UPPER CLYDE SHIPBUILDERS (Hansard, 11 December 1969)

§ The Minister of Technology (Mr. Anthony Wedgwood Benn)
With permission, Mr. Speaker, I should like to make a statement on Upper Clyde Shipbuilders Ltd.
I informed the House on 19th June of the arrangements the Shipbuilding Industry Board was making to provide assistance under the Shipbuilding Industry Act to Upper Clyde Shipbuilders Ltd.—[Vol. 785, c. 721–6.] This action has not yet restored the confidence of suppliers and customers to the extent necessary to enable the company to carry on its business on a satisfactory long-term basis. The Shipbuilding Industry Board does not consider that it would be justified in present circumstances in providing further help to the company out of the funds available to it under the Shipbuilding Industry Act.
However, the company has been seeking ways of improving its position in recent months, and to allow it a further 663 period in which to show results the Government have decided to introduce fresh legislation to provide assistance to this company by way of loans not exceeding £7 million and, if necessary, guarantees of completion in the case of new orders of particular and immediate value to the company because they are for early completion.
Any funds required immediately for such loans will be provided in the first instance from the Civil Contingencies Fund; a Supplementary Estimate will be submitted to the House at the appropriate stage.
While we are seeking to provide financial help to the company outside the Shipbuilding Industry Act, this will be related to the continuing process of reorganising and strengthening the shipbuilding industry, particularly on the Clyde, with a view to improving its productivity and future prospects. I am in close touch with the Shipbuilding Industry Board which is actively considering what further measures may prove desirable to that end.

§ Mr. Speaker
I see a number of hon. Members rising, and would remind the House that there is a good deal of business to be dealt with.

§ Mr. Gordon Campbell
Is the Minister aware that his statement is very disquieting, since it appears to be contrary to the arrangements and the forecast in his statement on 19th June? As the subject cannot be dealt with adequately by questions and answers now, and since legislation is to be introduced, will the Minister confirm that there will be an early opportunity for a debate, when we can consider, for example, what commitments guarantees of completion could entail and the implications of the Shipbuilding Industry Board's decision to do no more?
Does the Minister recognise that the picture of the whole of the Clyde must be considered, especially the Lower Clyde group, which is successfully building and selling ships without needing Government help? Have the earlier plans of the Government for a rationalisation and reorganisation of the labour force in the 664 area been altered, or is this still considered essential, as I believe it to be, for orderly progress towards a satisfactory solution?

§ Mr. Benn
The hon. Gentleman has raised many questions. When the legislation comes forward, there will be an opportunity to debate this matter. As for possible conflict with the statement which I made in June, we said then, with the assent of the Shipbuilding Industry Board, that it would look at the situation in the light of progress made early next year, which is a few weeks away.
It is true that the Shipbuilding Industry Board, having considered this matter, does not feel it to be right within the remit of the Shipbuilding Industry Act to give further help. However, I am bound to take into account the matters which the hon. Gentleman raised in the debate yesterday, namely, the wider social and economic considerations, which the House will want to debate when the Bill comes forward.
As for the future development of shipbuilding on the Clyde as a whole, I have made reference in the last paragraph of my statement to this matter. The House knows that I have always taken the view that the sooner one gets to the point of considering the river as a whole in shipbuilding terms the beter it will be.

§ Mr. Small
I am grateful to my right hon. Friend for the support that he is giving to the region. Can he say whether he has taken regional employment prospects fully into account in making his statement?

§ Mr. Benn
I am grateful to my hon. Friend for a chance to underline this because, apart from the points which I made in my earlier answers, under the reorganisation of government since the summer I have acquired fresh responsibilities in the regional industrial field, and this reinforces me in my judgment that it was right to provide this further help.

Mr. Edward M. Taylor
Can the right hon. Gentleman confirm that there has been a substantial increase in productivity in U.C.S. since June, when the first loan was given? Can he confirm that the board will continue to guarantee shipbuilding credits for new orders in the future? Finally, does the right hon. 665 Gentleman agree that this loan of £7 million makes the total amount loaned to the U.C.S. £12 million, which the company says was the minimum that it requires to put the yards in order?

