HC Deb 26 June 1953 vol 516 cc2315-24

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. R. Thompson.]

3.59 p.m.

Mr. Frederick Willey (Sunderland, North)

In October of last year I raised on the Adjournment the question of shipbuilding, and I make no apology for taking a second opportunity to review this great national industry this afternoon. It vitally affects my constituency and the town of Sunderland.

On the last occasion that this matter was raised the Civil Lord expressed the view that I was being too pessimistic. I felt that he was being too optimistic. Let me qualify anything that I may say by stating at once that I have no desire to introduce any spirit of alarm into the industry——

It being Four o'Clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. R. Thompson.]

Mr. Willey

All I ask is that we should be realistic about it, and if there are any steps which we ought to be taking now, that we should take them now.

In the case of Sunderland we were disappointed with last year's output. I know we differ about the basis upon which we calculate the output, but I take the view, shared by the industry, that our output last year was the lowest for 13 years. This year there have been a series of complaints by the shipbuilders about the vexed question of the steel allocation and the sequence of supplies. If I had been fortunate enough to have more time I should have called the Civil Lord's attention to many of these complaints, but I content myself with saying that they cover practically all the yards and also the works building the engines, who complain that because of out of sequence supplies the engines have been out of sequence in relation to the ships which have been built.

I will be content to quote one complaint because I know that it was brought to the attention of the Civil Lord. Mr. Short expressed himself in a manner more forcible than I employ in the House. When a ship was being launched recently in the Short Brothers yard, he said, complaining about the delays: The position had been aggravated by considerable out-of-sequence deliveries. Assurances had been given in Parliament that shipbuilders were receiving more and more steel, but, if I may be permitted to use a Ministerial expression, it is all baloney. Last year, during 11 months of steel rationing, we were allowed to receive, on paper, some 70 to 75 per cent. of our requirements, but at the end of the year the mills had failed to deliver this quantity by some 10 per cent. He went on to comment about the position this year and said: With still two weeks of the first quarter to go, I can say that from the present rate of delivery to this yard we shall not get any of the arrears and shall be 10 to 12 per cent. short of our allocations. I have used Sunderland by way of illustration, but this was the condition of the yards generally.

When we last debated the subject I gave the figures published by Lloyd's, and again I rely on the Lloyd's figures. When we received the figures for the building year 1952 we found that the tonnage commenced in 1952 was 292,000 tons less than the previous year, the tonnage launched 29,000 tons less and the tonnage completed 76,000 less, and at the end of the year the tonnage under construction was 64,000 tons less than it was the previous year. The most disturbing feature about all this, as I said last time, was that this was not the position in world shipbuilding generally. Whereas we showed these decreases, the Japanese, the Germans, the United States and Sweden all showed substantial increases in the various categories.

We agreed last time about the importance of the tanker construction. We found at the end of the year that the proportion of tankers being built in British yards had dropped over the year from 53 to 37 per cent. With regard to orders—I have asked hon. Members to foe realistic—we had, of course, to expect some shrinkage compared with the exceptionally heavy order book of the previous year, but it has been disturbing to find the order book only one-third of what it was the previous year.

Since then we have had the figures for the first quarter of this year, and they show an aggravation of the position. This is the disturbing note of the position. We find that after the first three months of this year the ships under construction have fallen by a further 13,500 tons compared with the previous quarter and there has been a more considerable fall in tonnage commenced. If we compare the 12 months prior to March, 1953. with the corresponding period up to March, 1952, we find that the position is aggravated and that the tonnage commenced is 324,000 tons less, the tonnage launched 216,000 tons less, the completed tonnage 10,000 tons less and that under construction 137,000 tons less. Again, subject to the qualification I made before, we find that in the first quarter of this year we put on the books only 170,000 tons compared with 482,000 tons in the corresponding quarter for 1952. We find now for the first time that we are putting on the order book considerably less tonnage than we are turning out.

