NORTHERN IRELAND (HARLAND AND WOLFF)

HC Deb 01 August 1975 vol 896 cc2474-540

1.8 p.m.

The Minister of State, Northern Ireland Office (Mr. Stanley Orme)

I beg to move, That the Shipbuilding Industry (No. 2) (Northern Ireland) Order 1975, a draft of which was laid before this House on 9th July, be approved. The main purpose of this draft order is to bring Harland and Wolff Limited into full public ownership, in fulfilment of the Government's decision which I announced to the House on 26th March 1975. The order also provides for the financial assistance which is needed if the company is to meet its existing commitments and to have a further chance of survival.

Pending this order becoming law, the financial assistance required to keep the company in funds is being provided by means of loans under the Shipbuilding Industry (Northern Ireland) Order 1975 which came into effect on 21st May. That order will be revoked by the act of making the order now before the House; and whatever amount of money has been by that date advanced under the earlier order will be covered by the provisions of this new order.

Although I have issued a detailed memorandum in response to the request from Members for more information, this order has major implications for public expenditure and for employment in Northern Ireland. It may help hon. Members in considering the Government's proposals if I relate something of the background to this measure. I hope that this information will help the House.

Although it is not alone in this among United Kingdom shipbuilders, Harland and Wolff has a sorry financial record. Despite massive financial assistance from the Government, it has failed to make a profit over the last 10 years. No ordinary dividend has been paid since December 1964 and no preference dividend since June 1966.

Total Government assistance to the company between 1966 and March 1975 was just over£81 million. In fairness to Harland and Wolff, it must be said that some£22 million of this aid has been of a standard type, including regional employment premium, such as is available to industry generally in Northern Ireland and to most other United Kingdom shipbuilders. Of the balance, some£33 million has been provided by means of grants and loans to develop the excellent facilities which the shipyard now enjoys. This still leaves£26 million which has been provided in the form of grant, equity and loan specifically to save Harland and Wolff from closure.

The figure of£81 million refers to aid given in the past, until March 1975. Since that date some£8 million has been provided, including some£5.7 million under the interim order. Putting these figures another way, if the draft order is approved and if all the money is taken up, the company will have received in the period from January 1966 to March 1979 a total of£119 million in special assistance. To that must be added some£23 million of standard assistance to date.

Reverting to my main theme, despite all this assistance the company could not get out of its troubles. In the summer of 1974 the directors had to come to the Government and say bluntly that they could not meet their liabilities as they fell due and that in the absence of Government guarantee they would have no alternative but to cease trading. The Government gave that guarantee subject to certain conditions, one of which was that a thorough reappraisal of the order book and of the company's prospects should be undertaken. As the House knows, a project team was appointed for this purpose and its review was completed earlier this year. The financial forecast submitted by the company assumed a very substantial improvement in productivity. Even so, on an order book of about£270 million at the end of 1974 a loss of£41 million was estimated between 1975 and 1978, when the last ship on order is due to be delivered.

Harland and Wolff possesses excellent facilities in the shape of the building dock and of the other capital facilities which have been provided largely at public expense and which are now largely operational. The company also has a long tradition and technical capability for building fine ships. Set against these attributes are the enormous financial and organisational problems with which the company is faced.

There is no hope for the company other than by a massive co-operative effort The Government believe that this can be achieved only by genuine industrial democracy and full worker participation. This means not merely good industrial relations but bringing the workers into decision-making processes themselves. Towards this end the Government have made a positive start. The discussion document "Industrial Democracy—Workers' Participation" has been published. Trade unionists and management are discussing this in detail and the Government hope to have their proposals in the very near future as a basis for action.

When this order is passed, it will be necessary to reorganise the company, and not least the board. The Government are hopeful that we will be able to proceed with worker representation directly from the shipyard itself on such a reconstruction. We are talking about worker participation not only at board level but at all levels throughout the company.

An important step towards the reconstruction has already been taken with the appointment of the new managing director, Mr. R. S. Punt. Unlike the previous appointment, this post was publicly advertised: 93 applications were received and a short list of six was finally interviewed. The interview panel was under my chairmanship and included two trade unionists—Mr. Sandy Scott, elected by the shipyard with a 78 per cent. ballot of all workers, and Mr. Andy Barr, appointed by the Belfast Confederation of Shipbuilding and Engineering Unions. A leading industrialist, Sir Arnold Weinstock, accepted my invitation to be a member of the assessors.

I am pleased to say that this experiment was an outstanding success and a consensus of opinion was arrived at with the appointment of Mr. Punt. I think it is fair to say that no company of this size and importance throughout Western Europe has had such an experiment in the selection of its managing director. I believe that this augurs well for the future of Harland and Wolff and I would want to wish Mr. Punt every success in the difficult task he has undertaken.

In an industry such as shipbuilding, with a difficult history in industrial relationships, only by the co-operation of the workpeople can we hope to achieve success. That is why the Government place such importance upon genuine and full industrial democracy.

Harland and Wolff has a special problem. Nearly 10 years ago the company took a decision to concentrate on the construction of large oil tankers and bulk carriers in a building dock, in contrast to the variety of ships which it had previously built on traditional slipways. That decision called for corresponding changes in the organisation and management procedures of the company. Quite simply, developments in management techniques and structures have failed to match the production needs associated with the investment programme.

A secondary factor has been the delay in bringing into full operation the new capital facilities themselves. In addition, the world market for large tankers has collapsed and its future is uncertain.

Harland and Wolff is not the only company that has been geared for this type of production. Shipyards all round the world have been equipped to build large tankers. It is, however, fortunate in having a successful engine works which has a good export record. Every possible avenue of diversification will be explored, but the fact remains that the yard has been constructed to build ships. When the world's market eventually revives, the skill of its workers and its modern facilities could put Harland and Wolff in a strong competitive position, provided that the necessary reorganisation has meanwhile been completed and has by then become effective. In the meantime the Government have undertaken to put the company on a sound economic footing.

I should like to inform the House what is involved financially in providing this last chance. It means that under the powers provided by the order new money will be put into the company to meet its cash needs. Article 6 (1) of the draft order limits the amount of new money to be provided out of public funds to£60 million. It also means that a financial reconstruction of the company, involving in part the writing off and in part the capitalisation of outstanding loans from the Government, will be undertaken. Under Article 6(2) of the draft order, these transactions involving old money already spent will not count against the£60 million limit.

Those Members who have studied the company's annual report and accounts for 1974, copies of which I arranged to be placed in the Library, will have seen that at the end of last year there was an accumulated adverse balance on profit and loss account of almost£60 million. But for the Government guarantee of July 1974, the company was hopelessly insolvent. The issued share capital of£11 million had been lost five times over. Clearly, if the company is to have a chance of survival it must stand on its own financial feet and be creditworthy in its own right. We must therefore put the company into a position of solvency so that it can continue trading and seek new orders without the support of the present Government guarantee.

It is also important for reasons of internal discipline that all those within the undertaking should realise that they are working within the constraints of limited liability. There is a full order book until 1978 and the company will have sufficient funds on current assessment to cover losses on that order book. However, next year it will be necessary for the company to be finding new orders; and these new orders will have to meet the criteria laid down by my right hon. Friend in March, namely, that all direct costs and overheads will have to be covered.

Members will have seen from the 1974 accounts that a large part of the accumulated deficit of£60 million is due to a provision of£41 million in respect of estimated losses still to be incurred on outstanding orders. Since these future losses will be progressively incurred—until the orders are finally worked off—it follows that the company does not need today all the cash that it will eventually require. Cash will be provided as necessary and it is for this reason that Article 5(4) of the order sets a time limit as far ahead as 31st March 1979.

In the light of these considerations, we propose to reconstruct the finances of the company first by writing off sufficient of the outstanding loans to eliminate the losses already incurred and to convert the remainder of the loans into share capital: and secondly to provide for future losses by an outright grant, which will be paid only as the cash is needed. These are the bare bones of the operation. I am quite deliberately not quoting figures in this context as we are not dealing with a static situation.

Members will appreciate that part of the£41 million provision is already being translated with the passage of time into actual losses, and cash is already being provided under the powers of the interim Order in Council, which we debated in the House on 8th May. Moreover, there are other important aspects to be taken into account. We have to provide cash for the remaining cost of the new facilities now nearing completion in the yard and to adjust for variations in stock levels, depreciation and so on.

The means by which the Government assistance will be given are set out in the order and it is desirable that there should be flexibility. The key condition associated with this special aid remains as I indicated to the House on 26th March. Government approval will be required before any new shipbuilding contracts are concluded, and this approval will not normally be given unless the Department of Commerce is satisfied that they will not be loss-making. The company may develop, but not without the Department's approval implement, diversification plans—possibly in conjunction with other companies. I want the company to feel free—and, indeed, to feel duty bound—to explore all possibilities for new production which might seem likely to improve viability. But we must be realistic about the limitations on substantial diversification in the short term. This is a shipyard: its skills are basically shipbuilding skills.

I should like to make one final point about financial assistance to ensure that there is no possibility of misunderstanding. I have spoken today and on previous occasions about the last chance, about there being no bottomless pit of public money and about the need for the company to demonstrate long before 1979 its ability to take on new work without loss—and I have said that if the company cannot do this it will be time for the Government to call a halt and to permit the rundown and even closure of the business.

In saying these things I have not meant to imply that Harland and Wolff will be excluded from aid which may be available to industry generally in Northern Ireland—for example, standard capital grants and regional employment premium —or to the United Kingdom shipbuilding industry in general, such as the current assistance under the Home Shipbuilding Credit Scheme. That is a very different matter, however, from leaving open a door to yet more special aid to pull the company out of fresh difficulties. I simply do not see this being possible.

It is intended, following the financial reconstruction of the company, that the Government's guarantee will be withdrawn as the company will then be creditworthy in its own right. Thereafter the board of the company must operate within the principles of limited liability under the Northern Ireland Companies Act.

Mr. A. W. Stallard (St. Pancras, North)

We have been listening to a mass of statistics and figures, which are very important, and none of us in the House would want to argue with the reasons my right hon. Friend has outlined for the massive financial assistance to the shipyard. That would be difficult when we have heard in the past few days about Norton Villiers and other industries in our own areas, so to speak.

In listening very carefully to what has been said, one of the factors that made the maintenance of this shipyard attractive to me was that it would supply employment for many people and that this would mean a move towards a much more balanced labour force than we have been led to understand exists. Is there anything in the criteria which have been outlined that will lead to the establishment of a more balanced labour force in the shipyard? If this were so, it would justify spending these massive sums in this industry.

Mr. Orme

I thank my hon. Friend for his remarks and his understanding of the position. I have discussed with the trade unions and management the work force at Harland and Wolff. We hope to tackle the problem my hon. Friend has raised by bringing in apprentices, from either community, in a manner which will bring more skills in to the shipyard.

Apart from the 10,600 workers in the shipyard itself, there are many thousands of others in all parts of the Province doing subcontract work for Harland and Wolff, and these workers are representative of both communities. But I take the point made by my hon. Friend. The Government do not underestimate it and are looking at it with seriousness.

