HC Deb 11 May 1967 vol 746 cc1791-805
The Chief Secretary to the Treasury (Mr. John Diamond)

I beg to move Amendment No. 5, in page 4, line 24, to leave out from the third "the" to "any" in line 25 and to insert "payment by".

Perhaps, Mr. Speaker, it would be convenient for this Amendment and Amendment No. 6 to be considered together, as they hang together.

Mr. Speaker

They will be grouped together.

Mr. Diamond

Thank you, Mr. Speaker.

Clause 7 at present enables the Minister to guarantee the repayment of loans in respect of orders placed by British owners with British shipbuilders, and the effect of these two Amendments is to enable him to guarantee the payment of all money due for the financing of such orders whether the liability arises under a loan agreement or otherwise. Perhaps I could therefore explain why it is necessary to have this alteration in the wording. The explanation will, at the same time, afford me an opportunity to give some information for which the hon. Member for Eastleigh (Mr. David Price) and the hon. Lady the Member for Tynemouth (Dame Irene Ward) asked in Committee.

At the request of the Government the London clearing and Scottish banks have agreed to provide finance for United Kingdom shipowners' shipbuilding contracts with British yards, within the limits set by the Clause, against Government guarantees for the full amount of each loan and of interest on it. The rate of interest payable on these loans will be a fixed rate of 5½ per cent. per annum payable half-yearly. This rate will be subject to review at the same time as the corresponding rate of interest under the export financing arrangements.

A commitment Commission of 1 per cent. on the amount of each loan contract will be payable by the shipowner when the contract is made. Loans will be repayable by equal half-yearly instalments, normally over a maximum period of eight years. The promissory notes which will be held by the banks under these arrangements will be refinanceable at the Bank of England—subject to prior discussion with the Bank of England in any case where recourse to financing is sought; they will not be marketable, but will be negotiable among the banks participating in the scheme.

It will be for the Government, of course, to decide what contracts shall be eligible for credit under these arrangements and for the associated guarantees. As the House knows, the Bill provides power to the Minister to guarantee loans up to a total of £200 million, and the Minister has arranged for the Ship Mortgage Finance Co. Ltd. to act on his behalf in assessing the creditworthiness of buyers and in advising on the necessary documentation on which guarantees will be issued.

I should like to say that the Government are grateful to the banks for agreeing to co-operate in these arrangements. The banks regard their primary lending functions as being to meet the normal requirements of industry and commerce for short-term finance and do not want their capacity to discharge that function to be inhibited by too great a volume of longer-term commitments. For this reason, the Government did not lightly ask them to undertake such a considerable volume of additional lending for a relatively long term and at a rate of interest which would not vary with changes in short-term rates, even though the credit was to be fully guaranteed by the Government. Indeed, the Government would not have made this request had it not been for the exceptional nature both of the position and problems of the shipbuilding industry, with which the House is familiar. It is with the knowledge that the situation and the request are alike exceptional that the banks have responded to the Government's request.

From a layman's point of view, the essence of the transactions I have been describing is that we have a bank lending money. From a layman's point of view, a loan is a loan, but under the arrangements which I have described one can contemplate one of three sets of circumstances: either a plain loan, or a loan with promissory notes issued as collateral security, or a financial transaction which consists of cash being issued, on the one hand, and a promissory note issued on the other, and therefore regarded in legal terms, not as a loan but as the purchase of promissory notes. As any one of these three arrangements might be made by the bank in the case of a particular loan it is necessary to widen the terms of the Clause, as these Amendments jointly do, in order to permit that facility which, I hope, will be acceptable to the House.

Mr. David Price

These Amendments are entirely agreeable to this side of the House. I am grateful to the Chief Secretary for his kindness in letting me know what was involved in all this, and I am sure that his explanation will have put over to the House the reasons for the Amendments.

