HC Deb 31 July 1972 vol 842 cc272-88
Mr. Millan

I beg to move Amendment No. 29, in page 12, leave out lines 2 and 3.

Since tabling the Amendment I have received a letter from the Minister stating that, even without the Amendment, he is sure that the position is taken care of. I was concerned about the words in lines 2 and 3, because it sometimes happens that a shipbuilding contract can be switched from one shipbuilder to another or from one shipowner to another. This can happen in genuine circumstances where there is no question of trying to evade the conditions being laid down by the Government in the Clause with regard to construction grants. I have, however, had an assurance from the Minister that these cases will be covered by the Bill, but it will do no harm for the Minister to put that assurance on the record.

Mr. Chataway

I am happy to confirm that we do not see any risk that the shipbuilder who delivers the ship will be deprived of grant if he has taken over the contract to construct the ship from another shipbuilder or if the shipowner assigns to another shipowner the right to receive delivery of the ship. In Committee I undertook to double-check this point for the hon. Gentleman, and I am glad to give this assurance.

Mr. Millan

With that assurance, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Douglas

I beg to move Amendment No. 30, in page 12, line 23, after 'installation', insert: 'not covered by the provisions of subsection 12 of this section'.

Mr. Deputy Speaker (Mr. E. L. Mallalieu)

I suggest that it will be convenient to discuss at the same time the following Amendments:

No. 34, in page 13, line 17, leave out paragraph (a), and

No. 35, in page 13, line 38, at end insert: '(12) In respect of any ship which on its delivery forms part of Her Majesty's Navy in the right of Her Government in the United Kingdom or is held by any person on behalf of or for the benefit of Her Majesty in that right, grant may be paid where the contract was subject to competitive tendering and where any percentage of the contract price falls to be treated under subsection (2) above as payable in 1972, 1973 or 1974, and the rate of grant shall be the following percentages of the sum so treated, namely—

  1. (a)if the relevant year is 1972, 7½ per cent.;
  2. (b)if the relevant year is 1973, 3 per cent.;
  3. (c)if the relevant year is 1974, 2¼ per cent.'.

Mr. Douglas

Our purpose here is to draw attention once again to the plight of yards engaged in naval shipbuilding. Since our debate in Committee, some of us have received a letter from the Minister indicating his willingness to have the position of naval shipbuilders looked into by the consultants Booz-Allen. However, I feel that we should still press for these companies to be brought within the scope of the tapering grant system, albeit at the reduced level specified in Amendment No. 35.

The foreword to the new publication of "Jane's Fighting Ships" last week has this to say: The stark truth is that the strength of the Royal Navy has fallen below the safety level required to protect the home islands, to guard the ocean trade route for the world-deployed British mercantile marine (still the largest in the world), to protect the vast commercial and financial interests overseas, and to meet NATO, ANZUC and other treaty commitments. That expression of considered view indicates that we are in grave danger of running down our naval shipyards and not giving them the assistance necessary to compete effectively to produce the sophisticated vessels needed to meet our defence requirements.

I know that the Minister is concerned about this matter, for he would not otherwise have brought these yards within the consultants' survey. But unless the consultants report very soon, or unless the yards have some sign that the pressure on their cash flow position will be relieved in the same way as it is for other shipyards, they will be in difficulty.

In Committee, we did not lay full stress on the export potential of the naval shipbuilding yards. If we do not give them assistance, we shall lose orders to overseas competitors. I recognise the difficulty of the Ministers position, and I accept that he regarded his arguments in Committee as refuting the case which we made. But I urge him to be aware of the plight of these yards and to think again. If he refuses to accord them the reduced form of tapering grant such as we propose in Amendment No. 35, he may find himself in the not too distant future having to take some of the additional measures which he has to hand under Clause 8 for some of the yards. I do not wish to be thought a prophet of doom, but their cash flow position is very difficult.

