HC Deb 06 May 1958 vol 587 cc1181-90

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

11.9 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

The matter I wish to put before the House and the Parliamentary Secre- tary to the Ministry of Supply tonight is a very important one for the Burgh of Clydebank. A great deal of discontent has been created in the Burgh by what has occurred in the Royal Ordnance Factory at Dalmuir, and also by what has been done in legislation passed through the House. When the Parliamentary Secretary was at the factory he made it quite plain—I agreed with him at the time, and still do—that for this factory to be an economic proposition it should employ between 3,000 and 5,000 workpeople. It is a huge plant and can carry these people. Economically, a factory of that size, costing, I believe, £10 million to £11 million, requires adequate capital equipment to employ 3,000 to 5,000 workers.

By the action of the Ministry of Supply, the factory is in process of being transferred to a company which has stated in Clydebank, to the people employed in the factory, that it is likely to employ about 900 people. Like the Parliamentary Secretary, I am a production engineer, and I know full well that if the factory is handed over on ordinary commercial, economic terms, it will be impossible for that company to make it a profitable proposition if it is able only to put 900 people on the floor of the factory. Furthermore, very few of the established skilled personnel of the factory will be needed among the 900. Perhaps no more than 40 or 50 of the 400 or 500 top-grade skilled, established men will be wanted. The remainder will be declared redundant.

There is considerable discontent in Clydebank, because in the factory the men have been informed that on behalf of the Ministry the officials are quite prepared to declare a man redundant and give him his gratuity provided he takes employment, if they want him, with Babcock and Wilcox. If, however, he uses his initiative and gets employment with John Brown, Tullis's, Singer, or Albion Motors, for example, as a skilled man, he will be leaving voluntarily and will get no gratuity. That is my information. I hope that the Parliamentary Secretary can repudiate it.

This factory, in an area where unemployment is growing, is being transferred to a company which is closing a tube works factory on the Hillingdon trading estate. In its Renfrew factory, the company's personnel has become 150 fewer over the last year and no new labour is being recruited and another factory is to work four days a week.

In the Royal Ordnance Factory itself, 16 machine tools, which would employ day and night shifts—perhaps 50 men—and labourers and others to feed the machines and carry stock to the machines and finished products from the machines, are being uprooted and shifted to Woolwich. That is my information. Our local newspapers saw here what appeared to be a complete absurdity, that the Ministry of Supply was uprooting capital equipment from Scotland and transferring it to England, denying employment to men who could operate the machinery in Scotland, while another Department was introducing a Bill, which, last week, was given a Second Reading, to make financial grants and loans to industrialists to take capital equipment to Scotland to utilise the unemployed labour. This seems to us to be absolutely crazy. The Government's right hand does not appear to know what their left hand is doing.

It may be that journalists in Scotland are quick to seize what is happening and that our Press is outspoken. Scotsmen are very outspoken, although I am not a Scotsman, as the hon. Gentleman knows. This position has been pinpointed and the people of Clydebank think that the Government are crazy. They uproot these machine tools, send them South, close a factory to save the taxpayers' money and the next thing they do is to spend the taxpayers' money to get private industrialists to take equipment up to Scotland again.

There must be an answer to such a stupid situation. The Clyde is an area where unemployment is increasing. Furthermore, Babcock and Wilcox has already stated that its orders have dwindled. I am aware that here is a process of transfer going on by phasing. I agree that there is no other way in which one can transfer one factory to another company, except by phasing. I have been in this process of phasing myself. I remember being the first toolmaker to go from the tool room of one big factory to another big factory, among 1,000 employees in the company, when we were taking over. I was there for fourteen months before we had the final take-over, so I appreciate the phasing process.

But it has been said that there has been no final settlement in the terms of transfer of this factory. Whether that is true or not I do not know, but if it is, this company is in process of phasing prior to final take-over next January. It is phasing at a rapid pace, bringing its own labour from Renfrew into the factory; it is uprooting Ministry of Supply equipment, taking over different sections of the factory, and doing this before there is complete and final agreement on every detail of the terms of transfer.

In all my experience in industry I have never known anyone agree to a first step being taken into the property until every detail had been signed and settled, because once one starts phasing into a plant, and getting in, one is in a very strong position. I would be surprised if it is a fact that everything has been legally tied up on every detail before this phasing started—and I shall expect an answer to that question from the hon. Gentleman. I know that the Ministry has agreed to put into the factory, right up to the period of January, as much civil work as it can.

I put it to the hon. Gentleman: if it is a fact that Babcock and Wilcox only want a part of this factory, and if it is to work only 900 men, there is no reason why the Ministry of Supply should not retain those elements of this factory with these machine tools, which could be used for the manufacture of atomic energy equipment pressure vessels for the Atomic Energy Authority, or the three big companies that are to work on atomic energy.

