UPPER CLYDE SHIPBUILDERS (Hansard, 29 July 1971)

§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)
With permission, Mr. Speaker, I will make a statement on the subject of Upper Clyde Shipbuilders.
The Group which I invited to advise me about Upper Clyde Shipbuilders has reported. Their report is now available in the Vote Office.
Their principal finding are that Upper Clyde Shipbuilders Limited, as organised in 1967, was doomed from the start as a result of the faulty concept of structure within which it was organised; the burden of eventual loss with which it was saddled; and the inadequate management with which it was provided. The group therefore conclude that any continuation of Upper Clyde Shipbuilders in its present form would be wholly unjustified". The group also state that the present order book is dangerously thin for U.C.S. in its present size, particularly in view of the low level of orders coming into the industry.
Nevertheless, if the order book is concentrated at the Govan and Linthouse sites; if ship production is standardised; if the management is radically reformed; and if much more productive and realistic working agreements can be negotiated with the men who would be employed there—on these conditions, the group think it should be possible to form a new company which would retain a viable shipbuilding capability on the Upper Clyde with prospects of some eventual expansion.
The Government accept these conclusions. But the groups conditions are fundamental and the enterprise can go forward only if they are met. In particular, I must emphasise the need, if this venture is to succeed, for the first class management and for satisfactory undertakings by the unions in relation to working practices and wage rates.
If these conditions are met, the Government believe that private capital should 792 be forthcoming, particularly from Scottish sources, and the Government themselves would be ready to provide some of the initial capital.
If the new venture can be established on the basis I have described, some 2,500 men will have the prospect of continued employment there.

§ Mr. Buchan
Absolute shame.

§ Mr. Davies
Another thousand men, and probably more, should be able to find work with other shipbuilders on the Clyde. Some, too, may be retained in work by other interests acquiring U.C.S. facilities from the liquidator. For the rest, a considerable number are likely to be needed for the completion of ships already building.

§ Mr. James Hamilton
Bunkum.

§ Mr. Davies
Thus, only about 400 men in all will become immediately redundant, although others will do so at intervals during the months to come as ships are completed. The Government will, of course, do everything possible to assist those who lose their jobs.
If the court grants the company's application for a winding up order, the liquidation of Upper Clyde Shipbuilders Limited will proceed.
While we are seeking to establish whether the conditions for a viable shipbuilding enterprise can be created on the lines recommended by the expert Group. I will have their continuing advice. I am grateful to them for the work they have already done.
To ensure meanwhile that the liquidator has the necessary working capital, the Government propose to allow him to retain for a limited period the moneys advanced under existing arrangements with the provisional liquidator. If during this period further sums are needed, then, provided there has been satisfactory progress in fulfilling the conditions I have outlined, funds will be made available from the Consolidated Fund and Estimates will be presented to the House in due course. If Government money were to be provided for a continuing operation, legislation would have to be introduced.

§ Mr. Benn
Is the Secretary of State aware—he is, of course—that he has 793 announced the end of Upper Clyde Shipbuilders, the closure of Clydebank and Scotstoun, direct unemployment of 5,000 to 6,000, which, allowing for suppliers, could rise to 15,000, and could bring male unemployment on Clydebank to 18 per cent.? This is a major tragedy for the men involved and for Scotland, and it has been introduced by the right hon. Gentleman without a single word of regret at any stage in his statement.
Is the right hon. Gentleman aware that we shall want an urgent debate on this matter, that the Advisory Group report, now in the Vote Office, is a political document without a single figure attached to it, and that the House will want a Select Committee to examine the record of the Government in this respect?
I should like to ask the Secretary of State two questions. First, how many redundancies does he expect, where will they take place, when will they take place, and what effect will they have on the rate of male unemployment in Scotland?
Secondly, what is the cost of this policy to the Government in payments to the liquidator, the cost of reconstruction and capital to finance private persons to come in, in terms of redundancy and unemployment pay and the public assets of some millions of pounds which he has written off in the statement which he has just announced?

