CONSOLIDATED FUND (No. 3) BILL

– in the House of Commons at 12:00 am on 20th April 1972.

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Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

10.19 p.m.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

The Bill and the Estimates which support it suggest that we should vote some £300 million on the refinancing of fixed rate export lending out of a total under subsection (e) of £311 million. As I understand the statement by the right hon. Gentleman the Member for—[Interruption.]

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. Will right hon. and hon. Members kindly withdraw from the Chamber more quietly.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

We have had a statement from the Minister for Trade but we are entitled to a bit more explanation. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) asked the Minister several questions at the time of his statement on 15th March. I do not know whether the Minister has all the annotations before him but he may remember the questions. In reply he promised to develop them in debate.

In the first instance, he recognised that this is part of the effort of the Government—a very welcome effort—to give shipbuilding its proper place in the economy of the United Kingdom. Shipbuilding will no longer be regarded as a free enterprise industry completely unprotected and unhelped in international markets. I welcome this because we are up against very formidable opposition, principally from our competitors from Japan.

I should like to know first just how the £300 million, a very large sum, fits into the general jigsaw which is the Government policy on shipuilding. It is very difficult to keep in order on these matters, because so many other factors influencing the question, but we cannot vote £300 million at nearly half past ten on a Thursday night, when we are all anxious to return to our constituencies without knowing how it fits into the general pattern of what the Government are doing.

I am not inviting the Minister for Trade to defend propositions which we shall have in later legislation. I do not want to tempt him, and I know he would not respond anyway, to go into the problems of UCS or anything like that. But what is the Government's thinking on the matter? I understand that the money is strictly related to a very short, two-year period. Do the Government really envisage that at the end of that time nothing will happen, that the credit system will suddenly be extinguished, or that it will be tapered off. We all know that the building of a ship is not confined to two years. The process of taking the order, building the ship and delivering it takes much longer than two years.

We have the statements by the Secretary of State for Trade and Industry on inflation-proof contracts. The Minister might touch on that. I should like to know the Government's intentions after we have spent the money, and I should like to know about other matters, such as whether this kind of credit is equal to the kind of credit available in other countries.

Today I was with a number of people in the industry who are not strictly shipbuilders but who supply the industry. They wonder how they are affected by the credits in relation to their supplies to the industry. For example, they are supplying some of the ships being built in UCS under the liquidator. Seventy per cent. of the innards of a ship come from firms not strictly recipients of the money. They are very concerned about how they are to be paid in relation to ships ordered now and supplied now under the export credit guarantee system. We wonder, for example, whether they will be beneficiaries, under the general strategy for shipbuilding, of all the proposals made by the Secretary of State for Trade and Industry for the shipbuilding industry.

I am anxious for the Minister to place the proposition in the context of all that we shall do for shipbuilding in the present Session, to see exactly how it fits into the quite proper treatment of shipbuilding as an economic advantage to Great Britain.

I represent a constituency which builds ships profitably. No one can accuse us of not building ships well and ata profit, without labour difficulties. We have done very well in that regard, so I am not pleading a special case of industrial difficulty. We are very proud of what we have done. People have said to me that shipbuilding is finished in the United Kingdom, that we should write it off because it costs us so much, that we should abandon it and let the free forces of the market deploy themselves, so that we get the right kind of shipbuilding industry, if any, in the United Kingdom. Fortunately, the Government have rejected that. They have said, "We want a shipbuilding industry in Great Britain." It is interesting to note that recently the EEC Commissioners re-examined their shipbuilding policy and decided that the Community of Ten, as it is to become, wants a shipbuilding industry.

I will not go into what the French or the Dutch do. I am interested simply in what the Community will do and what we are trying to do just before we are admitted to the Community. This money will carry us forward until 1974. By that time we will I hope, have been in the Community for 12 or 15 months. Will we carry on some kind of variant of our present credit system as part of Community policy? Are we to advocate some other mechanism to make shipbuilding an intrinsic part of the economy, not just of Great Britain but of the Community? It is in that spirit that I rise to question the Supplementary Estimate.

I am not at all hostile towards it. The Government are to be congratulated on what is a substantial conversion, not so much to credits as to matters ancillary to what we are now discussing. In that spirit I invite the right hon. Gentleman to tell us a little more because the industry is anxiously awaiting more definitive news of what is to happen to Government assistance over the next12 to 24 months in the critical time before we accede to the Treaty of Rome, join the EEC and take in shipbuilding as a thriving industry fully able to match international competition, particularly from the Far East.

10.27 p.m.

Photo of Mr Michael Noble Mr Michael Noble , Argyll

I thank the hon. Member for Greenock (Dr. Dickson Mabon) for raising this point and hope that he does not feel that I am in any way being discourteous to the House in not making a long speech on this Bill. My constituency adjoins the hon. Gentleman's although it is separated by a length of water, and I fully appreciate the importance in his constituency of an efficient shipbuilding operation for which I have a great deal of admiration.

My problem in answering his questions fully is simply that I think what he is referring to is the arrangement for home shipbuilding which is carried out under other powers and on a different Vote and therefore quite outside the scope of this Bill. He need not worry about this situation. As for shipbuilding for export, which is part of the operations at the successful yard represented by the hon. Gentleman, the situation is not likely to change, because the arrangements agreed with all the OECD countries are that the export credit guarantees for shipbuilding should be carried out at a flat rate of 7 per cent. irrespective of whether we enter the Common Market.

We are not therefore at any competitive disadvantage with the countries concerned. I share his view that shipbuilding is exceedingly important in our part of Scotland and to the United Kingdom as a whole. The shipping industry is to some extent dependent on the shipbuilding industry. This is a valuable asset. I can assure the hon. Gentleman that there is nothing in the Bill which will in any way affect our competitive position or our shipbuilding industry. He said that we were passing the Bill, which appears to be using £300 million, and I can tell him that this is to some extent illusory. It is using £300 million but it is money that was in the expenditure anyway and we are merely transferring it from what was Bank of England expenditure to ECGD for reasons, which I am sure the hon. Gentleman has studied, which I gave in my statement to the House a few weeks ago. This is a purely procedural matter. We have the greatest interest in maintaining a strong shipbuilding industry. There is nothing in the Bill which will affect what the hon. Gentleman and I want in this regard.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

Does this affect the revolving shipbuilding credit? In the questions and answers to which I referred, the hon. Member for Dorset, West (Mr. Wingfield Digby) asked how much of the revolving shipbuilding credit was outstanding, and the right hon. Gentleman promised that he would give a figure later on. I hope he now has that figure.

Photo of Mr Michael Noble Mr Michael Noble , Argyll

I have not got the figure but this does not affect it.

Question put and agreed to.

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

Committee tomorrow.