SHIPPING AND SHIPBUILDING

HC Deb 26 July 1968 vol 769 cc1194-224

12.45 p.m.

Mr. Frederick Willey (Sunderland, North)

I wish to turn the House's attention to two of our basic, essential industries—shipping and shipbuilding. It is hard to discuss them in the short time at our disposal, but I realise the difficulties and I shall be brief.

In a way, the post-war history of both these industries reflects what has happened to Britain since the war. Dealing, first, with shipping, we have been able to maintain, and indeed increase, our mercantile fleet, but it has seriously lost ground in the world. Last year was a significant year because for the first time the British fleet ceased to be the largest in the world. Liberia now has the largest mercantile fleet in the world. Only 20 years ago, Liberia had a couple of ships and a fleet tonnage of 700. Twenty years ago, Norway had a fleet of 4 million tons. Now its fleet is over 18 million tons. Twenty years ago, Japan—and this is not without significance if we think what has happened in shipbuilding—had a fleet of 1 million tons and now has a fleet of 17 million tons.

Therefore, in the world, the British mercantile marine no longer has the dominant position which it had 20 years ago. Expressing this in percentages, whereas, before the war, the British fleet represented 28 per cent. of the world fleet, it now represents just over 12 per cent.

My interest in shipping is secondary. My primary interest has always been in shipbuilding. But the fate of shipbuilding depends upon shipping. We depend on shipping for our orders. When I put forward proposals for the shipbuilding industry in the mid-1950s, I suggested that a fact-finding inquiry should be made, not only into the shipbuilding industry, but into the shipping industry. Eventually, we had a fact-finding inquiry into shipbuilding and the Report and recommendations of the Geddes Committee. Everyone in the shipbuilding industry recognised the success of that inquiry.

I ask my hon. Friend the Parliamentary Secretary to consult the industry so that consideration might be given to holding such an inquiry into the shipping industry. I am not being doctrinaire. I know that the shipping industry is working on a very narrow margin of profitability. I readily acknowledge the importance of its recent increase in its contribution to the balance of payments. I recognise the special prob- lems of an international industry. Developing countries develop their own mercantile marine. I know of the steps taken by other countries in trade discrimination. These are the sort of problems which should be considered so that recommendations may be made about the industry as a whole.

There are other problems. We are developing highly sophisticated ships, which, we must recognise, demand smaller crews. There is the problem of our coastal shipping. We must sit up and take notice when we find that for years the Dutch and Germans have been able to take some of our coastal shipping trade from under our noses. I know that those in the industry have a very healthy regard for its independence, but today, the industry has the benefit of free depreciation and investment allowances and I ask those in the industry to accept such a suggestion and see whether we might get a development similar to that which has taken place in shipbuilding.

The post-war position in shipbuilding is worse than it is in shipping. We have been able to maintain a stable level of output in shipbuilding, remarkably stable if we think of the years before the war. But we have seriously lost ground to other countries. I remember that in 1947 we were building more than half the world's ships. During the last few years, the level has dropped to as low as 7½ per cent. I remember repeatedly calling attention in the House in the mid-1950s to what Sweden, France and Germany were doing, and, much more important, to what Japan was doing and how she had recovered from her first set-back. I remember then being told by Conservative Members how unrealistic I was about Germany and Japan. I called attention to the fact—and this would affect an inquiry into shipping— that for the first time we were then placing orders abroad for British shipping. I was told at the time that only 4 per cent of our shipping was being built abroad and that there was no cause for concern.

Things have turned out differently. Last year, when our yards achieved their finest export output since 1920, we were still a net importer of new shipping. Today, we have over 1 million tons under construction abroad for registration in the United Kingdom. If we look at the position of shipbuilding in the world as a whole we find that Japan is at the top of the table, and, not only that, but if we take the whole shipbuilding world's order book, we see that Japan has orders equal to the total of those of the next four countries in the table. Sweden is now determined to hold her second place. We have then got Germany. Fighting for fourth and fifth place—and I am glad to say we are moving up—are ourselves and France.

Now one cannot blame the Government for this. I am sure that the House would acknowledge that never before, I think, has so much been done for this industry. I mentioned the proposals I made in the mid-1950s. I then suggested, as I said, that we should have a fact-finding inquiry. We got the Geddes Committee appointed immediately by the Government and we got a very good Report from that Committee. I also suggested, secondly, that we should have a Reorganisation Commission. That is what we got in the Shipbuilding Industry Board, with its grants and loans.

I should like to make, by way of aside, two points. When I suggested a Reorganisation Committee I also suggested that there should be power to enforce a reorganisation scheme by regulations approved by Parliament. I think, retrospectively, that was right. I do not emphasise it too much, because I recognise the importance of independence and initiative in the industry, but I think that it was right that there should be some public responsibility for reorganisation of the industry.

However, I think that this is more important. I also suggested that such a Board should also deal with the problem of redundant capacity and see that suitable alternative work is provided for redundant manpower, and I think that that was right. I know that some of my hon. Friends are rightly concerned about workers who may be made redundant at the Furness shipyard, but I think that it would have been done better directly within the concern of the body responsible for reorganisation. I think, also, and I I know that many of my hon. Friends share this view, that we have to take more realistic steps about the question of providing alternative work for the men made redundant by reorganisation in the industry.

I turn briefly to the prospects of the industry as they appear today. The short-term prospects, I think, are very good indeed. They have considerably improved, and I think that we can say that the industry has been able to take full advantages of the opportunities given first by Suez and then by devaluation. There has been a remarkable improvement over the last quarter of last year and the first two quarters of this year. I think we can also say, while recognising this considerable recovery, that the action of the S.I.B. has been right and that the owners have been encouraged by the credit guarantees at the right time. We have got these home orders now being put into British yards.

Looking at the long-term prospects, while I would pay tribute to the work of Sir William Swallow and his Board, I do not think that we can be quite so confident. We can pay tribute to them for what they have done about the Upper and Lower Clyde, about the Tyne, and what they are doing on the Wear. Oddly enough, we have particular difficulties on the Wear, for we were pioneers in this field. In 1954, we got a considerable merger by the Sunderland Shipbuilding Company—the Doxford group. Now we are trying to get a merger for the whole river against the background of the substantial part of the industry which has been merged already. Outside that group we have only a couple of yards. I think that Sir William takes a realistic view, our credits were not held up, and the Board has agreed that it will consider the loan and grant proposals made by the Sunderland Shipbuilding Company in the context of the general interests of the Wear.

