HC Deb 20 December 1935 vol 307 cc2237-46

3.30 p.m.


I desire briefly to call attention to the Government's scrap-and-build shipping scheme, of which I regard the shipbreaking and steel industry as being an integral part. I suggest that there is insufficient consideration so far being given to the shipbreaking industry. At the moment it does not materially concern my Division, where I have a very efficient and progressive shipbreaking yard. We are at the moment happily occupied in breaking up the Cunard-White Star liner "Doric," but I wish to deal with the principle of the matter and to safeguard people in employment. My information is that there are about 27 shipbreaking yards in this country, most of which are situated in or near distressed areas. At the present time there are only about one-third of the full capacity at work in these shipbreaking yards. Before the War the British ship-breaking yards had about 80 per cent. of the world's shipbreaking business, and to-day it is not far from the figure of 20 per cent. of the world's shipbreaking business. On the subject of employment—although it is very difficult to get figures, and I should hesitate to attempt to quote figures to my very efficient hon. Friend the Parliamentary Secretary of the Board of Trade—as far as I can ascertain, there are about 1,000 now employed in the shipbreaking industry, and it can absorb comfortably about 3,000.

Within the last few weeks the Parliamentary Secretary, in reply to a question in this House, stated that there were 45 ships which had come within the purview of the scrap-and-build scheme; 11, representing 38,000 tons, were being broken up in British shipyards; and 15, representing 75,000 tons, had gone abroad; and 19 were at the moment unallocated. If we work out that figure we find that of the ships already consigned to the scrap heap only one-third remained, in this country for British ship-breaking yards. I presume that the reason why licences and permits have been granted for the export of these ships to be broken up abroad is the question of price, because it is recognised that the first call on this scheme of the Government is the shipbuilder and shipowner, and he must get his price in order to be prepared to rebuild. My information again is that the difference in price is not more than about 10 per cent. If that is so, another point may be made on the question of wages and employment, because about half the cost of a ship for scrapping is represented in wages for performing the work. If we take, as an example, a ship sold in the region of £10,000, a 10 per cent. margin of that sum is £1,000, so that the wages expended on breaking up the ship would be in the region of £5,000. It is pretty obvious that the out-of-work pay for the men that might have been employed in breaking up that ship amounts to £2,500, so that the country from one source or another has to find £2,500 for men out of work, whereas 1,000 would have brought that business to this country and they would have been absorbed in industry. From the purely economic, business point of view there is no question as to what is the correct and most paying thing to do. So much for unemployment.

I should like to turn to steel, which should be an integral part of the scheme. It would be safe to say that shipbreaking yards are the graveyard of the derelict ship and also the birthplace of raw material for the steel industry. I notice that the imports of scrap into this country represent about 40,000 tons a month. That could obviously be produced in this country. We have the shipbreaking yards and we have the ships. There is here a difference, an anomaly which might easily be composed. There are four parties involved in the scrap-and-build shipping scheme—the shipowner, the ship-breaker, the steel industry and the Government. Surely, it is possible that these four interests could get round a table, compose their difficulties and devise a scheme whereby the ships that are so badly needed in our shipbreaking yards could produce the raw material, the scrap, with British labour, that the steel industry requires. Meanwhile, would it be possible until some such arrangement is arrived at, agreeable to all the parties and definitely beneficial to the country, that there should be a more rigorous consideration before the granting of licences giving permission for ships to go abroad to be broken up? Before those certificates are finally granted would it not be possible for the Board of Trade to consult the shipbreaking interests of this country and see whether the price or any other difference that might arise could be composed, and so leave the business in this country?

3.36 p.m.


The hon. Member was kind enough to give me notice that he desired to raise this matter on the Adjournment, and he was also good enough to indicate the points to which he particularly desired to call attention. If there were a possibility of increasing the employment in the shipbreaking yards of this country by an act which the Government could properly do, no one would be more delighted than myself. The point is, that in the scrap-and-build scheme to which the hon. Member has called attention we are concerned only in the first place with general cargo vessels. We are only dealing, as the hon. Member, who represents a seaport town, will realise, with a section of the scrapping trade. Any redundant liner tonnage, such as the "Doric" of the Cunard White Star Fleet, and any other ship of any kind besides the general cargo vessel, is outside the Government's scheme altogether, outside Government control and in the area of free competition. Any sort of licensing scheme dealing with a permit to scrap British vessels abroad, if it were to be made generally effective would have to go widely outside the existing scrap-and-build scheme. It would require legislation and would have to be thought out on a very large-scale plan. I only mention that matter so that the hon. Member will not overlook it.


I was only asking in my last question that before these permits are given for a British ship to go to the Continent or otherwise to leave this country to be broken up, that the ship-breaking industry itself should be consulted, to see whether it would be possible to avoid that. That would not involve legislation.


