Shipbuilding

Opposition Day – in the House of Commons at 4:56 pm on 1st February 1984.

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Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East 4:56 pm, 1st February 1984

Before we begin the important debate on the industrial and social consequences of the Government's policy on the shipbuilding industry, I must tell the House that I have selected the amendment in the name of the Prime Minister.

Seventeen hon. Members have written to me indicating that they wish to speak in the debate. In view of the late start, I hope that hon. Members will keep their speeches as short as possible.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 5:02 pm, 1st February 1984

I beg to move, That this House, recognising the importance to the United Kingdom economy of the maintenance of a strong merchant, naval and offshore shipbuilding industry, and keenly conscious of the devasting social consequences of further major yard closures, calls upon Her Majesty's Government to use the new opportunity presented by the successful trade union efforts to avoid a national stoppage to abandon its ideological commitment to privatise the industry, and instead to reach agreement on a corporate plan for the future of the industry with a realistic strategy for its further development, modernisation and re-equipment, and thus help to restore the necessary confidence to the workforce, its suppliers and customers. Our choice of subject—the future of the shipbuilding industry—for one of our all too few Opposition days shows the great importance that the Labour party attaches to the survival and revival of Britain's shipbuilding industry and its connected offshore construction activities. It also reflects the serious position that confronts the whole of the industry, and our total dissatisfaction with the policy—perhaps I should say the lack of policy—of the Government.

Although less than a fortnight ago we gave a half-day to debating the special problems of Scott Lithgow and its imminent closure, in view of yesterday's announcement about its proposed take-over by Trafalgar House it is right that I should begin my speech with some reference to that. We were told yesterday, in somewhat sibylline terms—following the Prime Minister's meeting with representatives of Scottish trade unions—that the slate was to be wiped clean on Scott Lithgow's finances and, in return, Trafalgar House would, it was hoped, take over the yard. I hope that today we shall have some explanation of what is being proposed. I am not inviting the Minister to intervene now because I am sure that he will want to set forth his remarks in a serious manner later.

Three questions immediately arise. First, is Trafalgar House intending to take over the Britoil contract? If so, and if the additional costs entailed by the delay in completing the rig are to be met by the Government, why is it necessary to hand over the yard to Trafalgar House?

Secondly, what evidence is there that there is more management skill in the sophisticated and specialist area of oil rig construction in Trafalgar House or any of its subsidiaries than exists already in Scott Lithgow? Thirdly, is there any guarantee that, once the Britoil contract is completed, there is any obligation on Trafalgar House to continue the Scott Lithgow oil rig operation?

* See c. 624–7 of Official Report for 6 February 1984.

Previous experience of Trafalgar House — I refer specifically to its major subsidiary, the Cunard shipping line — shows that the firm has no commitment to the British shipbuilding industry. We well remember that during the Falklands campaign one major Cunard vessel was sunk and the Queen Elizabeth 2 and the Cunard Countess needed major refits. Almost unbelievably, Cunard intended that all three major contracts should be placed abroad. The refurbishment of the QE2 took place in a German shipyard and the Cunard Countess was refitted in Malta. As to the Atlantic Conveyor, it was only after the Government had been pressed by the Opposition to intervene and pay an additional subsidy that Cunard was persuaded to place its order with a British shipyard. So there is no commitment by Trafalgar House to British shipbuilding.

We are, therefore, extremely apprehensive about the fate of Scott Lithgow if it is to be transferred into the hands of Trafalgar House. The question is whether Trafalgar House will take over the Britoil contract, and there is still major doubt about that. As the matter is so recent, I can only base my remarks on what the better informed newspapers have to say. We get an entirely different impression from the Financial Times than we do from The Daily Telegraph. However, both newspapers have serious doubts whether Trafalgar House is interested in, or has the capability for, taking over that major contract. Both newspapers refer to the various douceurs that the Government appear to be offering Trafalgar House to take over Scott Lithgow — whether or not it is obliged to complete the contract.

The Daily Telegraph refers to the possibilty of placing naval orders for conventional submarines with Scott Lithgow. Both newspapers refer to the financing of large-scale redundancies for at least half the work force. I hope that the Minister will give the House a great deal more information about that when he speaks.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

Will the right hon. Gentleman accept that Trafalgar House and Cunard are consistently profitable, while British Shipbuilders has consistently made losses? Surely Scott Lithgow—if it is taken over—is far more likely to be successful under the wing of that company than under British Shipbuilders?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I shall say something about the policies of British shipping companies later on. They have an important part to play.

Cunard's own record has been very uneven. The company was taken over by Trafalgar House in a somewhat odd and unusual extension of a property company's activities into shipping. Since then, mixing property deals with more conventional liner operations, it has managed to be profitable. However, in the light of recent experience, and on the basis of the orders which the company has placed over a number of years, we cannot assume that it has any commitment to the British shipbuilding industry.

Our debate today will not be restricted to Scott Lithgow. We shall consider the condition and prospects of the whole shipbuilding industry of Britain, but discussion of Scott Lithgow is relevant to the wider debate bacause it exemplifies and symbolises the Government's approach to the industry. I shall explain in a moment the main features of that approach.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

The right hon. Gentleman referred to doubts about the ability of Trafalgar House in this specialised field. The company is already operating in this field. It has an operation in the north-east which is engaged in the oil industry in the North sea.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I am aware that there is a subsidiary—a construction firm—which was taken over from one of the steel companies some years ago. As we all know, Trafalgar House is constantly engaged in the purchase of companies. However, I have no reason to believe that the company has any experience in the construction of sophisticated rigs. Its expertise in building submersible rigs is totally undemonstrated.

There are lessons to be learnt from the Government's treatment of Scott Lithgow. Their approach to Scott Lithgow has been the same as that applied to the whole of the British industry. First, there has been a deliberate and protracted ministerial and managerial effort to pin the responsibility for the undoubted difficulties of the shipyard on the work force alone. I do not contest that, as in other British industries, the performance of the work force has on occasions fallen short of what the industry and the country have needed to achieve the rate of growth and the rise in living standards which our people wish to see, but the responsibility of management has been no less than that of the work force, and in most instances far greater.

From the days of the Geddes report in 1966, no one could have had any doubts about the defects in the management and organisation of the British shipbuilding industry. Given that history, the approach of sensible men would have been an undeviating search for improved performance by all those concerned—management and labour—in British shipyards.

The approach of the Government has been one-sided abuse of the work force and the attribution of all the industry's difficulties to the restricted practices or incorrigible greed of the employees in the shipyards. There has been no mention of management failure, the lack of realism in the contracts entered into between major customers and British Shipbuilders, or—in the case of the Britoil contract—of the almost endless changes in technical and design requirements which have poured into the yard ever since the contract was signed. Those changes in design requirements appear to have originated in the experience of the American company Odeco, operation from New Orleans, and in response to a disaster to an earlier rig built to a similar design, but there has been no mention of that in the House of Commons.

Laying the blame on the unions is the first feature of the Government's approach. The second is the systematic propagation of the view that the industry must be substantially contracted to reflect not just the protracted world recession in shipbuilding but the alleged cumulative and irreversible inefficiencies of Britain's shipyards. Closure or redundancy—or closure and redundancy—are the orders of the day. Three additional yards are soon to close. I refer to Robb at Leith, Clelands on the Tyne and Goole Shipbuilders on Humberside. Those closures will make some 1,500 men redundant, while the further contraction of the labour force in other yards which are still open will account for no fewer than 4,900 jobs in the first half of 1984. In addition, 5,800 jobs were lost in the second half of last year.

The test applied throughout appears to be the short-term profitability of the yard concerned. The fact that in both Robb and Clelands negotiations for new orders are well advanced does not count in the Government's, or British Shipbuilders', decisions. Yet I can think of few industries where the medium to long-term view of demand is more necessary. Like steel, and one or two other major capital industries, shipbuilding is peculiarly sensitive to the business cycle — the fluctuations of demand between trough and peak of business activity. That cycle has been enormously deepened since 1974 by the destructive effect of the massive changes in the movement, supply and price of oil, and by the worst recession that the world economy and the world trading system have suffered since the 1930s.

In such circumstances it is, for the shortsighted, tempting to wipe out loss-making activities. Those were the arguments used to contract the British shipbuilding industry and the British steel industry in the 1930s, and such policies were the basic reason why we were in such desperate supply difficulties not only in the war years but in the years of the sustained recovery after 1945.

The third feature of the Government's policy, illustrated by their approach to Scott Lithgow, is the blind faith in the virtues of privatisation, which is the Government's sovereign remedy for all industrial problems. So compelling is the myth of private ownership, or so attractive the prospect of private profit, that it appears likely that the Government will pay massive sums of money—including the placing of warship contracts—with those yards which are sold off to private enterprise, while denying the same sums of money and the same assistance to the publicly owned British Shipbuilders.

The irony and the folly of that whole approach can be demonstrated by the appalling decline of the industry. In 1950 the British shipbuilding industry was the largest shipbuilding industry in the world, accounting for 43 per cent. of world output. Under private ownership, the industry shrank. By 1975, when we took it into public ownership — my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) was very much in the lead—its share of world output had shrunk to 3 per cent., and the volume of output in the 1970s was no greater than it had been in 1950. In 1975 the yards were, with few exceptions, on the point of bankruptcy. That is the record of private ownership in the post-war period. Those who believe that a sovereign remedy can be found simply by handing the industry—or bits of it—back to private ownership must be out of their minds.

Those central features of the Government's approach —blaming the men and the unions, the commitment to contraction and redundancy, and the commitment to the earliest possible privatisation of the remaining yards—are now generally known, but they are nowhere more clearly recognised than in the yards themselves and in the communities where those yards play so important a part. In many areas, direct and indirect employment centred on the shipbuilding industry provides the economic and social lifeblood of whole communities.

The bulk of our shipyards are in the older industrial areas in the north in England and Scotland — areas which have been special victims of the present British and world recession. Anyone who knows the industrial community around Scott Lithgow and Govan can have no doubt of the catastrophic consequences of closures to those communities, or the effects of the closure of Austin and Pickersgill or Sunderland Shipbuilders on Sunderland, Swan Hunter Shipbuilders on Newcastle, Smith's Dock on Middlesbrough, Cammell Laird on Birkenhead, or Vosper Thornycroft on Southampton. Those, of course, are only the major yards. On the smaller communities of Leith, Aberdeen, Grangemouth, Troon and Goole, the effect of yard closures, given the dearth of alternative employment, is an appalling prospect.

Not surprisingly, the men are deeply worried. Their jobs, skills and communities are at risk. They have seen their industry pared away year after year. From April 1982 until the beginning of this year there was a pay freeze.

When we last debated shipbuilding on the British Shipbuilders (Borrowing Powers) Bill on 1 November, the prospects for a national stoppage were serious. The mood in the industry reflected not just grievances about pay and the pressure for still further changes in the work practices, but the underlying feeling that there was no Government commitment to the industry's future and no way forward.

No one who has followed the negotiations during the past three months, culminating in the settlement of 25 January, can fail to recognise the skill and determination with which the union side pressed for an acceptable agreement which would give the industry a further chance to survive. No one can say, with the chairman of British Shipbuilders on holiday in Canada, that management evinced an equal and overriding interest in a settlement.

No one who listened to or took part in the debate on the affairs of the industry on 1 November, and the more recent debate on Scott Lithgow, could fail to be struck by Ministers' barely concealed hostility to the industry and their readiness to wash their hands of the responsibility for its future.

The negotiations, against the odds, succeeded. I hope that, in spite of reservations, the yards will endorse the agreements reached by their union representatives by the deadline of 10 February. No one who has read the agreement can doubt that the unions have made a further and major contribution to the success of shipbuilding. The end of demarcation and the complete interchange within the three main groups which has now been established is a major step; so is the establishment of composite groups embracing all the shipyard skills to tackle the entire range of tasks which may be required to complete a shipyard job. The result of these changes will be to bring industry's productivity fully into line with the standards established by our competitors in northern and western Europe. That is bound to help, but we should be foolish if we were to delude ourselves into believing that that is sufficient or the end of the matter. It is not. We must also consider the much more deadly competition which comes not from our European competitors but from the far east and, most notably, Japan and, ever-increasingly, Korea. We must also be clear that labour productivity is only one factor in the competitiveness and success of shipbuilding. Equally important is the cost of the other inputs which account for so large a part of the total cost of what is, increasingly, an assembly industry. It is of enormous importance that Governments should pursue policies designed to assist the industry's recovery no less favourable than those available from Government to our overseas competitors.

If we are to use the new breathing space that has been won by the agreements negotiated this month, we must work out a new and intelligent policy for the industry's future. The first essential step is to abandon the foolish and ideological commitment to privatisation. The Minister of State is recorded as favouring the privatisation of the naval shipyards. We are bound to take him seriously, because he has the authority of the Conservative party manifesto behind him. However, it needs only a cursory glance at British Shipbuilders' accounts to discover that by far its most profitable part is the activity of the naval shipyards. If those are removed and privatised, it is difficult to see how the remaining merchant shipyards and the offshore construction yards can survive. Many believe that they are not intended to survive.

The Government must make a serious commitment to the future of shipbuilding in Britain. A corporate plan—there was a draft in 1982, but it was more a discussion document than a serious plan—agreed and understood by the industry, is urgently needed. It is essential that a strategy, relevant to the changed patterns of demand which have taken place and which will grow throughout this and the next decade, is worked out. Once a strategy has been agreed, it will be up to the Government, in partnership with the industry, to see it through.

I referred earlier to shipbuilding as an industry peculiarly susceptible to the peaks and troughs of demand. If we allow the industry to go down during a trough, we are condemning ourselves to a further massive deterioration in our trade balance when, as new peaks of demand are reached, we are forced to buy abroad. The Minister will have noted the announcement by the French Government only a week ago of their intention, in this year of continued recession, to back their shipyards with an additional £330 million.

The Government must find ways to bring together the shipping and shipbuilding industries. When one reflects on the fact that during the four and half years that have elapsed since the Government came to power the British merchant fleet has shrunk from 37 million tonnes to 23 million tonnes, or from 1,200 merchant ships to some 800, it may be argued that the need for a shipping policy is as great as that for a shipbuilding policy.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The right hon. Gentleman is saying that there are two reasons for the problems of our shipbuilding industry. One, as he puts it, is the Government's ideological preoccupation with privatisation, and the other is the too short-term view of what he believes is a cyclical industry. If those factors are the cause of the problems, why do the problems seem to extend to almost all western Europe's shipbuilding industries? Why is there a contraction throughout western Europe? Does that not show that the right hon. Gentleman is not getting to the bottom of the problem?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

All that the Minister is saying, and I believe that he is right, is that the recession, which is particularly fierce in Britain is, nevertheless, strongly felt throughout the Western world.

This year we are beginning to see some revival in world trade, which inevitably affects world shipping. Last year, and the year before, if my memory is correct, we saw a decrease in the volume of world trade. When there is a decrease in world trade, as the Minister of State knows, the problems of industries such as shipping and shipbuilding are bound to intensify.

The extraordinary feature of British shipping and shipbuilding, when compared with the relationships between the shipping and shipbuilding industries of our European, not to mention our far eastern, competitors is, in recent years, the amazingly low proportion of orders placed by British shipping companies with British shipbuilding yards.

Let me illustrate that. I am taking the average for 1978–81, the four most recent years for which I have complete records. The orders placed in their country's yards by French shipbuilders averaged something over 87 per cent.; those placed by Belgian shipowners averaged some 97 per cent.; by Italian shipowners some 95 per cent.; and those placed by the allegedly more liberal traders—the West Germans, the Danes and the Dutch—averaged respectively 85 per cent., 76 per cent. and 71 per cent. The proportion of orders placed with British yards by British shipowners in the same four years was just under 26 per cent., and Britain has by far the largest shipping fleet of any country in Europe.

In addition, although all shipbuilding industries receive financial aid in one way or another, the evidence that I have seen strongly suggests that the aid provided by the British Government, quite apart from what is done through our shipping fleet, is significantly less generous than that provided by other Governments for our main competitors.

There must be a new relationship between British shipowners and shipbuilders, but that can be achieved only through a strong Government link. I regard the settlement reached this month as a welcome reprieve for the British shipbuilding industry. I greatly feared that a catastrophe was about to occur — one which, I judged, the Government were not prepared to try to avert.

If our industry is to survive in the years ahead, a real and serious planning strategy must be worked out. It is essential that that be done and that the new corporate plan be underwritten by the Government themselves. That is the only way to restore the confidence of the men who work in the industry and, perhaps even more important in these times, the confidence of their customers both at home and abroad. Customers will not be won while there is uncertainty about the future of so many British shipyards.

It would be a crowning shame and folly if, through Government neglect and ideological folly, the one island nation of Europe whose commerce is overwhelmingly seaborne, and the one industrial nation of this continent which has major oil and gas resources under its seas, found itself within the next decade without the capacity to build the ships which it needs or the oil rigs required for the North sea and deeper waters.

I urge the House to accept our motion and the Government to recognise that the time has come for a major change in policy.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford 5:32 pm, 1st February 1984

I beg to move, in line 1, to leave out from 'House' to the end of the Question, and to add instead thereof: 'recognising the seriousness of the problems facing the merchant and offshore shipbuilding industries, supports the efforts of the Government and British Shipbuilders to create a more efficient and competitive industry; endorses the Government's policy of returning as much as possible of the industry to the private sector; and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing the British Shipbuilders proposals for changes in working practices.'. I begin by apologising to the House. I feel a little better about this apology in view of the slight touch of the late delivery problem with the right hon. Member for Bethnal Green and Stepney (Mr. Shore) today. Unfortunately, I shall have to leave the debate almost as soon as I finish speaking. As the House will appreciate. the Opposition could not possibly have known when they chose this subject for debate that today would be the day on which the Nissan agreement was to be made. I have to leave to complete some arrangements about that. I hope that the House will forgive me. I felt that I could not simply not take part in a debate of this nature and I shall read the record most carefully tomorrow morning.

Listening to the right hon. Member for Bethnal Green and Stepney, I could not help wondering at times why the Opposition had chosen this subject and why they chose to deal with it as the right hon. Gentleman did. I wondered what they sought to gain from it. The motion is a self-indulgent display of self-righteousness. They may perhaps gain a little cheap instant popularity among some of the workers at British Shipbuilders and among certain trade unions.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

We are concerned about the industry.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

There is no need to put down such a silly motion to demonstrate that. The right hon. Gentleman and his colleagues are simply trading unrealistic daydreams about the shipbuilding business. The general idea seems to be that if they sling enough mud at the Government some of it may stick, but what will stick in the minds of many who heard the right hon. Gentleman's speech is that it was an epic of encouragement for future irresponsibility from start to finish. Indeed, one did not have to wait to hear the right hon. Gentleman's speech. It was sufficient to read the motion.

The motion calls upon Her Majesty's Government to use the new opportunity presented by the successful trade union efforts to avoid a national stoppage". If it was trade union efforts that averted the stoppage, who the devil does the right hon. Gentleman think was trying to cause a stoppage?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The right hon. Gentleman knows that that is nonsense. I also know him and I have some quotations from him that he will not welcome hearing later. He knows full well that the dispute arose because Mr. Graham Day insisted on delivery of productivity promises made time and again in the past but not delivered. That was the cause of the dispute.

Photo of Mr Gordon Bagier Mr Gordon Bagier , Sunderland South

It is project management that is adrift.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The Government cannot possibly be blamed for the fact that the work force at British Shipbuilders refused to adopt practices that have been commonplace in every other yard in western Europe for the past decade.

It is also hard to stomach talk by the Labour party about ideological commitment to privatisation of the industry. Whose ideological commitment was it to nationalise the industry? I remember the right hon. Member for Manchester, Gorton (Mr. Kaufman) describing that as being in the cause of the advance of Socialism. If that is not ideological commitment, I do not know what is. Since that rush of blood to the head and the advance of Socialism, which the right hon. Gentleman is trying to leave behind now that he is described as a Right-winger, the once-proud yard of Scott Lithgow has been brought to the verge of collapse. Yet the Opposition motion reads as though ideology were immorality.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

The history of the shipbuilding industry shows that from the early 1960s onwards one private yard after another collapsed. Successive Governments, including the Conservative Government under the right hon. Member for Old Bexley and Sidcup (Mr. Heath), had to take over major yards on the Clyde, as they had earlier had to rescue the John Brown contract for the Queen Mary and secure completion of the Queen Elizabeth. That was done by successive Governments not for ideological reasons but for the entirely practical reason that that was the only way to retain a shipbuilding industry in Britain. That was why we took over the industry in 1975.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The right hon. Gentleman talks as though taking it over ended the problems and the threat of closures when the reverse is true. The policies pursued in the days to which he harks back were profoundly wrong policies which have landed us in our present problems.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I cite an example in support of my right hon. Friend's argument. The Humber Graving Dock, a privately-owned shipbuilding and ship repair company in my constituency, yesterday announced 500 redundancies. It is no coincidence that that company's losses were sustained from 1977 onwards. [Interruption.] The company itself states: It will be seen that Humber Graving Dock made satisfactory profits for many years, but following nationalisation of shipbuilding and ship repairing … made huge losses"—

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Order. I understand that the hon. Gentleman wishes to catch my eye, but he must not make his speech now.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I assure my hon. Friend that I have got the message. He does not need to read the whole of this year's statement and accounts to convince the Government that when there is competition between the nationalised sector and the private sector it is the private sector that gets ground down, whether it is more efficient or not.

The right hon. Member for Bethnal Green and Stepney takes the high-minded line that to suggest privatisation is ideologically immoral, whereas to suggest nationalisation is utterly natural. He will have some fun if his former right hon. Friend Mr. Benn gets back to the House and starts leaning over his shoulder with his ideological commitment to nationalisation.

In any event, is it so immoral or ideological to have given the workers at Readheads, at Grangemouth Shiprepairers or perhaps at Tyne Shiprepairers a chance to escape from the straitjacket of nationalisation, which has been costing them their jobs, into the private sector to seek to save their jobs? Those workers do not think so, even if the right hon. Gentleman wants to stop them saving their jobs.

Photo of Dr David Clark Dr David Clark Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Education)

As the Minister mentioned my constituency, may I ask him to remind the House that those two shipyards, Readheads and Middle Docks, went bankrupt under private ownership in the 1970s, before nationalisation, under Court Line, and that those same workers were glad that the state intervened at that time to save their jobs?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The point underlying what was said by the right hon. Member for Bethnal Green and Stepney is that the state has not saved their jobs but has merely prolonged the agony and prevented the coming of changes that could conceivably have done so.

I found it sad that a right hon. Gentleman for whom I have considerable respect should indulge in such humbug. To listen to him, one would have thought that it was simply a question of an obstinate Government refusing to allow British Shipbuilders to take orders from queues of shipowners who were striving to get their orders into British Shipbuilders' yards and that that had brought about the crisis in the industry.