This is good progress. What concerns me is something rather less specific, less identifiable. The Geddes Report gave us three alternatives: the industry could decline, it could hold on, or it could grow. The Geddes Committee came down on the side of growth and the S.I.O. equally is on the side of growth. I want to define growth in terms of the Geddes Report. Growth is that within two to three years after reorganisation, the British shipbuilding industry should gain on the world market a share of 12½ per cent. or more. It is now enjoying 8 per cent. of the market. This is a considerable task. The Geddes Committee defined the capacity of the British yard and the output of British yards as round about 2¼ million tons per annum.

Now I am not convinced that the industry has yet accepted this target. We on the North-East Coast have been very disturbed at the threatened closure of the Furness yard and the fact that no merger would consider taking the yard. We have got to get the industry more firmly committed to a target of 2¼ million tons.

My second point is that in the Geddes Report there were seven points for early discussion. I want the Minister of State to say what progress has been made with the seven points. I shall mention only a couple, but they are very important. There is the question of manpower required by the industry. It is very important to get this defined because of the problem of alternative work following reorganisation as it is carried out. Without alternative work it is very difficult to carry out reorganisation and to carry it out we have to provide the necessary alternative work.

There is also the question of effective machinery for consultation at yard level. This is equally important. I would pay tribute to what the unions have done and I would pay tribute to what happened on the Tyne and we want progress likewise on the Wear.

The third point I would put is that we recognise that, following the reorganisation of the shipbuilding industry, we must consider marine engineering. We recognise that this is a much more complex and difficult problem. I should very much like my hon. Friend to say what progress is being made with this. I do not quarrel with Sir William for taking shipbuilding first, and then marine engineering. I agree that B.R.S.A. should be associated with this. I think it right and proper that it should do, but I would welcome anything my hon. Friend has to say about marine engineering and the progress which has been made towards reorganisation.

To conclude, I think that we can pay credit to the shipbuilding industry. It is providing good deliveries. It has taken advantage of the attractive credit facilities, and it is at present doing well enough on price. It is price that is really important, looking further ahead. It is price that will be absolutely crucial in the world market. Price turns ultimately on higher productivity and higher productivity turns on successful reorganisation of the yards—and successful reorganisation, I emphasise, that is carried out in the spirit of the Geddes Report.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Sydney Irving)

Order. I would remind the House that this debate must finish at ten minutes past two, and that if all hon. Members who wish to speak are to get in to the debate all hon. Members must be brief.

1.0 p.m.

Rear-Admiral Morgan Giles (Winchester)

I agree that shipping and ship building are extremely important for Britain, and that it is very appropriate that we should have this debate on the last day before the Summer Recess. This is a most exciting time for all seamen and engineers with all the prospects and the development in super tankers of which we read so much. This morning, however, I want to draw attention to another angle of shipping, and that is its protection.

It must never be forgotten that the world-wide protection of shipping has always been the principle rôle of our naval forces. There is no need for me to emphasise that without the safe and timely arrival of merchant ships in peace time and in war, the country would starve. There is no need for me to go into the history of the convoys, the Battle of the Atlantic, and so on, in the two great wars of this century. But what worries me now is that the policy of the Government seems to be to reduce our Armed Forces—

Mr. E. Shinwell (Easington)

On a point of order, Mr. Deputy Speaker. This debate was arranged primarily and exclusively for the discussion of shipping and shipbuilding. The protection of British shipping does not enter into the debate this morning. Surely the hon. and gallant Gentleman the Member for Winchester (Rear Admiral Morgan Giles) has the common sense to understand that we in the North-East are concerned with a special problem. Will he not intervene in affairs that do not concern him?

Mr. Deputy Speaker

Order. The title of the debate is rather general, although I think that it would be in conformity with the practice of the House if it were confined to one aspect of the subject.

Rear-Admiral Morgan Giles

I quite understand the point, Mr. Deputy Speaker, but there is no point in having ships built unless they are also protected. I have heard many shipowners and merchant seamen express anxiety about the Government's policy on this score.

What are the possible threats that face our merchant shipping today? No purpose is served by hiding our heads in the sand First of all, there are nearly 400 Soviet submarines, half of them nuclear-powered, and that, to put it in proportion, is ten times as many submarines as Hitler had at the start of the Second World War.

Next, there are very highly sophisticated surface-to-surface missiles in torpedo boats and destroyers—

Mr. Ted Leadbitter (The Hartlepools)

On a point of order, Mr. Deputy Speaker. I agree that the title of the debate is such that it can be interpreted fairly generally, but it will be agreed that my right hon. Friends the Members for Easington (Mr. Shinwell) and for Sunderland, North (Mr. Willey) had the specific intention to talk about the industry. I think that the hon. and gallant Gentleman the Member for Winchester (Rear-Admiral Morgan Giles) should desist.

Mr. Deputy Speaker

The hon. and gallant Member will probably realise that, in any case, I was about to intervene. It is true that the title of the debate is general, but the hon. and gallant Gentleman is getting outside even the broad title of the debate of shipping and shipbuilding into realms of defence. The intention was not to go as wide as that in this debate.

Mr. John Rankin (Glasgow, Govan)

Further to that point of order, Mr. Deputy Speaker. In view of the interruptions caused by the intervention of the hon. and gallant Gentleman the Member for Winchester (Rear-Admiral Morgan Giles), will those of us who want to discuss shipping and shipbuilding be allowed a little extra time beyond the point at which the debate is supposed to end?

Mr. Deputy Speaker

I can give no undertaking about time. Technically, any aspect is in order in this debate, but I think that if, in accordance with the practice of the House, the hon. and gallant Gentleman will confine himself to the subject on the Order Paper, it will help the House.

Rear-Admiral Morgan Giles

I am talking about shipping, and an extremely important aspect of it, namely, that of our ships once built, and nothing is more important to the country than that they should not thereafter be sunk as soon as they get to sea.