Why cannot these men be used in Scotland, instead of transferring them to England? Why cannot they be used for work on British Railways, in the mines, electricity, or the steel industry? I am sure that plenty of work could be provided for them through the Ministry, rather than that they should be uprooted from their homes in Clydebank and have to move elsewhere into England. They have been told time and again that not one of them can be placed under the Ministry of Supply in Scotland. They all have to come down South, at the same time as the Government are passing through the House legislation to encourage private industry to move into these areas where there is persistent unemployment.

The movement from Scotland to south of the Border is getting absurd. More than 12,000 skilled engineers left Scotland to come down here last year, with a population of 10 million to 12 million in only a few square miles. With this happening, the unemployment danger becomes greater, because of the loss of skilled men. Yet here is a Department of State taking an action which takes more skilled men from Scotland, and which enhances the possibility of a rise in the unemployment rate among semiskilled and unskilled men.

With the Government passing legislation and giving grants and loans to private industry to stimulate employment in Scotland, a Department of State like the Ministry of Supply should do everything in its power to take up and employ in its own establishments highly skilled men whose families will be uprooted if the Government's proposals ar implemented. I hope that the hon. Gentleman will look into the proposed transfer of this factory again and consider whether it is possible to limit the transfer, so that part of the factory can be retained by the Ministry of Supply to provide much needed hardware for the Services. It is a Government establishment and the Ministry of Supply is in a position to give it orders; and even with our reduced defence programme there must be plenty of work which could be provided for these men to prevent their machinery having to be taken to Woolwich and then asking them to follow it. That seems to me socially and economically stupid.

I hope that the Parliamentary Secretary will answer some of the propositions which I have put to him, which are based on the information which has been given to me.

11.21 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. W. J. Taylor)

The hon. Member for Dunbartonshire, East (Mr. Bence), as is his custom, has made the best possible case he can for his constituents, but it is not a very strong one, principally because the information upon which he has based his arguments is almost entirely contrary to the real facts.

My first official visit after I was appointed to my present post at the Ministry of Supply was to the Royal Ordnance Factory, at Dalmuir. One might aptly describe it as a "baptism of fire". Those who know the Clyde- side will appreciate that a person who visits it will find that his objective is closely examined by the people on the spot. I received a thorough baptism on the full day which I spent at this factory.

I met the Chairman and members of the General Council of the Scottish T.U.C. and also the factory shop stewards and representatives of the non-industrial staff at this factory. I therefore made an early acquaintance with the problems and difficulties which the hon. Gentleman has been discussing, and since then I have kept in very close touch with the situation as it has developed at Dalmuir.

The decision to transfer this factory to Babcock and Wilcox was announced by my right hon. Friend in the House on 15th July. This decision, and the other changes affecting Royal Ordnance Factories which were announced at that time, was the outcome of the new pattern of defence policy. With the big reductions in the size of the Armed Forces it was clear that the requirements of the Services for conventional armaments, for which this factory is equipped, would be very much smaller than they have been since the time of the Korean rearmament programme.

Nothing has happened since last summer to alter the situation in Dalmuir. Indeed, taking the gun carriage and tank group of factories as a whole, the position now is worse than it was then regarding future orders for the Services. As the plans of the Service Departments have been worked out in greater detail it has become clear that even after making the reductions announced last year the capacity of the remaining ordnance factories will still be considerably greater than we shall require to meet future defence needs, so far as we can foresee them. Hence the further announcement made by my right hon. Friend recently, of the closure of Cardiff, the accelerated closure of Wigan, and reductions at Woolwich and Nottingham.

The great concentration of defence work is, I believe, generally recognised and accepted, and I do not think that anyone would suggest that we should go on turning out arms which are no longer required. The issue at Dalrnuir, therefore, resolved itself into the question: what should be done with the factory? The hon. Gentleman has made considerable play with the suggestion that we should turn over the factory to the production of civil goods under our own management. My right hon. Friend made it quite clear that our policy on civil work was on these lines. He said: … civil work will be accepted when it helps to keep in being management and labour needed for defence, or when the facilities available supplement a shortage of capacity in industry."—[OFFICIAL REPORT. 15th July, 1957; Vol. 573, c. 760.] It is not our intention to set up substantial new factories for undertaking civil work, nor to keep whole factories in operation on this basis.

There is no doubt that the bodies most able to exploit civil markets are those already in the business. We already obtain a small amount of work from some of them to supplement their own resources, but not on such a scale as to keep whole factories in action. If, on the other hand, we were to try to enter the field on this scale ourselves, without relying on firms already in established lines of business, we should have to build up a large sales organisation, obtain the use of designs, and try to overtake the market experience that others have spent years in acquiring. To do this would be to stake the future of redundant factories on the chance of success of a singularly difficult enterprise, the outcome of which, to say the least, would be very doubtful.

At best, it would be a long time before we should be in a position to restore the activity of the factory. It would provide no solution for the immediate difficulties of our employees, and have nothing to do with the purpose for which the Royal Ordnance Factories are maintained. I hope, therefore, that I can make it clear to the hon. Gentleman that it is quite impracticable for the Government to retain the Dalmuir factory on this basis; and we have no intention of doing so. The decision to dispose of it must stand, because it is the only sensible and practicable course.