I turn now to Article 4 of the order, which deals with compensation to existing shareholders. It is well known that Harland and Wolff by now would have ceased to exist but for the massive amounts of aid which have been injected by successive Governments and but for the present Government's July 1974 guarantee of the company's liabilities. The share capital has been lost five times over. The company is now insolvent. Without the support of successive Governments, the company would have gone into liquidation and the shareholders would have received nothing for their holdings.

But Harland and Wolff is the only major shipbuilder which has received Government aid whose shares have continued to be quoted on the Stock Exchange. Between July 1974 and 26th March 1975—that is, the date on which I told the House of the Government's intention to take the company into public ownership—the shareholders reasonably could have inferred that the company would continue in its present form and that their investment would be protected by the then current Government financial guarantees. Perhaps for this reason, trading in the shares had continued on the Stock Exchange throughout this period.

Taking account of these considerations, and after close scrutiny of share prices over varying periods of time, the Government have decided that the sums shown in Article 4(2) represent fair compensation to the private shareholders. I must emphasise that this decision has been reached in the light of the very special circumstances of the Harland and Wolff case. The combination of circumstances is unique and is not found in any other shipbuilding company in the United Kingdom. We believe that these compensation proposals are fair, to the general taxpayer as well as to the shareholder.

Finally, I should like to summarise the main arrangements which will follow the assumption of full public ownership. First, the status of the company will not be that of a nationalised corporation. It will remain that of a limited liability company under the Northern Ireland Companies Act. Secondly, work has already begun to plan and effect the financial reconstruction to which I referred earlier.

Thirdly, there is the whole question of the relationship of the company with the Government, closely linked with which is accountability to Parliament. Work is quite well advanced on drafting strategic guidelines for the future conduct of the company's business and for detailed monitoring of future progress. In other words it will be for the Government, who are providing the financial sinews, to regulate the relationship with the company and to set down a precise stipulation of the conditions on which this financial support is being continued. It will be for the board to run the company in accordance with those guidelines. In the last resort it is, of course, for the House, during the present period of direct rule, to determine its relationship with Harland and Wolff, as on any other matter.

However, in the meantime Ministers envisage that they will continue to deal with questions from Members as they arise on general policy and on matters concerning the use to which the financial assistance is being put.

Mr. Michael McNair Wilson (Newbury)

Will Harland and Wolff now come under the investigation of the Select Committee on Nationalised Industries?

Mr. Orme

We will examine this point. It raises wider issues. There are other limited liability companies of 100 per cent. shareholding which are under the Government's control. The Government will put no barriers in the way of Parliament examining this issue in the best manner that Parliament determines. One of the differences between nationalised industries and 100 per cent. public ownership on this basis is that Ministers will answer questions about the company in the House, as opposed to what happens in the case of nationalised industries, which make a yearly report and are not answerable in the House. This is an important point for people who are interested in parliamentary accountability to take into account.

Lastly, there is the question of the company's relationship with British Shipbuilders. The Government having taken the view that Harland and Wolff should be treated separately from the rest of the United Kingdom shipbuilding industry, and having stressed the desirability of the company being—and being seen to be—owned by and responsible to the people of Northern Ireland, it will be essential to ensure that there is effective liaison between Harland and Wolff and the board of British Shipbuilders when that body has been set up. I cannot say today exactly what form these arrangements will take.

Mr. J. Enoch Powell (Down, South)

The right hon. Gentleman referred to the company being owned by the people of Northern Ireland. In what sense is it owned by the people of Northern Ireland more than by the people of Cornwall?

Mr. Orme

The right hon. Gentleman and I have had this argument before. In the special circumstances of Northern Ireland the Government took a decision to exclude the company from the public ownership proposals. The Department of Commerce will have a function of monitoring and control in helping the company. We believe that when, as we hope, a satisfactory form of devolved government is arrived at, the Northern Ireland people will have a vested interest in this shipyard. That is Government policy.

Mr. Powell

I ask the right hon. Gentleman to take this point seriously. I accept that the form of public ownership and of administration is special to this company, but I ask him not to state what I believe not to be the case, namely, that the ownership of this company is in any respect special to the people of Northern Ireland as opposed to any other part of the population of the United Kingdom. It is a liability of the United Kingdom as a whole. The money is being raised on the credit of the United Kingdom and partly by the taxpayers of the United Kingdom, and the management will be responsible, through the Treasury Bench in this House, to the electorate of the United Kingdom.

Mr. Orme

The right hon. Gentleman has raised an important and fundamental point. There are many people in Northern Ireland who would use the arguments he is using as a basis for indefinite and continuing public money support irrespective of what was happening in the shipyard. The Government have said quite fairly to people in Northern Ireland that some account must be taken of expenditure in Northern Ireland in relation to the expenditure in this shipyard. I believe that no other shipyard in similar circumstances in any other part of the United Kingdom would have been maintained under these proposals. This is happening because of the special position and the realities of Northern Ireland.

In presenting this draft order for acceptance to the House today, I have spelt out many of the difficulties facing Harland and Wolff. Everyone who works in the yard will have to make a great effort if the difficulties are to be overcome. By 1978 we will know whether Harland and Wolff has won through. None the less, despite these problems, the Government look forward with confidence to the future success of this new publicly-owned company, the success of which will be of benefit not only to the workers themselves but also to the people of Northern Ireland.

1.36 p.m.

Mr. John Biggs-Davison (Epping Forest)

I shall try to be brief, and I shall certainly not repeat anything I said in the debate on the interim Order in Council.

The first point I want to make is of a constitutional or, at least, a procedural kind. I understand that the order is a hybrid instrument. In normal times the nationalisation of shipbuilding in Northern Ireland, which is what the order is about, would hardly have been undertaken in a debate lasting not more than one and a half hours and there would surely have been a Bill. The rights of the subject are affected as much by the order as if there were not an order but a Bill. If there had been a Bill, I suppose that a Select Committee might have been set up to deal with it as a hybrid Bill.

The House knows that the Hybrid Instruments Committee in another place has been considering this draft Shipbuilding Industry (No. 2) (Northern Ireland) Order. Forty-three petitions have been lodged against it. According to the First Report from the Hybrid Instruments Committee in the other place, a memorandum from the Northern Ireland Office explaining the background to the order and giving comments on the petitions has been considered. The Committee, according to its First Report, has come to the conclusion that there should be a further inquiry by a Select Committee into the basis of compensation set out in Article 4(2) of the order and, secondly, the basis on which the relative treatment of preference and ordinary shareholders was determined.

I fear that someone might accuse this House of proceeding to consideration of the order without making sure that those who are drastically affected by its provisions will enjoy opportunities which they would have enjoyed if the Government had brought in a Bill—which would have been the case in normal times—for the nationalisation of Harland and Wolff instead of resorting to an order under the Northern Ireland Act 1974. We are not presented with a Bill. We are confronted with an instrument that we cannot amend.

I understand the difficulties of the Government and the urgency with which they are trying to act in this very difficult matter, but I hope that before agreeing to the motion the House will be assured by the right hon. Gentleman that the Government will take account of the position in the other place and of the misgivings which I have expressed and, if necessary, return to the House and proceed further by way of a separate order.

Mr. Orme

Taking the hon. Gentleman's last two questions, the Government and the House would have to consider any recommendations coming from the other place. On this specific point, the fact that any recommendation has been made in another place does not preclude us from proceeding today, as the hon. Gentleman said. On the central point of the matter that the hon. Gentleman raised, I understand that discussions will be going on next week on this point in the other place, and I do not want to say anything which might prejudice those discussions.

Mr. Biggs-Davison

I am obliged to the right hon. Gentleman. I do not say that we are acting incorrectly in any way. This is less a point of procedural propriety than one of political morality. One would have expected so grave a matter to be the subject of a Bill if the times in Northern Ireland were not so troubled and if the situation were not so urgent. It is because there is no Bill that the hybrid Bill procedure in this House has not been resorted to. There is no procedural fault. I was trying to make it clear that people outside will expect this House to respect at any rate the moral right of those affected by this legislation.

Mr. Orme

In a sense, this point conflicts directly with what the right hon. Member for Down, South (Mr. Powell) said. One of the problems with Northern Ireland legislation is that we treat it separately, and Northern Ireland Members insist on parliamentary time to debate and to put through orders in their own right. The hon. Gentleman will realise that the Government have set aside a full day of parliamentary time on the Floor to deal with important Northern Ireland matters today, and we are dealing with a relatively small part of the United Kingdom, albeit an important part.

Mr. Biggs-Davison

I shall not press that point further in view of the assurances which the right hon. Gentleman has given, because I want to keep my remarks as brief as possible. But it is strange that, in the space of a dog watch and from benches which are less than crowded, it is proposed to take into full public ownership a concern whose giant cranes against the Belfast sky symbolise its historic dominant position in the Northern Ireland economy—the company which contributed so much to the nation in war time.

I have already touched on the question of compensation for those expropriated in connection with what I said about the hybrid nature of this order. In view of that, I simply ask the right hon. Gentleman on what basis the definitive calculation of compensation given in Article 4(2) of the order was made and whether there has been a recent share valuation.

Then I have one or two questions touching on what the Government propose to do with their new piece of property. The argument has to be met that, even if it were decided to close down Harland and Wolff altogether, the loss of jobs might not be as serious as has sometimes been said, and, now that the work force in Harland and Wolff has declined from about 25,000 in 1960 to about 10,000 today, the point has to be considered whether men having the skills and being of the quality that we recognise could not find engineering employment elsewhere in the United Kingdom. I should be grateful to have the right hon. Gentleman's views about that. We referred to it briefly in an earlier debate.

I am a little confused about the matter on which the right hon. Member for Down, South (Mr. Powell) intervened, namely, the intention to keep Harland and Wolff separate from other plans for the shipbuilding industry but to forge positive links between Harland and Wolff and a future aircraft and shipbuilding board. I was disappointed that the Minister of State was not able to take us any further into his confidence or to let us know how he thought it was likely to work out than he did on 8th May.

I draw my remarks to a conclusion now because I know that Northern Ireland Members wish to contribute, in addition to my hon. Friend the Member for Newbury (Mr. McNair-Wilson), who has a special knowledge of these matters. I put one final question to the Minister of State, whose interest in the welfare, employment and retraining of Ulster workers is much appreciated. He men- tioned some of the proposals in the discussion paper, "Industrial Democracy". Where have we got to in regard to the possibility of an advisory board? We were told that the stewards were asked whether they would be willing to serve on such a board if it was set up. Can the right hon. Gentleman tell us a little more about that?

We welcome the stern intention which the right hon. Gentleman expressed of imposing very strong financial controls and of putting a bottom to this pit of expenditure which successive Governments have lavished on Harland and Wolff.

1.46 p.m.

Mr. J. Enoch Powell (Down, South)

This is a very limited debate, and there is a certain irony in that, having saved time on the previous draft order, we are unable to use it on what must be one of the most important measures for Northern Ireland to have come before the House under the 1974 Act.

