NORTH ATLANTIC SHIPPING BILL

HC Deb 01 May 1961 vol 639 cc914-1037

Order for Second Reading read.

3.47 p.m.

The Minister of Transport (Mr. Ernest Marples)

I beg to move, That the Bill be now read a Second time.

For many years, the Cunard Steamship Co., Ltd., has operated an express weekly passenger service across the Atlantic with the two vessels which are known as the "Queen" ships, the "Queen Mary" and the "Queen Elizabeth". The "Queen Mary" first sailed in 1936, and the end of her life is expected in 1965, in four years. The "Queen Elizabeth" is four years younger and, therefore, ought to last at least a further four years.

The story started two or three years ago, when Cunard told the Government that it could not find enough capital, either from its own resources or by borrowing on the market, to replace the "Queen Mary" by a ship of the same class at current shipbuilding prices. The choice facing the Government was quite clear. Sooner or later, our express passenger service across the Atlantic would cease or Government assistance to build a successor ship to the "Queen Mary" would be necessary.

At this point, it might be convenient to the House to examine the facts and nature of the express passenger North Atlantic service. I wish to distinguish between that express passenger service and the ordinary service across the Atlantic, because the express passenger service takes the cream of the passengers who go across the Atlantic by ship. In most of my speech, I shall be referring to the express service rather than the slower service.

In the first place, it is the most travelled long sea route in the world. Secondly, it is the best known service in the world, and it gives British shipping and shipbuilding a unique chance to prove their worth in maritime activities, be they shipping services or shipbuilding skills.

Thirdly, it is the most heavily subsidised service in the world, and, later, I will give details of the subsidies which various Governments give to their ships. Fourthly, this route earns currency of all sorts—hard currency, dollar currency, and so on—for this country, which assists our balance of payments.

Therefore, the previous Administration made two decisions. First, that this unique British service should not be allowed to die out because Cunard could not itself raise all the capital. The Government decided to assist, provided—and I said provided—there were genuine commercial prospects of a successful service, and provided, also, that reasonable financial arrangements could be made with Cunard. Accordingly, in the 1959 General Election Manifesto, the previous Government announced that, if returned, they would support the continuation of the North Atlantic British express passenger service. That was the first action they took. They pledged themselves, subject to these two provisos.

Secondly, in September, 1959, the Government appointed a Committee under the chairmanship of Viscount Chandos to advise them on all the complicated issues involved. These included many questions, for example, what were the commercial prospects, what was the best size and type of ship, and what should be the extent and form of the Government's assistance. Lord Chandos was the Chairman of that Committee, which took evidence from Cunard, from other ship-owners and from many other interests.

The Committee used the Economist Intelligence Unit to make a long-term survey of the probable trends in sea traffic. It asked Research Services, Limited, to analyse the reasons why passengers travel by sea, and also to assess whether those reasons might continue to prevail in the future. With the help of the Yarrow Admiralty Research Department, known as Y.A.R.D., it examined several different types and sizes of ship and various types and patterns of service. Many technical aspects were given exhaustive study.

I think that it would be appropriate, at this stage, if I said that the Government are very grateful for the thorough way in which this Committee tackled a rather difficult job, with all its complications and complex issues.

Mr. E, Shinwell (Easington)

Why did you not publish the Report?

Mr. Marples

That question was addressed to Mr. Speaker, and not to me, but I can say that the Report was not published because, when he was given the terms of reference, Viscount Chandos was told that the evidence would be confidential, and that the Report would be confidential, too. If Viscount Chandos and his Committee took evidence in confidence, and, if afterwards, they were to break that confidence, that is something which the right hon. Gentleman will surely know is a breach of faith. I am sure that he will be the last person to say that a breach of faith of that sort should be committed, and I am quite certain that I shall carry him with me in that particular respect.

Mr. R. J. Mellish (Bermondsey)

On this very important point about the Chandos Committee, would the right hon. Gentleman tell us why, in the terms of reference of that Committee, it was not allowed to go into other aspects of this problem?

Mr. Marples

The terms of reference were announced and were accepted by the House, and the Committee went to work on these terms of reference. It is rather pointless now to say that the terms of reference should be altered. They were accepted by the House, and it was made quite clear to Lord Chandos, who carried out these terms of reference, that that is what the Committee was asked to do.

Sir Peter Agnew (Worcestershire, South)

My right hon. Friend has said that the terms of reference were accepted by the House. Was there ever a Motion before the House?

Mr. Marples

The Government announced the terms of reference to the House in the time of the previous Administration, and the time to raise objections was then, and not after the Committee had reported. After it has reported is rather too late. Therefore, I say that the Government are grateful for the thorough manner in which the Committee tackled its task.

On 1st June, 1960, a summary of the recommendations was circulated in HANSARD. In brief, the Committee recommended a ship of 75,000 gross tons, with a service speed of 29½ knots, 990 feet overall length, and with a passenger capacity of 2,270. The total cost was not to exceed £30 million, Cunard providing £12 million and the Government the remaining £18 million as a loan bearing 4½ per cent. interest from the date when the ship came into service. There were provisions dealing also with depreciation, the security of the Government loan and its redemption.

Finally, the Committee recommended the construction of the ship by competitive tender. These recommendations were acceptable to Cunard. All this made it clear that the Government could redeem their election pledge and ensure the continuation of the Atlantic service on reasonable terms. The Government accepted the recommendations subject to some financial modifications which I will explain later. In November, 1960, the details of the Government's decision were announced to the House.

In Clause I of the Bill, the Government seek Parliamentary authority to give effect to that decision, and the way in which the Government propose to use that authority is explained in the White Paper, which sets out the memorandum of points of agreement—what I call the heads of agreement—between Cunard and the Government. The final details of the legal formal agreement will be laid before Parliament, and will, of course, be based upon the memorandum in the White Paper.

At this stage, I should like to compare the Chandos Committee recommendations and the Government's proposals. The recommendations about the characteristics of the new ship and the basis of tendering are accepted as they stand, and I will explain them later. The new ship will be owned by a separate company, and this will be Cunard White Star, Limited, an existing wholly-owned subsidiary, but the ship will be maintained and operated by Cunard. That is important. The agreement will provide for the maintenance of British control of both Cunard and Cunard White Star, Limited, and in view of the take-over bids from other countries, it is necessary to have these provisions in our agreement.

There were four modifications to the Chandos Committee's financial recommendations, and I should like to explain them. First, on the form the assistance should take, the Committee recommended that the loan should bear interest at 4½ per cent. per annum. The subsidy element is obviously the difference between 4½ per cent. and the rate of interest normally charged by the Public Works Loan Board. The Government agreed that the amount of assistance should be calculated in this way, but we considered that the expedient of giving an artificially low rate of interest was, in effect, concealing the actual subsidy. We did not wish to conceal the subsidy, and, therefore, we prefer the usual interest at the rate normally charged by the Public Works Loan Board. The difference between that rate and the 4½ per cent. recommended would be given to Cunard by way of an outright grant. In this way, the size of the assistance is not concealed. It is there for all to see. As recommended by the Committee, Cunard would get the amount of assistance recommended, but in another form. It is not concealed. Everybody can see it, and I am sure that it is better, if a subsidy is given, that we should all know what the sum is, rather than that it should be at an artificially low rate of interest. In practice, this is how it would work.

Let us assume that the total cost is £30 million, and that the Government loan is up to £18 million. The £18 million loaned by the Government will not bear interest at 4½ per cent., as suggested by the Chandos Committee. It would be split into two parts. First, a loan of £14¾ millions at 6¼ per cent., which is the rate now ruling, and, secondly, an outright grant of £3¼ million, which would enable Cunard to have its subsidy.

The second alteration was on how to meet the cost of the ship, which, as the House will recall, was estimated to be not more than £30 million. The recommendation of the Committee was that Cunard would pay a fixed sum of £12 million and that the Government would raise the rest of the cost up to a maximum of £18 million. The new arrangement is that the Government and Cunard will contribute in the proportion of three to two up to a maximum of £30 million. If it costs more than £30 million, Cunard will pay the excess, so that under the new arrangement it is in the interests of the Cunard Company to keep down the cost of the ship. That did not apply in the arrangement suggested by the Committee.

The third alteration was concerning the date when payment of the interest on the loan was to start. The recommendation of the Committee was, broadly, that it should start from the date when the ship entered service. The new arrangement is that interest will be charged from the date when the cash is actually advanced, and I think that this is a much more businesslike arrangement than the one the Committee recommended. But as the ship cannot earn anything until it is in service, the interest accruing during construction will be added to the loan and will be repayable on the same terms.

The fourth alteration was this. The Committee recommended that if profits on Cunard's investment were less than 3 per cent. per annum there should be a reduction of the interest charges received by the Government. This has been abandoned. Now there will be no reduction in the Government's rate of interest, even if the Cunard's investment earns less than 3 per cent. The Committee also recommended that if profits were greater than 7 per cent. repayments of capital should be accelerated. This rate of 7 per cent. has been raised to 7½ per cent., partly as a quid pro quo for the previous concession. Apart from these differences, depreciation and redemption of and security for the Government loan are as recommended.

Those are what I call the facts of the story. I should like to examine in greater detail some aspects of that story. First, I wish to deal with the size and type of ship and the type of service which should be provided. It has been suggested in many quarters that the new ship should be smaller. Critics have put forward differing sizes, ranging from 30,000 tons to 70,000 tons. On this question we must bear in mind what is our object. It is to provide a weekly service with two ships or a fortnightly service with one ship. This is the standard of the express passenger service provided by the "United States" and the "France" as well as by the existing "Queens". To provide a weekly service means that a crossing must take five days or less because of the time taken in the turn round. A five day crossing of the Atlantic requires a high service speed. This can be attained only by a ship of about 1,000 feet in length if we want reasonable passenger comfort especially in the winter.

A technical formula which can be understood by laymen was set out in the leading article in the Shipbuilding and Shipping Record of 13th April. It is that the square root of the length in feet should be not less than the speed in knots. That is easy to work out. A speed of 30 knots demands a minimum length of 900 feet. The "United States" is 917 feet in length and has a normal service speed of 30 knots, although she can do more than that. The "France" will be 1,035 feet in length and will also have a service speed of about 30 knots. The new ship which we propose will be 990 feet in length, with a speed of 29½ knots.

The Chandos Committee examined every possibility concerning the size of ship with the aid of the Yarrow Admiralty Research Department. For example, it examined the possibility of a ship of 52,000 tons, which would be the largest and, therefore, the most economic ship propelled by twin screws. This was unsatisfactory in several ways. The reduction in capital and operating costs would not be sufficient to offset the decrease in accommodation and earning capacity. Moreover, it could not be relied upon to keep a decent service in the winter. A smaller ship with the same engine power would be even less economic. A smaller ship with a reduced engine power and, therefore, reduced cruising speed could not provide an express passenger service of the same standard as that now provided either by Cunard or by its main competitors.

These considerations also rule out a dual-purpose ship operating, shall we say, on winter cruises. Many people suggested that we should have a ship of a certain size which, in winter, could take people on "summer cruises" to the West Indies. But if it was to be used for summer cruises to the West Indies and berth at certain places it would not be able to fulfil the requirements of a ship crossing the North Atlantic. Any ship which can operate on the Atlantic express passenger service is bound to be unsuitable for other trades.

Another suggestion is that nuclear propulsion should be used. I wish that this were possible, but it is not. Nuclear propulsion is not yet sufficiently developed and we cannot delay the building of the new ship because the life of the present ship, the "Queen Mary", will be finished in 1965 and she will become extremely expensive to operate after that date. The main initiative and responsibility rests with Cunard. Its long experience of the Atlantic makes it the best judge of what is wanted, and the technical assistance provided by the Admiralty Research Department will help in making sure that a really fine ship is built.

I think that it would be right if I made a comparison between the subsidies which are paid by various nations on this specialised express service. We must remember that if we ask a private enterprise firm here to compete with other ships which are heavily subsidised and say to it, "We will give you no subsidy", it is obvious that it will not live in the competitive race. We must bear that in mind. There was a letter in The Times today which asked why a firm should have a subsidy. We must compare like with like. If it is to meet competition which is subsidised, it is folly to think that it can do so without a subsidy. [Interruption.] If the right hon. Member for Easington (Mr. Shinwell) will contain himself for a moment, which he always does so easily in the House, I will try to analyse the subsidies which are paid.

Subsidies can be of two sorts: first, on the capital costs; and, secondly, on the running costs. First, I wish to deal with subsidies on the capital costs. America provides a subsidy of 58 per cent. of the capital costs of her ships. France is providing 20 per cent. of the capital costs. The subsidy which we propose under the Bill, £3¼ million, is equal to a subsidy of 11 per cent. of the capital costs. By no stretch of the imagination can it be said that we are subsidising Cunard excessively compared with other countries abroad.

Mr. John Diamond (Gloucester)

Will the right hon. Gentleman clear up one relevant point concerning the comparisons that he is making? Are the cases that he has mentioned strictly comparable? I bear in mind particularly such things as investment allowances. Do they apply in other countries?

Mr. Marples

The hon. Member, who has been a member of the Institute of Chartered Accountants, knows very well that an analysis of the position in America, France and this country would take several hours. From the point of view of the cash given to this company by way of subsidy on capital costs, it is obvious that we are giving far less than is given by our competitors abroad.

Mr. Shinwell

Can the right hon. Gentleman tell us the assets of the United States and French companies compared with the assets of the Cunard White Star?

Mr. Marples

That is a very complicated thing to deal with by question and answer across the Floor of the House. The right hon. Gentleman has had plenty of time to table a Question on the matter. Although I am not responsible for the assets of the American and French companies, if he tables a Question I will do my best to enlighten him if he does not know the answer.

Mr. Mellish

The right hon. Gentleman is making the fair argument that it is necessary and right that this ship should be subsidised by the Government. May we take it from that that it is being said from the Government Front Bench that all future shipbuilding in this country will carry a subsidy?

Mr. Marples

If the hon. Gentleman believes that, he will believe anything. What I said was that this is an express passenger service across the Atlantic which is unique, because every other country subsidises this route more heavily than any other route in the world. We therefore have either to get out of the route or to give a subsidy which, at any rate, gives the private enterprise firm a chance to compete with the higher subsidies given by other countries. I hope that the hon. Gentleman will not read into what I have said the interpretation that he indicated. I shall be very disappointed if he does.

So much for the capital costs of the ship. A ship has running costs, too. The Americans subsidise the running costs of their ship, the "United States", to the extent of 28 per cent. The French provide a sum equal to any losses of the company. In our case, we are providing nothing for running costs. Therefore, I think that it can be said that the subsidy which we are giving for this ship is less than the subsidy given by other countries for their ships, in respect of capital costs. We give nothing for running costs, and they give various amounts. While we may argue about subsidies, therefore, it is clear that the arrangement which has been made is a hardish bargain by the Government in these circumstances. The present subsidy is roughly comparable with the 1934 subsidy to the present "Queens".

The Atlantic crossing has always been subsidised, from the "Lusitania" and the "Mauretania" onwards. In the special circumstances of this route, we cannot expect Cunard, without a little subsidy towards the cost of the ship, to compete with France and America, who give a much bigger subsidy on the capital cost and also a subsidy on running costs, which we do not give.

I turn to the question of the security and the repayment with interest of the Government loan. The first half of the new ship's life is likely to be the most profitable, and by the end of that time the earnings of the ship should have been enough to provide cover for repayment of almost all of the Government loan, in addition to the interest due. Until the loan has been repaid the return on the equity capital payable to the Cunard shareholders is pegged at a level of 7½ per cent. less Income Tax, and any excess will accelerate repayment of the Government loan. The Government will have a specific charge on the ship itself and the depreciation fund, too, and a floating charge on all the other assets of the Cunard White Star Company. The one exception to this is the revenue of the depreciation fund, on which the Government will have a floating charge and not a fixed charge.

It has been suggested that the Government should take an equity interest in the new company, but we do not want to expose the taxpayers' money to any greater degree of risk than is necessary to secure the Government's object, which is the continuation of this service. In fact, with the insecurities which lie ahead the terms which have been secured are a good deal more favourable to the Government than any equity interest which would rank on equal terms with the Cunard equity shareholding.

I turn to the tenders. The Committee recommended that the ship should go to competitive tender to all the appropriate yards in this country, and invitations to tender were sent out by Cunard at the end of March to the six appropriate shipyards in this country—John Brown's and Fairfield's, on the Clyde; Harland and Wolff, of Belfast; Cammell Laird, of Birkenhead; and Swan Hunter's and Vickers-Armstrongs, on the Tyne. The Ministry, again with the advice of the Yarrow Admiralty Research Department, will be associated with Cunard in the assessment of the tenders received and the contract will be given to the firm which submits the best tender. The best tender will not necessarily be the lowest priced. It will be the best all-round proposition in terms of value for money. There are such things as delivery dates and many other technical details to take into account, and the acceptance of any tender depends upon Parliament passing this Bill.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

Will the right hon. Gentleman be a little more explicit? He has said that it will not necessarily be the lowest price and that all kinds of conditions may be attached. Recently, he announced in the House that another facet would be that the shipyard must be sited in a local unemployment area. Does that still apply? If a shipyard is sited adjacent to a local unemployment area, such as Swan Hunter's, will it be considered equally with the others?

Mr. Marples

The hon. Member's basic question is made on a false assumption. In answer to a supplementary question I said that the normal procedure for a Government contract was that, other things being equal, it should go to an area scheduled as an area which required more employment.

This is not a Government contract. It is being given by Cunard with the assistance of the Government. In any case, in a ship of this complexity and size it is highly improbable that other things will be equal. I am certain that some firm will produce a tender which will be acceptable, and I cannot believe that in so complex a ship costing £30 million two tenders will be identical. I hope that that relieves the hon. Member's anxiety.

Mr. Cyril Bence (Dunbartonshire, East)

In answering a Question a few weeks ago the Minister suggested that Cunard would have the final word in deciding the acceptance of the tender. May we be assured that Cunard will have the decisive say in which tender it will accept?

Mr. Marples

If the Government are giving a loan of this sort, Cunard will naturally initiate it and will decide it, but Cunard will have the assistance of the Ministry and the Admiralty Research Department; and, naturally, we shall all have to reach an agreement together. Where £18 million of Government money are involved, we must be certain that the tender goes to the right person.

Dame Irene Ward (Tynemouth)

rose—

Mr. Popplewell

This is every important.

Dame Irene Ward

The hon. Member has had one go.

Mr. Popplewell

Do I understand that the Minister is renouncing the impression which he created in the country a little while ago when he said that the decisive factor would be the siting of work within a local unemployment area? Is he withdrawing that? Does he mean that those yards which are not within such an area, but are adjacent to it, will be considered on equal terms with all the rest?

Mr. Marples

That point arose many weeks ago. I will send the hon. Member the record in HANSARD, SO that he can study it. It was said many weeks ago. The hon. Member has not read his HANSARD; otherwise, he would not ask that question.

Mr. Popplewell

rose—

Mr. Marples

I give way now to my hon. Friend the Member for Tynemouth (Dame Irene Ward).

Dame Irene Ward

I thank my right hon. Friend for giving way to me. How much will the House of Commons know when the tenders are received and when the decision has been taken? How much information are we to be given so that we may be assured that the tender has been awarded on the basis which my right hon. Friend outlined to us? This is a very important matter to all rivers, and we want as much information as we can possibly be given.

Mr. Marples

Tenders coming to the Government are always treated as confidential. This is the usual practice of all Governments on contracts, whether for roads, houses, schools, or anything else, and this will be treated in precisely the same way. The final form of legal agreement will be presented to the House and the House will be able to see it.

May I turn from the North-East Coast to the insurance of these ships? The Government have provided insurance for both Queens.

Mr. Percy Collick (Birkenhead)

The impression prevailing in shipyards throughout the country is that the sole criterion is price. On the basis of the Minister's previous statement, the empression was that the decision about the tender would be given by the Government solely on price. I am sure that many of my colleagues will agree that that was the opinion in the country, whatever it may be in the Government. The opinion is that the decision on the tender would be on price. Today, the Minister has added one or two other considerations. He ought to make it abundantly clear to the country what the other considerations are.

Mr. Marples

The impression has never been created that it was solely a matter of price. It is a matter of value for money. If a certain yard, on a £30 million contract, tendered £10,000 cheaper and a five-year longer delivery date, does the hon. Member imagine that the Government would accept the lowest price? Not on your life. The Government will accept the tender which is the best value for money, technically and in terms of delivery date and in terms of price, quality and many other things. I do not wish to take too long on this matter, because the House has not very long to debate it.

I turn to the question of insurance. The Government provided insurance on these lines for both the "Queen Mary" and the "Queen Elizabeth". From Clause 2 it will be seen that the value of the new ships will be such that it is likely that the normal insurance market will be unable to cover all the insurance. Therefore, the Government intend to provide insurance for such part of the value of the ship as the normal insurance market cannot cover. This will apply to the usual marine risks on the hull and the machinery and also to war risks and third party liability risks. Normal commercial rates will be charged and that is precisely what happened with the "Queen Mary" and the "Queen Elizabeth". That arrangement was a separate arrangement from the financial assistance which the Government provided some four years later by way of subsidy in 1934, and it turned out that the Government made a considerable profit from their insurance of those ships.

I must emphasise that the insurance proposals do not constitute financial assistance to the Cunard Company since full payment will be charged for risks underwritten by the Government. Nor will the Government be competing in any way with the normal insurance market. The market will have first refusal of the business, and the Government will only underwrite such part of the risk as the market is unable to accept. The insurance agreement will be subject to affirmative Resolution of both Houses of Parliament.

I have concentrated on this issue of a subsidy for a North Atlantic ship and the Cunard Company. It has been asked if the Government are committed to a second ship. The proposed arrangements relate only to the replacement of the "Queen Mary". The "Queen Elizabeth" will have several years of life even after the new ship enters service. The question of her replacement will not, therefore, arise for some time. The Chandos Committee explicitly refrained from making any recommendation on a second ship because it recognised that by the time it became necessary to make a decision about it conditions might be quite different in two respects. First, the commercial prospects of the service and, secondly, in the type of ship which it might be feasible to introduce. The present proposed arrangements for the replacement of the "Queen Mary" therefore leave the question of the "Queen Elizabeth" entirely open. The Government have entered into no commitment on the point, stated or implied.

I would finish by saying that it would be wrong to draw from the Bill—and this is the answer to the hon. Member for Bermondsey (Mr. Mellish)—any far-reaching conclusion on the Government's policy either towards the shipping industry or on the general question of investment in private industry.

The object of the Bill is to secure the continuance of the British express passenger service across the North Atlantic, and the Government have considered this to be a proper object of national policy. This North Atlantic express passenger service is a unique matter in both the intensity of subsidised competition and the peculiar significance to the nation of the express service which the Cunard Company has for so long and so splendidly maintained.

I have tried to cover as many of the points as I could in this Second Reading speech in the shortest possible time. I hope that I have explained it reasonably fully, but I want to make it quite clear that this ship, we are convinced, will make a contribution. The crucial part is the first half of its life. The Chandos Committee did think that this trend to travel by sea would continue for some time. Naturally, more people will go by air, but the point is that more people are travelling more frequently; in the affluent society they tend to spend more money on travel.

Therefore, the Chandos Committee, consisting of very eminent and distinguished people, and backed by expensive research, was convinced that it would be possible for the sea to attract a number of passengers over the next ten to fifteen years. Some people go for a holiday for health reasons and go because they like, for instance, to get away from the telephone. It is fortunate that my right hon. Friend the Postmaster-General is not here, but sometimes it is a comfort to be away for five days and not have the telephone ringing.

Mr. Shinwell

Will there be no telephones in the new ship?

Mr. Marples

Yes, there will be telephones there, but they will be so expensive that people will not use them.

Having explored this subject exhaustively, and having gone into all the technical aspects of what I consider the reasonably good terms, I hope that the House will give the Bill a Second Reading without a Division.

4.25 p.m.

Mr. G. R. Strauss (Vauxhall)

We have listened with interest to the speech of the right hon. Gentleman, but I do not think that I have ever heard a speech by a Minister, speaking from that Front Bench, which was received with as little enthusiasm from his supporters behind him as this one. There was not one murmur of approval when the right hon. Gentleman sat down. Indeed, there was what has been called "a resounding silence", which was most impressive.

I wonder what we shall hear during the rest of the debate. We know from past experience—on Wednesday afternoons—that a number of hon. Gentlemen on the other side of the House axe critical of the proposal, as they have been sniping at the Minister at Question Time at every opportunity. Today, looking at the serried ranks of hostile faces behind him, and seeing that nearly all hon. Members opposite have speech notes in their hands, we wonder whether we are to witness a grand assault. It will be very enjoyable to us on this side of the House to witness this new split in the Conservative Party.

I suppose, from the fact that the Chancellor of the Exchequer is sitting next to the Minister of Transport, that it is he who will answer this debate. He will find that he will have a number of important and difficult questions to answer, some of which I hope to put to him, and others by my hon. Friends, and some which will, no doubt, be put to him from hon. Members sitting behind him. We had rather hoped—anyhow, I had, personally—that the new Joint Parliamentary Secretary to the Ministry of Transport would have taken his plunge today as a Front Bench speaker and given us his views.

