to try to consider the situation, and by assuring the company that the Government would, by one means or another, find the means of paying the wages for a further week, I bought the time of an extra day or two. It was on Sunday that the management told me that its estimates, which were by then only five days old, had once again proved to be incorrect and that the company did not have the means to pay the wages this week. Thus, the Government's assurance to provide these means was advanced by a week.
In these circumstances, I ask the House to believe that it would have been an exceedingly imprudent man who would have given any great credence to the assurances I was given that the company would shortly move into profit and that all would shortly be satisfactory. After the repeated experiences, at such short intervals during the three-year life of this company, it was too much to believe that suddenly for some reason everything would be changed—when even during the week during which this information was revealed the estimates themselves had been changed and the ability of the firm to pay wages for one week, which had been foreseen, had suddenly disappeared as if by magic. I cannot believe that anybody who had the responsibility of answering to the House for his handling of funds belonging to the State could possibly reasonably accept that he was dealing with a certain proposition for the future. I certainly was unprepared to do so. In the light of that, I had to inform the company that I would not make available a large additional sum of money, without assurances of any positive or reasonable kind at all, with a view to enabling it to carry on for goodness knows how long, another three, four or five months, however long it might be, before it returned to the charge again and found that its need once again was for large additional sums.
But at the same time, and very naturally, I realised that the consequences obviously would be dreadfully serious in a number of ways, about which the House has been talking and will continue to talk about today. They would be dreadfully serious, obviously, first and foremost in terms of employment in the area, already in a serious situation; dreadfully serious in terms of the future of the industry as a whole, with this enormous element of the shipbuilding industry of Britain so dangerously threatened, and serious indeed in terms of shipowners too, with their reliance on the ships being built in the yards of U.C.S., currently about 16 ships in course of building, and there is an order book for a further 16 which are not yet commenced.
All these things constituted a very worrying situation which one was faced with almost at the turning of a hand, without time to give adequate careful thought as to the consequences. However, as hon. Members know, the company has now petitioned, and the petition has been granted by the court, to name a provisional liquidator. The provisional liquidator is a certain Mr. Robert Smith of the firm of Arthur Young, McLelland and Moore, which is well known in the area. Mr. Smith is named as provisional liquidator, and during the time of his provisional liquidation he is entitled to survey the size of the problem with which he is faced and to seek so to deal with it as would most benefit the interests of creditors, to whom alone he is responsible. However, I said yesterday that it would be my purpose to seek his co-operation in trying to ensure that, facing the future, we deal, as far as it is possible to deal, with the very great problems to which I have referred. I am sure that the House will be relieved to know that contact with Mr. Smith has revealed that he is fully prepared so to co-operate and to do all in his power to try to facilitate the most orderly, sensible and humane arrangements which can possibly be brought about on the Clyde.
I also mentioned that it was my intention to try to get together a group of people who would, in their way, have expertise of a kind which would help in this sort of situation, in giving advice to both Mr. Smith and to me. The advice is primarily for me, because the liquidator, as I have said, is responsible only to the creditors and, therefore, the advice of the experts, however valuable, may not be germane to the precise responsibilities of Mr. Smith.
The House will be interested to know that I have already persuaded three very admirable people to help in this way. They are Mr. Alexander McDonald, Chairman of Distillers, who has a very distinguished reputation in accountancy and finance; Sir Alexander Glen, who is very well known in the shipping world; and Mr. David Macdonald, a director of Hill Samuel, an extremely well known banking firm. These three, and perhaps one or two more, will constitute the group which I hope during the course of the next six or eight weeks will be able signally to help the orderly reorganisation and reconstruction of what has been a greatly disappointing concern.
I feel convinced that if the efforts of all concerned are directed towards attaining the best possible result from this unfortunate and tragic episode, very much can be done. The essence of this business is still one which has promise for the future. We are dealing with an industry which has very great prospects. It is not at all an industry without prospects. We are dealing with an industry, in the case of the yards in question, which has undoubtedly either very good facilities or facilities, in some cases, which can be greatly improved, even if some are now past their best. Therefore, the whole effort of the Government certainly, and I hope that of the House as a whole, will be now directed solely to trying to secure from this unhappy circumstance the best possible ultimate result. That is possible, but it will require an intensive effort during the next few weeks. That effort will certainly not be denied by any of those concerned with the future of the industry.
Although the debate is on the Motion for the Adjournment, my right hon. Friends and I regard it as a Motion of censure on the Government—[HON. MEMBERS: "In Government time?"]—
—for the statement made yesterday and the amplification made today, if for no other reason than that the Minister primarily responsible for regional policy should have chosen to make a speech about Upper Clyde Shipbuilders without regard to his regional responsibilities.
The argument which we put before the House this afternoon is that the statement made yesterday represented the wrong policy, that the motives were political and not economic, that the House was misled by the right hon. Gentleman—I shall come to that shortly—and that he entirely disregarded the wider social considerations for which he is responsible. In putting the argument of the Opposition before the House today, we shall urge an alternative course of action upon him.
The right hon. Gentleman reminded the House of the background and history of the shipbuilding industry. He did not however, remind the House of the situation under which the industry suffered during the period from 1950 to 1964. In 1950 British shipbuilders launched 48 per cent. of the ships launched in the world. By the time Labour were elected in 1964 this figure had shrunk to about 6 per cent. and the main tragedy for the British shipbuilding industry occurred long before the measures taken under the Geddes Report were brought forward.
The industry had a record of appalling management and bad industrial relations. And it was a fragmented industry. When Geddes reported he was able to point out that there was one shipyard in Japan bigger than the whole British shipbuilding industry put together. There was no effective marketing done by the old management, and anyone who wants to find a condemnation of the industry had better read or reread the Geddes Report. There was no link between research and management or production.
In 1966 Geddes recommended a major restructuring of the industry, and this was supported by both sides of the industry. Under that provision the Shipbuilding Industry Board was established. It was agreed by the House—I piloted the legislation through the House and there was no disagreement at that time from either side of the House—that the support for the industry should be linked to the reorganisation of the management of the industry. Lest anybody suppose—for I have seen a Motion tabled about myself—that the only shipbuilders which were helped by the Government were those that had been unsuccessful, let it be clear that Swan Hunter received substantial sums of public money from the Labour Government. I congratulate the hon. Member for Belfast, East (Mr. McMaster), to whom I shall refer again shortly, who constantly pressed the case of Harland and Wolff upon us. Harland and Wolff received substantial sums of money under the Shipbuilding Industry Board. The Greenock Dock, which had been set up as a nationalised concern by the Conservative Government before 1964 at a cost of about £4½ million, went bankrupt in the conditions obtaining, and Lower Clyde, that is Scott and Lithgow, received that dock as part of the reorganisation arrangements. The most difficult conditions of all obtained in Upper Clyde, with Fairfields, which went bankrupt before Geddes reported, and the rest of the Upper Clyde yards.
The problems on Upper Clyde were a great deal worse than in any other part of the United Kingdom. There was the QE2, which had been sponsored by the previous Government and which would have remained as a rusting hulk on the Clyde, like the "Queen Mary" before the war, had it not been for the money put in by the Labour Government under the Industrial Expansion Act. I attended meetings of Ministers at the time, when it was clear that the privately-owned John Brown Company could not complete the QE2, nor could Cunard have coped with it.
It therefore fell to us to pick up the mess that we inherited from the private ownership in the past and to try to implement the Geddes Report. Do not let anyone think that Yarrow's, which are now, as the Secretary of State said, on their own again, did not get substantial grants of public money. Indeed, the Secretary of State said that he has seen the covered berths. These were financed by taxpayers' money. If vigorous action had not been taken by the Labour Government in the shipbuilding industry, it would, by and large, have gone out of business altogether between 1964 and 1970. The only alternative to the policy we pursued—I shall return to some criticism in a moment—would have been to allow that bankruptcy to have occurred.
It is true—the Minister made some slight reference to this—that when Upper Clyde Shipbuilders came together it had a number of very serious financial crises through the summer of 1969. These crises stemmed from the QE2 and from that inherited losses from the other yards. A very grave situation developed on the Clyde during the summer of 1969.
It was my task to go there and make it clear, as I did on a number of occasions in the yards themselves to the men concerned, that there was no safety net under shipbuilding on Upper Clyde which would allow it to receive unlimited support from Government unless it was prepared to reorganise itself. We knew, and everybody concerned with the industry knew, that it would take a substantial time before Upper Clyde Shipbuilders could reorganise itself. We also knew—this is why I criticise the Secretary of State for not making any reference to his regional responsibilities—that with male unemployment at the level it was in West Central Scotland and on the Clyde, and with 70 per cent. to 80 per cent. of the equipment used in shipbuilding being bought in from other suppliers about 60 per cent. of that being bought in from areas nearby, if Upper Clyde Shipbuilders was allowed to collapse it would be a major tragedy for the Clydeside.
We also knew—I shall return to the question of these marvellous experts that we have heard about—that on any cost-benefit study which was made of the alternative cost of giving further support as compared with the cost of redundancy pay, unemployment pay and all that it would involve to bring in new jobs, our investment in Upper Clyde Shipbuilders made economic sense as well. I sat with Treasury Ministers and with Ministers from the Department of Employment discussing these questions. I am reminded by one of my hon. Friends of the figures. It costs £1 million per 1,000 workers for their first year of unemployment and £750,000 per 1,000 workers for their second year.
Therefore, we did support Upper Clyde; and we were right to support Upper Clyde. Nothing that the Secretary of State said today leads me to suppose that the decision was wrong, save only one criticism that the Secretary of State might make, namely, that we should have followed his example of Rolls-Royce and nationalised Upper Clyde Shipbuilders at the time.
However, I was not prepared to let the Clyde shipyards become bankrupt at that time, and I was certainly not prepared to recommend to the House that we should compensate the private shipbuilders for the assets which we have had to acquire in any circumstances other than bankruptcy.
Another consideration which influenced us when we considered our policy was that every other shipbuilding country subsidies its shipbuilding industry. When I was in America in April of last year I was told by somebody in the Department of Commerce that it cost 20,000 dollars per merchant seaman in subsidy to keep the American merchant fleet going. That was the way it was evened out. Indeed, President Nixon announced substantial support last year for the shipbuilding industry. In Japan, there is a requirement that home orders have to be placed with Japanese yards. No such requirement exists in the United Kingdom. France and Germany subsidise their shipbuilding industries. Sweden has put money into its yards. Holland, following the example of the Geddes Report, set up a support scheme similar to that which we introduced.
If the hon. Gentleman wants to go into the question of restrictive practices he should consider how far restrictive practices are stimulated or removed by a policy of full employment. If a policy of deliberately increasing unemployment is pursued, which is the policy that the Government are pursuing, restrictive practices will return in this industry straight away.
This is an industry which should appeal to the Secretary of State, because there are no tariffs in the shipbuilding industry. Therefore, in contrast with the policy that he has been discussing—"thinking aloud" is his phrase; I am not opposed to thinking aloud; I do a lot of it myself—in connection with the motor industry, we now have a situation where the British shipbuilding industry is being left on its own alone among shipbuilding countries.
In the course of the summer of 1969, as I told the House, I went to Clydeside—to every yard, to every group of workers, to tell them that there was no safety net; and there was no safety net. In June 1969—I come now specifically to the intervention by the hon. Member for Harwich (Mr. Ridsdale)—a reconstruction was agreed bringing in Ken Douglas, a very able shipyard manager who had had great success in his previous post, and a rundown in the labour force was agreed with the unions so as to get productivity up. In December, 1969 a further £7 million was made available.
The result of that reconstruction is there for anyone to study today—an 87 per cent. increase in productivity in steel throughput in the last 12 months, a £90 million order book, and possible profitable orders for product carriers of a standard design at £5 million a copy up to, perhaps, 20 orders that might be obtained.
The Linthouse capacity, which was one of the yards which had originally been shut down and closed out, has now been brought back into production to meet the need. There has been a further plan, which has been mentioned by Mr. Douglas and discussed with the union, for using some of the labour from John Brown on the highly efficient steel fabricating equipment over the river at Govan to provide greater opportunity for higher productivity.
The House may be interested in the figures contained in yesterday's statement made by Upper Clyde Shipbuilders. The concern reports on its progress since it was established:
Despite these difficulties "—
it is referring to the inherited loss—
the throughput of steel today, measured in gross tons, is over 1,300 tons a week, compared with the average in 1970 of 867 tons a week.
In fact, last week the throughput had risen to even above the 1,300 figure.
This has been achieved by a steelwork labour force 16 per cent. less in numbers than in 1970. The overall reduction in the labour force in the past 15 months is 25 per cent.
The statement gives figures for the number of ships delivered as follows—in 1968, three ships delivered; in 1969, seven ships delivered; in 1970, 12 ships delivered; and the programme for 1971 was for 18 ships to be delivered.
The hon. Gentleman has got the point. I congratulate him. The new management has moved away from the old complex ships that made losses on to the Clyde class ships or standardised ships from which profits will come. The hon. Gentleman must know practically nothing about the work done in Upper Clyde if he has missed that point.
I come now to the attitude of the Conservative Opposition during the period that we were in office and to their attitude in Government today. In general terms, there was bitter hostility to the policy that we pursued in respect of the shipbuilding industry. The only exception was those Conservative Members who had shipbuilding constituencies. There is not one Conservative Member sitting for a shipbuilding constituency, whether in Belfast, Tynemouth, whether the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor), who despite his laissez-faire protestations, was pleading for money for Upper Clyde Shipbuilders in the summer of 1969, who was not trying to get money for the shipyards.
The truth is that while the leadership of the Conservative Party was attacking the policy of intervention and preparing the betrayal announced yesterday the individual Members were trying to get every penny that they could.
It is true that the overall Geddes policy—I have said this in the House—appeared at the time to command general support. But the policy of intervention, of which Geddes was the most dramatic example, became the subject of most bitter attack in general. In particular, many Scottish Members—I will not name other than those I have pointed out in respect of their constituencies—came to me privately in London and in Glasgow, pleading for support for Upper Clyde Shipbuilders. They were right to plead for support, for the policy that we pursued was right.
Meanwhile, the Opposition's policy was being prepared in secret. There is a report in The Guardian, today—not the first time that it has appeared. I quote words alleged to have been written by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), whom I do not see present in the House, in a memorandum written in December, 1969. In that memorandum the hon. Gentleman analysed the position—the figures are certainly drawn from fact at the time—and made this recommendation:
We could put in a Government 'butcher' to cut up U.C.S. and to sell (cheaply) to Lower Clyde and others the assets of U.C.S. to minimise upheaval and dislocation. I am having further views on the practicability of such an operation, which I will report
(d) After liquidation or reconstruction as above, we should sell the Government holding in U.C.S. even for a pittance.
That is the hon. Gentleman, as quoted in The Guardian today from December, 1969, indicating what was taking place in the background.
When the Government came to power we heard from the Secretary of State many references to firms that required Government assistance. We had those references at the party conference and in the Queen's Speech. There was no doubt in the mind of anybody who heard them that Upper Clyde was the target to which the right hon. Gentleman was directing his attention. It came as a bit of a surprise to him and the Cabinet to discover that it was not Upper Clyde that came up first but Rolls-Royce, which was not what they had intended. Rolls-Royce was then bankrupted, nationalised and subsidised as an example of the Government's rigidity towards firms requiring some Government assistance.
How does the right hon. Gentleman reconcile what he has just said with the extraordinary efforts that I and others deployed over the turn of the year to try to see U.C.S. through?
Very easily, because the Ridley policy did not come out in today's Guardian. It appeared on 6th May 1970, and the reference to the Government butcher and the cutting up linked to Shadow Cabinet thinking was made public before the election. Everybody to whom I have spoken about Upper Clyde Shipbuilders since the Government came to power knew perfectly well that the Government were determined that the yard would receive no support.
I am answering the question in these terms: that confidence in the continuation of Upper Clyde Shipbuilders had been undermined by Conservative Government thinking before and since the election.
I will come now to the policy which the right hon. Gentleman claimed in his speech was the policy that he had pursued. First, there was the dismantling of the I.R.C., which would have been in a position, in a situation like the present one, to contribute something to the solution to the problem the right hon. Gentleman now faces. Second, the Industrial Expansion Act, under which we financed the QE2, was repealed. Third, the right hon. Gentleman attacked the Shipbuilding Industry Board, in a speech that I heard at the Press Gallery lunch, an open meeting, as a body "designed to distort" the judgment of people in shipbuilding on matters of this kind.
Then, in November, the right hon. Gentleman held up the payment of credits to U.C.S. He admits today for the first time that he had a responsibility to do that. However, he did not tell Upper Clyde Shipbuilders that he was doing it. I understand from the management that it learnt accidentally that the credits were being held up when it telephoned the Department in November. No public statement was made to the House, just as with Vehicle and General, where we were told it was "not beneficial" to reveal to Parliament the right hon. Gentleman's policy. He knew, and all the people who were building ships for Upper Clyde, knew from November to February that he had, at best, little confidence in the capacity of U.C.S. to survive. When he says that the figures changed from day to day—and that is a very real problem for a Minister—he knows very well that figures change as confidence changes. When it is thought that the Government will allow a company to go bankrupt people demand their money, and that is why the figures alter from one week to another. [HON. MEMBERS: "Resign."]
The right hon. Gentleman has come out with his new policy at a time when there are 117,000 out of work in Scotland, 7·4 per cent. male unemployment compared with, I think, 4·5 per cent. in England. In Glasgow there are 27,000 men out of work, a proportion of 9·6 per cent., and a figure of unemployment higher than in Northern Ireland. If there were to be the sort of unemployment that could follow from the right hon. Gentleman's decision, it would increase unemployment by 10 per cent. in Scotland.
Let us now examine the Government's case as presented by the right hon. Gentleman today. First, he made something yesterday and today of saying that Mr. Hepper could not foresee the viability of U.C.S. He said yesterday that Mr. Hepper had not be able to give him any assurance on it. But the assurance Mr. Hepper was unable to give was an assurance of viability without the money that he was seeking. If that money had been made available the forecast of viability made by U.C.S. before the credits were held up was October, 1971, and I understand that with the £5 million credit made available now the company was in a position to forecast accurately that it would be viable by March, 1972.
I am sure that the right hon. Gentleman would not wish to mislead the House. The fact is that the company foresaw a net asset deficiency of between £4 million and £5 million by the end of August. Is he seriously trying to tell us that within the compass of 12 months the company foresaw that being reversed? If so, the chairman of the company was quite unable to tell me that last Sunday.
The right hon. Gentleman had access to the company's monthly figures, because it was provided that they should be made available to his Department. The argument that the figures came as a surprise to him cannot stand examination. There was an S.I.B. director, Mr. Mackenzie, acting for the Government on the board of the company. In May the company wrote to the right hon. Gentleman, but he brushed off the letter because he said that it painted a glowing picture. What did it say? I have an extract here. It said:
While the trading results show a most encouraging trend the cash position continues to be acutely difficult.
It was in early May that the right hon. Gentleman had those figures. The question is, who is misleading the House, the right hon. Gentleman or me?
One of the right hon. Gentleman's own backbenchers, the hon. Member for Glasgow, Hillhead (Mr. Galbraith) asked yesterday whether the unions could have done more to help. The right hon. Gentleman replied that some discussions had occurred with the unions, but
It proved impossible for the unions to subscribe to any such arrangement."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 36.]
The House should know what the arrangement was. It was that the unions should take a 20 per cent. wage cut and put it in the back of the book to get back later. The management, quite rightly, did not press that solution upon the workers. It was wrong of the right hon. Gentleman to suggest yesterday without greater candour that the unions had in some way at the last minute failed to contribute to a solution to the problem.
We come to what the Government plans for U.C.S. are. The right hon. Gentleman made a very vague statement yesterday and, apart from naming three experts, he said practically nothing more today. The Clydebridge British Steel Corporation works is having to cut down overtime because of the situation and, I believe, is to lay off men. There will be further bankruptcies on the Clyde among the supplier companies. Unemployment will rise.
Who are the experts that the right hon. Gentleman named? The I.R.C. has gone; the Shipbuilding Industry Board has been attacked. If the right hon. Gentleman had asked the Capability Unit, he would have been given the figures of the cost of liquidation against the cost of support, the figures that I gave the right hon. Gentleman. I take it that the Capability Unit is there to bring into account social security and redundancy payments and the cost of providing new jobs, which is about £1,000 to £1,500 per job. Lord Rothschild would have brought those figures in. But the right hon. Gentleman did not consult any of those people. He certainly did not consult the people in the yards. There are 7,300 people in Upper Clyde, and they are pretty expert on the problems of the yard. The right hon. Gentleman has appointed a banker, somebody from the Distillers Company and a distinguished chartered accountant to tell him what to do with a yard that has made notable progress over the past few years.
I attended two meetings about Upper Clyde yesterday, one in the House, when I heard the Secretary of State's hon. Friends cheer his statement, and the other in Clydebank Town Hall, when I met the shop stewards. The resentment there that the right hon. Gentleman had not the guts to go and see them himself passes belief. If he had had the courage to go to Clydeside and talk to the men concerned he would have heard what they wanted to say to him. I took a pencil to write down their comments, and I will tell the right hon. Gentleman what they said.
Before the right hon. Gentleman does so, will he be kind enough to recall that I did go to Clyde-side a matter of three to four weeks ago and stated publicly, in the face of many men of precisely the kind he is speaking about, exactly what the Government's policy on these matters was?
The point about going to Clydeside—[HON. MEMBERS: "Withdraw."]—is not just to shout at the men but to listen to what they have to say, to go to every yard and meet the shop stewards, the staff and the manual workers and listen to them.
The men said—and I believe it to be true—that a political assassination of Upper Clyde lies behind what has happened. They know that the Government has 49 per cent. and the unions have 1½ per cent. of the shares of Upper Clyde, deriving from their putting their own money into Fairfields to keep it going, so that makes a total of over 50 per cent. Fairfields is the one yard that might be attractive if people were trying to hive it off, because it has done very well under the new management.
The shop stewards said that the surge in productivity of 87 per cent. in a year to which I have referred was—and I wrote down their words,
Because the men and the management have got closer together.
They also said:
We are not going to give up the fruits of three years' work and have these yards closed, and we are not going to accept hiving off.
The House would be well advised to heed those words.
After all the debates on industrial relations and the speeches by the Prime Minister and the Secretary of State for Employment, we are faced with this situation; workers staying in their yards, working in their yards without guarantee of pay because they believe in what they have been doing over the past three years. Is that to be an unfair industrial practice under the code of conduct to be provided under the Industrial Relations Act?
The greatest gain in the three years' work that has been done in Upper Clyde is the transformation of the labour force from people utterly dejected by the failures of private management; the restructuring of the unions; and the assumption of responsibility. Now the Government have awakened a force in Scotland, and I believe in industry generally, that will not easily be put back.
