HC Deb 25 July 1979 vol 971 cc802-30

1.7 a.m.

The Minister of State, Department of Industry (Mr. Adam Butler)

I beg to move. That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1979, which was laid down before this House on 10 July, be approved. Under section 11 of the Aircraft and Shipbuilding Industries Act the borrowing limit of British Shipbuilders is set at £200 million. There is provision to increase the limit by order, subject to the approval of the House, up to a maximum of £300 million. I propose that the borrowing limit should now be increased to that maximum of £300 million.

The House will be aware, from my statement on Monday, of the background to this proposal. In view of that statement and the lengthy exchanges on it, I do not propose to say anything further about the background.

Merchant shipbuilding is in the grip of a severe recession. This is mirrored by the financial results of the corporation. In its first nine months its trading loss, before interest, was £104 million.

The report and accounts were laid before the House today. Last year the corporation made a trading loss of £49 million against a target of £45 million.

The previous Administration set the loss limit for 1979–80 at £100 million after crediting intervention fund assistance. This increase in the loss limit must have reflected the view held by Ministers then that the going would be tough. Our review has led us to a similar, if not more pessimistic, conclusion.

On capital expenditure, British Shipbuilders is spending at the rate of about £40 million per annum, of which considerably over half is on naval yards. Both the losses to which I have referred and the capital expenditure have to be financed. British Shipbuilders' cash limit this year, including receipts of intervention fund assistance, has accordingly been set at £250 million.

There is some urgency about the need to increase the borrowing limits. That is why we have to debate the order in the final days before the recess. By mid-July, the amount of the corporation borrowing to be counted against the borrowing limit had risen to approximately £160 million. Of this, about £95 million had been advanced from the national loan fund on an interim basis pending further consideration as to the most appropriate means of financing the corporation. The remainder includes a temporary borrowing facility of £30 million and overseas borrowing in connection with the Polish deal of just over £30 million.

In my statement, I gave a trading loss figure for 1980–81 of £90 million, before crediting intervention fund assistance. Although we still have to set a cash limit for that year, that trading loss limit illustrates all too clearly why we need to raise the borrowing limit above £200 million. Indeed, the increase to £300 million will not be sufficient to last through this financial year, and the Government will bring forward legislation in the autumn to increase the borrowing limit further.

The rapid increase in British Shipbuilders' borrowing requirements underlines the substantial support that has been provided by the Government in the present difficult circumstances of the industry. There is of course a need to strike a balance between the needs of the industry and what the taxpayer is prepared to pay. We cannot provide support without limit. But the point that I stress to the House is that the support that we are providing will be available for a two-year period and this will allow British Shipbuilders to plan accordingly and will remove the uncertainty that has prevailed since the corporate plan was presented to Ministers last winter.

Our hope, which I know is shared by all those who work in the industry, is that British Shipbuilders will take the opportunity provided by Government support over these two years to improve its efficiency and productivity so that when the market recovers it will be able to prosper and compete without subsidy in what is likely still to be a very tough world.

Against a sombre world backcloth for merchant shipbuilding, and in order to give room for Government support for our industry over the next few months until we need to bring forward new legislation, I ask the House to approve the order.

1.13 a.m.

Dr. John Cunningham (Whitehaven)

We welcome the fact that the Government have brought forward the order, even at this late hour, and we shall not object to its passage. We agree that it is clearly of the utmost urgency that British Shipbuilders' borrowing limit should be increased.

The position in shipbuilding and the financial constraints on British Shipbuilders give us the opportunity to probe the Government further and more carefully on their attitude to British Shipbuilders than we were able to do even in a fairly lengthy series of questions following the Minister of State's statement on Monday.

I start by declaring an interest. I am a sponsored Member of the General and Municipal Workers' Union, which plays a major role in the British shipbuilding industry, both on its own account and as a member of the Confederation of Ship. building and Engineering Unions.

I wish to make clear that, despite what the Minister of State has hinted and some in the media have indicated, there are large and fundamental differences in the positions of the Government and the Opposition in respect to shipbuilding in the United Kingdom.

It is utterly false to suggest that if we had been in office at this time we should have proceeded in the same way as the Government. The position of the previous Government was as set out by my right hon. Friend the Member for Chesterfield (Mr. Varley) in the Official Report on 4 April this year, beginning in column 829. It is a simple matter for anyone who wishes to compare the relative positions of the major parties on shipbuilding to contrast that statement with the statement made on Monday by the Minister of State, which begins in column 41 of the Official Report for 23 July. It is obvious, even on a cursory appraisal of the two statements, that there are fundamental differences of position.

It is also not true, contrary to what some people have stated outside the House, that the unions involved in the industry—either the individual unions or the Confederation of Shipbuilding and Engineering Unions—accept the position of the Government or, for that matter, any of the options set out by British Shipbuilders. None of those options was accepted by the previous Government.

It is clear that market forces are not operating in shipbuilding, not only in the United Kingdom but worldwide. There is no use pretending that if our shipbuilding was forced into a position of financial rectitude in the next couple of years the problem would be solved. It would not be solved. The most recent example is the Shell-Esso vessel that went to Finland. Clearly market forces were not operating in respect of that contract, as even the Minister of State, I believe, would acknowledge.

More specifically, the previous Government, and certainly the Opposition now, do not accept the so-called option 2 of British Shipbuilders. We said that we were determined to ensure that British Shipbuilders maintained its share of world shipbuilding. That was the preference of the Labour Government. It remains our position. In view of his remarks in this debate and in view of his statement on Monday, will the Minister of State say whether he thinks that British Shipbuilders will be able to sustain anything like option 2 under the conditions that the Government are laying down? Will British Shipbuilders be able to finance anything like option 2, in view of the Government's attitude to the industry?

The borrowing powers are clearly not adequate. The Minister has already indicated that new legislation will be needed. It is obvious that the maximum will be affected very soon. Will the Minister give some indication when the House can expect the legislation and what it is likely to contain? Even a broad outline would be helpful.