Frankly, I have some contempt for the way in which, not least through this debate—if it goes the way that the motion suggests it is likely to go—the matter is being approached by Labour Members, and I should be particularly depressed to see a willingness to play politics with men's livelihoods—[Interruption.]—and in doing so to do further damage to the already slim chance of saving British Shipbuilders' merchant shipping and rig building yards from complete disaster.

Let us look at the industry and at what was expected of it. Let us consider, for example, what the right hon. Member for Gorton expected of it when he was Minister of State and was taking through—in a rather inadequate manner, judging by the time that it took him to do it—the Aircraft and Shipbuilding Industries Bill. Speaking about the financial objectives, he said: In a good year, when there is a surplus after covering interest and tax liabilities, the Corporations will be expected to pay a dividend to the Government on their PDC. In a bad year a dividend may be waived entirely. He went on: We should, as I say, normally expect PDC dividend to be paid, and we should make sure that PDC payments balanced out in such a way as to provide what we ask for earlier in the Bill as an adequate return".—[Official Report, Standing Committee D, 19 February 1976; Vol. IV, c. 1025.] That was what the right hon. Gentleman expected when he was going to nationalise the shipbuilding industry. The then Under-Secretary of State for Industry, now Lord Carmichael, put it even more strongly—I am not sure whether the right hon. Member for Gorton would wish to water it down, judging from the remarks of his right hon. Friend the Member for Bethnal Green and Stepney—when he said some much tighter things, for example: The Corporations will be subject to stringent financial regimes … They will be required to pay full interest on their borrowings … Section 5 of the National Loans Act 1968 required that loans from the Fund should be at rates not less than the Treasury would have to pay for loans of similar periods and terms … They will have to pay dividends on their public dividend capital. They will have to earn the public sector test discount rate on their investments". — [Official Report, Standing Committee D, 22 January, 1976; Vol. IV, c. 395.] Goodness me, great things were expected of those organisations in those happy days when they were being put into the safe hands of the state. If one really wants to rub the point in, one can recall the right hon. Member for Gorton saying: They will be expected to pay a dividend on their PDC … the Secretary of State wants the Corporations to earn a proper rate of return … It"— referring to the Government— could not set, as a financial duty, the earning of a loss. Oh no? He went on They will have to pay dividends on their PDC because if they do not do so, we have power to require them to do so." —[Official Report, Standing Committee D, 12 February 1976; Vol. IV, c. 895–6.] Let the right hon. Gentleman try requiring them to pay a dividend on their PDC. Therefore, when the right hon. Member for Bethnal Green and Stepney asks for even more money to be put into financing the losses, he sings a different tune from his now very moderate and Right-wing right hon. Friend.

We must ask the House to look more carefully at the performance of the industry, not as Labour Members wished it to be—as they daydreamed about it being—but as it actually has been.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The expectations have always been clear. The right hon. Member for Gorton used to say, "We expect the shipbuilding industry to be profitable," so let us look at the record of the merchant shipbuilding division. In 1982–83 the total loss before interest and tax, but after crediting intervention fund payments of £20·4 million, was £55·7 million, a total cost to the taxpayer of £76 million. In that year, of the 11 companies in the division, eight made a loss. It might be suggested that the figures have been selectively culled, so let us take 1981–82. In that year there was a loss—again before interest and tax after crediting intervention fund payments of some £47 million —of £36·2 million, giving a total of £83·2 million. In that year, nine of the 11 companies made losses.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I will tell the right hon. Gentleman so what. So what? That was money that could not be put into any other enterprise. So what? It was money that could not go into hospitals. So whit? It was money that could not go into the National Health Service. So what? It was money that could not go into BL or any of the other organisations of which the right hon. Gentleman is fond. So what? Let him get to his feet and explain what he meant.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

So what else does the right hon. Gentleman expect in the middle of the worst slump that his policies helped to engender? What happened to the profits of private industry in 1981 and 1982? They were lower than they had ever been, not just in the right hon. Gentleman's adult lifetime and not just in the public sector but in the private sector as well, for there were more company liquidations in those two years than we had memory or record of.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The failings of the industry have nothing to do with the Government's ideology? Is it all now to do with the slump? We seem to have a change of tune half way through. I will tell the right hon. Gentleman what happened to the profits of the private sector; they were milked to pay the losses of British shipbuilders. In 1980–81 the loss was £36 million, with intervention fund credits of £44 million, and again, nine of the 11 companies made losses—£80 million in total.

But the most ridiculous aspect of the Opposition motion is its attempt to make the responsibility for the misfortunes of the shipbuilding industry predominantly, if not entirely, a matter for the Government—that is, until the right hon. Member for Bethnal Green and Stepney changed his mind when he was caught on the hop and made a foolish intervention. In the Labour party's book, all would be well but for the Government—[Interruption]— but Labour Members know that that is rubbish.

There has been a world depression in which even the most efficient yards have had to struggle to find orders. I regret having to say this from the Dispatch Box because it will not help British Shipbuilders to get more orders, but bluntly, the British shipbuilding yards have not had reputations in some cases such as to attract customers. Nor have their prices, nor their ability to deliver on time, made them attractive to customers.

No one except our competitors can take any comfort from that. I find it especially frustrating because I know, as we all know, that, given proper leadership and management, and when they put their minds, hearts and backs into the job, our shipyard workers can match their competitors. Yet in recent years, with honourable exceptions, they have not done so.

It does no good to whine on, as the right hon. Member for Bethnal Green and Stepney did, that the saviour must be the Government. The motion refers to a corporate plan … with a realistic strategy for its further development, modernisation and re-equipment … to restore …confidence to the workforce, its suppliers and customers. It is interesting to note which comes last on the Opposition's list. I refer to the appendage that is hung on the end as though he did not matter—the customer. He is always last in the Labour party's thinking. All it can do is complain that customers are not patriotic if they do not put their orders into our yards. It never thinks of what has happened to some of those who have shown their patriotism by doing so.

Why did the right hon. Gentleman not suggest that there could have been a touch of patriotism in ensuring that every ship in the yards was delivered on time as far as it was humanly possible for the management and work force to do so? Would there not have been a touch of patriotism in meeting the requirements of the British shipowner as well as calling for patriotism on the part of the British shipowner to order a ship that might be six months late and lose the business to which he was committed on the original delivery date?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Is it lack of investment or lack of equipment that has deterred customers from placing their orders here? Is that why customers have hesitated to put work into our yards? If so, that lack of equipment does not arise from a lack of taxpayers' money.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

About £1 billion of public money has been consumed since nationalisation by way of losses and intervention fund subsidy. I give way to the right hon. Member for Gorton, who wants to defend his optimism.

Photo of Gerald Kaufman Gerald Kaufman Shadow Secretary of State (Home Office)

Is it not a fact that, due to the world slump, every shipbuilding industry is making losses and that the chance of getting orders depends upon the amount and rate of aid that a Government can provide? Is it not a fact that the Government have reduced the intervention fund from £85 million, as it was under the Labour Government, to an extension of only £10 million for the current period after a figure of £40 million for last year? Is it not a fact also that, as a result, the work force under this Government has declined by 33 per cent. at the rate of 6,500 a year? Is the right hon. Gentleman aware that Sir Robert Atkinson, whom the Government appointed, said that if it had not been for the Polish order, which was gained through nationalisation, our shipbuilding capability in significant part might have had to be disturbed, and that it was through that act that nationalisation saved the British shipbuilding industry, which the Government are now destroying?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am delighted with the right hon. Gentleman's intervention. I shall deal with only a few of his arguments because it is too tempting to take them all. First, I shall deal with intervention-fund degressivity. When the right hon. Gentleman signed the fourth directive in a flush of pro-European feeling and said that he wanted a European shipbuilding policy, he committed himself to degressivity. He has a pretty poor memory because when the Government took office in 1979 he had let the shipbuilding fund run out of money. There was not an intervention fund. The right hon. Gentleman had better start remembering. Irrespective of what he says now, it is illuminating to read what he said in a debate on the shipbuilding industry in February 1977. He said: It would be foolish to bail out yards that are not able to meet pricing and delivery criteria. Does the right hon. Gentleman still think that it would be foolish to bail out yards that are not able to meet "pricing and delivery criteria"?

Photo of Gerald Kaufman Gerald Kaufman Shadow Secretary of State (Home Office)

To begin with, the right hon. Gentleman has entirely misinformed the House, no doubt deliberately, about the state of the intervention fund when the Labour Government left office. On 4 April 1979 we announced that £85 million would be made available from the intervention fund for the following year, which was the same sum made available for the previous year and £20 million more than the sum for the year behind that. As soon as the Conservative Government took office, they cut our £85 million to £65 million. The intervention fund was not empty. We had obtained a commitment to increase it from Brussels. The right hon. Gentleman is misrepresenting what was said about the nationalised shipyards. When I made the statement from which he has taken a few words, I was announcing for the first time ever an intervention fund that was designed to gain orders. In the course of so doing I said: Our aim is not to see how many yards we can close; it is to find the maximum numbers of yards that we can keep open. We obtained more orders than the Government have obtained to date, and under the Labour Government the rate of job losses was a fraction of that which has taken place under the Conservative Administration. The shipyard workers who are listening to the debate want the return of a Labour Government, not a Conservative one.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

So it is extraordinary that a Conservative Government were returned after the general election. I do not want to do the right hon. Gentleman a disservice. I know what he said in column 1653 during the debate that took place in February 1977. He said: We continue to be firm advocates of a Community policy for shipbuilding. That was the statement of a devoted European, and enthusiast for the Community. However, he had not got his intervention fund properly sewn up when the Conservative Government took office, despite the announcement that was made so shortly before the general election. I recollect well what he said in another passage of the report of the 1977 debate. He said: Shipbuilding industries all over the world from Japan to Sweden are accepting the inevitability of contraction, and Britain cannot be insulated from this world trend."—[Official Report, 24 February 1977; Vol. 926, c. 1653–65.] But now, when times are much more difficult, we are told that we can insulate ourselves. The right hon. Gentleman has no credit with anyone. How can he argue that there has been a shortage of investment, as his right hon. Friend the Member for Bethnal Green and Stepney suggested, if £1 billion has been consumed over the years?

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

I find the Front Bench exchanges interesting but given that the matter is of deep and considerable concern to my constituents and that time is passing, is the Minister going to make any statement on the future of Scott Lithgow? My constituents are desperately worried and they are not interested in Front Bench exchanges. Let us hear something about the future of Scott Lithgow, which is in my constituency.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I appreciate that, but I must explain that the Front Bench exchanges take place because I try always to be as generous as I can in giving way to those who wish to intervene.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I shall come to Scott Lithgow in a moment. First, let us discuss what can be done by the Government and the Opposition to help British Shipbuilders, including Scott Lithgow.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Where was the, right hon. Member for Gorton and his colleagues, including the hon. Member for Greenock and Port Glasgow (Dr. Godman), on the issue of new working practices? Did they support the efforts of the management and of some union leaders to get those practices established, practices which have been accepted for the past decade in Europe and in Japan? There was not a word of support for Mr. Day from the right hon. Gentleman and, indeed, he has made matters worse this afternoon.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

If the hon. Gentleman wishes to tell us that he was on the side of management in getting the new working practices accepted, I shall welcome his intervention.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

I constantly urged the management and work force at Scott Lithgow to reach an agreement on working practices. The survival plan was the management's document. Anyone who has any knowledge of industrial relations knows that one starts with the management's position and the union's position, arrives at a compromise and enters into an agreement that meets with the qualified support of both sides. That is what I urged on the management and work force at Scott Lithgow.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The hon. Gentleman should have gone beyond that and urged the unions to tell the management how it could achieve greater productivity. What was the advice that the right hon. Member for Gorton and his hon. Friends gave the men of British Shipbuilders when they were on the verge of a strike? Did they tell the workers at Scott Lithgow that a solid "no" vote, and absolute determination to avoid a strike call—

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

Let us hear about the future of Scott Lithgow.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

—and the wholehearted adoption of new practices might just save the Britoil rig, and that a strike might finally destroy it and any confidence in a will to catch up on lost time and deliver by the new deadline?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Did the right hon. Gentleman and his colleagues who have been attacking me stay silent or even support a strike call that they knew could be nothing more than an overture to a funeral march? I found not one word from any Opposition official spokesmen speaking up for sanity on that issue. What is all this talk about what this Government should do? There is just an unhappy appendage, a last thought, to the Labour party's motion —the customer, who has been absent from our yards. No one can create queues of customers for shipyards while lines of ships are laid up because of lack of freight to carry. But even in these difficult days, there are orders for the yards to take, and it is up to industry to set out to attract those orders.

Negotiations are in progress between British Shipbuilders and various interests including Trafalgar House. Those negotiations do not directly involve the Government, although I can say something about them. Their aim is to see what can be saved from an unhappy position that reflects credit on none of the parties. I refer to a yard whose past performance has reflected badly on British Shipbuilders and on Scott Lithgow's management and work force. Our aim is to see what can be salvaged and to ascertain whether under new ownership with new management and new work practices the rig can be completed and a business established. The Government would be delighted if such a rescue could be made successfully. We will help, as my right hon. Friend the Prime Minister recently told those concerned. By wiping the slate clean. There will be no responsibility on whomever takes over the yard for the redundancy costs of those who must lose their jobs or for the losses already incurred on the rig.

This part of our debate about Scott Lithgow is immensely sad against the backdrop of an industry that has already cost the taxpayer £1 billion. How much better it would have been if we could have put that money to more productive uses.

But there are some encouraging signs: slightly fewer ships are laid up; freight rates are hardening; and there are forecasts of 5 to 6 per cent. growth this year in world trade, which suggests a modest improvement in shipping. Times in shipbuilding are still grim, and I, like Opposition Members, believe that the agreement reached between British Shipbuilders and the Confederation of Shipbuilding and Engineering Unions has begun to open a way forward. As the right hon. Member for Gorton used to say, British Shipbuilders will be able to survive if, and only if, it drives down its costs at least to the level of other European yards. To do that, there must be a willingness to overcome the problems of low productivity that have beset the industry in the past. It is clear that that can produce results. We saw, for example, what could be done when the work force and management cast aside old practices and worked with determination in producing the ships that were required for the Falklands conflict. Opposition Members know that, and they need not take my word for the results that can be achieved by those new working practices. They can take the word of a spokesman for the Amalgamated Union of Engineering Workers, as recently reported in The Scotsman. An AEUW spokesman from Hall Russell made it clear: About 95 per cent. of the changes"— those changes being discussed between British Shipbuilders and the CSEUthey are looking for have been here since about 1970". If that is so, there is little wonder that Hall Russell is surviving.

Compare that with Henry Robb, now in the process of closure, to which reference is also made in The Scotsman. When steelworkers agreed to help complete the paintwork on a ship to get it out on time and on cost, the regular painters objected, so extra painters had to be brought across from the other side of Scotland, from the Clyde. Bluntly, such antics—not the Government—have sunk Henry Robb and others.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

Is the Secretary of State aware that there are faults on both sides? As management apparently manage, will the right hon. Gentleman accept that the old style of the heavy hand does not always help in reaching an understanding with the work force? Workers at Henry Robb have offered to change. Recently, they put on paper certain guarantees that were forwarded to Mr. Graham Day. He acknowledged that changes were taking place in the yard. Despite that, he deliberately held back on three main orders for RASCO, the Suez Canal Authority and Caledonian-MacBrayne, which is coming up shortly for consideration. The yard did not close. It was starved to death. That was a political action by an appointee of the Government. It is a political, not a simply commercial issue. Politics comes into the matter.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Politics does not come into it.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

Ministers do not decide to which yards the orders go.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

Who appointed management?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

That is a decision made by the management in the belief that it is in the best commercial interests of British Shipbuilders in general. No doubt, the type of antics to which I have referred had something to do with the way that British Shipbuilders' management thought about the matter. There are faults on the management side, and no one denies that. We must concentrate on those places where the management and the men can reach a sensible agreement—not after closure is announced but well before—to keep customers.

Photo of Gavin Strang Gavin Strang , Edinburgh East

Will the right hon. Gentleman give way on that point?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I must press on, although I shall give way.

Photo of Gavin Strang Gavin Strang , Edinburgh East

I shall be brief. Will the Secretary of State give us at least the assurance that, although he has said that the Government wanted to avert the complete closure of Scott Lithgow, they are equally prepared to look sympathetically at any proposals to retain shipbuilding?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

If a private sector operator wants to take over the yard, I have no doubt that Mr. Day would welcome discussions with that operator. I cannot predict what the outcome would be. That would be a matter of commercial negotiation for the parent company.

While those attitudes which were shown by the regular painters at Henry Robb exist, it is unrealistic and improper to expect the Government to save those intent on self-destruction. It is irresponsible of the Opposition to claim that we should.

The House is anxious about the future of British Shipbuilders and the private sector, and I shall therefore sum up our intentions. I shall make it clear what is meant by the expression "wiping the slate clean" at Scott Lithgow. The proposition under negotiation is that the new operator should make a fresh start at the yard with the Britoil rig. The terms of any deal depend on the negotiations, and I cannot and will not predict their outcome. For our part, we will be prepared to foot the full bill for the losses incurred by the yard so far. I hope that that will represent a clean slate on which a sound commercial deal can be struck between BS and the interested parties. We hope to see a sound and commercial business making profits and safeguarding jobs, but whether that is possible depends upon many factors.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

I believe that the House would like more information. The main press comment relates to Trafalgar House. In the public domain that company, which is ostensibly a holding company, is not one that commands great credibility. Will Trafalgar House or one of the subsidiaries command the expertise?

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

I am sure that the management of Trafalgar House is having close talks with British Shipbuilders. The potential customer for the rig will judge whether the management is adequate. We would not help by digging too far into the proposed arrangements.

We are currently discussing the corporate plan with Mr. Day and his colleagues. In that context, we will discuss our support for the industry with the European Commission.

The plan will lead to the disposal of the warship building yards, the peripheral businesses and the remainder of the ship repair yards in the relatively near future, leaving Mr. Day and his colleagues free to concentrate on the difficult problems of the merchant yards and engine building.

I must say that the prospect for the industry is a difficult one. There is some prospect of an upturn in world orders, but there is little doubt that special circumstances in 1983 brought forward some orders from later years. Therefore, we should not assume that the increase in orders last year will be carried through. What is certain is that only by ensuring the maximum of efficiency, the maximum productivity, the best management and, above all else, total devotion to customer satisfaction, will British Shipbuilders have any hope of survival.

During my time at the Department of Industry in 1981, I was struck with both the good and the bad aspects of British Shipbuilders, and I sought to ensure that our treatment of yards would take their performance into account. I hope that our plan for survival will do so—indeed, it would be madness if it did not. We must approve the corporate plan, within which are the plans for investment. Those are business decisions.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

In the past, the right hon. Gentleman has expressed very clear views about the division of responsibility. He knows full well that a corporate plan must be approved. That involves the overall strategy of the corporation. It does not involve our deciding which yards take which orders on a day-to-day basis.

None of us—men or management—can save yards from self-destruction. We have a duty to ensure that those intent on self-destruction do not drag others down with them. It is in that spirit that my right hon. Friends and I have tabled an amendment to the Opposition motion which offers support to British Shipbuilders and the Government to create a more efficient and competitive industry … and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing the new working practices.

We Conservatives, like the Opposition, recognise the social consequences of yard closures. We have not pursued some wild destructive policy of yard closures over the past four years, nor do we now want to see yards close if they can survive. But yards can close themselves, and yards without customers are dead.

We have not shrunk, nor will we shrink, from support where it can lead to viability, nor shall we shrink from facing the facts squarely when a yard has no customers willing to place work in it. It is with that in mind that I ask the House to reject a discredited and incredible Opposition motion in favour of the more serious, realistic amendment that encapsulates our programme to help British Shipbuilders through to viability.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead 6:13 pm, 1st February 1984

I begin on a non-controversial note by saying that I doubt whether anyone would object to the Secretary of State putting the seal on his agreement with Nissan. He would do more good by doing that than by coming to the House and speaking in the way that he has done in the last half an hour.

The right hon. Gentleman made a remarkably unconstructive speech in a tone of voice that varied disagreeably between the venomous and the sanctimonious. It appeared to reply to a speech that had not been delivered.

I hold no brief for the Opposition Front Bench, with which I disagree just as often as I do with the Secretary of State, but I thought that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) made a calm, constructive speech in which he looked to the future and tried to face some of the real problems and difficulties.

However, the Secretary of State — apart from his interventions which embellished it—came along with a carefully prepared speech which replied in great detail to one that was never delivered. It was, I thought, a mistaken use of ministerial time.

Photo of Mr Norman Tebbit Mr Norman Tebbit , Chingford

The right hon. Gentleman is making a mistake, because he has clearly not read the amendment to the motion on which I was speaking, as is customary in the House.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

I have read the amendment to the motion, and I shall have something to say about it. But the Secretary of State referred much more to the speech of the right hon. Member for Bethnal Green and Stepney and replied to that—[Interruption.] I note that the Secretary of State is now leaving, no doubt to deal with his Japanese colleagues.

The safeguarding and preservation of Britain's future in this industry, and as many jobs as possible, is far more important than who owns parts or the whole of the industry. In retrospect, I would not have nationalised the industry—and not too much in retrospect: no one can accuse me of having shown any great enthusiasm for further nationalisation for several decades past.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

The right hon. Gentleman will recall, in his previous incarnation as a member of the Labour party, standing in the rain in Shawfield football stadium when we wanted to bring Upper Clyde Shipbuilders into the public sector to save thousands of jobs.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

Primarily I wanted to save jobs. I have adopted a non-dogmatic attitude on that issue. I have no doubt that other hon. Members can quote examples where I have voted for nationalisation, but one of the problems of our two-party system is that it is inevitable that one votes, as every hon. Member has, for some things that do not command one's full enthusiasm, until one decides that one has voted for too many and makes a break.

I fail to see how the setting up of British Shipbuilders has contributed to the industry or the nation, but, that having happened, it does not follow that the major policy and principle of privatisation is the right answer. That is the reverse of the old Irish story, that if one wants to get to Ballylicky, one would not start from here. Whether one wants to get to Ballylicky or anywhere else, one must start from one's present position. That is so in this case.

The onus of proof lies very much on those who want to make a change, be it a change to nationalisation or to privatisation. In a sense, I would take that view even more strongly if I thought that the Labour party might recover enough to form another Government. It would presumably renationalise and have the industry absolutely set on the course that for several decades has done such immense damage to the steel industry. That is a dreary course of alternation about which people should be extremely careful.

I do not believe that the frontier between the private and public sectors must be absolutely rigid, but it is desirable that it should be as stable as possible. It is extremely harmful to the industry, and to those who work in it, if it is moved backwards and forwards for purely ideological reasons.