However, although the is not to speak, apparently, I should like to take this opportunity of congratulating him warmly on his promotion—[HON. MEMBERS: "Hear, hear."]—which, in the opinion of all of us, I think, is well deserved, not only on the ground of the qualities he has shown as a Parliamentarian, but because of his distinguished naval career. We hope that he will be able to inject into his Ministry a sense of urgency on the problems concerning the shipping and shipbuilding industry, a sense of urgency which seems to so many of us, I think on both sides of the House, to have been so gravely lacking during recent years. What we hope to get from the Ministry in future is action and not excuses for inaction.

Some of the underlying troubles of the shipbuilding and shipping industry will, no doubt, be raised during the debate this afternoon by hon. Members, but I propose to confine myself to the substance of the Bill before us in the hope that we shall be able to have, before long, another debate in which we can concentrate on the broader problems of these industries.

We are being asked to endorse a Government proposal to grant a subsidy and a loan to the Cunard Company to enable it to replace the "Queen Mary" by another prestige North Atlantic liner of the same type. Two questions arise, therefore, which have to be considered today. Is it wise, in these days, to use substantial national resources for such a purpose at all, and, if so, are the financial terms of which the Government propose to do so fair to the taxpayer?

Let us consider, first, the wisdom of building a new ship of the "Queen" class. The Minister told us the grounds on which he and the Government believe this to be desirable, but when we are considering this matter it is important to appreciate the manner and the timing of the Government's decision. The Government have developed the strange habit of making a decision on highly technical matters, announcing them, and subsequently appointing an authoritative and expert committee to consider the wisdom of the decision and its consequences.

They have recently done that on two occasions. They did so over the break-up of the British Transport Commission. The Prime Minister announced that in the Government's view it was desirable to alter the structure of British Railways. He announced that, as far as we know, out of the blue. It was contrary to the subsequently published views of the Select Committee that was sitting on the matter at the time.

The announcement was made and then, afterwards, the right hon. Gentleman set up the expert Stedeford Committee to consider how this could be done. Again, another bad habit of the Government in this matter is that when such an expert committee is set up the House of Commons is deprived of an opportunity to study its report and is so put at a great disadvantage. The Government have behaved similarly in the matter which is before us today. Without, as far as we are aware, seeking the advice of any independent authority, the Prime Minister announced—in the course of the General Election, be it noted—that the Government had decided to give financial support for the replacement of the "Queens".

Mr. Bence

The Prime Minister said that in Glasgow.

Mr. Strauss

At the same time, the right hon. Gentleman announced that an expert committee was to be set up, consisting of a senior partner in a shipping company and of a chartered accountant, with Lord Chandos as chairman, to report on the "best and fairest" way—those were the words used—of giving this financial support.

As I have said, this decision was announced during the course of the General Election. No doubt, the right hon. Gentleman was largely concerned at the time in putting forward in the election manifesto some matter which appeared attractive to the electorate. But it is all the more necessary now, when we are in calmer political waters, to examine very carefully the merits of the proposals then put forward and to consider, in particular, whether, since that announcement was made, events have not developed which cast doubts on the wisdom of the original decision.

The success of the North Atlantic passenger sea transport service depends primarily on the number of passengers who, during the next twenty years or so, are likely to cross it in luxury liners. An article in the Daily Telegraph last week, which some hon. Members may have read, recited the pessimistic forecast, which later proved to be false, when the Government, in 1934, agreed to help with financial resources the completion of the "Queen Mary". Since then, conditions have changed fundamentally. We are now living in an age of air transport, and all experience shows that this is not only growing with amazing speed, but it is steadily displacing the more leisurely form of transport by sea. This is particularly true of the North Atlantic crossing.

Let us consider some of the figures which have been published recently. In 1948, 637,000 people crossed the North Atlantic by sea and only 240,000 by air. Ten years later, in 1958, more people crossed by air than by sea. The number of sea passengers was 958,000 and the number of air passengers 1,193,000. The change since 1958 from sea transport to air transport has accelerated considerably, and it is an important factor to bear in mind that this acceleration has been particularly marked since 1959, when the Prime Minister announced the Government's decision.

Sir James Duncan (South Angus)

Are these international figures or British figures, and are they confined to luxury liners?

Mr. Strauss

I am quoting them from a letter which appeared a little while ago in The Times and which have not been contradicted by anybody. I accept them as correct. If they are false, no doubt the hon. Gentleman will give other figures.

According to that same source, during last year the number of air passengers rose to nearly 2 million while the number of sea passengers crossing the North Atlantic dropped to 866,000. There is, therefore, a decline in the number of sea passengers crossing the North Atlantic and it is also stated in the same letter, and I assume it to be correct, that the number of passengers who crossed in the "Queens" last year dropped by 6 per cent.

Mr. F. A. Burden (Gillingham)

The right hon. Gentleman should remember, in relation to that last quotation, that the dock strike had a considerable effect on the number of passengers on the "Queens" last year.

Mr. Strauss

That may be so, but even taking that into account I think that the trend is quite clear and I do not think that anyone will deny that it will continue and probably accelerate considerably during the coming years.

Mr. John Howard (Southampton, Test)

I have figures from Southampton Docks. The passengers going to the United States and Canada in 1959 and 1960 were 163,000 and 169,000 respectively.

Mr. Strauss

I was talking about the double journey.

Mr. Howard

These figures relate to the double journey.

Mr. Strauss

It may be that the hon. Gentleman's figures are correct. I have been quoting from the letter in The Times, which has not been contradicted and which said that there has been a 6 per cent. fall.

The House will have noted that in view of the greater desire of passengers crossing the Atlantic to travel faster by air in greater numbers, air fares are coming down rapidly. They have been reduced and are to be reduced further. According to the proposals of many of the airlines they will be reduced substantially in the next year or two. One must therefore accept the fact that the chances of increasing the number of passengers on ships crossing the Atlantic in the next twenty years or so are very bleak indeed.

The Minister of Transport made a number of points in favour of the Government's proposals. He said that all other countries subsidise the trans-Atlantic passenger service.

Mr. Marples

The express services.

Mr. Strauss

If we want to compete, we must do it, also. I do not think that anyone can deny that. I certainly do not. America, France and Italy do so, and I understand that Russia is now likely to try to put a ship in this service. But this means that with the new ships built by these countries there is likely to be increased capacity on the North Atlantic to meet a falling number of passengers. Competition therefore will be more difficult and more intense than ever.

Mr. John Rankin (Glasgow, Govan)

Does my right hon. Friend not recollect that his own figures have shown that the total number crossing the North Atlantic by air and by sea has vastly increased since 1947 and that the figures which he has given show that the traffic is there?

Mr. Strauss

I will give figures year by year if my hon. Friend would like to have them, but I have tried to show that the sea crossings have fallen. [HON. MEMBERS: "NO."] All right, perhaps somebody will give authoritative figures later which will be contrary to mine.

The question is whether, in view of all this, it is desirable to compete in this trade or to leave this very hazardous business to other countries and to use our resources on more modern ventures which are likely to be commercially more successful and in every way nationally more advantageous.

The same considerations apply to the arguments put forward by the Minister of Transport, and others outside the House, about the prestige of maintaining this service. Many maintain that it is desirable, for these purposes, for Britain to have these ships. I wonder? Compared with other potential achievements, will Britain really gain so much by having a fine, possibly the finest, liner on the North Atlantic route? Is it really worth trying to maintain what has been described as an "out-moded status symbol"? One has the feeling that people who think that way are living in the past, are indulging in nostalgic images of bygone glories—with their minds attuned to the first part, rather than to the second part, of the twentieth century.

Mr. Howard

Would the right hon. Member not agree that, according to his argument, the Canadians and the Americans are apparently living in the past, although they provide 70 per cent. of the passengers for the "Queens"?

Mr. Strauss

If they are indulging in folly, that is no reason why we should do likewise. [HON. MEMBERS: "Oh."] Whatever may be said, I know that the view is taken by many hon. Gentlemen opposite that this form of investment in the present age is very doubtful.

Mr. Bence

May I inform my right hon. Friend that the "Empress of Britain" sailed on her maiden voyage from Greenock last week, and that she was loaded with passengers?

Mr. Strauss

That may be so, but I do not know what subsidy the "Empress of Britain" received in her building. We are at the moment considering the placing of our resources, and, of course, of the taxpayers' money, on a particular venture.

I believe that Britain's prestige in the eyes of the world will depend in the coming years on such things as our social and cultural achievements: our attitude to commonwealth and world affairs and our contribution to the advancement of science, rather than to the maintenance of our competitive position in this highly difficult and contracting business.

Two arguments advanced by the Minister must receive special consideration. First, in spite of what appear to be the highly unfavourable economic prospects of any new North Atlantic luxury ships, the Cunard Company takes a different view, since it is prepared to invest £12 million of its shareholders' money in this enterprise, on condition, of course, that the Government put up a large sum with a subsidy attached. If this proposal is such a good commercial proposition I wonder whether it would not have been possible for the Cunard Company to have put up all the money that was required for this venture. It is clear, from a study of the company's last balance sheet, that its reserves for ship replacement and other general purposes amounts to £38 million. It seems that the company is not short of money, or at least its credit is good, and that if it wanted to borrow the necessary money it could have done so.

The other argument in favour of the Bill is a powerful one, that the building of a "Queen" replacement will provide badly needed work in one of our shipyards and additional work for many of the ancillary shipbuilding trades. We are all aware that the prospects for our shipbuilding and ancillary industries over the next five years are poor. The cause of this sorry state of affairs has been due in part to world conditions over which our industry had no control and, in part, to internal defects for which responsibility does rest with the industry and which, we hope, Government pressure will soon remedy.

But whatever the causes, the fact remains that the tonnage likely to be built in Britain's shipyards during the next five years will be well below capacity, and some of the yards may be wholly or partially idle. This, of course, will have serious consequences to those who work in them, many of whom may not be able to get employment elsewhere.

For this reason alone, we propose not to vote against the Second Reading of the Bill, but to try to remove most of its objectionable features at a later stage. In this connection, the first question we would like to be answered is whether it would not have been better for the interests of the shipbuilding industry, if those interests rather than sentiment motivated the Government, to have built several smaller ships, so spreading the work to a number of shipbuilding yards.

Many people in the shipbuilding industry support the view that a number of first-class smaller ships might have served their interests better. Two fine liners, the "Canberra" and the "Orion" have recently been built by P. & O. at a cost of £30 million—without that company having to obtain any subsidy from the Exchequer.

If the major consideration of the Government is to help the British shipbuilding industry, hon. Gentlemen are bound to be wondering whether that help could have been given by a number of other means, such as fiscal policy, which would not have singled out one company for assistance, and such policy would have obviated the need for a Government subsidy which we so deplore when indulged in by other Governments.

Sir John Vaughan-Morgan (Reigate)

The right hon. Gentleman is deploying his argument against the Bill in a masterly way, yet he has told the House that he does not intend to vote against the Second Reading.

Mr. Strauss

The value of the Bill to the nation is in grave doubt. Nevertheless, it has some favourable objectives, one of which is the work it will provide for our shipbuilding industry.

Sir J. Vaughan-Morgan

The right hon. Gentleman is no doubt aware that his party is not given to honouring an election pledge. That is where the right hon. Gentleman is luckier than are we.

Mr. Strauss

The hon. Member made an exceptionally important statement in that last remark. The Conservative Party is bound by a pledge given at election time, possibly partly for electioneering purposes, and although subsequent events have produced arguments contrary to that pledge the Conservative Party feels bound to proceed with the matter. That does not prevent hon. Gentlemen on this side of the House from feeling free to criticise the Bill. Because of certain advantages which will accrue from the passing of the Bill, my hon. Friends and I do not propose to vote against its Second Reading, out we hope to remove many of its objectionable features at a later stage.

Mr. John Peyton (Yeovil)

Am I correct in thinking that the sole reason for the right hon. Gentleman taking a neutral attitude towards the Bill is for employment considerations in the shipbuilding industry? If that is the case, it would seem a very locally confined view to be taking.

Mr. Strauss

Definitely yes, as far as I am concerned. The employment factor is so important that we feel we cannot oppose the Bill.

Mr. John Rodgers (Sevenoaks)

While the right hon. Gentleman says that his main consideration is that of employment in the shipbuilding industry, can he say what concessions he hopes to wrest from the Minister which will meet the objections that he has to the Bill?

Mr. Strauss

We hope to improve the Bill by altering for example, its financial provisions which, we think, are entirely wrong, although I will deal with that matter later. It seems to us that there are other ways in which the Government could have helped the industry if they had so desired, but that would not have contained the many objections which this Bill possesses.

I turn now to the financial side of the Government's proposal. In spite of what the Minister said, we must anticipate that in a few years' time the Cunard Company will come to us with very strong arguments for demanding a similar subsidy for a second Queen. The reason why it will do that is one known to everyone connected with the shipping industry. It has been stated by the Cunard Company spokesman that to run an express North Atlantic service successfully two ships are necessary. For that reason, the American Government are at the moment authorising the building of a sister ship to the "United States". We must, therefore, anticipate that before long the Cunard Company will ask for a further subsidy. The Government may not give it, but when we are considering the financial provisions in this case we must assume that we shall be asked to agree to similar financial provisions for another ship.

The £18 million which the Government will provide by way of loan and subsidy amounts to about 60 per cent. of the cost of the ship. My first comment is that at the proposed 4½ per cent. rate of interest—if one considers it solely from the interest point of view—the terms are far more favourable than the Government are prepared to accept for financing the nationalised industries or local authorities for essential public services.

The next point—we must bear this in mind when considering this proposal—is that this is another example, a striking one, of the different attitudes which the Government take to the spending of public money for social purposes and for helping private industry. Patients under the National Health Service will now have to pay more out of their own pockets for the drugs that they need when they are ill, but the Treasury can always find sufficient money to help private industry. No doubt this is all good Conservative doctrine. The Government are certainly applying it to a rapidly increasing extent.

The Economist, in its 22nd April issue, gave some interesting figures which serve as a background for this debate. It did so in an article entitled appropriately "Public assistance to industry". It showed that in the previous Budget £378 million was provided for this purpose, and that this year—of course, nothing is included for the "Queens"—the figure has risen to £401 million. Most of this goes to the farming industry, but of particular significance in relation to this debate is that the aid given this year to industry proper amounts to £77 million, which is six times greater than the amount actually paid out three years ago. The present Administration may, therefore, be "of the people and by the people", but it is certainly "for big business".

The objection that we have to the Government helping industry by loan or subsidy is not so much that it does so, but the way it does so. The worst features of the Bill are the terms, so patently disadvantageous to the nation, on which the Exchequer support is to be provided. In no previous case, as far as I am aware, with the possible exception of Colvilles, has it been so shameless. If the State provides 60 per cent. of the money—without which the ship could not be built—if, as the Cunard Company presumably believes, this venture is likely to prove profitable, why should not the State participate in those profits? Why should there not be real partnership between the State and private industry?

The Minister of Transport dealt with that point, in passing, in, I thought, a most extraordinary way. He said that he refuses to accept this principle, because he does not want to "expose taxpayers' money to any greater degree of risk than necessary". This is really most extraordinary. If a finance house in the City proposed a big scheme for financing an industrial development, it would never accept the terms which the Chancellor has accepted in this case.

I could give the House many examples of the quite proper demands of banks and finance houses undertaking financing operations of this sort which ask for—and have their demands accepted—some equity in the venture and some chance of getting the money back and making a little profit if the venture succeeds.

Mr. J. Howard

This is interesting. Can the right hon. Gentleman tell us the names of the finance houses in the City which ask for a share in the equity and, at the same time, guarantee not only as a first charge the repayment of the mortgage, but for equity shareholders the repayment of the £18 million as a first charge?

Mr. Strauss

I think that I can help the Government from my own knowledge. A little time ago, just before the iron and steel industry was nationalised, the Steel Company of Wales required £35 million, a sum similar to that required for the building of the new "Queen". The Finance Corporation of Industry said that it would advance this money on debentures, but on the condition that it had an option on equity shares. That condition was accepted. The result of the condition was that the State had to pay the Finance Corporation of Industry, when it nationalised the industry £2¼ million, the value of the equity shares which it had acquired as a result of the condition it had laid down. That is a complete answer to the hon. Gentleman and also a complete answer to the Government.

Mr. Howard

It is nothing of the sort. That was an option to acquire equity shares. In the case of the Cunard Company it is a guarantee by the Cunard Company that in the event of the Cunard White Star, the subsidiary company, being unable to repay the whole of the £18 million, the Cunard Company, the parent company, will repay the funds.

Mr. Strauss

The fact is that in the case that I mentioned there were debentures which the Finance Corporation of Industry held, and on top of that—I could give hon. Members opposite other examples—an equity interest was demanded. Sometimes that is demanded in participating debenture shares. If it is right for the Finance Corporation of Industry, which is a semi-public body, to make such a request, why is it not right for the Government to do so, too?

What reason can there be for putting such huge sums of the taxpayers' money in a venture of this sort and saying that if it turns out profitably the profits are to go only to those people who put up 40 per cent. of the money? It seems to me to be utterly inexcusable. The Minister's statement that he does not want to risk the taxpayer's money unduly is wholly irrelevant. There is no greater risk in asking for an option of this sort or in demanding participating debentures.

I must add, because this is an exceedingly important point, that the Government's refusal to ask for some participation in possible profits has—the Minister probably knows this, and the Chancellor of the Exchequer, too—surprised most respectable pillars of the Conservative Party. I should like to quote comments by The Times and the Financial Times on this matter. I think that in this respect I could not be in more respectable company.

The Shipping Correspondent of The Times wrote on 1st July, 1959, which was before the announcement of the Government's decision: If the new Queens are built with Government money the only proper method would be to detach them from the remainder of the Cunarder Group. Either the Government could build the ships and let the Cunard manage them, or a new company could be set up with Cunard and the Government sharing the equity. The Financial Times said, on 6th June, 1960: If there is a prospect of a profit why should not the Government participate in the equity? Once again, as in the £50 million loan to Colvilles, it appears that public loan capital is providing gearing for the equity. A change of plan here would go a long way to allaying any public disquiet which may develop in the matter. Public disquiet has developed, and we hope and believe that the House will support us in the view that, in this respect, the agreement reached between the Government and the Cunard Company is highly objectionable and utterly indefensible.

To sum up. We doubt the wisdom of providing millions of pounds from our national resources in building a replacement for the "Queen Mary". The Chandos Committee considered the trends in the numbers of passengers who are using the "Queens", but we wonder whether that Committee took into account the latest figures available, which show the trends to be unfavourable. We feel that it is an anachronism to spend so much money in building this new ship in this age of air transport, and that there might be better ways, with greater long-term effects, of helping the shipping industry, perhaps at less cost to the taxpayer. We have, also, strong objection to the financial provisions of the Bill, which we consider to be an unjustifiable betrayal of the public interest in favour of private industry.

5.2 p.m.

Sir John Vaughan-Morgan (Reigate)

Talk about the vote following the voice! The speech of the right hon. Member for Vauxhall (Mr. Strauss) was the strongest speech for a Motion of censure which is not to be followed by a vote that I have ever heard. He gave a long list of objections and, in his view, only one minor advantage in favour of voting for the Bill. Many of us who dislike this Bill intensely—our dislike is no secret to my right hon. Friend the Minister of Transport—feel ourselves very much hampered by the General Election pledge, and, if it had not been for that pledge in our manifesto and in the speeches that were made at the election, my right hon. Friend would have had to face a vote at the end of this debate. But the right hon. Member for Vauxhall has no such ground for disliking the Bill as we have.

Mr. Collick

May I remind the hon. Gentleman that the right hon. Member for Woodford (Sir W. Churchill) made the case in this House when he said that nothing stuck in the Tory election manifesto committed an incoming Tory Government?

Sir J. Vaughan-Morgan

I am afraid that I do not feel like that. No doubt the hon. Member for Birkenhead (Mr. Collick) will be able to make a speech on this subject. I must be frank. Many of us think that the Conservative Party's election manifesto's pledge on this subject was entered into lightly and irresponsibly, and that should be said here and now from these benches. Many of my hon. Friends entirely agree with me in that view.

I agree with those who hold that a subsidy to any industry, public or private, should be regarded with suspicion, though not all are bad.

Mr. Bence

What about agriculture?

Sir J. Vaughan-Morgan

Is it the Labour Party's policy to disagree with agricultural subsidies? As I was saying, many subsidies to industry are bad, and many are good, but they should all be examined with a tooth-comb for their economic, social or political purposes, to see if they are entirely justified.

Most of the subsidies which Parliament approves—and this applies to agriculture—are general subsidies. The one we are discussing, however, is to go to a particular firm and not to an industry as a whole. It is for a particular company, a particular route and a particular ship. If it had been the question of a general subsidy to the shipbuilding industry, tiding it over a difficult period of reconstruction in order to make it more efficient—as, in the opinion of many experts, it conspicuously is not—there would be a very different case, as there was for the Cotton Industry Act. But it is not, however, and the answer to the right hon. Member for Vauxhall about unemployment is that this means one order which will keep one yard busy and still leave the rest with the dwindling order books of today.

My right hon. Friend will have some support from hon. Members who have shipyards in their constituencies, but one of the things he may have noticed today is that he will get into trouble when the order is placed in one yard and the other yards have not got a slice. So let him be careful of those who might support him at the moment. I am as delighted as everybody at the appointment of my hon. Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) as Joint Parliamentary Secretary to the Ministry of Transport. It is a brilliant piece of posting, but it will not be an adequate compensation to those yards that are not to get a crack at the £3¼ million involved.

If this Bill were to help the shipping industry as a whole to fight the discrimination and the unfair competition which it is having so disgracefully to face on the high seas, it would be a different matter. I, for one, would not question a Bill or a Vote that would help that industry which is, frankly, suffering so unjustly at the present time. But this Bill is not of that nature. It favours one line, leaving the others to struggle unaided.

Of course, we must recognise, as my right hon. Friend said, that there is a long tradition of subsidy for the Cunard Company. It has been in receipt of Government subventions of one sort or another for fifty-eight years. Amongst all the respectable matrons of the shipping industry, it stands out as the one scarlet woman. Can it be any surprise that the Chamber of Shipping, speaking for the respectable matrons, is beginning to wonder whether the wages of sin are not worth while after all. No wonder, in its report, after stating what is to be done for the Cunard Company, it says: It follows that the Government should consider other cases where equally urgent reasons can be shown for Government help. Perhaps my right hon. and learned Friend the Chancellor of the Exchequer, when he winds up the debate, will say whether he supports that view. If so, he will have a very big bill to face, because this is not the only route that is subsidised. My right hon. Friend the Minister of Transport said that it was the most highly subsidised, but there are others which have subsidies. What is the policy to be towards them?

Of course, this proposal will receive much support from the shipbuilding areas, and I do not blame them. I would take the same view if I represented a shipbuilding area. It will also receive support from my hon. Friend the Member for Southampton, Test (Mr. J. Howard), for Southampton, not unnaturally, has some interest in the future of the Cunard Company. He is a friend of mine of many years standing, and also a constituent. I hope that after today I shall still retain both his friendship and his franchise.

What are the other arguments deployed in this matter? One is that it will help the tourist industry. That is fair enough, at a price, and I do not want to enter into an argument about statistics. Perhaps we can have more accurate ones before the end of the debate. But it is worth remembering, if we are to subsidise the Cunard Company, that not all of the Cunard passengers come to England. Many of them go to France, and many of the passengers on the other subsidised ships come to Britain at the expense of the taxpayers of other countries. But I still agree that shipping has an important, if dwindling, contribution percentagewise to make to the tourist traffic over the next ten years.

As other hon. Members have said, more and more people turn to travelling by air. I speak with some slight knowledge of and interest in trans-Atlantic travel. I and my family have been crossing the Atlantic for over twenty-five years. Perhaps I should explain that America is my mother-in-law country. At least one of my family goes over every year. I have a sentimental regard for the Cunarders. I went over on the "Britannic" to get married, and I have travelled on nearly all the ships.

As I have said, one or other of my family goes over to America almost every year, but for ten years or more we have not gone by boat. Last year I crossed the Atlantic by air in six hours which was less time than my wife once spent on New York dock waiting to get through the American Customs. That is what is known as progress.

My right hon. Friend referred in his speech, and in a rather surprising answer to a Parliamentary Question the other day, to the fact that many people travel for health reasons. That is a rather surprising one to me—this added burden to the National Health Service. It is true enough that many businessmen, having found in America that exporting is not fun but absolute agony, choose this form of travel for the purpose of relaxation, and, I suspect, as a further respite from the household chores. But is it really for the taxpayer to subsidise the transportation across the Atlantic of tired tycoons?

