HC Deb 17 March 1970 vol 798 cc351-64

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

11.2 p.m.

Mr. Edwin Brooks (Bebington)

It was about two years ago that the Government decided that future nuclear submarine construction would be confined to the Vickers yard at Barrow-in-Furness. In reaching that controversial decision to concentrate the Fleet programme on the lead yard, the Ministry of Defence unleashed a major crisis in the shipbuilding industry along the Mersey.

The decision to deny Cammell Laird any further share of nuclear work was not made public for 12 months. Immediately, however, it caused consternation throughout the whole development area, particularly as the employment situation was by then showing those signs of slow deterioration which were to make the Hunt proposals for de-scheduling Merseyside clearly premature.

On 10th March, almost exactly a year ago, the matter was debated at length in the House, and I will resist the temptation to quote my speech. However, in my final sentence I urged the Government to consider the advisability now of helping the yard to invest its skill and expertise in the nuclear propulsion of surface ships."—[OFFICIAL REPORT, 10th March, 1969; Vol 779. c. 1075.] This possibility was also urged on my hon. Friend the Member for The Wrekin (Mr. Fowler), who was at that time Parliamentary Secretary to the Ministry of Technology, by a deputation from Birkenhead Council, which visited London on 2nd April.

Since that meeting several hon. Members, including myself, have sought to clarify the situation, and in particular to discover what progress has been made by the Ministry's cost-benefit study of a nuclear ship project. This study was described in The Times on 24th February, 1969, and its existence was confirmed in a Commons answer of 15th April. On 9th July the Minister stated in the House: Information is being sought from shipbuilders, shipowners, the Shipbuilding Industry Board and others. We hope to have the first results of the study by the autumn."—[OFFIcIAL REPORT, 9th July, 1969; Vol. 786, c. 1347.] However, it seems that nothing definitive has yet emerged, although on 26th January my hon. Friend informed the hon. Member for Haltemprice (Mr. Wall) and myself: When the current study of the costs and benefits of a nuclear ship project is completed, it will be possible to consider how best to respond to the interest of hon. Members."—[OFFICIAL REPORT, 26th January, 1970; Vol. 794, c. 227–8.] To this rather cryptic answer I would merely say that much more is at stake than the interest of a few hon. Members. I have no wish to sound melodramatic, or to exaggerate the gravity of the situation facing Cammell Laird in the 'seventies, but I believe that the future of shipbuilding itself along the Mersey cannot now be taken for granted indefinitely. In recent weeks there has been a spate of speculation in the Press following the disclosure of substantial losses on the shipbuilding activities of the firm. In The Times on 6th February appeared a detailed account of the financial tribulations caused by serious disruption of the shipyard production programme … along with difficulties in delivery of materials from sub-contractors… The article went on: Cammell says that the problems were much more serious than anticipated. Plainly it had to undergo tough labour bargaining, and it comments somewhat elliptically that the changeover from the naval programme, after the loss of future Fleet submarine contracts, to merchant ship construction proved unexpectedly difficult. Unexpected or not, it seems clear that the loss of the vital submarine contract has cast a long shadow over Merseyside shipbuilding.

Against this background of uncertainty. and with an unemployment percentage on Merseyside of 4.3 per cent.—which is the highest level since the Tory peaks of 1962–64—my hon. Friend must pardon my growing impatience with the sort of tantalising replies he gave me on 4th February and again yesterday. He informed me on the earlier occasion that the Ministry of Technology study was expected "shortly", whereas yesterday no reference was made to any cost-benefit study whatsoever.

I hope that tonight is the night for hard news. But my constituency anxieties are not the only reason why I have sought to bring this matter before the House. My basic object is to gain some clarification about the Government's view of marine nuclear propulsion at a time when major changes and advances in both super-tankers and container ships have radically transformed the economics of such an enterprise.

The nuclear ship has obvious potential advantages over conventional oil-fired vessels, as the Padmore Committee of 1964 on Nuclear Power for Ship Propulsion fully recognised in principle. But its high capital costs will be offset only if vessels of very large installed shaft horsepower operating at high rates of utilisation can be introduced. Without a high rate of turn-round the nuclear ship cannot realise its optimum operating costs; in other words, a nuclear ship subject to fits and starts is as uneconomic as a nuclear power station subject to peaks and troughs in load factors.