The hon. Member referred to the facts surrounding the transfer of the factory to Babcock and Wilcox, and to judge by some of his remarks I doubt whether he fully appreciates how fortunate it is from the point of view of the workpeople that we were able to arrange for the transfer of this factory to such a firm. It is a very large factory, capable of employing well over its present labour force, as the hon. Gentleman said, and only a very substantial and expanding industrial concern like Babcock and Wilcox would be in a position to take it over bodily and to offer new employment to a large number of the workpeople. I shall have something more to say about numbers in a moment. I only wish that I could be confident of finding an equally satisfactory solution for some of our other factories which are available for disposal in various parts of the country at this time.

I want to say a word about the arrangements that we have made for the takeover. If we can take up the point which the hon. Member raised in passing, about the terms of the take-over, in a very large transaction like this the first and most important thing that the parties have to strive for is an agreement in principle. If that agreement is arrived at, and the financial terms of the lease are defined clearly and accepted by both parties, it is not necessary to work out every little detail in the lease or the agreement before we start to move in or make arrangements for the take-over. I can assure the hon. Gentleman that we are not so remiss in our duty to the taxpayers as to allow any loose arrangements to obtain in a situation like this.

We have been making great efforts to ensure that the transfer takes place as smoothly as possible. The labour force is at present engaged mainly on the production of Conqueror tanks. This work will be completed by the end of this year. As the tanks come off the line, we have no military orders to replace them. Employment can, therefore, be maintained only by gradually introducing the new work that the factory will eventually be employed on. Our aim, and that of the Babcock and Wilcox management, is to introduce new work so as to dovetail with the rundown of the Service orders. Surely this is the only reasonable and practicable policy.

I do not know whether the hon. Gentleman has seen the poster which the firm of Babcock and Wilcox has put up in its Renfrew factory, its main establishment. There are some very important statements in it. It describes how the firm hopes that the changeover can be effected gradually and smoothly, and goes on: … work which, in the main, is outwith our Renfrew capacity, has been sub-contracted to Dalmuir. It goes on: In addition, with the agreement of the Ministry of Supply, we have commenced manufacture there, under our own supervision, of certain work of which Dalmuir has no previous experience. Initially, this consists of components for the Hinckley Point Atomic Power Station. It also says: The object in acquiring the Dalmuir Works is to increase the output of the company by employing more men. This will be achieved by selecting products not now being manufactured at Renfrew, together with a much greater output of cranes, materials handling equipment, and special vessels for the oil and chemical industries. The statement, which is dated 1st May, 1958, concludes: In general, the work undertaken at Dalmuir is such that it provides additional work for men employed in most departments at Renfrew. It will, of course, stimulate employment at Dalmuir as well.

Although Babcock and Wilcox's lease of the factory does not become operative until 1st January next year, we shall be managing the factory jointly with it until that date. This will ensure continuity of management and should help to make the transition as easy as possible. Babcock and Wilcox has set up an employment office at the factory to assist the workpeople in considering offers of employment, and as it introduces its own work in the way I have just described, so opportunities arise for our employees to transfer to Babcock and Wilcox.

There is no truth whatever in the suggestion that the hon. Gentleman made that a gratuity is dependent upon acceptance of employment with Babcock and Wilcox. The Financial Secretary to the Treasury announced last week a new code relating to gratuity payments to established employees which is a great improvement on what prevailed before the statement was made. No conditions like those suggested by the hon. Gentleman are attached to it. If an established employee finds that he cannot move for reasons of personal domestic inconvenience, or whatever it may be, he can take another job and have the new and improved gratuity at the same time. He is not in the position, as the hon. Gentleman said, of having to make a great sacrifice.

If Babcock and Wilcox did not begin to take over until after defence work is completed at the end of the year, there would be a complete shut-down of the factory of from six to eight weeks. At the best, therefore, those people who wished to transfer would have to wait that period before work could be found for them, but many would have to leave long before the end of the year because, as the armament work runs down, we have no other work for the factory. Workpeople would, therefore, be discharged by degrees as the military order is completed.

I hope that there will be no misunderstanding about this. This has had to happen at other factories. It is by far the simplest arrangement from the purely managerial point of view and it is by no means an easy task to attempt to dovetail the introduction of new work into the decline of the old.

Under the new arrangements, to which I have referred, concerning gratuity payment, an established man who wishes to leave the Government service and find employment in the same area may, like his unestablished colleagues, now claim a termination payment calculated according to his length of service. The established man is now much more happily placed and we hope that the new arrangements will make for a smoother takeover of labour by Babcock & Wilcox.

At no other factory have we so far been able to make arrangements for disposal so far in advance of the ending of military production and so calculated to ease the redeployment problems of the redundant workpeople. This has been our main object throughout. We are making great efforts to ensure that the transition takes place smoothly and I earnestly appeal for co-operation with us, from the hon. Member and all those whom he represents, to ensure that it is brought to a successful conclusion

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to Twelve o'clock.