Coming back to the tourist trade, could not my right hon. Friend the President of the Board of Trade use the money many times over to far better purpose? Could he not use an even more increased subvention for the British Tourist Association? Could we not give some help to improving conditions at London Airport, an improvement which is much needed? Should we, in fact, subsidise tourism any way, whether by sea or by air? The best comment on that matter came from my right hon. Friend the Minister of Aviation on 21st November last year when he said in another context: However I am certain that airlines have to pay their own terminal charges. We cannot make them part of the Welfare State…"—[OFFICIAL REPORT. 21st November, 1960; Vol. 630, c.750.] That was my right hon. Friend the Minister of Aviation, and I think that what he then said goes for the Cunarder of my right hon. Friend the Minister of Transport as well.

If we are committed to this subsidy—ship or ships; I am not quite certain which after hearing my right hon. Friend's speech—is this the right size of ship or not?

Mr. Diamond

Will the hon. Gentleman give way? This is a most important point. The hon. Gentleman is saying that he is not going to vote against the Bill because of an election pledge, but the election pledge was to replace the "Queen" liners in the plural.

Sir J. Vaughan-Morgan

I agree. I am asking my right hon. Friend to clarify what the future position is.

Is this the right size of ship any way? Are we, frankly, catering for the right kind of traffic? In a year in which the "Oriana" has been launched—a brilliant credit to British craftsmanship and design, and a dollar-earner unsubsidised—we come forward with a project for a larger ship with no greater carrying capacity.

The reason given, which I must say I sometimes find a little perplexing, is that one needs more room when crossing the Atlantic than when crossing the Pacific, which is a longer journey. One of my hon. Friends has been into this point in great detail. It is quite true that a certain cubic footage per passenger has to be provided on the Atlantic run to compete with the other lines. As far as I can make out, it boils down to this. If people travel on the Atlantic, they must all have their meals at one sitting whereas if people travel on the Pacific they can have their meals at two sittings. Quite candidly, is that really what we should be subsidising? Is it really true that we have to have this enormous amount of accommodation?

My right hon. Friend talked about it being necessary to provide comfortable conditions in the winter. But the "Queen" liners are half empty in the winter. There is plenty of room any way. Incidentally, if any hon. Member ever wants to travel on a "Queen" liner on the cheap, the thing to do is to book on one of the other Cunarders. The sailing is usually can celled at the last moment and one finds oneself travelling on a "Queen" much cheaper. That, of course, is strictly with in these four walls, and I hope that not too many hon. Members—

Mr. Burden

Of course, that is a very good advertisement for the big ship which sails on time.

Sir J. Vaughan-Morgan

I am all for travelling on the big ship—it does not always arrive on time even if it sails on time—but not, if I may say so, at the taxpayers' expense.

Quite frankly, I think that we are completely missing the boat with the tourists of today. Cheap transportation is what is needed—and for which there is a demand—in competition with air travel. The American tourist of fifty years ago who went abroad for three months with several of those enormous cabin trunks still exists, but frankly, he is not the important factor that he was. Why subsidise him, or the tired tycoon? Why not concentrate on the new tourist?

The other argument is the need to maintain a weekly service. I hope that my right hon. and learned Friend the Chancellor will deal more fully with this point when he winds up. I suspect that that is outmoded too. Surely the weekly service was a necessity in the days when the mails were carried by the Cunarders. Was not that the primary object of the weekly service, and does it now apply to the same extent, if at all? To comply with this business of the weekly sailing and with this curious matter of the accommodation, we have to have a ship that will be empty half the winter and which will not take part in the profitable winter trade. In short, I think that we are backing the wrong horse. It has been entered in the wrong race any way, and probably we ought not to indulge in betting.

Then there is the argument about prestige, which it is very difficult to assess. The Russians launch a man into space and the British launch a white elephant on to the ocean. Is our prestige really enhanced by this? My right hon. Friend referred to the "Queen Mary" and the "Queen Elizabeth". I was in New York in those early days of 1940 when the Queen Elizabeth arrived on its maiden voyage, at the beginning of four or five years of wonderful national service. But those arguments do not apply now, however, and I question very much whether our prestige is really enhanced by just trying to have a bigger boat on the Round Pond than the other boys. If the Americans and the French choose to spend their money in this way, I see no reason why we should necessarily follow suit. We started the business of subsidisation and we are the people who ought to take the lead in getting out of the contest.

My hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) summed it all up when he described this as an obsolescent status symbol. We could all find ways of spending £3½ million to that end. When all is said and done, as far as I am concerned there is only the one reason of the election manifesto. I could not vote for the Bill in any circumstances. I would abstain if there were a vote, but I could not agree that it was a good or a wise Bill. We have this millstone round our necks and some of us feel very unhappy about it.

To turn to the details of the Bill, I give enormous credit to my right hon. Friend for what he has done to improve upon the recommendations of the Chandos Report. My half-term report is, "Marples has done well, but could do better if he tried". Many of us on this side look forward to co-operating with my right hon. Friend in Committee, perhaps to improve the Bill even further.

We must remember that Lord Chandos was probably inhibited by his terms of reference. I regret very much that we are not to see the Chandos Report. I respect the reasons, but I should have thought that it would be worth while publishing at least a bowdlerised report, if that is the right word. My right hon. Friend has, however, produced a better bargain than was originally put forward.

I regret the Bill very much indeed, but let me end on another note. However much we may criticise this project, if it goes through and the ship is built let us wish success and prosperity to all who sail in her.

5.23 p.m.

Mr. E. Shinwell (Easington)

I join with other hon. Members in congratulating the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) on his elevation to Ministerial appointment. It is, however, within the recollection of hon. Members that for a considerable time, in reply to Questions in the House, the Minister of Transport claimed that he could undertake the whole of our transport responsibilities without assistance. It would appear that he must have accepted the appointment of the hon. and gallant Member for Croydon, North-East with considerable reluctance. The purpose for which he proposes to use the hon. and gallant Member is not quite clear. In due course, we shall have to have the Parliamentary Secretary's responsibilities defined.

It is obvious why the Government produced the Bill. It was because a reference to it was contained in the Tory Party's election manifesto. It was obviously a vote-catching device. There was fear of a recession in Belfast and there was the prospect of unemployment on the Clyde, on the Mersey and on the Tyne, in our great shipbuilding centres. Therefore, the Government produced this item in their election manifesto to provide some assurance to those concerned with the shipbuilding industry in the places I have mentioned by a promise that some day a new "Queen" would be constructed.

People in Belfast, on the Tyne, the Mersey and elsewhere all expected that when the "Queen" was constructed, they would have the sole responsibility. Now, we have this squalid competition. What is to be the end of it all? Whoever gets the tender, there will be trouble for the Government. Possibly, Belfast may get it. I would say that on the whole, because of the dim prospects that face Harland & Wolff, who have hardly anything on their order book, and because of their vast capacity and the growing unemployment in Northern Ireland, their claim to have the construction of the new Cunarder is probably greater than the claims represented by other shipbuilding centres.

Suppose that Harland & Wolff secure the order. What will happen? They may be precluded from undertaking other orders for smaller vessels which might have come their way, and in four or five years' time, when they have constructed the "Queen", there will be an even more serious recession in Northern Ireland. From the point of view of Harland & Wolff, it would be far better to search for business elsewhere for the construction of smaller vessels than to undertake the construction of a "Queen".

I want to say categorically and emphatically that I am unreservedly and without qualification opposed to the Bill and I wish that my party would join me in that declaration. We had an excellent speech from my right hon. Friend the Member for Vauxhall (Mr. Strauss), who made a vicious, devastating attack upon the proposals in the Bill. I respect his opinion that the only reason why we support the Bill is because it will provide employment somewhere or other. I can imagine a much better way of spending the taxpayers' money to provide employment. Some day, we shall have a debate on shipping and shipbuilding. We cannot in the course of this debate discuss all the consequences of the recession that has accompanied these twin industries for several years.

There has been a gradual dwindling of our strength and influence in shipping and shipbuilding over the past half-dozen years. Our share of world trade, for example, has diminished substantially. The facts are well known to hon. Members. Our capacity in shipbuilding is vast and it can undertake a vast number of additional orders, but they are not available. This is because of the competition from foreign shipbuilding centres.

What is the situation as regards the advantage obtained by foreign shipbuilding interests? The facts are simple. Foreign shipbuilding firms in Scandinavia and elsewhere on the Continent can offer credit terms much more favourable than the terms offered in this country. I understand that many of the foreign shipbuilding firms can offer credit facilities of 80 to 85 per cent. over a period of eight years. The very best we can find in this country is around 30 per cent. for a period of five years. Obviously, advantage accrues to the foreign shipbuilder and British shipbuilding interests are suffering very seriously.

However, we are not to discuss the general question of shipping and shipbuilding in this debate. I want to concentrate, as other hon. Members have, on the proposal that the Cunard line should have the opportunity of constructing this vessel. The question is: does it need this subvention, this form of national assistance? That is what it is. Hon. Members opposite turn up their noses when it is a question of providing National Assistance for poor folk and question the propriety of spending vast sums of taxpayers' money in that way, but this is a form of national assistance. The question is, does the Cunard line need it?

I have availed myself of some statistics. They are bound to be accurate because they are extracted from the balance sheets of the Cunard line. Reference was made by my right hon. Friend who opened the debate from this side of the House to the vast reserves at the disposal of the Cunard line, but there are some particulars which he did not mention. One is that its investments at the latest available date were £15½ million. Those are substantial investments, but that is not all. It is not often that one finds an item of this kind in contemporary balance sheets. Cash at bank equals almost £6 million. I presume that that is available after depredation has been provided for.

That is not all. Properties owned by Cunard White Star amount to nearly £4 million. Cunard White Star owns a considerable amount of real estate in the United States, the United Kingdom, Italy and other parts of the world. Much of that—I use the expression used by the hon. Member for Reigate (Sir J. Vaughan-Morgan)—consists of "white elephants" where very little business is done, but they are maintained in order to preserve prestige. No doubt they contribute to increased overhead costs. These are some of the facts.

Mr. J. Howard

Before the right hon. Member leaves those very interesting figures, can he tell us about liners already under construction to which these capital commitments may apply?

Mr. Shinwell

I shall do my best to furnish the information about future capital ships replacements. The company has vast reserves for that purpose, but, as far as I can gather, it is not building many ships.

Mr. Burden

I am sure the right hon. Member would not like to mislead the House. In fact the Cunard Company has spent £30 million on building new ships, quite apart from the "Queens", since the war.

Mr. Shinwell

Is that remarkable? It is quite obvious that the hon. Member is not acquainted with the shipping position in this country. Take the case of the Royal Mail Line. That company is not obtaining a subsidy from the Government or anyone else. It has to raise capital in the open market, but in the last few years it has had three ships constructed by Harland and Wolff at a cost of more than £16 million. The British Commonwealth Line, associated with the P. & O., has spent vast sums—I believe much more than Cunard has spent since the war—in the construction of its vessels.

Mr. Stanley R. McMaster (Belfast, East)

I think that earlier the right hon. Member was implying that no further passenger liners would be built by any company when the "Queen" is finished.

Mr. Shinwell

I admit that that is an assumption, but it is probably well founded in view of the inability of British shipbuilders to obtain further orders from ship-owners, for reasons I shall advance in a moment, and because they are in keen competition with builders abroad. These are facts which are established. It is not certain that ship-owners will be busily employed in the coming years. I wish it were otherwise, but we have to face the facts, which are very unpalatable.

Mr. Kenneth Lewis (Rutland and Stamford)

At the beginning of his speech, the right hon. Member considered that it might be well if the shipyards gave up this order for the new Cunard liner, because they might get other orders. Now he is saying that they could not get other orders.

Mr. Shinwell

I shall come to that in a moment. Remind me of it if I do not do so. I want to maintain the sequence in my remarks, in spite of these interruptions.

I was about to ask: who are the best judges of the future of the Cunard line on the matter of ships? I should say that they are the Cunard line directors themselves. I say that because the line is now going into the air business, very substantially, with Eagle Airways. Perhaps I had better quote from what the company said, because that may reinforce the case which was presented by the hon. Member for Reigate. I had better also say a word about the directors. How do they fare in this business? On the last available date they had £130,000 in emoluments. That is not bad. That was the average over a period of years. They do quite well.

They are in process of acquiring Eagle Airways Limited and associated companies and one of the leading private aircraft operators in the United Kingdom. This is what they said: The Eagle have converted an extensive international network of scheduled services in Europe and in addition are operating an extensive route network in the Western Hemisphere. The company is going in for aircraft on a grand scale and trying to attract passengers who travel by air in competition with itself. I think that hon. Members can depend upon it that, one of these days, when air travel has been further developed and fares have been reduced—as is certain to happen because our aircraft industry is in competition with air services of other countries—the Cunard line will reduce its fares for travelling by sea. Then losses will be sustained and it will come to the Government and say, "We are very sorry, but we cannot pay what we owe you. What about another subvention?" By that time we shall have had another General Election and, without a doubt, the Government will again promise assistance to the company.

Are we concerned about the Cunard line in isolation, or are we concerned about the well-being of the shipbuilding industry as a whole? I maintain that the generality of hon. Members are concerned about the latter. I have said elsewhere, and repeat here, that if we have money to spend clearly it would be far better to provide as part of our shipbuilding policy—only as part of our shipbuilding policy—some subvention in the form provided in the Bill on reduced interest rates instead of going into the market and paying 6½ per cent.—interest rates of 4½ per cent. backed by the Government, which is a subsidy—for some of the other shipping companies.

From the point of view of Belfast, the Tyne, the Mersey and the Clyde it would be much better in the next few years to have the opportunity of building a vessel of 22,000 tons, 23,000 tons or 24,000 tons when, as under this Bill, some of them would be excluded. Three out of the four will be excluded from participating in the construction of the new Cunarder. That is one way to deal with the position.

Moreover, it seems to me that, if they can find subventions of this kind, the time has come when the Government might consider the position of some of the smaller shipbuilding companies and ship-owning firms. Here may I quote a passage, to which the hon. Member for Reigate referred, from the Chamber of Shipping Report. I think it should be placed on record, so that the public, or at any rate hon. Members, may know what the Chamber thinks about this proposal in relation to the general position of the shipbuilding industry: An example is that of the Cunard Steam-Ship Company Ltd. in relation to the maintenance of an express passenger service on the North Atlantic. With the heavily-subsidised competition which the Cunard Company has to face in the North Atlantic, British ship-owners were not surprised that the company found it necessary to place its position before the Government. Here I pause to make this observation. Reference has been made to this country having subsidised shipbuilding and shipping long before other countries. That is not true. Many years ago, indeed before the First World War, I recollect that Matson, one of the United States lines, was heavily subsidised by the United States Government which has gone on subsidising its shipping ever since. Without heavy subsidies, United States shipping would find it impossible to carry on, as is well known. But it is obvious that when we in this country are faced with heavily subsidised foreign competition, something has to be done for our industry.

I want to make it clear that I do not regard it as inherently unsound for the Government to provide subsidies, even for private industry, if that be in the national interest. I would rather see the Government take over the industry and administer it, but looking at this assembly, and at hon. Members opposite, I shall not cry for the moon. I know that such a state of affairs is unlikely for a long time, but some time it will come. In a way, this proposal is the beginning and that is troubling some hon. Members opposite. They are afraid that if subsidies are provided, the question of control will arise. If a measure of control is agreed upon, then the question of ownership arises, and that is what hon. Members opposite are afraid of. I can understand it. In the future more firms will be concerned. Do not let us make any mistake about that. The quotation continues: There are, however, other British shipping interests which are having growing difficulty in meeting government-aided competition in one form or another and equally have had, or will be required to incur, very great capital expenditure for the construction of new tonnage The General Council submits that the Government having decided that aid to the Cunard Company is desirable in the national interest, it follows that the Government should be ready to consider other cases where equally cogent reasons can be shown for Government help. The General Council considers that it is logical and reasonable to suggest that, although one British shipping company may have problems greater than another, the Government cannot, justifiably, assist one interest within an independent industry without being prepared to consider, on merits, the need to help others. I think that that is a logical position. Why single out this particular company, with its huge reserves, with its substantial investments and with its property interests—and all for the purpose of building another vessel which in the course of the next ten years, may, as was rightly said by the hon. Member for Reigate, become a white elephant?

In those circumstances, one might expect that hon. Members opposite opposed to this proposal will vote against it. I tell the House frankly that the reason I cannot vote against it is that my party has for cogent reasons, relating to the need for providing more employment, and on an assumption which I believe to be false, decided not to vote against it. What is the position of hon. Members opposite? The hon. Member for Reigate told us truthfully—I pay tribute to him for stating the facts as he knows them—that the reason why many hon. Members opposite, although opposed to its provisions are not prepared to vote against the Bill—despite the fact that they dislike the Bill and its financial provisions—is that in 1957 or 1958, or some time or other whenever it was, the Tory Party issued an election manifesto and promised that a vessel of this kind would be constructed; so that on the Merseyside, on the Clyde and on the Tyne—and in Belfast—people thought that they were going to have the opportunity to build it. What a shocking state of affairs.

I do not believe that it will be possible to make much amendment of this Bill during the Committee stage. I am not much concerned about the financial details. Probably they are as good as any that could have been devised. But I enter one caveat. I cannot understand—the Government having appointed the Chandos Committee which went into the matter thoroughly, and they must have expected repercussions from this scheme on the shipbuilding industry as a whole—why we cannot be provided with a copy of the report so that we may understand exactly what was discussed. There must be some reason for the concealment

The Minister adopted in his speech that flighty manner which he usually adopts as if he knows more than anybody else. I sometimes wish that I were as clever as the right hon. Gentleman thinks he is. He has a style to which we are habituated. Sometimes it goes very well and sometimes it is a bit boring. But when the right hon. Gentleman says that the Chandos Report was confidential one might suppose that it was a defence matter; that he was a defence Minister telling us that in the interests of security we cannot see what is in the report. The next will be that when it comes to parking meters the right hon. Gentleman will say, "I cannot tell you the reason why we have parking meters in this street and not in the other, because it is confidential."

I am not opposed to this Bill because I am opposed to the subsidy. We have become used to subsidies. They are provided for the agriculture industry, and private industry must have subsidies. We cannot carry on without them—State assistance, national assistance, hon Members may call it what they like. The fact is that, as the years go by, Governments of whatever complexion are bound to come to the assistance of industry. It is happening all over the world. It will happen more and more in this country. So I do not object to that. But do not let us pretend that this will solve the problems of the shipping and shipbuilding industry. One of these days, perhaps as a result of the appointment of the hon. and gallant Member for Croydon, North-East as a Joint Parliamentary Secretary to the Minister of Transport, we may yet see the formulation of a much more satisfactory and reasonable policy within the Ministry than we have had from the right hon. Gentleman.

5.49 p.m.

Mr. Paul Williams (Sunderland, South)

The House always throroughly enjoys a contribution from the right hon. Member from Easington (Mr. Shinwell) on the subject of shipping and shipbuilding, more especially as he always attempts to promote British interests in this matter. I hope, in that connection, to be able in some degree to follow the right hon. Gentleman. Unlike him, I oppose the general principle of State finance being provided for private industry. To me, that seems wrong in principle and unfortunate in practice, because when there is a private subsidy of this nature inefficiency tends to creep in and sterilise that dynamic form of management which one would hope to see in private industry.

My right hon. Friend the Minister of Transport referred to the inability of the Cunard Company to provide the capital for this development out of its own resources. Perhaps it would be worth while looking for a moment at this state of affairs in a little more detail. How is it that the Cunard Company cannot find the capital needed for this development? Is it because the cost of replacement is so much higher than the original historic cost? If this is so, surely that shows in some small measure that our economy, more particularly in relation to shipping companies, is so over-taxed that the replacement of ships at the normal rate is now well-nigh impossible.

There is a very strong feeling—I hope that my right hon. and learned Friend the Chancellor of the Exchequer will take note of it, in preparation for his next Budget—that the chances of replacing ships now is small as a result of punitive taxation over the years. Indeed, the shipping industry must be grateful for the Chancellor's confirmation of the 40 per cent. investment allowance in this Budget, and of its continuance over the lifetime of this Parliament. It was a notable step that he committed himself or any future Chancellor for the lifetime of this Parliament.

But the point surely is that British shipping now is so highly taxed that the chance of replacing the ships is reduced very considerably. For British shipping, and this is true of British industry in general, we are building up such a highly taxed economy that it is beyond the ability of industry, of shipbuilders, ship-owners, engineering, whatever hon. Members wish—to replace and modernise at a competitive rate of knots by comparison with our foreign competitors.

If we accept the principle, as apparently the Government do, that private industry deserves a subsidy—that is a principle which I personally do not accept—they have not yet, to my mind, sufficiently accepted the point made by the right hon. Member for Easington, which, I think, was a very valid one, that they are discriminating in favour of one particular company over and above other types of transport and other types of companies within the shipping industry. To me, that is a thoroughly repulsive doctrine. It is as though we singled out one hon. Member of this House and treated him preferentially in relation to his Parliamentary salary because he takes a particular interest in promoting the tourist industry, or something of that nature. It is a complete non sequitur to pick out one firm within one industry.

If the shipbuilding industry deserves support, and if one can accept the Government's offer, surely it would be better to try to find some way of supporting success—supporting those companies which out of their own resources, manage to provide replacements, such as the P. & O. line with the "Canberra" and the "Oriana". If we are to enter this field of support for private industry, surely it is all the better to support the successful rather than the less successful.

Mr. Bence

Does the hon. Member realise that this and previous Administrations have subsidised MacBraynes?

Mr. Williams

Of course I do, and it is for a particular social purpose and a very limited parochial Scottish purpose.

One looks at the whole question of the Cunard Company from the point of view of this principle. Cunard's take the view that the trans-Atlantic service, which is an express service, is, in fact, itself a profitable venture. I should like to hear whether that is true; I am told that it is. If it is a profitable venture, this removes completely, lock stock and barrel, every argument for subsidy for this venture. If it is profitable, surely the Cunard Company could have found some other way of raising the money, either from the resources which the right hon. Member for Easington read out from the Stock Exchange card—I note that he uses the Stock Exchange card for reliable information—or have gone elsewhere to finance its venture.

What I find more difficult than anything else to understand is that at a time when the State is putting money into the Cunard Company to build ships the company is putting its own money into aviation to buy up an air company and, presumably, to buy new aircraft, because it cannot possibly go on operating with the aircraft that the Eagle Company had before. It seems to me that it is a completely illogical position into which the Government and the Cunard Company have got themselves.

The Cunard Company has come to the Government for money to build ships while, at the same time, using its own money, resources and management to get into the air. I would have thought that this alone excuses the Government, if they really want an excuse, from any embarrassment which they may have felt about their election pledge. The situation has changed since the election of 1959. Since then, the Cunard Company has got into the air and this, I believe, wipes the slate clean of the election pledge. I had considerable doubts about the consultations that went on, and whether or not they went on within the Conservative Party. I think that we want a better justification from the Government as to why they want to put their money, and, therefore, the taxpayers' money, into the Cunard Company when Cunard's is using its own money to get into the air.

Mr. Burden

I am grateful to my hon. Friend for giving way, but he is not quite accurate in giving the impression that he has tried to do. Practically every shipping company has gone into the air. The Cunard Company is unique in regard to ships.

Mr. Williams

My hon. Friend knows a great deal about Cunard Eagle. He says that every shipping company of size is going into the air. That is true, but they are doing it with their own money and not with the taxpayers' money. My hon. Friend says that the Cunard Company is not doing it with the taxpayers' money. Apparently there is a difference between taking the taxpayers' money for building ships and using its own resources for getting into the air.

That is the point on which the House should stick. It should demand a better explanation from the Government why they did not inquire a little more into this matter. I do not want to elaborate further on this question of the Cunard Company except to say that I think there was a time, and I think that this may have changed last week, when there was danger of the Government shuffling off their general responsibility for shipping and shipbuilding by saying, "We provide this subsidy and support for the Cunard Company". For too long our administrators have had too little regard for the general maritime interests of the nation. I hope, like right hon. and hon. Members on both sides of the House, that we shall have a general debate on shipping and shipbuilding in the near future. In the meantime, this Bill can only be a sop to shipping and shipbuilding.

In welcoming the appointment of my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) to his position as Joint Parliamentary Secretary, I hope that he will support the general view that this matter should not be treated as an excuse for taking no further interest in British shipping and shipbuilding, but as a spur to providing a dynamic policy which will face up to the flag discrimination policies, to flags of convenience, or more insultingly, the flags of necessity policies and the taxation and other policies used by other nations. I hope that we shall see a more positive view of help for British shipping and shipbuilding. For this reason, I could not ever possibly support the Bill and I should like to think that it may well be strangled in Committee.

5.59 p.m.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

We have heard quite a lot today from hon. Members opposite to the effect that the only reason why they support the Bill is because of an election promise. That is not the reason, and they know it. That is simply the excuse they are giving, because, as my hon. Friend the Member for Birkenhead (Mr. Collick) reminded the House a little while ago, their own leader said that an election promise given during an election does not bind a Government when in power. They accepted that philosophy when the Labour Party was in office during the Second Reading of the Iron and Steel Bill. Now they are in some difficulty. They want a shield to prevent the world at large knowing the intense bitterness and difference of opinion they have with the occupants of their own Front Bench, and they are now utilising the outworn adage of saying, "If it were not for the election pledges".

