SHIPBUILDING INDUSTRY

HC Deb 09 August 1966 vol 733 cc1400-6

The President of the Board of Trade (Mr. Douglas Jay)

On 24th March I expressed the Government's appreciation of the work of the Geddes Committee and announced the acceptance by the Government of its Report as a basis for considering the future of the shipbuilding industry. I said then that the Government would be prepared to play their part, broadly along the lines indicated in the Report, if those in the industry were prepared to play theirs.

At the end of June I received memoranda from both the employer and union organisations reporting the conclusions that they had reached on the main recommendations which the Report addressed to them, and indicating the action which they were taking. The Government are now satisfied, both from knowledge of what has already been achieved such as the recent important demarcation agreement, as well as from the memoranda submitted by each side—[Interruption.]

Mr. Speaker

Order. The background of noise makes it difficult to follow the statement.

Mr. Jay

I am satisfied that the industry has accepted the basic recommendations in the Report and that both sides are prepared to co-operate in giving the industry a fresh start. I can now therefore confirm the Government's decision to play their part also in the reorganisation of the shipbuilding industry.

We have already taken steps in the Finance Bill to provide by Order for shipbuilders to be relieved of certain indirect taxes in respect of home orders. We shall make this Order shortly to come into force cm 12th September. We intend to introduce legislation this Session establishing a Shipbuilding Industry Board to promote the reorganisation of the industry.

We have in mind ceiling commitments for Exchequer assistance of the kind proposed by the Geddes Committee, but the precise financial arrangements to be included in the legislation need further study. The actual expenditure will mainly depend on the progress made by the industry itself and, before giving financial support to new groupings, we shall want to be satisfied that all possible steps will be taken to ensure competitive efficiency and viability.

I am glad to announce that Mr. William Swallow, until recently Chairman and Managing Director of Vauxhall Motors Ltd., has agreed to accept the chairmanship of the Shipbuilding Industry Board when it is set up; and I hope to announce the names of two other members in the near future. They will be able to hold discussions with firms and unions in advance of legislation as recommended in the Report.

Another important recommendation in the Report concerned naval orders. The Government agree on the desirability of concentrating orders for frigates and destroyers in a few yards specialising in the production of this kind of sophisticated vessel. The detailed arrangements for giving effect to this change, including the placing of naval orders, will be worked out in consultation with the Shipbuilding Industry Board in the light of the reorganisation of the industry as a whole.

I hope that this statement provides the necessary basis for both sides of the industry to proceed with their plans. The Government believe that any lasting solution of the industry's problems can only be achieved by the reorganisation of the industry and a new relationship between the two sides along the lines suggested by the Committee. On both these fronts the industry has made a fresh start since the Report was published. In the months ahead the two sides of the industry will need both to carry this much further in consultation with the Government and the new Shipbuilding Industry Board, and to complete the work on hand in individual yards without delays.

An excellent opportunity now exists in shipbuilding for a rapid increase in productivity which could bring substantial benefits to the balance of payments.

Mr. Barber

I should like to add my tribute to that of the President of the Board of Trade on the speedy way in which both sides have responded to the Geddes Report. Perhaps I may put to the right hon. Gentleman four brief questions. First, what effect will the wages freeze have upon productivity bargains which are already in hand and which are so important in the context of the Geddes Report? Secondly, will the proposed Industrial Reorganisation Corporation have any part to play in the rationalisation of this industry? Thirdly, in view of the progress which has been made under the Geddes Report, would it not be better to defer for the time being the transfer of responsibility for shipbuilding from the Board of Trade to the Ministry of Technology, which, as the Minister knows, was decided without any consultation with the shipbuilders and is against their wishes?

Finally, does the President of the Board of Trade agree with the Geddes Committee that the answer to improved competitiveness in the shipbuilding industry does not lie in nationalisation, or State participation, to use the Committee's words? Does not the right hon. Gentleman recognise that if full cooperation is to be forthcoming from the shipbuilding industry he must say now that as far as the shipbuilding industry is concerned nationalisation is out?

Mr. Jay

The implementation of productivity bargains will, of course, be deferred for six months, in accordance with the principles of the White Paper, in this industry as in other industries. The Industrial Reorganisation Corporation will work closely together with the Shipbuilding Industry Board and it is quite possible that finance may be required from the I.R.C. as well as directly from the Government.

The transfer of responsibility from the Board of Trade to the Ministry of Technology was stated in the announcement by my right hon. Friend the Prime Minister as being planned to occur after this statement had been made, which closes the first chapter of the operation. That is still our intention and I think that that is the best way to put this plan into effect.

As to nationalisation and other matters of that kind in the future of the industry, the Government's policy is as I have stated it this afternoon.

Mr. Grimond

Have the Government been able to give any advice about, or have they any policy for, the single yards in isolated shipbuilding centres?

Mr. Jay

That is matter which should now be considered by the Shipbuilding Industry Board in consultation with the industry, and, of course, in the light of what was said in the Geddes Report, but we would not like to lay down any dogmatic conclusion now.

