HC Deb 25 April 1972 vol 835 cc1282-8

3.52 p.m.

The Minister for Industrial Development (Mr. Christopher Chataway)

The House will recall that on 3rd November, 1971, the Secretary of State for Trade and Industry announced that a loan facility of up to £3 million was being made available to Cammell-Laird Shipbuilding and Engineering Limited while the new management completed its review of the company's future. This review has now been completed and has been examined by the Government and by the Laird Group, the other shareholder.

The shareholders have concluded that there are reasonable prospects of a viable future for the firm as a merchant shipbuilder and that it should be enabled to strengthen its position and to undertake a substantial programme of modernisation. The Government are prepared in principle to provide finance for this purpose, but consider that such a programme must be examined in the context of the general review of the shipbuilding industry which, as announced in paragraph 37 of Cmnd. 4942, is to be carried out by the Industrial Development Executive.

It is, however, important that this examination should not lead to damaging delay. The Government, therefore, accept that the company should proceed immediately with the necessary initial steps. The Government will, therefore, ensure that the £3 million facility already announced will be made available in an appropriately accessible form, and will also, subject to continuing consultation with the company, be prepared to make available further sums up to about £3 million to cover such commitments as may prove unavoidable to enable modernisation to proceed.

The Government will, of course, wish to satisfy themselves that the company and the unions are vigorously tackling outstanding problems in the field of labour relations so that full benefit is obtained from the modernisation and substantial safeguards to employment are thus provided.

The general review will be pressed ahead as quickly as possible, and I will make a further announcement in due course.

Mr. Benn

I thank the Minister for his statement, which we very much welcome, of a further £3 million in addition to the £3 million announced at the end of last year.

May we take it that the Industrial Development Executive will be taking on the work of the Shipbuilding Industry Board as well as that of the IRC? Will the right hon. Gentleman tell the House when the legislation will be brought before the House so that we can debate the provisions?

Is the right hon. Gentleman aware that now that the Ministry of Technology has been re-established and is pursuing a vigorous interventionist policy, the Opposition will look on the Government's proposals with keen interest and critical sympathy?

Mr. Chataway

If anyone were to take seriously the right hon. Gentleman's remarks, he could only conclude that he had a very superficial knowledge of these matters. The right hon. Gentleman will recognise that the free-booting agency which he established in the IRC, with the possibility of buying shares in the market and taking over firms against their wishes, bears very little relationship to the task with which I am entrusted.

Leaving aside what I suppose must be regarded as the expected knockabout from the right hon. Gentleman, I am glad that he supports the measures which I have announced. The necessary legislation will be brought forward as soon as possible.

Mr. Skeet

While welcoming the news, may I ask my right hon. Friend to bear in mind that £10 million of public money has already been allocated to this company? Will he indicate in the general rationalisation which is to take place the types of vessel which are likely to be built there. Will they include LNG, LPG and chemical tankers, or is it intended to keep to sophisticated vessels in this shipyard?

Mr. Chataway

Only £3 million has been afforded in support of this company hitherto. What I have announced today is a commitment up to a further £3 million for modernisation. The yard has been primarily a naval shipbuilder in the past. It sees its future largely as a commercial merchant shipbuilder. It is to that end that the modernisation is now being pursued.

Mr. Dell

I welcome the statement. Regarding the right hon. Gentleman's reference to or emphasis on merchant shipbuilding, may I ask whether there is any intention—I hope not—to prevent the firm tendering for naval orders in future?

What is the estimate of the total cost of modernisation required compared with the £3 million now being brought forward?

Will the right hon. Gentleman tell us the likely effect that his statement will have on employment, bearing in mind the considerable fall in employment in the yard over the last few years?

Mr. Chataway

There is no suggestion that the yard would be prevented from tendering for naval orders from time to time in future. It is simply that it sees its main future as a commercial merchant shipbuilder.

Regarding the total cost of the modernisation programme, we are at the moment in discussion with the firm and the other shareholder and shall wish to consider the total extent of modernisation in the context of the general review of shipbuilding. I will announce to the House any decisions as and when they can be made.

The yard at the moment employs 5,500, and the company believes that it should be able to maintain employment at that figure.

Dame Joan Vickers

I am a little disturbed about future naval orders. May I have an absolute assurance that work which would normally go to Her Majesty's dockyards will not go to this yard in future?

