§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ifor Davies.]
§ 1.8 a.m.
§ Mr. Stanley R. McMaster (Belfast, East)I should like, first, to thank the Minister of State for coming along after a very busy day—I know that he has had a busy day at Southampton—and waiting until a late hour tonight to reply to me in this debate. Our time is very limited. Therefore, I should like to deal briefly and in order with two topics, shipping and shipbuilding.
With respect to shipping, the Government have a long history of assistance to the British shipping industry. This goes back to the First World War, following which we had the Trade Facilities and Irish Loan Guarantee Acts and other Acts of Parliament to give special assistance to the British shipping industry. Money was made available both by way of guarantee and loan for the British shipping industry, and this was followed by the scrap and build policy which lasted about two years, but this policy was not a great success in the inter-war period, and under the British Shipping Industry Act many ways to avoid the provisions were sought, such as purchase of old ships and scrapping those and replacing them with new ones, which, some claimed, led 802 to surplus shipping tonnage and depressed freight rates.
The British shipping industry is today facing very severe troubles. The rate of profit has been cut to such a degree that the industry can hardly make any profit at all. I would suggest, therefore, that there is a strong case for some further aid to the industry. Not only are profit margins ridiculously low, but many of Britain's competitors enjoy special favour. Some are flying flags of convenience and enjoy exemption from tax; others enjoy special forms of subsidy and assistance.
In addition, many overseas countries assist their shipbuilding industry, either direct or indirectly. It has been suggested that the steel which goes into ships in Japan is subsidised because of the export element in the building. The Common Market countries are at present considering a direct subsidy of 10 per cent. for their shipbuilding industry.
Both these industries are of vital importance to this country. Not only do our shipowners earn about £80 million to £90 million, which assists our balance of trade, each year, but if the British shipping industry cannot survive against the competition which it is facing today, it has been estimated that we should have to spend about £250 million in carrying vital freights to and from these islands.
These are the considerations which I should like the Minister to bear in mind when he considers the suggestions which I should like now to make for the assistance of the industry. First of all, I would ask him to make as strong representations as he can to the Chancellor of the Exchequer, while the Finance Bill is being discussed, to see whether some concession could not be incorporated into those provisions which particularly affect the industry. The Corporation Tax and Capital Gains Tax are particularly heavy on shipowners. Secondly—again of great importance to our shipowners—I should like the Minister to consider whether the credit facilities at present available to British shipowners when they buy ships abroad cannot be extended to those shipowners when they buy them in this country.
The present state of trade is such that if a foreign shipowner buys his 803 ship in Britain, he can get special assistance from E.C.G.D. and special assisted credit. This is not available to a British shipowner who buys a ship in Britain. We have seen some important orders—including the large Shell tankers—going abroad, and I would suggest that the Minister looks into this problem. He might also consider whether some form of special investment allowance were possible to encourage British shipowners to build in Britain. In 1964, 84 per cent. of the orders which came into British yards came from British shipowners. Our fleet is still the largest shipping fleet in the world, though it has been increasing at a much slower rate than the fleets of many foreign countries.
I should like the Minister to look into certain practices, such as flag discrimination, to consider whether strong countermeasures cannot be taken against countries adopting these practices, for example, Uruguay and others.
Finally, under this heading, I would like the Minister to give all the assistance he can to the British Shipping Research Association, which has done very good work in the past and which has lust developed, in co-operation with the British shipbuilders, a new type of bulk carrier.
It has been said that the Japanese, who are one of our strongest competitors, have designed and are designing better vessels than Britain is. I would like the Minister to encourage anything that will change this situation.
I feel that the Government can give further assistance to the shipbuilding industry, in addition to the measures which I have mentioned. These measures indirectly help the British shipbuilding industry. British shipping is one of our shipbuilding industry's biggest customers and the building industry is helped if the shipping industry is helped. Is it possible to give further aid to our shipbuilders so that they can face the competition from abroad and so remain in business?
The type of aid which I have mentioned includes not only direct help to the British ship owners but assistance under the Local Government Acts in areas such as Northern Ireland and Scotland, both of which the Minister recently visited. The money could be 804 used in these areas to modernise the yards. Since the war many of our main competitors have been able to build fine new yards, whereas in Britain we have had a much slower modernisation programme and we have had to build on old foundations which are often not suitable for modern shipbuilding. More money should be invested in the shipbuilding industry to carry out further modernisation and to install new cranes which are necessary for modern methods of fabrication.
