SHIPPING AND SHIPBUILDING

HC Deb 15 February 1962 vol 653 cc1526-655

3.52 p.m.

Mr. Frederick Willey (Sunderland, North)

I beg to move, That this House, convinced of the vital importance of the shipping and shipbuilding industries, and noting with concern their continuing serious difficulties, regrets the failure of Her Majesty's Government to take or promote any effective action to remedy the position. This is another chapter in the debate that we have pursued since 1951. It has not been a satisfactory debate, because we have not yet had an effective or satisfactory reply from the Government. Meanwhile, while we have been debating these industries their position has steadily worsened. Since 1951, the world merchant shipping fleet has increased by sixteen times the tonnage that we have added to our own British fleet. As I said in the debate which we held in the summer, during this time flags of convenience fleets have increased fourfold. During this time, also, the practice of flag discrimination and other discriminatory practices have increased rapidly. The pattern of trade has been changing drastically to our disadvantage.

My hon. Friend the Member for Edmonton (Mr. Albu) gave a very good illustration of this in our last debate, when he pointed out that only 35 per cent. of the oil brought into this country was brought in British ships. As we both pointed out in that debate, during the last two years we had reached the dangerous position in which we were no longer making a profit on shipping; in fact, we had a heavy loss, which was increased further last year.

When we turn from shipping to shipbuilding during the time of Conservative administration, we find that the share of world shipping production enjoyed by British shipyards has been more than halved. When we consider the export orders within the volume of British shipbuilding, we find, again, that these have been more than halved during the time of Conservative administration. While appreciating the distinction between building for registration here and building for British owners, we have, none the less, reached the strikingly disastrous position where, if we look at the shipping under construction, Britain is the largest importer of new shipping in the world today.

If we review the position which has obtained since the Minister of Transport took office, we have seen a further weakening of the British fleet and a very marked increase in discriminatory practices against the British fleet. When we look at shipbuilding, whereas the order book, which admittedly, had fallen from the 7 million tons that it was in 1957, was 4 million tons when the right hon. Gentleman took office, it is now no more than 2½ million tons. We know that while the right hon. Gentleman has enjoyed his office 21,000 workers have left the shipbuilding industry despite substantial unemployment in the industry. There are 500,000 tons less under construction.

When we look at the preparing figures, we are 300,000 tons down on the figures that obtained when the right hon. Gentleman took office. If we take the position even since our last debate in July, unfortunately freight rates have failed to recover and discrimination is far worse than it was last summer.

When we look at the shipping and shipbuilding areas we find that when I spoke in the debate in July we had 3.9 per cent. unemployed in Sunderland and it is now 5.1 per cent. For some reason that I have not been able to ascertain—I do not know whether the right hon. Gentleman has been consulted—we have been taken off the list of special areas receiving assistance under the Local Employment Act, and that is with more than 5 per cent. unemployed. In the neighbouring areas we have South Shields and South-East Tyneside where in the summer, when we last debated this matter, unemployment was 3.4 per cent. and is now 5.6 per cent. At Walls-end, unemployment has been doubled since our last debate.

If we take other typical areas, my hon. Friend the Member for Greenock (Dr. Dickson Mabon) was in the unfortunate position of having to speak for a constituency which, in July, had 7 per cent. unemployment and now has 7.5 per cent. My hon. Friend the Member for Bermondsey (Mr. Mellish) mentioned Northern Ireland the other day. Whereas Northern Ireland, in July, had 6.9 per cent. unemployment it is now 7.8 per cent. In Belfast, there are several thousand more unemployed than at the time of our last debate. I see that the Government accept the first part of the Motion they cannot deny that this is a serious state of affairs for these two great British industries, and for a country which is totally dependent on sea transport.

Before dealing with the general issues, I must say that the right hon. Gentleman is the wrong man for the job. He is far too much of a lightweight and far too fond of "gimmicks" to solve difficult problems like these. For better or worse, both these industries are traditional, conservative industries, and the right hon. Gentleman is out of climate when dealing with them. However, I concede that he has a difficult job to tackle.

Let us consider the scope of the task and let us begin with the docks. The only progress has been the belated setting up of the Rochdale Committee, which, I cannot help suspecting, was to buy time. There have been previous inquiries into the docks and the position is well known. We know the situation in ports and docks such as Rotterdam, and we know that something must be urgently done for the docks in this country.

I shall try to keep in good company this afternoon and I will begin by calling in aid the Economist. I do not know whether the right hon. Gentleman has read an article in this week's Economist which points to some of the things which should be done urgently, and refers to the right hon. Gentleman's direct responsibility. I am glad to see that the right hon. Gentleman has now sent for the article, although I had hoped that he would have read it. It says that one of the great handicaps in our ports is the congestion on the inadequate roads leading to them. That is preposterous in our country, where our great advantage is that we have a short haul to the docks. This invaluable asset is wasted by congestion on the roads, and so we get appalling figures for late arrivals of goods at the docks.

The Rochdale Committee is dealing only with the major ports, but there are about 200 smaller ports around the British coast. What is the right hon. Gentleman's policy towards those smaller ports? He seems to have abandoned them. I now call in aid The Times which, the other day, said that it was obvious that we had to consider not only the major ports, but ports as a whole. We cannot consider major ports without considering all of them, large and small, but there is no sign that the Government even intend to do that. This is a matter which is not only of critical concern but of immediate concern, for the situation in our ports is vital if we enter the Common Market.

If we think of ports and the smaller ports, we cannot help but think of the coastal fleet. Are we to assume that the right hon. Gentleman will not change his mind and that the coastal fleet is written off? I part company from The Times on this issue, because it criticises the right hon. Gentleman only for acting "too sharply and too soon", whereas our criticism is that he has acted in this way at all. What he has failed to do is to consider the overall position of inland transport and the way of making the best use of our resources.

I do not know whether the right hon. Gentleman can tell us when Standing Committee E is likely to consider Clause 54 of the Transport Bill, but we know that in the meantime the coastal fleet loses an average of one ship every week, and is more than 100 ships short of what it had a few years ago. In due course, a "welcoming" Amendment to the Motion will be moved. What do we have to welcome in the docks, the smaller ports, and the coastal fleet which is essential to British tramp-shipping?

I now come to British shipping generally. I pay tribute to what is being done about research. We now have the British Shipping Research Association, with which the General Council of British Shipping is associated. We have the Technical and Development Committee and the new Research Department at the Chamber of Shipping. All those are welcome developments. Indeed, in the last debate we drew attention to the need for what might be called operational research. A good deal is now being done, although it is rather late in the day. However, both the shipping and the shipbuilding industries cannot help but feel that they are prejudiced compared with other forms of transport when it comes to the expenditure of public funds on research. I hope that the right hon. Gentleman will not fail to give adequate backing to this welcome stepping-up of research.

The essential factors which affect the situation of British shipping today are the continuance of the depressing overhang of surplus shipping, the relative worsening of the position of the British mercantile fleet and—and this is really disturbing—the continuation and aggravation of unfair practices against British shipping. I want to deal particularly with flags of discrimination, because in present circumstances, perhaps unfortunately, the problem of flags of convenience is much less important.

In our last debate, the Parliamentary Secretary conceded that the greatest single problem facing British shipping was that of flags of discrimination. The right hon. Gentleman accepted his own responsibility and said: The prosperity of British shipping in the modern world, without any shadow of doubt, depends on close partnership between the Government and the industry. It is the job of the industry to be efficient and competitive. It is the job of the Government to hold the ring so that the industry can operate in conditions of free and fair international competition."—[OFFICIAL REPORT, 13th July, 1961; Vol. 644, c. 610–11.] The industry is trying to ensure that competition and efficiency, but the right hon. Gentleman has entirely failed to discharge his responsibilities. Far from his holding the ring, the British shipping fleet is now in an even more difficult position than it was six months ago.

Just over a year ago we had a survey when the General Council of British Shipping made urgent representations to the right hon. Gentleman, saying: Her Majesty's Government should equip itself with such general powers as it needs for the effective application of counter-measures…and should, as a matter of urgency, intensify and extend its studies of possible counter-measures and their application in individual cases. Hon. Members will remember that in our last debate the Government were pressed from both sides of the House to make up their mind and to resort to enabling legislation. Until they equip themselves with such powers, they cannot argue effectively against these practices. In due course, hon. Members opposite will have to make up their minds about their "welcoming" Amendment, but the present position is that no action has been taken by the right hon. Gentleman.

We have also to remember that other countries have taken these powers. The United States has them and Western Germany has them and has exercised them. The British shipping industry has argued that unless action is taken, the battle will be lost, because shippers will be driven to expediency and compromise which will amount to condoning these practices. Again, I plead with the right hon. Gentleman to agree that we should take same such action and that we should have legislation with teeth so that we can then negotiate effectively.

I am sure that all hon. Members recognise that in considering this problem of discrimination we have to consider the United States. The action of the right hon. Gentleman in respect of what has happened in the United States is pitiful. We noticed the strong representations which British shipping made during the course of recent legislation in the United States, not entirely without success for some modifications were made, but we had no sign of action by the Government. This legislation is now on the United States Statute Book and revealing itself as a major threat to British shipping. There is now a new body, the Federal Maritime Commission, whose sole duty is to discharge regulatory powers. The draft regulations have shocked everybody and show that the United States will act upon the strictest interpretation of this new legislation.

It is an especial and particular threat now to British shipping for two reasons. One of our lifelines over the past years has been O.E.E.C.—now O.E.C.D.—and its Maritime Transport Committee. However, at the end of last year that body faded away and was replaced by O.E.C.D., including the Americans and Canadians. This confronts British shipping with another hazard. I have called in aid The Times, and I call it in aid again. It recently carried some good articles on the liner conference system, and the increasing threat to it. This is a particularly British invention, and something of which we can be especially proud. As far as we can see, the whole system is now being threatened. In this situation there must be somebody who is prepared to stand up and talk to the Americans. This is a matter of politics. We have previously appealed for it to be raised through N.A.T.O. and the other channels open to us. The position in the British mercantile marine is as much a matter of defence to us as supporting their fleet is to the Americans.

Dealing with the liner conference system, I think that we have to divorce the two strands of this system and separate them. I think that we have to ensure that our shipowners provide, as they do, a professional, efficient service, and at the same time we have to recognise that strong political pressures are at work. We know what we want to avoid. We want to avoid the substitution of the liner conference system by something analogous to international airways. We have to recognise the difficulties. We have to recognise that emerging countries want to play a part and, therefore, we must make it patently clear that we can ensure fair dealing.

This is a political problem. All that we want to be satisfied about is that something is being done. At the moment, the right hon. Gentleman is not doing anything. Like the Minister of Agriculture, Fisheries and Food, at the end of the day he will set up another committee. Action must be taken now. Every day, every week, every month of delay means that we are more seriously prejudiced.

I cannot leave shipping without mentioning the Cunarder. I think that I will draw a discreet veil over that incident.

Mr. John Rankin (Glasgow, Govan)

Why?

Mr. Willey

It is clear that everything we said in the House was justified. It is clear, too, that the Government now have a duty to do something. They were prepared to provide public funds. This meant a lot to us on the North-East Coast, and we want to know what is now to be done to aid British shipping and ship-building. The right hon. Gentleman pledged himself to provide Exchequer assistance, but we have had no further statement from him.

I remind the House again that we shall in due course be considering a "welcoming" Amendment to this Motion. There is not very much here to welcome. On the contrary, there is a lot that depresses us. It is conceded that this is a serious matter, and that this great national industry is facing serious difficulties. It needs—and I emphasise that it has been asked for—action, aid and assistance from the Government.

I turn now to shipbuilding. Here we have another report, but it does not help very much. In fact, we have had two reports. The productivity report on the Swedish shipyards is helpful, and may I preface my remarks by paying tribute to the research work that has been done. We recognise that new steps are being taken to help the industry. We welcome these steps, and we hope that there will be concentration on problems of management, production, and marine propulsion.

The right hon. Gentleman should bear in mind what my hon. Friends said about his responsibility for development contracts. We ought to promote development contracts, but I want to deal, as I did when discussing shipping, with the position of the industry generally. All that the right hon. Gentleman has done is to call for more and more reports. He ought to face the facts. The D.S.I.R. Report of 1960 said that world production during the next five years could fall to as low as one-quarter of the present level before it begins to recover. This is a desperate situation for a great industry to find itself in. If we consider the current position, we concede at once that the figures for the last quarter show an improvement. We concede that some of our yards, and every credit to them, have some good orders from foreign owners in face of cut-throat competi tion. Indeed, one shipbuilder said the ether day: Our shares drop every time we announce a new order. We have to recognise that some of these orders are being obtained in spite of desperately keen competition, but when we consider the position last year, after allowing for cancellations the position is that, although there was an improvement, we put on the order books less than half a year's output from British shipyards. It is true that we still have1¼ million tons yet to be laid down. The real significance of this is that it represents a year's work, and it is within this period that something must be done. I am sure that nobody wants to see our shipyards run into difficulties which can now be avoided.

This may be the last opportunity to do something for our shipyards. When we consider these orders, we have to make allowance for the fact, as the Shipbuilding Conference has pointed out, that a fair proportion of these orders are suspended, and that the position is not likely to change in the next twelve months. The other point is that these orders are unevenly spread, and there are many yards which are right up against serious difficulties.

Another significant factor is that over the last year—in fact, over the last few years—there has been a low rate of ordering by British owners. The other day one of our builders put it at no higher than 2½ per cent., probably about half the rate that would be required only for normal replacement.

I know that the right hon. Gentleman always slips out of this, but I am convinced that this position is not unrelated to the question of credits. We have the accountants' report, but I agree with the hon. Member for Tynemouth (Dame Irene Ward) that this does not carry us very much further forward. We need a lot more information before it can help us very much. The Government themselves concede the need to do something because they have taken steps, which I welcome, to improve credit and to peg back the rate of interest for export orders. They did this after the accountants' reported, which is proof that the answer did not lie in the right hon. Gentleman's report.

Perhaps I might ask the right hon. Gentleman to deal with something which concerns three of our yards at the moment. I am referring to the orders from the Argentine. The Argentine Embassy announced that British yards had been given orders for ten warships. I do not think that the value of the order was stated, but it is understood to -be in the neighbourhood of £17 million. These orders were going to Samuel White, John Thornycroft, and Yarrows. It was subsequently announced that they had been held up because of credit difficulties. These orders are of great importance to the yards concerned. I suppose that they represent two or three years' work, and I hope we will not conclude this debate without a definite statement from the Government that these orders have been placed and accepted.

Dealing generally with this question of credit, I call in aid the statement of Lord Piercy, in the Annual Report of the Ship Mortgage Finance Company. He claims that a large part of the foreign business lost to British yards in the past two or three years has been primarily due not to prices and to delivery dates but to a lack of competitive financial facilities. Foreign yards have been able to offer from time to time fixed rates as low as 5 per cent. loans for a proportion of the cost varying from 70 per cent. to 90 per cent. and for periods of repayment from seven to ten years. That is the difficulty which our yards have been facing in competition with foreign yards. Even with the advantageous terms now being made available, our yards remain at a disadvantage as compared with those of many of our competitors. Moreover, this is not merely a question of straightforward credit facilities. The hon. Lady the Member for Tynemouth was right in calling attention to the unfair competition which our yards have to face. Let us consider the Common Market countries. France provides a substantial subsidy; Italy has a much larger subsidy; the Netherlands provide for a refund of the turnover tax; and the Germans have better credit facilities. Furthermore, the right hon. Gentleman cannot deny that the West German Government will take further action in this matter fairly soon.

These are the countries with which the right hon. Gentleman's Government are proposing an association. We must realise that if we go into the Common Market we shall find that the shipbuilding yards of the Common Market countries will be at an advantage. Outside the Common Market, Japanese yards have always received Government support against outside competition, where necessary.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Is the hon. Member aware that if we join the Common Market we can sue at the International Court of Justice at The Hague in respect of subsidies which are paid in competition with ours?

Mr. Willey

I merely call attention to the facts as they are at the moment. The hon. Member may draw such comfort as he can from them. I cannot.

I want to return to the position of British owners. No one is quarrelling with the better terms made available to assist exports, but they prejudice the British owners. At present, 80 per cent. of the orders are coming from British shipowners. We must consider the overall position of orders in respect of British shipbuilding. The right hon. Member completely misled the House at Question Time yesterday. Last summer, the General Council of Shipping pointed out to him that credit facilities ought to be given to shipbuilders; it also said that British shipowners should not be placed in a worse position in regard to British shipyards as a result of the quite proper incentive being given to promote exports.

The Council also said that the absence of comparable facilities for British owners might well have the result of causing British owners in highly competitive international shipping to take advantage of such similar credit facilities as are available to them for building in foreign yards. That seems to be the present situation. The shipowners, also, can point out that a British ship which is destined to be a foreign-going ship almost qualifies as an export. At any rate, it will earn foreign currency.

In this situation, considered against the background of the lag on the part of British shipowners to put in orders, the matter must be clarified, or the present position will be aggravated and British owners will refrain from putting in new orders. The right hon. Gentleman should recognise the need to see that our shipyards are not prejudiced by the steps taken to increase exports. These are immediate issues, upon which we must have clarification in the course of the debate. if we do not have that clarification, in the very sensitive and difficult twelve months that lie ahead of us British shipowners may continue to hold back, at a time when, in the national interest, we must encourage more orders to be placed.

I could have dealt with many other matters which I am sure will be dealt with during the course of the debate. There is the question of productivity. I am glad to see that the Minister of Labour is here. I hope that he will have something further to report about the discussions which he opened in December. I do not know whether other hon. Members agree with me, but I always regard the question of productivity as being primarily, initially and essentially a matter for managements. The whole industry must see that we provide better, more imaginative and up-to-date management.

The Minister of Labour (Mr. John Hare)

I am hoping very much that the unions will agree to come together with the employers, under the chairmanship of the Ministry of Labour, to discuss the whole question of productivity. There has been a delay since the meeting was called.

Mr. Willey

I do not need to comment upon the reason for the delay; the right hon. Gentleman knows what it is as well as I do. There is no disagreement between management and men that it is vital, in the interests of both, to see that we obtain as great a rate of productivity as possible in the shipbuilding industry. Incidentally, we ought to pay tribute to some of the work that has been done in the past few years. We have some first-class yards, especially on the North-East Coast.

Mr. Rankin

And on Clydeside.

Mr. Willey

And, I am sure, elsewhere. My hon. Friend will have an opportunity to explain how the yards in his area are very nearly as good as those that we have modernised on the North-East Coast.

Other questions affecting the industry concern yard reorganisation, and encouraging specialisation. I welcome the steps that have been taken collectively to secure a run of orders. Then there are the very important questions of marine propulsion, the disadvantage which we have in respect of larger diesels, and nuclear propulsion. I dealt with this matter at length last year. It is a national disgrace. We had a long start in nuclear propulsion, but today we find ourselves behind not only the Russians and United States, but the West Germans. They will have a ship afloat long before we do. We are even behind Italy, Norway and Japan.

I may not have dealt with all the matters which affect the industry, but the right hon. Gentleman has had all the facts before him for a considerable time. All the reports and recommendations have been placed before him. He has agreed that it is up to him to hold the ring in shipping. He has failed abysmally in discharging that responsibility. There is nothing to welcome there.

In shipbuilding, the Parliamentary Secretary concluded the last chapter by saying that he would have preferred to wait until the autumn. The right hon. Gentleman anticipated our debate by saying, in a speech on Clydeside: My time to be serious about the shipping and shipbuilding industries will be when Parliament meets after the Recess. He spent his time talking about the clinical diagnosis, the facts of life, and ultimately facing the brutal truth. We have now waited for several months. We want a statement now. We are entitled to a statement now.

If a crisis is to develop in British shipbuilding it may still be twelve or even eighteen months ahead, but now is the time for action, and in the interests of these two great national industries I appeal to the right hon. Gentleman, even at this late stage, to intervene, and say that he now appreciates the difficulties of shipbuilding, and that he will assist. If he fails to give us that assurance we shall have no hesitation at all; it will be our duty to divide the House against him.

4.30 p.m.

The Minister of Transport (Mr. Ernest Marples)

I beg to move, to leave out from "difficulties" to the end of the Question and to add instead thereof: welcomes the steps taken by Her Majesty's Government to assist the efforts of these industries to promote efficiency and improve their competitive position". The hon. Member for Sunderland, North (Mr. Willey), in his concluding remarks, said that hon. Members opposite wanted something to be done now; they wanted action. I will deal with that point first, and later with the other points which were made by the hon. Gentleman.

I know that during the last debate on this subject I said that the Government would step in, if the discussions between management and men were not fruitful. My hon. Friend the Member for Sunderland, South (Mr. P. Williams) will remember that. We did step in and I am most grateful, as we all should be, to my right hon. Friend the Minister of Labour, who persuaded representatives of both sides of the industry to have talks. This was just before Christmas.

An agreement was reached then to set up a working party, under the chairmanship of a Ministry of Labour representative, to go into these matters. What happened? The trade unions, because they were in dispute with employers about pay and hours, would not take part in the talks for the time being.

Quite frankly, I deplore that action. Where can it lead us? In 1961, nobody could be complacent about the situation of the shipbuilding industry. We heard the "Jeremiah" on the benches opposite saying how bad it was. We find that the industry is searching for orders while Sweden has almost 4 million tons of orders on the stocks. We might ask ourselves why. The reason why Sweden has these orders is that productivity there is one-third higher than in this country and that wages are one-third higher. The shipyards there have the biggest order book in the world and they have got it because relations between—

Mr. Cyril Bence (Dumbartonshire, East)

rose—

Mr. Marples

I cannot give way. The hon. Member for Sunderland, North was reasonably fair, but he cannot put this sort of thing at the door of the Government. It is not the fault of the Government that productivity is not increasing. It is a question of the management and the unions getting together under the chairmanship of my right hon. Friend's Ministry; and that is what my right hon. Friend has been trying to achieve. The unions will not come in. When we look at the Report, "Shipbuilding in Sweden", by the British productivity team which went there, what do we find? There were trade union members on that team. It says: From study of the matter, it becomes apparent that this productivity"— that is, the superior Swedish productivity— arises from the allowable flexibility of labour and the discipline of both labour and employers—flexibility in that any man within the industry is free to do any work which is within his physical and technical ability, and discipline in that labour and management each respect and honour the decisions and agreements of their elected representatives. The Report, which is signed by employers and employees which is not yet implemented and which took two years to be produced—longer than it takes some people to build a ship—goes on to say: It appeared to us that the success of Swedish shipbuilders was based on the acceptance by labour that the prospects and prosperity of the industry lay in employers being allowed full responsibility for administration, equipment and manning, while labour hired their services on properly negotiated terms in the full knowledge that, unless each side played its part to the full, the required results would not be forthcoming.

Mr. Edward Short (Newcastle-upon-Tyne, Central)

Will the Minister now read the rider added by the trade union section?

Mr. Marples

This is a statement of the findings in Part 11 of the Report. I have read them and this was subscribed to by trade union representatives who went to Sweden. To read out the whole lot would take a long time. The hon. Gentleman can read out any rider he likes, but that is what was said, and the trade union leaders subscribed to it.

Mr. Short

The trade union members added this rider: These relaxations "— that is, on demarcation— take place mainly to avoid redundancies, or to relieve bottle-necks, and are not practised promiscuously as contended by the employers' delegation. That puts the thing in a different light.

Mr. Marples

And the answer is, "So what?" They agreed to it. There is a flexibility of labour in Sweden. One of the things that I and my hon. and gallant Friend found on our recent tours was that they had only one or two unions and there were no demarcation disputes but freedom to transfer. For example, a plater would transfer with a welder, or a welder with a plater. In some cases, men working with iron or steel would go to work with wood and a man would actually manufacture furniture, if he had the necessary skill. A man would have a main skill and also subsidiary skills which he was allowed to exercise.

Let us face this fact. It is no use being mealy-mouthed about it. Unless we solve this problem we cannot compete with countries like Sweden.

Mr. Bence

rose—

Mr. Marples

I am sorry, but it is no use uttering unctious platitudes on this matter. Either we must do that—I am not saying who is responsible for not doing it—or fail. I mean that honestly, and I must tell the House and the country that that is what will happen to our shipbuilding industry unless—

Mr. Bence

This is important, and I think that it should be on the record. It is only a few months since there was launched from John Brown's yard a passenger liner, the "Transvaal Castle", which was built without one man-hour being lost over a dispute—and that was on the Clyde.

Mr. Marples

I am grateful for that. I hope that it will happen often.

The point is that these demarcation disputes do occur—

Mr. Bence

Very rarely.

Mr. Marples

—sometimes. It is not only demarcation disputes that occur. It is the fact that if there are four or five different trades involved on a job, some people have to wait while the representatives of other trades are brought in. Sometimes it is necessary for four or five people to wait until another technician comes along. The flexibility on the Continent is one of the reasons why the continental shipyards are in advance of this country. There are many historical reasons why we have these demarcation disputes. The hon. Member for Sunderland, North blamed the Government, in spite of our efforts to try to bring both sides together. I think that was a little unfair.

In our last debate I spoke at great length about shipbuilding, and for a shorter time about shipping. Today, I propose to speak for a short time about shipbuilding and for longer about shipping, because I believe that the orders we have here at home can be the foundation of a satisfactory shipbuilding industry. The number of orders secured recently, subject to cancellation, have improved. They are not good, but they have improved. In 1961, there were 887,000 gross tons. In 1960, the figure was 560,000 gross tons. In 1959, it was 319,000 gross tons. Even allowing for cancellations, the prospects are better today than during the last two years, as I think the hon. Member for Sunderland, North will agree.

In 1959, cancellations were almost equal to the amount of orders received that is to say, that the 319,000 gross tonnage was practically the same amount as the cancellations. Since 1959, orders have increased and cancellations have fallen. It is slightly better. What is encouraging is that foreign orders have increased. In 1961, there were 324,000 tons of foreign orders out of 887,000 tons, which represents three times the figure for 1960. How did we secure this? I think that, first it was because of modernisation. There is no doubt that our yards have been producing ships faster recently than for many a long day. Secondly, it is because of the keen prices which have been quoted by our shipbuilders.

The hon. Gentleman mentioned that they have been quoting keen fixed prices with fixed delivery dates, and that is true. For twenty years the shipbuilding industry has had a very easy passage—from 1939 to about 1959. The industry has been on a virtually cost plus basis, with unlimited delivery dates. I know, from my experience as a civil engineer, that with cost plus one is not half as keen over management as when fixed prices are quoted—

Mr. Bence

But more money is made that way.