We have some serious charges to make against the Government on this matter. I, with some of my right hon. and hon. Friends, strongly resent the Government appointing committees to examine the affairs of industry or other undertakings and giving the committees terms of reference so narrow that when they report the Government can say that they are acting in accordance with the recommendations of the committees, without giving Parliament the opportunity of knowing what the committees have recommended.

As one of my hon. Friends has already said, we have been bought twice like this. There is the example of the transport system, in regard to which the Stedeford Committee made certain recommendations. When this brilliant mouthpiece called Marples at the Ministry of Transport—where is he?—he is missing from his duties—wanted to defend the break-up of the transport system, he hid behind the Stedeford Committee. Now when he wants to defend giving a huge sum of money to private enterprise, he shields himself behind the Chandos Committee and says what the Government are now doing is broadly in accord with the recommendations of that Committee.

Parliament is entitled to much more courtesy than that. It is obvious from its investments that the Cunard Company is profitable. Indeed, it has been able to branch out from its normal trading activities and engage in air traffic. It has sought still further avenues of high profitability. In these circumstances, the nation should know why it is necessary for a huge sum of public money to be given to this company.

Under the Bill the Government will provide 60 per cent. of the cash involved in building the new "Queen". They will provide £18 million out of the total of £30 million. In an unguarded moment the Minister of Transport said that the rate of interest would be 4½ per cent. We are told that the Chandos Committee recommended the same rate. When challenged that this is exceedingly unfair to publicly-owned undertakings, which have to borrow money for modernisation at the market rate of 6½ per cent., the Minister rather altered his tone and said that the money advanced to build the new "Queen" would be at the current market rate. That was a complete change.

According to the Bill, the Minister's words are technically correct. It says that if Cunard's borrowing has to take place at current market rates of interest, the Government will subsidise the difference between 4½ per cent. and the current market rate. This takes us back to the Minister's original statement. In effect, the Cunard Company will get this subsidy at 4½ per cent., whereas publicly-owned and local authority undertakings have to borrow on the open market at 6½ per cent. We on this side have a very deep-rooted objection to such a procedure.

The Minister then said that it has always been usual for the shipping industry, or the Cunard Company, to be subsidised in providing these wonderful ships. He said that this has been so through the ages. He took refuge in that. However, in addition to the subsidy, there is also the fantastic fact that the Government will be the insurers of the vessel. They will be the underwriters. They will accept all construction insurance risks. They will accept the operational insurance risks. This is additional assistance to a company which is engaging in outside activities and showing a good profit.

My hon. Friends and I feel that there is a case for a new "Queen" of this size. We must face the fact that the "United States" and the "Ile de France" are wonderful ships. The present "Queens" are facing keen competition from these ships in trying to maintain their share of Atlantic traffic.

There is a lucrative traffic backwards and forwards across the Atlantic, and it is likely to continue for a considerable time. I say this with due deference to my right hon. Friend the Member for Vauxhall (Mr. Strauss); but the figures he quoted showed that there is a general increase in travel, both in air travel and in sea travel. The present trend, which is likely to continue, is that travel by sea is not increasing at the same rate as travel by air.

In spite of this, I think that there is a case, and will be for some time to come, for a ship such as this operating on the North Atlantic route. Anyone who has travelled on this type of ship will undoubtedly agree that it is a very good type of ship on which to travel. Therefore, there is a case for such a ship, apart altogether from its prestige value.

If shipping companies find it difficult to produce the capital themselves, why should the Government subsidise such a company to the tune of £18 million? Under the articles of agreement for operating the ship, a new company called the Q.3 Company will be established specifically to operate the new ship. Why cannot the Government themselves build the new ship? Why cannot they provide all the cash, instead of 60 per cent. of it? Why cannot they allow a shipbuilding company to act as agent for them, in the same way as the Minister of Transport employs various companies to act as his agents in connection with his new roads? Where public money is involved to this extent, why should not all the profit resulting from the venture go back to the taxpayer, who is providing the bulk of the money? Why should not the taxpayer receive the profits which are likely to accrue? Neither Cunard nor any other shipping company would undertake such a venture if it did not expect profits to result from it.

What intrigues me more than any thing is the opposition from the Government back benches. "Election pledge" is just an excuse, and the Government know it. The cause of the opposition from the other side is the pressure being brought on those back benchers by interests that know they will not share in the rake-off from Government money. They do not like the idea of public money going to a single company and not to the industry as a whole—

Mr. P. Williams

Would the hon. Member be rather more specific about what he has said? He is using rather wild phrases which to me are absolutely meaningless.

Mr. Popplewell

The hon. Gentleman knows quite well what I mean. He has been subjected to much pressure from that direction, as have most hon. Members opposite. It is no good their acting as injured innocents; most hon. Members have been subject to this sort of pressure. That is the real root of that trouble.

I share the general opposition to subsidies for industry as a whole that has been expressed by the hon. Member for Sunderland, South (Mr. P. Williams). The transport subsidy is entirely unnecessary, and the responsibility for that rests squarely on the shoulders of the present Administration. I oppose the whole idea of subsidies for private enterprise. It is not even necessary in this case. Even if financial assistance were necessary to get a prestige ship to withstand the unfair discrimination shown by other nations, the whole of the cash should be found by the Government. This should be a Government undertaking, and a company should run the vessel in the same way that the special Q.3 Company is to run this show.

I wholeheartedly agree that this is not the way to deal with shipping as a whole, and I do not think that the Government themselves think that it is. It is a special instance, but instead of their handing out the taxpayers' money to private enterprise in this way, I would have preferred the Government to have put forward proposals that would have shown their interest in trying to get some world agreement on the problem of flags of discrimination, and so place our shipping on terms equal to those enjoyed by the shipping of other nations.

The Minister of Transport said this afternoon that the U.S.A. is providing 58 per cent. of capital costs. He mentioned that in connection with our guaranteeing 60 per cent. of the capital cost of the new "Queen". He said that France guarantees 20 per cent. of capital costs, but added that it was rather difficult to estimate exactly how much subsidy goes into the running costs of the shipping undertakings of the various nations. Far from his having difficulty in estimating the figures, I hope that he has the information in his Department, and that, before very long, the House will have an opportunity of getting down to the basic difficulties of our shipping industry.

We can, do and will produce passenger-carrying ships second to none in the world. Even today we can far outstrip any of our foreign competitors in the production of passenger liners and that type of vessel. As a whole, the shipbuilding industry suffers more from competition in the production of the tanker class, where so many difficulties and semi-skilled jobs are involved. When it comes to construction needing the skilled craftsman, the skilled tradesman, we can still compete in price, in quality of commodity, in delivery times and all the rest, even in the face of the favourable terms given by other nations to their shipbuilding industries.

I wish that the Government had taken a wider view instead of saying that Government assistance in the building of a new "Queen" was an election pledge. That idea was hurriedly thought up during "MacWonder's" election tour of Scotland. It was the sort of sop that we are used to from this Government. Instead of presenting us with this Measure, I would rather the Government had come forward with proposals to deal with the biggest evil attaching to the shipping industry—the concessions and flags of discrimination, which present a greater threat than do flags of convenience—and I hope that as a result of today's debate we may soon have an opportunity to discuss that aspect.

I have no hesitation in saying that had there been a vote tonight I would, for the reasons I have given, have supported this Measure. I do not agree with the Government's method, but there is a case for Britain to own a vessel that can challenge the "United States"—the American trans-Atlantic flagship; that can challenge the "Ile de France", the flagship of the French line, and which will not only uphold the nation's prestige—there is more than that involved—but which will prove remunerative. Only in this way can we get and keep our fair share of the market.

6.18 p.m.

Mr. Fergus Montgomery (Newcastle-upon-Tyne, East)

First, I should like to offer my congratulations to my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) on his appointment as a Joint Parliamentary Secretary to the Ministry of Transport with a special interest in shipping and shipbuilding. I left school in 1946 and went into the Navy. I was a very humble ordinary seaman who had not been home on leave at all until some of us were offered five days' leave if we went on a course in what was then the new Electrical Branch. I went to that branch, in which my hon. and gallant Friend was my absolute superior officer.

I eventually got the title of P.E.M. and went home on leave. A friend asked my mother how I was getting on. My mother said, "He's doing famously—he is a P.E.M., you know." When her friend asked what that meant, my mother had to admit that she did not really know, and shouted upstairs to me, "What does P.E.M. stand for?" When I answered, "Probationary Electrician's Mate," it stopped her ever again boasting about my naval prowess.

I am surprised that some of my hon. Friends object to the Bill, because our election manifesto said that we intended to support the building of a new "Queen"—

Mr. Strauss

"Queens".

Mr. Montgomery

I beg pardon—"Queens".

There is a very famous shipyard in my constituency, and I used that fact in my election manifesto to help me in my campaign—[Interruption.] Well, my majority is still only 98—hon. Members cannot really begrudge me that. That being so, if the Government had not implemented this pledge I am afraid that I would have been on their bones just as much as some hon. Members are now.

Several hon. Members oppose the Bill on the ground that aircraft will destroy the economy of fast passenger ships. I am not altogether convinced by this argument, because I believe that there will always be some people who will prefer to travel by sea. I had the good fortune, last summer, to go to America as a guest of the American Government. I had to travel on an American ship, because the Americans were paying my fare. The ship was absolutely crammed, and there were many people who had travelled from America to Europe on the "Queen Mary" and the "Queen Elizabeth" and who were returning to America on the "United States". Many of them were loud in their praise of the "Queens", which they preferred to the "United States", which was, perhaps, jazzier and bigger, but not better.

One has heard the argument that two airliners costing £4 million could carry more passengers across the Atlantic in a year than an expensive ship, and much more quickly. This is not a straightforward argument, because allowance is not made for the fact that one good ship is worth ten airliners.

I should declare my interest in that I have in my constituency a Vickers naval yard, one of the firms tendering for this contract. One of the wonderful things that has happened in connection with this venture is that Vickers naval yard, together with their traditional rivals, Swan Hunter & Wigham Richardson, have joined together to submit a joint tender for this contract, and I believe that this good will and co-operation which has been devised with the object of ensuring that the Tyne builds the next "Queen" liner is a good thing. It also shows the determination of Tyneside to do all in its power to get this contract on to our river.

I would not say that we have been altogether helped by certain statements which have been made. The Minister's statement on 29th March, that if the tenders were equal the contract would go to a development district, which would exclude the merger of Swan Hunter & Wigham Richardson and Vickers-Armstrong, caused a furore on Tyne-side. I was delighted when the Minister recanted and, on 11th April, said that the best tender would be accepted and this would be determined by purely commercial considerations.

It is necessary that that should be said, because there was also another unfortunate statement by Sir John Brocklebank, the Chairman of the Cunard Line, who said that he expected that John Brown, Clydebank, would be asked to reserve a berth for the Cunarder. I think that was a remiss statement, to give the impression that it was a foregone conclusion that John Brown would get this contract. It should be made clear that John Brown has no divine right to build the next "Queen" liner.

If the Cunard Line had supplied all the money, it could be said that the choice should automatically rest with that company, but, as has been said, a great deal of public money is to be spent and, therefore, in all fairness, we must ensure that there is no favouritism, and all that the other shipbuilding companies are asking is that they shall have a fair chance to tender for this contract.

It has been said by some people that Swan Hunter & Wigham Richardson and Vickers-Armstrong may have less experience of building passenger liners than other firms, but that is not necessarily so. Both of these shipyards have an excellent record. Swan Hunter & Wigham Richardson have built such fine ships as the "Dominion Monarch" and, in fact, they built the original "Mauretania". Vickers-Armstrong built the "Empress of England"—

Mr. Shinwell

Suppose that Belfast were to get the order. Would the hon. Gentleman be in favour of the contract going there?

Mr. Montgomery

Yes, provided that I believed that the tender which came from Belfast was the best one. I believe that most shipbuilders will support that view. All they want to be sure of is that it will all be fair and square and that one particular area will not get an unfair advantage over another.

Recently, Vickers-Armstrong built a new liner called the "Empress of Canada". A well-known shipping journalist has described this as the finest fittted out ship that he has visited for twenty years. I dare say that he has also visited Clydeside in the last twenty years, so this is quite a feather in the cap for Tyneside. Vickers-Armstrong and Swan Hunter have spent a lot of money on modernising their plant and facilities, and without doubt they are amongst the most modern and progressive concerns anywhere.

All that the shipyards ask is that they shall get a fair deal, that the tenders are judged according to merit and price, and that justice will not only be done, but will be seen to be done. At this point, I wish to make a plea to my right hon. Friend. I suggest that a small independent committee should be set up to examine these tenders and to award the contract.

I welcome the Bill because I believe that, all things being equal, Tyneside can produce a highly competitive tender. I also believe that if awarded the contract Tyneside would build a ship of which not only the North-East but the whole of Britain could be proud, because we have the skill, the resources and the necessary ability to do the job. All that we ask from this Bill is a chance to prove our ability.

6.27 p.m.

Mr. John Diamond (Gloucester)

The City of Gloucester has many obvious advantages, but it does not include among them shipbuilding facilities of the kind which have been mentioned by several hon. Members. It indeed has a very fine river, the River Severn, but, so far as I am aware, nothing larger than petrol tankers use it. Therefore, I may perhaps address myself to the Bill with a little more objectivity than can some speakers.

It is clear that until the hon. Member for Newcastle-upon-Tyne, East (Mr. Montgomery) spoke, there were at least two reasons for supporting this Bill. The first was the election pledge, and the second was the Chandos Report. We can now add a third reason, the fact that we are indebted to this Bill for the hon. Member's presence. Had the election pledge not been made we should have been denied his presence and we should have had with us the gentleman who previously represented the constituency.

Perhaps we should consider the two main arguments to see where they lead us. The first one intrigues me because it is the first time, so far as I am aware, that a Minister has said that the reason for introducing a Bill has been an election pledge. According to the right hon. Gentleman the Minister of Transport, it was said by the Prime Minister, and it was included in the election manifesto. But this is not accurate, and we should get it cleared up. What the Prime Minister said and what the election pledge said was that the two "Queen" liners—in the plural—would be replaced. The right hon. Gentleman has made a long and careful speech demonstrating that, although he is in favour of this Bill which deals with the replacement of one "Queen" liner, he wants it to be clearly understood that this is not to be taken as an argument for replacing the second one which has another five years' life and, therefore, consideration need not be given to that for the time being.

We should like from the Government Front Bench an authoritative reply as to where we stand. Whose word weighs the more—that of the Prime Minister and the election pledge, or that of the Minister of Transport? Or are we going to be driven to the new Conservative philosophy that we should in all circumstances carry out precisely 50 per cent. of our election pledges?

Mr. Burden

That is a very naive argument. The hon. Gentleman knows that there is and there will be no question of replacing the second "Queen" until after the next election anyhow, so it is quite clear now that only one can be dealt with.

Mr. Diamond

We understand the niceties of pledges. We understand that no Government can pledge their successor. We understand also that there is here not a question of a Government but of a party at election time making a promise to the electorate, on the basis of which a candidate in a particular constituency might be returned. Indeed, the hon. Member for Newcastle-upon-Tyne, East told us that as a result of this pledge he secured the considerable majority of 98 at the election. I am not pulling his leg when I say that. I sat in the House at one time with a majority of 42. I regard a majority of 98 as very substantial. We should have clear what the Tory Party said in its pledge and what it intended by what was said in its manifesto. It is still the same Conservative Party, and it will, presumably, put forward candidates at the next election. We want to know what reliance is to be placed on Conservative Party pledges at election time.

The second argument is based on the Chandos Report. The right hon. Gentleman really cannot expect us to put much weight on this Report, for several reasons. In the first place, as he knows very well, it was not a report on what should be done. It was a report on how a particular decision should be carried out, a totally different thing. The election pledge had been made, and the terms of reference were, "We have made this promise. Which is the best way of carrying it out?" No consideration, therefore, could be given to whether it was a wise promise or not, to alternative means of travel, to how much time had elapsed since the promise was made, and so forth. There were many fundamental considerations to be taken into account which anyone examining the matter would have wished to consider. That is the first reason why we cannot place much reliance on the Chandos Report.

Secondly, the Minister really cannot have it both ways. Either one has a report and puts it on the table so that hon. Members may look at it, or one does not rely on it. Hon. Members are charged with the responsibility of reading reports and making up their minds on the basis of evidence put before them. It is not our job merely to follow behind the Minister because he says that he has read a report, the report says such-and-such and comes to certain conclusions. We are entitled to see the evidence. We are entitled to know exactly on what considerations the conclusions were based. We cannot perform our functions as Members of Parliament unless we do those things, and the right hon. Gentleman must not be disappointed if nobody places great weight on the Report. (a) because of the narrow terms of reference, and (b) because we are not allowed to see it. Therefore, the two arguments which have been advanced in favour of the Bill seem to be very thin indeed.

Several arguments have been advanced against the Bill. I shall not go through them all. It is within everyone's knowledge that the matter is full of doubt. It would be very difficult for anyone without the fullest possible direct first-hand information to decide a whole host of difficult questions about, for instance, whether it ought to be a ship or an aircraft which should be built, whether it ought to be a ship of this size or of another size, whether the money to help relieve unemployment could be used much better in other ways, and so forth. A host of fundamental questions require answering. I have mentioned some of them, and I am not at all satisfied that the answer we have before us is correct.

I am perfectly satisfied, however, that the means for implementing the Government's decision are wholly objectionable and inadequate. It seems that the Conservative Party realises from time to time that there has to be public subsidy for private enterprise. We accept and understand that and we have developed machinery for giving it effect. The Conservative Party is always in the philosophical difficulty that, having decided that it is necessary, it rejects or recoils from accepting the means to give effect to the decision. What is put before us now must be judged by Tory philosophy, not by ours. Our philosophy would have moved us to approach the matter in a different way. That is understood, as my right hon. Friend the Member for Easington (Mr. Shinwell) explained, and there is no point in crying for the moon and trying to persuade hon. Members opposite to accept what we say because, obviously, they quite sincerely cannot do so. However, let us judge what is proposed by Tory philosophy.

We have before us a proposal to build a ship. The proposal has been examined, and the report has been that it is worth while. We are told not that it is not worth while but that it is worth while building the ship. Why does not the company which wants to build a ship like this get on with it? The answer is that the Government, apparently, are prepared to subsidise it, but not on any social grounds, not for reasons of unemployment, not on some grounds as were present in regard to steel or Colvilles, where it was said that the new facilities would not be put where they were, that is, in areas where there was unemployment, unless the Government were prepared to assist, because it would be uneconomic to do so. Those are not the reasons advanced here. According to the right hon. Gentleman, the matter is to be dealt with on a purely commercial basis.

We are told that the winning tender will be decided on purely a commercial basis. Then why is not the contract to follow a purely commercial basis? The purely commercial basis, as the Minister knows, would mean, "Heads I win, tails I lose". It would not mean, as this contract means, "Tails I lose, and heads I cannot possibly win". It will be "Tails I lose" because, of course, if the venture does not succeed, if the new ship is not a success, the Government will lose their money, that is to say, the taxpayer will lose his money. They will lose some money. It is impossible to say how much. Certainly, they will lose up to £3¼ million if the venture is not a success, and that is taxpayers' money.

Incidentally, the £3¼ million, it should be noticed, is just about the right amount which Cunard Eagle would require to buy two American aeroplanes in which to carry across the Atlantic all the passengers which it is proposed should be carried by this new £30 million ship.

Mr. Burden

Nonsense.

Mr. Diamond

If the hon. Gentleman says that, will he say what the right figure is?

Mr. Burden

When the hon. Member talks of aircraft in the same sense as he talks of shipping, he should remember the capital investment. He must take into consideration the life of the aircraft, the cost of replacement, etc. All manner of other considerations should be taken into account. He is an accountant and he should realise that very well.

Mr. Diamond

It is true that a ship lasts longer than an aircraft, but aircraft last a great deal of time, as anyone interested in the second-hand aircraft market knows. There are a great many aircraft available for sale on the secondhand market, and aircraft last a long time.

Mr. Burden

There again, the hon. Member is on a false point. There are so many second-hand obsolescent aircraft for sale because people are not buying them.

Mr. Diamond

One of the reasons why aircraft are for sale second-hand is that people are not buying them. I merely make the point quite simply that aircraft do last rather longer than one might have expected. They become obsolete but not worn out. They become obsolete because there are new models, new designs, with new speeds, and so forth, but they do not wear out quickly. They last a very long time. If the hon. Member wants to be technical—he appeals to me on that basis—he should take into account the fact that aircraft last a long time, although they do not last so long as ocean-going liners.

The fact remains—the hon. Member for Gillingham (Mr. Burden) has not denied it, and I understand that he is a director of Cunard Eagle himself, so he should have the information—that the amount of the subsidy now proposed is sufficient to buy two American aeroplanes of a size suitable to transport across the Atlantic in one year precisely the same number of passengers as it is suggested are likely to be transported by the "Queens", and the total amount involved in the new "Queen" is £30 million as opposed to the £3¼ million involved in the subsidy.

I return to the main terms on which this is being negotiated. The terms are that in certain circumstances the Government and the taxpayer will lose. The terms are that in no circumstances can the Government or the taxpayer win—in no circumstances at all. If the scheme is utterly successful, if the ship is utterly successful, if an American company or a Greep ship-owner buys it out or takes over Cunard, whatever the circumstances which one can envisage, the most that can happen is that the Government will receive back their money—the loan and the subsidy. That is the best that can possibly happen. The worst thing that can possibly happen is that the whole lot will be lost.

There is the probability that only the subsidy will be lost—the £3¼ million—but nobody can tell. It is precisely because nobody can tell that I fail to understand why the Government are not prepared to do what would be done in any ordinary commercial transaction; that is, to say "We cannot foresee the future with certainty; it may be brighter than we think, or it may be less bright than we think, but we want this new ship built for a variety of reasons"—which I personally cannot accept—and that we should be doing it on the basis that if things do not go quite well, the Government, which has contributed and which has in fact been persuaded of the need to build the ship, will lose, but if things go well the Government should share in the profits. What is wrong with a simple commercial contract like that?

Mr. J. Howard

I wish to refer to only one of the remarks of the hon. Member for Gloucester (Mr. Diamond), and that is when he said that we may lose the whole of the money put into this transaction. If he will refer to the Memorandum in paragraph 3, he will see that the Cunard Company will pay to the Government the amount of the deficiency. He will surely agree that in these circumstances the Cunard Company stands to lose a very great deal of money, and that the Government are in fact indemnified?

Mr. Diamond

I heard the hon. Gentleman make that remark earlier in an intervention. I do not know where that is, and if he can tell me where it is—

Mr. Howard

On page 3, at the end of paragraph 3.

Mr. Diamond

The paragraph says: Cunard will undertake with H. M. Government that if the Q.3 Company are unable to pay the full amount which they may be required to pay as aforesaid, Cunard will pay H.M. Government the amount of the deficiency. The terms of the transaction as set out clearly show, and perhaps the right hon. Gentleman will correct me if I am wrong, that in certain circumstances the parent company guarantees the repayment of the loan, but only in certain circumstances. These circumstances are, for example, purchase by an outside body, but only in these circumstances is it guaranteed. It is not guaranteed in all events.

I hope the right hon. Gentleman will contradict me if I am wrong, but as I read it, it is only in a limited set of circumstances that the guarantee of the parent company subsists, and, in the generality of circumstances, if the money is lost through trading or in a variety of ways other than special ways, the guarantee does not come into effect. Therefore, I hope the hon. Gentleman agrees with me that there are many circumstances in which the whole of the money might be lost, and that there is not a single circumstance in which the Government can gain any advantage whatsoever.

I say to the right hon. Gentleman that that needs explanation according to Tory philosophy. He needs to explain to us why, if it is right to enter into a commercial contract for tenders which will be decided by commercial grounds, and not on full employment or other social welfare grounds, it is necessary to have an agreement under which, if things go one way, the Government lose, and if they go the other way, the Government cannot possibly gain.

I think there are other points to be considered. There is nothing whatever here about representation on the Board of the new company. Why not? What is the difficulty about that? Here is a new company, as I understand it, specially incorporated for the purpose of running this ship. Its accounts and activities can easily be identified and separated from all the other activities of the Cunard Company, and it is not to be confused, as this is subsidy money, with the air activities which have been undertaken by Cunard with its own money and with no assistance from the Government. The whole of the profits of these air activities will go to the Cunard shareholders, because it is a separate organisation. What is the difficulty about having an interest in this separate organisation? What is the difficulty of having seats on the board of a separate organisation? We still have our directors on B.P.; I am not aware that they have all resigned. If we are putting public money into this, why not have directors there also?

Let me repeat, in case anybody did not hear what my right hon. Friend said, that I know of no finance house that would think of putting up money on terms like this without requiring, not only a seat on the board, but the possibility of controlling the board, and some interest in the equity in the form either of convertible debentures or some real interest in the equity, so that if things go well the people putting up the risk money, albeit with some kind of security, will get a share in a successful business being carried on. I do not understand at all why the right hon. Gentleman chose to speak so shortly today and why he hardly dealt with this point at all. It is a perfectly valid point on perfectly good commercial grounds. I hope that we shall get a full answer. There are other points which can be dealt with on the Committee stage more fully, and I will not detain the House with them now, but will leave it there with these few comments, with the request that the Minister should give the fullest attention to what has been said.

