SECRETARY OF STATE FOR INDUSTRY

HC Deb 12 December 1977 vol 941 cc53-115

4.25 p.m.

Mr. John Nott (St. Ives)

I beg to move, That the salary of the Secretary of State for Industry should be reduced by half Perhaps I should comment initially that we do not feel particularly strongly about the Secretary of State's salary, but, naturally, we wish to protect the Business of the House, since we would obviously have won an Adjournment motion. While still on my opening comments may I thank the hon. Member for Manchester, Ardwick (Mr. Kaufman) for so courteously circulating so many of my right hon. and hon. Friends to say that he would refer to us in the debate? I have here his letter to me which says: Mr. Kaufman has asked me to inform you that he will be making reference to you during his winding-up speech. It is a unique occasion for Labour Ministers to refer to the people who actually take part in the debate and I should like to congratulate him. The Leader of the House, as far as I am aware, has never actually referred to anything that has ever been said in a debate at all, so we look forward to hearing what he has to say about us.

Before considering the merits of the Polish deal for the United Kingdom economy and particularly for our shipbuilding, marine engineering and shipping industries, it is just not possible to pass over the disastrous picture facing shipbuilding throughout the world. The House is very conscious of the crisis that affects the steel industry, but a combination of factors makes the world shipbuilding situation even worse.

World capacity for shipbuilding is likely to be over 200 per cent. too great by 1980–81. Shipyards in nearly all the OECD countries are concentrated in areas of high unemployment and social stress. The LDCs—the less developed nations—are engaged in extending their capacity out of sheer economic nationalism and are being encouraged to do so by aid assistance of the kind that we understand the right hon. Lady the Minister of State for Overseas Development is now contemplating to gain orders from India. The Soviet Union and the COMECON countries are using their growing merchant fleets to undercut world freight rates further, and this is being done at the expense of our shipping industry, which employs at least 100,000 people.

Compounding all these problems for the shipbuilding industries of the world is, of course, the total lack of effective discipline, even within the OECD itself, to prevent more and more protectionist measures, and I think that the lack of discipline within the OECD is exemplified by the cynical avoidance of the rules in the case of the Eurobond issue which accompanies the Polish deal. It is on that subject that I wish to talk in the course of my remarks.

No doubt the Secretary of State, in so far as he goes beyond the unemployment problems of Govan and Swan Hunter, will wish to rest much of his case on the international situation. I shall not elaborate further on that, because we have started the debate rather late. All of us are conscious of some of the massive problems facing world shipbuilding, and I leave it to the Secretary of State to fill in the points that I have not mentioned.

Suffice it to say that Japan alone now has the capacity to produce all the world's shipping requirements, having multiplied its capacity 10 times in 10 years and having accompanied this massive expansion of its shipbuilding capacity as usual by a fairly protectionist policy for its own shipping industry. It is, amazingly enough, this Government who have been at the forefront of Community efforts to restrain the Japanese, to criticise the Japanese and to lambast the Japanese for their protectionist policies. It is this Government who only a week or two ago, were protesting to the French in a letter—I believe to the French Prime Minister—about the way in which the French were contemplating the extension of credit to the Soviet Union.

We have here hypocrisy on a grand scale. We have this Government lecturing others—particularly the Japanese and now the French—on the extension of the credit race in international dealings, something from which everybody loses, yet it is this same Government who, in this particular deal are extending the frontiers of shipbuilding credit and protection beyond that of any method so far used by any country.

As with so many developing tragedies, the solution to the problem is all too clear. The current spate of protectionist measures all over the world, the use of intervention funds, of soft credit, of extended credit and of unsecured credit, of subsidised steel—and our steel is being heavily subsidised on its way to the shipyards at present by the loss that British steel is making—and reorganisation grants are all being practised in every nation in varying degrees, but never has there been such a combination of protectionist measures used by any country as is being used by the Government in this case.

All these measures are merely prolonging the slump in world freight rates and so making the position worse. The Government, the trades unions and the chaps working in the shipyards know perfectly well that until world freight rates recover and until the supply from the world's yards is brought into line with the demand for ships, especially bulk carriers, prospects for employment will grow worse. The chance of a stable future for the shipyard workers and their far more numerous brothers in marine engineering and in the shipping industry will deteriorate at an accelerating pace if this situation continues.

The Secretary of State has been open and honest about this. He has said that redundancies are inevitable. The Government's Shipbuilding (Redundancy Payments) Bill is an acknowledgment that redundancies are inevitable in the shipyards. By the way, the Conservative Party fully support the Bill and it may be that we would be prepared to go further on the amounts that are included in the Bill.

With regard to the amount of money being put by the taxpayer into the Polish order, the forthcoming Shipbuilding (Redundancy Payments) Bill talks of a mere £8 million in redundancy payments for shipyard workers. As I shall show, the sum of money which actually goes into the yards as a result of this deal is infinitely greater than that.

Maybe the Prime Minister and his colleagues have bought one extra year of employment for Govan and, possibly, for Swan Hunter, if the problems there are sorted out, but they have done so at the expense of an even worse future for shipyard workers generally as a result and, as I hope to show, they will do substantial damage to the morale of the marine engineering industry and of the shipping industry in the process.

The situation was put into proper perspective in a speech the other day by Mr. Otto Norland, a director of Hambros, the bank which has helped the Government in the worst aspects of this deal. Mr. Norland said: If a ship which costs $25 million to build allowing for depreciation and no profit is sold for $15 million with 70 per cent. credit over seven years the direct subsidised loss of $10 million may not be an important factor in itself compared with alternative 'ad hoc' solutions for the shipyard in question. But what appears to be of little importance in each individual case quickly compounds into a series of consequences which have a major impact on ship values, shipbuilding prospects and finance. He concluded: With each new ship built on uncommercial terms and for which there is no genuine demand, the return to a reasonably balanced supply and demand position in shipping is deferred a little longer and the cost to governments of continuing to support the surplus shipyards is increased. That encapsulates the situation very well.

For the purpose of my remarks on the deal I should like to assume some facts. I am not privy—if that is the correct terminology—to all the details of this deal, but I should like to say this to the Secretary of State about the information. The Secretary of State initialled a letter of intent, or something of that kind—not the contract, but a letter of intent—on 21st November. That was publicised and I have here the Press announcement made by him at the time. Because of the problems at Swan Hunter and the difficulty of allocating some of the ships to yards, we know that the schedule attached to the contract—I hope that I have got the terminology correct—the schedule that will set out which ships go to which yards, has, of course, been held up. Therefore, so far as I am aware, the final contract has not yet been signed; or, if it has been signed, it was signed last weekend.

We have been waiting for the final contract, but all the fundamental principles have been clear for several weeks. As I said, the Secretary of State initialled the letter of intent three weeks ago. Therefore, all the facts have been known to the Government.

But instead of British Shipbuilders or the Department of Industry making a comprehensive statement about the deal, details have been dribbled out piecemeal through Questions and Press articles.

This morning the Secretary of State was entertaining industrial correspondents at the Department of Industry. For weeks, having known the main details of this transaction, the Government have had a rotten Press, brought derision on themselves and on this country, and what is worse, have been indirectly responsible for advertising all over the world the problems of Swan Hunter.

If I may make a personal comment, I quite understand the problems of Swan Hunter. They are serious industrial relations problems about parity between two groups of workers. This situation was known to the Government many months ago. But, by not actually making a comprehensive announcement, they ensured that all this rumour and innuendo about the deal would go on and on.

The truth of the matter is that thousands of banks throughout the world have the Hambros placing document, which is £36 million worth of the deal. This has been circulating around the world for weeks. If one goes to the City for lunch—hon. Gentlemen are often asked and they often go; indeed, many Labour hon. Members are frequently asked more often than members of the Conservative Party, for they need convincing—one finds that the amount of money that is going in from the intervention fund has certainly been talked about for weeks. Even the fixed charter terms between the joint company and the Polish shipping company are said for the bulk carriers to be about $133,000 a quarter.

So all the main facts of the deal have been dribbled out in bits and pieces and there are literally hundreds of people who know most of the facts of this deal. There is not, certainly, a Japanese, nor a Norwegian, a South Korean, a Brazilian nor a Filipino official concerned with shipbuilding in the world who is not able to piece together the main facts of this deal. Yet here in the House of Commons we are denied a simple, comprehensive statement on what the deal is all about because of "commercial reasons". But the Government say that they have already cleared this deal with the EEC Commission. So all the civil servants in the EEC know the facts. The bankers know the facts. Why cannot the House of Commons be told? It is the House of Commons that will have to find the money.

It is no use the Minister saying, "We cannot announce this until the contract is signed". The letter of intent has been signed and all this innuendo and rumour would have ended long ago if we in this House could have been told before today what the main bones of the deal were.

Let me say what facts I am going to take for the purpose of assessing the merits of the deal. I hope that I have got them more or less right. I should like to assume that the Japanese would have bid roughly 30 per cent. below the British yards for this deal, and that therefore the intervention fund has put in around £28 million to bring the price down to £115 million price to the joint company. That is roughly the order of things—a price of £115 million, probably about 30 per cent. below what the Japanese would have quoted. That is where the intervention fund came in and the intervention fund has put in about £28 million.

ECGD has advanced £80.5 million at 7½ per cent. over seven years, which is strictly in accordance with OECD rules. I believe that the prudential limits for the Poles under Section 2 have had to be hastily raised to meet the £80 million of the ECGD credit.

The Eurobond issue of $65 million appears to have funded the balance of the 100 per cent., and something extra, because there has been a partial refunding of early repayments of capital and interest. I understand the whole of the Hambros loan has been passed straight through to the joint British-Polish company which is buying the ships and so we are talking of a credit of just over 100 per cent. Perhaps the Secretary of State will confirm that.

In arriving at the full cost to the taxpayer it is necessary to take not just the £28 million in intervention money but the difference between the prevailing rate of interest at which the money is borrowed by ECGD and the rate at which the ECGD lent that money at its present discounted value. We must take the cost of the exchange cover, because the shipyards are taking a sterling risk and Hambros's loan was in dollars, so there is the cost of the exchange cover to be considered. We must take the differential interest also in terms of the dollar-sterling rate. If we take the present value of all these additional subsidies, the interest rate and the exchange cover, the figure amounts to roughly £10 million. I shall be delighted to show the right hon. Gentleman my figures.

Therefore, we are talking in my view of a taxpayers' subsidy for this deal of roughly £38 million—a figure of £28 million is involved in the intervention fund and the rest relates to the calculation of the present value of the interest differentials and so on. The effective subsidy is anyhow over £35 million, and then there is also the 100 per cent. credit. I add in nothing for the possible cost of meeting any penalties that might arise.

The most pernicious part of this deal is the Eurobond issue. It was a wholly private financing, raised in the market by British Shipbuilders, with British Shipbuilders then lending the money to the British-Polish company. Therefore, that did not conflict with the OECD rules.

Furthermore, it will be said that the funding of such a joint company is an option which the Government would have offered to British ship owners.

That argument is not only spurious but dishonest. What are the facts? It is known throughout the international markets that the credit and standing of the Poles is inadequate for them to raise 15-year money in their own name. Indeed, Guinness Mahon was asked to try to raise that money for the Poles and could not do so, so that the matter had to go back to the Government to find a way round this problem.

The Government devised a means of indirectly guaranteeing the Poles. What happened was that the Eurobond issue was placed round the world and involved a figure of $65 million. There was no formal guarantee given by the British Government, but it is certainly a British Government credit. It is that credit that has enabled British Shipbuilders to raise this money. There is no doubt that this loan was raised on the credit of the British Government, even though there was no formal guarantee. That British Government credit has been provided to enable the Poles to use their ships in competition with our own.

What will happen if the Polish ships default on their charter? That is a proper banking question, and it is of great importance to this House. The lenders have not lent against the proceeds of the charter, even though the charter may match the borrowing. The lenders have lent against the credit of British Shipbuilders. Presumably, British Shipbuilders has the first mortgage on the ships. We do not know whether it is a British or a Polish mortgage, but we know that a Polish mortgage would not be bankable in the international community.

However, we must presume that British Shipbuilders has the security on its loan to the shipping company which will own the ships and will have the first mortgage on them. But if there were to be a default, the British taxpayers would be left with the full financial liability of repaying the £36 million loan and would have on their hands bulk carriers which are almost worthless in the international shipping market.

What happens if the Poles default on their charter? First, the British taxpayers will have to find £28 million and will face an extra burden of £10 million. They will then have to meet a default payment of £36 million in respect of the British Shipbuilders' loan.

This is not just an academic question. At present there is an interesting case taking place involving the Czarnikow Sugar Company, a firm of London sugar brokers. It entered into a contract with Rolimpex, the Polish State purchasing agency, at a certain price, whereupon the price of sugar rose substantially. The Polish Government instructed Rolimpex not to deliver and claimed force majeure. So far the courts have upheld the claim, but the substance of the case is that when circumstances went against the Poles, the sugar contract became unattractive to Romlimpex. However, the Polish Government did not back up the Polish company but sheltered behind the force majeure ruling. Therefore, the British organisation finds itself in a situation of having no recourse to the Polish Government at all. The case now going to the House of Lords and will be fought on the force majeure point, but I wish to emphasise that in that case the Polish Government did not even support one of their own agencies.

Let me say to the Treasury—because we are always being told that it is the Chancellor of the Duchy of Lancaster who concots these awful financing deals—that I believe that this is all a little too clever. It is the knd of avoidance, if not evasion, of international rules and obligations that would bring down a massive heap of criticism upon private citizens who indulged in such practices. The Hambros loan of £36 million is a pure contrivance, engineered by the Government to evade the spirit of the OECD rules and it involves substantial risks for the British taxpayer which should be wholly unacceptable to this House.