In addition, the Minister could help by providing assistance for the building of dry docks and other facilities which would enable British builders to compete for the very large orders which are being placed abroad, particularly in Japan.
I was glad that the Minister recently visited Harland and Wolff, which is in my constituency and in which I am particularly interested. This yard is of vital importance to the economy of Northern Ireland and employs some 12,000 men in Belfast. The yard has been modernised in the most ambitious manner over the past five years and, as a result, it has been most successful in getting new orders. The whole House will welcome the recent announcement that the order for a tanker for Sigval Bergesen, of 167,000 tons, the largest in the world, has been placed at Harland Wolff.
This reinforces my point that in Britain we have a shipbuilding industry which is second to none. The industry can build both specialist boats and passenger liners, vessels which require individual construction and the large bulk carriers and tankers in respect of which we are facing such strong competition from the Far East.
If we are able to build competitively a boat like that being built for Norway, is it not a pity that similar orders cannot be placed by British owners such as Shell? The suggestion is now being considered that the new dry dock to be built at Belfast should be enlarged. This may be the last chance to build in Belfast a dry dock large enough to take not only the tankers at this moment being built, and not only the new one for Norway, but the 200,000-tonners which, I believe, will be built in the near future and which will perhaps become the standard tankers of the future.
805 It is now proposed that the dock should be 1,000 ft. long and 150 ft. wide. It is to be built on the last available site in Belfast for such a dry dock. I ask the Minister not be pound foolish and penny wise, but to take the opportunity to build a dry dock wide enough to take the biggest boats being built here and, if necessary, to leave the length—once built, a dry dock can always be lengthened, but it is very difficult to widen it—so that no matter how wide the boats become, the dock will be big enough to take them.
I ask the Minister to consider the various comments I have made and also to consider the difficult question of trade union relationships. There are many different unions in the shipyards—more than 20—with which the management has to deal. Although we have a great deal of skill at building boats in this country, we are sometimes hampered by demarcation and other arguments among the various unions. Perhaps the management is not as up to date and as modern as it could be. Nothing is ever perfect in this world and there is nothing that cannot be improved. I hope that the Geddes Committee will pay particular attention to this aspect of the problems facing our shipbuilders so that our yards can compete with those in the Far East.
§ Mr. James A. Kilfedder (Belfast, West)Would not my hon. Friend agree that part of the difficulty which the shipyards face—and I am thinking particularly of the Belfast yard—is a sort of holier than thou attitude of the managements which makes them want to criticise the men they employ, but which at the same time prevents them from seeing their own defects? Although modernisation of the yards is very important, does not my hon. Friend agree that it has not been matched in the relationship between the men and the management, which too often puts the blame on the trade unions?
§ Mr. McMasterI agree that the problems of trade union relations and public relations are among the most difficult we have to face. We have an unfortunate history, particularly of unemployment in our shipyards, but it would be a mistake to exaggerate the problems. We are the finest shipbuilders in the world and we will do damage to 806 the yards if we get this difficulty out of proportion. There is scope for improvement on both sides, but we must keep the problem in proportion.
§ Mr. R. Chichester-Clark (Londonderry)I do not want to intervene for more than a moment. I want only to ask the Minister whether he has yet received tenders for the dry dock and to reinforce what has been said about the size of the dry dock which my hon. Friend the Member for Belfast, East (Mr. McMaster), who works so hard for the area with which he is concerned, mentioned in connection with the 167,000 ton tanker. Does that order in any way call into question the size, length and breadth, of the proposed dry dock?
§ 1.25 a.m.
§ The Minister of State, Board of Trade (Mr. Roy Mason)This is an opportune moment for a debate on shipping and shipbuilding. I am sorry that it is only an Adjournment debate because there is so much to say at this moment of time. I received no evidence whatsoever of shipbuilding in Japan being directly subsidised. The hon. Member for Belfast, East (Mr. McMaster) referred to Shell tankers being ordered in Japan. I hope that he and the House will remember that the order was won on sheer competition. The German and British tenders were up to £¾ million more expensive than the Japanese were working to.
