HC Deb 31 July 1974 vol 878 cc808-14
The Secretary of State for Industry (Mr. Anthony Wedgwood Benn)

I apologise, Mr. Speaker, for making two statements on the same day. With permission, I want to make a statement on the public ownership of shipbuilding and associated industries.

The Labour Party Election Manifesto stated our intention of taking shipbuilding, ship repairing and marine engineering into public ownership and control.

United Kingdom shipbuilding has had an indifferent record in recent years, with static or falling output despite a growing world demand for ships. In 1955 its merchant ship output of 1.3 million gross registered tons was larger than that of any other country and amounted to 26 per cent. of the world total. By the end of 1973 our industry was sixth in the world, having been overtaken by Japan. Sweden. West Germany, Spain and France; and the 1973 output of 1.06 million gross regisstered tons was only 3.6 per cent. of the world total. Shipbuilding employment, which is mainly in assisted areas, has fallen from some 130,000 in 1955 to 69,000.

Over the past 10 years large sums of Government assistance have been provided to shipbuilding companies. Despite this, it is clear that much of the industry will be unable to compete effectively in the world market unless there are changes in management methods and working practices which will allow the more efficient use of its resources and unless there is substantial further investment and modernisation, the funds for which are unlikely to be available from private sources.

Employment in ship repair has halved over the past 10 years and stood at 26,000 in 1973. The recently published report on the industry by PA Management Consultants Ltd. criticised the excessive fragmentation of the industry in the major estuaries, and concluded that changes in structure and substantial modernisation were essential so that this industry, which is also an important employer in a number of assisted areas, could become an effective force.

In view of the history of the last 20 years, the Government believe that necessary changes will not come about while the industry is in fragmented private ownership and that public ownership of the major companies, including specialist engine builders, offers the only effective prospect of achieving the objective of enabling British shipbuilding and ship repair not merely to survive but to prosper in the highly competitive markets of the world.

Our detailed proposals for legislation will be set out in a White Paper later this year. Before this, the Government wish to receive and consider the views of all interested parties on matters the legislation will need to cover—for example the best organisational structure for the nationalised industry. The Government would also welcome views on other relevant matters.

I propose to undertake consultations on the basis of a discussion paper which I am sending today to the Shipbuilders and Repairers National Association; the Confederation of Shipbuilding and Engineering Unions; the Chamber of Shipping of the United Kingdom; the National Association of Marine Engine Builders; and the British Marine Equipment. Council. I have placed copies in the Vote Office and in the Library of the House, and I am also sending copies to the Confederation of British Industry, the Trades Union Congress and to the Economic Development Committee for Shipbuilding and Ship Repair. Copies are also available to interested parties on request from the Shipbuilding Policy Division of my Department.

The legislation will provide for fair compensation to be paid for the interests to be taken into public ownership. The Bill will contain provisions on the lines of those contained in the Iron and Steel Act 1967 to guard against the dissipation of property and assets of the companies to be nationalised and their subsidiaries in the period until vesting day. These provisions may be applied to any transactions entered into after today.

Mr. Heseltine

Only a few minutes ago the whole House made accord with the Secretary of State for Industry when he said that he was to have due regard for public expenditure. It has not taken long for him to change his mind, and no one will be surprised at today's statement.

May I ask him, first, what compensation will be payable for investment in this industry that takes place after today? Secondly, what will be the total estimated cost of the proposals outlined in his statement? Thirdly, may I ask him to confirm that his statement is misleading in that he attacks the efficiency of the industry, when the figures he has given indicate that half as many men today are producing only 20 per cent. less output than they were in 1955?

I further suggest to him that as the State now owns 50 per cent. by output of the shipbuilding and repairing industry, it would be a genuine attempt to see whether nationalisation works better than the private sector by allowing the two to compete to see which is likely to solve the very real problems facing this industry, rather than impose a doctrinal solution when there is not a shred of evidence anywhere in the world that success is likely to attend upon its outcome.

Mr. Benn

I have had occasion to comment to the hon. Gentleman before that he should study the facts more carefully. From 1964–65 to 1974–75—that is, a 10-year span—the loans by Government to this industry have run at £62 million. I published the figures in an Answer yesterday. The grants were £79 million and the shareholdings £14 million, and during that period—indeed, over the 10-year period that I have described—this industry has absolutely failed to invest for the future, to get a rising share of the world market or to provide secure employment for those who work in it.

If the hon. Gentleman's definition of private enterprise is that with a booming world market for ships British industry should congratulate itself on running down in numbers, not increasing its share of the world market and being overtaken by the other five major shipbuilding countries, I simply do not accept it. I think the hon. Gentleman will have a very difficult job to establish that with public opinion.

Having said that, I would add that this is a consultative document that is being issued today and, as I made clear, the negotiations about compensation will take place at a later stage.

