§ Order for Second Reading read.
§ 3.57 p.m.
§ The Minister of Transport (Mr. Ernest Marples)
I beg to move, That the Bill be now read a Second Time.
We have two Bills before the House today, and I will try to be as brief as possible in order to give hon. Members on both sides of the House a chance to participate in the debate. I will first explain the purpose of the Bill. It is to give me as Minister specific powers to lend money on favourable terms to United Kingdom shipowners to finance the building of ships in United Kingdom yards. There is a stated limit to the sums which I can lend and also a time limit. The Bill flows from the Shipbuilding Credit Scheme which was announced on the 29th May, 1963, and in fact the scheme has been operating since that date. This legislation gives me specific authority to make loans under that scheme.
Why did the Government decide on this particular scheme? Because of the increasing difficulties our shipbuilders faced. There were two reasons for those difficulties. The first was the enormous growth of shipbuilding capacity throughout the world, and the second was the long depression into which world shipping fell six years ago. At the end of 1958, our shipbuilding industry had on hand two years' orders for merchant ships on which work had not begun. At the beginning of 1963 there was only about six months' work. Orders were very unevenly spread and yards were beginning to close down.
Clearly something had to be done to tide the industry over this crisis, and one method widely canvassed at the time was scrap-and-build. There was a scrap-and-build scheme before the war, but precedents can be good or bad, and I believe that that precedent was definitely bad. One reason why we did not want scrap-and-build was that it involves an outright general subsidy, and this is not desirable. For a long time we in this country have been saying that we deplore the payment of subsidies in some other countries. How could we continue our efforts to stop their 233 subsidies if we ourselves started paying them? Some people argued that the purpose of the scrapping element was either to promote new building or to counter criticism that subsidising building without scrapping would increase the world surplus of tonnage and thereby prolong the shipping depression. But scrapping on a national basis could not have affected the world surplus, at any rate not enough to bring about an increase in orders for new ships. In any case, the British merchant fleet was already reasonably modern. The Government therefore decided to provide a sharp, once-and-for-all stimulus to building by offering long-term loans to owners at Government lending rates.
I now come to the form of the scheme. First, it is restricted to United Kingdom owners. We decided against lending money to foreign owners, because that might well have given a new impulse to the international credit race and in any case foreign owners already enjoy special export credit facilities if they build here. Our purpose was to stimulate orders by United Kingdom owners who are such very important customers for the United Kingdom shipbuilding industry. Secondly, we excluded fishing vessels, because the owners of fishing vessels are eligible for help under other schemes which come within the responsibilities of my right hon. Friend the Minister of Agriculture, Fisheries and Food. Thirdly, we excluded ships of less than 100 gross tons. This was because the demand for small craft has been and still is quite high.
Mr. E. Feruyhough (Jarrow)
In restricting loans to United Kingdom owners, has the right hon. Gentleman also specified that the orders must be dealt with in British shipyards?
§ Mr. Marples
I now turn to the way in which we handled applications for the loans. To get expert advice, we set up the Shipbuilding Credit Advisory Committee, under the chairmanship of Lord Piercy, to advise me as Minister. I am grateful to Lord Piercy and his colleagues for their very skilled and penetrating advice. The Committee advised on the merits of each application for a loan, the credit-worthiness of the applicants and the security available. We for our part had 234 to strike a very careful balance between the promotional requirements of the scheme and the need to protect public money.
The promotional value of the scheme has been oar ability to offer loans of up to 80 per cent. for 10 years at Government lending rates of interest. On the other side, the Advisory Committee took into account the general reputation of the prospective borrower, his managerial efficiency, his past record of earnings and the likelihood of similar future standards of performance. The basic security which we have asked for has been a mortgage on the ship to be built and in some cases an additional security, usually a lien on another ship, a guarantee from a parent company, or a promise of employment for the ship, such as a long charter.
We also made sure in each case that the ship would be built straight away. The reason for this was that our aim has been to get work for the shipyards now. Apart from the new Cunarder, we were not interested in projects to begin in 1965 or later. The problem was immediate and required an immediate solution. It is particularly appropriate that one of the first ships to be built under the scheme is being launched today in Sunderland. I shall expect tributes of gratitude from my hon. Friend this Member for Sunderland, South (Mr. P. Williams) in due course.
All the provisions which I have described are covered by Clause 1. Clause 2 deals with finance.
§ Dr. J. Dickson Mabon (Greenock)
The Minister said—and it is important that this should be explained on Second Reading—that he was not interested in what the position would be in 1965 and that that was the reason for the limitation. Would he explain his prognosis of the industry in 1965 and 1966 which enabled him to say that?
§ Mr. Marples
I am coming to that later. What I tried to convey was that the shipbuilding industry was facing a crisis of a sudden drop of orders and of unemployment in the shipbuilding areas. The first thing to do was to get immediate orders projected into the shipbuilding industry so that ships could be built to provide employment and the yards made busy and then there could 235 be a survey of what remedial measures could be taken to meet the present fierce competition. The first thing to be done was to get orders. I will later deal with the position in 1965. The purpose of the Bill was to provide immediate and not long-term relief for the shipyards. That is the point I was trying to make.
Clause 2 covers the financial arrangements. The money for the loans will come from the Consolidated Fund. This is normal. Up to now we have used the provisional authority of the Appropriation Act. This arrangement will enable me to remunerate the Ship Mortgage Finance Company which provided valuable and expert service to Lord Piercy's Advisory Committee. This arrangement also gave me authority to enter into commitments with borrowers, though no loans will actually be made under its authority. All the loans will be made under the authority of the Bill when it becomes an Act.
I should now like to refer to the progress of the scheme. The shipping and shipbuilding industries have welcomed it. Last May, I said that initially £30 million would be made available, but applications soon exceeded that amount and in July the amount was increased to £60 million. In October, I announced the loan for the new Cunarder and an increase in the money available to £75 million. Applications have been received for all this. There is still some work to do on the later applications, but very shortly the last loan offer will have been made and accepted. This will provide the shipbuilding industry with about 850,000 gross tons of new building. So much for the volume of orders.
I want now to spend a short time discussing the scheme's effect on the shipping industry and to discuss the types of tonnage ordered. This is most interesting. I cannot yet give absolutely accurate figures of the result of the scheme, but, apart from the new Cunarder, which is a special case, the most interesting feature of the tonnage ordered is the predominance of bulk carriers. These amount to more than 500,000 gross tons. Tankers account for another 150,000 gross tons and cargo liners, which are rather more complex and expensive, for nearly 120,000 gross 236 tons. The rest is made up of many types—small coastal and short sea vessels, tugs, dredgers and so on—adding up to about 22,000 tons.
Although the scheme was intended primarily to help the shipbuilding industry—giving loans to ship owners was merely a method of helping ship builders; in my view, the best method—it also helped shipowners to maintain the modernisation of their fleets. Successful applicants have been free to place their orders with the builders of their choice, which is important, for it is no part of my job to tell shipowners where to place their orders. Some builders have done much better than others, which is only to be expected because they are more modernised and have better capacity, better productivity and so on. However, it is satisfactory that the share of the total tonnage under the scheme gained by the principal shipbuilding areas is roughly in proportion to their share of the industry's total capacity.
I should now like to refer to the scheme's effect and likely effect on the shipyards over the next few years. In June, 1963, that is, before any work had started on credit scheme orders, about 1 million gross tons of merchant ships were under construction and about 53,000people were employed. If the rate of ordering of recent years had continued, it seemed more than likely that employment on merchant work would fall to about 44,000 by March, 1964, and to below 30,000 a year later. That would have been a tremendous drop in the number employed.
We think that by March this year work will have started on more than three-quarters of the tonnage financed under the scheme and something approaching 1,500,000 tons of merchant shipping altogether will then be under construction in our yards. This level ought at least to be maintained for the remainder of this year and into next and employment on new building should rise quite rapidly as well, I would think to around 70,000 by the spring, and should be at least maintained at that level for the following 12 months. I want to be fair about this and not claim the whole credit. Since the credit scheme was introduced, there has been a slight improvement in general trading 237 conditions for shipowners all over the world. The improvement has been with us for too short a time to be sure that it will continue, but there are already signs that it is leading to some revival in the rate of ordering of new ships, and I have made some allowance for this in the estimates which I have just given.
§ Mr. Paul Williams (Sunderland, South)
I should like to check my right hon. Friend's figures. Did he say that 53,000 people were employed in the industry before the scheme and that by March 1964, as a consequence of the scheme, the number will have risen to 70,000?
§ Mr. Marples
Yes, those two figures are correct. It would have gone down to much below 53,000 if we had not introduced the scheme, but now it should be 70,000 by the spring, which is very much more than before the scheme was introduced. I cannot predict how things will go after about the spring of 1965—this is the point made by the hon. Member for Greenock (Dr. Dickson Mabon). That is as far as we can get with firm prospects at the moment. It all depends on the prospects as the shipowners see them from now on, because the prosperity of our shipbuilding industry is inevitably tied up with our shipowning industry.
There is one thing of which I am certain. If it had not been for the shipbuilding credit scheme, the fall in shipyard employment would have continued much further. As it is, the tide has been turned and the industry has been given a breathing space. Some people have wondered why no more loans are to be offered to shipowners. I think that they have misunderstood the purpose of the whole scheme. It has been so successful that, together with the improvement I have mentioned in what I might call the natural rate of ordering, the level of activity in our shipyards will soon be at a level greater than the industry may be able to sustain in the long term.
It is no good for the nation, or for the shipbuilding industry itself, to prolong artifically an excess of capacity by continuing a scheme like this for too long. One of the biggest problems the industry faces is to reshape itself so that its production units can keep their order 238 books reasonably full. Only then will there be real security of employment, and, quite frankly, I believe that that is one of the keys to the future of this industry.
§ Mr. Bruce Millan (Glasgow, Craigton)
Can the right hon. Gentleman be a little more specific about that and say what he would aim at in terms of annual tonnage for the industry?
§ Mr. Marples
I am not going to be more specific at this stage, because I cannot predict further than the spring of 1965. All I can say is that we do not want an industry which has a tremendous volume of orders one year and none the next. We must have continuity, and this industry will have to be reshaped so that all its production units can keep their order books reasonably full. The purpose of the scheme was to provide a breathing space for the industry to take time to perform that very task. That is a job for the industry. It is not a job for me. If it asks for my assistance, I shall do what I can to help, but it is a private enterprise industry, and it is up to the industry to see what it can do.
Finally, I have a word or two to say about the future of the industry. I would be misleading the House if I gave the impression that the Government thought that the considerable difficulties which the shipbuilding industry has had to face in the past two years, and which it is facing now, are over. They are not. A great deal will depend on how the improvement in shipping prospects continues. It is clear that non-credit scheme orders from United Kingdom owners came in at a better rate in the year as a whole than at any time since the depression set in. The improvement began in the third quarter of the year, and was more marked in the last quarter. Export orders were higher in 1963 than for years past, and I think that the industry should be congratulated on that. There were very valuable contracts among them.
Competition between yards in this country, and between home and overseas yards as well, is likely to remain very fierce. For large tankers the pace has undoubtedly been set by Japan. She has emerged as one of the most powerful shipbuilding forces in the world for 239 tankers, and even Swedish builders, who are formidable competitors any way, are having to cut prices to the bone to compete with Japan.
In those circumstances, our builders are likely to have to go on quoting very keen prices, and this means that they must do everything they can to cut their costs. I do not for a moment suppose that there is any easy solution or any short cut. I think that the builders must examine all the elements of the cost of a ship and reduce them all as far as they possibly can. This may involve a radical reshaping and concentration of the yards themselves, and, just as important—or perhaps even more important—of the shops where the engines are built. It means finding ways of cutting costs of the materials and equipment which go to make ships. This will not be easy, for these costs are largely outside the builder's direct control, but all the same, having studied and lived with this problem for more than four years, I believe that there are possibilities. This may involve the owners being readier to accept the builders' proposals than they have been in the past, and there may be other ways in which owners and builders can collaborate in this. We have the Shipping Advisory Panel with a lot of distinguished shipowners on it, and I hope to get advice and guidance from the panel as to what assistance we in the Ministry can give to bring about the desired state of affairs.
I come next to the labour situation. This is a subject with which employers and unions have been wrestling for over two years in a working party under a Ministry of Labour chairman. I make no secret of the fact that progress has been disappointing and distressingly slow. I hope that with the recent settlement on pay and hours it will be possible for both sides to get somewhere. I am sure that it is as much in the interests of the men themselves as of the management that this should happen. Indeed, it must happen if this industry is to be healthy and vigorous in the years to come.
With this competition from Japan, from Sweden, from Germany and from Holland, we cannot afford any inefficiency, and what is frustrating and distressing is that when one goes round 240 the shipyards one sees men who individually are highly skilled craftsmen, but yet, for some reason or other, we cannot get this harmonious relationship whereby we can get flexibility of labour. I beg the men and the employers to get together on this point if they wish to face and beat the competition from abroad.