Mr. Marples

That may be, but it is made much more easily. That is the reason why the shipbuilders found it difficult to transfer from a cost plus to a fixed price basis. It is always difficult, whether in civil engineering, shipbuilding or anything else. This is a harsh world and we find ourselves up against it. I am bound to give them credit for this. They have quoted keen prices. They have in many cases gone without their profit, and, in some cases, have gone without any contribution to their overheads. That ought to be said in their favour, and I am very grateful to them for it.

The third reason why we have got these orders is that some Continental yards have fuller order books than we have. Therefore, their delivery dates are naturally longer, and people want keen delivery dates nowadays. However, Sweden has four years' work in hand and has no subsidies of any sort, either direct or concealed by way of credits. They have higher wages than we have, yet they still have four years' orders in hand, and most of those orders are for export. This is something that we in this House should ponder. Although we have done better in shipbuilding recently, I agree with the hon. Gentleman that there is absolutely no cause at all for complacency, because the net figure for new orders is less than half the capacity of the industry. There is no doubt at all about it; even though we have done better, we still cannot be complacent.

What disturbs me particularly is that in Norway they have ordered 1,250,000 tons from abroad, while the United Kingdom, traditionally a friend of Norway, has secured only about 172,000 tons. That is not very hopeful. The managements of shipbuilding firms have been criticised in the last two or three years and have had a great deal of adverse publicity. I myself was a little critical of them in the last debate, but I believe that they are now facing the facts. We are moving through the transition stage from a sellers' market into a buyers' market. There have been one or two good illustrations of the way in which they are co-operating together, and the tendering for the Q.3 from the North-East Coast was one indication of how bright managements can be when they so decide.

I should like to say a word on research, which the hon. Member mentioned. The new British Shipping Research Association is a merger and expansion of the old British Shipbuilding Research Association and Pametrada. I agree with him that we played some part in bringing that about. I welcome more than anything else the co-operation between shipping interests. The shipowners are now having three members on that Board. I am also grateful to the shipowners for co-operating with dock and harbour authorities on the question of international cargo handling. I am convinced myself that we can no longer consider shipping, shipbuilding and docks in isolation, and I think that more and more they will be brought together, if not organisationally, certainly technically, because their problems hang together.

I do not want to deal a great deal with shipbuilding, except so far as the hon. Member provoked me by blaming the Government for something which was not their fault. I have dealt with orders and research, and I should now like to mention the question of credits. There was a recent announcement by my right hon. and learned Friend the Chancellor of the Exchequer that credits for exports for terms up to five years will be available at 5½ per cent. fixed and for longer terms at 6½ per cent. These arrangements, combined with very greatly improved facilities available for credit insurance through the E.C.G.D., now enable shipbuilders to offer terms most competitive internationally, and everybody welcomes that. All this has been done without a trace of subsidy.

When we talk about credits, we have to remember that there is credit at market rates and credit which can hide an element of subsidy. I agree with the hon. Gentleman. I think it is the intention of the West German Government to introduce some facilities, but we have not been able to find out what they are. No doubt they are facilities which will have the effect of a subsidy, in which case, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out, they could be remedied through the Common Market procedures.

I want to get the question of credits straight. If one can get credit in unlimited quantities on subsidised terms, one can sell almost anything. The Cunard Company was to be given a loan, as recommended by the Chandos Committee, at a low rate of interest of 4½ per cent., which was, in effect, a concealed subsidy. I refused to allow a concealed subsidy. I said that we would call a spade a spade and announce to the world what the subsidy was. I had telegrams from two hon. Members about the loss of a tanker order for Sunderland. I made a lot of inquiries. I was told that we lost the order because of a lack of credit. I found that the firm wanted 100 per cent. of the cost of the ship on credit, repayable over a period of 20 years, and that the tanker was being chartered to an oil company, which was, in effect, raising capital on the market at a figure, I think, of 5.7 per cent. per annum.

Quite honestly, if one can borrow 100 per cent. of the money, repayable over 20 years, at a rate of interest like that, I should be buying I.C.I. and Courtaulds. We should not have been debating that yesterday; I would have bought them myself. In those circumstances, one is not selling a ship; one is not selling the credit; one is just giving it away. When hon. Members say that the Government are not providing the credits, they must make up their minds whether they mean credit on market terms or on subsidised terms. The Government have no intention—I make this statement categorically now—of subsidising shipbuilding or shipping, either directly or indirectly, by way of loans.

Mr. Mark Woodnutt (Isle of Wight)

Would not my right hon. Friend agree that, in the case of E.C.G.D. guarantees, we should offer a sufficient percentage to enable firms like Samuel White, Thornycrofts and Yarrows, to obtain the necessary credit? If the Department is not prepared to do that, we shall not get the orders. It is not a question of subsidising, but of giving the necessary credit guarantees.

Mr. Marples

The case which my hon. Friend has in mind will be dealt with by my hon. and gallant Friend the Par- liamentary Secretary, because I know that hon. Members will want to speak about these matters.

There are two separate points. There Es credit insurance, which guarantees against a bad debt, and there is the question of raising the money. My hon. Friend asked me if I would agree that the E.C.G.D. should give a certain percentage, but the percentage which it normally gives for exports is fixed for each particular country. If 65, 75, or 80 per cent. was the right figure for a particular country for heavy electrical goods, that is the measure of the stability of that country, and it should apply to all goods in exactly the same way. Thus, if it was 75 per cent. for heavy electrical goods, it should be 75 per cent. for ships, and the same if it was either 65 or 80 per cent. The moment that the Government asked E.C.G.D. to vary interest rates for different industries we should be in a muddle. Every industry would say, "You must help us when you are helping the others." I do not think that could be tolerated.

Mr. Douglas Marshall (Bodmin)

May I raise one point on the question of subsidy again? I am not quite clear of my tight hon. Friend's thinking on the subject. Towards the late twenties, the Bank of England rediscounted shipping bills, but this was discontinued by Montagu Norman. If the Bank rediscounted shipping bills, would my hon. Friend agree that it would not be a subsidy?

Mr. Marples

I should have to go into that, because Montagu Norman was a bit before my time. I really cannot answer that. I am not at all sure that Montagu Norman's views commanded complete unanimity and respect in this House at the particular time. Be that as it may, I will look at the point.

The great advantage which our shipbuilding industry has, and which other shipbuilding industries abroad do not have, is that we have a large home market. We hear continually that if we had a solid basis in a home market we could export much more cheaply. We have a large home market, the largest active trading fleet in the world. By all normal statistical averages our shipping owners should be ordering about 1 million tons a year to replace ships which are becoming obsolete. They have not been doing that for a number of reasons.

The first reason is the heavy ordering up to 1957 and that backlog is being worked off. Secondly, there is a large surplus of world tonnage. Thirdly, British ship owners have been more cautious than foreign owners. The shipbuilders asked me if I would ask the shipowners what orders were likely to be made, and I have asked them this in the strictest confidence. I say this to the House, because naturally they do not want to let their plans out to competitors; but we want to give the shipbuilding industry some idea of the rhythm of orders they can expect in future.

Mr. Elwyn Jones (West Ham, South)

Could the right hon. Gentleman say something about the ship-repairing industry, and, in particular, whether he is now satisfied that British shipowners are seeing that their ships are repaired in English shipyards instead of abroad?

Mr. Rankin

And in Scottish shipyards.

Mr. Marples

There are also one or two Welsh shipyards. It must be left to the shipowner to go wherever it is convenient for repairs. The North-East Coast is not a terminal port, such as Hamburg. A ship goes to Hamburg where it is convenient to have it repaired. The North-East Coast is not a terminal port, but the facilities offered there are so favourable that orders are taken away from the terminal ports. The competitive forces must be allowed to work out in this way. If we started directing our ships solely to keep to England, Scotland, Wales, Northern Ireland, the Isle of Man or Jersey, other countries might adopt the same attitude, in which case a grievous blow would be dealt to our trade.

I turn to the shipping industry, whose problems are crucial. If we can maintain our shipping industry, whatever the difficulties of the future, I think the owners would rather place their orders—all other things being equal—with a British yard than with a foreign yard. The main question is the surplus tonnage in the world. The supply of ships greatly exceeds demand and the dry cargo tramp freights have been reduced to levels very little above operating costs.

Liner earnings have been affected because the load factors are lower and competition from tramps has made it more difficult for them to raise their rates. I agree that the tonnage of shipping laid up is smaller than it was, but large quantities of surplus tankers exist and employment cannot be found for them carrying oil. They have turned to other cargoes. There are 2 million deadweight tons of tankers now carrying grain. They put some dry cargo ships out of a job. But for this incursion of tankers into the grain trade, the world market for dry cargo tonnage would probably have reached a reasonably economic level. This is a factor to take into account in assessing our shipping industry. There is little that the Government can do about the world problem, but we shall keep in contact with the Chamber of Shipping about it.

The second great problem is that of operating costs. Operating costs of British ships have risen rather steeply. The reason for that is that crew wages showed a steep rise last summer. We have to face the fact that it means that operating costs are more expensive than they were. There is no doubt that the two sides of the industry have to get together to see if they can reduce operating costs by improved methods and new techniques.

For example, I do not believe for a moment that we have gone thoroughly into the question of automation in the engine room of a ship. I saw a report recently by some consultants about American experience; apparently it had been found possible to reduce by over half the number of men in the engine room of a particular ship. I think that can be done. If both sides could get together and if co-operation is harmonious between the two sides, that could help a great deal. There is also the necessity of having standard handling and standard containers.

Mr. E. Shinwell (Easington)

The right hon. Gentleman is on a very important point. Of course, we ought to adopt modern methods if the ship owners have the money. That is the crux of the problem. Of course, they would adopt modern techniques in the engine room and elsewhere, even on deck, if the Government provided the money.

Mr. Marples

If they were able to reduce operating costs it would be well worth spending the money, because it would make for more efficiency. That is what happens in business. If one has a super market one reduces operating costs and gets a good return on the money invested. Therefore, I am very glad that we shall have more emphasis placed on the operational side of shipping research.

I also believe, and I am sure that the shipbuilders will agree, that we ought to have more standardisation when we build ships in this country. We must try to get ship owners to accept more standard components than they do now. One firm on Tyneside who came to see me recently said that they had had an order for nine ships. It was a case of exact repetition. They were astonished—both the workmen and management—to find how the ninth ship was made much cheaper than the first. If we could get the shipbuilders and ship owners together it might be possible to get standardisation of bollards, scuttles, small pumps and the like. That would make a great difference.

I am stating the problems which face the industry. The third is nationalism in shipping. The hon. Member for Sunderland, North referred to flag discrimination. There is no doubt that no longer do the ordinary forces of commerce operate in the matter of chartering ships. The political and economic policies of many national governments, including some in the Commonwealth, operate against British shipping. Their fleets cannot pay in fair competition so their governments build them up and keep them going with lavish subsidies.

We have done everything which the General Council of British Shipping has asked us to do except one thing, that is to retaliate. We have asked the Council to give us cases in which it thinks retaliation would be in the interests of this country. It is no good retaliating if that does more damage to us than good. The hon. Member said that we had done nothing about it, but only yesterday I saw the Council of Shipping—which includes the Chamber of Shipping and the Liverpool Steamship Owners—and they gave us their views. They were unanimous for the first time, and they told us what they wanted to do regarding America.

I do not exclude the possibility of taking powers to retaliate if it would be to our advantage to do so, but at the same time we want to know that it would be to our advantage. It is no good taking retaliatory action if that would damage us more. The right hon. Member for Easington (Mr. Shinwell) who is very restless, can retaliate a lot himself. The point is that if there is a case for retaliation against a particular country I should like that case brought to the House so that we can go into it.

Mr. Paul Williams (Sunderland, South)

Is not my right hon. Friend missing the whole point of the proposition? The proposition is not necessarily that we should take retaliatory action but that as a first step we should have powers to take it. The very arming of ourselves with those powers might "persuade"—I use that word in inverted commas—other nations to more sensible policies, That is the crux of the problem.

Mr. Marples

I quite agree. This was the point I discussed yesterday with the General Council.

Dame Irene Ward (Tynemouth)

If we discussed retaliatory measures on the Floor of the House against one particular country, would it not seem rather ridiculous then to have to bring in an enabling Bill? If we had an enabling Bill first and then had to make such a decision, we could get straight on with it, which is what we want to do.

Mr. Marples

I have had some experience of trying to get the House to approve enabling Bills. I have not found it easy. I have been grilled and cross-examined. The first thing hon. Members ask is, "What do you want this for?" I say, "I do not know, but I want the enabling powers". Everybody agreed when I wanted to have enabling powers in London, but they all opposed them when I asked for them in the Road Traffic Bill.

I have dealt with retaliation. I want also to mention interference with conference operations. This is very serious. In fact it is just as serious as flag discrimination. The hon. Member for Sunderland, North said that this was a contribution which British shipowners made to the world and it dates from 1875. It is a long time ago. It has done a great deal of good, because it has given frequent and regular services at stable freight rates. That was sometimes necessary for refrigerated cargoes, and so on. The United Kingdom liner tonnage is largely organised in conferences. Lt is a British invention and is dominated by the traditional maritime countries particularly by British shipowners. This means that control of the operations is in Europe. Many of the newly emerging countries resent this. They think it is alien and remote control. This applies to some of our newly emerging Commonwealth countries. They want a greater say in the way in which freight rates are set. They are less and less willing to accept the argument that shippers and shipowners should settle their own affairs without Government intervention. There is increasing unilateral interference by foreign Governments. This development causes great problems, both for the Government and shipowners. It is up to shipowners to try to convince the shippers and the foreign Governments that their freights are reasonable, but it is not easy for them to do this.

I come to one example mentioned by the hon. Member for Sunderland, North. This is the biggest single case of unilateral Government interference with conferences. This is by America. [HON. MEMBERS: "Hear, hear."] I will be quite honest and straight about this. The real trouble lies in the United States Shipping Act, 1916. This gave United States officials very wide powers to control the affairs of liner conferences and, indeed, any other liner companies engaged in the overseas commerce of the United States. Until recently it was administered in a reasonable way; I am certain of that. Under the existing powers they could have taken more detrimental administrative action than they did.

This Act was amended last year in a way which clarifies, and in some respects extends, these powers of control. The General Council of British Shipping made persuasive and cogent representations against the Bill in America. The Council was listened to and succeeded in getting some amendments made. The British Government played their part, both in ensuring that the Council had a good hearing and also by making our protests. We made more protests than all the other European countries put together. Our protests may have been ineffective, but at any rate we tried as best we could in the circumstances. Without the strong representations of the Government and the General Council acting as a team, I believe that these powers would have been worse than they now are. They are objectionable as they now are, but they would have been worse.

Even as it is, the regulations being issued by the Federal Maritime Commission and its activities generally give us no ground at all for hope that in practice the law will be administered in a reasonable way. I want to say this categorically. The American law and practice are unacceptable to us, because they are burdensome to our ship owners. They are likely to be detrimental to our trade, as well as to our shipping. In many respects they are contrary to our views about international jurisdiction.

We are not alone in holding these views. Our friends in Europe hold a similar view. We have already had two meetings in Paris when we discussed it with the responsible Ministers and their officials. I have invited them to attend a meeting in London to discuss the matter next month—I think it is on 7th March—when we shall hope to present to them what are our views on the American legislation and what action we can take as Europe combined, because then we will be more effective and more powerful than if we go alone. If we cannot get them to combine together, we shall go alone. I would rather take our friends in Europe with us, because they are just as adversely affected as we are. We are meeting in March.

Mr. Willey

There will be no result.

Mr. Marples

It is no good the hon. Gentleman saying that. We are meeting to discuss it.

Mr. Willey

This is the burden of our case. We want a new Minister who will get something done. The right hon. Gentleman has been saying things—[HON. MEMBERS: "Oh."] It is true. He has been making representations since he has been in office. The result is absolutely nil.

Mr. Marples

It is quite clear that the hon. Gentleman does not read HANSARD. We obtained quite a number of concessions in the recent legislation the Americans passed. If the hon. Member asks the Chamber of Shipping, he will find that it will support my statement.

Let us get this question in perspective. Although flag discrimination is evil and we ought to do our best to fight it, the greater part of world shipping is still open to free competition. It is not all dominated by flag discrimination. The prize goes to the most efficient. It goes to the shipowner who is in the field first with the size and type of vessel required by the trader or charterer at the right time and at the right price.

Some of our continental friends are very skilled at this game. They are very efficient. They have no subsidies and no help, would go so far as to say that foreign competitors of this kind, who have no special advantages beyond their own commercial energy and skill, are more dangerous to our ship owners than the other kind who have to rely upon Governments to bolster them up with all the various devices such as subsidies which a Government can produce.

The proof of this is Scandinavian ship owners. They have no subsidy. They have no cargo preference. They have no tax advantages. Unlike our own ship owners, they have comparatively little home based-trade to carry. Nevertheless, since the war they have expanded their fleets out of all recognition and by all accounts have made a very comfortable living out of it. How do they do it? This is most interesting, because they have done it without subsidy.

Mr. John Howard (Southampton, Test)

Do not the Scandinavian ship owners receive a tax free allowance which they can put to reserve for the renewal of their fleet?

Mr. Marples

That is so in the case of one Scandinavian country, but not the others. But we have a 40 per cent. investment allowance, which is very similar. There is no doubt that the Scandinavian countries have done this by adapting their services to changes in the pattern of world seaborne trade. For example, the declining coal trade has been more than replaced by an ever growing volume of demand for oil, for which more and larger tankers were required.

In opening the debate the hon. Member for Sunderland, North said that we were bringing in in our own ships only 35 per cent. of the oil this country uses. The point is that the Scandinavians are the people who supplied these oil tankers. They have taken the business up. During the last ten years they have secured many profitable long term charters from British oil companies in which British independent owners, with few exceptions, showed little interest. This is one reason why our balance of shipping payments is in the red. At the moment the people of Scandinavia are concentrating on large specialised bulk carriers and they have shown a great deal of interest in this. I am certain that our own shipping owners are conscious of this and I hope that they, too, will go in for new types of super cargo ships.

In conclusion, I want to mention two points about the future. First, I am positive that technically the trend must be more research into the three sections—shipping, shipbuilding, and docks—because they all hang together. If a standard is to be set, it must apply to a ship, the shipbuilder must bear it in mind, and the docks must know. That is an inevitable trend in the industry.

In reply to the hon. Member for Sunderland, North, I would say that there was no pressure for an inquiry into the docks from anyone in this House or outside it. We have not been dilatory. We have set up a first-class Committee, and it is working very well. The hon. Gentleman quoted the Economist, which said that the virtue of the Rochdale Committee was that it could make recommendations not only in this sphere but right along the line of dock working. As that quotation is on my side, so must the hon. Gentleman be—

Mr. Austen Albu (Edmonton)

Can the right hon. Gentleman say whether there will be an interim Report?

Mr. Marples

No, I cannot. I have seen Lord Rochdale, and he is anxious not to make an interim Report. He wants to make one Report which will cover the whole subject, and I am quite certain that it will be most valuable.

I believe that the partnership between the Government, the Chamber of Shipping and the Shipbuilding Conference has to be closer in the future than it has been in the past. In the last year, and I say this quite categorically to my critic, the hon. Member opposite—[HON. MEMBERS: "Critics."] No, only one hon. Member has so far spoken; the rest will come later—that the meetings have been more frequent and the contact has been closer both with shipping and shipbuilding interests than it ever was in the past—

Mr. Willey

And more dissatisfaction.

Mr. Marples

No, I do not think so—only with the hon. Gentleman.

I think that if we are to have this sort of partnership we must ask the shipping and shipbuilding interests and, ultimately, the dock and harbour interests, what sort of partnership they think would be the most fruitful to set up. They may want a new form of partnership. We have thrown out new ideas which those interests may accept or reject or to which they may suggest amendments, but as long as their suggestions are constructive the Government will meet them in order to get the most harmonious and the most effective partnership possible.

A partnership will not succeed unless both sides are free and frank, and that we intend to be. I am very grateful to my hon. and gallant Friend the Parliamentary Secretary who, since his appointment, has worked very hard going round the docks and shipyards. He has done much to promote the confidence those people now feel in the Government—[Interruption.] There is not a shipbuilder on that side of the Chamber at all.

The Government have to act as a catalyst for those ideas and, in moving this Amendment, I assure the House that we in the Government will certainly play our part.

5.14 p.m.

Dr. Horace King (Southampton, Itchen)

When the Minister gave a glowing account of what happens in the Scandinavian countries he neglected to mention that they have Socialist Governments; and a much more equitable distribution of the wealth produced, not only by the shipping industries but by the whole nation, than we have. I believe, as does the Minister, in the getting together of managements and men, but if we want them to get together we have to create a climate of good will, and a climate of social justice. One of our indictments of the Government is that many of their major actions have, by their injustice, militated against the getting together of managements and men, not only in the shipping and shipbuilding industries but in many others, in a common effort to step up production and productivity.

My own experiences have made me think that there are often better human relationships in the shipping than in the shipbuilding industry. The shipbuilding industry has a legacy to shake off. I have told the House before of an old friend of mine who worked for fifty years in a shipyard. On the day he left, he just drew his wages. There was no word of thanks, no gold watch, no testimonial—he just finished. As long as employers in the shipbuilding or any other industry regard their workers just as things to be hired and fired we shall never get the good relationships that are so necessary—

Mr. Anthony Fell (Yarmouth)

What was the name of the friend?

Dr. King

I shall give it to the hon. Gentleman outside—and take him to see my friend, if he wishes.

Mr. Fell

I was trying to be fair. I was hoping that the hon. Gentleman would name the individual so that we and the country could know.

Dr. King

I do not believe in pillorying individuals for what is part of a wrong system.

Mr. Fell

But the hon. Gentleman is doing so.

Dr. King

The workers in the shipbuilding industry—and this is purely factual—work as hard, and for as long hours—indeed, in many cases they work longer hours—as most of their competitors in the great battle for shipbuilding and ship repairing. The task that faces the Minister and the country is that of getting better value out of that work, and increasing productivity.

The main background of this debate is well known, and I shall not repeat it in detail. World shipbuilding has grown since the war until there is enough capacity to replace the world's shipping fleets every ten years. As the average life of a ship is between 20 years and 30 years, the world has at least double the shipbuilding capacity it needs. Britain, therefore, has to fight in a fiercely competitive market against highly-skilled nations, many of them with post-war shipyards and the latest techniques.

The simple fact is that we are not getting enough foreign orders. In our last shipping debate the Minister told us that at that time Germany was building for export 1.6 million tons out of a total of 2.3 million tons built, and that Sweden was building 1 million for export out of 1.6 million built, whereas, at that moment, the United Kingdom was building 0.4 million for export out of 2.7 million tons built; and that even of that small fraction about one-third was for our own Colonies as part of our colonial policy.

The position is even worse than that; we are not even building all our own ships. In three years, British shipping placed abroad orders for 1 million tons—worth about £120 million. I wish that British shipowners would be a little more British. Capitalism was never patriotic; its policy is always to buy in the cheapest market and to sell in the dearest one, whether or not that is good for the interests of a country as a whole. We all remember the notorious stockbroker, mentioned when this House considered a case some three years ago, who said, "This may be bad for Britain but it makes sense to me".

I should like to see the rightful pride of shipowners in British shipping extended by them to their fellow-Britons who make ships and who repair them. As it is, ships that could easily be built and repaired in Britain are being built or repaired in foreign shipyards, and British shipbuilders and ship-repairers face unemployment because shipowners find it cheaper to get the work done abroad—

Mr. Harold Steward (Stockport, South)

The hon. Member gave certain figures for different countries, and I am trying to follow him as closely as I can. Will he explain those figures a little further, so that we may be quite sure to what they refer?

Dr. King

The figures I gave were of the gross shipbuilding of a country in one year and the amount of it that was for ship owners abroad; in other words, the amount of shipbuilding that that country was selling abroad as part of its battle for exports. I want to be fair to the ship owners and I quote in their defence from the 11th January issue of the Weekly Shipping Journal. Referring to this very problem it states: In the majority of cases. British owners are unable to obtain credit facilities at reasonably low and—most important—stable rates of interest. Foreign shipping companies can reap the benefits of the new credit cover measures introduced by the Export Credits Guarantee Department which do not apply to their British counterparts. Thus we have the ludicrous situation in which it is sometimes easier for a British owner to go abroad for his new ships because he is unable to secure the desired credit terms at home. Still overhanging British shipping are the grim problems of flags of convenience and flag discrimination and the fact that, no matter what other countries may say about it, it is clear that British shipbuilders are facing unfair competition from some of the foreign yards through concealed if not open subsidies. In these cases, as the Minister has said today, there are sometimes open subsidies from foreign exchequers.

Against all of this, the Minister's speech this afternoon made interesting listening. Some hon. Members attended a dinner given by the Shipping Federation at which the right hon. Gentleman was the guest of honour soon after he became Minister of Transport. On that occasion the right hon. Gentleman asked them for time in which to examine the problem. We believe that he has had more than enough time to do that and that the nation has a right to expect even more action than what he has set out in his speech today.

But I rise chiefly to raise a constituency problem and to illustrate, from it, a principle. The main industries of Southern Hampshire are shipping, shipbuilding, ship-repairing, aircraft and railways—most of which have received some rather hard knocks in recent years. For the past thirty years I have spoken at open-air meetings outside Thornycroft's shipyard at Woolston, Southampton. It is a significant social phenomenon of this century that political meetings addressed by Labour hon. Members mostly take place outside the gates of factories even in the workers' own time. However, this firm has a proud record in building cargo boats, coastwise shipping craft and in work for the Admiralty. Its war work is beyond praise.

With Harland and Wolff it plays a vital part in the economic life of Southampton and when one or both are threatened it means a great deal to the area. Admiralty work has shrunk, as hon. Members know. There is fierce competition for the few crumbs that the Admiralty has to throw to British shipbuilding. Thornycroft, like other firms, are desperately seeking orders abroad and I quote, again from the Weekly Shipping Journal, a well-deserved tribute paid to the shipbuilders. …shipbuilders are preoccupied with securing other orders to fit in between so as to keep their labour forces together. To this end, representatives of British yards are travelling extensively throughout the world in an endeavour to secure new business, and the results already achieved show that these have not been wasted journeys. Every order which a shipbuilding firm secures abroad affects those grave figures of our comparative position in building for export which the Minister gave us last July. It affects the nation in its struggle for economic viability and it means work for British shipyard workers. But in the struggle to land foreign orders these firms are faced with the problem of credit facilities. Every big jab they undertake ties up whatever capital they have—the smaller the firm the more difficult the problem—and send them into the market looking for capital.