Having abandoned their attempt to roll back the frontiers of the state on public expenditure and the reduction of taxation, and being engaged daily in increasing the power of the state over local Government in a highly centralised way, the Government are trying to compensate for that through privatisation for its own sake. I am against that. I shall, therefore, as I think will my hon. Friends, vote for the amendment of the right hon. Member for Bethnal Green and Stepney. However, I should not do so if there were added to it a rider that the right hon. Gentleman and his hon. Friends would reverse it in due course if they had the opportunity to do so, because I am in favour of stability, not dogmatic rules.

If we are convinced that privatisation in the case of Scott Lithgow is the best way to preserve jobs, I accept it as an acceptable exception to the general rule of stability that I have tried to lay down. However, as this appears, rightly or wrongly — probably wrongly — to be the Government's determination, I am not prepared to have an ideological battle when so very much is at stake for the lower Clyde and for the communities of Greenock, Port Glasgow and the surrounding area. The most important thing is to preserve the jobs and to preserve the yard at the highest level of activity, and with the most secure future that it is possible to achieve.

There are certain questions on which I should like to ask for assurances that I believe the House ought to have. First, is the Trafalgar House deal really going to come off? The Secretary of State for Scotland must be careful about not getting a reputation for trailing solutions that look very attractive when the heat is on him and then hoping that, the heat having gone off, he can explain that the deal somehow disappeared.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

The right hon. Gentleman was praising the Secretary of State for Scotland the other day.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

Incidentally, I think the right hon. Gentleman ought to be present for the debate. The Under-Secretary is in the Chamber and will take notes of what is being said.

Taking up the point of my old hon. Friend the Member for Dunfermline, West (Mr. Douglas)—I mean old in the sense of going back a number of years—about my having praised the Secretary of State, I certainly thought it right to say a few words of fairness about the Secretary of State's general performance, but if he pursues this policy of trailing great solutions merely as an alibi to get through a difficult period, and then they do not come off, I take back the relatively nice things that I said about him two weeks ago.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

In one of his very constructive factual remarks the Secretary of State probably pretty well answered the next crucial point, but I should like to have an assurance on it. Is it the intention of the Government that the rig should be completed in the yard under whatever the ownership might be, the existing ownership or the new one?

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

If that is so, that is a new, clear statement, and it was not made, as I think the hon. Gentleman will agree, in very ringing tones. It was very different from the tones in which he made his controversial remarks. I take it he said that it is the intention of the Government that the rig should be completed. That is crucial.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

It is sometimes desirable to have statements from Ministers, and not merely a report in even the Glasgow Herald. That really is crucial. If not, the lesson would be lost on Scott Lithgow, and Scotland and Britain would be effectively out of this important and advanced field of technolgy. Submarines and submarine contracts, while they may be a very helpful addition—and submarines should be built on the lower Clyde—would not be a substitute for the rig being cancelled and for the yard being effectively out of that field.

I find it just a little peculiar that the Government should apparently have trailed in the Daily Telegraph today the fact that submarine orders were to be forthcoming. I hope that they may be, but it is rather a curious approach to competition that, before one knows who owns the yard, before one knows what the management is, before one has thought about asking for tenders or receiving tenders, one announces that, if the yard is privatised, one will give it submarine orders, whereas presumably there was no question of doing so when it was publicly owned.

Third, why is Trafalgar House thought to be so good at running a shipyard? What great ships has it built, as opposed to sailing ships that it owns being refitted in other yards? Exactly what change will the change of ownership make in the running of the yard? The work force, which I believe has taken account of the time of great uncertainty that it has been through recently, wants, I hope, with the management, to make a new beginning, but it will be basically the same work force. As the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley) said in the debate last week, in what I thought was a penetrating remark, the work force, if not the same people, are the brothers or sons of the people who work at IBM, with outstanding success and outstanding productivity, so much so that IBM pays constant tribute to the productivity of that plant as the highest level of any of its plants in the world, and it has many. That is a very good point. There were obviously grave management weaknesses in the early stages of the contract, but I believe that they have been substantially corrected. I think it would be a great mistake if there were to be a complete upheaval again in the management team. I do not believe it will be possible to have a completed rig by 1986 unless one sticks broadly — as one obviously would with the present work force—with the reconstituted management team.

Photo of Mr Christopher Hawkins Mr Christopher Hawkins , High Peak

The hon. Gentleman asked what great ships Trafalgar House had built. Would the hon. Gentleman not accept that the principles of good management are frequently transferable? This is a non-party political point. Taking Michael Edwardes as an example, what great car firm did he run before he went to British Leyland? Yet he did a fine job of reviving that company.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

I recognise, of course, that good management has its value, but Trafalgar House is a very remote holding company, and Trafalgar House will not, in fact, build many parts of the rig in Scott Lithgow.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

It is a great mistake to believe that one must interrupt every other sentence and therefore hold up speeches and prevent other hon. Members from speaking. I am right at the end of my speech.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Glasgow Hillhead

No, I am not giving way. I intend to conclude my speech. I believe that that will be in the interests of the House generally, so that the House does not suffer excessively long speeches.

I have no dogmatic view about the ownership of the industry. I deplore dogmatism on both sides. I deplore making a shuttlecock out of this industry, as has been done with other industries. By far the most important thing is to get the rig completed in the yard, and to provide a future for the yard. If the Government will give adequate guarantees there, even though I may not be entirely persuaded by their case that privatisation is the route—I do not want to indulge in a sterile ideological dispute—the important thing is the future of the yard. The ownership of the yard is of relatively minor importance.

Photo of Mr Paul Bryan Mr Paul Bryan , Booth Ferry 6:29 pm, 1st February 1984

First, I declare my interest as a director of Furness Withy, a major shipping company, and, more relevant perhaps to the debate, my interest as the Member of Parliament representing Goole where the dockyard is about to close down. The closure comes as a shattering blow to the town. I may not be talking about thousands of redundancies, as many hon. Members have had to do coming from the major shipbuilding areas — the number is 370 — but, nevertheless, in a small town such as Goole the impact is shocking.

Given the history of the yard, the shock is all the greater. It is not a tale of years of losses, bad industrial relations, late deliveries, absenteeism, poor quality and so on. Not a bit of it. The town regards the shipyard as something of an institution. For many years the yard has been the biggest employer of males in the town. Until nationalisation it was reasonably prosperous and provided steady employment for generations of men in the Goole area. However, in recent years, since nationalisation, the yard, like many other shipyards, has been making losses, although productivity has still been above the average for the shipyards of British Shipbuilders.

Deliveries have been good. There have been no complaints about quality, and on the whole industrial relations have been pretty good. It is against that background that the closure comes as a great blow. I cannot say that it comes as a complete surprise. For the best part of the year there was work, but when it was completed there was no other order on the way, and clearly closure threatened.

When I went to see Graham Day to obtain some idea of the prospects, he was quite frank. He expressed sympathy for the situation, but had no prospect to offer. Therefore, although the closure has not come as a surprise, the yard has been an integral part of the town and it is hard to believe that it is to go for ever.

Having said all that, what is to happen now? The yard is not likely to be sold as a going concern. Voluntary redundancies are already on the way for many of the work force and before long the yard's life as a shipbuilding yard will be over. Could it be turned into a shiprepair yard? I hear that the Humber graving dock is about to close, and that will leave the Humber without any major repair setup. However, the yard at Goole was built for shipbuilding and I should be surprised if it could take on the work of the Humber graving dock, with its large facilities.

Therefore, one is driven to the conclusion that the yard's life must be over and that jobs can be found only in an expanding local economy. The local economy will expand only in accordance with the efforts of local people, employers, entrepreneurs, local authorities, organisations and so on. The Government have a part to play, although not a major one. They could help.

At present Goole has intermediate area status. Its neighbours, Hull and Scunthorpe, both have development area status. In the Scunthorpe area there are also three enterprise zones. The various statuses were all based on unemployment figures which are now well out of date. In December the male unemployment figure for Hull was 19·2 per cent., for Scunthorpe 16·6 per cent. and for Goole 17·4 per cent. Although Goole had higher unemployment than Scunthorpe, it did not enjoy the same development area status. However, after the closure of the dockyard, male unemployment in Goole will stand at 22 per cent. and will be above the levels of Hull and Scunthorpe. In Old Goole, the area immediately around the dock, the figure will stand at about 27 per cent. Therefore, judging by the figures, Goole certainly qualifies for development area status or as an enterprise zone.

According to the White Paper, which was published in December, a new map of revised areas will be published. The new categories will be formed in accordance with new criteria. The White Paper states that the criteria will include not only unemployment, but cost-effectiveness, and that greater importance will be attached to service industries. Under the new criteria, Goole will be able to make a stronger case.

With regard to cost-effectiveness, Goole is the biggest inland port in the country. It is connected to the entire motorway network via the M62, and it has recently acquired a bypass. A truck from Goole can reach any part of the country in the course of a working day. Most of the new businesses which have sprung up in Goole during the past few years are connected in one way or another with the port or our admirable communications.

Goole also has good industrial estates with an ample number of factories as well as room for development. Therefore, on the counts of unemployment, cost-effectiveness and the development of service industries, Goole is well placed. I see from the White Paper that we are asked to make our submissions by 24 May. With the help of the local council and other organisations, I propose to make a submission, and I think that Goole is in a strong position to be awarded development area status.

That is all that one can say so soon after the tragedy has hit Goole. However, I hope that we shall have time to discuss this subject again, because it cannot be dealt with in one afternoon. It needs to be thoroughly thrashed out when all of us have had more time to think about the situation in which these beleaguered towns find themselves.

Photo of Mr Ernie Ross Mr Ernie Ross , Dundee West 6:36 pm, 1st February 1984

This seems to be a night for making apologies, so I apologise for the fact that I shall leave the Chamber after I have spoken, because this is my wedding anniversary—[HON. MEMBERS: "Hear, hear".] Twenty years ago I was married, and 20 years ago I left the shipping industry, having served my time as a marine engineer and apprentice in a shipyard called Robb Caledon in Dundee.

I am sorry that the Secretary of State for Trade and Industry has left the Chamber, because some of his comments about the work force's failure to respond to the needs of the yard in the 1970s, 1980s and 1990s were ill-founded. Although there was an agreement on the dropping of demarcation and restrictive practices in the Robb Caledon yard many years before its closure, it still closed. Therefore, tomorrow, when the Secretary of State has read this debate, I hope that he will reply to me and give some advice to those shipyard workers, many of whom are still on the labour exchange in Dundee. They did exactly as the Secretary of State demanded. They dropped their opposition to demarcation and restrictive practices, but that did not save the yard, despite the fact that it was building ships with machinery that was 20 or 30 years out of date. Restrictive practices just did not exist when that yard closed.

The present situation represents a mess for British Shipbuilders and for all those in the shipping industry. Our priority must be to maintain shipbuilding capacity in the United Kingdom, to defend an integrated shipbuilding and shipping industry, and to restore the British merchant fleet. That priority was missing from the Secretary of State's speech. Therefore, I hope that the Minister will tell us more about what the Government intend to do to help the industry.

The Secretary of State laid great stress on his disappointment in the motion. However, the Opposition are not the only people to think like that. Recently, all the church leaders in Scotland said exactly the same thing. I would not want to say that church leaders know very much about building ships of oil rigs, but they are aware of what is going on in their communities.

The matter was also the subject of early-day motion 255 which the Secretary of State might like to read as well; there he will see words similar to those in the motion before the House.

A big question mark hangs over the shipping industry. The warship yards are allegedly ready to be privatised. Smaller yards are closing. Following the announcements yesterday and today it seems likely that Britain will be left with only one yard within British Shipbuilders, Cammell Laird, capable of building offshore rigs. The decimation of the industry is wreaking havoc not only on communities but on the economy. The United Kingdom shipping industry has contributed over £1 billion annually to the balance of payments in recent years. During 1982 exports by British Shipbuilders increased significantly by 31 per cent., to £288 million. However, against this substantial income the Government's policy of non-intervention in shipping and shipbuilding is nonsense; they are actually supporting the United Kingdom's competitors. The lack of a coherent maritime policy is ensuring that the Government are presiding over the demise of the British merchant fleet and the decimation of the British shipping industry.

In the 1983 annual shipping review released by the General Council of British Shipping, the president, Richard Tookey, stated that if free trade was the maxim, such a policy should accommodate the protectionist measures of other nations. There seems to be a determination by the Government to ensure that British manufacturing industry, whether in cars or ships, does not survive into the 1990s. Those of us who are concerned about the future of aerospace await with trepidation the Minister coming to the Dispatch Box to tell us about the Government's commitment to aerospace.

We have heard tonight the prime example of the failure of the Government to respond to the problem of Scott Lithgow. Only now is the truth becoming apparent. We have been through the myths of lazy, inefficient workers. We now know that Britoil accepts that most of the responsibility for delay rests with management. The Government knew that, yet they took no action. Many former chairmen and directors of British Shipbuilders have been quoted. I should like to put on record the comments of a former managing director of Lithgows, Mr. Balch, who wrote in strong terms to the Financial Times on 26 January, praising the dedication and skill of the work force. Other hon. Members have been making that point for months but have not got a response from the Government.

The Secretary of State attacked my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) for his failure to say anything about recent negotiations. Within the industry there have been many hours of negotiations during the past few months between management and trade unions, with the encouragement of my right hon. and hon. Friends, to find a solution that would help to save British shipbuilding. The trade unions, under the auspices of the shipbuilding negotiating committee, have endeavoured to find a plan to save the industry, not an easy task when confronted at the negotiating table by someone who does not have the same commitment to the industry. That has come out of the negotiations and the Minister must accept responsibility for it.

The whole approach to the shipping industry is piecemeal and sporadic. If a company wishes to borrow under EC provisions, it must go cap in hand to the Government. At the same time there is still no confirmation of the rumours circulating within the industry that 17 ships are being held up deliberately by the Ministry of Defence until the three small yards, Robb Caledon, Cleland and Goole are closed.

There is no point in people crying out that the work force is not committed to the industry when the facts demonstrate the opposite. The work force is committed not only to the survival of the industry but to making it profitable. It cannot be stressed often enough in the debate that there is a lack of commitment by the Government and by the management of British Shipbuilders.

There are people in the industry who are trying to bring forward a coherent strategy. My trade union, the Technical Administrative and Supervisory Section of the Amalgamated Union of Engineering Workers, has for many years argued for an integrated maritime policy. In conjunction with the National Union of Seamen, TASS intends to produce a booklet at the end of February, if there is still an industry then, which will show where a start might be made on restructuring the industry. Great stress will be laid on the home coastal trade and the need for a policy of cabotage.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

Does the hon. Gentleman recall the situation at Robb Caledon and how, from the failure to keep the yard open, something else emerged—North sea activity? He played no small part in bringing that to Dundee and I pay him credit for that. Would it not be right to remind the House of the difficulties we faced then and the fact that we managed to achieve results which brought jobs to the old Robb Caledon yard?

Photo of Mr Ernie Ross Mr Ernie Ross , Dundee West

When the Robb Caledon yard closed, we could have lost a valuable site. The efforts of Kestrel are to be commended, but the yard should never have closed. There could have been a working relationship between Kestrel and the Robb Caledon division at Dundee which would greatly have enhanced the potential for Kestrel and British Shipbuilders in the North sea oil industry.

TASS and the National Union of Seamen will produce a document at the end of the month which will offer a way forward for the shipping industry. That document will make it clear that over 30,000 seafaring jobs have disappeared since 1979. It will detail the structural changes that have occurred in shipping which demand Government intervention. It will show that approximately one third of the United Kingdom coastal trade has been captured by foreign flag vessels. It will show that three of the top five countries in that one third restrict their coastal trade to their own flag vessels. In 1962 the Department of Trade survey showed that 46 out of 76 countries practised cabotage in some form. In 1983–84 the Government are still not prepared to help British Shipbuilders, the balance of trade and the shipping industry.

There must be fewer side swipes by the Minister at those who may or may not have been responsible for the state of the industry. There must be a much more positive commitment from the Government about what they intend to do to help the industry, which is on its knees, and to help a work force that has demonstrated through its representatives that it is prepared to dedicate itself to making the industry efficient and productive. It needs the support of Government if that is to happen.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes 6:47 pm, 1st February 1984

Like my hon. Friend the Member for Boothferry (Sir P. Bryan) I have bad news concerning my constituency. When I intervened during the speech by my right hon. Friend the Secretary of State, I was surprised that the hon. Member for Dundee, West (Mr. Ross) asked from a sedentary position what ship repairing and shipbuilding there was in my constituency. Since 1913 we have had the Humber Graving Dock, which has been a successful ship repairing and shipbuilding company in private hands. Until 1977 it made profits every year. Until this week it has employed some 500 workers.

Obviously it is not just the hon. Gentleman who does not appreciate the role of this company in the industry. The right hon. Member for Bethnal Green and Stepney (Mr. Shore), when listing the redundancies that had taken place in the shipbuilding and ship repairing industries, did not mention the latest and largest number of redundancies announced this week at the port of Immingham. I was utterly appalled at the speech of the right hon. Member for Bethnal Green and Stepney, because the policies which he advocated seemed to condemn docks such as Humber Graving to closure and redundancy. That private ship repairing company has been driven out of business principally because of unfair subsidies and competition arising from the nationalisation of British Shipbuilders.

The company has said that it has made losses since 1977. It says categorically that it is no coincidence that those losses coincided with the nationalisation of British Shipbuilders. It has appealed to me as the local Member of Parliament and to Ministers in the Department of Trade and Industry for British Shipbuilders to be given no more subsidies. It has made representations to my hon. Friend the Under-Secretary of State. I am grateful to him for seeing me some four weeks ago and for receiving representatives of the company on 23 January.

I regret that it has not been possible for the Government to make money available to the company, but I understand the reasons for that. Humber Graving Dock's problems have been caused by the Government giving taxpayers' money to selected portions of the shipbuilding industry—the nationalised industry.

If we accept the proposition of the right hon. Member for Bethnal Green and Stepney that the problems of ship repairers have nothing to do with nationalisation, we should examine other possible causes. No one can deny that Humber Graving has suffered from its share of bad management. Moreover, no one who knows anything about the company doubts that industrial relations have also contributed to the problem. It is not for me as a Member of Parliament to apportion blame to management or the work force, but it is impossible to deny that industrial relations have been appalling for several years. That cannot have assisted the company to rectify the £6 million losses which have occurred since 1977. It is only because the company was taken over by the holding company, Richardsons, Westgarth that redundancies did not occur earlier.

My experience of local unions does not inspire me with much confidence. When the announcement was made yesterday, I made it clear that I recognised the problems created by unfair competition. I also said that I recognised the problems created by poor management and poor industrial relations. I am not at all impressed by the way in which the union convener is trying to deal with the problems at Humber Graving. He asked me to telephone him. I did so this morning. As the local Member of Parliament I was only too pleased to discuss the matter with him at the earliest opportunity. Serious negotiations are going on with Seaforth Welding. We all hope that it will take over part of Humber Graving Dock.

I have been involved in those discussions with the Department of Trade and Industry and was able to see the Under-Secretary of State a few weeks ago about them. However, when I rang the union convener this morning he slammed the telephone down on me when I mentioned the delicacy of the negotiations and said that in the next two or three days the union would have to give a clear sign to Seaforth Welding that it was prepared to acknowledge past mistakes and give a commitment to change working practices. If it does not do that, we run the risk of no employees being retained at Humber Graving Dock. We should be under no illusions. Even if the negotiations with Seaforth Welding are successful, few employees will be taken on.

Photo of Austin Mitchell Austin Mitchell Chair, Treasury & Civil Service Sub-Committee, Opposition Whip (Commons)

Does the hon. Gentleman agree that it is hardly surprising that the convener put the 'phone down on him if he blamed what has happened at Humber Graving Dock on the workers and bad industrial relations? Does he further agree that there is no inducement for another firm to continue work at Humber Graving Dock if, on an occasion such as this, he denigrates management and workers and blames them for the problems?

The dock is doing a superb job on the Aurelia and has been widely praised. The yard is working on £17 million worth of orders and a contract for P and O worth £2 million will come in on Monday. The real problem is the depressed state of demand for repairs, which has been caused by the crisis in British shipping and the intense competition which has inevitably resulted from yards which do not have enough work. The industrial relations record at the dock has been extremely good for the past four years. It is unreasonable in the circumstances that I have outlined to attack management and men and to use them as an excuse for the Government's failure to manage the economy.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

The hon. Member for Great Grimsby (Mr. Mitchell) should know the circumstances of that company well. Seaforth Welding knows the company's history and is under no illusions about what it might take on. I assure the hon. Gentleman that if he reads the reports in the Grimsby Evening Telegraph and the Scunthorpe Evening Telegraph he will find that I did not mince my words. However, if we are to save any remnants of Humber Graving Dock it is about time that employees ad especially trade union officials recognised their obligations as well as my obligations and the Government's.

I shall now deal with the Government's obligation to see whether there is any way in which they can assist successful completion of the negotiations with Seaforth Welding. As I have said, I was able to meet my hon. Friend the Under-Secretary of State and arrange for meetings with him and Richardsons, Westgarth. Those meetings took place. I should like to ask my hon. Friend the Minister a question, the answer to which could have a direct and beneficial bearing on the negotiations with Seaforth Welding. Can he give the House an unequivocal assurance that the Government will provide no more subsidies and guarantee no more orders to Tyne Shiprepairers after the next 12 months? Contrary to what the hon. Member for Great Grimsby said, there is no doubt that the competition from Tyne Shiprepairers is unfair.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

I have already given way to the hon. Member for Great Grimsby who has a constituency interest in this matter, but I give way to the hon. Gentleman.

Photo of Dr David Clark Dr David Clark Shadow Minister (Business, Innovation and Skills), Shadow Spokesperson (Education)

The hon. Gentleman mentioned one of my constituents. I am intrigued by what the hon. Gentleman has said. Are the Government giving any guarantees to the privately owned Tyne Shiprepairers group? We should all like to know if they are.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

It is not for me to answer that question. My hon. Friend the Minister is far better placed to answer it. I am merely trying to point out that whereas the constituency of the hon. Member for South Shields (Dr. Clark) has had the benefit of substantial public funds, mine has had not one penny piece. I am simply asking my hon. Friend the Minister to bear in mind the extreme unfairness which has led directly in my view—and in that of the company—to the redundancies. There can be no doubt that the nationalisation of British Shipbuilders and the constant flow of public money to state-run enterprises in the shipbuilding industry have had a direct impact on Humber Graving Dock.

Photo of Mr Donald Dixon Mr Donald Dixon , Jarrow

Will the hon. Gentleman give way?

