HC Deb 24 February 1977 vol 926 cc1652-68
The Minister of State, Department of Industry (Mr. Gerald Kaufman)

This House is aware of the serious crisis facing the world shipbuilding industry. Without swift action by the Government, much of the merchant shipbuilding industry in the United Kingdom could close within two years. There would be heavy unemployment on the Clyde, the Tyne, the Wear and Tees and the Mersey, and in Belfast.

This is unacceptable to the Government. Shipbuilding industries all over the world from Japan to Sweden are accepting the inevitability of contraction, and Britain cannot be insulated from this world trend. What we must do is ensure that it takes place within a positive forward-looking policy framework.

The Government are determined to emerge from this crisis with a substantial and viable shipbuilding industry with secure long-term employment prospects.

The Government have therefore decided to use their powers under Part 2 of the Industry Act 1972 to assist the yards in Britain to obtain orders. A sum of £65 million has been set aside for this purpose of which half will be available during the next six months. This figure will be the control ceiling and will operate in place of the cash limit covering all forms of assistance for building ships, which will be terminated. The Industrial Development Advisory Board will be consulted about the fund.

Harland and Wolff, which is already in public ownership, will not be part of British Shipbuilders and will continue to be dealt with by my right hon. Friend the Secretary of State for Northern Ireland.

In accordance with our obligations under the Treaty of Rome, we have informed the Commission for the European Economic Community of our intention to introduce this intervention fund as a matter of urgency. In our view, these proposals conform with our treaty obligations. We continue to be firm advocates of a Community policy for shipbuilding.

The intervention fund will be operated selectively to secure the maximum benefit at least cost. In its administration my Department will work in consultation with the Organising Committee for British Shipbuilders, which will have an important advisory rôle. In considering the use of the fund my Department will wish to discuss with the companies concerned the scope for reducing costs and improving performance.

National Shipbuilders and Repairers Limited will have an important rôle in seeking new orders for the industry, and its activities will be assisted by the creation of the intervention fund. I shall be placing in the Library of both Houses a copy of the company's memorandum and articles of association as soon as the company is registered. To complement this action a major advance factory programme costing over £12 million has been put in hand in shipbuilding areas.

To assist British Shipbuilders, when it is created, to alleviate the human problems caused by the contraction of the industry, my right hon. Friend will be bringing forward proposals to Parliament for a redundancy scheme similar to that for the British Steel Corporation. Similar arrangements will be made for Harland and Wolff. My immediate concern is to secure orders in order to promote the increased competitiveness needed to secure a future for the industry. These measures to alleviate the industrial and social effects of the world shipbuilding crisis are important and must form part of a longer-term strategy of modernisation and rationalisation following upon public ownership.

Mr. Biffen

Is the Minister aware that we join him in acknowledging the seriousness of the problem that confronts the shipbuilding industry, in this country and world-wide, and in recognising the very serious human and social consequences that flow from that situation? Is he further aware that that is not confined to shipbuilding but also encompasses ship repairing? Therefore, will he take this opportunity to comment on the Report from the Standing Orders Committee of another place and make clear what is to be the Government's policy in respect of ship repairing?

Is the Minister aware that, notwithstanding the generally tolerant and sympathetic response that I have made to his statement, he could have sought a programme of agreed rationalisation with the shipbuilding industry at any time over the past two years, instead of which he has had recourse to the discredited policies of nationalisation in a Bill with the added defect of hybridity?

I should like to put three questions concerning the proposed financial aid. First, what is the sum of the expected expenditures that will now be replaced by the £65 million? Second, can the Minister assure us that the moneys will be allocated to yards with proven records of meeting delivery dates and with established standards of productivity and profitability? Will the views of the Industrial Development Advisory Board be sought and published? Finally, what reduction in total United Kingdom shipbuilding capacity is envisaged as a result of these proposals?

One point outside the actual question of the fund—what consultations are now under way with our trading partners to guard against the prospects of an international Dutch auction in shipbuilding and shipping subsidies?

Mr. Kaufman

The hon. Member, with his well-known amiability, finds it a little difficult to make the polemical noises that his predecessor, the hon. Member for Henley (Mr. Heseltine) used to inflict upon us. He does his best, but he carries conviction only when he speaks seriously. Therefore I shall disregard his bogus polemicism and merely deal with the serious questions that he has put to me.

