HC Deb 09 June 1969 vol 784 cc966-71
Mr. Gordon Campbell

(by Private Notice) asked the Minister of Technology whether he will make a statement on the latest proposals which he has made to Upper Clyde Shipbuilders.

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

In the absence of my right hon. Friend, in Bonn, I shall, with your permission, Mr. Speaker, and that of the House, answer this Question.

My right hon. Friend had full discussions with Upper Clyde Shipbuilders Limited last Friday and explained that he had approved, after consultations with his colleagues, the Shipbuilding Industry Board's offer of further loans and grants to the company under the Shipbuilding Industry Act, 1967.

The Shipbuilding Industry Board had already told the company that it would be prepared at a later stage to discuss separately, under the normal procedure, loans of a further sum of £4.3 million for capital investment. Apart from this, and in addition to the assistance already given to the company, the board has now offered £5 million in grants and loans subject to assurances by the company of its readiness to accept the conditions set out by the board. These include changes in the structure of the U.C.S. board and senior management, full co-operation from the trade unions for the U.C.S. plan now being discussed, and a higher public shareholding in equity.

In making this offer the Shipbuilding Industry Board took account of the latest information received from the company, the various plans prepared by the company, and its own assessment of the prospects, in the confidence that the sums offered would be sufficient, provided the necessary drive and faith in the future of the company were forthcoming from the management in full co-operation with the trade unions. The board also made the offer on the clear understanding that no further funds would be provided to the company under the Act for working capital.

The company is now considering this offer in consultation with the trade unions and in the light of discussions about the possibility of obtaining further funds from commercial sources.

Mr. Campbell

Is the hon. Gentleman aware that this statement and last Friday's statement leave a number of questions unanswered—for example, how much of the £5 million would be in loans and what the condition concerning the full co-operation of the trade unions implies? Perhaps the Minister prefers to leave this confidential for the negotiations, but can he say when he expects the negotiations to be completed, as a crisis situation has continued for several weeks which cannot be good for the industry? Can the Minister state that the main objective of these proposals is early achievement of viability by the group?

Mr. Fowler

To reply to the last part of the question first, I can confirm that that is the principal objective of the whole exercise.

As for the detail of the conditions and the split between loans and grant, I think that at this stage this would be better left to negotiation between the S.I.B. and the U.C.S. board. I ask the House at this difficult stage to show some restraint in this matter. We expect that the discussions of U.C.S. and the trade unions will be complete towards the end of this week. In the meantime, I may say that the trade unions have been showing a positive and helpful attitude in this matter.

Mr. Rankin

In accepting what my hon. Friend has just said, may I ask him to convey to his right hon. Friend that according to today's issue of the Glasgow Herald, Mr. Henson Moore, a well-known industrialist and shipbuilder in the United States, has just placed an order with the Clydebank Division of U.C.S. on the basis of his belief that U.C.S. is the finest body of shipbuilders in the world? Will that tribute give my right hon. Friend sufficient confidence not to make the gap of £3 million in the money which is needed too big a handicap?

Mr. Fowler

I will certainly convey to my right hon. Friend the views of my hon. Friend and those reported in the Glasgow Herald as to the excellence of the U.C.S. I must, however, ask my hon. Friend to be careful when he speaks of a £3 million gap. The S.I.B. made its offer in the confidence that granted the conditions which I have set out, this would be an adequate sum for the purposes of U.C.S.

My right hon. Friend was greatly encouraged by the response on Friday and is convinced that, at last, it is realised that the solution to this problem does not simply lie in Whitehall or, indeed, in the disbursement of Government moneys, but also lies on the Clyde and calls for drive, guts and determination from all involved in U.C.S.

Mr. Edward M. Taylor

While I appreciate the difficulty of the problem facing the Minister, may I ask whether he can give an assurance that if the financial and other problems are resolved by the end of the week the full and known credit facilities of the S.I.B. and the Exports Credits Guarantee Department will be available to U.C.S. to enable it to get more orders and restore confidence, which is the vital issue?

Mr. Fowler

While I cannot properly speak for E.C.G.D., I am sure that I can give the hon. Member the assurance that once this crisis is over U.C.S. will be in exactly the same position as any other shipbuilder and, I would expect—and, indeed, hope—would go from strength to strength.

