British Shipbuilders

– in the House of Commons at 4:02 pm on 14th December 1988.

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Photo of Mr Tony Newton Mr Tony Newton , Braintree 4:02 pm, 14th December 1988

I beg to move, That this House notes with approval the progress which has been made towards returning to the private sector the shipbuilding yards and other facilities owned by British Shipbuilders; notes also that, despite every effort, it has not proved possible to establish a viable basis for continued shipbuilding at North East Shipbuilders Ltd.; and warmly welcomes the measures proposed by Her Majesty's Government to encourage new enterprise and employment opportunities on Wearside.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I think that it will be most helpful to the House if I open the debate by concentrating on the major issues at not too great a length, in view of the numbers wishing to speak, and then, with the leave of the House, respond at the end to the specific points that hon. Members will no doubt want to raise.

It is important first to say something about the wider background, which is, of course, the difficult condition of the world shipbuilding market over a long period. In particular, in the early 1970s, the worldwide effects of the huge increases in oil prices produced a sharp reduction in shipbuilding demand, at just about the same time as earlier massive investment in Japan and the developing programme of investment in South Korea were bringing about a huge increase in shipbuilding capacity.

The extent of the problem can perhaps best be illustrated by the simple fact that in 1987, even after very considerable reduction of capacity had taken place, less than 10 million compensated gross tonnes of new ships were delivered by an industry whose worldwide building capacity is something like 18 million tonnes. In other words, the industry worldwide had facilities that could build nearly twice as much shipping as anyone was willing to buy. The effects of that have, inevitably and inescapably, been felt throughout the world.

The debate will understandably focus especially on the position in Britain, where employment in merchant shipbuilding fell from 45,200 in 1977 to 11,300 in 1987, a loss of nearly 34,000 jobs. But the context in which that figure has to be viewed is one in which, in the same period, France lost 21,000 jobs out of 30,000, Germany lost more than 26,000 jobs out of 39,000, the Dutch more than 17,000 jobs out of fewer than 21,000, the Swedes more than 15,000 jobs out of fewer than 17,000, and the Norwegians nearly 14,000 jobs out of fewer than 18,000. The Japanese industry lost more than 100,000 jobs from the 1977 base of 164,000.

In the past two years, Sweden has abandoned the production of larger merchant ships, and its two major yards have been converted for other industrial uses. France has carried out a major restructuring, cutting from five significant yards down to one, with more than 5,000 job losses. Germans yards have shed some 6,000 jobs in that period. Japan has completed a major restructuring of its merchant shipbuilding industry, which involves substantial capacity cuts—since 1985, direct and sub-contract employment in Japanese yards has fallen by almost 50,000 people. Even the Koreans are not immune from the problems presented by low demand for new ships and continuing huge over-capacity. Their single largest yard is currently employing only half the people that it was designed for.

There is no reason to suppose that the problem of overcapacity in shipbuilding is suddenly about to disappear, as had earlier been hoped. I can best illustrate that by referring to the forecasts of the Association of West European Shipbuilders, of which British Shipbuilders is, of course, a member. In 1984, in its last report on this matter until recently, it suggested an average annual building requirement of 12·7 million compensated gross tonnes between 1984 and 1990, and 18·5 million CGT between 1990 and 1995. As the House will realise from the figure I gave earlier about total world capacity in 1987, that would have meant a demand in the first half of the next decade roughly equal to the industry's capacity in 1987.

The latest AWES forecast, in a report published only three months ago, now puts average annual demand between 1990 and 1995 at only 12·5 million compensated gross tonnes, and suggests that even in the second half of the next decade, demand will not recover to the extent previously predicted for the first. Moreover, the Japanese assessment of the likely course of demand is in line with those forecasts. Whatever may be said—we have said it before and will say it again—about the uncertainties of forecasting, I think that the House will agree that there is no basis here for the view that the problem of excess capacity is about to go away, and that all that is needed is to find a way to tide things over until the good times return.

These, then, are the problems with which successive British Governments, like other Governments throughout the world. have been wrestling. The previous Labour Government nationalised the industry in 1977, in the hope and belief that this would provide a good framework within which to conduct the necessary restructuring and create a viable shipbuilding industry. It would be hard for anyone to argue that those hopes have been fulfilled, or show any real signs of being fulfilled. Since vesting day in July 1977, some £2 billion of public money has been put into British Shipbuilders in one form or another, without achieving what we would all wish to see. Indeed, that figure includes losses of £650 million just on building ships, of which only £250 million represents permitted subsidy under the agreed rules of the European Community.

The recent position of NESL itself perhaps illustrates the position most starkly. In the past five years, it has completed no contract to cost, and the total subsidy on shipbuilding contracts has averaged 50 per cent. of the building costs incurred. In the past three years, it lost £100 million through operating losses over and above intervention fund subsidy of a roughly similar amount; and in the last full year for which we have figures, it lost £56 million on a turnover of £69 million.

The present Government—I simply state this as a fact, of which the House is already aware—take the view that the better course, in the light of this experience, is to seek to return the industry to the private sector, subject, where appropriate, to the availability of subsidy within the rules agreed in the Community—the so-called sixth directive.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury)

As the Minister has criticised so strongly the management of British Shipbuilders for the chain of losses that he has just described, why has he relied so heavily on that management's advice about the viability of the bids now being considered for the Sunderland yards?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

British Shipbuilders management, as the people who have been running the industry on the Government's behalf, are an appropriate source of advice for us to seek, without our necessarily always and unalterably accepting that advice. The very experience that British Shipbuilders management has had in the difficulties that it has experienced in recent years puts it in a position to judge the difficulties that others are likely to have when they are confronted by what are, frankly, optimistic bids.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

May one drew the conclusion from the answer given by the Minister to the hon. Member for Berwick-upon-Tweed (Mr. Beith) that because, according to the Government, British Shipbuilders could not make a success of the industry, it may have been induced into the position where it finds it difficult to recommend that anyone else can do so? Is not that the logical contradiction and the true position?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

It is neither a contradiction nor a logical position to adopt. As I said to the hon. Member for Berwick-upon-Tweed (Mr. Beith), British Shipbuilders experience of accepting, on what has turned out to be, at times, a dramatically over-optimistic basis, contracts that have incurred substantial losses or have collapsed disastrously—as happened with the Danish ferry contract—puts it in a good position to make judgments when others come forward with what are, in my view, overoptimistic bids. I have no doubt that the hon. Member for Sunderland, North (Mr. Clay) will make a number of points to which I shall have to respond, should he be fortunate enough, as I hope he will be, to catch your eye, Mr. Speaker.

The naval shipbuilding yards were sold between 1984 and 1986. The process of selling those yards primarily concerned with merchant shipbuilding—or rather, those that were part of British Shipbuilders, since there were already a number of smaller privately owned yards—has been in train since earlier this year, following my predecessor's statement to the House on 18 April. It is that process of selling the merchant shipbuilding yards belonging to British Shipbuilders that has led to today's debate.

Taken as a whole, that process is being carried through with considerable success. As I told the House in my statements of 14 November and 7 December, at the outset British Shipbuilders owned shipyards at Govan, Sunderland, Appledore and Port Glasgow, together with the Clark Kincaid marine engine builders at Greenock and a services subsidiary, Marine Design Consultants, at Dundee and Sunderland.

The Govan yard has been successfully sold to the Norwegian company, K vaerner Industries. It is making Govan the centre for its gas-carrying ship technology, with a programme of work taking the yard well into the 1990s. Negotiations for the sale of the Appledore yard in Devon are at an advanced stage. It is set to become part of the Langham Industries group—I hope, around the turn of the year. Clark Kincaid at Greenock should similarly be sold shortly to the management buy-out team. I am particularly pleased, that Clark Kincaid will build the engines for the first two gas-carrying ships that K vaerner is building at Govan. Negotiations with Ailsa Perth for the sale of Ferguson have got off to a good start. There is a reasonable chance that the sale will be completed by early February. The terms of all those disposals are now under consideration by the European Commission.

Finally, as the House will recall from my statement on 7 December, I have accepted British Shipbuilders recommendation that the preferred bidder for Marine Design Consultants should be the team led by its managing director. I hope that that sale will he completed early next year.

Five of the six main undertakings owned by BS have either been successfully returned to the private sector or are well on the way to being so. Those five undertakings account for nearly two of every three of the 6,500 people employed by British Shipbuilders when my predecessor made his statement on 18 April.

The exception, which will no doubt be the main focus of attention in this debate for that very reason, is North East Shipbuilders Limited at Sunderland. The House may feel that it is not surprising that it should have proved far and away the most difficult—and in the event, in our view, impossible—to secure its future, given the facts that I have already recounted about its record in recent years, together with the collapse of the Danish ferry order which was originally seen as its life line. That does not alter the fact that it is a major disappointment, and I do not pretend otherwise to the House. However, it was not for want of effort by Ministers, by officials, or by British Shipbuilders itself—whose chairman travelled many thousands of miles following up any possibility offering even a glimmer of a more successful outcome.

Our determination to find a way forward for NESL, if we could, is clear from our willingness to allow successive extensions of time for possibilities to be explored. Interested parties were originally asked whether they could bid by the middle of August. When the response indicated that there was little prospect of satisfactory bids being received on that time scale, a deadline was set for the receipt of bids by the end of September. At a late stage in the evaluation of those bids, when one of the bidders sought to modify his bid, further time was allowed to take account of that. When none of those bids proved to stand up, but nevertheless there was reason to believe that other possibilities might still produce a solution, further time was allowed, until the end of November, to establish whether any of those possibilities could produce proposals that would give a firm basis for detailed negotiation, leading to our overriding requirement of a viable future for the yards.

In the course, of that process there were discussions with more than 15 bidders or possible bidders, including a number of other overseas interests. Unhappily, none of those appearing to offer the best prospects, and in particular the necessary financial backing to overcome the difficulties I described, produced bids or proposals offering a prospect of successful negotiation. Those that produced bids or proposals did not, in the Government's judgment in the light of the advice of BS and of their financial advisers, offer the basis of a viable future for merchant shipbuilding in the Sunderland yards. As I told the House last Wednesday, in our view, none of the latest proposals provided evidence of sufficient financial resources, given the major uncertainties of the shipbuilding market. None gave evidence of sufficient work for the future. All would have involved levels of subsidy which, in one case in particular, could have faced difficulties under the sixth directive.

In reaching that judgment, we took full account of the widely canvassed possibility of a substantial order for general cargo ships for Cuba. On that, two main points must be made. First, as is all too clear from the figures I gave earlier, there is no guarantee that such an order can be secured in the face of the international competition that exists in a situation of considerable over-capacity. Secondly, it is, in our judgment—and I accept that it is a matter of judgment—highly unlikely that those ships can be built at a price that the Cubans will be willing to pay without Sunderland's incurring further losses, even after allowing for the maximum subsidy under the European rules.

Given those doubts, to have accepted a proposal that effectively depended on such an order, especially from a bidder whose financial solidity was itself unacceptable, would have been no service to the people of Sunderland or to anyone else. That is why, reluctantly but firmly, we came to the conclusion that I announced to the House last week. We believe the right course now is to concentrate on building a new industrial future for Sunderland.

I announced last week a package of measures designed to assist those who will be made redundant in the coming weeks from NESL and to promote alternative employment in the town. One of the main elements in the package is the proposed enterprise zone, offering rate relief for 10 years for new developments, a simplified planning regime and 100 per cent. capital allowances on new industrial and commercial development. That enterprise zone will provide a major new incentive to companies to move into the area, as has been the experience with zones in other areas.

The Northern Development Company is already on record as having said that an enterprise zone will significantly improve Sunderland's chances of attracting inward investment. I also announced that English Estates would be providing 220,000 sq ft of high-quality factory space, at a cost of more than £7 million. I should make it clear that I expect English Estates to have provided a substantial amount of factory space by this time next year.

The third main element in the package of measures for Sunderland, which I mentioned last week, is £10 million for the encouragement of new enterprise and employment opportunities. Half of that sum will be devoted to counselling and retraining assistance for the Sunderland work force. It is our intention that no one will have to leave NESL without having had access to the expert advice on new job opportunities that will be provided by the services offered by my right hon. Friend the Secretary of State for Employment. That advice will be offered in one-to-one interviews, with the aim of ensuring that an individual's existing skills are fully assessed in relation to available jobs.

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

The Minister will recall that, during last week's statement, I asked two basic questions. First, I asked how many jobs had been created to replace jobs lost in the mining industry. Secondly, I asked the Minister to investigate the magnitude of youth unemployment in the borough. I have obtained the most up-to-date figures, which may be of interest to the Minister. There are 6,035 youngsters who are either unemployed or on a job scheme that has a finite time limit. I asked what vacancies had been notifed to the careers office by employers. The Minister may be interested to know that in Sunderland there are five vacancies, in Houghton there are none and in Washington there are six vacancies. In other words, there are 11 job vacancies for more than 6,000 youngsters without proper jobs.

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I intended to say something in a moment about the number of jobs being created in Sunderland, and I shall. 1 shall study further the figures that the hon. Gentleman has just brought into the debate. However, I must make the point that it is well known that the job vacancies notified to jobcentres—I assume that the hon. Gentleman meant jobcentres—represent a substantial understatement of the jobs available in an area. A considerable amount of evidence is available to that effect.

The other half of the £10 million will be used to help new businesses to start up or existing businesses to expand. Obviously, we shall be prepared to look at any type of business that can make a real contribution to the welfare of Sunderland. These measures, which are substantial in themselves—as I said last week, they have a total value over a period of about £45 million—are, of course additional. That point does not seem to have been fully appreciated by Sunderland borough council in some of the comments that it made last week. They are additional to the help that is already available to Sunderland and will build on what is already being achieved there. They are over and above the support—estimated to be something more than £120 million—that the Government are spending this year in Tyne and Wear in general, including Sunderland in particular.

Unemployment has fallen in the area by more than 7,000 in the past two years, and some 1,000 new jobs have been created in Sunderland in the past year, thanks to the combined work of the city action team, the Tyne and Wear development corporation, the Northern Development Company and the local authorities. Sunderland continues to be helped directly by regional assistance made available to the north-east by the Department of Trade and Industry, which has created or safeguarded 135,000 jobs in the past decade.

What is particularly striking and encouraging for the future is the success of Sunderland and the north-east generally in attracting investment. It is expected that more than 3,500 new jobs will be created there in the next two to three years by Nissan, Ikeda Bussan, which makes components for Nissan, NEK Cables of Norway and Goldstar Electronics of South Korea. That is a measure of what has already been achieved in the north-east and, not least, in Sunderland, and on which we believe that the measures that were announced last week will build still further.

I said last week that the House would share my regret that it had not proved possible to find a way forward for NESL and that, at least, was clear. The House will also share my view that there is a way forward for Sunderland, which will give it the new opportunities that all of us want to see. It is those new opportunities that we are now determined to achieve.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham 4:27 pm, 14th December 1988

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: That this House condemns the decision to close North East Shipbuilders Ltd. and the loss of jobs and damage to the Sunderland economy which the closure will mean; deplores the obsession with dogma which puts privatisation above the securing of orders; and regrets the unnecessary and untimely demise of British merchant shipbuilding.

I propose to waste little time on the Government motion or on the Minister's speech. I hope that the Minister will not take it amiss that he will not find it embarrassing if I say that I felt that his heart was not in it. I believe that he came to his new responsibilities and discovered that he was the prisoner of a policy bequeathed him by his predecessor and which was then foisted on him by the Secretary of State. He has tried hard to escape the trap in which he found himself, but it is unfortunate for all concerned that, in the end, he has not been able to spring that trap.

The right hon. Gentleman has approached his task today—and his task last week as well—with an appropriately heavy heart because he understands that what he has to announce means the destruction of jobs, the destruction of a major British industry and the destruction of hopes for the future of our industrial economy. It is a wanton act of destruction and an outrageous act of industrial vandalism. Like all acts of vandalism, it is all the more sickening because it is so unnecessary.

The parrot cry for so long in respect of the British shipbuilding industry has been that there are no orders to sustain it. The Minister was very fair in acknowledging that that is precisely the problem that the whole of the world shipbuilding industry has faced over a long period. There is not a shipbuilding industry in the world that has survived without subsidy, and substantial subsidy at that. I can simply counsel the Minister and regret that he and his predecessor have so often grossly and unfairly overstated the degree of subsidy on which our own shipbuilding industry has relied. The absence of orders is not the central point today.

There can be no ground for closing down what remains of British merchant shipbuilding with the excuse that there are no orders. The reason for the closure lies in the Government's obsession with dogma and their insistence on putting privatisation before commercial sense and industrial logic. I use the words "obsession with dogma" advisedly because it takes an obsessive and doctrinaire Government to be ready to kill an industry rather than allow it to survive and prosper in the public sector. It is almost as though the shipbuilding industry is being judged on its past, rather than on its present or its future. It is almost as though this industry is being punished for the subsidy that it has received in the past, rather than being rewarded for its efforts and encouraged to take the opportunities that now open up for it.