6.46 p.m.

Mr. John Rodgers (Sevenoaks)

As the House is aware, I have the gravest doubts and misgivings about the Bill. I am sorry that the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) is not present, because the misgivings and doubts which I express have nothing whatever to do with any pressure brought to bear on me from any quarter whatever. I am sure that that is the view of every hon. Member on this side of the House, whatever view he takes about the Bill. I had hoped that the time had long since passed when the Opposition would impute base motives to hon. Members on this side. It is a childish thing to do, and in this case I am convinced that it is not true.

My hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), in what I thought was an extremely brilliant, witty and somewhat devastating speech, deployed all the arguments that I would wish to deploy against the Bill, and, therefore, I do not wish to detain the House very long. I wish, in summarising my opposition to the Bill, to join hon. Members on both sides of the House in congratulating my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett), who is the new Joint Parliamentary Secretary to the Ministry of Transport, on sitting for the first time on the Front Bench, and on joining the Ministry on the shipping side.

My right hon. Friend the Minister kept referring to the fact that this subvention to the Cunard Company in replacement of one of the "Queens" was really historical. We have done it before, therefore it was nothing new, and there was no reason why we should not go on doing it again, but this is not quite the case. There are many differences now from the time when we agreed to build the "Queen Mary". Then, there was mass unemployment, and anything which would create employment was to be welcomed. There was the strategic concept, which might justify the subvention, and the idea that the ship could be used as a troop carrier if war came. No such necessity arises in this case.

Again, air travel had not developed to anything like the extent to which it has developed now. When one boils down the arguments of my right hon. Friend I must say that I see no reason whatsoever for Government subvention, except on the grounds of pure prestige—that we ought to keep our place in the trans-Atlantic shipping industry. But we are already losing it. In the last ten years Cunard's share of the trans-Atlantic trade has dropped from 60 to 30 per cent., while that of all the other main lines has increased. What is the reason for this?

I am not a shipping man, but I am worried because nearly all the other shipping companies which are doing much better than the Cunard Company are operating ships which are much smaller than the "Queens". We are told that the ship proposed is the only sized ship which can maintain a regular express service across the Atlantic. However, as far as I know, the United States lines have never missed a sailing yet. They may have been delayed for a few hours. I do not understand why the French, the Italians and the United States can operate ships which are much smaller than the "Queens" and still, first, make bigger profits, secondly, get more of the traffic, and, thirdly, keep regular sailings.

Mr. J. Howard

In 1955, 201,000 people crossed the Atlantic, 84,000 of them in the "Queens". That is 42 per cent. of the total. In 1960, 169,000 people crossed the Atlantic, 73,000 of them in the "Queens". That is 43 per cent. of the total. Over those five years there has been a slight increase in the percentage of people carried by the "Queens", but, no doubt, figures can be made to mean anything.

Mr. Rodgers

Today, I have been foxed by statistics given from both sides of the House. I propose to produce some quite different figures which I believe to be accurate. They are based mainly on Board of Trade figures and therefore, I have some belief in them. According to my information, in the last full year, 750,000 people have crossed the Atlantic by air and less than half that number have gone by sea. It would, therefore, appear that the number of people travelling by air is going up while the number travelling by sea is going down all the time. [HON. MEMBERS: "No."] All right, the number travelling by sea is not increasing at the same rate as the number travelling by air. Far more people are travelling by air than by sea. I do not think that anyone will quibble with that.

The number of people travelling in the "Queens" last year fell by 6 per cent. The total decline in Cunard passengers was 21,286, which is a quite substantial decline, while over the same period the number of people travelling by air increased by 24 per cent.

Sir J. Duncan

My hon. Friend will, I am sure, realise that there was a long strike in America.

Mr. Rodgers

That would equally affect the other ships, like the "United States".

I have on a previous occasion referred to this vessel as an obsolescent national status symbol, and I think that that is what it is. A ship of this size could be used on no route other than the North Atlantic route. It has no alternative use. I believe that, if the facts were examined objectively, it would not be proceeded with. It is obsolete before it sails. One reason for this is that the number of passengers travelling by air is increasing and the other reason is that far more tourist class as against first-class passengers are crossing the Atlantic by sea and air. This also has to be borne in mind. If the ship is proceeded with—and I am afraid that it will be—I hope that it will not be called after Her Majesty. It would be much more fitting if it were called the "Queen Anne".

If the argument is that the reason for the Government wanting to give a new subvention is to help shipbuilding, I agree with the right hon. Member for Easington (Mr. Shinwell) that this is not the right way to tackle it. If my right hon. Friend were asked candidly how he would use the £18 million to benefit the shipbuilding industry, I am sure that he would not for one moment say that this is the way to do it. He is far too intelligent to believe that this proposal will be of real assistance to the shipbuilding industry. It is true that it will help a particular shipbuilding firm, or firms, in one area for a very limited time, but there is a need for us to tackle the whole problem of shipbuilding and shipping industry and to marry these two industries.

In my view, the concern of the Government should be directed at the reorganisation of the shipbuilding and shipping industries and to bringing them together. They should ensure that management is improved and they should encourage amalgamations, much though it is disliked by hon. Members opposite. They should ensure that the restrictive practices which bedevil the industries are abolished so that we can produce ships at competitive prices. All this should be the concern of a Minister of Shipping and of his colleagues, not this miserable subsidy.

I believe that the Bill should be rejected. I shall not vote against it. Apparently no one is to propose that it should be rejected and, therefore, I shall probably abstain. In view of the speeches which we have heard from hon. Members opposite, I fail to understand why they did not move the rejection of the Bill.

Mr. James Callaghan (Cardiff, South-East)

Let us do it now.

Mr. Rodgers

I think that I have said enough to show why I object on principle to the subsidy to the Cunard White Star, particularly because it has enough assets to pay for this ship itself. As many hon. Members have said, it is spending millions of pounds on Boeing aircraft and is expanding in the aircraft industry with its own money. Yet it expects the Government to provide some of the capital for the "Queens". If we go ahead with the Bill I hope that, in Committee, we will modify the financial terms which have been suggested. One possibility is to make the £3½ million subsidy, a straight gift, as a loan at the same rate of interest as is granted by the Public Works Loan Board.

Secondly, I do not understand why the assets of Cunard White Star could not be set off as collateral against the loan and not, as proposed, only in the event of it being taken over by a foreign owner. I believe that the whole of the assets of the Cunard Line should be set off against the Government loan.

Although I am utterly opposed to the Bill, I have nothing against Cunard White Star Limited. I have often travelled both to and from America on both "Queens" and I have enjoyed my visits. Nowadays, I travel much more often by air. On Friday, I am going to the United States by air. I think that the Cunard Company provides the best service of any shipping company whose ships cross the Atlantic, but I also believe that the time for the "Queens" to flourish is finished and done with.

6.58 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

I have a little regret in that I feel myself compelled to support a Measure for subsidising private enterprise by giving it a preferential rate of interest, but I console myself with the fact that, if this is the beginning of a principle by which when this House or any responsible body in the country decides that some social wealth should be created or something should be created by loans at a modified or differential interest rate, I am all in favour of it.

We need many new houses and hospitals. It would be for the prestige of this country if we increased our building of hospitals and the redevelopment of our towns by giving a loan at a 4½ per cent. interest rate instead of forcing local authorities on to the market. After all, we have taken Cunard off the market because we think that this ship is highly desirable. Looal authorities cannot hold reserves.

We are told that the Cunard Company has £38 million in reserve. We must not, however, think that it can spend this money on one ship for the North Atlantic run. It has many obligations concerning the replacement of cargo boats and marine services all over the world. This reserve of £38 million must cover a large number of replacement responsibilities in other directions. For goodness' sake, let us be fair to the Cunard Company.

I enjoyed tremendously the speech of the hon. Member for Reigate (Sir J. Vaughan-Morgan). It was an extraordinarily witty Parliamentary performance. The hon. Member suggested, however, that he travelled by air unsubsidised. I have done a lot of work for the aircraft industry since 1920, and everyone knows that the whole of that industry has been built by the pouring in of thousands of millions of pounds in the construction of aircraft.

Sir J. Vaughan-Morgan

I must plead innocent to the accusation. I did not say that air travel was unsubsidised.

Mr. Bence

You objected to travel ling in a subsidised ship, but you travel by air—

Mr. Speaker

The hon. Member must address his observations to the Chair, otherwise we get into a muddle.

Mr. Bence

I beg pardon, Mr. Speaker.

When talking about subsidising the Cunard Company, it should not be forgotten that the aircraft industry, one of the greatest competitors of shipbuilding, has reached its peak only because it has had thousands of millions of pounds of public money poured into this development. Sixty years ago, our shipbuilding industry had the advantage of a huge Navy and huge naval development and research, which the shipbuilding firms could use and pass over to the merchant shipping industry. Those days have gone for this country. Now, we have reached the stage where the Government are compelled, over an ever-widening field, to subsidise private enterprise in some form or other.

Every industrial nation in the West is living in an age when the so-called organisation of production by private enterprise is failing in every direction. Government finance has to come in. The old traditional measures of financing industry are breaking down. Sir Nicholas Cayzer spoke at the launching of a ship at John Brown's, Clydebank. I forget the name of this fine big ship. They are all fine big ships from John Brown's, and the bigger they are the finer they are. Sir Nicholas Cayzer said that the vast majority of international trade and merchant shipping relationships were inter-governmental. All over the world Governments are dominating the shipping policies of their respective nations. Many of the agencies with which traders have to trade are semi-Government institutions. This is happening all over the world.

I remember the deflation of 1922, when the City of Cardiff was called the city of broken millionaires. The big shipping companies were bankrupt. One of the shipping magnates, Sir Daniel Ratcliffe, shot himself. He was a millionaire one day and was broke the next. He blew his brains out. We seem to have passed the age of voluntary liquidation. Industrial organisations on a big scale in this country do not go into liquidation. They bring the begging bowl to the Treasury to get money to carry them through. Whether it is because the banks and insurance companies have such heavy portfolios of industrial shares, I do not know, but it seems that the age of voluntary liquidation and the writing down of capital has gone. We live in an age when Governments come to the rescue of firms or of whole industries which are in difficulties.

Nevertheless, I understand some of the opposition from merchant shipping about this subsidy to Cunard. We have had it said here this afternoon—

Mr. Peyton

The hon. Member is making a wholly unjustifiable statement. In speaking of the opposition from merchant shipping, he is falling into a mistake which already has been made by hon. Members on his side of the House that speeches from these benches are made on grounds of merchant shipping. One of the reasons why I look with disfavour upon the Bill is that the consequence of this kind of action is likely to be a large queue for similar subsidies. The hon. Member must get that right.

Mr. Bence

I was making the point that there is opposition in the country by merchant snipping houses—

Mr. Peyton

Which ones?

Mr. Bence

Runciman's oppose it, do they not?

Mr. Peyton

I do not believe that the hon. Member has any evidence to suggest that any merchant shipping firm is opposed to it.

Mr. Bence

All right. It has been said here today that there are strong objections to giving these terms to a specific company, Cunard. It has been said outside this House as well that there are strong objections to the whole principle of the Bill. I am only repeating what has been said.

Mr. Peyton

The hon. Member must get this clear. The objections do not come from the industry. The industry, I understand, is very much inclined to support the Bill, hoping for a few crumbs to be left over from it.

Mr. Bence

I have listened to objections from an individual connected with merchant shipping criticising the terms of giving Cunard a special favour. I do not put it any higher than that. It may not be organised opposition, but there are individuals connected with merchant shipping who object to this being done for the Cunard Company.

I was surprised at the Minister telling us that it was not desirable for the Government to hold any equity interest in the new ship, because we might lose the lot. That is fantastic. The Cunard Company has reserves of £38 million, which may cover the cost of replacing twenty or thirty cargo ships of all kinds. It has other merchant vessels besides the two crossing the Atlantic. It has vast obligations apart from two "Queens". So we must not take the whole of the £38 million. The £12 million that Cunard is putting up is as much as it can spare from those reserves for this re placement. Cunard must have a fleet of 70 or 80 vessels—

Mr. Shinwell

It is no use my hon. Friend assuming that the Cunard line contemplates, from its £38 million less the £12 million involved in the Bill, building a number of cargo vessels. Why does he assume that?

Mr. Bence

Cunard has a fleet of 70 or 100 merchant vessels. Some of them may be ten or twenty years old and replacements will be coming along. The "Britannic" was to be replaced a few years ago, and the Company was to finance it, but it was cancelled. I am only making the general commercial assumption that any big company with reserves has a lot of obligations outside one ship. That is a fair assumption to make.

Why cannot we hold an equity share interest in this venture? I was at the launching of the "British Queen", a 50,000-ton oil tanker, from John Brown's. It was launched for B.P. I understand that the Government are an equity shareholder in B.P.

Mr. Shinwell

They have been for years.

Mr. Bence

The Government hold 53 per cent., I believe, of the equity shares. I hope that I shall have the pleasure of being invited to the launching of the "Prince Charles", not the "Queen Anne".

Why cannot we hold equity shares in it? Are the Government preparing for the taxpayer to lose money? I agree with my hon. Friend the Member for Gloucester (Mr. Diamond) about not taking equities in it because we might lose the money. In any event, we shall lose the money that we put in. The Government are making a completely wrong assumption. I am surprised that we cannot take an equity interest in this new Cunarder when she is built, especially when we have equities in B.P.

I want to discuss the tenders for the ship and its possibilities in the future as against air travel. I agree with the Minister that such a venture as this, costing £30 million, must be on what the Minister called a commercial basis. Whatever tender is accepted, however, the ship which comes off the drawing board, from any shipyard, must show techniques in design and in amenities within the ship well ahead of anything that is afloat today. It is better to pay a little more for a ship that is a tremendous improvement on anything now being built or afloat than to pay less money for something similar to what is now being built or afloat.

Success in an enterprise such as this, carrying across the highly competitive North Atlantic ferry, will go to the nation which puts into service the ship which is at least half a decade ahead of anything at present sailing. If that is what the right hon. Gentleman means by a commercial proposition, I agree with him wholeheartedly. Something more than price is involved in this contract. It is not necessarily the lowest price which will provide the ship which will capture—which is what the ship has got to do—the seagoing traffic across the North Atlantic ferry. This is why I am all in favour of the Bill and support it, and support the British mercantile marine wherever it is.

Since 1945 the British mercantile marine has been under very heavy pressure from the United States and even from India and Argentina. All those nations now want their own merchant fleets. To them a merchant fleet is a kind of symbol, an oceanic symbol, of sovereignty. It is no good, for instance, telling the Indian Government that P. & O. or British India or the Commonwealth Line can do the job more economically than they can. They want their own merchant fleet.

We are being driven back. The United States, by their subsidising policies, are driving us back. It seems to me that some hon. Gentlemen opposite want to retreat. I do not want to retreat. Although I am a landlubber, I love the sea and ships. I suppose that to every Britisher a ship is a symbol of Britain. I want to see a strong mercantile marine. I believe it is necessary.

Carriage by sea is to this island nation as vital as agriculture. I believe it is absolutely vital to us, and that we all of us as taxpayers should make sacrifices if need be to maintain our merchant fleet and to show the world that we are not prepared to retreat or to become a fifth or sixth rate maritime nation and that we are determined to hold our own and do all we are capable of in sea transport.

Mr. Diamond

I apologise to my hon. Friend for this intervention, but his mention of agriculture reminds us all that agriculture is helped not by putting the whole of the eggs in one basket, not by giving to one farmer in respect of one cow or pedigree bull £20 million.

Mr. Bence

It is perfectly true that the Government have put thousands of millions of eggs into the aircraft basket—for jet aircraft, passenger airliners—but up to the present have put nothing in the shipping basket. It is true that over sixty years there have been general financial arrangements with Cunard, and the only Cunarder not built by John Brown was the "Mauretania", which was built at Newcastle-upon-Tyne. That order was given to Newcastle-upon-Tyne because John Brown had not a berth vacant at the time.

Mr. McMaster

I am sure the hon. Member does not want to give a wrong impression. Many liners were built at Belfast by Harland and Wolff for the White Star Line which later became part of the Cunard Company.

Mr. Bence

That was before 1920 or 1921, and I was talking about Cunarders.

However, in supporting this Measure, and notwithstanding that it may well be the forerunner of further Government help to the shipbuilding industry—as, indeed, I hope it is—I hope that we shall hear no more of this nonsense that if it is successful the Government will deny themselves the privilege of taking an equity holding in the project, so that if there is any benefit only the shareholders will get it and the taxpayers only pay the piper. That seems to me quite wrong. But I certainly do wholeheartedly support this Measure, and I hope that the firm which produces the best design at a reasonable price gets the contract, because I know very well that, if that is so, John Brown's will get it.

7.15 p.m.

Mr. F. A. Burden (Gillingham)

One thing which is perfectly clear is that the new "Queen" will not sail from the Medway and it will not be built in Chatham Dockyard. I was very interested to see, in the General Election Manifesto of the Conservative Party, the statement that We also intended to support the replacement of the Queen liners. At that time, of course, we in Chatham were, as we still are, interested in building a new type of vessel in this country, a nuclear submarine, and I give my hon. and gallant Friend notice that we shall press on the case for that as strongly as possible.

Some of my right hon. and hon. Friends have today produced, against these proposals for the construction of the new "Queen", arguments on the basis that they are most strongly opposed to the subsidy, and some of them have criticised the proposals on the ground that such a ship as this projected one will be obsolescent before it is built. Those arguments, however, were just as strong and just as valid during the General Election as they are now, but not once did I find that my hon. and right hon. Friends raise these criticisms during the election. Their arguments, which they have put forward today, were just as valid at that time when they fought the election on that election manifesto.

Mr. Geoffrey Hirst (Shipley)

Is my hon. Friend trying to say that nobody in the party at any time in the election disapproved this part of the manifesto, because, in fact, I did?

Mr. Burden

That appears to me to be an absolutely lone voice in the wilderness. I do not know that there was any general objection at that time. If I had felt so passionately about it as my hon. Friend apparently now feels I should have had to consider very seriously whether I could support a Government who proposed something to which I was so violently and passionately opposed.

Mr. Diamond

rose—

Mr. Burden

Will the hon. Member allow me to go on just for a little while? Then I will give way.

Mr. Shinwell

But my hon. Friend only wants to pour oil on the troubled waters opposite.

Mr. Burden

Now I, also, want to disclose my own position quite frankly. During the election and after it, when this proposal was made, neither I nor the Government nor the Cunard Company had any idea that the Cunard Company would have any interest whatsoever in Eagle Airways, now Cunard Eagle Airways, nor did I have any idea that I should be associated with Eagle Airways, which, ultimately, became Cunard Eagle Airways. I want to make that position perfectly clear. The Chandos Committee and others took this matter into consideration long before there was any question of Cunard taking any interest in Eagle Airways.

What happened is this. I think that we have to consider these facts. Then, I think, many of my right hon. and hon. Friends will come to the conclusion to which I have come. It was perfectly clear that the Cunard Company came to the situation where they said, "The life of the 'Queen Mary' is now coming to an end, the useful economic life of the 'Queen Mary' on the Atlantic, and we have to consider what we are to do in the future." They saw the simple economic fact with which they were faced, and the board considered that, in the circumstances, it could not undertake, with its other commitments, the spending in one sum of an amount sufficient to finance a new "Queen" costing about £30 million. The Cunard Company estimated, quite properly, I believe, that it was just not a proposition without some Government help.

Mr. Shinwell

Why?

Mr. Burden

Because it is responsible for running a big shipping company with considerable commitments which it is far better able to judge, with respect, than the right hon. Gentleman.

Mr. Shinwell

The assumption underlying the hon. Member's argument is that when the ship is constructed the company will have to pay £30 million. Are we to understand that there is no shipbuilding company which is prepared to provide credit facilities, not similar to those provided by foreign builders but approaching them? For example, it could pay the £30 million over a period of years.

Mr. Burden

Certainly not, and that, obviously, was one of the reasons which were considered when this matter was discussed at top level in the Cunard Company. Then the Cunard people, with all their experience of the North Atlantic, considered the alternatives of smaller vessels as a replacement, but it was perfectly clear to them that it was impossible to replace the "Queen", to do the job for which she was intended, by a very much smaller vessel. In the light of their considerable experience, they decided that it was essential to go ahead with a big liner, but in the present circumstances of the finance required for a vessel of that kind they decided that they must consult the Government, place the facts of the situation before them, and ask that those facts be considered.

In view of what has been said in the House today, it is perfectly obvious that the Cunard Company would have preferred to remain master entirely in its own house and not to have to go to the Government in any way for assistance or guidance in this matter. It is also perfectly clear that the Government were absolutely free to refuse to do anything whatever. No doubt some right hon. and hon. Members consider that that is what they should have done. But it is clear that it is a matter of great national interest that this country should remain in the North Atlantic, and that if it does not, then very cogent reasons should be given at Government level for the refusal of the Government to enable the country so to remain. The Government quite properly considered that Cunard had a case and they decided to take certain action.

In the first place, in assessing this action, it should be remembered that the "Queen Mary" was laid down, in 1932, at an estimated cost of about £4½ million and that the Inland Revenue allowed a depreciation of roughly 100 per cent. on the historic cost over twenty years, but the estimated replacement cost of the vessel today to do an identical job is not £4½ million, but £30 million.

It should also be remembered by the House that the Cunard company would have been in a very much better position had it not been for the fact that during the seven best years of the life of the "Queen Elizabeth" and of the "Queen Mary" it was denied the services of those vessels in a commercial capacity and the ships were going across the Atlantic on their strategic duties. They were hired to the Government for 5 per cent. for depreciation plus 2½ per cent. It seems likely that if, in addition to the money that could have been earned by these ships at that time, the Inland Revenue had allowed a realistic figure for the general cost of replacement, the Cunard company would have been in a perfectly adequate position and would have been quite able to construct this new ship out of the company's resources.

The Government, quite properly, did not promise out of hand to help. The House would have been most upset if the Government had done so. The Government decided to carry out a thorough investigation of the whole position and they set up a Committee under a man well known to the House and very much respected for his ability, integrity and business acumen—the present Lord Chandos. The terms of reference of that Committee set up in September, 1959, may be summarised as to consider how best the British express passenger service across the Atlantic could be maintained. I have heard some of my hon. Friends criticise the circumstances, but I do not think that any of my hon. Friends who were here when Lord Chandos was a Minister in the House, and who have seen his record since, would do other than accept that he would go into the matter absolutely thoroughly and would produce an accurate and objective report.

Mr. Hirst

According to the terms of reference.

Mr. Burden

But I think that hon. Members know Lord Chandos well enough to realise that if he thought that this project was not a runner at any cost he would have made that perfectly clear to the Government and to everybody concerned. Lord Chandos has shown in his Report that he and his Committee are widely favourable to Government participation in the construction of the new "Queen". Nor would anyone suggest that the Committee did not thoroughly investigate all the scientific and other factors that might be germane to the decision to construct the new vessel.

We can take it that Lord Chandos considered whether we should build an express trans-Atlantic liner of the largest size possible, or a smaller one. He no doubt considered all aspects relating to size, cost, operation and subsidised foreign shipping. He no doubt also considered to some extent—and we may well be given some information on this today—the likely impact on North Atlantic shipping of the increase in air travel.

This is a matter of interest not only to the Cunard Company and the Government at this stage, but to the country as a whole. Some of my right hon. and hon. Friends take the view, I believe quite wrongly, that the rate of increase in air travel will create in some way or another a situation in which sea travel practically disappears. I do not believe that. They are quite wrong. What is happening, in fact, is that air travel is making people more travel-minded generally and, complementary with that, the standard of living on both sides of the Atlantic has increased. Although the number of people travelling by air has increased at a greater rate than the percentage of travellers by sea, I believe that the number of sea passengers will increase considerably in the years ahead.

I can perhaps illustrate this by an incident that happened to me today. An American client was speaking to me in my office and he had no idea that I intended to take part in this debate, or even that a debate was to take place. He said, voluntarily, that he had always in the past flown to and from Europe on his business trips. He found, after flying, that it took him nearly a week to recover when he returned to America. He said, "I have been in eight European capitals in thirteen days. I shall travel home by sea". He said that he intended to make the sea journey in the "America", and he told me, "I shall be going home by sea because I shall be able to get down to my work more quickly after a relaxing sea voyage."

That is likely to be the trend in future. As more and more people travel across the Atlantic, many of them will come to realise that by far the best method of traversing this route is to journey one way by air and the other way by sea. People are getting longer vacations and they are finding that two weeks is sufficient to visit a country, and they will use the remainder of their holiday to travel home by sea, which in itself is a holiday.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The Minister gave some figures earlier which showed that in the past four years the number of sea travellers had declined by 18 per cent., but over that same period the number of air travellers had increased by nearly 50 per cent.