But all this is for the industry itself to tackle. It is not for the Government to tell the industry how to run its business. If the industry asks for our assistance, we shall do what we can to help. What we have done is to secure a breathing space at a time when fortunes had been brought dangerously low. This has enabled the industry itself to look up from its immediate preoccupation with survival and get employment going—in fact to increase it—and get ready for the future. I am sure that the shipbuilders recognise this, and that being so the shipbuilding credit scheme has served its purpose.
I know that many hon. Members wish to take part in the debate, and I have deliberately kept my contribution short because we have a short debate. I should like the shipbuilding industry, both employers and employees, to know that in this Bill the Government made a sincere effort, which, as it happened, was successful, although doubts were expressed when I made the first announcement of it in this House. I hope that the industry will use this breathing space to get down to the question of the right size and shape of the industry, and to the question of improving its efficiency. If it does that, we in the Government will play our part.
Many of the Bills which I introduce are controversial. This is one of the shortest and simplest of the Bills that I have brought in, and I think that it is one that will not arouse a great deal of controversy.
§ Mr. Marples
I am sorry, but hope springs eternal. I always try to be non-controversial, but from time to time things happen which do not allow me to be that. I was hoping that all hon. Members would vote for the Bill; that they would think it was a good scheme, and would give me advice and guidance, 241 and at the same time perhaps give some to the shipbuilding industry. With those few words, I hope that the House will give the Bill a Second Reading.
§ 4.18 p.m.
§ Mr. Frederick Willey (Sunderland, North)
I am sure that on reflection the right hon. Gentleman will be bitterly disappointed with his speech. He has given us a few platitudes. He said that he had lived with this problem for four years. That being so, and knowing how desperately important this is, we had expected something constructive.
Having said that, I at once take advantage of the rare opportunity which I am afforded on this occasion of welcoming the Bill; of welcoming something that the right hon. Gentleman has done. In fact, I have every reason to do that, because when we last discussed shipbuilding in 1962 I suggested it. In that debate I said, first, that the yards had a year's work ahead and that within that period something would have to be done. Secondly, I called attention to the low rate of orders from British owners and said that it was about half the normal replacement rate. Thirdly, I said that I was convinced that the position was not unrelated to credits. Fourthly, I called attention to the advice of Lord Piercy and said that he had pointed out that the competition from foreign yards did not seem to be due to prices or delivery dates but to the financial facilities they provided.
Fifthly, I then welcomed the action which the Government had taken to persuade foreign owners to put in orders to British yards, by giving them facilities comparable with those which they enjoyed abroad, but I said that this aggravated the position of the British owner. Sixthly, I said that this was important to British shipyards, because 80 per cent. of the orders coming to them came from British owners. Seventhly, I said that in this situation British owners would refrain from putting in orders to British yards, and I concluded by pointing out that in the very sensitive and difficult twelve months that lay ahead of us British shipowners might continue to hold back, at a time when, in the national interest, it was necessary to encourage the placing of more orders.
242 The right hon. Gentleman then rejected all those propositions, and that argument. Now, very late in the day, he has taken action. When I say "late in the day", he should not smile, because the shipbuilding districts went through a desperate winter in 1962–63. We finished 1962 with completions standing at a figure 350,000 tons lower than the year before. We have not got the figure for 1963, but we believe that it may be just below 1 million tons. In other words, the level of output of British shipyards has been drastically changed in the past eighteen months, through the inaction of the right hon. Gentleman. Action could have been taken eighteen months ago when we called for it.
Nevertheless, in this changed situation we welcome the aid that is afforded. I am sure that no one will make any point about this being retrospective legislation. Once the announcement was made it had to be implemented, or the position would have deteriorated, as the right hon. Gentleman said. But we expected far more from him today, because as he has said, this Bill offers only a breathing space. We feel that the right hon. Gentleman should have been more encouraging than merely to say that this is a once-for-all provision, without any reference to what is to be done in the breathing space.
The right hon. Gentleman said that this Bill will provide temporary relief. I agree that it will provide sufficient relief to see the Government over the General Election, whether it comes early or late in the year, but it will do little more. He said that it will provide temporary relief to a hard-pressed industry, but his reference to a "hard pressed industry" is something of an under-statement. Since 1951, when his Government took office, there has been a catastrophic change in two of Britain's greatest industries—shipping and shipbuilding. When the Government took office the British mercantile fleet represented 20 per cent. of the world's fleet; it now represents only 15 per cent. The position has been entirely changed as a result of the development of flags of convenience, flag discrimination and all the other discriminatory practices.
The Minister has said that shipbuilding depends on shipping. We have appealed to him to produce enabling 243 legislation, not for the purpose of retaliation but to negotiate on a level with those against whose actions we are protesting. He has said nothing about this. I acknowledge the action that the Minister has taken, but I also recognise that the shipping industry has called upon him to take further and firmer action. He has said nothing at all about that, and until he does so there will be disquiet in the industry.
I now turn to the shipbuilding industry. When his Government took office we were the greatest shipbuilding country in the world. We have lost that position overwhelmingly to Japan. When his Government took office British yards provided 37 per cent. of the world's output. In 1962, the figure dropped to 13 per cent., and in the past year it will have undoubtedly dropped lower still. It dropped in 1962—and this is the important thing—when there was no crisis in world shipbuilding. World shipbuilding output increased in that year by 2½ million tons. That was when he rejected our appeal to provide credit facilities which could have tided us over that difficult year. I believe that he has deliberately reduced the level of output of British shipbuilding in the past eighteen months.
If we remember the situation that existed before this Government took office we must regard the situation which obtained until recently as almost inconceivable—a situation in which the United Kingdom became the largest importer of new shipping in the world. Fortunately, that situation does not obtain today, but we are still fourth among importers of new shipping. Over 300,000 tons of our shipping is being constructed abroad for British owners and we now have 64,000 fewer workers in the industry than when the Conservatives came into office in 1951. In all our shipbuilding areas there is heavy unemployment, and the hon. Member for Sunderland, South (Mr. P. Williams) and I know that our town is not even recognised as a growth area.
In these circumstances we naturally accept the Bill, and what has been done in anticipation of its provisions, as a breathing space, but we want to know what will be done during the breathing space. All that the right hon. Gentle- 244 man has mentioned is contraction. If he mentions contraction he must be more specific. He cannot go on talking continually about contraction and then expect a positive response from the industry.
This is particularly important, for two reasons. During the summer Mr. Westphal, the chairman of the Association of German Shipyards, said that discussions were proceeding successfully for a scheme for the reduction of shipbuilding capacity. He said that these discussions had proceeded well in Europe, but that their success would depend upon the co-operation or non-co-operation of the Japanese. The right hon. Gentleman said nothing about this. I should like to know what is happening. If there are any cartel discussions about the reduction of an industry such as British shipbuilding we want to know about it.
We know that the Minister's Department produced a scheme for the contraction of British shipbuilding, and we also know that it did not receive Cabinet approval. I believe that it was a two-phased scheme. This is relevant in present circumstances, because the second phase was to discourage orders being given to inefficient yards and, after a period, to close those yards. Only after that was consideration to be given to the question of aid to efficient yards.
§ Mr. Marples
The suggestion that a scheme was proposed by my Department and was rejected by the Cabinet is a complete figment of the hon. Member's imagination.
§ Mr. Willey
I will give the right hon. Gentleman the source of my information after the debate. However, I am partly obliged to him for saying this. I would like him to tell us—if he contradicts what I say—what was proposed by his Department.Is it a fact, then, that it has proposed nothing at all? I was being more generous to his Department. I understood that it had prepared a plan, but that it had not obtained Cabinet approval. In a sense, it is more disturbing if we have got no plan than if we have got a specific plan, because time after time the right hon. Gentleman has taken the easy course by saying that we should have more flexibility in the industry. He asks us 245 to consider what has been accomplished in Sweden. There is a big difference between Sweden and this country. In Sweden the worker has security. If we want flexibility in British shipbuilding we must create an established labour force, and for that we need a plan.
It may be that this factor is exaggerated, but if we are to obtain the necessary response it is the right hon. Gentleman's responsibility to see that a fairly clear idea of the future of British shipbuilding is presented, and that we all know what its capacity is envisaged to be. Once we have that information we can obtain security for the workers, and then the greater flexibility which he wants.
It is also necessary to do something about providing alternative work. I have already referred to my constituency. We have had heavy unemployment in our shipyards, but in the Government White Paper on the North-East it is made clear that Sunderland is not in a growth area. This does not provide the prospect of alternative work, and if there is contraction we must have this in order to create this sense of security.
There is the question of bringing alternative work into the yards. This is not only a question of providing alternative employment. It is also a question of costs. Today I am in a welcoming mood. I pay credit to the Minister of Public Building and Works for what he has done. But it is minimal. It is a beginning. A few weeks ago the right hon. Gentleman said that he had set up three inquiry centres and that there had been 30 inquiries from shipbuilders. As one might expect, a shipbuilder in the North-East has set the pace. A subsidiary company has been set up in co-operation with the builders. This is only a start and more will have to be done.
The Japanese are giving a lead. They are not complaining of a lack of orders. They are using their plant for dual purposes, for the construction of machinery, bridges and other things. This is a factor which has to be brought into our yards if we are deliberately to set out, as is conceded by everyone, to try to bring down building costs. These are the sort of things about which I expected to hear from the Minister. When he made a 246 statement in May of last year, I mentioned two things. One was the type of ships—the Minister has referred to that—and the nature of the orders put in, and the other was the general reorganisation of construction.
Something is being done about the type of the ships. We talked about that years ago. We have the building of standard ships and batch production, and credit is due to firms like Swan and Hunter for what they have done. But this is something which should be pursued more vigorously. Reorganisation of construction is cardinal. Sir William Lithgow, who has set a good example himself, said that success in shipbuilding lies in management, and that is very true. We need a better lead for management planning particularly at the most difficult stage of fitting out. The Patton Report, to which the right hon. Gentleman did not refer, said that there was little experience of effective outfit planning in this country. I give credit to what the B.S.R.A. is doing at Fairfields. But more ought to be done. The position regarding shipbuilding is so difficult and desperate that it is not good enough to say that something is being done. It is a question of whether we are doing something with sufficient vigour and energy.
It is not only a question of the organisation of yards and management planning—the right hon. Gentleman touched on this—but also it is a question of looking forward and thinking about the operational costs of a ship. Something is being done about that. But it is not enough, and it is being done very late. We are far behind countries like Japan. More research is required into the efficiency of loading and unloading and getting a shorter turn-round time, and into the carrying capacity of ships. I mentioned operational costs. The Japanese have set the pace. We have heard their claims about the automatic freighter. If the right hon. Gentleman has been faced with this problem for four years it is no use now shrugging off responsibility. It should be his purpose to promote and encourage the necessary research and development. It was alleged the other day that a British builder using British components would add 7 per cent. to the cost of a ship. We must pay more attention to the com- 247 ponents and design and to their efficiency and cost.
The right hon. Gentleman mentioned the engine sector, the Achilles heel of British shipbuilding production. But he said little about it. The other day the Minister for Science suggested that we ought to have a development contract to speed up the work on an all-British high-powered marine diesel. The right hon. Gentleman did not mention that. Did not he know about it? Is there no co-operation and co-ordination? In debates over the last ten years we have discussed development contracts of this nature. We ought not to be dependent on the Swiss and the Danes. That is something about which the Government cannot abrogate responsibility. The right hon. Gentleman has travelled abroad and ought to appreciate that in countries like Japan, France, West Germany and Sweden there is public interest in a great national industry.
The right hon. Gentleman has not referred to nuclear propulsion. This is still in an unholy muddle. The Minister loves undertaking personal responsibility, and so I invite him to take personal responsibility for seeing that this matter is put right. The Atomic Energy Authority and the industry are not working smoothly together. It is not a case of being out of sight of the development made by Russia and America. We now know that we are a long way behind West Germany. The West Germans will have their nuclear propelled shipping operating by 1967 at the latest. It is not only a question of Russia, the United States, Germany and Japan, but also other European countries.
So far as one can see Europe is going nuclear in respect of shipbuilding. There are developments in Norway, Italy, Denmark, Sweden, France and the Netherlands. Yet we are still held back because of indecision and an inability to place responsibility anywhere. That is why I invite the right hon. Gentleman to accept responsibility. Let us have someone who is responsible. In shipbuilding and shipping it has always been true that the means of propulsion are all-important. If there is a chance of shipping going nuclear, as it is obvious 248 that many of our competing shipbuilding countries believe, we must always be in the van in order to retain our place. These are things about which we expected to hear from the right hon. Gentleman. They are the things which determine the future of the industry and the position it will occupy after the General Election.