Can the right hon. Gentleman explain why, if in his opinion the shipyards are so viable and offer future profitability, that opinion is not shared by anyone else, particularly the other shareholders, and therefore why it is not possible to raise other finance outside the Government?
If the hon. Gentleman thinks that bankers are the only people who can tell us what is sensible and what is not sensible to do, then, among many other companies, we would not have a Rolls-Royce. Our view is that the company should be nationalised since the record of the private shareholders in the shipbuilding industry is not very good. The responsibility for the management should be decided in the yard, and I must say I find it hard to understand why the Government should deny £5 million to keep 27,000 Scottish shipbuilding and engineering workers going, when they are preparing to pay hundreds of millions of £s to keep the French farmers going under the Common Market agricultural policy—[Interruption.]
—and as a result allow British steel workers to become redundant so that they can be recruited for the German steel yards.
I come to what the right hon. Gentleman said yesterday about the "odious hypocrisy" of which I am guilty. I want to read what the right hon. Gentleman said yesterday. He said:
I really think that the odious hypocrisy comes from the other side.
May I read to the House what the right hon. Gentleman said in December 1969? He said:
'After giving the most careful consideration to these proposals, the Government have regretfully concluded that, having regard to the need to contain Government expenditure, there is not sufficient priority to justify the investment of further public funds in this enterprise in the face of the many competing demands on national resources."—[OFFICIAL REPORT, 2nd December 1969; Vol. 792, c. 1305.]
In view of that "—
said the right hon. Gentleman—
I am horrified at what the right hon. Gentleman has just said."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 34.]
The right hon. Gentleman has had 24 hours to check that quotation. It was picked up by the Daily Telegraph and The Times in its leading article. I did make a statement on Upper Clyde Shipbuilders, but I made it on 11th December, 1969. This is what I said:
However, the company has been seeking ways of improving its position in recent months, and to allow it a further period in which to show results the Government have decided to introduce fresh legislation to provide assistance to this company by way of loans not exceeding £7 million …"—[OFFICIAL REPORT, 11th December, 1969; Vol. 793, c. 662–3.]
The right hon. Gentleman totally misled the House.
I am very ready to apologise to the right hon. Gentleman for having quoted a remark he made about Beagle in the belief that it was made about U.C.S. I would, nonetheless, ask him to confirm whether he did not make a remark in exactly the same terms about U.C.S. outside this House?
I accept the right hon. Gentleman's apology wholeheartedly. If I may say to him, without discourtesy, an apology should not be qualified by an attempt to reintroduce the charge without any foundation. The House is always ready to accept an apology from an hon. Member if a quotation he has given was, as he now recognises, totally inaccurate. It did not refer to Upper Clyde. At no stage in the whole of the period when I was responsible for Upper Clyde Shipbuilders did I ever say, in the House or outside, that if the improvements we forecast could be made and must be made were not made that we would not be prepared to continue to support it.
I am in favour of a Select Committee to inquire into the handling of Upper Clyde Shipbuilders, from the very beginning through to the decision made by the Minister yesterday. I made the same offer on Rolls-Royce because I believed that a comparison of the records would confirm the wisdom of the policy we pursued and the failure of the Government's policy. We have not had a Select Committee or any inquiry on Rolls-Royce. Maybe with the American Congress debating it it would be difficult to establish that now. There is no reason whatsoever, now that Upper Clyde Shipbuilders has been forced into liquidation, why we should not have a Select Committee of Parliament to examine the records from the beginning.
It is sometimes customary to demand a Minister's resignation at the end of a speech attacking his policy.
I certainly do not intend to demand the Minister's resignation today, because his arrogance, inaccuracy, heartlessness and incompetence are typical of the Government of which he is a member and will, ultimately, bring him and his colleagues, all of them, down together.
Mr. Speaker has asked me to acquaint the House with the fact that there are more than 20 hon. Members who wish to catch the eye of the Chair, quite apart from any of those whom the Chair might feel disposed to call who have not actually written in. It is greatly to be hoped that hon. Members will see fit to contain their speeches at least within 15 minutes.
. On a point of order, Mr. Deputy Speaker. For obvious reasons, I did not want to interrupt my right hon. Friend when he extracted an apology from the Minister, but I feel that we should have some guidance from you. An apology merely indicates that someone has made a mistake. There was no indication given by the right hon. Gentleman about whether he knowingly referred to this quotation yesterday. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) can look after himself in terms as to whether he thinks the apology was gracious enough, but there is surely some reflection on a Minister and on a Department—
Order. I am sorry to interrupt the hon. Gentleman. I realise how strong feelings are about this, but we must have a sense of what is and what is not the prerogative of the Chair in these matters. What the hon. Gentleman is raising has nothing whatever to do with the Chair. I must ask him to accept that what I say is correct and to allow the debate to continue. Mr. Galbraith.
Order. The hon. Member for Birmingham, Smethwick (Mr. Faulds) knows that he cannot go on like that. I ask him to be a parliamentarian and allow the hon. Member to continue.
Perhaps it will be a case of third time lucky! After listening to the right hon. Member for Bristol, South-East (Mr. Benn), I am still not certain why we are having this debate today. I realise that the right hon. Gentleman probably has a bad conscience because it is his baby that has gone astray. When one does not have much of a case, one's best approach is to abuse one's opponents, as the right hon. Gentleman did yesterday and again today, producing a great deal of heat, and perhaps helping to unite his own party, which gave tongue as if it were at a football match instead of the House of Commons, but certainly not producing much light. I do not see how a debate held today could possibly produce much light. It would have been far better to wait until some of the facts became clearer and to suspend judgment until then. To that extent it is merely a question of blood-letting.
Perhaps the hon. Gentleman does not realise that one purpose of the debate is to allow hon. Members with constituency interests to tell the Secretary of State the strength of their feelings. If the hon. Gentleman were doing his job properly as an hon. Member representing a Glasgow constituency he would tell the Secretary of State the feelings of the people in Glasgow. That would serve the purpose of the debate.
The hon. Gentleman does not need to tell me how to conduct my business as a representative of one of the Glasgow constituencies. This is-exactly why I am speaking, and I am very glad, Mr. Deputy Speaker, that you have given me the opportunity of speaking so early. It would have been better to wait until some of the facts became clearer and to suspend judgment until then. But no—the Labour Party is all heart and, unfortunately, no head. With the best will in the world the Labour Party makes the most catastrophic errors —and this is one of them—when in office, and is always out of office when the time comes to collect the pieces. This is the job the Conservative Party always has to do.
Does the hon. Gentleman support my right hon. Friend's suggestion that an inquiry should be held to find out who was responsible for the problems? My right hon. Friend offered this when Rolls-Royce collapsed, and he offers it now. He believes that his record is quite clear and open, and would be delighted to have a public inquiry.
I always believe that when I see the right hon. Gentleman I should say, "Get thee behind me, Satan." [HON. MEMBERS: "Cheap!"] I do not think it is cheap. This is a catastrophe, and in a catastrophe there is a natural tendency to look for scapegoats, which is what the hon. Member for Glasgow, Woodside (Mr. Carmichael) wants, and that is what the right hon. Gentleman hopes to get from a Select Committee. The natural tendency is to try to find someone other than oneself to blame, but the fault often lies less in our stars than in ourselves, and it is the parentage of the Upper Clyde Shipbuilders that is wrong.
First, there was the Fairfield experiment, helped on its way to become one of the great loss leaders of the century by Mr. George Brown, as he then was—
There is no evidence of that. Will the hon. Gentleman say what evidence there was when the Fairfield experiment was terminated in 1968, that it was a great loss leader? All the evidence was to the contrary.
My evidence is different from the hon. Gentleman's. If the hon. Gentleman has any evidence, perhaps he will proceed in due course, if he is fortunate enough to catch your eye, Mr. Deputy Speaker, to give it to the House. In my opinion, the easy availability of public funds to Fairfield communicated itself to Upper Clyde Shipbuilders, which never seem to have realised that firms are in business not to provide jobs at a loss but to provide jobs at a profit. Anybody can provide jobs at a loss, but to provide jobs at a profit is a much harder task. So it was that when the right hon. Gentleman's ill-fated Shipbuilding Industry Bill became law, and when the Shipbuilding Industry Board used its powers to create the U.C.S.—to coerce, indeed, many of the firms into it—the company began its existence with entirely the wrong outlook. Jobs rather than profits were what mattered, when, of course, in the long term there cannot be jobs without profits.
It gives me no pleasure to point out that all the fears I expressed on Second Reading of the Shipbuilding Industry Bill have turned out to be correct. I would much rather have been proved wrong. What I said on that occasion was not at all well received on Clydeside, but, unfortunately, it has turned out to be true. I said:
The Government and the S.I.B. must face up to the problem of profitability. It is no good reforming the industry and making it look neat and tidy on paper, if in the process we make it impossible for the few profitable firms to continue competing successfully abroad."—[OFFICIAL REPORT, 9th March, 1967; Vol. 742, c. 1820.]
In saying that, I was thinking particularly of Connell and Yarrow. Yarrow, I hope, has managed to extricate itself in time, and should be all right, especially if it is encouraged to submit tenders to any foreign country—and I stress this—any foreign country which may want frigates built. But Connell, a good small yard, looks like sinking with the rest. It is a great tragedy and, although it may surprise hon. Gentlemen opposite, it is a tragedy that I feel acutely and in a personal way. I was brought up on Clyde-side in the years of depression, and I can remember only too well—
The hon. Gentleman should get out of the House if he cannot make a decent contribution. I remember only too well how the gaunt half-finished hull of the giant Cunarder, which the right hon. Member for Bristol, South-East referred to and which later became the "Queen Mary" dominated the landscape for years on end, a constant reminder of human misery. I can remember the wonderful feeling of hope and elation we all felt when work again began on her.
Much later, when I was Civil Lord of the Admiralty and occupied in relation to the shipbuilding industry much the same position as my right hon. Friend occupies now, I came to know the industry in a different way, and formed a great affection for it and wished it well. But all the time I was afraid that no one in in the industry realised that the heyday of the nineteenth century was over and that its present-day foundations were extremely weak.
At the time of the debate on the Shipbuilding Industry Bill we all paid obeisance to Geddes, to which the right hon. Member for Bristol, South-East referred. There was to be amalgamation and the provision of public cash; but the third, and perhaps the most important, element of the trinity recommended by Geddes was absent. There was no reform of the unions. Instead of the two or three unions recommended, the ancient proliferation remained. That is quite unlike what happened in Japan, to which the right hon. Member for Bristol, South-East referred, but he omitted to refer to the difference in the union structure in Japan.
I know that it is common in the House for the Labour Party to criticise management and for the Conservative Party to have doubts about the unions—probably in both cases unfairly so—but why, when this industry was obviously ailing, did the unions, while accepting the gospel of Geddes in all other respects, fail to apply it to themselves?
Of course, we are told that productivity has gone up, and one would expect it to have gone up. One would expect the throughput of steel to be yet greater because, as I explained in an intervention, the type of ship being built now is infinitely less sophisticated—ships are just tin boxes with an engine inside—in comparison with what was produced. But productivity can sometimes be produced at too high a price. The more food one gives to a cow the more milk it will produce, but is the little extra milk worth the extra cost of the food? It is no good saying that there are £90 million worth of orders if it takes more than £90 million to build the ships to fulfil the orders. I am afraid that that is likely to be the case, for I am informed that wage rates, which are extremely important in the shipbuilding industry, have more than doubled in the last two or three years, while the earnings of the more highly skilled are at about the £2,000 per annum mark.
The unions have been pricing themselves and their members out of a job. It is tragic, when their own livelihood is is at stake, that they could not do what any sensible person would do, which is to try not to take quite so much out until the industry is clearly more able to stand on its own feet and pay its own way. That is what you or I, Mr. Deputy Speaker, if we were running a little sweetie shop would do. Why should it not equally apply to the shipbuilding industry?
There has been talk about liquidity crises, but everything points to something much more serious than the mere lack of cash flow. If bridging finance were all that was necessary and business prospects otherwise were sound, why come to the Government? Why not go to the banks? That is what they are for. Clearly, the banks were not interested, and so it had to be the Government again, after over £20 million had already been given.
One must look at this question of continuous Government finance from the point of view of other taxpayers in industry and of other shipbuilding companies. Why should one company in one industry be favoured in this way when the extra burden of the tax may well mean that another company in another industry, perhaps with less emotional claims for help, is forced into bankruptcy because of this extra tax burden? It is not fair, and it does not make sense to continue in this way.
Though as a Clydesider I say it with a heavy heart, I do not think this Government, or any Government—even one of which the right hon. Member for Bristol, South-East is a member—could have continued any longer writing these blank cheques. The day for reckoning had more than come. Tobacco came and went; then there was flax and linen with the vast trade and wealth they brought. More recently it has been the heavy industries and shipbuilding, and many have criticised our over-dependence on these heavy industries.
The present changes should be seen in this historic perspective, and such Government money as is available should not be used to prop up an old industry in its original state, as the right hon. Gentleman has suggested. The money should be used to encourage new industries and help the old industries, as I believe is my right hon. Friend's intention, to adjust to changed circumstances. This may mean a slimmer shipbuilding industry on the Clyde, and a tightening of our belts for a bit. But ships have to be built somewhere, and if Clydesiders want to do the job there is no reason why they should not if they make the right efforts and proper sacrifices.
It is in this spirit of making the best of a bad job, of recognising the facts of today and trying to get the most out of them, not harking back to a past that is dead—it is in this spirit of modified hopefulness for the future well-being of the area in which I was born and bred, and which I have the honour to represent, that I give my support, as I believe all fair-minded people will also do, to my right hon. Friend in the Herculean task of encouraging reconstruction. That is what lies ahead of us, and it is to that task that we should all bend our backs without delay and without recrimination.
The most significant part of this debate for me today was to watch the Prime Minister and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), when references were being made to the so-called Ridley plan.
I alluded to this matter in a speech to a shipbuilding audience in Greenock almost exactly a year ago, and I warned the shipbuilders that this is what they could expect from a Tory Government. Neither the Prime Minister nor the hon. Gentleman today rose to deny the existence of this policy statement. The hon. Gentleman was in the House when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) referred to this matter. It appears in The Guardian today, and I suggest that Ministers should read it. They might recall the policies which they endorsed before the General Election. This all feeds the fires of doubt in our minds since we believe that this step is an inevitable pace forward by the Government in a course for action on which they were determined when they were elected.
There are many yards, including the Lower Clyde, which have been favourably helped by the Shipbuilding Industry Act, which was passed by the Labour Government. That legislation was supported by many hon. Members opposite. I am surprised that the Member for Glasgow, Cathcart (Mr. Edward Taylor), in view of his history on this matter, has not resigned from the Government. I know that personally he must regard this as an appalling decision. I cannot understand how he can stay on in his present office. That Act is a good piece of legislation and is not an ill-fated Measure, such as the hon. Member for Glasgow, Hillhead (Mr. Galbraith) described it. Many yards have prospered because of the existence of that Act. I hope that the Government will learn the bitter lesson of this liquidation and not leave our present yards to go on their own, but will keep a careful eye on the situation. We should make sure that our nation's shipbuilding industry does not go under because of unfair foreign trade practices. The Government have a duty to look after this industry. The Secretary of State is the sponsoring Minister for the shipbuilding industry and in the last analysis is responsible for any problems which exist in the yards. It is not just the Upper Clyde that will suffer by this present calamity. Every other shipbuilding yard will feel the effects of this collapse in some way.
The Secretary of State's speech was incredible. I listened carefully to what he said. I believe that he is an honourable man, but did he have no intention of following the Ridley plan? I appreciate that all these meetings he described were held and that he wanted to find the right way to go about this matter. I have had some experience of Government, and I find it incredible that he did not know of the financial developments evolving as they did, and only six days ago.
Prior to a debate on 3rd February to which the Secretary of State for Scotland replied on the subject of the Report of the Select Committee on Scottish Affairs—which was the day before Rolls-Royce collapsed—we knew of the many rumours which were circulating both in this House and from well-meaning people outside that there was about to be an announcement of the collapse of the U.C.S. and a declaration by the Government of extraordinary steps. But we were wrong. It was not U.C.S. that went bust. It was Rolls-Royce.
A special development area was announced clearly to meet the loss of jobs in Rolls-Royce. That special development area has done little so far compared to the losses which we face. I was in the United States a fortnight ago and I went to Congress to examine, among other matters, the chances of the Administration getting through what is colloquially called the "Lockheed deal". I regret to tell the House that the chances of getting this deal through are very slender indeed. So let us not assume that the problems of Rolls-Royce have been solved.
U.C.S., to my mind, has been dealt with badly by the Government. If the Minister has nothing to hide, if this is his story and the Ridley plan is a piece of nonsense which we have soaked up from The Guardian, the Minister should agree to a Select Committee to settle once and for all the charge that the Government have conspired to bring down Upper Clyde Shipbuilders for their own doctrinaire reasons. By bringing down U.C.S. they will, in Rolls-Royce fashion, bankrupt the contracts and particularly their obligations to others, get out of their commitments and escape many financial obligations. I do not like the morality of that, but that appears to be the kind of government that we must get used to. There are many suppliers in my constituency which will be hard up. One firm was on the telephone today and was worried about a sum of £100,000. I do not think that that particular firm will go bankrupt—I pray that it will not—but it is possible that this sum and even smaller amounts will break many people. This is one obligation that the Government seem to have ignored in allowing this process of liquidation to take place in this way. It may be that they hope that the bits and pieces will be picked up by other yards. I am not sure that the Government are not hoping that the Lower Clyde will pick up one or two of the yards in the Upper Clyde. At one time I advocated such a thing to the distress of some of my constituents. I then believed that a union of the yards on the river would be wiser than to leave the situation as it was. So did the Geddes Report. The Lower Clyde could then be in a position of running the entire yards under one strong shipbuilding union.
I am not sure whether the right hon. Gentleman believes that the Lower Clyde will step in. I do not believe that it will, certainly at this stage. The Scott Lithgow Group has labour problems and capital development problems of its own. Who will step in? Will it be Onassis who will buy the yards? What will happen? I was astounded when the right hon. Gentleman sat down after 15 minutes without mentioning the process which was to take place in the next eight or ten weeks. All we know is that the Government are to spend £2 million, instead of the £6 million that was asked for, to pay the men's wages. That is just a start. We do not know what else will be done.
What about the creditors? Will the Government later on, as they did in the Rolls-Royce fiasco, pick up the tabs elsewhere, in which case they will be spending not £2 million but substantially more?
I wholeheartedly endorse what was said by my right hon. Friend the Member for Bristol, South-East, that there should have been a cost analysis carried out by the Capability Unit or a similar body. Will the Government not lose a lot more than £6 million because of what they have done? This is the case the Minister must prove. He may not be able to deploy his entire case today but he should have given the House more information and thus more hope for the future. Many thousands of men are employed in other firms apart from U.C.S., all of whom are in fear of the future of their jobs and are greatly concerned at the situation. Yesterday I was not exactly at my calmest when putting a supplementary question to one of the Minister's junior colleagues and I said that in Scotland unemployment was 10 per cent. I should have said "in parts of Scotland". My own labour exchange manager gave me the figure for my constituency today, and I might add that Greenock is not directly affected by this matter. I have in my constituency between 100 and 200 workers who, I am told, are directly involved in the U.C.S. but many more, thousands, are involved indirectly in supplying and working for U.C.S. Today the figure of unemployment in my constituency stands at 9·3 per cent. It contains a large number of skilled men. This is very sad. I have said before in Greenock that if U.C.S. goes down the drain it is as much a disaster for my men as it is for the men directly involved, because they will be standing outside the yards and asking for the jobs of my constituents. In 1945 one Conservative candidate said he wanted to get back to a situation of 11 men chasing 10 men's jobs. That ratio is now much higher on Clydeside.
If the Minister wants to absolve his reputation, he should consider seriously whether he will set up a Select Committee. We want to find out what the Government were up to in June, 1970, and particularly in October and November of that year as well as in February, 1971. We want to find out whether it is a conscious act that the Government have been leading up to ever since they adopted this attitude to U.C.S.
Because the Minister has shown that he resents the lame ducks of industry and that it is not in the interests of working men to be employed by the so-called lame ducks. At the Tory Party conference this was the best example he gave, and in return he was given the biggest cheer of his political life, short though it is. I believe that at least subconsciously he is motivated by a resentment of lame ducks as not in the interests of workers. He can have that theory but he had better examine the facts and see whether this company is truly a lame duck. As a Minister it was my duty at one time to attend meetings with the Ministry of Technology and to argue the U.C.S. case, which was a much more difficult situation than today. It is a sad epilogue to this affair that just when the company seems to be getting over its great difficulties the Government are pulling the rug from under it.
I must be brief. A Select Committee must not be lightly dismissed, since it would reveal the honourableness of the Government's course of action. We also want to know the mechanism and the process of unemployment and deployment of labour in the next eight weeks. We want to know what special economic measures will be taken to speed up the replacement of these jobs in the West of Scotland which are so desperately needed. We want a positive programme from the Government so that we may know what may happen in the next few months. These are months when Scotland will be experiencing unemployment figures during the summer that we have never known since before the war in 1939. It is as stark as that; and that was before this U.C.S. disaster. This is before Rolls-Royce seeks to escape any further difficulties. The situation could not be worse. This is a black day. If we are to make life better for those whom we represent, the Government must put forward positive programmes tonight and clearly state what they intend to do now in June, July and August of this unhappy year.
The hon. Member for Greenock (Dr. Dickson Mabon) deludes himself if he considers that we shall achieve a reversal of unemployment figures by pouring millions of pounds into an industry which, on the figures which have been supplied, is not viable. All that we should achieve, as his right hon. Friend the Member for Bristol, South-East (Mr. Benn) achieved, would be a postponement of the day.
The hon. Gentleman referred to The Guardian. I suggest that he also refers to the article in The Times today by Maurice Corina and takes note of the facts quoted, and particularly of the final sentence:
Managements and unions ought not to be surprised at the hurtful consequences now that time seems to have run out.
The hon. Gentleman referred to some of my hon. Friends who took part in earlier debates when they supported the
payment of further cash into this industry. He made particular reference to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor). Surely the hon. Gentleman recognises that on matters which touch one's own constituents one is inclined and, indeed, duty bound to fight and present the cause for those constituents as powerfully as possible and perhaps without the detached view that those with no constituency interest can take who look at the overall national interest. If rôles were reversed, I am sure that the hon. Gentleman would show the same eloquent language in arguing the cause for his constituents, notwithstanding that it might be against what he believed to be in the national interest if he were not so involved.
I particularly want to refer to the speech of the right hon. Member for Bristol, South-East. He started by saying that the Motion to adjourn the House should be a censure Motion. Perhaps that is the one part of his speech with which my hon. Friends would agree. It should have been a censure Motion upon the right hon. Gentleman himself.