The last of the principal possible threats that face our ships are mines, and every port on the Continental Shelf is very vulnerable to that form of warfare. I do not say that all-out attack on our shipping is the most likely thing to happen, but it is a possibility that cannot be entirely neglected.

There are also below-the-threshold possibilities. There is the individual harassment of merchant ships at sea—Interruption.]

Mr. Deputy Speaker

Order. I am unable, under the rules of order, to rule the hon. and gallant Member out of order, but he is not conforming to the spirit and practice of the House if he proceeds on the line he is taking at the moment.

Rear-Admiral Morgan Giles

With the greatest respect, Mr. Deputy Speaker, I am talking about shipping, and I am trying very hard to keep in order, having in mind the title of the debate.

Among the individual threats that face our ships, in addition to being badly constructed, or being burnt because fire precautions are not apt, are individual harassment at sea, and sabotage. After all, 40 per cent. of our merchant ships at sea have Chinese crew members. I have often sailed with them—

Mr. W. E. Garrett (Wallsend)

On a point of order, Mr. Deputy Speaker. I am probably one of the most tolerant men in the House, but we have already decided the subject for debate. We have heard the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) start on a defence question, and now we are coming back to protection of shipping at sea in the sense of safety regulations, which is completely beyond the scope of the debate.

Mr. Deputy Speaker

Order. I have indicated my position from the Chair. This is an Adjournment debate. I am unable to rule the hon. and gallant Gentleman out of order, but I have tried to press on him my view that he is not acting in accordance with the spirit of the debate.

Rear-Admiral Morgan Giles

Many hon. Gentlemen who have intervened in this debate, which is most interesting, have one view of shipping, but there are other views of shipping which are of vital importance to the country and, quite honestly, I do not see why one aspect is more important than another. The title of the debate is shipping and shipbuilding.

The ordinary hazards of the ocean for those ships, once they have been built and launched, are numerous, and it is the great tradition of seamen of all nations to help one another when they are in danger. I do not wish to see us, the British, with our great seafaring traditions, unable to make our fair contribution to the safety of modern shipping right round the world.

In order that the ships we have and run and build shall be properly protected at sea, we should not be deprived of aircraft carriers of some sort or another. It is idle for the Government to suggest that helicopters can suffice for that purpose. We must also not be deprived of enough frigates—

Mr. Leadbitter

On a point of order, Mr. Deputy Speaker. Would you not agree that every hon. Member with the exception of the hon. and gallant Member opposite knows exactly what the debate is about? Some of us are here to talk about the industry and the people in it. The hon. and gallant Gentleman should at least have the courtesy and manners of his Service rank and his place in the House to behave properly.

Mr. Deputy Speaker

Order. I think that the interests of the House and of those hon. Members who wish to take part in this debate would be best served if I were to allow the hon. and gallant Member to proceed, and to come to a conclusion as quickly as possible.

Rear-Admiral Morgan Giles

On the subject of courtesy and manners, Mr. Deputy Speaker, I have been interrupted about six times when speaking on a subject which is just as important as the building, the designing and the running of ships. I quite understand that many hon. Members wish to speak, but so. incidentally, do I. But in view of the obvious feeling of the House, I am confining my speech as closely as I can.

One of the most important matters concerned with the protection of shipping is that our naval forces must not be confined to European waters under a single Commander-in-Chief buried in a concrete hole in Northwood. It will be a bad day for Britain when no British merchant ships are in waters other than the Atlantic.

I do not want to go into the details of what protective measures are needed for shipping—the naval staff know what to do about this. All that is essential from the parliamentary point of view is to see that this Government do not reduce our defence forces to impotence. I have put as concisely as I can what I wanted to say on this vital matter affecting our shipping.

1.10 p.m.

Mr. Arthur Blenkinsop (South Shields)

I shall bring the debate back to discuss the subject which was intended. I intend to speak purely about coastwise shipping. I share a deep concern about the situation today with many of my constituents who are seamen.

I agree with my right hon. Friend the Member for Sunderland, North (Mr. Willey) about this serious matter. Many of us are concerned about the size of the fleets engaged in coastwise shipping, which have been reduced so rapidly over recent years. Compared with immediately pre-war, we have rather less than half the numbers of ships employed in coastwise shipping. One feature which concerned us is that a high proportion of British ships are being sold and there has been a great increase in the chartering of foreign vessels. This concerns very deeply seamen many of whom are my constituents.

We have to face the problem of the decline of coal cargoes. I suppose we should welcome the fact that ships are far more efficient; they use fewer men in relation to tonnage, but what we are not prepared to face without challenge is that a great deal of the coastwise trade is obtained by foreign flags. There is general anxiety lest coastwise shipping is not given its proper consideration in the whole of transport. It is very much the Cinderella of Transport. Many of us are not satisfied that the Government have given adequate consideration to the modern use of coastwise shipping today.

For example, we face the fact that in recent years there has been an increase of about 28 per cent. in foreign flag use in coastwise shipping, as against either the stability or reduction of our own shipping in coastwise trade. This is a field which needs full investigation. I am not satisfied that there has been adequate investigation of the position and the reasons for it.

For example, over many years, there was the established coal trade of the Tyne and Blyth to Cornwall, but now 87 per cent. of that trade is carried by ships with foreign flags. I have with me the names of some ships which have come in recently to this trade under foreign flags. It is fair to say that the National Union of Seamen does not want to take the kind of exclusive measures which are taken abroad. In many countries foreign flags are excluded from coastwise shipping, yet here a great deal of the coasting trade is taken over by countries which apply very tight controls for their own trade.

The National Union of Seamen does not suggest that we should apply complete exclusion of foreign flags from our coastwise shipping, but the union is concerned that there should be effective and adequate control. Over recent years there has been a rapid decline in the number of British ships used by the nationalised gas and electricity industries. I have a list of some of the ships which have been sold, but I will not take up time by reading it. It is a substantial list of 19 ships sold in recent years by these nationalised industries, 14 to foreign flags. We understand that many of those who buy those ships use them for coastwise cargoes here. This matter needs to be investigated.