It is true that the collapse of the Danish ferry order created an immediate and difficult problem, but even there, there is a mystery and a sense that the crisis was not wholly unwelcome to a Government who had already decided to wield the executioner's axe. The contract with Johansen subsists. Every effort to negotiate further possible buyers for those Danish ferries has met with the objection from Johansen that he still has a contract to buy them. No real effort has been made either to keep Johansen to his contract or to declare him to be in default. Consequently, he and the Government, through their paralysis, have allowed the situation to frustrate genuine expressions of interest from about 80 potential buyers. They may not all be serious or to be taken seriously, but there are real expressions of interest in buying the ferries and none of them have been pursued.

We therefore cannot avoid the conclusion that it was convenient for the Government to discover that the collapse, or apparent collapse, of the Danish ferries order had come about at about the time when they had decided to close those yards.

An equally great—perhaps even greater—mystery surrounds the Cuban order. The Minister will accept that the Cuban order for 10 general purpose merchant ships is worth about £110 million. The seriousness of the Cuban interest can hardly be denied, but the Minister's predecessor denied it when my hon. Friend the Member for Sunderland, North (Mr. Clay) and I went to see him earlier this year and when he gave evidence to the Select Committee. The Cubans are serious, and have been serious all along, and the Minister cannot say that the order could not have been secured at a reasonable price, as no negotiations ever took place. The Cubans have merely suggested an opening target price. They have never been permitted to get to the negotiating table to start to negotiate specifications and price.

Even now, at this late stage, the Cubans continue to signal the seriousness of their interest. The No. 2 man at ASIMEX is to visit London in the next few days, and I understand that he is prepared to negotiate a deal under which he would lease one of the yards and take on short-term contract labour for the duration of the build. That would save 900 jobs, and it would keep the yard alive until we could decide whether there was an upturn in world shipping demand. If the offer is to be taken up, however, quick action is required.

I am glad to hear that the Minister is to wind up the debate; perhaps he may even wish to intervene in my speech to answer this question. The Cubans are prepared to defer placing the order elsewhere for at least another month. Is the Minister prepared to enter proper negotiations with the Cubans, and to put up a proper negotiating partner? So far, the Cubans have been unable to negotiate with British Shipbuilders, and a successor has not been put in place with which to take up negotiations.

The matter is urgent because, if the closure of the yards is finally and irreversibly notified to the EEC Commission, intervention fund assistance will be lost for ever. Has that notification yet been made, is it irreversible and is it in any sense a condition of EEC approval of the other disposals of which the Minister spoke? What we need to know—the information that is desperately needed on Wearside—is whether the door has finally been closed, or whether even now it remains open. If it has finally been closed, this debate is a charade: it has come too late and it is a debate that the Government have offered when they have already cut the throat of British merchant shipbuilding.

It appears that the Minister does not propose to intervene, but I hope that he will comment in winding up.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

The Minister made some play of the fact that in his view optimistic assessments had been made of the upturn in world shipping. Let me draw attention to some surveys and forecasts that suggest otherwise. A recent survey of world shipping is much more optimistic. It talks of demand rising to 30 million tonnes in the mid-1990s. There are unmistakable signs in the world shipping market—in the price of second-hand ships, in freight and charter charges and in other market indicators—that clearly show that the world upturn has at last arrived. That is why the Cubans are trying to get in early with substantial orders: they know that there will soon be pressure on capacity. That is why it is so ludicrous that the Sunderland yards are to be closed at this moment of all moments.

All independent observers would accept that, on the basis of substantial investment, the Sunderland yards have become the best equipped yards in Europe and the European yards best placed to take advantage of the coming upturn. Huge efforts have been made by the work force, to which I am sure the Minister would wish to pay tribute. The taxpayer has put in huge investment and, as a consequence, the yards are at the leading edge of new technology. Even the Japanese have visited Sunderland to see how it is done. No one can walk away from those yards without a heavy heart at the thought that that impressive capacity is to be lost to our industrial economy. To turn our back on orders and close down the yards is a vote of no confidence in all that has been achieved so far—and, paradoxically, in the very management whom the Government recently installed.

No sensible business man would walk away from a market when it was just about to turn up, or write off huge investment made or skills developed just when all those efforts were on the point of paying off. No sensible Government would abandon their indigenous merchant shipbuilding capacity just when it is becoming clear that the prizes will go to the Governments who have had the courage, commitment and foresight to stick with their shipbuilding industries. What has been the point of making the effort and of keeping faith with the industry if the Government lose their nerve or prefer political to industrial objectives just when it is all likely to pay off at last and when better times are coming? The truth is that we do not have a serious business man or a sensible Government in charge. We have in charge a salesman who sees no value in anything that cannot be sold and who would close down a vital industry rather than have it remain in public ownership.

There is a value in what is being lost. It is a value that is very great to the people whose jobs and communities are affected and to the economy of Britain. Lord Young may not have obtained the price that he wanted, but there is a price to be paid.

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

Is my hon. Friend surprised at the way in which the Secretary of State is acting, given that he is only a jumped-up property developer who is not interested in the backbone of British industry? The Government do not care tuppence about subsidies; they operate a double standard. Farmers, for example, are subsidised out of the taxpayers' pocket to the tune of £13 a week for every family in Britain to ensure that their industry ticks over. The same Government wrote off £4 billion of Rover's debt so that they could hand the company over to British Aerospace—the company to whose chairman the right hon. Member for Chingford (Mr. Tebbitt) acts as an adviser.

Photo of Mr Bryan Gould Mr Bryan Gould , Dagenham

My hon. Friend is on a strong point. He confirms my contention that the values of the asset stripper underlie this sorry story. If no one can be found to offer the required price for the assets, they are simply thrown away. The price that Lord Young had put on the assets could not be obtained, but there is a price to be paid. It will be paid by 2,000 people whose jobs will be lost as a direct result and by a further 3,000 whose jobs will be lost as an indirect consequence. It will be paid by the Sunderland economy.

The package that the Minister has announced is no more than a pathetic sop and a salve for a guilty conscience. The price will be paid in the destruction of a 600-year-old tradition and of the pride and identity of the shipbuilding community. It will be paid in the loss of a future for an industry that will matter greatly to our economy and our industrial base. In the end, this country will no longer be a maritime nation. It cannot now build for its own merchant fleet or to preserve, protect and develop its own trade and strategic requirements.

We are a smaller and weaker economy and country as a consequence, blind to our past and, apparently, to the future and its needs. We are the victim of a Government who see no value in our industrial economy, who care nothing and know nothing about our industrial base, who —as they say—know the price of everything but the value of nothing. The consequence is that the British merchant shipbuilding industry is the last and, in many ways, the most lamented in the long list of this Government's victims.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth 4:40 pm, 14th December 1988

This sad day has been long in coming, but it has been envisaged in our debates for some time.

My right hon. Friend the Minister has given a lucid explanation of the international scene and background. Last night I read the Booze Allen report, one of the earliest documents on shipbuilding that I have seen. It came out in 1972, and what it had to say was prophetic. Let me briefly quote its conclusions: Despite the growing world demand for shipbuilding the UK will be faced with rapidly increasing competition in the next ten years, as world-wide over-capacity becomes more severe … Government support alone cannot ensure a long term market for the industry, nor is technology likely to offer any particular advantage in the UK. That is exactly what has come to pass. It is little comfort to us that the same has happened in all other western European countries, as my right hon. Friend pointed out.

In 1975 I visited the Swedish shipbuilding industry, which was a new creation. Modern yards had been built from scratch in green field sites. Every one of them has now closed. At that time the Swedes were second only to the Japanese in shipbuilding. I was surprised that a small country like Sweden could have achieved such a position, but it had. The whole industry came and went within about 10 years. The reason has basically been competition from the Far East—cheap labour competition, especially from Korea—which came about at the same time as a tremendous fall in world demand for ships. In 1974 over 200 million tonnes were on order; now the figure is down to 33 million tonnes. Last year, only 16 million tonnes were built. That in itself is almost a halving of the amount built the year before.

My right hon. Friend referred to the vast sum of public money that has gone into the industry in this country. I compute it as about £1 million for every working day that British Shipbuilders has been in existence. If I have a criticism, it relates to whether that taxpayers' money has been spent to best advantage. It does not seem to me to have achieved much. I understand the arguments that supported it at the time, but I cannot help wondering whether we might have obtained better value by using it in different ways.

One way in which we might have used it would have been to help our Merchant Navy more. If we had put more funds into supporting our shipowners, we might now have had a more assured order book for the future. I think that Govan comes best out of the recent dramatic events. It has an assured future by having a shipowner as its owner, which makes a good deal of sense. I had lunch today with a foreign shipowner who owns a yard in his country. He believes, as I do, that that is probably the key to success for western shipbuilding—that there should be a natural market from the yard owner's own fleet. Of course, he can also sell ships to others if circumstances permit.

Photo of Mr Edward Garrett Mr Edward Garrett , Wallsend

There is a slight contradiction in the hon. Gentleman's argument. Only this afternoon I heard that more redundancies are to be announced tomorrow at Swan Hunter, whose work force in Tyneside is shared between his constituency and mine. That contradicts the argument that private owners know best what is best for their business.

Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth

Swan Hunter lost out on the last frigate order because, as the hon. Gentleman knows, it was considerably undercut by the other frigate builder. I am happy to tell the hon. Gentleman that, when I last talked to Swan Hunter's management, they said that they now thought that they had got their sums wrong and believed that they could have put in a lower bid in the light of what they know now. I am hopeful that, in the next round of frigate orders, Swan Hunter will be successful. Everyone agrees that it is a very technically competent yard. I am sure that the hon. Member for Wallsend (Mr. Garrett) thinks so as well, and hopes, as I do, to see more frigate orders going there in future—which, of course, would lead to more employment in the yard.

When will there be an upturn in the merchant shipbuilding scene? I do not expect one until the second half of the 1990s. The Drewry shipping consultants, in a recent in-depth study, forecast a further decline in western Europe as the industry concentrates in the far east. Sadly, I also believe that that will happen. I do not think that the House fully appreciates the scale of competition from the Far East with which we are faced. The Japanese export some 16 ships every month; we are not able to export 16 in a year, and nor are the other western European countries. The Japanese and Koreans together have over 300 ships on order, a total of 22 million tonnes. My right hon. Friend read out figures for the fall in the labour force in the main traditional shipbuilding countries, but I think that he will find that the Koreans have added some 100,000 men to their labour force at a time when the rest of the world has seen labour forces contract. The various hourly wage rates are quoted in dollars, because that is the currency of international shipping. In the United Kingdom the rate is approximately $9 an hour. In Korea it is approximately $3 an hour. The Koreans also work about twice as many hours a week as western Europeans are expected to work, and of course they do not have the overheads of modern western industral society. In general, Korean yards have the advantage of paying only about a fifth of the labour costs paid by our yards in Sunderland or other Western European countries.

Recent figures show that the cost of building a bulk carrier in a typical European yard would be $21 million, and that the far east price was $12 million. In other words, the prices being fixed by our low-cost competitors in the far east are being fixed at a figure a great deal lower than the cost of building the ship in this country—in some cases, lower than the cost of the parts that go into building it. The 28 per cent. intervention fund has proved wholly inadequate to meet the competition, and the result has been losses that, in Sunderland, have been running at a rate of £1 million a week. That is due to the world price being fixed by yards in the far east whose workers are paid a fifth of the wages that we pay. These are the facts of life for this country and for Holland, Germany, France, Sweden and the other former shipbuilding countries of Europe. Korea has trebled its capacity while the western European industries have been declining. Now Korea and Japan produce four times as many ships as the whole of Europe put together.

We have been forced in desperation to take dubious contracts, with inevitably huge subsidies and heavy losses on top of that. We have been faced with customers who have no money and want 15 years to pay, or go bust like ITM in Sunderland or renege on the contract as the Danes did.

My right hon. Friend the Minister of Trade and Industry shares my deep concern over the decision that has had to be taken for Sunderland. I congratulate him on the package that he has put together to seek to create new jobs for the future in Sunderland. The total sum has been decried and derided as inadequate, but it works out at £20,000 for every man working in the yard. In addition, a significant sum of redundancy pay is being paid into the community. If it is anything like that paid out in previous cutbacks in the shipbuilding industry, it will be about £10,000 to £11,000 per man. In total there is a massive sum going into the community in Sunderland.

We must all seek to put that money to the best possible use to ensure jobs for future generations in the town. It is no good looking back to the past with pride—however much we are entitled to do so. We must look up the river to Nissan and the industries of the future.

As my right hon. Friend said, there has been a significant fall in the number of unemployed in Sunderland. Unemployment is a desperate problem in that town; nobody could say otherwise. However, there has been an encouraging fall of 7,000 in the past two years and 4,000 in the past year. The number of jobs in shipbuilding in Sunderland has already fallen from 7,500 a few years ago, to 2,200 today. That fall of about 5,000 jobs has been dealt with by the creation of new jobs at Nissan and elsewhere. That is what we must continue to do in the three or four years ahead, by means of the various schemes introduced by my right hon. Friend. It is wrong to decry the nature of those schemes or their magnitude.

Yesterday, the Northern Development Company said that the mood was favourable for new jobs and businesses in the north-east. It saw the new enterprise zone in Sunderland as an attractive feature to new businesses coming to set up in the north-east from abroad or from other regions of Britain. We have not yet heard any details about the enterprise agency proposed by my right hon. Friend. I await those details with great interest because that agency will have a very important part to play for future generations in terms of jobs and the creation of a new spirit in the town.

Tyne and Wear chamber of commerce is particularly strong and will be prepared to accept the challenge. One of the features of the past few months has been the tremendous co-operation between all sides in Sunderland in seeking to save the yards. In the years immediately ahead, we must show the same co-operation in seeking to replace them with future employment in modern industries. The proposed schemes will work towards that end. There is a great deal of Government money going into them and there must be co-ordination of the efforts of all those in the region, whether it be the urban development corporation which concentrates on redeveloping the river banks, the Northern Development Company which attracts industry to the region, or English Industrial Estates which is the Government's industrial promotional agency for property and is creating new factories in Sunderland. All those must work together to provide a future for Sunderland based on secure jobs for the long-term future and not what have come to be give-away ships, for there cannot be a sound future for Sunderland based on continuing to build give-away ships.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North 4:54 pm, 14th December 1988

The decision announced last Wednesday has been widely described as industrial vandalism. Those words are not rhetoric; they are accurate and specific. Vandalism is about wanton destruction, and there is no doubt that this destruction is planned, calculated and deliberate. Vandalism is also about unnecessary destruction and I hope to prove that this destruction, if it goes ahead, is wholly unnecessary.

I concur with my hon. Friend the Member for Dagenham (Mr. Gould) that the Chancellor of the Duchy of Lancaster wanted to find a solution. That is shown by the number of postponements of the closure decision. I thank him for that. However, as I have said before, tragically he inherited a course of events set by his predecessor, the right hon. and learned Member for Rushcliffe (Mr. Clarke). In order to avert that course of events, he had to reverse some aspects of Government policy or overcome difficulties within his Department and British Shipbuilders. However, if he really wishes to retain a viable shipbuilding industry on Wearside, there is a chance for him to do so.

On Monday I attended the launch of the last ferry from Southwick. It was a moving occasion; many people felt empty and unable to comprehend the fact that that beautiful ship, built in that magnificent facility, would probably be the last. In Sunderland, the reality that hundreds of years of tradition are coming to an end is still sinking in. If the workers in the yards and the people of the town felt that we were facing a lack of orders, they could learn to live with the bitterness. If they felt that they had been working in an out-of-date facility which needed massive investment in plant and machinery that could not be provided and that it could not keep up with other yards in the world, it would be easier to bear. If they felt that they were operating in a declining market and that there was no future for the industry, it would have been bitter and difficult to take, but they might have been able to swallow it. However, the opposite is true; that is why people are so angry.

I pay tribute to the managing director of North East Shipbuilders, together with the rest of its management, work force and shop stewards, who have had to live through months of torture. I pay tribute to all the parties on the council, who were all opposed to what the Government were doing. I pay tribute to the people of the town who have been united in their wish to save the yards.

It is worth referring to the compliment that the Prime Minister paid to the quality of the work and the management and work force in the yards less than three years ago when she named the Stena Seawell. She paid a glowing tribute at that time and said: We have the skills, the enterprise, the inspiration to do it — I hope we'll be able to do a repeat performance by virtue of the tremendous advertisement we can blazon across the world". She referred to it being a modern ship and mentioned the latest technology. All that has been put on record many times.

It is interesting to refer to a speech made in the House at the time by the right hon. Member for City of Chester (Mr. Morrison), who was then the Minister of State: Building ships more efficiently is the key to delivering them on time and to the owners' satisfaction. I have already referred to the fact that my right hon. Friend the Prime Minister named the Stena Seawell last Friday. The delivery of that highly complex vessel on time and in perfect condition speaks volumes for the dedication and effectiveness of the Sunderland management and work force. It is the best kind of advertisement that the industry could have, and it is worth more than any amount of Government support. I am sure that all right hon. and hon. Members will join in applauding that success."—[Official Report, 28 April 1986; Vol. 96, c. 683] It is remarkable that Ministers were praising the yards at that time and that they are now announcing closures.

