Orders of the Day — Aircraft and Shipbuilding Industries Bill

Part of the debate – in the House of Commons at 12:00 am on 2 December 1975.

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Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth 12:00, 2 December 1975

It is incredible that when two such important industries are to be taken over by the Government the House should be allowed only one day's debate. There are 42 constituencies affected by the shipbuilding side alone, and their 42 hon. Members will no doubt wish to take part in the debate, and that is apart from the aircraft side. I note the contrast with the Government's procedure on the Hare Coursing Bill, when they found unlimited time to put forward arguments on the chasing of hares.

I shall concentrate on shipbuilding, which is vital for the future prosperity of Tyneside, where nearly half the industrial capacity for shipbuilding is concentrated. Throughout the world the industry faces a crisis greater than any it has faced in modern times. On the one hand, there has been a doubling of capacity to construct vessels and, on the other hand, a halving of demand. That extra capacity has come largely from countries in the Far East which have received considerable Government aid. Japan alone can now build more than all the ships which are likely to be needed in the world for the next few years.

Another formidable challenge comes from the new industry in Korea, where four or five new giant yards are being constructed. The first was built in only 15 months and was designed and supervised by a British company. That is a tribute to the management skill of the British shipbuilding industry, which is often falsely maligned. It is ironic that the first major order obtained by the new Korean yard was for vessels to Govan design for Kuwait. This is an order which would have gone to the nationalised Govan yard if it had been in any state to take on the work. Korea is a hard-working nation, labour is abundant, there are no strikes and the quality of the ships is apparently satisfactory. The pay is £9 for a 44-hour week. The Government make available 80 per cent loans over 15 years at 7 per cent. That is the measure of the competition which faces the British and Western European shipbuilding industries.

When we look at the present state of the British industry we find that the private yards on the whole are in good heart and the naval yards are doing extremely well with up to 80 per cent. of their orders coming from abroad. They are world leaders, but we are already receiving reports that foreign Governments are worried at the prospect of nationalisation and the dead hand of Government applied to naval exports.

The private yards have two problems. One is raging inflation. They cannot be blamed for that. That is the fault of right hon. and hon. Gentlemen on the Government Front Bench. Their second problem is the difficulty they are experiencing in competing in present world conditions, especially when they do not receive Government aid comparable with that received by their competitors. I might add that none of the Western European Governments have suggested that their shipbuilding industries should be nationalised because it is necessary to provide them with aid.

What a contrast when we look at the other side of the British industry! The State-controlled yards tell a horrifying story. Harland and Wolff lost £60 million in a year. Contrast that with Swan Hunter, which made £14 million in a year. The aid committed to Harland and Wolff is now no less than £140 million. The total committed aid for Govan is betwen £50 million and £60 million, which represents £10,000 for every person working in that yard. Tens of millions of pounds of public money are being poured into Cammell Laird. The Public Accounts Committee recently deplored the lack of effective control over public funds put into this yard. That is what is known by the Government as "public accountability". What examples for public ownership; what examples for State control! Yet this example of public ownership is to be applied to the flourishing or reasonably successful private yards.

Let us look at the reasons put forward for the nationalisation of the yards.

The first is that they have failed the nation and taken public money. The total State aid made available to shipyards over the past 10 years and commited for the future is £300 million. Of that, 90 per cent. has gone to yards controlled by the Government. The private companies have had £18 million in loans, which they are required to re-pay in the normal way with interest, and £8 million in grants. A further £4 million in grants in now available to them. So 90 per cent. of that public money has gone to the State-controlled yards.

The second argument is that the private yards have failed to modernise. In fact, the private yards have spent tens of millions of pounds of their own money on modernisation. The picture now is very different from what it was a few years ago. One of the main problems with Harland and Wolff is that money has been poured from a bottomless public purse into an enormous new outfit which is capable of building 1 million-ton ships at a time when no one wants large ships. How wise the managements in the private yards were not to follow down the false path of building huge ships. Had they done so, it would have led to disaster all over the country and enormous redundancy now.