British Shipbuilders

Part of the debate – in the House of Commons at 6:27 pm on 14th December 1988.

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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.