On the question of European subsidies for shipbuilding and the possibility that they may subsidise by 10 per cent.—it is only a suggestion which has been made so far; even if it were accepted, it would not be operative till 1967—I am not eager to see a subsidy race. This is not the answer to the future of British shipbuilding. The real answer is, as it was with the question of the Shell tankers, an increase in productivity in British yards. That is what I am eager to see done as quickly as possible.
The hon. Gentleman referred to various changes in taxation which he would like to see introduced to assist the British shipping industry. No doubt my right hon. Friend the Chancellor of the Exchequer will take careful note of the points the hon. Gentleman raised. The topics are almost sub judice because we are going through many of these questions 807 on the Finance Bill. However, I can give the hon. Gentleman an assurance that these matters are subject to close scrutiny in the light of the Finance Bill's implications of all that is happening in shipping at present.
The hon. Gentleman expressed concern at the effects of flag discrimination on our shipping industry and, as a consequence, on our balance of payments. No doubt he had in mind the discrimination which has been exercised by Uruguay. This is the most recent discriminatory practice. The Government view with real concern the growing pressures towards flag discrimination. This may not yet be a worldwide problem, but in particular trades its effects can be serious. This is particularly true of Uruguay. Flag discrimination distorts the economics of shipping and impedes the free flow of trade. Goods are delayed while they await ships of particular flags. Storage and other costs are increased. Shipping costs rise because load factors are reduced and the quality of service suffers as a result.
So far on this question I think the hon. Gentleman and I are in agreement. We would both like to contain and, if possible, reduce the amount of flag discrimination that goes on. The problem is how to do it. Hitherto we have generally opposed flag discrimination by diplomatic protests and in negotiations on aid or finance, and we have had a number of successes. Wherever possible, we act in conjunction with the Governments of like-minded maritime nations, since we think that joint action of this sort will carry much more weight than individual protests.
The Uruguayan Government have been left in no doubt about the concern with which the Governments of the United Kingdom and other maritime countries view their discriminatory measures, both present and proposed. Indeed, as recently as 31st March a collective note of protest was delivered in Montevideo on behalf of the United Kingdom, eight other European Governments and Japan. At the moment we must await their reply. In the light of their reply, we shall consider with the other countries concerned what action we should take.
Gloomy predictions are often made about the prospects for our shipbuilding industry in general and that in Northern 808 Ireland in particular, but I cannot accept that they accord with the facts. Indeed, it is a disservice to the industry to imply that it has not a great deal to be proud of, not only in the past but also in the present.
What are the facts about the current position of British shipbuilding? Briefly, our industry is second to none in the quality and variety of its products. In recent months it has been winning, in the face of fierce competition, a most encouraging flow of orders from both home and overseas purchasers. During the first four months of 1965 new orders totalled 528,000 gross tons, as against 309,000 gross tons in the comparable period of 1964. Since the end of April orders for some 185,000 gross tons have been reported—all for export—including the order which Harland and Wolff has secured from Norway for the largest tanker ordered to date. More important, new orders exceeded completions by a considerable margin, even though the latter have been running at an unusually high level.
As a result, by the end of March the industry's total order book had risen to 2½ million gross tons, the highest since 1961, when the last of the post-Suez backlog was still being worked off. The marked upswing of our fortunes in the world export market is especially gratifying. Since the beginning of this year 17 firm export orders totalling 392,000 gross tons have been announced. This represents a substantial and encouraging improvement in the export performance of British shipyards in comparison with earlier years. Indeed, the industry has already, in less than five months, booked more than three times the volume of total export orders secured in the whole of 1964. Furthermore, export orders so far this year are well over the 1963 total, itself the best year for export orders since 1957.
There can be no doubt—and the industry itself has readily acknowledged the fact—that the Government's measures to help exports made a substantial contribution towards this splendid achievement. Of especial benefit to the shipbuilding industry have been the arrangements to provide export finance for capital goods, including ships, at a fixed rate of interest. Extension of the bank guarantee facilities has also helped. 809 The Government's measures have enabled British shipbuilders to offer their overseas customers credit terms which compare favourably with those available from other shipbuilding countries, and this, in particular, has paid divdends.
Since the introduction of the new arrangements in January, export orders totalling nearly 400,000 gross tons and worth over £30 million have been booked, while shipyards report that the volume of new inquiries from abroad has doubled. Moreover, E.C.G.D. currently has around 80 inquiries in respect of business worth about £120 million in various stages of negotiation.