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith

No, I shall not give way. I was in the middle of asking the Minister a question about Tyne Shiprepairers. My constituents who are employed at Humber Graving Dock, will want to feel that they have the same opportunities as those afforded to employees of ship repairing firms in the state sector, including those about to be privatised. Earlier this afternoon, my right hon. Friend the Secretary of State for Trade and Industry spoke about Scott Lithgow, saying that the Government were prepared to wipe the slate clean and stand the cost of redundancies. It might be possible for Humber Graving Dock to be given the same facility. If there is public funding to assist with redundancy payments to shipyard workers elsewhere, why cannot that assistance be given in my constituency, to Humber Graving Dock?

There should be equal treatment. No subsidies should be paid to any ship repairing firm, or the slate should not be wiped clean anywhere in the country. Alternatively, subsidies should be given to companies such as Scott Lithgow and Tyne Shiprepairers, as well as to Humber Graving Dock.

I am sorry to have aroused passions in Opposition Members, but it must be said that there is blame on the union side at Humber Graving Dock. The sooner the unions give a public commitment that they acknowledge that a massive change in working practices must take place, the sooner there will be an incentive to Seaforth Welding seriously to consider taking over part of Humber Graving Dock. If negotiations are successful, there will be only a certain number of jobs. We should be under no illusion that Seaforth Welding will be able to accommodate all the 500 employees in the company. Let us not suggest that Seaforth Welding, if it can take over the present company, will take over responsibility for all the work force.

The Government can assist. The Minister of State and the Under-Secretary know the details and what is at stake. I hope that they will be able to give specific answers to my two questions about this company in my constituency.

Photo of Nick Brown Nick Brown , Newcastle upon Tyne East

On a point of order, Mr. Deputy Speaker. I urge those who take the record of our proceedings to make absolutely sure that there is no more confusion between Mr. N. Brown and Mr. M. Brown. I should not like any of the remarks made by the hon. Member for Brigg and Cleethorpes (Mr. Brown) to be attributed to me.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

I feel sure that the Official Report will be as accurate as it always is.

Photo of Mr Gordon Bagier Mr Gordon Bagier , Sunderland South 7:04 pm, 1st February 1984

I congratulate the hon. Member for Brigg and Cleethorpes (Mr. Brown) on restoring the debate to the level it reached when the Secretary of State sat down. The hon. Gentleman is clearly a candidate for entry into the league of those who are described in various parts of the House, and elsewhere, by names that I, as a gentlemen, would not use. I hope the work force in the hon. Gentleman's constituency, which the hon. Gentleman has been knocking about strongly, will take due note of what the hon. Gentleman said about it at the next general election.

I am more concerned to turn the debate to a consideration of the industry's future, and the effect on the shipbuilding areas if there is no future in the industry.

I sympathised much more with the hon. Member for Boothferry (Sir P. Bryan) when he referred to the high unemployment in his constituency. Although it is a relatively small figure, his constituency is badly hit. It was significant that there was not one word of sympathy from the Secretary of State when he talked about the industry. He talked about the social consequences, but there was no question of him sympathising with those affected.

In Sunderland, which is heavily dependent on merchant shipbuilding, unemployment varies from 41 per cent. To 33 per cent. If the shipyards in Sunderland close, we shall be in serious difficulty. That is why I should like to ask where the Government are going. They owe the House a much tighter explanation than they have given up to now.

The Secretary of State made great play of the motion and amendment on the Order Paper. He was selective when he quoted from our motion and the Government amendment. I recommend him to read at least the first few lines of our motion: That this House, recognising the importance to the United Kingdom economy of the maintenance of a strong merchant, naval and offshore shipbuilding industry". That is important, and it is what we are interested in.

During the general election all the candidates received a questionnaire. In the introduction we were told: Our merchant fleet has halved during the last seven years from 1,614 ships to under 900. Three ships a week are now being laid up or sold. If this continues there will be no British Merchant Fleet by 1999. That was from the British Maritime League. Those people describe themselves as non-party-political. However, they are concerned about our maritime fleet.

In today's Lloyd's List, there is a strong letter headed: Govt turns deaf ear to pleas for fleet support". The letter states: by allowing British operators to flag out their vessels the Govt has been aiding and abetting the decline of the merchant navy; by allowing this, the overall position in respect of bad crewing and safety standards will be exacerbated. The fleet has declined by that tremendous amount.

The British Maritime League stated: Our fishing fleet has been decimated. I do not have to tell our colleagues from Grimsby and elsewhere, even the hon. Member for Brigg and Cleethorpes (Mr. Brown), that the fishing fleet has been decimated. The circular goes on: Our shipbuilding and marine equipment industry is going through the worst slump in its history. British Shipbuilders alone has reduced its manpower by 55 per cent.—24,000 people—and plans to reduce it by a further 6,000 in the near future. The circular also states: The Royal Navy and its support services have been steadily weakened to the point where their ability to carry out their role effectively is in doubt. I wonder whether the hon. Member for Brigg and Cleethorpes or the Secretary of State replied to the circular from the British Maritime League and how it fits in with what they are doing now.

The Secretary of State let the cat out of the bag towards the end of his speech. He did not refer much to the excellent speech by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). He said that he would support the part of British Shipbuilders' corporate plan to transfer the warship building yards to the private sector. He said that that would leave us with the difficult job of looking after the merchant yards. I am interested in the merchant yards in Sunderland and elsewhere. I believe that the Government are interested only in handing them over to private enterprise.

Will the Minister tell us what he thinks will be the future structure of the merchant shipbuilding capacity? Does he believe that it will be modernised, then privatised and left to get on with the job? The Government amendment states that the House endorses the Government's policy of returning as much as possible of the industry to the private sector". The Government believe that that is a panacea. We in Sunderland have good reason to remember what has happened in the private sector, as my hon. Friend the Member for South Shields (Dr. Clark) said.

Sunderland Shipbuilders, one of the most effective yards in Britain, nearly went to the ground because it was part of the Court Line empire. That profitable shipyard almost went under the receiver's hammer. The Secretary of State made a snide remark about Mr. Tony Benn. I would be the last to be accused of being a great supporter of Mr. Benn, but I must say that when the Sunderland yard appeared to be about to close, Mr. Benn, as the responsible Minister, agreed to take it under public ownership as a going concern. If he had not done that orders would have been lost. He showed a concern for the work force that is lacking in this Government.

A delegation of Tyneside shipyard workers visited the House today and expressed deep concern about their future. One shop steward told me that at a quarter to four yesterday the nationalised firm of Sunderland Forge was told that it would be sold—just like that, without any consultation. The work force was neither considered nor consulted. A draught of fear ran through that factory because the workers did not know what would happen to them. They should have been consulted; that is open government. Or are the Government frightened to admit what the future might be? One of the shop stewards hit the nail on the head when he said, "I cannot understand why it is being privatised when it is profitable." That is the tragedy — it is being privatised because it made the mistake of being profitable. If it had been losing money, it would have been a different story. The Government want to get their sticky hands on a profitable section of the shipbuilding industry and its ancillary services. That is why they want the warship section.

Even at this late stage, I appeal to the Government to show some conscience about what is happening to the societies that depend on the shipbuilding industry. They should not only ask themselves whether Trafalgar House or some other private concern will invest their brass in the industry, because those whom we represent have invested their lives in the industry. The country owes them something for that.

It is little short of disgraceful for an island nation even to think of reducing its shipbuilding capacity and its merchant fleet to the extent that they are being reduced under this Government. I hope that when the Minister replies he will explain how the Government reached the conclusion that reducing shipbuilding capacity by knocking the blazes out of it has some patriotic effect on an island nation.

As my hon. Friend the Member from Sunderland, North (Mr. Clay) has said, I am an optimist in expecting some finer feelings from the Government. I agree that I did not expect that from the Secretary of State, but I have not yet given up hope for the Minister of State. I see that I have raised a smile on his face.

The Opposition are concerned about the shipbuilding industry. We believe that Britain needs it in this great competitive world. The Government lecture us on how the lads should be competitive. The Financial Times article on the demarcation dispute shortly before Christmas stated: Any suggestion that the primary cause of losses in the industry is rigid demarcation and unproductive labour should be treated with considerable scepticism. The article was right. We might discuss the difficulties of management and so on, but let us at least give credit to the industry and its unions. There have been massive changes in working practices and the workers have done their utmost to help put the industry back on course.

What do the Government really want? They know who our main competitors are, and South Korea is one. At a recent Select Committee hearing Mr. Atkinson said about the position in Korea: Of course, their operations are totally uncommercial and are being funded by the Government. Korea is demanding a large share of the shipbuilding industry. It has new technology and low wages. A recent report in the Sunday Times about Korean shipbuilding stated: Part of the success comes from cheap labour. Most shipyard workers put in 10 hours a day, six days a week and are not averse to additional early morning, late night or Sunday overtime. Wages are still only about one third of their Japanese counterparts, strikes are illegal and unions are mostly formed by management. Is that what the Government want? If they examine their consciences they will admit that they do not want strong trade unions; they do not want people to have a decent standard of living. The Opposition will not stand for that approach to our great industry.

The Opposition will press the motion. We know that we will be defeated in the vote, but we will win the debate. We always win the debate, and there is no shadow of doubt about that. When Conservative Members go through the Lobby tonight, I hope that they will have a social conscience about the work force and communities that will be affected by the Government's proposals.

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan 7:16 pm, 1st February 1984

As usual, the Opposition seek to lay the blame for the shipbuilding crisis on this Government—

Photo of Mr Roland Boyes Mr Roland Boyes , Houghton and Washington

Exactly. The hon. Gentleman has made his point and should now sit down.

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan

The hon. Gentleman, in his usual manner, addresses the House from a sedentary position. If he wants to make a speech, he should attempt to catch your eye, Mr. Deputy Speaker. I hope that we will have no more of these interventions in such a serious debate. The hon. Gentleman is becoming famous for them.

Since the Government were elected, their intention has always been to maintain the shipbuilding industry. They have stood by that commitment, but it has been a one-sided affair. That has been obvious since the prolonged parliamentary struggle in 1977 over the Aircraft and Shipbuilding Industries Act. The Opposition must accept that the greatest problem has been the rapid decline of shipbuilding throughout Europe during the 1950s and 1960s. Our share of the world market has fallen to only 3 per cent. The collapse forced British Shipbuilders to come to the Government to ask for approval of further loan facilities. When the 1977 Act was passed, the loan was fixed by the then Government at £200 million. That was increased in stages to £800 million, and by July 1983 the Government were forced to increase the loan to £1,000 million. By the end of 1983 it had to be further increased to £1,200 million.

Against that background, British Shipbuilders was suffering from mounting losses each year. In 1982–83, it lost £117 million. That was an increase of 600 per cent and far in excess of its agreed loss limit. That is the financial side of the story. The Government can be justly proud of their financial commitment to the industry. However, the story of the losses is a sorry tale, and both management and work force in British Shipbuilders should take heed of it.

British Shipbuilders, being acutely aware of the crisis in many of the yards in the group, produced a survival plan. The three main targets in the survival plan were to cut costs, boost production and deliver on time. It has been said today—no doubt it will be said again—that the records of many of the yards in meeting these targets was abysmal. Much unnecessary overtime was being worked, there was no increase in production, the need for flexibility was being ignored by the workforce and management seemed to have no grasp of the critical importance of the fact that overheads and losses often accounted for as much as 50 per cent. of the total cost of an order. More than half the working days were being lost—that is suicidal for any business—and absenteeism had reached alarming proportions. It does not take much intelligence to appreciate that together, those factors were responsible for enormous losses, and, more important—as the Secretary of State for Trade and Industry has said today—for a loss of confidence by the customer who had placed the order. That loss of confidence had reached a stage at which customers were excluding some of the yards from their tender lists.

Companies must take action which will give customers the confidence to place further orders. In the case of the survival plan, it was vital for British Shipbuilders to demonstrate to the customers that it had the ability and the desire to meet programme dates on existing contracts. That was necessary in order to restore confidence. The company was aware that if it did not obtain general recognition that many improvements had been implemented in performance, it could not survive. It was made clear to both management and work force that such improvements were fundamental to success and that everyone in the industry must understand that survival was possible only if the matter was treated with the urgency that it deserved.

Top and middle management—and, to be fair, some of the work force—accepted the survival plan. Some people at Scott Lithgow accepted it. However, that acceptance was thwarted by the national officers of the trade unions, who insisted that any deal on work practices would only be accepted if British Shipbuilders would guarantee the future of all the yards and work forces. How any trade union could ask any business to give such a guarantee is beyond comprehension. In addition, the offer by British Shipbuilders of an increase of £7 a week in basic pay in return for acceptance of the survival plan was not accepted. The work force also declined to accept major reforms of restrictive practices and demarcation lines within the yards, or the aim of British Shipbuilders to improve productivity to the level of the company's competitors in northern Europe and in the far eastern yards.

The survival plan was rejected, with the result—as is well known—that the trade unions threatened a national strike if British Shipbuilders insisted on implementing it. Good reason prevailed when it became clear to the unions that British Shipbuilders had no intention of giving in to their demands and that some of the commercial yards might be closed permanently if the strike went ahead. I am glad to hear from hon. Members on both sides of the House that further talks have produced agreement, after minor amendments by both parties, and that the survival plan is now being actively considered by unions and management in the various yards.

Without doubt, there is still a serious problem. Orders are not coming forward in many of the yards, and the outlook is bleak. There is a total glut in shipping capacity, which means that new orders are not being placed. There is a glut of 40 per cent. in shipping capacity. In March 1983 some 91 million tonnes of shipping were lying idle. Competition from foreign yards is fierce, and at the end of November 1983 British Shipbuilders' order book was worth only an estimated £2,500 million, which included £1,800 million of defence work and only £500 million of merchant shipping.

I sympathise with the hon. Member for Sunderland, South (Mr. Bagier), who said that as a merchant nation we should endeavour to maintain a higher proportion of merchant shipping. I was born in Greenock, and in my youth—

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan

As usual, there is a clown in the Chamber.

I was born in Greenock, and I do not forget the many years in which the British shipbuilding industry was a shipbuilding industry.

The picture is not all black. Provided that the management and work force of British Shipbuilders get the plan working, any further loss of job in real terms may be delayed.

The Navy has recently announced the ordering of 12 new type 23 frigates over the next decade at £100 million each. The first orders are expected to be announced this year. We in Scotland hope that some of the orders will go to Scotland. Yarrow on the Clyde has designs on the orders, and perhaps some will go to Scott Lithgow.

As my right hon. Friend mentioned, Hall Russell in Aberdeen has received an order from the Ministry of Defence to build three moorings and salvage vessels at £28 million. There are also high hopes that the Scott Lithgow yard will be saved from closure, although there are bound to be redundancies there in the first instance.

A number of firms have expressed interest in Scott Lithgow. I intervened in the speech of the hon. Member for Glasgow, Hillhead (Mr. Jenkin) because he was referring specifically to Trafalgar House. The House should not lose sight of the fact that Trafalgar House is not the only firm interested. We who wish to see the restoration of that yard are delighted that more than one company is interested. Some of the other interested companies may have more expertise in shipbuilding than in rig construction. In the past few years, Scott Lithgow has developed into a rig construction yard rather than a shipbuilding yard. That is sad, because for over 50 years there was always a submarine in the dry dock.

I am glad to know that the Prime Minister, the Secretary of State for Scotland and the Secretary of State for Trade and Industry are in active discussion with the interested firms. I am, however, surprised and disappointed by the comments of some trade union leaders who met my right hon. Friend yesterday and by the adverse comments by Labour and Liberal party spokesmen in the west of Scotland, particularly those attributed in today's Glasgow Herald to Mrs. Helen Liddell and to Mr. Ross Finnie of the Liberal party.

Scott Lithgow has no future under the management of British Shipbuilders. That yard has cost the taxpayer £160 million in losses since 1977. It accounted for £66 million of the £117 million which British Shipbuilders lost in 1982–83. Trade unions should be more than delighted to learn that anyone is interested in taking over the yard.

Last week there was turmoil in the lower Clyde area when the yard was threatened with closure. Now that there is a possibility of a private firm taking over the management responsibility, the trade unions are reluctant to accept the plan and a deal which could save their members' jobs. Do they not realise that it could be the life saver which all at the yard desire? The Government have said, as my right hon. Friend the Secretary of State repeated today, that existing losses will be wiped out and that the cost of redundancy will be met by the Government. Whichever operator takes over the yard, it will take it over with a clean slate.

In the discussions that I had with the joint shop stewards committee at Scott Lithgow last week, they told me that they would be happy to accept a private operator after full negotiations. I accept, as the hon. Member for Sunderland, South said, that there must be negotiations between management and work force if there is to be a happy relationship between them in any shipyard. The same applies to any commercial business. The shop stewards agreed that they would go into the private sector yet after Mr. Duncan McNeill met my right hon. Friend the Prime Minister yesterday he is reported as saying: unless and until the Government laid its cards on the table by revealing the effects of privatisation, then privatisation 'was not an option'. Do they or do they not want the yard to stay open? I believe that the yard has a future. I have known it all my life and I know what it can do. British Shipbuilders has made a genuine effort to improve the yard's productivity—

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

The hon. Gentleman mentioned a constituent of mine, Mr. Duncan McNeill. His commitment to Scott Lithgow's future is as strong as that shown tonight by the hon. Member for Banff and Buchan (Mr. McQuarrie). The remainder of the shop stewards committee, the work force and management feel the same. As a Greenockian, the hon. Gentleman should know that is true of the Greenock and Port Glasgow community.

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan

I am proud to be a branch of the green oak tree. I accept what the hon. Member for Greenock and Port Glasgow (Dr. Godman) said about Mr. McNeill but, unfortunately, the statement attributed to him in the Glasgow Herald belies what he told me last week. I hope what the hon. Gentleman said is correct, because that is what I should like to hear.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

My hon. Friend will remember that when we met the shop stewards there was no doubt that they were making no qualifications about who should own the yard or what the future was. They were interested in keeping the yard open.

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan

I am grateful to my hon. Friend for making that point. In an effort to improve the yard's productivity, British Shipbuilders engaged a Dutchman, Mr. Kooymans, who is an expert at rig construction. I should like to pay a special tribute to him for the considerable improvement he has made in the yard's productivity. The steps he took have had a considerable effect. I can give two examples of that. The first is in the steel section, where productivity has been increased by 30 per cent. and, the second in the welding section where, with the use of semi-automatic equipment, production has increased by 100 per cent.

Mr. Kooymans has gained the respect of management and the work force. He has stated that if the work force and management accept flexibility, Scott Lithgow can be put into profit very shortly.

I take issue with the right hon. Member for, Hillhead who was plainly unaware that some of the present management had only been temporarily seconded to the yard. They cannot hope to be retained. There must be new management the right hon. Gentleman admitted, when he was challenged by one of my hon. Friends, that new management, such as Sir Michael Edwardes, could make a success of the firm. There is no reason why any firm that takes it over should not make a success of it.

The present management has also played a part in reducing costs. Overtime, which cost £7·5 million last year with no great increase in productivity, has been cut by 75 per cent. Subcontracting has been cut by 65,000 per cent.—[[HON. MEMBERS: "What?"]—£65,000 and the work has been put back in the yard. Absenteeism, which was alarming, has been cut to single figures. It is estimated that those steps will save between £6 million and £7 million this year. That has been achieved by the full cooperation of management and work force.

Would it not be better for national trade union leaders to leave the Scott Lithgow survival plan negotiations to the joint shop stewards committee which is actively engaged in the yard's day-to-day running? The local committee knows far more about what is going on at Scott Lithgow than the national leaders. I ask trade union leaders to act responsibly and let us get the yard going again. Let us have no more talk in the press from ill-informed people of a "sell-out." We are talking about people's jobs and the economy of the Inverclyde region. I hope that no one—trade unions, management or anyone else — will do anything to damage the present negotiations, or the blame for the devastation of the lower Clyde will be laid at their feet.

We want a strong, viable shipbuilding industry. It failed miserably under nationalisation; it is now time to put it right by allowing the private sector to run it with the good will of the work force and management. The Government's commitment to shipbuilding will continue to be implemented only so long as the trade unions and the Labour and Liberal parties do nothing to damage what is now a must if Scott Lithgow is to be saved instead of being closed, with the resulting devastation of the Inverclyde region.

Photo of Frank Field Frank Field , Birkenhead 7:37 pm, 1st February 1984

I wish to return to the urgency that my hon. Friend the Member for Sunderland, South (Mr. Bagier) introduced to our proceedings. The sad and simple fact about today's debate is that we are trying to tell the Government that the spectre of closure is haunting many of our shipyard towns. Closure is a possibility in towns which have already been buffeted not just by the present recession but, long before this Government were elected, by the economy. I do not wish to lay the blame solely on this Government, although things have speeded up since the 1979 election.

I wish to remind the House of the sufferings endured by Birkenhead. In the first two years of the Government's life we lost 1,800 jobs. That was bad enough for a town which already had high unemployment, but since then job losses have speeded up until they are now out of control. The latest figures which the Government can give are for the mid-point of 1983. If we take the period from 1979 to 1983, we find that there have been more than 20,000 job losses in the Birkenhead area.

Tonight we are discussing the hope which the Government, along with other parties, hold for the survival of shipbuilding in Britain and shipbuilding in Birkenhead. The closure of the yard in Birkenhead takes place against the decimation of much of our industrial base. In many streets in Birkenhead, unemployment is now well over 40 per cent. We are not discussing just a closure or the fact that 4,000 jobs might be lost. That is bad enough, given the number of jobs that have been lost over the last few years, but, as hon. Members who have defended the interests of Scott Lithgow have pointed out, we are equally concerned about the multiplication of job losses if subcontractors are forced to close their doors.

Indeed, this issue is even more important than that. Cammell Laird is now the only major training centre remaining in the Merseyside area. If the Government hold out the prospect of an industrial renaissance—which will affect the north-west and Merseyside in particular—we shall need a skilled labour force if we are to benefit from it. This therefore is another reason why Cammell Laird must be saved.

Apart from the immediate horror and cost of losing this shipyard in my constituency, and the subcontractors who will be dragged down by that decision, people generally will lose hope of participating in any industrial future at all.

If anything major happens to Cammell Laird, the morale of the whole area will be affected—not just the morale of those who work in the yard or the industries and small firms that service it. The catechism, when speaking of the sacraments, teaches us the importance of outward visible signs. If the Government allow that yard to close, that will be an outward, visible sign of how much they care about our area.

I hope that my short contribution has reintroduced the urgency surrounding this debate—the spectre of closure that haunts many shipyard workers and their families as well as workers in the supply industries.

I do not apologise for speaking about Cammell Laird. Indeed, general principles can be drawn from my remarks which are relevant to the national debate. An important lesson can be drawn from Cammell Laird's record. It completed on time the Bayleaf order for the Royal Fleet Auxilliary. It built a type 42 frigate—the Liverpool—a year ahead of the target date set, and the sea trials revealed the excellent quality of workmanship. However, that yard is now facing problems, and it would be foolish if I tried to hide them from the House.

At present the yard is building a jack-up rig for British Gas, and that is behind schedule. If the yard is to survive, it must build it and deliver it on time by 26 April. However, it is no longer totally within the power of the workers or management to deliver on time.