I want first to thank the Minister of State for the trouble which he took in providing the House with the documentation on the company, despite the printing difficulties which prevailed. I hope that the right hon. Gentleman will, as speedily as possible, ensure that in some form the document is made available to the public in the normal way, for they have as much interest as we have in learning these facts.

Mr. Orme

Having supplied it first to right hon. and hon. Members, we have now made it available to the broadcasting media and the Press. If the right hon. Gentleman so desires, the Government will make it available to the public as well.

Mr. Powell

I think Her Majesty's Stationery Office should take steps to make it generally available since it is a matter of public interest, not only in Northern Ireland.

However, the document is defective in two respects. First, it does not contain what this House will insist on having, one way or another, and that is a post mortem upon the years 1971–73.

I shall not discuss today the form which that post-mortem should take. But we must know what happened. We must know what degree of responsibility attaches to the administration of the day and, if there were facts discreditable to the then management of the firm—a firm which existed only as a result of the expenditure of public money—those facts must be known publicly.

The second deficiency is that, however much the document is strong, valuable and clear on history, it is weak on the future. We are told that the project team carried out a thorough reappraisal of the prospects of the company and its future organisation. There are some hints of this in the document; but there is still a South Sea Bubble element about the proposals, because we are not told in any detail the result of that reappraisal or what the form of reorganisation is to be.

My right hon. Friend the Member for Belfast, East (Mr. Craig), who is prevented by reasons of health from taking the part which by right belongs to him in this debate, was perfectly right when on 8th May he said that it was not enough that we should have a Civil Service examination of the state of the yard and of the Government's responsibilities but that we wanted a broader examination of the structure and problems of Harland and Wolff". The hon. Member for St. Pancras, North (Mr. Stallard) was referring to the same point when he intervened.

There are three general considerations which I believe we must have firmly in mind in judging what we are to do. The first is that a loss such as we are contemplating in this case is not a mere piece of bookkeeping pedantry. It is not something that belongs only to finance and not to the real world. On the contrary, a loss of these dimensions means that for years past—and, indeed, for some time to come—a large body of men with great skills are employed in the work of destruction. It is not merely that their labours and their efforts are being wasted —that they are not being employed in any way—but that they are actually producing a minus result. It is not their fault; but it is a fact that we are not entitled to overlook.

Certainly we are not entitled to confuse it with the importance which we all attach to minimising unemployment. In the first place, stable employment cannot be founded upon loss-making activities. Of course, the Government recognise that in the decision which they have plainly taken.

Secondly, the reality of a financial loss is not wished out of existence by the fact that employment is being provided at the same time. An important exchange took place on 8th May between the hon. Member for Newton (Mr. Evans) and my right hon. Friend the Member for Belfast, East. I shall recall this exchange in case anyone should suppose that any hon. Member taking part in this debate, above all from Northern Ireland, can be insensitive to the relevance to employment in Northern Ireland. The hon. Member for Newton intervened to suggest that it was better to have accepted the fixed price contracts with the colossal losses that they involved than have no orders at all". My right hon. Friend replied: That is an argument which I am reluctant to accept. I am aware of the social needs and of the problems arising out of the availability of employment in Harland and Wolff. But, in my opinion there are many other ways in which we could find a solution to the problems."—[Official Report, 8th May 1975; Vol. 891, c. 1767, 1766.] The fact is that, as loss-making cannot be a basis of continued stable employment, we shall have to find other ways of solving those problems unless there is a revolutionary alteration in a very short time in the prospects of Harland and Wolff. I am not saying anything there which is distinct from the position the Government have taken up.

So, the first general consideration we must have in mind is that loss-making by its nature damages every element in the community and is no basis for stable employment.

The second consideration is that judgment of commercial prospects is not commonly most successfully exercised by politicians and public bodies. One of the most striking features of the piece of history which we have in the document presented by the right hon. Gentleman is that it was the Shipbuilding Industry Board, set up on behalf of the public to form a judgment on these matters, which aided and abetted Harland and Wolff in the most crucial miscalculation of the past 10 years. The Shipbuilding Industry Board proved to be no wiser than the management of Harland and Wolff, to put it mildly.

As politicians we must recognise that we have no special expertise in judging the prospects of profitability or the chances of a future market two, five or 10 years ahead. Indeed, I think that, as politicians, we are more at the mercy of fashionable views about what is needed and what will be needed than those who, in the privacy of a board room, risking their own money and other people's, form a cool and often secret judgment as to future developments. This is no abstract consideration, because, in the basic statement made by the right hon. Gentleman on 26th March, the condition is laid down that the Government will not allow the firm to undertake future work unless they satisfy him that all direct costs and overheads can be covered in the building years beyond 1978…Unless it can obtain orders which can be completed without loss, a halt must be called."—[Official Report, 26th March 1975; Vol. 889, c. 498.] The Secretary of State's judgment as to orders which will be completed years ahead without loss is as fallible as the judgments which his predecessors and the Shipbuilding Industry Board took in the past.

From this I deduce a principle which I hope may win acceptance—that, in forming the judgment which is built into his condition for this subvention, he will proceed, as far as humanly possible, upon strict commercial lines, that he will not feed into his judgment factors which would not be taken into account in the board room of a private enterprise company, but that his judgment will be, as near as may be, an objective one. I believe that is the intention; but it is salutary that we should remind ourselves how often in the past judgments about future profitability and loss-making in the case of Harland and Wolff have gone astray despite the very best political intentions.

I come to my third general consideration. There is always a temptation—I hope I shall be forgiven if I say that it is a temptation which assails Socialists even more violently than it assails the rest of us—to assume that human nature can somehow be altered so as to make our plans and wishes come true—that it has been thus and thus in the past, but, cheer up, people will behave differently in future and so, because we have confidence that they will behave differently, we put forward this or that proposition.

Mr. Stallard

Does the right hon. Gentleman accept that what we say in reality is that we will change the environment in which people operate and thereby hope that they will change their ways?

Mr. Powell

I do not want to get into the debate between the geneticists and the environmentalists. For practical political purposes it is always safest to treat human nature—whether individual human nature or human nature collectively—as a constant. If it turns out to be better than it has been in the past, that will be a bonus. However, in the context of judgments such as the one that is taking place today, we have no right to assume that future experience will differ substantially from that of the past. I am not pouring cold water upon the Minister of State's notions of participation or on his hopes for the improvement of labour relations, which we all share in this undertaking. However, we as politicians should face the fact that we are too often tempted to assume that people will behave differently and too often, to our disappointment, find, as might have been predicted, that they continue to behave as they have commonly done before.

I should like to quote two sad phrases from the document of the right hon. Gentleman. It refers to the P200 scheme on page 7 and to the reasons why this did not come to the intended fruition. The words are: much of the basic planning data remains unvalidated against the shop-floor experience". Translated into English, that means that the plan assumed that people would behave differently from the way in which they did behave.

Referring to the future, the next page of the document says: Steps have been taken to bring overhead costs under control, but these will take some time to bear fruit… Then come the crucial words: and depend essentially on the proper motivation of the staff that actually incurs expenditure. I am all in favour of responding to the intervention by the hon. Member for St. Pancras, North, who suggested putting human beings into an environment in which the desirable stimuli will be brought to bear upon them. I have no objection to hoping for a change of motivation and a fundamental change of collective behaviour; but to rest our plans on that happening is to fly in the face of all political experience.

I turn to the judgment which my right hon. and hon. Friends and I, with a full sense of responsibility, take upon the proposition which is before the House in the terms of this order. I use the words which my right hon. Friend the Member for Belfast, East used when the announcement was made on 26th March. He said: the important part of the statement, to my mind, is the sentence, 'Unless it can obtain orders which can be completed without a loss, a halt must be called'" —[Official Report, 26th March, 1975; [Vol. 889, c. 500.] It is important that that should have been emphasised by the right hon. Gentleman, who in this House represents not only the area where the shipyard is situated but also a substantial proportion of those who directly or indirectly are employed as a result of its operations. It means that we accept, under the severest conditions and limitations, the decision of the Government: first, that this firm could not now be brought to a full stop, that no one could justify that, and that no one would propose it, but secondly, that we can only be justified in providing this extra£60 million, at the cost of resources which will come from profit-making activities in the rest of the economy, if we seriously mean, and will not go back upon, our undertaking that no future activities will be undertaken which, on commercial judgment and with the most objective appraisal, are not likely to prove profitable.

That was what the right hon. Gentleman meant when he used those fatal words that this is the "final and last chance". They are too often used in political vocabulary. There is usually a chance after the last chance: we are always talking about the last chance and not meaning it. Here, however, we are merely playing with men's lives, with the economy of Northern Ireland, and with our own responsibilities if we do not mean what is said in that statement in the most literal sense of the term.

Let us accept this order subject to those conditions and considerations. In doing that, right hon. and hon. Gentlemen representing constituencies in Northern Ireland are making a commitment themselves. They are making the commitment for the future that if and when the Government are called upon to carry out and fulfil the conditions which they have attached to this decision, they will give the Government their support in so doing.

2.06 p.m.

Mr. Gerard Fitt (Belfast, West)

It will be clear from the exchanges which have taken place this morning that the Belfast shipyard is no ordinary shipyard. It has an exclusiveness all its own, by virtue of the fact that it is situated in Northern Ireland and because of the political situation. My right hon. Friend the Minister of State mentioned, during the course of his remarks this morning something that we have known for a long time in Northern Ireland, namely, that the Belfast shipyard has been kept going and kept in existence because of political considerations. That has to be admitted. We in Northern Ireland have known that for quite a long time.

The right hon. Member for Down, South (Mr. Powell) has, in the past, taken offence at the fact that sometimes it would appear that Northern Ireland accounts are made up separately from other parts of the economy of the United Kingdom and, therefore, the spotlight of public opinion can be focused on the financial assistance and subsidy which is given. However, I do not believe that he will object to the fact that the Belfast shipyard is being treated as a separate entity. It bears very little relationship to other shipyards in other parts of the United Kingdom. Had it not been for the political situation in Northern Ireland, I am convinced—and my right hon. Friend has confirmed my impression—that the Belfast shipyard would have closed. The right hon. Member for Down, South questioned my right hon. Friend the Secretary of State, asking "Why stress the fact that it is the Northern Irish people who are concerned with the Belfast shipyard when Cornwall is just as concerned because it is a United Kingdom matter rather than a Northern Ireland matter?"

Mr. Powell

There was evidently a misunderstanding. The right hon. Gentleman said that the shipyard would be for the ownership of the people of Northern Ireland. I am not denying that it is of greater concern to the people of Northern Ireland than it is to the people of the rest of the United Kingdom. However, I invited the right hon. Gentleman to correct his statement that the ownership was in any way peculiar to or vested in the people of Northern Ireland. It is a separate point.