I have not heard an adequate answer to the suggestion that instead of the gas boards and the electricity authority having separate fleets it might be better to combine them in one fleet although that would probably mean a diminution in the number of men employed. It would encourage the building and bringing into service of more modern vessels as it is a common criticism that many of these ships are of considerable age. Figures appear to suggest that the ships used and in the ownership of the nationalised boards are more efficient and cheaper to operate than vessels chartered from outside, but it is suggested that outside chartering is steadily increasing.

Not enough consideration has been given to the actual contributions which a modernised coastwise industry can make to transport. I want an assurance that a full investigation and full representation of coastwise shipping interests shall be included in any discussion of our transport needs. For long hauls coastwise shipping is more efficient than many other systems of transport. I am not satisfied that in all cases British rail is treating this industry fairly. Why are British ships sold at the present rate when it seems that they could be more efficiently used in a combined fleet? Is it not possible to encourage the building of more modern vessels for these purposes?

Naturally, all of us who represent seamen know too how eager they are to know when the new merchant shipping Bill will be introduced? They have pleaded for this over many years. Discussions have gone on we hope satisfactorily and we should like an assurance that the Bill will be introduced next Session.

1.19 p.m.

Mr. John Rankin (Glasgow, Govan)

I represent a constituency in Glasgow which is one of the largest shipping and shipbuilding areas in the world. When I become a Member of this House, 10,000 people were employed in the yards there. A few years ago that number had been reduced to a little under 5,000. One of the yards, Harlands, had closed completely and two others were in danger. One was at Linthouse and the other was Fairfields, which became a celebrated cause.

I never fail to pay tribute to the fact that a Labour Government saved Fair-fields shipbuilding yards. They saved the jobs of 3,000 men and kept a great deal of the prosperity which shipbuilding had brought to Govan still alive. I never fail to give credit to the part which the Prime Minister and one or two of his prominent colleagues at that time played in saving the yard. One and a half million pounds were necessary to do so. We would never have got that sum had we had any Government other than a Labour Government in power at that time.

That is my interest in this debate. Not only is Govan a great shipbuilding yard. Glasgow, itself, of which Govan is a part, is one of the world's greatest shipping areas. Today, I shall content myself, because of shortage of time and out of consideration for my colleagues, by dealing solely with the shipbuilding aspect.

Difficulties were found to exist in Fairfield shipbuilding yard after the Government had made it possible for it to continue. Investigations and the research associated with them were carried out by a group of competent, technically and technologically trained, investigators, some of them with a national reputation. They discovered among many causes for our troubles, an outstanding one. The yard's labour force was in a state of flux. The total number of employees was 3,000. Everyone automatically assumed that the 3,000 who were employed at the end of one year were the same 3,000 who were working there in the following year. Investigation and research showed that the turnover in a given year was well above 2,000. More than 2,000 new employees had come in. There was an alarming lack of constancy in personnel.

One result was that there could be no continuity of policy within the yard. There could be no community of attitude in developing solutions to shipbuilding problems. It was like trying to build a city with a floating population. Strikes were frequent. The men, who were un- known to the Board, were never consulted about anything associated with the yard.

The big change that has taken place on Clydeside has been the creation of a Joint Industrial Council by the United Clyde Shipbuilders which under the new dispensation created there runs Fairfields, Linthouse, Clydebank, Scotstoun and the yard which mostly does Admiralty work. The Joint Industrial Council has shed a new light on shipyard problems and brought a new approach to their solution. It has made a notable contribution to creating a new spirit within the yard.

The personnel of the Council is very important. It is composed of representatives appointed by the directors from their number; by the management; by the foremen; by the national trade union leaders; by the local trade union leaders; and by the shop stewards. They discuss all problems affecting production in the yards at all levels—wages, hours of work, output, methods of production, grievances, contracts of employment; indeed, all matters affecting the life and living of all employees in the yards at whatever level they operate.

This new spirit of community is reflected in today's order book which, since 7th February, when U.S.C. was constituted, shows £20 million worth of ships waiting to be built or in process of building at the yards on Upper Clydeside, including one container ship won at a price of £5 million against world competition. Out of a total of 13,000 employees, there has not been one redundancy since the start of the new era.

Though the Linthouse division will cease operation in August of this year, the engineering side, employing 1,600 persons, will not be affected. This should be made widely known, because the closing of Linthouse has been interpreted over a very wide area as the closing of the entire shipyard including the engineering side, whereas its 1,500 shipyard workers will be absorbed in the other divisions—at Clydebank, and so on. A new design establishment will be opened where formally the yard stood.

On Clydeside today the big change which has taken place is that men matter in shipbuilding and they realise that they matter. That is the important revolution which has happened in my area during the last few years. Their job is important at whatever level they perform it. So the necessity for disciplines like good time-keeping is accepted, and cooperation in getting the ship launched on schedule ensues.

Modernisation is a necessity—a must, if you like. The former Fairfields shipbuilding yard, the new Fairfields shipbuilding yard, and the U.S.C., have all, in their turn, modernised; but, as Geddes has said, "Modernisation is not enough". Nor even are excellent ships, though they embody in their construction the most recent technical innovations. To maintain or recapture a world position in shipbuilding three musts are involved. First, we must have the complete support and co-operation of the men in the yard by guaranteeing them their income. Second, the discipline of work at all levels must be upheld. Third, we must maintain a programme for the men to ensure continuity. By shaping our policy along these lines Britain will recapture her world position in this famous industry.

1.30 p.m.

Mr. Ted Leadbitter (The Hartlepools)

My first word is to compliment my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) on an inspiring though brief and constructive speech, the kind of speech which we like to hear on this important subject.

Also, I follow my right hon. Friend the Member for Sunderland, North (Mr. Willey) in his comments, perhaps underlining what he had to say by referring to the release provided by the information office of the shipbuilding industry only yesterday. The total order book in this country up to 30th June this year shows 207 ships at just over 2½ million gross tons. The new orders received in the 12 months up to the end of June, cover 173 ships to a total of 1,898,000 tons. The House is always pleased to see such a signal improvement in new and total orders and to congratulate the shipbuilding industry and all those who work in and for it.