§ Mr. Davies
With characteristic exaggeration, the right hon. Gentleman seeks to cloak his own manifest responsibility for the situation. He criticises this Group, which is both expert and impartial —[HON. MEMBERS: "Tory."]—nonsense —as to the views which it expresses, largely to conceal the fact that its criticism is, quite properly, directed against himself.
The right hon. Gentleman asked me two questions of merit. First, what redundancies do I anticipate? I have made it clear in my statement that redundancies immediately are unlikely to be more than 400. The ultimate redundancies will depend whether the project which this Group has outlined is sustainable and can be undertaken. They also depend on the ultimate disposal, with work continuing, of parts of the U.C.S. activity, particularly those to which he referred at Clydebank and Scotstoun. Therefore, any 794 endeavour to try to forecast at this moment the exact number or timing of redundancies would be irresponsible.
On the right hon. Gentleman's second question, the total cost which may be envisaged for Government expenditure clearly depends on what access there is to private funds to sustain this further project. Until such time as that is clear, it is impossible to say what the position will be. For guidance, however, it is right to say that up to the present £4 million has been advanced to the provisional liquidator, of which approximately £1¼ million is in the form of effective grants. The remainder, approximately £2¾ million, advanced to keep the labour force at work until 6th August in the recognition that a large part of the work involved is to complete ships for which payment will be made, is in the form of a loan to the provisional liquidator, and it is that loan which he will retain for the time being.

§ Mr. Benn
The right hon. Gentleman has not answered my questions. There must have been some figures before the Cabinet when it reached a view as to how many redundancies would be involved and what the cost to public funds would be. Will he tell the House what figures the Cabinet had? Will he also tell the House why the Advisory Group's report has been published without a single figure in it anywhere? If the right hon. Gentleman believes that responsibility lies elsewhere—[HON. MEMBERS: "You."]—will he agree to a Select Committee of the House examining the records of both Governments in this respect?
Finally, is the right hon. Gentleman aware that, since this policy was forecast almost exactly in the Ridley Report, we do not believe a word that the Government say on the matter?

§ Mr. Davies
I must say to the right hon. Gentleman that that is pure evasion. The responsibility lies entirely with him. He resents the report because, quite rightly, it points the finger at him, and he should answer that responsibility.

§ Mr. Bruce-Gardyne
Does my right hon. Friend agree that the report of the wise men makes it quite clear that the overwhelming responsibility for this tragedy rests on the shoulders of the right 795 hon. Member for Bristol, South-East (Mr. Benn)? Is he further aware that just two years ago the right hon. Gentleman told a Select Committee on Scottish Affairs that to give an open-ended commitment to one shipyard would totally undermine shipbuilding policy generally? In the light of those two facts, will he treat the right hon. Gentleman's comments with the contempt that they deserve?

§ Mr. Davies
Yes, Sir. I heartily endorse every word of my hon. Friend's statement.

§ Mr. Small
This is the grimmest news that the Clyde has had in years. Connells in Scotstoun is in my constituency, and I know the concern of the workers there. This is a matter of judgment as to whether this group is viable or not. The loyalty to the group over the last 18 months by the workers there has been outstanding, and I repeat that this is a matter of judgment.
What guarantee has the liquidator for continuing wages to the men after the terminal date of 6th August, and for how long will these wages be continued during the phasing-out period?

§ Mr. Davies
I have made the point about funds being presently in the liquidator's hands, and I have described what they are. They will remain available to him to secure a continuation of employment in the terms in which my statement reads. The liquidator is in possession of such funds as will enable him so to continue. While he has specific responsibility to have regard to the interests of the creditors, it is essential that nothing he does, or that I do in support of him, should prejudice his legal responsibilities in that field.

§ Mr. Ian Lloyd
But is it not time that both the House and the country recognised that neither of the right hon. Gentlemen opposite is wholly responsible for this tragic situation? Was it not very fully predicted in the D.S.I.R. Report on the industry, published in 1960, and does the Minister not agree—[Interruption.]

§ Mr. Speaker
Order. I want to hear the question which the hon. Member is putting.

§ Mr. Ian Lloyd
Does the Minister not agree that there can be no effective response to the massive challenge presented 796 to Western Europe by the Japanese shipbuilding industry unless that response is now organised on a Western European scale? Is that not now our policy?

§ Mr. Davies
I am sure that my hon. Friend is right in saying that there is a problem for Western Europe at the moment. Despite all the polemics and hostilities which this matter may arouse, what seems to me to be critical is to try to get this residual element, which looks as though it might have a future, to work. It is essential to try to do so.