Mr. Fitt

I understand that it is the right hon. Gentleman's intention at all times to forge the links—which exist—between Northern Ireland and the rest of the United Kingdom so that it will not be shown up as being the nigger in the woodpile or the black sheep of the family. That is, and always has been, the right hon. Gentleman's intention. He stresses that it is a United Kingdom project rather than a Northern Ireland project. This highlights the fact that although the British Government are subsidising the Belfast shipyard and have kept it in existence for many years, a Celt from Cornwall, a Scotsman from Scotland or a Welshman from Wales would not get a job in the Belfast shipyard because of the Safeguarding of Employment Act (Northern Ireland) 1947, which is on the statute book in Northern Ireland. The position is that Northern Ireland will take whatever financial assistance it can but it will prevent Englishmen, Scotsmen or Welshmen, indeed, any other United Kingdom citizen, from getting a job in that very same industrial establishment.

Mr. McCusker

If there were no one in Northern Ireland to fill a particular position or who did not have the qualifications to fill a position, it was quite in order to recruit someone from any part of the United Kingdom.

Mr. Fitt

Those are not the reasons why the Safeguarding of Employment Act (Northern Ireland) 1947 was put on the statute book in the Stormont Parliament. It was meant to prevent people coming from Southern Ireland, the Republic, to take jobs in Northern Ireland. It is putting a sugar coating on the pill to say that it applies to Englishmen, Scotsmen and Welshmen. We all know the political reasons which would prevent a person from the United Kingdom from getting a job in the Belfast shipyard.

Representatives of Belfast, of whatever political persuasion, are all very concerned to see that the shipyard proves to be efficient in the future and that it maintains or even increases its present labour force. Much depends on the employment position in the shipyard. The spin-off to all the ancillary industries is very important in the Northern Ireland economy.

However, we have not arrived at the position I should like to see. This was brought out today by my hon. Friend the Member for St. Pancras, North (Mr. Stallard). I want to see effective and urgent steps taken to bring about a balanced labour force in the shipyard. For many years the vast majority of jobs in the shipyard—9,000 as opposed to 1.000, or 9,500 as opposed to 500—have been given to supporters of one political per suasion. This cannot be good for industrial relations, for efficiency or for the overall morale of people employed in the industry. I believe that my right hon. Friend the Minister has already had representations made to him on that aspect.

There are people in the rural areas outside Belfast, where there is very high unemployment, who quite naturally feel that the Belfast shipyard has been given too much priority. They feel that at all times it is given all sorts of financial assistance because of the political situation, but to the detriment of trying to build up commerce and industry in the more remote areas of Northern Ireland. That feeling is not limited exclusively to the minority community. There are areas of high unemployment within the majority community, and they also look askance at the preferential treatment given to the shipyard.

The hon. Member for Epping Forest (Mr. Biggs-Davison) seemed to be objecting to the fact that we were running thin on the ground when we were talking about nationalisation. We are even thinner now, as I see no Tories who will express their concern about it. However, there is one on the Opposition benches. I am not certain into which category I should put my Northern Ireland colleagues—Tories or semi-Tories. But more interest should have been shown in the matter.

Only this week I have spoken to many of my hon. Friends—and, indeed, to some Opposition Members—who are deeply concerned at the closure of Norton-Villiers-Triumph, which is a British concern in England. Thousands of people will become unemployed and the motor cycle industry will die because it will never be possible to breathe back life into the industry as the world markets will have gone and others, particularly the Japanese, will have taken up those markets. We have seen the killing off of an industry.

Naturally my hon. Friends who represent the constituencies concerned, and trade unionists, would feel very concerned at what appears to be preferential treatment for the Belfast shipyard. The sums that have been mentioned today would go a long way towards saving NVT and perhaps settling its whole financial problem.

My right hon. Friend said that he was hoping to bring about a balanced labour force in the shipyard. I am concerned about this matter, especially representing a constituency such as mine. Expressing a Socialist viewpoint, I have always been opposed to the fact that there appear to be strictures on the religious qualifications of people seeking jobs in the Belfast shipyard. My right hon. Friend says that an apprentice training scheme is being started which in future will mean that representatives of the minority Catholic community would have the skills required to take up employment in the yard. That is all to the good, and I accept that. But there are many semi-skilled jobs in the yard for which no great skills are required, and many labouring jobs, in which people of other political or religious persuasions could be employed. That certainly has not happened.

I can agree with the right hon. Member for Down, South when he says that there is a feeling that, whatever may come, the Belfast shipyard will be kept going. One of my hon. Friends quite recently met people employed in that yard and talked to them about the financial implications involved. The response he got was one that we have heard for many years in Northern Ireland: "It is all talk about closing down the Belfast shipyard. The British Government would be afraid to do it because of the political repercussions, and 10,000 unemployed people with a particular political allegiance could not be thrown on the streets because of the chaos which would ensue, particularly in Belfast."

That is an impression which exists in that shipyard. I do not believe that the skilled and semi-skilled work force there have been responsible for the gross inefficiency which has come to light over recent years. I believe that it was a question of gross inefficiency at management level, such as accepting fixed-price contracts, completely against the trend. It was the management that was to blame rather than the work force.

It is said that if the yard were to close down we could find work for the skilled engineers and men employed there in other parts of the United Kingdom. But that is not realistic because in Northern Ireland there is no great attachment to the doctrine of mobility of labour. People do not like travelling very far to their work in Northern Ireland. It is such a small place. People do not like being asked to travel more than two or three miles to work.

Therefore, it would be much more difficult to try to find employment for the 10,000 people employed in the Belfast shipyard in industries in the United Kingdom, especially when we are in the middle of an economic recession in Britain. If we cannot find jobs in the United Kingdom for those who will be made redundant because of the closure of NVT, it is highly unlikely that Northern Ireland people, unemployed because of the closure of the shipyard, would be able to find jobs.

I support the order, I have always supported keeping open the yard. However, I have the objection that there appears to be a bias in favour of people giving allegiance to one political persuasion before they get jobs in that yard. I hope that that will end very soon. Now that the Government are in complete financial control, I hope that they will be able to use their authority to ensure that other people who have the skills and are able to do the job will get jobs in the yard on their merits.

In that connection the Government should again make matters clear. I can see the headlines in tomorrow's newspapers in Northern Ireland: "Enoch Powell demands closure of the shipyard." That is the way in which it will be taken in Northern Ireland. I do not think that that is what the right hon. Gentleman was advocating. He was pointing out the gross inefficiency and saying that there must come a day when, if the yard cannot be made more efficient, it will have to close. I agree that he is no supporter of lame duck industries in Northern Ireland. He has been quite honest in his political life in making that point clear.

I support the order as it stands, but I do so with the reservation that before I could give it my wholehearted support I should have to be convinced that the overall direction was being changed to encourage people to apply for jobs in the yard because they need the jobs and not because of their religious or political beliefs.

2.19 p.m.

Mr. Robert J. Bradford (Belfast, South)

It has been said that sooner or later everyone must sit down at the banquet of consequences. This is true not only of individuals but also of industrial establishments. To this banquet of consequences we can invite the previous administration, the yard management and the work force of Harland and Wolff. But the purpose of reflecting upon past decisions is not only to apportion blame but to learn from mistakes and to engender the hope in Northern Ireland that Harland and Wolff can and must become viable. It has been said in a previous debate on Harland and Wolff that one cannot envisage Northern Ireland without the contribution of this industry, strong and viable, taking its place in the total economy of the Province.

Looking at the record of the previous Government—my right hon. Friend the Member for Down, South (Mr. Powell) alluded to this—we see one or two disturbing facts. First, there is the salary and terms of employment of the previous managing director and, second, there is the whole question of possible bonuses which may have led to unrealistic delivery dates being quoted, which in turn led to expensive penalty clauses.

In 1973, I am led to understand, the then Minister for Commerce was informed by shop floor representatives from the yard that there was tremendous overloading of the work force and of middle management, that there were two men for every job in Harland and Wolff and that, therefore, advance planning and, if possible, immediate diversification were necessary. But the then Minister said that that was nonsense, and that everyone involved and employed in the yard was needed.

That statement was based on the fact that there was to be future planning and that the planning department was working overtime—but no new plans for diversification or new structures were forthcoming. Indeed, one man in middle management, Mr. McCallum, stated the need for drastic reduction in middle management. He was sacked because he had spoken the truth at an inopportune time.

My right hon. Friend the Member for Belfast, East (Mr. Craig), who unfortunately cannot be here for reasons of health, alluded to the cancellation of contracts involving Island Fruit Contractors, who are a subsidiary of Maritime Fruit Carriers. He asked for clarification and for much more information about the cancellation of fixed price contracts. After some research, some disturbing facts have come to our attention. The share price of Maritime Fruit Carriers, which not so long ago stood at$29, is now 7½cents. The company's assets are$66 million and its debts$281 million. Orders for new ships were placed with Swan Hunter and with Harland and Wolff, but the company has recently had to charter eight tankers to the Soviet Union. The company has also asked the Government and other shipping concerns to take over responsibility for nine ships which it had placed on order. It is thought that there may be political reasons why the true financial state of the company is not made more public.

Harland and Wolff entered into an agreement for the cancellation of contracts which cost it a considerable amount. My right hon. Friend the Member for Belfast, East asked for clarification, but to my knowledge—I spoke to him on the telephone not long ago—this information has not yet been given.

The work force are aware that Harland and Wolff has a poor record and low productivity. I say this having contacted a number of groups in the yard who are most concerned about their past record over the last decade. These men have been saying that most contracts are a year late, that Harland and Wolff takes three times as long to produce a vessel as a foreign yard and that there is a lack of flexibility. Other yards in the world committed to producing tankers will be competing now for specialised tonnage and their task will be much more difficult.

The company is only too well aware of the great problems and the poor record, but it is not prepared to leave it there. It is also aware of the need for advanced and imaginative planning and looks forward to the worker participation of which the Minister has spoken.

Some of these men, in their untrained and unskilled way, have tried to project their planning on to paper. They talk about the possibility of indoor construction methods, which would reduce the loss of time and labour and the cost of production. They have referred to the great strides in indoor construction in Sweden at the moment, where vessels of up to 73,000 tons can be built under cover. They have also considered the possibility of oil rig construction. A number of rigs are being constructed in Northern Europe. They are trying in the only ways open to them at present to consider diversification and future planning.

The morale of the work force has suffered over the past few years because of the uncertainty and the number of changes in management. There is now a sense of anticipation. They are delighted that the gentleman who is to asume responsibility at Harland and Wolff has come up through the ranks. He knows the situation at Harland and Wolff. The workers are prepared to trust him. That trust will contribute a great deal to a a new atmosphere. Whether we share the reservations expressed by my right hon. Friend the Member for Down, South is not the issue. At least the relationships at Harland and Wolff will be improved, with a consequent improvement in morale.

The workers are aware that there is not a bottomless well of Government resources. They realise that as a result of the tremendous economic plight obtaining in the rest of the kingdom, there is no longer any possibility of saying "If the productivity rate does not match that which is expected of us, so what?"

We are debating the issue of Harland and Wolff against the backcloth of reality. That reality is shared by Members of Parliament and the work force at Harland and Wolff. If, after sharing a feast of facts at this banquet of consequences, the management of Harland and Wolff can give clearsighted and determined leardership, and if the workers accept that productivity is the key, Belfast will find itself again with the world's greatest shipyard.

