HC Deb 13 March 1957 vol 566 cc1269-80

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

9.58 p.m.

Mr. Jahn Rankin (Glasgow, Govan)

I desire to draw the attention of the House to the shortage of steel supplies for shipbuilding and ship repairing. I wish that the debate might have been held in a happier industrial climate and I am sure hon. Members on both sides of the House hope, even at this last hour, that there will not be a clash between employers and employees in this great industry.

It is an industry which is, of course, of special concern to me, because so many of my constituents are employed in shipbuilding and engineering, and I have no wish to see suffering where that can be avoided. At the moment the general picture of the industry is one that can be called good. Statistically, we have a total order book which carries 6 million tons of shipping, including 2 million tons of new shipping orders in 1956. That can be described as very satisfactory. Exports of ships and boats in 1955 were worth £53.6 million, and in 1956 they rose to £93.6 million. I think that that is astonishing progress.

It being Ten 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. Barber.]

Mr. Rankin

In 1954, gross profits of £15,637,000 were shown by 24 companies, and in 1955 those 24 companies showed gross profits of £17,752,000. These figures are taken from the Financial Times of 7th January, 1956. In 1955, gross profits of £20,283,000 were shown by 29 companies, and in 1956 the same 29 companies earned gross profits of £22,664,000. Those figures are found in the Financial Times of 12th January of this year.

The Blue Book of National Income and Expenditure for last year, giving the most recent and comprehensive figures, shows that the shipbuilding, engineering and electrical industries earned net profits of £286 million in 1952; £301 million in 1953; and £335 million in 1954. If we add a total output from United Kingdom shipyards valued at £200 million I think it will be agreed that the financial and productive aspects of the industry are in very good heart. Yet we no longer lead the world. According to the Manchester Guardian of 27th February, Last year Japan more than doubled her tonnage of the previous year and, for the first time excluding the war years, the output of Britain and Northern Ireland was surpassed by that of another country. Why? Shipbuilders are unanimous in their answer; they are not getting sufficient steel in proper sequence to hold their place in world competition. Who is the fly in the ointment? The Civil Lord of the Admiralty must be held largely responsible. He, if anyone, is the criminal —and for that he must answer tonight. Only once since 1945 have we reached a total output of 1½ million tons of shipping, and that was in 1954. Yet, our shipyards are equipped to produce 1¾million tons ever year. We have the men and the facilities, but we are not getting the deliveries. During the last twelve years we have lost, in export potential, 3 million tons of ships and boats. In view of our balance of trade difficulties the Admiralty can take no pride in that achievement.

How far is the steel industry itself responsible for our decline? The output of the industry has certainly been raised and is now running at 21 million tons yearly. We pay tribute to the industry for that effort. But the demand for steel in shipbuilding still exceeds the supply. One naturally wonders how far a better organisation of the industry would increase the output of steel plate. It is quite clear to me that more capital is required in the industry. It is not getting that capital because private sources are not supplying it. If the Government are anxious to see that more steel is produced, and if more capital is required to produce it, are the Government prepared to put capital into the industry?

If they are forced to do so, are they going to follow the policy of the Labour Party and realise that if we must supply the money we are bound to take control of the industry in the long run? I do not deny that little things are being done to help overcome our immediate difficulties. One way of improving supplies is to license the export of steel, and that, I believe, is being done. That may be making a contribution. I should not imagine that it would be very great, but I hope that the Minister will be able to tell us how far the licensing of steel for export has modified the existing shortage.

What about the method of allocating steel? Is this a sort of free-for-all, with each builder being supplied from the nearest steel maker? What is the exact function of the Civil Lord in this business? He will remember that that question was raised at the time when this debate had its origin. We understand that he looks after the interests of the steel users, that the Minister of Transport safeguards the needs of those who require steel for transport purposes, that the Minister of Supply looks after the building requirements, and that nuclear development and oil interests are in the hands of a noble Lord in another place. I wonder whether this is the shape of things to come.

Is the noble Lord, in effect, to be cast in the rôle of controller? Obviously, atomic needs will have first claim on steel, because the Government clearly intend to press ahead with this programme and we have to be sure that they do not do so at the expense of other essential requirements and so leave the Departments concerned to squabble among themselves for the steel that remains. What is the Civil Lord's power and function in allocating steel to shipbuilding? Can he do anything about the organisation of supplies? Can he make sure that the steel not only comes in sufficient quantity to the industry, but at the time when it is needed? Will our steel position enable us to face up to the production of the 65,000 ton oil tankers and does not the Minister regard it as a scandal that no shipyard in Scotland is large enough to build these vessels?