It is possible that the Government would be prepared to match these terms for a British shipping company—although that is not the basis of my argument—through Section 10 of the Industry Act, the intervention fund, capital allowances and all the rest of it, and even by financing through a joint company. That is possible, but on this occasion we are doing something different. We are not assisting the British shipping industry. The Government through British Ship-builders, are entering an alliance with those who are opposed to NATO to embarrass our friends.

This is financing by the use of our credit—the reputation of the House of Commons is at stake—and the taxpayers' money. The credit is being given to a COMECON nation that is already a party to putting our seamen out of work by undercutting freight rates all over the world. We are acting in alliance with the Soviet merchant fleet, which is using its merchant ships all over the world to spread Communist subversion.

The Government are lending not to a British company but to a Polish company. British seamen will not be hired. The ships will not fly the British flag. Although the ships will be financed 100 per cent. by Britain with a large taxpayer subsidy, they will not be available to us in time of war as are all British merchant ships.

It must be said that the Chrysler financing—that is going wrong now—at least assisted our allies to compete against the British motor industry. All that the Polish financing is doing is assisting the Poles, who are undercutting the British shipping industry and freight rates throughout the world. We are assisting the Poles and making it easier for them to undercut.

Mr. Gordon A. T. Bagier (Sunderland, South)

Does the hon. Gentleman agree that Polish shipping yards are now building about 100,000 gross registered tons of shipping for British-based ship owners?

Mr. Nott

I know they are. If the Poles wish to offer attractive terms to British shipping companies, it is right for the companies to take them.

I am complaining that we are offering greater credit than has ever been offered before in the international market. I have done my best to ascertain whether there has ever been an offer in the world shipping market that has involved so much credit. It is true that the Norwegians have done some 100 per cent. financings, but they have done that only when part of the 100 per cent. has come from United Nations aid funds, which is within the OECD rules. The Japanese have advanced 70 per cent. credit, but never 100 per cent. credit.

I have consulted many international shipping companies and I have not been able to find one example of a Government offering 100 per cent. credit plus a subsidy, and the credit and subsidy are being given to a COMECON country, not a less developed country.

I turn to the Prime Minister's part in this affair. The Sun today carries the caption Varley is in the doghouse".

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

Perhaps the hon. Gentleman will turn the page.

Mr. Nott

The caption on page 2 states Varley is in the doghouse [Interruption.] The House seems to be more amused with page 3. That leads me to say that we all know that for the love of one Labour marginal seat the Prime Minister will ski down Mount Everest in the nude with a carnation in his mouth. I am sorry to say that that was provoked by page 3. I am sure that the Government Front Bench will understand.

It was the Prime Minister's foolish statement at the Labour Party Conference that undermined the position of our negotiators. The Prime Minister virtually committed the country to the order, and the Poles have taken us for one big long ride ever since. If "Varley" is in the doghouse, he is the wrong fellow. It is the Prime Minister who has lost most of the orders that we could have obtained by blurting out the news on the platform at the Labour Party Conference before its time.

If we are to fill our yards with uneconomic orders, at least let us do so with vessels that are equipped with British parts and engines. In fact, 10 of the marine engines are going to Poland. The catalogue of protest from the marine engineering industry is building up very quickly. I shall refer only to two or three examples before I conclude.

In its letter Stone Manganese Marine Ltd. states that the company is the principal propeller works in the world. It says that its Greenwich propeller foundry has closed and that its Birkenhead propeller works and the Dennystown Forge Co. Ltd. in Scotland are in jeopardy as a result of the Government having negotiated a deal with the Poles in which half of the engines will go to Poland, as well as the propellers and shafts.

I quote from the letter of the managing director of Norbrit-Pickering Ltd. The managing director writes to Mr. Casey: Our company has a factory in Coatbridge, Lanarkshire, which is entirely devoted to the manufacture of stud link chain cable and accessories. The letter continues: In some of the larger sizes of chain we are the only producer within the UK … and we are dependent on the British shipbuilding industry for a very high proportion of our total chain output. Consequently the contract terms of the Polish order, whereby the chain and anchors will be of Polish manufacture, could have very serious consequences in our group. Coatbridge is already an area of high unemployment, and with the removal of this slice of our market there will be considerable strain on preserving employment. The decks are going to the Norwegians. According to Lloyd's List, the Poles have specified that the decks should be built in Norway and not by British yards. The firm of W. L. Byers of Sunderland has been informed that all the anchors are to be made in Poland. I have 20 letters from British manufacturers in the marine engineering sector.

We protest that a large proportion of the subcontracting orders are going to Poland. If we are to take on these uneconomic orders for our yards for employment purposes, one imagines that it would be insisted that the marine engineering industry, which is a considerably larger employer than the shipyards, would get the orders.

We recognise that several social problems would arise on the Clyde and the Tyne if more redundancies arose at this stage, but the order buys only a little time. It does so by supporting two particular yards at the expense of shipyard workers in many other yards. It will merely contribute to lower freight rates than would otherwise obtain.

The Government are extending the credit race, and this will lead to an undermining of our shipping industry, which employs 100,000 people throughout the world. As the Secretaries of State for Industry and Trade know very well, the industry has already been threatened by COMECON competition. As for the suggestion that the bulk carriers will be used by the Poles only in the Baltic, let us remember that the Baltic is open to the British shipping industry and that if the carriers are used in the Baltic, that will mean, indirectly, less work for the British shipping industry.

In the end it all comes back to the fact that we must separate the social problems from the economic problems, as the German Government and the German trade unions are doing now, and as the Government propose. We have to retain a slimmed-down but viable shipbuilding capacity, not least for defence reasons. It is bound to be smaller and slimmer than it is now. It is no use Mr. Parker, the marketing director of British Shipbuilders, saying on "Panorama" that there are no plans to reduce capacity, that that is for others and that we must await the corporate plan of British Shipbuilders, which will not be available until April. That sort of statement will make the handling of these problems all the more difficult.

Mr. Eric S. Heffer (Liverpool, Walton)

The hon. Gentleman seems to be saying that the slimming down of the industry must take place immediately. I have heard nothing from him so far about what his party would do to overcome the immediate problems that exist in the industry. It is all very well having sympathy for the shipyard workers, but those from areas such as mine and the North-East will know that it is not sympathy that they want but jobs.

Mr. Nott

I believe that I am right in saying that the hon. Gentleman represents one of the major shipping ports in the world. A great concentration of his constituents are seamen who work in the shipping industry. Throughout his constituency there are many firms working in the marine engineering business. The shipbuilding industry, the shipping industry and the marine engineering industry are brothers and sisters. We cannot take action to help out one if there are damaging repercussions for the others.

Mr. Heffer

They are not complaining to me.

Mr. Nott

I must tell the hon. Gentleman that the unions in the shipping industry are complaining strongly about the threat from the COMECON countries. If he has not heard what the National Union of Seamen and the officers' union have said about the way in which COMECON countries are under-cutting freight rates, I am sorry. The hon. Gentleman has obviously missed out. But it has been said by those unions on several occasions.

Our shipping industry is contributing almost the same amount to our balance of payments as North Sea oil. It has weathered the slump in freight rates pretty well. Its ships are modem. This year 93 per cent. of our requirements for new ships are being built in British yards. But the industry's future is threatened—[Interruption.] I repeat, 93 per cent. of our requirements this year have gone to British yards. The fact of the matter is that the shipping industry is threatened by the very group of nations—the Soviet bloc—to which the Government now bring comfort with a subsidy of about £38 million, credit of over 100 per cent., underwriting of financial risks up to £36 million, and penalty liabilities of an unknown kind.

Where are these huge industrial subsidies going to end? Chrysler, British Leyland, British Steel, and now we are going into business of assisting Communist nations. All these subsidies will have to be paid for by our successful companies, by the shipping industry and by the marine engineering industry. Is this part of the Government's industrial strategy? If so, we do not understand it, nor, I hope, does the Secretary of State for Trade, who is always going on about the Japanese. I hope that, as part of his trade policy, he is not in favour of the British Government advancing 100 per cent. credit and giving subsidies of this kind. It is no use the right hon. Gentleman lecturing the Japanese if his own Government are to give these credit rates for shipbuilding.

Sir Harold Wilson (Huyton)

The hon. Gentleman referred to the fact that British shipping companies were now placing 93 per cent. of their orders with British yards. Is he aware that two years ago there seemed little probability that they would be placing even 50 per cent. or 60 per cent. of their orders with British yards? Will he give credit to my right hon. Friends for the pressure that they have put on and the inducements that they have given to get those ships into British yards?

Mr. Nott

Yes. I am delighted that the British shipping industry is building in British yards. But I also see no reason why, if overseas yards are offering attractive terms, the British shipping industry should not take advantage of them. I see nothing wrong in the fact that the British shipping industry was building ships elsewhere. In many cases British shipping companies would have built in British yards in the past if they had been offered the same penalty clauses as the Secretary of State is now offering to the Poles. British shipping companies have never been offered similar penalty clauses to those being offered by British Shipbuilders.

Mr. Robert Hughes (Aberdeen, North)

Will the hon. Gentleman give way?

Mr. Nott

No. I must conclude now.

Vickers, Vosper Thorneycroft, Yarrow and Swan Hunter are engaged on work for the Ministry of Defence. If the Prime Minister wanted to look after Govan and Swan Hunter until the next election—I can understand what he feels about this matter—would it not have been better to have spent the subsidy—between £28 million and £38 million—on building a few more fisheries protection vessels or a few more ships to defend our oil rigs? If it was necessary to spend this money to keep the Govan and Swan Hunter people employed—this is very much a short-term measure—would it not have been better to have spent the money on the Royal Navy? At least the Royal Navy is on our side.

Mr. Deputy Speaker (Sir Myer Galpern)

Before calling the Secretary of State for Industry, I remind the House that this debate must conclude at 7 o'clock. I should add that any references to page 3 of the Sun will be out of order.

5.4 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley)

We have just listened to a speech from the hon. Member for St. Ives (Mr. Nott) which was characteristically full of sour and unjust remarks. The hon. Gentleman spent 40 minutes addressing the House, but he did not tell us whether he supports the Polish deal and the work that it will provide. The truth of the matter is that the Opposition do not give a fig about the work in British shipyards and they do not give a fig for British shipyards either.

The hon. Gentleman's remarks caused no surprise to my right hon. and hon. Friends. It is nice to know that the British Navy is on our side. I only wish that we could say the same of the Opposition. We know that they are not on our side or on the side of those who work in British shipyards. That causes us no surprise. We all remember the hon. Gentleman's remarks on 1st December last year when he made some most disgusting and squalid personal attacks on members of the Organising Committee for British Shipbuilders. I think that probably the hon. Gentleman was ashamed of that speech and that it will probably come to pass that he will be ashamed of the remarks that he has made today, because we know how much good will he has for the shipbuilding industry.

As to the hon. Gentleman's attack on trade with Communist countries, I shall leave that to be dealt with by my hon. Friend the Minister of State in winding up. I do not know whether that accords with the remarks made by the right hon. Lady the Leader of the Opposition, who has spent a good deal of time during the past few months in various Communist countries.

Last week my right hon. Friend the Prime Minister said that if the Opposition chose to have a debate on this Polish deal, they could have all the figures that it was appropriate to produce. So they shall. But first we need to set the whole question of the Polish contract in its context.

When my hon. Friend the Minister of State announced the introduction of the intervention fund on 24th February, he warned that, without swift action by the Government, much of the merchant shipbuilding industry in the United Kingdom would close within two years. That danger arose because of a catastrophic slump in the shipbuilding market.

In 1973, new orders for ships throughout the world amounted to over 72 million gross tons, of which 54 million tons was for new tankers. Then came the Yom Kippur war and the oil crisis.

In 1975, cancellations exceeded new orders by 19 million tons. Orders placed in British shipyards with a capacity of over 1¼ million tons totalled only 73,000 tons. The shipbuilding market has not recovered from that disastrous slump, and will not do so for many years. New orders worldwide have now been running at only 13 million tons annually for the past three years.

Against this background it is not surprising that all the world's traditional shipbuilding countries have been fighting by every means possible to stave off collapse. Every major shipbuilding country in Western Europe has introduced subsidies or other aids to shipbuilding. That is the market in which our industry has to compete. My hon. Friend's statement on 24th February set out very clearly the types of action that we would take to help our industry in these market conditions.

Throughout the past 10 months that budget of £65 million has been kept to strictly. Commitments from the fund, including commitments for assistance for the Polish deal, amount to £50 million. The fund was submitted to the Commission of the EEC and received its formal approval. Every single use of the fund has had to be submitted to the Commission, and every single use of the fund has been approved by the Commission. That includes the Polish contract.

Our financial advisers—among them, Hambros Bank—with their skilled advice and services helped British Shipbuilders put together an ingenious financial package.

That is what private industry does. That is what our foreign competitors do. That is what our nationalised industries are constantly being urged to do. That is what selling abroad is all about. Without this approach we could never have won the Polish order, because we had to fight very hard to win the Polish order.

The hon. Member for St. Ives said that it was without parallel. In certain respects, it is not without parallel. I shall not go into this matter in detail, because I should have to reveal commercial confidences. The hon. Gentleman was not a Minister in the then Department of Trade and Industry. However, I suggest that he should advise some of his hon. Friends to look at some of the deals which were concluded when they were in office.

The financial package which has been devised accords with what private industry does. That is what our foreign competitors do and that is what our nationalised industries are constantly being urged to do. That is what selling abroad is all about. Without this approach we should never have won the Polish order. We had to fight very hard to get it.

The Opposition want to wreck this deal. That is clear from the remarks of the hon. Member for St. Ives and from the remarks that some hon. Members have been making in the last few days. They seem to think that the Polish order was dreamed up out of thin air. But there was always going to be a Polish order, for the simple reason that the Poles need the ships. The question was: where were the Polish ships to be built? Were the Poles going to buy them from Japan, Norway or elsewhere? That seems to be what the Opposition would have liked.