2.32 p.m.

Mr. Michael McNair-Wilson (Newbury)

It may seem incongruous that a Member of Parliament representing a landlocked constituency should wish to involve himself in the affairs of one great shipyard. I suspect that I am the only Member of Parliament who has worked at Queen's Island. I worked for Short Bros. and Harland in 1955 and 1956. In those days the people at Short Bros. and Harland felt themselves to be the poor relations. We looked up at the gantries and saw the great ships on the slipways at Harland and Wolff. I remember someone saying to me after I came to Belfast that Belfast was Harland and Wolff. We could not imagine one without the other.

Having worked for the poor relation, Short Bros. and Harland, I was surprised to notice in the annual report for Harland and Wolff for 1974 that£164,000 profit had been returned by the poor relation to Harland and Wolff, which has now become a sick giant.

The right hon. Member for Down, South (Mr. Powell) said that a post mortem should take place on what happened to bring Harland and Wolff to the pass whereby we are proposing that it should be nationalised. I thought, from the tenor of what the right hon. Gentleman said, that he felt this was not the moment for such a post mortem. Perhaps he is right. When I think of those halcyon days of 1955 and 1956, when Harland and Wolff was profitable, rich and effective. I am obliged to ask a number of questions about what happened.

The Government have provided us with an excellent statement. We also have a number of the company's annual reports to read. Having read those documents, we are left with an equal number of unanswered and answered questions.

The Minister of State repeated what he said on 8th May, which was as follows: For the yard to be kept open and given a chance to survive financial help must be provided now. The company will need funds by the end of May. If the order is not made tonight the yard will immediately close."—[Official Report, 8th May 1975; Vol. 891, c. 1759.] The right hon. Gentleman was right. In that speech he also said that the Government were proposing to give the company a loan of up to£40 million which imposed on both the Government and the company a duty to ensure that the money was used in a manner best calculated to restore the company, if at all possible, to commercial viability. He was right to use the qualification "if at all possible".

There must be a doubt in our minds, when this order is passed, whether we are pouring good money after bad, whether the yard can once again be the king of Belfast Lough or whether by 1979, or perhaps sooner, it will be faced with a different fate which has been clearly spelt out.

I take comfort not from the admirable words of the Minister of State but from the fact that his words were almost exactly those used by Mr. Robin Bailie, the Minister of Commerce in the Northern Ireland Government, in 1971. On that occasion, after the Northern Ireland Government had given£7 million worth of assistance to the company, he said: Once this financial support has been given there will be no question of either the United Kingdom Government or the Northern Ireland Government accepting responsibility for making good any deficiency in the company's resources, should it get into financial difficulties in the future. The right hon. Member for Down, South has good cause to cast doubts on the words of the Minister of State. There was a precedent. I am sure that the Minister of State will remind himself of Mr. Bailie's words. Perhaps he will wonder how he is able to say almost exactly the same words four years later. He may wonder why we should believe that what he says is the last word.

It is incredible that this great shipyard, which has been extensively re-equipped, which has the largest capacity building dock in the world, with a matchless team of 10,000 workers, with an order book of£200 million and with 13 ships under construction, is now bankrupt. How was it possible that in 1974 it turned in a loss of£16 million, which admittedly was only half that of 1973? But if those figures are taken together, they total£50 million. We must ask how this has come about. Is it the fault of the fixed-price contracts? It would be too simple if we found just one reason for the catastrophe. But if it is the fault of fixed-price contracts, why was nothing said about them in any of the annual reports?

Why did not Lord Rochdale, the chairman of the company, give a warning of the position of the company? Who fixed the contracts, who takes the responsibility —Mr. Hoppe, Mr. Watt or Lord Rochdale? Who decided on the policy? When will we be told his name? Will he be made accountable to the House of Commons? Did the bankruptcy occur as a result of the Ulster Workers' Council strike? Was the steel strike one of the causes of the problem? Not nearly enough information is supplied. Was it bad management? Was it overmanning? Lord Rochdale has been remarkably uncommunicative since he took over in 1971. When Mr. Bailie made the statement about the£7 million in 1971, who told him that£7 million would be enough to get Harland and Wolff out of its difficulties and into a profitable state?

Who was it in the management of Harland and Wolff who was quoted in The Times as stating that by 1972 Harland and Wolff would be on the verge of profitability, by 1973 it would be profitable and by 1974 it would be very profitable? If the management of Harland and Wolff believed that, no wonder we are in the mess we are in now, because it was living in a fool's paradise.

Just when did it all go wrong, and why was nothing ever told to the shareholders and the Northern Ireland Government who, after Mr. Baillie's statement, had taken up a 47.6 per cent. holding in the company? Somewhere accountability did not seem to get into the heads of management, and we have a right to that accountability in the House of Commons.

When Lord Rochdale became chairman, the company also took on the very expensive Mr. Iver Hoppe to be its managing director. Mr. Hoppe said that what was needed was a master plan to examine the yard and devise the right solutions. He called his master plan the P200. It was to be the blueprint for the future. Both Lord Rochdale and Mr. Hoppe seem to have been so enamoured of what they thought they could do that they persuaded my right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw) when he was Secretary of State for Ireland to put£23 million of Government money into the yard, admittedly with a further£12 million from Harland and Wolff, to extend the facilities, modernise and even, it was said, find 4,000 further jobs for people in the Belfast area. At the time that money was provided,£14 million was provided to cover losses. That was the situation as recently as 1972.

Mr. Hoppe was a little more cautious than the management in his statements about Harland and Wolff being very profitable by 1974. He thought that profitability could come in four or five years, which if one leads on from 1972 takes us to 1976–77. Yet, as we know from what the Minister of State told us in one of the more recent debates, every order to be completed by 1978 will turn in a loss for the company. It is a remarkable state of affairs.

I am reminded of the RB211 situation with Lockheed and the bankruptcy of Rolls-Royce. I might even wonder whether the bankruptcy of Rolls-Royce did not enable the Government to renegotiate the contract with Lockheed. By the same token, if Harland and Wolff had been bankrupted perhaps the contracts for the ships now being built might have been renegotiated.

Will the Minister of State say what, if any, measures have been taken to renegotiate some of the fixed-price contracts and whether there is any possibility of calling in aid the huge rise in costs caused by inflation which must have made a profound difference to each of those contracts and which could not have been envisaged when they were let?

Mr. Hoppe was fairly cautious in thinking that four or five years would elapse before profitability was achieved but in his chairman's statement which he signed on 19th April 1973 Lord Rochdale said: Assuming the expected co-operation from all our employees, the total contribution from the ships under construction should re-establish the profitability of the company. Certainly the growing potential of the company gives your Board encouragement and confidence for the future. That was what Lord Rochdale said in April 1973. A month later the company was back asking the Government for assistance to continue its business. So I wonder whether the Chairman of Harland and Wolff really knew what he was writing about. If he did not, one wonders what sort of lead he could have been giving to the company since he was appointed in 1971. Perhaps I am being unfair to Lord Rochdale. Perhaps if he were here he could explain these matters and make me wish to withdraw those words. But as I read his chairman's statement I am left with a growing sense of unease about his knowledge of what was going on in his company.

So we move on from 1973 through 1974 to this debate, and all the time the company is having to receive Government assistance. In July 1974 the Minister of State said that he envisaged full public ownership if the company was to be kept afloat. He was clearly right. At the same time he talked of a comprehensive review of the company's business affairs and the company's management, structure and resources, an examination of its order book, strenuous action to reduce the overheads and the implementation of realistic manpower policies.

Am I right in assuming that those are the terms of reference which Mr. Downey was given for his committee's work which, I understand, has culminated in a report? Although we have had a statement from the Government, if Mr. Downey's report is in existence the House of Commons would have benefited considerably from a sight of it. Do the Government at any stage intend to publish a White Paper on Harland and Wolff, giving details of what has happened and what they plan for the future? If they do, will it include Mr. Downey's report?

Mr. Orme

Mr. Downey and his small project team were put into Harland and Wolff to assess the financial situation for the Government. As the hon. Gentleman said, we were dealing with forward orders, fixed price orders not to be completed for three years. I have published in the explanatory memorandum as much as possible of what Mr. Downey presented to the Government. The Government have to be careful not to jeopardise the commercial viability of the company, as has been recognised by the right hon. Member for Down, South (Mr. Powell) on previous occasions when he has raised the matter.

I should not like the hon. Gentleman to feel that we are sitting on a fat report from Mr. Downey which contains all the the answers. It has not worked that way. As recommendations have been made, the Government, if they have agreed with them, have examined and implemented them and I have presented as much of the report as possible to the House.

Mr. McNair-Wilson

I am grateful to the Minister for that statement.

As I have said, I should have liked to have seen some parts of the report, but at least the Government's memorandum was very valuable. When I was looking through it, what struck me most forcefully was that in 1967 the company was considering the problems of the yard in terms of what is described as an untidy management—I assume that that does not describe their clothing so much as their effectiveness, lack of budgetary control and a marketing side that needed strength.

In 1971 the company again went in for a period of self-analysis and considered that it should be looking at the reorganisation of management and the reorganisation of financial control. So there is the common factor in both cases of budgetary control, and that should have caused considerable concern. As the right hon. Member for Down, South said, what is the point of making products at a loss? It merely wastes the labour of the human beings that goes into the products and without budgetary control, one will never know whether the company is profitable. In four years the company did not succeed in achieving, even to its own satisfaction, the sort of budgetary control that might conceivably have staved off the situation it is now in.

One is obliged to say that if those individual items had to be looked at in 1967 and 1971, and if under the heading of "Budgetary control" no suggestion was made that fixed price contracts deserved a second look, there was something wrong with the management of Harland and Wolff, and something wrong with the financial control, something which may well be the root cause of what has gone wrong.

I very much hope that the industrial democracy proposals to which the Minister referred, which are so well set out in the little booklet, may give the firm the new board and new management control that it so clearly needs. I hope that Mr. Punt will be a great success. The fact that he starts with so much popular support in the yard must augur well for his future. However, he is taking over at a time when the shipbuilding industry of Great Britain faces a very difficult future, perhaps more uncertain than at any time in its history. Therefore, it is not unreasonable to suppose that Harland and Wolff will have the same sort of difficulties.

The Minister rightly said that Harland and Wolff is a shipbuilding organisation. That is its raison d'etre. That is its tradition. I remember the chairman of Short Bros, and Harland telling me once, when someone talked about that company diversifying," You cannot diversify as simply as that. You have your skills in one direction. If you want to diversify into some other skill, the only way is to buy that skill, in terms of buying a company." Yet I was impressed by the suggestion of the hon. Member for Belfast, South (Mr. Bradford) that the company should be looking at North Sea oil exploitation and considering whether it could emulate some of the work being done in Norway. At Stavanger last year I saw huge oil rigs being assembled. One suspects that they have something in common with marine technology. I should like to think that at least some such consideration has gone through the minds of those who manage Harland and Wolff, in terms of North Sea and perhaps Celtic Sea oil.

