§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Grey.]
§ 7.25 a.m.
§ Dr. John Dunwoody (Falmouth and Camborne)I am fortunate at the end of this long all-night sitting to be able to raise the important subject of the ship repairing industry, and I am raising it particularly in connection with the foreign currency saving rôle of the industry. I do this now because of the economic situation that the country is facing. I believe that this is perhaps the most important and topical element amongst the various elements that make up the problem which the ship repairing industry is facing.
I am bound during the time that is available to me to discuss some of the 1586 technical problems, some of the international commercial aspects of this industry, and also some of the general consequences of changes in the industry in the future, because these are all inevitably interlinked.
I am particularly pleased that my hon. Friend is to answer the debate because I know not only of his interest in and responsibility for this industry but of the number of visits that he has made to ship repairing yards in different parts of the country, and in particular his valuable visit to the yard at Falmouth in my constituency, a yard whose problems and difficulties have stimulated me to apply for this Adjournment debate.
This is a rapidly changing industry, and the changes affect both labour and management in many different ways. It is an industry that is becoming increasingly specialised. It is an industry that is making much greater demands for skilled labour and for technicians of one sort and another. Perhaps more striking than anything else, it is a highly competitive industry on a worldwide basis. It is because of all the rapid changes that we have seen in recent years that some of the difficulties which have arisen have to be faced by the British ship repairing industry.
The foreign currency saving rôle of the industry is considerable, and the potential saving is far greater than it is now. In a moment or two I shall quote some figures for earnings in the industry and for expenditure on ship repairing which I think will illustrate that. I think one should emphasise that there are two elements in this foreign currency saving rôle. First, there is the fact that if we can keep British ship repair work in this country we shall save foreign currency which otherwise would be spent on repairing British ships in foreign yards. Second, if we can, as we do—although not to the extent which I should like to see—attract foreign ships to our repair yards we earn foreign currency.
I believe that ship repairing is the cinderella of the shipping world. Compared with ship owning and ship building, ship repairing all too often seems to be left out in the cold. Although as an industry it benefits from the general financial assistance that is available to all kinds of industries, for one reason or 1587 another—for example, because many of these yards are situated in development areas—there have not been any special incentives for this industry of the kind that we have seen in other industries. There have not been the incentives and inducements that we have seen in many manufacturing industries. There has not been the Government action that we have seen in some other industries in recent years.
In agriculture considerable efforts are being made to achieve a vast import-saving programme. It is hoped to save £160 million in a few years' time. In the tourist industry about £8 million a year is to be spent by the Government to attract foreign tourists in order to earn foreign currency and save foreign currency by retaining in this country some of the tourists who otherwise would go abroad. More generally, we have recently had introduced the import deposit scheme, which has had an effect on our trading position, on the import situation, and, therefore, on the balance of payments.
I am not asking for a handout for this industry, but I am asking for two things. I am asking that it should be treated equally with other comparable industries in the United Kingdom, and that it should be enabled to compete effectively with its overseas competitors.
The competitiveness of this industry is one of the major problems, and it is shrouded in mystery. There is a sucession of rumours, innuendoes, and sometimes even accusations which considerably affect its foreign currency earning and saving capacity. There have been some disturbing trends in the past three or four years. I was very unhappy to receive in answer to a Parliamentary Question the information that between 1964 and 1967 the amount of foreign currency earned by the industry dropped from £10.4 million to £8T million, a considerable drop, especially when one takes into account inflation over this period. Yet over the last three of those years, 1965–67, expenditure by the British industry in British yards has remained static at £49 million.
When one remembers that the amount of ship repairing in the world is almost certainly increasing fairly rapidly, the declining work in our yards is very disturbing 1588 and shows how much must be going to foreign yards. Unfortunately, information on this aspect of the problem does not seem to be available to the Departments concerned.
The first obvious reason for this problem of competitiveness is that many new foreign repair yards have been built, with considerable capital investment. For instance, a new yard at Lisnave near Lisbon can take for repair oil tankers of 250,000 tons and in a few years will be able to take tankers of 750,000 tons. We have nothing of that size; so that must mean increased competition.