I have not yet reached the question with which the hon. Member concluded his speech. In the first place I wanted to make sure that the House appreciates the problem which we are discussing. In point of fact the British Shipping (Assistance) Act, 1935, has as its object the removal from the world register of as much obsolete tonnage as possible in order to provide a direct inducement to the construction of modern British vessels. The hon. Member will understand that in terms of employment the building of a ship occupies far more hands than the destruction of a derelict vessel, however skilful the particular yard in which the ship may be broken up. The hon. Member has referred to certain figures and has given his impression of the imports into this country of scrap. I would like to make the point, because this whole question of scrapping vessels abroad has attracted public attention, that Great Britain, in common with other iron and steel manufacturing countries of Western Europe, ordinarily has far more scrap than she needs for home consumption, and on balance is an exporter. There seems to be a popular idea that this country imports a great deal of scrap, but on the ordinary run of the years Great Britain is a great exporter of scrap, whereas certain other countries, particularly Italy and Japan, being steel manufacturing countries with an insufficient supply of pig-iron and scrap, are always in need of scrap, and therefore inclined to offer higher prices.

It is right that in 1934 there was an excess of imports over exports, and that for the first 11 months of this year the excess appears to have continued. But there must be some special consideration to have rendered that possible, because on broad, general lines this country is an exporter. Normally it is desired that the two vessels which are to be scrapped in order to enable the new vessel to be laid down should be scrapped in this country. If a British shipowner scraps two vessels, and they are both broken up in British yards, and he orders the new vessel to be laid down in a British yard, and orders British machinery, that is the absolute ideal. There is no wish to allow a single vessel to be broken up otherwise than in a British yard except where otherwise the refusal to give permission would have, as a consequence, the non-placing of the order for the new ship. The main consideration must be that the tonnage shall be broken up, and as a result an order for a new vessel placed. If the Government, on the advice of the appropriate advisory committee, find that it is a question between not having the operation carried out at all or permitting the vessel to be broken up outside this country, they have no hesitation in adopting the second alternative. The hon. Member has referred to the price differentiation, and has surprised me by saying that on the information before him the difference in price between that offered from outside sources and from within this country was not more than a 10 per cent. difference. That does not accord, broadly speaking, with the notion I have. It is true that recently British shipbreakers have shown a tendency to offer higher prices for scrap than they have been offering hitherto. The difference, the yawn, between prices on my calculation is far more than 10 per cent.

Let me tell the House how this price difference, in fact, operates. A reputable ship-owning line with good resources desiring to take advantage of the assistance given by the British Shipping (Assistance) Act, 1935, is offered as an inducement Government facilities at a low rate of interest. That is one inducement which a prosperous line possessing good resources is likely to obtain from coming within the scheme. That inducement is the difference between 2¾ or 3 per cent. interest and the rate at which that same company could borrow in the market. Calculations on particular proposals which are put before the appropriate committee, and in due course before the Board of Trade, show that the whole of the difference between 2¾ per cent. under this scheme and the rate of interest obtainable in the open market is off-set by the loss which will accrue if the vessel is sold to a British shipbreaker as compared with when it is sold to a foreign ship-breaker. In such circumstances as that it is impossible to withhold a licence to export that vessel for breaking up when, as a result of refusing the licence, the whole operation would fall to the ground.

May I mention one other fact? I am not at all unsympathetic to the hon. Member's speech; indeed, I am grateful for the opportunity of the matter being raised. I am anxious that the problem as a whole should be looked at. I am quite willing to keep in close communication with the hon. Member and to listen to any representations he desires to make. His actual point as to consultations cannot be met, but I can assure him that the matter is constantly kept under review, and that these facts are well known to the Government Department administering this matter. Just in the measure in which scrap commands a higher price in some countries than in our own, so does the vessel to be scrapped obtain a fictitious plus value. Many a British shipowner desiring to come within the British Shipping (Assistance) Act, 1935, and take advantage of the scheme finds it necessary, before he can place an order for the construction of new vessels, to acquire additional tonnage in order that it might be scrapped. Just because there is a higher price level ruling in some parts of the world for scrap so does the vessel which is bought from a willing seller to be scrapped acquire an additional value, and therefore means an additional cost to the shipowner at the time he buys it.

These are all factors which make it necessary to see that the main intention of the Act of 1935 is not defeated by the inability of the owner to secure a fair return for the vessels he is scrapping and is not, on the other hand, compelled to pay unduly high prices for vessels which he desires to acquire in order to implement the necessary amount of tonnage he has to scrap before he comes within the scheme. There is world competition for scrap. The fact that British ship-breakers have recently been offering prices of 30s. per ton is likely to help British ship-breakers in their task of securing tonnage. I have the prices of the principal ship-breaking yards in Scotland, on the North East Coast and in South Wales, and, of course, in that area the firm to which the hon. Member has called attention is naturally prominent.

Recognised ship-breakers have recently become associated in the Ship-breakers' Association, the members of which rent or own in all 27 of the principal yards, with a dismantling capacity of about 1,000,000 tons annually and providing employment, not as the hon. Member said for 3,000 men, but for between 4,000 and 5,000. The industry is of course exposed to competition both in the purchase of raw material and in the sale of its finished product. Of the various vessels which have been scrapped so far a very fair percentage of the tonnage has been procured by our own British yards. The question is governed by price considerations and I am afraid the suggestion which the hon. Member submitted—in broad outline that we might bear in mind the incidence of this question in relation to the Unemployment Fund—is one which cannot be taken into account. That consideration would be applicable to any industry in any part of the country and once we contemplated giving Government facilities on the basis that if we failed to do so there would be more expenditure on unemployment pay, I think we should wander very far from the paths of ordinary finance. I understand the hon. Member's point but I can give him no encouragement along those lines.