There is a big difference in the attitude of the parties on providing finance for the industry. As the Minister knows, it was our view that financing should be carried out through public dividend capital and not through the national loan fund financial arrangements. Are not repayments to the Government by British Shipbuilders, with money provided by the Government, simply a vicious circle? This will not help the situation. It will probably have a major impact on the ability actually to finance shipbuilding. If, as the Minister indicated, the trading loss limit of British Shipbuilders is to be maintained at £100 million, will there not be difficulty in providing money on a national loan fund financing basis?

Will the Minister be a little more explicit about the Government's position on orders? He well knows that the Labour Government—and not only Ministers in the Department of Industry but even my right hon. Friend the Leader of the Opposition, when he was Prime Minister—worked very hard to obtain work for British Shipbuilders. Orders from the Middle East, the Polish order, the Ministry of Defence orders that we brought forward, and the use of the overseas aid programme—all these matters were given major priority by the Labour Government to keep our shipbuilding intact and to provide work throughout the United Kingdom for British Shipbuilders.

The Government have been rather reticent in saying how they will act in these areas. It is not good enough to say that there are no orders around. We recognise that there is a major problem in world shipbuilding, but the Government could show a little more willingness—it would not be difficult to show a little more; they have not shown much so far—to try to get work for a major traditional industry.

How will the intervention fund be used? Indeed, what use will it be if there are no orders? The Government have a major responsibility there. One has only to look at British Shipbuilders' berth programme to see that many of our major yards, on the Clyde, the Tyne, the Wear and the Tees will face imminent problems.

We call upon the Government to act much more urgently and with more vigour to tackle these very serious problems for communities in the areas that I have mentioned. They are likely to run out of work very quickly now—some, perhaps, within a matter of weeks.

Will the Minister also tell us a little more about the Government's attitude to the ship repairing industry? Again, major problems exist, but the Government have given little or no indication of their approach to this section of the industry. The Minister will know that before the general election a Bill had been published to change the law on the credit guarantee scheme for ship repairing. Is it the Government's intention to bring forward such a Bill? If so, when is it likely to appear? What proposals do the Government have to help this section of the industry? Are talks proceeding within the industry, with both the public and the private sectors of ship repairing, about any help under the Industry Act or in any other way?

Another important question is, what will happen in the industries associated with shipbuilding, such as the marine engine industry? Already a large number of redundancies have been declared at Doxford Engines Ltd., on the Wear. What will happen to our national capability? What will happen to companies such as Doxford, and to Kincaid, in Scotland? Shall we be able to maintain a capability in slow-speed diesel engines with these financial arrangements being laid down by the Government?

I say to the Minister, as we said to him when he made his statement, that we do not regard the financial arrangements as adequate. Perhaps more importantly, we do not regard the time scale that he envisages, the two years about which he has talked, as being anything like sufficient to give the industry and the unions a fair chance to resolve the problems. That is being quite fair with the Minister. There are major problems. The unions recognise that. They want a fair amount of time to get to grips with the problems.

Is it reasonable, is it in the national interest, to put such a straitjacket on our own industry when we know that other Governments in Europe and beyond are being far more relaxed in their approach to their own industries? Is it not true that it is not the fault of the British shipbuilding industry that there is such massive excess capacity in the world? That has nothing to do with our industry, which has hardly expanded its capacity for the past 20 years; in fact it has probably contracted slightly in that time. Do we not also have good, well equipped shipyards in this country, and should not we do everything possible, in terms of the financial structure and the time scale, to ensure that it survives the crisis in world shipbuilding?

I have said more than enough to make clear that there are fundamental differences between the former Labour Government's approach to British Shipbuilders and that of the present Administration. Our policy was to save as many jobs as possible, to maintain a share of the world market to ensure that British orders for ships as far as possible went to British shipyards. We wanted to safeguard our technology and our capability in new marine technology, in emergency support vessels which are so important to the development of our continental shelf activities. Would it not be outrageous if we were unable to continue to provide vessels like that, when we are becoming a world leader in the development of offshore oil and gas resources? I have already mentioned slow-speed marine diesel engines.

I am in no doubt that it is totally false to suggest that there is little or no difference between the two approaches to the problems of shipbuilding. There is no doubt in the minds of workers and their unions on the Clyde in Birkenhead, on the Tyne and elsewhere in the North-East about this matter. The Minister of State should recall the experience of his hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) and be careful that the ghost of Upper Clyde Shipbuilders does not come back to haunt him with the same results as it had at that time for his hon. Friend.

Many of my hon. Friends, some of whom are here tonight, have been appalled by the Government's statement and the devastation that is likely to be caused in many of their constituencies. They, too, have many important questions to put to the Minister in this debate.

1.28 a.m.

Sir William Elliott (Newcastle upon Tyne, North)

Like the hon. Member for Whitehaven (Dr. Cunningham), I recognise the need for putting forward this order at this late hour. The hon. Gentleman suggested that there are fundamental differences in the approach of each side of the House to our shipbuilding industry. What each side has in common is the need to face hard economic facts. I agree wholeheartedly with the hon. Gentleman about our need, as a nation, to maintain a viable and sound shipbuilding industry, but we have to look hard at the industry to see whether it is sound and viable, and I am afraid we find that it is not. I also agree with my hon. Friend the Minister of State that the taxpayer cannot be expected for ever to supply support without limit.

Any curtailment of the shipbuilding industry is as serious for the Tyne, part of which I represent, as it is for any other part of the country. Again, I agree with the hon. Member for Whitehaven that we have some good modern yards, including the Wallsend shipyard on the Tyne.

Today's press—produced an hour ago—states that the heaviest loss in British shipbuilding last year was in the area of the Tyne. The once proud Swan Hunter sector of the British shipbuilding industry is showing a pre-tax loss of £15.8 million—a great increase on the figures of a year ago. It is essential to realise that there is no future for our shipbuilding industry unless our yards are made reasonably competitive and unless hard economic facts are faced.