The right hon. Gentleman made the very proper point that it is one thing for the. Government to ask the banks to cooperate in short-term financing but as most of the joint stock banks tend to be in the short-term lending business, one cannot ask them to co-operate with the Government in providing such loans over too long a time scale. This raises the point we were able to discuss in the Standing Committee—when some of us were possibly considered to be pessimists—that it might be necessary to have a credit scheme for rather longer than we may now anticipate. I said in Committee that as long as our creditors run credit schemes it is very difficult for us not to do so, and that is the real justification for the Clause.

That being so, the problem relates— and I would not pretend for a moment to know the solution—to the long-term future. The Government have left the position flexible, but I am sure that they are right in not asking the banks to commit themselves over too long a period. I join with the Chief Secretary in thanking the banks for having been prepared to commit themselves for as long a term as they have.

I am also very pleased that the Government have tied their arrangements with the banks for shipbuilding schemes to the general arrangements that successive Governments have had with the banks for the general support of export finance. It would be wrong to deal with the shipbuilding credit on different rates and terms from those with which we deal with the general support of exports.

An important point, with which I am sure the right hon. Gentleman will agree, is this. When any Government, of whatever party, ask the banks for special arrangements for something that is identified as being of national interest, we want stability for interest rates so that industry can know exactly the terms on which it can get money. If those rates are very preferential against the going rate on the market, there is a hidden subsidy which is not in this case carried by the taxpayer in the Consolidated Fund but by the commercial banks. In so doing, the commercial banks are withdrawing a bit of their total funds of cash available to the generality of British industry and trade. The House should remember this. That is why we are so grateful to the banks. But the Chief Secretary will agree that for the Government to ask this of the banks, and for the banks to respond, we must use this good will from the banks sparingly. If we did so on a large scale we could be reducing and prejudicing the flow of funds into the generality of commerce and industry to its detriment.

I thank the Chief Secretary for the way in which he introduced the Amendment, and I commend it.

Amendment agreed to.

Further Amendments made: No. 6, in page 4, line 28, leave out' for the purpose of' and insert: 'of any sum payable by that person in respect of principal or interest under arrangements (whether by way of loan or otherwise) entered into by that person for the purpose of financing'.

No. 8, in page 4, line 40, after 'since', insert 'the date of'.

No. 9, in page 4, line 42, after 'undertaking', insert: '(including a reorganisation begun but not completed before that date)'.—[Mr. Diamond.]

7.30 p.m.

Mr. David Price

I beg to move Amendment No. 10, in page 5, line 11, at the end to insert: (c) that any reorganisation agreed or proposed includes a formal agreement with representatives of the workpeople concerned, to promote higher productivity, to remove obstacles to increased efficiency and to ensure continuing consultation between management and workpeople. The object of this Amendment is to follow up a discussion we had in Committee on an Amendment moved by my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis). The wording of his Amendment did not commend itself to the Committee, but I gained the impression that the spirit of what he was trying to get at received a certain agreement in principle in the Committee. It is simply that the shipbuilding industry is an industry which has had a very hard history in human terms and it is also an assembly industry. Therefore, if this Bill is to succeed and if the sort of groupings we are aiming at are to be successful, it is essential to have the good will and co-operation of those working in the industry. This is common ground.

In Clause 7 we are dealing with the criteria that will be open to the Shipbuilding Industry Board in recommending to the Minister that he should give his guarantee and warranty for a credit. I am sure the whole House will agree that firms which do not receive that guarantee will be in a very difficult competitive position—I do not say an impossible position, but an extremely difficult one—against firms which get the support of the S.I.B. and of the Minister. In this Clause we have two major criteria. My hon. Friend the Member for Rutland and Stamford proposed to add a third dealing with staff relations and reorganisation as they affect those working in the yards. His Amendment did not commend itself because it referred to the trade unions and, as the Parliamentary Secretary said when commenting on the proposal, it raised issues which, as the Geddes Report pointed out, were far wider.