If British shipbreakers desire to attract to themselves a greater percentage of the tonnage for scrapping it must be on terms of competition with foreign countries making similar offers for similar scrapping. The hon. Member referred to pre-War practice. He would be well advised to look into that matter a little further. For many a year British shipyards have not attracted the fullest possible quantity of tonnage for scrapping, and it is a matter which merits careful consideration. In some countries ships are broken up in bond so that there is no duty paid upon them and that gives them an advantage in offering scrap prices. While the Government share the hon. Member's wish that as large a percentage as possible of shipbreaking should take place in the shipyards of this country, it would be unwise to make any sort of promise that the Government will introduce an alteration in the administration of this scheme to bring that about artificially. On the contrary, I think that would defeat rather than aid the ends which the hon. Member and the Government alike have in view.

3.54 p.m.


I think it is a pity that private Members in this House do not use the opportunity presented by the Adjournment Motion to cover the whole field of policy and thus enable hon. Members on every side to raise whatever subjects may be in their minds. Nobody can complain about the subjects which have been raised to-day. They are very important. The only complaint which any hon. Member, and especially any private Member, can make is that the Labour party should have wasted so much time this morning which otherwise might have been spent in valuable discussion. We have now come to the last six minutes before the House adjourns for Christmas and I make no apology for reminding those hon. Members who are still here that on the wide field and taking the broadest view we are going home not, shall I say, depressed but, I think, all of us in a very subdued frame of mind under the shadow of a threatened coal strike under the shadow of the depressed areas and unemployment and under the shadow—let us face it—of a considerable loss of prestige by this country in world affairs. I do not think there is any useful purpose to be served by recriminations. What has been, has been. But I think it worth while, in the last five minutes of this Debate, to see if it is not possible to learn one lesson at any rate from the distressing and disturbing events of the last fortnight. If there is one lesson to be learned, it is the absolute necessity, in a turbulent, disturbed, and dangerous world, of the Government of this country, whatever political complexion it may have, being possessed of a definite theme, to a constructive policy, which it is determined, to the best of its ability, to press to the end. Under present conditions you cannot pursue what I would call a hand-to-mouth policy. You cannot live from day to day. You have to have, whether at home or abroad, objectives, and to pursue them remorselessly to the end. It is better to pursue, I think, even a bad or a wrong objective than to have no definite objective at all.

I do not think any Member of the Government or of the Cabinet was particularly to blame for the developments or the events of last week, but what has disturbed us is the apparent inability on the part of the Government to see what the ordinary man in the street saw so quickly, that between the speech delivered by the Foreign Secretary last September at Geneva and the Paris proposals there was a vast gap. What shocked the country was that apparently, as it were by accident, or inadvertently, there had been a complete and sudden change of policy, and what shocked some of us in the House was that it was not quite apparent to the Members of the Government until it was pointed out by the Press and by the public. The impression one got of the last Government and that one gets of the present Government is of a lot of well-intentioned, very intelligent, able men doing their best in their own Departments from day to day, but without enough direction, without perhaps enough control, without enough co-ordination.

The plea that I want to make is that during the Recess Ministers should direct their attention very carefully indeed to the machinery of government, which should be completely overhauled, with regard to both foreign and internal affairs, and having directed their attention to the machinery of government, I believe that, a policy of support of the League having been imposed upon them, they ought to direct their attention very carefully to the machinery of the League itself at Geneva. Machinery is very important, efficiency is important, and efficient machinery is essential to efficient government. The lesson to be learned is not that anyone has been guilty of dishonesty or ineptitude. The lesson which we ought to learn from the events of the last fortnight is not that the individual has broken down, but that undoubtedly in existing conditions the machinery of government in this country has broken down.

If I may raise what may seem to hon. Members to be a trivial point, but I do not believe it is, because it is symptomatic of the whole system, as long as we maintain a sort of traditional system of Ministerial salaries—I raised this the other night—which are utterly meaningless and inept and would not be tolerated in any competent business in this country, it is a sort of sign and symptom of the absolute lack of administrative efficiency. That is what the Government have to consider more than anything else—how to make the machinery and how to impose on that machinery a definite, direct objective and policy to be pursued without flinching to the end. Unless we do that, I can only see us muddling on at home and abroad until some disaster overtakes us. The lips of the Prime Minister yesterday were not unsealed. Some of us wish they had been, but the last point that I want to make is this: Everyone knows, it is implicit, that one of the causes of the trouble has been the lack of efficiency of the defences of this country. I would say, in view of the money spent on our defences in the last ten years, that there must be some inefficiency in administration to cause that. With the overhauling of the machinery of this country and the League must go the thorough overhauling of the defences and the administration of the defences of this country.

Adjourned accordingly at Four o'clock, until Tuesday, 4th February, pursuant to the Resolution of the House this day.