As my hon. Friend the Member for Dagenham said, it is all happening because the Government put the dogma of privatisation before commercial necessity. The tragedy is that, unlike any other privatisation, whatever the ideological merits of the argument, the privatisation was stumbled into almost by accident. The right hon. and learned Member for Rushcliffe intended that the yard should close because it had no orders. Then an extremely embarrassing thing happened. There was a possible order from Cuba and that is where the trouble started.

The right hon. and learned Gentleman pretended that he had never had an intervention fund application, even though, as he told the Select Committee, the chairman of British Shipbuilders had written a letter in the normal manner setting out the deal and asking for intervention funds. However, the Minister's predecessor persisted in effectively misleading the House by saying that he had never received such an application. Eventually it became clear that a form should have been filled in but that he had told the chairman not to fill it in, but to write a letter instead.

By then it was clear that there was this order, so the intervention fund application was made. The line then changed. The intervention fund could not he used unless the yard was privatised. The point that was made at the time, and that is still made, is how on earth can we expect to find a buyer for the yard when the yard's forthcoming order book has not been finalised? If the Government had been serious about privatising NESL instead of closing it, they would have encouraged British Shipbuilders by helping it to obtain the Cuban order. Then the Government would have talked about privatisation. By doing it the other way round, the Government sounded NESL's death knell.

The Danish ferries have already been mentioned. I believe that the DTI did not want to solve that problem. It is a peculiar coincidence that this week, within days of the announcement of the closure of the yeard, Mr. Johansen, who originally defaulted on the 24 ferries contract, is about to sign a contract for six ferries from British Shipbuilders, in addition to the two ferries that he has already ordered.

If Mr. Johansen is buying six ferries from British Shipbuilders to settle the deal and get it out of the way, why did he not buy six ferries from British Shipbuilders six months ago? I am becoming increasingly suspicious about it. I remember that the right hon. and learned Member for Rushcliffe announced almost gleefully in this place that there were problems about the Danish ferries contract. Then I found out that in March, six weeks before any public announcement, the Prime Minister had told a Conservative councillor in Sunderland that there was a problem about the contract. Why on earth had the Prime Minister been briefed about that long before anyone in Sunderland knew about it, other than this Conservative councillor? I think that it smells.

As for subsequent events, I hope that the Minister will not deny that the Export Credits Guarantee Department, not British Shipbuilders, could have stopped that contract with Mr. Johansen. He defaulted to the ECGD and the Department could have cross-defaulted the whole contract. If it had done that, either Mr. Johansen would have had to pay up and Sunderland would have continued to build the ferries for him, or he would have been out of it and somebody else could have come in.

We know that some of the inquiries have not been serious, but I understand that there have been sufficient serious inquiries about the ferries since British Shipbuilders cancelled the contract with Mr. Johansen. Nevertheless, every time somebody seriously proposes to buy any ferries, British Shipbuilders is scared off because Mr. Johansen threatens litigation again. The ECGD and the Department of Trade and Industry should have dealt with that. Sunderland would probably still be building ferries instead of facing the problems that it faces now. The Minister's predecessor was quite happy to allow the persecution of British Shipbuilders by that evil man from Denmark to continue so that it would provide an excuse for closing the yard.

Despite the default on the ferries, there was the Cuban order. That was not an obscure order from a small island on the other side of the world with a different political system. In shipping terms, Cuba is a massive nation. It has one of the world's biggest fleets. Its fleet is expanding, and 23 ships of the existing fleet were built on the north-east coast of England. Why was Cuba so keen to place the order in Sunderland? It has a greater respect for the technical qualities and abilities of that yard than our Government. The Cubans made it clear throughout that they liked the ships and that they wanted more of them. They have bent over backwards to place the order in the north-east.

It must be unprecedented for another country that is trying to place such a large export order in the United Kingdom to be so abused, to have so much misinformation and misrepresentation put around about their intentions and effectively to be spat upon by our Government. There was misinformation about the price that Cuba was prepared to pay. It said that it wanted to negotiate the price. Cuba sent a letter of intent, which it said would be transferred to other bidders. In that letter Cuba said it would negotiate at about £10·9 million per ship. I have heard civil servants and those in high positions in British Shipbuilders say that they would not pay even £2 million less per ship.

When I organised the bids for those yards, I recall informing the chairman of British Shipbuilders that the Cubans were prepared to make a stage payment of 20 per cent. when the contract had been signed. It would have been one of the most generous stage payments ever made. It would have provided the yard with a huge cash flow advantage, with 20 per cent. of the contract up front. I was told, "I just don't believe that. They would not do it. Why should they?" However, on the same day as I was told that, the Cubans' financial adviser at Lloyds bank informed a senior civil servant in the DTI that that was what his customers were prepared to do.

It is quite scandalous that the Minister should say that these bids and the Cuban order have been seriously assessed when so much misinformation went unchallenged. Cuba wanted 10 ships and 10,000 containers. That is £15 million to £20 million-worth of work on top of the ships. Cuba was interested in training Cuban shipyard workers so that they could then return to Cuba and work in the industry in Havana. Cuba thought that it might be possible to send an occasional repair job for Cuba to the River Wear. It offered to set up a joint marketing company with the yard to sell the yard's products in Africa, the far east, Latin America and other places where they have influence. It also offered a five-year co-operation deal with the yard on marketing and other projects, but we are told that all that is not serious.

I return to the point that was made earlier. Having described the loss of British Shipbuilders and the state that the industry was in, the Minister said: Against that background, it was clear to my predecessor tand to me that a solid future for the yards depended on finding new owners who could run them in a viable way." —[Official Report, 7 December 1988; Vol. 143, c. 318.] If that is their view of how British Shipbuilders has run the industry, it is a little odd that it has been left entirely to British Shipbuilders to judge who would be an appropriate buyer.

As for the bids that were made, in the case of each of the four early bidders there were complaints about their treatment. Regardless of the merits of their bids, all the bidders said that the goalposts were moved, that new conditions were laid down after they had been told what the conditions would be, and that when those conditions were met even more conditions were found about which they had not been told in the first place.

Now that we have run out of time, I must ask the Minister a crucial question. Why was there a relaxed seven-week delay in the summer during the bid process? The bidders were asked to bid by 15 August, but they were then told that their bids need not be placed until 30 September. I have heard it said that the bidders wanted more time, but the four who eventually submitted bids have all told me that they were prepared to bid by 15 August. I know that two of them complained in writing about the deadline having been put back.

Somebody has been guilty of the most appalling incompetence. The entire privatisation process that the Government wanted to pursue was held up for seven weeks. We could have been seven weeks further on. We should then have been seven weeks less away from the end of the year and there would still have been a chance to produce a satisfactory result.

Included among the early bidders was the owner of the West German shipping company, the Egon Oldendorff line. The hon. Member for Tynemouth (Mr. Trotter) referred to the importance of shipowners being involved in the ownership of yards. He was prepared to bring to the consortium an order for six 33,000 tonne bulk carriers. He was on the point of placing that order in Korea. The contract was within days of being signed. He sent a letter, of which I know the DTI is aware, in which he said that he would withdraw that order from the Inchon yard in Korea and place it in Sunderland at a higher price. Perhaps the price was still not good enough, but when big German shipowners make offers such as that it is criminal that bids should be rejected out of hand and that a yard should have to close.

It is interesting that that shipowner said to me later that, if he were to become involved in any other consortium or in any other form of ownership bidding for NESL, he would do so on condition that if his name were mentioned, even in confidence, to either the DTI or British Shipbuilders he would pull out of it. The House will have to make its own judgment about why shipowners and others appear to be so paranoid about their names being mentioned to the DTI and British Shipbuilders. That, though, is how they feel. That is what I have been told. Privatisation is made rather difficult when the people who can be involved and provide takeover backing are nervous about how their names are used. I shall later relate my own experience of that.

When the Chancellor told the House that he would allow a little more time for bids to be put in, I decided, but not out of any commercial interest, to try to put something together. I thought, "No one else is doing it," I knew that the Cubans were interested, but I decided to put in a bid myself. I sent a letter to the chairman of British Shipbuilders which was copied to Lazards and the DTI. In it was the name of Mr. John Hall as a potential substantial investor. The letter clearly said, "In Confidence" but within 24 hours the public relations consultant of British Shipbuilders had leaked his name to at least six journalists to my knowledge. That has been one of the common problems experienced during the privatisation process.

When I asked for some financial information from an NESL director, he understandably said that I had to sign a letter of confidentiality and that I would have to get such a letter from British Shipbuilders' headquarters. I telephoned BS headquarters and was told, "No, no, no. You get it from Lazards." I telephoned Lazards and was told, "No, no, no. You should get it from British Shipbuilders, but we will send you one anyway to save time." That demonstrates that nobody knew what they were doing or what the rules were right from the start.

On 28 November, I received two letters. One was from Mr. Reg Arnell, board member for finance of British Shipbuilders, refusing for the second time to tell me what the alternative use valuation of NESL was and that he did not see any good reason why a bidder should want to have that information. The other was from David Coates, head of the shipbuilding division of the DTI, saying, among other things, that I ought to understand that BS's recent alternative use valuation for NESL was £9 million to £10 million and that, if I did not bid near that price, the Commission might regard the difference as an operating subsidy and count it against intervention fund on future contracts. Therefore, while BS told me, "We will not tell you—you do not need to know," the DTI was telling me, "You had better know because you will be in trouble if you do not." Brilliant!

When I complained to the chairman of British Shipbuilders about being treated in that way, I was told that he had told me the information personally six months previously, so why was I complaining? I thought it extraordinary that information apparently given in confidence to me as a Member of Parliament might be used later for commercial purposes. As a result of being abused in that way, I do not feel particularly bound by any confidences made subsequently.

On the Friday after the bid was submitted, I received a letter, again from Mr. David Coates, head of the shipbuilding division in the DTI, saying that a key part of my proposal was not acceptable to the European Commission. He had written to me on 21 November saying that it was acceptable. I am quite sure that he said that in good faith. He got it wrong, which is fair enough. However, when I was told two days after I had put in a submission that a key piece of information, which came from the DTI, was wrong, it might have given me a bit more time to sort it out. I was told that a key part of the proposal was not acceptable at 4 pm on Friday afternoon. The following Wednesday, the Minister was in the House announcing a closure.

On the same Friday, I was told by Mr. Lister, the chairman of British Shipbuilders, that the proposal was good, but not good enough. He told me that Lazards had already done an assessment of the financial side of the bid. It was clear to me from what he said that some things had been added up twice. Repeated requests for meetings were made by the consortium but, as was not the case with previous bidders, those requests were refused. Even meetings with the consortium's accountants, financial advisers or solicitors were refused.

The consortium's accountants telephoned Lazards and asked whether it had done the assessment. Lazards said yes. The accountants said, "We would like to talk to you, as we think that there may be some misunderstandings," but Lazards replied, "It is too late. We have already told British Shipbuilders what our conclusions are." That is an absolutely incredible way in which to conduct matters. I do not know how the Minister can say that the issue received serious consideration. We asked for meetings in our original proposal and in our revised proposal, and telephone calls asking for meetings were made.

Finally, on the Tuesday before the Minister came to the House to announce the closure, I spent the morning accompanied by my hon. Friend the Member for Gateshead, East (Ms. Quin). When we talked to Mr. Coates from the DTI about certain aspects of the proposal, he said, "Do you really want to meet British Shipbuilders?" "Of course I do," I said. He arranged it. He told me to be at Knightsbridge at 3.30 pm that afternoon. We finally got a meeting. A careful assessment of the proposal was supposed to have been made. The meeting was at three hours' notice, so it was impossible to bring in any advisers or other members of the consortium. And the Minister says that this has been a serious process.

We were hounded at the meeting about the consortium not having enough financial backing. We were told when the meeting started that Tom Burlison, the regional secretary of the General, Municipal, Boilermakers and Allied Trades Union, had telephoned Mr. Lister before the meeting. Mr. Lister's account of the conversation was that Tom Burlison had telephoned and said that GM BATU might stump up a bit more money. Mr. Lister said that his response was, "Can you write out a cheque for £10 million here and now?"—a pretty facetious question. The response was apparently no.

John Edmonds, the general secretary of the union, was present when Mr. Burlison made the telephone call and confirmed his account of it, which is that Mr. Burlison said, "Give me three weeks and I shall raise the money." We were hounded for three hours about financial backing, when Mr. Lister had just been told that somebody was prepared to raise £10 million in three weeks.

Is the yard really to close because of those three weeks? There was another extraordinary incident at that fatal meeting on Tuesday afternoon. When we were being pressed on equity, it was pointed out that the potential investment by managers at the yard had not been counted. I found it extraordinary that that was the first time that they knew that any managers wanted equity in the yard. In the proposal which we submitted was a letter from Brian Tennant, the production director of NESL, saying quite clearly that managers were being asked to contribute equity. If Mr. Lister and Lazards were unaware of that, they could not even have read the proposal. That is how serious the consideration was.

The meeting got even funnier. When I said, "You know it now. Here is the letter which was in the proposal. The management will offer some equity"—some senior managers support the consortium; it is effectively a management buy-out as well as a work force buy-out—I was told, "That does not make any difference because managers are not allowed to use any of their redundancy money in British Shipbuilders disposals. That is a British Shipbuilders rule." I do not know whether it is a good rule or a bad one, but it is a pity that bidders were not told that in the first place. It is a bit odd that something that goes on in all other management buy-outs turned out not to be allowed here the day before it was announced that the yard is to close.

The whole thing has been an absolute scandal. It is a scandal in the wider sense that 2,000 jobs have been murdered and British merchant shipbuilding has effectively come to an end. It is also a scandal that the process should have been dealt with in such a way. The Minister must say more about the role of the European Commission. We have heard that, if BS makes the work force redundant and a new owner re-employs some workers, the redundancies—or some of them—will count as operating aid and against contract aid.

The yard has no work at the moment. That is the Government's responsibility because they delayed the Cuban order. People are being laid off as a result. We are told, however, that lay-off pay counts as operating aid and will be counted against intervention fund and in future. The steel and equipment for the nine ferries have no more than scrap value, but we are told that, if BS allowed a purchaser to take that material and equipment, its full original cost would count against intervention fund. We are told that British Shipbuilders' losses count against a future owner. I suspect that behind the Minister's words, "Haven't I done well? We have done five successfully; it is a pity about NESL," is a reason for British Shipbuilders to wash its face for the other five—Clark Kincaid, Ferguson, Troon, Appledore and MDC. They are closing NESL so that they can have an easy time with the Commission on the other disposals. Whatever the Minister says, I shall never believe anything different.

At the end of the day, whether or not all the rulings or advice from the Commission are true, no formal proposal was ever put to the Commission before the proposal to close the yard. We are entitled to know the cause of death. Doctors have to put reasons on death certificates; they cannot say, "It might have been a bit of cancer, but he did have bronchitis and he broke his leg two years ago".

Was it the European Commission? Did the rules of the sixth directive make it impossible for a new owner to take over? Was it the fact that the yard had no orders? That has been clearly shown to be untrue. Was it the privatisation process itself? Was it Mr. Johansen? Was it all those reasons, or did the Government welcome all those excuses to propose closure because ideologically they no longer wanted to support shipbuilding?

The final tragedy is this. I shall not spend much time on it, but when I look at the £45 million rescue package I ask myself the following question. If a big industry had just closed on the River Wear and an intelligent consultant was brought in to suggest what could be done to restore jobs in the area, he would say, "It is a riverside site. Let us find something appropriate for it. Let us find something which can produce exports because we have a big balance of payments problem. Let us find a growing market, albeit a weak market in recent years, but one that is on the upturn." When they considered all those points, they would probably say, "Let us start shipbuilding on the River Wear. There is a market, it is a riverside site, and there is an order available to start it."

If it were an empty site, the capital investment in machinery and equipment would be too much. It would certainly be too much for the Government. But that is not the case; the stuff is already there. The Government plan to pull it down. People might say that it might take time to get a skilled work force together to specialise in such activities. The work force exists, but it is being sacked. If shipbuilding were not there already, there would be a unique opportunity to start it, but the Government will not do that. Instead, they will close it down, and that is why people feel so outraged. If we had to swallow privatisation, at least it could have been done fairly, not with the idiocy, incompetence and corruption of the way in which it was carried out.

Hoping to end on a more positive note, may I say that, even at this stage, the Cubans, who apparently were not serious and who suffered so much abuse and misrepresentation, are so anxious for their ships to be built in those yards that they have said that they will not place the order anywhere else for another month. They are still hoping that a solution can be found.

The proposal is that at least we could save Southwick, a yard built specifically for volume production of the ships that the Cubans want. At least we could give it two or three years' breathing space. The Cubans could lease the yard from BS, a residuary body, the DTI, the Urban Development Corporation or whomever ended up owning it. Let the Cubans lease the facilities. Let them take whatever intervention fund is available next year after various bits and pieces have been knocked off by the redundancies, British Shipbuilders' operating losses and so on. Let them take whatever intervention fund is available. Let them have the credit terms which were always available and which other member states allow.