Money has to be borrowed at a dear price today and, even so, it is not easily obtainable. The Government help, but that help is inadequate, say the shipbuilding firms. British firms tendering for jobs tender against foreign competitors who are backed by their Governments up to the hilt with money at low interest rates.

Thornycroft is at present tendering for six coastal minesweepers for the Argentine Government. White's—and the hon. Gentleman the Member for the Isle of Wight (Mr. Woodnutt) will, I hope, later speak about this—are engaged in similar tenders for other craft. Yarrow is also engaged in similar tenders for the Argentine. These firms have asked the Government to give them a higher cover than the 75 per cent. offered on these contracts, but so far the Government have refused to budge. It appeared, from the Minister's speech this afternoon, that he dug himself in very emphatically when he was asked to shift his ground on this.

These contracts mean work for Southampton, the Isle of Wight and for the shipyards on Clydeside and they mean good export business and a vital contribution to our balance of payments. Frankly, I cannot see the Government's difficulty, for all the firms are of national repute. The Minister said that he was not prepared to subsidise, but what we are seeking today is not a subsidy. The only risk in such a foreign contract is that of the collapse of the foreign Government concerned. The Minister is prepared to underwrite such a danger to the extent of 75 per cent., but I believe that the kind of risk the Minister has spoken of—the danger of some foreign Government disappearing—is one which should be undertaken by Britain rather than by some private individual on behalf of Britain.

At present E.C.G.D. will underwrite 75 per cent., but Thornycroft and the other firms have been asking for 90 per cent. The Government's excuse is the traditional one given by the Treasury from time immemorial; that if they do it for shipping they will have to do it for all trade with the Argentine Republic. A letter which Thornycroft received stated: To increase E.C.G.D.'s offer to cover above 75 per cent. could only be done as part of a general relaxation for all capital goods business with Argentina put to E.C.G.D. for cover. And, as usual, when the Treasury says, "If we do it for you we shall have to do it for others," it does not do it for anybody. There is a case for extended cover for all capital goods in this desperate struggle for exports. The shipbuilders of Britain are fighting a hard fight—for themselves, their workmen, but also for Britain. It is short-sightedness on the part of the Government not to give them the help they need and I hope that at least one result will spring from this debate and that the Government will step up the credit aid they are prepared to grant for export shipbuilding orders.

Mr. J. Howard

Does not the hon. Gentleman consider that the possibility of naval ships being built on the stocks in this country for a foreign Power is always a valuable reserve if there is ever a danger of war?

Dr. King

I have said that I do not think that the risk of a cover higher than 75 per cent. is a very real risk. But there are indeed safeguards and advantages such as my colleague the hon. Gentleman the Member for Southampton, Test (Mr. J. Howard) mentions.

If the Government do nothing about it, what will happen? Some of the contracts will be lost, because borrowed money is too dear and no finance corporation will take the risk which the Government are not prepared to take. The money which is borrowed will be dear in any case, thanks to the Government's policy of dear money which makes money dearer to borrow in England than almost anywhere in the world, apart from Asiatic moneylenders. In other cases, firm will find it simply impossible to obtain the credit they require. Their tenders for contracts may be priced out of competition and, in some cases, they may be unable to tender at all.

As was said by my hon. Friend the Member for Sunderland, North (Mr. Willey), millions of pounds worth of contracts are at stake in the various cases I have spoken about and about which, I know, the hon. Member for Test and other hon. Members wish to speak. I plead with the Government to reconsider their decision

5.30 p.m.

Mr. Simon Wingfield Digby (Dorset, West)

The hon. Member for Southamption, Itchen (Dr. King) speaks with the advantage of representing Southampton, which has a long tradition of shipbuilding and ship-repairing. I remember with pleasure visiting the Thornycroft yard, where such excellent warships are built, and visiting the "Queen Mary" herself in dry dock in Southampton. I am not sure whether that is the hon. Gentleman's constituency or the constituency of my hon. Friend the Member for Southampton, Test (Mr. J. Howard).

Mr. J. Howard

Mine.

Mr. Rankin

We built the "Queen Mary" on Clydeside.

Mr. Digby

I am aware of that.

I cannot in this debate claim, as many others can, that I have a constituency interest in shipping and shipbuilding. My constituency once played a much larger part in shipping than in does today, because Lyme Regis and Bridport provided the only shelter between Portland Bill and the mouth of the Exe, and in the days of sail that shelter was sometimes very welcome because the Chesil Beach is not a very comfortable place if one is on a lee shore. But the subject we are debating this afternoon is extremely important and one about which it is difficult not to feel deeply if one has been connected with ships and shipping.

This country—I apologise for repeating it—is a great trading country and relies on sea-borne transport for its trade. This fact alone makes us pay special attention to the problems of British shipping and shipbuilding. We have lately become somewhat conditioned in the House to threats from foreign competition to one industry or another. In both our shipping and shipbuilding industries we have for long been accustomed to play a dominant rôle in the world. We have tended to take our lead too much for granted. I believe that that easy lead has come to and end once and for all and we must accordingly approach these industries in a different way.

The reason for the change is not lack of efficiency. Economic nationalism is rampant in the world, and, although one hears about the liberalisation of trade, there is scarcely a small nation which does not wish to have its own shipyards and its own shipping and is not prepared to push them by all the means at its disposal.

I believe that the circumstances are permanently changed and that we must, first of all, assess how much of the field is really open to free competition and how much is not so open today and is not likely to be. Having made that assessment, we must ask ourselves whether we have certain cards in our hands. I do not accept that we have none. Everyone wants to export. As just about the biggest importer in the world, Britain has cards to play in trying to secure fairness for our ships in competing for freights.

In one way, this debate which combines the shipbuilding and shipping industries is a little difficult. Although they are so alike, there are many points of variance. The shipbuilder is the producer. The ship owner is the consumer. Naturally, every ship owner hopes to buy his ships as cheaply as possible in order to be able to compete better. Every shipbuilder hopes to have—he has never really had it in the history of shipbuilding—a steady flow of orders, with not too many on one occasion and too few on another. It is difficult, when debating the two subjects together, to remember the points where they conflict.

One could not take great exception to the Motion in the way it was introduced. I thought at first that the hon. Member for Sunderland, North (Mr. Willey) had in mind that there was some simple way in which we could compel foreigners to order their ships here. Of course, that is out of the question. There is no way of compelling a foreign owner to order his ships in our yards if he does not want to do it. I confess that, when I first read the Government Amendment, I was a little surprised at it because of the stress it put on efficiency and competitive position. As I have explained, I do not believe that that is the whole issue at all. If we had only efficiency and competitive position to worry about, our worries would be small. In fact, we have moved into a world where competition is not free. There are the various forms of unfair competition of which we know, and I am convinced that they are here to stay. It is no use our playing the rules of cricket when everyone else is playing football.

The question is whether we can retaliate against this unfairness with our economic power without hurting ourselves more than we can help ourselves. The Chamber of Shipping in its excellent policy document has come out now in favour of the Minister taking powers, and nothing in his speech pleased me more than when my right hon. Friend said that he was prepared to consider taking general powers, although he did not seem very keen to present the Bill to the House.

I believe that, if he were to take these general powers to retaliate, it might never be necessary to use them. I do not see why we should not. I am told that the West Germans have done it. The Americans—although in some ways they are much to blame—have taken firm action on similar lines. In my view, the Minister should take powers so that we are in a position where, with efficiency, we may at least reap some benefit.

Mr. Rankin

Can the hon. Gentleman reconcile what seems to be a contradiction? In order to thrive, we must be world carriers. If we take powers to retaliate, will not those powers in some way interfere with our desire to be world carriers?

Mr. Digby

That is the danger, of course, but the countries with the worst records in this matter are countries which have very new shipping industries and are trying to ensure that all their imports and exports are carried in their own ships. I do not think that they are the kind of Powers which would affect our interests very much. There is a danger, but I think that, if these powers are taken, it will be possible to avoid using them except on very rare occasions.

It is extremely important that we should get together and take the lead, for it is for us to take the lead, with the other maritime nations. Now that we are engaged in conversations with the six, I hope that this matter has been raised in the secret negotiations because, so far as I know, none of the Six is an offender, and we and the Six together could surely be in a position to put a stop to a lot of these practices.

I believe it is all too easy to forget certain basic facts. First, in regard to tonnage, we have been congratulating ourselves a little today because things are better, but it is salutory to remember that we have today only 16 per cent. of world tonnage whereas only 50 years ago we had 45 per cent, nearly half. It is excellent that we have again climbed up and have nearly 21½million tons of shipping, above our pre-war total, but again we must remember the other side of the coin, that a far larger proportion of that is tankers and a far smaller proportion is specialised ships like passenger liners.

If we consider the world building figures and the world scrapping figures, it is obvious that too much tonnage is being built and retained in the world. If we try to work out how world trade is likely to expand, we have the same picture of tremendous competition, and there are likely to be too many ships for the trade.

But it is important to remember the part played traditionally in our economy by the shipping industry. Only in 1952 the earnings of the industry were £754 million and the invisible exports amounted to no less than £221 million. We all know—it has been referred to this afternoon—that these invisible earnings have been greatly reduced. I have been much surprised by the Treasury's attitude, which seems to accept this position, when we think of the debates that we have had about expanding exports in other directions by only a little. It seems to me that this traditional sector of invisible exports warrants very much more attention than we are giving to it.

The industry also provides valuable employment. There are 140,000 people serving in and connected with ships, about the same number of people who are engaged in our merchant shipyards. This constitutes a sizeable slice of employment. It is interesting to note the way in which employment in the shipping industry has remained fairly constant over the years. In 1849, 152,000 people were engaged in the industry. However, there were at that time 3 million tons of shipping as against 21½ million tons today. That is some indication of the way in which conditions on board ship have improved, particularly in our tankers. In 1871, the number of people employed in the shipping industry was nearly 200,000. We have therefore gone back quite a lot. Nevertheless, shipping is a valuable source of employment, although, as the Minister rightly said, any manpower saving which can be effected should be effected.

What are the difficulties of the industry? They are flag discrimination and subsidies. In its policy report, the Chamber of Shipping has done a good job in pointing out how diverse these can be. They are not always easy to detect, but in many cases they are determined attempts to promote shipping under a particular flag, which very often is economically quite unjustified, as a matter of national prestige. In particularly bad cases, it is even necessary for our owners to go into some sort of partnership with a firm in the country concerned in order to avoid being driven out of a trade which has been traditional to Britain for many years.

Then there is the problem of taxation and flags of convenience to which hardly any reference has been made today. The Government certainly should be given full credit for the 40 per cent. investment allowance, although, as has been pointed out, it is of diminished value since it was introduced because the profits of shipping have been low. But it can be of great value again. Nevertheless, taxation is a real problem. If the Minister doubts that, I hope that he will call to mind the experience of the Greek Government which, by introducing taxation changes, have been able to attract back a very large tonnage to the Greek flag from flags of convenience countries. If the maritime nations are prepared to stand together, a great deal can be achieved. It is not necessary simply to resign ourselves to our fate.

I should like to say a few words about the shipbuilding industry. Here again the picture is, in a sense, similar in that we are having a decreasing share of an increasing volume of shipbuilding in the world as a whole. Again national prestige comes into the matter because every small country—and these small States are breeding like rabbits at the moment—has to have its own shipyard, however hopelessly inefficient it may be. Reference has been made this evening to the order books. At one time, the queues of people wishing to have ships built here were very long. In fact they were too long. Our order books were over-flowing with orders. Many people joined the queue as one tends to join any queue, not being sure what they would order when they reached the head of it. To a certain extent, that slowed everything down and gave a false picture. That situation has now come to an end. We have returned to much more selective shopping. However, we must be very careful to ensure that anything we say today does not deter those who wish to order ships from builders in this country.

Various figures have been given about the kind of orders we could expect over the next few years from home owners if they undertook reasonable replacement. To me, they all appear to be a little optimistic in present circumstances. I suppose that the capacity of the industry is about 1.6 million tons a year. During the five years that I had anything to do with it the output was 1.3 or 1.4 million tons. We were then in great difficulty in obtaining sufficient steel from the other Departments to enable us to carry on with the work that we had. We have got considerably below that figure already, which shows how under-capacity we are. If we can expect orders totalling only 800,000 tons from the home owners we shall not be working to capacity and the less efficient yards will be in some danger.

I do not believe that the shipbuilding yards of this country are inefficient. I think that, by and large, they are efficient. There are always exceptions in every industry. I suppose that I have visited every major shipbuilding yard in this country, and my impression of them is that they are efficient. But that is an impression of efficiency under handicaps. We are too apt to forget that in criticising the shipbuilding industry. It is a traditional industry which has grown up from very small yards to large yards, very often on quite the wrong sites.

It is easy to talk about what the continental yards, such as the Dutch and German yards, can do. But that is due largely to the courtesy of the Royal Air Force in blitzing the older yards so that those countries had to start again from scratch. I think that this country has only one small yard which has been designed and laid out since the First World War. For an assembly industry of this kind, we want a straight line from the time that the steel plates come in and the sections are built until we get to the slipway at the other end. That is quite impossible in the majority of yards in this country, for perfectly good geographical reasons.

I give the highest credit to shipbuilders who spend a great deal of money on modernisation. Much of it has been excellently carried out. But it is not possible to make a perfect yard on a bad site unless one is prepared to scrap and start again.

Mr. Stanley R. McMaster (Belfast, East)

When my hon. Friend says that no new yard has been laid out since the First World War, does he include the modernisation and completely new layout of the Musgrave yard of Harland and Wolff?

Mr. Digby

I do not know that particular modernisation scheme. I cannot call it to mind. I am talking about completely new layouts on modern lines. That is what is wanted.

I hope that the Minister will give some thought to the question of scrap and build, not so much for ships, but for shipyards. We should have a few 100 per cent. modern yards built on 100 per cent. modern sites. I do not see how that can be done without a good deal of encouragement from the Government.

I now come to another handicap of the industry to which quite a lot of reference has been made already. It concerns demarcation disputes and the question whether it is possible for the unions to amalgamate. I am doubtful whether this can be done. This is a traditional industry. There is the tradition in it of booms and slumps which have left behind many scars. We must recognise this and realise that it is one of the handicaps of being a very old industry.

I agree that a certain amount can be done in research. I welcome the new set-up because the research will be carried out much more satisfactorily in future. The Minister has had three or four Reports—the Report, the Shipbuilding Advisory Committee Report and the Accountant's Report—which make some good points. They make the point, for example, that in management, perhaps, the shipyards are rather more undermanaged than most industries, which tend to be over-managed.

I should like to say a word on a slightly different subject. In shipbuilding, we have been accustomed to pioneering in the world and to giving a lead. There have always been people who thought that new ideas were dangerous and not practical. I call to mind Samuel Cunard, who came from Halifax, Nova Scotia, to this country with the idea of founding the first steamship line across the Atlantic. He was treated with scepticism by all the pundits and those who had influence, but he was rescued, curious though it may seem, by the Board of Admiralty, which was very far-seeing and gave him the mail contract which enabled him to get the service going.

So, today, we must beware of being too sceptical of nuclear propulsion. I realise that it is uneconomic and as yet expensive, but it is dangerous for anybody in our position to allow the others to get as far ahead as they are. The Americans have two nuclear-propelled surface ships afloat and they have 61 nuclear-propelled submarines either in being or ordered. We have only one launched. In addition to the Americans, the Russians have a nuclear-powered icebreaker and other countries have conducted considerable studies.

After a good deal of hesitation, the Government have turned down the proposal for our first nuclear-powered merchant ship. Whether they were right or wrong, I do not know. That depends upon how much energy they devote to research now. It seems strange, however, that at a time when we can undertake so much expenditure in other forms of transport—we were told yesterday of the need by the railways for £151 million, and eight nuclear power stations are producing power for the grid system, admittedly uneconomically—we are told that we cannot do anything for the shipbuilding industry because it is not sufficiently economic. Instead, we are to have a research programme involving £3 million over three years.

Recently, I had an Adjournment debate on this matter. It is difficult to discover what that programme amounts to. I should have thought that having got a little behind in the race, we should abandon the idea of a pressurised water reactor and go ahead to the boiling water reactor or something like it. Of the four reactors which have been taken for study under the scheme, one is a pressurised water reactor and another is a boiling water reactor. The scheme is no good, however, unless we push forward and make good the lead in boiling water reactors, too, that the Americans have over us. It is no use having a few scientists where the Americans have hundreds.

I ask the Minister to put his back into the research study. It is true that there has not been a break-through yet and that this new means of propulsion is not economic, but one cannot tell where the break-through will come and we are simply not in a position to take advantage of it should it occur.

My right hon. Friend the Minister has many other responsibilities with road and rail, but I urge him to have plenty of time for the problems of shipping and shipbuilding. They have become much more important and serious in the last few years. In unfair competition, we are up against something with which it is difficult to compete. We have a little leeway to make up here and there in efficiency, but we are more or less all right. As the leader in The Times today said, the Government have to be prepared to alter their view of the kind of Government help that is necessary for shipping and be prepared to come in and, as my right hon. Friend today nearly promised—he did not quite go all the way—take enabling powers to deal with unfair competition. I hope that he will think about this again and decide to take action.

5.55 p.m.

Mr. E. Shinwell (Easington)

Like the hon. Member for Dorset. West (Mr. Wingfield Digby) I have no special constituency interest, but fifty-one years ago I made contact with the mercantile marine and I have been associated with it in one form or another ever since. To me, this is no party matter. The maintenance of an efficient mercantile marine is a matter of vital national interest.

There is an Opposition Motion on the Order Paper to which I subscribe. There is an Amendment by the Government which is about the most brazen piece of effrontery I have experienced in a long number of years in this assembly. It makes extraordinary reading. We are asked to accept an Amendment which welcomes the steps taken by Her Majesty's Government to assist the efforts of these industries to promote efficiency and improve their competitive position". What steps have been taken? What are the measures which we are asked to welcome?

Mr. Short

Not one.

Mr. Shinwell

Because of attending an important meeting elsewhere, I was not able to hear the whole of the Minister's speech, but I heard the last part of it. All I have to say is that if the first part was as useless as the second, it might well not have been delivered.

I do not want to be too harsh with the Minister. One is tempted to castigate him, but he is not primarily responsible. In matters of finance, he has to deal with the Treasury. One can be certain that any appeal to the Treasury for finance is more likely than not to be rejected, particularly if it is for something really valuable, as in the present instance.

Whenever we have a debate of this kind, hon. Members—I am far from criticising what they do—are inclined to deal with the statistics of the problem: for example, the volume of world tonnage, the comparable tonnage in Great Britain, the dwindling orders and the rest of it. What we are primarily concerned with in this debate, however, is whether it is possible to promote some kind of solution to the problem that faces the mercantile marine. I say "the mercantile marine" advisedly, because on the fortunes and the future of the mercantile marine depend the fortunes and future of the shipbuilding industry. They are interlocked; one depends on the other. The shipbuilding industry, however, depends more on the mercantile marine, although the mercantile marine obviously cannot do without the vessels that are produced in the shipbuilding yards.

Let us consider the problem for a moment. First, it is a matter of international trade. If there was a vast extension of international trade which would lead to the carrying of goods in greater volume and over longer distances, that would help us to find at least a partial solution.

But we are faced with the other problem of surplus tonnage. There is far more tonnage in the world at the disposal of the various maritime nations than is necessary in the circumstances of international trade at the present time. Over and above that, we have the twin evils produced by the United States some years ago, to which attention is always directed, namely, flags of convenience and flag discrimination, although flags of convenience are of less importance and are a lesser evil than flag discrimination.

I deny emphatically that the problem is attributable to the lack of efficiency in our shipbuilding yards or to the lack of skilled craftsmanship at the disposal of our workers. All the evidence points in another direction. The hon. Member for Dorset, West has just spoken about shipyards which are not laid out on modern lines and therefore presumably are incapable of producing the best class of ships. What about the "Canberra" and the "Empress of Canada" and the vessels recently produced by some of the liner companies at extraordinary expense?

Mr. Wingfield Digby

I did not say that we are incapable of producing the best class of ships. They are being produced, although under more difficult conditions than any of our competitors and in completely pre-war built yards.

Mr. Shinwell

I am pointing out that even if the hon. Member is right and some of the shipyards are less than modern, the fact remains that we are able still to produce some of the finest ships that have ever sailed, and in face of intense competition. We need not argue about it. It happens to be right and the evidence is there for everybody to see. Our workers have a traditional skill over a long period of years. The tradition runs now into many centuries, to the days of the old wooden vessels. The skill is there and the will is there if only the facilities were available. Let us see what the solution is that the Government present to the House.

When I came into the Chamber I heard the Minister, who is now absent—and I do not complain about that—talking about retaliation. This was received with some assent from the benches opposite and I am not sure that there was not some assent from this side of the House. To me this is completely derisory. I know something about the history of the mercantile marine and about the old navigation laws, but they were abandoned, and rightly so. If we ever sought to retaliate we can depend upon it that the capacity for retaliation of other countries who have already embarked on a venture of that kind might be superior to our own and we might and ourselves in a position even worse than our present situation.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett)

Perhaps the right hon. Gentleman did not hear the whole of my right hon. Friend's remarks. He had already made exactly the point which the right hon. Gentleman is now making and which we made at some length in the previous debate. The Government entirely agree that retaliation as such is a very dubious weapon. What my right hon. Friend was talking about was American interference with conferences, which is a different matter.

Mr. Shinwell

When the Minister talked about taking powers of a retaliatory character he obviously meant something other than merely concerting with some European maritime countries in making representations to the United States Government in a diplomatic or some other fashion, though undoubtedly that is also worth while and we have advocated it on many occasions in the course of debates and in Questions.

When the Minister spoke of taking powers, and that was received with some measure of approbation on the other side of the House, what kind of retaliation had he in mind? Does he propose to do as the Americans have done, through the medium of discrimination, in refusing to allow foreign cargoes to be carried in American tonnage to the extent of more than 50 per cent.? If we adopted a measure of that kind we can depend upon it that the Americans would outwit us in time, and I am unaware of any other form of retaliation. Is it any use the Minister pretending that he is about to exercise powers to enable him to take drastic action to help our shipping industry? This is simply misleading the House and the country and I am satisfied that the Chamber of Shipping would not suggest to the right hon. Gentleman that we should adopt retaliatory measures of that character.

We must look elsewhere. We cannot do much about boosting international trade, and therefore the prospect is very gloomy indeed. I am bound to say, much as I dislike having to say it, that I do not believe that there is any prospect of improving the position of the mercantile marine, or of the shipbuilding industry, for at any rate the next two or three years. The reason is the vast amount of tonnage which is being produced elsewhere and, over and above that, the fact to which the Minister referred and which is extremely important, namely, the capacity of tankers to switch over from carrying oil cargoes to dry cargoes. This makes matters extremely difficult for the tramp trade of this and other countries and, as we know, it is indeed affecting the liner trade.

The only hope we have is that the volume of international trade will be increased, and I do not know what measures we can take to bring that about. We, therefore, come to the possibility of another and partial solution, and no more than that. We cannot propose a complete solution at present. We can only consider a partial one, something that will alleviate present conditions and will mitigate the hardship that now exists. When the Minister was speaking I interjected and my interjection was received in unfriendly fashion by hon. Members opposite. They thought that I should not speak about finance in respect of modernisation. The Minister spoke of the need for modernisation in the engine rooms of British vessels which he thought would reduce overhead costs and make it unnecessary to employ so many men in the engine room.

Is the Minister not aware that even in the largest liners, because oil has been used instead of coal for so many years, the number of men employed is out of all reckoning compared with the number employed in the old stokeholds? In the ordinary tramp steamer, the men in the engine room, the chief engineer, second engineer and perhaps third engineer and the number of greasers attending the engines would not be more than half-a-dozen. This is no solution of the problem. In any event, if there is to be modernisation in the engine room or on the deck, or in the shipyards, finance is necessary. The question is whether the shipowners have the money. Most shipowners have great trouble in meeting the Claims of their shareholders.

Moreover, some of them find it impossible to meet depreciation charges. When the Minister of Transport said yesterday, in reply to me and some of my hon. Friends, that investment allowances were available, he forgot that they apply only when a company is in the position to pay its taxes out of profits. Where there are low or no profits, these allowances are not applicable.

I now come to what I regard as a possible—and again I say, partial—solution. It concerns credit. I cannot for the life of me understand why the Government embarked on the policy of providing credits for the purpose of exporting ships—that is to say, building them in this country for foreign owners—while refusing to stimulate the home industry and the mercantile marine by providing, at any rate, some credit facilities.

I am no industrial tycoon and never have had the ambition to be one. But there are some on the benches opposite and there are some of a minor capacity in industry, and they know one thing if nothing else: that one cannot build up an effective export trade unless, at the same time, one is building up an efficient and successful home trade, because one has to deal with overheads and cannot deal effectively with exports on what I might call a unilateral basis—if I may be excused the use of such an expression. I am sure that hon. Members understand what I am driving at.

Therefore, in order to assist shipbuilders—which I understand to be the intention—the Government have provided credit for overseas sales. I believe that it is at 5½ per cent. Shipbuilders can, for an extended period, at 5½ per cent. interest, provide credit to a foreign ship owner and thereby get orders in the face of competition from shipyards abroad. I agree that that is an advantage, but if we are to build ships for the British mercantile marine something similar is required. This, the Government boggle at and refuse to face.

No doubt the Parliamentary Secretary will say that the ship owners want no subsidies. How often have I heard that statement from the ship owners themselves! I know some of them and have been on very friendly terms with them for a long time. They have always said that they do not want subsidies, that they resent Government interference. Over a period of years I have been associated with the mercantile marine in one way or another. I have watched the change of temper and the readiness of the ship owners to ask—almost beg, sometimes, and I do not blame them for that—for Government assistance.

This brings me to what I call the piece de résistance of this debate, the question of the Cunarder. It is the ghost which haunts us.

Mr. Bence

It is the skeleton in the cupboard.

Mr. Shinwell

It is not exactly in the cupboard now. We are giving it an airing. The Government Amendment calls upon us to welcome the steps taken by the Government … to assist the efforts of these industries to promote efficiency and improve their competitive position. There was a good deal of controversy about the Cunarder. One of the bitterest opponents among the Members opposite was the hon. Member for Sunderland, South (Mr. P. Williams). The only hon. Member opposite who was keen about it—he is not present at the moment—was the hon. Member for Gillingham (Mr. Burden). He has something to do with Cunard-Eagle Airways, and he was concerned not so much about the Cunarder but about something else up in the air. The proposition in the North Atlantic Shipping Act did not come off—I said at the time that it would not.