I agree with my hon. Friend that "Robbing" is perhaps more apt. First, we have to remember the Beagle episode. I should be out of order if I developed that point. However, the quotation by my right hon. Friend in referring to the Beagle episode was absolutely apt to the attitude adopted by the right hon. Member for Bristol, South-East towards Upper Clyde. The way that the right hon. Gentleman gaily disbursed £8 million of the taxpayers' money on that occasion, having from time to time assured the House that the proposition was viable and that tomorrow the sun would be shining and all would be well, was on all fours with his speeches and attitude towards Upper Clyde.
Secondly, there were the right hon. Gentleman's actions concerning Rolls-Royce. Again, I should be out of order if I developed that matter.
Finally—I hope finally—we have the right hon. Gentleman's action concerning Upper Clyde with £25 million of the taxpayers' money down the drain.
The total of those three episodes, which were the right hon. Gentleman's responsibility, come to about £8 per family in this country. That is quite a sum to have been disbursed on those chickens which have come home to roost. All has gone, and with it has gone a great deal more. Not only has public money put into these enterprises been lost, but creditors, suppliers, and so on, have lost money. When the Labour Government produced the funds to support those particular ventures—whether it be Beagle, Rolls-Royce or Upper Clyde—suppliers were given a blanket assurance that with Government support these industries would be profitable and viable and all would be well, so suppliers lost a lot of money, as did the taxpayers. This should also be put down to the debit of the right hon. Gentleman.
No. If the hon. Gentleman was about to say that all the creditors of Beagle were paid in full, that is correct, but again out of the public purse.
To what avail were these millions of pounds wasted? It was not to safeguard jobs. All that was done was to postpone the period when the inevitable unemployment came about. It was postponed in the case of Upper Clyde because it was not electorally convenient for that particular chicken to come home to roost.
It was not done to enhance our reputation, which has suffered in each of these ventures because false promises were put forward and now we have the reality. It is now recognised that these particular projects, which were spoken about so highly by the right hon. Gentleman, have turned out to be very much lame ducks.
It was not done to support or encourage growth points in the economy. There has been no growth and no prospect of growth developing from these projects. It was done to postpone the inevitable.
The situation was correctly, perhaps generously, summed up by Maurice Corina in The Times this morning in the heading to his article,
Too much optimism … too little realism.
I suggest that perhaps it should have been that there was too little judgment and too little courage to take the right decision when it should have been taken.
Had normal commercial considerations been allowed to obtain, there would have been realistic cut-backs in Upper Clyde in 1967 and 1968, and there would now be the prospect of a re-vamped commercially viable industry. It has now become a postponed task which falls on those who have to carry out the reconstruction suggested by my right hon. Friend.
The right hon. Member for Bristol, South-East seemed somewhat confusing regarding past finance. I am not surprised. His record on finance has not been one of particular credit. He seemed unable to distinguish a lack of liquidity from a deficiency in assets. Reference to the OFFICIAL REPORT tomorrow will show the confusion in his mind. Lack of liquidity in an otherwise viable and profitable industry would not prevent any bridging finance either from the banks, which the right hon. Gentleman derided, or from other sources.
The right hon. Gentleman referred to the contribution of the unions. He suggested that the unions had not failed to contribute to a solution. The question which I throw back is: what did the unions contribute to a solution?
I shall give way when I have finished this point.
The record of the unions has not been one of great credit throughout. During the last year, when everyone in the shipbuilding industry knew the serious financial plight of most yards, the number of days lost was nearly double the national average, and at the height of the last Upper Clyde crisis two unions were squabbling over who should fit metal windows to vessels known to be under construction at a loss.
What contribution were the unions asked to make? Which official, of which union, was asked to make a contribution? Was there any consultation between the yard and the general secretary or the president of any of the unions involved?
The right hon. Gentleman's statement was to deny that the unions had refused to make any contribution. The question that I ask is what contribution did they make?
Will the hon. Gentleman give the date on which he says the unions were squabbling? During the last 12 months U.C.S. has had one of the best industrial relations records in industry.
I am referring to the last Upper Clyde crisis. I accept that since then there has been an increase in productivity, but in talking of the contribution made by the unions the right hon. Gentleman referred with pleasure to what had been done during the previous three years. I suggest that during those three years the record was patchy, to use a fairly neutral word.
The right hon. Gentleman asked what would be the cost of liquidation compared with the cost of support. The question that I ask is how long that support would be necessary. When would the next tranche be required? For how long would the yard be able to continue? Would it have to come back again for more? By accepting the solution put forward by my right hon. Friend, we shall have a once-for-all operation. It will enable us at the end of the reconstruction to have a viable industry and men who will have been retrained and whose skills can profitably be used in industry.
As my hon. Friend the Member for Glasgow, Hillhead (Mr. Galbraith) said, it is no good fooling ourselves. It is no good continuing to invest in industries that are losing money and have no prospect of making money. In the present state of affairs, all that we would be doing would be to conceal unemployment. The situation is unreal, and quite unacceptable to me. If the £25 million that has been poured into this company had been diverted to setting up a new and viable industry and to retraining people, we might have had there an industry of which hon. Members on both sides could be proud. Instead of that, what we have is a measure of the waste that there has been.
Continuing to provide money to Upper Clyde cannot be viewed in isolation. If a subsidy is given to one yard, it means that that yard is being helped while others are not. It puts the other yards at a disadvantage. It puts them in the position where they may cease to be viable. It may be that as a result of propping up an inefficient yard other yards are forced to close. Doing that is a means of exporting unemployment from one part of the country to another, and that is something which I regard as untenable.
We must face the realities of the situation. Of course there are circumstances in which it is right for public money to be used in certain operations in industry. That has always been conceded, but what is the yardstick to be? Is it right that if there is no prospect of a company paying its way it should continue to be propped up? The answer must be "No". To use money in that way must be to misuse our national resources and our skills. It cannot be in the interests of the country or of the men concerned to do that. It merely postpones the evil day.
Bearing in mind the record of U.C.S., and remembering that the promise that all would be well tomorrow has been repeated so often and broken just as often, it would be untenable and irresponsible to go on supporting the company in the way that it has been supported in the past. Even the management was unable to look five days ahead with its cash forecast.
I welcome the opportunity of visiting Glasgow on some occasion. I should hate the hon. Gentleman to be under the impression that what I am saying is loaded against the skilled workers on Upper Clyde, for whom I have the greatest sympathy, but I do not believe—
—that it is in their interests to put off the inevitable day, which will come sooner or later, when it will have to be recognised that this yard, as it is now set up, cannot survive. The Government cannot go on pouring millions of pounds into one yard. To do so would be a grave misuse of resources, and if would do no service to those employed there to hold them in suspense in that way.
The management has shown its inability to make forecasts, and the yard's record is one of such grave error and misfortune that no commercial organisation would support it. The Government are the trustees of public resources, and one must ask whether it is right for them to go further into this venture without abusing their position. It would make no difference if the I.R.C. or the Industrial Expansion Act were still operating. It would make no difference to the proposition that public resources should not be devoted to supporting something which, in the best judgment that can be applied, cannot become viable.
I ask my right hon. Friend to give us some idea of what further cash injection might be necessary during this period of reconstruction. I accept that public resources should be devoted to this difficult briding operation, but I hope we can be assured that this will be done for only so long as it is necessary to make sure that a recreated and reconstructed viable economic unit is formed and set on the right road.
I started by saying that this should have been a Motion of censure on the right hon. Member for Bristol, South-East, and that remains true. I wish that the right hon. Gentleman were in his place. It is with him, and him alone, that the responsibility lies. The country will recognise that.
I hope that the Secretary of State is not leaving, because I want to refer to him at the beginning of my speech. The House cannot let this question of the quotation pass without further inquiry. Of course we accept the Secretary of State's apology, but this House depends upon Government statements being accurate or, if they are not, being corrected at the first opportunity. This is not just a Government statement. It is a Government statement very damaging to the Opposition, as it purports to set out the late Government's view on this whole matter.
As I understand it, the Secretary of State came to the House this afternoon knowing that this quotation was wrong. He made a speech to the House in which, as I understand it, he made no effort to correct it. If he had not been challenged by the right hon. Member for Bristol, South-East (Mr. Benn), would he ever have corrected it? Although we accept his apology, he owes the House some further explanation of why he did not make this apology earlier and correct the record.
I do not want to go into the history of this matter in great detail. I believe that the original conception of Upper Clyde Shipbuilders was mistaken. It was an error to think that by joining together five yards of which two were in some difficulty and one other was not very profitable one could have put all of them on their feet. I am not one of those who believe that bigger always means better.
There are too many yards in the shipbuilding company, and undoubtedly in the past, although things have improved, there have been industrial troubles which affected this company. But the Government have now been in office for nearly a year and this is another example of the chaotic state of their economic and industrial policies.
We now have inflation accompanied by stagnation, which is particularly damaging in Scotland, and a very high level of unemployment. Apparently the Government are doing nothing about inflation. They disclaim all incomes policy. Even if they succeeded in holding down inflation to 10 or 12 per cent., which is their best hope, it would be very damaging.
I draw their attention to what has lately happened in the Shell Company. There is a lot of criticism of the unions for asking for wage increases of 10, 13 and 15 per cent. The non-executive directors of the Shell Company have just voted themselves not a 15 per cent. increase but two and a half times their present salary. Have the Government made a cheep? Have they dissociated themselves in any way from this gross piece of irresponsibility at the very head of one of the largest companies in this country? No. Who would be in a better position to do it than the Secretary of State for Trade and Industry?
—without interruption, it would be fair to draw attention to the time when the salaries of those nonexecutive directors were last reviewed, which is not irrelevant to the point.
That may be so, but this is the moment above all others when if we want restraint we must show an example. It is no good senior management lecturing the unions about asking for 10 per cent. at the bottom of the scale and then taking not 10 or 15 per cent. but 200 or 300 per cent. themselves. If the hon. Member speaks for the Government in this matter, I pray to God that they are out as soon as may be.
We are in danger of having the worst of all worlds. There may be something to be said for letting companies go bankrupt. It is not medicine which I would recommend in all cases, but at least it is conceivable that that would be an economic policy. But what do we get? We get the situation in which the Government are bound to step in. They cannot in this day and age let this number of people be thrown upon the dole, and they are not prepared to do it. Therefore, we have all the damage of a liquidator, and at the end of the day the pieces have to be picked up and some effort made to cement them together again.
I should like to know whether there was any contingency planning. We know from that admirable paper, the Guardian, of which I am a director, what appears to be a very important and interesting piece of news—that the Government were looking ahead. A paper was produced by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), we understand, in which it was contemplated that there might be trouble with this firm.
Did the Government take any steps to ensure that the men who might be thrown out of work, who would not be absorbed by other Clyde shipbuilders, had any other prospect of employment? Have they done anything to promote the public works which would be useful in Glasgow, and would be useful if we are going into the Common Market? No. Have they taken any steps to reflate the Scottish economy by measures applicable only to areas of high unemployment? No. As a result, we now have the worst of all worlds—a collapse of confidence and a collapse of what passes for a Government's economic policy.
I am also amazed that we were told so little this afternoon about the Government's present plans for Upper Clyde Shipbuilders. If the conduct of the management is as the Secretary of State described it, it is incredible. When we are told by the hon. Member for Leicester, South-West (Mr. Tom Boardman) that had the shipbuilding industry been left to the commercial interests, if this is a typical example of what the commercial interests would have done, we cannot have much faith in that. This alone merits some inquiry.
What the Government have said to the directors, what inquiries they are making into this extraordinary story, we do not know. All we know is that three men—three wise men, as usual—are being asked, out of the blue, to examine the future of this company. None of them knows anything about shipbuilding, and all they will be capable of doing is looking at the matter from a purely commercial point of view and saying that it does not look as though the company will be profitable by accountants' standards.
Even on this there seems to be some doubt. Is the Secretary of State saying that not only were the original contracts unprofitable—that was no fault of the Government—but that the current contracts are unprofitable too? On this most important point, about which there is great confusion, I am assured that the more recent contracts for this firm are not necessarily unprofitable at all, and that many of them have escalation clauses which will allow for some inflation.
Is it the Government's view that not only is there a cash shortage in the firm but that the estimates of cash flows in the next five to 10 years show that even if those orders are completed and the terms fulfilled they will not be profitable? The House at least has a right to have that answered. Surely this answer must be known by now.
The very term "reconstruction" presumably means that shipbuilding in some form will go on at Upper Clyde. I assume that we may take it that these orders will be completed. It would be disastrous for this country if we welshed on the 16 ships which are being built and the 16 more on order. If this is so, was it wise to deal this savage blow at confidence not only on the Clyde but on every shipbuilding river and to the whole industry of this country by appointing a liquidator?
If the Government's policy really was to kill off "lame ducks", although one may not approve of it, it would at least be a policy. But it is not. It is to do the maximum damage to lame ducks and then try to revive them. This is the most disastrous policy of all.
I should also like to know whether the Government are acting as a Government or as a shareholder. They have certainly advanced large sums to the company. They must have had progress reports and access to the books if they had wanted it. The Government have a representative of the S.I.B. on the board of U.C.S. and, with highly capable people like the new managing director, it is inconceivable that they could not have found out the true state of affairs before last Wednesday.
If the Government were taken by surprise to such an extent, and if they really do not know what to do in the circumstances—that is, if there has been no planning—then an inquiry is fully made out, and it should cover not only the conduct of the Government but every facet of the case.
I cannot believe that hon. Members will be satisfied with either the statement made today or with the vague promise that three wise men, none of whom knows anything about shipbuilding, will inquire into the matter and advise the Minister. There must have been some policy formulated within the Ministry and some sort of planning. If there was, we are entitled to know about it.
When an hon. Member from my part of the country intervenes in a debate of this sort, he does so with a considerable degree of humility, for we have no shipyards or ailing industries in the middle of London. Indeed, we have the lowest level of unemployment in the country. It is, therefore, rather difficult when an hon. Member, whose constituents are not themselves feeling the lash, wishes to contribute to such a debate and offer sympathy to those who are feeling it.
While many hon. Members will disagree with my views, I trust they will appreciate that I intervene because of my belief that Government policy in this matter will benefit the country as a whole. I appreciate, however, that in the short-term it may cause human suffering. We are, of course, paying the price of many years of mismanagement, for which both sides of industry have been responsible. The Government have now felt it necessary, I believe rightly, to take the steps which they have announced, though I appreciate that they may cause suffering in Scotland and other parts of the country.
What the Government have done is right, because if there is one reason above all others why this country has suffered industrial decline since the war—indeed, in some ways since the 1890s—it is because we have been reluctant to change. We have been too anxious to preserve existing forms and industries. This has shown itself in many ways, but particularly in the low level of investment on the part of management and in the reluctance of trade unions to change outdated practices.
It has also shown itself in the fact that for far too long Governments of all complexions have propped up ailing companies and industries which have had no hope of viability in the long run. I have no doubt that if the kind of philosophy which has dominated much of British public life since the war had applied in the middle of the last century, we would have supported the coach lines against the railways and fought to preserve the jobs of the coach drivers by not allowing the railways to expand.
Shipbuilding in general, and Upper Clyde Shipbuilders in particular, are classic examples of this difficulty. Here we have an industry in which too many people and assets have been tied up in an organisation which, from its inception, has staggered from one crisis to another. Management has been unable to forecast the future or produce claims which could hold water by any conceivable set of commercial criteria. This has also been an industry in which trade union cooperation has not always been as great as one would wish.
Whatever arguments hon. Gentlemen opposite adduce, there is no I.R.C., P.I.B., or any series of alphabetical initials or gimmicks which will make an uneconomic company viable or a poor management a good one. Ships, like other commodities, must be sold to produce a reasonable profit, and to do otherwise serves no purpose, not even the purpose of preserving jobs.
If we are to prosper, we must use the limited resources at our disposal in such a way that they have a chance to pay their way, to the benefit of the men who are thereby provided with jobs and to the benefit of the nation and the taxpayer. In the long run, taking money from the taxpayers' pockets and shovelling it into companies which need permanent support is no prescription for a viable economic future.
We must treat with care the quotations of the right hon. Member for Bristol, South-East (Mr. Benn). One such quotation—I understand it came from a speech he made in a debate during an earlier U.C.S. crisis—in a newspaper yesterday declared:
There is a limit beyond which the Government—any government—would not concentrate resources on something that turns out to be unworkable.
When something turns out to be unworkable, be it Rolls-Royce in its previous form or U.C.S., and must go to the wall, that creates a deplorably bad impression both at home and abroad, and people are bound to wonder whether our industry is not collapsing. This is the price we have to pay when something is proved to be unworkable.
U.C.S. is like a cat which has nine lives and has exhausted them all. It is vital to the nation and to Scotland that the men whose resources are employed in this disastrous concern should not be wasted. They should be put to work in something from which the country as well as the men themselves have a chance to benefit.
It is a commentary on the debate that we so far had from the Government side of the House only one Scottish participant. We have now had contributions from two English hon. Members. One does not wish to object on nationalistic grounds, but one must comment on the remarkable lack of interest which Scottish Conservative hon. Members are showing in the debate. It is scandalous that on an issue like this, which is so damaging to the Scottish economy, they are not only not participating but have not even had the courtesy to attend to listen to the debate.
However disagreeable one finds the views of the hon. Member for Glasgow, Hillhead (Mr. Galbraith) on matters relating to the shipbuilding industry, he shows an interest in the subject and, while he obviously wishes to see the eventual collapse of U.C.S., he at least has the courage to stand up and state his views.
The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) gave no indication that he knew anything about U.C.S. It is basic to our case that it is completely incorrect—indeed, there has been no evidence to support the proposition—to say that there was no hope for U.C.S., that the situation was beyond recall and that the company under its present structure was unworkable. My right hon. Friend the Member for Bristol, South-East (Mr. Benn), in a brilliant speech, explained that the company was going into liquidation at the very time when its prospects were turning very much for the better and when there were real hopes of viability.
Another deficiency in the speech of the hon. Member for the Cities of London and Westminster was his lack of comment about U.C.S. in the context of either British shipbuilding as a whole or of world shipbuilding. This was also a deficiency in the Secretary of State's remarks. As my right hon. Friend the Member for Bristol, South-East pointed out, and as the hon. Member for Belfast, East (Mr. McMaster) said yesterday, many other shipbuilding nations are facing similar difficulties. Governments which are by no means of a Socialist complexion feel that their shipbuilding industries should be supported during their present difficulties because, in the long-term, they can be viable and offer good prospects. The present Government seems to have taken the view, unlike other Governments faced with similar problems, that they will not support the British shipbuilding industry through its present difficulties. That is the basic complaint which we make about the Government with regard to shipbuilding as a whole and in their disastrous application of that particular policy to the LLCS, situation.
It is not true that the Labour Government took the attitude that any amount of public money should be poured into the industry, whether LLCS, or any other firm, regardless of the situation within the companies concerned and regardless of the long-term viability of the industry. The Labour Government were supporting the Geddes proposition that with reconstruction, reorganisation, better management, better industrial relations and the necessary infusion of capital, the shipbuilding industry could succeed and could be an important contributor to the industrial strength of Britain. It was on that basis that the Geddes Committee reported, that the 1967 Act was put into operation and that the various schemes of support introduced by the Labour Government were implemented. Looking at the whole situation we see that a great deal has been achieved since the 1967 Act. It is a pity that not enough has been achieved sufficiently quickly to overcome all the difficulties we now face.
The second strand in the Minister's argument yesterday—he was proved so devastatingly wrong in this by the fact that he gave a misquotation—was that in any case the Labour Party would have allowed U.C.S. to go to the wall if we had been the Government at present. That is not true. In any case, it is incompatible with the argument of the right hon. Gentleman that the Labour Government were willing to put unlimited amounts into the industry regardless of viability. We were willing to give every support to U.C.S. and any other shipbuilding firm which was in difficulties provided that there were real prospects of viability in the longer term. At the time of the last infusion of Government assistance to U.C.S., we believed—we believe even more so now—that U.C.S. had a viable long-term future. We are supported in that belief by the very capable management which U.C.S. has at present.
I turn to the facts about the situation as it has developed over the last 12 or 18 months. The Minister made no attempt to answer the points made yesterday and today about the improved productivity record of U.C.S. over the last 18 months. The facts are on the record and have not been disputed by the Government or by anyone else. The Minister did not dispute the point made earlier by the right hon. Member for Orkney and Shetland (Mr. Grimond) that the real loss-makers for U.C.S. were contracts taken a number of years ago at fixed prices, that they were running out and that we were now moving into a situation in which the company was starting to produce very rapidly a new type of ship specially designed on a standardised basis on contracts taken at a price which would give an economic return to the company. The Minister did not dispute the tremendous improvements in labour productivity over the last year or two, nor the fact that there has been a run-down in the labour force over the last 15 months of no less than 25 per cent. That was done with the full co-operation of the trade unions concerned.
Some rather ill-advised comments have been made by hon. Gentlemen opposite about the trade union attitude. The trade unions have co-operated very well indeed with management over the last 15 months or so in that massive reduction in the labour force. It was a very courageous thing for them to do, especially with the Clydeside unemployment situation, about which we on this side of the House feel so strongly and bitterly.
The situation was improving, but we know from the management's statement that up to the present the situation had not improved to an extent which would have allowed the company to move out of its financial difficulties completely. But we are entitled to have from the Minister a clearer statement than we have had so far about what it was that Mr. Hepper said to the Secretary of Slate for Trade and Industry about the viability of the company. There is a direct conflict between what the Minister has said and what my right hon. Friend said this afternoon was his information about what Mr. Hepper said to the Minister on Sunday last.
This afternoon the Minister was talking about a rather different thing from what we on this side of the House, at least up to this point, have considered to be the question of viability. We all know that Upper Clyde Shipbuilders has been running at a loss and that the losses have been coming down very considerably. The figures must be available to the Government, and the Secretary of State for Scotland is under an obligation to give them to the House.
What I had understood to be the point about viability was at what point these losses would stop and the company begin to get itself on an economic basis and start making profits to pay back some of the losses of the past. That was my understanding of what viability meant. But the Minister seemed to have a different idea about it. He did not use the expression "profits and losses" in the statement he made yesterday nor in what he said today. This is not simply a technical point. Among other things, the Minister is a chartered accountant, and he used his words with extreme care in what he said yesterday and more explicitly today when he challenged my right hon. Friend and asked him whether he seriously suggested that the company would be in a position to make sufficient profits by March, 1972, to pay off the £4 million or £5 million deficiency which the company had told him it would have by August of this year.
That is an entirely different thing—the use of the terms "excess assets over liabilities" or "excess liabilities over assets"—it is entirely different from the understanding that we had and on which I understood that Mr. Hepper was willing to give assurances to the Government that losses would cease and the company would begin to make profits.
The important consideration is that the losses should cease reasonably quickly and that the company should begin to make profits. It is utterly unreasonable for the Government to say that not only should the losses cease but they should cease so quickly and the profits should be built up so rapidly that the deficiency which the company was presenting to the Minister last week should be paid off within two or three months.