The Amendment I am moving will, I hope, meet the spirit of the discussion which I detected as being the l.c.m. of the Committee without falling into errors of draftmanship and raising the wider and more controversial issues which were in my hon. Friend's Amendment. I should have thought the House would agree that nowadays in our desire to increase productivity it is important to have formal agreements between staff and workpeople in the yard.

My Amendment does not raise the question of trade unions. We had an interesting discussion about whether more trade unions would emerge in the industry or not. My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) pointed out that although they may have merged there was still the question of trades within the trade unions.

The phrase in the Amendment, to remove obstacles to increased efficiency deals with the problem of old established practices which in human terms may have sound reasons but which events have gone beyond. Then the Amendment refers to ensuring continuing consultation between management and workpeople. I am sure the Minister will agree that continuing consultation is of the essence of this matter. I am also sure that the House will agree that this must be both on the formal and informal levels. Seeing the Minister present on the Front Bench, I do not think that I need give further explanation.

It is clear from a reading of the Geddes Report and from mv limited ex- perience of the industry that the biggest obstacle to progress is not scientific or even financial, but human. Conversely, if we get human relations right we can get remarkable results from limited resources. This is the essence of the problem facing the British shipbuilding industry. My motive in moving this Amendment is that I do not believe it sufficient to get the groupings and finance right unless we get the human relations right.

The Minister of Technology (Mr. Anthony Wedgwood Benn)

I thank the hon. Member for Eastleigh (Mr. David Price) for moving this Amendment and for the way in which he moved it. One of the difficulties which my hon. Friend and I have had during the passage of this Bill has been the attractive character of Amendments moved by hon. Members opposite. When attractive Amendments are attractively presented it is doubly difficult for a Minister to resist them, but in this case I ask the House not to put this provision in the Bill.

I ask that, not because I think the spirit behind the Amendment is not good—I think it is good—but because the hon. Member answers the Amendment in the latter part of his speech. He was quite right in saying that human relations in this industry will be of critical importance if the Geddes reorganisation is to succeed and if the industry is to have a long-term future. But to make statutory provisions for good human relations as incorporated in an Amendment of this kind would create real difficulties. I shall not make anything of the point which occurred to me that in earlier stages the hon. Member sought to remove some conditions and now he wishes to insert other conditions.

The difference is that the other conditions put on the Board the necessity to take into consideration certain things whereas in this case there would be no discretion left to the Board at all. The phrase, "a formal agreement" is very rigid. I can envisage a case where the unions and the management were in a state of great excitement over a new group and discussing productiviity arrangements and all the things covered by the Amendment and, because nothing had been written in the formal agreement, the: S.I.B. would be precluded from providing the credit arrangements which a group needed to get its orders. There is a serious danger here that, with the best will in the world, the Amendment, were it put into the Bill, would be too rigid. It might actually delay certain things we would all like to see done and it might be counter-productive, to use the current jargon.

If it would help the hon. Gentleman, I am certainly very happy to make a declaration, as it were, that the spirit of the Amendment will be very much in the mind of the Board as it approaches the task which the House is shortly to lay upon it. When I say "the spirit of the Amendment", I mean both in its positive and its negative senses. Negatively, if there is no response on this matter of relations between management and workers—or "workpeople", to use the phrase incorporated in the Amendment—clearly this would be a factor disinclining the Board to take the view that the proposed reorganisation was likely to be effective. More positively, the Board will be looking for, and seeking to encourage in every way possible, the considerations incorporated in the Amendment.

If this can constitute a Ministerial declaration in lieu of a statutory addition to the Bill, I am very happy to give it. I am sure that I carry the Board with me in doing it. I am grateful to the hon. Gentleman for giving me this opportunity for saying how the Board and my Department regard this problem.