Mr. Chataway

Nothing that I have announced this afternoon could carry that implication.

Mr. Stonehouse

What investment in equity shares does the Minister intend to take up in return for the £6 million investment of taxpayers' funds?

Mr. Chataway

We shall be considering with the other shareholder the most appropriate arrangements. We shall not come to a final decision about that matter until we are able to determine the total extent of the modernisation programme.

Mr. Bruce-Gardyne

What did my hon. Friend mean by an "appropriately accessible form"? Was that the point to which the right hon. Member for Wednesbury (Mr. Stonehouse) was referring?

Mr. Chataway

No, Sir. It is simply that £3 million has hitherto been avail- able as a standby credit. It is clear that it will be required by the firm, and we are discussing with it what would be the most appropriate form.

Mr. Heffer

Will the right hon. Gentleman spell out in a little greater detail exactly what kind of supervision the Government will institute over the use to which the money is put?

Will the Minister accept that Merseyside is pleased that the Government have gone back on their previous policy, because it is absolutely essential to develop the shipbuilding industry on Merseyside and elsewhere?

Is the right hon. Gentleman aware that industrial relations at Cammell-Laird have been pretty good for some considerable time and that the basic problem in the past on Merseyside has been not bad industrial relations but bad management?

Mr. Chataway

I accept that there is a connection between bad industrial relations and bad management, and I do not believe that this yard has been entirely free from either. The new management which was installed by my right hon. Friend in this firm believes, as I have said, that it will be possible to maintain employment at its present level. I recognise that, as the hon. Gentleman says, the prosperity of this firm is extremely important to Merseyside. The Government recognise that practically every country in the world is at the moment supporting its shipbuilding firms, and, as we have always made clear, we are determined to pursue a strategy in the regions where 90 per cent. of the shipbuilding firms are located which is fairer to those regions.

Mr. Warren

Would my right hon. Friend clarify whether or not this aid is in the form of a loan or a grant, and say what repayment terms he has in mind?

Mr. Chataway

These are matters which are being negotiated with the other shareholder and will not be determined until we are in a position to decide the full extent of the modernisation programme. But I can assure my hon. Friend and the hon. Member for Liverpool, Walton (Mr. Heffer) that we are monitoring the performance of the firm very carefully and that over the past months we have received from the new management on a regular monthly basis a very full flow of information.

Mr. Frederick Lee

I join my right hon. Friend in welcoming these announcements, but is the right hon. Gentleman aware that on the theme of modernisation he can modernise the only steelmaking capacity in the North-West—namely, that at Irlam—at a lower cost than £6 million?

Mr. Chataway

I think that that is another question.

Mr. Rost

Will the Government be directly represented on the board?

Mr. Chataway

That, too, is a matter that will be considered when the final plans can be determined.

Mr. Willey

Will the Minister recognise that the most efficient and prosperous shipyards in Britain are on the River Wear, and when he is considering Government aid will he consider investing a few million pounds of Government money in the best-managed, most efficient and most profitable yards in the country? If he used his common sense he would be putting in money to increase their capacity.

Mr. Chataway

The right hon. Gentleman tempts me to propositions to which I should be rash to subscribe, but it is clear that all major shipbuilders will benefit from the measures that were announced by my right hon. Friend the Chancellor of the Exchequer and from the measures contained in that White Paper.

Mr. Winterton

Can we take it from my right hon. Friend's statement this afternoon that any large national company that runs into trouble will be able to come to the Government for assistance?

Mr. Chataway

I think that my hon. Friend knows perfectly well that that is not the position. As my right hon. Friend the Secretary of State has made clear on many occasions, it would be a sad delusion on the part of any inefficient management to believe that was the case. What we recognise is that there are regional difficulties and that there are in this country industries which compete not in a free market but against subsidised competitors.

Dr. Dickson Mabon

I want to ask a question about legislation. As regards this announcement or any part of the announcements concerning shipbuilding, of which there were three in the major Bill concerning the right hon. Gentleman's Ministry, on whose Vote is this money to be carried? I warmly welcome the fact that the Minister is considering equity in view of the bitter experience that we have had in Governments of both parties in connection with two major investments on the Clyde, both of which lost a great deal of Government money through the Government not having equity.

Mr. Chataway

The full modernisation programme will be paid for as a result of the powers that we shall be seeking in due course, but the timing of the legislation would be a matter for my right hon. Friend the Leader of the House.