UPPER CLYDE SHIPBUILDERS (Hansard, 23 September 1971)

§ Mr. Ross (by Private Notice)
asked the Secretary of State for Trade and Industry if he will make a statement on the latest developments on Upper Clyde Shipbuilders.

§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. John Davies)
I apologise for the length of this answer, but much has happened since I made my statement to the House on 29th July.
The Government have been actively engaged in discussions with all concerned, in order to pursue their objective of establishing whether the conditions can be created for the re-establishment of a viable merchant shipbuilding enterprise on the Upper Clyde.
My colleagues and I have had discussions with the trade unions, with shop stewards, with shipowners, with the liquidator and the present management, with suppliers, with prospective purchasers of parts of U.C.S., and with many other interests.
Nothing has arisen to alter the Government's belief that the proposals of the Advisory Group offer the best prospect of an enduring and viable shipbuilding undertaking, and it is these proposals—based on the Govan and Linthouse yards —which the Government are wholeheartedly seeking to implement. The Government would welcome it if private interests came forward to take over the Clydebank and Scotstoun yards; indeed, several concerns have expressed interest. If there were any viable proposals for providing employment in those yards—those in Clydebank and Scotstoun—they would be eligible for the full range of assistance under the Local Employment Acts.
A significant step forward was taken this week, with the formation by private interests, with private resources, of Govan 177 Shipbuilders Ltd., whose chairman is Mr. Hugh Stenhouse and managing director Mr. Archibald Gilchrist. Mr. Kenneth Douglas, the managing director of U.C.S., has undertaken to give every possible assistance to the planning of the future operations of the new company.
The Government have agreed that this company will be the vehicle for special Government support for the new enterprise which we hope to see created at Govan and Linthouse.
This means that an entity now exists, with the key nucleus of management, which can enter into meaningful discussions with representatives of labour, with current and prospective customers, and with the liquidator, in order to establish whether the Government's conditions for support of this enterprise can be met. The most critical one now is the collaboration of the representative of the workers. Mr. Stenhouse and Mr. Gilchrist are ready to start discussions with them immediately; the reaction of the men yesterday was not helpful, and in my view not in their best interests.
I must reiterate that Government support will only be forthcoming if acceptable agreements can be reached with the unions about working practices and wage rates. Without this, there can be no prospect that the new company would be viable.
It is in the interests of all concerned that discussions between the unions and the management of Govan Shipbuilders Ltd. should start as soon as possible and be quickly brought to a successful conclusion. Continued uncertainty can only prejudice the future of the company.
The Government are prepared to do all in their power to assist the re-establishment of merchant shipbuilding on the Upper Clyde. But there must be cooperation from the workers if this is to be achieved.

§ Mr. Ross
As far as I can see—the right hon. Gentleman will correct me if I am wrong—despite all the delegations and discussions, not only with the shop stewards but with the Trades Union Congress, the Government have not moved at all from the position stated in the House, that they would limit their help to one company based upon Govan-Linthouse. Can the right hon. Gentleman tell me, then, how much finance 178 will be made available to the company? What limit does he place upon it, bearing in mind that the new chairman—and I make no comment on the fact that he has just resigned from the treasurership of the Tory Party in Scotland; I dare say his company is still subscribing its annual £25,000 to the Tory Party—though it is fair to say that he also aided Fairfields— Mr Stenhouse said that it will require a very great deal of money? I quote his own words there. I want to know how much, and how it compares with the amount that was required by U.C.S. to keep going.
Second, is the Secretary of State aware that on 9th July the new chairman said at Strathclyde University that the shipbuilders should have stopped launching ships on the narrow waters of the Clyde years and years ago? That does not give one a great amount of faith in the confidence the chairman has in his new company. Would the right hon. Gentleman say that the Glasgow Herald was right in suspecting that the Government could get no one else to take over the job?
Will the right hon. Gentleman say what is the exact position of Mr. Ken Douglas? If he is interested in the confidence of the workers, this is vital. Is he just assisting in relation to his present position with U.C.S., or has he actually got a contract, or is he likely to have one, with the new company?
What about Connell's of Scotstoun and John Brown's? The Secretary of State said that the Government would welcome anyone coming forward to continue shipbuilding there—at least, I hope that he did not rule out shipbuilding. He said that those who came would be entitled to help under the Local Employment Acts, but the help given to the new Govan-Linthouse company is not under the Local Employment Acts alone. It is special help. Does that mean that the Government rule out the possibility of special help for the continuation of shipbuilding at these two other important yards?
Will the right hon. Gentleman comment on the statement yesterday by Sir Charles Connell, head of a family with over a century's tradition of shipbuilding in the Scotstoun area, that the Government are as impenetrable as a stone wall?