Some of these yards have a better geographical position than ours; some are situated further down the merchant vessel routes, particularly those of the oil tankers. It is often said that the rates of pay of workers in foreign yards in direct competition with us are lower than those in this country or that working conditions are inferior and trade union organisation is not at such a high level. It is sometimes said that manning scales in this country in some trades are higher than those abroad, and that overseas industry receives subsidies which are not available to our industry. The example of United States legislation which encourages American shipbuilding to use American repair yards is frequently instanced.
Another factor to be remembered is the general attitude in some parts of the industry, on both sides. It has faced dramatic changes in recent years, which have not always been easy for management or workers to adjust to. We must remember this attitude and the industry's communications when talking about competitiveness. This is a field in which my friends in the industry, rather than the Government, can do most, and they must act in certain respects if the industry is to survive.
I would ask my hon. Friend to answer some of the questions about competitiveness. Will he make a detailed assessment of the situation in some of the European repair yards in direct competition with us? That would be well within the capacity of our commercial attaches at embassies in such countries as France, Spain and Portugal. It would help us to assess our competitiveness more accurately.
1589 Will my hon. Friend consider the question of conducting a full examination into the industry in Britain; into the whole aspect of its efficiency, productivity, the use it makes of its resources and its future development? Perhaps machinery like a little "Neddy" could do the job. Will he also look into the promotion of British ship repair yards among British shipowners, since I am sure that more could be clone by way of publicity, advice and so on?
In coming to the regional implications that any changes might have, I stress that this is an industry which, perhaps more than any other, is situated in areas which have serious regional problems. Certain towns, some of them quite small, are utterly dependent on the industry. I am particularly concerned with the situation in Falmouth, my constituency, because in the near future certain sections of the industry in some areas may face a critical situation. The economic pressures are not only intense but are increasing, and towns like Falmouth, which are far from centres of population, are particularly vulnerable because of their relative isolation.
I would not ask for a vast subsidy to be poured into the industry, but steps should be taken to help the industry to help itself. I therefore feel justified in asking for some assistance. If there were a severe rundown in the industry—this particularly applies to West Cornwall and Falmouth—or if a closure occured or even a break-up of the permanent labour force, it would be little short of a catastrophe.
In the area with which I am particularly concerned a permanent labour force was established as the result of an agreement between management and unions. It was a courageous agreement from the point of view of both sides. It was entered into a few years ago, and it is costing a great deal now because of the rundown which has occured in the amount of work available. The catastrophe resulting from, for example, a closure in my part of the world would be of unprecedented magnitude because not only is West Cornwall and Falmouth largely dependent on the industry but our unemployment figures are already a number of times that of the national average. The workers in this area could not find 1590 alternative employment within a radius of 100 to 150 miles.
It would be a catastrophe from a national point of view as well. We should disperse a highly skilled labour force, we should lose managerial know-how that has been built up over a number of years, in Falmouth we should lose the nation's premier oil tanker port, and we would lose a ship repair port of considerable strategic significance from the point of view of Falmouth being the first port for ships coming across the Atlantic and from the Mediterranean.
It is reasonable to say, therefore, that Falmouth is a special case. In case a crisis should arise before the assessments and general considerations to which I have referred have been carried out, I hope that we shall be given an assurance that the Minister will consider taking some sort of emergency measures, perhaps of a temporary nature. This would tide the industry over. If such emergency measures were not taken, the Government's problem in the long run would be even greater.
I have been speaking of an industry which has a real future. It must have the courage to accept change and be willing to re-examine some of the past assumptions that have been made on both sides of it. On the part of the Government there should be greater understanding and possibly assistance. I hope that this debate will help us to achieve these two aims.
§ 7.39 a.m.
§ The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Gerry Fowler)I am glad that my hon. Friend the Member for Falmouth and Camborne (Dr. John Dunwoody) has raised this matter, because it has enabled him to develop in an extended form some of the matters which he has recently been seeking to raise in Questions. He has been doing this on behalf of his constituents and in respect of an industry which serves his constituency. I am sure that there can be few hon. Members who are as diligent in the defence of the interests of their constituents as is my hon. Friend.