The only contribution that the Government have to make is to give decent credit terms to people who the Government have acknowledged always pay on the nail and never default. Let them take the yard and find a shipbuilder—a distinguished shipbuilder is available elsewhere—to manage the contract for them, and let them employ local workers in Sunderland to build that contract. Let them do it at their own risk, so that, if they get only nine ships instead of 10 ships for their money, that is their risk. There is no financial risk to the British Government.

The Government need only say yes and agree credit. It would provide a breathing space and allow us not to have to finalise the debate about whether there are further orders and whether there is an upturn in the market. In the two or three years that the contract is being built, we shall find out. It would keep a foot in the door.

What possible reason can the Government have for refusing that proposition if the Cubans are prepared to agree to it? It suits everyone. There is no problem about transfer of ownership; the Cubans would lease it. There is no question of losses for the Government; it would be done at the Cubans' own risk. If the Minister says, "Yes, we shall give it a try," and immediately withdraws the notification of the closure of Southwick to the Commission—there is to be a meeting in seven days' time and the Commission will need a change of notification well before that meeting—I shall believe that he genuinely wanted to save something and finally had the opportunity to do so.

That proposition meets every objection that the Government have raised to every previous proposal. It meets all the objectives, it retains shipbuilding at no loss to the Government, it saves at least a few hundred jobs for people who wish to remain working in shipbuilding, and it gives us a breathing space to decide what to do in the long term. If the Minister says no to that, he will confirm the notion that, whatever his own feelings, the Government started something several months ago that they would not allow anyone to change—even one of their Cabinet Ministers.

Photo of Miss Emma Nicholson Miss Emma Nicholson , Torridge and West Devon 5:26 pm, 14th December 1988

I speak as a Member with shipbuilding responsibilities—Appledore is in my constituency—and family and political links in the north-east. My father was a Member of Parliament for Morpeth and I fought Blyth, as it was then, before the hon. Member for Blyth Valley (Mr. Campbell) took his seat. Further, I was a management consultant with 10 years' hands-on experience in heavy and light industry.

I was intrigued by the lengthy speech of the hon. Member for Sunderland, North (Mr. Clay) pinning his case to the two words, "economic vandalism". He used those words with intensity; he said he meant them and that they were the purpose of his speech. If he really meant them, perhaps he will allow me to examine those two words.

If the phrase means anything at all and is not just two words plucked out of the Oxford dictionary, it must mean the wanton destruction of something that is financially healthy. As a former management consultant, I must say that that means to me a company with full order books, an expanding work force and a bright future, with buyers clamouring for appointments and with the managing director and chairman with their sleeves rolled up, working exceptionally hard and being desperate for time, with the telephone constantly ringing. Alas, the truth is very different from the way in which the hon. Member for Sunderland, North described recent months for NESL. It would appear that it has been dependent on Members of Parliament to make its business appointments. That cannot he right.

In chasing the Cuban rainbow, the hon. Gentleman overlooked the fact that Cuba is a Communist republic where key workers send their children to fee-paying private schools. That is bad news in his terms.

Photo of Miss Emma Nicholson Miss Emma Nicholson , Torridge and West Devon

When hon. Members want another to give way, they normally rise to their feet. Therefore, I shall continue.

If the mythical consultant to whom the hon. Gentleman referred went to look at NESL after closure, would he honestly propose such things as the hon. Member for Sunderland, North suggested? Would he honestly say that in a declining shipping market the one thing that we should do for Sunderland is to bring in more shipbuilding? He would not. He would suggest small businesses. He would suggest that the outposts of large and flourishing businesses should be tempted to go there by such things as the Minister has announced—for example, enterprise zones.

Sadly, NESL, which is a fine facility, is not in a niche market. It is in open competition. As my hon. Friend the Member for Tynemouth (Mr. Trotter) said, it competes with shipbuilding yards in countries such as Korea, which pay wages that we would not tolerate. NESL is exposed to open competition in the world market. It has not built the niche that would enable it, in a difficult world market, to pursue its business in such a way as to make it financially viable.

The small Appledore shipyard in my constituency, which will soon be known as Appledore Shipbuilders, provides a good opposite to NESL. It has been able to carve out a niche market in dredgers. I am delighted that, following ministerial help, John Langham of Langham Industries fully expects to complete all the negotiations next week and effectively to take over the yard at the end of the month. He envisages no problems. Everything is geared up—the management is in place and already there is a firm letter of intent relating to a large aggregate dredger, which will provide work for the yard until July 1990.

Because John Langham has been actively marketing and promoting the yard, he has discussed contracts for two further dredgers to be built following completion of the large dredger, or slotting in with its construction. With orders coming in, it is possible to juggle and to get more work. Mr. Langham aims to re-enter the market for small corvettes, or gunboats, which would provide coastal protection for foreign navies in the far east. The yard built minesweepers for the Royal Navy after the war, but the market faded. Private enterprise will probably bring the yard back into that market. Langham Industries is quietly confident that it can turn the company around. Like NESL—indeed, like all British shipbuilding yards—Appledore has been a loss-maker. The proper objective is to make it fully profitable. Langham Industries aims to break even within the next 18 months.

What is the difference between a company that is nationalised and run by the Government—perhaps I should say "run down by successive Governments", because Governments are demonstrably bad at running industry—and one that is private? The difference is motivation. The Opposition talk scathingly about "profit making". What is wrong with profit making? Making a profit means that one can look after not only one's family but a large and expanding work force. It means bringing money into areas and making things happen. It means doing what we all want to do—raising the economic level and increasing people's happiness. The key is to get our shipbuilding companies into the hard commercial world in which we must all live. We cannot seek Cuban rainbows or live in Alice Through the Looking Glass worlds.

Shipbuilding is still bumping along with the barnacles scraping the bottom. There has been only a marginal improvement. No one knows whether the improvement is sustainable. It is folly to pretend that a marvellous world is around the corner. That chimera has floated further and further away over the many months of the continuing debate on the privatisation of British shipbuilding. There is a long way to go in the shipbuilding market. We must learn to live off what is available.

How does the sale of Appledore, a small but crucial yard, compare with NESL's failure? Private industry saw NESL as unviable, even at a rock-bottom price. It was given subsidies of many millions of pounds a year. The yard lost more than £100 million over three years, with £66 million lost last year alone to keep 2,000 jobs going. Can that be logical and proper?

The loss of those 2,000 jobs is a minor run down compared with the massive run-down under the last Labour Government. Between 1974 and 1979, about 10,000 jobs were lost. Is that not the death sentence—pronounced then and not today—to which the hon. Member for Sunderland, North referred? The hon. Gentleman has now disappeared from the Chamber. Those 2,000 jobs lost are little enough compared with the haemorrhage earlier.

It was a shame that the Labour Government closed the last ship repair yard on the Wear, Greenwell. I understand that the area may return to ship repair work, rather than shipbuilding. I am glad that Sunderland's economic base, as in so many depressed areas, is now much sounder than it was under Labour, when large losses were suffered. Perhaps due to the general upturn in the economy under the Conservative Government, it will now be easier to find jobs for those 2,000 people.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

Surely the hon. Lady accepts that, under the Conservative Government, the losses in shipyards in Tyne and Wear have been far greater than in any other period. The losses under Labour about which she talks simply do not compare with the huge haemorrhage and losses experienced since 1979.

Photo of Miss Emma Nicholson Miss Emma Nicholson , Torridge and West Devon

Because of the better economic conditions under the Conservative Government, it will be much easier to find work for those people who are now losing their jobs. The yards suffered much more under Labour, just as pit after pit was closed in Durham under Labour. My right hon. Friend the Prime Minister helped a tremendous amount in trying to find orders for the yards.

The hon. Member for Dagenham (Mr. Gould) described the closure of NESL as a destruction of jobs, major industry and hopes for the future. He was totally wrong. It marks the creation of jobs which will last in industries which are for the future. It marks the creation of small and large industries which will give young people a viable future. It marks the creation of hope, which will help the area much more than continued propping up of an industry which, alas, is past its best. It is not a matter of dogma on privatisation or, as the hon. Member for Dagenham said, putting privatisation dogma before commercial sense and profitability. On the contrary, we are putting commercial sense and profitability before the dogma of nationalisation.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool 5:37 pm, 14th December 1988

During the past three decades, there has been bloodletting in the shipbuilding industry that cannot be matched in by any other industry in the land. During the 1950s, our shipbuilding industry was the largest in the world. In 1985, we were promised, in a statement by the Minister for Trade, that our 1·25 per cent. share of the world market would be increased. But there has been a dramatic decline in the industry. We do not hear such words today. The labour force has decreased from 85,000 to between 45,000 and 40,000.

The Government have been tricky again. The Opposition demanded a debate on the Sunderland closure, but the motion is about British shipbuilding and the successes of privatisation. It says that some parts of the industry are not viable, and that is the end of that. The motion does not deal specifically with the subject about which we talked last week. I challenge the Minister about the calculation behind the Government's statement. I have made it clear that it was convenient that the Prime Minister had returned from Gdansk in Poland, where there is a shipbuilding yard.

My hon. Friend the Member for Sunderland, North (Mr. Clay) has given us a remarkable account of the to-ings and fro-ings and the misinterpretations, confusions, contradictions and political nepotism. However, if the Prime Minister had intended to keep the Sunderland yard open, she would have gone to Poland and said to our Polish friends, "In Britain, we have done what you want here in Gdansk," but the decision was already made. She must have known then that she did not intend to save the Sunderland yard.

The Chancellor of the Duchy of Lancaster has a remarkable reputation for understanding the issues with which he deals, but he is not master in his own house. It is sometimes embarrassing to be a parrot for the man in the other place, the Secretary of State for Trade and Industry. The Chancellor has had an unpleasant task which he did not deserve and I absolve him from responsibility for the decision that has been made.

On the other hand, as the Chancellor of the Duchy of Lancaster is a good Member of the House, he might have felt a little upset. He might have said, "I don't like what's going on here. I'll resign." Last week's statement contained no feeling at all for the kind of Christmas card that has been sent to the Sunderland workers.

The hon. Member for Tynemouth (Mr. Trotter) talks glibly, as I have known him talk for many years. He said that he had a chat with the chairman of the Northern Development Company, who apparently said that things were looking buoyant and that jobs were coming up. However, if we start off from a low level of economic activity and there is an upward trend, it is easy to feel buoyant.

I come from a part of the world not far from that of the hon. Member for Tynemouth, but I am an expert on closures. If a shipyard worker, instead of the hon. Gentleman, had gone to see the chairman of the Northern Development Company to ask him about the economy in the northern region and the chairman had replied that things were buoyant, what would the shipyard worker do when he and 2,000 or more of his colleagues lost their jobs?

We have not yet mentioned the multiplier effect. The service and supply industries will also be affected so, in all, about 5,000 jobs will be lost, although, if I am conservative, perhaps I should say 4,500 jobs will be lost in all. It would not please that shipyard worker for the chairman to talk about buoyancy if his skills, pride, hopes and aspirations for his family are suddenly shattered. In any case, the poor guy can live, even when he is in work, only by obtaining a little credit to help him over Christmas.

In 1962, my constituency lost a shipyard. I am an expert in industrial closures in a town of 90,000 people, where only about 30,000 have jobs. In 1962, we lost 5,000 jobs and, in the following 15 years, we lost almost 20,000. I know what it means and I am heartily sick and tired, after 25 years in this place, of listening to the same glib chat with Conservative Members saying, "We'll mend it. We'll put it right. Let's have a task force." What will we do with a task force? We simply bring in civil servants, give them a job and call it a task force.

We are good at cosmetics in this country. What has happened in Sunderland reminds me vividly of what happened all those years ago. It takes a long time to put matters in order when the economy is breached in this way. We have had a post mortem here today. My hon. Friend the Member for Sunderland, North said that there would be a month's breathing space and a kind offer. I thought that, although we had had a post mortem, there would be no need for a requiem mass, but we might as well have a requiem mass. Nothing has come out of the House today apart from a factual account of the position and some palliatives from a few Conservative Members who feel good because the Secretary of State has offered £45 million to create new job opportunities. The hon. Member for Tynemouth should know better.

We have been shifting regional policies year after year, until many of our people are immune to those palliatives. It is time that politicians did something to find out how people really feel, instead of talking to the chairmen of development corporations, good as they are, and feeling satisfied because the economic indicators are looking a little better. We should put ourselves in the position of a shipyard worker listening to the director of a development company saying that the economy is becoming buoyant. That is not true in this case.

This might have been a useful debate, but, unfortunately, it will achieve nothing. However, I hope that there will be sufficient press coverage to show that the Government have once again done a spot of professional cheating.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley 5:47 pm, 14th December 1988

Almost everyone must have a great deal of sympathy for the people of Sunderland because of the number of jobs that they will lose. [Interruption.]It is all very well for Opposition Members to sneer at that, but no Conservative Members takes any comfort or pleasure from the fact that jobs will be lost, although we are not so blinkered as to claim that those jobs have been lost as a result of Government actions or policies.

Opposition Members have accused us of murdering Sunderland and the yard. In truth, the yard was murdered many years ago. It is worth looking briefly at the history of shipbuilding to put the matter in perspective and to learn some lessons for the future. We began shipbuilding in Britain with many natural advantages—abundant rivers and estuaries, demand from the largest merchant marine in the world, resources of iron and steel and, many years ago, the finest engineering industry in the world.

However, as long ago as the late 19th century, virtually no new shipbuilding capacity was laid in, and by the turn of the century our shipyards had already become unsuitable for the larger steel ships that were being built. By the beginning of the first world war, our yards were already far less modern than those of the United States and Germany. In addition, they were riddled with labour problems. In 1914, at the outbreak of the first world war, there were no fewer than 90 demarcated skills in British yards. In writing about the time, one historian stated: The engineers quarrelled with the boilermakers, shipwrights and joiners, brassworkers and tinplate workers; the boilermakers with the shipwrights, smiths, chippers and drillers; the shipwrights with the caulkers, boat and barge builders, mast and blockmakers, and joiners and the joiners with the mill-sawyers, patternmakers, cabinet makers, upholsterers and French polishers. On the Tyne there was an average of one major strike per month over questions of demarcation". That was the position at the turn of the century.

Apart from labour problems, we were falling behind in education and skills. In 1907, Britain had one full-time student of naval architecture per 16,000 tonnes of ship produced. In Germany, there was one per 100 tonnes. It is no surprise that our share of world tonnage shrunk from 60 per cent. in 1913 to just over 30 per cent. by the outbreak of world war two. The labour situation had not improved one jot by the outbreak of the second world war. Even Ernest Bevin noted in a letter in 1942 how difficult and backward the shipbuilding industry has been from a labour point of view … Everything that has been done has almost had to be forced upon them.

Even under the threat of Hitler, the Amalgamated Engineering Union and the Boilermakers Society refused to allow men of the National Union of Railway men—the electricians trade union similarly prevented non-union electricians—to work in yards to remedy skill shortages. There were numerous inter-union demarcation strikes during the second world war, but union attitudes alone were not to be blamed. There was a legacy of bitterness, poor management and poor education, and these factors were also partly to blame.

Attitudes that were ingrained over many years made investment in the yards harder to secure, and the shipbuilding industry has suffered ever since from a lack of investment. It is one of the many factors that allowed far eastern competition to overtake us in the 1950s. Even during the second world war, the Germans were using 20-tonne cranes, whereas in our yards the norm was a 3 to 5 tonner. When one-man pneumatic riveting was introduced in the early 1940s, the unions insisted on a riveter's mate being put by every riveter. The mate just stood and watched the job being done.

Since the breathing space after the war, when every other country's shipbuilding industry was flat on its back, there has been further, continual and sorry decline. By 1954, German ship exports had passed the United Kingdom total. A year later, the Japanese had overtaken us. In the 1980s, conditions are harder than ever before. Even the Japanese, with all their efficiency, management, fine education and natural advantages, are now beginning to lay men off and to close yards. The huge Mitsubishi yards at Nagasaki are now only partially operational. Even the South Koreans, with their advantages of cheap labour and discipline, have severe problems in the shipbuilding industry.

The answer to the problem is not to keep pouring money into an industry which, sadly, was overtaken many decades ago. We cannot make a living on past glory. The more money that we put into declining and unprofitable industries, the more jobs we cause to be lost elsewhere in our economy. There is no future in that.

It is nonsense for Opposition spokesmen to talk of the Government's lack of concern about the nation's indutrial base. It is worth reminding them that, when the Labour Government were in office, shipyards were closed and many jobs were lost in the shipyards and ship repair yards. Indeed, during that period our manufacturing output shrunk, whereas under the present Government manufacturing output has risen. It has done so extremely rapidly since the trough of world recession in 1981.

If we are to have an industrial policy, we must examine what the Japanese have done, so that we understand why they have succeeded. Over the past 50 years, the Japanese have had a consistent policy of allowing old and relatively low-tech, labour-intensive, low added-value industries to decline. They have not attempted to subsidise them. Instead they have invested in productive capacity in newer and higher added-value industries. They have left the older and more labour-intensive industries to countries that are best able to cope with them, such as South Korea and China. That is what we must do. We must not keep old and dying industries alive, however painful it might be to do otherwise. We must concentrate our investment on newer, less labour-intensive and higher value-added industries. That is what we must do to help the people of Sunderland. It may have been the short-term political option to keep the yards open. It may have appeared kind, and it would have been the easier decision to make. I believe, however, that it would have been a disastrous decision in the long term for the region and for the national economy.