The right hon. Gentleman has talked about credit. This immediately accentuates the importance of price. I have been talking about matters which affect the efficiency of the industry and therefore affect price. There is one thing that affects price more than anything else and that is steel. It is the most expensive material item in shipbuilding. My hon. Friend the Member for Edmonton (Mr. Albu) raised the question of steel in our last debate. Prejudicial practices regarding the steel industry affect the shipbuilding industry, and there is reference to that in the Patton Report. I should like to know how effectively these things have been straightened out.
More important is the price of steel. Mr. Allan J. Marr, president of the Shipbuilding Conference and the head of one of the yards in my constituency, said that some foreign countries are able to buy steel at prices substantially less than those in Britain and the difference has been as much as £7 a ton. The right hon. Gentleman spoke about Sweden. We know that the Swedes are getting cheaper steel from the Poles. This represents a dramatic change in the competitive position of British shipbuilding. A great advantage which British shipbuilders have always had was the benefit of cheaper steel than could be obtained by foreign yards with whom they were competing. There was a time when the price differential was as much as £20 in our favour against the Swedish shipyards.
We are approaching a General Election and the right hon. Gentleman may as well face the fact that this is a political question. The British shipbuilding industry has been the victim of the denationalisation of the steel industry. As the Minister will know, I have said this repeatedly in my constituency and it has been raised during election after election. This is a fact. The Government denationalised the 249 steel industry and the increasing price of steel was an inevitable consequence. What was once the great advantage of the British shipbuilders has been translated into a disadvantage. Our steel industry is in production units smaller than in any competing steel industry in the world. It has been broken up and this is reflected in the price. We have had this unfortunate period of redundancy in the steel industry where the smallest unit carrying the heaviest redundancy has determined the price of steel. Shipyards have suffered. One of the most important factors when we are thinking of the costs of ships built in British shipyards has been the rapid increase in the price of steel.
If we turn to the industry and what can be done in this breathing space, we have had nothing from the Minister in either fields. He has complained that we are competing with subsidised production but has not mentioned anything that he has done to ensure that we compete on level terms. He said that because there is unequal competition he cannot take any action about "scrap and build" because it would mean subsidy here.
What about Soviet orders? Massive orders have been placed in Japan by the Soviets. We have had the satellite countries—Roumania, Czechoslovakia, East Germany and Bulgaria—placing orders. But none of them seems to be attracted to this country. Perhaps the Parliamentary Secretary will deal with this. What the Minister cannot do is to ride two horses—say that he cannot take any action which might involve a subsidy because foreign shipbuilders are subsidised and at the same time take no action about subsidisation by foreign countries.
With regard to "scrap and build", the situation facing us is depressing. There have been a long series of discussions between the Minister and interested parties. The Minister has discussed the subject with shipping and shipbuilding interests and with the Trades Union Congress. The Trades Union Congress suggested that we should stabilise shipping at 20 million tons and accept a 5 per cent. replacement rate and ensure this by extended credits. If the Minister rejects these proposals, it is for him to produce others. I agree with him that 250 the British mercantile fleet is a modern one, but 2¼ million tons are more than twenty years of age. There is the ridiculous position of selling the old tonnage abroad and further depressing freight rates.
We know that the French will be introducing a "scrap and build" scheme this year. If the right hon. Gentleman rejects all he proposals made to him, it is up to him to make his own suggestions. We cannot afford to say very late in the day after shipbuilding has been very seriously run down that we have given it a breathing space. What we want to know is what lead the Government are giving during this relatively short space of time which will in any case be interrupted by a General Election. The shipbuilders are suggesting that the scheme has been cut off prematurely and should have been continued. The right hon. Gentleman has aggravated the position by shrugging his shoulders and saying "It is a once-and-for-all. I have no further responsibility."
It is in this sense that the Minister's speech is disappointing. It will be a serious matter for shipbuilding if after the General Election the right hon. Gentleman still occupies his present office. I hope that for both these great industries—shipping and shipbuilding—the General Election will ensure one thing if notaing else, that the right hon. Gentleman, who has failed to face up to his responsibilities, will no longer be responsible for them.
§ 4.44 p.m.
§ Colonel Sir Leonard Ropner (Barkston Ash)
It seems to me that if the Minister of Transport had dealt even shortly with all the subjects which the hon. Member for Sunderland, North (Mr. Willey) asked him to deal, we should have been here all night, unless, as I think highly probable, Mr. Speaker had ruled my right hon. Friend out of order
I ought to proclaim my personal interest in the Bill. I am not a shipbuilder but I am a shipowner, and in that capacity I have made use of the shipbuilding credit scheme, the main purpose of which, as my right hon. Friend has said, was to bring more employment to the shipbuilding industry.
In the early weeks of last year the outlook in many of our shipyards was 251 pretty bleak, and the consequence of high unemployment in the yards was, of course, made all the more serious because so many of them were situated in districts where the level of unemployment was much in excess of the national average when the credit scheme was introduced.
No doubt the Minister of Transport had in mind also the fact that our shipbuilders are open to the direct competition of foreign builders who, directly or indirectly, in one form or another, are in many cases subsidised by their Governments. Certainly the scheme has stimulated the placing of orders for new ships in the United Kingdom by British owners, although I must add that it is impossible to determine the extent to which owners have been encouraged to place orders because of the credit scheme or, alternatively, by the improvement of the level of freight rates which went on over the last three quarters of last year. However, I think it will be found when the figures become available that in terms of tonnage about 40 per cent. of the 1963 orders are ships making use of the credit scheme. But, of course, it does not follow that if an owner used the credit scheme he would not have ordered a ship if no credit scheme had been available to him. It is certainly the case that without this stimulus of participation in the credit scheme foreign shipowners have recently placed many orders, particularly for those classes of ships which I think the Minister of Transport mentioned—namely, large tankers and large bulk carriers, dry cargo vessels.
Some new orders from foreign owners have been secured by British builders in the face of very keen competition from foreign builders, who, as the hon. Member for Sunderland, North has reminded us, have had the advantage of being able to obtain cheaper steel supplies. This fact should be noted in South Wales today. The price of steel is the most important factor in the price of a ship, and a saving of only £5 on each ton of steel which goes into the construction of a 70,000 ton deadweight tanker represents a reduction in the cost of construction of £100,000. An order for a ship can be won or lost by a British ship- 252 builder for a very much smaller sum than £100,000.
It seems too absurd for words, but it is nevertheless true, that until the credit scheme became operative a foreign shipowner who placed an order for a ship with a British builder was able to obtain from the British Government through export credit guarantees more advantageous credit facilities than a British owner. The Financial Memorandum of the Bill says:…loans will not impose any eventual burden on the Exchequer.Why then, I ask the Minister, bring this credit scheme to an end in May of this year? I understand that the whole permitted total of £75 million has already been pledged or very nearly so. Therefore, no more loans can be authorised unless the sum available is increased. So the Government credit for British owners to build ships in British yards has dried up. Once again. British owners will be placed in a disadvantageous position by the Minister of Transport because for British owners the shipbuilding credit scheme will have gone but for foreign owners credit facilities through export credit guarantees will remain. To me, and. I would have thought, to most people, this seems completely potty and altogether wrong. Why should foreign owners be assisted to a greater extent than British owners by our Government?
If the Minister of Transport is really going to allow this, I should like the Parliamentary Secretary to tell us why it is to be allowed. In any case, is it not unwise to terminate the shipbuilding credit scheme before the Government, the shipowners and the shipbuilders have really learnt its potential in helping owners and builders? We really do not know whether that potential has been exhausted. I should be grateful if the Parliamentary Secretary would give me an answer to that question.
I conclude by referring very briefly to the future prospects of the shipping and shipbuilding industries. As has already been said, the shipbuilding capacity of the world is far in excess of normal demands, and sooner or later there must be contraction. No doubt British shipbuilders will not wholly escape from this painful process. British shipowners are the best customers of 253 our shipbuilders, but of world tonnage the proportion flying the Red Ensign grows ever less. Trade reservation in favour of their own ships, other forms of flag discrimination, subsidies and the use of flags of convenience—all these practices are pursued by foreign Governments and foreign shipowners, and they are spreading and growing in intensity. There are sections of the British Merchant Navy for which the outlook is pretty dismal, and it seems that there will be ever-lessening orders for the shipbuilders after the period covered by the provisions of the Bill, as the hon. Member for Sunderland, North said.
The scheme has certainly been of assistance, but it will not solve the long-term problem of either shipowners or shipbuilders. I reinforce what the hon. Member for Sunderland, North said by expressing the hope that quite soon the Minister of Transport will give further thought to shipping and will let the House know what are his proposals for dealing with a problem which is already urgent and which may be far more urgent only two or three years ahead.
§ 4.56 p.m.
§ Dr. J. Dickson Mabon (Greenock)
I agree with practically everything said by the hon. and gallant Member for Barkston Ash (Sir L. Ropner), but I disagree with his last remarks because I do not feel that the present Minister of Transport is the man to give us a new vision of the shipbuilding industry of tomorrow. He demonstrated that in the debate today.
§ Dr. Mabon
Shipbuilding and shipping—since they go hand in hand, if that is the right metaphor. There have been so many mixed metaphors today that I am afraid of using any.
For four years the Minister has lived with the problem and has produced no solution. The Bill is his latest palliative, and I agree with my hon. Friend the Member for Sunderland. North (Mr. Willey) that it is no long-term solution to the troubles of the shipbuilding industry.
But let us start at the beginning with shipping. It is my firm belief, which has been expressed by several of my 254 hon. Friends and on occasions by hon. Members opposite, that the Government must make up their mind on the position which they will adopt in the international field in relation to the protection of British shipping. Until now the Government have taken a classical laissez faireposition, which is that we are a great shipping nation and that we disdain any restrictive or protective practices whatever and therefore we discourage these new countries from unfairly adopting uneconomic, nationalistic, Chauvinistic techniques or subterfuges, which interfere with the natural flow of commerce.
This was a valid position to adopt in Edwardian days before the First World War, and perhaps—although I doubt it—even in the years between the wars, but it is certainly not a position for us to take in the mid-1950s and 1960s. I am not for a moment suggesting that we should recklessly embark on a legislative programme to arm ourselves with powers which we should then proceed to use against other nations. I accept that in the present state of commerce in the world that would perhaps hurt us more than it would help us, but it would not have been wrong to put Bills before the House to give us reserve retaliatory powers and the capability to hit back at those countries which have hit us hard over preceding years. This is the sadness of it—that in a Bill such as this, which is, after all, an attempt to help the shipbuilding industry, no effort has been made to get at the root of the problem, which is to help the development of our shipping industry. But I see that you are showing a little concern about this argument, Mr. Deputy-Speaker.
§ Mr. Deputy-Speaker (Sir Robert Grimston)
The purpose of the Bill is to make loans for the construction and alteration of ships. I have allowed the debate to go fairly wide and to include a number of subjects, but I think that to discuss legislation against the shipping practices of other countries is going too wide.
§ Dr. Mabon
I thank you for allowing me to go so far. At least I have made my point and have backed up the comments of the hon. and gallant Member for Barkston Ash. If we had had such legislation perhaps our position in inter- 255 national conferences would have been stronger and we should have reached the settlements which we wanted. We have seen the position growing very much worse in past months, and no doubt this subject will be raised once again in the conversations which the Prime Minister will have with the President of the United States next month.
I pass quickly to the shipbuilding industry itself. I agree very much with what my hon. Friend the Member for Sunderland, North said about the price of steel and the price which the shipbuilding industry has had to pay for the denationalisation of steel. It will be interesting to read what the Restrictive Trade Practices Court, about which we heard earlier from the Secretary of State for Industry and Trade, will say about the practice of the private steel industry of calling its maximum prices in fact its minimum prices to shipbuilders. It will be interesting to compare our prices when that court examines them in relation to Common Market prices, because our shipbuilding industry, both managers and men, has to face a very difficult problem of increasing competition from Common Market countries. These are matters which ought to engage the Minister's attention, and if we are to concern ourselves with trying to solve the problems of the shipbuilding industry he ought to have said this afternoon that he is concerned about the price of steel and about the situation in the steel industry and that he is most anxious to help the shipbuilding industry to meet its difficulties in this matter.
I join my hon. Friend the Member for Sunderland, North in lamenting the Minister's phrase that the Bill represents a once-for-all, sharp, short assistance to the shipbuilding industry. I regret that very much. It is a very sad situation that after four years it emerges that this is the Minister's only solution, and that when we press him on the subject of what happens after the spring of 1965, he does not know what the situation will be in the shipbuilding industry then, nor, for that matter, can he outline what he hopes will be the position later in 1965.