First, the hon. Gentleman asked about the replacement of money. This £65 million is new money. There has not previously been a sum allocated for assistance to shipbuilding in this way. Assistance to shipbuilding has previously had to take its turn and to fight for its chance with all other money allocated under that excellent Industry Act of 1972, which the hon. Gentleman laboured so hard to put upon the statute book.

Second, the assistance will go to yards very much according to the criteria that the hon. Gentleman suggested. It would be foolish to bail out yards that are not able to meet pricing and delivery criteria, which would make sure that the money allocated was spent in a sensible way.

As for the publication of the IDAB reports, again, from his experience of the Industry Act, the hon. Gentleman will know the circumstances in which those reports are published. I have already said that the IDAB will be consulted, but I cannot give the hon. Gentleman commitments about the publication of those reports beyond what is in the 1972 Industry Act.

The hon. Gentleman asked what kind of reduction in capacity we were looking for. We are not looking for any. We have made it clear to our colleagues in the Community and to others that we refuse to accept across-the-board reductions in capacity for the British shipbuilding industry. Our industry has not increased its capacity in the last 30 years, while other industries all over the world have been increasing theirs. Therefore, we refuse to take part in the kind of Procrustean operation that has been suggested in some quarters. Our aim is not to see how many yards we can close; it is to find the maximum numbers of yards that we can keep open.

The hon. Gentleman also asked about talks in a wider sphere. Our talks in the EEC are of great importance. They have been proceeding with officials. I had a meeting myself only this morning with Commissioner D'Avignon, and will be seeing him again. Talks in the OECD are also going forward. It is extremely important that so far as possible we co-ordinate our policies with those of other shipbuilding countries that are facing the same problems, but we had to make it clear that in this circumstance the crisis had grown too great, that it was not possible for us to wait any longer and that is why we have made the decision that I have announced to the House.

On the question of ship repair, I am glad that the hon. Gentleman acknowledges the problems of the ship repairing industry, which were so greatly pushed aside during our rather prolonged proceedings on the Aircraft and Shipbuilding Industries Bill. With regard to the Report of the Examiners, a statement will be made upon that in due course.

Mr. Fernyhough

Does my hon. Friend appreciate that many of us are very glad that he has made it clear to the Commission that the situation in the British shipbuilding and ship repairing industry is so grave that we cannot wait for its long-winded comments? Is he further aware that it would have been a tragedy if a maritime nation such as ours, with two experiences of world war, had allowed the shipbuilding and ship repairing industry to go out of existence, as it was likely to have done but for my hon. Friend's statement? How successful has he been in getting British shipowners to place or to promise to place future orders with British shipyards?

Mr. Kaufman

As I told the House, we made it clear to our colleagues in the Community that it was not possible for us to await the achievement of a Community policy on shipbuilding. Nevertheless, we are extremely anxious, with our colleagues in the Community, to achieve a joint policy. Between us, we can achieve things, especially in relation to competition from Japan and other countries in the Far East, which it is not possible for us to achieve on our own. We hope that this fund will be able to take its place within a Community policy, but meanwhile, as my right hon. Friend points out, we have to go ahead on our own.

I assure my right hon. Friend—the Prime Minister has made this clear a number of times himself—that we are determined to maintain a modern, viable shipbuilding industry, with long-term prospects for employees.

We have the third largest shipping fleet in the world. We cannot allow a situation to develop in which we could not supply our own shipowners. Recently my right hon. Friend the Prime Minister and I met the General Council of British Shipping. My officials met the council again yesterday. We hope—and we have every encouragement—that it will cooperate with us in making sure that the intervention fund works satisfactorily. To take one example—my hon. Friend will know of this—an extremely satisfactory order has recently been placed with Sunderland Shipbuilders, for a British shipowner, which will provide satisfactory employment there for some time.

Mr. Emery

Can the Minister tell the House more about the way in which this money is to be distributed? Will it be in the form of a direct non-returnable grant? If it is to be in loan form, what interest terms will be structured against it, and how will they compare with the terms for normal bank loans? Can any of the money be used to assist in the credit terms that could be given to potential buyers? Often credit terms are a major factor in attracting new shipping business. Ours have not always been equal to those given by foreign yards.