British Shipbuilders' target, to cut merchant shipbuilding capacity to 430,000 tons by March 1981, is optimistic. There was only 230,000 tons of new orders last year. No matter how much the hon. Member for Whitehaven extols the virtues of the Labour Government's approach to the shipbuilding industry, the previous Government cannot avoid that hard fact. Thank heavens for naval work for the Tyne. Without that we would be in a sorry state.

The hon. Member for Whitehaven suggests that the new Government's approach is wrong. However, he is at variance with British Shipbuilders. The chief executive, Mr. Casey, suggests that the present Government's statement on shipbuilding ends an era of uncertainly for British Shipbuilders. At least it now knows where it is. As Mr. Casey states, British Shipbuilders is on its mettle. It has two years in which to show results. The Tyne is grateful for those two years. With its proud record, the Tyne is prepared to have a go in those two years, within the Government's guidelines, at helping to make our industry competitive in the years to come. Surely, there is a place for British shipbuilding in the years which lie ahead. I commend the Government for introducing the order.

1.33 a.m.

Mr. Don Dixon (Jarrow)

My hon. Friend the Member for Whitehaven (Dr. Cunningham) has put the Opposition case well. When we talk of British Shipbuilders we are not talking about competition in this country. I remind the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) that I have worked in every shipbuilding and repairing yard on the Tyne.

Mr. Ken Douglas, who runs Austin and Pickersgill's nationalised yard, wrote in an article in The Guardian on Monday: We are not competing against the Japanese shipbuilder or the Japanese shipyard worker, or the German or the Belgian or the Dutch or anything else. We are competing as a Government with Government terms offered elsewhere and it is a purely political thing. If Japan is giving a 50 per cent. subsidy, half the price of the ship, what kind of productivity levels would we have to reach to compete with that? If our men built the ship for nothing, we still can't win. I fail to understand how the hon. Member for Newcastle upon Tyne, North can talk about competition and getting productivity right when we have to face international factors such as that.

When I asked the Minister of State a supplementary question about his statement on shipbuilding, I was told that I was being emotive. This is an emotive issue. We are not talking about one job. We are talking about whole communities. To many in the industry shipbuilding is not just a job but a way of life. The close relationship that exists between working and living environments certainly exists on the Tyne, as the hon. Member for Newcastle upon Tyne, North, should know.

The social and economic life of whole communities relies upon shipbuilding. Perhaps I may give some examples to bear out what I have said. First I refer to the constituency of my hon. Friend the Member for Wallsend (Mr. Garrett). Some years ago a survey was conducted in the Swan Hunter yard at Wallsend. It was found that 62 per cent. of the work force lived in Wallsend or in the two adjacent districts. On Wearside the situation is more marked. A recent survey at Austin and Pickersgill's Southwick yard showed that 37 per cent. of the work force lived within one mile of the yard and that only 1.5 per cent. lived more than five miles from it.

Shipbuilding and the connected industries have formed an important part of the heavy industrial base of the North-East for many years. In certain areas in the North-East there is a long tradition of employment in shipbuilding and ship repairing, and we have a highly skilled labour force. Nearly 8 per cent. of employment in manufacturing industry in the Northern region is in shipbuilding and marine engineering. That compares with under 2.5 per cent. in the United Kingdom as a whole. In certain parts of the North-East the concentration is much higher. On Wearside it is 20 per cent. and on Tyneside 16 per cent. That probably underestimates the amount of employment generated by the industry in the North-East, because many engineering firms carry out marine engineering work.

Within the North-East region there exists a totally integrated shipbuilding and ship repairing industry, supplied and serviced almost wholly from within the region. That state of affairs is not to be found in any other part of the United Kingdom. Apart from the importance to the North-East of the shipbuilding and repairing industries, those industries play an important part in the economic life of the Northern region.

Unemployment in the Northern region has been consistently higher than in any other region of the United Kingdom, with the exception of Northern Ireland. The region accounts for over 20 per cent. of the total employment in shipbuilding and marine engineering in the United Kingdom. We were able, because of the skills and capacities, to take advantage of the boom in orders in 1973. In that year 51 per cent. of the tonnage launched in the United Kingdom was launched in North-East yards.

In March 1974, 44 per cent. of the industry's total order book was with firms in the North-East. That impressive record was achieved over the years without much Government aid. Is it fair, when there is a world surplus of shipping, that the British shipbuilding industry should contract when it has been declining for years? Unemployment has been exported to us from some nations with newly established shipbuilding industries. We in the North-East cannot accept any further contraction in the industry there.

In addition to shipbuilding and ship repairing, the North has many other organisations connected with them. The university of Newcastle has the largest and foremost naval architectural department in the country. It has close connections with the industry in the North-East and elsewhere. The university also has a marine industry centre which was set up in 1970. The centre is a university department, but its activities are mainly commercially oriented. Its aims are to provide a consultancy service to the industry by means of contract research and development, and technical consultancy.

Sunderland polytechnic has a department of naval architecture, too, and in South Shields we have the marine and technical college, which is internationally known. With these institutions in the North-East, we have the greatest concentration in the country of technical education facilities directly concerned with the shipbuilding industry.

The British Ship Research Association has its headquarters at Wallsend, again in my hon. Friend's constituency. The association is the central research organisation of the British shipbuilding industry and offers a consultancy service as well as undertaking longer-term research and development projects.

My hon. Friend the Member for Whitehaven made the point that finance is not the only thing that shipbuilding requires. It needs orders, and they must be provided. I come now to a few suggestions, to some of which reference has already been made. First, we require a scrap-and-build scheme, and the sooner we get it the better. We shall then be able to get some orders and be able to use the finance of the intervention fund. There should be more attractive credit terms for intending buyers. There should be special incentives to home shipowners to build in British yards. We should bring forward orders in the defence programme, as my hon. Friend the Member for Whitehaven said, and we should ask harbour authorities and other suitable bodies to bring forward their vessel replacement programmes. We should investigate the possibilities of diversification in shipbuilding.