Photo of Chris Mullin Chris Mullin , Sunderland South 5:56 pm, 14th December 1988

I share the widespread view that the decision to close the yards was made some months ago, and that since then nothing has been allowed to get in its way. I believe that it was taken before the Minister took office. I recall an article that appeared in The Guardian during March—I think that it was the front page lead—that quoted apparently well-informed sources as saying categorically that the Government proposed to wind up British Shipbuilders.

I join my hon. Friend the Member for Sunderland, North (Mr. Clay) in paying tribute to those who have participated in the campaign over the past eight months to keep the yards open, especially the people of Sunderland. They have been supported by the Sunderland borough council, people of all political opinions and the work force. The shop stewards and others have led a magnificent campaign. I pay tribute to my hon. Friend the Member for Sunderland, North, who has been outstanding. His speech reflected his inspirational leadership on this issue.

When the Minister replies, I hope that he will respond seriously to the proposal of my hon. Friend the Member for Sunderland, North that at least one part of North East Shipbuilders Ltd. should be saved. I understand that the Cubans are returning next week and one must admire the persistence and generosity of their approach. After all the rebuffs, they are still interested in placing orders with NESL, or what remains of it. I hope that the Minister will assure us that any proposals that the Cubans have to make will be taken much more seriously than the ones that have so far been put before the Government.

It has been said that Cuba is a Communist country. I do not know what that has to do with the matter. I should like to know the terms of the order from the Chinese that was received at Govan for the COSCO ships, such as the length of credit and the interest rates. It would be interesting to match the terms of that order with what may be offered in reponse to a Cuban order.

The upturn in shipping has been referred to with various degrees of scepticism by Ministers over a long period. We need look no further than today's Lloyd's List,a newspaper which must be taken to know something about the shipbuilding industry. The first sentence of the leading article reads: With new building prices hardening and secondhand prices for most types of ship escalating appreciably, there is real confidence that the ship, at long last, is set to acquire something of a scarcity value which it has not enjoyed for 15 years. Those at Lloyd's List probably know a great deal more than those at the Department of Trade and Industry about the future of the industry.

I would not like the House, including Ministers, to be under the illusion that indignation at what has been done to Sunderland is confined merely to the Government's political opponents. Last week, after the ministerial announcement that NESL would be closed, the leader of the Conservative group on Sunderland borough council said: They have done at a stroke what the Germans for six years tried to do. It is industrial sabotage. He added: I think the decision was taken nine months ago by Lord Young.

I should also like to quote from the Sunderland Echo, the owners of which gave £2,500 to the Conservative party last year and, therefore, must be considered to be reasonably impartial on this issue. The Sunderland Echo described the Minister's statement last week as misguided, short-sighted and cruel … A self-inflicted and disabling wound to a maritime country which has deliberately enfeebled a strategic industry. I do not know whether the owners of the Sunderland Echo will make a donation to the Conservative party next year, but I pay tribute to their support for the campaign to save the shipyard.

I want the Minister also to understand the reason for the great anger that the decision has generated. The anger is not irrational, contrived or founded solely on the basis of emotion. The shipyard workers of Sunderland are not daft. They know as well as anyone that if there is no work, yards will have to close. However, as has already been made clear, there was and there is work. Reference has been made repeatedly to the Cuban order, which is worth around £110 million. I acknowledge again the extraordinary patience of the Cubans, who must be, as I am, bewildered by the fact that, in a world where shipyards are crying out for orders, they cannot find anyone to take their very large order seriously. That order is one of the largest on offer anywhere in the world.

The past eight months have been wasted looking for an owner for North East Shipbuilders. That time should have been spent looking for orders. Orders are available, and other western European yards have obtained them. Last April, a large order for a passenger ship worth $150 million was placed at a West German yard. In July and August, orders for tankers and chemical carriers were placed with Spanish yards and, recently, a large order was placed for Soviet cargo ships. I checked with the Department of Education and Science this afternoon and I understand that the Department has invited tenders for an Antarctic survey ship. Why could not that ship be built in Sunderland? That order is within the gift of the Government.

Hon. Members have already compared this privatisation with others. It has become normal for the victim of privatisation to be fattened up through various price increases, as we have seen with electricity, water and other major privatisations. At no stage in their programme of privatisation did the Government choose a moment to put an industry on the market when its fortunes were at the absolute lowest point. However, that happened with North-East Shipbuilders.

Lloyd's List remarked on an alternative only last week: The United Kingdom Government could at least have admitted that the shipbuilding industry was looking rather better in the medium term and financed the Cuban order to tide the yard over until rather more commercial orders came along.It could have given the yard another couple of years in the public sector, with the knowledge that the security this would provide could have encouraged work, for assuredly no owner"— this is surely the key point— is going to place an order in a yard which is under threat of immediate closure.

The background against which this disaster has been inflicted on Sunderland is that our merchant fleet is being allowed to disappear in the face of repeated warnings from every responsible source, including the Select Committees on Defence and on Transport, within the past year. The United Kingdom fleet in 1980 contained 1,275 ships or 42·3 million tonnes and, by 1986, the latest year for which I have seen figures, the fleet was down to 545 ships or 11·2 million tonnes. The percentage of world tonnage under the British flag in 1980 was 6·4 per cent. It is now down to 1·8 per cent. Half the fleet that sailed to the Falklands now sails under foreign flags. The Select Committee on Transport stated that our ships are older and more in need of replacement than those of our chief rivals.

The problem is wider than just the future of British shipbuilders or North East Shipbuilders. The problem is that the Government have no maritime policy. We are an island nation, dependent for our survival on trade, but we cannot own or build our own ships. Surely it is not beyond the wit of Government to devise a policy, even at this late stage, to salvage what remains of our capacity.

I want to quote, not from an Opposition Member, but from a former Conservative Member, Sir Edward du Cann. Two years ago, in a debate on the future of the shipbuilding industry he said—

Photo of Mr Robert Atkins Mr Robert Atkins , South Ribble

We have heard it before.

Photo of Chris Mullin Chris Mullin , Sunderland South

Yes, I know that the Minister has heard it before, but it is rather apposite. Sir Edward du Cann was right. He said: During my time in the House I have watched the decline of many manufacturing industries and the extinction of others—motorcycles, television, radio, optical instruments, motor cars and so on. Too many have declined and too many have gone. We choose fancy words to describe the process—and rationalisation is one. To me, it has been a history of industrial disaster … Future generations will never forgive us if we do not say that this process of attrition in British manufacturing industry has gone far enough. It is time to cry halt."—[Official Report, 21 May 1986; Vol. 898, c. 422.] That is what Sir Edward du Cann said about shipbuilding two years ago. How right he was.

In his aid package announced last week for Sunderland, the Minister offered £45 million over 10 years or so. That money would have been better spent subsidising a new order. That would have cost less and preserved, or created, more jobs. I also invite the Minister to compare the £45 million on offer with the £155 million that has been taken away from Sunderland over the past decade in lost rate support grant. That is equivalent to virtually the total budget of Sunderland for one year. That is not a source of amusement, although the Minister may find it so.

This is a disaster for Sunderland, because it takes place in a town that already has some of the highest unemployment in the country. In Sunderland, there are whole streets where virtually no one is working and where a generation of children are growing up who may never work. Some of those made redundant last week have been made redundant three or four times, working their way down the river as each enterprise folds beneath them.

The Minister has before him the last of many positive proposals from my hon. Friend the Member for Sunderland, North. What will the Minister do about it? Will he take that proposal a lot more seriously than the others that we have heard about tonight? I hope that the Minister will rise to the occasion.

Photo of Mr James Cran Mr James Cran , Beverley 6:08 pm, 14th December 1988

Today's debate has art air of inevitability about it. I was the Confederation of British Industry's northern director in 1979. I was based in Newcastle upon Tyne, and I knew Sunderland extremely well. I was also familiar with the shipyards that we have been discussing this afternoon. I remember members of the work force, the management, people living in Sunderland and in Newcastle and Jarrow asking me, in view of the level of public funds going to shipbuilding support, how long their companies and jobs could survive. There was a level of understanding at the time of the problems facing shipbuilding. It is therefore by no manner or means a new phenomen and no hon. Member could say that the Government had not, with a vengeance, supported the industry. Indeed, some of us believe that the Government have persisted for too long in supporting the industry.

The chairman of British Shipbuilders appeared before the Trade and Industry Select Committee—of which I am a member—in June 1988, and more or less said that, just because the Koreans had lost £2·3 billion in building ships and grabbed a 17 per cent. share of the world market, perforce this country and every other country should follow suit. I thought that an extraordinary argument at the time, and the more that I have thought about it, the more ludicrous it has become. For each country to outdo other countries in providing even larger subsidies and making even larger losses is a bankrupt policy. It is a fool's paradise to suggest that losses within an industrial company or organisation guarantee jobs at the end of the day. They do not. That was understood by the people of the north-east in 1979, and I suspect that it is understood there today.

When the chairman of British Shipbuilders appeared before the Select Committee, I was intrigued by the question whether British Shipbuilders could ever become profitable. One would have thought that the answer would be that it could do so. Other hon. Members have already said that seaborne trade is at a 10-year high and that, the second-hand ship market has virtually disappeared, which indubitably gives opportunities to British Shipbuilders. However, the chairman's answer was: I believe five or six years down the line we could almost get to break-even or break-even itself subject to the market improving. In effect, he was saying that we would have to wait until 1994 for the organisation to break even.

I remind the House that this would coincide with demand being at its highest, since demand is rising. Therefore, if the organisation can break even only when demand is at its highest, the fact that it is a cyclical industry makes it difficult to imagine what will happen after 1994 if demand turned down. It is absurd to ask the taxpayer to continue to bear that sort of burden—£2 billion since 1979. I strongly believe that that £2 billion could have been infinitely more wisely spent, not only for the benefit of the people of Sunderland, but for people in other areas. My constituency is home to a shipbuilding firm, Dunstons of Hessle, which has never received a penny piece of public funds. Yet it is supposed to operate in world markets, it is supposed to win orders, it is supposed to pay weekly salaries to its work force. I can say with some pride that that is exactly what it is doing, and British Shipbuilders should have done the same.

Photo of John Redwood John Redwood , Wokingham

Does my hon. Friend agree that on many occasions during the past 12 years the shipbuilding industry has forecast an improvement in demand and a reduction in losses, but that often those forecasts have not come true? Should we give any more credence to the current forecast of those two events happening?

Photo of Mr James Cran Mr James Cran , Beverley

I could not agree more with my hon. Friend, because that is exactly what has happened in that cyclical industry. Indeed, when upturns did occur, the then management of British Shipbuilders could not take advantage of them because its overheads were far higher than those of most of its competitors. I concede that the current chairman is attempting to deal with that position but, alas, it may be too late. I see that you are looking at me, Madam Deputy Speaker, and I wonder whether you want—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I am listening to what the hon. Gentleman has to say.

Photo of Mr James Cran Mr James Cran , Beverley

I am delighted to hear that, Madam Deputy Speaker. British shipbuilding, in contradistinction to British Shipbuilders, certainly has a future. The United Kingdom should take a certain amount of pride—I certainly do—in the fact that we are in the lead in the restructuring of shipbuilding—[Laughter.] Opposition Members may laugh, but the chairman of British Shipbuilders told the Select Committee: The Koreans have recognised they bought a 17 per cent. world market share by selling below cost and they have now turned their attention to other industries … they are not interested in subsidising shipbuilding to the extent they have in the past.

The penny has at long last dropped in Korea, just as it has dropped in this country. The resources that we pour into British Shipbuilders could be far better spent in rejuvenating the economies of the regions. I am not prepared to take any lessons from Opposition Members about the need for vibrant regional economies in the United Kingdom. I have operated in the regions all my life and there was not one that I did not wish to leave in better condition than I found it. I am sure that that would be true of every hon. Member. It is instructive to study the figures for economic growth in the regions, because almost every index shows that the northern regions are doing rather better than the southern regions. There is no reason why that should not continue in the north-east, just as it is in Yorkshire and Humberside.

I realise that Opposition Members do not want to hear literate and economic truths, so they will not welcome my next remarks. The Government are taking three steps that will help the economy of the northern region. First, the Chancellor of the Duchy announced a £43 million package last week, and I pay tribute to him for that. I have taken the trouble to speak to my contacts in the north-east because I did not think it right to speak from hearsay.

In contradistinction to what has been said by some Opposition Members, that package is very much welcomed in the north-east. It recognises the fact that the Government were not prepared to pull the rug from under the north-east and not offer some hope of future economic growth. The Government should be applauded for that. [Interruption.] I have been here throughout the debate, and Opposition Members must listen to what I have to say.

Secondly, I did not hear any Opposition Member mention the Northern Development Company, the body that encourages inward investment. It now receives greater resources than almost any other such body in the English regions. It certainly receives more Government money than my region of Yorkshire and Humberside. I make no complaint about that, because it merits that support in present circumstances. That company is respected by all the other inward investment bodies for its level of success.

The third matter that the Opposition clearly do no want to hear, but will, relates to the Tyne and Wear development corporation. I do not hear much from them on that subject. I wonder how many other hon. Members took the trouble to consult a document that it has produced called, "Forward to 1991". Clearly, not many.

That document is extremely bullish about the future of the north-east, particularly Sunderland. I have three encouraging quotations to give the House. The first states: We discovered that the area already has a sound economic base"— the corporation says that, not me or the Government— with a skilled and adaptable workforce. Those are exactly the ingredients that will produce the sort of economic success that the north-east and Sunderland in particular need.

Secondly, the document states: it became clear to us that people do have confidence in the area. It appears that inward investors have confidence in that region, but Opposition Members have shown precious little confidence and they should be thoroughly ashamed. If I were to speak about my region I would speak with pride and confidence.

I realise that Opposition Members are growing impatient, but the third quote states: The result of our appraisal is a far more positive picture than we'd expected. And while clearly there are problem areas these are on a limited scale.

There is an inevitability about the debate, but no inevitability that Sunderland need decline in any way, shape or form. If in 10 years' time the figures for any index of economic development in Sunderland are not better than in the past 10 years, I shall regard that as a failure. I do not expect it to happen.

Photo of Alan Beith Alan Beith Shadow Spokesperson (Treasury) 6:21 pm, 14th December 1988

We have had some offensive and patronising comments from Conservative Members. They are patronising towards the north-east, local authorities, trade unions and those who have been involved in the creation of the Northern Development Company. They are patronising to the shipbuilding industry, which has had to face all the turmoil of change and was busily re-equipping itself when this blow hit it, to those in all parties and sections of the community who have campaigned for Sunderland and its shipyard, and to the hon. Member for Sunderland, North (Mr. Clay) who made such an effective case. I had hoped to see him become a capitalist entrepreneur. That would have had a nice political irony to it. I genuinely wished him success in his bid. The fact that he was prepared to undertake that venture showed that everybody on all sides of the political spectrum set aside their general political views to see what could be done for Sunderland shipyards—everybody, that is, except the Government, who could have set aside some of their political preconceptions.

My great anxiety is that the whole affair has been bungled. It is a sign of Government bungling that there could still be the prospect of realistic progress with the Cuban order, given the possibility of substantial container work alongside shipbuilding work, which would have made use of the Pallion yard in Sunderland as well as shipbuilding yards. When Conservative Members talk about the sums that would have been involved—I presume they are thinking of the intervention fund help for that order—they seem to forget the Government's readiness to offer a substantially larger amount to Mr. Tikkoo for an order to go to the Harland and Wolff yard in Belfast, and in the end that did not work out. We did not hear the same complaints from them then.

We are entitled to ask what is happening on the ferries order. How is it that ferries could be sold to Mr. Johansen, as we believe they have, when that deal could not be completed in preceding months and when no Government action could deal with Mr. Johansen's default? Why do the Government not, at least for the next two years, secure a future for the sites? Given the strategic importance of shipbuilding, it seems absurd for these sites to fall into complete disrepair just when it is recognised that there could be a significant upturn in shipbuilding. Yesterday I listened to Conservative Members explaining that there were strategic reasons for intervening in the market. They were talking about nuclear power. But all of a sudden those arguments are of no consequence because we are talking about merchant shipping and shipbuilding. Today, strategic reasons cannot be allowed to interfere with the operation of the market, according to them.

What has the Minister said to the European Community about the Sunderland yard? Has he taken action to ensure that we do not permanently lose the right to build ships and have intervention funding in Sunderland? As he well knows, that could be the effect. We are entitled to know what he has said to the European Community.

The Minister talks about the success of privatising the rest of British Shipbuilders, but there will not be unbridled enthusiasm in all parts of Sunderland or Dundee at the acceptance of the managing director's bid for Marine Design Consultants. One can only hope that that bid will be successful, but it is viewed with apprehension by many who work for the enterprise in Sunderland and by those engaged in Dundee.