Mr. Kaufman

The money will be available in the form of a grant, although we shall be ready to discuss any flexibility in the way in which it is allocated. There are many possibilities that we can discuss with the shipbuilders, together with the way in which we could perhaps obtain some recompense for the way in which the money is allocated.

The hon. Gentleman drew attention to a very important point by referring to credit terms. We recognise that some countries outside the OECD and the EEC manipulate credit terms and suit themselves. On the other hand, we have to operate within the OECD and we have to make sure that the necessary regulations are satisfactorily observed. We always seek to be as helpful as we can in granting credit terms, but credit terms and assistance are outwith this intervention scheme.

Mr. Emery


Mr. Kaufman

That is right.

Mrs. Bain

Does the Minister accept that many people will regard these proposals as being too little and too late? Why has it taken the Government so long to get round to accepting the proposals put forward throughout the passage of the Aircraft and Shipbuilding Industries Bill? Why are the Government now attempting a policy of planned redundancy in the shipbuilding industry?

How much of the money will be allocated to the Scottish yards? Will encouragement be given for diversification into various aspects of shipbuilding, such as fishery protection, oil rig defence, and so on?

Mr. Kaufman

The hon. Lady finds it just about as difficult to be sour as does the hon. Member for Oswestry (Mr. Biffen), but she does make the effort. I sat with her hon. Friend the Member for Dundee, East (Mr. Wilson) on the Committee which dealt with the Bill in 58 sittings, most of which he attended, but I never heard him put forward a single positive proposal about how the shipbuilding industry should be assisted. He made very interesting speeches on Scottish law, which I found educational, but said nothing that was of positive use in helping the shipbuilding industry.

The hon. Lady should not ask for an allocation for Scotland. If we were to make a pro rata allocation, Scotland might get less than if we were to allocate on the basis of need and in sensible circumstances. A number of Scottish yards have recently been found work are being found work as a result of action by this Government. This would not have been available if we had taken a crude pro rata approach to assistance for shipyards. We are trying to assist them according to need.

The hon. Lady makes an important point about diversification. We have tried to see whether any immediate diversification can be obtained for such Scottish yards as Hall Russell and Robb Caledon. I have discussed this with a delegation from Robb Caledon, and I shall be seeing Hall Russell this week. That is immediate and, as it were, ad hoc diversification. Longer-term diversification must depend on capital investment, which will be possible only when we get British Shipbuilders into being.

I reject what the hon. Lady said about planned redundancis—she must always have her slogan. We are seeking to achieve the maximum amount of planned employment, with all too little help from the hon. Lady's party.

Several Hon. Members rose

Mr. Speaker

Order. I shall do my utmost to call those hon. Members who have a direct constituency interest in the matter, as far as I can recall it. It would be helpful if we could rather concentrate on matters that are raised.

Mr. Craig

While warmly welcoming the Minister's announcement, may I ask for an assurance that when he seeks out new orders he will co-ordinate his efforts closely with those of the Secretary of State for Northern Ireland and that there will be regular machinery for cooperation?

Mr. Kaufman

I give the right hon. Gentleman that assurance. I should point out to him that, to take a recent example, I have been co-operating closely with my right hon. Friend the Secretary of State for Northern Ireland on the question of work on LPG carriers for Harland and Wolff. We hope to make some progress on that. We regard the problems of Harland and Wolff as serious and as problems that we want to help solve. But direct assistance will come, as the right hon. Gentleman would expect, from my right hon. Friend the Secretary of State for Northern Ireland.

Mr. Loyden

Is my hon. Friend aware that his statement will be welcomed by the shipbuilding industry, even if only as showing that the Government's attention has been turned to the problem? Is he also aware that great concern is felt by workers in the industry about the delays caused to the Aircraft and Shipbuilding Industries Bill? When he deals with the Bill, will my hon. Friend take into account the position of the ship repairing industry? When he raises the question of the competitiveness of the industry, is he aware—I have written to him on this matter—that a yard on Merseyside tendering 40 per cent. below the nearest tender was, in the end, unsuccessful because of the intervention of the Government of the Irish Republic? That contract was subsequently taken to Ireland. In those circumstances, does he agree that it is impossible for the British-based ship repairing industry to compete?