§ Mr. Rankin
If there has to be a residual effort, or any kind of resulting effort, does not the right hon. Gentleman realise the importance of creating confidence among the men who are working in the shipyards on Clydeside? Does he realise the importance of that?
Does the right hon. Gentleman further realise that his statement will destroy any little remnants that exist of that confidence? Does he realise that? Will he tell us one or two other things? How many shipbuilding yards on Clydeside are to be closed? He has not told us that yet.
Why is the action of Fairfields in the period from 1964 to 1967 exempt even from criticism, and why is it that the condemnation and the criticism starts only from 1967? Does not the right hon. Gentleman realise that Fairfields were functioning in the situation which he condemns for three solid years? Does he approve of how Fairfields were run then? If he does, will he seek to keep Fairfields going, as it could do, with whatever shipyards will be remaining on Clydeside when he has finished with it?

§ Mr. Davies
On the question of confidence, with all the uncertainties which have overwhelmed this concern from its inception, it is difficult to speak of confidence about its future at any time.
The number of yards that will be closed will depend upon the result of the various efforts that are now made. The first effort will be to try to get this proposed project going. If that happens, the Fairfields yard at Govan will be the central unit of the project.

§ Mr. Rankin
Which yards?

§ Mr. Davies
The Fairfields yard at Govan, which is the central unit of that project with Linthouse. The two other 797 main yards of U.C.S., Clydebank and Scotstoun, will be disposed of, perhaps for continuing work, by the liquidator.

Mr. Edward Taylor
Can my right hon. Friend say something about the procedure for bringing together those who may be able to give the assurances which might preserve these yards on the Upper Clyde? Second, can he say whether any apprentices will be involved in the immediate redundancies? As some of these youngsters may have served for three or four years, will he consider taking urgent steps to bring together the Confederation of Local Employers to see whether these young people can complete their apprenticeships?

§ Mr. Davies
The purpose to which my hon. Friend refers in specifically that to which I am addressing myself.
I am conscious of the problem of apprentices, and so, indeed, is the liquidator. Discussions have taken place between him and others concerned with a view to trying to ensure the eventual completion of their apprenticeships.

Several Hon. Members
rose—

§ Mr. Speaker
Order. I must warn the House—[Interruption.]—I am not going to stop these questions now, but I must warn the House that there can be only a limited period for them.

§ Mr. McCartney
Will the right hon. Gentleman say whether, implied in his statement, there is the possibility, or perhaps the probability, of the whole of the shipbuilding unit on the Upper Clyde being disposed of? I understood the right hon. Gentleman to say that unless certain conditions were obtained in the immediate future in the negotiations that are taking place the possibility of a viable shipbuilding unit would not exist. Does that mean that the right hon. Gentleman still has in mind the complete decimation of shipbuilding on the Upper Clyde?
Will the right hon. Gentleman also say what he has in mind for those workers whom he has said will be made redundant? Is he making any provision for the employment of at least some of the redundant workers behind the desks of the employment exchanges to cope with increased productivity in the only place where it is happening in Scotland?
798 Can the right hon. Gentleman say what the Government have in mind when he tells us that the Government are concerned to do everything possible to alleviate the circumstances of these men? Remembering what one of his right hon. Friends said recently, that there were signs of improvement in Scotland, and immediately afterward the unemployment rate shot up by thousands, with disastrous results, may I ask the right hon. Gentleman whether he is following the policy that was followed when that occurred? Does this mean that not only U.C.S. workers are in peril, but that other workers face the same danger, too? Can the right hon. Gentleman spell out exactly what the Government propose to do to protect the interests of shipbuilding workers?
When my hon. Friend—

§ Mr. Speaker
Order. The hon. Member must ask a Question.

§ Mr. McCartney
I am trying to pose the questions and the reasons for them at the same time. Whey my hon. Friend the Member for Glasgow, Scotstoun (Mr. Small) said that this was the biggest disaster for years in Scotland, he was right. It is a great disaster, but would not the Minister agree that he is the biggest disaster of all time?

§ Mr. Davies
The answer to the first of the hon. Gentleman's questions is that the intention, if at all possible, is to get the project, which the group has recommended, to work. That will require a great deal of effort.
In answer to the second question, the help which can be given to those who are rendered redundant is that which is available through the Department of Employment and which is well known to the hon. Gentleman.
The third question relates essentially to the effect on suppliers and the work forces which are involved with suppliers. If it proves possible to work the project which has been recommended, it is the intention to transfer the bulk of the existing shipbuilding programme of U.C.S. to the new project. If this is so, the suppliers' outlets will be to a considerable degree preserved. This should give some reassurance on the subject of their employment.