Photo of Mr Albert McQuarrie Mr Albert McQuarrie , Banff and Buchan

Cammell Laird and Scott Lithgow are the two rig construction yards within British Shipbuilders. Does the hon. Gentleman accept that British Shipbuilders made a fundamental error by trying to transfer shipbuilders to rig construction in too short a time and without adequate training?

Photo of Frank Field Frank Field , Birkenhead

There is a danger that some hon. Members assume more expertise than they possess. It is easy to sound off. That sounds good, but it does not help to build ships or oil rigs on time. I am mindful of my limitations when I speak to people in the yard who possess far more skills than I do.

As I was saying, it is no longer totally within our power to decide whether or not we build on time. There is the crucial question of outside suppliers. In building that jack-up rig, Cammell Laird is dependent on outside suppliers for vital parts, and if they do not deliver on time the yard will not be able to meet the deadline of 26 April.

The Government also have a responsibility. I hope that the Minister of State, when replying. will not adopt the attitude of the Secretary of State;, otherwise, morale in that shipyard and others will hit rock bottom. So far, little encouragement or hope can be drawn from what the Government have said.

Cammell Laird now has to jump three hurdles, the first of which is the new working procedures. From what they have said, it appears that some hon. Members think that those new procedures have been agreed. They have been agreed only at national level, and must still be agreed at local level.

The Secretary of State taunted us by asking how many Labour Members had supported this new era for the shipbuilding industry. It comes strangely from a Government who do not think that politicians should participate in industrial relations to suggest that somehow the Opposition have a crucial role to play. However, we do have a role to play. We must stress publicly what I hope many of my hon. Friends have said privately to those who work in the shipyards—the importance of the successful outcome of those negotiations.

Given the condition that the shipbuilding industry is now in, and given that they have had to deal with this Government, the trade union leaders have done extraordinarily well in the negotiations. They do not dispute the direction of change. There has been no dispute about that. Their concern has been about the pace of change. At the same time, they have tried to win wage increases for their members.

It should be remembered that during the past 18 months those who work in the shipyards have had wage cuts, something which did not even occur in the 1930s. Wage rates were cut in the 1930s, but prices fell faster, and as a result real wages rose. Shipyard workers have suffered a period of wage cuts which no other group in British industry has had to bear. Against that background, the trade union leaders have been extraordinarily successful in boxing with the Government.

I now come to the second hurdle. Cammell Laird must try to win the Sun Oil contract, and here the Government have responsibility. If they maintain the stance which they adopted last week on Scott Lithgow and are prepared to see yards fail, I doubt whether any foreign company will be prepared to place an order with any British yard. Therefore, the Government must play their part in steadying the nerves of those who are able to place orders.

Thirdly, I plead with the Government to stop playing politics with orders. Last July we were told that they were asking for tenders for two type 22 frigates. The bids had to be in by September. Classification meetings were held in November. By 18 November we were told that there would be a second round of re-submissions. On 18 January we were told that there would be a third round. Many shipyard workers feel that the Government are holding back on placing orders until they decide what they will do on the privatisation issue; in other words, that they will not look at those bids on their face value and make awards to the most competitive yards, but are trying to fit them into a longer-term privatisation strategy.

I conclude by making three, I hope constructive, suggestions. First, I have never disputed that the Government have a mandate to privatise. I disagree with it, but I have never disputed it. If the Government hold to that policy now, it will be impossible for merchant shipbuilding to survive the next couple of years. I therefore appeal to the Government, not to drop their deeply held views, but not to play politics with the future of merchant shipbuilding during the next couple of years.

Secondly, I make a plea in respect of a corporate plan. When I speak to my shop stewards, which I often do, I never attack the Government for not putting money into the industry. However, during the time that I have been in the House we have not once debated a corporate plan for the industry. My criticism is that, while the Government have come up with money, they have never come up with money linked to a long-term view of the industry, and it is that for which we are looking to the Government tonight.

Thirdly, while I understand all the difficulties of trying to persuade the shippers in this country to place orders with British yards, cannot the Government at least begin discussions with them on the sort of terms which they might be able to offer to achieve that? If the Minister could weave those three points into his reply, at least we could go back to our shipyard workers and the towns we represent with some message of hope, for that message has been sadly lacking in what the Government have said so far.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth 7:52 pm, 1st February 1984

It is safe to say that the industry under discussion tonight, merchant shipbuilding in Britain, is in its worst condition ever and is trading against the worst market conditions of any industry in this country.

We should remind ourselves that the plight is not unique to the industry in Britain. The same problems are arising in every western European country. One reads in the technical press of closures and rundowns in Sweden, Holland and Germany. In all western European countries there is the same crisis with the same difficult conditions and decisions having to be faced.

Reference has been made to the tonnage of ships laid up. To put what has been said another way, about three years' production for all the world's shipyards is surplus and is laid up around the world. That perhaps enables us to understand the situation more clearly because one can get carried away when quoting millions of tonnes. It is against those market conditions that we are discussing the future of British Shipbuilders. About one tenth of all world tonnage is surplus, and it is naturally extremely difficult to obtain any orders for new ships in those circumstances.

I understand that in the current financial year, British Shipbuilders hopes to obtain orders for only eight merchant ships for the whole of the industry in this country. Austin and Pickersgill, alone, if it had the opportunity, probably could produce 14 ships in a year on the production line that it has established. Against that, I repeat, we are hoping to obtain orders for eight ships for the whole industry. That is the measure of the crisis and it justifies my earlier comment that, with the world market conditions as bad as they are for ships, no industry in the country faces such a serious situation.

The speech of the right hon. Member for Bethnal Green and Stepney (Mr. Shore) seemed to be far away from the reality of the situation and contained no analysis of the market conditions, of the reasons for our present plight and of what is wrong with the industry. Four factors affect shipbuilding as they affect every other industry. They are the demand for the product, and I have commented on that; the competition; the efficiency of the industry; and the amount of Government support. I shall deal first with the last factor.

In the last five years, Government have provided £1 billion for shipbuilding in Britain. That figure includes Harland and Wolff in Belfast, which does not come within the remit of British Shipbuilders or of the Department of Industry, being in Ulster. However, it is engaged in exactly the same industry — trying to build merchant ships—so it is fair to include in the equation the sum provided to that yard, just as it is to include the amounts provided to the yards on the Clyde, the Mersey and the Tyne. As I say, the total has been £1 billion in five years, which means a great measure of commitment by the Government to the industry.

I understand that last year, Swan Hunter alone received £30 million of public money—in one yard on the Tyne in one year—which is equivalent to over £3,000 for each man in the yard. I am not prepared, therefore, to accept a criticism of the Government that they are not doing their part in dealing with this crisis.

Returning to the question of demand, one can see why owners are—I was going to say "reluctant" to buy ships but I do not think that that is the word; they are refusing to buy ships. Freight rates are now lower than they were in 1976. In other words, if an owner has a ship available for charter, he will obtain for carrying freight less than he would have got seven years ago, despite the change in the value of money during that time. In real terms, the freight rate has more than halved in the past seven years. Against that background, one can hardly give a ship away.

There is sometimes talk of solving the problem by a policy of scrap and build, but for many owners it is a policy of scrap and pay the creditors. Ships are now being scrapped when they are only seven years old, and then they are not being replaced. The fact that the Western merchant fleets are declining does not help. The reductions in the merchant fleets of the world are taking place mostly in the European countries—the British, French, West German, Norwegian and Italian merchant fleets — while the increases are occurring in places like China, Saudi Arabia and other emerging and developing countries.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

For some reason, the figures for Taiwan are included among those for China. I do not know why that is so, but the hon. Gentleman is right to mention Taiwan.

I should have liked to hear from the right hon. Member for Bethnal Green and Stepney his view of why British shipowners, when they order ships — and they are ordering very few at present, just a handful—do not place the orders in this country. I hope that that is an issue which the right hon. Gentleman has explored, although he did not enlighten us with the results of any inquiries that he had made.

I have asked the question many times, but I regret to say that the answers that I receive are that there is too long a history of delay, with serious consequences for the shipowner if the ship is not delivered on time. I believe that we now have yards which are capable of good delivery. Unfortunately, reputations are a long time changing and I echo the suggestion by hon. Members that our shipowners should seek to buy their ships in this country if at all possible.

In considering competition, figures have already been given for Korea in particular. That country is rapidly emerging as a major producer, and I have been warning the House about the situation since I was there in 1976. I have said, in previous debates from my observations there, that they work 73 hours a week for £60 a week. The workers in the shipyards are constructing ships with steel made in steelworks in which, no doubt, the wage rate is similar. Mr. Ken Douglas, a well-respected manager in the British industry who retired recently, has estimated that the Koreans have a £3 million advantage on the assembly of a ship with a £10 million sale price as a result of those wage figures alone, plus of course the further advantage from the low wage rates involved in the production of any of the parts of the ship that are made in their low-wage economy. It is true that they do not have trade unions there. Perhaps they will come in time, but that will not happen quickly. The people who work in the yards there, though badly off by our standards, are however far better off than their neighbours down the road and their brothers who are ploughing the fields with oxen. In an emerging country the people in the yards are basically pleased with their present standard of living, even if it is extremely bad by our standards. It is clear that that competition is here to stay; we must face it and tackle it. The only answer is increased productivity in our yards. A feature that sticks in my mind is the number of times that that has been said by myself and others in the House. The Geddes report way back in 1966 and the Booz-Allen report in 1972 both spelt out the need for change. Unfortunately, that change has not taken place to the extent necessary. We must all hope that it will happen at the 11th hour. Only if it does will the industry have a future. It is as simple as that.

Apart from increasing productivity by changing working methods, a critical feature is the number of hours actually worked each day in the yards. I am not being offensive in saying that, but I have seen figures that show a lack of productive work when our people are within the gates of the yard. I am not blaming those individuals. I am blaming the attitude of all in the yard, the management as well as the men. We are deluding ourselves in thinking that adequate productivity can be achieved if, as is said by some management, only four and a half hours are being worked by some of the men in a yard. That is a reflection on management as much as on men. That cannot continue in any yard that wants to stay open. The work force must understand that as much as we do. The message must be put over to them in language that they understand and accept. That can be done and it is beginning to be done in the better yards where management is facing the challenge.

The yards have varied in their efficiency and in their reaction to change over the past few years. There have been deathbed repentances in some yards and in some instances repentance has perhaps come from the grave. Others, fortunately, have learnt the lesson, and I believe that we are now seeing significant improvements in some yards. Pay elsewhere in western Europe tends to be higher than in our yards because fewer working hours are required to build a ship.

The House has not said nearly enough on that subject and I very much regret that one of the Select Committees has not taken the subject on board. Some extremely interesting statistics could be unearthed on the number of hours taken to build a standard type of ship in Britain compared with those needed by our competitors in western Europe to build an equivalent ship. That is the way to success in providing work and better pay for the workers in the yards. If we can match western Europe on the time it takes to build ships, we shall get the work and also be in a position to pay higher wages.

We have seen a sad contraction in the number of yards and the people employed in them. The hon. Member for Birkenhead (Mr. Field) spelt out clearly the fear at Cammell Laird. I pray that that yard will survive. Clelands, one of the smaller shipyards, which is situated in my constituency, is closing. It is a small comfort that many of the men have been found jobs at Swan Hunter up the river, but for how long they will have that employment I do not know. We must hope that Swan Hunter will have sufficient work to keep them all in employment. It is a great relief to me and to us all on Tyneside that Swan Hunter is held in such high regard by the Royal Navy and has so much naval work. I am not being rude about Cammell Laird when I say that I was told by Swan Hunter that the delivery of a destroyer at Cammell Laird one year early meant a somewhat longer delivery time than that usually performed by Swan Hunter.

It is difficult to decide which yards will have to go when there are no orders. I was most disappointed at the decision of British Shipbuilders to close Clelands. There has been no substantial investment in that yard for many years. It has the appearance of being old and is certainly not one of the yards with modern facilities. However, it had the great advantage of a very good labour force. I believe that it has not had a single late delivery in recent history. That is something that cannot be said of all the other yards. It has a good reputation with its customers, and it is liked by the Royal Navy. It has built a number of small naval auxiliaries. I very much regret that British Shipbuilders felt it necessary to close the yard and move whatever work might come along to other yards in other parts of its empire.

I accept that with the few orders that are available, not all the small yards in the division could remain open. There is only enough work for half of them, but it is particularly unfortunate that a yard which has a good labour force and which has done its stuff and worked hard should close.

Has the massive Government aid that has been given to the industry been used correctly? Have we obtained the best value for money? I am not sure that we have, but I do not criticise my right hon. and hon. Friends on the Government Front Bench for that. The way in which the money has been spent has been dictated very much by the international restraints that are upon us, imposed by the EC and other international bodies of which we are members.

It seems extraordinary that we are unable to use all the intervention fund that is available in the current year. It is extraordinary that about three quarters of it will not be used. By international agreement, we are allowed to subsidise the ship prices that we offer by only 15 per cent. or 17 per cent. That is not a large enough subsidy to obtain orders. We would have to subsidise by twice that extent if we were to obtain orders. What happens if there is no work for the yards and a huge loss? The taxpayer will have to meet the bill to pay for the men to do nothing. Surely the money would be better spent on reducing the prices we quote. That does not make sense. I do not believe that we have always made the best use of the taxpayer's money and the same is no doubt happening as much in Germany and every other shipbuilding country in western Europe. The artificial restraints in subsidy that are being imposed by the EC are ruining the industry in western Europe. I am one of those who favour our membership of the EC. It must be right to work with our colleagues over the Channel, but one hears of tortuous regulations that are being prepared to control the life and work of commercial travellers—that is the sort of thing upon which they set their heart in Brussels—while we have an industry that has been in a desperate, mortal crisis for five or six years, it is relevant to ask what Brussels has done. The answer is that it has done nothing constructive to help.

What is the main feature of the problem? The answer is competition from the far east. Nothing has been done by Brussels to help any of the countries of the EC on that front. Brussels should play a major part in tackling the problem that the European industry faces. All governments should get together to try to use the money that is provided for their industries in a way that will provide orders, work and jobs. We want jobs, work and orders, and not subsidies to pay for empty berths in the yards. I hope that that will be taken on board by my right hon. and hon. Friends on the Government Front Bench. I hope that the Minister will comment on that when he replies.

I am sure that merchant shipbuilding will continue in Britain. There will be shipbuilding on the Clyde, the Tyne, the Wear and Tees in future, but it will be very much less than hitherto and much less than we would all want. The British people accept not just that we have a maritime tradition but that we have a current maritime need. They accept that we must build merchant ships. I believe that the Government have accepted that and will continue to do so. I believe also that shipbuilding cannot continue without a partnership between the Government, management and men. The Government will have to continue to provide financial assistance in the foreseeable future. In my view, like all European Governments, they will have to do so for a long time. Management and men must work together to ensure that we achieve the best possible use of the yards.

We now have an agreement at national level. The hon. Member for Birkenhead, who speaks with much knowledge of the industry, wisely reminded us that it is at national and not local level. I think that we shall see the implementation of the agreement locally in the weeks ahead. We must do so if there is to be any future for shipbuilding in Britain. Quite clearly, the future lies in implementing the agreement.

The industrial relations director of British Shipbuilders, Mr. Maurice Phelps, spelt the message out in Shipbuilding News. He wrote: We have all heard it before but we have not done it. I regret we have not done more since nationalisation to improve performance. We urgently need to have the best working practices and the most effective manning levels. We must do all of this and we must do it now. If we do not, we are wasting our time and we can fold up this industry. I believe that that message is now understood in the industry and that there will be a future for it.

Photo of Mr Ronald Brown Mr Ronald Brown , Edinburgh Leith 8:10 pm, 1st February 1984

The Secretary of State mentioned Leith, and that is a curious honour if ever there was one. I do not know where the right hon. Gentleman has gone, but perhaps he is selling bikes to Nissan.

Leith has a famous history, going back about five centuries, and certain milestones must be mentioned. In 1511 the Great Michael was built in Leith—a warship which never fired its guns in anger, and no doubt the English will appreciate that point. More recently, Leith pioneered new technology for shipbuilding. In 1832 the Sirius, which was built in Leith, was the first steam-driven paddle vessel to cross the Atlantic. In the 1880s Leith pioneered the development of steam vessels.

Leith's record in two world wars is recognised world wide. Recently, German documents have revealed Leith's contribution to the war effort, and it is a good one. A leading shipbuilding authority said: Leith has a heritage of enterprise, skill and craftmanship created and maintained in circumstances of which we should be extremely proud. What went wrong? The boom period disguised the fact that owners had milked the industry dry. They had taken the profits and run, ignoring the future. The bosses' philosophy was this: in the good times we do not have to invest; in the bad times we cannot afford to invest.

What happened in 1977 when the shipbuilding industry was nationalised? Many owners were paid huge sums of money which they did not deserve. Had it been up to me, most of them would have been gaoled. I have said that before in the Chamber and I do not mind repeating it. Labour Governments have been far too generous in taking over neglected industries such as shipbuilding. The people who run those industries have been proved consistently to have thought about themselves, not about the national interest. They have repeatedly bled the country dry.

The other day a Social Democratic party Member said that we must take stock, and he was right for once. We must face the reality. It is no use bemoaning the past. We know that the shipbuilding industry is suffering from unfair competition during a world slump. The former chairman of British Shipbuilders said: European shipbuilding cannot compete with the false prices and financial packages being quoted by the Koreans and Japanese. Unless the EEC acts vigorously without delay the European shipbuilding will become extinct. We have to persuade the Government to do something. This Government have done very little.

In 1972, shipbuilding represented 9·8 per cent. of United Kingdom investment. Today that investment is down to less than 1 per cent. About 60 per cent. of our imports and 60 per cent. of our exports are moved on foreign ships. It is easy to use flags of convenience, and that is part of the explanation for that action. Many owners take advantage of cheap labour and exploit workers, whether they work on ships or in shipyards. Subsidies are a fact of life. The European Community depends on giving generous subsidies to farmers to over-produce. That is all right for Conservative Members who have broad acres. They can justify that action. It is all right if the subsidy helps them, and the Tories are good at helping themselves.

The Government's most recent answer was to appoint Mr. Graham Day, the Canadian whiz kid, to take over British Shipbuilders. He has admitted that his main job is to slim down the industry—a type of Dr. Beeching. I am sure that that is bad medicine for the industry, as we have already seen. He has made it clear that he will do the Government's bidding and privatise some yards and close others. Last week, he decided to close three yards, including Henry Robb of Leith.

Photo of Mr Gerald Malone Mr Gerald Malone , Aberdeen South

Is the hon. Gentleman suggesting that the whole of British Shipbuilders can continue on the same basis as at present? Is he saying that it should be maintained at this level? Does he not accept that some slimming down is essential?

Photo of Nick Brown Nick Brown , Newcastle upon Tyne East

There may be an argument for slimming down or reorganisation, but it is not justified in the case of Robbs. It was said that Robbs lacked orders. That was an artificial position. When the announcement date was declared last week, Robbs were in the running for Ministry of Defence work. Overnight the circumstances changed, and lo and behold I was told by the Minister of State for Defence Procurement that Robbs had overpriced itself. That was the first time the Minister had said that Robb's prices were too high. Clearly, the Minister cobbled together a story to try to justify Mr. Graham Day's actions.

Robbs did not deal only with Ministry of Defence work. The people in Leith know that Robbs was in the running for three major orders, and perhaps for many others. It was in the running for the order from RASCO, with the Ras-Lano project in Libya. Today I saw the Libyan ambassador, who confirmed that Robbs was still in the running for that order. Unfortunately, Robbs no longer exists as a company. Robbs was also in the running for an order with the Suez Canal authority. In a few weeks' time it would have been considered for a ferry order with Cal-Mac, but that is not possible now. Robbs has been starved to death. It has been killed off—it did not die off—because of a decision by the Government and Mr. Graham Day, who has been appointed to do a job for Government.

British Shipbuilders wants the best of both worlds. It wants orders and it wants to close a number of yards. It wants to slim down the industry by fair means or foul, and I am afraid that it will do so mostly by foul means. Ironically, the small ships sector is the growth area for shipbuilding. In that sector, Robbs had a chance, but it is not getting it. Officially the yard is closed but, ironically, work continues. The Ministry of Defence unfortunately forgot that there was a small research submarine in the yard. The work force has kept faith with the Ministry of Defence, while neither the Government nor Graham Day have kept faith with the work force. The men are doing the refit on that vessel as promised. They respect the customer and are showing that in practice. Having said that, I admit that no work force in any yard is perfect. All groups of workers have made mistakes, but most mistakes were made by management in the boardrooms.

If we want a new beginning, management must listen to the workers and take them into its confidence. When I first met Mr. Graham Day and put that point to him he agreed that changes were needed, but when I asked whether he would take the shop stewards into his confidence and let them meet potential customers he said that that was too radical. If that happened, the shop stewards would get to know what was going on. There was a great deal of horsetrading and double-dealing going on. Management do not want change because they reflect the attitude of the Government.

If British Shipbuilders was not playing fair with employees, Mr. Graham Day, representing British Shipbuilders, has not played fair with Parliament. He did not have the courtesy to consult local Members of Parliament and to explain the position before announcing that a yard was to be closed or slimmed down, as the jargon goes. He may eventually see me because I have asked to see him, but it will be well after the closure announcement and he is unlikely to change his mind about Henry Robb.

Shipbuilding needs a new deal all round. It is not a lame duck industry, although it would be a dead duck if the Conservatives had their way. With a little care the patient can be revived and recover, but the Conservatives will not give it that care because their attitude is selfish. They want to get the maximum out of it for themselves and maximum profits for their friends.

Other Governments—even capitalist Governments—do not take such a reactionary attitude. They believe in intervening to help their industries, but the Conservatives have repeatedly made it clear that that is not the attitude here. The chaos faced by the industry under the Tories is clear proof that we need a Labour Government to sort out the mess. Public ownership must be turned into Socialist ownership involving the work force. Worker participation and workers' control is needed more than ever, because that is how real democracy will be achieved in this country, not by people like me getting up and talking about it. It is a matter of involvement. We need it in shipbuilding and in every aspect of the economy.

Whatever is said and done today—the voting will no doubt go the Tory way—the struggle for Robbs will go on and we shall look after the submarine like the good workers that we are.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East 8:23 pm, 1st February 1984

It is a shame that the hon. Member for Edinburgh, Leith (Mr. Brown) did not follow the lead of my hon. Friend the Member for Tynemouth (Mr. Trotter), who spoke so knowledgeably about the real problems that face the shipbuilding industry. The hon. Member for Leith did not even bother to analyse the problem, which is the first thing that we must do.