Dame Irene Ward

I am glad that this matter has been raised, because I come from a famous naval shipbuilding area. I do not want to enter into the problems of the industry as they will be affected by the Bill because I am not competent to do so. There is no doubt that our Navy is falling below strength. I do not know and do not suppose I ever will know whether this is because the Minister of Defence has lost a battle with the Treasury. The problem with making representations in the House is that Ministers always have to pretend that the policy they are advocating is their policy, and hon. Members never knew if the Minister's true policy has been suppressed by the Treasury. I am therefore always interested when any publication such as "Jane's Fighting Ships" comes out with knowledge and experience in the way that the recent edition has.

I hope that, if the Minister is unable to do anything on the Amendment, he will talk to the Minister of Defence to see if he is in trouble with the Treasury. If he is, those of us who are interested in the Navy, who believe in it and who know how necessary it is—we have the most wonderful Navy in the world—could press from both sides of the House to ensure that it is built up to a better standard of equipment and ships and with more men than at the present time.

Mr. Chataway

I shall take to the Minister of Defence the offer of assistance from my hon. Friend the Member for Tynemouth (Dame Irene Ward) in any trouble he may have from time to time with the Treasury. I think he will probably be glad of it.

I have had a number of conversations with my hon. Friend the Minister of State for Defence Procurement on the problems which we discussed at some length in Committee, and which have been raised again tonight. I know that he is extremely well-informed on these matters and that he is aware of the difficult problems involved. But the basis for the shipbuilding grant is that the merchant shipbuilding industry has had to face a great deal of subsidised competition. Things are different in the building of warships, because some major contracts are allocated without competitive tendering and in no case do warship builders have to face fierce competition. So they are in a fundamentally different situation. While I recognise that there have been problems, I do not think that the case has been made out for the extension of the shipbuilding grant to the warship builders.

The Minister of State for Defence Procurement is considering various measures which in future contracts would reduce the extent to which shipbuilders will have to provide in their fixed price quotations for the possible risks of long-term contracts and I hope that these changes will be of assistance. As the hon. Member for East Stirlingshire (Mr. Douglas) has mentioned, I have decided to include warship builders within the long-term study of the shipbuilding industry by the management consultants that we have appointed. While I know, therefore, that he will be disappointed that I am not able to accept his Amendment, I hope the hon. Gentleman will recognise that measures are being taken in this sphere and that he will not feel it necessary to press the Amendment.

3.45 a.m.

Mr. Millan

That is not a satisfactory answer. It is welcome that the warship builders are being included in the long-term study being carried out by Messrs. Booz-Allen, but we are dealing with what are likely to be substantial sums of money being paid to merchant shipbuilders, and there is unlikely to be anything coming out of the long-term study which will compensate the warship builders for what they will lose compared with the merchant shipbuilders by being excluded from the assistance being provided in the Bill.

We tried to meet some of the points made by the Minister in Committee. For example, the Amendments which we are now discussing would apply only in a case where there had been competitive tendering. We appreciate that where contracts have been allocated the circumstances may be rather different from the normal merchant shipbuilding difficulties. However, in cases of warship building where there have been competitive contracts—we have seen nothing in what the Minister told us in Committee and nothing in the letter that he has written to some of us in the last few days to controvert this—we still feel there is a lot to be said for including the naval ship-builders in the provisions of the Bill.

I do not know whether my hon. Friend will wish to press the Amendment, but, having considered carefully what was said in Committee, we see no reason why this kind of proposal relating only to competitive contracts should not have been included in the Bill.

Mr. Douglas

I am not at all happy with the reply I have received from the Minister. I take it that, with the pressure which has been exerted from this side of the House and by his hon. Friend the Member for Tynemouth (Dame Irene Ward), he will be appraised of the difficulties of the naval shipuilders. Therefore, even before the consultants have reported to him, I hope that, in discussion with his hon. Friend the Minister of State for Defence Procurement, he will examine carefully what might be done in the interim and put proposals before the other place to assist the naval shipbuilders. In the circumstances, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Bruce-Gardyne

I beg to move Amendment No. 31, in page 12, line 28, at end insert: or such lesser percentage as may be required to enable Her Majesty's Government to subscribe to any international agreement to limit subsidies to shipbuilding'.