Dame Irene Ward (Tynemouth)

I find the Minister's answer to the Amendment both disappointing and encouraging. It is difficult to know from what he said on which side to come down. On reading the Amendment, having for many years as a Geordie moved in and out of many shipyards, I regarded it as very satisfactory, because it is tremendously important in the creation of human relationships in industry for those engaged at all levels in industry to feel that it has been possible in a Bill to arrive at a form of words which states in formal terms the best of what those concerned in the industry want.

In a way, this is perhaps an old move to try to get into a Bill a relationship which could revolutionise the productivity and the interest of those concerned on both sides of the industry. Those who have been in the House for any length of time will agree that any new development is always difficult. As we all know what we want, as both sides of the House are agreed on it, and as it applies to all sections of industry, it is devastating to learn that it is impossible to find words which will not create difficulties. I regard it as fantastic that when we are entering upon a new era, particularly after the Geddes Report and after the introduction of the Bill, which has been so well received on both sides of the House, words cannot be found to interpret in the Bill the spirit of the Amendment. Those engaged in the industry on Tyneside to whom I have spoken would be delighted if we could write into the Bill an acceptable form of words embodying the spirit of the Amendment.

7.45 p.m.

It would be of inestimable value in the creation of more modern relationships if we could arrive at a form of words which one could point to as being the agreement of both sides of the House. With the best will in the world, it will not be nearly as easy to explain a Ministerial declaration. The people in my part of the world are of a suspicious nature. Declarations are not regarded in exactly the same way as words which can be read. I am disappointed at the period which has elapsed between Committee and Report stages. I hope that the Amendment has been on the Notice Paper for some time. With skill, especially in view of the support the Minister has given to the spirit of the Amendment, I should have thought that a form of words could have been devised to create a movement forward in this new era of co-operation in the industry.

As the right hon. Gentleman has refused to accept the Amendment in its present terms, we shall not be able to get it into the Bill. I am not all that keen on Ministerial declarations of intent. I suppose that I am, coming from my part of the world, a bit suspicious. However, we have brains in this country. It is ridiculous that we should be unable to find an appropriate form of words. I press the right hon. Gentleman to consult the Board. I should hate the Board to be restricted in any way. Those on the Board will be just as keen as everybody else to put the spirit of the Amendment into operation.

I ask the right hon. Gentleman to consult all these great brains and not let it be said that on a matter such as this we cannot find proper words to embody the spirit of the Amendment. It is important that we give encouragement and inspiration to those in the industry who are trying to make a go of it. They must make a go of it, in view of the rather devastating state of the industry. I ask the right hon. Gentleman to reconsider the matter and to find an appropriate form of words so that in another place a declaration of intent can be transformed into statutory reality.

Mr. McMaster

Like my hon. Friend the Member for Tynemouth (Dame Irene Ward), I was sorry to hear the Minister refuse to accept the Amendment. One of the great difficulties which have faced our shipyards in their attempt to remain competitive as an international industry has been the number of trade unions involved in our shipyards. There are seventeen or eighteen trade unions represented in each of our yards. There have been some notable examples of getting together, particular in the metal working trades. The boilermakers and the shipwrights have recently got together, and their amalgamation is most encouraging for the industry as a whole. However, as my hon. Friend the Member for Eastleigh (Mr. David Price) said, there are still many trades and many problems arising from demarcation between trades. I am sure, therefore, that action by the Minister to encourage the trade unions to get round these obstacles, obstacles arising from demarcation and other restrictive practices, would help the industry to become competitive.

The main purpose of the Bill is to give effect to the recommendations of the Geddes Committee. The Geddes Committee went to some length in considering this problem. It is not too much to ask the Government to go further than the Minister has. I was glad to hear his declaration encouraging trade unionists to get together, but it must be remembered that very few trade unionists will read the report of this debate. What they will refer to is the Bill itself. It ought to be possible to incorporate words—perhaps leaving out the expression "formal agreement" if that has particular significance—drafting a provision so as to encourage the trade unions, which have al- ready shown themselves to be co-operative, to be more co-operative.