I make this other suggestion, too. When I worked in the ship repairing industry, as I did for a considerable time, a lot of the work that was done—I talk about Brigham and Cowan, Redhead, Middle Docks and Smith's Dock repair yards—was on converting ships from coal to oil. It might be a good idea, because of the energy crisis, if we started converting them back to coal. That would probably give a lot of work to the ship repairing industry.

I do not often talk about statistics, because I have been unemployed on a number of occasions and I know that there is no point in standing in the dole queue and being told "You are only one of 50 per cent. and last week you were one of 60 per cent." If a man is unemployed, he is 100 per cent. unemployed.

The other thing to be remembered about unemployment in the North-East, where it is fairly high, is that it is worse than a prison sentence, because a man who goes to gaol at least knows that he will be released but a man who is paid off in the North-East does not know when he will get a job.

Here are the odds against a worker paid off in the shipyards in the North-East getting another job, and again I take this one from one of the national newspapers. They are 71 to one against for a steel worker; for the fitting-out trades—painters, plumbers, electricians and so on—they are up to 45 to one against; and for an unskilled worker they are 371 to one against.

I said in my maiden speech, and I emphasise it again now, that we will not tolerate the solutions of the 1930s being applied to the problems of the 1980s, yet that apparently is what the present Government are trying to do to the shipbuilding industry. We have already seen what rationalisation does. We saw it in the 1930s, when we had National Shipbuilding Securities Limited going about the country buying up shipyards, selling the assets and putting a 40-year embargo on the building of ships. I know from experience, because in Jarrow, the town where I was born, they came in 1934 and bought a Palmer's yard, sold the assets and put a 40-year embargo on, throwing the men on the streets. Yet, a few years later, when there was a war in 1939, the men were taken back into the industry.

A shipyard worker was so vital during the war that he was exempt from going into the Army, and if he did not work overtime he was up before a tribunal and fined for not doing it. Yet these were the men who had been thrown on the scrapheap a few years before through private enterprise and the operation of the market forces that we hear about so often from the present Government Britain is an island, and it requires a shipbuilding industry in peacetime as well as in wartime.

I have no doubt that many people will know the name J. B. Priestley, a well-known novelist. He visited Jarrow during the 1930s after the shipbuilding industry had closed down. He wrote about the hundreds of men who were standing about the streets and about shops being closed. He referred to the area as giving the impression of having "entered a bleak Sabbath ". That is what happens when communities are broken up. We are talking not about individual jobs but about closely knit communities that rely on the industry. They rely on not only marine engineering firms, to which my hon. Friend the Member for White haven referred, but such things as shops and credit facilities.

I hope that the Minister of State will answer soma; of the questions that have been asked by my hon. Friend the Member for Whitehaven. It is vital that certain questions are answered and that action is taken to save the many jobs that I fear will be lost in the shipbuilding industry in the near future.

1.46 a.m.

Mr. Gordon Wilson (Dundee, East)

Despite the lateness of the hour, it is highly suitable that we should have a brief debate on the future of the shipbuilding industry. If one thing is certain, it is that the statement made earlier this week spread a considerable amount of doom and gloom through the industry. When the Minister of State made his statement about the aid that is to be given to the industry, he was extremely quiet about the use to which the funds that are to be made available might be applied. He was quiet about the scrap-and-build orders. He merely said that these were a hope for the future. He did not spell out when the ships might be made available.

It is clear that the industry is fast running out of orders. As the hon. Member for Whitehaven (Dr. Cunningham) has said, an intervention fund is of no use if there are no orders on which the moneys can be spent. I hope that it is impressed upon the Minister that non-use of the intervention fund through the non-availability of orders will not be tolerated and will not be accepted. I warn the hon. Gentleman that the feeling in Scotland on the issue will be strong indeed. In previous years a Conservative Government experienced difficulty when facing the might of the shipbuilding workers.

The Minister said on Monday that he had given orders to British Shipbuilders that within a tight time span it was to order the butchery of the industry, the loss of about 10,000 jobs and the closure of yards. To him that may seem a reasonable financial target to achieve, but to those of us who live in communities which derive badly needed employment from the shipbuilding industry that policy is harsh, inhuman, unkind and, even by the Government's standards, had economics.

In Dundee there is now over 10 per cent. male unemployment. It seems that about 1,000 jobs are at stake at the Robb Caledon yard. If those jobs are lost, male unemployment will be increased to an extremely high level. These are not matters that can be disregarded. They mean a tremendous amount to the communities involved.

What future does the Minister hold out to yards such as Robb Caledon, on the Tay? They were taken into public ownership on two bases. The first basis was maintenance of employment. It was argued that public ownership was the only way of safeguarding the jobs. How does the Minister relate the promises made two or three years ago, which he has now to honour through his Department, with the statement that he made earlier this week and the criteria that he outlined then?

The second basis was investment in new facilities. When the Robb Caledon yard was in private ownership, there was little investment in new machinery and equipment. Therefore, those who worked in the yard had their hands tied behind their backs, because they were using outdated machinery. Yet since the yard was nationalised little has been spent on new equipment.

If, as the Minister said, much of the money that has been made available by the expansion of the limits is to go on revenue financing, how much will be available for the modernisation of such a yard? A yard such as the Caledon, which has never been modernised and has been allowed to remain undeveloped, is in the market for the smaller ships—those which are likely to be on the market, particularly if a scrap-and-build policy is initiated. It is the smaller ships which are older, nearing the end of their lives. That yard is well placed to deal with ships of that size. Therefore, it is important that the Minister should outline tonight when the scrap-and-build policy will be put in motion, how many orders he envisages will come from it, and what future he expects for a yard such as the Caledon.

Over the next few months many people will be asking the Government questions about those areas which are north of the prosperous areas of the United Kingdom—the prosperous areas where the fat cats in the South, who get their taxation benefits, live. We represent areas which are suffering from industrial recession and depression. It seems to me that the present Government are dedicated to stripping away from our areas what limited employment resources they have, with no realistic plans for the provision of fresh jobs which might take the place of those made redundant by technology.

