HC Deb 01 June 1960 vol 624 cc1438-42
34. Dame Irene Ward

asked the Minister of Transport if he will now make a statement on the Chandos Report.

Mr. Marples

As I said on 25th May in answer to my hon. Friend the Member for Sunderland, South (Mr. P. Williams), the Report of the Chandos Committee is confidential. But the Committee has prepared a summary which, with permission, I will circulate in the OFFICIAL REPORT. I must make it clear that this in no way implies that the Government accept the proposals of the Committee, which are, however, being urgently considered.

Dame Irene Ward

As I cannot put a supplementary question on what my right hon. Friend is placing in HANSARD, may I ask my right hon. Friend whether, when we know what has been recommended and when the Government have made a decision, he will arrange matters through the usual channels so that views can be expressed by the House of Commons as to what it thinks of the recommendations? May we have an undertaking that the Government will not commit themselves before the House of Commons has had an opportunity of expressing its views?

Mr. Marples

My experiences at the Dispatch Box are that when a Report is published the views of the House are made abundantly clear.

Mr. Benn

Does not the right hon. Gentleman recognise that, if the House is to have a sensible debate on this matter, it must have as much information made available to it as is available to the Government? Will not he reconsider the possibility of publishing the Report as it stands?

Mr. Marples

No, that would be impossible because it would mean breaking promises. A firm undertaking was given by my predecessor to Lord Chandos, namely, that the Report would be treated as confidential and would not be published. In turn, Lord Chandos gave a similar assurance to his colleagues on the Committee and to people who gave evidence before the Committee, and they gave away confidential information. In these circumstances the main Report of the Committee must remain confidential, but I am grateful to Lord Chandos for this summary which will give the conclusions to the world as a whole.

Mr. Shinwell

As the Chandos Report may make a considerable impact on the future of the shipping industry of the United Kingdom, surely before the Government come to a decision on whether the Cunard Steamship Co. Ltd. should receive a subsidy or a loan at a low rate of interest the House should have an opportunity of discussing it in general.

Mr. Marples

That question should be put to my right hon. Friend the Leader of the House. I am certain that, if asked on Thursday after Questions, he will undertake to provide an opportunity for that.

Mr. Chetwynd

Can the Minister say what is the main conclusion of the Report? Are there to be one Queen, two Queens or what?

Mr. Marples

As the summary will be published in HANSARD tomorrow, perhaps the hon. Gentleman will read it.

Mr. Popplewell

Will the Minister take note of what his hon. Friend the Member of Tynemouth (Dame Irene Ward) said? Before the Government commit themselves, will the right hon. Gentleman ensure that there is a debate in the House on this matter? We in the North-East are very much perturbed about it. We are afraid that the Chandos Committee may recommend the closure of certain small shipyards and that there should be concentration on the larger ones. We have memories of Shipbuilding Securities of days gone by. We do not want that to happen again. We should have a debate in the House on the principle involved.

Mr. Marples

The Chandos Committee's terms of reference had no relationships to closing down shipyards.

Dame Irene Ward

As my right hon. Friend's reply on the question of a debate is not satisfactory, may I ask him whether he will, as the responsible Minister, point out to the Leader of the House that, in the interests of the future of shipbuilding and shipping in this country, which are absolutely vital to our survival, there should be a debate before a final decision is taken? It is up to my right hon. Friend. He should not push it on to the House of Commons to make representations.

Mr. Marples

I should be most agreeable to a debate. If time can be found for one in the usual way I shall he delighted.