He keeps repeating pessimistic phrases and is for ever depressing the shipbuilders, whether managers or men, 256 with his phrases about the industry not being the right size or shape. If a man of his intelligence knows that the industry is not of the right size, why does he not tell the industry what size it ought to be? But he never does. He is for ever the pessimistic unfair critic of the industry, always lamenting its faults, sometimes, in fact, to the detriment of its interests by telling the world about it, as when he sent an accountant round the Western European countries to tell us how bad were the economics of our shipbuilding industry. Perhaps his pessimism is unintentional, but it appears that he is trying to run down the industry. He told us again that the industry is getting £75 million and that after this breathing space rigorous competition will quickly put it in its place and bring it down to the right size and shape. What is the right size and shape? I know that the Minister has his limitations, although he does not think so, but he ought at least to consult the Government's advisers in the National Economic Development Council, who assess the position of our different industries in relation to the plans for the development of the country—the famous 4 per cent. national increase at which the Prime Minister tells us the Government are aiming after 12 years of having failed to secure the target in any single year.
Why not ask the National Economic Development Council? Why does not the Minister tell the Council, "I want a special study of the shipbuilding industry. I want to know what is the place of the United Kingdom shipbuilding industry in the 1960s and 1970s so that I know what kind of advice I can give to the Cabinet in relation to its help for this industry through the difficult years ahead. Will it be a complete write-off or will it be an industry one-third of the present size? Or can it remain substantially as it is? I can then tell the Cabinet the answer". The Secretary of State for Industry and Trade will then be able better to look after all the shipbuilding areas which may be affected adversely and declare them growth areas. My hon. Friend the Member for Sunderland, North pointed out that in the North-East plan Sunderland is not a growth area. The same situation applies to my constituency. Areas in which shipbuilding ceases and which, through the 257 Ministerial neglect, are in difficulties, will see unemployment but are yet not in the White Paper plan.
If the Minister can do nothing to help us in the face of events today, at least he might tell us this and give, us a chance—those who represent these constituencies—to try to get consideration from other Government Departments in relation to the training or retraining of the many skilled men who will be put out of work. But the Minister is dilly-dallying. He is making no attempt to get to the hard core of the problem. He is not telling us what position the shipbuilding industry should take in the life of the country. When he tells us that the labour forcehas fallen and has been falling consistently for many years, he does so as if the revelation suddenly came upon him in the year 1961 with a crisis in the shipbuilding industry.
In fact, the fall in orders has been going on since 1956. Indeed, in some places it started even before that. The modernisation of many yards was delayed to keep pace with full order books, and then they began the move towards modernisation, perhaps a little too late. We have had this problem of a falling labour force, a discontented labour force, an uncertain labour force and a dissatisfied management for many years, certainly all the years during which the Minister has been in charge of the Ministry. I believe that with the Order in Council which was approved by the House in the winter of 1959, transferring functions to the Minister of Transport, a serious mistake was made, because no one Minister can be responsible for all the affairs in the right hon. Gentleman's Department together with the problems of shipbuilding. Since then justice has not been done to the seriousness of the problem.
I put it to the right hon. Gentleman that this is a controversial Bill—not because we shall vote against it, for we shall not, but because we realise that it could have been a thousand times better if it had been a Bill intended not as a palliative for the past, because the money has all been spent, but rather as a promise and intention for the future. This is a Bill which ought to have provisions allowing the Minister to extend the scheme from time to time as 258 he wishes and to move in different directions in regard to shipbuilding. There is no reason why such a Bill could not be the instrument by which the Government should provide money to finance nuclear reactors in ships. There is no reason why it should not be the instrument by which we made possible the development of other forms of marine propulsion. There is no reason why it should not be the instrument for development in many ways of which the Minister has not thought.
But, instead, it dies with its entry on to the Statute Book. It is dead once it is approved, because the money has all been spent, and the Minister has to go through the whole rigmarole again of setting up committees, establishing machinery and approving applications. What a waste of time, effort and energy. How short-sighted when on Second Reading the Minister tells the industry, "This is the last hope you have. This is year of breathing space. After this you are on your own. After the election you are on your own, and through the rigours of competition you will find your own size and shape".
The Minister said that the Committee set up to vet all these loans consisted of persons who were able to assess the managerial prowess, economic efficiency and various virtues of enterprise in this country and, having settled that, to award the loans to the applicants and to see which yards could meet the obligations sought by the shipowners.
The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett)
I think that the hon. Member misunderstood my right hon. Friend. The Committee had nothing to do with the yards to which the orders went. It was concerned only with recommending the shipowners appropriate to receive the loans.
§ Dr. Mabon
I accept that. Perhaps I seem to have misled the House in this regard. But I take it that the Minister feels that he is in a position to make comments about the efficiency of shipping enterprises. Why does he not set up a comparable committee to give an impartial assessment of the shipbuilding virtues within the industry and all concerned with the industry? Then he would be able to talk in precise terms 259 without slandering everybody. He would be able to state who are doing well in the shipbuilding industry and, by omission, let those who are not mentioned know that they are not doing well.
It is by that, and only by that, that the right hon. Gentleman can escape the charge that he is an enemy of the industry by his constant general criticism of it. I feel sincerely that unless the Minister withdraws his general charges against the industry he will depress it still further.
Turning to the problem of the workpeople, how is it possible to get the co-operation which we so earnestly hope for if we do not give the men the feeling that they are part not only of a family but of a living family? The right hon. Gentleman constantly tells us that the shipbuilding industry is going down the drain. How does the Minister expect the men, whose only defence against unemployment is restrictive practice, to surrender that weapon? The whole thing it potty, to use the words of the hon. and gallant Member for Barkston Ash. If we want the men to accept the fact, and I hope that they will, that the industry should play as a team, that there should be flexibility and all the rest in the yards, then we can only do it if the men are given security of tenure in their jobs—not necessarily the jobs which they are doing at the moment but the jobs which they may be doing in the future.
When confidence comes to the industry and justice comes to the men we shall have a contented labour force and one able to do more than it does at present by way of productivity, imagination and enterprise. That is what is needed. We cannot say to an industry in such a difficult situation as the Minister is saying, "This is the last time we shall help you, and that will be the end".
§ 5.30 p.m.
§ Mr. Paul Williams (Sunderland, South)
I think everyone will agree with some of the latter sentiments expressed by the hon. Member for Greenock (Dr. Dickson Mabon). There is no doubt at all that on the internal relations issue of the industry there is a dramatic and immediate need to reconcile two apparently contradictory points of view, points of view which the hon. Member for Sunderland, North (Mr. Willey) and 260 I have put repeatedly in shipbuilding debates. It is the apparent contradiction of the demand for flexibility by management and for security by trade unionists. I personally believe that the time has long since passed for Government initiative, whether by the Ministry of Transport or the Ministry of Labour, in the calling together of representatives of the two sides of industry, for at the moment the two sides never seem to come to the point of decision. I should have thought there was a rôle which could be played by the Ministry, not necessarily in order to come to an immediate decision but to encourage the two sides to come to a more fruitful understanding about securing the greater flexibility which must be the prerequisite for greater security.
Having said that, I would, in a small, timorous voice, like to welcome the Bill. I believe that it has brought necessary but nevertheless short-term sustenance to a hard-pressed industry. It is, in fact, very sizeable help. Eight hundred and fifty thousand tons of orders is something not to be sneezed at in a shipbuilding world which is cutting its own throat because of its various overcapacities. However, I think that in the winding-up speech the Minister might give us a bit of detail on one element of this £75 million, more particularly the last £15 million or £17 million. I refer, of course, to the Cunard.
We had a North Atlantic Shipping Bill a few years ago which, I am delighted to say, disappeared below the surface unlamented. I should like to know how this element of the credit facility is to be used to assist Cunard. I should like to think that we could get a more modern method of tendering in the industry. Rather than have three or four firms being invited to tender for the new Cunarder, the firm which would have got the order under the previous scheme should be asked to enter into negotiation, thereby having only one tender and not wasting the time, energy and expense of the other companies. This would secure justice in relation to the other Bill and would short-circuit negotiations on this scheme. It would achieve an economy for the industry which might be worth while.
I welcome the Bill for two reasons. First, it releases a number of pent up 261 orders which have been pending in the shipowners' minds while awaiting the Government's decision. One might say that this scheme has been held up for too long, but, in fact, a number of orders were in train awaiting the announcement of the scheme, and the very fact that the scheme has been brought into being has brought these orders forward. Secondly, it was a stimulus to new orders. I am delighted with what the Minister said. He said that this was in no way an attempt to bolster up the inefficient, which, of course, is a perfectly sound and laudable ambition.
Then one comes to phrases such as "rationalisation" and "rather inefficient". What yardstick are we to use? I am delighted with some of the figures produced by my hon. Friend. He gave the figure of 53,000 employees before the scheme was announced, rising to 70,000 by March this year. That is an appreciable increase. But are these figures going to be sustained? That is what is really important for the shipbuilding industry.
Again, coming back to the point of security and flexibility, if we could say that 70,000 employees was a reasonable figure to turn out 1¼ million tons of shipping a year, this would be security not in fixed figures but in an estimate of what the industry needs. I personally believe that the nigger in the woodpile—or is it the white man in the woodpile, I am not sure—is that the Government—not this Government but any Government—have not sufficiently appreciated the rôle of shipping in the nation's economy. Every shipbuilding order is an export order even if it is for a British owner, because it saves in foreign currency. Indeed, it may do more. It may be a positive earner of foreign currency. Allied to that are the insurance associations that flow from British shipping crossing the oceans of the world. In this way, one begins to scratch at the surface of understanding the importance of the British shipping industry.
Unfortunately, we find repeatedly that Governments, perhaps even Ministers of Transport, Presidents of the Board of Trade and Chancellors of the Exchequer do not understand the dramatic contribution which British shipping makes to 262 the sustenance of the economy and to high and rising standards of living. Therefore, I go further and say that if we are to assist our shipping industry effectively and in tangible terms it may mean making tax concessions to it of a sizeable nature. We must maintain a building capacity which is necessary for economic reasons and for strategic reasons too.
Therefore, I say that there are two reasons for sustaining the British shipping industry and the British shipbuilding industry. One reason is economic. That is an argument sufficient to itself. The other reason is the strategic need to maintain a capacity which can be called upon in times of need and urgency. But there is doubt, I think, about this scheme in the minds of some people. One doubt is, as my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) said, that we are possibly now going back to the position where foreign owners will again be preferred to British owners in the credit facilities available to them for placing orders in British yards. If we are going back to that scheme it will be Bedlam run riot again.
With his visual candour, the hon. Member for Sunderland, North admitted that he made a speech about this matter some time ago. Again with his usual candour, he did not admit that anyone on this side of the House took the same line on the question of credit. But I think he would now admitthat there were a number of hon. Members on both sides who pointed out this contradiction. If we go back to this contradiction again it will create a disservice to the industry. It is something which must be guarded against if there is to be long-term confidence and security in the industry, which we all want to see.
I say quite frankly that I am sorry that machinery was not included in the scheme. It would have been a help to a number of makers of smaller parts if machinery had been included, although I quite understand that there could be a hesitation about it.
§ Vice-Admiral Hughes Hallett
Machinery is included so long as it is made in this country. If the marine engines are ordered abroad, the credit scheme cannot apply to the price of the engines.
§ Mr. Williams
Will my hon. and gallant Friend confirm that it applies also to things like winches and machinery of that kind? I am not quite sure about that.
§ Mr. Williams
Then I withdraw the point I made. I am delighted that the matter is cleared up in that way. There was some doubt about it earlier.
Whatever the scheme has done in providing orders and in providing employment, there is considerable doubt about whether it is providing profitable operations for the companies building the ships themselves. There is the difficult problem here—I do not know how the House can even begin to resolve it—that the orders are not sufficiently profitable, or may even be making marginal losses, so, although one is keeping yards operating and although the yards may be providing employment and paying wages, the total effect may not be a very great contribution to the financial solvency of the companies involved in those orders for a long time.
I come now to one or two suggestions. I have already made one in relation to Cunard, suggesting that there should be a special form of tendering for that ship. Second, like the hon. Member for Greenock, I regret that no move was made in the application of this credit facility to take the plunge in nuclear power. We are delaying far too long about this. In the past, I took the view—I admit it frankly—that we ought to wait for a commercial ship, but we now see other nations not only catching up but overtaking us at a great rate of knots. We cannot much longer go on failing to get our feet wet in this matter. We must have some operating experience. Therefore, I hope that we shall hear in the winding-up speech something about what is happening in nuclear power, related to this particular Bill, and why an opportunity could not have been taken here and now to make the first step.
I have already said something about labour relations. I firmly believe that an initiative can and should now be taken in this connection.
Next, I mirror the remarks of my hon. and gallant Friend the Member for 264 Barkston Ash on the subject of steel prices. A reduction of £5 a ton on a 75,000-ton deadweight tanker, as he said, would represent an effective saving of £100,000, which is a lot of money, about 3 per cent. of the cost of such a vessel. It would be a very valuable contribution towards getting orders from foreign owners.
I return to my point about having a right appreciation by the Government of these twin industries. We need a right appraisal both at the Treasury and at the Board of Trade of the rôle of British shipping allied to a resolve to secure its position in all trade treaties. I should like an assurance from the Government that this matter of trade treaties is properly borne in mind and that the Ministry of Transport, representing the shipping industry, makes its voice heard.