Mr. Deputy Speaker

With this Amendment it will be convenient to discuss Amendment No. 32, in page 12, line 29, at end insert: 'or such lesser percentage as may be required to enable Her Majesty's Government to subscribe to any international agreement to limit subsidies to shipbuilding'.

Mr. Bruce-Gardyne

The purpose of these two Amendments is to provide that the working subsidy provided under subsection (3) for the shipbuilding industry, not in the current year, but for each of the next two succeeding years, should be adjustable downwards to take account of any international agreement which may be reached about the scale of subsidisation of our overseas competitors in shipbuilding. I have regarded the subsection as arguably the most pernicious in the whole Bill, because I have never been convinced by the argument of my right hon. Friends that the purpose of what might be called the inflation subsidies to the shipbuilding industry was simply and solely to put it on a par with subsidised shipyards overseas.

There is a clear implication in all that was said, particularly by my right hon. Friend the Secretary of State when he was announcing the special form of assistance for Upper Clyde shipyards, that the inflation subsidy incorporated in the Clause would be designed to enable other shipyards to compete, and to compete in inflation, with the Upper Clyde, enjoying as it will an open-ended subsidy from the taxpayer. The implications are ominous. I have never been able to see how once we become involved in the process of cross-subsidisation from one part of British industry to another we can stop at one particular industry.

In other words, what we read in subsection (3) we shall have to see extended to all sorts of other industries, for precisely the same reason, that where we have offered a taxpayers' subsidy to assist it in meeting inflation, and in particular wage inflation, other industries will have to be treated alike. All that we have been told about the potential uses of Clause 8 have only gone to underline those anxieties. My right hon. Friend the Minister for Industrial Development made clear on Friday afternoon that this was precisely the sort of purpose for which Clause 8 could be used.

Therefore, in the Amendment I am seeking to underline that the purpose of the subsection is, and must only be, to put shipyards in this country on a parallel basis of subsidies with yards overseas, and at the same time to give my right hon. Friends every incentive to come to an agreement as rapidly as possible on the reduction, and preferably the elimination, of the existing Dutch auction in shipbuilding subsidies.

In Committee my right hon. Friend said: In framing our proposals for the construction grants scheme, we naturally took account of such international developments, and the rates of grant for 1973–74—the 4 per cent. and the 3 per cent.—conform to the new policy on shipbuilding aids now under consideration in the E.E.C. draft directive and the broad aim of the arrangements being discussed in O.E.C.D.… I am anxious to ensure that a stop is put on the escalation of subsidies in shipbuilding. It is extremely important internationally and in the interests of shipbuilders everywhere that an agreement should be reached. The explanation about the 4 per cent. and 3 per cent., therefore, is that they conform to what we hope will be the agreement shortly to be reached."—[OFFICIAL REPORT, Standing Committee H, 13th July, 1972 c. 787.] I want to confirm my right hon. Friends in well-doing. In the light of the words which my right hon. Friend spoke in Committee then, there should be no reason why he should not accept the Amendment. If he felt unable to do so, our suspicions about the precise purpose and objective of these construction grants could inevitably only be strengthened.

Mr. T. H. H. Skeet (Bedford)

My right hon. Friend the Minister for Industrial Development has been conscious of the future of the shipbuilding industry. One of the greatest drawbacks has been the subsidies which have been paid internationally. One or two international agreements have been entered into, and the OECD has already been referred to.

The matter goes back a few years to when the German and the Benelux countries decided that they would not enter the subsidy war. France and Italy have gone along the other way, and at one stage Italy had a subsidy of about 30 per cent. A recent edict from the Community has brought this down, and Germany has come down to between 5 per cent. and 6 per cent. in overall subsidies. The figure is roughly the same for the Benelux countries. France was formerly at about 10 per cent. and is now down to about 5 per cent. Italy has receded from 18 per cent. to 10 per cent.