Similarly, a small vessel is unlikely to be worth considering, which is partly the reason for the Padmore Committee's conclusion that the time was not yet ripe for a nuclear ship. The committee had, in fact, taken as the effective upper limits of power and weight a mere 20,000 shaft horsepower ship reactor and 70,000 deadweight tons. But only last month we saw 200,000 ton super-tankers on the Mersey, and much larger monsters seem only a matter of time.

Perhaps even more significantly, there has been a dramatic increase in shaft horsepower in container ships since 1965. The O.C.L. and A.C.T. vessels now in service have shaft horsepower in the range 30,000–35,000, and in a recent paper prepared by Messrs. Gaunt, Rouse and Wilkinson, of Vickers, a table was published showing a range of container ships now on order of between 60,000 and 120,000 shaft horsepower. These three authors had already, in October 1969, presented a design study for a nuclear-powered container ship, with parameters which included a limitation of power to 60,000 shaft horsepower and a service speed of 27 knots. It was planned to carry 1,800 containers, and would have been broadly comparable in speed and tonnage of cargo carried to the present generation of steam turbine and diesel container ships due to be delivered to O.C.L., Hamburg Amerika, Ben Line and Scanservice during 1971 and 1972.

The authors concluded: The results gained from the economic comparison made between the conventional and the nuclear-powered vessel for this particular study were found to be most encouraging, and did further reinforce our long-held belief that the application of nuclear power to certain types of vessels over specified routes could be economically justified. More recently the authors have extended there design study to accommodate further itineraries, including the Panama Canal route for a global circumnavigation taking in Yokohama and Sydney. Further, in order to make meaningful economic comparisons between the nuclear and conventional vessels, a fleet of six nuclear-powered container ships was assumed to be operating on the specified itinerary, capable of transporting 4.9 million tons of containerised cargo a year. From this, a comparable conventional fleet could be calculated which proved to be one of seven vessels when using the 1575 container 27 knot vessel which it was calculated would have the same principal dimensions and displacement as the nuclear vessel.

Time precludes my following through the detailed economic calculations based on the discounted cash flow technique which were then made of the two alternative fleets. Obviously many variables could not be costed precisely, notably the cost of nuclear fuel over the operating lifetime, assumed for discount purposes of over 21 years. But I presume that similar difficulties must face the Ministry of Technology forecasts, and in view of the uncertainties in the costing of, say, enriched uranium via the centrifuge process in the 'eighties, it is surely too much to expect that any long-term nuclear project will never involve a degree of risk.

At any rate, the Vickers team calculates that only when discount rates in excess of 9 per cent. are reached does the conventional fleet of vessels show any advantage over the nuclear alternative. This rate rises to 11 per cent. if the assumption is made that future advances in nuclear fuel technology and fuel cell manufacturing techniques bring about a reduction of 7½ per cent. in existing nuclear fuel costs. As it says, such a discount level would be considered, for most shipping ventures to be an extremely fair return on invested capital. This is not the time and place to enter these realms of the higher physics and the flightier finance, but I gain the impression from the Vickers work and from the studies of Cammell Laird that we are at least very near the break even point in nuclear propulsion for the coming fleets of container ships. If this is so, I really cannot understand why the Government seem so coy about embarking on the feasibility studies and the prototype vessel which would have to be the prelude to any major British rôle in this development.

I recognise that the Minsitry of Technology is hostile to the prestige extravaganza, and I welcome, as must any good member of the P.A.C., signs of financial rectitude in place of the blank cheque approach to the Concorde. But the Concorde lesson is not that advanced technological ventures must henceforth be shunned simply because there is an element of risk attached to them. Such timidity would have left the British shipbuilding industry still making coracles and dugouts.

The real lessons of the Concorde which should be applied to any nuclear ship project are that no potentially costly and strange technologies should lack the discipline of periodic reviews and ceilings upon research expenditure, and that it is unwise to eliminate private enterprise and finance from such advanced and risky projects.

In the case of a nuclear ship, I have seen numerous and probably highly speculative forecasts of cost, but the Vickers study proposed a figure of £12.8 million for each of the six nuclear container ships that it envisaged. The cost of a prototype ship is therefore likely to be in the range of £10 to £15 million, which means that the whole project is likely to cost little more than 1 per cent. of the total research and development which Britain and France will largely write off as a net loss on the Concorde. But, apart from this, the vessel will have an active life ahead of her following this expenditure, unlike the "Ark Royal".