Against this background the Admiralty have taken some steps. I am being generous this afternoon, but I think I ought to add that they should have been taken long before. The hon. Gentleman the Member for Sunderland, South (Mr. P. Williams) by fighting the by-election helped to expedite that position. We have got an Interdepartmental Committee as a short-term remedy and the promise of an increase of plate construction as a long-term remedy. There are, however, many disturbing features which persist and become more serious. There was some chance earlier in the year that freight rates might steady, but they are dipping again. I concede at once that the Civil Lord is not responsible for freight rates, but I am asking him to pay attention to the significance of the drop in freight rates. We have had repeated statements from chairmen of the shipping companies giving a very gloomy prospect for the immediate future. We have got a continuance of an air of frustration in the yards. It is still there.

I would welcome a statement from the First Lord of the progress made by the Interdepartmental Committee. In spite of that Committee we have still got complaints about steel deliveries and out-of-sequence deliveries, though there have not been so many complaints from Wearside, but there have been some from the Clyde. Moreover, we have got this position that not only is there a fall in the order book, but there are no orders of any magnitude being placed this year. Let me give an illustration away from the Wear. The chairman of Harland and Wolff said that there is going to be redundancy in the finishing trades. That is the beginning of a serious position which already has begun to make its impact in certain areas.

We have got to accept the fact that there has been a fairly wide scale deferment of orders. We have also got—and this is only in the last two or three months—cancellation of orders. I have been one of the minority who has said that if things deteriorated sufficiently in the shipping world we would have cancellation of orders. I know the official view has been that there would not be cancellation of orders, but I happen to know that in the Wear we had serious cancellations between the wars even on the payment of severe penalties. There are the beginnings of cancellations now though the cancellations have been mainly tankers, about which the hon. Member was so optimistic when we last debated this matter. But apart from the tankers, we have now got the cancellation of dry cargo merchantmen. It has not been in my constituency, but we feel apprehensive about it nonetheless. We have a position at Greenock which is quite serious.

It is not long ago since the Civil Lord said at Newcastle that this year we would build at a higher rate than at any time since the end of the war. He said in October: The outlook for the industry is, I think, undoubtedly good. Because we have to be realistic about this, I want to know whether those estimates still hold good? If they do not, I want a beginning to be made without any more delay on an examination of the problems, both long term and short term, affecting this great national industry upon which the prosperity of this country depends, in part at least.

There are many industrial questions. I shall not discuss the Confederation's wage claim but I have some sympathy for this industry because it is a wage claim which has been brought upon them by the policy of the present Government in their redistribution of income. It is all very well for the shipbuilders to say that they agreed to a wage advance in November, 1951, but the £ today is worth 1s. 8d. less than it was then. There are questions like shift work, which affects an industry like shipbuilding with its heavy capital overhead costs. That may seem out of context with what I have been saying, but it has to be looked at. Then there is the vexed question of demarcation. If we are seeking stability in this industry, these questions must be faced and I want a beginning to be made.

Last time I mentioned National Shipbuilding Securities. No one knows what they are up to. We know the levy goes on and on, as it has done since 1939, but what use will be made of those resources? The main objective, which I am sure the hon. Gentleman and I share, is to seek to achieve in this difficult industry a continuous level of stable employment and, therefore, a stable output, and to provide alternative work. It is a matter outside the immediate responsibility of the hon. Gentleman but it is within his interest. I concede at once that he has the Shipbuilding Advisory Committee under the chairmanship of Sir Graham Cunningham, and that the Committee has done excellent work, I am not saying anything to detract from the work they have done, but I am asking the hon. Gentleman to initiate an inquiry on a much wider scale outside his departmental responsibility.