§ Mr. Benn
The hon. Gentleman leaves out of account the necessity that fell to me earlier in the year to bring home to the company and the unions the need to take measures which have been taken since the summer. Indeed, had they not been taken I should not have felt able to come forward with this proposal.
The S.I.B. remains entirely concerned with this company and with shipbuilding on the Clyde, and will be keeping in touch with it in the normal way. In addition, I shall obviously require progress reports in view of the sums of money involved.

§ Mr. Hugh D. Brown
Will my right hon. Friend accept that we appreciate this continuing interest by the Government in the difficulties of Upper Clyde Shipbuilders? Will he also agree that it seems to many of us that the Opposition cannot make up their mind whether they want a successful U.C.S.? The impression being created in my mind is that there is a strong Conservative lobby from the Lower Clyde shipbuilders. Will he confirm that private enterprise failed to find the capital that was required for U.C.S. during the recent trouble?

Mr. Senn
The problems of this industry and this company are so formidable that I do not think I should like to add to my tasks the responsibility of reading the minds of hon. Gentlemen opposite, some of whom, during difficult periods, have been helpful to me in dealing with the problems involved.
I think that everybody who knows about the background of Upper Clyde and the difficulties that it experienced will recognise that it was to some extent a special case. There are 13,000 people working in Upper Clyde Shipbuilders, in an area where there is more than 6 per cent. male unemployment. However, one wants to give the best chance of survival to those from other shipbuilding areas and to see that they are not damaged. I readily assure the House that I shall be watching this with that consideration very much in mind.

§ Sir Keith Joseph
Will the right hon. Gentleman confirm that U.C.S. was the result of a merger—which was bitterly opposed by some of its members, but forced through by the Government—of some successful and some not so successful shipbuilding companies? Secondly, will he tell the House why the S.I.B. has evidently washed its hands of any further money for the Upper Clyde? Thirdly, will he say whether it is true that £20 million of taxpayers' money has already been made available to U.C.S.? Fourthly, what is the right hon. Gentleman's estimate of what the completion guarantee which he has provided this afternoon might cost the taxpayers in due course?

§ Mr. Benn
The right hon. Gentleman's first question about a merger being forced through against the will of those involved is another way of saying that if the Government had done nothing there would have been a major tragedy of the Clyde. There would have been a very serious tragedy there, and in other areas in the country where Government assistance has been provided with rather less publicity because it has contributed towards earlier profitability. The rôle of Government in this has been successful in the sense that British shipbuilding has the biggest order book for 10 years. There is a shipbuilding boom in the world, with the British share of that boom being very high—higher than it was at any time under the policy of the previous Conservative Government.
On the second point, about the Shipbuilding Industry Board having washed its hands of the matter, I do not think that that is the right presentation of what has happened. It has said that on strict shipbuilding industry grounds, taking into account the total sum given to it by Parliament, it would not have been right itself to have put more into this group. In view of the wider economic, regional, and Scottish considerations, to which the party opposite devoted a whole debate yesterday, we thought it necessary to go in and contribute towards giving this company the opportunity of proving its capability in the future. I am sure that when the House debates the matter it will decide that that was the right decision.
On the totality of the sums involved, I have referred to the £7 million today, 667 the sums already received amount to £5½ million in grant, and £7.7 million in loans or equity. The future completion guarantee relates to completion against the risk of insolvency and is limited to that. It is not a general guarantee which goes wider than is strictly necessary to deal with the problem of confidence, which has been one of the major difficulties faced by the U.C.S.

§ Mr. Rankin
Is my right hon. Friend aware that when the Linthouse Shipyard ceased building ships 1,600 men who would normally automatically have become unemployed were absorbed by the Govan division of U.C.S., giving it an uneconomic labour force? Despite that, it has carried on successfully but is finding it difficult to make ends meet because of the lack of money and the heavy load that it is carrying. Therefore, the step which my right hon. Friend has taken now will be widely welcomed and is one of the wisest things that he has done during this difficult period on Clyde-side.

§ Mr. Benn
I think that it would have been wrong to have allowed confidence issues to kill U.C.S. before it had the opportunity to prove the value of the changes that it has carried through. I know that my hon. Friend has been saying this in his constituency, but I remind him, nevertheless, that this does not mean that the company has any less responsibility to raise its productivity. Indeed, to avoid the dangers about which hon. Gentlemen opposite are concerned, it is essential that productivity continues to rise in U.C.S.