I wonder whether the ships being built are the right ones. I am no expert on shipping—I wish I were—but I recently talked to a shipping engineer who said that our yards should be looking again at the sort of ships that they are turning out, maximising their skills to turn out specialist ships, which apparently still have a very good market.

How will the yard compete against the rest of the British shipbuilding industry if it is to be nationalised, as the Government have said? Will Harland and Wolff be forced into a simple competitive situation? Will it receive the same treatment as the rest of the nationalised yards? Will there be some form of sharing, so that it at least does not lose out because the other yards are able to gain Government support, and therefore perhaps a subsidy which Harland and Wolff does not possess? I wonder why Harland and Wolff could not have been kept going with further loans until the shipbuilding nationalisation proposals became law.

If I were working at Harland and Wolff, I should want to feel that I was part of the British shipbuilding industry overall. I should feel that my future was safer if that were so. Therefore, I shall be grateful if the Minister can say why he has decided that the yard should he cast adrift from the rest of the industry.

I feel that in conclusion I can do no better than to use once again some words of the ever-optimistic Lord Rochdale, the present Chairman of Harland and Wolff. Little more than nine months ago, when the company was rocketing towards bankruptcy, he said virtually nothing in his chairman's statement about the company's problems. But he managed to add in that statement, on 17th October 1974: Whilst we are by no means yet out of the wood, there are some signs for encouragement. At any rate, I believe we are on the move again and in the right direction. I do not know what Lord Rochdale had in mind, but I have a feeling that the Minister of State and perhaps the order are in the right direction.

2.56 p.m.

Mr. McCusker (Armagh)

I listened to the Minister of State with a sinking feeling as he rolled out the damning statistics. I kept saying to myself "Before he finishes, he will say those things which I believe he naturally feels, he will give some encouragement and strike a note of optimism, as he has in the several statements he has made about the matter in the House during the past year." But he did not do it. He did not speak in anything like the way in which he has spoken before.

The note struck by the right hon. Gentleman has been taken up by my hon. Friends. I do not want to appear critical, but my right hon. Friend the Member for Down, South (Mr. Powell) was almost writing the firm's obituary for 1978 or 1979 when he suggested that his colleagues should be prepared now to back the Government in the action which they are threatening might be necessary then. This should be a rebirth. We are not digging graves. I hope that we are heralding a new dawn for Harland and Wolff. That may sound like a clichébut I do not want it to sound like that.

The Minister of State should be a male midwife this afternoon. We are not, I hope, here to pronounce the obituary on Harland and Wolff. The Minister said that success would depend essentially on the proper motivation of the staff. How can we establish the proper motivation of the staff to face five critical years if we start by almost saying today that we do not believe that the firm has much chance anyway? I can understand how one can read the memorandum and look at experience and perhaps come to that conclusion. Perhaps to some extent I am falling into the same trap, but we should not be prepared to take up that attitude here.

I am not prepared to say that I shall do anything in the years ahead which could ultimately result in 10,000 of my countrymen being thrown on to the dole, but I emphasise that I do not expect an open cheque. There are things that can be done during the period ahead.

We should not lose sight of the fact that we are discussing the order in the context of 38,000 unemployed in Northern Ireland, of whom 10,000 have become unemployed during the past 12 months. We are discussing the largest employer in the Province, whose labour force would represent 25 per cent. of that total of unemployed. If they were thrown on the dole tomorrow, the unemployment statistics would run into double figures.

It is no solution for me to be told that my countrymen could find jobs in other parts of the United Kingdom. I do not want to see Northern Ireland a depopulated wilderness. I am not interested in the fact that an engineer from Belfast may find a job in Glasgow, Liverpool, Birmingham or somewhere else. I wish to see pursued regional and economic policies which will maintain employment in Northern Ireland.

Mr. Bradford

Does my hon. Friend accept that the new found enthusiasm and honesty of the people on the shop floor in Harland and Wolff give us as politicians and, to some extent, leaders the cue and represent a perfect example in this important phase which is a watershed in the history of Harland and Wolff?

Mr. McCusker

One can take encouragement from that. My hon. Friend has stated the position much more accurately than the hon. Member for Belfast, West (Mr. Fitt), who tended to imply that there was an irresponsible attitude among the Harland and Wolff work force that they should be bailed out in any circumstances. I did not find such an attitude, and nor did my colleagues, at the meeting with the Confederation of Shipbuilding and Engineering Unions. It is unfortunate that the hon. Gentleman was not present at it. If he had been, he would have obtained a more accurate picture.

I do not use the unemployment statistics solely as an argument for maintaining employment in Harland and Wolff. The shipyard represents the focus and base of engineering technology in Northern Ireland, and the consequence of its closure would not be a few thousand unemployed; it would have severe repercussions throughout the economic and industrial structure of our Province.

In view of the history of the Government's financial intervention in Harland and Wolff in the past 10 years, it was inevitable that this day would come. No further public funds should be invested in the shipyard without its being taken into public ownership. However, the Minister of State knows from discussions with me that I object to the way in which he proposes it. I am not interested in parliamentary control, and the argument for the type of structure which he has set up does not appeal to me.

Harland and Wolff should have been integrated into the United Kingdom shipbuilding nationalisation programme. It is no answer to say, "We hope that there will be acceptable devolved Government in Northern Ireland and that they will accept responsibility for the shipbuilding functions". Does that mean that a Scottish Assembly will accept responsibility for the shipbuilding activities, mining activities and steelmaking activities in Scotland? Would the Minister of State support that? If so, he would not be speaking with the same voice as the Under-Secretary of State for Industry, who a few weeks ago I heard successfully countering the arguments of the Scottish nationalists when they were putting this case. When the hon. Gentleman was speaking, I said to myself, "I wish that I could have him on these benches when the order comes forward". I recommend to the Minister of State that he should read the comments of his colleague.

As I have said, Harland and Wolff should come within the United Kingdom's shipbuilding nationalisation programme. I welcome the suggestion in the Minister's speech that the door is not shut to that possibility. Perhaps he will expand on that matter. If the Secretary of State for Industry believes that Bristol Channel Ship Repairers are essential to a United Kingdom shipbuilding nationalisation programme, surely Harland and Wolff must have a much stronger case.

Harland and Wolff occupies a unique position not only in the economy of Northern Ireland but in the development and history of Belfast and Northern Ireland in general. There is a mythology surrounding it. Stories abound in Northern Ireland about the behaviour of its work force. There was perhaps a basis for this mythology in the halcyon days of 20 or 30 years ago. It would be easy to fall into the trap of blaming the problems of Harland and Wolff on the work force. It would be akin to a ship running on a reef and sinking and blaming the stokers for the disaster. The responsibility for such a position in the company must lie with the management. I tend to have reservations when a memorandum details further proposals before earlier recommendations have been put into effect.

In retrospect, I know that it is easy to be critical of the management and of people who made those recommendations. It would be too easy to blame the last régime which was in charge, but they must surely bear a heavy responsibility for the impasse which has been reached in the last year. It is difficult to be optimistic and to look forward to a rosy future for shipbuilding in Northern Ireland, and indeed in the United Kingdom. I hope that the Minister in his reply to this debate will make clear his own hopes for Harland and Wolff in the future. We must have leadership if these hopes are to be realised. I very much welcome the document which has been issued on the subject of industrial democracy. I welcome the realistic, sound proposals which it contains. They were not proposed in any hard-line fashion. They contained a range of matters which the work force may have an opportunity to discuss. I hope that we shall be given an assurance that the workers will be brought into these matters very quickly. Can the Minister give more details about the work of the new managing director and about when he is expected to get things moving?

I welcome the appointment of Mr. Punt. That is a rather unusual name for somebody who will be building super tankers, but I hope at any rate that he will be successful. I certainly wish him every success and I am sure that I speak for everybody in Northern Ireland.

3.8 p.m.

Mr. John Dunlop (Mid-Ulster)

I should like to make a brief contribution to the debate, more on a personal and perhaps emotional basis than others who have so far taken part.

I have said before in the House that my father worked on Queen's Island. I am a trade unionist and the son of a trade unionist. My father was an ardent trade unionist and an artisan tradesman. As a small boy I remember being taken by the hand on a Sunday afternoon down to Harland and Wolff to see the White Star liner "Olympic" which had been brought in for reconditioning just after the First World War. My father had the doubtful honour of French-polishing the captain's cabin. I remember seeing his work.

I also remember that many times during the civil war in the early 1920s I tried to comfort my mother who waited fearful that my father would not reach home after work. During that period in those terrible days many workers had to cross Fraser Street bridge and then walk through Bryson Street and Seaford Street. In those same streets men are still being shot down in cold blood by the same enemies who are the scourge of our country.

I was very disappointed at the remarks of the hon. Member for Belfast, West (Mr. Fitt) who got on to his usual political tack. I am sorry that the hon. Gentleman is not now present in the Chamber. There are times when he reminds me of an old 78 record with its needle stuck in the middle. He does not seem to be able to get any further in respect of political alignment in Northern Ireland. I submit that it has nothing at all to do with the position of Harland and Wolff today.

I believe that if there were a wholesale infusion of workers—skilled, semi-skilled or unskilled—from the Falls Road, Ballymurphy or Ardoyne into the shipyard it would not make any difference to its viability today.

In my opinion, the reason for there being a sort of imbalance of workers in the Queen's Island is that Harland and Wolff is in East Belfast. People have been born and reared in the shadow of the gantries of Harland and Wolff, and reared to shipbuilding. They have gone into it because their fathers were in it, in just the same way as the miners of the Welsh valleys go into mining because their fathers were in it. No one can conceive of thousands of miners being transhipped from the Welsh valleys to the motor car or engineering industry of the Midlands because of any political alignment. We cannot imagine such a situation. Therefore, I am sorry that the hon. Member for Belfast, West introduced this element into his speech. I should have thought that he would be more factual and say something more encouraging about the prospects of this great shipyard in the future. I join with my colleagues in saying that I should be deeply hurt and that it would be a very great sadness to me if that great shipyard were to fail and cease to be part and parcel of the economic structure of Northern Ireland.

I am sure that the Minister of State will forgive me if I return to something I mentioned some time ago. That is the solitary oil rig which was built at Harland and Wolff and which is now operating very successfully in the North Sea. The question has been asked: why did they stop at one when there is a demand for this type of engineering product and when there might be much more demand in the future? Can the Minister tell us whether this one oil rig was built at a loss and whether the building of the oil rig contributed to some of the losses incurred by Harland and Wolff? It would be interesting to know whether that is the case.

Mr. Punt, one of the new managing directors, has been mentioned. I had the privilege of travelling home to Northern Ireland with him on a British Airways flight. The reason we got into conversation was that—

Rev. Ian Paisley

You were late.

Mr. Dunlop

Yes, we were late. We got into conversation and we were trying between us to find out why, for reasons of security British Airways could not give us a cup of tea or coffee and some biscuits and yet we could see a trolley full of booze being pushed up the gangway of the aircraft and offered for sale.