Notice, however, what the Government proposed to do in that Act. We are told that there should be no subsidy for ship owners, yet that Act provided for £3,750,000 of subsidy and £12 million on loan. It may have been £18 million on loan—I am not sure now. The figure ran into many millions, however. Yet we are told that the ship owners dislike the idea of asking for a subsidy. It did not trouble the Cunard Line very much, and I should not be surprised if, in the future, if it decided to build another Queen or a minor Queen—say, a Princess—it asked for a subvention or at any rate financial assistance.

Let us face this, I do not know whether shipbuilders and ship owners really believe now that a subsidy is unnecessary. I do not know whether that is the intention of the Chamber of Shipping. But unless there is financial assistance of some kind in the form of a lower rate of interest to enable them to carry on their business, some of them will go out of existence.

I make a suggestion to shipbuilders. It is about time that some of the smaller firms in the business considered merging. I know that some people do not like the idea but I do not mind it. I think that it is necessary in certain conditions. Things are rather difficult at present in this industry, and it is essential to consider whether it is not more sensible to merge some firms, to amalgamate, rather than try to carry on business which is almost impossible in existing circumstances.

The hon. Member for Dorset, West talked of modernisation, and I agree with him that we ought to modernise and take advantage of every new technique and scientific discovery. But there is not much advantage in it if we are to have small shipyards. It is better to have larger shipyards like Thornycrofts, John Brown's, or Harland and Wolff's and others more capable of tackling their problems than the smaller yards.

What is more, they can speculate a little. Their resources are larger. I notice that Barclay Curie & Co., Ltd., on the Clyde, a firm I know well, has decided to build a ship "on spec". I read that in The Times and in the Daily Telegraph. It is to be a 14,000 tonner.

Sir James Lithgow used to do this. He was one of the famous builders on the Clyde. In the days of the depression he built a lot of ships "on spec", like ready-mades in a clothing shop. He took his chance of selling them, and eventually he did. Sometimes he sold them at low prices but that was in times of depression. Now we are again in depression and I am sure that it would be a good thing to build ships "on spec" if the money were available. If the big firms can do it, all the better, and if they think it possible the Government should back them up if they too think it sound policy.

Something like this must be done to maintain our mercantile marine, even if we do not go into the Common Market—God forbid that we do. It seems that the Government must help in the absence of a greater volume of international trade, with increased surplus tonnage, and with the difficulties encountered in facing the Americans, who have been so sticky about this business, and who claim to be partners with us in N.A.T.O. and in the United Nations and elsewhere yet are doing their damnedest to hurt our mercantile marine.

That is strong language, but it is absolutely right, and I wish some right hon. Gentlemen opposite would talk in that fashion to the Americans, who understand that language anyhow. In the presence of all these difficulties, it seems to me that the Government have to go some way to the assistance of the shipbuilding industry and, of course, to the mercantile marine.

I still maintain—there is nothing political about it—that it is a matter of vital consideration for this country. We have to build up the mercantile marine and maintain it—scrap the old ships which have become obsolete and to which the ship owners cling because they have not the money to replace them. Unless we do that I am afraid that this country will degenerate not into a second rate but into a third, fourth or, perhaps, a fifth rate industrial Power, and I do not want to see that happen in my time.

6.21 p.m.

Dame Irene Ward (Tynemouth)

May I ask, Mr. Speaker, whether I should be in order to read out my own Amendment?

Mr. Speaker

I am afraid not. The hon. Lady's Amendment is not selected.

Dame Irene Ward

Would it not even be possible for me to read it out, so that everyone knows what I have in mind?

Mr. Speaker

Yes, the hon. Lady can read it out as part of her speech.

Dame Irene Ward

I should like to read out my ideas of what I had hoped to find in my right hon. Friend's speech this afternoon. I should have liked to have found in his speech a statement by Her Majesty's Government on the steps to be taken by them, in consultation with the Shipbuilding Conference, Chamber of Shipping and the Coastal Shipping Organisation, to meet the needs of these industries. Although I listened very carefully to a lot of statements of one kind or another, I did not find a clear and concise policy, such as we might have expected from Her Majesty's Government, to deal with these very serious difficulties, which my right hon. Friend has in fact accepted in the Motion which was moved by the hon. Member for Sunderland, North (Mr. Willey).

I want to make two points before I come to the main purpose of my speech. It is rather disturbing that in all the arguments which have been put forward about the difficulties in the shipbuilding industry in particular, no one has mentioned that industrial re-rating part of which has already taken place, has come at the most awkward time for the shipbuilding industry in tendering in competition with other countries, and it has, of course, added to the complications of the industry. I thought that perhaps my right hon. Friend the Minister of Transport might have said whether he would have discussions with the Chancellor of the Exchequer on whether there was any way of ameliorating this rather difficult situation for the shipbuilding industry. The other point, which is rather off beat and which I do not want to discuss in detail, is to ask my right hon. Friend whether at any time we are to have the Merchant Shipping Act brought up to date. I thought that would have been a quite valuable contribution. As my right hon. Friend has been so busy telling us that if we wanted to introduce an enabling Bill he would, of course, produce it for the House of Commons at once, if there were any controversy about its introduction, he could substitute the Merchant Shipping Act and have it brought up to date.

I was glad to hear my right hon. Friend talk about co-operation with the various oragnisations which serve our shipbuilding, shipping, ship-repairing and coastal shipping interests. I noticed with some dismay that my right hon. Friend never mentioned coastal shipping, and I hope that every hon. Member who is interested in the shipping problem will from now until the end of the debate mention coastal shipping, because, evidently, it has yet to be engrained on the heart of my right hon. Friend. He did, however refer to partnership with all those organisations, and I am glad that my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), a former Civil Lard of the Admiralty, spoke in some detail about the difficulty of discussing shipping and shipbuilding together, because I understand that those who run our great industries also share that view. Although, of course, it is fair to say that if shipping is prosperous, shipbuilding also should be prosperous, they represent a series of quite different problems. I was very sorry that we were not able to have this debate in two parts because then it would have been easier to get the Minister on the hook twice instead of once.

If my right hon. Friend does in fact believe in partnership, I think that the best service he could render would be to suggest that shipbuilding, shipping and coastal shipping should no longer come under his Department. My right hon. Friend tried to deal, very fairly, I thought, with the problems of flag discrimination, but these are problems really related to trade, and it is no good thinking that my right hon. Friend, even with the best will in the world, when he is concerned with home problems of road and rail, is in a position to fly over to see the President of the United States. It would be far better to have shipping connected with the Board of Trade and to allow the whole of the shipping problems to be dealt with, as indeed they are, as a trade concern.

I should much prefer to see shipbuilding again linked with the Admiralty. When the Minister of Transport has to try to make the railways pay, it is obvious that his interest lies in giving the greatest facilities he can to the railways, and that can operate unfairly against coastal shipping. It is putting too great a strain on my right hon. Friend to expect him to be fair to coastal shipping when he has the Chancellor of the Exchequer, the Financial Secretary and the new Chief Secretary to the Treasury and all the hierarchy of the Treasury at his heels. I am sure that my suggestion would meet with the acclamation of the shipbuilding and shipping communities I do not suggest that at this time of economic difficulties we should have a Ministry of Shipping, but we want a Department which can give more time than my right hon. Friend can to these great problems. I hope that this is one of the changes which will be made.

Everyone has been rightly concerned with the credit problem. We welcome the Government's decision to move in the direction of which my right hon. Friend spoke; but, even though orders may be attracted from foreign owners, that only adds to the complication of producing an increased surplus world tonnage. I am in no position to say what is right or wrong in this matter, or even to say where the balance lies, but I am certain that while the extension of credit to shipbuilders to attract foreign owners to build in our yards is satisfactory to shipbuilders, it will not be satisfactory to the shipping industry. That adds to my point that it is extraordinarily difficult to discuss the problems of shipbuilding and shipping together. To do so is to blur the issues.

Mr. Woodnutt

Would not my hon. Friend agree that while her remarks may be valid for ordinary merchant shipping, they could not be applied to naval craft, which was the matter raised this afternoon?

Dame Irene Ward

I know that naval craft are in an entirely different category and that if I were in my hon. Friend's position I should be fighting tooth and nail to get the orders to which he referred. However, having just been to the Argentine and other parts of South America, I find it difficult to say that if one thinks that the economy of a country is collapsing, one should pay its bills for it. I do not want to be too depressing to those of my hon. Friends who have been fighting for these credit facilities—I should have done exactly the same in their position—but I could find some very satisfactory ways of spending the money on our own naval building, and I would rather be linked with countries that have sound economies than countries which have unsound economies.

I well remember having a clash with the Board of Trade before the war when we wanted to get extended credits to build Polish liners here. The Government refused and the Italians built the liners and the Poles paid in coal, so that we lost the shipbuilding orders and lost the coal orders and the only country which suffered was Great Britain. One of those ships was sunk in the mouth of the Tyne.

I do not take very kindly to the Government's Amendment. I am delighted to be associated with a river on which the shipbuilding industry is, in its own right, highly efficient and highly competitive, and I do not think that their choice of words reflects very great credit on the Government. Certainly I do not propose to vote for their Amendment.

My hon. Friend the Member for Dorset, West spoke of the application of nuclear power to marine propulsion. I think that he should get up to date. I read a most interesting comment in the Financial Times which gave me great hope and of which I shall quote the relevant passage. It was written by the scientific correspondent and published on 14th December, 1961. It said: A three-pronged programme has been put forward by Captain Farquhar Atkins, of Vickers Nuclear Engineering Company—which groups Rolls-Royce, Foster Wheeler and Vickers—providing for the construction of a shore-based prototype of a steam-cooled heavy water moderated reactor. This is claimed by the company to be now an economic proposition. That ought vitally to alter the Government's whole approach and the amount of support which they are prepared to give to this new development. Having seen no contradiction of this statement in the Financial Times—and I am certain that its scientific correspondent would not make an incorrect statement which would not immediately be corrected by a firm like Vickers—I accept it at its face value. The shipbuilding industry has asked for a grant of £1 million towards increased research. My right hon. Friend did not even mention that in passing. I mention it as one of the practical things which could be done, but I want now to turn to this very important matter of nuclear propulsion.

I am afraid that I shall now have to be a little controversial and refer to the research which has been going on into the application of nuclear power to marine propulsion. Although this matter has not been raised very much in the House, the Government were practically committed to saying that there would be a nuclear-powered British ship sailing the high seas in 1964. I think that they meant not a naval but a merchant ship. There then arose the controversy about the technical committee, which was then attached to the Admiralty and which consisted of technicians and shipbuilders and others, which wanted to get agreement about a prototype ship with an appropriate reactor which would sail the high seas to get the necessary commercial and economic data required to see whether there was any future in this kind of propulsion.

There were all sorts of signs of a great battle developing between the Treasury and the shipbuilders about who was to pay for the pilot ship. Very quickly that Admiralty committee was disbanded, much to my regret, and was whisked under the Minister of Transport. I believe that the Minister of Transport would not fight for money for the ship nearly as hard as the Admiralty would have been prepared to do, and I was sorry when the change was made. What next happened was that without warning, except the announcement that no proper reactor from the tenders submitted could be accepted, the whole matter was handed over to the Atomic Energy Authority, a move which I viewed with the greatest suspicion because that was the way in which the Government were able to prevent an application to the Treasury by the shipbuilders for money to build the pilot ship. This was the way the Government stamped on the development of nuclear power for merchant ships, and I deplore and decry their fantastic decision. If it is true that Vickers have a reactor which is an economic proposition, it is deplorable that the project should have become sunk in the Atomic Energy Authority. I view this situation with great misgivings and apprehension.

It would be stupid of me, having no scientific knowledge and no scientific brain, to go further than I have done this afternoon, but many eminent people who are entitled to speak feel that if the United States of America, Russia and West Germany can develop these nuclear projects it would be a great disaster if this country, being a great maritime nation—and we still are a great maritime nation—were not in at the beginning. If my right hon. Friend can find £3 million for the research project by the Atomic Energy Authority we can surely prise that £3 million from the Authority and—always assuming that the reactor is the economic proposition which Vickers believe it to be—put it into a pilot ship so that the world can know that we still have inventors and brains which no other country can surpass.

I know that many other hon. Members wish to contribute to the debate. I merely wish to say that I cannot support the Government Amendment. Indeed, I take great exception to it. In the welter of words that came from my right hon. Friend there was nothing very encouraging to shipbuilders, to shipowners or to me. I did not hear anything that could be of very great encouragement to coastal shipping. I am sorry that my Amendment cannot be called. Between now and the time when my hon. and gallant Friend replies I must make up my mind whether I shall abstain, or support the Opposition. I have no intention of supporting what I consider to be a most disastrous and ill-worded Amendment by Her Majesty's Government.

6.42 p.m.

Mr. E. Fernyhough (Jarrow)

The Minister is not present at the moment, but he will presumably read HANSARD tomorrow, and will then appreciate how kind and tender towards him the hon. Member for Tynemouth (Dame Irene Ward) is. She displayed towards him the some measure of affection that she displays towards everybody who has to stand at the Dispatch Box. That is why we always listen to her with much interest, and always welcome her in our Lobby. We hope that we shall have that privilege again tonight. Whether she is a better Opposition than we are is open to question. It is a matter of opinion, and this is an opinion-forming place. We shall see when the vote is taken whose opinions have been most influenced.

I have a measure of sympathy with the Minister. He has several intractable problems, of which this is the worst. He must solve the problem of the railways, but he has not the slightest idea how to do it; he must solve the problem of the roads, but he has not the slightest idea how to do it, and he must solve the problem of shipping and shipbuilding, and he has little or no idea how to do that.

I do not attach too much blame to him. It would be very easy to do so, but I do not believe that anybody on either side of the House has a permanent solution for the problem that we are now discussing. This problem faces Britain because of the changing world in which we are living. It is the same problem that faces our coal and our manufacturing industries. It is the problem of how to sustain and maintain an industry when newly emerging nations are engaging in that industry.

Hon. Members opposite have acknowledged the craftsmanship and ability of the men in the shipyards. It has been most refreshing to hear them do so. There have been occasions when, from the speeches made by hon. Members opposite, one would have thought that the shipyard workers were the most idle and irresponsible of all British workers.

Mr. P. Williams

No.

Mr. Fernyhough

It is no good the hon. Member saying "No". Hon. Members opposite are always saying that the shipyard workers are irresponsible and always come out on strike without just cause, often because of demarcation disputes. These are the factors which are supposed to have led to our not being able to compete in world shipping. But we know that in the one country in the world which hon. Members opposite always ask us to look up to for efficiency, intelligent management and research—America—it costs twice as much to build a ship as it does in Britain. It has never been a good argument to pretend that our workers were not pulling their weight, or that they could have built ships faster if they had had the will and enthusiasm. The hon. Member for Sunderland, South (Mr. P. Williams) has in the past put down many Questions concerning the shortage of steel plate. The industry could not get the plate, so it was impossible for them to build ships faster. At any rate, if they had worked any faster they would have worked themselves out of their jobs. That position, however, no longer applies. The supply of steel is plentiful. So I repeat that it has been refreshing to listen for the first time to hon. Members opposite paying a few compliments to the men working in our shipyards and in our ship-repairing industry.

Mr. P. Williams

It is only in recent years that steel supplies for the shipyards have become easier than they were in the preceding years, and there are many reasons for that. Nevertheless, I am sure that the hon. Member will wish to pay a fair and just tribute to those on both sides of the House who have said that troubles have been caused by both sides of the industry, largely due to the present attitudes taken up both by managements and unions. That is the keypoint. If one blames the other and the other blames the one we shall never settle these problems. A breakthrough in labour relations must be made, or the industry will sacrifice itself in endless petty and unmeaningful disputes.

Mr. Fernyhough

I do not disagree for a moment with what the hon. Member has said, but many hon. Members opposite will not admit that the blame was not all one one side. They have said that the trouble was caused solely because of the irresponsibility of the men who were building and repairing the ships. If the debate has done nothing but get rid of that illusion it will have been well worth while.

This problem will not be solved very easily. I am concerned to know what steps the Government will take. I should like to know whether they are prepared to face the fact that the labour force in the shipbuilding industry will fall by 100,000 men in the next decade. Even if we continue building at the rate which the Minister suggested, which is only slightly above two-thirds of the average of the last ten years—assuming that his optimism is justified—the improved methods of construction which have been developed will enable us to construct that tonnage with a substantial reduction in the manpower at present engaged on shipbuilding and repairing.

I am as sorry as anybody that this industry is facing the same measure of contraction as the coal industry and the railways. I am concerned that in those areas where contraction will take place and where, to a large extent, communities have been dependent on one industry for a substantial part of the employment for the community, long before this contraction occurs the Government will have taken steps to provide alternative employment for skilled and unskilled men who will find that they are no longer required in the shipping and shipbuilding industries because of the contraction.

The hon. Member for Tynemouth referred to shipping orders which were lost to this country before the war. I should like to refer to one order which we lost after the war. Today the Minister spoke in stronger terms in his references to America than any Minister has for a long time, and I welcome that part of his speech. I believe, particularly in relation to shipbuilding, that we have permitted America to give instructions, to issue directions and to pursue policies in a manner which has proved very harmful to the industry.

In 1951, when we were in power, Poland ordered two tankers from us. These tankers were paid for before they were due to be delivered. When the tankers had been constructed and were due for delivery, we said that we would not deliver them. No one will ever succeed in convincing me that it was the Labour Government who did not want to deliver the tankers. I am satisfied that it was the Americans who told us that we could not deliver those tankers, and we did not deliver them. The Danes, who are also members of N.A.T.O., subsequently built the two tankers for Poland which we were not permitted to deliver. I do not know whether we have had any more orders from Poland since then, but I do know that subsequent to that time we have laid down regulations regarding orders from countries behind the Iron Curtain which make it impossible for those countries to give us orders.

We have insisted, for instance, that the ships should not travel faster than 11 knots and that they should not have engines to enable them to make 16 knots. We have put forward all kinds of military reasons against them having ships to travel at the speed they desire which, in the day of atomic weapons, are like something from "Alice in Wonderland".

Mr. Rankin

Does my hon. Friend realise that the same policy which was applied by America with relation to Poland has been applied also with regard to almost every country on the other side of the Iron Curtain?

Mr. Fernyhough

I quite agree. I know of a case where the Bulgarians wanted ships which they were not permitted to have constructed to their design to travel at the speed which they wanted; and, therefore, either the order went elsewhere, or they began to develop their own shipyards. No industry is paying a greater price for what I would call the conduct of the cold war than our shipbuilding industry.

One of the tragedies is that the nations which cause the most difficulty and embarrassment are those with whom we are allied in N.A.T.O.

Mr. Rankin

Our best friends are our worst enemies.

Mr. Fernyhough

America, Germany and Greece are three of the nations causing the most difficulty to our shipbuilding industries. They are countries with which we are closely associated for military purposes and yet, apparently, for economic reasons we are prepared to cut each other's throats. It does not make sense that nations should band together, as we have done in N.A.T.O., for military purposes and then, by separate measures, seek to destroy part of each other's industries. When military leaders get together in N.A.T.O. to discuss military matters, they might sometimes also discuss economic matters, and begin to think about getting a little more economic co-operation in the same way as we are supposed to have complete military co-operation.

I think it unfair to pretend that the owners of British shipyards have in any way been slack or indifferent about their reconstruction and modernisation programmes. Some have carried out tremendous improvements in layout and equipment. When people point to German and Japanese shipyards as examples and say, "Look how modern and efficient and up to date they are", they should realise that these people did not do it off their own bat. It was American lend-lease and American aid which made Hamburg one of the finest shipyards in Europe. It is all American equipment, and these countries did not have to produce it or buy it. Most of the equipment was given to them. Japan benefited tremendously from the extreme generosity of the Americans in this respect, and so it is unfair to pretend that our shipyard owners, or the workers in the yards, are not as efficient and enthusiastic, and as capable of doing a good job as workers in any of the foreign yards with which they are in competition.

In general, the industry faces the problems resulting from living in a new world. We live in a dramatically changing situation with more and more nations trying to become self-sufficient in every respect. It will be a tragedy if this continues, because in the long run it must mean that a world which could enjoy an abundance, and reach a standard of living hitherto undreamed of, will be denied the opportunity to do so because of the intense competition which exists where there should be the greatest measure of co-operation and international understanding.

I beg the Parliamentary Secretary and his Minister to recognise that it is not good enough merely to attempt to tackle this problem and to be satisfied if, during the next ten or twenty years, we can maintain the industry at two-thirds of what its labour force has been and what its capacity has been over the last decade. That will mean terrible disappointment. It will mean much bitterness, much hardship and much frustration to many communities, to countless men and to thousands of homes.

If they recognise that that is the position, the Government have a great duty and moral obligation to see that in those areas where this contraction takes place, with consequent unemployment, industry is guided or directed to provide the alternative employment for the men who are bound in the long run to be displaced by what is now taking place.

7.0 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The hon. Member for Jarrow (Mr. Fernyhough) has made a very restrained speech; indeed, I could agree with nearly all he said. It has been noticeable that the debate has been most restrained and thoughtful. There has been no tendency to make accusa- tions against the two industries which we are discussing. I think this reflects the gravity of the situation.

I think that the link between shipping and shipbuilding is that these are the two industries which alone are completely unprotected by subsidy, by tariff, or any other form of protection. This is an experience which other industries have not had for many years, and it is a lesson which many industries which now regard themselves as efficient should take to heart. They should take a look at the difficulties facing the shipbuilding and shipping industries and the way they are surmounting them in a completely free market.

There have been many criticisms in the past, particularly of our shipbuilding industry, and it is of the shipbuilding industry that I should like particularly to speak today. Straight away, I must declare that I have a remote interest in that industry. We have had, first, the D.S.I.R. Report, and then last summer we had the Peat Marwick Report on why British orders were going abroad. We have had many criticisms from the Minister himself on various occasions, and I should like to welcome straight away his changed attitude today. He admitted that perhaps some of the things that have been said were rather harsh, that there were very real difficulties and that the industry was readjusting itself to present circumstances.

The reason for the relative decline in orders placed in British yards in 1959 and 1960 is that, in the main, our yards, or most of them, were relatively full with orders placed many years before, whereas other yards on the Continent and elsewhere were not so full. They could therefore offer better terms to would-be purchasers of ships, better conditions, better delivery dates and better prices, and it was for that reason that 1959 was a year in which we received no net orders at all. Just like the coal industry, which the hon. Gentleman mentioned, shipbuilding has had to make an agonising reappraisal when it went from a completely sellers' market to a buyers' market in a short time and had to change many of the practices which it had been able to get away with before.

Since 1959, which was certainly the nadir of ordering, there has been a steady increase in ordering, and, particularly in 1961, a very large increase in foreign ordering. In fact, 29 per cent. of the 1961 tonnage was foreign orders, and that is an achievement of which we can all be proud, which leads me to the conclusion that the shipbuilding industry has not done as badly as people have made out. There is one obvious major difficulty, to which many hon. Members have referred, and that is the decline in orders placed by the British mercantile marine. To maintain its fleet in good position, it should order one million tons a year, but the figures are 300,000, 700,000 and 600,000 tons only in the last three years, speaking roughly. However, that is a subject which I do not intend to pursue today, although that does not mean that I do not recognise its importance and that I do not welcome the contributions made by other hon. Members on this vital subject.

Of these tonnages, 24 per cent., 26 per cent., and 20 per cent., respectively, in the last three years have been placed abroad, and that is a secondary problem which is of great importance to the shipbuilding industry. We have to consider very carefully why so many of these orders have gone abroad. I feel that the Peat Marwick Report in this context, perhaps, was not a very helpful document. The inquiry was very car-fully chosen for this period of time, when the shipbuilding industry was going through its worst difficulties and before the situation began to improve. It was the nadir of our ordering in the shipbuilding industry.

Secondly, its terms of reference were far too narrow. They did not include foreign orders placed in Britain or any information about the exact reasons why these orders were being placed. We could have greatly expanded the whole of that Report and learned something from it. Indeed, there is something to be said for reporting on the shipping and shipbuilding industries as a whole, but that is a different question, not connected with the narrow terms of reference of the Peat Marwick Report. Public condemnation and criticism of the shipbuilding industry is therefore wrong, but, having said that, I do not think there is anything wrong in trying to examine the reasons why British shipyards have not secured the maximum number of orders, particularly from our own owners here at home.

The five headings which I should like to take in discussing this matter are delivery, credit, yard modernisation, labour and price. These are definitely the important things raised already in the debate today. I do not think that delivery is now a problem. That is generally admitted, because we can now match the delivery dates of the various foreign builders. But if we should get our yards filled with orders again, then delivery dates will become longer, and we shall find it far harder to fulfil the requirements of buyers than we do at the present time. The length of delivery periods is only a measure of how full of work our yards are.

Secondly, in regard to credits, I am very glad that the Government have accepted that credit is important in this matter. I have had a most helpful letter from my hon. and gallant Friend who is to reply to the debate, in which he says: The 7 per cent. Bank rate is undoubtedly a serious handicap in the export field, on top of which there is undoubted difficulty in getting five or ten years' credit through normal channels on anything like the scale which is needed. That is an admission that I am very glad to see, because I believe that it is absolutely true that some small firms are held up and seriously hampered for lack of credit. It is not so much that the rates are too high, but that some of them are not able to get credit at all. Even if they can, they find the 7 per cent. or 8 per cent. which they may be asked to pay higher than the credit which competitors abroad are offering. Regarding the German shipbuilding industry, we do not know whether it is offering subsidised credit or not, but there is a lot of talk about the rates which makes one suspicious that there may be a Government subsidy in lower credit rates.

I was extremely glad—and it is the only thing that the Government have done for the shipbuilding industry, and I think we should welcome it—when they announced the 5½ per cent. fixed credit, which was a very good contribution, but I was horrified to find out that it did not apply to British ship owners. The Chancellor answered a Question of mine on Tuesday to this effect. There were so many arguments in favour that I am surprised he has not already tried to fix up something on the same lines for British ship owners.