The Minister was in Glasgow at the weekend. He was going over the shipyards of the Clyde and, according to the Glasgow Herald yesterday, he was impressed by the tremendous amount of work being done to improve facilities for greater production of shipbuilding. Sir James McNeill, the President of the Shipbuilding Conference, tells us that there are six shipyards in the United Kingdom which can produce the 65,000-ton tanker. There is not one in the hon. Gentleman's own country, according to the reply that he gave me yesterday, yet he says that he is impressed by the tremendous amount of work being done to improve facilities in Scotland.

This is very important because the Financial Times of yesterday told us that there is little difference in cost per ton of oil between a 38,000-ton tanker going through the Suez Canal and a 65,000-ton tanker going round the Cape. Obviously, the 65,000-ton tankers will be a very important product of our shipyards in the near future. If the Clyde is to produce them, shall we have a dry dock big enough to service them?

I understand that the Iron and Steel Board is pressing the steel industry to increase plate production, and that discussions have been held with the Iron and Steel Federation and the principal makers. What definite proposals are before the Board? Can the Minister say anything about that? I hope he realises the tremendous importance of this debate, despite what may happen during the next few days. We hope that the worst will not come, but whether it comes or not the steel position is vital to this country, and I hope that the Civil Lord will tell us that he has the power to ensure that the shipbuilding industry gets steel in sufficient quantities when it needs it and that he is the man who will see that that is one.

10.12 p.m.

Mr. Paul Williams (Sunderland, South)

Like the hon. Member for Govan (Mr. Rankin), I profoundly regret the background against which we are bound to think and talk about this subject this evening. We are at the point where bitternesses may be re-aroused. No one, whatever his feelings, and in whatever part of the House he sits, can help regretting the situation which is building up.

Unlike the hon. Member for Govan, I will speak not as a Scottish Nationalist——

Mr. Rankin

Oh.

Mr. Williams

—Scottish Nationalist in tone—but merely as one who, with the hon. Member for Sunderland, North (Mr. Willey), represents the largest shipbuilding town in the world.

Mr. Rankin

Next to Glasgow.

Mr. Williams

To no one do we bow on that claim. Within our borough boundary we build a greater tonnage than is built on any other river throughout the globe. That is no mean boast, and it is right that it should be put on record on my behalf and on behalf of the hon. Member for Sunderland, North.

I wish to put four points to my hon. Friend. First, the shipbuilding industry appears to be suffering from—I do not want to be too harsh in this—either years of neglect or years of lack of result. Throughout the years since the war there has been building up a situation in which shortage of steel or the wrong type of delivery has inevitably jeopardised the flow of production.

Having said that, I am not sure where the blame for it lies, for within the ambit of the Admiralty so little power rests in this matter. Responsibility to this House may lie in the Admiralty, but how much direct control has the Admiralty had or how much should it have had? Following that theme, I welcome the transfer of responsibility for iron and steel matters generally into the purview of the Minister of Power; but I would ask my hon. Friend what this means in terms of direct responsibility for the flow of steel to the shipvards. Does it mean that the Shipbuilding Advisory Committee, an invaluable body in this sense, will continue to advise the Admiralty, or will its advice be placed at the disposal of the Ministry of Power, or both Departments?

It seems to me that the moment when the responsibility for iron and steel matters is being transferred to the Ministry of Power may be the moment at which we can look again at this Ministerial responsibility for the delivery of steel to the shipyards. We all know—especially those of us who, like my hon. Friend the Member for Tynemouth (Dame Irene Ward), come from the northeast—that the north-east suffered rather severely last year as a whole from the failure of steel supplies. Indeed, in many yards production could have been about 20 per cent. higher. Again, we must see this against the background of what is happening, and I am talking not of industrial matters but of the reconstruction of so many yards, on which many of the profits to which the hon. Gentleman referred are consumed——

Mr. Rankin

I said net profits.

Mr. Williams

The hon. Member also mentioned gross profits.

Many of the profits of these firms are used to help to realign the slips so that we can think and talk in terms of the 80,000-ton tanker where before we thought and spoke in terms of the 8,000, the 9,000 and the 10,000 ton tanker. Where yards are realigning and re-equipping themselves, and where amalgamations and developments are going through, it is not enough that the old flow of steel should be maintained. If these large capital investment programmes are to be brought to fruition and made profitable both to the companies and those working in them, there must be an increased flow of steel.

