MARATHON CONSTRUCTION COMPANY (GRANT) (Hansard, 19 July 1973)

§ The Minister for Industrial Development (Mr. Christopher Chataway)
Her Majesty's Government recently received a communication from the Commission suggesting that the payment of construction grants on mobile offshore installations under Part III of the Industry Act 1972 is a contravention of the Council Directive on aid to shipbuilding, No. 273 of 1972. The letter invited our observations. We do not accept the Commission's view of this matter, but we are considering its letter and will be replying to it in due course.
Pending the resolution of this issue, which may take some time, we shall, of course, continue to meet our obligations to pay these grants. And, of course, the House will be aware that the directive in question expires at the end of this year.

§ Mr. Hughes
Bearing in mind that the House was assured during the passage of the Industry Act that the proposal to allow grants for this type of construction could not be challenged by the EEC, may I take it that the right hon. Gentle. man is being specific in saying that this recent communication will be challenged at all costs? Will he tell the House how this directive affects other oil rig construction bases in Scotland? If it affects future construction rig sites, is he aware that the ability of Scotland to benefit from the discovery of North Sea oil will be greatly impaired?

§ Mr. Chataway
The hon. Gentleman will appreciate that this grant is only one small part of the assistance available to the Marathon Company. I assure him that we shall safeguard the position of this company.
Part III of the Industry Act was discussed with the Commission in advance, 710 of its passage. The Commission is doing its job—a job we very much want to see it do which is to ensure that there is not competitive bidding among member countries. Hence it makes these inquiries of this Government as it does of others.

§ Mr. Bruce-Gardyne
Will my right hon. Friend bear in mind in considering this approach from the Commission that not all firms in Scotland are by any means convinced that the provision of these taxpayers' subsidies to an American concern to enable it to take work which might otherwise have gone to domestic Scottish concerns in the same industry is necessarily in the long-term interests of employment and prosperity in Scotland?

§ Mr. Chataway
There can be no question of this company having taken work away from other firms since it is the only manufacturer of submersible rigs of this kind. I would argue strongly that this country has benefited substantially over the years from offering the same regional incentives to incoming firms as to British industry.

§ Mr. Ewing
The Minister indicated that the Government did not accept the contents of the directive from the EEC. Later he said, "Pending the resolution of this issue". Does this mean that he is open to persuasion by the Common Market, and that if the EEC persuades him that the Government are wrong they will not proceed with this type of grant? The right hon. Gentleman should be aware that the whole of the North Sea oil industry is at stake on this issue.

§ Mr. Chataway
We are talking about the interpretation of a directive which applies to shipbuilding as a whole and which expires at the end of this year. The Commission has suggested that this particular feature of construction grants, which represents a very small part of the total, is a contravention of the directive on aid to shipbuilding. We do not agree with that. Therefore, it may take a little time to resolve the issue.

Mr. Edward Taylor
Is my right hon. Friend aware that hon. Members such as myself, who have worked in shipbuilding, and who represent the Glasgow area, appreciate just as much as do farmers 711 from the east coast of Scotland the splendid work that he personally did in getting this magnificent operation and others to Clydebank? Does he agree that this issue is far more important than a 4 per cent. grant to Marathon? It affects firms which took, and were grateful for, the Minister's assurance that the amounts set out in the White Paper will be paid until 1st January 1978. In those circumstances, while we fully appreciate that the Minister and the Government will be doing all they can to safeguard the position, will he set out clearly what the practical position is in the event of his being unable to agree with the Commission on this issue? What will happen then? Will it go to the Court or to the Council of Ministers where we have a veto?

§ Mr. Chataway
No, Sir. The implications of the decision are not as my hon. Friend fears. He suggests that they throw into doubt the incentives which are generally available under the Industry Act. But he will know that, contrary to the forecasts made by hon. Gentlemen opposite for several months previously, the result of the discussions on Article 154 of the Treaty of Accession make it clear that our system of regional aids remains untouched. We are talking about the interpretation of one directive relating to shipbuilding. It affects only one company and it simply concerns this year. Therefore, my hon. Friend need not entertain the anxieties that he appears to have.

§ Mr. Gourlay
Is the Minister aware that after the liquidation of the Burntisland Shipbuilding Company in 1968, causing severe unemployment in the area, the Robb Caledon Shipbuilding Company took over the shipyard and has only recently made a major breakthrough by getting a contract for the manufacture of modules for oil rigs. After considerable pressure on the Department, the company has recently received a grant. Will he therefore confirm that in no circumstances will any proportion of the grant be clawed back and that it can proceed with this project?

§ Mr. Chataway
I confirm that this matter does not affect Robb Caledon in any way. It affects only the one company that we have mentioned, and I 712 have given an undertaking that we shall safeguard that company's position.

§ Mr. Ross
Is the Minister aware that when this matter was discussed in Committee on the Industry Bill he told the Committee not to be worried because he was keeping closely in touch with the Commission? He went on— In framing our proposals for the construction grants scheme, we naturally took account of such international developments and the rates of grant … conform to the new policy on shipbuilding aids … in OECD."—[OFFICIAL REPORT, Standing Committee H, 13th July 1972; c. 787.] When did the Minister have the first indication of difficulty? How can he be satisfied that the difficulty ends with the mobile offshore platforms of Marathon? Is not he aware that there are four or five firms which build offshore platforms? Does he realise that this is not satisfactory, bearing in mind the assurances we were given? If the EEC questions our rights on this, what will happen about the rights of other companies which are building similar platforms all round our coasts?

§ Mr. Chataway
During the passage of the Industry Act we took into account the policy of the Community. It should be noted that expenditure under this head represents less than half of 1 per cent. of the total expenditure under the Industry Act. As I have explained to the House, we are concerned here with the interpretation of one directive. It is absolutely right that the Commission should ask these questions. It is asking them of other Governments, and it is in the interest of industry in Scotland, as throughout the United Kingdom, that there should not be a bidding up in aid throughout the Community but that there should be a common discipline. There will be many occasions when the Commission will make inquiries of this kind.