It means subsidising our competitors at our own people's expense. It also means that we shall force our ship owners abroad where they can get the sort of credit they want if they are affected in this way. It would not cost the Government a penny more to get this concession ex tended to British ship owners, because the Government do not subsidise the scheme in the first instance. A British ship sailing for British owners can be one of the biggest earners of foreign exchange we can have. I think this is a point which needs very serious reconsideration by the Government. I hope they will do all they can to get it put right.

As to modernisation, I think the very large bulk of our yards are now as good as any in the world. In the last few years £150 million has been spent in bringing them up to date. A very large proportion of our yards can boast the same equipment and facilities that any decent yard on the Continent or Japan can offer. I do not believe there is the discrepancy which is often talked about. Some of our yards are bad very often because of the structure of the companies which own them, in which the capital is too small, or there is bad management. Sometimes it is because of the lie of the land. The yard may be on a river which is too small and is unable to cope with modern building methods.

In cases where firms are not competing there no doubt will be a contraction. The economic thrust of competition will force such firms out of the market, but I do not believe that on the whole the industry will have any need to contract in total. The capacity of those firms which are not competing could well be taken up by other firms. The hon. Member who talked about the contracting industry of shipbuilding may be wrong. We may easily maintain our present output if we can get the orders.

Research is very important. Now that we have this new organisation I hope the Government will not be parsimonious over helping the industry in research In all other industries the Government are lending a hand financially. One of the ways in which we could legitimately help the industry and our exports is by con- tributing to the funds of research associations. I hope there will not be parsimony on that score.

My right hon. Friend spoke a great deal about restrictive practices in the industry. It is right that we should discuss this problem. I should like to put it into its right perspective. The labour costs of a ship may be only 20 per cent. or 25 per cent. of its total costs. If we could increase productivity by 10 per cent. we would probably not decrease costs by more than 2 per cent. or 2½ per cent. That shows that this is not a major source of difficulty. I do not think many of us would claim that the removal of restrictive practices would increase productivity by as much as 10 per cent., but there is very fierce competition. It is a highly competitive business. Clearly every percentage or fraction of a percentage that we can get off costs is likely to help us to win foreign orders. We cannot just shrug this off on the ground that it is not important.

The Report on shipbuilding in Sweden to which my right hon. Friend referred deals with the question of flexibility of labour. Most shipyard managers to whom I have talked share the view that flexibility is a matter of the greatest importance. It is worth mentioning that in Sweden today on a general fabrication one can employ two men only, one helping the other, whereas to do the same work in this country, because of demarcation, we need a plater with his helper, a welder, a burner and a caulker at various stages of the operation. This is nothing to do with the multiplicity of unions, for normally all these men would belong to the same union. It cannot be in the interests either of the industry or of the men that this should be so. We also learn that certain specialised machines such as profile plate burners require twice the number of men to operate in this country than in Sweden. Restrictions regarding apprenticeship reduce the number of skilled men who will become available later in the industry.

I could not agree more with my right hon. Friend that these are practices which in a civilised, modern and affluent society such as this we should be able to do without. I was sad to hear that the trade unions had withdrawn from the conference under the chairmanship of the Minister of Labour. I hope that they will get together again; I do not care under whose chairmanship. I am not saying that it is the fault of anyone, but I hope that somehow the industry—as other industries have to—will bring itself together to talk about these things and try to find a way out of the difficulties.

I hope that the Government will be ceaseless and tireless in their efforts to help towards finding a solution. If these people will not come to London, let us chase them to the shipbuilding areas and see if we can convene conferences and committees on the spot because the present situation must be doing harm to the industry. I hope that this problem will be referred to the new National Economic Development Council. That might well have some comments and good guidance to give, which would be helpful.

The overall effect of these various factors is on price. The price of a ship is what in the long run will sell it or lose us the order. I do not think the industry can afford a general increase in wage rates at present. To press for an increase in wage rates would have the effect of killing the goose which lays the golden eggs. I hope we shall not have a contracting shipbuilding industry because those who work in it at this time when it is struggling for its survival try to take too much out of it. That is what happened to some parts of the American coal industry. I hope it will not happen to this industry, but that productivity and efficiency will rise to give the extra money that people want.

Another large element in price is material costs. Material costs are very much under the control of the Government. There can be no doubt that the tax imposed on fuel oil will put up the price of steel. Putting up the price of steel must in the long run put up the price of ships. If the taxation policy of the Government is to be to make industries carry an ever greater burden it must inevitably follow that those industries become less competitive. The same is true of rates. We have various assurances that the re-rating of industry will not have a large effect on the cost of shipbuilding, but those in the industry are not satisfied nor happy about that. They feel great apprehension. Any statement from the Government Front Bench of what is to happen about such increases would allay fears that the industry may become uncompetitive for this reason.

I do not think there is very much wrong with our shipbuilding industry. It contains both good and bad firms. We must bear in mind that it has faced tremendous unfettered competition with considerable success. I have mentioned some small parts where I think the Government can help and some small ways in which I think the industry itself can help.

I end with a plea that in the next few years, aware of this situation and watching this unfortunately low order book, we can get some of the old postures removed, some of the old ideas and practices which have grown up with every understandable justification removed, and rejuvenate the industry. The cause of the trouble is that this is an old industry. Let us try to find a way to rejuvenate it and get it to think once more on modern lines by removing practices which might well cause it to strangle itself if we do not look out.

7.20 p.m.

Mr. Edward Short (Newcastle-upon-Tyne, Central)

Before I begin my argument, may I support what a number of my hon. Friends from the North-East have said, namely, how very disappointed we were that the Q.3 order was cancelled. I am another Member of Parliament who supported this project all the way through. My own area put a great deal of effort into the tender. Two great firms amalgamated to submit a tender. They put in one of the most imaginative tenders which has ever been submitted for a ship. At the last they were ditched by the Government—not by Cunard, but by the Government. [HON. MEMBERS: "No."] Yes, certainly by the Government. I do not accept for one moment that it was done by Cunard. I am sure that it was done by the Government.

Vice-Admiral Hughes Hallett

Will the hon. Member be kind enough to amplify and say exactly what he means by that statement?

Mr. Short

I am not going to amplify it—

Dame Irene Ward

The hon. Member cannot.

Mr. Short

—because I want to follow up my argument. I am sure that the hon. Lady the Member for Tynemouth (Dame Irene Ward) does not believe that it was a Cunard decision. It was a Government decision.

The shipping industry is perhaps more vitally concerned with the life and livelihood of this country than any other industry. Ships carry two-thirds of our food and two-thirds of our raw materials. Unfortunately, it is only in wartime that the public recognises its indebtedness to our shipping. If the public took more interest in our shipping industry, I am sure that it would exert more pressure on the Government to do something about it. Any Government who wanted to promote the economic health of the country would make shipping a No. 1 priority. Under this Government it is very far indeed from being a No. 1 priority.

I have rarely heard a more empty speech than the Minister's speech today. I was shocked at the paucity of information or ideas, or suggestions or proposals, for helping the shipping industry. From the way the right hon. Gentleman spoke one would imagine that he came into office only yesterday and that the Government came to power only last week. But the Government have been in office for ten and a quarter years. What is the good of a conference yesterday, the day before the debate? They have had ten and a quarter years to do something about this.

Today there are 13,000 unemployed in the shipbuilding and ship-repairing industry. I believe that this represents about 5½ per cent. of the total labour force. My hon. Friend the Member for Sunderland, North (Mr. Willey) gave some figures for the North-East. In all the major shipbuilding centres in the North-East the unemployment figure is about the 5 per cent. mark. Unemployment in the shipbuilding industry itself is very much higher than that. It is the biggest element in this 5 per cent. In addition, in recent years many thousands of skilled workers have left the industry. It is a tragedy that this great skilled labour force should be dissipated in this way.

As regards the order book, it is true that the yards have two years work, but a good deal of this will not be worked until 1964–65, so there will be gaps in production. We should remember that gaps in production are not just statistics. They are people. The orders are still shrinking. As my hon. Friend the Member for Sunderland, North said, even now they amount to only 50 per cent. of the output rate. In 1960 there were orders for 246 British ships. In 1961 the figure had dropped to 199 British ships.

In spite of this and in spite of Government inertia, the industry has done a great deal to help itself in recent years. I believe that both sides of the shipbuilding and ship-repairing industry have made enormous efforts to compete with foreign yards, and I am glad that so many Members on both sides of the House have paid tribute to the efforts the industry itself has made in the last few years.

I absolutely refute the Minister's contention that the Confederation of Ship Building and Engineering Unions has not co-operated. This is utter mischievous nonsense. There has been a great deal of co-operation with the unions. As a result of this co-operation, the industry has considerably increased its competitiveness.

The basic problem is how to compete with foreign yards—this, plus the position in the freight markets. The world capacity of shipbuilding could replace the entire world's mercantile marine in fourteen years, but the average life of a ship is about twenty-five years. Therefore, the total world capacity is about 40 per cent. too great for the volume of world trade. This situation makes the competitiveness of British yards of the utmost importance. In fact, competitiveness is the key to the whole situation.

Although the industry has had precious little help from the Government to increase its competitiveness in recent years, it has done a good deal. The ship-repairing industry is in good shape, and for once I agree with the hon. Lady the Member for Tynemouth that the ship-repairing facilities on the Tyne are probably the best in the world today. The industry has carried out a great deal of modernisation, especially by providing dry dock facilities. I am sorry that this side of the question has not received more mention in the debate today. Vickers-Armstrongs are building their big dry dock in the old Palmers Yard on the other side of the Tyne. Cammell Laird is building one on the Mersey. Another is being built at Greenock.

The shipbuilding industry is also making a great effort to modernise itself. A good deal of progress has been made in discussions with the unions. It is worth mentioning the co-operation that four union members gave in the Ship Building Advisory Committee's Sub-Committee on Prospects. In both sections of the industry—the repairing section and the building section—British yards are now competitive with their Continental rivals, both with regard to time and with regard to price. We should shout that from the housetops. We should not be silent about it. It is a little repugnant to us in Britain to blow our awn trumpets, but I think this is 'something we should blow our own trumpets about.

The efforts the industry has made in recent years are beginning to show results. In ship-repairing some excellent orders have been carried out in the past year. In ship surgery, for example, Vickers-Armstrongs have grafted a 200-ft. piece on to the Esso tanker "Portsmouth". This is the sort of first-rate order that the ship-repairing industry had had in recent years. In the last year the ship-repairing industry in this country has done £50 million of work.

In shipbuilding also the orders have increased to some extent. It is very gratifying that Norway, which was once one of our best customers for shipbuilding, is now beginning once more to take an interest in British shipbuilding. However, in spite of all these efforts and all this improvement, orders are still coming in only to the extent of 50 per cent. of the output. In face of this, with both sides of the industry doing so much, it is monstrous that this Government have sat on their behinds for ten years and barely lifted a finger to help the industry. There is little more that the industry can now do to help itself, except one thing that I shall mention later. From now on, it will be trying to pull itself up by its stocking-tops.

There is the great question mark of the Common Market, though none of us doubts that the Government have already decided that we shall enter it. What effect will that have on the shipping industry? The shipbuilders are relying on getting rid of the French and Italian subsidies, but will it turn out that way? I have not yet been assured by anyone on that topic. Joining the Common Market will certainly result in a great Europeanisation of our trade, which will greatly affect our shipping. What effect will the Channel Tunnel have on our shipping? All these things make it urgently necessary that the Government should have a policy to help the industry. I shall not go into all the political aspects of increasing world trade, or into the dangers of getting tangled up with Europe—I hope that we can fight a General Election on that subject.

There are three things that the Government ought to do, and in relation to two of them the Government are directly responsible. The first is to give more assistance to the ship-repairing industry by tax incentives. Further modernisation is needed, and especially the provision of more dry dock facilities. As 49 per cent. of our orders are for large tankers it is essential that there should be a good deal more provision of dry dock facilities if our ship-repairing industry is to continue to be progressively competitive. As the hon. Member for Tynemouth said, that is especially necessary with industrial re-rating looming ahead in 1963.

I am in favour of investment allowances comparable with the 40 per cent. available for ships, plus a high annual depreciation. As my right hon. Friend the Member for Easington (Mr. Shinwell) said, this applies only to those firms that are making a profit, but I am sure that it would help in the provision of further dry dock facilities. With so many bigger tankers coming into service, larger dry docks are needed, but dry docks, because of their low earning power, are not an attractive investment. All these arguments were advanced when we debated last year's Budget. They were rejected, but I hope that the Government will look at this aspect again. because dry dock development is probably the main key to the health of our ship-repairing industry.

Secondly, we need credit facilities on reasonable, stable terms, especially for British ship owners. Foreigners now have the benefit of the credit cover introduced by the Export Credits Guarantee Department, and we are grateful for that. It helps, but it is a little ridiculous that there are not adequate credit facilities available at reasonably low and stable rates of interest for British ship owners. It is now easier for our ship owners to go abroad for their vessels. That was already a serious problem at the end of last year, when thirty-eight ships for registration in Britain were being built abroad. As my hon. Friend the Member for Sunderland, North said, we are now the biggest ship-importing country in the world.

The need for credit is not a peculiarity of the shipbuilding industry; it applies to all capital industries. Speaking of credit facilities, Mr. Dodds, chairman of Niarchos (London) Ltd., recently said that his company … contemplated still more orders and they would come if the price and delivery were attractive and if better terms for financing—such as currently prevailed in other countries—could be obtained in this country. 'Perhaps I should be a little more specific on this point,' he added. 'The Governments of many of the other shipbuilding countries have given direct or indirect assistance to their shipbuilding industry, as a result of which the yards not only quote highly competitive building costs, but also high proportions of finance and stable interest rates; in some cases they will even accept payment in currencies other than their own'. This industry is vital to our economy, to our people and to the areas in which the shipyards are situated, but its product involves so much capital that it is now essential that the Government should do more to provide the necessary credit.

Thirdly, I agree with the two hon. Members who have said that there should be more flexibility of labour in the industry. Here, the Government can help indirectly. I do not minimise the difficulty, and I do not exaggerate it. The importance the Minister attached to it today was quite out of proportion, but more should be done. There is a good deal of management-trade union co-operation—the S.A.C. sub-committee stresses that. Good progress is being made but, if full employment is to be obtained, more is needed—quite apart from improved competitiveness— especially on demarcation lines. The Minister spoke of Sweden and it is perfectly true that Swenden has done a great deal, as a result of co-operation, to overcome redundancy. I look upon this as one of the three essentials for restoring prosperity to shipbuilding and ship-repairing.

Given those three things, there is great scope for improvement, even in present world conditions, in getting British orders. We have 933 British ships over twenty-five years old, and 384 ships that are between twenty years and twenty-five years old. Their replacement would mean the building of 140 British ships each year over the next ten years. That work, plus foreign orders, plus the increase in our mercantile fleet, would ensure the prosperity of the industry for the next ten years, but it could be done only with Government credit assistance.

We cannot afford any further dissipation of a highly-skilled labour force which, after our Armed Forces, is one of our most vital strategic forces. It is also vital to our economy. The Government have failed lamentably to arrest its decline. Indeed, they have done nothing, politically, to stimulate world trade, or to deal with flags of convenience, flag discrimination, and all the rest. They have done precious little fiscally, and they have not even begun to approach the working out of a comprehensive policy for the shipbuilding and ship-repairing industries. They have failed the people whom I represent—and I represent many shipbuilding workers—just as they have failed the nation, and the sooner they go the better.

7.38 p.m.

Mr. Stanley R. McMaster (Belfast, East)

This has been a very quiet debate but, judging from the criticisms, there is a great deal of quiet fire behind it. I should like to follow the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) by first saying a little about my own interest in the shipbuilding industry. As some hon. Members may know, I represent a constituency in which there is the largest single shipbuilding yard in the United Kingdom—that of Harland and Wolff, at Belfast. It has eighteen different slipways. For the last twenty years, the firm has employed between 22,000 and 24,000 men, but in the past twelve months it has had to lay off between 7,000 and 8,000 of them.

My Ulster Unionist colleagues in this House and I have had many meetings with the trade unions, with the management, and with the Northern Ireland Government. On several occasions in the last few months we have discussed with Mr. Barr and Mr. Morrow, the two trade union leaders, the problems facing the shipbuilding industry, with particular reference to my constituency. They expressed considerable concern about the heavy redundancies facing Belfast because—and I hope that all hon. Members now realise this—the unemployment rate in Northern Ireland is very much higher than it is in this country. Ulster now has an average of 9 per cent. unemployed. The hon. Gentleman the Member for Sunderland, North (Mr. Willey) thought that the figure was somewhat lower; I am pleased to have this opportunity to correct him.

Because the unemployment rate is so high the men who are laid off by Harland and Wolff cannot easily find alternative employment. Thus they are extremely concerned to ensure that every possible measure is taken by the Government to improve the position of the shipyards and shipbuilders in the United Kingdom. The union prepared several thoughtful memoranda and presented them to hon. Members and to the Northern Ireland Government for study, and I wish to comment on some of their suggestions and adopt some of their arguments in my remarks.

Reference has already been made to a leading article in today's The Times, and I wish to reiterate the statement in that article that the people in this industry are very independent. They are independent and conservative and the management of Harland and Wolff in Belfast wishes to be left alone to get on with the job. Much has been said about the efficiency of British shipbuilding, but I would remind the House that out of the fifty-three passenger liners built since the war thirty-three of them have been built in this country, including the "Canberra" which was launched last year from our yard in Belfast. This was the biggest ship laid down and built in this country since the launching of the "Queens".

I will take issue with any hon. Member who suggests that our shipbuilding industry is not efficient. Hon. Members who say that sort of thing—even those who sit on the Front Bench and occasionally appear on television—do a disservice to shipbuilding when they suggest that only 20 per cent. of the industry is efficient.

Mr. Willey

Will the hon. Gentleman specify the right hon. Gentleman to whom he is referring?

Mr. McMaster

Of course I will. I am not frightened to do so. I believe that the Minister himself has stated that only a part of the shipbuilding industry is efficient. Other hon. Members, both in today's debate and in the debate we had before the Summer Recess, have made similar comments. The industry faces many problems. For instance—and this matter has been referred to by several hon. Members, although I will not go into the statistics—about double the shipbuilding capacity exists in the world's yards than is required to meet the normal replacement of ships.

I remind hon Members that the shipbuilding capacity of this country has not increased since the war, while the capacities of many other countries have grown considerably. We have been told that in Scandinavia and other countries, as a result of growing nationalism and the drive for self-dependence, yards have been created, built or rebuilt since the war. By "other countries" I am referring particularly to Japan, Sweden and Germany. As new and modern yards have come into being, the result is that the British shipbuilding industry and shipbuilders throughout the world face a shortage of orders There is no need for me to remind the House, after the speech of the hon. Gentleman the Member for Newcastle-upon-Tyne, Central, of the great history of Britain's shipping and shipbuilding industries, for it is a history of service in peace and war which dates back to the beginning of this country. There is also no need to remind hon. Members of the contribution made by these industries to Britain's taxation burdens over the years.

Reference has already been made to the assistance given to shipping by the 40 per cent. investment allowance but, as the right hon. Gentleman the Member for Easington (Mr. Shinwell) commented, what is the use of a 40 per cent. investment allowance if one does not make any profit? How does this compare with the system in Western Germany or Sweden where a much larger percentage sometimes 100 per cent., goes free of tax and is set aside for replacement?

British ship owners have paid their fair share of tax and no one is suggesting that that should not have been the case in the prosperous years that followed the war. But shipping is in a much different position today and it differs from other industries which, in some cases, are protected. For instance, aviation is subsidised by the Government. Other industries which compete, perhaps not with the shipping industry, are protected by high tariffs and import duties so that they may continue to flourish and prosper. The shipping industry is not protected in any way.

In his speech the Minister said that he had no intention of financially protecting or assisting the shipping industry. But have not the Government a duty to pay back or to use some of the money which was creamed off the shipping companies in more prosperous times? Such action on the part of the Government would help the industry now that it is facing tremendous difficulties and the growing practices of flag discrimination and flags of convenience. These practices allow foreign countries to insist that part of the cargoes and trade from those countries should be carried in ships owned and registered in those countries.

The Government have done little to counter these practices, and I welcomed the statement made by my right hon. Friend that he intends to have further discussions with America. In answer to a Question two years ago the Minister told me that he was having discussions with America. When the Prime Minister went to see the President of the United States two years ago he told me, in answer to a Question, that he discussed, among other things, the problem of our shipping and shipbuilding industries and that he had left a dossier with the President. That dossier must have a Tot of dust on it by now.

Now that the new President of the United States is firmly established I hope that the Government will take a firm line on this subject, especially since there can perhaps be no fear of bad relations existing between our two countries. A firm line is certainly needed since the Minister has admitted that America is one of the chief offenders in respect of flag discrimination.

I do not wish to be entirely destructive in my remarks, for it is easy to criticise. I wish, therefore, to suggest some remedies. Some of these have already been mentioned by hon. Members while others are to be found in the various Reports and publications with which we have been swamped over the past year or two. There have been references to the D.S.I.R. Report, the report of Peat, Marwick, Mitchell and Co. and to the Report of the Shipbuilding Advisory Committee on the prospects of the shipping industry.

I hope that my hon. and gallant Friend, when he winds up, will tell us what has been done about the recommendations contained in those Reports. What has been done, for instance, about the recommendation contained in paragraph 73 (i) of the Report of the Shipbuilding Advisory Committee that the Government should review its planned requirements for Government-owned ships with a view to placing as many orders as possible in the next two or three years. It has come to my knowledge that the British Petroleum Company, a company in which the British Government have a controlling interest, time-charters foreign ships to carry oil. Would it not be far better if a Government-controlled company like that time-chartered British ships and assisted British shipping interests? British shipping interests are one of the main sources of orders for the British shipbuilding yards. Eighty per cent. of our orders come from British owners.

The Government, I think, admit their responsibility in this matter. However, they suggest very little positive action to help. I welcomed the recent statement that E.C.G.D. would be assisted by long-term credits. The long-term credit which was to be made available in conjunction with the Export Credits Guarantee Department was to be provided by a consortium of insurance companies. When I asked my right hon. Friend whether the £100 million which the consortium of insurance companies thought of providing would be enough—it is the figure suggested some time ago by the Chamber of Shipping in one of its reports—the only answer I had was that my right hon. Friend hoped that other insurance companies would add to the fund. Surely, the Government can do better than that. More money can be made available to finance proper long-term credits, over five years or perhaps as long as ten or twelve years, for the building of ships.

One hon. Member, if he catches the eye of the Chair, will, I believe, raise a problem concerning an order to be placed by the Argentine. There are other similar orders which this country is losing because there is not sufficient long-term credit available to meet the requirements of foreign ship owners who would like to order ships in this country. Better terms are being made available by our competitors. The Swedes and the Germans, and even the French, with whom several contracts are to be placed by the Norwegians for the building of tankers, I believe, are benefiting from subsidies which are not matched in this country.

Let us make no pretence about it. Other countries do not follow the same strict lines that we follow. They subsidise their shipping and shipbuilding. It is accepted that France, Italy and Japan all subsidise their shipping and shipbuilding. If I am wrong in that, perhaps my hon. and gallant Friend will contradict me when he winds up.

I support what has been said already by several speakers on both sides when they ask that the same E.C.G.D. and long-term credit facilities should be made available to British ship owners. Is it not absolutely ridiculous that a British ship owner can get better terms from Germany or Holland than he can if he builds a ship in this country? If he builds in this country he has to go out into the market and borrow at 7, 8 or 9 per cent. instead of being able to borrow at the fixed rate of 6½ per cent. which is being offered to foreign ship owners. How can this help either British shipping or British shipbuilding?

Pleas have frequently been made about dry docks, and I have a word to say about that subject, too. In Belfast, fifty years ago, we laid down a large new dry dock called the Musgrave Dock. At the time, it was the biggest dry dock in the country and it led to very much work coming to Belfast. We now need another dry dock, perhaps a very large one capable of taking ships of up to 100,000 tons. But whether it be a big one or not, if the shipyard could be given the 40 per cent. investment allowance which is given to ship owners when replacing their vessels this would probably have an effect in influencing the decision as to whether, or when, to build the new dry dock which I think the company knows it needs.

We require a much more far-sighted policy on the part of the Government than we have seen up to date. In foreign affairs, there is surely scope, when we are entering into trading agreements with South American countries or countries in the Middle or Far East which practise flag discrimination, to insist that they should abandon or at least modify the discrimination they practise in return for concessions which we make with respect to trade. Any country with which we have a trade agreement or even a mutual defence agreement is open to this kind of barter or negotiation. If we cannot by international co-operation get rid of the practices of flag discrimination, we ought to be able by bilateral agreements to encourage and persuade other countries to abandon these policies which are so harmful to British shipping.

I wonder whether it has ever been put to the Government of the United States how harmful is their policy of discrimination and how short sighted it is in times of emergency of war. Everyone in the House will admit that a great deal of American foreign policy seems to be affected by the fear of a war with Russia. If they are so frightened of such an emergency, if they are so anxious to have bases in this country, why should they encourage certain expatriate Greeks and others to build ships flying the flags of Liberia and other "ad lib" countries? Can they trust these people in time of emergency or war to use their ships on behalf of the nations of the free Western world? Would it not be wiser to build up and protect the British merchant marine, their traditional ally, rather than assist with American capital, as they have done in the past twelve or fifteen years, the building up of large foreign-owned fleets?

I call for a very much stronger and firmer line, in concert with other European countries if we can, but on our own if we cannot, when our Government are dealing with these two problems, flags of convenience and flag discrimination.

Mr. Rankin

On those two aspects of the matter, does not the hon. Gentleman realise that he has a very powerful bargaining point? If the Americans will not listen, he can say, "No more 'Christmas' presents".

Mr. McMaster

I do not believe in blackmail. However, I do believe that we should, without any hint of blackmail, come to an agreement with the United States Government whereby the Merchant Shipping Act, which was amended last year and about which there was so much discussion, and their policies should be applied in a way which in no way injures the British merchant marine. It cannot be in the long-term interests of the United States to injure the British merchant marine. That is the bargaining point that I would use rather than the threat which the hon. Member for Glasgow, Govan (Mr. Rankin) suggested.

I support what has been said about retaliatory powers. If this country is prepared to adopt retaliatory powers, use need not necessarily be made of those powers. The countries with which we are trading and with which we are dealing in respect of flag discrimination would know that we intended to take a firm line and did not plan to be pushed about and bullied in this respect. Every country is open to reason, and it can be shown quite easily to countries which practise flag discrimination, such as Brazil and even ex-Commonwealth countries, that such policies only increase freight rates and the price of the commodities carried in the ships.