Nevertheless, we must come down to the central question in regard to any industrial activity, namely, to what extent do the people who work in it benefit, and to what extent do they have security? In a modern society, there is no point in a man or woman developing a high excellence of skill if, round the corner, there is always the dread possibility of un- employment. The shipbuilding industry must look at itself from that point of view.

Hon. Members on both sides always feel sad at any turn of events such as that which I am about to relate, but for me the matters which I have to raise are particularly painful. I have reached the point when I can hardly go on Recess without a feeling of utter dismay in the knowledge that in my constituency and the area in which I live, the Teesside and Hartlepool area, about 2,500 people are to lose their jobs. As a Socialist, I gave my word to the electorate that conditions would be better. There is not one hon. Member on this side, or, I am sure, in the House as a whole who can be happy at the spectre of unemployment, no matter what the cause, no matter what the purpose of industrial reorganisation may be. The prospect that men and women committed to their standards of life and with the asset of their skills may in 1968 have to move out of the industry which they love and for which they have worked is a matter of real national concern.

I have some pertinent questions to put to the Minister. I am referring, as he knows, to the Furness shipyard. From time to time, we have appealed to the Government for a holding operation to keep the men at work. Can he tell me of any occasion anywhere in the world when a modern shipyard has closed at a time of increasing building operations? Does he deny that the Furness shipyard is the most modern in the United Kingdom, and, indeed, one of the most modern in Europe? Does he deny that in recent years—I am talking not just of the latter years of the decade—£2½ million of public money has been put into that yard, which is now held by private enterprise?

If he cannot deny that, will he say who will have this £2½ million of British investment in the form of grant when the yard closes, the last man leaves and the gates clang shut? Does Mr. Charles Clore get it? Does Sears Holding Company get it? Where does it go? Who will buy the assets of the yard when it becomes undervalued purely because it is silent and inactive, though every piece of equipment in it is modern, automated or semi-automated, the most rationalised yard in the United Kingdom?

Am I expected to sit in the House of Commons and refrain from asking, "Is there no damned justice in the world if 2,500 men get their cards, and Mr. Charles Clore gets his benefit out of public money in the form of grant?"

I want my hon. Friend the Parliamentary Secretary to dwell upon these matters. I want him to tell the House by what stretch of imagination we can reach a point when there is increasing shipbuilding capacity in this country but nothing is done about the inherent injustices which arise from our own investment incentives.

Will my hon. Friend answer some more simple questions? How does it come about that £36 million of taxpayers' money is given to foreign shipowners with registered offices in this country who can use that money to buy ships abroad? How does it come about that British shipowners are calculated to receive in the next few years £65 million with a right of option to build their ships abroad? How does it come about that a country which is still a major maritime Power cannot sustain its own shipbuilding industry?

I want my hon. Friend to answer these questions. I told him by letter that I should be raising them with him today. The Government have done what, possibly, no other Government have ever done in helping the shipbuilding industry, with a measure of wisdom, pride and generosity for which they have never received due credit. Financial support for the shipbuilding industry runs to something like £250 million. The Shipbuilding Industry Board has at its disposal about £32½ million for the reorganisation of the industry. The Industrial Expansion Act provides another £20 million, and other facilities for the shipbuilding industry and shipping amount to about £200 million.

While I charge private industry for taking money from the British taxpayer in order to reorganise, I directly charge the private sector of the shipbuilding industry with neglecting that support and behaving as though it were still composed of ordinary companies which think that if they cannot make their way as they want they will run out, as Charles Clore's company is doing.

My charge is not so much against the Government, but against the 19th-century attitudes and ways of thought still in the minds of some British shipbuilding industrialists. But, if I am not charging the Government with what has happened at Furness, I say to them none the less that, as they have shown the power and readiness to help the shipbuilding industry, they can do the same for Furness.

There is great social cost in having nearly 3,000 men out of work—all the unemployment benefits, redundancy payments and so on, with, at the periphery of the industry, the cost to ancillary services, shopkeepers and the rest. There is, I plead with the Government to consider, the great social cost. They would do far better now to have a holding operation at Furness. With shipbuilding capacity in this country now beginning to boom, the 1970s will prove to be a time when we shall still need that modern yard. It is false economy to reduce our shipbuilding capacity.

So, on the basis of economic wisdom and the basis of social justice, I plead that the Government should show private enterprise that they can project their already valuable aid to a point where there is a deep wound and carry out an operation to clean it up and heal it so that the shipbuilding industry and all the men and women in it can feel that, come what may, we have a Government who will keep it steady, growing and healthy.

1.40 p.m.

Mr. Gordon A. T. Bagier (Sunderland, South)

I want to follow on what my hon. Friend the Member for The Hart-lepools (Mr. Leadbitter) has said. One of the disturbing features about the ultimate closure of the Furness yard is that it is a unit taken out of the shipbuilding complex of the country, particularly in the North-East. I remind my hon. Friend that the Northern Group of Members of Parliament has been pressing the Minister for some months to see whether something can be done about the yard.

In the light of the relatively boom conditions upon which the shipbuilding industry has entered, I feel that any closure of any part of the industry, particularly a modern unit, would be detrimental to the industry.

This week we have received news about orders about which we should have been laughed out of court if we had been trying to forecast them two years ago. TheShipping Gazette states that this is a red letter week for the River Wear because of the number of orders received. The article ends by saying that the additional negotiated contracts in the pipeline are the most memorable in the industry of the Wear.

It may well be said that the situation is nothing to complain about. But I would utter a word of warning. We cannot accept a situation of boom conditions that leads to another slump. I remind the House that the right hon. Member for Wallasey (Mr. Marples), when the Conservative Party was in power, did his best for the industry by providing a credit of £70 million. But this was immediately gobbled up by the industry and nothing was done about reorganisation. The present Government have provided a large amount of credit for the industry and a large amount of money for the purpose of reorganisation. We have told the Shipbuilding Industries Board that if public money is to be used we must have results in the form of a regrouping of the industry. This is why my right hon. Friend the Member for Sunderland, North (Mr. Willey) and I have been disturbed about the lack of progress on the Wear.

