For those of us who are concerned for the future of this industry and who take albeit a passing interest in marine affairs, a crucial issue is the annual review by the competition policy directorate of the Commission when the market-driven basis for fixing the level of intervention funding for new ships is decided. This attempt to quantify the lowest far east price compared with the lowest European production cost has now been carried out and tabled by the consultants.
Those directly involved have suggested to me that there are, inevitably, weaknesses and inconsistencies within the current study. This year's study was, for example, carried out prior to the Gulf crisis which has had a negative impact on shipping freight rates. This, in turn, has caused a fall in the value of ships, which could ultimately affect new-build prices. I understand that the Commission will, after consulting member states, be bringing its recommendation on the level of aid for 1991 to the Council of Ministers towards the end of this month.
Having taken account of the current unsettled state of shipping and the new-build market, it appears that, apart from Denmark, and perhaps Holland, there is strong support in Europe for the idea of maintaining the current level of 20 per cent. aid for a further six months at least. Depending on the Gulf crisis, it should then be possible to carry out a further review, with the objective of reducing subsidy in a market which, I hope, would have stabilised, but it is my understanding that the United Kingdom Government have not, in line with the majority of member states, taken this sensible and pragmatic view of the situation. Rather, they appear to support a figure closer to, if not below, 10 per cent.
Given the uncertainty of the market and the difficulties in exactly defining the price-cost differential between far eastern and European yards, would not the Government be wiser to show greater flexibility by agreeing, for another six months, to the present level of intervention funding?
Recovery is still a fragile path for our shipbuilders, but they are striving with determination and are making an effort of which we in this House and the nation should be proud. Their effort must not be undermined. They require consideration, understanding and support, not indifference. That is particularly important in the United Kingdom context. A sensible level of intervention funding for 1991 will be vital to the two most recently privatised major yards, Kvaerner-Govan in Glasgow and Harland and Wolff in Belfast. The House will recall that the latter was bought from the Government just over a year ago through a management-worker buy-out.
Significant progress is now being made, after all the painful reconstruction that Harland and Wolff has undergone over recent years. It would be wrong if it, and Kvaerner-Govan, were not to have the benefit of a committed and involved Government approach. Surely it is obvious that there are both regional and national benefits to be achieved by this nation aligning itself with the majority of European Governments and supporting a realistic level of intervention funding that would help to ensure the winning of new orders for the United Kingdom yards in 1991.