There still remains the hoary old question of whether the Ministry of Transport is the right Ministry. In saying this, I do not in any way attack my right hon. Friend. I believe that he has become progressively more sympathetic to the shipping and shipbuilding industry. Nevertheless, I think that it is really too large a Ministry, embracing as it does roads, railways and other things. One puts them in that order of priority, of course. Shipping and shipbuilding should be first, but they always come last. It seems that shipping matters do not rate anything higher than a protest at a meeting between the Prime Minister and the President in Washington, and the protests are then shelved and forgotten.
Over the years, those who have taken an interest in shipping matters have questioned a succession of Prime Ministers and Ministers of Transport about what representations have been made to the Americans. I agree with those who say that we should take power to take retaliatory action. The very threat of it might have a salutary effect. However, having said that, I welcome the action of the Minister in slapping back into the face of the American Federal Maritime Commission—
§ Mr. Deputy-Speaker
Order. The hon. Gentleman is now straying into a subject which goes wide of the Bill.
§ Mr. Williams
I bow to your Ruling, Mr. Deputy-Speaker. 265 I put one more question to my right hon. Friend. One of the burdens on the shipbuilding and marine engine industries is the fuel oil tax. Engines have to be shore-tested, and this may cost tens of thousands of £s not in fuel oil but in fuel oil duty. Surely, a concession could have been negotiated in preparing this loan scheme. Perhaps it may be done by development contract—it may now be in train—but there is no doubt that this duty is a heavy impost on an industry which is trying to develop new engines. I hope that something further can be said in this connection.
I conclude by referring to steel and shipbuilding. I understand that there are those who would nationalise one or other or both of these industries. I cannot persuade myself that the nationalisation of either of them could, by the longest stretch of the imagination, be thought to be of any value whatever to British shipbuilding. On the contrary, it would be more likely to drive away foreign orders. I cannot persuade myself that a British nationalised shipbuilding corporation would be liable to get the sort of orders which our yards can get in competition with foreign yards, but, rather, the very fact of nationalisation would make foreign owners look elsewhere. In welcoming the Bill, therefore, I welcome also the enterprise of our free industry and reject the concept of nationalisation.
§ 5.26 p.m.
§ Mr. E. Fernyhough (Jarrow)
Years ago, I listened to the hon. Member for Sunderland, South (Mr. P. Williams), week after week, putting questions to his own Front Bench asking why the shipbuilding industry could not get from the privately-owned steel industry the plates which it required to carry out the contracts which it had obtained from both British and foreign shipping lines. It was a private industry, perfectly free to trade where it liked, without regard to the national interest; but, of course, had the steel industry been nationalised at the time of which I am speaking, the hon. Gentleman would not have needed to ask those questions. This afternoon, everyone has spoken about the price of steel and the part it plays in the cost of building a ship. It 266 was hon. Members opposite who made the chairman of the nationalised steel industry put up the price of steel when he did not think that it was necessary, thus making steel more expensive than it need have been for every shipbuilding yard in the country. I could go on arguing the merits of nationalisation, but, Mr. Deputy-Speaker, I think that you have been sufficiently tolerant in allowing me to go thus far, and I leave it there. We shall carry out that task in a very short time, and the hon. Gentleman will not be sitting there to see how it works.
The hon. Member for Sunderland, South made a very important point about security in the industry. One of the most saddening experiences for anyone interested in shipbuilding and the men employed in the industry is to go to a launching. One sees there the men who are proud, and rightly proud, of the work which they have put into the ship. Very often, the launching takes place at about 12o'clock or, perhaps, 3 o'clock in the afternoon, and then, at 5 o'clock, hundreds of the men who contributed to the building of that magnificent vessel are told that they are not wanted, and they do not know when next they will be called back to work.
This is 1964. Can one wonder why there is trouble from time to time in the industry when men are still treated in that way and they have no more security than there was in the docks years ago? One day, the industry will have to realise that it must have a scheme similar to what now obtains in the docks. There must be a system of fall-back pay so that, if there is no work, a man is sustained by the industry until he is wanted. Some such principle must be introduced into shipbuilding and ship-repairing if there is ever to be a decent management-worker relationship. Given the present casual basis of employment, it will be impossible to build up the understanding which is so necessary if the industry is to have a really successful future.
Like the hon. Member for Sunderland, South, I welcome the Bill for what it is. We in the North-East have probably done better out of it than any other part of the country, and this reflects great credit on our yards and the men who work in them. In recent 267 months particularly, we have shown that we are able to compete successfully with foreign competitors.
Those who tell us that the industry cannot compete successfully do not always see the picture in full focus. The shipbuilder is still dependent upon the private contractor for many of his supplies. No matter how tightly he controls his own prices, if contractors allow the prices of the goods which they supply to rise, he still finds himself facing difficulties which are not of his own making. Some attempt should be made, therefore, to try to get contractors to play the game so that the shipbuilders do not always receive the blame when they are charged with not being competitive.
It is unfortunate that this is, as the Minister said, a once-for-all scheme, that there is to be this £75 million and then the industry will be left where it was before the £75 million was granted. It is noteworthy that the Bill has been introduced within the last 12 months of the present Administration. The new interest of the Minister of Transport in shipbuilding is paralleled by the sudden interest displayed this afternoon by the President of the Board of Trade in restrictive practices, resale price maintenance, etc. I do not believe that we should have had the Bill if the Administration had had two or three years to run.
It is significant that, because of the Bill, there will be, in March this year, two months from now, 13,000 more people employed in the industry than there were before the scheme was announced. This is welcome news. We are all very happy that there should be full employment in the shipyards and the ship-repairing industry. But why has it taken the Government so long to decide that something had to be done? Why are they so certain that it will not be necessary after the present financial blood transfusion to do anything more to assist the industry's future? After all, the 850,000 tons of new shipping which this £75 million represents is equivalent to only eight months' work for the British shipbuilding industry. They are very welcome eight months, but what about 12 or 18 months from now? Suppose the indus- 268 try then is in the same parlous plight it was in 12 months ago. Will nothing further be done?
The point, quite frankly, is that this has given everybody, I hope, a bit of a breathing space, and I hope that the Minister, and the industry, and all those concerned about the future of this industry, will get together to see what they can do to guarantee that it has a good future. We all know the problems which the industry faces. I hope they will be tackled, by the only people who can help, with a little more courage and determination than has been shown in the past.
We are granting £75 million under this Bill to the British shipping industry. Leyland Motors has just secured from Cuba a big contract for buses, and Leyland Motors cannot find a British ship in which to take those British exports to Cuba. I think we have a right to know what hon. and right hon. Gentlemen opposite are going to do about this, because under this Bill we are giving credits to the tune of £75 million to British shipping lines, and Leyland's could not find a single British shipping line to carry to Cuba the buses for which it has secured a contract from Cuba. And the Admiralty could not help Leyland's. So this export is going to be carried by ships from the German Democratic Republic. This really is a scandal. At a time when we are discussing credits of £75 million to our own shipping lines it is monstrous that not a single one of those lines was prepared to carry British manufactured buses to Cuba and Leyland Motors had to go to a Communist country in order to get ships to transport their export orders.
Everybody knows why this is. It is because those ships would be black-listed by our American allies if they were to carry those buses. I say that the Government have a great responsibility in this matter. I repeat they should have a little more courage, and stand up with a little more determination for the freedom of the seas to which we have always subscribed.
Thirdly, may I repeat that I hope that we shall very definitely use the breathing space which this Bill gives us to try to bring greater security to the industry, and to make the prospects for those in the industry and those who own it a 269 little more certain and positive and prosperous in the years which lie ahead, than they have been during the last two or three years in particular.
§ 5.40 p.m.
§ Mr. Rafton Pounder (Belfast, South)
I am very much indebted to have been given this opportunity to say something in this debate, and particularly to follow immediately after the hon. Member for Jarrow (Mr. Fernyhough), because on the last occasion I addressed this House—my maiden speech a month ago—he was kind enough to say some very complimentary things about me immediately after I sat down.
Although it is probably too early to gauge the full effect of the Government's shipbuilding credit scheme, there have nevertheless been a number of encouraging indications that the long dearth of orders from which British shipyards have suffered in recent years may be beginning to come to an end. Whether or not it would be altogether accurate to attribute this improvement entirely to the credit scheme would be to dogmatise, and that is something I am not prepared to do, but I think that there can be no doubt at all that the Government's scheme did come at exactly the right psychological moment, a moment not only when British shipyards had made themselves perhaps more competitive than they had been hitherto, but also at the time when British shipowners were beginning to give serious consideration as to whether or not the time had come, or at any rate was approaching, when they should modernise and re-equip their fleets.
Under the terms of the scheme, shipowners had an incentive to make up their minds quickly and to make their applications for assistance without delay, because both the amount of money to be allocated and also the period of time when applications for assistance had to be made were both limited. So far as one can gather from my right hon. Friend's opening remarks in this debate, the results to date have been gratifying. As he said, when the original loan of £30 million was announced some nine months or so ago the initial impression in British shipyards was that this was a useful beginning but that it was certainly no more than that, and that it would not be sufficient to lift the indus- 270 try out of its depression. Since then the figure has been more than doubled, and shipbuilders are becoming somewhat more optimistic. For the next year or so the overall prospects of the industry are reasonably bright.
But, unfortunately, it is only for the next year or so. It would be quite wrong to suggest, as I have heard many people not in this House but outside suggest, that this once and for all Government shot on the arm would resolve the shipbuilders' problems. Further rationalisation see us to be almost inevitable. Certainly in Belfast the great shipbuilding firm there has already faced up to this need and has carried through an imaginative and far-reaching programme of modernisation.
The new wave of orders has been very unevenly spread, and, at any rate excluding the project of the Q4, it is very unlikely that the orders placed under the scheme will be providing employment in, say, a year or eighteen months from now. Unfortunately, there is still a disquietingly large amount of shipbuilding capacity in the world unutilised, coupled with an enormous volume of shipping tonnage plying the high seas for trade. No action by any one Government can solve these critical problems, put what one can say is that the British Government have given the British shipbuilding industry a stimulus at a particularly opportune time, and I think it is fair to say, partly for that reason, and partly as a result of the improvements which the shipbuilding industry has made in itself, that it would be wrong to say that Britain is in a more parlous position now than most of her overseas competitors. Britain can no longer be fairly described as the most ill member of a world-wide sick industry. Nor, indeed, need she be in future if advantage is taken of the new flow of orders to carry out the programme of modernisation so urgently and desperately needed in British shipyards. These are almost as much a responsibility for the trade unions as they are for management.
I think it is probably fair to say that in any event Britain's future as a shipbuilding nation almost certainly depends upon concentrating on the production of high quality shipping, because it is in this sphere that our main strength un- 271 doubtedly lies, and I would submit that no reference to high quality shipbuilding would be complete without a mention of the Belfast shipyard where for more than a century countless ships of many varying dimensions and designs have been produced, and where the very high quality of workmanship bears favourable comparison with that anywhere in the world.
But although the clouds on the horizon may have appeared to have lifted somewhat, at least for the more efficiently managed firms, nobody should expect a quick end to the shipbuilders' troubles. The recovery has been somewhat selective. There is no doubt at all that some yards have benefited quite substantially inrecent months, whereas others have benefited barely at all, and nothing has emerged, in my submission, to alter the general impression that a major process of amalgamation and concentration in the shipbuilding industry lies ahead.
Although the industry as a whole is no longer in the slough of depression, the prices at which business is being won are still devastatingly severe. The financial stability of many firms in the industry will require a long time to be re-established after the recent bad years, but at least the point appears to have been reached, whether a result of this Bill or not, where a certain number of orders are going to the more efficient firms in the industry. The indiscriminate slump in orders of eighteen months ago no longer seems quite to obtain as it did until very recently indeed.
Thus far I have confined my remarks to the main issue of the shipbuilding credit scheme and the improved situation which it has in some part initiated. There is, I regret to say, a great deal of ill-informed talk on how shipyards can improve their methods. I wish to refer to only one of those ill-informed ideas. Times without number one hears people say that if only our shipyards and marine engine works would adopt the principle of interchangeability of parts then the prime costs of manufacture could be reduced and much time and expense would be saved in maintenance. Many things may be matters of opinion, but one thing is certain: the idea of interchangeability of parts as between one shipbuilder and another and as between 272 one manufacturer of powerful propelling machinery and another is simply academic nonsense.