§ Mr. Davies
The right hon. Gentleman's first question was on the degree to which the Government may have changed their mind. They have not changed their mind. I made that very clear in my statement. The fact is that the Government said from the beginning that they were convinced that the proposal made by the Advisory Group seemed possible of attaining a viable solution, and they still believe it. They said from the beginning that they were prepared to see that any proposals made by other private parties for the other yards would be given assistance within the framework of the Local Employment Acts. That is still their position, so there is no reason to change their mind. Nothing has been brought up that would cause them to change their mind on these matters.
The right hon. Gentleman asked me the limit on finance. The truth is that I am awaiting as a first step the action of the embryo management of the new company to spell out their proposals for the requirements of the company to put in place an effective and viable shipbuilding industry on those two yards. Until I have it, I cannot say what is the extent of the finance required. The right hon. Gentleman would make a comparison with the requirement of the U.C.S. management for the salvage of their concern, but there is no comparison between the two concerns. The proposal made by that management was to pay immediate, pressing, short-term debts, and not to constitute a long-term, viable shipbuilding industry on the Upper Clyde, which is the intention here.
I am sure that the right hon. Gentleman will recognise that in saying what he did at Strathclyde University Mr. Stenhouse was emphasising that the great future for a flexible, major shipbuilding industry lay not in the Upper Clyde but m waters which were deep enough to launch the kind of ship now in wide demand. That was the point of what he had to say.
About Mr. Douglas, I cannot say very much more than I have. He is abroad at present and I saw him before he went away, when he gave me his unrestricted guarantee of support in getting this new company going. In exactly what position he will be, I cannot say—it is a matter for the management and it has not yet had an opportunity to meet him since 180 the general proposition was organised They must meet before that point can be clarified.
Connell's may well believe that some alternative solution is desirable. All I can say is that the proposals which it has put forward are not of a kind to convince the Government that they are more correct than those of the Advisory Group. On the contrary, the views of the Advisory Group still retain the confidence of the Government.

§ Mr. Rankin
Has the right hon. Gentleman observed that, when the chairman and secretary of the new company arrived yesterday at the gates at Fairfields, they were denied admission by the workers' committee under the chairman who has been running the industry, more or less, for some time now? Has the right hon. Gentleman nothing to say about that? Has he been in touch with the new management in order to find out what approaches it will now make to the workers to see what new form of management should be organised to give the workers in the industry a much greater involvement in running the industry than they have ever had before? As the person responsible to this House, what is the right hon. Gentleman going to do to face this entirely new situation?

§ Mr. Davies
The hon. Gentleman will be aware that I spent a large part of yesterday with these two gentlemen, so I think that I can say that I am up to date on their views. As I have said, they are exceedingly anxious at the earliest opportunity to institute discussions with the representatives of the workers. But yesterday they were not accorded the right to do so by the representatives of the workers in the yard. Their sole anxiety is so to do and if that anxiety is not met by a corresponding degree of willingness on the other side, it is hard from them to bring into effect the kind of proposals they would wish to make.

§ Dame Irene Ward
Will my right hon. Friend accept—

§ Mr. William Hamilton
It is the Scottish Tories we want to hear.

§ Dame Irene Ward
A lot of people in my part of the country work on the Clyde. Will my right hon. Friend accept that a lot of sane people in the British Isles are 181 very grateful to him for all the effort that he and the Government have made to try to meet this very difficult problem of Clydeside and that they wish him and all those who want to see the Upper Clyde prosperous every success? Good luck to you all! [Laughter.]

§ Mr. Davies
I am grateful to my hon. Friend for what she said, although I realise that it may have provoked mirth from the Opposition. The amount of effort and determination put by the Government and others into this work over the last few months is not subject to reproach—quite the contrary.

§ Mr. Small
I heard the right hon. Gentleman's statement with the greatest dismay. It appears to me to be an exercise in intellectual sterility. How many employees of U.C.S. will have been made redundant and unemployed by Christmas?

§ Mr. Davies
It is impossible to answer that question—at least until such time as the new management can get into discussion with the workers about the future of the yard. The workers hold the key to the very question the hon. Gentleman poses.

§ Mr. Grimond
Do we understand that the Connell family has made proposals to reactivate its yard at Scotstoun and that this has been rejected? Secondly, what has happened to Mr. Kelly? Thirdly, who is actually going to build ships for this new company? We have heard about the chairman, who is not a shipbuilder, although he has some experience in dealing with organisations in difficulty, which may stand him in good stead. Who is going to build ships? Was Mr. Douglas offered the job of doing that or not? If not, why not?
Finally, we know that the chairman of the new company is in favour of opening up an entirely new shipbuilding yard at Hunterston or thereabouts. Have the Government considered this? If they are asked for money for this purpose, are they prepared to make it available? If they are, what are they going to do to offer other employment on the Upper Clyde, which will be desperately hit through unemployment? What plans have the Government for alternative employment on the Upper Clyde, whatever happens?