Three years ago, as my hon. Friend will recall, the Select Committee on Science and Technology heard Lord Penney argue that oil-fired propulsion would have a 10 to 20 per cent. economic advantage over a nuclear reactor. Lord Penney was not talking about the present generation of container vessels of 60,000 shaft horsepower upwards which would benefit nuclear power owing to its smaller incremental costs with size. Nevertheless, even on his necessarily pessimistic forecasts, it would seem that the nuclear vessel, far from being a write-off as will the Concorde's research and development, will ply the high seas for many years at a cost only marginally more expensive than the conventional vessel.

Since the conventional vessel will also cost money to build—one of comparable size would be in the range of £9 million to £10 million in all probability—I am simply arguing that investment in a nuclear prototype vessel, even on the more pessimistic forecasts of recent years, would cost the taxpayer far less than a mile of urban motorway in London.

I think that we need to get these matters in some such perspective. We are one of the great martime nations of all time. and, with massive increases in world commerce, the scope for a major shipbuilding industry in the decades ahead seems evident.

Of course, it may be said that we can afford to sit back and wait for the Russians, the Americans, the Germans and the Japanese to incur the costs of basic research in nuclear marine propulsion: let them iron out the bugs, for a change. But, in view of our work in reactor design and our world lead in so many of the peaceful uses of atomic energy, we would be unwise to appear to be opting out of a technology where we have accumulated substantial expertise through our Polaris and Fleet submarine work. It would be different if the costs seemed overwhelming, but I have tried to argue that recent work discounts such gloom, and I would hope that the Ministry of Technology's cost-benefit analysis takes into account the intangible as well as the tangible benefits of a merchant navy nuclear project.

Even the announcement of such a project would bring an electrifying response among the shipyard workers of Barrow and Birkenhead, whose yards have contributed so much to British naval security over the years. The effect on morale may be difficult to quantify in the cost-benefit calculations, but it can make all the difference between an image of industrial decline and bloody-mindedness and an image of sophisticated skills thrusting towards the future.

This Government have been generous towards the development areas, with £50 million preferential assistance going to Merseyside in 1968–69. Also there are many exciting developments in the region, not least the development at Capenhurst of the world's first ultracentrifuge technology for the enrichment of uranium. Yet the shipbuilding workers feel bruised and bewildered, and the Government cannot avoid a large measure of responsibility for the way in which the naval nuclear rug was pulled from under their feet.

It would be paradoxical if at a moment when a completely novel, yet potentially most exciting technology arrived in Capenhurst a much older industry on Merseyside should appear to be denied any opportunity to pioneer a similarly novel, yet potentially most exciting, nuclear technology. So I urge my hon. Friend to consider whether the time has now come, particularly as the economy is so manifestly on the mend, for Britain to take the road to maritime nuclear power for peaceful purposes. I recognise that this would need to be done in stages, and it may well be that such work would need to be shared between the two yards possessing experience in nuclear propulsion.

The first stage is presumably to seek from both Vickers and Laird a major feasibility study of the concept. As Gaunt, Rouse and Wilkinson said recently: At this point in time, uncertainty as to the values of cost for the nuclear aspects is inevitable for until a full design programme for these items has been carried out, a large degree of variation cannot be ruled out. They go on to speak of the need for a national research effort to reduce the current uncertainties to reasonable, accurate probabilities, and I assume that such work might embrace industry outside shipbuilding in the narrow sense.

However, if we are to stop chasing each other round the mulberry bush for ever, someone somewhere has to focus all this research and industrial effort, and I should like to see the Government and the container consortia groups jointly finance the two shipbuilding yards to carry out the necessary preparatory design work for a prototype vessel. Perhaps we can encourage or involve other European partners in such work. The Germans have recently shown interest in nuclear propulsion, as in the "Otto Hahn", and there is, after all, the precedent of the centrifuge collaboration between three States, all of which have a notable shipbuilding record. But, whatever the response from other countries, and even if it were eventually decided to build an exclusively British nuclear ship at Barrow rather than at Birkenhead, I would still feel as strongly that this is well worth pursuing for the sake of Britain in the 'eighties.