British Shipbuilders went out and sold aggressively. It fought to bring the orders to Britain. It is stupid to imagine that big export orders can be won in fiercely competitive market conditions without providing credit. The Export Credits Guarantee Department exists to enable our exporters to provide satisfactory credit. In order to bring home the largest shipbuilding order for years we had to provide credit arrangements which met the customer's needs and which were strictly within the requirements of the EEC and OECD. Contrary to what the hon. Member for St. Ives said, the arrangements into which we have entered do not violate OECD conditions. That is what we have achieved and it should bring tributes to British Shipbuilders and to the City banks. It should not become an issue of malevolent slander as it has from the Dispatch Box today.

We have to go and fight for orders. We shall do that because we want to secure a future for our shipbuilding industry. We are determined to do that. We have the third largest merchant shipping fleet and one of the largest navies in the world. We cannot let our shipbuilding industry be destroyed. We must not—in my judgment and, I hope, in the judgment of the majority of hon. Members—become the permanent captives of foreign suppliers.

There is another reason why we must protect our shipbuilding industry. About 90 per cent. of our industry is centred in areas with historically high rates of unemployment such as Tyneside, Clyde-side, Merseyside, Wearside and Northern Ireland. These are the places that we have been helping by means of the intervention fund and other measures.

Our major success has been to win orders from British owners. In 1975 only 10 per cent. of orders for United Kingdom registration was placed with British yards. In the first nine months of this year, almost three-quarters of the orders were for United Kingdom registration. That did not happen by accident. It was the result of a major campaign in which we won the co-operation of the General Council for British Shipping.

Before the Polish deal, 20 out of the 24 orders that were won with the assistance of the intervention fund were for British registration. The orders that we have gained so far, including the Polish deal, amount to 403,000 gross tons, representing a total of 21,000 man years of work.

In Clydeside, Tyneside, Teesside, Wear-side, Dundee and Aberdeen men are at work today who would be drawing the dole if it had not been for these orders. I suppose that that would have pleased the Opposition. If I had come here today and announced that 8,000 redundancies were taking place the hon. Member for St. Ives probably would have cheered. His comments will be noticed in the shipbuilding areas.

Not only are we building the ships but the engines and components. The hon. Member for St. Ives referred to the marine industry. A total of 88 per cent. of the work involved in the Polish deal is work for Britain. The Polish order means vital work for workers in the North-East and Greenock, and our hard-pressed steel industry will be providing about 50,000 tons of steel.

Mr. James Dempsey (Coatbridge and Airdrie)

Can my right hon. Friend comment on the reports that the firm of Norbrit-Pickering of Coatbridge is not to be considered for any of the chain making involved in the Polish contract? This firm has an enormous skill which has been built up over the years by the management and work force. I should be most grateful if the Secretary of State could say that this matter will be examined.

Mr. Varley

I shall ask British Shipbuilders to look into what my hon. Friend has said. It is not uncommon for ship owners to specify that certain requirements should be built in a particular country. That occurs when British owners place work overseas.

A total of 88 per cent. of the work on these ships will take place in Britain. There is no doubt about that. If we left it to the Opposition none of this work would come to Britain.

In 1975 Britain was fifth in the table of international shipbuilding output. This year, on the basis of orders won, we have shot up to second place. That is a measure of the success of our policy. In getting the orders we have committed £50 million of the £65 million in the fund. But even with these major successes, our yards are still hit hard by the crisis that affects the whole world industry.

The orders that we have taken this year, including the Polish order, are equivalent to less than two-thirds of our present level of output. What we have done is to ward off a disaster. We have not found a cure. We must go on discussing this with British Shipbuilders within the framework of its corporate plan.

Far too many hon. Members opposite are not interested in families, communities and job security. All they care about is looking for mud to throw and hoping that some of it will stick. That is the motivation behind their attack on this Polish deal.

The Polish order is by far tthe largest single call on the fund—which is not surprising because it is by far the largest single order. I have not previously thought it right to provide information about the size of grant from the shipbuilding intervention fund for the Polish deal.

As was explained to the House last February, assistance from the fund is tailored flexibly to the circumstances of each prospective ship order, to enable the shipbuilder to quote a competitive price. This price is a matter for commercial negotiation between shipbuilder and customer. The more the customer knows about the size of grant to other customers for previous orders the more his hand will be strengthened for his negotiation.

Publication of grants is thus liable to increase the cost to public funds of supporting the shipbuilding industry, and to reduce the amount of orders which can be secured from the fund. Equally, to publicise all the other financial arrangements would be likely to make the job of selling ships to other customers still harder.

Mr. Michael Grylls (Surrey, North-West)

Will the right hon. Gentleman give way?

Mr. Varley

The hon. Member for Surrey, North-West (Mr. Grylls) is the last person to whom I would give way.

Mr. Grylls

Give way.

Mr. Deputy Speaker

Order. If the Minister does not give way, he does not give way.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

On a point of order, Mr. Deputy Speaker. The Secretary of State has told my hon. Friend the Member for Surrey, North-West (Mr. Grylls) that he is the last person to whom he would give way. Is not that a personal attack on my hon. Friend, particularly since my hon. Friend the Member for St. Ives (Mr. Nott) gave way each time he was asked, with one exception? Should not the Secretary of State apologise to my hon. Friend.

Mr. Deputy Speaker

The question of giving way is entirely in the hands of the individual who is addressing the Chamber.

Mr. Varley

I shall not give way to the hon. Member for Surrey, North-West. On 19th May he sent a letter to the Prime Minister in which he made an attack upon me which he subsequently learned to be wrong. The hon. Member sent me a tatty, squalid little apology. I refuse to give way to him. I wish to get on with my speech since we have so little time.

My right hon. Friend the Prime Minister said last Thursday that all the figures that are appropriate to produce will be given. I shall therefore give the facts about the subsidy on this occasion. But I want to make clear that to do so more generally would be likely to damage the interests of both the industry and the taxpayer, and I strongly advise the House not to press me to do so for other deals.

I should also remind the House that nationalised industries are responsible for their own commercial actions. Sponsoring Ministers have always, and rightly, been unwilling to answer to the House for the commercial decisions and arrangements which the corporations make in the ordinary way of business. The House has always recognised that to have such management decisions always open to discussion in the House would be damaging to the efficiency of the industries.

The ships to be supplied to the Poles will be sold by British Shipbuilders to a company to be established in Poland which will be jointly owned by British Shipbuilders and the Polish Steamship Company—PZM. It was made clear in the joint communiqué last December that the necessary financial arrangements for the establishment and running of the joint enterprise would be made by the British side of the partnership. That was done more than a year ago.

The joint venture company will bare-boat charter the ships to the Polish Steamship Company for periods of 13 to 15 years. In order to secure the business, the Government have agreed to give a subsidy from the intervention fund of not more than £28 million. There have been allegations that much larger amounts of public funds will be spent to subsidise this order. That is simply not true. There is of course a guarantee of export credit by ECGD, but that is a normal part of any export transaction. The amount of the guarantee meets the normal EEC and OECD requirements—that is to say, it is not more than 70 per cent. of the export price. British Shipbuilders will provide finance to the joint venture company, but it will do this not with public funds, but with funds borrowed on the commercial market, and a loan of $65 million has been raised from a consortium of banks without Government guarantee.

The £28 million subsidy comes out of the £65 million budget that was announced for the intervention fund in February. After allowing for that commitment there still remains around £10 million uncommitted from the fund. The fund has been used frugally and with prudence to secure orders for 48 ships. The balance will be similarly used and other orders are in prospect.

Furthermore, I can assure the House that one British shipowner was offered the same percentage subsidy as for the Polish deal, rejected it and placed an order abroad instead.

The EEC Commission is fully satisfied that the arrangements for the deal meets its rules. The Accounting Officer of my Department is also satisfied.

It should be borne in mind that in due course the PAC, through the Comptroller and Auditor General, will have full access to all relevant papers.

The attacks on this deal by Conservative Members are typical of their double standards—

Mr. Nott

I am grateful to the Secretary of State for confirming the figures that I gave the House, but will he answer the question I put to him? What mortgage does British Shipbuilders have in return for its advancing of this $65 million to the joint British-Polish company? Does it have a British or a Polish first mortgage on the ships as security for the money which Hambros has lent to it and which it will lend to the joint company?

Mr. Varley

I do not have precise information on that, but if the information is available it will be provided by my hon. Friend the Minister of State in his winding-up speech. This is an important matter. The other factors about the repayment of the money from the charter have been fixed and do not depend on the charter or the amount of charter that will take place.

The attack on the deal by the Conservatives is typical of their double standards. Every Question Time they make an issue about the level of unemployment and they often have the brass neck on occasions to stage debates about unemployment. In some respects they are quite right because the level of unemployment is far too high. Yet every time the Government act to save the jobs of British workers, and in this case to preserve from collapse a vital and strategic industry for Britain, they attack us for it, and look for dirt to throw. The motion before the House is to reduce the Secretary of State's salary. The real target of the right hon. Lady the Leader of the Opposition and those who have signed the motion is not a Minister's salary, but the livelihood of every shipbuilding worker in England, Scotland and Northern Ireland. That is why the House will throw out the motion.

5.15 p.m.

Mr. David Hunt (Wirral)

Soon after I arrived in the House I heard a speech by the present Prime Minister promising to sustain a period of open government. It is a reflection on this deal that most of the information has been kept under wraps and has not yet been revealed even in this debate. Apparently, we must await the speech of the Minister of State when he winds up the debate to discover more information, but I hope that at some stage during that speech he will seek to respond to the very valid questions put forward by my hon. Friend the Member for St. Ives (Mr. Nott).

It is not just the terms of the Polish contract so far as they involve shipbuilding aspects that give rise to concern. What is to be the liability of the British taxpayer when the ships come to trade? They will be trading in direct competition with British ship owners. What will be the liability to the British taxpayer when those jointly owned ships seek to trade directly in competition with our shipowners?

There has been no denial from the Government in the debate that these ships will compete with British ships. The trade by British ships in carrying Polish coal to Southern Ireland is one such example. I understand from those who ply that trade that they are quite clear in their minds that these ships will be used in direct competition on that route. I give an example of one route, but I know of others. May we have some information from the Minister of State as to whether my suspicions are correct?

We have an assurance from British Shipbuilders that these ships will not be trading directly in competition with British ship owners. May we have that assurance repeated in this debate? Will the Minister of State ensure that no point will be taken on whether the competition is direct or indirect? We want to know whether these ships will be used in any competition with British ship owners.

Mr. Heffer

I am against the attitude expressed by the hon. Member. Whether or not the ships will compete with British owners, the hon. Member appears, like his hon. Friend the Member for St. Ives (Mr. Nott), to be against the decision of the Government. Is he aware, however, that his hon. Friend the Member for Wallasey (Mrs. Chalker), who is seated just behind him, actually demanded, after the difficulties at Swan Hunter, that some of the vessels should be build on Merseyside? The Conservatives had better make up their minds where they stand on these issues.

Mr. Hunt

I usually have a tremendous amount of respect for the hon. Member for Liverpool, Walton (Mr. Heffer), but he has interrupted me too early in my speech. I shall be dealing with the points he is making about the future of the British shipbuilding industry.

Much of our concern is to know the effect of the deal on British shipping. There are still unknown terms and unseen conditions which will almost certainly make life more difficult for British shipping at a time of serious world overcapacity and intense world competition. The Minister must respond to these points. What about the long-term future of British shipbuilding? This is surely one of the key questions in the debate.

I now seek to respond to the hon. Member for Walton. British shipbuilding employs 82,000 people. In this country we have some of the best and most efficient shipyards. Cammell Laird, for which many of my constituents work, which is within the constituency of the Secretary of State for Trade, the right hon. Member for Birkenhead (Mr. Dell), builds ships better than anywhere else in the world. We have a fine shipbuilding industry.

What we really should be discussing is the way in which we can maintain and improve our shipbuilding capacity. We ought to be discussing the way in which we can meet the demands of the 1980s and 1990s. Instead we have what appears to have been a short-term expedient at great cost to the taxpayer, perpetuating an uneconomic situation and no long term policy.

Mr. Robert Hughes

Will the hon. Gentleman give way?

Mr. Hunt

Perhaps I may finish answering the hon. Member for Walton.

When British Shipbuilders came into being, in July, one of its major priorities was said to be to work out a plan for a slimmed-down industry with a capacity more in line with the United Kingdom's likely share of a greatly reduced world market. Yet the announcements and comments that have been coming out of British Shipbuilders have not been in accordance with that announced objective. Mr. Michael Casey stated in The Times on 1st July: I would like to make it clear that we have no plans for redundancies in British Shipbuilders or for closures. Our policy is for an all-out drive for orders. I would try, in as constructive a manner as possible to plead that this is surely Cloud-cuckoo-land. The truth is that at a time of serious world over-capacity, world shipbuilding capacity is three times the demand for new ships. Therefore, perhaps one of the most important and urgent things that must come out of British Shipbuilders is a clear and definite long-term policy for British shipbuilding.

Mr. Robert Hughes

I appreciate entirely the hon. Gentleman's point that British Shipbuilders ought to be looking into the 1980s and 1990s at a plan for a viable and worthwhile industry. But if we allow the industry to collapse and disappear in the next two or three years, how can we have a long-term plan? That is a contradiction that the hon. Member will have to resolve.

Mr. Hunt

There is no contradiction, because the alternative to perpetuating uneconomic yards with this deal is not "collapse". There must surely be a medium-term policy that will seek to preserve the expertise that we have in our shipbuilding yards without causing a collapse in shipbuilding and at the same time without causing serious competition for British ship owners.

I believe that our objective must surely be to exploit and to increase our shipbuilding expertise in readiness for the demands of the 1980s and 1990s. My hon. Friend the Member for St. Ives, towards the end of his speech, started to make quite clear exactly where that longterm policy could lie.