Mr. Kaufman

One of the problems of certain ship repair yards—my hon. Friend has knowledge of this—is that their facilities are such that it is difficult for them to offer the kind of services which ship repair yards in other countries offer. We are well aware of the problems created by the delays in the passage of the Bill, but no one on the Government side of the House can be blamed for those delays; we have made every effort to get the Bill on to the statute book as we put it forward.

Mr. Grylls

I ask the Minister to return to the question put by my hon. Friend the Member for Oswestry (Mr. Biffen). I remind him that he must try to answer questions. The simple question is: 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? What is the extra cost in lost jobs and damage to firms by the Government's plodding on with this silly, doctrinaire nationalisation Bill?

Mr. Kaufman

The hon. Gentleman ought not to lecture the House on this matter. The Industry Act 1972, worthy though it is, is an Act under which we can make available certain kinds of assistance, but it prevented us from participating in the ownership of the companies. The hon. Gentleman is simply seeking—as interestingly as always—to get the Government to dole out State money as gifts to private enterprise, and not very enterprising private enterprise in many cases. Of course we could have used the Industry Act to give hand-outs to this industry, but it is not simply a stop-gap scheme—which is what the intervention fund is—that is required. Many rundown yards in Great Britain need modernisation. Massive sums for investment are required for that. The hon. Gentleman is asking for Government expenditure. as gifts to private enterprise. The only way in which this essential modernisation can be achieved is by getting the industry into public ownership and allowing the corporation to proceed with its corporate plan.

Mr. Urwin

I join my colleagues who have given a warm welcome to my hon. Friend's statement. May I ask him, first, how much of this capital would have been required if the nationsalisation Bill had reached the statute book in accordance with the Government's schedule? Secondly, large and welcome as the sum of money is, does my hon. Friend consider that it is enough to pump into the industry when the industry is in a rather parlous state? Like other hon. Members, I should also like to ask what sort of allocation there will be to the Tyne, the Wear and the Tees. Where will the additional £12 million of investment for factories take place?

Mr. Kaufman

We shall be making a statement about the advance factories fairly soon, and my hon. Friend will then be able to see the areas to which they will be allocated. My hon. Friend understandably questions whether this sum of money is enough to save all the jobs in the industry. The answer is "No". We would require many hundreds of millions of pounds to save all the jobs in the industry. What we are seeking to do as an interim measure is to secure orders in the short term, particularly in the first part of this year, to save a number of yards which would go under, because it is a fact that without further orders about half the yards in the British shipbuilding industry will run out of work this year. A very few yards have work running beyond 1978. That is the extent of the problem that we have inherited.

As for the question of the allocation to the Tyne, the Wear and the Tees, there is no allocation to any particular area. I made that clear to the hon. Member for Dunbartonshire, East (Mrs. Bain). What we have is an intervention fund. We shall use it in the best way possible, and I assure my hon. Friend, an effective spokesman for the area he represents, that his part of the country will be well to the fore in the allocation of the fund, provided that the orders are obtainable for the yards. We are doing what we can now to try to get orders for some of the yards in my hon. Friend's area.

Mr. Maxwell-Hyslop

Why did the Government resist for so long the advice constantly given from this side of the House that the Conservatives' 1972 Industry Act was the appropriate legislation under which the industry could be assisted? Does not the hon. Gentleman's damagingly belated conversion to that view add to what has been obvious for a very long time—that the Government's nationalisation measure is not the appropriate means, as opposed to the Industry Act? Is not that why the Government have deliberately delayed the nationalisation Bill for nine months and are still deliberately delaying it by refusing to remove from it the provision for nationalising the ship repair industry? Can the hon. Gentleman deny that his conversion, however belated, is at least and at last authentic?

Mr. Kaufman

The hon. Gentleman lives in his own world of delusion into which I prefer not to intrude. He asks why we have not recognised that the 1972 Industry Act is the appropriate legislation. The answer is that it is not the appropriate legislation. It is useful legislation for short-term assistance in particular cases, but it is totally inappropriate for bringing about the planned modernisation of an entire industry.

Several Hon. Members rose

Mr. Speaker

I propose to call the hon. Members who are on their feet at this moment—but not all at the same time, of course.