I would like to conclude by requesting—and thereby mirroring what has been said by other speakers today—the Government to give serious consideration to the extension of the principle of this Bill for a further period and also of providing, therefore, further financial assistance—say, another Bill which would provide a loan of, say, £20 million to £25 million per annum for the next three years. It is generally acknowledged, and rightly so, that this Bill has given a much needed fillip to the shipbuilding industry, but one sunny day simply does not make a summer. The industry does require additional assistance if it is to be given a reasonable opportunity of completing its necessary programme of reorganisation. Shipbuilding is an industry vital to the economic well-being not only of Northern Ireland but also of several regions in the rest of the United Kingdom, the North-East Coast, the Clyde and Merseyside, to mention three. If the £75 million injection proves to be insufficient, then I hope that the Government will consider an additional financial jab into the vein of this industry.
§ 5.48 p.m.
§ Mr. Cyril Bence (Dunbartonshire, East)
I certainly agree with much the hon. Member for Belfast, South (Mr. Pounder) has said, especially the point he made that the British shipbuilding industry is not the most ill of sick industries. I certainly agree with that, because I have never believed the British shipbuilding industry to be as decrepit as some of its most vigorous critics have made it out to be. Certainly, in the last five years or so a famous firm in my own constituency has spent some £4 million to £5 million on modernisation.
The British shipbuilding industry is as competent today as ever it was to meet fair and just commercial competition from whatever quarter it comes. Unfortunately, as the hon. Member for Sunderland, South (Mr. P. Williams) intimated, much of that competition is not, in the sense that we understand it, fair, reasonable, open, commercial competition, and, unfortunately, I must subscribe to the position which I am 273 sure will be taken by the Parliamentary Secretary and say that it is no answer to the problem of uncommercial and unethical practices by someone else to adopt them oneself. That is no answer. It is merely an exacerbation of the problem.
The responsibility of the trade unions and employers in the efficient and economic production of ships of high quality is a truism. The main responsibility of producing anything in this country rests not with the Government but with those engaged in the production of wealth, from the managing director down to the office boy. I look upon this Bill as another instance of the Government saying to an industry, as they should say to every industry, that the function of the Government is not to make the nation prosperous. Governments cannot make the nation prosperous. What they can do is do give a lead and to create a feeling of confidence so that people get stuck into their jobs and are not afraid of the future, thus bringing prosperity not only to themselves but to the country as a whole.
One thing about the Bill which disappoints me—[Interruption.] That is a good old trade union and Socialist philosophy. This is a case of earning the nation's income by good, conscientious work and not by speculation or gambling. This is creating wealth, not on the Stock Exchange but on the factory floor and in the shipyard. That is the difference between the hon. Member and myself. This Bill is a palliative. The Government are offering to take the place of the commercial banks for a short time. The commercial banks cannot give the extended credit which is necessary. They have not the resources to finance the shipbuilding industry. Therefore, the Government step in and finance to the tune of £75 million, an industry which at the moment cannot be financed by private enterprise.
This is an admission that the shipowners of this country cannot get credit at sufficiently satisfactory terms from the commercial banks or any other financial institution. Therefore, the Government step in and act as the dispensers of credit to enable our owners to replace their fleets. They have been forced info this position by the practice of other nations in replacing their fleets. The 274 question whether the present Administration will be in power in 12 months' time is problematical, but I hope that this is not a temporary measure to help the shipbuilding industry but that it will become interwoven into our general structure for financing certain basic activities. I hope that the principle which apples in the case of the White Fish Authority and the nationalised industries wil1 apply in the shipbuilding industry.
As I say, the Government have become a great financing institution for the shipbuilding industry. This is important because the shipbuilding industry has returned to the position of being an industry employing casual labour. In my constituency, John Brown & Co. Ltd., probably one of the best known yards in the country, has just launched a wonderful vessel, the S.S. "Centaur". It has a specially constructed hull which enables it not only to dock alongside a quay but to discharge its cargo on a beach.
Now that this ship has been launched, there is nothing immediately on hand for John Brown. Therefore, much against the company's will, 750 men in the finishing trades have had to be dismissed temporarily, although it has told them that it hopes to take them back in a few months. This undermines men's confidence. Here is a famous yard, with a fairly good order book, mostly tankers, which has been forced to treat a great deal of its labour, particularly in the finishing trades, as casual labour.
We have ended the system of casual labour in the dock industry. Why cannot it be ended in the shipbuilding industry? I feel sure that trade unions and employers in the shipbuilding industry and the Government can work out some means of ending casualisation. I have no doubt chat there are areas in the shipbuilding centres, such as the Wear, Tyne, perhaps Belfast and the Clyde, where men can move from yard to yard by agreement between the personnel managers. This mutual interchange in order to get rid of casualisation is very desirable.
I have spent a large part of my life in the motor industry. One can manufacture motor cars in bits and pieces and put them on the shelf, so to speak, as stock. If the order book is not full, one 275 can stockup. This cannot be done with ships. I see major difficulties in maintaining a balanced labour force and in bringing about a continuity of employment. It is difficult to imagine shipyards building up stocks of ships because there are no immediate orders. It may be possible to produce standard hulls in a small number for merchantmen or tramp ships, but that does not provide for the finishing trades. It seems to be in the finishing trades that there is this casual employment of operatives.
§ Mr. P. Williams
Everyone preaches in favour of standardisation for everyone else but himself. In this case, the owners—and I do not blame them—are the difficulty because they always want something tailor-made to their requirements. This is the weakness from the shipbuilding point of view, but the strength from the owning point of view. Unless an owner can get something tailor-made be cannot operate efficiently.
§ Mr. Bence
I am not a shipwright or an expert on shipbuilding. I can understand a company which is trading with different parts of the world and engaged in heavy traffic wanting the hull and layout of a ship to be tailored to its demands, but that does not alter the fact that within a ship itself thousands of components could be standard equipment, such as valves, pipes and all the gadgets which go into a marine engine. I imagine that there could be a range of standardised pumps. Door handles, crockery and similar articles could be manufactured in tremendous quantities to go into different passenger vessels. There could be standardised units in diesel engines even when they are made by different engineering companies.
The machine manufacturing industry is included in this. I understand that under Clause 1 the Minister can give credits to the manufacturers of propulsion machinery. Am I right about that?
§ Vice-Admiral Hughes Hallett
The credits are given in respect of propulsion machinery as long as it is made in this country. We allowed three ships with foreign engines to be built, but in that case the cost of the foreign engine was not included in the credit sum calculated.
§ Mr. Bence
I assume that the credit that was granted would cover the cost not only of the building of the hull but of the installation of the machinery if the manufacture of that machinery were in a British shipbuilding engineering shop, wherever it might be.
Standardisation is a great feature in the economic processes of manufacture. Will the Minister have powers—such as were suggested by the Minister of Aviation when we had the shotgun marriage between the manufacturers of aircraft in order to get State subsidies to keep the aircraft industry going and to put it on an economic basis—when these credits are applied for—I see that any number of loans under this Clause may be made to the same person—to make loans? I can imagine the circumstances that might arise.
If the firm of John Brown has an order for a hull from one of the big liner companies, in view of the fact that the Ministry has granted loans to the manufacturer of diesel engines, will the Minister have power under the Bill to insist that to get the full benefit of this credit the propulsion machinery in that ship must be provided by a certain company which had provided machinery for several ships of the same kind, and which was therefore able to provide it cheaper than perhaps the yard where the hull was being built?
These are the sort of things that I can imagine happening. Is there the possibility within the Bill that, as the Government are now financing the building of the machinery and the hull, if the owner decides that the hull should be built here and wants a certain type of propulsion machinery, the Minister will be in a position only to accept the proposition provided that the owner submittingthe proposition for a new vessel has manufactured in certain engineering shops propulsion machinery, and that unless that is done the Minister can refuse a loan?
I see here very great danger. I hope my assumption is wrong and that it will never come to this. I want the Government to undertake the financing of shipbuilding, which is a great national industry. I agree with what was said by the hon. Member for Sunderland, South. Unfortunately, some people in this country make a tremendous hullaballoo 277 about the farmers who use our land so intelligently, saving the nation hundreds of millions of dollars in foreign exchange by providing us with food. I wish that some people would shout as loud as the farmers do to show that the shipowners of this country are doing exactly the same thing. We are a maritime nation and the shipbuilders, the merchant seamen and the shipping owners, all of them co-operating, are providing a tremendous service to this country.
This is the beginning. I do not think that the Government can finance an industry for one or two years and then drop it and allow commercial finance to take over, and when things get sticky again step in. This sort of thing cannot go on any longer. This is the beginning of the Government becoming the permanent financial institution for British shipbuilding. Therefore, I want to make sure that the industry, both the shipbuilders and the owners, will retain complete freedom in placing orders and specifying the type of ships they want. They know better about this than Whitehall. I do not want anyone in Whitehall to tell the shipowners, "We will give you a loan if you have the engines built here". I want to see the people who run those industries have the right to specify the type of ships they want. Although the Government is to lend them the money, I hope that they will have sufficient confidence in these industries and in the people who run them and who know their own business.
It is the duty of any Government to see that the resources of our nation are not wasted. I hope that the Minister will give us an assurance that there will be no danger of Government intervention of the type I have described. There have been suggestions mooted many times in the shipbuilding industry that there should be a concentration of machinery building in one or two units. The Parliamentary Secretary knows this and the Minister of Transport. That has been said many times and in many quarters. There has been a suggestion that some of these yards should give up their engineering shops and that they should be centralised. I do not think that is desirable. It may be desirable to have large powerful units, but I think that it is always a good thing to have 278 a mixed economy, as we have on Clydebank in the firm of John Brown, which does the whole lot itself and where it can have a balanced labour force provided, of course, that the orders come in. I hope that this Bill will not lead to excessive Government powers in directing people as to where or how their ships should be built or the type of machinery that should be installed.
I am assured by the people who ought to know in the shipbuilding industry that at the present time the British shipbuilder is having to pay a higher price for British steel relative to the general price structure than that paid by shipbuilders in Europe for their steel. It is not a sufficient answer to say, as I have heard it said, that Continental steel is more expensive than British steel, but Continental steel for the European shipbuilders, as a factor in the generalcost of shipbuilding, is lower than it is in Great Britain. The shipbuilders on the Continent buy their steel from the Coal and Steel Community at a figure which bears a lower relation to the general cost than the British shipbuilder who buys steel from the British steel industry. This ought to be looked into.
I had always understood that British steel was the cheapest in the world. It certainly was at one time, even as recently as 1948. Is that no longer the position? If so, is this not one of the major difficulties facing the shipbuilding industry? If, as a cost factor in ship production, steel prices weaken our competitive position, we should know all the facts about it.
The hon. Member for Sunderland, South said he was afraid that if the steel industry became nationalised its position might become worse. Is he aware that the price of steel has risen since the industry was denationalised? It must be remembered that the industry worked in the face of tremendous obstacles during the war. It had to produce steel at a terrific rate so that we could get the ships we needed. In the five or six years after the war little time was available for refurbishing the capital which had been created in the industry long before the war and which in many cases had been completely absorbed and, in terms of machinery, worn out.
It must also be remembered that there are today many State-owned facets of 279 the steel industry. These make steel plate and sheet for use in shipbuilding and this shows that no one in the industry need fear the industry becoming State-owned. In fact, the Government nationalised one section of the industry a few months ago, the Drogheda Iron and Coal Company's works at Newport.
In welcoming the Bill, I hope that it will not be long before another Measure is introduced to make the State the principal financing institution for shipbuilding. Only in that way will we get rid of the casualisation of labour, give stability to the industry and ensure continuity of orders. We must bring the position to an end when people are waiting for the next order and the next extension and advance, hoping for another Bill to be introduced to give the industry easier terms.
§ 6.12 p.m.
§ Mr. Stanley R. McMaster (Belfast, East)
I do not intend, in rising to welcome the Bill, to delay the House for long at this stage. Attention has already been drawn to the fact that the proposals contained in the Bill were suggested to the Government a long time ago. I recall that about a year ago, when debating the position of the British shipping and shipbuilding industry, I pressed for measures such as those set out in the Bill. At that time they were not acceptable to my right hon. Friend.
The Bill provides only a temporary respite. I was glad to note that in his speech my right hon. Friend pointed to the increase in employment which will occur in the industry as a result of the Bill. He hoped that the number of employees would increase from about 53,000 to about 70,000 by the spring of this year. That rise will be welcomed, but it is to be deplored that the conditions in shipbuilding in Britain have been the subject of so much uncertainty for those employed in it. As my right hon. Friend pointed out, we face competition from all parts of the world, particularly the yards in Japan, Sweden, Germany and Holland.
It must not be forgotten that countries abroad give assistance to their shipbuilding industries, whether in the way suggested by the hon. Member for Dunbartonshire, East (Mr. Bence)—some 280 form of steel subsidy—by direct assistance, or even by a policy of scrap and build, which the French are about to introduce. Whatever may be said about the scrap and build policy, it is assistance.
In many previous debates, I have pressed my right hon. Friend to study the assistance that is given abroad. I have urged him to use all the means at his disposal to persuade other countries to abandon unfair practices such as those I have mentioned, or even the practice of shipowning—since one practice can affect another—but until he is successful in persuading them to abandon these practices we must, if we are to maintain our shipbuilding industry, equal the assistance that is given abroad.