That would mean going from a situation in which one was admittedly making very substantial losses to a situation in which one was making very substantial profits very rapidly. That is what the Minister had in mind and that is why there is this conflict between what he said yesterday and what Mr. Hepper gave my right hon. Friend to understand was the conversation that he had with the Minister at the weekend. They were talking about different things. But all the Press this morning, I think without exception, have assumed that when Mr. Hepper was unable to give this assurance to the right hon. Gentleman, what he was saying was that he could give no date on which the company could move from a loss-making to a profit-making basis. If the information that we on this side have is correct, that is not so. The management of U.C.S. were able to give a date, and one which was reasonably soon, at which that situation would arise. It would have been irresponsible to attempt to give a date on which these profits would accumulate enough to wipe off the kind of deficiency from which the company was asking the Government to rescue them in the approach which it made last week.
Mr. T. H, H, Skeet:
I wonder whether the hon. Gentleman takes into account that loan stock becomes repayable from 1973 and that there is a possible action against the company by Cunard for the late delivery of the Queen Elizabeth II?
I am taking all these things into account. With respect, the Secretary of State for Scotland should answer this point and not leave it to the hon. Gentleman. These are important points. We ought to have an answer about them.
The main argument from the Government side, made especially by the hon. Member for Cities of London and Westminster, is that there was absolutely no hope for the viability of the company. That is not my understanding of the situation and this important matter ought to be cleared up.
I turn to the question whether the Government were, or should have been, informed. It is incredible that the Secretary of State should pretend that it was only last week that he discovered or was properly informed of the serious situation the company was in. If that is what in fact happened, not only the company but also his departmental officials are at fault and he as a Minister is grossly at fault. Even from the record of the last few months' events which the Secretary of Stale read out to us we can see immediately that he must be at fault.
The Secretary of State told us that in October, 1970 the S.I.B. director reported to the Government through the S.I.B. that the company was in a serious financial position. He said that between November, 1970 and February, 1971 he stopped the guarantees on his own initiative. Incidentally, the Secretary of State under the Act, in giving guarantees, acts on recommendations of the S.I.B. and does not act directly. Whether on the Board's recommendations or not, the Secretary of State said that without any kind of public announcement he stopped giving guarantees in respect of ships being built by U.C.S.
The Secretary of State made a statement on 11th February on the question of capital reconstruction of U.C.S. When he was asked four weeks later to explain what the statement meant and to say if the capital reconstruction had been worked out, the right hon. Gentleman could not do so. He was asked a month after that, again, if he could give details of the capital reconstruction. He still could not do so. On Second Reading of the Shipbuilding Industry Bill on 22nd April I asked the Minister who wound up the debate whether he would clarify the position with regard to U.C.S., but we had no clarification from the Government about capital reconstruction.
That was fundamental to the continued financial viability of the company. All this was taking place between 11th February and yesterday's announcement. To put it at its mildest, it is grossly misleading to pretend that in this situation the Government did not know, and were not concerned with, what was going on. There was the scare at the time of the recent Cunard claim. There were substantial stories in all the newspapers then. Did not the departmental officials care to inquire what everybody else was inquiring, namely, what was happening at U.C.S.? That was not last February or last November. It was much more recent than that.
Then there was the letter which my right hon. Friend read out and which was written by the company to the Government at the beginning of May pointing out that there was a serious cash position at that time. The Secretary of State has said that the letter was written about something entirely different. My right hon Friend quoted from the letter. Was that an accurate quotation? If it was, it is impossible for the Secretary of State to say that he and his Department knew nothing about the situation before Wednesday of last week.
Then there was the extraordinary reference made by the Secretary of State yesterday to the speech made by my right hon. Friend in December, 1969. I agree with the right hon. Member for Orkney and Shetland that this is not just the kind of ordinary slip that can be made in any Government Department or by any Minister. We wonder what kind of advice and information is being given to the Secretary of State when he can be supplied on an important and grave statement such as that which he made yesterday with a quotation damaging to the Opposition but which referred not to U.C.S. but to an entirely different company. That is not just a minor slip which may be made by a junior official. It is a very serious matter.
What the Secretary of State has demonstrated to us this afternoon is not that the Government did not know or that they could not have known. All that he has demonstrated, if he is an honest man, as we assume that he is, is that he did not know. It seems that the only document that ever landed on the Secretary of State's desk was the Ridley document. It would seem that that is the document on which he has based on all his policy decisions in the last few days.
The report quoted in The Guardian this morning shows that there has been within the Government Department concerned a very considerable amount of malice towards U.C.S. and everything that it has stood for. For a long time we on this side have suspected that that malice has existed. We know that some hon. Members opposite do not like U.C.S. and that they do not particularly like Clydeside. They do not like Clydeside politically. They do not like the shipbuilding industry in general or U.C.S. in particular.
Now we have it stated in The Guardian this morning in the most inelegant, malicious and disgusting terms that there is within the Department concerned with the industry a document circulating which speaks about the "butchering" of one of our major industrial concerns on Clyde-side which employs very large numbers of people.
Therefore, we cannot accept at face value what the Minister told us this afternoon, unless he is a Minister of appalling incompetence with no grip on what is happening in his Department. That may be the real explanation for what has happened.
The decision has been taken quite regardless of the absolutely disastrous unemployment position existing in the West of Scotland. I would accept as a general proposition, if this were an academic debating society, if we were talking about political principles rather than about a practical proposition, if there were thousands of other jobs available in the West of Scotland, and if there was a company which was taking up large sums of public money with no prospect of viability, that it would not make sense to keep that company going.
Neither leg of that proposition bears serious examination. This is not a company which has no prospect of viability. Even more serious than that, there are no other jobs available. There are about 25 unemployed men in Glasgow and the West of Scotland chasing every vacancy. What good does it do for the hon. Member for Cities of London and Westminster to talk about deploying these men into other jobs? There are no other jobs in the West of Scotland. That is the reality of which the Government have taken no real account in taking this decision to allow U.C.S. to go into liquidation.
This is a Rolls-Royce type of situation. The decision is taken largely out of malice, prejudice and political dogmatism to allow a major company to go to the wall, but the Government have no idea how to pick up the pieces. They will have to pick up the pieces, as even yesterday's statement demonstrates. The Government are delivering a shattering blow not only to U.C.S., but to Clydeside, to the whole of the shipbuilding industry, and to industry as a whole, as they did with Rolls-Royce.
We are committing ourselves to spending every week £¼ million of Government money for a minimum period of eight weeks, which is £2 million. If things go badly, as they may well do, we shall be committed to large sums of money in redundancy and unemployment benefit on top of that. At the end of the day we shall have spent just as much Government money as would have been involved in putting in £5 million in the first place. All this has been done with damage to the company, to Clydeside, to British industry, and to Britain as a whole.
I do not expect that the Government can allow 7,500 jobs to be lost. The Government say that they will save as many as possible. I hope that the Secretary of State for Scotland, who bears some responsibility for looking after Scottish interests, will give us more information. I understand that he said something last night on television. If the Government have any idea at all about what is to happen to U.C.S., let them give the information to the House and not on television or anywhere else.
I very much hope that, just as the Government were forced to retract and retrace their steps in the Rolls-Royce situation, they will be forced in the U.C.S. situation to retrace their steps and to save the jobs which are at stake. I know from meeting some of the men concerned and from my own general knowledge of workers in the West of Scotland that there is a resentment and bitterness against the Government which I have not known at any time since I entered the House in 1959. This is entirely different from the feeling that existed even between 1959 and 1964. There is a strong feeling of anger that the public was misled in June, 1970, that people are being sold down the river now, and that the Government have no real regard for their interests and no regard for the employment position in Scotland. The people believe that the Government have put political dogma before the real needs of the people of Scotland.
This feeling of resentment and anger will continue and will explode. It will force the Government to ensure that all these jobs are saved. We on this side will do everything in our power to achieve that objective.
I am pleased to follow the spirited speech by the hon. Member for Glasgow, Craigton (Mr. Millan). I have great sympathy with him representing also, as I do, an area of high unemployment where many of the people are employed in heavy industry, particularly in shipbuilding. In this debate on the tragedy of the Upper Clyde, I can understand the feelings on both sides about the 7,500 directly affected and the 20,000 others who will be indirectly affected if the Upper Clyde folds up.
However, so far the debate has touched only the edge of the problem. The right hon. Member for Bristol, South-East (Mr. Benn) spoke with some feeling about the competition that British shipyards face. In many debates during the six years in which the right hon. Gentleman held office between 1964 and 1970 I asked him—in shipbuilding debates and at Question Time—exactly what subsidies were being paid by our foreign competitors. At that time the right hon. Gentleman would not give me a reply. Now that he is in opposition the right hon. Gentleman becomes a recent convert to the theory that Britain must be prepared to match the type of competition which we face abroad.
The plight of the Upper Clyde shipyards is not unique to the Upper Clyde. Swan Hunter and Harland and Wolff have made losses in the past year. There is not a shipyard in the United Kingdom operating at a profit.
I accept the point in so far as a substantial sum of public money has been put into Harland and Wolff over the last five years. Harland and Wolff has been a little more fortunate than Upper Clyde, because the greater part of this public money is represented in buildings and plant and machinery. No one visiting Belfast can fail to be impressed by the massive building dock which has been laid down to take ships of up to 1 million tons—five times the size of ships at present being ordered. The fabrication sheds that back that up make up facilities of which we in Northern Ireland are justly proud. Unfortunately, a much smaller proportion of the £20 million to £25 million which has been put into Upper Clyde since 1967 has been reflected in improvement of their building facilities.
Reverting to a matter I mentioned during the question period that followed the Secretary of State's statement yesterday, I want to refer to the type of competition that we are facing throughout the world. There is not a shipbuilding country in the world which does not help its shipbuilding industry. In France there is a subsidy which I believe has been reduced to 10 per cent., but which until a year or two ago was 15 to 16 per cent. That is paid directly to the shipbuilders on every order they obtain. In Italy a somewhat higher subsidy of about 14 per cent. is made available. If the yard is on the Mediterranean the equivalent of a regional subsidy of a further 1 or 2 per cent. is made available by the French Government to French shipyards.
Spain is harder to compare, because the shipbuilding industry there is Government-owned, but Spain is the one country in Europe still prepared to quote fixed-price contracts. Much of the trouble of Upper Clyde and other shipyards in this country is that they have been obliged to quote fixed prices for orders, knowing that they may not be completed for four or five years. In the face of inflation and rapidly-escalating costs of not only wages but steel and other raw materials, they have found it impossible to complete those contracts without incurring losses. The shipbuilders were in an unfavourable position. They either quoted a fixed price or lost the contract simply because our foreign competitors were prepared to quote fixed prices as they were being subsidised.
Although recently France has reduced her direct subsidy, she has written a very complicated clause into her new shipbuilding agreement. If inflation in France is more than 4 per cent. per annum the French Government will give a further subsidy to offset this inflation in cost on the building contract.
In Scandinavia direct assistance has been given to various shipyards. Sweden has recently had to assist the Uddeval-lavarvet yard, a large yard in which the Government have a 50 per cent. holding. The Götaverken yard, a fine yard with a modern conveyor belt system of shipbuilding has also been assisted by the Government. In Denmark the Burmeister and Wain's yard, one of the leading shipyards in the world, has been assisted by the Government. Many German shipyards have also had bitter experiences in the past two or three years, and there have been wholesale dismissals there. The Government have also given them assistance to offset the losses resulting from the revaluation of the mark. That is the type of assistance being given in Europe to our principal competitors.
Our other main competitor is Japan. The Japanese also help their shipyards, first, as we help our motor car industry, by protection. The Japanese have encouraged the building up of Japanese shipping fleets, and until last year any ship owner who ordered a ship abroad had to pay a 15 per cent. import duty on it. The result was obvious: the Japanese built their ships in Japan. On the strength of their strong home market, they were able to lay down some of the most modern shipyards in the world, behind this protective tariff. We in Britain, completely unhelped by our Government, had to compete with them.
Moreover, the Japanese, because of vertical integration, were able to build ships with steel for which they paid a very special price which, as in Germany, was cheaper for the Japanese shipbuilder than the steel bought by the British shipbuilder. In addition to such assistance given in Japan, and probably also in Spain and other European countries, Germany has been prepared to help her shipbuilding industry by quoting special terms for the price of steel, and by offering special concessions for large bulk purchases.
I should not conclude this part of my speech dealing with our main foreign competitors without mentioning the other shipbuilding countries, because I should like to make this a worldwide survey. The United States protects its shipbuilding industry and subsidises it in a way unrivalled anywhere else. The subsidy there has been 55 per cent.; that is the figure which the Americans estimate reflects as a direct subsidy the difference between shipbuilding costs in Europe and in the United States. It is now being reduced to 30 per cent.
It is also to be noted that unless a United States ship owner builds his ships in the United States he suffers a considerable trading disadvantage. If his ships are to carry cargoes which originated in the United States, the ships must have been built in the United States. That is an important form of protection used by the United States to ensure that its shipyards shall not go bankrupt.
We cannot obtain information from behind the Iron Curtain. We know only that some Russian ships have recently been sold at very low prices. There is no way of determining how ships built behind the Iron Curtain are costed, but we know that in Russia, as in every other country, it is a matter of Government policy to maintain the shipyards.
In the face of facts like those, I must admit that I am very disappointed that in his opening speech my right hon. Friend the Secretary of State for Trade and Industry did not give more indication of the Government's policy towards the shipbuilding industry. The one little way in which we help our shipyards is by guarantees. Their level was recently extended to £700 million. Unfortunately, the entire £700 million has now been committed, and the figure is totally inadequate. The policy has been in operation for six or seven years, and it has not to date cost the Government a penny, so there is no Government aid or subsidy in it in the proper sense of the words.
The industrial editor of The Times, Mr. Maurice Corina, wrote on page 19 today:
An indication of the Government's ideas is expected to be given today during the emergency debate on the UCS liquidation.
I think that the author of that article has his finger on the pulse of the country as a whole and of the House. Hon. Members did expect some indication to be given to the House today of the Government's policy towards the shipbuilding industry as a whole. It is not sufficient to deal piecemeal with problems such as the one that has occurred within the past seven days.
It is vital to the United Kingdom that we maintain our shipbuilding industry, first, for defence reasons, because we have one of the largest Merchant Marines in the world. If our merchant ships operate around the world, they must be repaired in British yards and in case of emergency should be protected by the Royal Navy. It is to the British shipyards that we look for our ships for the Royal Navy. Second, and equally important for trade reasons, our ships carry most of our trade both to and from the United Kingdom. If we had no shipbuilding industry or no shipping industry the cost to our balance of payments would be substantial. Third, we build ships not only for British ship owners but for other ship owners throughout the world. The construction of ships is one of the United Kingdom's valuable export industries.
On the figures that I have already quoted, our shipbuilding industry could easily collapse entirely. If foreigners are to be subsidised while Swan Hunter and every other British yard loses money, all our yards will go out of business in time unless the Government are prepared to face up to the situation. Here I speak also of the last Labour Government, who have been out of office for only one year. They had six years and dealt with the matter in an equally piecemeal way. They did not provide any firm policy for our shipbuilding industry. The right hon. Member for Bristol, South-East had six years in which to match the tide of competition from abroad. The only policy introduced was the guarantee.
The hon. Gentleman stretches the credulity of the House when he suggests that the former Labour Government did nothing. The whole structure of the Shipbuilding Industry Board was ours. The assistance given through the industrial Expansion Act was ours. The further assistance that we could have given through the Industrial Reorganisation Corporation was ours. On each of these, the hon. Gentleman voted for the destruction of devices that could now be used to give further assistance to the shipbuilding industry.
I repeat that the problems of the industry cannot be dealt with piecemeal. Certain capital sums were made available to various shipyards as a result of the Geddes Committee's proposals. They were designed to rationalise our shipbuilding industry and put it on its feet. But something more permanent and more carefully thought out is required.
I listened with interest to the speech of my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman). While following his argument, I cannot accept his main statement that it is unsatisfactory that the industry should be continually propped up.
This industry must be helped, just as the motor car industry is helped by protection. The shipbuilding industry is in a different position from other industries. It is not protected; it receives neither tariff protection nor direct subsidy. While we face the type of competition that we are facing from abroad it is the duty of the Government, in the interests of the nation to study the help given abroad, to attempt to quantify it, as has been done in the United States, and to fix a figure which will put our shipyards on an equal footing with foreign competitors.
The Government should take this action first for defence reasons, secondly for trading reasons, and thirdly because of the invisible earnings of our shipping industry. British shipping contributes to our balance of payments with substantial invisible earnings. If Britain is not to support its shipyards and shipping industry properly, then she will have to spend valuable foreign currency on ships bought from abroad. We would suffer a deficit. When ships are built in this country, I would remind my hon. Friend, the profit on the income earned is taxed here and this reduces the cost. If a ship is bought abroad the gross sum spent on the vessel is lost. This must be taken into account in balancing the value of our shipping industry to this country.
The problems of Upper Clyde have been accentuated by recent wage rates and much play has been made by hon. Gentlemen on both sides on this point. I have always been a firm believer in steadily increasing wage rates: wages must improve along with the increase in the gross national product and the increasing prosperity of the country. They must increase at the same rate as wages are increasing throughout the world. This must be balanced by an increase in productivity. I am afraid, however, from my knowledge of Upper Clyde, that wage rates have increased more rapidly than productivity. I was sorry to hear the hon. Member for Bristol, South-East boast of the fact that the tonnage produced on the Upper Clyde has increased dramatically and say that it was better for this country to build more large container-type vessels such as tankers and other bulk carriers than smaller, specialised vessels.
I have visited Connell's yard on the Clyde and I was very impressed at the smaller but very much more expensive and profitable specialised vessels produced in that yard—mixed bulk carriers to carry mixed cargoes of grain and liquid. It is better for this country to specialise in the more expensive type of vessel rather than to concentrate on increasing tonnage. There is greater profit, greater scope for our technology, in producing this specialised, expensive type of ship rather than larger empty hulls. Some of the figures quoted during this debate have tended to cloud the issue. The main point is that with rising wage rates in the shipbuilding industry, in common with other industries—and wage rates must rise if shipbuilding is to attract the right kind of person to maintain its position as one of our leading, vital industries—then productivity must increase as rapidly as elsewhere in the economy.
The Government should study the assistance which has been given abroad and make subsidies available to British shipbuilders directly related to those given abroad. I am not a great believer in subsidies, but while they are being paid by other countries they ought to be paid by this Government. At the same time, the Government can work internationally for an all-round reduction in subsidies. It seems rather pointless one nation fighting another, increasing the subsidies. The Americans were recently up to 55 per cent. The people who benefit from this are not the Upper Clyde Shipbuilders or other shipyards—they go into bankruptcy as a result. The people who benefit are those countries who trade in these subsidised vessels, who do not have a merchant marine of their own. They are being subsidised by the shipbuilding countries. This country cannot afford to wear a white sheet and to set an example of non-subsidy, hoping that other countries will follow suit. While our main competitors are subsidising their shipbuilding industries, we must do the same and work for a step by step reduction of subsidies. When the other countries have reduced their subsidies we will reduce ours.
Perhaps the Secretary of State for Scotland, in winding up, will define terms such as "viable" and "profit-earning". What does "viable" mean in this context, particularly in the context of subsidised international competition? What does "profit-earning" mean in relation to this industry which has no protection? Secondly, will he deal with the overall policy for British shipbuilding? Will he say a few words about the Government's future plans?
It is totally unsatisfactory that the problems should be dealt with piecemeal by successive governments, on an ad hoc basis, as the need arises. We must have some overall policy so that not only will the shipyards be able to raise the capital they need on the ordinary market but so that they will be able to guarantee their future, They must be able to get the recruits they need, particularly the university graduates, who will be so vital to the industry's future. These things will maintain the morale of those employed in the industry.
The hon. Member for Belfast, East (Mr. McMaster) is as anxious as anyone to obtain Government assistance for his constituency. He talks about raising the ante to £700 million, and, like an Irishman, talks about one door opening and two others closing.
I live within the environment of this industry and I do not like to hear people talking about jobs. On the river this is a way of life. The boys during the war were not recruited in the City of Westminster, they came from the river. I This country cannot afford to wear a termed "Yesterday's Workers"— 2,500 men.
We must get the record straight. From 1950 to 1960 the take-over boys, the Charles Clores and the rest, ran this country; they were the "faceless men". Shipbuilding was not exceptional among Britain's failing industries. There were economies of scale in the yards, and lubricating machinery was offered to help these things come about.
Fairfield under private enterprise failed before the Geddes Report came out, and there was a rescue operation. The amazing thing about all this in political terms is the change of attitude, and the co-operation of the trade union movement is an example to the community. People came from all over the world to see the Fairfield experiment, but where were all the shipbuilders? Did they come up the Clyde to support the Fairfield experiment? Not on your nelly! It was a dangerous germ of an idea. There is no progress without friction.
My colleagues who have come down from the Clyde do not come here as beggars; they come for the right to work. I know something about the dignity of labour, and the Government had better take a good look at the road they are travelling. The men who will be coming down tomorrow in their hundreds are fighting for their lives.
A week ago I opened the Yarrow training school, so I have a real understanding of the industry. Nevertheless, I am a politician by conviction. Parents make sacrifices so that their children can become craftsmen. Having become craftsmen, they have a right to work. In the old days when one went to the labour exchange for a job there was the "non-genuinely seeking work clause", but that does not operate when there is no work to be had, and we are fast getting into that position. The Government should be seen to govern, and I ask the right hon. Gentleman, when the three wise men bring in their economic portfolio at the end of the day, to see that there are no redundancies. There can never be a demarcation dispute on empty bellies, and the sooner we get them filled the better.
I listened with a great deal of interest to
the spirit behind the speech of the hon. Member for Glasgow, Scotstoun (Mr. Small). It is true that one cannot have a demarcation dispute on an empty stomach. Over the years the shipyards have had managerial and labour problems. Labour in recent years has done its best to put things right but, unfortunately, some of the problems go back over many years. The Shipbuilding Industry Board Annual Report to 31st March, 1970, said:
In 1969, however, the performance of the industry did not demonstrate an improvement in the relationship of management and labour: there was a marked increase in both the number of stoppages and the total man-hours lost as compared with 1968.
This is a tragedy for any industry which is on the way down.
The former Minister of Employment and Productivity in the Labour Government referred the industry to the C.I.R. for examination. I understand that the report when it came out was a confidential document, but a certain amount reached the newspapers. The people who were lambasted were management for not taking advantage of opportunities, and the Amalgamated Society of Boilermakers clinging to sectional interests, for separateness and also for being the strongest divisive factor in the industry. The C.I.R. recommended that something should be done to rationalise the whole process.
It is of great anxiety to me to see one of the oldest industries in the United Kingdom, which used to contribute about 48 per cent. of all the ships built, now dwarfed down to producing approximately 6½ per cent.