While it is apparent that subsidies are falling, when we enter the EEC I see great difficulties ahead of us. The Anglo-Saxon countries are prepared to eliminate these subsidies completely, recognising, as one of the essential features of selling ships, that one cannot do it by escalating subsidies but only by reducing subsidies and having fair competition. But France and Italy are running independently.

It is essential to comply with the directives of the Commission; indeed we will be obligated to do so. But the wider setting of the OECD should be closely followed in practice, since it encompasses the world. That would be the ideal solution. What chance has my right hon. Friend of reaching agreement on these matters? Does he envisage further reductions in subsidies? If we do not have these reductions by 1974, when the shipbuilding industry will be in its worst period of crisis, there will be a clamour for subsidies to be increased once again. That will be an unfavourable trend and we should take the right steps now.

Dame Irene Ward

I oppose the Amendment. I always enjoy listening to people talking who do not really know anything about the problem—I say that with respect to my hon. Friend the Member for South Angus (Mr. BruceGardyne). In Committee, my right hon. Friend the Secretary of State must have been in a conciliatory mood and seems to have had a lot of people against him, because what he said then was not helpful either. In a better frame of mind, he would have phrased his comments much better. Perhaps my hon. Friend the Member for South Angus would get in touch with the head of our research department, a man of great ability and knowledge who really knows what is going on in shipbuilding.

When the late Vice-Admiral Hughes-Hallett was in this House, he made supreme efforts to deal with the shipbuilding problem but the nigger in the woodpile happened to be France. He told us that it was impossible to find out what methods the French were using to subsidise their shipbuilders. Indeed, we used the Secret Service to try to penetrate the system operating in France, but it was unsuccessful. I beg my right hon. Friend on this occasion to take note of what I say, since I have been engaged on this problem for many years. We have a long way to go.

If we could have non-subsidisation British shipbuilding would easily top the world, but we are not in that position. It is very nice to have these cosy conversa- tions, thinking that the shipbuilding countries of the world will do away with subsidisation. I am afraid that they will not, and that my hon. Friends who have spoken do not know much about shipbuilding. I always like to hear landlubbers talking about ships. I say that they are on the wrong track. Many people in the House know what is going on. Although it may not be necessary to do so, I advise my right hon. Friend to be very careful not to get involved with people who do not know what they are talking about.

4.0 a.m.

Mr. Ridley

No doubt I shall be accused of not knowing anything about shipbuilding, or what I intend to talk about. Just as my hon. Friend the Member for Tynemouth (Dame Irene Ward) was candid enough to admit that she knew nothing about naval shipbuilding, I do the same on this occasion, in order to placate her.

I want to question one thing—the bland assumption that all our competitors are subsidising shipbuilding far more than we are and that therefore it is right, natural and proper that we should match them and, indeed, exceed them. As I understand it, the only countries that are paying higher subsidies than we are, before the Bill becomes law, are France, Italy and Spain, who are small producers of ships. The main competition comes from the Scandinavian countries and Japan, and to some extent Germany. But the suggestion that we are being outflanked by heavy subsidisation throughout the world is wrong. We should avoid using that argument.

As my hon. Friend the Member for Bedford (Mr. Skeet) said, European subsidies are falling. Due to pressure started in the OECD and pushed forward by this Government, who made a strong plea that subsidies should be reduced worldwide, they have been reduced, and the countries who used to subsidise are subsidising less. Therefore it is slightly unfortunate that at this time we should greatly increase the subsidies that we are paying. It weakens our hand in OECD, and it will weaken our hand in the Common Market if we say that all other countries must reduce their subsidies when under the Bill we are increasing ours.

Dame Irene Ward

We could keep quiet. We do not need to announce it in Brussels or anywhere else.

Mr. Ridley

Before spending tens of millions of pounds it is usual at least to announce it in the House, in the form of a Bill. We shall probably not be striking many chords tonight, because it is almost four o'clock in the morning. It is the next best thing to keeping quiet. No one will take much notice of this debate.