Mr. E. Fernyhough (Jarrow)

Perhaps the hon. Member does not recall, as I recall, that 40 years ago British Shipbuilding Securities did exactly what he said should happen to the industry now. As a consequence, when the war broke out we had to scour the country to get the boilermakers, the fitters and all the rest of them who had been sacked, because they were no longer available to do the jobs the nation needed to be done. Does the hon. Member not realise that, as a maritime nation dependent upon our food imports and upon our exports of manufactured goods, and upon our Navy, sometimes it may be necessary to carry shipyards as we carry the fire brigade?

Mr. Hunt

What I am suggesting is a way in which we can preserve the expertise in our shipbuilding yards. I should like to expand on that point. If we were—I do not expect it from the present Government—to recognise the need to increase our naval and merchant strength, many of the problems in our shipbuilding industry would be met. We should also be preserving the very expertise to which the right hon. Member for Jarrow (Mr. Fernyhough) has referred, which we need to preserve if we are to keep our shipbuilding capacity for the 1980s and 1990s.

That shipbuilding capacity will not be needed for building iron hulks. It will be for building more sophisticated ships. That is quite clear. Therefore, to build that sort of expertise into our capacity for the future means of necessity that a constructive policy would be to increase our naval strength.

Mrs. Margaret Bain (Dunbartonshire, East)

Will the hon. Gentleman give way?

Mr. Hunt

I have given way far too many times already. I shall not give way again, because many hon. Members wish to catch youur eye, Mr. Speaker.

Not only should we be able to preserve our capacity, but we should be able to improve it if more orders were placed for British frigates, warships, submarines—both conventional and nuclear—fishery protection vessels and vessels to protect our North Sea oil rigs. I am sure that many hon. Members would far prefer, as I would, a bolstering and a preserving of our shipbuilding capacity in that way to giving to a rival nation part of the Soviet bloc which is seeking to erode our place as one of the world leaders in shipping, a very generous deal at great cost to the British taxpayer.

Building naval vessels, as many hon Members with naval yards in their constituencies will know, is a great discipline. What is needed in British shipyards is more expertise and less unskilled labour. The voluntary redundancy scheme will be a help but there must be in addition a positive direction in policy—

Mr. Heffer

That is an indication that the hon. Member knows absolutely nothing about the industry.

Mr. Hunt

We must, in addition, have a positive direction in policy. We need from the present Government a long-term policy for British shipbuilding instead of, as is happening at present, the short term expediency of the Polish contract and the buying of time with a totally uneconomic order, which will help the Poles considerably to compete with our own ship owners.

When the Minister responds to this debate, will he widen it beyond the terms of the Polish deal and refrain from personal jibes? The Secretary of State referred to my hon. Friend the Member for St. Ives making "sour remarks". I think that most of the Secretary of State's remarks were unacceptably personal. The Secretary of State gave us very little by way of constructive policy for British shipbuilding. What the 82,000 people in British shipyards want to know is what is the Government's long-term policy for shipbuilding. We have a right to expect an answer in this debate.

5.30 p.m.

Mr. Frederick Willey (Sunderland, North)

The Opposition are obviously trying to wreck this agreement. That is shown by the fact that we are having a debate today. The debate could well have been held after Christmas. It has been held today because there is the opportunity, as I see it, to wreck this contract.

On the contrary, I think that I am speaking for the shipbuilding industry generally when I say that we welcome this contract. We believe that there has been a justifiable expenditure of public money to buy time at a critically important point for the shipbuilding industry. Incidentally, no one can deny that in competing for work in the present heavily subsidised world market we are in a better position to negotiate with British Shipbuilders representing us than we would have been under private enterprise. There is no doubt about that.

I accept the allocation of the orders. But the Government should make it clear that it is on social and not economic grounds. I would have preferred the allocation to be done under Section 4 of the Act. In Sunderland—I do not want to prejudice the order—we regard the Indian order for six ships, complementary to the Polish order and we understand that over the next few days there will be the announcement of a British order. We can fit in both these orders.

I want to deal primarily with the difficulties currently arising from industrial relations. We in Sunderland have been involved through Austin & Pickersgill. On the Wear we have pay parity in each of the yards—we have no difficulty about that. Austin & Pickersgill did not seek an allocation of the Polish order. Indeed, it said that it did not want an allocation. I want to explain why.

First, the men said "The work is in dispute." That is a traditional ground for not taking an allocation of work. Secondly, they said that the terms were not acceptable. They said that they might be acceptable for Iron Curtain countries, but they were not acceptable here. For example, they said, if it be the fact, that there was provision for unlimited overtime, and they found that unattractive in an area with heavy unemployment. They pointed out that in any case Austin & Pickersgill has a magnificent record for delivering on time, and has consistently made a profit. They said that the responsibility for any conditions such as these lay with the management, which must bear it. That again seems to be a reasonable point of view.

It was because I anticipated these difficulties that I suggested that Polish orders for the North-East should have been given to a consortium. If that had been done, we might have resolved this sort of difficulty. Altogether, I am far from satisfied with the progress made by British Shipbuilders with industrial relations, so critical to the present situation.

In April, after a considerable time since we had suggested a feasibility study concerning Doxfords, we approached the Minister of State with constructive suggestions about Doxfords. As always, he met us sympathetically but said that it would be primarily a matter for British Shipbuilders. He added, by way of assurance, that he would use his good offices to bring about an early meeting between British Shipbuilders and management and workers' representatives. So far, we have had no response to that proposal.

On 21st June, at the request of the Wear Confederation, I asked the Chairman of British Shipbuilders to use his good offices to promote an inaugural meeting between management and men. As the Confederation expressed its objective it wanted to ensure that the management and unions should co-operate fully, and take advantage of the new opportunities afforded by nationalisation. I got no reply. I met the Chairman with other Northern Members to discuss shipbiulding generally. He apologised and next day I got his reply. He gave a general assurance that he would be "delighted to see anyone"—incidentally, we were not asking him to see anyone but to inaugurate a meeting—but added the important qualification that he would do so "whenever appropriate".

I took the matter up with him again. I said that I appreciated that there were discussions at national level, but I emphasised, as I have done many times, that it was no good in British shipbuilding asking for things to be agreed nationally. They have to be agreed at district level. I assured the Chairman that our sole purpose was to ensure that nationalisation got off "on the right foot, and to encourage a co-operative effort in the yards". He replied on 5th August, that he could arrange a meeting some time in September. Just before September, the Deputy Chairman intervened. He said that there were national discussions and they had to await results before, to use his own picturesque language continuing our exercise of meeting the workforce. I am still awaiting a reply.

So, in the case of Doxfords, we have been waiting nine months; in the case of the Wear yards we have been waiting six months. It is not surprising that, in the meantime, industrial relations have deteriorated. It is not surprising that the men now say that Section 5 of the Act, on which we spent a good deal of time, is being sabotaged. Many are even saying that one cannot expect a retired admiral with a couple of civil servants to run this industry. That is their colloquial way of expressing their dissatisfaction with the progress so far made.

But progress in industrial relations is essential to the industry for two reasons. First, it is still a relatively labour-intensive industry, dependent on good relations. Secondly, it is threatened by massive redundancies, and everyone knows that there have to be good relations between management and men if one is even to consider the question of redundancies. Industrial relations, which we spent so long discussing in Committee, have not been afforded the top priority that they should have been given, and we are suffering accordingly. It is a familiar position, certainly in the North-East.

I hope that British Shipbuilders will realise the situation. We have at any rate now a recognition that good relations have to be promoted from district upwards and not imposed from the centre downwards. This matter is very urgent. I think that all those concerned with the industry are upset by what has occurred in the last few weeks, and we want to see these matters sorted out. The only way to sort them out is by improving industrial relations and avoiding the belief that this newly-nationalised industry is not going to be as flexible and responsive as we all hoped it would be.

Several Hon. Members

rose—

Mr. Speaker

Order. May I appeal to the House? There are now 40 minutes left for Back-Bench contributions to the debate. I earnestly hope that we shall have brief speeches, because I want to call as many hon. Members as possible.

5.48 p.m.

Mr. Michael Grylls (Surrey, North-West)

After what you have said, Mr. Speaker, I shall pass over the rather bad-tempered and petulant remarks made by the Secretary of State for Industry when I tried to intervene in his speech. I want to concentrate on the more serious point that he concluded with—the question of unemployment.

Most of us on this side of the House will treat with scorn his remarks about unemployment, coming as they do from a member of a Government who have raised unemployment on the Tyne by 20,000 since February 1974 and on the Clyde by 25,000. Let not this Government rub our noses in the unemployment issue. They are the guilty ones. They have created unemployment.

On this Opposition Supply Day the Secretary of State has at last told us what the level of the subsidy is in the Polish order. He would have had to tell us any way. It would have had to appear in the Industry Act report. He could still have given us more detail than he has. In the last Industry Act report there was detail of the £5 million grant to Lithgows, so why could we not have detailed figures about this Polish order?

There has been widespread discussion about the rôle of the House of Commons and its control over expenditure. It is a depressing fact that the House of Commons has been treated with what I would call supreme contempt. As my hon. Friend the Member for St. Ives (Mr. Nott) said in his excellent speech. the shipping industry around the world seems to know more of the details than are known by ourselves, and so do the Press and the shipping industry.

The Prime Minister made some remarks about the subject at the Labour Party Conference. I think he misled the conference, although no doubt he did not intend to do so. He talked of a sale of 24 ships. He would have been more frank if he had spoken of the leasing of 22 ships, 11 of which would still belong to the British taxpayer.

Thanks to an Opposition Supply Day, at least we have the chance to put to the Government the questions which need answering, but it is the greatest impertinence for the Secretary of State to come to the House in a bad-tempered mood, thoroughly cross at having to come at all, to tell us what is going on—

Mr. Robert Hughes

rose—

Mr. Grylls

I will not give way as there is so little time available. Since all this has been going on there has been no statement to the House, although, as I have indicated, there have been remarks made about it at the Labour Party Conference. There was the agreed communiqué, signed and issued by the Secretary of State, about a new era of economic co-operation, which was said to be the successful conclusion of long and complex negotiations, but the Government have failed to communicate to the House of Commons the information that we need.

The communiqué ended by saying that work on these ships would begin immediately. We now know that that is certainly not true. It would have been more usual, following this very important agreement—if it is so important—for the Secretary of State to have the courtesy to come here and tell us what was going on.

We censure the Secretary of State very strongly this afternoon for his conduct. If he criticises any part that I have played in this matter, I can tell him that I have been endeavouring on behalf of the House of Commons to get some of the facts before us. If we have managed to get some facts today, I am glad about that. But there are so many questions left open and so little time in which to debate them that I believe the Trade and Industry Sub-Committee of the Expenditure Committee will have to get going very quickly in order to it looks as though the deal is not a deal with them.

After the probing that we have done, very good one. Indeed, when we look at the terms which have been extracted from the Government by the Polish Government, some might say that the British Government have been taken to the Polish cleaners. It is supreme folly to subsidise the merchant fleet of the Communist world so that it may compete against our own fleet. It may please the Tribune Group, but I doubt whether it pleases many others in this House of Commons or, perhaps even more important, those who work—

Mr. Heffer

Why will the hon. Member not grow up?

Mr. Grylls

If the hon. Member for Liverpool, Walton (Mr. Heffer) were to go round his constituency and ask the many people who work in the shipping industry and the many sailors what they think—

Mr. Heffer

I know them. The hon. Member does not.

Mr. Grylls

Let him ask them what they think about this sort of competition. These ships—which are being almost given to the Polish Government—will operate completely outside all the financial disciplines under which the British merchant marine has to operate. The Poles do not operate under a market economy. They do not have to make a profit at the end of the day This has to be recognised in considering a deal of this sort.

I like the way in which it has been called a deal. It started off as an order. Then someone rumbled that it was not an order, so the word "deal" was used. That is more honest. The best comparison that I can make is that it is rather like selling tanks to Rommel.

Mr. Bagier

Whose ships are being built in Poland?

Mr. Grylls

There are at present 14.8 million tonnes of bulk carriers laid up. If the Secretary of State, or the hon. Members who have intervened, would go to the Norwegian fjords, they would see that they are chock-a-block with bulk carriers that have been laid up by Western fleets. When it is said that British owners could have the same terms for the building of similar ships, it can be seen that is a totally phoney offer with such a surplus of bulk carriers throughout the world.

We accept, of course, that in relation to unemployment in the short term in British yards the deal is useful. My criticism is that the Government have totally failed to use the deal in order to establish a strategy for the running down of the British shipbuilding industry.

Mr. Robert Hughes

That is the point—the hon. Member wants it to be run down.

Mr. Grylls

Does the Minister agree with the figures of the EEC Commission showing that the capacity for shipbuilding in the EEC has to be reduced from 4.4 million deadweight tonnes to 2.4 million deadweight tonnes by 1980? Have the Government agreed—

Mr. Robert Hughes

rose—

Mr. Grylls

I hope that we shall get the answer from the Minister later on The West Germans have reduced their capacity in the shipyards over the past two years to the extent of 9,000 people. This has been achieved by giving generous redundancy terms and by retraining. These are sensible measures with which Conservatives agree. What have the British Government done?

The Secretary of State referred to the Official Report of 24th February 1977 and to the statement by the Minister of State about the need for swift action by the Government. It was right to say that there should be swift action, but what has been done about it? It has taken 10 months to produce a three-clause Bill. It was produced only a few weeks ago. That is evidently what the Government regard as swift action.

If swift action was needed, why was it not taken in February 1977? The Government have been sitting around for the past 10 months. The Bill will not become law, presumably, until the New Year at the earliest. The Government have totally failed to come to grips with the problem. They could have used this order—which obviously will go through—to help the industry in a more effective way.

The strange details of the joint venture company would have baffled Sherlock Holmes. It is a most extraordinary setup. No wonder the Prime Minister did not mention it in his speech at the Labour Party Conference! He kept that under wraps. If he pretends that he did not know about the joint venture company on 4th October, when he spoke, I can only say that that is odd, because the Secretary of State told me in a Written Answer that he had approved the setting up of that joint company two days earlier. Surely that was not just dreamed up overnight.