I do not think that the Minister can justify any policy which will butcher the yards in Scotland at this time, when our country is not only suffering from the employment difficulties that I have mentioned but is contributing, through the oil revenues and the development of the oil resources, vast sums of money to the English Government, who seem dedicated to using that money to prop up rich people in the South of England rather than giving jobs to the folk in Scotland.

1.53 am
Mr. Frank Field (Birkenhead)

The Government's record over a short period has already given a rude awakening to many groups, none more than those who followed the fashionable opinion. One debating point outside the Chamber is the question where power lies in our society. For Members of this Parliament there can be little doubt where it lies. Ministers exercise considerable power, and that power is being used ruthlessly in industrial matters, especially in the shipbuilding industry.

I have two tasks tonight. First, I want to show, as did my hon. Friend the Member for Whitehaven (Dr. Cunningham), that the order, which is part of a Government strategy on shipbuilding, marks a major change in the Government's approach to the industry. Secondly, I want to report some of the views of workers in Cammell Laird, the shipyard in my constituency. What does the order mean? What does the Government's policy mean for workers in Birkenhead?

The hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) quoted the comment of the chief executive of British Shipbuilders, Mr. Casey, who has said that the Government's statement earlier this week ended the uncertainty in the industry. That may well be so for chief executives, but the uncertainty continues for workers in the industry. Indeed, the statement heightens that uncertainty.

On a number of important policy issues the Government have been making out that they are not making decisions affecting the numbers of jobs within the industry under discussion. We heard it in relation to Shotton and we heard it earlier this week in relation to British Shipbuilders. They were setting down cash limits. That might mean job reductions, but somehow it was not the Government's direct responsibility. Their attempt to wash their hands of responsibility for the numbers being made redundant by Government policy is to outshine Pontius Pilate in this respect.

The increased uncertainty that workers are finding certainly at Cammell Laird—according to the chairman of the shop stewards' committee—is hardly a stimulus to increase productivity. Expecting the chop—having the sword of Damocles hanging over jobs—is hardly a stimulus to production, let alone to breaking records.

The chairman of the shop stewards' committee reports that we cannot expect to get the best out of men at a time when we desperately need to do so when there is so much uncertainty not at chief executive but at grass roots level.

The decision that we are in part debating tonight about shipbuilding and the way in which it is affecting different regions—specifically Merseyside—cannot be divorced from other Government policies, such as the closure of Shotton and the possible spill-over of the loss of 1,000 jobs in Merseyside. It may be that later today we shall get a statement about the Government cancelling their Civil Service dispersal policy, with the consequent loss of up to 3,000 jobs that we hoped to get. These are major body blows to an area suffering from high unemployment.

The last comment that I want to report from the chairman of the shop stewards' committee is that, with all these policies mounting and pushing more and more people out of work, the Government would be foolish to expect their decisions to be accepted quietly. That matter should weigh with us when considering the effects of the order within the wider context of Government policy on shipbuilding.

The second task on which I want to touch—my hon. Friend the Member for Whitehaven has already referred to it—is the importance of showing that a major change in the direction of policy towards shipbuilding has come with a change of Government. The bipartisan approach to merchant shipbuilding is clearly over. We can see that in the way that the Government are defining the capacity of the industry.

Earlier this week the Minister of State, Department of Industry, vis-à-vis the capacity of shipbuilding, said: I have had to say that the capacity of 430,000 tons is the highest figure that, in our view, could be retained."—[Official Report, 23 July 1979; Vol. 971, c. 42.] Compare that with previous Labour Governments' commitments on capacity. To a Labour Government 430,000 tons was a floor. To this Government it is a ceiling.

Another way of defining the capacity of the industry was touched on by my hon. Friend the Member for Whitehaven. He said that the Labour Government were prepared to commit resources to keep British shipbuilding's share of world trade. The present Government are not prepared to make such a commitment, because they see the capacity of the industry differently—a much smaller capacity for shipbuilding workers.

There are now four major differences in policy between the two parties. First, and perhaps most important, there is the amount of financial support that the present Government are prepared to give to shipbuilding. That level of support stems directly from their tax-cutting Budget of eight weeks ago. Earlier this week, when I questioned the Minister, I tried to develop what was a popular phrase of yesteryear—that one person's wage increase was another person's price increase—by suggesting that under this Government one person's tax cut was another person's job loss.

The Minister took issue with me, so my first question is this: if the tax cuts are to result in a surfacing of new jobs, when are those new jobs going to surface? When can Members representing shipbuilding constituencies tell those who are to be made unemployed by the fundamental change in Government policy when to expect the new jobs?

Mr. Cordon Wilson

Will the hon. Gentleman accept that if the Government are so confident that their new economic policies are going to work, it would be more correct to maintain jobs in the shipbuilding industry until those new jobs are made available? If the Government do not do that, it indicates that they have no intention of providing those new jobs within a reasonable time span.

Mr. Field

That would certainly be a humane and sensible approach. We must leave it to the Minister to tell us whether it is his approach.

The first major difference is on the level of financial support that the parties are prepared to give to shipbuilding and the capacity of the industry. The second difference lies in the urgency with which they are prepared to bring forward public orders. Again, one needs to compare the Minister of State's statement on shipbuilding—when he said that the Government would advance public sector orders where practicable—with the statement that the Labour Government made before the election, in which they said their policy was to bring forward as many public sector orders as possible, adding that the intervention fund would be used to help secure those orders. Will the intervention fund be used similarly by this Government?

The third difference on shipbuilding policy between the two sides is the linkup between foreign aid programmes and the winning of orders by our hard-pressed yards. Again, let us compare the commitment of the Labour Government with the absence of any statement or reference to using the aid programme by the Minister of State when he made his statement on the industry.

The fourth major difference on shipbuilding policy between the two parties is the extent to which they will back the attempts to export naval ships. Again, we must compare the non-reference in the statement to the development of this side of our programme with the earlier statement by the Labour Government on what their plans would be if they won the election.