Rev. Ian Paisley

Good temperance stuff.

Mr. Dunlop

We could not understand the strange fact, that for security reasons, apparently, we could not get tea or coffee, but it did not seem to matter that we could get booze. Mr. Punt told me that he was the deputy managing director of Harland and Wolff. He did not, naturally talk too deeply about the prospects of the yard, or about his own prospects, but we had a conversation about the shipyard and about my association with it.

In conclusion, I join my colleagues in saying that we do not want to see the demise of Harland and Wolff. We believe that, if it were integrated into the full programme of nationalisation of the shipbuilding industry of Great Britain and Northern Ireland, there would be better days ahead for Harland and Wolff.

3.14 p.m.

Rev. Ian Paisley (Antrim, North)

The presence of so many Members from Northern Ireland in the House on a Friday underlines the fact that we are discussing a very important subject which has ramifications for the whole of the Province.

My hon. Friend the Member for Mid-Ulster (Mr. Dunlop) was fortunate to get on a flight to Ulster. Some of us will not be able to return to that part of the United Kingdom this evening and must delay our return until tomorrow, simply because the British Airways service has become so abominable between Belfast and London. We are part of the United Kingdom, but the amazing fact now is that parts of the United Kingdom are less accessible than Timbuctoo, South Africa or even Uganda.

We in Northern Ireland have a deep interest in this subject. All hon. Members may not know that Northern Ireland's industry has in the past had its fulcrum in this shipyard. It is all very well to attempt to discuss the shipyard as a separte economic unit, but those of us from the Province know that there are small businesses in County Fermanagh and in my constituency of North Antrim that depend for their livelihood and for the continuity of employment of their small work force on contracts from the Belfast shipyard.

We are not talking about an isolated shipyard. We are talking about an undertaking which is integrated into the whole of our economy and which is essential to our future well-being. No hon. Member on these benches can say to the Minister, even though the Minister might take some comfort from things which have been said today, that at a future date we might be prepared to vote for the complete collapse of the Belfast shipyard.

I am dedicated to keeping the Belfast shipyard in operation. I believe that there is hope and a future for the shipyard. I believe that the steps being taken today will bring us to a realisation of this.

I do not attempt to blink at the hard facts. I have lived all my working life in East Belfast where the shipyard is situated. For many years I have worked among the shipyard workers as a minister of religion. I know how these families think. I know their outlook. It must be realised that today we are not dealing with an intangible concept. We are dealing with men's lives, their livelihood, their future, their homes, their morale.

I wish to identify myself with the very relevant remarks made by my hon. Friend the Member for Armagh (Mr. McCusker). We in Northern Ireland believe that this intervention will help to secure the future of the Belfast shipyard.

The Minister of State has brought a sympathetic touch to this question and it would be churlish of my hon. Friends and I not to pay him a warm tribute. Many of us have talked to him about this matter and he has an exact grasp of the situation. He will be the first to recognise that there will be a reduction in the workforce.

Like my hon. Friends I have no desire that the people of Belfast should have to go to another part of the United Kingdom to obtain employment. I want them to be employed in the Province in which they were born, the Province in which they have their roots and, as far as possible, in the place where they have been brought up.

But I sound a note of warning. It may be that the people of Northern Ireland will have to learn that in order to get employment they will have to travel greater distances than they have ever done before. We have a strange situation in my own constituency where a large heavy engineering firm is short of skilled workers. Even in this day and age, when there is mass unemployment in Northern Ireland, there are small pockets where skilled workers are needed. The people of Northern Ireland will have to learn that they may have to travel considerable distances, which they have never contemplated before, in order to be suitably employed.

I am alarmed to find that the Belfast shipyard is outside the scope of the United Kingdom dimension. I first raised this matter many months ago—I think in a previous Parliament. I am sorry that the Government have not seen fit to treat the Belfast shipyard in the overall context of the shipbuilding industry and its nationalisation in the remainder of the United Kingdom. It is strange, when such a suggestion is made about the Welsh and Scottish shipyards and when Wales and Scotland are to have devolved Assemblies, that the Northern Ireland shipyard appears to be isolated.

That brings me to what is perhaps the most vitally important feature of this proposal, which entails£60 million being put into the Belfast shipyard. Other areas of Ulster's economy will suffer, including areas which at the moment are profitable but which perhaps will not remain profitable if it is not possible for them to have help. We are all aware of the general economic situation affecting the United Kingdom. Northern Ireland being on the periphery of the United Kingdom, will suffer far more severely. In this situation, a person's most valuable possession is a job. We must see that there are jobs and that those who have jobs already have them preserved. The right hon. Gentleman will remember emphasising the importance of this recently in the constituency of my hon. Friend the Member for Londonderry (Mr. Ross). He said that there must be a drive to get new jobs and, even more important, to keep the jobs that we have already.

Today, we have a measure which we hope will be of help in that direction. While there is a bright hope for the viability of the yard, I feel that we must face the realities of the situation.

The shipyard has had a sorry past, and the appointment of Mr. Hoppe only highlighted that past. The Minister of State is not responsible for what took place in the past, of course, but those who were responsible did not accept their accountability to the taxpayers who supplied the money to help the shipyard.

Mention has been made of the shareholders. They should realise that they are very fortunate in getting the deal that they have been offered. The shipyard could have been closed and then reopened without the shareholders getting a penny. I do not want to hear any shipyard shareholder grousing about what has taken place. The shareholders are getting a good deal. They are fortunate to get anything at all. I can tell hon. Members on the Opposition Front Bench that, because of what they were to receive, the shareholders present at the meeting were near to getting on their knees to thank Almighty God that the shipyard was to be taken over.

Mr. Biggs-Davison

I was not really dealing with the merits, if any, of their claims. I was merely dealing with people's rights in relation to this House.

Rev. Ian Paisley

The hon. Member knows that I would not try to misconstrue what he has said. This matter arose in Northern Ireland when I was a Member of the old Stormont. I want to make it clear to the general public that if the Government had bought the shares at their then market value, they would not have had to pay so much for obtaining a controlling interest in the shipyard. This matter was raised in another House.

I appreciate that no Government have the right to confiscate a person's private property, whether it be shares or other property. However, it should be spelt out today that the shareholders of Harland and Wolff have done very well out of what has happened. Indeed, perhaps in this uneconomic climate they have done too well. The sun has perhaps shone upon them too much.

The unfortunate aspect about the shipyard is that it has put all its eggs in one basket. It has been modernised to build super-tankers. Perhaps the market for super-tankers is finished. Therefore, we have a modernised shipyard geared to produce an unviable product. This is very serious and must be faced.

The healthy heart of a shipyard is the engineering shop. That is a viable unit. From that can flow renewed strength to perhaps the periphery of the shipyard, thus strengthening the whole. I must apologise to the Minister because I did not hear his opening remarks. However, if he failed to inject a note of confidence and optimism when he opened the debate, I am sure he will inject that note when he replies. He has all the facts and still believes—I am sure he would not present this order today if he did not—that something can be done.

I regret that any political or sectarian matters should have been brought into the debate by the hon. Member for Belfast, West (Mr. Fitt). The history of Northern Ireland requires study. Since coming to Northern Ireland, the Minister has become aware of the circumstances and the background.

I could take the Minister to industries in certain areas where no Protestants are employed, but nobody shouts that it is discrimination. Those areas have always had traditional employment for the Roman Catholic section of the population. I can call to mind sections of the building trade where no Protestants are employed. I think particularly of tilers and roofers. Those industries are completely controlled by members of the Roman Catholic population. It is not because as specialists in roofing and tiling they want to keep the Protestants out but because in the long history of Northern Ireland these jobs have always been limited to certain families, and people have been brought up to develop these talents.

I do not believe that there is discrimination in the shipyard. The Ombudsman has never been asked to deal with this matter. Not one case has been referred to him concerning this matter.

We welcome the fact that we have been allowed longer than usual to discuss this order. Usually we grouse that we have only one and a half hours. We welcome the fact that the Government have lent us a kindly ear in this matter. We appreciate what they are doing. We are facing the facts as representatives of Northern Ireland. I trust that what has been done today will close the sorry chronicle of past years and open a new book, the chapters of which will tell of the sturdy independence—I do not use the world "independence" in a political sense—of the hard-working, self-reliant Ulster people who will again put the Belfast shipyard on the map and ensure that it gives employment to many of the people of East Belfast as well as in other areas of Northern Ireland.

3.30 p.m.

Mr. John Carson (Belfast, North)

I should like to add my congratulations to the right hon. Gentleman the Minister of State on what he is doing for the Belfast shipyard. I represent Belfast, North and many of my constituents are employed by the shipyard. On behalf of the workers in North Belfast I should like to tell the Minister how much we appreciate the time, the energy and the concern which he has given to the plight of the Belfast shipyard.

Some people welcome the kiss of life for the shipyard. However, when an industry or project is nationalised we often hear that it has received the kiss of death. We have often read in the Press in the past of a nationalised industry which has shown a loss of so many million pounds over the past 12 months. Many people in my constituency and throughout Northern Ireland hold the view that once a shipyard is nationalised it has received the kiss of death.

The majority of people who work at the Belfast shipyard are highly skilled and semi-skilled but all, including labourers, are loyal to the shipyard. There is a minority who maintain that it is their money that has been paid back, that it is public money and that they are entitled to abuse their position within the shipyard and accept all that is given.

We welcome the£60 million injection to the shipyard. However, we cannot keep dipping into the well. The well will not continue for ever. I should like to put on record a warning to the workers of the shipyard. Not only does the management need a shaking up, but I am sure the Minister will agree that during the past seven years there have been too many changes in management. It has been headlined that a certain gentleman will take control of the shipyard and wonderful changes are promised. We may even see a magic wand being waved over the shipyard. We have been promised that the shipyard will be viable yet, alas, every report strikes a note of sadness and despair into the very heart of Belfast, to see, once again, the plight of the shipyard—the money being lost, the tremendous threat to employment in the area and even to the business community.

The roots of the shipyard cover a large area and are not just confined to the immediate area of the shipyard. By providing employment for a large section of the Belfast work force, the shipyard provides a living for people on the shop floor and people in areas to the east and north of Belfast. Shop doors are often kept open because of the money that comes from the Belfast shipyard, because that money provides employment for shop assistants and many other resources for the family.

We welcome this injection into the Belfast shipyard. We implore the workers of the shipyards—not only the management, which needs shaking up—to tighten their belts and realise that they are, perhaps, getting their last chance. They must pull together and make the Belfast shipyard, which was once the greatest industry in Northern Ireland, viable, make it pay and make it a place to be proud of and in which everyone will have a pride, from the workers up to the chairman.

3.35 p.m.

Mr. Orme

This debate has been helpful to the Government. I say that with confidence, but nevertheless with the warning that has just been given by the hon. Member for Belfast, North (Mr. Carson). I hope that the order will be helpful to Harland and Wolff in its new presence and new organisation. I shall come shortly to one or two of the central issues which have been raised, not least that of confidence in the future of the shipyard itself. However, I turn first to the central point which has been reflected in many of the speeches.