Why is this deal regarded as commercially confidential? I do not think that anyone in the shipping industry really believes that the details of the joint company need to remain confidential. I ask the Minister why there was not a straight sale to the Polish shipping company. Would not that have been less risky to the British taxpayer? Or is the truth of the matter that the Poles have no money and therefore we have had to have this leasing agreement? I hope that the Minister will tell us why this joint company was set up. Is it perhaps, as my hon. Friend the Member for St. Ives suggested, simply an arrangement to get round the rules of the Organisation for Economic Co-operation and Development?

The Secretary of State this afternoon still does not seem to know about the question of a mortgage. He has not taken the trouble to find out. I hope that the Minister of State will deal with this question. Will half the mortgage be guaranteed by the Polish Government? Presumably, it will. Will it be by Bank Handlowy, which has a representative in the City of London? Have the Poles enough money to guarantee the mortgage—if there is a mortgage?

What details are there of the charter-hire arrangement? Will payment be in zlotys, dollars, or pounds? Will there be an exchange risk?

I appreciate that the Minister cannot hope to answer all these questions in the short time available tonight, but I hope that I have shown that the House of Commons, through one of its Select Committees or in some other way, must somehow get to the bottom of this deal.

What will happen if the charter-hire arrangement does not hold up? What will happen if the income is not sufficient to pay for the capital which has been borrowed by this joint company? It appears from a report in the Financial Times that the Poles think it will not be. They think that the charter-hire income will be $126,000 a quarter whereas, according to the report, they will not be able to finance the deal for under $131,600 a quarter. Can we have the details of that, or is it too difficult for the Secretary of State to carry these figures around in his head? Perhaps the Minister can tell us.

What about the British sailors? Why do we not have some British sailors on these ships, particularly if the ships are half British-owned and will continue to be half British-owned? Why has not the hon. Member for Kingston upon Hull, East (Mr. Prescott), who is a leading light in the National Union of Seamen, come here to demand that British seamen should be on these ships? Is it because Polish seamen are paid half the rate and thus the Poles will be able to compete with our own companies?

Because of the shortage of time, I shall now sit down. I believe that at the end of the debate there will still be a lot of questions to be answered. I believe that the House of Commons will want to follow them up. The Secretary of State and the Prime Minister have only themselves to blame for bringing this cloud of suspicion over this rather peculiar deal.

The Secretary of State has not lifted that cloud completely today. I do not believe that the Government will. I believe that their scurrilous behaviour deserves to be severely censured tonight and that the House of Commons, in one way or the other, will want to return to investigating this deal.

6.2 p.m.

Mrs. Margaret Bain (Dunbartonshire, East)

Before I come to the main points of my speech—I fully appreciate the request for brevity—I must pass some comments on the conduct of the official Opposition so far. First, it ill suits the official Opposition to complain about lack of time since this is their Supply Day and it was their decision to restrict the debate to three hours.

Second, no alternative strategy has been forthcoming from the official opposition. One hon. Member has suggested that we continue to expand the naval programme, no doubt up to the level where we can hire a destroyer for a day's outing down the Clyde. However, that hon. Gentleman made no reference to the public expenditure implications of this, or to the competition that this would place on other priorities in society.

Third, not one Conservative Member from Scotland has signed the motion. No doubt this reflects the fact that they yet again have sunk to third place in the polls in Scotland and have recognised the implications of what they are doing to the West of Scotland.

No member of the Official Opposition has pointed out that the country which was second in this particular tender was Norway which has 0.1 per cent. unemployment. If we had not won this contract for the United Kingdom it would have gone to a country where there is limited unemployment, and unemployment is surely the crux of this matter.

I ask my hon. Friends to support the Government in the Lobby tonight. This is fundamental, because the Scottish shipyards are the training grounds for the skills of future generations. We must recognise the service that is given to the community by Govan Shipbuilders in particular and by the Strathclyde training section of that yard.

I would refer to the most fundamental matter which is put forward in the book "Scotland 1980" by Mr. John Firn. He is not a member of the SNP, but he has pointed out the implications for the whole of Scotland with regard to the manufacturing base. In West Central Scotland that means the shipyards. He pointed out that: By mid-1976, manufacturing's share of total employment had fallen below 30 per cent. for the first time in living memory, and well over 110,000 manufacturing jobs had been lost since the mid-1960s. If manufacturing is less than 30 per cent. of total employment in 1980—and by mid-1977 it is already well below trend—and if the indigenous share of that manufacturing remains about the level of the mid-1970s, then it could mean that only about 12 per cent. of total employment was in the private manufacturing sector. This is a truly insignificant level, and much bigger below that of the United Kingdom as a whole, and of the other small countries such as Norway, Sweden, Finland or Denmark, with which Scotland is often compared. Indeed, there must be grave doubts about the ability of a sector that size to play a major part in the type of strong, export-orientated, industrial growth strategy that is required in Scotland. With regard to the need to maintain the manufacturing base, it is shocking that not one Conservative Member from Scotland has come along today to speak in the debate or has bothered to sign the motion.

In purely human and social terms it is wholly desirable that we accept this contract even though the financial returns will be less spectacular than they will be in the employment sector. There is a desperate need for this work in West Central Scotland and other areas like Dundee. Robb-Caledon, in the constituency of my hon. Friend the Member for Dundee, East (Mr. Wilson), is now in the position of having its jobs guaranteed till the middle of 1979.

I should like briefly to refer to the attitude of the shipbuilders in Scotland with regard to this deal. They have accepted it with reservations because they see no alternative at the moment. No other jobs were in the offing. Although competitive with the whole of Western Europe, Govan Shipbuilders cannot compete with the kind of subsidies that are given to the Far Eastern countries in particular.

From speaking to representatives of the shipbuilding industry over the weekend I know that there are various questions that they would like to put to the Government. Why were the yards themselves not allowed to deal directly with the Poles, rather than through British Shipbuilders, particularly in view of the fact that Govan Shipbuilders has no representation on the board of British shipbuilders? Second, what happened to the large-sized vessels originally included in the contract? My understanding is that three vessels were originally nominated in the tender of 4,500 tons, 16,500 tons and 34,000 tons. Those vessels disappeared from the contract and the ships allocated to the Scottish yards, particularly to Govan, are below the size with which those yards usually deal.

Although the Secretary of State referred to the situation in the steel industry, can he, perhaps, delineate the implications for the Scottish steel industry, because we are interested in this aspect throughout the whole of west central Scotland?

We have been told that 12 out of 22 of the engines are to be built in the United Kingdom, if we are to believe the reply given by the Government on 29th November. Can we have an indication of how many of these engines will be built in Scotland?

Can the Secretary of State outline to us what kind of difficulties our yards might find themselves in if the Poles fail to come up with the necessary equipment in order to allow the Scottish yards to fulfil the contract? Would this include penalty clauses in respect of Govan Shipbuilders? That yard is concerned that it should not be victimised as a result of any failure of the sub-contractors to produce the goods on time.

Another question of more general interest is: has the Secretary of State reached the situation where he can give us a definite figure in terms of the European dimension with regard to the rundown in the shipbuilding industry in general, particularly over the next decade. My understanding is that the European Community has projected a cut-back of 45 per cent. and that OECD has projected a cut-back of 60 per cent. The most recent figure suggests that the British Government are contemplating a fall of 30 per cent. These are matters of general interest to the shipbuilding industry and they must be answered in this debate.

Much play has been made of the rôle of the ship owners and the effect on them. I would be a great deal more sympathetic with the British ship owners, and the action of the Conservative Party, if the record of the ship owners in placing orders in our yards had been much better.

I want to quote from "British Shipbuilders—What Next?", a study commissioned by the Amalgamated Society of Boilermakers. It is a statistical and useful document for anyone interested in British shipbuilding and the shipping trade in general. Page 15 states that the share of contracts from British ship owners to United Kingdom shipyards has fallen steadily since the 1960s. Between 1961 and 1966 the average was 67.6 per cent., between 1967 and 1971, 32 per cent. and from 1971 to 1976, 28.1 per cent.

I for one was pleased to learn from the Secretary of State today that a great deal more of the tonnage is being placed in our own yards. We are particularly glad about this since it was our party which advocated the concept of an intervention fund long before it was adopted by this Government. During the passage of the Aircraft and Shipbuilding Bill we pointed frequently to the Norwegian example: the importance was in terms of giving orders rather than the overall administrative running of the industry.

However, there is one final reservation that I make about this deal. It affects specifically Govan, in which I have a fairly high constituency interest in that many of my constituents travel to Govan to work. It is in connection with what has happened at Swan Hunter and industrial relations generally in our shipyards. I am surprised that the Government have not pointed out to the people of Swan Hunter that the kind of dispute happening there at the moment is very similar to the one that we had in Govan in 1972. We reached a solution at that stage, and it has given the Govan shipyards one of the best industrial relations records in the United Kingdom. It was achieved by deciding that all trades should be paid the same basic rate, with special additional allowances being awarded to the steel workers. I suggest that this is one way of solving the Swan Hunter dispute.

The solution of the Swan Hunter dispute has implications for Scotland. Govan has already accepted two of the ships rejected by Swan Hunter during the dispute. If we do not solve this dispute at Swan Hunter and more ships are sent to Govan, it means that Govan, along with Smith's on Teesside, will find itself in extreme difficulties should there be any possibility of contracts similar to the Kuwait-type contract awarded by the Arabs to Govan. I am sure that I do not have to point out just how impressed the Arabs were by this design. If Govan is placed in the situation of having to build a very substantial number of ships which are smaller in size than those with which it normally copes, it will be placed in extreme difficulty, along with Smith's on Teesside, in not being able to tender for further contracts. It would be tragic for the whole of West Scotland if we lost substantial orders in this direction, because the kind of technical expertise that we have built up in West Central Scotland is aimed spcifically at this type of ship. The alternative is for foreign owners to place their orders with the Hyundai yard in Korea, which does not have the technical expertise of other yards.

Dr. M. S. Miller (East Kilbride)

The hon. Lady is putting forward an interesting argument, and indicating that there are industries which require expertise and economic developments surrounding the whole of the United Kingdom. She is not merely relating them to one area. Does she think that this should be carried on in other areas, or does she still maintain that only Scotland should build Scottish things?

Mrs. Bain

Everyone appreciates that unemployment is an international problem, and I do not at this stage intend to debate the Scotland Bill with the hon. Member for East Kilbride (Dr. Miller).

Mr. Heffer

Will the hon. Lady give way?

Mr. Speaker

Order. For Back Benchers, this debate will be finishing in 11 minutes, and I am hoping to get in another two speakers.

Mrs. Bain

Any Scottish Member of Parliament who sees fit to vote against this contract is voting for further unemployment in Scotland, and that is already a scourge on our society.

6.14 p.m.

Mr. William Small (Glasgow, Garscadden)

This debate is about Greek meeting Greek. I am surprised that the Scottish National Party should put up the hon. Member for Dunbartonshire, East (Mrs. Bain) to be its spokesman when the hon. Member for Dundee, East (Mr. Wilson) spent 58 days discussing the Bill. The trouble with the SNP is that its members see a potential swan in every duck egg.

I turn at once to the speech of the hon. Member for Surrey, North-West (Mr. Grylls), the Sophocles of the Conservative Party. Certainly he tries to be the greatest Athenian tragedian since Sophocles died in 1459 B.C. Those who did not serve on the Standing Committee will recall Herodotus. He listened to all the important people but, at the end of the day, he made up his own mind and decided that his own script was the best.

In terms of this order I can assure my right hon. Friend that people on the Clyde are delighted that the Government have gone in for a form of economic stimulation in a way which will be good for the souls of those men who make our ships.

Mr. David Lambie (Central Ayrshire)

My hon. Friend appears to think that all the people on the Clyde are happy that the Government have accepted this order. However, I can tell him that my people in Ailsa are not happy because, despite ministerial assurances, we have not yet received an order. My hon. Friend the Member for Glasgow, Garscadden (Mr. Small) does not speak for the people of Troon.

Mr. Small

I take on board what my hon. Friend said. However, I speak against the background of the loss of dignity which occurred in the old days. I had the misfortune to walk the streets for two years, and I know something about it. As long as a man has a roof over his head, he has a chance. However, there is no mobility on the river. Once a boy has served his time and started in shipbuilding, he cannot go anywhere else. A young man today has to train himself in metrication and decimalisation. Those are the tools of the trade. When I went into maths, engineering and drawing, they were the requirements for me. So those who are disfranchised as young apprentices are lost souls in terms of the future of the trade. Their job is to keep their expertise in modern technology based on the river.

I take the point of the hon. Member for St. Ives (Mr. Nott), who said that we should have better redundancy payments. The Government propose a voluntary redundancy scheme. I am not happy about it; indeed, I never endorse redundancy. Instead, we may have to consider early retirement and better benefit schemes rather than straight redundancy.

I do not want to detain the House but I assure the Treasury Bench that the Government have my 100 per cent. support, and I think that I speak for those on the Clyde whose future will depend on repeated orders such as this.

6.17 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I want to ask the Minister of State whether he will reveal the nature of the penalty clauses. That has not yet been revealed, and it cannot possibly be secure commercially.

However, my main concern is with the deal itself, and I begin with the economy of Poland. The total Polish indebtedness in hard currencies is now running at 2.7 times the annual hard currency earnings of that country. The annual interest in hard currencies on those borrowings is running at £400 million a year. The interest is increasing rapidly. On the other hand, the foreign earnings of Poland are decreasing sharply. It means that the chances of Poland being able to finance further debts in hard currencies are very slim. That is why serious question marks have been drawn across the credit-worthiness of the Poles.