This also enables us to debate at a little greater length the situation in the ship repair industry and the various possibilities which have been suggested in the House of late for helping that industry. 1591 My hon. Friend says that he wants essentially two things—first, treatment for the ship repair industry equal to that of comparable British industries and, second, the creation of the ability in the British ship repair industry to compete on equal terms with foreign yards.
I should like to begin, therefore, by saying a word about these two general propositions. Taking the second one first, my hon. Friend perhaps falls into a trap when he talks about the subsidies reputed to be given in many foreign countries, and when he speaks of the difficulty that British yards may have in competing with them—the trap of exaggerating in some degree the governmental or other help which our foreign competitors receive, using this as an explanation or an excuse for a failure on the part of the British industry, if such a failure there be, to get its proper share of the world market.
I do not necessarily accept that there has been a significant failure on the part of British industry in this respect. The danger is that if we suggest that all our difficulties flow from governmental or other assistance to our competitors abroad we are almost inciting our own industry to say, in the words of Shakespeare, but using modern terminology, "The fault, dear Brutus, lies in the Government and not in ourselves."
There is a danger in this, because there is no incentive to the industry to make efforts to improve its international competitiveness. I do not wish to imply that it has not been competitive, in the international sense, in the past, but if it is to remain so there is no point in just running on the spot; obviously the pace of international competition is becoming more severe with every week that passes.
My hon. Friend alluded to some problems which the industry has met. He alluded to the growth of new foreign yards and suggested that we had nothing in this country to compare, for example, with the Lisnave yard at Lisbon in terms of size. He said that that yard could repair tankers of 250,000 tons, and soon would be able to repair tankers of 750,000 tons, and that there was no comparable yard in this country. That is true. As my hon. Friend says, this means that tankers of this size are inevitably repaired at Lisbon or elsewhere, and not 1592 in this country. But, as he rightly pointed out, one of the great difficulties for Britain is her geographical situation in respect of large tanker repairs. The normal practice with a large tanker is to clean out its tanks in the early part of its return voyage, which inevitably means that the tanker does not repair at or close to the point of discharge. It is much more likely to repair at some mid-way point on its return voyage.
In this eventuality it is difficult to see what one could do to get this country a fair share of the repair business for large tankers. I do not in any sense rule out the possibility that it may be necessary, at some point and in a suitable location—after receiving a sensible and economically costed proposition—to consider whether or not to invest in a larger repair dock in this country. On the other hand, I do not want to encourage people to believe that this would necessarily mean that we should get a large share of the repair business for large tankers.
My hon. Friend referred also in the same context to the statistics, which indicate that up to the end of 1967 the amount of business taken by British ship repair yards from the British shipping industry was relatively static over a period of years and that the amount of business it was gaining from foreign customers was declining at the end of that period. I draw to my hon. Friend's attention one fact about the last year in the series which he quoted which will explain to him why the figure for the business taken by the British ship repair industry from British shipowners was the same that year as it was the previous year and not higher and why the amount of foreign business that the industry gained was lower. It is a simple fact which one might subsume in one word—Suez.
As my hon. Friend knows, one of the effects of Suez was to place considerable strains on the resources of the world shipping industry. Repairs were put off where they could be put off. In consequence, business necessarily declined for not only the British ship repair industry but for most of the world's ship repair industries in the latter part of 1967 and, indeed, into 1968. It was only in the course of last year that business began to pick up again. It is reasonable to assume that in default of any further major disturbances to the pattern of world shipping 1593 1969 will prove to be the first normal year for some little time. It may therefore be wiser, in comparing a series of annual figures, to wait until we have the figure for this year before deciding whether there is any long-term trend. So I ask my hon. Friend not to be despondent about the moral to be drawn from the figures he quoted.