§ Mr. Davies
Connells has tentatively inquired of the liquidator regarding the possibility of re-purchase of the Scotstoun yard. It has also suggested to the Government that it might be a good proposition to integrate that yard into the new Govan-Linthouse scheme. On the first point, I can only say that I acknowledge its interest. On the second, I must tell the right hon. Gentleman that an examination of the Connell family's proposal did not convince me that it was as wise as or wiser than the scheme of the Advisory Group.
The right hon. Gentleman asked me about Mr. Kelly's position. I am sorry to have to tell him that Mr. Kelly came to see my Department today and said that he is withdrawing his proposal for the purchase of Clydebank. He will be making a statement later today about his reasons.
Finally, the right hon. Gentleman asked me about Hunterston. I hope he realises that the Government have already given substantial support to this proposal for a study of the future possibilities of Hunterston as a varied industrial centre. That study is the first step which must be taken.

§ Mr. Millan
Is it not clear that the Government will not get the support of the work force when there is the prospect of no fewer than 6,000 redundancies hanging over Clydeside with no prospect of alternative jobs available? Does not he agree that there must be a solution which also includes Clydebank and Scotstoun? Why should it be right for the Government to put, as they will have to put, millions of £s into the Govan-Linthouse scheme but not to give financial assistance to the proposition for Scotstoun and Clydebank? Without that, there will be no real solution at all.

§ Mr. Davies
The hon. Gentleman clearly did not hear what I said. The Government are quite prepared to consider eligible private proposals for Scotstoun and Clydebank under the Local Employment Acts. Those Acts are the vehicle for that kind of development. Surely it must be in the interests of everyone in this House to encourage those concerned to see that the maximum number of jobs are saved on Clydeside, but I do not think that the hon. Gentleman's observation is conducive to that end.

§ Dr. Dickson Mabon
Accepting what the right hon. Gentleman said about trying to save the maximum number of jobs, may I ask whether he can give us figures of financial estimates? What is the financial estimate he has for helping the Govan-Linthouse grouping? He has hinted at propositions concerning Scotstoun and Clydebank. What limit has he in mind for helping such propositions? Is it not the case that these two sums together would be greater than the sum required by the original proposition which he condemned as not being good enough? Is it not also the case that, in the end, the Government's proposals for assisting the yards will produce substantially fewer jobs for a larger amount of money than would originally have been needed?

§ Mr. Davies
The first point to emphasise is that the Government cannot make financial forecasts until they have proposals before them. At the moment, they have no proposals before them of a practical kind. It is exceedingly difficult at this stage to see the investment cost required in order to bring the Govan-Linthouse complex into an internationally competitive position. It is not in that position at the moment, and investment may be considerable. A clear distinction must be drawn between finance which would be made available for investment and the competitive improvement of the yards. Altogether, about £20 million was advanced in some form or other by the last Government with virtually no investment effect being felt on the yards. It is therefore important to distinguish between the effort required now and the request of the U.C.S. management that the Government should simply bail it out of its short-term liabilities.

§ Mr. Benn
Instead of lecturing the men in the Upper Clyde shipyards, should not the right hon. Gentleman recognise that they are fighting for their jobs and their survival against a background of rising unemployment, which is made worse by today's figures, and that a real understanding by the Government of the position of the men is an essential prerequisite for any survival of shipbuilding, or any plan which they bring forward? Is not the right hon. Gentleman aware that it is hard to take seriously any proposal for the future based on the 184 shadow company, which is just set up, when everyone knows that such a company would survive only on the basis of the massive Government investment which must be necessary even for the plan which the Advisory Group has brought forward?
Finally, if the Government absolutely refuse to listen to any plan other than that of their own Advisory Group, whose workings were never made public, does not the right hon. Gentleman realise that it is very hard to take seriously the Government's concern about unemployment when they still plan to throw thousands of men out of work as a result of the Advisory Group's recommendations?

§ Mr. Davies
The right hon. Gentleman is overstating the position when he says that I am not prepared to listen to any plan when the Government have spent literally weeks considering several proposals which have received the most careful attention. The fact is that in every reasonable sense the proposals which have come forward have not been as good as those put before the Government by the Advisory Group they have retained.

Several Hon. Members
rose—

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