Mr. Shinwell

Is my right hon. Friend aware that the statement which he has made about the creation of the Shipbuilding Industry Board will be warmly welcomed by all sections of the shipbuilding industry, which have already conveyed their views to many hon. Members, on both sides of the House?

May my right hon. Friend answer two questions? First, is it not important that the legislation should be proceeded with at the earliest possible moment and that there should be no delay? Secondly, I note that my right hon. Friend has suggested the appointment of a chairman, but it is not important that in the appointment of personnel the trade union side should be adequately represented?

Mr. Jay

Yes, I agree with my right hon. Friend on both points. It is intended to legislate this Session. The importance of trade union representation is fully understood.

Mr. Maudling

The president of the Board of Trade will be aware that one of the problems is that British shipowners can often get better credit terms from foreign yards than they can from domestic yards. Does he recall that the previous Conservative Government gave a £75 million credit scheme to deal with this problem? Do the present Government propose anything similar to that?

Mr. Jay

Yes, and I also recall that the previous Conservative Government failed to provide adequate credit for exports of ships. We intend to do both.

Mr. Blenkinsop

Will my right hon. Friend do everything he can to speed up the completion of the membership of the Shipbuilding Industry Board? Is he aware that we welcome very much its setting up, and that we very much want to see it getting on with its job?

Mr. Jay

Yes. I hope that the other members will be appointed very shortly.

Mr. Galbraith

Can the President of the Board of Trade tell the House whether the Government's object is to encourage amalgamations which flow naturally between firms, or whether he wishes to force them together against their natural affinities—by, for example, giving or withholding naval orders, to which he referred in his statement? Are these unions to be shotgun marriages? Or are they to be allowed to develop naturally without unfair pressure being put on them by the Government through the placing of naval orders?

Mr. Jay

What we want to see are groupings which will ensure a maximum increase in efficiency and productivity in the industry. On individual cases, we shall act in the light of the advice of the S.I.B.

Mr. Hector Hughes

Will my right hon. Friend define the exact powers of the Shipbuilding Industry Board and say when it will begin its work?

Mr. Jay

It will begin its work on a non-statutory basis immediately. Its powers will be, of course, to advise the Government, both on the powers which it will have now and the statutory powers which we hope it will have later, if the House agrees.

Dame Irene Ward

While there are many things to be extremely proud of in the amount of rationalisation which has been so successfully carried on, may I ask the right hon. Gentleman whether, in view of the fact that there are a great many details which are not very clear, and some issues on which we must have satisfactory answers, is it not rather a pity that this great industry is not able to be debated before the House goes into recess? May I have an assurance that there will be a debate immediately after our return?

Mr. Jay

I shall be very willing to have that, but I think the latter part of the hon. Lady's question ought really to go to the Leader of the House.

Dame Irene Ward

No. Let the right hon. Gentleman get on with it.

Mr. Small

Will the ordering of frigates be directly by the Board or departmentally with the yards?

Mr. Jay

The orders for naval vessels will, of course, be in the future as in the past by the defence Departments.

Dame Joan Vickers

In view of the fact that it is the custom for the Royal Naval dockyards to build frigates and that at present work for them is essential because already unemployment is starting, can the right hon. Gentleman assure me that he will not take away any future orders from the Devonport and other dockyards?

Mr. Jay

There is no such intention. I think that if the hon. Lady wants further details she ought to address that question to my right hon. Friend the Minister of Defence.

Mr. Ian Lloyd

Is the right hon. Gentleman aware that a widely held view about the weakness of the industry is that it has resulted from the failure to build building docks? In view of the report from John Brown's, published last week, giving encouragement to that view, will he give the maximum possible assistance to these groups which have decided to go ahead with building building docks?

Mr. Jay

We will certainly give encouragement to this idea.

Mr. Noble

Will the right hon. Gentleman make certain that the Board bears in mind that in the race for efficiency some of the smaller yards are now well ahead of the bigger ones, although it is the bigger ones which get the publicity and Government money? Will he try to ensure that the smaller yards, whether on the Clyde or the Tyne or elsewhere, do not get forgotten in the rush for the big names?

Mr. Jay

Yes, I think that that is certainly true, in some cases, though not necessarily all.

Mr. Barber

I think that the President of the Board of Trade must have misunderstood my last question, because he failed to answer it. In the Geddes Report it is stated: We are not recommending policies of nationalisation or State participation in shipbuilding". Does the right hon. Gentleman agree, or does he not agree, with that?

Mr. Jay

As I said, the Government's policy is exactly as I gave it in my statement this afternoon.

Mr. Buchan

Will my right hon. Friend, if the industry requires it, say that State participation will be forthcoming, as we have done with regard to Fairfield's? What will be the relationship on the question of research? Will it be tied up with the Ministry of Technology, or will the industry be encouraged to establish research centres? Will my right hon. Friend ensure that the colleagues of the chairman already appointed will be not merely luminaries of commerce, but representatives of the trade unions and practising shipbuilding engineers?

Mr. Jay

It is part of this scheme that loans should be made to the industry by the Government. It would be a large part of the job of the Board to advise on that. Responsibility for research will, of course, rest with the Minister of Technology.