For us to spoil the ship for a ha'porth of tar, in a manner of speaking, would be to risk missing the boat for ever. In terms of technological spin-off, or, say, of benign nuclear fall-out, there is a strong argument for being up among the leaders in research and development, and I suggest that the potential rewards for the balance of payments ten years and more from now would alone justify the scale of risk which now seems to be implicit in such a venture.

I end by quoting the optimistic, if tentative, conclusion of the Vickers team. It states: It is clear from the results given in this paper, that provided the actual cost figures for reactors and for nuclear fuel are eventually established to be within certain favourable ranges of possible values, then nuclear power is more than competitive in the type of ship we have described, when operating in the given itinerary. I simply remind my hon. Friend that he who hesitates is lost.

11.18 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Dr. Ernest A. Davies)

I am grateful to my hon. Friend the Member for Bebington (Mr. Brooks) for bringing forward the question of the nuclear-powered merchant ship for debate this evening, because a number of hon. Members have asked me a lot of questions on this subject recently, and it gives me an opportunity to reply in a fuller manner than is possible at Question Time to a number of these important points.

My hon. Friend has, of course, spoken in very strong terms, as one would expect of him, of the Government's decision to withdraw the work on the nuclear submarines from Cammell Laird. This, I know, springs from his very deep concern for employment prospects amongst his constituents and for the prosperity of the Wirral in general. The House and the Government are very much aware of my hon. Friend's very deep feeling on the matter. No one could have made more determined representations to the Government on the subject than he has, but I am sure that he would not expect me to go into the question of the submarines, as that is not a matter for my Department.

My hon. Friend paid tribute to the Government's general policy of support for the region, and, in particular, the support for additional industrial development of an area which has known a lot of difficulty in the past. This is, and continues to be, a massive programme, and I am grateful to my hon. Friend for bringing it to our attention now—

Mr. Speaker

Order. It will help the reporters if the hon. Member speaks up.

Dr. Davies

I now turn to the main question of the nuclear ship. My hon. Friend would not expect me, in the course of this debate, to go in for a detailed exchange on all the economic questions or on all the detailed figures, some of which he has quoted from a paper. But I should point out that the Government's involvement in the nuclear ship project has been going on for a number of years.

As my hon. Friend remarked, we had the Padmore Report in 1964, and the Select Committee on Science and Technology reported on an investigation that it carried out in 1966–67. That report contained evidence taken from Lord Penney, who was at that time the Chairman of the Atomic Energy Authority. Lord Penney suggested that the oil-fired ship was still considerably in advance, in economic terms, of the nuclear-powered ship, but he went on to remark that perhaps the matter ought to be looked at in two or three years. That second review has precipitated the debate tonight.

I am obliged to recognise that over this period there have been changes in ship design. Super-tankers of up to 200,000 tons deadweight are now sailing the oceans. As my hon. Friend has pointed out, larger ones may be forthcoming in the not too distant future.

We have seen a considerable growth in the use of the container ship and the container as a general means of transportation. Obviously, if the container ship is to be a profitable and useful vessel it must have a quick turn round and a higher speed than would normally be expected of, say, a conventional merchant ship now or in past years. These two matters—the massive size of the tanker and the demand for greater speed from the container ship—call for a more powerful propulsive unit. The figures being talked about are anything between 60 and 70 megawatts of output. I use the electrical term because this gives us a direct comparison with the scale of power output from a nuclear reactor in a power station. This is where we have most experience of these units.

In the face of developments of this kind, there seemed to be a case for a further look at the prospects for nuclear propulsion. This has also been prompted by further developments which have taken place abroad. In the 'sixties Germany built a nuclear-powered ship, the "Otto Hahn". In Japan one is being built now. But I should point out that these two ships were or are being built by nations which have no experience and have no capacity for building naval vessels with nuclear propulsion units.

If we look elsewhere abroad, in the 'fifties both the U.S.A. and the U.S.S.R. built nuclear-powered ships. Both those countries have a capability for building naval ships with nuclear-powered units.

Britain and France have the capacity for building, and, indeed, have built, naval ships with nuclear-powered units, but have not gone on to build civil craft. There is, therefore, a distinction between those with no naval experience and those with. But it is important to recognise that those countries which have built merchant ships with nuclear-powered units have built them knowing that they would not be economic in that, if used in the ordinary commercial sense, that they would not yield a profit.