One of the messages that we want to take from this debate to the country is that we are not prepared to accept from the Government that there is no difference between the approach of a Labour Government and the approach of a Conservative Government to the shipbuilding industry. There are major differences—for example, in our commitment to merchant shipbuilding capacity. There are four questions that I wish to put to the Minister.

The first comes from workers at Cammell Laird. They feel that when we compete for both home and foreign orders we do so with our arms behind our backs—that we do not compete on equal terms with some of our competitors. For example, they quote the recent Shell order, which went to Finland. In this country we would have found it very difficult to cover raw materials in the agreed price.

Mr. Malcolm Thornton (Liverpool, Garston)

I had the pleasure, with the hon. Gentleman, of visiting Cammell Laird last Friday, and I agree that much has been done there to improve the yard's productivity. But the competitiveness that the hon. Gentleman talks about was not restricted to price. Does not he agree that the Finnish tender was also very much better in terms of delivery date—a matter that our own industry must get to grips with?

Mr. Field

I agree with the hon. Member. Even if we could have competed on the time factor, the difference of £40 million—a sum far greater than the final agreed price—would have left us at the starting point rather than the finishing gate. Productivity is one side. The first point that I made—I believe that the hon. Member for Liverpool, Garston (Mr. Thornton) picked this up when he was at the yard last week—was that when there is such uncertainty in the industry it is terribly difficult to improve productivity. All the efforts are to stretch out the orders rather than complete them on time.

I return to my questions. First, shall we be able to compete on equal terms? Secondly, what is the Minister's commitment on bringing forward public sector orders? Are we to use the intervention fund? Thirdly, what part does the Minister see in trying to link the gaining of orders with our foreign aid programmes? Fourthly, will there be a real desire on the part of the Government to chase every order going—foreign and home—so as to make some difference to the number of redundancies that hang over our shipyards? If those questions are answered in the affirmative, will the Minister give us an undertaking that soon after we return from the recess he will report progress on all four fronts?

2.6 a.m.

Mr. W. E. Garrett (Wallsend)

It is remarkable that for two successive days I have sat in this Chamber and have only now been lucky enough to catch your eye, Mr. Deputy Speaker. I represent a constituency that has the largest number of people employed in the industry, the largest volume of work in the industry, and the largest volume of naval work under construction. I can only assume that Mr. Speaker was so blinded by the eloquence of some of my hon. Friends that he overlooked a humble Back Bencher such as me.

This debate is only one and a half hours in length. Some of my younger and somewhat vociferous hon. Friends might bear that in mind on other occasions. The essential thing about this House is not just that one should speak but that one should listen, too.

The House is indebted to my hon. Friend the Member for Whitehaven (Dr. Cunningham) for putting the points that I would have liked to put had I been Opposition Front Bench spokesman. Those who heard my hon. Friend the Member for Jarrow (Mr. Dixon) speak will have relished the feelings of my hon. Friend on this issue. I was born and bred in that area, but I have never worked in a shipyard. However, I understand the feelings that my hon. Friend tried to express.

We must recognise that the Minister has a difficult and unpleasant job to perform. While we on the Labour Benches may make a lot of noise on the issue, we have to remember that there are some difficult decisions to make.

I pay credit to the chairman, chief executive and the board of British Shipbuilders, which has made a great contribution to solving the nation's employment problem during a difficult period. I hope that the Minister will convey my views to those concerned. The one question that I wish to ask is this: will the Minister impress upon the board and his advisers the necessity for British Shipbuilders to continue with the high level of technological research that has been a feature of this important industry throughout the years? If—I use that word deliberately—and when the situation improves for merchant shipping orders, and for naval orders, too, I hope that this research will be maintained at a high financial level. That is my contribution to the debate.

2.10 a.m.

Mr. Ernie Ross (Dundee, West)

I associate myself with the comments of my hon. Friends the Members for White-haven (Dr. Cunningham), for Jarrow (Mr. Dixon) and for Birkenhead (Mr. Field). I propose to make one or two points because, whether one is a Back Bencher of long standing or a new Member, one cannot run away from the fact that there has been a change in the strategy for the industry that we are considering and that there is a difference in philosophy between the two sides of the House.

If the Government were sincere in what they say from the Dispatch Box, they would not cut subsidies to industry and jobs would not be sacrificed in the name of efficiency. Instead, there would be an immediate halt to our contribution to the Common Market. We are now contributing £1,000 million as our membership fee—£1,000 million that could be invested in jobs in this country. This money is being paid in spite of the fact that the Common Market is one of the most inefficient institutions in the world, and in spite of the fact, also, that the majority of the people in Britain did not vote at the European elections.

This is all part of what members of the Conservative Party call being good Europeans. Off they go to Brussels, Union Jacks in one hand and blank chques in the other, throwing thousands of people, young and old, on to the dole queues through cuts in regional aid and cuts in support for British Shipbuilders. At the same time, they are prepared to pay £1 billion to a grossly inefficient Common Market to qualify for a badge as a good European. Will the Minister guarantee that if the Common Market does not, in his own words, produce high levels of efficiency and productivity within two years the Government will withdraw all aid to that lame duck?

I remind the hon. Member for Dundee, East (Mr. Wilson) that one reason for this debate is the absence of his party. Every time there is a price increase, every time there is a reduction in social services, every time there is a factory or shipyard closure, every time there is a rent increase in Scotland, the working people of this country will remember the actions of the tartan Tories who connived with their Tory comrades to bring down the Labour Government and replace them with a party dedicated in its continued determination irreversibly to alter the balance of wealth and power in this country in favour of those who have most and need it least. In particular, the shipyard workers in Scotland, as they sign on the dole queue, will not forget those who conspired to bring them to that situation. As the quality of their life deteriorates even further, the magnificent 11 will not be forgotten.

