Orders of the Day — British Shipbuilders (Borrowing Powers) Bill

Part of the debate – in the House of Commons at 4:54 pm on 28th April 1986.

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Photo of Mr John Smith Mr John Smith , Monklands East 4:54 pm, 28th April 1986

As usual, the Opposition will not oppose a Bill that gives British Shipbuilders extra borrowing powers. But this is the occasion for a very timely debate on the shipbuilding industry. It is clear to all who know about the industry that the merchant shipping side is approaching as serious a crisis as it has ever faced.

During the past few years the industry has shrunk, particularly in terms of manpower. Since 1979, we have lost 48,000 jobs in shipbuilding and ship repair. But even more important, a crisis is now imminent. The Minister read out the orders that are now with British merchant shipyards. But he failed to add that all of them are near completion. He did not mention any prospective orders. As far as I know, it is highly speculative whether any orders are in prospect. We face the awful truth that, as the year progresses, the time approaches when some of those yards will have no orders. If orders are not obtained very quickly, there will be a difficult gap to bridge if orders are subsequently obtained. I am sure that the Minister realises that a lot of preparatory work needs to be done before a ship is properly under construction.

Some commentators, including, I believe, the retiring chairman of British Shipbuilders, have said that the years between 1986 and 1990 would be the crisis years for shipbuilding. It is believed that it is possible to contemplate some rise in orders after then, because of the shipping industry's need for replacement orders. Whether or not that is true, the crunch has already arrived for British merchant shipbuilding. Capacity simply cannot be reduced further. If it is, it will fall below the minimum size necessary to retain a proper shipbuilding industry. There must be a minimum size to justify the design capability, the research and development effort and the substantial work force and management who are committed to the industry. If the industry contracts further, we shall cease to have an industry.

In 1986, shipbuilding in this country faces survival or extinction. Of course, the consequences of extinction are dramatic not just for the industry but for those areas of the country that are deeply dependent on it for their prosperity and employment. I need mention only Tyneside, Teesside, Wearside and Clyde, although there are more shipbuilding areas than that. However, those regions are particularly dependent on the industry, and it is unthinkable that ships should not be made on those principal rivers.

Other trades are dependent on the shipbuilding industry, ranging from those involved in the steel industry to those that produce fairly minor pieces of equipment. It has been calculated that there are at least three jobs outwith the shipbuilding and ship repair industries for every one job within them. Therefore, the consequences go much wider than just the shipbuilding areas, and affect many other parts of our manufacturing industry.

The tragedy for the industry is that a Conservative Government are in power at this time of crisis. It is now clear that the decision to privatise the naval shipyards was one of the most stupid decisions in the history of Government relationships with British shipbuilding. Just when the industry is at its most vulnerable, its most profitable part has been handed over to the private sector, leaving British Shipbuilders exposed.

The former chairman of British Shipbuilders, Sir Robert Atkinson, told us when privatisation was being considered that, if it took place, we would cease to have an integrated industry, and the Government would be taking away the very capability which had helped it to survive and which would enable it to survive again through the difficult years ahead.

The industry would have had sufficient problems without privatisation, but with privatisation and its stunning financial effect on British shipbuilders the industry has been forced into an unnecessary crisis. A handicap has been imposed upon it just when there is a world slump in orders and a catastrophic decline in the United Kingdom merchant fleet. The problem for us is not a fall in orders but a relative fall in the British share of the market. Only about 2 per cent. of the world's shipbuilding orders come to Britain. Taking all that into account, the privatisation of the naval shipyards must rank as one of the most stupid acts of Government for many years.

We say that the industry must survive. The Government's clear responsibility is to ensure that it does. The crisis is one of depth as well as of timing. Speed is necessary if there is to be a chance of survival. It is clear from recent days and months that the Government do not understand that the timing of orders is of tremendous importance to both naval and merchant shipbuilding. If the timing is wrong, unnecessary damage will be caused.

I shall suggest a number of measures which, in addition to those which are under way, the Government should undertake to help the industry survive the crisis. First, there must be a proper Government procurement policy. Orders are available from the public sector. They should be organised and brought forward so that they are in time for the British shipbuilding industry. I hope that never again will orders go abroad such as that from Pacific Nuclear Carriers for an important nuclear carrier ship. For a British public sector organisation to give an order to another country is intolerable. The Government should have stopped that. I hope that if that occurs again it will be stopped.

The Minister should co-ordinate and bring forward as many public sector orders as can be found. I hope that he will not say that it cannot be done, because it was done under a Labour Government. Indeed, my right hon. Friend the Member for Glasgow, Govan (Mr. Milian) was responsible on a number of occasions for intervening positively—for example, on British National Oil Corporation orders. The Government should make an internal effort to co-ordinate and organise orders as soon as possible. That would provide an important breathing space for our merchant yards.

One initiative should be pursued vigorously by the Department of Trade and Industry. It affects in particular the Sunderland and Govan yards. I refer to the proposal by British Shipbuilders for the fleet support king 20/20 vessel. That has been developed extensively within British Shipbuilders and involves a new type of fleet auxiliary vessel. It has possibilities for foreign navies, but it is crucial that orders come from the Royal Navy to give it credibility on the foreign market. I do not suggest that it is a substitute for the auxiliary oiler replenishment vessels, but it is complementary to them. It represents a new opportunity for the British merchant yards by supplying naval orders, particularly abroad.