The bulk of this money will find its way into the hands of the Shipbuilding Industry Board, dispensing in such grants about £60 million. For that the taxpayer is getting a covered berth and a big dock in Belfast, which could probably have been put together for one-tenth of the sum expended. The rest of the money will go into losses, wages, commercial inefficiences, and the rest. I question where this money will find itself. It will be found more difficult to exact capital assets in return for this money, because I see nothing in the Bill demanding accountability or that there be plans to provide capital assets, working capital, new yards or new machinery.

I doubt very much whether we shall see more or improved shipyard facilities at the end of three years as a result of this Clause. That is a pity, and the least quid pro quo for which the House can ask is that, each year, in respect of these large sums of money, they should be asked to get a management consultant to make a report on organisation and administration and for that report to be put into the hands of the Government and for the Government to publish it, if they think fit, because, if money of that order has to be spent, we need to know that it is spent on efficient concerns and in the best way possible to improve the efficiency of those concerns.

I hope that we will have something of this sort from my right hon. Friend because this is a concomitant of receiving large sums of public money under an Act of Parliament, so that we can be satisfied. After all, we have to justify to our constituents raising the taxation to pay for this, and we might have to face increased taxation as a result of the Bill. I do not know how many thousands it will put on the Exchequer over the years, but we have to justify it and to prove that it will be well spent. I hope to hear something positive in that direction from my right hon. Friend.

I commend my hon. Friend's principle even although the wording may not suit my right hon. Friend. The interests of this country are not to increase shipbuilding subsidies, but to get others reduced. If anything in the Bill stands in the way of that policy, it is very short-sighted indeed.

My right hon. Friends have been quick in getting the 10 per cent. principle through in the first year. That is the big one, but there are the 4 per cent. and 3 per cent., and the great damage to our commercial shipbuilding interests, is not worth it if this Bill stands in the way of reduction in other countries. I hope that my right hon. Friends will regard this as negotiable and that it will be so in the OECD. I hope nothing will be said in Paris at OECD to stand in the way of the levelling down of the subsidies throughout the world, because it has been a nonsense in the past and it is disturbing at this time, when the world shipbuilding industries are moving towards a levelling down of subsidies, that we should start to increase the pace.

Mr. Chataway

My hon. Friend the Member for Tynemouth (Dame Irene Ward) is right, I believe, in urging that it will not be easy totally to abolish subsidies in the shipbuilding countries of the world. She recalls the late Vice Admiral Sir Hughes-Hallett, my constituency Vice-President for a while. She reminds us all that this is not something we have been trying to do for only a few months, but is a battle that has been going on over many years.

My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) gave a list of some countries which he believed were subsidising shipping on a considerable scale. It was not an exhaustive list. The United States, according to my information, is now subsidising by up to 50 per cent. My hon. Friend the Member for Bedford (Mr. Skeet) was probably right in suggesting that there are subsidies on a substantial scale being paid at the moment. That we want to see them reduced and abolished is absolutely right. Therefore we welcome the new directive of the EEC, which will limit subsidies for 1973 to 4 per cent. That is exactly in line with what we are proposing.

As for 1974, when we intend to move to 3 per cent., we believe this to be in line with Common Market thinking. We have had discussions with OECD and our need to introduce this temporary assistance has been fully understood and has not given rise to difficulty. The OECD has under consideration a general arrangement for the progressive removal of obstacles to normal competitive conditions in the shipbuilding industry. We are extremely anxious to make progress within the OECD and the EEC in this direction.