The recovery package which the Government have offered will not be enough, even when set beside the splendid self-help efforts in which the Sunderland people are engaged, including the Wearside opportunity initiative. My right hon. and hon. Friends and I have warmly welcomed Nissan to the Sunderland area and believe that it has been a beneficial enterprise for British industry in general because of the example that it can set British industry. But it would take three Nissans and a great deal of public funding to make up the shortfall in Sunderland's employment problems. It would take three whole Nissans to solve the problems to which the closure of this shipyard has added so hugely.

Sunderland is a handsome, lively town which has united with great spirit in the fight for the shipyards. That spirit has not been recognised by the Government. They owe Sunderland a tremendous debt. The first way to discharge that debt is to seek, even now, a continued future for some shipbuilding in Sunderland; the second is to offer far more to Sunderland's future than they have done so far.

Photo of Julian Brazier Julian Brazier , Canterbury 6:27 pm, 14th December 1988

I am sorry to have missed the hulk of this debate, but I was engaged elsewhere. Many of those present came to the successful parliamentary maritime group session with my right hon. Friend the Chancellor of the Duchy of Lancaster, and I should like to return to many of the points that I know have been raised. I firmly believe that the Government have made the right decision on Sunderland but that nevertheless they must look carefully at their future policy on shipyards and shipping.

I used to work for a company which had more than 50 shipyards worldwide in its client base. I visited several of them, and one where I worked was Swan Hunter shipbuilders in the north-east. The reasons why the shipyards' customers, the shipping companies, have turned down so much do not relate to anything temporary that will disappear overnight or in the next few years, although there may seem to be a glimmer of light on the horizon. In a world of oil pipelines, fewer oil tankers are needed. In a world of containerisation, there are not vast numbers of ships tied up loading and unloading for long periods. The sad fact is that, around the world, there are mothballed and semi-mothballed yards, which will come straight back on stream as soon as the first sign of an upturn is seen, and I admit that there are signs of a temporary upturn. Many of those yards enjoy considerable subsidy, which will ensure that prices remain low.

The Government are right to take the view that it is absurd to say on purely regional grounds that we should keep the shipyard going in those market conditions. They have adopted a sensible attitude towards Sunderland shipbuilders. The substantial sum of £45 million that they have put forward will go a long way towards filling the gap that must be filled with modern competitive industries of the sort on which my hon. Friends have touched so well.

There are, however strategic and military reasons for believing that we must keep a minimum base of shipbuilding, just as we need to keep a minimum strategic base in shipping. We know of the number of ships that we needed in the Falklands crisis, and that other crises may require more ships over a longer period, as well as substantial ship repair, ship conversion and other facilities. For this reason, it is essential that, just as the Government have defined a strategic core for shipping, they define a strategic core for shipbuilding and ship repairs. Inevitably, because of subsidies paid to shipbuilding industries in other countries, such a strategic definition will involve subsidies-although not, I hope, on the scale that we have had. If there is no subsidy, what happened in Sweden, where what were arguably the most efficient shipbuilding companies in Europe disappeared, will happen to the remainder of our shipyards. The way to apply this core principle may be to look particularly hard at the dual capability naval shipyards, of which Swan Hunter is an example. If the intervention funding available to the small residual core outside the naval sector were to be available to these yards as well, with the baseload of work for the Royal Navy and the Royal Fleet Auxiliary, they would be well placed to survive almost any storm in the market.

In a nutshell, we must strike a balance. There is no point in trying to keep yards going for regional reasons where there is no hope for the future. However, we must keep a small basic core of shipbuilding, just as we must keep a core of shipping. This will mean defining that core and being willing to continue to subsidise it.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East 6:31 pm, 14th December 1988

When the closure of North East Shipbuilders Ltd. was announced to the House last week, the reactions were emotional and the atmosphere was highly charged. Two emotions predominated—anger and sadness. I share both. There were many reasons for the anger expressed last week, particularly since the statement had been widely leaked in advance, which undermined many of the arguments that we wished to make. There was also anger at the outrageous decision to close a modern yard that had not just the possibility but the probability of a multi-million pound order. We were also angry that the closure seemed to stem simply from the Government's political dogma, and that the Government had been determined to force through change in ownership at the worst possible time, when the negotiations for the Cuban order were taking place. That decision merely added greatly to the delays and uncertainties of the situation.

There was also anger because the Government did not seem to have explored every possibility, and because the EEC made no formal presentation of a rescue bid. Like others, I have been closely linked to the shipyards in Sunderland, in my case because, since 1979, I have represented the area in the European Parliament. When I was first elected, there were some 27,000 shipyard workers in Tyne and Wear. Seven years later there were fewer than 7,000 and today there are fewer than half that number.

Throughout the period of decline, we were told that restructuring was necessary and that we needed a restructured industry that would be slimmed down and capable of competing. In the process, workers, particularly in the Sunderland yards, undertook many sacrifices. There were dramatic changes in working patterns, such as the development of flexible methods of working, and a great deal of modernisation of the yards. Now, we see that all that sacrifice was to no avail. That explains some of the anger and the reactions on Wearside.

Throughout my nine years as a European Member of Parliament, I was keenly aware of the lack of action by the Government and the EEC when they were confronted with the determined and cut-throat competition from the far east. It has not helped that we have had so many different Ministers with responsibility for shipping over this time, or that even in this crucial period, we have had another change of Minister. It has also not helped that in the EEC there has been little in the way of a shipbuilding policy worthy of the name. The only policy has been one of limiting state aid by the EEC countries to their respective shipyards. That policy has been inadequate to ensure that Britain and Europe survive the years of shipbuilding slump and will be in a position to pick up orders.

The EEC has adopted a negative approach, which has been aided and abetted by our Government. Over the past nine years, there have been few negotiations on shipbuilding between the EEC and Japan and Korea. Although great concern has been expressed about the unfavourable trade balance between the EEC and the trading countries of the far east, shipbuilding has been a low priority in all those discussions. The latest issue of the publication European Report says that, once again, negotiations led by the European Commission with Japan and South Korea to re-organise the world shipbuilding market have come to a standstill. That standstill is nothing new, because it has existed for the past nine years, and even more so recently, when such discussion was vital for the future of British shipbuilding industry.

The redundancies and restructuring sacrifices made by those in the EEC shipbuilding industry have been unequally shared out. Recently, the Minister admitted to me in a letter that we had lost more shipbuilding jobs than any other EEC country. Capacity in certain European countries has been reduced much more dramatically than in others, despite the existence of supposedly fair EEC rules. The shipbuilding world is not a chivalrous business. It is dependent on political will and decisions by politicians, just as much as on the efforts of business men. For that reason, we feel that the British Government and the EEC have let us down by not defending the industry and ensuring its future.

Furthermore, the demise of shipbuilding takes place at a time when we have a record balance of payments deficit and when that deficit is dramatic in manufactured goods. What is the Government's response? Simply to close down a superb manufacturing facility in Sunderland and run the shipbuilding industry into the ground. This is a disgraceful record.

Throughout the debate, the Government have suggested various palliatives, or bandages, for the wounds of the shipbuilding industry. I know, from experience in the EEC, of the money that is available there to help the shipbuilding areas, and that would have been available for Wearside and the whole of the north-east simply because of the redundancies that have already taken place. The closure of North East Shipbuilders Ltd. is irrelevant to that. We would have earned a large slice of money to help that area, irrespective of the closure.

Other hon. Members have mentioned the different points of view held in the Government's ranks. There is a clear division between various members and supporters of the Conservative party who are interested in maritime policy and shipbuilding and those who, unfortunately, have been particularly powerful in the Cabinet and who have taken the opposite view. It is a great tragedy that the wrong side has won the argument.

Two or three months ago, I accompanied my hon. Friends the Members for Sunderland, North (Mr. Clay) and for Sunderland, South (Mr. Mullin) for discussions with the Minister's predecessor. On that occasion, we presented him with a book entitled "Sunderland—the Town where Ships are Born". Unfortunately, we did not realise that we were making that presentation to the man who would be responsible for Sunderland becoming known as the town where shipbuilding died. The Government's decision is disgraceful, and it is one for which they will be blamed for a long time to come—not only in Sunderland and in the north east but throughout the country.

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

On a point of order, Mr. Deputy Speaker. As the Minister referred to my constituency on a number of occasions during his opening speech, I wish to know why I have not been called to speak—particularly in view of the fact that one hon. Member who was called honestly admitted he was not present in the Chamber for most of the debate.

Photo of Mr Paul Dean Mr Paul Dean , Woodspring

I regret that a number of hon. Members wishing to speak have not been called, and that the hon. Member for Greenock and Port Glasgow (Dr. Godman) is among them. I suggest that he might seek to intervene during one of the wind-up speeches.

Photo of Mr John Garrett Mr John Garrett , Norwich South 6:41 pm, 14th December 1988

We have been discussing an industrial tragedy—a tragedy not only for Sunderland but for every region of the country. It has been a deeply serious debate, with my hon. Friends making their analysis of the causes of North East Shipbuilders' closure and its consequences for their constituencies. In an outstanding speech, my hon. Friend the Member for Sunderland, North (Mr. Clay) asked many important questions of the Minister, particularly in respect of the Cubans' latest proposition, which I hope the right hon. Gentleman will answer.

There is no doubt that the Government contributed to the closure by concentrating on seeking private owners for the yards in pursuit of their privatisation ideology rather than on helping the yard to obtain orders and assuring its production continuity. One of our concerns is the lack of any Government strategy or policy for merchant shipbuilding, other than to get it out of the public sector by any means, as quickly as possible.

In a memorandum submitted on 14 June to the Select Committee on Trade and Industry, British Shipbuilders observed: We are concerned that there is apparently no policy concerning the merchant shipbuilding industry or indeed the whole maritime infrastructure of the United Kingdom. This is in no way concerned with the question of either public or private ownership. British Shipbuilders also made the point that shipping policy should be an integral part of national maritime capacity, and clearly it was right to say so. British Shipbuilders' opinion was that merchant shipbuilding worldwide was on the brink of an upturn for the 1990s, as has been said many times during the debate.

In his evidence to the Select Committee, the chairman of British Shipbuilders said that his view of the upturn was based on the fact that seaborne trade was at a 10-year high and on the increase in freight rates. He remarked that a new generation of efficient modern ships is needed to replace much of the present world fleet. The re-equipment of the Sunderland yard placed it in an excellent position to take advantage of an upturn.

On 28 June, the then Chancellor of the Duchy of Lancaster told the Select Committee: I think there is plainly some improvement in the market, yes … I think I do accept there is a change. He referred to the scope for replacing aging vessels throughout the world. But now it suits the Government to play down the upturn. When all the signs are right, only then do the Government decide to end merchant shipbuilding in a modern, competitive yard.

Ministers talk of £1·8 billion being sunk into British Shipbuilders, but they know that the cost of merchant shipbuilding was about one third of that total. They maintain that all such subsidies are unacceptable. It is a pity that they do not apply the same economic logic to the farm subsidies that they so generously support.

The Government's decision itself incurs enormous costs. Two thousand jobs will be lost in the yards, and for every job lost there, three will go in sub-contracting and service industries. There is also the indirect multiplier effect of the loss of spending power in the local community. At least one job in retailing banking and services is lost for every two redundancies in manufacturing. Therefore, in an area of 20 per cent. unemployment, one is confronting job losses totalling about 10,000.

I turn to the Government's programmes for creating employment in Sunderland—what the Financial Times called a "palliative package". We know something about enterprise zones because last year the DTI published an evaluation report on them. We know that, in the 23 enterprise zones, most of the jobs created were transfers from their local economies—and that most were transfers from areas of high unemployment. Only 12 per cent. of enterprise zone firms were in high-tech industries, 40 per cent. of the new jobs were unskilled, and the cost was £30,000 per job. More than one quarter of the jobs were in retailing and distribution, and the retailing jobs were created at the expense of local city centres. All that is revealed in the Government's own report.

The last thing that Sunderland's redundant skilled workers need is the building of yet another shopping experience or more low-paid, unprotected jobs in retailing or warehousing. The zone cannot, anyway, be established before next April, and it will be long after that before any new jobs appear. Whatever economic development takes place, it will not use shipyard workers' skills or the equipment that is in the yards.

Over the next three years, about £5 million will be made available to encourage new enterprise in Sunderland. That is a paltry sum. With a balance of payments crisis, and record—and still rising—interest rates, there has hardly ever been such an unpropitious time to start new enterprise. We all know that new firms are acutely sensitive to interest rates. Another £5 million will be made available over three years to assist NESL's present staff to retain and to find new jobs. Retrain for what? From where are the new jobs to come? Will the Government assist local organisations to produce an inventory of available skills and help to find a substantial employer willing to use them? Or will the Government trust to market forces to produce sufficient small firms and new starts to provide employment?

One of the most interesting exchanges in the Select Committee concerned national industrial policy. British Shipbuilders' chairman made the modest proposal that there should be a maritime policy for Britain, encouraging British shipbuilders to have ships built in British yards, and that there be a forum in which maritime interests could discuss such issues with the Government. He said that no such regular forum existed. There is no such forum, there is no such policy, and there is no strategy. We have instead a series of financial expedients, which The Guardian of 9 December described as "Young's dream come true": Lord Young, the Trade and Industry Secretary, yesterday saw come true his dream of ending his department's role as sponsor to what he sees as British industry's 'lame ducks' and creating a Department of Enterprise … Closure of the NESL shipbuilders was the last big obstacle to establishing his new-look department.

Other Governments defend their shipbuilding interests, but ours sells them out. The Minister in the other place had no intention of saving the yards. The decision was delayed simply because the Prime Minister was giving support to Polish shipyard workers. The closure was a forgone conclusion, and the Secretary of State was determined to kill off NESL so that he could create his new-look Department of Enterprise—or is it Department of Advertising? I am never sure.

The Government have betrayed thousands of shipyard workers and the national interest in an act of gross incompetence and folly.

Photo of Mr Tony Newton Mr Tony Newton , Braintree 6:48 pm, 14th December 1988

In view of the closing remarks of the hon. Member for Norwich, South (Mr. Garrett) I must flatly deny that there is any truth in his suggestion that the decision I reluctantly and regretfully announced last week was a forgone conclusion, or that the Prime Minister's visit to Gdansk played the part suggested by the hon. Gentleman and by one of his hon. Friends earlier.

We have been seeking a way forward for the yards within the terms that we set out. In my opening speech, I went to some lengths to describe the various processes through which we went and the various points at which time extensions were allowed to explore further possibilities. I make that absolutely clear. I shall not speak further on that point, because if I do, it will prevent me from replying to points on which hon. Members seek replies.

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

I am grateful to the Minister for showing his characteristic courtesy by giving way to me.

May I point out to the right hon. Gentleman, with regard to his remarks about Clark Kincaid and Ferguson, that the negotiations concerning the buyers at Clark Kincaid are proceeding apace. However, I must say to him, in all seriousness, that the negotiations concerning Ferguson at Port Glasgow are deeply worrying. I have been informed that the shop stewards have been denied a meeting with representatives of the preferred bidders, Ailsa Perth of Troon. If such an impediment has been placed in their way, will the Minister do what he can to bring the two parties together?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

The hon. Gentleman has put his point fairly. I hope that he will accept from me that this is the first that I have heard about a difficulty of that kind. There have been a number of occasions when, in advance of the naming of a preferred bidder, there has been some controversy about whether it would be appropriate for representatives of the work force to talk to the various possible bidders, but the general understanding has been that any preferred bidder would wish to talk to the work force in whatever way seemed most appropriate. I have certainly not sought to discourage that. I shall not comment further in my immediate response, but I shall look at the point that the hon. Gentleman has raised on behalf of his constituents and be as helpful as I can—in the spirit in which he raised the question.

The hon. Member for Dagenham (Mr. Gould) asked me a number of questions, which interrelated to a significant extent with points that were made subsequently by the hon. Member for Sunderland, North (Mr. Clay). He asked me whether the closure proposals for NESL had been notified to the European Commission. The answer is yes. To allow an orderly rundown in activity and to make redundancy payments, we have already notified our intention to pay closure aid at NESL, by way of redundancy payments to the work force and assistance with retraining and job creation.

The hon. Member for Dagenham asked me whether the notification was reversible. I am not sure whether "reversible" is the right word, but it would be possible to renotify to the Commission. Several Opposition Members, including the hon. Member for Sunderland, North, made that point. There is one problem on which those hon. Members may care to reflect. The hon. Member for Sunderland, North made a proposal, and I once again pay tribute to the ingenuity with which he has acted on these matters in recent weeks and the tremendous effort he has put in. However, it is not clear to me how far it is a proposal from him which the Cubans are considering, or how far it is a proposal from the Cubans, which is, properly, for British Shipbuilders or the Government to consider. I am advised that no such proposal has been received—which is not to say that the Government would not look at it were it received. I hope that the hon. Gentleman understands what I am saying.

The point I want to make is that the proposal made by the hon. Member for Sunderland, North would itself involve the entire existing work force being made redundant; that is a difficulty on which I want him to reflect. The hon. Member proposed that, after renotification, the work force would be re-employed—he hopes—on some completely new basis to start up the yard again with only one third of the current work force at Sunderland, and that is the best hope that he would hold out.

