British Shipbuilders

Part of the debate – in the House of Commons at 6:41 pm on 14th December 1988.

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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.