On 4 April of this year the then Secretary of State for Industry said: it is clear that, given the severity of the world recession, the Corporation will continue to make substantial losses because its facilities are not running at their economic level."—[Official Report, 4 April 1979; Vol 965, c. 831] The situation has changed. Why have the Government stipulated a two-year moratorium? Are they privy to some secret that they cannot share with this side of the House? Have they some inside information of a sudden and dramatic upsurge in worldwide shipbuilding requirements? Does any other European nation agree with this two-year moratorium for shipbuilding, or is it just another exercise by the Conservative Party in an attempt to convince the public at large that it is genuinely concerned to give Britsh Shipbuilders an opportunity to survive?

I remind the House of the comments of the right hon. Member for Sidcup (Mr. Heath). While it is true that his Administration had a record of monumental failure, compared with what the present Government are proposing for the next two or three years it could be regarded as weak and pale. Speaking in Dundee in September 1969, the right hon. Member for Sidcup said: We refuse to condemn large parts of the Kingdom to slow decline and decay, to dereliction and to persistent unemployment in pursuit of old-fangled 19th century doctrines of laissez-faire. The Minister would do well to convey that message to his overlord, the Secretary of State for Industry. He might also remind him of the last Joseph who had responsibility for looking after the economic prosperity of a country. He was adviser to the Egyptian pharaoh and achieved prosperity not by cuts in public expenditure or aid to industry but by the good old Socialist approach of public ownership of the means of production, distribution and exchange of the corn of Egypt.

I concede that today's Joseph has a not insignificant difficulty to overcome. His pharaoh is a bit of a dreamer. She has a current fantasy that by throwing people out of work, raising prices and cutting services she can make them better off, and by his actions it appears that the Secretary of State intends to interpret those fantasies literally.

Finally, I wish to mention a yard in my area. Robb Caledon is a specialist builder, and if it goes, with it will go some of the best specialist skills in shipbuilding and design in the country. Once they are lost we shall not be able to bring them back, even if shipbuilding comes out of its present slump.

The Robb Caledon shipyard has the ability to build ships on the very edge of technology. Recently it built a cable-laying ship for the Post Office, which many other yards in Britain did not even bother to tender for. We are concerned about the jobs and the future prosperity of 105 apprentices in that yard and the future apprenticeships that might be available to the people in Dundee. Perhaps in his reply the Minister will deal with that problem.

2.17 a.m.

Mr. Adam Butler

One advantage of a debate at this time of night is that only those with a genuine interest in the industry are likely to come to the Chamber and make a contribution, and I appreciate the support of my hon. Friends.

Mr. Douglas Hogg (Grantham)

We are here because the Whips tell us to be.

Mr. Butler

It also gives hon. Members a useful opportunity to make further points and for me to answer questions for which perhaps there was insufficient time on Monday. My hon. Friend the Member for Grantham (Mr. Hogg) need not worry. We have to stop at 2.37 a.m. The hon. Member for Whitehaven (Dr. Cunningham), as official spokesman for his party, covered most of the points subsequently raised, and I shall concentrate mainly on what he said.

I shall pass on the words of the hon. Member for Wallsend (Mr. Garrett) to the board of British Shipbuilders. I appreciate the fact that the hon. Gentleman felt that I, too, had a difficult job, but the onus is on the corporation. As the chief executive said, the corporation is on its mettle, and I am sure that it will rise to the task.

The hon. Member for Birkenhead (Mr. Field) asked many questions.

Mr. W. E. Garrett

Will the Minister emphasise the importance of maintaining the research establishments within the United Kingdom, and if necessary extending them? I repeat that there is a necessity to meet the challenge in 1981. We may have a smaller force, but it will require more technology. We must maintain that technology for the reserve position.

Mr. Butler

Hansard is being printed again, and I shall draw attention to what the hon. Member has said.

As I said, the hon. Member for Birkenhead asked me many questions, with which I hope to deal. One of the reasons why Cammell Laird has a good future is the new covered shed. I saw the type 42 only a few weeks ago. That covered shed exists because of the investment of funds by the previous Conservative Government, and that is appreciated in the yard. I hope that the hon. Member will remember that, because some people think that Tory Governments have done nothing for shipbuilders. We are doing what we can to help now, in an even worse situation.

Other hon. Members have mentioned the scrap-and-build scheme. This scheme has been proposed by the Commission. It has not got far and the details are not finalised. Basically, for every 2 tonnes of shipping scrapped 1 tonne would be built in its place. There would be a subsidy both for scrapping and for rebuilding. It would be a Community scheme.

We are in favour of the scheme, with certain important conditions. I am not prepared to put Government funds into a central Community fund unless we get something out of it. That is one of my principal conditions. If the scheme is to work, it must be introduced as soon as possible. But it will not be introduced for some months. I shall see what I can do to urge it on its way.

The scrap-and-build scheme will not result in many orders. The British merchant shipping fleet is young. Those shipowners with whom I have talked do not view the scrap-and-build scheme with particular interest. Some would take advantage of it. If the scheme produced only a few ships, it would be welcome in our yards. I intend to press the Commission to proceed with the scheme as soon as possible.

As the hon. Member for Birkenhead said, when production is low it is difficult to increase productivity. That is a fact of industrial life. I have told management and unions that much rests on improving productivity. They realise that. They will make all efforts to improve productivity. I hope that nothing will he done to discourage them.

We must compete in the world, as the hon. Member for Jarrow (Mr. Dixon) said. Japanese prices, without subsidy are about half ours. Japanese productivity is more than twice as good as ours. We have to compete against such countries. Let us go for increases in productivity to improve the output of our yards.

The hon. Member for Whitehaven made some serious comments. He raised the question of financing the corporation. I referred to the use of the national loans fund on an interim basis while we are considering what to do permanently. My words were similar to those used by the previous Administration in April. It was then suggested that public dividend capital should be the basis. That is one of the options. This is not of vital consequence at present. I said in my statement that we would reduce the capital to zero, which will help to cope with the problem of interest, but we shall be concluding, fairly soon I hope, what should be the capital basis of the corporation.