The trend of the 1960s has been towards a reduction of trade barriers and towards a policy of inter-dependence, not independence, amongst countries. The policy of flag discrimination is based on the very antithesis of this. It is based on the idea that each country should be completely independent.

I therefore suggest that one very practical and good way in which the Government can help British shipping and shipbuilding is to pursue actively and seriously a properly designed firm foreign policy, without any secrecy. I also suggest that short-term relief might be given to our shipbuilding industry by reviewing our defence commitments. It has been suggested recently in the Press that we are considering replacing our aircraft carriers.

If my right hon. Friend could consult his right hon. and hon. Friends in the Government and persuade the Ministers concerned to order whatever new aircraft carriers and other assault vessels and ships they will require soon before too many men are made unemployed in the yard, and perhaps leave the shipbuilding industry for ever, relief would be given to the situation in Belfast and in other yards, and it would be for the good and benefit of the country as a whole because the prices paid for boats ordered and built now would inevitably be less than the prices which would be paid in five, six or seven years' time when, perhaps, it would be too late and men would have to be attracted back into the shipbuilding industry in order to meet the Navy's requirements.

I should like to conclude my suggestions with one which has been made before by my hon. Friend the Member for Tynemouth (Dame Irene Ward) and others, namely, that the Ministry dealing with shipping should perhaps fulfil a more important function in the Government and that it should be up-graded. I have a high respect for my right hon. Friend the Minister of Transport, but he has a great deal to do. He has to look after the road and rail programmes as well as be responsible for shipping and shipbuilding. Because of the great importance of our shipbuilding and shipping industries, which has been brought out very well in this debate, there should be a separate Ministry for them. One of my hon. Friends recently wrote to the Government about a hazard in his constituency on the South Coast arising from water ski-ing. I am told that the letter was referred to the Parliamentary Secretary responsible for shipping. Let not the Parliamentary Secretary be "Minister of Water Ski-ing".

During the Minister's speech we heard a repetition of very many points made in the Reports to which I have referred. The Chamber of Shipping's Report of last year, the Report of the General Council of British Shipping, the D.S.I.R. Report and other Reports, all contain the points mentioned by my right hon. Friend. There was nothing fresh in his approach. What action have the Government taken to assist the efforts of the shipbuilding and shipping industries?

Mr. Bence

None whatever.

Mr. McMaster

What suggestions have the Government for promoting their efficiency and improving their competitive position?

Mr. Rankin

None.

Mr. McMaster

I find myself very much in agreement with my hon. Friend the Member for Tynemouth on this subject. My right hon. Friend said that he did not intend to give financial support to these industries, no matter what competition they faced from abroad. All that our competitors, such as the Japanese, have to do is to subsidise their ships for a few more years until the British shipping industry is no more and then charge whatever prices they like for their boats.

Surely the Government should not adopt this head-in-the-sand attitude. Surely my right hon. Friend is not so hide-bound, so inflexible, in his devotion to economic theory that he is not prepared in any circumstances to assist the British shipping and shipbuilding industries. It was this inflexibility and inability to adapt themselves to realities which led to the extinction of the dynosaurs.

Mr. Bence

Is that what the hon. Gentleman calls his Front Bench—dynosaurs?

Mr. McMaster

In conclusion, I suggest that the Government must be prepared to meet the world as they find it. They must be practical. As long as flag discrimination continues and as long as foreign countries subsidise their industries, it is no use saying that when we go into the Common Market we can take action against these countries. We are not yet in the Common Market. We may not be in it for some time.

It must be admitted that some of our shipbuilding yards are not as efficient and up-to-date as some of our competitors' yards. We have been told that yards in Germany have been rebuilt, very often with foreign capital, after being completely destroyed during the war. On the other hand, some of our yards are very much more efficient than yards in Sweden and Germany. We are now winning contracts, not only from British shipowners, but from the Norwegians and others abroad. Surely it is the job of the ship owners and of the shipbuilders to attend to the details of modernisation.

I suggest to my right hon. Friend that the time for platitudes and for a recital of details about which we know already, is past. It is time for the Government to take positive action in the diplomatic and financial fields in the ways that I have mentioned in order to assist our shipping and shipbuilding industries. If they are not assisted, how will they be able to compete with European, American and Far Eastern competitors? The greater part of my right hon. Friend's speech today was a red herring dragged across the debate. We want to get down to the vital issue, and that is to ensure that the British shipping industry and British shipbuilders have fair play.

I say this very strongly. Together with my hon. Friend the Member for Tynemouth, unless I hear something a little more encouraging in the winding-up speech of my hon. and gallant Friend the Parliamentary Secretary, unless I hear something other than the old mixtures of clichés and platitudes as before, I will not be able to support the Amendment.

8.10 p.m.

Mr. William Small (Glasgow, Scotstoun)

My contribution will not be as long as the speech to which we have just listened from the hon. Member for Belfast, East (Mr. McMaster) and I hope that it will satisfy the unemployed in the shipyards of Northern Ireland. It is well known in the House of Commons that the first preoccupation of Scottish Members is jobs. There is an idea abroad that economic growth is the Government's policy, but we cannot have economic growth without jobs.

I should like to reply to much of what the Minister said, but my short contribution to the debate is made with a sense of urgency and is based on a constituency interest. I should like the Minister to recognise that he will not have any demarcation disputes from empty berths. The figures as I know them show that there are sixty empty berths in the Scottish yards. So demarcation disputes cannot arise there. In my constituency, Scotstoun has five yards.

The initiative of the yards is such that Barclay Curle's have built a ship "on spec" whilst others are going out urgently for orders. The particular case to which I wish to refer is Yarrow's and the Argentine order. The firm is endeavouring to be successful in this venture and I should like to explain what it means to the community in the surrounding area.

Undoubtedly, there have been attempts by the yards to attract as many orders as possible and one would have anticipated the maximum Government support. I am aware as the Minister is well aware of the negotiations which have taken place on behalf of Messrs. Yarrow for terms from the Export Credits Guarantee Department. I will not go into details, but I have knowledge of the transactions which took place between Messrs. Yarrow and the Board of Trade. I am not betraying any confidence concerning percentage or anything else, but will deal with what is already public knowledge.

We in Scotland rely on the use of the Local Employment Act as the main feature in the distribution of jobs. Their existing structure puts the shipyards in a slightly different category. When Yarrow's and others go out in competition against other countries to find work for their yards, the employment situation should not be prejudiced by Government action.

I listened this afternoon to the Minister's speech. He has a rigidity of mind when jobs are at stake. I am aware of the Minister's business acumen and interests and of his duty to protect the taxpayer to a certain degree, but he must not be rigid for ever or be deterred by the idea that he may create a precedent which will be held against him in future.

The case which I am quoting is referred to in The Times of 12th January this year under the heading: Argentina to buy ten ships. Value about £17 million. The offer to build the ships has been accepted by the Argentine Government subject to certain important conditions which have still to be negotiated and which, I hope, will be completed shortly. I make the case with a sense of urgency, because finality will soon be reached. Messrs. Yarrow have a man in Buenos Aires for the completion of the negotiations. As the Press report states, Messrs. Yarrow competed for the contract against six countries. The vessel which is to be built is of British design, Messrs. Yarrow having been successful against competitors from other countries who were invited to tender.

My point as an engineer is that modern developments bring new electronic equipment to the work almost every other week. A large amount of electronic and engineering equipment has to be installed. The community of the area is desirous that features of this kind should be introduced, so that opportunities can be provided to train apprentices in modern techniques rather than that they should be faced with the prospect of dead-end jobs when leaving school.

I am unashamedly making a special plea on behalf of my constituency. It is desirable for various reasons that the Argentine contract should be placed in the area. People down here in England may talk about economic growth, but up in Scotland all we hear about is jobs in the pipeline or jobs in prospect.

I understand that Messrs. Yarrow's order for the ship includes not only the building of the ship, but also the provision of accessories and its maintenance. It is an attractive feature for a shipyard to undertake the maintenance of a vessel which it has constructed. Other interests in the area and in Lanarkshire would benefit from the order. Not only is steel required for the vessel, but furnishings and other ancillaries have to be provided. Their supply will be spread over an area which is suffering from unemployment.

What has been the reward for the enterprise of Yarrow's when going into competition? The firm has met the Board of Trade. I do not intend to betray any confidence between Messrs. Yarrow and myself or any knowledge which I possess, but I make this special plea, before it is too late, for the Government to' be sufficiently flexible when there is something really to be gained. This is no hypothetical case. This enterprising firm, which has gone out into keen competition against others, is entitled to the maximum Government support.

I am aware of the political risks at stake. If the Government want full employment, is it the enterprising person who goes out and wins an order who should bear the risk? Why should not the Government take their share of it. I hope that the Minister will use his utmost influence, at Cabinet level if necessary, to ensure that this order does not leave the British shipyards. I make this special constituency plea on behalf of Yarrow's. Other hon. Members whose constituencies also have an interest in the contract are present in the House tonight.

8.20 p.m.

Mr. Paul Williams (Sunderland, South)

At this stage, not only is there very little new to say, but I hope that the hon. Member for Glasgow, Scotstoun (Mr. Small) will forgive me if I do not follow up his remarks. Although whether I agreed or not is a matter of opinion for another stage, I much appreciated his plea on behalf of his local interests. It is interesting and sometimes exciting in the House to hear someone passionately defending the interests of his voters and not ploughing a party furrow in these matters.

Although from time to time I have been critical of the Minister in shipping and shipbuilding matters, it is only fair to say that my right hon. Friend has a difficult piece of ocean to navigate with these two industries. There are conflicting interests between ship ownership and shipbuilding, and this leads my right hon. Friend also into having conflicting interests with his other responsibilities for the railways. That is why I find it difficult to go along in terms of the Government's Amendment. It seems to me that they have done very little over the years positively to help shipping and shipbuilding. One could cite large or small examples, such as the end of derating and the present Transport Bill, providing for the withdrawal of certain rights for coastal shipping.

My first point, which I hope to make briefly and simply, is that these two industries need to do more to help themselves. It is wrong for us permanently to attack the Government, enjoyable though that may be from time to time, if we do not tell the industries themselves that they need to do more to help themselves. It is for this reason that I particularly appreciated the speech of the hon. Member for Sunderland, North (Mr. Willey). He struck the right note in getting the debate off party political levels. This matter is far above party levels. It is a matter of importance to the nation in its economic survival.

The figures we have seen over the years of declining revenue and of declining assistance in our balance of payments make it of supreme national importance that the shipping industry and part passu the shipbuilding industry survive. I should like to know whether it is the Government's opinion that at the moment British ship owners are missing the boat in placing orders when this may be the bottom of the market from the point of view of buying ships or placing orders. There is great danger that to hold off from placing orders now may lead the United Kingdom owners into having to go into the market to buy when prices are again rising. I hope that we shall be given some indication whether or not this is a reasonable view.

On the owning side of the industry, I should like to refer to what the Minister said about flags of discrimination and what has been happening over the years. In April, 1962, as my hon. Friend the Member for Belfast, East (Mr. McMaster) mentioned, the Prime Minister deposited a document with President Kennedy. It was most impressive, and we all referred to it in the July debate. What has come of it? Very little. There is to be another protest. This is very interesting. I hope that the Minister will be more successful in future in rallying the genuine maritime Powers to form a joint opinion and to bang the drum with the Americans and tell them that if this is the way they continue to treat the allies the consequence of their policy will be to undermine their allies until the American alliance is in jeopardy. If the Americans believe in this alliance it must be on fair terms and must not be dictated to by the superior strength of the Americans.

We should put ourselves in a position in which we could retaliate and have power of sanction over American behaviour. It might not be wise at any given moment to use it in general or in a specific case, but we could create fear of our having this reserve power. Someone said earlier in the debate that this would be using blackmail which he did not want. It may be blackmail, but this is the way to handle the matter now, and we should have some sort of sanction over American behaviour. I hope that my right hon. Friend has not a closed mind on this point.

Mr. Marples

I assure my hon. Friend that I do not have a closed mind, but there are two separate points. The first is that we have to try to get our European friends together and to act together, and I said that if we did not act together then we were prepared to go it alone.

Mr. Williams

I am grateful to my right hon. Friend for that comment. This is a policy which some of us on both sides of the House have been pressing for some time. We welcome the small reactor among us, and we welcome the fact that my right hon. Friend is at least taking up the point and pushing it forward.

Mr. Rankin

At last.

Mr. Williams

On the problem of building, I should like to take up the point made by the hon. Member for Sunderland, North. I thought it very courageous, fair and honest of him to make it. It was a point which was completely missed by all other speakers in the debate. He recognised that losses are being made on many of the orders which are placed today. It is important in terms of wage negotiations, the profitability of the industry, and harmonious relations in the industry that this point should be completely understood, because it shows that many of the building companies are behaving in a responsible way in trying to keep together the teams of skilled men upon whom the future of the industry depends.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) referred to the amount of money spent recently in the modernisation of yards. He mentioned a figure of £150 million. We must not decry the efforts of the British shipbuilder in modernising and following up from the banks of the rivers and delving back into the slums to build yards and make them into modern flow production lines. But there is the difficulty which my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) mentioned, that no new yards have been built because of the very geography of the areas in which our shipyards are situated.

We must, however, record and welcome the modernisation which has been and is taking place and the voluntary amalgamations that are taking place. An example of one way in which this can be encouraged is the Swan Hunter-Vickers Armstrong and the Doxford-Sunderland Group. This is the march of progress, but do not let us say automatically that all yards should be part of a large group. Many of the smaller yards perform a vital function in producing the type of vessel which the British merchant fleet needs.

The problem of subsidised foreign building is incredibly difficult in terms of our relations with our European competitors. What can be done to persuade European countries not to engage in providing subsidies? I am a resolute opponent of our joining the Common Market, but if we accept the doctrine that we are going into the Common Market we should be warning European countries now of the consequences of our entry. We should be telling them what it will mean in affecting their present practices, and we should be starting to launch this argument at them at this point.

The point has been repeatedly made that people welcome the advantages that are being given, through credit, to foreign owners. But we have really put ourselves in a ridiculous position. Whilst at the one moment we decry the flag discrimination which the Americans are pursuing, we ourselves are discriminating in another sense by providing credit facilities in favour not of British but of foreign owners. It is a very strange situation into which we have manœuvred ourselves or have been manœuvred.

Of course, it was right to provide comparable facilities for export orders, but practically every shipbuilding order has a large proportion of export in its very make-up, in that the ships which are completed carry goods either between third countries or between other countries and this country. This is the most basic of all our export industries and deserves to be treated equally, whether the owner is a home owner or a foreigner.

If I come now to talk about labour relations I hope that I will be allowed to declare, in this case, an absence of interest—and I hope that I will not be too censured by the Sunderland Borough Labour Party for anything I may say. I believe that, fundamentally, the question of labour relations causes only a marginal effect on the cost of the end product, but that nevertheless it is a vital margin not just in terms of the extra cost itself but in terms of the atmosphere it creates about the industry.

This is incomparably more important than the actual tens of thousands of pounds involved. There are two apparently conflicting points of view. There is the management point of view which says, "We want flexibility and an end to demarcation"—a perfectly reasonable request. Then there is the union attitude, "We want security." That is a perfectly reasonable point of view as well.

Yet people appear to regard these two things as being conflicting and contradictory. I do not see them as being contradictory. I believe that one can get harmony out of these apparent conflicts. There can surely be a trading of apparently conflicting interests, by which security on one side can be exchanged for flexibility on the other. This is an industry where there are no long-term contracts. In fact, men can be laid off at too short notice. Indeed, many of the practices are near feudal, and that is why I say that there is room for bargaining.

I am not talking here about the pay pause or wages or details of that kind, but of a matter of major importance in terms of this industry's survival—that we must reconcile the demand for security with the demand for flexibility. The only practical way in which this cause can be advanced is by the Minister of Labour taking a more positive line than before—banging heads together, if need be, in trying to get a reconciliation of these apparent contradictions.

If this cannot be done, then, as the hon. Member for Jarrow (Mr. Ferny-hough) implied, this industry will go into a well-deserved decline. If we can get a new attitude to replace the old one—however that old one may have been justifiable in the past—and exchange the demands of the two sides of the industry, then it can be as great again as it was in the past.

8.33 p.m.

Mr. Edward Milne (Blyth)

Much of what the hon. Member for Sunderland, South (Mr. P. Williams) has said will find an echo of agreement on this side of the House. He began by indicating that the question of an approach on a party political line was to some extent out. One of the surprising features of the debate has been that the old arguments in relation to shipbuilding in particular and to shipping and shipbuilding in general, have more or less disappeared.

It was the custom in the immediate past for one side or the other to blame management or the industry. Almost without exception, however, today's speeches have laid stress on the improvements that have taken place, and also on the way in which the industry to a large extent is fitting itself to meet the challenge of 1962 and the years further ahead.

But one point missing has been the failure of many hon. Members opposite to display the same type of courage and attitude of the hon. Lady the Member for Tynemouth (Dame Irene Ward) who indicated that she will either abstain or go into the Division Lobby against the Government. I do not think that it is wrong or unnecessary to remind the House that the Motion … regrets the failure of Her Majesty's Government to take or promote any effective action to remedy the position. It is precisely on that point that a lot of the appeals for a non-political approach are bound to fall to the ground.

Because of the limited time and the fact that the debate is nearing its close, it is difficult to take up all the points which have been raised. I shall do what was suggested by a previous speaker and leave the question of shipping to deal with shipbuilding. It was also suggested that we should have had a better debate if this had been done at the start of it. As one hon. Member said, it would have given us two hooks on which to put the Minister of Transport instead of one—an admirable outlook, I think, and one shared by many of us on this side of the House, and, no doubt, by one or two hon. Members on the other.

As a Member for a North-East constituency, I would point out to the Minister that the north-east of England constitutes not three rivers but four. In addition to the Tyne, the Wear and the Tees, there is the River Blyth, with a shipyard which fits in with the argument of the hon. Member for Sunderland, South—that while mergers and amalgamations may be necessary to face the challenge in the future to the shipyard industries, our shipping requirements also need a certain number of small yards, situated throughout the country, to meet other needs.

Nowhere is this more necessary than in the north-east of England. As an adopted Northumbrian, I take a great deal of pride in the fact that if, as my hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short) said, the Government had allowed the Cunarder to be built—

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

Nonsense; withdraw.

Mr. Milne

I am merely quoting what has already been said, and no doubt the Minister will be able to reply to this point. I repeat what I said. In the course of his contribution, my hon. Friend the Member for Newcastle-upon-Tyne, Central mentioned the question of the Cunarder. I do not want to enter into a dispute—

Mr. Montgomery rose—

Mr. Milne

I have no time to give way. The only point I want to make in relation to the Cunarder is that I share the pride of the North East in the fact that its yards managed to wrest from my native Scotland, the traditional home of the Cunarder, the right to build this liner. I hope that the Government will look at the position again, and that, if a decision is taken to build it, the value of that victory will be seen in jobs in the North-East.

Mr. Marples

The Government made a deal with the Cunard Company and were prepared to hack that deal. It was the Cunard Company that decided not to build the ship—not the Government.

Mr. Milne

I am prepared to accept the Minister's statement because he has listened to the point which I have just made, but his quarrel is not with me but with those who have made this point.

I was talking about the shipyard in Blyth. As most people are aware, the first aircraft carrier, the first "Ark Royal", was built in the Blyth shipyard, and we also have a close connection with coast-wise shipping and shipping generally. Last year we wrested from the Tyne the right to claim the title of the largest coal-exporting port in Britain if not in Europe. The proverb is now not taking coals to Newcastle, but taking coals to Blyth.

In discussing the decline of the industry in the last ten years, we have to consider one factor especially. The tradition which established Britain as the shipbuilder to half the world has gone. Between 1951 and 1959 our share of the world's export markets fell from 49 per cent. to 3 per cent. That is vital to towns which have shipyards. The Shipyard Advisory Committee's Sub-Committee on prospects had this to say: The industry is of particular importance in certain areas of the country, in some of which there is a relatively high level of general unemployment. A contraction of work in the shipyards and related industries would, therefore, be serious for these areas. I am extremely glad that there are now signs that this matter will be dealt with. There are signs of improvement in the problem of bringing smaller ports into use and that of increasing research undertaken and assisted by the Government.

It has been claimed that production costs in Britain are too high. Hon. Members on both sides of the House have been making comparisons with other European shipbuilding countries. While the earnings of shipyard workers are 20 per cent. lower in Germany and 40 per cent. lower in Japan than they are in Britain, in Sweden they are 40 per cent. higher. We may have to look to this Scandinavian country for a solution of many of our problems. The right hon. Gentleman will be aware that Sweden has had a democratic Socialist Government for a long time and has certain advantages in consultation between Labour and management which our Government are unable to provide, especially since the introduction of the pay pause.

Commenting on the movement of Belfast shipwrights to Sweden—and I am sorry that the hon. Member for Belfast. East (Mr. McMaster) is no longer present—the Guardian said that they had to seek employment in Sweden because their own Government could not provide them with work. It went on to say: This is probably as much a result of a national wages policy as of straightforward industrial management. Once a year the national representatives of the Swedish workers, in close touch with the Government, meet the representatives of Swedish industry to decide roughly what new wage settlements are needed. The article added that If Mr. Selwyn Lloyd's 'Neddy' worked half as well as this system seems to have done in Sweden, we might look forward to a bit of industrial peace in Britain. It is all very well for the Minister to look surprised at this statement, but his own Shipbuilding Advisory Committee made the same kind of recommendation, in paragraph 59, when it said that all managements should make the most strenuous efforts to improve labour relations and engender understanding and trust among their workmen. In this connection it might be of assistance if employers encouraged their managements at all levels to follow good practice in personnel management. This is something that the Minister could pass on to the industry.

I agree with the hon. Member for Sunderland, South that the climate in most, if not all, British shipyards is ready for this kind of leadership, and it is because that leadership has been lacking that it has been necessary for my right hon. and hon. Friends to put down this Motion of censure.

The figures show the efficiency of certain foreign shipyards in relation to our own. As the article said: The figures admit it for us, and it is no use pleading—as some British employers do—that it is all a matter of foreign Governments subsidising their shipyards. I can go some way with the Minister on this point. There are no Government subsidies in Sweden; but there are some of the highest average wages in the world. Sweden's example needs to be more closely examined.

I now wish to direct the attention of the Minister to the question of export credits, which has already been touched upon. All hon. Members representing shipyard constituencies will agree, from consultations they have had with people who are connected with the industry, that it is clear that our export credits system is a very cumbersome one, and that even the limited assistance that is given is made less effective because of this. A long process has to be gone through when one is faced with an inquiry from an overseas owner or an accredited broker. The system requires details of the outline specification, price, delivery date, and credit facilities. After that a credit of five years after delivery is often made. Some people, on being asked to produce evidence that foreign yards are better assisted by their Governments, say that our system causes unnecessary delay in the preparation of specifications and the passing of tenders. The Minister should examine this question very closely.

It has been agreed that speeches in the closing stages of the debate shall be short, and I shall not refer to some of the other issues that I wanted to raise. I conclude by saying that we have watched the relative position of our shipping industry decline in the world. We have watched it adjusting itself to changing conditions in the last two or three years. We now require some action by the Minister and the Government to give the industry the assistance it so badly needs.

8.45 p.m.

Mr. Mark Woodnutt (Isle of Wight)

There are only ten minutes available, so I shall make my speech as brief as possible. I cannot support the Opposition Motion, because I do not agree that the Government have done nothing. On the other hand, I cannot support the Government Amendment, because I do not think that they have done nearly enough.

I want to refer particularly to the question of credit facilities for shipbuilders. The credit guarantee facilities offered by the Export Credits Guarantee Department of the Board of Trade to industry in general are most welcome, and so are the other arrangements which have recently been announced. Particularly long-term credits, and I have no doubt that these measures which have been introduced have proved very helpful to most of our exporters in industry. But shipbuilding is another matter, as has been said so often, and particularly by my hon. Friend the Member for Sunderland, South (Mr. P. Williams). It is our most important exporting industry.

We shall not achieve the increase in our foreign sales that we require unless the Government give better credit facilities to shipbuilders. The builders must be placed in a position where they can do two things. First, they must be able to offer credit facilities comparable with those offered by foreign Governments, and secondly, they must give credit facilities which are sufficient to meet the credit requirements of the person buying the ship.

I should like to quote from the Review of the Year by the President of the Ship Building Conference, who said: Whatever may be said to the contrary, the paramount consideration is the question of credit. That is quite emphatic, and I am sure that that gentleman knows what he is talking about. I was very hopeful when the President of the Board of Trade, on 12th April, announced the improved facilities which he would arrange through the Export Credits Guarantee Department. The right hon. Gentleman particularly mentioned ocean-going ships. Then, last week, my hopes, if not shattered, were very badly bent, because the improvement which I expected to be forthcoming has not transpired. I am sure that there will be far-reaching ill effects for the shipbuilding industry.

I wish to refer particularly to the Argentine contract, which has been mentioned by the hon. Member for Southampton, Itchen (Dr. King) and the hon. Member for Glasgow, Scotstoun (Mr. Small). This contract is for no less than £25 million split between three firms: Yarrow's of Scotstoun, for two Leander frigates at £10 million; J. Samuel White, in my constituency, for two Leander frigates for another £10 million, and six minesweepers to be built by Thornycrofts of Southampton for £5 million, making a total of £25 million. These orders were obtained against the most fierce competition from eleven foreign firms and two other British firms.

It was made clear at the time of placing the contract by both the Argentine Government and our three firms, that it was subject to satisfactory credit facilities being arranged. It was always made abundantly clear by the Argentine Government that it expected to pay 20 per cent. during the course of construction and 80 per cent. on extended credit over five years from the date of delivery. The Board of Trade was approached and the facilities it offered the firms, the percentage guarantee it offered on the balance of 80 per cent., was not sufficient for the builder's requirements. The builders asked for more and were told that if they went to the Argentine Government and obtained a letter of intent and submitted it to E.C.G.D., the matter would be considered again. It was on this basis that they tendered. They got their letter of intent and then they were informed that the Board of Trade could not give them more than the facility already offered.

The companies are in a position where the guarantee offered is insufficient. They cannot put their companies at risk beyond the amount they have stated, and it means that unless the Argentine Government are prepared to change their credit requirements or unless the three British firms are able to spread the risk to some of their sub-contractors, by getting them to take up part of the risk, this order is in jeopardy and will, in fact, be lost.