The story of British shipbuilding is a deeply depressing one. Our market share in world shipbuilding fell from 40 per cent. in 1926 to 20 per cent. in 1956 and is now only 3 per cent. As the size of ships has increased, the number of vessels built in this country has decreased even faster. Employment in the industry is less than half the level of 1956 and the decline has been more marked in every year that has followed a very large pay rise.

Despite the decline in numbers, however, productivity is still below pre-nationalisation levels. Ten months ago, 91 tonnes of shipping were laid up and idle—64 per cent. more than the figure nine months previously—and there is little sign of that trend abating. In November 1983 this country had 1·8 billion tonnes in warship orders on its books but only 0·5 billion tonnes in merchant orders. World new orders declined from 14 billion tonnes to 11·3 billion tonnes in the five years following nationalisation. British Shipbuilders' share of the market declined even faster, from 2·3 per cent. in 1977 to 1·8 per cent. last year.

Every aspect of this deeply gloomy litany makes one thing clear. There is no simple solution. There is no panacea, and things will not improve for a long time because world overcapacity is still 40 per cent.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside

My hon. Friend may be aware that the laid-up tonnage in the world today almost exactly equals the total annual capacity of all the shipbuilding yards in the world working flat out. The average life of ships is 20 years but the average age of those actually in service is only 8½ years, so the future looks even gloomier for the shipbuilding industry.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

I am grateful to my hon. Friend. He echoes the point made by my hon. Friend the Member for Tynemouth. That is why I say that there is no easy solution.

Although world capacity is bound to fall, the process will be very gradual. We must therefore seek methods at least partially to ameliorate the desperate problems of what is undoubtedly a major strategic industry in an island with the proud maritime tradition of ours. The greater the problems, the greater must be our determination to slow down and in some cases even to halt the decline of that industry.

I therefore awaited some feasible, practicable suggestions from Her Majesty's loyal Opposition. In this, a debate of their own choosing, I hoped to hear fresh ideas, radical thoughts and evidence of real understanding of the practical and technical problems of the industry. I hoped to hear realistic proposals for halting the decline and stagnation. I hoped to hear how we could consolidate and rebuild the industry. But I was deeply disappointed. That is perhaps not surprising. An Opposition led by a man who in his first major speech as Leader of the Opposition castigated the Government for not spending £2 million to save £18,000 per year—a return of 0·9 per cent.—must suffer from exceptional economic illiteracy.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

It all comes down to the same thing, because in the end one has to make some money out of it some time.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

How much are you making out of the Falklands?

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

We have peace in the Falklands. That is what we have got out of that.

I hoped to hear constructive ideas from the Opposition, but all that we heard were proposals for the continued nationalisation of British Shipbuilders, a nationalised shipping line and counter-productive and unworkable protectionism — the same old doctrinaire policies that have sapped this nation's wealth and assisted in its decline. Perhaps I expected too much from the Opposition parties, and perhaps I should suggest to my right hon. Friend that, if he wants some practical suggestions, he should look to the Government party and to his hon. Friends, because we will give him some proposals that will assist him in his task.

The demise of British shipbuilding is not inevitable. Steps are being taken, and further steps should be taken. None of these steps will be easy, and they will require a degree of flexibility and a willingness to accept change that regrettably has not characterised the industry in the past.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

I fully agree—both management and workers.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

That is the most sensible thing the hon. Gentleman has said.

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

British Shipbuilders is right, therefore, to pursue rationalisation, it is right to press for acceptance of its survival plan, and it is right to eradicate the bane of shipbuilding—counter-productive demarcation, and the restrictive practices which have gone on for so long.

We on this side will offer every support for British Shipbuilders to become as competitive as north European yards. The Government are right, of course, to assist shipbuilding in this country by increasing warship orders and increasing the borrowing powers to £1·2 billion while the industry reorganises itself. It is right to press ahead with the injection of private capital to denationalise Vickers, Vosper Thornycroft and Yarrow warship yards. The Government are also right to encourage management buy-outs. I wish Readheads, Tyne and Wear Ship Repair and Grangemouth dockyard, management and workers, the best of luck. Indeed, it is those managements and workers who keep telling us that their firms would be viable institutions if they were allowed to get on with the job. I am pleased that we have given them the opportunity, and the right, to follow policies that have proved so successful in the National Freight Corporation. I wish these new capitalists the best of good fortune.

None of us would deny that, although the measures that have been taken are welcome and essential, there remains a profound problem, the merchantmen yards. There is, I repeat, 40 per cent. overcapacity in world yards. Despite the intervention fund and improving world and United Kingdom trade, despite a better exchange rate that assists us and despite the new sense of realism of management and work force, those factors in themselves are not enough. We have heard what is happening in Austin and Pickersgill, at Govan, at Smiths dock, at Ferguson Aisla and at Hall Russell and the rest, and it is deeply worrying, because all these merchant yards are in very deep plight. Despite the Government's sensible initiative, therefore, much more needs to be done to avert what is undoubtedly a catastrophe in merchant shipbuilding.

I ask my right hon. Friend to consider policies that fall into two parts, the one fiscal and the other practical. I recommend, following the 1981 start-up scheme and the 1983 business expansion scheme, that the latter be widened to allow for vessels on charter, for, as my right hon. Friend no doubt knows, the present regulations exclude this type of trade from qualifying, although it is a high-risk trade and competing against highly subsidised foreign flags. I therefore ask my right hon. Friend to consider most expeditiously the proposals put forward by the General Council of British Shipping.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

Does my hon. Friend agree that it is particularly galling that, in the North sea, where there is intense competition in the offshore supply vessel market from the Norwegians, many of those ships are subsidised by the sort of scheme that he suggests the Government should introduce?

Photo of Mr Jonathan Sayeed Mr Jonathan Sayeed , Bristol East

I am grateful to my hon. Friend. He makes an excellent point in amplification of the general point that I was making.

On the practical side, I remain convinced that we need to encourage British shipowners to fly the British flag in ships manned by British crews and built in British yards. I am convinced that one of the ways we can do this is to consider the extension of the Scads-Arapaho-Reliant project. For those who are not aware of what is currently happening, this is a project to determine the feasibility of outfitting merchantmen in time of conflict with self-protection weapons systems, sea-to-air and sea-to-surface missile defences, or as helicopter control ships or auxiliary fixed-wing carriers, and to date the trials have been very successful. It is estimated that the cost of converting, outfitting and providing missile weapon systems for seven ships—of those seven ships, two are auxiliary fixed wing carriers, two helicopter control and operation vessels, one amphibious support ship and two landing and logistic craft — will be £170 million, a minuscule amount compared with how much it would cost for purpose-built vessels.

I do not pretend they will be as good as purpose-built vessels, but I would encourage my right hon. Friend to discuss the project with the Secretary of State for Defence to ascertain whether it may be possible to get funds from the defence Vote to encourage owners to have British flag vessels built in British yards fitted for, but not with, a defence capability and able to be speedily converted—whether it be a ro-ro ship into an assault ship, a bulk carrier into a helicopter carrier, a container vessel into a logistic ship or a crude carrier into a fixed-wing aircraft carrier. All of these are practical. I understand that, providing the vessels are fitted with a deck strengthening system that does not inhibit their effective use as merchantmen and that they carry no armaments, such financial assistance would not contravene any treaty or international obligations that we have.

There are other measures, small in themselves, but effective in their totality. I am certain that we need, as a nation and as community, to increase and to police the safety standards on board vessels. That includes the manning standards and the provision of equipment. By so doing and by ensuring that our partners in Europe do exactly the same, we shall keep out some pretty ratty, ropey and dangerous vessels and make sure there is a better chance of their being scrapped and other vessels being built. We need to encourage British shipping generally, and that could be done by reforming the pilotage situation and abolishing the docklabour scheme. By assisting British shipping, we will assist British shipbuilding.

When the Opposition asked for the debate, we on this side hoped for some fresh thinking from Opposition Members. With few exceptions, the positive ideas, the practical ideas, the ideas that hold out any hope for the future, have come from this side of the House. I for one, and I am sure my right hon. and hon. Friends, will be voting against this sterile and threadbare motion standing in the Opposition's name.

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. The House will wish to know that the wind-up speeches are expected to begin at about 9.10 pm. As six hon. Members still hope to speak in the debate, brief speeches will be a great help to everybody.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North 8:40 pm, 1st February 1984

When the Government's amendment appeared on the Order Paper the cat was out of the bag, because it became clear that the Government's policy was to privatise not only naval yards but, as Opposition Members have suspected for some time, every other part of the industry—if there is any left.

The only thing to make up our minds about is whether the Government believe that there will be anything left for their privatising friends to get their greedy hands on. Apart from the quite hypocritical accusation that no positive suggestions have been made by Opposition Members, all that we have heard from Conservative Members is a continual misunderstanding, and in some cases quite vitriolic and vicious abuse, of the trade unions and workers involved in British Shipbuilders.

If more shipyard workers listened to such debates and read the Official Report, and if more of them had been in the Strangers Gallery earlier today to listen to Conservative Members — and particularly to the Secretary of State, although his speech was not the only one of its kind—the chances of the new agreements being accepted at a local level would be in jeopardy. Shipyard workers are sick and tired of the hypocritical advice of, and frequent slanders by, Conservative Members about their working practices and about what they have, or have not put into the industry. I resent Conservative Members even talking about productivity. You do not talk about productivity when you know nothing about the industry, and have not talked to the families of those who suffered, even since nationalisation. Some of the demarcation disputes and restrictive practices that you talk about have saved the lives as well as the health of our workers—

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

Order. I do not think that the hon. Gentleman intends to accuse me of that.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

I apologise, Mr. Deputy Speaker. By "you" I meant "Conservative Members".

My hon. Friend the Member for Sunderland, South (Mr. Bagier) referred to the shipbuilding industry in Korea. He spoke about the wage rates and asked whether that was what Conservative Members sought in Britain. He pointed out that there were no trade unions in Korea, that to strike there was a criminal offence and that strikers ended up in gaol. He rightly asked whether that was the vision that Conservative Members had of Britain's shipbuilding industry. It certainly seems to be.

As Conservative Members take such offence to my remarks about productivity, it is worth mentioning that in Korea a survey was carried out in 1982 not by the United Nations or a Socialist organisation, but by the Korean Ministry of Labour. The survey found that out of 3,480,000 workers, 1,230 were killed that year at work, and another 18,300 lost an arm or leg, or were suffering a complete mental breakdown which was directly attributable to the nature of their work. That is 30 times, or more, the rate for manufacturing industry in Britain.

The hon. Member for Tynemouth (Mr. Trotter) offered us a brief respite, and the hope that there was some glimmer of understanding among Conservative Members when he referred to conditions in South Korea. I hope he agrees that we cannot ask British shipyard workers to compete in any way with such conditions. Hon. Member after hon. Member has confirmed that the competition comes from the far east and, in particular, from Korea. They should address themselves far more to the conditions that exist there. We shall never have, or even want to have, the sort of murderous productivity of those Korean yards.

People ask what the solution is. In his analysis of what was wrong, the Secretary of State seemed to be in some difficulty. Half the time he refused to recognise that there was a world recession. Indeed, when he wanted to slander and condemn the record under nationalisation, he did not want to know that the industry had been operating in a world recession. However, when the finger was pointed at his Government's record, the only problem seemed to be the world recession, and no other explanation seemed possible.

Whatever the problems, however severe the recession, and whatever is said about the fact that only eight merchant orders are expected this year for British yards, it might be useful if the Minister could explain how the Sanko Steamship Co. in Japan has put in 125 orders altogether during the past 12 months. I believe that 113 were placed last year and that there have already been another 12 this year. Obviously, given the nature of the Japanese conglomerates, that steamship company has substantial connections with the Japanese Government and the Japanese banking sector.

Despite the world recession and the complete lack of demand, 14 companies in Japan, with more than that number of yards, have full order books and work until 1986 as a result of one order which was clearly placed as a result of Government intervention and inspiration. It is sustaining the whole of the Japanese merchant shipbuilding industry. As a crisis measure, why on earth cannot this Government do something similar, or insist that British Shipbuilders do something similar. The EEC's absurd non-interventionist, or negatively interventionist, strategies would make that difficult, as the hon. Member for Tynemouth mentioned, but why do we not say that the survival of our shipbuilding industry is more important than complying with EEC regulations and conventions with which other countries do not comply?

Why do not we use some public money? I think that the hon. Member for Tynemouth was hinting that we should substantially increase the amount of money available for intervention. Earlier today the Secretary of State announced something that would probably involve £35 million of taxpayers' money.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

I was suggesting, not that the intervention fund should be increased, but that it should be used. At present three quarters of it is not used because the rate of intervention is not sufficient to obtain the orders.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

I am grateful to the hon. Gentleman for that clarification. I thought I said that the percentage available had been increased. Like me, I think that the hon. Gentleman was suggesting that we should be talking about a subsidy of at least 35 per cent., if not 40 or 50 per cent. This afternoon the Secretary of State was enthusiastic about that £35 million and was apparently happy to give it away to a Japanese company to create, initially, 400 or 500 jobs. If that plant does not come to Sunderland, may we please have the £35 million for something else? If that £35 million was used to subsidise 20 SD14s, and so brought down their price from £7·2 million to £5·5 million, those ships would be bought and would keep the yard going for the next two or three years with 1,000 more workers than at present. That is what we should be doing during the next two or three years. If only £200 million or £300 million of subsidy money was used in that way we could fill all Britain's merchant yards with orders, just as the Japanese have done.

Instead, the Government are interested only in deliberately running down the industry. Scandalously, orders were turned away from Clelands to justify the closure of that yard. The Government are also deliberately running down the larger merchant yards so that they either have to close or are sold for a song to private buyers. The Government's strategy is to allow yards such as Austin and Pickersgill and the two Sunderland shipbuilders yards, which have useful facilites and assets to be sold to private buyers for a song.

When the upturn comes that Graham Day keeps predicting, those private buyers will tell the workers that they can return to work on their terms. Those terms will look more and more like those of the South Korean industry. I bitterly resent the way in which privatisation has taken place. I object to the fact that the work force at Sunderland Forge was told late yesterday afternoon, without any time for discussion or consultation, that they would be disposed of—a charming term—by the end of the year. Sunderland Forge is in my constituency, and I resent the fact that the first I knew of that was when the local newspaper rang me and said that the shop stewards had told the paper about it. The management was denying it. Two hours later the managemet confirmed it. What a scandalous way to treat 400 people, many of whom had put their lives into that place, which made a profit last year. The Government seem to be obsessed with privatisation. That is the only policy they have. It will be nonsense if they proceed like this.

I conclude by quoting someone whom I do not think could be accused of being a Socialist theoritician or ideologically motivated, Mr. J. P. Cashman, deputy secretary of Lloyd's Register. Speaking at a conference on shipbuilding organised by Tyne and Wear county council "Save Our Shipyards" campaign at the end of last year, he said: Who must make the decisions which are necessary, to produce effective corrective measures? To my mind the solution, or part of it, no longer lies in the hands of the speculator or entrepreneur as in the heyday of private enterprise. I believe the fate of, certainly the direction taken by, world shipping in general will be decided on political grounds. Shipbuilding has proceeded too far along the road towards total state subsidy and control to survive indefinitely as an industry of private initiative and enterprise. That was said, not by a Socialist or by someone ideologically committed to nationalisation, but by someone who seems to understand more than anyone on the Government side of the House the reality in which we are operating.

If the Government do not take heed and yards are allowed to close, in my constituency unemployment rates will rise. At present they are 31·2 per cent. in Red House, 38·9 per cent. in Downhill, 36·8 per cent. in Southwick, 41·3 per cent. in South Hylton and 53·5 per cent. in the East End. These are areas where the majority lives within a mile of the shipyards. Those rates will go up to 60 or 70 per cent. If the Government carry on with this policy, and if they allow shipbuilding communities to go under and unemployment rates in those areas to rise to 60, 70 and 80 per cent., it will be Conservative Members who will live to regret it.

Photo of Mr Michael Colvin Mr Michael Colvin , Romsey and Waterside 8:52 pm, 1st February 1984

I always look for common ground in this place. Something said by the hon. Member for Sunderland, North (Mr. Clay) seemed to echo a cry which went out from both sides of the House—that is, for some sort of a new deal for British Shipbuilders. In the nine point productivity plan now agreed at national level, I believe we have that deal. I trust that he and other Opposition Members will be using their best endeavours to persuade yards in their constituencies to agree that productivity plan and to give British Shipbuilders the kiss of life that it so urgently needs.

I should like to concentrate my brief remarks this evening on three aspects of the shipbuilding industry: first, state aid to the industry; secondly, the private shipbuilding and ship repairers' sector; and, thirdly, the Government's plans for privatisation and their effect on fair competition.

There is no shortage of state aid to the industry in the United Kingdom. Since nationalisation shipbuilding has received approximately £1,000 million in grants and loans from the Exchequer. If British Shipbuilders had remained in the private sector, the companies would certainly have needed assistance, but they would also have had to face up to the need for rationalisation much sooner, and the cost to the Exchequer might well have been less.

It has often been suggested that foreign shipbuilding competition benefits from unfair subsidies. That is not so. Details published by the Department of Trade and Industry show that although there is some variety as to the method of subsidy, the United Kingdom is not really out of line with other countries. Unfortunately, state aid in the United Kingdom, and in Europe as well, has been used over the years to cover up bad performance rather than to modernise. So where do we go from here?

As hon. Members are aware, the EEC's directives on aid to shipbuilding were intended to stop competition between member states in the provision of aid. It is generally agreed that we need to look again at the nature of Common Market assistance and perhaps bring it more into line with what happens on the other side of the Iron Curtain in the Comecon countries.

We need a balance between capital and operating aid, with help for capital investment on research and development and the introduction of computer-assisted design and manufacture. On the operating side a case can be made for the Community-wide home credit scheme which is now being discussed, albeit at the early stages. That could bring shipping and shipbuilding closer together, something stressed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). It would enable competition to take place within the Community and it would encourage intra-EEC trade in components. That is most important because shipbuilding is now largely an assembly industry.

We must work together within Europe to increase competitiveness and, it is hoped, completely reject any state supported system intended simply as a jobs preservation exercise, because that in the long run would destroy the industry once and for all. I certainly agree with my hon. Friend the Member for Tynemouth (Mr. Trotter) that the workings of the intervention fund need an urgent overhaul.

No debate on shipbuilding would be complete without a mention of the private sector. When the industry was nationalised in 1977 a number of the smaller companies were left outside British Shipbuilders. Of these, 31 became members of the Ship Repairers and Shipbuilders Independent Association. That does not represent the whole of the private sector, but it is representative. About one third of these were shipbuilders and about two thirds ship repairers. Today exactly half of those companies have gone out of business. As we have frequently said on this side in previous debate, that has been due in no small part to unfair competition from British Shipbuilders. I appreciate that that has been acknowledged by my hon. Friend the Minister of State, who will be replying to the debate, but I wonder why the Government have done so little to rectify the situation.

It could even be said that with the decision to privatise the ship repairing division of British Shipbuilders, the problem of unfair competition has grown. For example, Tyne Shiprepair Ltd. is being sold to a management buy-out which will save the 850 jobs. The British Shipbuilders Act 1983 has made that possible. How can those companies already in the private sector, who have managed to survive hitherto, compete with the sort of offers being made to the employees of Tyne Shiprepair, which seem to indicate a massive subsidy, if not directly from the Government, then from its parent, British Shipbuilders?

I should like the Minister to explain how the new owners of Tyne Shiprepairers Ltd. can guarantee all the workers they employ 12 months work. There is considerable concern on this side of the House that the company may have been promised work on royal fleet auxiliaries; the refit of Sir Tristram has been mentioned. This is no more and no less than subsidised or rigged competition which will drive even more private companies out of business. Only this week the Humber Graving Dock announced 500 redundancies because of this very proposal by Tyne Shiprepairers.

Royal Fleet Auxiliary work is extremely important to our ship repair companies, whether in the state or the private sectors. That is why there is considerable anxiety in the industry about the Ministry of Defence's proposal to commercialise the Gibraltar royal naval dockyard with a scheme that will cost the British taxpayer at least £28 million in capital and £14 million in Royal Fleet Auxiliary work over three years.

Admittedly, the money can be made available to A and P Appledore, which bid successfully for the dockyard scheme, only when it manages to negotiate a new workers charter with the labour force. But as Mr. Joe Bassano and his Socialist and Labour party, which is based on the Transport and General Workers' Union, did so well in the Gibraltar general election last Thursday, it is highly unlikely that Appledores will succeed in driving the hard bargain that it will have to achieve to make the dockyard competitive in the face of competition from Algeciras, Cadiz and Malta. If it does not, the project will surely fail either because Appledore does not get the money or because if the Government give way—I strongly hope that they will not—the workers will price themselves out of business.

At the moment, those workers have parity with workers in the United Kingdom. That makes them at least 50 per cent. more expensive in labour terms than their Mediterranean competitors. Alas if the scheme is successful it could remove 10 per cent. of Royal Fleet Auxiliary work from British yards. At the moment that work is regarded as good bread and butter business.

I remind the House that with no state support for independent ship repairing and only intervenion fund assistance for shipbuilding, the private sector has had to face the worst recession that the industries have ever known. They have also had to meet intense competition from the state — supported corporation and from overseas. The result has been major redundancies and closures following substantial losses which private enterprise cannot endure for long, unlike state-supported industries which are financed by Government-backed loans.

The prospects for ship repairing in the United Kingdom show that there will be no increase in demand and that there will therefore be further contraction in the overall capacity if state-owned facilities are returned to the private sector. The independent shipbuilding industry has witnessed the transfer of one yard to state ownership and the closure of other yards because of the recession in shipbuilding. The survival of remaining yards with only intervention fund assistance is a tribute to their remarkable determination. I trust that the price of keeping British Shipbuilders afloat and privatising some of its companies will not be the elimination of companies that are already in the free enterprise sector.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow 9:01 pm, 1st February 1984

I can tell the hon. Member for Banff and Buchan (Mr. McQuarrie) that I have every confidence in Mr. Duncan McNeill and his fellow shop stewards. Whoever organises and manages Scott Lithgow and the building of the Britoil rig will find a shop stewards committee that is receptive to the organisation of working practices. I should like the Secretary of State and the Minister to follow the honourable initiative of the hon. Member for Banff and Buchan who visited my constituency. I should like Ministers to speak to the management and work force at Scott Lithgow.

I can also tell this House, Trafalgar House and every other house in Britain that my major concern since becoming the Member of Parliament for Greenock and Port Glasgow has been to ensure the completion of the Britoil rig at Scott Lithgow. That is still my prime objective. As a Socialist I believe that the best way forward is to renegotiate the Britoil contract with Government support. If such a renegotiation were accomplished, Scott Lithgow could go from strength to strength.