The hon. Gentleman asked what help there might be for ship repairing. I assure him that we intend to bring forward a Bill soon after the recess to extend the home credit scheme to conversions by British shipowners, and that will certainly help our ship repairing businesses. I must say, however, that certain ship repair interests are profitable, and they are in the private sector. It may be that that is a better place for ship repair interests. The proof of the pudding is in the eating.

The hon. Gentleman referred to marine engines. We regret the redundancies that have been declared at Doxford, but I am told that they have been in the air for some time, and the blame cannot be attached to the Government. There are three other marine engine builders, all operating under licence, and some of those are in better shape than is Doxford, but where there is a problem with ships there is a problem with marine engines.

There is hope in regard to slow diesel engines. We hope that there will be a demand because of the need for fuel economy. Certain ships throughout the world are converting to diesel, and that may bring orders to our companies.

The hon. Gentleman wisely pointed out that the intervention fund is of no use unless there are orders. The record of the past year of operation has shown the truth of that statement. Despite a fairly high ceiling, the amount of intervention fund money used during the past year was as little as £15 million. We need orders, and I could not have stressed that more in my statement on Monday.

I turn to the important question whether there is a difference between the approach of the Government and that of the previous Administration. The proposals on scrap and build, home credits for conversion, some extension to credits under OECD regulations and the bringing forward of orders all appeared in the April statement and in my statement.

The hon. Member for Jarrow said that we cannot tolerate the solutions of the 1930s. If he believes that we are putting forward such solutions, he must also point an accusing finger at his party, because the measures that I propose are virtually identical to those in the policy of the previous Administration.

Dr. John Cunningham

That is not good enough. It is not fair for the Minister to make that assertion. We acknowledge that the policies to which he has referred are the same. It would be foolish to deny that, but there is a major difference between us.

The Minister is making a far better winding-up speech than we had dared to hope for, but there was no suggestion in our previous policy that we would guarantee finance for the industry for only two more years, and no suggestion that we would accept option 2 as a maximum capacity position for the industry. There is no common ground between us on those fundamental points.

Mr. Butler

The hon. Gentleman is right. I was leaving the best bits until the end. He told us that the Government did not accept any of the options put forward by British Shipbuilders. It is British Shipbuilders, not the Government, which has put forward the options. It is the preferred strategy of British Shipbuilders, not that of the Government, that we discussed on Monday.

The previous Administration found a cunning way of expressing the situation, saying that they were prepared to support British Shipbuilders in retaining its share of world shipbuilding. That was accepted. But what use is it? A figure of 3½ per cent. of world shipbuilding was mentioned. Does the hon. Gentleman not appreciate that if the world shipbuilding capacity reduces, so, in real terms, does that 3½ per cent.? The Japanese, with more than half the world capacity, have reduced that capacity by at least one-third and, according to my recent information, are only operating one-third of the remaining two-thirds. World capacity has come down by a substantial amount. The hon. Gentleman will find the same picture in Europe. German yards and others have been cut by a similar amount—by one-third, by 40 per cent., and in some cases by a half. So the figure of 3½ per cent. will represent considerably less than the hon. Gentleman thought it represented a short time ago.

It was a weasel way of trying to say that he would support the industry at its then current rate. The hon. Gentleman knows as well as I do that this could not be done, because he had seen the corporate plan of British Shipbuilders. That is the second main difference between this Government and his Administration. This Government acted. His Government sat on the corporate plan, doing nothing for months until the vote in this House that signalled a general election, when the Government hurried out with a programme. There was a row about having debates or not having debates and giving replies by written answer. A long statement was issued in the form of a written answer about what the Government intended to do. The statement was long overdue. What it revealed was what the Government had not done. That is the difference between this Government and the previous Labour Administration. We have acted.

There was no intervention fund. It had lapsed nearly two months before I took up office. My first action was to get the fund operating again.

Dr. John Cunningham

The hon. Gentleman is using immoderate language. If he were to practise what he preaches, he would regret his choice of words. He is erecting his argument around the fact that a statement was made, or, as he says, rushed out, on 4 April. Does he think that the Secretary of State for Industry at that time knew that there was to be a general election? Of course he did not, so the hon. Gentleman's argument falls.

Mr. Butler

I do not know whether the Secretary of State for Industry knew that there was to be an election, but the rest of the country did. The Government had been defeated in the House. It was bound to come about. The only question was a date at the end of April or the beginning of May. If the right hon. Gentleman did not know, I am sorry, but the difference is that this Government acted, whereas the previous Government sat and did nothing, having presided over a reduction of 11,000 or 12,000 jobs in the merchant shipbuilding industry in the previous two years. I do not accuse the hon. Gentleman of bringing about that situation, but it is hypocritical to suggest now that he did not know that further reduction had to take place in the industry.

I am accused of offering aid to the shipbuilding industry for two years. I take pride in the fact that we have put forward our ideas for a two-year period. That is another difference. There was nothing in the April statement to indicate how long the aid would continue.

Mr. Robert Rhodes James (Cambridge)

Will my hon. Friend confirm that the former Government fell on 28 March.

Mr. Butler

I would never dispute any date that my hon. Friend puts forward. I am grateful to him. Therefore, it is conceivable that the Secretary of State for Industry knew what the future held.

As I was saying, we have at least been prepared to look forward for two years. As my hon. Friend the Member for Newcastle-upon-Tyne, North (Sir W. Elliott) said, this was appreciated by the British Shipbuilders board. The chief executive said that this had removed the uncertainty. I prefer that to a statement of the sort that we had in April, looking forward only a single year.

As I said on Monday, the help that may be needed after that period will depend largely on the extent to which those in the industry have succeeded in helping themselves. By that I mean that if the industry can show that it has got itself into a competitive state, that will he the sort of industry that all of us would want to see and would be prepared to support. That is where I stand—on the final paragraph of my statement on Monday.

Question put and agreed to.

Resolved. That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1979, which was laid before this House on 10 July, be approved.