The crucial test is: can we look ahead in the future not to a recurrence of the difficulties that we have experienced in the past but to profit-making? When my right hon. Friend said yesterday that the total liabilities were about £9 million he was being conservative. I have since had an opportunity of reading the Evening Standard, in which the total liabilities are given as about £28 million. With a liability of that nature, a prospective claim against the company for late delivery, difficulty with the competition of ships—some of which may not be built—a legacy of fixed interest contracts, which I dare say will come under the umbrella of the £28 million, can the right hon. Member for Bristol, South-East (Mr. Benn) say that this is a viable entity? This is the acid test.
If it appears that this is not one incident but the culmination of a long period in which U.C.S. has asked for additional sums from the public purse and secured them, in which it has made promises which it has failed to keep, this suggests that management has not had a grip on the situation, and my right hon. Friend is right in suggesting that the company should go into liquidation and that there should be a reconstruction.
The hon. Member has the advantage of having read the Evening Standard, but I draw his attention to the fact that the liquidator will be asking the Government for £3 million. Will the hon. Gentleman press his right hon. Friend to say whether or not that £3 million will be granted?
That is not particularly helpful to the U.C.S. for the simple reason that £2 million or £3 million is nothing compared with the total liabilities of £28 million—nor is £6 million. What my right hon. Friend has to decide is the viability of this branch of the industry, particularly when firms further down the Clyde are a little more successful. Swan Hunter has been a little more successful than U.C.S. According to the Financial Times this morning, the loss by Swan Hunter is not as substantial as would have appeared. Swan Hunter has not received from the Government the aid which U.C.S. has had.
I have listened to the arguments of my hon. Friend the Member for Belfast, East (Mr. McMaster) about the subsidies which should be granted to the shipbuilding industry, but the dispositions from the Government over the years all seem to have gone into U.C.S. and to the undertaking in Northern Ireland. Little has gone to the other companies which have to face the world situation.
We have a common market in the shipbuilding industry. There are no tariffs between us and continental countries. What my right hon. Friend has to do is to pick good management. If he does that he will have the right structure. The first thing the right hon. Member for Bristol, South-East did was to fly all round the country consulting shop stewards. The initial mistake was his in putting in the wrong team.
The U.C.S. has been hindered by inflation. Steel prices have crept up at least four times during the last two years. Steel enters the price to the extent of 18 per cent. with a large ship, rising to 26 per cent. with a tanker; wage costs involve about 25 per cent.; and these two factors are responsible for some of the difficulties.
It was a matter of concern to me when the "Jervis Bay" was towed out of the Clyde and sent to Western Germany for completion, and when the possibility of a Norwegian order was lost because the unions were arguing amongst themselves about what remuneration should be paid. This should not happen.
This is not in the last century; it is current. Although output per man may have improved during the last 18 months, this has not been the trend over recent years. If the workers appreciated the difficulties we should be a long way towards solving our problem.
I realise that my right hon. Friend tried to make an investigation earlier and demanded information which was not forthcoming. Only last week was he told that the company was in imminent danger, and he has had only a few days in which to make contingency plans. Remember, a number of problem boys from the Labour Party have now come on to his desk for solution. We have to provide the solutions; they provide the mistakes. I do not like to see any man unemployed. A man is not well off if he is picking up unemployment benefit. This means misery and unused talent. I ask my right hon. Friend to come to the House as early as possible with his plans for reconstruction. Will he make known exactly how many people will be displaced and put forward proposals to cover the others?
I regret that the Chevron refinery did not come to the Clyde as it would have absorbed 132 men, though I am not suggesting that they would have come from the shipyards. I hope that people who might be dispossessed will be able to go into the Lower Clyde or be utilised elsewhere in the country. I am certain that, if the U.C.S. is to be successful, it should be involved in the tanker building business, as this is where there will be expansion in the future. It may be that other people have different ideas, but I merely make the suggestion. It is unfortunate that this situation will encourage unemployment, but the seeds of this matter go back to the Labour Government which make a mistake in judgment in backing a deal that was bad from the start.
It is not without interest to the House and to Scotland that the only Tory Member from Scotland who has taken part in this debate made his contribution and then disappeared. We have now had from the Government side of the House four speeches on a Scottish shipbuilding problem from the Cities of London and Westminster, Leicester, Bedford and Belfast. The hon. Member for Belfast, East (Mr. McMaster) said that he was against subsidies. It is astonishing that such a statement should come from that hon. Member when Northern Ireland is propped up by taxpayers here in the form of various subsidies.
I have not finished with the hon. Member yet. He made the kind of speech which I have heard him make so often, and yet he goes into the Government Lobby to vote against a policy that he ought to support. What we are asking for, not only in the name of sound economics but in the name of humanity, about which the Secretary of State knows very little, is a sum of £6 million.
It is interesting that during four hours of debate there have been only four Scottish Tory Members in the House. That is a sign of the importance they attach to this debate. That is why they have only a handful of Members in this House, and that is why they will have a damned sight less when the election comes.
I wonder why the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) does not break with convention and speak in this debate. We know that he is a junior Minister, and I suppose he feels that he has no responsibility in this matter. He is on record when in Opposition as saying that money should be poured in to save U.C.S. Will he go into the Government Lobby this evening, will he come with us into the Opposition Lobby, or will he resign? Who the hell cares what he does, but Cathcart will tell him what it thinks as soon as he faces the electorate at the polls.
This debate relates to a political issue. It is a rescue operation for the Secretary of State for Trade and Industry and for the Prime Minister. The Prime Minister is desperately anxious to prove his virility by being tough. He appointed the right hon. Gentleman as Secretary of State to be a "hatchet man" par excellence and also appointed two or three minions as probationary "hatchet men".
The hon. Member for Cirescester and Tewkesbury (Mr. Ridley) produced his plan for the demolition of this company before he was appointed a Minister. The very first speech by the right hon. Gentleman from the Government Dispatch Box dealt with lame ducks and, to be consistent, he has had to make the same kind of noises both yesterday and today. I met the Minister in other circumstances before he came to this House and I thought that he was a cultivated, civilised and gentle man. By heavens, we certainly see a difference now. His behaviour at that Box and the policies that he is pursuing on behalf of the Government will result in the greatest tragedy for a century for Scotland and for Britain as a whole.
It is no good the right hon. Gentleman or the Government as a whole saying that their whole economic policy must be based only on the criterion of profitability. This is what the right hon. Gentleman, so far as he has a philosophy at all, has continually propounded at the Dispatch Box. That is why he came along to the House yesterday and misquoted my right hon. Friend. And he has not heard the last of that matter. I do not know where he got that quotation. Was it in his brief, and was the brief provided by the Tory Central Office or by the Civil Service? If it was the latter, then some disciplinary action should be taken. If the former, then the right hon. Gentleman is under considerable pressure to resign. The apology he gave this afternoon was less than gracious. We want to hear a lot more about the matter. If he is able to misquote in the way he did, he could equally misquote the timetable that he seeks to lay before the House.
Many of us find it incredible that a Government, with a 49 per cent. share in a company, did not know what was going on until last week. I do not believe it, and I do not believe that anybody in Scotland believes it. The Department for Trade and Industry is the most incompetent, inefficient, dogmatic and dishonest part of the Government. And that is saying something. We have only to remember the Pinnock affair, Rolls-Royce, V and G because in in each case they have proved to be dishonest, deceptive or not telling the whole truth to the House. Does the right hon. Gentleman deny any of that?
That is just what I wanted to hear. The right hon. Gentleman is saying that every word he has said is honest, that every action he has taken is honourable and that he has taken no step to deceive this House on the V. & G. matter or in regard to Rolls-Royce. We can prove the contrary.
Today we are concerned not with the incompetence or even dishonesty or inefficiency of the right hon. Gentleman's Department. We are concerned with jobs on Clydeside. We want from the Government some guarantee of security for those men. The hon. Member for Glasgow, Hillhead (Mr. Galbraith) spoke of wage-earners pricing themselves out of jobs. I have with me the Daily Record, which in Scotland is the equivalent of the Daily Mirror. Yesterday it carried a story about a young man called George Smith. The story read:
The young couple were looking forward to a bright future, having moved into a comfortable new home. But now the problems which threaten the company have thrown a dark shadow over their lives. Prospects of another job for George are not good. He must seek unskilled work at a low wage, or he must emigrate.
We heard a lot about emigration when we were in Government. By God, if this matter goes through and these jobs are lost the emigration figures will soar. The story also says that George's basic wage was £23 a week and that with overtime he can take home more. These are the
men whom the Government say are responsible for the cost-inflation with which we are now afflicted. They are not highly-paid men; they have done their job towards increased productivity. This is happening at the very moment when this company might well be on the verge of profitability.
The right hon. Gentleman tried his best to denigrate the management and the men in an attempt to justify the hatchet job on which he is now engaged. As was said by the right hon. Member for Orkney and Shetland (Mr. Grimond), the result of his ill-thought-out policy is to get the worst of all worlds. We do not know where we are going from here. There is a degree of uncertainty and disillusionment that has not been experienced in Scotland for years.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) mentioned the overall assessment of the situation. If we look at the round figure of 30,000 jobs or thereabouts which are now in jeopardy, if we examine the figure of socia security benefit for which those men would have to apply and would get, and if we take account of the income tax lost to the Revenue we shall find that the sums involved amount to at least £1 million a week. Five weeks of such treatment and the sum involved would be equivalent to what U.C.S. is asking for now to save these jobs.
That is what we want to know, silly man. That is why the men are coming down here, because they do not know where they are with this Government. Come to that, the Government do not know where they are. That is why the right hon. Gentleman made such a short speech. He thought the shorter the speech the better, and he may be right about that. The Prime Minister is the man to blame. He put the hatchet man there, God forgive him. But the Government as a whole must accept responsibility for what is happening in Scotland for U.C.S. is just as small part of the picture of what is happening in Scotland and in other regions of Britain. The Government do not know where they are going. We do—and the sooner the better.
A short while ago the hon. Member for Glasgow, Scotstoun (Mr. Small) said he spoke for himself as representing a traditional way of life on the waterside. It was a moving speech to many of us who are not blessed to come from Scottish constituencies. I know that includes me, but I do not know whether to include the hon. Member for Fife, West (Mr. William Hamilton), who does his best as an Englishman gone north. Many of us come from a variety of backgrounds with strong traditional links. I have links with agriculture which are as strong as those that bind the hon. Member for Scotstoun to shipbuilding. The regrettable fact is that, although the hon. Gentleman may reflect his background traditions in shipbuilding, as I do in respect of agriculture, there is no such thing in. this world as preserving a way of life.
If I needed authentication of that observation, I have only to look at this morning's report from U.C.S., which says that over the last 15 months it has reduced the labour force by 25 per cent. It is part of the dilemma of politicians that we are always being beckoned by the mirage that somehow or other we can devise the right size of industry in the right locations, with the right mix of goods. This probably is more true of shipbuilding than of most other industries. Not many years ago our shipyards accounted for about 48 per cent. of total world tonnage launched. We have seen a rapid diminution of that share.
Therefore, it is natural that we should try to preserve the pattern of shipbuilding, and it was perhaps reached in its most developed sense by my hon. Friend the Member for Belfast, East (Mr. McMaster), who not only knew roughly where ships ought to be made, but said that it was better for this country to concentrate upon the specialised type of ship. This was in the argument whether Upper Clyde had got the correct order book.
I say in all humility that I try to be a professional politician, but I am daunted at the prospect of trying to devise the right size of shipbuilding industry, where it should proceed, and with what mix of orders.
The dilemma which confronted my right hon. Friend—indeed, it has confronted previous Governments—was how best we could moderate trends going outside this country which could not be reversed by unilateral action from within. None the less, we could try to mitigate the untrammelled operating of market forces by such social considerations as we are able to bring to bear. We might seriously question whether we have had good value for money in that direction. That is one reflection which we should be making upon this subject.
I am worried about the channels of communication between the Government and Upper Clyde Shipbuilders. This is no reflection on my right hon. Friend; it is a reflection upon what this House in its wisdom has sought to do over recent years through legislation. There is a temptation to go for the middle way in politics. That is one of the most fatal temptations to which politicians can succumb. The middle way is to have some kind of mix of public ownership which does not carry the full stigma of nationalisation nor the rigours of free enterprise. In a sense, this would be a wide-ranging variation of the B.P. theme where there is State involvement in the equity of a company, but somehow we want to keep it as far removed from the day-to-day activities of Whitehall as possible. I can understand the anxiety of many people—I share these anxieties rather less than many others—about day-to-day political supervision where money is voted by the taxpayer. None the less, we have sought to establish an elaborate mechanism which, on the one hand, would provide public funds, but, on the other hand, would keep at arm's length direct ministerial responsibility.
I am not happy about the way that the public sector investment in U.C.S. seems to have had to proceed through the S.I.B. and its representative on the Board. I do not accept in any sense that it is a censure on Mr. Mackenzie or upon my right hon. Friend that the communication between them is as it has been. That it is unsatisfactory must now be evident to the entire House. But I believe that they were both operating within the framework which this House decided in its legislation. [Interruption.] This is the kind of issue which should emerge from the debate.
If the hon. Member for Fife, West, who we know is interested in committees of one kind and another, wishes to add to the list by having a Select Committee, I note his enthusiasm.
This problem goes far beyond the question of U.C.S. It concerns the extent to which accountability is sought for public funds and the extent to which a Minister may feel that he is correctly appraised of what is being done by those who, in the first resort, will turn to him as banker. I am far from happy about the situation that has been revealed in that respect.
I should now like to reflect on what may happen in the immediate and medium future. The first reflection which I make under this consideration is that I am a little less impressed than I used to be about the so-called economies of scale. I am glad to observe that the hon. and learned Member for Montgomery (Mr. Hooson), a Liberal Member, agrees with me on this point, because I am going on to conclude from that that one of the most fallacious arguments being advanced in the current debate about the Common Market is the supposed advantages from economies of scale. Again, I am glad to observe the support of the representative of the Liberal Party in this respect. May his scepticism infect his five fellow Liberals, because they may have a valuable rôle to play in the coming months.
On the question whether U.C.S. was on the verge of profitability, we had the benefit of the doubtless judiciously considered commercial opinion of the hon. Member for Fife, West that that was the position. If so, I do not think that the conventional financial institutions would believe that U.C.S. was the victim of a sustained vendetta being carried out by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) and would therefore have been deterred from advancing funds. There is a marked reluctance of the market to provide capital because, for one reason or another, it does not believe that this organisation has the commercial viability which certain interested politicians proclaim. The market will not supply money for shipbuilding if it thinks that political leverage will do the job for it. Political leverage is precisely what a number of hon. Gentlemen opposite seem to be trying to apply. I wonder whether in the long term it is in the best interests of any industry, and, above all, its employees, to become isolated from the more commercial forms of operation and to become permanently dependent upon—
I include farming within that heading. I should be happy for the hon. Member for East Stirlingshire (Mr. Douglas) to come to North Shropshire to debate this matter with me at any time. I wonder whether it is in the best interests of such industries to perpetuate a dependence on politically motivated decisions. Our history does not indicate that employees benefit best from these circumstances.
I turn now to what will happen. The House should not be under any illusion that we are seeing a major act of Government withdrawal. On the contrary, I think that we are seeing my right hon. Friend make an attempt to find a more suitable structure than that which now persists for shipbuilding on the Upper Clyde. I shall view the development of that ambition and that undertaking with a great deal of interest, because I have not been overwhelmingly impressed by the manner in which the Government got themselves involved in the Rolls-Royce affair. But I am, as ever, faithful, charitable and hopeful, and I believe that lessons have been learned from Rolls-Royce.
No, this is my last sentence.
I shall be interested to see how the Government proceed with the objectives which they have set themselves for the reorganisation of shipbuilding on the Upper Clyde. As the right hon. Member for Orkney and Shetland (Mr. Grimond) said yesterday, this consortium has been ill-starred, and we must be sure, because we owe it to the workers on Clydeside, that anything that replaces it has a far better chance of being a viable and commercial success.
I congratulate the hon. Member for Oswestry (Mr. Biffen) on his ingenuity in getting in that plug against the Common Market during a debate on Upper Clyde Shipbuilders. I re-echo the sentiment, expressed by many of my hon. Friends, that it is significant that the Government are padding this debate with hon. Members who have some financial knowledge. Apart from the hon. Member for Glasgow, Hillhead (Mr. Galbraith), who has little or no shipbuilding interests in his constituency, no voice has been heard from the other side of the House about what we in Scotland feel about the situation that has developed.
The hon. Member for Oswestry spoke about the Government trying to find a more suitable structure. Let us try being realistic. What they mean by a suitable structure is that the unprofitable element will be cut off. It is no news to anyone that the unprofitable element at the moment is Clydebank, but there is a soft spot in every Scotsman's heart for Clydebank, because it was nearly blitzed off the face of the earth, thanks to its pre-eminence in shipbuilding. That is what the Nazis were after, and it is the sons and grandsons of the people who soldiered on during that period who are being put out of work today.
After the war there were bulging order books to replace the ships that had gone to the bottom of the sea, but management became abysmally slack and this was seen in the falling off of orders. Private enterprise let us down; and a prominent Tory Prime Minister did not help the situation at all by saying that they had never had it so good. The trouble was that too many people believed him. When Geddes came along and reported that the shipbuilding industry needed complete reconstruction, U.C.S. was formed. It began with a disastrous inheritance, resulting from a period of Tory indolence and lack of interest.
One or two hon. Members have talked about the "Jervis Bay" being towed away, and about demarcation disputes. As my right hon. Friend the Member for Bristol, South-East (Mr. Benn) said, if someone wants to make craftsmen stand by their lines of demarcation, he should do what the Government are doing now. I think it reflects great credit on the men in charge of U.C.S. that they have broken through so many lines of demarcation, and that productivity is on the way up.
U.C.S. is geared to the present set-up because work levels in engineering in Glasgow are dangerously low. In the east end of Glasgow, which used to be the powerhouse of industry, there is not one major industry. My constituency of Springburn used to be the powerhouse of the locomotive industry, but there is now not one major industry there. On the river we are destroying the one major industry that exists, and the situation now is worse than it was during the depression years when previous Tory Governments allowed the grass to grow in the yards. Although during those years thousands of people were unemployed, the factories were still there. But the factories have now gone; they are being demolished.
There has been talk about taxpayers' money going down the drain. My right hon. Friend the Member for Bristol, South-East is censured for pouring money into U.C.S., but U.C.S. has justified the faith which the Labour Government had in it. It is quite impossible to take all five yards and make them all profitable at the same time. They took probably the worst one, Fairfields, and made it viable. If anything is hived off, Fairfields is probably the first to go. Productivity is rising, the order books are full, and more orders are coming in. Our faith is being justified.
Last week two reports were published—one by O.E.C.D., and the other by the National Institute—which said that inflation was worse in Britain than anywhere else, that we were making no progress at all, and yet here we are calmly appointing a liquidator to put anything up to 7,000 men on to the employment exchange. I take the right hon. Gentleman's assurance that it will not be the whole 7,000, but how many small firms which depend en shipbuilding and rely on banks for their money, firms which have good managements, will be able to get the necessary cash? Where is the confidence to come from? Does anyone think that banks will keep these small firms going? There will be a flood of bankruptcies because of this decision to put the liquidator into U.C.S.
I could not say where the orders are coming from. I know that the statement that there are £90 million worth of orders on the books, and another £100 million worth of orders in the pipeline, if this money is forthcoming.
In a period of rampant inflation, we are considering putting men on the street and paying them for doing nothing. I do not see how that will help the inflationary trend or how it will help us as a country to climb out of the pit into which a lack of confidence in the Government has put us. The Economist last week criticised the Chancellor of the Exchequer who made a blunder of £1¼ billion in the g.d.p. in his Budget speech. When the six months were half over, he forecast that for the first six months of this year the g.d.p. would be £32·2 billion. In the event, the figure turned out to be £31·7 billion. This has come about because of a drop in demand. We are accentuating this. I forecast this will prove one of the greatest blunders of the Government. It is a blunder born of haplessness and dogmatism. I urge the Government to think again about bringing this consortium into public ownership. Upper Clyde Shipbuilders is pulling itself up by its own bootlaces. It is proving that the faith which we placed in it was justified. Upper Clyde Shipbuilders and the men concerned on the Clyde are only asking for a chance to finish the job.
It has been a fascinating day. I have found, as so often when Scottish affairs are being discussed, that England might just as well not be part of the United Kingdom. It seems that we are not supposed to be privy to the hopes, the fears or the prospects, good or bad, whatever they be, of Scotland. I happen to believe in a United Kingdom, and I fail to see why it should call for very much comment that English men dare to intrude on this debate.
We have heard some fascinating fables today, of the sort that one imagines progressive co-operative folk frighten the Woodcraft Folk with around the camp fire at night—that there is a Government in existence who think it fun to go around bankrupting prosperous companies, or that there is a sort of witches' coven of bankers who meet sometimes in the City of London and sometimes down at Cirencester, with no other object than to dismember profitable companies, or that bankers go around the place looking, out of spite, for a company which would be prosperous to which they can deny funds.
These are just fables. If Upper Clyde Shipbuilders was a profitable concern, it would not find this difficulty in raising money. But only today we read in the Evening Standard of the hopes which have been fulfilled, of which the hon. Member for Glasgow, Springburn (Mr. Buchanan) spoke—a £28 million deficit. Was that the hope that he had in mind?
An interesting point was made by the right hon. Member for Bristol, South-East (Mr. Benn)—that other countries subsidise their shipbuilding. That was not the argument with which he came when he was restructuring U.C.S. Then, it was that the structure was wrong and that if it was put right the company would be viable. Now, the story is different—and what is needed is an overall subsidy.
I sometimes find it difficult when looking across at the right hon. Gentleman not to be reminded of Peter Pan who believed in fairies and pirates and would not grow up. J. M. Barrie dealt with his Peter Pan very much better than the Leader of the Opposition has dealt with his. Barrie exiled his to Never-Never Land, while the Leader of the Opposition brought his back from another place to try to bring Never-Never Land here.
A pantomime on the stage is all very well, but pantomime as played by the right hon. Gentleman yesterday goes too far. A Privy Councillor, an ex-Minister of the Crown, hot-footed it up to the Clyde, and, if the Daily Mirror reported him rightly, delivered himself of some interesting views. He was asked whether he agreed with the decision of Clyde workers to take over any yard threatened with closure. He said—at least, this is what the Daily Mirror said he said—
It is for you as workers to decide. In my own view, in the light of what has been said, you should regard it as your yard, and it is absolutely justified in the circumstances in which you find yourselves.
I hope that the Leader of the Opposition will take his impetuous right hon. Friend on one side and have a chat with him. When he says that they should regard it
as their yard, I should have thought that the right hon. Gentleman, above anyone, would have known that 49 per cent. of it belongs, through Her Majesty's Government, to the public—
And not just to those 7,500, but to the other 50 million, too. We have had threats of confiscation of property by the State without any compensation—for example, British United and the Carlisle breweries. But never before have we had a Privy Councillor encouraging criminal industrial anarchy of this kind.