Mr. Burden

I am discussing this matter from a long-term point of view. There has been a considerable recovery in the number of sea travellers during the last year or so, and in the past twelve months, out of 169,000 people crossing the Atlantic by sea, 73,000 of them were carried by the "Queens". That is a point we must keep in perspective when discussing this subject. Of course, that is a great number of passengers. They not only pay their fares to travel by sea, but many thousands of them stay in British hotels and spend a lot of money in British shops.

During our debate today there has been quite a lot of criticism from what I might term the "armchair critics", who really have little or no expert knowledge of this matter. They certainly have not got the knowledge or experience that is possessed by the expertise of the Cunard Company or of the Chandos Committee. How many hon. Members could put as much time and study into this matter as did the experts in Cunard and the Chandos Committee? Those experts spent months carefully investigating the many facets of this subject and, with respect, my hon. Friend the Member for Sunder-land, South (Mr. P. Williams) cannot claim to have done nearly as much research as did the members of that Committee.

Mr. P. Williams

Nor have the vast majority of hon. Members of this House. The Government have put before us proposals for the distribution of money. Surely hon. Members are permitted to discuss the matter, even as a matter of political principle.

Mr. Burden

My hon. Friend has expressed an opinion without having the facts to back up his view.

The Chandos Committee carefully went into the question of the size and type of vessel that should replace the "Queen" and they were not alone in their recommendations. The Naval Research Establishment came to precisely the same conclusion with regard to the type of vessel. Looking at the facts and figures that are available to any hon. Member who wishes to study this subject, over the last forty years the general trend in shipping has been to use fewer, but larger, ships, and to replace a considerable number of smaller ships with bigger ones. It will be obvious to all hon. Members that in doing this the manning overheads are less costly, operating costs generally are lower and maintenance costs are cheaper. These larger vessels also have a much greater passenger carrying capacity.

If two vessels are required for the North Atlantic passenger service, both vessels must be capable of speeds of 29½ knots. Thus, they cannot be small ships. It is estimated that 900 feet is the minimum length for a ship with the power to produce a speed of 29½ knots and, if the right hon. Member for Easington (Mr. Shinwell) doubts that estimate, his hon. Friends in the shipping industry will assure him of its accuracy. Passenger accommodation on these vessels must be comparable with, or better than, any other ship of a comparable nature on this route flying a foreign flag.

Many hon. Members have argued the case for a smaller ship. At the moment, the French are building a ship of 68,000 tons for the North Atlantic express passenger service. Does any hon. Gentleman wish to suggest that the French, the Cunard line, the Chandos Committee, as well as the Naval Research Establishment, are wrong in suggesting a ship of the size proposed? No other long seat route connects two parts of the world that are so thickly travelled, so highly industrialised and so prosperous as does the North Atlantic and Western European shipping route.

It is recognised by the maritime countries of the world as the shop-window in which to display their maritime and engineering abilities and their shipbuilding knowledge and generally to reflect the efficiency and ability of their industries. Why have those other countries subsidised the route? It is for that very reason—because they believe that is absolutely vital to their general shipping interests that they should be on that great waterway.

It has also been for us a vast earner of foreign exchange. Since 1947, the two "Queens" have earned no less than 320 million dollars. In addition to that money spent on fares, we have to add the very considerable sums spent by visitors in our hotels and shops throughout our country.

Sir John Barlow (Middleton and Prestwich)

That figure of dollar earnings is most interesting. Can my hon. Friend give the net dollar profit?

Mr. Burden

I am sorry that I cannot give that figure, but it can probably be obtained. It will be realised that one of the important things that we wish to do is to obtain dollars. To arrive at the figure my hon. Friend wants we must also work out the amount spent by visitors in our hotels and shops, and so on, in order to ascertain the complete benefit.

Sir J. Barlow

rose—

Mr. Burden

I cannot give way again. I am sure that my hon. Friend will have every opportunity of being called later, and he will then probably be able to argue that point.

Some of my hon. Friends argue that this vessel will probably be obsolescent before she is built. They think of nuclear propulsion, and believe that it is just around the corner. But it is really a very considerable way off. No doubt the members of the Chandos Committee, the Naval Research Establishment and the Government considered the possibilities of nuclear propulsion in the near future, but they have given the go-ahead to this traditionally propelled liner. Other hon. Members have argued about the air, but I think that I have made my view on that very clear.

There is one other point which has not been mentioned in the debate and which I believe to be very important when we are questioning the advisability of constructing another "Queen", and that is the very great and growing importance of fast sea freight. There is possible a very considerable extension of trade between this country and America, and I hope and believe that it will continue to grow. More and more people are sending their goods, particularly consumer goods, by air, but there is a restriction on that because, obviously, articles must be light in weight and not bulky and of a high cost ratio to make air freight pay.

But there is also a much greater desire nowadays to buy smaller and buy more often, and, thus, fast sea freight is becoming more important than it has ever been. Already, the "Queens" play a very important part in increasing Anglo-American trade. The weekly fast freight service of the "Queens", with all the knowledge that is behind this type of freight by Cunard, can not only help to pay for the "Queens" themselves, but can also help in a very considerable way the general industry and export trade of this country to America.

When we are considering this matter, we ought also to think of the situation in the British shipbuilding industry.

As every right hon. and hon. Member knows, the graph of unemployment among the 178,000 shipyard workers is, unfortunately, rising. The new "Queen" will provide work for about 5,000 men for some time, and I believe that that must also be taken into consideration when we are discussing these matters.

The Government decided, I believe, to grant the Cunard Company help because it was clear that the vessel would not otherwise be built, and this is nothing more than a specific subsidy for a specific ship built for a specific purpose. That is the point which should be remembered by my hon. Friends who object bitterly from the subsidy point of view.

Outside Britain, the ship will earn us a great deal of foreign exchange in fares, and we must not forget the money which will be spent in hotels, restaurants and shops in this country. When people wish to travel by ship it is surely desirable that they should travel in the finest trans-Atlantic passenger ship in the world, and I believe it is imperative that that ship should be British-built. I believe that the Government were right in giving a promise in their election manifesto, and I believe that they are no less right in implementing it. The opposition among my colleagues has been very vociferous, but I believe that generally today there is very much more support than opposition for the proposal.

7.47 p.m.

Mr. John Rankin (Glasgow, Govan)

If in the orthodox fashion which is alleged to prevail in this Chamber the votes had to follow the voices on both sides, then I suppose that when we came to ten o'clock tonight the Minister's Bill would be in a very perilous position. I assure the Minister right away that he has my support for the Bill, and that may somewhat lighten the burden which both sides have placed upon his shoulders during the debate.

I declare my interest right away. As the hon. Member for Gillingham (Mr. Burden) said, we cannot at this stage and with this Bill before us ignore the position of the shipbuilding industry, and although we are promised much fuller debate about the industry at some future date, there is no reason why it should not at this stage, even if only superficially, engage our attention. The Shipbuilding Conference issued its statistics last week. These show the most serious condition of this great industry. At the end of March, 1957, they had on their books about 6 million gross tons of shipbuilding orders, but by the end of March this year the figure had been reduced to 3 million gross tons.

That is a most disturbing position. It is one which the House cannot afford to ignore and one which I certainly cannot ignore as the representative of one of the biggest shipbuilding areas in the United Kingdom—Govan, Where nearly 10,000 people are engaged in three great shipbuilding yards. Naturally the continuing decline in the strength of the order books disturbs not only those who are concerned in the work of the yards but those who are dealing, at management level, with the problems involved in shipbuilding.

Like right hon. and hon. Members on both sides of the House, I have taken the trouble to consult those persons who enjoy top-level appointments in this industry, who direct its fortunes for good and ill. Their view is not the one which, in some respects, has been put forward today by the Minister. He said that nuclear propulsion had not yet been sufficiently developed. I am certain that, in putting forward that view, he is fortified by substantial advice, but I must put against it advice which I think is equally substantial. It comes from those who are engaged in this work and who have a proposition before the Government, which, I assume, has engaged his attention.

They believe that nuclear propulsion is with us now, that a nuclear propelled ship is a possibility, and that in this advance in the propulsion of ships, we at the moment have the chance of a leadership which, if we neglect it, we may never again have an equal opportunity to achieve. I hope that the Minister will look again at the question of nuclear propulsion and keep before him the proposition deployed by Fairfield Yard in my division.

Again, he said that the object of the Bill was to secure the continuance of the Atlantic passenger service. As he pointed out, and as we all know, there are two ships now operating that service, and we assume that it will be necessary for two ships to continue to carry on the service, if it is to be carried on as it presently is. That means that the Government must now, to some extent, be looking to the future.

When the "Queen Elizabeth" reaches the period where her service no longer is economic, then, if the pledge which was given at the General Election, and about which we have heard something today, is carried out, I take it that there will be a successor to the "Queen Elizabeth", just as there will probably be a successor to the "Queen Mary". I do not believe that is looking too far ahead, because, if two ships are necessary to carry on the service now, I think that it will be more than difficult to find one ship which could carry out the work of two ships on this route. Perhaps the right hon. Gentleman may be tempted to prospect a little on that point, or may refer it to the Chancellor of the Exchequer, who might be invited to look at it when he comes to reply.

Something has been said about the impact of air travel on the North Atlantic transit of passengers. That is a matter which has engaged the attention of those of us who take an active interest in the work of the Ministry of Aviation. I was interested in the figures given by my right hon. Friend the Member for Vauxhall (Mr. Strauss), which clearly show that there is a greater and greater number of people travelling by air than by sea. I do not think that anyone will dispute the fact that there has been a big transfer from sea travel to air travel.

My right hon. Friend, if I got his figures correctly, pointed out that in 1948 the number who travelled by sea was 647,000 and the number who travelled by air was 240,000. He said that in 1961—perhaps there is a little obscurity at this point—

Mr. Strauss

I said 1960.

Mr. Rankin

Then the fault was mine. My right hon. Friend said that the number who travelled by air in 1960 was 2 million and the number who travelled by sea was 860,000. His figures clearly demonstrate that the number of persons who crossed the Atlantic in toto during 1948 was about 887,000, but that the number who crossed last year was around 2,860,000. That is a vast change, and there lies the opportunity for ships.

Only a week ago last Saturday I explored that aspect of the problem with one of the executives who—it is no secret—will be very interested in this new ship. He said that, in his view, there is a continuing market for a ship of this quality and size on the North Atlantic route. He went so far as to say that there is room for two ships, just as we have two today. He said that the traffic is there and that it is our business to get it.

While, admittedly, air travel may still continue to be an active competitor, and a very serious one, because the introduction of the DC.8 and the Boeing 707 has attracted, and must continue to attract, an increasing number of people to it, the total market is also expanding, and that is the reason why, in my view—and I am interested in both developments—there is room and ample scope not only for our new types of aircraft but also for our new types of ship.

I do not want to go into technical details of the type of ship which is necessary for this job. I do not think that it is my business. I am certain that the Minister has considered the matter very carefully. I am sure that he has received the best possible advice, and I should not in any way seek to oppose anything he said in that regard, because it has been substantiated by the advice which I have received. But I should like to ask one question of the right hon. Gentleman about a matter which occurs in Clause 1 (9) and again in Clause 2 (9) of the Bill. Reference is made there to the fact that the Minister shall, not later than the end of November following the year, send the account to the Comptroller and Auditor-General who shall examine, certify and report on the account and lay copies of it, together with his report, before each House of Parliament. In a matter of this kind it seems to me that a long time will elapse between the termination of the financial year and the rendering of accounts and their appearance in this House for the information and guidance of hon. Members. There may be a substantial reason for that; I do not know. But I hope that the Minister will tell us why such an apparently long time should elapse before this financial information comes under the scrutiny of hon. Members.

There has been a good deal or argument about the propriety of the subsidy. I find it rather interesting, in view of the fact that for the first time the Treasury has issued a memorandum giving us exact details of all the subsidies and loans given by this Government, without any obvious objection whatever from hon. Members opposite. They cover a vast part of the economic life of this country. As was said by my right hon. Friend the Member for Vauxhall, these amount to £400.9 million. My right hon. Friend said £401 million, but what is a decimal point when one is discussing sums of that nature? It is strange that when we discuss a subsidy of £18 million it has caused all the bruhaha—I hope that word is understood by hon. Members opposite; all the tumult and shouting—if I may translate it into ordinary dictionary English—which has ensued. There is all this acquiescence abouts£401 million of subsidy and loans, and all this noise about a subsidy of £18 million.

Mr. Marples

It is £3,750,000.

Mr. Rankin

One may call it £3,750,000, but we are to find the substantial sum of £18 million.

Mr. Marples

As a loan.

Mr. Rankin

All right. The right hon. Gentleman has not been listening as carefully as he usually listens. I said that the £401 million was subsidies and loans. I hope I said that quite clearly. And the £18 million is in exactly the same position. I hope I am not wrong about that. There is both subsidy and loan embodied in the £18 million. I was trying to compare like with like. If I had not done so, I should have been challenged by hon. Members opposite.

I wonder why there is all the criticism, all the seemingly implied threat about the advances on this issue, from hon. Members opposite. What is the story behind it all? Will no one talk freely about it? Why should they oppose this bill? Why the emphasis? I myself emphasised the point referred to by the hon. Member for Gillingham. He said that this was a specific subsidy for a specific ship built for a specific purpose, and that is true. I interrupted the right hon. Gentleman to say, "For this particular ship". That was a remark in his aid because of the boisterous unwelcome which was accompanying certain parts of his speech.

Hon. Members on this side of the House have perfectly clear consciences about subsidies and loans. I believe in them. I believe that the resources of this nation should always be placed behind any project which is essential in the national interest in order to tide it over hard times. But, as was said by my right hon. Friend the Member for Easington (Mr. Shinwell), I do not believe in just giving away money without receiving some obligation in return. If we are to help by providing loans and subsidies. I demand some form of control.

I will go a step beyond control. If private industry cannot run its own business properly, efficiently and effectively in the national interest, the Government, on behalf of the nation, are bound to step in and assume the ownership of whatever industry is failing in its purpose. The Government must keep the people of this country employed and keep industry going. Industry must not be run for profit alone. That is the source of the whole trouble. Today industry is being run in order to create private profit. It is not being run in the interests of the nation as a whole.

We have to face a farcical situation which the Minister of Aviation has had to face in another respect, and which was outlined again by my right hon. Friend the Member for Easington, and I agree with what he said. We are to give aid in the form of subsidy and loan to a project of the Cunard Company, which is backing the Eagle Aircraft Company to the tune of nearly £2 million in order to compete with a nationalised industry, British European Airways, which at least at one time was subsidised by the Government in order that it might gain a footing in a very keen market.

This is rather an absurd position. As a Member of this House one must weigh up all the pros and cons of the situation and it may possibly be difficult to reach a decision. But I have reached mine, after weighing them up and judging them as I see them. I said to the Minister when I began my speech that I would ease his mind, which probably was seriously troubled in the earlier part of the debate. He has my support in this matter for what it is worth. In my division there is danger of unemployment, and, in my view, unemployment and its cost is a graver consequence to the nation than would be the subsidising of the Cunard Company. Therefore, I support the Bill for this and the other reasons I have given.

8.11 p.m.

Mr. John Henderson (Glasgow, Cathcart)

I agreed with the speech of the hon. Member for Glasgow, Govan (Mr. Rankin) until he began to introduce support for further nationalisation by claiming that the Government should have some control and eventually complete ownership of a great industry such as shipbuilding. The hon. Gentleman and myself must part company.

Mr. Rankin

The hon. Member has misunderstood me. I was dealing at that point not with the shipbuilding, but with the ship-owning aspect. The Cunard Company is not a shipbuilding company.

Mr. Henderson

There is very little difference between the shipbuilding industry and ship owning. If he is advocating control of ownership of either, then I repeat that we must part company.

The hon. Member also touched upon the question of election pledges. Almost every right hon. and hon. Member has introduced that subject into his speech. When all is said and done, any Government that fail to put into effect their election promises ought to be turned out at the opportunity. The inference is made that, apart from the merits of the building of this great liner, and apart from the merits of the subsidy—it was implied that these merits did not exist—it was only because of the election pledge that the Bill was brought forward. I dissociate myself from those innuendoes or suggestions.

I believe that the Minister and the Government are looking forward to keen competition for the existing traffic between America and this country and that they have been honest in their efforts to face up to the responsibility of making provision for the future. The question that the full Report of the Chandos Committee has not been submitted to Members of the House has been raised more than once. I am in perfect agreement with the Minister. I do not think that it is desirable that a most confidential document, the findings of this very important Committee comprising experts presided over by one of the most eminent industrialists in this country if not in the world, should be made public to hon. Members or to the public. Firms are competing one with the other and a tremendous amount of damage could be done to their future prospects if confidential information contained in the Report were made public. I think that the Minister is perfectly justified in withholding the Report from hon. Members and the public.

A good deal of heavy weather has been made by some hon. Members because of the interest of the Cunard Company in an airline. I think that the explanation of that is comparatively simple. Any great shipping company or any airline wants to have relationship one with the other. To provide transport for passengers coming by liner it is bound to face up to the fact that it may be necessary to provide airline facilities for them.

The hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) introduced for the first time the various areas interested in securing this order—Northern Ireland, Tyneside and Clydeside. I hope that the Minister will not merely take into account the cheapest offer; I am sure that he will not. I am sure that he will take the best offer; and that does not necessarily mean the cheapest offer. I think that he must also take into account the record of the firms tendering for this huge order. All the firms are firms of first-class importance. In one area, Clydeside, there is a certain amount of unemployment building up. The same, unfortunately, applies to Northern Ireland, and, to a lesser degree, perhaps, to the North-East Coast of England.

I suggest to the Minister that when he takes into account the question of unemployment, the question of the prestige associated with the building of a great liner like this, and the question of building a fast-going liner between this country and America, he should give special consideration to the record of the firms which have done such great work in the past. I hope that the House will approve the Bill, that the expectations of those engaged in shipbuilding will be fulfilled, and that this country will again put out on the waters between England and America a ship built by the best craftsmen, built by the best skill, a ship that will not only serve the seas but will be a testimony to the craftsmanship, ingenuity and skill of those who build her.

8.19 p.m.

Mr. William Small (Glasgow, Scotstoun)

I listened with interest to the comments which the hon. Member for Glasgow, Cathcart (Mr. J. Henderson) made, but the timing of this Bill is of interest. When I look back on my entry into the House, I recall that I made my maiden speech in a debate on shipping. In the General Election manifesto the question of the Cunard was trotted around the Clyde, Merseyside, the Tyne and Belfast as a vote catcher. The Government have now no alternative because although the Local Employment Bill was supposed to do so much, the depreciation in the shipbuilding areas is greater now than at the time of the introduction of that Bill. The shrinkage in terms of craftsmen in the Clyde area has been from 10,000 to 9,000, and there is a comparable decrease in apprentices.

In advancing the case for the Bill, the Minister spoke about value for money. This consideration must be related to the question whether we are to pay unemployment benefit or whether we are to create opportunity. Although the position as regards the interest charges is not as satisfactory as I would like, I must support the Bill, because it is the only instrument at present available which will create any future prospect of a big job in any shipbuilding yard.

The long-term return is that technicians, craftsmen, skilled men and apprentices in the successful shipbuilding yard will have promotion prospects, and this will help to preserve the shipbuilding craft. Many people come to me and ask me to advise them whether they should stay in shipbuilding or take their skills elsewhere. In view of the migration from the North and other areas to other Continents, there is a need for creative effort of this character.

One or two people, apart from people within the shipbuilding industry, have spoken to me about their right to tender. The Cunard Company has laid it down that there will be five competitive tenders. Since there is so much public money involved, people in the electrical and plastic industries who have the right to quote for most things want to know what their rights are to quote. How expensive are the tenders? Who determines the schedules? Is this exclusive to Swan, Hunter and Wigham Richardson and John Brown? If public money is involved, people will want to know how expensive the schedules will be and to which areas they will go so that they may quote on the basis of a fair return. Clause 1 (4) says: The total of any advances made by way of grant by virtue of subsection (3) of this section shall not exceed three and a quarter million pounds: Provided that the Minister may by order contained in a statutory instrument of which a draft has been laid before the Commons House of Parliament and approved by a resolution of that House, substitute for the reference in this subsection to three and a quarter million pounds a reference to such greater sum as may be specified in the order. What circumstances would justify an increase of the £3¼ million by Statutory Instrument? What circumstances are envisaged? Why cannot the Bill lay down clearly and specifically that the grant is to be £3¼ million?

In view of the position and needs of shipbuilding yards, the Bill has my support.

8.23 p.m.

Mr. Stanley R. McMaster (Belfast, East)

It is with pleasure that I follow the hon. Member for Glasgow, Scotstoun (Mr. Small), who spoke with such feeling on the fall in employment in shipbuilding yards.

I want to say one brief word of welcome to my hon. and gallant Friend the Joint Parliamentary Secretary. I join with more senior Members of the House and say how glad I am as a junior Member to see him on the Front Bench tonight.

We have heard some interesting speeches in this debate. An attack was made from this side of the House on the Government's policy of subsidising the Cunard Company. I am in agreement with the speakers on this side of the House who criticised the policy of subsidising private enterprise. I agree with the comment of the General Council of the Chamber of Shipping that the subsidy is not the long-term answer to the problems of the shipping or shipbuilding industries. The Council said, however, that it is important to note that there should be an exception in the case of foreign competition when that is subsidised.

The main purpose of the Government should surely be to end all international subsidy, which can so often lead to a war between different countries to see which can subsidise the most. My right hon. Friend told us how the Americans are heavily subsidising not only the passenger lines but all other lines. They are subsidising them in two ways. The first is by giving them a capital grant—that is, by subsidising the cost of building boats in American yards. The second is by subsidising their operating costs. We know that France also subsidises. My right hon. Friend neglected to mention Italy, which now pays a subsidy of 20 to 30 per cent. on the building cost and also pays a subsidy on the operating costs of her boats. Britain pays no subsidy on operating costs. It would be quite wrong for us to pay any subsidy on operating costs.

However, we must consider our position very carefully. The choice facing the Government is whether we are to remain in the field and continue to sail ships flying the British flag, and built in British yards, on traditional routes of the world, where we have always sailed them, or whether we are to give in to foreign lines which are so heavily subsidised.

This is the qualification and this is the necessity for the Bill. We cannot afford to ignore such unfair competition. The first and most important reason why we cannot afford to do so is because of our great position as a maritime nation. Secondly, from the point of view of our export industry, about which so much has been said in recent debates, to lose or weaken our shipbuilding industry would mean not only a loss of ships which we build for foreign countries—we have built many of them, including many at the yard of Harland and Wolff in my constituency—but we should also lose invisible earnings, which have been a very valuable contribution in the past to our balance of trade and balance of payments.

The third reason, which hon. Members on both sides were correct in stressing, is the employment position in shipbuilding yards at the moment. In Belfast we are faced with very heavy redundancy. Unless the Government step in and help to fill the gap which is mentioned in the recently released Report of the Shipbuilding Advisory Committee on the prospects of the shipbuilding industry, we shall be left with no shipbuilding industry in this country at all, because of unfair competition abroad from yards not only in France, Italy and America, but also in Sweden and Germany, which were so heavily subsidised and helped to rebuild after the war.

I disagree in particular with the remarks of the right hon. Gentlemen the Members for Easington (Mr. Shinwell) and for Vauxhall (Mr. Strauss) and also my hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), who said that this subsidy can help only one yard. That is complete nonsense as, I think, they themselves later admitted. No matter who gets the contract—whether it be Harland and Wolff or John Brown, or whether it goes to the Tyne—the other yards will benefit because the successful yard cannot do all the work itself and there will be an overflow to the others. As the shipbuilding work will be more spread out, this subsidy will help all the yards. The subsidy is only £3½ million, although there is a loan of £18 million—

Mr. Mellish

Is the hon. Gentleman saying that if a Belfast yard got the order it could do only its own particular job and that any other work would go to other yards?

Mr. McMaster

I say that a contract like this would employ a very large number of men for three years. Even the shipbuilding manpower resources of Belfast are limited, so, as has happened in the years since the war, some work would have to be turned from Belfast and might very well go to John Brown or to Newcastle.

I also disagree with the statement made by the right hon. Member for Vauxhall that the yard that won the contract would suffer in the long run because once the "Queen" was built there would be nothing more for the yard to do. If he has read the Report, he will see that shipbuilding is facing temporary trouble because of heavy building in the past, but it will not be very long before many cargo and passenger liners will need to be replaced. After the bleak period of the next two or three years referred to in the Report, there will be plenty of work for the yards.

It is therefore essential that we should remain shipbuilders. We shall always want ships. As has been said often in this debate, passenger traffic across the Atlantic has increased very distinctly in the last ten years but, with growing prosperity and the expansion of world trade, freight traffic must also increase. Only a very small part of that freight can be carried in aircraft. Britain has been the largest shipbuilder and, in terms of money, still is the largest shipbuilder in the world.

I am surprised that nobody has yet touched on the strategic aspect. What would happen if the Government were not prepared to support British shipbuilding? What would happen in times of danger if all the cargo vessels and the liners were owned by expatriate Greek ship-owners, financed in the United States, sailing under flags of convenience but owing no true allegiance to any country? Are we to be placed at their mercy in times of crisis? Are we to depend on them to supply all the necessary shipping, and in that way lose our own shipping and our shipbuilding yards?