There are other factors which we must bear in mind. I am sure the hon. Gentleman would concede that there is the rehabilitation of foreign yards and the impact this has had upon world shipping and the effect it may have upon this country. Then there is the practice of some foreign countries to subsidise shipping, directly in the case of France and Italy and indirectly elsewhere. We are also seeing our percentage of world shipping falling. The Japanese, although they have been doing well until recently, nevertheless have started to tackle the question of their own shipping and shipbuilding realistically. They have a Government white paper and are considering future policy. Similarly, in the United States, there is a great deal of governmental concern about the level of shipping which the United States should hold, and, of course, the shipbuilding policy which should be behind it.

All I ask the Civil Lord this afternoon is to recognise that the time has come when we cannot be content with short-term expedients. We recognise—I hope it be the case—that the Inter-Departmental Committee has improved matters regarding the immediate factor of which I have complained so frequently. I do not expect the hon. Gentleman, for political reasons, to accept the desirability of a development council—I recognise at once that some of the interests of the industry have already expressed themselves as rather critical of it; but I should like the hon. Gentleman to consult with his colleagues in devising some form of inquiry, which, for the reasons I have given, must extend beyond the scope of his own Department. I think that the industry as a whole, in spite of its criticism of any inquiry regarding its affairs, would welcome some sign of the Government's interest.

I should like some body to be set up—we used to call it a working party—to review the industry. I should like the Government to consider such reports as that body might make and I should like a Government White Paper. Then, we might get a useful round-the-table discussion. That discussion should be held soon and its progress should be expedited, because the time is coming, as has been recognised by all of us, when we will have to take more effective and concrete steps to determine and maintain a stable level of employment for our shipyards, which remain one of our great national assets.

The Civil Lord of the Admiralty (Mr. Wingfield Digby)

I am grateful, as, I am sure is the House, to the hon. Member for Sunderland, North (Mr. Willey) for giving us an opportunity of discussing again the very important industry of shipbuilding. It is certainly an industry which the Government watch with the greatest attention. The Government are fully alive to the problems of the industry and are anxious that it should work smoothly. There is no doubt of the importance of this industry to our national economy, and that will certainly be kept in view, including the support it gives us in the field of foreign exchange.

I thought that the hon. Member was a little too pessimistic. To listen to him, anyone would have imagined that the industry was in a serious way and not that it had four years of work on the order books. Four years of work on the order books is a lot, and it represents a big lag in the delivery dates which can be offered. That is a subject which, obviously is bound to be considered seriously by anyone wanting a new ship.

The hon. Member does not do any service to the industry when he spreads alarm and despondency, because it will not encourage foreign shipowners to place orders in our yards if that sort of idea goes out about the state of the industry. I assure the House that the industry is in a very prosperous state. It is extremely satisfactory to have four years of orders on the books. We could hardly hope to maintain permanently very much more than that.

It is true that the shortage of steel plates has held us back a little from what we might have achieved, but when we compare the output of the industry today with its output of former years before the war, we must feel great confidence in the future of the industry. The hon. Member referred to the actual target we have in mind, which we hope will be achieved during the year. It depends on the steel plate position whether it will be achieved, but we certainly hope to do better than we have done since the war, if not this year perhaps next year. I thought that the hon. Member was flogging a dead horse when he referred to National Shipbuilding Securities. I would remind him that the policy in regard to that matter is exactly the same as it was under the Government which he supported.

As he mentioned, there has been some criticism among shipowners of the rise in shipbuilding costs in this country and one or two statements have been made that some owners might reconsider orders they were about to place. Costs certainly are a very important factor in the shipbuilding industry, particularly at a time of increasing international competition when we are having to face new competition from yards re-opened overseas. But the question of cost, I must remind the House, is primarily one for discussion within the industry between shipbuilders and shipowners and it is primarily on that basis that it should be considered.

Nevertheless, we would do well to bear in mind certain of the factors which are affecting costs at present. First, there is the price of steel. The price of heavy steel plates does compare very favourably with that of most, if not all, of our competitors. For instance, heavy steel plates here cost £31 a ton. In Western Germany they cost £41 per ton and, in the Netherlands, £42 a ton. In the case of Japan I have no exact figure, but I understand that it is higher. There is quite a possibility that this advantage in the price of steel which the shipbuilding industry enjoys may be narrowed by a tendency overseas to reduce steel prices.