On top of that, this country subscribed to a meeting in June last year of the seven major exporting nations which agreed to keep to certain minima terms for loans, as regards both interest and maturity times, to the Eastern bloc as a whole and to Poland especially. We realised that not only were we putting more capital into the country than perhaps we could afford but that we were landing more debt upon the Poles than they could probably service.

It was against this background of all the exporting nations agreeing that Poland was hardly a country to which more credit could be extended that the Prime Minister rose at the Labour Party Conference and announced the Polish ships deal. Little did we know at the time that he had certainly made the Poles an offer which they could not refuse, an offer which was so good that there was no way in which the Poles, in their parlous economic situation, could turn it down.

The Poles have not been asked to put one single zloty on the table. Apart from the £28 million grant, there is £116 million on loan from this country. The whole cost and perhaps a little more is falling on the British, whether the taxpayer or the private sector. In the end, as my hon. Friend the Minister for St. Ives (Mr. Nott) has said, the debt is guaranteed by the British taxpayer through British Shipbuilders or through the Export Credits Guarantee Department.

In effect, we are spending a mixture of loans and grants totalling about £150 million on giving this order to the Poles so that this group of ships can compete against us. The House should ask itself one simple question. It is not whether this is a good commercial deal, because it clearly is not; nor whether it is necessary to beat the competition. It might well have been, but for the Prime Minister's hamfisted intervention in the deal, thereby making the terms worse by his premature announcement. Nor should we ask whether the deal is necessary to fill the shipyards. The question that we should ask is "Is this the best way to deploy £150 million of our money in order to help the industry and employment in the industry?"

It would be better if the money had been used in other ways, which I shall list in order of ascending desirability. First, it would have been better to pay wages to 8,000 men on condition that they did not go near the shipyards. That would have done less harm. At least we should not have had this fleet competing with our merchant fleet. Secondly, it would have been better if we had taken the ships out to sea after they were completed and solemnly sunk each one of them in the deepest part of the Atlantic. That, too, would have done less harm, because the ships could not have competed, but it would also have provided a little employment for the steel industry, because we should have sunk 50,000 tons of steel.

If we had spent the money on ordering ships for the Royal Navy, for oil rig protection, fishery protection, or any other public purpose for which ships are required, we should at least have made a useful investment. If we had persuaded British shipowners to take this contract and this money we should have strengthened our investment in British ships. Best of all—this is where the Government have really gone wrong—we would have done better if we had taken this money and invested it in more modern ship-building capacity, in redundancy payments to surplus shipyard workers, in new equipment and new advances in technology. I do not know how many hon. Members have visited the Japanese shipyards. I have not done so, but I have seen drawings, pictures and photographs of them, and I know well the shipyards on the Tyne, Clyde and Wear from personal experience at one time as a builder of shipyards.

If we want to secure orders in the slump times and take advantage of the boom times, it is vital to spend our scarce resources on making our shipbuilding capacity up to date, not squandering the money to buy time or to buy votes, as the Prime Minister has sought to do, not squandering it by providing a fleet which will be of advantage only to our competitors. That is to mistake the difference between investment and subsidy; the difference between doing something which will possibly lead to commercial viability and long-term jobs and mortgaging the future in order to make the situation secure for a few months only, until the next election. How cynical can a Government be, and how corrupt can one get in politics?

6.25 p.m.

Mr. Norman Lamont (Kingston upon Thames)

The phrase "commercial confidentiality" featured consistently throughout the Secretary of State's speech. Without being unduly provocative, I may perhaps begin by observing that it is curious that a political party that is such a strong supporter of that favourite theme of the Secretary of State for Energy, open government, should have been so coy until today. It is strange that from a party so many of whose members get their knees jerking at the mere mention of the words "public accountability", "bringing government closer to the people" and "full disclosure" there has been a deafening silence about the details of the deal until today's debate.

The Secretary of State's criticisms of my hon. Friend the Member for Surrey, North-West (Mr. Grylls) were unjustified. It is now six months since Lord Winter-bottom assured the House of Lords that the full details of the deal would be made available to Parliament. We have repeatedly received stonewalling answers to Questions, and my hon. Friend quite rightly went on demanding that we should have those details.

Of course, as my hon. Friend the Member for St. Ives (Mr. Nott) said, in one sense the deal has not been secret at all. The details have been common knowledge in the City. The newspapers all appear to know. How is it that my hon. Friend the Member for St. Ives was able to read out the details before the Secretary of State had spoken? He gave rather more details than the right hon. Gentleman did. Everybody knows. The EEC and OECD have been given the details. Everyone has been given them, except those who should have had them first—the Members of this House.

The lesson is that if the Government insist on intervening and meddling with public money, they must expect to be held accountable. As long as they refuse to answer reasonable requests for information about deals of this kind involving public money, they must expect people to believe, as I still believe, that all the talk of commercial confidentiality was just a shibboleth, a cloak to hide incompetence and bungling.

Mr. Robert Hughes

rose—

Mr. Lamont

I shall give way a little later.

We did not hear much from the Secretary of State today. Considerable question marks still remain against the deal. We do not know what the charter rates will be. It was astonishing that the Secretary of State could not give us details about the mortgages on the ships. We hope that the Minister of State will give those details, as promised, because in a deal of this kind there is a danger of default by the Polish buyers of the ships. We have been told by my hon. Friend of a Polish State trading corporation that defaulted on its obligations, so that the guarantees had to be called. We seem to be moving to a situation in which there can be bankruptcies in Communist economies but not in capitalist ones.

What we heard from the Secretary of State this afternoon in no way allayed our anxieties. Whatever way one looks at the deal—whether from the point of view of British Shipbuilders, British shipping, the national interest or the considerable international problems—there are grave anxieties about it.

Some hon. Members may not be fully aware of the desperately serious international position. I am referring not merely to the over-capacity of ships in the world, but to Governments' tremendous competitive ploughing of money into shipyards. Governments in competition with other Governments are putting more money into shipyards to build ships that the world does not want. That drives down charter rates and puts pressure on the ship owners, who cannot then place more orders with the shipbuilders, which leads the Governments to intervene more and more. We have a whirlpool that could eventually turn out to be like our secondary banking crisis on a world scale.

It is estimated that over the next seven years Governments will pour £58,000 million into supporting shipbuilding industries throughout the world. All Governments are desperate to do it. They are doing it in the hope that other people's industries will collapse before their own. The more they do it, the more they drive down charter rates and the fewer orders there will be to be placed in yards in Britain or anywhere else.

Mr. Arthur Blenkinsop (South Shields)

How would it help our shipping industry for the orders to be placed in South Korea or somewhere else?

Mr. Lamont

I shall deal with that point later, but I would say that it is up to the Government to work for international action to limit the credit race. It is also certainly up to them not to indulge in backhand deals which make the position much worse.

Everything we have heard today indicates that the deal adds a new dimension to the credit race. It is clear that it is an unprecedented credit at 100 per cent. When we also take into account the exchange rate cover, the direct subsidy and the interest subsidy, we see that the cost to the taxpayer is about £38 million. All that is before we count the penalties for late delivery, which every hon. Member knows are certain to be invoked. [Hon. MEMBERS: "Rubbish."] They will be an addition to the Government's liability.

The Government deny that they are doing anything new in the credit race. I prefer to take the views of those who have less of a vested interest—for example, the Norwegians, who turned down the contract because the credit terms were too onerous; the Germans, who have criticised the deal; the British shippers, who have consistently made clear their reservations; or Commissioner Davignon.

The Secretary of State said that the EEC had approved the deal. Perhaps Commissioner Davignon had little option but to approve it. But his views were made very clear in The Times of 3rd December. According to The Times, he gave a strong hint that the commission would not approve again the kind of subsidized credit deal that made possible the recent British sale of ships worth £115 million to Poland. He added—and this is significant in the light of the Secretary of State's denials—that the…deal would directly threaten the competitive position of EEC merchant fleets by enabling a rival to equip itself at excessively cheap rates. The Government may fool themselves, but they certainly do not fool us.

There is only one possible defence of subsidies on the scale that the Government propose. That is if the Government were proposing to use the time bought to reorganise our yards, to put them on a basis on which they were providing the sort of ships likely to be able to be supplied in the future. But that is not being done. The management of British Shipbuilders says that there will be no closures, that there will be no redundancies. In Brussels the Government opposed the plans put forward by Commissioner Davignon. Labour Members may convince themselves that they are saving jobs, but they can believe that only if they are totally blind to everything except the immediate present.

One cannot save jobs by subsidising over-capacity, driving down charter rates further, so that fewer and fewer orders will be placed in British yards. One cannot save jobs by subsidising at £4,000 a head traditional bulk carriers which, alas, will be built in the future much more competitively by the Koreans and people in the Third world.

How much better it would have been if the Government had spent these sums on retraining, on encouraging new industries or perhaps restoring some of their defence cuts! The House may like to be reminded of the cuts that they have made in destroyers, frigates, conventional submarines and anti-mine vessels. The Under-Secretary of State for Defence for the Royal Navy recently said: The average age of the major units of the Fleet … is about 12 years.'—[Official Report, 8th November 1977; Vol. 938, c. 474.] The assessment has been made that 40 out of 180 of this country's warships are now obsolete. Of course, we do not believe that all yards can do defence work, but there is no doubt that much of the over-capacity could have been taken up by restoring the cuts that the Government have made needlessly and irresponsibly.

The shipping aspect of this deal is also crucial and nothing that I have heard has deflected me from my view that the deal is thoroughly against the interests of British shipping. We are not saying that this country should not sell ships to Poland, but that we should not sell them on terms that will enable the Poles to undercut British shippers.

The British shipping industry is of vital importance to this country. British shipping will contribute to our balance of payments next year an amount equivalent to the whole of North Sea oil in one year. It is one of our most profitable and competitive industries and the Government seem determined to damage the interests of a competitive industry and to shore up one that cannot survive in its present size and form.

I turn lastly to the wider national interest and the use of public resources. I do not believe that bought business is ever good business and that is exactly what this deal is. We are bribing the Poles to place their orders in British yards. The Poles have not had to put up a single zloty. We thought that we were bribing them to buy British, but now it appears that we are bribing them to buy British, Swedish, Polish and goodness knows what else as well.

Will the Minister say whether those ships that are meant to be built at Swan Hunters could be reallocated to any other British yard? Will credit be used to subsidise the wholesale building of ships somewhere else?

One wonders what reason can have brought the Government to this madness. They seem desperate to protect their own infant industry and to go to any lengths to get it orders. British Shipbuilders is not yet the British Steel Corporation, but the way that we are going on, it soon will be an equal drain on national resources.

The Secretary of State made a remark with which I thoroughly agreed. He said that had we not had the yards brought together and had the industry not been nationalised, it would not have been possible to secure this order. That is the greatest indictment of the nationalisation of the shipbuilding industry.

Some civil servants and former employees of Crown Agents could be forgiven a little cynicism when they contemplate Parliament's discussion of this deal. If we have had three inquiries into Crown Agents, we should surely have one inquiry into the conduct of the Prime Minister in this matter. We do not know—and I do not suppose that we shall—what the intervention fund contribution would have been had the Prime Minister not come along. We do not know and shall never know what the import content was before the right hon. Gentleman arrived on the scene, but there is no doubt that his flag-waving exercise has cost this country dear and has immeasurably strengthened the position of the Poles and enabled them to drive a harder bargain at the expense of the British taxpayer.

This all has a familiar smell. It is all the old style from which. I thought we had got away: if something is announced in the papers it is a fact; as long as it gets applause at the Labour Party Conference, that is all that matters. I now understand a remark of Roy Jenkins quoted in the Crossman diaries. It was a reference to the present Prime Minister: All the qualities that Harold is accused of having, Jim really has. This deal is a sorry escapade. The House of Commons has been abused. The taxpayer has been abused, and nothing but damage has been done to the national interest. I have no hesitation in urging my right hon. and hon. Friends to vote with me in the Lobby tonight.

6.40 p.m.

The Minister of State, Department of Industry (Mr. Gerald Kaufman)

The decision by the Tory Opposition to stage this debate today has been reckless by any standards, even by their own standards. During this unparalleled international shipbuilding slump all our major European competitors have found it essential to bring in special schemes to defend their shipbuilding industries from under-priced Far Eastern competition. But the Tories want our industry to weather the storm unaided, even if it capsizes as a result. For them it is good enough for our competitors in France, Italy, Holland, Norway and Sweden to protect their industries, but it is too good for Britain. The Tories used to claim to be the party of the Union Jack. Now they seem to prefer the label "Made in Japan". We disagree. We are taking action to safeguard the industry.

We reject the across-the-board cuts feared by the hon. Member for Dunbar tonshire, East (Mrs. Bain) and we have told the European Commission that. As for what was said by the Opposition spokesman about everything being cured by placing defence orders all around the country, I must point out that his hon. Friends who served on the Committee on the Aircraft and Shipbuilding Industries Bill specifically and repeatedly asked me for assurances that naval ships would not be built in non-naval yards to protect those yards. They asked me to repeat what were known as the "Carrington assurances", and I gladly did so.

We are having greater success than any other shipbuilding nation when it comes to winning orders. Only one competitor has a longer order book than ours. The Tories are reckless, too, in their callous disregard for the unemployment problems in the shipbuilding areas. Today we have heard several speeches from them. No one has paid even perfunctory attention to the need to save jobs in areas which suffer from chronic unemployment, areas like Clydeside, Tyneside, Wearside and Belfast.

Maybe the debate would have been different if hon. Members opposite who represent shipbuilding areas had caught your eye, Mr. Speaker. Certainly outside this House these hon. Members have joined in the scramble for a share of the Polish order. The hon. Member for Wallasey (Mrs. Chalker) has written to me putting in a claim for propellers for Poland to be made on Merseyside.