Following is the summary:

SUMMARY OF THE REPORT OF THE COMMITTEE PRESIDED OVER BY LORD CHANDOS]

  1. 1. We were asked to consider how the British express passenger service across the North Atlantic could best be maintained. The Cunard Company have a unique experience and a successful record in this service and we therefore assumed that if possible we should recommend a solution which would command the support of this Company, and its goodwill.
  2. 2. We have tried to forecast the future volume and composition of the trans-Atlantic traffic, and to take proper account of the likely scale and nature of competition both by sea and air. With the permission of the Government, we employed the services of the Economist Intelligence Unit to make a long-term survey of the trends likely to affect travel by sea, and of Research Services Ltd. to obtain an analysis of the reasons why passengers travel by sea today and to assess whether the same motives are likely to impel them in the future. We have consulted shipowners and other interests, as well as Cunard themselves. We have examined several different types and sizes of ships and also various types and patterns of service. In these enquiries we have had the help of the Government agency Y-ARD whose services, and particularly those of Mr. Norton, have proved invaluable.
  3. 3. The Cunard Company are firmly of the view that, in the face of the severe competition they will be likely to meet both from the air and from subsidised ships of other nations, any replacement ship, in order to provide a continuing attraction to passengers, must be of the highest standards and capable of making 1441 the crossing in under five days. This in itself means that it would be of a size and speed which would make it unsuitable for any other service.
  4. 4. After long discussions with our professional advisers and with the Cunard Company, we have come to the conclusion—and the Cunard Company agree—that a ship having the following characteristics would best and most economically replace the "Queen Mary" and maintain the British express passenger service across the North Atlantic:
  5. 5. Our advice is that the cost of such a ship would be between £25 million and £28 million, though Cunard think it will probably be higher. Since Cunard have available only £12 million from their own resources to invest in the project, the Government would have to provide the remainder of the capital cost. We have agreed with the Cunard Company that if the Government should decide to do so, the financial arrangements which would best safeguard the interests of the taxpayer on the one hand and the Company on the other would seem to be as follows:—

Cost

  1. (a) The agreement would be subject to the capital cost not exceeding £30 million.

Ownership

  1. (b) The ship would be owned and operated by the Cunard Company through a separate Company to which the Cunard Company would subscribe £12 million as equity capital. The remainder of the cost, not exceeding £18 million, would be provided by the Government as loan capital. Alternatively the ship could be owned and/or operated by the Cunard Company so long as the Government were left in the same position as regards security and redemption as if the ship were owned by a separate Company.

H.M. Government's Loan Interest

  1. (c) The loan would bear interest at 4½ per cent. per annum from the date on which the ship comes into service.

Redemption

  1. (d) The loan would be redeemed by the operation of a 4½ per cent. sinking fund over twenty-five years.
  2. (e) If the gross yield on the Cunard equity exceeds an average of 7 per cent., the excess would go to accelerate redemption of the Government loan.
  3. (f) Cunard would have the right to redeem the outstanding balance at par at any time on reasonable notice.

Depreciation

  1. (g) Depreciation would be at a rate of one-twenty-fifth of the capital cost per annum.

H.M. Government's Security

  1. (h) On the assumption that the ship is owned by a separate subsidiary Company, the Government would have a charge on all assets and earnings of the Company, including accumulated depreciation funds. The use of depreciation funds would be subject to the approval of the Government. Equivalent arrangements should be made if the ship is not owned by a separate Company.

Construction

  1. (i) The construction of the ship would he put out to open competitive tender with all appropriate shipyards.
  2. (j) The loan would be interest free during the construction period, except that any Government money drawn in the first two years of that period would bear interest at 2½ per cent. for the remainder of the period.

Adjustment of Interest Rate

  1. (k) If, from the beginning of the sixth year of service, the gross yield on Cunard's investment falls below 3 per cent. in any calendar year, then for each one-half per cent. fall the interest on the Government loan would be reduced by one-half per cent. for that calendar year.

6. We have not attempted to make any recommendations about the replacement of the "Queen Elizabeth" or the use of nuclear propulsion because such a recommendation would be premature. If, by the time when replacement of the "Queen Elizabeth" becomes necessary, no major change has occurred in the need for the maintenance of a British express sea service across the North Atlantic and in its prospects as a commercial service, we assume that H.M.G. would be prepared to assist in a manner appropriate in the circumstances. At that time experience will have been gained from the operation of the first ship, further knowledge of the effect of competition from the air will be available, and it will be possible to assess whether nuclear propulsion can be applied to passenger liners.

Chandos (Chairman).

John Hobhouse.

Thomas Robson.

J. N. Wood (Secretary).

May. 1960.