§ Mr. Russell Johnston
While welcoming the safeguarding of employment in U.C.S., because the right hon. Gentleman must be concerned about the position, may I ask him whether he has confidence in the management? In particular, can he say whether the order book is estimated to make a profit, and whether that profit will cover loan interest charges and capital repayments? If it does not, it will create yet another difficult situation in a short time.

§ Mr. Benn
I think that the House knows that there were management changes in the summer. I am happy to express our confidence in the new arrangements that have been made.
668 One of the difficulties which the company has had this year, and it is a difficulty which has made things extremely hard for it, is that during the long months of public discussion about the finances of the company the problem of getting orders or supplies on credit during the normal course of business made worse a situation which was in any case difficult for the new group.

§ Mr. Dalyell
Is my right hon. Friend aware that those who represent suppliers such as the foundry industry throughout Scotland and the North of England are deeply grateful for his dialogue and the trouble that he has taken, and are appalled at the double thinking of the Opposition today and yesterday? Can my right hon. Friend say something about the terms of the request that he has had on the issue of the Civil Contingencies Fund?

§ Mr. Benn
It is not a request. All that I was announcing was that pending the legislation, payments would be made from the Civil Contingencies Fund. I do not think that there is any special novelty in that. That is the procedure normally adopted by Governments. When they come forward and announce prospective legislation, they have to announce their interim arrangements. This is exactly the same as was done by the party opposite.

§ Miss Harvie Anderson
Will the right hon. Gentleman now try to persuade his right hon. Friends to back those parts of the Upper Clyde yard which wish to tender but cannot do so because there is insufficient underwriting of whatever offers they have to make to foreign countries? This is obviously a great impediment in filling order books. Will the right hon. Gentleman try to put pressure on other Government Departments to show confidence in this matter?

§ Mr. Benn
That was exactly the object of my statement, to make it clear that those who were holding back from placing orders solely on the grounds of anxiety about the existence of the company could set their fears at rest. As for the guarantees, these are designed solely to meet that point.

§ Dame Irene Ward
I come from another shipbuilding area which has had a lot of assistance from both sides of the House. Is this not a purely political 669 decision? How has the statement been received by other shipbuilding rivers? In the total context of organising our shipbuilding, which is essential, it is important that we should know what the whole of the industry in England, Wales, Scotland and Northern Ireland think about this decision. It is very important if we take what has happened on Tyneside, where there is continual unemployment in shipbuilding, or on the Wear—

§ Mr. Speaker
Order. We are not debating the issue. The hon. Lady must make her question brief.

§ Dame Irene Ward
I support that view, but Scotland always has a special privileged position compared with other parts of the country.

§ Mr. Speaker
Order. The hon. Lady must support my view in practice.

§ Mr. Benn
The hon. Lady kindly recognises the fact that her part of the country has received help from the Shipbuilding Industry Board, and I can think of some special cases where very special measures were taken. For example, there was the Furness Shipyard, which was brought into a group when it would otherwise have been lost to the industry.
Having said what she has, the hon. Lady will know the value of Government help provided for structural change of this kind; she will know that to lose from the United Kingdom a part of our shipbuilding capability at a time when the world boom in orders is growing and continuing to offer us good prospects would not be good for the British shipbuilding industry. These factors should reassure her, particularly since she knows as well as I do that it would be folly on the part of the Government—and they do not intend to do this—to use one part of their policy to undermine new-found strength in other areas.
The hon. Lady asks: was this a political decision? It was a decision taken by the Government arising out of social and economic needs, and to that extent exactly compatible with the purpose of Parliament, which is to reach decisions based on assessments of the realities of the situation.

§ Dame Irene Ward
Answer the other questions.

§ Mr. Tilney
Since this is likely to prove unfair to Merseyside, particularly to Cammell Laird, who have lost the nuclear contract, could the Minister say that, if need be, a similar loan will be made available to Cammell Laird?

§ Mr. Dalyell
What about directing nuclear orders to Cammell Laird?

§ Mr. Benn
The hon. Gentleman the Member for Liverpool, Wavertree (Mr. Tilney) knows the basis upon which the policy was presented to Parliament and went through with general assent. When the new Bill conies forward, it will be open to the hon. Gentleman and others to argue whether it was right to have decided upon these special measures. I regard this as being in the context of regional policy, with a very strong shipbuilding interest.

§ Mr. Speaker
Order. I must protect the business of the day.