Since there is no sign that we are being successful in persuading them to abandon these practices, I regret that the assistance given under the Bill has not been taken a step further. It is limited. One hon. Member opposite spoke about the assistance under the Bill being a grant to the industry. It is not a grant but a loan. Only by way of saving the industry some interest is it, I suspect, anything else, and I believe that that saving will not amount to many millions of pounds a year.
§ Mr. McMaster
Not exactly, but I suspect that it will not be more than £1 million or £2 million, but perhaps my right hon. Friend will correct me if I am wrong. The Bill does so much good for so little cost that it is a pity that it has not been extended, because it is the duty of the Government to ensure that British shipbuilders are not at a disadvantage compared with their overseas counterparts.
How can uncertainty of tenure of employment come to an end unless there can be some certainty that there will be a continuing flow of orders to the British yards? I have been relieved to see the number of orders which have been placed with Harland and Wolff in Northern Ireland. I was also pleased to learn that that firm was the largest shipbuilder in the United Kingdom last year. The company has, perhaps, benefited to a greater extent than any other British yard, but the position on the Lagan and
281 Belfast is somewhat different to that on the Clyde, Tyne and Merseyside, where several builders are building on one estuary and river. In Belfast there is now only one shipyard, and that is owned by Harland and Wolff.
I recently had the pleasure of going round that yard and of seeing the modernisation that has been carried out there. The improvements were seen by my hon. Friend the Parliamentary Secretary when he visited Northern Ireland, and I welcome the interest that has been shown by the Government to Northern Ireland. While there I saw the new craneage, although the modernisation has meant men being declared redundant in large numbers. In the past five years, since I came to this House, I have seen the number of men employed at Harland and Wolff's yard cut by half—from about 22,000 or 23,000 to about 10,000 or 11,000. Despite the new arrangements, men were being laid off before Christmas. However, this redundancy was overcome and the matter was soon resolved in the sensible way which these matters are usually dealt with in Belfast and the men returned to work.
In a recent discussion with the trade unions, in Belfast, I received reassuring information about the measure of flexibility that had been accepted at Harland and Wolff. I must re-emphasise the point, because if we expect concessions from the trade unions on things like demarcation, designed to deal with contingencies such as those that have arisen over the past four or five years when men have been laid off, it is reasonable in return to offer the men left some continuing security of employment. This security can only be ensured by extending the terms of Bills like this.
Another point concerns interpretation. The Explanatory and Financial Memorandum says that Clause 1…enables the Minister to make loans for the construction, completion or alteration of ships in shipyards…My information—and I have asked Parliamentary Questions on it—is that this provision applies only to major alterations—to "jungle-rising", as I have seen done in Belfast, by means of which boats are enlarged by putting in new sections. I should like to see this credit scheme extended to other forms of 282 repair. I do not see why it should be limited to this one sphere. If the Minister's aim in introducing this Bill is to assist British shipbuilders, all forms of modernising and repairing of boats should be covered, and it should be possible for British ship owners to apply for the same kind of assistance for such work, which benefits the shipbuilding industry directly but also benefits our shipping industry, because it improves our merchant fleet. It is a little late to do this in this Bill—we have heard that the money has already been used up—but I should like him to consider extending the terms for the future, not only in regard to time but in regard to the number of uses to which the money may be put.
My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) spoke of trade reservation and flag discrimination. These practices are widely adopted throughout the world and injure British shipping. I strongly hope that when the Minister takes action to assist British shipping he will assist not only the large shipowners who are running liners but the many small tramp owners. These vessels are very often engaged in carrying not British but foreign cargo from one foreign port to another foreign port, and earn a great deal of money for the Treasury in the process. It is most important that these shipowners, sometimes operating in a small way, should be given the same assistance when replacing their vessels as foreign tramp owners can obtain when ordering ships abroad, or even when ordering them in Britain.
I do not think that my right hon. Friend dealt satisfactorily with this point this afternoon. He said that the provisions laid down would come to an end in the spring of this year, but he did not give any indication at all that the credits given through E.C.G.D. to foreign owners building boats in Britain would come to an end at the same time. One of the points we argued a year ago in favour of this provision was that the British shipowner should not be put at a disadvantage vis-á-visthe foreign owner ordering in Britain. That argument is as true today as it will be tomorrow, and that fact alone is an overwhelming argument in favour of extending the provisions of the Bill. We are an island people and cannot neglect either our 283 shipping or our shipbuilding industries. The point has been made many times and does not need to be laboured, but I do not think that my right hon. Friend has given it proper weight.
I also support what was said by my hon. Friend the Member for Sunderland, South (Mr. P. Williams) about building boats powered by nuclear engines. Not only would we obtain operating experience by ordering such vessels but we would get operating "know-how". There is a great danger that our shipbuilding yards—with the exception of one that is engaged in nuclear submarine building, which is in a quite different category—will fall behind in the building "know-how" that is so essential if they are to remain in business for the rest of the century.
It has always rather surprised me, and here I agree with my hon. Friend the Member for Sunderland, South—though I do not wish to reflect on the Minister in any way—[Hon. Members: "Why not?"]—because that is the way I feel. I do not wish to reflect in any way on the energy and capacity of my right hon. Friend, but he has a great deal on his plate. We have a separate Minister of Aviation. Aviation is important, but surely shipping and shipbuilding are older and more important interests in Britain. I should like to see a separate Minister—with, perhaps, a separate voice in the Cabinet—to deal with these matters that are so vital to our country and to our prosperity. I hope that this point will be borne in mind by the Government, particularly in the changing circumstances of the coming year. I welcome the Bill, as far as it goes, but it is still lacking, and needs quite a lot of extension.
§ 6.27 p.m.
The Parliamentary Secretary to the Ministry of Transport (Vice-Admiral John Hughes Hallett)
I should like to answer the last point made by my hon. Friend the Member for Belfast, East (Mr. McMaster) before I forget it. It has often been argued, not only by my hon. Friend but by other hon. Members, that there would be advantage in having aseparate Ministry of shipping, but I can assure my hon. Friend that a great deal of time is spent in the Ministry of 284 Transport on shipping matters by a whole section of the Ministry and by my right hon. Friend himself—I daresay as much as he spends on inland transport. This idea of having a multiplicity of Ministeries dealing with different topics has to be balanced against the advantages of any given interests, such as those of shipping and shipbuilding, being under a Minister who is in the Cabinet. My hon. Friend no doubt will agree that if there were Ministries for one thing and another we would end up with a Cabinet of about fifty Ministers.
We have had an interesting debate and, if I may say so, it started on a more acrimonious note from the Opposition benches than have previous debates on shipping and shipbuilding. I was glad to observe that, because I think that it reflects the better outlook for the shipbuilding industry. I think that is why the hon. Member for Sunderland, North (Mr. Willey) felt freer to lash out a little. We take that in good part, and perhaps I may say without impertinence that we very much appreciated the restraint shown by the Opposition a year ago, when the outlook for the industry was so very serious.
Naturally, most of the debate ranged over the future long-term prospects of the industry rather than the immediate effects of the Bill. I want to go back to both of these points, because while no one would deny that the long term matters more than the short term, at the same time it would be foolish to underestimate the good which has already been done by this scheme. Before coming to those points, I should try to answer specific matters raised in the debate.
The hon. Member for Sunderland. North began by accusing my right hon. Friend of speaking only platitudes and suggesting nothing constructive. Most of my right hon. Friend's speech was devoted to an exposition of the Bill, which was not unnatural since he was moving its Second Reading. The hon. Member then went on to claim that he had advocated a credit scheme in 1962. I recollect that he did, but I doubt very much whether a credit scheme at that time would have been effective, because the differentials at that time between prices in British yards and the prices of 285 our continental rivals were much greater than they are now and I do not think that a simple credit scheme would have done the trick.
The hon. Member repeated the old chestnut about our being the largest importer of foreign ships. He must realise that this is not so. He must distinguish between genuine British shipping firms whose orders abroad are negligible and other firms who legitimately, for reasons of their own, register in Britain but who actually buy ships abroad.
The hon. Member made a great deal of play about exactly what we mean by the contraction of the industry and the hon. Member for Greenock (Dr. Dickson Mabon) made the same point. The House will recollect that in March. 1961, we had the Report of the Dunnett Committee which made a very careful estimate of what the likely volume of annual orders would be for the British shipbuilding industry. We still see no reason to dissent from that estimate, and that is my answer to the hon. Member. The whole industry is familiar with the Report, and when we have been asked we have always told the industry that there is a long-term forecast of likely orders. We do not say that that forecast is right but we do not see that it can be improved as an estimate.
The only hint of policy that emerged from the speech of the hon. Member for Sunderland, North struck me as a desire for a very considerable degree of Government interference in the control and direction of the various activities of shipbuilders. Heaven help the industry and the men who work in it if a Labour Government embark upon such an enterprise. I find myself far more in agreement with the views of the hon. Member for Dunbartonshire, East (Mr. Bence) on this subject.
§ Mr. Willey
This is not a question of interference with or direction of the industry, but of whether we have a sense of national planning and whether the industry has a pretty clear idea of where it will stand in three or four years' time. Almost every country with which we are competing has such a conception and the shipbuilding industries of those countries do not hesitate to go to their Governments. When the hon. and gallant Gentleman talks about the 286 flexibility of labour, I must tell him that we shall not have that flexibility until there is a sense of an established labour force.
§ Vice-Admiral Hughes Hallett
The only countries of which I can think offhand that can give their industries a fairly accurate forecast of the size of their merchant fleet, and consequently of building orders, are those countries which operate their shipping with a very heavy subsidy. What the hon. Member says would be true to a certain extent of the United States but in countries which operate a free shipping service it is very difficult to forecast with any certainty.
My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) suggested that many of the orders placed under this scheme might have been placed anyway. I do not dissent from that, but I ask him as a shipowner himself whether he can place his hand on his heart and say what orders would have been placed in this country had it not been for this credit scheme. I have an uneasy feeling that many of the orders might have gone abroad.
Arising from the same point, my hon. and gallant Friend made great play of the better credit facilities for export orders enjoyed by foreign shipowners when they come to order ships in this country. Incidentally, he was wrong to say that these better facilities are provided by the Government. They are provided by financial institutions in the City. The apparent anomaly arises from the world-wide competition to offer special export credit facilities and other export facilities. A Japanese shipowner would make exactly the same complaint in his own country, because he would find that the rate of interest for borrowing is different and the price he pays for steel is different from that which the non-Japanese shipowner pays if he orders in Japan. This is not done by subsidy but by private arrangements within the banks and within the industry.
The hon. Member for Greenock went rather wide in the debate and eventually his discourse on shipping was stopped. I cannot follow it in detail, but I would reply to his remarks on our shipping policy by saying that he should calculate, 287 if he can, the consequences of this country going back to a policy of protection. He should ask himself whether the united stand now taken by this country and, largely under the leadership of this country and my right hon. Friend, by other great European maritime nations together with Japan, is not a better policy.
§ Dr. Dickson Mabon
The fact is that we are losing this battle steadily and by not having reserve retaliatory powers we are demonstrating to the world that we have no intention of fighting; Britain will not flex her muscles in this respect.
§ Vice-Admiral Hughes Hallett
This is a matter in which not only this country but all our friends in Europe find it difficult to go further than we are going now. I do not think it would be to the advantage of the shipbuilding industry, indirectly, if we found ourselves eventually forced to go back to a policy of protected shipping.
The hon. Member asked whether the Bill might not have been made an instrument for finding money for nuclear propelled ships and nuclear research. No doubt it could have been, but we do not think that that would have been appropriate. The Bill was drawn up with a very narrow object in mind which has largely been achieved. The hon. Member went on to suggest that just as the Piercy Committee had been able to look into the managerial efficiency and credit-worthiness of shipowners who apply for loans, a comparable committee should inquire into the whole state of the shipbuilding industry. My answer is that we have had quite a number of inquiries recently.
We had the Dunnett Committee in which both sides of the industry and Government officials participated. We had the D.S.I.R. Report on the industry's research needs, which the hon. Member will remember created a certain amount of excitement and furore when it was issued, and we had an investigation carried out by Peat, Marwick, Mitchell & Co. into the reasons why orders were being placed abroad. We had also the industry's own productivity report, the Patton Report. I do not think that a further inquiry would have thrown much more light on the general state of the industry.
288 My hon. Friend the Member for Sunderland, South (Mr. P. Williams) welcomed the Bill and laid stress on the need for better labour relations, with which I wholly agree. Referring to the new Cunarder, he asked whether Cunard might help the firm which would have got the order under the old scheme by not being required to put out a competitive tender, but merely to go back and place the order on the Tyne. As I understand it, the consortium which made the tender on the Tyne has not finally decided whether to tender or not. But supposing it does. It does not necessarily follow that it will win the order. A great deal has happened in the way of modernising other yards since the previous tenders were put in. Furthermore, my hon. Friend asked why firms should waste money by putting in tenders which they are not certain to win. They are under no obligation to undertake expensive tendering at all.