So we come to the prospects for this shipyard. Yesterday, the right hon. Gentleman prattled on gaily about £90 million-worth of orders on the books. He should tell us whether they are like the RB 211 orders, every one at a loss. He crowed about the £100 million-worth more orders in the pipeline. Are these new ships designed, are they priced, are they costed, are they sold? If the orders were taken, would they be delivered on time? These are the points which the right hon. Gentleman knows about.
I have no confidence in that Rolls-Royce management which the right hon. Gentleman set up anyway.
This is a management that, in January, knowing that its guarantees were being withheld, said that all was well and that the future was bright, and then in June is struck by bankruptcy out of a clear blue sky at 48 hours' notice. When those deals were done U.C.S. was given £20 million by the right hon. Gentleman. He knew that they were financial boozers, and he turned them into financial alcoholics—as he did Rolls-Royce.
What is more, now, when they say, "Another little £5 million or £6 million drink will not do us any harm; we will give it up before long," he has the audacity to suggest that we should keep feeding them with the stuff. It is another of the right hon. Gentleman's white-hot technological marvels that has cooled down from white heat into the red of the account books, and he knows it. His petulant, ill-natured, ill-considered call to the workers to commit the sort of industrial anarchy that he eggs them on to ill becomes any man who has ambitions to sit on a Front Bench on either side of the House.
Many hon. Members have spoken with whom I would wish to quarrel, particularly the hon. Member for Epping (Mr. Tebbit), except for his suggestion that if Scotland had its own Government, we might not be in this predicament today. But the time for developing that argument is not now.
I have heard a lot of Tories from English constituencies, non-shipbuilding constituencies, speaking today. There is nothing wrong with that, but their attitude suggested that they were taking delight in the Secretary of State's refusal to help U.C.S. We had a deplorable speech from the hon. Member for Leicester, South-West (Mr. Tom Boardman), a speech of contentious rubbish, on which he consistently refused to be tackled at any stage. We had disgraceful speeches from Scottish Members, like the hon. Member for South Angus (Mr. Bruce-Gardyne), and the hon. Member for Glasgow, Hillhead (Mr. Galbraith). The hon. Member for Hillhead makes speeches which are treachery coming from a Scotsman, particularly from one who represents a Glasgow constituency.
In speaking about the depression years, the hon. Member for Hillhead gave the impression that he was among those who suffered at that time. I was reminded of the story of the skilled man who was unemployed for three years while the "Queen Mary", of which the hon. Gentleman spoke, was "resting". Having been unemployed for that time, this skilled man appeared at the gate and was told by the foreman, "Your tools are a bit rusty", to which the man replied, "Ay, but you should see your frying-pan." The hon. Member for Hillhead talks humbug on this issue. He is like the foreman.
In a television interview last night the Secretary of State talked about we in Scotland getting help from people who have the interests of shipbuilding at heart. It was a clear admission that he does not include himself among those who have the interests of this industry at heart.
We are in a deplorable position. Whatever part the right hon. Gentleman played in this as an individual, he must accept that the position has arisen from the obsession of the Prime Minister to prove to the Tory troglodytes that he is devoid of a single drop of the milk of human kindness. We are living with a Government whose philosophy is that the balance sheet is sacrosanct and that if it does not show a profit someone or some firm must have its throat cut. We are seeing the phasing-out of this industry by the Tories.
On too many occasions the Secretary of State has taken on the rôle of undertaker at the Dispatch Box while those behind him have played the part of mutes. This is particularly so of Scottish hon. Members. One such person who has been silent is the Secretary of State for Scotland. What was his part in this? What is his attitude to the refusal of the Secretary of State to assist U.C.S.?
The whole country is becoming a lame duck under the Tories. Perhaps £6 million is a lot of money, but it is only a drop in the bucket compared with the £750 million wasted on that empty social lunatic project called the Concorde, which will never pay, even if it is adopted by the world's airlines, which, if it is, will only be a curse to the human race. In any event, all the work on that project was provided in England—[Interruption.]— but the Government will not provide even £6 million to help U.C.S.
Three questions must be answered. First, is it a fact that the news affecting U.C.S. came like a bolt from the blue to the Secretary of State? If the Government have a large financial interest in the shipyard, do they not receive regular reports about what is going on? If so, this news could not have come as such a surprise. If it did, it reveals a deplorable lack of control over public money.
Secondly, did the procrastination in the payment of grants which were due to the yards affect the liquidity of U.C.S.? Thirdly, what part did the Secretary of State play in this decision? I hope that before the debate ends these questions will be answered. The Government are sowing the wind. They will reap the whirlwind.
I wish at the outset to comment on some of the remarks made by the hon. Member for Oswestry (Mr. Biffen). There is some validity in his argument that, as politicians, we should not make statements about the structure of an industry generally or of a company in particular. Nevertheless, as politicians we make pledges. We made some a year ago, and one in particular that was made by both parties was to produce full employment.
No hon. Member who represents a Scottish constituency went before the electorate last year and suggested that by this date there would be over 120,000 unemployed in Scotland. Nor did we suggest that we would embark on a process which would directly produce job losses.
I regret that the hon. Member for Perth and East Perthshire (Mr. MacArthur) is not in his place. He is fond of quoting the statistics of so-called job losses under the Labour Government. Today, either by design or accident—one can be charitable and say that it has been an accident—the Government are producing job loses and the erosion of skill in Scotland at an alarming rate.
It is nonsense for the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) to deploy sophisticated financial arguments and suggest that somehow or other one can treat the capital deployed in the shipyards of Scotland like rubber to be moulded and used for other purposes.
The Secretary of State, who visited Yarrow's a few weeks ago, knows that capital deployed in shipyards is deployed in a specific way and that the £1·2 million used in that yard is designed to produce sophisticated ships. When the liquidator moves in he looks at the value of the assets. Those assets on Clydebank, at Govan and elsewhere will seem little because they are designed specifically to build ships, and these assets, particularly at Govan, are among the best in the world.
Although hon. Gentlemen opposite may criticise the management of U.C.S., I challenge them to say where they would find a better man than Ken Douglas to manage any consortium or grouping. They may find better accountants and people with knowledge of writing down and revaluing assets, but they will not find a better man to build ships, and that is surely what these assets are designed to do.
A disturbing factor which has not been mentioned in the debate so far is the fact that this is supposed to be a growth industry. The hon. Member for the Cities of London and Westminster is constantly telling us to get on the growth train. Our difficulty has been the restructing of this industry to enable it to benefit from its growth potential.
Although there has been a 25 per cent. reduction in employment during the restructuring of the industry in the last 18 months, between 7,000 and 8,000 men have left the yards in the last five years, and this has not happened without the co-operation of the trade union. I do not suggest that the unions in the shipbuilding industry have been beyond reproach, but hon. Gentlemen opposite must recognise that we have been trying to change attitudes that go back half a century or more.
Unhappily, fear of the dole and the scrap heap is returning to Clydeside. The hon. Member for Epping (Mr. Tebbitt) made great play of a statement in the Daily Mirror, but does he not realise that these men are asking for the right to work? It is not vandalism or a red revolution. In the U.C.S. News of March, 1971, Ken Douglas says:
We all know the self-appointed critics (mainly outside the industry) who have been spreading doubts and fears for the future of the British shipbuilding industry including that of our own company. I however know that we do have a future, and a good one, too, for we have already faced up to many difficulties and solved them and are continuing to make progress.
That is what the men have heard from one of the best managers in the country. Having heard that, if they feel that they are being cheated, no matter what I may think about the constitutionality of their actions, I would not be a shipbuilding worker myself if I did not have the greatest sympathy for them if
they went into the yards and said, "We are not moving until our jobs are guaranteed." Hon. Gentlemen opposite have never gone into a shipyard and scraped the snow off the plates in the morning.
Some may have, but they have deployed their time in making money in a roulette society, neglecting the human elements that made the country great in the past. These men are asking for the right to work in a growth industry.
The hon. Gentleman really missed the point. The view I quoted was not his view but that of the right hon. Member for Bristol, South-East (Mr. Benn), who expressed it as, "You should regard it as your yard and it is absolutely justified in the circumstances in which you find yourselves." Either it is theirs or it belongs to the nation. It must be one or the other, and it cannot be for both to muck about with.
I am sorry that I gave way to the hon. Gentleman. I am one of a family with five uncles in the shipyard and a father who worked in U.C.S. until he died in September last year. My father used to speak of it as "his yard". It was his sweat and toil that made the yard, not shareholders' money. It was his yard. I have a great deal of sympathy and understanding with the men in the industry who feel that it is their yard. They are saying it at a once or twice remove. They have a deep feeling of identity. It is a tribute to the management that it has enhanced that feeling of identity. I should not contradict the actions of those men.
I turn to one or two points of substance in relation to the background of the debate. The Secretary of State made certain points about lack of knowledge and background information about the viability of these yards. In a debate which I initiated on 25th March, the Under-Secretary of State, the well-known butcher, made this statement:
It is not enough to say, 'These yards are in difficulty financially. Therefore, there must be grants or money from the Government in order to make sure they survive.' There is a duty on those who work in them to make sure that they survive, and we want it to be made extremely clear that the situation is still
critical—it is perhaps true to say that it is fairly critical in all three of the main Clyde yards.
The words were used advisedly that the yards are in a critical state. We are asked to believe, on the evidence put forward by the Secretary of State, that one of his Ministers, knowing that the situation was critical and having a Government director at one remove, was not almost weekly or at least monthly in touch with these yards to get some indication of their cash flow position. I find that very difficult to believe.
Then the Minister, replying with a more euphoric phrase, gave this view:
I believe that there is no reason why the Clyde should not be employing twice as many people in shipbuilding at some future date."—[OFFICIAL REPORT, 25th March. 1971; Vol. 814, c. 1064–6.]
I accept the view of the hon. Member for Oswestry that one should not talk about the structure of an industry and should not necessarily build up false hopes. But I assume that the Minister was in daily touch with the industry, and he is putting forward the view that the numbers employed could possibly be doubled. So there is a futuristic prospect here.
The receiver is on the record, as I understand it, as saying that he will be asking the Government for £3 million to carry on until the affairs are cleared up. May we have the assurance that that £3 million will be granted? If it is granted, why are there difficulties about £5 million or £6 million?
A point of substance on the guarantees is that, in his wisdom, the Minister has held up underwriting guarantees which ought to have been due to U.C.S. These guarantees have to be processed through the Shipbuilding Industry Board. Did the Minister hold up guarantees which had the approval of that Board or did the Board put a question mark into the Minister's mind on the guarantees? If the Board said, "All right, go ahead with the guarantees", what other information did the Government have at their disposal as a reason for holding up the guarantees? These are important points requiring an answer.
We can accept the process of change. No man has a right, in days of technological change, to think that he can go into an industry at the age of 16, or whatever it may be, and be employed in the same industry until he is 65. All thinking people, including trade unionists, accept that. A man in Britain has a right to expect that if a Government, by their action or by their failure to act, throw him on to the scrap heap, that Government and the nation have a responsibility. If there are to be regroupings on the Upper Clyde, these ought to be brought before the House for debate. We shall not stand idly by looking at the situation developing as it is at present.
The Government and the House have a responsibility. The people of Scotland recognise that industrial change has to take place. We have had a tremendous process of industrial change in the past 10 to 15 years, most of it, especially in the period of the Labour Government, underwritten by a humanitarian outlook. Hon. Members opposite will be challenged and held accountable by the nation if, on the basis of a mere accountancy standard, they allow the humanitarianism of Britain to go by the board and create once again two nations.
The hon. Member for East Stirlingshire (Mr. Douglas) made a number of points with which I wholeheartedly agree. I endorse every word he spoke about the right of man to give of his labour. The hon. Gentleman spoke of the loyalty which one hears of in day-to-day language around a yard or a factory—"our yard", "our factory". People come to look on the premises where they work as their own property. I welcome remarks such as those.
Unfortunately, in other words, I cannot follow the hon. Gentleman. There are hon. Members on this side who have got their hands dirty with steel plate work and who have scraped snow off steel plates in stockyards and the like. I am proud to be one of them. I have worked with my hands for years. I am always proud to do so and to keep fit and be able to work. In that way a man knows the other side of the coin and does not sit humbly on these benches listening to those who would imply that we have no practical knowledge of industry.
Great play has been made about £90 million worth of orders. This evening's Press speaks of debts amounting to £28 million. According to my rough and ready calculations relating to the construction of ships £28 million equals the cost of the raw materials which would be required to fulfil those orders. I am not including engines and fitting out; it is the pure raw material element of the order book which equals the debt or the millstone which is currently around the yards' necks.
It makes me wonder how far we can rely in any reconstruction on the present financial and executive management being competent to continue with the task lying before them and to turn what is claimed to be possibly a break-even on production business into one which is capable of showing an adequate return.
Much has been said about the yards' present general manager. I have not had the pleasure of meeting him. No doubt he is very competent. It appears that those above him on the administration side are far from competent. I wonder how any hon. Member can consider pouring further money into that business whilst those men remain in control. Those are the men who have got through approximately £20 million in 3½ years with virtually nothing to show for it except debts just announced to the tune of £28 million.
I should not object to seeing Japanese, German, Swedish or Norwegian executives in the yard if they made the yard into a viable unit; because that is what both sides wish to see. To be viable, an industry must be efficiently managed. It would appear that such has not been the case with the Upper Clyde consortium.
We may also wish that further economies can be made in construction. It is not so long ago in terms of shipbuilding that welding was considered to be a novelty. We have learned much since then. We have learned that we can cut out waits and production time by new methods. All these points should be considered, because it was the reluctance to accept new methods in years gone by which has helped to run shipbuilding into the ground.
I regret having to mention the question of demarcation, but automatic welding caused its troubles, again undermining the industry's profitability in the long term.
These are issues which must be faced. The new management, whoever they may be, as well as those in the yard, must be receptive to new ideas and must implement them without any holding back. If they are to pull the yard round, as I am convinced that they can, these points must be considered and the shipyard workers must accept that they are responsible, equally with the management, for the yard's prosperity, which means that the ships must be produced on the right date, free of defect, and in accordance with specification. I am positive that this can be achieved.
I pose four questions to the Minister with particular reference to the previous activities at Upper Clyde. First, how many working days have been lost through strikes since the yards were amalgamated in February 1960? The right hon. Member for Bristol, South-East (Mr. Benn) made great play of the increase in the number of ships launched or completed over the years. I should like to know, second, not only the number of ships, but also, third, the gross tonnages and how many of them were delivered on time.
Fourthly and finally, what is the number of late deliveries and of potential claims which may be submitted against the yards by virtue of their failure to complete?
Apart from these four questions, I believe that the suggestions put forward by the Government must be supported by those who would not hide their heads in the sand. I therefore propose to give every support that I can to the Government's handling of this matter.
I state my interest, first, from the general point of view of being interested in the Scottish economy and, second, as a member of a trade union which is vitally concerned in the work available on the reaches of the Clyde.
I listened very carefully to the statement made this afternoon by the Secretary of State. The right hon. Gentleman started by telling us that he would elaborate on the necessarily short remarks that he made yesterday. His remarks today were longer but they contained not one new item of substance. What we were looking for from the right hon. Gentleman today was some statement about how long he would guarantee the yards to keep them going at full capacity until there can be a decision about the future. His is now the responsibility for ensuring that the yards are maintained and that the fullest possible level of employment is maintained within the yards.
The Secretary of State cannot escape the consequences of his own actions and inadequacies. It is no good his telling the House that as the senior Minister in a new Department—one of the new super-Departments which is allegedly overseeing great areas of trade and industry and overseeing the whole pattern of planning for the future—he did not know what was happening in Upper Clyde Shipbuilders. It is the negation of government to say that there was no contingency planning for what was ahead.
It is no use the Government saying, "We have been the Government for only 12 months. We cannot be expected to know all the problems." They knew of these problems long before they came into government. We were told all about the marvellous conferences at such places as Selsdon Park where future policies were worked out. During the election period there were stories of the computer which was installed in the Prime Minister's Albany flat and was supposed to provide all the answers to Britain's problems and would, almost at a stroke, wipe out what the Tories considered to be six years of Labour Government.
A year later, after all the organisation and government, the import from the C.B.I, tells the House, "Sorry, chaps. I did not know anything about it. You cannot blame me. It is all the fault of the fellows who left office." This is not government. The sooner the Ministers realise they are there and must do something about it the better.
I believe that the whole crisis in U.C.S. stems from a series of events, not at the time obviously inter-related, but—with hindsight, I admit—showing a clear pattern of responsibility. It started with the famous "lame duck" speech. That was bad enough. It was followed by the collapse of Rolls-Royce, which was even worse. I remember hon. Members on this side telling the Secretary of State and the Prime Minister that the serious consequences of the welshing on the Rolls-Royce debts would reverberate throughout industry. It is no joy to anyone on this side to have been correct.
The crisis of the cash flow and the cash crisis in U.C.S. is a direct responsibility of suppliers being in jeopardy. Every time hon. Members on this side have tried to plead the case for the subcontractors of Rolls-Royce we have been met with the bland statement, "That is the responsibility of the liquidator. The Government have no responsibility."
Faced with the withdrawal or nonavailability of guarantees, how else can one expect creditors to behave than to begin to demand their money quickly? As they begin to demand their money quickly and it is not forthcoming with the necessary speed, what story gets around? I have been in industry long enough to know what happens when the money is not coming in. One hears from people involved in the same line of work that the money is not being paid, and one begins to press harder and harder. I am convinced that the whole responsibility for the crash of U.C.S. rests squarely upon the shoulders of the Secretary of State and his Department.
Why is not a Rolls-Royce type situation—not a welshing on the debts, but a nationalisation of Upper Clyde Shipbuilders—being contemplated to keep this vast industry going? Is it simply because no defence interests are involved? This was the great excuse that we got from the Tories for not allowing Rolls-Royce to go to the wall. It was the defence interests, not the interests of the shareholders or of the workers.
It never ceases to astonish me that if the merchants of death want money there is no hesitation in finding it. If people are seeking money to provide weapons to kill people off in millions, there is a bottomless purse to provide that money. When it comes to the building of ships for peaceful purposes and to providing or safeguarding jobs for people and keeping the country's economy going, we cannot find £5 million or £6 million or even £3 million.
The Government must not think that the U.C.S. business is the end of the matter. I hope that they can reorganise it in such a fashion that all those employed in the yards can be maintained in employment and all the orders fulfilled. Whatever the future is, unless there are firm guarantees from the Government for the next five years at least as to credit for U.C.S. there will be a recurring cash flow crisis in a couple of years as other firms in different parts of the country go down.
The Government do not seem to have realised that with the "lame duck" speech they started a snowball trickling down the hillside that has grown bigger with the passage of time and which may well reach avalanche proportions. It is not just U.C.S. and the future of the consortium. What about Swan Hunter, Harland and Wolff, and other shipyards? They will be concerned.
I am concerned from a small constituency interest which I mention in passing, because in face of the massive problem of U.C.S. the small shipyards in Britain are of no consequence. I should not wonder if many small shipyards throughout the country are not having the jitters about what the future holds for them.
I have always been very concerned about pumping money into private enterprise when the money is simply going to shareholders and not going down to the men in the yards or on the shop floor. This is not my concern about U.C.S. With my political and Socialist conviction, I often had a lot to swallow in view of the amount of money made available to private enterprise by the Labour Government. But I accepted that that should be done because it was necessary for the good of the Scottish people and people working in factories throughout the country. I have never forgotten the statement by the ex-General Secretary of the Scottish Trades Union Congress when I, as a young lad, appeared to criticise the immediate past Secretary of State for Scotland and others for doing too much to prop up private industry. George Middleton told me,
The road to Socialism, brother, is not paved with derelict industries.
I remind Conservative hon. Members that the road to one nation is not paved with derelict industries.
My only regret about the actions of the last Government towards U.C.S. is that they did not do the job properly by nationalising it and making it a truly national concern—and not only U.C.S., but the whole of the shipbuilding industry. I hope that when my party, of which I am proud, becomes the Government again my right hon. Friends will have learnt the lessons and will not allow any possibility of crashes like U.C.S. to be on the horizon.
My only reason for intervening in the debate is that I have a background of interest in the shipbuilding industry and served on the Committees that dealt with the industry in the last Parliament, when we were providing subsidies to assist it.
I am amazed by the tone of the Opposition when dealing with the present situation. My early experience of the industry was very different from the situation that faces U.C.S. or the country through the action of my right hon. Friend the Secretary of State for Trade and Industry. My early experience was of an industry that got into trouble in the late 1920s and early 1930s, when there was a closure of the yard in the town of Jarrow, in which I lived, resulting in 85 per cent. of the people there being out of work. My father, who was employed in the industry, was out for 2½ years. In due course, as a young man I became a labour manager in a shipyard on the Tyne. So I have a knowledge of the industry and an interest in it and a very warm regard for everyone who works in it.
The industry has been subsidised since before the war, though it was subsidised in rather a different way then, through the naval programme. It was because the Government of the day cut back on the naval programme that the town in which I lived lost its yard overnight. That happened partly because Labour hon. Members asked the Government to cut back on armaments. I am sure that the hon. Member for Aberdeen, North (Mr. Robert Hughes) did not mean all he said. He must recognise that part of the armaments programme can be a ship. I have not noticed that those who represent shipyards have ever been very slow to request that the Government should build armaments in the form of ships to provide work for the yards.
The surprise I had about the invective of right hon. and hon. Members opposite against the Government action in the present situation is because I do not see it leading to large-scale unemployment. I intervened in the speech of the hon. Member for Fife, West (Mr. William Hamilton). He called me rather silly. I call him names sometimes, and sometimes he calls me names. We do not mind very much. I cannot imagine that my right hon. Friend has taken the action he has taken today in order to cause, as the hon. Gentleman suggested might happen, 30,000 people to become unemployed. If that happened, my right hon. Friend would have me to contend with as well, because unemployment is already high enough, and is bound to go a bit higher in the winter anyway. The last thing I would put up with would be a Secretary of State for Trade and Industry who deliberately discharged a policy the aim of which was to add to the existing unemployment and the high unemployment that there is likely to be in the next few months. I am certain that is it because my right hon. Friend wants to avoid unemployment in the Upper Clyde that he has taken the action that he has.
I am very interested in the hon. Gentleman's argument. Can he tell the House what will be the effect of the Government's action on employment or unemployment in Scotland?
I am coming to that. The present situation is that, subsidies having been started in the last Parliament, a certain section of the shipbuilding industry seems to consume those subsidies very heavily, whilst other sections have not applied for subsidies on the same scale.
The granting of subsidies to the shipbuilding industry as such is probably questionable, but there is a case for subsidies for the shipping industry, provided they are related to the kind of subsidies being given by other countries to their own shipping industries. Clearly, it is impossible for the shipbuilding industry to compete in price if it is competing against overseas firms that are heavily subsidised. No Government should discount that point, and I hope that my right hon. Friend will not do so, and that no sane Minister would do so.