Other features are involved, such as long-term employment for those in the industry, who are fed up with being laid off for two or three months every year. We want to see the Wear healthy and proceeding along the same lines as the Clyde and the Tyne. I recognise that the Tyne is getting ahead with longstanding agreements to provide stability in the industry for those who have had more than their fair share of men waiting at the gates. The industry is an extremely important factor in our economy. It is a very high foreign currency earner. I give great credit to some of the yards in the Wear for capturing a larger corner of the Liberty ship replacement. This is for the benefit of the country.

But we must not sit back and be complacent. The present situation is the result of Suez, the advantage provided by devaluation, and, even more important in the long term, the fact that we have a lot of orders because of our short order book and not because of cost. If we sit back and complacently hope that this will carry on when the short order book period is over and we go into open competition with the Japanese, the Swedes and our other competitors, we may start slumping down, with the resultant effect upon the people in the industry.

This has been a very important debate. My right hon. Friend the Member for Sunderland, North quoted some words from the Geddes Report—that we can either decline, hold on or grow. What the House and the Government want from the industry is growth. We do not want to consolidate a position where we are producing the same number of ships of reduced capacity with a reduced work force. We want to bring into operation the whole of our facilities and aim at a larger section of the shipbuilding industry of the world. I am convinced that with our skills and with the co-operation which the trade unions are now giving to management and with the financial help that the Government are giving the industry, Britain can aim at a larger share of the shipbuilding of the world and do it on a straight competitive basis founded on skills and costs.

I have intervened only briefly because of shortage of time. I applaud my right hon. Friend for giving the House the opportunity of this debate.

1.45 p.m.

Mr. W. E. Garrett (Wallsend)

I am pleased that time has been provided for this important debate. I congratulate my hon. Friend the Member for the Hartlepools (Mr. Leadbitter) and my hon. Friend the Member for Sunderland, South (Mr. Bagier) on thoughtful and stimulating speeches about this important sector of our economy.

Unlike the Wear and the Tees, there is on Tyneside a period of quiet confidence. Undoubtedly the Tyneside shipbuilding consortium has gradually acquired economic strength which should allow it to meet overseas competition with every degree of confidence.

A variety of factors have brought about this happy situation. The major one is the present Government's financial policy of support to the shipbuilding sector of the industry. There has been a realisation that the industry has acquired more know-how in construction, thus enabling keener competitive prices with other shipbuilding nations.

The trade unions, after a few doubtful thoughts, appear to have accepted the need for a responsible attitude to wages and labour problems, while management, after some initial blunders in the field of industrial relations, appears to have obtained the confidence of the trade union leaders.

However, I think that more credit should be given to the salesmen who travel the world to obtain the orders. Both senior management and employees should appreciate how successful this group of dedicated men have been in winning orders against very difficult odds. This gradual building up of team work augurs well for the shipbuilding industry.

My hon. Friend the Member for South Shields (Mr. Blenkinsop) referred to coastal shipping. He gave some interesting statistics. I should like the Government to examine some elements of the problem as it affects coastal shipping. There should be an examination of the part that the industry will play in an integrated transport system. My right hon. Friend the Member for Sunderland, North (Mr. Willey) said that consideration should be given to the introduction of a national shipping line, which would integrate all forms of shipping and work out a new life-saving policy for coastal shipping. I still think that there is a great future for British coastal shipping, especially in view of the development of container ships, and there is also, of course, increased traffic to the Continent.

I hope that some of the problems that I have mentioned will be dealt with by the Minister. If he cannot give an immediate reply, I hope that he will consider them when he deals with matters affecting his Department.

1.49 p.m.

Mr. Edward M. Taylor (Glasgow, Cathcart)

This has been a very interesting and stimulating debate. Every hon. Member who has taken part has had a very real interest in the two great industries, shipping and shipbuilding.

I am sorry that the one note of discord was the heckling of my hon. and gallant Friend the Member for Winchester (Rear- Admiral Morgan Giles). Perhaps hon. Gentlemen who were anxious to speak were a little unfair to him. He was referring to a very vital question—now can we not realise how important security is to our own ships at a time when so many of our own vessels are locked in the Suez Canal, and how important, also, is naval shipbuilding, which employs about 20 per cent. of the manpower in our shipyards?

Shipbuilding is a very vital industry. About 73,000 people are employed directly on shipbuilding and ship repairing, and about 200,000 families depend directly or indirectly on shipbuilding for their livelihood. Numbers do not show the real importance of the industry. As the hon. Member for The Hartlepools (Mr. Leadbitter) pointed out, they are employed in just the places where the economy needs to be stimulated. Therefore, when a yard closes, or is in difficulty, it is of even greater significance because it happens in areas like the Clyde, Tyneside and Northern Ireland, where we have an over-dependence on heavy industry and jobs in shipbuilding, which is concentrated, are so important. This makes it even more vital for our economy as a whole that shipbuilding should prosper.

Several hon. Members have stressed the importance of the Geddes Committee, and what a difference it has made to the industry's outlook. This is certainly true. I believe that we have at present a very happy situation in orders. As the hon. Member for South Shields (Mr. Blenkinsop) said, in the first six months of this year we had an additional 1 million gross tons in orders, which is the highest figure for such a period since 1957. We now find ourselves with a total order book of about £300 million, a very substantial and happy order book indeed.

Many reasons have been given for this improvement, but I agree with the hon. Member for The Hartlepools that shipbuilding credits have been the most significant, the availability of credit. In the international market the cash customer has almost disappeared, and the most vital thing in obtaining new orders is good credit facilities. We saw an immediate upsurge in orders in the shipbuilding industry when my right hon. Friend the Member for Wallasey (Mr. Marples) brought in his shipbuilding credit scheme, providing around £75 million. Afterwards, we had a decline. Now, with the assistance of the banks, the Government have been able to provide £200 million of credit, and we have had another upsurge of orders.

Although we now find ourselves in a happy position once again, I and other hon. Members fear that once the £200 million of favourable credit is exhausted we could be back to square one. Perhaps it would be a little unfair to say that, because as a result of the Shipbuilding Industry Act major reorganisations have taken place on the Tyne and Clyde, so that we shall not be going back exactly to square one. But there is a real danger of a dearth of orders if steps are not taken to provide credit, if it is required, in fair competition with our international competitors.