If today's newspapers are to be believed it would appear that the Prime Minister has acknowledged the social effects of closure at Scott Lithgow. I believe that the right hon. Lady has said that they would be devastating. In reply to my question about the follow-on effect of a closure at Scott Lithgow, the Scottish Office in the shape of the Under-Secretary of State for Scotland suggested that if Scott Lithgow were to close another 3,000 jobs would be lost in industries that supply it with goods and services.

I am not an uncritical reader of newspapers, but I am pleased that it would appear that the Prime Minister believes that if the management and work force at Scott Lithgow can put a good performance behind them, albeit under new ownership, that could lay the foundation for a successful future for the yard. Such observations stand in sharp contrast to the unpleasant denigration of management and work force that has been indulged in by Ministers and by members of the board of British Shipbuilders. My concern is for the completion of the Britoil rig and the retention on the lower Clyde of as many jobs as is humanly possible.

However, major questions must still be answered. No one has offered an adequate explanation of how privatisation of Scott Lithgow will safeguard 4,000 jobs. It is my objective to save as many jobs as possible. What will happen if the animated attempt to sell off the yard falls through? There should be a public inquiry into this sorry affair. Failing an inquiry, Parliament should subject the issue to another form of critical examination.

What is the position of Mr. Graham Day and his board? What is their collective view on the offshore engineering industry? A recent brochure produced by British Shipbuilders offshore division has on its front cover a picture of a semi-submersible structure built by Scott Lithgow. Inside the brochure, we find the statement: An impressive track record has also been established in work for the offshore oil industry, the specialist companies in the Offshore Division having constructed heavy-duty semi-submersibles and DP"— that is dynamic positioning— drillships … The formation of the Offhore Division has enabled the highly-specialised knowledge required to meet the changing needs of the industry, as it develops into deeper and harsher waters, to be concentrated in two major production facilities, Cammell Laird Shipbuilders Ltd. and Scott Lithgow Ltd. What has happened to that commitment to Scott Lithgow? There is a wide gap between the appearance and the reality of British Shipbuilders' commitment to this vital industry.

I have said before, and others, including the Minister of State, Department of Energy have said that activity in the North sea and elsewhere will increase this year. The offshore oil and gas industries are in a very buoyant and active phase.

Why, with a bright future being predicted for the oil and gas industries and the construction yards, does British Shipbuilders appear unwilling to approach the Government for help? Why are the Government willing to cover Scott Lithgow's losses by giving money to a privately owned yard, but not to British Shipbuilders? Why is that assistance denied to British Shipbuilders? Part of the answer may be in British Shipbuilders' reluctance to ask for help.

There are further questions to be answered, but I am well aware that time is racing on. The recent developments surrounding Scott Lithgow represent something of a trial — that may sound absurd to some Conservative Members — for the badly maligned management and work force of Scott Lithgow, and the people of Scotland. Some, however, seem willing to put their trust in the work force. Trafalgar House is not the only company with an interest in Scott Lithgow, and British Shipbuilders has said that one of the company's most valuable assets is the skill and expertise of the work force.

The Scottish people, with vigorous help from newspapers such as the Daily Record, the Glasgow Herald, the Evening Times in Glasgow and, of course that illustrious journal the Greenock Evening Telegraph, have helped to influence thinking on Scott Lithgow. A change has taken place in the public's perception of Scott Lithgow.

The Glasgow Herald states: For the moment we can take stock of progress so far and conclude that Scotland is ahead in the fight for Scott Lithgow. However the question remains concerning British Shipbuilders' seeming reluctance to engage as comprehensively as it could in the offshore construction industry. There are a number of questions surrounding the negotiations. I saw that the Minister shook his head when an article from the Daily Telegraph was quoted, about submarine work being given to a privatised Scott Lithgow.

My primary objective since I became a Member of the House has been that that rig, the most advanced of its kind in the world, should be built on the lower Clyde. Allied to that objective, I wish to see as much retention of a highly skilled work force as is humanly possible. I believe that with the right encouragement from the Government, the rest of us and the trade union movement —there have been mistakes on both sides in the past—and with changing public perception and the willingness of the shop stewards and the management to negotiate a workable working agreement, Scott Lithgow has a healthy future.

Photo of Mr Donald Dixon Mr Donald Dixon , Jarrow 9:11 pm, 1st February 1984

The only reason why I am winding up for the Oppositon is that, unfortunately, my hon. Friend the Member for Falkirk, East (Mr. Ewing) is ill. I shall try to emulate the speech that he would have made.

I was more than pleased by the speech of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore). When he was first appointed Secretary of State for Trade and was in charge of shipbuilding, I had my reservations. However, Mark Twain said that when he was 16 he thought his father was a fool. By the time he was 21 he was amazed how much his father had learnt in those short years.

I was disappointed, if not surprised, at the speech of the Secretary of State for Trade and Industry. The more I listened to him, the more I was convinced that the person was right who said that if the Prime Minister sacked him she would qualify for a Queen's award to industry.

Since 1979 we have had several debates on the shipbuilding industry. Unfortunately, each one has been when redundancies have been about to occur. It is the same today. I have been accused of being emotional while speaking about the shipbuilding industry. I make no apologies for that, having worked in the industry all my working life. I have lived since I was born, and still live, among the families of shipyard workers. I know the hardships which they have had to face over the years. I know the hardships which my grandparents and my father faced. It annoys me at times when I hear Conservative Members pontificating about what the workmen should do, when some of them have never seen a pair of overalls, let alone worn a pair. We have heard such speeches in the debate.

There was never a positive policy for shipbuilding until the industry was nationalised in 1977. It was taken out of the hands of private enterprise, which had lost the initiative in world markets. The industry is a classic example of the failure of competitive capitalism to create proper conditions for the workers, or the industry to benefit the economy. To hear some of the speeches made in the debate, one would think that British shipbuilding had been nationalised since the beginning of the century. It was in private hands until it was nationalised in 1977. As my right hon. Friend the Member for Bethnal Green and Stepney said, if it had not been nationalised in 1977, and if the Labour Government had not contracted the Polish order, there would have been no shipbuilding industry.

People talk about restrictive practices, but what they are talking about is trained men doing jobs which they are capable of doing. When we talk about demarcation, we are talking about demarcation created by the employers, not by the trade unions or the tradesmen. If the management cannot organise the electricians, plumbers and boilermakers, it is about time that the management was changed. It is not a matter of demarcation.

The Government amendment refers to privatisation. During all the years that I worked in the industry it was in private hands. The shipbuilding and ship repair industries were a jungle until nationalisation in 1977. It would turn the clock back to put the industries into private hands.

We should treat like with like when we talk about productivity. When the shipyards were in private hands, they were starved of investment, year after year. The Paton report of 1962, the Geddes report of 1966 and the Booz-Allen report of 1972 all shared a common theme — the lack of investment in the British shipbuilding industry. After the war the industry had full order books, but the owners would not invest a halfpenny. It is not so long since the men in the yards were pushing shell plates around on wooden bogies. The central problem is investment. Let us consider the equipment of the Japanese and Korean shipyards. Japan invested £600 million last year in its seven shipyards, and South Korea has invested £400 million year after year.

Too much of the recent publicity about the problems of British Shipbuilders has focused on productivity and delivery dates. The Prime Minister has accused parts of British Shipbuilders of dismal performance. The right hon. Lady and her Government should remember that it is not so long since they pinned a medal on one of the directors of Swan Hunter for the efforts of the 2,000 workers on the Tyne in getting the task force ready for the Falklands dispute.

Many of my colleagues were upset—and rightly so—when the Secretary of State for Scotland compared the record of Britain's work force with that of the paddyfield labour force in Ayrshire. All the publicity has missed the major problem, which is the massive slump in orders being placed throughout the world. Worldwide demands have fallen from 35 million tonnes in 1975 to 14 million tonnes, and there appears to be little prospect of recovery in the immediate future. A major crisis is building up in the British yards because of the lack of orders.

Without new orders, the last delivery date for Govan shipyard is April 1984; for Smiths docks, June 1984; and for Austin and Pickersgill, December 1984. The engine build capacity is also in serious trouble, as was mentioned by my hon. Friends the Members for Sunderland, North (Mr. Clay) and for Sunderland, South (Mr. Baiger). The Government must address themselves to the workload crisis.

The trade unions have co-operated with British Shipbuilders to raise productivity. According to the chairman of British Shipbuilders, the new agreement will raise productivity to a level on a par with that of northern European yards. It is a pity that the chairman did not show the concern expressed by the trade unions when the industry was threatened with a national strike on 6 January. Mr. Day went on holiday to Canada for three weeks and left the union negotiators to sort out the problems with a director. That is not the sort of behaviour that we expect from someone who is responsible for a vital industry.

A great deal of nonsense is talked about high wages. A recent survey carried out by a trade union at a British Shipbuilders' establishment showed that 62 per cent. of the manual workers were in receipt of some form of state benefit. During the period when the shipyard workers fell from 3rd to 19th in the wages league, the members of the board looked after their money. The 1981 report showed that the 17 full-time and part-time members cost £215,000. In the 1982–83 report, the figure was £398,618 for the 14 part-time and full-time board members. In effect, the average payment for the board members of British Shipbuilders increased from £12,681 in 1980 to £28,472 in 1983—an increase of 128 per cent. At the same time the workers dropped from third place to 19th in the wages league.

There is a view in certain parts of the House that the taxpayer would be better off if British Shipbuilders were allowed to disappear, in view of the losses that it is making. That view is factually wrong, and it displays, too, a callous disregard for the fate of the workers and their families. This year British Shipbuilders had a wages bill of about £500 million. As a consequence it paid to the Exchequer a total of £180 million in income tax and national insurance. British Shipbuilders stands to lose £120 million. That is a drain on the Exchequer, but in net terms the Exchequer is still £60 million better off than it would be if the industry were to die.

If the industry did not exist, £280 million in exports would be lost. Sixty per cent. of the cost of a ship is for materials, and that is not accounted for by British Shipbuilders. Nearly all of that is supplied by United Kingdom families. If the industry did not exist, 30,000 people making steel, engines and other components would not be needed. They would no longer pay at least £100 million a year in income tax and national insurance.

Those who say that money spent on the shipbuilding industry should be spent elsewhere are wrong. If the industry disappeared, the Exchequer would lose receipts of £280 million in order to save the £120 million which it is paying in subsidies at the moment. That is economics gone crazy. The taxpayer would not be better off; he would be worse off by £160 million. One must also take into account the cost of maintaining 90,000 people on the dole. It costs £6,000 a year to keep a shipyard worker out of work. It costs £6,000 to subsidise him in the present state of world shipping.

The Government, the media and the nation must stop being complacent about the disastrous situation in the industry. They must stop saying that it would be a blessing in disguise if the industry were to disappear. The situation is critical, not just for the workers, but for the future of the industrial base and for our ability to create exports and maintain social services.

We want action to stop the lifeblood draining away from the industry. By October 1983, 30,000 jobs had been lost. In October 1983 British Shipbuilders announced another 2,069 redundancies. In January 1984 the rundown of Scott Lithgow was announced, with another 4,000 job losses. Last Wednesday a further 1,872 job losses were announced, with three yard closures—Clelands, Henry Robb and Goole.

The hon. Member for Tynemouth (Mr. Trotter) and my hon. Friend the Member for Edinburgh, Leith (Mr. Brown) referred to Henry Robb. The Observer of 10 October 1983 said: As attempts are made to avert a national strike in British Shipbuilders, three yards face closure — because of an unexplained hold-up in accepting £50 million worth of naval orders. Contracts for at least 14 ships are in the pipeline from the Ministry of Defence—and they seem tailor-made for the three small yards, Henry Robb at Leith, Clelands at Wallsend and Goole on Humberside. But BS has said that 1,500 workers face redundancy because of a lack of fresh orders at the yards which will run out of existing work within a few weeks. Despite renewed assurances from BS that work for the yards is being actively sought, it appears acceptance of the orders is being deliberately delayed to get the closures out of the way". I am convinced that British Shipbuilders decided to close Clelands last October. British Shipbuilders deliberately delayed placing the orders there. There was an ash carrier for the CEGB. British Shipbuilders had the letter of intent in November. The technical drawings were done, yet the order was transferred to another yard. I believe that if there were a national strike, Mr. Day would say that Clelands would not open its gates again.

The Government's response has been inadequate. There is overcapacity in every country. Each country is taking measures to buy work. Prices offered by the Asian yards are 35 per cent. lower than those offered by British shipbuilders. In the Financial Times on 25 January there was an article about the problems faced by the French. It was reported that the French Government had decided to give the French shipbuilding industry an additional £290 million to £330 million in subsidy this year, and had blocked an order from a French shipping company for four ships from a Yugoslav shipyard.

My hon. Friend the Member for Sunderland, South said that Japanese shipowners had placed orders for 113 cargo ships to keep the Japanese shipbuilding industry going. All kinds of attractive credit arrangements are being offered. Other countries are buying their way out of their problems. The Government are incapable of appreciating the point, or they do not care.

How long will British Shipbuilders fight according to the Marquis of Queensberry rules when every other country is involved in all-in wrestling? The Government are like the little boy standing on the burning deck. They are pursuing a policy of privatising warship yards where there is Ministry of Defence work, but they have no policy for the others.

A concerted policy of intervention is needed to protect the nation's vital interests. As my right hon. Friend the Member for Bethnal Green and Stepney said, we are an island nation dependent upon our maritime industry for our survival and defence. We live on an island in a world which is two thirds covered by water. About 90 per cent. of the value of our trade is carried by ships. It is essential for us to have a shipping industry and the capability to build and maintain the ships.

British shipowners such as Cunard and P and O and operators in the North sea must be persuaded to place orders in British yards. The Government have a range of carrots and sticks which they could use. Tax relief on ships built in non-EEC yards must be removed. Incentives must be offered to place work in British yards. Shipbuilding communities, the Exchequer and the taxpayer would benefit.

There will be jobs on the Sun Oil contract for Cammell Laird and the BP advanced SWOP project, and the renewal of the QE2's engines is being discussed. Those jobs must be placed in British yards to keep them busy. Only then can the work force produce the high levels of efficiency which have been asked for by British Shipbuilders.

The Government own British Shipbuilders. Britoil said that three quarters of the blame for the problems with its contract at Scott Lithgow was down to bad management. We have heard enough about blaming the work force for that. It is a problem which British Shipbuilders' owners must cure. The Government must stop making statements which undermine customer confidence in British Shipbuilders. The industry can and will deliver. It needs Government support and coherent policies to enable it to survive. Without that it cannot survive, whatever efforts are made by the dwindling work force.

My right hon. Friend the Member for Bethnal Green and Stepney spoke about the social consequences of closures. There is a close relationship in shipbuilding communities between the working and living environment. There is a remarkably strong community spirit among shipbuilding workers. For example, a survey conducted not so many years ago showed that at the Swan Hunter Wallsend yard, 62 per cent. of the work force either lived in Wallsend or adjacent towns. The situation on Wearside is even more marked. A survey of the work force in Austin and Pickersgill showed that 37 per cent. lived within one mile of the yard and that only 5 per cent. lived more than five miles away.

Some people say that Graham Day and his board are Shipbuilding Security reincarnated. Let me enlighten those hon. Members who do not know about Shipbuilding Security. That organisation was set up in the 1930s and comprised merchant bankers, shipowners and shipbuilders. At that time there was overcapacity and a world slump, and they went around the country, bought the shipyards, closed them down and sold the assets, with no worry about the social consequences.

Those vultures came to Jarrow in 1934 and bought the Jarrow shipyard. It was subsequently closed and a 40-year embargo was placed on the building of ships. Afterwards, Ellen Wilkinson wrote a book called, "The Town that was Murdered: The Life Story of Jarrow". My father and grandfather were two of the 5,000 men who were thrown on the scrap heap in 1934. My grandfather never worked again. My father did, in 1939 when the ships were needed, and if he refused to work overtime he appeared before a tribunal and was fined. The ships were not needed in 1934 but they were needed in 1939. The same can be said of the Falklands campaign, when the workers were praised by the Prime Minister and some of her Cabinet colleagues.

For a long time Tyne and Wear county council has conducted a "Save Our Shipyards" campaign. Had the Secretary of State for Industry and the Minister of State done as much as Michael Campbell and Jim Cousins— the leader and deputy leader of Tyne and Wear county council—the industry would not be in its present state. Tyne and Wear has tried in every way to attract orders for the shipbuilding industry. It is a pity that the Government do not take a leaf out of its book.

Not so long ago P and O placed a £90 million order for one of the largest cruise liners ever to be built, and that went to Finland. When my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) wrote to the Prime Minister, she replied that that order could not be placed with British Shipbuilders because we did not have the finishing trades to carry it out. What nonsense. Joiners, electricians, plumbers and so on are out of work in the Tyne and Wear area.

We require a relaxation of the financial limits and the maintenance of the intervention board at an adequate level. There must be incentives for British shipowners to have their ships built in British yards. We must maximise United Kingdom offshore orders for the North sea oil and gas industries. There must be long-term planning for public sector ordering, especially for naval vessels. We must introduce a scrap and build policy to upgrade British shipbuilding standards and to accelerate orders for new ships.

Those are the things that the Government should do. They should not repeatedly blame the workers for the problems now faced by the shipbuilding industry. The Opposition are concerned about the industry. That is why my right hon. Friend the Leader of the Opposition will visit the Tyne on 27 February at the invitation of the GMBATU. He will speak to the shipbuilding workers, because he is more concerned than the Government about the plight of the industry and the shipbuilding communities.

As an island race we depend on exports and imports for our survival. Therefore, it is indisputable that the main form of transport is by sea, and that means ships. Our ability to build those ships is of the utmost importance to our economic and strategic survival.

Nobody doubts, on the defence side, that we should build vessels for our Navy. Everybody with knowledge of the industry agrees that merchant shipping, naval building, ship repairing and engine building are all part of the whole and that the condition of one affects the others. It would be absolute nonsense to sell off the warship yards and expect merchant shipbuilding to survive, and I hope that the Minister will say something positive in reply to the debate.

Questions need to be answered about Tyne Shiprepairers. It was said that that yard had gone through a traumatic experience when it was nationalised. In fact, British ship repairers were not nationalised in 1977. The shipbuilding industry was nationalised and the ship repairing industry volunteered to be nationalised. The shop stewards at Tyne Shiprepairers have estimated that the entitlement under the shipbuilding redundancy scheme for the employees there totals £10·7 million. There has been a £4·2 million buy-out. What has happened to the £6·5 million of redundancy money to which the 985 workers are entitled?

May we be told how much the owners of Tyne Shiprepairers paid for that industry? Were the two directors who bought it out on British Shipbuilders' payroll? Are Abbott and Burns the only directors of Tyne Shiprepairers, or are there other directors who are still employed by British Shipbuilders with an interest in Tyne Shiprepairers? I hope that the Minister will answer those and other questions, and comment on the constructive suggestions that my right hon. and hon. Friends have made in the debate.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames 9:37 pm, 1st February 1984

I think that I am right in saying that this is the first time that the hon. Member for Jarrow (Mr. Dixon) has spoken from the Opposition Front Bench. I hope, therefore, that it is in order for me to congratulate him on his speech and his appearance there. He speaks with first-hand knowledge of this subject, as I know because he and I were members of the Standing Committee last year on the British Shipbuilders Bill, now an Act. We welcome the sincerity and expertise that he brings to debates on shipbuilding.

I hope that the House will bear with me if, at the outset, though not at length, I refer to the international situation on shipbuilding because it is extremely important. Indeed, I was surprised that the right hon. Member for Bethnal Green and Stepney (Mr. Shore) did not press us rather more about the international regime and what was happening in the EC. It is important to place the matter in the international context because, as has been said time and again in the debate, this is an industry which worldwide is facing a massive crisis of over-capacity.

We have seen not just one but two severe recessions within a decade in shipbuilding. We had scarcely got out of the first before we had the second. In addition, there has been added the problem of new emerging nations developing their own shipbuilding industries and selling ships at prices with which it is difficult for the developed countries to compete.

The effect of this crisis, as I said to the right hon. Member for Bethnal Green and Stepney when I intervened in his speech, has been felt not just in Britain but throughout western Europe whose shipbuilding industries have contracted more than ours. Since 1975, employment in the shipbuilding industry in Europe has halved. Perhaps the right hon. Member for Bethnal Green and Stepney was seeing the crisis too much in a national and not enough of an international context.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I will give way shortly.

A real question is being posed, and that is whether shipbuilding can survive in western Europe.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I shall give way in a moment. I shall make my speech in my own way and then I shall allow the hon. Gentleman to intervene.

The very fact that the question is being asked—"Can shipbuilding survive in western Europe?"—emphasises that we must be as competitive as we can. That is why we must ensure that we match the best levels of productivity, certainly in Europe.

Photo of Frank Dobson Frank Dobson Shadow Minister (Health)

Why does the Minister think of shipbulding in an international context? Does he recall that when the Prime Minister went to China she launched a ship in Shanghai and asked what better she could do than launch a ship which had been built in China and financed by funds from Hong Kong? Does he think that she would have done better to launch a ship on the Tyne, the Wear, the Clyde or the Mersey?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The hon. Gentleman may remember also that at that time British Shipbuilders had rather extensive interests in China and was hoping to do some business by selling technology to China. The response to the international situation must be an international one. That is why the previous Labour Government accepted the principle that aid to the industry should be degressive. That is why they negotiated the fourth directive. The EC dimension—[Interruption.] Mr. Speaker, may I appeal to you for your protection?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I do not know what is going on.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

The hon. Member for Wolverhampton, South-West (Mr. Budgen) was casting a slur upon Mark Thatcher. That is what was going on.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

The previous Labour Government accepted the fourth directive and the principle that it is wrong to continue to have ever-growing subsidies that add to capacity, drive down ship prices and exacerbate the problem. That directive was succeeded by the fifth directive, which expires at the end of the year.

I expected the right hon. Member for Bethnal Green and Stepney to ask what the Government see as the future for the EC regime after the expiry of the fifth directive. We have had many discussions with Commissioner Andriessen and the Commission, about the regime that might replace the existing fifth directive. We have tried to bring home to the Commission the reality and the seriousness of the lack of orders.

It may interest Labour Members to know that given the present level of subsidy it is extremely difficult for yards in western Europe to get orders. We have drawn the commission's attention to that and we have said that, whatever the overall level of subsidy may be, we would like the intervention fund to be applied more flexibly. We have suggested that it might be applied so that there is a greater intensity of application of fund for particular orders. We should like to apply the intervention subsidy more flexibly.

We cannot act alone; we must get the agreement of other countries. If other countries are not under the same pressure because they are more competitive than us, that underlines the need for us to reach, at the very least, the best standards of European competitiveness and productivity. In the meantime, while we are trying to advance the case in Europe, we have said that we are prepared to give help on a case-by-case basis to get orders. The House recognises that orders are extremely few and far between. The long-term aim must be, as it was with the previous Labour Government, to reduce aids and to approach a viable industry.