My hon. Friend went on to say that shipbuilding orders were not profitable, and I agree. They are not always profitable, and I shall refer to this matter later. My hon. Friend made suggestions which we shall study, and he asked specifically whether we could assure him that when trade treaties are signed the shipping and shipbuilding industries in this country are taken into consideration. I assure my hon. Friend that they are. My right hon. Friend is invariably consulted, and wherever it is practicable and appropriate such safeguards are written in.
The hon. Member for Jarrow (Mr. Fernyhough)—I think very rightly—at the beginning of his speech stressed that it was important for the happiness and efficiency of the industry to ensure that the people who worked in it had a feeling of security. His hon. Friend the Member for Dunbartonshire, East made very much the same point. The hon. Member for Jarrow gave the example of the sad scenes which occur when a ship is launched, when a large number of steelworkers are paid off that same evening. Curiously enough, his hon. Friend gave the reverse example of a large number of men in finishing trades being paid off until the next ship was on the stocks, when they would be taken on again.
Surely those are striking examples of the advantages of the Continental and 289 Japanese systems of greater flexibility of labour, where the men are trained and able to carry out more than one job? Although it may not give complete uniformity, none the less it greately reduces these fluctuations, and is one reason why greater security is possible.
§ Mr. Fernyhough
The incident which I mentioned showed that all the people who have been employed on building that ship walked off the yard and did not know when they would come back, because they would not be able to return until a new ship was on the stocks.
§ Vice-Admiral Hughes Hallett
I do not accept that. It is true that if there is a period when no ships are being built the number of men employed in the yards is small, but if the men who have been helping in the finishing stages of the ship are also capable of being employed in the earlier stages when she is on the stocks, obviously the gaps in employment and the fluctuations in the way various trades are employed will be very much less. I think that that is a statement of the obvious, and that no one would dispute it. The argument that has been put forward from time to time against this flexibility is that it is impossible for a man to be fully skilled in more than one trade at a time. All I can say is that it is done in other countries, and I cannot believe that our people are of a lower standard. However, I shall come back to this subject later.
§ Mr. Bence
I made the statement about people employed in the finishing trades. There are many functions in a shipyard where there is flexibility and the men can be moved from one operation to another, but the hon. and gallant Member must not ask plumbers to go up aloft and work on the layout, because they do not know the first thing about it. They are plumbers. They can do a variety of plumbing jobs, but we must not ask carpenters and joiners who build ships' furniture to try to weld plates, because they know nothing about that job. The hon. and gallant Member must not stress flexibility to that extent. He must not expect artificers to be first officers on the bridge, because it is not possible to stretch flexibility that far.
§ Vice-Admiral Hughes Hallett
It is always possible to give extreme examples, but the fact remains—and it 290 is no good our ignoring this—that a remarkable degree of interchangeability is achieved in foreign yards, and if the hon. Gentleman had been with my right hon. Friend and me when we visited some of these foreign yards I think that he would have been surprised. I certainly was.
My hon. Friend the Member for Belfast, South (Mr. Pounder) began by saying that he thought the timing of this Measure was correct. I was glad to hear him say that, because I am sure that he is right. I am prepared to concede that there may have been a certain element of luck in that the timing fitted in so well with the needs of the industry, but I am sure that the timing was right.
My hon Friend went on to remind us of the great benefits which the firm in which he is interested, Messrs. Harland and Wolff, has gained from rationalisation, or modernisation. In that case the two words really apply to the same process. I agreed with a great deal of what my hon. Friend said about the various measures that were needed to make the industry more competitive. I also agreed with him when he called attention to the difficulties facing some of our foreign competitors as well as the difficulties facing this country.
My hon. Friend was followed by the hon. Member for Dunbartonshire, East who followed up my hon. Friend's last point by reminding us that the industry is a great deal more efficient than it is often painted, and that cannot be said too often. We rightly concentrate on weaknesses in the industry, because we are trying to give a lead to improve it, but there are great areas where the industry is fully competitive with any other country in the world.
The hon. Gentleman went on to point out that the function of the Government was not to create prosperity but to give a lead and create the climate in which it can come. He asked whether we had power under the Bill to impose standardisation, to give directions as to where orders should be placed, and so on. There are no such powers in the Bill, and I assure the hon. Gentleman that this Government at any rate would never dream of embarking on any enterprise of that nature. In fact, I cannot think that any Government would. After all, even in the nationalised industries 291 one does not interfere in that sort of thing. It is regarded as part of the commercial judgment of the board which runs the industry.
My hon. Friend the Member for Belfast, East suggested at the beginning of his speech that most countries give assistance to their shipbuilding industries. Certainly some do, and I assure my hon. Friend that there is no lack of study of the subject by the Government. But the countries that give assistance are not very important in the context of what we are discussing today. The two dangerous competitors are Sweden and Japan and their industries are not directly assisted by the Government; at any rate, not to any appreciable extent.
§ Mr. McMaster
My hon. and gallant Friend referred to the fact that Japanese shipping was assisted by the steel subsidy. Has he taken account of the fact that cheaper steel is provided for ships that are built for export?
§ Vice-Admiral Hughes Hallett
That is not a subsidy by the Government. It is an arrangement between the Japanese shipbuilders and the Japanese steel companies. It is an arrangement within the industries.
That brings me to my hon. Friend's intervention on the question of steel, on which the hon. Member for Sunderland, North, my hon. Friend the Member for Sunderland, South, and the hon. Member for Dunbartonshire, East spoke at great length. The facts are that the price of steel accounts for more than 20 per cent. of the cost of producing a big tanker.
It is true that our shipbuilders have been worried about the prices that they have had to pay for steel, because the shipbuilders of Japan and Sweden have been able to get it more cheaply—just how much more cheaply it is not easy to establish. One sometimes hears the most sweeping statements about price differentials between one country and another, but on investigation they turn out to be based not on ruling prices but on prices for job lots or, at any rate, comparatively small quantities—too small to affect the average price.
292 Nevertheless, it looks as if the Swedish yards have been able to get their steel at prices far below that which our builders have to pay to account for a difference in the cost of a tanker of between 30s. and 35s. per dead weight ton, according to our calculations. That is a serious matter. It is not a negligible proportion. It works out at about £80,000 on a 50,000 ton dead weight tanker. The Japanese also have some advantage in this regard in respect of the ships they build for export, but it does not appear to be so great as in the case of Sweden.
Our maximum steel prices are fixed by the Iron and Steel Board. The heavy steel makers have agreed among themselves to charge their customers these maximum prices, and these agreements are coming before the Restrictive Practices Court, starting in April. The shipbuilders are at present considering the nature of their evidence. I shall say no more than that tonight.
Dr. Dickson Mabon: In the hon. and gallant Member's illustration concerning Sweden, what is the practice under E.F.T.A.? Is there anything in the E.F.T.A. Agreement which may shake the position of Sweden or affect our own?
§ Vice-Admiral Hughes Hallett
I do not think that Sweden is doing anything outside the terms of E.F.T.A. It is not a question of subsidy, or anything like that. Although important, the steel question must not be exaggerated. I went to a Swedish yard a few months ago and I found there was no cheap steel there at all at that time.
I now want to say something about the short-term effects of the Bill. I feel that the House has not entirely appreciated the magnitude of the change which took place in 1963. At the risk of boring the House I want to give one or two figures again. A year ago the total on our order books, including all work in hand, stood at just over 2 million tons. Six months ago it had fallen to 1.8 million tons. Today it has risen, and stands at 2.4 million tons. During 1963, at total of over 1½ million tons of orders was booked, of which about 41 per cent.—about 640,000 tons—was under the aegis of the Government credit scheme. It is clear that 293 there has been a dramatic upturn in the immediate outlook, but, as the figures show, it would be wrong to ascribe it all to the influence of the credit scheme.
§ Mr. Fernyhough
I understood the Minister to say in his opening speech that orders under the credit scheme amounted to 850,000 tons.
§ Vice-Admiral Hughes Hallett
That is the total, but it has not all been placed in 1963. Some orders are still to come.
The first reason why the position of the industry has improved is that it has become more competitive, especially in respect of the more complicated vessels, such as passenger liners, specialised bulk carriers, dredgers and so forth. This was shown clearly in the first quarter of 1963, before the credit scheme took effect, when there were 400,000 tons of orders, 42 per cent. of which was for export, on foreign account.
Secondly, the credit scheme itself has achieved almost exactly what was intended. Thirdly, freight rates have recovered a little from the disastrous level to which they fell during the shipping slump. This has encouraged the more enterprising shipowners to feel once again that shipping services may become profitable, especially for new and more economical ships.
To this I must enter one caveat. Shipbuilding prices are still abnormally low, and we are far from satisfied that the orders placed in 1963 will yield a margin of profit sufficient for the health of the industry. Yet the orders are very much welcomed for the employment they produce in regions where the main industry is bound up with shipbuilding.
In this connection I want to say a word or two about the effect on employment, which goes some way towards justifying the Bill. About 1,200,000 tons of merchant ships are under construction, and 58,000 people are engaged in shipbuilding at this moment. The last time when the volume of work under construction was as high as that was in the summer of 1962, when we had 66,000 men in the industry. These figures suggest that there has been an improvement in productivity, and we all know that there has been an increase in the speed of building. This, by itself, means an increase in productivity. Also, a 294 faster stream of orders is needed to keep a given labour force in steady employment. That is what modernisation is about. It is at once a reason and a justification for the £150 million spent by the industry in making some of its shipyards up to date. Had this not been done, orders would have gone abroad, and no amount of credit schemes would have saved the industry.
In forecasting how employment in the yards is likely to be influenced by the credit scheme we have made some allowances for increased productivity. My right hon. Friend has indicated that later this year we expect to have about 1½ million tons of commercial vessels under construction, giving employment to about 70,000 men. Here again, there is an interesting comparison to be made. The last time that the level of activity was as high was in the middle of 1961, when about 80,000 men were employed.
Another consequence of modernisation is that it augments the immense surplus of building capacity of the whole world, and the substantial surplus in this country—by how much is a matter of argument. But it would be unrealistic to imagine that every yard in the kingdom is likely to be fully occupied again.
This brings me to the second lesson, that when an old-established firm goes out of business—painful though it is—it is a mistake to imagine that this is a bad thing for the industry as a whole. As my right hon. Friend indicated, some rationalisation is necessary if costs are to be kept to the minimum, and one form which rationalisation commonly takes is the closure of some yards so that others can work at full capacity. In this connection I repeat that the volume of employment is determined by the size of the total order book and not by the way in which it is divided between different yards.
The livelihood of the workers can be secured only if they are employed in highly efficient and up-to-date yards. How secure will their employment be then? That is the great question, on the answer to which will depend the ultimate justification for the Bill. We wanted to give the industry a breathing space, not for the Government to breath down its neck but rather for its leaders to take stock of their position and to do what needs to be done to bring 295 their costs into line with those of their foreign competitors.
As to prices, let us be careful not to equate them necessarily with costs. The facts have to be faced, and the position is fairly clear. There is nothing secret about it. We are least competitive when it comes to building the very large and simple vessels, such as tankers and bulk carriers. Our most formidable European rival is Sweden, and from all the information which the Government have been able to glean—most of it being published information—Swedish prices are anything from £5 to £6 lower per deadweight ton than our own, and Japanese prices are more like £10 lower. In terms of percentages that means that the prices are over 10 per cent. lower in Sweden and nearly 20 per cent. lower in Japan.
Many reasons have been advanced to account for the differences, but this is not the occasion to go into them. Nevertheless, I can assure the House that the industry is using the time bought by this Bill to explore them with great care, and it is keeping us informed of its findings. We are satisfied that there is no fundamental reason why our industry should not be able to match Swedish prices. There cannot be any reason. That is why it would be wrong to go on supporting the industry indefinitely in some special way, such as by this credit scheme. The remedy is in the hands of those on both sides of the industry and it seems probable that the greatest single contribution which could be made would be through the more efficient employment of labour. That has been said at intervals for years. But its truth becomes even more apparent the more one analyses and compares our position with that of other countries.
I am not thinking only of demarcation. The first requisite is that work should be carefully planned and well organised day by day. That is rendered immeasurably easier if demarcations are neither too numerous nor too rigid. Japan is a tougher competitor. Japanese labour is not only highly efficient, it is also cheap. I am not saying that this accounts for all the difference in price, far from it, or even that it accounts for most of the difference. But it is 296 probably the most important single factor and I therefore suggest that the best single step which the industry could take, in return for what Parliament is doing for the industry in passing this Bill today, would be to reach agreement, at long last, on the more efficient training, organisation and employment of shipyard labour. With this thought I commend the Bill to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Rees.]
§ Committee Tomorrow.