The question behind this is not, if I may say so with respect to the hon. Gentleman who has raised it, one of fair shares. The real question is one of—hideous word though it is—maximising the output of the steel industry. That is the basic problem which we should be investigating.

I hope that the hon. Member for Govan will forgive me if I make what may to him sound like a partisan point. He referred to the absence of private capital. I am not at all sure that he is completely right on that, but I am quite sure that the shadow of the political threat hanging over the steel industry may well affect the thoughts and convictions of those who wish to invest. I do not believe that this is something which can be shrugged off. This threat of renationalisation is, in fact, a reality—much though I think it will not come to pass. Nevertheless, the threat is there, and may do much to reduce the willingness of the investor to put money into the industry.

One final question I should like to ask my hon. Friend. Is he satisfied that the present prices structure—the prices at which steel is sold—is the way in which we shall get the best flow, or is it that, under the present prices structure, the steel is going into some industries less worthy than shipbuilding?

10.17 p.m.

Mr. Frederick Willey (Sunderland, North)

I wonder if before the Civil Lord replies I could ask a few questions? I appreciate, of course, that he has only a short time in which to reply. I join my hon. Friend in expressing anxiety about the future of this great industry and, with him, I hope that dislocation will be avoided. It would be a great tragedy to the industry in its present difficulties. The industry does, indeed, face immense difficulties, the main one being intense world competition.

We all appreciate the enormous difficulties that exist in the supply of plate. We have inadequate capacity, and there has been an unpredictable demand for it. The first question I wish to put to the Civil Lord is what progress has been made in increasing our capacity for producing plate? He will remember that assurances have been given about this. Secondly—and I think that the hon. Member for Sunderland, South (Mr. P. Williams) would accept this—our experience over the last few years indicates that there seems to be a case for a permanent allocation. Considerable pressure from various sources—atomic energy, railways and shipbuilding—will be made. The shipbuilding industry should know how it is placed, and I should like the Civil Lord to deal with this vexed question of allocations. Thirdly—I raised this at Question Time— will he tell me how successful the licensing system has been in saving more steel for the shipbuilding industry?

Finally, will the hon. Gentleman give us an up-to-date report on the discussions which have been held with the Board of Trade, and will he say whether over the next few years the industry expects greater and assured supplies to overcome this persistent difficulty of supplies out of sequence? This is a fabricating and assembling industry and, if costs are to be competitive, it is essential that the steel is not only supplied, but is supplied in the sequence in which the shipbuilders require it.

10.21 p.m.

The Civil Lord to the Admiralty (Mr. T. G. D. Galbraith)

I am grateful to the hon. Member for Govan (Mr. Rankin) for initiating this important discussion on the supply of steel to the shipbuilding and ship-repairing industries. Quite apart from the Departmental interest which, as Civil Lord, I have in this matter, I share with the hon. Gentleman a personal interest because our two constituencies face each other across the Clyde and in each there are considerable shipbuilding and ship-repairing activities.

The problem that I am discussing tonight is not a new one. I sympathise with a lot of what the hon. Gentleman has said and I understand the reasons—I do not believe they were couched in a Scottish Nationalist manner—which made him raise it on the Adjournment tonight. As my hon. Friend the Member for Sunderland, South (Mr. P. Williams) pointed out, the problem is not confined only to the Clyde. The House has been concerned for many months with the question of better supplies of steel, and in view of the interest which has been displayed in so many quarters, I am glad to have the opportunity tonight of putting the matter in a clearer perspective.

In the latter part of 1954 and the beginning of 1955, some ground was lost in the supply of steel. Since then, however, persistent efforts have been made both by the Admiralty and by the industry to improve supplies, and these efforts have met with some success. Deliveries in 1956 were 20 per cent. higher than they were in the trough between the end of 1954 and the beginning of 1955, and were 14 per cent. up on 1955 as a whole. In fact, last year 738,000 tons of plate and heavy sections were delivered to the industry, and that is more than has been delivered in any year since the present system of recording began in 1948. I think I can fairly claim that things are better than they were.

Mr. Rankin

Shall we be able to keep it up?

Mr. Galbraith

I will come to that in a minute. An improvement has taken place, but I would not say that the supply position is even yet entirely satisfactory.