It is particularly pleasing to note in addition to all that the recent interest of the Norwegians once again in British shipbuilding. They are old traditonal customers of British shipyards and they are starting to order afresh here. The old ties with the Scandinavian market will, I believe. have been strengthened by the sales campaign mounted by the industry with the Board of Trade's support at the recent International Shipping Exhibition in Oslo. Twenty-nine British shipyards were represented at the Exhibition, and I was most impressed to see during my visit to Oslo the effort they were making. I have every hope that their efforts there will lead to a new increase in export orders for ships from Norway.
I make no apology to hon. Members for dwelling at length on this question of shipbuilding exports. The balance of payments difficulties which the Government have had to sort out can only be solved by a sustained improvement in exports. The shipbuilding industry is to be congratulated on its contribution. As a result, shipyard activty is now at a very high level and this is likely to continue for some time to come. Many yards are acutely short of skilled workers, both in the steelwork and fitting out trades. The problem for some yards is to keep to their launching and delivery schedules. I know that the industry appreciates the importance of this and I trust that both sides of the industry will co-operate to see that these dates are kept, for in present conditions delivery can be as important as price in so highly competitive a market. Moreover, failure to meet agreed delivery dates, particularly in the case of foreign customers, can 810 not only tarnish the image of British shipbuilding, but also prejudice our exports of capital goods generally.
Before I leave the story of the industry's recent achievements, I must say a special word about the industry in Northern Ireland. Harland and Wolff, as the hon. Gentleman has mentioned, has just secured an order worth nearly £5 million for a 167,000 deadweight tons tanker for a Norwegian shipowner. This will be the largest tanker on order anywhere in the world and by far the biggest to date built in the United Kingdom. Harland and Wolff deserves the warmest congratulations on its spectacular achievement. In addition to making a substantial contribution to our balance of payments, the order is further evidence of the confident challenge presented by the United Kingdom shipbuilding industry in world markets. I have seen the yard. I have seen its reorganisation. I particularly visited the Musgrave yard. I say to Harland and Wolff on its effort in capturing this order: well done indeed.
The order will also have a major impact on the Belfast yard's prospects and will have been good news to all engaged on shipbuilding in Northern Ireland. When added to the existing order book which, in addition to naval vessels, totals nearly a quarter of a million gross tons of merchant ships, the latest order will do much to ensure the jobs of shipyard workers for some time to come. This is indeed welcome news. because although unemployment among shipyard workers is at the lowest level for several years, shipbuilding as a major source of employment is of special importance in the economy of Northern Ireland. I shall be meeting hon. Members representing Northern Ireland constituencies later this morning and we will be able to discuss the position of shipbuilding in Belfast in more detail. The dry dock tenders have not vet been received and I cannot add anything more on the subject. It is still under discussion and nothing yet has been finalised.
I ought to say something more about the industry, especially now that we have set up the Geddes Committee. It may seem strange, against this background, that the Government should have set up the Shipbuilding Inquiry Committee under 811 the chairmanship of Mr. Reay Geddes. There are certain factors in the present situation which neither those engaged in the industry nor the Government can afford to neglect. The past pattern of this industry has been one of large fluctuations in the order book and the level of activity in the yards. At one time the industry has been prosperous and at another it has seen hard times.
At present, although the orders and level of activity are high, the industry has not reached that level of prosperity for which it hoped. Neither the return on investment nor the return to the workers as a result of the efforts made to get orders and to produce the good ships for which the industry is noted has reached a satisfactory level. World shipbuilding capacity is growing fast, probably faster than demand, and the problem is to ensure that while so many yards have more work on hand than they have had for some time the industry can organise itself to meet the challenge of world competition.
What the industry must seek, and what the Government want to help it to seek, is security, not the security of the feather- 812 bed but the security which comes of confidence in its ability to compete. I want to get rid of the casual time that attaches to the industry. That is one of my major aims. I hope that the Committee will be able to make its recommendations for action by employers, workers and the Government early next year. I understand that it is making good progress and that it has already stressed to the industry its hope that its establishment will not impose a pause on the industry. It is certainly the Government's wish that the industry should redouble its efforts to prepare for the future as a matter of urgency. The Committee's Report will be of much more value if the industry has already faced the problems ahead and started on the road to their solution. Among the needs of the industry in securing its future prosperity—
§ The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty-two minutes to Two o'clock.