Can we afford to do that with a £25 million order? I know that I am arguing on a narrow front, but it is not just a constituency point. There are three firms involved, and it is national policy that is wrong. We must review not just these orders but our whole credit facility policy for future orders.

I have examined all the arguments that the Government could possibly put up to support their point of view, and I will briefly set up those arguments and knock them down again. Could it be, I thought, the state of the Argentine economy? We read in the Press some three weeks ago a rather bad report of the present situation in the Argentine, and my hon. Friend the Member for Tynemouth (Dame Irene Ward) earlier in the debate said that we should not risk money in respect of a country that is "going broke". Who said the Argentine is "going broke"? I have never heard anything so ridiculous in my life, and I reject that argument entirely. If it were the case that the economy of the country was so unsound, the Board of Trade has no right to offer to guarantee the very substantial portion which it has offered to guarantee. I could have understood if it had been said that we should not touch it at all, but having gone so far, why the Board of Trade could not go that little bit further I cannot understand.

Is there another argument that it might possibly be unfair to other British yards who quoted on the basis of 50 per cent. immediately or during construction and 50 per cent. extended credit? Everyone knows that the Argentine would not accept as tight a credit offer as that, and we also know that foreign builders were able to make a better offer. Could it be that, as my right hon. Friend said earlier in the debate when I intervened, that we cannot depart from the rate for the industry, 60 per cent. for one particular industry, and 75 per cent. for another industry? He mentioned merchant ships. We cannot put naval ships in the same category as merchant ships. This is a completely separate matter, and I say that it should be treated as a special case, particularly from the point of view that the craftsmanship employed in building, naval ships is of a far higher standard and requires a far higher skill than that employed in building merchant ships.

At the moment, while small orders are being placed by our own Admiralty, there is a drift away from naval shipbuilding. We must stop it, in the national interest, because we must always maintain the potential of our yards and see that we have both the skilled men and the managements there to build the extra ships if they are required. We must stop this drift away from the shipyards, and from that point of view it is most important that this work should be fulfilled.

I also wondered if it may not be the balance of trade, but when one looks at the figures one sees that the crude balance for 1961 with the Argentine is adverse. It is against us to the tune of £24 million, roughly about the same figure as that for the contracts. I know that we do not trade bilaterally, but nevertheless it would be very desirable when we bear in mind the number of countries with which we have adverse balances of trade, if we could swing one the other way in our favour. May it be that the guarantees for the Argentine have reached their limit? If that is so, I should like to quote a statement made by my right hon. Friend the President of the Board of Trade on 12th April last, in which, particularly referring to ocean-going ships, he said: In highly exceptional cases, where the business could not otherwise be financed and where, in the opinion of the Government, there are compelling reasons for regarding the project as one of outstanding economic importance to the United Kingdom, supplementary finance may be provided from the Exchequer under Section 3 of the Export Guarantees Act."—[OFFICIAL REPORT, 12th April, 1961; Vol. 638, c. 239.] That is the statement made by the President of the Board of Trade in which he said that if it was of outstanding importance to the national economy the Government would stand behind the E.C.G.D. and give a further guarantee. Is not this in the interests of the national economy?

Not only is it a £25 million order, but all future orders will be in jeopardy if it is not fulfilled. It is in the interest of employment for it would give work for 1,000 men for three-and-a-half years in the Isle of Wight, but if we do not get this job 300 or 400 will be made redundant in addition to the 700 already made redundant. It will be the same in the constituency of Scotstoun—1,000 men employed for three-and-a-half years—and it must mean 400 or 500 men at Thornycrofts. This is of importance to the national economy. Therefore, the Government should stand firmly behind what they have offered to do.

I am one who still believes that British workmen and British shipyards make the best ships in the world. If the Government stand firmly behind them we can recapture our place as the leading shipbuilders in the world. Because they have failed to do so, I cannot possibly support the Government Amendment tonight.

9.3 p.m.

Mr. Austen Albu (Edmonton)

This is the second night running on which the Government have received practically no support from their own back benchers. On this occasion we understand that the majority of those who have spoken from the Government benches intend to abstain on the Government Amendment, although for some reason they do not find themselves able to vote for our Motion. This cannot be a comfortable situation for Ministers.

During the hour or two while dinner is being consumed we frequently get in these debates a number of constituency speeches, all of them well-informed. This has been one of the best-informed debates we have had for a long time. There is a tendency at that time, particularly when party controversy gets a little low, for an air of complacency sometimes to come over our proceedings. There is a tendency at that time for the faults in our industries to be blamed on everyone else, on other countries but not on our own Government or on the industry itself. My hon. Friend the Member for Blyth (Mr. Milne) referred to this in his speech.

I do not think it a good thing, however much we are anxious not to run down our own industries, to withhold criticisms either of the Government or the industries when we are discussing these problems in this House. The one change which has taken place since the debate in July is that the Government have at last recognised that a completely new situation has arisen in the shipping industry and that it is not likely to change. This is the growth of Government-supported shipping lines and Government-supported shipbuilding yards in many foreign countries. It is unfortunate that the example in bad practices in shipping policy, particularly flag discrimination, was set by such advanced and wealthy industrial countries as the United States and Canada. I am sorry that Canada, a Commonwealth country, is now following up its flag discrimination policy by increasing its subsidy to shipbuilding—I understand that it now gives a 40 per cent. subsidy—and rigging its dollar-sterling exchange rates so as to give an even further advantage to its shipbuilders.

The example of supporting one's national shipping flags is spreading to the newly-developing countries, all of which now seem to think that it is desirable to build a shipyard and, having got a shipyard, to build ships and, having got ships, to see that they have cargoes. I wish that these countries could be persuaded that this has not got the prestige of an airline and is economically extremely expensive and not likely to help their national economies. It is taking place now in South America, where I understand that the United States intends to retaliate, though what it can do further in flag discrimination and in support of its own merchant fleet I do not know.

So far there is no doubt that Government action has not been energetic enough in facing up to this situation. In fact, it appears that only today for the first time have the Government admitted that this situation is not likely to change, unless drastic action is taken. I simply cannot understand why the Minister is unwilling to introduce enabling legislation to give him the power to take such action as he may find necessary when he discusses the matter with his European colleagues. He was asked to do so by hon. Members on both sides, both in last year's debate and today, and I hope that he will think again about it.

We are all glad to hear that at last he has taken up the suggestion made by my hon. Friend the Member for Sunderland, North (Mr. Willey) last July—in fact, a good deal before last July—of getting together with the other maritime European countries to try to fight back. My hon. Friend made this suggestion a tong time ago, and it has taken the Minister all this time to get down to the point of having the meetings. Can he not use the new O.E.C.D.? Why does he not consult his right hon. Friend the President of the Board of Trade about this, because in O.E.C.D. the European nations would be able to confront America and Canada, which are now in the new organisation, and these matters could be thrashed out there. I am not sure whether this would be a suitable agency, but it would certainly be a way of exposing the American policy and making America defend it.

The Minister referred to the shipping conferences and the obvious need to replace them by another system. I have never understood them very well, but I am told that in this I am in the overwhelming majority. Even The Times has suggested that if present trends continue—my hon. Friend the Member for Sunderland, North referred to the danger of getting into a sort of I.A.T.A. situation—we may have to turn liner operation into a public service. I have no doubt that this suggestion will make the blood of hon. Members opposite run cold.

I do not intend to say any more about shipping, but, as several hon. Members on both sides have pointed out, shipping is of great importance to British shipbuilding because of the high proportion of ships built in British yards which are built for British owners. This proportion is becoming even greater. Less than one-fifth of the ships under construction at home in the United Kingdom are for registration abroad. As has been pointed out, we are now a substantial importer of ships. In fact, we are the largest importer. Twenty-eight ships are now being built abroad, fifteen of them in the Netherlands, a country whose shipyards have not been mentioned in the debate.

I was surprised that the Minister, after the fuss he made about it in the last debate, made no reference to the Report by Peat Marwick and Mitchell. The Report has hardly been mentioned today. The truth is that it was a very small mouse indeed. The inquiry was not very helpful. Its terms of reference were far too narrow and I do not think much was learned from it.

It made some references to credit, though not many. However, it appears quite clear that credit is an important issue. The more I listened to the debate and heard the topsy-turvy story of us giving credit for ships to be exported so that they can compete with British ships, no credit being given for the building of ships in British yards, the more it seemed to me to be a sort of Alice in Wonderland. I hope that the Government will examine this question again. We certainly need to export ships and we must provide the credit to do it, but I fail to understand why we should encourage our own ship owners to go abroad where they can get credit rather than build their ships at home.

In so far as the Peat Marwick and Mitchell Report said anything, it said that price was the important factor, which was not exactly a startlingly brilliant discovery. Price is very much related to the efficiency of the yards. It is very significant that yards which are known to have been substantially modernised are now doing very much better than yards which are known not to have been modernised. Let there be no mistake about it; there are large yards in the United Kingdom that have not modernised, and there are others that have, and are doing well. My hon. Friend the Member for Newcastle-upon-Tyne, Central (Mr. Short) referred with justification to what has been done on the Tyne.

In discussing the efficiency of the yards and the efficiency of management, I come to the Minister's surprising attack on the unions as his only method of replying to my hon. Friend the Member for Sunderland, North. Incidentally, the right hon. Gentleman is now behaving as I understand he always behaves when meeting the Shipbuilding Advisory Committee—with complete and utter disrespect. That is one of the reasons why industrial relations in the shipbuilding industry are not very good, and it is no doubt one of the reasons why he has had to ask his right hon. Friend the Minister of Labour to take over the job of dealing with that industry—

Mr. Marples

I am obliged to the hon. Gentleman for giving way. I would ask him how many times I have met the Shipbuilding Advisory Committee, when I met it, and what I said?

Mr. Albu

The right hon. Gentleman could not meet the Shipbuilding Advisory Committee because, of course, it has not met for more than twelve months. That is one of our complaints against him, and—

Mr. Marples

The hon. Gentleman said I had met the Committee and had said certain things—[HON. MEMBERS: "No."] I now ask: when did I meet the Committee, and what did I say? He accused me of meeting it, and of saying certain things. All I ask is: when did I meet it, and what did I say?

Mr. Albu

I am told that on the first occasion the Minister met the members of the Shipbuilding Advisory Committee he treated them with what they considered to be gross discourtesy, and as far as he has met them individually they think that he has not treated them with the respect they deserve. What the trade unions cannot understand is why it is necessary for the Ministry, already having all these committees under its aegis, to set up yet another committee to deal with these problems.

The right hon. Gentleman, as his only method of replying to my hon. Friend, made a substantial attack on the trade unions. My hon. Friend the Member for Southampton, Itchen (Dr. King) quite rightly pointed out that there is a very substantial difference in the social conditions in Britain and in Sweden. In Sweden there are not the social differences, or the difference in the basis of education. The Swedes have a very high standard of wages and a very high standard of management, which may well have something to do with the difference in the situation there and in the United Kingdom.

The problem of inefficient shipyards is not only a matter of trade unions and workers but of management and, in saying that, I call in aid at least two witnesses. The first witness is the Toothill Report on the Scottish Economy. It is true that it does not mention industries by name, but I do not think that anyone can doubt that in discussing the Scottish economy the Toothill Committee was very largely discussing the Scottish shipbuilding industry. The Report states: It was put to us that the prime responsibility for good industrial relations rests with managements. These representations have added force in that they were put to us chiefly by management itself. We are well aware that there are occasions when labour, like management, will display unreasonableness to the point where agreement becomes virtually impossible, and that national strike action or disputes over demarcation may be beyond the influence of individual managements. But it is the responsibility of management to take the initiative in fostering good relations. Where relations are consistently unsatisfactory, a proper question for management is where it, itself, is going wrong. Anybody who knows anything at all about the subject knows that the conditions in which the men work in many of our yards are absolutely scandalous. There is not only the problem of insecurity of employment; the working conditions are often not fit for pigs. That is one of the differences between many British yards and many Continental ones.

I had not really intended to make this attack on management. I would not have done so had not the Minister made his violent attack on the unions, but let us have it out fairly. If we are to have this sort of accusation, let us see where the responsibility lies. Perhaps the right hon. Gentleman heard the very interesting broadcast, published in the Listener of 14th September of last year, by Mr. Ian Lloyd, economic adviser to one of our largest shipping lines.

Mr. Lloyd says that the first cause of inefficiency in British shipyards is the backwardness of industrial relations, to which I have already referred. The second difference is our lack of trained minds at top and middle management able to react to change. Thirdly, he refers to the greater proportion of professional staff abroad able to use the new techniques, and quotes one Swedish yard which has thirty-five graduates in a specialised research and development section. I myself know of another Continental yard, that of one of the largest marine engine builders in the world, employing 10,000 people, which has 175 graduates from technical universities, and 375 of what we would call technicians who, after doing four years apprenticeship, have undertaken three years whole-time education. I do not suppose that there are more than fifty graduates in the whole of the British shipyards. This is one of the reasons for the present difficulties.

Mr. P. Williams

I believe that there is some doubt about the accuracy of those figures, which, I understand, come out of the D.S.I.R. inquiry, since a number of the yards involved did not bother to answer the inquiry. I do not want to detract from the general principle of what the hon. Gentleman has been saying, but I suggest that the figures and the arguments arising out of them should not be carried too far.

Mr. Albu

I am sure they are substantially correct. Even if I increase the figure I mentioned to 100 graduates in the whole of the British shipyards, and I should be very surprised to find that number, probably half of them are employed in Admiralty research. However, we must face the facts and admit that this may be causing some of the difficulties.

I wish to turn to other aspects of the Peat Marwick and Mitchell Report. There was a refusal on the part of one yard—I believe one of the largest in the United Kingdom—to install the type of engine that was required by a customer unless the firm built the engine itself. I understand that the same thing has happened again and that the yard in question lost another order as a result of this. I think that the Minister should bring pressure to bear upon yards which refuse to supply such requirements of the customer, especially in view of the criticism in the D.S.I.R. Report of the marine engineering industry of this country. There is no reason why our shipyards should suffer because some of our marine builders are not very efficient.

Another point to which I would draw the attention of the House, which is handicapping the real modernisation of some of our yards, is the price structure for steel sheet and this concerns the introduction of the latest techniques such as improved methods of flame cutting and so on. I am told that this is a serious problem because, with the new methods of cutting, very much larger sheets can be dealt with—but one must have very much closer tolerances and the tolerances are based on percentage of sheet size. I am told that the present price structure can well have the effect of making, for instance, a tanker weigh several hundred tons more than otherwise, with the obvious consequent loss of earning capacity.

Regarding research, we welcome the fact that the new research association is to be set up and I hope that it will be got going soon. I hope that it will devote a good deal of attention to diesel engine research for it may be that we should stop spending money on turbine research. Let us leave that to the electrical companies. They are quite capable of doing it probably much better than the marine engineering firms and are probably capable of building better turbines.

It is really shocking that the British marine engineering industry has hardly produced a single diesel engine of its own. Even the one it has produced is four or five years behind those produced by the Continental builders. Some real stimulant in the field of diesel engine research is required and probably some substantial rationalisation of production—which may mean mergers—might be required within the marine engineering industry.

I have made a number of criticisms and have given some of the reasons for the difficulties in some of the yards—but I will not mention where I think they exist. Practically every hon. Member who knows about shipbuilding knows where they are. I wonder if the Government are prepared to allow the shipbuilding industries in those areas simply to decline. After all, these areas are substantially dependent on shipbuilding and are in the places where unemployment has been growing rapidly.

It has been pointed out that the situation is particularly bad in Belfast, where there are only three slips occupied at Harland and Wolff's out of eighteen. In the past fifteen months 12,000 men have been laid off out of a staff of 24,000 and a further 1,500 men will be laid off by June of this year. In the Republic of Ireland, south of the Border, the Dutch are building a large new modern yard which will not make things any easier for Belfast.

The hon. Member for Belfast, East (Mr. McMaster) asked the Government, as they have been asked many times in the past, whether they would assist in the building of a dry dock there which would take the largest types of ships for repair, up to 100,000 tons. I understand that this would be some help. The unions in Northern Ireland and the Northern Ireland Labour Party have put forward substantial proposals to the Northern Ireland Government and the home Government for a planning and development organisation for Northern Ireland, and they have made two rather interesting suggestions. The first is that a scientific research unit concerned with the problems of applied science should be set up. The second is that an economic and market research organisation should be set up, no doubt to consider alternative industries if shipbuilding continues to decline.

The truth is that, if the Government want to bring up to date the yards which are not so modern and are not doing well, they must find some way of injecting new scientific ideas and new scientific staff into them. One way, undoubtedly, would be by development contracts for radically advanced types of ship. I do not think that it would be possible in some yards to have them built unless the Government did something also to inject rather better quality professional staff into them.

Some of us who saw the Minister on television when he made the famous statement about 20 per cent. efficiency were rather interested or amused when he was asked whether he believed that some of the yards should be nationalised, at which he shrugged his shoulders and said, "Well, no I am a Conservative". That is not a very good reason for not doing it. I am not asking him at the moment to nationalise the yards, though I do say that he should do something to bring them up to date.

When we talk of radically advanced types of ship, we think immediately of nuclear power. There was a very powerful attack made on the Minister today by, first, the hon. Member for Dorset, West (Mr. Wingfield Digby) who provided a really interesting contrast between traditionalism and progress, as one would expect, of course, from a former Civil Lord of the Admiralty. I remember crossing swords with the hon. Gentleman some years ago When I was chairman of one of the sub-committees of the Estimates Committee which considered the Royal Naval Dockyards. The Admiralty, of course, always adopts one's proposals ten years later without telling one anything about it. The hon. Gentleman was supported by the hon. Lady the Member for Tynemouth (Dame Irene Ward) who gave a description of the sorry Ministerial muddle over this issue and the difficulty of finding where the responsibility really lies which I thought was completely devastating.

The situation has become very bad indeed. There are not, it is true, many merchant ships, but a good deal of experience in the handling of nuclear-powered reactors at sea will be gained by surface ships even if they are naval vessels. The American Navy now has 65 vessels with 76 reactors at sea. Westinghouse has contracts for 52 reactors for marine use and General Electric has contracts for 10. As these reactors are built, of course, costs are being substantially reduced. The Americans have not only their submarines but they have in operation one cruiser. They have ready for trials one aircraft carrier. They have launched a frigate and they have authorised another frigate. They have land-based prototypes operating or under construction to a total of seven, and also, of course, they have the "Savannah", the merchant ship, which is coming along. We have one submarine under construction and one planned.

Of course, as hon. Members have pointed out, it is not only in America that these advances are being made. The Germans are building two nuclear-powered ships. Deutsche Werff have designed one 45,000 ton ship and there is now planned by a Government-backed agency another of 16,000 tons. The European Nuclear Energy Agency of the O.E.C.D. is preparing a nuclear-powered ship, an oceanographic research vessel, as a possible future joint undertaking to be built at Le Havre. Another project is in preparation for an 18,000 ton nuclear propelled bulk carrier also under the ægis of the European Nuclear Energy Agency. I do not know how far we are associated with these projects, and I should like to know. Study will shortly be begun in the Netherlands on a 65,000 ton tanker under the sponsorship of the Dutch Government. I understand that the Swedish firm of Cockums is undertaking other European projects.

If we are not careful, we shall get seriously behind in this matter. It is not a question as to whether or not there is at the moment a strictly economic reactor or whether a nuclear reactor ship will be strictly economic, but it will take a long time to build the ship, to gain experience of operating it, of maintaining it, and so on. We simply cannot afford to fall behind other countries. We need the ship in order to gain experience in operating her and maintaining her apart from the experience of building her. The building of such a ship to the very high standards required, with very high tolerances and high standards of safety and design, will involve a terrific injection of scientific management and really high-quality scientific engineering into the yards.

A ship or two of this kind, although it is not the only type of advanced ship which the Government might support, might have a substantial effect in gingering up some of the more backward yards. It might be a difficult problem to give such a ship to one of the backward yards. But if the contract for it were given to one of them the Government could insist that they add to their existing management and professional staffs the people whom they considered necessary in order to carry out the job.

It is clear—this has been said several times in the debate—that Government Departmental arrangements for dealing with shipping and shipbuilding are unsatisfactory. The personality of the Minister is quite unsuited to the job. As far as one can see, he has not any real interest in the shipping and shipbuilding industries. He has far too much on his plate and is too much concerned with having his name flashed around all over the place and being generally quoted in the newspapers than he is with getting on with this very serious and difficult job. In my submission, the appointment of a Parliamentary Secretary to deal with shipping and shipbuilding, even a man with the experience of the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett), is not enough. A much more continuously interested Department is needed. I am not sure that I should like to see the responsibility for shipping returned to the Board of Trade, as the hon. Member for Tynemouth suggested. However, that might be the right way to deal with it. But something has to be done.

Finally, I should like to quote what The Times stated today, because it is relevant to our discussion. It referred to the mounting flow of appeals to the Government for help and stated: This mounting flow of appeals has, however, exposed one glaring fact: the Government are not equipped to deal with them. The traditional attitude of these industries, that they should look after themselves, has been traditionally accepted by governments; so it was never deemed necessary to have an important government department with the requisite expertise. It is less than a year since a Minister was appointed for the first time with special responsibility. His hard-working department at the Ministry of Transport is still not equipped to branch out far from its main historic function; the regulation of safety on British ships, and the competence of seafarers. For its new responsibility for shipbuilding, the Ministry is even more sparsely furnished. It ends by quoting the recommendation of the General Council of British Shipping, that in the conditions of today, departmental responsibility for shipping—which derives historically from safety regulatory functions—should be so adjusted that the main purpose and functions of the department are to foster the prosperity of British shipping as an industry of national importance. Shipping may be almost the last industry to have tried to maintain the 19th century tradition of free trade. I do not doubt that if we could have maintained it, the maritime countries, including ourselves, would have gained greatly. But we cannot maintain it. It is no good thinking that we are any longer in a position to maintain the situation which existed at that time. I do not know whether we can persuade other countries to come closer to our way of thinking.

There were some exchanges across the Floor of the House earlier about how far we could achieve this end by pressure or blackmail. Personally, I am afraid that force only will have any effect. I mean, not physical force, but the force of competition, of legislation and of Government action. No amount of good will will persuade the Americans—or the Canadians, the Australians, the Indians or anybody else—to change their habits.

What we have to do, therefore, is to organise the maritime nations who have the greatest interest in this matter to try to get the best conditions for themselves. The Government have at last woken up to this, but this is extraordinarily late and far too little. It is for that reason that we will divide against them tonight. I only hope that some hon. Members on the Government side who said that they cannot support the Government Amendment will read again our Motion and see whether they can support us in the Lobby.

9.31 p.m.

The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett)

The hon. Member for Edmonton (Mr. Albu) referred towards the end of his speech to the leading article in today's The Times. I, too, read that article. We should not, perhaps, dissent from the idea underlying it, but I am not at all convinced that the solution would lie in a further proliferation of Government Departments and officials. It may well be that alternative machinery would be better, and that is a matter which is in our minds, as my right hon. Friend the Minister indicated when opening the debate from the Government side.

In the first five minutes of the speech of the hon. Member for Edmonton, I found little with which to disagree. After that, it fell away sadly. The hon. Member said some unkind things about some of our shipyards and managements, and especially about Doxford diesels, which would have caused an uproar had my right hon. Friend dared to say such things. I assure the hon. Member that his criticism of my right hon. Friend the Minister of Labour holding the meetings about demarcation is quite misplaced. The Ministry of Labour is the Department which deals with industrial relations throughout the whole of industry. It would be quite improper for such meetings to be held at the Ministry of Transport.

This has been a good-tempered and helpful debate, but I must take exception to one statement in it. I refer to the assertion by the hon. Member for Newcastle-upon-Tyne, Central (Mr. Short) that it was the Government and not the Cunard Company who were responsible for the cancellation of the Q.3. I assure the House that that is totally untrue. Indeed, the Government were not even consulted by the board before taking its decision. Indeed, there was no reason why they should be consulted. I should like also to point out that the Act is still on the Statute Book, despite the efforts of the hon. Member for Oldham, West (Mr. Hale) to remove it. In the circumstances, I am not surprised that when I challenged the hon. Member for Newcastle-upon-Tyne, Central he found himself unable to amplify his statement.

Dr. J. Dickson Mabon (Greenock)

Is the Parliamentary Secretary correct in using the word "cancelled"? Is it not the case that the position of the Government is that if later this year the Cunard Company wishes to take up the original agreement of the Government, the Government will reconsider their position and, perhaps, implement the North Atlantic Shipping Act?

Vice-Admiral Hughes Hallett

Pre-cisely. I was quoting from what was said earlier in the debate. The hon. Member has just given an exact statement of the position.

I propose, first, to say a short word about research and development, a subject in which the hon. Member for Edmonton takes much interest but about which he did not say so much tonight. In the last debate in July, I had a number of things to say on this subject, and I am glad to note that events have moved very much as we hoped. The formation of the new B.S.R.A., in which is incorporated the research side of Pametrada, was announced last November. The General Council of Shipping has since accepted an invitation to join this association and, at the same time, the General Council is putting in hand its own review of the British shipping industry's research requirements.

On the marine engineering side, an economic and technical study of research requirements has now been carried out jointly by the Ministry of Transport and D.S.I.R. We have had full co-operation in this task from the marine engine building firms and the research associations concerned. Taken together, these are encouraging developments, and we are much happier now about shipbuilding research in its widest sense than we were a year ago. What is more, the Government have played an active part in these affairs. That, perhaps, explains why our critics have been rather silent about them.

I turn now to the question of employment in the shipbuilding industry, about which many hon. Members have understandably expressed anxiety. I found the approach of the hon. Member for Jarrow (Mr. Fernyhough) to this subject both helpful and sympathetic. It is certainly true that unemployment in the shipbuilding industry is higher than among industrial workers as a whole. Nevertheless, it is fair to remind the House that, up to date at any rate, the position is not nearly so serious as is sometimes supposed, except, of course, in Northern Ireland. Here I sympathise with my hon. Friend the Member for Belfast, East (Mr. McMaster) and his constituents. I am sure we all agree that he put the Northern Ireland case both lucidly and with his usual tenacity.

Mr. McMaster

I am most grateful to my hon. and gallant Friend, but I hope that he will have a little more hope to offer.

Vice-Admiral Hughes Hallett

I am not sure. My hon. Friend must listen to what I have to say.

The general position with regard to employment is that, during the 31 years which ended last November, the number of men employed fell by no less than 33,000 in the industry altogether, but I am glad to say that the number registered as unemployed rose only by 2,300, which means that over 90 per cent. were absorbed in other industries. I am advised by my right hon. Friend the Minister of Labour that, generally speaking, the skilled workers have found alternative skilled work to go to and that the bulk of unskilled men have found work on building sites.