It must now be apparent to Labour right hon. and hon. Members that profitability in industry, whether it is nationalised or free enterprise is essential if we are to preserve employment. If there is no profitability, sooner or later the taxpayers are bound to say of a nationalised industry, "We cannot go any further", and with a private enterprise company sooner or later the same thing will be said by the market, which is the ordinary man in the street in these days of unit trusts and insurance companies, which provide large amounts of money for industry. The trade unions have their own unit trust, which has money invested in private industry. I put some money in it some years ago, but it has not grown very much. If industry is profitable, the unit trust provides increasing dividends. Profitability is essential if the workers are to retain their jobs. Without it, there is run-down, and if there is run-down there is a liquidation of labour forces, redundancy, pay-off.
Upper Clyde Shipbuilders is almost a Government company. Many of us have been talking today as though it needed to be nationalised, but the Government own 49 per cent. of the equity. I cannot accept that my right hon. Friends did not know what the state of the company was, because if I did I should not believe that they knew what they were talking about when they talked about free enterprise.
I have a small company, and it is my job to see that it is profitable. I do not see why I should pay heavy taxes out of my company profits to provide an excessive subsidy for other, larger companies that cannot make a profit. If in my small way I put some money in another company and took a shareholding in it, I should want a work and progress report every few months. I should want to know exactly what was happening to my money. The Government are in exactly the same position. I am sure that they knew that the company would very soon get into difficulties. I accept that it may have been a surprise suddenly to find that it had only a week of wages in the kitty, but I am certain that they did not think that it had much more than money to pay the wages for a month or so in the kitty.
So my right hon. Friend decided to liquidate the company deliberately, as part of policy. When hon. Members opposite say that, I accept it. But the reasons why he did it were quite different from those which they have given, and which they are giving to the workers in Glasgow. The right hon. Member for Bristol, South-East (Mr. Benn) yesterday went to Glasgow to try to poison them against the Government. He told them exactly the same as he has told the House today, that the liquidation of the company was to create unemployment and to put the yard into the ditch. That is not true, and the weeks will show that it is not true.
That can only be proved in a few weeks from now. The first reason why the company has been liquidated by my right hon. Friend is that that was the only way he thought that he could get the structure right. That is not political dogma, but good business sense, which is the great difference in outlook between the present Government and a Labour Government. The structure created by the right hon. Member for Bristol, South-East was very wrong, and he knows it. My right hon. Friend and the Cabinet decided that the only way to get it right was to allow the company to go into liquidation. If they could have got it right in any other way which was not unduly costly, they would have done it. In other words, they calculated that it would be cheaper to let it liquidate and then get it right than to go on slowly tinkering with it, while all the time it was eating up the taxpayers' money.
Of course not. My whole speech has led up to this point. I said that my right hon. Friend had known that the present situation was coming, and deliberately thought that the present policy would be the best way to get the restructuring right.
The second reason for my right hon. Friend's allowing the company to go into liquidation is that he wanted to put some backbone into it and to encourage the backbone in the other companies in the shipbuilding industry which have some backbone. If the Government had continued to ladle out subsidies to the Clyde, what would have happened to the firms on the Tyne, such as Swan, Hunter and Hawthorne, Leslie, the companies that I know, the company that I worked in, which has been struggling valiantly with very little subsidy and has successfully reorganised itself into an effective group, has got its management structure right, and has made improvements in its labour relations, with a working together of management and unions? That is a great advance on anything that has happened before.
What would have happened if yesterday my right hon. Friend had said "Well you have done very well, but the lame duck in Scotland, which has not done well enough, will continue to receive subsidy." My right hon. Friend will still be supporting this group for the next few months in other ways. He has already said that the Government will stand behind the wage bill. I am certain that he has no intention of creating unemployment. What he is intending to do is to restructure and so encourage the new set-up, with new management if necessary. Some of the management is good mangement as has been said on the other side. I would not have thought it sensible to sack such competent management as there is. He has to get the financial structure right, and once he has done that this group will be in as strong a position as is the Swan, Hunter group on the Tyne. Furthermore it will be encouraged to stand on its own feet. It will have backbone.
Surely the best way of restructuring this firm is not to force it into liquidation. That may be the best way from a business point of view, but is he saying that from the point of view of the workers in Glasgow it is the best way?
Yes it is. The hon. Gentleman knows perfectly well what liquidation means. The difficulty is that outside—and the Government must beware of this—liquidation normally means that in the minds of the public there is the picture of a close-down, a shutting of the gates and a paying-off of the workers. This will not happen. This is not liquidation of that kind. This is simply a blood-letting operation which will enable the Government to do what they like structurally, or with management, to achieve a new set-up.
The hon. Gentleman is making forecasts about what will happen and what will not happen. Is he aware that the people on the Clyde want to know from the Government and have not heard? Will he say how many people will be unemployed because of the decision?
But has the hon. Member been present during my speech? I spoke about unemployment at the beginning and made it clear that in my view the Government did not want to create more unemployment. They intended, through this action, to reinforce a consistent and profitable industry on the Clyde and in this group. The right hon. Member for Bristol, South-East made great play this afternoon with the misquotation, or misrouted quotation, of my right hon. Friend taken from HANSARD. The truth is that that quotation was a very clear one by the right hon. Gentleman.
The right hon. Gentleman, when he was in Government, said that there was a limit to Government subsidy. There came a time when Government subsidy had to stop. If it had to continue, the Government must take other action along with that subsidy. That is what the quotation meant, whether it referred to Beagle or this group. Does he still think that? Does he still think that it is helpful to an industry, or a section of an industry, to continue to treat it as though it were part of the Welfare State? Does he not think, now, as he thought then, that it is better to attempt to put some backbone into it, to make it enterprising so that it can be profitable both for the area in which it operates and for the people who work in it?
Representing as I do a constituency in which is situated the Clydebank division of U.C.S., I wish first to say that I am not an economist and do not intend to follow the academic, economic dialogue which has been floating backwards and forwards and which has included a considerable amount of waffle intended to restrict the time available for more useful purposes.
I represent an area which will be seriously affected by the decision made by the Government yesterday and the decisions which the Government may make in the next few weeks. We on Clydeside, especially in the Clydebank area, have suffered disastrously since the Tory Government came to power last year from the run-down of industries, redundancies and closures of factories all over the area. The decision announced by the Minister yesterday is a further step in the decimation of general industry in the area. The right hon. Gentleman's statement yesterday confirmed my long-standing belief that it was almost the intention of the Government to use U.C.S., particularly the Clydebank division, as an example to justify and give credence to the Minister's "lame duck" statement.
Today, when we expected the Minister to fill in the details of the intentions and future prospects, all we had from him was a longer speech containing no more information. This confirms that the creation of unemployment is a principal prop in the economic policies of the Government. When a similar statement was made yesterday, several hon. Members on the Government benches shook their heads in dissent, but if the Government are not carrying out a deliberate policy of this kind, God help us. When one considers the massive unemployment the Government have created, what will be the result next winter when the policies bite into the industrial body of Scotland, particularly in Glasgow?
In reply to a question from me yesterday, the Secretary of State for Trade and Industry said:
There is a grave risk of escalating beyond reason at the moment the problem in regard to unemployment and the impact on suppliers and families. I believe that this was the case in the Press over the weekend. I do not anticipate that the kind of figures which have been mentioned are the figures with which we shall be faced, but it is the Government's firm intention to achieve that that shall not be so."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 37.]
Will the Minister give a clear indication of what is to happen with the restructuring of U.C.S.? Is he saying implicitly
in his reply that he will save the whole organisation and the employment opportunities in these yards, or is he saying that 25 per cent. will be cut away? If the latter, who will be the 25 per cent. at work at the moment who will be chopped off? If he does not know, was the reply he gave to me yesterday the first thought that came into his head, or was it another illustration of the Minister's intention to mislead the House when direct questions are put to him?
In the yards under U.C.S. control, in the Govan division there are 2,500 employees, in Clydebank 2,600, in Scotstoun 1,000, in Linthouse 400. There are 290 apprentices and 1,500 staff over the whole organisation. Those figures applied on 15th June this year, and they are roughly 2,800 down on the March, 1970, figures. That figure shows that we were yesterday as I claimed, talking not in terms of 7,500 or 30,000 persons but in terms of 120,000 human beings, and that I was nearer to the truth than was the Secretary of State when he replied to me.
If 25 per cent. is cut off that figure, taking families into account, the number involved will be near to 120,000 persons. Although it might be fine for hon. Gentlemen on the Government benches and the Secretary of State for Trade and Industry to talk in terms of balancing the books, we on Clydebank do not consider the balancing of the books to be the end of the matter. We must take account of the human and social problems which we have been living with over the last year, which are multiplying every day and which the Government intend to multiply further.
The workers and their representatives have been quoted times without number by Tory hon. Members as being responsible for the downfall of U.C.S. and of other companies, the run-down of companies and the loss of business opportunities to them. No one can honestly point a finger at the employees in the U.C.S. yards, for their contribution towards creating a viable situation in U.C.S. has been second to none. There is no doubt about that. These conscious decisions made by the workers and their representatives were made under extreme difficulties, in the face of a long tradition of bitterness between management and men, to try to get away from the old methods and the old bitterness and hatreds. Now they find that the wheel is turning round again, and they are in the position they were in several years ago when they had to choose between continuing the process of better understanding, better productivity and viability for their industry and going back to the old days of protecting their jobs by whatever means they could.
Speaking on the Second Reading of the Industrial Relations Bill, I referred to the fact that the Government's general policies were forcing us towards a situation that could lead to social disorder, for which the Government would be responsible. I said:
These matters suggest to me that the Government fully realise the implications and the social upheaval that can be caused by the legislation they are putting through."—[OFFICIAL REPORT, 14th December, 1970; Vol. 808, c. 1021.]
Taking this in the context of U.C.S. and the general situation on Clydeside, the Government are telling the workers that they are not interested in preserving their jobs or in maintaining a decent standard of living for them and their families. The only reaction that can come to that is the one which the shop stewards and workers in U.C.S. have already taken. If there is a substantial job loss, a substantial reduction in the earning capability of the men and women in the area and suffering for the men's wives and families, then they will prove that they can do the job without the Government.
I was in Glasgow on Clydebank last night with my right hon. Friend the Member for Bristol, South-East (Mr. Benn). I can confirm to members of the Conservative Party that if they go on for ever talking about this matter without producing the goods for the workers on Clydeside, they had better think again. Unless the Government realise this and take immediate steps to reverse the policy indicated yesterday by the Secretary of State, we shall have on our hands a situation where we shall have to bring back the troops from Ulster because they will probably be needed in places like Clydebank and elsewhere.
It might be ridiculous to the hon. Gentleman, but that is the Government's frame of mind and, therefore, it is a distinct possibility. The Conservative benches do not seem to understand what is happening. I believe that we are entering a situation similar to that in the 1930s. Certainly no workers on Clydeside are complacent about what happened in those days. They remember the hunger marches and still talk about the 504, or the "Queen Mary" as it became known, which lay rusting in the yards. The Clyde shipbuilders are determined not to return to such a situation, even if it means taking over the places of work, using the tools in these places and continuing to produce the goods.
One hon. Member mentioned earlier that a hull had been towed away from one of the Clyde berths. I guarantee that no hulls will be towed away from U.C.S. yards because the trade unions have decided to control those yards and they will not agree to any such course. The other trade unions will make sure that anything that prevents the workers achieving their aims in this connection will be obstructed by them. I believe that we should try to avoid the bitter and social policies which bring about degradation, reduction of standards, poverty and the loss of dignity that goes hand in hand with continuous unemployment.
It was a most unpleasant experience to see Tory back benchers stand and cheer the statement which was made by the Secretary of State. It was an unqualified statement and indicated nothing except that there would be unemployment on Clydeside. I saw many members of the Tory "boilermakers branch" leave the Chamber as soon as this debate began. That shows the difference in attitude between the two sides of the House. I approve of the proposition that U.C.S. should be nationalised as a first step towards nationalisation of the shipbuilding industry.
For some weeks I thought that the "Last of the Baskets" was a canned television programme for projection throughout the United Kingdom on a T.V. network. Judging by all the things I have heard from hon. Members opposite in their deliberate attempts to frustrate honest and serious debate, it makes me think that we have a rival programme on the Tory benches. The workers realise that this is happening and will give their answer to the Tories if they ever have the guts to stand in a General Election.
The hon. Member for Dunbartonshire, East (Mr. McCartney) will forgive me if I do not follow him in his remarks. In one sense nobody could really hope to do so since the hon. Gentleman is very much closer than other hon. Members in this House to many of these issues in the tragic situation which this disaster represents.
There is one point which perhaps I would make about the hon. Member's speech. In the present serious situation which neither side would attempt to diminish what best serves the interests of all who work on Clydeside—is a realistic approach to the problems that exist. I regret that much of the benefit of this debate has been lost because it has occurred so soon after the event. The Secretary of State's announcement was made yesterday, a liquidator has been appointed today and the House has gone straight into a debate, during the middle of which we are informed in tonight's Evening Standard about matters which must be new to many hon. Members, and obviously many important facts will become evident as the hours pass.
Hon. Members understandably have been pressing my right hon. Friend to say what will happen in this situation and have asked how many redundancies will occur and what the new form is to be. Every hon. Member knows that it is impossible for my right hon. Friend, within 24 hours of this decision having been announced and with a liquidator having just been appointed, to come forward with answers to those questions. A further debate will soon be necessary when more of the information is known.
I am glad that the right hon. Member for Bristol, South-East (Mr. Benn) is in his place since I wish to address myself to what has been the essential thesis of the Opposition attack made on the Secretary of State. This surely is that the reconstruction of U.C.S. was just reaching its peak, that it was just coming to a final difficult cash flow situation, and that with this one last injection it would be out in the open country and the future of the shipyards would be assured. This is the thesis which has been advanced, and the argument has been that the Government's failure yet again to inject capital, as it were at the last ditch, has let down a group which would otherwise have got through and stood on its own feet.
I apologise for being absent from the Chamber for a short time, but I took the opportunity to try out this thesis on a number of people with experience of shipping who are in no way partisan and have interests both as customers and observers of the situation on the Clyde. I presented this thesis to them and asked, "What is your honest opinion of that?" The reply was, "That simply is not true; that is not the situation". There are other elements with which I should like to deal of which I am critical, but that thesis as a criticism does not stand up to the facts and the information which I have received.
The hon. Member for East Stirlingshire (Mr. Douglas) referred to this as a growth industry and said that there were great prospects for shipping. From the information which I have received I can appreciate the situation which faced my right hon. Friend. There have been great improvements. There has been a boom in shipping. Shipowners have been prepared to pay almost any price to get ships because there was a boom in shipping rates. That situation has changed drastically. We have heard that U.C.S. was coming out into open country, but future marketing prospects are now extremely uncertain. We are facing a severe shipping slump. Those with ships on order are now offering them for resale. This situation has not so far been mentioned by hon. Members. People who have placed orders are trying to get rid of them. That is hardly a rosy outlook for a shipyard to face in terms of future market prospects. This is an international situation.
The right hon. Member for Bristol, South-East referred to new developments in standard shipping such as the Panamax bulk carrier. I take no pleasure in saying that I do not know of any exciting sales prospects for it. I understand that it was recently exhibited at the Oslo Fair and that no orders were taken for it. If this is one of the main planks for the future, we can see how difficult that future may be.
It also seems grossly unfair to treat U.C.S. as one unit. I understand that it is very much the curate's egg. Glasgow Members will know this only too well. There is a great difference in performance. The right hon. Member for Bristol, South-East quoted the average figures for performance and improvements in productivity. Perhaps his right hon. Friend the Member for Kilmarnock (Mr. Ross) will give the figures broken down for individual yards to show how uniform or otherwise the improvements were.
Some pretty glowing tributes have been paid to the management. I was brought up in an old school which believes that management must face the final responsibility in all these matters. I have previously referred in the House to a very good slogan which used to hang behind President Truman's desk saying, "The buck stops here."
I think that the management have some real questions to answer. In February of this year, when customers for ships on the stocks were agreeing to pay a further average of 8 per cent. for their ships, they were given to understand that the cash situation was really all right, and that it was only a fad of the D.T.I, that they were being asked to subscribe the extra money.
Only a month ago speeches were being made, not least by the managing director, to the effect that they were through the worst and that things were now going well, and yet, I understand, at that very time there were ships which could not be completed. On one ship alone, 250 separate items could not be installed because U.C.S. could not afford to buy them. It had not got credit with the suppliers to enable it to get hold of those items. Other items were installed in other ships only because the owners themselves put up the money to get them.
That brings me to my point about what really has been going on from the point of view of getting information about this situation. When there is this scale of liability, and when the Government are so heavily involved, one asks whether this company may have been in breach of the Companies Act for some considerable time. It may be that it was continuing to trade when it was no longer viable if it did not have assurances of support.
Would it be part of my hon. Friend's argument that had the right hon. Member for Bristol, South-East (Mr. Benn) known of this £28 million liability when he was on his feet he might have drawn a slightly different conclusion from the one that he did?
I accept my hon. Friend's point. There are many questions that need answering, and one matter with which I hope my hon. Friend will deal is that of control over the way in which public money is spent. I accept, even though some of my hon. Friends may not, that there may be occasions on which public money can be properly applied if it genuinely helps to overcome temporary difficulties in restructuring, provided that there are genuine prospects for the future, but what we want to make sure of, above all, is that if public money is spent in that way there is an effective monitoring system so that we know what is going on. Has there been any change in the monitoring system used by the previous Government so that this Government can control the way in which public money is spent, and can know what is happening to public assets of this kind?
There is no question but that this emergency arose, more than anything else, out of a total lack of confidence on the part of suppliers, and because of the drying up of credit. It is against that background that we await fuller information on this tragic matter.
It was the hon. Member for Epping (Mr. Tebbit) who described this as a fascinating debate. I have been fascinated by it—not least by the way it started. The Secretary of State for Trade and Industry spoke very quietly but was, I thought, under some strain. He was probably realising for the first time exactly the enormity of the disaster that this means for ordinary men, their wives and their families. Yet his speech was more like a recital of a company secretary than a great political occasion—and in Scotland this is a great political occasion.
It was only when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) gave the coup de grace with the truth about that quotation that I began to realise just why the right hon. Gentleman was under a strain. I am convinced that he knew that the quotation he used yesterday was wrong, but he decided not to get up and make the kind of statement that he should have made and apologise to the House.
The hon. Member for Orkney and Shetland (Mr. Grimond) is quite right—[Interruption.] I know that the hon. Member for Bedford (Mr. Skeet) was here for part of the time, but he was not here all the time. I reckon that I heard a lot of the speeches. If he thinks that I can stand here on this occasion without being politically controversial, he does not know me at all. As well as the right hon. Member for Orkney and Shetland, my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) also mentioned this point.
A little more explanation is required. The Secretary of State should know that when one makes a mistake of that kind what the House prefers is someone to come forward without being pushed, to make the apology or explanation, and that is the end of it.
There was one moment when he said that he was concerned about the enormity of the effect on the men and on the owners and on the industry, but what I deplore is that he failed to accept his own responsbilities for regional policies and put this into its proper setting. It is not just the Scottish setting of 117,000 wholly unemployed. It is a Glasgow setting; it is even more a section of Glasgow and the Clyde setting, where there are already nearly 30,000 wholly unemployed, with a male unemployment rate of 9·6 per cent.
The hon. Members for Bedford and for Leicester, South West (Mr. Tom Boardman) said that it was time that these men got other jobs out of this industry. Where are they going to get them? The Secretary of State cannot give us any optimistic news about what will happen in the city of Glasgow, the greater Glasgow area or the Scottish area over the next winter.
My hon. Friends have said that unemployment in Britain is worse than it has been for 40 years. We cannot say that in Scotland. The monthly average rate of unemployment in Scotland for the first first four months of this year was 119,000. We have only to go back eight years to 1963, when the figure was 120,000 for the same months. And the Prime Minister of today was the man responsible for regional policies at that time. Need none wonder at the sullen looks and angry feelings in Glasgow now. These men have been through it all before.
The hon. Member for Glasgow, Hill-head (Mr. Galbraith), who was a Minister at the Scottish Office, spoke today rather scathingly about this whole issue of giving assistance. He said, in effect, "It is not fair or sensible to sign blank cheques." They were interesting remarks and he was the only Scottish Tory hon. Member to contribute to the debate. [Interruption.] I am glad to see a few more of them coming into the Chamber. I do not blame them for being absent. I dare say that having heard the speech of the hon. Member for Hillhead they had had enough.
As the hon. Member for Hillhead was speaking my eyes fell on the Under-Secretary of State for Health and Education at the Scottish Office. Are hon. Gentlemen opposite aware of who was asking for money for U.C.S. when it was in difficulties in the past? The hon. Member for Hillhead, a former Under-Secretary at the Scottish Office, was one of them. Has he forgotten? Does he recall asking my right hon. Friend the Member for Bristol, South-East when we were in office:
as he was responsible for the shotgun marriage which created the U.C.S. he has some responsibility to see that there is a sufficient dowry to make the marriage workable."—[OFFICIAL REPORT, 21st May, Vol. 784, c. 405.]
He was asking for more money—
—and a month later he said:
we are glad that, for the time being anyway, Upper Clyde Shipbuilders will be able to carry on.
He was not asking for bankruptcy then but for more money. He went on:
Can the Minister explain the nature of the difference of £3 million between what the
company considered necessary and what the Government were willing to offer?"—[OFFICIAL REPORT, 19th June, 1969, Vol. 785, c. 722.]
He was suggesting that we should be giving more. Today, however, in his wisdom, he takes a different view—but is he as wise as the other three wise men about whom we have heard today?
If the right hon. Gentleman will do his research work thoroughly, he will go back to the beginning and quote what I said on the Second Reading on what was then the Shipbuilding Industry Bill. He will find the same philosophy that I eunciated today. If that had been followed we would not be facing the trouble that we are facing today.
I will certainly go back to the beginning. The Secretary of State spoke of what happened in 1966 and 1968, but that was not the beginning. I spoke to a man who has today been on the Clyde for 35 years. He was telling me of what happened a lot earlier than 1964. He recalled what happened to Dennys, Blythswood, Inglis, Harlands and Simon Loebnitz. Year after year one yard after another went out of business and the Government of the day did nothing.
When Fairfields were in the same position the Labour Government stepped in and saved it. We had already set up the inquiry that led to the Geddes Report. When we saved Fairfields, hon. Members from Glasgow constituencies were pleased, although I can remember the sniping we faced from the Conservative Front Bench, even when we went on to debate the Shipbuilding Industry Bill. Under that Measure about £55£ million was laid aside for this industry. It has been used well by many yards and without it shipbuilding would have faced a disastrous future in the late 'sixties.