It has also been stated, quite rightly, that many foreign tourists from across the Atlantic visit the United Kingdom. They do so because they come to Southampton in one of the "Queens". But if they travelled in American or French ships going straight to Le Havre, would those people come to this country and spend their dollars? Their dollars have been and are vital to us. It does not matter what the net profits are—and that question has been asked. If we can spend £s in this country to earn dollars, the gross is the net gain to this country.

A ship like this is of enormous prestige value, though I put that last in this series of reasons for supporting the Bill. Such a ship is a shop window for Britain. It shows that we can still build the best ships in the world and sail them in competition. Furthermore, this subsidy is very much smaller than that given to our American, French and Italian competitors on the North Atlantic route.

Suggestions have been made for helping our shipbuilding industry in general, and I want now to address myself to my right hon. and learned Friend the Chancellor of the Exchequer who is, I believe, to reply to this debate. Mention has been made of the guarantee that is incorporated in the Bill, and I want to draw attention to guarantees, not only to the Cunard Company but to other British companies. It seems that as a result of the recent extension of the Export Credit Guarantees Department's cover for more than five years, foreign ship owners have an advantage over ours in the building of ships. I ask my right hon. Friend to look into this matter particularly to see if these credit guarantees can be extended to British ship-owners when they build their vessels in their own shipyards. In addition, I would ask him to consider the recommendation in the Shipbuilding Advisory Committee's Report on scrapping and building. There would seem to be a strong case for following such a policy.

Many hon. Members on both sides of the House have missed this point. They have said, "Why support this Cunard Bill? This is not what British shipping really needs." I think I have said enough to show why we need a subsidy for the "Queen" and to indicate that we should not merely stop there. Let us consider other ways of meeting these subsidies which America, France and other countries pay, and scrapping and building might be a very good way of doing that.

In the long term we must aim at persuading our competitors to abandon these protective practices—not only the payment of subsidies but practices such as flag discrimination. I noted with pleasure the efforts which were made to this end by the Prime Minister in his recent visit to America. I hope they will be followed up at the highest level and that the strongest representations and pressure will be brought to bear upon the United States, France and Italy and perhaps through G.A.T.T., to abandon these discriminatory practices which are so harmful to cheap shipping transport costs throughout the world which must be the aim of all sensible Governments.

I congratulate my right hon. Friend on what he has managed to do in this Bill. He has managed to achieve the paramount purpose of the Government in shipping, namely, to keep our shipbuilding industry efficient and competitive. The way in which the loan has been granted to the Cunard Company, the Government providing the basic loan and the Cunard Company paying the rest, gives all the encouragement in the world to the yards which are tendering for this contract to put in competitive tenders. I believe there will be the keenest of competitive tendering for this contract.

Unlike the right hon. Member for Easington, I do not believe that British shipbuilding yards are unnecessarily expensive. He has said that the prices which we quote do not compare with prices quoted abroad. I would refer him—I am sorry that he is not in his place at the moment—to the Shipbuilding Advisory Committee's Report, and particularly to its remarks in paragraph 26. The British shipbuilding yards are as efficient as any in the world, and many a company which has ordered its ships abroad has been surprised at the final price when it has added all the extras, which are included in the usual British shipbuilding contract.

I should like to make a particular plea to my right hon. and learned Friend the Chancellor of the Exchequer to augment the support which he has given and is giving to the shipbuilding industry through this Bill, by exempting the industry from the effects of the payroll tax which was announced in the Budget. I should like to quote from paragraph 26 of the Report of the Advisory Committee: The latest evidence available suggests that at least some United Kingdom shipbuilders are now offering prices as low as their foreign competitors, though we are informed that this is sometimes achieved only by eliminating profits and cutting overhead charges even in those firms which are known to be leading in the industry in the introduction of cost-cutting techniques. If they are cutting profits and cutting themselves so fine, how can they possibly face an uncertain payroll tax which might interfere with the prices they have to quote in order to win contracts?

Mr. Bence

I hope the hon. Gentleman will put an Amendment down in due course.

Mr. McMaster

The time will come.

Other help can be given to the shipbuilding industry, but I do not want to trespass on the time of the House now. The principal feature which strikes me is the cost of steel. I have referred to the effect of a payroll tax on the cost of labour. The other main constituent in the price of a vessel, a "Queen" or any other vessel, is the price of the steel which goes into it. The price of steel is very much determined by the price of coal. Unfortunately, in this country today we have to pay more for our coal than we should have to pay even for coal imported from the United States or from Europe. Therefore, I question seriously the Government's policy in closing opencast mines where cheap coal could be obtained.

Mr. Deputy-Speaker

The hon. Member is straying too far.

Mr. McMaster

I apologise, Mr. Deputy-Speaker. I related that matter to the subject of our debate because there have been constant references to the cost of the proposed vessel, and the price of steel is an element in the cost. However, I will leave that.

I have avoided basing my speech on the affairs of my constituency tonight in the interests of the wider scope of the debate on the shipbuilding industry, but I will close by referring to both our problems and our successes there. Messrs. Harland and Wolff have a very great shipbuilding record. As we all know, it is one of the companies tendering for the contract. Two vessels built there, the "Oriana" and the "Canberra", have been spoken of with praise tonight. The "Canberra", launched last Saturday, is the largest vessel to be built in this country since the "Queens". I suggest, therefore, that we have a strong case in tendering for the "Queen" liner contract.

I praise also the very conscientious attitude of the trade unions in Northern Ireland. In the Report of the Advisory Committee to which I have referred, there are references to trade disputes which often hinder the industry. In Northern Ireland, we have a fine record of good relations between management and men. A very realistic attitude has been apparent recently in the approach to demarcation problems. This attitude has been evident throughout the years since the war, and our record compares most favourably with that of any other yard in the country. I praise particularly the realistic attitude of management, trade unions and men.

I agree with what has been said about the contract being placed fairly, but I ask my right hon. and learned Friend to consider for a moment what would happen if, all other things being equal, the tenders were equally balanced, taking into account delivery date, price, and all the rest. I suggest that in such a case my right hon. and learned Friend should revert to an Answer given by my right hon. Friend the Minister of Transport when he said that social factors would be considered. There is to be committed here £18 million of taxpayers' money. The Government should insist, as they have the right to do, according to the White Paper, in consulting the Cunard Company about the placing of the contract, on considering unemployment factors. In Northern Ireland, we have over 8 per cent. unemployment, which is six times the national average. About 7,000 or 8,000 men are being laid off in Belfast since the completion of the "Canberra", and those men have very little opportunity of finding other work in Northern Ireland. In the unlikely event of equal tenders being submitted, regard should be had to these factors in the placing of the contract.

8.44 p.m.

Dr. J. Dickson Mabon (Greenock)

The hon. Member for Belfast, East (Mr. McMaster), in his speech, reminded me of a remark attributed to Jimmy Maxton at one of his election meetings. He was accused of trying to support two contradictory arguments at the same time. When taxed with this, he replied, quick as a flash, "If you can't ride two horses at one time, you ought not to be in the damned circus anyway". Perhaps that was the genius of the hon. Member's speech. I think that he did very well. He concluded by making an appeal to the Chancellor and referring to various things said in the Report of the Shipbuilding Advisory Committee. I congratulate him on the procedural agility by which he brought those matters and the price of coal into his speech, falling foul of the Chair only once. It was quite remarkable.

In arguing for this, the hon. Member tended to try to meet the point raised, I think quite sensibly, by my right hon. Friend the Member for Easington (Mr. Shinwell) and my right hon. Friend the Member for Vauxhall (Mr. Strauss). There is a suggestion here that, somehow or other, this proposition of the Government is an exclusive alternative to any other means of helping the shipbuilding industry, and I should like the Chancellor, if he is replying to the debate, to tell us that that is not so, but that, in fact, this is simply a contribution to the shipping world, to the nation as a whole, rather than any pretence of being a solution to our shipbuilding problems.

I know that, in the words of my hon. Friend the Member for Widnes (Mr. MacColl) in another context, hon. Members have tonight paraded like oriental concubines before the Government, displaying the charms of their various shipbuilding firms in the hope that their own constituencies might be chosen for the contract. That temptation apart, I think the Chancellor would agree that we require a very extensive debate so that the Government might get the chance, through the new Joint Parliamentary Secretary—whom I congratulate on his appointment, and from whom we expect rollicking speeches from that Front Bench—to display their intentions towards shipbuilding.

I do not represent a constituency which is in the position of being able to build the new Cunarder and, therefore, I am, in a sense, unbiassed, but I represent a constituency which is very much concerned with the welfare of shipbuilding. In that respect, it is worth while reminding the Chancellor that the point raised both by my right hon. Friend the Member for Easington and by the hon. Member for Belfast, East is very important, namely, the problem of subsidies. The hon. Member for Belfast, East talked about ending all international subsidies, but that is really crying for the moon. I do not see a situation arising anywhere in the near future, and certainly not in the next critical five years which he mentioned.

After all, the Minister of Transport prides himself, a little unduly at times, on being extremely energetic and enthusiastic. He has been in Washington and has done all he can, he says, to make representations to the Americans about many of the objections raised by hon. Members tonight, and which have been put on the record, about shipping and shipbuilding, but the fact is that we are no nearer to having international agreements about flags of convenience, subsidies or anything else. It would be quite foolish for the Government to make their policy for the next five years on the supposition that we are to have some international agreement of some kind on this score. I think that the hon. Member for Belfast, East might put aside his prejudices in this matter, to which he is entitled, and realise that subsidies have come to be an instrument of Government assistance to the shipbuilding industry.

Of course, with the subsidies there comes the unpleasant part, from the hon. Gentleman's point of view, in that there is the bargaining, because subsidies are money from the public purse and can only be given under public surveillance and with due regard to the public interest. Perhaps this is where those hon. Gentlemen opposite come in—those who are opposed to this openly, none of whom seems inclined to vote against the Bill tonight, and those who have made reservations in regard to their position on subsidies in general.

When the hon. Gentleman talks about the "scrap and build" policy, this is one of the recommendations in the Advisory Committee's Report. It is an interesting Report, which makes nine recommendations, of which five have nothing to do with Parliament at all. They are entirely concerned with the industry internally. One other concerns a matter of amalgamation, to which an hon. Member opposite has said we were opposed. I do not know how he gets that impression, because I think that the smaller and medium-sized yards lend themselves readily to amalgamation.

The other three points were concerned with the Chancellor, and I hope that tonight, at any rate, the Chancellor will tell us about them, and what thoughts he has on the policy of scrap and build. He might say that he wishes to reserve a view on that matter for a later date, but it is an important point. The hon. Gentleman for Belfast, East must realise that the policy of scrap and build is a policy of subsidisation. If the hon. Gentleman advocates it, it means that he is in favour of large subsidies over a wider field. This is the point of my intervention. I feel that a declaration must be made tonight that this is only a solution of part of the problem and that the Government intend to adopt the same vigorous attitude towards the shipbuilding industry as a whole as they have adopted towards this project to replace the "Queen Mary".

I welcome the Bill. I think that it is a sensible Bill. All the Jeremiahs on the Government benches who have predicted how obsolescent this vessel will be, and who have wanted us to haul down the "Red Duster" over the Atlantic in favour of the larger vessels of other countries, are very wrong. It is right that the Government should take this step. I commend them wholeheartedly for taking it, but I want them to assure me that the real solution to the problems of the shipbuilding industry has yet to come, and that they will make an early announcement concerning their solution.

8.51 p.m.

Mr. John Howard (Southampton, Test)

I agree with the remarks of the hon. Member for Greenock (Dr. Dickson Mabon). Undoubtedly, this subsidy is directed towards the passenger trade in the North Atlantic. The question before the House is: do we as a nation hold our position in the North Atlantic passenger trade? A great deal has been said about the advantages of the Bill to the shipbuilding industry. I acknowledge those advantages quite readily. My hon. Friend the Member for Belfast, East (Mr. McMaster) referred to them. The Opposition Front Bench gave the position of the shipbuilding industry as their reason for supporting the Bill. However, I consider the shipbuilding angle as incidental to the main theme of maintaining our position in the North Atlantic passenger trade.

In common with many of my hon. Friends, I am opposed to indiscriminate subsidies. I wish that there were other ways of providing the funds needed for the replacement of the "Queen Mary". We are considering a loan of £18 million, of which £3¼ million is a subsidy, or, to put it another way, is the result of making available a loan at 4¼ per cent. interest instead of the higher rate of interest of 6¼ per cent. for loans from the Public Works Loan Board. On that basis, we might say that the Cunard Steam-ship Company Ltd. should have found the funds from its own resources for this vessel.

Other things being equal, perhaps that would have been possible, but circumstances have changed enormously since the "Queen Mary" was built nearly thirty years ago. If building costs had remained stable instead of increasing between six and seven times and if taxation policy had enabled the Cunard Company to put away reserves to build a liner costing £30 million from the earnings of its predecessor, then I would join my hon. Friends in opposing a subsidy for the replacement of the liner.

Three points have emerged from the debate, with which various hon. Members have endeavoured to deal. The first is whether it is desirable to compete in the North Atlantic trade. The second is whether we should operate with the fast luxury liners which have been the subject of this debate and which are capable of crossing the Atlantic in five days or whether we should use smaller vessels. The third is whether there is a good reason for Government finance being applied to this project.

At this stage, I must disclose a constituency interest. I represent the Port of Southampton, which is the premier passenger port of this country. Over half the passengers coming into or leaving Great Britain for any destination enter or leave by Southampton. The "Queen Mary" and the "Queen Elizabeth" are essentially Southampton ships, and they are as much a feature of the port as the Bells of St. Mary's. I will not go on to extoll the virtues of the Port of Southampton other than to remark that we have a magnificent ocean terminal and dry dock, which are admirably fitted for the reception of these large passenger liners.

It has been established that it is desirable to compete in the passenger trade in the North Atlantic. The problem has been considered by the Chandos Committee, which decided that if a replacement is to be provided it should be of roughly the same size as ore of the existing "Queens". Furthermore, it is clear that, as the "Queen Mary" ageing rapidly, not only must the replacement be planned, but construction must begin during the life of the present Parliament.

The two "Queens" have not always operated in normal times and in their early years they had to carry the heat and burden of wartime troopships. I recall a trip which I made to the United States during the war, as a passenger in the "Queen Elizabeth", to collect a minesweeper. I read with pleasure the fact that I had been allocated a stateroom. On arriving aboard, I was surprised to find that 48 other people were occupying it. I was consoled, subsequently, by the fact that we carried only 5,000 passengers on the outward journey to New York, as compared with the 14,000 passengers who travelled in the troopship to Europe on the return journey.

The House will be satisfied that it is still desirable for Britain to hold her proud position in the North Atlantic. I hope that enough has been said today to demonstrate that it is still a worthwhile proposition. The Chandos Committee was asked to consider how the British passenger express service across the North Atlantic could best be maintained. The significance of those words is that they referred to a decision which the Government had already taken and which has been mentioned on many occasions during the debate in relation to our election manifesto. I was one of the many people who featured that item of Conservative policy in my election address and I have no doubt that many of my hon. Friends accepted this pledge by implication.

The situation has not changed materially since October, 1959. It is still reasonable to say that there are merits in remaining in the North Atlantic passenger business. If we do not pass the Bill and offer the subsidy to the Cunard Company, which, after all, has been selected by the Chandos Committee as the company most capable of operating the new liner, the alternative is to leave the field to the other nations and to content ourselves with operating an Atlantic service through existing smaller ships and, therefore, virtually to abdicate from this important service in favour of the Americans, the French, the Dutch and the Germans.

I mention the last two nations because they are operating with smaller ships. The reason why they can do so is that they have a much longer distance to travel and, therefore, they cannot enjoy the advantages of large liners capable of traversing the Atlantic in five days, thus having the weekend at sea which is an important consideration in passenger liners. They have to take more than the five days in any event, because their ports are much further east than Southampton or the port of Le Havre, in France.

We also face hectic competition from the airline companies, about whom a great deal has been said this afternoon. The question is whether this competition will overwhelm the seaborne passenger traffic. Fifteen airlines from fourteen nations operate over the Atlantic. Below them, there are twenty-five passenger liners operated under fifteen different flags. This fierce struggle is nothing new. It has existed throughout the twentieth century and it has been a struggle for the trans-Atlantic trade.

Reference has been made to the potential of the passenger traffic. I noticed that the European Travel Bureau forecasts that by 1965 about 1½ million people will make trips to Europe from America. I submit that there is no reason why the shipping industry should not secure a share of that traffic. After all, shipping has much to offer which air travel has not. If one travels by sea there is opportunity for relaxation. The figures show that there is a marked tendency for people to travel in one direction by sea.

Now that the Cunard Company, as we are so well aware, has taken an interest in Eagle Airways perhaps it is not too much to hope that air tickets can be made available for both sea and air travel and that the present restrictions on the interchangeability of sea and air tickets can be overcome.

We have heard about the declining trade in the Atlantic. Recent figures do not bear that out. We are running at about 169,000 passengers annually to and from the United States as against 163,000 in 1959, and of the 169,000 passengers 73,000, or 43 per cent., are carried in the "Queen" liners as against, say, five years ago when they carried a similar proportion, 42 per cent.

To refer very briefly to the second question facing us, namely, whether luxury liners are the right liners for this traffic, certainly the Chandos Committee came to that conclusion, and I think it is fair to say, from the surveys which have been undertaken and from consultations with other ship-owners, that this is the right size of ship, that is, a ship nearly 1,000 ft. long and capable of about 30 knots.

These, then, are some of the essentials of meeting foreign competition and air competition: fast service across the Atlantic, a weekly service by large ships which are limited chiefly to the port of Southampton and the French Atlantic ports. If we need a comparison we need only to look at the French building programme. Both the old "Normandie" and the new "France" are about 70,000 tons, and that, I think, supports the decision of the Government and the recommendations of the Chandos Committee. The "United States" is not quite so large, but there are special circumstances, including the need for her to go through the Panama Canal, as part of the terms of the United States Government's subsidy. Moreover, she is powered not by normal commercial engines operating under commercial conditions but by Wasp aircraft carrier engines operating at a very much greater pressure and able to develop rather higher speeds than commercially normal.

Is there a reason for Government finance for this project, and, if so, are the arrangements satisfactory? That is, I think, the final question that the House must answer. The basic reason for the Government finance is clearly the fact that the liner will cost £30 million and that the Cunard Company can put only £12 million into the proposition. Therefore, either the Government or the City have to bridge the gap. In view of the very many uncertainties which are peculiar to the North Atlantic trade the Government have decided to come in and to provide a subsidy which makes the replacement of the liner possible. Uncertainties arise, first, because of the cutthroat competition on the Atlantic and because Cunard are competing with modern liners which are heavily subsidised.

The new French liner's building costs, for example, are to be subsidised. Also, there is doubt about the extent to which foreign competition may receive even greater subsidies in the future. If we have any doubt about the latter point, we have only to refer to the "Stale of the Union" message delivered by President Kennedy to realise that Americans are still very determined to subsidise their shipping. There is, therefore, a great degree of commercial uncertainty about the future of this liner and of North Atlantic trade. This is good reason for Government intervention to secure our position in the North Atlantic and to recognise the special circumstances which obtain because of subsidies given to our competitors.

American subsidies cover operating costs to bring them down to European level and they may run to as much as £1,700 to £3,000 a day whilst the liner is operating. The Americans also supply a loan for building, plus Government subsidy to bring the cost of building down to the price of the cheapest European yard. The building cost of the "United States" was £27 million, and £17 million was provided by the United States Government in subsidy.

The same comment applies to the French liner where of the £32 million overall cost £7 million were provided by subsidy. The Dutch also provide loans at advantageous rates for shipbuilding. In the special circumstances, therefore, and in view of the approval which the General Council of British Shipping has given to this project the House can reasonably accept the Bill and look for-ward to the building of the "Q 3", the new Cunarder.

We have already given some subsidies to the textile industry and if we now come forward with a subsidy in the peculiar circumstances of the North Atlantic trade, we shall at least underline the point which hon. Members have been making when they have complained about flag discrimination and other restrictive practices throughout the world which prevent British ships earning the full earnings which British "know-how" and ability entitle them to earn. By passing the Bill we shall demonstrate, in particular, to the Americans, who are the worst offenders in shipping discrimination and subsidies, that we do not intend to be run off the Atlantic route simply because they have waded in with subsidies for their vessels.

9.8 p.m.

Mr. R. J. Mellish (Bermondsey)

I would begin as so many other right hon. and hon. Members have begun by saying how happy we are at the appointment of the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett) as Joint Parliamentary Secretary to the Ministry of Transport. I can say quite sincerely that in the last few years he and I have become very good friends. He has been a very painstaking back bencher and a hard worker and we are looking forward to his speeches on shipbuilding and ship repairing.

The hon. and gallant Gentleman has a very wily Minister who will want to stoke and run the ship and direct everybody; and the hon. and gallant Gentleman will have to be an admiral, first-class, if he is to keep the ship on course. I give the hon. and gallant Gentleman and the Chancellor due notice that although we have debated many shipping problems today, we hope very shortly to have a debate on the present position of the industry. I am sure that the hon. and gallant Member will take a leading part in that debate.

It is all that we have before us at the moment, but we cannot believe that this Bill represents the Government's only contribution to the shipping industry. Many of us today find ourselves in an embarrassing situation and I declare that at once. Quite frankly, if it were possible I should oppose the Bill, for many reasons which I hope to give in a moment. But for the reason which has been so admirably presented by every one of my hon. Friends representing Scottish constituencies—that this is the only Bill at the moment that will supply some sort of aid to some shipbuilding yard somewhere—we as a party cannot turn our back on the fact that it represents £18 million of Government aid. It could be misrepresented in the country if we were to oppose the Bill.

Therefore, reluctantly, I must inform the House that we shall not oppose the Bill on Second Reading, although we hope to be given more assurances from the Chancellor of the Exchequer when he replies to the debate. What further assurances the Chancellor can give us, I do not know, but at least the right hon. and learned Gentleman can say what the Government proposes to do for the shipbuilding industry in the near future. For that reason, my hon. Friend the Member for Vauxhall (Mr. Strauss) said that although we had severe criticism of the Bill, we would not oppose its Second Reading.

If we look back we find that this Bill originated at election time, when the Prime Minister gave a pledge. On that occasion, the Prime Minister was speaking in Scotland and the pledge having been made, was written into the Conservative Party's manifesto and, I suppose, it was meant for Scottish consumption. There was a great deal of unemployment in Scotland at that time, and the Prime Minister said—and it is in the manifesto for all to see— we shall support the replacement of the Queen liners". It is arising out of that statement that I must ask the Chancellor of the Exchequer—since the Minister of Transport is so keen to assure us about the honesty of this Government in carrying out their pledges—to be completely candid with us and say whether the Government intend also to replace the "Queen Elizabeth" The Minister of Transport rather ducked answering that question when he made a play about how the Conservative Party intended to keep its election pledges. As far as I am concerned, the whole thing was very dishonest. The Prime Minister made the statement when he was trying to win seats in Scotland for the Conservatives. He did not have very much luck. As I say, there was unemployment in Scotland and it was election time; and the hon. Member for Newcastle-upon-Tyne. East (Mr. Montgomery) has admitted that he exploited that statement and interpreted it to apply to his own area, and the result was that the hon. Gentleman got in with a majority of 98 votes.

Mr. Montgomery

I said that the statement appeared in the Conservative Party election manifesto. I was fighting an election in a big shipyard area and there was nothing wrong in my bringing forward a point which was mentioned in that manifesto. There was nothing wrong in that, and I won the seat.

Mr. Mellish

I am making the simple point that the Prime Minister made that speech in Scotland and that the remarks contained in it were meant for Scottish consumption. The Prime Minister was alarmed about the unemployment position in Scotland and, obviously, he had to promise something.

The statement was made "off the cuff", as it were, and it was followed by the establishment of that mysterious Committee under the chairmanship of Lord Chandos. That Committee appears to have followed typically on the line that is normally taken by the Minister of Transport, who never seems to do anything openly. I do not know why the Committee could not have reported all the information to the House. In any case, the Chandos Committee was inhibited, before it got started, by its terms of reference. Its job was to see how, in fact, it could implement the pledge given by the Prime Minister in that election manifesto, and it was within the narrow orbit of those terms of reference that the Committee reported, we gather, to the Minister of Transport.

One question worrying hon. Members on this side of the House is: did the Committee consider whether the £18 million the Government intend to spend on this venture could have been spent in another way to help the British shipbuilding industry? I gather not, but surely we are entitled to know.

Mr. Burden

The hon. Member is surely aware that a great deal of the investigation made by the Chandos Committee was of such a character that, if there had been a complete disclosure, a lot of valuable information would have gone to foreign countries.

Mr. Mellish

Perhaps the hon. Member has some inside knowledge of Government activity. We are all aware that in his speech today he declared that he had a vested interest in this matter, that he is associated with the shipping line that has been awarded this subsidy, the Cunard Line.