We fully understand the pleas that are sometimes made, and one was made at Question Time yesterday and was indicated in a speech by the hon. Member for Blyth (Mr. Milne) today, to direct work into those areas where unemployment is high. But frankly we do not believe that such a policy would be in the long-term interests of the industry, nor that it would be fair to those areas whose efficiency is enabling them to compete successfully for orders. Apart from that, it would not be at all easy to implement a policy of this nature, particularly in regard to commercial and export orders, and I ask how those who advocate it suggest that it should be carried out. Is it to be done by selective subsidy, by direction, or by what means?

Mr. Milne

I hope that the hon. and gallant Gentleman is not suggesting that yards in the development districts are not competitive and are not fitting themselves to meet the new needs of the time. The Chief Secretary to the Treasury indicated yesterday that, all other things being equal, the development districts would have consideration.

Vice-Admiral Hughes Hallett

That is perfectly true, but the conditions in which that can be done scarcely ever occur in shipbuilding, where orders go to competitive tender—and they really are competitive. I assure the hon. Member that one does not have equal tendering in the shipbuilding industry. This end could be achieved, of course, by nationalisation, but I notice that nobody suggested that today, and I wonder whether any serious person would advocate it. It would not produce a single additional order, and if it meant spreading work evenly without regard to efficiency would not reduce costs.

The outlook is governed by two factors, the scale of activity and the extent to which higher productivity will reduce the number of shipyards needed for a given output. Past experience shows that nothing is more risky than to forecast a demand for new ships. But I think that some of my hon. Friends were unduly pessimistic about the number of British orders now going abroad. In 1959 the proportion was as high as 29 per cent., but I am glad to say that by last year it had fallen to 10 per cent. Although I have not got the figures off hand—they need some investigation—I am inclined to doubt the truth of the oft repeated assertion that we are now the biggest importer of ships.

Be that as it may, if we assume that orders can be got in 1962 and 1963 at the same rate as in 1961, then we estimate that the total tonnage under construction will fall to perhaps less than 1 million tons in two years time. That, it is true, represents only 60 per cent. of present capacity and would involve some reduction of the present labour force.

Again, it is true, on the other hand, that there may be some dramatic upturn in demand for new tonnage, but at the moment we must face the fact that it is hard to see why that should happen. Alternatively, our yards may obtain a higher proportion of foreign orders than in the past. Certainly that must be their aim. But, again, it would be rash for the House to assume that that is necessarily going to happen.

In saying that, I am making no reflection on the industry. We have been, as my right hon. Friend said, tremendously encouraged by the determined way in which many of the yards are fighting back against foreign competition. But the truth is that the surplus building capacity in the world is now too enormous to permit over-optimistic conclusions. In the meanwhile, in the fairly short term, the output from our yards this year is likely to be very much the same as last year.

I want to turn now to the second point—productivity. A good deal has been said about that and demarcation. I have not the slightest intention of indulging in any recrimination on the subject. During visits which I paid to European yards, I was fortunate in being accompanied by an expert in production. Through the courtesy of our hosts we were able to arrive at a fairly reliable comparative figure for productivity for steel-workers, which is easier in their case than in the case of the others.

Broadly speaking, it seemed that the good yards in Sweden were about 30 per cent. above the level of the best yards in this country. In reply to my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), I would say that we have a number of yards in this country which are technically well up to European standards. I agree with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), who made that point.

But this difference was not only so in Sweden. In Denmark, which I also visited, the difference was less, but again it would seem to have been of the order of 20 per cent. In France, it was less again. I went to the big yard at St. Nazaire, where the liner "France" was built. There the difference was about 10 per cent., but this may tend to rise because the yard is being modernised, although, if one takes the efficiency of the yard as a whole that is not necessarily a safe assumption. This would affect the cost of a ship by anything from 2 to 6 per cent. and that, of course, is crucial in these highly competitive days.

Both my right hon. Friend and I were satisfied from what we saw—we went to different yards—that this higher productivity is due to the greater flexibility with which labour is organised and its willingness to co-operate with management for securing maximum output. It simply is not true that European workers as a whole work harder than ours or that individually they are more skilful. We must make no mistake about that. Unless some sort of agreements are reached which will enable the productivity of our workers to reach the level which their skill and energy deserves it to reach, unless restrictions which frustrate progressive management can be lifted and, of course at the same time unless these agreements can make provision for greater security for the men, then the long-term outlook for the industry is bleak.

A certain amount has been said about nuclear propulsion. Indeed, my hon. Friends the Member for Tynemouth (Dame Irene Ward) and Dorset, West, and the hon. Member for Edmonton had a good deal to say about it. Since the last debate we have, of course, announced our decision to concentrate for the time being on reactor research. But to make sure that we are kept in closest touch with what is going on, a steering committee has been appointed, under the chairmanship of the Permanent Secretary of the Ministry of Transport, with whom the scientists will keep in close touch the whole time. I realise that some people feel that we ought to be more adventurous and should be building a ship. At one time I shared this view myself. I should like to tell the House why eventually I concluded that our present policy, which is, after all, based on the advice of an expert committee, is right.

Britain, fortunately, is already well placed to gain general engineering experience in the nuclear field on account of our enormous programme of nuclear power stations. There we have a certain advantage. In so far as the special problems associated with use of fissionable material at sea is concerned, we are already gaining experience by building nuclear submarines. Therefore, the only justification for building a nuclear ship now would be that if by doing so we would add to our experience and the knowledge needed before economic nuclear machinery could be made and operated. That is just what would not be the case. No one today can point to any reactor and say that there is a system which is capable of being developed into an economic proposition. The moment that our scientists can do this, whether next month or next year, a new situation will have arisen, and we shall, naturally, then review the position.

Mr. Albu

Can the bon. and gallant Gentleman tell us whether we are in any way associated with any of the European projects?

Vice-Admiral Hughes Hallett

Certainly we are with some, but I should require notice before expressing myself one way or the other. I should have to have notice of the question to answer it with accuracy.

Dame Irene Ward

Would my hon. and gallant Friend allow me to ask a question? Can he say absolutely what is the answer to the Vickers position in regard to its reactor which it thinks is economic, and if it is so, can we look for quick action?

Vice-Admiral Hughes Hallett

I would not comment on that. My hon. Friend must draw her own conclusion. Our advice is that there is no system at present which can be stated with assurance to be either economic or on the direct road which would lead to economy.

I want to talk about finance and credit, on which a great deal has been said by the right hon. Member for Easington (Mr. Shinwell) and a number of my hon. Friends, particularly my hon. Friend the Member for Sunderland, South (Mr. P. Williams)—although I unfortunately missed his speech, I was told that it was one of exceptional lucidity and statesmanlike delivery.

Despite what my right hon. Friend said when opening the debate for the Government, several hon. Members have pressed for special credit terms for British shipowners. I can only repeat that, in the light of our present information—and this point was made the other day by the Chancellor of the Exchequer—we do not consider that Government assistance would be appropriate, except in those unusual circumstances which led, for example, to our offer to Cunard. What is more, as I think the right hon. Member for Easington admitted, no formal request has been made to the Government for help in this manner by any other British shipowner. Of course, if the General Council were to approach us with specific proposals, whether for the industry as a whole or some section of it, we should consider most carefully what it had to say. But I hasten to add that not only has this not happened so far, but we certainly would not wish to encourage the idea that Government aid would be forthcoming. After all, there was an acknowledged need in the case of export orders for ships—and for other export orders for that matter—and that need has now been met by private enterprise and without cost to the taxpayer, which is as it should be. I cannot help thinking that, in so far as a similar need exists for home orders, it, too, will be met by the market.

I want to turn to the special question of the prospective orders for the Argentine warships. The detailed arrangements for giving E.C.G.D. cover are confidential as between the parties concerned. But from what hon. Members have said, it is perfectly clear that already there has been a partial disclosure. I want, first, to dispel any idea that the Government were not eager that British firms should secure these valuable orders. Quite apart from their effect in maintaining employment, which is very important, we have a very long tradition of friendship with the Argentinian Navy, which we would like to see continued.

The difficulty which has now arisen is in connection with the raising of part of the money which cannot be insured against default. This insurance, as the House knows, is a function of E.C.G.D., which comes under my right hon. Friend the President of the Board of Trade and which is an organisation which, by common consent, is the most effective of its kind in Europe if not in the world. The extent of the cover which can be given is based on the advice of an independent expert committee. Some hon. Members have stated that this extent is 75 per cent., but the figure is confidential both to applicants and policy holders alike.

This was all known from the outset by all the tendering firms, some of whom in tendering on this basis may have been excluded from consideration. Many weeks ago, Yarrows wrote and asked the Ministry of Transport for support in an attempt to get additional cover. While agreeing to use our good offices, the Department warned the firm that it was most unlikely that this would be done. The chairman of Thornycroft's, which was another of the firms concerned, came to see me personally with a similar request, and I gave him the same 'advice. The chairman of J. Samuel White dealt directly with my right hon. Friend the President of the Board of Trade, from whom he received no encouragement whatsoever for the idea that the extent of the cover could be increased. I can only hope that the firms which now find themselves in difficulties have not in, fact tendered beyond their financial resources.

I may say that much though we regret the position in which they find themselves, it is quite incorrect to say that it will necessarily result in a loss in our total export orders to Argentina. Finally, questions of credit insurance are for my right hon. Friend the President of the Board of Trade, and I do not intend to go into further detail tonight. I understand that a number of Questions on this subject are to be answered by my right hon. Friend on Tuesday, and what is more, he tells me that he is first on the list.

I want now to say a word about shipping. I would have liked to have had longer to speak about shipping, because I listened with particular interest to the constructive suggestions of a number of hon. Members on this subject.

Mr. Willey

I am sure that hon. Members who are affected by this matter of credit insurance would not like it to be left in this casual way—that Questions can be asked and answered. This is a matter of major importance to three of our large shipbuilding companies. Could not the Parliamentary Secretary be more constructive and say that his right hon. Friend will at any rate meet the chairmen and discuss the matter with them?

Vice-Admiral Hughes Hallett

That has been asked over and over again, and I am not going to add to anything I have said.

No one has seriously disputed that the basic difficulty which confronts our ship owners and the ship owners of all nations is the present surplus tonnage. I entirely agree with the right hon. Member for Easington and my hon. Friends who have pointed out that that is what really governs the fortunes of the shipbuilding industry. Although it is sometimes suggested that it can be resolved by international agreement, I am bound to point out that it is unlikely that this country would retain a merchant navy of anything like its present size if sizes were to be regulated by international agreement. That is the danger which the hon. Member for Sunderland, North (Mr. Willey) foresaw in going too far along the road of Government interference.

A great deal has been said about these tiresome, interfering practices of nationalistic nations. It is only fair to say that, however mistaken we may feel their policies to be in this day and age, they are at least understandable and perhaps excusable in the case of the smaller nations. But we find the shipping practices and legislation of the United States less easy to stomach. As my right hon. Friend said earlier, the principal European maritime nations—not only the Six—have twice met in Paris on the subject.

The hon. Member for Easington (Mr. Shinwell) asked what he had in mind. I am afraid that the meetings were confidential, and I am sure that he will acquit me of any discourtesy if I say nothing more at this moment. But at our next meeting, on 6th March, we certainly hope to reach a measure of agreement on the most effective way of handling this difficult problem.

Mr. Shinwell

The Minister referred to retaliatory measures. What is meant by retaliation? It is no use threatening that we can take measures only to find that they are impracticable.

Vice-Admiral Hughes Hallett

I can only ask the right hon. Gentleman to wait and see. I cannot go beyond that now. These are serious matters.

Mr. A. C. Manuel (Central Ayrshire)

The old oyster.

Vice-Admiral Hughes Hallett

Quite apart from political threats our ship owners are also faced with a continual challenge from technical developments. The modern specialised bulk carrier has captured an important proportion of the trade carried by the older types of dry cargo ship. It is noteworthy that much of the spectacular growth of the Norwegian merchant navy has been in these modern types of ship. I mention this in order to underline the fact that the future of British shipping cannot be assured merely by Government action against discrimination, no matter how effective such action might be. It will depend on the ability of the industry to move with the times, and to remain competitive from every point of view.

I repeat that we are grateful to the Opposition for having made the debate possible. We agree with them that these two industries are vital to the nation, and we agree that they are both facing grave difficulties. But we do not accept that these difficulties are the result of any action or inaction on the part of the Government. On the contrary, as I said last July, the extent to which any Government can help industries which, by their nature, are international, is marginal. In so far as we understand the policies and the remedies proposed from the benches opposite, we believe that, in the main, they would at the best be irrelevant and in some cases actively harmful.

But I am not asserting that nothing constructive has been put forward. Indeed, we are grateful for some of the suggestions that have been made. But what my right hon. Friend and I have tried to do in this debate is to indicate the true nature and the extent of the problems which confront British ship owners and shipbuilders at present. I certainly do not intend to close on any note of easy optimism. Our shipyards are faced with a contraction of business which it is hardly within their power to avert. In such a situation their future prosperity and, in certain instances, their very survival, will depend on their ability to lower their costs and remain competitive. Last year they secured 7.7 per cent. of the world's orders, and it is important

that that proportion should rise. I am satisfied that managements in most of the yards are now awake to this need, and I hope that it is also realised by the workers.

But the key to the future rests with the shipping industry, because the dominant position it held in the past—and which it still holds, though to a diminishing extent—was founded on the liner trades, and has since been buttressed by the conference system. Today, these foundations are threatened alike by political and economic pressures and also by technical change. Therefore, a cruel dilemma faces our ship owners today. On the one hand, they can fight a defensive action, and if they do nothing more than this the British Merchant Navy will continue year by year to decline relative to the rest of the world, although the process may be slow.

Alternatively, they can accept the inevitability of great changes in the pattern and technique of this industry and seek to take advantage of these changes, because only by so doing can they hope to maintain their present position relative to their foreign neighbours. This we believe they will do, and this we intend to help them to achieve.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 138, Noes 225.

Division No. 91.]	AYES	10.0 p.m.
Ainsley, William	Dempsey, James	Hynd, H. (Accrington)
Albu, Austen	Diamond, John	Hynd, John (Attercliffe)
Allaun, Frank (Salford, E.)	Donnelly, Desmond	Irving, Sydney (Dartford)
Allen, Scholefield (Crewe)	Ede, Rt. Hon. C.	Janner, Sir Barnett
Baird, John	Edwards, Walter (Stepney)	Jay, Rt. Hon. Douglas
Bellenger, Rt. Hon. F. J.	Fernyhough, E.	Jeger, George
Bence, Cyril	Fletcher, Eric	Johnson, Carol (Lewisham, S.)
Bennett, J. (Glasgow, Bridgeton)	Foot, Dingle (Ipswich)	Jones, Dan (Burnley)
Blackburn, F.	Foot, Michael (Ebbw Vale)	Jenes, Elwyn (West Ham, S.)
Boardman, H.	Fraser, Thomas (Hamilton)	Kenyon, Clifford
Bowden, Rt. Hn. H. W.(Leics, S. W.)	Gaitskell, Rt. Hon. Hugh	Key, Rt. Hon. C. W.
Bowen, Roderic (Cardigan)	George, Lady Megan Lloyd (Crmrthn)	King, Dr. Horace
Boyden, James	Grey, Charles	Lawson, George
Braddock, Mrs. E. M.	Griffiths, Rt. Hon. James (Llanelly)	Lee, Miss Jennie (Cannock)
Brockway, A. Fenner	Griffiths, W. (Exchange)	Lever, L, M. (Ardwick)
Broughton, Dr. A. D. D.	Hall, Rt. Hn. Glenvil (Colne Valley)	Lewis, Arthur (West Ham, N.)
Brown, Rt. Hon. George (Belper)	Hamilton, William (West Fife)	Lipton, Marcus
Butler, Herbert (Hackney, C.)	Hannan, William	Mabon, Dr. J. Dickson
Callaghan, James	Hart, Mrs. Judith	MacColl, James
Castle, Mrs. Barbara	Hayman, F. H.	McInnes, James
Chapman, Donald	Henderson, Rt. Hn. Arthur (Rwly Regis)	McKay, John (Wallsend)
Cliffe, Michael	Herbison, Miss Margaret	McLeavy, Frank
Corbet, Mrs. Freda	Holman, Percy	McMaster, Stanley R.
Crosland, Anthony	Holt, Arthur	MacPherson, Malcolm (Stirling)
Davies, Harold (Leek)	Houghton, Douglas	Mallalieu, J.P.W. (Huddersfield, E.)
Deer, George	Hughes, Emrys (S. Ayrshire)	Manuel, A. C.
Delargy, Hugh	Hunter, A E.	Marsh, Richard
Mendelson, J. J.	Reynolds, G. W.	Steele, Thomas
Millan, Bruce	Rhodes, H.	Stewart, Michael (Fulham)
Milne, Edward	Roberts, Goronwy (Caernarvon)	Stonehouse, John
Mitchison, G. R.	Robertson, John (Paisley)	Stones, William
Monslow, Walter	Robinson, Kenneth (St. Pancras, N.)	Strachey, Rt. Hon. John
Morris, John	Rogers, G. H. R. (Kensington, N.)	Strauss, Rt. Hn. G. R. (Vauxhall)
Moyle, Arthur	Ross, William	Thomson, G. M. (Dundee, E.)
Noel-Baker, Francis (Swindon)	Royle, Charles (Salford, West)	Thornton, Ernest
Oliver, G H.	Shinwell, Rt. Hon. E.	Tomney, Frank
Oram, A. E.	Short, Edward	Wainwright, Edwin
Pannell, Charles (Leeds, W.)	Silverman, Julius (Aston)	Warbey, William
Pargiter, G, A.	Silverman, Sydney (Nelson)	Wilkins, W. A.
Parker, John	Skeffington, Arthur	Willey, Frederick
Pavitt, Laurence	Slater, Mrs. Harriet (Stoke, N.)	Williams, W. R. (Openshaw)
Peart, Frederick	Slater, Joseph (Sedgefield	Williams, W. T. (Warrington)
Price, J. T. (Westhoughton)	Small, William	Willis, E. G. (Edinburgh, E.)
Randall, Harry	Smith, Ellis (Stoke, S.)	Woof, Robert
Rankin, John	Snow, Jullan
Redhead, E. C.	Sorensen, R. W.	TELLERS FOR THE AYES:
Reid, William	Soskice, Rt. Hon. Sir Frank	Mr. Ifor Davies and Mr. McCann.
NOES
Agnew, Sir Peter	Finlay, Graeme	Lucas-Tooth, Sir Hugh
Aitken, W. T.	Fisher, Nigel	McAdden, Stephen
Allason, James	Fletcher-Cooke, Charles	MacArthur, Ian
Ashton, Sir Hubert	Fraser, Hn. Hugh (Stafford & Stone)	McLaren, Martin
Atkins, Humphrey	Fraser, Ian (Plymouth, Sutton)	Maclean, Sir Fitzroy (Bute & N. Ayrs.)
Barber, Anthony	Gammans, Lady	Macleod, Rt. Hn. Iain (Enfield, W.)
Barlow, Sir John	Gardner, Edward	Macmillan, Rt. Hn. Harold(Bromley)
Batsford, Brian	Gilmour, Sir John	Macmillan, Maurice (Halifax)
Baxter, Sir Beverley (Southgate)	Glover, Sir Douglas	Macpherson, Niall (Dumfries)
Bell, Ronald	Glyn, Sir Richard (Dorset, N.)	Maddan, Martin
Bennett, F. M. (Torquay)	Goodhew, Victor	Manningham-Buller, Rt. Hn. Sir R.
Berkeley, Humphry	Gower, Raymond	Marples, Rt. Hon. Ernest
Biffen, John	Grant-Ferris, Wg. Cdr. R.	Marshall, Douglas
Birch, Rt. Hon. Nigel	Green, Alan	Marten, Neil
Bishop, F. P.	Gurdon, Harold	Mathew, Robert (Honiton)
Black, Sir Cyril	Hall, John (Wycombe)	Matthews, Gordon (Meriden)
Bossom, Clive	Hamilton, Michael (Wellingborough)	Maxwell-Hyslop, R. J.
Bourne-Arton, A.	Harrison, Col. Sir Harwood (Eye)	Maydon, Lt.-Cmdr. S. L. C.
Boyd-Carpenter, Rt. Hon. J.	Harvey, Sir Arthur Vere (Macclesf'd)	Mills, Stratton
Boyle, Sir Edward	Hay, John	Montgomery, Fergus
Braine, Bernard	Heald, Rt. Hon. Sir Lionel	More, Jasper (Ludlow)
Brewis, John	Hicks Beach, Maj. W.	Morrison, John
Brooke, Rt. Hon. Henry	Hill, Mrs. Eveline (Wythenshawe)	Nugent, Rt. Hon. Sir Richard
Brooman-White, R.	Hill, J. E. B. (S. Norfolk)	Oakshott, Sir Hendrie
Brown, Alan (Tottenham)	Hobson, Sir John	Page, Graham (Crosby)
Browne, Percy (Torrington)	Hocking, Philip N.	Page, John (Harrow, West)
Bryan, Paul	Holland, Philip	Pannell, Norman (Kirkdale)
Buck, Antony	Hope, Rt. Hon. Lord John	Pearson, Frank (Clitheroe)
Bullard, Denys	Hopkins, Alan	Peel, John
Bullus, Wing Commander Eric	Hornby, R. P.	Percival, Ian
Campbell, Sir David (Belfast, S.)	Hornsby-Smith, Rt. Hon. Dame P.	Pickthorn, Sir Kenneth
Campbell, Gordon (Moray & Nairn)	Howard, Hon. G. R. (St. Ives)	Pitman, Sir James
Carr, Compton (Barons Court)	Hughes Hallett, Vice-Admiral John	Pitt, Miss Edith
Carr, Robert (Mitcham)	Hughes-Young, Michael	Pott, Percivall
Channon, H. P. G.	Hulbert, Sir Norman	Powell, Rt. Hon. J. Enoch
Clark, Henry (Antrim, N.)	Hutchison, Michael Clark	Price, David (Eastleigh)
Clark, William (Nottingham, S.)	Iremonger, T. L.	Prior, J. M. L.
Clarke, Brig. Terence(Portsmth, W.)	Irvine, Bryant Godman (Rye)	Prior-Palmer, Brig. Sir Otho
Cleaver, Leonard	Jackson, John	Proudfoot, Wilfred
Collard, Richard	James, David	Pym, Francis
Cooper, A. E.	Jennings, J. C.	Quennell, Miss J. M.
Cordeaux, Lt.-Col. J. K.	Johnson, Dr. Donald (Carlisle)	Ramsden, James
Corfield, F. V.	Johnson, Eric (Blackley)	Rawlinson, Peter
Craddock, Sir Beresford	Jones, Rt. Hn. Aubrey (Hall Green)	Redmayne, Rt, Hon. Martin
Critchley, Julian	Kerans, Cdr. J. S.	Rees, Hugh
Crosthwaite-Eyre, Col. Sir Oliver	Kerby, Capt. Henry	Rees-Davies, W. R.
Curran, Charles	Kerr, Sir Hamilton	Renton, David
Currie, G. B. H.	Kimball, Marcus	Ridley, Hon. Nicholas
Dance, James	Lancaster, Col. C. C.	Ridsdale, Julian
Deedes, W. F.	Langford-Holt, Sir John	Rippon, Geoffrey
de Ferranti, Basil	Leather, E. H. C.	Roberts, Sir Peter (Heeley)
Digby, Simon Wingfield	Leavey, J. A.	Rodgers, John (Sevenoaks)
Doughty, Charles	Leburn, Gilmour	Roots, William
Drayson, G. B.	Legge-Bourke, Sir Harry	Russell, Ronald
du Cann, Edward	Lewis, Kenneth (Rutland)	St. Clair, M.
Eccles, Rt. Hon. Sir David	Litchfield, Capt. John	Scott-Hopkins, James
Eden, John	Lloyd, Rt.Hn. Geoffrey (Sut'nC'dfield)	Shaw, M.
Elliot, Capt. Walter (Carshalton)	Lloyd, Rt. Hon. Selwyn (Wirral)	Smith, Dudley (Br'ntfd & Chiswick)
Elliott, R. W. (Nwcstle-upon-Trent, N.)	Longbottom, Charles	Smithers, Peter
Emery, Peter	Longden, Gilbert	Smyth, Brig. Sir John (Norwood)
Farey-Jones, F. W.	Loveys, Walter H.	Soames, Rt. Hon. Christopher
Farr, John	Lucas, Sir Jocelyn	Spearman, Sir Alexander

Steward, Harold (Stockport, S.)	Tiley, Arthur (Bradford, W.)	Watkinson, Rt. Hon. Harold
Stodart, J. A.	Tilney, John (Wavertree)	Wells, John (Maidstone)
Studholme, Sir Henry	Touche, Rt. Hon. Sir Cordon	Whitelaw, William
Summers, Sir Spencer (Aylesbury)	Turner, Colin	Williams, Dudley (Exeter)
Talbot, John E.	Turton, Rt. Hon. R. H.	Wilson, Geoffrey (Truro)
Taylor, Sir Charles (Eastbourne)	Tweedsmuir, Lady	Wise, A. R.
Taylor, Edwin (Bolton, E.)	van Straubenzee, W. R.	Wolrige-Gordon, Patrick
Taylor, Frank (M'ch'st'r, Moss Side)	Vane, W. M. F.	Wood, Rt. Hon. Richard
Teeling, Sir William	Vaughan-Morgan, Rt. Hon. Sir John	Woollam, John
Thatcher, Mrs. Margaret	Vickers, Miss Joan	Worsley, Marcus
Thomas, Leslie (Canterbury)	Walder, David	Yates, William (The Wrekin)
Thomas, Peter (Conway)	Walker, Peter
Thompson, Richard (Croydon, S.)	Walker-Smith, Rt. Hon. Sir Derek	TELLERS FOR THE NOES:
Thorneycroft, Rt. Hon. Peter	Wall, Patrick	Mr. Edward Wakefield and
		Mr. Chichester-Clark.

Proposed words there added.

Main Question, as amended, put and agreed to.

Resolved, That this House, convinced of the vital importance of the shipping and shipbuilding industries, and noting with concern their continuing serious difficulties, welcomes the steps taken by Her Majesty's Government to assist the efforts of these industries to promote efficiency and improve their competitive position.