The hon. Member for Epping Forest (Mr. Biggs-Davison) raised the question of unemployment and whether it would be possible to re-employ people if anything happened to the shipyard or to part of it. The hon. Member for Antrim, North (Rev. Ian Paisley) underlined the point I want to make. As Minister responsible for industrial and economic affairs in the Province, I am concerned about rising unemployment, which is affecting the Province as a whole. Some areas in Northern Ireland are now for the first time in recent years witnessing a rise in unemployment. I have said previously that it does not matter whether one is unemployed in Coleraine or unemployed in Strabane because the effects are still just as bad for one's family, wherever the unemployment occurs.

I want to use the employment aspect in a broader context. As we know, the unemployment figures are now well over 8 per cent. in Northern Ireland. Unfortunately they are rising. As much as one wants to get new investment and new industry—I spend a great deal of time trying to attract these—to lose jobs and employment which are long established would be a serious blow indeed. The textile, clothing and shoe industries and farming have all suffered serious blows. I am pleased to say that the engineering industry is holding its own. I hope that it will improve beyond just doing that.

If industry were to take out of the engineering industry a complex of industry the size and importance of Harland and Wolff, it would have the effect of not merely the loss of 10,000 jobs, because about 30,000 jobs throughout the Province are reliant, to varying degrees, upon the shipyard. We have only to think of the effect that this would have on Belfast as an engineering centre which is known throughout the world to realise the implications.

I have said on several occasions to employers in Northern Ireland who looked upon such a development as something that might be in their interest that they should be very careful before they wish for that sort of development, because if the industrial base, which is far too narrow already, had a severe hammer blow of losing a shipyard the size of Harland and Wolff, it would affect the prospect for engineering and manufacturing in the whole of Northern Ireland. I know that the hon. Member for Epping Forest attaches importance to employment. He asked what effect there would be and I have tried to explain.

I thank the hon. Gentleman for what he said about industrial democracy. The right hon. Gentleman for Down, South (Mr. Powell) welcomed the experiment. I agree with him that we cannot change the minds of men about public or private enterprise by passing an order, but the Government are trying to create the conditions in which the type of development we believe necessary for the shipyard can be undertaken.

The hon. Member for Newbury (Mr. McNair-Wilson) made an informative and detailed speech stemming from his understanding of that situation after having worked in the complex. If I do not answer all his points, I will see that he gets a reply in writing. I want to link his question about fixed-price orders with the situation of the shipbuilding industry as a whole.

The present order book of the company comprises 13 ships, a substantial numbers of which are on fixed prices. It would not be in the company's commercial interests to disclose further details. Every effort is being made to accelerate completion of the remaining fixed-price contracts to minimise the anticipated losses. The cancellation of the three bulk carriers was the simplest way of getting rid of some of the worst loss-makers in the industry.

One has to consider the shipbuilding industry world-wide when dealing with a complex situation such as that of Harland and Wolff. The trouble is that those who place the orders have been able to call the tune. They have fought for fixed prices. Harland and Wolff is not the only shipyard that has suffered.

The right hon. Member for Down. South mentioned a wider philosophical point—whether a Government can run a shipyard when they do not have the commercial expertise. I accept that no Minister or civil servant can run a yard from outside. We are trying to do what needs to be done by way of the order, industrial democracy and the appointment of the right people to make the decisions which will make the yard viable.

This is not just a philosophical point. The writ of Adam Smith does not run in any shipyard in the world. From Japan to Belfast, every shipyard is losing orders—including West Germany, Sweden, Africa, South America. So I do not underestimate the difficulties. That is why I say to the hon. Member for Armagh (Mr. McCusker) that it would have been wrong if I had not put the facts on the table today. They make sorry reading but all of them are true. In the Harland and Wolff context I need not invent the facts or make the situation appear worse. There is this difficulty. The position of Harland and Wolff, despite the plight of the other shipyards, is worse than that of most other shipyards. Productivity has increased and we hope that that will continue.

I welcome the confidence which has been expressed about the appointment of Mr. Punt. I hope that we do not expect miracles from him. He has a difficult task to perform. He cannot perform it without the co-operation of everyone at the shipyard. The Government must create the right conditions so that he can implement his plans for the shipyard. He was freely selected by public advertisement and has the good will of the work people. The trade unionists on the board of assessors did not seek to appoint a person who would be easy on the workers in the shipyard. They recognised that he would have many difficult decisions to take, and that he must gain the cooperation and the confidence of the work people to carry out those decisions. I know that he will receive that confidence. I look forward to future developments along those lines.

Mr. Bailey's words were quoted by the hon. Member for Newbury. I had not read those words previously. The fact that they happened to coincide is purely coincidental. I am sure that he will respect that point of view.

The hon. Member for Armagh spoke about confidence. I have given the unpleasant facts and have said that the Government cannot go on indefinitely underwriting this situation. Nevertheless the Government would not invest£60 million of new money, would not be going ahead with the appointments and would not be considering diversification and industrial democracy if they had no confidence in the industry. I would not be doing so if I did not believe that there was hope for the future. However, it would be equally wrong for me to paint a picture based on supposition or on my hope that the situation could be corrected. It would be wrong and dishonest of me to do that. I believe that there is hope, which we must work to fulfil. We must take into account the world trade situation, the question of tankers and bulk carriers and the fact that the yard might be able to build 10,000-ton steel barges. There is no easy answer or panacea.

Reference was made to oil rigs, of which there is a surplus. One company in Scotland is already experiencing difficulties. I shall not comment on that. The method of design is changing from steel to concrete. Those realities must be taken into account. The engine works is making engines for the shipyard and also exporting them to Japan. The survival of that shipyard will depend on the development of ships.

Money begins to lose its reality when we talk in terms of£60 million, but we have to bear in mind that the order book contains orders worth£270 million. In spite of these large sums of money, the difference between success and failure can be very narrow.

I welcome the support given by my hon. Friend the Member for Belfast, West (Mr. Fitt) for the continuation of the shipyard. The best way to resolve the problem which he raised, and the way in which I am trying to resolve it, is to make sure that opportunities for learning skills are given to the whole community. That is why I put such trust in the Government training centres and why I want a wider industrial base. That can be achieved through apprentice training and we must remember that these skills cannot be learned overnight.

I have talked over these issues with the shop stewards who know what it is like to work in the shipyards and who talk to the workpeople day in, day out. One sees things differently perhaps from a long way off—whether in Belfast, in a Government office or in the House. The shop stewards have assured me that the last thing they want to be plagued by is discrimination. There is a genuine desire throughout the shipyard to avoid discrimination. The Government have not lost sight of that problem and the constructive way to proceed is by convincing the people on the shop floor. I visited Dungannon recently where I saw a small co-operative with a mixed work force which was doing a remarkable job. I went there to congratulate the co-operative which had not only made a profit but was able to pay back a Government loan. A large part of the work it was doing was subcontracting work for the shipyard. Similar efforts are being made in many parts of the Province. This shows that the existence of the shipyard means work for many other establishments outside it.

I have dealt in some detail with employment and I have tried to deal with many of the broader aspects—

Mr. Biggs-Davison

If the hon. Gentleman is leaving industrial relations, may I ask whether any conclusion has been reached about the possible representation of the work force on the advisory board?

Mr. Orme

We have to proceed as quickly as possible but we cannot proceed faster than the rate at which the decisions can be implemented. Proposals brought forward by the workers are before the management. I try to see that the workers do not simply have to adopt what the Government say. We want the proposals to come from them. I understand that the discussions are going extremely well, and I hope to have some of those proposals before me in August.

We have heard a lot of criticism of management today and the Government's intention is to start reorganising management as quickly as possible. There must not be any slackness in the speed with which the trade unions and the company discuss these proposals, and I am glad that the hon. Member for Epping Forest raised that point. There is a sense of urgency, because of the need to complete the reorganisation as quickly as possible. That is one of the reasons why we so desperately want to put the order into effect as soon as possible.

The issue of the links between this publicly-owned industry and any future shipbuilding board was raised. We went over well-rehearsed arguments. It is rather odd that many hon. Members on the Opposition benches are members of a party which wants a strong, devolved form of government in Northern Iceland, covering a wide cross-section of the community. The matter is being discussed in the Convention. But suddenly, when the argument does not suit, it appears that such a form of Government is wanted in the United Kingdom context when it comes to the shipyard. There is an anomaly in that argument.

Rev. Ian Paisley

I do not want to enter into the political argument with the right hon. Gentleman today, but I am sure that he will realise that the form of devolved government for which the United Unionists are pressing is one within the United Kingdom. There are hon. Members from other parts of the United Kingdom who want a form of devolved government that will eventually lead to breaking up the United Kingdom. We want a form of devolved government which retains our place within the kingdom, and which could lead to the strengthening of the Kingdom. We believe that that is the road that a devolved government should take in the whole United Kingdom.

Mr. Orme

I accept the point. I did not try to imply that such a form of Government would be outside the United Kingdom. I accept that the whole argument is within the United Kingdom and that we are talking about devolved government, whether in Scotland, Wales or Northern Ireland, within the context of the United Kingdom.

But the Government felt that it was necessary to bring home the urgency of the situation. They have been forced by lack of legislative time to postpone the shipbuilding Bill until the next Session. It will go through early in that Session, but for Harland and Wolff we could not afford to wait. We must get on with the job. To have waited, no matter how long it took, would have been disastrous.

I do not want to give the impression that I am moving away from a firm decision that the Government have taken. I argued with the right hon. Member for Down, South that there is a direct relationship between our policy, the Department of Commerce and the devolved Government in Northern Ireland. If we are in the United Kingdom context, the Minister is still answerable in this House. This is the supreme Parliament. The Government have clearly stated that we shall answer questions and be more accountable to the House than are the current nationalised industries.

Mr. Michael McNair-Wilson

Will the Minister say absolutely clearly who will own Harland and Wolff after the order has come into effect? Will it belong to Her Majesty's Government in Westminster or to the Department of Commerce in Northern Ireland? The rest of the shipbuilding industry will belong to the Government, so if Harland and Wolff belonged to them I cannot see why the two could not have been put together.

Mr. Orme

The order makes it clear that it is vested in the Department of Commerce. But we are in a period of direct rule. I am the Minister—plainly there will be other Ministers—who is answerable to the House. If there were a form of devolved government in Northern Ireland, the relationship would have to be discussed with this Parliament. I hope that that makes the position clear.

I thank hon. Members for the tenor of their speeches and for the appreciation of the problem which they have shown. We are talking about the survival of a basic United Kingdom industry situated in Belfast which is known world-wide, which has a reputation for skill in the building of ships and which the Government want to see succeed. We hope that we have laid the basis for that. I am sure that the House will wish the venture every success.

Question put and agreed to.

Resolved. That the Shipbuilding Industry (No. 2) (Northern Ireland) Order 1975, a draft of which was laid before this House on 9th July, be approved.

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