Mr. Heffer

Is my hon. Friend aware that his statement today will be very welcome in areas such as Merseyside and all other shipbuilding areas which have high levels of unemployment and cannot afford to have any more workers out of work? Is he aware, however, that many of us believe that, because of the dilemma we are in over the Bill for public ownership of the shipbuilding and ship repairing industry, the time has come to take one step backwards in order to take two steps forward at a later stage? We would suggest that the Government might consider accepting that the shipbuilding and aircraft industries should be publicly owned immediately, and that the National Enterprise Board or other agencies could consider buying the ship repairing sections in order to deal with the present situation. While the money is vital, the long-term solution must be the money plus public ownership and planning of the industry on a national basis.

Mr. Kaufman

I have already told the House that the Government will be making a statement about the Bill in due course, and I do not want to go beyond that. I thank my hon. Friend for the way in which he has welcomed my statement. With his long experience of representing a shipbuilding area, he will know how important this interim aid is to areas such as that which he most effectively represents.

Mr. Michael Marshall

Will the Minister acknowledge that a major problem still remains, because he must admit that the amounts involved are not massive in relation to the difficulties that the industry faces? Will he try to spread the money as effectively as possible, accepting that there is a strong case for putting it where it could most effectively be used, by encouraging companies which are already profitable to raise their own capital? Will he act along these lines and show a more flexible attitude? Will he tell the House that he is willing to see a company such as Vosper-Thornycroft dropped from the nationalisation proposals so that it can get past the investment hiatus, raise the capital and get on with its own work?

Mr. Kaufman

We are certainly not prepared to drop companies such as Vosper Thornycroft from the publicly-owned corporation. Vosper Thorneycroft will be included in British Shipbuilders. I recognise that the amounts are not massive. I have already said that in reply to my hon. Friend the hon. Member for Houghton-le-Spring (Mr. Urwin). The fact is that very much larger sums of money are necessary if the British shipbuilding industry is to be bailed out of its present terrible position. What we are seeking to do in the short term is to save as many jobs as possible while making sure that the areas in which the jobs are saved are areas which can deliver ships of the right quality and on time, because that is very important too.

Mr. Gould

Will my hon. Friend nevertheless pay some attention to those parts of the shipbuilding industry which are not covered by his statement? In particular, will he ensure that the Royal Navy continues to place contracts with the three specialist yards—I think particularly of the Type 42 frigate and Vosper Thornycroft—so that they can maintain their own capability, both in their own interests and in the interests of the industry and the Royal Navy?

Mr. Kaufman

We have already made statements about the affirmation of the position of the three specialist warship builders— what I think was called the Carrington assurance. That remains, and we stand by it. We of course recognise that there are areas such as my hon. Friend's which have a particular interest in certain types of vessel. I know that my hon. Friend has in mind particular problems on which I cannot comment now. But I would tell my hon. Friend's constituents that in pleading for his area there is no hon. Member who does it more effectively than he does.

Mr. Blenkinsop

Will my hon. Friend emphasise that the investment fund is related to ship repair as well as shipbuilding, and that in particular it could be available for practical investment schemes for modernisation on the Tyne, schemes that we have put up to my hon. Friend in the past, affecting many firms already under public ownership?

Mr. Kaufman

I fear that I cannot give my hon. Friend the answer that he would like. The money is being made available to bridge the price gap with some of our competitors in other countries beyond the EEC who are undercutting us. That is what we hope to succeed in doing. I assure my hon. Friend that the Tyne is very much to the fore in our consideration of these matters. We do not disregard the ship repair problems on the Tyne, but my statement is not designed to deal with those.

Several Hon. Members rose

Mr. Speaker

I shall call the remaining two hon. Members who are standing, but I must point out that I made a mistake and overlooked the right hon. Member for Lowestoft (Mr. Prior), who indicated that he has a constituency interest in this subject. Also, of course, I shall call the spokesman for the Opposition.

Mr. James Johnson

I welcome the Minister's vigorous and generous statement. Will he accept that the fact that we are passing legislation for a 200-mile fishing limit means that there will have to be enforcement of that limit? There are many small yards on Humberside which build vessels for that purpose and they need orders badly. Will the Minister consult the Secretary of State for Defence about the need to place orders for vessels of a fisheries protection type?