What we want to ensure is that the removal of subsidies is not unilateral but multilateral and, so far as we can ensure it, universal. My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) said that if we were quite convinced about what we were doing and the subsidies stood in the way of international agreement why not accept his Amendment? I can reassure him that we are quite convinced that the rates we propose for next year and the year after represent a thoroughly realistic target at which to aim with shipbuilding subsidies. It would be misleading, if by accepting this Amendment I were to give the impression that we had any new proposals to table within OECD, or that we were urging a steeper rate of decline in subsidies than we have previously indicated we were satisfied with, or if by accepting the Amendment I were to suggest that I think there is a possibility of moving down faster than this. More important, if I were to accept the Amendment I would be removing a certainty that is of some value to the shipbuilding industry. The industry has the certainty, once the Bill is passed, that grants will be paid—10 per cent. this year, 4 per cent the year after and 3 per cent the year after that. If for a purely cosmetic reason and without believing that the Amendment would lead to any different conclusion I were to accept it, I would simply run the risk that for no benefit I would be importing an unnecessary uncertainty for shipbuilders.

Mr. Bruce-Gardyne

My right hon. Friend made it clear a few moments ago that while his prediction of 4 per cent. rate was based on the recommendations of the Commission and therefore was pretty safe for next year, the choice of the 3 per cent. for the year after was much more a matter of judgment and guesswork. Supposing there were to be an international agreement within the EEC or OECD to limit the maximum permissible level of subsidy under this type of arrangement to 2 per cent. Is he telling the House that he would feel obliged to resist the agreement along those lines to, retain a 3 per cent. margin for the British shipbuilding industry?

4.15 a.m.

Mr. Chataway

I regard that as an extremely hypothetical question. If the Commission were to withdraw its directive stipulating 4 per cent. next year and to agree that it should be zero per cent., we should face another situation. I regard that as unlikely. I regard the situation that my hon. Friend describes in 1974 as unlikely. In such a matter as this, one has to proceed on the best estimate that one can make.

We have been involved closely in discussions in the OECD and in the Common Market. I think that this represents what we believe to be a realistic de-escalation of subsidies. So for the possibility which my hon. Friend believes to exist of getting 2 per cent. instead of 3 per cent.—and I do not believe that it exists—it is not worth while accepting his Amendment, which would import as unnecessary uncertainty for the ship builders.

Mr. Ridley

Surely it is far more important that we should be in a position to reduce to 2 per cent. if that is the international agreement than the inconvenience of accepting an Amendment, which is really what my right hon. Friend argues. He may not like the wording, but if he accepted the principle, surely it would be much better to have it in the Bill so that the shipbuilding industry was in no doubt that if international conditions made it possible my right hon. Friend would reduce the subsidy in accordance with our agreements.

Mr. Chataway

At this hour, clearly I am not explaining myself very well. It was not that it was inconvenient to accept the Amendment. That was not the basis of my argument. It was that by stipulating that the subsidy would be at 10 per cent. this year, 4 per cent. the year after, and 3 per cent. the year after that, one was providing a certainty on which ship builders could plan. I do not believe that 2 per cent. is more likely to be achieved in 1974 than 3 per cent. These are realistic estimates, and the balance of advantage lies in going for this degree of de-escalation of subsidies and this degree of certainty.

Mr. Bruce-Gardyne

My right hon. Friend has not entirely alleviated my anxieties. To some extent, he has compounded them. He has made it clear that notwithstanding attempts to come to a more rational system of limitation of subsidies internationally, we shall be bound to drag our heels to the extent that is required to conform with the terms of the subsection. I agree with my hon Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) about the undesirability of such a posture.

Nor are one's anxieties alleviated by my right hon. Friend's comments about cross-subsidisation between different yards in this country, or going on to other industries. I can only express the hope that we shall not regret the limitations which will be imposed upon us by the Clause and find in a year or two that we are obliged to resist agreement on a more sensible system of shipbuilding subsidies internationally. If we do, we shall have cause to regret this night's work.

Amendment negatived.

Mr. Douglas

I beg to move Amendment No. 33, in page 13, line 12, after 'fit', insert: 'but having due regard to the terms of contract between the shipbuilder and customer in relation to the date of delivery of the ship or mobile offshore installation'. These words which I propose should be inserted supplement the powers which the Secretary of State takes under Clause 11(8) which states: The Secretary of State may make the payment of a grant subject to such conditions as he thinks fit.… I wish the Secretary of State to have regard to the terms of contract between the shipbuilder and customer in relation to the date of delivery of the ship or mobile offshore installation. I realise that in strict legalistic terms my suggestion in relation to the Secretary of State's power may not be strictly accurate, but the intention, I trust, is fairly clear and ought to be acceptable to the House.