Section 7 of the Act mentions £200 million. My information is that while the money has not been spent most has been allocated, and there is a real danger that, once it is absorbed, the sheer pressure of foreign competition and the foreign availability of cheap credit will make it very difficult for the upsurge in orders to continue.

Therefore, we are entitled to ask the Minister what will be our position if the order book declines substantially once the credits are exhausted. If they were not available we might find ourselves in the position we were in in 1966, when only 482,000 gross tons were ordered, because the foreigners could offer credit at 4 and 5 per cent. for about 90 per cent. of the value of the ship, and our own shipbuilders could provide only 8 or 8½ per cent. rates of interest for about half the value of the ship. The Minister has an obligation to say today, while things are rosy, what will be the future position once the credit is exhausted.

But credits were only part of the story. Major reorganisation and changes in attitude were the result of the changes in structure which were brought about. This has been a major step forward, but it is wrong to underestimate the great changes involved and the difficulties of firms in co-operating and becoming part of an integrated shipbuilding group. We have seen the difficulties on the Wear. Perhaps they have been exaggerated, because while it was contended that people would not come round the table together, progress has recently been made there. But there is a great danger in making the assumption of the Shipbuilding Industry Act that extra size will necessarily guarantee greater efficiency and success. We have many examples of individual shipyards not acting as part of a group that have a wonderful success story.

The most important part of merging is the greater security it brings. The hon. Member for The Hartlepools spoke sincerely on this point, and the hon. Member for Glasgow, Govan (Mr. Rankin) explained what a great difference job security could make to attitudes. Perhaps too much emphasis has been placed on the damaging effects of the old régime because, of course, there are men moving from one yard to another. The hon. Member for Govan mentioned Fairfields and how it had a turnover of 2,000 in a total labour force of 3,000. But within the shipyards of the Clyde there is bound to be a great deal of movement as the finishing trades move from one yard to another. While there certainly was redundancy, some of which has now been removed, one could over-estimate the changes which took place in the past.

I am surprised that no hon. Member has mentioned one of the basic recommendations of the Geddes Committee, on the question of steel prices. We talk a great deal about shipyard efficiency, but often forget that 75 per cent. of the cost of a ship is entirely outwith the control of the shipbuilders. With the greatest efficiency and reorganisation, they can change only the other 25 per cent. Steel amounts to about 20 per cent. of the cost of a ship. Geddes recommended a rebate, but we have not yet see much progress. Can the Minister give us any information?

On a purely Scottish point, what will be the steel industry's future pricing policy? We have had a uniform price for steel in Scotland, though we have suffered from differentials in the prices of gas and coal, which are so high. There is very considerable alarm on Clydeside that the nationalised steel industry might bring in differential prices, which could go against Clydeside's interests.

I should now like to say a few brief words on shipping, to which the right hon. Member for Sunderland, North (Mr. Willey) referred in his interesting speech. Flags of convenience are a serious problem, and we have a problem in coastal shipping. We should not try to approach the problem of flags of convenience from the negative point of view, with the country trying to take in its own washing. As an international trading nation we could not afford to do that. Perhaps we have been a little unfair on the flags of convenience countries, some of which have very high standards. We want to ensure international freedom of the seas for our ships to sail wherever they can. This is a matter for international co-operation.

We can under-estimate the great value of our coastal shipping trade. The White Paper on the Transport of Freight said that the Government recognised the enormous contribution which coastal shipping makes, and accepted the principle that competition must be fair. There was a very valuable protection for coastal shipping in the 1962 Act, and there has been protection going back to 1921. A safeguard against unfair competition by British Railways could be invoked if the Government gave assistance to British Railways by way of deficit financing.

The Transport Bill has swept the deficit under the carpet. Instead of a deficit of £150 million, there is an annual grant through loans, write-offs and subsidies of about £140 million. Therefore, this protection is entirely removed. Can the Government give us an assurance that the protection of fair competition with British Railways will be brought back?

The hon. Member for South Shields spoke of the possibility of future legislation for the shipping industry. Progress has been remarkable between the shipowners and the unions concerned, and I understand that the report of the Pearson Court of Inquiry has been acceptedin toto by both management and men. There have been eight meetings and great progress has been made. There is agreement in principle. I understand that, at the next meeting in September, more progress is expected. Can the hon. Gentleman tell us whether legislation will follow?

This has been an interesting and stimulating debate. It has shown the whole in- dustry that, while it has its problems, at least it has many friends in the House of Commons.

2.0 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Gerry Fowler)

This is a fascinating debate on two important and related topics—and perhaps some topics not very much related to either. It is the first general debate we have had on shipbuilding and the shipping industry during the past year and I welcome it for that reason. I have been asked many questions—far more than I can answer in the brief time at my disposal, but I will do my best.

The shipbuilding industry is in much better shape than it was a year ago— there is no doubt of that. The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) has just mentioned that over 1 million gross tons of orders have been booked in the first half of the year. This is the best figure since 1957. I make no apology for re-emphasising that. It is an excellent record, the best for 11 years.

At the end of last month, the industry's order book for merchant shipping amounted to 2,569,000 gross tons at an estimated value of £300 million. This is a much more encouraging situation than we have known for some time. Nevertheless, there is no room for complacency. The industry must maintain its efforts to obtain orders because the world market in ships has always been volatile and fluctuating.

There can be no certainty that the high level of ordering we have seen in recent years will continue. That is why I am glad that hon. Members have drawn attention to the need to use the present improved situation in the industry as a breathing space in which to carry through reorganisation and to improve the long-term competitive position.