Mr. Kaufman

You have said, Mr. Speaker, that you are calling the right hon. Member for Lowestoft (Mr. Prior). One of the right hon. Gentleman's grievances is that an order for that kind of vessel for Brooke Marine has gone to Humberside. I think that I had better not exacerbate the problem between the right hon. Member and my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson). On the general proposition that my hon. Friend has raised, we are well aware of this point. I am considering the matter very carefully and in detail. It presents certain problems of financing. I am in consultation with the Secretary of State for Defence about it and if a feasible, sensible scheme can be brought forward we shall be interested in examining it.

Mr. Prior

I apologise to the Minister for not being here at the beginning of his statement. When he considers what can be done to place extra orders or help with orders for certain types of vessel for fisheries protection, will he bear in mind that Brooke Marine has been exporting 85 per cent. of its production, and that it is a very modern and efficient yard? However, it will run out of orders completely by August this year, and a very serious unemployment situation is likely to prevail as a result. In view of the fact that Brooke Marine has had such an exceptional export record over the past 10 years, will the Minister give an assurance that he will do everything he can to help?

Mr. Kaufman

I give that assurance. The right hon. Member does well to speak as he does of Brooke Marine, which is a very good yard and to which I have been devoting direct attention lately to see what can be done to help it. However, it shares the problems of a number of yards around our coasts and estuaries. I am trying to see whether something direct can be done for the yard and whether a scheme of the kind that my hon. Friend the Member for Kingston upon Hull, West mentioned can be brought about. If it can, we shall then see whether Brooke Marine can be assisted by that means.

Mr. John Evans

Will the Minister accept that his announcement of aid to the industry is very welcome? However, his talk of a redundancy payment scheme, contraction, and advance factory building programmes will bring a touch of fear to Merseyside, Tyneside and Clydeside—areas where there is already far too much unemployment. Does he agree that the real problem facing the industry is lack of orders? While the industry does need reorganisation, one of the most crippling problems is the ferocious competition from Japan. If the EEC talks are to be meaningful the Community must take a much tougher line with Japan. May I add my weight to the suggestion that we must accept the verdict of the Examiners—no matter how regretfully—and that a Bill should be brought in to bring the shipbuilding industry into public ownership as quickly as possible? I do not think that the Opposition will be difficult about that.

Mr. Kaufman

On my hon. Friend's point about the Bill, I have nothing to add to what I have said already. I fully recognise the fears that exist in the shipbuilding areas about the words "contraction" and "redundancy payment schemes", but we must face the fact that without new orders two-thirds of the shipbuilding workers in this country will be out of work by the end of next year. This is the dimension of the problem with which we must deal. I have never said, in all my visits to shipyards, that we could save all the jobs in the industry. I have told shop stewards at every yard that I have visited—and there have been many—that public ownership of itself will not save a single job. What will save the industry is modern equipment and facilities and the ability to deliver on time and at the right prices. That is what we are seeking to do in securing orders—orders and nothing else are the key. We are working very hard with our EEC partners to deal with the Japanese problem. The Japanese have made certain concessions but we believe that it is open to them to make more. We are working hard to try to obtain that.

Mr. Biffen

Is the Minister aware that talk of redundancy comes uneasily from the lips of anyone in any quarter of the House, but there is a certain paradox in his original statement and the supplementary answer that he gave me? In the original statement, the Minister talked about forward-looking and positive policies being the Government's framework, but he said that Britain was not insulated from the world-wide trend of contraction in the industry. In his answer to my supplementary question, however, he dismissed my inquiry about the amount of reduction proposed in the total United Kingdom shipbuilding capacity. Ambiguity on these matters serves no one. Surely a reduction in capacity is in prospect. Therefore, surely I should ask what part his measures, announced this afternoon, play in securing a planned reduction in capacity.

Mr. Kaufman

The question is a fair one, but to answer it in plain and simple terms is not as easy as it sounds. We wish to maintain the maximum productive capacity in this country compatible with the order situation. There is no point in having over-capacity, which will go on in a situation where orders are not available over a prolonged period. But we have no plans, as such, for a reduction of capacity, and certainly we have no plans for a reduction of capacity by a specific amount. We recognise that there will have to be a contraction. I have made no bones about that, either to hon. Members in this House or to the unions. There will have to be a contraction, but we are not planning a specific contraction and we are certainly not planning a percentage contraction. We want to maximise the size of the industry, but the industry of maximum size will be smaller than that which we have now.