Another factor in cost is modernisation. There are certain difficulties in modernising old yards for some of the old sites are not ideal for modern methods, but great progress has been made in this field and licences are easier now. Both the number and value of shipyards and dry dock modernisation projects approved already this year are more than those of both the last two years. It will be seen that we are making real progress there.

Thirdly, there is the question of capacity. It is admitted that at present we are not working to full capacity in the shipbuilding industry. We should like to; every industry always wants to work to full capacity. That sometimes means that an industry works to full capacity at the expense of some other industry in the supply of raw materials. We hope that at the end of the year we shall be getting nearer to capacity than at present.

That brings me to the question of steel supplies and here again I think the hon. Member was unduly gloomy. It is quite true that there have been difficulties. Very much more steel plate is required than used to be needed owing to there being more welding and the use of corrugated bulkheads, and so on, and the steel plate capacity is not sufficient to provide for the increased demand. But the steel plate capacity is something which should have been thought about many years back. It is not something which can be done in a day. Perhaps the hon. Member will reflect on that when he criticises us and will wonder where the blame should be laid.

We have looked into the position and we have abolished the old control. I should have expected the hon. Member to have supported control, as he would support most controls, but he criticised our control very freely. It has been abolished and now we have the Interdepartmental Committee and hope that that will ensure that shipbuilders get their fair share of steel plate and enable supplies to flow more smoothly. There are still bound to be some difficulties, but we hope that they will be ironed out. During the third quarter there is the holiday period and the production of steel plate, as of many other things, is bound to fall a little; that is to be expected. Apart from that, I think we can look forward to a very much brighter prospect with regard to the steel plate supply.

The sequence of deliveries will always be difficult because some of the things which are required in the shipbuilding industry mean a very short run for the steel mills and are very disadvantageous to them in trying to achieve good production. I am sure that the House will be glad to have noted that the President of the Shipbuilding Conference, Mr. Con-nell, has been appointed to the new Iron and Steel Board, so that the views of an experienced shipbuilder will be available there.

On the question of foreign competition, I have already spoken in the House about the rehabilitation of foreign yards. That was bound to come, and we were bound to feel the impact of the new competition, both from Germany and Japan.

I should also like to mention the question of orders. It is quite true that the demand for ships has been slacker since the middle of last year. The hon. Member spoke disparagingly of the orders for 1952 as a whole. I would remind him that they represent no less than 1.48 million tons, which is more than we have ever built in time of peace in this country. That is not a figure which I think need be alarming. I agree that I should like to see more orders coming along now, but I really do not think that with delivery dates so very long we can expect orders to continue piling up at quite the same rate.

As I have already said, we have four years work ahead of us and I do not believe that there is any ground at the moment for alarm about the future of industry. Roughly one-third of the ships that we are building are of foreign account, and about three-fifths of all the orders are for tankers. I do not think that there is any need for anxiety about tankers. I was not quite clear what was the hon. Member's anxiety in that respect. They stand in reasonable relationship in the order book.

Cancellations were mentioned. It is true that there have been cancellations, but looked at in the light of the total order book they are quite negligible. It would be absolutely wrong to attach any special significance to them at the present time. One other point I should like to make is about naval rearmament. On an earlier occasion the hon. Member asked whether that had interfered unduly with orders for merchant ships. I can reassure him about that position.

Turning to employment, there are now about 160,000 workers engaged in this industry, which is more than at any period since early 1950. The hon. Member will, I think, agree, that that is a satisfactory state of affairs. He really need not be so alarmed; the outlook for the industry is a good one.

The country owes a debt both to management and workers in the industry. It has performed great services to us in our economic life in the field of foreign exchange. In addition, we have maintained our position as the finest shipbuilders in the world.

Question put, and agreed to.

Adjourned accordingly at Twenty-nine Minutes past Four o'Clock.