§ Mr. Ross
Am I right in thinking that the present work force of U.C.S. numbers 8,300 and that the right hon. Gentleman under his reconstruction gives the possibility, and only the possibility, of continued employment for only 2,500? Therefore, this is not reconstruction; it is butchery.
Is the Secretary of State aware that one of the saddest days of my life was when I was in Maryhill Barracks with the H.L.I. and went through Clydebank the day after it had been bombed by the Germans? The blow that has been delivered to Clydebank by the Government is even worse than that. The right hon. Gentleman should be ashamed of it.
Is he aware that there is no evidence that social considerations have been brought into this? This is a cold and callous manoeuvre such as was foreseen by the Ridley report. Will the right hon. Gentleman go up to Clydebank and then to Scotstoun and talk to the men and tell them why he is doing this? Exactly how are these men to find employment when the unemployment rate in this area is already nearly 10 per cent.? Will he tell us just exactly what hope there is of getting private capital into this project? What hope has he, on the basis of a statement such as the one he has just made, of getting a continuation of the co-operation that the unions have given to the management in recent years?

§ Mr. Davies
The hope I have is certainly not assisted by the remarks made by the right hon. Gentleman.

§ Mr. Ross
Disgraceful !

§ Mr. Davies
The responsibility for this event lies squarely on the Front Bench opposite—[Interruption.]

§ Mr. Speaker
Order. I cannot allow this to continue. This is a matter which ought to be debated—

Hon. Members
Hear, hear.

Other hon. Members
Butchery !

§ Mr. Speaker
Order—and it might be that I could help.

§ Mr. Harold Wilson
Mr. Speaker, in view of the callous and unfeeling attitude of the Secretary of State—[Interruption.]

§ Mr. Speaker
Order. I want to hear what the Leader of the Opposition has to say.

§ Mr. Wilson
—which has been endemic in Government policy since the right hon. Gentleman's maiden Ministerial speech nine months ago, does the right hon. Gentleman recognise that it is not from him that we want to hear and that in the debate that must take place—[HON. MEMBERS: "Oh."]— we have our own rights in this matter, but in that debate the House has a right to acquire the attendance of the Prime Minister?

§ Mr. Benn
I beg to ask leave, Mr. Speaker, to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely, the Government's decision on the future of Upper Clyde Shipbuilders and its implications for those concerned, for Scotland, and for shipbuilding as a whole.

§ Mr. Speaker
The right hon. Gentleman asks leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely, the Government's decision on the future of Upper Clyde Shipbuilders and its implications for those concerned, for Scotland, and for shipbuilding as a whole. I am satisfied that the matter raised by the right hon. Gentleman is one proper to be discussed, and I hope perhaps a little more quietly, under Standing Order No. 9.
Has the right hon. Gentleman the leave of the House?

§ Mr. Speaker
The right hon. Gentleman's Motion for the Adjournment of the House will now stand over until the commencement of public business on Monday afternoon when a debate on the matter will take place for three hours under Standing Order 9(2).

§ Dr. Dickson Mabon
On a point of order, Mr. Speaker. This concerns a matter related to that which we have just discussed and is a matter which is before the courts. I had an urgent communication this morning from a constituent who has substantial interests in the proposed liquidation of U.C.S. I have informed the Secretary of State of this matter. My constituent in his turn has been in communication with, he tells me, 75 of the creditors.
I have quickly perused this short report. I understood the Secretary of State to say that he was accepting the recommendation in paragraph 3.1(1) that an end be made to U.C.S. How is it possible for us to prevent further developments, if the debate is not to take place till Monday and when the significant item in the court proceedings which are taking place is that the creditors are not willing to press their claims subject to certain agreement with the liquidator?

§ Mr. Speaker
It is quite clear to me from what the hon. Gentleman has already said that this can be nothing to do with the Chair.

§ Dr. Mabon
Further to that point of order, Mr. Speaker. Surely this is a very relevant matter. It involves a great deal of money for many small traders, and Monday may be too late—

§ Mr. Speaker
That may well be so, but it has nothing to do with the Chair. I have given my decision about the debate and that must stand.