HC Deb 17 January 1972 vol 829 cc30-3
Mr. John Davies

With permission I will now answer Questions Nos. 26 and 60.

Govan Shipbuilders Ltd. is at present a non-trading company. At this stage its issued share capital is nominal, consisting of two £1 ordinary shares, which are held by private interests. The company is in the process of preparing proposals to acquire and operate two and possibly three of the U.C.S. yards and until these proposals have been received and considered it is not possible to say what investment will be required if it is to commence trading.

The results of the consultancy studies of Govan, Linthouse and Scotstoun are expected to be available to me within the next week or two. At about the same time I hope to receive the advice of Govan Shipbuilders Ltd. on the prospects of creating a viable shipbuilding enterprise with particular reference to future orders, and agreements with the unions on working practices and wage rates.

The board of Govan Shipbuilders announced on 5th January that it had appointed Lord Strathalmond as Chairman in succession to Hugh Stenhouse who was so tragically killed on 25th November. In my statement to the House on 20th October, I referred to negotiations by the Minister for Industry with certain shipowners to enable them to confirm orders necessary to maintain work at the Govan and Linthouse yards while Govan Shipbuilders Ltd. is preparing its proposals.

I am now able to report that negotiations have been completed with the Brazilian Government which will allow the liquidator to continue work on an order for a dredger. I am publishing details in the OFFICIAL REPORT.

I welcome the visit of Mr. McGarvey and Mr. Service, of the Confederation of Shipbuilding and Engineering Unions, to Houston last week where they had discussions with several American interests who are considering possible plans for the Clydebank yard. For some months past the liquidator and my Department have been in touch with the most active of these American firms but they are not yet ready to come to any decision.

They have let me know that they hope to come back for further discussions here in the next few weeks.

I will continue to keep the House informed of developments.

Mr. Rankin

I take it from the trend of the right hon. Gentleman's reply that he is proposing to give the backing of further capital to the expansion of Govan and Linthouse and the other yard now under consideration at Scotstoun. I take it that that is the purpose of his reply. May I say that that will create a very good spirit in the Govan division? We hope that with the support which the right hon. Gentleman is promising to the industry in that part of Glasgow we are going to get a resurrection on Clydeside. I trust that he is prepared to go forward to the fullest extent with this change in attitude that we now expect. I can assure him that he will get his reward because of the path he is now following.

Mr. Davies

I sincerely hope that Govan Shipbuilders Ltd. will find itself able to put before me proposals which have the full support of the trade unions in the near future.

Mr. Edward Taylor

Is my right hon. Friend aware that the news that the position of Connell's is still very hopeful, as we await the report of the consultants, will be welcomed on Clydeside? In view of the efforts by Mr. McGarvey and his colleagues, will my right hon. Friend make it clear that the Government have not closed their mind to the possibility of further assistance to Clydebank in the event of a private company wishing to take over?

Mr. Davies

No, indeed not. I repeat what I have said many times before. There are real measures of support at the Government's hand providing the necessary criteria are fulfilled. This support will be available to private interests in Clydebank if they fulfil the conditions.

Mr. Small

Is it not the case that Govan Shipbuilders Ltd. is operating at the moment without a labour force? Does he intend his study to be made public?

Mr. Davies

The company is operating without a labour force at the moment. It is awaiting, in some ways, the kiss of life, and when I have proposals from the company I shall give it if they satisfy me. I will have to consider the nature of the report referred to by the hon. Gentleman before I make a decision on that question.

Mr. Millan

Is the right hon. Gentleman aware that we all congratulate the trade unions on the welcome initiative they have taken in obtaining and maintaining the interest of these three American companies, but that we see no similar sense of urgency on the Government's part? Will he get in touch with the three American firms concerned as a matter of urgency to see whether something could be done definitely about Clydebank quickly, because so much else depends upon it?

Mr. Davies

The hon. Gentleman may be surprised to know that my Department has been in continual contact with the firms concerned for months past.

Mr. Benn

As the Clydebank problem is the one remaining barrier to the establishment of Govan Shipbuilders Ltd., which we all want to see achieved, and as the unions have taken the initiative and have promised full co-operation, has the right hon. Gentleman gone into the question of the financial help that would be needed by one or other of these three American companies in order to try to get Clydebank re-launched and thus remove the remaining obstacle to the success of the remaining projects?

Mr. Davies

No one of these three American concerns is yet in a position to put proposals to the Government or anyone else. They have asked us specifically not to press them to do so until they have had further time to consider the problem. Details of financial commitments and liabilities undertaken in respect of an order for a Suction Dredger placed by the Brazilian Government with U.C.S. Ltd.

  1. 1. In his statement of 20th October the Secretary of State referred to the provision of guarantees to shipowners and the Liquidator.
  2. 2. Negotiations with the Brazilian Government and with the Liquidator of Upper Clyde Shipbuilders Ltd. on the guarantees needed to enable work to continue at Govan on a suction dredger ordered by the Brazilian Government from U.C.S. have been concluded.
  3. 3. The vessel is expected to cost more to build than the Liquidator or any successor company could expect to receive from the shipowner under the contract. The Liquidator was prepared to continue work on the vessel if he were assured that most of the extra cost would not fall upon the U.C.S. assets. The Government has agreed therefore to contribute to the extra costs up to a maximum of £500,000.
  4. 4. The Government has also undertaken, if the dredger is not delivered by a certain date, to refund all payments under the contract made directly by the Brazilian Government after 15th June, 1971 and those made by banks on their behalf. The maximum potential liability under this guarantee is estimated at £1.3 million.
  5. 5. A supplementary estimate will be presented in due course to provide for the additional expenditure.