Manifestly, any process of renotification that called into question the capacity of British Shipbuilders to pay redundancy payments within the terms of the overall notification to the European Community would present considerable difficulties, as the work force at Sunderland would not want to have any question marks raised over the payments that they were expecting in those circumstances. I do not make that point to shoot down the hon. Gentleman's proposal.

The hon. Member for Dagenham asked me to say whether we would negotiate in terms of a proposal on those lines. I should prefer to say that we shall consider any proposition put to us, in the way that I outlined in my statement last week. I said that we had hopes of finding a buyer for Sunderland Forge Services, which employs a significant part of the work force at Sunderland, and that I would ask British Shipbuilders to explore possibilities that appeared to exist in respect of Pallion, rather than Southwick, for a possible use that had connections with shipping—that is, conversions and repair, rather than building. In that same spirit, I will not seek to rule out anything. That would not be in the spirit in which I have been carrying out my responsibilities. However, I must say that I would not be prepared to run risks with the other disposals that have been notified to the Commission as part of an overall package. I must point out to the hon. Member for Dagenham that they have been notified together simply because it is obviously sensible for the Commission to look at our position in respect of British Shipbuilders as a whole. That does not—I repeat not—in any sense mean that any individual proposal is dependent on any other individual proposal that has been put to the Commission at the same time. I am not prepared to do anything that might jeopardise other disposals, on which we have made such good progress, or the package of measures for Sunderland.

Following any proposition put forward by the hon. Member for Sunderland, North, there would be a large number of redundancies at Sunderland and it would be necessary to take action to ensure new jobs and new enterprise in the town. I should not want to risk that. The hon. Member for Sunderland, North, gave some indication of his proposition in a message to my office yesterday, but in the circumstances in which he has put it forward, I am not in a position to give any undertakings about the future availability of intervention fund aid for several reasons—some of which I have touched on in the past few minutes.

I can say to the hon. Members for Sunderland, North and for Berwick-upon-Tweed (Mr. Beith) that I can and shall do everything possible to ensure that no options are prematurely blocked off—by, for example, the immediate disposal of equipment in the yards—although I cannot give precise undertakings about the length of time. The Tyne and Wear development corporation, for example, is commissioning a study of possible future uses for the yard, for marine or non-marine purposes, and that must be taken into account. I shall certainly ensure—I deliberately choose general terms—that no precipitate action is taken that blocks off a possibility for using the yards in a productive way as part of the general aim of promoting employment in Sunderland. I hope that that general observation will be welcomed.

Photo of Mr Robert Clay Mr Robert Clay , Sunderland North

Will the Minister give at least one commitment? Will he say that he has not entirely ruled out renotifying the Commission that there may be a continuation of shipbuilding at Southwick whatever reduction in the intervention fund next year is consequent on that? Will he at least not rule that out entirely?

Photo of Mr Tony Newton Mr Tony Newton , Braintree

I have used the phrase "rule out" in some of what I have said, but not in the specific terms that the hon. Gentleman has described. I shall not be as specific as the hon. Gentleman has pressed me to be, simply because I am not prepared to run risks with the package, which we are determined to press ahead with for Sunderland as a whole. Nor am I prepared to jeopardise the successful sale of other yards around the country with the good prospects that exist in those places for the future of the work force. It would be irresponsible for me to run such risks in response to the question that the hon. Member for Sunderland, North has asked me.

It has, inescapably, been impossible for me to comment on all the points that have been raised, including many of the detailed complaints made by the hon. Member for Sunderland, North.

Finally. I must say to the hon. Member for Dagenham and other hon. Members that it is quite ludicrous to suggest that this means the end of merchant shipbuilding—let alone shipbuilding—in this country. There will still be more than 30,000 people employed in shipbuilding. British Shipbuilders accounts for a very small part of shipbuilding employment as a whole. There will remain not only important civil yards, such as Govan, but military yards with substantial merchant shipbuilding capacity. Should demand arise for ships that can be sold at satisfactory prices, we could and would turn towards it. No one—not even the hon. Member for Sunderland, North—has suggested that the whole of shipbuilding employment in Sunderland can be retained. In those circumstances, we shall need new enterprise and new jobs in Sunderland, and that is what we are determined to bring about.

Question put, That the amendment be made:—

The House divided: Ayes 227, Noes 290.

Division No. 16][7 pm
Abbott, Ms DianeDixon, Don
Adams, Allen (Paisley N)Dobson, Frank
Allen, GrahamDoran, Frank
Alton, DavidDouglas, Dick
Anderson, DonaldDuffy, A. E. P.
Archer, Rt Hon PeterDunnachie, Jimmy
Armstrong, HilaryEadie, Alexander
Ashley, Rt Hon JackEastham, Ken
Ashton, JoeEvans, David (Welwyn Hatf'd)
Banks, Tony (Newham NW)Ewing, Harry (Falkirk E)
Barnes, Harry (Derbyshire NE)Ewing, Mrs Margaret (Moray)
Barnes, Mrs Rosie (Greenwich)Fatchett, Derek
Beckett, MargaretFaulds, Andrew
Beggs, RoyField, Frank (Birkenhead)
Beith, A. J.Fields, Terry (L'pool B G'n)
Bell, StuartFisher, Mark
Bennett, A. F. (D'nt'n & R'dish)Flannery, Martin
Bermingham, GeraldFlynn, Paul
Bidwell, SydneyFoot, Rt Hon Michael
Blair, TonyForsythe, Clifford (Antrim S)
Blunkett, DavidFoster, Derek
Boyes, RolandFoulkes, George
Bradley, KeithFraser, John
Bray, Dr JeremyFyfe, Maria
Brown, Gordon (D'mline E)Galbraith, Sam
Brown, Nicholas (Newcastle E)Galloway, George
Brown, Ron (Edinburgh Leith)Garrett, John (Norwich South)
Buchan, NormanGarrett, Ted (Wallsend)
Buckley, George J.George, Bruce
Caborn, RichardGilbert, Rt Hon Dr John
Callaghan, JimGodman, Dr Norman A.
Campbell, Ron (Blyth Valley)Gordon, Mildred
Canavan, DennisGould, Bryan
Cartwright, JohnGraham, Thomas
Clark, Dr David (S Shields)Grant, Bernie (Tottenham)
Clarke, Tom (Monklands W)Griffiths, Win (Bridgend)
Clay, BobGrocott, Bruce
Clelland, DavidHardy, Peter
Clwyd, Mrs AnnHattersley, Rt Hon Roy
Cohen, HarryHealey, Rt Hon Denis
Cook, Frank (Stockton N)Heffer, Eric S.
Cook, Robin (Livingston)Henderson, Doug
Corbett, RobinHinchliffe, David
Corbyn, JeremyHogg, N. (C'nauld & Kilsyth)
Cousins, JimHolland, Stuart
Cox, TomHome Robertson, John
Crowther, StanHood, Jimmy
Cryer, BobHowarth, George (Knowsley N)
Cummings, JohnHowell, Rt Hon D. (S'heath)
Cunningham, Dr JohnHowells, Geraint
Dalyell, TamHoyle, Doug
Darling, AlistairHughes, Robert (Aberdeen N)
Davies, Rt Hon Denzil (Llanelli)Hughes, Roy (Newport E)
Davies, Ron (Caerphilly)Hughes, Sean (Knowsley S)
Davis, Terry (B'ham Hodge H'l)Hughes, Simon (Southwark)
Dewar, DonaldHume, John
Illsley, EricPendry, Tom
Ingram, AdamPike, Peter L.
Janner, GrevillePowell, Ray (Ogmore)
Jones, Ieuan (Ynys Môn)Prescott, John
Jones, Martyn (Clwyd S W)Primarolo, Dawn
Kaufman, Rt Hon GeraldQuin, Ms Joyce
Kennedy, CharlesRadice, Giles
Kilfedder, JamesRandall, Stuart
Kinnock, Rt Hon NeilRedmond, Martin
Lambie, DavidRees, Rt Hon Merlyn
Lamond, JamesReid, Dr John
Leadbitter, TedRichardson, Jo
Leighton, RonRoberts, Allan (Bootle)
Lestor, Joan (Eccles)Robertson, George
Lewis, TerryRobinson, Geoffrey
Litherland, RobertRooker, Jeff
Livingstone, KenRoss, Ernie (Dundee W)
Livsey, RichardRowlands, Ted
Lloyd, Tony (Stretford)Ruddock, Joan
Lofthouse, GeoffreySalmond, Alex
Loyden, EddieSedgemore, Brian
McAllion, JohnSheerman, Barry
McAvoy, ThomasSheldon, Rt Hon Robert
Macdonald, Calum A.Shore, Rt Hon Peter
McFall, JohnShort, Clare
McKay, Allen (Barnsley West)Skinner, Dennis
McKelvey, WilliamSmith, C. (Isl'ton & F'bury)
McLeish, HenrySnape, Peter
McNamara, KevinSoley, Clive
McTaggart, BobSpearing, Nigel
McWilliam, JohnSteinberg, Gerry
Madden, MaxStott, Roger
Maginnis, KenStrang, Gavin
Mahon, Mrs AliceStraw, Jack
Marek, Dr JohnTaylor, Mrs Ann (Dewsbury)
Marshall, David (Shettleston)Thomas, Dr Dafydd Elis
Marshall, Jim (Leicester S)Thompson, Jack (Wansbeck)
Martin, Michael J. (Springburn)Turner, Dennis
Martlew, EricVaz, Keith
Maxton, JohnWalker, A. Cecil (Belfast N)
Meale, AlanWall, Pat
Michael, AlunWallace, James
Michie, Bill (Sheffield Heeley)Walley, Joan
Michie, Mrs Ray (Arg'l & Bute)Wardell, Gareth (Gower)
Mitchell, Austin (G't Grimsby)Wareing, Robert N.
Molyneaux, Rt Hon JamesWelsh, Michael (Doncaster N)
Moonie, Dr LewisWigley, Dafydd
Morgan, RhodriWilliams, Rt Hon Alan
Morley, ElliottWilliams, Alan W. (Carm'then)
Morris, Rt Hon A. (W'shawe)Wilson, Brian
Morris, Rt Hon J. (Aberavon)Winnick, David
Mowlam, MarjorieWise, Mrs Audrey
Mullin, ChrisWorthington, Tony
Murphy, PaulWray, Jimmy
Nellist, DaveYoung, David (Bolton SE)
Oakes, Rt Hon Gordon
O'Brien, WilliamTellers for the Ayes:
O'Neill, MartinMr. Frank Haynes and
Orme, Rt Hon StanleyMrs. Llin Golding.
Patchett, Terry
Adley, RobertBeaumont-Dark, Anthony
Aitken, JonathanBellingham, Henry
Alexander, RichardBendall, Vivian
Alison, Rt Hon MichaelBennett, Nicholas (Pembroke)
Allason, RupertBenyon, W.
Amess, DavidBevan, David Gilroy
Amos, AlanBiffen, Rt Hon John
Arbuthnot, JamesBody, Sir Richard
Arnold, Jacques (Gravesham)Bonsor, Sir Nicholas
Arnold, Tom (Hazal Grove)Boscawen, Hon Robert
Ashby, DavidBowden, A (Brighton K'pto'n)
Aspinwall, JackBowden, Gerald (Dulwich)
Atkins, RobertBowis, John
Atkinson, DavidBoyson, Rt Hon Dr Sir Rhodes
Baker, Nicholas (Dorset N)Brandon-Bravo, Martin
Baldry, TonyBrazier, Julian
Banks, Robert (Harrogate)Bright, Graham
Batiste, SpencerBrown, Michael (Brigg & Cl't's)
Bruce, Ian (Dorset South)Hanley, Jeremy
Buck, Sir AntonyHannam, John
Budgen, NicholasHargreaves, A. (B'ham H'll Gr')
Burt, AlistairHargreaves, Ken (Hyndburn)
Butcher, JohnHarris, David
Butler, ChrisHaselhurst, Alan
Butterfill, JohnHawkins, Christopher
Carlisle, John, (Luton N)Hayes, Jerry
Carlisle, Kenneth (Lincoln)Hayhoe, Rt Hon Sir Barney
Carrington, MatthewHayward, Robert
Carttiss, MichaelHeathcoat-Amory, David
Cash, WilliamHeddle, John
Chalker, Rt Hon Mrs LyndaHicks, Mrs Maureen (Wolv' NE)
Channon, Rt Hon PaulHicks, Robert (Cornwall SE)
Chapman, SydneyHiggins, Rt Hon Terence L.
Chope, ChristopherHill, James
Churchill, MrHind, Kenneth
Clark, Hon Alan (Plym'th'S'n)Hogg, Hon Douglas (Gr'th'm)
Clark, Dr Michael (Rochford)Holt, Richard
Clark, Sir W. (Croydon S)Hordern, Sir Peter
Clarke, Rt Hon K. (Rushcliffe)Howarth, Alan (Strat'd-on-A)
Colvin, MichaelHowarth, G. (Cannock & B'wd)
Conway, DerekHowell, Rt Hon David (G'dford)
Coombs, Anthony (Wyre F'rest)Howell, Ralph (North Norfolk)
Coombs, Simon (Swindon)Hughes, Robert G. (Harrow W)
Cope, Rt Hon JohnHunt, David (Wirral W)
Cormack, PatrickHunt, John (Ravensbourne)
Couchman, JamesHunter, Andrew
Cran, JamesIrvine, Michael
Critchley, JulianIrving, Charles
Davies, Q. (Stamf'd & Spald'g)Jack, Michael
Davis, David (Boothferry)Jackson, Robert
Day, StephenJanman, Tim
Devlin, TimJessel, Toby
Dickens, GeoffreyJohnson Smith, Sir Geoffrey
Dicks, TerryJones, Gwilym (Cardiff N)
Dorrell, StephenJones, Robert B (Herts W)
Douglas-Hamilton, Lord JamesJopling, Rt Hon Michael
Dover, DenKey, Robert
Durant, TonyKing, Roger (B'ham N'thfield)
Dykes, HughKirkhope, Timothy
Emery, Sir PeterKnapman, Roger
Evans, David (Welwyn Hatf'd)Knight, Greg (Derby North)
Evennett, DavidKnight, Dame Jill (Edgbaston)
Fallon, MichaelKnowles, Michael
Favell, TonyKnox, David
Fenner, Dame PeggyLang, Ian
Field, Barry (Isle of Wight)Latham, Michael
Finsberg, Sir GeoffreyLawrence, Ivan
Fishburn, John DudleyLee, John (Pendle)
Fookes, Miss JanetLeigh, Edward (Gainsbor'gh)
Forman, NigelLennox-Boyd, Hon Mark
Forsyth, Michael (Stirling)Lightbown, David
Forth, EricLilley, Peter
Fox, Sir MarcusLord, Michael
Freeman, RogerLuce, Rt Hon Richard
French, DouglasLyell, Sir Nicholas
Fry, PeterMcCrindle, Robert
Gardiner, GeorgeMacfarlane, Sir Neil
Garel-Jones, TristanMacKay, Andrew (E Berkshire)
Gill, ChristopherMaclean, David
Gilmour, Rt Hon Sir IanMcLoughlin, Patrick
Glyn, Dr AlanMcNair-Wilson, Sir Michael
Goodhart, Sir PhilipMcNair-Wilson, P. (New Forest)
Goodlad, AlastairMadel, David
Goodson-Wickes, Dr CharlesMajor, Rt Hon John
Gorman, Mrs TeresaMalins, Humfrey
Gow, IanMans, Keith
Gower, Sir RaymondMaples, John
Grant, Sir Anthony (CambsSW)Marland, Paul
Greenway, Harry (Ealing N)Marlow, Tony
Gregory, ConalMarshall, Micheal (Arundel)
Griffiths Sir Eldon (Bury St E')Martin, David (Portsmouth S)
Griffiths, Peter (Portsmouth N)Mates, Michael
Grist, IanMaude, Hon Francis
Grylls, MichaelMawhinney, Dr Brian
Gummer, Rt Hon John SelwynMaxwell-Hyslop, Robin
Hamilton, Hon Archie (Epsom)Mayhew, Rt Hon Sir Patrick
Hamilton, Neil (Tatton)Meyer, Sir Anthony
Hampson, Dr KeithMiller, Sir Hal
Mitchell, Andrew (Gedling)Shepherd, Colin (Hereford)
Moate, RogerShepherd, Richard (Aldridge)
Monro, Sir HectorShersby, Michael
Montgomery, Sir FergusSims, Roger
Moore, Rt Hon JohnSkeet, Sir Trevor
Morris, M (N'hampton S)Smith, Sir Dudley (Warwick)
Morrison, Sir CharlesSmith, Tim (Beaconsfield)
Morrison, Rt Hon P (Chester)Speller, Tony
Moss, MalcolmSpicer, Sir Jim (Dorset W)
Moynihan, Hon ColinSpicer, Michael (S Worcs)
Mudd, DavidSquire, Robin
Neale, GerrardStanbrook, Ivor
Nelson, AnthonySteen, Anthony
Neubert, MichaelStern, Michael
Newton, Rt Hon TonyStevens, Lewis
Nicholls, PatrickStewart, Allan (Eastwood)
Nicholson, David (Taunton)Stewart, Andy (Sherwood)
Nicholson, Emma (Devon West)Stokes, Sir John
Onslow, Rt Hon CranleyStradling Thomas, Sir John
Oppenheim, PhillipTapsell, Sir Peter
Page, RichardTebbit, Rt Hon Norman
Paice, JamesTemple-Morris, Peter
Patnick, IrvineThatcher, Rt Hon Margaret
Patten, John (Oxford W)Thompson, D. (Calder Valley)
Pattie, Rt Hon Sir GeoffreyThorne, Neil
Peacock, Mrs ElizabethThurnham, Peter
Porter, Barry (Wirral S)Townend, John (Bridlington)
Porter, David(Waveney)Townsend, Cyril D. (B'heath)
Portillo, MichaelTrotter, Neville
Powell, William (Corby)Waddington, Rt Hon David
Price, Sir DavidWakeham, Rt Hon John
Raffan, KeithWalker, Bill (T'side North)
Rathbone TimWaller, Gary
Redwood, JohnWalters, Sir Dennis
Renton, TimWard, John
Rhodes James, RobertWarren, Kenneth
Riddick, GrahamWatts, John
Ridsdale, Sir JulianWells, Bowen
Rifkind, Rt Hon MalcolmWheeler, John
Roberts, Wyn (Conwy)Widdecombe, Ann
Roe, Mrs MarionWiggin, Jerry
Rost, PeterWilkinson, John
Rumbold, Mrs AngelaWood, Timothy
Sayeed, JonathanWoodcock, Mike
Scott, NicholasYeo, Tim
Shaw, David (Dover)
Shaw, Sir Giles (Pudsey)Tellers for the Noes:
Shaw, Sir Michael (Scarb')Mr. John M. Taylor and
Shephard, Mrs G. (Norfolk SW)Mr. Tom Sackville.