Mr. Richard Wainwright

The Secretary of State says that before publishing the White Paper he wishes to receive views on the best organisational structure for this nationalised industry. Will the Secretary of State be good enough to explain where he expects to locate this fund of knowledge on how to organise a nationalised industry successfully, and in particular where he is looking for advice on how to organise a manufacturing industry on a nationalised basis which has to compete in a highly competitive international market?

Mr. Benn

All I can say is that by any criteria which the hon. Gentleman likes to mention, this industry has not been very successful over the years. Where is the skill and ability? It is in the industry itself. I have the gravest doubts about the present arrangement under which the private sector control continues, the Government subsidise it and every year or two hire numbers of consultants to abuse the industry for its failures. We should have some institutional arrangements under which the people who work in the industry, management and men, for the first time have the opportunity of developing their own industry free from the failures of the private enterprise framework that surrounds them.

Mr. Flannery

Will my right hon. Friend accept that his statement will give deep satisfaction on this side of the House and to the vast majority of the British people? Would he agree with me that the very people who are condemning him for intelligent use of public money, in which he has engaged during the recent period, have accepted during their tenure of office £3,000 million subvention of public money to shore up their much-vaunted, yet faltering, private enterprise system?

Mr. Benn

I am grateful for what my hon. Friend has said. I have absolutely no doubt whatever that this will be welcomed by those working in the industry because they have suffered more than any other group of people from the framework in which they were expected to earn their living. They have seen the essential investment denied them. They have seen other shipbuilding countries get ahead of them, and they have been put in the humiliating position—with all their skill and craft, some of it going back many generations—of being presented to the public as a failure. What has failed has not been the skill of the workers or the management but the framework in which they have had to work.

Mr. Trotter

May I remind the Minister that some 80 per cent. of the public funds have gone into the publicly-owned yards and that the private yards, including Swan Hunter's on Tyneside, are booming with the largest order books which they have had in 10 years? May I repeat the question: what is the arithmetic of this crazy and costly exercise? How much will it cost the taxpayer to take over booming and successful private yards, and what will be the cost of the losses in the future when the dead hand of nationalisation has reduced them to the same level as those which are at present publicly owned?

Mr. Benn

I can assure the hon. Gentleman that nothing could have been more costly or wasteful than the framework within which the taxpayer has been financing the shipbuilding industry up to now. I published the figures in answer to the hon. Gentleman's own Question yesterday I have a copy of the Answer before me. He will see the size of the subventions that have been made. Nor would it be true to say that any shipbuilder—even of the kind to whom he refers with a special local constituency interest—has not benefited from Government assistance of some kind or another, though it is also true—and quite right that it should be true—that in considering their attitude towards less successful shipbuilding industries, the previous Government as well as this Government and the Government of which I was a member took account of regional implications in their support.

When the previous Conservative Government finally acceded to the demand of the Clydeside workers, that they should have the right to work, they contributed many millions of pounds because it was not only shipbuilding but employment considerations that were in mind. But that is a bad basis for developing investment and a future in an industry that is meeting a rapidly growing world demand for ships.

Mr. Blenkinsop

Is my right hon. Friend aware that some thousands of my constituents working in the shipbuilding and ship repair industries will welcome very strongly the statement that he has made? Is he also aware that they have already come together to prepare some preliminary statements for him—of which I believe he already has a copy—illustrating some of the priorities which they believe need attention in the urgent requirement for further investment, especially in the repair industry?

Mr. Benn

I know that what my hon. Friend says is right because I had the opportunity of going there to meet both the management of the Court Line Group—which we acquired recently—and the stewards and workers in that industry. In the course of a long discussion I had with them they made it clear that in the new environment of public ownership, the scope for co-operation exists between management and men—for the men regard their own management very highly—and the possibility of the development of a forward-looking corporate strategy. If the Opposition think that there are any votes in fighting nationalisation of the shipbuilding industry, they have made the biggest mistake of their lives.

Sir Harmar Nicholls

The Minister spoke in disparaging terms of what he calls "fragmentation" on the management side. Has he any plans in his new structure for dealing with fragmentation on the union side? Twenty-one unions to build a ship! He spoke of how Japan had overtaken us. The Japanese have two shipbuilding unions. Has the Minister got that in mind for increasing efficiency?

Mr. Benn

Not for the first time, the hon. Member has revealed his misunderstanding of the nature of trade unions, which is that they are voluntary organisations of workers banding themselves together to defend and promote the interests of their members. In the past 20 years none of the shipbuilding unions has received any Government money. Therefore, there is no parallel between unions and managements.

All I would say is that one of the most encouraging things about the discussions—and I have been involved in them, with responsibilities for shipbuilding going back to 1966—is that the forward-looking plans for investment, for exports and for the new strategy of the industry have come from trade unionists working in the shipbuilding industry. If we can harness their energy to the industry's future, it will be a great future.

Several Hon. Members rose

Mr. Speaker

Order. We cannot debate this statement today.

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