It is clear that the latest building in the 'sixties is specifically to get experience not just of a merchant ship but also of nuclear-powered construction. It is interesting to note that the two countries that were first with nuclear-powered merchant ships have not gone on into any further programme of civil building. This shows how important it is to look not only at the technical problems concerned with design and construction but at the other aspects to which I shall come in a moment.

It has been suggested that because of this progress in other countries we might be falling behind. I do not wish in any way to suggest that we should be other than always on the alert for the opportunity to keep our industry in the forefront of sensible development. This is essential. We are a trading nation, and we have to trade with sophisticated products. I hope, therefore, that what I am about to say will not suggest any sense of complacency; on the contrary.

As we have such a tremendous amount of experience in the use of nuclear power for civil purposes, such as the generation of electricity, we have a tremendous expertise in nuclear matters. We also have a tremendous expertise in shipbuilding. In purely technical terms, the designing and creating of a reactor and putting it into a suitable ship to sail across the oceans is within our capacity, and, therefore, in that sense we need not think that because there is a merchant ship sailing the seas but not under a British flag we are falling behind in the technological respect.

In view of the changing circumstances to which I have referred, industry and Government must always be on the alert, but the real point at issue is whether a nuclear-powered ship can be built and operated on a normal commercial basis, and this has to be taken account of over and above the technical considerations of design and construction. It is necessary to consider the entire economics of operation.

It was against that background that my right hon. Friend the Minister of Technology put in hand a new study by the Ministry. This was announced to the House on 15th April, 1969, and in reply to Questions and promises were made that some of the results of the study might in due course be made known. This study has been undertaken in considerable depth, and has been in progress ever since my right hon. Friend made his statement. If it is to be an adequate, deep, and worthwhile study, it must take time, and it means consulting the interests and authorities concerned.

My hon. Friend referred to papers by Gaunt, Rouse, and Wilkinson. These papers are known to, and have been studied by, the study group. It has also looked into evidence from many quarters, both at home and abroad, including evidence from two British shipbuilders who have gone into this subject recently, and, naturally, there have been consultations with the Atomic Energy Authority.

The first task of the study group was to consider whether, in the present and foreseeable conditions, there was an economic or commercial advantage for the ship operator. This is the vital question, and, quite rightly, the first one that the study group had to consider. Its second task was to estimate what the demand might be for the kind of ship in which nuclear propulsion might be in competition with the more convential power unit. Its third task was to consider what part the Government ought to play in any nuclear-powered ship project and what the cost to public funds might be. Its fourth task was to assess the benefits to the country's economy if the Government embarked on such a programme.

In carrying out its task the study group has given due weight to many factors. These include changing technical factors such as the increase in the size of tankers and the demand for faster container ships. Individual ships and the fleet concept have equally been studied. The various sea routes acress which a ship might reasonably be expected to operate have also been considered. In addition, more is now known about the cost of marine oil fuels than was known a little while ago, and also about their likely trends in future.

From this point, I hope that my hon. Friend will accept that this matter has been gone into very thoroughly. I have not listed all the factors which are taken into account but I have given examples in reply to some of the points put. It is because we have gone into this matter so deeply that the study has continued up till now. Shortly, as I have told the House, the results of the study will be placed before Ministers and will then be considered by them. We shall then consider how best to make them known to the House since this interest has been shown.

I am glad to note that my hon. Friend shares the Ministry's opposition to what he described as technological extravaganza and that, as a member of the Public Accounts Committee, he accepts the need for financial discipline, which is essential in any project, even if the costs might appear marginal when compared with some other, larger, project. He has called for a major feasibility study of the nuclear ship project. I hope he will accept that the study I have just outlined is pretty well in line with his request.

I am also glad to notice that my hon. Friend thinks that ship owners and ship operators should be brought into this matter. It is so often argued purely in terms of shipbuilding, whereas, of course, the heart of the matter lies in successful ship operation. I can tell him that ship owners have been consulted.

I finish on the note that if my hon. Friend accepts the need for some kind of financial discipline, he will recognise that there is some merit in the Ministry's view that one such method would be the prospect of orders from the ship owners.

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-eight minutes to Twelve o'clock.