I listened with great interest to the so-called experts on shipbuilding speaking to the previous Amendment. I think it was the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who mentioned three countries—France, Spain and Italy—which were subsidising their shipbuilding a little more than we subsidise ours. I was amazed to hear the suggestion that these are not very substantial shipbuilding nations. Let me quote from the supplement to The Motor Ship of July, 1972, which states: Back into third position after nine months is France which increased its order book —and I must emphasise that this is in a time of stagnation in terms of the world merchant fleets— during the quarter by over ½ million tons d.w. to 94 vessels aggregating 8,407,020 tons d.w., a tonnage almost identical to a year ago.… Included in the present figure is an order placed by the Shell Group with Chantiers de L' Atlantique for a total of one million tons d.w.… The return of France to third position has displaced Spain to fourth… And these are inconsequential countries! We come after Germany; we are sixth in this league table. I accept that Italy is somewhere down the league.

I welcome the Government's proposals to give these tapering grants. I think they are sensible in relation to the position that the United Kingdom occupies at the present time. This situation will not get easier. Other countries, particularly Spain, are building new yards.

I should like to quote from Fairplay International Shipping Journal of July, 1972. This is what we are likely to be faced with in consequence of expansion on the part of some of our own domestically-based companies operating internationally: … A & P Appledore International will be able to undercut Japanese prices for v.l.c.c.s. by as much as 10 per cent. That is the degree of competition which the United Kingdom shipbuilding industry will face. We may have debates on whether we ought to have a British shipbuilding industry. There are many reasons why we should have a United Kingdom shipbuilding industry, and I ask the right hon. Gentleman to pay particular attention to the terminology of the Amendment.

I know that the Minister desires to help the industry. I suggest that he has power under the Clause to exercise his discretion about how these grants will be paid. I ask the right hon. Gentleman to pay particular regard to the contract between the shipbuilder and the customer. I know that he made certain overtures to us in Committee and resisted the points that we made, but I hope that, having taken cognisance of some of the arguments that I have put forward this evening, having noted the expert advice which is no doubt coming from his Department about the state of the shipbuilding industry, and having recognised that there is a slump in world orders and that any shipping company may be in difficulties in completing its orders, for reasons which may not be of its own making, he will respond favourably to the intention of the Amendment.

Mr. Chataway

There are great difficulties about accepting the Amendment. I have sympathy with the hon. Gentleman's intentions, and we went into this in some detail in Committee. The difficulties to which I referred then still exist. First, if one were to try to base a scheme such as that suggested by the hon. Gentleman on force majeure one would be in a difficult area of definition. It would not be possible to have force majeure clauses in contracts between shipbuilders and their customers, because they vary a great deal.

Secondly, the Amendment would cause some difficulties to the industry, because some shipbuilders stand to benefit from delays in construction this year, since delay would bring into 1972 for 10 per cent. grant work which would otherwise qualify in 1971. A proposal of this kind cuts both ways. It means that some will not qualify for grant at all, whereas they would have qualified for 10 per cent., as well as enabling others to be helped along the lines which the hon. Gentleman has in mind. The principal difficulty is that one would be forced into trying to determine whether a delay really was outside the responsibility of the shipbuilder. The hon. Gentleman has one or two particular difficulties in mind, but this is not a possible means of assistance.

Another objection to the Amendment is that it does not do what the hon. Gentleman wants. I have not stuck on the drafting objection to the Amendment. I assure the hon. Gentleman that we have looked carefully at this, but it just is not possible to accept the Amendment.

Mr. Douglas

In view of the Minister's reply, and in view of the arguments that we have put to the right hon. Gentleman, reluctantly I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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