In the industries with which our shipbuilding industry competes, for example, in Scandinavia, Germany and the Far East, there is only one union per industry to negotiate with the management, when a dispute arises here, on the other hand, we often find several unions involved. Sometimes, the management itself is not involved, but there is a dispute among the trade unions themselves. This slows down work in the yard and tends to make the British industry even less competitive because it is more difficult for us to meet the prices and delivery dates quoted by our competitors.

Will the Minister go a little further than his declaration, therefore, and say that he is really behind the purpose of the Amendment? Even at this late stage, will he consider whether there is another step he can take to deal with this aspect of the problem and help to make our industry competitive? He would give much more satisfaction if he did.

Mr. William Small (Glasgow, Scotstoun)

The intention of the Amendment is good, it is an expression of every good will, but it would be quite impracticable. There were distress signals out for our shipbuilding industry, as we all know, and then we had Geddes. One remarkable feature was the acceptance of Geddes by the workpeople; they were the first to welcome the Report. They made their arrangements known in April or May, immediately following the Report. We now have a new atmosphere in the shipbuilding industry. Everyone feels an identity of interest in wishing to salvage the industry out of its difficulties. To that end, the Government have brought in the Bill.

But let us look at what is going on now in terms of reorganisation, reorganisation being the operative word. There may be one yard with excellent labour relations. I can quote the example of Yarrow's in Scotstoun, where the shop stewards actually called a Press conference to express a vote of confidence in their own management. If we make things restrictive and embody the intention of the Amendment in the Bill, there will have to be agreement with workpeople in other yards. This is difficult enough now. On the Clyde, for example, we have what we know as "Y.C. & S.", Yarrow, Connell and Stephens. Then the principle is extended to include Fairfield's and Brown's. It will be necessary to take this broader mass of trade unionists along in negotiation.

On the Clyde, they got through the Prices and Incomes Board with the Clyde agreement—that is actually agreed now—and it has been accepted as a generality throughout Britain's shipbuilding yards that the workpeople would relax working practices. The initiation of such developments would be made more difficult if we put an added restrictive burden on those who are ready to reorganise and reconstruct.

It is simpler to have a declaration of intent from the Minister, leaving the thing where it is in the present atmosphere of general acceptance of a desire to salvage the industry. However long the life of the Shipbuilding Industry Board may be—the Opposition want to extend it for another year—it would be much better to have this left on a voluntary basis, without prejudice to the negotiations which will take place with the management on mergers, rather than adopt the restriction of a unanimity rule. This is what we should be asking for if we incorporated the Amendment in the Bill, and one particular leader might not be prepared to give way in the trade unions, on the works councils, or whatever it might be.

Mr. Benn

May I have the leave of the House to speak again?

The hon. Lady the Member for Tynemouth (Dame Irene Ward) spoke movingly and urged me many times to follow her advice. The Ministerial declaration is not, perhaps, as meaningless as it may seem to her at first sight. Under the terms of the Bill, the Minister will have to approve all these things. Therefore, when I said what I did in answering the Amendment, I was giving some public indication of the way in which a Minister would look at this matter. I have no reason to doubt that the S.I.B. would look at it as well before the question came to me, but my declaration has a little more meaning in that the action is Ministerial action in the end. The Minister gives the guarantee in this case, and I suggest that the Board does not need a statutory provision.

My real anxiety is this. We all want a new spirit, but I doubt that the new spirit will spread as much as it should if it is confined in a statutory bottle. My fear is that, if we have a statutory bottle for the new spirit, there may well be circumstances in which harm will be done to what hon. Members have in mind. There are all sorts of practical difficulties.