One of the main difficulties to which the hon. Gentleman referred was the difficulty about the incorrect sequence of deliveries. The hon. Member for Sunderland, North (Mr. Willey) also referred to this. This difficulty is closely connected with the general problem of adequate supplies, and as the increased supplies reach the yards, as they have been doing particularly towards the end of last year, this difficulty will gradually decrease; and the output of ships this year ought to go up.

However, in order to press on towards its maximum output, the industry could absorb this year an additional 75,000 to 100,000 tons of steel. In view of the figures of increased supplies which I have already given to the House, I have confidence that this need is going to be met, but it would be unrealistic and unfair of me to suggest that this is going to be the end of all the difficulties. The difficulties in the supply of steel are going to continue until the productive capacity of the steel mills catches up with the growing demand for plate and sections, and it is a demand which affects not only the shipping industry but many other industries which use the same kind of steel.

I have been asked some questions about what I as Civil Lord to the Admiralty can do. The hon. Gentleman imagined that there was some kind of licensing or allocation system in existence. I am sorry that I have got to disappoint him. Nothing like that exists at all. Supplies of steel are allocated to customers by the producers in accordance with the normal commercial procedure. So far as the Admiralty, the sponsoring Department, is concerned, what happens is that the shipbuilding and ship-repairing industries bring to the notice of the Admiralty the overall position of their industries, and the stage reached in the negotiations with the steel industry with the aim of meeting their requirements. Then, when the Admiralty has that information, with the broad view which it already possesses of the forward requirement for ships, the Admiralty is able to represent Departmentally the case for further supplies of steel to the shipyards.

This method of dealing with the matter may not appeal to the hon. Gentleman, who I know hankers after controls and firm allocations, but the success of the method is to be seen in the fact of the increased supplies which came to the shipbuilding industry last year.

The hon. Gentleman asked me something about super-tankers. He will recall that my right hon. Friend the Prime Minister told the House recently that this question of super-tankers was under study. There is a committee sitting on it at the moment, and the outcome of that committee's deliberations has not been published, but the forward plans of the steel industry will obviously have to take account of these requirements. I think that, although we do not know what they are, they will be fairly substantial. In the meantime, I think the hon. Gentleman will be interested to know that, with the supply of steel at the present rate—with no increase at all—the shipyards in this country are expecting to complete a million tons of tankers in each of the next three years.

Of course, I admit that, quite apart from the question of the future of supertankers, the yards are not getting at present everything they need or would like to have in regard to steel supplies. There is nothing unusual in that. Nobody in this world ever gets everything he wants, and the shipbuilding industry is not alone in wanting plate and heavy sections. I admit, as the hon. Gentleman pointed out, that the shipping industry is an exporting industry, with valuable exports of about £90 million a year, and I know that its productive capacity is not fully used, but the same conditions apply, I am informed, to other industries. For example, there are constructional engineers, makers of rolling stock, and electrical constructors. All of these contribute to the export trade and could produce more if they had greater supplies of steel.

On top of these competing demands, there is the new requirement of the atomic energy programme, to which the hon. Gentleman also referred and which I am sure he would not wish to hamper in any way. In fact, the situation is, as indeed the hon. Gentleman himself realised, that there is not enough steel to satisfy all the demands at the moment. We are suffering, if that is the right word —it is not the right word really—we are affected by the success of the Government's policy for the expansion of industry. There is a surge in our economy, demand is buoyant and supply naturally takes time to catch up. That is the background, and it is a background of competing demand against which the increased supplies last year to the shipbuilding industry must be judged.

If the hon. Gentleman will look at the problem in perspective against the demands of industry as a whole, I think he will realise that the amount of steel which went last year to the shipbuilding industry showed a not unsatisfactory increase in the supply. I do not want the hon. Gentleman to think that the Admiralty, as the sponsoring Depart- ment, is in the least complacent. We recognise that the shipbuilding and ship-repairing industries are great industries for the future of this country, that they have an important rôle to play in our export trade and that full use is not being made at the moment of their potential capacity.

What we want to do in these circumstances is to get even more steel into the yards. So far as the capacity of the steel-making industry is concerned, that is what we have already done, and I have given the figures for last year. We will continue to try to do the same in the future to the best of our ability.

Question put and agreed to.

Adjourned accordingly at Twenty-nine Minutes past Ten o'clock.