Mr. Burden

I did not.

Mr. Mellish

The hon. Gentleman did. He tried hard in his speech today to defend why this particular firm, in which he has an interest, should receive an £18 million grant from the Government. That is very natural. If I were associated with a company and was to get all that amount of money, I should defend it all the time.

The fact is that we have not seen the Chandos Committee's Report. It is a tragedy that it was not able to consider how best Government aid could be given to the shipping industry as a whole. The burden of our case is the way in which this was done on an election pledge given "off the cuff" for a certain reason in the North and exploited in other parts, and at the end of the day I believe it will not benefit the industry in the way it should.

The hon. Member for Belfast, East (Mr. McMaster) made a rather extraordinary speech. He began by saying, if I understood him—if I can ever understand the Northern Ireland dialect—that it does not matter who gets the contract because all yards will benefit, and then he went on to say why he thought his own yard ought to get the contract. I could not quite follow that.

My right hon. Friend the Member for Easington (Mr. Shinwell) made a first-class speech on the subject. He is qualified to do so, because he has spent many years in the industry. He said that he believed that Belfast should get the contract. I do not think that it will, and I will explain why. When the tenders are considered, much will depend on the date of delivery, above all else, and one of the problems here is that the contract will be given to a yard which is fully geared and can give the guarantees which the Government may well want.

The Belfast position is a tragic one. We all appreciate that. I believe that even if Belfast were given the contract it certainly would not be, for Belfast, the sort of dawn that the hon. Member for Belfast, East would like us to believe. I warn him that we want a much longer-term policy for Belfast than this contract.

The hon. Member paid tribute to the workers in Belfast, and I am glad that he did so. Most of those who work in the shipyards are members of the union of which I am proud to be a member. It is good to hear from a Conservative Member some nice things about the Transport and General Workers' Union.

Mr. McMaster

I am astonished at what the hon. Member, as the spokesman on the Opposition Front Bench, has said in criticism of yards in Belfast, for they have built the largest passenger liners except the "Queens" and have delivered them in good time. Is he not aware that the Belfast yards are the biggest and best geared yards in the United Kingdom for building the projected liner?

Mr. Mellish

I am not prepared to say that the Belfast people are more worthy of the contract than anybody else. In fact, this is the wicked part of the Bill. There is so much competition and so much anxiety about who is to get the contract at the end of the day. I wonder what my hon. Friends from Scotland, who are now so gleefully supporting the Bill, would say if they found that Belfast got it. Would they then be so keen about this? If they could turn the clock back, would they then vote against the Bill?

One of the most important speeches made today was that by the hon. Member for Reigate (Sir J. Vaughan-Morgan). He asked questions which I want to take up and which, I hope, the Chancellor will answer. He said that of all the shipping companies in Britain the Cunard Line is the one which, over the last fifty-eight years, has had subsidies of one kind or another from the Government. He asked why it should be the Cunard Line only. Why is it that over fifty-eight years this company, above all others, has, somehow, had special preference? We are entitled to know. Why is it that the projected "Queen" has had to be built by the Cunard Line? Why were not other lines asked to compete for the contract?

We have heard a wonderful story about the ships built in Belfast, and I quite agree with what was said. They were built not by the Cunard Line but by other firms. Why were these firms not asked to compete? There is an air of mystery about this, and it should be cleared up. I do not deny that the Cunard Company has done a first-class job in the past, but it strikes me as very odd that that one company out of the whole industry should get special preference. I ask the Chancellor of the Exchequer to let us know that.

The Minister said, in effect, that it was right for a subsidy of this kind to be paid because foreign ships on the North Atlantic run are heavily subsidised by their Governments. I do not deny that, but it is not only on the North Atlantic route that foreign ships are subsidised. If it is his claim that the subsidy must be paid because foreign ships are subsidised on this route, then his new Joint Parliamentary Secretary will have to explain, in the debate on the shipping industry, why other British ships on other routes cannot be subsidised.

The Labour Party is not opposed to subsidies for private industry. The agricultural industry receives millions of pounds from the Government, and we support the help that is given to it. But in the case of a subsidy of this kind I do not know why the Tory Party does not want more control by the Government. It is allowing £18 million of Government money to be spent, as a subsidy, without any control over it. Members opposite apparently do not want any profit from it. They seem to be ashamed of the word "profit". As my right hon. Friend the Member for Vauxhall suggested, it seems that, to Members opposite, it is almost immoral for the Government to make a profit.

Yet I submit that had the new "Queen" been certain to make a profit, the Government would not have been asked for a subsidy. I do not believe that the Cunard Company would not, in those circumstances, have been able to raise the money from shipping circles. The hon. Member for Gillingham (Mr. Burden) told a wonderful story about the Cunard Company. According to him, it is, apparently, the greatest company that ever existed. He has a few shares in it, that is why. If that company could have shown the collateral, it would have been able to find the money itself. The nation will not make the profit that it should out of this transaction. Indeed, the Government intend to treat the Cunard Company better than they treat the local authorities, who are building houses for ordinary people.

The Chancellor of the Exchequer must explain why the Report of the Chandos Committee was not allowed to be published, what he feels about the shipping industry generally, and whether the Bill is a pointer to subsidies being applied over a much larger area. If it is such a pointer, I shall not mind, provided that the Government take a measure of control over what is done with the nation's money, because it is right that they should do so.

When the tender is finally decided, the emphasis must be put on the situation of various shipyards. I sincerely hold the view—and I hope that it will be accepted in the House as a whole—that Northern Ireland's position is very serious, because one of the problems of that part of the United Kingdom is that, if a shipyard worker is thrown out of work, he has no other job to go to, unless he emigrates to England. There is 8 per cent. unemployment in Northern Ireland.

We on this side are just as concerned about Belfast as is the Conservative Party. I am rather tired of hearing Conservative Members talking about the Empire, and Northern Ireland being a part of it, while allowing the serious position in Belfast to worsen. That position should be given more attention than it is in this House. If Belfast does get the contract for this new liner, I shall not be unhappy and will recognise the reason for it.

My right hon. Friend the Member for Easington referred to credit facilities given to foreign firms engaged in shipbuilding. Is it proposed, because of the plight of our own industry—which is acknowledged by the decision taken in the Bill—to give credit facilities to other British shipping firms? Has the Chancellor of the Exchequer any idea how best to help the industry? I believe that it needs special help. It is right to acknowledge that if we are to maintain our position in the world today shipping is one of our most important industries, so it is the job of the Government to help that industry when it is in trouble. I wish to know whether the right hon. and learned Gentleman will tell what facilities may be provided.

The hon. Member for Sunderland, South (Mr. P. Williams) is one of the "rebels" of the Conservative Party and it is good to see him on his feet and attacking.

Mr. P. Williams

I am sitting down.

Mr. Mellish

He said—being a right-wing reactionary Tory, he would be expected to say it—that he is opposed to subsidies of any kind. I wish that the hon. Gentleman would say that in the agricultural areas, many of which are represented by Conservative Members of Parliament. He was really saying that he was opposed to this particular subsidy which, for some extraordinary reason, he finds obnoxious. I join with the hon. Member in saying that the lack of control in this respect is a reason for objecting to the subsidy. The hon. Gentleman also said that the British shipping industry is taxed more than any other industry in this country, and that, also, was a fair comment. We should ask the Chancellor of the Exchequer whether he can tell us how best he can extend relief to the industry.

I believe that the Bill was drafted because of an election pledge given by the Prime Minister which he is now being compelled to redeem, much against the will of many hon. Members. We have seen what is, perhaps, a greater revolt among back bench Members opposite than has occurred before, and there are sound reasons why they should object to one firm being given special privileges. I object, also. I think that it smells. We have not seen the Committee's Report on which this Bill has been based and we have not been able to examine the facts. We are told that this company is to be given £18 million of public money and that it will be given preference, even over local authorities. If the interest rate goes above 4½ per cent. it will be given a grant. That means that this firm will be given money at one of the lowest rates of interest prevailing in the country and that that will be done by means of an Act of Parliament. Because hon. Members on this side of the House recognise that its provisions will afford some form of relief for the unemployment in the shipping industry, they are prepared to support the Bill.

9.28 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

This has been a remarkable debate. It has been much more agreeable than were some of our other debates. On the merits, I think hardly any hon. Member has completely agreed with any other hon. Member. It has also been an agreeable debate for the Government. On the whole, the House has agreed on two points. First, that no one would vote against the Government tonight, and, secondly, on the welcome given to my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) on his appointment as Joint Parliamentary Secretary to the Ministry of Transport.

References have been made to the problems of the shipping and shipbuilding industries, and I accept the sincerity with which hon. Members have voiced their anxieties. I do not think this is the occasion for a full debate on that topic. I say to the hon. Member for Greenock (Dr. Dickson Mabon), for example, that there is certainly no suggestion on the part of the Government that this Bill is an answer to the problems of the shipping or the shipbuilding industry. May I say in parenthesis that I think not quite enough credit is given to the Government for the 40 per cent. investment allowance which is a very large contribution to the industry. I also hope very much that the recent proposals about credit terms for sales overseas will prove of great value to the exporters of ships.

Mr. P. Williams

My right hon. and learned Friend has made an important point about the debate not going wider. Will he undertake to consult his right hon. Friend the Leader of the House about the possibility of having a wider debate on shipping and shipbuilding in due course?

Mr. Lloyd

My hon. Friend knows well enough that that is not a matter for me, but I will convey to my right hon. Friend the point which my hon. Friend has made.

Regarding this Bill, I think I must declare an interest. It is not a financial interest. I was born and bred on Merseyside, and it is quite true that for some time the larger Cunarders have sailed from Southampton—I am not quite sure why. But, nevertheless, Liverpool is the home of the Cunard Company, and when I was young great names like the "Mauretania", the "Aquitania" and the "Lusitania" were always in my ears. I shall not forget the personal sense of shock that I felt as a small boy when the "Lusitania" was sunk in the First World War. I confess a special sympathy for those who build and sail these ships. It may be very insular, sentimental and old-fashioned, and the rest of it and I can see that my financial head must rule my heart, but, nevertheless, I must confess to the House that I start with a prejudice in favour of the building of big ships.

Mr. Shinwell

How many?

Mr. Rankin

On the Clyde?

Mr. Lloyd

Where they are built is another matter.

Three fundamental questions have been raised in the debate. First, should the Government get themselves mixed up in the North Atlantic express passenger service by sea? Secondly, if so, is this the right sort of ship for them to have? And thirdly, are the financial terms tolerable? I shall not deal with the question of tenders and details with regard to them. That is more a matter for my right hon. Friend.

On the first question of whether the Government should get themselves mixed up in the North Atlantic traffic, I apologise for repetition, but I think it is important that we should state again the facts of this situation. This route is the most highly subsidised route in the world. Other countries subsidise it much more than we have done. The present proposal involves a subsidy of about 11 per cent. even supposing the full grant of £3¼ million is paid. The French are contributing 20 per cent. of the cost of the "France" and making up any current losses of the company running the vessel.

The United States Government paid over 58 per cent. of the cost of the "United States", 45 million dollars out of 78 million dollars, and they contribute now 28 per cent. or the running cost. The Dutch, who have not been referred to much in this debate, advanced 50 per cent. of the cost of the "Rotterdam", at 4½ per cent., with the proviso that no interest was to be paid if the owning company operated at a loss. Therefore, I maintain that if we are to remain in this passenger ship route we have to accept the fact that it is a subsidised route.

There is a long tradition of financial help for this route. This Bill is not a new departure. I have read debates in 1903 about the Bill put forward then and in 1934 the proposals dealing with the "Queen Mary" and the "Queen Elizabeth". I think that it may not be uninteresting to the House if I said a word or two about those transactions.

In 1903 the agreement with Cunard was that £2.6 million was advanced at 2¾ per cent. for building the "Lusitania" and the "Mauretania". The object was to build ships capable of a speed of 23½ knots and more. There was a current subsidy to Cunard of £150,000 a year for operating high speed vessels. The ships came into service in 1907 and the agreement was for 20 years from that date. The "Lusitania" was sunk, alas, in 1915, but the "Mauretania" continued in service until 1927.

As to the "Queen Mary" and the "Queen Elizabeth", in 1934, the Government advanced nearly £4 million to the Cunard on very favourable terms, the first £2¾ million at ½ per cent. below the Bank Rate until 1st January, 1940, and the remainder under arrangements which made possible abatement or waiver of interest. This was followed by a loan of £5 million in 1937 for building the "Queen Elizabeth" on similarly favourable terms, £2½ million at ½ per cent. below Bank Rate until 1943 and interest waiver arrangements on the remaining £2½ million. One of the interesting facts about that transaction is that the overall interest on the Government loans, all of which were repaid, was about 1⅓ per cent.

My hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) talked about the Cunard Company being the scarlet woman of the shipping industry and about the wages of sin. I do not admit that the previous transactions were either immoral or dishonourable. On the whole, the transactions of which I have spoken were useful to the nation. My hon. Friend takes too puritanical a view of financial support.

I am certain that the very clear consequence of no help from the Government in these circumstances would be the gradual withdrawal from the express weekly route across the Atlantic. It would not be total withdrawal from the North Atlantic services, because the slower ships would survive and continue, but, with the increased costs of running the "Queen Mary", there is no doubt about the future. It is that it would be the gradual withdrawal from the express services.

This is an issue which each one of us in the House must face. I am absolutely satisfied that without this action, which the Government have put forward for the approval of the House, this ship would not be built—unless the Government did it themselves. Right hon. and hon. Gentlemen who are critical of this proposal must accept that either the ship would not be built or the Government would have to build it themselves. I am unable to accept the proposition that the Government should accept the whole of the risk of building this ship.

An argument based on what the Cunard Company does with the rest of its assets is unsound. That is not the point. The point is whether this ship would be built. That is what we have to face. Some of my right hon. and hon. Friends will ask, as perhaps the right hon. Member for Easington (Mr. Shinwell) will ask, "What would it matter if the ship was not built?" This is also something which we must face. The right hon. Member for Vauxhall (Mr. Strauss) spoke of the deteriorating passenger figures and seemed to take a very melancholy view of passenger prospects. That is a possible view to hold, but I do not hold it. I think that a residuum of people will continue to want to cross the Atlantic by ship. They will be very much attracted to a new ship. A new ship will have a very considerable selling point of its own for this service. I do not accept that we shall reach the position, certainly within the next fifteen years, when we should be so despairing of the prospects as to say this is not an economic proposition to begin with.

There is another point which I do not think has been much emphasised in the House today but which is very much in my mind. That is the foreign currency earnings of this ship. I am advised that in each of the years 1958 and 1959 the dollar earnings from the two "Queens" amounted to about 25 million dollars gross and about 20 million dollars net. The advice we have is that the new ship is estimated to earn about 15 million dollars gross and 13 million dollars net annually. That is a very substantial contribution to the balance of payments.

It does not end there. If no British citizen can travel across the Atlantic in a British ship, be may be inclined to go in a ship of another country. He will travel, as one of my hon. Friends admitted that he would travel, in the "United States", or whatever ship it may be, and there will be a loss of foreign currency in that way.

I also feel that if we do gradually withdraw from this express service there will be a tendency to by-pass Britain in more ways than one. I know that these other lines still call here, but I feel, as I say, that this would give substance to the idea of a direct route from North America to Continental Europe, and that we would be pushed out and by-passed. I hope my hon. Friends will not think that this is an insubstantial argument. There are substantial reasons, on foreign currency grounds and on the general position of keeping us in this picture, for supporting the kind of proposition we advance.

A good deal of reference has been made to the prestige element, and on that I have only this to say. If we decided to withdraw from this route I am sure that there would be an awful hullabaloo on prestige grounds. Of course, it might be said that this was an outmoded status symbol, but I think that if the idea got about that we were withdrawing from the route many people would ask, "Is not this a tremendous betrayal of British prestige and interest?" I say, quite frankly, that to build what I believe will be the finest ship afloat is not bad business for us on prestige grounds.

I have dealt with the point as to whether Her Majesty's Government should concern themselves with this route. The second point, which, I agree, is a very practical one, is whether, if we are to do this, this is the right sort of ship. It has been suggested that to have more rather smaller ships would be a better use of public money, and, indeed, of the money of the Cunard Company. All I can say about that is that Lord Chandos's Committee was set up to examine that very point. Lord Chandos is known to hon. Members.

Another member of that Committee was Sir John Hobhouse, of the Blue Funnel Line. Sir John has been known to me for many years. He is a political opponent, but has immense knowledge of shipping, and most of us who have some knowledge of Merseyside would not think that the judgment of the Blue Funnel Line is at fault about much that has to do with shipping. Sir John Hobhouse has retired from the Chairmanship of the Blue Funnel Line. I make it absolutely clear that I do not call him in as a witness in support of the proposition that we should do this, but simply as to whether or not, if we do this, this is the right sort of ship. We have the evidence of Lord Chandos, of Sir John Hobhouse and of one of the most expert accountants in the country—

Mr. Shinwell

Will the Chancellor tell me where the evidence is? He and his right hon. Friend the Minister of Transport have spoken of it, but where is the recorded evidence that demonstrates that the Committee said that this is the type of ship to build in preference to building smaller ships of considerable speed?

Mr. Lloyd

I do not know what the evidence is. I doubt whether I should understand it if I did know it, but I do know that these people of experience, having considered the evidence, came to this conclusion. And that is what I think is important. What is the point of setting up a special committee if one then has to go into all the evidence oneself and come to a conclusion oneself? The plain fact of the matter is that, as I understand it, on this point the Chandos Committee was absolutely specific. It said that if this thing is to be done that is the right way to do it.

Nor does it rest only with the conclusions of the Chandos Committee. The Yarrow Admiralty Research Department came to exactly the same conclusion—

Mr. Shinwell

The right hon. and learned Gentleman's language is within my memory. He said that some hon. Members have suggested that instead of building this ship, of great size, of 29½ knots, and at great expense, we should build four ships or a number of smaller ships for the Atlantic trade, and he said that this is precisely the point with which the Committee dealt. Where is the evidence? Where is the evidence that the Committee dealt with this point? Was the issue before the Committee: "Shall we build one ship which the Government will partly subsidise, or shall we subsidise the building of several ships?"

Mr. Lloyd

The point was that the Committee recommended that the only way to stay in this business was to build a ship of this size. There was an original idea of a ship of 85,000 tons, but the Chandos Committee came to the conclusion that it should be 75,000 tons. The Committee went into this matter in very great detail and made a most meticulous examination of the alternatives. As I say, in a matter of this sort one is very much affected by the judgment of someone whom one knows to have tremendous experience in these matters.

Mr. Bence

Was it not a fact that the Yarrow Admiralty Committee and other authorities determined, in tanks in which winter conditions were created similar to those in the North Atlantic, that a vessel between 900 ft. and 1,000 ft. was the range of size within which the maximum speed could be given over the North Atlantic route?

Mr. Lloyd

I believe that the preponderance of effective advice has been that if we are to do this thing—I am not attempting to judge whether we do it or not—this is the right way to do it. That is the second point.

Mr. Mellish

Is not the whole truth that the terms of reference which the Chandos Committee was given were so narrow because they were allied with the statement that was made in the election manifesto of the party opposite? This is what we are complaining about. The Chandos Committee was not given the right terms of reference.

Mr. Lloyd

I do not think the hon. Member is making a fair point. The Chandos Committee advised that if we were to attempt to stay in the North Atlantic express passenger service with some ship supported by Government funds, the way to do it was with a ship of 75,000 tons. That was the Committee's view, and I think that was the view which was supported by the Yarrow Admiralty Research Department.

The third point to which a great deal of attention has been paid today is: are the financial terms tolerable? Is this the right sort of ship to back? Is it right to give to the Cunard Company a grant of £3¼ million and a loan of £14¾ million? Reference has been made—and I do not apologise for repeating it—to the respects in which the present bargain is more favourable than the original Chandos proposals. Full interest of 6¼ per cent., or whatever is the rate appropriate at the time, is going to be paid during the construction of the vessel. There is going to be no abatement of interest on the Government loan if the Cunard Company's equity earnings on the new ship are low, and there is to be a sharing of any saving of costs. Those are three important respects in which the final proposals are an improvement, from the Government's point of view, on the Chandos proposals.

The second matter on which I should have thought the House would agree is that this is going to be an open subsidy. On the whole, it is better to have an open cash grant instead of a concealed subsidy at an artificially low rate of interest, and I think that in this respect the current proposals differ from those made in earlier years and, on the whole, are an improvement on the earlier proposals.

The third aspect of this matter is the question of the Cunard interest. I was asked, "Why only the Cunard Company?" I would remind the House that when the 1934 bargain was being made it was one of the conditions of the bargain that the White Star and Cunard should amalgamate. It is not just a question of selecting one company on the North Atlantic route to which to give a special benefit, but we insisted in those days that the two companies should get together. I should have thought, in view of the extent of international competition, that that was not an unreasonable proposition.

It is said also that the Government should have asked the Cunard Company to pledge all its assets against the ship. The fact of the matter is that the Cunard Company is putting in £12 million of its own money, its shareholders' money. I do not think it would have been reasonable to ask it to underwrite the Government's loan in full. The right hon. Member for Easington said something about the Cunard Company's resources, and he gave some figures. I think he said it had £15 million investments and £6 million in cash. But, of course, £12 million of that is earmarked for this purpose, and, again, the company has its own replacement problems, quite apart from this ship. People may talk about the "scarlet woman" of the Atlantic but it should not be forgotten that, since the war, the Cunard Company has spent £30 million of its money building 200,000 tons of shipping for this purpose. Obviously, it has a considerable replacement programme of its own for which it has earmarked certain funds. I suggest that it is a very remarkable indication of its confidence in the future of this project that it is prepared to back it with £12 million of its own money.

As has been said, the Government will have a lien over all depreciation moneys. In addition, any excess of equity earnings over 7½ per cent. is to go towards accelerated redemption of the loan. This is a very considerable degree of security for the Government.

I agree with hon. Members opposite in the view which I, as Chancellor of the Exchequer, have to take. I am very much concerned with the prospects of being repaid. I want to deal for a moment or two with those prospects. The Government have a first charge on the ship; they can take it over if there is any default. Apart from that, they will receive annuities calculated to pay off the loan with interest in twenty-five years. Finally, they have a charge over accumulated depreciation moneys which will be set aside at the rate of 4 per cent. per annum on the cost of the ship. This means that, within thirteen years, or about half-way through the life of the ship, unless the financial results are very much worse than, I think, anyone has reason to expect, the Government will have received back, or will have a claim on sums amounting to, £14¾ million, or virtually the whole loan. That takes us, in effect, over the first half of the life of the ship. (After ten years, the corresponding figure is over £11¼ million.) I say, therefore, that whatever may be the uncertainties about the latter part of the life of the ship, the Government have an assurance that by far the greater part of the advance will be covered well before the ship is halfway through its career, and fully covered thereafter. If the ship does well and the funds are available, there are provisions for accelerated redemption.

The right hon. Member for Vauxhall concluded his remarks about the financial aspects of the proposition with what I thought was a remarkable contradiction. First, he said that this would be a completely unrewarding proposition because the traffic figure would not justify the risks taken. Next, he stressed how monstrous it was that the Government were not insisting in taking part in the equity.

Mr. Strauss

I said that it seemed on the figures which we knew that the prospects for commercial success in this trade were poor, but, on the other hand, the Cunard Company were optimistic. There is no reason why, if the Cunard Company's estimates should turn out to be right, the Government should deny themselves some share in the profit which is to be made by the transaction.

Mr. Lloyd

The answer is that we have driven what we think is a fairly hard but fairly reasonable bargain. We have what we regard as security for our loan. Even now, I cannot understand why, if one takes a pessimistic view of the prospects, that should be a ground for great condemnation of the Government because we have not insisted upon an equity interest. Of course, the right hon. Gentleman will know that, if we had insisted on an equity interest, that might have carried with it further responsibilities.

To sum up, I would say, as Chancellor of the Exchequer, that I do not welcome proposals for subsidy in the public sector or the private sector of industry. I would much rather see both sectors of industry in this country able to stand on their own feet, and I assure the right hon. Member for Easington that I am not doctrinaire in this matter any more than he is. I should like to see both sectors standing on their own feet. Nevertheless, I agree with the hon. Member for Greenock that each proposition has to be examined upon its merits, and we are putting forward this proposition as an individual proposition and not as an attempted solution to all the problems of shipping or the shipbuilding industry.

I think that there are three arguments why the House should give a Second Reading to this Bill. First, this is a highly subsidised route, and without a subsidy this ship would not be built, and Cunard would gradually withdraw from the express passenger service on the North Atlantic. Secondly, the expert advice given to the Government is that this is the right sort of ship to build for this purpose. Thirdly, in all the circumstances, the bargain struck with Cunard is not unfair to the taxpayer. I would say that it compares favourably with some of the other bargains which I have to strike, on behalf of the taxpayers, with certain other interests and industries. I therefore ask the House to give the Bill a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a committed of the whole House.—[Mr. Hughes-Young.]

Committee Tomorrow.