Question accordingly negatived.

It being after Seven o'clock, MR. DEPUTY SPEAKER put the main Question, pursuant to order [9 December]:

The House divided: Ayes 281, Noes 223.

Division No. 17][7.14 pm
Adley, RobertBenyon, W.
Aitken, JonathanBevan, David Gilroy
Alexander. RichardBiffen, Rt Hon John
Alison, Rt Hon MichaelBonsor, Sir Nicholas
Allason, RupertBoscawen, Hon Robert
Amess, DavidBowden, A (Brighton K'pto'n)
Amos, AlanBowden, Gerald (Dulwich)
Arbuthnot, JamesBoyson, Rt Hon Dr Sir Rhodes
Arnold, Jacques (Gravesham)Brandon-Bravo, Martin
Arnold, Tom (Hazel Grove)Brazier, Julian
Ashby, DavidBright, Graham
Aspinwall, JackBrown, Michael (Brigg & Cl't's)
Atkins, RobertBruce, Ian (Dorset South)
Atkinson, DavidBuck, Sir Antony
Baker, Nicholas (Dorset N)Budgen, Nicholas
Baldry, TonyBurt, Alistair
Banks, Robert (Harrogate)Butcher, John
Batiste, SpencerButler, Chris
Beaumont-Dark, AnthonyButterfill, John
Bellingham, HenryCarlisle, John, (Luton N)
Bendall, VivianCarlisle, Kenneth (Lincoln)
Bennett, Nicholas (Pembroke)Carrington, Matthew
Carttiss, MichaelHicks, Robert (Cornwall SE)
Cash, WilliamHiggins, Rt Hon Terence L.
Chalker, Rt Hon Mrs LyndaHill, James
Channon, Rt Hon PaulHind, Kenneth
Chapman, SydneyHogg, Hon Douglas (Gr'th'm)
Chope, ChristopherHolt, Richard
Clark, Hon Alan (Plym'th S'n)Hordern, Sir Peter
Clark, Dr Michael (Rochford)Howarth, Alan (Strat'd-on-A)
Clark, Sir W. (Croydon S)Howarth, G. (Cannock & B'wd)
Clarke, Rt Hon K. (Rushcliffe)Howell, Rt Hon David (G'dford)
Colvin, MichaelHowell, Ralph (North Norfolk)
Conway, DerekHughes, Robert G. (Harrow W)
Coombs, Anthony (Wyre F'rest)Hunt, David (Wirral W)
Coombs, Simon (Swindon)Hunt, John (Ravensbourne)
Cope, Rt Hon JohnHunter, Andrew
Cormack, PatrickIrvine, Michael
Couchman, JamesIrving, Charles
Cran, JamesJack, Michael
Critchley, JulianJackson, Robert
Davies, Q. (Stamf'd & Spald'g)Janman, Tim
Davis, David (Boothferry)Jessel, Toby
Day, StephenJohnson Smith, Sir Geoffrey
Devlin, TimJones, Gwilym (Cardiff N)
Dickens, GeoffreyJones, Robert B (Herts W)
Dicks, TerryJopling, Rt Hon Michael
Douglas-Hamilton, Lord JamesKey, Robert
Dover, DenKing, Roger (B'ham N'thfield)
Durant, TonyKirkhope, Timothy
Dykes, HughKnapman, Roger
Emery, Sir PeterKnight, Greg (Derby North)
Evans, David (Welwyn Hatf'd)Knight, Dame Jill (Edgbaston)
Evennett, DavidKnowles, Michael
Fallon, MichaelKnox, David
Favell, TonyLang, Ian
Fenner, Dame PeggyLatham, Michael
Field, Barry (Isle of Wight)Lawrence, Ivan
Finsberg, Sir GeoffreyLee, John (Pendle)
Fishburn, John DudleyLeigh, Edward (Gainsbor'gh)
Fookes, Miss JanetLennox-Boyd, Hon Mark
Forman, NigelLightbown, David
Forsyth, Michael (Stirling)Lilley, Peter
Forth, EricLloyd, Michael
Fox, Sir MarcusLord, Michael
Freeman, RogerLuce, Rt Hon Richard
French, DouglasLyell, Sir Nicholas
Fry, PeterMaCrindle, Robert
Gardiner, GeorgeMacfarlane, Sir Neil
Garel-Jones, TristanMackey, Andrew (E Berkshire)
Gill, ChristopherMcLoughlin, Patrick
Gilmour, Rt Hon Sir IanMcNair-Wilson, Sir Michael
Glyn, Dr AlanMcNair-Wilson, P. (New Forest)
Goodhart, Sir PhilipMadel, David
Goodlad, AlastairMajor, Rt Hon John
Goodson-Wickes, Dr CharlesMalins, Humfrey
Gorman, Mrs TeresaMans, Keith
Gow, IanMaples, John
Gower, Sir RaymondMarland, Paul
Grant, Sir Anthony (CambsSW)Marlow, Tony
Greenway, Harry (Ealing N)Marshall, Michael (Arundel)
Greenway, John (Ryedale)Martin, David (Portsmouth S)
Gregory, ConalMates, Michael
Griffiths, Sir Eldon (Bury St E')Maude, Hon Francis
Griffiths, Peter (Portsmouth N)Mawhinney, Dr Brian
Grist, IanMaxwell-Hyslop, Robin
Gummer, Rt Hon John SelwynMayhew, Rt Hon Sir Patrick
Hamilton, Hon Archie (Epsom)Meyer, Sir Anthony
Hamilton, Neil (Tatton)Miller, Sir Hal
Hampson, Dr KeithMitchell, Andrew (Gedling)
Hanley, JeremyMoate, Roger
Hannam, JohnMonro, Sir Hector
Hargreaves, A. (B'ham H'll Gr')Montgomery, Sir Fergus
Hargreaves, Ken (Hyndburn)Moore, Rt Hon John
Harris, DavidMorris, M (N'hampton S)
Haselhurst, AlanMorrison, Sir Charles
Hawkins, ChristopherMorrison, Rt Hon P (Chester)
Hayes, JerryMoss, Malcolm
Hayhoe, Rt Hon Sir BarneyMoynihan, Hon Colin
Hayward, RobertMudd, David
Heathcoat-Amory, DavidNeale, Gerrard
Hicks, Mrs Maureen (Wolv' NE)Nelson, Anthony
Neubert, MichaelSkeet, Sir Trevor
Newton, Rt Hon TonySmith, Sir Dudley (Warwick)
Nicholls, PatrickSmith, Tim (Beaconsfield)
Nicholson, David (Taunton)Speller, Tony
Nicholson, Emma (Devon West)Spicer, Sir Jim (Dorset W)
Onslow, Rt Hon CranleySpicer, Michael (S Worcs)
Oppenheim, PhillipSquire, Robin
Page, RichardStanbrook, Ivor
Paice, JamesStern, Michael
Patnick, IrvineStevens, Lewis
Patten, John (Oxford W)Stewart, Allan (Eastwood)
Pattie, Rt Hon Sir GeoffreyStokes, Sir John
Peacock, Mrs ElizabethStradling Thomas, Sir John
Porter, Barry (Wirral S)Tapsell, Sir Peter
Porter, David (Waveney)Taylor, John M (Solihull)
Portillo, MichaelTebbit, Rt Hon Norman
Powell, William (Corby)Temple-Morris, Peter
Price, Sir DavidThatcher, Rt Hon Margaret
Raffan, KeithThorne, Neil
Rathbone, TimThurnham, Peter
Redwood, JohnTownend, John (Bridlington)
Renton, TimTownsend, Cyril D. (B'heath)
Rhodes James, RobertTrotter, Neville
Riddick, GrahamWaddington, Rt Hon David
Ridsdale, Sir JulianWakeham, Rt Hon John
Rifkind, Rt Hon MalcolmWalker, Bill (T'side North)
Roberts, Wyn (Conwy)Waller, Gary
Roe, Mrs MarionWalters, Sir Dennis
Rost, PeterWarren, Kenneth
Rumbold, Mrs AngelaWells, Bowen
Sackville, Hon TomWheeler, John
Sayeed, JonathanWiddecombe, Ann
Scott, NicholasWiggin, Jerry
Shaw, David (Dover)Wood, Timothy
Shaw, Sir Giles (Pudsey)Woodcock, Mike
Shaw, Sir Michael (Scarb')Yeo, Tim
Shephard, Mrs G. (Norfolk SW)
Shepherd, Colin (Hereford)Tellers for the Ayes:
Shepherd, Richard (Aldridge)Mr. Stephen Dorrell and
Shersby, MichaelMr. David Maclean.
Sims, Roger
Abbott, Ms DianeClelland, David
Adams, Allen (Paisley N)Clwyd, Mrs Ann
Allen, GrahamCohen, Harry
Alton, DavidCook, Frank (Stockton N)
Anderson, DonaldCook, Robin (Livingston)
Archer, Rt Hon PeterCorbett, Robin
Armstrong, HilaryCorbyn, Jeremy
Ashley, Rt Hon JackCousins, Jim
Ashton, JoeCrowther, Stan
Banks, Tony (Newham NW)Cryer, Bob
Barnes, Harry (Derbyshire NE)Cummings, John
Barnes, Mrs Rosie (Greenwich)Cunningham, Dr John
Beckett, MargaretDalyell, Tam
Beggs, RoyDarling, Alistair
Beith, A. J.Davies, Rt Hon Denzil (Llanelli)
Bell, StuartDavies, Ron (Caerphilly)
Bennett, A. F. (D'nt'n & R'dish)Davis, Terry (B'ham Hodge H'l)
Bermingham, GeraldDewar, Donald
Bidwell, SydneyDixon, Don
Blair, TonyDobson, Frank
Blunkett, DavidDoran, Frank
Boyes, RolandDouglas, Dick
Bradley, KeithDuffy, A. E. P.
Bray, Dr JeremyDunnachie, Jimmy
Brown, Gordon (D'mline E)Eadie, Alexander
Brown, Nicholas (Newcastle E)Eastham, Ken
Brown, Ron (Edinburgh Leith)Evans, John (St Helens N)
Buchan, NormanEwing, Harry (Falkirk E)
Buckley, George J.Ewing, Mrs Margaret (Moray)
Caborn, RichardFatchett, Derek
Callaghan, JimFields, Terry (L'pool B G'n)
Campbell, Ron (Blyth Valley)Fisher, Mark
Canavan, DennisFlannery, Martin
Cartwright, JohnFlynn, Paul
Clark, Dr David (S Shields)Foot, Rt Hon Michael
Clarke, Tom (Monklands W)Forsythe, Clifford (Antrim S)
Clay, BobFoster, Derek
Foulkes, GeorgeMichie, Mrs Ray (Arg'l & Bute)
Fraser, JohnMitchell, Austin (G't Grimsby)
Fyfe, MariaMolyneaux, Rt Hon James
Galbraith, SamMoonie, Dr Lewis
Galloway, GeorgeMorgan, Rhodri
Garrett, John (Norwich South)Morley, Elliott
Garrett, Ted (Wallsend)Morris, Rt Hon A. (W'shawe)
George, BruceMorris, Rt Hon J. (Aberavon)
Gilbert, Rt Hon Dr JohnMowlam, Marjorie
Gordon, MildredMullin, Chris
Gould, BryanMurphy, Paul
Graham, ThomasNellist, Dave
Grant, Bernie (Tottenham)Oakes, Rt Hon Gordon
Griffiths, Win (Bridgend)O'Brien, William
Grocott, BruceO'Neill, Martin
Hardy, PeterOrme, Rt Hon Stanley
Hattersley, Rt Hon RoyOwen, Rt Hon Dr David
Healey, Rt Hon DenisPatchett, Terry
Heffer, Eric S.Pendry, Tom
Henderson, DougPike, Peter L.
Hinchliffe, DavidPowell, Ray (Ogmore)
Hogg, N. (C'nauld & Kilsyth)Prescott, John
Holland, StuartPrimarolo, Dawn
Home Robertson, JohnQuin, Ms Joyce
Hood, JimmyRadice, Giles
Howarth, George (Knowsley N)Randall, Stuart
Howell, Rt Hon D. (S'heath)Redmond, Martin
Howells, GeraintRees, Rt Hon Merlyn
Hoyle, DougReid, Dr John
Hughes, John (Coventry NE)Richardson, Jo
Hughes, Robert (Aberdeen N)Roberts, Allan (Bootle)
Hughes, Roy (Newport E)Robertson, George
Hughes, Sean (Knowsley S)Robinson, Geoffrey
Hughes, Simon (Southwark)Rooker, Jeff
Illsley, EricRoss, Ernie (Dundee W)
Ingram, AdamRowlands, Ted
Janner, GrevilleRuddock, Joan
Jones, Martyn (Clwyd S W)Salmond, Alex
Kaufman, Rt Hon GeraldSedgemore, Brian
Kennedy, CharlesSheerman, Barry
Kilfedder, JamesSheldon, Rt Hon Robert
Kinnock, Rt Hon NeilShore, Rt Hon Peter
Lambie, DavidShort, Clare
Lamond, JamesSkinner, Dennis
Leadbitter, TedSmith, C. (Isl'ton & F'bury)
Leighton, RonSnape, Peter
Lestor, Joan (Eccles)Soley, Clive
Lewis, TerrySpearing, Nigel
Litherland, RobertSteinberg, Gerry
Livingstone, KenStott, Roger
Livsey, RichardStrang, Gavin
Lloyd, Tony (Stretford)Straw, Jack
Lofthouse, GeoffreyTaylor, Mrs Ann (Dewsbury)
Loyden, EddieThomas, Dr Dafydd Elis
McAllion, JohnThompson, Jack (Wansbeck)
McAvoy, ThomasTurner, Dennis
Macdonald, Calum A.Vaz, Keith
McFall, JohnWalker, A. Cecil (Belfast N)
McKay, Allen (Barnsley West)Wall, Pat
McKelvey, WilliamWallace, James
McLeish, HenryWalley, Joan
McNamara, KevinWardell, Gareth (Gower)
McTaggart, BobWareing, Robert N.
McWilliam, JohnWelsh, Michael (Doncaster N)
Madden, MaxWigley, Dafydd
Maginnis, KenWilliams, Rt Hon Alan
Mahon, Mrs AliceWilliams, Alan W. (Carm'then)
Marek, Dr JohnWinnick, David
Marshall, David (Shettleston)Wise, Mrs Audrey
Marshall, Jim (Leicester S)Worthington, Tony
Martin, Michael J. (Springburn)Wray, Jimmy
Martlew, EricYoung, David (Bolton SE)
Maxton, John
Meacher, MichaelTellers for the Noes:
Meale, AlanMr. Frank Haynes and
Michael, AlunMrs. Llin Golding.
Michie, Bill (Sheffield Heeley)

Question accordingly agreed to.

Resolved,That this House notes with approval the progress which has been made towards returning to the private sector the shipbuilding yards and other facilities owned by British Shipbuilders; notes also that, despite every effort, it has not proved possible to establish a viable basis for continued shipbuilding at North East Shipbuilders Ltd.; and warmly welcomes the measures proposed by Her Majesty's Government to encourage new enterprise and employment opportunities on Wearside.