My hon. Friend also suggested on this same general topic—of creating a new ability on the part of the British industry to compete with foreign yards—that we might look at the legislation of some of our foreign competitors. Not least he referred to the United States. It is well known that the United States provides considerable incentives for its own ship repair industry. In the United States there is a duty of 50 per cent. on nonessential repairs which are effected outside the United States. This is a considerable incentive. This policy is in accord with the Americans' general subsidies to ship construction and ship operation.
Our policy is, and has been for some little time, on the contrary, to try to reach an international agreement on the containment and removal of such barriers to genuine competition. Even if we were to adopt the American measures, it is very doubtful whether it would be to our overall advantage.
Here I come to a very important point. Whereas the American fleet is largely engaged in coastal trade—if trade to Hawaii and Alaska is included in coastal trade—the British fleet is to a considerable extent engaged in cross trades. Many British vessels seldom, if ever, touch our own shores. In this event, it would be patent nonsense to introduce legislation on the American pattern, even if it were desirable in the sense that we believed that we should encourage international subsidies to the ship repair, shipbuilding and ship operating industries, rather than seek to work for their removal. It would be patent nonsense simply because it would be impossible for many British ships to repair in British yards, and it would add to the difficulties of the British shipping industry if British vessels were in general required to repair in British yards, because that industry, too, faces fierce international competition. Anything the Government did to 1594 add to the costs of that industry by forcing it to repair in Britain, rather than in what proved to be the most convenient and economic points for a particular ship on a particular voyage, could only lead to its becoming internationally less competitive.
Therefore, any suggestion that we should ape the United States is perhaps a little wrong-headed. There are other countries that in some degree help their ship repair industry, but there is nothing in the world comparable to the United States' legislation. Italy, for example, gives subsidies for conversions in Italian yards, and Canada grants tax benefits for conversions, but this is a rather specialised field.
In general, we find that most countries adopt the same practice as we do. Denmark, Federal Germany, Norway, Sweden, South Africa and Greece, just like the United Kingdom, give customs duty rebates on imported materials for ship repair work. That is the sum total of their direct subsidy to the industry. In this sense our industry is on all fours with most of the world's ship repair industry.
My hon. Friend also asked for comparable treatment with other British industry, and he instanced agriculture at some length. I am not sure whether the parallel is or can be with agriculture, and I am not sure where the parallel can be with much of manufacturing industry. The best thing I can do on this topic is to tell him that if he can make some detailed and sensible suggestion as to how we could help the ship repair industry in such a way as to increase its long-term competitiveness, rather than, to use the popular phrase, to feather-bed it in the short term, I should be very happy to consider it and to think again as to whether anything could be done to help this industry specifically. But to date I have never seen such a proposal.
In most areas in which the ship repair industry flourishes—by no means all, but certainly in my hon. Friend's constituency—the industry already receives pretty hefty regional benefits, not only in terms of help for new investment but R.E.P. and S.E.T. premiums, which help with labour-costs in what is essentially a labour-intensive industry. If my hon. Friend can think of any other substantial way in 1595 which we can help the industry I shall be glad to hear it.
It has been suggested that we might encourage re-grouping inside the industry. There is possibly something in this, but much of the industry is already grouped. One can point to the Swan Hunter and Smith's Dock consortium, and the Falmouth firm of Silley Cox is linked with R. H. Green and Silley Weir in the Port of London. So one could go on. There has been grouping, and this is not an industry where one could expect a response to grouping of the kind one can expect in ship building, because there the economies of scale are likely to be substantially higher. If my hon. Friend will think again about this, I am quite prepared to think again myself.
1596 My hon. Friend spoke about the regional implications of the difficulties of the firm in his constituency and firms elsewhere, and asked whether I would consider emergency measures for Falmouth in the event of a crisis. If there were a serious crisis of employment in Falmouth, I and my right hon. and hon. Friends in other Departments would, of course, immediately consider what the Government could do to help. But I cannot give him any assurance in advance today that we should be able to help a specific firm in a specific way.
I hope that my hon. Friend will rest content with what I have been able to say.
§ Question put and agreed to.
§ Adjourned accordingly at six minutes to Eight o'clock a.m.