On the question of publicity, I am much taken by what the hon. Lady said, but I can only say that not many people read Acts of Parliament. I do not know how many Acts of Parliament circulate in the pubs and clubs of the North-East, but, to the best of my knowledge, I have never seen an Act of Parliament anywhere except in the House of Commons, save, of course, in the offices of those who are concerned from a legal point of view. I am sure that Acts of Parliament are less read even than HANSARD, which is a shame when one remembers how much work goes into them.

The hon. Lady spoke of the impact which what has been said in the House would have on people working in the shipyards. The pamphlet, "A Fresh Start in Ship Building", of which 100,000 copies were printed and circulated, deals very fully with better industrial relations, and I am not sure that that does not mean rather more than acceptance of an Amendment in the Bill.

I hope that the House will feel that there is no division of opinion in what we seek to achieve but will, for the reasons I have given, accept that a statutory provision for a formal agreement in each case, might actually harm the purpose which hon. Members have in mind.

Mr. David Price

The House is grateful to the right hon. Gentleman for what he has said, but, before asking leave to withdraw the Amendment, I put this point to him. I am sure that most of us entirely agree with the spirit of what he and the hon. Member for Glasgow, Scotstoun (Mr. Small) said, that these things are better done informally. Nevertheless, I believe that we have reached a stage in several industries at which one needs a formal agreement as a minimum. I have for years preached the same doctrine as the right hon. Gentleman has enunciated, but, over the years, I have begun to have my doubts.

8.0 p.m.

I take an example from a sphere closely related to this, in which the same argument arises, namely, racial discrimination. All of us present tonight would agree that one cannot make people of different races like each other by passing laws. At the same time, I suspect that most of us would also agree that it is necessary to have minimum statutory safeguards against gross racial discrimination. With great respect to the experience of the hon. Member for Glasgow, Scotstoun I believe that in an industry with as long a history of indifferent industrial relations, and sometimes of sheer hard times for owners, managers and workpeople alike, it is necessary to formalise part at least of what is agreed informally. I have always said that what is agreed informally at the yard level is more than what is formalised. I believe that the Amendment, by introducing formal agreements, will assist shop stewards, members of trade unions, members of workers' committees, managers, directors or whoever has to put over to the doubters amongst the people concerned that change really makes sense and is fair.

I have seen this in my own experience in the heavy chemical industry, as has the Parliamentary Secretary. As an old work study man with a stop-watch, I know that my task was made easier by the fact that my masters and the leaders of the trade unions affected in the plant in which I was working had made a formal agreement about how we operated work study and that arrangements had been made and formalised about redundancy. We were jolly certain that in practice there would be no redundancy, because we were an expanding industry. But the agreement was there as a formal safeguard. I suggest to the right hon. Gentleman and his colleagues in the Government, as I do to my colleagues, based on substantial experience in these matters, that although we want the voluntary spirit I believe that we can promote a better voluntary spirit if there is, in cricket terms, the long-stop of formal arrangements.

With those final thoughts I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Dell

I beg to move Amendment No. 11, in page 5, line 15 to leave out from 'agreement' to the end of line 16 and insert: 'or agreements relating to the giving of the guarantee'. I foreshadowed the Amendment in Committee. Subsection (4) requires Treasury approval of the terms of any guarantee and makes it clear that the Minister is to be entitled to make a charge for giving a guarantee. It assumes, however, that all the provisions relating to the guarantee, including any provision for a fee for giving it, will be in one agreement— … the agreement under which the guarantee is given —to quote the Bill.

In practice, this will not be so. The guarantee will be contained in an agreement between the Minister and the bank, and the provision of a fee, which may be known as a premium, and other provisions imposing obligations on the purchaser towards the Minister will be contained in a separate agreement between the Minister and the purchaser. Accordingly, the Amendment provides that the terms and conditions are to be prescribed in the agreement or agreements relating to the giving of the guarantee rather than in the agreement under which the guarantee is given.

Mr. Price

The House is grateful to the Parliamentary Secretary for that explanation of a technical Amendment. I hope that the House will accept the Amendment.

Amendment agreed to.