Mrs. Lynda Chalker (Wallasey)

The Minister knows full well that the reason that I wrote about the propeller order was that the one propeller manufacturer in this country will go without work twice over because the Prime Minister, by prematurely announcing that order at Brighton, forced the Poles to come back and say, "No, we shall make the propellers in Poland". Will the Minister now answer and say what will happen about the earlier propeller order, because propellers can be made in Poland only under licence from SMM if the propellers are for ships built for the Polish State organisations, and that does not include this Anglo-Polish company?

Mr. Kaufman

Will the hon. Lady vote with us for the order tonight? If not, surely she does not want to soil her hands with any of it. The only change that has occurred since the Prime Minister's announcement of the order to the Labour Party's Conference in October has been that we have won more work for Kincaid's at Greenock. That is the only change that we have brought about.

The hon. Member for Tynemouth (Mr. Trotter) has appealed to the outfitters at Swan Hunter for a truce in their overtime ban. The Sunderland Echo reported him last week pleading with the outfitters to "Keep this order for Britain". Will he vote tonight to keep the order for Britain?

Mr. Neville Trotter (Tynemouth)

Do not the Government realise that one cannot keep the industry going by paying £100 million a year out of the taxpayers' purse? Is it not extraordinary that this is the first debate on shipbuilding—apart from the one on nationalisation—that has been held in the four years of this Government, and that the Government have no policies whatsoever on this?

Mr. Kaufman

Now the workers on the Tyne know that the hon. Member for Tynemouth wants them on the dole. He adds his voice to those of the hon. Members representing cosy constituencies in Surrey, Cirencester and Tewkesbury and St. Ives, who recklessly whipped up this storm in a samovar.

Mr. Nott

rose—

Mr. Kaufman

May I proceed? I have given way several times, and I shall give way later if I have time.

The Opposition are reckless in their sheer ignorance. Reading their statements during the past few days and listening to their speeches today we could be forgiven for believing that the arrangements for this deal have startled them with shocking suddenness, that they have been so shrill in demanding information because they have been kept in the dark for so long.

But the basic facts about this deal have been known for almost a year—ever since my right hon. Friend the Prime Minister signed his joint communiqué with the Polish Prime Minister in London precisely 12 months ago this week. I quote the communiqué: The two Prime Ministers agreed on the establishment of a joint Anglo-Polish company which would build, in British yards, in co-operation with the Polish shipbuilding industry, up to 22 cargo vessels to be owned and managed by the Polish side of the partnership. The necessary financial arrangements for the establishment and running of the joint enterprise would be made by the British side of the partnership. The arrangements outlined in that communiqué are similar to techniques employed by many of our competitors in the battle for orders. This time British Shipbuilders won because they had the benefit of a sophisticated financial package constructed with the skilled services of Hambros Bank. The basic arrangements have been public knowledge since December 1976, yet it is only in the past four weeks that the hon. Members for Surrey, North-West (Mr. Grylls) and Aberdeen, South (Mr. Sproat) have assumed their rôles as the Starsky and Hutch of the Tory Party and flooded the Order Paper with Questions about the deal.

Mr. Nott

The hon. Gentleman has referred to "cosy constituencies". Is he aware that in Cornwall unemployment is double what it is in any of the shipbuilding areas and that the regional development grant to Cornwall is about a quarter of the subsidy going into this deal? That is because Labour seats are involved.

Mr. Kaufman

I shall be coming to the question of Labour seats, but if the hon. Gentleman wants to make an appeal for increased public expenditure, he had better sort out the matter with the right hon. Member for Leeds, North-East (Sir K. Joseph).

What members of the Tory Party say interests them are the financial details—the pounds, the pence and what the hon. Member for Surrey, North-West so beautifully pronounces as the zlotys. That is what they want to know about. They reject all Government arguments about the importance of commercial confidentiality. The hon. Member for Kingston upon Thames (Mr. Lamont) called that a shibboleth.

What Conservative Members are demanding is that the Labour Government should set a precedent that Tory Governments have always rejected, because all Governments, and particularly Tory Governments, find it necessary to guard confidential commercial information which could handicap our industrialists and exporters if made public. During their last period of office, Tory Ministers at the Department of Trade and Industry put up this defence again and again.

Asked about financial details concerning Concorde, the then Secretary of State, the right hon. Member for Knutsford (Mr. Davies), stonewalled. He said: It would not be in the best interests of the project to give further details of the commercial elements of the pricing formula."—[Official Report, 17th January 1972, Vol. 829, c. 1.] Questioned about the location of factories in Scotland, Mr. Christopher Chataway, as Minister for Industrial Development, responded: It is not the practice to reveal details of confidential discussions with individual firms."—[Official Report, 24th July 1972; Vol. 841, c. 211.] At least as addicted to this formula as any of his colleagues—at at rate, during his brief period in office—was the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). This was his reply to a Question about pipeline steel: This is a commercial matter."—[Official Report, 7th February 1972; Vol. 830, c. 236.] His response to a question about steelworks scrap was: This is a purely commercial matter."—[Official Report, 11th February 1972; Vol. 830, c. 471.] Knowing the fastidious reticence of members of the Tory Party about revealing financial information, all this is hardly surprising. After all, it took them 86 years and the threat of legislation to bring themselves to publish their own party accounts.

Mr. Grylls

rose—

Mr. Kaufman

In a moment. I still have to deal with the hon. Gentleman. If he will rise in due order, I will give way to him.

Now the Tories have dreamed up a fresh reason for their new-found addiction to the slogan "Publish and be damned". While they care nothing, as they have shown today, for the jobs of British shipbuilding workers, they are suddenly deeply concerned about the jobs of British merchant seamen. The hon. Member for Cirencester and Tewkesbury spoke movingly last week in the House about the danger from the Polish deal. He warned in the most ominous terms that the transaction threatens the jobs of thousands of British seamen who will be forced to go out of business if the ships are ever built."—[Official Report, 7th December 1977; Vol. 940, c. 1402.] Those were his words, and the hon. Gentleman nods to confirm them.

But that statement showed the same recklessness as all the other Tory attacks on this contract, because it is very interesting that not once since the Polish deal was announced have the Government received a single protest from the National Union of Seamen—and presumably it cares more about its members' jobs even than Conservative Members do. Perhaps the trade union leaders know something that Tory Members do not know. Perhaps they know that the total number of crew on all 24 ships for Poland will be little more than 500 men.

Mr. Norman Lamont

The hon. Gentleman may have received no representations from the National Union of Seamen, but will he confirm that he has received many representations from the General Council of British Shipping? We certainly have, and I cannot believe that the Government have not.

Mr. Kaufman

But the hon. Member for Cirencester and Tewkesbury was talking about the jobs of thousands of sailors. As for the representations of the General Council of British Shipping, I believe that when the Council knows the facts it will be less disturbed than it is, because some of the ships are to replace very old ships now in service which will go out of service and, therefore, there will be no expansion of the Polish fleet. The small ships are likely to be used in Polish coastal trade where there is not likely to be a large number of British ships, and the large ships have been specially designed for Baltic ports, which reduces the likelihood of their competing with British ships.

So why are the Tories so anxious to wreck this deal? We waited to find out, and the hon. Member for St. Ives gave us the answer. He said that we were going into the business of assisting Communist countries. That is what they are worried about. But the right hon. Lady the Leader of the Opposition spends much of her time visiting Communist countries. This year she has been to China and Yugoslavia, and not long ago she was in Communist Romania. There she will have heard about the mutually beneficial Anglo-Romanian deal on the BAC111 aircraft, a deal that was lauched by the last Tory Government and was made possible by financial underwriting by the present Labour Government.

There is another even bigger BAC111 deal being negotiated with Communist Romania. Its value could be over £200 million. If it comes off, it will be very largely due to underwriting from the British Government. While the British Aircraft Corporation was still in private ownership, its top executive came to see me at the Department of Industry and asked my help in making the credit terms more attractive. I was happy to oblige.

The men in ultimate control of BAC at that time were Lord Robens and Sir Arnold Weinstock. Are the Tories writing off those two gentlemen as Communist lackeys of the same villainy as Admiral Sir Anthony Griffin, Chairman of British Shipbuilders? The Anglo-Romanian BAC 111 deal will bring work not to Labour shipbuilding areas but to a factory just down the road from the constituency of the hon. Member for Surrey, North-West.

When the right hon. Lady the Leader of the Opposition was in Communist Yugoslavia last week, she visited a plant at which diesel engines are being produced under licence from Perkins of Peterborough. She paid tribute to those arrangements—and I quote—as an excellent example of British-Yugoslav industrial co-operation". She said that she would like to see more of this activity taking place.

The right hon. Lady and the whole House will applaud another development which was encouraged by the meeting between the British and Polish Prime Ministers a year ago. On Wednesday of this week, there will be a ceremony in Warsaw to launch the new Warsaw air terminal—a £50 million deal. A British company has won the contract. That company is Cementation Ltd., which, like the Daily Express, is a subsidiary of Trafalgar Investments. I am sure the House will be glad to know that that important project in Communist Poland, undertaken by a subsidiary of Trafalgar Investments and a partner of the Daily Express, was handsomely assisted by ample credit facilities provided by the British Government. I cannot reveal further details because, to take up the words of the hon. Member for Cirencester and Tewkesbury on an earlier occasion, it was a purely commercial matter.

Mr. Grylls

Is the Minister saying that on the grounds of commercial confidentiality he will not give any further information on this deal either to the House of Commons or to a Select Committee of the House? Will he answer the question put to him about the mortgage to which he promised to reply?

Mr. Kaufman

On the question of mortgage, I am assured by British Shipbuilders that no difficulties have been raised by PZM as to the provision of adequate security for British Shipbuilders

in relation to these ships. I hope that that will dispose of the hon. Gentleman's misgivings. It clearly has. All details will be revealed that are not damaging to the commercial confidentiality of which the hon. Member for Cirencester and Tewkesbury was such a conscientious guardian.

We all know that many major export deals rely heavily on Government credit facilities. Opposition Members may protest that there is a crucial difference between all these other deals and the Polish shipbuilding deal. Their protests may arise because of the fact that we are subsidising the Polish deal. I do not understand what makes that so novel or shocking. The House has known since February that we stand ready to subsidise shipbuilding orders, if need be. That was when I announced the £65 million intervention fund that is subsidising the Polish deal as it has subsidised orders for 24 other ships, most of them for British ship owners. When I made that announcement, only one Opposition Member criticised these subsidy arrangements. I refer to the hon. Member for Surrey, North-West, who asked me: why has he wasted three years when he could have used the Industry Act 1972 to help the shipbuilding industry from the first day on which his Government came into office?"—[Official Report, 24th February 1977; Vol. 926, c. 1660.] The hon. Gentleman's complaint was that we should have put more money in sooner.

The Tory attack on this deal today is their latest cynical example of the opposition of opportunism. The intervention fund launched by the Labour Government has the objective of saving jobs—and we are succeeding in our objective. The intervention fund preferred by the Tories is called the dole. I ask the House to throw out this motion.

Question put, That the salary of the Secretary of State for Industry should be reduced by half:—

The House divided: Ayes 246, Noes 295.