A number of hon. Members, espeically the hon. Member for Birkenhead (Mr. Field), have suggested that we should take a lead on behalf of the shipping industry, direct our attention to credit terms and ascertain whether there is anything that would encourage the shipping industry to place more orders in the United Kingdom. We are looking at that aspect all the time. On several occasions, I have put specific propositions to the General Council of British Shipping to ascertain whether alterations in our credit arrangements could encourage more orders to be placed within the United Kingdom. That is not something that has just happened recently. I have been trying for a considerable time to make progress in discussions with the industry.

We cannot go down the road of compulsion. Shipping is an important industry employing 65,000 to 70,000 people, compared with 17,000 in merchant shipbuilding. If we could achieve an alteration that could help the industry, we would be keen to pursue that course. My hon. Friend the Member for Romsey and Waterside (Mr. Colvin) referred to an EC-wide home credit scheme, which is being discussed within the Commission. If that scheme develops, it might help the European industry. Our ideas must be consistent with that scheme.

Not surprisingly, a large part of the debate has been taken up with the crisis at Scott Lithgow. Last week, I explained that British Shipbuilders had explained to us their figures showing that it was cheaper for British Shipbuilders to acquiesce in cancellation than to continue with the contract. I emphasise that renegotiation is not a matter just of altering the words in the contract but means putting more money into a contract under which there have already been huge losses. The commercial judgment of British Shipbuilders is that it does not wish to continue with this contract on which there have been losses of more than £40 million on a rig which is only one third completed.

Much has been said by Conservative Members and much said in return about the statements on the record of Scott Lithgow. I shall not go over that again. The yard's financial performance cannot be denied, wherever the blame lies—it has not been good. I emphasise that I and my right hon. Friend the Secretary of State have never said that the position at Scott Lithgow is the fault of just the labour force. It is extremely difficult to come to a conclusion that management does more than carry a large part of the blame for its position. Having made that admission, I do not believe that it alters the conclusion. British Shipbuilders must be the best judge of its management resources, how they are best deployed — [HON. MEMBERS: "Who?"] British Shipbuilders, at the board level and its chairman, are the best judges of whether the position is retrievable. Building Shipbuilders believes that it would not be right and could be expensive to renegotiate.

Last week, when I said that there was just a glimmer of hope and a possibility of a private takeover of the yard, great scepticism was expressed. Negotiations are taking place with live, breathing human beings. Trafalgar House is one of a number of parties with whom discussions are taking place. Hon. Members have expressed some scepticism about whether Trafalgar House could complete the order and whether is suitable for such a company to do so. Trafalgar House has a number of offshore interests. Its subsidiaries include Cleveland Bridge and Sea Platform Constructors Ltd. Trafalgar House may have to buy expertise or form a partnership with other people, but that is a matter for it. It would not be interested in the contract and a deal with the yard unless it felt that there was something that it could develop.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

The Minister should spend more time talking about the future of Scott Lithgow rather than about his perception of its history. Does he intend to visit Greenock and Port Glasgow in the near future?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I have not had an invitation and I have no immediate plans to do so, but I have met people from the yard — I met some only yesterday — and I am familiar with their views. I am certainly prepared to listen and talk to them, but I very much hope that the attitude will not be like that adopted by some who came with the Scottish TUC to see the Prime Minister yesterday. As my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) emphasised, they took the attitude that it was unacceptable for private enterprise to take over the yard. I hope that everyone, including the Opposition, will welcome that opportunity and not oppose it for reasons of dogma because it is private enterprise and not nationalisation. I hope that they will also not oppose it because it robs them of their favourite solution of throwing money at problems. The Government have said that they are prepared to wipe the slate clean and this could be the beginning of a fresh start for the yard. We must all hope that that will be the case.

Photo of Mr Donald Dixon Mr Donald Dixon , Jarrow

If Scott Lithgow is taken over by a private company will the Minister ensure that all the workers receive their full entitlement from the British Shipbuilders redundancy scheme?

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I think that that assurance can be given. They will be eligible for the redundancy scheme.

Not surprisingly, a large part of the debate has been taken up with the closure of some of the smaller yards such as Robb, Goole and Clelands, but the plain fact is that there is a dearth of orders. Hon Members may say that particular orders might have gone to those yards, but that must be a judgment for British Shipbuilders as to how the business is to spread. The fact remains that there is not enough work to go round and to maintain all the capacity that we have.

Paradoxical though it may seem, I do not believe that the scenario is all gloom. There is one point of common ground between Government and Opposition. We decided that the Labour party was right to appoint Graham Day to British Shipbuilders the first time round, and we now have a chairman who is a first-rate manager and will do much to raise the morale of the company and to improve its management.

The right hon. Member for Bethnal Green and Stepney called for a new strategy. Mr. Day is developing a new product and marketing strategy. Although in the long run this country may not be able to compete right across the board in merchant shipbuilding, there may be areas of the market in which we can compete, perhaps less often with the far east but with other countries in western Europe.

Mr. Day is also taking steps to get the corporations swiftly out of ship repair. I profoundly believe that that is right. Whatever the arguments for nationalisation of shipbuilding, it made no sense to include ship repair, as was amply demonstrated by the fact that until the offshore work came along losses per head in ship repair were larger than in any other division.

My hon. Friends the Members for Brigg and Cleethorpes (Mr. Brown) and for Romsey and Waterside (Mr. Colvin) asked about the management buy-outs that have occurred in some British ship repair yards. I can assure my hon. Friends that those ship repairers have not been given assurances that Government work or MOD work will be steered in their direction. Any guarantees that have been given to the labour force have been made by the management of the new yards, and they are not ones to which the Government are a party. However, it is right—and I hope that both sides of the House will agree—that British Shipbuilders, in those circumstances where ship repair yards might have closed completely leaving no jobs—800 jobs would have gone at Tyne Shiprepairers—should give a little help to get the buy-outs to happen and to get those ship repair yards into the private sector.

Mr. Day is also making rapid progress on our plans to press ahead with the privatisation of warship building.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

We are discussing prospects with potentially interested parties. Opposition Members have expressed their continued opposition, but I do not entirely believe their fears and anxieties about employment in a privatised warship industry. In the old private enterprise days, when the warship yards were in private ownership, we actually managed to get some export orders. We have not had a single warship order from abroad since British Shipbuilders was nationalised.

The most encouraging evidence that the corporation is at last getting to grips with its problems is the agreement that has been reached between the management and trade unions about more flexible working practices. I am sure that everyone on this side of the House would agree that that is long overdue. We have had restricted practices in our shipbuilding industry that have been positively medieval. The debate within the unions recently has been not about pay, but about working practices. If we want to have a shipbuilding industry, we simply cannot afford to maintain restrictive practices of that kind. I liked the definition of the hon. Member for Jarrow of restrictive practices: trained men doing jobs for which they were trained. The hon. Gentleman ought to look ahead. We simply cannot afford to maintain those attitudes to restrictive practices in our—

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

No, I am not giving way. We have been criticised for not giving enough money to British Shipbuilders. I rather feared that the opposite criticism might have been made, that we have poured money into British Shipbuilders, £900 million since 1979, and the largest part of that money has gone into merchant shipbuilding, an industry employing only 17,000 people today, and in 1979 even, only 25,000 people. There are so many other industries that could have done with £900 million. The textile industry, which has received very little—

Photo of Mr Gordon Bagier Mr Gordon Bagier , Sunderland South

The Government are writing off merchant shipbuilding.

Photo of Mr Norman Lamont Mr Norman Lamont , Kingston upon Thames

I am not writing off merchant shipbuilding, and I do not think that anyone should maintain that £900 million is other than substantial support by the Government. This is not the time to go on pouring money into an industry. It is a time to get an industry to face up to its problems. Unless we get a better reputation in the market place, shipbuilding in this country will not survive.

Opposition Members criticised us because jobs have gone, but they know full well that, in the first year of nationalisation, 8,000 jobs disappeared. They know that their own Ministers in 1977 and 1978 said that a contraction of the industry was inevitable. They know that, if we are going to maintain a merchant shipbuilding capacity, it will have to contract further. Their own Minister in 1977 and 1978 used to tell their own Back Benchers that money was not unlimited, that competitiveness mattered, that getting ships delivered on price, and on time, mattered, but now, of course, it is all different. We cannot wonder that the trade unions did not listen. They did not listen because they have heard it before. They had heard it many times from the then Labour Government, and nothing was ever done. The problem was that the unions heard it again and again. But this time we have a Government and a management who mean business, and who have the determination to create a competitive industry. Some of my hon. Friends may have been put off by the hypocrisy of Opposition Members, others by their naivety and yet others by their irresponsibility with public money, but I am sure that all my right hon. and hon. Friends agree that the combination of all three is absolutely intolerable.

For that reason, I urge my right hon. and hon. Friends to reject the motion and to vote in favour of the amendment.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 198, Noes 285.

Division No. 150][10 pm
AYES
Adams, Allen (Paisley N)Clark, Dr David (S Shields)
Alton, DavidClarke, Thomas
Anderson, DonaldClay, Robert
Archer, Rt Hon PeterCocks, Rt Hon M. (Bristol S.)
Ashley, Rt Hon JackCohen, Harry
Atkinson, N. (Tottenham)Concannon, Rt Hon J. D.
Bagier, Gordon A. T.Conlan, Bernard
Banks, Tony (Newham NW)Cook, Frank (Stockton North)
Barnett, GuyCook, Robin F. (Livingston)
Barron, KevinCorbett, Robin
Beckett, Mrs MargaretCorbyn, Jeremy
Beith, A. J.Cowans, Harry
Bell, StuartCraigen, J. M.
Bennett, A. (Dent'n & Red'sh)Crowther, Stan
Bermingham, GeraldCunliffe, Lawrence
Bidwell, SydneyCunningham, Dr John
Blair, AnthonyDalyell, Tam
Boothroyd, Miss BettyDavies, Rt Hon Denzil (L'Ili)
Boyes, RolandDavies, Ronald (Caerphilly)
Bray, Dr JeremyDavis, Terry (B'ham, H'ge H'I)
Brown, Gordon (D'f'mline E)Deakins, Eric
Brown, Hugh D. (Provan)Dewar, Donald
Brown, N. (N'c'tle-u-Tyne E)Dixon, Donald
Brown, Ron (E'burgh, Leith)Dobson, Frank
Bruce, MalcolmDormand, Jack
Buchan, NormanDouglas, Dick
Caborn, RichardDubs, Alfred
Callaghan, Jim (Heyw'd & M)Duffy, A. E. P.
Campbell, IanDunwoody, Hon Mrs G.
Campbell-Savours, DaleEadie, Alex
Canavan, DennisEastham, Ken
Carlile, Alexander (Montg'y)Ellis, Raymond
Cartwright, JohnEvans, Ioan (Cynon Valley)
Evans, John (St. Helens N)Meacher, Michael
Fatchett, DerekMeadowcroft, Michael
Field, Frank (Birkenhead)Michie, William
Fields, T. (L'pool Broad Gn)Mikardo, Ian
Fisher, MarkMitchell, Austin (G't Grimsby)
Flannery, MartinMorris, Rt Hon A. (W'shawe)
Foot, Rt Hon MichaelMorris, Rt Hon J. (Aberavon)
Forrester, JohnNellist, David
Foster, DerekOakes, Rt Hon Gordon
Foulkes, GeorgeO'Brien, William
Fraser, J. (Norwood)O'Neill, Martin
Freud, ClementOrme, Rt Hon Stanley
George, BruceParry, Robert
Godman, Dr NormanPendry, Tom
Golding, JohnPenhaligon, David
Gould, BryanPike, Peter
Gourlay, HarryPowell, Raymond (Ogmore)
Hamilton, James (M'well N)Prescott, John
Hamilton, W. W. (Central Fife)Radice, Giles
Harman, Ms HarrietRedmond, M.
Harrison, Rt Hon WalterRees, Rt Hon M. (Leeds S)
Hart, Rt Hon Dame JudithRichardson, Ms Jo
Hattersley, Rt Hon RoyRoberts, Ernest (Hackney N)
Healey, Rt Hon DenisRobertson, George
Heffer, Eric S.Robinson, G. (Coventry NW)
Hogg, N. (C'nauld & Kilsyth)Rooker, J. W.
Holland, Stuart (Vauxhall)Ross, Ernest (Dundee W)
Home Robertson, JohnRoss, Stephen (Isle of Wight)
Howell, Rt Hon D. (S'heath)Ryman, John
Howells, GeraintSedgemore, Brian
Hoyle, DouglasSheerman, Barry
Hughes, Dr. Mark (Durham)Sheldon, Rt Hon R.
Hughes, Robert (Aberdeen N)Shore, Rt Hon Peter
Hughes, Roy (Newport East)Short, Ms Clare (Ladywood)
Hughes, Sean (Knowsley S)Short, Mrs R.(W'hampt'n NE)
Janner, Hon GrevilleSilkin, Rt Hon J.
John, BrynmorSkinner, Dennis
Johnston, RussellSmith, C.(Isl'ton S & F'bury)
Jones, Barry (Alyn & Deeside)Smith, Rt Hon J. (M'kl'ds E)
Kaufman, Rt Hon GeraldSnape, Peter
Kennedy, CharlesSoley, Clive
Kilroy-Silk, RobertSpearing, Nigel
Kinnock, Rt Hon NeilSteel, Rt Hon David
Kirkwood, ArchibaldStewart, Rt Hon D. (W Isles)
Lambie, DavidStrang, Gavin
Lamond, JamesStraw, Jack
Leadbitter, TedThomas, Dafydd (Merioneth)
Leighton, RonaldThomas, Dr R. (Carmarthen)
Lewis, Ron (Carlisle)Thompson, J. (Wansbeck)
Litherland, RobertTinn, James
Lloyd, Tony (Stretford)Torney, Tom
Lofthouse, GeoffreyWainwright, R.
Loyden, EdwardWallace, James
McCartney, HughWardell, Gareth (Gower)
McDonald, Dr OonaghWareing, Robert
McKelvey, WilliamWeetch, Ken
Mackenzie, Rt Hon GregorWelsh, Michael
Maclennan, RobertWhite, James
McNamara, KevinWigley, Dafydd
McTaggart, RobertWilliams, Rt Hon A.
McWilliam, JohnWilson, Gordon
Madden, MaxWinnick, David
Marek, Dr JohnWrigglesworth, Ian
Marshall, David (Shettleston)Young, David (Bolton SE)
Martin, Michael
Mason, Rt Hon RoyTellers for the Ayes:
Maxton, JohnMr. Frank Haynes and
Maynard, Miss JoanMr. Allen McKay.
NOES
Adley, RobertAtkins, Rt Hon Sir H.
Aitken, JonathanAtkins, Robert (South Ribble)
Alexander, RichardBaker, Nicholas (N Dorset)
Alison, Rt Hon MichaelBaldry, Anthony
Amery, Rt Hon JulianBatiste, Spencer
Amess, DavidBeaumont-Dark, Anthony
Ancram, MichaelBellingham, Henry
Arnold, TomBendall, Vivian
Ashby, DavidBenyon, William
Aspinwall, JackBerry, Sir Anthony
Bevan, David GilroyHamilton, Hon A. (Epsom)
Biffen, Rt Hon JohnHampson, Dr Keith
Biggs-Davison, Sir JohnHannam, John
Blaker, Rt Hon Sir PeterHargreaves, Kenneth
Body, RichardHarris, David
Bonsor, Sir NicholasHarvey, Robert
Boscawen, Hon RobertHawkins, C. (High Peak)
Bottomley, PeterHayhoe, Barney
Bowden, A. (Brighton K'to'n)Hayward, Robert
Bowden, Gerald (Dulwich)Henderson, Barry
Boyson, Dr RhodesHicks, Robert
Braine, Sir BernardHiggins, Rt Hon Terence L.
Brandon-Bravo, MartinHirst, Michael
Bright, GrahamHogg, Hon Douglas (Gr'th'm)
Brinton, TimHolland, Sir Philip (Gedling)
Brittan, Rt Hon LeonHooson, Tom
Brooke, Hon PeterHordern, Peter
Brown, M. (Brigg & Cl'thpes)Howell, Rt Hon D. (G'ldford)
Bruinvels, PeterHunt, David (Wirral)
Bryan, Sir PaulHunter, Andrew
Buchanan-Smith, Rt Hon A.Hurd, Rt Hon Douglas
Budgen, NickJackson, Robert
Bulmer, EsmondJohnson-Smith, Sir Geoffrey
Burt, AlistairJopling, Rt Hon Michael
Butler, Hon AdamKnight, Mrs Jill (Edgbaston)
Butterfill, JohnLamont, Norman
Carlisle, John (N Luton)Lang, Ian
Carlisle, Kenneth (Lincoln)Lee, John (Pendle)
Chalker, Mrs LyndaLester, Jim
Channon, Rt Hon PaulLightbown, David
Chapman, SydneyLilley, Peter
Churchill, W. S.Lloyd, Ian (Havant)
Clark, Hon A. (Plym'th S'n)Lloyd, Peter, (Fareham)
Clark, Dr Michael (Rochford)Lord, Michael
Clark, Sir W. (Croydon S)Luce, Richard
Clarke, Kenneth (Rushcliffe)Lyell, Nicholas
Clegg, Sir WalterMcCrindle, Robert
Cockeram, EricMcCurley, Mrs Anna
Colvin, MichaelMcCusker, Harold
Coombs, SimonMacfarlane, Neil
Cope, JohnMacGregor, John
Cormack, PatrickMacKay, Andrew (Berkshire)
Couchman, JamesMacKay, John (Argyll & Bute)
Cranborne, ViscountMaclean, David John.
Critchley, JulianMacmillan, Rt Hon M.
Crouch, DavidMcNair-Wilson, P. (New F'st)
Currie, Mrs EdwinaMcQuarrie, Albert
Dickens, GeoffreyMalins, Humfrey
Dicks, T.Malone, Gerald
Dorrell, StephenMaples, John
Douglas-Hamilton, Lord J.Marland, Paul
Dover, DenshoreMarshall, Michael (Arundel)
du Cann, Rt Hon EdwardMather, Carol
Durant, TonyMaude, Francis
Dykes, HughMawhinney, Dr Brian
Eggar, TimMaxwell-Hyslop, Robin
Emery, Sir PeterMayhew, Sir Patrick
Evennett, DavidMellor, David
Eyre, Sir ReginaldMerchant, Piers
Fairbairn, NicholasMeyer, Sir Anthony
Fallon, MichaelMiller, Hal (B'grove)
Farr, JohnMills, lain (Meriden)
Fenner, Mrs PeggyMills, Sir Peter (West Devon)
Fletcher, AlexanderMiscampbell, Norman
Fookes, Miss JanetMitchell, David (NW Hants)
Forman, NigelMoate, Roger
Forsyth, Michael (Stirling)Monro, Sir Hector
Forth, EricMontgomery, Fergus
Fowler, Rt Hon NormanMoore, John
Fox, MarcusMorrison, Hon C. (Devizes)
Fraser, Peter (Angus East)Moynihan, Hon C.
Fry, PeterMudd, David
Gale, RogerNeale, Gerrard
Glyn, Dr AlanNeedham, Richard
Goodlad, AlastairNelson, Anthony
Gower, Sir RaymondNeubert, Michael
Greenway, HarryNewton, Tony
Grist, IanNicholls, Patrick
Grylls, MichaelNicholson, J.
Gummer, John SelwynNormanton, Tom
Norris, StevenShaw, Sir Michael (Scarb')
Onslow, CranleyShelton, William (Streatham)
Oppenheim, PhilipShepherd, Colin (Hereford)
Oppenheim, Rt Hon Mrs S.Shepherd, Richard (Aldridge)
Ottaway, RichardSilvester, Fred
Parkinson, Rt Hon CecilSims, Roger
Parris, MatthewSkeet, T. H. H.
Patten, John (Oxford)Smith, Tim (Beaconsfield)
Peacock, Mrs ElizabethSoames, Hon Nicholas
Pink, R. BonnerSpeller, Tony
Pollock, AlexanderSpence, John
Powell, William (Corby)Spencer, D.
Powley, JohnSpicer, Jim (W Dorset)
Prentice, Rt Hon RegSpicer, Michael (S Worcs)
Proctor, K. HarveySquire, Robin
Pym, Rt Hon FrancisStanbrook, Ivor
Raffan, KeithStanley, John
Rathbone, TimSteen, Anthony
Rees, Rt Hon Peter (Dover)Stern, Michael
Renton, TimStevens, Lewis (Nuneaton)
Rhodes James, RobertStevens, Martin (Fulham)
Rhys Williams, Sir BrandonStewart, Allan (Eastwood)
Ridley, Rt Hon NicholasStewart, Andrew (Sherwood)
Ridsdale, Sir JulianStewart, Ian (N Hertf'dshire)
Rifkind, MalcolmStradling Thomas, J.
Rippon, Rt Hon GeoffreySumberg, David
Roberts, Wyn (Conwy)Tapsell, Peter
Robinson, Mark (N'port W)Taylor, John (Solihull)
Roe, Mrs MarionTaylor, Teddy (S'end E)
Rossi, Sir HughTebbit, Rt Hon Norman
Rost, PeterTerlezki, Stefan
Rowe, AndrewThomas, Rt Hon Peter
Rumbold, Mrs AngelaThompson, Donald (Calder V)
Ryder, RichardThompson, Patrick (N'ich N)
Sackville, Hon ThomasThorne, Neil (Ilford S)
St. John-Stevas, Rt Hon N.Thornton, Malcolm
Sayeed, JonathanThurnham, Peter
Shaw, Giles (Pudsey)Townsend, Cyril D. (B'heath)
Tracey, RichardWells, John (Maidstone)
Trippier, DavidWheeler, John
Trotter, NevilleWhitfield, John
Twinn, Dr IanWhitney, Raymond
van Straubenzee, Sir W.Wiggin, Jerry
Vaughan, Sir GerardWinterton, Mrs Ann
Viggers, PeterWinterton, Nicholas
Waddington, DavidWolfson, Mark
Walden, GeorgeWood, Timothy
Walker, Bill (T'side N)Woodcock, Michael
Walker, Rt Hon P. (W'cester)Yeo, Tim
Waller, GaryYoung, Sir George (Acton)
Walters, Dennis
Wardle, C. (Bexhill)Tellers for the Noes:
Watson, JohnMr. Tim Sainsbury and
Watts, JohnMr. John Major.
Wells, Bowen (Hertford)

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments), and agreed to.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

forthwith declared the main Question, as amended, to be agreed to.

Resolved,That this House, recognising the seriousness of the problems facing the merchant and offshore shipbuilding industries, supports the efforts of the Government and British Shipbuilders to create a more efficient and competitive industry; endorses the Government's policy of returning as much as possible of the industry to the private sector; and welcomes the new mood of realism shown by the Shipbuilding Negotiating Committee in agreeing the British Shipbuilders proposals for changes in working practices.