My right hon. Friend the Member for Sunderland, North (Mr. Willey) and my hon. Friend the Member for Sunderland, South (Mr. Bagier) drew attention to the situation on the Wear. I do not want to go into detail about the situation there, but to do what they did—use it as the basis for a homily. It is true that some reorganisation and modernisation has taken place on the Wear during the last 15 years. Nevertheless, I hope that neither there nor anywhere else will shipbuilders: be deceived by the present improvement in their position into thinking that they can thereby dispense with the need to reorganise their resources and to modernise not only their plant but their working practices. I hope that they will take the opportunity offered by the Shipbuilding Industry Act and the Shipbuilding Industry Board—I remind them that the life of the Board is limited by the Act to the end of 1970, although it is extendable by one year only—to reorganise their resources so that, when the Board does go out of existence, they will be able to stand on their own feet against competition from all over the world.

The position has already improved in this sense. I am glad that my right hon. Friend the Member for Glasgow, Govan (Mr. Rankin) drew attention to the position on the Upper Clyde. He said that the order book there was £20 million. He was not quite right. This is the figure since the formation of Upper Clyde Shipbuilders. I am sure that is what he intended to convey. This is a dramatic improvement in a relatively short period.

Perhaps even more important is the partnership established between the workers in the industry and the firm which employs them. There is now the Joint Industrial Council and a unique experiment in labour relations in this industry—the sort of development we all hoped would come out of the old Fairfields scheme. The management of U.C.S. has repeatedly said that it will adopt the best management practices to be found not only in shipbuilding but in industry generally. It learnt from Fairfields and elsewhere to establish a new system of labour relations on the Upper Clyde and this has enabled it, in conjunction with the order book, to guarantee that, provided there is mobility of labour, there will be no redundancies in the first two years of the operation of U.C.S. This is something for which we are profoundly grateful.

On the Tyne, things are also much improved. Orders of £46 million have been taken since the beginning of the year. I hope and expect that we shall have further good news from the Tyne in the near future. I was impressed by the statement made by Sir John Hunter, at a launching on the Tyne recently, that the Tyne has now a consistent record of early delivery. That cannot be emphasised often enough. The old days when, perhaps justifiably, some sectors of the industry acquired a bad reputation for late delivery are becoming, thank goodness, a thing of the past.

My hon. Friend the Member for Wallsend (Mr. Garrett) spoke of the prospects on the Tyne. He mentioned difficulty in securing a labour charter there. Talks have been going on for some considerable time and the news is very hopeful and encouraging. I hope that soon we shall see the labour situation on the Tyne transformed in a new formal agreement.

So much for the success half of the story. I want to say a word about another area, because my hon. Friend the Member for The Hartlepools (Mr. Lead-bitter) dwelt at some length on it. It is less of a success story. It is, of course, the Furness yard. I need scarcely say that I agree with my hon. Friend the Member for Govan that men matter. It can please no one to see such excellent facilities going out of shipbuilding. Nevertheless, we must make some qualification of what my hon. Friend the Member for The Hartlepools said about the Furness yard.

That it is a modern yard in terms of steel-working facilities, I would not dispute. Nevertheless, there are certain weaknesses in the physical structure which must be borne in mind because they make the problem of securing its long-term future more difficult. It is suited for the building of bulk carriers and tankers but. unfortunately, the size of tanker it can take is limited, and for the yard to build very large tankers of the future in competition with other yards, even if it were possible, would be very expensive. So some qualification must be made of my hon. Friend's characterisation of the facilities available at the yard.

My hon. Friend suggested that the proper solution would be for the Government or the Shipbuilding Industry Board to carry out a holding operation. Holding for what? The basic situation is that the yard has long-term prospects only in so far as it can be made part of a larger group in the North-East. It could then contribute its strength to the larger group and take its share of the work.

Mr. Leadbitter

I remind my hon. Friend, on the question of a North-East grouping, that there was a meeting last year and that shipbuilders on Wearside and Tyneside will have nothing to do with it. On the size of tankers, the Geddes Report refutes every word my hon. Friend has just said.

Mr. Fowler

I do not want to dwell on this, because the House must move on to another debate.

On the size of the tanker, I do not know to what my hon. Friend is referring, because it is an inescapable fact that the Furness yard can cope with tankers up to about 200,000 tons deadweight, or just over, whereas the size of tankers on order has already escalated. I think the largest is 312,000 tons.

If we are to solve the Furness problem, we must consider ownership, management and orders. Those three things go together. It is no use getting orders unless we can settle the ownership problem, or unless we have an efficient management to take over the yard to secure a continuing flow of orders. For the Government to step in to subsidise orders, thereby, in all probability, taking them away from other yards in this country, and to find, three years hence, that we are in no better position than today at Furness would be a profound error.

I do not want to sound entirely negative. This does not mean that we have abandoned hope of saving Furness. This is a different question. The answer may yet come, but it will not come by the Government saying, "Clearly, the answer is for us to step in and put up money", which may be good money poured after bad.

Reference has been made to investment grants. Investment grants for shipping were designed to encourage the modernisation of our shipping industry as well as to secure orders for our shipyards. But we must not forget the shipping aspect. This is a subject to which the Government devote continued attention. It may be that we shall be able to remove some of the anomalies concerning investment grants for ships. There was a change in January this year. But we have to look at the interests of the shipping industry as well as the shipbuilding industry.

Finally, I have been asked various questions about coastal shipping. I must be brief on this. Perhaps the wisest thing I can do, since I have no departmental responsibility for the matter, is to draw the attention of my right hon. Friend the President of the Board of Trade to the points that have been made.

However, I will say a word on the proportion of coastwise traffic carried in foreign bottoms. From what some of my hon. Friends were saying—and I do not want to minimise the problem—one would think that this had become a large proportion of coastwise traffic. The proportion of dry cargo in 1964 was 2.3 per cent. It rose to 2.5 per cent. in 1965 and it was about 3.3 per cent. in 1966 and 1967. The latest available figures show that it has been running at about that level over the first four months of this year. So, while there is a problem, it is not as serious as has been suggested.

We are not unique in permitting foreign bottoms to trade around our shores. France, the Netherlands, Germany and Italy reserve their coastal trade, but Belgium and Norway, like us, do not. I trust that my hon. Friends will not exaggerate the nature of this problem.

Mr. Deputy Speaker

I thank right hon. and hon. Members for their cooperation. The debate that we are about to embark upon must finish at 3 o'clock. Therefore, I hope that hon. Members will bear in mind there are others who wish to speak. It will help if speeches are kept brief.