Division No. 47]	AYES	[6.59 p.m.
Adley, Robert	Awdry, Daniel	Biffen, John
Aitken, Jonathan	Baker, Kenneth	Biggs-Davison, John
Alison, Michael	Bell, Ronald	Blaker, Peter
Amery, Rt Hon Julian	Bennett, Sir Frederic (Torbay)	Body, Richard
Arnold, Tom	Bennett, Dr Reginald (Fareham)	Boscawen, Hon Robert
Atkins, Rt Hon H. (Spelthorne)	Benyon, W.	Bottomley, Peter
Atkinson, David (Bournemouth, East)	Berry, Hon Anthony	Bowden, A. (Brighton, Kemptown)
Boyson, Dr Rhodes (Brent)	Hastings, Stephen	Page, Rt Hon R. Graham (Crosby)
Braine, Sir Bernard	Havers, Rt Hon Sir Michael	Page, Richard (Workington)
Brittan, Leon	Hayhoe, Barney	Parkinson, Cecil
Brocklebank-Fowler, C.	Heath, Rt Hon Edward	Pattie, Geoffrey
Brooke, Peter	Heseltine, Michael	Percival, Ian
Brotherton, Michael	Higgins, Terence L.	Peyton, Rt Hon John
Brown, Sir Edward (Bath)	Hodgson, Robin	Pink, R. Bonner
Bryan, Sir Paul	Holland, Philip	Prentice, Rt Hon Reg
Buchanan-Smith, Alick	Hordern, Peter	Price, David (Eastleigh)
Buck, Antony	Howe, Rt Hon Sir Geoffrey	Prior, Rt Hon James
Budgen, Nick	Howell, David (Guildford)	Pym, Rt Hon Francis
Bulmer, Esmond	Hunt, David (Wirral)	Raison, Timothy
Burden, F. A.	Hurd, Douglas	Rathbone, Tim
Butler, Adam (Bosworth)	Hutchison, Michael Clark	Rees, Peter (Dover & Deal)
Carlisle, Mark	Irving, Charles (Cheltenham)	Rees-Davies, W. R.
Chalker, Mrs Lynda	James, David	Renton, Rt Hon Sir D. (Hunts)
Churchill, W. S.	Jessel, Toby	Renton, Tim (Mid-Sussex)
Clark, Alan (Plymouth, Sutton)	Johnson Smith, G. (E Grinstead)	Rhodes James, R.
Clark, William (Croydon S)	Jones, Arthur (Daventry)	Ridley, Hon Nicholas
Clegg, Walter	Jopling, Michael	Ridsdale, Julian
Cooke, Robert (Bristol W)	Joseph, Rt Hon Sir Keith	Rifkind, Malcolm
Cope, John	Kaberry, Sir Donald	Roberts, Wyn (Conway)
Cormack, Patrick	Kershaw, Anthony	Rossi, Hugh (Hornsey)
Costain, A. P.	Kimball, Marcus	Rost, Peter (SE Derbyshire)
Critchley, Julian	King, Evelyn (South Dorset)	Royle, Sir Anthony
Crouch, David	King, Tom (Bridgwater)	Sainsbury, Tim
Crowder, F. P.	Kitson, Sir Timothy	St. John-Stevas, Norman
Davies, Rt Hon J. (Knutsford)	Knight, Mrs Jill	Scott, Nicholas
Dean, Paul (N Somerset)	Knox, David	Shaw, Giles (Pudsey)
Dodsworth, Geoffrey	Lamont, Norman	Shelton, William (Streatham)
Douglas-Hamilton, Lord James	Latham, Michael (Melton)	Shepherd, Colin
Drayson, Burnaby	Lawrence, Ivan	Shersby, Michael
du Cann, Rt Hon Edward	Lawson, Nigel	Sims, Roger
Durant, Tony	Lester, Jim (Beeston)	Sinclair, Sir George
Dykes, Hugh	Lewis, Kenneth (Rutland)	Skeet, T. H. H.
Eden, Rt Hon Sir John	Lloyd, Ian	Smith, Dudley (Warwick)
Edwards, Nicholas (Pembroke)	Loveridge, John	Smith, Timothy John (Ashfield)
Emery, Peter	McAdden, Sir Stephen	Speed, Keith
Eyre, Reginald	McCrindle, Robert	Spence, John
Fairbairn, Nicholas	Macfarlane, Neil	Spicer, Michael (S Worcester)
Fairgrieve, Russell	MacGregor, John	Sproat, Iain
Farr, John	MacKay, Andrew (Stechford)	Stanbrook, Ivor
Fell, Anthony	Macmillan, Rt Hon M. (Farnham)	Stanley, John
Finsberg, Geoffrey	McNair-Wilson, M. (Newbury)	Steen, Anthony (Wavertree)
Fisher, Sir Nigel	McNair-Wilson, P. (New Forest)	Stewart, Ian (Hitchin)
Fletcher, Alex (Edinburgh N)	Madel, David	Stokes, John
Fookes, Miss Janet	Marshall, Michael (Arundel)	Stradling Thomas, J.
Forman, Nigel	Marten, Neil	Tapsell, Peter
Fowler, Norman (Sutton C'f'd)	Mates, Michael	Taylor, R. (Croydon NW)
Fox, Marcus	Mather, Carol	Taylor, Teddy (Cathcart)
Fraser, Rt Hon H. (Stafford & St)	Maudling, Rt Hon Reginald	Tebbit, Norman
Fry, Peter	Mawby, Ray	Temple-Morris, Peter
Galbraith, Hon T. G. D.	Maxwell-Hyslop, Robin	Thatcher, Rt Hon Margaret
Gardiner, George (Reigate)	Mayhew, Patrick	Thomas, Rt Hon P. (Hendon S)
Gardner, Edward (S Fylde)	Meyer, Sir Anthony	Townsend, Cyril D.
Gilmour, Rt Hon Ian (Chesham)	Miller, Hal (Bromsgrove)	Trotter, Neville
Gilmour, Sir John (East Fife)	Mills, Peter	van Straubenzee, W. R.
Glyn, Dr Alan	Mitchell, David (Basingstoke)	Vaughan, Dr Gerard
Godber, Rt Hon Joseph	Moate, Roger	Viggers, Peter
Goodhart, Philip	Monro, Hector	Wakeham, John
Goodhew, Victor	Montgomery, Fergus	Walder, David (Clitheroe)
Goodlad, Alastair	Moore, John (Croydon C)	Walker, Rt Hon P. (Worcester)
Gorst, John	More, Jasper (Ludlow)	Walters, Dennis
Gow, Ian (Eastbourne)	Morgan, Geraint	Warren, Kenneth
Gower, Sir Raymond (Barry)	Morgan-Giles, Rear-Admiral	Weatherill, Bernard
Grant, Anthony (Harrow C)	Morrison, Charles (Devizes)	Wells, John
Gray, Hamish	Morrison, Hon Peter (Chester)	Whitelaw, Rt Hon William
Griffiths, Eldon	Mudd, David	Wiggin, Jerry
Grist, Ian	Neave, Airey	Winterton, Nicholas
Grylls, Michael	Nelson, Anthony	Wood, Rt Hon Richard
Hall, Sir John	Neubert, Michael	Young, Sir G. (Ealing, Acton)
Hall-Davis, A. G. F.	Newton, Tony	Younger, Hon George
Hamilton, Michael (Salisbury)	Nott, John
Hampson, Dr Keith	Onslow, Cranley	TELLERS FOR THE AYES:
Hannam, John	Oppenheim, Mrs Sally	Mr. Spencer Le Marchant and
Harvie Anderson, Rt Hon Miss	Page, John (Harrow West)	Mr. Michael Roberts.
Haselhurst, Alan
NOES
Abse, Leo	Ashton, Joe	Barnett, Rt Hon Joel (Heywood)
Allaun, Frank	Atkins, Ronald (Preston N)	Bates, Alf
Anderson, Donald	Atkinson, Norman	Bean R. E.
Archer, Rt Hon Pater	Bagier, Gordon A. T.	Beith A. J.
Armstrong, Ernest	Bain, Mrs Margaret	Benn, Rt Hon Anthony Wedgwood
Ashley, Jack	Barnett, Guy (Greenwich)	Bennett, Andrew (Stockport N)

Bidwell, Sydney	Grant, John (Islington C)	Morris, Rt Hon J. (Aberavon)
Bishop, Rt Hon Edward	Grimond, Rt Hon J.	Moyle, Roland
Blenkinsop, Arthur	Grocott, Bruce	Murray, Rt Hon Ronald King
Boardman, H.	Hardy, Peter	Newens, Stanley
Booth, Rt Hon Albert	Harrison, Rt Hon Walter	Noble, Mike
Boothroyd, Miss Betty	Hart, Rt Hon Judith	Oakes, Gordon
Bottomley, Rt Hon Arthur	Hattersley, Rt Hon Roy	Ogden, Eric
Boyden, James (Bish Auck)	Hatton, Frank	O'Halloran, Michael
Bradley, Tom	Hayman, Mrs Helene	Orbach, Maurice
Bray, Dr Jeremy	Healey, Rt Hon Denis	Orme, Rt Hon Stanley
Brown, Hugh D. (Provan)	Heffer, Eric S.	Ovenden, John
Brown, Robert C. (Newcastle W)	Hooley, Frank	Padley, Walter
Buchan, Norman	Hooson, Emlyn	Palmer, Arthur
Butler, Mrs Joyce (Wood Green)	Horam, John	Pardoe, John
Callaghan, Jim (Middleton & P)	Howells, Geraint (Cardigan)	Park, George
Campbell, Ian	Hoyle, Doug (Nelson)	Parker, John
Canavan, Dennis	Huckfield, Les	Parry, Robert
Cant, R. B.	Hughes, Rt Hon C. (Anglesey)	Pavitt, Laurie
Carmichael, Neil	Hughes, Robert (Aberdeen N)	Pendry, Tom
Carter, Ray	Hughes, Roy (Newport)	Penhaligon, David
Carter-Jones, Lewis	Hunter, Adam	Perry, Ernest
Cartwright, John	Irvine, Rt Hon Sir A. (Edge Hill)	Phipps, Dr Colin
Castle, Rt Hon Barbara	Irving, Rt Hon S. (Dartford)	Price, William (Rugby)
Clemitson, Ivor	Jackson, Colin (Brighouse)	Radice, Giles
Cocks, Rt Hon Michael (Bristol S)	Jackson, Miss Margaret (Lincoln)	Rees, Rt Hon Merlyn (Leeds S)
Cohen, Stanley	Janner, Greville	Reid, George
Coleman, Donald	Jay, Rt Hon Douglas	Richardson, Miss Jo
Colquhoun, Ms Maureen	Jeger, Mrs Lena	Roberts, Albert (Normanton)
Conlan, Bernard	Jenkins, Hugh (Putney)	Roberts, Gwilym (Cannock)
Cook, Robin F. (Edin C)	John, Brynmor	Robinson, Geoffrey
Corbett, Robin	Johnson, James (Hull West)	Roderick, Caerwyn
Cowans, Harry	Johnson, Walter (Derby S)	Rodgers, George (Chorley)
Cox, Thomas (Tooting)	Johnston, Russell (Inverness)	Rodgers, Rt Hon William (Stockton)
Craigen, Jim (Maryhill)	Jones, Alec (Rhondda)	Rooker, J. W.
Crawford, Douglas	Jones, Barry (East Flint)	Roper, John
Crawshaw, Richard	Jones, Dan (Burnley)	Rose, Paul B.
Cronin, John	Judd, Frank	Ross, Stephen (Isle of Wight)
Crowther, Stan (Rotherham)	Kaufman, Gerald	Ross, Rt Hon W. (Kilmarnock)
Cryer, Bob	Kelley, Richard	Ryman, John
Cunningham, G. (Islington S)	Kerr, Russell	Sandelson, Neville
Cunningham, Dr J. (Whiteh)	Kilroy-Silk, Robert	Sedgemore, Brian
Davidson, Arthur	Kinnock, Neil	Selby, Harry
Davies, Bryan (Enfield N)	Lambie, David	Sever, John
Davies, Denzil (Llanelli)	Lamborn, Harry	Shaw, Arnold (Ilford South)
Davies, Ifor (Gower)	Lamond, James	Sheldon, Rt Hon Robert
Davis, Clinton (Hackney C)	Latham, Arthur (Paddington)	Shore, Rt Hon Peter
Deakins, Eric	Leadbitter, Ted	Short, Mrs Renée (Wolv NE)
Dean, Joseph (Leeds West)	Lee, John	Silkin, Rt Hon S. C. (Dulwich)
Dell, Rt Hon Edmund	Lestor, Miss Joan (Eton & Slough)	Sillars, James
Dempsey, James	Lever, Rt Hon Harold	Silverman, Julius
Doig, Peter	Lewis, Ron (Carlisle)	Skinner, Dennis
Dormand, J. D.	Lipton, Marcus	Small, William
Douglas-Mann, Bruce	Litterick, Tom	Smith, John (N Lanarkshire)
Duffy, A. E. P.	Loyden, Eddie	Snape, Peter
Dunlop, John	Luard, Evan	Spearing, Nigel
Dunn, James A.	Lyon, Alexander (York)	Spriggs, Leslie
Dunnett, Jack	Lyons, Edward (Bradford W)	Stallard, A. W.
Eadie, Alex	Mabon, Rt Hon Dr J. Dickson	Stewart, Rt Hon M. (Fulham)
Edge, Geoff	McCartney, Hugh	Stewart, Rt Hon M. (Fulham)
Ellis, John (Brigg & Scun)	MacCormick, Iain	Stoddart, David
English, Michael	McDonald, Dr Oonagh	Stott, Roger
Ennals, Rt Hon David	McElhone, Frank	Strang, Gavin
Evans, Fred (Caerphilly)	MacFarquhar, Roderick	Strauss, Rt Hon G. R.
Evans, Ioan (Aberdare)	McGuire, Michael (Ince)	Summerskill, Hon Dr Shirley
Ewing, Harry (Stirling)	MacKenzle, Rt Hon Gregor	Swain, Thomas
Ewing, Mrs Winifred (Moray)	Maclennan, Robert	Taylor, Mrs Ann (Bolton W)
Fernyhough, Rt Hon E.	McMillan, Tom (Glasgow C)	Thomas, Dafydd (Merioneth)
Fitch, Alan (Wigan)	McNamara, Kevin	Thomas, Jeffrey (Abertillery)
Flannery, Martin	Madden, Max	Thomas, Mike (Newcastle E)
Fletcher, Ted (Darlington)	Magee, Bryan	Thomas, Ron (Bristol NW)
Foot, Rt Hon Michael	Mallalieu, J. P. W.	Thompson, George
Ford, Ben	Marks, Kenneth	Thorne, Stan (Preston South)
Forrester, John	Marshall, Dr Edmund (Goole)	Thorpe, Rt Hon Jeremy (N Devon)
Fowler, Gerald (The Wrekin)	Marshall, Jim (Leicester S)	Tierney, Sydney
Fraser, John (Lamceth. N'w'd)	Mason, Rt Hon Roy	Tinn, James
Freeson, Rt Hon Reginald	Maynard, Miss Joan	Tomlinson, John
Garrett, John (Norwich S)	Meacher, Michael	Tomney, Frank
Garrett, W. E. (Wallsend)	Mellish, Rt Hon Robert	Torney, Tom
George, Bruce	Mendelson, John	Tuck, Raphael
Gilbert, Dr John	Mikardo, Ian	Varley, Rt Hon Eric G.
Ginsburg, David	Millan, Rt Hon Bruce	Wainwright, Edwin (Dearne V)
Golding, John	Miller, Dr M. S. (E Kilbride)	Wainwright, Richard (Colne V)
Gould, Bryan	Molloy, William	Walker, Harold (Doncaster)
Gourlay, Harry	Moonman, Eric	Walker, Terry (Kingswood)
Graham, Ted	Morris, Alfred (Wythenshawe)	Ward, Michael
Grant, George (Morpeth)	Morris, Charles R. (Openshaw)	Watkins, David

Weetch, Ken	Willey, Rt Hon Frederick	Woodall, Alec
Weitzman, David	Williams, Rt Hon Shirley (Hertford)	Woof, Robert
Wellbeloved, James	Williams, Sir Thomas (Warrington)	Wrigglesworth, Ian
Watkinson, John	Wilson, Alexander (Hamilton)	Young, David (Bolton E)
Welsh, Andrew	Wilson, Gordon (Dundee E)
White, Frank R. (Bury)	Wilson, Rt Hon Sir Harold (Huyton)	TELLERS FOR THE NOES:
White, James (Pollok)	Wilson, William (Coventry SE)	Mr. Joseph Harper and
Whitlock, William	Wise, Mrs Audrey	Mr. James Hamilton
Wigley, Dafydd

Question accordingly negatived.