Mr. Small

While I am grateful for my hon. Friend's statement, I hope that he will recognise that it is now time to lay aside much of the criticism about the Upper Clyde Shipbuilders. No company in Britain has ever had to sustain so prolonged an attack in terms of exposure of its intimate details. At the weekend—

Mr. Speaker

Order. The hon. Member must ask a question.

Mr. Small

Is my hon. Friend aware that at the weekend there was a sense of the position being much more soluble than it has hitherto been and that the full co-operation of the trade unions has been assured? It is interesting to note that for the first time they have had the opportunity of knowing publicly of the full affairs of the firm.

Mr. Fowler

We, too, have been much encouraged by the signs of movement in recent days and the signs that, at long last, the gravity of the position has been realised and the fact that this calls for the fullest co-operation from all sides of U.C.S. in the implementation of some quite painful measures. I take the point made by my hon. Friend about the weekend. That is our impression, too.

Mr. Grimond

Would it not be helpful if we could get away from the cliffhanging drama surrounding this matter and now realise that this group has one of the most efficient shipyards, Yarrow's, in the world and that if we can leave Mr. Hepper to get on with reorganisation the duty of the Government is primarily to ensure that if there has to be a reduction in the number of people employed they will be redeployed either lower down the Clyde or in other industries? Will the Minister give an assurance that the Government are taking steps to that end?

Mr. Fowler

I am glad that the right hon. Gentleman mentioned other job opportunities further down the Clyde. I understand that over, perhaps, 18 months or two years, up to 1,500 jobs may be created at Lithgow's and that there will be further job requirements at Yarrow's, to which the right hon. Gentleman rightly paid tribute.

As for the cliff-hanging aspect, perhaps I should say that the Shipbuilding Industry Board has reacted very quickly to the precise applications put to it by U.C.S. The difficulty—I well appreciate the firm's problems—has been that the costing and accounts of U.C.S. have not always enabled U.C.S. to be precise as to its essential needs and that in these difficult circumstances the company's need of S.I.B. assistance has frequently escalated.

Mr. Lawson

Will my hon. Friend convey to his right hon. Friend my thanks for the very great consideration and attention which he has shown to this problem affecting the Upper Clyde? Will he take it that the prevailing opinion in the West of Scotland is that if management and men in the Upper Clyde shipbuilding industry are now prepared to get down to it the Clyde will once again show that it can build ships as economically and as well as any other part of the world?

Mr. Fowler

I agree entirely with the latter part of my hon. Friend's question. As for the actions of my right hon. Friend in this matter, the House might be interested to know that since 12th February this year he has had 13 meetings with local Members of Parliament, 15 with U.C.S. management, seven with the Scottish T.U.C. and many others, too.

Mr. Biffen

Is the hon. Gentleman aware that there will be much satisfaction that the commitment of public funds is limited to the £9.3 million referred to in his statement? Would he not further agree that if the Upper Clyde Shipbuilders are as efficient as has been suggested by the right hon. Member for Orkney and Shetland (Mr. Grimond) and by the hon. Member for Motherwell (Mr. Lawson), they should have no great difficulty in raising further funds from the private capital market?

Mr. Fowler

I note what the hon. Member says about the limited commitment of public funds. I should explain that this is what we believe U.C.S. will require on the basis of the best assessment that we can make. It would be quite wrong to commit anything over and above that sum, not least because it would mean that U.C.S. was subsidised against other British competition as well as against foreign competition.

Mr. Hugh D. Brown

Will my hon. Friend make it clear that it is because of the past inefficiencies of private enterprise that public money is needed at this time to inject confidence into the enterprise? Will he also accept from me that our outstanding impression has been of the willingness on the part of the unions to co-operate and that in this context legislation along the lines of "In Place of Strife" has very little relevance?

Mr. Fowler

The latter part of my hon. Friend's question has very little relevance to the U.C.S. problem. It is accepted on all hands that some injection of public funds is necessary, and this has been done. The argument has been about the precise total. I, too—I say it again—am much impressed by the co-operative spirit in which the unions are approaching this problem.

Mr. Whitaker

With the injection of so much further public money, should not there be more public directors to safeguard the public interest in the quality of management?

Mr. Fowler

That is a matter for discussion between the S.I.B. and the U.C.S. management. Let it be clear, however, that it is the quality of executive management rather than simply nominating a few extra men to the board that makes all the difference in the running of a firm.