Would any hon. Gentleman opposite who represents a shipbuilding constituency say that the Labour Government should not have intervened on that occasion? If they would they would prove themselves completely out of touch with reality, though what we did was contrary to the dogma of many Conservatives. The Under-Secretary of State for Trade and Industry, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), may recall that he said at that time that it would be better to leave things to the free play of the market—let Fairfields go; let U.C.S. go. He was the architect of the butchering plan that we heard about in the Guardian today. I ask the Secretary of State for Scotland whether he knew about that plan. Did he get a copy of it? I want a direct answer.
This explains a lot about what the Conservative Party intended to do when they assumed office. This was following the peregrinations of the Under-Secretary of State with Sir Eric Yarrow and with Lower and Upper Clyde people. He wrote his report and a Government butcher was put to work to cut up U.C.S. and sell cheaply to Lower Clyde and others the assets of U.C.S., and—a phrase reminiscent of the statement we had from the Minister—to minimise the upheaval and dislocation. I am sure that the right hon. Gentleman remembers using very much the same phrase. That is what he will do; reconstruct to minimise the upheaval and unemployment. But this was the policy put forward to the hon. Gentleman's shadow Cabinet.
Another strange thing about the whole of the exercise is that the right hon. Gentleman says, rather like the Prime Minister, that he did not know anything about it; no one told him; he did not know until last Wednesday. Yet in his recital of events and his concerns, and the activities of Mr. Mackenzie, whom I know very well, and I am sure is a very good director and would keep him informed of what happened—
I am sure that the right hon. Gentleman is not saying "No". He is dealing with the reputation of others, as well as his own. Mr. Mackenzie was put in by the Government as the liquidator in the Fairfields case. He is a man who is very highly respected and I am sure he did his duty. It just means that the right hon. Gentleman was not being told.
When did the Secretary of State come into this matter? There is a report in today's Scottish Daily Press to the effect that a spokesman of U.C.S. stated that a letter was sent to the Secretary of State in May. He denied that a message had gone to him and then U.C.S. replied that it was a letter that had been sent to him. They may have denied that now. It is surprising that the right hon. Gentleman will accept that a letter came to him. From my experience of the U.C.S. when I was Secretary of State, I know that when they sent a letter to the Ministry of Technology they always kept the Scottish Office informed as to the position. I want to know when the Secretary of State was called into consultation.
I also want to know what attitude he adopted, because he must be aware of the problem that he has with unemployment in the Glasgow area at present, and he knows very well—he used the figures last night when he and I were on television—that the number of people laid off might be 2,000 in the yard but that for every job in the yard, because this is an assembling industry, there are two or three jobs outside. So 2,000 means nearer 8,000.
Another newspaper today stated the figure as 3,500. We have had no information or indication from the right hon. Gentleman as to what he saw as the future size of this yard and which parts would be affected. There are men, women and children whose livelihood and prospects depend on it.
I spoke today to a young chap who had a wife and three children. He does not know what is ahead of him in a fortnight. Did the right hon. Gentleman realise the enormity of the decision he was taking and the balance he was making? I am sorry that he was not here when I began my speech. He selected his words about profitability much more carefully than he selected his quotation. There were these words, which were obviously misinterpreted by the newspaper reporters, to the effect that Mr. Hepper had failed to give an indication as to when the concern would become a profitable industry. I know that the right hon. Gentleman did not say that, but that was the impression that everybody got.
Did the Secretary of State expect that in a matter of months the concern could not only move into profitability but achieve profitability to such a degree that it could aggregate sufficient funds to pay back the accrued liabilities? This was asking the impossible. It makes it almost look as if the Government were looking for an excuse to put the Ridley plan into operation.
This is our challenge to the Government. This situation would gravely affect an area already badly afflicted by unemployment. The Secretary of State had the knowledge that his Department had no answers for it. He knew that the unemployment situation would be made worse by this decision. Then the position was that the Government could not or would not because of their political outlook and because of all that had been said about lame ducks prop up industries. The "lame duck" speech was one of the most expensive speeches from the point of view of Britain's reputation that has ever been made. [HON. MEMBERS: "No."] Ask Rolls-Royce. [HON. MEMBERS: "Rubbish."] It is not rubbish. Unfortunately it is fact. This is what was put into the balance against the livelihood and prospect of all these workers.
It is not only U.C.S. This has implications for other yards. The hon. Member for Belfast, East (Mr. McMaster) was right to be concerned, because he knows full well that what has happened to U.C.S. today can happen to Harland and Wolff in Belfast tomorrow.
What about the so-called strong position that Swan Hunter is in—a loss of £6 million this year and a loss of more than £4 million last year?
So we are told that the crutches must be removed. What will be left of our shipbuilding industry? Will not the Secretary of State face the fact about the subsidies and the support which are given elsewhere and realise exactly what they mean to Britain? We shall still need ships. Who will build them? Japan? Germany? It is even suggested that the Government want foreigners to come in and take over what is left of the yards on the Clyde. This is what we are told in relation to the steel industry in Scotland. This is Britain under the new patriots.
They should be ashamed of what they have done. If the Secretary of State for Scotland listened to these discussions in Cabinet and did not oppose this, he is not fit to be Secretary of State for Scotland. Feelings in Scotland are pretty high. The Secretary of State for Scotland said in the Scottish Grand Committee this morning that he had not had time to read the Scottish papers. It is a great pity that he has not read them. [An HON. MEMBER: "A good job."] Perhaps it is a good job, but it is part of the right hon. Gentleman's job to know what the papers are saying.
So perhaps the Secretary of State is not aware of what the Daily Record and all the other Scottish papers have said. All the Scottish Tories except one absented themselves out of shame today and left the field clear for the failing speeches from such places as Oswestry and Leicester—Common Market and all.
I said very clearly that I would be prepared to give way to a Scottish Tory. I do not know whether the hon. Gentleman heard me say this, but there was only one of them who had the courage to speak. I do not blame Scottish Tory Members for not being here: they have to suffer the kind of leadership that they have. I do not know for how long it must go on. I can tell them that if the people of Scotland were given the chance every Scottish Tory would be out tomorrow.
I am surprised that the hon. Member for Glasgow, Cathcart (Mr. Edward
Taylor) is still a member of the Government. When it was suggested today by my right hon. Friend the Member for Bristol, South-East that Scottish Tories had been the first to ask for money for U.C.S. there were shouts of complaint and denial by hon. Members opposite. But the one man who did not deny it was the hon. Member for Glasgow, Cathcart. Not only did he ask for money but when he got it he said, "Thank you". When we appreciate that the aim of that quotation which was to be thrown at us all day today was to turn the debate into a debate on a vote of censure on my right hon. Friend the Member for Bristol, South-East, we find it very strange to read what the hon. Gentleman said to my right hon. Friend on 19th June, 1969, when we were faced with a catastrophe and acted to deal with it. He said:
Is the right hon. Gentleman aware that there is great relief on Clydeside that this catastrophe has been averted and appreciation of the time and attention which he has given to this great problem? "—[OFFICIAL REPORT, 19th June 1969; Vol. 785, c. 724.]
The hon. Gentleman is now a member of the Government.
From the time when he heard about the present crisis, how much time and attention did the Secretary of State give to it? He says that 48 hours was all he had. That was all he gave himself to make up his mind and at one stroke we had catastrophe on the Clyde. I assure the right hon. Gentleman that before we are finished I am sure that the whole folly of what has been done will be evident to everybody, including himself. We appeal to him, before that time comes, to change his mind. He has the power to do what he did in the case of Rolls-Royce, and let the Government take over the yards. That is a sensible way to do it.
What has already happened? The right hon. Gentleman would not give £5 or £6 million to U.C.S., but I understand that the liquidator has already asked for £3 million just to keep it going. Then we are to have a restructured company, or something.
Yes. That is what I have said. It is no wonder I do not give way to the hon. Gentleman.
How much will the right hon. Gentleman's policy cost? The right hon. Gentleman will need to supply some initial funds to that new company. What shall we finish up with? We shall finish up with a worsening unemployment situation in Scotland. Craftsmen who know their job—and the right hon. Gentleman said in Glasgow that they know their job, and have a tradition in it—will be unemployed, and there will be a much reduced yard with no guarantee of any further success. That is what the Government have brought the great yards of the Clyde to. I am surprised that the right hon. Gentleman did not resign. The duty of the Secretary of State for Scotland was clear. If he did not oppose the decision, he should resign. If he did. he should not be speaking tonight.
This debate has been arranged immediately after the sudden announcements which had to be made yesterday by my right hon. Friend the Secretary of State for Trade and Industry and Upper Clyde Shipbuilders.
Right hon. and hon. Members have given their own versions of the events of the past three years, and have rightly expressed anxiety about the unemployment in the area of Scotland concerned, anxiety which I fully share, which can be the consequence of what has happened.
The consortium named Upper Clyde Shipbuilders, as my right hon. Friend said in opening, was formed as a company in February, 1968.
It is apparent from the speeches I have heard during the day that some hon. Members were not aware even of those elementary points.
It is a matter of history that at the time there was criticism about whether that was a wise decision, and the Government of the day and the responsible Minister of that time must share responsibility for it.
It was a year later that it became publicly apparent that U.C.S. was in great financial difficulties. Clearly, the then Government, a year after the formation of U.C.S., were deeply involved. The chairman of the company made it clear that he had been assured that that Government would support the new consortium through difficulties in its first year or two.
Although there were some critics at the time, it was reasonable that the then Government should feel under some obligation in the early days. What is depressing about today's situation is that U.C.S. has had continuing crises and is still in deep financial difficulties almost 2½ years later.
During those two and a half years I have been continuously concerned with the problems and vicissitudes of U.C.S. As the right hon. Gentleman knows, I was the official Opposition spokesman dealing with the matter. It was I who was impressing upon the right hon. Gentleman the difficulties then facing U.C.S. The right hon. Member for Kilmarnock (Mr. Ross) conveniently forgot that it was I who was pursuing his right hon. Friend in his office in those days to give U.C.S. a decent chance to get started.
Listening to the right hon. Gentleman today, and remembering speaking to him in those days, it is hard to believe that it is the same person who was so uncertain over two years ago about whether to give financial help to U.C.S. I was pointing out then that the Government of the time were under some obligation to help U.C.S. get started, having forced this merger into existence, provided that there was a clear objective of viability in the near future.
Eventually, two years ago, that Government decided to make financial help available, but, clearly, on the basis of early viability. When this first came up in this House on 5th May, 1969, I asked, in a supplementary to my own Private Notice Question, whether the right hon. Gentleman recognised the seriousness of the situation, which had been confirmed by a statement from U.C.S. over that weekend. In reply the right hon. Gentleman said:
…I regard the statement which was made by the Chairman of Upper Clyde Shipbuilders over the weekend as completely irresponsible, because he knew very well that the case was under consideration. By making
that statement he has created a great deal of confusion."—[OFFICIAL REPORT, 5th May, 1969; Vol. 783, c. 37.]
On the following day, 6th May, in a supplementary question after a statement he made, the right hon. Gentleman said:
…we have never accepted and do not now accept that there is a 'safety net' under Upper Clyde Shipbuilders or any other shipbuilding group which entitles those working in these groups to expect that the Government will continue to underwrite losses irrespective of the circumstances."—[OFFICIAL REPORT, 6th May 1969; Vol. 783, c. 275.]
After that crisis, which lasted several weeks, in reply to a further Private Notice Question tabled by me on 9th June, I received a reply from the then Joint Parliamentary Secretary to the Ministry of Technology. His statement included the words
The board "—
that is, the Shipbuilding Industry Board—
also made the offer on the clear understanding that no further funds would be provided to the company under the Act for working capital.
In reply to my supplementary question:
Can the Minister state that the main objective of these proposals is early achievement of viability by the group?
I was told:
To reply to the last part of the question first, I can confirm that that is the principal objective of the whole exercise."—[OFFICIAL REPORT, 9th June, 1969; Vol. 784, c. 967.]
That was over two years ago. Because I was dealing with the difficulties with U.C.S. from the Opposition Front Bench I was well aware that the Labour Government were in two minds as to whether to allow liquidation then. This was no secret to the shipbuilders or the Press. U.C.S. had been in existence for only a year and a half, and it estimated that it could reach early viability provided that it was helped during the first two years. It was reasonable that the Government should have given it a chance.
I now come to what the right hon. Member for Bristol, South-East (Mr. Benn) was saying at that time—[Interruption.] I am replying. The right hon. Member gave his version of events and I did not interrupt him, but I gave him notice that I would give my version later. In his statement he referred to his visits to Glasgow. During one of these, on 6th June, 1969, shortly before the Private
Notice Question to which I have referred, he said:
It is the final offer. There is no question whatsover—I do not want anybody to be under any doubt—there is no question whatsoever of negotiating for increasing in any shape or form the amount of £5 million which I am here to announce today.
This was the right hon. Member for Bristol, South-East, speaking. "It is the final offer", he said. This extract was repeated for those who happened to be listening the day before yesterday by the B.B.C. The statement was reported widely in the Press the day after he made it. As reported in the Daily Express, he said, "Not a further penny".
The right hon. Gentleman knows very well the circumstances of that visit, when I said that I was not prepared to offer further money in June but that in the autumn the Shipbuilding Industry Board would consider, in the light of the progress made, what further money should be granted. The right hon. Gentleman knows this well, because the Central Office and the Department have been scouring for quotations. While I had responsibility for U.C.S., at no point did I ever say that no further money would be made available for the yard if it moved towards viability.
It is a little early in the right hon. Gentleman's speech for the House to be so lively. If it continues to be as lively as it is now, I do not know what I shall do later on. I hope that hon. Members will observe the same moderation for the Secretary of State as they did for the right hon. Member for Bristol, South-East (Mr. Benn).
The right hon. Gentleman has conveniently forgotten that I was personally involved two years ago, and I have kept a record of everything that I have been concerned with.
What did the right hon. Gentleman expect to gain by his visits to Glasgow? Did he expect those who were listening to him to believe him when he used those emphatic words? Did those who were listening to him in Glasgow really believe him? If they did not, the whole purpose of his visit and his speech was nullified. If they did believe him, that credibility must have been completely destroyed when five months later he announced the loan of a further £7 million. His speech in Glasgow may have seemed to have been what a "whizz kid" should be doing, but I can tell the right hon. Gentleman, if others did not tell him at the time, that the effects of his visits to Glasgow were the opposite of what he intended, and were in the result almost disastrous. Perhaps because of his own peculiar style of doing things, with always a throng of journalists and photographers around him, he was not taken seriously.
I have given way, Mr. Speaker, and the right hon. Gentleman made a long intervention. Those whom the right hon. Gentleman addressed in Scotland assumed that he was acting out some charade for his personal satisfaction. On the other side, there were several journalists during the days of Government shilly-shallying in May and June, 1969—
On a point of order, Mr. Deputy Speaker. Whilst it is true that a Minister or anyone else can reply to a debate in his own way, is it not nevertheless wrong for hon. Members to read speeches in this House? Is it not an insult to hon. Members after a serious debate that a prepared statement should be given by a so-called Minister of the Crown?
I think the hon. hon. Member and the whole House realise perfectly well what is the custom of the House. Speakers from the two Front Benches are, by custom of the House, allowed to refresh their memories from copious notes. No one has yet sought to define exactly what that means. The House in its good sense knows that the right hon. Gentleman is perfectly in order in doing what he is doing.
The right hon. Gentleman does not like having his memory refreshed with the exact words he used two years ago. In criticising my right hon. Friend the Secretary of State for Trade and Industry, the right hon. Gentleman referred to social and regional policies. Did he have social considerations and regional policies in mind in Glasgow in June when he said that this was the final offer? He was having to face then a somewhat similar situation, but in the early days, when there was hope of viability. [HON. MEMBERS: "Reading."] Hon. Gentlemen seem to want to be childish and silence this debate. Unfortunately, two years later we are back to square one. Viability seems even more distant now than it did then. None the less, the right hon. Gentleman in June, 1969, was stating that this was the final offer. Does he accept that this was consistent with his regional responsibilities.?
The right hon. Gentleman referred to the difficulties in which U.C.S. again found itself last October and alleged that U.C.S. was not informed by the Government at that time that the credit guarantees were being withheld. I can refute this allegation completely. The chairman of U.C.S. was notified at a meeting on 27th October before any credits were withdrawn.
The hon. Gentleman should be patient and wait for what I shall say. The hon. Gentleman appears to criticise the fact that the guarantees were withdrawn and that this had not been announced to the House, but surely if the former Minister of Technology had made an announcement of this kind, it would simply have made things more difficult by undermining confidence by his statement.
When the former Minister of Technology made statements to the House, he underlined the importance of discretion in these matters and we cooperated with him, but his own style of operating in this instance with the maximum of personal publicity does little to help. [HON. MEMBERS: "Answer the debate."]
It has been suggested that U.C.S. had made progress in productivity during the past year. [An HON. MEMBER: "You are worse than Davies."] I must remind the House of the facts. I understand that since February there has been some improvement in throughput of steel, but wage costs per ton of steel have remained about the same owing to wage increases. Only last October U.C.S. had one of its most shattering unofficial strikes. In addition, the managing director was reported in the Glasgow Herald on 7th October as saying that there had been a serious deterioration in productivity by steel workers since the holidays. That newspaper on the same day in a leading article headed "Death wish" said:
The death-wish of the boiler-makers at U.C.S. comes closer and closer to fulfilment. No shipyard, in the present state of competition for orders and narrow profit margins, could long afford to be closed down. The action of the boiler-makers would be less culpable (though it would still be irresponsible) if they had held their hand until all the agreed negotiating procedures had been completed and had waited for their union to declare an official strike … Instead, they walked out after only a month of negotiations, leaving the management, their colleagues in other trades, and their union officials to pick up the pieces.
That was only last October. Therefore, it is misleading to speak about a completely changed situation during the past year.
The right hon. Member for Bristol, South-East even raised the question of using the I.R.C., as if the Government were in some way to blame because it is not now available. [An HON. MEMBER: "What a farce!"] I would point out that throughout the period of difficulty when he was Minister he never brought in the I.R.C. That was a typically irrelevant point which is a convenient attitude to take now when Labour are out of office.
Those who were greatly concerned to promote the interests of shipbuilding in Scotland were worried as to the time when U.C.S. would become viable and turn the corner. Two years ago it seemed that this could happen during last year. After reorganisation at the beginning of this year it was hoped that the way would now be clear. Last week's news was about the most depressing and sudden news that any Secretary of State for Scotland could receive; namely that the company had no alternative but to appoint an immediate provisional liquidator. Moreover, the accompanying information indicated that it was not in the kind of difficulties which could have been assisted by a bridging loan. The trouble went deeper than that. Whatever attempts have been made to maintain confidence, the problem of viability had receded into the distance.
A question was asked about moving into profitability. I regret to say that each time the company has come for assistance, there have been the most solemn assurances that if it were only to get it, it would become profitable, always at some future date. I am not sure what is meant by this latest assertion about the company nearing immediate profitability. The proposition that was put to my right hon. Friend was that it was insolvent but hoped that it could get solvent again if the Government were prepared to provide £5 to £6 million as grant for equity, not as loan, and if its creditors would accept 33p in the £, which would have meant a further £5 million to them. All this was on the basis that there would be no further supply or labour problems of the kind that had beset the company. Even then, because of its heavy accrued debts, the board could give my right hon. Friend no promise when the company would be solvent again. I understand that the provisional liquidator has this afternoon said that the company owes its creditors £28 million.
Questions have been raised about the suddenness of this last crisis and the short notice given to the Government. There was an extraordinary story in the Press, to which the right hon. Member for Kilmarnock referred, to the effect that on 9th May I had received advance notification of U.C.S. being in urgent financial difficulties. I have looked up that date. I find that it was a Sunday when, although I had a lot of desk work to do, I otherwise did little except go to church. No message was passed to me in church or by telephone. Further inquiries indicate that the origin of this story has nothing to do with me. I hope, therefore, that it can now be buried.
My ear has been so attuned over the past 2½ years to troubles arising at intervals at U.C.S., both when I was in Opposition and since being in Government, that I could not have failed to respond instantly to any message of that kind. None came, and I, like others, hoped that U.C.S. was turning the corner into a viable future.
This story may have been a reference to a letter dated 3rd May from the company to the Department of Trade and Industry. This letter forwarded the management's monthly budget accounts up to mid-March and indicated that trading results showed a most encouraging trend but that the cash position continued to be acutely difficult. There was no hint in that letter, or in letters received during May from the company's auditors, of any serious change for the worse. The cash position had been difficult for some time and the statement that it continued to be acutely difficult did not suggest any great change.
A new overall profit prediction was commissioned by the board of the company on 7th May, but it was not completed until 7th June. It was examined by the board on that day and the chairman confirmed, at a meeting with the Shipbuilding Industry Board on 8th June, that he did not appreciate until 7th June that the situation was reaching a crisis point. The right hon. Member for Kilmarnock asked when I was informed. The answer is: Wednesday last, the day on which my right hon. Friend the Secretary of State for Trade and Industry was informed of this crisis situation.
The increase in unemployment which must follow, however much we can reduce and mitigate its effects, is the last thing that we would wish. As my right hon. Friend has announced, the Government are immediately making funds available to pay wages for at least a further week, and will seek the cooperation of the provisional liquidator in the reconstruction. There should be no immediate closure of yards. The Government's aim in working with the provisional liquidator will be to keep going the work on ships and the parts of U.C.S. which can be expected to have a viable future. In this way as many jobs as possible will be preserved and the position of suppliers assisted. This is the constructive operation on which the Government, at very short notice, are concentrating all their efforts.
Despite what we were led to believe earlier, are we now to understand that the Government are paying wages for only one week, not eight weeks? Will the right hon. Gentleman confirm that, because he has made a most serious announcement?
We have undertaken to pay wages for at least one week, and we are immediately getting in touch with the provisional liquidator who took office only today.
A number of hon. Members referred to the assistance which some other countries give to their shipbuilding industries, and gave the impression that little, if anything, was done in this country. I must point out that there are credit guarantees for United Kingdom shipowners ordering from United Kingdom yards, there is shipbuilders' relief—
I do not intend to give way to the hon. Gentleman.
There is shipbuilders' relief—2 per cent. of contract price of ship as a tax rebate, and duty-free entry for materials and equipment. Assistance through the board has amounted to £20 million in grants, and £32½ million in loans since 1967. Other assistance is available not confined to shipbuilding; for example. Local Employment Acts, and export credit guarantees. That must be stated for the record.
On a point of order, Mr. Speaker. Is it in order for the right hon. Gentleman continually to evade points that have been put to him during the debate? I put to him the point—
The right hon. Gentleman mentioned some shipyard figures of recent times, but he did not mention some of the experiences of a previous Government. For example, they allowed the Firth of Clyde dry dock to fail. When that company went into liquidation, the Government provided the provisional liquidator with a small, short-term loan.